•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;

•Our success depends on our ability to compete effectively in highly competitive markets;

•Potential gaps in our risk management policies and internal audit procedures may leave us exposed to unidentified or unanticipated risk, which could negatively affect our business;

•Any failure to maintain effective internal control over financial reporting could impair the reliability of our financial statements, which in turn could harm our business, impair investor confidence in the accuracy and completeness of our financial reports and our access to the capital markets and cause the price of our common stock to decline and subject us to regulatory penalties;

•Changes in accounting standards could materially impact our financial statements;

•Material and negative developments adversely impacting the financial services industry at large and causing volatility in financial markets and the economy may have materially adverse effects on our liquidity, business, financial condition and results of operations;

•Our business may be adversely affected by economic conditions in general and by conditions in the financial markets;

•We are subject to extensive regulation that could limit or restrict our activities and adversely affect our earnings;

•Changes in federal, state or local tax laws, or audits from tax authorities, could negatively affect our business, financial condition, results of operations or cash flows;

•Litigation and regulatory investigations are increasingly common in our businesses and may result in significant financial losses and/or harm to our reputation;

•We are subject to capital adequacy and liquidity standards, and if we fail to meet these standards, whether due to losses, growth opportunities or an inability to raise additional capital or otherwise, our business, financial condition, results of operations, or cash flows would be adversely affected;

•Increases in FDIC deposit insurance premiums and assessments could adversely affect our financial condition;

•Federal banking agencies periodically conduct examinations of our business, including our compliance with laws and regulations, and our failure to comply with any regulatory actions, if any, could adversely impact us;

•The Federal Reserve may require us to commit capital resources to support the Bank;

•We may face higher risks of noncompliance with the Bank Secrecy Act and other anti-money laundering statutes and regulations than other financial institutions;

•Failures to comply with the fair lending laws, CFPB regulations or the Community Reinvestment Act, or CRA, could adversely affect us;

•Our principal shareholders and management own a significant percentage of our shares of voting common stock and will be able to exert significant control over matters subject to shareholder approval;

•The rights of our common shareholders are subordinate to the holders of any debt securities that we have issued or may issue from time to time;

•The stock price of financial institutions, like Amerant, may fluctuate significantly;

•We can issue additional equity securities, which would lead to dilution of our issued and outstanding Class A common stock;

•Certain provisions of our amended and restated articles of incorporation and amended and restated bylaws, Florida law, and U.S. banking laws could have anti-takeover effects;

•We may not be able to generate sufficient cash to service all of our debt, including the Senior Notes, the Subordinated Notes and the Debentures;

•We are a holding company with limited operations and depend on our subsidiaries for the funds required to make payments of principal and interest on the Senior Notes, Subordinated Notes and the Debentures;

•We may incur a substantial level of debt that could materially adversely affect our ability to generate sufficient cash to fulfill our obligations under the Senior Notes, the Subordinated Notes and the Debentures; and

•The other factors and information in this Form 10-K and other filings that we make with the SEC under the Exchange Act and Securities Act. See “Risk Factors” in this Form 10-K.

The foregoing factors should not be construed as exhaustive and should be read together with the other cautionary statements included in this Form 10-K. Because of these risks and other uncertainties, our actual future financial condition, results, performance or achievements, or industry results, may be materially different from the results indicated by the forward-looking statements in this Form 10-K. In addition, our past results of operations are not necessarily indicative of our future results of operations. You should not rely on any forward-looking statements as predictions of future events.

All written or oral forward-looking statements that are made by us or are attributable to us are expressly qualified in their entirety by this cautionary note. Any forward-looking statement speaks only as of the date on which it is made, and we do not undertake any obligation to update, revise or correct any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.

Item 1. ~~Business~~BUSINESS

Our Company

We are a bank holding company headquartered in Coral Gables, Florida, with ~~$8.1~~$9.7 billion in assets, ~~$5.9~~$6.9 billion in loans ~~$6.0~~held for investment, $7.9 billion in deposits, ~~$747.4~~$736.1 million of shareholders’ equity, and ~~$1.6~~$2.3 billion in assets under management and custody (“AUM”) as of December 31, ~~2018.~~2023. 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 ~~U.S.~~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. Fiduciary, investment, ~~and~~ wealth management and mortgage services are provided by the ~~Bank’s national trust company subsidiary, Amerant Trust, N.A., or Amerant Trust, and~~Bank, the Bank’s securities broker-dealer subsidiary, Amerant Investments, Inc., or Amerant ~~Investments. We call these services~~Investments, the Bank’s Grand Cayman based trust company subsidiary, Elant Bank & Trust Ltd., or the Cayman Bank, and ~~entities wealth management.~~Amerant Mortgage, LLC, or Amerant Mortgage.

The Bank was founded in 1979 and is the largest community bank headquartered in Florida. We currently operate 23 banking centers where we offer personal and commercial banking services. The Bank’s primary markets are South Florida, where we are headquartered and operate 1516 banking centers in ~~the~~ Miami-Dade, Broward and Palm Beach ~~counties; the greater~~counties, and in Houston, Texas, ~~area,~~ where we have ~~eight~~six banking centers that serve the nearby areas of Harris, Montgomery, Fort Bend and Waller ~~counties; a loan production office, or LPO,~~counties. We recently opened a new banking center in ~~Dallas, Texas;~~Tampa, FL, where we also expect to open a regional headquarter office in 2024. The Bank intends to open several additional banking centers in 2024 and has obtained Office of the Comptroller of the Currency, or OCC, approval to proceed with each location. The Bank intends to open new locations in downtown Miami, FL and in Ft. Lauderdale, FL in 2024. The Bank also expects to open a new regional headquarter office in Plantation, FL in 2024 as previously announced in the third quarter of 2023.

Amerant Investments is a member of the Financial Industry Regulatory Authority (“FINRA”), the Securities Investor Protection Corporation (“SIPC”) and a ~~LPO~~registered investment adviser with the Securities and Exchange Commission, or SEC. Amerant Investments provides introductory brokerage, investment and transactions services primarily for customers of the Bank. Amerant Mortgage offers a full complement of residential lending solutions including conventional, government, construction, jumbo loans, and other residential lending product offerings.

The Cayman Bank is a bank and trust company domiciled in ~~New York, New York.~~George Town, Grand Cayman. The Cayman Bank operates under a Cayman Offshore Bank license, or B license, and a Trust license and is supervised by the Cayman Islands Monetary Authority, or CIMA. The Cayman Bank has no staff and its fiduciary services and general administration are provided by the staff of the Bank. Approximately 50% of our trust relationships, including those of many of our important foreign customers, employ Cayman Islands trusts and are domiciled in the Cayman Bank. The OCC periodically examines the Bank and reviews the fiduciary relationships and transactions that the Bank manages for the Cayman Bank. In 2023, the Company approved a plan for the dissolution of the Cayman Bank, which is currently expected to be completed in 2024. We ~~currently have 911 FTEs throughout our markets.~~ expect to retain certain trust relationships by migrating them to Florida foreign trust structures.

We have no foreign offices. The Cayman Bank does not maintain any physical offices in the Cayman Islands and has a registered agent in Grand Cayman as required by applicable regulations.

Through the Bank’s subsidiary, CB Reit Holding Corporation, or REIT Hold Co., we maintain a real estate investment trust, CB Real Estate Investments, or REIT, which is taxed as a real estate investment trust. The REIT holds various of the Bank’s real estate loans, and allows the Bank to better manage the Bank’s real estate portfolio.

Our History

From 1987 through December 31, 2017, we were a wholly-owned subsidiary of Mercantil Servicios Financieros, C.A., which we refer to as ~~MSF.~~the “Former Parent”. On ~~March 15,~~August 10, 2018, ~~MSF transferred 100%~~we completed our spin-off from the Former Parent, or the Spin-off. Our shares of ~~our outstanding~~ Class A common stock and Class B common stock, together, the Company Shares, to a newly created Florida common law, non-discretionary, grantor trust, which we refer to as the Distribution Trust or the Trust. See “Item 13. Certain Relationships and Related Party Transactions, and Director Independence.”

On August 10, 2018, we completed our spin-off from MSF, or Spin-off, through the distribution, or Distribution, of 19,814,992 shares of our Class A common stock and 14,218,596 shares of our Class B common stock in each case adjusted for a stock split completed on October 24, 2018. The shares distributed in the Distribution, or Distributed Shares, constituted 80.1% of the total issued and outstanding Company Shares of each class. As a result of the Distribution, each holder of record of MSF’s Class A common stock or Class B common stock on April 2, 2018 received one share of our Class A common stock or one share of our Class B common stock for each share of MSF Class A common stock or Class B common stock, respectively.

The Distributed Shares were registered with the United States Securities and Exchange Commission, or SEC, on Form 10, or the Spin-off Registration Statement. Except for Company Shares held by our affiliates, including Company Shares held in the Distribution Trust on behalf of MSF, the Distributed Shares were freely transferable.

Following the Spin-off, MSF retained 19.9% of our Class A common stock, the Class A Retained Shares, and 19.9% of our Class B common stock, the Class B Retained Shares, in the Distribution Trust,. We call the Class A Retained Shares and the Class B Retained Shares, collectively, the Retained Shares.

~~The Company Shares~~ began trading on the Nasdaq Global Select Market on August 13, 2018.

On December 21, 2018, we completed an initial public offering, the IPO, of 6,300,000 shares of Class A common stock. MSF sold all 4,922,477 shares of its Class A Retained Shares in the IPO. We received no proceeds from MSF’s sale of its Class A Retained Shares in the IPO. We sold 1,377,523 shares of our Class A common stock in the IPO and used all of the proceeds we received to repurchase 1,420,135.66 Class B Retained Shares from MSF.

At December 31, 2018, MSF beneficially owned less than 5% of all of the Company’s outstanding shares of common stock and the Board of Governors of the Federal Reserve System, or the Federal Reserve, determined that MSF no longer controlled the Company for purposes of the Bank Holding Company Act of 1956.

OnIn January ~~23,~~ 2019, we sold an additional ~~229,019~~ shares of our Class A common stock when the underwriters in the IPO completed the partial exercise of their over-allotment option which was granted in connection with the IPO.

In ~~January and February of 2019,~~November 18, 2021, we completed ~~private placements whereby we issued and sold 1,903,846~~a clean-up merger resulting in the simplification of our capital structure by automatically converting shares of ~~our~~the Company’s Class B common stock into shares of the Company’s Class A common stock. November 17, 2021 was the last day of trading of the Company’s shares of Class B common stock on “The NASDAQ Stock Market LLC (“NASDAQ”) after which only the Company’s shares of Class A common stock ~~pursuant~~traded on the NASDAQ under the symbol “AMTB”.

On August 3, 2023, the Company provided written notice to ~~a series~~NASDAQ of ~~stock purchase agreements. On February 28, 2019, we used~~its determination to voluntarily withdraw the ~~proceeds from the exercise~~principal listing of the ~~underwriters’ over-allotment option and the private placements to repurchase from MSF all of the remaining Class B Retained Shares. Following this repurchase, MSF no longer owns any Company Shares.~~

~~Our~~Company’s Class A common stock, $0.10 par value per share (the “Class A common stock”), from NASDAQ and ~~Class B common stock is listed~~transfer the listing of the Common Stock to the New York Stock Exchange (“NYSE”). The Company’s Common Stock listing and trading on NASDAQ ended at market close on August 28, 2023, and trading commenced on the ~~Nasdaq Global Select Market~~NYSE at market open on August 29, 2023 where it continues to trade under the ~~trading symbols~~stock symbol “AMTB” ~~and “AMTBB,” respectively.~~.

~~New Brand~~

We are rebranding our Company as Amerant. We believe our new name and logo will identify us as separate and distinct from MSF and promote our strategic focus as a community bank with its own identity. All the entities in our organization are adopting the new name and logo, and the Company will formally change its name, subject to shareholders approval, following our 2019 annual shareholders’ meeting. We changed the Nasdaq Global Select Market trading symbols for our Class A common stock and Class B common stock to “AMTB” and “AMTBB,” respectively, to reflect the new brand.

~~Our Segments~~

~~We report our results of operations through four segments: Personal and Commercial Banking, or PAC, Corporate LATAM, Treasury and Institutional.~~

The PAC segment represents the largest contributor to our results in terms of loan and deposit volumes and income, representing, among others, the following businesses: CRE, middle market, commercial (both domestic and international), small business and personal, family and household clients (both domestic and international). This segment is supported by the Bank’s 15 banking centers in Florida, eight in Texas and two LPOs, one in New York, New York, and one in Dallas, Texas, which we recently opened, along with a wide array of products and services offered by the Bank.

Corporate LATAM serves Tier 1 financial institutions and a select number of companies in the target countries of Brazil, Chile, Peru, Colombia and Mexico. Corporate LATAM customers generally have over $1.0 billion in annual sales and operate in several large industries.

Treasury manages certain elements of the Bank’s balance sheet, including liquidity, duration, economic values and general asset/liability management, or ALM. Therefore, it derives a significant portion of its results from its securities portfolio management activities. These activities seek to maintain an adequate combination of profitability, liquidity, interest risk and credit risk in the Bank’s investment portfolio in support of our overall strategic goals, including capital preservation. Through the timing of its purchases and sales to achieve these objectives, Treasury historically has also generated revenue during volatile economic periods. In addition, Treasury, together with PAC, participates in the offering of derivative instruments to our borrowers seeking to hedge changes in their loan interest rates.

~~The activities of our Institutional segment relate to institutional or corporate overhead activities, including those of Amerant Trust and Amerant Investments.~~

Our Markets

Our primary market areas are South Florida ~~the greater~~(Miami-Dade, Broward and Palm Beach counties), Tampa, FL and Houston, ~~Texas and the greater New York City area, especially the five New York City boroughs.~~Texas. We serve our market areas from our headquarters in Coral Gables, ~~Florida,~~FL and through a network of 1516 banking locations in South Florida, ~~and eight~~6 banking locations in ~~the greater~~ Houston, Texas ~~area.~~and 1 in Tampa, FL. Our subsidiary, Amerant Mortgage, operates its business nationally and has direct access to federal housing agencies.

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”). The 2023 Class A Common Stock Repurchase Program was set to expire on December 31, 2023 and on December 15, 2023, the Company announced that the Board approved to extend the expiration date to December 31, 2024. In 2023, we repurchased an aggregate of 259,853 shares of Class A common stock at a weighted average price of $18.98 per share, under the 2023 Class A Common Stock Repurchase Program. The aggregate purchase price for these transactions was approximately$4.9 million, including transaction costs. At December 2023, the Company had $20 million available for repurchase under this repurchase program.

Amerant Mortgage

As of December 31, 2023 and 2022, the Company had an 100% and 80% ownership interest in Amerant Mortgage, respectively. In the fourth quarter of 2023, the Company increased its ownership interest in Amerant Mortgage to 100% from 80%. This transaction had no material impact to the Company’s results of operations in 2023. In connection with the change in ownership interest, which brought the minority interest share to zero, the Company derecognized the equity attributable to noncontrolling interest of $3.8 million at December 31, 2023, with a corresponding reduction to additional paid-in capital. On March 31, 2022, the Company contributed $1.5 million in cash to Amerant Mortgage, increasing its ownership interest to 57.4% as of March 31, 2022 from 51% as of December 31, 2021. In addition, in the three months ended June 30, 2022, the Company increased its ownership interest in Amerant Mortgage to 80% from 57.4% at March 31, 2022. This change was the result of: (i) two former principals of Amerant Mortgage surrendering their interest in Amerant Mortgage to the Company, when they became full time employees of the Bank (the “Transfer of Subsidiary Shares From Noncontrolling Interest”), and (ii) an additional contribution made by the Company of $1 million, in cash, to Amerant Mortgage in the three months ended June 30, 2022. 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. In 2023, we acquired the remaining ownership interest in Amerant Mortgage as previously mentioned and rightsized staffing given the current rate environment.

Employee Stock Purchase Plan

In 2023, the Company continued to offer its Employee Stock Purchase Plan (“ESPP”) which was approved by shareholders in 2022. The number of shares of Class A common stock issued under the ESPP was 56,927 in 2023 compared to 35,337 in 2022.

The purpose of the ESPP is to provide eligible employees of the Company and its designated subsidiaries with the opportunity to acquire a stock ownership interest in the Company on favorable terms. The ESPP provides for six month offering periods commencing each December 1st and ending on May 31st of the following year and beginning on each June 1st and ending on the following November 30th. Our ESPP permits participating employees to purchase shares of our Class A common stock through payroll deductions of no less than 1% and up to 15% of their eligible compensation. Each participating employee is able to purchase a maximum of 5,000 shares of our Class A common stock during an offering period (subject to a limit of $25,000 in fair value of shares of our Class A common stock for each calendar year). The price per share is equal to the lower of 85% of the fair market price on the first trading day of the offering period or 85% of the fair market price on the last trading day of the offering period.

Amerant SPV, LLC

In May 2021, we incorporated Amerant SPV. As we seek to innovate, address customer needs and compete in a fast changing and competitive environment, our Company is looking to partner with fintech and specialty finance companies that are developing cutting edge solutions and products and have the potential to improve our products and services to help our clients achieve their goals in a fast changing world. From time to time, the Company may evaluate select opportunities to invest and acquire non-controlling interests, through Amerant SPV, in companies it partners with, or may acquire non-controlling interests of fintech and specialty finance companies that the Company believes will be strategic or accretive. In addition, through Amerant SPV, we may also invest in companies and funds that invest in technology companies that are developing solutions aimed at allowing financial institutions and community banks to more effectively compete and serve their customers. At December 31, 2023 and 2022, the Company’s equity and non-equity investments through Amerant SPV totaled $7.3 million and $7.6 million, respectively. In 2023, the Company recorded an impairment charge of $2.0 million related to an equity investment carried at cost which are included in other assets in the consolidated balance sheets.

Our Business Strategy

Amerant’s Strategy is designed to improve value for its three most important stakeholders: shareholders, clients, and employees.

Improve shareholder value by achieving top-quartile performance vs. peers

•Bring the entire workforce aligned with a culture of attaining client primacy and driving organic growth

•Measure everything against profitability to ensure prioritization of highest value opportunities.

•Align enterprise-wide focus on executing defined strategic initiatives.

Be the “Bank of Choice” in the markets we serve by earning the Trusted Advisor role to the client

•Deliver a relationship-first, solution-oriented approach.

•Provide consistent, personalized client experiences driven by the proactive delivery of tailored

solutions, relationship-based pricing, and service excellence.

•Create a simple, seamless, and streamlined onboarding and servicing experience.

Be the “Employer of Choice” in the markets we serve by attracting, retaining, developing, recognizing, and

rewarding our team members

•Implement talent development programs that enable our people to pursue career aspirations,

expand their depth of knowledge, and improve their skill set.

•Align incentives to strategic priorities and reward our team members for improving value to our

stakeholders.

Our goals and objectives can be realized through the successful execution of a focused set of high-value Strategic Initiatives. Our Strategic Initiatives include:

•Further Strengthen the Foundation to extract maximum value from our modern technology ecosystem and continuously strengthen our operational and technology infrastructure to keep pace with competitors and enable scalability and organizational agility.

•OurRelationship-first Focus centered on acquiring client relationships with high long-term value potential by creating a culture of sales excellence and analytically empowering our people to deliver personalized experiences, tailored holistic solutions, and earn the role of trusted advisor.

•DriveSuperior Experience and Operational Excellence through enhanced client onboarding, origination, and servicing to deliver streamlined, simple, and satisfying client experiences, reduce expenses, and fortify operational efficiency.

•Attract, Retain, & Reward the Right People: Our people are the cornerstone of our success and have propelled the Bank forward amid numerous challenges. To sustain this momentum, we are committed to developing both internal and external pipelines and aligning incentives to strategic goals to acquire, retain, and reward the right people.

•Profitably Grow the Bank by driving organic growth in priority markets, expanding international banking, developing a proven blueprint for new domestic market entry, and preparing the bank to cross $10 billion in total assets.

Progress on Strategic Initiatives

Further strengthen the foundation. The Company believes that having both the right foundation and the right technology is key to achieve this objective. In 2023, the Company launched a new Amerant website which provides improved user experienced with enhanced navigation and ease of access to information across all device types. Additionally, the Company completed the transition to Fidelity National Information Services’ (“FIS”) core data processing platform which improves our operations as well as upgrades the digital experience for our customers.

Relationship-first focus. We are focused on seizing opportunities in the markets we serve to increase our share of consumer, small business, and commercial core deposits while reducing our reliance on brokered funds. Our growth in 2023 was reflective of our deposits-first, organic, relationship-based approach. 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. 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. The Company continues to work on optimizing its operating structure to support its business activities. In 2023, staff reduction costs include severance expenses, primarily related to severance expenses in connection with employment terminations and changes in certain positions. In addition, the completion of our core system transition to FIS is expected to yield significant annual savings, while allowing us to efficiently scale our business as we grow, achieve greater operational efficiencies and deliver advanced solutions and a superior experience to our customers. The Company is committed to continuous evaluation of staffing levels in all areas on an annual basis based on performance and business need.

Attract, retain & reward the right people. In 2023, we remained committed to developing both internal and external pipelines and aligning incentives to strategic goals to acquire, retain, and reward the right people. We recruited two executives for the previously open positions for a new Head of Commercial Banking and a new Houston market president. We also ~~maintain~~announced the appointment of our new Chief Financial Officer (“CFO”), which completed all expected executive-level changes in management, as our former CFO has now assumed the role of Chief Operating Officer. In addition, we have partnerships in place with universities in our local communities to promote social mobilities in communities we serve and diversify our workforce. We develop our talent through a ~~LPO~~growth mindset by building on existing skills and providing the right resources and opportunities to ensure early career talent can thrive at Amerant.

Profitably grow the Bank. In 2023, we continued to drive organic growth in ~~New York, New York that focuses on originating CRE loans, and~~priority markets. We optimized our international banking structure with the intent to grow international deposits as a ~~LPO~~source of funds given favorable pricing while also continuing to add diversification to our funding base. As previously mentioned, we recently opened a new banking center in ~~Dallas, Texas that originates all types of commercial loans. As~~Tampa, FL as part of our ~~strategic plan,~~ongoing efforts in ~~addition to expansion in our~~capturing domestic market ~~areas, we may further diversify our markets through entry into other large metropolitan markets, especially in other major cities in Texas. Expansion may include LPOs and banking centers.~~share,

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. Our lending policies do not provide for any loans that are highly speculative, subprime, or that have high loan-to-value ratios. These components, together with active credit management, are the foundation of our credit culture, which we believe is critical to enhancing the long-term value of our organization to our customers, employees, shareholders and communities.

Credit Concentrations. In connection with the management of our credit portfolio, we actively manage the composition of our loan portfolio, including credit concentrations. Our loan approval policies establish concentration limits with respect to industry and loan product type to ensure portfolio diversification, which are reviewed at least annually. The CRE concentration limits include sub-limits by type of property and geographic market, which are reviewed semi-annually. Country limits for loans to foreign borrowers are also assessed ~~semi-annually.~~annually. In general, all concentration levels are monitored on a monthly basis.

Loan Approval Process. We seek to achieve an appropriate balance between prudent and disciplined underwriting and flexibility in our decision-making and responsiveness to our customers. As of December 31, ~~2018,~~2023, the Bank had a legal lending limit of approximately ~~$132.6~~$144.7 million for unsecured loans, and its “in-house” single obligor lending limit was $35.0 million for CRE loans, representing ~~26.40%~~24.2% of our legal lending limit and $30.0 million for all other loans, representing ~~22.63%~~20.7% of our legal lending limit as of such date. Our credit approval policies provide the highest lending authority to our credit committee, as well as various levels of officer and senior management lending authority for new credits and renewals, which are based on position, capability and experience. These limits are reviewed periodically by the Bank’s ~~board~~Board of ~~directors.~~Directors. 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. Our underwriting policies and practices govern the risk profile and credit and geographic concentration of our loan portfolio. We also have what we believe to be a comprehensive methodology to monitor these credit quality standards, including a risk classification system that identifies possible problem loans based on risk characteristics by loan type as well as the early identification of deterioration at the individual loan level.

Credit risk management involves a collective effort among our ~~loan officers~~relationship managers and credit underwriting, credit administration, credit risk and collections personnel. We generally conduct weekly credit committee meetings to approve loans at or above $20 million (loans for customers with an aggregate exposure equal to or above $20 million are also considered by the credit committee) and review any other credit related matter. ~~Once~~In addition, starting in the third quarter of 2021, the credit committee also began weekly reviews of the non-performing loan portfolio, with a ~~month,~~goal of prudently reducing the ~~asset~~levels of these non-earning assets. Asset quality trends and delinquencies are also reviewed by the credit committee and reports are elevated to senior management and the ~~board~~Board of directors. Our evaluation and compensation program for our loan officers includes significant asset quality goals, such as the percentage of past due loans and charge-offs to total loans in the officer’s portfolio, that we believe motivate the loan officers to focus on the origination and maintenance of high quality credits consistent with our strategic focus on asset quality.

~~The Bank’s Credit Committee holds monthly meetings to discuss credit quality trends, including past due status and changes to loan performance.~~Directors. Our policies require rapid notification of delinquency and prompt initiation of collection actions. ~~Loan officers,~~Relationship managers, credit administration personnel and senior management proactively support collection activities. The variable incentive compensation of our relationship managers is subject to downward adjustment based on the asset quality of each relationship manager’s portfolio. 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 provide a full range of deposit products and services, including a variety of checking and savings accounts, certificates of deposit, money market accounts, debit cards, remote deposit capture, online banking, mobile banking, ~~e-Statements~~ and direct deposit services. We also offer business accounts and cash management services, including business checking and savings accounts and treasury management services for our commercial clients. We solicit deposits through our relationship-driven team of dedicated and accessible bankers, through community-focused marketing and, increasingly, through ~~community focused marketing.~~our dedicated national online channel. We also seek to cross-sell deposit and wealth management products and services at loan origination, and loans to our depository and other customers. Our deposits are fully-insured by the Federal Deposit Insurance Corporation (“FDIC”), subject to applicable limits. See “-Supervision and Regulation.”

~~We utilize brokered deposits.~~ As of December 31, ~~2018~~2023 and ~~2017,~~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.

As of December 31, 2023 and 2022, we had brokered deposits of ~~$642.1~~$736.9 million and ~~$780.0~~$629.3 million, ~~10.6%~~9.3% and ~~12.34%~~8.9% of our total deposits at those dates, respectively.

Following the Spin-off, we have sought to continue to increase our share of domestic deposits by continuing our banking center expansion and redevelopment plans and focusing on improved efficiency and customer satisfaction.

Investment, Advisory and Trust Services

We offer a wide variety of trust and estate planning products and services ~~through Amerant Trust. Catering~~catering to high net worth customers, our trust and estate planning products include simple and complex ~~trusts;~~trusts, private ~~foundations;~~foundations, personal investment companies and escrow accounts. ~~Amerant Trust also acts as~~

The Cayman Bank serves a ~~U.S. fiduciary responsible~~number of our trust and wealth management customers, and developed high net worth international customer relationships with offshore trust and estate planning services. In 2023, the Company approved a plan for ~~managing trust or escrow assets, provides custody services, and provides trust administrative services to MSF’s non-U.S. affiliates, including~~the dissolution of the Cayman Bank, which ~~we plan~~is expected to acquire from MSF, as discussed below. See “Item 13. Certain Relationships and Related Party Transactions, and Director Independence.” Amerant Trust’s wholly-owned subsidiary, CTC Management Services, LLC, provides corporate and ancillary administrative services for Amerant Trust’s fiduciary relationships.

be completed in 2024. We expect to retain certain trust relationships by migrating them to Florida foreign trust structures.

We also offer brokerage and investment advisory services in global capital markets through Amerant ~~Investments, which is a member of FINRA, the Securities Investor Protection Corporation (SIPC) and a registered investment adviser with the SEC.~~Investments. Amerant Investments acts as an introducing broker-dealer through Pershing (a wholly-owned subsidiary of The Bank of New York Mellon) to obtain clearing, custody and other ancillary services. Amerant Investments offers a wide range of products, including mutual funds, exchange-traded funds, equity securities, fixed income securities, structured products, discretionary portfolio management, margin lending and online equities trading. Amerant Investments has distribution agreements with many major U.S. and international asset managers, as well as with some focused boutique providers. Amerant Investments provides its services to the Bank’s U.S. domestic and international ~~customers mainly in the PAC segment.~~customers. The Bank’s retail customers are offered non-FDIC insured investment products and services exclusively through Amerant Investments.

MSF indirectly, through its Panama holding company, currently owns 100% of Mercantil Bank and Trust Limited (Cayman), or the Cayman Bank, a bank and trust company located in St. George, Grand Cayman. The Cayman Bank operates under a Cayman Offshore Bank license, or B license, and a Trust license and is supervised by the Cayman Islands Monetary Authority, or CIMA. The Cayman Bank has no staff and its fiduciary services and general administration are provided by the staff of Amerant Trust and the Bank, respectively, under separate agreements. Approximately 50% of our trust relationships, including those of many of our important foreign customers, employ Cayman Islands trusts and are domiciled in the Cayman Bank. The OCC periodically examines the Bank and Amerant Trust and reviews the fiduciary relationships and transactions that Amerant Trust and the Bank manage for the Cayman Bank.

We have historically operated and managed the Cayman Bank as part of our service agreements with MSF. The Cayman Bank serves a number of our trust and wealth management customers. The Bank intends to acquire the Cayman Bank from a MSF subsidiary for cash at its fair market value based on the Cayman Bank’s shareholder’s equity, adjusted to reflect income and losses to the closing date and purchase accounting adjustments, including the mark to market of all assets and liabilities at the closing date, plus a premium of $885,000. The premium is based upon a valuation of the Cayman Bank prepared for us by Hovde Group, an investment banking firm. Based on the Cayman Bank’s December 31, 2018 balance sheet, the estimated purchase price would be approximately $13.4 to $14.4 million. We anticipate that the necessary bank regulatory approvals will take 3 to 6 months to complete. The acquisition is expected to be completed promptly after the receipt of the last required bank regulatory approval. See “Item 13. Certain Relationships and Related Party Transactions, and Director Independence.”

This acquisition is subject to the negotiation of a definitive agreement and the receipt of necessary Federal Reserve and CIMA regulatory approvals. Prior to the completion of the acquisition, we expect to continue the existing fiduciary services and general administrative services agreements with Amerant Trust and the Bank, subject to any regulatory requirement. The continuation of these services, as well as the continued and sole designation of our officers and directors, including Mr. Wilson, as officers or directors of the Cayman Bank will protect our customers’ interests pending the proposed acquisition.

Other Products and Services

We offer banking products and services that we believe are attractively priced with a focus on customer convenience and accessibility. 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 ~~ATMs,~~automated teller machines (“ATMs”), and banking by mobile ~~device,~~devices, telephone and mail. 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. Amerant also currently provides its customers with an Overdraft Protection program, which allows customers to link eligible checking accounts to automatically transfer available funds from backup account(s) to cover transactions that exceed their available balance.

Many of the services provided inthrough our online platform are also available via our mobile application for smart devices. We also offer debit cards, ~~credit cards to our international customers,~~ night ~~depository,~~depositories, direct deposit, cashier’s checks, safe deposit boxes in various locations and letters of credit, as well as treasury management services, including wire transfer services, remote deposit capture and automated clearinghouse services. In addition, we offer other more complex financial products such as derivative instruments, including interest rate swap and cap contracts, to ~~our most~~more sophisticated ~~commercial real estate~~ lending customers.

Investments

Our investment policy, set by our ~~board~~Board of ~~directors,~~Directors, requires that investment decisions ~~are~~be made based on, but not limited to, the following four principles: investment quality, liquidity requirements, interest-rate risk sensitivity and estimated return on investment. These characteristics are pillars of our investment decision-making process, which seeks to minimize exposure to risks while providing a reasonable yield and liquidity. ~~The investment policy is carried out by Treasury in coordination with ALCO.~~ Under the direction of ~~ALCO~~the Asset-liability Management Committee (“ALCO”) and ~~Treasury, the Bank employees have delegated authority to invest~~senior management, investment in securities ~~within~~are made following specified policy and program guidelines.

Information Technology Systems

~~We continue~~As part of our continued efforts to ~~make significant investments in~~improve our information technology ~~systems for our deposit~~platforms and ~~lending operations~~drive operating efficiency, in the fourth quarter of 2021 the Company entered into a new multi-year outsourcing agreement with financial technology leader FIS to assume full responsibility over a significant number of the Bank’s support functions and ~~treasury management activities. We believe that these investments,~~staff, including additional technology changes to implement our strategic plan, are essential to increase our overall customer experience, to support our compliance, internal controls and efficiencies, to enhance our capabilities to offer new products, and to provide scale for future growth and acquisitions. We license ourcertain back-office operations. The Company completed the transition of its core data processing platform ~~from a nationally recognized bank software vendor, which provides us with~~and other applications in the fourth quarter of 2023. We believe these platform and applications have essential functionalities and scalability to support our continued ~~growth. Our internal network~~growth and ~~the majority of key applications are maintained in-house. The scalability of our infrastructure is designed to support our~~ expansion strategy. ~~In addition, we leverage~~Under this outsourcing relationship, the ~~capabilities of third-party service providers~~Bank expects to ~~augment the technical capabilities~~achieve greater operational efficiencies and ~~expertise that is required for us~~ to ~~operate as an effective~~deliver advanced solutions and ~~efficient organization. We believe our management of these third-party relationships complies with FFIEC’s guidelines.~~services to its customers.

The Bank is actively engaged in identifying and managing cybersecurity risks. Protecting company data, non-public customer and employee data, and the systems that collect, process, and maintain this information is deemed critical. The Bank has an enterprise-wide Information Security Program, or Security Program, which is designed to protect the confidentiality, integrity and availability of customer non-public information and bank data. The Security Program iswas also designed to protect our operations and assets through a continuous and comprehensive cybersecurity detection, protection and prevention program. 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. Cybersecurity for additional information on how we address and manage cybersecurity risks.

The Bank also has a business ~~continuity~~continuity/disaster recovery plan, or BCP, which it actively manages to prepare for any business continuity challenges it may face. Our ~~business continuity/disaster recovery plan~~BCP provides for the resiliency and recovery of our operations and services to our customers. The plan is supported and complemented by a robust business continuity governance framework, a life safety program as well as an enterprise-wide annual exercise and training to keep the program and strategies effective, scalable and understood by all employees. We believe both the Information Security Program and ~~business continuity programs~~BCP adhere to industry best practices and comply with the ~~FFIEC’s~~ guidelines of the Federal Financial Institutions Examination Council, or FFIEC, and are subject to periodic testing and independent audits.

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 also compete with mortgage companies, brokerage firms, trust service providers, consumer finance companies, mutual funds, securities firms, insurance companies, third-party payment processors, ~~fintech~~financial technology companies, or fintechs, and other financial intermediaries on various of our products and services. Some of our competitors are not subject to the regulatory restrictions and the level of regulatory supervision applicable to us.

Interest rates on loans and deposits, as well as prices on fee-based services, are typically significant competitive factors within the banking and financial services industry. Many of our competitors are much larger financial institutions that have greater financial resources than we do and compete aggressively for market share. These competitors attempt to gain market share through their financial product mix, pricing strategies and larger banking center networks. Other important competitive factors in our industry and markets include office locations and hours, quality of customer service, community reputation, continuity of personnel and services, capacity and willingness to extend credit, electronic delivery systems and ability to offer sophisticated banking products and services. 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~~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.~~customers and employees.

Human Capital Management

The Company’s key human capital management objectives are to attract, retain and develop the highest quality talent. To support these objectives, the Company’s human resources programs are designed to continuously develop talent; reward and support our team members through competitive pay and benefits; enhance the Company’s culture through efforts aimed at making the workplace more engaging and inclusive; and engage team members as brand ambassadors of our products and experiences.

Guided by our core values, the people at Amerant are committed to providing our customers with the right products, services and advisory services; treating everyone as we expect to be treated; being leaders in innovation, quality, efficiency, and customer satisfaction; consistently exceeding expectations; promoting a diverse and inclusive work environment; holding ourselves and each other accountable; and being the bank of choice in the markets we serve. We believe we have a strong workforce, with a good mix of professional credentials, experience, tenure and diversity, which coupled with their commitment to uncompromising values, provide the foundation for our Company’s success.

The Company’s Human Capital Management includes the following areas of focus:

Talent. Attracting, developing, and retaining the best talent with the right skills and values, in accordance with our precepts, is central to our long-term strategy to drive our success.

Our ~~Employees~~

Asworkforce composition is aligned with our business needs. Management trusts it has adequate human capital to operate its business successfully. The Company and its subsidiaries had 682 full-time equivalent employees, or FTEs, at the end of ~~December 31, 2018, we employed 911 FTEs. None~~2023. Approximately 85% of our ~~employees are represented by any collective bargaining unit~~workforce is in Florida, 7% in Texas and 8% in other states to support the growth and expansion of Amerant Mortgage, and Amerant’s remote work program.

Talent acquisition efforts remained focused on sales, business development and revenue generating roles, accounting for 49% of all hires. In addition, temporary resources were contracted to support our customers through the Company’s transition to FIS’ core data processing platform. In 2023, we acquired the talent to support the expansion of our Domestic Retail Banking Division, opening new banking centers in Downtown Miami, Key Biscayne and Tampa. Our talent acquisition team uses internal and external resources to recruit highly skilled and talented workers, and we encourage and reward employee referrals for open positions. We hire the best person for the job without regard to gender, ethnicity or ~~are parties~~other protected traits and it is our policy to ~~a collective bargaining agreement. We consider our relations~~comply fully with ~~our employees~~all federal and state laws relating to ~~be very good and monitor these through annual employee engagement surveys. The Bank has earned an AON’s Regional “Best Employer” award~~discrimination in the ~~last three years. This award recognizes those organization that have made an extraordinary effort to gain a competitive advantage through their people and, in doing so, become employers of choice.~~

~~Other Subsidiaries~~

~~Intermediate Holding Company~~

The Company owns the Bank through our wholly-owned, intermediate holding company, Mercantil Florida Bancorp Inc., or Mercantil Florida. Mercantil Florida is the obligor under the $118.1 million aggregate principal amount of junior subordinated debentures related to our outstanding trust preferred securities. As of December 31, 2018 and 2017, Mercantil Florida had cash and cash equivalents of $32.9 million and $39.1 million, respectively.

~~Voting Trust~~

~~In October 2008, MSF, the Company and various individuals as Voting Trustees, entered into a Voting Trust Agreement, which we call the Voting Trust. The Voting Trust was amended and restated in 2017.~~

The Voting Trust was organized under the laws of Florida and was a grantor trust for federal income tax purposes. It held all the issued and outstanding shares of capital stock of Mercantil Florida, which is the Bank’s immediate parent and sole shareholder. The Voting Trust was a “company” subject to supervision and regulation under the BHC Act. The Voting Trust had issued Voting Trust certificates representing the entire interest in the Voting Trust to the Company. In the event of Control Changes in MSF, the Voting Trustees, could cancel the existing Voting Trust certificates and distribute these to MSF’s shareholders pro rata to preserve the Bank and MSF’s shareholders’ economic interests in the Bank. No Control Change had occurred prior to July 24, 2018.

~~The Voting Trust was terminated on July 24, 2018. The Spin-off made the Voting Trust unnecessary.~~

workplace.

Learning and Development. Our team members are inspired to achieve their full potential through learning and development opportunities, recognition, and motivation. We invest in creating opportunities to help them grow and build their careers through a multitude of learning and development programs. These include online instructor-led and on-the-job learning assignments. 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. We used an online talent development tool to provide team members with various learning options, including instructor-led classroom and virtual courses, on-demand recorded sessions and self-paced web-based courses. We also promoted our partnership with Cornerstone Content Anytime to support our team members' ongoing, ever-changing needs on topics such as leading effectively, overall mental health and well-being, and organizational time management.

The ~~REIT~~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. Additionally, we focused on Digital Sales Enablement by supporting the Digital Transformation team in relaunching our Customer Relationship Management, or CRM, tool, known internally as Harmony.

~~Through~~

We delivered approximately 23,000 learning hours and invested an average of over $1,050 per team member in all our learning programs. To support consistency with maintaining learning hours in alignment with industry standards, we launched a partnership with LinkedIn Learning. This partnership will allow team members to complete learning courses on demand based on individualized development needs.

We also continue offering higher-education tuition cost reimbursement programs, which are aimed at helping our team members put their career goals within reach and provide them with access to a wide variety of degrees and certificates. In 2023 we established a partnership with Westfield Business School, which provides our team members an opportunity to complete an Executive MBA at a low cost.

In addition to the ~~Bank’s subsidiary, CB Reit Holding Corporation, or REIT Hold Co.,~~efforts for learning and development, the executive leadership team has worked to create management succession plans and individual development plans for the officers within the organization. This focus on Talent Management ensures we ~~maintain~~strengthen the organization’s overall capability by identifying critical roles and high-potential team members. The development plans are heavily focused on meeting the organization’s future needs.

As we continue in our efforts to develop and promote women, we launched our Grit and Grace Women’s Development program at the end of 2023. The program aims to elevate and develop high performing, high potential women, as we continue to prepare talent for the senior leadership bench.

Employee engagement. To assess and improve retention and engagement, the Company regularly conducts anonymous surveys to seek feedback from our team members on a ~~real estate investment trust, CB Real Estate Investments, or REIT, which is taxed as a real estate investment trust. The REIT holds various~~variety of topics, including but not limited to confidence in company leadership, the competitiveness of our compensation and benefits package, career growth opportunities, and improvements on how we could make our company an employer of choice.

In 2023 we continued to capture team member sentiments at all stages of the ~~Bank’s real estate loans,~~team member’s life cycle, from onboarding to offboarding. We also launched our annual Engagement Survey. We achieved a 76% Engagement score (As per the Engagement Survey vendor’s thresholds, any score that is above 60% represents extremely high engagement).

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 ~~allows~~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.

As we approached the transition date of our core data processing platform and other applications in the fourth quarter of 2023, we wanted to ensure our team members were ready for the transition. To help team members embrace change and overcome adversity, we partnered with Alec Ingold, Full Back for the Miami Dolphins to lead our team members through four months of “change talks”. This program helped our team members to develop strategies to adapt to change in new ways while also sparking motivation and innovation across our team.

Health and Safety. Consistent with our operating principles, the health and safety of our team members is of top priority. Hazards in the workplace are actively identified and management tracks incidents so remedial actions can be taken to improve workplace safety.

Diversity, Equity and Inclusion (“DEI”). In 2023, the Diversity, Equity and Inclusion program, also known as the I Belong program, continued launching activities within its strategic roadmap, pillars, and goals. Our four pillars focus on Talent, Workplace, Communication, and Community.

Our diversity and inclusion goals are to build teams that reflect the communities we serve while hiring and supporting diverse talent. The ethnicity of our workforce was 76% Hispanic, 17% White, 4% Black, 2% Asian, and 5% other. Our workforce was 47% male and 53% female at the close of 2023, and women represented 51% of Amerant’s middle management leadership (as classified by Equal Employment Opportunity Commission Category “Middle, First Management Officials”). Over 50% of our workforce is female, and most of our workforce self-identifies as Hispanic or Latino. Also, the Bank ~~to better manage~~has a 41% representation of females in senior leadership roles. In addition, the ~~Bank’s real estate portfolio.~~Company’s Board of Directors, which consists of 11 members, currently has 4 female independent directors.

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. The REIT’s outstanding common stock is owned entirely by REIT Hold Co. Of the REIT’s 1,250 issued and outstanding 6.00% preferred shares (par value $750), 1,125 are owned by REIT Hold Co. and 122 are owned by different employeesprogram resulted in five of the ~~Bank.~~six interns being offered continued employment.

~~Dividend Restrictions~~

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 ~~bank holding company,~~focus for 2023. We launched our first Resource Group, “We Are Multicultural” which aims to promote ethnic inclusion across all levels of the organization.

As we continue building a DEI awareness culture, our team member learning programs also reflect our diversity and inclusion pillars. In 2023 we continued our partnership with a learning provider to provide our Executive Leadership team with education on DEI Conscious Inclusion. In addition, team members were assigned a customized Unconscious Bias course to ensure team members have the skills to recognize and counter biases.

For over 20 years, we have championed targeted development programs for underrepresented talent in partnership with the Center for Financial Training, a local chapter of the American Bankers Association.

Total Rewards (compensation and benefits). We believe in a competitive, total rewards program aligned with our business objectives and the interests of our stakeholders. We remain committed to delivering a compensation program with the fundamental principles of fairness, transparency, efficiency, and compliance with laws and regulations. Based on specific job position and market conditions, our total rewards program combines fixed and variable compensation: base salary, short-term incentive, equity-based long-term incentive, and a broad range of benefits. This compensation approach plays a significant role in our ability to ~~pay dividends is affected by~~attract, retain and motivate the ~~policies~~quality of talent necessary to achieve our strategic business goals and ~~enforcement powers~~drive sustained performance. Our ESPP, was the latest benefit rolled out to our team members, which enables them to purchase shares of the ~~Federal Reserve.~~Company’s common stock at a 15% discount with a look-back feature.

Our compensation model encourages team members to contribute towards the achievement of shared corporate objectives, while differentiating pay on performance based on individual contributions. In 2023, the Amerant internal Deposit Referral Fee Program was designed to incentivize our team members for the referral of new deposit business.

Based on our commitment to and knowledge that maintaining fair and transparent compensation principles and a diverse and inclusive culture for our teams has a direct impact on engagement, drive and performance, in 2023, we conducted a high level pay equity analysis to estimate the adjusted gender pay gap. According to the outcome of this analysis Amerant Bank pay gap falls in the low range for a typical U.S. organization and U.S. based commercial bank.

Wellness: The Company takes pride in providing excellent health and wellness benefits to our team members and their families. The benefits package offered includes comprehensive medical, dental, vision, as well as supplemental short and long-term life and out of pocket costs insurance. Along with these benefits we also offer Flexible Spending Accounts (FSA) and Health Savings Accounts (HSA).

Medical Plans: Our nationwide healthcare plans allow full-time and part-time team members to select from multiple health plan options. The company provides competitive medical premiums, including a wellness premium discount when team members complete preventive requirements and completion of a health risk assessment. The Company contributes up to 92% towards the medical premium depending on the tier chosen and whether wellness requirements have been completed. The Company also contributes $500 towards the HSA accounts at the beginning of each year when the team member has the high deductible medical plan for the team member only coverage and $1,000 for all other tiers on the high deductible plans.

Dental, Vision and Legal Plans: Full-time and part-time team members are eligible to participate in our dental, vision, and legal plan offerings. The Company contributes up to 100% depending on the plan and chosen tier and provides access to numerous providers across the country. Team members can also choose to purchase out of pocket insurance policies providing income protection and cash for services with five different plans from accident, short term disability, cancer, hospital indemnity, and critical care. The Legal Plan is an attorney owned and operated legal plan offering comprehensive legal assistance, advice, and discounted representation on all types of legal services.

Life, AD&D and Disability: Group Basic Life and AD&D Insurance is offered to all full-time and part-time team members, at two times their annual salary with a maximum coverage of $300,000. Team members may choose to purchase additional life insurance up to 5 times their annual salary to a max of $750,000. Full time and part-time team members also benefit from free Short & Long-Term Disability insurance.

Retirement Plans: In addition ~~because~~to health insurance benefits, the Company also offers to all team members a tax-qualified retirement contribution plan with the Company’s 100% matching contribution up to 5% of a participant’s eligible compensation, and a non-tax qualified retirement contribution plan to certain eligible highly compensated team members. Our total benefits package supports our team member’s well-being to achieve a healthy and financial lifestyle goal.

Environmental, Social and Governance (“ESG”)

During 2023 we ~~are~~evolved our ESG program to Sustainability Program and named it “Impact” to reflect the scope of our ultimate goal, and in accordance with industry trends. We completed a ~~bank holding company, we are dependent upon~~series of activities within the ~~payment~~scope of ~~dividends by~~ the ~~Bank~~program. In the environmental front, some of those activities included: i) base-lining scope 1 and 2 carbon emissions, defining long-term carbon emission targets and purchasing green-house gas emission offsets to usreach carbon neutrality in 2022 and pre-purchasing carbon emission offsets to cover our calculated baseline scope 1 and 2 carbon emissions for 2023 through 2025; ii) implementing data management tools in our loan and core systems to code and monitor for Environmentally Conscious Financing (“ECF”); iii) establishing a partnership with the Everglades Foundation in South Florida; and (iv) transitioning to the use of ocean bound plastic for all Amerant plastic cards. In the social front, some of those activities included: i) hosting our various Internship Programs in partnership with local colleges and universities in South Florida, which serve as ~~our principal~~a diverse source of ~~funds~~talent; ii) launching Amerant’s Down-payment Assistance Program (“ADAP”) for first-time home buyers through our subsidiary Amerant Mortgage; (iii) performing team member engagement survey and internal fair pay gap assessment based on gender; and (iv) launching “Top Women Performers" Program and mandatory online education course on unconscious bias for all team members. In the governance front, some of those activities included: (i) increasing women and minority representation in our Board of Directors and (ii) integrating sustainability factors into our procurement and third party, strategic and reputational risk frameworks.

In2023, we continued to ~~pay dividends~~advance our Impact Program initiatives and completed a series of activities within the scope of the program. Those activities included: i) pre-purchasing carbon emission offsets to cover our calculated baseline scope 1 and 2 carbon emissions for 2023 through 2025; ii) launching and offering team members an online course on the “Return On Investment (ROI) of Going Green,” as part of our efforts to sponsor environmentally conscious activities; iii) sponsoring the “Dream in Green” program - the ~~future, if any,~~Green Schools Challenge, which engages students in hands-on activities to save energy and ~~to make other payments. The Bank is also subject to various legal, regulatory~~water at school and ~~other restrictions on its ability to pay dividends~~teaches them about the links between natural resources, climate change and ~~make other distributions~~community sustainability; and ~~payments to us. For further information, see “Supervision and Regulation-Payment of Dividends.”~~iv) sponsoring the “Freebee” transportation service in Key Biscayne, FL, which reduces carbon emissions in that geography.

SUPERVISION AND REGULATION

We and the Bank are extensively regulated under U.S. Federal and state laws applicable to financial institutions. Our and the Bank’s supervision, regulation and examination are primarily intended to protect depositors and ~~maintain~~customers, the ~~safety and soundness~~Deposit Insurance Fund (“DIF”) of ~~financial institutions~~the FDIC, and the ~~federal deposit insurance fund generally. Such supervision~~stability of the U.S. financial system and ~~regulation~~ are not intended to protect ~~the holders of~~ our ~~capital stock and other securities issued by us.~~shareholders or debt holders. Any change in applicable law or regulation may have a material effect on our business. The following ~~discussion~~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.

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.~~Act”). Bank holding companies generally are limited to the business of banking, managing or controlling banks, and certain related activities. We are required to file periodic reports and other information with the Federal ~~Reserve. The Federal~~ Reserve, which examines us and our non-bank subsidiaries.

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 holding companies continue to be subject to Federal Reserve supervision, regulation and examination. The Company has not elected to become a financial holding company, but it may elect to do so in the future. Bank holding companies that have not elected such treatment generally must limit their activities to banking activities and activities that are closely related to banking.

The Bank is a national bank subject to regulation and regular examinations by the OCC and is a member of the Federal Reserve Bank of Atlanta. OCC regulations govern permissible activities, capital requirements, branching, dividend limitations, investments, loans and other matters.

The Bank is a member of the FDIC’s DIF, and its deposits are insured by the FDIC up to the applicable limits, and, as a result, it is subject to regulation and deposit insurance assessments by the FDIC. See “FDIC Insurance Assessments”. The FDIC also has backup examination authority and certain enforcement powers over the Bank.

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. If the Bank reports assets over $10 billion for four consecutive quarters, it would meet the FDIC’s definition of a “large financial institution” and would be subject to direct supervision by the CFPB for compliance with a variety of consumer compliance laws, and for assessment of the effectiveness of the Bank’s compliance management system. As we are approaching the $10 billion in assets threshold, in the fourth quarter of 2023 we engaged a consulting firm to perform an assessment of our compliance management system and our risk management program to gauge our preparedness to meet the additional regulatory requirements and CFBP supervision that would be applicable to us after surpassing the threshold. The assessment yielded several observations with recommended actions that have been classified and prioritized based on ratings and will be implemented through action plans beginning in 2024.

Source of Strength

Federal Reserve policy and federal law, require a bank holding company, such as the Company, to act as a source of financial and managerial strength to its FDIC-insured Bank subsidiary, and to commit resources to support its subsidiary, particularly when such subsidiary is in financial distress. In furtherance of this policy, the Federal Reserve may require a bank holding company to terminate any activity or relinquish control of a non-bank subsidiary (other than a non-bank subsidiary of a bank) upon the Federal Reserve’s determination that such activity or control constitutes a serious risk to the financial soundness or stability of any subsidiary depository institution. Further, federal bank regulatory authorities have additional discretion to require a financial holding company to divest itself of any bank or non-bank subsidiary if the agency determines that divestiture may aid the depository institution’s financial condition.

Change in Control

Federal law limits the amount of voting stock of a bank holding company or a bank that a person may acquire without the prior approval of banking regulators. 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. The CBC Act creates a rebuttable presumption of control if a person or group acquires the power to vote 10% or more of our outstanding voting common stock. 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. As a result, our shareholders may be less likely to benefit from the rapid increases in stock prices that may result from tender offers or similar efforts to acquire control of other companies. Investors should be aware of these requirements when acquiring our shares of common stock.

Acquisitions

The BHC Act requires prior Federal Reserve approval for, among other things, the acquisition by a bank holding company of direct or indirect ownership or “control” of more than 5% of the voting shares or substantially all the assets of any bank, or for a merger or consolidation of a bank holding company with another bank holding company. The BHC Act permits acquisitions of banks by bank holding companies, subject to various restrictions, including that the acquirer is “well capitalized” and “well managed”. With certain exceptions, the BHC Act prohibits a bank holding company from acquiring direct or indirect ownership or “control” of voting shares of any company that is not a bank or bank holding company and from engaging directly or indirectly in any activity other than banking or managing or controlling banks or performing services for its authorized subsidiaries. AHowever, a bank holding company may ~~however,~~ engage in or acquire an interest in a company that engages in activities that the Federal Reserve has determined ~~by regulation, or order,~~ to be so closely related to banking, or managing or controlling ~~banks as to be a proper incident thereto.~~banks.

Bank holding companies that are and remain “well-capitalized” and “well-managed,” as defined in Federal Reserve Regulation Y, and whose insured depository institution subsidiaries maintain “satisfactory” or better ratings under the Community Reinvestment Act of 1977 (the “CRA”), 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. In addition, under the BHC Act’s merchant banking authority and Federal Reserve regulations, financial holding companies are authorized to invest in companies that engage in activities that are not financial in nature, as long as the financial holding company makes its investment with the intention of limiting the terms of its investment, does not manage the company on a day-to-day basis, and the investee company does not cross-market with any depositary institutions controlled by the financial holding company. Financial holding companies continue to be subject to Federal Reserve supervision, regulation and examination, but the Gramm-Leach-Bliley Act of 1999 (the “GLB Act”) applies the concept of functional regulation to the activities conducted by their subsidiaries. For example, insurance activities would be subject to supervision and regulation by state insurance authorities. The Federal Reserve recommended repeal of the merchant banking powers in its September 16, 2016 study pursuant to Section 620 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”). The Company has not elected to become a financial holding company, but it may elect to do so in the future.

~~The BHC Act permits acquisitions of banks by bank holding companies, subject to various restrictions, including that the acquirer is “well capitalized” and “well managed”.~~ A national bank located in Florida, with the prior approval of the ~~Office of the Comptroller of the Currency (“OCC”),~~OCC, may acquire and operate one or more banks in other ~~states pursuant to a transaction in which the bank is the surviving bank.~~states. In addition, national banks located in Florida may enter into a merger transaction with one or more out-of-state banks, and an out-of-state bank resulting from such transaction may continue to operate the acquired branches in Florida. ~~The Dodd-Frank Act permits banks, including national banks, to branch anywhere in the United States.~~

The Company is a legal entity separate and distinct from the Bank. Various legal limitations restrict the Bank from lending or otherwise supplying funds to us. We and the Bank are subject to Sections 23A and 23B of the Federal Reserve Act and Federal Reserve Regulation W thereunder.

Section 23A defines “covered transactions,” which include extensions of credit, and limits a bank’s covered transactions with any affiliate to 10% of such bank’s capital and surplus. All covered and exempt transactions between a bank and its affiliates must be on terms and conditions consistent with safe and sound banking practices, and banks and their subsidiaries are prohibited from purchasing low-quality assets from the bank’s affiliates. Finally, Section 23A requires that all of a bank’s extensions of credit to its affiliates be appropriately secured by permissible collateral, generally U.S. government or agency securities. Section 23B of the Federal Reserve Act generally requires covered and other transactions among affiliates to be on terms and under circumstances, including credit standards, that are substantially the same as or at least as favorable to the bank or its subsidiary as those prevailing at the time for similar transactions with unaffiliated companies.

Federal Reserve policy and the Federal Deposit Insurance Act, as amended by the Dodd-Frank Act, require a bank holding company to act as a source of financial and managerial strength to its FDIC-insured bank subsidiaries. These may require bank holding companies to support their bank subsidiaries with additional investments, including in situations where additional investments in the bank subsidiary may not otherwise be warranted. In the event an FDIC-insured subsidiary becomes subject to a capital restoration plan with its regulators, the parent bank holding company is required to guarantee performance of such plan up to 5% of the bank’s assets, and such guarantee is given priority in bankruptcy of the bank holding company. In addition, where a bank holding company has more than one bank or thrift subsidiary, each of the bank holding company’s subsidiary depository institutions may be held responsible for any losses to the Deposit Insurance Fund, or DIF, if an affiliated depository institution fails. As a result, a bank holding company may be required to loan money to a bank subsidiary in the form of subordinate capital notes or other instruments which qualify as capital under bank regulatory rules. However, any loans from the holding company to such subsidiary banks likely will be unsecured and subordinated to such bank’s depositors and to other creditors of the bank. See “-Capital.”

~~Relationship with MSF~~

We were a wholly-owned indirect subsidiary of MSF from 1987 until August 2018. MSF was a “bank holding company” under the BHC Act as a result of its control of the Company and the Bank, and was also a “foreign banking organization”, or FBO, as a result of its control of the Bank. MSF distributed 80.1% of our Class A and Class B common stock to its shareholders in the Spin-off on August 10, 2018. MSF sold all its remaining Company Class A voting stock in the Company’s IPO that closed on December 21, 2018. The Company used IPO proceeds to repurchase Class B non-voting common stock from MSF on December 28, 2018, reducing MSF’s holding in Class B common stock to less than 5% of the Company’s total common stock capital.

The Federal Reserve determined that MSF no longer “controlled” the Company or the Bank as of year-end 2018 and, therefore, was no longer a bank holding company or FBO subject to Federal Reserve supervision or regulation.

MSF made several commitments to the Federal Reserve in furtherance of the Company’s separation and to avoid potential issues under the “Joint Agency Statement on Parallel-Owned Banking Organizations” (April 23, 2001), or the “Parallel Banking Policy Statement”. MSF and its subsidiaries committed to the Federal Reserve that they would not, directly or indirectly engage in, or be a party to, any business transaction or relationship (including, without limitation, any receipt of funds as a depository) with the Company or any of its subsidiaries. Notwithstanding this limitation, MSF may engage in the following transactions:

~~Certain limited existing business and transitional service relationships existing in December 2018;~~

~~The acquisition by the Bank of the Cayman Bank, an indirect MSF subsidiary, subject to any required regulatory approvals; and~~

~~The lease of space at market rates by the Company to MSF to house certain MSF employees who perform treasury services.~~

The Company has policies and procedures that are designed to reduce risk, and to properly govern remaining relationships with MSF and its subsidiaries. The Bank’s relations with MSF and its subsidiaries are currently treated as related party transactions, which are subject to review and approval by our Audit Committee.

~~Bank Regulation~~

The Bank is a national bank subject to regulation and regular examinations by the OCC, and is a member of the Federal Reserve Bank of Atlanta. OCC regulations govern permissible activities, capital requirements, branching, dividend limitations, investments, loans and other matters. Under the Bank Merger Act, prior OCC approval is required for a national bank to merge or consolidate with, or purchase the assets or assume the deposits of, another bank. In reviewing applications to approve mergers and other acquisition transactions, the OCC is required to consider factors similar to the Federal Reserve under the BHC Act, including the applicant’s financial and managerial resources, competitive effects and public benefits of the transaction, the applicant’s performance in meeting community needs, and the effectiveness of the entities in combating money laundering activities. The Dodd-Frank Act permits banks, including national banks, to branch anywhere in the United States.

~~The Bank is a member~~

Governance and Financial Reporting Obligations

We are required to comply with various corporate governance and financial reporting requirements under the Sarbanes-Oxley Act of 2002 (“SOX Act”), as well as rules and regulations adopted by the SEC, the Public Company Accounting Oversight Board (“PCAOB”), and the New York Stock Exchange (the “NYSE”). In particular, in order to comply with Section 404 of the ~~FDIC’s DIF~~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. The assessments of the Company's internal control over financial reporting as of December 31, 2023 are included in this report under “Item 9A. Controls and ~~its deposits are insured by the FDIC to the fullest extent permitted by law. As a result, it is subject to regulation and deposit insurance assessments by the FDIC.~~ 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. Public companies must give shareholders the opportunity to vote on say-on-pay proposals at least every three years and the opportunity to vote on the frequency of say-on-pay votes at least every six years, indicating whether the say-on-pay vote should be held annually, biennially, or triennially. Prior to 2022 as an EGC, the Company was not required to comply with these provisions of the Dodd-Frank Act. Beginning in 2022, after the Company exited its EGC status, the Company began complying with these provisions.

Volcker Rule

The “Volcker Rule” issued under the Dodd-Frank Act, which became effective in July 2015, generally prohibits banking organizations with over $10 billion in assets from (i) engaging in certain types of proprietary trading, and (ii) acquiring or retaining an ownership interest in or sponsoring a “covered fund,” all subject to certain exceptions. The Volcker Rule also details certain limited activities in which bank holding companies and their subsidiaries may continue to engage and requires banking organizations to implement compliance programs. In 2020, amendments to the proprietary trading and covered funds regulations took effect, simplifying compliance and providing additional exclusions and exemptions. We and the Bank ~~also is subject to regulations issued by the CFPB, with respect to consumer financial services and products, but is~~were not subject to the ~~federal Consumer Financial Protection Bureau (“CFPB”) supervision or examination because~~Volcker Rule in 2023, but may become so in the future.

Transactions with Affiliates and Insiders

Pursuant to Sections 23A and 23B of the Federal Reserve Act, and Federal Reserve Regulation W thereunder, the Bank ~~has less than $10 billion~~is subject to restrictions that limit certain types of ~~assets. See “-FDIC Insurance Assessments”.~~

~~The OCC has adopted~~transactions between the Federal Financial Institutions Examination Council’s (“FFIEC”) Uniform Financial Institutions Rating System, which assigns each financial institution a confidential composite “CAMELS” rating basedBank and its non-bank affiliates. In general, U.S. banks are subject to quantitative and qualitative limits on ~~an evaluation~~extensions of credit, purchases of assets and rating of six essential components of an institution’s financial condition and operations: Capital Adequacy, Asset Quality, Management, Earnings, Liquidity and Sensitivity to market risk, as well as the quality of risk management practices. For most institutions, the FFIEC has indicated that market risk primarily reflects exposures to changes in interest rates, and the ability to manage market risk.

~~Evaluations of the component areas of the CAMELs rating take into consideration the institution’s size and sophistication, the nature and complexity of~~certain other transactions involving its activities, its risk profile, and the adequacy of its capital and earnings in relation to its level of market risk exposure. Market risk is rated based upon, but not limited to, an assessment of the sensitivity of the financial institution’s earnings or the economic value of its capital to adverse changes in interest rates, foreign exchange rates, commodity prices or equity prices, management’s ability to identify, measure, monitor, and control the risks of its operations and the nature and complexity of interest rate risk exposure arising from non-trading positions. The OCC considers anti-money laundering / Bank Secrecy Act, or AML/BSA, examination findings in a safety and soundness context when assigning the management component rating. Serious deficiencies in a bank’s AML/BSA compliance create a presumption that the management rating will be adversely affected because risk management practices are less than satisfactory.

Composite ratings are based on an evaluation of an institution’s managerial, operational, financial, and compliance performance. The composite CAMELS rating is not an arithmetical formula or rigid weighting of numerical component ratings. Elements of subjectivity and examiner judgment, especially as these relate to qualitative assessments, are important elements in assigning ratings.

~~The Gramm-Leach-Bliley Act, or the GLB Act, and related regulations require~~non-bank affiliates. Additionally, transactions between U.S. banks and their ~~affiliated companies~~non-bank affiliates are required to ~~adopt~~be on arm’s length terms and ~~disclose privacy policies, including policies regarding~~must be consistent with standards of safety and soundness.

Reserves

The Federal Reserve requires all depository institutions, such as the ~~sharing~~Bank, to maintain reserves against transaction accounts (primarily noninterest-bearing and Negotiable Orders of ~~personal information with third-parties. The GLB Act also permits bank subsidiaries~~Withdrawal, or NOW, checking accounts). Effective March 26, 2020, the Federal Reserve reduced reserve requirement ratios to ~~engage in “financial activities” similar~~zero percent, effectively eliminating reserve requirements for all depository institutions. These reserve requirements are subject to ~~those permitted to financial holding companies. In December 2015, Congress amended~~annual adjustment by the GLB Act as part of the Fixing America’s Surface Transportation Act. This amendment provided financial institutions that meet certain conditions an exemption to the requirement to deliver an annual privacy notice. On August 10, 2018, the CFPB announced that it had finalized conforming amendments to its implementing regulation, Regulation P.Federal Reserve.

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 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. Some state laws also protect the privacy of information of state residents and require adequate security of such data, and certain state laws may, in some circumstances, require us to notify affected individuals of security breaches of computer databases that contain their personal information. These laws may also require us to notify law enforcement, regulators or consumer reporting agencies in the event of a data breach, as well as businesses and governmental agencies that own data. See Section 1C. Cybersecurity for information on how we address and manage cybersecurity risks.

The Bank maintains LPOs in New York City and Dallas, Texas. LPOs may only engage in certain functions on behalf of the Bank, such as soliciting loans (including assembling credit information, property inspections and appraisals, securing title information, preparing loan applications, solicitation loan servicing), and acting as a liaison with customers of the Bank. Loans and credit extensions cannot be approved by a LPO. Our LPO offices also solicit deposits, provide information about deposit products, and assist customers in completing deposit account opening documents. The LPOs are not “branches” under applicable OCC regulations and cannot engage in general banking transactions, deposit taking and withdrawals, or lending money. The LPOs are subject to supervision and examination by the OCC.

Community Reinvestment Act and Consumer Laws

The ~~Bank is subject to the~~ Community Reinvestment Act (“CRA”) and ~~the OCC’s~~its corresponding regulations ~~thereunder. Under the CRA, all FDIC-insured institutions have a continuing and affirmative obligation, consistent with their safe and sound operation,~~are intended to encourage banks to help meet the credit needs of ~~their entire~~the communities they serve, including ~~low-~~low and ~~moderate-income neighborhoods. The CRA requires~~moderate income neighborhoods, consistent with safe and sound banking practices. These regulations provide for regulatory assessment of a ~~depository institution’s primary federal regulator,~~bank’s record in ~~connection with its examination of the institution, to assess the institution’s record of assessing and~~ meeting the credit needs of its market area. Federal banking agencies are required to publicly disclose each bank’s rating under the ~~communities served by that institution, including low- and moderate-income neighborhoods.~~CRA. The OCC considers a bank’s CRA rating when the bank ~~regulatory agency’s assessment of the institution’s record is made available~~submits an application to ~~the public. Further, such assessment is required of any institution that has applied to:~~

~~charter a national bank;~~

establish ~~new branch offices (banking centers) that accept deposits;~~

~~relocate an office;~~

bank branches, merge ~~or consolidate~~ with another bank, or acquire the assets orand assume the liabilities of ~~a federally regulated financial institution; or~~

~~obtain deposit insurance coverage for a newly chartered institution.~~

~~The CRA performance~~another bank. In the case of a ~~banking organization’s depository institution subsidiaries is considered by~~bank holding company or financial holding company, the Federal Reserve ~~and other federal bank regulators~~reviews the CRA performance record in connection with the application to acquire ownership or control of shares of a bank holding ~~company and bank mergers and acquisitions, and branch applications. When considering BHC Act applications,~~company. An unsatisfactory record can substantially delay or block the transaction. The Bank has received an “outstanding” rating since 2000, including its most recent CRA evaluation completed in 2022.

On October 24, 2023, the Federal Reserve, ~~will assess~~ the ~~performance of each subsidiary depository institution of the applicant bank holding company,~~FDIC, and such performance may be the basis for denying the application. A less than satisfactory CRA rating will slow, if not preclude, acquisitions, and new banking centers and other expansion activities and will prevent a company from becoming a financial holding company.

As a result of the GLB Act, CRA agreements with private parties must be disclosed and annual CRA reports must be made. The federal CRA regulations require that evidence of discriminatory, illegal or abusive lending practices be considered in the CRA evaluation.

~~On August 28, 2018,~~ the OCC ~~proposed rulemaking to modernize~~issued a final rule amending the ~~regulatory framework implementing~~agencies’ CRA regulations. In developing the ~~CRA. The proposal seeks comments on ways to increase lending and services to people in low- and moderate-income areas and clarify and expand~~final rule, the types of activities eligible for CRA consideration. The OCC shares responsibility for enforcing the rules with the Federal Reserve and the FDIC. Even though the Federal Reserve did not join the OCC in the publication of its proposed rulemaking concerning revisions toagencies’ objectives included updating the CRA regulations ~~it is considering ideas regarding modernizing~~to strengthen the achievement of the core purpose of the statute, and adapting to changes in the banking industry, including the expanded role of mobile and online banking. Most of the final rule’s new requirements are applicable beginning January 1, 2026. The remaining new requirements, including data reporting requirements, are applicable on January 1, 2027. We continue to evaluate the impact of any CRA ~~tailoring the CRA regulations for banks~~changes and their impact to our financial condition, results of ~~different sizes~~operations, and ~~improving the consistency and predictability of CRA evaluations and ratings.~~liquidity, which cannot be predicted at this time.

The Bank is also subject to, among other things, ~~fair lending~~other federal and state consumer laws ~~including~~and regulations that are designed to protect consumers in transactions with banks. While the list set forth below is not exhaustive, these laws and regulations include the Equal Credit Opportunity Act, ~~(“ECOA”) and~~the Home Mortgage Disclosure Act, the Electronic Funds Transfer Act, the Fair ~~Housing~~Credit Reporting Act, both of which prohibit discrimination based on race or color, religion, national origin, sex and familial status in any aspect of a consumer or commercial credit or residential real estate transaction. The Department of Justice (“DOJ”) and the federal bank regulators have issued an Interagency Policy Statement on Discrimination in Lending to provide guidance to financial institutions in determining whether discrimination exists, how the agencies will respond to lending discrimination, and what steps lenders might take to prevent discriminatory lending practices. The DOJ has prosecuted what it regards as violations of the ECOA and Fair HousingReal Estate Settlement Procedures Act, ~~and the fair lending laws, generally.~~

The federal bank regulators have updated their guidance on overdrafts several times, including overdrafts incurred at automated teller machines (“ATMs”) and point of sale (“POS”) terminals. Overdrafts have become a focus of the CFPB. Among other things, the federal regulators require banks to monitor accounts and to limit the use of overdrafts by customers as a form of short-term, high-cost credit, including, for example, giving customers who overdraw their accounts on more than six occasions where a fee is charged in a rolling 12 month period a reasonable opportunity to choose a less costly alternative and decide whether to continue with fee-based overdraft coverage. It also encourages placing appropriate daily limits on overdraft fees, and asks banks to consider eliminating overdraft fees for transactions that overdraw an account by a de minimis amount. Overdraft policies, processes, fees and disclosures are frequently the subject of litigation against banks in various jurisdictions. In May 2018, the OCC encouraged national banks to offer short-term, small-Dollar installment lending. The Federal Reserve expressed similar support for responsible small Dollar lending in its June 2018 Consumer Compliance Supervision Bulletin and recently commented on certain bank practices with respect to overdraft fees being unfair or deceptive acts or practices in violation of Section 5 of the Federal Trade Commission Act. The CFPB proposed on February 6, 2019 to rescind its mandatory underwriting standards for loans covered by its 2017 Payday, Vehicle Title and Certain High-Cost Installment Loans rule, and has separately proposed delaying the effectiveness of such 2017 rule.

~~The CFPB has the authority, previously exercised by the federal bank regulators, to adopt regulations and enforce various laws, including the ECOA, and other fair lending laws,~~ the Truth in Lending Act, the ~~Electronic~~Expedited Funds ~~Transfer~~Availability Act, ~~mortgage lending rules,~~ 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 ~~Reporting~~Transactions Act, and, as applicable, their implementing regulations (i.e., Regulations B, C, E, V, X, Z, CC, and DD among others. These laws and regulations mandate certain disclosure requirements and regulate the ~~Privacy~~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 ~~Consumer Financial Information rules.~~these consumer protection laws and regulations as part of its ongoing client relations.

The CFPB has the authority over many consumer financial protection laws, and is authorized to adopt regulations with respect to the same. Although the CFPB does not examine or supervise banks with less than $10 billion in assets, it exercises broad authority in making rules and providing guidance that affects bank regulation in these areas and the scope of bank regulators’ consumer regulation, examination and enforcement. Banks of all sizes are affected by the CFPB’s regulations, and the precedents set by CFPB enforcement actions and interpretations. The 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. On February 6, 2018, the CFPB issued for public comment proposed amendments to its payday lending rule, which rescinded provisions governing underwriting of certain loans and delayed the August 19, 2019 compliance date for the mandatory underwriting provisions of the payday lending rule.

Standards for Safety and Soundness

~~Residential Mortgages~~

CFPB regulations that require lenders to determine whether a consumer has the ability to repay a mortgage loan became effective on January 10, 2014. These established certain minimum requirements for creditors when making ability to repay determinations, and provide certain safe harbors from liability for mortgages that are “qualified mortgages” and are not “higher-priced.” Generally, these CFPB regulations apply to all consumer, closed-end loans secured by a dwelling, including home-purchase loans, refinancing and home equity loans (whether first or subordinate lien). Qualified mortgages must generally satisfy detailed requirements related to product features, underwriting standards, and requirements where the total points and fees on a mortgage loan cannot exceed specified amounts or percentages of the total loan amount. Qualified mortgages must have: (1) a term not exceeding 30 years; (2) regular periodic payments that do not result in negative amortization, deferral of principal repayment, or a balloon payment; (3) and be supported with documentation of the borrower and his or her credit worthiness. We anticipate focusing our residential mortgage origination on qualified mortgages and those that meet our investors’ requirements, but we may make loans that do not meet the safe harbor requirements for “qualified mortgages.”

The Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018, or the “2018 Growth Act”, provides that certain residential mortgages held in portfolio by banks with less than $10 billion in consolidated assets automatically are deemed to be “qualified mortgages.” This relieves such institutions from many of the requirements to satisfy the criteria listed above for “qualified mortgages.” Mortgages meeting the “qualified mortgage” safe harbor may not have negative amortization, must follow prepayment penalty limitations included in the Truth in Lending Act, and may not have fees greater than 3% of the total value of the loan.

The Bank generally services the loans it originates, excluding those it sells. The CFPB adopted mortgage servicing standards, effective in January 2014. These include requirements regarding force-placed insurance, certain notices prior to rate adjustments on adjustable rate mortgages, and periodic disclosures to borrowers. Servicers will be prohibited from processing foreclosures when a loan modification is pending, and must wait until a loan is more than 120 days delinquent before initiating a foreclosure action. Servicers must provide borrower’s direct and ongoing access to its personnel, and provide prompt review of any loss mitigation application. Servicers must maintain accurate and accessible mortgage records for the life of a loan and until one year after the loan is paid off or transferred. These new standards are expected to increase the cost and compliance risks of servicing mortgage loans, and the mandatory delays in foreclosures could result in loss of value on collateral or the proceeds we may realize from a sale of foreclosed property.

The Federal ~~Housing Finance Authority (the “FHFA”) updated The Federal National Mortgage Association’s,~~Deposit Insurance Act requires the federal bank regulatory agencies to prescribe, by regulation or ~~Fannie Mae’s,~~guideline, operational and the Federal Home Loan Mortgage Corporation’s, or Freddie Mac’s (individually and collectively, “GSE”), repurchase rules, including the kinds of loan defects that could lead to a repurchase request to, or alternative remedies with, the mortgage loan originator or seller. These rules became effective January 1, 2016. The FHFA also has updated these GSEs’ representations and warranties framework and announced on February 2, 2016 an independent dispute resolution, or IDR, process to allow a neutral third-party to resolve demands after the GSEs’ quality control and appeal processes have been exhausted.

~~The Bank is subject to the CFPB’s integrated disclosure rules under the Truth in Lending Act and the Real Estate Settlement Procedures Act, called “TRID,”~~managerial standards for ~~credit transactions secured by real property. The TRID rules adversely affected our mortgage originations in 2016, while we revised our~~all insured depository institutions relating to: (1) internal controls; (2) information systems and processes to comply with these rules. Our residential mortgage strategy, product offerings, and profitability may change as these regulations are interpreted and applied in practice, and may also change due to any restructuring of Fannie Mae and Freddie Mac as part of the resolution of their conservatorships. The 2018 Growth Act reduced the scope of the TRID rules by eliminating the wait time for a mortgage, if an additional creditor offers a consumer a second offer with a lower annual percentage rate. Congress encouraged federal regulators to provide better guidance on TRID in an effort to provide a clearer understanding for consumers and bankers alike. The 2018 Growth Act also provides partial exemptions from the collection, recording, and reporting requirements under Sections 304(b)audit systems; (3) loan documentation; (4) credit underwriting; (5) interest rate risk exposure; and (6) ofasset quality. The federal banking agencies have adopted regulations and Interagency Guidelines Establishing Standards for Safety and Soundness to implement these required standards. These guidelines set forth the ~~Home Mortgage Disclosure Act, or HMDA, for those banks~~safety and soundness standards used to identify and address problems at insured depository institutions before capital becomes impaired. Under the regulations, if a regulator determines that a bank fails to meet any standards prescribed by the guidelines, the regulator may require the bank to submit an acceptable plan to achieve compliance, consistent with ~~fewer than 500 closed-end mortgages or less than 500 open-end lines of credit in both of the preceding two years, provided the bank’s rating under the CRA~~deadlines for the ~~previous two years has been at least “satisfactory.” On August 31, 2018, the CFPB issued an interpretive~~submission and ~~procedural rule to implement~~review of such safety and ~~clarify these requirements under the 2018 Growth Act.~~soundness compliance plans.

~~Other Laws and Regulations~~

~~The International Money~~Anti-money Laundering Abatement and Anti-Terrorism Funding Act of 2001 (Title III of the USA PATRIOT Act) specifies “know your customer” requirements that obligate financial institutions to take actions to verify the identity of the account holders in connection with opening an account at any U.S. financial institution. Bank regulators are required to consider compliance with anti-money laundering laws and provisions before acting upon merger and acquisition and other expansion proposals. Furthermore, significant civil and criminal monetary penalties for violations of this Act can be imposed.

New Federal Financial Enforcement Network (“FinCEN”) rules, effective May 2018, require banks to know the beneficial owners of customers that are not natural persons, to update customer information to develop a customer risk profile, and generally monitor such matters.

The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 or(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. By way of amendments to the Bank Secrecy Act (“BSA”), the USA ~~PATRIOT~~Patriot Act ~~subjects financial institutions~~puts in place measures intended to ~~prohibitions against specified financial transactions~~encourage information sharing among bank regulatory and ~~account relationships as well as to enhanced due diligence and “know your customer” standards in their dealings with~~law enforcement agencies. In addition, certain ~~foreign~~provisions of the USA Patriot Act impose affirmative obligations on a broad range of financial institutions.

The USA ~~PATRIOT~~Patriot Act, ~~requires financial institutions~~the BSA and related federal regulations require banks to establish anti-money laundering programs that include policies, procedures and ~~sets forth minimum standards,~~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 Anti-Money Laundering Act ("AMLA"), which amends the ~~regulators refer~~BSA, was enacted in early 2021. The AMLA is intended to ~~as “pillars”~~be a comprehensive reform and modernization of U.S. bank secrecy and anti-money laundering laws. In particular, it codifies a risk-based approach to anti-money laundering compliance for ~~these programs, including:~~

financial institutions, requires the U.S. Department of the Treasury to promulgate priorities for anti-money laundering and countering the financing of terrorism policy, requires the development of standards for testing technology and internal ~~policies, procedures,~~processes for BSA compliance, expands enforcement- and ~~controls;~~investigation-related authority (including increasing available sanctions for certain BSA violations), and expands BSA whistleblower incentives and protections.

Many AMLA provisions will require additional rulemakings, reports and other measures, and the ~~designation~~impact of the AMLA will depend on, among other things, rulemaking and implementation guidance. In June 2021, the Financial Crimes Enforcement Network (“FinCEN”), a ~~compliance officer;~~

~~an ongoing employee training program;~~

~~an independent audit function to test~~bureau of the ~~programs;~~U.S. Department of the Treasury, issued the priorities for anti-money laundering and

~~ongoing customer due diligence and monitoring.~~

~~The Company is also~~ countering the financing of terrorism policy required ~~to comply with various corporate governance and financial reporting requirements~~ under the ~~Sarbanes-Oxley Act,~~AMLA. The priorities include corruption, cybercrime, terrorist financing, fraud, transnational crime, drug trafficking, human trafficking and proliferation financing.

In addition, South Florida has been designated as ~~well as related rules~~a High Intensity Financial Crime Area (“HIFCA”), by FinCEN and ~~regulations adopted~~a High Intensity Drug Trafficking Area (“HIDTA”), by the ~~SEC, the Public Company Accounting Oversight Board (“PCAOB”) and the Nasdaq Stock Market. As a newly public company, and as an emerging growth company, we~~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 HIDTA designation makes it possible for local agencies to benefit from ongoing HIDTA-coordinated program initiatives that are ~~not required currently~~working to ~~comply with various provisions of the Sarbanes-Oxley Act. See “Summary-Emerging Growth Company Status.”~~reduce drug use.

~~The Company regularly evaluates its controls, including~~

There is also increased scrutiny of compliance with the ~~SEC~~sanctions programs and rules administered and enforced by the Office of Foreign Assets Control (“OFAC”) of the U.S. Department of Treasury. 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 issues regulations that restrict transactions by U.S. persons or entities (including banks), located in the U.S. or abroad, with certain foreign countries, their nationals or “specially designated nationals.” OFAC regularly publishes listings of foreign countries and designated nationals that are prohibited from conducting business with any U.S. entity or individual. While OFAC is responsible for promulgating, developing and administering these controls and sanctions, all of the bank regulatory agencies are responsible for ensuring that financial institutions comply with these regulations.

Lending Practices

Federal bank regulatory guidance titled “Concentrations in Commercial Real Estate Lending, Sound Risk Management Practices” (the “CRE Guidance”) requires that appropriate processes be in place to identify, monitor and control risks associated with real estate lending concentrations. This could include enhanced strategic planning, CRE underwriting policies, risk management, internal controls, portfolio stress testing and risk exposure limits as well as appropriately designed compensation and incentive programs. Higher allowances for loan losses and capital levels may also be required. 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. We have always had significant exposures to loans secured by CRE due to the nature of our markets. We believe our long term experience in CRE lending, underwriting policies, internal controls, and ~~expects~~other policies currently in place, as well as our loan and credit monitoring and administration procedures, are generally appropriate to ~~continue~~manage our concentrations as required under the guidance.

Federal law limits a bank's authority to ~~spend significant amounts~~extend credit to directors and executive officers of ~~time~~the bank or its affiliates and ~~money~~persons or companies that own, control or have power to vote more than 10% of any class of securities of a bank or an affiliate of a bank, as well as to entities controlled by such persons. Among other things, extensions of credit to insiders are required to be made on terms that are substantially the same as, and follow credit underwriting procedures that are not less stringent than, those prevailing for comparable transactions with unaffiliated persons. Also, the terms of such extensions of credit may not involve more than the normal risk of repayment or present other unfavorable features and may not exceed certain limitations on the amount of credit extended to such persons, individually and in the aggregate, which limits are based, in part, on the amount of the bank's capital.

Debit Interchange Fees

Interchange fees are fees that merchants pay to card companies and card-issuing banks such as the Bank for processing electronic payment transactions on their behalf. The “Durbin Amendment” in the Dodd-Frank Act provides limits on the amount of debit card interchange that may be received or charged by the debit card issuer, for insured depository institutions with $10 billion or more in assets (inclusive of affiliates) as of the end of the calendar year. Subject to certain exemptions and potential adjustments, the Durbin Amendment limits debit card interchange received or charged by the issuer to $0.21 plus 5 basis points multiplied by the value of the transaction. Upon crossing the $10 billion asset threshold in a calendar year, the rules require compliance with these ~~rules.~~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. If so, the ~~Company fails~~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 ~~comply with these internal control rules in~~debit card interchange to materially reduce the future, it may materially adversely affect its reputation, its ability to obtain the necessary certifications to its financial statements, its relations with its regulators and other financial institutions with which it deals, and its ability to access the capital markets and offer and sell Company securities on terms and conditions acceptable to the Company. See “Risk Factors—We may determine that our internal controls and disclosure controls could have deficiencies or weaknesses.”Company's revenue.

Payment of Dividends and Repurchases

The Company is a legal entity separate and distinct from the Bank. Our primary source of cash is dividends from the Bank. Prior regulatory approval is required if the total of all dividends declared by a national bank (such as the Bank) in any calendar year will exceed the sum of such bank’s net profits for the year and its retained net earnings for the preceding two calendar years, less any required transfers to surplus. During 2018, the Bank paid cash dividends of approximately $47.5 million, including the $40 million special dividend used to pay such amount as a dividend to MSF in connection with the Spin-off. At December 31, 2018, the Bank could have declared additional dividends of approximately $82.6 million, without prior OCC approval.

~~In addition, we~~We and the Bank are subject to various general regulatory policies and requirements relating to the payment of dividends, including requirements to maintain capital above regulatory minimums. The Federal Reserve and the OCC are authorized to determine when the payment of dividends by the Company and the Bank, respectively, would be an unsafe or unsound practice, and may prohibit such dividends.

The Federal Reserve ~~has~~and the OCC have indicated that paying dividends that deplete a ~~bank holding company’s~~bank’s capital base to an inadequate level would be an unsafe and unsound banking practice. The Federal Reserve ~~has~~and the OCC have each indicated that depository institutions and their holding companies should generally pay dividends only out of current year’s operating earnings.

~~Under~~

A bank holding company must give the Federal Reserve ~~Supervisory Letter SR-09-4 (February 24, 2009), as revised December 21, 2015,~~prior notice of any purchase or redemption of its equity securities if the ~~board~~consideration for the purchase or redemption, when combined with the consideration for all such purchases or redemptions in the preceding 12 months, is equal to 10% or more of ~~directors of~~its consolidated net worth. The Federal Reserve may disapprove such a purchase or redemption if it determines that the proposal would be an unsafe or unsound practice or would violate any law, regulation, Federal Reserve order, or condition imposed in writing by the Federal Reserve. This notification requirement does not apply to a bank holding company ~~must consider different factors to ensure~~ that qualifies as well-capitalized, received a composite rating and a rating for management of “1” or “2” in its ~~dividend level is prudent relative to maintaining a strong financial position,~~last examination and is not ~~based on overly optimistic earnings scenarios, and the absence of potential events that could affect a company’s ability~~subject to pay a dividend while still maintaining a strong financial position. As a general matter, the Federal Reserve has indicated that the board of directors of a bank holding company should consult with the Federal Reserve and eliminate, defer or significantly reduce the bank holding company’s dividends if:any unresolved supervisory issue.

~~its net income available to shareholders for the past four quarters, net of dividends previously paid during that period, is not sufficient to fully fund the dividends;~~

~~its prospective rate of earnings retention is not consistent with its capital needs and overall current and prospective financial condition; or~~

~~it will not meet, or is in danger of not meeting, its minimum regulatory capital adequacy ratios.~~

The Basel III Capital Rules, ~~were fully phased-in on January 1, 2019 and~~which we discuss below, further limit our permissible dividends, stock repurchases and discretionary bonuses, including those of the Bank, unless we and the Bank continue to meet the fully phased-in capital conservation buffer ~~requirement effective January 1, 2019.~~requirement. The Company and the Bank exceeded the capital conservation requirement at year end ~~2018.~~ 2023. See ~~“Basel III~~ “Capital ~~Rules.”~~Requirements”.

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.

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. The required capital ratios are minimums, and the Federal Reserve and OCC may determine that a banking organization, based on its size, complexity or risk profile, must maintain a higher level of capital in order to operate in a safe and sound manner. Risks such as concentration of credit risks and the risk arising from non-traditional activities, as well as the institution’s exposure to a decline in the economic value of its capital due to changes in interest rates, and an institution’s ability to manage those risks are important factors that are to be taken into account by the federal banking agencies in assessing an institution’s overall capital adequacy. The following is a brief description of the relevant provisions of these capital rules and their potential impact on our and the Bank's capital levels. The relevant capital measures are the total risk-based capital ratio, Tier 1 risk-based capital ratio, common equity Tier 1 or “CET1” capital ratio, as well as, the leverage capital ratio.

The Federal Reserve has risk-based capital rules for bank holding companies and the OCC has similar rules for national banks. These rules ~~required at year end 2018~~require a minimum ratio of capital to risk-weighted assets (including certain off-balance sheet activities, such as standby letters of credit) and capital conservation buffer of ~~9.875%~~10.50%. Tier 1 capital includes common equity and related retained earnings and a limited amount of qualifying preferred stock, less goodwill and certain core deposit intangibles. Voting common equity must be the predominant form of capital. Tier 2 capital consists of non-qualifying preferred stock, qualifying subordinated, perpetual, and/or mandatory convertible debt, term subordinated debt and intermediate term preferred stock, up to 45% of pre-tax unrealized holding gains on available for sale equity securities with readily determinable market values that are prudently valued, and a loan loss allowance up to 1.25% of its standardized total risk-weighted assets, excluding the allowance. The capital rules also define the risk-weights assigned to assets and off-balance sheet items to determine the risk-weighted asset components of the risk-based capital rules, including, for example, “high volatility” commercial real estate, past due assets, structured securities and equity holdings. We collectively refer to Tier 1 risk based capital and Tier 2 capital as Total risk-based capital.

In addition, the Federal Reserve has established minimum leverage ratio guidelines for bank holding companies, which provide for a minimum leverage ratio of Tier 1 capital to adjusted average quarterly assets (“leverage ratio”) equal to 4%. However, regulators expect bank holding companies and banks to operate with leverage ratios above the minimum. The guidelines also provide that institutions experiencing internal growth or making acquisitions will be expected to maintain strong capital positions substantially above the minimum supervisory levels without significant reliance on intangible assets. The Federal Reserve has indicated that ~~the Federal Reserve~~it will continue to consider a “tangible Tier 1 leverage ratio” (deducting all intangibles) in evaluating proposals for expansion or new activity. Higher capital may be required in individual cases and depending upon a bank holding company’s risk profile. All bank holding companies and banks are expected to hold capital commensurate with the level and nature of their risks, including the volume and severity of their problem loans. The level of Tier 1 capital to risk-adjusted assets is becoming more widely used by the bank regulators to measure capital adequacy. Neither the Federal Reserve nor the OCC has advised us of any specific minimum leverage ratio or tangible Tier 1 leverage ratio applicable to the Company or the Bank, respectively. Under Federal Reserve policies, bank holding companies are generally expected to operate with capital positions well above the minimum ratios. The Federal Reserve believes the risk-based ratios do not fully take into account the quality of capital and interest rate, liquidity, market and operational risks. Accordingly, supervisory assessments of capital adequacy may differ significantly from conclusions based solely on the level of an organization’s risk-based capital ratio.

The Federal Deposit Insurance Corporation Improvement Act of 1991, or FDICIA, among other things, requires the federal bank regulators to take “prompt corrective action” regarding depository institutions that do not meet minimum capital requirements. FDICIA establishes five capital tiers: “well capitalized,” “adequately capitalized,” “undercapitalized,” “significantly undercapitalized” and “critically undercapitalized.” A depository institution’s capital tier will depend upon how its capital levels compare to various relevant capital measures and certain other factors, as established by regulation.

All of the federal bank regulators also have regulations establishing risk-adjusted measures and relevant capital levels which implement the “prompt corrective action” standards applicable to banks. The relevant capital measures are the total risk-based capital ratio, Tier 1 risk-based capital ratio, common equity Tier 1 or “CET1” capital ratio, as well as, the leverage capital ratio. Under the regulations, national banks will be:

Well-capitalized if it has a total risk-based capital ratio of 10% or greater, a Tier 1 risk-based capital ratio of 8% or greater, a CET1 capital ratio of 6.5% or greater, a leverage capital ratio of 5% or greater and is not subject to any written agreement, order, capital directive or prompt corrective action directive by a federal bank regulatory agency to maintain a specific capital level for any capital measure;

“Adequately capitalized” if it has a total risk-based capital ratio of 8% or greater, a Tier 1 risk-based capital ratio of 6% or greater, a CET1 capital ratio of 4.5% or greater, and generally has a leverage capital ratio of 4% or greater;

“Undercapitalized” if it has a total risk-based capital ratio of less than 8%, a Tier 1 risk-based capital ratio of less than 6%, a CET1 capital ratio of less than 4.5% or generally has a leverage capital ratio of less than 2%;

“Significantly undercapitalized” if it has a total risk-based capital ratio of less than 6%, a Tier 1 risk-based capital ratio of less than 4%, a CET1 capital ratio of less than 3%, or a leverage capital ratio of less than 3%; or

~~“Critically undercapitalized” if its tangible equity is equal to or less than 2% to total assets.~~

~~The federal bank regulators have authority to require additional capital.~~

~~The Dodd-Frank Act significantly modified the capital rules applicable to us and call for increased capital, generally.~~

The generally applicable prompt corrective action leverage and risk-based capital standards, or generally applicable standards, including the types of instruments that may be counted as Tier 1 capital, will be applicable on a consolidated basis to depository institution holding companies, as well as their bank and thrift subsidiaries.

~~The generally applicable standards in effect prior to the Dodd-Frank Act will be “floors” for the standards to be set by the regulators.~~

Bank and thrift holding companies with assets of less than $15 billion as of December 31, 2009, will be permitted to include trust preferred securities that were issued before May 19, 2010, as Tier 1 capital, but trust preferred securities issued by a bank holding company after May 19, 2010 will no longer count as Tier 1 capital. Our trust preferred securities outstanding at December 31, 2018 were issued before May 19, 2010, and are included in our Tier 1 capital.

Information concerning our and the Bank’s regulatory capital ratios at December 31, 2018 and December 31, 2017 is included under the heading “Regulatory Capital Requirements” in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of Annual Report on Form 10-K.

Depository institutions that are “adequately capitalized” for bank regulatory purposes must receive a waiver from the FDIC prior to accepting or renewing brokered deposits, and cannot pay interest rates that exceed market rates by more than 75 basis points. Banks that are less than “adequately capitalized” cannot accept or renew brokered deposits. FDICIA generally prohibits a depository institution from making any capital distribution (including paying dividends) or paying any management fee to its holding company, if the depository institution thereafter would be “undercapitalized.” Institutions that are “undercapitalized” are subject to prohibitions on brokered deposits, growth limitations and are required to submit a capital restoration plan for approval. A depository institution’s parent holding company must guarantee that the institution will comply with such capital restoration plan. The aggregate liability of the parent holding company is limited to the lesser of 5% of the depository institution’s total assets at the time it became undercapitalized and the amount necessary to bring the institution into compliance with applicable capital standards. If a depository institution fails to submit an acceptable plan, it is treated as if it is “significantly undercapitalized.” If the controlling holding company fails to fulfill its obligations under FDICIA and files (or has filed against it) a petition under the federal Bankruptcy Code, the claim against the holding company’s capital restoration obligation would be entitled to a priority in such bankruptcy proceeding over third-party creditors of the bank holding company. Significantly undercapitalized depository institutions may be subject to a number of requirements and restrictions, including orders to sell sufficient voting stock to become “adequately capitalized”, requirements to reduce total assets, and cessation of receipt of deposits from correspondent banks. “Critically undercapitalized” institutions are subject to the appointment of a receiver or conservator.

~~The prompt corrective action rules have been conformed by the Basel III Capital Rules, as discussed below.~~

~~Basel III Capital Rules~~

The Federal Reserve, the OCC and the other bank regulators adopted in June 2013 final capital rules (the “Basel III Capital Rules”) for bank holding companies and banks implementing the Basel Committee on Banking Supervision’s “Basel III: A Global Regulatory Framework for more Resilient Banks and Banking Systems.” These new U.S. capital rules are called the Basel III Capital Rules, and were generally fully phased-in on January 1, 2019.

The Basel III Capital Rules limit Tier 1 capital to common stock and noncumulative perpetual preferred stock, as well as qualifying trust preferred securities and cumulative perpetual preferred stock issued before May 19, 2010, each of which are grandfathered in Tier 1 capital for bank holding companies with less than $15 billion in assets. A new capital measure CET1, has been added by the Basel III Capital Rules. CET1 includes common stock and related surplus, retained earnings and, subject to certain adjustments, minority common equity interests in subsidiaries. CET1 is reduced by deductions for:

~~Goodwill and other intangibles, other than mortgage servicing assets, which are treated separately, net of associated deferred tax losses (“DTLs”);~~

~~Deferred tax assets (“DTAs”) arising from operating losses and tax credit carryforwards net of allowances and DTLs;~~

~~Gains on sale from any securitization exposure; and~~

~~Defined benefit pension fund net assets (i.e., excess plan assets), net of associated DTLs.~~

~~The Company made a one-time election in 2015, whereby CET1 will not be adjusted for certain accumulated other comprehensive income (“AOCI”).~~

~~Additional “threshold deductions” of the following that are individually greater than 10% of CET1 or collectively greater than 15% of CET1 (after the above deductions are also made):~~

~~Mortgage service assets, net of associated DTLs;~~

~~DTAs arising from temporary differences that could not be realized through net operating loss carrybacks, net of any valuation allowances and DTLs;~~

~~significant common stock investments in unconsolidated financial institutions, net of associated DTLs; and~~

Noncumulative perpetual preferred stock, Tier 1 minority interest not included in CET1, subject to limits, and current Tier 1 capital instruments issued to the U.S. Treasury, including shares issued pursuant to the TARP or SBLF programs, will qualify as additional Tier 1 capital (all other qualifying preferred stock, subordinated debt and qualifying minority interests will be included in Tier 2 capital).

Table of ~~0.625% or less became effective in 2016. In 2018, the capital conservation buffer is 1.875% or less.~~Contents

In ~~addition~~order to ~~the~~avoid certain restrictions on permissible dividends, stock repurchases and discretionary bonuses, a minimum ~~risk-based capital requirements, a new~~ “capital conservation buffer” of CET1 capital of at least 2.5% of total risk-weighted assets, ~~will be~~is required. The capital conservation buffer ~~will be~~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%; ~~and~~

or (iii) the banking organization’s total risk-based capital ratio minus 8.0%.

