UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
ý☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2018March 31, 2021
¨
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period __________ to __________

Commission File Number: 001-38534
Mercantil Bank Holding Corporationamtb-20210331_g1.jpg
Amerant Bancorp Inc.
(Exact Name of Registrant as Specified in Its Charter)
Florida
65-0032379
(State or other jurisdiction of
incorporation or organization)
65-0032379
(I.R.S. Employer
Identification No.)
220 Alhambra Circle
Coral Gables, Florida
(305) 460-8728
Florida33134
(Address and telephone number of principal executive offices)(Zip Code)
(305)460-4038
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report: N/A)
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolsName of exchange on which registered
Class A Common StockAMTBNASDAQ
Class B Common StockAMTBBNASDAQ
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  ý    No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ¨ No ý
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ¨                                         No ý
The registrant became subject to these requirements on August 8, 2018.
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes ý                                         No ¨


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”,filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ¨
Accelerated filer
☒
Non-accelerated filer ¨
Smaller reporting company¨
☐
Emerging growth companyý
Non-accelerated filer ý (Do not check if a smaller reporting company)
☒
If an emerging growth company, indicate by check mark if the companyregistrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨☐ 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes ¨☐       No ý☒
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
ClassOutstanding as of September 21, 2018May 6, 2021
Class A Common Stock, $0.10 par value per share
74,212,40829,001,646 shares of Class A Common Stock
Class B Common Stock, $0.10 par value per share
53,253,1578,748,667 shares of Class B Common Stock

1



MERCANTIL BANK HOLDING CORPORATIONAMERANT BANCORP INC. AND SUBSIDIARIES
FORM 10-Q
June 30, 2018March 31, 2021
INDEX
Page
PART I.
Page
3
Consolidated Balance Sheets as of June 30, 2018March 31, 2021 (Unaudited) and December 31, 2017 (Unaudited)2020
3
Consolidated Statements of Operations and Comprehensive Income for the three and six months ended June 30, 2018March 31, 2021 and 20172020 (Unaudited)
4
Consolidated Statements of Changes in Stockholders’ Equity for the sixthree months ended June 30, 2018March 31, 2021 and 20172020 (Unaudited)
6
Condensed Consolidated Statements of Cash Flows for the sixthree months ended June 30, 2018March 31, 2021 and 20172020 (Unaudited)
7
Notes to Interim Consolidated Financial Statements (Unaudited)
89
Item 2
4237
Cautionary Notice Regarding Forward-Looking Statements
37
Overview
41
Selected Financial Information
49
Results of Operations
54
Financial Condition
65
Item 3
8286
Item 4
8286
PART II
Item 1
8387
Item 1A
8387
Item 2
8388
Item 3
8388
Item 4
8388
Item 5
8388
Item 6
8489
8590



2
Table of Contents




PART I.Part 1. FINANCIAL INFORMATION



ITEM 1. FINANCIAL STATEMENTS
Mercantil Bank Holding CorporationAmerant Bancorp Inc. and Subsidiaries
Consolidated Balance Sheets (Unaudited)
(in thousands, except share data)(Unaudited) March 31, 2021December 31, 2020
Assets
Cash and due from banks$37,744 $30,179 
Interest earning deposits with banks195,755 184,207 
Cash and cash equivalents233,499 214,386 
Securities
Debt securities available for sale1,190,201 1,225,083 
Debt securities held to maturity104,657 58,127 
Equity securities with readily determinable fair value not held for trading23,965 24,342 
Federal Reserve Bank and Federal Home Loan Bank stock56,469 65,015 
Securities1,375,292 1,372,567 
Loans held for sale1,044 0 
Loans held for investment, gross5,753,794 5,842,337 
Less: Allowance for loan losses110,940 110,902 
Loans held for investment, net5,642,854 5,731,435 
Bank owned life insurance218,903 217,547 
Premises and equipment, net109,071 109,990 
Deferred tax assets, net15,607 11,691 
Goodwill19,506 19,506 
Accrued interest receivable and other assets135,322 93,771 
Total assets$7,751,098 $7,770,893 
Liabilities and Stockholders' Equity
Deposits
Demand
Noninterest bearing$977,595 $872,151 
Interest bearing1,324,127 1,230,054 
Savings and money market1,494,227 1,587,876 
Time1,882,130 2,041,562 
Total deposits5,678,079 5,731,643 
Advances from the Federal Home Loan Bank1,050,000 1,050,000 
Senior notes58,656 58,577 
Junior subordinated debentures held by trust subsidiaries64,178 64,178 
Accounts payable, accrued liabilities and other liabilities115,171 83,074 
Total liabilities6,966,084 6,987,472 
Contigencies (Note 16)00
Stockholders’ equity
Class A common stock, $0.10 par value, 400 million shares authorized; 29,001,646 shares issued and outstanding (2020 - 28,806,344 shares issued and outstanding)2,904 2,882 
Class B common stock, $0.10 par value, 100 million shares authorized; 8,920,315 shares issued and outstanding (2020: 9,036,352 shares issued and outstanding)892 904 
Additional paid in capital304,448 305,569 
Retained earnings456,861 442,402 
Accumulated other comprehensive income19,909 31,664 
Total stockholders' equity785,014 783,421 
Total liabilities and stockholders' equity$7,751,098 $7,770,893 
(in thousands, except per share data)June 30,
2018		 December 31, 2017
 
  
Assets   
Cash and due from banks$27,125
 $44,531
Interest earning deposits with banks90,105
 108,914
Cash and cash equivalents117,230
 153,445
Securities   
Available for sale1,649,665
 1,687,157
Held to maturity88,440
 89,860
Federal Reserve Bank and Federal Home Loan Bank stock74,014
 69,934
Loans held for sale—
 5,611
Loans, gross6,219,549
 6,066,225
Less: Allowance for loan losses69,931
 72,000
Loans, net6,149,618
 5,994,225
Bank owned life insurance203,236
 200,318
Premises and equipment, net121,683
 129,357
Deferred tax assets, net23,219
 14,583
Goodwill19,193
 19,193
Accrued interest receivable and other assets84,166
 73,084
Total assets$8,530,464
 $8,436,767
Liabilities and Stockholders' Equity   
Deposits   
Demand   
Noninterest bearing$860,745
 $895,710
Interest bearing1,403,657
 1,496,749
Savings and money market1,646,392
 1,684,080
Time2,452,344
 2,246,434
Total deposits6,363,138
 6,322,973
Advances from the Federal Home Loan Bank and other borrowings1,258,000
 1,173,000
Junior subordinated debentures held by trust subsidiaries118,110
 118,110
Accounts payable, accrued liabilities and other liabilities71,834
 69,234
Total liabilities7,811,082
 7,683,317
Commitments and contingencies (Note 11)
 
    
Stockholders’ equity (Note 1)   
Class A common stock, $0.10 par value, 400,000,000 shares authorized; 74,212,408 shares issued and outstanding7,421
 7,421
Class B common stock, $0.10 par value, 100,000,000 shares authorized; 53,253,157 shares issued and outstanding5,325
 5,325
Additional paid in capital359,008
 359,008
Retained earnings367,681
 387,829
Accumulated other comprehensive loss(20,053) (6,133)
Total stockholders’ equity719,382
 753,450
Total liabilities and stockholders’ equity$8,530,464
 $8,436,767

The accompanying notes are an integral part of these consolidated financial statements (unaudited).
3
Table of Contents
Mercantil Bank Holding CorporationAmerant Bancorp Inc. and Subsidiaries
Consolidated Statements of Operations and Comprehensive Income (Unaudited)


Three Months Ended March 31,
(in thousands)20212020
Interest income
Loans$52,771 $59,788 
Investment securities7,507 11,065 
Interest earning deposits with banks51 462 
Total interest income60,329 71,315 
Interest expense
Interest bearing demand deposits113 135 
Savings and money market deposits980 3,266 
Time deposits7,360 13,484 
Advances from the Federal Home Loan Bank2,758 4,412 
Senior notes942 0 
Junior subordinated debentures607 789 
Total interest expense12,760 22,086 
Net interest income47,569 49,229 
Provision for loan losses0 22,000 
Net interest income after provision for loan losses47,569 27,229 
Noninterest income
Deposits and service fees4,106 4,290 
Brokerage, advisory and fiduciary activities4,603 4,133 
Change in cash surrender value of bank owned life insurance1,356 1,414 
Securities gains, net2,582 9,620 
Cards and trade finance servicing fees339 395 
Loss on early extinguishment of advances from the Federal Home Loan Bank, net0 (7)
Other noninterest income1,177 2,065 
Total noninterest income14,163 21,910 
Noninterest expense
Salaries and employee benefits26,427 29,326 
Occupancy and equipment4,488 3,803 
Telecommunication and data processing3,727 3,464 
Professional and other services fees3,784 2,954 
Depreciation and amortization1,786 1,959 
FDIC assessments and insurance1,755 1,118 
Other operating expenses1,658 2,243 
Total noninterest expenses43,625 44,867 
Income before income tax expense18,107 4,272 
Income tax expense(3,648)(890)
Net income$14,459 $3,382 
 Three Months Ended June 30, Six Months Ended June 30,
(in thousands, except per share data)2018 2017 2018 2017
Interest income       
Loans$62,448
 $53,790
 $122,118
 $103,870
Investment securities12,709
 12,515
 24,450
 25,081
Interest earning deposits with banks759
 364
 1,279
 737
Total interest income75,916
 66,669
 147,847
 129,688
        
Interest expense       
Interest bearing demand deposits113
 84
 202
 184
Savings and money market deposits3,104
 2,187
 5,688
 4,381
Time deposits10,172
 6,193
 18,872
 11,853
Advances from the Federal Home Loan Bank6,511
 4,345
 12,501
 8,594
Junior subordinated debentures2,025
 1,855
 3,960
 3,679
Securities sold under agreements to repurchase2
 564
 2
 1,205
Total interest expense21,927
 15,228
 41,225
 29,896
Net interest income53,989
 51,441
 106,622
 99,792
Provision for loan losses150
 3,646
 150
 7,743
Net interest income after provision for loan losses53,839
 47,795
 106,472
 92,049
        
Noninterest income       
Deposits and service fees4,471
 4,868
 9,053
 9,774
Brokerage, advisory and fiduciary activities4,426
 4,897
 8,841
 10,158
Change in cash surrender value of bank owned life insurance1,474
 1,242
 2,918
 2,487
Cards and trade finance servicing fees1,173
 1,114
 2,235
 2,185
Gain on early extinguishment of advances from the Federal Home Loan Bank882
 —
 882
 —
Data processing, rental income and fees for other services to related parties613
 969
 1,494
 1,552
Securities gains, net16
 177
 16
 155
Other noninterest income1,931
 4,492
 3,492
 5,665
Total noninterest income14,986
 17,759
 28,931
 31,976
        
Noninterest expense       
Salaries and employee benefits34,932
 31,666
 68,973
 63,974
Occupancy and equipment4,060
 4,052
 7,775
 8,761
Professional and other services fees5,387
 2,744
 11,831
 5,401
FDIC assessments and insurance1,468
 2,180
 2,915
 4,143
Telecommunication and data processing3,011
 2,417
 6,095
 4,169
Depreciation and amortization1,945
 2,039
 4,086
 4,466
Other operating expenses1,835
 5,567
 6,608
 8,899
Total noninterest expenses52,638
 50,665
 108,283
 99,813
Net income before income tax16,187
 14,889
 27,120
 24,212
Income tax expense(5,764) (4,499) (7,268) (7,315)
Net income$10,423
 $10,390
 $19,852
 $16,897
        
        
        
        
        

The accompanying notes are an integral part of these consolidated financial statements (unaudited).
4
Table of Contents
Mercantil Bank Holding CorporationAmerant Bancorp Inc. and Subsidiaries
Consolidated Statements of Operations and Comprehensive Income (Unaudited)


Three Months Ended March 31,
(in thousands, except per share data)20212020
Other comprehensive (loss) income, net of tax
Net unrealized holding (losses) gains on debt securities available for sale arising during the period$(9,466)$26,702 
Net unrealized holding gains (losses) on cash flow hedges arising during the period36 (1,514)
Reclassification adjustment for items included in net income(2,325)(7,305)
Other comprehensive (loss) income(11,755)17,883 
Comprehensive income$2,704 $21,265 
Earnings Per Share (Note 18):
Basic earnings per common share$0.38 $0.08 
Diluted earnings per common share$0.38 $0.08 

 Three Months Ended June 30, Six Months Ended June 30,
(in thousands, except per share data)2018 2017 2018 2017
Other comprehensive (loss) income, net of tax       
Net unrealized holding (losses) gains on securities available for sale arising during the period$(5,454) $5,980
 $(20,431) $7,552
Net unrealized holding gains (losses) on cash flow hedges arising during the period2,139
 (1,453) 6,352
 (1,295)
Reclassification adjustment for net losses (gains) included in net income2
 (93) 159
 (47)
Other comprehensive (loss) income(3,313) 4,434
 (13,920) 6,210
Comprehensive income$7,110
 $14,824
 $5,932
 $23,107
        
Basic and diluted earnings per share:       
Net income available to common shareholders$10,423
 $10,390
 $19,852
 $16,897
Basic and diluted weighted average shares outstanding127,466
 127,466
 127,466
 127,466
Basic and diluted income per common share$0.08
 $0.08
 $0.16
 $0.13
Cash dividends declared per common share (Note 1)$—
 $—
 $0.31
 $—

The accompanying notes are an integral part of these consolidated financial statements (unaudited).
5
Table of Contents
Mercantil Bank Holding CorporationAmerant Bancorp Inc. and Subsidiaries
Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)
SixThree Months Ended June 30, 2018March 31, 2021 and 2017



2020

Common StockAdditional
Paid
in Capital		Treasury StockRetained
Earnings		Accumulated Other Comprehensive IncomeTotal
Stockholders'
Equity
(in thousands, except share data)Shares OutstandingIssued Shares - Par Value
Class AClass BClass AClass B
Balance at December 31, 202028,806,344 9,036,352 $2,882 $904 $305,569 $0 $442,402 $31,664 $783,421 
Repurchase of Class B common stock— (116,037)— — — (1,855)— — (1,855)
Treasury stock retired— — — (12)(1,843)1,855 — — 0 
Restricted stock issued196,015 — 22 — (22)— — — 0 
Restricted stock surrendered(713)— — — (13)— — — (13)
Stock-based compensation expense— — — — 757 — — — 757 
Net income— — — — — — 14,459 — 14,459 
Other comprehensive loss— — — — — — — (11,755)(11,755)
Balance at March 31, 202129,001,646 8,920,315 $2,904 $892 $304,448 $0 $456,861 $19,909 $785,014 

 Common Stock Additional
Paid
in Capital		 Retained
Earnings		 Accumulated Other Comprehensive Loss Total
Stockholders'
Equity
 Class A Class B    
(in thousands, except share data)Shares
Issued and
Outstanding		 Par
value		 Shares
Issued and
Outstanding		 Par
value		    
Balance at
December 31, 2016		74,212,408
 $7,421
 53,253,157
 $5,325
 $359,008
 $343,678
 $(10,695) $704,737
Net income—
 —
 —
 —
 —
 16,897
 —
 16,897
Other comprehensive income—
 —
 —
 —
 —
 —
 6,210
 6,210
Balance at
June 30, 2017		74,212,408
 $7,421
 53,253,157
 $5,325
 $359,008
 $360,575
 $(4,485) $727,844
                
Balance at
December 31, 2017		74,212,408
 $7,421
 53,253,157
 $5,325
 $359,008
 $387,829
 $(6,133) $753,450
Dividends (Note 1)—
 —
 —
 —
 —
 (40,000) —
 (40,000)
Net income—
 —
 —
 —
 —
 19,852
 —
 19,852
Other comprehensive loss—
 —
 —
 —
 —
 —
 (13,920) (13,920)
Balance at
June 30, 2018		74,212,408
 $7,421
 53,253,157
 $5,325
 $359,008
 $367,681
 $(20,053) $719,382
Common StockAdditional
Paid
in Capital		Treasury StockRetained
Earnings		Accumulated Other Comprehensive IncomeTotal
Stockholders'
Equity
(in thousands, except share data)Shares OutstandingIssued Shares - Par Value
Class AClass BClass AClass B
Balance at December 31, 201928,927,576 14,218,596 $2,893 $1,775 $419,048 $(46,373)$444,124 $13,234 $834,701 
Repurchase of Class B common stock— (932,459)— — — (15,239)— — (15,239)
Treasury stock retired— — — (446)(61,166)61,612 — — 0 
Restricted stock issued6,591 — 1 — (1)— — — 0 
Restricted stock surrendered(129)— — — (2)— — — (2)
Restricted stock forfeited(54,462)— (6)— 6 — — — 0 
Stock-based compensation expense— — — — 392 — — — 392 
Net income— — — — — — 3,382 — 3,382 
Other comprehensive income— — — — — — — 17,883 17,883 
Balance at March 31, 202028,879,576 13,286,137 $2,888 $1,329 $358,277 $0 $447,506 $31,117 $841,117 



The accompanying notes are an integral part of these consolidated financial statements (unaudited).
6
Table of Contents
Mercantil Bank Holding CorporationAmerant Bancorp Inc. and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)



Three Months Ended March 31,
(in thousands)20212020
Cash flows from operating activities
Net income$14,459 $3,382 
Adjustments to reconcile net income to net cash provided by operating activities
Provision for loan losses0 22,000 
Net premium amortization on securities3,591 3,775 
Depreciation and amortization1,786 1,959 
Stock-based compensation expense757 392 
Change in cash surrender value of bank owned life insurance(1,356)(1,414)
Securities gains, net(2,582)(9,620)
Deferred taxes and others(99)(5,255)
Loss on early extinguishment of advances from the FHLB, net0 7 
Net changes in operating assets and liabilities:
Accrued interest receivable and other assets(3,229)(1,539)
Accounts payable, accrued liabilities and other liabilities(6,305)(10,509)
Net cash provided by operating activities7,022 3,178 
Cash flows from investing activities
Purchases of investment securities:
Available for sale(96,197)(197,522)
Held to maturity securities(50,274)0 
Federal Home Loan Bank stock0 (8,538)
(146,471)(206,060)
Maturities, sales, calls and paydowns of investment securities:
Available for sale115,125 196,698 
Held to maturity3,578 3,382 
Federal Home Loan Bank stock8,547 7,349 
127,250 207,429 
Net decrease in loans86,376 61,641 
Proceeds from loan sales1,173 13,109 
Net purchases of premises and equipment and others(805)(1,321)
Net cash provided by investing activities67,523 74,798 
Cash flows from financing activities
Net increase (decrease) in demand, savings and money market accounts105,868 (36,038)
Net (decrease) increase in time deposits(159,432)121,107 
Proceeds from Advances from the Federal Home Loan Bank0 280,000 
Repayments of Advances from the Federal Home Loan Bank0 (250,007)
Redemption of junior subordinated debentures0 (28,068)
Repurchase of common stock - Class B(1,855)(15,239)
Common stock retired to cover tax withholding(13)(2)
Net cash (used in) provided by financing activities(55,432)71,753 
Net increase in cash and cash equivalents19,113 149,729 
Cash and cash equivalents
Beginning of period214,386 121,324 
End of period$233,499 $271,053 
 Six Months Ended June 30,
(in thousands)2018 2017
Cash flows from operating activities   
Net income$19,852
 $16,897
Adjustments to reconcile net income to net cash provided by operating activities   
Provision for loan losses150
 7,743
Net premium amortization on securities8,447
 9,936
Depreciation and amortization4,086
 4,466
Increase in cash surrender value of bank owned life insurance(2,918) (2,487)
Deferred taxes, securities net gains or losses and others(4,374) (184)
Net changes in operating assets and liabilities   
Accrued interest receivable and other assets(2,075) 2,378
Account payable, accrued liabilities and other liabilities3,071
 6,078
Net cash provided by operating activities26,239
 44,827
    
Cash flows from investing activities   
Purchases of investment securities:   
Available for sale(121,245) (116,495)
Held to maturity securities—
 (12,586)
Federal Reserve Bank and Federal Home Loan Bank stock(13,642) (16,819)
Maturities, sales and calls of investment securities:   
Available for sale122,805
 311,647
Held to maturity1,338
 —
Federal Reserve Bank and Federal Home Loan Bank stock9,563
 13,388
Net increase in loans(174,197) (382,566)
Proceeds from loan portfolio sales23,781
 63,256
Net purchases of bank premises and equipment(3,522) (268)
Net proceeds from sale of subsidiary7,500
 —
Net cash used in investing activities(147,619) (140,443)
    
Cash flows from financing activities   
Net decrease in demand, savings and money market accounts(165,745) (148,347)
Net increase in time deposits205,910
 170,922
Net decrease in securities sold under agreements to repurchase—
 (15,000)
Proceeds from Advances from the Federal Home Loan Bank and other banks656,000
 690,500
Repayments of Advances from the Federal Home Loan Bank and other banks(571,000) (610,500)
Dividend paid(40,000) —
Net cash provided by financing activities85,165
 87,575
Net decrease in cash and cash equivalents(36,215) (8,041)
    
Cash and cash equivalents   
Beginning of period153,445
 134,989
End of period$117,230
 $126,948
    
Supplemental disclosures of cash flow information   
Cash paid:   
Interest$40,491
 $29,359
Income taxes15,203
 7,931

The accompanying notes are an integral part of these consolidated financial statements (unaudited).
7
Amerant Bancorp Inc. and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited) (continued)
Three Months Ended March 31,
(in thousands)20212020
Supplemental disclosures of cash flow information
Cash paid:
Interest$11,736 $21,890 
Income taxes324 295 
Initial recognition of operating lease right-of-use assets55,670 0 
Initial recognition of operating lease liabilities56,024 0 
The accompanying notes are an integral part of these consolidated financial statements (unaudited).
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Mercantil Bank Holding CorporationAmerant Bancorp Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)


1.Business, Basis of Presentation and Summary of Significant Accounting Policies
1.Basis of Presentation and Summary of Significant Accounting Policies
Mercantil Bank Holding Corporationa) Business
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, as a result of its 100% indirect ownership of MercantilAmerant 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 Reserve Bank of Atlanta (“Federal Reserve Bank”) and the Federal Home Loan Bank of Atlanta (“FHLB”). The Bank has two3 principal subsidiaries, Mercantil Investment Services,Amerant Investments, Inc., a securities broker-dealer (“Amerant Investments”), Amerant Trust, N.A, a non-depository trust company (“Amerant Trust”), and MercantilElant Bank & Trust Company, N.A.
As of(the “Cayman Bank”), a bank and trust company domiciled in the Cayman Islands acquired in November 2019. In December 31, 20172020, the Company wasBank joined a wholly owned subsidiary of Mercantil Servicios Financieros, C.A.third party to form Amerant Mortgage, LLC. (“MSF”Amerant Mortgage”). OnIn March 15, 2018, MSF transferred ownership of 100% of2021, the Company SharesBank and Amerant Trust received authorization to a non-discretionary common law grantor trust governed bymerge Amerant Trust with and into 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.
On February 6, 2018, the Company filed amended and restated articles of incorporationBank, with the Secretary of State of the State of Florida. Pursuant to this action, the total number ofBank as sole survivor, effective on April 1, 2021.
The Company’s Class A and Class B common shares (“Company Shares”), which the Company is authorized to issue is 400,000,000 and 100,000,000, respectively. In addition, effective on February 6, 2018, the Company exchanged 100% of the 298,570,328 Class A and 215,188,764 Class B Company Shares outstanding, for 74,212,408 Class A and 53,253,157 Class B Company Shares. This facilitated the distribution of onestock, par value $0.10 per common share, of Class A and Class B Company Shares for each outstanding share of MSF Class A and Class B common stock, respectively, discussed below. All references made topar value $0.10 per common share, or per share amounts in the consolidated financial statements for the periods presentedare listed and applicable disclosures have been retroactively adjusted to reflect this exchange. See Note 22 to the audited consolidated financial statements for additional information, which are included in the Company’s definitive Information Statement filed with the Securities and Exchange Commission (“SEC”) as Exhibit 99.1 to its Current Report on Form 8-K on August 10, 2018 (the “Information Statement”).
On March 13, 2018, the Company paid a special, one-time, cash dividend of $40.0 million to MSF.
The Distribution Trust was established by MSF and the Company pursuant to a Distribution Trust Agreement 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 all Company Shares of each Class held in the Distribution Trust for the benefit of MSF and its subsidiaries are the “Retained Shares”.
The Distributed Shares were distributed to MSF shareholders on August 10, 2018 (the “Distribution”). As a result of the Distribution, the Company is a separate company whose common stock is listedtrade on the Nasdaq StockGlobal Select Market under the symbols “MBNAA” (for“AMTB” and “AMTBB,” respectively.
Stock Repurchase Program
On March 10, 2021, the Company’s Class A common stock) and “MBNAB” (forBoard of Directors approved a stock repurchase program which provides for the potential repurchase of up to $40 million of shares of the Company’s Class B common stock)stock (the “2021 Stock Repurchase Program”). For more information about the 2021 Stock Repurchase Program, see Note 15 to our unaudited interim financial statements in this Form 10-Q.
COVID-19 Pandemic
CARES Act
On March 11, 2020, the World Health Organization recognized an outbreak of a novel strain of the coronavirus, COVID-19, as a pandemic. The Distribution Trust continues to holdCOVID-19 pandemic adversely affected the Retained Shares pending their sale or disposition by MSF or,economy resulting in certain circumstances where there is a change150-basis-point reduction in controlthe federal funds rate, and the enactment of MSF, their contribution by MSF to the Company.
In October 2008, MSF, the CompanyCoronavirus Aid, Relief, and various individuals as Voting Trustees, entered into a Voting Trust Agreement (the “Voting Trust”Economic Security Act (“CARES Act”). The Voting Trust was establishedCARES Act provided emergency economic relief to promoteindividuals, small businesses, mid-size companies, large corporations, hospitals and other public health facilities, and state and local governments, and allocated the interestsSmall 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 and expand its businessbegan participating in the United StatesSBA’s Paycheck Protection Program, or “PPP”, by facilitating accessproviding loans to these businesses to cover payroll, rent, mortgage, healthcare, and utilities costs, among other essential expenses. In early January 2021, a third round of PPP loans provided additional stimulus relief to small businesses and individuals who are self-employed or independent contractors. As of March 30, 2021, total PPP loans were $164.8 million, or 2.9% of total loans, compared to $198.5 million, or 3.4% of total loans as of December 31, 2020. The Company estimates as of March 31, 2021, there were $173.2 million of deposits related to the United States’ capital markets,PPP compared to $95.4 million as of December 31, 2020. On May 4, 2021, the Company entered into an agreement to sell to a third party, in cash, PPP loans with an outstanding balance of approximately $95.1 million, and expects to provide continued appropriate corporate governancerealize a pre-tax gain on sale of the Bank upon the occurrence of certain changes or threatened changes in control of MSF not approved by MSF’s board of directors.

approximately $3.8 million. The Company retained no loan servicing rights.
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Mercantil Bank Holding CorporationAmerant Bancorp Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)



Loan Modification Programs
On July 24, 2018,March 26, 2020, the Voting Trust was terminated. Accordingly, allCompany began offering loan payment relief options to customers impacted by the existing Voting Trust certificatesCOVID-19 pandemic, including interest-only and/or forbearance options. These programs continued in the second, third and fourth quarters of 2020, and first quarter of 2021. In the first quarter of 2021, the Company also began to selectively offer additional temporary loan modifications that allow it to extend the deferral and/or forbearance period beyond 180 days. Consistent with accounting and regulatory guidance, temporary modifications granted under these programs are not considered troubled debt restructurings, or TDRs. Loans which have been canceled. Allmodified under these programs totaled $1.1 billion as of March 31, 2021. As of March 31, 2021, modified loans totaling $62.1 million, or 1.1% of total ($43.4 million, or 0.7%, at December 31, 2020), were still under the issueddeferral and/or forbearance period.
b) Basis of Presentation and outstanding sharesSummary of capital stock of Mercantil Florida Bancorp, Inc (“Florida Bancorp”), which is the Bank’s sole shareholder, previously held by the Voting Trust, were transferred to the Company on that date. The Company is now the sole shareholder of Florida Bancorp, and the indirect owner of 100% of the Bank.
On August 8, 2018, the Company became subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Securities Act”).Significant Accounting Policies
The accompanying unaudited interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of SEC Regulation S-X of the SEC.S-X. Accordingly, they do not include all of the information and footnotes required for a fair statement of financial position, results of operations and cash flows in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”).GAAP. These unaudited interim unaudited consolidated financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. These adjustments are of a normal, recurring nature. Interim period operating results may not be indicative of the operating results for a full year or any other period. These unaudited interim unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements as of December 31, 20172020 and 20162019 and for each of the three years in the period ended December 31, 20172020 and the accompanying footnote disclosures for the Company, which are included in the Information Statement.Form 10-K.
The effects of significant subsequent events, if any, have been adequately recognized or disclosed in these unaudited interim consolidated financial statements. Subsequent events have been evaluated through September 21, 2018, the date when these consolidated financial statements were available to be issued.
For a complete summary of our significant accounting policies, please see Note 1 to the Company’s audited consolidated financial statements as of December 31, 2017 and 2016 and for each of the three years in the periodCompany’s annual report on Form 10-K for the year ended December 31, 2017, which are included in2020, filed with the Information Statement.Securities and Exchange Commission (“SEC”), on March 19, 2021 (the “Form 10-K”) .
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Amerant Bancorp Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)

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 periods.
Significant estimates made by management include: i)(i) the determination of the allowance for loan losses; (ii) the fair values of securities and the value assigned to goodwill during periodic goodwill impairment tests; (iii) the cash surrender value of bank owned life insuranceinsurance; and the reporting unit to which goodwill has been assigned during the annual goodwill impairment test; and (iii)(iv) the determination of whether the amount of deferred tax assets will more likely than not be realized. Management believes that these estimates are appropriate. Actual results could differ from these estimates.

9
TableThe COVID-19 pandemic has severely restricted the level of Contents
Mercantil Bank Holding Corporationeconomic activity in the U.S. and Subsidiaries
Notesaround the world since March 2020. Several states and cities across the U.S., including the States of Florida, New York and Texas and cities where we have banking centers, LPOs and where our principal place of business is located, have also implemented quarantines, restrictions on travel, “shelter at home” orders, and restrictions on types of business that may continue to Interim Consolidated Financial Statements (Unaudited)


Revisions
Duringoperate or may be reinstated in the second quarterfuture. While some of 2018,these measures and restrictions have been lifted and most businesses have begun to reopen, the Company determinedcannot predict when restrictions currently in place may be lifted, or whether restrictions that have been lifted will need to revise its presentation of loans by classes to correct for certain immaterial misclassificationsbe imposed or tightened in the presentationfuture if viewed as necessary due to public health concerns. Given the uncertainty regarding the spread and severity of loans by classes in the footnotesCOVID-19 pandemic and its adverse effects on the U.S. and global economies, the impact to the Company’s consolidated financial statements as of December 31, 2017. The Company assessed the impact of these misclassificationscannot be accurately predicted at this time.

c) Recently Issued Accounting Pronouncements
Issued and determined they had no effectAdopted
New Guidance on the Consolidated Balance Sheet as of December 31, 2017, the Consolidated Statements of Operations and Comprehensive Income for the three and six-month periods ended June 30, 2017, or the Consolidated Statement of Cash Flows for the six months ended June 30, 2017.
The following tables show the effects of the correction of the misclassifications to the footnotes to the Company’s consolidated financial statements as of December 31, 2017. This change in classification is reflected in the footnotes to the consolidated financial statements as of June 30, 2018 and for the three and six months periods ended June 30, 2018 and 2017.
Loan portfolio by class:
 December 31, 2017
(in thousands)As Reported As Revised Effect of change
Real estate loans     
Commercial real estate     
Non-owner occupied$1,745,839
 $1,713,104
 $(32,735)
Multi-family residential795,912
 839,709
 43,797
Land development and construction loans421,285
 406,940
 (14,345)
 2,963,036
 2,959,753
 (3,283)
Single-family residential515,237
 512,754
 (2,483)
Owner-occupied429,803
 610,386
 180,583
 3,908,076
 4,082,893
 174,817
Commercial loans1,529,572
 1,354,755
 (174,817)
Loans to financial institutions and acceptances497,626
 497,626
 —
Consumer loans and overdrafts130,951
 130,951
 —
 $6,066,225
 $6,066,225
 $—

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Mercantil Bank Holding Corporation and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)


Age analysis of the loan portfolio by class:
As reported:
 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               
Non-owner occupied$1,745,839
 $1,745,686
 $—
 $—
 $153
 $153
 $162
 $—
Multi-family residential795,912
 795,912
 —
 —
 —
 —
 —
 —
Land development and construction loans421,285
 421,285
 —
 —
 —
 —
 —
 —
 2,963,036
 2,962,883
 —
 —
 153
 153
 162
 —
Single-family residential515,237
 504,204
 6,609
 2,421
 2,003
 11,033
 5,004
 226
Owner-occupied429,803
 423,560
 1,571
 503
 4,169
 6,243
 10,398
 —
 3,908,076
 3,890,647
 8,180
 2,924
 6,325
 17,429
 15,564
 226
Commercial loans1,529,572
 1,523,329
 1,814
 5
 4,424
 6,243
 11,103
 —
Loans to financial institutions and acceptances497,626
 497,626
 —
 —
 —
 —
 —
 —
Consumer loans and overdrafts130,951
 130,846
 57
 29
 19
 105
 55
 —
 $6,066,225
 $6,042,448
 $10,051
 $2,958
 $10,768
 $23,777
 $26,722
 $226

As revised:
 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               
Non-owner occupied$1,713,104
 $1,712,624
 $—
 $—
 $480
 $480
 $489
 $—
Multi-family residential839,709
 839,709
 —
 —
 —
 —
 —
 —
Land development and construction loans406,940
 406,940
 —
 —
 —
 —
 —
 —
 2,959,753
 2,959,273
 —
 —
 480
 480
 489
 —
Single-family residential512,754
 501,393
 6,609
 2,750
 2,002
 11,361
 5,004
 226
Owner-occupied610,386
 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 loans1,354,755
 1,350,667
 385
 5
 3,698
 4,088
 8,947
 —
Loans to financial institutions and acceptances497,626
 497,626
 —
 —
 —
 —
 —
 —
Consumer loans and overdrafts130,951
 130,846
 57
 29
 19
 105
 55
 —
 $6,066,225
 $6,042,448
 $10,051
 $2,958
 $10,768
 $23,777
 $26,722
 $226

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Mercantil Bank Holding Corporation and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)



Age analysis of the loan portfolio by class:
Effects of change:
 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               
Non-owner occupied$(32,735) $(33,062) $—
 $—
 $327
 $327
 $327
 $—
Multi-family residential43,797
 43,797
 —
 —
 —
 —
 —
 —
Land development and construction loans(14,345) (14,345) —
 —
 —
 —
 —
 —
 (3,283) (3,610) —
 —
 327
 327
 327
 —
Single-family residential(2,483) (2,811) —
 329
 (1) 328
 —
 —
Owner-occupied180,583
 179,083
 1,429
 (329) 400
 1,500
 1,829
 —
 174,817
 172,662
 1,429
 —
 726
 2,155
 2,156
 —
Commercial loans(174,817) (172,662) (1,429) —
 (726) (2,155) (2,156) —
Loans to financial institutions and acceptances—
 —
 —
 —
 —
 —
 —
 —
Consumer loans and overdrafts—
 —
 —
 —
 —
 —
 —
 —
 $—
 $—
 $—
 $—
 $—
 $—
 $—
 $—
Loans by credit quality indicators:
As reported:
 December 31, 2017
  Credit Risk Rating  
    Classified  
(in thousands) Nonclassified  Substandard  Doubtful  Loss  Total
Real estate loans         
Commercial real estate         
Non-owner occupied$1,745,677
 $162
 $—
 $—
 $1,745,839
Multi-family residential795,912
 —
 —
 —
 795,912
 Land development and construction loans421,285
 —
 —
 —
 421,285
 2,962,874
 162
 —
 —
 2,963,036
Single-family residential509,368
 5,869
 —
 —
 515,237
Owner-occupied417,694
 12,109
 —
 —
 429,803
 3,889,936
 18,140
 —
 —
 3,908,076
Commercial loans1,513,375
 16,197
 —
 —
 1,529,572
Loans to financial institutions and acceptances497,626
 —
 —
 —
 497,626
Consumer loans and overdrafts125,762
 5,189
 —
 —
 130,951
 $6,026,699
 $39,526
 $—
 $—
 $6,066,225




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Mercantil Bank Holding Corporation and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)



Loans by credit quality indicators:

As revised:
 December 31, 2017
  Credit Risk Rating  
    Classified  
(in thousands) Nonclassified  Substandard  Doubtful  Loss  Total
Real estate loans         
Commercial real estate         
Non-owner occupied$1,712,615
 $489
 $—
 $—
 $1,713,104
Multi-family residential839,709
 —
 —
 —
 839,709
Land development and construction loans406,940
 —
 —
 —
 406,940
 2,959,264
 489
 —
 —
 2,959,753
Single-family residential506,885
 5,869
 —
 —
 512,754
Owner-occupied596,519
 13,867
 —
 —
 610,386
 4,062,668
 20,225
 —
 —
 4,082,893
Commercial loans1,340,643
 14,112
 —
 —
 1,354,755
Loans to financial institutions and acceptances497,626
 —
 —
 —
 497,626
Consumer loans and overdrafts126,838
 4,113
 —
 —
 130,951
 $6,027,775
 $38,450
 $—
 $—
 $6,066,225
Effects of change:
 December 31, 2017
  Credit Risk Rating  
    Classified  
(in thousands) Nonclassified  Substandard  Doubtful  Loss  Total
Real estate loans         
Commercial real estate         
Non-owner occupied$(33,062) $327
 $—
 $—
 $(32,735)
Multi-family residential43,797
 —
 —
 —
 43,797
Land development and construction loans(14,345) —
 —
 —
 (14,345)
 (3,610) 327
 —
 —
 (3,283)
Single-family residential(2,483) —
 —
 —
 (2,483)
Owner-occupied178,825
 1,758
 —
 —
 180,583
 172,732
 2,085
 —
 —
 174,817
Commercial loans(172,732) (2,085) —
 —
 (174,817)
Loans to financial institutions and acceptances—
 —
 —
 —
 —
Consumer loans and overdrafts1,076
 (1,076) —
 —
 —
 $1,076
 $(1,076) $—
 $—
 $—




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Notes to Interim Consolidated Financial Statements (Unaudited)



Allocation of allowance for loan losses at end of the period, as reported, revised and effects of change:
 December 31, 2017 December 31, 2016
(in thousands)As Reported As Revised Effect of change As Reported As Revised Effect of change
    
Real estate$30,246
 $31,290
 $1,044
 $31,055
 $30,713
 $(342)
Commercial33,731
 32,687
 (1,044) 40,555
 40,897
 342
Financial institutions4,362
 4,362
 —
 5,304
 5,304
 —
Consumer and others3,661
 3,661
 —
 4,837
 4,837
 —
 $72,000
 $72,000
 $—
 $81,751
 $81,751
 $—
 March 31, 2018 March 31, 2017
(in thousands)As Reported As Revised Effect of change As Reported As Revised Effect of change
    
Real estate$29,416
 $30,503
 $1,087
 $32,742
 $32,471
 $(271)
Commercial34,759
 33,672
 (1,087) 36,387
 36,658
 271
Financial institutions3,671
 3,671
 —
 5,615
 5,615
 —
Consumer and others4,272
 4,272
 —
 4,619
 4,619
 —
 $72,118
 $72,118
 $—
 $79,363
 $79,363
 $—

Summary of impaired loans:
As reported:
 December 31, 2017
  Recorded Investment    
(in thousands) With a Valuation Allowance  Without a Valuation Allowance  Total  Year Average  Total Unpaid Principal Balance  Valuation Allowance
Real estate loans           
Commercial real estate           
Non-owner occupied$—
 $—
 $—
 $143
 $—
 $—
Multi-family residential—
 1,318
 1,318
 7,898
 1,330
 —
Land development and construction loans—
 —
 —
 1,359
 —
 —
 —
 1,318
 1,318
 9,400
 1,330
 —
Single-family residential—
 877
 877
 3,100
 871
 —
Owner-occupied—
 9,488
 9,488
 13,080
 10,494
 —
 —
 11,683
 11,683
 25,580
 12,695
 —
Commercial loans7,173
 3,743
 10,916
 18,653
 16,940
 2,866
 $7,173
 $15,426
 $22,599
 $44,233
 $29,635
 $2,866




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Notes to Interim Consolidated Financial Statements (Unaudited)



Summary of impaired loans:
As revised:
 December 31, 2017
  Recorded Investment    
(in thousands) With a Valuation Allowance  Without a Valuation Allowance  Total  Year Average  Total Unpaid Principal Balance  Valuation Allowance
Real estate loans           
Commercial real estate           
Non-owner occupied$—
 $327
 $327
 $225
 $327
 $—
Multi-family residential—
 1,318
 1,318
 7,898
 1,330
 —
Land development and construction loans—
 —
 —
 1,359
 —
 —
 —
 1,645
 1,645
 9,482
 1,657
 —
Single-family residential—
 877
 877
 3,100
 871
 —
Owner-occupied—
 10,918
 10,918
 13,440
 12,323
 —
 —
 13,440
 13,440
 26,022
 14,851
 —
Commercial loans7,173
 1,986
 9,159
 18,211
 14,784
 2,866
 $7,173
 $15,426
 $22,599
 $44,233
 $29,635
 $2,866
Effects of change:
 December 31, 2017
  Recorded Investment    
(in thousands) With a Valuation Allowance  Without a Valuation Allowance  Total  Year Average  Total Unpaid Principal Balance  Valuation Allowance
Real estate loans           
Commercial real estate           
Non-owner occupied$—
 $327
 $327
 $82
 $327
 $—
Multi-family residential—
 —
 —
 —
 —
 —
Land development and construction loans—
 —
 —
 —
 —
 —
 —
 327
 327
 82
 327
 —
Single-family residential—
 —
 —
 —
 —
 —
Owner-occupied—
 1,430
 1,430
 360
 1,829
 —
 —
 1,757
 1,757
 442
 2,156
 —
Commercial loans—
 (1,757) (1,757) (442) (2,156) —
 $—
 $—
 $—
 $—
 $—
 $—

Commitment and contingencies:
The Company previously disclosed in Note 16 “Commitments and Contingencies” to its audited consolidated financial statements as of December 31, 2017, the approximate contract amount of credit card facilities of $266.8 million. This amount should have been disclosed as $200.2 million. This change has no effect on the Consolidated Statements of Operations and Comprehensive Income, Balance Sheets or Cash Flows.



