Amerant Bancorp (NASDAQ: NYSE:AMTB) reported a significant rise in its third-quarter 2023 earnings, with net income attributable to the company reaching $22.1 million, up from $7.3 million in the previous quarter. The company also highlighted a series of strategic moves aimed at improving its balance sheet composition and reducing non-performing assets. It is also preparing for a core conversion in November.
Key takeaways from the call include:
Gross loans decreased by $74 million to $7.1 billion, while total deposits remained relatively flat at $7.5 billion.
* The company repurchased 142,000 shares of common stock and paid out a cash quarterly dividend of $0.09 per share.
* The efficiency ratio improved to 64.1%, and ROA and ROE were 0.92% and 11.93%, respectively.
* Amerant Bancorp entered into an agreement to sell the largest credit exposure in its discontinued New York City portfolio.
The company expects a balance sheet growth of $250 million to $300 million in the next quarter, with strong deposit growth and a decrease in net interest margin.
Amerant Bancorp reported certain costs for new applications and services that will be used in parallel with current applications until early 2024, temporarily increasing the efficiency ratio. The company also highlighted a decrease in the coverage for credit losses to 1.40% from 1.48% in the previous quarter.
The company experienced a decrease in net new assets and market valuations in the second quarter, resulting in a decline in earnings. However, compared to the same quarter last year, there was an increase of $281 million or 15.5%, driven by net new assets and higher market valuations.
Amerant Bancorp is preparing for a conversion to FIS in early November, which will provide a state-of-the-art core system and strengthen cybersecurity infrastructure. The company also plans to open new locations in downtown Miami, Fort Lauderdale, Tampa, and Houston and has entered into partnerships with the University of Miami Hurricanes and the Florida Panthers to enhance brand awareness.
The company discussed plans to gain additional efficiencies throughout 2024 and expects the impact of pricing pressures to be lower in upcoming quarters. In terms of net interest margin, the company expects some compression in the short term but anticipates expansion in 2024.
The company expects a stronger performance in 2024 and is taking measures to improve its efficiency ratio to 60%. It aims to reduce non-performing loans and stabilize credit costs, particularly in the indirect consumer charge-offs, as the portfolio decreases over time. The company is also focused on growing its deposit base and has added new business development officers to its team.
In terms of expenses, Amerant Bancorp expects a range of $59.5 million to $61 million in the fourth quarter, with additional technology-related expenses in 2024. However, it plans to hold expenses flat over time by redeploying costs into other initiatives. The company expects continued growth and aims to focus on continuous improvement efforts in the future.
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