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What changed in Amerant Bancorp Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Amerant Bancorp Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+884 added−988 removedSource: 10-K (2024-03-07) vs 10-K (2023-03-01)

Top changes in Amerant Bancorp Inc.'s 2023 10-K

884 paragraphs added · 988 removed · 620 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

148 edited+77 added−97 removed131 unchanged
Biggest changeThe CFPB has focused on various practices to date, including revising mortgage lending rules, overdrafts, credit card add-on products, indirect automobile lending, student lending, and payday and similar short-term lending, and has a broad mandate to regulate consumer financial products and services, whether or not offered by banks or their affiliates.
Biggest changeThe CFPB has focused on various practices to date, including revising mortgage lending rules, overdrafts, credit card add-on products, indirect automobile lending, student lending, and payday and similar short-term lending, and has a broad mandate to regulate consumer financial products and services, whether or not offered by banks or their affiliates. 20 Table of Contents Standards for Safety and Soundness The Federal Deposit Insurance Act requires the federal bank regulatory agencies to prescribe, by regulation or guideline, operational and managerial standards for all insured depository institutions relating to: (1) internal controls; (2) information systems and audit systems; (3) loan documentation; (4) credit underwriting; (5) interest rate risk exposure; and (6) asset quality.
Business Developments New Share Repurchase Program On December 19, 2022, the Company announced that the Board of Directors authorized a new repurchase program pursuant to which the Company may purchase, from time to time, up to an aggregate amount of $25 million of its shares of Class A common stock (the “2023 Class A Common Stock Repurchase Program”).
Business Developments Share Repurchase Program On December 19, 2022, the Company announced that the Board of Directors authorized a new repurchase program pursuant to which the Company may purchase, from time to time, up to an aggregate amount of $25 million of its shares of Class A common stock (the “2023 Class A Common Stock Repurchase Program”).
These federal laws and regulations generally make it more difficult to acquire a bank holding company and a bank by tender offer or similar means than it might be to acquire control of another type of corporation.
These federal laws and regulations generally make it more difficult to acquire a bank holding company or a bank by tender offer or similar means than it might be to acquire control of another type of corporation.
The USA Patriot Act and BSA and related federal regulations require banks to establish anti-money laundering programs that include policies, procedures and controls to detect, prevent and report money laundering and terrorist financing and to verify the identity of their customers and of beneficial owners of their legal entity customers.
The USA Patriot Act, the BSA and related federal regulations require banks to establish anti-money laundering programs that include policies, procedures and controls to detect, prevent and report money laundering and terrorist financing and to verify the identity of their customers and of beneficial owners of their legal entity customers.
We provide individuals and businesses with a comprehensive array of deposit, credit, investment, wealth management, retail banking and fiduciary services. We serve customers in our United States markets and select international customers. These services are offered through Amerant Bank, N.A., or the Bank, which is also headquartered in Coral Gables, Florida, and its subsidiaries.
We provide individuals and businesses with a comprehensive array of deposit, credit, investment, wealth management, retail banking, mortgage services and fiduciary services. We serve customers in our United States markets and select international customers. These services are offered through Amerant Bank, N.A., or the Bank, which is also headquartered in Coral Gables, Florida, and its subsidiaries.
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”), the Bank also is subject to regulations issued by the Consumer Financial Protection Bureau, or CFPB, with respect to consumer financial services and products, but is not subject to direct CFPB supervision or examination because the Bank has less than $10 billion in assets.
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”), the Bank also is subject to regulations issued by the Consumer Financial Protection Bureau (“CFPB”), with respect to consumer financial services and products, but is not subject to direct CFPB supervision or examination because the Bank has less than $10 billion in assets.
Reserves The Federal Reserve requires all depository institutions, such as the Bank, to maintain reserves against transaction accounts (primarily noninterest-bearing and Negotiable Orders of Withdrawal, or NOW, checking accounts). Effective March 26, 2020, the Federal Reserve reduced reserve requirement ratios to zero percent, eliminating reserve requirements for all depository institutions.
Reserves The Federal Reserve requires all depository institutions, such as the Bank, to maintain reserves against transaction accounts (primarily noninterest-bearing and Negotiable Orders of Withdrawal, or NOW, checking accounts). Effective March 26, 2020, the Federal Reserve reduced reserve requirement ratios to zero percent, effectively eliminating reserve requirements for all depository institutions.
On our website, you can access, free of charge, our reports on Forms 10-K, 10-Q and 8-K, as well as proxy statements on Schedule 14A and amendments to the materials. Materials are available online as soon as practicable after we file them with the SEC.
On our website, you can access, free of charge, our reports on Forms 10-K, 10-Q and 8-K, as well as proxy statements on Schedule 14A and amendments to these reports and materials. Materials are available online as soon as practicable after we file them with the SEC.
Many AMLA provisions will require additional rulemakings, reports and other measures, and the impact of the AMLA will depend on, among other things, rulemaking and implementation guidance. In June 2021, the Financial Crimes Enforcement Network, a bureau of the U.S.
Many AMLA provisions will require additional rulemakings, reports and other measures, and the impact of the AMLA will depend on, among other things, rulemaking and implementation guidance. In June 2021, the Financial Crimes Enforcement Network (“FinCEN”), a bureau of the U.S.
He founded and joined Amerant Mortgage in November 2020 from City National Bank of Florida, or CNB, where he served as EVP and Executive Vice President for Private Banking, Private Wealth, and Residential Mortgage. Prior to joining CNB in 2017, Howard was EVP, Consumer & Residential Lending & Treasury Management at Sabadell United Bank, N.A. Mr.
He founded and joined Amerant Mortgage in November 2020 from City National Bank of Florida, or CNB, where he served as EVP and Executive Vice President for Private Banking, Private Wealth, and Residential Mortgage. Prior to joining CNB in 2017, Mr. Levine was EVP, Consumer & Residential Lending & Treasury Management at Sabadell United Bank, N.A. Mr.
Prior to joining the MSF, Mr. Capriles served as a foreign exchange trader with the Banco Central de Venezuela (Venezuelan Central Bank) from 1989 to 1991. Mr. Capriles also served as a Professor in the Economics Department at Universidad Católica Andrés Bello in Caracas, Venezuela from 1996 to 2008. 31 Table of Contents Mr.
Prior to joining MSF, Mr. Capriles served as a foreign exchange trader with the Banco Central de Venezuela (Venezuelan Central Bank) from 1989 to 1991. Mr. Capriles also served as a Professor in the Economics Department at Universidad Católica Andrés Bello in Caracas, Venezuela from 1996 to 2008. 30 Table of Contents Mr.
We believe both the Security Program and BCP adhere to industry best practices and comply with the guidelines of the Federal Financial Institutions Examination Council, or FFIEC, and are subject to periodic testing and independent audits. 13 Table of Contents Competition The banking and financial services industry in our footprint is highly competitive, and we compete with a wide range of lenders and other financial institutions within our markets, including local, regional, national and international commercial banks and credit unions.
We believe both the Information Security Program and BCP adhere to industry best practices and comply with the guidelines of the Federal Financial Institutions Examination Council, or FFIEC, and are subject to periodic testing and independent audits. 11 Table of Contents Competition The banking and financial services industry in our footprint is highly competitive, and we compete with a wide range of lenders and other financial institutions within our markets, including local, regional, national and international commercial banks and credit unions.
The Debentures are guaranteed by the Company. The Trust Preferred Securities and the Debentures issued by the Company include calculations that are based on 3-month LIBOR.
The Trust Preferred Securities and the Debentures issued by the Company include calculations that are based on 3-month LIBOR.
Under certain circumstances, these agencies may enforce similar remedies directly against officers, directors, employees and others participating in the affairs of a bank or bank holding company, including fines, penalties and the recovery, or claw-back, of compensation. FDIC Insurance Assessments Deposits at U.S. domiciled banks are insured by the FDIC, subject to limits and conditions of applicable laws and regulations.
Under certain circumstances, these agencies may enforce similar remedies directly against officers, directors, employees and others participating in the affairs of a bank or bank holding company, including fines, penalties and the recovery, or claw-back, of compensation. 26 Table of Contents FDIC Insurance Assessments Deposits at U.S. domiciled banks are insured by the FDIC, subject to limits and conditions of applicable laws and regulations.
Upon crossing the $10 billion asset threshold in a calendar year, the rules require compliance with these limits by no later than July 1 of the following year. The Bank did not exceed the $10 billion asset threshold in 2022, but may exceed this threshold in 2023.
Upon crossing the $10 billion asset threshold in a calendar year, the rules require compliance with these limits by no later than July 1 of the following year. The Bank did not exceed the $10 billion asset threshold in 2023, but may exceed this threshold in 2024.
Bank Holding Company and Bank Regulation The Company is a bank holding company, subject to supervision, regulation and examination by the Federal Reserve under the Bank Holding Company Act, or “BHC Act.” Bank holding companies generally are limited to the business of banking, managing or controlling banks, and certain related activities.
Bank Holding Company and Bank Regulation The Company is a bank holding company, subject to supervision, regulation and examination by the Federal Reserve under the Bank Holding Company Act (“BHC Act”). Bank holding companies generally are limited to the business of banking, managing or controlling banks, and certain related activities.
If so, the Company's compliance with the provisions of the Durbin amendment would be required no later than July 1, 2024, and we do not expect the limits to debit card interchange to materially reduce the Company's revenue.
If so, the Company's compliance with the provisions of the Durbin amendment would be required no later than July 1, 2025, and we do not expect the limits to debit card interchange to materially reduce the Company's revenue.
Anti-money Laundering 22 Table of Contents The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the “USA Patriot Act”), provides the federal government with additional powers to address terrorist threats through enhanced domestic security measures, expanded surveillance powers, increased information sharing and broadened anti-money laundering requirements.
Anti-money Laundering The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the “USA Patriot Act”), provides the federal government with additional powers to address terrorist threats through enhanced domestic security measures, expanded surveillance powers, increased information sharing and broadened anti-money laundering requirements.
We believe that having the ability to adjust their incentive compensation based on asset quality motivates the relationship managers to focus on the origination and maintenance of high-quality credits consistent with our strategic focus on asset quality. Deposits Our deposits serve as the primary funding source for lending, investing and other general banking purposes.
We believe that having the ability to adjust their incentive compensation based on asset quality motivates the relationship managers to focus on the origination and maintenance of high-quality credits consistent with our strategic focus on asset quality. 9 Table of Contents Deposits Our deposits serve as the primary funding source for lending, investing and other general banking purposes.
We offer a full suite of online banking services including online account opening for domestics and international retail customers, access to account balances, statements and other documents, Zelle for consumer and businesses, online transfers, online bill payment and electronic delivery of customer statements, as well as automated teller machines (“ATMs”), and banking by mobile devices, telephone and mail.
We offer a full suite of online banking services including online account opening for domestic and international customers, access to account balances, statements and other documents, Zelle for consumer and businesses, online transfers, online bill payment and electronic delivery of customer statements, as well as automated teller machines (“ATMs”), and banking by mobile devices, telephone and mail.
The primary focus for learning in 2022 included supporting the organization in the transformation to FIS® and supporting leaders in upskilling their ability to lead teams effectively, manage performance and drive change to reach organizational business goals.
The primary focus for learning in 2023 included supporting the organization in the transformation to FIS and supporting leaders in upskilling their ability to lead teams effectively, manage performance and drive change to reach organizational business goals.
Full time and part time team members also benefit from free Short-Term Disability insurance.
Full time and part-time team members also benefit from free Short & Long-Term Disability insurance.
Controls and Procedures.” Shareholder Say-On-Pay Votes Under the Dodd-Frank Act public companies are required to provide shareholders with an advisory vote on executive compensation (known as say-on-pay votes), the frequency of a say-on-pay vote, and the golden parachutes available to executives in connection with change-in-control transactions.
Controls and Procedures.” 18 Table of Contents Shareholder Say-On-Pay Votes Under the Dodd-Frank Act public companies are required to provide shareholders with an advisory vote on executive compensation (known as say-on-pay votes), the frequency of a say-on-pay vote, and the golden parachutes available to executives in connection with change-in-control transactions.
This program includes an information security governance structure and related policies and procedures, security controls, protocols governing data and systems, monitoring processes, and processes to ensure that the information security programs of third-party service providers are adequate. Our Security Program also continuously promotes cybersecurity awareness and culture across the organization.
This program includes an information security governance structure and related policies and procedures, security controls, protocols governing data and systems, monitoring processes, and processes to ensure that the information security programs of third-party service providers are adequate. Our Security Program also continuously promotes cybersecurity awareness and culture across the organization. See Section 1C.
Risk Factors” and include, but are not limited to the following: Risks related to Funding and Liquidity • Liquidity risks could affect our operations and jeopardize our financial condition and certain funding sources could increase our interest rate expense. • We may not be able to develop and maintain a strong core deposit base or other low-cost funding sources. • We may elect or be compelled to seek additional capital in the future, but that capital may not be available when it is needed or on acceptable terms and, as a result, our ability to expand our operations could be materially impaired. • Our ability to receive dividends from our subsidiaries could affect our liquidity and our ability to pay dividends.
Risk Factors” and include, but are not limited to the following: Risk related to Funding and Liquidity • 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.
Under the Change in Bank Control Act, or CBC Act, and the regulations thereunder, before acquiring control of any bank holding company or any national bank a person or group must give advance notice to the Federal Reserve and the OCC. Upon receipt of such notice, the regulatory agencies may or may not approve the acquisition.
Under the Change in Bank Control Act (“CBC Act”), and the regulations thereunder, before acquiring control of any bank holding company or any national bank a person or group must give advance notice to the Federal Reserve and the OCC. Upon receipt of such notice, the regulatory agencies may or may not approve the acquisition.
Mr Plush (“Jerry”) , age 64, serves as the Company’s Chairman, President, and CEO since June 8, 2022, having served previously as Vice-Chairman, President & CEO since July 1st, 2021, and previously as Vice-Chairman & CEO since March 20, 2021. Mr.
Plush (“Jerry”) , age 65, serves as the Company’s Chairman, President, and CEO since June 8, 2022, having served previously as Vice-Chairman, President & CEO since July 1st, 2021, and previously as Vice-Chairman & CEO since March 20, 2021. Mr.
Risks Related to Our Business and Operations • 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. • New lines of business, new products and services, or strategic project initiatives may subject us to additional risks. • We may not have the ability or resources to keep pace with rapid technological changes in the financial services industry or implement new technology effectively. • Conditions in Venezuela could adversely affect our operations. • Our ability to achieve our environmental, social and governance goals are subject to risks, many of which are outside of our control, and our reputation could be harmed if we fail to meet such goals. • We may be unable to attract and retain key people to support our business. • Severe weather, natural disasters, global pandemics, acts of war or terrorism, theft, civil unrest, government expropriation or other external events could have significant effects on our business. • Any failure to protect the confidentiality of customer information could adversely affect our reputation and subject us to financial sanctions and other costs that could have a material adverse effect on our business, financial condition and results of operations. • We could be required to write down our goodwill. • We have a net deferred tax asset that may or may not be fully realized. 33 Table of Contents • 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.
Risks Related to Our Business and Operations • 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 face significant operational risks. • We may not have the ability or resources to keep pace with rapid technological changes in the financial services industry or implement new technology effectively. • Conditions in Venezuela could adversely affect our operations. • Our ability to achieve our environmental, social and governance goals are subject to risks, many of which are outside of our control, and our reputation could be harmed if we fail to meet such goals. • We may be unable to attract and retain key people to support our business. • Severe weather, natural disasters, global pandemics, acts of war or terrorism, theft, civil unrest, government expropriation or other external events could have significant effects on our business. • Any failure to protect the confidentiality of customer information could adversely affect our reputation and subject us to financial sanctions and other costs that could 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. 33 Table of Contents • Our success depends on our ability to compete effectively in highly competitive markets.
Risks Related to Risk Management, Internal Audit, Internal Controls and Disclosure Controls • 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.
Risks Related to Risk Management, Internal Audit, Internal and Disclosure Controls • 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.
These reserve requirements are subject to annual adjustment by the Federal Reserve. 21 Table of Contents Privacy A variety of federal and state privacy laws govern the collection, safeguarding, sharing and use of customer information, and require that financial institutions have policies regarding information privacy and security.
These reserve requirements are subject to annual adjustment by the Federal Reserve. 19 Table of Contents Privacy and Data Security A variety of federal and state privacy laws govern the collection, safeguarding, sharing and use of customer information, and require that financial institutions have policies regarding information privacy and security.
The guidance provides the following criteria regulatory agencies will use as indicators to identify institutions that may be exposed to CRE concentration risk: (i) experienced rapid growth in CRE lending; (ii) notable exposure to a specific type of CRE; (iii) Total reported loans for construction, land development, and other land of 100% or more of a bank’s total risk-based capital; or (iv) Total reported loans secured by multifamily and nonfarm nonresidential properties and loans for construction, land development, and other land are 300% or more of a bank’s total risk-based capital and the outstanding balance of the institutions CRE portfolio has increased by 50% or more in the prior 36 months.
The CRE Guidance provides the following criteria regulatory agencies will use as indicators to identify institutions that may be exposed to CRE concentration risk: (i) experienced rapid growth in CRE lending; (ii) notable exposure to a specific type of CRE; (iii) Total reported loans for construction, land development, and other land of 100% or more of a bank’s total risk-based capital; or (iv) Total commercial real estate, which includes loans secured by multifamily and nonfarm nonresidential properties and loans for construction, land development, and other land are 300% or more of a bank’s total risk-based capital and the outstanding balance of the institutions CRE portfolio has increased by 50% or more during the prior 36 months.
Department of Treasury, or “OFAC.” OFAC administers and enforces economic and trade sanctions against targeted foreign countries and regimes, terrorists, international narcotics traffickers, those engaged in activities related to the proliferation of weapons of mass destruction, and other threats to the national security, foreign policy or economy of the United States, based on U.S. foreign policy and national security goals.
OFAC administers and enforces economic and trade sanctions against targeted foreign countries and regimes, terrorists, international narcotics traffickers, those engaged in activities related to the proliferation of weapons of mass destruction, and other threats to the national security, foreign policy or economy of the United States, based on U.S. foreign policy and national security goals.
The program resulted in five of the ten interns being offered continued employment. As part of our Workplace pillar, educating our team members, increasing the I Belong brand presence, and driving an inclusive environment through our Business Resources Groups and Executive DEI Council were a focus for 2022.
The program resulted in five of the six interns being offered continued employment. As part of our Workplace pillar, educating our team members, increasing the I Belong brand presence, and driving an inclusive environment through our Business Resources Groups and Executive DEI Council were a focus for 2023.
The assessments of the Company's internal control over financial reporting as of December 31, 2022 are included in this report under “Item 9A.
The assessments of the Company's internal control over financial reporting as of December 31, 2023 are included in this report under “Item 9A.