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Notes to Interim Consolidated Financial Statements (Unaudited)


2.Recently Issued Accounting Pronouncements
Emerging Growth Company
Section 107 of the JOBS Act provides that, as an “emerging growth company” we 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 “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We intend to take advantage of the benefits of this extended transition period, for as long as it is available.
Changes to the Disclosure Requirements for Fair Value MeasurementsLeases
In AugustDecember 2018, the Financial Accounting Standards Board (“FASB”) issued amendments to the disclosure requirements for fair value measurements. The amendments modify the fair value measurements disclosures with the primary focus to improve effectiveness of disclosures in the notes to the financial statements that 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 entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. The Company is currently assessing the impact this new guidance may have on the Company’s consolidated financial statements and footnote disclosures.
Narrow Amendments to Pending New Guidance on Leases
In July 2018, the FASB issued amendments to narrow aspects of the new guidance issued in February 2016 for the recognition and measurement of all leases . The amendments address certain lessor’s issues associated with: (i) sales taxes and other similar taxes collected from lessees, (ii) certain lessor costs and (iii) recognition of variable payments for contracts with lease and nonlease components. The new guidance on leases issued in February 2016 requires lessees to recognize a right-of-use asset (“ROUA”) and a lease liability for most leases within the scope of the guidance. The Company adopted this standard on January 1, 2021 using the modified retrospective transition approach. Adoption of this standard resulted in a ROUA and a lease liability of $54.5 million and $55.0 million, respectively, which are presented in other assets and other liabilities, respectively, in the Company’s consolidated balance sheet at March 31, 2021.
The Company determines if an arrangement is or contains a lease at the inception of the contract. Operating lease ROUAs and liabilities are recognized at the inception date based on the present value of lease payments over the lease term. At lease inception, when the rate implicit in each lease is not yet effective. These amendments, andreadily available, the related pending new guidance, are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020, for private companies, and for fiscal periods beginning after December 15, 2018, and interim periods within those fiscal years, for public companies. Early adoption is permitted. The Company is inrequired to apply an incremental borrowing rate to calculate the processROUA and lease liability. The incremental borrowing rate is based on factors including the lease term and various market rates. Additionally, the Company also considers lease renewal options reasonably certain of exercise for purposes of determining whether these amendments and the related new pending guidance will have a material effect on its consolidated financial statements, when adopted.
Removal of Outdated OCC Guidance
In May 2018, the FASB issued amendments which removed outdated guidance related to the Office of the Comptroller of the Currency (“OCC”)’s Banking Circular 202, Accounting for Net Deferred Tax Changes. This guidance, which limited the net deferred tax debits that can be carried on a bank’s statement of condition for regulatory purposes, has been rescinded by the OCC. These amendments became effective immediately upon issuance and had no impact to the Company’s interim unaudited consolidated financial statements.

lease term.
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Notes to Interim Consolidated Financial Statements (Unaudited)



Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income
In February 2018,The new leasing standard provides several optional expedients in transition. The Company elected certain practical expedients, which allows the FASB issued guidance that allows a reclassification from AOCICompany to retained earnings for stranded tax effects resultingnot reassess prior conclusions on lease classification, embedded leases and initial indirect costs. The Company elected to exclude short-term leases up to 12 months from the newly enacted federal corporate income tax rate. The amountrecognition of right-of-use assets and lease liabilities. Additionally, the reclassification is the difference between the historical corporate income tax rateCompany elected to separate lease and the newly enacted 21% corporate income tax rate pursuant to H.R. 1, An Act to Providenon-lease cost and account 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 resulting in a $1.1 million increase in retained earnings in 2017.them separately.
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. In June 2020, the FASB amended the effective date of the new guidance on hedging. This guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years for public business entities. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. The Company is in the process of determining whether the adoption of this guidance will have a material impact on the Company’s consolidated financial statements and disclosures.
Statement of Cash Flows Classification of Certain Receipts and Payments
In August 2016 , the FASB issued specific guidance for the classification of a number of cash receipts and payments, including debt prepayment or debt extinguishment costs, settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that 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 bank-owned life insurance policies. The new guidance is effective for years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019, for private companies, and for years beginning after December 15, 2017 and interim periods within those fiscal years for public companies. Early adoption is permitted. The Company is in the process of understanding whether this new guidance will have a material impact on its consolidated statement of cash flows when adopted.
Accounting for Credit Losses on Financial Instruments
In June 2016, the FASB issued new guidance for the accounting for credit losses on instruments within its scope. The new guidance introduces an approach based on expected losses to estimate credit losses on certain types of financial instruments. 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, 2020, and interim periods within fiscal years beginning after December 15, 2021, for private companies, and for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, for public companies. Early2021. The adoption is permitted for fiscal years beginning after December 15, 2018. The Company isof this guidance in the processfirst quarter of determining whether these changes will2021 did not have a material impactan effect on itsthe Company’s consolidated financial positionstatements.
d) Subsequent Events
The effects of significant subsequent events, if any, have been recognized or resultsdisclosed in these unaudited interim consolidated financial statements.



2. Interest Earning Deposits with Banks
At March 31, 2021 and December 31, 2020, interest earning deposits with banks are mainly comprised of operations or disclosures.deposits with the Federal Reserve of approximately $196 million and $184 million, respectively. At March 31, 2021 and December 31, 2020, the average interest rate on these deposits was approximately 0.10% and 0.31%, respectively. These deposits mature within one year.


3.Securities
Amortized cost and approximate fair values of debt securities available for sale are summarized as follows:
March 31, 2021
Amortized
Cost		Gross UnrealizedEstimated
Fair Value
(in thousands)GainsLosses
U.S. government-sponsored enterprise debt securities$598,250 $15,090 $(2,637)$610,703 
Corporate debt securities338,473 8,903 (1,802)345,574 
U.S. government agency debt securities214,901 3,810 (2,636)216,075 
U.S. treasury securities2,504 6 0 2,510 
Municipal bonds14,243 1,096 0 15,339 
Total debt securities available for sale (1)$1,168,371 $28,905 $(7,075)$1,190,201 
__________________
(1)As of March 31, 2021, includes residential and commercial mortgage-backed securities with amortized cost of $624.0 million and $134.5 million, respectively, and fair value of $637.5 million and $135.8 million, respectively.
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Notes to Interim Consolidated Financial Statements (Unaudited)



December 31, 2020
Amortized
Cost		Gross UnrealizedEstimated
Fair Value
(in thousands)GainsLosses
U.S. government sponsored enterprise debt securities$640,796 $21,546 $(1,007)$661,335 
Corporate debt securities292,033 10,787 (1,106)301,714 
U.S. government agency debt securities202,135 4,458 (2,015)204,578 
U.S. treasury securities2,505 7 0 2,512 
Municipal bonds50,309 4,635 0 54,944 
Total debt securities available for sale (1)$1,187,778 $41,433 $(4,128)$1,225,083 
Accounting for Leases__________________
In February 2016, the FASB issued guidance for the recognition(1)As of December 31, 2020, includes residential and measurementcommercial mortgage-backed securities with amortized cost of all leases. The new guidance requires lessees to recognize a right-of-use asset$647.0 million and a lease liability for most leases within the scope$123.9 million, respectively, and fair value of the guidance. There were no significant changes to the guidance for lessors. The standard is effective for fiscal years beginning after December 15, 2019,$666.7 million and interim periods within fiscal years beginning after December 15, 2020, for private companies, and for fiscal periods beginning after December 15, 2018, and interim periods within those fiscal years, for public companies. Early adoption is permitted. The new standard must be adopted using a modified retrospective transition at the beginning of the earliest comparative period presented, and provides for certain practical expedients. $128.4 million, respectively.
The Company ishad investments in the process of determining whether this new guidance will have a material impact on its consolidated financial position, results of operations and disclosures, when adopted.
Recognition and Measurement of Financial Instruments
In January 2016, the FASB issued changes to the guidance on the recognition and measurement of 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. The Company is in the process of determining whether these changes 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 in the process of determining whether the new guidance will have a material impact on its consolidated financial position or results of operations.


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Notes to Interim Consolidated Financial Statements (Unaudited)

3.Securities
Amortized cost and approximate fair values offoreign corporate debt securities available for sale are summarizedof $16.4 million and $17.1 million at March 31, 2021 and December 31, 2020, respectively. At March 31, 2021 and December 31, 2020, the Company had 0 foreign sovereign or foreign government agency debt securities available for sale.
In the three months ended March 31, 2021 and 2020, proceeds from sales, redemptions and calls, gross realized gains, gross realized losses of debt securities available for sale were as follows:
Three Months Ended March 31,
(in thousands)20212020
Proceeds from sales, redemptions and calls of debt securities available for sale$43,854 $139,072 
Gross realized gains$2,947 $9,266 
Gross realized losses0 (23)
Realized gains, net on sales of debt investment securities$2,947 $9,243 
 June 30, 2018
 Amortized
Cost		 Gross Unrealized Estimated
Fair Value
(in thousands) Gains Losses 
U.S. government sponsored enterprise debt securities$855,688
 $1,110
 $(29,314) $827,484
Corporate debt securities376,581
 2,062
 (3,714) 374,929
U.S. government agency debt securities256,498
 300
 (5,961) 250,837
Municipal bonds177,632
 275
 (4,600) 173,307
Mutual funds24,263
 —
 (1,155) 23,108
 $1,690,662
 $3,747
 $(44,744) $1,649,665
 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 securities310,781
 3,446
 (835) 313,392
U.S. government agency debt securities293,908
 870
 (3,393) 291,385
Municipal bonds179,524
 2,343
 (1,471) 180,396
Mutual funds24,262
 —
 (645) 23,617
U.S. treasury securities2,700
 2
 (1) 2,701
 $1,700,571
 $8,445
 $(21,859) $1,687,157
At June 30, 2018 and December 31, 2017, the Company had no foreign sovereign debt securities.
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:
March 31, 2021
Less Than 12 Months12 Months or MoreTotal
(in thousands)(in thousands)Estimated
Fair Value		Unrealized
Loss		Estimated
Fair Value		Unrealized
Loss		Estimated
Fair Value		Unrealized
Loss
U.S. government-sponsored enterprise debt securitiesU.S. government-sponsored enterprise debt securities$86,734 $(2,413)$8,364 $(224)$95,098 $(2,637)
Corporate debt securitiesCorporate debt securities63,290 (1,049)8,201 (753)71,491 (1,802)
U.S. government agency debt securitiesU.S. government agency debt securities36,577 (792)80,582 (1,844)117,159 (2,636)
June 30, 2018
Less Than 12 Months 12 Months or More Total$186,601 $(4,254)$97,147 $(2,821)$283,748 $(7,075)
(in thousands)Estimated
Fair Value		 Unrealized
Loss		 Estimated
Fair Value		 Unrealized
Loss		 Estimated
Fair Value		 Unrealized
Loss
U.S. government sponsored enterprise debt securities$298,313
 $(6,389) $482,682
 $(22,925) $780,995
 $(29,314)
U.S. government agency debt securities101,040
 (1,949) 127,393
 (4,012) 228,433
 (5,961)
Municipal bonds59,772
 (1,152) 72,742
 (3,448) 132,514
 (4,600)
Corporate debt securities219,052
 (3,537) 4,714
 (177) 223,766
 (3,714)
Mutual funds—
 —
 22,865
 (1,155) 22,865
 (1,155)
$678,177
 $(13,027) $710,396
 $(31,717) $1,388,573
 $(44,744)


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Notes to Interim Consolidated Financial Statements (Unaudited)

December 31, 2017December 31, 2020
Less Than 12 Months 12 Months or More TotalLess Than 12 Months12 Months or MoreTotal
(in thousands)Estimated
Fair Value		 Unrealized
Loss		 Estimated
Fair Value		 Unrealized
Loss		 Estimated
Fair Value		 Unrealized
Loss		(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 sponsored enterprise debt securities$71,825 $(661)$14,472 $(346)$86,297 $(1,007)
Corporate debt securitiesCorporate debt securities31,777 (1,106)0 0 31,777 (1,106)
U.S. government agency debt securities92,138
 (728) 128,316
 (2,665) 220,454
 (3,393)U.S. government agency debt securities9,254 (62)80,964 (1,953)90,218 (2,015)
Municipal bonds4,895
 (8) 76,003
 (1,463) 80,898
 (1,471)
Corporate debt securities94,486
 (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)
$112,856 $(1,829)$95,436 $(2,299)$208,292 $(4,128)
At June 30, 2018March 31, 2021 and December 31, 20172020, 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 government has affirmed its commitment to support.agencies. The Company does not considerbelieves these issuers to present little credit risk. The Company considers these securities to beare not 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 losses on municipal and corporate debt securities at June 30, 2018 and December 31, 2017, are attributable to changes in interest rates and investment securities markets, generally, and as a result, temporary in nature. The Company does not considerconsiders these securities to beare not other-than-temporarily impaired because the issuers of these debt securities are considered to be high quality, and managementgenerally present little credit risk. The Company does not intend to sell these investments and it is more likely than not that it will not be required to sell these investments before their anticipated recovery.
Amortized cost and approximateAs of March 31, 2021, the fair valuesvalue of debt securities held to maturity totaled $104.1 million ($104.7 million - amortized cost), including residential and commercial mortgage-backed securities totaling $73.6 million ($75.4 million - amortized cost) and $30.5 million ($29.3 million - amortized cost), respectively. At March 31, 2021, unrealized gains and losses related to these securities totaled $1.9 million and $2.5 million, respectively.
As of December 31, 2020, the fair value of debt securities held to maturity totaled $61.1 million ($58.1 million - amortized cost), including residential and commercial mortgage-backed securities totaling $29.5 million ($28.7 million - amortized cost) and $31.6 million ($29.5 million - amortized cost), respectively. At December 31, 2020, unrealized gains related to these securities totaled $3.0 million. There were 0 unrealized losses at December 31, 2020.
At March 31, 2021 and December 31, 2020, all debt securities held to maturity were issued or guaranteed by the U.S. government or U.S. government-sponsored entities and agencies.
Contractual maturities of debt securities at March 31, 2021 are summarized as follows:
 June 30, 2018
 Amortized
Cost		 Gross Unrealized Estimated
Fair Value
(in thousands) Gains Losses 
Securities Held to Maturity -       
   U.S. government sponsored enterprise debt securities$85,497
 $—
 $(3,486) $82,011
   U.S. Government agency debt securities2,943
 —
 (83) 2,860
 $88,440
 $—
 $(3,569) $84,871

Available for SaleHeld to Maturity
(in thousands)Amortized
Cost		Estimated
Fair Value		Amortized
Cost		Estimated
Fair Value
Within 1 year$16,480 $16,566 $0 $0 
After 1 year through 5 years154,293 158,338 14,916 14,773 
After 5 years through 10 years291,573 299,132 11,353 11,788 
After 10 years706,025 716,165 78,388 77,530 
$1,168,371 $1,190,201 $104,657 $104,091 
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Notes to Interim Consolidated Financial Statements (Unaudited)

 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 securities3,034
 —
 —
 3,034
 $89,860
 $47
 $(441) $89,466
Contractual maturitiesEquity securities with readily available fair value not held for trading consist of securities at June 30, 2018 aremutual funds with an original cost of $24.0 million, and fair value of $24.0 million and $24.3 million as follows:
 Available for Sale Held to Maturity
(in thousands)Amortized
Cost		 Estimated
Fair Value		 Amortized
Cost		 Estimated
Fair Value
Within 1 year$2,816
 $2,808
 $—
 $—
After 1 year through 5 years331,256
 328,917
 —
 —
After 5 years through 10 years253,954
 249,963
 —
 —
After 10 years1,078,373
 1,044,869
 88,440
 84,871
No contractual maturities24,263
 23,108
 —
 —
 $1,690,662
 $1,649,665
 $88,440
 $84,871
At June 30, 2018of March 31, 2021 and December 31, 2017,2020, respectively. These equity securities available for sale with ahave no stated maturities. The Company recognized unrealized losses of $0.4 million and unrealized gains of $0.4 million during the three months ended March 31, 2021 and 2020, respectively, related to the change in fair value of approximately $270 millionthese mutual funds.

4.Loans
The loan portfolio consists of the following loan classes:
(in thousands)March 31,
2021		December 31,
2020
Real estate loans
Commercial real estate
Non-owner occupied$1,713,967 $1,749,839 
Multi-family residential722,783 737,696 
Land development and construction loans351,502 349,800 
2,788,252 2,837,335 
Single-family residential625,298 639,569 
Owner occupied940,126 947,127 
4,353,676 4,424,031 
Commercial loans1,104,594 1,154,550 
Loans to financial institutions and acceptances16,658 16,636 
Consumer loans and overdrafts278,866 247,120 
$5,753,794 $5,842,337 
At March 31, 2021 and $246 million, respectively,December 31, 2020, loans with an outstanding principal balance of $1.4 billion, were pledged as collateral to secure securities sold under agreements to repurchase and advances from the FHLB.

The amounts above include loans under syndication facilities of approximately $443 million and $455 million at March 31, 2021 and December 31, 2020, respectively, which include Shared National Credit facilities and agreements to enter into credit agreements with other lenders (club deals), and other agreements.
International loans included above were $133.1 million and $152.9 million at March 31, 2021 and December 31, 2020, respectively.
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4.Loans
The age analysis of the loan portfolio consistsby class, including nonaccrual loans, as of the following loan classes:
(in thousands)June 30,
2018		 December 31,
2017
Real estate loans   
Commercial real estate   
Non-owner occupied$1,864,645
 $1,713,104
Multi-family residential858,453
 839,709
Land development and construction loans402,830
 406,940
 3,125,928
 2,959,753
Single-family residential514,912
 512,754
Owner-occupied653,902
 610,386
 4,294,742
 4,082,893
Commercial loans1,432,033
 1,354,755
Loans to financial institutions and acceptances368,864
 497,626
Consumer loans and overdrafts123,910
 130,951
 $6,219,549
 $6,066,225
The amounts above include loans under syndication facilities of approximately $1,048 million and $989 million at June 30, 2018March 31, 2021 and December 31, 2017, respectively.2020 are summarized in the following tables:
The following tables summarize international loans by country, net of loans fully collateralized with cash of approximately $28.0 million and $31.9 million at June 30, 2018 and December 31, 2017, respectively.
March 31, 2021
Total Loans,
Net of
Unearned
Income		Past DueTotal Loans in
Nonaccrual
Status		Total Loans
90 Days or More
Past Due
and Accruing
(in thousands)Current30-59
Days		60-89
Days		Greater than
90 Days		Total Past
Due
Real estate loans
Commercial real estate
Non-owner occupied$1,713,967 $1,706,681 $5,570 $973 $743 $7,286 $8,515 $743 
Multi-family residential722,783 713,361 9,422 0 0 9,422 11,369 0 
Land development and construction loans351,502 351,502 0 0 0 0 0 0 
2,788,252 2,771,544 14,992 973 743 16,708 19,884 743 
Single-family residential625,298 612,490 8,793 611 3,404 12,808 10,814 0 
Owner occupied940,126 930,918 435 5,068 3,705 9,208 12,527 0 
4,353,676 4,314,952 24,220 6,652 7,852 38,724 43,225 743 
Commercial loans1,104,594 1,062,400 512 2,896 38,786 42,194 45,282 0 
Loans to financial institutions and acceptances16,658 16,658 0 0 0 0 0 0 
Consumer loans and overdrafts278,866 278,603 216 20 27 263 270 3 
$5,753,794 $5,672,613 $24,948 $9,568 $46,665 $81,181 $88,777 $746 

December 31, 2020
Total Loans,
Net of
Unearned
Income		Past DueTotal Loans in
Nonaccrual
Status		Total Loans
90 Days or More
Past Due
and Accruing
(in thousands)Current30-59
Days		60-89
Days		Greater than
90 Days		Total Past
Due
Real estate loans
Commercial real estate
Non-owner occupied$1,749,839 $1,741,862 $1,487 $0 $6,490 $7,977 $8,219 $0 
Multi-family residential737,696 737,696 0 0 0 0 11,340 0 
Land development and construction loans349,800 349,800 0 0 0 0 0 0 
2,837,335 2,829,358 1,487 0 6,490 7,977 19,559 0 
Single-family residential639,569 631,801 3,143 671 3,954 7,768 10,667 0 
Owner occupied947,127 941,566 439 0 5,122 5,561 12,815 220 
4,424,031 4,402,725 5,069 671 15,566 21,306 43,041 220 
Commercial loans1,154,550 1,113,469 3,675 1,715 35,691 41,081 44,205 0 
Loans to financial institutions and acceptances16,636 16,636 0 0 0 0 0 0 
Consumer loans and overdrafts247,120 246,997 85 6 32 123 233 1 
$5,842,337 $5,779,827 $8,829 $2,392 $51,289 $62,510 $87,479 $221 
16
 June 30, 2018
(in thousands)Brazil Venezuela 
Others (1)
 Total
Real estate loans       
Single-family residential (2)
$212
 $136,681
 $6,286
 $143,179
Loans to financial institutions and acceptances130,866
 —
 221,498
 352,364
Commercial loans5,974
 —
 98,003
 103,977
Consumer loans and overdrafts (3)
3,653
 35,137
 7,598
 46,388
 $140,705
 $171,818
 $333,385
 $645,908
__________________
(1)Loans to borrowers in 19 other countries; the total by country does not individually exceed 1% of total assets.
(2)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 are suspended, if the deposits decline below the authorized credit line.


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Mercantil Bank Holding CorporationAmerant Bancorp Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)

5.Allowance for Loan Losses
 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 acceptances129,372
 —
 93,000
 258,811
 481,183
Commercial loans8,451
 —
 —
 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 18 other countries; the total by country does not individually exceed 1% of total assets.
(2)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 authorized credit line.

The analysis of the loan portfolio delinquencies by class, including nonaccrual loans, as of June 30, 2018 and December 31, 2017 are summarized in the following tables:
 June 30, 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               
Non-owner occupied$1,864,645
 $1,864,496
 $—
 $—
 $149
 $149
 $10,510
 $—
Multi-family residential858,453
 858,453
 —
 —
 —
 —
 —
 —
Land development and construction loans402,830
 402,830
 —
 —
 —
 —
 —
 —
 3,125,928
 3,125,779
 —
 —
 149
 149
 10,510
 —
Single-family residential514,912
 508,426
 919
 1,127
 4,440
 6,486
 6,334
 —
Owner-occupied653,902
 650,586
 1,711
 —
 1,605
 3,316
 7,186
 —
 4,294,742
 4,284,791
 2,630
 1,127
 6,194
 9,951
 24,030
 —
Commercial loans1,432,033
 1,428,566
 330
 200
 2,937
 3,467
 9,934
 27
Loans to financial institutions and acceptances368,864
 368,864
 —
 —
 —
 —
 —
 —
Consumer loans and overdrafts123,910
 122,234
 653
 360
 663
 1,676
 42
 663
 $6,219,549
 $6,204,455
 $3,613
 $1,687
 $9,794
 $15,094
 $34,006
 $690

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Mercantil Bank Holding Corporation and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)

 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               
Non-owner occupied$1,713,104
 $1,712,624
 $—
 $—
 $480
 $480
 $489
 $—
Multi-family residential839,709
 839,709
 —
 —
 —
 —
 —
 —
Land development and construction loans406,940
 406,940
 —
 —
 —
 —
 —
 —
 2,959,753
 2,959,273
 —
 —
 480
 480
 489
 —
Single-family residential512,754
 501,393
 6,609
 2,750
 2,002
 11,361
 5,004
 226
Owner-occupied610,386
 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 loans1,354,755
 1,350,667
 385
 5
 3,698
 4,088
 8,947
 —
Loans to financial institutions and acceptances497,626
 497,626
 —
 —
 —
 —
 —
 —
Consumer loans and overdrafts130,951
 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 June 30, 2018 and December 31, 2017, loans with an outstanding principal balance of $1,730 million and $1,476 million, respectively, were pledged as collateral to secure advances from the FHLB.

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Mercantil Bank Holding Corporation and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)

5.Allowance for Loan Losses
The analyses by loan segment of the changes in the allowance for loan losses for the three months ended March 31, 2021 and six months periods ended June 30, 2018 and 2017,2020, and its allocation by impairment methodology and the related investment in loans, net as of June 30, 2018March 31, 2021 and 20172020 are summarized in the following tables:
Three Months Ended March 31, 2021
(in thousands)Real EstateCommercialFinancial
Institutions		Consumer
and Others		Total
Balances at beginning of the period$50,227 $48,130 $1 $12,544 $110,902 
(Reversal of) provision for loan losses(1,936)702 0 1,234 0 
Loans charged-off
Domestic0 (235)0 (431)(666)
International0 0 0 0 0 
Recoveries0 605 0 99 704 
Balances at end of the period$48,291 $49,202 $1 $13,446 $110,940 
Allowance for loan losses by impairment methodology:
Individually evaluated$2,918 $26,665 $0 $1,077 $30,660 
Collectively evaluated45,373 22,537 1 12,369 80,280 
$48,291 $49,202 $1 $13,446 $110,940 
Investment in loans, net of unearned income:
Individually evaluated$19,892 $60,891 $0 $8,261 $89,044 
Collectively evaluated2,742,923 2,154,463 18,073 749,291 5,664,750 
$2,762,815 $2,215,354 $18,073 $757,552 $5,753,794 
 Three Months Ended June 30, 2018
(in thousands)Real Estate Commercial Financial
Institutions		 Consumer
and Others		 Total
Balances at beginning of the period$30,503
 $33,672
 $3,671
 $4,272
 $72,118
(Reversal of) provision for loan losses(1,814) (1,750) (354) 4,068
 150
Loans charged-off         
Domestic—
 (2,355) —
 (98) (2,453)
International—
 (52) —
 (230) (282)
Recoveries4
 269
 —
 125
 398
Balances at end of the period$28,693
 $29,784
 $3,317
 $8,137
 $69,931


17
 Six Months Ended June 30, 2018
(in thousands)Real Estate Commercial Financial
Institutions		 Consumer
and Others		 Total
Balances at beginning of the period$31,290
 $32,687
 $4,362
 $3,661
 $72,000
(Reversal of) provision for loan losses(2,635) (1,215) (1,045) 5,045
 150
Loans charged-off        

Domestic—
 (2,737) —
 (117) (2,854)
International—
 (52) —
 (630) (682)
Recoveries38
 1,101
 —
 178
 1,317
Balances at end of the period$28,693
 $29,784
 $3,317
 $8,137
 $69,931


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Mercantil Bank Holding CorporationAmerant Bancorp Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)

Three Months Ended March 31, 2020
(in thousands)Real EstateCommercialFinancial
Institutions		Consumer
and Others		Total
Balances at beginning of the period$25,040 $22,482 $42 $4,659 $52,223 
Provision for loan losses11,390 7,530 0 3,080 22,000 
Loans charged-off
Domestic0 (1,101)0 (222)(1,323)
International0 (34)0 (251)(285)
Recoveries0 185 0 148 333 
Balances at end of the period$36,430 $29,062 $42 $7,414 $72,948 
Allowance for loan losses by impairment methodology:
Individually evaluated$1,157 $4,038 $0 $1,525 $6,720 
Collectively evaluated35,273 25,024 42 5,889 66,228 
$36,430 $29,062 $42 $7,414 $72,948 
Investment in loans, net of unearned income:
Individually evaluated$1,936 $24,232 $0 $7,521 $33,689 
Collectively evaluated2,931,900 2,104,220 16,576 581,942 5,634,638 
$2,933,836 $2,128,452 $16,576 $589,463 $5,668,327 
 June 30, 2018
(in thousands)Real Estate Commercial Financial
Institutions		 Consumer
and Others		 Total
Allowance for loan losses by impairment methodology         
Individually evaluated$4,055
 $2,252
 $—
 $—
 $6,307
Collectively evaluated24,638
 27,532
 3,317
 8,137
 63,624
 $28,693
 $29,784
 $3,317
 $8,137
 $69,931
Investment in loans, net of unearned income         
Individually evaluated$11,078
 $16,206
 $—
 $306
 $27,590
Collectively evaluated3,078,004
 2,184,226
 371,498
 558,231
 6,191,959
 $3,089,082
 $2,200,432
 $371,498
 $558,537
 $6,219,549
 Three Months Ended June 30, 2017
(in thousands)Real Estate Commercial Financial
Institutions		 Consumer
and Others		 Total
Balances at beginning of the period$32,471
 $36,658
 $5,615
 $4,619
 $79,363
 Provision for (reversal of) loan losses2,262
 4,760
 (1,639) (1,737) 3,646
Loans charged-off        
Domestic—
 (1,097) —
 (15) (1,112)
International—
 (143) —
 (258) (401)
Recoveries107
 23
 —
 1,080
 1,210
Balances at end of the period$34,840
 $40,201
 $3,976
 $3,689
 $82,706






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Mercantil Bank Holding Corporation and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)

 Six Months Ended June 30, 2017
(in thousands) Real Estate  Commercial  Financial
Institutions		  Consumer
and Others		  Total
Balances at beginning of the period$30,713
 $40,897
 $5,304
 $4,837
 $81,751
Provision for (reversal of) loan losses4,056
 6,695
 (1,328) (1,680) 7,743
Loans charged-off        

Domestic(97) (1,415) —
 (128) (1,640)
International—
 (6,042) —
 (477) (6,519)
Recoveries168
 66
 —
 1,137
 1,371
Balances at end of the period$34,840
 $40,201
 $3,976
 $3,689
 $82,706
          
 June 30, 2017
(in thousands)Real Estate Commercial Financial
Institutions		 Consumer
and Others		 Total
Allowance for loan losses by impairment methodology         
Individually evaluated$—
 $3,407
 $—
 $—
 $3,407
Collectively evaluated34,840
 36,794
 3,976
 3,689
 79,299
 $34,840
 $40,201
 $3,976
 $3,689
 $82,706
Investment in loans, net of unearned income         
Individually evaluated$13,733
 $36,855
 $—
 $2,277
 $52,865
Collectively evaluated2,708,546
 2,351,544
 424,434
 539,976
 6,024,500
 $2,722,279
 $2,388,399
 $424,434
 $542,253
 $6,077,365


The following is a summary of the recorded investment amount of loan sales by portfolio segment:
Three Months Ended March 31, (in thousands)Real EstateCommercialFinancial
Institutions		Consumer
and others		Total
2021$0 $0 $0 $1,173 $1,173 
2020$0 $11,901 $0 $1,208 $13,109 
Three Months Ended June 30,
(in thousands)		Real Estate Commercial Financial
Institutions		 Consumer
and others		 Total
2018$5,049
 $5,774
 $—
 $—
 $10,823
2017$2,045
 $7,696
 $—
 $—
 $9,741




18
Six Months Ended June 30,
(in thousands)		Real Estate Commercial Financial
Institutions		 Consumer
and others		 Total
2018$8,007
 $15,774
 $—
 $—
 $23,781
2017$3,922
 $35,057
 $24,277
 $—
 $63,256


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Mercantil Bank Holding CorporationAmerant Bancorp Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)

The following is a summary of impaired loans as of June 30, 2018March 31, 2021 and December 31, 2017:2020:
March 31, 2021
 Recorded Investment
(in thousands) With a Valuation Allowance Without a Valuation Allowance Total Year Average (1) Total Unpaid Principal BalanceValuation Allowance
Real estate loans
Commercial real estate
Non-owner occupied$8,523 $0 $8,523 $8,364 $8,513 $2,918 
Multi-family residential0 11,369 11,369 6,048 11,291 0 
Land development and construction
 loans		0 0 0 0 0 0 
8,523 11,369 19,892 14,412 19,804 2,918 
Single-family residential5,421 5,648 11,069 10,392 11,132 907 
Owner occupied632 11,895 12,527 12,939 12,371 212 
14,576 28,912 43,488 37,743 43,307 4,037 
Commercial loans34,341 10,946 45,287 47,357 67,251 26,453 
Consumer loans and overdrafts269 0 269 169 267 170 
$49,186 $39,858 $89,044 $85,269 $110,825 $30,660 
_______________
(1)Average using trailing four quarter balances.

December 31, 2020
 Recorded Investment
(in thousands) With a Valuation Allowance Without a Valuation Allowance Total Year Average (1) Total Unpaid Principal Balance Valuation Allowance
Real estate loans
Commercial real estate
Non-owner occupied$8,219 $0 $8,219 $6,718 $8,227 $3,175 
Multi-family residential0 11,341 11,341 3,206 11,306 0 
Land development and construction loans0 0 0 0 0 0 
8,219 11,341 19,560 9,924 19,533 3,175 
Single-family residential5,675 5,250 10,925 9,457 10,990 1,232 
Owner occupied636 12,178 12,814 13,295 12,658 214 
14,530 28,769 43,299 32,676 43,181 4,621 
Commercial loans33,110 11,100 44,210 38,534 66,010 25,180 
Consumer loans and overdrafts232 0 232 221 229 147 
$47,872 $39,869 $87,741 $71,431 $109,420 $29,948 
_______________
(1)Average using trailing four quarter balances.

19
 June 30, 2018
  Recorded Investment    
(in thousands) With a Valuation Allowance  Without a Valuation Allowance  Total  Year-To-Date Average  Total Unpaid Principal Balance Valuation Allowance
Real estate loans           
Commercial real estate           
Non-owner occupied$10,352
 $—
 $10,352
 $8,734
 $10,402
 $4,055
Multi-family residential—
 726
 726
 927
 731
 —
Land development and construction loans—
 —
 —
 —
 —
 —
 10,352
 726
 11,078
 9,661
 11,133
 4,055
   Single-family residential—
 306
 306
 746
 297
 —
   Owner-occupied—
 6,303
 6,303
 6,918
 6,222
 —
 10,352
 7,335
 17,687
 17,325
 17,652
 4,055
Commercial loans4,572
 5,331
 9,903
 8,939
 18,302
 2,252
 $14,924
 $12,666
 $27,590
 $26,264
 $35,954
 $6,307
During the three and six months ended June 30, 2018, the Company recognized interest income of $83 thousand and $108 thousand, respectively, on impaired loans.
 December 31, 2017
  Recorded Investment    
(in thousands) With a Valuation Allowance  Without a Valuation Allowance  Total  Year Average  Total Unpaid Principal Balance  Valuation Allowance
Real estate loans           
Commercial real estate           
Non-owner occupied$—
 $327
 $327
 $225
 $327
 $—
Multi-family residential—
 1,318
 1,318
 7,898
 1,330
 —
Land development and construction loans—
 —
 —
 1,359
 —
 —
 —
 1,645
 1,645
 9,482
 1,657
 —
Single-family residential—
 877
 877
 3,100
 871
 —
Owner-occupied—
 10,918
 10,918
 13,440
 12,323
 —
 —
 13,440
 13,440
 26,022
 14,851
 —
Commercial loans7,173
 1,986
 9,159
 18,211
 14,784
 2,866
 $7,173
 $15,426
 $22,599
 $44,233
 $29,635
 $2,866

During the three and six months ended June 30, 2017, the Company recognized interest income of $1.1 million on impaired loans.

