UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~June 30, ~~2020~~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

Amerant Bancorp Inc.

(Exact Name of Registrant as Specified in Its Charter)


Florida		65-0032379
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
220 Alhambra Circle
Coral Gables,	Florida	33134
(Address of principal executive offices)		(Zip Code)
(305)		460-4038
(Registrant’s telephone number, including area ~~code~~code)
(Former name, former address and former fiscal year, if changed since last report: N/AA)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbols	Name of exchange on which registered
Class A Common Stock	AMTB	NASDAQ
Class B Common Stock	AMTBB	NASDAQ

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 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,” “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 company

☒

If an emerging growth company, indicate by check mark if the ~~company~~registrant 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.


Class						Outstanding as of ~~November 5, 2020~~Outstanding as of July 26, 2021
Class A Common Stock, $0.10 par value per share						~~28,858,853~~29,010,321 shares of Class A Common Stock
Class B Common Stock, $0.10 par value per share						~~13,286,137~~8,471,120 shares of Class B Common Stock

AMERANT BANCORP INC. AND SUBSIDIARIES

FORM 10-Q

~~September~~June 30, ~~2020~~2021

INDEX


		Page
PART I.	FINANCIAL INFORMATION
Item 1	Financial Statements	4
	Consolidated Balance Sheets as of ~~September~~June 30, ~~2020~~2021 (Unaudited) and December 31, ~~2019~~2020	4
	Consolidated Statements of Operations and Comprehensive ~~(Loss)~~Income for the three and ~~nine~~ six month periods ended ~~Sept~~e ~~mber~~June 30, ~~2020~~2021 and ~~2019~~2020 (Unaudited)	5
	Consolidated Statements of Changes in Stockholders’ Equity for the three and ~~nine~~six month periods ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020 (Unaudited)	7
	Consolidated Statements of Cash Flows for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020 (Unaudited)	9
	Notes to Interim Consolidated Financial Statements (Unaudited)	11

















Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3846
	Cautionary Notice Regarding Forward-Looking Statements	3846
	Overview	43
	~~Selected Financial Information~~	5350
	Results of Operations	59
	Financial Condition	7779
Item 3	Quantitative and Qualitative Disclosures About Market Risk	~~103~~101
Item 4	Controls and Procedures	~~103~~101
PART II	OTHER INFORMATION
Item 1	Legal Proceedings	~~104~~102
Item 1A	Risk Factors	~~104~~102
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	~~104~~103
Item 3	Defaults Upon Senior Securities	~~104~~103
Item 4	Mine Safety Disclosures	~~104~~103
Item 5	Other Information	~~104~~103
Item 6	Exhibits	~~105~~104
	Signatures	~~106~~105

Table of Contents

Part 1. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Amerant Bancorp Inc. and Subsidiaries

Consolidated Balance Sheets


(in thousands, except share data)	(in thousands, except share data)	(Unaudited) September 30, 2020		December 31, 2019		(in thousands, except share data)	(Unaudited) June 30, 2021		December 31, 2020

Assets	Assets					Assets
Cash and due from banks	Cash and due from banks	$	34,091	$	28,035	Cash and due from banks	$	45,198	$	30,179
Interest earning deposits with banks	Interest earning deposits with banks	193,069		93,289		Interest earning deposits with banks	126,314		184,207
Cash and cash equivalents	Cash and cash equivalents	227,160		121,324		Cash and cash equivalents	171,512		214,386
Securities	Securities					Securities
Debt securities available for sale	Debt securities available for sale	1,317,724		1,568,752		Debt securities available for sale	1,194,068		1,225,083
Debt securities held to maturity	Debt securities held to maturity	61,676		73,876		Debt securities held to maturity	93,311		58,127
Trading securities						Trading securities	198		0
Equity securities with readily determinable fair value not held for trading	Equity securities with readily determinable fair value not held for trading	24,381		23,848		Equity securities with readily determinable fair value not held for trading	23,988		24,342
Federal Reserve Bank and Federal Home Loan Bank stock	Federal Reserve Bank and Federal Home Loan Bank stock	65,015		72,934		Federal Reserve Bank and Federal Home Loan Bank stock	47,675		65,015
Securities	Securities	1,468,796		1,739,410		Securities	1,359,240		1,372,567

Mortgage loans held for sale (at fair value)						Mortgage loans held for sale (at fair value)	1,775		0
Loans held for investment, gross	Loans held for investment, gross	5,924,617		5,744,339		Loans held for investment, gross	5,606,773		5,842,337
Less: Allowance for loan losses	Less: Allowance for loan losses	116,819		52,223		Less: Allowance for loan losses	104,185		110,902
Loans held for investment, net	Loans held for investment, net	5,807,798		5,692,116		Loans held for investment, net	5,502,588		5,731,435
Bank owned life insurance	Bank owned life insurance	216,130		211,852		Bank owned life insurance	220,271		217,547
Premises and equipment, net	Premises and equipment, net	126,895		128,824		Premises and equipment, net	108,708		109,990
Deferred tax assets, net	Deferred tax assets, net	16,206		5,480		Deferred tax assets, net	13,516		11,691
Goodwill	Goodwill	19,506		19,506		Goodwill	19,506		19,506
Accrued interest receivable and other assets	Accrued interest receivable and other assets	94,556		66,887		Accrued interest receivable and other assets	135,728		93,771
Total assets	Total assets	$	7,977,047	$	7,985,399	Total assets	$	7,532,844	$	7,770,893
Liabilities and Stockholders' Equity	Liabilities and Stockholders' Equity					Liabilities and Stockholders' Equity
Deposits	Deposits					Deposits
Demand	Demand					Demand
Noninterest bearing	Noninterest bearing	$	916,889	$	763,224	Noninterest bearing	$	1,065,622	$	872,151
Interest bearing	Interest bearing	1,210,639		1,098,323		Interest bearing	1,293,626		1,230,054
Savings and money market	Savings and money market	1,496,119		1,475,257		Savings and money market	1,682,619		1,587,876
Time	Time	2,253,899		2,420,339		Time	1,633,041		2,041,562
Total deposits	Total deposits	5,877,546		5,757,143		Total deposits	5,674,908		5,731,643
Advances from the Federal Home Loan Bank and other borrowings		1,050,000		1,235,000
Advances from the Federal Home Loan Bank						Advances from the Federal Home Loan Bank	808,614		1,050,000
Senior notes	Senior notes	58,498		0		Senior notes	58,736		58,577
Junior subordinated debentures held by trust subsidiaries	Junior subordinated debentures held by trust subsidiaries	64,178		92,246		Junior subordinated debentures held by trust subsidiaries	64,178		64,178
Accounts payable, accrued liabilities and other liabilities	Accounts payable, accrued liabilities and other liabilities	97,292		66,309		Accounts payable, accrued liabilities and other liabilities	127,340		83,074
Total liabilities	Total liabilities	7,147,514		7,150,698		Total liabilities	6,733,776		6,987,472
Commitments and contingencies (Note 15)
Contingencies (Note 16)						Contingencies (Note 16)	0		0

Stockholders’ equity	Stockholders’ equity					Stockholders’ equity
Class A common stock, $0.10 par value, 400 million shares authorized; 28,860,423 shares issued and outstanding (2019 - 28,927,576 shares issued and outstanding)		2,886		2,893
Class B common stock, $0.10 par value, 100 million shares authorized; 13,286,137 shares issued and outstanding (2019: 17,751,053 shares issued; 14,218,596 shares outstanding)		1,329		1,775
Class A common stock, $0.10 par value, 400 million shares authorized; 29,028,672 shares issued and outstanding (2020 - 28,806,344 shares issued and outstanding)						Class A common stock, $0.10 par value, 400 million shares authorized; 29,028,672 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; 8,534,120 shares issued and outstanding (2020: 9,036,352 shares issued and outstanding)						Class B common stock, $0.10 par value, 100 million shares authorized; 8,534,120 shares issued and outstanding (2020: 9,036,352 shares issued and outstanding)	853		904
Additional paid in capital	Additional paid in capital	359,553		419,048		Additional paid in capital	299,547		305,569
Treasury stock, at cost; 3,532,457 shares of Class B common stock in 2019.		0		(46,373)

Retained earnings	Retained earnings	433,929		444,124		Retained earnings	472,823		442,402
Accumulated other comprehensive income	Accumulated other comprehensive income	31,836		13,234		Accumulated other comprehensive income	23,758		31,664
Total stockholders' equity before noncontrolling interest						Total stockholders' equity before noncontrolling interest	799,885		783,421
Noncontrolling interest						Noncontrolling interest	(817)		0
Total stockholders' equity	Total stockholders' equity	829,533		834,701		Total stockholders' equity	799,068		783,421
Total liabilities and stockholders' equity	Total liabilities and stockholders' equity	$	7,977,047	$	7,985,399	Total liabilities and stockholders' equity	$	7,532,844	$	7,770,893

The accompanying notes are an integral part of these consolidated financial statements (unaudited).

Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Consolidated Statements of Operations and Comprehensive ~~(Loss)~~ Income (Unaudited)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	(in thousands)	2020		2019		2020		2019		(in thousands)	2021		2020		2021		2020
Interest income	Interest income									Interest income
Loans	Loans	$	52,736	$	66,118	$	166,007	$	199,641	Loans	$	53,612	$	53,483	$	106,383	$	113,271
Investment securities	Investment securities	9,120		11,325		30,813		35,792		Investment securities	7,499		10,628		15,006		21,693
Interest earning deposits with banks	Interest earning deposits with banks	61		761		579		2,304		Interest earning deposits with banks	62		56		113		518
Total interest income	Total interest income	61,917		78,204		197,399		237,737		Total interest income	61,173		64,167		121,502		135,482

Interest expense	Interest expense									Interest expense
Interest bearing demand deposits	Interest bearing demand deposits	97		191		336		766		Interest bearing demand deposits	123		104		236		239
Savings and money market deposits	Savings and money market deposits	1,278		4,125		6,113		11,872		Savings and money market deposits	945		1,569		1,925		4,835
Time deposits	Time deposits	10,874		13,284		36,764		38,577		Time deposits	6,327		12,406		13,687		25,890
Advances from the Federal Home Loan Bank	Advances from the Federal Home Loan Bank	2,820		6,253		10,342		18,750		Advances from the Federal Home Loan Bank	2,255		3,110		5,013		7,522
Senior notes	Senior notes	942		0		1,026		0		Senior notes	942		84		1,884		84
Junior subordinated debentures	Junior subordinated debentures	558		1,748		1,918		5,943		Junior subordinated debentures	609		571		1,216		1,360
Securities sold under agreements to repurchase	Securities sold under agreements to repurchase	0		3		0		3		Securities sold under agreements to repurchase	1		0		1		0
Total interest expense	Total interest expense	16,569		25,604		56,499		75,911		Total interest expense	11,202		17,844		23,962		39,930
Net interest income	Net interest income	45,348		52,600		140,900		161,826		Net interest income	49,971		46,323		97,540		95,552
Provision for (reversal of) loan losses		18,000		(1,500)		88,620		(2,850)
Net interest income after provision for (reversal of) loan losses		27,348		54,100		52,280		164,676
(Reversal of) provision for loan losses										(Reversal of) provision for loan losses	(5,000)		48,620		(5,000)		70,620
Net interest income (loss) after (reversal of) provision for loan losses										Net interest income (loss) after (reversal of) provision for loan losses	54,971		(2,297)		102,540		24,932

Noninterest income	Noninterest income									Noninterest income
Deposits and service fees	Deposits and service fees	3,937		4,366		11,665		12,793		Deposits and service fees	4,284		3,438		8,390		7,728
Brokerage, advisory and fiduciary activities	Brokerage, advisory and fiduciary activities	4,272		3,647		12,730		11,071		Brokerage, advisory and fiduciary activities	4,431		4,325		9,034		8,458
Change in cash surrender value of bank owned life insurance	Change in cash surrender value of bank owned life insurance	1,437		1,449		4,278		4,272		Change in cash surrender value of bank owned life insurance	1,368		1,427		2,724		2,841
Securities gains, net	Securities gains, net	8,600		906		25,957		1,902		Securities gains, net	1,329		7,737		3,911		17,357
Cards and trade finance servicing fees	Cards and trade finance servicing fees	345		1,034		1,013		3,368		Cards and trade finance servicing fees	388		273		727		668
Gain (loss) on early extinguishment of advances from the Federal Home Loan Bank, net		0		0		(73)		557
Data processing and fees for other services		0		70		0		955
Loss on early extinguishment of advances from the Federal Home Loan Bank, net										Loss on early extinguishment of advances from the Federal Home Loan Bank, net	(2,488)		(66)		(2,488)		(73)

Other noninterest income	Other noninterest income	1,701		2,364		6,385		6,221		Other noninterest income	6,422		2,619		7,599		4,684
Total noninterest income	Total noninterest income	20,292		13,836		61,955		41,139		Total noninterest income	15,734		19,753		29,897		41,663

Noninterest expense	Noninterest expense									Noninterest expense
Salaries and employee benefits	Salaries and employee benefits	28,268		33,862		79,164		101,356		Salaries and employee benefits	30,796		21,570		57,223		50,896
Occupancy and equipment	Occupancy and equipment	4,281		3,878		12,304		12,152		Occupancy and equipment	5,342		4,220		9,830		8,023
Telecommunication and data processing	Telecommunication and data processing	3,228		3,408		9,849		9,667		Telecommunication and data processing	3,515		3,157		7,242		6,621
Professional and other services fees	Professional and other services fees	3,403		4,295		10,322		11,693		Professional and other services fees	4,693		3,965		8,477		6,919
Depreciation and amortization	Depreciation and amortization	1,993		1,928		5,912		5,880		Depreciation and amortization	1,872		1,960		3,658		3,919
FDIC assessments and insurance	FDIC assessments and insurance	1,898		597		4,256		3,167		FDIC assessments and insurance	1,702		1,240		3,457		2,358
Other operating expenses	Other operating expenses	2,429		4,769		5,300		13,672		Other operating expenses	3,205		628		4,863		2,871
Total noninterest expenses	Total noninterest expenses	45,500		52,737		127,107		157,587		Total noninterest expenses	51,125		36,740		94,750		81,607
Income (loss) before income tax		2,140		15,199		(12,872)		48,228
Income (loss) before income tax expense (benefit)										Income (loss) before income tax expense (benefit)	19,580		(19,284)		37,687		(15,012)
Income tax (expense) benefit	Income tax (expense) benefit	(438)		(3,268)		2,677		(10,369)		Income tax (expense) benefit	(4,435)		4,005		(8,083)		3,115
Net income (loss)		$	1,702	$	11,931	$	(10,195)	$	37,859
Net income (loss) before attribution of noncontrolling interest										Net income (loss) before attribution of noncontrolling interest	15,145		(15,279)		29,604		(11,897)
Noncontrolling interest										Noncontrolling interest	(817)		0		(817)		0
Net income (loss) attributable to Amerant Bancorp Inc.										Net income (loss) attributable to Amerant Bancorp Inc.	$	15,962	$	(15,279)	$	30,421	$	(11,897)

The accompanying notes are an integral part of these consolidated financial statements (unaudited).

Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Consolidated Statements of Operations and Comprehensive ~~(Loss)~~ Income (Unaudited)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
(in thousands, except per share data)	(in thousands, except per share data)	2020		2019		2020		2019		(in thousands, except per share data)	2021		2020		2021		2020

Other comprehensive (loss) income, net of tax
Net unrealized holding gains on debt securities available for sale arising during the period		$	3,824	$	6,866	$	39,887	$	37,457
Other comprehensive income (loss), net of tax										Other comprehensive income (loss), net of tax
Net unrealized holding gains (losses) on debt securities available for sale arising during the period										Net unrealized holding gains (losses) on debt securities available for sale arising during the period	$	4,937	$	9,361	$	(4,529)	$	36,063
Net unrealized holding (losses) gains on cash flow hedges arising during the period	Net unrealized holding (losses) gains on cash flow hedges arising during the period	(28)		68		(1,702)		57		Net unrealized holding (losses) gains on cash flow hedges arising during the period	(29)		(160)		7		(1,674)
Reclassification adjustment for items included in net income	Reclassification adjustment for items included in net income	(6,687)		(965)		(19,583)		(2,242)		Reclassification adjustment for items included in net income	(1,059)		(5,591)		(3,384)		(12,896)
Other comprehensive (loss) income		(2,891)		5,969		18,602		35,272
Comprehensive (loss) income		$	(1,189)	$	17,900	$	8,407	$	73,131
Other comprehensive income (loss)										Other comprehensive income (loss)	3,849		3,610		(7,906)		21,493
Comprehensive income (loss)										Comprehensive income (loss)	$	19,811	$	(11,669)	$	22,515	$	9,596

Earnings Per Share (Note 17):
Earnings Per Share (Note 18):										Earnings Per Share (Note 18):
Basic earnings (loss) per common share	Basic earnings (loss) per common share	$	0.04	$	0.28	$	(0.24)	$	0.89	Basic earnings (loss) per common share	$	0.43	$	(0.37)	$	0.81	$	(0.28)
Diluted earnings (loss) per common share	Diluted earnings (loss) per common share	$	0.04	$	0.28	$	(0.24)	$	0.88	Diluted earnings (loss) per common share	$	0.42	$	(0.37)	$	0.81	$	(0.28)

The accompanying notes are an integral part of these consolidated financial statements (unaudited).

Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)

Three and ~~Nine~~Six Month Periods Ended ~~September~~June 30, ~~2020~~2021


		Common Stock						Additional Paid in Capital			Treasury Stock			Retained Earnings					Accumulated Other Comprehensive Income				Total Stockholders' Equity				Common Stock															Additional Paid in Capital					Treasury Stock				Retained Earnings				Accumulated Other Comprehensive Income				Total Stockholders' Equity Before Noncontrolling Interest				Noncontrolling interest				Total Stockholders' Equity
(in thousands, except share data)	(in thousands, except share data)	Shares Outstanding		Issued Shares - Par Value												(in thousands, except share data)		Shares Outstanding										Issued Shares - Par Value
		Class A	Class B	Class A		Class B				Additional Paid in Capital			Treasury Stock					Retained Earnings				Accumulated Other Comprehensive Income			Class A					Class B					Class A			Class B			Additional Paid in Capital				Treasury Stock				Retained Earnings				Accumulated Other Comprehensive Income				Total Stockholders' Equity Before Noncontrolling Interest				Noncontrolling interest

Balance at December 31, 2019		28,927,576	14,218,596	$	2,893	$	1,775							$	419,048	$	(46,373)								$	444,124		$	13,234	$	834,701
Balance at December 31, 2020																									Balance at December 31, 2020		28,806,344					9,036,352				$	2,882		$	904			$	305,569							$	0							$	442,402					$	31,664			$	783,421	$	0	$	783,421

Repurchase of Class B common stock	Repurchase of Class B common stock	—	(932,459)	—		—		—						(15,239)							—					—					(15,239)			Repurchase of Class B common stock	—			(116,037)			—					—				—				(1,855)				—				—				(1,855)				—		(1,855)
Treasury stock retired	Treasury stock retired	—	—	—		(446)		(61,166)			61,612			—					—					0		Treasury stock retired		—					—				—			(12)			(1,843)					1,855				—				—				0				—				0
Restricted stock issued	Restricted stock issued	6,591	—	1		—		(1)			—			—					—				0		Restricted stock issued		196,015					—				22			—			(22)					—				—				—				0				—				0
Restricted stock surrendered	Restricted stock surrendered	(129)	—	—		—		(2)			—			—					—				(2)		Restricted stock surrendered		(713)					—				—			—			(13)					—				—				—				(13)				—				(13)
Restricted stock forfeited		(54,462)	—	(6)		—		6			—			—					—				0

Stock-based compensation expense	Stock-based compensation expense	—	—	—		—		392			—			—					—				392		Stock-based compensation expense		—					—				—			—			757					—				—				—				757				—				757
Net income		—	—	—		—		—			—			3,382					—				3,382
Other comprehensive income		—	—	—		—		—			—			—					17,883				17,883
Balance at March 31, 2020		28,879,576	13,286,137	$	2,888	$	1,329	$	358,277		$	0		$	447,506				$	31,117			$	841,117
Net income attributable to Amerant Bancorp Inc.																									Net income attributable to Amerant Bancorp Inc.		—					—				—			—			—					—				14,459				—				14,459				—				14,459

Other comprehensive loss																									Other comprehensive loss		—					—				—			—			—					—				—				(11,755)				(11,755)				—				(11,755)
Balance at March 31, 2021																									Balance at March 31, 2021		29,001,646					8,920,315				$	2,904		$	892		$	304,448				$	0			$	456,861			$	19,909			$	785,014			$	0			$	785,014
Repurchase of Class B common stock																									Repurchase of Class B common stock		—					(386,195)				—			—			—					(6,540)				—				—				(6,540)				—				(6,540)
Treasury stock retired																									Treasury stock retired		—					—				—			(39)			(6,501)					6,540				—				—				0				—				0
Restricted stock forfeited	Restricted stock forfeited	(9,819)	—	(1)		—		1			—			—					—				0		Restricted stock forfeited		(7,270)					—				(2)			—			2					—				—				—				0				—				0
Restricted stock units vested	Restricted stock units vested	3,439	—	—		—		—			—			—					—				0		Restricted stock units vested		33,780					—				2			—			(2)					—				—				—				0				—				0
Performance share units vested																									Performance share units vested		1,729					—				—			—			—					—				—				—				0				—				0
Restricted stock surrendered																									Restricted stock surrendered		(1,213)					—				—			—			(26)					—				—				—				(26)				—				(26)
Stock-based compensation expense	Stock-based compensation expense	—	—	—		—		750			—			—					—				750		Stock-based compensation expense		—					—				—			—			1,626					—				—				—				1,626				—				1,626
Net loss		—	—	—		—		—			—			(15,279)					—				(15,279)
Net income attributable to Amerant Bancorp Inc.																									Net income attributable to Amerant Bancorp Inc.		—					—				—			—			—					—				15,962				—				15,962				—				15,962
Net loss attributable to noncontrolling-interest shareholders																									Net loss attributable to noncontrolling-interest shareholders		—					—				—			—			—					—				—				—				0				(817)				(817)

Other comprehensive income	Other comprehensive income	—	—	—		—		—			—			—					3,610				3,610		Other comprehensive income		—					—				—			—			—					—				—				3,849				3,849				—				3,849
Balance at June 30, 2020		28,873,196	13,286,137	$	2,887	$	1,329	$	359,028		$	0		$	432,227				$	34,727			$	830,198
Restricted stock forfeited		(12,773)	—	(1)		—		1			—			—					—				0
Balance at June 30, 2021																									Balance at June 30, 2021		29,028,672					8,534,120				$	2,904		$	853		$	299,547				$	0			$	472,823			$	23,758			$	799,885			$	(817)			$	799,068

Stock-based compensation expense		—	—	—		—		524			—			—					—				524
Net income		—	—	—		—		—			—			1,702					—				1,702
Other comprehensive loss		—	—	—		—		—			—			—					(2,891)				(2,891)
Balance at September 30, 2020		28,860,423	13,286,137	$	2,886	$	1,329	$	359,553		$	0		$	433,929				$	31,836			$	829,533

The accompanying notes are an integral part of these consolidated financial statements (unaudited).

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Amerant Bancorp Inc. and Subsidiaries

Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)

Three and ~~Nine~~Six Month Periods Ended ~~September~~June 30, ~~2019~~

Common Stock Additional
Paid
in Capital Treasury Stock Retained
Earnings Accumulated Other Comprehensive Income (Loss) Total
Stockholders'
Equity
(in thousands, except share data) Shares Outstanding Issued Shares - Par Value
Class A Class B Class A Class B
Balance at December 31, 2018 26,851,832 16,330,917 $ 2,686 $ 1,775 $ 385,367 $ (17,908) $ 393,662 $ (18,164) $ 747,418
Common stock issued 2,132,865 — 213 — 29,005 — — — 29,218
Repurchase of Class B common stock — (2,112,321) — — — (28,465) — — (28,465)
Restricted stock issued 1,299 — — — — — — — 0
Stock-based compensation expense — — — — 1,492 — — — 1,492
Net income — — — — — — 13,071 — 13,071
Other comprehensive income — — — — — — — 16,015 16,015
Balance at March 31, 2019 28,985,996 14,218,596 $ 2,899 $ 1,775 $ 415,864 $ (46,373) $ 406,733 $ (2,149) $ 778,749
Stock-based compensation expense — — — — 1,474 — — — 1,474
Net income — — — — — — 12,857 — 12,857
Other comprehensive income — — — — — — — 13,288 13,288
Balance at June 30, 2019 28,985,996 14,218,596 $ 2,899 $ 1,775 $ 417,338 $ (46,373) $ 419,590 $ 11,139 $ 806,368
Stock-based compensation expense — — — — 1,483 — — — 1,483
Net income — — — — — — 11,931 — 11,931
Other comprehensive income — — — — — — — 5,969 5,969
Balance at September 30, 2019 28,985,996 14,218,596 $ 2,899 $ 1,775 $ 418,821 $ (46,373) $ 431,521 $ 17,108 $ 825,751
2020


	Common Stock						Additional Paid in Capital		Treasury Stock		Retained Earnings		Accumulated Other Comprehensive Income		Total Stockholders' Equity
(in thousands, except share data)	Shares Outstanding		Issued Shares - Par Value
	Class A	Class B	Class A		Class B
Balance at December 31, 2019	28,927,576	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 issued	6,591	—	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, 2020	28,879,576	13,286,137	$	2,888	$	1,329	$	358,277	$	0	$	447,506	$	31,117	$	841,117

Restricted stock forfeited	(9,819)	—	(1)		—		1		—		—		—		0
Restricted stock units vested	3,439	—	—		—		—		—		—		—		0
Stock-based compensation expense	—	—	—		—		750		—		—		—		750
Net loss	—	—	—		—		—		—		(15,279)		—		(15,279)
Other comprehensive income	—	—	—		—		—		—		—		3,610		3,610
Balance at June 30, 2020	28,873,196	13,286,137	$	2,887	$	1,329	$	359,028	$	0	$	432,227	$	34,727	$	830,198

The accompanying notes are an integral part of these consolidated financial statements (unaudited).

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Amerant Bancorp Inc. and Subsidiaries

Consolidated Statements of Cash Flows (Unaudited)


		Nine Months Ended September 30,					Six Months Ended June 30,
(in thousands)	(in thousands)	2020		2019		(in thousands)	2021		2020
Cash flows from operating activities	Cash flows from operating activities					Cash flows from operating activities
Net (loss) income		$	(10,195)	$	37,859
Adjustments to reconcile net (loss) income to net cash provided by operating activities
Provision for (reversal of) loan losses		88,620		(2,850)
Net income (loss) before attribution of noncontrolling interest						Net income (loss) before attribution of noncontrolling interest	$	29,604	$	(11,897)

Adjustments to reconcile net income (loss) to net cash provided by operating activities						Adjustments to reconcile net income (loss) to net cash provided by operating activities
(Reversal of) provision for loan losses						(Reversal of) provision for loan losses	(5,000)		70,620
Net premium amortization on securities	Net premium amortization on securities	11,174		10,763		Net premium amortization on securities	6,999		7,448
Depreciation and amortization	Depreciation and amortization	5,912		5,880		Depreciation and amortization	3,658		3,919
Stock-based compensation expense	Stock-based compensation expense	1,666		4,449		Stock-based compensation expense	2,383		1,142
Change in cash surrender value of bank owned life insurance	Change in cash surrender value of bank owned life insurance	(4,278)		(4,272)		Change in cash surrender value of bank owned life insurance	(2,724)		(2,841)
Securities gains, net	Securities gains, net	(25,957)		(1,902)		Securities gains, net	(3,911)		(17,357)

Gains on sale of loans, net						Gains on sale of loans, net	(3,806)		0
Deferred taxes and others	Deferred taxes and others	(16,180)		(935)		Deferred taxes and others	1,225		(16,934)
Loss (gain) on early extinguishment of advances from the FHLB		73		(557)
Loss on early extinguishment of advances from the FHLB, net						Loss on early extinguishment of advances from the FHLB, net	2,488		73
Net increase in mortgage loans held for sale (at fair value)						Net increase in mortgage loans held for sale (at fair value)	(1,775)		0
Net changes in operating assets and liabilities:	Net changes in operating assets and liabilities:					Net changes in operating assets and liabilities:
Accrued interest receivable and other assets	Accrued interest receivable and other assets	3,885		16,917		Accrued interest receivable and other assets	(1,224)		(6,551)
Accounts payable, accrued liabilities and other liabilities	Accounts payable, accrued liabilities and other liabilities	(4,412)		10,511		Accounts payable, accrued liabilities and other liabilities	4,103		(652)
Net cash provided by operating activities	Net cash provided by operating activities	50,308		75,863		Net cash provided by operating activities	32,020		26,970

Cash flows from investing activities	Cash flows from investing activities					Cash flows from investing activities
Purchases of investment securities:	Purchases of investment securities:					Purchases of investment securities:
Available for sale	Available for sale	(380,226)		(290,059)		Available for sale	(214,273)		(293,027)
Held to maturity securities						Held to maturity securities	(50,274)		0

Federal Home Loan Bank stock	Federal Home Loan Bank stock	(8,568)		(24,319)		Federal Home Loan Bank stock	(19)		(8,538)
		(388,794)		(314,378)			(264,566)		(301,565)
Maturities, sales and calls of investment securities:
Maturities, sales, calls and paydowns of investment securities:						Maturities, sales, calls and paydowns of investment securities:
Available for sale	Available for sale	673,836		430,118		Available for sale	232,518		383,073
Held to maturity	Held to maturity	11,658		7,182		Held to maturity	14,733		7,886
Federal Home Loan Bank stock	Federal Home Loan Bank stock	16,487		24,336		Federal Home Loan Bank stock	17,360		16,486
		701,981		461,636
Net increase in loans		(221,372)		(98,478)
							264,611		407,445
Net decrease (increase) in loans						Net decrease (increase) in loans	131,882		(146,318)
Proceeds from loan sales	Proceeds from loan sales	17,126		259,754		Proceeds from loan sales	105,771		15,235

Net purchases of premises and equipment and others	Net purchases of premises and equipment and others	(3,846)		(8,384)		Net purchases of premises and equipment and others	(2,268)		(3,331)

Net cash provided by investing activities		105,095		300,150
Cash paid in business acquisition						Cash paid in business acquisition	(1,037)		0
Net cash provided by (used in) investing activities						Net cash provided by (used in) investing activities	234,393		(28,534)

Cash flows from financing activities	Cash flows from financing activities					Cash flows from financing activities
Net increase (decrease) in demand, savings and money market accounts		286,843		(232,420)
Net decrease in time deposits		(166,440)		(107,418)
Net increase in demand, savings and money market accounts						Net increase in demand, savings and money market accounts	351,786		253,821
Net (decrease) increase in time deposits						Net (decrease) increase in time deposits	(408,521)		13,738

Proceeds from Advances from the Federal Home Loan Bank and other borrowings		700,000		935,000
Repayments of Advances from the Federal Home Loan Bank and other borrowings		(885,073)		(930,447)
Proceeds from Advances from the Federal Home Loan Bank						Proceeds from Advances from the Federal Home Loan Bank	285,500		700,000
Repayments of Advances from the Federal Home Loan Bank						Repayments of Advances from the Federal Home Loan Bank	(529,618)		(885,073)
Proceeds from issuance of Senior Notes, net of issuance costs	Proceeds from issuance of Senior Notes, net of issuance costs	58,412		0		Proceeds from issuance of Senior Notes, net of issuance costs	0		58,412

Redemption of junior subordinated debentures	Redemption of junior subordinated debentures	(28,068)		(25,864)		Redemption of junior subordinated debentures	0		(28,068)
Proceeds from common stock issued - Class A		0		29,218

Repurchase of common stock - Class B	Repurchase of common stock - Class B	(15,239)		(28,465)		Repurchase of common stock - Class B	(8,395)		(15,239)
Common stock retired to cover tax withholding	Common stock retired to cover tax withholding	(2)		0		Common stock retired to cover tax withholding	(39)		(2)
Net cash used in financing activities		(49,567)		(360,396)
Net cash (used in) provided by financing activities						Net cash (used in) provided by financing activities	(309,287)		97,589
Net increase in cash and cash equivalents	Net increase in cash and cash equivalents	105,836		15,617		Net increase in cash and cash equivalents	(42,874)		96,025

Cash and cash equivalents	Cash and cash equivalents					Cash and cash equivalents
Beginning of period	Beginning of period	121,324		85,710		Beginning of period	214,386		121,324
End of period	End of period	$	227,160	$	101,327	End of period	$	171,512	$	217,349

The accompanying notes are an integral part of these consolidated financial statements (unaudited).