The capital conservation buffers and the related restrictions on permissible dividends, stock repurchases and discretionary bonuses were applicable for the first time in 2016. The capital conservation buffer

~~Full compliance with~~

Thecapitalelementsandtotalcapitalunderthe ~~capital conservation buffer is required by January 1, 2019. Thereafter, permissible dividends, stock repurchases and discretionary bonuses~~BaselIIICapitalRules are ~~limited to the following percentages based on the capital conservation buffer~~ as ~~calculated above, subject to any further regulatory limitations, including those based on risk assessments and enforcement actions:~~

follows:


Minimum CET1		4.50%

~~Buffer%~~	% ~~Limit~~
~~More than 2.50%~~	~~None~~
~~> 1.875% - 2.50%~~	~~60.00%~~
~~> 1.250% - 1.875%~~	~~40.00%~~
~~> 0.625% - 1.250%~~	~~20.00%~~
~~< 0.625%~~	0%

~~The various capital elements and total capital under the Basel III Capital Rules, as fully phased-in on January 1, 2019 are:~~



	~~Fully Phased In January 1, 2019~~
~~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%

~~Changes~~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. Non-advanced approaches institutions were permitted to implement the Capital Simplifications Final Rule as of its revised effective date in ~~Risk-Weightings~~

~~The Basel III Capital Rules significantly change~~ the ~~risk-weightings used~~quarter beginning January 1, 2020, or wait until the quarter beginning April 1, 2020. As of the date of implementation, the required deductions from regulatory capital CET1 elements for mortgage servicing assets (“MSAs”) and temporary difference deferred tax assets (“DTAs”) are only required to ~~determine risk-weighted~~the extent these assets exceed 25% of CET1 capital ~~adequacy. Among various other changes, the Basel III Capital Rules apply a 250% risk-weighting to MSRs,~~elements, less any adjustments and deductions (the “CET1 Deduction Threshold”). MSAs and temporary difference DTAs that cannot be realized through net operating loss carry-backs and significant (greater than 10%) investments in other financial institutions. The proposal also would change the risk-weighting for residential mortgages, including mortgages sold. A new 150% risk-weighted category applies to “high volatility CRE loans,” or “HVCRE,” which are credit facilities for the acquisition, construction or development of real property other than one-to-four family residential properties or commercial real projects where: (i) the loan-to-value ratio is not in excess of interagency real estate lending standards; and (ii) the borrower has contributed capital equal to not less than 15% of the real estate’s “as completed” value before the loan was made.

~~The Basel III Capital Rules also change some of the risk-weightings used to determine risk-weighted capital adequacy. Among other things, the Basel III Capital Rules:~~

~~Assign a 250% risk-weight to MSRs;~~

~~Assign up to a 1,250% risk-weight to structured securities, including private label mortgage securities and asset backed securities;~~

~~Retain existing risk-weights for residential mortgages, but assign a 100% risk-weight to most CRE loans and a 150% risk-weight for “high volatility” CRE loans, which we refer to as HVCRE;~~

~~Assign a 150% risk-weight to past due exposures (other than sovereign exposures and residential mortgages);~~

~~Assign a 250% risk-weight to DTAs, to the extent~~ not deducted from capital ~~(subject~~are assigned a 250% risk weight. Investments in the capital instruments of unconsolidated financial institutions are deducted from capital when these exceed the 25% CET1 Deduction Threshold. Minority interests in up to ~~certain maximums);~~

~~Retain the existing 100% risk-weight for corporate and retail loans; and~~

~~Increase the risk-weight for exposures to qualifying securities firms from 20% to 100%.~~

~~HVCRE loans currently have a risk weight of 150%. Section 214~~10% of the ~~2018 Growth~~parent banking organization’s CET1, Tier capital and total capital, after deductions and adjustments are permitted to be included in capital effective October 1, 2019. Also, effective October 1, 2019, the final rule made various technical amendments, including reconciling a difference in the capital rules and the bank holding company rules that permits the redemption of bank holding company common stock without prior Federal Reserve approval under the capital rules. Such redemptions remain subject to other requirements, including the BHC Act ~~restricts~~and Federal Reserve Regulation Y. The Company adopted these simplified capital rules in the first quarter of 2020 and they had no material effect on the Company’s regulatory capital and ratios.

The Basel Committee on Banking Supervision published the last version of the Basel III accord in 2017, generally referred to as “Basel IV.” The Basel Committee stated that a key objective of the revisions incorporated into the framework is to reduce excessive variability of risk-weighted assets, which will be accomplished by enhancing the robustness and risk sensitivity of the standardized approaches for credit risk and operational risk. This will facilitate the comparability of banks’ capital ratios, constraining the use of internally modeled approaches, and complementing the risk-weighted capital ratio with a finalized leverage ratio and a revised and robust capital floor. Leadership of the Federal Reserve, OCC, and FDIC, who are tasked with implementing Basel IV, supported the revisions. Under the current U.S. capital rules, operational risk capital requirements and a capital floor apply only to advanced approaches institutions, and not to us. The impact of Basel IV on us will depend on the manner in which it is implemented by the federal bank ~~regulators from applying this risk weight except to certain acquisition development~~regulators.

As of December 31, 2023, the Company’s and ~~construction (“ADC”) loans. The federal bank regulators issued~~the Bank's CET1 ratio were 9.79% and 10.73%, respectively. In addition, the Company’s and the Bank’s total risk-based capital ratio as of December 31, 2023 were 12.12% and 11.95%, respectively. As a ~~notice of a proposed rule on September 18, 2018 to implement Section 214~~result, both the Company and the Bank are currently classified as "well-capitalized" for purposes of the 2018 Growth Act, by revising the HVCRE definition. If this proposal is adopted, it is expected that this proposal would reduce the Company’s risk weighted assets and thereby increase the Company’s risk-weighted capital. For example, if the proposed rule had been in effect at December 31, 2018, the Company’s risk weighted assets would have been $60.3 million less, and the Company’s Tier 1 capital ratio would have been approximately 11 basis points greater.OCC's prompt corrective action regulations.

~~Illustrations~~

Table of ~~the~~ Contents

Prompt Corrective Action Rules

Under the Basel III Capital Rules, the prompt corrective action rules and categories changed as of January 1, 2015. The following illustrates the current range of the changes from well capitalized, to undercapitalized, to critically undercapitalized categories. The adequately capitalized and significantly undercapitalized categories also were retained with appropriate changes, but are not included in the following illustration.




	~~Basel III~~
~~Well capitalized~~
~~CET1~~	~~6.5%~~
~~Tier 1 risk-based capital~~	~~8.0%~~
~~Total risk-based capital~~	~~10.0%~~
~~Tier 1 leverage ratio~~	~~5.0%~~
~~Undercapitalized~~
~~CET1~~	~~< 4.5%~~
~~Tier 1 risk-based capital~~	~~≤ 6.0%~~
~~Total risk-based capital~~	~~< 8.0%~~
~~Tier 1 leverage ratio~~	~~< 4.0%~~
~~Critically undercapitalized~~	~~Tier 1 capital plus non-Tier 1~~ ~~perpetual preferred stock to total assets ≤ 2.0%~~

Section 201 of the 2018 Growth Act provides that banks and bank holding companies with consolidated assets of less than $10 billion that meet a “community bank leverage ratio,” established by the federal bank regulators between 8% and 10%, are deemed to satisfy applicable risk-based capital requirements necessary to be considered “well capitalized.” The federal banking agencies ~~have~~are required to take "prompt corrective action" with respect to financial institutions that do not meet minimum capital requirements. The law establishes five categories for this purpose: "well-capitalized," "adequately capitalized," "undercapitalized," "significantly undercapitalized" and "critically undercapitalized." To be considered "well-capitalized," an insured depository institution must maintain minimum capital ratios and must not be subject to any order or written directive to meet and maintain a specific capital level for any capital measure. To be well-capitalized, the ~~discretion~~Bank must maintain at least the following capital ratios:

•10.0% Total capital to ~~determine~~risk-weighted assets

•8.0% Tier 1 capital to risk-weighted asset

•6.5% CET1 to risk-weighted assets; and

•5.0% leverage ratio.

An institution that fails to remain well-capitalized becomes subject to a series of restrictions that increase in severity as its capital condition weakens. Such restrictions may include a prohibition on capital distributions, restrictions on asset growth or restrictions on the ability to receive regulatory approval of applications. The regulations apply only to banks and not to BHCs. However, the Federal Reserve is authorized to take appropriate action at the holding company level, based on the undercapitalized status of the holding company's subsidiary banking institutions. In certain instances relating to an undercapitalized banking institution, does not qualify for such treatment due to its risk profile. An institution’s risk profile may be assessed by its off-balance sheet exposure, trading of assets and liabilities, notional derivatives’ exposure, and other factors.

~~On November 21, 2018,~~ the ~~federal banking agencies issued for public comment a proposal under which a community banking organization~~BHC would be eligible to elect the community bank leverage ratio framework if it has less than $10 billion in total consolidated assets, limited amounts of certain assets and off-balance sheet exposures, and a community bank leverage ratio greater than 9%. A qualifying community banking organization that has chosen the proposed framework would not be required to ~~calculate~~guarantee the ~~existing risk-based~~performance of the undercapitalized subsidiary's capital restoration plan and ~~leverage~~could be liable for civil money damages for failure to fulfill those guarantee commitments.

In addition, failure to meet capital ~~requirements. This proposal further provides that~~requirements may cause an institution ~~will be considered to have met the capital ratio requirements~~ to be ~~“well-capitalized” for~~directed to raise additional capital. Federal law further mandates that the ~~agencies' prompt corrective action rules, provided it has a community bank leverage ratio greater than 9%.~~

The Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update, or ASU, 2016-13 “Financial Instruments - Credit Losses” which applies a current expected credit losses (“CECL”) model to financial instruments. It is effective for fiscal years after December 31, 2019 for public companies, though there is a phase-in for emerging growth companies. CECL may affect the amount, timing and variability of the Company’s credit charges, and therefore its net income and regulatory capital. The Federal Reserve and other federal bank regulators have adopted a policy to allow a three-year phase-in of CECL’s effects on regulatory capital (the “CECL Capital Phase-In”). See “Risk Factors—Our allowance for loan losses may prove inadequate or we may be negatively affected by credit risk exposures.”

~~FDICIA~~

FDICIA directs each federal bank regulatory agency to prescribe standards for depository institutions and depository institution holding companies relating to internal controls, information systems, internal audit systems, loan documentation, credit underwriting, interest rate exposure, asset growth composition, a maximum ratio of classified assets to capital, minimum earnings sufficient to absorb losses, a minimum ratio of market value to book value for publicly traded shares,agencies adopt safety and soundness standards generally relating to operations and management, asset quality and executive compensation, and authorizes administrative action against an institution that fails to meet such standards. Failure to meet capital guidelines may subject a banking organization to a variety of other ~~standards as~~enforcement remedies, including additional substantial restrictions on its operations and activities, termination of deposit insurance by the ~~federal bank regulators deem appropriate.~~FDIC and, under certain conditions, the appointment of a conservator or receiver.

~~Enforcement Policies~~Lending Practices

Federal bank regulatory guidance titled “Concentrations in Commercial Real Estate Lending, Sound Risk Management Practices” (the “CRE Guidance”) requires that appropriate processes be in place to identify, monitor and ~~Actions~~control risks associated with real estate lending concentrations. This could include enhanced strategic planning, CRE underwriting policies, risk management, internal controls, portfolio stress testing and risk exposure limits as well as appropriately designed compensation and incentive programs. Higher allowances for loan losses and capital levels may also be required. 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. We have always had significant exposures to loans secured by CRE due to the nature of our markets. We believe our long term experience in CRE lending, underwriting policies, internal controls, and other policies currently in place, as well as our loan and credit monitoring and administration procedures, are generally appropriate to manage our concentrations as required under the guidance.

Federal law limits a bank's authority to extend credit to directors and executive officers of the bank or its affiliates and persons or companies that own, control or have power to vote more than 10% of any class of securities of a bank or an affiliate of a bank, as well as to entities controlled by such persons. Among other things, extensions of credit to insiders are required to be made on terms that are substantially the same as, and follow credit underwriting procedures that are not less stringent than, those prevailing for comparable transactions with unaffiliated persons. Also, the terms of such extensions of credit may not involve more than the normal risk of repayment or present other unfavorable features and may not exceed certain limitations on the amount of credit extended to such persons, individually and in the aggregate, which limits are based, in part, on the amount of the bank's capital.

Debit Interchange Fees

Payment of Dividends and Repurchases

We and the Bank are subject to various general regulatory policies and requirements relating to the payment of dividends, including requirements to maintain capital above regulatory minimums. The Federal Reserve and the OCC ~~monitor compliance with laws~~are authorized to determine when the payment of dividends by the Company and ~~regulations.~~the Bank, respectively, would be an unsafe or unsound practice, and may prohibit such dividends. The ~~CFPB monitors compliance with laws~~Federal Reserve and ~~regulations applicable~~the OCC have indicated that paying dividends that deplete a bank’s capital base to ~~consumer financial products and services. Violations of laws and regulations, or other~~an inadequate level would be an unsafe and unsound ~~practices, may result in these agencies imposing fines, penalties and/or restitution, cease~~banking practice. The Federal Reserve and ~~desist orders, or taking other formal or informal enforcement actions. Under certain circumstances, these agencies may enforce similar remedies directly against officers, directors, employees~~the OCC have each indicated that depository institutions and ~~others participating in the affairs~~their holding companies should generally pay dividends only out of ~~a bank or~~current year’s operating earnings.

A bank holding company must give the Federal Reserve prior notice of any purchase or redemption of its equity securities if the consideration for the purchase or redemption, when combined with the consideration for all such purchases or redemptions in the preceding 12 months, is equal to 10% or more of its consolidated net worth. The Federal Reserve may disapprove such a purchase or redemption if it determines that the proposal would be an unsafe or unsound practice or would violate any law, regulation, Federal Reserve order, or condition imposed in writing by the Federal Reserve. This notification requirement does not apply to a bank holding company that qualifies as well-capitalized, received a composite rating and a rating for management of “1” or “2” in its last examination and is not subject to any unresolved supervisory issue.

The Basel III Capital Rules, which we discuss below, further limit our permissible dividends, stock repurchases and discretionary bonuses, including ~~fines, penalties~~those of the Bank, unless we and the ~~recovery, or claw-back,~~Bank continue to meet the fully phased-in capital conservation buffer requirement. The Company and the Bank exceeded the capital conservation requirement at year end 2023. See “Capital Requirements”.

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 ~~compensation.~~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.

~~Fiscal~~Capital Requirements

We and ~~Monetary Policy~~

~~Banking is~~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. The required capital ratios are minimums, and the Federal Reserve and OCC may determine that a ~~business that depends on interest rate differentials. In general, the difference between the interest paid by a bank~~banking organization, based on its ~~deposits~~size, complexity or risk profile, must maintain a higher level of capital in order to operate in a safe and ~~its other borrowings,~~sound manner. Risks such as concentration of credit risks and the ~~interest received by a bank on its loans and securities holdings, constitutes the major portion of a bank’s earnings. Thus, our earnings and growth, and that of the Bank,~~risk arising from non-traditional activities, as well as the ~~values~~institution’s exposure to a decline in the economic value of its capital due to changes in interest rates, and ~~earnings~~an institution’s ability to manage those risks are important factors that are to be taken into account by the federal banking agencies in assessing an institution’s overall capital adequacy. The following is a brief description of the relevant provisions of these capital rules and their potential impact on our ~~assets~~ and the ~~costs of our deposits and other liabilities~~Bank's capital levels. The relevant capital measures are ~~subject to~~ the ~~influence of economic conditions generally, both domestic and foreign, and also to~~total risk-based capital ratio, Tier 1 risk-based capital ratio, common equity Tier 1 or “CET1” capital ratio, as well as, the monetary and fiscal policies of the U.S. and its agencies, particularly the Federal Reserve. The Federal Reserve regulates the supply of money through various means, including open market dealings in U.S. government securities, the setting of the discount rate at which banks may borrow from the Federal Reserve, and the reserve requirements on deposits.leverage capital ratio.

The Federal Reserve has ~~been paying interest~~risk-based capital rules for bank holding companies and the OCC has similar rules for national banks. These rules require a minimum ratio of capital to risk-weighted assets (including certain off-balance sheet activities, such as standby letters of credit) and capital conservation buffer of 10.50%. Tier 1 capital includes common equity and related retained earnings and a limited amount of qualifying preferred stock, less goodwill and certain core deposit intangibles. Voting common equity must be the predominant form of capital. Tier 2 capital consists of non-qualifying preferred stock, qualifying subordinated, perpetual, and/or mandatory convertible debt, term subordinated debt and intermediate term preferred stock, up to 45% of pre-tax unrealized holding gains on ~~depository institutions’ required~~available for sale equity securities with readily determinable market values that are prudently valued, and ~~excess reserve balances since October 6, 2008.~~a loan loss allowance up to 1.25% of its standardized total risk-weighted assets, excluding the allowance. The ~~payment~~capital rules also define the risk-weights assigned to assets and off-balance sheet items to determine the risk-weighted asset components of ~~interest on excess reserve balances was expected~~the risk-based capital rules, including, for example, “high volatility” commercial real estate, past due assets, structured securities and equity holdings. We collectively refer to ~~give~~Tier 1 risk based capital and Tier 2 capital as Total risk-based capital.

In addition, the Federal Reserve ~~greater scope~~has established minimum leverage ratio guidelines for bank holding companies, which provide for a minimum leverage ratio of Tier 1 capital to ~~use its lending programs~~adjusted average quarterly assets (“leverage ratio”) equal to ~~address conditions in credit markets while~~4%. However, regulators expect bank holding companies and banks to operate with leverage ratios above the minimum. The guidelines also ~~maintaining~~provide that institutions experiencing internal growth or making acquisitions will be expected to maintain strong capital positions substantially above the ~~Federal Funds rate close to the target rate established by the Federal Open Market Committee, or FOMC.~~minimum supervisory levels without significant reliance on intangible assets. The Federal Reserve has indicated that it will continue to consider a “tangible Tier 1 leverage ratio” (deducting all intangibles) in evaluating proposals for expansion or new activity. Higher capital may ~~use this authority~~be required in individual cases and depending upon a bank holding company’s risk profile. All bank holding companies and banks are expected to ~~implement a mandatory policy~~hold capital commensurate with the level and nature of their risks, including the volume and severity of their problem loans. The level of Tier 1 capital to ~~reduce excess liquidity, in~~risk-adjusted assets is becoming more widely used by the ~~event of, or threat of, inflation.~~

~~In April 2010,~~bank regulators to measure capital adequacy. Neither the Federal Reserve ~~Board amended Regulation D (Reserve Requirements~~nor the OCC has advised us of ~~Depository Institutions) authorizing~~any specific minimum leverage ratio or tangible Tier 1 leverage ratio applicable to the Reserve Banks to offer term deposits to certain institutions. Term deposits, which are deposits with specified maturity dates, will be offered through a Term Deposit Facility. Term deposits will be one of several tools thatCompany or the Bank, respectively. Under Federal Reserve ~~could employ~~policies, bank holding companies are generally expected to ~~drain reserves as policymakers judge that a less accommodative monetary policy is appropriate.~~

~~In 2011,~~operate with capital positions well above the ~~Federal Reserve repealed its historical Regulation Q to permit banks to pay interest on demand deposits.~~minimum ratios. The Federal Reserve ~~also engaged in several rounds~~believes the risk-based ratios do not fully take into account the quality of ~~quantitative easing, or QE, to reduce~~capital and interest ~~rates by buying bonds,~~rate, liquidity, market and ~~“Operation Twist” to reduce long term interest rates by buying long term bonds, while selling intermediate term securities. Beginning in December 2013, the Federal Reserve began to taper~~operational risks. Accordingly, supervisory assessments of capital adequacy may differ significantly from conclusions based solely on the level of ~~bonds purchased in December 2013, but continued~~an organization’s risk-based capital ratio.

In order to ~~reinvest~~avoid certain restrictions on permissible dividends, stock repurchases and discretionary bonuses, a minimum “capital conservation buffer” of CET1 capital of at least 2.5% of total risk-weighted assets, is required. The capital conservation buffer is calculated as the ~~principal of its securities as these mature.~~

~~The Federal Reserve’s Normalization Policy was adopted September 2014. This Policy includes gradually raising~~lowest of: (i) the ~~Federal Reserve’s target range for~~banking organization’s CET1 capital ratio minus 4.5%; (ii) the ~~Federal Funds rate to more normal levels and gradually reducing~~banking organization’s Tier 1 risk-based capital ratio minus 6.0%; or (iii) the Federal Reserve’s holdings of U.S. government and agency securities. The Federal Reserve’s target Federal Funds rate has increased nine times since December 2015 in 25 basis point increments from 0.25% to 2.50% on December 20, 2018. Although the Federal Reserve considers the target Federal Funds rate its primary means of monetary policy normalization, in September 2017, it began reducing its securities holding by not reinvesting the principal of maturing securities, subject to certain monthly caps on amounts not reinvested. In 2019, due to various factors, the Federal Reserve indicated no immediate further increases in its target Federal Funds rate, and that the Federal Reserve was reconsidering an appropriate level for its securities holdings, and therefore its securities sales. In March 2019, the Federal Reserve’s Open Market Committee determined to slow the reduction in its monthly sales of its holdings of Treasury securities from $30 billion to $15 billion beginning in May 2019, and to conclude the reduction in its securities holdings at the end of September 2019. It will allow its holdings of mortgage backed securities, or MBS, to decline by reinvesting $20 billion per month of MBS principal repayments in Treasury securities, while retaining flexibility to sell MBS over the longer run.

The nature and timing of any changes in monetary policies and their effect on us and the Bank cannot be predicted. The turnover of a majority of the Federal Reserve Board and the members of its FOMC and the appointment of a new Federal Reserve Chairman may result in changes in policy and the timing and amount of monetary policy normalization.

banking organization’s total risk-based capital ratio minus 8.0%.

ThecapitalelementsandtotalcapitalundertheBaselIIICapitalRules are as follows:

~~FDIC Insurance Assessments~~


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 ~~Bank’s deposits are insured by DIF~~Federal Reserve, the OCC, and the ~~Bank is subject to~~ FDIC, ~~assessments~~published a final rule on July 22, 2019 (“the Capital Simplifications Final Rule”) that simplifies existing regulatory capital rules for ~~its deposit insurance, as well as assessments by the FDIC to pay interest on Financing Corporation, or FICO, bonds.~~

Effective April 1, 2011, the FDIC began calculating assessments based on an institution’s average consolidated total assets less its average tangible equity, or FDIC Assessment Base, in accordance with changes mandated by the Dodd-Frank Act. The FDIC’s changes shifted part of the burden of deposit insurance premiums toward depositorynon-advanced approaches institutions, ~~relying on funding sources other than customer deposits.~~

Effective July 1, 2016, the FDIC again changed its deposit insurance pricing and eliminated all risk categories and now uses a “financial ratios method” based on CAMELS composite ratings to determine assessment rates for small established institutions with less than $10 billion in assets, or Small Banks. The financial ratios method sets a maximum assessment for CAMELS 1 and 2 rated banks, and sets minimum assessments for lower rated institutions. All basis points are annual amounts.

~~The following table shows the FDIC assessment schedule for 2017 applicable to Small Banks,~~ such as the ~~Bank.~~



	~~Established Small Institution CAMELS Composite~~
	~~1 or 2~~	3	~~4 or 5~~
~~Initial Base Assessment Rule~~	~~3 to 16 basis points~~	~~6 to 30 basis points~~	~~16 to 30 basis points~~
~~Unsecured Debt Adjustment~~	~~-5 to 0 basis points~~	~~-5 to 0 basis points~~	~~-5 to 0 basis points~~
~~Total Base Assessment Rate~~	~~1.5 to 16 basis points~~	~~3 to 30 basis points~~	~~11 to 30 basis points~~

~~On March 15, 2016~~Company. Non-advanced approaches institutions were permitted to implement the ~~FDIC implemented Dodd-Frank Act provisions by raising~~Capital Simplifications Final Rule as of its revised effective date in the ~~DIF’s minimum reserve ratio~~quarter beginning January 1, 2020, or wait until the quarter beginning April 1, 2020. As of the date of implementation, the required deductions from ~~1.15% to 1.35%. The FDIC imposed a 4.5 basis point annual surcharge on insured depository institutions with total consolidated~~regulatory capital CET1 elements for mortgage servicing assets ~~of $10 billion or more, or Large Banks. The new rules grant credits to smaller banks for the portion of their regular assessments that contribute to increasing the reserve ratio from 1.15% to 1.35%.~~

~~The FDIC’s reserve ratio reached 1.36% on September 30, 2018, exceeding the minimum requirement. As a result, deposit insurance surcharges on Large Banks ceased,~~(“MSAs”) and ~~smaller banks will receive credits against their deposit assessments from the FDIC for their portion of assessments that contributed~~temporary difference deferred tax assets (“DTAs”) are only required to the ~~growth~~extent these assets exceed 25% of CET1 capital elements, less any adjustments and deductions (the “CET1 Deduction Threshold”). MSAs and temporary difference DTAs that are not deducted from capital are assigned a 250% risk weight. Investments in the ~~reserve ratio~~capital instruments of unconsolidated financial institutions are deducted from ~~1.15%~~capital when these exceed the 25% CET1 Deduction Threshold. Minority interests in up to ~~1.35%. The Bank’s credit at~~10% of the ~~close~~parent banking organization’s CET1, Tier capital and total capital, after deductions and adjustments are permitted to be included in capital effective October 1, 2019. Also, effective October 1, 2019, the final rule made various technical amendments, including reconciling a difference in the capital rules and the bank holding company rules that permits the redemption of ~~2018 was $2.1 million and credits will be received and applied against the Bank’s deposit insurance assessment each quarter that the reserve ratio exceeds 1.36%.~~

Prior to June 30, 2016, when the new assessment system became effective, the Bank’s overall rate for assessment calculations was 9 basis points or less, which was within the range of assessment rates for the lowest “risk category”bank holding company common stock without prior Federal Reserve approval under the ~~former FDIC assessment~~capital rules. ~~In 2018, 2017~~Such redemptions remain subject to other requirements, including the BHC Act and ~~2016, we recorded a FDIC insurance premium expense of $6.2 million, $5.2 million and $5.1 million, respectively.~~

In addition, all FDIC-insured institutions are required to pay a pro rata portion of the interest due on FICO bonds, which mature during 2017 through 2019. FICO assessments are set by the FDIC quarterly on each institution’s FDIC Assessment Base.Federal Reserve Regulation Y. The ~~FICO assessment was 0.580 basis points in three quarters of 2015, except for the third quarter of 2015, when the FICO assessment was 0.600 basis points. The FICO assessment rate was 0.580 basis points~~Company adopted these simplified capital rules in the first quarter of ~~2016,~~2020 and ~~0.560 basis points~~they had no material effect on the Company’s regulatory capital and ratios.

The Basel Committee on Banking Supervision published the last version of the Basel III accord in 2017, generally referred to as “Basel IV.” The Basel Committee stated that a key objective of the revisions incorporated into the framework is to reduce excessive variability of risk-weighted assets, which will be accomplished by enhancing the robustness and risk sensitivity of the standardized approaches for credit risk and operational risk. This will facilitate the ~~remainder~~comparability of ~~that year.~~banks’ capital ratios, constraining the use of internally modeled approaches, and complementing the risk-weighted capital ratio with a finalized leverage ratio and a revised and robust capital floor. Leadership of the Federal Reserve, OCC, and FDIC, who are tasked with implementing Basel IV, supported the revisions. Under the current U.S. capital rules, operational risk capital requirements and a capital floor apply only to advanced approaches institutions, and not to us. The ~~FICO Assessment rate was 0.560 basis points~~impact of Basel IV on us will depend on the manner in which it is implemented by the ~~first quarter~~federal bank regulators.

As of ~~2017, and 0.540 basis points for~~December 31, 2023, the other three quarters. FICO assessments of less than $500,000 were paid to the FDIC in 2015, 2016 and 2017, respectively. FICO assessments were 0.460 basis points in the first quarter of 2018, 0.440 basis points in the second quarter of 2018 and 0.320 basis points for the third and fourth quarters of 2018. FICO assessments of less than $500,000 were paid to the FDIC in 2018. The FICO assessments have declined to 0.140 basis points in the first quarter of 2019 and 0.120 basis points in the second quarter. The last FICO bonds mature in 2019Company’s and the ~~FICO assessments will end.~~Bank's CET1 ratio were 9.79% and 10.73%, respectively. In addition, the Company’s and the Bank’s total risk-based capital ratio as of December 31, 2023 were 12.12% and 11.95%, respectively. 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.

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. The law establishes five categories for this purpose: "well-capitalized," "adequately capitalized," "undercapitalized," "significantly undercapitalized" and "critically undercapitalized." To be considered "well-capitalized," an insured depository institution must maintain minimum capital ratios and must not be subject to any order or written directive to meet and maintain a specific capital level for any capital measure. To be well-capitalized, the Bank must maintain at least the following capital ratios:

•10.0% Total capital to risk-weighted assets

•8.0% Tier 1 capital to risk-weighted asset

•6.5% CET1 to risk-weighted assets; and

•5.0% leverage ratio.

An institution that fails to remain well-capitalized becomes subject to a series of restrictions that increase in severity as its capital condition weakens. Such restrictions may include a prohibition on capital distributions, restrictions on asset growth or restrictions on the ability to receive regulatory approval of applications. The regulations apply only to banks and not to BHCs. However, the Federal Reserve is authorized to take appropriate action at the holding company level, based on the undercapitalized status of the holding company's subsidiary banking institutions. In certain instances relating to an undercapitalized banking institution, the BHC would be required to guarantee the performance of the undercapitalized subsidiary's capital restoration plan and could be liable for civil money damages for failure to fulfill those guarantee commitments.

In addition, failure to meet capital requirements may cause an institution to be directed to raise additional capital. Federal law further mandates that the agencies adopt safety and soundness standards generally relating to operations and management, asset quality and executive compensation, and authorizes administrative action against an institution that fails to meet such standards. Failure to meet capital guidelines may subject a banking organization to a variety of other enforcement remedies, including additional substantial restrictions on its operations and activities, termination of deposit insurance by the FDIC and, under certain conditions, the appointment of a conservator or receiver.

Lending Practices

~~The federal~~

Federal bank ~~regulators released~~regulatory guidance ~~in 2006 on~~titled “Concentrations in Commercial Real Estate ~~Lending”~~Lending, Sound Risk Management Practices” (the “CRE Guidance”). The guidance defines CRE loans as exposures secured by raw land, land development and construction (including 1-4 family residential construction), multi-family property, and non-farm nonresidential property where the primary or a significant source of repayment is derived from rental income associated with the property (that is, loans for which 50% or more of the source of repayment comes from third party, non-affiliated, rental income) or the proceeds of the sale, refinancing, or permanent financing of this property. Loans to REITs and unsecured loans to developers that closely correlate to the inherent risks in CRE markets would also be considered CRE loans under the guidance. Loans on owner occupied CRE are generally excluded.

~~The CRE Guidance~~ requires that appropriate processes be in place to identify, monitor and control risks associated with real estate lending concentrations. This could include enhanced strategic planning, CRE underwriting policies, risk management, internal controls, portfolio stress testing and risk exposure limits as well as appropriately designed compensation and incentive programs. Higher allowances for loan losses and capital levels may also be required. The ~~guidance is triggered when either:~~

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 ~~reported~~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.~~

~~The Bank monitors its concentration~~capital and the outstanding balance of the institutions CRE ~~loans and its relationship to its Total Risk-based Capital. The following table depicts~~portfolio has increased by 50% or more during the ~~exposure for the last three years ending December 31, 2018, 2017 and 2016:~~

(in thousands, except percentages) 2018 2017 2016
Commercial real estate (CRE)
Nonowner occupied $ 1,809,356
$ 1,713,104
$ 1,377,753
Multi-family residential 909,439
839,709
667,256
Land development and construction loans 326,644
406,940
429,085
Total CRE $ 3,045,439
$ 2,959,753
$ 2,474,094
% of risk-based capital 344.61 % 334.11 % 291.75 %
% of total loans 51.44 % 48.79 % 42.92 %
Land development and construction loans $ 326,644
$ 406,940
$ 429,085
% of risk-based capital 36.96 % 45.94 % 50.60 %
% of total loans 5.52 % 6.71 % 7.44 %
Total risk-based capital $ 883,746
$ 885,855
$ 848,029
Total loans $ 5,920,175
$ 6,066,225
$ 5,764,761

prior 36 months. We have always had significant exposures to loans secured by CRE due to the nature of our markets. We believe our long term experience in CRE lending, underwriting policies, internal controls, and other policies currently in place, as well as our loan and credit monitoring and administration procedures, are generally appropriate to manage our concentrations as required under the guidance.

Debit Interchange Fees

Interchange fees are fees that merchants pay to card companies and card-issuing banks such as the Bank for processing electronic payment transactions on their behalf. The ~~federal~~“Durbin Amendment” in the Dodd-Frank Act provides limits on the amount of debit card interchange that may be received or charged by the debit card issuer, for insured depository institutions with $10 billion or more in assets (inclusive of affiliates) as of the end of the calendar year. Subject to certain exemptions and potential adjustments, the Durbin Amendment limits debit card interchange received or charged by the issuer to $0.21 plus 5 basis points multiplied by the value of the transaction. 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. 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.

Payment of Dividends and Repurchases

A bank ~~regulators~~holding company must give the Federal Reserve prior notice of any purchase or redemption of its equity securities if the consideration for the purchase or redemption, when combined with the consideration for all such purchases or redemptions in the preceding 12 months, is equal to 10% or more of its consolidated net worth. The Federal Reserve may disapprove such a purchase or redemption if it determines that the proposal would be an unsafe or unsound practice or would violate any law, regulation, Federal Reserve order, or condition imposed in writing by the Federal Reserve. This notification requirement does not apply to a bank holding company that qualifies as well-capitalized, received a composite rating and a rating for management of “1” or “2” in its last examination and is not subject to any unresolved supervisory issue.

The Basel III Capital Rules, which we discuss below, further limit our permissible dividends, stock repurchases and discretionary bonuses, including those of the Bank, unless we and the Bank continue to ~~look~~meet the fully phased-in capital conservation buffer requirement. The Company and the Bank exceeded the capital conservation requirement at year end 2023. See “Capital Requirements”.

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 ~~risks~~time of ~~various~~each dividend, to satisfy the preferential rights upon dissolution of shareholders whose preferential rights are superior to those entitled to receive the dividend.

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 ~~asset categories~~capital to risk-weighted assets. The required capital ratios are minimums, and the Federal Reserve and OCC may determine that a banking organization, based on its size, complexity or risk ~~management. In December 2015,~~profile, must maintain a higher level of capital in order to operate in a safe and sound manner. Risks such as concentration of credit risks and the risk arising from non-traditional activities, as well as the institution’s exposure to a decline in the economic value of its capital due to changes in interest rates, and an institution’s ability to manage those risks are important factors that are to be taken into account by the federal banking agencies in assessing an institution’s overall capital adequacy. The following is a brief description of the relevant provisions of these capital rules and their potential impact on our and the Bank's capital levels. The relevant capital measures are the total risk-based capital ratio, Tier 1 risk-based capital ratio, common equity Tier 1 or “CET1” capital ratio, as well as, the leverage capital ratio.

The Federal Reserve has risk-based capital rules for bank holding companies and the OCC has similar rules for national banks. These rules require a minimum ratio of capital to risk-weighted assets (including certain off-balance sheet activities, such as standby letters of credit) and capital conservation buffer of 10.50%. Tier 1 capital includes common equity and related retained earnings and a limited amount of qualifying preferred stock, less goodwill and certain core deposit intangibles. Voting common equity must be the predominant form of capital. Tier 2 capital consists of non-qualifying preferred stock, qualifying subordinated, perpetual, and/or mandatory convertible debt, term subordinated debt and intermediate term preferred stock, up to 45% of pre-tax unrealized holding gains on available for sale equity securities with readily determinable market values that are prudently valued, and a loan loss allowance up to 1.25% of its standardized total risk-weighted assets, excluding the allowance. The capital rules also define the risk-weights assigned to assets and off-balance sheet items to determine the risk-weighted asset components of the risk-based capital rules, including, for example, “high volatility” commercial real estate, past due assets, structured securities and equity holdings. We collectively refer to Tier 1 risk based capital and Tier 2 capital as Total risk-based capital.

In addition, the Federal Reserve has established minimum leverage ratio guidelines for bank holding companies, which provide for a minimum leverage ratio of Tier 1 capital to adjusted average quarterly assets (“leverage ratio”) equal to 4%. However, regulators ~~issued~~expect bank holding companies and banks to operate with leverage ratios above the ~~Interagency Statement~~minimum. The guidelines also provide that institutions experiencing internal growth or making acquisitions will be expected to maintain strong capital positions substantially above the minimum supervisory levels without significant reliance on ~~Prudent Risk Management~~intangible assets. The Federal Reserve has indicated that it will continue to consider a “tangible Tier 1 leverage ratio” (deducting all intangibles) in evaluating proposals for ~~Commercial Real Estate Lending~~expansion or new activity. Higher capital may be required in individual cases and depending upon a bank holding company’s risk profile. All bank holding companies and banks are expected to ~~highlight prudent risk management practices, within existing guidance, that regulated financial institutions should implement along with maintaining~~hold capital ~~levels~~ commensurate with the level and nature of their ~~CRE concentration risk, especially where~~risks, including the volume and severity of their problem loans. The level of Tier 1 capital to risk-adjusted assets is becoming more widely used by the bank regulators to measure capital adequacy. Neither the Federal Reserve nor the OCC has advised us of any specific minimum leverage ratio or tangible Tier 1 leverage ratio applicable to the Company or the Bank, respectively. Under Federal Reserve policies, bank holding companies are generally expected to operate with capital positions well above the minimum ratios. The Federal Reserve believes the risk-based ratios do not fully take into account the quality of capital and interest rate, liquidity, market and operational risks. Accordingly, supervisory assessments of capital adequacy may differ significantly from conclusions based solely on the level of an organization’s risk-based capital ratio.

In order to avoid certain restrictions on permissible dividends, stock repurchases and discretionary bonuses, a ~~bank has a sharp increase in CRE loans~~minimum “capital conservation buffer” of CET1 capital of at least 2.5% of total risk-weighted assets, is required. 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 ~~significant concentrations of CRE secured by a particular property type.~~

(iii) the banking organization’s total risk-based capital ratio minus 8.0%.

~~In 2013,~~ ThecapitalelementsandtotalcapitalundertheBaselIIICapitalRules 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 ~~other banking regulators issued their “Interagency Guidance~~the FDIC, published a final rule on ~~Leveraged Lending” highlighting standards~~July 22, 2019 (“the Capital Simplifications Final Rule”) that simplifies existing regulatory capital rules for ~~originating leveraged transactions and managing leveraged portfolios,~~non-advanced approaches institutions, such as ~~well~~the Company. Non-advanced approaches institutions were permitted to implement the Capital Simplifications Final Rule as ~~requiring banks to identify their highly leveraged transactions,~~of its revised effective date in the quarter beginning January 1, 2020, or ~~HLTs. The Bank adjusted its lending practices to conform to this guidance. Beginning September 30, 2017~~wait until the ~~Company updated application of the definition of HLT to include unfunded commitments as part of the leverage ratio calculation.~~quarter beginning April 1, 2020. As of December 31, 2018, syndicated loans that financed HLTs of $207.7 million, or 3.51% of total loans, compared to $141.3 million, or 2.33% of total loans, as of December 31, 2017 and $174.7 million, or 3.03% of total loans, as of December 31, 2016. The Government Accountability Office issued a statement on October 23, 2017 that this guidance constituted a “rule” for purposes of the Congressional Review Act, which provides Congress with the right to review the guidance and issue a joint resolution for signature by the President disapproving it. No such action was taken, and instead, the federal bank regulators issued a September 11, 2018 “Statement Reaffirming the Role of Supervisory Guidance.” This Statement indicated that guidance does not have the force or effect of law or provide the basis for enforcement actions, and that guidance can outline supervisory agencies’ views of supervisory expectations and priorities, and appropriate practices.

~~Other Dodd-Frank Act Provisions~~

~~In addition to the capital, liquidity and FDIC deposit insurance changes discussed above, some of the provisions of the Dodd-Frank Act that we believe may affect us are set forth below.~~

~~Financial Stability Oversight Council~~

The Dodd-Frank Act created the Financial Stability Oversight Council, or FSOC, which is chaired by the Secretary of the Treasury and composed of representatives from various financial services regulators. The FSOC has responsibility for identifying risks and responding to emerging threats to financial stability.

~~Executive Compensation~~

The Dodd-Frank Act provides shareholders of all public companies with a say on executive pay. Under the Dodd-Frank Act, each company must give its shareholders the opportunity to vote on the compensation of its executives, on a non-binding advisory basis, at least once every three years. The Dodd-Frank Act also adds disclosure and voting requirements for golden parachute compensation that is payable to named executive officers in connection with sale transactions.

The SEC is required under the Dodd-Frank Act to issue rules obligating companies to disclose in proxy materials for annual shareholders meetings, information that shows the relationship between executive compensation actually paid to their named executive officers and their financial performance, taking into account any change in the value of the shares of a company’s stock and dividends or distributions. The Dodd-Frank Act also provides that a company’s compensation committee may only select a consultant, legal counsel or other advisor on matters of compensation after taking into consideration factors to be identified by the SEC that affect the independence of a compensation consultant, legal counsel or other advisor.

Section 954 of the Dodd-Frank Act added section 10D to the Securities Exchange Act of 1934 (the “Exchange Act”). Section 10D directs the SEC to adopt rules prohibiting a national securities exchange or association from listing a company unless it develops, implements, and discloses a policy regarding the recovery or “claw-back” of executive compensation in certain circumstances. The policy must require that, in the event an accounting restatement due to material noncompliance with a financial reporting requirement under the federal securities laws, we will recover from any current or former executive officer any incentive-based compensation (including stock options) received during the three year period preceding the date of implementation, the ~~restatement, which is in excess~~required deductions from regulatory capital CET1 elements for mortgage servicing assets (“MSAs”) and temporary difference deferred tax assets (“DTAs”) are only required to the extent these assets exceed 25% of ~~what would have been paid based on the restated financial statements. There is no requirement of wrongdoing by the executive,~~CET1 capital elements, less any adjustments and ~~the claw-back is mandatory~~deductions (the “CET1 Deduction Threshold”). MSAs and applies to all executive officers. Section 954 augments section 304 of the Sarbanes-Oxley Act, which requires the Chief Executive Officer and Chief Financial Officer to return any bonus or other incentive or equity-based compensation received during the 12 months following the date of similarly inaccurate financial statements, as well as any profit receivedtemporary difference DTAs that are not deducted from the sale of employer securities during the period, if the restatement was due to misconduct. Unlike section 304, under which only the SEC may seek recoupment, the Dodd-Frank Act requires us to seek the return of compensation.

The SEC adopted rules in September 2013 to implement pay ratios pursuant to Section 953 of the Dodd-Frank Act, beginning with fiscal year 2017 annual reports and proxy statements. The SEC proposed Rule 10D-1 under Section 954 on July 1, 2015 which would direct the Nasdaq Stock Market and the other national securities exchanges to adopt listing standards requiring companies to adopt policies requiring executive officers to pay back erroneously awarded incentive-based compensation. In February 2017, the acting SEC Chairman indicated interest in reconsidering the pay ratio rule.

~~The Dodd-Frank Act, Section 955, requires the SEC, by rule, to require that each company disclose~~capital are assigned a 250% risk weight. Investments in the ~~proxy materials for its annual meetings whether an employee or board member is permitted to purchase financial~~capital instruments ~~designed to hedge or offset decreases in the market value~~ of ~~equity securities granted as compensation or otherwise held by the employee or board member. The SEC proposed implementing rules in February 2015, though the rules have not been implemented to date.~~

~~Section 956 of the Dodd-Frank Act prohibits incentive-based compensation arrangements that encourage inappropriate risk taking by covered~~unconsolidated financial institutions are ~~deemed~~deducted from capital when these exceed the 25% CET1 Deduction Threshold. Minority interests in up to 10% of the parent banking organization’s CET1, Tier capital and total capital, after deductions and adjustments are permitted to be ~~excessive, or~~included in capital effective October 1, 2019. Also, effective October 1, 2019, the final rule made various technical amendments, including reconciling a difference in the capital rules and the bank holding company rules that ~~may lead to material losses. On June 21, 2010,~~permits the ~~federal~~redemption of bank regulators adopted guidance on Sound Incentive Compensation Policies, which, although targeted to larger, more complex organizations than us, include principles that have been applied to smaller organizations similar to us. This guidance applies to incentive compensation to executives as well as employees, who, “individually or a part of a group, have the ability to expose a banking organization to material amounts of risk.” Incentive compensation should:

~~provide employees incentives that appropriately balance risk and reward;~~

~~be compatible with effective controls and risk-management; and~~

~~be supported by strong corporate governance, including active and effective oversight by the organization’s board of directors.~~

The federal bank regulators, the SEC and other regulators proposed regulations implementing Section 956 in April 2011, which would have been applicable to, among others, depository institutions and their holding companies with $1 billion or more in assets. An advance notice of a revised proposed joint rulemaking under Section 956 was published by the financial services regulators in May 2016, but these rules have not been adopted. New discussions about implementing rules have arisen in early 2019.

~~As an emerging growth~~ company we are eligible to take advantage of exemptions to some of the requirements detailed above that are imposed upon us as a public company, including, but not limited to, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, exemptions from the requirement to provide information on the relationship between executive compensation actually paid to our named executive officers and our financial performance, exemptions from the requirement to disclose the ratio of our Chief Executive Officer pay to the pay of our median employee, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.

~~Debit Card Interchange Fees~~

The “Durbin Amendment” to the Dodd-Frank Act provide for new rules requiring that interchange transaction fees for electric debit transactions be “reasonable” and proportional to certain costs associated with processing the transactions. Thecommon stock without prior Federal Reserve ~~has established standards for assessing whether interchange fees are reasonable and proportional, which a Federal District Court ruled were improperly adopted. This decision in~~ ~~NACS v. Board of Governors of~~approval under the ~~Federal Reserve System~~, was reversed by the District of Columbia Circuit Court of Appeals in 2014 and the Supreme Court declined to hear an appeal on January 20, 2015. The Durbin Amendment is applicable to banking organizations with assets of $10 billion.

~~As a subsidiary of MSF, we were~~capital rules. Such redemptions remain subject to the Durbin Amendment interchange rules since MSF had consolidated assets over $10 billion. As a result of not being controlled by MSF after 2018, we are not subject to the Federal Reserve’s Durbin Amendment limits on interchange.

~~Derivatives~~

~~The Dodd-Frank Act requires a new regulatory system for the U.S. market for swaps and~~ other ~~over-the counter derivatives, which includes strict capital and margin~~ requirements, central clearing of standardized over-the-counter derivatives, and heightened supervision of over-the-counter derivatives dealers and major market participants. These rules likely have increased the costs and collateral required to utilize derivatives, that we may determine are useful to reduce our interest rate and other risks.

~~Other~~

The Dodd-Frank Act required an estimated 240-300 rulemakings and an estimated 130 studies. Many of these rules and studies have been completed. Generally, the Dodd-Frank Act and the related rules are complex, have increased our compliance costs, as well as costs imposed on the markets and on others with whom we do business. Many of the rules still lack authoritative interpretative guidance from the applicable government agencies.

~~Other Legislative and Regulatory Changes~~

~~Various legislative and regulatory proposals,~~ including substantial changes in banking, and the regulation of banks, and other depositories and financial institutions, compensation, and the regulation of financial markets and their participants and financial instruments, and the regulators of all of these, as well as the taxation of these entities, are being considered by the executive branch of the federal government, Congress and various state governments.

The President of the U.S. and certain members of the Legislature appear committed to financial regulatory reform, including changes to the Dodd-Frank Act. The President has frozen new rulemaking generally, and on February 3, 2017 issued an executive order containing “Core Principles for Regulating the United States Financial System,” or the Core Principles. The executive order directs the Secretary of the Treasury to consult with heads of Financial Stability Oversight Council’s members and report to the President within 120 days and periodically thereafter on how laws and government policies promote the Core Principles and to identify laws, regulations, guidance and reporting that restrain financial services regulation in a manner consistent with the Core Principles. Another executive order requires the repeal of two existing rules for any new significant regulatory proposal. Although this executive order does not apply to the SEC, the federal bank regulators or the CFPB, these independent agencies are encouraged to seek cost savings that would offset the costs of new significant regulatory actions.

~~The 2018 Growth Act, which was enacted on May 24, 2018, amends the Dodd-Frank Act,~~ the BHC Act and Federal Reserve Regulation Y. The Company adopted these simplified capital rules in the ~~Federal Deposit Insurance Act~~first quarter of 2020 and ~~other federal banking~~they had no material effect on the Company’s regulatory capital and ~~securities laws~~ratios.

The Basel Committee on Banking Supervision published the last version of the Basel III accord in 2017, generally referred to ~~provide regulatory relief in these areas:~~

~~consumer~~as “Basel IV.” The Basel Committee stated that a key objective of the revisions incorporated into the framework is to reduce excessive variability of risk-weighted assets, which will be accomplished by enhancing the robustness and risk sensitivity of the standardized approaches for credit risk and ~~mortgage lending;~~

operational risk. This will facilitate the comparability of banks’ capital ~~requirements;~~

~~Volcker Rule compliance;~~

~~stress testing~~ratios, constraining the use of internally modeled approaches, and ~~enhanced prudential standards;~~complementing the risk-weighted capital ratio with a finalized leverage ratio and

a revised and robust capital ~~formation.~~

~~On July 6, 2018,~~floor. Leadership of the Federal Reserve, OCC, and FDIC, ~~issued an interagency statement describing their interim positions~~who are tasked with implementing Basel IV, supported the revisions. Under the current U.S. capital rules, operational risk capital requirements and a capital floor apply only to advanced approaches institutions, and not to us. The impact of Basel IV on ~~regulations affected~~us will depend on the manner in which it is implemented by the ~~2018 Growth Act that remain in effect until~~federal bank regulators.

As of December 31, 2023, the ~~agencies amend their regulations to conform to that Act.~~

WeCompany’s and the Bank's CET1 ratio were 9.79% and 10.73%, respectively. In addition, the Company’s and the Bank’s total risk-based capital ratio as of December 31, 2023 were 12.12% and 11.95%, respectively. As a result, both the Company and the Bank are ~~evaluating the 2018 Growth Act and its likely effects on us. We believe it will facilitate our business, subject to its interpretation and implementation by our regulators. The following provisions~~currently classified as "well-capitalized" for purposes of the ~~2018 Growth Act may be especially helpful to banks of our size:~~OCC's prompt corrective action regulations.

“qualifying community banks,” defined as institutions with total consolidated assets of less than $10 billion, which meet a “community bank leverage ratio” of 8.00% to 10.00%, may be deemed to have satisfied applicable risk based capital requirements as well as the capital ratio requirements;

section 13(h) of the BHC Act, or the “Volcker Rule,” is amended to exempt from the Volcker Rule, banks with total consolidated assets valued at less than $10 billion, and trading assets and liabilities comprising not more than 5.00% of total assets;

~~“reciprocal deposits” will not be considered “brokered deposits” for FDIC purposes, provided such deposits do not exceed the lesser of $5 billion or 20% of the bank’s total liabilities; and~~

the consolidated asset threshold at which company-run stress tests are required increased from $10 billion to $250 billion, and the consolidated asset threshold for mandatory risk committees increased from $10 billion to $50 billion.

~~On November 21, 2018,~~Prompt Corrective Action Rules

•10.0% Total capital to risk-weighted assets

•8.0% Tier 1 capital to risk-weighted asset

•6.5% CET1 to risk-weighted assets; and

•5.0% leverage ratio.

An institution that fails to remain well-capitalized becomes subject to a series of restrictions that increase in severity as its capital condition weakens. Such restrictions may include a prohibition on capital distributions, restrictions on asset growth or restrictions on the ability to receive regulatory approval of applications. The regulations apply only to banks and not to BHCs. However, the Federal Reserve is authorized to take appropriate action at the holding company level, based on the undercapitalized status of the holding company's subsidiary banking institutions. In certain instances relating to an undercapitalized banking institution, the BHC would be required to guarantee the performance of the undercapitalized subsidiary's capital restoration plan and could be liable for civil money damages for failure to fulfill those guarantee commitments.

Enforcement Policies and Actions

The Federal Reserve and the OCC monitor compliance with laws and regulations. The CFPB monitors compliance with laws and regulations applicable to consumer financial products and services. Violations of laws and regulations, or other unsafe and unsound practices, may result in these agencies imposing fines, penalties and/or restitution, cease and desist orders, or taking other formal or informal enforcement actions. 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. 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. In order to fund the DIF, all insured depository institutions are required to pay quarterly assessments to the FDIC that are based on an institutions assignment to one of four risk categories based on supervisory evaluations, regulatory capital levels and certain other factors. The FDIC has the discretion to adjust an institution’s risk rating and may terminate its insurance of deposits upon a finding that the institution engaged or is engaging in unsafe and unsound practices, is in an unsafe or unsound condition to continue operations, or violated any applicable law, regulation, rule, order or condition imposed by the FDIC or written agreement entered into with the FDIC. The FDIC may also prohibit any FDIC-insured institution from engaging in any activity it determines to pose a serious risk to the DIF.

London Inter-Bank Offered Rate (LIBOR) Cessation and Replacement Rates

The Company owns all of the common capital securities issued by five 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”). 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. Under the LIBOR Act, on the first London banking day after June 30, 2023 (the “LIBOR Replacement Date”), a benchmark replacement recommend by the Federal Reserve will replace LIBOR in certain contracts, including those that contain no fallback provisions and other related aspects. Based on a review of the Trust Preferred Securities and the Debentures documents, these document do not provide a replacement rate for 3-month LIBOR or include other fallback provisions which would apply on the LIBOR Replacement Date. Based on the U.K. 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. Accordingly, after the LIBOR Replacement Date, the 3-month CME term SOFR as adjusted by the relevant spread adjustment of 0.26161%, became the benchmark replacement for 3-month LIBOR in the Trust Preferred Securities and Debentures documents, and all applicable benchmark replacement conforming changes as specified in the regulations became an integral part of the Trust Preferred Securities and Debenture documents.

Lender Net Worth Adjusted Requirements

Amerant Mortgage is currently an approved seller and servicer with Fannie Mae for the purpose of selling Fannie Mae eligible loan production and retaining the Mortgage Servicing Rights, or MSRs, of those same loans. As an approved Fannie Mae seller and servicer, Amerant Mortgage must meet certain net worth covenants outlined in Maintaining Seller/Servicer Eligibility section of the Fannie Mae Selling Guide, the “Selling Guide”.

Under the Selling Guide, Amerant Mortgage must meet a minimum net worth requirement of $2.5 million plus 0.25% of the outstanding unpaid principal balance of the portfolio of loans Amerant Mortgage is contractually obligated to service for Fannie Mae (the “Lender Adjusted Net Worth”). Failure to meet the minimum net worth or net worth decline tolerance outlined above, may prompt the suspension of Amerant Mortgage as an approved seller and/or servicer, which would prevent Amerant Mortgage from taking down new commitments to deliver loans to Fannie Mae and adding loans to any portfolio that Amerant Mortgage services for Fannie Mae.

Cybersecurity Regulations and Guidelines

The federal banking regulators regularly issue new guidance and standards, and update existing guidance and standards, regarding cybersecurity, which are intended to enhance cyber risk management by financial institutions. Financial institutions are expected to comply with such guidance and standards and to accordingly develop appropriate security controls and risk management processes. If we fail to observe this regulatory guidance or standards, we could be subject to various regulatory sanctions, including financial penalties.

Since May 2022, a rule adopted by the federal banking agencies ~~issued for public comment~~requires banking organizations to notify their primary banking regulator within 36 hours of determining that a ~~proposal~~"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 ~~simplify regulatory capital~~result in material loss, or its operations that would impact the stability of the United States.

In December 2023, new SEC rules became effective that require public companies, among other things, to report material cybersecurity incidents in current reports on Form 8-K. 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.

State regulators have also been increasingly active in implementing privacy and cybersecurity standards and regulations. Recently, several states have adopted regulations requiring certain financial institutions to implement cybersecurity programs and providing detailed requirements with respect to these programs, including data encryption requirements. Many states have also recently implemented or modified their data breach notification, information security and data privacy requirements. We expect this trend of state-level activity in those areas to continue and are continually monitoring developments where our customers are located.

Risks and exposures related to cybersecurity attacks, including litigation and enforcement risks, are expected to be elevated for ~~qualifying community banking organizations, as required by~~ the 2018 Growth Act. Under the proposal, a qualifying community banking organization would be eligible to elect the community bank leverage ratio framework. See “Supervision and Regulation—Other Legislative and Regulatory Changes.”

The Volcker Rule change may enable us to invest in certain collateralized loan obligations that are treated as “covered funds” prohibited to banking entities by the Volcker Rule. Reciprocal deposits, such as CDARs, may expand our funding sources without being subjected to FDIC limitations and potential insurance assessments increases for brokered deposits. The FDIC announced on December 19, 2018 a final rule that change existing rules to comply with the 2018 Growth Act’s reciprocal deposits provisions effective March 26, 2019. Well-capitalized and well-rated banks are not required to treat reciprocal deposits as brokered deposits upforeseeable future due to the ~~lesser of 20% of total liabilities or $5 billion. Banks that are not both well-capitalized~~rapidly evolving nature and well-rated may exclude reciprocal deposits under certain circumstances. The December 19, 2018 release also included a proposal seeking comments on the brokered deposits and related interest rates restrictions rules. Reciprocal deposits, such as CDARs, may expand our funding sources without being subjected to FDIC limitations and potential insurance assessments increases for brokered deposits.

~~Certain~~sophistication of these ~~proposals, if adopted, could significantly change~~threats, as well as due to the expanding use of Internet banking, mobile banking and other technology-based products and services by us and our customers. See Item 1A. Risk Factors for a further discussion of risks related to cybersecurity and Item 1c. Cybersecurity for further information on how we address and manage cybersecurity risks .

Future Legislative Developments

Congress may enact legislation from time to time that affects the regulation ~~or operations~~ of ~~banks and~~ the financial services ~~industry. New~~industry, and state legislatures may enact legislation from time to time affecting the regulation of financial institutions chartered by or operating in their states. Federal and state regulatory agencies also periodically propose and adopt changes to their regulations or change the manner in which existing regulations are applied. The substance or impact of pending or future legislation or regulation, or the application thereof, cannot be predicted, although any change could impact the regulatory structure under which we or our competitors operate and may significantly increase costs, impede the efficiency of internal business processes, require an increase in regulatory capital, require modifications to our business strategy, and limit our ability to pursue business opportunities in an efficient manner. It could also affect our competitors differently than us, including in a manner that would make them more or less competitive. A change in statutes, ~~are regularly proposed that contain wide-ranging proposals for altering the structures,~~ regulations or regulatory policies applicable to us or any of our affiliates could have a material, adverse effect on our business, financial condition and ~~competitive relationships~~results of ~~the nation’s financial institutions.~~operations.

~~Corporate website~~

Available Information

We maintain a website at the address www.amerantbank.com. 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. Additionally, the SEC maintains a website at the address www.sec.gov that contains the information we file or furnish electronically with the SEC. The information contained on our website is not incorporated by reference in, or considered part of, this ~~Annual Report on~~ Form 10-K.

Supplementary Item, Information about our Executive Officers

~~Item~~The Executive Officers of the Company as of March 7, 2024, are as follows:

Gerald P. Plush. 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. Plush has been a director of the Company’s and the Bank’s Board of Directors since July and October 2019, respectively, and served as Executive Vice-Chairman from February 2021 until his appointment as Vice-Chairman & CEO in March 2021. Mr. Plush is a highly respected financial services industry professional with over 35 years of senior executive leadership experience. From 2019 to February 2021, he was a partner at Patriot Financial Partners (“Patriot”), a private equity firm where he sourced new investment opportunities and represented Patriot on the Board of Directors for multiple portfolio banks, specialty finance and fintech companies. In 2018, he served as CEO for Verdigris Holdings, Inc., leading this start up through the regulatory application, organization and initial funding processes. Mr. Plush’s other prominent leadership roles include his tenure with Santander US from 2014 to 2017, initially as CFO and Executive Committee member, and subsequently as Chief Administrative Officer. He served on the board of Santander Consumer from 2014 to 2016, and as a director for the FHLB of Pittsburgh from 2016 to 2017. Mr. Plush previously served as President, COO and Board Member for Webster Bank beginning in 2006 as EVP and Chief Financial Officer. Prior to Webster, he spent 11 years with MBNA America, most recently as Senior Executive Vice President & Managing Director for corporate development and prior to that as CFO - North America.

Mr. Plush holds a Bachelor of Science degree in Accounting from St. Joseph’s University in Philadelphia, Pennsylvania. He is a CPA and CMA (inactive), and currently serves on several local boards, including the board of directors of the Miami-Dade Beacon Council, the Orange Bowl Committee, and the University of Miami Citizen’s Board.

Sharymar Calderón Yépez. Mrs. Calderón, age 36,was appointed Executive Vice President, Chief Financial Officer (CFO) in June 2023. Calderón is responsible for Amerant’s financial management, including treasury, financial reporting and accounting, financial analysis, investor relations & sustainability, internal controls and corporate tax. She also chairs the Asset-Liability Committee. Prior to her appointment as CFO, Mrs. Calderón served as Senior Vice President, Head of Internal Audit at Amerant since June 2021, where she led the implementation and monitoring of the Company’s audit plan and risk assessments, including coordination with external auditors and the integration of SOX audits. She is a licensed CPA in both Florida and Puerto Rico. Prior to Amerant, Mrs. Calderón worked at Ocean Bank as SVP, Head of Payment Operations. Before that, she worked at PricewaterhouseCoopers for nine years, where she began her career as an Associate and rose to Senior Manager over the course of her tenure, gaining extensive experience in financial services, including banking, broker dealers and asset management.

Mrs. Calderón received a double Bachelor of Business Administration in Accounting and Marketing from the University of Puerto Rico. She is a licensed Certified Public Accountant (CPA) in Florida and Puerto Rico, a member of the American Institute of Certified Public Accountants (AICPA), a member of the Puerto Rico State Society of CPAs and its Florida Chapter, and the Association of Latino Professionals for America (ALPFA). Mrs. Calderón currently serves on the board of directors of the Miami Zoo.

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. Capriles is responsible for all enterprise risk management oversight, including credit, market, operational and information security risk, BSA/AML and consumer compliance, as well as information technology. Mr. Capriles served in various roles with the former parent of the Bank, Mercantil Servicios Financieros, or MSF since 1995, including as Corporate Treasurer from 2008 to 2015, head of Corporate Market Risk Management from 1999 to 2008, and as Corporate Risk Specialist from 1995 to 1999, where he led the project to implement MSF’s enterprise risk management model. 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.

Mr. 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. He is a seasoned banking professional with significant experience in corporate and commercial banking. In his role, Esterripa oversees multiple business sectors, including commercial banking, commercial real estate, syndication, specialty finance, and treasury management. Before joining the Company, Mr. Esterripa served as EVP, Wholesale Banking Executive at City National Bank - Florida since 2016. From 2013 to 2017, he was SVP, Corporate & Commercial Banking Manager at BankUnited, NA. He served as Executive Vice President at Stonegate Bank from 2012 to 2013 and as Senior Vice President at Capital Bank since 2010 prior to that. From 2009 to 2010, Esterripa was SVP, Chief Lending Officer at Pacific National Bank, and from 2006 to 2009, he served as SVP, Head of Middle Market Division at Mercantil Commercebank, NA. Mr. Esterripa is a graduate of the Harvard Business School executive management program.

Carlos Iafigliola. Mr. Iafigliola, age 47, was appointed Senior Executive Vice President, Chief Operating Officer (COO) in June 2023. He is responsible for Amerant’s loan and deposit operations, project management, technology services, procurement, facilities, strategy and digital. Mr. Iafigliola chairs the Board of Amerant Investments and is member of the Board of Amerant Mortgage. He serves as Board member for Habitat for Humanity Broward and is a member of the Investment Committee of United Way Miami. Prior to his appointment as COO, Mr. Iafigliola served as EVP, Chief Financial Officer (CFO) since May 2020 spearheading Amerant’s financial management, including treasury, financial reporting and accounting, financial analysis, investor relations & sustainability, internal controls and corporate tax. Mr. Iafigliola also served as SVP, Treasury Manager from 2015 to May 2020 and held various management positions in the Treasury area from 2004 to 2015. Prior to joining Amerant, he served in senior roles in Market Risk at Banco Mercantil, also known as Mercantil Servicios Financieros (MSF), from 2000 to 2004. He joined MSF in April 1998.

Mr. Iafigliola earned a degree in Economics from Universidad Católica Andrés Bello in Caracas, Venezuela in 1998 and a Masters in Finance from Instituto de Estudios Superiores de Administración (IESA) in 2003. He was also part of Miami Leadership Program cohort 2011.

Howard Levine. Mr. Levine, age 52, serves as Senior Executive Vice-President and Head of Consumer Banking since January 2023. He has served as Executive Vice-President and Head of Consumer Banking since joining the Bank in June 2022. Mr. Levine oversees the Private Client Group, Wealth Management, Small Business Banking, Retail Banking, and Amerant Mortgage. Prior to joining the Bank, Mr. Levine served as EVP and Chief Revenue Officer at Amerant Mortgage, of which he is a founding partner. 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. 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.

Mariola Sanchez. Mrs. 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. With an educational background in human behavior and law, in addition to 15 years working at the Bank, she brings a wealth of organizational knowledge and an informed perspective to her role. She and her leadership team are focused on learning and development, management practices, and diversity and inclusion. As General Counsel, Mrs. Sanchez advised the Company on a range of legal matters, including labor and employment. She has practiced law for over 25 years, primarily as in-house counsel for financial institutions. Prior to joining Amerant in 2007 as Associate General Counsel, she served as Associate General Counsel at Regions Bank (formerly Union Planters Bank).

Mrs. Sanchez earned a bachelor’s degree in Psychology from the University of Miami and a Juris Doctorate from St. Thomas University. In April 2021, she also graduated from the Yale School of Management’s ExecOnline’s Fostering Inclusion and Diversity Program . Active in the community, Mrs. Sanchez serves as a Director of the Board of Voices for Children Foundation, Inc.

Armando Fleitas, age 47, serves as Executive Vice-President, Chief Accounting Officer (“CAO”) since March 2023 overseeing general accounting and accounts payable; investment accounting and operations; mortgage banking finance and accounting; and financial reporting to the Federal Reserve Bank and other federal and state banking supervisory authorities, the Securities and Exchange Commission, and the Office of Comptroller of the Currency. 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. In his prior and current role, he has been responsible for overseeing the preparation of consolidated and stand-alone statutory financial statements, the quarterly and annual reports on Forms 10-Q and 10-K of the Company filed with the SEC. Previously, he was also responsible for overseeing the Company’s internal controls over financial reporting and vendor management functions. Mr. Fleitas began his career in 1996 at PwC Venezuela, transitioning in 2003 to PwC in the US. At PwC, he held various roles in the areas of audit and accounting consulting services primarily serving customers in the financial services industry.

Mr. Fleitas earned a bachelor’s degree in accounting from Universidad Católica Andrés Bello in Caracas, Venezuela, in 1998 and a master’s degree in accounting from the Huizenga School of Business and Entrepreneurship at Nova Southeastern University, Fort Lauderdale, USA, in 2011. He is a Certified Public Accountant (CPA) in the United States (NH-2005-active, NY-2010-inactive), and in Venezuela (2006). He holds a Chartered Global Management Accountant (CGMA) designation and is a member of the Florida Institute of Certified Public Accountants (FICPA) and the American Institute of Certified Public Accountants (AICPA).

SUMMARY OF RISK FACTORS

Our business is subject to a number of risks that could cause actual results to differ materially from those indicated by forward-looking statements made in this Form 10-K or presented elsewhere from time to time. These risks are discussed more fully under “Item 1A. Risk ~~Factors~~Factors” and include, but are not limited to the following:

~~Any of the following~~

Risk related to Funding and Liquidity

•Liquidity risks could ~~harm~~affect our ~~strategic plan, business,~~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.

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.

•Nonperforming and similar assets take significant time to resolve and may adversely affect our business, financial condition, ~~and~~results of operations, or cash flows.

•We are subject to environmental liability risk associated with lending activities.

•Deterioration in the value of an investment in our stock. The risks discussed below also include forward-looking statements, and our actual results may differ substantially from those discussed in such forward-looking statements.real estate markets, including the secondary market for residential mortgage loans, can adversely affect us.

Risks Related to Our Business and Operations

•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 ~~adopted and are~~the ability or resources to keep pace with rapid technological changes in the early stages of implementing our strategic plan to simplify our business model and focus our activities as a community bank serving our domestic customers and select foreign depositors and wealth management customers. Our plan includes a focus on profitable growth, cross selling to gain a larger share of our respective customers' business, core deposit generation, loan growthfinancial services industry or implement new technology effectively.

•Conditions in our local markets, changes in loan mix to higher margin loans, and improving our customer experience, improving our processes, and achieving operating efficiencies and cost reductions. Our strategic plan includes significant changes, which may require certain changes in our culture and personnel. We seek to identify and serve our customers' needs better and more broadly, including our valued foreign customers. We have significantly reduced our Corporate LATAM lending businesses, while seeking higher margin domestic lending opportunities in our markets. We are in the process of reviewing our business segmentation for management reporting purposes.

The strategic plan's technology changes and systems conversions involve execution and other risks. Market interest rates may not continue to increase as we have assumed, and all our market and customer initiatives are being made in highly competitive markets. Our plans may take longer than we anticipate to implement, and the results we achieve may not be as successful as we seek, all of whichVenezuela could adversely affect our ~~business, results of operations,~~operations.

•Our ability to achieve our environmental, social and ~~financial condition. Many of these factors, including interest rates, are not within our control. Additionally, the results of our strategic plan~~governance goals are subject to ~~the other~~ risks, ~~described herein that affects~~many of which are outside of our ~~business, which include:~~

~~Our focus on domestic lending in highly competitive markets may not meet~~control, and our ~~objectives, and may pose additional or other risks than low margin loans to foreign financial institutions.~~

~~Our funding has depended on foreign deposits and~~reputation could be harmed if we ~~may not be able to replace lost low cost foreign deposits with domestic deposits with similar costs and long-term customer relationships.~~

Our profitability objectives have been revised and now assume two 25 basis point increases in short-term interest rates through 2020, which may not occur, especially as a result of the Federal Reserve’s pause in its Normalization Policy (as defined below) announced in early 2019.

~~The benefits from our technology investments may take longer than expected and may not be as large as expected, or may require additional investments.~~

~~If we are unable to reduce our cost structure, including through reductions in FTEs, as we anticipate, we may not be able~~fail to meet ~~our profitability objectives.~~such goals.

Our strategic plan may take longer than anticipated and may be more expensive to implement than is currently anticipated, and otherwise may achieve less than we expect, any of which could adversely affect our business growth, results of operations and financial conditions.

Our wealth management business currently relies almost entirely on our Venezuelan customers. Our strategic plan for expanding our wealth management business to U.S.-based customers, in this highly competitive business, may not be as successful as we seek.

Any significant unanticipated or unusual charges, provisions or impairments, including as a result of any legal proceedings or industry regulatory changes, could adversely affect our ability to implement or realize the expected results of the strategic plan.

•We ~~may determine that our internal controls and disclosure controls could have deficiencies or weaknesses.~~

We regularly review our internal controls for deficiencies and weaknesses. We have had no material weaknesses, but we have had deficiencies in the past. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our financial statements will not be prevented or detected on a timely basis. Although we seek to prevent, discover and promptly cure any deficiencies or weaknesses in internal controls, as a relatively new public company, we may have material weaknesses or significant deficiencies in the future. If we are unable to remediate such weaknesses or deficiencies, we may be unable to ~~accurately report~~attract and retain key people to support our financial results, or report them within the timeframes required by law or Nasdaq rules. Failure to comply with the SEC internal controls regulations could also potentially subject us to investigations or enforcement actions by the SEC or other regulatory authorities. If we fail to implement and maintain effective internal controls over financial reporting, 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. Such events could cause investors to lose confidence in our reported financial information, the trading price of our shares of common stock could decline and our access to the capital markets or other financing sources could be limited.business.

~~Operational risks are inherent in our businesses.~~

Operational risks and losses can result from internal and external fraud; gaps or weaknesses in our risk management or internal audit procedures; errors by employees or third-parties; failure to document transactions properly or to obtain proper authorization; failure to comply with applicable regulatory requirements and conduct of business rules in the various jurisdictions where we do business or have customers; failures in the models we generate and rely on; equipment failures, including those caused by natural disasters or by electrical, telecommunications or other essential utility outages; business continuity and data security system failures, including those caused by computer viruses, cyberattacks, unforeseen problems encountered while implementing major new computer systems, upgrades to existing systems or inadequate access to data or poor response capabilities in light of such business continuity and data security system failures; or the inadequacy or failure of systems and controls, including those of our suppliers or counterparties. Additionally, providing services outside the U.S. to non-U.S. persons may involve greater complexity and risks than providing such services in our primary U.S. markets. Although we have implemented risk controls and loss mitigation actions, and substantial resources are devoted to developing efficient procedures, identifying and rectifying weaknesses in existing procedures and training staff, there is no assurance that such actions will be effective in controlling all of the operational risks faced by us. See “—-The Bank continues to provide certain services to MSF’s subsidiaries, even after the Spin-off, which could present additional regulatory and operational risks to us.”

~~Market conditions and economic cyclicality may adversely affect our industry.~~

~~We are exposed to downturns in the U.S. economy and market conditions generally. We believe the following, among other things, may affect us in 2019 and beyond:~~

We expect to face continued high levels of regulation of our industry as a result of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, or the Dodd-Frank Act, related rulemaking and other initiatives by the U.S. government and its regulatory agencies, including the Consumer Financial Protection Bureau, or the CFPB. Compliance with such laws and regulations may increase our costs, reduce our profitability, and limit our ability to pursue business opportunities and serve customers’ needs. The Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018, or the 2018 Growth Act, various pending bills in Congress and statements by our regulators may offer some regulatory relief for banking organizations of our size. We believe that comprehensive regulatory relief will be slow and contentious. We are uncertain about the scope, nature and timing of any regulatory relief, and its effect on us, if any.

Although unemployment nationally is low, the economy is growing relatively slowly. The Federal Reserve adopted in September 2014 a normalization of monetary policy, or the Federal Reserve Normalization Policy, which includes gradually raising the Federal Reserve’s target range for the Federal Funds rate to more normal levels and gradually reducing the Federal Reserve’s holdings of U.S. government and agency securities. The Federal Reserve’s target Federal Funds rate has increased nine times since December 2015 in 25 basis point increments from 0.25% to 2.50% on December 20, 2018. Although the Federal Reserve considers the target Federal Funds rate its primary means of monetary policy normalization, in September 2017, it also began reducing its securities holdings by not reinvesting the principal of maturing securities, subject to certain monthly caps on amounts not reinvested. Such reduction may also push interest rates higher and reduce liquidity in the financial system. Since its last rate hike in December 2018, the Federal Reserve paused its increases in interest rates and in March 2019 announced that it was reducing its sales of Treasury securities 50% to $15 billion per month and ending such sales at the end of September 2019, and reducing its holdings of MBS by reinvesting $20 billion per month of MBS principal repayments in Treasury securities, while reserving the flexibility to sell MBS over the longer run. This will leave the Federal Reserve’s securities portfolio at a higher level than earlier expected. The Federal Reserve also suggested that it would not raise market interest rates in 2019. The nature and timing of any changes in monetary policies and their effect on us and the Bank cannot be predicted. See “Supervision and Regulation—Fiscal and Monetary Policy.”

Market developments, including employment and price levels, stock market volatility and declines, and tax changes, such as the Tax Cuts and Jobs Act of 2017, or the 2017 Tax Act, signed into law by the President on December 22, 2017, may affect consumer confidence levels from time to time in different directions, and may cause adverse changes in payment behaviors and payment rates, causing increases in delinquencies and default rates, which could affect our charge-offs and provisions for credit losses.

Our ability to assess the creditworthiness of our customers and those we do business with, and to estimate the values of our assets and collateral for loans may be impaired if the models and approaches we use become less predictive of future behaviors and valuations. The process we use to estimate losses inherent in our credit exposure, or estimate the value of certain assets, requires difficult, subjective, and complex judgments, including forecasts of economic conditions and how those economic predictions might affect the ability of our borrowers to repay their loans or the value of assets.

The 2017 Tax Act substantially limits the deductibility of all state and local taxes for U.S. taxpayers, including property taxes, and lowers the cap on the amount of primary and secondary residential mortgage indebtedness for which U.S. taxpayers may deduct interest. These changes, with or without increases in interest rates, generally, could have adverse effects on home sales, the volume of new mortgage and home equity loans and the values and salability of residences held as collateral for loans.

Our ability to borrow from and engage in other business with other financial institutions on favorable terms, or at all, could be adversely affected by disruptions in the capital markets or other events, including, among other things, investor expectations and changes in regulations in the U.S. and foreign markets.

Failures of other financial institutions in our markets and increasing consolidation of financial services companies as a result of market conditions could increase our deposits and assets and necessitate additional capital, and could have unexpected adverse effects upon us and our business.

The “Volcker Rule,” including final regulations adopted in December 2013, may affect us adversely by reducing market liquidity and securities inventories at those institutions where we buy and sell securities for our portfolio and increasing the bid-ask spreads on securities we purchase or sell. These rules have decreased the range of permissible investments, such as certain collateralized loan obligation interests, which we could otherwise use to diversify our assets and for asset/liability management. The 2018 Growth Act removed Volcker Rule restrictions on banks under $10 billion in assets, and the federal banking agencies have asked for public comment on a proposal that would simplify and tailor compliance requirements relating to the Volcker Rule. See “Supervision and Regulation-Other Legislative and Regulatory Changes.”

~~Our profitability and liquidity may be affected by changes in interest rates and interest rate levels, the shape of the yield curve and economic conditions.~~

Our profitability depends 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. Net interest income will be adversely affected by market interest rates changes where the interest we pay on deposits and borrowings increases faster than the interest earned on loans and investments. Interest rates, and consequently our results of operations, are affected by general economic conditions (domestic and international) and fiscal and monetary policies, as well as expectations of these rates and policies, and the shape of the yield curve.

~~Our balance sheet is asset sensitive. Therefore, a decrease in interest rates or a flattening or inversion of the yield curve could adversely affect us, generally.~~

Our income is primarily driven by the spread between these rates. As a result, a steeper yield curve, meaning long-term interest rates are significantly higher than short-term interest rates, would provide the Bank with a better opportunity to increase net interest income. Conversely, a flattening or inversion of the U.S. yield curve could pressure our NIM as our cost of funds increases relative to the spread we can earn on our assets. In addition, net interest income could be affected by asymmetrical changes in the different interest rate indexes, given that not all of our assets or liabilities are priced with the same index. Prior to its pause in the first quarter of 2019, the Federal Reserve Normalization Policy resulted in a gradual increase of the Federal Reserve’s target Federal Funds rates and a decrease in the Federal Reserve’s holdings of securities. In March 2019, the Federal Reserve announced plans to reduce its sales of Treasury securities 50% to $15 billion per month beginning in May 2019 until it stops such sales at the end of September 2019, as well as reduce its holdings of MBS by reinvesting $20 billion per month of MBS principal repayments in Treasury securities. These plans may have unpredictable effects on the shape of the yield curve and longer term interest rates. See “Supervision and Regulation—Fiscal and Monetary Policy.”

The production of mortgages and other loans and the value of collateral securing our loans, are dependent on demand within the markets we serve, as well as interest rates. Increases in interest rates generally decrease the market values of fixed-rate, interest-bearing investments and loans held, the value of mortgage and other loans produced, including long term fixed-rate loans and the value of loans sold, mortgage loan activities and the collateral securing our loans, and therefore may adversely affect our liquidity and earnings, to the extent not offset by potential increases in our NIM.

The 2017 Tax Act, including its fiscal stimulus, limitations on the deductibility of residential mortgage interest and business interest expenses and other changes, could have mixed effects on economic activity and reduce the demand for loans and increase competition among lenders for loans. The 2017 Tax Act could also promote inflation and higher interest rates.

~~Our cost of funds may increase as a result of general economic conditions, interest rates, inflation and competitive pressures.~~

The Federal Reserve raised the target Federal Funds rate nine times between December 2015 and December 2018, after which the Federal Reserve paused its Normalization Policy. In March 2019, the Federal Reserve announced that it was reducing its monthly sales of Treasury securities 50% to $15 billion per month beginning in May 2019 and ending such sales at the end of September 2019, and announced that it was reducing its holdings of MBS by reinvesting $20 billion per month of MBS principal repayments in Treasury securities, while reserving the flexibility to sell MBS over the longer run. The Federal Reserve has kept interest rates low over recent years, and the Federal government continues large deficit spending. Our costs of funds may increase as a result of general economic conditions, interest rates and competitive pressures, and potential inflation resulting from government deficit spending and the effects of the 2017 Tax Act and monetary policies. Traditionally, we have obtained funds principally through deposits, including deposits from foreign persons, and borrowings from other institutional lenders. Generally, we believe deposits are a cheaper and more stable source of funds than borrowings because interest rates paid for deposits are typically lower than interest rates charged for borrowings from other institutional lenders. We expect that our future growth will depend on our ability to retain and grow a strong, low-cost deposit base from U.S. domiciled persons. Increases in interest rates could also cause consumers to further shift their funds to more interest bearing instruments and to increase the competition for funds. While the Federal Reserve’s Normalization Polucy contemplated gradually increasing interest rates, the Normalization Policy is currently paused. Interest rates could increase more or less quickly than anticipated, after the resumption of the Normalization Policy, and the competition for deposits could increase. If customers reduce the mix of their interest bearing and noninterest bearing deposits, or move money to higher rate deposits or other interest bearing assets offered by competitors or from transaction deposits to higher interest bearing time deposits, we could lose a relatively low cost source of funds, increasing our funding costs and reducing our net interest income and net income. Additionally, any such loss of funds could result in lower loan originations and growth, which could materially and adversely affect our results of operations and financial condition, including liquidity. See “Supervision and Regulation—Fiscal and Monetary Policy.”

Many of our loans and our obligations for borrowed money are priced based on variable interest rates tied to the London Interbank Offering Rate, or LIBOR. We are subject to risks that LIBOR may no longer be available as a result of the United Kingdom’s Financial Conduct Authority ceasing to require the submission of LIBOR quotes in 2021.

The potential cessation of LIBOR quotes in 2021 creates substantial risks to the banking industry, including us. Unless alternative rates can be negotiated and determined, our floating rate loans, funding and derivative obligations that specify the use of a LIBOR index, will no longer adjust and may become fixed rate instruments at the time LIBOR ceases to exist. This would adversely affect our asset/liability management and could lead to more asset and liability mismatches and interest rate risk unless appropriate LIBOR alternatives are developed. ~~It could also cause confusion that could disrupt the capital and credit markets as a result of confusion or uncertainty.~~

The Federal Reserve has sponsored the Alternative Reference Rates Committee, or ARRC, which serves as a forum to coordinate and track planning as market participants currently using LIBOR consider (a) transitioning to alternative reference rates where it is deemed appropriate and (b) addressing risks in legacy contracts language given the possibility that LIBOR might stop. On April 3, 2018, the Federal Reserve began publishing three new reference rates, including the Secured Overnight Financing Rate, or SOFR. ARRC has recommended SOFR as the alternative to LIBOR, and published fallback interest rate consultations for public comment and a Paced Transition Plan to SOFR use. The Financial Stability Board has taken an interest in LIBOR and possible replacement indices as a matter of risk management. The International Organisation of Securities Commissions, or IOSCO, has been active in this area and is expected to call on market participants to have backup options if a reference rate, such as LIBOR, ceases publication. The International Swap Dealers Association has published guidance on interest rate bench marks and alternatives in July and August 2018. It cannot be predicted whether SOFR or another index or indices will become a market standard that replaces LIBOR, and if so, the effects on our customers, or our future results of operations or financial condition.

~~The expected discontinuance in LIBOR may also affect interest rate hedges and result in certain of these becoming ineffective and ineligible for hedge accounting.~~

~~Our derivative instruments may expose us to certain risks.~~

We use, from time to time, derivative instruments to offset current or future changes in cash flows of certain of our FHLB advances. In addition, we enter into matched offsetting derivative transactions in order to manage credit exposure arising from derivative transactions with customers. We may enter into a variety of derivative instruments, including options, futures, forwards, and interest rate and credit default swaps, with a number of counterparties. Amounts that we expect to collect under current and future derivatives are subject to counterparty risk. Our obligations under our borrowings are not changed by our hedging activities and we are liable for our obligations even if our derivative counterparties do not pay us. Such defaults could have a material adverse effect on our financial condition and results of operations. Substantially all of our derivatives require us to pledge or receive collateral or make payments related to any decline in the net estimated fair value of such derivatives executed through a specific broker at a clearinghouse or entered into with a specific counterparty on a bilateral basis. In addition, ratings downgrades or financial difficulties of derivative counterparties may require us to utilize additional capital with respect to the impacted businesses.

Our valuation of securities and investments and the determination of the amount of impairments taken on our investments 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. 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. 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. In addition, in times of financial market disruption, certain asset classes that were in active markets with significant observable data may become illiquid. In those cases, the valuation process includes inputs that are less observable and require more subjectivity and management judgment. Valuations may result in estimated fair values which vary significantly from the amount at which the investments may ultimately be sold. Further, rapidly changing and unprecedented credit and equity market conditions could materially affect the valuation of securities in our financial statements and the period-to-period changes in estimated fair value could vary significantly. Decreases in the estimated fair value of securities we hold may have a material adverse effect on our financial condition. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates.”

The determination of the amount of impairments varies by investment type and is based upon our periodic evaluation and assessment of known and inherent risks associated with the respective asset class. Such evaluations and assessments are revised as conditions change and new information becomes available. We reflect any changes in impairments in earnings as such evaluations are revised. However, historical trends may not be indicative of future impairments. In addition, any such future impairments or allowances could have a materially adverse effect on our earnings and financial position. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates.”

~~Our success depends on our ability to compete effectively in highly competitive markets.~~

The 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. We compete for deposits, loans, and other financial services in our markets with other local, regional and national commercial banks, thrifts, credit unions, mortgage lenders, trust services providers and securities advisory and brokerage firms. Marketplace lenders operating nationwide over the internet are also growing rapidly. Many of our competitors offer products and services different from us, and have substantially greater resources, name recognition and market presence than we do, which benefits them in attracting business. In addition, larger competitors may be able to price loans and deposits more aggressively than we are able to and have broader and more diverse customer and geographic bases to draw upon. The Dodd-Frank Act allows others to branch into our markets more easily from other states. Failures of other banks with offices in our markets and small institutions wishing to sell or merge due to cost pressures could also lead to the entrance of new, stronger competitors in our markets.

~~Our success depends on general and local economic conditions where we operate.~~

Our success depends on economic conditions, generally, especially in the geographic markets we serve. The local economic conditions in our markets have a significant effect on our commercial, real estate and construction loans, the ability of borrowers to repay our loans and the value of the collateral securing our loans. Adverse changes in economic conditions in the regions where our loans are originated, primarily South Florida, the greater Houston and Dallas-Fort Worth, Texas areas, and the greater New York City area, and secondarily in Brazil, Panama, Chile, Colombia, Mexico and Peru where we have trade financing and financial institution credits, could negatively affect our results of operations and our profitability. As of December 31, 2018 and 2017, we had $157.2 million and $182.7 million of consumer loans and residential mortgage loans secured by properties in the U.S. outstanding to Venezuelan persons, respectively. This exposure to Venezuelan borrowers includes $28.2 million and $37.6 million of consumer and other loans at December 31, 2018 and 2017, respectively. Further, our loan production, generally, is subject to seasonality, with the lowest volume typically in the first quarter of each year. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Financial Condition.”

~~Severe weather and natural disasters, including hurricanes, tornados, earthquakes, fires, droughts and floods, acts~~•Any failure to protect the confidentiality of war or terrorism, theft, civil unrest, government expropriation, condemnation or other external events in our markets where we operate or where our customers live (including Venezuela, which is experiencing civil unrest, a depreciated currency and hyperinflation estimated by the International Monetary Fund at 1,370,000% in 2018) could have a significant effect on our ability to conduct business. Such events could affect the stability of our deposit base, impair the ability of borrowers to repay outstanding loans, impair the value of collateral securing loans, cause significant property damage, result in loss of revenue and/or cause us to incur additional expenses. Although management has established disaster recovery and business continuity policies and procedures, the occurrence of any such event could have a material adverse effect on our business, which, in turn, could have a material adverse effect on our financial condition and results of operations. Our business is concentrated in three markets—South Florida, the greater Houston, Texas area and the greater New York City area, which may increase our risks from the weather. For example, in Fall 2017, both the greater Houston, Texas area and South Florida were struck by major hurricanes within days of each other.

~~Defaults by or deteriorating asset quality of other financial institutions could adversely affect us.~~

We have exposure to many different industries and counterparties, and routinely execute transactions with counterparties in the financial services industry, including brokers and dealers, central clearinghouses, commercial banks, investment banks, hedge funds and investment funds, our correspondent banks and other financial institutions, especially those in the Latin American countries where we make such loans. Many of these transactions expose us to credit risk in the event of the default of our counterparty. In addition, with respect to secured transactions, credit risk may be exacerbated when the collateral held by us cannot be realized or is liquidated at prices insufficient to recover the full amount of the loan or derivative exposure due to us. We also may have exposure to these financial institutions in the form of unsecured debt instruments, derivatives and other securities. Further, potential action by governments and regulatory bodies in response to financial crises affecting the global banking system and financial markets, such as nationalization, conservatorship, receivership and other intervention, whether under existing legal authority or any new authority that may be created, or lack of action by governments and central banks, as well as deterioration in the banks’ creditworthiness, could adversely affect the value and/or liquidity of these instruments, securities, transactions and investments or limit our ability to trade with them. Any losses or impairments to the carrying value of these investments or other changes may materially and adversely affect our results of operations and financial condition.

In addition we maintain credit relationships with large financial institutions that we believe are of high quality, primarily in Brazil, Chile, Colombia and Peru. In addition to the risks posed by relationships with U.S. counterparty financial institutions, transactions with foreign financial institutions may be subject to currency and exchange rate controls, regulation, inflation or deflation, and fiscal and monetary policies in the foreign countries that are significantly different than in the U.S.

~~Nonperforming and similar assets take significant time to resolve and may adversely affect our results of operations and financial condition.~~

At December 31, 2018 and 2017, our nonperforming loans totaled $17.8 million and $26.9 million, respectively, or 0.30% and 0.44% of total loans, respectively. In addition, we had OREO of $0.4 million and $0.3 million at December 31, 2018 and 2017. 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. 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,customer information could adversely affect our ~~business, results of operations~~reputation and subject us to financial condition. In addition, the resolution of nonperforming assets requires commitments of time from management, which can be detrimental to their other responsibilities. There can be no assurance that we will not experience increases in nonperforming loans, OREO and similar nonperforming assets in the future.

~~Changes in the real estate markets, including the secondary market for residential mortgage loans, may adversely affect us.~~

Notwithstanding changes made in the 2018 Growth Act, the effects of the CFPB changes to mortgage and servicing rules effective at the beginning of 2014, the CFPB’s unified Truth in Lending Act and the Real Estate Settlement Procedures Act, or RESPA, rules for closed end credit transactions secured by real property that became effective in October 2015, often called TRID rules, enforcement actions, reviews and settlements, changes in the securitization rules under the Dodd-Frank Act, including the risk retention rules that became effective December 24, 2016, and the Basel III Capital Rules (see “Supervision and Regulation—Basel III Capital Rules”) could have serious adverse effects on the mortgage markets and our mortgage operations.

The TRID rules have affected our current and proposed mortgage business and have increased our costs as a result of our compliance efforts. In addition, the CFPB’s final regulations implementing the Dodd-Frank Act, which require that lenders determine whether a consumer has the ability to repay a mortgage loan, which became effective in January 2014, have limited the secondary market for and liquidity of many mortgage loans that are not “qualified mortgages.”

~~Increasing interest rates and the 2017 Tax Act’s limitations on the deductibility of residential mortgage interest and state and local property~~sanctions and other ~~taxes~~costs that could adversely affect consumer behaviors and the volumes of housing sales, mortgage and home equity loan originations, as well as the value and liquidity of residential property held as collateral by lenders such as the Bank, and the secondary markets for residential loans. Acquisition, construction and development loans for residential development may be similarly adversely affected.

The Federal National Mortgage Association, or Fannie Mae, and the Federal Home Loan Mortgage Corporation, or Freddie Mac, have been in conservatorship since September 2008. Minimal capital at Fannie Mae and Freddie Mac, the levels of risky assets at the Federal Housing Administration, or FHA, and the FHA’s relatively low capital and reserves for losses, the current levels of home sales, and the risks of interest rates increasing materially from historically low levels, as well as the 2017 Tax Act, could also have serious adverse effects on the mortgage markets and our mortgage operations. Such adverse effects could include, among other things, price reductions in single family home values, further adversely affecting the liquidity and value of collateral securing commercial loans for residential acquisition, construction and development, as well as residential mortgage loans that we hold, mortgage loan originations and gains on sale of mortgage loans. In the event our allowance for loan losses is insufficient to cover such losses, if any, our earnings, capital and liquidity could be adversely affected.

~~Our allowance for loan losses may prove inadequate or we may be negatively affected by credit risk exposures.~~

We periodically review our allowance for loan losses for adequacy considering economic conditions and trends, collateral values and credit quality indicators, including past charge-off experience and levels of past due loans and nonperforming assets. We cannot be certain that our allowance for loan losses will be adequate over time to cover credit losses in our portfolio because of unanticipated adverse changes in the economy, market conditions or events adversely affecting specific customers, industries or markets, and changes in borrower behaviors. Differences between our actual experience and assumptions and the effectiveness of our models may adversely affect our business, financial condition, ~~including liquidity and capital, and~~ results of ~~operations. The Financial Accounting Standards Board,~~operations, or FASB, issued ASU No. 2016-13 “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” or CECL, on June 16, 2016, which changed the loss model to take into account current expected credit losses. As an emerging growth company, CECL will be effective for our fiscal year beginning January 1, 2021. However, absent changes in current bank regulatory requirements, we maycash flows.

•We could be required to apply CECL beginning January 1, 2020 for bank regulatory purposes and all other reporting purposes. CECL substantially changes how we calculate our allowance for loan losses. We are evaluating CECL and when we will be required to adopt it. We cannot predict when and how it will affect our results of operations and the volatility of such results, our financial condition, including our regulatory capital.

~~If our business does not perform well, we may be required to recognize an impairment of~~write down our goodwill or other ~~long-lived assets or to establish~~intangible assets.

•We have a ~~valuation allowance against the~~net deferred ~~income~~ tax asset ~~which could adversely affect our results of operations~~that may or ~~financial condition.~~

We had goodwill of $19.2 million on December 31, 2018 and 2017, respectively, which represents the excess of consideration paid over the fair value of the net assets of a savings bank acquired in 2006. We perform our goodwill impairment testing annually using a process, which requires the use of estimates and judgment. The estimated fair value of the reporting unit is affected by the performance of the business, which may be especially diminished by prolonged market declines. If it is determined that the goodwill has been impaired, we must write down the goodwill by the amount of the impairment, with a corresponding charge to net income. Although we have had no goodwill write-downs historically, any such write-downs could have an adverse effect on our results of operations or financial position.

Long-lived assets, including assets such as real estate, also require impairment testing. This testing is done to determine whether changes in circumstances indicate that we will be unable to recover the carrying amount of these assets. Such write-downs could have a material adverse effect on our results of operations or financial position.

Deferred income tax represents the tax effect of the timing differences between financial accounting and tax reporting. Deferred tax assets, or DTAs, are assessed periodically by management to determine whether they are realizable. Factors in management’s determination include the performance of the business, including the ability to generate future taxable income. 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~~fully realized.

•We may incur losses due to minority investments in fintech and specialty finance companies.

•We are subject to risks associated with a corresponding charge to net income. Such charges could have a material adverse effect on our results of operations or financial position. In addition, changes in the corporate tax rates could affect the valuesub-leasing portions of our ~~DTAs and may require a write-off of some of those assets. The 2017 Tax Act reduced the U.S.~~ corporate income tax rate to 21% effective for periods starting January 1, 2018, from a prior rate of 35%. At December 31, 2018, we had net DTAs with a book value of $16.3 million, based on a U.S. corporate income tax rate of 21%. In December 2017, we remeasured our net DTAs and recorded $9.6 million in additional tax expense and a corresponding reduction in net income as a result of the 2017 Tax Act. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates.”

headquarters building.

~~Mortgage Servicing Rights, or MSRs, requirements may change and require us to incur additional costs and risks.~~

The CFPB adopted new residential mortgage servicing standards in January 2014 that add additional servicing requirements, increase our required servicer activities and delay foreclosures, among other things. These may adversely affect our costs to service residential mortgage loans, and together with the Basel III Capital Rules, may decrease the returns•Our success depends on ~~MSRs. Declines in interest rates tend to reduce the value of MSRs as refinancings may reduce serviced mortgages.~~

The CFPB and the bank regulators continue to bring enforcement actions and develop proposals, rules and practices that could increase the costs of providing mortgage servicing. Historically, we have not serviced mortgage loans for others. However, if we were to provide servicing in the future, regulation of mortgage servicing could make it more difficult and costly to timely realize the value of collateral securing such loans upon a borrower default.

~~We may be contractually obligated to repurchase mortgage loans we sold to third-parties on terms unfavorable to us.~~

As a routine part of our business, we originate mortgage loans that we subsequently sell to investors. We do not currently originate mortgage loans for direct sale to any governmental agencies and government sponsored enterprises, or GSEs, such as Fannie Mae or Freddie Mac, but expect to make such direct sales in the future. In connection with the sale of these loans to private investors and GSEs, we make customary representations and warranties, the breach of which may result in our being required to repurchase the loan or loans. Furthermore, the amount paid may be greater than the fair value of the loan or loans at the time of the repurchase. No mortgage loan repurchase requests have been made to us; however, if repurchase requests were made to us, we may have to establish reserves for possible repurchases, which could adversely affect our results of operations and financial condition.

~~Our concentration of CRE loans could result in further increased loan losses, and adversely affect our business, earnings, and financial condition.~~

CRE is cyclical and poses risks of possible loss due to concentration levels and risks of the assets being financed, which include loans for the acquisition and development of land and residential construction. The federal bank regulators released guidance in 2006 on “Concentrations in Commercial Real Estate Lending.” The guidance defines CRE loans as exposures secured by raw land, land development and construction (including 1-4 family residential construction), multi-family property, and non-farm nonresidential property, where the primary or a significant source of repayment is derived from rental income associated with the property (that is, loans for which 50% or more of the source of repayment comes from third-party, non-affiliated, rental income) or the proceeds of the sale, refinancing, or permanent financing of the property. Loans to real-estate investment trusts, or REITs, and unsecured loans to developers that closely correlate to the inherent risks in CRE markets would also be considered CRE loans under the guidance. Loans on owner occupied CRE are generally excluded.

The Bank’s portfolio of CRE loans was 344.6% of its risk-based capital, or 51.44%% of its total loans, as of December 31, 2018 compared to 334.11% of its risk-based capital, or 48.79% of its total loans, as of December 31, 2017. Our CRE loans included approximately $1.8 billion and $1.6 billion of fixed rate loans at December 31, 2018 and 2017, respectively. These may adversely affect our margins in a rising interest rate environment and present asset/liability mismatches and risks since our liabilities are generally floating rate or have shorter maturities.

The banking regulators continue to scrutinize CRE lending and further addressed their concerns over CRE activity in December 2016, requiring banks with higher levels of CRE loans to implement more robust underwriting, internal controls, risk management policies and portfolio stress testing, as well as higher levels of allowances for possible losses and capital levels as a result of CRE lending growth and exposures. Lower demand for CRE, and reduced availability of, and higher costs for, CRE lending could adversely affect our CRE loans and sales of our OREO, and therefore our earnings and financial condition, including our capital and liquidity.

As of December 31, 2018, approximately 55% of total CRE loans were in Miami-Dade, Broward and Palm Beach counties, Florida, 18% were in the greater Houston, Texas area, and 22% were in the greater New York City area, including all five boroughs. The remainder were in other Florida, Texas and New York/New Jersey markets. Our CRE loans are affected by economic conditions in those markets.