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Mercantil Bank Holding CorporationAmerant Bancorp Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)



Troubled Debt Restructurings
The recorded investmentfollowing table shows information about loans modified in loans considered troubled debt restructurings (“TDRs”) completed during the six months ended June 30, 2018 totaled approximately $12.9 million, which includes $10.4 million inTDRs as of March 31, 2021 and December 31, 2020:
As of March 31, 2021As of December 31, 2020
(in thousands)Number of ContractsRecorded InvestmentNumber of ContractsRecorded Investment
Real estate loans
Commercial real estate
Non-owner occupied1 $1,660 1 $1,729 
Single-family residential3 722 2 267 
Owner occupied4 6,641 4 6,784 
8 9,023 7 8,780 
Commercial loans10 3,419 11 3,851 
Total (1)
18 $12,442 18 $12,631 
______________
(1)Balances as of March 31, 2021 and December 31, 2020 include a commercial real estate non-ownermultiple loan relationship with a South Florida customer consisting of CRE, owner occupied loan, $1.9 million in a real estate owner-occupied loan and $0.6 million in a commercial loan. During the six months ended June 30, 2018, the Company charged off $1.1 million as a result of these TDR loans. In the six months ended June 30, 2018, there were no TDRs completed since June 30, 2017 which subsequently defaulted under the modified terms of the loan agreement. As of June 30, 2018, all TDR loans were real estate and commercial loans under modifiedtotaling $9.8 million and $8.4 million, respectively. This TDR consisted of extending repayment terms and adjusting future periodic payments which resulted in no additional reserves. As of March 31, 2021 and December 31, 2020, this relationship included 2 and 4 residential loans totaling $1.5 million, which were not modified. During the second quarter of 2020, the company charged off $1.9 million against the ALL associated with this commercial loan relationship. The Company believes the specific reserves associated with these loans, which total $0.8 million at March 31, 2021 ($1.0 million at December 31, 2020) are adequate to cover probable losses given current facts and circumstances.

During the three months ended March 31, 2021, new TDRs consisted of 1 single-family residential loan with a recorded investment of $0.5 million as of March 31, 2021. There were 0 new TDRs during the three months ended March 31, 2020. During the three months ended March 31, 2021, TDR loans that did not substantially impactsubsequently defaulted within the 12 months of restructuring totaled $2.7 million, including 4 commercial loans totaling $1.9 million and 1 owner occupied loan of $0.8 million. During the three months ended March 31, 2021 and 2020, the Company had no charge-offs against 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.a result of TDR loans.
Credit Risk Quality
The Company’s investment in loans by credit quality indicators as of June 30, 2018 and December 31, 2017 are summarized in the following tables:








20
 June 30, 2018
  Credit Risk Rating  
    Classified  
(in thousands) Nonclassified  Substandard  Doubtful  Loss  Total
Real estate loans         
Commercial real estate         
Non-owner occupied$1,854,135
 $10,510
 $—
 $—
 $1,864,645
Multi-family residential858,453
 —
 —
 —
 858,453
 Land development and construction loans402,830
 —
 —
 —
 402,830
 3,115,418
 10,510
 —
 —
 3,125,928
Single-family residential508,578
 6,334
 —
 —
 514,912
Owner-occupied644,363
 9,539
 —
 —
 653,902
 4,268,359
 26,383
 —
 —
 4,294,742
Commercial loans1,421,122
 8,891
 2,020
 —
 1,432,033
Loans to financial institutions and acceptances368,864
 —
 —
 —
 368,864
Consumer loans and overdrafts118,176
 5,734
 —
 —
 123,910
 $6,176,521
 $41,008
 $2,020
 $—
 $6,219,549

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Mercantil Bank Holding CorporationAmerant Bancorp Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)



Loans by Credit Quality Indicators
Loans by credit quality indicators as of March 31, 2021 and December 31, 2020 are summarized in the following tables:
March 31, 2021
 Credit Risk Rating
Nonclassified Classified
(in thousands)PassSpecial Mention Substandard Doubtful Loss Total
Real estate loans
Commercial real estate
Non-owner occupied$1,659,501 $45,206 $5,684 $3,576 $0 $1,713,967 
Multi-family residential711,414 0 11,369 0 0 722,783 
 Land development and construction loans351,502 0 0 0 0 351,502 
2,722,417 45,206 17,053 3,576 0 2,788,252 
Single-family residential614,484 0 10,814 0 0 625,298 
Owner occupied906,454 21,045 12,627 0 0 940,126 
4,243,355 66,251 40,494 3,576 0 4,353,676 
Commercial loans1,014,319 43,313 21,045 25,917 0 1,104,594 
Loans to financial institutions and acceptances16,658 0 0 0 0 16,658 
Consumer loans and overdrafts278,568 0 298 0 0 278,866 
$5,552,900 $109,564 $61,837 $29,493 $0 $5,753,794 
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Amerant Bancorp Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)
December 31, 2017December 31, 2020
 Credit Risk Rating   Credit Risk Rating
   Classified  Nonclassified Classified
(in thousands) Nonclassified  Substandard  Doubtful  Loss  Total(in thousands)PassSpecial Mention Substandard Doubtful Loss Total
Real estate loans         Real estate loans
Commercial real estate         Commercial real estate
Non-owner occupied$1,712,615
 $489
 $—
 $—
 $1,713,104
Non-owner occupied$1,694,004 $46,872 $4,994 $3,969 $0 $1,749,839 
Multi-family residential839,709
 —
 —
 —
 839,709
Multi-family residential726,356 0 11,340 0 0 737,696 
Land development and construction loans406,940
 —
 —
 —
 406,940
 Land development and construction loans342,636 7,164 0 0 0 349,800 
2,959,264
 489
 —
 —
 2,959,753
2,762,996 54,036 16,334 3,969 0 2,837,335 
Single-family residential506,885
 5,869
 —
 —
 512,754
Single-family residential628,902 0 10,667 0 0 639,569 
Owner-occupied596,519
 13,867
 —
 —
 610,386
Owner occupiedOwner occupied911,867 22,343 12,917 0 0 947,127 
4,062,668
 20,225
 —
 —
 4,082,893
4,303,765 76,379 39,918 3,969 0 4,424,031 
Commercial loans1,340,643
 14,112
 —
 —
 1,354,755
Commercial loans1,067,708 42,434 21,152 23,256 0 1,154,550 
Loans to financial institutions and acceptances497,626
 —
 —
 —
 497,626
Loans to financial institutions and acceptances16,636 0 0 0 0 16,636 
Consumer loans and overdrafts126,838
 4,113
 —
 —
 130,951
Consumer loans and overdrafts246,882 0 238 0 0 247,120 
$6,027,775
 $38,450
 $—
 $—
 $6,066,225
$5,634,991 $118,813 $61,308 $27,225 $0 $5,842,337 

6.Time Deposits
6.Time Deposits
Time deposits in denominations of $100,000 or more amounted to approximately $1.4$1.1 billion and $1.2$1.3 billion at June 30, 2018March 31, 2021 and December 31, 2017,2020, respectively. Time deposits in denominations of more than $250,000 or more amounted to approximately $723$581 million and $624$661 million at June 30, 2018March 31, 2021 and December 31, 2017,2020, respectively. Time deposits include brokered time deposits, all in denominations of less than $100,000. As of June 30, 2018March 31, 2021 and December 31, 20172020, brokered time deposits amounted to $738 million and $780 million, respectively.$494 million.

7.Advances From the Federal Home Loan Bank and Other Borrowings
The Company had outstanding advances from the FHLB and other borrowings. These borrowings bear fixed interest rates or variable rates based on 3-month LIBOR as follows:
22
Year of MaturityInterest
Rate		 June 30, 2018 December 31, 2017
(in thousands, except percentages)     
20180.90% to 2.38% $417,000
 $567,000
20191.00% to 3.86% 225,000
 155,000
20201.50% to 2.74% 306,000
 211,000
20211.93% to 2.50% 190,000
 240,000
20222.48% to 2.80% 120,000
 —
   $1,258,000
 $1,173,000

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Mercantil Bank Holding CorporationAmerant Bancorp Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)

7.Advances from the Federal Home Loan Bank
8.Derivative Instruments
At June 30, 2018March 31, 2021 and December 31, 20172020, the Company had outstanding advances from the FHLB as follows:
Outstanding Balance
Year of MaturityInterest
Rate		Interest
Rate Type		At March 31, 2021At December 31, 2020
(in thousands)
20220.65% to 0.65%Fixed50,000 50,000 
20230.87% to 0.95%Fixed70,000 70,000 
2024 and after (1)0.62% to 2.42%Fixed930,000 930,000 
$1,050,000 $1,050,000 
_______________
(1)As of March 31, 2021 and December 31, 2020, includes $530 million (fixed interest rates raging from 0.62% to 0.97%) in advances from the FHLB that are callable prior to maturity.

8.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 March 31, 2021, these Senior Notes amounted to $58.7 million, net of direct unamortized issuance costs of $1.3 million. 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, and are fully and unconditionally guaranteed by our wholly-owned intermediate holding company subsidiary Amerant Florida Bancorp (“Amerant Florida”).

9. Junior Subordinated Debentures Held by Trust Subsidiaries
The following table provides information on the outstanding Trust Preferred Securities issued by, and the junior subordinated debentures issued to, each of the statutory trust subsidiaries as of March 31, 2021 and December 31, 2020:
March 31, 2021December 31, 2020
(in thousands)Amount of
Trust
Preferred
Securities
Issued by
Trust		Principal
Amount of
Debenture
Issued to
Trust		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 VI9,250 9,537 9,250 9,537 20023-M LIBOR + 3.35%2033
Commercebank Capital Trust VII8,000 8,248 8,000 8,248 20033-M LIBOR + 3.25%2033
Commercebank Capital Trust VIII5,000 5,155 5,000 5,155 20043-M LIBOR + 2.85%2034
Commercebank Capital Trust IX25,000 25,774 25,000 25,774 20063-M LIBOR + 1.75%2038
Commercebank Capital Trust X15,000 15,464 15,000 15,464 20063-M LIBOR + 1.78%2036
$62,250 $64,178 $62,250 $64,178 
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Amerant Bancorp Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)
10.Derivative Instruments
At March 31, 2021 and December 31, 2020, the fair values of the Company’s derivative instruments were as follows:
March 31, 2021December 31, 2020
(in thousands)Other AssetsOther LiabilitiesOther AssetsOther Liabilities
Interest rate swaps designated as cash flow hedges$0 $1,404 $0 $1,658 
Interest rate swaps not designated as hedging instruments:
Customers21,297 2,292 39,715 0 
Third party broker2,292 21,297 0 39,715 
23,589 23,589 39,715 39,715 
Interest rate caps not designated as hedging instruments:
Customers0 125 0 58 
Third party broker7 0 6 0 
7 125 6 58 
$23,596 $25,118 $39,721 $41,431 
 June 30, 2018 December 31, 2017
(in thousands)Other Assets Other Liabilities Other Assets Other Liabilities
Interest rate swaps designated as cash flow hedges$14,417
 $—
 $5,462
 $—
Interest rate swaps not designated as hedging instruments:       
Customers304
 —
 1,375
 —
Third party broker—
 304
 —
 1,375
 304
 304
 1,375
 1,375
Interest rate caps not designated as hedging instruments:       
Customers—
 1,084
 —
 195
Third party broker1,084
 —
 195
 —
 1,084
 1,084
 195
 195
 $15,805
 $1,388
 $7,032
 $1,570

Derivatives Designated as Hedging Instruments
At June 30, 2018The Company enters into interest rate swap contracts which the Company designates and December 31, 2017 the Company’squalify as cash flow hedges. These interest rate swaps designatedare 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 on designated debt instruments. These interest rate 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 agreementscontracts without exchange of the underlying notional amount.
As of June 30, 2018At March 31, 2021 and December 31, 2017, respectively,2020, the Company had 16 and 155 interest rate swap contracts with total notional amounts of $280totaling $64.2 million and $255 million, respectively, that were designated as cash flow hedges to manage the exposure of floatingvariable rate interest payments on all of the currentlyCompany’s outstanding variable-rate junior subordinated debentures with principal amounts at March 31, 2021 and expected subsequent rollover of FHLB advances.December 31, 2020  totaling $64.2 million. The Company expects the hedge relationshipsthese interest rate swaps to be highly effective in offsetting the effects of changes in interest rates in theon cash flows associated with the Company’s variable-rate junior subordinated debentures. In the first quarter of 2021, we recognized unrealized losses of $0.2 million in connection with these interest rate swap contracts (unrealized gains of $0.1 million in the first quarter of 2020), which were included as part of interest expense on junior subordinated debentures in the Company’s consolidated statement of operations and comprehensive income. As of March 31, 2021, the estimated net unrealized losses in accumulated other comprehensive income 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 ineffectivenessThe Company is recognizing the contracts’ cumulative net unrealized gains or losses wereof $8.9 million in earnings over the remaining original life of the terminated interest rate swaps ranging between one month and seven years. The Company recognized approximately $0.3 million and $0.4 million as a reduction of interest expense on FHLB advances in the threefirst quarters of 2021 and six months ended June 30, 20182020, respectively, as a result of this amortization.

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Amerant Bancorp Inc. and 2017.Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)
Derivatives Not Designated as Hedging Instruments
Interest Rate Swaps
At June 30, 2018March 31, 2021 and December 31, 2017,2020, the Company had two79 and one76 interest rate swap contracts with customers, respectively, with a total notional amount of $57.8$480.6 million and $54.6$475.6 million, respectively. These instruments involve athe payment of variable-rate payment to the customeramounts in exchange for the Company receiving from the customer a fixed-rate paymentamounts over the life of the contract. In addition, at June 30, 2018March 31, 2021 and December 31, 2017,2020, the Company had 79 and 76 interest rate swap mirror contracts, respectively, with a third party brokerbrokers with similar terms.
At June 30, 2018In 2019, the Company entered 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. As of March 31, 2021 and December 31, 2017,2020, the Company had eleven2 swap participation agreements with total notional amounts of approximately $32.0 million. The notional amount of these agreements is based on the Company’s pro-rata share of the related interest rate swap contracts. As of March 31, 2021 and sevenDecember 31, 2020, the fair value of swap participation agreements was not significant.
Interest Rate Caps
At March 31, 2021 and December 31, 2020, the Company had 22 and 23 interest rate cap contracts with customers with a total notional amount of $275.7$452.4 million and $162.1$486.5 million, respectively. These instruments involve the Company making payments if an interest rate exceeds the agreed strike price. In addition, at June 30, 2018March 31, 2021 and December 31, 2017,2020, the Company had 7 and 8 interest rate cap mirror contracts, respectively, with avarious third party brokerbrokers with similar terms.total notional amounts of $118.1 million and $152.2 million, respectively.



Credit Risk-Related Contingent Features

Some agreements may require the posting of pledged securities when the valuation of the interest rate swap falls below a certain amount.
At March 31, 2021 and December 31, 2020, the derivative contracts subject to credit-risk related contingent features was as follows:

(in thousands)March 31, 2021December 31, 2020
Fair value of derivative contracts$24,993 $41,373 
Securities Pledged31,586 52,857 
Liquidity exposure$(6,593)$(11,484)

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Mercantil Bank Holding CorporationAmerant Bancorp Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)

11.Leases
The Company leases certain premises and equipment under operating leases. The leases have remaining lease terms ranging from less than one year to 45 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. The Company had $0.3 million in variable lease payments during the three months ended March 31, 2021, which include mostly common area maintenance and taxes, included in Occupancy and Equipment on the Consolidated Statements of Income. Lease costs for the three months ended March 31, 2021 were as follows:
9.(in thousands)Income TaxesMarch 31, 2021
Lease cost
Operating lease cost$1,909 
Short-term lease cost155
Variable lease cost333
Sublease income(108)
Total lease cost$2,289 

As of March 31, 2021, a right-of-use asset of $54.5 million and an operating lease liability of $55.0 million were included in “Other assets” and “Other liabilities”, respectively, on the unaudited consolidated balance sheets. The table provides supplemental information related to leases as of and for the three months ended March 31, 2021:
(in thousands, except weighted average data)
Cash paid for amounts included in the measurement of operating lease liabilities1,765 
Operating lease right-of-use asset obtained in exchange for operating lease liability1,044 
Weighted average remaining lease term for operating leases21.0 years
Weighted average discount rate for operating leases5.72 %

The following table presents a maturity analysis and reconciliation of the undiscounted cash flows to the total operating lease liabilities as of March 31, 2021:
(in thousands)
Twelve Months Ended March 31,
2021$7,113 
20226,335 
20234,504 
20244,483 
20254,145 
Thereafter77,444 
Total minimum payments required104,024
Less: implied interest(49,020)
Total lease obligations$55,004 


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Amerant Bancorp Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)
12.Stock-based Incentive Compensation Plan
The Company sponsors the 2018 Equity and Incentive Compensation Plan (the “2018 Equity Plan”). See Note 11 to the Company’s audited consolidated financial statements in the 2020 annual report on Form 10-K for more information on the 2018 Equity Plan and stock-based compensation awards for the year ended December 31, 2020, including restricted stocks and restricted stock units (“RSUs”).
On 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 will be used in connection with a Long-Term Incentive Plan (the “LTI Plan”), a sub-plan under the 2018 Equity Plan. See detailed information below.
Restricted Stock Awards
The following table shows the activity of restricted stock awards during the three months ended March 31, 2021:
Number of restricted sharesWeighted-average grant date fair value
Non-vested shares, beginning of year210,423 $13.55 
Granted196,015 16.65 
Vested(2,630)14.91 
Forfeited0 0 
Non-vested shares at March 31, 2021403,808 $15.05 

On February 16, 2021, the Company granted 194,492 shares of restricted Class A common stock to certain of its employees under the LTI Plan. These shares of restricted stock will vest in three approximately equal amounts on each of February 16 2022, 2023 and 2024. The fair value of the restricted stock granted was based on the market price of the shares of the Company’s Class A common stock at the grant date which was $16.65 per share.
On March 2, 2021, the Company granted 1,523 shares of restricted Class A common stock to a new employee.These shares of restricted stock will vest in three approximately equal amounts on each of March 2, 2022, 2023 and 2024. The fair value of the restricted stock granted was based on the market price of the shares of the Company’s Class A common stock at the grant date which was $16.41 per share.
The Company recorded compensation expense related to the restricted stock awards of $0.5 million and $0.3 million during the three months ended March 31, 2021 and 2020, respectively. The total unamortized deferred compensation expense of $3.7 million for all unvested restricted stock outstanding at March 31, 2021 will be recognized over a weighted average period of 1.7 years.
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Amerant Bancorp Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)
Restricted Stock Units (“RSUs”) and Performance Stock Units (“PSUs”)
The following table shows the activity of RSUs and PSUs during the three months ended March 31, 2021:
Stock-settled RSUsCash-settled RSUsTotal RSUsStock-settled PSUs
Number of RSUsWeighted-average grant date fair valueNumber of RSUsWeighted-average grant date fair valueNumber of RSUsWeighted-average grant date fair valueNumber of PSUsWeighted-average grant date fair value
Nonvested, beginning of year38,327 $13.45 20,766 $13.45 59,093 $13.72 0 0 
Granted120,513 16.65 0 0 120,513 16.65 120,513 13.82 
Vested0 0 0 0 0 0 0 0 
Forfeited0 0 0 0 0 0 0 0 
Non-vested, end of year158,840 $15.88 20,766 $13.45 179,606 $15.69 120,513 $13.82 
On February 16, 2021, in connection with the LTI Plan, the Company entered into five separate PSU Agreements with five executives which granted awards consisting of the opportunity to earn, in the aggregate, a target of 58,136 performance based restricted stock units, or PSUs. These PSUs generally vest at the end of a three-year performance period, but only results in the issuance of shares if the Company achieves a performance target. The actual number of PSUs, if earned, could range from 50% to 150% of the target PSUs. The fair value of the PSUs granted was $16.67 per PSU based on the results of a Monte Carlo simulation to estimate the fair value of the PSUs as of the grant date.
On February 16, 2021, in connection with the LTI Plan, the Company entered into five separate RSU Agreements with five executive which granted, in the aggregate, 58,136 RSUs that will vest in three equal installments on each of the first three anniversaries of the grant date. The fair value of the RSUs granted was based on the market price of the shares of the Company’s Class A common stock at the grant date which was $16.65 per RSU.
On February 16, 2021, in connection with a sign-on grant, the Company entered into a PSU Agreement with one executive which granted an award consisting of the opportunity to earn a target of 62,377 performance based restricted stock units, or PSUs. These PSUs generally vest at the end of a three-year performance period, but only results in the insurance of shares if the Company achieves a performance target. The actual number of PSUs, if earned, could range from 50% to 100% of the target PSUs. The fair value of the PSUs granted was $11.15 per PSU based on the results of a Monte Carlo simulation to estimate the fair value of the PSUs as of the grant date.
On February 16, 2021, in connection with a sign-on grant, the Company entered into a RSU Agreement with one executive which granted 62,377 RSUs that will vest in three equal installments on each of the first three anniversaries of the grant date. The fair value of the RSUs granted was based on the market price of the shares of the Company’s Class A common stock at the grant date which was $16.65 per RSU.
The Company recorded compensation expense related to RSUs and PSUs of $0.4 million and $0.1 million during the three months ended March 31, 2021 and 2020, respectively. The total unamortized deferred compensation expense of $3.6 million for all unvested stock-settled RSUs and PSUs outstanding at March 31, 2021 will be recognized over a weighted average period of 2.3 years.

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Amerant Bancorp Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)
13.Income Taxes
The Company uses an estimated annual effective tax rate method in computing its interim tax provision. This effective tax rate is based on forecastforecasted annual consolidated pre-tax income, permanent tax differences and statutory tax rates. Under this method, the tax effect of certain items that do not meet the definition of ordinary income or expense are computed and recognized as discrete items when they occur.
The effective combined federal and state tax rates for the sixthree months ended June 30, 2018March 31, 2021 and 20172020 were 26.80%20.15% and 30.21%20.83%, respectively. Effective tax rates differ from the statutory rates mainly due to the impact of forecastforecasted permanent non-taxable interest and other income, and the impact of permanent non-deductible discrete expense items incurred during the period, which primarily include the non-deductible Spin-off costs and the effect of corporate state taxes.
10.14.    Accumulated Other Comprehensive LossIncome (“AOCL”AOCI”):
The components of AOCLAOCI are summarized as follows using applicable blended average federal and state tax rates for each period:
 June 30, 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$(40,997) $10,023
 $(30,974) $(13,415) $2,884
 $(10,531)
Unrealized gains on interest rate swaps designated as cash flow hedges14,417
 (3,496) $10,921
 5,602
 (1,204) $4,398
Total AOCL$(26,580) $6,527
 $(20,053) $(7,813) $1,680
 $(6,133)

March 31, 2021December 31, 2020
(in thousands)Before Tax
Amount		Tax
Effect		Net of Tax
Amount		Before Tax
Amount		Tax
Effect		Net of Tax
Amount
Net unrealized holding gains on debt securities available for sale$21,830 $(5,337)$16,493 $37,305 $(9,120)$28,185 
Net unrealized holding gains on interest rate swaps designated as cash flow hedges4,521 (1,105)3,416 4,605 (1,126)$3,479 
Total AOCI$26,351 $(6,442)$19,909 $41,910 $(10,246)$31,664 
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Notes to Interim Consolidated Financial Statements (Unaudited)

The components of other comprehensive lossloss/income for the periods presented is summarized as follows:
Three Months Ended March 31,
20212020
(in thousands)Before Tax
Amount		Tax
Effect		Net of Tax
Amount		Before Tax
Amount		Tax
Effect		Net of Tax
Amount
Net unrealized holding (losses) gains on debt securities available for sale:
Change in fair value arising during the period$(12,528)$3,062 $(9,466)$35,342 $(8,640)$26,702 
Reclassification adjustment for net gains included in net income(2,947)721 (2,226)(9,243)2,260 (6,983)
(15,475)3,783 (11,692)26,099 (6,380)19,719 
Net unrealized holding gains (losses) on interest rate swaps designated as cash flow hedges:
Change in fair value arising during the period47 (11)36 (2,004)490 (1,514)
Reclassification adjustment for net interest income included in net income(131)32 (99)(426)104 (322)
(84)21 (63)(2,430)594 (1,836)
Total other comprehensive (loss) income$(15,559)$3,804 $(11,755)$23,669 $(5,786)$17,883 





30
 Three Months Ended June 30,
 2018 2017
(in thousands)Before Tax
Amount		 Tax
Effect		 Net of Tax
Amount		 Before Tax
Amount		 Tax
Effect		 Net of Tax
Amount
Unrealized (losses) gains on available for sale securities:           
Change in fair value arising during the period$(6,716) $1,262
 $(5,454) $9,271
 $(3,291) $5,980
Reclassification adjustment for net gains included in net income(16) 4
 (12) (177) 63
 (114)
 (6,732) 1,266
 (5,466) 9,094
 (3,228) 5,866
Unrealized gains (losses) on interest rate swaps designated as cash flow hedges:           
Change in fair value arising during the period2,574
 (435) 2,139
 (2,253) 800
 (1,453)
Reclassification adjustment for net interest expense included in net income19
 (5) 14
 32
 (11) 21
 2,593
 (440) 2,153
 (2,221) 789
 (1,432)
Total other comprehensive (loss) income$(4,139) $826
 $(3,313) $6,873
 $(2,439) $4,434
 Six Months Ended June 30,
 2018 2017
(in thousands)Before Tax
Amount		 Tax
Effect		 Net of Tax
Amount		 Before Tax
Amount		 Tax
Effect		 Net of Tax
Amount
Unrealized (losses) gains on available for sale securities:           
Change in fair value arising during the period$(27,566) $7,135
 $(20,431) $11,708
 $(4,156) $7,552
Reclassification adjustment for net gains included in net income(16) 4
 (12) (155) 55
 (100)
 (27,582) 7,139
 (20,443) 11,553
 (4,101) 7,452
Unrealized gains (losses) on interest rate swaps designated as cash flow hedges:           
Change in fair value arising during the period8,608
 (2,256) 6,352
 (2,008) 713
 (1,295)
Reclassification adjustment for net interest expense included in net income207
 (36) 171
 82
 (29) 53
 8,815
 (2,292) 6,523
 (1,926) 684
 (1,242)
Total other comprehensive (loss) income$(18,767) $4,847
 $(13,920) $9,627
 $(3,417) $6,210

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Mercantil Bank Holding CorporationAmerant Bancorp Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)

15. Stockholders’ Equity
11.    Commitmentsa) Class A Common Stock
Shares of the Company’s Class A common stock issued and outstanding as of March 31, 2021 and December 31, 2020 were 29,001,646 and 28,806,344, respectively.
b) Class B Common Stock and Treasury Stock
Shares of the Company’s Class B common stock issued and outstanding as of March 31, 2021 and December 31, 2020 were 8,920,315 and 9,036,352, respectively. As of March 31, 2021 and December 31, 2020, the Company had 0 shares of Class B common stock held as treasury stock.
On March 10, 2021, the Company’s Board of Directors approved a stock repurchase program which provides for the potential repurchase of up to $40 million of shares of the Company’s Class B common stock (the “2021 Stock Repurchase Program”). Under the 2021 Stock Repurchase Program, the Company may 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 Exchange Act. The extent to which the Company repurchases its shares of Class B common stock and the timing of such purchases will depend upon market conditions, regulatory requirements, other corporate liquidity requirements and priorities and other factors as may be considered in the Company’s sole discretion. Repurchases may also be 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 2021 Stock Repurchase Program does not obligate the Company to repurchase any particular amount of shares of Class B common stock, and may be suspended or discontinued at any time without notice.
During the three months ended March 31, 2021, the Company repurchased an aggregate of 116,037 shares of Class B common stock at a weighted average price per share of $15.98 under the 2021 Stock Repurchase Program. The aggregate purchase price for these transactions was approximately $1.9 million, including transaction costs. In the first quarter of 2021, the Company’s Board of Directors authorized the cancellation of those 116,037 shares of Class B common stock.

16.    Contingencies
The Company and its subsidiaries are partyparties to various legal actions arising in the ordinary course of business. In the opinion of management, the outcome of these proceedings litigation will not have a significant effect on the Company’s consolidated financial position or results of operations.
The Company occupies various banking centers 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 $1.6 million and $1.4 million for the three months ended June 30, 2018 and 2017, respectively, and $3.0 million for each of the six months ended June 30, 2018 and 2017.
Financial instruments whose contract amount represents off-balance sheet credit risk at June 30, 2018March 31, 2021 are generally short-term and are as follows:
(in thousands)Approximate
Contract
Amount
Commitments to extend credit$761,378 
Standby letters of credit9,644 
Commercial letters of credit701 
$771,723 
31
(in thousands)Approximate
Contract
Amount
Commitments to extend credit$750,440
Credit card facilities200,912
Standby letters of credit19,271
Commercial letters of credit4,718
 $975,341

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Notes to Interim Consolidated Financial Statements (Unaudited)

12.17.    Fair Value Measurements
Assets and liabilities measured at fair value on a recurring basis are summarized below:
March 31, 2021
(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
Debt securities available for sale
U.S. government-sponsored enterprise debt securities$0 $610,703 $0 $610,703 
Corporate debt securities0 345,574 0 345,574 
U.S. government agency debt securities0 216,075 0 216,075 
Municipal bonds0 15,339 0 15,339 
U.S treasury securities0 2,510 0 2,510 
0 1,190,201 0 1,190,201 
Equity securities with readily determinable fair values not held for trading0 23,965 0 23,965 
Bank owned life insurance0 218,903 0 218,903 
Derivative instruments0 23,596 0 23,596 
$0 $1,456,665 $0 $1,456,665 
Liabilities
Derivative instruments$0 $25,118 $0 $25,118 
 June 30, 2018
(in thousands)Quoted
Prices in
Active
Markets
for Identical
Assets
(Level 1)		 Third-Party
Models with
Observable
Market
Inputs
(Level 2)		 Internal
Models
with
Unobservable
Market
Inputs
(Level 3)		 Total
Carrying
Value in the
Consolidated
Balance
Sheet
Assets       
Securities available for sale       
U.S. government sponsored enterprise debt securities$—
 $827,484
 $—
 $827,484
Corporate debt securities—
 374,929
 —
 374,929
U.S. government agency debt securities—
 250,837
 —
 250,837
Municipal bonds—
 173,307
 —
 173,307
Mutual funds—
 23,108
 —
 23,108
 —
 1,649,665
 —
 1,649,665
Bank owned life insurance—
 203,236
 —
 203,236
Derivative instruments—
 15,805
 —
 15,805
 $—
 $1,868,706
 $—
 $1,868,706
Liabilities       
Derivative instruments$—
 $1,388
 $—
 $1,388


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Notes to Interim Consolidated Financial Statements (Unaudited)

December 31, 2020
(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
Debt securities available for sale
U.S. government-sponsored enterprise debt securities$0 $661,335 $0 $661,335 
Corporate debt securities0 301,714 0 301,714 
U.S. government agency debt securities0 204,578 0 204,578 
U.S treasury securities0 2,512 0 2,512 
Municipal bonds0 54,944 0 54,944 
0 1,225,083 0 1,225,083 
Equity securities with readily determinable fair values not held for trading0 24,342 0 24,342 
Bank owned life insurance0 217,547 0 217,547 
Derivative instruments0 39,721 0 39,721 
$0 $1,506,693 $0 $1,506,693 
Liabilities
Derivative instruments$0 $41,431 $0 $41,431 
33
 December 31, 2017
(in thousands)Quoted
Prices in
Active
Markets
for Identical
Assets
(Level 1)		 Third-Party
Models with
Observable
Market
Inputs
(Level 2)		 Internal
Models
with
Unobservable
Market
Inputs
(Level 3)		 Total
Carrying
Value in the
Consolidated
Balance
Sheet
Assets       
Securities available for sale       
U.S. government sponsored enterprise debt securities$—
 $875,666
 $—
 $875,666
Corporate debt securities—
 313,392
 —
 313,392
U.S. government agency debt securities—
 291,385
 —
 291,385
Municipal bonds—
 180,396
 —
 180,396
Mutual funds—
 23,617
 —
 23,617
U.S. treasury securities—
 2,701
 —
 2,701
 —
 1,687,157
 —
 1,687,157
Bank owned life insurance—
 200,318
 —
 200,318
Derivative instruments—
 7,032
 —
 7,032
 $—
 $1,894,507
 $—
 $1,894,507
Liabilities       
Derivative instruments$—
 $1,570
 $—
 $1,570
Level 2 Valuation Techniques
The valuation of securities and derivative instruments is performed through a monthly pricing process using data provided by third parties considered leading global providers of independent data pricing services (the “Pricing Providers”). These Pricing Providers collect, use and incorporate descriptive market data from various sources, quotes and indicators from leading broker dealers to generate independent and objective valuations.
The valuation techniques and the inputs used in our consolidated financial statements to measure the fair value of our recurring Level 2 financial instruments consider, among other factors, the following:
Similar securities actively traded which are selected from recent market transactions;
Observable market data which includes spreads in relationship to LIBOR, swap curve, and prepayment speed rates, as applicable; and
The actual interest rate spread and prepayment speed are used to obtain the fair value for each related security.
On a quarterly basis, the Company evaluates the reasonableness of the monthly pricing process for the valuation of securities and derivative instruments. This evaluation includes challenging a random sample of the different types of securities in the investment portfolio as of the end of the quarter selected. This challenge consists of obtaining from the Pricing Providers a document explaining the methodology applied to obtain their fair value assessments for each type of investment included in the sample selection. The Company then analyzes in detail the various inputs used in the fair value calculation, both observable and unobservable (e.g., prepayment speeds, yield curve benchmarks, spreads, delinquency rates). Management considers that the consistent application of this methodology allows the Company to understand and evaluate the categorization of its investment portfolio.

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Notes to Interim Consolidated Financial Statements (Unaudited)

The methods described above may produce a fair value calculation that may differ from the net realizable value or may not be reflective of future fair values. Furthermore, while the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of its financial instruments could result in different estimates of fair value at the reporting date.
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
The following tables present the major categories of assets measured at fair value on a non-recurring basis at March 31, 2021 and December 31, 2020:
March 31, 2021
(in thousands)Carrying AmountQuoted
Prices in
Active
Markets
for Identical
Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)		Total Impairments
Description
Loans held for investment measured for impairments using the fair value of the collateral$45,956 $0 $0 $45,956 $19,838 
Loans held for sale1,044 1,044 0 0 0 
47,000 1,044 0 45,956 19,838 

December 31, 2020
(in thousands)Carrying AmountQuoted
Prices in
Active
Markets
for Identical
Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)		Total Impairments
Description
Loans held for investment measured for impairments using the fair value of the collateral$50,199 $0 $0 $50,199 $19,843 

Loans held for sale

Loans held for sale are carried at the lower of cost or estimated fair value. The fair values of loans held for sale are based on commitments on hand from investors within the secondary market for loans with similar characteristics. As such, the fair value adjustment for loans held for sale is classified as Level 1.

Collateral Dependent Loans Measured For Impairment

The Company measures the impairment of collateral dependent loans based on the fair value of the collateral in accordance with the provisions of ASC-310-35 “Impairment of Loans and Receivables”. The Company primarily uses third party appraisals to assist in measuring impairment on collateral dependent impaired loans. The Company also uses third party appraisal reviewers for loans with an outstanding balance of $1 million and above. These appraisals generally use the market or income approach valuation technique and use market observable data to formulate an opinion of the fair value of the loan’s collateral. However, the appraiser uses professional judgment in determining the fair value of the collateral or properties and may also adjust these values for changes in market conditions subsequent to the appraisal date. When current appraisals are not available for certain loans, the Company uses judgment on market conditions to adjust the most current appraisal. The sales prices may reflect prices of sales contracts not closed and the amount of time required to sell out the real estate project may be derived from current appraisals of similar projects. As a consequence, the fair value of the collateral is considered a Level 3 valuation.

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Amerant Bancorp Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)
There were no0 other significant assets or liabilities measured at fair value on a nonrecurring basis at June 30, 2018. The following table presents the major category of assets measured at fair value on a nonrecurring basis atMarch 31, 2021 and December 31, 2017:
 December 31, 2017
(in thousands)
Quoted
Prices in
Active
Markets
for Identical
Assets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Other
Unobservable
Inputs
(Level 3)
 
Total
Impairments
Description       
Loans held for sale$5,611
 $—
 $—
 $—
Loans Held for Sale. The Company measures the impairment of loans held for sale based on the amount by which the carrying values of those loans exceed their fair values. The Company primarily uses independent third party quotes to measure any subsequent decline in the value of loans held for sale. As a consequence, the fair value of these loans held for sale are considered a Level 1 valuation.2020.
Fair Value of Financial Instruments
The fair value of a financial instrument represents the price that would be received from its sale in an orderly transaction between market participants at the measurement date. The best indication of the fair value of a financial instrument is determined based upon quoted market prices. However, in many cases, there are no quoted market prices for the Company’s various financial instruments. As a result, the Company derives the fair value of the financial instruments held at the reporting period-end, in part, using present value or other valuation techniques. Those techniques are significantly affected by management’s assumptions, the estimated amount and timing of future cash flows and estimated discount rates included in present value and other techniques. The use of different assumptions could significantly affect the estimated fair values of the Company’s financial instruments. Accordingly, the net realized values could be materially different from the estimates presented below.
The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value:
Because of their nature and short-term maturities, the carrying values of the following financial instruments were used as a reasonable estimate of their fair value: cash and cash equivalents, interest earning deposits with banks, variable-rate loans with re-pricing terms shorter than twelve months, demand and savings deposits, short-term time deposits and other borrowings.
The fair value of loans held for sale, securities, bank owned life insurance and derivative instruments, are based on quoted market prices, when available. If quoted market prices are unavailable, fair value is estimated using the pricing process described in Note 17 to the audited consolidated financial statements for the three years ended December 31, 2017 and as of December 31, 2017 and 2016.