Amerant Bancorp Inc. and Subsidiaries

Consolidated Statements of Cash Flows (Unaudited) (continued)


		Nine Months Ended September 30,					Six Months Ended June 30,
(in thousands)	(in thousands)	2020		2019		(in thousands)	2021		2020
Supplemental disclosures of cash flow information	Supplemental disclosures of cash flow information					Supplemental disclosures of cash flow information
Cash paid:	Cash paid:					Cash paid:
Interest	Interest	$	57,247	$	74,928	Interest	$	26,106	$	41,037
Income taxes	Income taxes	6,230		6,699		Income taxes	8,398		948

Initial recognition of operating lease right-of-use assets						Initial recognition of operating lease right-of-use assets	55,670		0
Initial recognition of operating lease liabilities						Initial recognition of operating lease liabilities	56,024		0

The accompanying notes are an integral part of these consolidated financial statements (unaudited).

Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Interim Consolidated Financial Statements (Unaudited)

1.Business, Basis of Presentation and Summary of Significant Accounting Policies

a) 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 Amerant Bank, N.A. (the “Bank”). The Company’s principal office is in the City of Coral Gables, Florida. The Bank is a member of the Federal Reserve Bank of Atlanta (“Federal Reserve Bank”) and the Federal Home Loan Bank of Atlanta (“FHLB”). The Bank has 3 ~~principal~~operating subsidiaries, Amerant Investments, Inc., a securities broker-dealer (“Amerant Investments”), Amerant ~~Trust, N.A,~~Mortgage, LLC (“Amerant Mortgage”), a ~~non-depository trust~~51% owned mortgage lending company ~~(“Amerant Trust”),~~domiciled in Florida, and Elant Bank & Trust (the “Cayman Bank”), a bank and trust company domiciled in the Cayman Islands acquired in November 2019.

In March 2021, the Bank and Amerant Trust, N.A, a non-depository trust company (“Amerant Trust”) received authorization to merge Amerant Trust with and into the Bank, with the Bank as sole survivor, effective on April 1, 2021. The Company completed the merger of Amerant Trust with and into the Bank on April 1, 2021.

In May 2021, the Company incorporated a new wholly owned subsidiary, Amerant SPV, LLC (“Amerant SPV”) with the purpose of investing and acquiring non-controlling interests in companies, including fintech and specialty finance companies.

The Company’s Class A common stock, par value $0.10 per common share, and Class B common stock, par value $0.10 per common share, are listed and trade on the Nasdaq Global Select Market under the symbols “AMTB” and “AMTBB,” respectively.

Restructuring Activities

The Company ~~is managed using a single segment concept,~~continues to work on ~~a consolidated basis,~~better aligning its operating structure and ~~management determined that no separate current or historical reportable segment disclosures are required under generally accepted accounting principles~~resources with its business activities. As part of these efforts, the Company decided to cease the origination of loans in New York and closed its New York City loan production office (the “NY LPO”). In addition, the Company decided to outsource the internal audit function and eliminated various other support positions. Additionally, the Company’s Chief Operating Officer (“COO”) stepped down from his position on June 30, 2021. Severance costs resulting from these events were approximately $3.3 million in the ~~United States~~second quarter of ~~America~~2021. Severance costs were mostly recorded in “salaries and employees benefits expense” in the Company’s consolidated statement of operations and comprehensive income.. Additionally, in the second quarter of 2021, the Company recorded a $0.8 million right-of-use asset (“~~U.S. GAAP”~~ROUA”). impairment associated with the closing of the NY LPO. The impairment was recorded in “occupancy and equipment expense” in the Company’s consolidated statement of operations and comprehensive income..

~~Initial Public Offering and Shares~~Stock Repurchase Program

On ~~December 21, 2018,~~March 10, 2021, the ~~Company completed an initial public offering (the “IPO”). In March 2019,~~Company’s Board of Directors approved a stock repurchase program which provides for the ~~Company repurchased the remaining~~potential repurchase of up to $40 million of shares of ~~its~~the Company’s Class B common stock ~~held by Mercantil Servicios Financieros, C.A., the Company’s former parent company (“the Former Parent”~~(the “2021 Stock Repurchase Program”). For more information about the ~~IPO and the repurchase of Class B common stock previously held by the Former Parent,~~2021 Stock Repurchase Program, see Note 15 to our ~~audited consolidated~~unaudited interim financial statements ~~included~~in this Form 10-Q.

Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Interim Consolidated Financial Statements (Unaudited)

Acquisition

On May 12, 2021 (the “Acquisition Date”), Amerant Mortgage completed the acquisition of First Mortgage Company (“FMC”). Amerant Mortgage and FMC were ultimately merged, allowing Amerant Mortgage to operate its business nationally with direct access to federal housing agencies. We refer to these transactions as the “FMC Acquisition”. The FMC Acquisition was recorded as a business acquisition using the acquisition method of accounting. The purchase price of approximately $1.0 million was paid in cash and represented the fair value of $0.5 million in mortgage servicing rights (“MSR”) acquired, plus a premium of $0.5 million. No liabilities were assumed in the ~~Company’s annual report~~transaction. The Company allocated the premium paid on ~~Form 10-K filed with~~ the ~~U.S. Securities~~purchase to an indefinite-lived intangible license which was recorded at its fair value of $0.5 million as of the Acquisition Date. The MSRs and ~~Exchange Commission (the “SEC”) on March 16, 2020 (the “Form 10-K”).~~premium assigned to an intangible asset were recorded in “Other assets” in the consolidated balance sheets. The transaction resulted in 0 goodwill.

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.

~~On March 13, 2020,~~ The COVID-19 pandemic adversely affected the ~~President of the Unites States of America (U.S.) declared~~economy resulting in a ~~national state of emergency. In response to this outbreak, the governments of many states, cities and municipalities~~150-basis-point reduction in the ~~U.S., including~~federal funds rate, and the ~~States~~enactment of Florida, New York and Texas, have taken preventative or protective actions, such as imposing restrictions on business operations and advising or requiring individuals to limit or forego their time outside of their homes.

On March 16, 2020, the Company activated its Business Continuity Plan (“BCP”) to continue to provide its products and services during the COVID-19 pandemic. The Company’s BCP plan is framed within regulatory guidelines and subject to periodic testing and independent audits. On June 3, 2020, the Company started Phase 1 of reintroducing employees working remotely back to the workplace. This involves following a careful, phased-approach which includes a voluntary return of a limited number of employees, based on work location, roles and responsibilities, and various safety protocols. On September 8, 2020, the Company started a new phase of reintroducing an increased number of employees back to the office, while ramping up safety protocols to protect the health and safety of employees. All Banking centers continue to operate on a regular schedule under strict federal, state and local government safety guidlines.

~~Table of Contents~~

~~Amerant Bancorp Inc. and Subsidiaries~~

~~Notes to Interim Consolidated Financial Statements (Unaudited)~~

~~On March 27, 2020,~~ the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”)~~, an approximately $2.0 trillion COVID-19 response bill to provide~~. The CARES Act provided emergency economic relief to individuals, small businesses, mid-size companies, large corporations, hospitals and other public health facilities, and state and local governments, ~~was enacted. The CARES Act~~and allocated the Small Business Administration, or SBA, $350.0 billion to provide loans of up to $10.0 million per small business as defined in the CARES Act.

On April 2, 2020, the Bank began participating in the SBA’s Paycheck Protection Program, or ~~“PPP”,~~PPP, by providing loans to these businesses to cover payroll, rent, mortgage, healthcare, and utilities costs, among other essential expenses. ~~On April 24, 2020, the Paycheck Protection Program~~In early January 2021, a third round of PPP loans provided additional stimulus relief to small businesses and ~~Health Care Enhancement Act, increasing funding to the PPP, was enacted. On July 4, 2020, new legislation was signed into law that extended the deadline to apply for loans under the PPP from~~individuals who are self-employed or independent contractors. As of June 30, ~~2020 until August 8, 2020. As of September 30, 2020,~~2021, total PPP loans were ~~$223.5~~$23.6 million ~~representing over 2,000~~, or 0.4% of total loans, compared to $198.5 million, or 3.4% of total loans as of December 31, 2020. The Company estimates as of June 30, 2021, there were $131.4 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 realized a pre-tax gain on the sale of approximately $3.8 million. The Company did not retain loan ~~applications booked.~~servicing rights.

Loan Modification Programs

On March 26, 2020, the Company began offering loan payment relief options to customers impacted by the COVID-19 pandemic, including interest-only and/or forbearance options. These programs continued throughout 2020 and in the ~~second~~six months ended June 30, 2021. In the first quarter of 2021, the Company also began to selectively offer additional temporary loan modifications that allowed it to extend the deferral and/or forbearance period beyond 180 days. Loans which have been modified under these programs totaled $1.1 billion as of June 30, 2021 and ~~third quarters~~December 31, 2020. As of ~~2020.~~June 30, 2021, modified loans totaling $54.4 million, or 1.0% of total ($43.4 million, or 0.7%, at December 31, 2020), were still under the deferral and/or forbearance period. Consistent with accounting and regulatory guidance, temporary modifications granted under these programs are not considered troubled debt restructurings, or TDRs. ~~Loans which have been modified under these programs totaled $1.1 billion as~~

Table of ~~September 30, 2020. As of this date, $101.2 million were still under the interest-only deferral and/or forbearance period. This includes $76.3 million of loans under a second deferral~~Contents

Amerant Bancorp Inc. and ~~$12.6 million under third deferral, which the Company began~~Subsidiaries

Notes to selectively offer as additional temporary loan modifications under section 4013, “Temporary Relief from Troubled Debt Restructurings” of the CARES Act, allowing the extension of the deferral and/or forbearance period beyond 180 days. The following table summarizes the loan balances in these programs as of September 30, 2020:Interim Consolidated Financial Statements (Unaudited)


~~Program Detail~~	~~September 30, 2020~~
~~(in thousands)~~
~~90-day payment deferral; interest added to principal balance upon modification and continues to accrue each month~~	$	~~73,400~~
~~90-day interest payment deferral with no escrow payments~~	~~23,049~~
~~90-day interest payment deferral including escrow payments~~	~~4,748~~
~~180-day interest payment deferral~~	0
	$	~~101,197~~

b) Basis of Presentation and Summary of Significant Accounting Policies

The accompanying unaudited interim consolidated financial statements have been prepared in accordance with ~~U.S. GAAP~~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. 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.~~ GAAP. These unaudited interim 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 consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements as of December 31, ~~2019~~2020 and ~~2018~~2019 and for each of the three years in the period ended December 31, ~~2019~~2020 and the accompanying footnote disclosures for the Company, which are included in the Company’s annual report on Form ~~10-K.~~10-K for the year ended December 31, 2020, filed with the Securities and Exchange Commission (“SEC”), on March 19, 2021 (the “Form 10-K”).

For a complete summary of our significant accounting policies, please see Note 1 to the Company’s audited consolidated financial statements in the Company’s annual report on the Form 10-K.

Non-Controlling Interest

Non-controlling interests on the consolidated financial statements include a 49% non-controlling interest of Amerant Mortgage. The Company records net loss attributable to non-controlling interests in its condensed consolidated statement of operations equal to the percentage of the economic or ownership interest retained in the interest of Amerant Mortgage and presents non-controlling interests as a component of stockholders’ equity on the consolidated balance sheets and separately as net loss attributable to non-controlling interests on the consolidated statement of operations and comprehensive income.

Mortgage Loans Held for Sale

Mortgage loans originated for sale are carried at fair value, with changes in fair value recognized in current period earnings. The fair value is measured on an individual loan basis using quoted market prices and when not available, comparable market value or discounted cash flow analysis may be utilized. Gains and losses on loan sales are recognized in other noninterest income in the consolidated statements of operations and comprehensive income.

Mortgage Servicing Rights

The Company recognizes as an asset the rights to service mortgage loans, either when the mortgage loans are sold and the associated servicing rights are retained or when servicing rights are obtained from acquisitions. The Company has elected to measure all MSRs at fair value. MSRs are reported on the consolidated balance sheets in the “Other assets” section, with changes to the fair value recorded as other noninterest income in the consolidated statements of operations and comprehensive income.

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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) 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 insurance; and (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.

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 ~~the Company has~~we have banking centers, ~~LPOs~~ and where ~~the Company’s~~our principal place of business is located or where we and our customers do business, have also implemented quarantines, restrictions on travel, “shelter at home” orders, and restrictions on types of business that may continue to ~~operate.~~operate or may be reinstated in the future. While ~~some~~most of these measures and restrictions have been lifted and ~~most~~ businesses ~~began~~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. The Company considered the impact of COVID-19 on the significant estimates management used. The Company recorded a provision for loan losses of $18.0 million and $88.6 million in the three and nine months ended September 30, 2020, respectively, including $12.2 million and $52.2 million in each of those same periods, respectively, mostly related to the estimated deterioration of our loan portfolio caused by the COVID-19 pandemic. The Company released $1.5 million and $2.9 million from the allowance for loan losses in the three and nine months ended September 30, 2019, respectively. In addition, the Company considered if events or circumstances indicating that potential potential impairment existed as of September 30, 2020, and determined it was more likely than not that goodwill was not impaired at that date and, therefore, 0 impairment charges were recorded.

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 ~~extent~~impact to which the COVID-19 pandemic may impact the anticipated amount of estimated loan defaults and losses and consequently, the adequacy of the provision for loan losses, whether it will result in impairments to goodwill or other intangibles in future periods or, in general, impact the Company’s financial ~~condition or results of operations is uncertain and~~statements cannot be accurately predicted at this time.

c) Recently Issued Accounting Pronouncements

Issued and ~~Not Yet~~ Adopted

~~Facilitation of the Effects of Reference Rate Reform on Financial Reporting~~

On March 12, 2020, the Financial Accounting Standards Board (“FASB”) issued amendments to guidance applicable to contracts, hedging relationships, and other transactions affected that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. These amendments provide optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship. The amendments also allow entities to make a one-time election to sell, transfer, or both sell and transfer debt securities classified as held to maturity that reference a rate affected by reference rate reform and that are classified as held to maturity before January 1, 2020.

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~~Amerant Bancorp Inc. and Subsidiaries~~

~~Notes to Interim Consolidated Financial Statements (Unaudited)~~

These amendments are effective for all entities as of March 12, 2020 through December 31, 2022. An entity may elect to apply these amendments to eligible hedging relationships existing as of the beginning of the interim period that includes March 12, 2020 and to new eligible hedging relationships entered into after the beginning of the interim period that includes March 12, 2020. An entity may elect to apply the amendments for contract modifications as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to the date that the financial statements are available to be issued. Once elected, these amendments must be applied prospectively for all eligible contract modifications and hedging relationships. The Company did not elect any of optional expedients as of September 30, 2020. The Company is in the process of evaluating the implications of these amendments to its current efforts for reference rate reform implementation.

New Guidance on Leases

In December 2018, the ~~FASB~~Financial Accounting Standards Board (“FASB”) issued amendments to new guidance issued in February 2016 for the recognition and measurement of all ~~leases which has not yet been adopted by the Company.~~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. ~~There were no significant changes to~~The Company adopted this standard on January 1, 2021 using the ~~guidance for lessors. These amendments, and the related pending new guidance, can be adopted using a~~ modified retrospective transition atapproach. Upon adoption of this standard, the ~~beginning~~Company recorded an ROUA and a lease liability of ~~the earliest comparative period~~$54.5 million and $54.0 million, respectively, which are presented in other assets and ~~provides for certain practical expedients.~~

~~In May 2020, the FASB again amended the effective date~~other liabilities as of the new guidance on leases. Previously, the amendments and related new guidance on leases were effective for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15,June 30, 2021, for private companies. The new guidance on leases is now effective for fiscal years beginning after December 15, 2021 and interim periods within fiscal years beginning after December 15, 2022. Early adoption is still permitted.respectively.

The Company ~~has completed~~determines if an arrangement is or contains a lease at the process of gathering a complete inventory of its lease contracts, migrating identified lease data onto a new system, and is in the final stages of testing and evaluating the results of testing. Based on these results, we currently expect to recognize an asset and a corresponding lease liability for an amount to be less than 1%inception of the ~~Company’s total consolidated assets~~contract. Operating lease ROUAs and liabilities are recognized at ~~adoption. The Company plans to adopt~~ the ~~new guidance in its consolidated financial statements for the year ending December 31, 2021.~~

~~New Guidance on Accounting for Credit Losses on Financial Instruments~~

~~In June 2016, the FASB issued the new guidance on accounting for current expected credit losses on financial instruments (“CECL.”) The new guidance introduces an approach~~inception date based on ~~expected losses~~the present value of lease payments over the lease term. At lease inception, when the rate implicit in each lease is not readily available, the Company is required to ~~estimate credit losses~~apply an incremental borrowing rate to calculate the ROUA and lease liability. The incremental borrowing rate is based on factors including the lease term and various ~~financial instruments, including loans. It~~market rates. Additionally, the Company also ~~modifies~~considers lease renewal options reasonably certain of exercise for purposes of determining 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.~~

In November 2018, the FASB issued amendments to pending new guidance on CECL to, among other things, align the implementation date for private companies’ annual financial statements with the implementation date for their interim financial statements. Prior to the issuance of these amendments, the guidance on accounting for CECL was effective for private companies for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. These amendments are effective for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years, for private companies.

In November 2019, the FASB amended the effective date of the new guidance on CECL. Previously, the amendments and related new guidance on CECL was effective for fiscal years beginning after December 15, 2021, and interim periods within those years, for private companies. The new guidance on CECL is now effective forlease term.

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Amerant Bancorp Inc. and Subsidiaries

Notes to Interim Consolidated Financial Statements (Unaudited)

~~fiscal years beginning after December 15, 2022~~

The new leasing standard provides several optional expedients in transition. The Company elected certain practical expedients, which allows the Company to not reassess prior conclusions on lease classification, embedded leases and ~~interim periods within those years. Early adoption is still permitted.~~initial indirect costs. The Company elected to exclude short-term leases up to 12 months from the recognition of right-of-use assets and lease liabilities. Additionally, the Company elected to separate lease and non-lease cost and account for them separately.

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Amerant Bancorp Inc. and Subsidiaries

Notes to Interim Consolidated Financial Statements (Unaudited)

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 ~~CECL~~hedging. This guidance is effective for fiscal years beginning after December 15, ~~2019,~~2018, and interim periods within those fiscal years for public ~~companies.~~

business entities. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. The ~~Company is currently assessing~~adoption of this guidance in the ~~impact that these changes will~~first quarter of 2021 did not have an effect on ~~its~~the Company’s consolidated financial statements, when adopted. As an Emerging Growth Company, or EGC, the Company currently plans to adopt the new guidance on CECL in its consolidated financial statements for the year ending December 31, 2023, or earlier in the event the Company ceases to be an EGC.statements.

d) Subsequent Events

The effects of significant subsequent events, if any, have been recognized or disclosed in these unaudited interim consolidated financial statements.

2. Interest Earning Deposits with Banks

At ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, interest earning deposits with banks are mainly comprised of deposits with the Federal Reserve and other U.S. banks of approximately ~~$193~~$126 million and ~~$93~~$184 million, respectively. At ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, the average interest rate on these deposits was approximately ~~0.38%~~0.10% and ~~2.19%~~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:


		September 30, 2020									June 30, 2021
		Amortized Cost		Gross Unrealized				Estimated Fair Value			Amortized Cost		Gross Unrealized				Estimated Fair Value
(in thousands)	(in thousands)			Gains		Losses				(in thousands)			Gains		Losses
U.S. government-sponsored enterprise debt securities	U.S. government-sponsored enterprise debt securities	$	711,769	$	24,190	$	(916)	$	735,043	U.S. government-sponsored enterprise debt securities	$	530,324	$	14,580	$	(1,321)	$	543,583
Corporate debt securities	Corporate debt securities	302,368		9,274		(1,586)		310,056		Corporate debt securities	348,370		13,076		(720)		360,726
U.S. government agency debt securities	U.S. government agency debt securities	212,823		4,375		(2,107)		215,091		U.S. government agency debt securities	283,187		3,474		(2,256)		284,405

U.S. treasury securities	U.S. treasury securities	2,506		8		0		2,514		U.S. treasury securities	2,503		4		0		2,507
Municipal bonds	Municipal bonds	50,905		4,115		0		55,020		Municipal bonds	2,707		140		0		2,847

		$	1,280,371	$	41,962	$	(4,609)	$	1,317,724
Total debt securities available for sale (1)										Total debt securities available for sale (1)	$	1,167,091	$	31,274	$	(4,297)	$	1,194,068

__________________

(1)As of June 30, 2021, includes residential and commercial mortgage-backed securities with amortized cost of $633.4 million and $129.4 million, respectively, and fair value of $646.5 million and $131.8 million, respectively.

December 31, 2019
Amortized
Cost Gross Unrealized Estimated
Fair Value
(in thousands) Gains Losses
U.S. government sponsored enterprise debt securities $ 927,205 $ 9,702 $ (3,795) $ 933,112
Corporate debt securities 247,836 5,002 (2) 252,836
U.S. government agency debt securities 230,384 895 (2,882) 228,397
U.S. treasury securities 106,112 1 (1,877) 104,236
Municipal bonds 47,652 2,519 0 50,171
$ 1,559,189 $ 18,119 $ (8,556) $ 1,568,752

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~~Amerant Bancorp Inc. and Subsidiaries~~

~~Notes to Interim Consolidated Financial Statements (Unaudited)~~

At September 30, 2020 and December 31, 2019, the Company had 0 foreign sovereign or foreign government agency debt securities. The Company had investments in foreign corporate debt securities of $16.8 million and $5.2 million at September 30, 2020 and December 31, 2019, respectively.

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Notes to Interim Consolidated Financial Statements (Unaudited)


	December 31, 2020
	Amortized Cost		Gross Unrealized				Estimated Fair Value
(in thousands)			Gains		Losses
U.S. government sponsored enterprise debt securities	$	640,796	$	21,546	$	(1,007)	$	661,335
Corporate debt securities	292,033		10,787		(1,106)		301,714
U.S. government agency debt securities	202,135		4,458		(2,015)		204,578

U.S. treasury securities	2,505		7		0		2,512
Municipal bonds	50,309		4,635		0		54,944
Total debt securities available for sale (1)	$	1,187,778	$	41,433	$	(4,128)	$	1,225,083

__________________

(1)As of December 31, 2020, includes residential and commercial mortgage-backed securities with amortized cost of $647.0 million and $123.9 million, respectively, and fair value of $666.7 million and $128.4 million, respectively.

The Company had investments in foreign corporate debt securities available for sale of $16.5 million and $17.1 million at June 30, 2021 and December 31, 2020, respectively. At June 30, 2021 and December 31, 2020, the Company had 0 foreign sovereign or foreign government agency debt securities available for sale.

In the three and ~~nine~~six month periods ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~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 September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	(in thousands)	2020		2019		2020		2019		(in thousands)	2021		2020		2021		2020
Proceeds from sales, redemptions and calls of debt securities available for sale	Proceeds from sales, redemptions and calls of debt securities available for sale	$	169,210	$	42,603	$	408,948	$	258,815	Proceeds from sales, redemptions and calls of debt securities available for sale	$	29,261	$	100,666	$	73,115	$	239,738

Gross realized gains	Gross realized gains	8,769		911		25,572		2,484		Gross realized gains	$	1,254	$	7,537	4,201		16,803
Gross realized losses	Gross realized losses	(125)		5		(148)		(582)		Gross realized losses	0		0		0		(23)
Realized gains, net		$	8,644	$	906	$	25,424	$	1,902
Realized gains, net on sales of debt investment securities										Realized gains, net on sales of debt investment securities	$	1,254	$	7,537	$	4,201	$	16,780

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:


		September 30, 2020													June 30, 2021
		Less Than 12 Months				12 Months or More				Total					Less Than 12 Months				12 Months or More				Total
(in thousands)	(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	U.S. government-sponsored enterprise debt securities	$	39,688	$	(502)	$	16,833	$	(414)	$	56,521	$	(916)	U.S. government-sponsored enterprise debt securities	$	71,184	$	(1,176)	$	6,861	$	(145)	$	78,045	$	(1,321)
Corporate debt securities	Corporate debt securities	54,568		(1,586)		0		0		54,568		(1,586)		Corporate debt securities	14,249		(114)		8,350		(606)		22,599		(720)
U.S. government agency debt securities	U.S. government agency debt securities	7,129		(27)		85,480		(2,080)		92,609		(2,107)		U.S. government agency debt securities	97,821		(696)		68,631		(1,560)		166,452		(2,256)

		$	101,385	$	(2,115)	$	102,313	$	(2,494)	$	203,698	$	(4,609)		$	183,254	$	(1,986)	$	83,842	$	(2,311)	$	267,096	$	(4,297)

December 31, 2019
Less Than 12 Months 12 Months or More Total
(in thousands) Estimated
Fair Value Unrealized
Loss Estimated
Fair Value Unrealized
Loss Estimated
Fair Value Unrealized
Loss
U.S. government sponsored enterprise debt securities $ 239,446 $ (1,740) $ 180,274 $ (2,055) $ 419,720 $ (3,795)
Corporate debt securities 8,359 (1) 300 (1) 8,659 (2)
U.S. government agency debt securities 41,300 (251) 117,040 (2,631) 158,340 (2,882)
U.S. treasury securities 97,471 (1,877) 0 0 97,471 (1,877)
$ 386,576 $ (3,869) $ 297,614 $ (4,687) $ 684,190 $ (8,556)

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Amerant Bancorp Inc. and Subsidiaries

Notes to Interim Consolidated Financial Statements (Unaudited)


	December 31, 2020
	Less Than 12 Months				12 Months or More				Total
(in thousands)	Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss
U.S. government sponsored enterprise debt securities	$	71,825	$	(661)	$	14,472	$	(346)	$	86,297	$	(1,007)
Corporate debt securities	31,777		(1,106)		0		0		31,777		(1,106)
U.S. government agency debt securities	9,254		(62)		80,964		(1,953)		90,218		(2,015)



	$	112,856	$	(1,829)	$	95,436	$	(2,299)	$	208,292	$	(4,128)

At ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, the Company held certain debt securities issued or guaranteed by the U.S. government and U.S. government-sponsored entities and agencies. The Company believes these issuers to present little credit risk. The Company considers these securities are 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 intend to sell these debt securities and it is more likely than not that it will not be required to sell the securities before their anticipated recovery.

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~~Amerant Bancorp Inc. and Subsidiaries~~

~~Notes to Interim Consolidated Financial Statements (Unaudited)~~

Unrealized losses on corporate debt securities are attributable to changes in interest rates and investment securities markets, generally, and as a result, temporary in nature. The Company considers these securities are not other-than-temporarily impaired because the issuers of these debt securities are considered to be high quality, and generally 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.

As of June 30, 2021, the fair value of debt securities held to maturity totaled $94.6 million ($93.3 million - amortized cost), including residential and commercial mortgage-backed securities totaling $63.9 million ($64.2 million - amortized cost) and $30.7 million ($29.1 million - amortized cost), respectively. At June 30, 2021, unrealized gains and losses related to these securities totaled $2.1 million and $0.7 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 June 30, 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.

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Amerant Bancorp Inc. and Subsidiaries

Notes to Interim Consolidated Financial Statements (Unaudited)

Contractual maturities of debt securities at ~~September~~June 30, ~~2020~~2021 are as follows:


		Available for Sale				Held to Maturity					Available for Sale				Held to Maturity
(in thousands)	(in thousands)	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value		(in thousands)	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Within 1 year	Within 1 year	$	24,889	$	25,027	$	0	$	0	Within 1 year	$	25,786	$	26,080	$	0	$	0
After 1 year through 5 years	After 1 year through 5 years	140,217		143,636		0		0		After 1 year through 5 years	121,784		125,084		12,589		12,534
After 5 years through 10 years	After 5 years through 10 years	299,581		313,242		11,463		12,020		After 5 years through 10 years	299,231		311,735		11,299		11,782
After 10 years	After 10 years	815,684		835,819		50,213		52,136		After 10 years	720,290		731,169		69,423		70,318

		$	1,280,371	$	1,317,724	$	61,676	$	64,156		$	1,167,091	$	1,194,068	$	93,311	$	94,634

Equity securities with readily available fair value not held for trading consist of mutual funds with an original cost of $24.0 million, and fair value of ~~$24.4~~$24.0 million and ~~$23.8~~$24.3 million as of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively. These equity securities have no stated maturities. The Company recognized unrealized gains of $22 thousand and $0.2 million during the three months ended June 30, 2021 and 2020, respectively, and unrealized losses of ~~$44.0 thousand~~$0.4 million and unrealized gains of ~~$0.5~~$0.6 million ~~during~~in the ~~three~~six months ended June 30, 2021 and ~~nine month periods ended September 30,~~ 2020, respectively, related to the change in fair value of these mutual ~~funds. NaN gains or losses were recognized during the three~~funds and ~~nine month periods ended September 30, 2019.~~recorded in results of operations.