~~Liquidity risks could affect operations and jeopardize our financial condition.~~

Liquidity is essential to our business. An inability to raise funds through deposits, borrowings, proceeds from loan repayments or sales, and other sources could have a substantial negative effect on our liquidity. Our funding sources include Federal Funds purchased, securities sold under repurchase agreements, core and non-core deposits (domestic and foreign), and short-and long-term debt. We maintain a portfolio of securities that can be used as a source of liquidity. We are also members of the Federal Home Loan Bank of Atlanta, or FHLB, and the Federal Reserve Bank of Atlanta, where we can obtain advances collateralized with eligible assets. There are other sources of liquidity available to us or the Bank should they be needed, including our ability to ~~acquire additional non-core deposits (such as reciprocal deposit programs such as the Certificate of Deposit Account Registry Service, or CDARS,~~compete effectively in highly competitive markets.

Risks Related to Risk Management, Internal Audit, Internal and brokered deposits). We may be able, depending upon market conditions, to otherwise borrow money or issue and sell debt and preferred or common securities in public or private transactions. Our access to funding sources in amounts adequate to finance or capitalize our activities on terms which are acceptable to us could be impaired by factors that affect us specifically or the financial services industry or the economy in general. Our ability to borrow or obtain funding, if needed, could also be impaired by factors that are not specific to us, such as disruptions in the financial markets or negative views and expectations about the prospects for the financial services industry.Disclosure Controls

The Company is an entity separate and distinct from the Bank. The Federal Reserve Act, Section 23A, limits our ability to borrow from the Bank, and the Company generally relies on dividends paid from the Bank for funds to meet its obligations, including under its outstanding trust preferred securities. The Bank’s ability to pay dividends is limited by law, and may be limited by regulatory action to preserve the Bank’s capital adequacy. Any such limitations could adversely affect the Company’s liquidity.

~~Certain funding sources may not be available to us and our funding sources may prove insufficient and/or costly to replace.~~

Although we have historically been able to replace maturing deposits and advances, we may not be able to replace these funds in the future if our financial condition or general market conditions change. The use of brokered deposits has been particularly important for the funding of our operations. If we are unable to issue brokered deposits, or are unable to maintain access to other funding sources, our results of operations and liquidity would be adversely affected. Our ability to accept, renew or replace brokered deposits without prior regulatory approval will be limited if the Bank does not remain well-capitalized.

Alternative funding to deposits may carry higher costs than sources currently utilized. If we are required to rely more heavily on more expensive and potentially less stable funding sources, profitability and liquidity could be adversely affected. We may determine to seek debt financing in the future to achieve our long-term business objectives. Any Company or Bank debt that is to be treated as capital for bank regulatory purposes requires prior Federal Reserve approval, which the Federal Reserve may not grant. Additional borrowings, if sought, may not be available to us, or if available, may not be on acceptable terms. The availability of additional financing will depend on a variety of factors such as market conditions, the general availability of credit, our credit ratings and our credit capacity. In addition, the Bank may seek to sell loans as an additional source of liquidity. If additional financing sources are unavailable or are not available on acceptable terms, our profitability and future prospects could be adversely affected.

~~Our Venezuelan deposit concentration means conditions in Venezuela could adversely affect our operations.~~

At December 31, 2018, 44.67% of our deposits, or approximately $2.7 billion, were from Venezuelan residents. The Bank’s Venezuelan deposits declined 31.32% from December 31, 2015 to December 31, 2018 and continue to decline. These declines were due in part to actions by the Company to reduce its compliance costs and from economic conditions in Venezuela that adversely affected our Venezuelan customers’ wealth and use of deposits to fund living expenses. All of the Bank’s deposits are denominated in Dollars. Adverse economic conditions in Venezuela may continue to adversely affect our Venezuelan deposit base and our ability to retain and grow these relationships, as customers rely on their Dollar deposits to spend without being able to earn additional Dollars. Venezuela’s currency controls and its official currency exchange rates for converting Bolivars into Dollars diverge widely from open market exchange rates, generally. According to the International Monetary Fund’s World Economic Outlook, Venezuela’s annual inflation rate is estimated to be 1,370,000% in 2018 and projected to be 10,000,000% in 2019. All of these factors greatly influence our Venezuelan customers’ access to Dollars and their ability to replenish the Dollars they consume.

Although foreign depositors may not seek as high yielding deposits as domestic customers, foreign deposits require additional scrutiny and higher costs to originate and maintain than domestic deposits in the U.S. The Bank has adopted strategies to manage and retain its foreign deposits consistent with U.S. anti-money laundering laws and its profit and risk objectives. If these strategies are unsuccessful, or economic conditions or other conditions worsen in Venezuela or our regulators restrict the Bank from taking its customers’ deposits, our volume of deposits from Venezuelan sources may decline further. A significant or sudden decline in our deposits from Venezuelan customers could adversely affect our results of operations and financial condition, including liquidity.

~~Our investment advisory and trust businesses could be adversely affected by conditions affecting our Venezuelan customers.~~

Although we seek to increase our trust, brokerage and investment advisory business from our customers in our markets, substantially all our revenue from these services currently is from Venezuelan customers. Economic and other conditions in Venezuela 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.

~~Our brokered deposits and wholesale funds increase our liquidity risks, and could increase our deposit insurance costs.~~

Our brokered deposits at December 31, 2018 were 10.6% of total deposits. Wholesale funding, including FHLB advances and brokered deposits, represented 26.3% of our funding at December 31, 2018. Our wholesale funding has increased 7.61% since 2016. The FDIC adjusts its deposit insurance assessments by up to 10 basis points annually for $10 billion and larger institutions that have brokered deposits exceeding 10% of total deposits where the bank also exceeds a certain risk level. More rigorous standards may also apply to banks with more than $10 billion in assets. In addition, excessive reliance on brokered deposits and wholesale funding is viewed by the regulators as potentially risky for all institutions, and may adversely affect our liquidity and the regulatory views of our liquidity. Institutions that are less than well-capitalized may be unable to raise or renew brokered deposits under the prompt corrective action rules. See “Supervision and Regulation—Capital.”

~~Technological changes affect our business, and we may have fewer resources than many competitors to invest in technological improvements.~~

The financial services industry is undergoing rapid technological changes with frequent introductions of new technology-driven products and services, and a growing demand for mobile and other phone and computer banking applications. In addition to allowing us to service our clients better, the effective use of technology may increase efficiency and may enable financial institutions to reduce costs and the risks associated with fraud and other operational risks. Largely unregulated “fintech” businesses have increased their participation in the lending and payments businesses, and have increased competition in these businesses. This trend is expected to continue for the foreseeable future. Our future success will depend, in part, upon our ability to use technology to provide products and services that meet our customers’ preferences and which create additional efficiencies in operations, while avoiding cyberattacks and disruptions, and data breaches. Our strategic plan contemplates simplifying and improving our information technology, and making significant additional capital investments in technology. We may not be able to effectively implement new technology-driven products and services as quickly or at the costs anticipated. Such technology may prove less effective than anticipated, and conversion issues may increase the costs of the new technology and delay its use. Many larger competitors have substantially greater resources to invest in technological improvements and, increasingly, non-banking firms are using technology to compete with traditional lenders for loans and other banking services. See “-Operational risks are inherent in our businesses.”

~~The fair value of our investment securities can fluctuate due to market conditions out of our control.~~

As of December 31, 2018, the fair value of the Company’s available for sale investment securities portfolio was approximately $1.6 billion and we had accumulated unrealized losses on those securities of $33.1 million. Factors beyond our control can significantly influence the fair value of securities in our portfolio and can cause potential adverse changes to the fair value of these securities. These factors include but are not limited to increases in interest rates, rating agency downgrades of the securities and defaults.

•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.

Our enterprise risk management and internal audit program is designed to mitigate material risks and loss to us. We have developed and continue to develop risk management and internal audit policies and procedures to reflect ongoing reviews of our risks and expect to continue to do so in the future. Nonetheless, our policies and procedures may not identify every risk to which we are exposed, and our internal audit process may fail to detect such weaknesses or deficiencies in our risk management framework. Many of our methods for managing risk and exposures are based upon the use of observed historical market behavior to model or project potential future exposure. Models used by our business are based on assumptions and projections. These models may not operate properly or our inputs and assumptions may be inaccurate, or may not be adopted quickly enough to reflect changes in behavior, markets or technology. As a result, these methods may not fully predict future exposures, which can be significantly different and greater than historical measures indicate. Other risk management methods depend upon the evaluation of information regarding markets, customers, or other matters that are publicly available or otherwise accessible to us. This information may not always be accurate, complete, up-to-date or properly evaluated. 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. In addition, we may have to implement more extensive and perhaps different risk management policies and procedures under pending regulations, including regulations and policies applicable to U.S. commercial banks. All of these could adversely affect our financial condition and results of operations.

•Any failure to ~~protect~~maintain effective internal control over financial reporting could impair the ~~confidentiality~~reliability of ~~customer information~~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.

Risks Related to External and Market Factors

•Material and negative developments adversely ~~affect our reputation~~impacting the financial services industry at large and causing volatility in financial markets and the economy may have ~~a material~~materially adverse ~~effect~~effects on our liquidity, business, financial condition and results of operations.

~~Various federal, state~~•Our business may be adversely affected by economic conditions in general and ~~foreign laws enforced~~ by the bank regulators and other agencies protect the privacy and security of customers’ non-public personal information. Many of our employees have access to, and routinely process, sensitive personal customer information, including through information technology systems. We rely on various internal processes and controls to protect the confidentiality of client information that is accessible to, orconditions in the ~~possession of, us~~financial markets.

Risks Related to Regulatory and our employees. It is possible that an employee could, intentionally or unintentionally, disclose or misappropriate confidential client information or our data could be the subject of a cybersecurity attack. Such personal data could also be compromised by third-party hackers via intrusions into our systems or those of service providers or persons we do business with such as credit bureaus, data processors and merchants who accept credit or debit cards for payment. 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. Such cyberattacks 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.Legal Matters

~~Our information systems may experience interruptions and security breaches, and are exposed to cybersecurity threats.~~

We rely heavily on communications and information systems, including those provided by third-party service providers, to conduct our business. Any failure, interruption, or security breach of these systems could result in failures or disruptions which could affect our customers’ privacy and our customer relationships, generally. Our systems and networks, as well as those of our third-party service providers, are subject to security risks and could be susceptible to cyberattacks, such as denial of service attacks, hacking, terrorist activities or identity theft. Financial institutions and their service providers are regularly attacked, some of which have involved sophisticated and targeted attack methods, including use of stolen access credentials, malware, ransomware, phishing, structured query language injection attacks, and distributed denial-of-service attacks, among others. Such cyberattacks may also be directed at disrupting the operations of public companies or their business partners, which are intended to effect unauthorized fund transfers, obtain unauthorized access to confidential information, destroy data, disable or degrade service, or sabotage systems, often through the introduction of computer viruses or malware, cyberattacks and other means. Denial of service attacks have been launched against a number of large financial services institutions, and we may be subject to these types of attacks in the future. Hacking and identity theft risks, in particular, could cause serious reputational harm. Cyber threats are rapidly evolving and we may not be able to anticipate or prevent all such attacks and could be held liable for any security breach or loss.

Despite our cybersecurity policies and procedures and our efforts to monitor and ensure the integrity of our and our service providers’ systems, we may not be able to anticipate all types of security threats, nor may we be able to implement preventive measures effective against all such security threats. The techniques used by cyber criminals change frequently, may not be recognized until launched and can originate from a wide variety of sources, including outside groups such as external service providers, organized crime affiliates, terrorist organizations or hostile foreign governments or agencies. These risks may increase in the future as the use of mobile banking and other internet-based products and services continues to grow.

Security breaches or failures may have serious adverse financial and other consequences, including significant legal and remediation costs, disruption of operations, misappropriation of confidential information, damage to systems operated by us or our third-party service providers, as well as damaging our customers and our counterparties. Such losses and claims may not be covered by our insurance. 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.

~~Future acquisitions and expansion activities may disrupt our business, dilute shareholder value and adversely affect our operating results.~~

While we seek continued organic growth, we may consider the acquisition of other businesses. To the extent that we grow through acquisitions, we cannot assure you that we will be able to adequately or profitably manage this growth. Acquiring other banks, banking centers, or businesses, as well as other geographic (domestic and international) and product expansion activities, involve various risks, including:

~~risks of unknown or contingent liabilities;~~

~~unanticipated costs and delays;~~

~~risks that acquired new businesses will not perform consistent with our growth and profitability expectations;~~

~~risks of entering new markets (domestic and international) or product areas where we have limited experience;~~

~~risks that growth will strain our infrastructure, staff, internal controls and management, which may require additional personnel, time and expenditures;~~

~~exposure to potential asset quality issues with acquired institutions;~~

~~difficulties, expenses and delays in integrating the operations and personnel of acquired institutions;~~

~~potential disruptions to our business;~~

~~possible loss of key employees and customers of acquired institutions;~~

~~potential short-term decreases in profitability; and~~

~~diversion of our management’s time and attention from our existing operations and business.~~

~~Attractive acquisition opportunities may not be available to us in the future.~~

We expect that other banking and financial companies, many of which have significantly greater resources, will compete with us to acquire financial services businesses. This competition could increase prices for potential acquisitions that we believe are attractive. Also, acquisitions are subject to various regulatory approvals. If we fail to receive the appropriate regulatory approvals, we will not be able to consummate an acquisition that we may believe is in our best interests. Additionally, regulatory approvals could contain conditions that reduce the anticipated benefits of a contemplated transaction. Among other things, our regulators consider our capital levels, liquidity, profitability, regulatory compliance, including anti-money laundering efforts, levels of goodwill and intangibles, management and integration capacity when considering acquisition and expansion proposals. Any acquisition could be dilutive to our earnings and shareholders’ equity per share of our 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 by delaying or preventing a change of control that you may favor.

~~Our 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.

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.

The Florida Business Corporation Act also provides that an “affiliated transaction” between a Florida corporation with an “interested shareholder,” as those terms are defined in the statute, generally must be approved by the affirmative vote of the holders of two-thirds of the outstanding voting shares, other than the shares beneficially owned by the interested shareholder. The Florida Business Corporation Act defines an “interested shareholder” as any person who is the beneficial owner of 10% or more of the outstanding voting shares of the corporation.

Furthermore, the BHC Act and the Change in Bank Control Act impose notice, application and approvals and ongoing regulatory requirements on any shareholder or other party that seeks to acquire direct or indirect “control” of bank holding companies, such as ourselves.

~~We may be unable to attract and retain key people to support our business.~~

Our success depends, in large part, on our ability to attract and retain key people. We compete with other financial services companies for people primarily on the basis of compensation, support services and financial position. Intense competition exists for key employees with demonstrated ability, and we may be unable to hire or retain such employees, including those needed to implement our business strategy. Effective succession planning is also important to our long-term success. The unexpected loss of services of one or more of our key personnel and failure to effectively transfer knowledge and smooth transitions involving key personnel could have material adverse effects on our business due to loss of their skills, knowledge of our business, their years of industry experience and the potential difficulty of timely finding qualified replacement employees. We do not currently anticipate any significant changes to our senior management team as a result of the recent Spin-off. However, there may be new positions which we may need to fill as we operate as an independent public company. We may not be able to attract and retain qualified people to fill these open positions or replace or succeed members of our senior management team or other key personnel. Rules implementing the executive compensation provisions of the Dodd-Frank Act may limit the type and structure of compensation arrangements into which we may enter with certain of our employees and officers. In addition, proposed rules under the Dodd-Frank Act would prohibit the payment of “excessive compensation” to our executives. Our regulators may also restrict compensation through rules and practices intended to avoid risks. These restrictions could negatively affect our ability to compete with other companies in recruiting and retaining key personnel.

~~Our associates may take excessive risks which could negatively affect our financial condition and business.~~

As a banking enterprise, we are in the business of accepting certain risks. The associates who conduct our business, including executive officers and other members of management, sales intermediaries, investment professionals, product managers, and other associates, do so in part by making decisions and choices that involve risks. We endeavor, in the design and implementation of our compensation programs and practices, to avoid giving our associates incentives to take excessive risks; however, associates may take such risks regardless of the structure of our compensation programs and practices. Similarly, although we employ controls and procedures designed to monitor associates’ business decisions and prevent them from taking excessive risks, and to prevent employee misconduct, these controls and procedures may not be effective. If our associates take excessive risks or avoid our policies and internal controls, their actions could have a material adverse effect on our reputation, financial condition and business operations.

•We are subject to extensive regulation that could limit or restrict our activities and adversely affect our earnings.

~~We and our subsidiaries are regulated by several regulators, including the Federal Reserve, the OCC, the FDIC, the SEC, and the Financial Industry Regulatory Authority, Inc.,~~•Changes in federal, state or ~~FINRA. Our success is affected by regulations affecting banks and bank holding companies, and the securities markets, and our costs of compliance~~local tax laws, or audits from tax authorities, could ~~adversely~~negatively affect our ~~earnings. Banking regulations are primarily intended to protect depositors and the FDIC Deposit Insurance Fund,~~business, financial condition, results of operations or DIF, not shareholders. The financial services industry also is subject to frequent legislative and regulatory changes and proposed changes. In addition, the interpretations of regulations by regulators may change and statutes may be enacted with retroactive impact. From time to time, regulators raise issues during examinations of us which, if not determined satisfactorily, could have a material adverse effect on us. Compliance with applicable laws and regulations is time consuming and costly and may affect our profitability.cash flows.

The nature, effects and timing of administrative and legislative change, including the 2018 Growth Act, and possible changes in regulations or regulatory approach resulting from the midterm 2018 elections, cannot be predicted. The federal bank regulators and the Treasury Department, as well as the Congress and the President, are evaluating the regulation of banks, other financial services providers and the financial markets and such changes, if any, could require us to maintain more capital and liquidity, and restrict our activities, which could adversely affect our growth, profitability and financial condition. Our consumer finance products, including residential mortgage loans, are subject to CFPB regulations and evolving standards reflecting CFPB releases, rule-making and enforcement actions. If our assets grow to $10 billion or more, we will become subject to direct CFPB examination.

•Litigation and regulatory investigations are increasingly common in our businesses and may result in significant financial losses and/or harm to our reputation.

We face risks of litigation and regulatory investigations and actions in the ordinary course of operating our businesses, including the risk of class action lawsuits. Plaintiffs in class action and other lawsuits against us may seek very large and/or indeterminate amounts, including punitive and treble damages. Due to the vagaries of litigation, the outcome of a litigation matter and the amount or range of potential loss at particular points in time may normally be difficult to ascertain. We do not have any material pending litigation or regulatory matters affecting us.

A substantial legal liability or a significant federal, state or other regulatory action against us, as well as regulatory inquiries or investigations, could harm our reputation, result in material fines or penalties, result in significant legal costs, divert management resources away from our business, and otherwise have a material adverse effect on our ability to expand on our existing business, financial condition and results of operations. Even if we ultimately prevail in the litigation, regulatory action or investigation, our ability to attract new customers, retain our current customers and recruit and retain employees could be materially and adversely affected. Regulatory inquiries and litigation may also adversely affect the prices or volatility of our securities specifically, or the securities of our industry, generally.

•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, ~~and~~results of operations, or cash flows would be adversely affected.

We are regulated as a bank holding company and are subject to consolidated regulatory capital requirements and liquidity requirements administered by the Federal Reserve. The Bank is subject to similar capital and liquidity requirements, administered by the OCC. The Basel III Capital Rules have increased capital requirements for banking organizations such as us. The Basel III Capital Rules include a new minimum ratio of common equity tier 1 capital, or CET1, to risk-weighted assets of 4.5% and a capital conservation buffer of 2.5% of risk-weighted assets. The Basel III Capital Rules became fully effective on January 1, 2019. See “Supervision and Regulation—Basel III Capital Rules.” We have established capital ratio targets that align with U.S. regulatory expectations under the fully phased-in Basel III Capital Rules. Although we have capital ratios that exceed all these minimum levels currently and on a fully phased-in basis and a strategic plan to maintain these levels, we or the Bank may be unable to continue to satisfy the capital adequacy requirements for the following reasons:

~~losses and/or increases~~•Increases in ~~our and the Bank’s credit risk assets and expected losses resulting from the deterioration in the creditworthiness of borrowers and the issuers of equity and debt securities;~~

~~difficulty in refinancing or issuing instruments upon redemption or at maturity of such instruments to raise capital under acceptable terms and conditions;~~

~~declines in the value of our securities or loan portfolios;~~

~~adverse changes in foreign currency exchange rates;~~

~~revisions to the regulations or their application by our regulators that increase our capital requirements;~~

~~reductions in the value of our DTAs and other adverse developments; and~~

~~unexpected growth and an inability to increase capital timely.~~

~~Any failure to remain “well capitalized,” for bank regulatory purposes, including meeting the Basel III Capital Rule’s conservation buffer, could affect customer confidence, and our:~~

~~ability to grow;~~

~~costs of and availability of funds;~~

FDIC deposit insurance ~~premiums;~~

~~ability to raise, rollover or replace brokered deposits;~~

~~ability to make acquisitions or engage in new activities;~~

~~flexibility if we become subject to prompt corrective action restrictions;~~

~~ability to make discretionary bonuses to attract~~premiums and ~~retain quality personnel;~~

~~ability to make payments of principal and interest on our capital instruments; and~~

~~ability to pay dividends on our capital stock.~~

The 2018 Growth Act provides that qualifying banks with less than $10 billion in consolidated assets that satisfy the “Community Bank Leverage Ratio” of between 8% and 10% are deemed to satisfy applicable risk based capital requirements necessary to be considered “well capitalized.” Though this provision may provide us relief from certain capital adequacy requirements in the future, we may be unable to qualify for such relief if our total consolidated assets exceed $10 billion or the federal banking agencies determine that our risk profile disqualifies us from such relief.

~~Our operations are subject to risk of loss from unfavorable fiscal, monetary and political developments in the U.S. and other countries where we do business.~~

Our businesses and earnings are affected by the fiscal, monetary and other policies and actions of various U.S. and non-U.S. governmental and regulatory authorities. Changes in these are beyond our control and are difficult to predict and, consequently, changes in these policies could have negative effects on our activities and results of operations.

Our Corporate LATAM segment is subject to risks inherent in making loans and executing transactions with counterparties located in Latin America. Our domestic business, including loans, deposits and wealth management, services persons from or dependent upon businesses or wealth from Venezuela and other Latin American countries, and are, therefore, subject to risk inherent to those countries. These risks include, among others, effects from slow or negative growth or recessionary or worse economic conditions, inflation and hyperinflation, currency controls and volatility, and the risk of loss from unfavorable political, legal or other developments, including social or political instability, in the countries or regions in which such counterparties operate, as well as the other risks and considerations as described further below.

Various countries or regions in which we, our counterparties or our customers operate or invest have in the past experienced severe economic disruptions particular to those countries or regions. In some cases, concerns regarding the fiscal condition of one or more countries and currency and exchange controls and other measures adopted by one country could cause other countries in the same region or beyond to experience a contraction of available credit, market and price volatility, illiquidity and reduced cross-border trading and financing activity.

Our results of operations from international activities and customers from other countries may be subject to adverse changes as a result of the above considerations, as well as possible governmental actions, including expropriation, nationalization, confiscation of assets, price controls, capital controls, exchange controls, changes in laws and regulations and civil unrest and changes in government. The effects of these changes could be magnified in smaller, less liquid and more volatile foreign markets.

Conducting business and having customers in countries with less developed legal and regulatory regimes, or with currency controls, often requires devoting significant additional resources to understanding, and monitoring changes in, local laws and regulations, as well as compliance with local laws and regulations and implementing and administering related risk policies and procedures. We can also incur higher costs, and face greater compliance risks, in structuring and operating our businesses outside the U.S. to comply with U.S. anti-corruption, anti-money laundering and other laws, regulations and sanctions. Failure to comply with such rules in our international activities could adversely affect our results of operations and regulatory relations in the U.S. and elsewhere.

~~Changes in accounting rules applicable to banks~~assessments could adversely affect our financial ~~conditions and results of operations.~~condition.

~~From time to time, the FASB and the SEC change the financial accounting and reporting standards that govern the preparation~~•Federal banking agencies periodically conduct examinations of our ~~financial statements. These changes can be difficult to predict~~business, including our compliance with laws and can materially impact how we record and report our financial condition and results of operations. In some cases, we could be required to apply a new or revised standard retroactively, resulting in us restating prior period financial statements. For example, the FASB’s new requirements under CECL include significant changes to the manner in which banks’ allowance for loan losses will be calculated at the effective date for such guidance for us. See Note 1 to our audited consolidated financial statements, “Allowance for Loan Losses.” Instead of using historical losses, the new guidance will require forward looking analysis with respect to expected losses over the life of loans and other instruments, and could materially affect our results of operations, the volatility of such resultsregulations, and our ~~financial condition.~~failure to comply with any regulatory actions, if any, could adversely impact us.

~~The 2017 Tax Act may have adverse effects on certain of our customers and our businesses.~~

The 2017 Tax Act will benefit us by reducing the maximum U.S. corporate income tax rate on our taxable income from 35% to 21%. This benefit may be diminished by the complexity, uncertainty and possible adverse effects of this legislation on certain of our borrowers, including limitations on the deductibility of:

~~residential mortgage interest;~~

~~state and local taxes, including property taxes; and~~

~~business interest expenses.~~

These changes may adversely affect borrowers’ cash flows and the values and liquidity of collateral we hold to secure our loans. Fewer borrowers may be able to meet the CFPB’s “ability to repay” standards, which include the borrower’s ability to pay taxes and assessments. Demand for loans by qualified borrowers could be reduced, and therefore competition among lenders could increase. Customer behaviors toward incurring and repaying debt could also change as a result of the 2017 Tax Act. As a result, the 2017 Tax Act could materially and adversely affect our business and results of operations, at least before taking into account our lower U.S. corporate income tax rate.

The Dodd-Frank Act currently restricts our future issuance of trust preferred securities and cumulative preferred securities as eligible Tier 1 risk-based capital for purposes of the regulatory capital guidelines for bank holding companies.

Bank holding companies with assets of less than $15 billion as of December 31, 2009, including us, are permitted to include trust preferred securities that were issued before May 19, 2010 as Tier 1 capital under the Dodd-Frank Act. As of December 31, 2018 and December 31, 2017, we had $114.1 million of trust preferred securities outstanding that were issued before May 19, 2010, and that have maturity dates between 2028 and 2036.

Should we determine it is advisable, or should our regulators require us, to raise additional capital, we would not be able to issue additional trust preferred securities, as only bank holding companies with assets of less than $500 million are permitted to continue to issue trust preferred securities and include them as Tier 1 capital. Instead, we would have to issue non-cumulative preferred stock or common equity, which are Tier 1 capital. Subordinated notes meeting Basel III Capital Rules may be issuable as Tier 2 capital. To the extent we issue new equity or securities convertible into Company Shares, it could dilute our existing shareholders. Dividends on any preferred stock we may issue, unlike distributions paid on trust preferred securities, would not be tax deductible, and the preferred stock would have a preference in liquidation and in dividends to our common stock. See “Supervision and Regulation.”

~~We may need to raise additional capital in the future, but that capital may not be available when it is needed or on favorable terms.~~

We anticipate that our current capital resources will satisfy our capital requirements for the foreseeable future under currently effective regulatory capital rules. We may, however, need to raise additional capital to support our growth or currently unanticipated losses, or to meet the needs of the communities we serve. Our ability to raise additional capital, if needed, will depend, among other things, on conditions in the capital markets at that time, which may be limited by events outside our control, and on our financial performance. If we cannot raise additional capital on acceptable terms when needed, our ability to further expand our operations through internal growth and acquisitions could be limited.

~~We will be subject to heightened regulatory requirements if our total assets grow and exceed $10 billion.~~

As of December 31, 2018 and December 31, 2017, our total assets were $8.1 billion and $8.4 billion, respectively. Based on our current total assets and growth strategy, we anticipate our total assets may exceed $10 billion within the next five years. In addition to our current regulatory requirements, banks with $10 billion or more in total assets are:

~~examined directly by the CFPB with respect to various federal consumer financial laws;~~

~~subject to reduced dividends on the Bank’s holdings of Federal Reserve Bank of Atlanta common stock;~~

~~subject to limits on interchange fees pursuant to the “Durbin Amendment” to the Dodd-Frank Act which are not applicable to us beginning in 2019;~~

~~subject to enhanced prudential regulation, to the extent not reduced or eliminated as a result of the 2018 Growth Act;~~

~~subject to annual Dodd-Frank Act self-administered stress testing, or DFAST, or similar stress testing, to the extent not reduced or eliminated by the 2018 Growth Act and our regulators;and~~

~~no longer treated as a “small institution” for FDIC deposit insurance assessment purposes.~~

Compliance with these additional ongoing requirements may necessitate additional personnel, the design and implementation of additional internal controls, or the incurrence of other significant expenses, any of which could have a material adverse effect on our business, financial condition or results of operations. Our regulators requested us to engage in stress testing similar to DFAST before the Bank reached $10 billion in total assets, and we expect to continue such testing notwithstanding changes to the DFAST test thresholds by the 2018 Growth Act. Our regulators may also consider our preparation for compliance with these regulatory requirements in the course of examining our operations generally or when considering any request from us or the Bank. It is unclear whether these expectations may change as a result of the 2018 Growth Act.

•The Federal Reserve may require us to commit capital resources to support the 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 make capital injections into a troubled subsidiary bank. In addition, the Dodd-Frank Act amended the Federal Deposit Insurance Corporation Act to require that all companies that control a FDIC-insured depository institution serve as a source of financial strength to the depository institution. 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 “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.

The U.S. Bank Secrecy Act, the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, or the USA PATRIOT Act, and other laws and regulations require financial institutions, among other duties, to institute and maintain an effective anti-money laundering program and file suspicious activity and currency transaction reports as appropriate. The Financial Crimes Enforcement Network, or FinCEN, which was established as part of the Treasury Department to combat money laundering, is authorized to impose significant civil money penalties for violations of anti-money laundering rules. FinCEN has engaged in coordinated enforcement efforts with the individual federal banking regulators, as well as the U.S. Department of Justice, or DOJ, Drug Enforcement Administration, and U.S. Internal Revenue Service, which we refer to as the IRS.

There is also regulatory scrutiny of compliance with the rules of the Treasury Department’s Office of Foreign Assets Control, or OFAC. OFAC 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. 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 action 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. 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, 2018, $2.7 billion, or 44.67%, of our total deposits were from residents of Venezuela. Our total loan exposure to international markets, primarily individuals in Venezuela and corporations in other Latin American countries, was $299.8 million or 5.06%, of our total loans, at December 31, 2018.

In recent years, we have expended significant management and financial resources to further strengthen our anti-money laundering compliance program. Although we believe our anti-money laundering and OFAC compliance programs, and our current policies and procedures and staff dedicated to these activities, are sufficient to comply with applicable rules and regulations, continued enhancements are ongoing and we cannot guarantee that our program will prevent all attempts by customers to utilize the Bank in money laundering or financing impermissible under current sanctions and OFAC rules, or sanctions against Venezuela, and certain persons there. If our policies, procedures and systems are deemed deficient or fail to prevent violations of law or the policies, procedures and systems of the financial institutions that we may acquire in the future are deficient, we would be subject to liability, including fines and formal regulatory enforcement actions, including possible cease and desist orders, restrictions on our ability to pay dividends, regulatory limitations on implementing certain aspects of our business plan, including acquisitions or banking center relocation or expansion, and require us to expend additional resources to cure any deficiency, which could materially and adversely affect us.

•Failures to comply with the fair lending laws, CFPB regulations or the Community Reinvestment Act, or CRA, could adversely affect us.

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 DOJ and the federal bank regulatory agencies have issued an Interagency Policy Statement on Discrimination in Lending to provide guidance to financial institutions in determining whether discrimination exists and how the agencies will respond to lending discrimination, and what steps lenders may take to prevent discriminatory lending practices. 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 Community Reinvestment Act (“CRA”) and periodic CRA examinations by the OCC. The CRA requires us to serve our entire communities, including low- and moderate-income neighborhoods. Our CRA ratings could be adversely affected by actual or alleged violations of the fair lending or consumer financial protection laws. Even though we have maintained an “outstanding” CRA rating since 2000, we cannot predict our future CRA ratings. Violations of fair lending laws or if our CRA rating falls to less than “satisfactory” could adversely affect our business, including expansion through branching or acquisitions.

~~Fannie Mae and Freddie Mac restructuring and changes in FHA mortgage guarantee program may adversely affect the mortgage markets and our sales of mortgages we originate.~~

Fannie Mae and Freddie Mac remain in conservatorship, and although legislation has been introduced at various times to restructure Fannie Mae and Freddie Mac to take them out of conservatorship and substantially change the way they conduct business in the future, no proposal has been enacted. Through 2017, all of Fannie Mae and Freddie Mac’s earnings above a specified capital reserve have been swept into the U.S. Department of the Treasury, or the Treasury Department, and have not been available to build Fannie Mae’s and Freddie Mac’s capital. At the end of 2017, the capital reserve was $3 billion for each of Fannie Mae and Freddie Mac.

In February 2018, Fannie Mae reported that the 2017 Tax Act had reduced its DTAs, and that it had a net worth deficit of $3.7 billion as of December 31, 2017. To eliminate its net worth deficit, the Treasury Department provided Fannie Mae with $3.7 billion of capital in the first quarter of 2018. Fannie Mae reported that it had a new worth of $6.2 billion as of December 31, 2018. Freddie Mac had a net worth deficit of $312 million at December 31, 2017, and the Treasury Department provided Freddie Mac with $312 million of capital in the first quarter of 2018. Freddie Mac reported that it had a net worth of $4.5 billion as of December 31, 2018.

Since Fannie Mae and Freddie Mac dominate the residential mortgage markets, any changes in their structure and operations, as well as their respective capital, could adversely affect the primary and secondary mortgage markets, and our residential mortgage businesses, our results of operations and the returns on capital deployed in these businesses.

~~The Federal Housing Administration, or FHA, recently announced that it would strengthen its underwriting standards, which reduce the number of borrowers and mortgages eligible for FHA guarantees.~~

~~Risks Related to Our Separation from MSF~~

~~We are changing our brand from “Mercantil” to “Amerant,” which could adversely affect our business and profitability.~~

Since 2007, we have marketed our products and services using variations of MSF’s “Mercantil” brand name and logo. We are rebranding our businesses as Amerant to distinguish our organization from our former parent company.

We believe our association with MSF has provided us with greater name recognition among our customers from Latin America, including those with homes or businesses in the U.S. MSF’s reputation and financial strength have benefited us historically. The use of our new brand will result in additional costs, such as signage, and may result in potential loss of customer recognition and business. We are redesigning our internet webpage, mobile application and email addresses as part of our transition to a new name, which could cause some customer confusion even when customers are redirected automatically to new websites and email addresses. See “Certain Relationships and Related Party Transactions” and “Supervision and Regulation.”

~~We will incur incremental costs as a separate, public company.~~

Although we maintained separate systems and conducted operations largely with our own staff separate from MSF and its other affiliates prior to the Spin-off, the Spin-off required us to incur additional personnel and other expenses as a standalone public company. Such expenses include, but are not limited to, SEC reporting, additional internal controls testing and reporting, and investor relations. These initiatives involve additional management time and costs, including the hiring and integration of certain new employees and changes in the manner of conducting certain functions. We may be unable to make the changes required in a timely manner and without unexpected costs, including possible diversion of management from our day-to-day operations, which could have a material adverse effect on our business, results of operations and financial condition.

~~As a separate, public company, we will expend additional time and resources to comply with rules and regulations that previously did not apply to us.~~

As a separate, public company, the various rules and regulations of the SEC, as well as the listing standards of the Nasdaq Global Select Market, where the Company Shares are listed, require us to implement additional corporate governance practices and adhere to a variety of reporting requirements. Compliance with these public company obligations increases our legal and financial compliance costs and places additional demands on our finance, legal and accounting staff and on our financial, accounting and information systems.

In particular, as a separate, public company, our management is now required to conduct an annual evaluation of our internal controls over financial reporting and include a report of management on our internal controls starting with our second annual report filed with the SEC on Form 10-K. For as long as we are an emerging growth company, we will not be required to have our independent registered public accounting firm attest to the effectiveness of our internal controls over financial reporting pursuant to Auditing Standard No. 5. If we are unable to conclude that we have effective internal controls over financial reporting, investors could lose confidence in the reliability of our financial statements, which could adversely affect market prices for our Company Shares.

~~Our historical consolidated financial data are not necessarily representative of the results we would have achieved as a separate company and may not be a reliable indicator of our future results.~~

Because we completed the Spin-off in August of 2018, our historical consolidated financial data included herein does not necessarily reflect the financial condition, results of operations or cash flows we would have achieved as a standalone company during the periods presented or those we will achieve in the future. In addition, significant increases may occur in our cost structure as a result of the Spin-off, including costs related to public company reporting, investor relations and compliance with the Sarbanes-Oxley Act. Also, we anticipate incurring material expenses in connection with rebranding our business. We recently completed a comprehensive strategic planning process to evaluate how we conduct business, including how to focus on our domestic U.S. business while better serving our valued foreign customers, reducing costs, and increasing core deposits, fee income, margins, and the number of services we provide per household and our profitability. As a result of these matters, among others, it may be difficult for investors to compare our future results to historical results or to evaluate our relative performance or trends in our business.

~~We expect to incur additional shareholder communication and maintenance expenses, even if our expense reduction measures are completed.~~

We expect to incur additional shareholder reporting, communication and maintenance expenses related to the large number of shareholders, most of whom reside outside the U.S. Our foreign shareholders will cause these expenses to be higher than desirable, except to the extent we can reduce these expenses through various measures, including electronic delivery consistent with SEC rules and shareholder consents.

~~The Bank continues to provide certain services to MSF’s subsidiaries, even after the Spin-off, which could present additional regulatory and operational risks to us.~~

The Bank, Amerant Trust and Amerant Investments have historically provided certain services to MSF’s international subsidiaries, including accounting and financial reporting, administration, operations and technology, planning and budgeting, human resources, vendor administration and management, trust administration, market risk assessment, operational risk and physical security, credit risk, loan review, technology infrastructure, treasury, and customer referral services. Pursuant to the Separation Agreement, the Bank continues to provide certain of these services on a transitional basis, following the Spin-off, on the same terms (including pricing) in effect as of the Spin-off, and which are compliant with Federal Reserve Regulation W. This contractual obligation could present future regulatory and operational risks to us, including with respect to compliance with U.S. anti-money laundering laws and Federal Reserve Regulation W. The terms of these arrangements may also be changed if the Federal Reserve or OCC view these arrangements as inappropriate, including under their policy statement on parallel-owned banking organizations.

~~Certain of our directors may have actual or potential conflicts of interest because of their MSF equity ownership or their positions with MSF and us.~~

MSF and the Company have one common director. This individual beneficially owns approximately 6.70% of the total outstanding shares of our Class A common stock, as of December 31, 2018. This person’s family controls additional Company Shares. This individual, our former Chairman, who also is MSF’s Chairman, resigned as our Chairman effective December 31, 2018 but continues as a Company director. This relationship and financial interest may create actual or perceived conflicts of interest when this person is faced with decisions that could have different implications for MSF and us. For example, potential conflicts of interest could arise in connection with the resolution of any dispute that may arise between MSF and us.

Risks Related to Ownership of Our Common Stock

•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.

Risks Related to our Indebtedness

•We may not be able to generate sufficient cash to service all of our debt, including the Senior Notes, the Subordinated Notes and the Debentures.

•We are a holding company with limited ~~market exists~~operations and depend on our subsidiaries for ~~Company Shares~~the funds required to make payments of principal and interest on the ~~Nasdaq Global Select Market.~~Senior Notes, Subordinated Notes and the Debentures.

Item 1A. RISK FACTORS

We are subject to risks and uncertainties that could potentially negatively impact our business, financial conditions, results of operations and cash flows. In evaluating us and our business and making or continuing an investment in our securities, you should carefully consider the risks described below as well as other information contained in this Form 10-K and any risk factors and uncertainties discussed in our other public filings with the SEC under the caption “Risk Factors”. We may face other risks that are not contained in this Form 10-K, including additional risks that are not presently known, or that we presently deem immaterial. This Form 10-K and the risks discussed below also include forward-looking statements, and our actual results may differ substantially from those discussed in such forward-looking statements. 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. An ~~active trading~~inability to raise funds through deposits, borrowings, proceeds from loan repayments or sales, and other sources could have a substantial negative effect on our liquidity. Our funding sources include deposits (core and non-core), federal funds purchased, securities sold under repurchase agreements, short-and long-term debt, the Federal Reserve Discount Window (Discount Window) and Federal Home Loan Bank of Atlanta, or FHLB, advances. We also maintain a portfolio of securities that can be used as a source of liquidity.

A substantial portion of our liabilities consist of deposit accounts that are payable on demand or upon several days' notice, including deposit accounts from Large Fund Providers (third-party customer relationships with balances of over $20 million). We also use brokered deposits and wholesale funding, which not only increases our liquidity risk but could also increase our interest rate expense and potentially increase our deposit insurance costs. Institutions that are less than well-capitalized may be unable to raise or renew brokered deposits under the prompt corrective action rules. See “Supervision and Regulation—Capital Requirements” in the Form 10-K.

Any significant restriction or disruption of our ability to obtain funding from these or other sources could have a negative effect on our ability to satisfy our current and future financial obligations, which could materially affect our financial condition or results of operations. Our access to funding sources in amounts adequate to finance or capitalize our activities on terms which are acceptable to us could be impaired by factors that affect us specifically or the financial services industry or the economy in general, including but not limited to: a downturn in economic conditions in the geographic markets in which we operate or in the financial or credit markets in general; increases in interest rates; the liquidity needs of our depositors as well as competition for deposits; the availability of sufficient collateral that is acceptable to the FHLB and the Federal Reserve Bank, fiscal and monetary policy; and regulatory changes. In addition, our ability to otherwise borrow money or issue and sell debt will depend on a variety of factors such as market conditions, the general availability of credit, our credit ratings, and our credit capacity.

Alternative funding to deposits may carry higher costs. 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.

Our deposits (including checking, savings, money market and other deposits) are the primary funding source for our lending activities. Our future growth will largely depend on our ability to expand core deposits, which provide a less costly and stable funding source. The deposit markets are competitive; therefore growing our core deposit base could be difficult. 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.

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.

We and the Bank are required by federal regulatory authorities to maintain adequate levels of capital to support our operations. 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 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. If we cannot raise additional capital when needed, our ability to further expand our operations, business, financial condition, results of operations, and cash flows could be adversely affected, and the price of our securities may decline.

Our ability to receive dividends from our subsidiaries could affect our liquidity and our ability to pay dividends.

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. These dividends are the principal source of funds to pay dividends on our common stock, as well as interest on our junior subordinated debentures and interest and principal on our Senior Notes and our Subordinated Notes. Several laws and regulations limit the amount of dividends that the Bank may pay us as well as the dividends that we may pay on our common stock, see “Supervision and Regulation - Payment of Dividends.” Limitations on our ability to receive dividends from our subsidiaries could adversely affect our liquidity and on our ability to service our debt and pay dividends.

We cannot assure that we will continue to pay dividends on our common stock in the future. Future dividends will be declared and paid at the discretion of our Board of Directors and will depend on a number of factors including, our results of operations, financial condition, liquidity, capital adequacy, cash requirements, prospects, regulatory capital and limitations, among others. 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.

Risks related to Credit and Interest Rate

Our profitability is subject to interest rate risk.

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. We expect to periodically experience “gaps” in the interest rate sensitivities of the Company’s assets and liabilities, meaning that either our interest-bearing liabilities will be more sensitive to changes in market interest rates than our interest-earning assets, or vice versa.

If interest rates rise, our net interest income and the value of our assets could be reduced if interest paid on interest-bearing liabilities, such as deposits and borrowings, increases more quickly than interest received on interest-earning assets, such as loans and investment securities. In addition, rising interest rates may reduce the demand for loans and the volume of mortgage originations and re-financings, adversely affecting the profitability of our business. Increases in market interest rates may also impact our customers’ ability to repay their loans, which could increase the potential for default and our level of nonperforming assets and adversely affect our operating results. Further, when loans are placed on nonaccrual status any accrued but unpaid interest receivable is reversed, which decreases interest income; simultaneously, we will continue to have a cost to fund the loan, which is reflected as interest expense, without any interest income to offset the associated funding expense. Thus, an increase in the amount of nonperforming assets would have an adverse impact on net interest income. Also, 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.

In declining rate environments, we may experience numerous loan prepayments and replacement loans may be priced at a lower rate, decreasing our net interest income. Further, should market interest rates fall below current levels, our net interest income could also be negatively affected if competitive pressures keep us from further reducing rates on our deposits, while the yields on our assets decrease through loan prepayments and interest rate adjustments. Since our balance sheet is asset sensitive, a decrease in interest rates or a flattening or inversion of the yield curve could adversely affect us.

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. 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.

The determination of the appropriate level of the allowance for credit losses inherently involves a high degree of subjectivity and judgment and requires us to make various assumptions and estimates about the collectability of our loan portfolio, including the creditworthiness of our borrowers, the value of the collateral securing our loans, our delinquency experience, economic conditions and trends, reasonable and supportable forecasts, and credit quality indicators (including past charge-off experience and levels of past due loans and nonperforming assets).We cannot assure that these assumptions and estimates will be adequate over time to cover expected credit losses in our portfolio. These assumptions and estimates may be affected by changes in the economy, market conditions, or events negatively impacting specific customers, industries or markets, or borrowers repaying their loans. If our allowance for credit losses on loans is not adequate, our business, financial condition, results of operations, or cash flows could be adversely affected. In addition, bank regulatory agencies periodically review our allowance for credit losses and may require an increase in the provision for credit losses or the recognition of further charge-offs. Any increases in the provision for credit losses will result in a decrease in net income and may adversely affect our business, financial condition, results of operations, or cash flows.

On December 31, 2022, we ceased to be an Emerging Growth Company, and we implemented FASB’s Accounting Standards Codification (“ASC”) Topic 326, Financial Instruments - Credit Losses, a new guidance on accounting for current expected credit losses on financial instruments (“CECL”). This guidance substantially changed the accounting for credit losses on loans and other financial assets held by banks, financial institutions, and other organizations. The standard changed the previous incurred loss impairment methodology in GAAP. Under the incurred loss model, we recognized losses when they were incurred. On the other hand, CECL requires loans held for investment and debt securities held to maturity to be presented at the net amount expected to be collected (net of the allowance for credit losses). CECL generally results in earlier recognition of expected credit losses and may result in higher provision for credit losses and higher volatility in the quarterly provision for credit losses. Future provisions under the CECL model could adversely affect our business, financial condition, results of operations, or cash flows.

Our concentration of CRE loans could result in increased loan losses.

CRE is cyclical and poses risks of possible loss due to concentration levels and risks of the assets being financed. 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.

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.

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. We cannot assure that our CRE concentration risk management program will effectively manage our CRE concentration.

CRE loans as well as other loans in our portfolio are secured by real estate. We may experience a significant level of nonperforming real estate loans if the economic conditions of the markets where we operate deteriorate, or in areas where real estate market conditions become distressed. The value of the collateral securing those loans and the revenue stream from those loans could be negatively impacted, and additional provisions for the allowance for credit losses could be required. Our ability to dispose of Other Real Estate Owned (“OREO”) properties at prices at or above the respective carrying values could also be impaired, causing additional losses.

In addition, if the United States economy returns to a recessionary state, management believes that it could significantly affect the economic conditions of the market areas we serve and we could experience significantly higher delinquencies and loan losses, and therefore impact our earnings and financial condition, including our capital and liquidity.

Many of our loans are to commercial borrowers, which have unique risks compared to other types of loans.

As of December 31, 2023, approximately $2.3 billion, or 34%, and $1.5 billion, or 22%, of our loan portfolio was comprised of CRE loans and commercial loans, respectively. Since payments on these loans are often dependent on the successful operation or development of the property or business involved, their repayment is sensitive to adverse conditions in the real estate market and the general economy and the collateral securing these loans may not be sufficient to repay the loan in the event of default. Consequently, downturns in the real estate market and economy increase the risk related to commercial loans, including CRE loans. Unlike residential mortgage loans, which generally are made on the basis of the borrowers’ ability to make repayment from their employment and other income and which are secured by real property whose value tends to be more easily ascertainable, commercial loans typically are made on the basis of the borrowers’ ability to make repayment from the cash flow of the commercial venture. Our commercial loans are primarily made based on the identified cash flow of the borrower and secondarily on the collateral underlying the loans. Most often, this collateral consists of accounts receivable, inventory and equipment. Inventory and equipment may depreciate over time, may be difficult to appraise and may fluctuate in value based on the success of the business. In some cases, the repossession of collateral may not be possible or may be delayed which could negatively impact the value we may realize from that collateral to repay the loan. If the cash flow from business operations is reduced, the borrower’s ability to repay the loan may be impaired. We attempt to mitigate this risk through our underwriting standards, including evaluating the creditworthiness of the borrower, and regular monitoring. However, these procedures cannot entirely eliminate the risk of loss associated with commercial lending. Due to the larger average size of each commercial loan as compared with other loans such as residential loans, as well as collateral that is generally less readily-marketable, losses incurred on a small number of commercial loans could have a material adverse impact on our financial condition and results of operations.

Also, the COVID-19 pandemic affected the markets where we operate, in particular, in the metropolitan New York area, where we no longer generate loans but still had loans held for investment as of December 31, 2023 totaling $217.0 million corresponding to commercial real estate properties, including retail and office properties. These properties have been, and may continue to be, negatively impacted by the consequences of the pandemic. 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.

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. 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. 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. In those cases, the valuation process includes inputs that are less observable and require more subjectivity and management judgment. Valuations may result in estimated fair values which vary significantly from the amount at which the investments may ultimately be sold. Further, rapidly changing and unprecedented credit and equity market conditions could materially affect the valuation of securities in our financial statements and the period-to-period changes in estimated fair value could vary significantly.

As of December 31, 2023, the fair value of the Company’s debt securities available for sale was approximately $1.2 billion, compared to $1.1 billion as of December 31, 2022. 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 2023, the Company ~~Shares,~~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.

Beginning January 1, 2022, debt securities available for sale are analyzed for credit losses under the new guidance on accounting for CECL, which requires the Company to determine whether the securities are considered impaired because their fair value is below their amortized cost basis as of the reporting date, and whether there is a need of a credit loss allowance. An allowance for credit losses is established for losses on debt securities available for sale due to credit losses and is reported as a component of provision for credit losses. Accrued interest is excluded from our expected credit loss estimates. 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. Prior to January 1, 2022, our debt securities classified as available for sale or held to maturity were generally evaluated for other than temporary impairment under the applicable accounting guidance.

The valuation of our investment portfolio is also influenced by external market and other factors, including implementation of SEC and FASB guidance on fair value accounting. 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 business, financial condition, results of operations, or cash flows .

At December 31, 2023 and 2022, our nonperforming loans totaled $34.4 million and $37.6 million, respectively, or 0.47% and 0.54% of total loans, respectively. We had no OREO balances at December 31, 2023 and 2022. 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. 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. Any increase in our nonperforming assets and related increases in our provision for credit losses could negatively affect our business and could have a material adverse effect on our capital, financial condition and results of operations. In addition, the resolution of nonperforming assets requires commitments of time from management, which can be detrimental to their other responsibilities. We cannot assure you 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. During our ordinary course of business, we may foreclose on and take title to properties securing certain loans. There is a risk that hazardous or toxic substances could be found on these properties. If hazardous or toxic substances are found, we may be liable for remediation costs, as well as for personal injury and property damage. Environmental laws may require the Company to incur substantial expenses and may materially reduce the affected property’s value or limit our ability to use or sell the affected property. In addition, future laws or more stringent interpretations or enforcement policies with respect to existing laws and regulations may increase our exposure to environmental liability. Environmental reviews of real property before initiating foreclosure may not be sufficient to detect all potential environmental hazards. The remediation costs and any other financial liabilities associated with an environmental hazard could have a material adverse effect on the Company’s business, financial condition, results of operations, or cash flows.

Deterioration in the real estate markets, including the secondary market for residential mortgage loans, can adversely affect us.

A decrease in residential real estate market prices or lower levels of home sales, could result in lower single family home values, adversely affecting the value of collateral securing residential mortgage loans and residential property collateral securing loans that we hold, mortgage loan originations and gains on the sale of mortgage loans. A decline in real estate prices increases delinquencies and losses on certain mortgage loans, generally, and particularly on second lien mortgages and home equity lines of credit. A substantial portion of our single family loans consist of jumbo loans, and the secondary market for jumbo mortgages has historically been less liquid compared to conforming loans. Significant ongoing disruptions in the secondary market for residential mortgage loans can limit the market for and liquidity of most residential mortgage loans other than conforming Fannie Mae and Freddie Mac loans. Deteriorating trends could occur, including declines in real estate values, home sales volumes, financial stress on borrowers as a result of job losses, increase in interest rates or other factors. These could adversely impact borrowers and result in higher delinquencies and greater charge-offs in future periods, which would adversely affect our business, financial condition, results of operations, or cash flows. In the event our allowance for credit losses on these loans is insufficient to cover such losses, our business, financial condition, results of operations, or cash flows could be adversely affected.

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.

We outsource many of our major systems and critical back-office operations, such as data processing, recording, and monitoring transactions, online banking interfaces and service, internet connections and network access. 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. An interruption or failure of the services we receive through these outsourced systems could cause an interruption of our operations. The occurrence of any systems failure or interruption could damage our reputation and result in a loss of customers and business, could subject us to additional regulatory scrutiny, or could expose us to legal liability. Any of these occurrences could have a material adverse effect on our business, financial condition, results of operations, or cash flows.

Our information systems are exposed to cybersecurity threats and may experience interruptions and security breaches that could adversely affect our business and reputation.

We rely heavily on communications and information systems, including those provided by third-party service providers, to conduct our business. Any failure, interruption, or security breach of these systems could result in failures or disruptions which could impact our ability to serve our customers, operate our business and affect our customers’ privacy and could damage our reputation, result in a loss of business, subject us to additional regulatory scrutiny or enforcement or expose us to civil litigation and possible financial liability. Our systems and networks, as well as those of our third-party service providers, are subject to security risks and could be susceptible to cyberattacks by third parties, including through coordinated attacks sponsored by foreign nations and criminal organizations to disrupt business operations and other compromises to data and systems for political or criminal purposes. Cyber threats are rapidly evolving and we may not be able to anticipate or prevent all such attacks and could be held liable for any security breach or loss. These risks have increased with the implementation of remote and/or hybrid work protocols and may continue to increase in the future as the use of mobile banking and other internet-based products and services continues to grow.

For example, in August 2022 and November 2023, we were notified by different third-party vendors that they had experienced potential cybersecurity incidents. On both occasions, we activated our incident response plan and the vendors completed forensic analyses to determine whether information from the Bank's customers was accessed and exfiltrated in an unauthorized manner. Once the forensic analyses were completed, we worked with the vendors and outside advisors to determine the appropriate course of action, including having the vendors provide notice to our affected customers and offer free credit monitoring services when appropriate. Our business, financial condition, or results of operations were not materially adversely affected by these cybersecurity incidents. We are not aware of any continuing cybersecurity threats or breaches involving these vendors, however, we, as well as our customers, regulators, and service providers, have experienced and will likely continue to experience a significant increase in information security and cybersecurity threats and attacks, see Item 1C. Cybersecurity for an additional discussion on our information security program.

Despite our cybersecurity policies and procedures and our efforts to monitor and ensure the integrity of our and our service providers’ systems, we may not be able to anticipate all types of security threats, nor may we be able to implement preventive measures effective against all such security threats. In addition, the impact and severity of a particular cyberattack may not be immediately clear, and it may take a significant amount of time before such determination can be made. While the investigation of a cyberattack is ongoing, we may not be fully aware of the extent of the harm caused by the cyberattack and it may not be clear how to contain and remediate such harm and any damage may continue to spread.

Security breaches or failures may have serious adverse financial and other consequences, including significant legal and remediation costs, disruption of operations, misappropriation of confidential information, damage to systems operated by us or our third-party service providers, as well as damaging our customers and our counterparties. Such losses and claims may not be covered by our insurance. 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 strategic plan and growth strategy may not be achieved as quickly or as fully as we seek.

The implementation of our strategic plan and growth strategy may take longer than we anticipate to implement, and the results we achieve may not be as successful as we seek, all of which could adversely affect our business, financial conditions, results of operations, or cash flows. 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.

Defaults by or deteriorating asset quality of other financial institutions could adversely affect us.

Financial services institutions are interrelated as a result of trading, clearing, counterparty, or other relationships. We have exposure to many different industries and counterparties, and routinely execute transactions with counterparties in the financial services industry, including brokers and dealers, commercial banks, investment banks, and other institutional clients. Many of these transactions expose us to credit risk and losses in the event of a default by a counterparty. Any such losses could have a material adverse effect on our business, financial condition, results of operations or cash flows. We also may have exposure to these financial institutions in the form of unsecured debt instruments, derivatives and other securities. Further, potential action by governments and regulatory bodies in response to financial crises affecting the global and U.S. banking systems and financial markets, such as nationalization, conservatorship, receivership and other intervention, or lack of action by governments and central banks, as well as deterioration in the banks’ creditworthiness, could adversely affect the value and/or liquidity of these instruments, securities, transactions and investments or limit our ability to trade with them. Any losses or impairments to the carrying value of these investments or other changes may adversely affect our business, financial condition, results of operations, or cash flows. The events in 2023 resulting in the failure of several banks in the U.S. may also result in potentially adverse changes to laws or regulations governing banks and bank holding companies or result in the imposition of restrictions through supervisory or enforcement activities, including higher capital requirements, which could adversely affect our business, financial condition, results of operations or cash flows.

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. There are substantial risks and uncertainties associated with these efforts, including external factors, such as compliance with regulations, competitive alternatives, and shifting market preferences, that may impact the successful implementation of a new line of business and/or a new product or service. In developing and marketing new lines of business and/or new products and services, we may invest significant time and resources. Initial timetables for the introduction and development of new lines of business and/or new products or services may not be achieved, and price and ~~market volatility~~profitability targets may not prove feasible, which could in turn have a material negative effect on our operating results. Additionally, any new line of ~~those shares.~~business and/or new product or service could require the establishment of new key and other controls and have a significant impact on our existing system of internal controls. Failure to successfully manage these risks in the development and implementation of new lines of business and/or new products or services could adversely affect our business, financial condition, results of operations, or cash flows.

~~There is currently a limited market for shares~~

We face significant operational risks.

We operate many different financial service functions and rely on the ability of our ~~Class A~~employees, third party vendors and ~~Class B common stock~~systems to process a significant number of transactions. Operational risk is the risk of loss from operations, including fraud by employees or outside persons, employees’ execution of incorrect or unauthorized transactions, data processing and ~~there~~technology errors or hacking and breaches of internal control systems. These risks have increased in light of remote and hybrid work arrangements that were implemented in response to the COVID-19 pandemic, and currently remain in effect.

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.

The financial services industry is ~~no assurance that an active market~~undergoing rapid technological changes with frequent introductions of new technology-driven products and services. In addition to allowing us to service our clients better, the effective use of technology may increase efficiency and may enable financial institutions to reduce costs and the risks associated with fraud and other operational risks. Our future success will ~~develop or be sustained. Although~~partially depend upon our Class A common stock and our Class B common stock are listed on the Nasdaq Global Select Market under the trading symbols “AMTB” and “AMTBB,” respectively, trading volumes remain limited. If more active trading markets do not develop, youability to use technology effectively. We may be unable to ~~sell~~effectively implement new technology-driven enhancements of products and services as quickly or ~~purchase shares~~at the costs anticipated, which could impair our ability to realize the anticipated benefits from such new technology or require us to incur significant costs to remedy any such challenges in a timely manner.

Many larger competitors have substantially greater resources to invest in technological improvements and, increasingly, non-banking firms are using technology to compete with traditional lenders for loans and other banking services. Third parties and vendors upon which we rely for our technology needs may not be able to develop, on a cost-effective basis, systems that will enable us to keep pace with such developments. As a result, our larger competitors may be able to offer additional or superior products compared to those that we will be able to provide, which would put us at a competitive disadvantage. We may lose customers seeking new technology-driven products and services to the extent we are unable to provide such products and services. 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 ~~common stock at~~deposits, or approximately $1.9 billion, were from Venezuelan residents. 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). These declines were due in part to actions by the ~~volume, price~~Company to reduce its compliance costs and ~~time~~to economic conditions in Venezuela that ~~you desire.~~adversely impact our Venezuelan customers’ ability to generate and save U.S. dollars. 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, 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.

~~Whether~~

In addition, although we seek to increase our trust, brokerage and investment advisory business from our domestic markets, substantially all our revenue from these services currently is from Venezuelan customers. 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.

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.

Companies across all industries are facing scrutiny from stakeholders related to ESG matters, including practices and disclosures related to environmental stewardship; social responsibility; diversity, equity and inclusion; and workplace rights. 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. If we are unable to meet our ESG targets or stakeholder expectations and industry standards, or if we are perceived to have not responded appropriately, our reputation could be negatively impacted. In addition, in recent years, investor advocacy groups and certain institutional investors have placed increasing importance on ESG matters. If, as a result of their assessment of our ESG practices, certain investors are unsatisfied with our actions or progress, they may reconsider their investment in our company. 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. 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 ~~purchase~~timelines we announce, or ~~sale prices~~at all, could increase the risk of litigation.

We may be unable to attract and retain key people to support our business.

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. If we are unable to hire and retain key individuals, we may be unable to implement our business strategy and our business, financial condition and results of operations may be negatively impacted. Our ability to attract and retain employees could also be impacted by changing workforce expectations, practices, and preferences, including remote work and hybrid work preferences, and increasing labor shortages and competition for labor, which could increase labor costs. Failure to attract well-qualified employees or to develop and retain our employees may adversely affect our business, financial condition, results of operations, or cash flows.

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.

Severe weather and natural disasters, (including hurricanes, tornados, earthquakes, fires, droughts and floods), acts of war or terrorism (such as Russia’s invasion of Ukraine and hostilities in Israel and surrounding areas), epidemics and global pandemics (such as the recent COVID-19 outbreak), theft, civil unrest, government expropriation, condemnation or other external events in the markets where we operate or where our customers live (including Venezuela) could have a significant effect on our ability to conduct business. Such events could affect the stability of our ~~common stock reflect a reasonable valuation~~deposit base, impair the ability of borrowers to repay outstanding loans, impair the value of collateral securing loans, cause significant property damage, impair employee productivity, result in loss of revenue and/or cause us to incur additional expenses. The occurrence of any such event could adversely affect our business, financial condition, results of operations, or cash flows.

Our business is mainly concentrated in two markets: South Florida, and the Houston, Texas area, which may increase our risks from extreme weather. These two market areas are susceptible to hurricanes, tropical storms and other similar severe weather events which could have the effects indicated above. 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. Additionally, the impact of severe weather in the markets where we operate has and may continue to increase the cost and reduce the availability of insurance needed for our business 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.

Various federal, state and foreign laws enforced by the bank regulators and other agencies protect the privacy and security of customers’ non-public personal information. Many of our ~~common stock~~employees have access to, and routinely process, sensitive personal customer information, including through their access to information technology systems. An employee could, intentionally or unintentionally, disclose or misappropriate confidential client information or our data could be the subject of a cybersecurity attack (including intrusion by hackers, and phishing attacks). 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. 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.

We could be required to write down our goodwill and other intangible assets.

We had goodwill of $19.2 million and other intangible assets of $5.8 million at December 31, 2023. Our business acquisitions typically have resulted in goodwill and other intangible assets, which affect the amount of future amortization expense and potential impairment expense. We make estimates and assumptions in valuing such goodwill and intangible assets that affect our consolidated financial statements. In accordance with GAAP, our goodwill and indefinite-lived intangible assets are not amortized, but are tested for impairment annually, or more frequently if events or changes in circumstances indicate that an asset might be impaired. The estimated fair value is affected by the performance of the business, which may ~~depend~~be especially diminished by prolonged market declines. If the goodwill has been impaired, we must write down the goodwill by the amount of the impairment, with a corresponding charge to net income. Based on ~~an active trading market developing,~~the annual impairment analysis, as of December 31, 2023, we recorded a $1.7 million pre-tax write off in goodwill and ~~thus~~other intangibles assets. If we record any future impairment loss related to our goodwill or other intangible assets, it could adversely affect our business, financial condition, results of operations, or cash flows. Notwithstanding the ~~price you receive for~~foregoing, the results of impairment testing on our ~~common stock,~~goodwill or other intangible assets have no impact on our tangible book value or regulatory capital levels.

We have a net deferred tax asset that may or may not ~~reflect its true~~be fully realized.

Deferred income tax represents the tax effect of the timing differences between financial accounting and tax reporting. Deferred tax assets, or ~~intrinsic value. Limited trading~~DTAs, are assessed periodically by management to determine whether they are realizable. 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. 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 ~~common stock may cause fluctuations~~business, financial condition, results of operations, or cash flows. In addition, changes in the ~~market~~corporate tax rates could affect the value of our ~~common stock~~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%. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates.”

We may incur losses due to ~~be exaggerated from~~minority investments in fintech and specialty finance companies.

From time to time, ~~leading~~we may make or consider making minority investments in fintech and specialty finance companies. If we do so, we may not be able to influence the activities of companies in which we invest and may suffer losses due to these activities. For example, the companies we invest in may have economic or business interests, values, or goals that are inconsistent or conflict with ours, which could damage our reputation or business. Additionally, the companies we invest in may experience financial difficulties, default on their obligations, diminished liquidity or insolvency; or our management team’s distraction relative to the potential financial benefit may be disproportional. In addition, although we may seek board representation in connection with certain investments, we cannot assure you that such representation will be obtained or that such representation will result in Amerant having a meaningful say in the Board decisions of such company. If the companies we invest in seek additional financing in the future to fund their growth strategies, these financing transactions may result in dilution to our ownership stakes and these transactions may occur at lower valuations than the investment transaction through which we acquired such ownership interest, which could significantly decrease the fair value of our investment in those entities. We may also be unable to dispose of our minority investments within our contemplated time horizon or at all. Our inability to dispose of our minority investment in an entity or a downward adjustment to or impairment of an equity investment could adversely impact our business, financial condition, results of operations, or cash flows.

We are subject to risks associated with sub-leasing portions of our corporate headquarters building.

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. 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. When we sublease spaces in the Property to third parties, we are not released from our underlying obligations under the Lease. We rely on the sublease income from subtenants to offset the expenses incurred related to our obligations under the Lease. Although we assess the financial condition of each subtenant to which we sublease space in the Property, the financial condition of each such subtenant or of a sublease guarantor(s), if any, may deteriorate over time. 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 subtenants default or terminate their subleases with us, we may experience a loss of planned sublease rental income, which could adversely impact our business, financial condition, results of operations, or cash flows. Additionally, if subtenants default on their sublease obligations with us or otherwise terminate their sublease agreement with us, we may be unable to secure a new subtenant on a timely basis, or at all, on the same or more favorable rent terms.

Our success depends on our ability to compete effectively in highly competitive 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. We compete for deposits, loans, and other financial services in our markets with other local, regional and national commercial banks, thrifts, credit unions, mortgage lenders, trust services providers and securities advisory and brokerage firms. Marketplace lenders operating nationwide over the internet are also growing rapidly, other fintech developments, including blockchain and other technologies, may potentially disrupt the financial services industry and impact the way banks do business. Many of our competitors offer products and services different from us, and have substantially greater resources, name recognition and market presence than we do, which benefits them in attracting business. In addition, larger competitors may be able to price ~~volatility~~loans and deposits more aggressively than we are able to and have broader and more diverse customer and geographic bases to draw upon.

Risks Related to Risk Management, Internal Audit, Internal and Disclosure Controls

Potential gaps in ~~excess~~our risk management policies and internal audit procedures may leave us exposed to unidentified or unanticipated risk, which could negatively affect our business.

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. Many of ~~that which would occur in a more active trading market.~~

~~If securities~~our methods for managing risk and exposures are based on observed historical market behavior to model or ~~industry analysts do~~project potential future exposure. Models used by our business are based on assumptions and projections. These models may not ~~publish research~~operate properly, or ~~publish~~our inputs and assumptions may be inaccurate or ~~unfavorable research about~~not be adopted quickly enough to reflect changes in behavior, markets, or technology. As a result, these methods may not fully predict future exposures, which can be significantly different and greater than historical measures indicate. In addition, our business and the ~~price~~markets in which we operate are continuously evolving, and we may fail to fully understand the implications of changes in our business or the financial markets or fail to adequately or timely enhance our enterprise risk framework to address those changes. Furthermore, we cannot assure that we can effectively review and monitor all risks or that all of our ~~common stock, including~~employees will closely follow our ~~Class A common stock,~~risk management policies and ~~trading volume~~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. If our enterprise risk management framework proves ineffective, we could ~~decline.~~

The trading market for our common stock, including our Class A common stock, depends in part on the research and reports that securities or industry analysts publish about us or our business. If few securities or industry analysts cover us, the trading price for our common stock may besuffer unexpected losses, which could adversely ~~affected. If one or more of the analysts who covers us downgrades our common stock or publishes incorrect or unfavorable research about~~affect our business, financial condition, results of operations, or cash flows.

Any failure to maintain effective internal control over financial reporting could impair the ~~price~~reliability of our ~~common stock would likely decline. If one or more~~financial statements, which in turn could harm our business, impair investor confidence in the accuracy and completeness of ~~these analysts ceases coverage of~~our financial reports and our access to the ~~Company or fails to publish reports on us regularly, or downgrades our common stock, demand for our common stock could decrease, which could~~capital markets and cause the price of our common stock ~~or trading volume~~ to ~~decline.~~decline and subject us to regulatory penalties.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, or ICFR and for evaluating and reporting on that system of internal control. Our ICFR is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Section 404 of the Sarbanes-Oxley Act requires us to furnish annually a report by management on the effectiveness of our ICFR. In addition, our independent registered public accounting firm is required to report on the effectiveness of our ICFR.

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. Such events could harm our business, cause investors to lose confidence in the accuracy and completeness of our reported financial information, cause the trading price of our shares of common stock to decline, our access to the capital markets or other financing sources could be limited and subject us to investigations, enforcement actions or regulatory penalties.

Changes in accounting standards could materially impact our financial statements

From time to time, accounting standards setters change the financial accounting and reporting standards that govern the preparation of our consolidated financial statements. These changes can be difficult to predict and can materially impact how we record and report our consolidated financial condition and consolidated results of operations. In some cases, we could be required to apply a new or revised standard retroactively, resulting in changes to previously reported financial results or a cumulative charge to retained earnings. See Note 1 - Business, Basis of Presentation and Summary of Significant Accounting Policies in the notes to consolidated financial statements included in Item 15.1 Consolidated Financial Statements in this report for further information regarding accounting standards updates.

Risks Related to External and Market Factors

Material and negative developments adversely impacting the financial services industry at large and causing volatility in financial markets and the economy may have materially adverse effects on our liquidity, business, financial condition and results of operations.

The actual occurrence or widespread concerns regarding the potential occurrence of illiquidity, operational failures, defaults, non-performance or other material and adverse developments that impact financial institutions and transactional counterparties, or other entities within the financial services industry at large, have previously caused, and could continue to cause, market-wide liquidity issues, bank-runs and general contagion across the global and U.S. financial services industry. For example, in March and April 2023, bank runs precipitated the failure of four banks in the U.S. causing a state of volatility in the capital and credit markets and uncertainty regarding the health of the U.S. banking system, particularly around liquidity, uninsured deposits and customer concentrations. This volatility has particularly impacted the price of securities issued by financial institutions, including ours. While the U.S. Department of the Treasury, the Federal Reserve Board and the FDIC acted promptly and collectively agreed to guarantee all deposits over the limit on insured deposits of $250,000 at three of these failed financial institutions, and the FDIC secured an agreement with a large financial institution for that institution to assume all of the deposits and substantially all of the assets of another failed institution, there can be no assurance that there will not be additional bank failures or issues in the broader financial system. Similarly, there can be no assurance that these U.S. government entities will act in a similar fashion in the event of the future closure or failure of any other banks or financial institutions. The cost of resolving the recent bank failures may prompt the FDIC to charge higher premiums above the current levels or to issue additional special assessments.

Adverse financial market and economic conditions may continue to exert downward pressure on the prices of stock and other securities and negatively impact credit availability for certain issuers, including us, without regard to their underlying financial strength. Additionally, these developments have negatively impacted customer confidence in the safety and soundness of banks. As a result, customers may choose to maintain deposits with large financial institutions or invest in higher yielding short-term fixed income securities, all of which could materially adversely impact the Company's liquidity, loan funding capacity, net interest margin, capital and results of operations. If the current levels of financial market and economic disruption, volatility and decreased levels of customer confidence continue or worsen, there can be no assurance that we will not experience adverse effects, which may materially impact our liquidity, business, financial condition, and results of operations.

Our business may be adversely affected by economic conditions in general and by conditions in the financial markets.

We are exposed to downturns in the U.S. economy and market conditions generally. We cannot accurately predict the possibility of the national or local economy’s return to a period of economic weakness or to recessionary conditions. Our primary markets are concentrated the in Miami-Dade, Broward, Palm Beach and Hillsborough (Tampa) counties in Florida, and Harris, Montgomery, Fort Bend and Waller counties in Texas. Adverse economic conditions in any of these areas and in the national economy may impact us significantly and unpredictably. 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. Any of these risks individually or a combination could adversely affect our business, financial condition, results of operations, or cash flows. Moreover, a potential U.S. federal government shutdown resulting from budgetary decisions, a prolonged continuing resolution, breach of the federal debt ceiling, or a potential U.S. sovereign default and the uncertainty surrounding the 2024 U.S. Presidential Election may increase uncertainty and volatility in the global economy and financial markets. In addition, international economic uncertainty could also impact the U.S. financial markets by potentially suppressing stock prices, including ours, and adding to overall market volatility, which could adversely affect our business. The effects of any economic downturn could continue for many years after the downturn is considered to have ended.

Weak economic conditions or significant uncertainty regarding the stability of financial markets related to stock market volatility, inflation, recession, or governmental fiscal, monetary and tax policies, among others, could adversely impact our business, financial condition, results of operations, or cash flows.

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.

Several regulators, including the Federal Reserve, the OCC, the FDIC, the Securities and Exchange Commission, the Financial Industry Regulatory Authority, and the Cayman Islands Monetary Authority, regulate us and our subsidiaries. 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. 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. 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. Based on our current total assets and growth strategy, we anticipate our total assets may exceed $10 billion in 2024. In addition to our current regulatory requirements, banks with $10 billion or more in total assets are, among other things: examined directly by the CFPB with respect to various federal consumer financial laws; subject to reduced dividends on the Bank’s holdings of Federal Reserve Bank of Atlanta common stock; subject to limits on interchange fees pursuant to the “Durbin Amendment” to the Dodd-Frank Act; subject to certain enhanced prudential standards; and no longer treated as a “small institution” for FDIC deposit insurance assessment purposes.

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.

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.

We are subject to changes in tax law that could increase our effective tax rates. These law changes may be retroactive to previous periods and as a result could negatively affect our current and future financial performance. In particular, the Inflation Reduction Act, which was signed into law in the United States in August 2022, among other things, imposes a surcharge on stock repurchases. Changes to our tax liability could have a material effect on our results of operations. In addition, our customers are subject to a wide variety of federal, state and local taxes. Changes in taxes paid by our customers may affect their ability to purchase homes or consumer products and could also make some businesses and industries less inclined to borrow, potentially reducing demand for our loans and deposit products. In addition, such negative effects on our customers could result in defaults on the loans we have made which would reduce our profitability and could materially adversely affect our business, financial condition, results of operations, or cash flows.

We are also subject to potential tax audits in various jurisdictions and in such event, tax authorities may disagree with certain positions we have taken and assess penalties or additional taxes. While we assess regularly the likely outcomes of these potential audits, there can be no assurance that we will accurately predict the outcome of a potential audit, and an audit could have a material adverse impact on 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 face risks of litigation and regulatory investigations and actions, including the risk of class action lawsuits. Plaintiffs in class action and other lawsuits against us may seek very large or indeterminate amounts, including punitive and treble damages. Due to the vagaries of litigation, the outcome of a litigation matter and the amount or range of potential loss at particular points in time may normally be difficult to ascertain.

A substantial legal liability or a significant federal, state or regulatory action, inquiry or investigation could harm our reputation, result in material fines, penalties, or legal costs, divert management resources away from our business, and otherwise adversely affect our business, financial condition, results of operations, or cash flows. Even if we ultimately prevail in a litigation, regulatory action or investigation, our ability to attract new customers, retain our current customers and recruit and retain employees could be adversely affected. Regulatory inquiries and litigation may also adversely affect the prices or volatility of our securities specifically, or the securities of our industry, generally.

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.

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. We cannot predict the effect on us and the Bank of changes to the current capital requirements.

Our ability to raise additional capital, if needed, will depend, among other, on the capital market conditions and on our financial condition and performance. Any failure to remain “well capitalized” for bank regulatory purposes could adversely affect our business, financial condition, results of operations, or cash flows, In addition, any failure to meet these capital and other regulatory requirements could affect our customers’ confidence, our cost of and availability of funds or FDIC deposit insurance premiums; and our ability to grow, raise, rollover or replace brokered deposits; make acquisitions, open new branches or engage in new activities; make payments of principal and interest on our debt instruments; and pay dividends on our capital stock.

Increases in FDIC deposit insurance premiums and assessments could adversely affect our financial condition.

FDIC insurance premiums we pay may change and be significantly higher in the future. The FDIC may be forced to charge higher premiums in the future if market developments significantly deplete the insurance fund of the FDIC and reduce the ratio of reserves to insured deposits. 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. Any increases in our assessment rate, future special assessments, or required prepayments in FDIC insurance premiums could reduce our profitability or limit our ability to pursue certain business opportunities, which could adversely affect our business, financial condition, results of operations, or cash flows.

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 and the OCC periodically conduct examinations of our business and the Bank’s business, including compliance with laws and regulations. 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. 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.

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. In addition, the Federal Deposit Insurance Corporation Act, as amended by the Dodd-Frank Act, requires that all companies that control an FDIC-insured depository institution must serve as a source of financial strength to the depository institution. 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.

The USA Patriot and BSA and the 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. In addition, FinCEN, which was established as part of the Treasury Department to combat money laundering, is authorized to impose significant civil money penalties for violations of anti-money laundering rules.

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. 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. 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. Our total loan exposure to international markets, primarily individuals in Venezuela and corporations in other Latin American countries, was $87.6 million, or less than 1.5%, of our total loans, at December 31, 2023.

If our policies, procedures and systems are deemed deficient or fail to prevent violations of law or the policies, procedures and systems of the financial institutions that we may acquire in the future are deficient, we would be subject to liability (including fines); formal regulatory enforcement actions (including possible cease and desist orders, restrictions on our ability to pay dividends, regulatory limitations on implementing certain aspects of our business plan, including acquisitions or banking center relocation or expansion); and additional expenses to cure any deficiency, which could adversely affect our business, financial condition, results of operations, or cash flows.

Failures to comply with the fair lending laws, CFPB regulations or the Community Reinvestment Act, or CRA, could adversely affect us.

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. 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. The CRA requires us to serve our entire communities, including low- and moderate-income neighborhoods. Our CRA ratings could be adversely affected by actual or alleged violations of the fair lending or consumer financial protection laws. Violations of fair lending laws or if our CRA rating falls to less than “satisfactory” could adversely affect our business, including expansion through branching or acquisitions.

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.

As of December 31, 2023, our executive officers, directors and each of our greater than 5% holders of our voting Class A common stock beneficially owned outstanding shares representing, in the aggregate, approximately 33% of the outstanding shares of our voting Class A common stock (without giving effect to the broad family holdings of the Capriles, Marturet and Vollmer families which will bring the percentage to an aggregate of approximately 55%). As a result, these shareholders, if they act individually or together, may exert a significant degree of influence over our management and affairs and over matters requiring shareholder approval, including the election of directors and approval of significant corporate transactions, such as mergers, the sale of substantially all of our assets and other extraordinary corporate matters. 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.

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.

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”). Because these debt instruments rank senior to our common stock, if we fail to timely make principal and interest payments on the Senior Notes, the Subordinated Notes and the Debentures, we may not pay any dividends on our common stock. Further, if we declare bankruptcy, dissolve, or liquidate, the holders of the Senior Notes, the Subordinated Notes and the Debentures must be satisfied before any distributions can be made to the holders of our common stock.

The stock price of financial institutions, like Amerant, may fluctuate significantly.

We cannot predict the prices at which our ~~Company Shares~~shares of common stock will continue to trade. You should consider an investment in our common stock to be risky. The trading price may be highly volatile, which may make it difficult for you to resell your shares at the volume, prices and times desired. There are many factors that may affect the market ~~prices~~price and trading volume of our ~~Company Shares may fluctuate widely, depending on many~~shares of common stock, including the factors ~~some~~described in this “Risk Factors” section, and other factors, most of which ~~may be beyond our control, including:~~

~~actual or anticipated fluctuations in our operating results due to factors related to our business;~~

~~the success or failure~~are outside of our ~~business strategies;~~

~~quarterly or annual earnings and earnings expectations for our industry, and for us;~~

~~our ability to obtain financing as needed;~~

~~our announcements or our competitors’ announcements regarding new products or services, enhancements, significant contracts, acquisitions or strategic investments;~~

~~changes in accounting standards, policies, guidance, interpretations or principles;~~

~~changes in tax laws, including the 2017 Tax Act;~~

~~the failure of securities analysts to cover our Company Shares;~~

~~changes in earnings estimates by securities analysts;~~

~~the operating and stock price performance of other comparable companies;~~

~~investor perceptions of the Company and the banking industry;~~

our profile, dividend policy or market capitalization may not fit the investment objectives of our current shareholders, many of whom are Venezuelans who became shareholders as a result of the Spin-off;

~~events affecting our shareholders in Venezuela, including hyperinflation and currency controls;~~

~~the intent of our shareholders to hold or sell their Company Shares;~~

~~fluctuations in the stock markets or in the values of financial institution stocks, generally;~~

~~changes in laws and regulations, including banking laws and regulations, affecting our business; and~~

~~general economic conditions and other external factors.~~control.

Stock markets in general have experienced volatility that has often been unrelated to the operating performance of a particular company or industry. These broad market fluctuations, ~~could also adversely~~as well as general economic, systemic, political and market conditions, including recessions, loss of investor confidence, and interest rate changes, may negatively affect the ~~trading~~market price of our ~~Company Shares.~~

~~Certain of our existing stockholders could exert significant control over the Company.~~

~~As of March 8, 2019, each of our executive officers, directors~~common stock. Increased market volatility may materially and greater than 5% holders of our Class A common stock beneficially owns outstanding shares representing, in the aggregate, approximately 28.86% of the outstanding shares of our Class A common stock as of March 8, 2019 (without giving effect to the broad family holdings of the Marturet and Vollmer families). As a result, these stockholders, if they act individually or together, may exert a significant degree of influence over our management and affairs and over matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions. Furthermore, the interests of this concentration of ownership may not always coincide with the interests of other stockholders and, accordingly, they could cause us to enter into transactions or agreements which we might not otherwise consider. This concentration of ownership of the Company’s Class A common stock may delay or prevent a merger or acquisition or other transaction resulting in a change in control of the Company even when other stockholders may consider the transaction beneficial, and might adversely affect the market price of our ~~Class A~~ common ~~stock.~~stock, which could make it difficult to sell your shares at the volume, prices and times desired.

If at a specific measurement time period, our public float calculation is below $700 million, we may not qualify as a well-known seasoned issuer and suffer negative consequences. If we do not qualify as a well-known seasoned issuer, we will not be able to file automatic shelf registration statements on Form S-3ASR and enjoy the benefits associated with such registration statements, such as automatic effectiveness immediately upon filing, permitting companies to omit more information from the base prospectus than permitted for other shelf registration statements, allowing companies to register unspecified amounts of securities and doing so without allocating among securities or between primary and secondary offerings, and permitting companies to pay filing fees on a “pay-as-you-go” basis at the time of each takedown from the shelf registration statement. Not qualifying as a well-known seasoned issuer may also impact the views or perceptions of investors and analysts and may influence investors’ willingness to purchase or hold our securities or analysts’ recommendations regarding our securities.

We ~~have the ability to~~can issue additional equity securities, which would lead to dilution of our issued and outstanding ~~Company Shares.~~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. ~~In addition, we~~We are authorized to issue up to ~~400~~250 million shares of our Class A ~~common stock and up to 100 million shares of our Class B~~ 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, ~~that~~which may be superior to the rights of holders of our Class A common stock. We are authorized to issue, without shareholder approval, except as required by law or the ~~Nasdaq Global Select Market,~~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.

Table of ~~our Class B common stock.~~Contents

~~We expect to issue more Class A common stock in the future which may dilute holders of Class A common stock.~~

Federal Reserve policy requires bank holding companies’ capital to be comprised predominantly of voting common stock. Class B common stock is not voting common stock for Federal Reserve purposes, therefore, we expect future issuances of Company Shares will be Class A common stock. These new issuances of Class A common stock, as well as their voting rights, may dilute the interests of our Class A shareholders, and increase the market for, and liquidity of, our Class A common stock generally, as compared to the market for, and liquidity of, our Class B common stock.

~~Holders of Class B common stock have limited voting rights. As a result, holders of Class B common stock will have limited ability to influence shareholder decisions.~~

Generally, holders of our Class B common stock will be entitled to one-tenth of a vote, and vote together with holders of our Class A common stock on a combined basis, on approval of our auditors for a given fiscal year, if we present such a proposal for shareholder consideration. As a result, virtually all matters submitted to our shareholders will be decided by the vote of holders of our Class A common stock and the market price of our Class B common stock could be adversely affected. Our Class B common stock has no other voting rights, except as required by the Florida Business Corporation Act to vote as a voting group on any amendment, alteration or repealCertain provisions of our amended and restated articles of incorporation ~~including~~and amended and restated bylaws, Florida law, and U.S. banking laws could have anti-takeover effects.

Certain provisions of our amended and restated articles of incorporation and amended and restated bylaws, as well as Florida law, and the BHC Act, and Change in Bank Control Act, could delay or prevent a change of control that you may favor. Our 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 ~~such events as~~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 ~~result~~rights plan that would have the effect of significantly diluting the stock ownership of a ~~merger, consolidation or otherwise~~potential hostile acquirer, likely preventing acquisitions that ~~significantly and adversely affects the rights or voting powers~~have not been approved by our board.

~~Our dual classes of Company Shares may limit investments by investors using index-based strategies.~~

~~Certain major providers of securities indices have determined to exclude~~The Florida Business Corporation Act contains a control-share acquisition statute that provides that a person who acquires shares ~~of companies with classes of common stock with different voting rights. These actions may limit investment~~ in Company Shares by mutual funds, exchange traded funds, or ETFs, and other investors basing their strategies on such securities indices, which could adversely affect the value and liquidity of Company Shares.

~~We are~~ an ~~“emerging growth company,” and, as a result of the reduced disclosure and governance requirements applicable to emerging growth companies, our common stock may be less attractive to investors.~~

~~We are an “emerging growth company,~~“issuing public corporation,” as defined in the ~~JOBS~~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. Furthermore, the BHC Act and ~~we intend~~the Change in Bank Control Act impose notice, application and approvals and ongoing regulatory requirements on any shareholder or other party that seeks to ~~take advantage~~acquire direct or indirect “control” of ~~some of the exemptions from reporting requirements that are afforded~~bank holding companies, such as ourselves.

Risks Related to emerging growth companies including, but not limited to, exemption from the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find our common stock less attractive because we intend to rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock prices may become more volatile. Indebtedness

We may ~~take advantage of these exemptions until we are no longer an emerging growth company.~~

~~We do~~ not ~~currently intend~~be able to ~~pay dividends on our common stock, including our Class A common stock.~~

~~We do not intend~~generate sufficient cash to ~~pay any dividends to holders~~service all of our ~~common stock for~~debt, including the foreseeable future. We currently intend to invest our future earnings, if any, to fund our growth or improve our costs and capital structure, including by redemption of high cost trust preferred securities. Therefore, you are not likely to receive any dividends on your common stock forSenior Notes, the ~~foreseeable future,~~Subordinated Notes and the ~~performance of an investment in our common stock will depend upon any future appreciation in its value. Our common stock could decline or increase in value.~~Debentures.

Our ability to ~~pay dividends~~make scheduled payments of principal and interest or to ~~shareholders~~satisfy our obligations in respect of our Senior Notes, Subordinated Notes and the Debentures or to refinance them will depend on our future ~~is subject~~operating performance. Prevailing economic conditions (including inflationary pressures, rising interest rates, and uncertainty surrounding global markets), regulatory constraints (including limitations on distributions to ~~profitability, capital, liquidity and regulatory requirements and these limitations may prevent~~ us from ~~paying dividends~~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. We may not be able to generate sufficient cash flows from operations, or obtain future borrowings in ~~the future.~~

~~Cash available~~an amount sufficient to enable us to pay our ~~expenses~~debt, or to fund our other liquidity needs. We may need to refinance all or a portion of our debt on or before maturity. 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.

We area separate and distinct legal entity from the Bank and our other subsidiaries. Our primary source of funds to make payments of principal and interest on the Senior Notes, the Subordinated Notes and the Debentures, and to satisfy any other financial obligations are dividends ~~to our shareholders is derived primarily~~ from ~~dividends paid to us by~~ the Bank. ~~The~~Our ability to receive dividends from the Bank is contingent on a number of factors, including the Bank’s ability to meet applicable regulatory capital requirements, the Bank’s profitability and earnings, and the general strength of its balance sheet. Various federal and state regulatory provisions limit the amount of dividends bank subsidiaries are permitted to pay to their holding companies without regulatory approval. In general, the Bank may only pay dividends either out of its net income after any required transfers to surplus or reserves have been made or out of its retained earnings. 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. Banking institutions that do not maintain capital in excess of the capital conservation buffer may face constraints on dividends, equity repurchases and executive compensation . Accordingly, if the Bank fails to maintain the applicable minimum capital ratios and the capital conservation buffer, dividends to us from the Bank may be prohibited or limited, and there may be insufficient funds to make principal and interest payments on the Senior Notes, the Subordinated Notes and the Debentures.

In addition, state or federal banking regulators have broad authority to restrict the payment of dividends, including in circumstances where a bank under such regulator’s jurisdiction engages in (or is about to engage in) unsafe or unsound practices. Such regulators have the authority to require that a bank cease and desist from unsafe and unsound practices and to prevent a bank from paying a dividend if its financial condition is such that the regulator views the payment of a dividend to constitute an unsafe or unsound practice.

Accordingly, we can provide no assurance that we will receive dividends from the Bank in an amount sufficient to pay the principal of, or interest on, 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.

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.

Neither we, nor any of our subsidiaries, are subject to any limitations under the terms of the indentures governing the terms of the Senior Notes, the Subordinated Notes and the Debentures from issuing, accepting or incurring any amount of additional debt, deposits or other liabilities, including senior indebtedness or other obligations ranking equally with the Senior Notes, the Subordinated Notes and the Debentures. We expect that we and our subsidiaries will incur additional debt and other liabilities from time to time, and our level of debt and the risks related thereto could increase.

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 addition, a breach of any of the restrictions or covenants in our existing debt agreements could cause a cross-default under other debt agreements. A significant portion of our debt then may become immediately due and payable. 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.

Item 1C. CYBERSECURITY

We recognize the security of our banking operations is critical to protecting our customers, maintaining our reputation and preserving the value of the Company. We have an enterprise risk management framework that is designed to identify, measure, control, monitor and mitigate risks across various aspects of our business and operations, including, credit, interest rate, liquidity, operational, regulatory compliance, strategic, reputational, and legal risks. As we rely and continue to increase our reliance on technology and given the constant state of cyber threats, information security or cybersecurity is a significant component of our enterprise risk management framework. Our Chief Information Security Officer, a key member of our risk management organization, who has overall responsibility, accountability, and ownership for this cybersecurity component, reports directly to the Chief Risk Officer and periodically presents reports to the Risk Committee of our Board of Directors.

We are actively engaged in identifying, managing, and mitigating cybersecurity risks with the objective of avoiding or minimizing the impact of malicious and non-malicious actions and threats aimed at penetrating, disrupting or misusing our systems and information. Protecting company data, non-public customer and employee data, and the systems that collect, process, and maintain this information is deemed critical. We have developed and implemented an enterprise-wide information security program, which is designed to protect the availability, integrity, and confidentiality of customer non-public information and company data, including the protection of the hardware and infrastructure used to store and transmit such information. Our Information Security Program is structured and aligned with the Federal Financial Institution Examination Council (“FFIEC”) guidelines for information security, regulatory guidance, and other industry standards. To promote the continued effectiveness of our information security program, we periodically conduct risk assessments, complete audits and tests, participate in industry associations, and review information from threat intelligence feeds. In addition, our Chief Information Security Officer and members of his team and of our Information Technology team regularly collaborate with external parties, including regulatory agencies, other banks and industry groups to share cyberthreat information, trends and issues and identify best practices.

We leverage knowledge, people, processes, and technology to develop, implement, manage, and maintain cybersecurity controls. Our information security program employs several detective and defensive tools designed to monitor, alert, and block suspicious activity, as well as to identify, report and address any suspected threats. Our information security program is a continuous on-going periodically updated program that is supported by policies, procedures, standards and guidelines; an Enterprise-wide Vendor Management Program; a Technology Project Management Office (PMO) and an Enterprise-wide Business Continuity and Disaster Recovery Program. This integration is aimed at ensuring that program is embedded into theorganization’s lines of business, support functions and third-party vendor management program.

We have implemented controls that align information security standards with the nature of our operations and strategic direction. When possible, we implement layered control systems by deploying different controls at different points of business processes and throughout an IT system so that the strength of one control can compensate for weaknesses in or possible failure of another control. We have also developed an enterprise-wide vendor management and third-party risk management program designed to identify, assess, and manage information security, operational and technology risks associated with third-party vendors. Our Enterprise-wide Vendor Management Program is in alignment with the FFIEC Guidelines for Third Party Service Providers and is designed to identify, assess, and manage risks, including cybersecurity risks, associated with external service providers. Our Information Security Program also continuously promotes cybersecurity awareness and culture across the organization, including regular education and training, that requires team members to complete training and certification on an annual basis and phishing simulations (attempts of attacks) monthly. New hires are also provided with information security awareness training during the orientation process. A customer security awareness and communication program has also been developed and implemented to keep customers abreast of security and fraud risks.

While we believe that our business, financial condition, or results of operations have not been materially adversely affected by any cybersecurity incidents, cybersecurity threats are common and pervasive and, we, as well as our ~~ability to pay dividends to our shareholders,~~customers, regulators, and service providers, have experienced and will likely continue to ~~be subject~~experience a significant increase in information security and cybersecurity threats and attacks, see “Our information systems are exposed to cybersecurity threats and ~~limited by~~may experience interruptions and security breaches that could adversely affect our business and reputation” in Item 1A. Risk Factors. We continuously assess the risks and changes in the cyber environment and update our information security program to reflect the results of ~~operations~~risk assessments and the key controls necessary to safeguard customer information and ensure the proper disposal of customer information. The program is updated considering changes in technology, the sensitivity of our customer information, internal or external threats to information, and our own changing business environment which can include mergers and/or acquisitions, outsourcing arrangements, and changes in customer information systems which may have material impact on the program. We also leverage control testing of key controls, systems, and procedures of our information security program performed by internal and external auditors and external partners, that is periodically completed to assess their design and operating effectiveness and make recommendations to strengthen our risk management program.

We have developed and maintain an incident response plan that provides a documented procedure to respond and address cybersecurity incidents, including timely notification to the Executive Management Committee and the Risk Committee of the ~~Bank~~Board of Directors. The incident response plan provides for the interaction and ~~its subsidiaries~~coordination of executive, strategic and tactical teams, depending on the severity level of the incident, aimed at facilitating coordination across multiple units and departments of the Company. Our incident response plan is tested at least annually.

Governance

The Information Security Department, under the leadership of the Chief Information Security Officer, has the responsibility for implementation and monitoring our ~~need~~information security program. The responsibilities of this department include cybersecurity risk assessments, vulnerability management, access reviews for systems and applications, incident response and management, gathering and sharing threat intelligence, monitoring of controls, and overall responsibility for the development of the information security program including relevant policies, procedures, standards and guidelines to ~~maintain appropriate liquidity~~enhance data security and ~~capital at all levels~~mitigate risks. Members of this department include individuals with varying degrees of education and experience, in particular, our Chief Information Security Officer has over twenty years of experience in information technology and risk management, with emphasis on information security and cyber security risk management; throughout his career he has served in different positions including as Information Technology Auditor, Technology Risk Manager, Information Security Program Manager and, since September 2018 as our CISO. He has a bachelor’s degree in computer systems analysis and has obtain several relevant certifications, including having completed the EC-Council’s Certified Chief Information Security Officer Program and obtaining the Information Systems Auditor and Risk and Information Systems Control certifications from the Information Systems Audit and Control Association, ISACA. Several management committees, including our Executive Management Committee, manage our information security program and meet periodically to review and discuss information security matters. In general, summaries of key matters discussed are reported to the Risk Committee.

Our Board, through the Risk Committee, is actively engaged in the oversight of our ~~business consistent with regulatory requirements~~information security program. The Risk Committee oversees our information security program, including management’s actions to identify and ~~the needs of our businesses. See “Supervision~~evaluate, material cyber vulnerabilities, threats, and ~~Regulation-Dividend Restrictions”~~

~~We face strategic~~ risks as ~~a newly independent company.~~

~~As a newly independent company,~~well as the development and our history as part of MSF, we face strategic risk. Strategic risk is the risk to current or anticipated earnings, capital, liquidity, or franchise or enterprise value arising from adverse business decisions, poor implementation of ~~business decisions, or lack of responsiveness~~mitigating and remediating actions. Our Chief Information Security Officer presents quarterly reports to ~~changes in~~ the ~~competitive landscape that~~Risk Committee regarding our information security program, including relevant information on key risk and performance indicators related to cybersecurity matters as well as significant cybersecurity and privacy events. In addition, our information security risk profile is presented to the banking and financial services industries in which we operate. We may have insufficient capital and insufficiently qualified personnel or culture to implement, as quickly as we seek, our strategy changes, including core deposit and fee income growth, improved margins, broader service to our customers, cost reductions and profitability increases.Risk Committee on a semi-annual basis.

~~Item 1B. Unresolved Staff Comments~~

~~Not Applicable.~~

Item 2. ~~Properties~~PROPERTIES

We conduct our business from our approximately 177,000 square foot headquarters building in Coral Gables, Florida (the “Headquarters Building”), located at 220 Alhambra Circle, Coral Gables, Florida 33134. ~~We own~~In 2021, we sold the ~~Coral Gables location~~Headquarters Building, and asleased-back the property for an eighteen-year term. As of December 31, ~~2018, occupy~~2023 we occupied approximately ~~72,000~~60,000 square feet, or approximately ~~41%~~34%, of the ~~building,~~Headquarters Building, with the remaining approximately ~~105,000~~117,000 square feet, or approximately ~~59%~~66%, either leased to ~~unrelated~~ third-parties or available for lease. ~~All of our business segments operate out~~In January 2024, we leased to a third-party approximately 19,000 square feet which we previously occupied. As a result, we now occupy approximately 41,000 square feet, or approximately 23%, of the ~~headquarters. A~~Headquarters Building.

Additionally, a significant portion of ~~the employees included in the Institutional segment, primarily~~our support ~~services,~~service units now operate out of our ~~approximately 100,000 square feet~~new operations center in the Miramar Park of Commerce (the “Miramar Operations Center”), located at 10500 Marks Way, Miramar, Florida 33025. 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. We own~~Florida (the “Old Beacon Operations Center”). In 2020, the ~~operations center and occupy 100%~~Company sold the Old Beacon Operations Center. Following the sale of ~~this building.~~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.

As of December 31, ~~2018,~~2023, we ~~have 23~~had 22 banking centers, including 1516 in Florida and 8six in Texas. ~~Thirteen~~We occupy 15 banking centers ~~are occupied~~ under lease agreements, ~~five owned~~four banking centers ~~are located on~~with long term ground leases subject to long-term land leases of 20 to 30 years, each with an option, or options to ~~renew for an additional 5 years and one owned banking center is located on ground subject to a long-term land lease that expires in 2020. These banking centers host various parts of our PAC segment.~~renew. Our banking centers range from approximately ~~2,800~~1,900 square feet to approximately ~~6,700~~7,000 square feet, average approximately ~~4,800~~3,750 square feet and total approximately ~~106,000~~82,000 square feet. The total monthly rent for the banking centers is approximately $411,000 and the total annual rental expense for the leased banking centers is approximately $4.9 million, including the long-term land leases.We opened a new Banking Center in Tampa, FL in 2024, which we also lease.