Sanchez, age 50, serves as Executive Vice-President and Chief People Officer since June 2022 and leads the Company’s approach to people and organizational culture. Previously, Mrs. Sanchez served as the Company and the Bank’s General Counsel since 2010.
Sanchez, age 51, serves as Senior Executive Vice-President and Chief People Officer since June 2022 and leads the Company’s approach to people and organizational culture. Previously, Mrs. Sanchez served as the Company and the Bank’s General Counsel since 2010.
The Gramm-Leach-Bliley Act, or the “GLB Act,” and related regulations require banks and their affiliated companies to adopt and disclose privacy policies, including policies regarding the sharing of personal information with third-parties.
The Gramm-Leach-Bliley Act (“GLB Act”), and related regulations require banks and their affiliated companies to adopt and disclose privacy policies, including policies regarding the sharing of personal information with third-parties.
By way of amendments to the Bank Secrecy Act, or “BSA,” the USA Patriot Act puts in place measures intended to encourage information sharing among bank regulatory and law enforcement agencies. In addition, certain provisions of the USA Patriot Act impose affirmative obligations on a broad range of financial institutions.
By way of amendments to the Bank Secrecy Act (“BSA”), the USA Patriot Act puts in place measures intended to encourage information sharing among bank regulatory and law enforcement agencies. In addition, certain provisions of the USA Patriot Act impose affirmative obligations on a broad range of financial institutions.
We continuously look for ways for improving our products, services and delivery channels. For example, in February 2022, we launched Amerant CoverMe, a program that eliminates overdraft fees for up to $100 and helps customers avoid declined transactions, returned checks and overdrafts.
We continuously look for ways for improving our products, services and delivery channels. For example, we currently offer Amerant CoverMe, launched in February 2022, which is a program that eliminates overdraft fees for up to $100 and helps customers avoid declined transactions, returned checks and overdrafts.
As a result of the Transfer of Subsidiary Shares From Noncontrolling Interest, the Company reduced its additional paid-in capital for a total of $1.9 million with a corresponding increase to the equity attributable to Noncontrolling interests. Total mortgage loans held for sale were $62.4 million as of December 31, 2022, compared to $14.9 million at December 31, 2021.
As a result of the Transfer of Subsidiary Shares From Noncontrolling Interest, the Company reduced its additional paid-in capital for a total of $1.9 million with a corresponding increase to the equity attributable to Noncontrolling interests. Total mortgage loans held for sale were $26.2 million as of December 31, 2023, compared to $62.4 million at December 31, 2022.
We believe that our credit approval process provides for thorough underwriting and sound and efficient decision making. 10 Table of Contents Credit Risk Management . We use what we believe is a comprehensive methodology to monitor credit quality and prudently manage credit concentrations within our loan portfolio.
We believe that our credit approval process provides for thorough underwriting and sound and efficient decision making. Credit Risk Management . We use what we believe is a comprehensive methodology to monitor credit quality and prudently manage credit concentrations within our loan portfolio.
We and the Bank were not subject to the Volcker Rule in 2022, but may become so in the future.
We and the Bank were not subject to the Volcker Rule in 2023, but may become so in the future.
Capriles, age 55, serves as Senior Executive Vice-President and Chief Risk Officer since January 2023, having previously served as Executive Vice-President and Chief Risk Officer since February 2018 and previously as the Company’s Chief Risk Officer since 2016. Mr.
Alberto Capriles . Mr. Capriles, age 56, serves as Senior Executive Vice-President and Chief Risk Officer since January 2023, having previously served as Executive Vice-President and Chief Risk Officer since February 2018 and previously as the Company’s Chief Risk Officer since 2016. Mr.
The proposal would also require reporting about a public company’s policies and procedures to identify and manage cybersecurity risks; as well as disclosure about the Board of Directors' oversight of cybersecurity risk; and management’s role and expertise in assessing and managing cybersecurity risk and implementing cybersecurity policies and procedures.
The new rules also require reporting about a public company’s policies and procedures to identify and manage cybersecurity risks; as well as disclosure about the Board of Directors' oversight of cybersecurity risk; and management’s role and expertise in assessing and managing cybersecurity risk and implementing cybersecurity policies and procedures.
In addition to surveying, we spent time on a team member listening tour to capture team members’ thoughts on life at Amerant, including Amerant Culture, Benefits, Learning and Development opportunities, and recognition. 15 Table of Contents These sentiments were shared with the senior management team, and we created an action plan to address the feedback received, which we expect to implement in 2023.
In addition to surveying, we spent time on a team member listening tour to capture team members’ thoughts on life at Amerant, including Amerant Culture, Benefits, Learning and Development opportunities, and recognition. These sentiments were shared with the senior management team, and we created an action plan to address the feedback received, which we expect to implement in 2024.
In November 2021, the federal banking agencies adopted a Final Rule, with compliance required by May 1, 2022, that requires banking organizations to notify their primary banking regulator within 36 hours of determining that a "computer-security incident" has materially disrupted or degraded, or is reasonably likely to materially disrupt or degrade, the banking organization's ability to carry out banking operations or deliver banking products and services to a material portion of its customer base, its businesses and operations that would result in material loss, or its operations that would impact the stability of the United States.
Since May 2022, a rule adopted by the federal banking agencies requires banking organizations to notify their primary banking regulator within 36 hours of determining that a "computer-security incident" has materially disrupted or degraded, or is reasonably likely to materially disrupt or degrade, the banking organization's ability to carry out banking operations or deliver banking products and services to a material portion of its customer base, its businesses and operations that would result in material loss, or its operations that would impact the stability of the United States.
However, a bank holding company may engage in or acquire an interest in a company that engages in activities that the Federal Reserve has determined to be so closely related to banking, or managing or controlling banks, as to be a proper incident thereto.
However, a bank holding company may engage in or acquire an interest in a company that engages in activities that the Federal Reserve has determined to be so closely related to banking, or managing or controlling banks.
We serve our market areas from our headquarters in Coral Gables, Florida, and through a network of 16 banking locations in South Florida and 7 banking locations in Houston, Texas. Our subsidiary, Amerant Mortgage, operates its business nationally and has direct access to federal housing agencies.
We serve our market areas from our headquarters in Coral Gables, FL and through a network of 16 banking locations in South Florida, 6 banking locations in Houston, Texas and 1 in Tampa, FL. Our subsidiary, Amerant Mortgage, operates its business nationally and has direct access to federal housing agencies.
The HIDTA designation makes it possible for local agencies to benefit from ongoing HIDTA-coordinated program initiatives that are working to reduce drug use. There is also increased scrutiny of compliance with the sanctions programs and rules administered and enforced by the Office of Foreign Assets Control of the U.S.
The HIDTA designation makes it possible for local agencies to benefit from ongoing HIDTA-coordinated program initiatives that are working to reduce drug use. 21 Table of Contents There is also increased scrutiny of compliance with the sanctions programs and rules administered and enforced by the Office of Foreign Assets Control (“OFAC”) of the U.S. Department of Treasury.
Levine has more than 25 years of experience in real estate finance and has experience running mortgage businesses through independent mortgage companies as well as in community banks. Howard has a bachelor’s degree from Hofstra University in Long Island, NY. Mariola Sanchez. Mrs.
Levine has more than 25 years of experience in real estate finance and has experience running mortgage businesses through independent mortgage companies as well as in community banks. Mr. Levine has a bachelor’s degree from Hofstra University in Long Island, NY. 31 Table of Contents Mariola Sanchez. Mrs.
Item 1. BUSINESS Our Company We are a bank holding company headquartered in Coral Gables, Florida, with $9.1 billion in assets, $6.9 billion in loans held for investment, $7.0 billion in deposits, $705.7 million of shareholders’ equity, and $2.0 billion in assets under management and custody (“AUM”) as of December 31, 2022.
Item 1. BUSINESS Our Company We are a bank holding company headquartered in Coral Gables, Florida, with $9.7 billion in assets, $6.9 billion in loans held for investment, $7.9 billion in deposits, $736.1 million of shareholders’ equity, and $2.3 billion in assets under management and custody (“AUM”) as of December 31, 2023.
In alignment with our Talent pillar, the I Belong program focused on attracting early career talent through partnerships with local schools, including the University of Miami, Florida International University, Barry University, and Miami Dade College. In 2022 we hosted ten interns from Florida International University and the University of Miami.
In alignment with our Talent pillar, the I Belong program focused on attracting early career talent through partnerships with local schools, including the Florida International University, Barry University, and Miami Dade College. In 2023 we hosted 9 interns from Florida International University, Barry University and Miami Dade College.
Risks related to Credit and Interest Rate • Our profitability is subject to interest rate risk. • Our allowance for credit losses may prove inadequate and our business, financial condition and profitability may suffer. • Our concentration of CRE loans could result in increased loan losses, and adversely affect our business, earnings, and financial condition. • Many of our loans are to commercial borrowers, which have unique risks compared to other types of loans. • Our valuation of securities and the determination of credit impairment in our investment securities portfolio are subjective and, if changed, could materially adversely affect our results of operations or financial condition. • Nonperforming and similar assets take significant time to resolve and may adversely affect our results of operations and financial condition. • We are subject to environmental liability risk associated with lending activities. • Deterioration in the real estate markets, including the secondary market for residential mortgage loans, can adversely affect us. • We may not effectively manage risks associated with the replacement of LIBOR as a reference rate.
Risk related to Credit and Interest Rate • 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. • Deterioration in the real estate markets, including the secondary market for residential mortgage loans, can adversely affect us.
While we seek to remain competitive with respect to fees charged, interest rates and pricing, we believe that our broad and sophisticated commercial banking product suite, our high-quality customer service culture, our positive reputation and long-standing community relationships enable us to compete successfully within our markets and enhance our ability to attract and retain customers.
While we seek to remain competitive with respect to fees charged, interest rates and pricing, we believe that our broad and sophisticated banking and financial products suite, our high-quality customer service culture, our positive reputation, brand recognition, and long-standing community relationships enable us to compete successfully within our markets and enhance our ability to attract and retain customers and employees.
As a result, the Bank is currently classified as "well capitalized" for purposes of the OCC's prompt corrective action regulations. Prompt Corrective Action Rules The federal banking agencies are required to take "prompt corrective action" with respect to financial institutions that do not meet minimum capital requirements.
As a result, both the Company and the Bank are currently classified as "well-capitalized" for purposes of the OCC's prompt corrective action regulations. 25 Table of Contents Prompt Corrective Action Rules The federal banking agencies are required to take "prompt corrective action" with respect to financial institutions that do not meet minimum capital requirements.
Our deposits are fully-insured by the Federal Deposit Insurance Corporation (“FDIC”), subject to applicable limits. See “-Supervision and Regulation.” As of December 31, 2022 and 2021, core deposits were $5.3 billion, and $4.3 billion, 75.5% and 76.2% of our total deposits at those dates, respectively. Core deposits consist of total deposits excluding all time deposits.
Our deposits are fully-insured by the Federal Deposit Insurance Corporation (“FDIC”), subject to applicable limits. See “-Supervision and Regulation.” As of December 31, 2023 and 2022, core deposits were $5.6 billion, and $5.3 billion, 70.9% and 75.5% of our total deposits at those dates, respectively. Our core deposits consist of total deposits excluding all time deposits.
The information contained on our website is not incorporated by reference in, or considered part of, this Form 10-K. 30 Table of Contents Supplementary Item, Information about our Executive Officers The Executive Officers of the Company as of March 1, 2023, are as follows: Gerald P. Plush.
The information contained on our website is not incorporated by reference in, or considered part of, this Form 10-K. 29 Table of Contents Supplementary Item, Information about our Executive Officers The Executive Officers of the Company as of March 7, 2024, are as follows: Gerald P. Plush. Mr.
Risks Related to Regulatory and Legal Matters • We are subject to extensive regulation that could limit or restrict our activities and adversely affect our earnings. • Litigation and regulatory investigations are increasingly common in our businesses and may result in significant financial losses and/or harm to our reputation. • We are subject to capital adequacy and liquidity standards, and if we fail to meet these standards our financial condition and operations would be adversely affected. • 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.
Risks Related to Regulatory and Legal Matters • We are subject to extensive regulation that could limit or restrict our activities and adversely affect our earnings. • 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.
Fiduciary, investment, wealth management and mortgage services are provided by the Bank, the Bank’s securities broker-dealer subsidiary, Amerant Investments, Inc., or Amerant Investments, the Bank’s Grand Cayman based trust company subsidiary, Elant Bank & Trust Ltd., or the Cayman Bank, and Amerant Mortgage, LLC. or Amerant Mortgage which began operations in May 2021.
Fiduciary, investment, wealth management and mortgage services are provided by the Bank, the Bank’s securities broker-dealer subsidiary, Amerant Investments, Inc., or Amerant Investments, the Bank’s Grand Cayman based trust company subsidiary, Elant Bank & Trust Ltd., or the Cayman Bank, and Amerant Mortgage, LLC, or Amerant Mortgage.
These laws and regulations mandate certain disclosure requirements and regulate the manner in which financial institutions must deal with clients when taking deposits or making loans to such clients. The Bank must comply with the applicable provisions of these consumer protection laws and regulations as part of its ongoing client relations.
These laws and regulations mandate certain disclosure requirements and regulate the manner in which financial institutions must deal with clients when taking deposits, making loans processing checks or certain electronic payments, and collecting consumer debts. The Bank must comply with the applicable provisions of these consumer protection laws and regulations as part of its ongoing client relations.
We generally use the following key metrics to track our progress on our deposits strategy: i) loan to deposits ratio, and ii) the ratio of non-interest bearing deposits to total deposits. The loan to deposit ratio at December 31, 2022 was 98.2%, compared to 98.9% at December 31, 2021.
We generally use the following key metrics to track our progress on our relationship-first strategy: i) loan to deposits ratio, and ii) the ratio of non-interest bearing deposits to total deposits. The loan to deposit ratio at December 31, 2023 was 92.0%, compared to 98.2% at December 31, 2022.
Credit Policies and Procedures General . We adhere to what we believe are disciplined underwriting standards. We maintain asset quality through an emphasis on local market knowledge, long-term customer relationships, consistent and thorough underwriting for all loans and a conservative credit culture. We also seek to maintain a broadly diversified loan portfolio across geographies, customers, products and industries.
We maintain asset quality through an emphasis on local market knowledge, long-term customer relationships, consistent and thorough underwriting for all loans and a conservative credit culture. We also seek to maintain a broadly diversified loan portfolio across geographies, customers, products and industries.
As of December 31, 2022 and 2021, we had brokered deposits of $629.3 million and $387.3 million, 8.9% and 6.9% of our total deposits at those dates, respectively.
As of December 31, 2023 and 2022, we had brokered deposits of $736.9 million and $629.3 million, 9.3% and 8.9% of our total deposits at those dates, respectively.
Capriles graduated with a degree in Economics from Universidad Católica Andrés Bello in Caracas, Venezuela and earned a master’s degree in International Development Economics from Yale University, and a MBA from the Massachusetts Institute of Technology. Howard Levine. Mr. Levine, age 51, serves as Senior Executive Vice-President and Head of Consumer Banking since January 2023.
Capriles graduated with a degree in Economics from Universidad Católica Andrés Bello in Caracas, Venezuela and earned a master’s degree in International Development Economics from Yale University, and a MBA from the Massachusetts Institute of Technology. Juan Esterripa. Mr. Esterripa, age 50, serves as Senior Executive Vice-President and Head of Commercial Banking since April 2023.
Risks Related to Ownership of Our Common Stock • Certain of our existing shareholders could exert significant control over the Company. • The rights of our common shareholders are subordinate to the holders of any debt securities that we have issued or may issue from time to time. • The stock price of financial institutions, like Amerant, may fluctuate significantly. • We have the ability to issue additional equity securities, which would lead to dilution of our issued and outstanding Class A common stock. • Certain provisions of our amended and restated articles of incorporation and amended and restated bylaws, Florida law, and U.S. banking laws could have anti-takeover effects.
Risks Related to Ownership of Our Common Stock • 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.
While the list set forth below is not exhaustive, these laws and regulations include the Equal Credit Opportunity Act (“ECOA”), the Fair Housing Act, the Truth in Lending Act, the Truth in Savings Act, the Electronic Funds Transfer Act, the Expedited Funds Availability Act, the Check Clearing for the 21st Century Act, the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the Home Mortgage Disclosure Act, the Fair and Accurate Credit Transactions Act, and the Real Estate Settlement Procedures Act, among others.
While the list set forth below is not exhaustive, these laws and regulations include the Equal Credit Opportunity Act, the Home Mortgage Disclosure Act, the Electronic Funds Transfer Act, the Fair Credit Reporting Act, the Real Estate Settlement Procedures Act, the Truth in Lending Act, the Expedited Funds Availability Act, the Truth in Savings Act, the Fair Housing Act, the Check Clearing for the 21st Century Act, the Fair Debt Collection Practices Act, the Fair and Accurate Credit Transactions Act, and, as applicable, their implementing regulations (i.e., Regulations B, C, E, V, X, Z, CC, and DD among others.
In addition, South Florida has been designated as a “High Intensity Financial Crime Area,” or HIFCA, by the Financial Crimes Enforcement Network (“FinCEN”) and a “High Intensity Drug Trafficking Area,” or HIDTA, by the Office of National Drug Control Policy. The HIFCA program is intended to concentrate law enforcement efforts to combat money laundering efforts in higher-risk areas.
In addition, South Florida has been designated as a High Intensity Financial Crime Area (“HIFCA”), by FinCEN and a High Intensity Drug Trafficking Area (“HIDTA”), by the Office of National Drug Control Policy. The HIFCA program is intended to concentrate law enforcement efforts to combat money laundering efforts in higher-risk areas.
The Bank also has a business continuity/disaster recovery plan, or BCP, which it actively manages to prepare for any business continuity challenges it may face. Our BCP provides for the resiliency and recovery of our operations and services to our customers.
Cybersecurity for additional information on how we address and manage cybersecurity risks. The Bank also has a business continuity/disaster recovery plan, or BCP, which it actively manages to prepare for any business continuity challenges it may face. Our BCP provides for the resiliency and recovery of our operations and services to our customers.
In particular, in order to comply with Section 404 of the SOX Act, we are required to include management’s report on internal controls as part of our Annual Report on Form 10-K and now that we are no longer an EGC, we must also include our independent registered public accounting firm’s report on internal controls.
In particular, in order to comply with Section 404 of the SOX Act, we are required to include management’s report on internal controls as part of our Annual Report on Form 10-K, as well as our independent registered public accounting firm’s report on internal controls.
Our deposit accounts are insured by the DIF generally up to a maximum of $250,000 per separately insured depositor.
Our deposit accounts are insured by the DIF generally up to a maximum of $250,000 per separately insured depositor and for each account ownership category.
