Amerant Bancorp Inc.

Ladies and gentlemen, thank you for standing by and welcome to the AMRIT third quarter 2020 earnings conference call. At this time, our participant lines are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Laura Rossi, Investor Relations Officer at AMRIT Bank. Thank you.

Thank you, Operator. Good morning to everyone on the call, and thank you for joining us to review Amer and Bancorp's third quarter 2020 results. With me this morning are Miller Wilson, Chief Executive Officer, Carlos Gafiliola, Chief Financial Officer, Miguel Palacios, Chief Business Officer, and T.L. Fisher, Credit Risk Manager. Before we begin, note that the company's press release Comments made on today's call and responses to your questions contain forward-looking statements. The company's business and operations are subject to a variety of risks and uncertainties, many of which are beyond its control, and consequently, actual results may differ materially from those expressed or implied. Please refer to the cautionary notices regarding forward-looking statements in the company's earnings release and presentation. For a more complete description of these and other possible risks, please refer to the company's annual report on Form 10-K for the year ended December 31st, 2019, and quarterly reports on Form 10-Q for the quarters ended March 31st, 2020 and June 30th, 2020, as well as the subsequent filings with the SEC. You can access these filings on the SEC's website. Please note that AMARANT has no obligation and makes no commitment to update or publicly release any revisions to forward-looking statements in order to reflect new information or subsequent events, circumstances, or changes in expectations, except as required by law. Should also note that company's press release, earnings presentation, and today's call include references to certain adjusted financial measures. also known as non-GAAP financial measures. Please refer to Appendix 1 of the company's earnings presentation for a reconciliation of each non-GAAP financial measure to its most comparable GAAP financial measure. I will now turn the call over to Mr. Wilson.

Mr. Good morning, and thank you for joining Amaranth's third quarter 2020 earnings call. As I did in the past few quarters, I will begin by discussing how Ameren continues to navigate the current environment, including an update around initiatives to put in place to mitigate the impact of the COVID-19 pandemic and our third quarter highlights. Carlos will then review our financial performance for the quarter in further detail. After our prepared remarks, Carlos, Miguel, Tiel, and I will discuss questions. On slide three, we continue to support our employees, customers, and communities throughout the third quarter as we executed against our business continuity plan. On the operational side, we began to roll out a new phase of reintroducing an increased number of employees back to the office, excluding those who faced challenges related to the pandemic that could prevent them from returning. To support these efforts, we have ramped up safety protocols, including implementing staggered schedules in an abundance of caution to protect the health and safety of our employees. Ameren banking centers continue to operate on a regular schedule under strict federal, state, and local government safety guidelines. Additionally, we continue many of the liquidity and risk management practices implemented earlier this year as a result of the pandemic, including proactive, careful, and frequent credit quality assessments of all portfolios. We particularly focused on loans in the most vulnerable industries that have been hardest hit by the pandemic and tightened our underwriting practices to enhance risk mitigation against the challenging market backdrop. While we continued waiving fees in the third quarter, with the exception of late payment fees on loans, we continued to offer loan payment relief options to customers. As of the close of the third quarter, Ameren has only received a limited number of requests for additional payment extensions, which our team is carefully evaluating. Notably, loans under deferral and or forbearance decreased significantly to 71.8 million, or just 1.2% of total loans as of October 23rd, from 654.4 million at the end of the second quarter and 1.1 billion at the beginning of the program in April. Most importantly, 99.9% of loans out of forbearance have resumed regular payments, and 94% of the loans that remain under deferral and or forbearance are backed by real estate collateral. Impressively, Ameren no longer has any deferrals or forbearance on our hotel loan portfolio, which is one of the most impacted industries by this pandemic. This represents a significant improvement to the outlook of our credit quality for future quarters. As we head into the fourth quarter, we will continue to focus on monitoring the performance of all segments of the loan portfolio while providing relief to customers in our communities. We also plan to leverage our new small business relationships as a result of our PPP participation to execute on cross-selling opportunities and drive profitability. Please turn to our third quarter highlights on slide four. I would like to start off by discussing the third section on the slide, credit quality, because I would like to emphasize their success in managing this aspect of our business, despite the current macroeconomic environment. During the quarter, we continued to assess forbearance status and general credit conditions on a daily basis for the entirety of our portfolio, closely examining loans in vulnerable industries, as well as the COVID-19 pandemic. Our efforts were fruitful. In the third quarter, our allowance for loan losses was 1.97%, down from 2.04% in the second quarter, primarily driven by the partial charge-off of the loan to a Miami-based U.S. coffee trader, which we refer to as the coffee trader, mentioned in our two most recent earnings calls. Additionally, we recorded a provision for loan losses of $18 million, which included $5.8 million related to the coffee trader. This compares to the $48.6 million provision in the second quarter. Equally as important, our ratio of allowance to non-performing loans decreased to 1.4 times in the third quarter from 1.5 times in the second quarter. Moving to other highlights, in the third quarter, we recorded net income of $1.7 million compared to a net loss of $15.3 million in the second quarter. I would also note that our non-interest income increased by 2.7% compared to the second quarter, driven by gains on debt security sales. At the same time, our non-interest expenses increased 23.8% quarter over quarter, largely due to higher salaries and employee benefit expenses, which Carlos will explain in more detail. Regarding our balance sheet, total loans were $5.8 billion, up slightly quarter over quarter, mainly driven by solid consumer appetite and increased demand for real estate loans. Total deposits were $5.9 billion, down 2.4% from $6.0 billion in the previous quarter, mainly driven by a reduction of brokered and customer CDs, which declined 101.2 million or 17.2% and 78.9 million or 4.3% respectively during the third quarter. These declines are due to our continued focus on increasing lower cost sources of funds and aggressively lowering CD rates. In the quarter, our cash position remained strong maintaining a substantial borrowing capacity with the Federal Home Loan Bank and a large investment securities portfolio that could be used as collateral for borrowings. Turning to slide five, as I mentioned before, in the quarter we had net income of 1.7 million compared to a net loss of 15.3 million in the second quarter, primarily driven to lower provision for loan losses in the third quarter, offset by higher non-interest expenses and lower net interest income. Our return on assets was 0.08% or 0.16% on an as-adjusted basis. And our earnings per share was 4 cents or 8 cents as an on-adjusted basis. Stockholders' equity was $829.5 million as of September 30, 2020, decreasing by $0.7 million, or 0.1% from the prior quarter, mainly due to the lower net unrealized gains on debt securities available for sale, driven by the sale of debt securities in the quarter, which was partially offset by net income recorded in the same period. Before I let Carlos take you through the quarter in more detail, I want to note that following the close of the third quarter, we announced a voluntary early retirement program and an involuntary service severance plan to better align our operating structure and resources with our business environment. Both plans are to be completed by year-end and result in meaningful future cost savings. I will now hand the call over to Carlos.