In addition to the banking centers, we lease approximately 14,000 square feet in Houston, Texas, which we use as our Texas regional office. ~~The Texas regional office is principally used by our PAC segment and the annual rent is approximately $600,000.~~

We lease approximately 6,000 square feet in New York City, which ~~our PAC segment principally uses~~was used as a LPO for CRE loans. ~~The annual rent is approximately $530,100.~~We closed our New York CRE LPO in 2021. We subleased this property in January 2022. We also lease ~~approximately 1,894~~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 ~~Dallas, Texas,~~Tampa, Florida, which now houses our ~~PAC segment began using in 2019 as a LPO. The annual rent is approximately $77,000.~~recently opened banking center and where our new Tampa Regional Office will be.

Our various leases have periodic escalation clauses and may have options for extensions and other customary terms.

6059

Years Ended December 31,
2018 2017 2016
(in thousands, except percentages) Average
Balances
Income/
Expense ⁽²⁾⁽³⁾
Yield/
Rates Average
Balances
Income/
Expense ⁽²⁾⁽³⁾
Yield/
Rates Average
Balances
Income/
Expense ⁽²⁾⁽³⁾
Yield/
Rates
Interest-bearing liabilities:
Checking and saving accounts -
Interest bearing demand $ 1,397,783
$ 657
0.05 % $ 1,627,546
$ 394
0.02 % $ 1,811,316
$ 653
0.04 %
Money market 1,215,635
12,840
1.06 % 1,312,252
8,780
0.67 % 1,390,574
8,187
0.59 %
Savings 422,672
71
0.02 % 474,569
76
0.02 % 511,576
119
0.02 %
Total checking and saving accounts 3,036,090
13,568
0.45 % 3,414,367
9,250
0.27 % 3,713,466
8,959
0.24 %
Time deposits 2,366,423
42,189
1.78 % 2,031,970
26,787
1.32 % 1,638,051
16,576
1.01 %
Total deposits 5,402,513
55,757
1.03 % 5,446,337
36,037
0.66 % 5,351,517
25,535
0.48 %
Securities sold under agreements to repurchase 271
6
2.21 % 36,447
1,882
5.16 % 63,515
3,259
5.13 %
Advances from the FHLB and other borrowings⁽⁴⁾
1,200,701
26,470
2.20 % 968,187
18,235
1.88 % 712,374
10,971
1.54 %
Junior subordinated debentures 118,110
8,086
6.85 % 118,110
7,456
6.31 % 118,110
7,129
6.04 %
Total interest-bearing liabilities 6,721,595
90,319
1.34 % 6,569,081
63,610
0.97 % 6,245,516
46,894
0.75 %
Total non-interest-bearing liabilities 923,339
1,152,121
1,233,280

Total liabilities 7,644,934
7,721,202
7,478,796

Stockholders' equity 728,175
766,083
717,727

Total liabilities and stockholders' equity $ 8,373,109
$ 8,487,285
$ 8,196,523

Excess of average interest-earning assets over average interest-bearing liabilities $ 1,154,366
$ 1,390,696
$ 1,489,068

Net interest income $ 219,039
$ 209,710
$ 191,933

Net interest rate spread 2.59 % 2.46 % 2.34 %
Net interest margin⁽⁵⁾
2.78 % 2.63 % 2.48 %
Ratio of average interest-earning assets to average interest-bearing liabilities 117.17 % 121.17 % 123.84 %

(2) Includes average non-performing loans of $34.3 million, $30.7 million and $90.6 million for the years ended December 31, 2023, 2022 and 2021, respectively. 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 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.

~~__________________~~


~~(1)~~	~~Average non-performing loans of $30.8 million, $46.1 million and $63.5 million for the years ended December 31, 2018~~, ~~2017 and 2016, respectively, are included in the average loan portfolio, net balance.~~

~~(2)~~

Includes nontaxable securities with average balances of $172.3 million, $163.9 million and $136.0 million for the years ended December 31, 2018, 2017 and 2016, respectively. The tax equivalent yield for these nontaxable securities was 4.11%, 3.86% and 3.66% for the years ended December 31, 2018, 2017 and 2016, respectively. In 2018,(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. 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. ~~In 2017 and 2016, the tax equivalent yields were calculated by assuming a 35% tax rate and dividing the actual yields by 0.65.~~

~~(3)~~

Includes nontaxable securities with average balances of $87.8 million and $24.6 million for the years ended December 31, 2018 and 2017, respectively. The tax equivalent yield for these nontaxable securities was 2.28% and 3.61% for the years ended December 31, 2018 and 2017, respectively. In 2018, the tax equivalent yield was calculated assuming a 21% tax rate and dividing the actual yield by 0.79. In 2017, the tax equivalent yield was calculated assuming a 35% tax rate and dividing the actual yield by 0.65.


~~(4)~~	~~The terms of the advance agreement require the Bank to maintain certain investment securities or loans as collateral for these advances.~~


~~(5)~~	Net interest margin is defined as net interest income divided by average interest-earning assets, which are loans, securities available for sale and held to maturity, deposits with banks and other financial assets, which yield interest or similar income.

(5) Includes nontaxable securities with average balances of $49.8 million, $43.6 million and $50.2 million for the years ended December 31, 2023, 2022 and 2021, respectively. The tax equivalent yield for these nontaxable securities was 4.22%, 3.46% and 2.58% for the years ended December 31, 2023, 2022 and 2021, respectively. 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.

(8) Net interest margin is defined as net interest income divided by average interest-earning assets, which are loans, securities, deposits with banks and other financial assets, which yield interest or similar income.

(9) Calculated based upon the average balance of total noninterest bearing and interest bearing deposits.

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 this table, we present for the periods indicated, the changes in interest income and the changes in interest expense attributable to the changes in interest rates and the changes in the volume of interest-earning assets and interest-bearing liabilities. For each category of assets and liabilities, information is provided on changes attributable to: (i) change in volume (change in volume multiplied by prior year rate); (ii) change in rate (change in rate multiplied by prior year volume); and (iii) change in both volume and rate which is allocated to rate. See “Risk Factors— Our profitability ~~and liquidity may be affected by changes in interest rates and~~is subject to interest rate ~~levels, the shape of the yield curve and economic conditions.~~risk.”


	Increase in Net Interest Income
	2023 vs 2022						2022 vs 2021
	Attributable to						Attributable to
(in thousands)	Volume		Rate		Total		Volume		Rate		Total
Interest income attributable to:
Loan portfolio, net	$	51,351	$	130,844	$	182,195	$	17,604	$	59,509	$	77,113
Debt securities available for sale	(1,775)		11,684		9,909		(1,851)		8,085		6,234
Debt securities held to maturity	1,228		1,112		2,340		1,983		1,638		3,621
Debt securities held for trading	33		(30)		3		(3)		2		(1)
Equity securities with readily determinable fair value not held for trading	—		33		33		(162)		(122)		(284)
Federal Reserve Bank and FHLB stock	105		1,057		1,162		(67)		410		343
Deposits with banks	1,637		12,422		14,059		35		3,871		3,906
Other short-term investments	102		—		102		—		—		—
Total interest-earning assets	$	52,681	$	157,122	$	209,803	$	17,539	$	73,393	$	90,932
Interest expense attributable to:
Checking and saving accounts:
Interest bearing demand	$	4,974	$	42,459	$	47,433	$	281	$	14,246	$	14,527
Money market	(856)		31,395		30,539		33		8,157		8,190
Savings	(14)		23		9		(1)		86		85
Total checking and saving accounts	4,104		73,877		77,981		313		22,489		22,802
Time deposits	12,283		44,422		56,705		(4,741)		3,099		(1,642)
Total deposits	16,387		118,299		134,686		(4,428)		25,588		21,160
Securities sold under agreements to repurchase	3		3		6		(1)		1		—
Advances from the FHLB and other borrowings	(1,766)		15,490		13,724		922		5,575		6,497
Senior notes	20		(20)		—		20		(22)		(2)
Subordinated notes	271		2		273		1,172		—		1,172
Junior subordinated debentures	—		1,315		1,315		—		581		581
Total interest-bearing liabilities	$	14,915	$	135,089	$	150,004	$	(2,315)	$	31,723	$	29,408
Increase in net interest income	$	37,766	$	22,033	$	59,799	$	19,854	$	41,670	$	61,524

Increase (Decrease) in Net Interest Income
2018 vs 2017 2017 vs 2016
Attributable to Attributable to
(in thousands) Volume Rate Total Volume Rate Total
Interest income attributable to:
Loan portfolio, net $ 3,121
$ 30,725
$ 33,846
$ 17,037
$ 18,202
$ 35,239
Securities available for sale (5,344 ) 4,466
(878 ) (6,196 ) 3,396
(2,800 )
Securities held to maturity 1,483
(485 ) 998
582
—
582
Federal Reserve Bank and Federal Home Loan Bank stock 537
637
1,174
551
85
636
Deposits with banks (132 ) 1,030
898
(57 ) 893
836
Total interest-earning assets $ (335 ) $ 36,373
$ 36,038
$ 11,917
$ 22,576
$ 34,493
Interest expense attributable to:
Checking and saving accounts:
Interest bearing demand $ (46 ) $ 309
$ 263
$ (74 ) $ (185 ) $ (259 )
Money market (647 ) 4,707
4,060
(462 ) 1,055
593
Savings (10 ) 5
(5 ) (7 ) (36 ) (43 )
Total checking and saving accounts (703 ) 5,021
4,318
(543 ) 834
291
Time deposits 4,415
10,987
15,402
3,979
6,232
10,211
Total deposits 3,712
16,008
19,720
3,436
7,066
10,502
Securities sold under repurchase agreements (1,867 ) (9 ) (1,876 ) (1,389 ) 12
(1,377 )
Advances from the FHLB 4,371
3,864
8,235
3,940
3,324
7,264
Junior subordinated debentures —
630
630
—
327
327
Total interest-bearing liabilities $ 6,216
$ 20,493
$ 26,709
$ 5,987
$ 10,729
$ 16,716
Increase (decrease) in net interest income $ (6,551 ) $ 15,880
$ 9,329
$ 5,930
$ 11,847
$ 17,777

In ~~2018,~~March 2022, the Federal Reserve increased its benchmark interest rate by 25 basis points as a key tool to help reduce inflationary pressures. 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. In 2023, there were 4 additional increases in the Federal Reserve benchmark interest rate of 25 basis points each in February 2023, March 2023, May 2023 and July 2023, which resulted in a total increase of 100 basis points in 2023.The accumulated increase of 525 basis points in the Federal Reserve’s benchmark interest rates since the first quarter of 2022 contributed to the increase in net interest income the Company ~~continued the strategy of rebalancing the mix of its interest-earning assets. This resulted~~experienced in an increase in interest income on the loan portfolio mainly driven by growth in the real estate loans portfolio and higher average rates, partially offset by lower interest income from securities available for sale mainly due to lower average balances. 2023.

In 2018, the Company continued offering competitive deposit products, particularly retail time deposits, in anticipation of higher market interest rates. This resulted in higher interest expense mostly due to higher average time deposit balances and rates and higher average rates on checking and saving accounts. The Company2023, we had higher average ~~volume~~balance of ~~advances from~~loans compared to the ~~FHLB,~~same period last year, which ~~contributed~~we attribute to ~~higher interest expense in 2018.~~our relationship-driven culture. In addition, our asset sensitive position enabled us to partially offset, via repricing of variable-rate loans, the incremental cost of deposits and other interest-bearing liabilities we recorded during 2023. See ~~discussion on net interest income~~discussions further below for ~~further~~more details.

In 2017, the decrease in securities available for sale was attributable to an asset mix rebalance where the reduction of investments was used to fund new loan production. In addition, checking and savings accounts decreased due to migration to time deposit products, foreign depositors’ increased usage of their U.S. Dollar denominated deposit balances for day-to-day expenses, and the Company’s decision to close certain foreign accounts. Venezuelans are increasingly required to use U.S. Dollars to purchase goods and services in Venezuela. These factors also reduced our concentration of large depositors. Increases in interest rates in these years caused our total interest expenses on these deposits to increase. The volumes of and rates paid on time deposits, including brokered certificates of deposits, also increased. See discussion on net interest income below for further details.

Net interest income

~~2018~~2023 compared to ~~2017~~2022

In ~~2018, we earned $219.0 million of~~2023, net interest income was $326.5 million, an increase of ~~$9.3~~$59.8 million, or ~~4.45%~~22.4%, from ~~$209.7~~$266.7 million in 2022. This was mainly driven by: (i) an increase of ~~net~~184 basis points in the yield on total interest ~~income earned~~earning assets; (ii) increases of $1.0 billion, or 17.5%, $91.5 million, or 39.5% and $41.8 million, or 21.7% in ~~2017.~~the average balance of loans, interest earnings deposit with banks, and debt securities held to maturity, respectively, and (iii) lower average balances of FHLB advances. The increase in net interest income was ~~due~~partially offset by: (i) higher cost of total deposits, FHLB advances and junior subordinated debentures; (ii) higher average balance of total deposits, primarily time and interest bearing demand deposits and; (iii) lower average balance of debt securities available for sale. The increase in average yields on interest earning assets includes the effect of the Federal Reserve’s actions to manage inflation in 2023, which consisted of raising its benchmark rate by a 50total of 100 basis ~~point improvement~~points in 2023. Net interest margin was 3.76% in 2023, an increase of 23 basis points from 3.53% in 2022. See discussions further below for more details.

Interest Income. Total interest income was $548.6 million in 2023, an increase of $209.8 million, or 61.9% compared to $338.8 million in 2022. This was primarily driven by a 184 basis points increase in the average yield on ~~interest-earning assets, partially offset by a 1.05% decrease~~total interest earning assets. In addition, there were increases of $1.0 billion, or 17.5%, $91.5 million, or 39.5% and $41.8 million, or 21.7% in the average balance of ~~interest-earning assets. In addition, the 2.32% increase in average interest-bearing liabilities was accompanied by a 37 basis point increase in average rates paid. Net~~loans, interest ~~margin improved 15 basis points from 2.63% in 2017 to 2.78% in 2018.~~

~~Interest Income.~~ Total interest income was $309.4 million in 2018 compared to $273.3 million in 2017. The $36.0 million, or 13.19%, increase in total interest income was primarily due to higher average balances in loansearnings deposit with banks, and debt securities held to maturity, ~~as well as higher average yields earned on interest-earning assets. These improvements~~respectively. The increases were partially offset by a decrease of $59.6 million, or 5.4%, in the average balance of debt securities available for ~~sale securities during the year ended December 31, 2018 with respect to 2017, in part due to redeployment of proceeds from such securities into loans.~~

Interest income on loans in the year ended December 31, 2018 was $257.6 million compared to $223.8 million in 2017. The $33.8 million, or 15.13%, increase was primarily due to a 51 basis points increase in average yields and a 1.39% increase in the average balance of loans in the year ended December 31, 2018 over 2017, mainly the result of growth in the real estate loan portfolio. sale. See “—Average Balance Sheet, Interest and Yield/Rate Analysis” for detailed information.

Table of ~~such securities held during the period.~~Contents

Interest income on loans in 2023 was $475.4 million, an increase of $182.2 million, or 62.1%, compared to $293.2 million in 2022. This result was primarily due to (i) a 186 basis points increase in average yields, mainly attributable to higher market rates and $3.6 million additional interest income in connection with a loan recovery previously charged off; and (ii) an increase of $1.0 billion, or 17.5%, in the average balance of loans compared to 2022. The increase in the average balance of loans includes: (i) originations of CRE and owner-occupied loans, (ii) origination of commercial loans; (iii) originations and purchases of single-family residential and construction loans through Amerant Mortgage and; (iv) originations of consumer loans under a separate white label program. The increase in average balance of loans was partially offset by the decrease in higher yielding indirect consumer loans. See “-Average Balance Sheet, Interest and Yield/Rate Analysis” for detailed information.

Interest income on debt securities available for sale was $43.1 million in 2023, an increase of $9.9 million, or 29.9%, compared to $33.2 million in 2022. This was mainly due to an increase of 111 basis points in average yields, primarily driven by higher market rates. This was partially offset by a decrease of $59.6 million, or 5.4%, in the average balance of these securities. The decline in the average balance was primarily due to decrease in carrying value due to market rates increasing throughout 2022 and 2023. In 2023, the average balance of accumulated net unrealized loss included in the carrying value of these securities was $118.5 million compared to $62.3 million in 2022. 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. In addition, the overall duration slightly increased to 5.0 years at December 31, 2023 from 4.9 years at December 31, 2022, which was primarily due to lower than expected mortgage-backed securities prepayments. See “—Average Balance Sheet, Interest and Yield/Rate Analysis” for detailed information.

Interest income on ~~the available for sale~~debt securities ~~portfolio decreased $0.9~~held to maturity was $8.0 million in 2023, an increase of $2.3 million, or ~~1.99%~~41.4%, compared to ~~$43.3~~$5.7 million in ~~2018 compared~~2022. This was mainly due to ~~$44.2~~an increase of $41.8 million, ~~in 2017. This decrease was primarily attributable to a decline of 12.10%~~or 21.7% in the average ~~volume~~balance of these securities ~~available for sale driven by our strategy~~in 2023 compared to 2022. In addition, there was an increase of ~~reducing lower-yielding assets and increasing average loan balances. Higher yields on securities available for sale, which increased an average of 27~~48 basis points in ~~2018~~average yields, primarily driven by higher market rates.

Interest Expense. Interest expense was $222.1 million in 2023, an increase of $150.0 million, or 208.0%, compared to $72.1 million in 2022. This was primarily due to: (i) higher cost of total deposits, FHLB advances and junior subordinated debentures. In addition, there was an increase of $1.1 billion, or 19.0% in the ~~same period~~average balance of total interest bearing liabilities, mainly time deposits and interest bearing demand deposits, and subordinated notes as these were issued in ~~2017, partially offset the lower average amount~~March 2022.

~~Interest Expense.~~ Interest expense on interest-bearing ~~liabilities increased $26.7~~deposits was $183.7 million in 2023, an increase of $134.7 million or ~~41.99%~~274.6%, compared to ~~$90.3~~$49.1 million in ~~2018 compared to $63.6 million~~2022. This increase was mainly driven by an increase of 202 basis points in ~~2017, primarily due to higher~~the average ~~time~~rates paid on total interest-bearing deposits, and ~~advances from the FHLB, and higher~~an increase of $1.2 billion, or 25.2%, in their average ~~interest rates, generally, partially offset~~balance. See below for a detailed explanation of changes by ~~lower average total checking and saving account balances and securities sold under repurchase agreements.~~major deposit category:

•Time deposits. Interest expense on total time deposits increased $56.7 million, or 256.3%, in 2023 compared to ~~$55.8~~2022. This was mainly driven by an increase of 214 basis points in the average cost of total time deposits. In addition, there was an increase of $739.9 million, or 55.4%, in the average balance of these deposits, including $437.7 million, and $313.5 million in ~~the year ended December 31, 2018 compared to $36.0 million for the comparable period~~customer certificate of ~~2017.~~deposits (“CDs”) and brokered time deposits, respectively. The ~~$19.7 million, or 54.72%, increase was primarily due to a 37 basis point~~ increase in the average ~~rate paid on total~~balance of time deposits ~~and a 16.46% increase in average time deposit balances,~~was partially offset by ~~lower average~~a decline of $11.2 million in online CDs.

•Interest bearing checking and savings accounts. Interest expense on total interest bearing checking and ~~saving account balances which decreased 11.08%. The~~savings accounts increased $78.0 million, or 289.6%, in 2023 compared to 2022, mainly due to an increase of ~~$334.5~~185 basis points in the average costs of these deposits. In addition, there was an increase of $481.7 million, or ~~16.46%, in average total time deposit balances resulted primarily from our promotions seeking longer-duration time deposits, in anticipation of higher interest rates~~13.7% in the ~~future. The decrease~~average balance of ~~$378.3 million, or 11.08%, in average~~ total interest bearing checking and ~~saving account~~savings accounts in 2023 compared to 2022, mainly driven by: (i) higher average domestic personal accounts; (ii) new domestic deposits from escrow accounts, municipalities, and from domestic individuals and businesses; and (iii) increased reciprocal deposits in 2023. These increases in average balances ~~is primarily the result~~were partially offset by a net decrease of ~~a decline of $550.2~~$154.7 million, or ~~17.59%~~7.2%, in the average balance of international accounts, including a decrease of $217.5 million or 12.4% in international personal accounts, partially offset by ~~higher average domestic deposits. The decline in average international deposits includes $250.7~~an increase of $62.8 million, or ~~38.57%~~16.0%, in international commercial ~~accounts and $299.4 million, or 12.09%, in personal~~ accounts. The decline in the average commercial deposit accounts resulted primarily from the closure of certain Venezuelan customer deposit accounts exceeding the Company’s risk thresholds. The Company believes the decline in the personal accounts average is primarily due to our Venezuelan customers’ spending their U.S. dollar savings. Additionally, in 2018 and 2017, the Bank selectively closed accounts held by Venezuelan and other international customers with approximately $272 million of deposits to reduce its compliance costs and risks. See discussion on deposits further below.

Interest expense on FHLB advances ~~and other borrowings~~ increased ~~$8.2~~$13.7 million, or ~~45.16%~~90.9%, in ~~2018~~2023 compared to ~~2017. This is the result of~~2022, mainly due to an increase of ~~24.02% in the average balances along with an increase of 32~~192 basis points in the average rate paid on these borrowings. ~~Advances from the FHLB are used to actively manage the Company’s funding profile~~The increase was offset by match funding CRE loans. FHLB advances bear fixed interest rates from 1.50% to 3.86%, and variable interest rates based on 3-month LIBOR, which increased to 2.82% at December 31, 2018 from 2.40% at December 31, 2017. At December 31, 2018, $886.0 million (75.99%)a decrease of FHLB advances were fixed rate and $280.0 million (24.01%) were variable rate. In prior years, the Company had designated certain interest rate swaps as cash flow hedges to manage this variable interest rate exposure. Beginning in February 2019, the Company terminated the interest rate swaps designated as cash flow hedges. The Company will recognize the resulting cumulative net unrealized gains aggregating $8.9 million in earnings over the remaining original life of the terminated interest rate swaps.

~~2017 compared to 2016~~

~~In the year ended December 31, 2017, we generated $209.7 million of net interest income, which was an increase of $17.8~~$106.4 million or ~~9.26%~~11.7%, ~~from the $191.9 million of net interest income in the year ended December 31, 2016. The increase in net interest income was due primarily to an increase of 2.91%~~ in the average balance on this funding source. In 2023, the Company borrowed $2.0 billion and repaid $2.2 billion of ~~interest-earning assets, coupled with a 34 basis point improvement in~~advances from the ~~average yield~~FHLB, including early repayments. See "Capital Resources and Liquidity Management” for more details on ~~interest-earning assets. For~~ the ~~years ended December 31, 2017 and 2016, our reported NIM was 2.63% and 2.48%, respectively, an improvement~~early repayment of ~~15 basis points.~~advances from the FHLB.

~~Interest Income~~. Total interest income was $273.3 million for the year ended December 31, 2017 compared to $238.8 million for the comparable period of 2016. The $34.5 million, or 14.4%, increase in total interest income was primarily due to higher average balances of loans and securities held to maturity, as well as higher average yields earned on those interest-earning assets. These improvements were partially offset by a decrease in the average balance of available for sale securities for the year ended December 31, 2017 compared to the same period of 2016, in part due to redeployment of those proceeds from such securities into loans.

Interest income on loans for the year ended December 31, 2017 was $223.8 million compared to $188.5 million for the comparable period of 2016. The $35.2 million, or 18.69%, increase was primarily due to a 32 basis point increase in average yield on loans and a 9.05% increase in the average balance of loans for the year ended December 31, 2017 compared to the same period in 2016, mainly the result of growth in the real estate loan portfolio. See “—Average Balance Sheet, Interest and Yield/Rates Analysis” for detailed information.

Interest income from our available for sale securities portfolio decreased $1.6 million, or 3.20%, to $47.8 million in the year ended December 31, 2017 compared to $49.5 million in the comparable period of 2016. This decrease was primarily attributable to a decline of 13.18% in the average volume of securities available for sale. Higher yields on securities available for sale, which increased an average of 18 basis points in 2017 as compared to 2016 offset the lower amount of securities held during the period.

~~Interest Expense~~. Interest expense on interest-bearing liabilities increased $16.7 million, or 35.65%, to $63.6 million for the year ended December 31, 2017 as compared to $46.9 million in the comparable period of 2016, primarily due to higher average time deposits and FHLB advances, and higher average interest rates, generally, partially offset by the maturity in 2017 of all outstanding securities sold under agreements to repurchase at the close of 2016.

Interest expense on ~~deposits~~junior subordinated debentures increased ~~to $36.0~~$1.3 million, ~~for the year ended December 31, 2017 as~~or 43.4%, in 2023 compared to $25.5 million for the comparable period of 2016. The $10.5 million, or 41.13%, increase was primarily due to an 18 basis point increase in the average rate paid, combined with the average balance of deposits increasing 1.77%. The increase in the average balance of deposits resulted primarily from increases in time deposits from domestic customers, partially offset2022, mainly driven by decreases in lower-cost demand, money market and saving deposits, principally from our foreign customers, as Retail customers, especially in the U.S., were attracted to higher interest rates available on time deposit products. The increase in the average interest rate paid was primarily due to the impact of higher market interest rates on time deposits and increases in time deposits that replaced transaction deposits from foreign customers and, to a lesser extent, competitive pricing paid on money market accounts.

~~Interest expense on advances from the FHLB increased $7.3 million, or 66.21%, in 2017 compared to 2016. This increase is the result of~~ an increase of ~~35.91% in the average balance outstanding of advances, which contributed $3.9 million of the increase, along with an increase of 34~~205 basis points in the average rate paid on ~~those advances, which contributed $3.3 million of the increase.~~these instruments.

Analysis of the Allowance for ~~Loan~~Credit Losses

Set forth in the table below are the changes in the allowance for loan losses for each of the periods presented.


	Years Ended December 31,
(in thousands)	2023		2022		2021		2020		2019
Balance at the beginning of the period	$	83,500	$	69,899	$	110,902	$	52,223	$	61,762
Cumulative effect of adoption of accounting principle (1)	—		18,674		—		—		—

Charge-offs

Real estate loans
Commercial real estate (CRE)
Nonowner occupied	$	(90)	$	(3,852)	$	(11,062)	$	—	$	—
Multi-family residential	(10,328)		—		—		—		—

	(10,418)		(3,852)		(11,062)		—		—
Single-family residential	(39)		(14)		(218)		(27)		(136)
Owner occupied	—		—		—		(75)		—
	(10,457)		(3,866)		(11,280)		(102)		(136)
Commercial	(21,395)		(9,114)		(13,227)		(29,917)		(3,032)
Consumer and others	(28,013)		(9,126)		(3,273)		(842)		(5,671)







Total Charge-offs (2)	$	(59,865)	$	(22,106)	$	(27,780)	$	(30,861)	$	(8,839)

Recoveries

Real estate loans
Commercial real estate (CRE)
Nonowner occupied	$	119	$	—	$	—	$	—	$	—

Land development and construction loans	177		47		125		—		190
	296		47		125		—		190
Single-family residential	95		199		131		120		230
Owner occupied	—		—		—		—		19
	391		246		256		120		439
Commercial	9,904		2,685		2,613		443		1,692
Consumer and others	1,397		157		408		357		319








Total Recoveries (2)	$	11,692	$	3,088	$	3,277	$	920	$	2,450

Net charge-offs	(48,173)		(19,018)		(24,503)		(29,941)		(6,389)

Provision for (reversal of) credit losses	60,177		13,945		(16,500)		88,620		(3,150)
Balance at the end of the period	$	95,504	$	83,500	$	69,899	$	110,902	$	52,223

Years Ended December 31,
(in thousands) 2018 2017 2016 2015 2014
Balance at the beginning of the period $ 72,000
$ 81,751
$ 77,043
$ 65,385
$ 60,468
Charge-offs
Domestic Loans:
Real estate loans
Commercial real estate (CRE)
Non-owner occupied $ (5,839 ) $ (97 ) $ (94 ) $ —
$ (602 )
Multi-family residential —
—
—
(197 ) (116 )
Land development and construction loans —
—
—
—
(218 )
(5,839 ) (97 ) (94 ) (197 ) (936 )
Single-family residential (27 ) (130 ) (195 ) (157 ) (287 )
Owner occupied —
(25 ) (24 ) (98 ) (988 )
(5,866 ) (252 ) (313 ) (452 ) (2,211 )
Commercial (3,662 ) (1,907 ) (1,305 ) (1,515 ) (4,953 )
Consumer and others (167 ) (341 ) (196 ) (4 ) (95 )
(9,695 ) (2,500 ) (1,814 ) (1,971 ) (7,259 )

International Loans ⁽¹⁾:

Commercial (1,473 ) (6,166 ) (19,610 ) (73 ) —
Consumer and others (1,392 ) (757 ) (1,186 ) (300 ) (281 )
(2,865 ) (6,923 ) (20,796 ) (373 ) (281 )
Total Charge-offs $ (12,560 ) $ (9,423 ) $ (22,610 ) $ (2,344 ) $ (7,540 )

______________

(1) Amounts reflect impact of the adoption of CECL effective January 1, 2022. See Note 1 to our audited annual consolidated financial statements in this Form 10-K for details on the adoption of the new accounting standard on estimating expected credit losses on financial instruments (CECL).

(2) Amounts include total charge-offs related to international loans for the years ended December 31, 2023, 2021, 2020, 20219 of $3 thousand, $8 thousand, $0.3 million, and $5.1 million, respectively. There were no charge-offs related to international loans in 2022. Total recoveries related to international loans in the years ended December 31, 2023, 2022, 2021, 2020, 2019 were $5.1 million, $1.0 million, $0.9 million, $0.4 million, and $0.8 million, respectively.

Years Ended December 31,
(in thousands) 2018 2017 2016 2015 2014
Recoveries
Domestic Loans:
Real estate loans
Commercial real estate (CRE)
Non-owner occupied $ 39
$ 717
$ 2,639
$ 56
$ 587
Multi-family residential —
—
1
148
103
Land development and construction loans 173
178
1,267
595
589
212
895
3,907
799
1,279
Single-family residential 176
1,205
105
252
403
Owner occupied 891
445
32
560
723
1,279
2,545
4,044
1,611
2,405
Commercial 435
221
84
1,064
1,914
Consumer and others 46
2
11
6
—
1,760
2,768
4,139
2,681
4,319

International Loans ⁽¹⁾:

Real Estate
Single-family residential $ 4
$ 10
$ 21
$ 98
$ 150
Commercial 41
297
1,000
—
—
Consumer and others 142
87
48
3
17
187
394
1,069
101
167
Total Recoveries $ 1,947
$ 3,162
$ 5,208
$ 2,782
$ 4,486

Net (charge-offs) recoveries (10,613 ) (6,261 ) (17,402 ) 438
(3,054 )
Provision for (reversal of) loan losses 375
(3,490 ) 22,110
11,220
7,971
Balance at the end of the period $ 61,762
$ 72,000
$ 81,751
$ 77,043
$ 65,385
2023 compared to 2022

~~______________~~

~~(1) Includes transactions~~The Company recorded a provision for credit losses of $60.2 million in ~~which the debtor or the customer is domiciled outside the U.S., even when the collateral is located~~2023, compared to $13.9 million in ~~the U.S.~~

~~Set forth~~2022. The $60.2 million provision for credit losses on loans includes $48.4 million in ~~the table below is the composition of international~~additional reserve requirements for loan charge-offs and credit quality, $4.1 million to account for loan growth and composition changes during the period, and $12.2 million to reflect macroeconomic conditions and loss factor updates. This provisions were offset by ~~country for each~~a release of $4.5 million related to the classification of the ~~periods presented.~~Houston CRE multifamily portfolio as held-for-sale as of December 31, 2023.

Years Ended December 31,
(in thousands) 2018 2017 2016
Commercial loans:
Brazil $ 1,473
$ 6,027
$ —
Colombia —
—
19,512
Venezuela —
137
97
Other Countries with less than $1,000 —
2
—
1,473
6,166
19,609
Consumer loans and overdrafts:
Venezuela 1,392
757
1,186
1,392
757
1,186
Total international charge offs $ 2,865
$ 6,923
$ 20,795

~~2018~~In 2023, total charge-offs totaled $59.9 million, an increase of $37.8 million, or 170.8% compared to ~~2017~~

~~During 2018, charge-offs increased to $12.6 million, compared to $9.4~~$22.1 million in ~~2017. The increase during 2018 is~~2022. Charge-offs in 2023 included (i) $28.1 million related to multiple consumer loans, primarily ~~attributed to a $5.8~~purchased indirect consumer loans; (ii) $10.3 million ~~charge-off~~ related to one CRE New York-based multifamily loan; (iii) $7.0 million related to a transportation industry commercial loan relationship that was ~~a TDR, $2.3~~transferred to other repossessed assets in the first quarter of 2023 and subsequently sold in the second quarter of 2023; (iv) $8.0 million ~~of charge-offs~~ related to ~~three domestic C&I~~four commercial loans ranging between $1 million to $3 million; and (v) $6.5 million in ~~the retail, wholesale~~connection with multiple smaller commercial and ~~telecommunications industries, and a $0.6 million increase related to credit card charge-offs. These increases~~real estate loans. Charge-offs in 2023, were partially offset byprimarily by: (i) $5.1 million recovery from a ~~decrease~~commodity trader charged-off in ~~commercial international charge-offs. Additionally, recoveries decreased to $1.9 million in 2018, compared to $3.2 million during 2017, mainly attributable to~~2017; (ii) a ~~$1.0~~$3.1 million recovery from a Miami-based U.S. coffee trader (“the Coffee Trader”) charged-off in the previous year; (iii) $1.4 million recovery from purchased consumer loans; and the remaining $2.1 million due to smaller multiple recoveries. 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 ~~single-family residential real estate~~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, the Company changed its policy for charging off unsecured consumer loans when balances are past-due 90 days or more. Previously, the Company charged-off these loan ~~and a $0.6 million recovery of a commercial real estate loan~~types when balances were 120 days past due. The Company believes this change is in ~~2017.~~line with prevalent practices in the marketplace. As a result ~~the ratio of net charge-offs/recoveries over the average total loan portfolio during 2018 increased 7 basis points, to a net charge-offs ratio of 0.18% in 2018 from 0.11% in in 2017.~~

We added $0.4 million of provision for loan losses during 2018. This compares to a $3.5 million reversal from the allowance for loan losses during 2017. The increase of $3.9 million during 2018 compared to 2017 is mainly the result of additional reserves in connection with the aforementioned CRE and C&I loan charge offs. These increases were partially offset by positive loan loss factor adjustments resulting from improving trends in our C&I and CRE loans which reduced our loan loss reserve requirements. Also, during 2017, additional provisions were mostly attributed to a qualitative assessment of the ~~effect of hurricanes Harvey and Irma on the Company’s loans to borrowers or on projects~~change in ~~South Florida and the Houston area.~~

~~2017 compared to 2016~~

~~In 2017,~~policy, charge-offs ~~declined to $9.4~~in 2022 include $3.4 million from ~~$22.6 million in 2016. Charge-offs in 2017 primarily included $6.0 million charge-offs related to a loan to a Latin American primary products company, and $0.8 million of credit card charge-offs.~~this policy change. The ~~remaining $2.5 million of charge-offs were due to domestic loans. As a result, the~~ ratio of net charge-offs over the average total loan portfolio held for investment was 0.69% in ~~2017 improved~~2023 compared to ~~0.11%, 21 basis points lower than~~0.32% in ~~2016.~~2022.

We ~~reversed $3.5 million from~~proactively and carefully monitor the allowance for loan losses in 2017, a favorable difference of $25.6 million versus the provision recorded in 2016. This reversal was primarily the result of continued improvements in the economic conditions in the U.S. domestic markets where we do business, the resulting positive impact those conditions have inCompany’s credit quality practices, including examining and responding to patterns or trends that may arise across ~~all major loan portfolios we originate, along with our continued reduction in exposure to Latin American loans.~~

certain industries or regions.

Noninterest Income

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

Years Ended December 31, Change
(in thousands, except percentages) 2018 2017 2016 2018 over 2017 2017 over 2016
Amount % Amount % Amount % Amount % Amount %
Deposits and service fees $ 17,753
32.95 % $ 19,560
27.36 % $ 20,928
33.61 % $ (1,807 ) (9.24 )% $ (1,368 ) (6.54 )%
Brokerage, advisory and fiduciary activities 16,849
31.27 % 20,626
28.85 % 20,282
32.57 % (3,777 ) (18.31 )% 344
1.70 %
Change in cash surrender value of bank owned life insurance⁽¹⁾
5,824
10.81 % 5,458
7.64 % 4,422
7.10 % 366
6.71 % 1,036
23.43 %
Cards and trade finance servicing fees 4,424
8.21 % 4,589
6.42 % 4,250
6.83 % (165 ) (3.60 )% 339
7.98 %
Data processing, rental income and fees for other services to related parties 2,517
4.67 % 3,593
5.03 % 4,409
7.08 % (1,076 ) (29.95 )% (816 ) (18.51 )%
Gain on early extinguishment of FHLB advances 882
1.64 % —
— % —
— % 882
N/M
—
— %
Securities (losses) gains, net (999 ) (1.85 )% (1,601 ) (2.24 )% 1,031
1.66 % 602
(37.60 )% (2,632 ) (255.29 )%
Other noninterest income ⁽²⁾
6,625
12.30 % 19,260
26.94 % 6,948
11.15 % (12,635 ) (65.60 )% 12,312
177.20 %
$ 53,875
100.00 % $ 71,485
100.00 % $ 62,270
100.00 % $ (17,610 ) (24.63 )% $ 9,215
14.80 %


	Years Ended December 31,												Change
(in thousands, except percentages)	2023				2022				2021				2023 vs 2022				2022 vs 2021
	Amount		%		Amount		%		Amount		%		Amount		%		Amount		%
Deposits and service fees	$	19,376	22.1	%	$	18,592	27.6	%	$	17,214	14.3	%	$	784	4.2	%	$	1,378	8.0	%
Brokerage, advisory and fiduciary activities	17,057		19.5	%	17,708		26.3	%	18,616		15.4	%	(651)		(3.7)	%	(908)		(4.9)	%
Loan-level derivative income (1)	4,580		5.2	%	10,360		15.4	%	3,951		3.3	%	(5,780)		(55.8)	%	6,409		162.2	%
Change in cash surrender value of bank owned life insurance (BOLI)(2)	5,173		5.9	%	5,406		8.0	%	5,459		4.5	%	(233)		(4.3)	%	(53)		(1.0)	%
Cards and trade finance servicing fees	3,067		3.5	%	2,276		3.4	%	1,771		1.5	%	791		34.8	%	505		28.5	%
Gain on sale of sale of Headquarters Building (3)	—		—	%	—		—	%	62,387		51.7	%	—		—	%	(62,387)		(100.0)	%
Securities (losses) gains, net (4)	(10,989)		(12.6)	%	(3,689)		(5.5)	%	3,740		3.1	%	(7,300)		197.9	%	(7,429)		(198.6)	%

Gain (loss) on early extinguishment of FHLB advances, net	40,084		45.8	%	10,678		15.9	%	(2,488)		(2.1)	%	29,406		275.4	%	13,166		N/M
Derivatives gains (losses,) net (5)	28		—	%	455		1	%	—		—	%	(427)		(93.8)	%	455		N/M
Other noninterest income (6)	9,120		10.6	%	5,491		8.2	%	9,971		8.3	%	3,629		66.1	%	(4,480)		(44.9)	%
Total noninterest income	$	87,496	100.0	%	$	67,277	100.0	%	$	120,621	100.0	%	$	20,219	30.1	%	$	(53,344)	(44.2)	%

__________________


~~(1)~~	~~Changes in cash surrender value are not taxable.~~


~~(2)~~	Includes rental income, income from derivative and foreign currency exchange transactions with customers, net gains on the disposition of bank properties, and valuation income on the investment balances held in the non-qualified deferred compensation plan.


~~N/M~~	~~Not meaningful~~

~~2018 compared~~(1) Income from interest rate swaps and other derivative transactions with customers. The Company incurred expenses related to ~~2017~~

~~Total noninterest income decreased $17.6~~derivative transactions with customers of $1.9 million, ~~or 24.63%, in 2018 compared to 2017. This change is mainly attributed to a one-time gain of $10.5~~$8.1 million and $0.8 million in ~~2017~~2023, 2022 and 2021, respectively, which are included in noninterest expenses.

(2) Changes in cash surrender value of BOLI are not taxable. In 2023, includes a charge of $0.7 million in connection with the enhancement/restructuring of BOLI in the fourth quarter of 2023.

(3) The Company sold its Coral Gables headquarters for $135.0 million, with an approximate carrying value of $69.9 million at the time of sale and transaction costs of $2.6 million. The Company leased-back the property for an 18-year term.

(4) Includes: (i) net loss of $10.8 million and $2.4 million in 2023 and 2022, respectively, and net gains of $4.3 million in 2021, in connection with the sale of debt securities available for sale; (ii) unrealized gains of $33 thousand in 2023 and unrealized losses of $1.3 million and $0.6 million in 2022 and 2021, respectively, related to the change in fair value of marketable equity securities not held for trading which are recorded in results of the period. Also, in 2023, the Company sold equity securities with readily available fair value not held for trading, with a total fair value of $11.2 million at the time of sale, and recognized a net loss of $0.2 million in connection with this transaction. Lastly, includes realized losses of $42 thousand on the sale of a mutual fund with a fair value of $23.4 million at the ~~Bank’s building~~time of the sale in ~~New York City. In addition, there was~~2021.

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

(6) Includes: (i) mortgage banking income of $4.5 million, $3.4 million and $1.7 million in 2023, 2022 and 2021, respectively, primarily consisting of net gains on sale, valuation and derivative transactions associated with mortgage loans held for sale activity, and other smaller sources of income related to the operations of Amerant Mortgage; and (ii) a ~~decrease~~gain of $3.8 million on the sale of PPP loans in ~~brokerage, advisory and fiduciary activities as a result~~2021. Other sources of ~~lower volumes of customer trading activities and related fees. Deposits and service fees decreased $1.8 million primarily due to lower wire transfer activity and related fees. Also, during 2018,~~ income ~~on derivative and~~in the periods shown include income from foreign currency exchange transactions with customers ~~declined $1.4~~and valuation income on the investment balances held in the non-qualified deferred compensation plan.

N/M Means not meaningful

2023 compared to 2022

Total noninterest income increased $20.2 million, or 30.1%, in 2023 compared to 2022. These results were mainly due to: (i) higher net gains on the early extinguishment of advances from the FHLB; (ii) higher other noninterest income; (iii) higher cards and trade finance servicing fees, and (iv) higher deposits and services fees. These increases were partially offset by: (i) net losses on securities totaling $11.0 million in 2023, mainly driven by ~~a decrease in the volume of international customer deposit transactions and related foreign currency exchange fees, and decline in fees on derivative transactions with customers.~~

~~Partially offsetting these results, there were lower net~~ losses on the sale of ~~investment~~certain debt securities ~~during 2018~~available for sale and marketable equity securities not held for trading compared to ~~2017~~$3.7 million in 2022 ; (ii) lower loan-level derivative income, and (iii) lower brokerage, advisory and fiduciary fees.

In 2023, the Company recorded total net gains of $40.1 million on the early extinguishment of approximately $1.7 billion of FHLB advances. In 2022, the Company recorded total net gains of $10.7 million on the early extinguishment of approximately $705 million of FHLB advances.

Other noninterest income increased $3.6 million, or 66.1%, in 2023 compared to 2022, primarily driven by: (i) an increase of $1.2 million or 34.7% in mortgage banking income compared to 2022; (ii) rental income from operating leases of approximately $0.9 million in 2023; and (iii) an increase of $1.5 million in income from foreign currency exchange transactions with customers and other smaller sources of income.

Cards and trade finance servicing fees increased $0.8 million, or 34.8%, in 2023 compared to 2022, mainly driven by higher debit cards interchange fee income.

Deposits and service fees increased $0.8 million, or 4.2%, in 2023 compared to 2022, mainly driven by higher service charge fee income and higher wire transfer fees.

In May 2023, the Company sold a portion of its investment in a corporate debt security held for sale issued by a financial institution, to reduce single point exposure. The Company received proceeds of $0.8 million and realized a pre-tax loss of $1.2 million in connection with this transaction. Additionally, on March 27, 2023, the Company sold one corporate debt security held for sale issued by Signature Bank, N.A in an open market transaction, and realized a pretax loss on sale of approximately $9.5 million in connection with this transaction. See “Securities” for additional information.

Loan-level derivative income decreased $5.8 million, or 55.8%, in 2023 compared to 2022, mainly driven by a lower volume of interest rate swap transactions with clients.

Brokerage, advisory and fiduciary activity fees decreased $0.7 million, or 3.7%, in 2023 compared to 2022, primarily driven by: (i) lower brokerage fees as a result of a lower volume of sales of securities available for sale during 2018 compared to 2017. Also, we received $0.9 million in compensation as a result of the early termination of certain advances from the FHLB during 2018.equity trading volumes/commissions and (ii) lower fiduciary fees.

Table of $1.4 million, 6.54%, in deposit and service fees, and net gains/losses on securities which decreased to a net loss of $1.6 million, compared to a net gain of $1.0 million in 2016. This resulted from the execution of a strategy to mitigate the potential negative impact on yields and fair values of certain securities, which were previously held as available for sale, from expected future increases in market interest rates. There was also a decline of $0.8 million, or 18.51%, in income from services provided to related parties, as a result of a periodic review of the services and associated costs related to our service arrangements with non-U.S. affiliates of the MSF group.Contents

~~2017 compared to 2016~~

Noninterest income increased $9.2 million, or 14.80%, in 2017 compared to 2016. In August 2017, the Bank sold its New York City building and later relocated its New York City based LPO to a new leased space. The LPO’s new offices are located two blocks from the Bank’s former location and are expected to increase the efficiency of our New York City operation. As a result of this sale in 2017, the Bank realized a one-time gain of $10.5 million recorded as other noninterest income. Other positive factors leading to the improvement in noninterest income in 2017 with respect to 2016 includedOur AUM totaled $2.3 billion at December 31, 2023, an increase of ~~$1.0~~$293.5 million, or ~~23.43%~~14.7%, from $2.0 billion at December 31, 2022, primarily driven by increased market valuations.

In 2023, the Company completed a restructuring of its BOLI program. This was executed through a combination of a 1035 exchange and a surrender and reinvestment into higher-yielding general account with a new investment grade insurance carrier. This transaction allowed for higher team member participation through an enhanced split-dollar plan. Estimated improved yields resulting from the enhancement have an earn-back period of approximately 2 years. In the fourth quarter of 2023, we recorded total additional expenses and charges of $4.6 million in connection with this transaction, including: (i) a reduction of $0.7 million to the cash surrender value of ~~BOLI policies,~~BOLI; (ii) transaction costs of $1.1 million, and ~~increases in brokerage, advisory and fiduciary activities, as well as in debit and credit cards fees.~~(iii) income tax expense of $2.8 million.

~~Offsetting these positive trends in noninterest income was a decline~~

Noninterest Expense

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

Years Ended December 31, Change
(in thousands, except percentages) 2018 2017 2016 2018 vs 2017 2017 vs 2016
Amount % Amount % Amount % Amount % Amount %
Salaries and employee benefits $ 141,801
65.96 % $ 131,800
63.48 % $ 129,681
65.40 % $ 10,001
7.59 % $ 2,119
1.63 %
Professional and other services fees 19,119
8.89 % 16,399
7.90 % 11,937
6.02 % 2,720
16.59 % 4,462
37.80 %
Occupancy and equipment 16,531
7.69 % 17,381
8.37 % 18,368
9.26 % (850 ) (4.89 )% (987 ) (5.37 )%
Telecommunications and data processing 12,399
5.77 % 9,825
4.73 % 8,392
4.23 % 2,574
26.20 % 1,433
17.08 %
Depreciation and amortization 8,543
3.97 % 9,040
4.35 % 9,130
4.60 % (497 ) (5.50 )% (90 ) (0.99 )%
FDIC assessments and insurance 6,215
2.89 % 7,624
3.67 % 7,131
3.60 % (1,409 ) (18.48 )% 493
6.91 %
Other operating expenses ⁽¹⁾
10,365
4.83 % 15,567
7.50 % 13,664
6.89 % (5,202 ) (33.42 )% 1,903
13.93 %
$ 214,973
100.00 % $ 207,636
100.00 % $ 198,303
100.00 % $ 7,337
3.53 % $ 9,333
4.71 %


	Years Ended December 31,												Change
(in thousands, except percentages)	2023				2022				2021				2023 vs 2022				2022 vs 2021
	Amount		%		Amount		%		Amount		%		Amount		%		Amount		%
Salaries and employee benefits (1)	$	133,506	42.9	%	$	123,510	51.2	%	$	117,585	59.3	%	$	9,996	8.1	%	$	5,925	5.0	%
Occupancy and equipment (2)(3)	27,843		8.9	%	27,393		11.3	%	20,364		10.3	%	450		1.6	%	7,029		34.5	%
Professional and other services fees (4)	34,569		11.1	%	22,142		9.2	%	19,096		9.6	%	12,427		56.1	%	3,046		16.0	%
Telecommunications and data processing	15,485		5.0	%	14,735		6.1	%	14,949		7.5	%	750		5.1	%	(214)		(1.4)	%
Loan-level derivative expense(5)	1,910		0.6	%	8,146		3.4	%	815		0.4	%	(6,236)		(76.6)	%	7,331		899.5	%
Depreciation and amortization(6)	6,842		2.2	%	5,883		2.4	%	7,269		3.7	%	959		16.3	%	(1,386)		(19.1)	%
FDIC assessments and insurance	10,601		3.4	%	6,598		2.7	%	6,423		3.2	%	4,003		60.7	%	175		2.7	%
Losses on loans held for sale (7)	43,057		13.8	%	159		0.1	%	—		—	%	42,898		N/M		159		N/M
Other real estate owned and repossessed assets (income) expense, net (8)(9)	2,092		0.7	%	3,408		1.4	%	—		—	%	(1,316)		(38.6)	%	3,408		N/M
Contract termination costs (10)	1,550		0.5	%	7,103		2.9	%	—		—	%	(5,553)		(78.2)	%	7,103		N/M
Advertising expenses	12,811		4.1	%	11,620		4.8	%	3,382		1.7	%	1,191		10.2	%	8,238		243.6	%
Other operating expenses (11)	21,089		6.8	%	10,716		4.5	%	8,359		4.3	%	10,373		96.8	%	2,357		28.2	%
Total noninterest expenses (12)	$	311,355	100.0	%	$	241,413	100.0	%	$	198,242	100.0	%	$	69,942	29.0	%	$	43,171	21.8	%

____________

(1) Include severance expense of $4.0 million, $3.0 million and $3.6 million in 2023, 2022 and 2021, respectively. Staff reduction costs in 2023, 2022 and 2021 consist of severance expenses primarily related to organizational rationalization.

(2) In 2023, includes $0.3 million in connection with the closure of a branch in Houston, Texas as well as an aggregate of $1.1 million related to ROU asset impairments in connection with the closure of two branches in 2023 (one branch in Miami, Florida and another branch in Houston, Texas). 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. In addition, in 2022 and 2021, includes lease termination expenses associated with the closure of a branch in Fort Lauderdale, Florida in 2021.

(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). In addition, in 2022, we had additional rental income in connection with the sublease of the NYC office space. Total rental income from subleases was $3.3 million and $2.9 million in 2022 and 2021, respectively.

(4) In 2023 and 2022, includes additional, nonrecurrent expenses of $5.8 million and $2.9 million, respectively, related to the engagement of FIS. Also in 2022, includes $0.2 million in connection with certain search and recruitment expenses and $0.1 million of costs associated with the subleasing of the New York office space and an aggregate of $0.4 million in other non-routine expenses in 2022. 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 ~~advertising, marketing,~~service fees in connection with our loan-level derivative income generation activities.

(6) In 2023, includes a charge of $0.9 million for the accelerated depreciation of leasehold improvements in connection with the closure of a branch in Miami, Florida in 2023. In 2021, includes $1.8 million of depreciation expense associated with the Company’s previously owned headquarters building. No depreciation expense related to the headquarters building was recorded in 2023 and 2022 as this property was sold and leased-back in the fourth quarter of 2021.

(7) In 2023, consists of losses on loans held for sale carried at the lower of cost or fair value, including valuation allowance as a result of changes in their fair value and losses on the sale of these loans. In 2023, includes $41.1 million in total valuation allowance as a result of changes in their fair value, and $2.0 million in losses on the sale of these loans. In the year 2022, represents $0.2 million in valuation allowance as a result of changes in the fair value of loans held for sale carried at the lower of cost or fair value.

(8) In 2023, includes a loss on sale of repossessed assets in connection with our equipment-financing activities of $2.6 million. In 2022, includes $3.4 million related to the fair value adjustments of one other real estate owned (“OREO”) property in New York. In addition, includes OREO rental income of $1.3 million in 2023. We had no OREO rental income in 2022.

(9) Beginning in 2023, OREO and repossessed assets expense is presented separately in the Company’s consolidated statement of operations and comprehensive (loss) income. In 2022, while OREO valuation expense was presented separately, all other OREO-related expenses were presented as part of other operating expenses in the Company’s consolidated statement of operations and comprehensive (loss) income. We had no other repossessed assets in 2022.

(10) Contract terminations and related costs associated with third party vendors resulting from the Company’s transition to our new technology provider.

(11) In 2023, includes goodwill and intangible assets impairments totaling $1.7 million related to two of our subsidiaries (Amerant Mortgage and the Cayman Bank). Also in 2023, includes additional costs of $1.1 million in connection with the restructuring of the Company’s BOLI as well as an impairment charge of $2.0 million related to an investment carried at cost and included in other assets. In all of the periods shown, includes mortgage loan origination and servicing expenses, charitable contributions, community engagement, postage and courier expenses, ~~provisions for possible losses on contingent loans, and~~ debits which mirror the valuation income on the investment balances held in the non-qualified deferred compensation plan in order to adjust ~~the~~our liability to participants of the deferred compensation ~~plan.~~plan and other smaller expenses.

(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.

~~2018~~NM Means not meaningful

2023 compared to ~~2017~~2022

Noninterest expense increased ~~$7.3~~$69.9 million, or ~~3.53%~~29.0%, in ~~2018~~2023 compared to ~~2017, primarily as~~2022, mainly due to: (i) higher losses on loans held for sale which include a ~~result~~valuation expense of ~~higher salary, employee benefits and professional fees~~$35.5 million related to the ~~Spin-off~~transfer of the Houston CRE loan portfolio from loans held for investment to loans held for sale carried at the lower of cost or fair value, and ~~becoming~~ a ~~public company, along with~~total loss of $7.6 million, including a $5.6 million valuation expense and a $2.0 million loss on sale, related to a New York-based CRE loan held for sale; (ii) higher ~~telecommunications~~professional and other service fees; (iii) higher other operating expenses; (iv) higher salary and employee benefits; (v) higher FDIC assessments and insurance expenses; (vi) higher advertising expenses; (vii) higher depreciation and amortization expense, and (viii) higher telecommunication and data processing expenses. These increases were partially offset ~~by decreases in FDIC insurance assessments, depreciation~~by: (i) lower loan-level derivative expenses; (ii) lower contract termination costs; and ~~amortization expenses, occupancy and equipment-related costs, and~~(iii) lower other ~~operating expenses, including lower than anticipated rebranding expenses.~~

The increase in salaries and employment benefits of $10.0 million, or 7.59%, in 2018 compared to 2017, reflects annual salary increases stemming from inflation and performance adjustments, and higher insurance benefit expenses, $4.7 million in connection with our voluntary early retirement and involuntary severance staff reduction expenses as part of our various restructuring activities in 2018, and $1.2 million compensation paid during the period to participants of the non-qualified deferred compensation plan to partially mitigate the effect of the unexpected early distribution for federal income tax purposes. The Spin-off caused an early distribution for U.S. federal income tax purposes from our deferred compensation plan. Our full time equivalent employees, or FTEs, were 911 at December 31, 2018, down 33 FTEs from 944 at the close of 2017.

The increase of $2.7 million, or 16.59%, in professional and other services fees during 2018 compared to 2017 was mainly the result of $1.3 million of legal and strategy advisory costs associated with our restructuring activities during 2018. In 2018, there was an increase of $0.5 million in the provision for legal, accounting and consulting fees associated with the Spin-off and becoming a public company compared to 2017. In addition, the increase in professional fees during 2018 reflects higher expenses as a result of incremental accounting, tax and consulting services and related expenses in connection with our registration with the SEC, and new ongoing reporting and compliance requirements as a new public company. The Company expects to incur higher professional expenses as a standalone public company, including additional costs associated with our restructuring activities, but does not expect further material professional expenses related to one-time Spin-off activities after 2018.

Telecommunications and data processing expenses increased $2.6 million, or 26.20%, in 2018 compared to 2017 mainly driven by data processing expenses associated with the introduction in 2017 of Mercantil TreasuryConnect, a new business online banking system designed to improve our customers’ ability to manage their business finances more efficiently and securely, and data processing expenses associated with the implementation of a new loan underwriting system and information security monitoring tools. During 2018, certain software expenses that in the previous period had been classified as “occupancy and equipment,” were classified as “telecommunication and data processing” to better reflect the nature and purposes of these expenses. These changes are associated with our ongoing efforts to streamline our processes to increase efficiency, including rationalization and consolidation of our computer applications and programs, deployment of better technology and further automation of operating processes.

Other operating expenses decreased $5.2 million, or 33.42%, during 2018 compared to 2017, mainly due to a reversal of provisions for possible losses on credit commitments of $1.0 million in 2018, compared to an addition to provisions for losses on credit commitments of $0.2 million in 2017. The change in provisions is primarily attributed to improvements in quantitative and qualitative loan loss factors with respect to credit commitments in the loan portfolio segments of domestic commercial real estate owned and ~~domestic commercial loans during the period.~~repossessed assets expense.

~~2017 compared to 2016~~

Noninterest expense increased $9.3 million, or 4.71%, in 2017 primarily as a result of higher professional fees, along with higher salary and employment benefits and other expenses. These increases were partially offset by a 5.37% reduction in occupancy and equipment-related costs mainly associated with ongoing efforts to improve our banking center network, along with physical and technology improvements to our customer service and support operations.

Professional and other services fees increased ~~$4.5~~$12.4 million, or ~~37.38%~~56.1%, in ~~2017~~2023 compared to 2022, primarily ~~due~~driven by higher consulting and other professional fees in connection with the Company’s transition to ~~accrued external legal~~our new technology provider, as well as other smaller consulting projects. In 2023, we incurred higher professional service fees in connection with the new outsourced technology services received from FIS. The Company completed the transition of its core data processing platform and ~~consulting fees~~other applications in the fourth quarter of 2023.

Other operating expenses increased $10.4 million, or 96.80%, in 2023 compared to 2022 , mainly driven by: (i) an impairment charge of $2.0 million related to an investment carried at cost in 2023; (ii) a $1.7 million goodwill and intangible impairment charge in 2023; (iii) $1.1 million in expenses related to the enhancement of BOLI during the fourth quarter of 2023 and; (iv) higher mortgage banking lending and servicing costs.

Salaries and employee benefits increased $10.0 million, or 8.1%, in 2023 compared to 2022 mainly driven by: (i) salary increases mainly in connection with new hires in 2023, primarily in business areas; (ii) higher stock-based compensation in connection with the long term incentive program, and new hires; (iii) higher insurance and benefit plans; (iv) severance expense; and (v) higher commissions. These results were partially offset by decreases in non-equity variable compensation associated with the ~~Spin-off. We expect~~Bank’s performance.

FDIC assessments and insurance increased $4.0 million, or 60.7%, in 2023 compared to 2022, primarily driven by higher FDIC assessment rates and higher average assets.

Advertising expenses increased $1.2 million, or 10.2%, in 2023 compared to 2022, mainly due to higher expenses resulting from advertising campaigns based on promotional agreements with professional sports teams as well as the naming rights to the Amerant Bank Arena in Sunrise, Florida.

Depreciation and amortization expense increased $1.0 million, or 16.3%, in 2023 compared to 2022. This was mainly driven by $1.0 million related to several branch closures that resulted in additional ~~professional fees~~depreciation expenses.

Telecommunication and data processing expenses increased $0.8 million, or 5.1%, in ~~2018~~2023 compared to 2022, primarily driven by a charge of $1.4 million in connection with ~~this transaction.~~

~~The~~the disposition of fixed assets due to the write off of in-development software in 2023. This increase ~~in salaries and employment benefits of $2.1 million, or 1.63%, mainly reflects annual salary increases,~~was partially offset by ~~the expenses accrued for~~lower computer software and technology support services.

Loan-level derivative expense decreased $6.2 million, or 76.6%, in ~~2016 associated with early retirement buyout packages with certain employees, and lower headcount at the end of 2017~~2023 compared to 2022, mainly driven by a lower volume of derivative transactions with clients.

Other real estate owned and repossessed assets expense decreased $1.3 million, or 38.6%, in 2023 compared to 2022, mainly driven by the ~~previous year, as~~absence in 2023 of a ~~result~~fair value adjustment of ~~the Bank’s ongoing efforts to operate more efficiently.~~$3.4 million in connection with an OREO property in New York that took place in 2022. The decrease was partially offset by: (i) $2.6 million in loss on sale of repossesses assets and other real estate valuation expense in 2023 (none in 2022), and (ii) new OREO rental income in 2023.

Income Taxes

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


(in thousands, except percentages)	Years Ended December 31,									Change
	2023			2022			2021			2023 vs 2022					2022 vs 2021
Income before income tax expense	$	41,328		$	78,584		$	144,020		$	(37,256)		(47.4)	%	$	(65,436)		(45.4)	%
Current tax expense:
Federal	19,768			15,609			23,225			4,159			26.6	%	(7,616)			(32.8)	%
State	1,313			1,116			4,681			197			17.7	%	(3,565)			(76.2)	%
	21,081			16,725			27,906			4,356			26.0	%	(11,181)			(40.1)	%



Deferred tax (expense) benefit	(10,542)			(104)			5,803			(10,438)			NM		(5,907)			(101.8)	%
Income tax expense	$	10,539		$	16,621		$	33,709		$	(6,082)		(36.6)	%	$	(17,088)		(50.7)	%
Effective income tax rate	25.50		%	21.15		%	23.41		%	4.35		%	20.6	%	(2.26)		%	(9.7)	%

(in thousands, except effective tax rates and percentages) Years Ended December 31, Change
2018 2017 2016 2018 vs 2017 2017 vs 2016
Current tax expense:
Federal $ 7,297
$ 19,194
$ 10,981
$ (11,897 ) (56.60 )% $ 8,213
74.79 %
State 1,964
1,763
844
201
(47.08 )% 919
108.89 %
9,261
20,957
11,825
(11,696 ) (55.80 )% 9,132
77.23 %
Impact of lower rate under the 2017 Tax Act:
Remeasurement of net deferred tax assets, other than balances corresponding to items in AOCI —
8,470
—
(8,470 ) (100.00 )% 8,470
100.00 %
Remeasurement of net deferred tax asset corresponding to items in AOCI —
1,094
—
(1,094 ) (100.00 )% 1,094
100.00 %
Deferred tax expense (benefit) 2,472
3,471
(1,614 ) (999 ) (28.84 )% 5,085
(315.06 )%
Income tax expense $ 11,733
$ 33,992
$ 10,211
$ (22,259 ) (65.48 )% $ 23,781
232.90 %
Effective income tax rate 20.38 % 44.12 % 30.22 % (23.74 )% (53.81 )% 13.90 % 45.90 %
______________

~~2018~~NM - means not meaningful

2023 compared to ~~2017~~2022

We recorded an income tax expense of ~~$11.7~~$10.5 million in ~~2018, $22.3~~2023 compared to $16.6 million ~~lower than the amount recorded~~ in ~~2017. This~~2022. The decrease in income tax expense in ~~2018 reflects the~~2023 was mainly driven by lower ~~corporate federal~~ income ~~tax rate under the 2017 Tax Act which, beginning January 1, 2018, decreased the corporate federal~~before income ~~tax rate from 35% to 21%.~~

~~The lower current tax expense~~taxes in ~~2018~~2023 compared to ~~2017 includes~~2022. However, there was a higher taxable income in 2018 which partially offset the lower corporate federal income tax rate in 2018. Higher taxable income in 2018 compared to 2017 was primarily the result of the improved operating performance during the year. In addition, in 2017 we reduced net DTAs and recorded approximately $9.6 million in additional tax expense resulting from the reduction in federal corporate income tax rates under the 2017 Tax Act.

~~The decrease in the~~ effective tax rate in ~~2018 from 44.12%~~2023 compared 2022, primarily driven by an additional tax expense of $2.8 million in ~~2017~~connection with the BOLI restructuring completed in 2023.

As of December 31, 2023, the Company’s net deferred tax asset was $55.6 million, an increase of $6.9 million, or 14.2% compared to ~~20.38%~~$48.7 million as of December 31, 2022. This increase was mainly driven by the tax effects of: (i) an increase of $35.5 million in ~~2018 is primarily~~ the ~~result~~valuation allowance of loans held for sale carried at the lower ~~statutory corporate federal income tax rate and~~of cost or fair value, and; (ii) a net increase of $12.0 million in the ~~additional~~allowance for credit losses. This was partially offset by the tax effect of: (i) a decrease of ~~the remeasurement of the~~$14.9 million in net ~~DTA~~unrealized holding losses on debt securities available for sale in ~~2017 as a result of the 2017 Tax Act’s lower tax rates. Partially offsetting this decrease in the effective income tax rate was~~2023 and; (ii) an increase in ~~nondeductible Spin-off costs in 2018 compared~~the deferred tax liability related to ~~2017. Nondeductible Spin-off costs in 2018 totaled $8.2 million in 2018, compared to none in 2017.~~

depreciation and amortization expense.

Non-GAAP Financial Measures

The Company supplements its financial results that are determined in accordance with Generally Accepted Accounting Principles (GAAP) with non-GAAP financial measures, such as “pre-provision net revenue (PPNR)”, “core pre-provision net revenue (Core PPNR)”, “tangible stockholders’ equity (book value) per common share”, “tangible common equity ratio, adjusted for unrealized losses on debt securities held to maturity”, and “tangible stockholders' equity (book value) per common share, adjusted for unrealized losses on debt securities held to maturity”. This supplemental information is not required by or is not presented in accordance with GAAP. The Company refers to these financial measures and ratios as “non-GAAP financial measures” and they should not be considered in isolation or as a substitute for the GAAP measures presented herein.

~~2017 compared to 2016~~

We ~~recorded income tax expense~~use certain non-GAAP financial measures, including those mentioned above, both to explain our results to shareholders and the investment community and in the internal evaluation and management of ~~$34.0 million~~our businesses. Our management believes that these non-GAAP financial measures and the information they provide are useful to investors since these measures permit investors to view our performance using the same tools that our management uses to evaluate our past performance and prospects for future performance, especially in ~~2017, $23.8 million higher than the amount recorded in 2016. This increase is the result of higher taxable income during the year, the impact~~light of the ~~2017 Tax Act,~~additional costs we have incurred in connection with the Company’s restructuring activities that began in 2018 and continued in 2023, including the effect of non-routine items such as the sale of loans and securities and other repossessed assets, Ban Owned life insurance restructure the valuation of securities, derivatives, loans held for sale and other real estate owned and repossessed assets, impairment of investments, the early repayment of FHLB advances, and other non-routine actions intended to improve customer service and operating performance. While we believe that these non-GAAP financial measures are useful in evaluating our performance, this information should be considered as supplemental and not as a ~~deferred tax expense~~substitute for or superior to the related financial information prepared in ~~2017 compared to a deferred tax benefit in 2016.~~accordance with GAAP. Additionally, these non-GAAP financial measures may differ from similar measures presented by other companies.

The ~~increase~~following table is a reconciliation of the Company’s PPNR and Core PPNR, non GAAP financial measures, as of the dates presented:


	December 31,
(in thousands)	2023		2022

Net income attributable to Amerant Bancorp Inc. (1)	$	32,490	$	63,310
Plus: provision for credit losses (1)(2)	61,277		13,945
Plus: provision for income tax expense (1)	10,539		16,621
Pre-provision net revenue (PPNR)	$	104,306	$	93,876
Plus: non-routine noninterest expense items	66,152		18,970
Less: non-routine noninterest income items	(28,468)		(7,367)
Core pre-provision net revenue (Core PPNR)	$	141,990	$	105,479

Non-routine noninterest income items:
Derivative gains, net	$	28	$	455
Securities loss, net	(10,989)		(3,689)
Bank owned life insurance charge (3)	(655)		—
Gain on early extinguishment of FHLB advances, net	40,084		10,678
Loss on sale of loans	—		(77)
Total non-routine noninterest income items	$	28,468	$	7,367


Non-routine noninterest expense items
Restructuring costs (4)
Staff reduction costs (5)	$	4,006	$	3,018
Contract termination costs (6)	1,550		7,103
Consulting and other professional fees and software expenses (7)	6,379		3,625
Digital transformation expenses	—		45
Disposition of fixed assets (8)	1,419		—
Branch closure and related charges (9)	2,279		1,612
Total restructuring costs	$	15,633	$	15,403
Other non-routine noninterest expense items:
Losses on loans held for sale (10)	$	43,057	$	159
Loss on sale of repossessed assets and other real estate owned valuation expense (11)	2,649		3,408
Goodwill and intangible assets impairment	1,713		—
Bank owned life insurance enhancement costs (3)	1,137		—
Impairment charge on investment carried at cost	1,963		—
Total non-routine noninterest expense items	$	66,152	$	18,970

(1) As previously disclosed, the Company adopted CECL in ~~current tax expense during~~ the ~~year resulted from higher taxable income from operations, partially offset by higher tax benefits associated with differences between the tax basis~~fourth quarter of certain assets and liabilities and their corresponding book basis compared to 2016. These differences in tax basis primarily include the provision for loan losses, net unrealized losses in other comprehensive income, deferred executive compensation, dividend income, goodwill and depreciation and amortization of properties and equipment.

In 2017, we wrote-off a total of $9.6 million of net DTAs resulting from the reduction in federal corporate income tax rates under the 2017 Tax Act. The 2017 Tax Act reduced the federal corporate income tax rate to 21%, which was2022, effective as of January 1, ~~2018, compared to 35%~~2022. See Form 10-K for more details of the CECL adoption in ~~prior periods. The write-off included~~2022.

(2) In 2023, includes $60.2 million of provision for credit losses on loans and $1.1 million on unfunded commitments (contingencies). In 2022, provision for credit losses on loans was $13.9 million, while there was no provision on unfunded commitments (contingencies).

(3) In 2023, the Company completed a restructuring of ~~net DTAs~~its bank-owned life insurance (“BOLI”) program. This was executed through a combination of a 1035 exchange and a surrender and reinvestment into higher-yielding general account with a new investment grade insurance carrier. This transaction allowed for higher team member participation through an enhanced split-dollar plan. Estimated improved yields resulting from the enhancement have an earn-back period of approximately 2 years. In 2023, we recorded total additional expenses and charges of $4.6 million in connection with this transaction, including: (i) a reduction of $0.7 million to the cash surrender value of BOLI; (ii) transaction costs of $1.1 million, and (iii) income tax expense of $2.8 million.

(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.

(5) Staff reduction costs consist of severance expenses related to organizational rationalization.

(6) Contract termination and related costs associated with ~~accumulated unrealized losses on securities available for sale~~third party vendors resulting from the Company’s engagement of FIS.

(7) In 2023, includes an aggregate of $6.4 million of nonrecurrent expenses in connection with the engagement of FIS and, ~~other items, which are recorded as accumulated other comprehensive income, or AOCI,~~to a lesser extent, software expenses related to legacy applications running in ~~shareholder’s equity. GAAP at~~parallel to new core banking applications. In 2022, includes: (i) $2.9 million in connection with the ~~close~~engagement of ~~2017 required the write-off~~FIS; (ii) $0.2 million in connection with certain search and recruitment expenses; (iii) $0.1 million of costs associated with ~~those items to be recorded against results~~the subleasing of ~~operations~~the New York office space, and (iv) an aggregate of ~~2017, as opposed to accumulated~~$0.4 million in other ~~comprehensive income.~~non-routine expenses.

(8) In ~~February 2018, GAAP was amended and enabled companies to retrospectively reclassify~~2023, includes expenses in connection with the ~~impact~~disposition of ~~these items from AOCI into retained earnings. We adopted this guidance effective in 2017 as permitted by the transition guidance.~~

~~The increase in the effective rate in 2017 from 30.22% in 2016 to 44.12% in 2017 is primarily~~fixed assets due to the write-off of net DTAs as a result of the 2017 Tax Act, partially offset by an increase of non-taxable income related to our investments in tax-exempt municipal bonds, as well as an increase in nontaxable income from the change in the cash surrender value of BOLI policies during the year.in-development software.

(9) In 2023, includes expenses of $0.3 million and $0.5 million ROUA impairment in connection with the closure of a branch in Houston, Texas and $0.9 million of accelerated amortization of leasehold improvements and $0.6 million of right-of-use or “ROU” asset impairment associated with the closure of a branch in Miami, Florida. In 2022, includes $1.6 million of ROU asset impairment associated with the closure of a banking center in Pembroke Pines, Florida in 2022.

(10) In 2023, includes: (i) a fair value adjustment of $35.5 million related to an aggregate of $401 million in Houston-based CRE loans held for sale which are carried at the lower of cost or fair value, and (ii) a loss on sale of $2.0 million related to a New York-based CRE loan previously carried at the lower of fair value or cost. In addition, in 2023, includes a fair value adjustment of $5.6 million related to a New York-based CRE loan held for sale carried at the lower of fair value or cost. In 2022, amount represents the fair value adjustment related to the New York loan portfolio held for sale carried at the lower of cost or fair value.

(11) In 2023, amount represents the loss on sale of repossessed assets in connection with our equipment-financing activities. In 2022, amount represents the fair value adjustment related to one OREO property in New York.

~~Segment Information~~

The following ~~tables summarize certain~~table is a reconciliation of the Company’s tangible common equity and tangible assets, non GAAP financial ~~information for our reportable segments~~measures, to total equity and total assets, respectively, as of the dates presented:







(in thousands, except percentages and per share amounts)	December 31, 2023			December 31, 2022










































































Stockholders' equity	$	736,068		$	705,726
Less: goodwill and other intangibles (1)	(25,029)			(23,161)
Tangible common stockholders' equity	$	711,039		$	682,565
Total assets	$	9,716,327		$	9,127,804
Less: goodwill and other intangibles (1)	(25,029)			(23,161)
Tangible assets	$	9,691,298		$	9,104,643
Common shares outstanding	33,603,242			33,815,161
Tangible common equity ratio	7.34		%	7.50		%
Stockholders' book value per common share	$	21.90		$	20.87
Tangible stockholders' book value per common share	$	21.16		$	20.19


Tangible common stockholders' equity	$	711,039		$	682,565
Less: Net unrealized accumulated losses on debt securities held to maturity, net of tax (2)	(16,197)			(18,234)
Tangible common stockholders' equity, adjusted for net unrealized accumulated losses on debt securities held to maturity	$	694,842		$	664,331
Tangible assets	$	9,691,298		$	9,104,643
Less: Net unrealized accumulated losses on debt securities held to maturity, net of tax (2)	(16,197)			(18,234)
Tangible assets, adjusted for net unrealized accumulated losses on debt securities held to maturity	$	9,675,101		$	9,086,409
Common shares outstanding	33,603,242			33,815,161

Tangible common equity ratio, adjusted for net unrealized accumulated losses on debt securities held to maturity	7.18		%	7.31		%
Tangible stockholders' book value per common share, adjusted for net unrealized accumulated losses on debt securities held to maturity	$	20.68		$	19.65

(1) At December 31, 2023, other intangible assets primarily consist of naming rights of $2.5 million and ~~for the periods indicated.~~

(in thousands) PAC Corporate LATAM Treasury Institutional Total
For the Year Ended December 31, 2018
Income Statement:
Net interest income $ 196,008
$ 5,308
$ 4,527
$ 13,196
$ 219,039
Provision for (reversal of) loan losses 1,303
(3,783 ) (212 ) 3,067
375
Net interest income after provision for (reversal of) loan losses 194,705
9,091
4,739
10,129
218,664
Noninterest income 22,556
365
8,400
22,554
53,875
Noninterest expense ⁽⁴⁾
160,491
4,035
11,438
39,009
214,973
Net income (loss) before income tax:
Banking 56,770
5,421
1,701
(6,326 ) 57,566
Non-banking contribution⁽¹⁾
2,552
13
—
(2,565 ) —
59,322
5,434
1,701
(8,891 ) 57,566
Income tax (expense) benefit (12,243 ) (1,122 ) 1,546
86
(11,733 )
Net income (loss) $ 47,079
$ 4,312
$ 3,247
$ (8,805 ) $ 45,833
As of December 31, 2018
Loans, net⁽²⁾
$ 5,845,266
$ 69,755
$ —
$ (56,608 ) $ 5,858,413
Deposits $ 5,339,099
$ 16,293
$ 642,106
$ 35,188
$ 6,032,686

(in thousands) PAC Corporate LATAM Treasury Institutional Total
For the Year Ended December 31, 2017
Income Statement:
Net interest income $ 182,872
$ 9,514
$ 6,649
$ 10,675
$ 209,710
Provision for (reversal of) loan losses 42
(3,879 ) (1,547 ) 1,894
(3,490 )
Net interest income after provision for (reversal of) loan losses 182,830
13,393
8,196
8,781
213,200
Noninterest income 26,468
509
8,920
35,588
71,485
Noninterest expense ⁽⁴⁾
161,002
4,894
11,256
30,484
207,636
Net income before income tax:
Banking 48,296
9,008
5,860
13,885
77,049
Non-banking contribution⁽¹⁾
4,788
55
—
(4,843 ) —
53,084
9,063
5,860
9,042
77,049
Income tax (expense) benefit (18,784 ) (3,207 ) 1,106
(13,107 ) (33,992 )
Net income (loss) $ 34,300
$ 5,856
$ 6,966
$ (4,065 ) $ 43,057
As of December 31, 2017
Loans, net⁽²⁾⁽³⁾
$ 5,542,545
$ 521,616
$ —
$ (64,325 ) $ 5,999,836
Deposits $ 5,454,216
$ 18,670
$ 779,969
$ 70,118
$ 6,322,973

~~Table~~mortgage servicing rights (“MSRs”) of ~~Contents~~

(in thousands) PAC Corporate LATAM Treasury Institutional Total
For the Year ended December 31, 2016
Income Statement:
Net interest income $ 157,325
$ 15,302
$ 12,586
$ 6,720
$ 191,933
Provision for (reversal of) loan losses 5,795
13,620
(1,069 ) 3,764
22,110
Net interest income after provision for (reversal of) loan losses 151,530
1,682
13,655
2,956
169,823
Noninterest income 26,461
843
7,808
27,158
62,270
Noninterest expense 156,146
8,295
9,041
24,821
198,303
Net income before income tax:
Banking 21,845
(5,770 ) 12,422
5,293
33,790
Non-banking contribution⁽¹⁾
5,136
(124 ) —
(5,012 ) —
26,981
(5,894 ) 12,422
281
33,790
Income tax (expense) benefit (10,068 ) 2,200
(1,473 ) (870 ) (10,211 )
Net income (loss) $ 16,913
$ (3,694 ) $ 10,949
$ (589 ) $ 23,579
As of December 31, 2016
Loans, net⁽²⁾
$ 5,163,655
$ 601,016
$ —
$ (81,661 ) $ 5,683,010
Deposits $ 5,728,228
$ 68,332
$ 691,000
$ 89,805
$ 6,577,365

~~_____________~~


~~(1)~~	~~Non-banking contribution reflects allocations of the net results of Amerant Trust and Amerant Investments subsidiaries to the customers’ primary business unit.~~


~~(2)~~	Provisions for the periods presented are allocated to each applicable reportable segment. The allowance for loan losses and unearned deferred loan costs and fees are reported entirely within Institutional.


~~(3)~~	~~Balances include loans held for sale of $5.6 million which are allocated to PAC.~~


~~(4)~~	~~Costs related to the Spin-off have been allocated to the Institutional reportable segment.~~

~~Personal and Commercial Banking~~

~~The PAC Banking segment represents the largest contributor to our results~~$1.4 million. At December 31, 2022, other intangible assets primarily consist of MSRs of $1.3 million. Other intangible assets are included in terms of loan and deposit volumes and income, representing, among others, the following business units: CRE, middle market, commercial (both domestic and international), small business and personal clients, which are supported by the Bank’s banking center network and a wide array of products and services offered by the Bank. It provides a range of products to serve both domestic and international clients, including those in Latin America, and its geographic footprint is concentrated in South Florida, the greater Houston, Texas area and the New York area, through the Bank’s 15 banking centers in Miami-Dade, Broward and Palm Beach counties, eight banking centers that serve nearby areas of Harris, Montgomery, Fort Bend and Waller countiesother assets in the ~~greater Houston, Texas area;~~Company’s consolidated balance sheets.

(2) At December 31, 2023 and the New York City area where we have a LPO in Midtown Manhattan. In addition, PAC, in conjunction with our Treasury segment, participates in the management of syndicated and purchased accounts receivable loans. We recently opened a LPO in Dallas, Texas. We also seek deposits through our LPOs.

~~2018 compared to 2017~~

PAC reported net income of $47.1 million in 2018, which represents a 37.26% increase from $34.3 million in 2017. This increase was mainly the result of higher net interest income combined with a decrease in noninterest expenses and lower income tax expense, partially offset by higher provision for loan losses, lower noninterest income and reduced non-banking contribution from Amerant Trust and Amerant Investments attributable to PAC customers.

~~100~~

Net interest income increased 7.18% to $196.0 million in 2018 from $182.9 million in 2017. This increase was primarily due to a $265.1 million increase in PAC’s average loan portfolio balance and increased funds transfer pricing credit on PAC’s deposits in 2018 compared to 2017. Higher average loan portfolio balances during the period2022, amounts were ~~primarily driven by increases in middle market domestic C&I and CRE loans.~~

In 2018, PAC reflected a provision for loan losses of $1.3 million compared to $42,000 in 2017. The increase was mainly the result of additional reserves allocated to one CRE loan in the Houston area. During the fourth quarter 2018, the Company partially charged off and sold this CRE loan which had been downgraded to substandard, placed in non-accrual status and modified in a TDR during the first half of 2018. Subsequently,calculated based ~~on the continued deterioration of~~upon the fair value of the collateral, the Company had allocated specific reserves of $3.9 million and $1.8 million in the second and third quarters of 2018, respectively. These results were partially offset by reversals from the allowance for loan losses, generally, due to overall improvements in quantitative loan loss factors and positive adjustments to qualitative loan loss factors used for domestic CRE and domestic C&I loans during the period.

Noninterest income decreased $3.9 million, or 14.78% to $22.6 million in 2018 from $26.5 million in 2017. This decrease was mainly the result of lower fee income on derivative transactions with customers, reduced deposit and service fees, and lower other operating income. The decrease in deposit and service fees was mainly driven by a lower volume of wire transfer activities and related fees. Lower other operating income resulted from no gains from the disposition of bank properties in 2018 compared to a net gain of $0.8 million in 2017 related to the sale of one banking center property in South Florida. In addition, there was a decrease in cards and trade finance servicing fees mainly driven by a lower volume of credit card activities during 2018 compared to 2017.

Non-banking contribution from Amerant Trust and Amerant Investments attributable to PAC customers decreased 46.70% to $2.6 million in 2018, from $4.8 million in 2017. The decrease is mainly the result of lower volumes of customer brokerage and advisory activities.

Although PAC reported a higher pre-tax income from operations, PAC reflected a lower income tax expense of $12.2 million in 2018 compared to an income tax expense of $18.8 million in 2017. This was directly attributed to the lower tax rate in 2018 due to the enactment of the 2017 Tax Act.

~~2017 compared to 2016~~

PAC reported net income of $34.3 million in 2017, which represents a 102.80% increase from $16.9 million in 2016. This increase was primarily attributable to higher net interest income together with lower provision for loan losses, which offset increased noninterest expense as well as lower non-banking contribution and higher income tax expenses. Non-banking contribution refers generally to the impact attributable to a segment from Amerant Trust and Amerant Investments.

Net interest income increased 16.24% to $182.9 million, from $157.3 million in 2016, primarily due to a $378.9 million, or 7.34%, expansion in PAC’s loan portfolio, as part of the continued focus on U.S. loan growth and credit quality strategies, combined with enhanced spreads as a result of an improved interest rate environment. The above growth in PAC’s loan portfolio was primarily driven by a $431.6 million, or 19.85%, increase in real estate loans to $2,605.3 million at the end of 2017 from $2,173.8 million at the end of 2016. Total real estate portfolio represented 47.01% of PAC’s loan portfolio in 2017 compared to 42.10% in 2016.

PAC’s loan loss provision decreased 99.28% to $42,000 in 2017 from $5.8 million in 2016. This lower loan loss provision, despite PAC’s loan portfolio expansion, resulted from a continued asset quality improvement in PAC’s loan portfolio primarily due to overall lower losses and improved qualitative and quantitative risk factors influencing reserve requirements as well as loan upgrades and recoveries specifically in the personal and real estate portfolios.

~~101~~

Noninterest expense increased 3.11% to $161.0 million in 2017 from $156.1 million in 2016, primarily due to higher product support expense allocations from those units supporting PAC’s sustained loan portfolio expansion.

~~Non-banking contribution, primarily from PAC customer brokerage and advisory activities, decreased 6.78% to $4.8 million in 2017 from $5.1 million in 2016.~~

PAC reported income tax expense of $18.8 million in 2017, an 86.57% increase from income tax expense of $10.1 million in 2016, which was directly attributed to PAC’s higher pre-tax income from operations.

~~Corporate LATAM~~

Corporate LATAM serves leading financial institutions and a select number of large corporate clients in Latin America, generally, with over $1.0 billion in annual sales in several large industries. These industries include: (i) financial and insurance; (ii) chemical, mineral, and plastics; (iii) primary metal and machinery; (iv) food and beverage; and (v) mining, quarrying, oil and gas extraction. The results of this segment are primarily driven by changes in short-term interest rates, the credit quality of its loan portfolio and the impact of the local foreign economic environment on borrower performance. Additionally, the majority of these non-financial foreign customers focus on extraction, manufacturing and export to the U.S., Europe and China, which exposes these industries to fluctuations in commodity prices and trading values.

~~2018 compared to 2017~~

Corporate LATAM reported net income of $4.3 million in 2018. This represented a decrease of $1.5 million, or 26.37%, from net income of $5.9 million in 2017. The lower net income during this period was primarily attributable to lower net interest income as a result of the 86.63% decline in loans in this segment during 2018, and reduced noninterest income, partially offset by lower noninterest expense.

Net interest income decreased 44.21% to $5.3 million from $9.5 million in 2017, mainly due to this segment’s significantly lower average loan balances during that period. At year-end 2018, loans had decreased $451.9 million, or 86.63%, from year-end 2017 as part of the continued loan portfolio diversification strategy to mitigate risk, and focus on higher margin domestic lending.

Noninterest income decreased 28.29% to $0.4 million in 2018 from $0.5 million in 2017, primarily due to lower deposit and service fees. The decrease in deposit and service fees was mainly the result of lower volume of wire transfer activities and related fees.

~~Noninterest expense decreased $0.9 million or 17.55% to $4.0 million in 2018 from $4.9 million in 2017, mainly due to lower personnel expenses and corporate operating expense allocations.~~

~~2017 compared to 2016~~

Corporate LATAM reported net income of $5.9 million in 2017, a $9.6 million, or a 258.53%, increase from a net loss of $3.7 million in 2016. This higher net income was primarily attributable to a reversal in the allowance for loan losses together with lower noninterest expense and higher non-banking contribution, which offset decreased net interest and noninterest income as well as higher income tax expenses.

The 37.83%, or $5.8 million, decrease in net interest income to $9.5 million in 2017 from $15.3 million in 2016 was primarily attributable to reduced average loan balances. At year-end 2017, loans had decreased $79.4 million, or 13.21%, as a result of our continued diversification strategy to mitigate risk in the Bank’s loan portfolio.

~~102~~

The $3.9 million reversal in the allowance for loan losses in 2017, which compared to a $13.6 million charge, mainly related to charge offs of a certain impaired loan in 2016, was primarily attributed to the reduction in the loan portfolio together with lower losses and lower credit risk factors.

Noninterest income decreased 39.62% to $0.5 million in 2017 from $0.8 million in 2016, primarily due to a lower level of wire transfers and letter of credit activities. The 41.00% reduction in noninterest expense to $4.9 million in 2017 from $8.3 million in 2016 was primarily the result of lower operating expenses and allocation expenses from product support units as part of the continued segment downsizing due to the Bank’s loan portfolio diversification strategy.

~~Non-banking contribution, primarily from Corporate LATAM customer brokerage and advisory activities, increased 144.35% to $0.05 million in 2017 from a $0.1 million loss in 2016.~~

~~Treasury~~

Treasury manages the Bank’s balance sheet, including the securities portfolio, the level and quality of liquidity, overall duration, economic value of equity and asset-liability position. Therefore, it derives a significant portion of its results from its securities portfolio management activities. These activities seek to maintain an adequate combination of profitability, liquidity, interest risk and credit risk in the management of the Bank’s investment portfolio in order to support the Bank’s overall strategic goals, including capital preservation. Through the timing of its purchases and sales to achieve these objectives, Treasury historically has also provided a source of revenue to us amid a highly volatile and constantly changing economic environment. In addition, Treasury participates in the sourcing and management of syndicated and purchased accounts receivable loans, in conjunction with PAC.

Net interest income includes credits and charges to Treasury as follows: (i) credit for interest income earned on all interest-earning assets, excluding loans other than those it co-manages with PAC, (ii) the net amount of funds transfer pricing derived from credits for funds sold to the business segments, primarily to fund loans, and charges for funds purchased from the business segments that generate deposits, and (iii) interest expense for professional funding, which is primarily comprised of brokered certificates of deposits and FHLB advances.

~~2018 compared to 2017~~

Treasury generated net income of $3.2 million in 2018, a $3.7 million, or 53.39%, decrease from $7.0 million in in 2017. This decrease was primarily the result of lower net interest income combined with a lower reversal from the allowance for loan losses, reduced noninterest income and higher noninterest expenses, partially offset by higher income tax benefit.

The 31.91% reduction in net interest income to $4.5 million in 2018 from $6.6 million in 2017 was primarily due to higher interest expenses paid on FHLB advances and brokered certificates of deposit. In 2018, the average balance of FHLB advances and other borrowings were $232.5 million, or 24.02%, higher than the same period in 2017. Average brokered certificate of deposit balances decreased $12.7 million or 1.77%, compared to 2017, however, the average rate paid on brokered certificate of deposits was 2.05% in 2018 compared to 1.60% in 2017. Brokered deposits year end 2018 were $137.9 million, or 17.68%, lower than at year end 2017.

The reduction in the reversal from the allowance for loan losses of $1.3 million in 2018 as compared to 2017 was mainly due to overall lower losses and lower risk factors on the syndicated and purchased accounts receivable loans during that period. Syndicated and accounts receivable loans are co-managed by Treasury and PAC, whereby Treasury originates, pre-screens, and executes the transactions, while PAC serves as a liaison with credit analysis for the underwriting and performs portfolio management. Although these loans are booked in PAC, both segments monitor and share the allocation of income and expense, as well as the loan loss provision associated with such loans.

~~103~~

Noninterest income decreased 5.83% to $8.4 million in 2018 from $8.9 million in 2017. This decrease in 2018 was primarily driven by $1.0 million net loss on sale of securities available for sale compared to a $1.1 million net gain during 2017, partially offset by the higher cash surrender value of BOLI and income from the early termination of short term FHLB advances.

Noninterest expense increased 1.62% to $11.4 million in 2018 from $11.3 million in 2017, primarily as a result of higher personnel expenses, increased telecommunication and data processing expenses, and higher fees on derivative transactions with customers.

Treasury reflected an income tax credit of $1.5 million in 2018 compared to an income tax credit of $1.1 million in 2017. Income from BOLI and tax-free municipal bonds is excluded from Treasury’s pre-tax income when income tax is calculated and allocated to the business segments. On this basis, Treasury realized a net loss before income tax of $8.6 million in 2018 versus a net loss before income tax of $3.1 million in 2017.

~~2017 compared to 2016~~

Treasury reported net income of $7.0 million in 2017, which represents a 36.38% decrease from $11.0 million in 2016. This decrease was primarily the result of lower net interest income combined with higher noninterest expense, and was partially offset by a higher reversal of loan loss reserve, increased noninterest income and lower taxes primarily as the result of higher tax-free income.

The decrease in Treasury’s net interest income to $6.6 million in 2017 from $12.6 million in 2016 was primarily attributable to a decreased interest income combined with an increase in interest expense. The decline in interest income resulted from a lower return on investments due to a reduction of $436.1 million in the securities available for sale that was partially offset by an increase of $89.9 million indebt securities held to maturity, and ~~improved yields. The increased interest expense resulted from higher interest expense on our FHLB advances~~assuming a tax rate of 25.36% and other borrowings due to an increase in volume of $242.0 million as compared to 2016 together with higher interest expense on brokered certificates of deposits as a result of an increase in volume of $89.0 million as compared to 2016. The funds obtained as a result of the above reduction in securities, together with the increases in professional funding were primarily used to support PAC’s continued loan growth during 2017.25.55%, respectively.

The higher loan loss provision reversal of $0.5 million in 2017 as compared to 2016 primarily resulted from overall lower losses and lower risk factors, as well as a reduction in the balance of syndicated and purchased accounts receivable loans. Syndicated and accounts receivable loans are co-managed by Treasury and PAC, whereby Treasury originates, pre-screens, and executes the transactions, while PAC serves as a liaison with credit analysis for the underwriting and performs portfolio management. Although these loans are booked in PAC, both segments monitor and share the allocation of income and expense, as well as the loan loss provision associated with such loans.

Noninterest income increased $1.1 million, or 14.24%, to $8.9 million in 2017 from $7.8 million in 2016, primarily due to non-taxable increases in the cash surrender value of BOLI policies together with swap valuation income. Noninterest expense increased $2.3 million, or 24.50%, to $11.3 million in 2017 from $9.0 million in 2016, primarily as the result of overall higher operating and allocated expenses.

Treasury reflected an income tax credit of $1.1 million in 2017 versus an income tax expense of $1.5 million in 2016. Income from BOLI and tax-free municipal bonds is excluded from Treasury’s pre-tax income when income tax is calculated and allocated to the business segments. On this basis, Treasury realized a net loss before income tax of $3.1 million in 2017 versus a net profit before income tax of $4.9 million in 2016.

~~104~~

~~Institutional~~

Results and balances of this segment correspond to institutional or corporate overhead activities, including those of Amerant Trust and Amerant Investments, the unallocated cost of support and operations units to other business units, the funds transfer pricing credit received for capital which is not allocated to other segments, the excess or deficit between the estimated level of provision for loan losses recorded versus the allocation made to each business unit, and accruals and provisions made at the Bank level before the details of the impact on each business unit is known at each reporting period-end.

Net interest income represents credits and charges, which are not allocated to the operating segments, primarily composed of credit for funds provided through shareholders’ equity and other non-interest-bearing liabilities, and interest expense arising from our junior subordinated debentures associated with our outstanding trust preferred securities.

Noninterest income and noninterest expense represent mainly noninterest income and expenses of Amerant Investments and Amerant Trust, fees charged to non-consolidated affiliates for services provided by support units under service agreements, and unallocated corporate overhead expenses. Each reporting period, noninterest income and expenses of Amerant Investments and Amerant Trust are allocated out to the business segments as non-banking contribution.

~~2018 compared to 2017~~

Institutional had a net loss of $8.8 million in 2018 versus net loss of $4.1 million in 2017, mainly attributable to higher provision for loan losses combined with lower noninterest income and higher noninterest expense, partially offset by higher net interest income.

Net interest income increased 23.62%, or $2.5 million, to $13.2 million in 2018 from $10.7 million in 2017, mainly due to the effect of lower funds transfer pricing charges for total other assets and higher fund transfer pricing credit received for capital.

In 2018, Institutional reported a provision for loan losses of $3.1 million compared to $1.9 million in 2017. This increase is mainly the result of loan loss reserves on credit cards which were allocated to Institutional. Any difference between the total provision for loan losses, or reversals recorded at the Company level versus the amounts allocated to reportable segments, is reflected under Institutional.

Noninterest income decreased 36.62% to $22.6 million in 2018 from $35.6 million in 2017, primarily due to a one-time gain of $10.5 million related to the sale of the Bank’s New York Building in 2017, and lower income from brokerage and advisory activities through Amerant Investments in 2018, mainly the result of lower volume of customer brokerage activity. In addition, our rental income declined during the period as a result of the sale of G200 Leasing, LLC in the first quarter of 2018. G200 Leasing, LLC owned and leased a corporate aircraft to MSF. These results were partially offset by no losses on sale of available for sale securities during 2018, compared to a $2.7 million net loss in 2017.

Noninterest expense increased 27.97% to $39.0 million in 2018 from $30.5 million in 2017, primarily due to higher legal and consulting fees associated with the Spin-off and becoming a public company, as well as increased expenses related to various restructuring activities including voluntary early retirement and involuntary severance staff reduction. Additionally, PAC and Corporate LATAM reduced their utilization of business support units and, therefore, the allocation of noninterest expense out to these segments declined, driving an increase in Institutional.

~~105~~

~~2017 compared to 2016~~

Institutional incurred a net loss of $4.1 million in 2017 versus a net loss of $0.6 million in 2016, which was primarily due to higher noninterest expense as well as an increase in income tax expense to $13.1 million in 2017, representing a $12.2 million increase from the $0.9 million income tax reported in 2016. This increase was primarily the result of the one-time effect on income tax expense attributable to the 2017 Tax Act, which was not allocated to the other segments. The above increases were partially offset by higher net interest income together with lower provision for loan losses and increased noninterest income in 2017 from 2016.

Net interest income increased 58.85%, or $4.0 million, to $10.7 million in 2017 from $6.7 million in 2016, primarily due to the effect of lower funds transfer pricing charges for total other assets and higher funds transfer pricing credit received for capital.

Institutional reported a 49.68% reduction in loan loss provision to $1.9 million in 2017 from $3.8 million in 2016. A reversal of $3.5 million of loan loss reserve was reflected at the Bank level in 2017 compared to a $22.1 million loan loss provision expense in 2016. As a result of overall improved asset quality and lower risk factors influencing reserve requirements, business segments were allocated a reversal of $5.4 million in 2017, which is $1.9 million greater than the $3.5 million reversal recorded at the total Bank level. Therefore, any difference between the provision for loan losses recorded at the Bank level, versus the one allocated to each business segment, is reflected under Institutional.

Noninterest income increased $8.4 million, or 31.04%, to $35.6 million in 2017 from $27.2 million in 2016, primarily attributable to a one-time gain of $10.5 million related to the sale of the Bank’s building in New York City and subsequent relocation of its LPO to a new space two blocks from the Bank’s former location. Noninterest expense increased $5.7 million, or 22.82%, to $30.5 million in 2017 from $24.8 million in 2016, mainly due to overall lower allocation of operating expenses from support units to business segments.