The capital elements and total capital under the Basel III Capital Rules are as follows: Minimum CET1 4.50% Capital Conservation Buffer 2.50% Total CET1 7.00% Deductions from CET1 100.00% Minimum Tier 1 Capital 6.00% Minimum Tier 1 Capital plus conservation buffer 8.50% Minimum Total Capital 8.00% Minimum Total Capital plus conservation buffer 10.50% The Federal Reserve, the OCC, and the FDIC, published a final rule on July 22, 2019 (“the Capital Simplifications Final Rule”) that simplifies existing regulatory capital rules for non-advanced approaches institutions, such as the Company.
The capital conservation buffer is calculated as the lowest of: (i) the banking organization’s CET1 capital ratio minus 4.5%; (ii) the banking organization’s Tier 1 risk-based capital ratio minus 6.0%; or (iii) the banking organization’s total risk-based capital ratio minus 8.0%. 24 Table of Contents The capital elements and total capital under the Basel III Capital Rules are as follows: Minimum CET1 4.50% Capital Conservation Buffer 2.50% Total CET1 7.00% Deductions from CET1 100.00% Minimum Tier 1 Capital 6.00% Minimum Tier 1 Capital plus conservation buffer 8.50% Minimum Total Capital 8.00% Minimum Total Capital plus conservation buffer 10.50% The Federal Reserve, the OCC, and the FDIC, published a final rule on July 22, 2019 (“the Capital Simplifications Final Rule”) that simplifies existing regulatory capital rules for non-advanced approaches institutions, such as the Company.
The Bank’s primary markets are South Florida, where we are headquartered and operate sixteen banking centers in Miami-Dade, Broward and Palm Beach counties, and Houston, Texas, where we have seven banking centers that serve the nearby areas of Harris, Montgomery, Fort Bend and Waller counties. In addition, we have a loan production office (“LPO”) in Tampa, Florida.
The Bank’s primary markets are South Florida, where we are headquartered and operate 16 banking centers in Miami-Dade, Broward and Palm Beach counties, and in Houston, Texas, where we have six banking centers that serve the nearby areas of Harris, Montgomery, Fort Bend and Waller counties.
As of December 31, 2022, the Bank had a legal lending limit of approximately $138.5 million for unsecured loans, and its “in-house” single obligor lending limit was $35.0 million for CRE loans, representing 25.3% of our legal lending limit and $30.0 million for all other loans, representing 21.7% of our legal lending limit as of such date.
As of December 31, 2023, the Bank had a legal lending limit of approximately $144.7 million for unsecured loans, and its “in-house” single obligor lending limit was $35.0 million for CRE loans, representing 24.2% of our legal lending limit and $30.0 million for all other loans, representing 20.7% of our legal lending limit as of such date.
Under Florida law, the Company may only pay dividends if, after giving effect to each dividend, the Company would be able to pay its debts as they become due and the Company’s total assets would exceed the sum of its total liabilities plus the amount that would be needed, if the Company were to be dissolved at the time of each dividend, to satisfy the preferential rights upon dissolution of shareholders whose preferential rights are superior to those entitled to receive the dividend.
Under Florida law, the Company may only pay dividends if, after giving effect to each dividend, the Company would be able to pay its debts as they become due and the Company’s total assets would exceed the sum of its total liabilities plus the amount that would be needed, if the Company were to be dissolved at the time of each dividend, to satisfy the preferential rights upon dissolution of shareholders whose preferential rights are superior to those entitled to receive the dividend. 23 Table of Contents Capital Requirements We and the Bank are required under federal law to maintain certain minimum capital levels based on ratios of capital to assets and capital to risk-weighted assets.
Understanding that everyone learns differently, we offer various learning options, including traditional classroom, virtual, any-time, mobile, and social collaboration. In 2022, we continued to empower our team members to reach their full potential by providing diverse learning programs, opportunities, and resources.
Our learning and development strategy is aligned with the global Association for Talent Development and our business strategy. Understanding that everyone learns differently, we offer various learning options, including traditional classroom, virtual, any-time, mobile, and social collaboration. In 2023, we continued to empower our team members to reach their full potential by providing diverse learning programs, opportunities, and resources.
Bank holding companies that meet certain criteria may elect to become “Financial Holding Companies.” Financial Holding Companies and their subsidiaries are permitted to acquire or engage in activities such as insurance underwriting, securities underwriting, travel agency activities, broad insurance agency activities, merchant banking and other activities that the Federal Reserve determines to be financial in nature or complementary thereto.
We are required to file periodic reports and other information with the Federal Reserve, which examines us and our non-bank subsidiaries. 16 Table of Contents Bank holding companies that meet certain criteria may elect to become “Financial Holding Companies.” Financial Holding Companies and their subsidiaries are permitted to acquire or engage in activities such as insurance underwriting, securities underwriting, travel agency activities, broad insurance agency activities, merchant banking and other activities that the Federal Reserve determines to be financial in nature or complementary thereto.
Financial Conduct Authority’s current statements, it does not appear that a synthetic LIBOR benchmark will be applicable to the Trust Preferred Securities and Debentures.
Financial Conduct Authority’s current statements, it does not appear that a synthetic LIBOR benchmark will be applicable to the Trust Preferred Securities and Debentures. The Company did not seek to amend the Trust Preferred Securities and Debentures documents to reflect any other LIBOR benchmark replacement.
Any change in applicable law or regulation may have a material effect on our business. The following is a brief summary that does not intend to be a complete description of all regulations that affect the Company and the Bank and this summary is qualified in its entirety by reference to the particular statutory and regulatory provisions referred to below.
The following is a brief summary that does not intend to be a complete description of all regulations that affect the Company and the Bank and this summary is qualified in its entirety by reference to the particular statutory and regulatory provisions referred to below.
Armando Fleitas , age 46, started serving as Senior Vice-President and Controller of the Company on January 1, 2021. Mr. Fleitas joined Amerant in 2010, serving in various management positions in the financial reporting area, including most recently, prior to his current role, as Senior Vice-President and Financial Reporting Manager.
Prior to being named CAO, Mr. Fleitas served as Senior Vice-President and Controller of the Company from January 1, 2021 until March 2023. Mr. Fleitas joined Amerant in 2010, serving in various management positions in the financial reporting area, including most recently, prior to his current role, as Senior Vice-President and Financial Reporting Manager.
The Company owns all of the common capital securities issued by 5 statutory trust subsidiaries (“the Trust Subsidiaries”), respectively. These Trust Subsidiaries were first formed by the Company for the purpose of issuing trust preferred securities (“the Trust Preferred Securities”) and investing the proceeds in junior subordinated debentures issued by the Company (the “Debentures”).
These Trust Subsidiaries were first formed by the Company for the purpose of issuing trust preferred securities (“the Trust Preferred Securities”) and investing the proceeds in junior subordinated debentures issued by the Company (the “Debentures”). The Debentures are guaranteed by the Company.
The ratio of non-interest bearing deposits to total deposits ratio was 19.4% at December 31, 2022 compared to 21.0% at December 31, 2021, which reflects growing consumer and business awareness of the rising interest rates and seeking better returns. Provide a superior customer experience.
The ratio of non-interest bearing deposits to total deposits ratio was 18.1% at December 31, 2023 compared to 19.4% at December 31, 2022, which reflects growing consumer and business awareness of the rising interest rates and seeking better returns. Drive superior experience and operational efficiency .

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOur amended and restated articles of incorporation and amended and restated bylaws include certain provisions that could delay a takeover or change in control of us, including: the exclusive right of our board to fill any director vacancy; advance notice requirements for shareholder proposals and director nominations; provisions limiting the shareholders’ ability to call special meetings of shareholders or to take action by written consent; and the ability of our board to designate the terms of and issue new series of preferred stock without shareholder approval, which could be used, among other things, to institute a rights plan that would have the effect of significantly diluting the stock ownership of a potential hostile acquirer, likely preventing acquisitions that have not been approved by our board.
Biggest changeOur amended and restated articles of incorporation and amended and restated bylaws include certain provisions that could delay a takeover or change in control of us, including: the exclusive right of our board to fill any director vacancy; advance notice requirements for shareholder proposals and director nominations; provisions limiting the shareholders’ ability to call special meetings of shareholders or to take action by written consent; and the ability of our board to designate the terms of and issue new series of preferred stock without shareholder approval, which could be used, among other things, to institute a rights plan that would have the effect of significantly diluting the stock ownership of a potential hostile acquirer, likely preventing acquisitions that have not been approved by our board. 54 Table of Contents The Florida Business Corporation Act contains a control-share acquisition statute that provides that a person who acquires shares in an “issuing public corporation,” as defined in the statute, in excess of certain specified thresholds generally will not have any voting rights with respect to such shares, unless such voting rights are approved by the holders of a majority of the votes of each class of securities entitled to vote separately, excluding shares held or controlled by the acquiring person.
We define fair value generally as the price that would be received in the sale of an asset or paid to transfer a liability. Considerable judgment is often required in interpreting market data to develop estimates of fair value, and the use of different assumptions or valuation methodologies may have a material effect on the estimated fair value amounts.
We generally define fair value as the price that would be received in the sale of an asset or paid to transfer a liability. Considerable judgment is often required in interpreting market data to develop estimates of fair value, and the use of different assumptions or valuation methodologies may have a material effect on the estimated fair value amounts.
If as a result of an examination, a federal banking agency were to determine that the financial condition, capital resources, asset quality, asset concentrations, earnings prospects, management, liquidity, asset sensitivity, risk management or other aspects of any of our operations have become unsatisfactory, or that we or our management were in violation of any law or regulation, it may take such remedial actions as it deems appropriate.
A federal banking agency may take such remedial actions as it deems appropriate, if, as a result of an examination, it were to determine that the financial condition, capital resources, asset quality, asset concentrations, earnings prospects, management, liquidity, asset sensitivity, risk management or other aspects of any of our operations have become unsatisfactory, or that we or our management were in violation of any law or regulation.
While we believe that our existing capital (which currently exceeds the capital requirements) will be sufficient to support our current operations and expected growth, factors such as faster than anticipated growth, reduced earnings levels, operating losses, changes in economic conditions, revisions in regulatory requirements, or acquisition opportunities may lead us to seek additional capital.
While we believe that our existing capital (which currently exceeds the capital requirements) will be sufficient to support our current operations and expected growth. However, factors such as faster-than-anticipated growth, reduced earnings levels, operating losses, changes in economic conditions, revisions in regulatory requirements, or acquisition opportunities may lead us to seek additional capital.
Our success is impacted by regulations affecting banks and bank holding companies, and the securities markets, and our costs of compliance could adversely affect our earnings. Banking regulations are primarily intended to protect depositors, consumers and the FDIC’s DIF, not shareholders. The financial services industry also is subject to frequent legislative and regulatory changes and proposed changes.
Our success is impacted by regulations affecting banks and bank holding companies, and the securities markets, and our costs of compliance could adversely affect our earnings. Banking regulations are primarily intended to protect depositors, consumers and the FDIC’s DIF, not shareholders. The financial services industry also is subject to frequent legislative and regulatory changes.
Please refer to the section in this Form 10-K titled “Cautionary Note Regarding Forward-Looking Statements” for additional information regarding forward-looking statements. Risk related to Funding and Liquidity Liquidity risks could affect our operations and jeopardize our financial condition and certain funding sources could increase our interest rate expense. Liquidity is essential to our business.
Please refer to the section in this Form 10-K titled “Cautionary Note Regarding Forward-Looking Statements” for additional information regarding forward-looking statements. Risks related to Funding and Liquidity Liquidity risks could affect our operations and jeopardize our financial condition and certain funding sources could increase our interest rate expense. Liquidity is essential to our business.
We are authorized to issue, without shareholder approval, up to 50 million shares of preferred stock in one or more series, which may give other shareholders dividend, conversion, voting, and liquidation rights, among other rights, that may be superior to the rights of holders of our Class A common stock.
We are authorized to issue, without shareholder approval, up to 50 million shares of preferred stock in one or more series, which may give other shareholders dividend, conversion, voting, and liquidation rights, among other rights, which may be superior to the rights of holders of our Class A common stock.
During periods of market disruption, including periods of significantly rising or high interest rates, rapidly widening credit spreads or illiquidity, it may be difficult to value certain of our securities if trading becomes less frequent or market data becomes less observable and certain asset classes may become illiquid.
During periods of market disruption (including periods of significantly rising or high interest rates, or rapidly widening credit spreads) certain asset classes may become illiquid and it may be difficult to value certain of our securities if trading becomes less frequent or market data becomes less observable.
As the nature, scope and complexity of ESG reporting, diligence and disclosure requirements expand, including the SEC’s recently proposed disclosure requirements regarding, among other matters, Greenhouse gas emissions, we may have to undertake additional costs to control, assess and report on ESG metrics.
As the nature, scope and complexity of ESG reporting, diligence and disclosure requirements expand, including the SEC’s proposed disclosure requirements regarding, among other matters, Greenhouse gas emissions, we may have to undertake additional costs to control, assess and report on ESG metrics.
The potential for such weather events has and may continue to cause our customers to incur higher property and casualty insurance premiums which may adversely affect the value and sales of real estate in the markets we operate.
Additionally, the potential for such weather events has and may continue to cause our customers to incur higher property and casualty insurance premiums which may adversely affect the value and sales of real estate in the markets we operate.
The issuance of additional equity securities or securities convertible into equity securities would result in dilution of our existing shareholders’ equity interests. In addition, we are authorized to issue up to 250 million shares of our Class A common stock.
The issuance of additional equity securities or securities convertible into equity securities would result in dilution of our existing shareholders’ equity interests. We are authorized to issue up to 250 million shares of our Class A common stock.
If a decline in economic conditions, natural disasters affecting business development or other issues cause difficulties for our borrowers of these types of loans, if we fail to assess the credit of these loans accurately when underwriting them or if we fail to adequately continue to monitor the performance of these loans, our loan portfolio could experience delinquencies, defaults and credit losses that could have a material adverse effect on our business, financial condition or results of operations.
If a decline in economic conditions, natural disasters affecting business development or other issues cause difficulties for our borrowers of these types of loans, if we fail to assess the credit of these loans accurately when underwriting them or if we fail to adequately continue to monitor the performance of these loans, our loan portfolio could experience delinquencies, defaults and credit losses that could have a material adverse effect on our business, financial condition, results of operations or cash flows.
The Florida and Houston, Texas banking markets in which we do business are highly competitive and our future growth and success will depend on our ability to compete effectively in these markets.
The Florida and Houston, Texas banking markets in which we do business are highly competitive; therefore, our future growth and success will depend on our ability to compete effectively in these markets.
In addition, the Federal Reserve and the FDIC have issued policy statements stating that insured banks and bank holding companies generally should pay dividends only out of current operating earnings. Banks and their holding companies are required to maintain a capital conservation buffer of 2.5% in addition to satisfying other applicable regulatory capital ratios.
In addition, the Federal Reserve and the FDIC have issued policy statements stating that insured banks and bank holding companies generally should pay dividends only out of current operating earnings. Banks and their holding companies are required to maintain a capital conservation buffer of 2.5% and satisfy other applicable regulatory capital ratios.
A substantial level of debt could have important consequences to us, holders of the Senior Notes, holders of our Subordinated Notes, holders of our Debentures and our shareholders, including the following: making it more difficult for us to satisfy our obligations with respect to our debt, including the Senior Notes, the Subordinated Notes and the Debentures; requiring us to dedicate a substantial portion of our cash flow from operations to payments on our debt, thereby reducing funds available for other purposes; increasing our vulnerability to adverse economic and industry conditions, which could place us at a disadvantage relative to our competitors that have less debt; limiting our flexibility in planning for, or reacting to, changes in our business and the industries in which we operate; and limiting our ability to borrow additional funds, or to dispose of assets to raise funds, if needed, for working capital, capital expenditures, acquisitions and other corporate purposes.
A substantial level of debt could have important consequences to us, holders of our Senior Notes, of our Subordinated Notes, of our Debentures and our shareholders, including making it more difficult for us to satisfy our financial obligations (including the Senior Notes, the Subordinated Notes and the Debentures); requiring us to dedicate a substantial portion of our cash flow from operations to payments on our debt, thereby reducing funds available for other purposes; increasing our vulnerability to adverse economic and industry conditions, which could place us at a disadvantage relative to our competitors that have less debt; limiting our flexibility in planning for, or reacting to, changes in our business and the industries in which we operate; and limiting our ability to borrow additional funds, or to dispose of assets to raise funds, if needed, for working capital, capital expenditures, acquisitions and other corporate purposes.
In 2022, the Company did not record an allowance for estimated credit losses on any of its debt securities available for sale. For more information about CECL, see Note 1 of our audited consolidated financial statements in this Form-10-K.
In 2023, the Company did not record an allowance for estimated credit losses on any of its debt securities available for sale. For more information about CECL, see Note 1 of our audited consolidated financial statements in this Form-10-K.
Decreases in the value of these assets, or the underlying collateral, or in the related borrowers’ performance or financial condition, whether or not due to economic and market conditions beyond our control, could adversely affect our business, results of operations and financial condition.
Decreases in the value of these assets, or the underlying collateral, or in the related borrowers’ performance or financial condition, whether or not due to economic and market conditions beyond our control, could adversely affect our business, financial condition, results of operations, or cash flows.
Our success depends, in large part, on our ability to attract and retain experienced personnel in key positions. Intense competition exists in the activities and markets that we serve for candidates with adequate qualifications and demonstrated ability.
Our success depends, in large part, on our ability to attract and retain experienced personnel in key positions. Intense competition exists in the activities and markets that we serve for candidates with appropriate qualifications and demonstrated ability.
Any failure or perceived failure, whether or not valid, to pursue or fulfill our ESG goals, targets and objectives or to satisfy various ESG reporting standards within the timelines we announce, or at all, could increase the risk of litigation. We may be unable to attract and retain key people to support our business.
Any failure or perceived failure, whether or not valid, to pursue or fulfill our ESG goals, targets and objectives or to satisfy various ESG reporting standards within the timelines we announce, or at all, could increase the risk of litigation. 44 Table of Contents We may be unable to attract and retain key people to support our business.
The Bank is subject to, among other things, the provisions of the Equal Credit Opportunity Act, or ECOA, and the Fair Housing Act, both of which prohibit discrimination based on race or color, religion, national origin, sex and familial status in any aspect of a consumer, commercial credit or residential real estate transaction.
The Bank is subject to the provisions of the Equal Credit Opportunity Act, or ECOA, and the Fair Housing Act, both of which prohibit discrimination based on race or color, religion, national origin, sex and familial status in any aspect of a consumer, commercial credit or residential real estate transaction.
We may not be able to refinance any of our debt when needed on commercially reasonable terms or at all. We are a holding company with limited operations and depend on our subsidiaries for the funds required to make payments of principal and interest on the Senior Notes, Subordinated Notes and the Debentures.
We may be unable to refinance any of our debt when needed on commercially reasonable terms or at all. We are a holding company with limited operations and depend on our subsidiaries for the funds required to make payments of principal and interest on the Senior Notes, Subordinated Notes and the Debentures.