4.Loans

The loan portfolio consists of the following loan classes:

(in thousands) September 30,
2020 December 31,
2019
Real estate loans
Commercial real estate
Non-owner occupied $ 1,797,230 $ 1,891,802
Multi-family residential 853,159 801,626
Land development and construction loans 335,184 278,688
2,985,573 2,972,116
Single-family residential 597,280 539,102
Owner occupied 937,946 894,060
4,520,799 4,405,278
Commercial loans 1,197,156 1,234,043
Loans to financial institutions and acceptances 16,623 16,552
Consumer loans and overdrafts 190,039 88,466
$ 5,924,617 $ 5,744,339

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~~Amerant Bancorp Inc. and Subsidiaries~~

~~Notes to Interim Consolidated Financial Statements (Unaudited)~~


(in thousands)	June 30, 2021		December 31, 2020
Real estate loans
Commercial real estate
Non-owner occupied	$	1,699,876	$	1,749,839
Multi-family residential	658,022		737,696
Land development and construction loans	361,077		349,800
	2,718,975		2,837,335
Single-family residential	616,545		639,569
Owner occupied	943,342		947,127
	4,278,862		4,424,031
Commercial loans	1,003,411		1,154,550
Loans to financial institutions and acceptances	13,672		16,636
Consumer loans and overdrafts	310,828		247,120
	$	5,606,773	$	5,842,337

At ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, loans with an outstanding principal balance of ~~$1.4~~$1.3 billion and ~~$1.6~~$1.4 billion, respectively, were pledged as collateral to secure advances from the FHLB.

The amounts above include loans under syndication facilities of approximately $458 million and $562 million at September 30, 2020 and December 31, 2019, respectively, which include Shared National Credit facilities and agreements to enter into credit agreements with other lenders (club deals), and other agreements.

The following tables summarize international loans by country, net of loans fully collateralized with cash of approximately $12.4 million and $15.2 million at September 30, 2020 and December 31, 2019, respectively.

September 30, 2020 December 31, 2019
(in thousands) Venezuela Others (1) Total Venezuela Others (1) Total
Real estate loans
Single-family residential (2) $ 90,768 $ 9,898 $ 100,666 $ 103,979 $ 7,692 $ 111,671
Commercial loans 0 44,491 44,491 0 43,850 43,850
Loans to financial institutions and acceptances 0 15 15 0 5 5
Consumer loans and overdrafts (3)(4) 236 5,908 6,144 8,318 7,593 15,911
$ 91,004 $ 60,312 $ 151,316 $ 112,297 $ 59,140 $ 171,437

~~__________________~~

~~(1)Loans to borrowers in 13 other countries at September 30, 2020 which do not individually exceed 1% of total assets (14 countries at December 31, 2019).~~

~~(2)Corresponds to mortgage loans secured by single-family residential properties located in the U.S.~~

~~(3)~~At December 31, 2019, Venezuela balances are mostly comprised of credit card extensions of credit to customers with deposits with the Bank. The Company phased out its legacy credit card products to further strengthen its credit quality. During the first quarter of 2020, the remaining balances related to the credit card product were repaid, therefore, there are 0 outstanding credit card balances as of September 30, 2020.

~~(4)Overdrafts to customers outside the United States were de minimis at September 30, 2020 and December 31, 2019.~~

~~The age analysis of the loan portfolio by class, including nonaccrual loans, as of September 30, 2020 and December 31, 2019 are summarized in the following tables:~~

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Amerant Bancorp Inc. and Subsidiaries

Notes to Interim Consolidated Financial Statements (Unaudited)

September 30, 2020
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 $ 1,797,230 $ 1,790,583 $ 157 $ 0 $ 6,490 $ 6,647 $ 8,289 $ 0
Multi-family residential 853,159 853,159 0 0 0 0 1,484 0
Land development and construction loans 335,184 335,184 0 0 0 0 0 0
2,985,573 2,978,926 157 0 6,490 6,647 9,773 0
Single-family residential 597,280 594,172 0 312 2,796 3,108 11,071 1
Owner occupied 937,946 931,192 3,881 0 2,873 6,754 14,539 0
4,520,799 4,504,290 4,038 312 12,159 16,509 35,383 1
Commercial loans 1,197,156 1,169,103 7,293 6,061 14,699 28,053 50,991 0
Loans to financial institutions and acceptances 16,623 16,623 0 0 0 0 0 0
Consumer loans and overdrafts 190,039 189,949 15 19 56 90 104 1
$ 5,924,617 $ 5,879,965 $ 11,346 $ 6,392 $ 26,914 $ 44,652 $ 86,478 $ 2

The amounts above include loans under syndication facilities of approximately $397 million and $455 million at June 30, 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 $121.1 million and $152.9 million at June 30, 2021 and December 31, 2020, respectively.

During the three months ended June 30, 2021, the Company sold PPP loans with an outstanding balance of approximately $95.1 million, and realized a pre-tax gain on sale of approximately $3.8 million. The Company retained no loan servicing rights on these PPP loans.

Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Interim Consolidated Financial Statements (Unaudited)

December 31, 2019
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 $ 1,891,802 $ 1,891,801 $ 1 $ 0 $ 0 $ 1 $ 1,936 $ 0
Multi-family residential 801,626 801,626 0 0 0 0 0 0
Land development and construction loans 278,688 278,688 0 0 0 0 0 0
2,972,116 2,972,115 1 0 0 1 1,936 0
Single-family residential 539,102 530,399 4,585 1,248 2,870 8,703 7,291 0
Owner occupied 894,060 888,158 1,360 1,724 2,818 5,902 14,130 0
4,405,278 4,390,672 5,946 2,972 5,688 14,606 23,357 0
Commercial loans 1,234,043 1,226,320 4,418 608 2,697 7,723 9,149 0
Loans to financial institutions and acceptances 16,552 16,552 0 0 0 0 0 0
Consumer loans and overdrafts 88,466 88,030 215 176 45 436 416 5
$ 5,744,339 $ 5,721,574 $ 10,579 $ 3,756 $ 8,430 $ 22,765 $ 32,922 $ 5
The age analysis of the loan portfolio by class, including nonaccrual loans, as of June 30, 2021 and December 31, 2020 are summarized in the following tables:


	June 30, 2021
	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	$	1,699,876	$	1,676,197	$	5,247	$	18,432	$	0	$	23,679	$	48,347	$	0
Multi-family residential	658,022		658,022		0		0		0		0		9,928		0
Land development and construction loans	361,077		361,077		0		0		0		0		0		0
	2,718,975		2,695,296		5,247		18,432		0		23,679		58,275		0
Single-family residential	616,545		610,588		653		1,393		3,911		5,957		7,174		20
Owner occupied	943,342		939,235		253		178		3,676		4,107		11,277		0
	4,278,862		4,245,119		6,153		20,003		7,587		33,743		76,726		20
Commercial loans	1,003,411		963,026		2,186		22		38,177		40,385		43,876		295
Loans to financial institutions and acceptances	13,672		13,672		0		0		0		0		0		0
Consumer loans and overdrafts	310,828		310,764		17		20		27		64		198		4
	$	5,606,773	$	5,532,581	$	8,356	$	20,045	$	45,791	$	74,192	$	120,800	$	319


	December 31, 2020
	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	$	1,749,839	$	1,741,862	$	1,487	$	0	$	6,490	$	7,977	$	8,219	$	0
Multi-family residential	737,696		737,696		0		0		0		0		11,340		0
Land development and construction loans	349,800		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 residential	639,569		631,801		3,143		671		3,954		7,768		10,667		0
Owner occupied	947,127		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 loans	1,154,550		1,113,469		3,675		1,715		35,691		41,081		44,205		0
Loans to financial institutions and acceptances	16,636		16,636		0		0		0		0		0		0
Consumer loans and overdrafts	247,120		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

2021

Table of Contents

Amerant Bancorp Inc. 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 and ~~nine~~six month periods ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, and its allocation by impairment methodology and the related investment in loans, net as of ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020 are summarized in the following tables:


		Three Months Ended September 30, 2020											Three Months Ended June 30, 2021
(in thousands)	(in thousands)	Real Estate		Commercial		Financial Institutions		Consumer and Others		Total		(in thousands)	Real Estate		Commercial		Financial Institutions		Consumer and Others		Total
Balances at beginning of the period	Balances at beginning of the period	$	54,498	$	57,579	$	0	$	7,575	$	119,652	Balances at beginning of the period	$	48,291	$	49,202	$	1	$	13,446	$	110,940
Provision for loan losses		1,259		11,048		0		5,693		18,000
(Reversal of) provision for loan losses												(Reversal of) provision for loan losses	(9,713)		5,017		0		(304)		(5,000)
Loans charged-off	Loans charged-off											Loans charged-off
Domestic	Domestic	0		(20,910)		0		(135)		(21,045)		Domestic	0		(1,688)		0		(844)		(2,532)
International	International	0		0		0		(4)		(4)		International	0		0		0		0		0
Recoveries	Recoveries	0		123		0		93		216		Recoveries	70		517		0		190		777
Balances at end of the period	Balances at end of the period	$	55,757	$	47,840	$	0	$	13,222	$	116,819	Balances at end of the period	$	38,648	$	53,048	$	1	$	12,488	$	104,185


		Nine Months Ended September 30, 2020											Six Months Ended June 30, 2021
(in thousands)	(in thousands)	Real Estate		Commercial		Financial Institutions		Consumer and Others		Total		(in thousands)	Real Estate		Commercial		Financial Institutions		Consumer and Others		Total
Balances at beginning of the period	Balances at beginning of the period	$	25,040	$	22,482	$	42	$	4,659	$	52,223	Balances at beginning of the period	$	50,227	$	48,130	$	1	$	12,544	$	110,902
Provision for (reversal of) loan losses		30,717		49,120		(42)		8,825		88,620
(Reversal of) provision for loan losses												(Reversal of) provision for loan losses	(11,649)		5,719		0		930		(5,000)
Loans charged-off	Loans charged-off											Loans charged-off
Domestic	Domestic	0		(24,086)		0		(401)		(24,487)		Domestic	0		(1,923)		0		(1,275)		(3,198)
International	International	0		(34)		0		(262)		(296)		International	0		0		0		0		0
Recoveries	Recoveries	0		358		0		401		759		Recoveries	70		1,122		0		289		1,481
Balances at end of the period	Balances at end of the period	$	55,757	$	47,840	$	0	$	13,222	$	116,819	Balances at end of the period	$	38,648	$	53,048	$	1	$	12,488	$	104,185

~~Table of Contents~~

~~Amerant Bancorp Inc. and Subsidiaries~~

~~Notes to Interim Consolidated Financial Statements (Unaudited)~~

September 30, 2020
(in thousands) Real Estate Commercial Financial
Institutions Consumer
and Others Total
Allowance for loan losses by impairment methodology:
Individually evaluated $ 2,450 $ 23,154 $ 0 $ 947 $ 26,551
Collectively evaluated 53,307 24,686 0 12,275 90,268
$ 55,757 $ 47,840 $ 0 $ 13,222 $ 116,819
Investment in loans, net of unearned income:
Individually evaluated $ 9,772 $ 68,964 $ 0 $ 8,005 $ 86,741
Collectively evaluated 2,950,354 2,215,505 16,623 655,394 5,837,876
$ 2,960,126 $ 2,284,469 $ 16,623 $ 663,399 $ 5,924,617

Three Months Ended September 30, 2019
(in thousands) Real Estate Commercial Financial
Institutions Consumer
and Others Total
Balances at beginning of the period $ 21,900 $ 25,824 $ 60 $ 9,620 $ 57,404
Provision for (reversal of) loan losses 487 (388) (2) (1,597) (1,500)
Loans charged-off
Domestic 0 (907) 0 (98) (1,005)
International 0 0 0 (1,661) (1,661)
Recoveries 0 190 0 212 402
Balances at end of the period $ 22,387 $ 24,719 $ 58 $ 6,476 $ 53,640

Nine Months Ended September 30, 2019
(in thousands) Real Estate Commercial Financial
Institutions Consumer
and Others Total
Balances at beginning of the period $ 22,778 $ 30,018 $ 445 $ 8,521 $ 61,762
(Reversal of) provision for loan losses (391) (3,065) (387) 993 (2,850)
Loans charged-off
Domestic 0 (2,773) 0 (504) (3,277)
International 0 (61) 0 (2,961) (3,022)
Recoveries 0 600 0 427 1,027
Balances at end of the period $ 22,387 $ 24,719 $ 58 $ 6,476 $ 53,640

Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Interim Consolidated Financial Statements (Unaudited)


		September 30, 2019											June 30, 2021
(in thousands)	(in thousands)	Real Estate		Commercial		Financial Institutions		Consumer and Others		Total		(in thousands)	Real Estate		Commercial		Financial Institutions		Consumer and Others		Total
Allowance for loan losses by impairment methodology:	Allowance for loan losses by impairment methodology:											Allowance for loan losses by impairment methodology:
Individually evaluated	Individually evaluated	$	397	$	1,722	$	0	$	1,185	$	3,304	Individually evaluated	$	11,665	$	22,869	$	0	$	1,232	$	35,766
Collectively evaluated	Collectively evaluated	21,990		22,997		58		5,291		50,336		Collectively evaluated	26,983		30,179		1		11,256		68,419
		$	22,387	$	24,719	$	58	$	6,476	$	53,640		$	38,648	$	53,048	$	1	$	12,488	$	104,185
Investment in loans, net of unearned income:	Investment in loans, net of unearned income:											Investment in loans, net of unearned income:
Individually evaluated	Individually evaluated	$	1,936	$	19,234	$	0	$	6,007	$	27,177	Individually evaluated	$	58,342	$	58,076	$	0	$	7,627	$	124,045
Collectively evaluated	Collectively evaluated	3,137,980		2,036,150		24,815		525,669		5,724,614		Collectively evaluated	2,633,318		2,049,944		15,333		784,133		5,482,728
		$	3,139,916	$	2,055,384	$	24,815	$	531,676	$	5,751,791		$	2,691,660	$	2,108,020	$	15,333	$	791,760	$	5,606,773

~~The following is a summary of the recorded investment amount of loan sales by portfolio segment:~~


	Three Months Ended June 30, 2020
(in thousands)	Real Estate		Commercial		Financial Institutions		Consumer and Others		Total
Balances at beginning of the period	$	36,430	$	29,062	$	42	$	7,414	$	72,948
Provision for (reversal of ) loan losses	18,068		30,542		(42)		52		48,620
Loans charged-off
Domestic	0		(2,075)		0		(44)		(2,119)
International	0		0		0		(7)		(7)
Recoveries	0		50		0		160		210
Balances at end of the period	$	54,498	$	57,579	$	0	$	7,575	$	119,652

Three Months Ended September 30,(in thousands) Real Estate Commercial Financial
Institutions Consumer
and others Total
2020 $ 0 $ 0 $ 0 $ 1,891 $ 1,891
2019 $ 0 $ 43,190 $ 0 $ 2,148 $ 45,338

Nine Months Ended September 30,(in thousands) Real Estate Commercial Financial
Institutions Consumer
and others Total
2020 $ 0 $ 11,901 $ 0 $ 5,225 $ 17,126
2019 $ 23,475 $ 229,310 $ 0 $ 6,969 $ 259,754

Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Interim Consolidated Financial Statements (Unaudited)


	Six Months Ended June 30, 2020
(in thousands)	Real Estate		Commercial		Financial Institutions		Consumer and Others		Total
Balances at beginning of the period	$	25,040	$	22,482	$	42	$	4,659	$	52,223
Provision for (reversal of) loan losses	29,458		38,072		(42)		3,132		70,620
Loans charged-off
Domestic	0		(3,176)		0		(266)		(3,442)
International	0		(34)		0		(258)		(292)
Recoveries	0		235		0		308		543
Balances at end of the period	$	54,498	$	57,579	$	0	$	7,575	$	119,652


	June 30, 2020
(in thousands)	Real Estate		Commercial		Financial Institutions		Consumer and Others		Total
Allowance for loan losses by impairment methodology:
Individually evaluated	$	2,565	$	23,640	$	0	$	1,499	$	27,704
Collectively evaluated	51,933		33,939		0		6,076		91,948
	$	54,498	$	57,579	$	0	$	7,575	$	119,652
Investment in loans, net of unearned income:
Individually evaluated	$	8,426	$	61,101	$	0	$	8,022	$	77,549
Collectively evaluated	2,918,353		2,270,212		16,597		589,560		5,794,722
	$	2,926,779	$	2,331,313	$	16,597	$	597,582	$	5,872,271

The following is a summary of ~~impaired loans as~~the recorded investment amount of ~~September 30, 2020 and December 31, 2019:~~loan sales by portfolio segment:

September 30, 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 $ 8,289 $ 0 $ 8,289 $ 5,147 $ 8,296 $ 2,450
Multi-family residential 0 1,484 1,484 371 1,477 0
Land development and construction
loans 0 0 0 0 0 0
8,289 1,484 9,773 5,518 9,773 2,450
Single-family residential 5,246 6,085 11,331 8,093 11,462 913
Owner occupied 658 13,881 14,539 13,610 14,372 221
14,193 21,450 35,643 27,221 35,607 3,584
Commercial loans 33,975 17,020 50,995 29,588 72,777 22,933
Consumer loans and overdrafts 95 8 103 264 100 34
$ 48,263 $ 38,478 $ 86,741 $ 57,073 $ 108,484 $ 26,551

~~_______________~~

~~(1)Average using trailing four quarter balances.~~

December 31, 2019
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 $ 1,936 $ 0 $ 1,936 $ 1,459 $ 1,936 $ 1,161
Multi-family residential 0 0 0 342 0 0
Land development and construction loans 0 0 0 0 0 0
1,936 0 1,936 1,801 1,936 1,161
Single-family residential 4,739 729 5,468 5,564 5,598 946
Owner occupied 6,169 7,906 14,075 9,548 13,974 501
12,844 8,635 21,479 16,913 21,508 2,608
Commercial loans 8,415 13 8,428 8,552 8,476 1,288
Consumer loans and overdrafts 395 9 404 153 402 378
$ 21,654 $ 8,657 $ 30,311 $ 25,618 $ 30,386 $ 4,274

~~_______________~~

~~(1)Average using trailing four quarter balances.~~


Three Months Ended June 30, (in thousands)	Real Estate		Commercial		Financial Institutions		Consumer and others		Total
2021	$	0	$	102,247	$	0	$	2,351	$	104,598
2020	$	0	$	0	$	0	$	2,126	$	2,126

Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Interim Consolidated Financial Statements (Unaudited)


Six Months Ended June 30, (in thousands)	Real Estate		Commercial		Financial Institutions		Consumer and others		Total
2021	$	0	$	102,247	$	0	$	3,524	$	105,771
2020	$	0	$	11,901	$	0	$	3,334	$	15,235

The following ~~table shows information about~~is a summary of impaired loans ~~modified in troubled debt restructurings (“TDRs’’)~~ as of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019:~~2020:


									June 30, 2021
		As of September 30, 2020			As of December 31, 2019				Recorded Investment
(in thousands)	(in thousands)	Number of Contracts	Recorded Investment		Number of Contracts	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	Real estate loans							Real estate loans
Commercial real estate	Commercial real estate							Commercial real estate
Non-owner occupied	Non-owner occupied	1	$	1,798	1	$	1,936	Non-owner occupied	$	37,522	$	10,892	$	48,414	$	18,361	$	48,418	$	11,665

Multi-family residential								Multi-family residential	0		9,928		9,928		8,530		9,839		0
Land development and construction loans								Land development and construction loans	0		0		0		0		0		0
									37,522		20,820		58,342		26,891		58,257		11,665
Single-family residential	Single-family residential	2	270		4	438		Single-family residential	5,350		2,081		7,431		10,189		7,351		1,107
Owner occupied	Owner occupied	4	6,918		4	6,580		Owner occupied	603		10,674		11,277		12,789		11,120		200
		7	8,986		9	8,954			43,475		33,575		77,050		49,869		76,728		12,972
Commercial loans	Commercial loans	8	881		2	2,682		Commercial loans	33,138		13,661		46,799		46,823		68,545		22,669
Consumer loans and overdrafts	Consumer loans and overdrafts	1	8		1	9		Consumer loans and overdrafts	195		1		196		200		195		125
Total (1)		16	$	9,875	12	$	11,645
									$	76,808	$	47,237	$	124,045	$	96,892	$	145,468	$	35,766

~~_________________~~_______________

(1)As of September 30, 2020 and December 31, 2019, include $7.0 million and $9.8 million, respectively, related to a multiple loan relationship with a South Florida customer, including CRE, owner occupied and commercial loans. This TDR consisted of extending repayment terms and adjusting future periodic payments which resulted in no additional reserves at the time of its modification. Four residential loans totaling $2.0 million and $2.2 million at September 30, 2020 and December 31, 2019, respectively, included in this loan relationship, were not modified. During the first nine months of 2020, the company charged off $1.9 million against the allowance for loan losses associated with this commercial loan relationship. The Company believes the specific reserves associated with this loan relationship, which total $1.1 million at September 30, 2020, are adequate to cover probable losses given updated collateral values, current facts and circumstances.Average using trailing four quarter balances.

~~The following table shows information about new loans modifications considered TDRs during the three and nine month periods ended September 30, 2020 and 2019:~~

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
(in thousands) Number of Contracts Recorded Investment Number of Contracts Recorded Investment Number of Contracts Recorded Investment Number of Contracts Recorded Investment
Real estate loans
Commercial real estate
Non-owner occupied 0 $ 0 1 $ 1,936 0 $ 0 1 $ 1,936
Single-family residential 0 0 0 0 0 0 1 187
Owner occupied 1 820 2 4,891 1 820 2 4,891
1 820 3 6,827 1 820 4 7,014
Commercial loans 6 190 1 2,708 6 190 1 2,708
Total (1)
7 $ 1,010 4 $ 9,535 7 $ 1,010 5 $ 9,722

~~__________________~~

~~(1)~~During the first nine months of 2020, TDR loans modified that subsequently defaulted within the 12 month of restructuring consisted of a $7.0 million multiple loan relationship with a South Florida customer, including CRE, owner occupied and commercial loans. This TDR consisted of extending repayment terms and adjusting future periodic payments which resulted in no additional reserves at the time of its modification.

Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Interim Consolidated Financial Statements (Unaudited)


	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 residential	0		11,341		11,341		3,206		11,306		0
Land development and construction loans	0		0		0		0		0		0
	8,219		11,341		19,560		9,924		19,533		3,175
Single-family residential	5,675		5,250		10,925		9,457		10,990		1,232
Owner occupied	636		12,178		12,814		13,295		12,658		214
	14,530		28,769		43,299		32,676		43,181		4,621
Commercial loans	33,110		11,100		44,210		38,534		66,010		25,180
Consumer loans and overdrafts	232		0		232		221		229		147
	$	47,872	$	39,869	$	87,741	$	71,431	$	109,420	$	29,948

_______________

(1)Average using trailing four quarter balances.

Troubled Debt Restructurings

~~Loans by Credit Quality Indicators~~

~~Loans by credit quality indicators~~The following table shows information about loans modified in TDRs as of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019~~2020:


	As of June 30, 2021			As of December 31, 2020
(in thousands)	Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment
Real estate loans
Commercial real estate
Non-owner occupied	1	$	1,592	1	$	1,729



Single-family residential	2	260		2	267
Owner occupied	4	6,508		4	6,784
	7	8,360		7	8,780
Commercial loans	11	5,048		11	3,851

Total (1)	18	$	13,408	18	$	12,631

______________

(1)Balances as of June 30, 2021 and December 31, 2020 include a multiple loan relationship with a South Florida customer consisting of CRE, owner occupied and commercial loans totaling $9.6 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 June 30, 2021 and December 31, 2020, this relationship included 2 and 4 residential loans totaling $1.5 million, which were not modified. During 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 $1.1 million at June 30, 2021 and December 31, 2020, are ~~summarized in the following tables:~~adequate to cover probable losses given current facts and circumstances.

September 30, 2020
Credit Risk Rating
Nonclassified Classified
(in thousands) Pass Special Mention Substandard Doubtful Loss Total
Real estate loans
Commercial real estate
Non-owner occupied $ 1,771,416 $ 16,780 $ 7,236 $ 1,798 $ 0 $ 1,797,230
Multi-family residential 851,675 0 1,484 0 0 853,159
Land development and construction loans 327,983 7,201 0 0 0 335,184
2,951,074 23,981 8,720 1,798 0 2,985,573
Single-family residential 586,208 0 11,072 0 0 597,280
Owner occupied 888,747 34,556 14,643 0 0 937,946
4,426,029 58,537 34,435 1,798 0 4,520,799
Commercial loans 1,118,851 27,111 37,338 13,856 0 1,197,156
Loans to financial institutions and acceptances 16,623 0 0 0 0 16,623
Consumer loans and overdrafts 189,928 0 111 0 0 190,039
$ 5,751,431 $ 85,648 $ 71,884 $ 15,654 $ 0 $ 5,924,617

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Amerant Bancorp Inc. and Subsidiaries

Notes to Interim Consolidated Financial Statements (Unaudited)

December 31, 2019
Credit Risk Rating
Nonclassified Classified
(in thousands) Pass Special Mention Substandard Doubtful Loss Total
Real estate loans
Commercial real estate
Non-owner occupied $ 1,879,780 $ 9,324 $ 762 $ 1,936 $ 0 $ 1,891,802
Multi-family residential 801,626 0 0 0 0 801,626
Land development and construction loans 268,733 9,955 0 0 0 278,688
2,950,139 19,279 762 1,936 0 2,972,116
Single-family residential 531,811 0 7,291 0 0 539,102
Owner occupied 871,682 8,138 14,240 0 0 894,060
4,353,632 27,417 22,293 1,936 0 4,405,278
Commercial loans 1,217,399 5,569 8,406 2,669 0 1,234,043
Loans to financial institutions and acceptances 16,552 0 0 0 0 16,552
Consumer loans and overdrafts 88,042 0 67 357 0 88,466
$ 5,675,625 $ 32,986 $ 30,766 $ 4,962 $ 0 $ 5,744,339
During the six months ended June 30, 2021, new TDRs consisted of 1 commercial loan with a recorded investment of $0.4 million as of June 30, 2021, and 1 single-family residential loan of $0.5 million which was paid off during the second quarter of 2021. There were 0 new TDRs during the six months ended June 30, 2020. During the six months ended June 30, 2021, TDR loans that subsequently defaulted within the 12 months of restructuring totaled $4.0 million, including 6 commercial loans totaling $3.2 million and 1 owner occupied loan of $0.8 million. In the six months ended June 30 2021, the Company had 0 charge-offs against the allowance for loan losses as a result of TDR loans. In the six months ended June 30 2020, the Company charged-off $1.9 million against the allowance for loan losses associated with TDR loans.

Loans by Credit Quality Indicators

6.~~Time Deposits~~

~~Time deposits in denominations~~Loans by credit quality indicators as of ~~$100,000 or more amounted to approximately $1.4 billion at September~~June 30, ~~2020~~2021 and December 31, ~~2019. Time deposits~~2020 are summarized in denominations of more than $250,000 amounted to approximately $763 million and $733 million at September 30, 2020 and December 31, 2019, respectively. As of September 30, 2020 and December 31, 2019, brokered time deposits amounted to $487 million and $662 million, respectively.the following tables:

7.~~Advances from the Federal Home Loan Bank and Other Borrowings~~

~~At September 30, 2020 and December 31, 2019, the Company had outstanding advances from the FHLB and other borrowings as follows:~~

Outstanding Balance
Year of Maturity Interest
Rate Interest
Rate Type At September 30, 2020 At December 31, 2019
(in thousands)
2020 0.44% to 2.35% Fixed $ 0 $ 135,000
2020 1.73% to 2.03% Variable 0 150,000
2021 1.75% to 3.08% Fixed 0 210,000
2022 0.65% to 2.80% Fixed 50,000 120,000
2023 and after (1) 0.62% to 3.23% Fixed 1,000,000 620,000
$ 1,050,000 $ 1,235,000


	June 30, 2021
	Credit Risk Rating
	Nonclassified				Classified
(in thousands)	Pass		Special Mention		Substandard		Doubtful		Loss		Total
Real estate loans
Commercial real estate
Non-owner occupied	$	1,618,672	$	32,858	$	36,040	$	12,306	$	0	$	1,699,876
Multi-family residential	648,094		0		9,928		0		0		658,022
Land development and construction loans	361,077		0		0		0		0		361,077
	2,627,843		32,858		45,968		12,306		0		2,718,975
Single-family residential	609,351		0		7,194		0		0		616,545
Owner occupied	912,511		19,456		11,375		0		0		943,342
	4,149,705		52,314		64,537		12,306		0		4,278,862
Commercial loans	917,659		40,151		23,055		22,546		0		1,003,411
Loans to financial institutions and acceptances	13,672		0		0		0		0		13,672
Consumer loans and overdrafts	310,627		0		201		0		0		310,828
	$	5,391,663	$	92,465	$	87,793	$	34,852	$	0	$	5,606,773

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Amerant Bancorp Inc. and Subsidiaries

Notes to Interim Consolidated Financial Statements (Unaudited)


	December 31, 2020
	Credit Risk Rating
	Nonclassified				Classified
(in thousands)	Pass		Special Mention		Substandard		Doubtful		Loss		Total
Real estate loans
Commercial real estate
Non-owner occupied	$	1,694,004	$	46,872	$	4,994	$	3,969	$	0	$	1,749,839
Multi-family residential	726,356		0		11,340		0		0		737,696
Land development and construction loans	342,636		7,164		0		0		0		349,800
	2,762,996		54,036		16,334		3,969		0		2,837,335
Single-family residential	628,902		0		10,667		0		0		639,569
Owner occupied	911,867		22,343		12,917		0		0		947,127
	4,303,765		76,379		39,918		3,969		0		4,424,031
Commercial loans	1,067,708		42,434		21,152		23,256		0		1,154,550
Loans to financial institutions and acceptances	16,636		0		0		0		0		16,636
Consumer loans and overdrafts	246,882		0		238		0		0		247,120
	$	5,634,991	$	118,813	$	61,308	$	27,225	$	0	$	5,842,337

6.Time Deposits

Time deposits in denominations of $100,000 or more amounted to approximately $1.0 billion and $1.3 billion at June 30, 2021 and December 31, 2020, respectively. Time deposits in denominations of more than $250,000 amounted to approximately $522 million and $661 million at June 30, 2021 and December 31, 2020, respectively. As of June 30, 2021 and December 31, 2020, brokered time deposits amounted to $390 million and $494 million, respectively.

Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Interim Consolidated Financial Statements (Unaudited)

7.Advances from the Federal Home Loan Bank

At June 30, 2021 and December 31, 2020, the Company had outstanding advances from the FHLB as follows:


			Outstanding Balance
Year of Maturity	Interest Rate	Interest Rate Type	At June 30, 2021		At December 31, 2020
			(in thousands)


2022	0.65%	Fixed	0		50,000
2023	0.62% to 1.06%	Fixed	104,063		70,000
2024 and after (1)	0.62% to 2.42%	Fixed	704,551		930,000
			$	808,614	$	1,050,000

_______________

(1)As of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~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.