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Mercantil Bank Holding Corporation and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)

The fair value of commitments and letters of credit is based on the assumption that the Company will be required to perform on all such instruments. The commitment amount approximates estimated fair value.
The fair value of fixed-rate loans, advances from the FHLB, and junior subordinated debentures are estimated using a present value technique by discounting the future expected contractual cash flows using the current rates at which similar instruments would be issued with comparable credit ratings and terms at the measurement date.
The fair value of long-term time deposits, including certificates of deposit, is determined using a present value technique by discounting the future expected contractual cash flows using current rates at which similar instruments would be issued at the measurement date.
The estimated fair value of financial instruments where fair value differs from carrying value are as follows:
March 31, 2021December 31, 2020
(in thousands)Carrying
Value		Estimated
Fair
Value		Carrying
Value		Estimated
Fair
Value
Financial assets:
Loans$2,804,208 $2,725,232 $2,884,550 $2,801,279 
Financial liabilities:
Time deposits1,387,791 1,405,972 1,547,396 1,569,897 
Advances from the FHLB1,050,000 1,068,572 1,050,000 1,078,786 
Senior notes58,656 61,606 58,577 61,528 
Junior subordinated debentures64,178 52,590 64,178 55,912 
35
 June 30, 2018 December 31, 2017
(in thousands)Carrying
Value		 Estimated
Fair
Value		 Carrying
Value		 Estimated
Fair
Value
Financial assets       
Loans$2,754,445
 $2,650,581
 $2,682,790
 $2,566,197
Financial liabilities       
Time deposits1,714,145
 1,702,150
 1,466,464
 1,461,908
Advances from the Federal Home Loan Bank1,256,000
 1,252,087
 1,161,000
 1,164,686
Junior subordinated debentures118,110
 99,304
 118,110
 95,979

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Notes to Interim Consolidated Financial Statements (Unaudited)


13.Segment Information
18.Earnings Per Share
The following tables provide a summarytable shows the calculation of the Company’s financial information asbasic and diluted earnings per share:
Three Months Ended March 31,
(in thousands, except per share data)20212020
Numerator:
Net income available to common stockholders$14,459 $3,382 
Denominator:`
Basic weighted average shares outstanding37,618 42,185 
Dilutive effect of share-based compensation awards228 348 
Diluted weighted average shares outstanding37,846 42,533 
Basic earnings per common share$0.38 $0.08 
Diluted earnings per common share$0.38 $0.08 
As of June 30, 2018March 31, 2021 and December 31, 20172020, potential dilutive instruments consisted of unvested shares of restricted stock and forrestricted stock units totaling 562,648 and 482,316, respectively. In the three months ended March 31, 2021 and six months periods ended June 30, 2018 and 2017 on a managed basis. The Company’s definition of managed basis starts with2020, potential dilutive instruments were included in the reported U.S. GAAP results and includes funds transfer pricing (“FTP”)diluted earnings per share computation because, when the unamortized deferred compensation and allocations of direct and indirect expenses from overhead, internal support centers, and product support centers. This allows management to assess the comparability of results from period-to-period arising from segment operations. The corresponding income tax impactcost related to tax-exempt items is recorded within income tax (expense)/benefit.these shares was divided by the average market price per share in those periods, fewer shares would have been purchased than restricted shares assumed issued. Therefore, in those periods, such awards resulted in higher diluted weighted average shares outstanding than basic weighted average shares outstanding, and had a dilutive effect in per share earnings.
36
(in thousands)Personal and Commercial Banking ("PAC") Corporate LATAM Treasury Institutional Total
Three Months Ended June 30, 2018 
Income Statement:         
Net interest income$47,105
 $1,219
 $1,942
 $3,723
 $53,989
Provision for (reversal of) loan losses824
 494
 (329) (839) 150
Net interest income after provision for (reversal of) loan losses46,281
 725
 2,271
 4,562
 53,839
Noninterest income5,708
 89
 3,451
 5,738
 14,986
Noninterest expense39,329
 1,468
 2,832
 9,009
 52,638
Net income (loss) before income tax:         
   Banking12,660
 (654) 2,890
 1,291
 16,187
   Non-banking contribution(1)
1,197
 11
 —
 (1,208) —
 13,857
 (643) 2,890
 83
 16,187
Income tax (expense) benefit(4,486) 58
 84
 (1,420) (5,764)
Net income (loss)$9,371
 $(585) $2,974
 $(1,337) $10,423
(in thousands)Personal and Commercial Banking ("PAC") Corporate LATAM Treasury Institutional Total
Six Months Ended June 30, 2018 
Income Statement:         
Net interest income$93,786
 $2,699
 $2,898
 $7,239
 $106,622
(Reversal of) provision for loan losses(1,315) (225) (446) 2,136
 150
Net interest income after (reversal of) provision for loan losses95,101
 2,924
 3,344
 5,103
 106,472
Noninterest income11,416
 198
 5,401
 11,916
 28,931
Noninterest expense79,343
 2,643
 5,794
 20,503
 108,283
Net income (loss) before income tax:         
   Banking27,174
 479
 2,951
 (3,484) 27,120
   Non-banking contribution(1)
1,247
 —
 —
 (1,247) —
 28,421
 479
 2,951
 (4,731) 27,120
Income tax (expense) benefit(6,707) (113) 396
 (844) (7,268)
Net income (loss)$21,714
 $366
 $3,347
 $(5,575) $19,852

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Notes to Interim Consolidated Financial Statements (Unaudited)

(in thousands)Personal and Commercial Banking ("PAC") Corporate LATAM Treasury Institutional Total
As of June 30, 2018         
Loans, net(2)
$5,826,731
 $394,572
 $—
 $(71,685) $6,149,618
Deposits$5,567,424
 $20,134
 $737,898
 $37,682
 $6,363,138
(in thousands)Personal and Commercial Banking ("PAC") Corporate LATAM Treasury Institutional Total
Three Months Ended June 30, 2017 
Income Statement:         
Net interest income$43,776
 $2,339
 $2,268
 $3,058
 $51,441
Provision for (reversal of) loan losses8,681
 (1,845) (819) (2,371) 3,646
Net interest income after provision for (reversal of) loan losses35,095
 4,184
 3,087
 5,429
 47,795
Noninterest income8,062
 148
 2,933
 6,616
 17,759
Noninterest expense38,618
 1,135
 2,445
 8,467
 50,665
Net income before income tax:         
   Banking4,539
 3,197
 3,575
 3,578
 14,889
   Non-banking contribution(1)
1,263
 24
 —
 (1,287) —
 5,802
 3,221
 3,575
 2,291
 14,889
Income tax expense(2,001) (1,147) (446) (905) (4,499)
Net income$3,801
 $2,074
 $3,129
 $1,386
 $10,390
(in thousands)Personal and Commercial Banking ("PAC") Corporate LATAM Treasury Institutional Total
Six Months Ended June 30, 2017 
Income Statement:         
Net interest income$85,164
 $4,903
 $4,593
 $5,132
 $99,792
Provision for (reversal of) loan losses9,812
 358
 (894) (1,533) 7,743
Net interest income after provision for (reversal of) loan losses75,352
 4,545
 5,487
 6,665
 92,049
Noninterest income14,145
 275
 4,113
 13,443
 31,976
Noninterest expense78,495
 2,517
 5,194
 13,607
 99,813
Net income before income tax:         
  Banking11,002
 2,303
 4,406
 6,501
 24,212
   Non-banking contribution(1)
2,349
 22
 —
 (2,371) —
 13,351
 2,325
 4,406
 4,130
 24,212
Income tax expense(4,730) (823) (59) (1,703) (7,315)
Net income$8,621
 $1,502
 $4,347
 $2,427
 $16,897

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Notes to Interim Consolidated Financial Statements (Unaudited)

(in thousands)Personal and Commercial Banking ("PAC") Corporate LATAM Treasury Institutional Total
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

__________________
(1)Non-banking contribution reflects allocations of the net results of the Trust Company and Investment Services 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 $5,611 thousand which are allocated to PAC.


41


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis is designed to provide a better understanding of various factors related to the Company’sAmerant Bancorp Inc.’s (the “Company,” “Amerant,” “our” or “we”) results of operations and financial condition and its wholly owned subsidiaries, including its principal subsidiary, MercantilAmerant Bank, N.A. (the “Bank”). The Bank has two principal subsidiaries, Mercantil Trust Company, N.A. (the “Trust Company”) and Mercantil Investment Services,Amerant Investments, Inc., a securities broker-dealer (“Investment Services”Amerant Investments”), and a Grand-Cayman based trust company subsidiary Elant Bank & Trust LTD. (the “Cayman Bank”).
This discussion is intended to supplement and highlight information contained in the accompanying unaudited interim unaudited consolidated financial statements and related footnotes included in this Quarterly Report on Form 10-Q (“Form 10-Q”), as well as the information contained in the Company’s definitive Information Statementannual report on Form 10-K filed with the SEC as Exhibit 99.1 to its Current ReportU.S. Securities and Exchange Commission (the “SEC”) on March 19, 2021 (“Form 8-K on August 10, 2018 (the “Information Statement”10-K”).

Special Notice
Cautionary Note Regarding Forward-Looking Statements
CertainVarious of the statements made in this discussion and analysis and elsewhere,Form 10-Q, including information incorporated herein by reference to other documents, are “forward-looking statements” within the meaning of, and subject to, the protections of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations, anticipations, assumptions, estimates, intentions and future performance and condition, and involve known and unknown risks, uncertainties and other factors, which may be beyond our control, and which may cause the actual results, performance, achievements, or financial condition of the Company to be materially different from future results, performance, achievements, or financial condition expressed or implied by such forward-looking statements. You should not expect us to update any forward-looking statements. These forward-looking statements should be read together with the “Risk Factors” included in our August 10, 2018 Registration StatementForm 10-K for the fiscal year ended December 31, 2020 and our other reports filed with the SEC.Securities and Exchange Commission (the “SEC”).
All statements other than statements of historical fact are statements that could be forward-looking statements. You can identify these forward-looking statements through our use of words such as “may,” “will,” “anticipate,” “assume,” “seek,” “should,” “indicate,” “would,” “believe,” “contemplate,” “consider”, “expect,” “estimate,” “continue,” “plan,” “point to,” “project,” “could,” “intend,” “target” and other similar words and expressions of the future. These forward-looking statements may not be realized due to a variety of factors, including, without limitation:
•Our profitability is subject to interest rate risk;
•We may be adversely affected by the effectstransition of LIBOR as a reference rate;
•Our concentration of CRE loans;
•Many of our loans are to commercial borrowers, which have unique risks compared to other types of loans.
•Our allowance for loan losses may prove inadequate;
•The collateral securing our loans may not be sufficient to protect us from a partial or complete loss;
•Liquidity risks could affect our operations and jeopardize our financial condition and certain funding sources could increase our interest rate expense;
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•Our valuation of securities and investments and the determination of the impairment amounts taken on our investments are subjective and, if changed, could materially adversely affect our results of operations or financial condition;
•Our strategic plan and growth strategy may not be achieved as quickly or as fully as we seek;
•Nonperforming and similar assets take significant time to resolve;
•We may be contractually obligated to repurchase mortgage loans we sold to third parties on terms unfavorable to us;
•Mortgage Servicing Rights requirements may change and require us to incur additional costs and risks;
•Our success depends on our ability to compete effectively in highly competitive markets;
•Defaults by or deteriorating asset quality of other financial institutions could adversely affect us;
•We could be required to write down our goodwill and other intangible assets;
•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 economic, business,results;
•Our ability to raise additional capital in the future;
•Conditions in Venezuela could adversely affect our operations;
•The COVID-19 pandemic and marketactions taken by governmental authorities to mitigate its spread has significantly impacted economic conditions, and changes, domestica future outbreak of COVID-19 or another highly contagious disease, could adversely affect our business activities, results of operations and foreign, especially those affecting our Venezuela depositors, including seasonality;financial condition;
governmental monetary and fiscal policies;
legislative and regulatory changes, including changes in banking, securities, and tax laws, regulations and rules and their application by our regulators, including capital and liquidity requirements, and changes in the scope and cost of FDIC insurance and in our regulation•As a participating lender in the U.S. or elsewhere;
changes in accounting policies, rules, and practices;
theSmall Business Administration Paycheck Protection Program, we are subject to additional risks of litigation from the Bank’s customers or other parties regarding the Bank’s processing of loans for the PPP and risks that the SBA may not fund some or all PPP loan guaranties;
•Potential gaps in our risk management policies and internal audit procedures may leave us exposed to unidentified or unanticipated risk;
•We may determine that our internal controls and disclosure controls could have deficiencies or weaknesses;
•Technological changes affect our business including potentially impacting the revenue stream of traditional products and services, and we may have fewer resources than many competitors to invest in inflationtechnological improvements;
•Our information systems may experience interruptions and security breaches, and are exposed to cybersecurity threats;
•Any failure to protect the confidentiality of customer information could adversely affect our reputation and subject us to financial sanctions;
•Future acquisitions and expansion activities may disrupt our business, dilute shareholder value and adversely affect our operating results;
•We may not be able to generate sufficient cash to service all of our debt;
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•We and Amerant Florida Bancorp Inc., the subsidiary guarantor, are each a holding company with limited operations and depend on our subsidiaries for the funds required to make payments of principal and interest rates on our debt;
•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 levels, composition,Senior Notes;
•Our business may be adversely affected by economic conditions in general and costs of deposits, loan demand, and the values and liquidity of loan collateral, securities, and interest sensitive assets and liabilities, and the risks and uncertainty of the amounts realizable;
changes in borrower credit risks and payment behaviors;

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changes in the availability and cost of credit and capitalby conditions in the financial markets,markets;
•We are subject to extensive regulation that could limit or restrict our activities and adversely affect our earnings;
•Litigation and regulatory investigations are increasingly common in our businesses and may result in significant financial losses and/or harm to our reputation;
•We are subject to capital adequacy and liquidity standards, and if we fail to meet these standards our financial condition and operations would be adversely affected;
•We will be subject to heightened regulatory requirements if our total assets grow in excess of $10 billion;
•The Federal Reserve may require us to commit capital resources to support the typesBank;
•We may face higher risks of instruments thatnoncompliance 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;
•A limited market exists for the Company's shares of Class B common stock;
•Holders of shares of Class B common stock have limited voting rights. As a result, holders of shares of Class B common stock will have limited ability to influence shareholder decisions;
•Certain of our existing shareholders could exert significant control over the Company;
•If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, the price of our common stock and trading volume could decline;
•The stock price of financial institutions, like Amerant, may fluctuate significantly;
•We have the ability to issue additional equity securities, which would lead to dilution of our issued and outstanding Company Shares;
•Our dual classes of Company Shares may limit investments by investors using index-based strategies;
•We do not currently intend to pay dividends on 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;
•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 included as capital for regulatory purposes;less attractive to investors;
changes in the prices, values, and sales volumes of residential and commercial real estate;
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the effects of competition from a wide variety of local, regional, national, and other providers of financial, investment, trust and other wealth management services;
the failure of assumptions and estimates underlying the establishment of allowances for possible loan and other asset impairments, losses, and other estimates;
the failure of assumptions and estimates, as well as differences in, and changes to, economic, market, and credit conditions, including changes in borrowers’ credit risks and payment behaviors from those used in our loan portfolio stress tests and other evaluations;
changes in technology or products that•We may be more difficult, costly, or less effective than anticipated;unable to attract and retain key people to support our business;
the effects•Severe weather, natural disasters, global pandemics, acts of war or other conflicts, acts of terrorism, hurricanestheft, civil unrest, government expropriation or other catastrophicexternal events that may affect general economic conditions;could have significant effects on our business; and
cyber attacks and data breaches that may compromise our systems or customers’ information;
the risk that our deferred tax assets, if any, could be reduced if estimates of future taxable income from our operations and tax planning strategies are less than currently estimated, and sales of our capital stock could trigger a reduction in the amount of net operating loss carry-forwards, if any, that we may be able to utilize for income tax purposes; and
the•The other factors and information in this reportour Form 10-K and other filings that we make with the SEC under the Exchange Act including the Information Statement.and Securities Act. See “Risk Factors” in our Form 10-K.
The foregoing factors should not be construed as exhaustive and should be read together with the Information Statement.other cautionary statements included in our 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-Q. 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.
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. 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 notice. We have no obligationnotice, together with those risks and do not undertake to update, revise or correct any ofuncertainties described in “Risk factors” in our Form 10-K, and in our other filings with the forward-looking statements afterSEC, which are available at the date of this report, or after the respective dates on which such statements otherwise are made.SEC’s website www.sec.gov.


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OVERVIEW

Our Company
We are a bank holding company headquartered in Coral Gables, Florida. We provide individuals and businesses a comprehensive array of deposit, credit, investment, wealth management, retail banking and fiduciary services, both toservices. We serve customers domiciled in theour United States markets and to select international customers. These services are offered primarily through the Bank, which is also headquartered in Coral Gables, Florida, and its subsidiaries. Fiduciary, investment and wealth management services are provided by the Bank’s national trust, Amerant Trust, Companythe Bank’s securities broker-dealer, Amerant Investments, the Bank’s Grand-Cayman based trust company subsidiary, the Cayman Bank, and Investment Services subsidiaries.the newly formed mortgage company, Amerant Mortgage. The Bank’s three primary markets are South Florida, where it operates 15we operate 18 banking centers in Miami-Dade, Broward and Palm Beach counties; the greater Houston, Texas area, where it has sevenwe have 7 banking centers that serve the nearby areas of Harris, Montgomery, Fort Bend and Waller counties and a LPO in HarrisDallas, Texas, which we opened in early 2019; and Montgomery counties; andthe greater New York City area, where we also maintain a LPO. See “Recent Developments” below for an update on the New York City area where itLPO.
Business Developments
Amerant Trust Merger
On December 30, 2020 we filed applications with the Office of the Comptroller of the Currency, or OCC, and the Federal Deposit Insurance Corporation, or FDIC, seeking approval to consolidate our existing trust and wealth management business, previously conducted by Amerant Trust, with the commercial banking business conducted by the Bank, by merging Amerant Trust with and into the Bank. See our Form 10-K for the year 2020 for more details.
We completed the merger of Amerant Trust with and into the Bank on April 1, 2021.
Recent Developments
New Vice-Chairman and CEO
On January 21, 2021, the Company reported Mr. Millar Wilson’s retirement from his role as Vice-Chairman and Chief Executive Officer and the appointment of Gerald P. Plush, as the Company’s Vice-Chairman and Chief Executive Officer effective the day following the filing of the Company’s 2020 annual report on Form 10-K for the year ended December 31, 2020 (the "2020 Form 10-K"). Mr. Plush has served as a Company director since July 2019 and served as Executive Vice-Chairman from February 15, 2021 until March 20, 2021.
The Company filed its 2020 Form 10-K with the SEC on March 19, 2021 and, therefore, effective March 20, 2021, Gerald P. Plush, who had served as Executive Vice Chairman since February 15, 2021, became the Company’s Vice-Chairman and Chief Executive Officer.
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Near and Long-Term Initiatives
As discussed on the earnings call to review our results for the first quarter ended March 31, 2021; in the coming weeks and months we intend to implement and/or expand several near and long-term initiatives that we expect will further our long-term strategy to improve performance and drive growth. These include:
Growing our core deposits. 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. We have identified a few ways to better target and attract these core deposits, including implementing/enhancing a completely digital onboarding platform, building out our treasury management sales force and adding additional treasury management capabilities, focusing our marketing to drive additional digital and in-branch traffic, and gathering other sources of deposits such as municipal accounts and wealth management.
Accelerating our digital transformation. Over the past several quarters we ramped up our digital efforts with the rollout of nCino and Salesforce and the introduction of Amerant Investments Mobile and are now focused on evaluating digital solutions in several key areas, including deposit account acquisition, small business lending and wealth management.
Improving Amerant's brand awareness. We will be ramping up our efforts to build brand awareness in the communities we serve, including improved signage and promotions as well as developing affinity relationships and increasing our community involvement.
Rationalizing our lines of business and geographies. We plan to expand our treasury management, wealth management, and develop specialty finance capabilities in order to grow the bank's revenue streams and fee opportunities. At the same time, we are curtailing future loan originations in the New York market. Our NYC location is a commercial real estate loan production office with minimal deposit relationships, and as we evaluate alternatives there, we will focus on growing in Midtown Manhattan.our core markets while also looking for opportunities to grow in contiguous markets.
We reportEvaluating new ways to achieve cost efficiencies across the business to improve our resultsmargin. Among other, we will be looking at the pricing of operations through four segments: Personalour products and Commercial Banking (“PAC”), Corporate LATAM, Treasury and Institutional. PAC delivers the Bank’s core services and product offerings, to domestic personal and commercial business customers and international customers, which are primarily personal customers. Our Corporate LATAM segment serves financial institution clients and large companies in Latin America. Our Treasury segment manages our securities portfolio, and supports Company-wide initiatives for increasing the profitability of other financial assets and liabilities. Our Institutional segment is comprised of balances and results of Investment Services and the Trust Company,balance sheet composition, as well as general corporate, administrativethe categories and support activitiesamounts of our spending.
Optimizing capital structure. We successfully completed in June 2020 a $60.0 million offering of 5.75% senior notes due 2025 and in December 2020 a modified Dutch auction tender offer pursuant to which we purchased approximately $54 million of shares of Class B common stock. In March of 2021, we announced a repurchase program to purchase up to $40 million of shares of Class B common stock which is currently underway. We will continue to evaluate our capital structure and ways to optimize it in the future.
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COVID-19 Pandemic
CARES Act

On March 11, 2020, the World Health Organization recognized an outbreak of a novel strain of the coronavirus, COVID-19, as a pandemic. For a more detailed discussion of the COVID-19 pandemic, see our Form 10-K for the year ended 2020.

On April 2, 2020, the Bank began participating in the SBA’s Paycheck Protection Program, or “PPP”, by providing loans to these businesses to cover payroll, rent, mortgage, healthcare, and utilities costs, among other essential expenses. In early January 2021, a third round of PPP loans provided additional stimulus relief to small businesses and individuals who are self-employed or independent contractors. Amerant continues to focus on providing funding to customers and communities by actively participating in the PPP and related government sponsored programs. As of March 30, 2021, total PPP loans were $164.8 million, or 2.9% of total loans, compared to $198.5 million, or 3.4% of total loans as of December 31, 2020. The Company estimates as of March 31, 2021, there were $173.2 million of deposits related to the PPP compared to $95.4 million as of December 31, 2020. On May 4, 2021, the Company entered into an agreement to sell to a third party, in cash, PPP loans with an outstanding balance of approximately $95.1 million, and expects to realize a pretax gain on sale of approximately $3.8 million. The Company retained no loan servicing rights.
Loan Loss Reserve and Modification Programs
On March 26, 2020, the Company began offering loan payment relief options to customers impacted by the COVID-19 pandemic, including deferral and/or forbearance options. These programs continued throughout 2020 and in the first quarter of 2021. Loans which have been modified under these programs totaled $1.1 billion as of March 31, 2021. As of March 31, 2021, $62.1 million, or 1.1% of total loans, were still under the deferral and/or forbearance period, an increase from $43.4 million, or 0.7% at December 31, 2020. This increase was primarily due to new modifications granted to two CRE retail loans in New York totaling $37.1 million and one multifamily loan in New York totaling $2.4 million, partially offset by $20.7 million in loans that resumed regular payments after deferral and/or forbearance periods ended. The Company began to selectively offer additional temporary loan modifications under programs that allow it to extend the deferral and/or forbearance period beyond 180 days. The aforementioned $62.1 million includes $19.8 million of loans that mature in the second quarter of 2021, $5.2 million that mature in the third quarter of 2021, and $37.1 million that mature in first quarter of 2022. Additionally, 99.5% of the loans under deferral and/or forbearance are secured by real estate collateral with average Loan to Value (“LTV”) of 68.2%. All loans that have moved out of forbearance status have resumed regular payments. In accordance with accounting and regulatory guidance, loans to borrowers benefiting from these measures are not reflectedconsidered TDRs. The Company continues to closely monitor the performance of the remaining loans in deferral and/or forbearance periods under the terms of the temporary relief granted.

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Risks and Uncertainties
The COVID-19 pandemic has severely restricted the level of economic activity in the U.S. and around the world since March 2020. Several states and cities across the U.S., including the States of Florida, New York and Texas and cities where we have banking centers, LPOs and where our other three segments.principal place of business is located, have also implemented quarantines, restrictions on travel, “shelter at home” orders, and restrictions on types of business that may continue to operate or may be reinstated in the future. While some of these measures and restrictions have been lifted and most businesses have begun to reopen, the Company cannot predict when restrictions currently in place may be lifted, or whether restrictions that have been lifted will need to be imposed or tightened in the future if viewed as necessary due to public health concerns. Given the uncertainty regarding the spread and severity of the COVID-19 pandemic and its adverse effects on the U.S. and global economies, the impact to the Company’s financial statements cannot be accurately predicted at this time.
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Primary Factors Used to Evaluate Our Business
Results of Operations. In addition to net income , the primary factors we use to evaluate and manage our results of operations include net interest income, noninterest income and expense,expenses, ROA and return on equity.ROE.
Net Interest Income. Net interest income represents interest income less interest expense. We generate interest income from interest, dividends and fees received on interest-earning assets, including loans and investment securities we own. We incur interest expense from interest paid on interest-bearing liabilities, including interest-bearing deposits, and borrowings such as FHLB advances from the Federal Home Loan Bank (“FHLB”) and other borrowings such as repurchase agreements, senior notes and junior subordinated debentures and other forms of indebtedness.debentures. Net interest income typically is the most significant contributor to our revenues and net income. To evaluate net interest income, we measure and monitor: (i) yields on our loans and other interest-earning assets; (ii) the costs of our deposits and other funding sources; (iii) our net interest spread; (iv) our net interest margin;margin, or NIM; and (v) our provisions for loan losses. Net interest spread is the difference between rates earned on interest-earning assets and rates paid on interest-bearing liabilities. Net interest marginNIM is calculated by dividing net interest income for the period by average interest-earning assets.assets during that same period. Because noninterest-bearing sources of funds, such as noninterest-bearing deposits and shareholders’stockholders’ equity, also fund interest-earning assets, net interest marginNIM includes the benefit of these noninterest-bearing sources of funds. Non-refundable loan origination fees, net of direct costs of originating loans, are deferred and recognized over the life of the related loan as an adjustment to interest income in accordance with generally accepted accounting principles in the United States of America (“GAAP”)
Changes in market interest rates and the interest we earn on interest-earning assets, or which we pay on interest-bearing liabilities, as well as the volumes and the types of interest-earning assets, interest-bearing and noninterest-bearing liabilities and shareholders’stockholders’ equity, usually have the largest impact on periodic changes in our net interest spread, net interest marginNIM and net interest income. We measure net interest income before and after the provision for loan losses.
Noninterest Income. Noninterest income consists of, among other things:revenue streams: (i) service fees on deposit and service fees;accounts; (ii) income from brokerage, advisory and fiduciary activities; (iii) benefits from and changes in cash surrender value of bank-owned life insurance, or BOLI, policies; (iv) card and trade finance servicing fees; (v) data processing, rental income and fees for other services provided to MSF and its affiliates; (vi) securities gains or losses; (vi) net gains and losses on early extinguishment of FHLB advances; and (vii) other noninterest income.
Our income from service fees on deposit accounts is affected primarily by the volume, growth and mix of deposits we hold.hold and volume of transactions initiated by customers (i.e. wire transfers). These are affected by prevailing market conditions, includingpricing of deposit services, interest rates, generally, and for deposit products, our marketing efforts and other factors.

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Our income from brokerage, advisory and fiduciary activities consists of brokerage commissions related to theour customers’ trading volume, of our customers’ transactions, fiduciary and investment advisory fees generally based on a percentage of the average value of assets under management and custody (“AUM”), and account administrative services and ancillary fees during the contractual period. Our assets under management and custody accounts declined $42.4 million, or 2.42%, to $1.71 billion at June 30, 2018 from $1.75 billion at December 31, 2017, primarily due to our decision to close certain foreign customer accounts.

Income from changes in the cash surrender value of our BOLI policies represents the amountamounts that may be realized under the contracts with the insurance carriers, which are nontaxable.
Card servicing fees include credit card issuance and credit and debit cards interchange fees. Credit card issuance fees are generally recognized over the period in which the cardholders are entitled to use the cards. Interchange fees, other fees and revenue sharing 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.
Card servicing fees have included credit card issuance and credit and debit card interchange and other fees. We have historically provided certain administrative servicesrevised our card program to MSF’s non-U.S. affiliates under certain service agreements with arms-length terms and charges. Income from this source changes based on changes to the direct costs associated with providing the services and based on changes to the amount and scope of services provided which are reviewed periodically. Following the Spin-off, we will continue to provide these services for transition periodsserve our card customers, reduce risks and increase the efficiency of 12-18 months, unless sooner terminated. All services are billed bya relatively small program. We entered into referral arrangements with recognized U.S.-based card issuers, which permit us to serve our international and paid by MSFdomestic customers and earn referral fees and share interchange revenue without exposure to credit risk. We ceased to be a direct card issuer early in U.S. Dollars. For the six months ended June 30, 2018, we were paid approximately $1.2 million for these services. MSF does not currently provide any material services to us for which they are compensated.2020.
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Our gains and losses on sales of securities is incomeare derived from the sale of securities withinsales from our securities portfolio and isare primarily dependent on changes in U.S. Treasury interest rates and asset liability management activities. Generally, as U.S. Treasury rates increase, our securities portfolio decreases in market value, and as U.S. Treasury rates decrease, our securities portfolio increases in value.
Our gains or losses on sales of property and equipment are recorded at the date of the sale and presented as other noninterest income or expense in the period they occur.
Our fee income generated on customer interest rate swaps are reported in other noninterest income.
Noninterest Expense. Noninterest expense includes,consists, among other things:things of: (i) salaries and employee benefits; (ii) occupancy and equipment expenses; (iii) professional and other services fees; (iv) FDIC deposit and business insurance assessments and regulatory assessments;premiums; (v) telecommunication and data processing expenses; (vi) depreciation and amortization; and (vii) other operating expenses.
Salaries and employee benefits include compensation (including severance expenses), employee benefits and employer tax expenses for our personnel.
Occupancy expense includes lease expense on our leased properties and other occupancy-related expenses. Equipment expense includes furniture, fixtures and equipment related expenses.
Professional and other services fees include legal, accounting and consulting fees, card processing fees, and other fees related to our business operations, and include director’s fees and regulatory agency fees, such as OCC examination fees.
InsuranceFDIC deposit and regulatorybusiness insurance assessments and premiums include FDICdeposit insurance, net of any credits applied against these premiums, corporate liability and corporateother business insurance premiums.
Telecommunication and data processing expenses include expenses paid to our third-party data processing system providers and other telecommunication and data service providers.
Depreciation and amortization expense includes the value associated with the depletion of the value on our owned properties and equipment, including leasehold improvements made to our leased properties.

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Other operating expenses will include the incremental cost associated with servicing the large number of shareholders we have post-Spin-off,advertising, marketing, community engagement and other operational expenses. Other operating expenses are partially offset by other operating expenses directly related to the extent such shareholders consentorigination of loans, which are deferred and amortized over the life of the related loans as adjustments to electronic delivery of documents that we are required by SEC rules to send to shareholders. interest income in accordance with GAAP.
Noninterest expenses generally increase as our business grows and whenever necessary to implement or enhance policies and procedures for regulatory compliance. During the three months ended March 31, 2021 and 2020, we incurred in restructuring expenses of approximately $0.2 million and $0.4 million, respectively, mainly related to digital transformation expenses. Restructuring expenses consist of those incurred for actions designed to implement the Company’s strategy as a new independent company. 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.
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Primary Factors Used to Evaluate Our Financial Condition
The primary factors we use to evaluate and manage our financial condition include asset quality, capital and liquidity.
Asset Quality. We manage the diversification and quality of our assets based upon factors that include the level, distribution and severityrisks in each category of the deterioration in asset quality.assets. Problem assets may be categorized as classified, delinquent, nonaccrual, nonperforming and restructured assets. We also manage the adequacy of our allowance for loan losses, or the allowance (“ALL”), the diversification and quality of loan and investment portfolios, the extent of counterparty risks, credit risk concentrations and other factors.
We review and update our ALL for loan loss model annually to better reflect our loan volumes, and credit and economic conditions in our markets. The model may differ among our loan segments to reflect their different asset types, and includes qualitative factors, which are updated semi-annually, based on the type of loan.
Capital. Financial institution regulators have established guidelines for minimum capital ratios for banks thrifts and bank holding companies. We manage capital based upon factors that include: (i) the level and quality of capital and our overall financial condition; (ii) the trend and volume of problem assets; (iii) the adequacy of reserves; (iv) the level and quality of earnings; (v) the risk exposures in our balance sheet under various scenarios, including stressed conditions; (vi) the Tier 1 capital ratio, the total capital ratio, the Tier 1 leverage ratio, and the Common Equity Tier 1CET1 capital ratio; and (vii) other factors.factors, including market conditions.
Liquidity. Our deposit base consists primarily of personal and commercial accounts maintained by individuals and businesses in our primary markets.markets and select international core depositors. In recent years, we have increased our access to fully-insured brokered time deposits under $250,000$250,000. In addition, in 2020, the Company began offering interest-bearing deposit products to broker-dealer firms through a third party deposit broker network, including brokered by third-party financial firms inmoney market and brokered interest bearing demand deposit accounts. However, we remain focused on relationship-driven core deposits. In the U.S. first quarter of 2021, we changed our definition of core deposits to better align its presentation with the Company’s internal monitoring and overall liquidity strategy. Under this new definition, core deposits consist of total deposits excluding all time deposits. In prior periods, the Company used the Federal Financial Institutions Examination Council’s (the “FFIEC”) Uniform Bank Performance Report (the “UBPR”) definition of “core deposits”, which exclude brokered time deposits and retail time deposits of more than $250,000. See “Core Deposits” discussion for more details.
We manage liquidity based upon factors that include the amount of core deposit relationships as a percentage of total deposits, the level of diversification of our funding sources, the allocation and amount of our deposits among deposit types, the short-term funding sources used to fund assets, the amount of non-deposit funding used to fund assets, the availability of unused funding sources, off-balance sheet obligations, the amount of cash and liquid securities we hold, the availability of assets to be readily convertedconvertible into cash without undue loss, the re-pricing characteristics and maturities of our assets when compared to the re-pricing characteristics of our liabilities and other factors.
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Performance Highlights
Performance highlights
Summary Results
The summary results for the three monthsquarter ended June 30, 2018 includedMarch 31, 2021 include the following (See “—(See “Selected Financial Highlights”Information” for an explanation of non-GAAP financial measures)Non-GAAP Financial Measures):
•Net income rose 0.32%of $14.5 million in the first quarter of 2021, up 327.5% from $3.4 million in the first quarter of 2020. Diluted earnings per share was $0.38 in the first quarter of 2021, compared to the same quarter in 2017. Excluding $3.2 million in pretax expenses associated with Spin-off activities, net income for the quarter rose 36.11%$0.08 in the same period.first quarter of 2020.
•Net interest income was $47.6 million down 3.4% from $49.2 million in the first quarter of 2020. NIM was 2.66% in the first quarter of 2021, up 1 basis point from 2.65% in the first quarter of 2020.
•There was no provision for loan losses recorded during the first quarter of 2021, compared to a $22.0 million provision recorded in the first quarter of 2020. The ratio of the ALL to total loans was 1.93% as of March 31, 2021, up from 1.29% as of March 31, 2020. The Company had no net charge offs in the first quarter of 2021. The ratio of net charge-offs to average total loans in the first quarter of 2020 was 0.09%.
•Noninterest income was $14.2 million in the first quarter of 2021, down 35.4% from $21.9 million in the first quarter of 2020.
•Noninterest expense was $43.6 million down 2.8% from $44.9 million in the first quarter of 2020. Adjusted noninterest expense (non-GAAP) was $43.4 million in the first quarter of 2021, down 2.5% from $44.5 million in the first quarter of 2020.
•The efficiency ratio was 70.7% in the first quarter of 2021, compared to 63.1% for the first quarter rose 4.95%of 2020.
•Total loans were $5.8 billion at March 31, 2021, down $87.5 million, or 1.5%, compared to the same quarter in 2017. Net interest margin for the quarter improved to 2.77% from 2.62% in the same quarter a year ago. The increasing amount of timeDecember 31, 2020. Total deposits in our deposit base, and their higher cost, limited the increase in our net interest margin.
Annualized ROA and ROE reached 0.50% and 5.57% during the quarter, respectively, versus 0.49% and 5.63%, respectively, in the same quarter last year. Excluding Spin-off expenses, annualized ROA and ROE during the quarter were 0.67% and 7.56%$5.7 billion at March 31, 2021, down $53.6 million, or 0.9%, respectively.
Annualized efficiency ratio of 76.31% compared to 73.22% in the same quarter in 2017. Excluding Spin-off expenses, the annualized efficiency ratio for the quarter was 71.68%.December 31, 2020.

•Stockholders’ book value per common share remained at $20.70 at March 31, 2021, compared to December 31, 2020. Tangible book value per common share remained flat at $20.13 as of March 31, 2021, compared to December 31, 2020.

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Commercial real estate loans grew 5.61% compared to December 31, 2017. New loan production in our highly attractive and competitive loan markets exceeded repayments during the quarter. Strong capital ratios above regulatory minimums to be considered “well capitalized” supported our loan growth strategy.
Selected Consolidated Financial HighlightsInformation
The following table sets forth selected financial information derived from our unaudited interim unaudited consolidated financial statements for the three and six months ended June 30, 2018March 31, 2021 and 20172020 and as of June 30, 2018March 31, 2021 and our audited consolidated financial statements as of December 31, 2017.2020. These unaudited interim unaudited consolidated financial statements are not necessarily indicative of our results of operations for the year ending December 31, 20182021 or any interim or future period or our financial position at any future date. The selected financial information should be read in conjunction with this Management’s Discussion and Analysis of Financial Condition and Results of Operations and our unaudited interim unaudited consolidated financial statements and the corresponding notes included in this Form 10-Q.