Factors in management’s determination include the performance of the business, including the ability to generate future taxable income. Realization of a deferred tax asset requires us to apply significant judgment and is inherently speculative because it requires estimates that cannot be made with certainty.
Factors in management’s determination include the performance of the business, including the ability to generate future taxable income. Realizing a deferred tax asset requires us to apply significant judgment and such judgment is inherently speculative because it requires estimates that cannot be made with certainty.
Any of these occurrences could have a material adverse effect on our financial condition and results of operations. 41 Table of Contents Our information systems are exposed to cybersecurity threats and may experience interruptions and security breaches that could adversely affect our business and reputation.
Any of these occurrences could have a material adverse effect on our business, financial condition, results of operations, or cash flows. 41 Table of Contents Our information systems are exposed to cybersecurity threats and may experience interruptions and security breaches that could adversely affect our business and reputation.
Under this requirement, we could be required to provide financial assistance to the Bank should it experience financial distress, even if further investment was not otherwise warranted. See “Source of Strength in Supervision and Regulation.” We may face higher risks of noncompliance with the Bank Secrecy Act and other anti-money laundering statutes and regulations than other financial institutions.
Under this requirement, we could be required to provide financial assistance to the Bank should it experience financial distress, even if further investments were not otherwise warranted. See “Source of Strength in Supervision and Regulation.” We may face higher risks of noncompliance with the Bank Secrecy Act and other anti-money laundering statutes and regulations than other financial institutions.
There is also regulatory scrutiny of compliance with the rules of the Treasury Department’s Office of Foreign Assets Control, or OFAC which administers and enforces economic and trade sanctions based on U.S. foreign policy and national security goals, including sanctions against foreign countries, regimes and individuals, terrorists, international narcotics traffickers, and those involved in the proliferation of weapons of mass destruction.
The Bank is also subject to regulatory scrutiny of compliance with the rules of the Treasury Department’s Office of Foreign Assets Control, or OFAC which administers and enforces economic and trade sanctions based on U.S. foreign policy and national security goals, including sanctions against foreign countries, regimes and individuals, terrorists, international narcotics traffickers, and those involved in the proliferation of weapons of mass destruction.
If we are required to rely more heavily on more expensive and potentially less stable funding sources or if additional financing sources are unavailable or are not available on acceptable terms, our profitability, liquidity, and prospects could be adversely affected. We may not be able to develop and maintain a strong core deposit base or other low-cost funding sources.
If we are required to rely more heavily on more expensive and potentially less stable funding sources or if additional financing sources are unavailable or are not available on acceptable terms, our profitability, liquidity, and prospects could be adversely affected. 35 Table of Contents We may not be able to develop and maintain a strong core deposit base or other low-cost funding sources.
As a matter of policy, the Federal Reserve, which examines us, expects a bank holding company to act as a source of financial and managerial strength to a subsidiary bank and to commit resources to support such subsidiary bank. The Federal Reserve may require a bank holding company to make capital injections into a troubled subsidiary bank.
As a matter of policy, the Federal Reserve, which examines us, expects a bank holding company to act as a source of financial and managerial strength to a subsidiary bank and to commit resources to support such subsidiary bank. The Federal Reserve may require a bank holding company to inject capital into a troubled subsidiary bank.
Economic and other conditions in Venezuela, or U.S. regulations or sanctions affecting the services we may provide to our Venezuelan customers may adversely affect the amounts of assets we manage or custody, and the trading volumes of our Venezuelan customers, reducing fees and commissions we earn from these businesses, and may materially and adversely affect our results of operations and financial condition.
Economic and other conditions in Venezuela, or U.S. regulations or sanctions affecting the services we may provide to our Venezuelan customers may adversely affect the amounts of assets we manage or custody, and the trading volumes of our Venezuelan customers, reducing fees and commissions we earn from these businesses, and may adversely affect our business, financial condition, results of operations, or cash flows.
In December 2021, we completed the sale of our approximately 177,000 square foot headquarters building (the “Property”) and in connection with the sale, we entered into an 18-year triple net lease for the Property (the “Lease”) at an initial base rent of $7,500,000 per year (escalating 1.5% each year), under which we are also responsible for the Property’s insurance, real estate taxes, and maintenance and repair expenses.
In December 2021, we sold our approximately 177,000 square foot headquarters building (the “Property”) and entered into an 18-year triple net lease for the Property (the “Lease”) at an initial base rent of $7,500,000 per year (escalating 1.5% each year), under which we are also responsible for the Property’s insurance, real estate taxes, and maintenance and repair expenses.
Our CRE loans included approximately $1.1 billion and $1.3 billion of fixed rate loans at December 31, 2022 and 2021, respectively. In a rising interest rate environment, fixed rate loans may adversely affect our margin and present asset/liability mismatches and risks since our liabilities are generally floating rate or have shorter maturities.
Our CRE loans included approximately $1.2 billion and $1.1 billion of fixed rate loans at December 31, 2023 and 2022, respectively. In a rising interest rate environment, fixed rate loans may adversely affect our margin and present asset/liability mismatches and risks since our liabilities are generally floating rate or have shorter maturities.
During the term of the Lease, we have the right to sublet the whole or any part of the Property. 46 Table of Contents While we occupy and we expect to continue to occupy a significant portion of the Property, we also currently sublease and intend to continue to sublease a significant portion of the Property to third parties.
During the term of the Lease, we have the right to sublet the whole or any part of the Property. While we occupy and we expect to continue to occupy a portion of the Property, we also currently sublease and intend to continue to sublease a significant portion of the Property to third parties.
New lines of business, new products and services, or strategic project initiatives may subject us to additional risks. We periodically evaluate our service offerings and, from time to time, may seek to implement new lines of business or offer new products and services within existing lines of business.
New lines of business, new products and services, or strategic project initiatives may subject us to additional risks. We periodically evaluate our service offerings and, occasionally, may seek to implement new lines of business or offer new products and services within existing lines of business.
Compliance with applicable laws and regulations is time consuming and costly and may affect our profitability. Additionally, banks with greater than $10 billion in total consolidated assets are subject to additional regulatory requirements. As of December 31, 2022, our total assets were $9.1 billion.
Compliance with applicable laws and regulations is time consuming and costly and may affect our profitability. Additionally, banks with greater than $10 billion in total consolidated assets are subject to additional regulatory requirements. As of December 31, 2023, our total assets were $9.7 billion.
Furthermore, the interests of this concentration of ownership may not always coincide with the interests of other shareholders, including you and, accordingly, they could cause us to enter into transactions or agreements which we might not otherwise consider or prevent us from adopting actions that we might otherwise implement.
Furthermore, the interests of these shareholders may not always coincide with the interests of other shareholders, including you and, accordingly, they could cause us to enter into transactions or agreements which we might not otherwise consider or prevent us from adopting actions that we might otherwise implement.
In a competitive market, depositors have many choices as to where to place their deposit accounts. As we continue to grow our core deposit base and seek to reduce our exposure to high rate/high volatility accounts, we may experience a net deposit outflow, which could negatively impact our business, financial condition and results of operations.
In a competitive market, depositors have many choices for where to place their deposits. As we continue to grow our core deposit base and seek to reduce our exposure to high rate/high volatility accounts, we may experience a net deposit outflow, which could negatively impact our business, financial condition, results of operations, or cash flows .
Executive Orders have sanctioned the Venezuelan government and entities it owns, and certain Venezuelan persons. In addition, the OCC has broad authority to bring enforcement actions and to impose monetary penalties if it determines that there are deficiencies in the Bank’s compliance with anti-money laundering laws. Monitoring compliance with anti-money laundering and OFAC rules is complex and expensive.
Executive Orders have sanctioned the Venezuelan government and entities it owns, and certain Venezuelan persons. In addition, the OCC has broad authority to bring enforcement actions and to impose monetary penalties if it finds deficiencies in the Bank’s compliance with anti-money laundering laws. Monitoring compliance with anti-money laundering and OFAC rules is complex and expensive.
If we are subject to a successful cyberattack or fail to maintain adequate internal controls, or if our employees fail to comply with our policies and procedures, misappropriation or intentional or unintentional inappropriate disclosure or misuse of client information could occur.
If we or any of our third party vendors are subject to a successful cyberattack or fail to maintain adequate internal controls, or if our employees fail to comply with our policies and procedures, misappropriation or intentional or unintentional inappropriate disclosure or misuse of client information could occur.
In 2022, the Company recorded pre-tax net unrealized holding losses of $127.7 million ($21.5 million in 2021) which are included in accumulated other comprehensive (loss) income for the period. These unrealized losses were mainly attributable to increases in market interest rates during the periods which translated into a decline in the estimated fair value of debt securities markets.
In 2023, the Company recorded pre-tax net unrealized holding losses of $14.9 million ($127.7 million in 2022) which are included in accumulated other comprehensive (loss) income for the period. These unrealized losses were mainly attributable to increases in market interest rates during the periods which translated into a decline in the estimated fair value of debt securities markets.
Banking institutions that do not maintain capital in excess of the capital conservation buffer may face constraints on dividends, equity repurchases and executive compensation based on the amount of the shortfall.
Banking institutions that do not maintain capital in excess of the capital conservation buffer may face constraints on dividends, equity repurchases and executive compensation .
In addition, the method that the FDIC uses to determine the amount of our deposit insurance premium will change once our total consolidated assets exceed $10 billion, which we expect may happen by the end of 2023.
In addition, the method that the FDIC uses to determine the amount of our deposit insurance premium will change once our total consolidated assets exceed $10 billion, which we expect may happen in 2024.
Our valuation of securities and the determination of credit impairment in our investment securities portfolio are subjective and, if changed, could materially adversely affect our results of operations or financial condition. Fixed maturity securities, as well as short-term investments that are reported at estimated fair value, represent the majority of our total investments.
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. Fixed-maturity securities, as well as short-term investments which are reported at estimated fair value, represent the majority of our total investments.
The Bank’s Venezuelan deposits have declined from December 31, 2018 to December 31, 2022 ( see Deposits by Country of Domicile in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations).
The Bank’s Venezuelan deposits have declined from December 31, 2019 to December 31, 2023 ( see Deposits by Country of Domicile in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations).
In addition, changes in the corporate tax rates could affect the value of our DTAs and may require a write-off of a portion of some of those assets. At December 31, 2022, we had net DTAs with a book value of $48.7 million, based on a U.S. corporate income tax rate of 21%.
In addition, changes in the corporate tax rates could affect the value of our DTAs and may require a write-off of a portion of some of those assets. At December 31, 2023, we had net DTAs with a book value of $55.6 million, based on a U.S. corporate income tax rate of 21%.
The nature, effects and timing of administrative and legislative change, and possible changes in regulation or regulatory approach cannot be predicted. Changes, if adopted, could require us to maintain more capital, liquidity, adopt changes to our operating policies and procedures and risk controls which could adversely affect our growth, profitability and financial condition.
The nature, effects and timing of legislative and regulatory changes, cannot be predicted. Changes, if adopted, could require us to maintain more capital, liquidity, or adopt changes to our operating policies and procedures and risk controls which could adversely affect our growth, profitability and financial condition.
We are not certain whether, if this were to occur, we would have, or be able to obtain, sufficient funds to make these accelerated payments. If any of our debt is accelerated, our assets may not be sufficient to repay such debt in full. Item 1B. UNRESOLVED STAFF COMMENTS None. 56
If this were to occur, we cannot assure you we would have or be able to obtain sufficient funds to make these accelerated payments. If any of our debt is accelerated, our assets may not be sufficient to repay such debt in full. Item 1B. UNRESOLVED STAFF COMMENTS None. 56
In addition to the immediate costs of any failure, interruption or security breach, including those at our third-party service providers, these events could damage our reputation, result in a loss of customer business, subject us to additional regulatory scrutiny, or expose us to civil litigation and possible financial liability, any of which could have a material adverse effect on our financial condition and results of operations.
In addition to the immediate costs of any failure, interruption or security breach, including those at our third-party service providers, these events could damage our reputation, result in a loss of customer business, subject us to additional regulatory scrutiny, or expose us to civil litigation and possible financial liability, any of which could adversely affect on business, financial condition, results of operations, or cash flows.
Our profitability depends to a large extent upon net interest income, which is the difference between interest earned on assets, such as loans and investments, and interest expense on interest-bearing liabilities, such as deposits and borrowings. Interest rate changes may impact our profits and the fair values of several of our assets and liabilities.
Our profitability depends largely upon net interest income, which is the difference between interest earned on assets, such as loans and investments, and interest expense on interest-bearing liabilities, such as deposits and borrowings. Interest rate changes may impact our profits and the values of several of our assets and liabilities.
In the event a subtenant that subleases spaces in the Property from us does not perform under the terms of a sublease agreement (due to its financial condition or other factors), we may not be able to recover amounts owed to us under the terms of each sublease agreement or the related guarantees, if any.
If a subtenant of the Property does not perform under the terms of a sublease agreement (due to its financial condition or other factors), we may not be able to recover amounts owed to us under the terms of each sublease agreement or the related guarantees, if any.
If we become subject to such regulatory actions, our business, financial condition, results of operations and reputation would likely be adversely affected. 51 Table of Contents The Federal Reserve may require us to commit capital resources to support the Bank.
If we become subject to such regulatory actions, our business, financial condition, results of operations, or cash flows and reputation would likely be adversely affected. The Federal Reserve may require us to commit capital resources to support the Bank.
Prevailing economic conditions (including inflationary pressures, rising interest rates, and uncertainty surrounding global markets), regulatory constraints, including, among other things, limitations on distributions to us from our subsidiaries and required capital levels with respect to our subsidiary bank and non-banking subsidiaries, and financial, business and other factors, many of which are beyond our control, will also affect our ability to meet these needs.
Prevailing economic conditions (including inflationary pressures, rising interest rates, and uncertainty surrounding global markets), regulatory constraints (including limitations on distributions to us from our subsidiaries and required capital levels with respect to our subsidiary bank and non-banking subsidiaries), and financial, business and other factors will also affect our ability to meet these needs.
Additionally, the results of our strategic plan are subject to the other risks described herein that affect our business, which include: lending, interest rate risk, seeking deposits and wealth management clients in highly competitive domestic markets; our ability to achieve our growth plans or to manage our growth effectively; the benefits from our technology investments, including the benefits and cost savings we expect to achieve from our outsourcing relationship with FIS®, may take longer than expected to be realized and may not be as large as expected, or may require additional investments; and if we are unable to reduce our cost structure, we may not be able to meet our profitability objectives.
Additionally, the results of our strategic plan and growth strategy are subject to the other risks described herein that affect our business, which include: lending, interest rate risk, seeking deposits and wealth management clients in highly competitive domestic markets; our ability to achieve our growth plans or to manage our growth effectively; the benefits from our technology investments, including the benefits and cost savings we expect to achieve from our outsourcing relationship with FIS, may take longer than expected to be realized and may not be as large as expected, or may require additional investments; and if we are unable to reduce our cost structure, we may not be able to meet our profitability objectives. 42 Table of Contents Defaults by or deteriorating asset quality of other financial institutions could adversely affect us.
Adverse economic conditions in any of these areas and in the national economy may impact us in significant and unpredictable ways and we may face the following particular risks: the demand for loans and our other products and services could decline, market developments may negatively affect industries we extend credit to and may result in increased delinquencies and default rates, which, among other effects, could negatively impact our charge-offs and allowance for credit losses; market disruptions could make valuation of assets more difficult and subjective and may negatively affect our ability to measure the fair value of our assets; and, loan performance could deteriorate, loan default levels and foreclosure activity increase and or our assets could materially decline in value.
We may face the following particular risks: the demand for loans and our other products and services could decline, market developments may negatively affect industries we extend credit to and may result in increased delinquencies and default rates, which, among other effects, could negatively impact our charge-offs and allowance for credit losses; market disruptions could make valuation of assets more difficult and subjective and may negatively affect our ability to measure the fair value of our assets; and, loan performance could deteriorate, loan default levels and foreclosure activity increase and or our assets could materially decline in value.
Changes in market interest rates are unpredictable as they are affected by many factors beyond our control, including general economic conditions (inflation, recession, unemployment), fiscal and monetary policy, and changes in the United States and other financial markets.
Market interest rate changes are unpredictable and caused by many factors beyond our control, including general economic conditions (inflation, recession, and unemployment), fiscal and monetary policy, and changes in the United States and other financial markets.
The ability to keep pace with technological change is important and the failure to do so could adversely affect our business, financial condition and results of operations. 43 Table of Contents Conditions in Venezuela could adversely affect our operations. At December 31, 2022, 27% of our deposits, or approximately $1.9 billion, were from Venezuelan residents.
The ability to keep pace with technological change is important and the failure to do so could adversely affect our business, financial condition, results of operations, or cash flows. Conditions in Venezuela could adversely affect our operations. At December 31, 2023, 24% of our deposits, or approximately $1.9 billion, were from Venezuelan residents.
For example, we entered into a new multi-year outsourcing agreement with the world's largest provider of banking and payments technology, to assume full responsibility over a significant number of the Bank’s support functions and staff, including certain critical back-office operations and will transition our entire core banking system to the one offered and serviced by this vendor.
For example, we entered into a new multi-year outsourcing agreement with the world's largest provider of banking and payments technology, to assume full responsibility over a significant number of the Bank’s support functions and staff, including certain critical back-office operations. In November 2023 we transitioned our entire core banking system to the one this vendor offers and services.
Furthermore, there can be no assurance that we can effectively review and monitor all risks or that all of our employees will closely follow our risk management policies and procedures, nor can there be any assurance that our risk management policies and procedures will enable us to accurately identify all risks and limit timely our exposures based on our assessments.
Furthermore, we cannot assure that we can effectively review and monitor all risks or that all of our employees will closely follow our risk management policies and procedures, or that our risk management policies and procedures will enable us to accurately identify all risks and limit timely our exposures based on our assessments.
Our ability to achieve our ESG targets, including our goal to offer $1 billion of sustainable products by 2025 and our plan to lead us to carbon-neutral operations by 2030 along with our other ESG targets for 2023-2030, and to accurately and transparently report our progress presents numerous operational, financial, legal and other risks, and may be dependent on the actions of third parties, all of which are outside of our control.
Our ability to achieve our ESG targets, including our goal to have offered $500 million in sustainable financing by 2025, and our plan to lead us to carbon-neutral operations by 2030 along with our other ESG targets for 2024-2030, and to accurately and transparently report our progress presents numerous operational, financial, legal and other risks, may be dependent on the actions of third parties, all of which are outside of our control.
We are authorized to issue, without shareholder approval, except as required by law or the Nasdaq Global Select Market, securities convertible into either common stock or preferred stock. Furthermore, we have adopted an equity compensation program for our employees, which also could result in dilution of our existing shareholders’ equity interests.