In ~~early April 2020,~~May 2021, the Company restructured ~~$420.0~~$285 million of its fixed-rate FHLB ~~advances extending their~~advances. This restructuring consisted of changing the original ~~maturities from 2021 to 2023~~maturity at lower interest rates. The new maturities of these FHLB advances range from 2 to 4 years compared to original maturities ranging from 2 to 8 years. The Company incurred an early termination and modification penalty of $6.6 million which was deferred and is being amortized over the term of the new advances, as an adjustment to the yields. The modifications were not considered substantial in accordance with GAAP.

During the second quarter of 2021, the Company had a loss of ~~$17.0~~$2.5 million ~~as a result~~on the early repayment of ~~this restructuring which was blended into the new interest rates~~$235 million of ~~these advances affecting the yields through their remaining maturities. The Company accounted for these transactions as the modification~~FHLB advances.

Table of ~~existing debt in accordance with U.S. GAAP.~~

Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Interim Consolidated Financial Statements (Unaudited)

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 ~~due~~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 ~~September~~June 30, ~~2020,~~2021, these Senior Notes amounted to ~~$58.5~~$58.7 million, net of direct unamortized issuance costs of ~~$1.5~~$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.~~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 ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019:~~2020:

September 30, 2020 December 31, 2019
(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 I $ 0 $ 0 $ 26,830 $ 28,068 1998 8.90% 2028
Commercebank Capital Trust VI 9,250 9,537 9,250 9,537 2002 3-M LIBOR + 3.35% 2033
Commercebank Capital Trust VII 8,000 8,248 8,000 8,248 2003 3-M LIBOR + 3.25% 2033
Commercebank Capital Trust VIII 5,000 5,155 5,000 5,155 2004 3-M LIBOR + 2.85% 2034
Commercebank Capital Trust IX 25,000 25,774 25,000 25,774 2006 3-M LIBOR + 1.75% 2038
Commercebank Capital Trust X 15,000 15,464 15,000 15,464 2006 3-M LIBOR + 1.78% 2036
$ 62,250 $ 64,178 $ 89,080 $ 92,246

On January 30, 2020, the Company redeemed all $26.8 million of its outstanding 8.90% trust preferred capital securities issued by Commercebank Capital Trust I (“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. This redemption reduced total cash and cash equivalents by $27.1 million, financial liabilities by $28.1 million, other assets by $3.4 million, and other liabilities by $2.2 million during the three months ended March 31, 2020. In addition, the Company recorded a charge of $0.3 million during the same period for the unamortized issuance costs. This redemption reduced the Company’s Tier 1 equity capital by a net amount of $24.7 million.


	June 30, 2021				December 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 VI	9,250		9,537		9,250		9,537		2002	3-M LIBOR + 3.35%	2033
Commercebank Capital Trust VII	8,000		8,248		8,000		8,248		2003	3-M LIBOR + 3.25%	2033
Commercebank Capital Trust VIII	5,000		5,155		5,000		5,155		2004	3-M LIBOR + 2.85%	2034
Commercebank Capital Trust IX	25,000		25,774		25,000		25,774		2006	3-M LIBOR + 1.75%	2038
Commercebank Capital Trust X	15,000		15,464		15,000		15,464		2006	3-M LIBOR + 1.78%	2036
	$	62,250	$	64,178	$	62,250	$	64,178

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Notes to Interim Consolidated Financial Statements (Unaudited)

10.Derivative Instruments

At ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, the fair values of the Company’s derivative instruments were as follows:


		September 30, 2020				December 31, 2019					June 30, 2021				December 31, 2020
(in thousands)	(in thousands)	Other Assets		Other Liabilities		Other Assets		Other Liabilities		(in thousands)	Other Assets		Other Liabilities		Other Assets		Other Liabilities
Interest rate swaps designated as cash flow hedges	Interest rate swaps designated as cash flow hedges	$	0	$	1,824	$	301	$	0	Interest rate swaps designated as cash flow hedges	$	0	$	1,230	$	0	$	1,658
Interest rate swaps not designated as hedging instruments:	Interest rate swaps not designated as hedging instruments:									Interest rate swaps not designated as hedging instruments:
Customers	Customers	44,738		0		11,236		527		Customers	26,453		980		39,715		0
Third party broker	Third party broker	0		44,738		527		11,236		Third party broker	980		26,453		0		39,715
		44,738		44,738		11,763		11,763			27,433		27,433		39,715		39,715
Interest rate caps not designated as hedging instruments:	Interest rate caps not designated as hedging instruments:									Interest rate caps not designated as hedging instruments:
Customers	Customers	0		26		0		46		Customers	0		140		0		58
Third party broker	Third party broker	6		0		33		0		Third party broker	6		0		6		0
		6		26		33		46			6		140		6		58
Mortgage derivatives not designated as hedging instruments:										Mortgage derivatives not designated as hedging instruments:
Interest rate lock commitments										Interest rate lock commitments	36		0		0		0
		$	44,744	$	46,588	$	12,097	$	11,809		$	27,475	$	28,803	$	39,721	$	41,431

~~NaN hedge ineffectiveness gains~~Derivatives Designated as Hedging Instruments

The Company enters into interest rate swap contracts which the Company designates and qualifies as cash flow hedges. These interest rate swaps are designed as cash flow hedges to manage the exposure that arises from differences in the amount of the Company’s known or ~~losses~~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 contracts without exchange of the underlying notional amount.

At June 30, 2021 and December 31, 2020, the Company had 5 interest rate swap contracts with notional amounts totaling $64.2 million that were ~~recognized on derivatives~~ designated as ~~hedging instruments~~cash flow hedges to manage the exposure of variable rate interest payments on all of the Company’s outstanding variable-rate junior subordinated debentures with principal amounts at June 30, 2021 and December 31, 2020 totaling $64.2 million. The Company expects these interest rate swaps to be highly effective in offsetting the effects of changes in interest rates on cash flows associated with the Company’s variable-rate junior subordinated debentures. In the second quarter and six months ended June 30, 2021, we recognized unrealized losses of $0.2 million and $0.4 million, respectively, in connection with these interest rate swap contracts (unrealized losses of $0.1 million and unrealized gains of $12 thousand in the ~~three~~second quarter and ~~nine month periods~~six months ended ~~September~~June 30, 2020, respectively), which were included as part of interest expense on junior subordinated debentures in the Company’s consolidated statement of operations and ~~2019.~~comprehensive income. As of June 30, 2021, the estimated net unrealized losses in accumulated other comprehensive income expected to be reclassified into expense in the next twelve months amounted to $0.8 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. The Company is recognizing the contracts’ cumulative net unrealized gains of $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 $0.7 million in the second quarter and six months ended June 30, 2021, respectively, as a reduction of interest expense on FHLB advances as a result of this amortization ($0.3 million and $0.7 million, in the second quarter and six months ended June 30, 2020, respectively), as a reduction of interest expense on FHLB advances as a result of this amortization.

Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Interim Consolidated Financial Statements (Unaudited)

Derivatives Not Designated as Hedging Instruments

Interest Rate Swaps

At ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, the Company had 6889 and 4976 interest rate swap contracts with customers, respectively, with a total notional amount of ~~$455.7~~$523.4 million and ~~$405.2~~$475.6 million, respectively. These instruments involve the payment of variable-rate amounts in exchange for the Company receiving fixed-rate amounts over the life of the contract. In addition, at ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, the Company had 6889 and 4976 interest rate swap mirror contracts, respectively, with third party brokers with similar terms.

In 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 ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, the Company had 2 ~~and 3~~ swap participation agreements ~~respectively,~~ with total notional amounts of approximately $32.0 ~~million and $50.2 million, respectively.~~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 ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, the fair value of swap participation agreements was not significant.

~~Table of Contents~~

~~Amerant Bancorp Inc. and Subsidiaries~~

~~Notes to Interim Consolidated Financial Statements (Unaudited)~~

Interest Rate Caps

At ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, the Company had 1821 and 1623 interest rate cap contracts with customers with a total notional amount of ~~$360.9~~$437.9 million and ~~$315.2~~$486.5 million, respectively. These instruments involve the Company making payments if an interest rate exceeds the agreed strike price. In addition, at ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, the Company had 116 and 138 interest rate cap mirror contracts, respectively, with various third party brokers with total notional amounts of ~~$184.7~~$108.2 million and ~~$234.1~~$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 June 30, 2021 and December 31, 2020, the derivative contracts subject to credit-risk related contingent features was as follows:


(in thousands)	June 30, 2021		December 31, 2020
Fair value of derivative contracts	$	28,663	$	41,373

Securities Pledged	32,214		52,857
Liquidity exposure	$	(3,551)	$	(11,484)

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Amerant 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 and $0.7 million in variable lease payments during the three and six months ended June 30, 2021, respectively, which include mostly common area maintenance and taxes, included in occupancy and equipment on the consolidated statements of income. Additionally, the Company recorded a $0.8 million impairment of ROUA associated with the closing of the NY LPO. This impairment was recorded as occupancy and equipment expense on the consolidated statements of income.

The following table presents lease costs for the three and six months ended June 30, 2021:


(in thousands)	Three months ended June 30, 2021		Six months ended June 30, 2021
Lease cost
Operating lease cost	$	1,914	$	3,823
Short-term lease cost	21		176
Variable lease cost	334		667
Sublease income	0		(108)
Total lease cost	$	2,269	$	4,558

As of June 30, 2021, a right-of-use asset of $52.5 million and an operating lease liability of $54.0 million were included in “Other assets” and “Other liabilities”, respectively, on the unaudited consolidated balance sheets. The table provides supplemental information to leases as of and for the three and six months ended June 30, 2021:


(in thousands, except weighted average data)
Cash paid for amounts included in the measurement of operating lease liabilities	1,771
Operating lease right-of-use asset obtained in exchange for operating lease liability	1,038
Weighted average remaining lease term for operating leases	21.0 years
Weighted average discount rate for operating leases	5.75	%

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Amerant Bancorp Inc. and Subsidiaries

Notes to Interim Consolidated Financial Statements (Unaudited)

The following table presents a maturity analysis and reconciliation of the undiscounted cash flows to the total operating lease liabilities as of June 30, 2021:


(in thousands)
Twelve Months Ended June 30,
2021	$	7,084
2022	5,689
2023	4,512
2024	4,412
2025	4,118
Thereafter	76,746
Total minimum payments required	102,561
Less: implied interest	(48,521)
Total lease obligations	$	54,040

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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 inon the ~~2019 annual report on~~ Form 10-K for more information on the 2018 Equity Plan and stock-based compensation awards for the year ended ~~2019,~~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 ~~nine~~six months ended ~~September~~June 30, ~~2020:~~2021:


		Number of restricted shares	Weighted-average grant date fair value			Number of restricted shares	Weighted-average grant date fair value
Non-vested shares, beginning of year	Non-vested shares, beginning of year	495,131	$	13.48	Non-vested shares, beginning of year	210,423	$	13.55
Granted	Granted	6,591	15.17		Granted	196,015	16.65
Vested	Vested	(433)	13.58		Vested	(2,630)	14.91
Forfeited	Forfeited	(77,054)	13.45		Forfeited	(7,270)	16.65
Non-vested shares at September 30, 2020		424,235	$	13.51
Non-vested shares at June 30, 2021					Non-vested shares at June 30, 2021	396,538	$	15.02

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 ~~$0.4~~$0.9 million and ~~$1.5~~$0.6 million during the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively, and $1.4 million and ~~$4.4~~$1.0 million during the ~~nine~~six months ended ~~September~~June 30, 2021 and 2020, ~~and 2019, respectively.The~~respectively. The total unamortized deferred compensation expense of ~~$1.6~~$2.8 million for all unvested restricted stock outstanding at ~~September~~June 30, ~~2020~~2021 will be recognized over a weighted average period of ~~1.0 year.~~1.6 years.

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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 ~~nine~~six months ended ~~September~~June 30, ~~2020:~~2021:


		Stock-settled RSUs			Cash-settled RSUs			Total RSUs				Stock-settled RSUs			Cash-settled RSUs			Total RSUs			Stock-settled PSUs
		Number of RSUs	Weighted-average grant date fair value		Number of RSUs	Weighted-average grant date fair value		Number of RSUs	Weighted-average grant date fair value			Number of RSUs	Weighted-average grant date fair value		Number of RSUs	Weighted-average grant date fair value		Number of RSUs	Weighted-average grant date fair value		Number of PSUs	Weighted-average grant date fair value
Nonvested, beginning of year	Nonvested, beginning of year	35,489	$	13.91	19,230	$	13.45	54,719	$	13.75	Nonvested, beginning of year	38,327	$	13.45	20,766	$	13.45	59,093	$	13.72	0	0
Granted	Granted	22,302	13.45		11,151	13.45		33,453	13.45		Granted	137,376	17.20		6,573	22.82		143,949	17.46		120,513	13.82
Vested	Vested	(3,439)	18.17		0	0		(3,439)	18.17		Vested	(33,780)	13.75		(11,151)	13.45		(44,931)	13.68		(1,729)	16.67
Forfeited	Forfeited	0	0		0	0		0	0		Forfeited	(8,378)	16.65		0	0		(8,378)	16.65		(8,000)	16.67
Non-vested, end of year	Non-vested, end of year	54,352	$	13.45	30,381	$	13.45	84,733	$	13.45	Non-vested, end of year	133,545	$	17.03	16,188	$	17.25	149,733	$	17.16	110,784	$	13.57

`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 of Class A common stock 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 executives 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 PSUs. These PSUs generally vest at the end of a three-year performance period, but only results in the issuance of shares of Class A common stock 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.

On June 9, 2021, the Company granted 19,719 RSUs to its independent directors, including 13,146 stock-settled RSUs and 6,573 cash-settled RSUs. 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 $22.82 per RSU. These RSUs will vest on June 9, 2022.

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Amerant Bancorp Inc. and Subsidiaries

Notes to Interim Consolidated Financial Statements (Unaudited)

The Company recorded compensation expense related to RSUs and PSUs of ~~$28 thousand~~$0.9 million and $0.1 million during the three months ended June 30, 2021 and 2020, respectively, and $1.2 million and $0.2 million during the ~~three and nine~~six months ended ~~September~~June 30, 2021 and 2020, respectively. The total unamortized deferred compensation expense of ~~$0.3~~$3.0 million for all unvested stock-settled RSUs and PSUs outstanding at ~~September~~June 30, ~~2020~~2021 will be recognized over a weighted average period of ~~0.8~~2.0 years.

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Amerant Bancorp Inc. and Subsidiaries

Notes to Interim Consolidated Financial Statements (Unaudited)

~~12.~~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 forecasted 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 ~~nine~~six months ended ~~September~~June 30, 2021 and 2020 were 21.45% and ~~2019 were 20.80% and 21.50%~~20.75%, respectively. Effective tax rates differ from the statutory rates mainly due to the impact of forecasted permanent non-taxable interest and other income, and the effect of corporate state taxes.

~~Table of Contents~~

~~Amerant Bancorp Inc. and Subsidiaries~~

~~Notes to Interim Consolidated Financial Statements (Unaudited)~~

~~13.~~14. Accumulated Other Comprehensive Income (“AOCI”):

The components of AOCI are summarized as follows using applicable blended average federal and state tax rates for each period:


		September 30, 2020						December 31, 2019							June 30, 2021						December 31, 2020
(in thousands)	(in thousands)	Before Tax Amount		Tax Effect		Net of Tax Amount		Before Tax Amount		Tax Effect		Net of Tax Amount		(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	Net unrealized holding gains on debt securities available for sale	$	37,353	$	(9,132)	$	28,221	$	9,563	$	(2,338)	$	7,225	Net unrealized holding gains on debt securities available for sale	$	26,977	$	(6,507)	$	20,470	$	37,305	$	(9,120)	$	28,185
Net unrealized holding gains on interest rate swaps designated as cash flow hedges	Net unrealized holding gains on interest rate swaps designated as cash flow hedges	4,785		(1,170)		3,615		7,953		(1,944)		$	6,009	Net unrealized holding gains on interest rate swaps designated as cash flow hedges	4,352		(1,064)		3,288		4,605		(1,126)		$	3,479
Total AOCI	Total AOCI	$	42,138	$	(10,302)	$	31,836	$	17,516	$	(4,282)	$	13,234	Total AOCI	$	31,329	$	(7,571)	$	23,758	$	41,910	$	(10,246)	$	31,664

The components of other comprehensive loss/income for the periods presented is summarized as follows:

Three Months Ended September 30,
2020 2019
(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 $ 5,062 $ (1,238) $ 3,824 $ 9,087 $ (2,221) $ 6,866
Reclassification adjustment for net gains included in net income (8,644) 2,113 (6,531) (906) 221 (685)
(3,582) 875 (2,707) 8,181 (2,000) 6,181
Net unrealized holding losses on interest rate swaps designated as cash flow hedges:
Change in fair value arising during the period (37) 9 (28) 90 (22) 68
Reclassification adjustment for net interest income included in net income (207) 51 (156) (370) 90 (280)
(244) 60 (184) (280) 68 (212)
Total other comprehensive (loss) income $ (3,826) $ 935 $ (2,891) $ 7,901 $ (1,932) $ 5,969


	Three Months Ended June 30,
	2021						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:
Change in fair value arising during the period	$	6,401	$	(1,464)	$	4,937	$	12,390	$	(3,029)	$	9,361
Reclassification adjustment for net gains included in net income	(1,254)		294		(960)		(7,117)		1,740		(5,377)
	5,147		(1,170)		3,977		5,273		(1,289)		3,984
Net unrealized holding losses on interest rate swaps designated as cash flow hedges:
Change in fair value arising during the period	(39)		10		(29)		(211)		51		(160)
Reclassification adjustment for net interest income included in net income	(130)		31		(99)		(283)		69		(214)
	(169)		41		(128)		(494)		120		(374)
Total other comprehensive income	$	4,978	$	(1,129)	$	3,849	$	4,779	$	(1,169)	$	3,610

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~~Notes to Interim Consolidated Financial Statements (Unaudited)~~

Nine Months Ended September 30,
2020 2019
(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:
Change in fair value arising during the period $ 52,794 $ (12,907) $ 39,887 $ 49,578 $ (12,121) $ 37,457
Reclassification adjustment for net gains included in net income (25,004) 6,113 (18,891) (1,902) 465 (1,437)
27,790 (6,794) 20,996 47,676 (11,656) 36,020
Net unrealized holding losses on interest rate swaps designated as cash flow hedges:
Change in fair value arising during the period (2,252) 550 (1,702) 75 (18) 57
Reclassification adjustment for net interest income included in net income (916) 224 (692) (1,065) 260 (805)
(3,168) 774 (2,394) (990) 242 (748)
Total other comprehensive income $ 24,622 $ (6,020) $ 18,602 $ 46,686 $ (11,414) $ 35,272

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Amerant Bancorp Inc. and Subsidiaries

Notes to Interim Consolidated Financial Statements (Unaudited)

~~14.~~


	Six Months Ended June 30,
	2021						2020
(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	$	(6,127)	$	1,598	$	(4,529)	$	47,732	$	(11,669)	$	36,063
Reclassification adjustment for net gains included in net income	(4,201)		1,015		(3,186)		(16,360)		4,000		(12,360)
	(10,328)		2,613		(7,715)		31,372		(7,669)		23,703
Net unrealized holding losses on interest rate swaps designated as cash flow hedges:
Change in fair value arising during the period	8		(1)		7		(2,215)		541		(1,674)
Reclassification adjustment for net interest income included in net income	(261)		63		(198)		(709)		173		(536)
	(253)		62		(191)		(2,924)		714		(2,210)
Total other comprehensive (loss) income	$	(10,581)	$	2,675	$	(7,906)	$	28,448	$	(6,955)	$	21,493

Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Interim Consolidated Financial Statements (Unaudited)

15. Stockholders’ Equity

a) Class A Common Stock

Shares of the Company’s Class A common stock issued and outstanding as of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019~~2020 were ~~28,860,423~~29,028,672 and ~~28,927,576,~~28,806,344, respectively. The Company had 0 shares of Class A common stock held as treasury stock.

b) Class B Common Stock and Treasury Stock

Shares of the Company’s Class B common stock issued and outstanding as of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019~~2020 were ~~13,286,137~~8,534,120 and ~~17,751,053,~~9,036,352, respectively. As of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019, there were 13,286,137 shares and 14,218,596 shares, respectively, of Class B common stock outstanding. As of September 30,~~ 2020, the Company had 0 shares of Class B common stock held as treasury stock. ~~At December 31, 2019,~~

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. Under the 2021 Stock Repurchase Program, the Company ~~had 3,532,457~~may repurchase shares of Class B common stock ~~held as treasury stock~~through open market purchases, by block purchase, in privately-negotiated transactions, or otherwise in compliance with Rule 10b-18 under the ~~cost method.~~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.

~~On February 14 and February 21, 2020,~~In the six months ended June 30, 2021, the Company repurchased an aggregate of ~~932,459~~502,232 shares of ~~nonvoting~~ Class B common stock ~~in two privately negotiated transactions (collectively, the “2020 Repurchase”) for $16.00~~at a weighted average price per share of ~~Class B common stock.~~$16.71 under the 2021 Stock Repurchase Program. The aggregate purchase price for these transactions was approximately ~~$15.2~~$8.4 million, including ~~$0.3 million in broker fees and other expenses. The Company funded~~transaction costs. In the ~~2020 Repurchase with available cash.~~

~~In March 2020,~~six months ended June 30, 2021, the Company’s Board of Directors authorized the cancellation of ~~all 4,464,916~~those 502,232 shares of Class B ~~Common Stock previously held as treasury stock, including shares repurchased during 2018, 2019 and 2020, effective March 31, 2020.~~common stock.

~~15. Commitments and~~16. Contingencies

The Company and its subsidiaries are parties to various legal actions arising in the ordinary course of business. In the opinion of management, the outcome of these proceedings will not have a significant effect on the Company’s consolidated financial position or results of operations.

The Company occupies various premises under noncancelable lease agreements expiring through the year 2046. Actual rental expenses may include deferred rents that are recognized as rent expense on a straight line basis. Rent expense under these leases was approximately $1.7 million and $1.3 million for the three months ended September 30, 2020 and 2019, respectively, and $4.7 million an~~d $4.1 million for the nine~~ ~~months ended September 30, 2020 and 2019, respectively.~~

Financial instruments whose contract amount represents off-balance sheet credit risk at ~~September~~June 30, ~~2020~~2021 are generally short-term and are as follows:


(in thousands)	Approximate Contract Amount
Commitments to extend credit	$	~~764,621~~749,185

Standby letters of credit	~~12,075~~10,456
Commercial letters of credit	~~355~~826
	$	~~777,051~~760,467

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Notes to Interim Consolidated Financial Statements (Unaudited)

~~16.~~17. Fair Value Measurements

Assets and liabilities measured at fair value on a recurring basis are summarized below:


		September 30, 2020									June 30, 2021
(in thousands)	(in thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Third-Party Models with Observable Market Inputs (Level 2)		Internal Models with Unobservable Market Inputs (Level 3)		Total Carrying Value in the Consolidated Balance Sheet		(in thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Third-Party Models with Observable Market Inputs (Level 2)		Internal Models with Unobservable Market Inputs (Level 3)		Total Carrying Value in the Consolidated Balance Sheet
Assets	Assets									Assets
Debt securities available for sale	Debt securities available for sale									Debt securities available for sale
U.S. government-sponsored enterprise debt securities	U.S. government-sponsored enterprise debt securities	$	0	$	735,043	$	0	$	735,043	U.S. government-sponsored enterprise debt securities	$	0	$	543,583	$	0	$	543,583
Corporate debt securities	Corporate debt securities	0		310,056		0		310,056		Corporate debt securities	0		360,726		0		360,726
U.S. government agency debt securities	U.S. government agency debt securities	0		215,091		0		215,091		U.S. government agency debt securities	0		284,405		0		284,405
Municipal bonds	Municipal bonds	0		55,020		0		55,020		Municipal bonds	0		2,847		0		2,847
U.S treasury securities	U.S treasury securities	0		2,514		0		2,514		U.S treasury securities	0		2,507		0		2,507
		0		1,317,724		0		1,317,724			0		1,194,068		0		1,194,068
Equity securities with readily determinable fair values not held for trading	Equity securities with readily determinable fair values not held for trading	0		24,381		0		24,381		Equity securities with readily determinable fair values not held for trading	0		23,988		0		23,988
Trading securities										Trading securities	198		0		0		198
Mortgage loans held for sale (at fair value)										Mortgage loans held for sale (at fair value)	0		1,775		0		1,775
Mortgage servicing rights (MSRs)										Mortgage servicing rights (MSRs)	0		0		537		537
Bank owned life insurance	Bank owned life insurance	0		216,130		0		216,130		Bank owned life insurance	0		220,271		0		220,271
Derivative instruments	Derivative instruments	0		44,744		0		44,744		Derivative instruments	0		27,475		0		27,475
		$	0	$	1,602,979	$	0	$	1,602,979		$	198	$	1,467,577	$	537	$	1,468,312
Liabilities	Liabilities									Liabilities
Derivative instruments	Derivative instruments	$	0	$	46,588	$	0	$	46,588	Derivative instruments	$	0	$	28,803	$	0	$	28,803

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Notes to Interim Consolidated Financial Statements (Unaudited)


		December 31, 2019									December 31, 2020
(in thousands)	(in thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Third-Party Models with Observable Market Inputs (Level 2)		Internal Models with Unobservable Market Inputs (Level 3)		Total Carrying Value in the Consolidated Balance Sheet		(in thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Third-Party Models with Observable Market Inputs (Level 2)		Internal Models with Unobservable Market Inputs (Level 3)		Total Carrying Value in the Consolidated Balance Sheet
Assets	Assets									Assets
Debt securities available for sale	Debt securities available for sale									Debt securities available for sale
U.S. government-sponsored enterprise debt securities	U.S. government-sponsored enterprise debt securities	$	0	$	933,112	$	0	$	933,112	U.S. government-sponsored enterprise debt securities	$	0	$	661,335	$	0	$	661,335
Corporate debt securities	Corporate debt securities	0		252,836		0		252,836		Corporate debt securities	0		301,714		0		301,714
U.S. government agency debt securities	U.S. government agency debt securities	0		228,397		0		228,397		U.S. government agency debt securities	0		204,578		0		204,578
U.S treasury securities	U.S treasury securities	0		104,236		0		104,236		U.S treasury securities	0		2,512		0		2,512
Municipal bonds	Municipal bonds	0		50,171		0		50,171		Municipal bonds	0		54,944		0		54,944
		0		1,568,752		0		1,568,752			0		1,225,083		0		1,225,083
Equity securities with readily determinable fair values not held for trading	Equity securities with readily determinable fair values not held for trading	0		23,848		0		23,848		Equity securities with readily determinable fair values not held for trading	0		24,342		0		24,342
Bank owned life insurance	Bank owned life insurance	0		211,852		0		211,852		Bank owned life insurance	0		217,547		0		217,547
Derivative instruments	Derivative instruments	0		12,097		0		12,097		Derivative instruments	0		39,721		0		39,721
		$	0	$	1,816,549	$	0	$	1,816,549		$	0	$	1,506,693	$	0	$	1,506,693

Liabilities	Liabilities									Liabilities
Derivative instruments	Derivative instruments	$	0	$	11,809	$	0	$	11,809	Derivative instruments	$	0	$	41,431	$	0	$	41,431

Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Interim Consolidated Financial Statements (Unaudited)

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 June 30, 2021 and December 31, 2020:


	June 30, 2021
(in thousands)	Carrying Amount		Quoted 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	$	39,625	$	0	$	0	$	39,625	$	19,838


	December 31, 2020
(in thousands)	Carrying Amount		Quoted 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

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.

There were 0 other significant assets or liabilities measured at fair value on a nonrecurring basis at ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019.~~2020.

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Amerant Bancorp Inc. and Subsidiaries

Notes to Interim Consolidated Financial Statements (Unaudited)

Fair Value of Financial Instruments

The estimated fair value of financial instruments where fair value differs from carrying value are as follows:


		September 30, 2020				December 31, 2019					June 30, 2021				December 31, 2020
(in thousands)	(in thousands)	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value		(in thousands)	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Financial assets:	Financial assets:									Financial assets:
Loans	Loans	$	3,001,353	$	2,914,257	$	2,819,477	$	2,721,291	Loans	$	2,709,554	$	2,640,886	$	2,884,550	$	2,801,279
Financial liabilities:	Financial liabilities:									Financial liabilities:
Time deposits	Time deposits	1,767,243		1,794,380		1,745,735		1,759,347		Time deposits	1,242,693		1,258,659		1,547,396		1,569,897
Advances from the FHLB	Advances from the FHLB	1,050,000		1,082,595		1,235,000		1,244,515		Advances from the FHLB	808,614		823,321		1,050,000		1,078,786
Senior notes	Senior notes	58,498		61,765		0		0		Senior notes	58,736		61,985		58,577		61,528
Junior subordinated debentures	Junior subordinated debentures	64,178		48,484		92,246		86,738		Junior subordinated debentures	64,178		54,256		64,178		55,912

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Notes to Interim Consolidated Financial Statements (Unaudited)

~~17.~~

18.Earnings Per Share

The following table shows the calculation of basic and diluted earnings per share:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
(in thousands, except per share data)	(in thousands, except per share data)	2020		2019		2020		2019		(in thousands, except per share data)	2021		2020		2021		2020
Numerator:	Numerator:									Numerator:
Net income (loss) before attribution of noncontrolling interest										Net income (loss) before attribution of noncontrolling interest	$	15,145	$	(15,279)	$	29,604	$	(11,897)
Noncontrolling interest										Noncontrolling interest	(817)		0		(817)		0
Net income (loss) attributable to Amerant Bancorp Inc.										Net income (loss) attributable to Amerant Bancorp Inc.	$	15,962	$	(15,279)	$	30,421	$	(11,897)
Net income (loss) available to common stockholders	Net income (loss) available to common stockholders	$	1,702	$	11,931	$	(10,195)	$	37,859	Net income (loss) available to common stockholders	$	15,962	$	(15,279)	$	30,421	$	(11,897)
Denominator:	Denominator:			`						Denominator:			`
Basic weighted average shares outstanding	Basic weighted average shares outstanding	41,722		42,466		41,875		42,562		Basic weighted average shares outstanding	37,330		41,720		37,473		41,953
Dilutive effect of share-based compensation awards	Dilutive effect of share-based compensation awards	343		449		0		319		Dilutive effect of share-based compensation awards	363		0		295		0
Diluted weighted average shares outstanding	Diluted weighted average shares outstanding	42,065		42,915		41,875		42,881		Diluted weighted average shares outstanding	37,693		41,720		37,768		41,953

Basic earnings (loss) per common share	Basic earnings (loss) per common share	$	0.04	$	0.28	$	(0.24)	$	0.89	Basic earnings (loss) per common share	$	0.43	$	(0.37)	$	0.81	$	(0.28)
Diluted earnings (loss) per common share	Diluted earnings (loss) per common share	$	0.04	$	0.28	$	(0.24)	$	0.88	Diluted earnings (loss) per common share	$	0.42	$	(0.37)	$	0.81	$	(0.28)

As of ~~September~~June 30, ~~2020 and 2019,~~2021, potential dilutive instruments consisted of unvested shares of restricted stock, restricted stock units and performance share units totaling 638,676 (June 30, 2020 - 491,360 unvested shares of restricted stock and restricted stock ~~units mainly related to the Company’s IPO in 2018, totaling 478,587 and 789,652, respectively.~~units). In the three ~~months~~and six month periods ended ~~September~~June 30, ~~2020 and 2019, and in the nine months ended September 30, 2019,~~2021, potential dilutive instruments were included in the diluted earnings per share computation because, when the unamortized deferred compensation cost related to 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. In the ~~nine months~~three and six month periods ended ~~September~~June 30, 2020, potential dilutive instruments were not included in the diluted earnings per share computation because the Company reported a net loss and their inclusion would have an anti-dilutive effect.