March 31, 2021December 31, 2020
June 30, 2018 December 31, 2017
(in thousands)
(in thousands)(in thousands)
Consolidated Balance Sheets   Consolidated Balance Sheets
Total assets$8,530,464
 $8,436,767
Total assets$7,751,098 $7,770,893 
Total investment securities1,812,119
 1,846,951
Total loan portfolio (1)
6,219,549
 6,066,225
Total investmentsTotal investments1,375,292 1,372,567 
Total gross loans (1)Total gross loans (1)5,754,838 5,842,337 
Allowance for loan losses69,931
 72,000
Allowance for loan losses110,940 110,902 
Total deposits6,363,138
 6,322,973
Total deposits5,678,079 5,731,643 
Advances from the FHLB and other borrowingsAdvances from the FHLB and other borrowings1,050,000 1,050,000 
Senior notes (2)Senior notes (2)58,656 58,577 
Junior subordinated debentures118,110
 118,110
Junior subordinated debentures64,178 64,178 
Advances from the FHLB and other borrowings1,258,000
 1,173,000
Stockholders' equity719,382
 753,450
Stockholders' equity (3)Stockholders' equity (3)785,014 783,421 
Assets under management and custody (4)Assets under management and custody (4)2,018,870 1,972,321 

Three Months Ended March 31,
20212020
(in thousands, except percentages and per share amounts)
Consolidated Results of Operations
Net interest income$47,569 $49,229 
Provision for loan losses— 22,000 
Noninterest income14,163 21,910 
Noninterest expense43,625 44,867 
Net income14,459 3,382 
Effective income tax rate20.15 %20.83 %
Common Share Data
Stockholders' book value per common share$20.70 $19.95 
Tangible stockholders' equity (book value) per common share (Non-GAAP) (5)$20.13 $19.43 
Basic earnings per common share$0.38 $0.08 
Diluted earnings per common share (6)$0.38 $0.08 
Basic weighted average shares outstanding37,618 42,185 
Diluted weighted average shares outstanding (6)37,846 42,533 
49
 Three Months Ended June 30, Six Months Ended June 30,
 2018 2017 2018 2017
 (in thousands, except per share amounts)
Consolidated Results of Operations       
Net interest income$53,989
 $51,441
 $106,622
 $99,792
Provision for loan losses150
 3,646
 150
 7,743
Noninterest income14,986
 17,759
 28,931
 31,976
Noninterest expense52,638
 50,665
 108,283
 99,813
Net income10,423
 10,390
 19,852
 16,897
Basic and diluted income per common share(2)
0.08
 0.08
 0.16
 0.13
Cash dividend declared per common share (2)
—
 —
 0.31
 —


47



Three Months Ended March 31,
20212020
(in thousands, except per share amounts and percentages)
Other Financial and Operating Data (7)
Profitability Indicators (%)
Net interest income / Average total interest earning assets (NIM) (8)2.66 %2.65 %
Net income / Average total assets (ROA) (9)0.76 %0.17 %
Net income / Average stockholders' equity (ROE) (10)7.47 %1.61 %
Noninterest income / Total revenue (11)22.94 %30.80 %
Capital Indicators (%)
Total capital ratio (12)14.12 %14.54 %
Tier 1 capital ratio (13)12.87 %13.38 %
Tier 1 leverage ratio (14)10.54 %10.82 %
Common equity tier 1 capital ratio (CET1) (15)11.90 %12.42 %
Tangible common equity ratio (16)9.88 %10.14 %
Asset Quality Indicators (%)
Non-performing assets / Total assets (17)1.16 %0.41 %
Non-performing loans / Total loans (1) (18)1.56 %0.59 %
Allowance for loan losses / Total non-performing loans123.92 %218.49 %
Allowance for loan losses / Total loans (1)1.93 %1.29 %
Net charge-offs / Average total loans (19)— %0.09 %
Efficiency Indicators (% except FTE)
Noninterest expense / Average total assets2.28 %2.27 %
Salaries and employee benefits / Average total assets1.38 %1.48 %
Other operating expenses/ Average total assets (20)0.90 %0.79 %
Efficiency ratio (21)70.67 %63.07 %
Full-Time-Equivalent Employees (FTEs)731 825 
Adjusted Selected Consolidated Results of Operations and Other Data (Non-GAAP) (5)
Pre-provision net revenue$18,107 $26,272 
Adjusted noninterest expense43,385 44,513 
Adjusted net income14,651 3,662 
Adjusted basic earnings per common share0.39 0.09 
Adjusted earnings per diluted common share (6)0.39 0.09 
Adjusted net income / Average total assets (Adjusted ROA) (9)0.77 %0.19 %
Adjusted net income / Average stockholders' equity (Adjusted ROE) (10)7.57 %1.74 %


50
 Three Months Ended June 30, Six Months Ended June 30,
 2018 2017 2018 2017
 (in thousands, except per share amounts and percentages)
Other Financial and Operating Data(3)
       
        
Profitability Indicators (%)       
Net interest income / Average total interest earning assets (NIM)(4)
2.77% 2.62% 2.72% 2.52%
Net income / Average total assets (ROA) (5)
0.50% 0.49% 0.47% 0.40%
Net income / Average stockholders' equity (ROE) (6)
5.57% 5.63% 5.31% 4.66%
        
Capital Adequacy Ratios (%)       
Total capital ratio (7)
12.61% 12.67% 12.61% 12.67%
Tier I capital ratio (8)
11.67% 11.51% 11.67% 11.51%
Tier I leverage ratio (9)
9.87% 9.79% 9.87% 9.79%
Common equity tier I capital ratio (CET1)(10)
10.13% 9.98% 10.13% 9.98%
        
Asset Quality (%)       
Non-performing assets / Total assets(11)
0.41% 0.65% 0.41% 0.65%
Non-performing loans / Total loan portfolio  (1) (12)
0.56% 0.91% 0.56% 0.91%
Allowance for loan losses / Total non-performing loans (12) (13)
201.55% 149.91% 201.55% 149.91%
Allowance for loan losses / Total loan portfolio (1) (13)
1.12% 1.36% 1.12% 1.36%
Net charge-offs / Average total loan portfolio (14)
0.04% 0.01% 0.04% 0.12%
        
Efficiency Indicators       
Noninterest expense / Average total assets (5)
2.50% 2.41% 2.57% 2.36%
Personnel expense / Average total assets (5)
1.66% 1.50% 1.64% 1.51%
Efficiency ratio (15)
76.31% 73.22% 79.88% 75.75%
        
Adjusted Selected Consolidated Results of Operations and Other Data (16) (17)
       
Adjusted noninterest expense$49,438
   $102,245
  
Adjusted net income before income tax19,387
   33,158
  
Adjusted net income14,142
   25,831
  
Adjusted basic and diluted earnings per share$0.11
   $0.21
  
Adjusted net income / Average total assets (ROA) (5)
0.67%   0.61%  
Adjusted net income / Average stockholders' equity (ROE) (6)
7.56%   6.91%  
Adjusted noninterest expense / Average total assets (5)
2.35%   2.43%  
Adjusted efficiency ratio (18)
71.68%   75.43%  

48



__________________
(1)     OutstandingTotal gross loans are net of unamortized deferred loan origination fees and costs, excludingcosts. At March 31, 2021, total loans include $1.0 million in loans held for sale. There were no loans held for sale at December 31, 2020.
(2)    During the allowancesecond quarter of 2020, the Company completed a $60 million offering of senior notes (the“Senior Notes”) with a coupon rate of 5.75%. Senior Notes are presented net of direct issuance cost which is deferred and amortized over 5 years.
(3)    On March 10, 2021, the Company’s Board of Directors approved a stock repurchase program which provides for loan losses.the potential repurchase of up to $40 million of shares of the Company’s Class B common stock (the “2021 Stock Repurchase Program”). In the first quarter of 2021, the Company repurchased an aggregate of 116,037 shares of Class B common stock at a weighted average price per share of $15.98 under the 2021 Stock Repurchase Program.
(2) The(4)     Assets held for clients in an agency or fiduciary capacity which are not assets of the Company and therefore are not included in the consolidated financial statements.
(5)    This presentation contains adjusted financial information determined by methods other than GAAP. This adjusted financial information is reconciled to GAAP in “Non-GAAP Financial Measures Reconciliation” herein.
(6 ) Potential dilutive instruments consisted of unvested shares of restricted stock and restricted stock units. During the three months ended March 31, 2021 and 2020, potential dilutive instruments were included in the diluted earnings per common share reflectcomputation because, when the pre-spin-off Exchange that changedunamortized deferred compensation cost related to these shares was divided by the number of Company Shares held by MSF without changing its 100% ownership of the Company. See Note 22 of our audited consolidated financial statementsaverage market price per share in those periods, fewer shares would have been purchased than restricted shares assumed issued. Therefore, in those periods, such awards resulted in higher diluted weighted average shares outstanding than basic weighted average shares outstanding, and Note 1 of our interim consolidated financial statements as of and for the six months ended June 30, 2018 for more details on the Exchange.had a dilutive effect in per share earnings.
(3)(7)     Operating data for the three and six month periods ended June 30, 2018 and 2017presented have been annualized.
(4) Net interest margin(8)     NIM is defined as net interest income divided by average interest-earning assets, which are loans, investment securities, deposits with banks and other financial assets which yield interest or similar income.
(5)(9)     Calculated based upon the average daily balance of total assets, excluding assets under management and custody.assets.
(6)(10)     Calculated based upon the average daily balance of stockholders’ equity.
(7)(11)     Total revenue is the result of net interest income before provision for loan losses plus noninterest income.
(12)     Total stockholders’ equity divided by total risk-weighted assets, calculated according to the standardized regulatory capital ratio calculations.
(8)(13)     Tier 1 capital divided by total risk-weighted assets.assets.Tier 1 capital is composed of Common Equity Tier 1 (CET1) capital plus outstanding qualifying trust preferred securities of $62.3 million as of March 31, 2021 and 2020.
(9)(14)     Tier 1 capital divided by quarter to date average assets. Tier 1 capital is composed of common equity tier 1 capital plus outstanding qualifying trust preferred securities of $114.1 million at June 30, 2018 and 2017.
(10) Common Equity Tier 1(15) CET1 capital divided by total risk-weighted assets.
(11)(16)     Tangible common equity is calculated as the ratio of common equity less goodwill and other intangibles divided by total assets less goodwill and other intangible assets. Other intangibles assets are included in other assets in the Company’s consolidated balance sheets.
(17)     Non-performing assets include all non-performingaccruing loans past due 90 days or more, all nonaccrual loans, restructured loans that are considered “troubled debt restructurings” or “TDRs”, and OREO properties acquired through or in lieu of foreclosure. Non-performing assets were $35.3 million and $55.5 million as of June 30, 2018 and 2017, respectively.
(12)(18)     Non-performing loans include all accruing loans 90 days or more past due, by more than 90 days, and all nonaccrual loans. Non-performing loans were $34.7 million and $55.2 million as of June 30, 2018 and 2017, respectively.restructured loans that are considered TDRs.
(13) Allowance for loan losses was $69.9 million and $82.7 million as of June 30, 2018 and 2017, respectively. See Note 5 to our audited consolidated financial statements and Note 5 to our unaudited interim consolidated financial statements for more details on our impairment models.
(14)(19)     Calculated based upon the average daily balance of outstanding loan principal balance net of unamortized deferred loan origination fees and costs, excluding the allowance for loan losses. During the first quarter of 2021, there were no net charge offs.
(15)(20)     Other operating expenses is the result of total noninterest expense less salary and employee benefits.
(21)     Efficiency ratio is the result of noninterest expense divided by the sum of noninterest income and net interest income.
(16) This presentation contains


51

Non-GAAP Financial Measures Reconciliation
Certain financial measures and ratios contained in this Form 10-Q, including “pre-provision net revenue (PPNR) ”, “adjusted noninterest expense”, “adjusted net income”, “adjusted earnings per share (basic and diluted)”, “adjusted return on assets (ROA)”, “adjusted return on equity (ROE)”, and other ratios appearing in the tables below are supplemental measures that are not required by, or are not presented in accordance with GAAP. The Company refers to these financial measures and ratios as “Non-GAAP financial measures.” The Company’s non-GAAP financial measures are derived from the Company’s interim unaudited consolidated financial statements, adjusted financial information, including adjusted noninterest expenses, adjusted net income before income taxes, and the other adjusted items shown, determined by methods other than GAAP.
The adjusted numbers take out thefor certain costs incurred by the Company in 2018the periods presented related to tax deductible restructuring costs.
We use certain non-GAAP financial measures, including those mentioned above, both to explain our results to shareholders and the Spin-off which commencedinvestment community and in the last quarterinternal evaluation and management of 2017our businesses. Our management believes that these non-GAAP financial measures and continued past June 30, 2018, and which are not deductible for Federal and state income tax purposes. The Company believes these adjusted numbersthe information they provide are useful to understandinvestors 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 light of the additional costs we have incurred in connection with the Company’s restructuring activities that began in 2018 and continued into 2021. While we believe that these non-GAAP financial measures are useful in evaluating our performance, absent this event. information should be considered as supplemental and not as a substitute for or superior to the related financial information prepared in accordance with GAAP. Additionally, these non-GAAP financial measures may differ from similar measures presented by other companies.
The following table reconciles these non-GAAPsets forth the Company’s Non-GAAP financial measurements as of and for periods presented:measures.
Three Months Ended March 31,
(in thousands)20212020
Total noninterest expenses$43,625 $44,867 
Less: restructuring costs (1):
 Staff reduction costs6 54 
Digital transformation expenses234 300 
Total restructuring costs240 354 
Adjusted noninterest expenses$43,385 $44,513 
Net income$14,459 $3,382 
Plus after-tax restructuring costs:
Restructuring costs before income tax effect240 354 
Income tax effect(48)(74)
Total after-tax restructuring costs192 280 
Adjusted net income$14,651 $3,662 
Net income$14,459 $3,382 
Plus: provision for loan losses— 22,000 
Plus: income tax expense3,648 890 
Pre-provision net revenue$18,107 $26,272 
52
 Three Months Ended June 30, 2018 Six Months Ended June 30, 2018
 (in thousands, except per share amounts and percentages)
     
Total noninterest expenses$52,638
  $108,283
Less Spin-off costs:    
Legal fees2,000
  3,000
Estimated compensation to non-qualified deferred compensation plan participants due to unexpected early distribution (19)
1,200
  1,200
Accounting and consulting fees—
  1,294
Other expenses—
  544
Total Spin-off costs3,200
  6,038
Adjusted noninterest expenses$49,438
  $102,245
     

49



Three Months Ended March 31,
(in thousands, except per share amounts and percentages)20212020
Basic earnings per share$0.38 $0.08 
Plus: after tax impact of restructuring costs0.01 0.01 
Total adjusted basic earnings per common share$0.39 $0.09 
Diluted earnings per share (2)$0.38 $0.08 
Plus: after tax impact of restructuring costs0.01 0.01 
Total adjusted diluted earnings per common share$0.39 $0.09 
Net income / Average total assets (ROA)0.76 %0.17 %
Plus: after tax impact of restructuring costs0.01 %0.02 %
Adjusted net income / Average total assets (Adjusted ROA)0.77 %0.19 %
Net income / Average stockholders' equity (ROE)7.47 %1.61 %
Plus: after tax impact of restructuring costs0.10 %0.13 %
Adjusted net income / Average stockholders' equity (Adjusted ROE)7.57 %1.74 %
Stockholders' equity$785,014 $841,117 
Less: goodwill and other intangibles(21,515)(21,698)
Tangible common stockholders' equity$763,499 $819,419 
Total assets$7,751,098 $8,098,810 
Less: goodwill and other intangibles(21,515)(21,698)
Tangible assets$7,729,583 $8,077,112 
Common shares outstanding37,922 42,166 
Tangible common equity ratio9.88 %10.14 %
Stockholders' book value per common share$20.70 $19.95 
Tangible stockholders' book value per common share$20.13 $19.43 
_________
 Three Months Ended June 30, 2018 Six Months Ended June 30, 2018
 (in thousands, except per share amounts and percentages)
     
Total net income before income tax$16,187
  $27,120
Plus: Total Spin-off costs3,200
  6,038
Adjusted net income before income tax$19,387
  $33,158
     
Total net income$10,423
  $19,852
Plus after-tax total Spin-off costs:    
Total Spin-off costs before income tax effect3,200
  6,038
Income tax effect (20)
519
  (59)
Total after-tax Spin-off costs3,719
  5,979
Adjusted net income$14,142
  $25,831
Basic and diluted income per common share$0.08
  $0.16
Plus: after tax impact of total Spin-off costs0.03
  0.05
Total adjusted basic and diluted income per common share$0.11
  $0.21
     
Net income / Average total assets (ROA) (5)
0.50%
  0.47%
Plus: after tax impact of total Spin-off costs0.17%
  0.14%
Adjusted net income / Average total assets (ROA) (5)
0.67%
  0.61%
     
Net income / Average stockholders' equity (ROE) (6)
5.57%
  5.31%
Plus: after tax impact of total Spin-off costs1.99%
  1.60%
Adjusted net income / stockholders' equity (ROE) (6)
7.56%
  6.91%
     
Noninterest expense / Average total assets (5)
2.50%
  2.57%
Less: impact of total Spin-off costs(0.15)%  (0.14)%
Adjusted Noninterest expense / Average total assets (5)
2.35%
  2.43%
     
Efficiency ratio (15)
76.31%
  79.88%
Less: impact of total Spin-off costs(4.63)%  (4.45)%
Adjusted efficiency ratio (18)
71.68%
  75.43%


(17) Non-GAAP financial measures(1) Expenses incurred for actions designed to implement the Company’s strategy as a new independent company. These actions include, but are not included aslimited to reductions in workforce, streamlining operational processes, rolling out the Amerant brand, implementation of new technology system applications, enhanced sales tools and fortraining, expanded product offerings and improved customer analytics to identify opportunities.
(2) Potential dilutive instruments consisted of unvested shares of restricted stock and restricted stock units. During the three months ended March 31, 2021 and six month periods ended June 30, 20172020, potential dilutive instruments were included in the diluted earnings per share computation because, no Spin-off costs were incurred for those periods.
(18) Adjusted efficiency ratio iswhen the efficiency ratio less the effect of total Spin-off costs.
(19) The Spin-off caused an unexpected early distribution for U.S. federal income tax purposes from ourunamortized deferred compensation plan. This distribution is taxablecost related to plan participants as ordinary income during 2018. We are partially compensating plan participants,these shares was divided by the average market price per share in the aggregate amount of $1.2 million, for thethose periods, fewer shares would have been purchased than restricted shares assumed issued. Therefore, in those periods, such awards resulted in higher tax expense they will incur asdiluted weighted average shares outstanding than basic weighted average shares outstanding, and had a result of the distribution increasing the plan participants' estimated effective federal income tax rates by recording a contribution to the plan on behalf of its participants. The after tax netdilutive effect of this $1.2 million contribution for the period ended June 30, 2018, is approximately $952,000. As a result of the early taxable distribution to plan participants, we will expense and deduct for federal income tax purposes, previously deferred compensation of approximately $8.1 million, resulting in an estimated tax credit of $1.7 million, which exceeds the amount of the tax gross-up paid to plan participants.
(20) Calculated based upon the estimated annual effective tax rate of 22.10%, which excludes the tax effect of discrete items, and the amount that resulted from the difference between permanent Spin-off costs of $5.5 million and $5.8 million for the three and six month periods ended June 30, 2018 that are non-deductible for Federal and state income tax purposes and total Spin-off costs recognized in the consolidated financial statements.


per share earnings.
50
53



Results of Operations - Comparison of Results of Operations for the Three and Six Months Ended June 30, 2018March 31, 2021 and 20172020

Net income
The table below sets forth certain results of operations data for the three month periods ended March 31, 2021 and six months ended June 30, 2018 and 2017:2020:
Three Months Ended March 31,Change
Three Months Ended June 30, Change Six Months Ended June 30, Change
2018 2017 2018 vs 2017 2018 2017 2018 vs 2017
(in thousands, except per share amounts and percentages)
(in thousands, except per share amounts and percentages)(in thousands, except per share amounts and percentages)202120202021 vs 2020
Net interest income$53,989
 $51,441
 $2,548
 4.95 % $106,622
 $99,792
 $6,830
 6.84 %Net interest income$47,569 $49,229 $(1,660)(3.4)%
Provision for loan losses150
 3,646
 (3,496) (95.89)% 150
 7,743
 (7,593) (98.06)%Provision for loan losses— 22,000 (22,000)N/M
Net interest income after provision for loan losses53,839
 47,795
 6,044
 12.65 % 106,472
 92,049
 14,423
 15.67 %Net interest income after provision for loan losses47,569 27,229 20,340 74.7 %
Noninterest income14,986
 17,759
 (2,773) (15.61)% 28,931
 31,976
 (3,045) (9.52)%Noninterest income14,163 21,910 (7,747)(35.4)%
Noninterest expense52,638
 50,665
 1,973
 3.89 % 108,283
 99,813
 8,470
 8.49 %Noninterest expense43,625 44,867 (1,242)(2.8)%
Net income before income tax16,187
 14,889
 1,298
 8.72 % 27,120
 24,212
 2,908
 12.01 %
Income tax(5,764) (4,499) (1,265) 28.12 % (7,268) (7,315) 47
 (0.64)%
Income before income tax expenseIncome before income tax expense18,107 4,272 13,835 323.9 %
Income tax expenseIncome tax expense(3,648)(890)(2,758)309.9 %
Net income$10,423
 $10,390
 $33
 0.32 % $19,852
 $16,897
 $2,955
 17.49 %Net income$14,459 $3,382 $11,077 327.5 %
Basic and diluted earnings per share(1)
$0.08
 $0.08
 $—
   $0.16
 $0.13
 $0.03
  
Basic earnings per common shareBasic earnings per common share$0.38 $0.08 $0.30 375.0 %
Diluted earnings per common share (1)Diluted earnings per common share (1)$0.38 $0.08 $0.30 375.0 %
__________________
(1)At June 30, 2018 and 2017, we had no outstanding dilutive instruments issued. Consequently, the basic and diluted earnings per share are equal in each of the periods presented.

(1)     Potential dilutive instruments consisted of unvested shares of restricted stock and restricted stock units. See Note 18 to our unaudited interim financial statements in this Form 10-Q for details on the dilutive effects of the issuance of restricted stock and restricted stock units on earnings per share for the three and three month periods ended March 31, 2021 and 2020.
N/M Means not meaningful



Three Months Ended June 30, 2018March 31, 2021 and 20172020
In the first quarter of 2021, we reported net income of $14.5 million, or $0.38 earnings per diluted share, compared to net income of $3.4 million, or $0.08 earnings per diluted share, in the same quarter of 2020. The increase of $11.1 million, or 327.5%, in net income was mainly the result of: (i) the absence of the $22.0 million provision for loan losses recorded in the first quarter of 2020, and (ii) lower noninterest expenses. This was partially offset by lower net interest income and lower noninterest income.
Net interest income of $10.4was $47.6 million and $0.08 basic and diluted earnings per share in the three months ended June 30, 2018 remained relatively unchanged whenMarch 31, 2021, a decrease of $1.7 million, or 3.4%, from $49.2 million in the three months ended March 31, 2020. This was mainly due to lower average yields on interest-earning assets and the interest expense associated with Senior Notes issued in the second quarter of 2020. These results were partially offset by lower average rates paid on total interest bearing liabilities, mainly driven by: (i) lower costs of deposits and FHLB advances in the first quarter of 2021 compared to the same quarter of 2017.2020, and (ii) the redemption of trust preferred securities in the first quarter of 2020.
During
54


Noninterest income was $14.2 million in the three months ended June 30, 2018, positive resultsMarch 31, 2021, a decrease of $7.7 million, or 35.4%, compared to $21.9 million in the three months ended March 31, 2020. This was mainly due to a $7.0 million decrease in net gains on securities, lower other noninterest income and lower deposit and service fees. The decrease in noninterest income was partially offset by higher brokerage, advisory and fiduciary fees in the first quarter of 2021 compared to the same quarter in 2020.
Noninterest expense was $43.6 million in the three months ended March 31, 2021, a decrease of $1.2 million, or 2.8%, from $44.9 million in the three months ended March 31, 2020. This decrease was primarily driven by improved credit qualitylower salaries and higher yields on interest-earning assets,employee benefits and lower other operating expenses. These decreases were partially offset by provisions forhigher professional and other services fees, occupancy and equipment costs and FDIC assessments and insurance expenses in the costs associated withfirst quarter of 2021 compared to the Spin-off totaling $3.2same period last year.
In the three months ended March 31, 2021 and 2020, noninterest expense included $0.2 million and lower noninterest income. Without Spin-off$0.4 million, respectively, in restructuring costs, consisting primarily of digital transformation expenses and staff reduction costs. The Company did not implement any staffing changes in the three months ended March 31, 2021 related to the COVID-19 pandemic.
Adjusted net income for the quarterthree months ended June 30, 2018 would have been $14.1March 31, 2021 was $14.7 million or $0.11 per basiccompared to an adjusted net income of $3.7 million in the three months ended March 31, 2020. Adjusted net income excludes restructuring costs of $0.2 million and diluted share, 36.11% higher than$0.4 million in the same quarterthree months ended March 31, 2021 and 2020 respectively. Pre-provision net revenue (“PPNR”) was $18.1 million in 2017 when no such costs had been incurred.the three months ended March 31, 2021 compared to $26.3 million in the three months ended March 31, 2020. See “Non-GAAP Financial Measures Reconciliation” for a reconciliation of these non-GAAP financial measures to their U.S. GAAP counterparts.
Net interest income improved
Three Months Ended March 31, 2021 and 2020
In the three months ended March 31, 2021, we earned $47.6 million of net interest income, a decline of $1.7 million, or 3.4%, from $51.4$49.2 million in the same period of 2020. The decrease in net interest income was primarily driven by: (i) a 46 basis point decline in the average yield on total interest-earning assets, and (ii) the addition of interest expense in the first quarter of 2021 associated with Senior Notes issued in the second quarter of 2017 to $54.0 million2020. These results were partially offset by a decrease of 55 basis points in average rates paid on total interest bearing liabilities, mainly driven by: (i) lower costs of deposits; (ii) FHLB advances, and (iii) the redemption of trust preferred securities in the first quarter of 2020. In addition, there was a decline in the average balance of total interest bearing liabilities. Net interest margin was 2.66% in the three months ended March 31, 2021, an increase of 1 basis point from 2.65% in the three months ended March 31, 2020. See discussions further below for more information on the issuance of Senior Notes in the second quarter of 2018,2020 and the redemption of trust preferred securities in the first quarter of 2020.
During the first quarter of 2021, the Company continued to focus on offsetting ongoing NIM pressure by (i) strategically repricing customer time and relationship money market deposits at lower rates; (ii) implementing floor rates in the loan portfolio; and (iii) evaluating additional interest-earning opportunities in higher-yielding lending programs.
55



Interest Income. Total interest income was $60.3 million in the three months ended March 31, 2021, compared to $71.3 million for the same period of 2020. The $11.0 million, or 15.4%, decline in total interest income was primarily due to a decline in yields of total interest-earning assets. In addition, there was a 2.9% decline in the average of total interest earning assets, mainly debt securities available for sale. This decline in the average balance of total interest earning assets was partially offset by an increase of $2.5$104.9 million, or 4.95%1.9%, primarily due to higher average yields on interest-earning assets and changes in the mixaverage balance of those assets. loans. See “—Average Balance Sheet, Interest and Yield/Rate Analysis” for detailed information. As
Interest income on loans in the three months ended March 31, 2021 was $52.8 million, a resultdecrease $7.0 million, or 11.7%, compared to $59.8 million for the comparable period of improved credit trends2020. This decrease was primarily due to a 54 basis point decline in certain loan portfolio segments, we recorded a provision for loan lossesaverage yields. This was partially offset by an increase of only $0.2$104.9 million, 1.9%, in the average balance of loans in the first quarter of 2021 over the same period in 2020, mainly attributable to: (i) the PPP loans primarily originated in the second quarter of 2018, compared to a provision to the allowance2020 and first quarter of $3.6 million2021 and (ii) higher-yielding consumer loans purchased throughout 2020 and in the samefirst quarter of 2017.
These positive results were partially offset by an increase in noninterest expense of $2.0 million, or 3.89%, primarily attributable to the Spin-off related expenses and higher salary and employee benefit costs and telecommunications and data processing expenses. In addition, there was a decline in noninterest income of $2.8 million, or 15.61%, mainly due to lower income from brokerage, advisory and fiduciary activities and other noninterest income.


51


Six Months Ended June 30, 2018 and 2017
Net income of $19.9 million and $0.16 basic and diluted earnings per share in the six months ended June 30, 2018 represents an improvement of $3.0 million, or 17.49% from net income of $16.9 million and $0.13 basic and diluted earnings per share reported in the same period of 2017.
This increase mainly resulted from improved credit quality and higher yields on interest-earning assets. Provisions for the costs associated with the Spin-off totaling $6.0 million and lower noninterest income in the six months ended June 30, 2018, negatively impacted the results. Without Spin-off expenses, net income for the six months ended June 30, 2018 would have been $25.8 million, or $0.21 per basic and diluted share, or 61.54% higher than the same period in 2017.
Net interest income improved from $99.8 million in the six months ended June 30, 2017 to $106.6 million in the six months ended June 30, 2018, an increase of $6.8 million or 6.84%, primarily due to higher average yields on interest-earning assets and changes in the mix of those assets. 2021. See “—Average Balance Sheet, Interest and Yield/Rate Analysis” for detailed information. As a result of improved credit trends in certain loan portfolio segments, we added provisions to
Interest income on the allowancedebt securities available for loan losses of only $0.2sale was $6.5 million in the six months ended June 30, 2018,first quarter of 2021, a decrease of $3.0 million, or 31.6%, compared to a provision to the allowance of $7.7$9.5 million in the same period of 2017.2020. This was mainly due to a decrease of $341.7 million, or 22.1%, in the average balance and a 29 basis point decline in average yields. As of March 31, 2021, corporate debt securities comprised 29.0% of the available-for-sale portfolio, up from 20.6% at March 31, 2020. We continue with our strategy to insulate the investment portfolio from prepayment risk. As of March 31, 2021, floating rate investments represent only 13.9% of our investment portfolio and recomposition towards high duration, and natural extension of the mortgage portfolio, has increased the overall duration to 3.4 years at March 31, 2021 from 3.0 years at March 31, 2020.
Interest Expense. Interest expense on total interest-bearing liabilities was $12.8 million in the three months ended March 31, 2021, a decrease of $9.3 million, or 42.2%, compared to $22.1 million in the same period of 2020. This was primarily due to: (i) lower cost of deposits; (ii) lower cost of FHLB advances, and (iii) lower interest expense due to the redemption of trust preferred securities in the first quarter of 2020. In addition, there was a decrease of 5.1% in the average balance of total interest bearing liabilities, mainly time deposits. These positive results were partially offset by an increasethe interest expense associated with Senior Notes issued in noninterestthe second quarter of 2020.
Interest expense ofon deposits was $8.5 million in the three months ended March 31, 2021, a decrease of $8.4 million, or 8.49%49.9%, compared to $16.9 million for the same period of 2020. This was primarily attributabledue to a 64 basis point decline in the Spin-off related expenses discussed above, higher salary and employee benefit costs and telecommunications and data processing expenses.average rates paid on deposits. In addition, there was a decline in noninterest income of $3.0 million, or 9.52%, mainly due to lower income from brokerage, advisory and fiduciary activities and other noninterest income.
Net interest income
Three Months Ended June 30, 2018 and 2017
In the second quarter of 2018, we earned $54.0 million of net interest income, an increase of $2.5 million, or 4.95%, from $51.4 million of net interest income earned in the same period of 2017. The increase in net interest income was due primarily to a 50 basis points improvement in the average yield on interest-earning assets, partially offset by a 0.40% decrease4.4% in the average balance of interest-earning assets. In addition,total interest bearing deposits, mainly lower average interest-bearing liabilities showed a 3.44% increase accompaniedbalance of time deposits partially offset by a 37 basis point increasehigher average balance of total interest bearing checking and savings accounts. Average total time deposits decreased by $504.5 million, or 20.5%, including declines of $366.3 million and $139.2 million, in averagecustomer certificate of deposits (“CDs”) and brokered deposits, respectively. The decline in customer CDs reflects the Company’s continued efforts to aggressively lower CD rates paid. Net interest margin improved 15 basis points from 2.62%and focus on increasing core deposits and emphasizing multiproduct relationships versus single product higher-cost CDs. As of March 31, 2021, the Company had $460.2 million of time deposits maturing in the second quarter of 20172021. This is expected to 2.77%decrease the average cost of CDs by approximately 40bps and the overall cost of deposits by 10bps. Average total interest bearing checking and savings account balances increased by $282.4 million, or 11.2%, in the same period of 2018.
Interest Income. Total interest income was $75.9 million in the secondfirst quarter of 20182021 compared to $66.7 million for the same period of 2017. The $9.2 million, or 13.87%, increase in total interest income was primarily due to higher average balances in loans and securities held to maturity, as well as higher average yields earned on all interest-earning assets. These improvements were partially offset by a decrease in the average balance of available for sale securities during the second quarter of 2018 with respect to the same period in 2020, mainly driven by: (i) an increase of 2017,$105.8 million in part due to the usethird-party interest-bearing domestic brokered deposits; (ii) higher average domestic personal accounts, and (iii) an increase of these funds to produce higher yielding loans. See “—Average Balance Sheet, Interest and Yield/Rate Analysis” for detailed information.
Interest income on loans in the second quarter of 2018 was $62.4 million compared to $53.8 million for the comparable period of 2017. The $8.7$59.7 million, or 16.10%, increase was primarily due to a 54 basis point increase in average yields and a 1.92% increase in the average balance of loans in the second quarter of 2018 over the same period in 2017, mainly the result of growth in the real estate loan portfolio. See “—Average Balance Sheet, Interest and Yield/Rate Analysis” for detailed information.

52



Interest income on the available for sale securities portfolio decreased $507 thousand, or 4.31%, to $11.3 million in the second quarter of 2018 compared to $11.8 million in the comparable period of 2017. This decrease is primarily attributable to a decline of 14.09% in the average volume of securities available for sale, the proceeds of which were partially reallocated to fund loan production. Higher yields of securities available for sale, which increased an average of 29 basis points in the second quarter of 2018 with respect to the same quarter in 2017, partially compensated the effect of the lower amount of securities held.
Interest Expense. Interest expense on interest-bearing liabilities increased $6.7 million, or 43.99%, to $21.9 million in the second quarter of 2018 compared to $15.2 million in the comparable period of 2017, primarily due to higher average time deposits and advances from the FHLB balances, and higher average interest rates on all main funding sources.
Interest expense on deposits increased to $13.4 million in the second quarter of 2018 compared to $8.5 million for the comparable period of 2017. The $4.9 million, or 58.19%, increase was primarily due to a 37 basis points increase in the average rate paid on total deposits. This resulted primarily from a 21.03% increase in average time deposit balance, and the lower average total checking and saving account balances which decreased 11.89%. The increase of $412.1 million, or 21.03%, in average total time deposit balances resulted from our promotions seeking longer-duration time deposits, in anticipation of higher interest rates in the future. The decrease of $414.8 million, or 11.89%, in average total checking and saving account balances is primarily the result of a decline of $584.4 million, or 18.18%3.0%, in the average balance of international accounts. This decline includes $281.0accounts, including an increase of $60.4 million, or 40.98%3.7%, in personal accounts partially offset by a decrease of $0.7 million, or 0.2%, in commercial accounts and $303.3 million, or 12.00%, in personal accounts. The decline in the commercial accounts average resulted primarily from the closure of Venezuelan customer accounts exceeding the Company’s risk thresholds. The decline in the personal accounts average is primarily due to our Venezuelan customers’ inability to replenish the dollar savings they consume.
56


Interest expense on FHLB advances and other borrowings increased $2.2decreased by $1.7 million, or 49.85%37.5%, in the second quarter of 2018 with respectthree months ended March 31, 2021 compared to the same period of 2017. This is the result of an increase of 29.93% in the average balance outstanding, along with an increase of 30 basis points in the average rate paid on of these borrowings. Advances from the FHLB are used to actively manage the Company’s funding profile, and bear fixed interest rates from 1.05% to 3.86%, and variable interest rates based on 3-month LIBOR which increased to 2.34% at June 30, 2018 from 1.30% at June 30, 2017. At June 30, 2018, $978.0 million (77.74%) of FHLB advances were fixed rate and $280.0 million (22.26%) were variable rate. The Company has designated certain interest rate swaps2020, mainly as cash flow hedges to manage this variable interest rate exposure.
Six Months Ended June 30, 2018 and 2017
In the six months ended June 30, 2018, we earned $106.6 million of net interest income, an increase of $6.8 million, or 6.84%, from $99.8 million of net interest income earned in the same period of 2017. The increase in net interest income was due primarily to a 50 basis point improvement in the average yield on interest-earning assets, partially offset by a 0.90% decrease in the average balance of interest-earning assets. In addition, average interest-bearing liabilities showed a 2.61% increase accompanied by a 32 basis point increase in average rates paid. Net interest margin improved 20 basis points from 2.52% in the six months ended June 30, 2017 to 2.72% in the same period of 2018.
Interest Income. Total interest income was $147.8 million in the six months ended June 30, 2018 compared to $129.7 million for the same period of 2017. The $18.2 million, or 14.00%, increase in total interest income was primarily due to higher average balances in loans and securities held to maturity, as well as higher average yields earned on all interest-earning assets. These improvements were partially offset by a decrease in the average balance of available for sale securities during the six months ended June 30, 2018 with respect to the same period of 2017, in part due to the partial migration of funds from securities into loans.