We are authorized to issue, without shareholder approval, except as required by law or the New York Stock Exchange, securities convertible into either common stock or preferred stock. Furthermore, we have adopted an equity compensation program for our employees and an employee stock purchase plan, which also could result in dilution of our existing shareholders’ equity interests.
If, based on available information, it is more likely than not that the deferred income tax asset will not be realized, then a valuation allowance must be established with a corresponding charge to net income. Such charges could have a material adverse effect on our results of operations or financial position.
If, based on available information, it is more likely than not that the deferred income tax asset will not be realized, then a valuation allowance must be established with a corresponding charge to net income. Such charges could adversely affect our business, financial condition, results of operations, or cash flows.
Our ability to raise additional capital, if needed, will depend on our financial performance and on conditions in the capital markets, economic conditions, and a number of other factors, many of which are outside our control. Accordingly, we cannot assure you of our ability to raise additional capital if needed or on terms acceptable to us.
Our ability to raise additional capital, if needed, will depend on our financial performance and the conditions in the capital markets, economic conditions, and other factors, many of which are outside our control. Accordingly, we may be unable to raise additional capital if needed or on acceptable terms.
Failures to comply with ECOA, the Fair Housing Act and other fair lending laws and regulations, including CFPB regulations, could subject us to enforcement actions or litigation, and could have a material adverse effect on our business financial condition and results of operations. Our Bank is also subject to the CRA, and periodic CRA examinations by the OCC.
Failures to comply with ECOA, the Fair Housing Act and other fair lending laws and regulations, including CFPB regulations, could subject us to enforcement actions or litigation, which could adversely affect our business, financial condition, results of operations, or cash flows. Our Bank is also subject to the CRA, and periodic CRA examinations by the OCC.
Accordingly, if market conditions deteriorate further and/or accounting guidance is updated and we determine our holdings of investment securities have experienced credit losses, our future earnings, financial condition, regulatory capital and continuing operations could be materially adversely affected. Nonperforming and similar assets take significant time to resolve and may adversely affect our results of operations and financial condition.
Accordingly, if market conditions deteriorate further and/or accounting guidance is updated and we determine our holdings of investment securities have experienced credit losses, our future earnings, financial condition, regulatory capital and continuing operations could be materially adversely affected.
All of the Bank’s deposits are denominated in U.S. Dollars. Adverse economic conditions in Venezuela may continue to negatively affect our Venezuelan deposit base and our ability to retain and grow these relationships, as customers residing in Venezuela rely on their U.S. Dollar deposits to fund living expenses and other necessities without being able to generate additional U.S. Dollars.
Adverse economic conditions in Venezuela may continue to negatively affect our Venezuelan deposit base, as customers residing in Venezuela rely on their U.S. Dollar deposits to fund living expenses and other necessities without being able to generate additional U.S. Dollars.
Such cyberattacks, if they result from internal control inadequacies or non-compliance, could materially damage our reputation, lead to civil or criminal penalties, or both, which, in turn, could have a material adverse effect on our business, financial condition and results of operations. 45 Table of Contents We could be required to write down our goodwill.
Such cyberattacks, if they result from internal control inadequacies or non-compliance, could materially damage our reputation, lead to civil or criminal penalties, or both, which, in turn, could adversely affect our business, financial condition, results of operations, or cash flows. 45 Table of Contents We could be required to write down our goodwill and other intangible assets .
Our inability to service our debt, pay our other obligations or pay dividends to our shareholders could have a material adverse impact on our financial condition and the value of your investment in our securities. 36 Table of Contents Risk related to Credit and Interest Rate Our profitability is subject to interest rate risk.
Our inability to service our debt, pay our other obligations or pay dividends to our shareholders could adversely impact our financial condition and the value our securities. 36 Table of Contents Risks related to Credit and Interest Rate Our profitability is subject to interest rate risk.
Compliance with these additional ongoing requirements may necessitate additional personnel, the design and implementation of additional internal controls, or may result in other significant expenses, any of which could have a material adverse effect on our business, financial condition or results of operations.
Compliance with these additional ongoing requirements may necessitate additional personnel, the design and implementation of additional internal controls, or may result in other significant expenses, any of which could adversely affect our business, financial condition, results of operations or cash flows.
The Federal Reserve Act, Section 23A, limits our ability to borrow from the Bank and our principal source of cash, other than securities offerings, is dividends from the Bank.
We are a legal entity separate and distinct from the Bank and our other subsidiaries. The Federal Reserve Act, Section 23A, limits our ability to borrow from the Bank and our principal source of cash, other than securities offerings, is dividends from the Bank.
Disruptions in markets, economic conditions, including those resulting from the response to the COVID-19 pandemic, or another similar pandemic, changes in laws or regulations or other events could have a significant impact on the ability of our customers to repay and may have a material adverse effect on our business, financial condition and results of operations.
Disruptions in markets, economic conditions, including those resulting from a pandemic, changes in laws or regulations or other events could have a significant impact on the ability of our customers to repay and may adversely affect our business, financial condition, results of operations, or cash flows.
We do not record interest income on nonaccrual loans or OREO, and these assets require higher loan administration and other costs, thereby adversely affecting our income.
Our non-performing assets may adversely affect our net income in various ways. We do not record interest income on nonaccrual loans or OREO, and these assets require higher loan administration and other costs, thereby adversely affecting our income.
There can be no assurance that we will not experience increases in nonperforming loans, OREO and similar nonperforming assets in the future. We are subject to environmental liability risk associated with lending activities . A significant portion of our loan portfolio is secured by real property.
We cannot assure you we will not experience increases in nonperforming loans, OREO and similar nonperforming assets in the future. 40 Table of Contents We are subject to environmental liability risk associated with lending activities . A significant portion of our loan portfolio is secured by real property.
Nonetheless, as with any risk management framework, there are inherent limitations to our current and future risk management strategies, including risks that we have not appropriately anticipated or identified, and our internal audit process may fail to detect such weaknesses or deficiencies in our risk management framework.
Our enterprise risk management and internal audit programs are designed to mitigate material risks. There may be inherent limitations to our current and future risk management strategies, including risks that we have not appropriately anticipated or identified. Additionally, our internal audit process may fail to detect such weaknesses or deficiencies in our risk management framework.
We, as a bank holding company, and the Bank are subject to capital rules of the Federal Reserve and the OCC, that implement a set of capital requirements issued by the Basel Committee on Banking Supervision known as Basel III.
We, as a bank holding company, and the Bank are subject to capital rules of the Federal Reserve and the OCC, that implement a set of capital requirements issued by the Basel Committee on Banking Supervision known as Basel III. See “Supervision and Regulation—Capital Requirements.” The regulatory capital rules applicable to us and the Bank may continue to change.
Any failure to protect the confidentiality of customer information could adversely affect our reputation and subject us to financial sanctions and other costs that could have a material adverse effect on our business, financial condition and results of operations.
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.
As of December 31, 2022, the Bank’s portfolio of CRE loans was 294.5% of its risk-based capital, or 39.3% of its total loans, as of December 31, 2022 compared to 289.1% of its risk-based capital, or 45.3% of its total loans, as of December 31, 2021.
As of December 31, 2023, the Bank’s portfolio of CRE loans was 274.3% of its risk-based capital, or 38.4% of its total loans, as of December 31, 2023 compared to 289.1% of its risk-based capital, or 45.3% of its total loans, as of December 31, 2022.
The risk of noncompliance with such rules can be more acute for financial institutions like us that have a significant number of customers from, or which do business in Latin America. As of December 31, 2022, $1.9 billion, or 27.1%, of our total deposits were from residents of Venezuela.
The risk of noncompliance with such rules can be more acute for financial institutions like us that have numerous customers from Latin America or who do business there. As of December 31, 2023, $1.9 billion, or 23.7%, of our total deposits were from residents of Venezuela.
As of December 31, 2022 debt securities available-for-sale had net unrealized holding losses of $113.0 million ($5.7 million in 2021) and net unrealized holding gains of $1.0 million ($21.5 million in 2021).
As of December 31, 2023 debt securities available-for-sale had net unrealized holding losses of $100.3 million ($113.0 million in 2022) and net unrealized holding gains of $3.2 million ($1.0 million in 2022).
In a rapidly changing interest rate environment, we may not be able to manage our interest rate risk effectively, which would adversely impact our financial condition and results of operations. Our allowance for credit losses may prove inadequate and our business, financial condition and profitability may suffer.
In a rapidly changing interest rate environment, we may be unable to manage our interest rate risk effectively, which could adversely impact our business, financial condition, results of operations, or cash flows. Our allowance for credit losses may prove inadequate.
However, our actions may not be sufficient to result in an effective internal control environment, and if we fail to implement and maintain effective ICFR, our ability to accurately and timely report our financial results could be impaired, which could result in late filings of our periodic reports under the Exchange Act, restatements of our consolidated financial statements, suspension or delisting of our common stock from the Nasdaq Global Select Market.
If we fail to implement and maintain effective ICFR, our ability to accurately and timely report our financial results could be impaired, which could result in late filings of our periodic reports under the Exchange Act, restatements of our consolidated financial statements, and suspension or delisting of our common stock from the New York Stock Exchange.
On June 23, 2020, the Company completed a $60.0 million offering of senior notes with a coupon rate of 5.75% and a maturity date of June 30, 2025 (the “Senior Notes”); on March 9, 2022, the Company sold and issued $30.0 million aggregate principal amount of its 4.25% Fixed-to-Floating Rate Subordinated Notes due March 15, 2032 (the “Subordinated Notes”); and as of December 31, 2022, the Debentures had an outstanding balance of $64.2 million.
As of December 31, 2023, we had outstanding an aggregate principal amount of $60.0 million of senior notes with a coupon rate of 5.75% and a maturity date of June 30, 2025 (the “Senior Notes”); an aggregate principal amount of $30.0 million of 4.25% Fixed-to-Floating Rate Subordinated Notes due March 15, 2032 (the “Subordinated Notes”); and an aggregate principal amount of $64.2 million in junior subordinated debentures (the “Debentures”).
In addition, our right and the rights of our creditors, including holders of the Senior Notes, the Subordinated Notes and the Debentures to participate in the assets of any non-guarantor subsidiary upon its liquidation or reorganization would be subject to the prior claims of such non-guarantor subsidiary’s creditors, except to the extent that we may ourselves be a creditor with recognized claims against such non-guarantor subsidiary. 55 Table of Contents We may incur a substantial level of debt that could materially adversely affect our ability to generate sufficient cash to fulfill our obligations under the Senior Notes, the Subordinated Notes and the Debentures.
In addition, our right and the rights of our creditors, including holders of the Senior Notes, the Subordinated Notes and the Debentures to participate in the assets of any non-guarantor subsidiary upon its liquidation or reorganization would be subject to the prior claims of such non-guarantor subsidiary’s creditors, except to the extent that we may ourselves be a creditor with recognized claims against such non-guarantor subsidiary.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe occupy 15 banking centers under lease agreements, four banking centers with long term ground leases subject to long-term land leases of 20 to 30 years, each with an option, or options to renew. Our banking centers range from approximately 1,900 square feet to approximately 7,000 square feet, average approximately 3,750 square feet and total approximately 87,000 square feet.
Biggest changeAs of December 31, 2023, we had 22 banking centers, including 16 in Florida and six in Texas. We occupy 15 banking centers under lease agreements, four banking centers with long term ground leases subject to long-term land leases of 20 to 30 years, each with an option, or options to renew.
Our various leases have periodic escalation clauses and may have options for extensions and other customary terms.
Our various leases have periodic escalation clauses and may have options for extensions and other customary terms. 59 Table of Contents
We also lease one location in Tampa, Florida which is primarily used as a LPO for C&I and CRE banking activities. In February 2023, the Company executed a new lease for 14,416 square feet office space in Tampa, Florida, which will house a new retail branch as well as a new Tampa Regional Office.
We also lease one location in Tampa, Florida which is primarily used as an LPO for C&I and CRE banking activities. In February 2023, the Company executed a new lease for 14,416 square feet office space in Tampa, Florida, which now houses our recently opened banking center and where our new Tampa Regional Office will be.
As of December 31, 2022 we occupy approximately 60,000 square feet, or approximately 34%, of the Headquarters Building, with the remaining approximately 117,000 square feet, or approximately 66%, either leased to third-parties or available for lease.
As of December 31, 2023 we occupied approximately 60,000 square feet, or approximately 34%, of the Headquarters Building, with the remaining approximately 117,000 square feet, or approximately 66%, either leased to third-parties or available for lease. In January 2024, we leased to a third-party approximately 19,000 square feet which we previously occupied.
Following the sale of the Beacon Operations Center, the Company leased-back the property for a two-year term ending on or before June 2023, including monthly rental periods. We continue to occupy 100% of this building.
Following the sale of the Beacon Operations Center, the Company leased-back the property for a two-year term ending on or before June 2023, including monthly rental periods. The Miramar Operations Center has a more efficient layout which allowed us to reduce our space to approximately 56,500 square feet from approximately 100,000 at the Old Beacon Operations Center.
In 2021, we entered into a lease agreement to relocate our operations center and a significant portion of our support services to the Miramar Park of Commerce (the “Miramar Operations Center”), located at 10500 Marks Way, Miramar, Florida 33025.
As a result, we now occupy approximately 41,000 square feet, or approximately 23%, of the Headquarters Building. Additionally, a significant portion of our support service units now operate out of our new operations center in the Miramar Park of Commerce (the “Miramar Operations Center”), located at 10500 Marks Way, Miramar, Florida 33025.
Removed
Additionally, a significant portion of our support service units operate out of our approximately 100,000 square feet operations center in the Beacon Industrial Park area of Doral, Florida (the “Beacon Operations Center”). In 2020, the Company sold the Beacon Operations Center.
Added
In 2023, we completed the relocation to the new Miramar Operations Center from the previous operations center located in the Beacon Industrial Park area of Doral, Florida (the “Old Beacon Operations Center”). In 2020, the Company sold the Old Beacon Operations Center.
Removed
The Miramar Operations Center has a more efficient layout that will allow us to reduce our space to approximately 56,500 square feet. We expect to complete this relocation in the first quarter of 2023. As of December 31, 2022, we have 23 banking centers, including 16 in Florida and 7 in Texas.
Added
Our banking centers range from approximately 1,900 square feet to approximately 7,000 square feet, average approximately 3,750 square feet and total approximately 82,000 square feet. We opened a new Banking Center in Tampa, FL in 2024, which we also lease.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeWhere appropriate, reserves for these various matters of litigation are established, under FASB ASC Topic 450, Contingencies, based in part upon management’s judgment and the advice of legal counsel. 57 At least quarterly, we assess our liabilities and contingencies in connection with outstanding legal proceedings utilizing the latest information available.
Biggest changeWhere appropriate, reserves for these various matters of litigation are established, under FASB ASC Topic 450, Contingencies, based in part upon management’s judgment and the advice of legal counsel. At least quarterly, we assess our liabilities and contingencies in connection with outstanding legal proceedings utilizing the latest information available.
As a result, the outcome of a particular matter or a combination of matters, if unfavorable, may be material to our financial position, results of operations or cash flows for a particular period, depending upon the size of the loss or our income for that particular period. Item 4. MINE SAFETY DISCLOSURES Not applicable. 58 Table of Contents PART II
As a result, the outcome of a particular matter or a combination of matters, if unfavorable, may be material to our financial position, results of operations or cash flows for a particular period, depending upon the size of the loss or our income for that particular period. Item 4. MINE SAFETY DISCLOSURES Not applicable. 60 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeUntil November 17, 2021 the Company’s shares of Class B common stock, par value $0.10 per share, were listed and traded on the Nasdaq Global Select Market under the symbol “AMTBB”, see “Clean-up Merger” under Item 1. Business. Holders of record As of February 22, 2023, there were 389 shareholders of record of the Company’s Class A common stock.
Biggest changeUntil November 17, 2021 the Company’s shares of Class B common stock, par value $0.10 per share, were also listed and traded on the NASDAQ under the symbol “AMTBB”, on November 18, 2021 these shares were converted into shares of Class A common stock. S ee “Our History” under Item 1. Business.
For further information, see “Supervision and Regulation—Payment of Dividends.” 59 Table of Contents Stock Performance Graph The following stock performance graph and related disclosures do not constitute soliciting material and should not be deemed filed or incorporated by reference into any other filing by us under the Securities Act or the Exchange Act, except to the extent we specifically incorporate them by reference therein.
For further information, see “Supervision and Regulation—Payment of Dividends.” 61 Table of Contents Stock Performance Graph The following stock performance graph and related disclosures do not constitute soliciting material and should not be deemed filed or incorporated by reference into any other filing by us under the Securities Act or the Exchange Act, except to the extent we specifically incorporate them by reference therein.
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market For Capital Stock Our shares of Class A common stock, par value $0.10 per share, are listed and trade on the Nasdaq Global Select Market under the symbol “AMTB”.
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market For Capital Stock Our shares of Class A common stock, par value $0.10 per share, are listed and trade on the NYSE under the symbol “AMTB”.
The following graph compares the cumulative total return of the Class A common stock from August 29, 2018 to December 31, 2022, as compared to the cumulative total return on stocks included in the NASDAQ Composite Index and the KBW Nasdaq Regional Bank Index over such period.
The following graph compares the cumulative total return of the Class A common stock from August 29, 2018 to December 31, 2023, as compared to the cumulative total return on stocks included in the NYSE Composite Index, the NASDAQ Composite Index and the KBW Nasdaq Bank Index over such period.
Dividends In each of the four quarters of 2022, the Company’s Board of Directors declared a cash dividend of $0.09 per share of the Company’s Class A common stock. The Company declared cash dividends in an amount of $0.06 per share of common stock on December 8, 2021.
Dividends In January 2024 and each of the four quarters of 2023 and 2022, the Company’s Board of Directors declared a cash dividend of $0.09 per share of the Company’s Class A common stock. The Company declared cash dividends in an amount of $0.06 per share of common stock on December 8, 2021.
Pursuant to S&P Global Market Intelligence data, August 29, 2018 is the first date pricing information was available for our common stock and no trading occurred until August 29, 2018. 60 Table of Contents Total Return Performance (in Dollars) August 29, 2018 December 31, 2018 December 31, 2019 December 31, 2020 December 31, 2021 December 31, 2022 AMTB $ 100.00 $ 72.28 $ 121.05 $ 84.44 $ 191.94 $ 149.11 NASDAQ Composite Index 100.00 81.82 110.64 158.92 192.92 129.06 KBW Bank Index 100.00 77.27 102.11 88.19 119.09 90.84 The above graph and table illustrate the performance of Company Class A from August 29, 2018, the first day that pricing information was available, and reflect: • the Spin-off; • the IPO; and • the Clean-up Merger, under which terms each outstanding share of Class B common stock was automatically converted to 0.95 of a share of Class A common stock.