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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 Amerant Bancorp Inc.’s (the “Company,” “Amerant,” “our” or “we”) results of operations and financial condition and its wholly and partially owned subsidiaries, including its principal subsidiary, Amerant Bank, N.A. (the “Bank”). The Bank has three ~~principal~~operating subsidiaries, ~~Amerant Trust, N.A. (“Amerant Trust”), a non-depository trust company,~~ Amerant Investments, Inc., a securities broker-dealer (“Amerant Investments”), ~~and~~Amerant Mortgage, LLC (“Amerant Mortgage”), a ~~grand-Cayman based trust~~51% owned mortgage lending company ~~subsidiary~~domiciled in Florida, and Elant Bank & Trust ~~LTD.~~ (the “Cayman Bank”)., a bank and trust company domiciled in the Cayman Islands acquired in November 2019. In March 2021, the Bank and Amerant Trust, N.A, a non-depository trust company (“Amerant Trust”) received authorization to merge Amerant Trust with and into the Bank, with the Bank as sole survivor, effective on April 1, 2021. In March of 2021, the Company incorporated Amerant SPV with the purpose of investing and acquiring non-controlling interests in companies, including fintech and specialty finance companies.

This discussion is intended to supplement and highlight information contained in the accompanying unaudited interim 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 annual report on the Form ~~10-K filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 16, 2020 (“Form 10-K”).~~10-K.

Cautionary ~~Notice~~Note Regarding Forward-Looking Statements

Various of the statements made in this 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”). ~~These forward-looking~~

Forward-looking statements include without limitation, future financial and operating results; costs and revenues; economic conditions generally and in our markets and among our customer base; the challenges and uncertainties caused by the COVID-19 pandemic; the measures we have taken in response to the COVID-19 pandemic; our participation in the Paycheck Protection Program (“PPP”); loan demand; changes in the mix of our earning assets and our deposit and wholesale liabilities; net interest income and margin; yields on earning assets; interest rates and yield curves (generally and those applicable to our assets and liabilities); credit quality, including loan performance, non-performing assets, provisions for loan losses, charge-offs, other-than-temporary impairments and collateral values; the effect of redemptions of certain fixed rate trust preferred securities and related junior subordinated debt; rebranding and staff realignment costs and expected savings; market trends; customer preferences and anticipated closures of banking centers in Florida and Texas, as well as statements with respect to our beliefs, plans, objectives, goals, expectations, ~~and~~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 ~~that are not historical facts.~~ should be read together with the “Risk Factors” included in the Form 10-K, in this Form 10-Q and our other reports filed with the 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,” “goals,” “outlooks,” “modeled”~~“target” and other similar words and expressions of the ~~future in this Form 10-Q.~~future. These forward-looking statements should be read together with the “Risk Factors” included in our Form 10-Q for the quarter ended June 30, 2020, our Form 10-K and our other reports filed with the SEC. Additionally, these forward-looking statements may not be realized due to a variety of factors, ~~which are, in some cases, beyond~~including, without limitation:

•Our profitability is subject to interest rate risk;

•We may be adversely affected by the ~~Company’s control and which could materially affect the Company’s results~~transition of operations, financial condition, cash flows, performance or future achievements or events. Currently, one of the most significant factors, is the potential adverse effect of the COVID-19 pandemic on the financial condition, results of operations, cash flows and performance of the Company and its customers and the global economy and financial markets. The extent of the impact of COVID-19 over the Company and its customers will depend on a number of issues and future developments, which, at this time, are extremely uncertain and cannot be accurately predicted, including the scope, severity and duration of the pandemic, the actions taken to contain or mitigate the impact of the pandemic, and the direct and indirect effects that the pandemic and related containment measures may have, among others. You should consider many of the risks listed in our Form 10-Q for the quarter ended June 30, 2020 together with those risks and uncertainties described in “Risk factors” in our Form 10-K and in our other filings with the SEC, as being heightenedLIBOR as a ~~result~~reference rate;

•Our concentration of ~~the ongoing COVID-19 pandemic.~~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;

3846

•

~~Additional factors that may cause actual results to deviate significantly from current expectations include but are not limited to:~~Liquidity risks could affect our operations and jeopardize our financial condition and certain funding sources could increase our interest rate expense;

•~~the COVID-19 pandemic has significantly impacted economic conditions globally~~Our valuation of securities and ~~in the United States, has adversely impacted our business, financial condition and results of operation,~~investments and the ~~ultimate impact~~determination of the impairment amounts taken on our ~~business, financial condition~~investments are subjective and, if changed, could materially adversely affect our results of operations ~~will depend~~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 ~~future developments~~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 ~~factors that~~intangible assets;

•Our historical consolidated financial data are ~~highly uncertain~~not necessarily representative of the results we would have achieved as a separate company and ~~will~~may not be ~~impacted by~~a reliable indicator of our future results;

•Our ability to raise additional capital in the ~~scope, severity and duration of the~~future;

•Conditions in Venezuela could adversely affect our operations;

•The COVID-19 pandemic and actions taken by governmental authorities ~~in response;~~to mitigate its spread has significantly impacted economic conditions, and a future outbreak of COVID-19 or another highly contagious disease, could adversely affect our business activities, results of operations and financial condition;

•asAs a participating lender in the U.S. Small Business Administration ~~(“SBA”) PPP, the Company and the Bank~~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 ~~strategic plan~~risk management policies and ~~growth strategy~~internal audit procedures may ~~not be achieved as quickly~~leave us exposed to unidentified or ~~as fully as we seek;~~unanticipated risk;

•~~operational risks are inherent in~~We may determine that our ~~businesses;~~internal controls and disclosure controls could have deficiencies or weaknesses;

•~~market conditions and economic cyclicality may adversely affect our industry;~~

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

•~~our cost of funds may increase as a result of general economic conditions, interest rates, inflation and competitive pressures;~~

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

•~~our derivative instruments may expose us to certain risks;~~

•our valuation of securities and investments and the determination of the amount of impairments taken on our investments are subjective and, if changed, could materially adversely affect our results of operations or financial condition;

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

•~~our success depends on general and local economic conditions where we operate;~~

•~~severe weather, natural disasters, global pandemics, acts of war or terrorism, theft, civil unrest, government expropriation or other external events could have significant effects on our business;~~

•~~defaults by or deteriorating asset quality of other financial institutions could adversely affect us;~~

•~~nonperforming and similar assets take significant time to resolve and may adversely affect our results of operations and financial condition;~~

•~~changes in the real estate markets, including the secondary market for residential mortgage loans, may adversely affect us;~~

•~~our allowance for loan losses may prove inadequate or we may be negatively affected by credit risk exposures;~~

•if our business does not perform well, we may be required to recognize an impairment of our goodwill or other long-lived assets or to establish a valuation allowance against the deferred income tax asset, which could adversely affect our results of operations or financial condition;

•~~mortgage servicing rights, or MSRs, requirements may change and require us to incur additional costs and risks;~~

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

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

•~~liquidity risks could affect operations and jeopardize our financial condition;~~

•~~certain funding sources may not be available to us and our funding sources may prove insufficient and/or costly to replace;~~

•~~our Venezuelan deposit concentration may lead to conditions in Venezuela adversely affecting our operations;~~

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

•~~our brokered deposits and wholesale funding increases our liquidity risk, could increase our interest rate expense and potentially increase our deposit insurance costs;~~

•~~technological~~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 technological improvements;

•~~potential gaps in our risk management policies~~Our information systems may experience interruptions and ~~internal audit procedures may leave us~~security breaches, and are exposed to ~~unidentified or unanticipated risk, which could negatively affect our business;~~cybersecurity threats;

•~~we may determine that our internal controls and disclosure controls could have deficiencies or weaknesses;~~

•~~any~~Any failure to protect the confidentiality of customer information could adversely affect our reputation and subject us to financial ~~sanctions and other costs that could have a material adverse effect on our business, financial condition and results of operations;~~sanctions;

•~~our information systems may experience interruptions and security breaches, and are exposed to cybersecurity threats;~~

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

•~~attractive acquisition opportunities~~We may not be ~~available~~able to ~~us in the future;~~generate sufficient cash to service all of our debt;

•~~certain provisions~~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 on our amended and restated articles of incorporation and amended and restated bylaws, Florida law, and U.S. banking laws could have anti-takeover effects by delaying or preventing a change of control that you may favor;

•~~we may be unable to attract and retain key people to support our business;~~debt;

•~~our employees~~We may ~~take excessive risks which~~incur a substantial level of debt that could ~~negatively~~materially adversely affect our ~~financial condition and business;~~ability to generate sufficient cash to fulfill our obligations under the Senior Notes;

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

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

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

•weWe 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;

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

•~~changes in accounting rules applicable to banks and financial institutions could adversely affect our financial condition and results of operations;~~

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

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

•weWe will be subject to heightened regulatory requirements if our total assets grow in excess of $10 billion;

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

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

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

•~~Fannie Mae and Freddie Mac restructuring may adversely affect~~A limited market exists for the ~~mortgage markets;~~Company's shares of Class B common stock;

•~~we adopted~~Holders of shares of Class B common stock have limited voting rights. As a ~~new accounting principle that requires immediate recognition in the statement~~result, holders of ~~income~~shares of ~~unrealized changes in the fair value of equity securities, which includes mutual funds, increasing the volatility of our results of operations;~~Class B common stock will have limited ability to influence shareholder decisions;

•~~we changed~~Certain of our ~~brand from “Mercantil” to “Amerant,” which~~existing shareholders could ~~adversely affect our business and profitability;~~exert significant control over the Company;

•~~we are incurring incremental costs as a separate, public company;~~

•~~as a separate, public company, we spend additional time and resources to comply with rules and regulations that previously did not apply to us;~~

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

•certain of our directors may have actual or potential conflicts of interest because of their equity ownership in Mercantil Servicios Financieros, C.A., or the Former Parent, or their positions with the Former Parent and us;

•ifIf 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;

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

•a limited market exists for the Company’s shares of Class B common stock on the Nasdaq Global Select Market. An active trading market may not develop or continue for the Company’s shares of Class B common stock, which could adversely affect the market price and market volatility of those shares;

•~~certain of our existing stockholders could exert significant control over the Company;~~

•weWe have the ability to issue additional equity securities, which would lead to dilution of our issued and outstanding ~~common stock;~~Company Shares;

•~~we expect to issue more Class A common stock in the future which may dilute holders of Class A common stock;~~

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

•~~our~~Our dual classes of ~~common stock~~Company Shares may limit investments by investors using index-based strategies;

•weWe 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 less attractive to investors;

•~~we do not currently intend~~We may be unable to ~~pay dividends on~~attract and retain key people to support our ~~common stock;~~business;

•Severe weather, natural disasters, global pandemics, acts of war or terrorism, theft, civil unrest, government expropriation or other external events could have significant effects on our ability to pay dividends to shareholders in the future is subject to profitability, capital, liquidity and regulatory requirements and these limitations may prevent us from paying dividends in the future;business;

•~~we face strategic risks as an independent company and from our history as a part of the Former Parent;~~

•~~the fair value of our investment securities can fluctuate~~We may incur losses due to ~~market conditions out of our control;~~

•~~we may not be able to generate sufficient cash to service all of our debt, including the Senior Notes;~~

•weminority investments in fintech 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 on the Senior Notes;

•~~we may incur a substantial level of debt that could materially adversely affect our ability to generate sufficient cash to fulfill our obligations under the Senior Notes;~~specialty finance companies; and

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

The foregoing factors should not be construed as exhaustive and should be read together with the ~~quarter ended June 30, 2020.~~

~~Forward-looking~~other cautionary statements ~~including those as to our beliefs, plans, objectives, goals, expectations, anticipations, estimates and intentions, involve known and unknown~~included in the Form 10-K. Because of these risks ~~uncertainties~~ and other ~~factors, which may be beyond~~uncertainties, our ~~control, and which may cause the Company’s~~ actual future financial condition, results, performance or achievements, or ~~financial condition to~~industry results, may be materially different from ~~future~~the results ~~performance, achievements, or financial condition expressed or implied~~indicated by ~~such forward-looking statements. You should not rely on any~~the forward-looking statements ~~as predictions of future events.~~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 ~~expect us~~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 ~~statements,~~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, together with those risks and uncertainties described in “Risk factors” in ~~our~~the Form 10-K, in ~~our~~this Form 10-Q ~~for the quarter ended June 30, 2020,~~ and in our other filings with the SEC, which are available at the SEC’s website www.sec.gov.

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. We serve customers in our United States markets and select international customers. These services are offered ~~primarily~~ through the Bank, which is also headquartered in Coral Gables, Florida, and its ~~Amerant Trust,~~subsidiaries. Fiduciary, investment, wealth management and mortgage lending services are provided by the Bank’s securities broker-dealer, Amerant Investments, ~~and~~the Bank’s Grand-Cayman based trust company subsidiary, the Cayman Bank, ~~subsidiaries.~~and the newly formed mortgage company, Amerant Mortgage. The Bank’s ~~three~~two primary markets are South Florida, where we operate 18 banking centers in Miami-Dade, Broward and Palm Beach counties; the greater Houston, Texas area, where we have ~~seven~~7 banking centers that serve the nearby areas of Harris, Montgomery, Fort Bend and Waller ~~counties, and a loan production office (“LPO”) in Dallas, Texas which opened in early 2019, and~~counties. See “Business Developments” below for an update on the ~~greater~~ New York City area LPO.

Business Developments

Amerant SPV, LLC

In May 2021, we incorporated a new wholly owned subsidiary, Amerant SPV. As we seek to innovate, address customer needs and compete in a fast changing and competitive environment, our Company is looking to partner with fintech and specialty finance companies that are developing cutting edge solutions and products and have the potential to improve our products and services to help our clients achieve their goals in a fast changing world.

From time to time, the Company may evaluate opportunities to invest and acquire non-controlling interests in companies it partners with, or may acquire non-controlling interests of fintech and specialty finance companies that the Company believes will be strategic or accretive. In June 2021, the Company made a $2.5 million equity investment in Marstone, Inc (“Marstone”), a digital wealth management fintech it has partnered with to provide digital wealth management and financial planning capabilities to new and existing customers. In connection with this investment, Gerald P. Plush, our Company’s Vice-Chairman, President & CEO, was appointed to Marstone’s Board of Directors. This investment in Marstone is included in the Company’s consolidated balance sheet as other assets.

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 the Form 10-K for more details.

We completed the merger of Amerant Trust with and into the Bank on April 1, 2021.

New Vice-Chairman, President 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 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 the 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.

On June 30, 2021, Mr. Alfonso Figueredo stepped down from his position as President and Chief Operating Officer of the Company. On June 9, 2021, the Board of Directors of the Company appointed Gerald P. Plush as President of the Company effective July 1, 2021 and, since that date, Mr. Plush has been serving as the Company’s Vice-Chairman, President and Chief Executive Officer.

Progress on Near and Long-Term Initiatives

As previously disclosed, 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.

We have continued work on implementing/enhancing a completely digital onboarding platform, adding talent to our treasury management sales force and support team in both Florida and Texas, as well as adding additional treasury management capabilities, and we have seen improvement in three key measures quarter over quarter: the loan to deposit ratio at June 30, 2021 was 98.8% compared to101.9% at December 31, 2020; non-interest bearing deposits to total deposits ratio was 18.8% at June 30, 2021 compared to 15.2% at December 31, 2020; and the ratio of brokered deposits to total deposits decreased to 9.4% at June 30, 2021 compared to 11.1%; at December 31, 2020.

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.

In the second quarter of 2021, we continued accelerating our digital transformation. We executed agreements with leading fintechs, Numerated Growth Technologies, Inc. (“Numerated”) and Marstone. We expect Numerated's platform to significantly improve the business loan account opening processes, making them faster and easier for customers, and enabling us to meet their existing financing needs quickly and efficiently.

In relation to Marstone, its online wealth management platform will help empower our customers to fully understand their financial position, plans and outlook. Amerant Investments will leverage Marstone’s platform in two main capacities: as a sub advisor and as a technological partner. Through Marstone's sub advisor offering, we'll be able to expand our reach in the mass affluent segment by offering a fully digital advisory experience. Through the technological partnership, Amerant Investments will be able to digitalize its existing advisory offering and leverage new tools to scale our business, including the introduction of MAPS by Marstone, a tool that will enable our customers to create financial plans and specific goals and providing a path to achieving them.

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.

In this area, many improvements have taken place or are underway, including the enhancement of our branch and ATM signage, rolling out new and improved branded items and significantly increasing public and media relations. Most importantly, we consider that the recent hiring of our new chief marketing officer and the engagement of Zimmerman Advertising, a leading agency in the US, as our new marketing agency, can help us elevate the Amerant brand and drive business growth.

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 curtailed loan originations in the New York ~~where we also maintain~~market and closed our New York City LPO, which was a ~~LPO that focuses on originating~~ commercial real estate loan production office with minimal deposit relationships. We will focus on growing in our core markets while also looking for opportunities to grow in contiguous markets. In the second quarter of 2021, the Company recorded a $0.8 million ROUA impairment associated with the closing of the NY LPO.

During the second quarter of 2021, we also completed a branch assessment as we are aiming to enhance our branch profitability by selecting locations that are consistent with our core markets. As a result of this assessment, we will be closing one branch in October 2021, and refreshing and/or relocating nine others in the future.

Amerant Mortgage launched operations at the end of May 2021 after completing its acquisition of First Mortgage Company (“~~CRE”~~FMC”) ~~loans.~~into which Amerant Mortgage was ultimately merged. This acquisition enabled Amerant Mortgage to operate its business nationally with direct access to federal housing agencies.

Evaluating new ways to achieve cost efficiencies across the business to improve our profitability. Among other items, we will be looking at the pricing of our products and offerings, balance sheet composition, as well as the categories and amounts of our spending.

The Company ~~continues~~continued to work on better ~~align~~aligning its operating structure and resources with its business activities. ~~As part~~During the second quarter of 2021, the Company decided to outsource the internal audit function and eliminated various other support positions. Severance costs resulting from these events, including severance cost related to the closure of the NY LPO, and the departure of the COO, were approximately $3.3 million in the second quarter of 2021.

With respect to our balance sheet composition, during the second quarter of 2021, the Company restructured $285 million of its fixed-rate FHLB advances. This restructuring consisted of changing the original maturity at lower interest rates. The new maturities of these FHLB advances range from 2 to 4 years compared to original maturities ranging from 2 to 8 years. The Company incurred an early termination and modification penalty of $6.6 million which was deferred and is being amortized over the term of the new advances, as an adjustment to the yields. The modifications were not considered substantial in accordance with GAAP. In addition, during the second quarter of 2021, the Company repaid $235 million of its FHLB advances, incurring a loss of $2.5 million. These events reduce our interest expense on this source of funds going forward.

Lastly, regarding our efforts to review the categories and amounts of our spending, immediately after the close of the second quarter of 2021, we determined to establish a central procurement function in order to achieve additional savings from expense base review, and established a business transformation/continuous improvement function and begun an 8-week process improvement initiative with a well-known firm to drive additional efficiency and enhance the customer experience, all with the goal of making banking with us easier.

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. In the six months ended June 30, 2021, the Company repurchased an aggregate of 502,232 shares of Class B common stock at a weighted average price per share of $16.71 under the 2021 Stock Repurchase Program. The aggregate purchase price for these transactions was approximately $8.4 million, including transaction costs. As of July 20, 2021 an additional 63,000 shares of Class B common stock at a price per share of $18.50 under the 2021 Stock Repurchase Program. We will continue to evaluate our capital structure and ways to optimize it in the future.

Environmental, Social and Governance (“ESG”). Since early 2021, we have been focused on developing and furthering our sustainability strategy and approach to contribute meaningfully and support a more sustainable future for our stakeholders, including our investors, employees, customers, and community. We have been working diligently during the last few months in developing our ESG strategy and program and, recently, our Board of Directors approved ~~a voluntary early retirement plan (the “Voluntary Plan”) and an involuntary severance plan (the “Involuntary Plan”) on October 9, 2020. Employees eligible for participation~~the ESG framework that we will used to develop specific ESG initiatives to be implemented in the ~~Voluntary Plan have 45 days~~coming months and years. We expect to ~~confirm their participation. Resulting costs~~share the material tenets of our ESG program and ~~savings will be determined after this point. The Involuntary Plan will affect approximately 37 persons and~~the progress our Company is ~~expected to cost approximately $1.9 million~~making in ~~one-time termination costs in the fourth quarter~~each relevant area as part of ~~2020 with estimated~~an annual ~~savings of approximately $5.8 million beginning in 2021. Both plans will be completed by year end.~~corporate social responsibility report starting next year.

On October 30, 2020, the Company closed one banking center in Florida and another in Texas. These closures are the result of extensive analyses of the profitability of the Company’s retail banking network and their current and expected individual contributions to achieving the Company’s strategic goals.

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.

~~On March 13, 2020, the President~~ For a more detailed discussion of the ~~Unites States of America (U.S.) declared a national state of emergency. In response to this outbreak,~~COVID-19 pandemic, see the governments of many states, cities and municipalities in the U.S., including the States of Florida, New York and Texas, have taken preventative or protective actions, such as imposing restrictions on business operations and advising or requiring individuals to limit or forego their time outside of their homes.

Form 10-K.

~~Business Continuity Plan Activated~~

The health and well-being of the Company’s employees, customers, and local communities remains paramount while the Company continues to provide the necessary services and products to customers with minimal disruption.

On March 16, 2020, we activated the Company's well-established Business Continuity Plan, or BCP. The BCP has effectively ensured the Company's resilient platform continues to operate during these extraordinary times, and has allowed us to continue providing the quality of products and services our customers have come to expect. The plan is supported and complemented by a robust business continuity governance framework, life safety program and annual enterprise-wide exercise and training program. The Company’s BCP plan is framed based on industry best practices and regulatory guidelines and is subject to periodic testing and independent audits. On June 3, 2020, the Company started Phase 1 of reintroducing employees working remotely back to the workplace. As a result, banking centers returned to regular business hours, following strict federal, state and local government guidelines supporting the safety of our employees and our customers. In the third quarter of 2020, we began to roll out a new phase of reintroducing an increased number of employees back to the office, excluding those who face challenges related to the COVID-19 pandemic that would prevent them from returning. To support these efforts, we have ramped up safety protocols, including implementing staggered schedules, in an abundance of caution to protect the health and safety of our employees. The Company’s banking centers continue to operate on a regular schedule under strict federal, state and local government safety guidelines. The Company continues to focus on serving customers without interruption, while maintaining a safe environment.

~~Supporting Our Communities~~

Beginning on March 26, 2020, we began providing an array of tangible and meaningful support measures to support our customers and communities during the COVID-19 pandemic. These measures include waiving the Bank’s ATM fees for customers and non-customers, late payment fees on all consumer and business loans, and deposit account fees on a case-by-case basis. Measures related to waiving of fees, with the exception of late payment fees on loans, were discontinued during the third quarter. The Bank is also refraining from reporting negative information such as past due balances to credit bureaus, and, importantly, offering individualized loan payment assistance such as interest payment deferral and forbearance options. Additionally, in April 2020, the Bank increased its mobile check deposit limits. All of these efforts align with regulatory guidance aimed at helping customers and communities, while remaining prudent and manageable, and will continue until further notice.

~~CARES Act~~

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), an approximately $2.0 trillion COVID-19 response bill, to provide emergency economic relief to individuals, small businesses, mid-size companies, large corporations, hospitals and other public health facilities, and state and local governments, was enacted. The CARES Act allocated the SBA $350.0 billion to provide loans of up to $10.0 million per small business as defined in the CARES Act. On April 2, 2020, the Bank began participating in the SBA’s ~~PPP,~~Paycheck Protection Program, or “PPP”, by providing loans to ~~these~~qualifying businesses to cover payroll, rent, mortgage, healthcare, and utilities costs, among other essential expenses. ~~On April 24, 2020, the Paycheck Protection Program~~In early January 2021, a third round of PPP loans provided additional stimulus relief to small businesses and ~~Health Care Enhancement Act, adding~~individuals who are self-employed or independent contractors. The Company continues to focus on providing funding to customers and communities by actively participating in the PPP ~~was enacted. On July 4, 2020, new legislation was signed into law that extended the availability~~and related government sponsored programs. As of ~~loans from~~ June 30, ~~2020 until August 8, 2020.~~ ~~On August 8, 2020, legislation providing funds through the PPP program expired. As of September 30, 2020,~~2021, total PPP loans were ~~$223.5~~$23.6 million, ~~representing over 2,000~~or 0.4% of total loans, ~~approved. Aproximately 90%~~compared to $198.5 million, or 3.4% of ~~these~~total loans ~~were under $350,000 each and represented approximately 51%~~as of ~~the PPP loan balances.The~~December 31, 2020. The Company estimates as of ~~September~~June 30, ~~2020,~~2021, there were ~~$97.2~~$131.4 million of deposits related to the PPP ~~loans primarily funded in~~compared to $95.4 million as of December 31, 2020. In the second quarter of ~~2020.~~

2021, the Company sold to a third party, in cash, PPP loans with an outstanding balance of approximately $95.1 million, and realized a pretax gain on sale of $3.8 million. The Company retained no loan servicing rights on these PPP loans.

Loan Loss Reserve and ~~Mitigation~~Modification Programs

On March 26, 2020, the Company began offering loan payment relief options to customers impacted by theCOVID-19 pandemic, including ~~interest-only~~deferral and/or forbearance options. These programs continued throughout 2020 and in the ~~second and third quarters of 2020. As of September~~six months ended June 30, ~~2020, loans~~2021.Loans which have been modified under these programs totaled $1.1 billion ~~or approximately~~ ~~19.3%~~as of ~~total loans~~.June 30, 2021. As of ~~September~~June 30, ~~2020, $101.2~~2021, $54.4 million, or ~~1.7%~~1.0% of total loans, were still under the ~~interest-only~~ deferral and/or forbearance ~~period.~~period, an increase from $43.4 million, or 0.7% at December 31, 2020. This ~~includes $76.3~~increase was primarily due to new modifications granted to two CRE retail loans in New York totaling $37.1 million, ofpartially offset by $26.1 million in loans ~~under a second~~that resumed regular payments after deferral ~~and $12.6 million under third deferral, which the~~and/or forbearance periods ended. The Company began to selectively offer as additional temporary loan modifications under ~~section 4013, “Temporary Relief from Troubled Debt Restructurings” of the CARES Act, allowing the extension of~~programs that allow it to extend the deferral and/or forbearance period beyond 180 days. The previously mentioned $54.4 million in loans includes: (i) $12.1 million of loans that matured in the second quarter of 2021 and will be transferred to OREO the third quarter of 2021; (ii) $5.2 million that mature in the third quarter of 2021, and (iii) $37.1 million that mature in the first quarter of 2022. Additionally, 100% of the loans under deferral and/or forbearance are secured by real estate collateral with average Loan to Value (“LTV”) of 83.1%. 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 ~~Troubled Debt Restructurings (“TDRs”).~~TDRs. The Company iscontinues to closely ~~monitoring~~monitor the performance of ~~these~~the remaining loans in deferral and/or forbearance periods under the terms of the temporary relief granted. ~~The following table summarizes the loan balances in these programs as of October 23, 2020, September 30, 2020, June 30, 2020 and May 1, 2020:~~

Program Detail October 23, 2020 September 30, 2020 June 30, 2020 May 1, 2020
(in thousands)
90-day payment deferral; interest added to principal balance upon modification and continues to accrue each month $ 64,249 $ 73,400 $ 349,166 $ 451,076
90-day interest payment deferral with no escrow payments 4,887 23,049 133,761 441,212
90-day interest payment deferral including escrow payments 2,614 4,748 150,464 196,809
180-day interest payment deferral — — 20,973 29,906
$ 71,750 $ 101,197 $ 654,364 $ 1,119,003

The Company performed a comprehensive review of its loan exposures by industry to identify those most susceptible to increased credit risk as a result of the COVID-19 pandemic. The Company estimated the outstanding loan portfolio is represented by loans to borrowers in industries, or with collateral values, that are potentially more vulnerable to the financial impact of the pandemic to be approximately 45% at September 30, 2020, compared to 42% at June 30, 2020. The Company estimates approximately 70% of these loans are secured with real estate collateral at September 30, 2020, unchanged from June 30, 2020.

The Company recorded a provision for loan losses of $18.0 million during third quarter of 2020, compared to $48.6 million and $22.0 million in the second and first quarters of 2020, respectively. The Company had released $1.5 million in the third quarter of 2019. The provision for loan losses in the third quarter of 2020 was the lowest recorded in any period this year. This decrease was mainly driven by a significant decline of the estimated allowance for loan losses associated with the COVID-19 pandemic, which dropped to $26.2 million as of September 30, 2020 from $32.9 million at the end of the second quarter of 2020, as well as lower specific reserve requirements related to loan portfolio deterioration.The increase during the second quarter of 2020 compared to the first quarter of 2020 was mainly due to a provision of $28.2 million due to specific reserve requirements as a result of loan portfolio deterioration and downgrades during the second quarter of 2020. In addition, the increase in the provision for loan losses during the second quarter of 2020 included $20.2 million driven by estimated probable losses reflecting deterioration in the macro-economic environment as a result of the COVID-19 pandemic across multiple impacted sectors.

The Company consistently reviews its existing credit approval practices to ensure that sound and prudent underwriting standards continue to drive the Company’s business relationships. As a result, the Company enhanced the monitoring of its entire loan portfolio and has proactively increased the frequency of periodic reviews and conversations with loan customers in anticipation of their future needs, which aligns with our relationship-centric banking model.

~~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 principal place of business is located or where we and our customers do business, have also implemented quarantines, restrictions on travel, “shelter at home” orders, and restrictions on types of business that may continue to ~~operate.~~operate or may be reinstated in the future. While ~~some~~most of these measures and restrictions have been lifted and ~~most~~ businesses ~~began~~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. For example, the States of Florida and Texas have seen increases in the cases of COVID-19 during the second quarter and into the third quarter which may prompt state or local governments to reinstate certain measures and restrictions. 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. ~~See—Risk Factors under Part II, Item 1A in this Form 10-Q.~~

Primary Factors Used to Evaluate Our Business

Results of Operations. In addition to net income ~~(loss)~~, the primary factors we use to evaluate and manage our results of operations include net interest income, noninterest income and expenses, ~~ROA~~ and ~~ROE.~~indicators of financial performance including return on assets (“ROA”) and return on equity (“ROE”).

