Amerant Bancorp Inc.

Greetings and welcome to the Ameren Third Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. A brief question and answer session will take place after the prepared remarks. As a reminder, this call is being recorded. I would now like to turn the call over to Laura Rossi, Head of Investor Relations and Strategy, Ameren Bank. Thank you, Laura. You may begin.

Thank you, Paul. Good morning, everyone, and thank you for joining us to review Amer and Bancorp's third quarter 2024 results. On today's call are Jerry Plosh, our Chairman and CEO, and Charimar Calderon, our Executive Vice President and CFO. As we begin, please note that discussions on today's call contain forward-looking statements within the meaning of the Securities Exchange Act. In addition, references will also be made to non-GAAP financial measures. Please refer to the company's earnings release for a statement regarding forward-looking statements, as well as for information and reconciliation of non-GAAP financial measures to GAAP measures. I will now turn it over to our Chairman and CEO, Jerry Plush.

Thank you, Laura. Good morning, everyone, and thank you for joining us today to discuss Amarant's third quarter 2024 results. But before we go through our financial results this quarter, I want to take a moment to acknowledge the devastating impact that hurricanes Helene and Milton have had on so many people and businesses. Our thoughts and prayers are with those who are affected by these storms, including our team members, customers, and partners. We are committed to supporting our communities during this difficult time, and we are working diligently to provide assistance and resources to those in need. I'm pleased to report that our Tampa area facilities were spared from any significant damage, Our team members are all okay, and they are back to working with our customers. So now we'll move on to quarter results. I'd like to address up front that this quarter, given our strategic decision to reposition the investment portfolio in conjunction with our successful capital raise in late September, the company recorded a substantial charge to earnings as expected, leading to the loss of $48.2 million we recorded for the quarter. Excluding the losses from the securities repositioning, as well as the rate down on other real estate owned, which we'll cover in detail shortly. Our core pre-provision net revenue was strong at $31.3 million. Note that results were also impacted by an elevated level of provision expense, which, while comparable to the second quarter, was necessary to address certain non-performing loans in the quarter, again, as we previously disclosed. Otherwise, our core business demonstrated strong performance, highlighted by solid organic loan and deposit growth. continued improvement in net interest income, and stability in the net interest margin. Shari will review these components in greater detail in just a few minutes. So let's start with the balance sheet on slide three. And here you can see that we officially crossed the $10 billion mark as total assets reached $10.38 billion as of the close of the third quarter, an increase over the $9.75 billion in the second quarter. Our cash and cash-in equivalents increased $361.5 million to $6.6 $171.8 million, compared to just $310.3 million in the second quarter of 2024. Our total investments remained relatively unchanged at $1.54 billion. You'll notice when Sherry covers investments in greater detail in a few minutes the significant improvement in AOCI from 2Q24, which resulted from the combination of improved valuations throughout the quarter and what was realized at quarter end due to the investment portfolio repositioning. Our total gross loans increased by $239.1 million to $7.56 billion from the $7.32 billion in the second quarter, all driven by organic loan growth. The loan pipeline is strong here in the fourth quarter, as we've already closed on approximately $123 million in loan production in the fourth quarter. And we expect to end the quarter with approximately $400 to $450 million in total production. Our total deposits increased by $294.9 million, to $8.11 billion compared to $7.82 billion in the second quarter as organic deposit growth continues to be strong. You'll note that we increased Federal Home Loan Bank advances by $150 million as we continue to position our balance sheet and execute on prudent asset liability management by adding some duration to our funding. Our total capital ratio as of the third quarter was 12.66% compared to 11.88% at the end of the second quarter. And our CET1 was 10.6% compared to 9.6%. But please note that we expect our CET1 to be at approximately 11.2% after we close on the Houston transaction in early November, and that will remain above 11% in 2025 as projected earnings support growth. You'll note that our changeable equity ratio was up to 8.48%, which includes the AOCI adjust reference resulting from the after-tax change in the valuation of our AFS investment portfolio. And then lastly, as of the third quarter, our Tier 1 capital ratio was 11.31%, compared to 10.34% as of the second quarter. We'll turn now to take a look at the income statement on slide four. And again, here's the diluted loss per share from the third quarter was $1.43 compared to 15 cents in diluted income per share in the second quarter. This again was primarily due to the losses recorded in the securities during the quarter and the other real estate owned loss recorded as previously noted. Our net interest margin was 3.49% in the third quarter compared to 3.56% in the second quarter. The decrease in margin resulted primarily from higher average balances in MPLs along with higher average balances in interest bearing liabilities. Our net interest income, however, was $81 million. It was up $1.6 million from the $79.4 million we recorded in the second quarter, and that's primarily driven by higher loan balances during the quarter. Our provision for credit losses was $19 million, down slightly from $19.2 million in the second quarter. Improving credit quality continues to be a major area of focus for us, and I'll cover more on this in my closing remarks. Our non-interest income decreased to negative 47.7 million, primarily due to the repositioning of the securities portfolio. Our non-interest income, however, excluding the securities losses, was 20.8 million. Our non-interest expense increased to 76.2 million, and that's inclusive of the nearly 6 million in REO valuation expense. And our pre-provision net revenue was a loss of $42.9 million compared to PPNR of $25.5 million in the second quarter of 24. However, PPNR excluding non-routine items and non-interest income and expense was $31.3 million, as I previously referenced, compared to the $31 million recorded in the second quarter. You'll also note that both non-interest income and non-interest expense include a $1.6 million impact from the unwinding of a swap in connection to the sale of a non-performing loan. So if we exclude this item, both non-interest income and non-interest expense are more in line with what we guided to last quarter. We'll turn now to slide five, and I'll cover a few other items. So you'll note first that we completed our public offering of 8.684,210 shares in Class A voting common stock at a price to the public of $19 a share. And this all occurred on September 27th of 24. This also included 784,210 shares issued upon the exercise in full of the underwriters and their option to purchase additional shares. So the total gross proceeds from the offering were approximately $165 million and net proceeds approximately $155.8 million. We paid our quarterly cash dividend of $0.09 per common share on August 30th of 2024. And our board of directors just approved a quarterly dividend of $0.09 per share payable on November 29th of 2024. We are working on increasing our sources of liquidity, and as such, our borrowing capacity at the end of the quarter with either the Fed or the Federal Home Loan Bank was 1.6 billion. But of note, as of October 21, 2024, after the transfer of additional loan collateral, our borrowing capacity has increased to 2.6 billion. And lastly, our assets under management increased 98.7 million to 2.6 billion driven primarily by market valuations and net new assets. We believe this is a great area of opportunity for us to look to grow fee income on a go-forward basis. You're going to note on slide six, we reintroduced a slide we had previously to provide some details around our updated share count post-transaction. So here you can see we issued approximately 8.7 million shares, which brought total shares outstanding at the close of the third quarter, the 42,103,623 shares, of which approximately 3 million are non-voting shares. So at this point, I'm going to turn things over to Sherry to cover metrics next and get into the financials in greater detail. Sherry?