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Interest income on loans in the six months ended June 30, 2018 was $122.1 million compared to $103.9 million for the comparable period of 2017. The $18.2 million, or 17.57%, increase was primarily due to a 53 basis points increase in average yields and a 2.67% increase in the average balance of loans in the six months ended June 30, 2018 over the same period in 2017, mainly the result of growth in the real estate loan portfolio.
Interest income on the available for sale securities portfolio decreased $2.0 million, or 8.61%, to $21.5 million in the six months ended June 30, 2018 compared to $23.6 million in the comparable period of 2017. This decrease was primarily attributable to a decline of 16.12% in the average volume of securities available for sale, the proceeds of which were partially reallocated to funding higher yielding loan production. Higher yields on securities available for sale, which increased an average of 22 basis points in the six months ended June 30, 2018 compared to the same period in 2017, offset the lower amount of securities held.
Interest Expense. Interest expense on interest-bearing liabilities increased $11.3 million, or 37.89%, to $41.2 million in the six months ended June 30, 2018 compared to $29.9 million in the comparable period of 2017, primarily due to higher average time deposits and FHLB advances, and higher average interest rates on all main funding sources, partially offset by lower average total deposits.
Interest expense on deposits increased to $24.8 million in the six months ended June 30, 2018 compared to $16.4 million for the comparable period of 2017. The $8.3 million, or 50.82%, increase was primarily due to a 31 basis point increase in the average rate paid on total deposits, reflecting a 19.82% increase in average time deposit balances, and lower average total checking and saving account balances which decreased 12.20%. The increase of $384.3 million, or 19.82%, in average total time deposit balances resulted primarily from our promotions seeking longer-duration time deposits, in anticipation of higher interest rates in the future. The decrease of $431.6 million, or 12.20%, in average total checking and saving account balances is primarily the result of a declinedecrease of $537.6 million, or 16.67%, in the average balance of international accounts. This decline includes $280.2 million, or 40.09%, in commercial accounts and $257.4 million, 10.19%, in personal accounts. The decline in the commercial accounts average resulted primarily from the closure of Venezuelan customer accounts exceeding the Company’s risk thresholds. The decline in the personal accounts average is primarily due to our Venezuelan customers’ inability to replenish the dollar savings they consume.
Interest expense on FHLB advances and other borrowings increased $3.9 million, or 45.46%, in the six months ended June 30, 2018 with respect to the same period of 2017. This is the result of an increase of 29.01% in the average balance outstanding , along with an increase of 2441 basis points in the average rate paid on these borrowings. Advances fromThis reduction in rates, includes the effect of the $420 million in FHLB are used to actively manageadvances restructuring completed in April 2020. In addition, there was a decline of $145.7 million, or 12.2%, in the Company’s funding profile, and bear fixed interest rates from 1.05% to 3.86%, and variable interest rates based on 3-month LIBOR which increased to 2.34% at June 30, 2018 from 1.30% at June 30, 2017. At June 30, 2018, $978.0 million (77.74%)average balance outstanding of FHLB advances were fixed rate and $280.0in the three months ended March 31, 2021 compared to the same period in 2020.
Interest expense on junior subordinated debentures decreased $0.2 million, (22.26%) were variable rate. The Company has designated certainor 23.1%, in the three months ended March 31, 2021 compared to the same period last year, mainly driven by a decline of $8.9 million, or 12.2%, in the average balance outstanding. This decline in the average balance resulted from the redemption of $26.8 million of trust preferred securities (fixed interest rate swaps as cash flow hedges to manage this variable- 8.90%) issued by the Commercebank Capital Trust I (“Capital Trust I”) and related subordinated debt.
During the second quarter of 2020, we completed a $60.0 million offering of Senior Notes with a fixed-rate coupon of 5.75%. In the first quarter of 2021, interest rate exposure.

expense on these Senior notes totaled $0.9 million. We had no interest expense on Senior Notes during the first quarter of 2020. See “—Capital Resources and Liquidity Management” for detailed information.
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57



Average Balance Sheet, Interest and Yield/Rate Analysis
The following tables present average balance sheet information, interest income, interest expense and the corresponding average yields earned and rates paid for the three and six months ended June 30, 2018March 31, 2021 and 2017.2020. The average balances for loans include both performing and nonperformingnon-performing balances. Interest income on loans includes the effects of discount accretion and the amortization of non-refundable loan origination fees, net deferredof direct loan origination costs, accounted for as yield adjustments. Average balances represent the daily average balances for the periods presented.
Three Months Ended March 31,
20212020
(in thousands, except percentages) Average
Balances		Income/
Expense		Yield/
Rates		Average
 Balances		Income/
Expense		Yield/
Rates
Interest-earning assets:
Loan portfolio, net (1)$5,678,547 $52,771 3.77 %$5,573,627 $59,788 4.31 %
Debt securities available for sale (2)1,207,764 6,495 2.18 %1,549,502 9,497 2.47 %
Debt securities held to maturity (3)67,729 302 1.81 %72,472 400 2.22 %
Debt securities held for trading104 1 3.90 %— — — %
Equity securities with readily determinable fair value not held for trading24,225 84 1.41 %24,052 131 2.19 %
Federal Reserve Bank and FHLB stock63,781 625 3.97 %71,192 1,037 5.86 %
Deposits with banks205,355 51 0.10 %171,848 462 1.08 %
Total interest-earning assets7,247,505 60,329 3.38 %7,462,693 71,315 3.84 %
Total non-interest-earning assets less allowance for loan losses498,754 488,651 
Total assets$7,746,259 $7,951,344 
 Three Months Ended June 30,
 2018 2017
  Average
Balances		 Income/
Expense		 Yield/
Rates		 Average
Balances		 Income/
Expense		 Yield/
Rates
 (in thousands, except percentages)
Interest-earning assets:           
Loan portfolio, net (1)
$5,890,459
 $62,448
 4.31% $5,779,708
 $53,790
 3.77%
Securities available for sale (2)
1,662,799
 11,257
 2.74% 1,935,557
 11,764
 2.45%
Securities held to maturity (3)
88,811
 346
 1.57% 2,720
 9
 1.33%
Federal Reserve Bank and FHLB stock70,243
 1,106
 6.45% 58,361
 742
 5.18%
Deposits with banks175,434
 759
 1.74% 143,044
 364
 1.02%
Total interest-earning assets7,887,746
 75,916
 3.91% 7,919,390
 66,669
 3.41%
Total non-interest-earning assets less allowance for loan losses531,294
     500,212
    
Total assets$8,419,040
     $8,419,602
    
            
Interest-bearing liabilities:           
Checking and saving accounts -           
Interest bearing DDA$1,417,230
 $113
 0.03% $1,657,285
 $84
 0.02%
Money market1,225,452
 3,086
 1.01% 1,352,299
 2,168
 0.64%
Savings431,686
 18
 0.02% 479,613
 19
 0.02%
Total checking and saving accounts3,074,368
 3,217
 0.42% 3,489,197
 2,271
 0.26%
Time deposits2,371,147
 10,172
 1.73% 1,959,066
 6,193
 1.27%
Total deposits5,445,515
 13,389
 0.99% 5,448,263
 8,464
 0.62%
Securities sold under agreements to repurchase423
 2
 1.90% 43,845
 564
 5.25%
Advances from the FHLB and other borrowings(4)
1,173,000
 6,511
 2.24% 902,776
 4,345
 1.94%
Junior subordinated debentures118,110
 2,025
 7.04% 118,110
 1,855
 6.43%
Total interest-bearing liabilities6,737,048
 21,927
 1.31% 6,512,994
 15,228
 0.94%
Total non-interest-bearing liabilities933,968
     1,168,207
    
Total liabilities7,671,016
     7,681,201
    
Stockholders’ equity748,024
     738,401
    
Total liabilities and stockholders' equity$8,419,040
     $8,419,602
    
Excess of average interest-earning assets over average interest-bearing liabilities$1,150,698
     $1,406,396
    
Net interest income  $53,989
     $51,441
  
Net interest rate spread    2.60%     2.47%
Net interest margin (5)
    2.77%     2.62%
Ratio of average interest-earning assets to average interest-bearing liabilities117.08%     121.59%    












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58



Three Months Ended March 31,
Six Months Ended June 30,20212020
2018 2017
 Average
Balances		 Income/
Expense		 Yield/
Rates		 Average
Balances		 Income/
Expense		 Yield/
Rates
(in thousands, except percentages)
Interest-earning assets:           
Loan portfolio, net (1)
$5,902,893
 $122,118
 4.18% $5,749,193
 $103,870
 3.65%
Securities available for sale (2)
1,669,607
 21,549
 2.60% 1,990,378
 23,580
 2.38%
Securities held to maturity (3)
89,165
 856
 1.93% 1,367
 9
 1.32%
Federal Reserve Bank and FHLB stock70,304
 2,045
 5.90% 58,814
 1,492
 5.14%
Deposits with banks157,391
 1,279
 1.63% 161,417
 737
 0.92%
Total interest-earning assets7,889,360
 147,847
 3.78% 7,961,169
 129,688
 3.28%
Total non-interest-earning assets less allowance for loan losses524,074
     496,791
    
Total assets$8,413,434
     $8,457,960
    
           
(in thousands, except percentages)(in thousands, except percentages) Average
Balances		Income/
Expense		Yield/
Rates		Average
 Balances		Income/
Expense		Yield/
Rates
Interest-bearing liabilities:           Interest-bearing liabilities:
Checking and saving accounts -           Checking and saving accounts -
Interest bearing DDA$1,446,823
 $202
 0.03% $1,679,350
 $184
 0.02%Interest bearing DDA$1,258,301 $113 0.04 %$1,071,558 $135 0.05 %
Money market1,219,748
 5,652
 0.93% 1,374,015
 4,344
 0.63%Money market1,236,026 966 0.32 %1,136,501 3,249 1.15 %
Savings438,668
 36
 0.02% 483,502
 37
 0.02%Savings318,800 14 0.02 %322,682 17 0.02 %
Total checking and saving accounts3,105,239
 5,890
 0.38% 3,536,867
 4,565
 0.26%Total checking and saving accounts2,813,127 1,093 0.16 %2,530,741 3,401 0.54 %
Time deposits2,323,746
 18,872
 1.63% 1,939,414
 11,853
 1.23%Time deposits1,956,559 7,360 1.53 %2,461,073 13,484 2.20 %
Total deposits5,428,985
 24,762
 0.91% 5,476,281
 16,418
 0.60%Total deposits4,769,686 8,453 0.72 %4,991,814 16,885 1.36 %
Securities sold under agreements to repurchase213
 2
 1.89% 46,906
 1,205
 5.20%
Advances from the FHLB and other borrowings (4)
1,179,934
 12,501
 2.13% 914,572
 8,594
 1.89%Advances from the FHLB and other borrowings (4)1,050,000 2,758 1.07 %1,195,714 4,412 1.48 %
Senior notesSenior notes58,618 942 6.52 %— — — %
Junior subordinated debentures118,110
 3,960
 6.82% 118,110
 3,679
 6.33%Junior subordinated debentures64,178 607 3.84 %73,123 789 4.34 %
Total interest-bearing liabilities6,727,242
 41,225
 1.23% 6,555,869
 29,896
 0.91%Total interest-bearing liabilities5,942,482 12,760 0.87 %6,260,651 22,086 1.42 %
Non-interest-bearing liabilities:Non-interest-bearing liabilities:
Non-interest bearing demand depositsNon-interest bearing demand deposits925,266 757,599 
Accounts payable, accrued liabilities and other liabilitiesAccounts payable, accrued liabilities and other liabilities93,450 88,894 
Total non-interest-bearing liabilities938,287
     1,176,969
    Total non-interest-bearing liabilities1,018,716 846,493 
Total liabilities7,665,529
     7,732,838
    Total liabilities6,961,198 7,107,144 
Stockholders' equity747,905
     725,122
    
Stockholders’ equityStockholders’ equity785,061 844,200 
Total liabilities and stockholders' equity$8,413,434
     $8,457,960
    Total liabilities and stockholders' equity$7,746,259 $7,951,344 
Excess of average interest-earning assets over average interest-bearing liabilities$1,162,118
     $1,405,300
    Excess of average interest-earning assets over average interest-bearing liabilities$1,305,023 $1,202,042 
Net interest income  $106,622
     $99,792
  Net interest income$47,569 $49,229 
Net interest rate spread    2.55%     2.37%Net interest rate spread2.51 %2.42 %
Net interest margin (5)
    2.72%     2.52%Net interest margin (5)2.66 %2.65 %
Cost of total deposits (6)Cost of total deposits (6)0.60 %1.18 %
Ratio of average interest-earning assets to average interest-bearing liabilities117.27%     121.44%    Ratio of average interest-earning assets to average interest-bearing liabilities121.96 %119.20 %
Average non-performing loans/ Average total loansAverage non-performing loans/ Average total loans1.54 %0.58 %
__________________
(1)Average non-performing loans of $34.0 million and $57.4 million for the three months ended June 30, 2018 and 2017, respectively, and $32.7 million and $62.7 million for the six months ended June 30, 2018 and 2017, respectively, are included in the average loan portfolio, net balance.
(2)
Includes nontaxable securities with average balances of $174.1 million and $159.1 million for the three months ended June 30, 2018 and 2017, respectively, and $175.4 million and $158.9 million for the six months ended June 30, 2018 and 2017, respectively. The tax equivalent yield for these nontaxable securities for the three months ended June 30, 2018 and 2017 was 4.10% and 3.87%, respectively, and 3.83% and 3.88% for the six months ended June 30, 2018 and 2017, respectively.


(1)    Average non-performing loans of $89.2 million and $32.8 million for the three months ended March 31, 2021 and 2020, respectively, are included in the average loan portfolio, net. Interest income that would have been recognized on these non-performing loans totaled $0.8 million and $0.4 million in the three months ended March 31, 2021 and 2020, respectively.
(2)    Includes nontaxable securities with average balances of $54.7 million and $49.4 million for the three months ended March 31, 2021 and 2020, respectively. The tax equivalent yield for these nontaxable securities for the three months ended March 31, 2021 and 2020 was 3.80% and 3.88%, respectively. In 2021 and 2020, the tax equivalent yields were calculated by assuming a 21% tax rate and dividing the actual yield by 0.79.
(3) Includes nontaxable securities with average balances of $56.6 million and $72.5 million for the three months ended March 31, 2021 and 2020, respectively. The tax equivalent yield for these nontaxable securities for the three months ended March 31, 2021 and 2020 was 2.40% and 2.81%, respectively. In 2021 and 2020, the tax equivalent yields were calculated by assuming a 21% tax rate and dividing the actual yield by 0.79.
(4)    The terms of the FHLB advance agreements 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, deposits with banks and other financial assets which yield interest or similar income.
(6)    Calculated based upon the average balance of total noninterest bearing and interest bearing deposits.
56
59




(3)
Includes nontaxable securities with average balances of $88.8 million and $2.7 million for the three months ended June 30, 2018 and 2017, respectively, and $88.9 million and $1.4 million for the six months ended June 30, 2018 and 2017, respectively. The tax equivalent yield for these nontaxable securities for the three months ended June 30, 2018 and 2017 was 2.00% and 2.15%, respectively, and 2.45% and 2.13% for the six months ended June 30, 2018 and 2017, respectively.
(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.

ProvisionAnalysis of the Allowance for Loan Losses
Set forth in the table below are the changes in the allowance for loan losses for each of the periods presented.
Three Months Ended March 31,
20212020
(in thousands)
Balance at the beginning of the period$110,902 $52,223 
Charge-offs
Domestic Loans:
Real estate loans
Owner occupied— (27)
Commercial(235)(1,074)
Consumer and others(431)(222)
(666)(1,323)
International Loans (1):
Commercial— (34)
Consumer and others— (251)
— (285)
Total Charge-offs$(666)$(1,608)
Recoveries
Domestic Loans:
Real estate loans
Single-family residential26 30 
Commercial447 61 
Consumer and others44 17 
517 108 
International Loans (1):
Commercial158 124 
Consumer and others29 101 
187 225 
Total Recoveries$704 $333 
Net recoveries (charge-offs)38 (1,275)
Provision for loan losses— 22,000 
Balance at the end of the period$110,940 $72,948 
 Three Months Ended June 30, Six Months Ended June 30,
 2018 2017 2018 2017
 (in thousands)
Balance at the beginning of the period$72,118
 $79,363
 $72,000
 $81,751
        
Charge-offs       
Domestic Loans:       
Real Estate       
Commercial Real Estate (CRE)       
Non-owner occupied—
 —
 —
 (97)
 —
 —
 —
 (97)
Single-family residential(27) —
 (27) (83)
Owner occupied—
 —
 —
 (25)
 (27) —
 (27) (205)
Commercial(2,355) (1,097) (2,737) (1,390)
Consumer and others(71) (15) (90) (45)
 (2,453) (1,112) (2,854) (1,640)
        
International Loans:       
Commercial(52) (143) (52) (6,042)
Consumer and others(230) (258) (630) (477)
 (282) (401) (682) (6,519)
Total Charge-offs$(2,735) $(1,513) $(3,536) $(8,159)
        
Recoveries       
Domestic Loans:       
Real Estate Loans       
Commercial Real Estate (CRE)       
Non-Owner occupied$4
 $15
 $5
 $67
Land development and construction loans—
 92
 33
 99
 4
 107
 38
 166
Single-family residential60
 1,064
 64
 1,110
Owner occupied95
 2
 883
 6
 159
 1,173
 985
 1,282
Commercial174
 21
 218
 60
__________________

(1)    Includes transactions in which the debtor or the customer is domiciled outside the U.S., even when the collateral is located in the U.S.
57
60



 Three Months Ended June 30, Six Months Ended June 30,
 2018 2017 2018 2017
 (in thousands)
Consumer and others26
 —
 32
 —
 359
 1,194
 1,235
 1,342
        
International Loans:       
Real Estate       
      Commercial Real Estate (CRE)       
               Non-owner occupied—
 —
 —
 2
 —
 —
 —
 2
Single-family residential—
 1
 —
 3
 —
 1
 —
 5
Consumer and others39
 15
 82
 24
 39
 16
 82
 29
Total Recoveries$398
 $1,210
 $1,317
 $1,371
        
Net charge-offs(2,337) (303) (2,219) (6,788)
Provision for loan losses150
 3,646
 150
 7,743
Balance at the end of the period$69,931
 $82,706
 $69,931
 $82,706


Set forth in the table below is the composition of international loanconsumer loans and overdraft charge-offs by country for each of the periods presented.
Three Months Ended March 31,
20212020
(in thousands)
Venezuela$— $231 
Other countries— 20 
Total charge offs$— $251 
 Three Months Ended June 30, Six Months Ended June 30,
 2018 2017 2018 2017
 (in thousands)
Commercial loans:       
Brazil$52
 $128
 $52
 $6,027
Others—
 15
 —
 15
Consumer loans and overdrafts:       
Venezuela230
 258
 630
 477
Total charge offs$282
 $401
 $682
 $6,519
Three Months Ended March 31, 2021 and 2020
During the three months ended June 30, 2018,March 31, 2021, charge-offs increaseddecreased $0.9 million, or 58.6%, compared to $2.7 million from $1.5 million during the same period of the prior year. The increase is primarily attributedDuring the first quarter of 2021, the Company had no net charge-offs, compared to a $2.3an aggregate of $1.1 million charge-off in 2018charge-offs related to three domestic4 commercial loans in the retail, wholesale and telecommunications industries. Additionally, recoveries decreased to $398 thousand in 2018, compared to $1.2 million during the same period in 2017, mainly attributable to a $1.0 million recovery in 2017 related to a single-family residential real estate loan. As a result, thefirst quarter of 2020. The ratio of net charge-offs over the average total loan portfolio duringwas 0.09% in the three months ended June 30, 2018 was 3 basis points higher than during the same periodfirst quarter in 2017.2020.

58



During the six months ended June 30, 2018, charge-offs decreased to $3.5 million from $8.2 million during the same period of the prior year. The decrease is primarily attributed to a $6.0 million charge-off in 2017 related to a loan to a primary products company in Brazil. The ratio of net charge-offs over average total loan portfolio during the six months ended June 30, 2018 improved 8 basis points, from 0.12% to 0.04% compared to the same period in 2017.
We added $150 thousand ofCompany recorded no provision for loan losses during the three and six months ended June 30, 2018. This comparesfirst quarter of 2021, compared to $3.6 million and $7.7 milliona provision of provisions for loan losses of $22.0 million recorded duringin the same periods last year. Thefirst quarter of 2020. This was primarily due to the decrease isin reserves associated with the COVID-19 pandemic, as a result of improving economic conditions, and lower loan portfolio volumes, offset by downgrades primarily attributed to improvements in quantitative loan loss factorscertain commercial, owner-occupied and positive adjustments to qualitative loan loss factors used for the portfolio segments of domestic commercial real estate and domestic commercialresidential loans during the period. These positive adjustments were partially offset byThe ALL associated with the COVID-19 pandemic decreased to $10.5 million as of March 31, 2021 from $19.8 million in the first quarter of 2020 at the onset of the COVID-19 pandemic.
As of March 31, 2021, the loan relationship with a $3.9Miami-based U.S. coffee trader (“Coffee Trader”) had an outstanding balance of approximately $19.6 million, provision fornet of a $19.3 million charge off recorded in the third quarter of 2020, unchanged from December 31, 2020. As of March 31, 2021 the Company had a specific loan loss requiredreserve of $12.3 million ($12.2 million as of December 31, 2020) on this relationship. We continue to closely monitor the liquidation process and, as more information becomes available, management may decide to adjust the loan loss reserve for this indebtedness. See “Item 7. Management’s Discussion and Analysis Of Financial Condition And Results Of Operations” included in June 30, 2018 associatedthe 2020 Form 10-K for more details on the loan relationship with one CRE loan. This provision resulted from an evaluationthe Coffee Trader.
While it is difficult to estimate the extent of the net realizable market valueimpact of the property securing this CRE loan. A recent appraisal indicatesCOVID-19 pandemic on the Company’s credit quality, we continue to proactively and carefully monitor the Company’s credit quality practices, including examining and responding to patterns or trends that may arise across certain industries or regions. Importantly, while the collateral securing the TDR has deteriorated further,Company continues to offer customized temporary loan payment relief options, including interest-only payments and weforbearance options, which are evaluating whether a further write-down may be required. Positive loan loss factors resulted from improving trends in factors associated with our real estate and commercial portfolio segments.not considered TDRs, it will continue to assess its willingness to offer such programs over time.


61

Noninterest Income
The table below sets forth a comparison for each of the categories of non-interestnoninterest income for the periods presented.
 Three Months Ended June 30, Change
 2018 2017 2018 over 2017
 Amount % of non-interest income Amount  % of non-interest income Amount %
 (in thousands, except percentages)
Deposits and service fees$4,471
 29.83% $4,868
 27.41% $(397) (8.16)%
Brokerage, advisory and fiduciary activities4,426
 29.53% 4,897
 27.57% (471) (9.62)%
Change in cash surrender value of bank owned life insurance(1)
1,474
 9.84% 1,242
 6.99% 232
 18.68 %
Cards and trade finance servicing fees1,173
 7.83% 1,114
 6.27% 59
 5.30 %
Gain on early extinguishment of FHLB advances882
 5.89% —
 —%
 882
  N/M
Data processing, rental income and fees for other services to related parties613
 4.09% $969
 5.46% (356) (36.74)%
Securities gains, net16
 0.11% 177
 1.00% (161) (90.96)%
Other noninterest income (2)
1,931
 12.88% 4,492
 25.30% (2,561) (57.01)%
 $14,986
 100.00% $17,759
 100.00% $(2,773) (15.61)%
Three Months Ended March 31,Change
202120202021 vs 2020
Amount%Amount%Amount%
(in thousands, except percentages)
Deposits and service fees$4,106 29.0 %$4,290 19.6 %$(184)(4.3)%
Brokerage, advisory and fiduciary activities4,603 32.5 %4,133 18.9 %470 11.4 %
Change in cash surrender value of bank owned life insurance (“BOLI”)(1)1,356 9.6 %1,414 6.5 %(58)(4.1)%
Securities gains, net (2)2,582 18.2 %9,620 43.9 %(7,038)(73.2)%
Cards and trade finance servicing fees339 2.4 %395 1.8 %(56)(14.2)%
Loss on early extinguishment of FHLB advances, net— — %(7)— %7 N/M
Other noninterest income (3)1,177 8.3 %2,065 9.3 %(888)(43.0)%
     Total noninterest income$14,163 100.0 %$21,910 100.0 %$(7,747)(35.4)%


59

___________

(1)    Changes in cash surrender value of BOLI are not taxable.
 Six Months Ended June 30, Change
 2018 2017 2018 over 2017
 Amount % of non-interest income Amount % of non-interest income Amount %
 (in thousands, except percentages)
Deposits and service fees$9,053
 31.29% $9,774
 30.57% $(721) (7.38)%
Brokerage, advisory and fiduciary activities8,841
 30.56% 10,158
 31.77% (1,317) (12.97)%
Change in cash surrender value of bank owned life insurance(1)
2,918
 10.09% 2,487
 7.78% 431
 17.33 %
Cards and trade finance servicing fees2,235
 7.73% 2,185
 6.83% 50
 2.29 %
Gain on early extinguishment of FHLB advances882
 3.05% —
 —%
 882
  N/M
Data processing, rental income and fees for other services to related parties1,494
 5.16% 1,552
 4.85% (58) (3.74)%
Securities gains, net16
 0.06% 155
 0.48% (139) (89.68)%
Other noninterest income (2)
3,492
 12.06% 5,665
 17.72% (2,173) (38.36)%
 $28,931
 100.00% $31,976
 100.00% $(3,045) (9.52)%
__________________
(1)Changes in cash surrender value are not taxable.
(2)    Includes net gain on sale of debt securities of $2.9 million and $9.2 million during the three months ended March 31, 2021 and 2020, respectively, and unrealized losses of $0.4 million and unrealized gain of $0.4 million during the three months ended March 31, 2021 and 2020, respectively, related to the change in market value of mutual funds.
(3)    Includes income from derivative transactions with customers totaling $0.2 million and $0.9 million in the three months ended March 31, 2021 and 2020, respectively. Other sources of income in the periods shown consist of rental income, income from derivative and foreign currency exchange transactions with customers gains on the disposition of bank properties, and valuation income on the investment balances held in the non-qualified deferred compensation plan.
N/M NotMeans not meaningful



Three Months Ended March 31, 2021 and 2020
Total noninterest income decreased $2.8$7.7 million, and $3.0 millionor 35.4%, in the three and six months ended June 30, 2018, respectively,first quarter of 2021 compared to the same periods of 2017. During these periods, there were decreasesquarter last year, mainly due to a $7.0 million decrease in net gains on securities and lower other noninterest income The decrease in noninterest income was partially offset by higher brokerage, advisory and fiduciary fees in the first quarter of 2021 compared to the same quarter in 2020.
Other noninterest income decreased $0.9 million, or 43.0%, in the first quarter of 2021 compared to the same period last year, mainly due to a decrease of $0.7 million, or 75.0%, in income from derivative transactions with customers.
Brokerage, advisory and fiduciary activities as a result of lowerincreased $0.5 million or 11.4%, in the three months ended March 31, 2021 compared to the same period last year. This was primarily due to higher volume of customer trading activities. Additionally, foractivity following increased market volatility and advisory services executed during the three and six months ended June 30, 2018, there were decreasesfirst quarter of 2021.
Our AUMs totaled $2.02 billion at March 31, 2021, an increase of $46.5 million, or 2.4%, from $1.97 billion at December 31, 2020,primarily driven by increased market value. Net new assets in other noninterest income primarily due to lower fee income on derivative and foreign currency exchange transactions with customersthe first quarter of $1.52021 represent $4.1 million, and $1.6 million, respectively, and no gain on the disposition of bank propertiesor 0.2%, compared to a gain of $0.9 million for the same periods a year ago. Also, included in other noninterest income and contributing to the decrease in the three and six months ended June 30 2018 was lower valuation income of $0.4 million and $0.1 million, respectively, on the investment balances held in the non-qualified deferred compensation plan, compared to the same periods in 2017. Conversely, other noninterest expense for these periods includes smaller mirror debits to adjust the liability to the plan participants. Partially offsetting these results, we received $882 thousand in compensation as a resultDecember 31, 2020, driven by continued execution of the early termination of certain advances fromCompany’s client-focused and relationship-centric strategy. Amerant remains focused on growing AUMs, both domestically and internationally, in efforts to further build up the FHLB duringfranchise and strengthen the second quarter of 2018, compared to none in the same period a year ago.Company’s fee-driven business.


60
62




Noninterest Expense
The table below presents a comparison for each of the categories of noninterest expense for the periods presented.
Three Months Ended March 31,Change
202120202021 vs 2020
Amount%Amount%Amount%
(in thousands, except percentages)
Salaries and employee benefits (1)$26,427 60.6 %$29,326 65.4 %$(2,899)(9.9)%
Occupancy and equipment4,488 10.3 %3,803 8.5 %685 18.0 %
Professional and other services fees (2)3,784 8.7 %2,954 6.6 %830 28.1 %
Telecommunications and data processing3,727 8.5 %3,464 7.7 %263 7.6 %
Depreciation and amortization1,786 4.1 %1,959 4.4 %(173)(8.8)%
FDIC assessments and insurance1,755 4.0 %1,118 2.5 %637 57.0 %
Other operating expenses (3)1,658 3.8 %2,243 4.9 %(585)(26.1)%
     Total noninterest expenses$43,625 100.0 %$44,867 100.0 %$(1,242)(2.8)%
 Three Months Ended June 30, Change
 2018 2017 2018 vs 2017
 Amount % of Total Amount % of Total Amount % of Total
 (in thousands, except percentages)
Salaries and employee benefits$34,932
 66.36% $31,666
 62.50% $3,266
 10.31 %
Occupancy and equipment4,060
 7.71% 4,052
 8.00% 8
 0.20 %
Professional and other services fees5,387
 10.23% 2,744
 5.42% 2,643
 96.32 %
FDIC assessments and insurance1,468
 2.79% 2,180
 4.30% (712) (32.66)%
Telecommunications and data processing3,011
 5.72% 2,417
 4.77% 594
 24.58 %
Depreciation and amortization1,945
 3.70% 2,039
 4.02% (94) (4.61)%
Other operating expenses (1)
1,835
 3.49% 5,567
 10.99% (3,732) (67.04)%
 $52,638
 100.00% $50,665
 100.00% $1,973
 3.89 %
 Six Months Ended June 30, Change
 2018 2017 2018 vs 2017
 Amount % of Total Amount % of Total Amount % of Total
 (in thousands, except percentages)
Salaries and employee benefits$68,973
 63.70% $63,974
 64.09% $4,999
 7.81 %
Occupancy and equipment7,775
 7.18% 8,761
 8.78% (986) (11.25)%
Professional and other services fees11,831
 10.93% 5,401
 5.41% 6,430
 119.05 %
FDIC assessments and insurance2,915
 2.69% 4,143
 4.15% (1,228) (29.64)%
Telecommunications and data processing6,095
 5.63% 4,169
 4.18% 1,926
 46.20 %
Depreciation and amortization4,086
 3.77% 4,466
 4.47% (380) (8.51)%
Other operating expenses (1)
6,608
 6.10% 8,899
 8.92% (2,291) (25.74)%
 $108,283
 100.00% $99,813
 100.00% $8,470
 8.49 %
_________________________
(1)    Includes $0.5 million in connection with a Long Term Incentive Compensation Program adopted in the first quarter of 2021.
(2)    Other service fees include expense on derivative contracts.
(3)    Includes advertising, marketing, 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 theour liability to participants of the deferred compensation plan.


61



Three Months Ended June 30, 2018March 31, 2021 and 20172020
Noninterest expense increased $2.0decreased $1.2 million, or 3.89%2.8%, in the three months ended June 30, 2018March 31, 2021 compared to the same period in 2017. This was the result of higher professional fees, along with higher salary2020, primarily driven by lower salaries and employmentemployee benefits and lower other operating expenses. These increasesdecreases were partially offset by lower FDIC assessments and other operating expenses.
The increase of $2.6 million inhigher professional and other services fees, duringoccupancy and equipment costs and FDIC assessments and insurance expenses in the first quarter ended June 30, 2018of 2021, compared to the same period last year is mainly the result of a $2.0 million provision for legal fees associated with the Spin-off. The Company expects to incur higher professional expenses as a standalone public company but does not expect further material professional expenses related to one-time Spin-off activities after the three months ended September 30, 2018.year.
The increase in salariesSalaries and employmentemployee benefits of $3.3decreased $2.9 million, or 10.31%9.9%, duringin the first quarter ended June 30, 2018of 2021 compared to the same period lastone year reflects the impact of annual salary increases stemming from inflation and performance adjustments, higher insurance benefit expenses, andago, mainly as a $1.2 million provision for the estimated compensation to be paid to participantsresult of the non-qualified deferredcompany’s ongoing transformation and efficiency improvement efforts. The decrease in salaries and employee benefits was partially offset by an increase of $0.8 million in bonus compensation planin the first quarter of 2021 compared to partially mitigate the effectsame period in 2020 resulting from: (i) adjustments to the Company’s variable compensation programs, at expected performance levels, after having curtailed them during 2020 in response to the COVID-19 pandemic, and (ii) the adoption of a new long-term equity incentive compensation program in 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. FTE Headcount asfirst quarter of June 30, 2018 was 940, up one person over the previous quarter.2021.
Other operating expenses decreased $3.7$0.6 million, or 67.04%26.1%, duringin the quarterthree months ended June 30, 2018March 31, 2021 compared to the same period last year, mainly due to a reversal of provisions for possible losses on credit commitments of $1.0 million in the second quarter of 2018, compared to an addition to provisions for possible losses on credit commitments of $0.7 million in the same quarter of 2017. The change in provisions is primarily attributed to improvements in quantitative and qualitative loss factors and positive adjustments to qualitative loan loss factors with respect to credit commitments in the portfolio segments of domestic commercial real estate and domestic commercial loans during the period. In addition, there were lower marketing expenses ofand other expenses.
Professional and other services fees increased $0.8 million, incurred duringor 28.1%, in the secondfirst quarter of 20182021 compared to the same period one year ago. This increase was mainly driven by: (i) higher consulting fees, primarily in connection with the design of 2017 as there were fewer promotional campaignsthe Company’s new compensation programs, and fees in the second quarterconnection with renegotiation of 2018 compared to the same period of 2017.certain contracts with vendors, and (ii) higher other professional fees.
Six Months Ended June 30, 2018


63

Occupancy and 2017
Noninterest expenseequipment costs increased $8.5$0.7 million, or 8.49%18.0%, in the six months ended June 30, 2018 compared to the same period 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 lower FDIC assessments as well as lower occupancy and equipment-related costs, and other operating expenses.
The increase of $6.4 million in professional and other services fees during the six months ended June 30, 2018 compared to the same period in 2017 was mainly the result of a $4.3 million provision for legal and consulting fees associated with the Spin-off. The Company expects to incur higher professional expenses as a standalone public company but does not expect further material professional expenses related to one-time Spin-off activities after the three months ended September 30, 2018.
The increase in salaries and employment benefits of $5.0 million, or 7.81%, in the six months ended June 30, 2018March 31, 2021 compared to the same period last year, reflectsmainly driven by the impactadditional rent expense associated with the Beacon Operations Center. The Company sold its Beacon Operations Center in the fourth quarter of annual salary increases stemming from inflation and performance adjustments, higher insurance benefit expenses, and a $1.2 million provision for2020. Following the estimated compensation to be paid to participantssale of the non-qualified deferred compensation planBeacon Operations Center, the Company leased-back the property for a two-year term. In the first quarter of 2021, the rent expense linked to the Beacon Operations Center was partially mitigateoffset by the effectabsence of $0.2 million of depreciation expense recorded in 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. FTE headcountsame period last year, when we still owned the property. This depreciation expense of $0.2 million is included as part of June 30, 2018 was 940, a decrease of four over“Depreciation and amortization” in the previous six months.table above.


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Other operatingFDIC assessments and insurance expenses decreased $2.3increased $0.6 million, or 25.74%57.0%, duringin the six months ended June 30, 2018first quarter of 2021 compared to the same period last year, mainly due to a reversalthe absence of provisions for possible losses on credit commitmentscredits received in the first quarter of $0.32020.

Adjusted noninterest expense totaled $43.4 million in the six months ended June 30, 2018, compared to an addition to provisions for possible losses on credit commitmentsfirst quarter of $0.92021, a decrease of $1.1 million, or 2.5%, from $44.5 million in the same periodfirst quarter of 2017. The change in provisions is primarily attributed to improvements in quantitative and qualitative loss factors and positive adjustments to qualitative loan loss factors with respect to credit commitments in the portfolio segments of domestic commercial real estate and domestic commercial loans during the period. In addition, there were lower marketing2020. Restructuring expenses of $0.5totaled $0.2 million incurred during the six months ended June 30, 2018 in comparison to the same period last year as there were fewer promotional campaigns in the first six monthsquarter of 20182021, a decrease of $0.1 million, or 32.2%, compared to $0.4 million in the same periodfirst quarter of 2017.2020, due to lower severance and digital transformation expenses.


We remain dedicated to finding new ways to increase efficiencies across the Company while simultaneously providing an enhanced banking experience for customers. As part of these continued efforts, the Company completed the full rollout of nCino for commercial use in the first quarter of 2021, a significant milestone in the Company's digital transformation. The Company expects to complete the rollout of nCino for Retail use in the second half of 2021. See “Item 7. Management’s Discussion and Analysis Of Financial Condition And Results Of Operations” included in the 2020 Form 10-K for more details.


Income Taxes
The table below sets forth information related to our income taxes for the periods presented.
Three Months Ended March 31,Change
202120202021 vs 2020
(in thousands, except effective tax rates and percentages)
Income tax expense$3,648 $890 $2,758 309.89 %
Effective income tax rate20.15 %20.83 %(0.68)%(3.26)%
 Three Months Ended June 30,Change Six Months Ended June 30,Change
 2018 2017 2018 vs 2017 2018 2017 2018 vs 2017
 (in thousands, except effective tax rates and percentages)
Income tax expense$5,764
 $4,499
 $1,265
 28.12% $7,268
 $7,315
 $(47) (0.64)%
Effective income tax rate35.61% 30.22% 5.39% 17.84% 26.80% 30.21% (3.41)% (11.29)%
TheIn the first quarter of 2021, income tax expense reflects the lower corporate federal income tax rate under the Tax Act of 2017 which, beginning January 1, 2018, decreased the corporate federal income tax rateincreased to 21% compared to 35% in the same period last year. However, higher taxable income during the three and six months ended June 30, 2018$3.6 million from $0.9 million compared to the same periods last year, partially offset the positive effectsfirst quarter of the lower tax rate for the three and six months ended June 30, 2018. In addition, the effective tax rate for these periods is significantly affected2020, mainly driven by permanent non-deductible items totaling $5.8 million for the six months ended June 30, 2018 associated with the Spin-off. Those items have been recognized as discrete itemshigher income before income taxes in the period.

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Segment Information
The following tables summarize certain financial information for our reportable segmentsfirst quarter of 2021. As of March 31, 2021, the Company’s net deferred tax assets were $15.6 million, an increase of $3.9 million, or 33.5%, compared to $11.7 million as of and for the periods indicated.
(in thousands)Personal and Commercial Banking ("PAC") Corporate LATAM Treasury Institutional Total
Three Months Ended June 30, 2018
Income Statement:         
Net interest income$47,105
 $1,219
 $1,942
 $3,723
 $53,989
Provision for (reversal of) loan losses824
 494
 (329) (839) 150
Net interest income after provision for (reversal of) loan losses46,281
 725
 2,271
 4,562
 53,839
Noninterest income5,708
 89
 3,451
 5,738
 14,986
Noninterest expense (4)
39,329
 1,468
 2,832
 9,009
 52,638
Net income (loss) before income tax:         
   Banking12,660
 (654) 2,890
 1,291
 16,187
   Non-banking contribution(1)
1,197
 11
 —
 (1,208) —
 13,857
 (643) 2,890
 83
 16,187
Income tax (expense) benefit(4,486) 58
 84
 (1,420) (5,764)
Net income (loss)$9,371
 $(585) $2,974
 $(1,337) $10,423


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(in thousands)Personal and Commercial Banking ("PAC") Corporate LATAM Treasury Institutional Total
Six Months Ended June 30, 2018
Income Statement:         
Net interest income$93,786
 $2,699
 $2,898
 $7,239
 $106,622
(Reversal of) provision for loan losses(1,315) (225) (446) 2,136
 150
Net interest income after (reversal of) provision for loan losses95,101
 2,924
 3,344
 5,103
 106,472
Noninterest income11,416
 198
 5,401
 11,916
 28,931
Noninterest expense (4)
79,343
 2,643
 5,794
 20,503
 108,283
Net income (loss) before income tax:         
   Banking27,174
 479
 2,951
 (3,484) 27,120
   Non-banking contribution(1)
1,247
 —
 —
 (1,247) —
 28,421
 479
 2,951
 (4,731) 27,120
Income tax (expense) benefit(6,707) (113) 396
 (844) (7,268)
Net income (loss)$21,714
 $366
 $3,347
 $(5,575) $19,852
          
As of June 30, 2018         
Loans, net(2)
$5,826,731
 $394,572
 $—
 $(71,685) $6,149,618
Deposits$5,567,424
 $20,134
 $737,898
 $37,682
 $6,363,138

(in thousands)Personal and Commercial Banking ("PAC") Corporate LATAM Treasury Institutional Total
Three Months Ended June 30, 2017
Income Statement:         
Net interest income$43,776
 $2,339
 $2,268
 $3,058
 $51,441
Provision for (reversal of) loan losses8,681
 (1,845) (819) (2,371) 3,646
Net interest income after provision for (reversal of) loan losses35,095
 4,184
 3,087
 5,429
 47,795
Noninterest income8,062
 148
 2,933
 6,616
 17,759
Noninterest expense (4)
38,618
 1,135
 2,445
 8,467
 50,665
Net income before income tax:         
   Banking4,539
 3,197
 3,575
 3,578
 14,889
   Non-banking contribution(1)
1,263
 24
 —
 (1,287) —
 5,802
 3,221
 3,575
 2,291
 14,889
Income tax expense(2,001) (1,147) (446) (905) (4,499)
Net income$3,801
 $2,074
 $3,129
 $1,386
 $10,390



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(in thousands)Personal and Commercial Banking ("PAC") Corporate LATAM Treasury Institutional Total
Six Months Ended June 30, 2017
Income Statement:         
Net interest income$85,164
 $4,903
 $4,593
 $5,132
 $99,792
Provision for (reversal of) loan losses9,812
 358
 (894) (1,533) 7,743
Net interest income after provision for (reversal of) loan losses75,352
 4,545
 5,487
 6,665
 92,049
Noninterest income14,145
 275
 4,113
 13,443
 31,976
Noninterest expense (4)
78,495
 2,517
 5,194
 13,607
 99,813
Net income before income tax:         
  Banking11,002
 2,303
 4,406
 6,501
 24,212
   Non-banking contribution(1)
2,349
 22
 —
 (2,371) —
 13,351
 2,325
 4,406
 4,130
 24,212
Income tax expense(4,730) (823) (59) (1,703) (7,315)
Net income$8,621
 $1,502
 $4,347
 $2,427
 $16,897

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
_____________
(1)Non-banking contribution reflects allocations of the net results of the Trust Company and Investment Services 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 $5,611 thousand which are allocated to PAC.
(4)Costs related to the Spin-off have been allocated to the Institutional reportable segment.


Personal and Commercial Banking (PAC)
Three Months Ended June 30, 2018 and 2017
PAC reported net income of $9.4 million in the three months ended June 30, 2018, which represents a 146.54% increase from $3.8 million in the same period in 2017.December 31, 2020. This increase was primarily the result of higher net interest income together with a reduced provision for loan losses, partially offset by lower noninterest income.
Net interest income increased $3.3 million, or 7.60%, to $47.1 million during the three months ended June 30, 2018 from $43.8 million in the same period in 2017. This increase is mainly due to a $242.1 million increase in PAC’s average loan portfolio balance for the three months ended June 30, 2018 compared to the same period last year, primarily driven by increases in the commercial and commercial real estate loan portfolios.