Net Interest Income. Net interest income, or NIM, 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 advances from the Federal Home Loan Bank (“FHLB”) and other borrowings such as repurchase agreements, senior notes and junior subordinated 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, 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. NIM is calculated by dividing net interest income for the period by average interest-earning assets during that same period. Because noninterest-bearing sources of funds, such as noninterest-bearing deposits and stockholders’ equity, also fund interest-earning assets, NIM 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 (“~~U.S.~~ 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 stockholders’ equity, usually have the largest impact on periodic changes in our net interest spread, NIM 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 revenue streams: (i) service fees on deposit 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) securities gains or losses; (vi) net gains and losses on early extinguishment of FHLB advances; and (vii) other noninterest income. ~~In 2019, noninterest income also included data processing and fees for other services provided to the Company’s Former Parent and its affiliates.~~

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 pricing of deposit services, interest rates, our marketing efforts and other factors.

Our income from brokerage, advisory and fiduciary activities consists of brokerage commissions related to our customers’ trading volume, 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 (“AUM”) accounts totaled $1.76 billion at September 30, 2020, a decrease of $53.0 million from $1.82 billion at December 31, 2019. The decrease was mainly attributable to lower valuations resulting from the global financial impact of the COVID-19 pandemic. This decrease was partially offset by net new assets of $58.9 millionin the first nine months of 2020, as the Company’s sales team continued to execute against the Company’s relationship-centric strategy, successfully increasing share of wallet of existing customers and acquiring new customers by leveraging the Company's broad commercial and branch network. The Company remains focused on growing AUM, both domestically and internationally, in efforts to further build up the franchise and strengthen the Company’s fee-driven business.

Income from changes in the cash surrender value of our BOLI policies represents the amounts that may be realized under the contracts with the insurance carriers, which are nontaxable.

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 revised our card program to continue to serve our card customers, reduce risks and increase the efficiency of a relatively small program. We entered into referral arrangements with recognized U.S.-based card

issuers, which permit us to serve our international and domestic customers and earn referral fees and share interchange revenue without exposure to credit risk. ~~Our credit card issuance and interchange fees, and interest, decreased as we~~We ceased to be a direct card ~~issuer.~~

In 2019 and prior periods, we historically provided certain administrative services to the Former Parent’s non-U.S. affiliates under certain administrative and transition service agreements with arms-length terms and pricing. Income from this source was generally based on the direct costs associated with providing the services plus a markup, and reviewed periodically. These fees were paid by our Former Parent and its non-U.S. affiliatesissuer early in U.S. Dollars. For the first nine months of 2019, we were paid approximately $1.0 million for these services. These administrative and transition services ended in 2019, therefore, we earned no fees for these services in 2020. ~~Our Former Parent’s non-U.S. affiliates have also provided, and continue to provide, certain shareholder services to us under a service agreement.~~

Our gains and losses on sales of securities are derived from sales from our securities portfolio and are 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 consists, among other 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 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), ~~stock-based compensation,~~ employee benefits and employer tax expenses for our personnel. Salaries and employee benefits are partially offset by the deferral of expenses directly related to the origination of loans. As mentioned in the “Net Interest Income” discussion above, non-refundable loan origination fees, net of direct costs of originating loans, are deferred and amortized over the life of the related loans as adjustments to interest income in accordance with U.S. GAAP.

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 stock-based compensation~~ and regulatory agency fees, such as OCC examination fees.

FDIC deposit and business insurance assessments and premiums include deposit insurance, net of any credits applied against these premiums, corporate liability and other 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.

Other operating expenses include advertising, marketing, ~~(including rebranding expenses),~~ community engagement and other operational expenses. ~~Other operating expenses include the incremental cost associated with servicing the large number of shareholders resulting from the spin-off from our Former Parent.~~ Other operating expenses are partially offset by other operating expenses directly related to the origination of loans, which are deferred and amortized over the life of the related loans as adjustments to interest income in accordance with ~~U.S.~~ GAAP.

Noninterest expenses generally increase as our business grows and whenever necessary to implement or enhance policies and procedures for regulatory compliance. ~~During the first nine months of 2020 and 2019, we incurred~~We had restructuring expenses of approximately ~~$3.5~~$4.2 million and ~~$4.9~~$4.4 million ~~respectively.~~in the three and six month periods ended June 30, 2021, respectively, and $1.3 million and $1.7 million in the three and six month periods ended June 30, 2020. In the ~~first nine months~~three and six month periods ended June 30, 2021, restructuring costs consisted of ~~2020, restructuring~~staff reduction costs, a lease impairment charge related to the closing of the NY LPO and digital transformation expenses ~~included $1.1 million and $2.5 million~~(consisted of staff reduction costs and digital transformation expenses ~~respectively ($1.4 million and $3.6 million of staff reduction costs and rebranding costs~~ in the ~~first nine months of 2019, respectively)~~three and six month periods ended June 30, 2020). 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.

4956

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 risks in each category of 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 ~~ALL,~~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 ~~at least~~ annually or more frequently if needed, 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 minimum capital ratios for banks 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 CET1 capital ratio; and (vii) other factors, including market conditions.

Liquidity. Our deposit base consists primarily of personal and commercial accounts maintained by individuals and businesses in our primary markets and select international core depositors. In recent years, we have increased our fully-insured brokered time deposits under ~~$250,000, but~~$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 money market and brokered interest bearing demand deposit accounts. However, we remain focused on relationship-driven core deposits. In the 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 readily convertible into cash without undue loss, the characteristics and maturities of our assets when compared to the characteristics of our liabilities and other factors.

5057

Summary Results

The summary results for the ~~quarter~~three and six month periods ended ~~September~~June 30, ~~2020~~2021 include the ~~following (See~~ ~~“Selected Financial Information” for an explanation of Non-GAAP Financial Measures Reconciliation):~~following:

•Net income of ~~$1.7~~$16.0 million in the second quarter of 2021 compared to a net loss of $15.3 million in the second quarter of 2020, and net income of $30.4 million in the six months ended June 30, 2021 compared to a net loss of $11.9 million in the same period of 2019. The decrease in net income compared to the same quarter last year was primarily due to the provision for loan losses recorded in the third quarter of 2020 compared to a reversal of provision for loan losses in the comparable period last year, and lower NII. These results were partially offset by higher non-interest income and lower non-interest expenses. Operating income, which excludes provision for income tax expense or benefit, provision for loan losses or reversals and net gains on securities, decreased to $11.5 million, down 9.8% from $12.8 million in the same period of 2019.six months ended June 30, 2020.

•NII was ~~$45.3~~$50.0 million, ~~down 13.8%~~up 7.9% from ~~$52.6~~$46.3 million in the ~~same period~~second quarter of ~~2019. Compared to the third quarter 2019, lower NII~~2020. NIM was 2.81% in the ~~third~~second quarter of 2021, up 37 basis points from 2.44% in the second quarter of 2020, ~~is attributed~~and 2.74% in the six months ended June 30, 2021, up 19 basis points from 2.55% in the six months ended June 30, 2020.

•A release of $5.0 million from the ALL was recorded during the second quarter of 2021, compared to a ~~decline in average yields on interest-earning assets, partially offset by lower deposit and wholesale funding costs. Net interest margin (“NIM”) was 2.39%~~$48.6 million provision recorded in the ~~third~~second quarter of 2020, ~~down from 2.80%~~and a $5.0 million release in the ~~third quarter~~six months ended June 30, 2021, compared to a provision of ~~2019.~~

•~~Credit quality is sound and reserve coverage remains strong. Balances~~loan losses of $70.6 million recorded in ~~loan forbearance programs declined to their lowest point since~~ the start of the COVID-19 pandemic, with most borrowers resuming their scheduled payments. In the third quarter of 2020, loans under interest-only deferral and/or forbearance totaled $101.2 million, down significantly from $1.1 billion at the beginning of April.six months ended June 30, 2020. The ~~Company has only received a limited number of requests for additional payment extensions, which are being carefully evaluated. The~~ ratio of ~~the~~ ALL to total loans was ~~1.97%~~1.86% as of ~~September~~June 30, ~~2020, up~~2021, down from ~~0.93% in the same period in 2019. In the third quarter~~1.90% as of ~~2020, the~~December 31, 2020. The ratio of net ~~loan~~ charge-offs to average total loans ~~increased to 1.41%, from 0.16%~~ in the ~~third~~second quarter of ~~2019. Provision for loan losses of $18.0 million~~2021 was 0.12% compared to 0.13% in the ~~third~~second quarter of 2020, and 0.06% in the ~~lowest recorded~~six months ended June 30, 2021, compared to 0.11% in ~~any quarter this year, reflects improving credit conditions on higher risk loans to borrowers as economic activity increases.~~the six months ended June 30, 2020.

•Noninterest income was ~~$20.3 million, up 46.7% from $13.8~~$15.7 million in the ~~same period~~second quarter of 2019. The year-over-year increase was largely the result of higher net gains on the sale of securities, in addition to increased brokerage, advisory and fiduciary income, partially offset by lower derivative income and decreased cards, deposits and other service fees. Net gains on sale of debt securities was $8.62021, down 20.4% from $19.8 million in the ~~third~~second quarter of 2020, ~~compared to $0.9~~and $29.9 million in the ~~same period last year.~~six months ended June 30, 2021, down $11.8 million, or 28.2%, compared to $41.7 million in the six months ended June 30, 2020.

•Noninterest expense was ~~$45.5 million, down 13.7% from $52.7~~$51.1 million in the ~~third~~second quarter of ~~2019. The year-over-year decline resulted mainly~~2021, up 17.2% from lower salaries and employee benefits, professional and other services fees and other noninterest expenses in the third quarter of 2020. This decline was partially offset by an increase in FDIC assessments and insurance in the third quarter of 2020. Adjusted noninterest expense was $43.7$43.6 million, up 39.2% from $36.7 million in the ~~third~~second quarter of 2020, ~~down 15.2% from $51.5~~and $94.8 million in the ~~third quarter of 2019. Adjusted noninterest expense in the third quarter of 2020 excludes $1.8~~six months ended June 30, 2021, up $13.1 million, ~~in restructuring expenses, compared to $1.3~~or 16.1%, from $81.6 million in the ~~same period of 2019.~~six months ended June 30, 2020.

•The efficiency ratio was ~~69.3% (66.5% adjusted for restructuring expenses)~~77.8% in the ~~third~~second quarter of 2021 compared to 55.6% for the second quarter of 2020, and 74.4% in the six months ended June 30, 2021 compared to ~~79.4% (77.5% adjusted for restructuring expenses) for~~59.5% in the ~~same period of 2019. The year-over-year decline is mainly attributable to the Company’s ongoing transformation and efficiency improvement efforts during the period.~~six months ended June 30, 2020.

•Total loans were ~~$5.9~~$5.6 billion ~~up by $180.3~~at June 30, 2021, down $233.8 million, or 3.1%, compared to $6.0 billion at December 31, 2019. As of September 30, 2020, PPP loans were $223.5 million, or 3.8% of total loans. Loans modified due to COVID-19 still under forbearance were $101.2 million,~~or 1.7%% of total loans, as of September 30, 2020. Total deposits were $5.9 billion, up $120.4 million, or 2.1%~~4.0%, compared to December 31, ~~2019. The Company estimates as of September~~2020. Total deposits were $5.7 billion at June 30, ~~2020, there were $97.2~~2021, down $56.7 million, ~~of deposits related~~or 1.0%, compared to ~~PPP loans funded in the second quarter of~~December 31, 2020.

•Stockholders’ book value per common share attributable to the Company increased to ~~$19.68, up 1.7%, from $19.35~~$21.27 at June 30, 2021, compared to $20.70 at December 31, ~~2019.~~ 2020.

•Tangible book value per common share (“TBV”) (non-GAAP) increased to ~~$19.17, up 1.8% from $18.84~~$20.67 as of June 30, 2021, compared to $20.13 at December 31, ~~2019.~~

~~Selected Financial Information~~

~~The following table sets forth selected financial information derived from our unaudited interim consolidated financial statements for~~2020. TBV is the three and nine month periods ended September 30, 2020 and 2019 and as of September 30, 2020 and our audited consolidated financial statements as of December 31, 2019. These unaudited interim consolidated financial statements are not necessarily indicative of our results of operations for the year ending December 31, 2020 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 consolidated financial statements and the corresponding notes included in this Form 10-Q.

September 30, 2020 December 31, 2019
(in thousands)
Consolidated Balance Sheets
Total assets $ 7,977,047 $ 7,985,399
Total investments 1,468,796 1,739,410
Total gross loans (1) 5,924,617 5,744,339
Allowance for loan losses 116,819 52,223
Total deposits 5,877,546 5,757,143
Advances from the FHLB and other borrowings 1,050,000 1,235,000
Senior notes (2) 58,498 —
Junior subordinated debentures (3) 64,178 92,246
Stockholders' equity 829,533 834,701
Assets under management and custody (4) 1,762,803 1,815,848

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
(in thousands, except percentages and per share amounts)
Consolidated Results of Operations
Net interest income $ 45,348 $ 52,600 $ 140,900 $ 161,826
Provision for (reversal of) loan losses 18,000 (1,500) 88,620 (2,850)
Noninterest income 20,292 13,836 61,955 41,139
Noninterest expense 45,500 52,737 127,107 157,587
Net income (loss) 1,702 11,931 (10,195) 37,859
Effective income tax rate 20.47 % 21.50 % 20.80 % 21.50 %
Common Share Data
Stockholders' book value per common share $ 19.68 $ 19.11 $ 19.68 $ 19.11
Tangible stockholders' equity (book value) per common share (5) $ 19.17 $ 18.63 $ 19.17 $ 18.63
Basic earnings (loss) per common share $ 0.04 $ 0.28 $ (0.24) $ 0.89
Diluted earnings (loss) per common share (6) $ 0.04 $ 0.28 $ (0.24) $ 0.88
Basic weighted average shares outstanding 41,722 42,466 41,875 42,562
Diluted weighted average shares outstanding (6) 42,065 42,915 41,875 42,881

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
(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) 2.39 % 2.80 % 2.49 % 2.89 %
Net income (loss) / Average total assets (ROA) (9) 0.08 % 0.60 % (0.17) % 0.64 %
Net income (loss) / Average stockholders' equity (ROE) (10) 0.81 % 5.81 % (1.62) % 6.43 %
Capital Indicators (%)
Total capital ratio (11) 14.56 % 14.77 % 14.56 % 14.77 %
Tier 1 capital ratio (12) 13.30 % 13.93 % 13.30 % 13.93 %
Tier 1 leverage ratio (13) 10.52 % 11.15 % 10.52 % 11.15 %
Common equity tier 1 capital ratio (CET1) (14) 12.34 % 12.57 % 12.34 % 12.57 %
Tangible common equity ratio (15) 10.16 % 10.26 % 10.16 % 10.26 %
Asset Quality Indicators (%)
Non-performing assets / Total assets (16) 1.08 % 0.42 % 1.08 % 0.42 %
Non-performing loans / Total loans (1) (17) 1.46 % 0.57 % 1.46 % 0.57 %
Allowance for loan losses / Total non-performing loans (18) 135.09 % 163.42 % 135.09 % 163.42 %
Allowance for loan losses / Total loans (1) (18) 1.97 % 0.93 % 1.97 % 0.93 %
Net charge-offs / Average total loans (19) 1.41 % 0.16 % 0.56 % 0.12 %
Efficiency Indicators (% except FTE)
Noninterest expense / Average total assets 2.24 % 2.64 % 2.11 % 2.65 %
Salaries and employee benefits / Average total assets 1.39 % 1.70 % 1.31 % 1.70 %
Other operating expenses/ Average total assets (20) 0.85 % 0.95 % 0.79 % 0.95 %
Efficiency ratio (21) 69.32 % 79.38 % 62.66 % 77.64 %
Full-Time-Equivalent Employees (FTEs) 807 838 807 838
Adjusted Selected Consolidated Results of Operations and Other Data (5)
Adjusted noninterest expense $ 43,654 $ 51,474 $ 123,589 $ 152,655
Adjusted net income (loss) 3,163 12,923 (7,409) 41,731
Operating income 11,540 12,793 49,791 43,476
Adjusted basic earnings (loss) per common share 0.08 0.30 (0.18) 0.98
Adjusted earnings (loss) per diluted common share (6) 0.08 0.30 (0.18) 0.97
Adjusted net income (loss) / Average total assets (Adjusted ROA) (9) 0.16 % 0.65 % (0.12) % 0.70 %
Adjusted net income (loss) / Average stockholders' equity (Adjusted ROE) (10) 1.51 % 6.30 % (1.17) % 7.09 %
Adjusted noninterest expense / Average total assets 2.15 % 2.58 % 2.05 % 2.57 %
Adjusted salaries and employee benefits / Average total assets 1.36 % 1.67 % 1.29 % 1.68 %

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
Adjusted other operating expenses/ Average total assets (20) 0.79 % 0.91 % 0.75 % 0.89 %
Adjusted efficiency ratio (22) 66.51 % 77.48 % 60.92 % 75.21 %

~~__________________~~

~~(1) Total gross loans are net of deferred loan fees and costs.~~

(2) During the second quarter of 2020, the Company completed a $60 million offering of 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) During the nine months ended September 30, 2020, the Company redeemed $26.8 million of its 8.90% trust preferred securities. The Company simultaneously redeemed the junior subordinated debentures associated with these trust preferred securities.

~~(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 ) As of September 30, 2020 and 2019 potential dilutive instruments consisted of unvested shares of restricted stock and restricted stock units mainly related to the Company’s IPO in 2018, totaling 478,587 and 789,652, respectively. During the three months ended September 30, 2020 and 2019, and the nine months ended September 30, 2019, potential dilutive instruments were included in the diluted earnings per share computation because, when the unamortized deferred compensation cost related to 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. During the nine months ended September 30, 2020, potential dilutive instruments were not included in the diluted earnings per share computation because the Company reported a net loss and their inclusion would have an antidilutive effect.

~~(7) Operating data for the periods presented have been annualized.~~

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

~~(9) Calculated based upon the average daily balance~~result of total ~~assets.~~

~~(10) Calculated based upon the average daily balance of~~ stockholders’ ~~equity.~~

~~(11) Total stockholders’ equity divided by total risk-weighted assets, calculated according to the standardized regulatory capital ratio calculations.~~

~~(12) Tier 1 capital divided by total risk-weighted assets.~~

(13) Tier 1 capital divided by quarter to date average assets. Tier 1 capital is composed of Common Equity Tier 1 (CET 1) capital plus outstanding qualifying trust preferred securities of $62.3 million and $89.1 million at September 30, 2020 and 2019, respectively. See footnote 2 for more information about trust preferred securities redemption transactions in the first quarter of 2020.

~~(14) Common Equity Tier 1 (CET 1) capital divided by total risk-weighted assets.~~

~~(15) Tangible common equity is calculated as the ratio of common~~ equity less goodwill and other ~~intangibles~~intangible assets divided by total ~~assets less~~shares outstanding. At June 30, 2021 and December 31, 2020, total stockholders’ equity was $799.1 million and $783.4 million, respectively, goodwill and other intangible ~~assets. Other intangibles~~ assets ~~are included in other assets in the Company’s consolidated balance sheets.~~

(16) Non-performing assets include all accruing 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 $86.5totaled $22.5 million and ~~$32.8~~$21.6 million, ~~as of September 30, 2020~~respectively, and ~~2019,~~total shares outstanding were 37,562,792 and 37,842,696, respectively.

(17) Non-performing loans include all accruing loans 90 days or more past due, all nonaccrual loans and restructured loans that are considered TDRs. Non-performing loans were $86.5 million and $32.8 million as of September 30, 2020 and 2019, respectively.

~~(18) Allowance for loan losses was $116.8 million and $53.6 million as of September 30, 2020 and 2019, respectively.~~ ~~See~~ ~~Note 5 to our audited consolidated financial statements in our Form 10-K and Note 5 to these unaudited interim consolidated financial statements for more details on our impairment models.~~

(19) Calculated based upon the average daily balance of outstanding loan principal balance net of deferred loan fees and costs, excluding the allowance for loan losses. During the third quater of 2020, the Company charged off $19.3 million against the allowance for loan losses as a result of the deterioration of a commercial loan relationship to a Miami-based U.S. coffee trader. This commercial loans relationship was placed in nonaccrual status in the second quarter of 2020. ~~See “Loan Quality” for more details.~~

~~(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.~~

~~(22) Adjusted efficiency ratio is the efficiency ratio less the effect of restructuring costs, described in “Non-GAAP Financial Measures Reconciliation” herein.~~

~~Non-GAAP Financial Measures Reconciliation~~

Certain financial measures and ratios contained in this Form 10-Q, including “adjusted noninterest expense”, “adjusted net (loss) income”, “operating 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, U.S. generally accepted accounting principles (“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 for certain costs incurred by the Company in the 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 investment community and in the internal evaluation and management of our businesses. Our management believes that ~~these~~this non-GAAP ~~financial measures and the information they provide are~~measure is useful to investors since ~~these measures permit~~it permits 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 2020, and the Company’s increases of its allowance for loan losses and net gains on sales of securities in the three and nine months ended September 30, 2020 . While we believe that these non-GAAP financial measures are useful in evaluating our performance, this information should be considered as supplemental and not as a 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 sets forth the Company’s Non-GAAP financial measures.~~

performance.

Three Months Ended September 30, Nine Months Ended September 30,
(in thousands, except per share amounts)
2020 2019 2020 2019
Total noninterest expenses $ 45,500 $ 52,737 $ 127,107 $ 157,587
Less: restructuring costs (1):
Staff reduction costs 646 450 1,060 1,357
Digital transformation expenses 1,200 — 2,458 —
Rebranding costs — 813 — 3,575
Total restructuring costs 1,846 1,263 3,518 4,932
Adjusted noninterest expenses $ 43,654 $ 51,474 $ 123,589 $ 152,655
Net income (loss) $ 1,702 $ 11,931 $ (10,195) $ 37,859
Plus after-tax restructuring costs:
Restructuring costs before income tax effect 1,846 1,263 3,518 4,932
Income tax effect (385) (271) (732) (1,060)
Total after-tax restructuring costs 1,461 992 2,786 3,872
Adjusted net income (loss) $ 3,163 $ 12,923 $ (7,409) $ 41,731
Net income (loss) $ 1,702 $ 11,931 $ (10,195) $ 37,859
Plus: income tax expense (benefit) 438 3,268 (2,677) 10,369
Plus: provision for (reversal of) loan losses 18,000 (1,500) 88,620 (2,850)
Less: securities gains, net 8,600 906 25,957 1,902
Operating income $ 11,540 $ 12,793 $ 49,791 $ 43,476
Basic earnings (loss) per share $ 0.04 $ 0.28 $ (0.24) $ 0.89
Plus: after tax impact of restructuring costs 0.04 0.02 0.06 0.09
Total adjusted basic earnings (loss) per common share $ 0.08 $ 0.30 $ (0.18) $ 0.98
Diluted earnings (loss) per share (2) $ 0.04 $ 0.28 $ (0.24) $ 0.88
Plus: after tax impact of restructuring costs 0.04 0.02 0.06 0.09
Total adjusted diluted earnings (loss) per common share $ 0.08 $ 0.30 $ (0.18) $ 0.97

Three Months Ended September 30, Nine Months Ended September 30,
(in thousands, except per share amounts and percentages) 2020 2019 2020 2019
Net income (loss) / Average total assets (ROA) 0.08 % 0.60 % (0.17) % 0.64 %
Plus: after tax impact of restructuring costs 0.08 % 0.05 % 0.05 % 0.06 %
Adjusted net income (loss) / Average total assets (Adjusted ROA) 0.16 % 0.65 % (0.12) % 0.70 %
Net income (loss) / Average stockholders' equity (ROE) 0.81 % 5.81 % (1.62) % 6.43 %
Plus: after tax impact of restructuring costs 0.70 % 0.49 % 0.45 % 0.66 %
Adjusted net income (loss) / Average stockholders' equity (Adjusted ROE) 1.51 % 6.30 % (1.17) % 7.09 %
Noninterest expense / Average total assets 2.24 % 2.64 % 2.11 % 2.65 %
Less: impact of restructuring costs (0.09) % (0.06) % (0.06) % (0.08) %
Adjusted noninterest expense / Average total assets 2.15 % 2.58 % 2.05 % 2.57 %
Salaries and employee benefits / Average total assets 1.39 % 1.70 % 1.31 % 1.70 %
Less: impact of restructuring costs (0.03) % (0.03) % (0.02) % (0.02) %
Adjusted salaries and employee benefits / Average total assets 1.36 % 1.67 % 1.29 % 1.68 %
Other operating expenses / Average total assets 0.85 % 0.95 % 0.79 % 0.95 %
Less: impact of restructuring costs (0.06) % (0.04) % (0.04) % (0.06) %
Adjusted other operating expenses / Average total assets 0.79 % 0.91 % 0.75 % 0.89 %
Efficiency ratio 69.32 % 79.38 % 62.66 % 77.64 %
Less: impact of restructuring costs (2.81) % (1.90) % (1.74) % (2.43) %
Adjusted efficiency ratio 66.51 % 77.48 % 60.92 % 75.21 %
Stockholders' equity $ 829,533 $ 825,751 $ 829,533 $ 825,751
Less: goodwill and other intangibles (21,607) (20,933) (21,607) (20,933)
Tangible common stockholders' equity $ 807,926 $ 804,818 $ 807,926 $ 804,818
Total assets $ 7,977,047 $ 7,864,260 $ 7,977,047 $ 7,864,260
Less: goodwill and other intangibles (21,607) (20,933) (21,607) (20,933)
Tangible assets $ 7,955,440 $ 7,843,327 $ 7,955,440 $ 7,843,327
Common shares outstanding 42,147 43,205 42,147 43,205
Tangible common equity ratio 10.16 % 10.26 % 10.16 % 10.26 %
Stockholders' book value per common share $ 19.68 $ 19.11 $ 19.68 $ 19.11
Tangible stockholders' book value per common share $ 19.17 $ 18.63 $ 19.17 $ 18.63

~~_________~~

(1) Expenses 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.

(2) As of September 30, 2020 and 2019 potential dilutive instruments consisted of unvested shares of restricted stock and restricted stock units mainly related to the Company’s IPO in 2018, totaling 478,587 and 789,652, respectively. During the three months ended September 30, 2020 and 2019, and the nine months ended September 30, 2019, potential dilutive instruments were included in the diluted earnings per share computation because, when the unamortized deferred compensation cost related to 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. During the nine months ended September 30, 2020, potential dilutive instruments were not included in the diluted earnings per share computation because the Company reported a net loss and their inclusion would have an antidilutive effect.

Results of Operations - Comparison of Results of Operations for the Three and ~~Nine~~Six Month Periods Ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020

Net income~~(loss)~~

The table below sets forth certain results of operations data for the three and ~~nine~~six month periods ended ~~September~~June 30, ~~2020~~2021 and ~~2019:~~2020:


		Three Months Ended September 30,				Change				Nine Months Ended September 30,				Change					Three Months Ended June 30,				Change				Six Months Ended June 30,				Change
(in thousands, except per share amounts and percentages)	(in thousands, except per share amounts and percentages)	2020		2019		2020 vs 2019				2020		2019		2020 vs 2019				(in thousands, except per share amounts and percentages)	2021		2020		2021 vs 2020				2021		2020		2021 vs 2020
Net interest income	Net interest income	$	45,348	$	52,600	$	(7,252)	(13.8)	%	$	140,900	$	161,826	$	(20,926)	(12.9)	%	Net interest income	$	49,971	$	46,323	$	3,648	7.9	%	$	97,540	$	95,552	$	1,988	2.1	%
Provision for (reversal of) loan losses		18,000		(1,500)		19,500		N/M		88,620		(2,850)		91,470		N/M
Net interest income after provision for (reversal of) loan losses		27,348		54,100		(26,752)		(49.5)	%	52,280		164,676		(112,396)		(68.3)	%
(Reversal of) provision for loan losses																		(Reversal of) provision for loan losses	(5,000)		48,620		(53,620)		(110.3)		(5,000)		70,620		(75,620)		(107.1)
Net interest income (loss) after (reversal of) provision for loan losses																		Net interest income (loss) after (reversal of) provision for loan losses	54,971		(2,297)		57,268		2,493.2	%	102,540		24,932		77,608		311.3	%
Noninterest income	Noninterest income	20,292		13,836		6,456		46.7	%	61,955		41,139		20,816		50.6	%	Noninterest income	15,734		19,753		(4,019)		(20.4)	%	29,897		41,663		(11,766)		(28.2)	%
Noninterest expense	Noninterest expense	45,500		52,737		(7,237)		(13.7)	%	127,107		157,587		(30,480)		(19.3)	%	Noninterest expense	51,125		36,740		14,385		39.2	%	94,750		81,607		13,143		16.1	%
Income (loss) before income tax		2,140		15,199		(13,059)		(85.9)	%	(12,872)		48,228		(61,100)		(126.7)	%
Income (loss) before income tax (expense) benefit																		Income (loss) before income tax (expense) benefit	19,580		(19,284)		38,864		201.5	%	37,687		(15,012)		52,699		351.1	%
Income tax (expense) benefit	Income tax (expense) benefit	(438)		(3,268)		2,830		(86.6)	%	2,677		(10,369)		13,046		(125.8)	%	Income tax (expense) benefit	(4,435)		4,005		(8,440)		210.7	%	(8,083)		3,115		(11,198)		359.5	%
Net income (loss)		$	1,702	$	11,931	$	(10,229)	(85.7)	%	$	(10,195)	$	37,859	$	(48,054)	(126.9)	%
Net income (loss) before attribution of noncontrolling interest																		Net income (loss) before attribution of noncontrolling interest	15,145		(15,279)		30,424		199.1	%	29,604		(11,897)		41,501		348.8	%
Noncontrolling interest																		Noncontrolling interest	(817)		—		(817)		NM		(817)		—		(817)		NM
Net income (loss) attributable to Amerant Bancorp Inc.																		Net income (loss) attributable to Amerant Bancorp Inc.	$	15,962	$	(15,279)	$	31,241	204.5	%	$	30,421	$	(11,897)	$	42,318	355.7	%
Basic earnings (loss) per common share	Basic earnings (loss) per common share	$	0.04	$	0.28	$	(0.24)	(85.7)	%	$	(0.24)	$	0.89	$	(1.13)	(127.0)	%	Basic earnings (loss) per common share	$	0.43	$	(0.37)	$	0.80	216.2	%	$	0.81	$	(0.28)	$	1.09	389.3	%
Diluted earnings (loss) per common share (1)	Diluted earnings (loss) per common share (1)	$	0.04	$	0.28	$	(0.24)	(85.7)	%	$	(0.24)	$	0.88	$	(1.12)	(127.3)	%	Diluted earnings (loss) per common share (1)	$	0.42	$	(0.37)	$	0.79	213.5	%	$	0.81	$	(0.28)	$	1.09	389.3	%

__________________

(1) ~~At September~~In the second quarter and six months ended June 30, ~~2020 and 2019,~~2021, potential dilutive instruments consisted of unvested shares of restricted stock, restricted stock units and performance share units (consisted of unvested shares of restricted stock and restricted stock units ~~totaling478,757~~in the second quarter and ~~789,652, respectively, mainly related to the Company’s IPO in 2018.~~six months ended June 30, 2020). See Note 1718 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 and performance share units on earnings per share for the three and ~~nine~~six month periods ended ~~September~~June 30, ~~2020~~2021 and ~~2019.~~2020.