Pursuant to S&P Global Market Intelligence data, August 29, 2018 is the first date pricing information was available for our common stock and no trading occurred until August 29, 2018. 62 Table of Contents Total Return Performance (in Dollars) August 29, 2018 December 31, 2018 December 31, 2019 December 31, 2020 December 31, 2021 December 31, 2022 December 31, 2023 AMTB $ 100.00 $ 72.28 $ 121.05 $ 84.44 $ 191.94 $ 149.11 $ 136.50 NYSE Composite Index 100.00 86.61 105.95 110.60 130.70 115.63 128.33 NASDAQ Composite Index 100.00 81.82 110.64 158.92 192.92 129.06 185.10 KBW Bank Index 100.00 77.27 102.11 88.19 119.09 90.84 86.49 The above graph and table illustrate the performance of Company Class A from August 29, 2018, the first day that pricing information was available, and reflect: • the Spin-off; • the IPO; and • the Clean-up Merger, under which terms each outstanding share of Class B common stock was automatically converted to 0.95 of a share of Class A common stock.
The shareholders of record include Cede & Co., a nominee for The Depository Trust Company, or DTC, which holds shares of our Class A common stock on behalf of an indeterminate number of beneficial owners.
Holders of record As of February 15, 2024, there were 385 shareholders of record of the Company’s Class A common stock. The shareholders of record include Cede & Co., a nominee for The Depository Trust Company, or DTC, which holds shares of our Class A common stock on behalf of an indeterminate number of beneficial owners.
Cumulative total return expressed in Dollars assumes an investment of $100 on August 29, 2018 and reinvestment of dividends as paid. (1) Shares of Company Class A common stock were distributed in the Spin-off at the end of the day on Friday, August 10, 2018 and were listed for trading beginning on Monday, August 13, 2018.
(1) Shares of Company Class A common stock were distributed in the Spin-off at the end of the day on Friday, August 10, 2018 and were listed for trading beginning on Monday, August 13, 2018.
Added
Previously and until August 28, 2023, the Company’s Class A common Stock were listed and traded on the Nasdaq Global Select Market, or NASDAQ.
Added
Cumulative total return expressed in Dollars assumes an investment of $100 on August 29, 2018 and reinvestment of dividends as paid. In 2022, because our Class A common stock was traded on NASDAQ, we used the NASDAQ Composite Index as our broad equity market index.
Added
As previously discussed, we voluntarily transferred the listing of our Class A common stock to the NYSE on August 29, 2023.
Added
As a result, we have changed our broad equity market index for purposes of disclosure in the stock performance graph to the NYSE Composite Index and have included returns in the stock performance graph based on both of these indices.
Added
In future periods, we will no longer reference the NASDAQ Composite Index in comparing total shareholder returns on our Class A common stock. We did not change our line-of-business index, which is the KBW Nasdaq Bank Index, as a result of our transfer to the NYSE.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeTangible book value per common share 1 was $20.19 as of December 31, 2022, compared to $22.55 at December 31, 2021. 1 Non-GAAP measure, see “Non-GAAP Financial Measures” for a reconciliation to GAAP. 69 Table of Contents Results of Operations - Comparison of Results of Operations for the Years Ended December 31, 2022 and 2021 Net income (loss) The table below sets forth certain results of operations data for the years ended December 31, 2022, 2021 and 2020: (in thousands, except per share amounts and percentages) Years Ended December 31, Change 2022 2021 2020 2022 vs 2021 2021 vs 2020 Net interest income $ 266,665 $ 205,141 $ 189,552 $ 61,524 30.0 % $ 15,589 8.2 % Provision for (reversal of) credit losses 13,945 (16,500) 88,620 30,445 (184.5) % (105,120) (118.6) % Net interest income after provision for (reversal of) credit losses 252,720 221,641 100,932 31,079 14.0 % 120,709 119.6 % Noninterest income 67,277 120,621 73,470 (53,344) (44.2) % 47,151 64.2 % Noninterest expense 241,413 198,242 178,736 43,171 21.8 % 19,506 10.9 % Income (loss) before income tax (expense) benefit 78,584 144,020 (4,334) (65,436) (45.4) % 148,354 NM Income tax (expense) benefit (16,621) (33,709) 2,612 17,088 50.7 % (36,321) NM Net income (loss) before attribution of noncontrolling interest 61,963 110,311 (1,722) (48,348) (43.8) % 112,033 NM Less: noncontrolling interest (1,347) (2,610) — 1,263 48.4 % (2,610) NM Net income attributable to Amerant Bancorp Inc. $ 63,310 $ 112,921 $ (1,722) $ (49,611) (43.9) % $ 114,643 NM Basic earnings (loss) per common share $ 1.87 $ 3.04 $ (0.04) $ (1.17) (38.5) % $ 3.08 NM Diluted earnings (loss) per common share (1) $ 1.85 $ 3.01 $ (0.04) $ (1.16) (38.5) % $ 3.05 NM __________________ (1) At December 31, 2022 and 2021, potential dilutive instruments consist of unvested shares of restricted stock, restricted stock units and performance stock units (consisted of unvested shares of restricted stock and restricted stock units at December 31, 2020).
Biggest changeCore PPNR 1 was $142.0 million in 2023, an increase of $36.5 million, or 34.6%, compared to $105.5 million in 2022. • Net interest margin was 3.76% in 2023, up 23 basis points from 3.53% in 2022. • Net interest income was $326.5 million in 2023, up $59.8 million, or 22.4%, from $266.7 million in 2022. • The Company recorded a provision for credit losses of $61.3 million in 2023, compared to $13.9 million in 2022. • Noninterest income was $87.5 million in 2023, up $20.2 million, or 30.1%, from $67.3 million in 2022. • Noninterest expense was $311.4 million in 2023, up $69.9 million, or 29.0%, from $241.4 million in 2022. • The efficiency ratio was 75.21% for the full-year 2023 compared to 72.29% for the full-year 2022. • Return on average asse ts (“ROA”) was 0.34% for the full-year 2023 compared to 0.77% for the full-year 2022. • Return on average equity (“ROE”) was 4.39% for the full-year 2023 compared to 8.45% for the full-year 2022. • Accumulated Other Comprehensive Loss (“AOCL) was $70.8 million as of December 31, 2023, an improvement of $9.8 million, or 12.2%, compared to $80.6 million as of December 31, 2022. 1 Non-GAAP measure, see “Non-GAAP Financial Measures” for a reconciliation to GAAP. 70 Table of Contents Results of Operations - Comparison of Results of Operations for the Years Ended December 31, 2023 and 2022 Net income The table below sets forth certain results of operations data for the years ended December 31, 2023, 2022 and 2021: (in thousands, except per share amounts and percentages) Years Ended December 31, Change 2023 2022 2021 2023 vs 2022 2022 vs 2021 Net interest income $ 326,464 $ 266,665 $ 205,141 $ 59,799 22.4 % $ 61,524 30.0 % Provision for (reversal of) credit losses 61,277 13,945 (16,500) 47,332 339.4 % 30,445 (184.5) % Net interest income after provision for (reversal of) credit losses 265,187 252,720 221,641 12,467 4.9 % 31,079 14.0 % Noninterest income 87,496 67,277 120,621 20,219 30.1 % (53,344) (44.2) % Noninterest expense 311,355 241,413 198,242 69,942 29.0 % 43,171 21.8 % Income before income tax expense 41,328 78,584 144,020 (37,256) (47.4) % (65,436) (45.4) % Income tax expense (10,539) (16,621) (33,709) 6,082 36.6 % 17,088 (50.7) % Net income before attribution of noncontrolling interest 30,789 61,963 110,311 (31,174) (50.3) % (48,348) (43.8) % Less: noncontrolling interest (1,701) (1,347) (2,610) (354) (26.3) % 1,263 (48.4) % Net income attributable to Amerant Bancorp Inc. $ 32,490 $ 63,310 $ 112,921 $ (30,820) (48.7) % $ (49,611) (43.9) % Basic earnings per common share $ 0.97 $ 1.87 $ 3.04 $ (0.90) (48.1) % $ (1.17) (38.5) % Diluted earnings per common share (1) $ 0.96 $ 1.85 $ 3.01 $ (0.89) (48.1) % $ (1.16) (38.5) % __________________ (1) At December 31, 2023, 2022 and 2021, potential dilutive instruments consist of unvested shares of restricted stock, restricted stock units and performance stock units.
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.
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.
The Company considers that all debt securities held to maturity issued or sponsored by the U.S. government are considered to be risk-free as they have the backing of the government.
The Company considers that all debt securities held to maturity issued or sponsored by the U.S. government are considered to be risk-free as they have the backing of the U.S. government.
In 2022, the Company repurchased an aggregate of 1,602,887 shares of Class A common stock at a weighted average price of $31.14 per share, under the New Common Stock Repurchase Program. The aggregate purchase price for these transactions was approximately $49.9 million, including transaction costs.
In 2022, the Company repurchased an aggregate of 1,602,887 shares of Class A common stock at a weighted average price of $31.14 per share, under the New Class A Common Stock Repurchase Program. The aggregate purchase price for these transactions was approximately $49.9 million, including transaction costs.
The Company adopted the CECL guidance as of the beginning of the reporting period of adoption, January 1, 2022, using a modified retrospective approach for all its financial assets measured at amortized cost and off-balance sheet credit exposures.
The Company adopted the CECL guidance as of the beginning of the reporting period of adoption, January 1, 2022, using a modified retrospective approach for all its financial assets measured at amortized cost and off-balance sheet credit exposures.
Factors that may be considered in aggregating loans for this purpose include but are not necessarily limited to, product or collateral type, industry, geography, internal risk rating, credit characteristics such as credit scores or collateral values, and historical or expected credit loss patterns.
Factors that may be considered in aggregating loans for this purpose include but are not necessarily limited to, product or collateral type, industry, geography, internal risk rating, credit characteristics such as credit scores or collateral values, and historical or expected credit loss patterns.
With respect to modifications made to borrowers experiencing financial difficulty, a change to the ACL is generally not recorded upon modification since the effect of these modifications is already included in the ACL given the measurement methodologies used to estimate the ACL.
With respect to modifications made to borrowers experiencing financial difficulty, a change to the ACL is generally not recorded upon modification since the effect of these modifications is already included in the ACL given the measurement methodologies used to estimate the ACL.
From time to time, the Company modifies loans by providing principal forgiveness on certain of its real estate loans. When principal forgiveness is provided, the amortized cost basis of the asset is written off against the ACL.
From time to time, the Company modifies loans by providing principal forgiveness on certain of its real estate loans. When principal forgiveness is provided, the amortized cost basis of the asset is written off against the ACL.
(3) In 2022, includes: (i) $2.9 million resulting from the Company’s transition to our new technology provider; (ii) $0.2 million in connection with certain search and recruitment expenses; (iii) $0.1 million of costs associated with the subleasing of the New York office space, and (iv) an aggregate of $0.4 million in other non-routine expenses.
In 2022, includes: (i) $2.9 million resulting from the Company’s transition to our new technology provider; (ii) $0.2 million in connection with certain search and recruitment expenses; (iii) $0.1 million of costs associated with the subleasing of the New York office space, and (iv) an aggregate of $0.4 million in other non-routine expenses.
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. 81 Table of Contents Noninterest Income The table below sets forth a comparison for each of the categories of noninterest income for the periods presented.
We 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. 81 Table of Contents Noninterest Income The table below sets forth a comparison for each of the categories of noninterest income for the periods presented.
At December 31, 2019, 2018, balances are mostly comprised of credit card extensions of credit to customers with deposits with the Bank. The Company phased out its legacy credit card products in the first quarter of 2020 to further strengthen its credit quality. (7) Secured by real estate properties located in the U.S.
At December 31, 2019, balances are mostly comprised of credit card extensions of credit to customers with deposits with the Bank. The Company phased out its legacy credit card products in the first quarter of 2020 to further strengthen its credit quality. (7) Secured by real estate properties located in the U.S.
As of December 31, 2021 and 2020, these balances were revised to exclude the Specialty industry segment which is now disclosed separately. (2) Includes marinas, nursing and residential care facilities, and other specialty type CRE properties. There were no loans in the Specialty industry segment as of December 31, 2019 and 2018.
As of December 31, 2021 and 2020, these balances were revised to exclude the Specialty industry segment which is now disclosed separately. (2) Includes marinas, nursing and residential care facilities, and other specialty type CRE properties. There were no loans in the Specialty industry segment as of December 31, 2019.
Beginning in 2022, rental income associated with the subleasing of portions of the Company’s headquarters building is presented as a reduction to rent expense under lease agreements under occupancy and equipment cost (included as part of other noninterest income in 2021 in connection with the previously-owned headquarters building).
(3) Beginning in 2022, rental income associated with the subleasing of portions of the Company’s headquarters building is presented as a reduction to rent expense under lease agreements under occupancy and equipment cost (included as part of other noninterest income in 2021 in connection with the previously-owned headquarters building).
The Company considers there are not current expected credit losses on these securities and, therefore, did not record an ACL on any of its debt securities held to maturity as of December 31, 2022. The Company monitors the credit quality of held to maturity securities through the use of credit ratings.
The Company considers there are not current expected credit losses on these securities and, therefore, did not record an ACL on any of its debt securities held to maturity as of December 31, 2023 and 2022. The Company monitors the credit quality of held to maturity securities through the use of credit ratings.
(4) In the fourth quarter of 2022, the Company changed its charge-off policy for unsecured consumer loans from 120 to 90 days past due. This change resulted in an additional $3.4 million in charge-off for unsecured consumer loans in 2022.
(5) In the fourth quarter of 2022, the Company changed its charge-off policy for unsecured consumer loans from 120 to 90 days past due. This change resulted in an additional $3.4 million in charge-off for unsecured consumer loans in 2022.
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.
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.
(3) In the first quarter of 2022, the Company collected a partial payment of approximately $9.8 million on one commercial nonaccrual loan of $12.4 million. Also, in the first quarter of 2022, the Company charged-off the remaining balance of this loan of $2.5 million.
(4) In the first quarter of 2022, the Company collected a partial payment of approximately $9.8 million on one commercial nonaccrual loan of $12.4 million. Also, in the first quarter of 2022, the Company charged-off the remaining balance of this loan of $2.5 million.
(3) Expenses incurred for actions designed to implement the Company’s strategy. These actions include, but are not limited to, reductions in workforce, streamlining operational processes, rolling out the Amerant brand, implementation of new technology system applications, enhanced sales tools and training, expanded product offerings and improved customer analytics to identify opportunities.
(4) Expenses incurred for actions designed to implement the Company’s strategy. These actions include, but are not limited to, reductions in workforce, streamlining operational processes, rolling out the Amerant brand, implementation of new technology system applications, enhanced sales tools and training, expanded product offerings and improved customer analytics to identify opportunities.
Consumer and other retail loans are charged off against the ACL at the earlier of (1) when management becomes aware that a loss has occurred, or (2) beginning effectiev as of December 31, 2022, when closed-end retail loans become past due 90 days (120 previously) or open-end retail loans become past due 180 days from the contractual due date.
Consumer and other retail loans are charged off against the ACL at the earlier of (1) when management becomes aware that a loss has occurred, or (2) beginning effective as of December 31, 2022, when closed-end retail loans become past due 90 days (120 previously) or open-end retail loans become past due 180 days from the contractual due date.
In 2022, 2021 and 2020, the tax equivalent yield was calculated assuming a 21% tax rate and dividing the actual yield by 0.79. (6) Excludes the allowance for credit losses. (7) The terms of the advance agreement require the Bank to maintain certain investment securities or loans as collateral for these advances.
In 2023, 2022 and 2021, the tax equivalent yield was calculated assuming a 21% tax rate and dividing the actual yield by 0.79. (6) Excludes the allowance for credit losses. (7) The terms of the advance agreement require the Bank to maintain certain investment securities or loans as collateral for these advances.
The table below summarizes, by remaining maturity, our significant contractual cash obligations as of December 31, 2022. Amounts in this table reflect the minimum contractual obligation under legally enforceable contracts with terms that are both fixed and determinable. All other contractual cash obligations on this table are reflected in our consolidated balance sheet.
The table below summarizes, by remaining maturity, our significant contractual cash obligations as of December 31, 2023. Amounts in this table reflect the minimum contractual obligation under legally enforceable contracts with terms that are both fixed and determinable. All other contractual cash obligations on this table are reflected in our consolidated balance sheet.
See our Annual Report on Form 10-K for the year ended December 31, 2021 for additional details on the Company’s financial condition and results of operations in 2021 and changes in the Company’s financial condition and results of operations from 2020 to 2021. Overview Our Company We are a bank holding company headquartered in Coral Gables, Florida.
See our Annual Report on Form 10-K for the year ended December 31, 2022 for additional details on the Company’s financial condition and results of operations in 2022 and changes in the Company’s financial condition and results of operations from 2021 to 2022. Overview Our Company We are a bank holding company headquartered in Coral Gables, Florida.
In 2021, includes additional expenses of $1.5 million, including: (i) $0.8 million of expenses in connection with the merger and related transactions, and (ii) $0.7 million resulting from the Company’s transition to our new technology provider. (5) Includes service fees in connection with our loan-level derivative income generation activities.
In 2021, includes additional expenses of $1.5 million, including: (i) $0.8 million of expenses in connection with the Clean-up Merger and related transactions, and (ii) $0.7 million resulting from the Company’s transition to our new technology provider. (5) Includes service fees in connection with our loan-level derivative income generation activities.
Loans are restored to accrual status when loans become well-secured and management believes full collectability of principal and interest is probable. 103 Table of Contents 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.
Loans are restored to accrual status when loans become well-secured and management believes full collectability of principal and interest is probable. 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.
(4) Includes customers’ overdraft balances totaling $4.7 million, $0.6 million, $0.7 million, $1.3 million and $1.0 million at each of the dates presented.
(4) Includes customers’ overdraft balances totaling $2.6 million, $4.7 million, $0.6 million, $0.7 million and $1.3 million at each of the dates presented.
An asset classified as loss is not considered collectable and is of such little value that the continuance of carrying a value on the books is not warranted. 108 Table of Contents We use the term “classified loans” to describe loans that are substandard and doubtful, and we use the term “criticized loans” to describe loans that are special mention and classified loans.
An asset classified as loss is not considered collectable and is of such little value that the continuance of carrying a value on the books is not warranted. 106 Table of Contents We use the term “classified loans” to describe loans that are substandard and doubtful, and we use the term “criticized loans” to describe loans that are special mention and classified loans.
There are no credit card balances or allowance for credit losses on the credit card product in 2022, 2021 and 2020.
There are no credit card balances or allowance for credit losses on the credit card product in 2023, 2022, 2021 and 2020.
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 loan losses.
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.
(9) Calculated based upon the average balance of total noninterest bearing and interest bearing deposits. 74 Table of Contents Interest Rates and Operating Interest Differential Increases and decreases in interest income and interest expense result from changes in average balances (volume) of interest-earning assets and interest-bearing liabilities, as well as changes in average interest rates.