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For the three months ended June 30, 2018, PAC reflected a provision for loan losses of $0.8 million compared to a provision for loan losses of $8.7 million in the same period in 2017. The decrease is primarily attributed to improvements in quantitative loan loss factors and positive adjustments to qualitative loan loss factors used for the portfolio segments of domestic commercial real estate and domestic commercial loans during the period. These positive adjustments were partially offset by a $3.9 million provision for loan loss required in June 30, 2018 associated with one CRE loan. This provision resulted from an evaluation of the net realizable market value of the property securing this CRE loan. A recent appraisal indicates that the collateral securing the TDR has deteriorated further, and we are evaluating whether a further write-down may be required. Positive loan loss factors resulted from improving trends in factors associated with our real estate and commercial portfolio segments.
Noninterest income decreased $2.4 million, or 29.20% to $5.7 million in the three months ended June 30, 2018 compared to $8.1 million in the same period in 2017. This decrease was mainly the result of lower fee income on derivative transactions with customers and lower other operating income from the disposition of bank property in South Florida during the three months ended June 30, 2018 compared to the corresponding period in 2017.
Six Months Ended June 30, 2018 and 2017
PAC reported net income of $21.7 million for the six months ended June 30, 2018, which represents an 151.87% increase from $8.6 million in the same period in 2017. This increase is mainly the result of higher net interest income combined with a reversal of the allowance for loan losses, partially offset by lower noninterest income, higher noninterest expense and reduced non-banking contribution from Trust and Investment Services attributable to PAC customers.    
Net interest income increased 10.12% to $93.8 million in the six months ended June 30, 2018 from $85.2 million in the same period in 2017. This increase is primarily due to a $276.1 million increase in PAC’s average loan portfolio balance and increased funds transfer pricing credit on PAC’s deposits for the six months ended June 30, 2018 compared to the same period a year ago. Higher average loan portfolio balances during the period were primarily driven by increases in the middle market and commercial real estate loan portfolios.
For the six months ended June 30, 2018, PAC reflected a $1.3 million reversal in the allowance for loan losses, compared to a provision for loan losses of $9.8 million in the same period in 2017. This change is primarily attributed to improvements in quantitative loan loss factors and positive adjustments to qualitative loan loss factors used for the portfolio segments of domestic commercial real estate and domestic commercial loans during the period. These positive adjustments were partially offset by a $3.9 million provision for loan loss required in June 30, 2018 associated with one CRE loan. This provision resulted from an evaluation of the net realizable market value of the property securing this CRE loan. A recent appraisal indicates that the collateral securing the TDR has deteriorated further, and we are evaluating whether a further write-down may be required. Positive loan loss factors resulted from improving trends in factors associated with our real estate and commercial portfolio segments.
Noninterest income decreased 19.29% to $11.4 million in the six months ended June 30, 2018 from $14.1 million in the same period in 2017. This decrease was mainly the result of lower fee income on derivative transactions with customers and lower other operating income from the disposition of bank property in South Florida during the six months ended June 30, 2018. In addition, there was a decrease in the volume of wire transfer activity and related fees during this period compared to the corresponding period of 2017.
Noninterest expense increased 1.08% to $79.3 million in the six months ended June 30, 2018, from $78.5 million the same period in 2017. This increase is primarily the result of higher product support expense allocations supporting PAC’s loan portfolio growth and ongoing banking center infrastructure transformation efforts.
Non-banking contribution from Trust and Investment Services attributable to PAC customers decreased 46.91% to $1.2 million in the six months ended June 30, 2018, from $2.3 million in the same period in 2017. The decrease is mainly the result of lower volume of customer brokerage activity.

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Corporate LATAM
Three Months Ended June 30, 2018 and 2017
Corporate LATAM had a net loss of $585 thousand in the three months ended June 30, 2018, compared to net income of $2.1 million recorded in the same period in 2017. The decrease in net income is mainly attributable to lower net interest income together with an increase in the provision for loan losses.
The 47.88%, or $1.1 million, decline in net interest income to $1.2 million from $2.3 million in the same period a year ago, was primarily the result of a $144.2 million lower average loan portfolio balance for the three months ended June 30, 2018 compared to the same period in 2017. The $494 thousand provision for loan losses in the three months ended June 30, 2018 was mainly due to required loan loss reserve on an impaired loan identified during the period. This compares to the $1.8 million reversal of the allowance for loan losses into the provision for loan losses in the same period of 2017, which was mainly driven by lower loan portfolio average balances during that period.
Six Months Ended June 30, 2018 and 2017
Corporate LATAM reported net income of $366 thousand for the six months ended June 30, 2018. This was a decrease of $1.1 million, or 75.63%, from net income of $1.5$15.5 million in the same period in 2017. The lower net income during this period was primarily attributable to a lower net interest income which was partially mitigated by a reduction in the allowanceunrealized holding gains on available for loan losses.
Net interest income decreased 44.95% to $2.7 million from $4.9 million in the six months ended June 30, 2018, mainly due to $132.9 million lower average loan portfolio balance during that period. The $225 thousand reversal of the allowance for loan losses during the six months ended June 30, 2018 was mainly attributed to a lower average loan portfolio balance, partially offset by a required loan loss reserve on an impaired loan identified during the three months ended June 30, 2018. This compares to a $358 thousand provision for loan loss in the same period of 2017 primarily related to charge offs of impaired loanssale securities during the first quarter of 2017.
Treasury
Three Months Ended June 30, 2018 and 2017
For the three months ended June 30, 2018, Treasury reported net income of $3.0 million, which represents a 4.95% decrease from $3.1 million for the same period in 2017. This decrease was primarily the result of lower net interest income together with higher noninterest expense, partially offset by an increase in noninterest income.
The 14.37% decrease in Treasury’s net interest income to $1.9 million in the three months ended June 30, 2018 from $2.3 million in the same period in 2017, was primarily attributable to higher interest expenses paid on longer duration FHLB advances as well as on brokered certificates of deposit. These results were partially offset by higher interest income from the investment securities portfolio and deposits with banks. In the three months ended June 30, 2018, the average balances of FHLB advances and other borrowings, and brokered certificates of deposit, were $270.2 million (29.93%) and $44.0 million (6.53%) higher than the same period in 2017.
Noninterest expense increased $387 thousand, or 15.83%, to $2.8 million in the three months ended June 30, 2018 from $2.4 million for the same period in 2017, primarily as a result of higher fees on derivative transactions.
Noninterest income increased $0.5 million, or 17.66%, to $3.5 million in the three months ended June 30, 2018 from $2.9 million in the same period in 2017. This increase is primarily due to higher income recorded in the change in cash surrender value of BOLI, and income from the early termination of short term FHLB advances.

2021.
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Six Months Ended June 30, 2018 and 2017
Treasury generated net income of $3.3 million in the six months ended June 30, 2018, a $1.0 million, or 23.00%, reduction from $4.3 million in the same period in 2017. This reduction was mainly attributable to lower net interest income combined with higher noninterest expenses, partially offset by higher noninterest income.
The 36.90% reduction in net interest income to $2.9 million in the six months ended June 30, 2018 from $4.6 million in the same period in 2017 was primarily due to higher interest expenses paid on longer duration FHLB advances and brokered certificates of deposit. These changes were offset by higher interest income on the investment securities portfolio. In the six months ended June 30, 2018, the average balances of FHLB advances and other borrowings, and brokered certificates of deposit, were $265.4 million (29.01%) and $40.9 million (5.85% ) higher than the same period in 2017.
Noninterest expense increased 11.55% to $5.8 million for the six months ended June 30, 2018 from $5.2 million for the same period in 2017, primarily as a result of higher fees on derivative transactions.
Noninterest income increased 31.32% to $5.4 million for the six months ended June 30, 2018 from $4.1 million in the same period in 2017. This increase is primarily due to higher income recorded in the change in cash surrender value of BOLI, and income from the early termination of short term FHLB advances. In addition, there were higher management fees from services provided to an MSF non-US affiliate during the period.
Institutional
Three Months Ended June 30, 2018 and 2017
For the three months ended June 30, 2018, Institutional reported net loss of $1.3 million compared to net income of $1.4 million in the same period in 2017, mainly attributable to lower reversals of allowance for loan losses, lower noninterest income and higher noninterest expense, partially offset by higher net interest income.
Net interest income increased 21.75%, or $665 thousand, to $3.7 million in the three months ended June 30, 2018 from $3.1 million in the same period in 2017, primarily due to higher fund transfer pricing credit received for the Company’s capital.
For the three months ended June 30, 2018, Institutional had a credit in its provision for loan losses which was 64.61%, or $1.5 million, lower than in the same period in 2017. 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 13.27% to $5.7 million in the three months ended June 30, 2018 from $6.6 million in the same period in 2017, primarily due to lower income from brokerage and advisory activities through our Investments Services subsidiary which is mainly the result of lower volume of customer brokerage activity. In addition, there was lower rental income recorded during the period as as result of the sale of G200 Leasing, LLC in the first quarter of 2018.
Noninterest expense increased $542 thousand, or 6.40%, to $9.0 million during the three months ended June 30, 2018, from $8.5 million in the same period in 2017. This increase is mainly the result of a $1.2 million provision for the estimated compensation to be paid 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. In addition, legal and consulting fees of $2.0 million associated with the Spin-off were allocated to the Institutional segment for the three months ended June 30, 2018.

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Six Months Ended June 30, 2018 and 2017
Institutional had a net loss of $5.6 million in the six months ended June 30, 2018 versus net income of $2.4 million in the same period in 2017, mainly attributable to lower noninterest income, higher noninterest expense and higher provision for loan losses, partially offset by higher net interest income.    
Net interest income increased 41.06%, or $2.1 million, to $7.2 million in the six months ended June 30, 2018 from $5.1 million in the same period 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 the Company’s capital.    
For the six months ended June 30, 2018, Institutional reported a provision for loan loss of $2.1 million compared to a credit to the provision for loan losses of $1.5 million for the same period in 2017. 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 11.36% to $11.9 million for the six months ended June 30, 2018 from $13.4 million for the same period in 2017, primarily due to lower income from brokerage and advisory activities through our Investments Services subsidiary which is mainly the result of lower volume of customer brokerage activity. In addition, there was lower rental income recorded during the period as as result of the sale of G200 Leasing, LLC in the first quarter of 2018.
Noninterest expense increased 50.68% to $20.5 million for the six months ended June 30, 2018 from $13.6 million for the same period in 2017, primarily due to a $4.3 million provision for legal and consulting fees associated with the Spin-off, and higher operating expenses related to ongoing software services. In addition, there were higher salaries and benefits due to a $1.2 million provision for the estimated compensation to be paid 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.
Financial Condition - Comparison of Financial Condition as of June 30, 2018March 31, 2021 and December 31, 20172020
Assets. Total assets were $8.5flat at $7.8 billion as of June 30, 2018, an increase of $93.7 million fromMarch 31, 2021 compared to December 31, 2017. This2020. In the first quarter of 2021, cash and cash equivalents and other assets increased $19.1 million, or 8.9%, and $41.6 million, or 44.3%, respectively. The $41.6 million, or 44.3%, increase in other assets was mainly attributable to andriven by the adoption of the new accounting guidance on leases.This increase was partially offset by a decrease of $155.4$88.6 million, or 1.5% in total loans held for investment net of the allowance for loan losses. In addition, the composition of interest-earning assets changed with respect to the previous year. See “—Average Balance Sheet, Interest and Yield/Rate Analysis” for detailed information. This isinformation, including changes in the resultcomposition of a strategic plan to improve our operating results by adjusting our mix of interest-earning assets, and liabilities consistent withNote 1 to our expectations that a rising interest rate environment will continue.unaudited interim financial statements in this Form 10-Q for more details on the new guidance on leases.

Cash and Cash Equivalents. Cash and cash equivalents decreasedincreased to $117.2$233.5 million at June 30, 2018March 31, 2021 from $153.4$214.4 million at December 31, 2017.2020. The increase of $19.1 million or 8.9%, was mainly attributable to higher balances at the Federal Reserve.
Cash flows provided by operating activities were $26.2was $7.0 million in the sixthree months ended June 30, 2018. This was primarily attributed toMarch 31, 2021, mainly driven by the net income earned. of $14.5 million recorded during the period.
Net cash used inprovided by investing activities was $147.6$67.5 million during the sixthree months ended June 30, 2018, primarily due toMarch 31, 2021, mainly driven by: (i) maturities, sales, calls and paydowns of securities available for sale and FHLB stock totaling $115.1 million and $8.5 million, respectively, and (ii) a net increasedecrease in loans of $174.2 million, and$86.4 million. These proceeds were partially offset by purchases of available for sale and held to maturity securities totaling $121.2$96.2 million and $50.3 million, respectively.
In the three months ended March 31, 2021, net cash used in financing activities was $55.4 million. These activities included: (i) a $159.4 million decrease in time deposits and (ii) the $1.9 million repurchase of shares of Class B common stock in the first quarter of 2021, under the 2021 Stock Repurchase Program. These disbursements were partially offset by maturities, sales and calls of securities available for sale totaling $122.8 million, and proceeds from loan sales totaling $23.8 million. In addition, cash flows from investing activities during the six months ended June 30, 2018, include $7.5 million in net proceeds from the sale of our G200 Leasing, LLC subsidiary, which leased a corporate plane to MSF.
In the six months ended June 30, 2018, net cash provided by financing activities was $85.2 million. These activities included $205.9 million higher time deposits and $85.0$105.9 million net additional advances borrowed from the FLHB, partially offset by $165.7 million net decreaseincrease in total demand, savings and money market deposit balancesbalances. See “—Capital Resources and Liquidity Management” for more information on the 2018 Special Dividend of $40.0 million paid on March 13, 2018 to MSF.Senior Notes.

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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 for the periods presented.
March 31, 2021December 31, 2020
(in thousands, except percentages)
Total loans, gross (1)$5,753,794 $5,842,337 
Total loans, gross / total assets74.2 %75.2 %
Allowance for loan losses$110,940 $110,902 
Allowance for loan losses / total loans, gross (1) (2)1.93 %1.9 %
Total loans, net (3)$5,642,854 $5,731,435 
Total loans, net / total assets72.8 %73.8 %
 June 30, 2018 December 31, 2017
 (in thousands, except percentages)
Total loans, gross$6,219,549
 $6,066,225
Total loans, gross / total assets72.91% 71.90%
    
Allowance for loan losses$69,931
 $72,000
Allowance for loan losses / total loans, gross (1) (2)
1.12% 1.19%
_______________
_________________
(1)Outstanding loan principal balance net of deferred loan fees and costs, excluding the allowance for loan losses.
(2)
See Note 5 of our audited consolidated financial statements and Note 5 of our unaudited interim consolidated financial statements for more details on our impairment models.

(1)    Total loans, gross are outstanding loan principal balance net of unamortized deferred nonrefundable loan origination fees and loan origination costs, excluding the allowance for loan losses. At March 31, 2021, the Company had $1.0 million in loans held for sale. There were no loans held for sale at December 31, 2020.



(2)    See Note 5 of our audited consolidated financial statements in the Form 10-K for the year ended December 31, 2020 and Note 5 of these unaudited interim consolidated financial statements for more details on our impairment models.
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(3)    Total loans, net are outstanding loan principal balance net of unamortized deferred nonrefundable loan origination fees and loan origination costs, net of the allowance for loan losses.


The composition of our CRE loan portfolio by industry segment at March 31, 2021 and December 31, 2020 is depicted in the following table:
(in thousands)March 31, 2021December 31, 2020
Retail (1)$1,064,988 $1,097,329 
Multifamily722,783 737,696 
Office space368,014 390,295 
Land and construction351,502 349,800 
Hospitality191,197 191,750 
Industrial and warehouse89,768 70,465 
$2,788,252 $2,837,335 
_________
(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.

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The table below summarizes the composition of our loan portfolio by type of loan as of the end of each period presented. International loans include but are not limited to, 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.
(in thousands)March 31, 2021December 31, 2020
Domestic Loans:
Real Estate Loans
Commercial real estate (CRE)
Non-owner occupied$1,713,967 $1,749,839 
Multi-family residential722,783 737,696 
Land development and construction loans351,502 349,800 
2,788,252 2,837,335 
Single-family residential536,965 543,076 
Owner occupied940,126 947,127 
4,265,343 4,327,538 
Commercial loans1,065,160 1,103,501 
Loans to depository institutions and acceptances (1)16,648 16,629 
Consumer loans and overdrafts (2)273,584 241,771 
Total Domestic Loans5,620,735 5,689,439 
International Loans:
Real Estate Loans
Single-family residential (3)88,333 96,493 
Commercial loans39,434 51,049 
Loans to depository institutions and acceptances10 7 
Consumer loans and overdrafts (4)5,282 5,349 
Total International Loans133,059 152,898 
Total Loan Portfolio$5,753,794 $5,842,337 

__________________
(1)    Mostly comprised of loans secured by cash or U.S. Government securities.
(2)    Includes customers’ overdraft balances totaling $0.4 million and $0.7 million as of March 31, 2021 and December 31, 2020, respectively.
(3)    Secured by real estate properties located in the U.S.
(4)    International customers’ overdraft balances were de minimis at each of the dates presented.

 June 30, 2018 December 31, 2017
 (in thousands)
Domestic Loans:   
Real Estate Loans   
Commercial real estate (CRE)   
Non-owner occupied$1,864,645
 $1,713,104
Multi-family residential858,453
 839,709
Land development and construction loans402,830
 406,940
 3,125,928
 2,959,753
Single-family residential371,733
 360,041
Owner occupied653,902
 610,386
 4,151,563
 3,930,180
Commercial loans1,328,056
 1,285,461
Loans to depository institutions and acceptances16,500
 16,443
Consumer loans and overdrafts77,522
 78,872
Total Domestic Loans5,573,641
 5,310,956
    
International Loans:   
Real Estate Loans   
Single-family residential (1)
143,179
 152,713
 143,179
 152,713
Commercial loans103,977
 69,294
Loans to depository institutions and acceptances352,364
 481,183
Consumer loans and overdrafts46,388
 52,079
Total International Loans645,908
 755,269
Total Loan Portfolio$6,219,549
 $6,066,225
67
__________________
(1)Secured by real estate properties located in the U.S.



As of June 30, 2018,March 31, 2021, the loan portfolio increased $153.3was $5.8 billion, down $87.5 million, or 2.53%1.5%, to $6.2 billion, as compared to $6.1 billion at December 31, 2017. Following our strategy, loans to international customers declined by $109.4 million, or 14.48%, as of June 30, 2018, compared to December 31, 2017.2020. Domestic loans decreased $67.7 million, or 1.2%, as of March 31, 2021, compared to December 31, 2020. The overalldecrease in total domestic loans includes net decreases of $49.1 million, $38.3 million, $7.0 million and $5.1 million in domestic CRE loans, commercial loans, owner occupied loans and single-family residential loans, respectively. The decrease in the loan portfolio in the first quarter of 2021 is primarily attributable to loan prepayments, and lower loan production which continued to be challenged as a result of the COVID-19 pandemic despite early signs of recovery in economic activity. These decreases were partially offset by an increase of $31.8 million in domestic consumer loans. The decrease in commercial loans during the first quarter of 2021 includes PPP loan prepayments of around $111.3 million partially offset by new PPP loan originations of $81.5 million in the first quarter of 2021. The increase in consumer loans includes $61.7 million in high-yield indirect consumer loans purchased during the first quarter of 2021.
The Company originated $81.5 million in new PPP loans during the first quarter of 2021, and received $111.3 million of prepayments in connection with PPP loan forgiveness applications, in line with program guidelines. PPP loan forgiveness is provided for under the CARES Act and consists of full payment by the Small Business Administration of the unpaid principal balance and accrued interest after loan forgiveness to eligible borrowers has been approved. As of March 31, 2021, total PPP loans outstanding were $164.8 million, or 2.9% of total loans, compared to $198.5 million, or 3.4% of total loans as of December 31, 2020.
As of March 31, 2021, loans under syndication facilities were $442.9 million, a decline inof $5.2 million, or 1.2%, compared to $448.1 million at December 31, 2020. As of March 31, 2021, syndicated loans that financed highly leveraged transactions were $22.1 million, or 0.1%, of total loans, compared to $19.2 million, or 0.3%, of total loans as of December 31, 2020.
Loans to international customers, primarily from Latin America, was partially offset by the addition of syndicated commercial loans to large corporations in Europe and Canada with world-wide operations and which we believe had good credit quality. The domestic loan exposure increased $262.7declined $19.8 million, or 4.95%13.0%, asduring the first quarter of June 30, 2018,2021 compared to December 31, 2017. This increase is mainly attributed to $166.2 million net increase in commercial real estate loans, $11.7 million net increase in single family residential loans, $43.5 million net increase in owner-occupied commercial real estate loans and $42.6 million net increase in commercial loans.

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2020.
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,Dollars, and bear fixed or variable rates of interest based upon different market benchmarks plus a spread.
 June 30, 2018 December 31, 2017
 
Net Exposure(1)
 
%
Total Assets
 
Net Exposure(1)
 
%
Total Assets
 (in thousands, except percentages)
Brazil$140,705
 1.65% $141,088
 1.67%
Venezuela (2)
171,818
 2.01% 182,678
 2.17%
Chile46,678
 0.55% 94,543
 1.12%
Colombia68,110
 0.8% 63,859
 0.76%
Panama31,139
 0.36% 51,557
 0.61%
Peru53,424
 0.63% 70,088
 0.83%
Mexico2,302
 0.03% 18,274
 0.22%
Costa Rica16,500
 0.19% 43,844
 0.52%
Other (3)
115,232
 1.35% 89,338
 1.06%
Total$645,908
 7.57% $755,269
 8.95%
March 31, 2021December 31, 2020
Net Exposure (1)
%
Total Assets
Net Exposure (1)
%
Total Assets
(in thousands, except percentages)
Venezuela (2)$77,600 1.0 %$86,930 1.1 %
Other (3)55,459 0.7 %65,968 0.9 %
Total$133,059 1.7 %$152,898 2.0 %
_________________
(1)Outstanding principal amounts, net of collateral of cash, cash equivalents or other financial instruments totaling $28.0 million and $31.9 million as of June 30, 2018 and December 31, 2017, respectively.
(2)Includes mortgage loans for single-family residential properties located in the U.S. totaling $136.7 million and $145.1 million as of June 30, 2018 and December 31, 2017, respectively.
(1)    Consists of outstanding principal amounts, net of collateral of cash, cash equivalents or other financial instruments totaling $13.1 million and $13.3 million as of March 31, 2021 and December 31, 2020, respectively.
(2)    Includes mortgage loans for single-family residential properties located in the U.S. totaling $77.5 million and $86.7 million as of March 31, 2021 and December 31, 2020, respectively.
(3)    Includes loans to borrowers in other countries which do not individually exceed one percent of total assets in any of the reported periods.

68

The maturities of our outstanding international loans were:
 June 30, 2018 December 31, 2017
 Less than 1 year 1-3 Years More than 3 years Less than 1 year 1-3 Years More than 3 years
 (in thousands)
Brazil$134,877
 $5,616
 $212
 $137,850
 $3,019
 $219
Venezuela(1)
27,319
 8,250
 136,249
 29,982
 8,460
 144,236
Chile41,251
 5,500
 178
 88,174
 6,191
 179
Colombia66,330
 87
 2,023
 60,000
 1,801
 2,057
Panama10,218
 20,970
 171
 24,967
 26,590
 —
Peru53,542
 —
 —
 70,088
 —
 —
Mexico863
 1,050
 584
 16,737
 951
 586
Costa Rica16,573
 —
 —
 43,844
 —
 —
Other(2)
66,972
 582
 46,491
 83,990
 1,192
 4,156
Total (3)
$417,945
 $42,055
 $185,908
 $555,632
 $48,204
 $151,433
March 31, 2021December 31, 2020
Less than 1 year1-3 YearsMore than 3 yearsTotalLess than 1 year1-3 YearsMore than 3 yearsTotal
(in thousands)
Venezuela (1)$417 $6,799 $70,384 $77,600 $420 $7,199 $79,311 $86,930 
Other (2)5,974 15,200 34,285 55,459 16,098 15,226 34,644 65,968 
Total (3)$6,391 $21,999 $104,669 $133,059 $16,518 $22,425 $113,955 $152,898 
_________________
(1)Includes mortgage loans for single-family residential properties located in the U.S. totaling $136.7 million and $145.1 million as of June 30, 2018 and December 31, 2017, respectively.
(1)    Includes mortgage loans for single-family residential properties located in the U.S. totaling $77.5 million and $86.7 million as of March 31, 2021 and December 31, 2020, respectively.
(2)    Includes loans to borrowers in other countries which do not individually exceed one percent of total assets in any of the reported periods.
(3)Outstanding principal amounts, net of collateral of cash, cash equivalents or other financial instruments totaling $28.0 million and $31.9 million as of June 30, 2018 and December 31, 2017,
(3)    Consists of outstanding principal amounts, net of cash collateral, cash equivalents or other financial instruments totaling $13.1 million and $13.3 million as of March 31, 2021 and December 31, 2020, respectively.

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69



Loan Quality
Allocation of Allowance for Loan Losses
In the following table, we present the allocation of the allowance for loan lossesALL by loan segment at the end of the periods presented. The amounts shown in this table should not be interpreted as an indication that charge-offs in future periods will occur in these amounts or percentages. These amounts represent our best estimates of losses incurred, but not yet identified, at the reported dates, derived from the most current information available to us at those dates and, therefore, do not include the impact of future events that may or may not confirm the accuracy of those estimates at the dates reported. Our allowance for loan lossesALL is established using estimates and judgments, which consider the views of our regulators in their periodic examinations. We also show the percentage of each loan class, which includes loans in nonaccrual status.
March 31, 2021December 31, 2020
June 30, 2018 December 31, 2017Allowance% of Loans in Each Category to Total LoansAllowance% of Loans in Each Category to Total Loans
Allowance % of Loans in Each Category to Total Loans Allowance % of Loans in Each Category to Total Loans
(in thousands, except percentages)
(in thousands, except percentages)(in thousands, except percentages)
Domestic Loans       Domestic Loans
Real estate$28,693
 49.67% $31,290
 48.04%Real estate$48,291 48.0 %$50,227 48.2 %
Commercial27,068
 33.75% 30,782
 33.38%Commercial49,084 37.8 %48,035 38.0 %
Financial institutions31
 0.27% 31
 0.27%Financial institutions— 0.3 %— 0.3 %
Consumer and others (1)
2,015
 5.92% 60
 5.86%Consumer and others (1)11,812 11.6 %10,729 6.9 %
57,807
 89.61% 62,163
 87.55%109,187 97.7 %108,991 97.4 %
       
International Loans (2)
       International Loans (2)
Commercial2,716
 1.63% 1,905
 1.14%Commercial118 0.7 %95 0.9 %
Financial institutions3,286
 5.71% 4,331
 7.93%Financial institutions1 — %1 — %
Consumer and others (1)
6,122
 3.05% 3,601
 3.38%Consumer and others (1)1,634 1.6 %1,815 1.7 %
12,124
 10.39% 9,837
 12.45%1,753 2.3 %1,911 2.6 %
       
Total Allowance for Loan Losses$69,931
 100.00% $72,000
 100.00%Total Allowance for Loan Losses$110,940 100.0 %$110,902 100.0 %
% Total Loans1.12%   1.19%  
% of Total Loans% of Total Loans1.93 %1.90 %
__________________
(1)Includes residential loans.
(2)Includes transactions in which the debtor or customer is domiciled outside the U.S. and all collateral is located in the U.S.

(1)     Includes mortgage loans for and secured by single-family residential properties located in the U.S.
(2)     Includes transactions in which the debtor or customer is domiciled outside the U.S. and all collateral is located in the U.S.

In the first quarter of 2021, the changes in the allocation of the ALL were driven by loan composition changes, primarily as a result of: (i) the increase in domestic consumer loans in the first quarter of 2021, and (ii) the reduction of the CRE portfolio in the first quarter of 2021. In addition, the change in allocation of the ALL in the first quarter of 2021, includes changes in the allocation of the loan loss provisions due to the estimated impact of the COVID-19 pandemic among the respective impacted portfolios, mainly domestic real estate, commercial and consumer. The ALL associated with the COVID-19 pandemic was $10.5 million as of March 31, 2021, a decrease from $14.8 million as of December 31, 2020.


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70





Non-Performing Assets
In the following table, we present a summary of our non-performing assets by loan class, which includes non-performing loans by portfolio segment, both domestic and international, and other real estate owned, or OREO, at the dates presented. Non-performing loans consist of (i) nonaccrual loans where the accrual of interest has been discontinued; (ii) accruing loans more than 90 days or more contractually past due as to interest or principal; and (iii) restructured loans that are considered “trouble debt restructurings”, or “TDRs”.
TDRs.
March 31, 2021December 31, 2020
June 30, 2018 December 31, 2017
(in thousands)
(in thousands)(in thousands)
Non-Accrual Loans(1)
   Non-Accrual Loans (1)
Domestic Loans:   Domestic Loans:
Real Estate Loans   Real Estate Loans
Commercial real estate (CRE)   Commercial real estate (CRE)
Non-owner occupied$10,510
 $489
Non-owner occupied$8,515 $8,219 
Multi-family residentialMulti-family residential11,369 11,340 
10,510
 489
19,884 19,559 
Single-family residential5,069
 4,277
Single-family residential8,622 8,778 
Owner occupied7,186
 12,227
Owner occupied12,527 12,815 
22,765
 16,993
41,033 41,152 
Commercial loans5,960
 2,500
Commercial loans (2)Commercial loans (2)45,282 44,205 
Consumer loans and overdrafts19
 9
Consumer loans and overdrafts256 219 
Total Domestic28,744
 19,502
Total Domestic86,571 85,576 
   
International Loans: (2)(3)
   
Real Estate Loans   Real Estate Loans
Single-family residential1,265
 727
Single-family residential2,192 1,889 
1,265
 727
Commercial loans3,974
 6,447
Consumer loans and overdrafts23
 46
Consumer loans and overdrafts14 14 
Total International5,262
 7,220
Total International2,206 1,903 
Total-Non-Accrual Loans$34,006
 $26,722
Total Non-Accrual LoansTotal Non-Accrual Loans$88,777 $87,479 
   
Past Due Accruing Loans(3)(4)
   
Domestic Loans:   Domestic Loans:
Real Estate Loans   Real Estate Loans
Single-family residential$—
 $112
Commercial27
 —
Commercial real estate (CRE)Commercial real estate (CRE)
Non-owner occupiedNon-owner occupied$743 $— 
Owner occupiedOwner occupied— 220 
Consumer loans and overdraftsConsumer loans and overdrafts3 1 
Total Domestic27
 112
Total Domestic746 221 
   
International Loans:   International Loans:
Real Estate Loans   Real Estate Loans
Single-family residential—
 114
Single-family residential— — 
Consumer loans and overdrafts663
 —
Consumer loans and overdrafts— — 
Total International663
 114
Total International— — 
Total Past Due Accruing Loans$690
 $226
Total Past Due Accruing Loans$746 $221 
   
Total Non-Performing Loans34,696
 26,948
Total Non-Performing Loans$89,523 $87,700 
Other Real Estate Owned558
 319
Other Real Estate Owned400 427 
Total Non-Performing Assets$35,254
 $27,267
Total Non-Performing Assets$89,923 $88,127 
__________________
(1)Includes loan modifications that met the definition of trouble debt restructuring which may be performing in accordance with their modified loan terms.
(2)Includes transactions in which the debtor or customer is domiciled outside the U.S., but where all collateral is located in the U.S.
(3)Loans past due 90 days or more but still accruing.

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71



(1)    Includes loan modifications that met the definition of TDRs that may be performing in accordance with their modified loan terms. As of March 31, 2021 and December 31, 2020, non-performing TDRs include $9.8 million and $8.4 million, respectively, in a multiple loan relationship to a South Florida borrower.

(2)    As of March 31, 2021 and December 31, 2020, includes a $19.6 million commercial relationship placed in nonaccrual status during the second quarter of 2020. During the third quarter of 2020, the Company charged off $19.3 million against the allowance for loan losses as a result of the deterioration of this commercial relationship.
(3)    Includes transactions in which the debtor or customer is domiciled outside the U.S., but where all collateral is located in the U.S.
(4)    Loans past due 90 days or more but still accruing.

At June 30, 2018,March 31, 2021, non-performing assets increased $8.0$1.8 million, or 29.29%2.0%, compared to December 31, 2017. This increase is mainly attributed to one2020.This was primarily driven by the placement in nonaccrual status of: (i) three commercial real estate, or “CRE”, loan and one commercial loan, with carrying values of $10.4loans totaling $1.7 million; (ii) two single-family loans totaling $1.2 million, and $4.5 million, respectively, which were placed in non-accrual status during the period. In addition, $651 thousand in credit card balances became 90 days past due during the period.(iii) two owner occupied loan loans totaling $1.4 million. These increases were partially offset by loan repaymentspaydowns and payoffs during the first quarter of $3.2 million and $5.1 million on three owner-occupied commercial real estate loans, and four commercial loans, respectively.2021.

We recognized no interest income on nonaccrual loans during the sixthree months ended June 30, 2018March 31, 2021 and 2017.2020. Additional interest income that we would have recognized on these loans had they been currentperforming in accordance with their original terms in the six month periodsthree months ended June 30, 2018March 31, 2021 and 20172020 was $707 thousand$0.8 million and $1.1$0.4 million, respectively.

The following table presents the recorded investment of potential problemCompany’s loans by loan category atcredit quality indicators are summarized in the dates indicated.following table. We have no purchased credit-impairedpurchased-credit-impaired loans.
March 31, 2021December 31, 2020
(in thousands)Special MentionSubstandardDoubtfulTotal (1)Special MentionSubstandardDoubtfulTotal (1)
Real Estate Loans
Commercial Real
Estate (CRE)
Non-owner
occupied		$45,206 $5,684 $3,576 $54,466 $46,872 $4,994 $3,969 $55,835 
Multi-family residential— 11,369 — 11,369 — 11,340 — 11,340 
Land development
and
construction
 loans		— — — — 7,164 — — 7,164 
45,206 17,053 3,576 65,835 54,036 16,334 3,969 74,339 
Single-family residential— 10,814 — 10,814 — 10,667 — 10,667 
Owner occupied21,045 12,627 — 33,672 22,343 12,917 — 35,260 
66,251 40,494 3,576 110,321 76,379 39,918 3,969 120,266 
Commercial loans (2)43,313 21,045 25,917 90,275 42,434 21,152 23,256 86,842 
Consumer loans and
overdrafts		— 298 — 298 — 238 — 238 
$109,564 $61,837 $29,493 $200,894 $118,813 $61,308 $27,225 $207,346 
 June 30, 2018  December 31, 2017 
(in thousands)Special Mention Substandard Doubtful 
Total (1)
 Special Mention Substandard Doubtful 
Total (1)
Real Estate Loans               
Commercial real estate (CRE)               
Non-owner occupied$11,695
 $10,510
 $—
 $22,205
 $1,020
 $489
 $—
 $1,509
Single-family residential42
 6,334
 —
 6,376
 —
 5,869
 —
 5,869
Owner occupied10,987
 9,539
 —
 20,526
 4,051
 13,867
 —
 17,918
 22,724
 26,383
 —
 49,107
 5,071
 20,225
 —
 25,296
Commercial loans5,759
 8,891
 2,020
 16,670
 6,100
 14,112
 —
 20,212
Consumer loans and overdrafts—
 5,734
 —
 5,734
 —
 4,113
 —
 4,113
 $28,483
 $41,008
 $2,020
 $71,511
 $11,171
 $38,450
 $—
 $49,621
____________________________
(1) There are no loans categorized as a “Loss” as of the dates presented.

(2) As of March 31, 2021 and December 31, 2020, includes $19.6 million in a commercial relationship placed in nonaccrual status and downgraded during the second quarter of 2020. As of March 31, 2021 and December 31, 2020, Substandard loans include $7.3 million, and doubtful loans include $12.3 million, related to this commercial relationship. During the third quarter of 2020, the Company charged off $19.3 million against the allowance for loan losses as a result of the deterioration of this commercial relationship.

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Classified loans, which includes substandard and doubtful loans, totaled $91.3 million at March 31, 2021, compared to $88.5 million and $36.4 million at December 31, 2020. This increase of $2.8 million, or 3.2%, compared to December 31, 2020 was primarily driven by the downgrade of four commercial loans totaling $3.2 million, two single-family loans totaling $1.2 million, and one CRE loan of $0.7 million. These increases were partially offset by loan paydowns and payoffs during the first quarter of 2021.

Special mention loans as of March 31, 2021 totaled $109.6 million, a decrease of $9.2 million, or 7.8%, from $118.8 million as of December 31, 2020. This decrease was primarily due to paydowns and payoffs of approximately $10.2 million and the downgrade of one commercial loan totaling $1.6 million to substandard, partially offset by the downgrade of one $2.8 million commercial loan relationship to special mention. All special mention loan remained current at March 31, 2021.
On March 26, 2020, the Company began offering loan payment relief options to customers impacted by the COVID-19 pandemic, including deferral and/or forbearance options. These programs continued throughout 2020 and in the first quarter of 2021. Loans which have been modified under these programs totaled $1.1 billion as of March 31, 2021. As of March 31, 2021, $62.1 million, or 1.1% of total loans, were still under the deferral and/or forbearance period, an increase from $43.4 million, or 0.7% at December 31, 2020. This increase was primarily due to new modifications granted to two CRE retail loans in New York totaling $37.1 million and one multifamily loan in New York totaling $2.4 million, partially offset by $20.7 million in loans that resumed regular payments after deferral and/or forbearance periods ended. The Company began to selectively offer additional temporary loan modifications under programs that allow it to extend the deferral and/or forbearance period beyond 180 days. The aforementioned $62.1 million includes $19.8 million of loans that mature in the second quarter of 2021, $5.2 million that mature in the third quarter of 2021, and $37.1 million that mature in first quarter of 2022. Additionally, 99.5% of the loans under deferral and/or forbearance are secured by real estate collateral with average Loan to Value (“LTV”) of 68.2%. All loans that have moved out of forbearance status have resumed regular payments. In accordance with accounting and regulatory guidance, loans to borrowers benefiting from these measures are not considered TDRs. The Company continues to closely monitor the performance of the remaining loans in deferral and/or forbearance periods under the terms of the temporary relief granted.

While it is difficult to estimate the extent of the impact of the COVID-19 pandemic on the Company’s credit quality, we continue to proactively and carefully monitor the Company’s credit quality practices, including examining and responding to patterns or trends that may arise across certain industries or regions. Importantly, while the Company continues to offer customized temporary loan payment relief options, including interest-only payments and forbearance options, which are not considered TDRs, it will continue to assess its willingness to offer such programs over time.
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Potential problem loans, which are accruing loans classified as substandard and are less than 90 days past due, at March 31, 2021 and December 31, 2020, are as follows:
(in thousands)March 31, 2021December 31, 2020
Real estate loans
Commercial real estate (CRE)
Non-owner occupied$— $744 
Owner occupied100 102 
100 846 
Commercial loans1,676 198 
Consumer loans and overdrafts (1)29 — 
$1,805 $1,044 
__________
(1) Corresponds to international consumer loans.