~~N/M Means~~NM - means not meaningful

Three Months Ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020

In the ~~third~~second quarter of ~~2020,~~2021, we reported a net income of ~~$1.7~~$16.0 million, or ~~$0.04~~$0.42 earnings per diluted share, compared to a net ~~income~~loss of ~~$11.9~~$15.3 million, or ~~$0.28 earnings~~$0.37 loss per diluted share, in the same quarter of ~~2019. The decrease of $10.2 million, or 85.7%, in net income was~~2020, mainly ~~the result of:~~due to: (i) the ~~$18.0~~5.0 million reversal of loan losses in the second quarter of 2021 compared to a provision for loan losses of $48.6 million in the third quarter of 2020, primarily due to the estimated probable losses reflecting deterioration of our loan portfolio due to the COVID-19 pandemic and specific reserves requirements on a commercial loan relationship, and (ii) lower net interest income. This was partially offset by: (i) lower noninterest expenses mainly due to lower salaries and employee benefits, lower other operating expenses and lower professional and other services fees, and (ii) higher noninterest income driven by $8.6 million of net gains on the sale of debt securities recognized in the thirdsecond quarter of 2020 and (ii) higher ~~brokerage, advisory~~net interest income. These results were partially offset by lower noninterest income and ~~fiduciary fees.~~higher noninterest expenses. Net income excludes an $0.8 million loss attributable to a 49% non-controlling interest of Amerant Mortgage, which commenced operations in May 2021. The Company attributed a net loss of $0.8 million to the non-controlling interest on the basis of a $1.7 million net loss for Amerant Mortgage for the six-months ended June 30, 2021, primarily derived from salary and employee benefits which are included in our consolidated results of operations.

Net interest income ~~declined to $45.3~~was $50.0 million in the three months ended ~~September~~June 30, ~~2020~~2021, an increase of $3.6 million, or 7.9%, from ~~$52.6~~$46.3 million in the three months ended ~~September~~June 30, ~~2019. The decrease of $7.3 million, or 13.8%,~~2020. This was primarily ~~due to~~the result of a decline in interest expense due to: (i) lower average cost of total deposits and FHLB advances, and (ii) lower average balances of time deposits and FHLB advances. In addition, there was an increase in the average yields on ~~interest-earning~~total interest earning assets. ~~This~~The increase in net interest income was partially offset by ~~lower deposit and lower wholesale funding costs~~a decline in the average balance of total interest earning assets and higher average ~~interest-earning asset balances.~~

balance of Senior Notes which were issued late in the second quarter of 2020. See “-
Net interest Income” for more details.

Noninterest income ~~increased to $20.3~~was $15.7 million in the three months ended ~~September~~June 30, ~~2020 from $13.8~~2021, a decrease of $4.0 million, or 20.4%, compared to $19.8 million in the three months ended ~~September~~June 30, ~~2019. The increase of $6.5 million, or 46.7%, is~~2020. This was mainly due to ~~$8.6~~a $6.4 million ofdecrease in net gains on sale of securities, and a $2.5 million net loss on the early termination of $235 million in FHLB advances in the three months ended June 30, 2021. The decrease in noninterest income was partially offset by: (i) higher other noninterest income mainly due to a net gain of $3.8 million on the sale of ~~debt securities recognized~~$95.1 million in PPP loans in the ~~third~~second quarter of ~~2020,~~2021 and (ii) higher ~~brokerage, advisory and fiduciary fees. These results were partially offset by: (i) lower cards and trade finance servicing fees; (ii) lower deposits~~deposit and service ~~fees and (iii) lower other noninterest income.~~fees. See “-Noninterest Income” for more details.

Noninterest ~~expenses decreased to $45.5~~expense was $51.1 million in the three months ended ~~September~~June 30, ~~2020~~2021, an increase of $14.4 million, or 39.2%, from ~~$52.7~~$36.7 million in the three months ended ~~September~~June 30, ~~2019. The decrease of $7.2 million, or 13.7%, is~~2020. This was primarily driven by: (i) ~~lower salaries~~higher salary and employee benefits ~~due to lower incentives associated with variable and long-term bonus programs, staff reductions in 2019 and 2018 and lower stock-based compensation expense, (ii) lower other operating expenses~~ mainly due to ~~lower marketing~~the absence of the $7.8 million deferral of expenses directly related to PPP loan originations, in accordance with GAAP, in the second quarter of 2020; (ii) higher severance expenses; (iii) higher other operating expenses; (iv) higher occupancy and ~~(iii) lower~~equipment expenses; (v) higher professional and other ~~services fees. This was partially offset by~~service fees, and (vi) higher FDIC assessments and ~~insurance expenses in the third quarter of 2020 compared to the same period last year.~~insurance. See “-Noninterest Expense” for more details.

In the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, noninterest expense included ~~$1.8~~$4.2 million and $1.3 million, respectively, in restructuring costs. In the second quarter of 2021, restructuring costs ~~consisting primarily~~consisted of staff reduction costs, a lease impairment charge related to the closing of the NY LPO, and digital transformation expenses (consisted of staff reduction costs and digital transformation expenses in the ~~three~~second quarter of 2020).

Noninterest expense for the second quarter included increased salaries and employee benefits expense and higher recruitment fees mostly related to Amerant Mortgage, which commenced operations in May 2021 and now has 38 FTEs at June 30, 2021.

Six Months Ended June 30, 2021 and 2020

In the six months ended ~~September~~June 30, 2020, and staff reduction and rebranding costs in the three months ended September 30, 2019. The Company did not implement any staffing changes in the three months ended September 30, 2020 related to the COVID-19 pandemic.

~~Adjusted net income for the three months ended September 30, 2020 was $3.2 million compared to an adjusted~~2021, we reported net income of ~~$12.9~~$30.4 million, in the three months ended September 30, 2019. Adjusted net income excludes restructuring costs of $1.8 million and $1.3 million in the three months ended September 30, 2020 and 2019, respectively. Operating income decreased to $11.5 million in the three months ended September 30, 2020or $0.81 earnings per diluted share, compared to $12.8 million in the three months ended September 30, 2019. Operating income excludes provisions for loan losses or reversals, net gains on securities and income tax expense or benefit. See “Non-GAAP Financial Measures Reconciliation” for a reconciliation of these non-GAAP financial measures to their U.S. GAAP counterparts.

~~Nine Months Ended September 30, 2020 and 2019~~

~~In the first nine months of 2020, we reported~~ a net loss of ~~$10.2~~$11.9 million, or ~~$0.24~~$0.28 loss ~~per share, compared to net income of $37.9 million, or $0.88 earnings~~ per diluted share, in the ~~same period of 2019. The decrease of $48.1 million, or 126.9%, in net income was~~six months ended June 30, 2020, mainly ~~the result of:~~due to: (i) the ~~$88.6~~$5.0 million reversal of loan losses in the six months ended June 30, 2021 compared to a $70.6 million provision for loan losses recorded in the ~~first nine~~six months ended June 30, 2020 and (ii) higher net interest income. These results were partially offset by lower noninterest income and higher noninterest expenses.

Net interest income was $97.5 million in the six months ended June 30, 2021, an increase of ~~2020, primarily~~$2.0 million, or 2.1%, from $95.6 million in the six months ended June 30, 2020. This was mainly due to ~~the estimated probable losses reflecting deterioration~~lower interest expense as a result of: (i) lower average cost of ~~our loan portfolio due to the COVID-19 pandemic~~total deposits and ~~specific reserves requirements on a commercial loan relationship,~~FHLB advances, and (ii) lower average balance of time deposits and FHLB advances. These results were partially offset by a decrease in interest income due to lower yields and average balance of total interest earning assets. See “-Net interest Income” for more details.

Noninterest income was $29.9 million in the six months ended June 30, 2021, a decrease of $11.8 million, or 28.2%, compared to $41.7 million in the six months ended June 30, 2020. This was mainly due to: (i) a $13.4 million decrease in net ~~interest income. This~~gains on securities; (ii) the previously mentioned net loss of $2.5 million on the early termination of FHLB advances in the second quarter of 2021, and (iii) lower derivative income in the six months ended June 30, 2021. The decrease in noninterest income was partially offset by: (i) ~~lower~~higher other noninterest ~~expenses~~income mainly due to ~~lower salaries and employee benefits and lower other operating expenses, and~~a gain of $3.8 million on the previously mentioned sale of PPP loans in the second quarter of 2021; (ii) higher ~~noninterest income driven by an increase of $23.5 million in net gains on the sale of securities recognized in the first nine months of 2020 compared to 2019,~~deposit and ~~higher income from brokerage, advisory~~service fees, and ~~fiduciary activities.~~

Net interest income declined to $140.9 million in the nine months ended September 30, 2020 from $161.8 million in the nine months ended September 30, 2019. The decrease of $20.9 million, or 12.9%, was primarily due to a decline in average yields on interest-earning assets. This was partially offset by a decline in the average rate paid on total interest bearing liabilities, including total deposits, FHLB advances and trust preferred securities, and higher earning assets average balances. The decrease in average rates paid on total interest bearing liabilities was partially offset by an increase in the average balance of time deposits.

Noninterest income increased $20.8 million, or 50.6%, in the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019, mainly due to an increase of $23.5 million in net gains on the sale of securities in the first nine months of 2020 compared to the same period last year, and(iii) higher brokerage, advisory and fiduciary fees. ~~These results were partially offset by: (i) lower cards and trade finance servicing fees; (ii) lower~~See “-Noninterest Income” for more details.

~~deposits~~

Noninterest expense was $94.8 million in the six months ended June 30, 2021, an increase of $13.1 million, or 16.1%, from $81.6 million in the six months ended June 30, 2020. This was primarily driven by: (i) higher salary and ~~service fees; (iii) the absence of data processing and fees for other services previously provided~~employee benefits mainly due to ~~the Former Parent and its affiliates, and (iv)~~ the absence of the ~~$0.6~~$7.8 million ~~gain on early extinguishment of FHLB advances in the first nine months of 2019.~~

Noninterest expenses decreased $30.5 million, or 19.3%, in the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019, primarily driven by: (i) lower salaries and employee benefits, mainly driven by staff reductions in 2018 and 2019 and lower stock-based compensation expense, the deferral ~~of $7.8 million~~ of expenses directly related to ~~origination of loans under the~~ PPP ~~program~~loan originations, in accordance with GAAP, ~~and lower incentives associated with variable and long-term bonus programs and~~in the second quarter of 2020; (ii) ~~lower~~higher severance expenses in the six months ended June 30, 2021; (iii) higher other operating ~~expenses mainly due to lower marketing expenses.~~ expenses; (iv) higher occupancy and equipment expenses; (v) higher FDIC assessments and insurance, and (vi) higher professional and other service fees. See “-Noninterest Expense” for more details.

In the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, noninterest expense included ~~$3.5~~$4.4 million and ~~$4.9~~$1.7 million, respectively, in restructuring costs. In the six months ended June 30, 2021, restructuring costs ~~consisting primarily~~consisted of staff reduction costs, a lease impairment charge related to the closing of the NY LPO, and digital transformation expenses (consisted of staff reduction costs and digital transformation expenses in the ~~nine~~six months ended ~~September~~June 30, ~~2020, and staff reduction and rebranding costs~~2020).

Noninterest expense in the ~~nine~~six months ended ~~September~~June 30, ~~2019. The Company did not implement any staffing changes in the nine months ended September 30, 2020~~2021 included increased salaries and employee benefits expense and higher recruitment fees mostly related to ~~the COVID-19 pandemic.~~

~~Adjusted net loss for the nine months ended September~~Amerant Mortgage, which commenced operations in May 2021 and now has 38 FTEs at June 30, 2020 was $7.4 million compared to an adjusted net income of $41.7 million in the same period of 2019. Adjusted net loss/income excludes restructuring costs of $3.5 million and $4.9 million in the nine months ended September 30, 2020 and 2019, respectively. Operating income was $49.8 million for the nine months ended September 30, 2020, up 14.5% from $43.5 million in the same period of 2019. Operating income excludes provisions for loan losses or reversals, net gains on securities and income tax expense or benefit. See “Non-GAAP Financial Measures Reconciliation” for a reconciliation of these non-GAAP financial measures to their U.S. GAAP counterparts.

2021.

Net interest income

Three Months Ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020

In the three months ended ~~September~~June 30, ~~2020, we earned $45.3 million of~~2021, net interest income ~~a decline~~was $50.0 million, an increase of ~~$7.3~~$3.6 million, or ~~13.8%~~7.9%, from ~~$52.6~~$46.3 million in the same period of ~~2019.~~2020. This was mainly the result of a decline in interest expense on total interest bearing liabilities, including declines of 37 basis points in the average yields and $461.1 million, or 7.4%, in the average balance. These declines were primarily due to: (i) lower average cost of total deposits and FHLB advances, and (ii) lower average balance of time deposits and FHLB advances. In addition, there was an increase of 7 basis points in the yield on total interest earning assets. The ~~decrease~~increase in net interest income was primarily driven by a 91 basis point decline in the average yield on interest-earning assets mainly due to lower market rates on variable-rate loans as a result of the Federal Reserve rate reductions and cuts, including the emergency rate cuts in March 2020 and the declines in the benchmark interest rate in the second half of 2019. These results were partially offset by: (i) a ~~decrease~~decline of 57 basis points in average rates paid on total interest bearing liabilities mainly driven by lower costs of deposits and FHLB advances as well as lower interest expense due to the redemption of trust preferred securities in the third quarter of 2019 and first quarter of 2020 and (ii) a 1.5% increase$514.9 million, or 6.7%, in the average balance of ~~interest-earning~~total interest earning assets, ~~mainly due to~~and (ii) higher ~~loan balances and higher cash balances at~~average balance of Senior Notes which were issued late in the ~~Federal Reserve.~~second quarter of 2020. Net interest margin was ~~2.39%~~2.81% in the three months ended ~~September~~June 30, ~~2020, a decrease~~2021, an increase of 4137 basis ~~points~~point from ~~2.80%~~2.44% in the three months ended ~~September~~June 30, ~~2019.~~2020. See discussions further below for more details.

During the second quarter of 2021, the Company continued to focus on offsetting ongoing NIM pressure by: (i) decreasing cost of funds via strategic repricing of customer time and relationship money market deposits and restructuring of FHLB advances, and (ii) proactively seeking to increase spreads in loan origination.

~~While~~

In May 2021, the ~~ongoing low-interest rate environment~~Company restructured $285 million of its fixed-rate FHLB advances. This restructuring consisted of changing the original maturity at lower interest rates. The new maturities of these FHLB advances range from 2 to 4 years compared to original maturities ranging from 2 to 8 years. The Company incurred an early termination and ~~potential runoff~~modification penalty of $6.6 million which was deferred and is being amortized over the term of the ~~Company’s low-cost foreign deposits will continue~~new advances, as an adjustment to ~~pressure NII and NIM,~~the yields. The modifications were not considered substantial in accordance with GAAP. In addition, in the second quarter of 2021, the Company ~~continues~~repaid $235 million of FHLB advances, which also contributed to ~~take decisive actions to manage these headwinds. Specifically,~~the decline in the ~~third quarter~~average balance of 2020, we continued to aggressively reprice deposits and seek lower-rate alternatives to replace brokered CDs, actively implement floor rates in the loan portfolio, assess risk and increase spreads during extensions and renewals in order to optimize yields, maximize high-yield investments consisting primarilyinterest bearing liabilities. As a result of ~~financial institutions subordinated debt, as well as seek to reduce asset sensitivity via duration.~~. ~~Importantly, in April 2020,~~this repayment, the Company ~~modified maturities on $420.0~~incurred a loss of $2.5 million ~~fixed-rate FHLB advances, resulting in 26 bps~~recorded as part of noninterest income. These transactions combined will represent annual savings ~~for this portfolio representing an estimated $2.4 million~~ of ~~cost savings for the remainder of 2020.~~ ~~See~~ — Capital Resources and Liquidity Management for detailed information. The Company will continue to take steps to mitigate the current interest rate environment and continued runoff of foreign deposits.

approximately $3.6 million.

~~On July 31, 2019~~Interest Income. Total interest income was $61.2 million in the three months ended June 30, 2021, a decline of $3.0 million, or 4.7%, compared to $64.2 million for the same period of 2020. This was primarily due to a decrease of $514.9 million, or 6.7%, in the average balance of total interest earning assets, mainly debt securities available for sale and ~~September~~loans. The decrease in total interest income was partially offset by a 7 ~~2019,~~basis points increase in the average yield on total interest earning assets, mainly driven by higher yields on loans.

Interest income on loans in the three months ended June 30, 2021 was $53.6 million, an increase of $0.1 million, or 0.2%, compared to $53.5 million for the comparable period of 2020. This result was primarily due to a 12 basis points increase in average yields, mainly attributable to higher-yielding consumer loans purchased throughout 2020 and the six months ended June 30, 2021. The increase in interest income on loans was partially offset by a decline of $185.8 million, or 3.3%, in the average balance in the second quarter of 2021 over the same period in 2020, mainly attributable to loan prepayments. See “—Average Balance Sheet, Interest and Yield/Rate Analysis” for detailed information.

Interest income on debt securities available for sale was $6.4 million in the second quarter of 2021, a decrease of $2.9 million, or 31.1%, compared to $9.3 million in the same period of 2020. This was mainly due to a decrease of $364.6 million, or 23.6%, in the average balance and a 25 basis points decline in average yields on these securities. The decline in the average balance was mainly driven by high prepayment activity of mortage-backed securities as well as sales completed throughout 2020 and the six months ended June 30, 2021. As of June 30, 2021, corporate debt securities comprised 30.2% of the available-for-sale portfolio, up from 25.4% at June 30, 2020. We continue with our strategy to insulate the investment portfolio from prepayment risk. As of June 30, 2021, floating rate investments represent only 11.9% of our investment portfolio (this includes debt securities available for sale and held to maturity and equity securities with readily determinable fair value not held for trading) compared to 15.2% at June 30, 2020. In addition recomposition towards high duration, and natural extension of the mortgage portfolio, has increased the overall duration to 3.0 years at June 30, 2021 from 2.6 years at June 30, 2020.

Interest Expense. Interest expense was $11.2 million in the three months ended June 30, 2021, a decrease of $6.6 million, or 37.2%, compared to $17.8 million in the same period of 2020. This was primarily due to: (i) lower average cost of deposits and FHLB advances, and (ii) a decrease of $461.1 million, or 7.4%, in the average balance of total interest bearing liabilities, mainly time deposits and FHLB advances. These results were partially offset by an increase in the average balance of Senior Notes which were issued late in the second quarter of 2020.

Interest expense on deposits was $7.4 million in the three months ended June 30, 2021, a decrease of $6.7 million, or 47.5%, compared to $14.1 million for the same period of 2020, primarily due to: (i) a 50 basis points decline in the average rates paid, and (ii) a decline of $273.6 million, or 5.4%, in the average balance of total interest bearing deposits, mainly time deposits. These declines were partially offset by a higher average balance of total interest bearing checking and savings accounts. See below for a detailed explanation of changes by major deposit category:

•Time deposits. Interest expense on total time deposits decreased $6.1 million, or 49.0%, in the second quarter of 2021 compared to the second quarter of 2020. This was mainly due to a decline of $694.7 million, or 28.0%, in the average balance, and a decline of 59 basis points in the average cost on these deposits. The decline in the average balance of total time deposits include decreases of $456.9 million and $158.0 million, in customer certificate of deposits (“CDs”) and brokered deposits, respectively. The decline in customer CDs reflects the Company’s continued efforts to aggressively lower CD rates and focus on increasing core deposits and emphasizing multiproduct relationships versus single product higher-cost CDs. As of June 30, 2021, the Company ~~redeemed all $10.0~~had $364 million of ~~its outstanding 10.18% trust preferred securities issued~~time deposits maturing in the third quarter of 2021. This is expected to decrease the average cost of CDs by ~~its Commercebank Capital Trust III subsidiary (“Capital Trust III”)~~approximately 12bps and the overall cost of deposits by 3bps.

•Interest bearing checking and savings accounts. Interest expense on checking and savings accounts decreased $0.6 million, or 36.2%, in the second quarter of 2021 compared to the same period last year, mainly due to a decrease of 12 basis points in the average costs on these deposits. This was partially offset by an increase of $421.1 million, or 16.5% in the average balance of total interest bearing checking and ~~all $15.0~~savings accounts in the second quarter of 2021 compared to the same period in 2020, mainly driven by: (i) third-party interest-bearing domestic brokered deposits with an average balance of $128.3 million in the second quarter of 2021 (there were no balances associated with these deposits in the second quarter of 2020); (ii) higher average domestic personal accounts, and (iii) an increase of $60.4 million, or 3.7%, in the average balance of international accounts, including an increase of $61.1 million, or 3.7%, in personal accounts partially offset by a decrease of $0.7 million, or 0.2%, in commercial accounts.

Interest expense on FHLB advances decreased by $0.9 million, or 27.5%, in the three months ended June 30, 2021 compared to the same period of 2020, mainly as a result of a decline of $241.0 million, or 20.7%, in the average balance on this funding source. In addition, there was a decrease of 10 basis points in the average rate paid on these borrowings. These reductions in FHLB advances’average balances and rates include the effects of: (i) the repayment of $235 million of ~~its outstanding 10.60% trust preferred securities issued by its Commercebank Statutory Trust II subsidiary (“Statutory Trust II”). On January 30, 2020,~~these borrowings in the second quarter of 2021 and (ii) the $420 million restructuring completed in April 2020. In addition, in May 2021, the Company ~~redeemed all $26.8~~completed the previously mentioned $285 million FHLB advances restructuring. See “Item 7. Management’s Discussion and Analysis Of Financial Condition And Results Of Operations” included in the Form 10-K for more details on the $420 million FHLB advances restructuring completed in April 2020.

Interest expense on Senior Notes increased to $0.9 million in the second quarter of ~~its outstanding 8.90% trust preferred capital securities~~2021 compared to $0.1 million in the second quarter of 2020. This result was mainly driven by an increase of $53.6 million in the average balance, as these Senior Notes were issued ~~by Commercebank Capital Trust I (“Capital Trust I”). These redemptions are expected to reduce~~late in the ~~Company’s annual pretax interest expense by approximately $5.0 million.~~second quarter of 2020. See “—Capital Resources and Liquidity Management” for detailed ~~information. Additionally,~~information on ~~August 8, 2019~~ the ~~Company entered into five~~issuance of Senior Notes.

Six Months Ended June 30, 2021 and 2020

In the six months ended June 30, 2021, net interest ~~rate swap contracts with notional amounts totaling $64.2~~income was $97.5 million, ~~that~~an increase of $2.0 million, or 2.1%, from $95.6 million in the same period of 2020. This was primarily due to a decline in interest expense on total interest bearing liabilities, including declines of 46 basis points in the average cost, and $389.0 million, or 6.2%, in the average balance. These declines were ~~designed as cash flow hedges, to manage~~primarily due to: (i) lower cost of total deposits and FHLB advances, and (ii) lower average balance of total interest bearing liabilities, mainly time deposits and FHLB advances. The increase in net interest income was partially offset by: (i) a decline of 20 basis points in the ~~exposure~~average yield and a decrease of ~~floating~~$367.4 million, or 4.9%, in the average balance on earning assets, and (ii) a higher average balance of Senior Notes which were issued late in the six months ended June 30, 2020. Net interest ~~payments on all~~margin was 2.74% in the six months ended June 30, 2021, an increase of 19 basis points from 2.55% in the Company’s variable-rate junior subordinated debentures. These cash flow hedges took advantage of the inverted yield curve to reduce the Company’s interest expense. The Company will continue to explore the use of hedging activities to manage its interest rate risk.six months ended June 30, 2020. See discussions further below for more details.

Interest Income. Total interest income was ~~$61.9~~$121.5 million in the ~~three~~six months ended ~~September~~June 30, ~~2020,~~2021, a decline of $14.0 million, or 10.3%, compared to ~~$78.2~~$135.5 million for the same period of ~~2019. The $16.3 million, or 20.8%, decline in total interest income was primarily~~2020, mainly due to a decline ~~in yields~~ of interest-earning assets as result of the aforementioned Federal Reserve rate reductions and cuts. This was partially offset by higher average balances of interest-earning assets driven by higher loan balances mainly due to PPP loans primarily originated20 basis points in the ~~second quarter~~average yield of ~~2020, and higher cash balances at~~interest earning assets. In addition, there was a decrease of $367.4 million, or 4.9%, in the ~~Federal Reserve.~~average balance of total interest earning assets, mainly debt securities available for sale. See “—Average Balance Sheet, Interest and Yield/Rate Analysis” for detailed information.

Interest income on loans in the ~~three~~six months ended ~~September~~June 30, ~~2020~~2021 was ~~$52.7~~$106.4 million, a decrease of 6.9 million, or 6.1%, compared to ~~$66.1~~$113.3 million for the comparable period of ~~2019. The $13.4 million, or 20.2%,~~2020. This decrease was primarily due to a ~~100~~21 basis point decline in average ~~yields. The decline~~yields, which includes the full effect of the Federal Reserve’s emergency rate cuts in ~~average yields is mainly the result~~March 2020. In addition, there was a decrease of ~~lower average market rates on variable-rate loans. This was partially offset by an increase of 2.0%~~$40.9 million, or 0.7%, in the average balance of loans in the ~~third quarter of 2020~~six months ended June 30, 2021 over the same period in ~~2019, mainly attributable to the PPP loans primarily originated in the second quarter of~~ 2020. See “—Average Balance Sheet, Interest and Yield/Rate Analysis” for detailed information.

Interest income on the available for sale debt securities decreased $1.6 million, or 16.4%, to $8.1 million in the three months ended September 30, 2020 compared to $9.7 million in the same period of 2019. This was mainly due to a 33 basis point decline in the average yields. In addition, in the third quarter of 2020, average balances declined $63.1 million, or 4.29%, compared to the same quarter last year.In the third and second of quarters 2020, prepayments on mortgage-related securities remained stable following a surge in expected prepayments during the first quarter of 2020. During the third quarter of 2020, the Company purchased $70.1 million in higher yielding corporate securities, mainly financial institutions subordinated debt. As of the end of the third quarter of 2020, floating rate investments represented 13.3% of our portfolio in line with 13.6% in the year ago period. As of September 30, 2020, corporate debt securities comprised 23.5% of the available-for-sale portfolio, up from 15.5% year-over-year.

~~Interest Expense.~~ Interest expense on total interest-bearing liabilities decreased $9.0 million, or 35.3%, to $16.6 million in the three months ended September 30, 2020 compared to $25.6 million in the same period of 2019, primarily due to lower cost of deposits and FHLB advances, as well as lower interest expense due to the aforementioned redemptions of trust preferred securities in 2019 and the first quarter of 2020. These results were partially offset by higher average time deposits balances and the interest expense associated with Senior Notes issued in the second quarter of 2020.

Interest expense on deposits decreased to $12.2 million in the three months ended September 30, 2020 compared to $17.6 million for the same period of 2019. The $5.4 million, or 30.4%, decrease was primarily due to a 43 basis point decline in the average rates paid on deposits, partially offset by higher average total deposits, primarily time deposits and interest bearing demand deposit accounts. Average total time deposits increased by $41.8 million, or 1.8%, mainly as a result of our efforts to capture online deposits. Average online deposits increased by $129.1 million, or 134.5%, to $225.1 million in the third quarter of 2020 compared to $96.0 million in the third quarter of 2019. Average total checking and savings account balances increased by $21.3 million, or 0.8%, in the quarter of 2020 compared to the same period in 2019, mainly due to by higher average total domestic checking and savings account balances. The increase in average total checking and savings account was partially offset a decline of $81.3 million, or 3.9%, in the average balance of international accounts. The decline in average international accounts includes a decrease of $110.9 million, or 6.2%, in personal accounts partially offset by an increase of $29.6 million, or 9.1%, in commercial accounts. The overall decline in average balance of international commercial and personal accounts is primarily due to the continued utilization of deposits from our Venezuelan customers to fund everyday expenses, as challenging conditions in their country persist. In the third quarter of 2020, the pace of utilization of deposits from Venezuelan residents declined compared to the same quarter one year ago, mainly attributable to

~~lower~~ ~~economic activity in Venezuela as a result of health measures implemented in the country due to the COVID-19 Pandemic.~~

In the third quarter of 2020, the Company continued to proactively reprice customer time and relationship money market deposits at lower rates and chose not to replace higher-cost maturing brokered deposits. During the third quarter of 2020, the Company saved $1.0 million in interest expense primarily due to the renewal of higher-cost maturing customer CDs with an average rate drop of 26 bps from the second quarter of 2020. As of September 30, 2020, the Company has a meaningful $884 million of time deposits maturing in the next six months. The Company expects to reprice these CDs at lower market rates upon maturity over the next two quarters bringing down the average cost of CDs by approximately 50bps, helping offset ongoing pressure on margin from soft yields on assets.

Interest expense on FHLB advances and other borrowings decreased by $3.4 million, or 54.9%, in the three months ended September 30, 2020 compared to the same period of 2019, mainly as a result of a decrease of 109 basis points in the average rate paid on these borrowings. This reduction in rates, includes the effect of the aforementioned $420 million in FHLB advances restructuring at the beginning of the second quarter of 2020. In addition, there was a decline of $98.7 million, or 8.6%, in the average balance outstanding in the three months ended September 30, 2020 compared to the same period in 2019.

Interest expense on junior subordinated debentures decreased by $1.2 million, or 68.1%, in the three months ended September 30, 2020 compared to the same period last year, mainly driven by a decline of $42.7 million, or 40.0%, in the average balance outstanding in connection with the redemption of trust preferred securities issued by the Capital Trust III, Statutory Trust II, and Capital Trust I and related subordinated debt, previously discussed.