(9) Calculated based upon the average balance of total noninterest bearing and interest bearing deposits. 75 Table of Contents Interest Rates and Operating Interest Differential Increases and decreases in interest income and interest expense result from changes in average balances (volume) of interest-earning assets and interest-bearing liabilities, as well as changes in average interest rates.
In addition, includes realized losses of $42 thousand on the sale of a mutual fund with a fair value of $23.4 million at the time of the sale in 2021. (5) Net unrealized gains and losses related to uncovered interest rate caps with clients.
Lastly, includes realized losses of $42 thousand on the sale of a mutual fund with a fair value of $23.4 million at the time of the sale in 2021. (5) Net unrealized gains and losses related to uncovered interest rate caps with clients.
The total allowance for credit losses for credit card receivables, after charge-offs, was at $1.8 million at December 31, 2019. We discontinued or credit card programs in 2020 and the outstanding credit card balances at the close of 2019 were repaid during the first quarter of 2020.
The total allowance for credit losses for credit card receivables, after charge-offs, was at $1.8 million at December 31, 2019. We discontinued our credit card programs in 2020 and the outstanding credit card balances at the close of 2019 were repaid during the first quarter of 2020.
The Company has not historically sold brokered CDs in denominations over $100,000. 118 Deposits by Type: Average Balances and Average Rates Paid The following table sets forth the average daily balance amounts and the average rates paid on our deposits for the periods presented.
The Company has not historically sold brokered CDs in denominations over $100,000. 116 Deposits by Type: Average Balances and Average Rates Paid The following table sets forth the average daily balance amounts and the average rates paid on our deposits for the periods presented.
See Note 14 to our audited consolidated financial statements in this Form 10-K for details on the dilutive effects of the issuance of restricted stock, restricted stock units and performance share units on earnings per share in 2022, 2021 and 2020.
See Note 14 to our audited consolidated financial statements in this Form 10-K for details on the dilutive effects of the issuance of restricted stock, restricted stock units and performance share units on earnings per share in 2023, 2022 and 2021.
Unrealized gains and losses on AFS securities are recorded as a separate component of shareholders’ equity (accumulated other comprehensive income or loss) and do not affect earnings until realized or deemed to be credit-impared.
Unrealized gains and losses on AFS securities are recorded as a separate component of shareholders’ equity (accumulated other comprehensive income or loss) and do not affect earnings until realized or deemed to be credit-impaired.
(2) In 2022 and 2021, includes ROU asset impairment charges of $1.6 million and $0.8 million, respectively, in connection with the closure of a branch in Pembroke Pines, Florida in 2022, and the close of our NY loan production office in 2021.
In 2022 and 2021, includes ROU asset impairment charges of $1.6 million and $0.8 million, respectively, in connection with the closure of a branch in Pembroke Pines, Florida in 2022, and the closure of our NY loan production office in 2021.
(2) Remained current and in accrual status as of December 31, 2022. 99 Table of Contents Foreign Outstanding The table below summarizes the composition of our international loan portfolio by country of risk for the periods presented.
(2) Remained current and in accrual status as of December 31, 2023. 99 Table of Contents Foreign Outstanding The table below summarizes the composition of our international loan portfolio by country of risk for the periods presented.
December 31, 2022 (in thousands, except percentages) Total Less than a year One to five years Five to ten years Over ten years No maturity Amount Yield Amount Yield Amount Yield Amount Yield Amount Yield Amount Yield Debt securities available for sale U.S.
December 31, 2023 (in thousands, except percentages) Total Less than a year One to five years Five to ten years Over ten years No maturity Amount Yield Amount Yield Amount Yield Amount Yield Amount Yield Amount Yield Debt securities available for sale U.S.
However, loans to foreign clients have more conservative underwriting criteria and terms. 96 Table of Contents Commercial loans. We provide a mix of variable and fixed rate C&I loans. These loans are made to a diverse range of business sizes, from the small-to-medium-sized to middle market and large companies.
However, loans to foreign clients have more conservative underwriting criteria and terms. Commercial loans. We provide a mix of variable and fixed rate C&I loans. These loans are made to a diverse range of business sizes, from the small-to-medium-sized to middle market and large companies.
For loans that do not share similar risk characteristics with other loans such as collateral dependent loans and modifications to borrowers experiencing financial difficulties, expected credit losses are estimated on an individual basis. 133 Table of Contents Expected credit losses are estimated over the contractual terms of the loans, adjusted for expected prepayments.
For loans that do not share similar risk characteristics with other loans such as collateral dependent loans and modifications to borrowers experiencing financial difficulties, expected credit losses are estimated on an individual basis. Expected credit losses are estimated over the contractual terms of the loans, adjusted for expected prepayments.
See Note 1 to our audited annual consolidated financial statements in this Form 10-K for details on the adoption of CECL. 129 Table of Contents Effects of Inflation and Changing Prices The consolidated financial statements and related consolidated financial data presented herein have been prepared in accordance with GAAP and practices within the banking industry, which require the measurement of financial position and operating results in terms of historical Dollars without considering the changes in the relative purchasing power of money over time due to inflation.
See Note 1 to our audited annual consolidated financial statements in this Form 10-K for details on the adoption of CECL. 127 T able of Contents Effects of Inflation and Changing Prices The consolidated financial statements and related consolidated financial data presented herein have been prepared in accordance with GAAP and practices within the banking industry, which require the measurement of financial position and operating results in terms of historical Dollars without considering the changes in the relative purchasing power of money over time due to inflation.
The following table sets forth information about the outstanding amounts of our short-term borrowings at the close of and for years ended December 31, 2022, 2021 and 2020.
The following table sets forth information about the outstanding amounts of our short-term borrowings at the close of and for years ended December 31, 2023, 2022 and 2021.
The securities issuers were from Canada in 2022, and from Japan and Canada in three different sectors in 2021 and 2020. The Company limits exposure to foreign investments based on cross border exposure by country, risk appetite and policy. All foreign investments are denominated in U.S. Dollars.
The securities issuers were from Canada in two different sectors in 2023 and 2022, and from Japan and Canada in three different sectors in 2021. The Company limits exposure to foreign investments based on cross border exposure by country, risk appetite and policy. All foreign investments are denominated in U.S. Dollars.
In addition, as of December 31, 2022, includes $43.8 million in consumer loans originated under a white-label program launched in the third quarter of 2022. (6) There were no outstanding credit card balances as of December 31, 2022, 2021 and 2020.
In addition, as of December 31, 2023, includes $52.9 million ($43.8 million in 2022) in consumer loans originated under a white-label program launched in the third quarter of 2022. (6) There were no outstanding credit card balances as of December 31, 2023, 2022, 2021 and 2020.
(2) Comprised mostly of CRE loans throughout South Florida, the greater Houston, Texas area, and New York. (3) Gasoline stations represented approximately 57%, 59% and 60% of the retail trade sector at year-end 2022, 2021 and 2020, respectively.
(2) Comprised mostly of CRE loans throughout South Florida, the greater Houston, Texas area, and New York. (3) Gasoline stations represented approximately 57%, 57% and 59% of the retail trade sector at year-end 2023, 2022 and 2021, respectively.
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 next twelve months. 127 Table of Contents Regulatory Capital Requirements We are subject to various regulatory capital requirements administered by the Federal Reserve and OCC.
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 next twelve months. Regulatory Capital Requirements We are subject to various regulatory capital requirements administered by the Federal Reserve and OCC.
The Company expects to collect the amortized cost basis of government insured residential loans due to the nature of the government guarantee and, therefore generally have no expected credit losses. 134 Table of Contents Expected credit losses on loans to borrowers that are domiciled in foreign countries, primarily loans in the Consumer and Financial Institutions portfolios are generally estimated by assessing the any available cash or other types of collateral, and the probability of losses arising from the Company’s exposure to those collateral assets.
The Company expects to collect the amortized cost basis of government insured residential loans due to the nature of the government guarantee and, therefore generally have no expected credit losses. 132 T able of Contents Expected credit losses on loans to borrowers that are domiciled in foreign countries, primarily loans in the Consumer and Financial Institutions portfolios are generally estimated by assessing the any available cash or other types of collateral, and the probability of losses arising from the Company’s exposure to those collateral assets.
(4) Includes loans to borrowers in other countries which do not individually exceed one percent of total assets in 2022, 2021 and 2020.
(4) Includes loans to borrowers in other countries which do not individually exceed one percent of total assets in 2023, 2022 and 2021.
The terms of the Clean-up Merger included the creation of a new class of Non-Voting Class A common stock. 123 Table of Contents In addition, all shareholders who held fractional shares as a result of the Clean-up Merger received a cash payment in lieu of such fractional shares.
The terms of the Clean-up Merger included the creation of a new class of Non-Voting Class A common stock. In addition, all shareholders who held fractional shares as a result of the Clean-up Merger received a cash payment in lieu of such fractional shares.
(2) As of December 31, 2022, includes approximately $45.3 million in commercial loans and leases originated under a white-label equipment financing solution launched in the second quarter of 2022. (3) Mostly comprised of loans secured by cash or U.S. Government securities.
(2) As of December 31, 2023 and 2022, includes approximately $56.5 million and $45.3 million, respectively, in commercial loans and leases originated under a white-label equipment financing solution launched in the second quarter of 2022. (3) Mostly comprised of loans secured by cash or U.S. Government securities.
Typically, lines of credit have a maturity of one year or less, and term loans have maturities of five years or less. In 2020, the Company began participating in the SBA’s PPP, by providing loans to businesses to cover payroll, rent, mortgage, healthcare, and utilities costs, among other essential expenses.
Typically, lines of credit have a maturity of one year or less, and term loans have maturities of five years or less. In 2021 and 2020, the Company participated in the SBA’s PPP, by providing loans to businesses to cover payroll, rent, mortgage, healthcare, and utilities costs, among other essential expenses.
The Company proactively manages its investment securities portfolio as a source of liquidity and as an economic hedge against declining interest rates whenever appropriate. 112 Table of Contents The following table sets forth the book value and percentage of each category of securities at December 31, 2022, 2021 and 2020.
The Company proactively manages its investment securities portfolio as a source of liquidity and as an economic hedge against declining interest rates whenever appropriate. 110 Table of Contents The following table sets forth the book value and percentage of each category of securities at December 31, 2023, 2022 and 2021.
(2) Includes mortgage loans for single-family residential properties located in the U.S. totaling 47.0 million, $64.6 million and $86.7 million as of December 31, 2022, 2021 and 2020, respectively. (3) There were no outstanding credit card balances as of December 31, 2022, 2021 and 2020.
(2) Includes mortgage loans for single-family residential properties located in the U.S. totaling 37.7 million, $47.0 million and $64.6 million as of December 31, 2023, 2022 and 2021, respectively. (3) There were no outstanding credit card balances as of December 31, 2023, 2022 and 2021.
The emphasis of this discussion will be on changes in the year ended December 31, 2022 with respect to 2021.
The emphasis of this discussion will be on changes in the year ended December 31, 2023 with respect to 2022.
In 2022, charge-offs included: (i) $6.1 million related to two commercial nonaccrual loans paid off during the period, including $3.6 million related to a Miami-based U.S. coffee trader (“the Coffee Trader”) and $2.5 million related to other loan; (ii) $3.9 million related to a New York based non-owner occupied loan; (iii) $3.0 million related to multiple commercial loans, and (iv) an aggregate $9.1 million related to multiple consumer loans.
In 2022, charge-offs included: (i) $6.1 million related to two commercial nonaccrual loans paid off during the period, including $3.6 million related to the Coffee Trader, and $2.5 million related to other loans; (ii) $3.9 million related to a New York based non-owner occupied loan; (iii) $3.0 million related to multiple commercial loans, and (iv) an aggregate $9.1 million related to multiple consumer loans.
The Company’s loans by credit quality indicators at December 31, 2022, 2021 and 2020 are summarized in the following table.
The Company’s loans by credit quality indicators at December 31, 2023, 2022 and 2021 are summarized in the following table.
(4) Primarily loans belonging to industrial sectors not included in the above sectors, which do not individually represent more than 1 percent of the total loan portfolio, and consumer loans which represented approximately 28.6%, 17.2% and 12.6% of the total in 2022, 2021 and 2020, respectively.
(4) Primarily loans belonging to industrial sectors not included in the above sectors, which do not individually represent more than 1 percent of the total loan portfolio, and consumer loans which represented approximately 20.6%, 28.6% and 17.2% of the total in 2023, 2022 and 2021, respectively.
Contractual maturities of investment securities are adjusted for anticipated prepayments of amortizing U.S. government sponsored agency debt and enterprise debt securities, which shorten the average lives of these investments. Goodwill. Goodwill was $19.5 million as of December 31, 2022 and 2021.
Contractual maturities of investment securities are adjusted for anticipated prepayments of amortizing U.S. government sponsored agency debt and enterprise debt securities, which shorten the average lives of these investments. Goodwill. Goodwill was $19.2 million and $19.5 million as of December 31, 2023 and 2022, respectively.
The Company held cash and cash equivalents of $64.9 million as of December 31, 2022 and $23.8 million as of December 31, 2021, 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.
The Company held cash and cash equivalents of $46.8 million as of December 31, 2023 and $64.9 million as of December 31, 2022, in funds available to service its Senior Notes, Subordinated Notes and junior subordinated debt and for general corporate purposes, as a separate stand-alone entity.
See discussion below for more details on the Amerant Florida Merger. 126 Table of Contents Amerant Florida Merger On August 2, 2022, the Company completed an intercompany transaction of entities under common control, pursuant to which the Company’s wholly owned subsidiary, Amerant Florida Bancorp Inc. (“Amerant Florida”), merged with and into the Company, with the Company as sole survivor.
See discussion below for more details on the Amerant Florida Merger. 124 T able of Contents Amerant Florida Merger On August 2, 2022, the Company completed an intercompany transaction of entities under common control, pursuant to which the Company’s wholly owned subsidiary, Amerant Florida Bancorp Inc. (“Amerant Florida”), merged with and into the Company, with the Company as sole survivor.
(5) Includes investments in FHLB and Federal Reserve Bank stock. Amounts correspond to original cost at the date presented. Original cost approximates fair value because of the nature of these investments. As of December 31, 2022, total securities increased $25.4 million, or 1.9%, to $1.4 billion compared to $1.3 billion as of December 31, 2021.
(6) Includes investments in FHLB and Federal Reserve Bank stock. Amounts correspond to original cost at the date presented. Original cost approximates fair value because of the nature of these investments. As of December 31, 2023, total securities increased $130.3 million, or 9.5%, to $1.5 billion compared to $1.4 billion as of December 31, 2022.
The Company incurred expenses related to derivative transactions with customers of $8.1 million, $0.8 million and $0.3 million in 2022, 2021 and 2020, respectively, which are included in noninterest expenses. (2) Changes in cash surrender value of BOLI are not taxable.
The Company incurred expenses related to derivative transactions with customers of $1.9 million, $8.1 million and $0.8 million in 2023, 2022 and 2021, respectively, which are included in noninterest expenses. (2) Changes in cash surrender value of BOLI are not taxable.
Salaries and employee benefits include compensation (including severance expenses), employee benefits and employer tax expenses for our personnel. Salaries and employee benefits are partially offset by costs directly related to the origination of loans, which are deferred and amortized over the life of the related loans as adjustments to interest income in accordance with GAAP.
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.
Amerant Mortgage had 68 FTEs at December 31, 2022 compared to 72 FTEs at December 31, 2021. 71 Table of Contents 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 years ended December 31, 2022, 2021 and 2020.
As of December 31, 2023, Amerant Mortgage had 67 FTEs compared to 68 FTEs at December 31, 2022. 72 Table of Contents 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 years ended December 31, 2023, 2022 and 2021.
Please refer to Note 1 of our audited consolidated financial statements in this Form-10K for a detailed discussion of CECL and other recently issued accounting pronouncements that have been adopted by us that will require enhanced disclosures in our financial statements in future periods. 136 Table of Contents
Please refer to Note 1 of our audited consolidated financial statements in this Form-10K for a detailed discussion of CECL and other recently issued accounting pronouncements that have been adopted by us that will require enhanced disclosures in our financial statements in future periods. 134 T able of Contents
(11) Includes $12.5 million and $7.1 million in 2022 and 2021, respectively, related to mortgage banking activities, primarily consisting of salaries and employee benefits, mortgage lending costs and professional and other services fees.
(12) Includes $14.4 million, $12.5 million and $7.1 million in 2023, 2022 and 2021, respectively, related to mortgage banking activities, primarily consisting of salaries and employee benefits, mortgage lending costs and professional and other services fees.
Securities are returned to accrual status only when collection of interest is reasonably assured. 132 Table of Contents Fair Value of Financial Instruments. We are, under applicable accounting guidance, required to maximize the use of observable inputs and minimize the use of unobservable inputs in measuring fair value.
Securities are returned to accrual status only when collection of interest is reasonably assured. 130 T able of Contents Fair Value of Financial Instruments. We are, under applicable accounting guidance, required to maximize the use of observable inputs and minimize the use of unobservable inputs in measuring fair value.
This first increase was followed by 6 additional increases in the Federal Reserve’s benchmark interest rates in 2022 (50 basis points in May 2022, 75 basis points in each June 2022, July 2022, September 2022 and November 2022, and 50 basis points in December 2022) which resulted in a total increase of 425 basis points year-to- date.
This first increase was followed by six additional increases in the Federal Reserve’s benchmark interest rates in 2022 (50 basis points in May 2022, 75 basis points in each June 2022, July 2022, September 2022 and November 2022, and 50 basis points in December 2022) which resulted in a total increase of 425 basis in 2022.
We had $1.7 billion, $1.4 billion and $1.3 billion of additional borrowing capacity with the FHLB as of December 31, 2022, 2021 and 2020, respectively. This additional borrowing capacity is determined by the FHLB. We also maintain relationships in the capital markets with brokers and dealers to issue FDIC-insured interest-bearing deposits, including certificates of deposits.
We had $1.9 billion and $1.7 billion of additional borrowing capacity with the FHLB as of December 31, 2023 and 2022, respectively. This additional borrowing capacity is determined by the FHLB. We also maintain relationships in the capital markets with brokers and dealers to issue FDIC-insured interest-bearing deposits, including certificates of deposits.
Our fee income generated on customer interest rate swaps and other loan level derivatives are primarily dependent on volume of transactions completed with customers and are included in noninterest income. In 2022, derivatives unrealized net gains of $0.5 million were primarily derived from changes in market value of uncovered interest rate caps with clients.
Our fee income generated on customer interest rate swaps and other loan level derivatives are primarily dependent on volume of transactions completed with customers and are included in noninterest income. Derivatives unrealized net gains and derivatives unrealized net losses are primarily derived from changes in market value of uncovered interest rate caps with clients.
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 book value for debt securities classified as held to maturity represents amortized cost less an allowance for credit losses (“ACL”) in 2022 if required.