Financial Condition - Comparison of Financial Condition as of December 31, ~~2018~~2023 and December 31, ~~2017~~2022

Assets. Total assets were ~~$8.1~~$9.7 billion as of December 31, ~~2018, a decline~~2023, an increase of ~~$312.4 million,~~$0.6 billion, or ~~3.70%~~6.4%, compared to $9.1 billion at December 31, ~~2017. These results were~~2022. This result was primarily driven by: an increase of (i) $333.3 million, or 4.9% in total loans held for investment, net of the allowance for credit losses, and loans held for sale at the lower of cost or fair value and mortgage loans held for sale; (ii) an increase of $130.3 million or 9.5% in total securities, mainly ~~driven by decreases~~debt securities available for sale; (iii) an increase of ~~$146.1~~$100.2 million, ~~$105.5 million,~~or 64.2%, in accrued interest receivable and ~~$67.7~~other assets primarily related to a receivable from insurance carrier for $62.5 million in ~~loans, total investment securities~~connection with the restructuring of the Company’s BOLI in 2023, and new OREO balances in 2023; (iv) an increase of $31.3 million, or 10.8%, in cash and cash ~~equivalents, respectively.~~equivalents; (v) an increase in BOLI of $6.6 million mainly due to net increase in cash surrender value of the policies during 2023; and (iv) an increase of $6.9 million in deferred tax assets mainly due to the result of the tax effect of the valuation allowance on loans held for sale carried at the lower of cost or fair value recorded in 2023. These ~~decreases in loans, investment securities and cash and cash equivalents include a decline in foreign loans,~~increases were partially offset by ~~higher domestic real estate loans. These changes reflect~~a decrease of $21.5 million, or 15.4% in operating lease right-of-use assets mainly the ~~execution~~result of modification of a lease in the ~~Company strategy to reduce its foreign loan exposure, increase its domestic lending activities and the profitability on its interest-earning assets.~~

~~Total assets were $8.4 billion as~~first quarter of December 31, 2017, relatively unchanged compared to December 31, 2016. Since 2016, the Company has executed a strategic plan to improve operating results by adjusting its mix of interest-earning assets and liabilities consistent with its expectation of higher interest rate levels.

2023.See ~~“—Average~~ “-Average Balance Sheet, Interest and Yield/Rate Analysis” for detailed information, including changes in the composition of our interest-earning assets.

~~106~~

Cash and Cash Equivalents

2023 compared to 2022

Cash and cash equivalents ~~decreased to $85.7~~totaled $321.9 million at December 31, ~~2018~~2023, an increase of $31.3 million, or 10.8%, from ~~$153.4~~$290.6 million at December 31, ~~2017.~~2022. The increase was primarily due to higher non-interest earning cash balances which include cash and due from banks and higher cash balances at the Federal Reserve Bank (“FRB”). At December 31, 2023 and December 31, 2022, cash balances held at the FRB were $246 million and $234 million, respectively. In addition, at December 31, 2023 and December 31, 2022, the Company’s cash and cash equivalents included restricted cash of $25.8 million and $42.2 million, respectively, which were held primarily to cover margin calls on derivative transactions with certain brokers. Furthermore, at December 31, 2023, the Company’s cash and cash equivalents included other short-term investments of $6.1 million which consists of U.S. Treasury Bills that mature in 90 days or less.

Cash flows provided by operating activities ~~were $62.2~~was $26.7 million in the year ended December 31, ~~2018. This was~~2023, primarily ~~attributed to~~driven by the net income ~~earned.~~ before attribution of non-controlling interest of $30.8 million recorded during the period

Net cash ~~provided by~~used in investing activities was ~~$206.5~~$606.6 million during the year ended December 31, ~~2018,~~2023, mainly driven by maturities, sales and calls of securities available for sale and FHLB stock totaling $280.0 million and $27.4 million, respectively, and proceeds from loan sales totaling $173.5 million. These proceeds were partially offset by purchases of available for sale securities totaling $216.2 million,by: (i) a net increase in loans of ~~$33.2~~$509.7 million, (ii) purchases of investment securities totaling $349.7 million and (iii) purchases of ~~FHLB stock totaling $27.7~~premises and equipment of $10.9 million. ~~The FHLB stock activity is due to changes~~In addition, in 2023, the ~~borrowing activity~~Company disbursed $65.0 million in connection with the ~~FHLB. In addition, cash flows~~restructuring of our BOLI program in 2023. These disbursements were partially offset by: (i) maturities, sales, calls and paydowns of investment securities totaling $218.5 million, (ii) proceeds from ~~investing activities during~~sale of loans held for investment and loans held for sale at the ~~year ended December 31, 2018, include $7.5~~lower of cost or fair value totaling $109.2 million, in(iii) net proceeds from the sale of ~~G200 Leasing, LLC.~~repossessed assets in connection with our equipment-financing activities of $2.5 million. See Note 1 of our audited consolidated financial statements in this Form-10-K for more information about the restructuring of our BOLI program in 2023.

In the year ended December 31, ~~2018,~~2023, net cash ~~used in~~provided by financing activities was ~~$336.4~~$611.2 million. These activities included ~~a $431.0~~net increases of $568.8 million ~~net decrease~~in time deposits and $281.8 million in total demand, savings, ~~and~~ money market deposit balances, the 2018 Special Dividend of $40.0 million paid on March 13, 2018 to MSF prior to the record date for the Spin-off, the 2018 repurchase of Class B common stock totaling $17.9 million and a $6.1 million net decrease in advances from the FLHB.balances. These ~~disbursements~~proceeds were partially offset by: (i) net repayments of FHLB advances of $222.0 million; (iii) $12.1 million of dividends declared and paid by ~~$140.7 million higher time deposits~~the Company in 2023, and ~~$17.9~~(iv) an aggregate $4.9 million in ~~proceeds from~~connection with the ~~issuance~~repurchase of shares of Class A common stock ~~in 2018.~~

Cash and cash equivalents increased $18.4 million, or 13.67%, to $153.4 million as of December 31, 2017 as compared to $135.0 million at December 31, 2016. The cash flows provided by operating activities were $73.3 million in 2017, primarily due to net income during the year, and higher accounts payable, accrued liabilities and other liability balances, partially offset by increasesunder a stock repurchase program launched in the ~~loans held~~first quarter of 2023. See “-Capital Resources and Liquidity Management” for ~~sale~~more details on changes in FHLB advances in 2023 and ~~accrued interest receivable and other assets.~~

In 2017, cash flows from investing activities provided us with $7.6 million, while in 2016 we used $322.2 million in investing activities. This change in cash flows from investing activities was primarily due to a decrease of $852.4 million, or 78.63%, used in the purchase of investment securities available for sale, a decrease of $30.0 million used for the purchase of BOLI, and an increase of $22.6 million in net proceeds from the sale of premises and equipment and others, partially offset by a decrease of $330.7 million in maturities, sales and calls of investment securities available for sale, an increase of $133.7 million, or 51.44%, in net cashed used in loan activities, and $90.2 million used for the purchase of held to maturity securities.

In 2017, we used $62.4 million in cash flows from financing activities, compared to $243.7 million provided by financing activities in 2016. This change is mainly the result of a decrease of $467.5 million, or 20.88%, in proceeds from advances from the FHLB and other banks, a decrease of $275.1 million, or 70.79%, in demand, savings and money market account balances, partially offset by $500.0 million less, or 24.64%, in repayments of advances from the FHLB and other banks.

stock repurchase programs.

~~107~~

Loans

Loans are our largest component of interest-earning assets. The table below depicts the trend of loans as a percentage of total assets and the allowance for loan losses as a percentage of total loans held for investment for the periods presented.

December 31,
(in thousands, except percentages)

2018 2017 2016
Total loans, gross $ 5,920,175
$ 6,066,225
$ 5,764,761
Total loans, gross / Total assets 72.87 % 71.90 % 68.34 %
Allowance for loan losses $ 61,762
$ 72,000
$ 81,751
Allowance for loan losses / Total loans, gross ^{(1) (2)}
1.04 % 1.19 % 1.42 %

~~_______________~~


~~(1)~~	~~Outstanding loan principal balance net of deferred loan fees and costs, excluding the allowance for loan losses.~~


~~(2)~~	~~See Note 5 to our audited consolidated financial statements for more details on our impairment models.~~


	December 31,
(in thousands, except percentages)	2023		2022		2021

Total loans, gross (1)	$	7,264,912	$	6,919,632	$	5,567,540
Total loans, gross (1) / Total assets	74.8%		75.8%		72.9%

Allowance for credit losses (2)	$	95,504	$	83,500	$	69,899
Allowance for credit losses / Total loans held for investment, gross (1) (2)	1.39%		1.22%		1.29%

Total loans, net (3)	$	7,169,408	$	6,836,132	$	5,497,641
Total loans, net (3) / Total assets	73.8%		74.9%		72.0%

~~The composition~~_______________

(1) Total loans, gross is the principal balance of ~~our CRE~~outstanding loans, including loans held for investment, loans held for sale at the lower of cost or fair value, and mortgage loans held for sale, net of unamortized deferred nonrefundable loan ~~portfolio by industry segment~~origination fees and loan origination costs, and unamortized premiums paid on purchased loans, excluding the allowance credit loan losses. At December 31, 2021, the Company had $143.2 million in loans held for sale carried at the lower of cost or estimated fair value. In the third quarter of 2022, these loans held for sale were transferred to the loans held for investment category, therefore, there were no loans held for sale carried at the lower of cost or estimated fair value at December 31, ~~2018~~2022. In the fourth quarter of 2023, the Company transferred an aggregate of $401 million in Houston-based CRE loans held for investment to the loans held for sale category, and ~~2017~~recognized a valuation allowance of $35.5 million as a result of the fair value adjustment of these loans. In addition, at December 31, 2023 and 2022, there were $26.2 million and $62.4 million, respectively, in loans held for sale carried at fair value in connection with the Company’s mortgage banking activities.

(2) In 2022, the Company adopted a new accounting standard on estimating expected credit losses, or CECL. In 2022, the Company recorded an increase to its ACL of $18.7 million as of January 1, 2022, with a corresponding after-tax cumulative effect adjustment to retained earnings of $13.9 million. See Note 1 to our audited consolidated financial statements on this Form 10-K for more details on the adoption of this new accounting standard..

(3) Total loans, net is ~~depicted in~~ the ~~following table:~~

principal balance of outstanding loans, including loans held for investment, loans held for sale carried at the lower of cost or fair value, and mortgage loans held for sale, net of unamortized deferred nonrefundable loan origination fees and loan origination costs, and unamortized premiums paid on purchased loans, excluding the allowance for credit losses.

December 31,
(in thousands) 2018 2017
Retail ⁽¹⁾
$ 1,081,133
$ 1,152,662
Multifamily 909,439
839,709
Office space 441,712
317,196
Land and construction 326,644
406,940
Hospitality 166,415
118,325
Industrial and warehouse 120,086
124,921
$ 3,045,429
$ 2,959,753

~~_______________~~


~~(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 with a primary retail component, where the primary source of repayment is derived from the rental income generated from the use of the property by its tenants.

~~108~~

The table below summarizes the composition of ~~our loan portfolio~~loans held for investment by type of loan as of the end of each period presented. International loans include transactions in which the debtor or customer is domiciled outside the U.S., even when the collateral is U.S. property. All international loans are denominated and payable in U.S. Dollars.

December 31,
(in thousands)

2018 2017 2016 2015 2014
Domestic Loans:
Real estate loans
Commercial real estate (CRE)
Nonowner occupied $ 1,809,356
$ 1,713,104
$ 1,377,753
$ 1,072,469
$ 722,044
Multi-family residential 909,439
839,709
667,256
452,699
234,699
Land development and construction loans 326,644
406,940
429,085
332,747
209,825
3,045,439
2,959,753
2,474,094
1,857,915
1,166,568
Single-family residential 398,043
360,041
315,648
279,086
241,430
Owner occupied 777,022
610,386
610,657
543,047
482,661
4,220,504
3,930,180
3,400,399
2,680,048
1,890,659
Commercial loans 1,306,792
1,285,461
1,432,517
1,497,487
1,485,918
Loans to depository institutions and acceptances ⁽²⁾
19,965
16,443
9,330
16,304
7,002
Consumer loans and overdrafts ⁽³⁾
73,155
78,872
74,575
69,165
57,910
Total Domestic Loans 5,620,416
5,310,956
4,916,821
4,263,004
3,441,489
International Loans:
Real estate loans
Single-family residential ⁽¹⁾
135,438
152,713
154,841
144,107
130,592
Owner occupied —
—
—
9
—
135,438
152,713
154,841
144,116
130,592
Commercial loans 73,636
69,294
238,285
469,653
926,479
Loans to depository institutions and acceptances 49,000
481,183
406,963
688,545
739,314
Consumer loans and overdrafts ⁽⁴⁾
41,685
52,079
47,851
57,904
60,456
Total International Loans 299,759
755,269
847,940
1,360,218
1,856,841
Total Loan Portfolio $ 5,920,175
$ 6,066,225
$ 5,764,761
$ 5,623,222
$ 5,298,330

~~__________________~~


~~(1)~~	~~Secured by real estate properties located in the U.S.~~


~~(2)~~	~~Secured by cash or U.S. Government securities~~


~~(3)~~	~~Includes customers’ overdraft balances totaling $1.0 million~~, ~~$1.8 million, $1.7 million , $0.7 million and $0.8 million at each of the dates presented.~~


~~(4)~~	~~There were no significant international customers’ overdraft balances at each of the dates presented.~~


	December 31,
(in thousands)	2023		2022		2021		2020		2019

Domestic Loans:
Real estate loans
Commercial real estate (CRE)
Nonowner occupied	$	1,616,200	$	1,615,716	$	1,540,590	$	1,749,839	$	1,891,802
Multi-family residential	407,214		820,023		514,679		737,696		801,626
Land development and construction loans	300,378		273,174		327,246		349,800		278,688
	2,323,792		2,708,913		2,382,515		2,837,335		2,972,116
Single-family residential (1)	1,422,113		1,048,396		586,783		543,076		427,431
Owner occupied	1,175,331		1,046,450		962,538		947,127		894,060
	4,921,236		4,803,759		3,931,836		4,327,538		4,293,607
Commercial loans (2)	1,461,269		1,338,157		942,781		1,103,501		1,190,193
Loans to depository institutions and acceptances (3)	13,375		13,292		13,710		16,629		16,547
Consumer loans and overdrafts (4)(5)(6)	389,991		602,793		421,471		241,771		72,555
Total Domestic Loans	6,785,871		6,758,001		5,309,798		5,689,439		5,572,902






International Loans:
Real estate loans
Single-family residential (7)	44,495		54,449		74,556		96,493		111,671


Commercial loans	41,918		43,077		22,892		51,049		43,850
Loans to depository institutions and acceptances	—		—		—		7		5
Consumer loans and overdrafts (8)	1,209		1,667		2,194		5,349		15,911
Total International Loans	87,622		99,193		99,642		152,898		171,437
Total Loans Held For Investment	$	6,873,493	$	6,857,194	$	5,409,440	$	5,842,337	$	5,744,339

__________________

(1) As of December 31, 2023 and 2022, includes approximately $251.8 million and $230.3 million, respectively, in single-family residential loans purchased by the Company through Amerant Mortgage.

(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.

(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.

(5) Includes indirect consumer lending loans purchased with an outstanding balance of $210.9 million and $433.0 million as of December 31, 2023 and 2022, respectively, net of unamortized premium paid of $2.7 million and $10.9 million as of December 31, 2023 and 2022, respectively. 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. 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.

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

~~109~~

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. 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.

(3) Includes loans held for investment in the NY loan portfolio, which were $217.0 million at December 31, 2023 and $330 million at December 31, 2022. In 2023, the Company reclassified $43.3 million related to a New York-Based CRE loan that were previously recorded as held for investment to loans held for sale. In 2022, the Company reclassified all loans in the NY loans portfolio previously classified as loans held for sale at the lower of cost or fair value, to loans held for investment.

At December 31, 2023, our CRE loans held for investment based in South Florida, Houston, New York and other regions were $1.7 billion, $317 million, $217 million and $65 million, respectively.

The table below summarizes the composition of our loans held for sale by type of loan as of the end of each period presented


(in thousands)	December 31, 2023		December 31, 2022		December 31, 2021		December 31, 2020		December 31, 2019
Loans held for sale at the lower of cost or fair value
Real estate loans
Commercial real estate
Non-owner occupied	$	—	$	—	$	110,271	$	—	$	—
Multi-family residential	309,612		—		31,606		—		—
Land development and construction loans	55,607		—		—		—		—
	365,219		—		141,877		—		—

Owner occupied	—		—		1,318		—		—



Total loans held for sale at the lower of cost or fair value (1)	365,219		—		143,195		—		—
Mortgage loans held for sale at fair value
Land development and construction loans (2)	12,778		9,424		—		—		—
Single family residential (3)	13,422		53,014		14,905		—		—
Total mortgage loans held for sale, at fair value (4)	26,200		62,438		14,905		—		—
Total loans held for sale	$	391,419	$	62,438	$	158,100	$	—	$	—

______________

(1)In the fourth quarter of 2023, the Company transferred an aggregate of $401 million in Houston-based CRE loans held for investment to the loans held for sale category, and recognized a valuation allowance of $35.5 million as a result of the fair value adjustment of these loans. In the third quarter of 2023, the Company transferred a New York-based CRE loan held for investment to the loans held for sale category, and recognized a valuation allowance of $5.6 million as a result of the fair value adjustment of this loan. In the fourth quarter of 2023, the Company sold this loan and there was no material impact to the Company’s results of operations as result of this transaction.

(2) In 2023, the Company transferred approximately $13 million in land development and construction loans held for sale to the loans held for investment category.

(3) In 2023, the Company transferred approximately $98.9 million, respectively, in single-family residential loans held for sale to the loans held for investment category.

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

(5) Remained current and in accrual status at each of the periods shown.

As of December 31, ~~2018, the loan portfolio decreased $146.1~~2023, total loans held for investment were $6.9 billion, up $16.3 million, or ~~2.41%~~0.2%, ~~to $5.9 billion, as~~ compared to ~~$6.1~~$6.9 billion at December 31, ~~2017. As part of our business strategy,~~2022. Domestic loans ~~to international customers declined by $455.5~~held for investment increased $27.9 million, or ~~60.31%~~0.4%, as of December 31, ~~2018,~~2023, compared to December 31, ~~2017.~~2022. The ~~overall decline~~increase in total domestic loans held for investment includes net increases of $373.7 million, or 35.6%, $128.9 million, or 12.3% and $123.1 million, or 9.2%, in domestic single-family residential loans, owner occupied loans and commercial loans, respectively. These increases were partially offset by decreases of: (i) $385.1 million, or 14.2% in domestic CRE loans mainly driven by the transfer of certain Houston-based CRE loans to held for sale carried at the lower of cost or fair value discussed further below, and (ii) $212.8 million, or 35.3%, in domestic consumer loans, as the Company discontinued the purchases of indirect consumer loans in 2023 and such indirect lending portfolio is set to runoff over time.

The increase in our domestic loan portfolio held for investment in 2023 includes the effect of: (i) originations of commercial loans, including $29 million of loans originated through a new white label equipment financing solution launched in the second quarter of 2022 as well as other specialty finance loans; (ii) originations of single-family residential loans; (iii) originations of CRE and owner-occupied loans; (iv) approximately $26.5 million of single-family residential loans purchased by the Company through its subsidiary Amerant Mortgage, and (v) originations of consumer loans of approximately $27 million through a new white-label program launched in the third quarter of 2022. These results were partially offset primarily by loan pay downs and payoffs during the period.

Loans to international customers, primarily from Latin America, was partially offset by the addition, early in 2018, of $27.4 million of syndicated commercial loans to large corporations in Europe and Canada with world-wide operations, and which we believe had good credit quality. In the second part of 2019, we disposed of approximately $122.4 million of syndicated loan interests to reduce risk and redeploy the proceeds in potentially higher yielding loans in our communities. The domestic loan exposure increased $309.5declined $11.6 million, or ~~5.83%~~11.7%, as of December 31, ~~2018,~~2023, compared to December 31, ~~2017.~~2022. This ~~increase is~~was mainly ~~attributed to an $85.7~~driven by payoffs, including $10 million ~~(2.9%) net increase~~ in ~~CRE loans, a $38.0 million (10.6%) net increase in domestic single family~~ residential loans, ~~a $166.6~~$1.2 million ~~(27.3%) net increase~~ in ~~owner-occupied real estate loans, a $21.3 million net increase in domestic C&I~~commercial loans and ~~an $80.3~~$0.5 million ~~decrease~~ in ~~land development~~consumer loans.

At December 31, 2023 and 2022, there were $26.2 million and $62.4 million, respectively, of mortgage loans held for sale carried at their estimated fair value. In 2023, in connection with mortgage loans held for sale, we originated and purchased approximately $343.5 million, and had proceeds of approximately $286.5 million, mainly from the sale of these loans.

In 2023, the Company added approximately $399.1 million in single-family residential and construction loans ~~in 2018.~~through Amerant Mortgage which includes loans originated and purchased from different channels.

In 2017, the loan portfolio increased $301.5 million, or 5.23%, to $6.1 billion at December 31, 2017, as compared to 2016. Since 2015, we implemented a strategy to reduce our international loan exposure, which is primarily in Latin America. As a result, loans to international customers decreased $92.7 million, or 10.93%, as of December 31, 2017, as compared to December 31, 2016. As part of the strategy, we accelerated our efforts to increase our domestic lending activities, primarily in CRE non-owner occupied loans and multi-family residential. These efforts resulted in an increase of $394.1 million, or 8.02%, as of December 31, 2017 compared to December 31, 2016, in loans to domestic borrowers. This growth was primarily comprised of $335.4 million of commercial non-owner occupied real estate loans, $172.5 million of commercial multi-family residential loans, and a decrease of $22.1 million, or 5.16%, of land development and construction loans.

In September 2018, the Company updated its application of the definition of “highly leveraged transactions,” or HLTs, to include unfunded commitments as part of the leverage ratio calculation in accordance with the “Interagency Guidance on Leveraged Lending” issued in March 22, 2013. As of December 31, ~~2018,~~2023, the Company had $365.2 million in loans held for sale carried at the lower of cost or fair value, which were previously recorded as loans held for investment. In the fourth quarter of 2023, the Company transferred an aggregate of $401 million in Houston-based CRE loans held for investment to the loans held for sale category, and recognized a valuation allowance of $35.5 million as a result of the fair value adjustment of these loans. In the third quarter of 2023, the Company transferred a New York-based CRE loan held for investment to the loans held for sale category, with an amortized cost of $48.8 million at the time of transfer, and recognized a valuation allowance of $5.6 million as a result of the fair value adjustment of this loan. The Company subsequently sold this loan and there was no material impact to the Company’s results of operations as result of this transaction.

As of December 31, 2023, substantially all CRE loans held for sale carried at the lower of cost or estimated fair value include loans in the multifamily segment.

As of December 31, 2023, loans under syndication facilities were $271.8 million, a decline of $95.2 million, or 25.9%, compared to $367.0 million at December 31, 2022. This was primarily driven by a decrease of $46.0 million in commercial real estate loans, $13.3 million in loans to depository institutions, and $12.1 million in land loans. This decrease was partially offset by an increase of $24.9 million in commercial loans. In addition, in the third quarter of 2023, the Company transferred a syndicated CRE loan in New York of $48.8 million to the held for sale category. This loan was subsequently sold in the fourth quarter of 2023. As of December 31, 2023, syndicated loans that financed ~~HLTs~~“highly leveraged transactions”, or HLT, were ~~$207.7~~$5.5 million, or ~~3.51%~~0.1% of total loans, compared to ~~$141.3~~$8.5 million, or ~~2.33%~~0.1% of total loans, as of December 31, ~~2017.~~2022.At December 31, 2023 and December 31, 2022, loans under syndication facilities held for investment include Shared National Credit facilities of $86.7 million and $143 million, respectively.

The following is a brief description of the composition of our loan classes:

Commercial Real Estate (CRE) loans. We provide a mix of variable and fixed rate CRE loans. These are loans secured by non-owner occupied real estate properties and land development and construction loans.

Loans secured by non-owner occupied real estate properties are generally granted to finance the acquisition or operation of CRE properties. The main source of repayment of these real estate loans is derived from cash flows or conversion of productive assets and not from the income generated by the disposition of the property held as collateral. These mainly include rental ~~apartments~~apartment (multifamily) properties, office, retail, warehouses and industrial facilities, and hospitality (hotels and motels) properties mainly in South Florida, the greater Houston, Texas area and the greater New York City area, especially the five New York City boroughs. Concentrations in these non-owner occupied CRE loans are subject to heightened regulatory scrutiny. See “Risk Factors—Our concentration of CRE loans could result in further increased loan losses, and adversely affect our business, earnings, and financial condition.”

Land development and construction loans includes loans for land acquisition, land development, and construction (single or multiple-phase development) of single residential or commercial buildings, loans to reposition or rehabilitate commercial properties, and bridge loans mainly in the South Florida, the greater Houston, Texas area and the greater New York City area, especially the five New York City boroughs. Typically, construction lines of credit are funded based on construction progress and generally have a maturity of three years or less.

~~110~~

Owner-occupied. Loans secured by owner-occupied properties are typically working capital loans made to businesses in the South Florida and the greater Houston, Texas markets. The source of repayment of these commercial owner-occupied loans primarily comes from the cash flow generated by the occupying business and the real estate collateral serves as an additional source of repayment. These loans are assessed, analyzed, and structured essentially in the same manner as commercial loans.

Single-Family Residential. These loans include loans to domestic and foreign individuals primarily secured by their personal residence in the U.S., including first ~~mortgage,~~mortgages on properties mainly located in Florida, home equity and home improvement loans, mainly in South Florida and the greater Houston, Texas markets. These loans have terms common in the industry. 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. These businesses cover a diverse range of economic sectors, including manufacturing, wholesale, retail, primary products and services. We provide loans and lines of credit for working capital needs, business expansions and for international trade financing. These loans include working capital loans, asset-based lending, participations in ~~shared national credits~~Shared National Credit facilities, or SNCs (loans of ~~$100.0~~$100 million or more that are shared by two or more institutions), purchased receivables and ~~Small Business Administration~~SBA loans, among others. The tenors may be either short term (one year or less) or long term, and they may be secured, unsecured, or partially secured. 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. In addition, the Company originates equipment loan and leases through a white-label equipment financing solution launched in the second quarter of 2022.

Commercial loans to borrowers in similar businesses or products with similar characteristics or specific credit requirements are generally evaluated under a standardized commercial credit program. Commercial loans outside the scope of those programs are evaluated on a case-by-case basis, with consideration of any exposure under an existing commercial credit program. The Bank maintains several commercial credit programs designed to standardize underwriting guidelines, and risk acceptance criteria, in order to streamline the granting of credits to businesses with similar characteristics and common needs. Some programs also allow loans that deviate from credit policy underwriting requirements and allocate maximum exposure buckets to those loans. Loans originated through a program are monitored regularly for performance over time and to address any necessary modifications.

Loans to financial institutions and acceptances. These loans primarily include trade financing facilities through letters of credits, bankers’ acceptances, pre and post-export financing, and working capital loans, among others. These loans are generally granted for terms not exceeding one year and on an unsecured basis under the limits of an existing credit program, primarily to the largest financial institutions in Brazil, Guatemala (at year end 2018), Chile and other countries in Latin America thatyear. Since 2019, we ~~believe are credit-worthy.~~have substantially reduced this activity.

Consumer loans and overdrafts. These loans include open and closed-end loans extended to domestic and foreign individuals for household, family and other personal expenditures. These loans include automobile loans, personal loans, or loans secured by cash or securities and revolving credit card agreements. These loans have terms common in the industry for these types of loans, except that loans to foreign clients have more conservative underwriting criteria and terms. Beginning in 2020, consumer loans include indirect unsecured personal loans to well qualified individuals we purchased from recognized third parties personal loan originators. However, we are focusing on organic growth and have not been purchasing any new indirect consumer loan production since the end of 2022.All consumer loans are denominated and payable in U.S. Dollars. In 2020, we wound down our credit card program to further strengthen the Company’s credit quality and, as a result, there are no credit card receivables outstanding after December 31, 2019.

~~111~~

The tables below set forth the unpaid principal balance of loans held for investment by type, by interest rate type (fixed-rate and variable-rate) and by original contractual loan maturities as of December 31, ~~2018:~~2023:


(in thousands)	Due in one year or less		Due after one year through five		Due after five years ⁽¹⁾		Total
Fixed-Rate Loans
(in thousands)
(in thousands)									Due in one year or less	Due after one year through five	Due after five years (1)	Total

Fixed-Rate
Fixed-Rate
Fixed-Rate
Real estate loans
Real estate loans
Real estate loans
Commercial real estate (CRE)
Commercial real estate (CRE)
Commercial real estate (CRE)
Nonowner occupied
Nonowner occupied
Nonowner occupied	$	69,160	$	785,208	$	446,493	$	1,300,861
Multi-family residential	16		382,370		111,605		493,991
Land development and construction loans	18		1,624		—		1,642
	69,194		1,169,202		558,098		1,796,494
	193,947
Single-family residential	5,434		31,962		124,145		161,541
Owner occupied	5,731		102,589		362,940		471,260
	80,359		1,303,753		1,045,183		2,429,295
	222,759
Commercial loans	323,421		93,332		21,813		438,566
Loans to financial institutions and acceptances	25,000		—		—		25,000
Consumer loans and overdrafts	6,957		5,992		36		12,985
	$	435,737	$	1,403,077	$	1,067,032	$	2,905,846
Variable Rate Loans
	$
Variable-Rate
Real estate loans
Real estate loans
Real estate loans
Commercial real estate (CRE)
Commercial real estate (CRE)
Commercial real estate (CRE)
Nonowner occupied
Nonowner occupied
Nonowner occupied	72,660		281,885		153,950		508,495
Multi-family residential	90,100		290,181		35,167		415,448
Land development and construction loans	128,313		159,154		37,535		325,002
	291,073		731,220		226,652		1,248,945
	306,191
Single-family residential	5,328		41,382		325,230		371,940
Owner occupied	21,482		88,062		196,218		305,762
	317,883		860,664		748,100		1,926,647
	408,853
Commercial loans	312,365		508,551		120,946		941,862
Loans to financial institutions and acceptances	31,000		—		12,965		43,965
Consumer loans and overdrafts	101,855		—		—		101,855
	$
	$	763,103	$	1,369,215	$	882,011	$	3,014,329
Total Loan Portfolio

Total Loans Held For Investment

Total Loans Held For Investment

Total Loans Held For Investment
Real estate loans
Real estate loans
Real estate loans
Commercial real estate (CRE)
Commercial real estate (CRE)
Commercial real estate (CRE)
Nonowner occupied
Nonowner occupied
Nonowner occupied	$	141,820	$	1,067,093	$	600,443	$	1,809,356
Multi-family residential	90,116		672,551		146,772		909,439
Land development and construction loans	128,331		160,778		37,535		326,644
	360,267		1,900,422		784,750		3,045,439
	500,138
Single-family residential	10,762		73,344		449,375		533,481
Owner occupied	27,213		190,651		559,158		777,022
	398,242		2,164,417		1,793,283		4,355,942
	631,612
Commercial loans	635,786		601,883		142,759		1,380,428
Loans to financial institutions and acceptances	56,000		—		12,965		68,965
Consumer loans and overdrafts	108,812		5,992		36		114,840
	$	1,198,840	$	2,772,292	$	1,949,043	$	5,920,175
	$

__________________

~~(1)~~

Includes a total of approximately $174.7 million of fixed-rate loans (50% single-family residential and 48% owner occupied), and $313.9 million of variable-rate loans (93% single-family residential and 6% owner occupied), maturing in 10 years or more. Fixed-rate and variable-rate loans maturing in 15 years or more represent 45% of total fixed-rate and 94%

(1) Includes a total of $713.2 million of fixed-rate loans (mainly comprised of 87% single-family residential and 9% owner occupied), and $647.6 million of variable-rate loans (mainly comprised of 95% single-family residential and 3% owner occupied), maturing in 10 years or more. Fixed-rate and variable-rate loans maturing in 15 years or more represent 86% of total fixed-rate and 87% of total variable-rate loans maturing in 10 years or more, respectively, and correspond primarily to single-family residential loans.


~~(2)~~	~~Secured by cash or U.S. Government securities~~

~~112~~

As of December 31, 2022, total loans held for investment include approximately $1.1 billion, or 15.5% of total loans held for investment, of loans that were priced based on variable interest rates tied to the LIBOR. In December of 2019, the Company appointed a management team charged with the responsibility of monitoring developments related to the proposed alternative reference interest rates to replace LIBOR, and guide the Company through the potential discontinuation of LIBOR. In 2020, the Company launched the LIBOR cessation project to identify and quantify LIBOR exposure in all product categories and lines of business, both on- and off-balance-sheet. During 2021, the Company completed its assessment of all third party-provided products, services, and systems that would be affected by any changes to references to LIBOR, including changes to all relevant systems. Beginning in January 2022, the Company started referencing new loans and other products, including loan-level derivatives, to the Secured Overnight Financing Rate (“SOFR”). In 2023, the Company completed the migration of all variable rate loans and derivative contracts from LIBOR to SOFR.

The tables below set forth the unpaid principal balance of total loans held for sale by type, by interest rate type (fixed-rate and variable-rate) and by original contractual loan maturities as of December 31, 2023:


(in thousands)	Due in one year or less		Due after one year through five		Due after five years		Total

Fixed-Rate
Real estate loans
Commercial real estate (CRE)
Nonowner occupied	$	—	$	—	$	—	$	—
Multi-family residential	—		24,146		1,538		25,684
Land development and construction loans	—		1,608		8,061		9,669
	—		25,754		9,599		35,353
Single-family residential (1)	—		—		13,422		13,422
Owner occupied	—		—		—		—




	$	—	$	25,754	$	23,021	$	48,775
Variable-Rate
Real estate loans
Commercial real estate (CRE)

Multi-family residential	—		241,387		42,541		283,928
Land development and construction loans	33,203		22,404		3,109		58,716
	33,203		263,791		45,650		342,644
Single-family residential	—		—		—		—
Owner occupied	—		—		—		—
	33,203		263,791		45,650		342,644
Commercial loans	—		—		—		—
Loans to financial institutions and acceptances	—		—		—		—
Consumer loans and overdrafts	—		—		—		—
	$	33,203	$	263,791	$	45,650	$	342,644



Total Loans Held For Sale
Real estate loans
Commercial real estate (CRE)
Nonowner occupied	$	—	$	—	$	—	$	—
Multi-family residential	—		265,533		44,079		309,612
Land development and construction loans	33,203		24,012		11,170		68,385
	33,203		289,545		55,249		377,997
Single-family residential (1)	—		—		13,422		13,422
Owner occupied	—		—		—		—




Total loans held for sale (2)	$	33,203	$	289,545	$	68,671	$	391,419

__________________

(1) Loans held for sale carried at their estimated fair value.

(2) Remained current and in accrual status as of December 31, 2023.

Foreign Outstanding

The table below summarizes the composition of our international loan portfolio by country of risk for the periods presented. All of our foreign loans are denominated in U.S. dollars, and bear fixed or variable rates of interest based upon different market benchmarks plus a spread.

December 31,
2018 2017 2016
(in thousands, except percentages)

Net Exposure (1) %
Total Assets Net Exposure (1) %
Total Assets Net Exposure (1) %
Total Assets
Venezuela ⁽²⁾
$ 157,162
1.93 % $ 182,678
2.17 % $ 184,148
2.18 %
Brazil 34,879
0.43 % 141,088
1.67 % 234,221
2.78 %
Panama 30,478
0.38 % 51,557
0.61 % 58,776
0.70 %
Chile 5,530
0.07 % 94,543
1.12 % 41,632
0.49 %
Colombia 5,368
0.07 % 63,859
0.76 % 107,388
1.27 %
Mexico 1,439
0.02 % 18,274
0.22 % 45,811
0.54 %
Peru 138
— % 70,088
0.83 % 51,524
0.61 %
Costa Rica 61
— % 43,844
0.52 % 16,350
0.19 %
Other ⁽³⁾
64,704
0.80 % 89,338
1.06 % 108,090
1.29 %
Total $ 299,759
3.70 % $ 755,269
8.95 % $ 847,940
10.05 %


	December 31,
	2023				2022				2021
(in thousands, except percentages)	Net Exposure (1)		% Total Assets		Net Exposure (1)		% Total Assets		Net Exposure (1)		% Total Assets

Venezuela (2)(3)	$	37,699	0.4	%	$	47,037	0.5	%	$	64,636	0.9	%







Other (1)(4)	49,923		0.5	%	52,156		0.6	%	35,006		0.4	%
Total	$	87,622	0.9	%	$	99,193	1.1	%	$	99,642	1.3	%

_________________

~~(1)~~

~~Consists of outstanding principal amounts, net of collateral of cash, cash equivalents or other financial instruments totaling $19.5 million,$31.9 million and $63.2 million as of December 31, 2018, 2017 and 2016,~~

(1) Collateralized with cash, cash equivalents or other financial instruments totaling $7.2 million, $6.3 million and $21.1 million as of December 31, 2023, 2022 and 2021 respectively.

(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.


~~(2)~~	~~Includes mortgage loans for single-family residential properties located in the U.S. totaling $129.0 million, $145.1 million and $147.0 million as of December 31, 2018, 2017 and 2016, respectively.~~

(3) There were no outstanding credit card balances as of December 31, 2023, 2022 and 2021.

(4) Includes loans to borrowers in other countries which do not individually exceed one percent of total assets in ~~any of the reported periods.~~2023, 2022 and 2021.

As of December 31, ~~2018,~~2023, the maturities of our outstanding international loans were as follows:

(in thousands) Less than 1 year 1-3 Years More than 3 years Total
Venezuela⁽¹⁾
$ 27,415
$ 1,059
$ 128,688
$ 157,162
Brazil 25,042
9,480
357
34,879
Panama ⁽⁴⁾
8,832
7,970
13,676
30,478
Chile 5,254
100
176
5,530
Colombia 3,342
80
1,946
5,368
Mexico 647
73
719
1,439
Peru 138
—
—
138
Costa Rica 61
—
—
61
Other⁽³⁾
28,391
497
35,816
64,704
Total $ 99,122
$ 19,259
$ 181,378
$ 299,759



(in thousands)	Less than 1 year(1)		1-3 Years(1)		More than 3 years(1)		Total(1)


Venezuela	$	262	$	—	$	37,437	$	37,699







Other	3,180		5,725		41,018		49,923
Total	$	3,442	$	5,725	$	78,455	$	87,622

~~_________________~~


~~(1)~~	~~Includes mortgage loans for single-family residential properties located in the U.S. totaling $129.0 million.~~

~~(2) Includes loans to borrowers in other countries which do not individually exceed one percent of total assets.~~


~~(3)~~	~~Consists of outstanding principal amounts, net of collateral of cash, cash equivalents or other financial instruments totaling $19.5 million.~~


~~(4)~~	~~The country’s local currency is pegged to the U.S. Dollar at a fixed exchange rate of 1:1.~~

During the three-years ended December 31, 2018, we continued the strategy to reduce the international loan exposure. As a result, loans to international customers, mainly companies and financial institutions in Brazil, Chile, Colombia, Costa Rica, Mexico, Panama and Peru, decreased $455.5 million, or 60.31%, in 2018, compared to 2017, and decreased $92.7 million, or 10.93%, in 2017, compared to December 31, 2016.

~~113~~

100

Loans by Economic Sector

The table below summarizes the concentration in our ~~loan portfolio~~loans held for investment by economic sector as of the end of the periods presented.


	December 31,
	December 31,																																					December 31,
(in thousands, except percentages)	2018					2017				2016				(in thousands, except percentages)	2023										2022									2021
	Amount			% of Total		Amount		% of Total		Amount		% of Total
			Amount
			Amount
			Amount																% of Total							Amount						% of Total							Amount						% of Total
Financial Sector ⁽¹⁾	$	127,298		2.15	%	$	545,609	8.99	%	$	481,794	8.36	%	Financial Sector (1)	$	255,179		3.7		3.7		%					$	190,934			2.8		2.8		%						$	78,168		1.5			1.5		%
Construction and real estate ⁽²⁾	3,195,626			53.98	%	3,116,648		51.38	%	2,638,147		45.76	%	Construction and real estate (2)	2,613,060			38.0		38.0		%					2,378,081				34.7		34.7		%						2,314,281			42.8			42.8		%
Manufacturing:
Foodstuffs, apparel	99,467			1.68	%	81,920		1.35	%	108,729		1.89	%
Foodstuffs, apparel
Foodstuffs, apparel															108,729				1.6		%					87,198						1.3	%						87,006						1.6	%
Metals, computer, transportation and other	278,960			4.71	%	270,736		4.46	%	384,206		6.66	%	Metals, computer, transportation and other	73,687			1.1		1.1		%					52,160				0.8		0.8		%						101,807			1.9			1.9		%
Chemicals, oil, plastics, cement and wood/paper	49,069			0.83	%	99,417		1.64	%	154,938		2.69	%	Chemicals, oil, plastics, cement and wood/paper	68,897			1.0		1.0		%					22,929				0.3		0.3		%						34,133			0.6			0.6		%
	427,496			7.22	%	452,073		7.45	%	647,873		11.24	%
Total manufacturing														Total manufacturing	$	251,313			3.7		%					$	162,287					2.4	%						$	222,946					4.1	%
Wholesale	712,512			12.04	%	542,521		8.94	%	508,218		8.82	%	Wholesale	400,983			5.8		5.8		%					614,971				8.9		8.9		%						572,109			10.6			10.6		%
Retail trade ⁽⁴⁾	289,019			4.88	%	291,707		4.81	%	346,264		6.01	%
Retail trade (3)														Retail trade (3)	420,907				6.1		%					424,894						6.2	%						380,545						7.0	%
Services:
Non-financial public sector
Non-financial public sector
Non-financial public sector															—				—		%					1,300						—	%						1						—	%
Communication, transportation, health and other	242,050			4.09	%	291,095		4.80	%	348,717		6.05	%	Communication, transportation, health and other	652,926			9.5		9.5		%					487,842				7.1		7.1		%						375,973			7.0			7.0		%
Accommodation, restaurants, entertainment	342,710			5.79	%	229,023		3.78	%	210,629		3.65	%	Accommodation, restaurants, entertainment	323,347			4.7		4.7		%					602,877				8.8		8.8		%						508,615			9.4			9.4		%
Electricity, gas, water, supply and sewage	17,208			0.29	%	25,053		0.41	%	19,895		0.34	%	Electricity, gas, water, supply and sewage	40,228			0.6		0.6		%					24,908				0.4		0.4		%						19,309			0.4			0.4		%
	601,968			10.17	%	545,171		8.99	%	579,241		10.04	%
Total services														Total services	$	1,016,501			14.8		%					$	1,116,927					16.3	%						$	903,898					16.7	%
Primary Products:
Agriculture, livestock, fishing and forestry	15			—	%	1,678		0.03	%	8,168		0.14	%
Agriculture, Livestock, Fishing, and forestry
Agriculture, Livestock, Fishing, and forestry
Agriculture, Livestock, Fishing, and forestry
Mining	5,551			0.09	%	6,752		0.11	%	12,108		0.21	%
	5,566			0.09	%	8,430		0.14	%	20,276		0.35	%
Other loans ⁽³⁾	560,690			9.47	%	564,066		9.30	%	542,948		9.42	%
	$	5,920,175		100.00	%	$	6,066,225	100.00	%	$	5,764,761	100.00	%
	21,011																	21,011					0.3		%					—					—		%						—					—		%
Other loans (4)														Other loans (4)	1,894,539				27.6		%					1,969,100						28.7	%						937,493						17.3	%
	$																$	6,873,493				100.0		%					$	6,857,194				100.0		%						$	5,409,440				100.0		%

111

(in thousands, except percentages) 2018 2017 2016
Amount % Amount % Amount %
Securities held to maturity:
U.S. Government sponsored enterprise debt $ 82,326
4.73 % $ 86,826
4.70 % $ —
— %
U.S. Government agency debt 2,862
0.16 % 3,034
0.16 % —
— %
$ 85,188
4.89 % $ 89,860
4.86 % $ —
— %
Securities available for sale:
U.S. Government sponsored enterprise debt $ 820,779
47.13 % $ 875,666
47.41 % $ 1,004,463
46.02 %
Corporate debt ⁽¹⁾
352,555
20.25 % 313,392
16.97 % 371,254
17.01 %
U.S. Government agency debt 216,985
12.46 % 291,385
15.78 % 549,084
25.16 %
Municipal bonds 160,212
9.20 % 180,396
9.77 % 166,889
7.64 %
Mutual funds ⁽⁴⁾
23,110
1.33 % 23,617
1.28 % 23,615
1.08 %
Commercial paper 12,410
0.71 % —
— % —
— %
Foreign sovereign debt ⁽²⁾
—
— % —
— % 5,237
0.24 %
U.S. Treasury debt —
— % 2,701
0.15 % 2,705
0.12 %
$ 1,586,051
91.08 % $ 1,687,157
91.36 % $ 2,123,247
97.27 %
Other securities ⁽³⁾:

FHLB stock $ 57,179
3.28 % $ 56,924
3.08 % $ 46,480
2.13 %
Federal Reserve Bank stock 13,010
0.75 % 13,010
0.70 % 13,010
0.60 %
$ 70,189
4.03 % $ 69,934
3.78 % $ 59,490
2.73 %
$ 1,741,428
100.00 % $ 1,846,951
100.00 % $ 2,182,737
100.00 %

~~123~~

In May 2023, the Company sold a portion of its investment in a corporate debt security held for sale issued by a financial institution, to reduce single point exposure. The Company realized proceeds of $0.8 million and realized a pre-tax loss of $1.2 million in connection with this transaction. This loss was recorded in the consolidated statement of operations and comprehensive income (loss) for the year ended December 31, 2023.

At December 31, 2022, the Bank had one corporate debt security held for sale (the “Signature Bond”) issued by Signature Bank, N.A. (“Signature”) with a fair value of $9.1 million and unrealized loss of $0.9 million. At December 31, 2022, the Signature Bond was in an unrealized loss position for less than one year. On March 12, 2023, Signature was closed by the New York State Department of Financial Services, which appointed the FDIC as receiver. The FDIC, as receiver, announced that shareholders and certain unsecured debt holders will not be protected. On March 27, 2023, the Bank sold the Signature Bond in an open market transaction and realized a pretax loss on sale of approximately $9.5 million which is recorded in the consolidated statement of operations and comprehensive income (loss) for the year ended December 31, 2023.

~~__________________~~

~~(1)~~

December 31, 2018 includes $36.2 million in “investment-grade” quality securities issued by corporate entities from Europe and Japan in three different sectors. December 31, 2017 and 2016 include $24.3 million and 26.2 million, respectively, in obligations issued by corporate entities from Panama, Europe and others in three different sectors. The Company limits exposure to foreign investments based on cross border exposure by country, risk appetite and policy. All foreign investments are denominated in Dollars.


~~(2)~~	~~December 31, 2016~~ includes debt securities issued or guaranteed by the governments of Latin American countries. This balance does not represent a significant exposure with respect to our total assets at the reported date.


~~(3)~~	~~Amounts correspond to original cost at the date presented. Original cost approximates fair value because of the nature of these investments.~~


~~(4)~~	~~Includes a publicly offered investment company which seeks current income and makes investments that qualify for CRA purposes.~~

Debt securities available for sale had net unrealized holding losses of $100.3 million and net unrealized holding gains of $3.2 million at December 31, 2023, compared to net unrealized holding losses of $113.0 million and net unrealized holding gains of $1.0 million at December 31, 2022 . In 2023, the Company recorded pre-tax net unrealized holding gains of $14.9 million which are included in accumulated other comprehensive (loss) income for the period. The improvement in unrealized holding losses was mainly attributed to decreases in the medium-term market interest rates during the period. The Company does not intend to sell these debt securities and it is more likely than not that it will not be required to sell the securities before their anticipated recovery. The Company believes these securities are not credit-impaired because the change in fair value is attributable to changes in interest rates and investment securities markets, generally, and not credit quality. As a result, the Company did not record an allowance for credit losses on these securities as of December 31, 2023 and 2022.

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. 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. Credit ratings are monitored by the Company on at least a quarterly basis. As of December 31, 2023 and 2022, all held to maturity securities held by the Company were rated investment grade.

112

The following table ~~set~~sets forth the book value, scheduled maturities and weighted average yields for our securities portfolio at December 31, ~~2018.~~2023. Similar to the table above, the book value for debt securities classified as available for sale and equity securities with readily determinable fair value not held for trading is equal to fair market ~~value and the~~value. The book value for debt securities classified as held to maturity is equal to amortized cost.


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. Government sponsored enterprise debt	$	557,307	3.98	%	$	616	2.82	%	$	36,757	3.22	%	$	28,642	4.12	%	$	491,292	4.03	%	$	—	—	%
Corporate debt-domestic	250,351		4.42	%	—		—	%	89,262		5.42	%	149,868		3.87	%	11,221		3.71	%	—		—	%
U.S. Government agency debt	390,777		4.10	%	134		3.05	%	2,294		4.17	%	6,167		6.34	%	382,182		4.06	%	—		—	%
Municipal bonds	1,668		2.44	%	—		—	%	—		—	%	347		1.91	%	1,321		2.58	%	—		—	%
Corporate debt-foreign	10,451		3.64	%	—		—	%	8,368		3.81	%	2,083		2.98	%	—		—	%	—		—	%
Collateralized loan obligations	4,957		6.57	%	—		—	%	—		—	%	—		—	%	4,957		6.57	%	—		—	%
U.S. treasury securities	1,991		4.47	%	1,991		4.47	%	—		—	%	—		—	%	—		—	%	—		—	%

	$	1,217,502	4.12	%	$	2,741	4.03	%	$	136,681	4.71	%	$	187,107	3.98	%	$	890,973	4.05	%	$	—	—	%

Debt securities held to maturity	$	226,645	3.40	%	$	—	—	%	$	—	—	%	$	19,099	2.30	%	$	207,546	3.50	%	$	—	—	%

Equity securities with readily determinable fair value not held for trading	2,534		2.80	%	—		—		—		—		—		—		—		—		2,534		2.80	%






Other securities	$	50,294	6.89	%	$	—	—	%	$	—	—	%	$	—	—	%	$	—	—	%	$	50,294	6.89	%
	$	1,496,975	4.10	%	$	2,741	4.03	%	$	136,681	4.71	%	$	206,206	3.82	%	$	1,098,519	3.95	%	$	52,828	6.69	%

113

(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
Securities held to maturity
U.S. Government sponsored enterprise debt $ 82,326
2.84 % $ —
— % $ —
—
$ —
— % $ 82,326
2.84 % $ —
— %
U.S. Government agency debt 2,862
2.73
—
—
—
—
—
—
2,862
2.73
—
—
85,188
2.84
—
—
—
—
—
—
85,188
2.84
—
—
Securities available for sale
U.S. Government sponsored enterprise debt $ 820,779
2.70 % $ 11
5.16 % $ 29,807
2.70 % $ 86,654
2.78 % $ 704,307
2.69 % $ —
— %
Corporate debt-domestic 316,387
3.12
40,804
2.66
249,709
3.17
25,874
3.35
—
—
—
—
U.S. Government agency debt 216,985
2.83
1,081
2.70
10,068
2.61
21,113
2.71
184,723
2.86
—
—
Municipal bonds 160,212
3.11
—
—
—
—
29,397
3.02
130,815
3.13
—
—
Corporate debt-foreign 36,168
3.38
—
—
36,168
3.38
—
—
—
—
—
—
Mutual funds 23,110
2.32
—
—
—
—
—
—
—
—
23,110
2.32
Commercial paper 12,410
2.77
12,410
2.77
—
—
—
—
—
—
—
—
1,586,051
2.85
54,306
2.69
325,752
3.13
163,038
2.90
1,019,845
2.78
23,110
2.32
Other securities
FHLB stock $ 57,139
6.19 % $ —
— % $ —
— % $ —
— % $ —
— % $ 57,139
6.19 %
Federal Reserve Bank stock 13,050
5.69
—
—
—
—
—
—
—
—
13,050
5.69
70,189
6.10
—
—
—
—
—
—
—
—
70,189
6.10
$ 1,741,428
2.98 % $ 54,306
2.69 % $ 325,752
3.13 % $ 163,038
2.90 % $ 1,105,033
2.78 % $ 93,299
5.16 %

The investment portfolio’s average effective duration in years was ~~3.4, 3.3~~5.0, 4.9 and ~~3.1 years~~3.6 as of December 31, ~~2018, 2017~~2023, 2022 and ~~2016,~~2021, respectively. ~~These~~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. Contractual maturities of investment securities are adjusted for anticipated prepayments of amortizing U.S. ~~Government~~government sponsored agency debt and enterprise debt securities, which shorten the average lives of these investments.

~~124~~

Management evaluates securities for other-than-temporary impairment, or OTTI, at least semi-annually, and more frequently when economic or market conditions warrant such an evaluation. For securities in an unrealized loss position, management considers the extent and duration of the unrealized loss, and the financial condition and near-term prospects of the issuer. Management also assesses whether it intends to sell, or it is more likely than not that it will be required to sell, a security in an unrealized loss position before recovery of its amortized cost basis. If either of these criteria regarding intent or requirement to sell is met, the entire difference between amortized cost and fair value is recognized as an impairment through earnings. For debt securities that do not meet the aforementioned criteria, the amount of impairment is split into two components as follows: OTTI related to credit losses, which must be recognized in the income statement; and OTTI related to other factors, such as interests rate changes which is recognized in other comprehensive income. The credit loss is defined as the difference between the present value of the cash flows expected to be collected and the amortized cost basis. For equity securities, the entire amount of impairment is recognized through earnings.

Goodwill. Goodwill was $19.2 million atand $19.5 million as of December 31, ~~2018, 2017~~2023 and ~~2016.~~2022, respectively. Goodwill mainly represents the excess of consideration paid over the fair value of the net assets of a savings bank acquired in 2006. In 2023, the Company recorded goodwill of $1.0 million in connection with a business acquisition completed by Amerant Mortgage in 2023. The Company recorded total goodwill impairment losses of $1.3 million in 2023 related to its subsidiaries Amerant Mortgage and the Cayman Bank. See Note 1 of our audited consolidated financial statements in this Form-10-K for more information about the business acquisition completed by Amerant Mortgage and the goodwill impairment charge recorded in 2023.

~~Liabilities.~~

Liabilities

Total liabilities ~~decreased $306.4 million, or 3.99%, to $7.4~~were $9.0 billion at December 31, ~~2018~~2023, an increase of $0.6 billion, or 6.6%, compared to ~~$7.7~~$8.4 billion at December 31, ~~2017.~~2022. This ~~decrease~~ was ~~mainly~~primarily driven by ~~a decline~~net increases of: (i) $0.9 billion, or 12.1%, in total deposits, ~~which include lower international~~mainly due to an increase in time deposits as well as interest bearing demand deposits. These increases were partially offset by ~~increased domestic~~net decreases of: (i) $261.5 million, or 28.8%, in advances from the FHLB, including the repayment of $2.2 billion, which was partially offset by the addition of $2.0 billion of these borrowings in 2023; (ii) a decrease of $17.0 million, or 12.1%, in long-term lease liability primarily resulting from the modification of a lease in 2023; and (iii) a net decrease of $16.6 million in obligations on derivative contracts margin requirements. See “Capital Resources and Liquidity Management” for more details on the changes of FHLB advances and subordinated notes and “Deposits” for more details on the changes of total deposits.

Deposits

We continue with our efforts in growing our deposits. Our efforts include the additions of retail, private and commercial banking team members, which contributed to increasing deposit levels in 2023. See ~~discussion on deposits further below.~~ “Our Company- Business Developments” for additional information.

Total ~~liabilities decreased $46.2 million, or 0.60%, to $7.68~~deposits were $7.9 billion at December 31, ~~2017 as~~2023, an increase of $0.9 billion, or 12.1%, compared to ~~$7.73 billion at~~ December 31, ~~2016. This decrease~~2022. The increase in deposits was mainly due to a net increase of $568.8 million or 32.9%, in time deposits in 2023 compared to 2022, which includes increases of $458.1 million, or 40.9%, in customer CDs and $110.8 million, or 18.2%, in brokered time deposits. In addition, there was a net increase of $281.8 million, or 5.3%, in core deposits which include increases of: (i) $260.2 million, or 11.3%, in interest bearing transaction accounts, primarily due to ~~a decrease~~increase in ~~total~~reciprocal deposits, municipalities and ~~the maturity in 2017 of all outstanding securities sold under agreements to repurchase outstanding at the close of 2016, partially offset by an increase of time deposits~~domestic businesses and ~~a higher outstanding balance of advances from the FHLB and other borrowings.~~

~~Deposits~~

~~Total deposits decreased $290.3~~(ii) $59.3 million, or ~~4.59%~~4.3%, ~~to $6.0 billion at December 31, 2018 compared to $6.3 billion at December 31, 2017. In 2018, decreases of $208.7 million in interest bearing, $126.9 million~~ in noninterest bearing transaction ~~accounts, and $95.4 million in savings and money market account deposits were partially offset by a $140.7 million~~accounts. The increase in ~~time deposits. These changes in~~core deposits and deposit mix were largely affected by declines in deposits from Venezuela customers, as discussed below. The increase of $140.7 million in time deposits include $278.6 million in retail time deposits,was partially offset by a decrease of ~~$137.9~~$37.6 million, or 2.3%, in ~~brokered time deposits.~~ savings and money market deposit accounts.

The increase in ~~retail time deposits reflects~~transaction account balances in 2023 compared to 2022 includes $0.3 billion or 5.4%, in higher customer account balances, partially offset by a ~~shift~~total decrease of $3.2 million, 15.4%, or in ~~customers’ deposit preferences as~~brokered interest ~~rates increased~~bearing and ~~we promoted longer time deposits by launching successful marketing campaigns offering competitive~~money market ~~rates during the period to increase these deposits, and in anticipation~~deposits.

As of ~~higher future interest rates.~~

~~During the year ended~~ December 31, ~~2018,~~2023 total brokered deposits were $736.9 million, an increase of ~~customers domiciled in Venezuela decreased by $453.2~~$107.6 million, or ~~14.40%~~17.1%, compared to $629.3 million at December 31, 2022.

114

Domestic deposits increased $0.8 billion, or 17.5%, to ~~$2.7~~$5.4 billion at December 31, ~~2018~~2023 from ~~$3.1~~$4.6 billion at December 31, ~~2017. In addition, deposit balances from other international customer~~2022. Foreign deposits ~~declined $15.6 million during 2018. These decreases were partially offset by an increase of $178.6~~increased $41.5 million, or ~~6.33%~~1.7%, in ~~balances~~2023 from domestic customer deposits. The trend of higher balances from U.S. customers reflects the Company’s continued focus on increasing the number of U.S. domestic customers while preserving valued foreign customer relationships.

~~125~~

~~Total deposits decreased $254.4 million, 3.87%, to $6.3~~$2.4 billion at December 31, ~~2017 as compared to $6.6 billion at~~2022. See discussions further below.

At December 31, ~~2016. In 2017, an increase in time deposits of $409.2 million partially offset decreases of $211.1 million, $239.4 million~~2023 and $213.1 million in noninterest bearing, interest bearing, and savings and money market account balances, respectively. The increase of $409.2 million in time deposits includes $320.2 million in retail time deposits, and an increase of $89.0 million in brokered deposits. In 2017, the deposits of customers domiciled in Venezuela decreased by $530.1 million, or 14.41%, and deposits from other countries, mainly in Latin America and the Caribbean, decreased $63.7 million, or 15.32%. These decreases were partially offset by an increase of $339.4 million, or $13.67%, in balances from U.S. customer deposits. The trend in higher retail time deposits balances in 2017 is mainly the result of campaigns aimed at capturing these types of longer duration deposits at current market rates, as part of the strategy to position the balance sheet to benefit from expected future increases in market interest rates, and to attract domestic deposits and replace foreign deposits. The trend of higher balances from U.S. customer deposits reflects the Company’s focus on increasing its visibility to U.S. domestic customers, on reducing its perceived reliance on customer deposits from foreign sources, on minimizing its concentration of large fund providers, and actively managing potential regulatory risks associated with its deposits.

The Bank uses the Federal Financial Institutions Examination Council’s, or FFIEC’s, Uniform Bank Performance Report, or UBPR, definition of core deposits, which consists of all relationships under $250,000. Core deposits, which exclude brokered time deposits and retail time deposits of $250,000 or more, were $4.7 billion and $4.9 billion as of December 31, ~~2018 and 2017, respectively. Core deposits represented 77.46% and 77.76%~~2022, approximately 65% of our total deposits at ~~those~~both dates ~~respectively. The slight decline in core deposits since~~were FDIC insured. In addition, at December 31, ~~2017 resulted primarily from a combination of the Company closing certain foreign customer accounts~~2023 and ~~foreign customers drawing down their account balances.~~

~~We utilize brokered deposits and, as of~~ December 31, ~~2018 and 2017,~~2022, we ~~had $642.1~~carried $423.0 million and ~~$780.0~~$261.8 million, respectively, in ~~brokered~~qualified public deposits, which ~~represented 10.64%~~are subject to collateral maintenance requirements by the state of Florida.

At December 31, 2023, reciprocal deposits were $1.0 billion and ~~12.34%, respectively, of~~held by over 200 customers compared to $418 million and held by over 27 customers at December 31, 2022. Reciprocal deposits are 100% insured by the FDIC, primarily through a deposit network. We are actively offering this alternative to our ~~total deposits.~~high balance customers.

~~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.~~

Years Ended December 31,
(in thousands, except percentages)

2018 2017 2016
Amount Rates Amount Rates Amount Rates
Non-interest bearing demand deposits $ 846,709
— % $ 1,078,225
— % $ 1,147,520
— %
Interest bearing deposits:
Checking and saving accounts:
NOW 1,397,783
0.05 % 1,627,546
0.02 % 1,811,316
0.04 %
Money market 1,215,635
1.06 % 1,312,252
0.67 % 1,390,574
0.59 %
Savings 422,672
0.02 % 474,569
0.02 % 511,576
0.02 %
Time Deposits 2,366,423
1.78 % 2,031,970
1.32 % 1,638,051
1.01 %
5,402,513
1.03 % 5,446,337
0.66 % 5,351,517
0.48 %
$ 6,249,222
0.89 % $ 6,524,562
0.55 % $ 6,499,037
0.39 %

~~126~~

Deposits by Country of Domicile

The following table sets forth the deposits by country of domicile of the depositor as of the dates presented.


	December 31,
(in thousands)	2023		2022		2021		2020		2019

Domestic (1)	$	5,430,059	$	4,620,906	$	3,137,258	$	3,202,936	$	3,121,827
Foreign:
Venezuela (2)	1,870,979		1,911,551		2,019,480		2,119,412		2,270,970
Others	593,825		511,742		474,133		409,295		364,346
Total foreign (3)	2,464,804		2,423,293		2,493,613		2,528,707		2,635,316
Total deposits	$	7,894,863	$	7,044,199	$	5,630,871	$	5,731,643	$	5,757,143

December 31,
(in thousands)

2018 2017 2016 2015 2014
Domestic $ 3,001,366
$ 2,822,799
$ 2,484,145
$ 2,030,078
$ 1,347,408
Foreign:
Venezuela 2,694,690
3,147,911
3,676,417
3,923,271
4,381,034
Others 336,630
352,263
416,803
566,325
546,638
Total foreign 3,031,320
3,500,174
4,093,220
4,489,596
4,927,672
Total deposits $ 6,032,686
$ 6,322,973
$ 6,577,365
$ 6,519,674
$ 6,275,080
___________

~~Our domestic~~(1) Includes brokered deposits ~~have increased every year since 2014, while~~of $736.9 million, $629.3 million, $387.3 million, $634.5 million and $682.4 million at December 31, 2023, 2022, 2021, 2020 and 2019, respectively.

(2) Based upon the diligence we customarily perform to "know our ~~total foreign deposits, especially deposits from Venezuelans, have declined during~~customers" for anti-money laundering, OFAC and sanctions purposes, we believe that the ~~same period. Most of the~~current U.S. economic embargo on certain Venezuelan ~~withdrawals from deposit accounts at the Bank are believed to be due to the effect of adverse economic conditions in Venezuela on~~persons will not adversely affect our ~~customers. Additionally, in 2018 and 2017, the Bank selectively closed accounts held by~~ Venezuelan ~~and other international customers with approximately $272.4 million of deposits to reduce its compliance costs and risks. We believe our deposit de-risking process is substantially complete.~~customer relationships, generally.

(3) Our other foreign deposits do not include deposits from ~~non-Venezuelan affiliates of MSF.~~Venezuelan resident customers.

The following table shows the ~~amounts and percentage changes in~~increase or (decrease), during the year our domestic and foreign deposits, including Venezuelan ~~deposits.~~resident customer deposits:

~~Percentage Changes~~


	Years Ended December 31,
	2023				2022				2021				2020

(in thousands, except percentages)	Amount		%		Amount		%		Amount		%		Amount		%
Domestic (1)	$	809,153	17.5	%	$	1,483,648	47.3	%	$	(65,678)	(2.1)	%	$	81,109	2.6	%
Foreign:
Venezuela	(40,572)		(2.1)	%	(107,929)		(5.3)	%	(99,932)		(4.7)	%	(151,558)		(6.7)	%
Others	82,083		16.0	%	37,609		7.9	%	64,838		15.8	%	44,949		12.3	%
Total foreign	41,511		1.7	%	(70,320)		(2.8)	%	(35,094)		(1.4)	%	(106,609)		(4.0)	%
Total deposits	$	850,664	12.1	%	$	1,413,328	25.1	%	$	(100,772)	(1.8)	%	$	(25,500)	(0.4)	%

___________

(1) Domestic deposits, excluding brokered deposits, increased $701.5 million, $1.2 billion, $181.5 million and $109.0 million in ~~Deposits~~

Years Ended December 31,
2018 2017 2016 2015
Deposits
Domestic 6.33 % 13.63 % 22.37 % 50.67 %
Foreign:
Venezuela (14.40 ) (14.38 ) (6.29 ) (10.45 )
Others (4.44 ) (15.48 ) (26.40 ) 3.60
Total foreign (13.40 ) (14.49 ) (8.83 ) (8.89 )
Total deposits (4.59 ) (3.87 ) (0.88 ) (3.90 )

~~Changes to Deposits Between Reporting Dates~~

Years Ended December 31,
(in thousands)

2018 2017 2016 2015
Domestic $ 178,567
$ 338,654
$ 454,067
$ 682,670
Foreign:
Venezuela (453,221 ) (528,506 ) (246,854 ) (457,763 )
Others (15,633 ) (64,540 ) (149,522 ) 19,687
Total foreign (468,854 ) (593,046 ) (396,376 ) (438,076 )
Total deposits $ (290,287 ) $ (254,392 ) $ 57,691
$ 244,594

2023, 2022, 2021 and 2020, respectively.

~~127~~

115

Domestic deposits increased $0.8 billion, or 17.5%, in 2023 to $5.4 billion at December 31, 2023 from $4.6 billion at December 31, 2022. 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. In addition, there was an increase of $309.6 million, or 77.2%, in domestic brokered time deposits as the Company elected to increase these deposits in order to lock lower interest rates in light of rising market rates.

~~Changes~~

Foreign deposits increased $41.5 million, or 1.7%, in 2023 to ~~Deposits Due~~$2.5 billion at December 31, 2023 from $2.4 billion at December 31, 2022, primarily driven by an increase of $82.1 million, or 16.0%, in deposits from countries other than Venezuela, primarily driven by our efforts to ~~Selected Account Closings~~grow deposits from customers in those other markets. This was partially offset by a decrease of $40.6 million, or 2.1%, in deposits from customers domiciled in Venezuela.

Core deposits

Core deposits were $5.6 billion, $5.3 billion and $4.3 billion as of December 31, 2023, 2022 and 2021, respectively. Core deposits represented 70.9%, 75.5% and 76.2% of our total deposits at those dates, respectively. The increase of $0.3 billion, or 5.3%, in core deposits in 2023 was mainly driven by the previously mentioned increase in interest bearing transaction accounts, primarily due to new domestic deposits and in noninterest bearing transaction accounts. Core deposits consist of total deposits excluding all time deposits.

Brokered deposits

We utilize brokered deposits primarily as an Asset/Liability Management tool. As of December 31, 2023 and 2022, we had $736.9 million and $629.3 million in brokered deposits, which represented 9.3% and 8.9%, respectively, of our total deposits. Brokered deposits increased $107.6 million, or 17.1%, in 2023 compared to December 31, 2022, mainly due to an increase in time deposits.

As of December 31, 2023 and 2022, brokered deposits included time deposits of $719.5 million and $608.7 million, respectively, and interest bearing demand and money market deposits totaling $17.4 million and $20.5 million, respectively. The Company has not historically sold brokered CDs in denominations over $100,000.

116

Year Ended December 31,
(in thousands, except percentages) 2018 2017
Foreign deposits, including Venezuela, closed by the Bank (in thousands)
$ 76,380
$ 196,083
Bank deposit closing as a % of the change in total foreign deposits, including Venezuela 16.29 % 33.06 %
Percentage change in Venezuela deposits excluding selected accounts closing (11.33 )% (9.19 )%

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.


	Years Ended December 31,
	2023				2022				2021
(in thousands, except percentages)	Amount		Rates		Amount		Rates		Amount		Rates

Non-interest bearing demand deposits	$	1,356,538	—	%	$	1,286,570	—	%	$	1,046,766	—	%
Interest bearing deposits:
Checking and saving accounts:
Interest bearing demand (1)	2,486,190		2.52	%	1,872,100		0.81	%	1,309,699		0.05	%
Money market (2)	1,226,311		3.44	%	1,323,563		0.88	%	1,311,278		0.27	%
Savings	284,510		0.05	%	319,631		0.04	%	324,618		0.02	%
Time Deposits (3)	2,074,549		3.80	%	1,334,605		1.66	%	1,668,459		1.42	%
	6,071,560		3.03	%	4,849,899		1.01	%	4,614,054		0.60	%
	$	7,428,098	2.47	%	$	6,136,469	0.80	%	$	5,660,820	0.49	%

___________

(1) In the years ended December 31, 2023, 2022 and 2021 includes reciprocal deposits with a total average balance of $584.0 million (average rate - 5.23%), $253.8 million (average rate - 1.35%), and $89.6 million (average rate - 0.13%), respectively.

(2) In the years ended December 31, 2023, 2022 and 2021, includes brokered deposits with a total average balance of $13.3 million (average rate - 5.07%), $43.3 million (average rate - 1.47%), and $109.3 million (average rate - 0.33%), respectively.

(3) In the years ended December 31, 2023, 2022 and 2021, includes brokered deposits with average balances of $673.2 million, $359.7 million, and $414.4 million, respectively, with average rates of 4.36%, 2.51%, and 2.11%, respectively.

117

Large Fund Providers

Large fund providers consists of third party relationships with balances over $20 million. At December 31, ~~2018~~2023 and ~~2017,~~2022, our large fund providers, ~~defined as third-party customer relationships with balances of over $10.0 million,~~ included ~~six~~19 and ~~four~~22 deposit relationships, respectively, with total balances of ~~$74.4 million~~$1.1 billion and ~~$59.0 million,~~$1.2 billion, respectively. ~~Additionally, at~~The decrease in large fund providers in December 31, ~~2018~~2023 was mainly driven by the Company’s continued focus on depository relationship. At December 31, 2023 and ~~2017 deposits~~December 31, 2022, approximately 51% and 60%, respectively, of these deposit balances from ~~MSF or its non-U.S. affiliates totaled $9.6 million and $49.5 million, respectively. These MSF-related deposits~~large fund providers were insured by the FDIC, as most of these funds are ~~expected to further decline in 2019.~~acquired via deposit networks.

Large Time Deposits by Maturity

The following table sets forth the maturities of our time deposits with individual balances equal to or greater than $100,000 as of the dates presented.


	December 31,
(in thousands, except percentages)	2023				2022				2021
Less than 3 months	$	178,102	13.7	%	$	140,292	15.1	%	$	261,779	31.1	%
3 to 6 months	239,843		18.4	%	148,137		16.0	%	134,709		16.0	%
6 to 12 months	698,897		53.6	%	497,436		53.6	%	153,695		18.3	%
1 to 3 years	174,792		13.4	%	135,663		14.6	%	281,366		33.5	%
Over 3 years	12,974		0.9	%	6,889		0.7	%	8,902		1.1	%
Total	$	1,304,608	100.0	%	$	928,417	100.0	%	$	840,451	100.0	%

118

December 31,
(in thousands, except percentages) 2018 2017 2016
Less than 3 months $ 339,485
24.34 % $ 301,872
25.56 % $ 216,742
23.50 %
3 to 6 months 305,351
21.89 % 220,862
18.70 % 188,956
20.49 %
6 to 12 months 331,739
23.78 % 324,011
27.44 % 277,810
30.12 %
1 to 3 years 205,900
14.76 % 197,119
16.69 % 230,068
24.94 %
Over 3 years 212,281
15.23 % 137,088
11.61 % 8,810
0.95 %
Total $ 1,394,756
100.00 % $ 1,180,952
100.00 % $ 922,386
100.00 %

Short-Term Borrowings. In addition to deposits, we use short-term borrowings, such as FHLB advances, and less frequently, advances from other banks, as a source of funds to meet the daily liquidity needs of our customers and fund growth in earning assets. Short-term borrowings have maturities of 12 months or less as of the reported period-end. ~~The majority~~All of our outstanding short-term borrowings atduring the three years ended December 31, ~~2018, 2017~~2023 and ~~2016~~as of December 31, 2023 and 2022 corresponded to FHLB ~~advances and, to a lesser extent, included borrowings from other banks.~~advances. There were no other borrowings or repurchase agreements outstanding as of December 31, ~~2018~~2023, 2022 and ~~2017. There were $50.0 million in outstanding repurchase agreements as of December 31, 2016.~~

~~128~~

2021.

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, ~~2018, 2017~~2023, 2022 and ~~2016.~~2021.


	Years Ended December 31,
(in thousands, except percentages)	2023			2022			2021
Outstanding at period-end	$	40,000		$	304,821		$	—
Average amount	49,572			111,448			28,273
Maximum amount outstanding at any month-end	204,863			304,821			130,000
Weighted average interest rate:
During period	4.27		%	1.98		%	0.36		%
End of period	5.46		%	3.17		%	—		%

119

Years Ended December 31,
(in thousands, except percentages) 2018 2017 2016
Outstanding at period-end $ 440,000
$ 567,000
$ 505,000
Average amount 505,417
460,708
379,833
Maximum amount outstanding at any month-end 632,000
567,000
545,250
Weighted average interest rate:
During period 2.10 % 1.43 % 0.92 %
End of period 2.52 % 1.43 % 1.22 %

Return on Equity and Assets

The following table shows return on average assets, return on average equity, and average equity to average assets ratio for the periods presented:

Years Ended December 31,
(in thousands, except percentages and per share data) 2018 2017 2016
Net income $ 45,833
$ 43,057
$ 23,579
Basic and diluted earnings per share 1.08
1.01
0.55

Average total assets $ 8,373,108
$ 8,487,285
$ 8,196,523
Average stockholders' equity 728,175
766,083
717,727
Net income / Average total assets (ROA) 0.55 % 0.51 % 0.29 %
Net income / Average stockholders' equity (ROE) 6.29 % 5.62 % 3.29 %
Net income / Average tangible common equity (ROATCE) 6.48 % 5.78 % 3.39 %
Average stockholders' equity / Average total assets ratio 8.70 % 9.03 % 8.76 %

Adjusted net income ⁽¹⁾
$ 57,923
$ 48,403
$ 23,579
Adjusted basic and diluted earnings per share ⁽¹⁾
1.36
1.14
0.55

Adjusted net income / Average total assets (ROA) ⁽¹⁾
0.69 % 0.57 % 0.29 %
Adjusted net income / Average stockholders' equity (ROE) ⁽¹⁾
7.95 % 6.32 % 3.29 %
Adjusted net income / Average tangible common equity (ROATCE) ⁽¹⁾
8.19 % 6.49 % 3.39 %


	Years Ended December 31,
(in thousands, except percentages and per share data)	2023			2022			2021
Net income attributable to the Company	$	32,490		$	63,310		$	112,921
Basic earnings per common share	0.97			1.87			3.04
Diluted earnings per common share (1)	0.96			1.85			3.01

Average total assets	$	9,452,221		$	8,187,688		$	7,533,016
Average stockholders' equity	740,630			749,549			795,841
Net income attributable to the Company/ Average total assets (ROA)	0.34		%	0.77		%	1.50		%
Net income attributable to the Company / Average stockholders' equity (ROE)	4.39		%	8.45		%	14.19		%

Average stockholders' equity / Average total assets ratio	7.84		%	9.15		%	10.56		%

__________________


~~(1)~~	~~See “Non-GAAP Financial Measures Reconciliation” for an explanation of certain non-GAAP measures.~~

~~129~~

~~We had no outstanding dilutive instruments issued as~~(1)As of December 31, ~~2018~~2023, 2022 and ~~2017. Consequently,~~2021, potential dilutive instruments consisted of unvested shares of restricted stock, restricted stock units and performance stock units. 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.

In 2023, basic and diluted earnings per share are equal in each of the periods presented. As of December 31, 2018, 736,839 unvested shares of restricted stock were excluded from the diluted earnings per share computation because when these share awards are multiplied by the average market price per share at that date, more shares would have been issued than restricted shares awarded. Therefore, such awards would have an anti-dilutive effect. As of December 31, 2017 and 2016, the Company had no other outstanding or potentially dilutive instruments.

~~During the years ended December 31, 2018 and 2017, earnings per share increased~~decreased compared to 2022, primarily as a result of ~~higher~~lower net income earned during ~~those years.~~the period.

Capital Resources and Liquidity Management

Capital ~~Resources.~~ Resources

Stockholders’ equity is influenced primarily by earnings, dividends, if any, and changes in ~~AOCI~~Accumulated Other Comprehensive Income or Loss (“AOCI” or “AOCL”) caused primarily by fluctuations in unrealized holding gains or losses, net of taxes, on debt securities available for sale ~~investment securities~~ and derivative instruments. AOCI isor AOCL are not included for purposes of determining our capital for holding and bank regulatory purposes.

~~2018 compared to 2017~~

Stockholders’ equity ~~decreased $6.0 million, or 0.80%, to $747.4~~was $736.1 million as of December 31, ~~2018, as~~2023, an increase of $30.3 million, or 4.3%, compared to $705.7 million as of December 31, ~~2017. The decrease resulted~~2022 . This increase was primarily driven by: (i) net income of $32.5 million in 2023; (ii) after-tax net unrealized holding gains of $9.4 million from the ~~Special Dividend~~change in the market value of ~~$40.0 million paid on March 13, 2018 to MSF prior to the record date for the Spin-off and a $12.0 million increase in AOCL mainly the result of lower~~debt securities available for sale, ~~valuations compared to December 31, 2017. The lower securities valuations~~and (iii) a net aggregate of $6.8 million in connection with stock-based incentive compensation programs. These increases were ~~due primarily to increases in market interest rates. Partially offsetting these results was the $45.8~~partially offset by: (i) $12.1 million ~~net income in 2018.~~

~~Initial Public Offering.~~ ~~On December 21, 2018,~~of dividends declared and paid by the Company ~~closed the IPO~~in 2023; and (ii) an aggregate of ~~6,300,000 shares~~$4.9 million of ~~its~~ Class A common stock repurchased in the first nine months of 2023, under a stock repurchase program launched in the first quarter of 2023. See more details on the stock repurchase program launched in the first quarter of 2023 further below.

120

Non-controlling Interest

The Company records net loss attributable to Non-controlling interests in its condensed consolidated statement of operations and comprehensive income (loss) equal to the percentage of the economic or ownership interest retained in the interest of Amerant Mortgage, and presents non-controlling interests as a component of stockholders’ equity on the consolidated balance sheets. In the fourth quarter of 2023, the Company increased its ownership interest in Amerant Mortgage to 100% as of December 31, 2023 from 80% at December 31, 2022. This transaction had no material impact to the Company’s results of operations in 2023. In connection with the change in ownership interest, which brought the non-controlling interest share to zero, the Company derecognized the equity attributable to noncontrolling interest of $3.8 million (a net loss) as of December 31, 2023, with a ~~public offering price~~corresponding reduction to additional paid-in capital at that date. Equity attributable to the non-controlling interest was a net loss of ~~$13.00 per share. Of~~$2.1 million as of December 31, 2022. In 2023 and 2022, net loss attributable to the ~~6,300,000~~non-controlling interest was approximately $1.7 million and $1.3 million, respectively.

Common Stock Transactions

Clean-Up Merger. On November 17, 2021, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”), between the Company and its newly-created, wholly-owned subsidiary, Amerant Merger SPV Inc. (“Merger Sub”), pursuant to which the Merger Sub would merge with and into the Company (the “Clean-up Merger”), and on November 17, 2021, the Company filed articles of merger (the “Articles of Merger”) with the Florida Secretary of State. In connection with the Clean-up Merger, Merger Sub merged with and into the Company as of 12:01 a.m. on November 18, 2021 (the “Effective Time of the Clean-up Merger”). The Clean-up Merger had been previously approved by the Company’s shareholders on November 15, 2021. Under the terms of the Clean-up Merger, each outstanding share of Class B common stock was converted to 0.95 of a share of Class A common stock without any action on the part of the holders of Class B common stock; however, any shareholder, together with its affiliates, who owned more than 8.9% of the outstanding shares of Class A common stock ~~sold in~~a result of the ~~IPO, the Company sold 1,377,523~~Clean-up Merger, such holder’s shares of Class A common stock ~~and MSF sold~~or Class B common stock, as the case may have been, was converted into shares of a new class of Non-Voting Class A common stock, solely with respect to holdings that were in excess of the 8.9% limitation. 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 ~~its 4,922,477~~the Clean-up Merger received a cash payment in lieu of such fractional shares. Following the Clean-up Merger, any holder who beneficially owned fewer than 100 shares of Class A common stock received cash in lieu of Class A common stock. In ~~addition,~~November 2021, the Company ~~granted~~repurchased 281,725 shares of Class A Common Stock that were cashed out in accordance with the ~~underwriters~~terms of the Clean-up Merger. These shares were repurchased at a ~~30-day option~~price per share of $30.10 and an aggregate purchase of approximately $8.5 million.

From and after the Effective Time of the Clean-up Merger, the separate corporate existence of Merger Sub ceased and the Company continued as the surviving corporation. In connection with the Clean-up Merger, the number of shares that the Company is authorized to issue decreased by 250,000,000. As a result of the Clean-up Merger, the Class B Common Stock is no longer authorized or outstanding, and November 17, 2021 was the last day it traded on the Nasdaq Global Select Market.

121

Common Stock Repurchases and cancellation of Treasury Shares.

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 ~~additional 945,000~~aggregate amount of $25 million of its shares of Class A common stock (the “2023 Class A Common Stock Repurchase Program”). The 2023 Class A Common Stock Repurchase Program was set to expire on December 31, 2023 and on December 15, 2023, the Company announced that the Board approved to extend the expiration date to December 31, 2024. In 2023, we repurchased an aggregate of 259,853 shares of Class A common stock at a weighted average price of $18.98 per share, under the ~~public offering~~2023 Class A Common Stock Repurchase Program. The aggregate purchase price ~~less~~for these transactions was approximately$4.9 million, including transaction costs. At December 2023, the ~~underwriting discount,~~Company had $20 million available for repurchase under this repurchase program.

On January 31, 2022, the Company announced that the Board of Directors authorized a new repurchase program pursuant to ~~cover over-allotments. The net proceeds~~which the Company may purchase, from time to ~~us from the sale~~time, up to an aggregate amount of $50 million of its shares of ~~our~~ Class A common stock in(the “New Class A Common Stock Repurchase Program”). In 2022, the ~~IPO in December 2018 were approximately $17.9 million. We received no proceeds from the sale~~Company repurchased an aggregate of 1,602,887 shares of ~~our~~ 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. On May 19, 2022, the Company announced the completion of the New Common Stock Repurchase Program.

In November 2021, the Company repurchased 281,725 shares of Class A Common Stock that were cashed out in accordance with the ~~IPO by MSF.~~terms of the Clean-up Merger. These shares were repurchased at a weighted average price per share of $30.10 and an aggregate purchase of approximately $8.5 million.

~~On January 23, 2019,~~

In September 2021, the ~~underwriters partially exercised their over-allotment option by purchasing 229,019~~Company’s Board of Directors authorized a stock repurchase program which provided for the potential to repurchase up to $50 million of shares of the Company’s Class A common stock ~~at the public offering price of $13.00 per share of Class~~(the “Class A ~~common stock. The net proceeds to us from this transaction were approximately $3.0 million.~~

~~MSF agreed to pay all underwriting discounts, commissions and offering expenses with respect to the IPO.~~

~~130~~

~~Class B~~ Common Stock Repurchase ~~at 97% of the sale price of Class A common stock.~~ ~~On December 27, 2018, following the December 21, 2018 closing of the Company’s IPO,~~Program”). In 2022 and 2021, the Company repurchased an aggregate of 652,118 shares and ~~MSF entered into the Class B Purchase Agreement. Pursuant to the Class B Purchase Agreement, the Company agreed to purchase up to all 3,532,457~~893,394 shares, of its nonvoting Class B common stock from MSF with the proceeds from Company sales of its Class A common stock. The purchase price of the shares of Class B common stock was 97% of the sales price of the sharesrespectively, of Class A common stock ~~sold by the Company to finance its repurchases of Class B common stock held by MSF. The repurchase~~at a weighted average price ~~for the Class B common stock was based upon various factors, including the advice of the Company’s financial advisors.~~

~~On December 28, 2018, the Company completed the purchase of 1,420,136 shares of Class B common stock from MSF for $12.61~~ per share of $33.96 and $31.18, respectively, under the Class ~~B common stock, representing an~~A Common Stock Repurchase Program. In 2022 and 2021, the aggregate purchase price for these transactions was approximately $22.1 million and $27.9 million, respectively, including transaction costs. On January 31, 2022, the Company announced the completion of ~~approximately $17.9 million. These 1,420,136 shares of~~the Class ~~B common stock are held at December 31, 2018 as treasury stock under the cost method.~~A Common Stock Repurchase Program.

On March ~~7, 2019,~~10, 2021, the ~~Company completed~~Company’s Board of Directors approved a stock repurchase program which provided for the ~~purchase~~potential repurchase of ~~the remaining 2,112,321~~up to $40 million of shares of the Company’s Class B common stock ~~from MSF for a weighted average purchase price of $13.48 per share of Class~~(the “Class B ~~common stock, representing~~Common Stock Repurchase Program”). In 2021, the Company repurchased an aggregate ~~purchase price~~ of approximately $28.5 million at 97% of the sale price of Class A common stock subsequent to December 31, 2018. The repurchase price for the Class B common stock was based upon various factors, including the advice of the Company’s financial advisors. All 3,532,457565,232 shares of Class B common stock ~~repurchased from MSF are held as treasury stock~~at a weighted average price per share of $16.92, under the ~~cost method.~~Class B Common Stock Repurchase Program. The aggregate purchase price for these transactions was approximately $9.6 million, including transaction costs. In September 2021, in connection with the Clean-up Merger, the Company’s Board of Directors terminated the Class B Common Stock Repurchase Program.

~~On February 1, 2019~~

122

In 2023, 2022 and ~~February 28, 2019,~~2021, the ~~Company issued and sold 153,846~~Company’s Board of Directors authorized the cancellation of all shares ~~and 1,750,000 shares, respectively,~~ of Class A common stock ~~in a private placement exempt from registration under Section 4(a)(2) of the Securities Act~~ and ~~SEC Rule 506 (the “Private Placements”). The Company used the net proceeds from the Private Placements to fund the Final~~ Class B ~~Repurchase.~~

~~2017 compared to 2016~~

~~Shareholder’s equity increased $48.7 million, or 6.91%, to $753.5 million~~common stock previously held as treasury stock, including all shares repurchased in 2023, 2022 and 2021. Therefore, the Company had no shares of common stock held in treasury stock at December 31, ~~2017 as compared~~2023, 2022 and 2021.

Dividends

Set forth below are the details of dividends declared and paid by the Company for the periods ended December 31, 2023 and 2022 and 2021, and subsequent to December 31, ~~2016, primarily due to $43.1 million net income, and a net increase in other comprehensive income of $5.6 million recorded during the year.~~2023:

Declaration Date

Record Date

Payment Date

Dividend Per Share

Dividend Amount

01/17/2024

02/14/2024

02/29/2024

$0.09

$3.0 million

10/18/2023

11/14/2023

11/30/2023

$0.09

$3.0 million

07/19/2023

08/15/2023

08/31/2023

$0.09

$3.0 million

04/19/2023

05/15/2023

05/31/2023

$0.09

$3.0 million

01/18/2023

02/13/2023

02/28/2023

$0.09

$3.0 million

07/20/2022

08/17/2022

08/31/2022

$0.09

$3.0 million

04/13/2022

05/13/2022

05/31/2022

$0.09

$3.0 million

01/19/2022

02/11/2022

02/28/2022

$0.09

$3.2 million

12/09/2021

12/22/2021

01/15/2022

$0.06

$2.2 million

Liquidity ~~Management.~~Liquidity refers to our ability to meet the cash flow requirements of depositors and borrowers, while at the same time meeting our operating, capital and strategic cash flow needs, all at a reasonable cost. We continuously monitor our liquidity position to manage our assets and liabilities in a manner that will meet our short-term and long-term cash requirements. We manage our liquidity position to meet the daily cash flow needs of customers, while seeking an appropriate balance between assets and liabilities to meet the return on investment objectives of our shareholders.Management

Our liquidity position is supported by management of liquid assets and liabilities, and access to other sources of funds. Liquid assets include cash, deposits in banks, available-for-sale securities, and maturities of our securities and loans. Liquid liabilities include core deposits, and advancesAdvances from the FHLB, and other borrowings. Other potential sources of liquidity include the ability to acquire additional deposits and the sale of loans. Our short-term and long-term liquidity requirements are primarily to fund ongoing operations, including payment of interest on deposits and debt, extensions of credit to borrowers and capital expenditures. These liquidity requirements are met primarily through cash flow from operations, redeployment of prepaying and maturing balances in our loan and investment portfolios, advances from the FHLB and other borrowings and increases in customer deposits including time deposits. For additional information regarding our operating, investing and financing cash flows, see the consolidated statements of cash flows provided in our consolidated financial statements.

Integral to our liquidity management is the administration of short-term borrowings. To the extent we are unable to obtain sufficient liquidity through deposits, we will seek to meet our liquidity needs through wholesale funding, including brokered deposits, or other borrowings on either a short- or long-term basis.

~~131~~

borrowing capacity

At December 31, ~~2018~~2023 and ~~2017,~~2022, the Company had ~~$1.2~~$0.6 billion and $0.9 billion, respectively, of outstanding advances from the ~~FHLB and other borrowings.~~FHLB. During the year ended December 31, ~~2018,~~2023, the Company repaid ~~$1.3~~$2.2 billion of outstanding FHLB advances, and ~~other borrowings, and obtained new borrowing proceeds of $1.3~~borrowed $2.0 billion from these sources. There were no other borrowings as of December 31, 2018. As of December 31, 2017, other borrowings consisted of $12.0 million of short-term federal funds purchased from other banks which matured in January 2018. The following table summarizes the composition of our FHLB advances and other borrowings by type of interest rate:

December 31,
(in thousands) 2018 2017
Advances from the FHLB and other borrowings:
Fixed rate ranging from 1.50% to 3.86% (December 31, 2017 - 0.90% to 3.86%) $ 886,000
$ 918,000
Floating rate based on 3-month LIBOR ranging from 2.40% to 2.82% (December 31, 2017 - 1.23% to 1.71%) ⁽¹⁾
280,000
255,000
$ 1,166,000
$ 1,173,000

~~__________________~~


~~(1)~~	We have designated certain interest rate swaps as cash flow hedges to manage this variable interest rate exposure. Subsequently in 2019, we terminated these hedges at a gain because we expect the pace of future rate increases to decline and negatively impact the value of these contracts.

this source.

At December 31, ~~2018,~~2023 and 2022 advances from the FHLB ~~and other borrowings~~ had maturities through ~~2023 (2021 at~~2028 and 2027, respectively. At December 31, ~~2017) with~~2023, advances from the FHLB had fixed interest rates ranging from ~~1.50%~~0.61% to ~~3.86%~~4.90% and, ana weighted average rate of ~~2.46% (interest~~3.65% (fixed interest rates ranging from ~~0.90%~~0.61% to ~~3.86%~~2.45%, and ana weighted average rate of ~~1.88%~~2.45% at December 31, ~~2017)~~2022).

We also have available uncommitted federal funds credit lines with several U.S. banks and U.S. branches of foreign banks totaling $35.5 million and $60.5 million at December 31, 2018 and 2017, respectively. We have decreased our available credit lines with U.S. branches of foreign banks partially due to the decline in our international lending activities.

We had ~~$1.4 billion, $1.3~~$1.9 billion and ~~$1.6~~$1.7 billion of additional borrowing capacity with the FHLB as of December 31, ~~2018, 2017~~2023 and ~~2016,~~2022, respectively. This additional borrowing capacity is ~~primarily based on loans pledged as eligible collateral.~~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 also have available uncommitted federal funds credit lines with several banks. At December 31, 2023 and 2022, we had no outstanding obligations on uncommitted federal funds lines with banks.

There were no other borrowings as of December 31, 2023 and 2022.

123

Subordinated Notes

On March 9, 2022, the Company entered into a Subordinated Note Purchase Agreement (the “Purchase Agreement”) with the Company’s wholly-owned subsidiary Amerant Florida Bancorp Inc. (Amerant Florida Bancorp Inc. was merged with and into the Company during the three months ended September 30, 2022), and qualified institutional buyers pursuant to which 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. Net proceeds were $29.1 million, after estimated direct issuance costs of approximately $0.9 million. Unamortized direct issuance cost are deferred and amortized over the term of the Subordinated Notes of 10 years. These Subordinated Notes are unsecured, subordinated obligations of the Company and rank junior in right of payment to all of the Company’s current and future senior indebtedness. The Subordinated Notes have been structured to qualify as Tier 2 capital of the Company for regulatory capital purposes, and rank equally in right of payment to all of our existing and future subordinated indebtedness. See Note 10 to audited consolidated financial statements in this Form 10-K for more details.

Holding and Intermediate Holding Subsidiaries

We are a corporation separate and apart from the Bank and, therefore, must provide for our own liquidity. ~~Our~~Historically, our main source of funding ishas been dividends declared and paid to us by the Bank. ~~Additionally, our subsidiary Mercantil~~In addition, we issued the Senior Notes in 2020 and Subordinated notes in 2022. Also, as a result of the Amerant Florida ~~Bancorp Inc., or Mercantil Florida, which~~Merger, the Company is ~~an intermediate bank holding company~~now the obligor and ~~the obligor~~guarantor on our junior subordinated debt and the guarantor of the Senior Notes and Subordinated Notes. The Company held cash and cash equivalents of ~~$32.9~~$46.8 million as of December 31, ~~2018~~2023 and ~~$39.1~~$64.9 million as of December 31, ~~2017~~2022, in funds available to service ~~this~~its Senior Notes, Subordinated Notes and junior subordinated ~~debt.~~debt and for general corporate purposes, as a separate stand-alone entity. See discussion below for more details on the Amerant Florida Merger.

124

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. In connection with the Amerant Florida Merger, the Company assumed all assets and liabilities of Amerant Florida, including its direct ownership of the Bank, the common capital securities issued by the 5 trust subsidiaries, and the junior subordinated debentures issued by Amerant Florida and related agreements. The Amerant Florida Merger had no impact to the Company’s consolidated financial condition and results of operations. See Note 11 to our audited consolidated financial statements on this Form 10-K, for additional information on the common capital securities issued by the 5 trust subsidiaries, and the junior subordinated debentures.

Subsidiary Dividends

There are statutory and regulatory limitations that affect the ability of the Bank to pay dividends to the Company. These limitations exclude the effects of ~~AOCI and AOCL.~~AOCI. Management believes that these limitations will not affect ~~our~~the Company’s ability ~~and Mercantil Florida’s,~~ to meet ~~our~~its ongoing short-term cash obligations.See ~~— “Supervision~~“Supervision and ~~Regulation.”~~Regulation” in this Form 10-K.

~~132~~

~~Table~~In December 2023, the Boards of ~~Contents~~

Directors of the Bank approved the payment of cash dividend of $20 million by the Bank to Amerant Bancorp.

In January, March and April 2022, the Boards of Directors of the Bank and Amerant Florida approved the payment of cash dividends of $40 million, $40 million and $34 million, respectively on each date, by the Bank to Amerant Florida and in the same amounts by Amerant Florida to Amerant Bancorp.

In July 2021, the Boards of Directors of the Bank and Amerant Florida approved the payment of cash dividends from the Bank and Amerant Florida to Amerant Bancorp, and declared dividend payments of: (i) $40.0 million from Amerant Florida to Amerant Bancorp, and (ii) $30.0 million from the Bank to Amerant Florida.

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. Failure to meet regulatory capital requirements may result in certain discretionary, and possible mandatory actions by regulators that, if taken, could have a direct material effect on our business, financial condition and results of operation. Under the federal capital adequacy rules and the regulatory framework for “prompt corrective action”, we must meet specific capital guidelines that involve quantitative measures of our assets, liabilities and certain off-balance sheet items as calculated for regulatory capital purposes. Our capital amounts and classification are also subject to qualitative judgments by the regulators, including anticipated capital needs. Supervisory assessments of capital adequacy may differ significantly from conclusions based solely upon the regulations’ risk-based capital ratios. Quantitative measures established by regulation to ensure capital adequacy require us to maintain minimum CET1, Tier 1 leverage, Tier 1 risk-based capital and total risk-based capital ratios. ~~Management believes, as~~

125

The Basel III rules became effective for the Company and the Bank on January 1, 2015 with full compliance with all of the requirements being phased in by January 1, 2019. The Company and the Bank opted to not include the AOCI in computing regulatory capital. As of December 31, ~~2018, 2017 and 2016~~2023, management believes that the Company and the Bank meet all capital adequacy requirements to which they are subject, and ~~exceed~~are well-capitalized. In addition, Basel III rules required the Company and the Bank to hold a minimum ~~requirements to be well-capitalized.~~ capital conservation buffer of 2.50%. The Company’s capital conservation buffer at year end 2023 and 2022 was 4.1% and 4.4%, respectively, and therefore no regulatory restrictions exist under the applicable capital rules on dividends or discretionary bonuses or other payments. See —“Supervision and Regulation— Capital” for more information regarding regulatory capital.