At June 30, 2018,March 31, 2021, total potential problem loans increased $21.9$0.8 million, or 44.11%72.9%, compared to December 31, 2017. This2020. The increase is attributedwas mainly due to one commercial loan downgrades during the period, including three CRE loans totaling $19.2of $1.5 million five owner-occupied real estate loans totaling $10.0 million and two commercial loans totaling $4.7 million.
One CRE loan with a carrying value of $10.4 million as of June 30, 2018 was downgraded to the substandard classification in the first quarter of 2021. This commercial loan remained current and placed in non-accrualaccrual status during the quarter endedat March 31, 2018. Subsequently,2021. The increase in potential problem loans was partially offset by one owner-occupied loan of $0.7 million that became non-performing in the Company agreed to restructure this loan by extending its maturity date and adjusting the loan’s monthly payments. As a resultfirst quarter of the modification in May 2018, the Company determined no additional impairment charges were necessary and deemed the modification a troubled debt restructuring. In June 2018, based on market information available, the Company estimated that the fair value of the collateral, after estimated selling costs, had dropped below the carrying value of the loan; therefore a $3.9 million specific reserve was allocated to this loan. A recent appraisal indicates that the collateral securing the TDR has deteriorated further, and we are evaluating whether a further write-down may be required.
The remaining two CRE loans, the five owner-occupied real estate loans and the two commercial loans were downgraded to special mention during the quarter ended June 30, 2018. These downgraded loans are under close monitoring and did not generate any additional provisions.

2021.
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Securities
The following table sets forth the book value and percentage of each category of securities at June 30, 2018March 31, 2021 and December 31, 2017.2020. The book value for debt securities classified as available for sale and equity securities represents fair value and the book value for debt securities classified as held to maturity represents amortized cost.
 June 30, 2018 December 31, 2017
 Amount % Amount %
 (in thousands, except percentages)
Securities held to maturity       
U.S. Government agency debt$2,943
 0.16% $3,034
 0.16%
U.S. Government sponsored enterprise debt85,497
 4.72% 86,826
 4.70%
 $88,440
 4.88% $89,860
 4.86%
Securities available for sale:       
U.S. Government agency debt$250,837
 13.84% $291,385
 15.78%
U.S. Government sponsored enterprise debt827,484
 45.66% 875,666
 47.41%
Corporate debt (1)
374,929
 20.69% 313,392
 16.97%
US Treasury debt—
 —% 2,701
 0.15%
Mutual funds23,108
 1.28% 23,617
 1.28%
Municipal bonds173,307
 9.56% 180,396
 9.77%
 $1,649,665
 91.03% $1,687,157
 91.36%
Other securities (2):
       
Federal Reserve Bank stock$13,050
 0.72% $13,010
 0.70%
FHLB stock60,964
 3.37% 56,924
 3.08%
 $74,014
 4.09% $69,934
 3.78%
 $1,812,119
 100.00% $1,846,951
 100.00%
March 31, 2021December 31, 2020
Amount%Amount%
(in thousands, except percentages)
Debt securities available for sale:
U.S. government agency debt$216,075 15.7 %$204,578 14.9 %
U.S. government-sponsored enterprise debt610,703 44.5 %661,335 48.1 %
Corporate debt (1) (2)345,574 25.1 %301,714 22.0 %
U.S. Treasury debt2,510 0.2 %2,512 0.2 %
Municipal bonds15,339 1.1 %54,944 4.0 %
$1,190,201 86.6 %$1,225,083 89.2 %
Debt securities held to maturity (3)$104,657 7.6 %$58,127 4.2 %
Equity securities with readily determinable fair value not held for trading (4)23,965 1.7 %24,342 1.8 %
Other securities (5):$56,469 4.1 %$65,015 4.8 %
$1,375,292 100.0 %$1,372,567 100.0 %
__________________
(1)
June 30, 2018 includes $53.4 million in “investment grade” quality securities issued by corporate entities from Panama, Europe, and Japan in three different sectors. December 31, 2017, includes $24.3 million 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 U.S. dollars.
(2)Amounts correspond to original cost at the date presented. Original cost approximates fair value because of the nature of these investments.

(1)     March 31, 2021 and December 31, 2020 include $16.4 million and $17.1 million, respectively, in “investment-grade” quality debt securities issued by foreign corporate entities. The securities’ issuers were from Canada and Japan in three different sectors at March 31, 2021 and December 31, 2020.The Company limits exposure to foreign investments based on cross border exposure by country, risk appetite and policy. All foreign investments are denominated in U.S. Dollars.

(2)    As of March 31, 2021 and December 31, 2020, debt securities in the financial services sector issued by domestic corporate entities represent 2.9% and 2.7% of our total assets, respectively.
(3)    Includes securities issued by U.S. government and U.S. government sponsored agencies.
(4)    Includes an open-end fund incorporated in the U.S. The Fund's objective is to provide a high level of current income consistent with the preservation of capital and investments deemed to be qualified under the Community Reinvestment Act of 1977.
(5)    Includes investments in FHLB and Federal Reserve Bank stock. Amounts correspond to original cost at the date presented. Original cost approximates fair value because of the nature of these investments.

As of March 31, 2021, total securities decreased by $2.7 million, or 0.2%, to $1.4 billion compared to December 31, 2020. This decrease in the first quarter of 2021, was mainly driven by maturities, sales and calls totaling $127.3 million, mainly debt securities available for sale. These results were partially offset by purchases of $146.5 million, including the purchase of $96.2 million in debt securities available for sale and the purchase of $50.3 million in debt securities held to maturity.
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The following tables set forth the book value, scheduled maturities and weighted average yields for our securities portfolio at March 31, 2021 and December 31, 2020. Similar to the table above, the book value for securities available for sale and equity securities is equal to fair market value and the book value for debt securities held to maturity is equal to amortized cost.
March 31, 2021
(in thousands, except percentages)TotalLess than a yearOne to five yearsFive to ten yearsOver ten yearsNo maturity
AmountYieldAmountYieldAmountYieldAmountYieldAmountYieldAmountYield
Debt securities available for sale
U.S. Government sponsored enterprise debt$610,703 2.39 %$2,484 2.21 %$42,804 2.35 %$62,511 2.92 %$502,904 2.33 %$— — %
Corporate debt-domestic329,207 3.45 %9,577 1.60 %102,320 2.40 %196,518 4.02 %20,792 4.14 %— — %
U.S. Government agency debt216,075 2.06 %77 3.12 %10,155 1.95 %16,461 1.68 %189,382 2.10 %— — %
Municipal bonds15,339 2.83 %— — %— — %12,252 2.84 %3,087 2.79 %— — %
Corporate debt-foreign16,367 2.88 %3,418 1.21 %1,559 0.95 %11,390 3.64 %— — %— — %
U.S. treasury securities2,510 0.34 %1,010 0.56 %1,500 0.19 %— — %— — %— — %
$1,190,201 2.63 %$16,566 1.55 %$158,338 2.32 %$299,132 3.60 %$716,165 2.32 %$— — %
Debt securities held to maturity$104,657 2.30 %$— — %$14,916 2.50 %$11,353 2.92 %$78,388 2.17 %$— — %
Equity securities with readily determinable fair value not held for trading23,965 1.26 %— — — — — — — — 23,965 1.26 %
Other securities$56,469 4.23 %$— — %$— — %$— — %$— — %$56,469 4.23 %
$1,375,292 2.65 %$16,566 1.55 %$173,254 2.34 %$310,485 3.57 %$794,553 2.31 %$80,434 3.34 %








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December 31, 2020
(in thousands, except percentages)TotalLess than a yearOne to five yearsFive to ten yearsOver ten yearsNo maturity
AmountYieldAmountYieldAmountYieldAmountYieldAmountYieldAmountYield
Debt securities available for sale
U.S. government sponsored enterprise debt661,335 2.41 %2,512 0.53 %19,859 2.23 %92,259 2.77 %546,705 2.37 %— — %
Corporate debt-domestic284,645 3.52 7,664 2.02 99,741 2.22 169,264 4.29 7,976 4.74 — — 
U.S. government agency debt204,578 2.03 153 2.11 11,581 1.92 15,967 1.76 176,877 2.06 — — 
U.S. Treasury debt securities2,512 0.34 — — 2,512 0.34 —— — — —— 
Municipal bonds54,944 2.86 — — — — 35,840 3.02 19,104 2.55 — — 
Corporate debt-foreign17,069 0.55 2,665 1.26 2,562 1.03 11,842 0.28 — — — — 
1,225,083 2.59 12,994 1.58 136,255 2.14 325,172 3.45 750,662 2.33 — — 
Debt securities held to maturity58,127 2.20 — — — — 11,409 2.92 46,718 2.02 — — 
Equity securities with readily determinable fair value not held for trading24,342 1.52 %— — — — — — — — 24,342 1.52 %
Other securities65,015 4.39 — — — — — — — — 65,015 4.39 
$1,372,567 2.64 %$12,994 1.58 %$136,255 2.14 %$336,581 3.43 %$797,380 2.31 %$89,357 3.61 %

The investment portfolio’s average duration was 3.4 years at March 31, 2021 and 2.4 years at December 31, 2020. The increase in duration was mainly due to lower expected prepayments and longer-duration securities purchased during the first quarter of 2021.

Liabilities
Total liabilities increased $127.8 million, or 1.66%, to $7.8were $7.0 billion at June 30, 2018March 31, 2021, a decrease of $21.4 million, compared to $7.7 billion at December 31, 2017.2020. This increase was primarily driven by higher advances from the FHLB and higher$53.6 million, or 0.9%, in lower total deposits.

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Deposits
Total deposits increased $40.2 million to $6.4 billion at June 30, 2018 compared to $6.3 billion at December 31, 2017. In 2018, an increase in time deposits of $205.9 million was partially offset by decreases of $35.0 million in noninterest bearing transaction accounts, $93.1 million in interest bearing, and $37.7 million in savings and money market account deposits,as customers shifted their deposit preferences as interest rates increased and we promoted longer term time deposits. These changes in deposits and deposit mix were also affected by declines in deposits from Venezuela customers described below. The increase of $205.9 million in time deposits include $248.0 million in retail time deposits, partially offset by a decrease of $42.1 million in brokered time deposits. The increase in retail time deposits reflects the impact of successful marketing campaigns launched during the period to increase these deposits which are being offered at competitive market rates.
During the six months ended June 30, 2018, deposits of customers domiciled in Venezuela decreased by $258.1 million, or 8.20%, to $2.9 billion at June 30, 2018 from $3.1 billion at December 31, 2017. This decrease was partially offset by an increase in other liabilities of $289.7$32.1 million. or 38.6%, mainly as a result of the adoption of the new accounting guidance on leases. See Note 1– Financial Information for additional information.

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Deposits
Total deposits were $5.7 billion at March 31, 2021, a decrease of $53.6 million, or 10.26%0.9%, compared to December 31, 2020. The decline in deposits in the three months ended March 31, 2021 was mainly driven by decreases of $159.4 million, or 7.8%, in balances from domestic customertime deposits and $93.6 million, or 5.9%, in savings and money market deposit accounts. This was partially offset by: (i) an increase of $105.4 million, or 12.1%, in noninterest bearing transaction accounts, including and estimate of $77.8 million in PPP-related deposits, and (ii) an increase of $94.1 million, or 7.6% in interest bearing transaction accounts. The decline in time deposits was primarily attributable to a $8.6$159.6 million, increaseor 10.3%, reduction in balances from other countries. The trend of higher balances from U.S. customer deposits reflectsCDs compared to December 31, 2020, as the Company’sCompany continued to aggressively lower CD rates and focus on increasing core deposits and emphasizing multi-product relationships versus single product higher-cost CDs. This decline in customer CDs includes a $48.1 million, or 24.2%, reduction in online CD balances. During the numberfirst quarter of U.S. domestic customers while preserving valued foreign customer relationships.2021 brokered deposits also decreased $81.9 million, or 12.9%, as the Company continued to focus on reduced reliance on this source of funding.


Deposits by Country of Domicile
The following table shows deposits by country of domicile of the depositor as of the dates presented and the changes during the period.
Change
(in thousands, except percentages)March 31, 2021December 31, 2020Amount%
Deposits
Domestic (1) (2)$3,175,522 $3,202,936 $(27,414)(0.9)%
Foreign:
Venezuela (3)2,088,519 2,119,412 (30,893)(1.5)%
Others (4)414,038 409,295 4,743 1.2 %
Total foreign2,502,557 2,528,707 (26,150)(1.0)%
Total deposits$5,678,079 $5,731,643 $(53,564)(0.9)%
_________________
(1)    Includes brokered deposits of $552.6 million and $634.5 million at March 31, 2021 and December 31, 2020, respectively.
(2)    Domestic deposits, excluding brokered, were up $54.5 million or 2.1%, compared to December 31, 2020.
(3)    Based upon the diligence we customarily perform to "know our customers" for anti-money laundering, OFAC and sanctions purposes, and a review of the Executive Order issued by the President of the United States on August 5, 2019 and the related Treasury Department Guidance, we do not believe that the U.S. economic embargo on certain Venezuelan persons will adversely affect our Venezuelan customer relationships, generally.
(4) Our other foreign deposits include deposits from non-Venezuelan affiliates of the Former Parent, and do not include deposits from Venezuelan resident customers.

Our domestic deposits decreased $27.4 million, or 0.9%, in the first quarter of 2021. However, domestic deposits increased almost every year since 2014 to 2020, while our total foreign deposits, especially deposits from Venezuelan residents, declined during the same period. Most of the Venezuelan withdrawals from deposit accounts at the Bank usesare believed to be due to the Federal Financial Institutions Examination Council’s,effect of adverse economic conditions in Venezuela on our Venezuelan resident customers.
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During the three months ended March 31, 2021, deposits from customers domiciled in Venezuela decreased by $30.9 million, or FFIEC’s, Uniform Bank Performance Report1.5%, to $2.1 billion, compared to December 31, 2020. During the first quarter of 2021, foreign deposits, which include deposits from other countries in addition to Venezuela, decreased by $26.2 million or UBPR definition1.0%. In the first quarter of 2021, deposits from Venezuela remained pressured mainly by the continued outflow of funds from our Venezuelan customers as difficult conditions in their country persist.

Core Deposits
Our core deposits which consists of all relationships under $250,000. Core deposits, which exclude brokered time deposits, were $3.9$3.8 billion and $4.1$3.7 billion as of June 30, 2018March 31, 2021 and December 31, 2017,2020, respectively. Core deposits represented 61.46%66.9% and 64.47%64.4% of our total deposits at those dates, respectively. The decline in core deposits since December 31, 2017 resulted primarily from a combination of the Company closing certain foreign customer accounts and foreign customers drawing down their account balances.
Brokered Deposits
We utilize brokered deposits and, as of June 30, 2018,March 31, 2021, we had $737.9$552.6 million in brokered deposits, which represent 11.60%represented 9.7% of our total deposits at that date. As of March 31, 2021, brokered deposits were down $81.9 million, or 12.9%, compared to $634.5 million as of December 31, 2020, mainly due to a decline in third-party interest bearing brokered deposits. As of March 31, 2021, and December 31, 2020, brokered deposits included time deposits of $494.3 million and $494.2 million, respectively, and third party interest bearing deposits of $58.2 million and $140.3 million, respectively.The Company has not historically sold brokered CDs in denominations over $100,000.
Large Fund Providers
At June 30, 2018March 31, 2021 and December 31, 20172020, our large fund providers, defined as third-party customer relationships with balances of over $10 million, included seventen and foureleven deposit relationships, respectively, with a total balances of $299.3 million and $349.0 million, respectively. The decline in the balance of $99.3 million and $59.0 million, respectively. At June 30, 2018 and December 31, 2017these deposits from MSF or its non-U.S. affiliates totaled $18.2 million and $49.5 million, respectively.was mainly driven by a reduction of third-party interest bearing brokered deposits.

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 June 30, 2018:March 31, 2021 and December 31, 2020:
March 31, 2021December 31, 2020
(in thousands, except percentages)
Less than 3 months$374,800 33.4 %$433,918 34.6 %
3 to 6 months206,863 18.4 %261,683 20.8 %
6 to 12 months250,598 22.3 %241,367 19.2 %
1 to 3 years273,852 24.4 %268,934 21.4 %
Over 3 years15,654 1.5 %49,948 4.0 %
Total$1,121,767 100.0 %$1,255,850 100.0 %
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 June 30, 2018
 (in thousands, except percentages)
Less than 3 months$242,399
 17.55%
3 to 6 months220,788
 15.98%
6 to 12 months508,117
 36.78%
1 to 3 years235,377
 17.04%
Over 3 years174,686
 12.65%
Total$1,381,367
 100.00%

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Short-Term Borrowings
In addition to deposits, we use short-term borrowings from time to time, such as FHLB advances and advancesborrowings 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 majorityAll of our outstanding short-term borrowings at June 30, 2018 andMarch 31, 2021 correspond to FHLB advances.There were no outstanding short-term borrowings at December 31, 2017 corresponded to FHLB advances and, to a lesser extent, included borrowings from other banks.2020.
The following table sets forth information about the outstanding amounts of our short-term borrowings at the close of, and for the sixthree months ended June 30, 2018March 31, 2021 and for the year ended December 31, 2017.2020. There were no repurchase agreements outstanding as of March 31, 2021 and December 31, 2020.
March 31,
2021		December 31,
2020
(in thousands, except percentages)
Outstanding at period-end$50,000 $— 
Average amount16,667 83,750 
Maximum amount outstanding at any month-end50,000 300,000 
Weighted average interest rate:
  During period0.65 %1.45 %
  End of period0.65 %— %
80
 June 30,
2018		 December 31,
2017
 (in thousands, except percentages)
Outstanding at period-end$597,000
 $567,000
Average amount485,333
 460,708
Maximum amount outstanding at any month-end597,000
 567,000
Weighted average interest rate:   
  During period1.92% 1.43%
  End of period2.16% 1.43%

Return on Equity and Assets
The following table shows annualized return on average assets, return on average equity, and average equity to average assets ratio for the periods presented:
 Three Months Ended June 30, Six Months Ended June 30,
 2018 2017 2018 2017
 (in thousands, except percentages and per share data)
Net income$10,423
 $10,390
 $19,852
 $16,897
Basic and diluted earnings per common share0.08
 0.08
 0.16
 0.13
        
Average total assets$8,419,040
 $8,419,602
 $8,413,434
 $8,457,960
Average stockholders' equity748,024
 738,401
 747,905
 725,122
Net income / Average total assets (ROA)0.50% 0.49% 0.47% 0.40%
Net income / Average stockholders' equity (ROE)5.57% 5.63% 5.31% 4.66%
Average stockholders' equity / Average assets ratio8.88% 8.77% 8.89% 8.57%
        
Adjusted net income (1)
$14,142
 $10,390
 $25,831
 $16,897
Adjusted basic and diluted earnings per common share (1)
0.11
 0.08
 0.21
 0.13
        
Adjusted net income / Average total assets (ROA) (1)
0.67% 0.49% 0.61% 0.40%
Adjusted net income / Average stockholders' equity (ROE) (1)
7.56% 5.63% 6.91% 4.66%
Three Months Ended March 31,
20212020
(in thousands, except percentages and per share data)
Net income$14,459 $3,382 
Basic earnings per common share0.38 0.08 
Diluted earnings per common share (1)0.38 0.08 
Average total assets$7,746,259 $7,951,344 
Average stockholders' equity785,061 844,200 
Net income / Average total assets (ROA)0.76 %0.17 %
Net income / Average stockholders' equity (ROE)7.47 %1.61 %
Average stockholders' equity / Average total assets ratio10.13 %10.62 %
Adjusted net income (2)$14,651 $3,662 
Adjusted earnings per common share (2)0.39 0.09 
Adjusted earnings per diluted common share (2)0.39 0.09 
Adjusted net income / Average total assets (Adjusted ROA) (2)0.77 %0.19 %
Adjusted net income / Average stockholders' equity (Adjusted ROE) (2)7.57 %1.74 %
__________________
(1)See “Financial Highlights” for an explanation of certain non-GAAP measures.


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None(1)Potential dilutive instruments consisted of our outstanding obligations are exchangeable for, or convertible into, equity securities. Consequently, our basicunvested shares of restricted stock and restricted stock units. During the three months ended March 31, 2021 and 2020, potential dilutive instruments were included in the diluted incomeearnings per share are equalcomputation because, when the unamortized deferred compensation cost related to these shares was divided by the average market price per share in eachthose periods, fewer shares would have been purchased than restricted shares assumed issued. Therefore, in those periods, such awards resulted in higher diluted weighted average shares outstanding than basic weighted average shares outstanding, and had a dilutive effect in per share earnings.
(2)See “Selected Financial Information” for an explanation of certain non-GAAP financial measures and see “Non-GAAP Financial Measures Reconciliation” for a reconciliation of the periods presented.non-GAAP financial measures to their GAAP counterparts.
During the three and six months ended June 30, 2018 and 2017,March 31, 2021, basic and diluted earnings per share increased as a result of higher net income in 2018earned compared to the same periods of 2017.period one year ago. .




81

Capital Resources and Liquidity Management
Capital Resources. 
Stockholders’ equity is influenced primarily by earnings, dividends, if any, and changes in accumulated other comprehensive income or loss (AOCI/L)(AOCI) caused primarily by fluctuations in unrealized holding gains or losses, net of taxes, on debt securities available for sale investment securities. AOCI/Lsale. AOCI is not included for purposes of determining our capital for bank regulatory purposes.
Stockholders’ equity decreased $34.1 million, or 4.52%, to $719.4was $785.0 million as of June 30, 2018 asMarch 31, 2021, an increase of $1.6 million, or 0.2%, compared to $783.4 million as of December 31, 2017, due to a special dividend2020. This increase was primarily driven by $14.5 million of $40.0 million paid on March 13, 2018 to MSF prior to the record date for the Spin-off, $19.9 million net income in the six months ended June 30, 2018 andfirst quarter of 2021, partially offset by $18.6 million decrease in AOCI primarily as a $13.9 million increase in AOCL mainly the result of lower valuation of the Company’s debt securities available for sale valuations compared to December 31, 2017. The lower securities valuations were due primarily toas a result of market increases in long-term yield curves.
Class B Common Stock Repurchases and Cancellation of Treasury Shares
On March 10, 2021, the Company’s Board of Directors approved a stock repurchase program which provides for the potential repurchase of up to $40 million of shares of the Company’s Class B common stock (the “2021 stock repurchase program”). Under the 2021 Stock Repurchase Program, the Company may repurchase shares of Class B common stock through open market interest rates.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 repurchases its shares of Class B common stock and the timing of such purchases will depend upon market conditions, regulatory requirements, other corporate liquidity requirements and priorities and other factors as may be considered in the Company’s sole discretion. Repurchases may also be 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 2021 Stock Repurchase Program does not obligate the Company to repurchase any particular amount of shares of Class B common stock, and may be suspended or discontinued at any time without notice. During the three months ended March 31, 2021, the Company repurchased an aggregate of 116,037 shares of Class B common stock at a weighted average price per share of $15.98 under the 2021 Stock Repurchase Program. The aggregate purchase price for these transactions was approximately $1.9 million, including transaction costs. In the first quarter of 2021, the Company’s Board of Directors authorized the cancellation of those 116,037 shares of Class B common stock.
On February 14 and February 21, 2020, the Company repurchased an aggregate of 932,459 shares of its outstanding Class B Common Stock in two privately negotiated transactions for an aggregate purchase price of $15.2 million, including $0.3 million in broker fees and other expenses. These 932,459 shares of Class B common stock were recorded as treasury stock under the cost method. The Company used available cash to fund these repurchases.
In March 2020, Company’s Board of Directors authorized the cancellation of all 4,464,916 shares of Class B Common Stock previously held as treasury stock, including shares repurchased during 2018, 2019 and 2020, effective March 31, 2020.
Liquidity Management. 
At June 30, 2018March 31, 2021 and December 31, 2020, the Company had $1.3$1.05 billion of outstanding advances from the FHLBFHLB. At March 31, 2021 and other borrowings, compared to $1.2 billion at December 31, 2017. During2020, we had an additional $1.3 billion available borrowing capacity under FHLB facilities. In the six months ended June 30, 2018, the Company repaid $571 millionfirst quarter of outstanding2021, there were no repayments of FHLB advances andor additional borrowings from this source.There were no other borrowings, and obtained new borrowing proceeds of $656 million from these sources. Other borrowings as of June 30, 2018 consisted of $2.0March 31, 2021 and December 31, 2020.
We also have available uncommitted federal funds lines with several banks, and had $70.0 million of short-term Fed Funds purchased from other banks which maturedavailability under these lines at March 31, 2021 and December 31, 2020.
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On June 23, 2020, the Company completed a $60.0 million offering of Senior Notes with a coupon rate of 5.75% and due 2025. See “Item 7. Management’s Discussion and Analysis Of Financial Condition And Results Of Operations” included in July 2018. The following table summarizes the composition of our FHLB advances and other borrowings by type of interest rate:
 June 30
2018		 December 31, 2017
 (in thousands)
Advances from the FHLB and other borrowings:   
Fixed rate ranging from 1.05% to 3.86% (December 31, 2017 - 0.90% to 3.86%)$978,000
 $918,000
Floating rate based on 3-month LIBOR ranging from 2.26% to 2.38% (December 31, 2017 - 1.23% to 1.71%) (1)
280,000
 255,000
 $1,258,000
 $1,173,000
__________________
(1)We have designated certain interest rate swaps as cash flow hedges to manage this variable interest rate exposure.

At June 30, 2018, advances from the FHLB and other borrowings had maturities through 2022 with interest rates ranging from 1.05% to 3.86%.2020 Form 10-K for more details.
We and our subsidiary, Amerant Florida, are a corporationcorporations separate and apart from the Bank and, therefore, must provide for our own liquidity. OurHistorically, our main source of funding ishas been dividends declared and paid to us and Amerant Florida by the Bank. Additionally, ourBank, while the Company issued the Senior Notes in 2020. The Company, which is the issuer of the Senior Notes, held cash and cash equivalents of $39.7 million as of March 31, 2021 and $43.0 million as of December 31, 2020, in funds available to service its Senior Notes and for general corporate purposes, as a separate stand-alone entity. Our subsidiary, Mercantil Florida Bancorp Inc., or MercantilAmerant Florida, which is an intermediate bank holding company, and the obligor on our junior subordinated debt and the guarantor of the Senior Notes, held cash and cash equivalents of $36.0$17.7 million as of June 30, 2018March 31, 2021 and $39.1$16.6 million atas of December 31, 20172020, in funds available to service thisits junior subordinated debt.debt and for general corporate purposes, as a separate stand-alone entity.

We have not provided summarized financial information for the Company and Amerant Florida as we do not believe it would be material information since the assets, liabilities and results of operations of the Company and Amerant Florida are not materially different from the amounts reflected in the consolidated financial statements of the Company.
80

Redemption of Junior Subordinated Debentures

On January 30, 2020, the Company redeemed all $26.8 million of its outstanding 8.90% trust preferred capital securities issued by Capital Trust I at a redemption price of 100%. The Company simultaneously redeemed all junior subordinated debentures held by Capital Trust I as part of this redemption transaction. See “Item 7. Management’s Discussion and Analysis Of Financial Condition And Results Of Operations” included in the 2020 Form 10-K for more details.

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/L.AOCI. Management believes that these limitations will not affect ourthe Company’s ability, and MercantilAmerant Florida’s ability, to meet ourtheir ongoing short-term cash obligations. See ‘Supervision “Supervision and Regulation” in the Information Statement.Form 10-K for the year ended December 31, 2020.
83

Regulatory Capital Requirements
OurThe 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
(in thousands, except percentages)Amount Ratio Amount Ratio Amount Ratio
June 30, 2018           
Total capital ratio$899,709
 12.61% $570,819
 8.00% $713,524
 10.00%
Tier I capital ratio832,765
 11.67% 428,114
 6.00% 570,819
 8.00%
Tier I leverage ratio832,765
 9.87% 337,598
 4.00% 421,998
 5.00%
Common Equity Tier I723,053
 10.13% 321,086
 4.50% 463,790
 6.50%
            
December 31, 2017

 

 

 

 

 

Total capital ratio$926,049
 13.30% $556,578
 8.00% $695,722
 10.00%
Tier I capital ratio852,825
 12.30% 417,433
 6.00% 556,578
 8.00%
Tier I leverage ratio852,825
 10.20% 335,647
 4.00% 419,559
 5.00%
Common Equity Tier I753,545
 10.70% 313,075
 4.50% 452,220
 6.50%
ActualRequired for Capital Adequacy PurposesRegulatory Minimums To be Well Capitalized
(in thousands, except percentages)AmountRatioAmountRatioAmountRatio
March 31, 2021
Total capital ratio$890,585 14.12 %$504,427 8.00 %$630,534 10.00 %
Tier 1 capital ratio811,348 12.87 %378,320 6.00 %504,427 8.00 %
Tier 1 leverage ratio811,348 10.54 %307,925 4.00 %384,906 5.00 %
Common Equity Tier 1 (CET1)750,257 11.90 %283,740 4.50 %409,847 6.50 %
December 31, 2020
Total capital ratio$876,966 13.96 %$502,463 8.00 %$628,078 10.00 %
Tier 1 capital ratio798,033 12.71 %376,847 6.00 %502,463 8.00 %
Tier 1 leverage ratio798,033 10.11 %315,770 4.00 %394,713 5.00 %
Common Equity Tier 1 (CET1)736,930 11.73 %282,635 4.50 %408,251 6.50 %
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
June 30, 2018           
Total capital ratio$868,917
 12.18% $570,704
 8.00% $713,380
 10.00%
Tier I capital ratio801,973
 11.24% 428,028
 6.00% 570,704
 8.00%
Tier I leverage ratio801,973
 9.55% 335,941
 4.00% 419,926
 5.00%
Common Equity Tier I801,973
 11.24% 321,021
 4.50% 463,697
 6.50%
            
December 31, 2017

 

 

 

 

 

Total capital ratio$885,855
 12.70% $556,446
 8.00% $695,557
 10.00%
Tier I capital ratio812,631
 11.70% 417,334
 6.00% 556,446
 8.00%
Tier I leverage ratio812,631
 9.70% 335,600
 4.00% 419,500
 5.00%
Common Equity Tier I812,631
 11.70% 313,001
 4.50% 452,112
 6.50%

ActualRequired for Capital Adequacy PurposesRegulatory Minimums to be Well Capitalized
(in thousands, except percentages)AmountRatioAmountRatioAmountRatio
March 31, 2021
Total capital ratio$890,909 14.13 %$504,267 8.00 %$630,334 10.00 %
Tier 1 capital ratio811,696 12.88 %378,200 6.00 %504,267 8.00 %
Tier 1 leverage ratio811,696 10.55 %307,785 4.00 %384,731 5.00 %
Common Equity Tier 1 (CET1)811,696 12.88 %283,650 4.50 %409,717 6.50 %
December 31, 2020
Total capital ratio$873,152 13.91 %$502,214 8.00 %$627,768 10.00 %
Tier 1 capital ratio794,257 12.65 %376,661 6.00 %502,214 8.00 %
Tier 1 leverage ratio794,257 10.07 %315,569 4.00 %394,461 5.00 %
Common Equity Tier 1 (CET1)794,257 12.65 %282,495 4.50 %408,049 6.50 %
81
84




Off-Balance Sheet Arrangements
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. For more details on the Company’s off-balance sheet arrangements, see Note 17 to our audited consolidated financial statements included in the Form 10-K for the year ended December 31, 2020.
(in thousands)March 31, 2021December 31, 2020
Commitments to extend credit$761,378 $763,880 
Letters of credit10,345 11,157 
$771,723 $775,037 

 June 30, 2018 December 31, 2017
 (in thousands)
Commitments to extend credit$750,440
 $762,437
Credit card facilities200,912
 200,229
Letters of credit23,989
 18,350
 $975,341
 $981,016
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 operating leases, and other borrowing arrangements. There have been no material changes to the contractual obligations previously disclosed in the Form 10-K

Critical Accounting Policies and Estimates
For our critical accounting policies and estimates disclosure, see the Information StatementForm 10-K where such matters are disclosed for the Company’s latest fiscal year ended December 31, 2017.2020.
Recently Issued Accounting Pronouncements. Refer to Note 2 to our unaudited interim consolidated financial statements included in this Form 10-Q, for a discussion of Except as discussed below, there are no recently issued accounting pronouncements that have recently been adopted by us. For a description of accounting standards issued that are pending adoption, see Note 1 “Business, Basis of Presentation and Summary of Significant Accounting Policies” in the Company’s interim consolidated financial statements in this Form 10-Q.

Effective January 1, 2021, the Company adopted the new accounting guidance on leases on a prospective basis, which resulted in the recognition of approximately $54.5 million of lease assets and approximately $55.0 million of lease liabilities. See Note 1– Financial Information for additional information.

Effective January 1, 2021, the Company adopted the new accounting guidance on accounting for targeted improvements to accounting for hedging activities, which did not have an effect on the Company’s consolidated financial statements. See Note 1– Financial Information for additional information.

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ITEM 3. 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 impact toeffects on earnings, equity and the available for sale portfolio mark-to-market exposure, of changes in market interest rates. Exposures are managed to a set of limits previously approved by our board of directors and monitored by management.
For a disclosure of the quantitative and qualitative information regarding There have been no material changes in our market risk exposure as of December 31, 2017 compared to those discussed in our Form 10-K, see the section titled Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” of the Information Statement. There have been no significant changes in the assumptions used in monitoring market risk as of June 30, 2018. The impact of other types of market risks, such as foreign currency exchange risk, is deemed immaterial..

ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
The Company with the participationmaintains a set of its management, including its Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the SecuritiesExchange Act) designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. Our management, with the participation of 1934, as amended)our Chief Executive Officer and our Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are effective as of the end of the period covered by this report. Based uponquarterly report on Form 10-Q to ensure that evaluationinformation we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and asreported within the time periods specified in the rules and forms of the end of the period covered by this report, the Company’sSEC, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, concluded that the Company’s disclosure controls and procedures were effectiveas appropriate, to allow timely decisions regarding disclosurerequired disclosures.
Changes in its reports that the Company files or submits to the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended. Internal Control Over Financial Reporting
There have beenwere no changes in the Company’sour internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the period covered by this reportForm 10-Q that havehas materially affected, or areis reasonably likely to materially affect, the Company’sour internal control over financial reporting.

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constrains and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.
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86


PART II. OTHER INFORMATION





ITEM 1. LEGAL PROCEEDINGS
We are, from time to time, in the ordinary course, engaged in litigation, and we have a small number of unresolved claims pending. In addition, as part of the ordinary course of business, we are parties to litigation involving claims to the ownership of funds in particular accounts, the collection of delinquent accounts, credit relationships, challenges to security interests in collateral and foreclosure interests, that are incidental to our regular business activities. While the ultimate liability with respect to these other litigation matters and claims cannot be determined at this time, we believe that potential liabilities relating to pending matters are not likely to be material to our financial position, results of operations or cash flows. Where appropriate, reserves for these various matters of litigation are established, under FASB ASC Topic 450, Contingencies, based in part upon management’s judgment and the advice of legal counsel.
At least quarterly, we assess our liabilities and contingencies in connection with outstanding legal proceedings utilizing the latest information available. For those matters where it is probable that we will incur a loss and the amount of the loss can be reasonably estimated, we record a liability in our consolidated financial statements. These legal reserves may be increased or decreased to reflect any relevant developments based on our quarterly reviews. For other matters, where a loss is not probable or the amount of the loss is not estimable, we have not accrued legal reserves, consistent with applicable accounting guidance. Based on information currently available to us, advice of counsel, and available insurance coverage, we believe that our established reserves are adequate and the liabilities arising from the legal proceedings will not have a material adverse effect on our consolidated financial condition. We note, however, that in light of the inherent uncertainty in legal proceedings there can be no assurance that the ultimate resolution will not exceed established reserves. As a result, the outcome of a particular matter or a combination of matters, if unfavorable, may be material to our financial position, results of operations or cash flows for a particular period, depending upon the size of the loss or our income for that particular period.

ITEM 1A. RISK FACTORS
In addition to the other information set forth in this report, you should carefully consider the factors discussed in “Risk Factors”evaluating an investment in the Information Statement, which could materially affectCompany's common stock, investors should consider carefully, among other things, the risk factors previously disclosed in Part I, Item 1A of our business, financial condition or future results. The risks described inAnnual Report on Form 10-K, for the Information Statement are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, and/or operating results in the future.year ended December 31, 2020.
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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Not applicable.The following table provides information regarding repurchases of the Company’s common stock by the Company during the three months ended March 31, 2021:

(a)(b)(c)(d)
PeriodTotal Number of Shares PurchasedAverage Price Paid Per Share
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)
Maximum Dollar Value of Shares that May Yet Be Purchased Under the Current Program
January 1 - January 31— $— — $40,000,000 
February 1 - February 28— — — 40,000,000 
March 1 - March 31116,037 15.98116,037 38,145,316 
Total116,037 $15.98 116,037 $38,145,316 

(1) On March 10, 2021, the Company’s Board of Directors approved a stock repurchase program which provides for the potential repurchase of up to $40 million of shares of the Company’s Class B common stock (the “2021 Stock Repurchase Program”). Under the 2021 Stock Repurchase Program, the Company may 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 Exchange Act. The extent to which the Company repurchases its shares of Class B common stock and the timing of such purchases will depend upon market conditions, regulatory requirements, other corporate liquidity requirements and priorities and other factors as may be considered in the Company’s sole discretion. Repurchases may also be 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 2021 Stock Repurchase Program does not obligate the Company to repurchase any particular amount of shares of Class B common stock, and may be suspended or discontinued at any time without notice. As of March 31, 2021, the Company had repurchased a total of $1.9 million or 116,037 shares of Class B common stock at an average price of $15.98 per share.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.None.

ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.

ITEM 5. OTHER INFORMATION
Not applicable.

None.    
83
88



ITEM 6. EXHIBITS
Exhibit
Number
Description
3.110.1
3.210.2
10.110.3
10.4
10.5
31.1
31.2
32.1
32.2
Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 of the Sarbanes-Oxley Act of 2002, by Alberto Peraza, Co-PresidentGerald P. Plush, Vice-Chairman and Chief Executive Officer.
32.2
101.INSXBRL Instance Document
101.SCHXBRL Taxonomy Extension Schema Document
101.CALXBRL Taxonomy Extension Calculation Linkbase Document
101.LABXBRL Taxonomy Extension Label Linkbase Document
101.PREXBRL Taxonomy Extension Presentation Linkbase Document
101.DEFXBRL Taxonomy Extension Definition Linkbase Document
104Cover Page Interactive Data (embedded within XBRL documents)

89



84



SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
AMERANT BANCORP INC.
(Registrant)
Date:May 7, 2021By:
MERCANTIL BANK HOLDING CORPORATION
(Registrant)/s/ Gerald P. Plush
Gerald P. Plush
Date:September 21, 2018By:
/s/ Millar WilsonVice-Chairman and Chief Executive Officer
(Principal Executive Officer)
Millar Wilson
Date:May 7, 2021By:
Chief Executive Officer and
Vice-Chairman of the Board
/s/ Carlos Iafigliola
Carlos Iafigliola
Date:September 21, 2018By:/s/ Alberto Peraza
Alberto Peraza
Co-PresidentExecutive Vice-President and Chief Financial Officer
(Principal Financial Officer)

8590