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 book value for debt securities classified as held to maturity represents amortized cost less allowance for credit losses (“ACL”), if any.
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.
See “Item 1- Business” for more details. 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.
As of December 31, 2022, corporate debt securities comprised 26.5% of the available-for-sale portfolio, down from 30.4% at December 31, 2021. We continue with our strategy to insulate the investment portfolio from prepayment risk. As of December 31, 2022, floating rate investments represent 13.2% of our total investment portfolio compared to 10.6% at December 31, 2021.
As of December 31, 2023, corporate debt securities comprised 21.4% of the available-for-sale portfolio, down from 26.5% at December 31, 2022. We continue with our strategy to insulate the investment portfolio from prepayment risk. As of December 31, 2023, floating rate investments represent 13.3% of our total investment portfolio compared to 13.2% at December 31, 2022.
Interest income that would have been recognized on outstanding non-performing loans at December 31, 2022, 2021 and 2020 was $0.8 million, $6.2 million and $2.7 million in 2022, 2021 and 2020, respectively. 73 Table of Contents (3) Includes the average balance of net unrealized gains and losses in the fair value of debt securities available for sale.
Interest income that would have been recognized on outstanding non-performing loans at December 31, 2023, 2022 and 2021, was $4.9 million, $0.8 million and $6.2 million, respectively. (3) Includes the average balance of net unrealized gains and losses in the fair value of debt securities available for sale.
The tax equivalent yield for these nontaxable securities was 3.00%, 1.76% and 2.94% for the years ended December 31, 2022, 2021 and 2020, respectively. In 2022, 2021 and 2020, the tax equivalent yield was calculated by assuming a 21% tax rate and dividing the actual yield by 0.79.
The tax equivalent yield for these nontaxable securities was 4.83%, 3.00% and 1.76% for the years ended December 31, 2023, 2022 and 2021, respectively. In 2023, 2022 and 2021, the tax equivalent yield was calculated by assuming a 21% tax rate and dividing the actual yield by 0.79.
Conversely, the reversal of a valuation allowance previously recorded against a DTA would result in lower tax expense. Recently Issued Accounting Pronouncements.
Conversely, the reversal of a valuation allowance previously recorded against a DTA would result in lower tax expense. 133 T able of Contents Recently Issued Accounting Pronouncements.
This was primarily driven by an increase in domestic core deposits which includes new deposits from escrow accounts, municipalities, and from domestic individuals and businesses through large fund providers and customer relationships during the period.
This was primarily driven by an increase in domestic core deposits which includes new deposits from escrow accounts, municipalities, and from domestic businesses and customer relationships during the period.
(8) International customers’ overdraft balances were de minimis at each of the dates presented. 93 Table of Contents The composition of our CRE loan portfolio held for investment by industry segment at December 31, 2022, 2021 and 2020 is depicted in the following table: December 31, (in thousands) 2022 2021 2020 2019 2018 Retail (1) $ 731,229 $ 751,202 $ 1,062,119 $ 1,143,565 $ 1,081,143 Multifamily 820,023 514,679 737,696 801,626 909,439 Office space 342,248 361,921 390,295 453,328 441,712 Specialty (2) 84,791 86,130 35,210 — — Land and construction 273,174 327,246 349,800 278,688 326,644 Hospitality 324,881 241,336 191,750 198,807 166,415 Industrial and warehouse 132,567 100,001 70,465 96,102 120,086 Total CRE Loans Held For Investment (3) $ 2,708,913 $ 2,382,515 $ 2,837,335 $ 2,972,116 $ 3,045,439 _______________ (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.
(8) International customers’ overdraft balances were de minimis at each of the dates presented. 92 Table of Contents The composition of our CRE loan portfolio held for investment by industry segment at December 31, 2023, 2022 and 2021 is depicted in the following table: December 31, (in thousands) 2023 2022 2021 2020 2019 Retail (1) $ 728,349 $ 731,229 $ 751,202 $ 1,062,119 $ 1,143,565 Multifamily 407,214 820,023 514,679 737,696 801,626 Office space 347,649 342,248 361,921 390,295 453,328 Specialty (2) 152,277 84,791 86,130 35,210 — Land and construction 300,378 273,174 327,246 349,800 278,688 Hospitality 282,085 324,881 241,336 191,750 198,807 Industrial and warehouse 105,840 132,567 100,001 70,465 96,102 Total CRE Loans Held For Investment (3) $ 2,323,792 $ 2,708,913 $ 2,382,515 $ 2,837,335 $ 2,972,116 _______________ (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.
(6) In the year ended December 31, 2022, includes: (i) $2.9 million in connection with the engagement of FIS; (ii) $0.2 million in connection with certain search and recruitment expenses; (iii) $0.1 million of costs associated with the subleasing of the New York office space, and (iv) an aggregate of $0.4 million in other expenses.
In 2022, includes: (i) $2.9 million in connection with the engagement of FIS; (ii) $0.2 million in connection with certain search and recruitment expenses; (iii) $0.1 million of costs associated with the subleasing of the New York office space, and (iv) an aggregate of $0.4 million in other non-routine expenses.
The increase in effective duration in 2022 compared to 2021 was primarily due to lower expected and actual mortgage-backed securities prepayments resulting from increased market interest rates.These estimates are computed using multiple inputs that are subject, among other things, to changes in interest rates and other factors that may affect prepayment speeds.
The increase in effective duration in 2023 compared to 2022 was primarily due to lower than expected mortgage-backed securities prepayments.These estimates are computed using multiple inputs that are subject, among other things, to changes in interest rates and other factors that may affect prepayment speeds.
The average balance includes includes average net unrealized losses of $62.3 million in 2022 and average net unrealized gains of $26.6 million and $35.5 million in 2021 and 2020, respectively. (4) Includes nontaxable securities with average balances of $18.4 million, $46.2 million and $72.2 million for the years ended December 31, 2022, 2021 and 2020, respectively.
The average balance includes average net unrealized losses of $118.5 million and $62.3 million in 2023 and 2022, respectively, and average net unrealized gains of $26.6 million in 2021. (4) Includes nontaxable securities with average balances of $17.8 million, $18.4 million and $46.2 million for the years ended December 31, 2023, 2022 and 2021, respectively.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

13 edited+3 added−7 removed18 unchanged
Biggest changeThis increase is mainly due to: (i) higher floating loan rates on existing loans due to higher short term market rates repricing higher through the quarter; (ii) the growth in the indirect lending portfolio that has average net fixed yields close to 7%, and (iii) the growth in the size of the balance sheet as total assets increased $1.5 billion, or 19.5%, in the the year ended December 31, 2022 compared to December 31, 2021.
Biggest changeThese decreases were partially offset by: (i) higher floating loan rates on existing loans due to increase in market rates repricing higher throughout 2023 and (ii) the growth in the size of the balance sheet as total assets increased $588.5 million or 6.4% in 2023 compared to 2022.
The improvements in the sensitivity of EVE from changes in interest rates as of December 31, 2022 for the 200 and 100 basis point increase buckets are principally attributed to the balance sheet becoming more asset sensitive compared to December 31, 2021.
The improvements in the sensitivity of EVE from changes in interest rates as of December 31, 2023 for the 200 and 100 basis point increase buckets are principally attributed to the balance sheet becoming more asset sensitive compared to December 31, 2022.
They include three types of analyses consistent with industry practices: • earnings sensitivity; • economic value of equity, or EVE; and • investment portfolio mark-to-market exposure (debt and equity securities available for sale and held to maturity securities). 137 Table of Contents The Company continues to be asset sensitive, therefore income is expected to increase when interest rates move higher, and to decrease when interest rates move lower.
They include three types of analyses consistent with industry practices: • earnings sensitivity; • economic value of equity, or EVE; and • investment portfolio mark-to-market exposure (debt and equity securities available for sale and held to maturity securities). 135 T able of Contents The Company continues to be asset sensitive, therefore income is expected to increase when interest rates move higher, and to decrease when interest rates move lower.
During the periods reported, the modeled effects on the EVE remained within established Company risk limits. 139 Table of Contents 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.
During the periods reported, the modeled effects on the EVE remained within established Company risk limits. 137 T able of Contents 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.
These limits are reviewed annually or more frequently as believed appropriate, based on various factors, including capital levels and earnings. 140 Table of Contents The following table sets forth information regarding our interest rate sensitivity due to the maturities of our interest bearing assets and liabilities as of December 31, 2022.
These limits are reviewed annually or more frequently as believed appropriate, based on various factors, including capital levels and earnings. 138 T able of Contents The following table sets forth information regarding our interest rate sensitivity due to the maturities of our interest bearing assets and liabilities as of December 31, 2023.
The following table shows the sensitivity of our EVE as a function of interest rate changes as of the periods presented: Change in equity (1) December 31, 2022 2021 Change in Interest Rates (Basis points) Increase of 200 (7.97) % (9.60) % Increase of 100 (3.06) % (3.23) % Decrease of 25 (2) — % 0.16 % Decrease of 50 (3) 3.08 % — % Decrease of 100 (3) 4.11 % — % Decrease of 200 (3) 4.95 % — % __________________ (1) Represents the percentage of equity change in a static balance sheet analysis assuming interest rate shocks are instant and parallel to the yield curves for the various interest rates and indices that affect our net interest income.
The following table shows the sensitivity of our EVE as a function of interest rate changes as of the periods presented: Change in equity (1) December 31, 2023 2022 Change in Interest Rates (Basis points) Increase of 200 (4.66) % (7.97) % Increase of 100 (0.38) % (3.06) % Decrease of 50 3.61 % 3.08 % Decrease of 100 1.83 % 4.11 % Decrease of 200 2.73 % 4.95 % __________________ (1) Represents the percentage of equity change in a static balance sheet analysis assuming interest rate shocks are instant and parallel to the yield curves for the various interest rates and indices that affect our net interest income.
The following table shows the sensitivity of our net interest income as a function of modeled interest rate changes: Change in earnings (1) December 31, (in thousands, except percentages) 2022 2021 Change in Interest Rates (Basis points) Increase of 200 $ 27,580 7.9 % $ 14,442 6.7 % Increase of 100 18,320 5.3 % 9,441 4.4 % Decrease of 25 (2) — — % (2,971) (1.4) % Decrease of 50 (5,683) (1.6) % (6,025) (2.8) % Decrease of 100 (3) (11,548) (3.3) % — — % Decrease of 200 (3) (34,279) (9.8) % — — % __________________ (1) Represents the change in net interest income, and the percentage that change represents of the base scenario net interest income.
The following table shows the sensitivity of our net interest income as a function of modeled interest rate changes: Change in earnings (1) December 31, (in thousands, except percentages) 2023 2022 Change in Interest Rates (Basis points) Increase of 200 $ 20,487 6.1 % $ 27,580 7.9 % Increase of 100 15,618 4.7 % 18,320 5.3 % Decrease of 50 (3,923) (1.2) % (5,683) (1.6) % Decrease of 100 (10,273) (3.1) % (11,548) (3.3) % Decrease of 200 (21,290) (6.3) % (34,279) (9.8) % __________________ (1) Represents the change in net interest income, and the percentage that change represents of the base scenario net interest income.
This table shows the result of this test as of December 31, 2022 and 2021: Change in market value (1) December 31, (in thousands) 2022 2021 Change in Interest Rates (Basis points) Increase of 200 $ (116,288) $ (108,280) Increase of 100 (59,755) (50,320) Decrease of 25 (2) — 10,811 Decrease of 50 30,527 21,439 Decrease of 100 (3) 60,578 — Decrease of 200 (3) 115,225 — __________________ (1) Represents the amounts by which the investment portfolio mark-to-market would change assuming rate shocks that are instant and parallel to the yield curves for the various interest rates and indices that affect our net interest income.
This table shows the result of this test as of December 31, 2023 and 2022: Change in market value (1) December 31, (in thousands) 2023 2022 Change in Interest Rates (Basis points) Increase of 200 $ (112,010) $ (116,288) Increase of 100 (54,182) (59,755) Decrease of 50 34,956 30,527 Decrease of 100 55,312 60,578 Decrease of 200 112,809 115,225 __________________ (1) Represents the amounts by which the investment portfolio mark-to-market would change assuming rate shocks that are instant and parallel to the yield curves for the various interest rates and indices that affect our net interest income.
Economic Value of Equity Analysis We use economic value of equity, or EVE, to measure the potential change in the fair value of the Company’s asset and liability positions, and the subsequent potential effects on our economic capital.
The Company periodically reviews the scenarios used for earnings sensitivity to reflect market conditions. Economic Value of Equity Analysis We use economic value of equity, or EVE, to measure the potential change in the fair value of the Company’s asset and liability positions, and the subsequent potential effects on our economic capital.
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.
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. 136 T able of Contents Net interest income in the base scenario, decreased to approximately $336.0 million in December 31, 2023 compared to $349.0 million in December 31, 2022.
The average duration of our investment portfolio increased to 4.9 years at December 31, 2022 compared to 3.6 years at December 31, 2021. The increase in duration was mainly d ue to lower expected and actual mortgage-backed securities prepayments resulting from increased market interest rates.
The average duration of our investment portfolio slightly increased to 5.0 years at December 31, 2023 compared to 4.9 years at December 31, 2022. The slight increase in duration was mainly due to lower mortgage-backed securities prepayments. Additionally, the floating rate portfolio slightly increased to 13.3% at December 31, 2023 from 13.2% at December 31, 2022.
Those limits correspond to the capital ratios that we would report taking into consideration the interest increase scenarios modeled.
We monitor our interest rate exposures monthly through the ALCO, and seek to manage these exposures within limits established by our Board of Directors. Those limits correspond to the capital ratios that we would report taking into consideration the interest increase scenarios modeled.
This information may not be indicative of our interest rate sensitivity position at other points in time. In addition, ALM considers the distribution of amounts indicated in the table, including the maturity date of fixed-rate instruments, the repricing frequency of variable-rate financial assets and liabilities, and anticipated prepayments on amortizing financial instruments.
This information may not be indicative of our interest rate sensitivity position at other points in time.
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(2) We discontinued this scenario due to its low probability in 2022 in light of rising interest rates in 2022.
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This decrease is mainly due to: higher cost of total deposits and borrowings.
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(3) We began/resumed modeling this scenario in 2022 due to its higher probability in light of rising interest rates in 2022. 138 Table of Contents Net interest income in the base scenario, increased to approximately $349.0 million in December 31, 2022 compared to $217.0 million in December 31, 2021.
Added
December 31, 2023 (in thousands except percentages) Total Less than one year One to three years Four to Five Years More than five years Non-rate Earning Assets Cash and cash equivalents $ 321,872 $ 246,883 $ — $ — $ — $ 74,989 Securities: Debt available for sale 1,217,502 268,654 319,225 170,532 459,091 — Debt held to maturity 226,645 — — — 226,645 — Marketable equity securities 2,534 2,534 — — — — Federal Reserve and FHLB stock 50,294 37,014 — — — 13,280 Loans held for sale 391,419 391,419 — — — — Loans held for investment - performing (1) 6,839,093 4,234,340 1,209,433 636,291 759,028 — Earning Assets $ 9,049,359 $ 5,180,845 $ 1,528,658 $ 806,823 $ 1,444,764 $ 88,269 Liabilities Interest bearing demand deposits 2,560,629 2,560,629 — — — — Saving and money market 1,610,218 1,610,218 — — — — Time deposits 2,297,097 1,509,891 671,752 114,543 912 — FHLB advances (2) 645,000 635,000 10,000 — — — Senior Notes 59,526 — 59,526 — — — Subordinated Notes 29,454 — — — 29,454 — Junior subordinated debentures 64,178 64,178 — — — — Interest bearing liabilities $ 7,266,102 $ 6,379,916 $ 741,278 $ 114,543 $ 30,366 $ — Interest rate sensitivity gap (1,199,071) 787,380 692,280 1,414,398 88,269 Cumulative interest rate sensitivity gap (1,199,071) (411,691) 280,589 1,694,987 1,783,256 Earnings assets to interest bearing liabilities (%) 81.2 % 206.2 % 704.4 % 4,757.8 % N/M __________________ (1) “Loans held for investment - performing” excludes $34.4 million of non-performing loans (non-accrual loans and loans 90 days or more past-due and still accruing).
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These increases were partially offset by higher cost of total deposits. The Company periodically reviews the scenarios used for earnings sensitivity to reflect market conditions.
Added
(2) Includes FHLB advances in the amount of $595.0 million set to mature in 2027 or later, which come with quarterly callable features. N/M Not meaningful. 139
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(2) We discontinued this scenario due to its low probability in 2022 in light of rising interest rates in 2022. (3) We began modeling these scenarios in 2022 due to their higher probability in light of rising interest rates in 2022.
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(2) We discontinued this scenario in 2022 due to its low probability in light of rising interest rates in 2022. (3) We began/resumed modeling this scenario in 2022 due to its higher probability in light of rising interest rates in 2022.
Removed
Additionally, the floating rate portfolio decreased to 13.2% at December 31, 2022 from 10.6% at December 31, 2021. We monitor our interest rate exposures monthly through the ALCO, and seek to manage these exposures within limits established by our Board of Directors.
Removed
December 31, 2022 (in thousands except percentages) Total Less than one year One to three years Four to Five Years More than five years Non-rate Earning Assets Cash and cash equivalents $ 290,601 $ 237,703 $ — $ — $ — $ 52,898 Securities: Debt available for sale 1,057,621 271,932 244,410 178,042 363,237 — Debt held to maturity 242,101 — — — 242,101 — Equity securities with readily determinable fair value not held for trading 11,383 — — — — 11,383 Federal Reserve and FHLB stock 55,575 49,824 — — — 5,751 Loan portfolio-performing (1) 6,882,033 4,630,873 924,246 646,129 680,785 — Earning Assets $ 8,539,314 $ 5,190,332 $ 1,168,656 $ 824,171 $ 1,286,123 $ 70,032 Liabilities Interest bearing demand deposits $ 2,300,469 $ 2,300,469 $ — $ — $ — $ — Saving and money market 1,647,811 1,647,811 — — — — Time deposits 1,728,255 1,474,510 197,889 53,589 2,267 — FHLB advances 906,486 305,000 551,486 50,000 — — Senior Notes 59,210 — 59,210 — — Subordinated Notes 29,284 — — — 29,284 — Junior subordinated debentures 64,178 64,178 — — — — Interest bearing liabilities $ 6,735,693 $ 5,791,968 $ 808,585 $ 103,589 $ 31,551 $ — Interest rate sensitivity gap (601,636) 360,071 720,582 1,254,572 70,032 Cumulative interest rate sensitivity gap (601,636) (241,565) 479,017 1,733,589 1,803,621 Earnings assets to interest bearing liabilities (%) 89.6 % 144.5 % 795.6 % 4,076.3 % N/M __________________ (1) “Loan portfolio-performing” excludes $37.6 million of non-performing loans (non-accrual loans and loans 90 days or more past-due and still accruing).

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