Our Company’s consolidated regulatory capital amounts and ratios are presented in the following table:


	Actual				Required for Capital Adequacy Purposes				Regulatory Minimums To be Well Capitalized
	Actual																				Actual							Required for Capital Adequacy Purposes								Regulatory Minimums To be Well Capitalized
(in thousands, except percentages)	Amount		Ratio		Amount		Ratio		Amount		Ratio		(in thousands, except percentages)		Amount				Ratio					Amount					Ratio			Amount						Ratio
December 31, 2018
December 31, 2023
Total capital ratio
Total capital ratio
Total capital ratio	$	916,663	13.54	%	$	541,638	8.00	%	$	677,047	10.00	%	$	979,777		12.12		12.12		%			$	646,481		8.00			8.00	%		$	808,101		10.00				10.00		%
Tier 1 capital ratio	859,031		12.69	%	406,228		6.00	%	541,638		8.00	%	Tier 1 capital ratio		851,787		10.54			10.54		%			484,860		6.00			6.00	%			646,481			8.00				8.00	%
Tier 1 leverage ratio	859,031		10.34	%	332,190		4.00	%	415,238		5.00	%	Tier 1 leverage ratio		851,787		8.84			8.84		%			385,598		4.00			4.00	%			481,998			5.00				5.00	%
Common equity tier 1 (CET1)	749,465		11.07	%	304,671		4.50	%	440,080		6.50	%
CET1 capital ratio													CET1 capital ratio		790,959				9.79		%			363,645					4.50	%		525,266						6.50		%

December 31, 2017
December 31, 2022
December 31, 2022
December 31, 2022
Total capital ratio
Total capital ratio
Total capital ratio	$	926,049	13.31	%	$	556,578	8.00	%	$	695,722	10.00	%	$	947,505		12.39		12.39		%			$	611,733		8.00			8.00	%		$	764,666		10.00				10.00		%
Tier 1 capital ratio	852,825		12.26	%	417,433		6.00	%	556,578		8.00	%	Tier 1 capital ratio		833,078		10.89			10.89		%			458,799		6.00			6.00	%			611,733			8.00				8.00	%
Tier 1 leverage ratio	852,825		10.15	%	335,647		4.00	%	419,559		5.00	%	Tier 1 leverage ratio		833,078		9.18			9.18		%			363,130		4.00			4.00	%			453,913			5.00				5.00	%
Common equity tier 1 (CET1)	753,545		10.68	%	313,075		4.50	%	452,220		6.50	%
CET1 capital ratio													CET1 capital ratio		772,105				10.10		%			344,100					4.50	%		497,033						6.50		%

December 31, 2016
December 31, 2021
December 31, 2021
December 31, 2021
Total capital ratio
Total capital ratio
Total capital ratio	$	890,147	13.05	%	$	545,727	8.00	%	$	682,159	10.00	%	$	934,512		14.56		14.56		%			$	513,394		8.00			8.00	%		$	641,742		10.00				10.00		%
Tier 1 capital ratio	809,167		11.86	%	409,295		6.00	%	545,727		8.00	%	Tier 1 capital ratio		862,962		13.45			13.45		%			385,045		6.00			6.00	%			513,394			8.00				8.00	%
Tier 1 leverage ratio	809,167		9.62	%	328,392		4.00	%	410,490		5.00	%	Tier 1 leverage ratio		862,962		11.52			11.52		%			299,746		4.00			4.00	%			374,683			5.00				5.00	%
Common equity tier 1 (CET1)	699,046		10.25	%	306,971		4.50	%	443,403		6.50	%
CET1 capital ratio													CET1 capital ratio		801,907				12.50		%			288,784					4.50	%		417,133						6.50		%

~~133~~

126

~~Table~~T able of Contents

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


	Actual				Required for Capital Adequacy Purposes				Regulatory Minimums to be Well Capitalized
(in thousands, except percentages)	Amount		Ratio		Amount		Ratio		Amount		Ratio
December 31, 2023
Total capital ratio	$	964,678	11.95	%	$	645,662	8.00	%	$	807,077	10.00	%
Tier 1 capital ratio	866,141		10.73	%	484,246		6.00	%	645,662		8.00	%
Tier 1 leverage ratio	866,141		9.03	%	383,864		4.00	%	479,830		5.00	%
CET1 capital ratio	866,141		10.73	%	363,185		4.50	%	524,600		6.50	%

December 31, 2022
Total capital ratio	$	923,113	12.10	%	$	610,149	8.00	%	$	762,686	10.00	%
Tier 1 capital ratio	837,970		10.99	%	457,612		6.00	%	610,149		8.00	%
Tier 1 leverage ratio	837,970		9.27	%	361,655		4.00	%	452,069		5.00	%
CET1 capital ratio	837,970		10.99	%	343,209		4.50	%	495,746		6.50	%

December 31, 2021
Total capital ratio	$	957,852	14.94	%	$	512,780	8.00	%	$	640,976	10.00	%
Tier 1 capital ratio	886,301		13.83	%	384,585		6.00	%	512,780		8.00	%
Tier 1 leverage ratio	886,301		11.84	%	299,466		4.00	%	374,332		5.00	%
CET1 capital ratio	886,301		13.83	%	288,439		4.50	%	416,634		6.50	%

Actual Required for Capital Adequacy Purposes Regulatory Minimums to be Well Capitalized
(in thousands, except percentages) Amount Ratio Amount Ratio Amount Ratio
December 31, 2018
Total capital ratio $ 883,746
13.05 % $ 541,564
8.00 % $ 676,955
10.00 %
Tier 1 capital ratio 826,114
12.20 % 406,173
6.00 % 541,564
8.00 %
Tier 1 leverage ratio 826,114
9.96 % 331,829
4.00 % 414,786
5.00 %
Common equity tier 1 (CET1) 826,114
12.20 % 304,630
4.50 % 440,021
6.50 %

December 31, 2017

Total capital ratio $ 885,855
12.69 % $ 556,446
8.00 % $ 695,557
10.00 %
Tier 1 capital ratio 812,631
11.68 % 417,334
6.00 % 556,446
8.00 %
Tier 1 leverage ratio 812,631
9.69 % 335,600
4.00 % 419,500
5.00 %
Common equity tier 1 (CET1) 812,631
11.68 % 313,001
4.50 % 452,112
6.50 %

December 31, 2016
Total capital ratio $ 848,029
12.40 % $ 545,608
8.00 % $ 682,010
10.00 %
Tier 1 capital ratio 767,048
11.30 % 409,206
6.00 % 545,608
8.00 %
Tier 1 leverage ratio 767,048
9.20 % 326,305
4.00 % 407,881
5.00 %
Common equity tier 1 (CET1) 767,048
11.30 % 306,905
4.50 % 443,307
6.50 %

The Basel III Capital Rules revised the definition of capital and describe the capital components and eligibility criteria for CET1 capital, additional Tier 1 capital and Tier 2 capital. ~~Although trust preferred securities issued after May 19, 2010 no longer qualify~~See “Item 1. Business — Supervision and Regulation” for detailed information.

In the fourth quarter of 2022, the Company adopted CECL. The Company has not elected to apply an available three-year transition provision to its regulatory capital computations as ~~Tier~~a result of its adoption of CECL in 2022. See Note 1 ~~capital,~~to our ~~existing $114.1 million aggregate outstanding trust preferred securities are grandfathered, and continue to qualify as Tier 1 capital.~~audited annual consolidated financial statements in this Form 10-K for details on the adoption of CECL.

127

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.

Unlike most industrial companies, virtually all the assets and liabilities of a financial institution are monetary in nature. As a result, interest rates have a more significant impact on a financial institution’s performance than the effects of general levels of inflation. However, inflation also affects a financial institution by increasing its cost of goods and services purchased, as well as the cost of salaries and benefits, occupancy expense, and similar items. Inflation and related increases in interest rates generally decrease the market value of investments and loans held and may adversely affect liquidity, earnings, and shareholders’ equity. Loan originations and re-financings also tend to slow as interest rates increase, and higher interest rates may reduce a financial institution’s earnings from such origination activities. Similarly, lower inflation and rate decreases increase the fair value of securities and loan origination and refinancing tend to accelerate.

~~134~~

Off-Balance Sheet Arrangements

We may engage in a variety of financial transactions in the ordinary course of business that, under GAAP, may not be recorded on the balance sheet. Those transactions may include contractual commitments to extend credit in the ordinary course of our business activities to meet the financing needs of customers. Such commitments involve, to varying degrees, elements of credit, market and interest rate risk in excess of the amount recognized in the balance sheets. These commitments are legally binding agreements to lend money at predetermined interest rates for a specified period of time and generally have fixed expiration dates or other termination clauses. We use the same credit and collateral policies in making these credit commitments as we do for on-balance sheet instruments.

We evaluate each customer’s creditworthiness on a case-by-case basis and obtain collateral, if necessary, based on our credit evaluation of the borrower. In addition to commitments to extend credit, we also issue standby letters of credit that are commitments to a third-party in specified amounts of payment or performance, if our customer fails to meet its contractual obligation to the third-party. The credit risk involved in the underwriting of letters of credit is essentially the same as that involved in extending credit to customers.

The following table shows the outstanding balance of our off-balance sheet arrangements as of the end of the periods presented. Except as disclosed below, we are not involved in any other off-balance sheet contractual relationships that are reasonably likely to have a current or future material effect on our financial condition, a change in our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.


	December 31,
(in thousands)	2023		2022		2021

Commitments to extend credit	$	1,305,816	$	1,165,701	$	899,016

Letters of credit	29,605		20,726		32,107
	$	1,335,421	$	1,186,427	$	931,123

Commitments to extend credit increased $140.1 million, or 12.0%, as of December 31, 2023 compared to December 31, 2022. This was mainly driven by an increase in commercial and industrial loan commitments.

The Company uses interest rate swaps and other derivative instruments as part of its normal business operations. See Footnote 12- Derivatives to our consolidated financial statements for details.

128

December 31,
(in thousands) 2018 2017 2016
Commitments to extend credit $ 923,424
$ 762,437
$ 916,724
Credit card facilities ⁽¹⁾
198,500
200,229
193,204
Letters of credit 27,232
18,350
16,492
$ 1,149,156
$ 981,016
$ 1,126,420

~~__________________~~


~~(1)~~	~~Includes approximately $10.0 million of credit card facilities to international customers which had been temporarily suspended at December 31, 2018.~~

Contractual Obligations

In the normal course of business, we and our subsidiaries enter into various contractual obligations that may require future cash payments. Significant commitments for future cash obligations include capital expenditures related to ~~real estate~~operating leases, certain binding agreements we have entered into for services including outsourcing of technology services, advertising and ~~equipment operating leases~~other services, and other borrowing ~~arrangements.~~arrangements which are not material to our liquidity needs. We currently anticipate that our available funds, credit facilities, and cash flows from operations will be sufficient to meet our operational cash needs for the foreseeable future. Other than the changes discussed herein, there have been no material changes to the contractual obligations previously disclosed in the 2022 Form 10-K.

The table below summarizes, by remaining maturity, our significant contractual cash obligations as of December 31, ~~2018.~~2023. Amounts in this table reflect the minimum contractual obligation under legally enforceable contracts with terms that are both fixed and determinable. ~~Our operating lease obligations are not reflected in our consolidated balance sheets in accordance with current accounting guidance.~~ All other contractual cash obligations on this table are reflected in our consolidated balance sheet.

~~135~~

As of December 31, ~~2018,~~2023 we had the following contractual cash obligations:


					Payments Due Date													Payments Due Date
(in thousands)												(in thousands)	Total	Less than one year	One to three years	Over three to five years	More than five years

Operating lease obligations
Operating lease obligations
Operating lease obligations
			Payments Due Date
(in thousands)	Total		Less than one year			One to three years		Over three to five years		More than five years
Operating lease obligations	$	71,960	$	6,281		$	12,153	$	10,455	$	43,071
Time deposits
Time deposits
Time deposits
Borrowings:
FHLB advances and other borrowings	1,166,000		440,000			516,000		210,000		—
FHLB advances
FHLB advances
FHLB advances
Senior notes
Subordinated notes
Junior subordinated debentures	118,110		—			—		—		118,110
Contractual interest payments ⁽¹⁾	164,734		32,199			39,422		23,564		69,549
	$	1,520,804	$	478,480		$	567,575	$	244,019	$	230,730
	$

__________________


~~(1)~~	(1) Calculated assuming a constant interest rate as ~~of December 31, 2018.~~

~~The Company is in the process~~ of gathering a complete inventory of leases which will be subject to new lease accounting guidance pending adoption by the Company, and migrating identified lease data onto a new system platform. Based on a preliminary evaluation, the Company expects to recognize an asset and a corresponding lease liability for an amount currently expected to be less than one percent of the Company’s total consolidated assets upon adoption of the pending new lease accounting guidance.December 31, 2023.

We believe that we will be able to meet our contractual obligations as they come due through the maintenance of adequate liquidity. We expect to maintain adequate liquidity through the results of operations, loan and securities repayments and ~~maturity activity~~maturities and continued deposit gathering activities. We also have various borrowing facilities at the Bank to satisfy both short-term and long-term liquidity needs.

In December 2021, the Company became a strategic lead investor in the JAM FINTOP Blockchain fund (the “Fund”). The Company is currently committed to making future contributions to the Fund for a total of $7.5 million at December 31, 2023.

~~136~~

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~~Table~~T able of Contents

Critical Accounting Policies and Estimates

The preparation of our consolidated financial statements in accordance with GAAP requires us to make estimates and judgments that affect our reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under current circumstances, results of which form the basis for making judgments about the carrying value of certain assets and liabilities that are not readily available from other sources. We evaluate our estimates on an ongoing basis. Actual results may differ from these estimates under different assumptions or conditions.

Accounting policies, as described in detail in the notes to our consolidated financial statements, are an integral part of our financial statements. A thorough understanding of these accounting policies is essential when reviewing our reported results of operations and our financial position. We believe that the critical accounting policies and estimates discussed below require us to make difficult, subjective or complex judgments about matters that are inherently uncertain. Changes in these estimates, that are likely to occur from period to period, or using different estimates that we could have reasonably used in the current period, would have a material impact on our financial position, results of operations or liquidity.

Securities. Securities generally must be classified as held to maturity, or HTM, debt securities available-for-sale, or AFS, trading or, equity securities with readily available fair values. Securities classified as HTM are securities we have both the ability and intent to hold until maturity and are carried at amortized cost, less any allowance for credit losses. Trading securities, if we had any, would be held primarily for sale in the near term to generate income. Debt securities that do not meet the definition of trading or HTM are classified as AFS.

The classification of investment securities is significant since it directly impacts the accounting for unrealized gains and losses on these securities. Unrealized gains and losses on trading securities, if we had any, and equity securities with readily available fair values, would flow directly through earnings during the periods in which they arise. AFS securities are measured at fair value each reporting period. 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. Investment securities that are classified as HTM are recorded at amortized cost, and reduced by an estimated amount of expected credit loss during the life of the investment, if any.

For debt securities available for sale, the Company evaluates whether: (i) the fair value of the securities is less than the amortized costs basis; (ii) it intends to sell, or it is more likely than not that it will be required to sell, the security before recovery of its amortized cost basis, and (iii) the decline in fair value has resulted from credit losses or other factors. The Company estimates credit losses on debt securities available for sale using a discounted cash flow model. The present value of an impaired debt security results from estimating future cash flows that are expected to be collected, discounted at the debt security’s effective interest rate. The Company develops its estimates about cash flows expected to be collected and determines whether a credit loss exists, generally using information about past events, current conditions, reasonable and supportable forecasts and other qualitative factors including the extent to which fair value is less than amortized cost basis, adverse conditions specifically related to the security, industry or geographic area, changes in conditions of any collateral underlying the securities, changes in credit ratings, failure of the issuer to make scheduled payments, among other qualitative factors specific to the applicable security. If a credit loss exists, the Company records an allowance for the credit losses, limited to the amount by which the fair value is less than the amortized cost basis. The Company recognizes in AOCI/AOCL a decline in fair value over the carrying amount of AFS securities that has not been recorded through an allowance for credit losses.

Debt securities available for sale are charged off to the extent that there is no reasonable expectation of recovery of amortized cost basis. Debt securities available for sale are placed on non-accrual status if the Company does not reasonably expect to receive interest payments in the future and interest accrued is reversed against interest income. Securities are returned to accrual status only when collection of interest is reasonably assured.

130

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. We classify fair value measurements of financial instruments based on the three-level fair value hierarchy in the guidance. We carry mortgage loans, AFS debt and other securities, BOLI policies and derivative assets and liabilities at fair value. From time to time, we also have loans held for sale carried at the lower of cost or fair value.

The fair values of assets and liabilities may include adjustments for various factors, such as market liquidity and credit quality, where appropriate. Valuations of products using models or other techniques are sensitive to assumptions used for the significant inputs. Where market data is available, the inputs used for valuation reflect that information as of our valuation date. Inputs to valuation models are considered unobservable if they are supported by little or no market activity. In periods of extreme volatility, lessened liquidity or in illiquid markets, there may be more variability in market pricing or a lack of market data to use in the valuation process. In keeping with the prudent application of estimates and management judgment in determining the fair value of assets and liabilities, we have in place various processes and controls including validation controls, for which we utilize both broker and pricing service inputs. Data from these services may include both market-observable and internally-modeled values and/or valuation inputs. Our reliance on this information is affected by our understanding of how the broker and/or pricing service develops its data with a higher degree of reliance applied to those that are more directly observable and lesser reliance applied to those developed through their own internal modeling. Similarly, broker quotes that are executable are given a higher level of reliance than indicative broker quotes, which are not executable. These processes and controls are performed independently of the business. For additional information, see Note 18 of our audited consolidated financial statements.

Allowance for Credit Losses

In 2022, the Company adopted Accounting Standards Codification Topic 326 - Financial Instruments - Credit Losses (ASC Topic 326), which replaced the incurred loss methodology for estimated probable loan losses with an expected credit loss methodology that is referred to as the current expected credit loss (“CECL”) methodology. 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.

Under the CECL accounting guidance, the Allowance for Credit Losses, or ACL, is a valuation account that is deducted from the amortized cost basis of financial assets, including loans held for investments and debt securities held to maturity, to present the net amount that is expected to be collected throughout the life of those financial assets. The estimated ACL is recorded through a provision for credit losses charged against income. Management periodically evaluates the adequacy of the ACL to maintain it at a level it believes to be reasonable. The Company uses the same methods used to determine the ACL to assess any reserves needed for off-balance sheet credit risks such as unfunded loan commitments and contingent obligations on letters of credit. These reserves for off-balance sheet credit risks are presented in the liabilities section in the consolidated balance sheets.

The Company develops and documents its methodology to determine the ACL at the portfolio segment level.The Company determines its loan portfolio segments based on the type of loans it carries and their associated risk characteristics. The measurement of expected credit losses considers information about historical events, current conditions, reasonable and supportable forecasts and other relevant information. Determining the amount of the ACL is complex and requires extensive judgment by management about matters that are inherently uncertain. 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.

131

Expected credit losses are estimated on a collective basis for groups of loans that share similar risk characteristics. 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. 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. Expected prepayments for commercial and commercial real estate loans are generally estimated based on the Company's historical experience. For residential loans, expected prepayments are estimated using a model that incorporates industry prepayment data, calibrated to reflect the Company's experience. The contractual term excludes expected extensions, renewals, and modifications unless either of the following applies: management has a reasonable expectation at the reporting date a modification related to a borrower experiencing financial difficulty will be executed, or the extension or renewal options are included in the original or modified contract at the reporting date and are not unconditionally cancellable by the Company.

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. The amount of the principal forgiveness is deemed to be uncollectible; therefore, that portion of the loan is written off, resulting in a reduction of the amortized cost basis and a corresponding adjustment to the ACL.

For the largest portfolio segments, including commercial and commercial real estate loans, expected credit losses are estimated using probability of default (“PD”) and loss given default (“LGD”) bottom-up approach, which derives the expected losses from borrower's and market or industry specific risk characteristics. For smaller-balance homogeneous loans with similar risk characteristics, including residential, consumer and small business loans, the models estimate lifetime loan losses based on the portfolio’s historical behavior. In order to incorporate forward-looking expectations, the ACL for these portfolios is adjusted based on macroeconomic factors proven to have effects on the performance of the credit quality of each respective portfolio. The models incorporate a probability-weighted blend of macroeconomic scenarios by ingesting numerous national, regional and metropolitan statistical area (“MSA”) level variables and data points. Some of the more impactful include both current and forecasted unemployment rates, home price index, CRE property forecasts, stock market and market volatility indices, real gross domestic product growth, and a variety of interest rates and spreads. The macroeconomic forecast process is complex and varies from period to period and therefore may results in increased volatility in the ACL and earnings.

All loss estimates are conditioned as applicable on changes in current conditions and the reasonable and supportable economic forecast. Additionally, the Company makes qualitative adjustments to the ACL when, based on management’s judgment, there are factors impacting expected credit losses not taken into account by the quantitative calculations. Potential qualitative adjustments include economic factors, including material trends and developments that, in management's judgment, may not have been considered in the reasonable and supportable economic forecast, credit policy and staffing, including the nature and level of policy and procedural exceptions or changes in credit policy not reflected in quantitative results, changes in the quality of underwriting and portfolio management and staff and issues identified by credit review, internal audit or regulators that may not be reflected in quantitative results, concentrations, considering whether the quantitative estimate adequately accounts for concentration risk in the portfolio, model imprecision and model validation findings; and other factors not adequately considered in the quantitative estimate or other qualitative categories identified by management that may materially impact the amount of expected credit losses.

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

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. Loans in this portfolio are generally fully collateralized with cash, securities and other assets and, therefore, generally have no expected credit losses.

Commercial real estate, commercial and financial institution loans are charged off against the ACL when they are considered uncollectable. These loans are considered uncollectable when a loss becomes evident to management, which generally occurs when the following conditions are present, among others: (1) a loan or portions of a loan are classified as “loss” in accordance with the internal risk grading system; (2) a collection attorney has provided a written statement indicating that a loan or portions of a loan are considered uncollectible; and (3) the carrying value of a collateral-dependent loan exceeds the appraised value of the asset held as collateral. 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. For open and closed-end retail loans secured by residential real estate, any outstanding loan balance in excess of the fair value of the property, less cost to sell, is charged off no later than when the loan is 180 days past due from the contractual due date. Consumer and other retail loans may not be charged off when management can clearly document that a past due loan is well secured and in the process of collection such that collection will occur regardless of delinquency status in accordance with regulatory guidelines applicable to these types of loans.

Recoveries on loans represent collections received on amounts that were previously charged off against the ACL. Recoveries are credited to the ACL when received, to the extent of the amount previously charged off against the ACL on the related loan. Any amounts collected in excess of this limit are first recognized as interest income, then as a reduction of collection costs, and then as other income.

Goodwill. Goodwill is evaluated for impairment at least annually and on an interim basis if an event or circumstance indicates that it is likely an impairment has occurred. We have applied significant judgment for annual goodwill impairment testing purposes. The Company recorded goodwill impairment of $1.3 million in 2023 as a result of this evaluation. Future negative changes may result in potential impairments in future periods.

Determining the fair value of the reporting unit to which goodwill is allocated to (the Company as a whole since we report using a single-segment concept) is considered a critical accounting estimate because it requires significant management judgment and the use of subjective measurements. Variability in the market and changes in assumptions or subjective measurements used to determine fair value are reasonably possible and may have a material impact on our financial position, liquidity or results of operations.

Deferred Income Taxes. We use the balance sheet method of accounting for income taxes as prescribed by GAAP. Under this method, DTAs and deferred tax liabilities, or DTLs, are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. If current available information raises doubt as to the realization of the DTAs a valuation allowance is established. DTAs and DTLs are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Accounting for deferred income taxes is a critical accounting estimate because we exercise significant judgment in evaluating the amount and timing of recognition of the resulting tax assets and liabilities. Management’s determination of the realization of DTAs is based upon management’s judgment of various future events and uncertainties, including the timing and amount of future income, reversing temporary differences which may offset, and the implementation of various tax plans to maximize realization of the DTAs. These judgments and estimates are inherently subjective and reviewed on a continual basis as regulatory and business factors change. Any reduction in estimated future taxable income may require us to record a valuation allowance against our DTAs. A DTA valuation allowance would result in additional income tax expense in such period, which would negatively affect earnings. Conversely, the reversal of a valuation allowance previously recorded against a DTA would result in lower tax expense.

133

Recently Issued Accounting Pronouncements. We have evaluated new accounting pronouncements that have recently been issued and have determined that certain of these new accounting pronouncements should be described in this section because, upon their adoption, there could be a significant impact to our operations, financial condition or liquidity in future periods. In the fourth quarter of 2022, the Company adopted new accounting guidance on current expected credit losses, or CECL with retroactive application as of January 1, 2022, the beginning of the adoption period. 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

Item 7A. ~~Quantitative And Qualitative Disclosures About Market Risk~~QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We believe interest rate and price risks are the most significant market risks impacting us. We monitor and evaluate these risks using sensitivity analyses to measure the effects of changes in market interest rates on earnings, equity and the available for sale portfolio mark-to-market exposure. Exposures are managed to a set of limits previously approved by our Board of Directors and monitored by management.

Our market risk is jointly monitored by the Treasury unit, which reports to our Chief Financial Officer, and the Market Risk ~~Management~~and Analytics unit, which reports to our Chief Risk Officer. ~~The unit’s~~Their primary responsibilities are identifying, measuring, monitoring and controlling interest rate and liquidity risks and balance sheet asset/liability management, or ALM. It also assesses and monitors the price risk of the Bank’s investment activities, which represents the risk to earnings and capital arising from changes in the fair market value of our investment portfolio.

Among its duties, the Treasury and Market Risk ~~Management unit~~and Analytics units performs the following functions:

•maintains a comprehensive market risk and ALM framework;

•measures and monitors market risk and ALM across the organization to ensure that they are within approved risk limits and reports to ALCO and to the ~~board~~Board of ~~directors;~~Directors; and

•recommends changes to risk limits to the ~~board~~Board of ~~directors.~~Directors.

We manage and implement our ALM strategies through monthly ALCO meetings. ~~The business lines participate in the ALCO meetings.~~ In the ALCO, ~~the Bank discusses, analyzes~~we discuss, analyze, and ~~decides~~decide on the best course of action to implement strategies designed as part of the ALM process.

~~We centralize all the market~~Market risks taken by the Bank into the Treasury segment. This is primarily achieved by Treasury purchasing funds from deposit-gathering units and selling funds to asset-generating units at the corresponding terms and yield curve rates. Therefore, the risk inherent in term and rate mismatches between financial assets and liabilitiesCompany are ~~reflected in the Treasury segment. Treasury manages this risk~~managed using ~~the~~an appropriate mix of marketable securities, wholesale funding and ~~derivatives contracts, while allowing our external business segments to focus their efforts on satisfying their customers’ financial needs, and building strong customer relationships.~~derivative contracts.

Market Risk Measurement

ALM

We use sensitivity analyses as the primary tool to monitor and evaluate market risk, which is comprised of interest rate risk and price risk. Exposures are managed to a set of limits previously approved by our ~~board~~Board of ~~directors~~Directors and monitored by ALCO.

Sensitivity analyses are based on changes in interest rates (both parallel yield curve changes as well as non-parallel), and are performed for several different ~~metrics, and~~metrics. 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 ~~(both~~(debt and equity securities available for sale and held to ~~maturity)~~maturity securities).

135

The Company continues to be asset sensitive, therefore income is expected to increase when interest rates move ~~higher.~~higher, and to decrease when interest rates move lower.

~~137~~

~~Table~~The high duration of ~~Contents~~

~~Our higher duration~~our balance sheet has led to more sensitivity in the market values of financial instruments (assets and liabilities, including off balance sheet exposures). This sensitivity is captured in the EVE and investment portfolio mark-to-market exposure analyses. In the earnings sensitivity analysis, the opposite occurs. The higher duration will produce higher income today and less income variability during the next 12 months.

We monitor these exposures, and contrast them against limits established by our ~~board~~Board of ~~directors.~~Directors. Those limits correspond to the capital levels and the capital leverage ratio that we would report taking into consideration the interest rate increase scenarios modeled. Although we model the market price risk of the available for sale securities portfolio, and its projected effects on AOCI or AOCL (a component of ~~shareholders’~~stockholders’ equity), the Bank and the Company made an irrevocable election in 2015 to exclude the effects of AOCI or AOCL in the calculation of its regulatory capital ratios, in connection with the adoption of Basel III Capital Rules in the U.S.

Earnings Sensitivity

In this method, the financial instruments (assets, liabilities, on and off-balance sheet positions) generate interest rate risk exposure from mismatches in maturity and/or repricing given the financial instruments’ characteristics or cash flow behaviors such as pre-payment ~~speed.~~speeds. This method measures the potential change in our net interest income over the next 12 months, which ~~illustrates~~corresponds to our short term interest rate risk. This analysis subjects a static balance sheet to instantaneous and parallel interest rate shocks to the yield curves for the various ~~interests~~interest rates and indices that affect our net interest income. We compare on a monthly basis the effect of the analysis on our net interest income over a one-year period against limits established by our ~~board~~Board of ~~directors.~~Directors.

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,
	Change in earnings (1)																					Change in earnings (1)
	December 31,																					December 31,
(in thousands, except percentages)	2018					2017					(in thousands, except percentages)	2023							2022
Change in Interest Rates (Basis points)
Increase of 200	$	30,993		12.80	%	$	33,631		15.80	%
Increase of 200
Increase of 200												$	20,487		6.1		%			$	27,580		7.9	%
Increase of 100	18,702			7.70	%	19,585			9.20	%	Increase of 100	15,618		4.7		4.7		%			18,320	5.3		5.3	%
Decrease of 25	(5,554		)	(2.30	)%	(5,399		)	(2.50	)%
Decrease of 50 ⁽²⁾	—			—	%	(11,664		)	(5.50	)%
Decrease of 100 ⁽³⁾	(22,789		)	(9.40	)%	—			—	%
Decrease of 50											Decrease of 50	(3,923)			(1.2)		%			(5,683)			(1.6)	%
Decrease of 100											Decrease of 100	(10,273)			(3.1)		%			(11,548)			(3.3)	%
Decrease of 200											Decrease of 200	(21,290)			(6.3)		%			(34,279)			(9.8)	%

F-11

Years Ended December 31,
(in thousands) 2018 2017 2016
Cash flows from operating activities
Net income $ 45,833
$ 43,057
$ 23,579
Adjustments to reconcile net income to net cash provided by operating activities
Provision for (reversal of) loan losses 375
(3,490 ) 22,110
Net premium amortization on securities 16,926
19,357
27,264
Depreciation and amortization 8,543
9,040
9,130
Stock-based compensation expense 166
—
—
Increase in cash surrender value of bank owned life insurance (5,824 ) (5,458 ) (4,422 )
Net gain on sale of premises and equipment —
(11,319 ) (1,956 )
Deferred taxes, securities net gains or losses and others 2,270
14,684
(3,991 )
Gain on early extinguishment of advances from the FHLB (882 ) —
(714 )
Net changes in operating assets and liabilities
Loans held for sale —
(5,705 ) (4,730 )
Accrued interest receivable and other assets 3,655
(1,257 ) (7,937 )
Account payable, accrued liabilities and other liabilities (8,901 ) 14,373
16,935
Net cash provided by operating activities 62,161
73,282
75,268

Cash flows from investing activities
Purchases of investment securities:
Available for sale (216,237 ) (231,675 ) (1,084,029 )
Held to maturity securities —
(90,196 ) —
Federal Home Loan Bank stock (27,667 ) (41,044 ) (53,350 )
(243,904 ) (362,915 ) (1,137,379 )
Maturities, sales and calls of investment securities:
Available for sale 279,959
655,305
986,041
Held to maturity 4,400
315
—
Federal Home Loan Bank stock 27,413
30,600
44,253
311,772
686,220
1,030,294
Net increase in loans (33,199 ) (393,636 ) (259,931 )
Proceeds from loan portfolio sales 173,473
85,767
105,164
Purchase of bank owned life insurance —
(30,000 ) (60,000 )
Purchases of premises and equipment (10,044 ) (8,606 ) (8,535 )
Proceeds from sales of premises and equipment and others 911
30,737
8,159
Net proceeds from sale of subsidiary 7,500
—
—
Net cash provided by (used in) investing activities 206,509
7,567
(322,228 )

Cash flows from financing activities
Net decrease in demand, savings and money market accounts (430,984 ) (663,568 ) (388,520 )
Net increase in time deposits 140,697
409,175
446,211
Net decrease in securities sold under agreements to repurchase —
(50,000 ) (23,488 )
Proceeds from Advances from the Federal Home Loan Bank and other borrowings 1,278,000
1,771,500
2,239,000
Repayments of Advances from the Federal Home Loan Bank and other borrowings (1,284,118 ) (1,529,500 ) (2,029,536 )
Dividend paid (40,000 ) —
—
Proceeds from common stock issued - Class A 17,908
—
—
Repurchase of common stock - Class B (17,908 ) —
—
Net cash (used in) provided by financing activities (336,405 ) (62,393 ) 243,667
Net (decrease) increase in cash and cash equivalents (67,735 ) 18,456
(3,293 )

Cash and cash equivalents
Beginning of period 153,445
134,989
138,282
End of period $ 85,710
$ 153,445
$ 134,989

~~152~~

~~Mercantil Bank Holding Corporation~~Amerant Bancorp Inc. and Subsidiaries

Consolidated Statements of Cash Flows

Years Ended December 31,
(in thousands) 2018 2017 2016
Supplemental disclosures of cash flow information
Cash paid:
Interest $ 89,283
$ 61,590
$ 46,109
Income taxes 18,954
18,881
9,264
Noncash investing activities:
Loans transferred to other assets 925
319
5,545
Loans held for sale exchanged for securities —
4,710
4,659


	Years Ended December 31,
(in thousands)	2023		2022		2021
Supplemental disclosures of cash flow information
Cash paid:
Interest	$	211,769	$	67,295	$	46,327
Income taxes	24,966		27,537		14,538
Initial recognition of operating lease right-of-use assets	—		—		55,670
Initial recognition of operating lease liabilities	—		—		56,024
Right-of-use assets obtained in exchange for new lease obligations	12,001		8,887		91,797
Noncash investing activities:
Surrender of bank owned life insurance receivable from former insurance carrier	63,628		—		—
Mortgage loans held for sale (at fair value) transferred to loans held for investment	98,918		96,233		—
Loans held for sale (at lower cost or fair value) transferred to loans held for investment	—		65,802		—
Loans held for investment transferred to loans held for sale (at lower of fair value or cost)	449,563		—		256,154
Net transfers from premises and equipments to operating lease right-of-use assets	—		—		69,931
Loans transferred to other assets	26,534		—		9,400

The accompanying notes are an integral part of these consolidated financial statements.

F-12

~~153~~

~~Mercantil Bank Holding Corporation~~Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, ~~2018, 2017~~2023, 2022 and ~~2016~~2021

1. Business, Basis of Presentation and Summary of Significant Accounting Policies


1.	~~Business, Basis of Presentation and Summary of Significant Accounting Policies~~

a) Business

~~Mercantil Bank Holding Corporation~~Amerant Bancorp Inc (the “Company”), is a Florida corporation incorporated in 1985, which has operated since January 1987. The Company is a bank holding company registered under the Bank Holding Company Act of 1956 (“BHC Act”), as a result of its 100% ~~indirect~~ ownership of Amerant Bank, N.A. (the “Bank”). The Company’s principal office is in the City of Coral Gables, Florida. The Bank is a member of the Federal Deposit Insurance Corporation (“FDIC”), the Federal Reserve Bank of Atlanta (“Federal Reserve ”) and the Federal Home Loan Bank of Atlanta (“FHLB”). The Bank is a national bank subject to regulation and regular examinations by the Office of the Comptroller of the Currency (“OCC”). The Bank has ~~two principal subsidiaries,~~three operating subsidiaries: Amerant Investments, Inc., a securities broker-dealer (“Amerant Investments”), ~~and~~ Amerant ~~Trust, N.A.~~Mortgage, LLC (“Amerant Mortgage”), a ~~non-depository~~mortgage lending company domiciled in Florida (“Amerant Mortgage”) and Elant Bank & Trust Ltd., a Grand-Cayman based trust company ~~(“Amerant Trust”~~(the “Cayman Bank”).

The Bank has been serving the communities in which it operates for ~~almost~~over 40 years. The Bank ~~is headquartered in the City of Coral Gables, Florida and~~ has 23 Banking Centers, including 1516 located in South Florida, ~~and 8~~six in the Greater Houston area, Texas, ~~as well as a loan production office~~and one in ~~New York City, New York, and a loan production office recently opened in Dallas, Texas.~~Tampa, Fl. As the main operating subsidiary of the Company, the Bank offers a wide variety of domestic, international, personal and commercial banking services. Investment, trust, fiduciary and wealth management services are provided through the Bank’s ~~main~~ operating subsidiaries Amerant Investments ~~Inc.~~ and the Cayman Bank. Amerant ~~Trust, N.A.~~Mortgage offers a full complement of residential lending solutions including conventional, government, construction, Jumbo loans, and other residential lending product offerings. The Company’s main activities are concentrated in its primary markets, with domestic customers located within those markets, and with international customers mainly located in Latin America. The Company does not have any significant concentrations to any one customer.

In May 2021, the Company incorporated a new wholly owned subsidiary, Amerant SPV, LLC, or Amerant SPV. From time to time, the Company may evaluate select opportunities to invest and acquire non-controlling interests, through Amerant SPV, in companies it partners with, or may acquire non-controlling interests of fintech and specialty finance companies that the Company believes will be strategic or accretive. In addition, through Amerant SPV, we may also invest in companies and funds that invest in technology companies that are developing solutions aimed at allowing financial institutions and community banks to more effectively compete and serve their customers.

The Company’s Class A common stock, par value $0.10 per common share (the “Common Stock”) was listed and traded on the The Nasdaq Stock Market LLC (“Nasdaq”) Global Select Market under the symbol “AMTB” until August 28, 2023. On August 3, 2023, the Company provided written notice to Nasdaq of its determination to voluntarily withdraw the principal listing of the Company’s Common Stock from Nasdaq and transfer the listing of the Common Stock to the New York Stock Exchange (“NYSE”). The Company’s Common Stock listing and trading on Nasdaq ended at market close on August 28, 2023, and trading commenced on the NYSE at market open on August 29, 2023 where it continues to trade under the stock symbol “AMTB”.

Restructuring Activities

The Company ~~Mercantil Servicios Financieros, C.A. (“MSF” or~~continues to work at optimizing its operating structure to best support its business activities.

In 2021, the ~~“former parent”), and various individuals as Voting Trustees,~~Bank entered into a ~~Voting Trust Agreement~~new multi-year outsourcing agreement with a recognized third party financial technology services provider (the ~~“Voting Trust”~~“Financial Technology Services Agreement”) ~~in October 2008. On July 24, 2018,~~. Under the ~~Voting Trust was terminated. The Company is now~~terms of this agreement, the ~~sole shareholder of Mercantil Florida Bancorp, Inc. and the indirect owner of 100%~~third party has assumed full responsibility over a significant number of the ~~Bank.~~

~~On August 8, 2018,~~Bank’s former support functions and staff, including certain back-office operations. This new relationship entails transitioning of our core data processing platform and other applications from previous software vendors to those offered by this third party financial technology service provider. This new agreement is expected to allow the Bank to achieve greater operational efficiencies and deliver more advanced solutions and services to our customers. Effective January 1, 2022, there were 80 employees who are no longer working for the Company ~~became subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Securities Act”).~~

~~On October 24, 2018, the Company announced it is rebranding~~ as “Amerant.” The Company’s principal subsidiaries have adopted this name and logo. The Company will use the Amerant brand and will officially change its corporate name upon approval at its annual shareholders’ meeting in 2019.

~~b) Spin-off~~

As of December 31, 2017 the Company was a wholly owned subsidiary of MSF. On March 15, 2018, MSF transferred ownership of 100% of the Company Shares to a non-discretionary common law, grantor trust formed pursuant to a Distribution Agreement among MSF, the Company and an unaffiliated trustee dated as of March 12, 2018, and governed by the laws of the State of Florida (the “Distribution Trust”). The Company and MSF are parties to an Amended and Restated Separation and Distribution Agreement dated as of June 12, 2018 that provided for the spin-off (the “Spin-off”) of the Company from MSF.

The Distribution Trust was established by MSF and the Company pursuant to a Distribution Trust Agreement, as amended, with a Texas trust company, unaffiliated with MSF, as trustee. The Distribution Trust held 80.1% of the Company Shares (the “Distributed Shares”) for the benefit of MSF’s Class A and Class B common shareholders of record (“Record Holders”) on April 2, 2018 (“Record Date”). The remaining 19.9% of the Company Shares were held in the Distribution Trust for the benefit of MSF (the “Retained Shares”).

~~The Distributed Shares were distributed to MSF shareholders on August 10, 2018 (the “Distribution”). As~~ a result of this new agreement. The Company completed the ~~Distribution,~~transition of its core data processing platform and other applications in the Company became a separate company and its common stock was listed on the Nasdaq Global Select Market on August 13, 2018. The Distribution Trust held the Retained Shares pending their disposition by MSF.fourth quarter of 2023.

~~154~~

F-13

~~Mercantil Bank Holding Corporation~~Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, ~~2018, 2017~~2023, 2022 and ~~2016~~2021

Contract termination Costs

~~c) Initial Public Offering~~

~~On December 21, 2018,~~In connection with the implementation of the Financial Technology Services Agreement, the Company ~~completed an initial public offering (the “IPO”). See Note 15~~recorded estimated contract termination and related costs of approximately of $1.6 million and $7.1 million in 2023 and 2022, respectively. The Company does not expect to ~~our consolidated financial statements for more information about~~incur significant contract termination costs in the ~~IPO.~~

At December 31, 2018, MSF beneficially owned less than 5% of all of the Company’s outstanding shares of common stock and the Board of Governors of the Federal Reserve System determined that MSF no longer controlled the Company for purposes of the Bank Holding Company Act of 1956.

~~In December 2018~~future in connection with the ~~IPO,~~implementation of this agreement.

Other Restructuring Costs

In 2023, the Company ~~repurchased~~recorded severance costs of approximately $4.0 million, branch closure expenses and related charges of $2.3 million, consulting and other professional fees and software expenses totaling of $6.4 million and a charge of $1.4 million related to the disposition of fixed assets due to the write off of in-development software.

In 2022, the Company recorded severance costs of approximately $3.0 million, consulting and other professional fees of $3.6 million and branch closure expenses and related charges of $1.6 million.

Severance costs are included in “salaries and employees benefits expense” in the Company’s consolidated statement of operations and comprehensive income (loss).

Optimizing Capital Structure

Subordinated Notes. On March 9, 2022, the Company completed a $30.0 million offering of subordinated notes with a 4.25% fixed-to-floating rate and due on March 15, 2032 (the “Subordinated Notes”). See Note 10-Subordinated Notes, for details.

Stock Repurchases. In March of 2021, the Company announced a repurchase program to purchase up to $40 million of shares of Class B common stock ~~from MSF.~~(the “Class B Common Stock Repurchase Program”). In ~~March 2019, following~~September 2021, the ~~partial exercise~~Company’s Board of ~~the over-allotment option by the IPO’s underwriters, and completion of certain private placements~~Directors authorized a stock repurchase program to repurchase up to $50 million of shares of the Company’s Class A common stock (the “Class A Common Stock Repurchase Program”), and terminated the Class B Common Stock Repurchase Program, previously authorized in March 2021.

In January 2022, the Company’s Board of Directors authorized a new repurchase program to repurchase up to $50 million of its shares of Class A common stock (the “New Common Stock Repurchase Program”). Also, in January 2022, the Company announced the completion of the Class A Common Stock Repurchase Program, previously authorized in September 2021. Lastly, in May 2022, the Company announced the completion of the New Common Stock Repurchase Program, previously authorized in January 2022.

In 2023, 2022 and 2021 the Company’s Board of Directors authorized the cancellation of all shares of Class A common stock and Class B common stock repurchased in 2023, 2022 and 2021.

See Note 18-Stockholders’ Equity for details on all stock repurchases.

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Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2023, 2022 and 2021

Clean-Up Merger. In November 2021, the ~~remaining shares~~Company’s shareholders approved a clean-up merger pursuant to which a newly-created subsidiary of the Company, formed with the only purpose of effecting the clean-up merger, merged with and into the Company (the “Clean-Up Merger”). Under the terms of the Clean-up Merger, among other actions, each outstanding share of Class B common stock ~~held~~was converted to 0.95 of a share of Class A common stock without any action on the part of the holders of Class B common stock. See Note 18-Stockholders’ Equity for details on the Clean-Up Merger.

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. In 2021, the Company’s Board of Directors declared a cash dividend of $0.06 per share of the Company’s Class A common stock. See Note 18-Stockholders’ Equity for details on all dividends declared.

Wholly-owned Subsidiaries Mergers

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 (the “Amerant Florida Merger”). In connection with the Amerant Florida Merger, the Company assumed all assets and liabilities of Amerant Florida, including its direct ownership of the Bank, the common capital securities issued by ~~MSF. See Note 15~~the 5 trust subsidiaries, and the junior subordinated debentures issued by Amerant Florida and related agreements. The Amerant Florida Merger had no impact to ~~our~~the Company’s consolidated financial ~~statements~~condition and results of operations. See Note 11- Junior Subordinated Debentures Held By Trust Subsidiaries for additional information on the common capital securities issued by the five trust subsidiaries, and the junior subordinated debentures.

Changes in Ownership Interest in Amerant Mortgage

At December 31, 2023 and 2022, the Company had an ownership interest of 100% and 80% in Amerant Mortgage, respectively. On December 31, 2023, Amerant Mortgage became a wholly-owned subsidiary of the Company as it increased its ownership interest to 100% effective as of December 31, 2023. This transaction had no material impact to the Company’s results of operations in the year ended December 31, 2023. In connection with the change in ownership interest, which brought the noncontrolling interest share of equity to zero, the Company derecognized the equity attributable to noncontrolling interest of $3.8 million at December 31, 2023, with a corresponding reduction to additional paid-in capital as of that date.

On March 31, 2022, the Company contributed $1.5 million in cash to Amerant Mortgage, increasing its ownership interest to 57.4% as of March 31, 2022 from 51% as of December 31, 2021. In addition, in the three months ended June 30, 2022, the Company increased its ownership interest in Amerant Mortgage to 80% from 57.4% at March 31, 2022. This change was the result of: (i) two former principals of Amerant Mortgage surrendering their interest in Amerant Mortgage to the Company, when they became full time employees of the Bank (the “Transfer of Subsidiary Shares From Noncontrolling Interest”), and (ii) an additional contribution made by the Company of $1 million, in cash, to Amerant Mortgage in the three months ended June 30, 2022. As a result of the Transfer of Subsidiary Shares From Noncontrolling Interest, in the year ended December 31, 2022, the Company reduced its Additional Paid-in Capital by a total of $1.9 million with a corresponding increase to the equity attributable to Noncontrolling Interest.

F-15

Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2023, 2022 and 2021

Business Acquisition

On January 13, 2023 (the “ 2023 Acquisition Date”), Amerant Mortgage completed the acquisition of certain assets and the assumption of certain liabilities of F&B Acquisition Group LLC (“F&B”), including access to an assembled workforce and other identifiable intangibles which collectively constituted a business (the “F&B Acquisition.”) The F&B Acquisition was recorded as a business acquisition using the acquisition method of accounting. The purchase price of approximately $2.0 million was paid in cash and included the fair value of certain loans held for sale of $1.0 million. Upon completion of the purchase price allowance in the forth quarter of 2023, the Company determined there was no contingent consideration required to be included as part of purchase price.The Company recorded goodwill of $1.0 million, which represented the excess of the initial purchase price over the estimated fair value of tangible and intangible assets acquired, net of the liabilities assumed.

On May 12, 2021 (the “Acquisition Date”), Amerant Mortgage completed the acquisition of First Mortgage Company (“FMC”). Amerant Mortgage and FMC were ultimately merged, allowing Amerant Mortgage to operate its business nationally with direct access to federal housing agencies. We refer to these transactions as the “FMC Acquisition.” The FMC Acquisition was recorded as a business acquisition using the acquisition method of accounting. The purchase price of approximately $1.0 million was paid in cash and represented the fair value of $0.5 million in mortgage servicing rights (“MSR”) acquired, plus a premium of $0.5 million. No liabilities were assumed in the transaction. The Company allocated the premium paid on the purchase to an indefinite-lived intangible license which was recorded at its fair value of $0.5 million as of the Acquisition Date. The MSRs and premium assigned to an intangible asset were recorded in “Other assets” in the consolidated balance sheets. The transaction resulted in no goodwill.

Naming Rights

In September 2023, the Company acquired exclusive naming rights to an arena in Broward County, Florida. The naming rights have been recorded as an intangible asset with an offsetting liability for related payments to be made in the future. The naming rights intangible asset is included in other assets in the Company’s consolidated balance sheets. The naming rights liability is included as part of other liabilities in the Company’s consolidated balance sheets.

Amerant SPV Investments

The Company, through Amerant SPV, has invested in equity and non-equity instruments issued by Marstone, Inc (“Marstone”), a digital wealth management fintech it has partnered with to provide digital wealth management and financial planning capabilities to new and existing customers. In connection with the equity investment, in November 2021, Gerald P. Plush, our Company’s Chairman, President & CEO, was appointed to Marstone’s Board of Directors as one of its seven individual members. In July 2023, the Company’s Chief Operating Officer replaced Mr. Plush in the role, and does not have individual power to control or direct the operations of Marstone. The Company’s equity investment in Marstone represents less than 5% of its voting power. In addition, the Company considers it does not have a variable interest in Marstone. At December 31, 2023 and 2022, the Company’s investments in Marstone include equity investments of $0.5 million and $2.5 million, respectively, and non-equity investments of $1.6 million and $1.3 million, respectively. In 2023, the Company recorded an impairment charge of $2.0 million related to its equity investments in Marstone.

F-16

Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2023, 2022 and 2021

In October 2021, the Company invested $2.5 million in an equity instrument issued by Raistone Financial Corp (“Raistone”), a financial technology solutions provider launched in 2017 that offers working capital financing solutions. This equity investment represents less than 5% of Raistone’s voting power. In addition, the Company considers it does not have a variable interest in Raistone. There were no additional investments in Raistone in 2023 and 2022.

In December 2021, the Company became a strategic lead investor in the JAM FINTOP Blockchain fund (the “JAM FINTOP Fund”), with an initial commitment of approximately $5.4 million that may be expanded to $9.8 million should the Fund increase to its maximum target size of $200 million. Initially, the JAM FINTOP Fund will focus its investments on the blockchain “infrastructure layer” that will help regulated financial institutions compliantly operate blockchain-powered applications in areas such as lending, payments, and exchanges. As a strategic lead investor in the JAM FINTOP Fund, the Company expects to have access and become an early adopter of this transformational technology. At December 31, 2023 and 2022 the investment in the JAM FINTOP Fund amounts to $1.4 million and $1.2 million, respectively.

In May 2023, the Company became an investor in the Black Dragon Fund (“Black Dragon”). At December 31, 2023, the investment in Black Dragon amounted to $1.0 million.

These investments in Marstone, Raistone, Black Dragon and the Fund are recorded at their original cost and are included in the Company’s consolidated balance sheet in other assets. The Company reviews these investments periodically for deterioration. At December 31, 2023, 2022 and 2021, other than the impairment charge discussed above in connection with the Company's investments in Marstone, the Company considers these investments are not deteriorated and did not record an impairment charge as a result.

Bank Owned Life Insurance

In the fourth quarter of 2023, the Company completed a restructuring of its bank-owned life insurance (“BOLI”) program. This was executed through a combination of a 1035 exchange and a surrender and reinvestment into a higher-yielding general account with a new investment grade insurance carrier. This transaction allowed for higher team member participation through an enhanced split-dollar plan. Estimated improved yields resulting from the enhancement have an earn-back period of approximately 2 years. In the fourth quarter of 2023, the Company recorded total additional expenses and charges of $4.6 million in connection with this transaction, including: (i) a reduction of $0.7 million to the cash surrender value of BOLI; (ii) transaction costs of $1.1 million, included as part of other operating expenses, and (iii) income tax expense of $2.8 million. In addition, as of December 31, 2023, the Company had a receivable from the prior insurance carrier for $62.5 million in connection with the restructuring of the Company’s BOLI in the fourth quarter of 2023, which was included as part of other assets in the Company’s consolidated balance sheet. The Company collected in full this receivable from the prior insurance carrier in February 2024.

Employee Stock Purchase Plan

On June 8, 2022, the shareholders of the Company approved the Amerant Bancorp Inc. 2021 Employee Stock Purchase Plan (the “ESPP” or the “Plan”). The purpose of the Plan is to provide eligible employees of the Company and its designated subsidiaries with the opportunity to acquire a stock ownership interest in the Company on favorable terms and to pay for such acquisitions through payroll deductions. All named executive officers, and all other executive officers of the Company who were eligible as of the enrollment deadline for the first offering period elected to participate in the Plan. See Note 14-Incentive Compensation and Benefit Plans for more ~~information about~~details on the ~~private placements~~ESPP.

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Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2023, 2022 and 2021

COVID-19 Pandemic

CARES Act. On March 11, 2020, the ~~repurchase~~World Health Organization recognized an outbreak of ~~Retained Shares previously held~~a novel strain of the coronavirus, COVID-19, as a pandemic. The COVID-19 pandemic adversely affected the economy, including significant changes in interest rates, and resulted in the enactment of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). The CARES Act provided emergency economic relief to individuals, small businesses, mid-size companies, large corporations, hospitals and other public health facilities, and state and local governments, and allocated the Small Business Administration, or SBA, $350.0 billion to provide loans of up to $10.0 million per small business as defined in the CARES Act.

On April 2, 2020, the Bank began participating in the SBA’s Paycheck Protection Program, or “PPP”, by ~~MSF.~~providing loans to qualifying businesses to cover payroll, rent, mortgage, healthcare, and utilities costs, among other essential expenses. As of December 31, 2023 and 2022, PPP loan balances were not significant. In the second quarter of 2021, the Company sold to a third party, in cash, PPP loans with an outstanding balance of approximately $95.1 million, and realized a pretax gain on sale of $3.8 million. The Company retained no loan servicing rights on these PPP loans.

~~d) Subsequent Events~~Loan Modification Programs. On March 26, 2020, the Company began offering loan payment relief options to customers impacted by the COVID-19 pandemic, including interest only and/or forbearance options. These programs continued throughout 2020 and in the six months ended June 30, 2021. In the third quarter of 2021, the Company ceased to offer these loan payment relief options, including interest-only and/or forbearance options. Loans that had been modified under these programs totaled $1.1 billion as of December 31, 2021. As of December 31, 2023 and 2022, there were no loans under these deferral and/or forbearance options.

~~The effects~~

F-18

Table of ~~significant subsequent events, if any, have been recognized or disclosed in these consolidated financial statements.~~Contents

e)Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2023, 2022 and 2021

b) Basis of Presentation and Summary of Significant Accounting Policies

Emerging Growth Company

Section 107 of the JOBS Act provides that, as an “emerging growth company”, or EGC, a Company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. Therefore, an EGC can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. In 2019, the Federal bank regulators recognized or permitted public companies that are EGCs to delay the adoption of accounting pronouncements until those standards would otherwise apply to private companies. The Company benefited from this extended transition period from the date it became a publicly traded company through the date immediately prior to December 31, 2022. As of December 31, 2022, the Company determined that it no longer qualified as an EGC as of December 31, 2022 and, therefore, was unable to continue to benefit from any extended transition period for complying with new or revised accounting standards as of that date. See discussion below of recently adopted accounting pronouncements as a result of this transition. See sections below for more details.

Significant Accounting Policies

The following is a description of the significant accounting policies and practices followed by the Company in the preparation of the accompanying consolidated financial statements. These policies conform with generally accepted accounting principles in the United States ~~(U.S. GAAP)~~(GAAP).

Segment Reporting

The Company is managed using a single segment concept, on a consolidated basis, and management determined that no separate current or historical reportable segment disclosures are required under GAAP.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. The Company evaluates whether it has a controlling financial interest in an entity in the form of a variable-interest entity, or a voting interest entity.

Non-Controlling Interest

The Company records net loss attributable to non-controlling interests in its consolidated statement of operations and comprehensive income (loss) equal to the percentage of the economic or ownership interest retained in the interest of Amerant Mortgage and presents non-controlling interests as a component of stockholders’ equity on the consolidated balance sheets and separately as net loss attributable to non-controlling interests on the consolidated statement of operations and comprehensive income (loss). At December 31, 2023, Amerant Mortgage became a wholly-owned subsidiary and, as result, there was no noncontrolling interests at that date. At December 31, 2022 and 2021, non-controlling interests in Amerant Mortgage were 20% and 49%, respectively. In 2021 and throughout the first quarter of 2022, non-controlling interests in Amerant Mortgage was 49%.

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Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2023, 2022 and 2021

Estimates

The preparation of financial statements in conformity with ~~U.S.~~ GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates made by management include: i)(i) the determination of the allowance for ~~loan~~credit losses; (ii) the fair values of loans, securities and ~~the reporting unit to which goodwill has been assigned during the annual goodwill impairment test;~~derivative contracts; (iii) the cash surrender value of bank owned life insurance; ~~and~~ (iv) the determination of whether the amount of deferred tax assets will more likely than not be ~~realized.~~realized; and (v) the determination of estimated contract termination costs. Management believes that these estimates are appropriate. Actual results could differ from these estimates.

~~Income Recognition~~

~~Interest income is generally recognized on~~In 2023 and 2022, noninterest expenses include $1.6 million and $7.1 million, respectively, of estimated contract termination costs associated with third party vendors resulting from the ~~accrual basis using~~Company’s transition to our new technology provider. Contract termination costs represent estimated expenses to terminate contracts before the interest method. Non-refundable loan origination fees, net of direct costs of originating or acquiring loans, as well as loan purchase premiums and discounts, are deferred and amortized over the term of the related loans as adjustments to interest income using the level yield method. Purchase premiums and discounts on debt securities are amortized as adjustments to interest income over the estimated lives of the securities using the level yield method.

~~155~~

~~Mercantil Bank Holding Corporation and Subsidiaries~~

~~Notes to Consolidated Financial Statements~~

~~December 31, 2018, 2017 and 2016~~

Brokerage and advisory activities include brokerage commissions and advisory fees. Brokerage commissions earned are related to the dollar amount of trading volume of customers’ transactions. Commissions and related clearing expenses are recorded on a trade-date basis as securities transactions occur. Advisory fees are derived from investment advisory fees and account administrative services. Investment advisory fees are recorded as earned on a pro rata basis over the term of the contracts, based on a percentage of the average value of assets managed during the period. These fees are assessed and collected at least quarterly. Account administrative fees are charged to customers for the maintenanceend of their ~~accounts~~terms, and ~~are earned and collected on a quarterly basis. Fiduciary activities fee income is recognized as earned on a pro rata basis over the term of contracts.~~

Card servicing fees include credit card issuance and credit and debit card interchange fees. Credit card issuance fees are generally recognized over the period in which the cardholders are entitled to use the cards. Interchange fees are recognized when ~~earned. Trade finance servicing fees, which primarily include commissions on letters of credit, are generally recognized over~~ the ~~service period on~~Company terminates a ~~straight line basis.~~

Deposits and services fees include service charges on deposit accounts, fees for banking services provided to customers including wire transfers, overdrafts and non-sufficient funds. Revenue is generally recognizedcontract in accordance with ~~published deposit account agreements for customer accounts~~its terms, generally considered the time when the Company gives written notice to the counterparty within the notification period contractually established, or when ~~fixed and determinable per contractual agreements.~~

~~Data processing, rental income and fees for other services~~the Company determines that it no longer derives economic benefits from the contracts. Contract termination costs also include expenses associated with the abandonment of existing capitalized projects which are no longer expected to ~~related parties~~be completed as a result of a contract termination. Changes to initial estimated expenses to terminate contracts resulting from revisions to timing or the amount of estimated cash flows are recognized asin the ~~services are provided in accordance with the terms~~period of the ~~service agreements.~~changes.

Earnings per Share

Basic earnings per share is computed by dividing net income available to common stockholders by the weighted-average number of common shares outstanding during each period. Unvested shares of restricted stock are excluded from the basic earnings per share computation.

Diluted net income per common share reflects the number of additional common stock that would have been outstanding if the dilutive potential common stock had been issued. Dilutive potential common stock consist of unvested shares of restricted stock, restricted stock units and performance stock units outstanding during the period. The dilutive effect of potential common stock is calculated by applying the treasury stock method. The latter assumes dilutive potential common stock are issued and outstanding and the proceeds from the exercise, are used to purchase common stock at the average market price during the period. The difference between the numbers of dilutive potential common stock issued and the number of shares purchased is included as incremental shares in the denominator to compute diluted net income per common stock. Dilutive potential common stock are excluded from the diluted earnings per share computation in the period in which the effect is anti-dilutive.

Changes in the number of shares outstanding as a result of stock dividends, stock splits, stock exchanges or reverse stock splits are given effect retroactively for all periods presented to reflect those changes in capital structure.

Income Recognition

Interest income is generally recognized on the accrual basis using the interest method. Non-refundable loan origination fees, net of direct costs of originating or acquiring loans, as well as loan purchase premiums and discounts, are deferred and amortized over the term of the related loans as adjustments to interest income using the level yield method. Purchase premiums and discounts on debt securities are amortized as adjustments to interest income over the estimated lives of the securities using the level yield method.

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Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2023, 2022 and 2021

Brokerage and advisory activities include brokerage commissions and advisory fees. Brokerage commissions earned are related to the dollar amount of trading volume of customers’ transactions. Commissions and related clearing expenses are recorded on a trade-date basis as securities transactions occur. The Company believes that the performance obligation is satisfied on the trade date because that is when the underlying financial instrument has been transferred to/from the customer. Advisory fees are derived from investment advisory fees and account administrative services. Investment advisory fees are recorded as earned on a pro rata basis over the term of the contracts, based on a percentage of the average value of assets managed during the period. The Company believes the performance obligation for providing advisory services is satisfied over time because the customer is receiving and consuming benefits as they are provided by the Company. These fees are assessed and collected at least quarterly. Account administrative fees are charged to customers for the maintenance of their accounts and are earned and collected on a quarterly basis. Fiduciary activities fee income is recognized as earned on a pro rata basis over the term of contracts.

Card servicing fees include credit and debit card interchange fees and other fees. Interchange fees are recognized when earned. Trade finance servicing fees, which primarily include commissions on letters of credit, are generally recognized over the service period on a straight line basis.

Deposits and services fees include service charges on deposit accounts, fees for banking services provided to customers including wire transfers, overdrafts and non-sufficient funds. Revenue from these sources is generally recognized in accordance with published deposit account agreements for customer accounts or when fixed and determinable per contractual agreements.

Loan-level derivative income is generated from back-to-back derivative transactions with commercial loan clients and with brokers. The Company earns a fee upon inception of the back-to-back derivative transactions, corresponding to the spread between a wholesale rate and a retail rate.

Stock-based Compensation

The Company may grant share-based compensation and other related awards to its non-employee directors, officers, employees and certain consultants. Compensation cost is measured based on the estimated ~~far~~fair value of the award at the grant date and recognized in earnings as an increase in additional paid in capital on a ~~straight -line~~straight-line basis over the requisite service period or vesting ~~period.~~period for each separately vesting portion of each award when awards have graded vesting features. The fair value of the unvested shares of restricted stock and restricted stock units is based on the market price of the Company’s Class A common stock at the date of the grant. The fair value of performance stock units at the grant date is based on estimated fair values using an option pricing model.

The Company maintains an ESPP. The ESPP allows eligible employees to purchase common stock at a 15% discount applied to the stock price at the beginning or end of the offering period, whichever is lower. Each offering period is six months in length with a purchase limit of 5,000 shares per eligible employee per offering period and a $25,000 per eligible employee contribution limit per year. Each offering period will begin the first trading day on or after June 1 and December 1 of each year. The fair value of the ESPP at the beginning of the offering period is based on an estimated fair value using an option pricing model. The Company recognizes compensation expense in an amount equal to the estimated fair value of the 15% discount plus the fair value of the look-back option, over the offering period.

Advertising Expenses

Advertising expenses are expensed as incurred, and includes amortization of naming rights intangible, except for media production costs which are expensed upon the first airing of the advertisement, and are included in other noninterest expenses.

~~156~~

F-21

~~Mercantil Bank Holding Corporation~~Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, ~~2018, 2017~~2023, 2022 and ~~2016~~2021

Voluntary and Involuntary Early Retirement Plan Expenses and other Staff Reduction Costs

The Company accounts for voluntary and involuntary early retirement plan expenses and other staff reduction costs by establishing a liability for costs associated with the exit or disposal activity, including severance and other related costs, when the liability is incurred, rather than when we commit to an exit plan.

In 2023, 2022 and 2021, salaries and employment benefits include $4.0 million, $3.0 million and $3.6 million, respectively, of severance expenses mainly in connection with the Company’s restructuring activities.

Offering Expenses

Specific, non-reimbursable, incremental costs directly attributable to a proposed or actual securities offerings are deferred and charged against the gross proceeds of the offering.

Loan-level derivative expenses

Loan-level derivative expenses are incurred in back-to-back derivative transactions with commercial loan clients and with brokers. The Company pays a fee upon inception of the back-to-back derivative transactions, corresponding to the spread between a wholesale rate and a retail rate.

Cash and Cash Equivalents

The Company has defined as cash equivalents those highly liquid instruments purchased with an original maturity of three months or less and include cash and cash due from banks, federal funds sold and deposits with ~~banks.~~banks and other short-term investments.

The Company must comply with federal regulations requiring the maintenance of minimum reserve balances against its deposits. AtEffective March 26, 2020, the Board of Governors of the Federal Reserve System reduced reserve requirements ratios to zero percent in response to the COVID-19 pandemic, therefore, there were no reserves required at December 31, ~~2018~~2023 and ~~2017, these reserve balances amounted~~2022.

The Company maintains some of its cash deposited with third-party depository institutions for amounts that, at times, may be in excess of federally-insured limits mandated by the Federal Deposit Insurance Corporation, or FDIC.

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Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to ~~approximately $0.2 million~~Consolidated Financial Statements

December 31, 2023, 2022 and ~~$1.2 million, respectively.~~2021

Securities

The Company classifies its investments in securities as debt securities available for sale, ~~and~~debt securities held to ~~maturity.~~maturity and equity securities with readily determinable fair value not held for trading. Securities classified as debt securities available for sale are carried at fair value with unrealized gains and losses included in accumulated other comprehensive income (“AOCI”) or accumulated other comprehensive loss (“AOCL”) in stockholders’ equity on an after-tax basis. Equity securities with readily determinable fair value not held for trading primarily consists of mutual funds carried at fair value with unrealized gains and losses included in earnings. Securities classified as debt securities held to maturity are securities the Company has both the ability and intent to hold until maturity and are carried at amortized cost. Investments in stock issued by the Federal Reserve and Federal Home Loan Bank of Atlanta (“FHLB”) are stated at their original cost, which approximates their realizable value. Realized gains and losses from sales of securities are recorded on the trade date and are determined using the specific identification method. Securities purchased or sold are recorded on the consolidated balance sheets as of the trade date. Receivables and payables to and from clearing organizations relating to outstanding transactions are included in other assets or other liabilities. At December 31, ~~2018~~2023 and ~~2017~~2022, securities receivables included in other assets amounted to ~~$3.5~~$0.8 million and ~~$6.5~~$0.9 million, respectively. At December 31, 2023 and 2022, securities payable related to purchases pending settlement and included in other liabilities amounted to $0.3 million.

~~The~~

For debt securities available for sale, the Company ~~considers an investment security to be impaired when a decline in~~evaluates whether: (i) the fair value ~~below~~of the securities is less than the amortized cost basis is other-than-temporary. When an investment security is considered to be other-than-temporarily impaired, the cost basis of the individual investment security is written down through earnings by an amount that corresponds to the credit component of the other-than-temporary impairment. The amount of the other-than-temporary impairment that corresponds to the noncredit component of the other-than-temporary impairment is recorded in AOCI and is associated with securities which the Company does not intendcosts basis; (ii) it intends to sell, ~~and~~or it is more likely than not that ~~the Company~~it will ~~not~~ be required to sell, the ~~securities prior to the~~security before recovery of its amortized cost basis, and (iii) the decline in fair ~~value.~~

value has resulted from credit losses or other factors. The Company estimates ~~the~~ credit ~~component of other-than-temporary impairment~~losses on debt securities available for sale using a discounted cash flow model. The Company estimates the expected cash flows of the underlying collateral using third party vendor models that incorporate management’s best estimate of current key assumptions, such as default rates, loss severity and prepayment rates (based on historical performance and stress test scenarios). Assumptions used can vary widely from security to security and are influenced by such factors as current debt service coverage ratio, historical prepayment rates, expected prepayment rates, and loans’ current interest rates. The Company then uses, as it deems appropriate, a third party vendor to determine how the underlying collateral cash flows will be distributed to each security. The present value of an impaired debt security results from estimating ~~its~~ future cash flows that are expected to be collected, discounted at the debt security’s effective interest rate. The Company ~~expects~~develops its estimates about cash flows expected to ~~recover~~be collected and determines whether a credit loss exists, generally using information about past events, current conditions, reasonable and supportable forecasts and other qualitative factors including the ~~remaining noncredit~~extent to which fair value is less than amortized cost basis, adverse conditions specifically related ~~unrealized~~to the security, industry or geographic area, changes in conditions of any collateral underlying the securities, changes in credit ratings, failure of the issuer to make scheduled payments, among other qualitative factors specific to the applicable security. If a credit loss exists, the Company records an allowance for the credit losses, ~~included as a component of AOCI.~~limited to the amount by which the fair value is less than the amortized cost basis. The Company recognizes in AOCI/AOCL any decline in the fair value below amortized cost on debt securities available for sale that has not been recorded through an allowance for credit losses.

Loans Held for Sale, at Lower of Cost or Fair Value

When the Company determines that a formal plan to sell loans in this category no longer exists, the Company reclassifies these loans to loans held for investment at their carrying value at the date of the transfer, with the loans’ carrying value becoming their new basis. Any resulting difference between the loans unpaid principal amount and their carrying value is amortized through earning for the remainder lives of the loans.

~~157~~

F-23

~~Mercantil Bank Holding Corporation~~Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, ~~2018, 2017~~2023, 2022 and ~~2016~~2021

Mortgage Loans Held for Sale, at Fair Value

Mortgage loans originated for sale are carried at fair value under the fair value option, with changes in fair value recognized in current period earnings presented in other income. The fair value is measured on an individual loan basis using quoted market prices and when not available, comparable market value or discounted cash flow analysis may be utilized. Gains and losses on loan sales are recognized in other noninterest income in the consolidated statements of operations and comprehensive (loss) income.

Loans Held for Investment

Loans represent extensions of credit which the Company has the intent and ability to hold for the foreseeable future or until maturity or payoff. These extensions of credit consist of commercial real estate loans, or CRE loans, (including land acquisition, development and construction loans), owner occupied real estate loans, single-family residential loans, commercial loans, loans to financial institutions and acceptances, and consumer loans. Amounts included in the loan portfolio are stated at the ~~amount of unpaid principal,~~loans unamortized costs reduced by ~~unamortized net deferred loan fees and origination costs and~~ an allowance for credit losses if any. The unamortized cost of a loan ~~losses. Unamortized net~~consists of its unpaid principal balance, unamortized premiums, discounts and deferred loan origination fees and costs, net of amounts previously charged off. Unamortized premiums, discounts and deferred loan origination costs, including premiums paid on purchases of indirect consumer loans as well as purchases of single-family residential loans and other loans, amounted to ~~$7.1~~$11.2 million and ~~$7.4~~$17.8 million at December 31, ~~2018~~2023 and ~~2017,~~2022, respectively.

A loan is placed in nonaccrual status when management believes that collection in full of the principal amount of the loan or related interest is in doubt. Management considers that collectability is in doubt when any of the following factors are present, among others: (1) there is a reasonable probability of inability to collect principal, interest or both, on a loan for which payments are current or delinquent for less than ninety days; or (2) when a required payment of principal, interest or both, is delinquent for ninety days or longer, unless the loan is considered well secured and in the process of collection in accordance with regulatory guidelines. Once a loan to a single borrower has been placed in nonaccrual status, management reviews all loans to the same borrower to determine their appropriate accrual status. When a loan is placed in nonaccrual status, accrual of interest and amortization of net deferred loan fees or costs are discontinued, and any accrued interest receivable is reversed against interest income.

Payments received on a loan in nonaccrual status are generally applied to its outstanding principal amount, unless there are no doubts on the full collection of the remaining recorded investment in the loan. When there are no doubts on the full collection of the remaining recorded investment in the loan, and there is sufficient documentation to support the collectability of that amount, payments of interest received may be recorded as interest income.

A loan in nonaccrual status is returned to accrual status when none of the conditions noted when first placed in nonaccrual status are currently present, none of its principal and interest is past due, and management believes there are reasonable prospects of the loan performing in accordance with its terms. For this purpose, management generally considers there are reasonable prospects of performance in accordance with the loan terms when at least six months of principal and interest payments or principal curtailments have been received, and current financial information of the borrower demonstrates that ~~performance will~~the borrower has the capacity to continue to perform into the near future.

The total outstanding principal amount of a loan is reported as past due thirty days following the date of a missed scheduled payment, based on the contractual terms of the loan.

Loans which have been modified because the borrowers were experiencing financial difficulty and the Company, for economic or legal reasons related to the debtors’ financial difficulties, granted a concession to the debtors that it would not have otherwise considered, are ~~accounted for as~~considered troubled debt restructurings (“TDR”).

F-24

Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2023, 2022 and 2021

In 2020, the Company began offering customized loan payment relief options as a result of the impact of the COVID-19 pandemic, including deferral and forbearance options. Consistent with accounting and regulatory guidance, temporary modifications granted under these programs are not considered TDRs. See “ Loan Mitigation Programs” discussion above for more information on these modifications.

Allowance for ~~Loan~~Credit Losses (ACL)

The ~~allowance~~ACL is a valuation account that is deducted from the amortized cost basis of financial assets carried at their amortized cost, including loans held for ~~loan losses represents an estimate~~investment and debt securities held to maturity, to present the net amount that is expected to be collected throughout the life of the ~~current amount of principal that~~financial asset. The estimated ACL is probable the Company will be unable to collect given facts and circumstances as of the evaluation date, and includes amounts arising from loans individually and collectively evaluated for impairment. These estimated amounts are recorded through a provision for ~~loan~~credit losses charged against ~~income.~~operations. Management periodically evaluates the adequacy of the ~~allowance for loan losses~~ACL to maintain it at a level ~~believed reasonable~~it believes to ~~provide for recognized and unrecognized but inherent losses in the loan portfolio.~~be reasonable. The Company uses the same methods used to determine the ~~allowance for loan losses,~~ACL to assess any reserves needed for off-balance sheet credit risks such as unfunded loan commitments and contingent obligations on letters of credit. These reserves for off-balance sheet credit risks are presented in the liabilities section in the consolidated balance sheets.

The ACL consists of two components: an asset-specific component for estimating credit losses for individual loans that do not share similar risk characteristics with other loans; and a pooled component for estimating credit losses for pools of loans that share similar risk characteristics. The ACL for the pooled component is derived from an estimate of expected credit losses primarily using an expected loss methodology that incorporates risk parameters such as probability of default (“PD”) and loss given default (“LGD”) which are derived from various vendor models and/or internally developed model estimation approaches for smaller homogenous loans.

PD is projected in these models or estimation approaches using economic scenarios, whose outcomes are weighted based on the Company’s economic outlook and are developed to incorporate relevant information about past events, current conditions, and reasonable and supportable forecasts. For commercial loans above $3 million, LGD is typically derived from the Company’s own loss experience based on specific risk characteristics.For commercial real estate loans, the LGD is derived from vendor models using property and loan risk characteristics. The estimation of the ACL for pools of loans that share similar risk characteristics involves inputs and assumptions, many of which are derived from vendor and internally-developed models. These inputs and assumptions include, among others, the selection, evaluation and measurement of the reasonable and supportable forecast scenarios, PD and LGD which requires management to apply a significant amount of judgment and involves a high degree of estimation uncertainty. The ACL estimation process applies an economic forecast scenario or a composite of scenarios based on management's judgment and expectations around the current and future macroeconomic outlook. Expected credit losses are estimated over the contractual term of the loans, adjusted for expected prepayments when appropriate. The contractual term of a loan excludes expected extensions, renewals, and modification under certain conditions.

For smaller-balance homogeneous pooled loans with similar risk characteristics such as collateral type and loan purpose (e.g., residential, small business lending under $3 million, consumer and land loans), other modeling techniques are used.These include modeling that relies upon observable inputs such as historical or average loss rates by year of loan origination (i.e.,vintage) and prepayment considerations for future expected contractual loan outstanding balances.

For the smaller-balance homogenous pooled loan segments, the quantitative estimates of expected credit losses are then adjusted to incorporate considerations of current trends and conditions that are not captured in the quantitative credit loss estimates through the use of qualitative or environmental factors. The measurement of expected credit losses on these loan segments is influenced by macro-economic conditions.

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~~Mercantil Bank Holding Corporation~~Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, ~~2018, 2017~~2023, 2022 and ~~2016~~2021

The Company develops and documents its methodology to determine the allowance for loan losses at the portfolio segment level. The Company determines its loan portfolio segments based on the type of loans it carries and their associated risk characteristics. The Company’s loan portfolio segments are: Real Estate, Commercial, Financial Institutions, Consumer and Other. Loans in these portfolio segments have distinguishing borrower needs and differing risks associated with each product type.

Commercial loans correspond to facilities established for specific business purposes such as financing working capital and capital improvements projects and asset-based lending, among others. These may be loan commitments, uncommitted lines ofExpected credit to qualifying customers, short term (one year or less) or longer term credit facilities, and may be secured, unsecured or partially secured. Terms on commercial loans generally do not exceed five years, and exceptions are documented. Commercial loans secured by owner-occupied real estate properties are generally granted to finance the acquisition or operation of commercial real estate properties, with terms similar to the properties’ useful lives or the operating cycle of the businesses. The main source of repayment of these commercial real estate loans is derived from cash flows and not from the income generated by the disposition of the property held as collateral. Commercial loans to borrowers in similar businesses or products with similar characteristics or specific credit requirements are generally evaluated under a standardized commercial credit program. Commercial loans outside the scope of those programs are evaluated on a case by case basis, with consideration of any exposure under an existing commercial credit program.

Loans to financial institutions and acceptances are facilities granted to fund certain transactions classified according to their risk level, and primarily include trade financing facilities through letters of credits, bankers’ acceptances, pre- and post-export financing, and working capital loans, among others. Loans in this portfolio segment are generally granted for terms not exceeding three years and on an unsecured basis under the limits of an existing credit program, primarily to large financial institutions in Latin America which the Company believes are of high quality. Prior to approval, management also considers cross-border and portfolio limits set forth in its programs and credit policies.

Consumer and other loans are retail open-end and closed-end credits extended to individuals for household, family and other personal expenditures. These loans include loans to individuals secured by their personal residence, including first mortgage, home equity and home improvement loans as well as revolving credit card agreements. Because these loans generally consist of a large number of relatively small-balance, homogeneous loans for each type, their risks are generally evaluated collectively.

An individual loan is considered impaired when it is probable that the Company will be unable to collect all amounts due, including both principal and interest, according to the contractual terms of the loan agreement. The Company generally considers as impaired all loans in nonaccrual status, and other loans classified in accordance with an internal risk grading system exceeding a defined threshold when it is probable that an impairment exists and the amount of the potential impairment is reasonably estimable. To determine when it is probable that an impairment exists, the Company considers the extent to which a loan may be inadequately protected by the current net worth and paying capacity of the borrower or any guarantor, or by the current value of the collateral.

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~~Table~~The Company modifies loans related to borrowers experiencing financial difficulties by providing multiple types of ~~Contents~~

~~Mercantil Bank Holding Corporation and Subsidiaries~~

~~Notes to Consolidated Financial Statements~~

~~December 31, 2018, 2017 and 2016~~

When a loan is considered impaired, the potential impairment is measured as the excess of the carrying value of the loan over the present value of expected future cash flows at the measurement date, or the fair value of the collateral in the case where the loan is considered collateral-dependent. If the amount of the present value of the loan’s expected future cash flows exceeds the loan’s carrying amount, the loan is still considered impaired but no impairment is recorded. The present value of an impaired loan results from estimating its future cash flows, discounted at the loan’s effective interest rate. In the case of loans considered collateral-dependent, which are generally certain real estate loans for which repayment is expected to be provided solely by the operation or sale of the underlying collateral, the potential impairment is measured based on the fair value of the asset pledged as collateral. The allowance for loan losses on loans ~~considered TDR is generally determined by discounting the restructured cash flows by the original effective interest rate on the loan.~~

Loans that do not meet the criteria of an individually impaired loan are collectively evaluated for impairment. These loans include large groups of smaller homogeneous loan balances, such as loans in the consumer and other loan portfolio segment, and all other loans that have not been individually identified as impaired. This group of collective loans is evaluated for impairment based on measures of historical losses associated with loans within their respective portfolio segments adjusted by a variety of qualitative factors. These qualitative factors incorporate the most recent data reflecting current economic conditions, industry performance trends or obligor concentrations within each portfolio segment, among other factors. Other adjustments may be made to the allowance for loans collectively evaluated for impairment based on any other pertinent information that management considers may affect the estimation of the allowance for loan losses, including a judgmental assessment of internal and external influences on credit quality that are not fully reflected in historical loss or their risk rating data. The measures of historical losses and the related qualitative adjustments are updated quarterly and semi-annually, respectively, to incorporate the most recent loan loss data reflecting current economic conditions.

~~Loans~~ to borrowers that are domiciled in foreign countries, primarily loans in the Consumer and Financial Institutions ~~portfolio segments,~~portfolios are ~~also evaluated for impairment~~generally estimated by assessing available cash or other types of collateral, and the probability of ~~additional~~ losses arising from the Company’s exposure to transfer risk. The Company defines transfer risk exposure as the possibility that a loan obligation cannot be serviced in the currency of payment (U.S. Dollars) because the borrower’s country of origin may not have sufficient available currency of payment or may have put restraints on its availability, such as currency controls. To determine an individual country’s transfer risk probability, the Company assigns numerical values corresponding to the perceived performance of that country in certain macroeconomic, social and political factors generally considered in the banking industry for evaluating a country’s transfer risk. A defined country’s transfer risk probability is assigned to that country based on an average of the individual scores given to those ~~factors, calculated using an interpolation formula. The results of this evaluation are also updated semi-annually.~~

collateral assets. Loans in ~~the Real Estate,~~ these portfolio are generally fully collateralized with cash, securities and other assets and, therefore, generally have no expected credit losses.

Commercial real estate, commercial and ~~Financial Institutions portfolio segments~~financial institution loans are charged off against the ~~allowance for loan losses~~ACL when they are considered ~~uncollectable.~~uncollectible. These loans are considered ~~uncollectable~~uncollectible when a loss becomes evident to management, which generally occurs when the following conditions are present, among others: (1) a loan or portions of a loan are classified as “loss” in accordance with the internal risk and credit monitoring grading system; (2) a collection attorney has provided a written statement indicating that a loan or portions of a loan are considered uncollectible; and (3) when loans are evaluated individually and the carrying value of a collateral-dependent loan exceeds the appraised value of the asset held as collateral.

Consumer and other retail loans are charged off against the ~~allowance for loan losses~~ACL at the earlier of (1) when management becomes aware that a loss has occurred, or (2) beginning effective as of and for the year ended December 31, 2022, when closed-end retail loans become past due ~~120~~90 days (120 days previously) or open-end retail loans become past due 180 days from the contractual due date. For open and closed-end retail loans secured by residential real estate, any outstanding loan balance in excess of the fair value of the property, less cost to sell, is charged off no later than when the loan is 180 days past due from the contractual due date. Consumer and other retail loans may not be charged off when management can clearly document that a past due loan is well secured and in the process of collection such that collection will occur regardless of delinquency status in accordance with regulatory guidelines applicable to these types of loans.

~~160~~

~~Mercantil Bank Holding Corporation~~concessions. When the Company modifies loans by providing principal forgiveness, the amount of the principal forgiveness is deemed to be uncollectible and, ~~Subsidiaries~~

~~Notes~~therefore, that portion of the loan is written off resulting in a reduction of the amortized cost basis and a corresponding adjustment to ~~Consolidated Financial Statements~~

~~December 31, 2018, 2017 and 2016~~

the ACL.

Recoveries on loans represent collections received on amounts that were previously charged off against the ~~allowance for loan losses.~~ACL. Recoveries are credited to the ~~allowance for loan losses~~ACL when received, to the extent of the amount previously charged off against the ~~allowance for loan losses~~ACL on the related loan. Any amounts collected in excess of this limit are first recognized as interest income, then as a reduction of collection costs, and then as other income.

Accrued Interest Receivable

The Company has elected to present accrued interest receivable related to loans, debt securities available for sale and held to maturity as part of other assets in the Company’s consolidated balance sheets. Therefore, accrued interest receivable is excluded from the amortized cost basis of loans, debt securities available for sale and held to maturity. The Company generally does not estimate an ACL on accrued interest receivable balances since uncollectible accrued interest is timely written off in accordance with the Company's accounting policies for non-accrual loans. Accrued interest receivable on nonaccrual loans is written off by reversing interest income.

~~Transfers~~Emerging Growth Company

Section 107 of ~~Financial Assets~~the JOBS Act provides that, as an “emerging growth company”, or EGC, a Company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. Therefore, an EGC can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. In 2019, the Federal bank regulators recognized or permitted public companies that are EGCs to delay the adoption of accounting pronouncements until those standards would otherwise apply to private companies. The Company benefited from this extended transition period from the date it became a publicly traded company through the date immediately prior to December 31, 2022. As of December 31, 2022, the Company determined that it no longer qualified as an EGC as of December 31, 2022 and, therefore, was unable to continue to benefit from any extended transition period for complying with new or revised accounting standards as of that date. See discussion below of recently adopted accounting pronouncements as a result of this transition. See sections below for more details.

~~Transfers~~Significant Accounting Policies

The following is a description of ~~financial assets are accounted for as sales or purchases when control over~~ the ~~assets has been surrendered~~significant accounting policies and practices followed by the ~~transferor. Control over transferred assets is deemed to be surrendered when~~Company in the assets have been isolated from the transferor, the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and the transferor does not maintain effective control over the transferred assets.

~~Premises and Equipment, Net~~

~~Premises and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation is computed on the straight-line basis over the estimated useful lives~~preparation of the ~~related assets. Leasehold improvements are amortized over~~accompanying consolidated financial statements. These policies conform with generally accepted accounting principles in the remaining term of the lease. Repairs and maintenance are charged to operations as incurred; renewals, betterments and interest during construction are capitalized. Gains or losses on sales of premises and equipment are recorded as other noninterest income or noninterest expense, respectively, at the date of sale.United States (GAAP).

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For purposes of recognition and measurement of an impairment loss, when the independent and identifiable cash flow ofSegment Reporting

The Company is managed using a single ~~asset may not be determinable, the long-lived asset may be grouped with other assets~~segment concept, on a consolidated basis, and management determined that no separate current or historical reportable segment disclosures are required under GAAP.

Principles of like cash flows. Recoverability of an asset or group of assets to be held and used is measured by comparing the carrying amount with future undiscounted net cash flows expected to be generated by the asset or group of assets. If an asset is considered impaired, the impairment recognized is generally measured by the amount by which the carrying amount of the asset or group exceeds its fair value.

~~Bank Owned Life Insurance~~

Bank owned life insurance policies (“BOLI”) are recorded at the cash surrender value of the insurance contracts, which represent the amount that may be realizable under the contracts, at the consolidated balance sheet dates. Changes to the cash surrender value are recorded as other noninterest income in the consolidated statements of operations.

~~Income Taxes~~

Deferred income tax assets and liabilities are determined using the balance sheet method. Under this method, the resulting net deferred tax asset is determined based on the future tax consequences attributable to differences between the financial statement carrying amount of existing assets and liabilities and their respective tax basis. The effect of changes in tax laws or rates is recognized in results in the period that includes the legislation enactment date. A valuation allowance is established against the deferred tax asset to the extent that management believes that it is more likely than not that any tax benefit will not be realized. Income tax expense is recognized on the periodic change in deferred tax assets and liabilities at the current statutory rates.Consolidation

The ~~results of operations of~~accompanying consolidated financial statements include the ~~Company and the majority of its wholly owned subsidiaries are included in the consolidated federal income tax return~~accounts of the Company and its ~~subsidiaries as members~~subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. The Company evaluates whether it has a controlling financial interest in an entity in the form of a variable-interest entity, or a voting interest entity.

Non-Controlling Interest

~~Under the intercompany income tax allocation policy, the Company and the subsidiaries included~~economic or ownership interest retained in the ~~consolidated federal tax group are allocated current~~interest of Amerant Mortgage and ~~deferred taxes~~presents non-controlling interests as ~~if they were separate taxpayers. As~~ a ~~result, the subsidiaries included in~~component of stockholders’ equity on the consolidated ~~group pay their allocation~~balance sheets and separately as net loss attributable to non-controlling interests on the consolidated statement of operations and comprehensive income ~~taxes to~~(loss). At December 31, 2023, Amerant Mortgage became a wholly-owned subsidiary and, as result, there was no noncontrolling interests at that date. At December 31, 2022 and 2021, non-controlling interests in Amerant Mortgage were 20% and 49%, respectively. In 2021 and throughout the ~~Company, or receive payments from the Company to the extent that tax benefits are realized.~~

first quarter of 2022, non-controlling interests in Amerant Mortgage was 49%.

~~161~~

F-19

~~Mercantil Bank Holding Corporation~~Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, ~~2018, 2017~~2023, 2022 and ~~2016~~2021

Estimates

~~Goodwill~~

~~Goodwill represents~~The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the ~~excess~~reported amounts of ~~consideration paid over~~assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates made by management include: (i) the determination of the allowance for credit losses; (ii) the fair values of loans, securities and derivative contracts; (iii) the cash surrender value of bank owned life insurance; (iv) the ~~net~~determination of whether the amount of deferred tax assets of a savings bank acquired in 2006. Goodwill is not amortized but is reviewed for potential impairment at the reporting unit level on an annual basis in the fourth quarter, or on an interim basis if events or circumstances indicate a potential impairment. As part of its testing, the Company may elect to first assess qualitative factors to determine whether it iswill more likely than not be realized; and (v) the determination of estimated contract termination costs. Management believes that these estimates are appropriate. Actual results could differ from these estimates.

In 2023 and 2022, noninterest expenses include $1.6 million and $7.1 million, respectively, of estimated contract termination costs associated with third party vendors resulting from the ~~fair value~~Company’s transition to our new technology provider. Contract termination costs represent estimated expenses to terminate contracts before the end of their terms, and are recognized when the ~~reporting unit is less than~~Company terminates a contract in accordance with its ~~carrying amount (“Step 0”). If~~terms, generally considered the ~~results of~~time when the ~~Step 0 indicate that more likely than not~~Company gives written notice to the ~~reporting unit’s fair value is less than its carrying amount,~~counterparty within the notification period contractually established, or when the Company determines that it no longer derives economic benefits from the ~~fair value~~contracts. Contract termination costs also include expenses associated with the abandonment of ~~the reporting unit relative~~existing capitalized projects which are no longer expected to ~~its carrying amount, including goodwill (“Step 1”). The Company may also elect~~be completed as a result of a contract termination. Changes to bypass the Step 0 and begin with Step 1. If the fair value of the reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired. However, if the carrying amount of the reporting unit exceeds its fair value, an additional procedure must be performed (“Step 2”). In Step 2, the implied fair value of the reporting unit’s goodwill is comparedinitial estimated expenses to ~~the carrying amount of goodwill allocated~~terminate contracts resulting from revisions to that reporting unit. An impairment loss is recorded to the extent that the carrying amount of goodwill exceeds its implied fair value at the measurement date. At December 31, 2018 and 2017, goodwill was considered not impaired and, therefore, no impairment charges were recorded.

~~Securities Sold Under Agreements to Repurchase~~

~~Securities sold under agreements to repurchase are classified as secured borrowings and are reflected at~~timing or the amount of estimated cash ~~received~~flows are recognized in ~~connection with~~ the ~~transaction.~~period of the changes.

~~Derivative Instruments~~Earnings per Share

~~Derivative instruments~~Basic earnings per share is computed by dividing net income available to common stockholders by the weighted-average number of common shares outstanding during each period. Unvested shares of restricted stock are excluded from the basic earnings per share computation.

Income Recognition

Interest income is generally recognized on the ~~consolidated balance sheet~~accrual basis using the interest method. Non-refundable loan origination fees, net of direct costs of originating or acquiring loans, as ~~other assets or other liabilities, at their respective fair values. The accounting for changes in~~well as loan purchase premiums and discounts, are deferred and amortized over the fair value of a derivative instrument is dependent upon whether the derivative has been designated and qualifies as part of a hedging relationship. For derivative instruments that have not been designated and qualified as hedging relationships, the change in their fair value is recognized in current period earnings. For derivative instruments that are designated and qualify as cash flow hedges, the effective portionterm of the ~~gain or loss~~related loans as adjustments to interest income using the level yield method. Purchase premiums and discounts on debt securities are amortized as adjustments to interest income over the derivative instruments is initially recognized as a component of AOCI, and subsequently reclassified into earnings in the same period during which the hedged transactions affect earnings. The ineffective portionestimated lives of the ~~gain or loss, if any, is recognized immediately in earnings. The Company has designated certain derivatives as cash flow hedges. Management periodically evaluates~~securities using the ~~effectiveness of these hedges in offsetting the fluctuations in cash flows due to changes in benchmark interest rates.~~

~~Fair Value Measurement~~

Financial instruments are classified based on a three-level valuation hierarchy required by U.S. GAAP. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follows:



~~Level 1~~	Inputs to the valuation methodology are quoted prices in active markets for identical assets or liabilities. Level 1 assets and liabilities may include debt and equity securities that are traded in an active exchange market, as well as certain U.S. securities that are highly liquid and are actively traded in over-the-counter markets.

level yield method.

F-20



~~Level 2~~	Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets and liabilities. Level 2 assets and liabilities include debt securities with quoted prices that are traded less frequently than exchange traded instruments which value is determined by using a pricing model with inputs that are observable in the market or can be derived principally from, or corroborated by, observable market data. This category generally may include U.S. Government and U.S. Government Sponsored Enterprise mortgage backed debt securities and corporate debt securities.

~~162~~

~~Mercantil Bank Holding Corporation~~Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, ~~2018, 2017~~2023, 2022 and ~~2016~~2021

Brokerage and advisory activities include brokerage commissions and advisory fees. Brokerage commissions earned are related to the dollar amount of trading volume of customers’ transactions. Commissions and related clearing expenses are recorded on a trade-date basis as securities transactions occur. The Company believes that the performance obligation is satisfied on the trade date because that is when the underlying financial instrument has been transferred to/from the customer. Advisory fees are derived from investment advisory fees and account administrative services. Investment advisory fees are recorded as earned on a pro rata basis over the term of the contracts, based on a percentage of the average value of assets managed during the period. The Company believes the performance obligation for providing advisory services is satisfied over time because the customer is receiving and consuming benefits as they are provided by the Company. These fees are assessed and collected at least quarterly. Account administrative fees are charged to customers for the maintenance of their accounts and are earned and collected on a quarterly basis. Fiduciary activities fee income is recognized as earned on a pro rata basis over the term of contracts.



~~Level 3~~	Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities may include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

~~A financial instrument’s categorization within~~

Deposits and services fees include service charges on deposit accounts, fees for banking services provided to customers including wire transfers, overdrafts and non-sufficient funds. Revenue from these sources is generally recognized in accordance with published deposit account agreements for customer accounts or when fixed and determinable per contractual agreements.

Loan-level derivative income is generated from back-to-back derivative transactions with commercial loan clients and with brokers. The Company earns a fee upon inception of the ~~valuation hierarchy~~back-to-back derivative transactions, corresponding to the spread between a wholesale rate and a retail rate.

Stock-based Compensation

The Company may grant share-based compensation and other related awards to its non-employee directors, officers, employees and certain consultants. Compensation cost is measured based on the estimated fair value of the award at the grant date and recognized in earnings as an increase in additional paid in capital on a straight-line basis over the requisite service period or vesting period for each separately vesting portion of each award when awards have graded vesting features. The fair value of the unvested shares of restricted stock and restricted stock units is based ~~upon~~on the ~~lowest level~~market price of ~~input that~~the Company’s Class A common stock at the date of the grant. The fair value of performance stock units at the grant date is ~~significant~~based on estimated fair values using an option pricing model.

Advertising Expenses

~~Recently Issued~~

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Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2023, 2022 and 2021

Voluntary and Involuntary Early Retirement Plan Expenses and other Staff Reduction Costs

Offering Expenses

Specific, non-reimbursable, incremental costs directly attributable to a proposed or actual securities offerings are deferred and charged against the gross proceeds of the offering.

Loan-level derivative expenses

Cash and Cash Equivalents

The Company must comply with federal regulations requiring the maintenance of minimum reserve balances against its deposits. Effective March 26, 2020, the Board of Governors of the Federal Reserve System reduced reserve requirements ratios to zero percent in response to the COVID-19 pandemic, therefore, there were no reserves required at December 31, 2023 and 2022.

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Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2023, 2022 and 2021

Securities

The Company classifies its investments in securities as debt securities available for sale, debt securities held to maturity and equity securities with readily determinable fair value not held for trading. Securities classified as debt securities available for sale are carried at fair value with unrealized gains and losses included in accumulated other comprehensive income (“AOCI”) or accumulated other comprehensive loss (“AOCL”) in stockholders’ equity on an after-tax basis. Equity securities with readily determinable fair value not held for trading primarily consists of mutual funds carried at fair value with unrealized gains and losses included in earnings. Securities classified as debt securities held to maturity are securities the Company has both the ability and intent to hold until maturity and are carried at amortized cost. Investments in stock issued by the Federal Reserve and Federal Home Loan Bank of Atlanta (“FHLB”) are stated at their original cost, which approximates their realizable value. Realized gains and losses from sales of securities are recorded on the trade date and are determined using the specific identification method. Securities purchased or sold are recorded on the consolidated balance sheets as of the trade date. Receivables and payables to and from clearing organizations relating to outstanding transactions are included in other assets or other liabilities. At December 31, 2023 and 2022, securities receivables included in other assets amounted to $0.8 million and $0.9 million, respectively. At December 31, 2023 and 2022, securities payable related to purchases pending settlement and included in other liabilities amounted to $0.3 million.

For debt securities available for sale, the Company evaluates whether: (i) the fair value of the securities is less than the amortized costs basis; (ii) it intends to sell, or it is more likely than not that it will be required to sell, the security before recovery of its amortized cost basis, and (iii) the decline in fair value has resulted from credit losses or other factors. The Company estimates credit losses on debt securities available for sale using a discounted cash flow model. The present value of an impaired debt security results from estimating future cash flows that are expected to be collected, discounted at the debt security’s effective interest rate. The Company develops its estimates about cash flows expected to be collected and determines whether a credit loss exists, generally using information about past events, current conditions, reasonable and supportable forecasts and other qualitative factors including the extent to which fair value is less than amortized cost basis, adverse conditions specifically related to the security, industry or geographic area, changes in conditions of any collateral underlying the securities, changes in credit ratings, failure of the issuer to make scheduled payments, among other qualitative factors specific to the applicable security. If a credit loss exists, the Company records an allowance for the credit losses, limited to the amount by which the fair value is less than the amortized cost basis. The Company recognizes in AOCI/AOCL any decline in the fair value below amortized cost on debt securities available for sale that has not been recorded through an allowance for credit losses.

Loans Held for Sale, at Lower of Cost or Fair Value

Loans originated for investment are transferred into the held for sale classification at the lower of carrying amount or fair value, when they are specifically identified for sale and a formal plan exists to sell them. When the Company determines that a formal plan to sell loans in this category no longer exists, the Company reclassifies these loans to loans held for investment at their carrying value at the date of the transfer, with the loans’ carrying value becoming their new basis. Any resulting difference between the loans unpaid principal amount and their carrying value is amortized through earning for the remainder lives of the loans.

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Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2023, 2022 and 2021

Mortgage Loans Held for Sale, at Fair Value

Loans Held for Investment

Loans represent extensions of credit which the Company has the intent and ability to hold for the foreseeable future or until maturity or payoff. These extensions of credit consist of commercial real estate loans, or CRE loans, (including land acquisition, development and construction loans), owner occupied real estate loans, single-family residential loans, commercial loans, loans to financial institutions and acceptances, and consumer loans. Amounts included in the loan portfolio are stated at the loans unamortized costs reduced by an allowance for credit losses if any. The unamortized cost of a loan consists of its unpaid principal balance, unamortized premiums, discounts and deferred loan origination fees and costs, net of amounts previously charged off. Unamortized premiums, discounts and deferred loan origination costs, including premiums paid on purchases of indirect consumer loans as well as purchases of single-family residential loans and other loans, amounted to $11.2 million and $17.8 million at December 31, 2023 and 2022, respectively.

A loan in nonaccrual status is returned to accrual status when none of the conditions noted when first placed in nonaccrual status are currently present, none of its principal and interest is past due, and management believes there are reasonable prospects of the loan performing in accordance with its terms. For this purpose, management generally considers there are reasonable prospects of performance in accordance with the loan terms when at least six months of principal and interest payments or principal curtailments have been received, and current financial information of the borrower demonstrates that the borrower has the capacity to continue to perform into the near future.

The total outstanding principal amount of a loan is reported as past due thirty days following the date of a missed scheduled payment, based on the contractual terms of the loan.

Loans which have been modified because the borrowers were experiencing financial difficulty and the Company, for economic or legal reasons related to the debtors’ financial difficulties, granted a concession to the debtors that it would not have otherwise considered, are considered troubled debt restructurings (“TDR”).

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Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2023, 2022 and 2021

Allowance for Credit Losses (ACL)

In 2022, the Company adopted Accounting ~~Pronouncements~~Standards Codification Topic 326 - Financial Instruments - Credit Losses (ASC Topic 326), which replaced the incurred loss methodology for estimated probable loan losses with an expected credit loss methodology that is referred to as the current expected credit loss (“CECL”) methodology.

The ACL is a valuation account that is deducted from the amortized cost basis of financial assets carried at their amortized cost, including loans held for investment and debt securities held to maturity, to present the net amount that is expected to be collected throughout the life of the financial asset. The estimated ACL is recorded through a provision for credit losses charged against operations. Management periodically evaluates the adequacy of the ACL to maintain it at a level it believes to be reasonable. The Company uses the same methods used to determine the ACL to assess any reserves needed for off-balance sheet credit risks such as unfunded loan commitments and contingent obligations on letters of credit. These reserves for off-balance sheet credit risks are presented in the liabilities section in the consolidated balance sheets.

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Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2023, 2022 and 2021

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 available cash or other types of collateral, and the probability of losses arising from the Company’s exposure to those collateral assets. Loans in these portfolio are generally fully collateralized with cash, securities and other assets and, therefore, generally have no expected credit losses.

Commercial real estate, commercial and financial institution loans are charged off against the ACL when they are considered uncollectible. These loans are considered uncollectible when a loss becomes evident to management, which generally occurs when the following conditions are present, among others: (1) a loan or portions of a loan are classified as “loss” in accordance with the internal risk and credit monitoring grading system; (2) a collection attorney has provided a written statement indicating that a loan or portions of a loan are considered uncollectible; and (3) when loans are evaluated individually and the carrying value of a collateral-dependent loan exceeds the appraised value of the asset held as collateral. 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 and for the year ended December 31, 2022, when closed-end retail loans become past due 90 days (120 days previously) or open-end retail loans become past due 180 days from the contractual due date. For open and closed-end retail loans secured by residential real estate, any outstanding loan balance in excess of the fair value of the property, less cost to sell, is charged off no later than when the loan is 180 days past due from the contractual due date. Consumer and other retail loans may not be charged off when management can clearly document that a past due loan is well secured and in the process of collection such that collection will occur regardless of delinquency status in accordance with regulatory guidelines applicable to these types of loans.

The Company modifies loans related to borrowers experiencing financial difficulties by providing multiple types of concessions. When the Company modifies loans by providing principal forgiveness, the amount of the principal forgiveness is deemed to be uncollectible and, therefore, that portion of the loan is written off resulting in a reduction of the amortized cost basis and a corresponding adjustment to the ACL.

Accrued Interest Receivable

Emerging Growth Company

Section 107 of the JOBS Act provides that, as an “emerging growth company”, or EGC, ~~the~~a Company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. Therefore, an EGC can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. ~~The Company intends to take advantage of~~In 2019, the ~~benefits of this extended transition period, for as long as it is available and consistent with bank regulatory requirements. The~~ Federal bank regulators ~~have not yet~~ recognized or permitted public companies that are EGCs to delay the adoption of accounting pronouncements until those standards would otherwise apply to private companies. The ~~Federal bank regulators position, unless changed, may cause us~~Company benefited from this extended transition period from the date it became a publicly traded company through the date immediately prior to ~~adopt~~December 31, 2022. As of December 31, 2022, the Company determined that it no longer qualified as an EGC as of December 31, 2022 and, therefore, was unable to continue to benefit from any extended transition period for complying with new or revised accounting standards as of that date. See discussion below of recently adopted accounting pronouncements as a result of this transition. See sections below for more details.

Significant Accounting Policies

Segment Reporting

Principles of Consolidation

The accompanying consolidated financial statements include the ~~SEC.~~accounts of the Company and its subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. The Company evaluates whether it has a controlling financial interest in an entity in the form of a variable-interest entity, or a voting interest entity.

~~Issued~~Non-Controlling Interest

The Company records net loss attributable to non-controlling interests in its consolidated statement of operations and ~~Adopted~~

~~Removal of Outdated OCC Guidance~~

~~In May 2018, the Financial Accounting Standards Board (“FASB”) issued amendments which removed outdated guidance related~~comprehensive income (loss) equal to the ~~Office~~percentage of the ~~Comptroller~~economic or ownership interest retained in the interest of Amerant Mortgage and presents non-controlling interests as a component of stockholders’ equity on the ~~Currency (“OCC”)’s Banking Circular 202,~~ ~~Accounting for Net Deferred Tax Changes. This guidance, which limited~~consolidated balance sheets and separately as net loss attributable to non-controlling interests on the ~~net deferred tax debits that can be carried on a bank’s~~consolidated statement of ~~condition for regulatory purposes, has been rescinded by~~operations and comprehensive income (loss). At December 31, 2023, Amerant Mortgage became a wholly-owned subsidiary and, as result, there was no noncontrolling interests at that date. At December 31, 2022 and 2021, non-controlling interests in Amerant Mortgage were 20% and 49%, respectively. In 2021 and throughout the ~~OCC. These amendments became effective immediately upon issuance and had no impact to the Company’s consolidated financial statements.~~

~~Reclassification~~first quarter of ~~Certain Tax Effects from Accumulated Other Comprehensive Income~~

In February 2018, the FASB issued guidance that allows a reclassification from AOCI to retained earnings for stranded tax effects resulting from the newly enacted federal corporate income tax rate. The amount of the reclassification is the difference between the historical corporate income tax rate and the newly enacted 21% corporate income tax rate pursuant to H.R. 1, An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for fiscal year 2018, known as the Tax Cuts and Jobs Act of 2017 (“the 2017 Tax Act”). This guidance is effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted for (1) public business entities for reporting periods for which financial statements have not been issued, and (2) for other entities for reporting periods for which financial statements have not yet been made available for issuance. The Company early-adopted this guidance and reclassified the effect of remeasuring net deferred tax assets related to items within AOCI to retained earnings resulting2022, non-controlling interests in ~~a $1.1 million increase in retained earnings in 2017.~~

Amerant Mortgage was 49%.

~~163~~

F-19

~~Mercantil Bank Holding Corporation~~Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, ~~2018, 2017~~2023, 2022 and ~~2016~~2021

Estimates

~~Issued~~The preparation of financial statements in conformity with GAAP requires management to make estimates and ~~Not Yet Adopted~~

~~New Guidance on Leases~~assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates made by management include: (i) the determination of the allowance for credit losses; (ii) the fair values of loans, securities and derivative contracts; (iii) the cash surrender value of bank owned life insurance; (iv) the determination of whether the amount of deferred tax assets will more likely than not be realized; and (v) the determination of estimated contract termination costs. Management believes that these estimates are appropriate. Actual results could differ from these estimates.

Earnings per Share

Income Recognition

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Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December ~~2018,~~31, 2023, 2022 and 2021

Brokerage and advisory activities include brokerage commissions and advisory fees. Brokerage commissions earned are related to the ~~FASB issued amendments to new guidance issued in February 2016~~dollar amount of trading volume of customers’ transactions. Commissions and related clearing expenses are recorded on a trade-date basis as securities transactions occur. The Company believes that the performance obligation is satisfied on the trade date because that is when the underlying financial instrument has been transferred to/from the customer. Advisory fees are derived from investment advisory fees and account administrative services. Investment advisory fees are recorded as earned on a pro rata basis over the term of the contracts, based on a percentage of the average value of assets managed during the period. The Company believes the performance obligation for providing advisory services is satisfied over time because the ~~recognition~~customer is receiving and ~~measurement of all leases which has not yet been adopted~~consuming benefits as they are provided by the Company. ~~The amendments in this Update address certain lessor’s issues associated with: (i) sales taxes~~These fees are assessed and collected at least quarterly. Account administrative fees are charged to customers for the maintenance of their accounts and are earned and collected on a quarterly basis. Fiduciary activities fee income is recognized as earned on a pro rata basis over the term of contracts.

Card servicing fees include credit and debit card interchange fees and other ~~similar taxes collected~~fees. Interchange fees are recognized when earned. Trade finance servicing fees, which primarily include commissions on letters of credit, are generally recognized over the service period on a straight line basis.

Deposits and services fees include service charges on deposit accounts, fees for banking services provided to customers including wire transfers, overdrafts and non-sufficient funds. Revenue from ~~lessees, (ii) certain lessor costs~~these sources is generally recognized in accordance with published deposit account agreements for customer accounts or when fixed and ~~(iii) recognition~~determinable per contractual agreements.

Loan-level derivative income is generated from back-to-back derivative transactions with commercial loan clients and with brokers. The Company earns a fee upon inception of ~~variable payments for contracts with lease and nonlease components. The new guidance on leases issued in February 2016 requires lessees~~the back-to-back derivative transactions, corresponding to ~~recognize~~the spread between a ~~right-of-use asset~~wholesale rate and a ~~lease liability for most leases within~~retail rate.

Stock-based Compensation

The Company may grant share-based compensation and other related awards to its non-employee directors, officers, employees and certain consultants. Compensation cost is measured based on the ~~scope~~estimated fair value of the ~~guidance. There were no significant changes~~award at the grant date and recognized in earnings as an increase in additional paid in capital on a straight-line basis over the requisite service period or vesting period for each separately vesting portion of each award when awards have graded vesting features. The fair value of the unvested shares of restricted stock and restricted stock units is based on the market price of the Company’s Class A common stock at the date of the grant. The fair value of performance stock units at the grant date is based on estimated fair values using an option pricing model.

The Company maintains an ESPP. The ESPP allows eligible employees to purchase common stock at a 15% discount applied to the ~~guidance for lessors. These amendments,~~stock price at the beginning or end of the offering period, whichever is lower. Each offering period is six months in length with a purchase limit of 5,000 shares per eligible employee per offering period and a $25,000 per eligible employee contribution limit per year. Each offering period will begin the ~~related pending new guidance, can be adopted using a modified retrospective transition~~first trading day on or after June 1 and December 1 of each year. The fair value of the ESPP at the beginning of the ~~earliest comparative~~offering period ~~presented,~~is based on an estimated fair value using an option pricing model. The Company recognizes compensation expense in an amount equal to the estimated fair value of the 15% discount plus the fair value of the look-back option, over the offering period.

Advertising Expenses

Advertising expenses are expensed as incurred, and ~~provides~~includes amortization of naming rights intangible, except for ~~certain practical expedients.~~media production costs which are expensed upon the first airing of the advertisement, and are included in other noninterest expenses.

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Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2023, 2022 and 2021

Voluntary and Involuntary Early Retirement Plan Expenses and other Staff Reduction Costs

The ~~amendments~~Company accounts for voluntary and involuntary early retirement plan expenses and other staff reduction costs by establishing a liability for costs associated with the exit or disposal activity, including severance and other related ~~new guidance on leases~~costs, when the liability is incurred, rather than when we commit to an exit plan.

Offering Expenses

Specific, non-reimbursable, incremental costs directly attributable to a proposed or actual securities offerings are ~~effective for fiscal years beginning after December 15, 2019,~~deferred and ~~interim periods within fiscal years beginning after December 15, 2020, for private companies,~~charged against the gross proceeds of the offering.

Loan-level derivative expenses

Loan-level derivative expenses are incurred in back-to-back derivative transactions with commercial loan clients and ~~for fiscal periods beginning after December 15, 2018, and interim periods within those fiscal years, for public companies. Early adoption is permitted.~~with brokers. The Company pays a fee upon inception of the back-to-back derivative transactions, corresponding to the spread between a wholesale rate and a retail rate.

Cash and Cash Equivalents

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Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2023, 2022 and 2021

Securities

For debt securities available for sale, the Company evaluates whether: (i) the fair value of the securities is less than the amortized costs basis; (ii) it intends to sell, or it is more likely than not that it will be required to sell, the security before recovery of its amortized cost basis, and (iii) the decline in fair value has resulted from credit losses or other factors. The Company estimates credit losses on debt securities available for sale using a discounted cash flow model. The present value of an impaired debt security results from estimating future cash flows that are expected to be collected, discounted at the debt security’s effective interest rate. The Company develops its estimates about cash flows expected to be collected and determines whether a credit loss exists, generally using information about past events, current conditions, reasonable and supportable forecasts and other qualitative factors including the extent to which fair value is less than amortized cost basis, adverse conditions specifically related to the security, industry or geographic area, changes in conditions of any collateral underlying the securities, changes in credit ratings, failure of the issuer to make scheduled payments, among other qualitative factors specific to the applicable security. If a credit loss exists, the Company records an allowance for the credit losses, limited to the amount by which the fair value is less than the amortized cost basis. The Company recognizes in AOCI/AOCL any decline in the fair value below amortized cost on debt securities available for sale that has not been recorded through an allowance for credit losses.

Loans Held for Sale, at Lower of Cost or Fair Value

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Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2023, 2022 and 2021

Mortgage Loans Held for Sale, at Fair Value

Loans Held for Investment

Loans represent extensions of credit which the Company has the intent and ability to hold for the foreseeable future or until maturity or payoff. These extensions of credit consist of commercial real estate loans, or CRE loans, (including land acquisition, development and construction loans), owner occupied real estate loans, single-family residential loans, commercial loans, loans to financial institutions and acceptances, and consumer loans. Amounts included in the loan portfolio are stated at the loans unamortized costs reduced by an allowance for credit losses if any. The unamortized cost of a loan consists of its unpaid principal balance, unamortized premiums, discounts and deferred loan origination fees and costs, net of amounts previously charged off. Unamortized premiums, discounts and deferred loan origination costs, including premiums paid on purchases of indirect consumer loans as well as purchases of single-family residential loans and other loans, amounted to $11.2 million and $17.8 million at December 31, 2023 and 2022, respectively.

A loan is placed in nonaccrual status when management believes that collection in full of the principal amount of the loan or related interest is in doubt. Management considers that collectability is in doubt when any of the following factors are present, among others: (1) there is a reasonable probability of inability to collect principal, interest or both, on a loan for which payments are current or delinquent for less than ninety days; or (2) when a required payment of principal, interest or both, is delinquent for ninety days or longer, unless the loan is considered well secured and in the process of ~~gathering~~collection in accordance with regulatory guidelines. Once a ~~complete inventory~~loan to a single borrower has been placed in nonaccrual status, management reviews all loans to the same borrower to determine their appropriate accrual status. When a loan is placed in nonaccrual status, accrual of ~~leases~~interest and ~~migrating identified lease data onto a new system platform. Based~~amortization of net deferred loan fees or costs are discontinued, and any accrued interest receivable is reversed against interest income.

Payments received on a ~~preliminary evaluation,~~loan in nonaccrual status are generally applied to its outstanding principal amount, unless there are no doubts on the full collection of the remaining recorded investment in the loan. When there are no doubts on the full collection of the remaining recorded investment in the loan, and there is sufficient documentation to support the collectability of that amount, payments of interest received may be recorded as interest income.

A loan in nonaccrual status is returned to accrual status when none of the conditions noted when first placed in nonaccrual status are currently present, none of its principal and interest is past due, and management believes there are reasonable prospects of the loan performing in accordance with its terms. For this purpose, management generally considers there are reasonable prospects of performance in accordance with the loan terms when at least six months of principal and interest payments or principal curtailments have been received, and current financial information of the borrower demonstrates that the borrower has the capacity to continue to perform into the near future.

The total outstanding principal amount of a loan is reported as past due thirty days following the date of a missed scheduled payment, based on the contractual terms of the loan.

Loans which have been modified because the borrowers were experiencing financial difficulty and the Company, ~~expects~~for economic or legal reasons related to ~~recognize~~the debtors’ financial difficulties, granted a concession to the debtors that it would not have otherwise considered, are considered troubled debt restructurings (“TDR”).

F-24

Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2023, 2022 and 2021

Allowance for Credit Losses (ACL)

F-25

Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2023, 2022 and 2021

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 available cash or other types of collateral, and the probability of losses arising from the Company’s exposure to those collateral assets. Loans in these portfolio are generally fully collateralized with cash, securities and other assets and, therefore, generally have no expected credit losses.

Accrued Interest Receivable

Transfers of Financial Assets

Transfers of financial assets are accounted for as sales or purchases when control over the assets has been surrendered by the transferor. Control over transferred assets is deemed to be surrendered when the assets have been isolated from the transferor, the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and the transferor does not maintain effective control over the transferred assets.

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Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2023, 2022 and 2021

Debt Modifications

Debt modifications or restructures are accounted for as modifications if the terms of the new debt and original instrument are not considered substantially different. The debt is not considered substantially different when the present value of cash flows under the terms of the new debt instrument are less than 10% different from the present value of remaining cash flows under the terms of the original instrument. If the new debt is considered substantially different, the original debt is derecognized and the new debt is recorded at fair value, with any prepayment penalty being amortized over the life of the new borrowing. If the new debt is considered substantially different, the original debt is derecognized with any prepayment penalty recorded as a loss on debt extinguishment as a component of noninterest income.

Premises and Equipment, Net

Premises and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation is computed on the straight-line basis over the estimated useful lives of the related assets. Repairs and maintenance are charged to operations as incurred; renewals, betterments and interest during construction are capitalized. Gains or losses on sales of premises and equipment are recorded as noninterest income at the date of sale.

The Company leases various premises for bank branches under operating leases. The leases have varying terms, with most containing renewal options and annual increases in base rents. Leasehold improvements are amortized over the remaining term of the lease.

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount ~~currently~~of an asset may not be recoverable. For purposes of recognition and measurement of an impairment loss, when the independent and identifiable cash flow of a single asset may not be determinable, the long-lived asset may be grouped with other assets of like cash flows. Recoverability of an asset or group of assets to be held and used is measured by comparing the carrying amount with future undiscounted net cash flows expected to be generated by the asset or group of assets. If an asset is considered impaired, the impairment recognized is generally measured by the amount by which the carrying amount of the asset or group exceeds its fair value.

Leases

The Company determines whether a contract is or contains a lease at inception. For leases with terms greater than twelve months under which the Company is lessee, right-of-use assets and lease liabilities are recorded at the commencement date. Lease liabilities are initially recorded based on the present value of future lease payments over the lease term. Right-of-use assets are initially recorded at the amount of the associated lease liabilities plus prepaid lease payments and initial direct costs, less any lease incentives received. The cost of short term leases is recognized on a straight line basis over the lease term. The lease term includes options to extend if the exercise of those options is reasonably certain and includes termination options if there is reasonable certainty the options will not be exercised. The Company uses its incremental borrowing rate based on the appropriate term and information available at commencement date in determining the present value of lease payments, unless an implicit rate is defined in the contract or is determinable, which is generally not the case. Leases are classified as financing or operating leases at commencement; generally, leases are classified as finance leases when effective control of the underlying asset is transferred. All the leases under which the Company is lessee are classified as operating leases. For operating leases, lease cost is recognized in earnings on a straight line basis over the lease terms.Variable lease costs are recognized in the period in which the obligation for those costs is incurred. Sublease income is recognized as a reduction to lease cost over a straight line basis over the lease terms.

The Company provides equipment financing through a variety of loan and lease structures, including direct or sale type finance leases and operating leases. Direct or sale type finance leases are carried at the aggregate of lease payments receivable and estimated residual value of the leased property, if applicable, less unearned income. Interest income is recognized over the term of the direct or sale type finance leases to achieve a constant periodic rate of return on the outstanding investment. Operating leases are stated at cost, less accumulated depreciation. Rental income in connection with operating leases are included as part of other noninterest income in the Company’s consolidated statement of operations and comprehensive income (loss).

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Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2023, 2022 and 2021

Mortgage Servicing Rights

The Company recognizes as an asset the rights to service mortgage loans (“MSRs”), either when the mortgage loans are sold to third parties and the associated servicing rights are retained or when servicing rights are obtained from acquisitions. These MSRs are initially recorded at fair value. The Company has elected to subsequently measure all MSRs at fair value. MSRs are reported on the consolidated balance sheets in the “Other assets” section, with changes to the fair value recorded as other noninterest income in the consolidated statements of operations and comprehensive (loss) income. At December 31, 2023 and 2022, MSRs totaled $1.4 million and $1.3 million, respectively.

Bank Owned Life Insurance

BOLI policies are recorded at the cash surrender value of the insurance contracts, which represent the amount that may be realizable under the contracts, at the consolidated balance sheet dates. Changes to the cash surrender value are recorded as other noninterest income in the consolidated statements of operations.

Other Real Estate Owned and Repossessed Assets

The Company, from time to time, receives other real estate property, or OREO, and non-real estate repossessed assets, in full or partial satisfaction of its loans. OREO and non-real estate repossessed assets are recorded at the fair value of the asset less the estimated cost to sell, and the loan amount reduced for the remaining balance of the loan. The amount by which the cost basis in the loan exceeds the fair value (net of estimated cost to sell) of the asset is charged to the ACL. Upon transfer to OREO and repossessed assets, the fair value less cost to sell becomes the new cost basis for the asset. Subsequent declines in the fair value of the assets below the new cost basis are recorded through the use of a valuation allowance. The fair value of OREO is generally based upon recent appraisal values of the property, less cost to sell. The fair value of non-real estate repossessed assets is generally provided by third parties based om their assumptions and quoted market prices for similar assets, when available. At December 31, 2023 the Company had OREO totaling $20.2 million (none at December 31, 2022) and is reported on the consolidated balance sheet in Other assets. In 2023, the Company repossessed and sold assets with a carrying value of $6.4 million and realized a loss on sale of approximately $2.6 million. There was no other repossessed assets activity in 2022.

Income Taxes

The results of operations of the Company and the majority of its wholly owned subsidiaries are included in the consolidated federal income tax return of the Company and its subsidiaries as members of the same consolidated tax group.

Under the intercompany income tax allocation policy, the Company and the subsidiaries included in the consolidated federal tax group are allocated current and deferred taxes as if they were separate taxpayers. As a result, the subsidiaries included in the consolidated group pay their allocation of income taxes to the Company, or receive payments from the Company to the extent that tax benefits are realized.

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Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2023, 2022 and 2021

Goodwill

Goodwill primarily represents the excess of consideration paid over the fair value of the net assets acquired in transactions recorded as business combinations. Goodwill is not amortized but is reviewed for potential impairment at the reporting unit level on an annual basis in the fourth quarter, or on an interim basis if events or circumstances indicate a potential impairment. As part of its testing, the Company may elect to first assess qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than ~~one percent~~its carrying amount which includes goodwill (“Step 0”). If the results of Step 0 indicate that more likely than not the reporting unit’s fair value is less than its carrying amount, the Company determines the fair value of the reporting unit relative to its carrying amount, including goodwill (“Step 1”). The Company may also elect to bypass Step 0 and begin with Step 1. If the fair value of the reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired. However, if the carrying amount of the reporting unit exceeds its fair value, then an impairment loss exists and is recognized in an amount equal to that excess, limited to the total amount of goodwill. At December 31, 2023, the Company determined that goodwill related to its subsidiaries Amerant Mortgage and the Cayman Bank was impaired and, therefore, recorded a goodwill impairment charge of $1.3 million in 2023. At December 31, 2022, goodwill was considered not impaired and, therefore, no impairment charges were recorded in 2022.

Securities Sold Under Agreements to Repurchase

Securities sold under agreements to repurchase are classified as secured borrowings and are reflected at the amount of cash received in connection with the transaction.

Derivative Instruments

Derivative instruments are recognized on the consolidated balance sheets as other assets or other liabilities, at their respective fair values. The accounting for changes in the fair value of a derivative instrument is dependent upon whether the derivative has been designated and qualifies as part of a hedging relationship. For derivative instruments that have not been designated and qualified as hedging relationships, the change in their fair value is recognized in current period earnings. For derivative instruments that are designated and qualify as cash flow hedges, the effective portion of the gain or loss on the derivative instruments is initially recognized as a component of AOCI or AOCL, and subsequently reclassified into earnings in the same period during which the hedged transactions affect earnings. The ineffective portion of the gain or loss, if any, is recognized immediately in earnings. The Company has designated certain derivatives as cash flow hedges. Management periodically evaluates the effectiveness of these hedges in offsetting the fluctuations in cash flows due to changes in benchmark interest rates.

The Company also enters into interest rate swaps to provide commercial loan clients the ability to swap from a variable interest rate to a fixed rate. The Company enters into a floating-rate loan with a customer with a separately issued swap agreement allowing the customer to convert floating payments of the loan into a fixed interest rate. To mitigate risk, the Company will generally enter into a matching agreement with a third party to offset the exposure on the customer agreement. These swaps are not considered to be qualified hedging relationships and therefore, all unrealized gain or loss is recorded as part of other noninterest income.

The Company enters into certain contracts involving the risk of dealing with financial institutional derivative counterparties to manage the credit risk exposure on certain interest rate swaps with customers. These contracts are carried at fair value and recorded in the consolidated balance sheet within other assets or other liabilities.

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Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2023, 2022 and 2021

Fair Value Measurement

Financial instruments are classified based on a three-level valuation hierarchy required by GAAP. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follows:


Level 1			Inputs to the valuation methodology are quoted prices in active markets for identical assets or liabilities. Level 1 assets and liabilities may include debt and equity securities that are traded in an active exchange market, as well as certain U.S. securities that are highly liquid and are actively traded in over-the-counter markets.


Level 2			Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets and liabilities. Level 2 assets and liabilities include debt securities with quoted prices that are traded less frequently than exchange traded instruments which value is determined by using a pricing model with inputs that are observable in the market or can be derived principally from, or corroborated by, observable market data. This category generally may include U.S. government and U.S. Government Sponsored Enterprise mortgage backed debt securities and corporate debt securities.


Level 3			Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities may include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

Reclassifications

In 2023 and 2022, advertising expenses are presented separately in the Company’s ~~total~~ consolidated statement of operations and comprehensive income (loss). Prior to 2022, these expenses were presented as a component of other noninterest expenses in the Company’s consolidated statement of operations and comprehensive income (loss). Also, in 2023 and 2022, loan- level derivative expenses are presented separately in the Company’s consolidated statement of operations and comprehensive income (loss). Prior to 2022, these expenses were presented as a component of professional and other services fees in the Company’s consolidated statement of operations and comprehensive income (loss).

In 2023, OREO and repossessed assets, ~~at adoption.~~net expense is presented separately in the Company’s consolidated statement of operations and comprehensive income (loss). OREO and repossessed assets expense includes expenses and revenue (rental income) from the operation of foreclosed property/assets as well as fair value adjustments and gains/losses from the sale of OREO and repossessed assets. In 2022 and 2021, while OREO valuation expense was presented separately, all other OREO-related expenses were presented as part of other operating expenses in the Company’s consolidated statement of operations and comprehensive income (loss). We had no other repossessed assets as of December 31, 2023, and as of and for the years ended December 31 2022 and 2021.

~~New~~

F-30

Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2023, 2022 and 2021

c) Recently Issued Accounting Pronouncements

Issued and Adopted

Guidance on Accounting for Credit Losses on Financial Instruments

In ~~November 2018,~~2022, the ~~FASB~~Company adopted ASC Topic 326 on CECL. 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 following table reflects the impact of adopting CECL on the Company’s consolidated balance sheets:


	January 1, 2022
(in thousands)	As Reported Under ASC 326		Pre-ASC 326 Adoption		Impact of ASC 326 Adoption
Assets
Allowance for credit losses	$	88,573	$	69,899	$	18,674
Deferred tax assets, net	16,103		11,301		4,802
Liabilities
Reserve for unfunded credit commitments	1,702		1,702		—
Stockholder’s Equity
Retained earnings	539,295		553,167		(13,872)

Upon CECL adoption, the Company did not record a change to the allowance for credit losses for off-balance sheet credit exposures, and the Company did not record an allowance for credit losses for debt securities available for sale and held to maturity. See Note 3-Securities for more details on the determination of expected credit losses on debt securities available for sale and held to maturity.

Guidance on Troubled Debt Restructurings

In March 2022, the Financial Accounting Standards Board (“FASB”) issued ~~amendments~~guidance that eliminates the recognition and measurement guidance on troubled debt restructurings, or TDR, for creditors, and aligns it with existing guidance to ~~pending~~determine whether a loan modification results in a new loan or a continuation of an existing loan. Theguidance also requires enhanced disclosures about certain loan modifications by creditors when a borrower is experiencing financial difficulty. The amended guidance is effective in periods beginning after December 15, 2022 using either a prospective or modified retrospective transition approach. Early adoption was permitted if an entity had already adopted the guidance on accounting for ~~current expected~~ credit losses on financial instruments (“CECL”) ~~to, among other things, align the implementation date for private companies’ annual financial statements with the implementation date for their interim financial statements. Prior~~. The Company adopted thisguidance on TDR as of January 1, 2023, and determined that its adoption had no material impact to the issuance of these amendments, the guidance on accounting for CECL was effective for private companies for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. These amendments are effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal to those years, for private companies.

In June 2016, the FASB issued the new guidance on CECL. The new guidance introduces an approach based on expected losses to estimate credit losses on various financial instruments, including loans. It also modifies the impairment model for available-for-sale debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination. The standard is effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal to those years, for private companies, and for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, for public companies. Early adoption is permitted for fiscal years beginning after December 15, 2018.

~~The Company is currently assessing the impact that these changes will have on its~~Company’s consolidated financial ~~statements, when adopted.~~

statements.

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F-31

~~Mercantil Bank Holding Corporation~~Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, ~~2018, 2017~~2023, 2022 and ~~2016~~2021

~~Changes to the Disclosure Requirements for~~Guidance on Fair Value ~~Measurements~~Hedges

In ~~August 2018,~~March 2022, the FASB issued ~~amendments~~amended guidance to ~~the disclosure requirements for~~expand and clarify existing guidance on fair value ~~measurements.~~hedge accounting of interest rate risk for portfolios of financial assets. The amendments ~~modify~~clarify, among others, the “last-of-layer” method for making the fair value ~~measurements disclosures with~~hedge accounting for these portfolios more accessible. The amendment also improves the ~~primary focus~~last-of-layer concepts and expands them to ~~improve effectiveness of disclosures~~non-prepayable financial assets, allowing more flexibility in the ~~notes~~structure of derivatives used to ~~the financial statements that~~hedge interest rate risk. The amended guidance is most important to the users. The new guidance modifies the required disclosures related to the valuation techniques and inputs used, uncertainty in measurement, and changes in measurements applied. These amendments are effective for ~~all~~public business entities for fiscal years beginning after December 15, 2022, and interim periods within those fiscal ~~years, beginning after December 15, 2019. Early adoption is permitted. The Company is currently assessing~~years. For all other entities, the ~~impact this new guidance may have on the Company’s consolidated financial statements and footnote disclosures.~~

~~Targeted Improvements to Accounting for Hedging Activities~~

In August 2017, the FASB issued targeted amendments to the guidance for recognition, presentation and disclosure of hedging activities. These targeted amendments expand and refine hedge accounting for both nonfinancial and financial risk components and align the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. The amendments also simplify the application of hedge accounting guidance. Thisamended guidance is effective for fiscal years beginning after December 15, ~~2018,~~2023. The amended guidance is available for early adoption. The Company adopted this guidance as of January 1, 2023, and determined that its adoption had no impact to its consolidated financial statements.

Facilitation of the Effects of Reference Rate Reform on Financial Reporting

On March 12, 2020, the FASB issued amendments to guidance applicable to contracts, hedging relationships, and other transactions affected by that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. These amendments provide optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship. The amendments also allow entities to make a one-time election to sell, transfer, or both sell and transfer debt securities classified as held to maturity that reference a rate affected by reference rate reform and that are classified as held to maturity before January 1, 2020. In December 2022, the FASB issued new guidance to extend the sunset date of this guidance from December 31, 2022 to December 31, 2024, after which entities will no longer be permitted to apply the relief under this guidance. Prior to this new guidance, these amendments were effective for all entities as of March 12, 2020 through December 31, 2022.

During 2021, the Company completed its assessment of all third-party-provided products, services, and systems that would be affected by any changes to references to LIBOR, including changes to all relevant systems. Beginning in January 2022, the Company started referencing new loans and other products, including loan-level derivatives to the Secured Overnight Financing Rate (“SOFR”). In 2023, the Company completed the migration of all variable rate loans, derivative contracts and other financial instruments from LIBOR to SOFR.

Issued and Not Yet Adopted

New Guidance for Segment Reporting

In November 2023, the FASB issued new guidance to improve disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses. In addition, the amendments require entities to provide all annual disclosures about a reportable segment’s profit or loss and assets currently required under FASB ASC Topic 280 in interim ~~periods within those fiscal years~~periods. Also, this guidance clarifies circumstances in which an entity can disclose multiple segment measures of profit or loss and provides new segment disclosure requirements for entities with a single reportable segment. For public business ~~entities. For all other~~ entities, the amendments are effective for fiscal years beginning after December 15, ~~2019,~~2023, and interim periods within fiscal years beginning after December 15, ~~2020.~~2024. The Company is ~~currently~~in the process of evaluating ~~whether~~ the ~~application~~impact of this ~~new~~ guidance ~~will have an impact to the Company’s~~on its consolidated financial ~~statements.~~statements when adopted.

~~Statement~~

F-32

Table of ~~Cash Flows Classification of Certain Receipts~~Contents

Amerant Bancorp Inc. and ~~Payments~~Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2023, 2022 and 2021

New Guidance on Income Taxes

In ~~August 2016 ,~~December 2023, the FASB issued ~~specific~~amended guidance that requires entities to provide additional income tax disclosures for annual and interim periods. This includes the ~~classification~~disclosure of ~~a number of cash receipts~~more detailed information on income tax reconciliations and ~~payments, including debt prepayment or debt extinguishment costs, settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that~~income tax paid. In addition, the amendments remove certain existing disclosure requirements related to uncertain tax positions and unrecognized deferred tax liabilities. For public business entities, the amendments are ~~insignificant in relation to the effective interest rate of the borrowing, proceeds from the settlement of insurance claims and proceeds from the settlement of BOLI. The new guidance is~~ effective for fiscal years beginning after December 15, ~~2018,~~2024, and interim periods within fiscal years beginning after December 15, ~~2019,~~2025. The Company is in the process of evaluating the impact of this guidance on its consolidated financial statements when adopted.

New Guidance for ~~private companies,~~Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions

On June 30, 2022, the FASB issued new guidance to improve fair value guidance for equity securities subject to contractual sale restrictions. These amendments clarify that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The amendments also clarify that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. The amendments also require additional disclosures for equity securities subject to contractual sale restrictions. For public business entities, the amendments are effective for fiscal years beginning after December 15, ~~2017~~2023, and interim periods within those fiscal ~~years for public companies. Early adoption is permitted.~~years. The Company is ~~currently assessing whether~~in the process of evaluating the impact of this ~~new~~ guidance ~~will have a material impact~~ on its consolidated ~~statement of cash flows~~financial statements when adopted.

~~Recognition and Measurement~~

d) Subsequent Events

The effects of ~~Financial Instruments~~

~~In January 2016, the FASB issued changes to the guidance on the recognition and measurement of~~significant subsequent events, if any, have been recognized or disclosed in these consolidated financial instruments. The changes include, among others, the removal of the available-for-sale category for equity securities and updates to certain disclosure requirements. This standard is effective for annual reporting periods beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019, for private companies, and for fiscal periods beginning December 15, 2017, and interim periods within those fiscal years, for public companies, with limited early adoption permitted. As of December 31, 2018, the Company classifies $23.1 million as available for sale equity securities. The Company currently expects that its available for sale equity securities consisting of a mutual fund investment will be reclassified out of the available for sale classification and presented separately on the face of the consolidated balance sheet. At adoption, the Company currently expects the cumulative unrealized loss of these securities previously recognized in AOCL will be recorded as an adjustment to the opening balance of retained earnings. Any further changes to the fair value of equity securities, other than equity method investments, will be recorded in net income. At December 31, 2018, the cumulative unrealized gross loss on this available for sale equity investment was $1.2 million. The Company is currently assessing whether other

statements.

~~165~~

F-33

~~Mercantil Bank Holding Corporation~~Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, ~~2018, 2017~~2023, 2022 and ~~2016~~2021

~~elements of the new guidance will have a material impact on its consolidated financial position or results of operations or disclosures.~~

~~Revenue from Contracts with Customers~~

In May 2014, the FASB issued a common revenue standard for recognizing revenue from contracts with customers. This new standard establishes principles for reporting information about the nature, amount, timing, and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The amended effective date is annual reporting periods beginning after December 15, 2018, and interim periods beginning after December 15, 2019, for private companies, and for annual reporting periods beginning after December 15, 2017, and interim periods within that reporting period, for public companies. Earlier adoption continues to be permitted. The Company is currently assessing whether the new guidance will have a material impact on its consolidated financial position or results of operations.

2.Interest Earning Deposits with Banks, Other Short-Term Investments and Restricted Cash

At December 31, ~~2018~~2023 and ~~2017~~2022 interest earning deposits with banks are mainly comprised of deposits with the Federal Reserve of approximately ~~$60~~$243 million and ~~$109~~$229 million, respectively. At December 31, ~~2018~~2023 and ~~2017,~~2022 the average interest rate on these deposits was approximately ~~1.88%~~5.64% and ~~1.10%~~1.79%, respectively. These deposits mature within one year.

As of December 31, 2023, the Company held US Treasury Bills classified as part of other short-term investments in the Company’s consolidated balance sheets. As of December 31, 2023, the Company held $6.1 million with an average yield of 4.80% related to these investments. These other short-term investments have a stated maturity of 90 days or less and as such are deemed cash and cash equivalents. There were no other short-term investments at December 31, 2022.


3.	~~Securities~~

At December 31, 2023 and 2022, the Company had restricted cash balances of $25.8 million and $42.2 million, respectively. These balances include cash pledged as collateral, by other banks to us, to secure derivatives’ margin calls. This cash pledged as collateral also represents an obligation, by the bank, to repay according to margin requirements. At December 31, 2023 and 2022, this obligation was $25.0 million and $41.6 million, respectively, which is included as part of other liabilities in the Company’s consolidated balance sheets. In addition, we have cash balances pledged as collateral to secure the issuance of letters of credit by other banks on behalf of our customers.

3.Securities

a) Debt Securities

Debt securities available for sale

Amortized cost, allowance for credit losses and approximate fair values of debt securities available for sale at December 31, 2023 and 2022 are summarized as follows:


	December 31, 2023
	Amortized Cost		Gross Unrealized				Allowance for Credit Losses		Estimated Fair Value
(in thousands)			Gains		Losses
U.S. government sponsored enterprise debt securities (1) (2)	$	591,972	$	2,297	$	(36,962)	$	—	$	557,307
Corporate debt securities (2)	285,217		—		(24,415)		—		260,802
U.S. government agency debt securities (1) (2)	428,626		933		(38,782)		—		390,777
U.S. treasury securities	1,998		—		(7)		—		1,991
Municipal bonds (1)	1,731		—		(63)		—		1,668
Collateralized loan obligations	5,000		—		(43)		—		4,957
Total debt securities available for sale (3)	$	1,314,544	$	3,230	$	(100,272)	$	—	$	1,217,502

December 31, 2018
Amortized
Cost Gross Unrealized Estimated
Fair Value
(in thousands) Gains Losses
U.S. government sponsored enterprise debt securities $ 840,760
$ 2,197
$ (22,178 ) $ 820,779
Corporate debt securities 357,602
139
(5,186 ) 352,555
U.S. government agency debt securities 221,682
187
(4,884 ) 216,985
Municipal bonds 162,438
390
(2,616 ) 160,212
Mutual funds 24,266
—
(1,156 ) 23,110
Commercial paper 12,448
—
(38 ) 12,410
$ 1,619,196
$ 2,913
$ (36,058 ) $ 1,586,051
__________________

(1)Includes residential mortgage-backed securities. As of December 31, 2023, we had total residential-mortgage backed securities, included as part of total debt securities available for sale, with amortized cost of $910.1 million and fair value of $844.5 million.

~~166~~

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~~Mercantil Bank Holding Corporation~~Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, ~~2018, 2017~~2023, 2022 and ~~2016~~2021

(2)Includes commercial mortgage-backed securities. As of December 31, 2023, we had total commercial mortgage-backed securities, included as part of total debt securities available for sale, with amortized cost of $99.7 million and fair value of $91.8 million.

(3)Excludes accrued interest receivable of $6.7 million as of December 31, 2023, which is included as part of other assets in the Company’s consolidated balance sheet. The Company did not record any write offs on accrued interest receivable related to these securities in 2023.

December 31, 2017
Amortized
Cost Gross Unrealized Estimated
Fair Value
(in thousands) Gains Losses
U.S. government sponsored enterprise debt securities $ 889,396
$ 1,784
$ (15,514 ) $ 875,666
Corporate debt securities 310,781
3,446
(835 ) 313,392
U.S. government agency debt securities 293,908
870
(3,393 ) 291,385
Municipal bonds 179,524
2,343
(1,471 ) 180,396
Mutual funds 24,262
—
(645 ) 23,617
U.S. treasury securities 2,700
2
(1 ) 2,701
$ 1,700,571
$ 8,445
$ (21,859 ) $ 1,687,157


	December 31, 2022
	Amortized Cost		Gross Unrealized				Allowance for Credit Losses		Estimated Fair Value
(in thousands)			Gains		Losses
U.S. government sponsored enterprise debt securities (1)(2)	$	480,359	$	981	$	(43,666)	$	—	$	437,674
Corporate debt securities (2)	306,898		1		(26,199)		—		280,700
U.S. government agency debt securities (1)(2)	373,593		42		(42,814)		—		330,821
U.S. treasury securities	1,997		—		(1)		—		1,996
Municipal bonds (1)	1,731		—		(75)		—		1,656
Collateralized loan obligations	5,000		—		(226)		—		4,774
Total debt securities available for sale (3)	$	1,169,578	$	1,024	$	(112,981)	$	—	$	1,057,621

________________

(1)Includes residential mortgage-backed securities. As of December 31, 2022, we had total residential-mortgage backed securities, included as part of total debt securities available for sale, with amortized cost of $743.0 million and fair value of $666.5 million.

(2)Includes commercial mortgage-backed securities. As of December 31, 2022, we had total commercial mortgage-backed securities, included as part of total debt securities available for sale, with amortized cost of $91.0 million and fair value of $80.9 million.

(3)Excludes accrued interest receivable of $5.6 million as of December 31, 2022, which is included as part of other assets in the Company’s consolidated balance sheet. The Company did not record any write offs on accrued interest receivable related to these securities in 2022.

The Company had investments in foreign corporate debt securities available for sale, primarily in Canada, of $10.5 million and $9.7 million at December 31, 2023 and 2022, respectively. At December 31, ~~2018~~2023 and ~~2017,~~2022, the Company had no foreign sovereign or foreign government agency debt ~~securities.~~securities available for sale. Investments in foreign corporate debt securities available for sale are denominated in U.S. Dollars.

In the years ended December 31, 2023 and 2022, proceeds from sales, redemptions and calls, gross realized gains, gross realized losses of debt securities available for sale were as follows:


	Years Ended December 31
(in thousands)	2023		2022		2021
Proceeds from sales, redemptions and calls of debt securities available for sale	$	4,069	$	61,399	$	114,923

Gross realized gains	—		73		4,307
Gross realized losses	(10,823)		(2,522)		(33)
Realized (loss) gain, net	$	(10,823)	$	(2,449)	$	4,274

F-35

Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2023, 2022 and 2021

The Company’s investment in debt securities available for sale with unrealized losses ~~that are deemed temporary,~~ aggregated by the length of time that individual securities have been in a continuous unrealized loss position, are summarized below:


	December 31, 2018
	Less Than 12 Months					12 Months or More					Total
	December 31, 2023																								December 31, 2023
	Less Than 12 Months																			Less Than 12 Months			12 Months or More				Total
(in thousands)	Estimated Fair Value		Unrealized Loss			Estimated Fair Value		Unrealized Loss			Estimated Fair Value		Unrealized Loss			(in thousands)	Number of Securities	Estimated Fair Value	Unrealized Loss		Number of Securities	Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss
U.S. government sponsored enterprise debt securities	$	90,980	$	(2,995	)	$	608,486	$	(19,183	)	$	699,466	$	(22,178	)
Corporate debt securities	243,667		(3,800		)	75,762		(1,386		)	319,429		(5,186		)
U.S. government agency debt securities	63,580		(939		)	133,886		(3,945		)	197,466		(4,884		)
Municipal bonds	1,449		(6		)	94,331		(2,610		)	95,780		(2,616		)
Mutual funds	—		—			22,865		(1,156		)	22,865		(1,156		)
Commercial paper	12,410		(38		)	—		—			12,410		(38		)
	$	412,086	$	(7,778	)	$	935,330	$	(28,280	)	$	1,347,416	$	(36,058	)
U.S. treasury securities
U.S. treasury securities
U.S. treasury securities
Collateralized Loan Obligations
	23


	December 31, 2022
	Less Than 12 Months					12 Months or More					Total
(in thousands)	Number of Securities	Estimated Fair Value		Unrealized Loss		Number of Securities	Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss
U.S. government sponsored enterprise debt securities	250	$	292,595	$	(22,315)	108	$	96,986	$	(21,351)	$	389,581	$	(43,666)
Corporate debt securities	50	203,516		(13,374)		14	72,190		(12,825)		275,706		(26,199)
U.S. government agency debt securities	92	88,056		(4,976)		104	240,668		(37,838)		328,724		(42,814)
Municipal bonds	3	1,656		(75)		—	—		—		1,656		(75)

U.S. treasury securities	1	1,996		(1)		—	—		—		1,996		(1)
Collateralized Loan Obligations	1	4,774		(226)		—	—		—		4,774		(226)
	397	$	592,593	$	(40,967)	226	$	409,844	$	(72,014)	$	1,002,437	$	(112,981)

~~167~~

F-36

~~Mercantil Bank Holding Corporation~~Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, ~~2018, 2017~~2023, 2022 and ~~2016~~2021

There were no debt securities available for sale held by the Company considered delinquent on contractual payments as of December 31, 2023 and 2022, nor were there any securities placed on non-accrual status during the year ended December 31, 2023 and 2022.

December 31, 2017
Less Than 12 Months 12 Months or More Total
(in thousands) Estimated
Fair Value Unrealized
Loss Estimated
Fair Value Unrealized
Loss Estimated
Fair Value Unrealized
Loss
U.S. government sponsored enterprise debt securities $ 333,232
$ (2,956 ) $ 485,555
$ (12,558 ) $ 818,787
$ (15,514 )
U.S. government agency debt securities 92,138
(728 ) 128,316
(2,665 ) 220,454
(3,393 )
Municipal bonds 4,895
(8 ) 76,003
(1,463 ) 80,898
(1,471 )
Corporate debt securities 94,486
(751 ) 3,694
(84 ) 98,180
(835 )
Mutual funds —
—
23,375
(645 ) 23,375
(645 )
U.S. treasury securities —
—
2,199
(1 ) 2,199
(1 )
$ 524,751
$ (4,443 ) $ 719,142
$ (17,416 ) $ 1,243,893
$ (21,859 )
U.S. Government Sponsored Enterprise Debt Securities and U.S. Government Agency Debt Securities

At December 31, ~~2018~~2023 and ~~2017~~2022, the Company held certain debt securities issued or guaranteed by the U.S. government and U.S. government-sponsored entities and ~~agencies held by the Company were issued by institutions which the Company believes to possess little credit risk.~~agencies. The Company does not consider these securities to be other-than-temporarily impaired because the decline in fair value is attributable to changes in interest rates and investment securities markets, generally, and not credit quality. The Company does not have the intentintend to sell these debt securities and it is more likely than not that it will not be required to sell the securities before their anticipated recovery.

~~Unrealized~~ The Company evaluates these securities for credit losses by reviewing current market conditions, the extent and nature of changes in fair value, credit ratings, default and delinquency rates and current analysts’ evaluations. The Company believes the decline in fair value on ~~municipal and corporate~~these debt securities ~~at December 31, 2018 and 2017, are~~is attributable to changes in interest rates and ~~investment~~ securities markets, generally, and asnot credit quality. As a result, ~~temporary~~the Company did not record an ACL on these securities as of December 31, 2023 and 2022.

Corporate Debt Securities

Investments in ~~nature.~~corporate debt securities available for sale in an unrealized loss position as of December 31, 2023 include: (i) securities considered “investment-grade-quality,” primarily issued by financial institutions, with a fair value of $252.4 million ($258.8 million at December 31, 2022) and total unrealized losses of $23.8 million at that date ($24.1 million at December 31, 2022), and (ii) a security considered “non-investment-grade-quality,” issued by a company in the technology industry, with a fair value of $8.4 million ($16.9 million at December 31, 2022) and total unrealized losses of $0.6 million at that date ($2.1 million at December 31, 2022).

As of December 31, 2023 and 2022, our corporate debt securities available for sale issued by financial institutions were primarily “investment-grade-quality”, and had a fair value of $186.9 million and $206.3 million, respectively, and net unrealized losses of $18.2 million and $16.6 million, respectively.

In May 2023, the Company sold a portion of its investment in a corporate debt security held for sale issued by a financial institution, to reduce single point exposure. The Company ~~does not consider these securities~~had proceeds of $0.8 million and realized a pre-tax loss of $1.2 million in connection with this transaction. This loss was recorded in the consolidated statement of operations and comprehensive income (loss) for the year ended December 31, 2023.

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Amerant Bancorp Inc. and Subsidiaries

Notes to ~~be other-than-temporarily impaired because the issuers of these debt securities are considered to be high quality,~~Consolidated Financial Statements

December 31, 2023, 2022 and ~~management~~2021

The Company does not intend to sell ~~these~~its investments in corporate debt securities available for sale and it is more likely than not that it will not be required to sell these investments before their anticipated recovery. The Company evaluates corporate debt securities for credit losses by reviewing various qualitative and quantitative factors such as current market conditions, the extent and nature of changes in fair value, credit ratings, default and delinquency rates, and current analysts’ evaluations. The Company believes the decline in fair value on these debt securities is attributable to changes in interest rates and investment securities markets, generally, and not credit quality. As a result, the Company did not record an ACL on these securities as of December 31, 2023 and 2022.

Debt securities held to maturity

Amortized cost and approximate fair values of debt securities held to maturity are summarized as follows:


	December 31, 2023
	Amortized Cost		Gross Unrealized				Estimated Fair Value		Allowance for Credit Losses
(in thousands)			Gains		Losses
U.S. government agency debt securities (1)	$	63,883	$	387	$	(6,914)	$	57,356	$	—
U.S. government sponsored enterprise debt securities (1)(2)	162,762		—		(15,173)		147,589		—
Total debt securities held to maturity (3)	$	226,645	$	387	$	(22,087)	$	204,945	$	—

December 31, 2018
Amortized
Cost Gross Unrealized Estimated
Fair Value
(in thousands) Gains Losses
Securities Held to Maturity -
U.S. government sponsored enterprise debt securities $ 82,326
$ —
$ (3,889 ) $ 78,437
U.S. Government agency debt securities 2,862
—
(49 ) 2,813
$ 85,188
$ —
$ (3,938 ) $ 81,250
__________________

(1)Includes residential mortgage-backed securities. As of December 31, 2023, we had total residential mortgage-backed securities, included as part of total debt securities held to maturity, with amortized cost of $199.2 million and fair value of $179.2 million

(2)Includes commercial mortgage-backed securities. As of December 31, 2023, we had total commercial mortgage-backed securities, included as part of total debt securities held to maturity, with amortized cost of $27.5 million and fair value of $25.7 million.

(3)Excludes accrued interest receivable of $0.7 million as of December 31, 2023, which is included as part of other assets in the Company’s consolidated balance sheet. The Company did not record any write offs on accrued interest receivable related to these securities in 2023.


	December 31, 2022
	Amortized Cost		Gross Unrealized				Estimated Fair Value		Allowance for Credit Losses
(in thousands)			Gains		Losses
U.S. government agency debt securities (1)	$	68,556	$	109	$	(7,778)	$	60,887	$	—
U.S. government sponsored enterprise debt securities (1)(2)	173,545		—		(16,823)		156,722		—
Total debt securities held to maturity (3)	$	242,101	$	109	$	(24,601)	$	217,609	$	—

_______________

(1)Includes residential mortgage-backed securities. As of December 31, 2022, we had total residential mortgage-backed securities, included as part of total debt securities held to maturity, with amortized cost of $213.9 million and fair value of $191.4 million.

(2)Includes commercial mortgage-backed securities. As of December 31, 2022, we had total commercial mortgage-backed securities, included as part of total debt securities held to maturity, with amortized cost of $28.2 million and fair value of $26.2 million.

(3)Excludes accrued interest receivable of $0.8 million as of December 31, 2022 which is included as part of other assets in the Company’s consolidated balance sheet. The Company did not record any write offs on accrued interest receivable related to these securities in 2022.

~~168~~

F-38

~~Mercantil Bank Holding Corporation~~Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, ~~2018, 2017~~2023, 2022 and ~~2016~~2021

The Company’s investment in debt securities held to maturity with unrealized losses aggregated by length of time that individual securities have been in a continuous unrealized loss position, are summarized below:


	December 31, 2023
	Less Than 12 Months					12 Months or More					Total
(in thousands)	Number of Securities	Estimated Fair Value		Unrealized Loss		Number of Securities	Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss
U.S. government agency debt securities	—	$	—	$	—	12	$	47,370	$	(6,914)	$	47,370	$	(6,914)
U.S. government sponsored enterprise debt securities	—	—		—		34	147,590		(15,173)		147,590		(15,173)
	—	$	—	$	—	46	$	194,960	$	(22,087)	$	194,960	$	(22,087)


	December 31, 2022
	Less Than 12 Months					12 Months or More					Total
(in thousands)	Number of Securities	Estimated Fair Value		Unrealized Loss		Number of Securities	Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss
U.S. government agency debt securities	—	$	—	$	—	12	$	50,755	$	(7,778)	$	50,755	$	(7,778)
U.S. government sponsored enterprise debt securities	31	142,033		(9,085)		3	14,689		(7,738)		156,722		(16,823)
	31	$	142,033	$	(9,085)	15	$	65,444	$	(15,516)	$	207,477	$	(24,601)

F-39

Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2023, 2022 and 2021

December 31, 2017
Amortized
Cost Gross Unrealized Estimated
Fair Value
(in thousands) Gains Losses
Securities Held to Maturity -
U.S. government sponsored enterprise debt securities $ 86,826
$ 47
$ (441 ) $ 86,432
U.S. Government agency debt securities 3,034
—
—
3,034
$ 89,860
$ 47
$ (441 ) $ 89,466

Beginning January 1, 2022, the Company evaluates all securities held to maturity quarterly to determine if any securities in an unrealized loss position require an ACL. 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 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. The Company monitors the credit quality of held to maturity securities through the use of credit ratings. Credit ratings are monitored by the Company on at least a quarterly basis. As of December 31, 2023 and 2022, all held to maturity securities held by the Company were rated investment grade or higher.

Contractual maturities

Contractual maturities of debt securities at December 31, ~~2018~~2023 are as follows:


	Available for Sale					Held to Maturity
	Available for Sale												Available for Sale		Held to Maturity
(in thousands)	Amortized Cost			Estimated Fair Value		Amortized Cost		Estimated Fair Value		(in thousands)	Amortized Cost	Estimated Fair Value		Amortized Cost		Estimated Fair Value
Within 1 year	$	54,477		$	54,306	$	—	$	—
After 1 year through 5 years	330,024			325,752		—		—
After 5 years through 10 years	166,152			163,039		—		—
After 10 years	1,044,277			1,019,844		85,188		81,250
No contractual maturities	24,266			23,110		—		—
	$	1,619,196		$	1,586,051	$	85,188	$	81,250
			$
			$
			$

Actual maturities of ~~investment~~debt securities available for sale and held to maturity may differ from contractual maturities because ~~borrowers~~issuers may have the right to call or prepay obligations with or without prepayment penalties. ~~Proceeds from sales and calls~~

b) Equity securities with readily available fair value not held for trading

As of ~~securities~~December 31, 2023, the Company had an equity security with readily available fair value not held for ~~sale in 2018 and 2017 were approximately$67~~trading with an original cost of $2.5 million and $393 million, respectively, with gross realized gains of $0.5 million and gross realized losses of $1.4 million in 2018 (gross realized gains of $2.6 million and gross realized losses of $4.2 million in 2017).

~~At December 31, 2018 and 2017, securities available for sale with a~~ fair value of ~~approximately $50~~$2.5 million, which was purchased in the second quarter of 2023. As of December 31, 2022, the Company had equity securities with readily available fair value not held for trading with an original cost of $12.7 million and ~~$246~~fair value of $11.4 million. These equity securities have no stated maturities. The Company recognized in earnings unrealized losses of $33 thousand and $1.3 million during the years ended December 31, 2023 and 2022, respectively, related to the change in fair value of equity securities with readily available fair value not held for trading.

In February 2023, the Company sold its equity securities with readily available fair value not held for trading, with a total fair value of $11.2 million at the time of sale, and recognized a net loss of $0.2 million in connection with this transaction.

c)Securities Pledged

As of December 31, 2023 and 2022, the Company had $206.4 million and $314.5 million, respectively, ~~were~~in securities pledged as collateral. ~~In 2018, these~~These securities were pledged ~~as collateral~~ to secure ~~sweep accounts. In 2017, these securities were pledged as collateral to secure~~public funds, advances from the ~~FHLB~~Federal Home Loan Bank and ~~sweep accounts.~~

for other purposes as permitted by law.

~~169~~

F-40

~~Mercantil Bank Holding Corporation~~Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, ~~2018, 2017~~2023, 2022 and ~~2016~~2021

4.Loans

a) Loans held for investment


4.	~~Loans~~

~~The loan portfolio consists~~Loans held for investment consist of the following loan classes:


(in thousands)	December 31, 2023		December 31, 2022
Real estate loans
Commercial real estate
Nonowner occupied	$	1,616,200	$	1,615,716
Multi-family residential	407,214		820,023
Land development and construction loans	300,378		273,174
	2,323,792		2,708,913
Single-family residential	1,466,608		1,102,845
Owner occupied	1,175,331		1,046,450
	4,965,731		4,858,208
Commercial loans	1,503,187		1,381,234
Loans to financial institutions and acceptances	13,375		13,292
Consumer loans and overdrafts	391,200		604,460
Total loans held for investment, gross (1)	$	6,873,493	$	6,857,194

_________________

(1)Excludes accrued interest receivable.

Real estate loans include commercial loans secured by real estate properties. Commercial loans secured by non-owner occupied real estate properties are generally granted to finance the acquisition or operation of commercial real estate properties, with terms similar to the properties’ useful lives or the operating cycle of the businesses. The main source of repayment of these real estate loans is derived from cash flows or conversion of productive assets and not from the income generated by the disposition of the property held as collateral. The main repayment source of loans granted to finance land acquisition, development and construction projects is generally derived from the disposition of the properties held as collateral, with the repayment capacity of the borrowers and any guarantors considered as alternative sources of repayment. Commercial loans secured by owner-occupied real estate properties are generally granted to finance the acquisition or operation of commercial real estate properties, with terms similar to the properties’ useful lives or the operating cycle of the businesses. The main source of repayment of these commercial real estate loans is derived from cash flows and not from the income generated by the disposition of the property held as collateral.

F-41

Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2023, 2022 and 2021

(in thousands) December 31,
2018 December 31,
2017
Real estate loans
Commercial real estate
Nonowner occupied $ 1,809,356
$ 1,713,104
Multi-family residential 909,439
839,709
Land development and construction loans 326,644
406,940
3,045,439
2,959,753
Single-family residential 533,481
512,754
Owner-occupied 777,022
610,386
4,355,942
4,082,893
Commercial loans 1,380,428
1,354,755
Loans to financial institutions and acceptances 68,965
497,626
Consumer loans and overdrafts 114,840
130,951
$ 5,920,175
$ 6,066,225

Single-family residential and consumer and other loans are retail open-end and closed-end credits extended to individuals for household, family and other personal expenditures. Single-family and consumer loans include loans to individuals secured by their personal residence, including first mortgage, home equity and home improvement loans as well as revolving credit card agreements. In addition, consumer and other loans, include purchased indirect lending loans we purchase from time to time from third parties. Because these loans generally consist of a large number of relatively small-balance, homogeneous loans for each type, their risks are generally evaluated collectively. In 2023, the Company purchased $26.5 million in single-family residential loans. In 2022, the Company purchased $385.8 million in indirect consumer loans and $173.1 million in single-family residential loans. There were no purchases of indirect consumer loans in 2023.

At December 31, 2023 and 2022, loans with an outstanding principal balance of $2.5 billion and $1.2 billion, respectively, were pledged as collateral to secure advances from the FHLB.

The amounts in the table above include loans held for investment under syndication facilities for approximately ~~$807~~$271.8 million and ~~$989~~$367.0 million at December 31, ~~2018~~2023 and ~~2017,~~2022, respectively, which include Shared National Credit facilities, or SNCs, and agreements to enter into credit agreements among other lenders (club deals), and other agreements. These loans are primarily designed for providing working capital to certain qualified domestic and international commercial entities meeting our credit quality criteria and concentration limits, and approved in accordance with credit policies. In addition, consumer loans and overdrafts in the table above include indirect consumer loans purchased totaling $210.9 million and $433.0 million at December 31, 2023 and 2022, respectively.

International loans included above were $87.6 million and $99.2 million at December 31, 2023 and 2022, respectively, mainly single-family residential loans. These loans are generally fully collateralized with cash, cash equivalents or other financial instruments.

F-42

Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2023, 2022 and 2021

The age analysis of the loan portfolio by class as of December 31, 2023 and 2022 is summarized in the following table:


	December 31, 2023
	Total Loans, Net of Unearned Income				Loans Past Due
(in thousands)			Current Loans		30-59 Days		60-89 Days		Greater than 90 Days		Total Past Due
Real estate loans
Commercial real estate
Nonowner occupied	$	1,616,200	$	1,615,772	$	428	$	—	$	—	$	428
Multi-family residential	407,214		403,288		2,360		1,558		8		3,926
Land development and construction loans	300,378		300,378		—		—		—		—
	2,323,792		2,319,438		2,788		1,558		8		4,354
Single-family residential	1,466,608		1,453,073		4,196		3,511		5,828		13,535
Owner occupied	1,175,331		1,164,059		9,642		185		1,445		11,272
	4,965,731		4,936,570		16,626		5,254		7,281		29,161
Commercial loans	1,503,187		1,472,531		23,128		1,626		5,902		$	30,656
Loans to financial institutions and acceptances	13,375		13,375		—		—		—		—
Consumer loans and overdrafts	391,200		383,689		3,142		4,277		92		7,511
	$	6,873,493	$	6,806,165	$	42,896	$	11,157	$	13,275	$	67,328

F-43

Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2023, 2022 and 2021


	December 31, 2022
	Total Loans, Net of Unearned Income				Loans Past Due
(in thousands)			Current Loans		30-59 Days		60-89 Days		Greater than 90 Days		Total Past Due
Real estate loans
Commercial real estate
Nonowner occupied	$	1,615,716	$	1,615,716	$	—	$	—	$	—	$	—
Multi-family residential	820,023		818,394		1,387		242		—		1,629
Land development and construction loans	273,174		273,174		—		—		—		—
	2,708,913		2,707,284		1,387		242		—		1,629
Single-family residential	1,102,845		1,098,310		3,140		150		1,245		4,535
Owner occupied	1,046,450		1,039,928		172		6,014		336		6,522
	4,858,208		4,845,522		4,699		6,406		1,581		12,686
Commercial loans	1,381,234		1,373,042		1,523		475		6,194		$	8,192
Loans to financial institutions and acceptances	13,292		13,292		—		—		—		—
Consumer loans and overdrafts	604,460		601,921		2,439		62		38		2,539
	$	6,857,194	$	6,833,777	$	8,661	$	6,943	$	7,813	$	23,417

F-44

Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2023, 2022 and 2021

Nonaccrual status

The following table presents the amortized cost basis of loans on nonaccrual status and loans past due over 90 days and still accruing as of December 31, 2023 and 2022:


	December 31, 2023
(in thousands)	Nonaccrual Loans With No Related Allowance		Nonaccrual Loans With Related Allowance		Total Nonaccrual Loans (1)		Loans Past Due Over 90 Days and Still Accruing
Real estate loans
Commercial real estate
Nonowner occupied	$	—	$	—	$	—	$	—
Multi-family residential	8		—		8		—


Single-family residential	773		1,686		2,459		5,218
Owner occupied	3,693		129		3,822		—
	4,474		1,815		6,289		5,218
Commercial loans	3,669		18,280		21,949		857

Consumer loans and overdrafts	—		38		38		49
Total (1)	$	8,143	$	20,133	$	28,276	$	6,124

_____________

(1)The Company did not recognize any interest income on nonaccrual loans during the year ended December 31, 2023.


	December 31, 2022
(in thousands)	Nonaccrual Loans With No Related Allowance		Nonaccrual Loans With Related Allowance		Total Nonaccrual Loans (1)		Loans Past Due Over 90 Days and Still Accruing
Real estate loans
Commercial real estate
Nonowner occupied	$	20,057	$	—	$	20,057	$	—
Multi-family residential	—		—		—		—


Single-family residential	—		1,526		1,526		253
Owner occupied	5,936		334		6,270		—
	25,993		1,860		27,853		253
Commercial loans	482		8,789		9,271		183

Consumer loans and overdrafts	—		4		4		35
Total (1)	$	26,475	$	10,653	$	37,128	$	471

_____________

(1)The Company did not recognize any interest income on nonaccrual loans during the year ended December 31, 2022.

F-45

Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2023, 2022 and 2021

b) Loans held for sale


(in thousands)	December 31, 2023		December 31, 2022













Loans held for sale at the lower of cost or fair value
Real estate loans
Commercial real estate

Multi-family residential	$	309,612	$	—
Land development and construction loans	55,607		—
Total loans held for sale at the lower of fair value or cost (1)	$	365,219	$	—

Mortgage loans held for sale at fair value
Land development and construction loans	12,778		9,424
Single-family residential	13,422		53,014
Total Mortgage loans held for sale, at fair value (2)	$	26,200	$	62,438
Total loans held for sale (3)	$	391,419	$	62,438

__________________

(2)Loans held for sale in connection with Amerant Mortgage’s ongoing business.

(3)Excludes accrued interest receivable.

In January 2024, the Company completed the sale of approximately $365.2 million in Houston-based CRE loans carried at the lower of fair value or cost at December 31, 2023. There was no material impact to the Company’s results of operations in 2024 as result of this transaction.

In 2023, the Company sold one New York-based CRE loan carried at the lower of fair value or cost of approximately $43.3 million, and recognized a loss on sale of $2.0 million in connection with this transaction. In 2022, the Company completed the sale of approximately $57.3 million in loans held for sale carried at the lower of fair value or cost related to the New York portfolio, at their par value.

c) Concentration of risk

While seeking diversification of our loan portfolio held for investment and held for sale, the Company is dependent mostly on the economic conditions that affect South Florida and the greater Houston and ~~the greater~~ New York City ~~area,~~areas, especially the five New York City boroughs. At December 31, 2023, our commercial real estate loans held for investment based in South Florida, Houston, New York and other regions were $1.7 billion, $317 million, $217 million and $65 million, respectively.

Diversification is managed through policies with limitations for exposure to individual or related debtors and for country risk exposure.

d) Accrued interest receivable on loans

Accrued interest receivable on total loans, including loans held for investment and held for sale, was $44.2 million and $27.7 million as of December 31, 2023 and 2022, respectively. In 2023, the Company reversed approximately $0.9 million of accrued interest receivable against interest income in connection with real estate and commercial loans placed in non-accrual status during the period. In the year ended December 31, 2022, the Company reversed accrued interest receivable on loans placed in non-accrual status during the year against interest income of approximately $0.9 million related to consumer loans and overdrafts and a total of $0.1 million related to real estate loans and commercial loans.

~~170~~

F-46

~~Mercantil Bank Holding Corporation~~Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, ~~2018, 2017~~2023, 2022 and ~~2016~~2021

5.Allowance for Credit Losses

The ~~following tables summarize international loans~~analyses by ~~country, net~~loan segment of ~~loans fully collateralized with cash of approximately $19.5 million and $31.9 million at~~the changes in the ACL for the years ended December 31, ~~2018~~2023 and ~~2017, respectively.~~2022 are summarized in the following tables:


	December 31, 2023
(in thousands)	Real Estate		Commercial		Financial Institutions		Consumer and Others		Total
Balances at beginning of the year	$	25,237	$	25,888	$	—	$	32,375	$	83,500

Provision for credit losses - loans	10,761		27,412		—		22,004		60,177
Loans charged-off	(10,418)		(21,395)		—		(28,052)		(59,865)
Recoveries	296		9,904		—		1,492		11,692
Balances at end of the year	$	25,876	$	41,809	$	—	$	27,819	$	95,504


	December 31, 2022
(in thousands)	Real Estate		Commercial		Financial Institutions		Consumer and Others		Total
Balances at beginning of the year	$	17,952	$	38,979	$	42	$	12,926	$	69,899
Cumulative effect of adoption of accounting principle (1)	17,418		(8,281)		(42)		9,579		18,674
Provision for (reversal of) credit losses - loans	(6,328)		1,619		—		18,654		13,945
Loans charged-off	(3,852)		(9,114)		—		(9,140)		(22,106)
Recoveries	47		2,685		—		356		3,088
Balances at end of the year	$	25,237	$	25,888	$	—	$	32,375	$	83,500

_________________

(1)The Company adopted CECL effective as of January 1, 2022. See Note 1 to our audited annual consolidated financial statements in this Form 10-K for details on the adoption of CECL.

F-47

December 31, 2018
(in thousands) Venezuela
Others ⁽¹⁾
Total
Real estate loans
Single-family residential ⁽²⁾
$ 128,971
$ 6,467
$ 135,438
Loans to financial institutions and acceptances —
49,000
49,000
Commercial loans —
73,636
73,636
Consumer loans and overdrafts ⁽³⁾
28,191
13,494
41,685
$ 157,162
$ 142,597
$ 299,759

~~__________________~~


~~(1)~~	~~Loans to borrowers in seventeen other countries which do not individually exceed 1% of total assets.~~


~~(2)~~	~~Corresponds to mortgage loans secured by single-family residential properties located in the U.S.~~


~~(3)~~	Mostly comprised of credit card extensions of credit to customers with deposits with the Bank. Charging privileges for Venezuela residents card holders are suspended when the cardholders’ average deposits decline below the outstanding credit balance. At the beginning of 2018, the Company changed the monitoring of such balances from quarterly to monthly.

December 31, 2017
(in thousands) Brazil Venezuela Chile
Others ⁽¹⁾
Total
Real estate loans
Single-family residential⁽²⁾
$ 219
$ 145,069
$ 179
$ 7,246
$ 152,713
Loans to financial institutions and acceptances 129,372
—
93,000
258,811
481,183
Commercial loans 8,451
—
—
60,843
69,294
Consumer loans and overdrafts ⁽³⁾
3,046
37,609
1,364
10,060
52,079
$ 141,088
$ 182,678
$ 94,543
$ 336,960
$ 755,269

~~__________________~~


~~(1)~~	~~Loans to borrowers in eighteen other countries which do not individually exceed 1% of total assets.~~


~~(2)~~	~~Corresponds to mortgage loans secured by single-family residential properties located in the U.S.~~


~~(3)~~	~~Mostly comprised of credit card extensions of credit secured to customers with deposits with the Bank. Charging privileges are suspended, if the deposits decline below the outstanding credit balance.~~

~~171~~

~~Mercantil Bank Holding Corporation~~Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, ~~2018, 2017~~2023, 2022 and ~~2016~~2021

~~The age analysis of the loan portfolio by class, including nonaccrual loans, as ofDecember 31, 2018 and 2017 are summarized in the following tables:~~

December 31, 2018
Total Loans,
Net of
Unearned
Income Past Due Total Loans in
Nonaccrual
Status Total Loans
90 Days or More
Past Due
and Accruing
(in thousands) Current 30-59
Days 60-89
Days Greater than
90 Days Total Past
Due
Real estate loans
Commercial real estate
Nonowner occupied $ 1,809,356
$ 1,809,356
$ —
$ —
$ —
$ —
$ —
$ —
Multi-family residential 909,439
909,439
—
—
—
—
—
—
Land development and construction loans 326,644
326,644
—
—
—
—
—
—
3,045,439
3,045,439
—
—
—
—
—
—
Single-family residential 533,481
519,730
7,910
2,336
3,505
13,751
6,689
419
Owner-occupied 777,022
773,876
2,800
160
186
3,146
4,983
—
4,355,942
4,339,045
10,710
2,496
3,691
16,897
11,672
419
Commercial loans 1,380,428
1,378,022
704
1,062
640
2,406
4,772
—
Loans to financial institutions and acceptances 68,965
68,965
—
—
—
—
—
—
Consumer loans and overdrafts 114,840
113,227
474
243
896
1,613
35
884
$ 5,920,175
$ 5,899,259
$ 11,888
$ 3,801
$ 5,227
$ 20,916
$ 16,479
$ 1,303

December 31, 2017
Total Loans,
Net of
Unearned
Income Past Due Total Loans in
Nonaccrual
Status Total Loans
90 Days or More
Past Due
and Accruing
(in thousands) Current 30-59
Days 60-89
Days Greater than
90 Days Total Past
Due
Real estate loans
Commercial real estate
Nonowner occupied $ 1,713,104
$ 1,712,624
$ —
$ —
$ 480
$ 480
$ 489
$ —
Multi-family residential 839,709
839,709
—
—
—
—
—
—
Land development and construction loans 406,940
406,940
—
—
—
—
—
—
2,959,753
2,959,273
—
—
480
480
489
—
Single-family residential 512,754
501,393
6,609
2,750
2,002
11,361
5,004
226
Owner-occupied 610,386
602,643
3,000
174
4,569
7,743
12,227
—
4,082,893
4,063,309
9,609
2,924
7,051
19,584
17,720
226
Commercial loans 1,354,755
1,350,667
385
5
3,698
4,088
8,947
—
Loans to financial institutions and acceptances 497,626
497,626
—
—
—
—
—
—
Consumer loans and overdrafts 130,951
130,846
57
29
19
105
55
—
$ 6,066,225
$ 6,042,448
$ 10,051
$ 2,958
$ 10,768
$ 23,777
$ 26,722
$ 226

~~At December 31, 2018 and 2017, loans with an outstanding principal balance of $1,680 million and $1,476 million, respectively, were pledged as collateral to secure advances from the FHLB.~~

~~172~~

~~Mercantil Bank Holding Corporation and Subsidiaries~~

~~Notes to Consolidated Financial Statements~~

~~December 31, 2018, 2017 and 2016~~


5.	~~Allowance for Loan Losses~~

The analyses by loan segment of the changes in the allowance for loan losses or ALL (ACL in 2023 and 2022) for the ~~years~~year ended December 31, ~~2018, 2017 and 2016~~2021 and its allocation by impairment methodology and the related investment in loans, net as of December 31, ~~2018, 2017 and 2016 are~~2021 is summarized in the following ~~tables:~~table:


	December 31, 2021
(in thousands)	Real Estate		Commercial		Financial Institutions		Consumer and Others		Total
Balances at beginning of the year	$	50,227	$	48,130	$	1	$	12,544	$	110,902
Reversal of (provision for) credit losses	(21,338)		1,463		41		3,334		(16,500)
Loans charged-off
Domestic	(11,062)		(13,227)		—		(3,491)		(27,780)
International	—		—		—		—		—
Recoveries	125		2,613		—		539		3,277
Balances at end of the year	$	17,952	$	38,979	$	42	$	12,926	$	69,899
Allowance for loan losses by impairment methodology
Individually evaluated	$	546	$	10,462	$	—	$	783	$	11,791
Collectively evaluated	17,406		28,517		42		12,143		58,108
	$	17,952	$	38,979	$	42	$	12,926	$	69,899
Investment in loans, net of unearned income
Individually evaluated	$	7,285	$	39,785	$	—	$	5,634	$	52,704
Collectively evaluated	2,346,923		2,075,338		14,127		920,348		5,356,736
	$	2,354,208	$	2,115,123	$	14,127	$	925,982	$	5,409,440

The ACL increased by $12.0 million, or14.4% at December 31, 2023, compared to December 31, 2022. The ACL as a percentage of total loans held for investment was 1.39% at December 31, 2023 compared to 1.22% at December 31, 2022. The provision for credit losses on loans in 2023 was partially offset by net charge-offs. The $60.2 million provision for credit losses on loans includes $48.4 million in additional reserve requirements for loan charge-offs and credit quality, $4.1 million to account for loan growth and composition changes during the period, and $12.2 million to reflect macroeconomic conditions and loss factor updates. This provision was offset by a release of $4.5 million related to the classification of the Houston CRE multifamily portfolio as held-for-sale.

F-48

December 31, 2018
(in thousands) Real Estate Commercial Financial
Institutions Consumer
and Others Total
Balances at beginning of the year $ 31,290
$ 32,687
$ 4,362
$ 3,661
$ 72,000
(Reversal of) provision for loan losses (2,885 ) 1,099
(3,917 ) 6,078
375
Loans charged-off

Domestic (5,839 ) (3,662 ) —
(194 ) (9,695 )
International —
(1,473 ) —
(1,392 ) (2,865 )
Recoveries 212
1,367
—
368
1,947
Balances at end of the year $ 22,778
$ 30,018
$ 445
$ 8,521
$ 61,762

Allowance for loan losses by impairment methodology
Individually evaluated $ —
$ 1,282
$ —
$ 1,091
$ 2,373
Collectively evaluated 22,778
28,736
445
7,430
59,389
$ 22,778
$ 30,018
$ 445
$ 8,521
$ 61,762
Investment in loans, net of unearned income
Individually evaluated $ 717
$ 9,652
$ —
$ 3,089
$ 13,458
Collectively evaluated 3,037,604
2,254,607
69,003
545,503
5,906,717
$ 3,038,321
$ 2,264,259
$ 69,003
$ 548,592
$ 5,920,175

~~173~~

~~Mercantil Bank Holding Corporation~~Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, ~~2018, 2017~~2023, 2022 and ~~2016~~2021

December 31, 2017
(in thousands) Real Estate Commercial Financial
Institutions Consumer
and Others Total
Balances at beginning of the year $ 30,713
$ 40,897
$ 5,304
$ 4,837
$ 81,751
Reversal of provision for loan losses (221 ) (1,027 ) (942 ) (1,300 ) (3,490 )
Loans charged-off

Domestic (97 ) (1,979 ) —
(424 ) (2,500 )
International —
(6,166 ) —
(757 ) (6,923 )
Recoveries 895
962
—
1,305
3,162
Balances at end of the year $ 31,290
$ 32,687
$ 4,362
$ 3,661
$ 72,000
Allowance for loan losses by impairment methodology
Individually evaluated $ —
$ 2,866
$ —
$ —
$ 2,866
Collectively evaluated 31,290
29,821
4,362
3,661
69,134
$ 31,290
$ 32,687
$ 4,362
$ 3,661
$ 72,000
Investment in loans, net of unearned income
Individually evaluated $ 1,318
$ 20,907
$ —
$ 374
$ 22,599
Collectively evaluated 2,912,786
2,073,351
497,626
559,863
6,043,626
$ 2,914,104
$ 2,094,258
$ 497,626
$ 560,237
$ 6,066,225

~~174~~

~~Mercantil Bank Holding Corporation and Subsidiaries~~

~~Notes to Consolidated Financial Statements~~

~~December 31, 2018, 2017 and 2016~~

December 31, 2016
(in thousands) Real Estate Commercial Financial
Institutions Consumer
and Others Total
Balances at beginning of the year $ 18,331
$ 44,734
$ 9,226
$ 4,752
$ 77,043
Provision for (reversal of) loan losses 8,570
16,153
(3,922 ) 1,309
22,110
Loans charged-off
Domestic (94 ) (1,496 ) —
(224 ) (1,814 )
International —
(19,610 ) —
(1,186 ) (20,796 )
Recoveries 3,906
1,116
—
186
5,208
Balances at end of the year $ 30,713
$ 40,897
$ 5,304
$ 4,837
$ 81,751
Allowance for loan losses by impairment methodology
Individually evaluated $ —
$ 6,596
$ —
$ —
$ 6,596
Collectively evaluated 30,713
34,301
5,304
4,837
75,155
$ 30,713
$ 40,897
$ 5,304
$ 4,837
$ 81,751
Investment in loans, net of unearned income
Individually evaluated $ 13,792
$ 51,332
$ —
$ 4,205
$ 69,329
Collectively evaluated 2,364,161
2,398,552
416,336
516,383
5,695,432
$ 2,377,953
$ 2,449,884
$ 416,336
$ 520,588
$ 5,764,761

The following is a summary of ~~the recorded~~net proceeds from sales of loans held for investment ~~amount of loan sales~~ by portfolio segment in the three years ended December ~~2018, 2017 and 2016:~~31, 2023:


(in thousands)	Real Estate		Commercial		Financial Institutions		Consumer and others		Total
2023	$	34,409	$	33,307	$	—	$	—	$	67,716
2022	$	11,566	$	13,897	$	—	$	1,313	$	26,776
2021	$	11,243	$	102,247	$	—	$	3,524	$	117,014

Loan Modifications to Borrowers Experiencing Financial Difficulty

(in thousands) Real Estate Commercial Financial
Institutions Consumer
and others Total
2018 $ 20,248
$ 138,244
$ —
$ 14,981
$ 173,473
2017 $ 15,040
$ 35,260
$ 40,177
$ —
$ 90,477
2016 $ 9,151
$ 72,597
$ 23,500
$ —
$ 105,248
The Company modifies loans related to borrowers experiencing financial difficulties by providing multiple types of concessions. Typically, one type of concession, such as a term extension, is granted initially. If the borrower continues to experience financial difficulty, another concession, such as principal forgiveness, may be granted.

~~175~~

~~Mercantil Bank Holding Corporation and Subsidiaries~~

~~Notes~~The Company had no new loan modifications to ~~Consolidated Financial Statements~~

borrowers experiencing financial difficulty during the year ended December 31, ~~2018, 2017 and 2016~~

~~The following is a summary of impaired~~2023. There were no loans ~~as of~~that defaulted in the year ended December 31, ~~2018~~2023 and ~~2017:~~

December 31, 2018
Recorded Investment
(in thousands) With a Valuation Allowance Without a Valuation Allowance Total Year Average Total Unpaid Principal Balance Valuation Allowance Interest Income Recognized
Real estate loans
Commercial real estate
Nonowner occupied $ —
$ —
$ —
$ 7,935
$ —
$ —
—
Multi-family residential —
717
717
724
722
—
32
Land development and construction
loans —
—
—
—
—
—
—
—
717
717
8,659
722
—
32
Single-family residential 3,086
306
3,392
4,046
3,427
1,235
108
Owner-occupied 169
4,427
4,596
5,524
4,601
75
14
3,255
5,450
8,705
18,229
8,750
1,310
154
Commercial loans 4,585
148
4,733
7,464
6,009
1,059
952
Consumer loans and overdrafts 9
11
20
15
17
4
—
$ 7,849
$ 5,609
$ 13,458
$ 25,708
$ 14,776
$ 2,373
$ 1,106

December 31, 2017
Recorded Investment
(in thousands) With a Valuation Allowance Without a Valuation Allowance Total Year Average Total Unpaid Principal Balance Valuation Allowance Interest Income Recognized
Real estate loans
Commercial real estate
Nonowner occupied $ —
$ 327
$ 327
$ 225
$ 327
$ —
$ —
Multi-family residential —
1,318
1,318
7,898
1,330
—
54
Land development and construction loans —
—
—
1,359
—
—
—
—
1,645
1,645
9,482
1,657
—
54
Single-family residential —
877
877
3,100
871
—
1,101
Owner-occupied —
10,918
10,918
13,440
12,323
—
11
—
13,440
13,440
26,022
14,851
—
1,166
Commercial loans 7,173
1,986
9,159
18,211
14,784
2,866
12
Consumer loans and overdrafts —
—
—
—
—
—
—
$ 7,173
$ 15,426
$ 22,599
$ 44,233
$ 29,635
$ 2,866
$ 1,178

~~176~~

~~Mercantil Bank Holding Corporation and Subsidiaries~~

~~Notes~~had been modified within 12 months preceding the payment default related to ~~Consolidated Financial Statements~~these modifications.

~~December 31, 2018, 2017 and 2016~~

Troubled Debt Restructurings

As result of adoption of guidance related to CECL in 2022, the Company had no reportable balances related to TDRs as of and for the year ended December 31, 2023. See Note 1 “Business, Basis of Presentation and Summary of Significant Accounting Policies” for additional information.

The following table shows information about loans modified in TDRs as of December 31, 2022.


	As of December 31, 2022
(in thousands)	Number of Contracts	Recorded Investment
Real estate loans
Commercial real estate
Non-owner occupied	1	$	448



Single-family residential	1	265
Owner occupied	2	7,065
	4	7,778
Commercial loans	9	3,416

Total (1)	13	$	11,194

_________________

(1)As of December 31, 2022, included a multiple loan relationship with a South Florida customer consisting of CRE, owner occupied and commercial loans totaling $9.8 million. This TDR consisted of extending repayment terms and adjusting future periodic payments which resulted in no additional reserves.

During the year ended December 31, 2022, there were no loans that were modified and met the definition of a TDR. In the year ended December 31, 2021, there were two commercial loans that were modified and met the definition of a TDR, totaling $0.9 million. There were no charge-offs against the ACL as a result of these TDRs during ~~2018, 2017~~2022 and ~~2016:~~2021.

2018 2017 2016
(in thousands) Number of Contracts Recorded Investment Number of Contracts Recorded Investment Number of Contracts Recorded Investment
Real estate loans
Commercial real estate
Nonowner occupied ⁽¹⁾
1
$ —
—
$ —
1
$ 208
Single-family residential —
—
2
—
1
49
Owner-occupied 1
1,831
1
—
3
846
2
1,831
3
—
5
1,103
Commercial loans 2
622
1
1,473
2
11,172
Consumer loans and overdrafts 1
10
—
—
—
—
Total ^{(2) (3)}
5
$ 2,463
4
$ 1,473
7
$ 12,275

~~_________________~~


~~(1)~~	In the fourth quarter of 2018, the Company sold one non-performing loan in the Houston area with a carrying value of $10.2 million, and charged off $5.8 million against the allowance for loan losses. This loan had been modified and met the definition of a TDR during the second quarter of 2018.


~~(2)~~	~~During 2018 and 2017, the Company charged off a total of approximately $6.9 million and $6.0 million, respectively, against the allowance for loan losses as a result of these TDR loans.~~

~~(3)~~

At December 31, 2018, 2017 and 2016, all TDR loans were primarily real estate and commercial loans under modified terms, including interest payment deferments and others, that did not substantially impact the allowance for loan losses since the recorded investment in these impaired loans corresponded to their realizable value, which approximated their fair values, or higher, prior to their designation as TDR.

During ~~2018, 2017~~the years ended December 31, 2022 and ~~2016,~~2021, there were no TDR loans that subsequently defaulted within the 12 months of ~~restructuring were as follows:~~restructuring.

F-49

2018 2017 2016
(in thousands) Number of Contracts Recorded Investment Number of Contracts Recorded Investment Number of Contracts Recorded Investment
Real estate loans
Single-family residential —
$ —
—
$ —
6
$ 3,010
Owner-occupied 1
1,831
1
618
4
2,959
1
1,831
1
618
10
5,969
Commercial loans 1
589
—
—
—
—
Consumer loans and overdrafts 1
10
—
—
—
—
3
$ 2,430
1
$ 618
10
$ 5,969

~~177~~

~~Mercantil Bank Holding Corporation~~Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, ~~2018, 2017~~2023, 2022 and ~~2016~~2021

Credit Risk Quality

The sufficiency of the ~~allowance for loan losses~~ACL is reviewed ~~monthly~~at least quarterly by the Chief Risk Officer and the Chief Financial Officer. ~~These recommendations are reviewed and approved monthly by the Executive Management Committee.~~ The Board of Directors considers the ~~allowance for loan losses~~ACL as part of its review of the Company’s consolidated financial statements. As of December 31, ~~2018~~2023 and ~~2017,~~2022, the Company believes the ~~allowance for loan losses~~ACL to be sufficient to absorb expected credit losses in the loans portfolio in accordance with ~~U.S.~~ GAAP.

Loans may be classified but not considered ~~impaired~~collateral dependent due to one of the following reasons: (1) the Company has established minimum dollar amount thresholds for ~~loan impairment testing,~~individual assessment of expected credit losses, which results in loans under those thresholds being excluded from ~~impairment testing~~individual assessment of expected credit losses; and ~~therefore not included in impaired loans;~~ (2) classified loans may be considered ~~nonimpaired~~in the assessment because ~~collection of~~the Company expects to collect all amounts ~~due is probable.~~due.

As part of the on-going monitoring of the credit quality of the Company’s loan portfolio, management tracks certain credit quality indicators including trends related primarily to (i) the risk rating of loans, (ii) the loan payment status, (iii) net charge-offs, (iv) nonperforming loans and (v) the general economic conditions in the main geographies where the Company’s borrowers conduct their businesses. The Company considers the views of its regulators as to loan classification and ~~impairment.~~in the process of estimating expected credit losses.

The Company utilizes ~~a credit~~an internal risk rating system to identify the risk characteristics of each of its loans, or group of homogeneous loans such as consumer loans. ~~Loans~~Internal risk ratings are ~~rated~~updated on a ~~quarterly~~continuous basis ~~(or more frequently when the circumstances require it)~~ on a scale from 1 (worst credit quality) to 10 (best credit quality). Loans are then grouped in five master risk categories for purposes of monitoring rising levels of potential loss risks and to enable the activation of collection or recovery processes as defined in the Company’s Credit Risk Policy. Internal risk ratings are considered the most meaningful indicator of credit quality for commercial loans. Generally, internal risk ratings for commercial real estate loans and commercial loans with balances over $3 million are updated at least annually and more frequently if circumstances indicate that a change in risk rating may be warranted. For consumer loans, single-family residential loans and smaller commercial loans under $3 million, risk ratings are updated based on the loans past due status. The following is a summary of the master risk categories and their associated loan risk ratings, as well as a description of the general characteristics of the master risk category:

Loan Risk Rating

Master risk category

Nonclassified

4 to 10

Classified

1 to 3

Substandard

Doubtful

Loss

Nonclassified

This category includes loans considered as Pass (5-10) and Special ~~Mention.~~Mention (4). A loan classified as ~~pass~~Pass is considered of sufficient quality to preclude a lower adverse rating. These loans are generally well protected by the current net worth and paying capacity of the borrower or by the value of any collateral received. Special Mention loans are defined as having potential weaknesses that deserve management’s close attention which, if left uncorrected, could potentially result in further credit deterioration. Special Mention loans may include loans originated with certain credit weaknesses or that developed those weaknesses since their origination.

F-50

Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2023, 2022 and 2021

Classified

This classification indicates the presence of credit weaknesses which could make loan repayment unlikely, such as partial or total late payments and other contractual defaults.

~~178~~

~~Mercantil Bank Holding Corporation and Subsidiaries~~

~~Notes to Consolidated Financial Statements~~

~~December 31, 2018, 2017 and 2016~~

Substandard

A loan classified substandard is inadequately protected by the sound worth and paying capacity of the borrower or the collateral pledged. They are characterized by the distinct possibility that the Company will sustain some loss if the credit weaknesses are not corrected. Loss potential, while existing in the aggregate amount of substandard loans, does not have to exist in individual assets.

Doubtful

These loans have all the weaknesses inherent in a loan classified as substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. These are poor quality loans in which neither the collateral, if any, nor the financial condition of the borrower presently ensure collection in full in a reasonable period of time. As a result, the possibility of loss is extremely high.

Loss

Loans classified as loss are considered uncollectible and of such little value that the continuance as bankable assets is not warranted. This classification does not mean that the assets have absolutely no recovery or salvage value, but not to the point where a write-off should be deferred even though partial recoveries may occur in the future. This classification is based upon current facts, not probabilities. As a result, loans in this category should be promptly charged off in the period in which they ~~surface as~~are determined to be uncollectible.

~~Loans by Credit Quality Indicators~~

~~The Company’s loans by credit quality indicators as of December 31, 2018 and 2017 are summarized in the following tables:~~

F-51

December 31, 2018
Credit Risk Rating
Nonclassified Classified
(in thousands) Pass Special Mention Substandard Doubtful Loss Total
Real estate loans
Commercial real estate
Nonowner occupied $ 1,802,573
$ 6,561
$ 222
$ —
$ —
$ 1,809,356
Multi-family residential 909,439
—
—
—
—
909,439
Land development and construction loans 326,644
—
—
—
—
326,644
3,038,656
6,561
222
—
—
3,045,439
Single-family residential 526,373
—
7,108
—
—
533,481
Owner-occupied 758,552
9,019
9,451
—
—
777,022
4,323,581
15,580
16,781
—
—
4,355,942
Commercial loans 1,369,434
3,943
6,462
589
—
1,380,428
Loans to financial institutions and acceptances 68,965
—
—
—
—
68,965
Consumer loans and overdrafts 108,778
—
6,062
—
—
114,840
$ 5,870,758
$ 19,523
$ 29,305
$ 589
$ —
$ 5,920,175

~~179~~

~~Mercantil Bank Holding Corporation~~Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, ~~2018, 2017~~2023, 2022 and ~~2016~~2021

Loans held for investment by Credit Quality Indicators

The following tables present Loans held for investment by credit quality indicators and year of origination as of December 31, 2023 and 2022:


	December 31, 2023
	Term Loans
	Amortized Cost Basis by Origination Year
(in thousands)	2023		2022		2021		2020		2019		Prior		Revolving Loans Amortized Cost Basis		Total
Real estate loans
Commercial real estate
Nonowner occupied
Credit Risk Rating:
Nonclassified
Pass	$	163,018	$	189,356	$	564,003	$	35,615	$	89,920	$	401,140	$	173,148	$	1,616,200
Special Mention	—		—		—		—		—		—		—		—
Classified
Substandard	—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total Nonowner occupied	163,018		189,356		564,003		35,615		89,920		401,140		173,148		1,616,200

Multi-family residential
Credit Risk Rating:
Nonclassified
Pass	1,860		69,875		96,028		5,930		72,389		119,550		41,574		407,206
Special Mention	—		—		—		—		—		—		—		—
Classified
Substandard	—		—		—		—		—		8		—		8
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total Multi-family residential	1,860		69,875		96,028		5,930		72,389		119,558		41,574		407,214

Land development and construction loans
Credit Risk Rating:
Nonclassified
Pass	71,157		9,920		28,934		21,959		—		26,942		141,466		300,378
Special Mention	—		—		—		—		—		—		—		—
Classified
Substandard	—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total land development and construction loans	71,157		9,920		28,934		21,959		—		26,942		141,466		300,378

Single-family residential
Credit Risk Rating:
Nonclassified
Pass	410,185		454,011		166,997		64,228		20,571		69,479		278,337		1,463,808
Special Mention	—		—		—		—		—		—		—		—
Classified
Substandard	—		—		—		—		—		384		2,416		2,800
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total Single-family residential	410,185		454,011		166,997		64,228		20,571		69,863		280,753		1,466,608

Owner occupied
Credit Risk Rating:
Nonclassified
Pass	221,137		245,680		414,263		20,741		57,681		158,678		37,538		1,155,718
Special Mention	—		4,186		7,926		—		—		—		3,611		15,723
Classified
Substandard	—		—		2,530		—		—		825		535		3,890
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total owner occupied	221,137		249,866		424,719		20,741		57,681		159,503		41,684		1,175,331

F-52

Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2023, 2022 and 2021

December 31, 2017
Credit Risk Rating
Nonclassified Classified
(in thousands) Pass Special Mention Substandard Doubtful Loss Total
Real estate loans
Commercial real estate
Nonowner occupied $ 1,711,595
$ 1,020
$ 489
$ —
$ —
$ 1,713,104
Multi-family residential 839,709
—
—
—
—
839,709
Land development and construction loans 406,940
—
—
—
—
406,940
2,958,244
1,020
489
—
—
2,959,753
Single-family residential 506,885
—
5,869
—
—
512,754
Owner-occupied 592,468
4,051
13,867
—
—
610,386
4,057,597
5,071
20,225
—
—
4,082,893
Commercial loans 1,334,543
6,100
14,112
—
—
1,354,755
Loans to financial institutions and acceptances 497,626
—
—
—
—
497,626
Consumer loans and overdrafts 126,838
—
4,113
—
—
130,951
$ 6,016,604
$ 11,171
$ 38,450
$ —
$ —
$ 6,066,225


	December 31, 2023
	Term Loans Amortized Cost Basis by Origination Year
(in thousands)	2023		2022		2021		2020		2019		Prior		Revolving Loans Amortized Cost Basis		Total
Non-real estate loans
Commercial Loans
Credit Risk Rating:
Nonclassified
Pass	414,882		280,911		13,432		9,738		34,209		34,804		661,979		1,449,955
Special Mention	—		—		—		—		—		2,056		28,205		30,261
Classified
Substandard	563		500		—		91		1,775		794		19,248		22,971
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total commercial loans	415,445		281,411		13,432		9,829		35,984		37,654		709,432		1,503,187

Loans to financial institutions and acceptances
Credit Risk Rating:
Nonclassified
Pass	—		—		—		—		—		13,375		—		13,375
Special Mention	—		—		—		—		—		—		—		—
Classified
Substandard	—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total loans to financial institutions and acceptances	—		—		—		—		—		13,375		—		13,375

Consumer loans
Credit Risk Rating:
Nonclassified
Pass	27,977		183,235		51,278		12,833		26		—		115,810		391,159
Special Mention	—		—		—		—		—		—		—		—
Classified
Substandard	—		—		—		—		—		—		41		41
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total consumer loans and overdrafts	27,977		183,235		51,278		12,833		26		—		115,851		391,200
Total loans held for investment, gross	$	1,310,779	$	1,437,674	$	1,345,391	$	171,135	$	276,571	$	828,035	$	1,503,908	$	6,873,493

F-53

Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2023, 2022 and 2021


	December 31, 2022
	Term Loans
	Amortized Cost Basis by Origination Year
(in thousands)	2022		2021		2020		2019		2018		Prior		Revolving Loans Amortized Cost Basis		Total
Real estate loans
Commercial real estate
Nonowner occupied
Credit Risk Rating:
Nonclassified
Pass	$	177,852	$	637,015	$	34,525	$	91,941	$	82,385	$	342,174	$	221,333	$	1,587,225
Special Mention	—		—		—		—		—		8,378		—		8,378
Classified
Substandard	—		—		—		20,113		—		—		—		20,113
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total Nonowner occupied	177,852		637,015		34,525		112,054		82,385		350,552		221,333		1,615,716

Multi-family residential
Credit Risk Rating:
Nonclassified
Pass	85,670		110,943		26,881		126,724		27,242		124,433		318,130		820,023
Special Mention	—		—		—		—		—		—		—		—
Classified
Substandard	—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total Multi-family residential	85,670		110,943		26,881		126,724		27,242		124,433		318,130		820,023

Land development and construction loans
Credit Risk Rating:
Nonclassified
Pass	8,846		27,746		23,459		188		—		26,930		186,005		273,174
Special Mention	—		—		—		—		—		—		—		—
Classified
Substandard	—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total land development and construction loans	8,846		27,746		23,459		188		—		26,930		186,005		273,174

Single-family residential
Credit Risk Rating:
Nonclassified
Pass	480,328		186,790		70,853		21,654		16,630		65,249		259,411		1,100,915
Special Mention	—		—		—		—		—		—		—		—
Classified
Substandard	—		—		—		—		—		741		1,189		1,930
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total Single-family residential	480,328		186,790		70,853		21,654		16,630		65,990		260,600		1,102,845

Owner occupied
Credit Risk Rating:
Nonclassified
Pass	256,816		479,961		22,341		63,629		21,790		162,411		33,146		1,040,094
Special Mention	—		—		—		—		—		—		—		—
Classified
Substandard	2,096		1,631		656		—		650		1,283		40		6,356
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total owner occupied	258,912		481,592		22,997		63,629		22,440		163,694		33,186		1,046,450

F-54

Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2023, 2022 and 2021


	December 31, 2022
	Term Loans Amortized Cost Basis by Origination Year
(in thousands)	2022		2021		2020		2019		2018		Prior		Revolving Loans Amortized Cost Basis		Total
Non-real estate loans
Commercial Loans
Credit Risk Rating:
Nonclassified
Pass	400,781		95,470		19,815		42,936		32,248		16,297		761,489		1,369,036
Special Mention	—		—		—		—		1,499		—		250		1,749
Classified
Substandard	—		84		267		194		27		984		8,890		10,446
Doubtful	—		—		—		3		—		—		—		3
Loss	—		—		—		—		—		—		—		—
Total commercial Loans	400,781		95,554		20,082		43,133		33,774		17,281		770,629		1,381,234

Loans to financial institutions and acceptances
Credit Risk Rating:
Nonclassified
Pass	—		—		—		—		—		13,292		—		13,292
Special Mention	—		—		—		—		—		—		—		—
Classified
Substandard	—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total loans to financial institutions and acceptances	—		—		—		—		—		13,292		—		13,292

Consumer loans
Credit Risk Rating:
Nonclassified
Pass	338,744		121,011		29,053		68		54		—		115,300		604,230
Special Mention	—		—		—		—		—		—		—		—
Classified
Substandard	98		128		—		—		—		4		—		230
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total consumer loans	338,842		121,139		29,053		68		54		4		115,300		604,460
Total loans held for investment, gross	$	1,751,231	$	1,660,779	$	227,850	$	367,450	$	182,525	$	762,176	$	1,905,183	$	6,857,194

F-55

Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2023, 2022 and 2021

The following tables present gross charge-offs by year of origination for the years ended December 31, 2023 and 2022:


	December 31, 2023
	Term Loans Charge-offs by Origination Year
(in thousands)	2023		2022		2021		2020		2019		Prior		Revolving Loans Charge-Offs		Total
Year-To-Date Gross Charge-offs
Real estate loans
Commercial real estate
Nonowner occupied	$	—	$	—	$	—	$	—	$	—	$	90	$	—	$	90
Multi-family residential	—		—		—		—		—		10,328		—		10,328
Land development and construction loans	—		—		—		—		—		—		—		—
	—		—		—		—		—		10,418		—		10,418
Single-family residential	—		—		—		—		—		39		—		39
Owner occupied	—		—		—		—		—		—		—		—
	—		—		—		—		—		10,457		—		10,457
Commercial loans	183		11,846		468		6,608		1,901		389		—		21,395
Loans to financial institutions and acceptances	—		—		—		—				—		—		—
Consumer loans and overdrafts	1,002		13,700		11,415		1,260		24		612		—		28,013
Total Year-To-Date Gross Charge-Offs	$	1,185	$	25,546	$	11,883	$	7,868	$	1,925	$	11,458	$	—	$	59,865


	December 31, 2022
	Term Loans Charge-offs by Origination Year
(in thousands)	2022		2021		2020		2019		2018		Prior		Revolving Loans Charge-Offs		Total
Year-To-Date Gross Charge-offs
Real estate loans
Commercial real estate
Nonowner occupied	$	—	$	—	$	—	$	3,852	$	—	$	—	$	—	$	3,852
Multi-family residential	—		—		—		—		—		—		—		—
Land development and construction loans	—		—		—		—		—		—		—		—
	—		—		—		3,852		—		—		—		3,852
Single-family residential	—		—		—		—		—		14		—		14
Owner occupied	—		—		—		—		—		—		—		—
	—		—		—		3,852		—		14		—		3,866
Commercial loans	2,524		527		4,545		1,033		—		485		—		9,114
Loans to financial institutions and acceptances	—		—		—		—		—		—		—		—
Consumer loans and overdrafts	3,120		4,604		1,395		2		—		5		—		9,126
Total Year-To-Date Gross Charge-Offs	$	5,644	$	5,131	$	5,940	$	4,887	$	—	$	504	$	—	$	22,106

F-56

Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2023, 2022 and 2021

Credit Risk Quality Indicators - Consumer Loan Classes

The credit risk quality of the Company’s residential real estate and consumer loan portfolios is evaluated by considering the repayment performance of individual borrowers, and then classified on an aggregate or pool basis. Loan secured by real estate in these classes which have been past due 90 days or more, and 120 days ~~(non-real estate secured)~~ or 180 days or more, are classified as Substandard and Loss, respectively. Beginning in 2022, unsecured consumer loans which become past due 90 days are charged- off (120 days previously). When the Company has documented that past due loans in these classes are well-secured and in the process of collection, then the loans may not be classified. ~~These indicators~~Loan-To-Value and FICO scores are also an important indicator of credit quality for single-family residential loans and consumer loans. When loans are classified, loan-to-value is updated at least annually. FICO scores are typically at origination, except for a significant portion of indirect consumer loans which are updated at least quarterly.

Single-family residential loans:


	December 31,
(in thousands, except percentages)	2023				2022				2021
	Loan Balance		%		Loan Balance		%		Loan Balance		%
Accrual Loans
Current	$	1,451,346	98.95	%	$	1,097,952	99.56	%	$	655,270	99.09	%
30-59 Days Past Due	4,046		0.28	%	2,965		0.27	%	531		0.08	%
60-89 Days Past Due	3,511		0.24	%	149		0.01	%	412		0.06	%
90+ Days Past Due	5,246		0.36	%	253		0.02	%	—		—	%
	12,803		0.88	%	3,367		0.30	%	943		0.14	%
Total Accrual Loans	$	1,464,149	99.83	%	$	1,101,319	99.86	%	$	656,213	99.23	%
Non-Accrual Loans
Current	$	1,727	0.12	%	$	358	0.03	%	$	2,612	0.39	%
30-59 Days Past Due	150		0.01	%	175		0.02	%	459		0.07	%
60-89 Days Past Due	—		—	%	1		—	%	—		—	%
90+ Days Past Due	582		0.04	%	992		0.09	%	2,055		0.31	%
	732		0.05	%	1,168		0.11	%	2,514		0.38	%
Total Non-Accrual Loans	2,459		0.17	%	1,526		0.14	%	5,126		0.77	%
Total single-family residential loans	$	1,466,608	100.00	%	$	1,102,845	100.00	%	$	661,339	100.00	%

~~180~~

F-57

~~Mercantil Bank Holding Corporation~~Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, ~~2018, 2017~~2023, 2022 and ~~2016~~2021

~~Single-family residential loans:~~

December 31,
(in thousands, except percentages) 2018 2017 2016
Loan Balance % Loan Balance % Loan Balance %
Accrual Loans
Current $ 518,106
   97.12 % $ 499,307
   97.38 % $ 455,410
   96.80 %
30-59 Days Past Due 7,634
   1.43 % 6,025
   1.17 % 4,675
   0.99 %
60-89 Days Past Due 633
   0.12 % 2,193
   0.43 % 1,395
   0.30 %
90+ Days Past Due 419
   0.08 % 225
   0.04 % 116
   0.02 %
8,686
   1.63 % 8,443
   1.64 % 6,186
   1.31 %
Total Accrual Loans $ 526,792
   98.75 % $ 507,750
   99.02 % $ 461,596
   98.11 %
Non-Accrual Loans
Current $ 1,624
   0.30 % $ 2,086
   0.41 % $ 2,290
   0.49 %
30-59 Days Past Due 276
   0.05 % 584
   0.11 % —
   — %
60-89 Days Past Due 1,703
   0.32 % 557
   0.11 % 38
   0.01 %
90+ Days Past Due 3,086
   0.58 % 1,777
   0.35 % 6,565
   1.39 %
5,065
   0.95 % 2,918
   0.57 % 6,603
   1.40 %
Total Non-Accrual Loans 6,689
   1.25 % 5,004
   0.98 % 8,893
   1.89 %
$ 533,481
   100.00 % $ 512,754
   100.00 % $ 470,489
   100.00 %

Consumer loans and overdrafts:


	December 31,
	December 31,																																						December 31,
(in thousands, except percentages)	2018				2017				2016				(in thousands, except percentages)		2023										2022										2021
	Loan Balance		%		Loan Balance		%		Loan Balance		%				Loan Balance					%							Loan Balance								%		Loan Balance						%
Accrual Loans
Current	$	113,211	98.58	%	$	130,830	99.91	%	$	120,463	98.40	%
30-59 Days Past Due	466		0.41	%	48		0.04	%	1,076		0.88	%
60-89 Days Past Due	243		0.21	%	18		0.01	%	443		0.36	%
90+ Days Past Due	885		0.77	%	—		—	%	370		0.30	%
	1,594		1.39	%	66		0.05	%	1,889		1.54	%
Total Accrual Loans	$	114,805	99.97	%	$	130,896	99.96	%	$	122,352	99.94	%
Non-Accrual Loans
Current
Current	$	16	0.01	%	$	16	0.01	%	$	43	0.03	%	$	383,689			98.09	%					$	601,920				99.58	%				$	423,373				99.93		%
30-59 Days Past Due	8		0.01	%	9		0.01	%	22		0.02	%	30-59 Days Past Due		3,142			0.80	%						2,439				0.40	%					22					0.01	%
60-89 Days Past Due	—		—	%	11		0.01	%	—		—	%	60-89 Days Past Due		4,277			1.09	%						62				0.01	%					5					—	%
90+ Days Past Due	11		0.01	%	19		0.01	%	9		0.01	%	90+ Days Past Due		54			0.01	%						35				0.01	%					8					—	%
	19		0.02	%	39		0.03	%	31		0.03	%
	7,473																7,473				1.90	%						2,536			0.42	%						35				0.01	%
Total Accrual Loans													Total Accrual Loans		$	391,162		99.99	%						$	604,456			100.00	%					$	423,408				99.94	%
Non-Accrual Loans
Current
Current
Current															$	—		—	%						$	1			—	%					$	251				0.06	%
30-59 Days Past Due													30-59 Days Past Due		—			—	%						—				—	%					—					—	%
60-89 Days Past Due													60-89 Days Past Due		—			—	%						—				—	%					2					—	%
90+ Days Past Due													90+ Days Past Due		38			0.01	%						3				—	%					4					—	%
	38																38				0.01	%						3			—	%						6				—	%
Total Non-Accrual Loans	35		0.03	%	55		0.04	%	74		0.06	%	Total Non-Accrual Loans		38			0.01	%						4				—	%					257					0.06	%
	$	114,840	100.00	%	$	130,951	100.00	%	$	122,426	100.00	%
Total consumer loans and overdrafts													Total consumer loans and overdrafts		$	391,200		100.00	%						$	604,460			100.00	%					$	423,665				100.00	%

~~181~~

F-58

~~Mercantil Bank Holding Corporation~~Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, ~~2018, 2017~~2023, 2022 and ~~2016~~2021

Collateral -Dependent Loans

Loans are considered collateral-dependent when the repayment of the loan is expected to be provided by the sale or operation of the underlying collateral. The Company performs an individual evaluation as part of the process of calculating the allowance for credit losses related to these loans. The following tables present the amortized cost basis of collateral dependent loans related to borrowers experiencing financial difficulty by type of collateral as of December 31, 2023 and 2022:


	As of December 31, 2023
	Collateral Type
(in thousands)	Commercial Real Estate		Residential Real Estate		Other		Total		Specific Reserves
Real estate loans
Commercial real estate

Multi-family residential	$	8	$	—	$	—	$	8	$	—

	8		—		—		8		—
Single-family residential (1)	—		773		—		773		—
Owner occupied (2)	3,684		—		—		3,684		—
	3,692		773		—		4,465		—
Commercial loans	—		—		21,250		21,250		8,073

Consumer loans and overdrafts	—		—		36		36		34
Total	$	3,692	$	773	$	21,286	$	25,751	$	8,107

_________________

(1)Weighted-average loan-to-value was approximately 64.8% at December 31, 2023.

(2)Weighted-average loan-to-value was approximately 73.0% at December 31, 2023.


	As of December 31, 2022
	Collateral Type
(in thousands)	Commercial Real Estate		Residential Real Estate		Other		Total		Specific Reserves
Real estate loans
Commercial real estate
Nonowner occupied (1)	$	20,121	$	—	$	—	$	20,121	$	—




Owner occupied (2)	5,934		—		—		5,934		—
	26,055		—		—		26,055		—
Commercial loans (3)	1,998		—		6,401		8,399		5,179


Total	$	28,053	$	—	$	6,401	$	34,454	$	5,179

_________________

(1)Weighted-average loan-to-value was approximately 92.7% at December 31, 2022.

(2)Weighted-average loan-to-value was approximately 62.7% at December 31, 2022.

(3)Includes loans with no specific reserves totaling $0.5 million with a weighted-average loan-to-value of approximately 42%

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Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2023, 2022 and 2021

Collateral dependent loans are evaluated on an individual basis for purposes for determining expected credit losses. For collateral-dependent loans where the borrower is experiencing financial difficulty and the Company expects repayment of the financial asset to be provided substantially through the operation or sale of the collateral, the ACL is measured based on the difference between the fair value of the collateral and the amortized cost basis of the loan as of the measurement date. When repayment is expected to be from the operation of the collateral, expected credit losses are calculated as the amount by which the amortized cost basis of the loan exceeds the present value of expected cash flows from the operation of the collateral. When repayment is expected to be from the sale of the collateral, expected credit losses are calculated as the amount by which the amortized cost basis of the loan exceeds the fair value of the underlying collateral less estimated costs to sell. The ACL may be zero if the fair value of the collateral at the measurement date exceeds the amortized cost basis of the loan. In the year ended December 31, 2023, the weighted-average loan-to-values related to existing owner-occupied collateral-dependent loans increased approximately 10.9% since December 31, 2022.

F-60

Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2023, 2022 and 2021

6. Premises and Equipment, Net

Premises and equipment, net include the following:


	December 31,				Estimated Useful Lives
(in thousands)	2023		2022		(in years)
Land	$	6,307	$	6,307	NA
Buildings and improvements	9,773		9,303		10–30
Furniture and equipment	18,684		21,499		3–10
Computer equipment and software	26,831		27,327		3
Leasehold improvements	29,724		23,587		3–30
Work in progress	5,315		6,644		NA
	$	96,634	$	94,667
Less: Accumulated depreciation and amortization	(53,031)		(52,895)
	$	43,603	$	41,772

December 31, Estimated
Useful
Lives
(in thousands) 2018 2017 (in years)
Land $ 18,307
$ 18,307
NA
Buildings and improvements 100,152
93,848
10–30
Equipment leased under an operating lease —
19,626
15
Furniture and equipment 21,579
19,832
3–10
Computer equipment and software 31,225
29,749
3
Leasehold improvements 19,301
18,260
5–10
Work in progress 5,170
6,532
NA
$ 195,734
$ 206,154

Less: Accumulated depreciation and amortization (72,231 ) (76,797 )
$ 123,503
$ 129,357

~~There were~~In October 2021, the Company committed to a plan for the sale and leaseback of its headquarters building in Coral Gables, Florida. At the time, the Company estimated the fair value less the cost to sell the property exceeded the carrying value, and therefore no ~~significant sales of properties in 2018.~~adjustment was needed. In ~~2017,~~December 2021, the Company sold ~~one property in New York City (the “New York Building”) and a Florida banking center~~its headquarters building ~~with a total carrying value of approximately $19.1~~for $135.0 million, ~~and realized an aggregate gain on sale of approximately $11.3 million. In 2016, the Company sold properties~~ with a carrying value of approximately ~~$1.0~~$69.9 million at the time of sale, and realized a pretax gain of $62.4 million, net of transactions costs. Following the sale of the Headquarters Building, the Company leased-back the property for an eighteen-year term.

In 2020, the Company sold its operations center in the Beacon Industrial Park area of Doral, Florida (the “Beacon Operations Center”) with a carrying value of approximately $13.7 million and realized ~~an aggregate gain on~~a loss of $1.7 million. Following the sale of ~~approximately $2.0 million.~~

~~In 2018,~~the Beacon Operations Center, the Company ~~sold all of its interest in an operating subsidiary, which held an aircraft leased solely to MSF under an operating lease.~~leased-back the the property for a two-year term.

Depreciation and amortization expense was approximately ~~$8.5~~$6.8 million, ~~$9.0~~$5.9 million and ~~$9.1~~$7.3 million in the years ended December 31, ~~2018, 2017~~2023, 2022 and ~~2016,~~2021, respectively. In ~~2018, 2017~~2023, 2022 and ~~2016~~2021 fully-depreciated equipment with an original cost of approximately ~~$0.8~~$6.7 million, ~~$1.4~~$12.2 million and ~~$1.9~~$1.3 million, respectively, were written-off and charged against their respective accumulated depreciation. In 2021, depreciation expense associated with the Company’s previously owned headquarters building was $1.8 million. No depreciation expense related to the headquarters building was recorded in 2023 and 2022 as this property was sold and leased-back in 2021. Depreciation expense in 2023, 2022 and 2021 includes approximately $0.9 million, $0.6 million and $0.5 million of accelerated depreciation of leasehold improvements resulting from branch closures.

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Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2023, 2022 and 2021

7. Time Deposits

Time deposits in denominations of $100,000 or more amounted to approximately ~~$1.4~~$1.3 billion and ~~$1.2 billion~~$928 million at December 31, ~~2018~~2023 and ~~2017,~~2022, respectively. Time deposits in denominations of more than $250,000 ~~or more~~ amounted to approximately ~~$718~~$693 million and ~~$624~~$486 million at December 31, ~~2018~~2023 and ~~2017,~~2022, respectively. The average interest rate paid on time deposits was approximately ~~2.51%~~3.80% in ~~2018~~2023 and ~~1.26%~~1.75% in ~~2017~~. ~~Time deposits include brokered time deposits, all in denominations of less than $100,000.~~2022. As of December 31, ~~2018~~2023 and ~~2017~~2022 brokered time deposits amounted to ~~$642~~$720 million and ~~$780~~$609 million, respectively.

~~182~~

~~Mercantil Bank Holding Corporation and Subsidiaries~~

~~Notes to Consolidated Financial Statements~~

At December 31, ~~2018, 2017~~2023 and ~~2016~~

2022 the maturity of time deposits were as follows:


(in thousands, except percentages)	2023				2022
Year of Maturity	Amount		%		Amount		%
2023	$	—	—	%	$	1,461,456	84.5	%
2024	1,494,035		65.0	%	133,059		7.7	%
2025	517,694		22.5	%	75,984		4.4	%
2026	166,783		7.3	%	1,340		0.1	%
2027	64,668		2.8	%	52,976		3.1	%
2028 and thereafter	53,917		2.4	%	3,440		0.2	%
Total	$	2,297,097	100.0	%	$	1,728,255	100.0	%

8.Advances From the Federal Home Loan Bank and Other Borrowings

At December 31, ~~2018~~2023 and ~~2017 time deposits maturities were as follows:~~

(in thousands, except percentages) 2018 2017
Year of Maturity Amount % Amount %
2018 $ —
— % $ 1,357,668
60.44 %
2019 1,438,565
60.26 % 331,515
14.76 %
2020 361,255
15.13 % 194,175
8.64 %
2021 168,850
7.07 % 103,781
4.62 %
2022 135,265
5.67 % 106,550
4.74 %
2023 and thereafter 283,196
11.87 % 152,745
6.80 %
Total $ 2,387,131
100.00 % $ 2,246,434
100.00 %


8.	~~Advances From the Federal Home Loan Bank and Other Borrowings~~

~~At December 31, 2018 and 2017,~~2022, the Company had outstanding advances from the FHLB and other borrowings as follows:


			Outstanding Balance at December 31,
Year of Maturity	Interest Rate	Interest Rate Type	2023		2022
			(in thousands)
2023	0.61% to 4.84%	Fixed	—		304,821
2024	1.68% to 5.46%	Fixed	40,000		100,000
2025	1.40% to 3.07%	Fixed	—		451,665
2026	4.90%	Fixed	10,000		—
2027 and after (1)	1.82% to 3.58%	Fixed	595,000		50,000
			$	645,000	$	906,486

_________________

Year of Maturity Interest
Rate December 31, 2018 December 31, 2017
(in thousands, except percentages)
2018 0.90% to 2.03% $ —
$ 567,000
2019 1.00% to 3.86% 440,000
155,000
2020 1.50% to 2.74% 306,000
211,000
2021 1.93% to 3.08% 210,000
240,000
2022 and after 2.48% to 3.23% 210,000
—
$ 1,166,000
$ 1,173,000
(1)As of December 31, 2023, there were $595.0 million in advances from the FHLB with quarterly callable features, and with fixed interest rates ranging from 3.44% to 3.58%. As of December 31, 2022, there were no callable advances from the FHLB.

At December 31, ~~2018, advances from the FHLB include $280 million ($255 million in 2017) which have variable interest rates ranging from 2.40% to 2.82% with maturities in 2019 (1.23% to 1.71% with maturities in 2018~~2023 and ~~2019).~~

~~At December 31, 2018 and 2017,~~2022, the Company held stock of the FHLB for approximately ~~$57 million.~~$37 million and $42 million, respectively. The terms of the Company’s advance agreement with the FHLB require the Company to maintain certain investment securities and loans as collateral for these advances. At December 31, ~~2018~~2023 and ~~2017,~~2022 the Company was in compliance with this requirement.

There were no other borrowings at December 31, ~~2018. Other borrowings at December 31, 2017 included $12 million in advances from other banks which matured in January 2018.~~ 2023 and 2022.

~~183~~

F-62

~~Mercantil Bank Holding Corporation~~Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, ~~2018, 2017~~2023, 2022 and ~~2016~~2021

In 2023, the Company realized total pretax gains of $40.1 million on the early repayment of $1.7 billion in advances from the FHLB. In 2022, the Company realized a net gain of $11.4 million on the early termination of $175 million of advances from the FHLB. In addition, in 2022, the Company incurred a loss of $0.7 million on the early repayment of $530 million in callable advances from the FHLB.


9.	~~Derivative Instruments~~

In 2021, the Company restructured $285 million of its fixed-rate FHLB advances, which were subsequently terminated in 2023 and are included among the $1.7 billion of early repayments mentioned above. This restructuring consisted of changing the original maturity at lower interest rates. The new maturities of these FHLB advances ranged from 2 to 4 years compared to original maturities ranging from 2 to 8 years. The Company incurred an early termination and modification penalty of $6.6 million which was deferred and being amortized over the term of the new advances, as an adjustment to the yields. In 2023, 2022 and 2021, the Company recognized $0.6 million, $1.9 million and $1.2 million, respectively, included as part of interest expense, as a result of this amortization. At December 31, 2023, there was no remaining unamortized penalty fee. The modifications were not considered a substantial modification in accordance with GAAP.

9. Senior Notes

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”). The net proceeds, after direct issuance costs of $1.6 million, totaled $58.4 million. As of December 31, 2023 and 2022, these Senior Notes amounted to $59.5 million and $59.2 million, respectively, net of direct unamortized issuance costs of $0.5 million and $0.8 million, respectively. The Senior Notes are presented net of direct issuance costs in the consolidated financial statements. These costs have been deferred and are being amortized over the term of the Senior Notes of 5 years as an adjustment to yield. These Senior Notes are unsecured and unsubordinated, rank equally with all of our existing and future unsecured, and unsubordinated indebtedness.

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Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2023, 2022 and 2021

10. Subordinated Notes

On March 9, 2022, the Company entered into a Subordinated Note Purchase Agreement (the “Purchase Agreement”) with Amerant Florida (the “Guarantor”), and qualified institutional buyers pursuant to which 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”). Net proceeds were $29.1 million, after estimated direct issuance costs of approximately $0.9 million. Unamortized direct issuance costs are deferred and amortized over the term of the Subordinated Notes of 10 years. As of December 31, 2023 and 2022, these Subordinated Notes amounted to $29.5 million and $29.3 million, respectively, net of direct unamortized issuance costs of $0.5 million and $0.7 million, respectively.

The Subordinated Notes will initially bear interest at a fixed rate of 4.25% per annum, from and including March 9, 2022, to but excluding March 15, 2027, with interest payable semi-annually in arrears. From and including March 15, 2027, to but excluding the stated maturity date or early redemption date, the interest rate will reset quarterly to an annual floating rate equal to the then-current benchmark rate, which will initially be the three-month Secured Overnight Financing Rate (“SOFR”) plus 251 basis points, with interest during such period payable quarterly in arrears. If the three-month SOFR cannot be determined during the applicable floating rate period, a different index will be determined and used in accordance with the terms of the Subordinated Notes.

These Subordinated Notes are unsecured, subordinated obligations of the Company and rank junior in right of payment to all of the Company’s current and future senior indebtedness. Prior to March 15, 2027, the Company may redeem the Subordinated Notes, in whole but not in part, only under certain limited circumstances. On or after March 15, 2027, the Company may, at its option, redeem the Subordinated Notes, in whole or in part, on any interest payment date, subject to the receipt of any required regulatory approvals. The Subordinated Notes have been structured to qualify as Tier 2 capital of the Company for regulatory capital purposes, and rank equally in right of payment to all of our existing and future subordinated indebtedness.

The Subordinated Notes were offered and sold by the Company in a private placement offering in reliance on exemptions from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), pursuant to Section 4(a)(2) of the Securities Act and Rule 506(b) of Regulation D under the Securities Act. In connection with the sale and issuance of the Subordinated Notes, the Company entered into a registration rights agreement, pursuant to which the Company agreed to take certain actions to provide for the exchange of the Subordinated Notes for subordinated notes that are registered under the Securities Act and will have substantially the same terms.

On June 21, 2022, the Company successfully completed the exchange of all of its outstanding Subordinated Notes for an equal principal amount of its registered 4.25% Fixed-to-Floating Rate Subordinated Notes due 2032 (the “Registered Subordinated Notes”). The terms of the Registered Subordinated Notes are substantially identical to the terms of the Subordinated Notes, except that the Registered Subordinated Notes are not subject to the transfer restrictions, registration rights and additional interest provisions (under the circumstances described in the registration rights agreement relating to our fulfillment of our registration obligations) applicable to the Subordinated Notes.

On August 2, 2022, the Company completed an intercompany transaction of entities under common control, pursuant to which the Guarantor, merged with and into the Company, with the Company as sole survivor . See Note 1- Business, Basis of Presentation and Summary of Significant Accounting Policies, for more details on the Amerant Florida Merger.

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Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2023, 2022 and 2021

11. Junior Subordinated Debentures Held by Trust Subsidiaries

At December 31, 2023 and 2022, 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”). The Debentures are guaranteed by the Company. The Company records the common capital securities issued by the Trust Subsidiaries in other assets in its consolidated balance sheets using the equity method. The Debentures issued to the Trust Subsidiaries, less the common securities of the Trust Subsidiaries, qualify as Tier 1 regulatory capital.

The following tables provide information on the outstanding Trust Preferred Securities issued by, and the Debentures issued to, each of the Trust Subsidiaries as of December 31, 2023 and 2022:


	December 31, 2023
(in thousands)	Amount of Trust Preferred Securities Issued by Trust		Principal Amount of Debenture Issued to Trust		Year of Issuance	Annual Rate of Trust Preferred Securities and Debentures	Year of Maturity

Commercebank Capital Trust VI	9,250		9,537		2002	3-M SOFR + 3.61%	2033
Commercebank Capital Trust VII	8,000		8,248		2003	3-M SOFR + 3.51%	2033
Commercebank Capital Trust VIII	5,000		5,155		2004	3-M SOFR + 3.11%	2034
Commercebank Capital Trust IX	25,000		25,774		2006	3-M SOFR + 2.01%	2038
Commercebank Capital Trust X	15,000		15,464		2006	3-M SOFR + 2.04%	2036
	$	62,250	$	64,178


	December 31, 2022
(in thousands)	Amount of Trust Preferred Securities Issued by Trust		Principal Amount of Debenture Issued to Trust		Year of Issuance	Annual Rate of Trust Preferred Securities and Debentures	Year of Maturity

Commercebank Capital Trust VI	9,250		9,537		2002	3-M LIBOR + 3.35%	2033
Commercebank Capital Trust VII	8,000		8,248		2003	3-M LIBOR + 3.25%	2033
Commercebank Capital Trust VIII	5,000		5,155		2004	3-M LIBOR + 2.85%	2034
Commercebank Capital Trust IX	25,000		25,774		2006	3-M LIBOR + 1.75%	2038
Commercebank Capital Trust X	15,000		15,464		2006	3-M LIBOR + 1.78%	2036
	$	62,250	$	64,178

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Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2023, 2022 and 2021

The Company and the Trust Subsidiaries have the option to defer payment of interest on the obligations for up to 10 semi-annual periods. In 2023 and 2022, no payments of interest have been deferred on these obligations. The Trust Preferred Securities are subject to mandatory redemption, in whole or in part, upon the maturity or early redemption of the debentures. Early redemption premiums may be payable.

LIBOR Cessation and Replacement Rate

The Trust Preferred Securities and the Debentures issued by the Company include calculations that are based on 3-month LIBOR. On March 15, 2022, the Adjustable Interest Rate (LIBOR) Act (the ‘LIBOR Act”) was signed into law. Under the LIBOR Act, on the first London banking day after June 30, 2023 (the “LIBOR Replacement Date”), a benchmark replacement recommend by the Federal Reserve will replace LIBOR in certain contracts, including those that contain no fallback provisions and other related aspects. The Federal Reserve issued its final regulations under the LIBOR Act. The final regulations: (i) address the applicability of the LIBOR Act to various LIBOR contracts, which include the Trust Preferred Securities and the Debentures, (ii) identify the benchmark replacements, (iii) include certain benchmark replacement conforming changes, (iv) address the issue of preemption and (v) provide other clarifications, definitions and information.

Based on a review of the Trust Preferred Securities and the Debentures documents, these documents do not provide a replacement rate for 3-month LIBOR or include other fallback provisions which would apply on the LIBOR Replacement Date. Based on the U.K. 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. Accordingly, absent an amendment to the Trust Preferred Securities and Debenture documents, some other change in applicable law, rule, regulation, or some other development, on and after the LIBOR Replacement Date, 3-month CME term SOFR or 6-month CME Term SOFR (as defined in the regulations) as adjusted by the relevant spread adjustment of 0.26161%, shall be the benchmark replacement for 3-month LIBOR in the Trust Preferred Securities and Debentures documents, and all applicable benchmark replacement conforming changes as specified in the regulations will become an integral part of the Trust Preferred Securities and Debenture documents, without any action by any party. The Company did not seek to amend the Trust Preferred Securities and Debentures documents to reflect any other LIBOR benchmark replacement. Accordingly, after the LIBOR Replacement Date, the 3-month CME term SOFR as adjusted by the relevant spread adjustment of 0.26161%, became the benchmark replacement for 3-month LIBOR in the Trust Preferred Securities and Debentures documents, and all applicable benchmark replacement conforming changes as specified in the regulations became an integral part of the Trust Preferred Securities and Debenture documents.

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Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2023, 2022 and 2021

12. Derivative Instruments

From time to time, the Company enters into derivative financial instruments as part of its interest rate management activities and to facilitate customer transactions. Those instruments may or may not be designated and qualify as part of a hedging relationship. The customer derivatives we use for the Company’s account are generally matched against derivatives from third parties, but are not designated as hedging instruments.

At December 31, ~~2018~~2023 and ~~2017~~2022 the fair value of the Company’s derivative instruments was as follows:


	December 31, 2023							December 31, 2022
				Fair value							Fair value
(in thousands)	Number of contracts	Notional Amounts		Other Assets		Other Liabilities		Number of contracts	Notional Amounts		Other Assets		Other Liabilities
Interest rate swaps designated as cash flow hedges	6	$	114,178	$	296	$	366	5	$	64,178	$	167	$	45
Derivatives not designated as hedging instruments:
Interest rate swaps:
Customers	146	1,037,773		6,767		47,221		143	925,433		603		66,439
Third party broker	146	1,037,773		47,221		6,767		143	925,433		66,439		603
	292	2,075,546		53,988		53,988		286	1,850,866		67,042		67,042
Interest rate caps:
Customers	13	325,995		—		4,983		19	448,817		—		10,002
Third party broker	14	360,995		5,195		—		20	511,900		10,207		—
	27	686,990		5,195		4,983		39	960,717		10,207		10,002

Credit risk participation agreements	7	92,654		—		—		4	73,968		—		—

Mortgage derivatives:
Interest rate lock commitments	93	43,087		447		2		86	77,034		727		—
Forward contracts	11	16,000		6		94		9	17,000		107		71
	104	59,087		453		96		95	94,034		834		71
Total derivatives not designated as hedging instruments	430	2,914,277		59,636		59,067		424	2,979,585		78,083		77,115
Total	436	$	3,028,455	$	59,932	$	59,433	429	$	3,043,763	$	78,250	$	77,160

F-67

December 31, 2018 December 31, 2017
(in thousands) Other Assets Other Liabilities Other Assets Other Liabilities
Interest rate swaps designated as cash flow hedges $ 9,386
$ 283
$ 5,462
$ —
Interest rate swaps not designated as hedging instruments:
Customers 1,420
—
1,375
—
Third party broker —
1,420
—
1,375
1,420
1,420
1,375
1,375
Interest rate caps not designated as hedging instruments:
Customers —
685
—
195
Third party broker 685
—
195
—
685
685
195
195
$ 11,491
$ 2,388
$ 7,032
$ 1,570

Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2023, 2022 and 2021

Derivatives Designated as Hedging Instruments

Interest Rate Swaps On Debt Instruments

The Company ~~maintains~~enters into interest rate ~~swaps~~swap contracts on debt instruments which the Company ~~had designated~~designates and ~~qualified~~qualifies as cash flow hedges. These interest rate swaps ~~were~~are designed as cash flow hedges to manage the exposure that arises from differences in the amount of the Company’s known or expected cash receipts and the known or expected cash payments ~~related to the Company’s variable-rate borrowings from the FHLB, the value of which are determined by interest rates.~~

~~At December 31, 2018 and 2017 the Company’s~~on designated debt instruments. These interest rate ~~swaps designated as cash flow hedges~~swap contracts involve the Company’s payment of fixed-rate amounts in exchange for the Company receiving variable-rate payments over the life of the ~~agreements~~contracts without exchange of the underlying notional amount.

At December 31, ~~2018~~2023 and ~~2017, respectively,~~2022, the Company had ~~16 and 15~~five interest rate swap contracts with ~~total~~ notional amounts totaling $64.2 million, maturing in the third and fourth quarters of ~~$280 million and $255 million, respectively, that~~2025. These contracts were designated as cash flow hedges to manage the exposure of ~~floating~~variable rate interest payments on all of the ~~currently~~Company’s outstanding ~~and expected rollover of~~ variable-rate ~~advances from the FHLB. At December 31, 2018, these advances have a carrying amount of $280 million and maturities of less than one year ($366 million~~junior subordinated debentures with ~~maturities ranging from two to nine years~~principal amounts at December 31, ~~2017).~~2023 and 2022 totaling $64.2 million. The Company expects these interest rate swaps ~~mature in one to eight years (three to nine years in 2017). The Company expects the hedge relationships~~ to be highly effective in offsetting the effects of changes in interest rates ~~in the~~on cash flows associated with the Company’s variable-rate junior subordinated debentures. In 2023 and 2022, the Company recognized unrealized gains and losses of $0.6 million and $0.4 million, respectively, in connection with these interest rate swap contracts, which were included as part of interest expense on junior subordinated debentures in the Company’s consolidated statement of operations and comprehensive income (loss). As of December 31, 2023, the estimated net unrealized gains in accumulated other comprehensive expected to be reclassified into expense in the next twelve months amounted to $0.6 million.

In 2019, the Company terminated 16 interest rate swaps that had been designated as cash flow hedges of variable rate interest payments on the outstanding and expected rollover of variable-rate advances from the FHLB. ~~No hedge ineffectiveness gains or losses were recognized in the years ended December 31, 2018 and 2017.~~

~~In February and March 2019, the Company terminated the interest rate swaps designated as cash flow hedges.~~ The Company ~~will recognize~~is recognizing the ~~contracts~~contracts’ cumulative net unrealized gains of $8.9 million in earnings over the remaining original life of the terminated interest rate ~~swaps.~~swaps ranging between one month and seven years. In 2023 and 2022 , the Company recognized approximately $1.3 million and $1.4 million, respectively, as a reduction of interest expense on FHLB advances as a result of this amortization. As of December 31, 2023, the remaining cumulative net unrealized gains related to these interest rate swaps was $2.3 million.

Interest Rate Swaps On Loans

In the second quarter of 2023, the Company entered into an interest rate swap contract with a notional amount of $50.0 million, and maturity in the second quarter of 2025. The Company designated this interest rate swap as a cash flow hedge to manage interest rate risk exposure on variable rate interest receipts on the first $50 million principal balance of a pool of loans. This interest rate swap contract involves the Company’s payment of variable-rate amounts in exchange for the Company receiving fixed-rate payments over the life of the contract without exchange of the underlying notional amount. In 2023, the Company recognized unrealized losses of $0.4 million related to this interest rate swap contract. These unrealized losses were included as part of interest income on loans in the Company’s consolidated statement of operations and comprehensive (loss) income. As of December 31, 2023, the estimated net unrealized losses in accumulated other comprehensive (loss) income expected to be reclassified into interest income in the next twelve months amounted to $0.4 million.

~~184~~

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~~Mercantil Bank Holding Corporation~~Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, ~~2018, 2017~~2023, 2022 and ~~2016~~2021

Derivatives Not Designated as Hedging Instruments

~~At December 31, 2018~~a) Customer related positions

The Company offers certain derivatives products, including interest rate swaps and ~~2017, the~~caps, directly to qualified commercial banking customers to facilitate their risk management strategies. The Company ~~had eight~~partially offsets its exposure to interest rate swaps and ~~one interest~~caps by entering similar derivative contracts with various third-party brokers.

Interest Rate Swaps

Interest rate swap contracts ~~with customers with a total notional amount of $80.4 million and $54.6 million, respectively. These instruments~~ involve the Company’s payment of ~~fixed-rate~~variable-rate amounts to customers in exchange for the Company receiving ~~variable-rate~~fixed-rate payments from customers over the life of the ~~contracts. In addition, at December 31, 2018 and 2017,~~contracts without exchange of the ~~Company had interest rate swap mirror contracts with a third party broker with similar terms.~~underlying notional amount. These instruments have maturities ranging from 5less than 1 to ~~10 years (10~~13 years in ~~2017) and do not~~2023 (1 to 14 years in 2022).

The Company enters into swap participation agreements with other financial institutions to manage the credit risk exposure on certain interest rate swaps with customers. Under these agreements, the Company, as the beneficiary or guarantor, will receive or make payments from/to the counterparty if the borrower defaults on the related interest rate swap contract. The notional amount of these agreements is based on the Company’s pro-rata share of the related interest rate swap contracts.

Interest Rate Caps

Interest rate cap contracts involve the ~~exchange of~~Company making payments if an interest rate exceeds the ~~underlying notional amount.~~agreed strike price. These instruments have maturities ranging from less than 1 to 11 years in 2023 (less than 1 to 12 years in 2022).

~~At December 31, 2018 and 2017,~~In April 2022, the Company ~~had sixteen and seven~~entered into 4 interest rate cap contracts with ~~customers~~various third-party brokers with a total notional ~~amount~~amounts of ~~$323.7 million and $162.1 million, respectively. In addition, at December 31, 2018 and 2017,~~$140.0 million. These interest rate caps initially served to partially offset changes in the ~~Company had~~estimated fair value of interest rate cap ~~mirror~~ contracts with ~~various third party brokers with similar terms. These instruments’ maturities range from less than 1 to 5 years (1 and half years to 4 years in 2017).~~


~~10.~~	~~Junior Subordinated Debentures Held by Trust Subsidiaries~~

customers. At December 31, ~~2018~~2023 and ~~2017, the Company owns all~~2022, there were 1 and 4 interest rate cap contracts, respectively, with total notional amounts of the common capital securities issued by 8 statutory trust subsidiaries (“the Trust Subsidiaries”). These Trust Subsidiaries were first formed by the Company for the purpose of issuing trust preferred securities (“the Trust Preferred Securities”)$35.0 million and ~~investing the proceeds~~$140.0 million, respectively, in junior subordinated debentures issued by the Company. The debentures are guaranteed by the Company. The Company records the common capital securities issued by the Trust Subsidiaries in other assets in its consolidated balance sheets using the equity method. The junior subordinated debentures issued to the Trust Subsidiaries, less the common securities of the Trust Subsidiaries, qualify as Tier 1 regulatory capital.connection with this transaction.

The following table provides information of the outstanding Trust Preferred Securities issued by, and the junior subordinated debentures issued to, each of the Trust Subsidiaries as of December 31, 2018 and 2017:

F-69

(in thousands) Amount of
Trust
Preferred
Securities
Issued by
Trust Principal
Amount of
Debenture
Issued to
Trust Year of
Issuance Annual Rate of Trust
Preferred Securities
and Debentures Year of
Maturity
Commercebank Capital Trust I $ 26,830
$ 28,068
1998 8.90% 2028
Commercebank Statutory Trust II 15,000
15,464
2000 10.60% 2030
Commercebank Capital Trust III 10,000
10,400
2001 10.18% 2031
Commercebank Capital Trust VI 9,250
9,537
2002 3-M LIBOR + 3.35% 2033
Commercebank Capital Trust VII 8,000
8,248
2003 3-M LIBOR + 3.25% 2033
Commercebank Capital Trust VIII 5,000
5,155
2004 3-M LIBOR + 2.85% 2034
Commercebank Capital Trust IX 25,000
25,774
2006 3-M LIBOR + 1.75% 2038
Commercebank Capital Trust X 15,000
15,464
2006 3-M LIBOR + 1.78% 2036
$ 114,080
$ 118,110

The Company and the Trust Subsidiaries have the option to defer payment of interest on the obligations for up to 10 semi-annual periods. In 2018 and 2017, no payment of interest have been deferred on these obligations. The Trust Preferred Securities are subject to mandatory redemption, in whole or in part, upon the maturity or early redemption of the debentures. Early redemption premiums may be payable.

~~185~~

~~Mercantil Bank Holding Corporation~~Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, ~~2018, 2017~~2023, 2022 and ~~2016~~2021

b) Mortgage Derivatives

The Company enters into interest rate lock commitments and forward sale contracts to manage the risk exposure in the mortgage banking area. Interest rate lock commitments guarantee the funding of residential mortgage loans originated for sale, at specified interest rates and times in the future. Forward sale contracts consist of commitments to deliver mortgage loans, originated and/or purchased, in the secondary market at a future date. In 2023 and 2022, the change in the fair value of these instruments was an unrealized loss and gain of $0.4 million and $0.2 million, respectively. These amounts were recorded as part of other noninterest income in the consolidated statements of operations and comprehensive income.

Credit Risk-Related Contingent Features


~~11.~~	~~Incentive Compensation and Benefit Plans~~

Some agreements may require the Company to pledge securities as collateral when the valuation of the interest rate swap derivative contracts fall below a certain amount. There were no securities pledged as collateral for interest rate swaps in a liability position at December 31, 2023. At December 31, 2022, there were $0.5 million in debt securities held for sale pledged as collateral to secure interest rate swaps designated as cash flow hedges, with a fair value of $45 thousand. Additionally, most of our derivative arrangements with counterparties require the posting of collateral upon meeting certain net exposure threshold. At December 31, 2023 and 2022, the Company had cash held as collateral for derivatives margin calls of $25.0 million and $41.6 million, respectively. See Note 2 “Interest Earning Deposits with Banks” for additional information about cash held as collateral. As of December 31, 2023 and 2022, there were no collateral requirements related to interest rate swaps with third-party brokers not designated as hedging instruments.

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Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2023, 2022 and 2021

13. Leases

The Company leases certain premises and equipment under operating leases. The operating leases have remaining lease terms ranging from less than one year to 42 years, some of which have renewal options reasonably certain to be exercised and, therefore, have been reflected in the total lease term and used for the calculation of minimum payments required.

Certain operating leases contain variable lease payments which include mostly common area maintenance and taxes, included in occupancy and equipment on the consolidated statements of income. The Company had $2.2 million, $1.7 million and $1.4 million in variable lease payments during the years ended December 31, 2023, 2022 and 2021, respectively.

The following table presents lease costs for the years ended December 31, 2023, 2022 and 2021:


(in thousands)	December 31, 2023		December 31, 2022		December 31, 2021
Lease cost
Operating lease cost	$	18,390	$	17,568	$	8,497
Short-term lease cost	49		62		176
Variable lease cost	2,238		1,746		1,371
Sublease income	(3,171)		(3,312)		(105)
Total lease cost	$	17,506	$	16,064	$	9,939

As of December 31, 2023 and 2022, the Company had a right-of-use (“ROU”) asset of $118.5 million and $140.0 million and total operating lease liability of $126.9 million and $145.3 million, respectively. As of December 31, 2023 and 2022, the Company had a short-term lease liability of $3.8 million and $5.2 million, respectively, included as part of other liabilities in the consolidated balance sheet.

The following table provides supplemental information to leases as of and for the years ended December 31, 2023, 2022 and 2021:


	December 31, 2023			December 31, 2022			December 31, 2021
(in thousands, except weighted average data)
Cash paid for amounts included in the measurement of operating lease liabilities	$	15,544		$	14,492		$	8,202
Weighted average remaining lease term for operating leases	16.6 years			18.1 years			19.2 years
Weighted average discount rate for operating leases	9.85		%	5.94		%	5.94		%

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Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2023, 2022 and 2021

The following table presents a maturity analysis and reconciliation of the undiscounted cash flows to the total operating lease liabilities as of December 31, 2023:


(in thousands)
Twelve Months Ended December 31,
2024	$	15,195
2025	15,487
2026	15,748
2027	16,042
Thereafter	201,028
Total minimum payments required	263,500
Less: implied interest	(136,551)
Total lease obligations	$	126,949

Actual rental expenses may include deferred rents that are recognized as rent expense on a straight line basis. Rent expense under these leases, net of sublease income, was approximately $17.5 million, $16.1 million and $9.9 million for the years ended December 31, 2023, 2022 and 2021, respectively.

In 2023 and 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). Rental income from subleases was $3.2 million, $3.3 million and $2.9 million in the years ended December 31, 2023, 2022 and 2021, respectively. In 2023 and 2022, rental income includes $2.6 million and $2.9 million, respectively, related to the subleasing of portions of the Company’s headquarters building, and $0.6 million and $0.4 million, respectively, mainly associated with the sublease of NY office space ($2.9 million in 2021 related to the subleasing of portions of the Company’s headquarters building). In 2023, rent expense includes an additional expense of $0.3 million related to the closing of one branch in the third quarter of 2023. In 2021, rent expense includes an additional expense of $0.5 million related to the closing of one branch in the fourth quarter of 2021.

In the years ended December 31, 2023, 2022 and 2021, the Company recorded ROU asset impairment charges of $1.1 million, $1.6 million and $0.8 million, respectively. ROU asset impairment charges in 2023 were in connection with the closure of a branch in Houston, Texas in 2023, and with the closure of another branch in Miami, Florida in 2023. In 2022 and 2021, ROU asset impairment charges were associated with the closure of a branch in Pembroke Pines, Florida in 2022 and the closure of the NYC loan production office in 2021, respectively. These impairments were recorded as occupancy and equipment expense on the consolidated statements of operations and comprehensive income (loss).

The Company provides equipment financing through a variety of loan and lease structures, including direct or sale type finance leases and operating leases. As of December 31, 2023 and 2022, there were $3.2 million and $13.6 million, respectively, in direct or sale type finance leases included as part of loans held for investment, gross in the Company’s consolidated balance sheet, and included as part of commercial loans in our loan portfolio held for investment. As of December 31, 2023, there were $2.9 million in operating leases included as part of premises and equipment, net of accumulated depreciation, in the Company’s consolidated balance sheet.

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Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2023, 2022 and 2021

14. Incentive Compensation and Benefit Plans

a) Stock-based Incentive Compensation Plan

~~On March 12, 2018, MSF, our sole shareholder at that time, approved the Mercantil Bank Holding Corporation 2018 Equity and Incentive Compensation Plan (the “2018 Equity Plan”).~~ The Company has reserved up to 3,333,333 shares of Class A common stock for issuance pursuant to the grant of options, rights, appreciation rights, restricted stock, restricted stock units and other awards under the Amerant Bancorp Inc. 2018 Equity ~~Plan.~~and Incentive Compensation Plan (the “2018 Equity Plan”).

On ~~December 21, 2018,~~February 11, 2021, the Company adopted a new form of performance based restricted stock unit agreement (“PSU Agreement”), and a new form of restricted stock unit agreement (the “RSU Agreement”) that is used in connection with ~~the closing of the Company’s IPO, the Company’s directors were granted restricted stock units, and various Company officers and employees were granted restricted Class A common stock awards,~~a Long-Term Incentive Plan (the “LTI Plan”), a sub-plan under the 2018 Equity Plan.

Restricted Stock Awards

~~On December 21, 2018,~~The following table shows the activity of restricted stock awards in 2023:



	Number of restricted shares	Weighted-average grant date fair value
Non-vested shares, beginning of year	295,076	$	25.83
Granted	10,440	27.42
Vested	(112,263)	24.36
Forfeited	(41,973)	24.20
Non-vested shares, end of year	151,280	27.49

In 2023, the Company granted ~~736,839~~10,440 shares of restricted Class A common stock (“RSAs”) to ~~officers and employees.~~various employees, under the LTI plan. These ~~shares of restricted stock~~RSAs will vest in three ~~approximately~~ substantially equal amounts on ~~each~~the first three anniversaries of ~~December 21, 2019, 2020 and 2021.~~the date of grant. The average fair value of the ~~restricted stock~~RSAs granted was based on the market price of the shares of the Company’s Class A common stock at the grant date which averaged $27.42 per share.

In 2022, the Company granted 175,601 RSAs to various executive officers and certain employees, under the LTI plan. These shares of restricted stock will vest in three substantially equal amounts on the first three anniversaries of the date of grant. The average fair value of the RSAs granted was ~~$13.45.~~ based on the market price of the shares of the Company’s Class A common stock at the grant date which averaged $31.83 per share

In ~~2018,~~2021, the Company granted 252,503 RSAs to certain employees, under the LTI plan, including: (i) 203,692 RSAs that will vest in three substantially equal amounts on the first three anniversaries of the date of grant, and (ii) 48,811 shares of which 50% will vest in two substantially equal amounts on each of the first two anniversaries of the date of grant, and the remaining 50% will vest on the third anniversary of the date of grant. The average fair value of the RSAs granted was based on the market price of the shares of the Company’s Class A common stock at the grant date which averaged $18.45 per share.

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Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2022, 2021 and 2021

In 2023, 2022 and 2021, the Company recorded ~~$0.2~~$2.3 million , $3.7 million and $2.8 million of compensation expense, respectively, related to ~~these restricted stock awards.~~RSAs. The total unearned deferred compensation expense of ~~$9.8~~$1.1 million for all unvested ~~restricted stock~~RSAs outstanding at December 31, ~~2018~~2023 will be recognized over a weighted average period of 21.1 years.

Restricted Stock Units

~~On December 21, 2018, the Company granted 86,535 restricted stock units~~ (“RSUs”) and Performance Stock Units (“PSUs”)

The following table shows the activity of RSUs and PSUs in 2023:



	Stock-settled RSUs		Stock-settled PSUs
	Number of RSUs	Weighted-average grant date fair value	Number of PSUs	Weighted-average grant date fair value
Nonvested, beginning of year	123,970	22.83	137,199	17.43
Granted	246,965	24.02	53,420	25.09
Vested	(65,526)	22.68	(10,621)	18.99
Forfeited	(16,464)	25.10	(2,867)	33.63
Non-vested, end of year	288,945	23.75	177,131	19.39

The tables below show detailed information about RSUs and PSUs granted to ~~its non-employee directors. Of~~various Company executives and employees for the ~~86,535 RSUs, 57,690 RSUs are settled~~years ended December 31, 2023, 2022, and 2021:

December 31, 2023

Award Type

Number of Units

Vesting Period

Awardee

Weighted-Average Grant Date Fair Value

RSUs

195,547

1/3 Each Year Equally for Three Years

Various Executive(s) and Employees

RSUs

22,498

20% Vesting Equally In Each of First Two Years, and 60% Vesting in Third Year

Various Executive(s) and Employees

Total RSUs

218,045

24.46

Total PSUs

53,420

Three Year Performance Target

Various Executive(s) and Employees

25.09

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Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2022, 2021 and 2021

December 31, 2022

Award Type

Number of Units

Vesting Period

Awardee

Weighted-Average Grant Date Fair Value

Total RSUs

34,589

1/3 Each Year Equally for Three Years

Various Executive(s) and Employees

33.23

Total PSUs

26,415

Three Year Performance Target

Various Executive(s) and Employees

33.63

December 31, 2021

Award Type

Number of Units

Vesting Period

Awardee

Weighted-Average Grant Date Fair Value

Total RSUs

120,513

1/3 Each Year Equally for Three Years

Various Executive(s) and Employees

16.65

Total PSUs

120,513

Three Year Performance Target

Various Executive(s) and Employees

13.81

For each of the years where PSUs were granted, the PSUs generally vest at the end of a three-year performance period, but only results in the issuance of shares of Class A common stock ~~while~~if the ~~remaining 28,845 RSUs are settled~~Company achieves a performance target. The actual amount of PSUs, if earned, varies on the percentage of the performance target achieved and could result in ~~cash, both upon vesting. These RSUs will vest~~more or less shares issued than the number of units granted in ~~three approximately equal amounts on~~ each of the precedent years outlined in the tables above.

The table below shows detailed information about RSUs granted to the Company’s independent directors for the years ended December ~~21, 2019, 2020~~31, 2023, 2022, and ~~2021.~~2021:



Year	Stock-Settled RSUs	Cash-Settled RSU	Total RSU	Vesting Period	Awardee	Weighted-average grant date fair value
2023	28,920	—	28,920	1 Year	Independent Directors	20.74
2022	17,250	—	17,250	1 Year	Independent Directors	28.98
2021	—	6,573	6,573	1 Year	Independent Directors	22.82
2021	13,146	—	13,146	1 Year	Independent Directors	22.82

In 2023, 2022 and 2021, the Company recorded compensation expense related to RSUs and PSUs of $4.5 million, $2.1 million and $2.6 million, respectively. The total unearned compensation of $4.3 million for all unvested stock-settled RSUs and PSUs at December 31, 2023 will be recognized over a weighted average period of 1.1 years.

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Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2022, 2021 and 2021

b) Employee Stock Purchase Plan

The Company offers an ESPP. The ESPP became effective on February 14, 2022, subject to obtaining shareholder approval. On June 8, 2022, the shareholders of the Company approved the ESPP. An aggregate of one million (1,000,000) shares of the Company’s Class A Common Stock (“Common Stock”) have been reserved for issuance under the ESPP. The purpose of the ESPP is to provide eligible employees of the Company and its designated subsidiaries with the opportunity to acquire a stock ownership interest in the Company on favorable terms and to pay for such acquisitions through payroll deductions. The number of shares of Class A common stock issued in 2023 and 2022 under the ESPP was 56,927 and 35,337, respectively. For the years ended December 31, 2023 and 2022, the Company recognized compensation expense of $0.5 million and $0.3 million, respectively, in connection with the ESPP.

c) Employee Benefit Plan

The ~~Mercantil~~Amerant Bank, ~~U.S.A.~~N.A. Retirement Benefits Plan (the “401(k) Plan”) is a 401(k) benefit plan covering substantially all employees of the Company.

The Company matches 100% of each participant’s contribution up to a maximum of 5% of their annual salary. Contributions by the Company to the Plan are based upon a fixed percentage of participants’ salaries as defined by the Plan. The Plan enables Highly Compensated employees to contribute up to the maximum allowed without further restrictions. All contributions made by the Company to the participants’ accounts are vested immediately. In addition, employees with at least three months of service and who have reached ~~the~~a certain age ~~of 21~~ may contribute a percentage of their salaries to the Plan as elected by each participant.

The Company contributed to the Plan approximately $5$3.6 million and $4$3.3 million in ~~2018~~2023 and ~~2017,~~2022 respectively, in matching contributions.

~~186~~

~~Mercantil Bank Holding Corporation and Subsidiaries~~

~~Notes to Consolidated Financial Statements~~

~~December 31, 2018, 2017 and 2016~~

The Company maintains the Amerant Bank, N.A. Executive Deferred Compensation Plan as a non-qualified plan for eligible highly compensated employees (the “Deferred Compensation Plan”). The Deferred Compensation Plan permits deferrals of compensation above the amounts that can be contributed for retirement under the 401(k) Plan. Under the Deferred Compensation Plan, eligible employees may elect to defer all or a portion of their annual salary and cash incentive ~~awards and allows them~~awards. Effective January 1, 2022, there were no matching contributions from the Company under the Deferred Compensation Plan. Prior to 2022, eligible employees were allowed to receive matching contributions up to 5% of their annual ~~salary.~~salary if the maximum amount allowed in the 401k had been reached. All deferrals, employer contributions, earnings, and gains on each participant’s account in the Deferred Compensation Plan are vested immediately. ~~The Spin-off caused~~

d) Subsequent Events

On February 16, 2024, the Company granted an ~~unexpected early distribution for U.S. federal income tax purposes from~~aggregate of 141,219 RSUs and a target of 68,473 PSUs to various executive officers and other employees under the ~~Deferred Compensation~~LTI Plan. ~~The Company partially compensated plan participants, in the aggregate amount~~

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Table of ~~$1.2 million, for the higher tax expense they will incur as a result of the distribution increasing the plan participants’ estimated effective federal income tax rates by recording a contribution~~Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to ~~the plan on behalf of its participants.~~Consolidated Financial Statements

December 31, 2023, 2022 and 2021


~~12.~~	~~Income Taxes~~

15. Income Taxes

The components of the income tax expense for the years ended December 31, ~~2018, 2017~~2023, 2022 and ~~2016~~2021 are as follows:


(in thousands)	2023		2022		2021
Current tax expense:
Federal	$	19,768	$	15,609	$	23,225
State	1,313		1,116		4,681



Deferred tax (expense) benefit	(10,542)		(104)		5,803
Total income tax expense	$	10,539	$	16,621	$	33,709

(in thousands) 2018 2017 2016
Current provision
Federal $ 7,298
$ 19,194
$ 10,981
State 1,964
1,763
844
Impact of lower rate under the 2017 Tax Act -
Remeasurement of net deferred tax assets, other than balances corresponding to items in AOCI —
8,470
—
Remeasurement of net deferred tax assets corresponding to items in AOCI —
1,094
—
Deferred tax expense (benefit) 2,471
3,471
(1,614 )
$ 11,733
$ 33,992
$ 10,211

~~On December 22, 2017, the 2017 Tax Act was signed into law. This law significantly changes U.S. tax law by, among other things, lowering corporate federal income tax rates and implementing~~The following table shows a territorial tax system. The legislation permanently reduces the U.S. corporate income tax rate from 35% to 21%, effective January 1, 2018. As a result of the reduction in the U.S. corporate federal income tax rate, the Company remeasured its ending net deferred tax assets at December 31, 2017 and recognized a total of $9.6 million tax expense in the Company’s consolidated statement of income for the year ended December 31, 2017.

~~187~~

~~Mercantil Bank Holding Corporation and Subsidiaries~~

~~Notes to Consolidated Financial Statements~~

~~December 31, 2018, 2017 and 2016~~

A reconciliation of the income tax expense at the statutory federal income tax rate to the Company’s effective income tax rate for each of the three years ended December 31, ~~2018, 2017,~~2023:


	2023				2022				2021
(in thousands, except percentages)	Amount		%		Amount		%		Amount		%
Tax expense calculated at the statutory federal income tax rate	$	8,679	21.00	%	$	16,503	21.00	%	$	30,244	21.00	%
Increases (decreases) resulting from:


Non-taxable interest income	(491)		(1.19)	%	(342)		(0.44)	%	(350)		(0.24)	%
Taxable (non-taxable) BOLI income	1,302		3.15	%	(1,135)		(1.44)	%	(1,146)		(0.80)	%
Stock-based compensation	(40)		(0.10)	%	(251)		(0.32)	%	(856)		(0.59)	%
State and city income taxes, net of federal income tax benefit	1,037		2.51	%	882		1.12	%	3,697		2.57	%
Rate differential on deferred items	(2,159)		(5.22)	%	(245)		(0.31)	%	769		0.53	%
Noncontrolling interest	357		0.87	%	283		0.36	%	548		0.38	%
Disallowed interest expense and other expenses	1,547		3.74	%	891		1.13	%	421		0.29	%
Other, net	307		0.74	%	35		0.05	%	382		0.27	%
Total income tax expense	$	10,539	25.50	%	$	16,621	21.15	%	$	33,709	23.41	%

F-77

Table of Contents

Amerant Bancorp Inc. and ~~2016 follows:~~Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2023, 2022 and 2021

2018 2017 2016
(in thousands) Amount % Amount % Amount %
Tax expense calculated at the statutory federal income tax rate $ 12,089
21.00 % $ 26,967
35.00 % $ 11,827
35.00 %
Increases (decreases) resulting from:
Impact of the 2017 Tax Act -
Remeasurement of net deferred tax assets —
— % 9,564
12.41 % —
— %
Non-taxable interest income (1,507 ) (2.62 )% (1,643 ) (2.13 )% (1,132 ) (3.35 )%
Non-taxable BOLI income (1,223 ) (2.12 )% (1,910 ) (2.48 )% (1,547 ) (4.58 )%
Non-deductible Spin-off costs 1,711
2.97 % —
— % —
— %
Disallowed interest expense allocable to tax exempt securities and other expenses 627
1.09 % 577
0.75 % 464
1.37 %
State and city income taxes, net of federal income tax benefit (131 ) (0.23 )% 1,146
1.49 % 549
1.62 %
Other, net 167
0.29 % (709 ) (0.92 )% 50
0.16 %
$ 11,733
20.38 % $ 33,992
44.12 % $ 10,211
30.22 %

The composition of the net deferred tax asset is as follows:


	December 31,
(in thousands)	2023		2022
Tax effect of temporary differences
Lease liability	$	32,449	$	37,345
Net unrealized losses in other comprehensive loss	24,053		27,663
Allowance for credit losses	23,177		19,811
Valuation allowance on loans held for sale	9,130		—

Deferred compensation	5,026		5,090
Stock-based compensation expense	1,761		1,333
Dividend income	(1,221)		(645)
Depreciation and amortization	(4,625)		(2,869)
Goodwill amortization	(4,926)		(4,949)
Right-of-use asset	(30,284)		(35,979)
Other	1,095		1,903
Net deferred tax assets	$	55,635	$	48,703

December 31,
(in thousands) 2018 2017
Tax effect of temporary differences
Provision for loan losses $ 13,581
$ 13,372
Net unrealized losses in other comprehensive income 5,878
1,680
Deferred compensation expense 3,489
3,460
Dividend income 605
946
Interest income on nonaccrual loans 341
599
Goodwill amortization (3,979 ) (3,223 )
Depreciation and amortization (3,934 ) (3,601 )
Other 329
1,350
Net deferred tax assets $ 16,310
$ 14,583

~~188~~

~~Mercantil Bank Holding Corporation and Subsidiaries~~

~~Notes to Consolidated Financial Statements~~

~~December 31, 2018, 2017 and 2016~~

The Company evaluates the deferred tax asset for recoverability using a consistent approach which considers the relative impact of negative and positive evidence, including its own historical financial performance and that of its operating subsidiaries and projections of future taxable income. This evaluation involves significant judgment by management about assumptions that are subject to change from period to period. Management believes that the weight of all the positive evidence currently available exceeds the negative evidence in support of the realization of the future tax benefits associated with the federal net deferred tax asset. As a result, management has concluded that the federal net deferred tax asset in its entirety will more likely than not be realized. Therefore, a valuation allowance is not considered necessary. If future results differ significantly from the Company’s current projections, a valuation allowance against the net deferred tax asset may be required.

At December 31, ~~2018~~2023 and ~~2017,~~2022, the Company had accumulated net operating losses (“NOLs”) in the State of Florida of approximately ~~$151.9~~$160.2 million and ~~$143.6~~$161.0 million, respectively. These NOLs are carried forward for a maximum of 20 years or indefinitely, depending on the year generated, based on applicable Florida law. The deferred tax asset related to these NOLs at December 31, ~~2018~~2023 and ~~2017~~2022 is approximately ~~$6.6~~$7.0 million and ~~$6.2~~$7.0 million, respectively. A ~~full~~ valuation allowance has been recorded against the state deferred tax asset ~~related to these NOLs~~ as management believes it is more likely than not that the tax benefit will not be realized.

At December 31, ~~2018~~2023 and ~~2017,~~2022, the Company had no unrecognized tax benefits or associated interest or penalties that needed to be accrued.

The Company and its subsidiaries file a consolidated federal income tax return as well as combined state income tax returns where combined filings are required. The federal and state tax returns for years 2020 through 2023 remain subject to examination by the corresponding tax jurisdictions.


~~13.~~	~~Accumulated Other Comprehensive Loss (“AOCL”):~~

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Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2023, 2022 and 2021

16. Accumulated Other Comprehensive Income (“AOCL/AOCI”):

The components of ~~AOCL~~AOCL/AOCI are summarized as follows using applicable blended average federal and state tax rates for each period:


	December 31, 2023						December 31, 2022
(in thousands)	Before Tax Amount		Tax Effect		Net of Tax Amount		Before Tax Amount		Tax Effect		Net of Tax Amount
Net unrealized holding losses on debt securities available for sale	$	(97,042)	$	24,614	$	(72,428)	$	(111,957)	$	28,605	$	(83,352)
Net unrealized holding gains on interest rate swaps designated as cash flow hedges	2,193		(561)		1,632		3,659		(942)		2,717
Total (AOCL) AOCI	$	(94,849)	$	24,053	$	(70,796)	$	(108,298)	$	27,663	$	(80,635)

December 31, 2018 December 31, 2017
(in thousands) Before Tax
Amount Tax
Effect Net of Tax
Amount Before Tax
Amount Tax
Effect Net of Tax
Amount
Unrealized losses on available for sale securities $ (33,145 ) $ 8,104
$ (25,041 ) $ (13,414 ) $ 2,883
$ (10,531 )
Unrealized gains on interest rate swaps designated as cash flow hedges 9,103
(2,226 ) $ 6,877
5,602
(1,204 ) 4,398
Total AOCL $ (24,042 ) $ 5,878
$ (18,164 ) $ (7,812 ) $ 1,679
$ (6,133 )

The components of other comprehensive (loss) income for the three-year period ended December 31, 2023 is summarized as follows:


	December 31, 2023
(in thousands)	Before Tax Amount		Tax Effect		Net of Tax Amount
Net unrealized holding gains on debt securities available for sale:
Change in fair value arising during the period	$	12,817	$	(3,460)	$	9,357

Reclassification adjustment for net losses included in net income	2,098		(531)		1,567
	14,915		(3,991)		10,924
Net unrealized holding losses on interest rate swaps designated as cash flow hedges:
Change in fair value arising during the period	(20)		5		(15)
Reclassification adjustment for net interest income included in net income	(1,446)		376		(1,070)
	(1,466)		381		(1,085)
Total other comprehensive income	$	13,449	$	(3,610)	$	9,839

~~189~~

F-79

~~Mercantil Bank Holding Corporation~~Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, ~~2018, 2017~~2023, 2022 and ~~2016~~2021


	December 31, 2022
(in thousands)	Before Tax Amount		Tax Effect		Net of Tax Amount
Net unrealized holding losses on debt securities available for sale:
Change in fair value arising during the period	$	(130,165)	$	33,014	$	(97,151)

Reclassification adjustment for net gains included in net income	2,433		(621)		1,812
	(127,732)		32,393		(95,339)
Net unrealized holding losses on interest rate swaps designated as cash flow hedges:
Change in fair value arising during the period	369		(149)		220
Reclassification adjustment for net interest income included in net income	(985)		252		(733)
	(616)		103		(513)
Total other comprehensive loss	$	(128,348)	$	32,496	$	(95,852)

~~The components of other comprehensive income (loss) for the three-year period ended December 31, 2018 is summarized as follows:~~


	December 31, 2021
(in thousands)	Before Tax Amount		Tax Effect		Net of Tax Amount
Net unrealized holding losses on debt securities available for sale:
Change in fair value arising during the period	$	(17,264)	$	4,304	$	(12,960)

Reclassification adjustment for net gains included in net income	(4,266)		1,028		(3,238)
	(21,530)		5,332		(16,198)
Net unrealized holding losses on interest rate swaps designated as cash flow hedges:
Change in fair value arising during the period	178		(41)		137
Reclassification adjustment for net interest income included in net income	(508)		122		(386)
	(330)		81		(249)
Total other comprehensive loss	$	(21,860)	$	5,413	$	(16,447)

F-80

December 31, 2018
(in thousands) Before Tax
Amount Tax
Effect Net of Tax
Amount
Unrealized losses on available for sale securities:
Change in fair value arising during the period $ (20,730 ) $ 5,465
$ (15,265 )
Reclassification adjustment for net losses included in net income 999
(244 ) 755
(19,731 ) 5,221
(14,510 )
Unrealized gains on interest rate swaps designated as cash flow hedges:
Change in fair value arising during the period 3,744
(1,081 ) 2,663
Reclassification adjustment for net interest income included in net income (243 ) 59
(184 )
3,501
(1,022 ) 2,479
Total other comprehensive loss $ (16,230 ) $ 4,199
$ (12,031 )

December 31, 2017
(in thousands) Before Tax
Amount Tax
Effect Net of Tax
Amount
Unrealized gains on available for sale securities arising during the period $ 6,875
$ (3,298 ) $ 3,577
Reclassification adjustment for net losses on sale of securities included in net income 1,601
(768 ) 833
Unrealized gains on interest rate swaps designated as cash flow hedges 293
(141 ) 152
Total other comprehensive income $ 8,769
$ (4,207 ) $ 4,562

December 31, 2016
(in thousands) Before Tax
Amount Tax
Effect Net of Tax
Amount
Unrealized losses on available for sale securities arising during the period $ (5,952 ) $ 2,113
$ (3,839 )
Reclassification adjustment for net gains on sale of securities included in net income (1,556 ) 552
(1,004 )
Unrealized gains on interest rate swaps designated as cash flow hedges 5,578
(1,980 ) 3,598
Total other comprehensive loss $ (1,930 ) $ 685
$ (1,245 )

~~190~~

~~Mercantil Bank Holding Corporation~~Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, ~~2018, 2017~~2023, 2022 and ~~2016~~2021

17. Related Party Transactions


~~14.~~	~~Related Party Transactions~~

The ~~Company was a wholly-owned subsidiary~~Company’s related parties include directors, executive officers, holders of MSF through August 10, 2018 when The Distributed Shares were distributed to MSF’s shareholders. MSF sold all of its voting Class A common stock in the IPO, and reduced its nonvoting Class B common stock to less than 5% or more of the Company’s ~~total~~ common stock, ~~on December 28, 2018. As a result, at year end 2018, MSF no longer controlled the Company~~ or ~~the Bank. Entities that are part~~any member of the ~~MSF group outside the U.S. were related parties during most~~immediate family of ~~2018.~~these persons. Transactions with related parties ~~are~~were entered into pursuant to the Company’s policies and procedures and applicable law, including Federal Reserve Regulation W, on substantially the same terms and conditions as transactions with unaffiliated third parties.

In addition to loans to related parties and associated interest income, which are described further below, ~~included in the~~ consolidated balance sheets and the consolidated statements of operations ~~are~~include the following amounts with related ~~parties as follows:~~parties:


	December 31,
(in thousands)	2023		2022



Liabilities
Demand deposits, noninterest bearing	$	1,228	$	1,733
Demand deposits, interest bearing	11,119		9,376
Savings and money market	3,981		1,703
Time deposits and accounts payable	4,089		4,652
Total due to related parties	$	20,417	$	17,464

December 31,
(in thousands) 2018 2017
Liabilities
Demand deposits, noninterest bearing $ 9,447
$ 24,879
Demand deposits, interest bearing 3,721
21,071
Money market 308
449
Time deposits and accounts payable 1,350
7,636
Total due to related parties $ 14,826
$ 54,035

Years Ended December 31,
(in thousands) 2018 2017 2016
Income
Data processing and other services $ 2,168
$ 1,532
$ 2,328
Rental income from operating lease 248
1,971
1,976
Service charges 95
90
83
$ 2,511
$ 3,593
$ 4,387
Expenses
Interest expense $ 126
$ 85
$ 73
Loss on sale of securities —
—
796
Fees and other expenses 623
302
504
749
387
1,373
$ 1,762
$ 3,206
$ 3,014

~~Securities transactions~~

~~On December 29, 2018, the Company repurchased Class B common stock from MSF. See Note 15 for more details.~~

In 2016, the Company sold securities guaranteed by the government of Venezuela to a non-U.S. affiliate at their fair value of approximately $11.8 million and realized a loss on the sale of approximately $0.8 million. Such securities had been held by the Company as available for sale.

~~191~~

~~Mercantil Bank Holding Corporation and Subsidiaries~~

~~Notes to Consolidated Financial Statements~~

~~December 31, 2018, 2017 and 2016~~


	Years Ended December 31,
(in thousands)	2023		2022		2021





Expenses
Interest expense	$	103	$	46	$	13

Fees and other expenses	56		58		53

	$	(159)	$	(104)	$	(66)

Loan transactions

The Company originates loans in the normal course of business to certain related parties. At December 31, ~~2018~~2023 and ~~2017,~~2022, these loans amounted to ~~$5.6~~$4.2 million and ~~$4.8~~$5.9 million, respectively. These loans are generally made to persons who participate or have authority to participate (other than in the capacity of a director) in major policymaking functions of the Company or its affiliates, such as principal owners and management of the ~~entity~~Company and their immediate families. Interest income on these loans was approximately $0.1 million, $0.2 million in ~~2018 and 2017.~~

~~In 2016, the Company purchased from the Bank a non-performing loan to a Canadian oil company’s Colombian operation at its fair value at the time~~each of the transaction. Subsequently, the Company sold to a non-U.S. affiliate shares received in a restructuring of the same loan at their estimated fair value of approximately $4.9 million, which was included in other assets in the cash flow statement. The Company realized no gain or loss on sale of such shares.

~~For~~ the years ended December 31, ~~2018~~2023 and ~~2017, participations~~2022, respectively.

Other assets and liabilities

In connection with litigation between the Bank, one of its former subsidiaries which merged with and into the Bank in ~~corporate financial institution loans that were sold to non-U.S. affiliates amounted to approximately $10 million~~prior years, and ~~$45 million, respectively. These participated loans were made to unaffiliated borrowers under terms consistent~~Kunde Management, LLC (”Kunde”), the parties entered into a confidential settlement agreement and the court entered an agreed order of dismissal with ~~the Company’s normal lending practices.~~prejudice on July 6, 2020. The Company ~~recorded no gain~~incurred approximately $1.1 million in legal fees through June 30, 2020 litigating this case. In connection with this litigation and settlement, certain related parties agreed to reimburse Amerant Trust, a maximum of $1.0 million of all legal fees and costs related to and arising from the litigation. As of December 31, 2020, the Company expected to be reimbursed up to $750,000 of these legal fees. In 2021, the Company was reimbursed $875,000 in connection with this event. The terms of the settlement agreement did not have a material impact on the Company's consolidated financial condition or ~~loss on these loan participation transactions. There were no participations purchased from affiliates in 2018 and 2017.~~

~~Services provided and received~~operating results.

The Company ~~has provided certain data processing~~had approximately $1.4 million and ~~corporate services~~$1.3 million, respectively, due to ~~non-U.S. affiliates under the terms~~its Trust Subsidiaries as of ~~certain services agreements. Fee income for those services are~~December 31, 2023 and 2022. This amount is included in ~~data processing and other fees above.~~

MSF has granted us a two-year license under our Amended and Restated Separation and Distribution Agreement dated as of June 12, 2018, commencing on August 18, 2018, to use the “Mercantil” name and marks in connection with our business. All such use must be in accordance with MSF’s current use policies. No fees areaccounts payable for the first year of the license. After the first year, the Company is obligated to pay a license fee monthly, at an annual rate equal to the lesser of $400,000 or the fair value of the license as determined by an independent appraisal consistent with Federal Reserve Regulation W. Payments under this license will cease when we terminate the use of the name and mark. We do not expect to pay any license fees to MSF.

In 2018, the Company entered into a custody agreement and an information agent agreement with an MSF’s wholly owned Venezuela bank, and MSF, respectively. As a service to its smaller shareholders and to promote shareholder liquidity generally, the Company pays fees to be agreed on a per account fee for serving as custodian and transaction fees for assisting with changes in share ownership, including distribution of any payments from the Company in respect of Company shares that may be repurchased. The agreements provide for monthly fees payable by the Company and have an initial term of one year, subject to renewal for an additional year, and may be terminated earlier.

~~Leasing subsidiary~~

On February 15, 2018, the Company sold its membership interest in G200 Leasing, LLC (“G200 Leasing”) to a non-U.S. affiliate subsidiary of MSF. Prior to the sale, G200 Leasing distributed $19.8 million in cash to the Bank. All of the membership interests in G200 Leasing were sold for $8.5 million, which approximated the fair value of net assets sold. Net assets sold were mainly comprised of approximately $1 million cash held at the Bank and approximately $7.5 million corresponding to the net book value of an aircraft owned by G200 Leasing . The Company recorded no gain or loss on this sale.

G200 Leasing had leased its aircraft to MSF. Under the terms of the lease agreement between G200 Leasing and MSF, MSF had sole use of the aircraft and provided for all of its scheduled maintenance, including maintaining sufficient qualified collateral in accordance with U.S. banking regulatory requirements. MSF had time deposits with the Company sufficient to meet those collateral requirements. Income from this lease agreement was included in rental income from the operating lease in the ~~table above.~~

precedent table.

~~192~~

F-81

~~Mercantil Bank Holding Corporation~~Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, ~~2018, 2017~~2023, 2022 and ~~2016~~2021

18. Stockholders’ Equity

~~Dividends paid~~

~~On March 13, 2018, the Company paid a special, one-time, cash dividend of $40.0 million to MSF, or $0.94 per common share, in connection with the Spin-off.~~


~~15.~~	~~Stockholders’ Equity~~

(a) Amended and Restated Articles of Incorporation

Clean-Up Merger

In November 2021, the Company’s shareholders approved a clean-up merger, previously announced by the Company in September 2021, pursuant to which a subsidiary of the Company merged with and into the Company (the “Clean-up Merger”). Under the terms of the Clean-up Merger, each outstanding share of Class B common stock was converted to 0.95 of a share of Class A common stock without any action on the part of the holders of Class B common stock; however, any shareholder, together with its affiliates, who owned more than 8.9% of the outstanding shares of Class A common stock as a result of the Clean-up Merger, such holder’s shares of Class A common stock or Class B common stock, as the case may have been, were converted into shares of a new class of Non-Voting Class A common stock, solely with respect to holdings that were in excess of the 8.9% limitation. The terms of the Clean-up Merger included the creation of a new class of Non-Voting Class A common stock. Following the Clean-up Merger, no shares of Class B common stock are authorized or outstanding, and November 17, 2021 was the last day they traded on the Nasdaq Global Select Market. 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. Following the Clean-up Merger, any holder who beneficially owned fewer than 100 shares of Class A common stock received cash in lieu of Class A common stock.

On ~~February 6, 2018,~~November, 17, 2021, the Company filed amended and restated articles of incorporation with the Secretary of State of Florida. Pursuant to the amended and restated articles, the total number of authorized ~~Company~~ shares of stock of all classes is ~~550,000,000,~~300,000,000, consisting of the following classes:


Class	Number of Shares		Par Value per Share		Class	Number of Shares	Par Value per Share
Common Stock:
Class A	400,000,000		$	0.10
Class B	100,000,000		0.10
	500,000,000
Class A - voting common stock
Class A - voting common stock
Class A - voting common stock
Class A - non-voting common stock
		250,000,000
Preferred Stock	50,000,000		0.10
	550,000,000
Preferred Stock
Preferred Stock
		300,000,000

Common Stock

~~Holders~~

The Class A voting common stock and the Class A non-voting common stock are identical in all respects except that the Class A non-voting common stock are not be entitled to vote on any matter (unless such a vote is required by applicable laws or NYSE regulations in a particular case).

On August 3, 2023, the Company provided written notice to Nasdaq of ~~shares~~its determination to voluntarily withdraw the principal listing of the Company’s Class A common stock from Nasdaq and shares of Class B common stock have identical rights in all respects other than voting rights. Shares of Class B common stock are not convertible into shares of Class A common stock or vice versa. Holders of shares of Class A common stock are entitled to one vote per share on all matters. Holders of Class B common stock are entitled to one-tenth of a vote per share of Class B common stock, voting (i) together withtransfer the Class A common stock as a single voting group on proposals to appoint the Company’s independent auditors, if the Company seeks such a vote, (ii) as required by the Florida Business Corporation Act, and (iii) as a single voting group in other circumstances, including a reorganization event that adversely affects the rightslisting of the ~~Class B common stock.~~Common Stock to the NYSE. The Company’s Common Stock listing and trading on Nasdaq ended at market close on August 28, 2023, and trading commenced on the NYSE at market open on August 29, 2023 where it continues to trade under the stock symbol “AMTB”

F-82

Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2023, 2022 and 2021

Preferred Stock

The Board of Directors is authorized to provide for and designate, out of the authorized but unissued shares of Preferred Stock, one or more series of Preferred Stock and, with respect to each such series, to fix the number of shares, the price, dividend rates, rights, preferences, privileges and restrictions, including voting rights, of one or more series of preferred stock ~~form~~from time to time, without any vote or further action by the shareholders. There are currently no outstanding shares of preferred stock.

Dividends

Dividends shall be payable only when, as and if declared by the Board of Directors from lawful available funds, and may be paid in cash, property, or shares of any class or series or other securities or evidences of indebtedness of the Company or any other issuer, as may be determined by resolution or resolutions of the Board of Directors. ~~Shares of Class B common stock are not entitled to receive dividends or distributions payable in shares of Class A common stock.~~

~~193~~

~~Mercantil Bank Holding Corporation and Subsidiaries~~

~~Notes to Consolidated Financial Statements~~

~~December 31, 2018, 2017 and 2016~~

b) ~~Stock Splits~~

On February 6, 2018, the Company exchanged 100% of the 298,570,328 shares of Class A common stock and 215,188,764 shares of Class B common stock outstanding, for 74,212,408 shares of Class A common stock and 53,253,157 shares of Class B common stock (the “Exchange”). This facilitated the distribution in the Spin-off of one share of Class A and Class B common stock for each outstanding share of MSF Class A and Class B common stock, respectively.

On October 23, 2018, the Company completed a 1-for-3 reverse stock split of the Company’s issued and outstanding shares of its Class A and Class B common stock (the “Stock Split”). As a result of the Stock Split, every three shares of issued and outstanding Class A common stock were combined into one issued and outstanding share of Class A common stock, and every three shares of issued and outstanding Class B common stock were combined into one issued and outstanding share of Class B common stock, without any change in the par value per share. Fractional shares were issued and no cash was paid by the Company in respect of fractional shares or otherwise in the Stock Split. The Stock Split reduced the number of shares of Class A common stock issued and outstanding from 74,212,408 shares to 24,737,470 shares, and reduced the number of shares of Class B common stock issued and outstanding from 53,253,157 shares to 17,751,053 shares.

As a result of the rebranding discussed in Note 1 to these consolidated financial statements, and in connection with the Stock Split, the Company's Class A and Class B common stock began trading on a Stock Split-adjusted basis on October 24, 2018 under the symbols “AMTB” (for the Class A shares) and “AMTBB” (for the Class B shares). The Company’s Class A and Class B shares had previously traded under the symbols “MBNA” and “MBNAA”, respectively.

All references made to share or per share amounts in the consolidated financial statements for the periods presented and applicable disclosures have been retroactively adjusted to reflect the Exchange and Stock Split. In addition, as a result of the Exchange and Stock Split, the Company reclassified an amount equal to the reduction in the number of Company Shares at par value to additional paid-in capital on its consolidated financial statements for the periods presented.

~~c) Class A~~ Common Stock

Shares of the Company’s Class A common stock issued and outstanding as of December 31, ~~2018~~2023 and ~~2017~~December 31, 2022 were ~~26,851,832~~33,603,242 and ~~24,737,470,~~33,815,161, respectively.

~~IPO~~

On December ~~21, 2018,~~19, 2022, the Company ~~closed~~announced that the ~~IPO~~Board of ~~6,300,000 shares of its Class A common stock at~~Directors authorized a ~~public offering price of $13.00 per share. Of the 6,300,000 shares of Class A common stock sold in the offering,~~new repurchase program pursuant to which the Company ~~sold 1,377,523 shares of Class A common stock and MSF sold all of its 4,922,477 shares of Class A common stock. In addition, the Company granted the underwriters a 30-day option~~may purchase, from time to ~~purchase~~time, up to an ~~additional 945,000 shares~~aggregate amount of ~~Class A common stock at the public offering price, less the underwriting discount, to cover over-allotment. The net proceeds to the Company from the sale~~$25 million of its shares of Class A common stock in(the “2023 Class A Common Stock Repurchase Program”). The 2023 Class A Common Stock Repurchase Program was set to expire on December 31, 2023 and on December 15, 2023, the ~~IPO were~~Company announced that the Board approved to extend the expiration date to December 31, 2024. In 2023, the Company repurchased an aggregate of 259,853 shares of Class A common stock at a weighted average price of $18.98 per share, under the 2023 Class A Common Stock Repurchase Program. The aggregate purchase price for these transactions was approximately ~~$17.9 million. The~~$4.9 million, including transaction costs. At December 2023, the Company ~~received no proceeds~~had $20 million available for repurchase under this repurchase program.

On January 31, 2022, the Company announced that the Board of Directors authorized a new repurchase program pursuant to which the Company may purchase, from ~~the sale~~time to time, up to an aggregate amount of $50 million of its shares of Class A common stock. Under the New Class A Common Stock Repurchase Program, the Company was able to repurchase shares of Class A common stock through open market purchases, by block purchase, in privately negotiated transactions or otherwise in compliance with Rule 10b-18 under the Exchange Act. The extent to which the Company was able to repurchase its shares of Class A common stock and the timing of such purchases depended upon market conditions, regulatory requirements, other corporate liquidity requirements and priorities and other factors as may have been considered in the ~~IPO by MSF.~~

~~On January 23, 2019,~~Company’s sole discretion. Repurchases may also have been made pursuant to a trading plan under Rule 10b5-1 under the ~~Underwriters partially exercised their over-allotment option by purchasing 229,019~~Exchange Act, which would permit shares to be repurchased when the Company might otherwise be precluded from doing so because of self-imposed trading blackout periods or other regulatory restrictions. The New Class A Common Stock Repurchase Program did not obligate the Company to repurchase any particular amount of shares of Class A common stock, and may have been suspended or discontinued at any time without notice. In 2022, the ~~Company’s~~Company repurchased an aggregate of 1,602,887 shares of Class A common stock at ~~the public offering~~a weighted average price of ~~$13.00~~$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. On May 19, 2022, the Company announced the completion of the New Common Stock Repurchase Program.

In November 2021, the Company repurchased 281,725 shares of Class A ~~common stock. The net proceeds to~~Common Stock that were cashed out in accordance with the ~~Company from this transaction~~terms of the Clean-Up Merger. These shares were repurchased at a price per share of $30.10 and an aggregate purchase price of approximately ~~$3.0~~$8.5 million.

~~MSF agreed to pay all underwriting discounts, commissions and offering expenses with respect to the IPO.~~

~~194~~F-83

~~Mercantil Bank Holding Corporation~~Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, ~~2018, 2017~~2023, 2022 and ~~2016~~2021

~~Private Placements~~

~~On February 1, 2019 and February 28, 2019,~~In September 2021, the Company’s Board of Directors authorized a stock repurchase program which provided for the potential to repurchase up to $50 million of shares of the Company’s Class A common stock. Under the Class A Common Stock Repurchase Program, the Company ~~issued and sold 153,846 and 1,750,000~~was able to repurchase shares of ~~its~~ Class A common stock through open market purchases, by block purchase, in privately negotiated transactions or otherwise in compliance with Rule 10b-18 under the Exchange Act. The extent to which the Company was able to repurchase its shares of Class A common stock and the timing of such purchases depended upon market conditions, regulatory requirements, other corporate liquidity requirements and priorities and other factors as may have been considered in the Company’s sole discretion. Repurchases may also have been made pursuant to a trading plan under Rule 10b5-1 under the Exchange Act, which would permit shares to be repurchased when the Company might otherwise be precluded from doing so because of self-imposed trading blackout periods or other regulatory restrictions. The Class A Common Stock Repurchase Program did not obligate the Company to repurchase any particular amount of shares of Class A common stock, and may have been suspended or discontinued at any time without notice. In 2022 and 2021, the Company repurchased an aggregate of 652,118 shares and 893,394 shares, respectively, ~~in private placements exempt from registration~~of Class A common stock at a weighted average price per share of $33.96 and $31.18, respectively, under ~~Section 4(a)(2)~~the Class A Common Stock Repurchase Program. In 2022 and 2021, the aggregate purchase price for these transactions was approximately $22.1 million and $27.9 million, respectively, including transaction costs. On January 31, 2022, the Company announced the completion of the Class A Common Stock Repurchase Program.

On March 10, 2021, the Company’s Board of Directors approved a stock repurchase program which provided for the potential repurchase of up to $40 million of shares of the Company’s Class B common stock. Under the Class B Common Stock Repurchase Program, the Company was able to repurchase shares of Class B common stock through open market purchases, by block purchase, in privately-negotiated transactions, or otherwise in compliance with Rule 10b-18 under the Securities Exchange Act ~~and Securities and SEC Rule 506~~of 1934, as amended (the ~~“Private Placements”~~“Exchange Act”). The ~~net proceeds~~extent to which the Company was able to repurchase its shares of Class B common stock and the timing of such purchases depended upon market conditions, regulatory requirements, other corporate liquidity requirements and priorities and other factors as may have been considered in the Company’s sole discretion. Repurchases may also have been made pursuant to a trading plan under Rule 10b5-1 under the Exchange Act, which would permit shares to be repurchased when the Company might otherwise be precluded from doing so because of self-imposed trading blackout periods or other regulatory restrictions. The Class B Common Stock Repurchase Program did not obligate the ~~Private Placements totaled~~Company to repurchase any particular amount of shares of Class B common stock, and may have been suspended or discontinued at any time without notice. In 2021, the Company repurchased an aggregate of 565,232 shares of Class B common stock at a weighted average price per share of $16.92, under the Class B Common Stock Repurchase Program. The aggregate purchase price for these transactions was approximately ~~$26.7 million.~~

~~Stock Compensation Award~~

~~On December 21, 2018,~~$9.6 million, including transaction costs. In September 2021, in connection with the ~~closing of~~Merger, the Company’s ~~IPO,~~Board of Directors terminated the Class B Common Stock Repurchase Program.

In 2023, 2022 and 2021, the Company’s ~~directors were granted restricted stock units, and various Company officers and employees were granted restricted~~Board of Directors authorized the cancellation of all shares of Class A common stock ~~awards, under the 2018 Equity Plan. Under this plan,~~and Class B common stock previously held as treasury stock, including all shares repurchased in 2023, 2022 and 2021. Therefore, the Company ~~issued an aggregate of 736,839~~had no shares of ~~restricted~~common stock ~~during 2018. Refer~~held in treasury stock at December 31, 2023, 2022 and 2021.

Stock-Based Compensation Awards

The Company grants, from time to time, stock-based compensation awards which are reflected as changes in the Company’s Stockholders’ equity. SeeNote ~~11 to our consolidated financial statements~~14 “Stock-Based Incentive Compensation Plan” for additional information about common stock transactions under the Company’s 2018 Equity Plan.

~~d) Class B Common Stock and Treasury Stock~~

~~Shares of the Company’s Class B common stock issued and outstanding as of December 31, 2018 and 2017 were 17,751,053.~~

On December 27, 2018, following the December 21, 2018 closing of the Company’s IPO, the Company and MSF entered into the Class B Purchase Agreement. Pursuant to the Class B Purchase Agreement, the Company agreed to purchase up to all 3,532,457 shares of its nonvoting Class B common stock from MSF using the net proceeds from the Company’s sale of its Class A common stock. On December 28, 2018, the Company completed the purchase of 1,420,136 shares of Class B common stock from MSF for $12.61 per shares of Class B common stock, representing an aggregate purchase price of approximately $17.9 million. The aforementioned 1,420,136 shares of Class B common stock are held in treasury stock under the cost method.

On March 7, 2019, the Company repurchased all of MSF’s 2,112,321 remaining shares of nonvoting Class B common stock at a weighted average price of $13.48 per share with proceeds from the IPO over-allotment exercise and the Private Placements, representing an aggregate purchase price of approximately $28.5 million. The aforementioned 2,112,321 shares of Class B common stock are held in treasury stock under the cost method.

~~e) Dividends~~

~~On March 13, 2018, the Company paid a special, one-time, cash dividend of $40.0 million to MSF, or $0.94 per common share.~~

~~195~~

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~~Mercantil Bank Holding Corporation~~Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, ~~2018, 2017~~2023, 2022 and ~~2016~~2021

c) Dividends

Set forth below are the details of dividends by the Company for the periods ended December 31, 2023 and 2022 and 2021, and subsequent to December 31, 2023:

Declaration Date

Record Date

Payment Date

Dividend Per Share

Dividend Amount

~~16.~~01/17/2024

~~Commitments and Contingencies~~02/14/2024

02/29/2024

$0.09

$3.0 million

10/18/2023

11/14/2023

11/30/2023

$0.09

$3.0 million

07/19/2023

08/15/2023

08/31/2023

$0.09

$3.0 million

04/19/2023

05/15/2023

05/31/2023

$0.09

$3.0 million

01/18/2023

02/13/2023

02/28/2023

$0.09

$3.0 million

07/20/2022

08/17/2022

08/31/2022

$0.09

$3.0 million

04/13/2022

05/13/2022

05/31/2022

$0.09

$3.0 million

01/19/2022

02/11/2022

02/28/2022

$0.09

$3.2 million

12/09/2021

12/22/2021

01/15/2022

$0.06

$2.2 million

~~The~~

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Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2023, 2022 and 2021

19. Commitments and Contingencies

From time to time the Company and its subsidiaries ~~are party~~may be exposed to ~~various legal actions arising in~~loss contingencies. In the ordinary, course of ~~business.~~business, those contingencies may include, known but unasserted claims, and legal / regulatory inquiries or examinations. The Company records these loss contingencies as a liability when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. In the opinion of management, the ~~outcome of these proceedings will not have~~Company maintains a ~~significant effect on~~liability that is in an estimated amount sufficient to cover said loss contingencies, if any, at the ~~Company’s consolidated financial position or results of operations.~~

The Company occupies various premises under noncancelable lease agreements expiring through the year 2046. Actual rental expenses may include deferred rents that are recognized as rent expense on a straight line basis. Rent expense under these leases was approximately $6 million for each of the years ended December 31, 2018, 2017 and 2016, respectively.

~~Future minimum annual lease payments under such leases are as follows:~~

Years Approximate
Amount
(in thousands)
2019 $ 6,281
2020 6,223
2021 5,930
2022 5,386
2023 5,069
Thereafter 43,071
$ 71,960
reporting dates.

The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit, ~~credit card facilities~~derivative contracts, and letters of credit. Most of our derivative arrangements with counterparties require the posting of collateral upon meeting certain net exposure threshold.

The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for loan commitments and letters of credit is represented by the contractual amount of those instruments. The Company uses the same credit policies in making loan commitments and letters of credit as it does for on-balance sheet instruments. The Company controls the credit risk of loan commitments and letters of credit through credit approvals, customer limits, and monitoring procedures.

Loan commitments are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Loan commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. The Company evaluates each customer’s credit-worthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation. Collateral held varies but may include cash, accounts receivable, inventory, property and equipment, real estate in varying stages of development and occupancy, and income-producing commercial properties.

Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support borrowing arrangements. They generally have one year terms and are renewable annually, if agreed. The credit risk involved in issuing standby letters of credit is generally the same as that involved in extending loan facilities to customers. The Company generally holds deposits, investments and real estate as collateral supporting those commitments. The extent of collateral held for those commitments at December 31, ~~2018~~2023 ranges from unsecured commitments to commitments fully collateralized by cash and securities.

~~196~~

~~Mercantil Bank Holding Corporation and Subsidiaries~~

~~Notes to Consolidated Financial Statements~~

~~December 31, 2018, 2017 and 2016~~

Commercial letters of credit are conditional commitments issued by the Company to guarantee payment by a customer to a third party, and are used primarily for importing or exporting goods and are terminated when proper payment is made by the customer.

Credit card facilities represent the unused balance of the customers’ available credit card lines, and correspond to the maximum possible credit risk to the Company should customers draw upon their available credit card lines. We have not experienced and do not anticipate that all of our customers will access their entire available line at any given point in time.

Financial instruments whose contract amount represents off-balance sheet credit risk at December 31, ~~2018~~2023 are generally short-term and are as follows:

(in thousands) Approximate
Contract
Amount
Commitments to extend credit $ 923,424
Credit card facilities 198,500
Standby letters of credit 19,562
Commercial letters of credit 7,670
$ 1,149,156


(in thousands)	Approximate Contract Amount
~~17.~~Commitments to extend credit	~~Fair Value Measurements~~$	1,305,816
Standby letters of credit	29,605

	$	1,335,421

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Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2023, 2022 and 2021

The following table summarizes the changes in the allowance for credit losses for off-balance sheet credit risk exposures for the years ended December 31, 2023, 2022 and 2021:


(in thousands)	Years Ended December 31,
		2023		2022		2021
Balances at beginning of the period		$	1,702	$	1,702	$	1,952
Provision for (reversal of) credit losses - off balance sheet exposures		1,400		—		(250)
Balances at end of period		$	3,102	$	1,702	$	1,702

Beginning in the third quarter of 2023, the provision for credit losses for off-balance sheet exposures is included as part of provision for (reversal of) credit losses in the Company’s consolidated statements of operations and comprehensive income (loss). Prior to that period, the provision for credit losses for off-balance sheet exposures was included as part of other operating expenses in the Company’s consolidated statements of operations and comprehensive income (loss). In 2023, the provision for credit losses for off-balance sheet exposures includes: (i) $0.3 million recorded in the first half of 2023 and included within other operating expenses in the Company’s consolidated statements of operations and comprehensive income (loss), and (ii) $1.1 million recorded in the second half of 2023 and included within provision for (reversal of) credit losses in the Company’s consolidated statements of operations and comprehensive income (loss).

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Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2023, 2022 and 2021

20. Fair Value Measurements

Assets and liabilities measured at fair value on a recurring basis are summarized below:


	December 31, 2018
	December 31, 2023													December 31, 2023
(in thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)			Third-Party Models with Observable Market Inputs (Level 2)		Internal Models with Unobservable Market Inputs (Level 3)		Total Carrying Value in the Consolidated Balance Sheet		(in thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)	Third-Party Models with Observable Market Inputs (Level 2)	Internal Models with Unobservable Market Inputs (Level 3)		Total Carrying Value in the Consolidated Balance Sheet
Assets
Securities available for sale
Cash and Cash equivalents
Cash and Cash equivalents
Cash and Cash equivalents
Other short-term investments
Other short-term investments
Other short-term investments
Securities
Debt Securities available for sale
Debt Securities available for sale
Debt Securities available for sale
U.S. government sponsored enterprise debt securities
U.S. government sponsored enterprise debt securities
U.S. government sponsored enterprise debt securities	$	—		$	820,779	$	—	$	820,779
Corporate debt securities	—			352,555		—		352,555
U.S. government agency debt securities	—			216,985		—		216,985
Collateralized loan obligations
U.S. treasury securities
Municipal bonds	—			160,212		—		160,212
Mutual funds	—			23,110		—		23,110
Commercial paper	—			12,410		—		12,410
	—
	—			1,586,051		—		1,586,051
Equity securities with readily determinable fair values not held for trading
Equity securities with readily determinable fair values not held for trading
Equity securities with readily determinable fair values not held for trading
	2,534
Mortgage loans held for sale (at fair value)
Bank owned life insurance	—			206,141		—		206,141
Other assets
Mortgage servicing rights (MSRs)
Mortgage servicing rights (MSRs)
Mortgage servicing rights (MSRs)
Derivative instruments	—			11,491		—		11,491
	$	—		$	1,803,683	$	—	$	1,803,683
			$
			$
			$
Liabilities
Other liabilities
Other liabilities
Other liabilities
Derivative instruments	$	—		$	2,388	$	—	$	2,388
Derivative instruments
Derivative instruments

~~197~~

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