During the second quarter of 2020, we completed a $60.0 million offering of Senior Notes with a fixed-rate coupon of 5.75%. During the third quarter of 2020, interest expense on these Senior notes totaled $0.9 million compared to none in the year ago period. ~~See~~ ~~“—Capital Resources and Liquidity Management” for detailed information.~~

~~Nine Months Ended September 30, 2020 and 2019~~

InInterest income on the ~~nine~~debt securities available for sale was $12.9 million in the six months ended ~~September~~June 30, ~~2020, we earned $140.9 million~~2021, a decrease of ~~net interest income, a decline of $20.9~~$5.9 million, or ~~12.9%~~31.4%, ~~from $161.8~~compared to $18.8 million in the same period of ~~2019. The~~2020. This was mainly due to a decrease of $355.1 million, or 22.9%, in ~~net interest income was primarily driven by~~the average balance and a 7626 basis point decline in ~~the~~ average ~~yield on interest-earning assets resulting from the Federal Reserve rate reductions~~yields. These results were mainly driven by a high prepayment activity of mortgage-backed securities and ~~cuts, including the emergency rate cuts in March~~sales completed throughout 2020 and the declines in the benchmark interest rate in the second half of 2019. These results were partially offset by: (i) a decrease of 40 basis points in average rates paid on total interest bearing liabilities mainly driven by lower costs of total deposits and FHLB advances, as well as lower interest expense due to the redemption of trust preferred securities in the third quarter of 2019 and first quarter of 2020 and (ii) a 1.02% increase in the average balance of interest-earning assets mainly due to higher loan balances and higher cash balances at the Federal Reserve. The decrease in average rates paid on total interest bearing liabilities was partially offset by an increase in the average balance of time deposits and the expense associated with the Senior Notes issued in the second quarter of 2020. Net interest margin decreased 40 basis points to 2.49% in the threesix months ended ~~September~~June 30, ~~2020 from 2.89% in the three months ended September 30, 2019.~~

~~Interest Income.~~ Total interest income was $197.4 million in the three months ended September 30, 2020, compared to $237.7 million for the same period of 2019. The $40.3 million, or 17.0%, decline in total interest income was primarily due to a decline in yields of interest-earning assets as result of the aforementioned Federal Reserve rate reductions2021, and ~~cuts. This was partially offset by higher average balances of interest-earning assets driven by higher loan balances and higher cash balances at the Federal Reserve.~~lower reinvestment rates. See “—Average Balance Sheet, Interest and Yield/Rate Analysis” for detailed information.

Interest ~~income on loans in the nine months ended September 30, 2020~~Expense. Interest expense was $166.0 million compared to $199.6 million for the comparable period of 2019. The $33.6 million, or 16.8%, decrease was primarily due to a 81 basis point decline in average yields. The decline in average yields is mainly the result of lower average market rates on variable-rate loans.This was partially offset by a $16.7 million, or 0.3%, increase in the average balance of loans in the first nine months of 2020 over the same period in 2019, mainly as a result of PPP loans primarily originated in the second quarter of 2020. ~~See~~ ~~“—Average Balance Sheet, Interest and Yield/Rate Analysis” for detailed information.~~

~~Interest income on the available for sale debt securities portfolio decreased $3.7 million, or 12.2%, to $26.9~~$24.0 million in the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021, a decrease of $16.0 million, or 40.0%, compared to ~~$30.6~~$39.9 million in the same period of ~~2019.~~2020. This was primarily due to: (i) lower average cost of total deposits and FHLB advances and (ii) a decrease of $389.0 million, or 6.2%, in the average balance of total interest bearing liabilities, mainly time deposits and FHLB advances.

Interest expense on deposits was $15.8 million in the six months ended June 30, 2021, a decrease of $15.1 million, or 48.8%, compared to $31.0 million for the same period of 2020. This was primarily due to a 3457 basis point decline in the average ~~yields, which includes the effect~~rates paid on deposits. In addition, there was a decline of ~~the aforementioned surge in prepayments on mortgage-related securities~~$600.1 million, or 24.3%, in the ~~first quarter~~average balance of ~~2020. During the first nine months~~time deposits. These declines were partially offset by a higher average balance of ~~2020, the Company purchased $247.3 million in higher yielding corporate securities, including $124.6 million in financial institutions subordinated debt.~~total interest bearing checking and savings accounts. See below a detailed explanation of changes by major deposit category:

~~Interest Expense.~~ • Time deposits. Interest expense on total ~~interest-bearing liabilities~~time deposits decreased ~~$19.4~~$12.2 million, or ~~25.6%~~47.1%, ~~to $56.5 million~~ in the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 compared to ~~$75.9 million in~~ the same period last year. This was mainly driven by a decrease of ~~2019, primarily due to lower~~64 basis points in the average cost and a decrease of ~~FHLB advances and deposits, lower interest expense due to~~$600.1 million, or 24.3%, in the ~~aforementioned redemptions~~average balance of ~~trust preferred securities, and lower average balances of total interest-bearing liabilities.~~time deposits. The ~~decreases in average rates paid and average balances of total interest bearing liabilities was partially offset by an increase~~decline in the average balance of time deposits includes decreases of $411.9 million and $148.7 million, in customer CDs and brokered deposits, respectively. The decline in customer CDs reflects the ~~Senior Notes issued~~Company’s continued efforts to aggressively lower CD rates and focus on increasing core deposits and emphasizing multiproduct relationships versus single product higher-cost CDs.

•Interest bearing checking and savings accounts. Interest expense on total interest bearing checking accounts decreased $2.9 million, or 57.4%, in the ~~second quarter~~six months ended June 30, 2021 compared to the six months ended June 30, 2020, mainly due to a decrease of ~~2020.~~25 basis points in the average cost. This was partially offset by an increase of $353.2 million, or 13.9%, in the average balance of total interest bearing checking and savings accounts, in the six months ended June 30, 2021 compared to the same period in 2020, mainly driven by: (i) third-party interest-bearing domestic brokered deposits with an average balance of $117.1 million in the six months ended June 30, 2021 (there were no balances associated with these deposits in the six months ended June 30, 2020); (ii) higher average domestic personal accounts, and (iii) an increase of $60.1 million, or 3.0%, in the average balance of international accounts, including an increase of $60.7 million, or 3.7%, in personal accounts partially offset by a decrease of $0.7 million, or 0.2%, in commercial accounts.

Interest expense on deposits decreased to $43.2 million in the nine months ended September 30, 2020 compared to $51.2 million for the same period of 2019. The $8.0 million, or 15.6%, decrease was primarily due to a 20 basis point decline in the average rates paid on deposits and lower average total deposits. Lower average total deposits include lower checking and savings account balances partially offset by higher time deposits. Average total time deposits increased by $83.5 million, or 3.5%, mainly as a result of our efforts to capture online deposits. Average online deposits increased by $127.7 million, or 162.6%, to $206.2 million in the first nine months of 2020 compared to $78.5 million in the same period in 2019. Average total checking and savings account balances for the first nine months of 2020 decreased year-on-year by $135.1 million, or 5.0%, primarily due to a decline of $202.8 million, or 9.2%, in the average balance of international accounts, partially offset by higher average domestic customer deposits. The decline in average international accounts includes a decrease of $210.9 million, or 11.3%, in personal accounts partially offset by an increase of $8.0 million, or 2.4%, in commercial accounts. The overall decline in average balance of international commercial and personal accounts is primarily due to the continued utilization of deposits from our Venezuelan customers to fund everyday expenses, as challenging conditions in their country persist. In the first nine months of 2020, the pace of utilization of deposits from Venezuelan residents declined compared to the same period one year ago, mainly attributable to lower ~~economic activity in Venezuela as a result of health measures implemented in the country due to the COVID-19 Pandemic.~~

Interest expense on FHLB advances ~~and other borrowings~~ decreased ~~by $8.4~~$2.5 million, or ~~44.8%~~33.4%, in the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 compared to the same period of ~~2019,~~2020. This was mainly as a result of a decrease of ~~104~~$193.7 million, or 16.4%, in the average balance and a decline of 25 basis points in the average rate paid on these borrowings. ~~This reduction~~These changes include the effects of: (i) the repayment of $235 million of these borrowings in ~~rates, includes~~ the ~~effect of the aforementioned~~six months ended June 30, 2021, and (ii) a $420 million restructuring completed in April 2020. In addition, in May 2021, the Company completed the previously mentioned $285 million FHLB advances restructuring. See “Item 7. Management’s Discussion and Analysis Of Financial Condition And Results Of Operations” included in the Form 10-K for more details on the $420 million FHLB advances restructuring ~~at the beginning of the second quarter of~~completed in April 2020. These results were partially offset by an increase of $28.4 million, or 2.6% in the average balance outstanding compared to the previous year. In addition, in 2019 the Company terminated interest rate swaps that had been designated as cash flow hedges to manage interest rate exposure on FHLB advances. As a result, the Company recorded a credit of approximately $1.0 million against interest expense on FHLB advances in the first nine months of 2020 ($0.9 million in the first nine months of 2019) and expects to record a credit of approximately $0.3 million in the rest of 2020. ~~See~~ ~~“—Capital Resources and Liquidity Management” for detailed information.~~

Interest expense on junior subordinated debentures decreased ~~by $4.0~~$0.1 million, or ~~67.7%~~10.6%, in the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 compared to the same period last year, mainly driven by a decline of ~~$47.2~~$4.5 million, or ~~41.3%~~6.5%, in the average balance ~~outstanding~~outstanding. This decline in ~~connection with~~the average balance resulted from the redemption of ~~the~~$26.8 million of trust preferred securities (fixed interest rate - 8.90%) issued by ~~Capital Trust III, Statutory Trust II, and~~the Commercebank Capital Trust I (“Capital Trust I”) and related subordinated debt ~~previously discussed.~~in the first quarter of 2020.

Interest expense on Senior Notes increased to $1.9 million in the six months ended June 30, 2021 compared to $0.1 million in the six months ended June 30, 2020. This result was mainly driven by an increase of $56.1 million in the average balance, as these Senior Notes were issued late in the six months ended June 30, 2020. See “—Capital Resources and Liquidity Management” for detailed information on the issuance of Senior Notes.

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 ~~nine month periods~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019.~~2020. The average balances for loans include both performing and non-performing balances. Interest income on loans includes the effects of discount accretion and the amortization of non-refundable loan origination fees, net of direct loan origination costs, accounted for as yield adjustments. Average balances represent the daily average balances for the periods presented.

Three Months Ended September 30,
2020 2019
(in thousands, except percentages) Average
Balances Income/
Expense Yield/
Rates Average
Balances Income/
Expense Yield/
Rates
Interest-earning assets:
Loan portfolio, net (1) $ 5,768,471 $ 52,736 3.64 % $ 5,656,469 $ 66,118 4.64 %
Debt securities available for sale (2) 1,409,768 8,096 2.28 % 1,472,884 9,681 2.61 %
Debt securities held to maturity (3) 63,844 324 2.02 % 79,820 436 2.17 %
Equity securities with readily determinable fair value not held for trading (4) 24,447 103 1.68 % 23,856 137 2.28 %
Federal Reserve Bank and FHLB stock 64,998 597 3.65 % 68,825 1,071 6.17 %
Deposits with banks 225,320 61 0.11 % 142,583 761 2.12 %
Total interest-earning assets 7,556,848 61,917 3.26 % 7,444,437 78,204 4.17 %
Total non-interest-earning assets less allowance for loan losses 526,065 472,967
Total assets $ 8,082,913 $ 7,917,404
Interest-bearing liabilities:
Checking and saving accounts -
Interest bearing DDA $ 1,193,920 $ 97 0.03 % $ 1,141,788 $ 191 0.07 %
Money market 1,154,795 1,190 0.41 % 1,152,700 4,109 1.41 %
Savings 321,657 88 0.11 % 354,554 16 0.02 %
Total checking and saving accounts 2,670,372 1,375 0.20 % 2,649,042 4,316 0.65 %
Time deposits 2,367,534 10,874 1.83 % 2,325,695 13,284 2.27 %
Total deposits 5,037,906 12,249 0.97 % 4,974,737 17,600 1.40 %
Securities sold under agreements to repurchase — — — % 378 3 3.15 %
Advances from the FHLB and other borrowings (5) 1,050,000 2,820 1.07 % 1,148,739 6,253 2.16 %
Senior notes 58,460 942 6.41 % — — — %
Junior subordinated debentures 64,178 558 3.46 % 106,899 1,748 6.49 %
Total interest-bearing liabilities 6,210,544 16,569 1.06 % 6,230,753 25,604 1.63 %
Non-interest-bearing liabilities:
Non-interest bearing demand deposits 936,349 802,274
Accounts payable, accrued liabilities and other liabilities 102,864 70,214
Total non-interest-bearing liabilities 1,039,213 872,488
Total liabilities 7,249,757 7,103,241
Stockholders’ equity 833,156 814,163
Total liabilities and stockholders' equity $ 8,082,913 $ 7,917,404
Excess of average interest-earning assets over average interest-bearing liabilities $ 1,346,304 $ 1,213,684
Net interest income $ 45,348 $ 52,600
Net interest rate spread 2.20 % 2.54 %
Net interest margin (6) 2.39 % 2.80 %
Ratio of average interest-earning assets to average interest-bearing liabilities 121.68 % 119.48 %


	Three Months Ended June 30,
	2021						2020
(in thousands, except percentages)	Average Balances		Income/ Expense		Yield/ Rates		Average Balances		Income/ Expense		Yield/ Rates
Interest-earning assets:
Loan portfolio, net (1)	$	5,526,727	$	53,612	3.89	%	$	5,712,548	$	53,483	3.77	%
Debt securities available for sale (2)	1,180,766		6,393		2.17	%	1,545,335		9,283		2.42	%
Debt securities held to maturity (3)	97,208		481		1.98	%	68,237		308		1.82	%
Debt securities held for trading	258		2		3.11	%	—		—		—	%
Equity securities with readily determinable fair value not held for trading	24,010		75		1.25	%	24,303		121		2.00	%
Federal Reserve Bank and FHLB stock	51,764		548		4.25	%	69,801		916		5.28	%
Deposits with banks	239,951		62		0.10	%	215,406		56		0.10	%
Total interest-earning assets	7,120,684		61,173		3.45	%	7,635,630		64,167		3.38	%
Total non-interest-earning assets less allowance for loan losses	559,807						512,569
Total assets	$	7,680,491					$	8,148,199


	Three Months Ended June 30,
	2021							2020
(in thousands, except percentages)	Average Balances			Income/ Expense		Yield/ Rates		Average Balances			Income/ Expense		Yield/ Rates
Interest-bearing liabilities:
Checking and saving accounts -
Interest bearing DDA	$	1,292,612		$	123	0.04	%	$	1,122,405		$	104	0.04	%
Money market	1,310,133			931		0.29	%	1,112,363			1,521		0.55	%
Savings	373,723			14		0.02	%	320,644			48		0.06	%
Total checking and saving accounts	2,976,468			1,068		0.14	%	2,555,412			1,673		0.26	%
Time deposits	1,789,517			6,327		1.42	%	2,484,219			12,406		2.01	%
Total deposits	4,765,985			7,395		0.62	%	5,039,631			14,079		1.12	%
Securities sold under agreements to repurchase	440			1		0.91	%	474			—		—	%
Advances from the FHLB and other borrowings (4)	922,050			2,255		0.98	%	1,163,022			3,110		1.08	%
Senior notes	58,697			942		6.44	%	5,136			84		6.58	%
Junior subordinated debentures	64,178			609		3.81	%	64,178			571		3.58	%
Total interest-bearing liabilities	5,811,350			11,202		0.77	%	6,272,441			17,844		1.14	%
Non-interest-bearing liabilities:
Non-interest bearing demand deposits	937,275							916,980
Accounts payable, accrued liabilities and other liabilities	142,226							106,738
Total non-interest-bearing liabilities	1,079,501							1,023,718
Total liabilities	6,890,851							7,296,159
Stockholders’ equity	789,640							852,040
Total liabilities and stockholders' equity	$	7,680,491						$	8,148,199
Excess of average interest-earning assets over average interest-bearing liabilities	$	1,309,334						$	1,363,189
Net interest income				$	49,971						$	46,323
Net interest rate spread						2.68	%						2.24	%
Net interest margin (5)						2.81	%						2.44	%
Cost of total deposits (6)						0.52	%						0.95	%
Ratio of average interest-earning assets to average interest-bearing liabilities	122.53		%					121.73		%
Average non-performing loans/ Average total loans	1.84		%					0.87		%

Nine Months Ended September 30,
2020 2019
(in thousands, except percentages) Average
Balances Income/
Expense Yield/
Rates Average Balances Income/ Expense Yield/ Rates
Interest-earning assets:
Loan portfolio, net (1) $ 5,685,187 $ 166,007 3.90 % $ 5,668,493 $ 199,641 4.71 %
Debt securities available for sale (2) 1,501,200 26,876 2.39 % 1,501,223 30,605 2.73 %
Debt securities held to maturity (3) 68,169 1,032 2.02 % 82,370 1,527 2.48 %
Equity securities with readily determinable fair value not held for trading (4) 24,268 355 1.95 % 23,510 418 2.38 %
Federal Reserve Bank and FHLB stock 68,650 2,550 4.96 % 67,387 3,242 6.43 %
Deposits with banks 204,269 579 0.38 % 132,617 2,304 2.32 %
Total interest-earning assets 7,551,743 197,399 3.49 % 7,475,600 237,737 4.25 %
Total non-interest-earning assets less allowance for loan losses 508,863 473,146
Total assets $ 8,060,606 $ 7,948,746
Interest-bearing liabilities:
Checking and saving accounts -
Interest bearing DDA $ 1,132,553 $ 336 0.04 % $ 1,203,449 $ 766 0.09 %
Money market 1,134,627 5,960 0.70 % 1,151,444 11,823 1.37 %
Savings 321,661 153 0.06 % 369,067 49 0.02 %
Total checking and saving accounts 2,588,841 6,449 0.33 % 2,723,960 12,638 0.62 %
Time deposits 2,437,353 36,764 2.01 % 2,353,866 38,577 2.19 %
Total deposits 5,026,194 43,213 1.15 % 5,077,826 51,215 1.35 %
Securities sold under agreements to repurchase 158 — — % 127 3 3.16 %
Advances from the FHLB and other borrowings (5) 1,135,931 10,342 1.22 % 1,107,531 18,750 2.26 %
Senior notes 21,334 1,026 6.42 % — — — %
Junior subordinated debentures 67,149 1,918 3.82 % 114,332 5,943 6.95 %
Total interest-bearing liabilities 6,250,766 56,499 1.21 % 6,299,816 75,911 1.61 %
Non-interest-bearing liabilities:
Non-interest bearing demand deposits 867,527 792,107
Accounts payable, accrued liabilities and other liabilities 99,510 69,652
Total non-interest-bearing liabilities 967,037 861,759
Total liabilities 7,217,803 7,161,575
Stockholders’ equity 842,803 787,171
Total liabilities and stockholders' equity $ 8,060,606 $ 7,948,746
Excess of average interest-earning assets over average interest-bearing liabilities $ 1,300,977 $ 1,175,784
Net interest income $ 140,900 $ 161,826
Net interest rate spread 2.28 % 2.64 %
Net interest margin (6) 2.49 % 2.89 %
Ratio of average interest-earning assets to average interest-bearing liabilities 120.81 % 118.66 %

~~___________~~


	Six Months Ended
	June 30, 2021					June 30, 2020
(in thousands, except percentages)	Average Balances			Income/ Expense		Yield/ Rates		Average Balances			Income/ Expense		Yield/ Rates
Interest-earning assets:
Loan portfolio, net (1)	$	5,602,218		$	106,383	3.83	%	$	5,643,088		$	113,271	4.04	%
Debt securities available for sale (2)	1,192,342			12,888		2.18	%	1,547,418			18,781		2.44	%
Debt securities held to maturity (3)	82,550			783		1.91	%	70,355			708		2.02	%
Debt securities held for trading	181			3		3.34	%	—			—		—	%
Equity securities with readily determinable fair value not held for trading	24,117			159		1.33	%	24,178			252		2.10	%
Federal Reserve Bank and FHLB stock	57,650			1,173		4.10	%	70,497			1,952		5.57	%
Deposits with banks	222,749			113		0.10	%	193,627			518		0.54	%
Total interest-earning assets	7,181,807			121,502		3.41	%	7,549,163			135,482		3.61	%
Total non-interest-earning assets less allowance for loan losses	532,232							500,363
Total assets	$	7,714,039						$	8,049,526

Interest-bearing liabilities:
Checking and saving accounts -
Interest bearing DDA	$	1,302,603		$	236	0.04	%	$	1,097,489		$	239	0.04	%
Money market	1,273,284			1,897		0.30	%	1,124,432			4,770		0.85	%
Savings	320,903			28		0.02	%	321,663			65		0.04	%
Total checking and saving accounts	2,896,790			2,161		0.15	%	2,543,584			5,074		0.40	%
Time deposits	1,872,577			13,687		1.47	%	2,472,646			25,890		2.11	%
Total deposits	4,769,367			15,848		0.67	%	5,016,230			30,964		1.24	%
Securities sold under agreements to repurchase	221			1		0.91	%	237			—		—	%
Advances from the FHLB and other borrowings (4)	985,672			5,013		1.03	%	1,179,368			7,522		1.28	%
Junior subordinated debentures	64,178			1,216		3.82	%	68,650			1,360		3.98	%
Senior notes	58,658			1,884		6.48	%	2,568			84		6.58	%
Total interest-bearing liabilities	5,878,096			23,962		0.82	%	6,267,053			39,930		1.28	%
Non-interest-bearing liabilities:
Non-interest bearing demand deposits	931,291							836,782
Accounts payable, accrued liabilities and other liabilities	118,021							97,816
Total non-interest-bearing liabilities	1,049,312							934,598
Total liabilities	6,927,408							7,201,651
Stockholders’ equity	786,631							847,875
Total liabilities and stockholders' equity	$	7,714,039						$	8,049,526
Excess of average interest-earning assets over average interest-bearing liabilities	$	1,303,711						$	1,282,110
Net interest income				$	97,540						$	95,552
Net interest rate spread						2.59	%						2.33	%
Net interest margin (5)						2.74	%						2.55	%
Cost of total deposits (6)						0.56	%						1.06	%
Ratio of average interest-earning assets to average interest-bearing liabilities	122.18		%					120.46		%
Average non-performing loans/ Average total loans	1.69		%					0.73		%

_____________

(1) Average non-performing loans of ~~$84.4~~$103.6 million and ~~$32.5~~$50.4 million for the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively, and ~~$55.9~~$96.4 million and ~~$25.6~~$41.6 million ~~for~~in the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021 and ~~2019,~~2020, respectively, are included in the average loan portfolio, net. Interest income that would have been recognized on these non-performing loans totaled ~~$1.0~~$0.9 million and ~~$0.3~~$0.6 million in the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively, and ~~$2.0~~$1.7 million and $1.1 million in the ~~nine~~six months ended ~~September~~June 30, 2021 and 2020, ~~and 2019,~~ respectively.

(2) Includes nontaxable securities with average balances of ~~$56.0~~$27.3 million and ~~$66.5~~$62.2 million for the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively, and ~~$55.9~~$47.9 million and ~~$115.5~~$55.8 million ~~for~~in the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021 and ~~2019,~~2020, respectively. The tax equivalent yield for these nontaxable securities was 2.15% and 3.77% for the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019 was 3.59% and 3.92%,~~2020, respectively, and ~~3.74%~~2.77% and ~~4.01%~~3.82% for the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021 and ~~2019,~~2020, respectively. In ~~2020~~2021 and ~~2019,~~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 ~~$63.8~~$52.2 million and ~~$79.8~~$68.2 million for the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively, and ~~$68.2~~$54.4 million and ~~$82.4~~$70.4 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively. The tax equivalent yield for these nontaxable securities was 2.19% and 2.30% for the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019 was 2.55% and 2.74%,~~2020, respectively, and ~~2.56%~~2.30% and ~~3.14%~~2.56% for the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021 and ~~2019,~~2020, respectively. In ~~2020~~2021 and ~~2019,~~2020, the tax equivalent yields were calculated by assuming a 21% tax rate and dividing the actual yield by 0.79.

(4) The Company adopted ASU 2016-01 on December 31, 2019. Prior to December 31, 2019, equity securities with readily determinable fair value not held for trading, which consists of mutual funds, were included as part of available for sale securities. Average balances for the three and nine month periods ended September 30, 2019 are shown separately for comparative purposes.

~~(5)~~ The terms of the FHLB advance agreements require the Bank to maintain certain investment securities or loans as collateral for these advances.

~~(6)~~(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.

Analysis 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 September 30,				Nine Months Ended September 30,
		2020		2019		2020		2019			Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	(in thousands)									(in thousands)	2021		2020		2021		2020

Balance at the beginning of the period	Balance at the beginning of the period	$	119,652	$	57,404	$	52,223	$	61,762	Balance at the beginning of the period	$	110,940	$	72,948	$	110,902	$	52,223

Charge-offs	Charge-offs									Charge-offs
Domestic Loans:	Domestic Loans:									Domestic Loans:
Real estate loans	Real estate loans									Real estate loans

Single-family residential	Single-family residential	(24)		(2)		(24)		(89)		Single-family residential	(58)		—		(58)		—
Owner occupied	Owner occupied	—		—		(27)		—		Owner occupied	—		—		—		(27)
		(24)		(2)		(51)		(89)
Commercial	Commercial	(20,910)		(907)		(24,059)		(2,773)		Commercial	(1,688)		(2,075)		(1,923)		(3,149)
Consumer and others	Consumer and others	(111)		(96)		(377)		(415)		Consumer and others	(786)		(44)		(1,217)		(266)
		(21,045)		(1,005)		(24,487)		(3,277)			(2,532)		(2,119)		(3,198)		(3,442)

International Loans (1):	International Loans (1):									International Loans (1):
Commercial	Commercial	—		—		(34)		(61)		Commercial	—		—		—		(34)
Consumer and others		(4)		(1,661)		(262)		(2,961)
Consumer and others (1)										Consumer and others (1)	—		(7)		—		(258)
		(4)		(1,661)		(296)		(3,022)			—		(7)		—		(292)
Total Charge-offs	Total Charge-offs	$	(21,049)	$	(2,666)	$	(24,783)	$	(6,299)	Total Charge-offs	$	(2,532)	$	(2,126)	$	(3,198)	$	(3,734)

Recoveries	Recoveries									Recoveries
Domestic Loans:	Domestic Loans:									Domestic Loans:
Real estate loans	Real estate loans									Real estate loans
Commercial Real Estate (CRE)										Commercial Real Estate (CRE)

Land development and construction loans										Land development and construction loans	$	70	$	—	$	70	$	—

Single-family residential	Single-family residential	27		56		97		199		Single-family residential	53		40		79		70
Owner occupied		—		—		—		2

		27		56		97		201
Commercial	Commercial	123		58		234		238		Commercial	303		50		750		111
Consumer and others	Consumer and others	19		4		38		11		Consumer and others	108		2		152		19
		169		118		369		450			534		92		1,051		200

International Loans (1):
International Loans (2):										International Loans (2):

Commercial	Commercial	—		132		124		360		Commercial	214		—		372		124
Consumer and others	Consumer and others	47		152		266		217		Consumer and others	29		118		58		219
		47		284		390		577			243		118		430		343
Total Recoveries	Total Recoveries	$	216	$	402	$	759	$	1,027	Total Recoveries	$	777	$	210	$	1,481	$	543

Net charge-offs	Net charge-offs	(20,833)		(2,264)		(24,024)		(5,272)		Net charge-offs	(1,755)		(1,916)		(1,717)		(3,191)
Provision for (reversal of) loan losses		18,000		(1,500)		88,620		(2,850)
(Reversal of) provision for loan losses										(Reversal of) provision for loan losses	(5,000)		48,620		(5,000)		70,620
Balance at the end of the period	Balance at the end of the period	$	116,819	$	53,640	$	116,819	$	53,640	Balance at the end of the period	$	104,185	$	119,652	$	104,185	$	119,652

__________________

(1) Primarily from Venezuela customers.

(2) 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.

~~Set forth in the table below is the composition of international consumer loans and overdraft charge-offs by country for each of the periods presented.~~

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
(in thousands)
Venezuela $ 4 $ 1,491 $ 242 $ 2,532
Other countries — 170 20 429
Total charge offs $ 4 $ 1,661 $ 262 $ 2,961

Three Months Ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020

The Company released $5.0 million from the ALL during the second quarter of 2021, compared to a provision of loan losses of $48.6 million recorded in the second quarter of 2020. The $5.0 million release was mainly driven by a decrease in reserves associated with the COVID-19 pandemic, as a result of improved macro-economic conditions and credit outlook, as the Florida and Texas economies continue to recover from the COVID-19 pandemic. In addition, the decrease in the loan portfolio outstanding balance when compared to the first quarter of 2021, also contributed to lower reserve requirements. These results were partially offset by loan downgrades and additional reserves allocated in connection with the COVID-19 pandemic, primarily due to slower economic recovery of the New York market in the second quarter of 2021. The ALL associated with the COVID-19 pandemic was $14.8 million at June 30, 2021 compared to $32.9 million at June 30, 2020.

During the three months ended ~~September~~June 30, ~~2020,~~2021, charge-offs ~~increased by $18.4~~decreased $0.4 million, or ~~689.5%~~19.1%, compared to the same period of the prior year. InThis was mainly driven by the ~~third quarter~~absence of ~~2020, the Company charged off $19.3~~a $1.9 million charge-off on a commercial loan related to ~~certain loan arrangements with~~ a ~~Miami-based U.S. coffee trader (“the Coffee Trader”) which had deteriorated and reserved~~South Florida food wholesale borrower in the second quarter of 2020. This result was partially offset by an aggregate of $0.7 million of charge-offs in the second quarter of 2021 related to consumer loans under indirect lending programs. The ratio of net charge-offs over the average total loan portfolio ~~during the three months ended September 30, 2020 increased 125 basis point to 1.41% from 0.16%~~was 0.12% in the ~~same quarter in 2019.~~

~~The Company recorded a provision for loan losses of $18.0 million during the third~~second quarter of ~~2020,~~2021 compared to ~~a reversal of loan losses of $1.5 million~~0.13% in the ~~third~~second quarter of 2019. The provision for loan losses during the third quarter of 2020 includes: (i) a provision of $12.2 million driven by estimated probable losses reflecting deterioration in the macro-economic environment as a result of the COVID-19 pandemic across multiple impacted sectors and (ii) $5.8 million from a specific reserve requirement related to the Miami-based U.S. Coffee Trader loan relationship.

2020.

As of ~~September~~June 30, ~~2020,~~2021, the loan relationship with ~~the~~ a Miami-based U.S. coffee trader (“Coffee ~~Trader~~Trader”) had an outstanding balance of approximately $19.6 million, ~~compared to $39.8 million as~~net of ~~June 30, 2020, as~~ a ~~result of the aforementioned~~ $19.3 million ~~charged~~charge off and a partial paydown of approximately $0.9 million. Based on the evaluation of additional information from the assignee leading the liquidation procedure for the Coffee Trader, management of the Bank and the Company considered it necessary and prudent to increase the specific reserve on these loans by an additional $5.8 millionrecorded in the third quarter of 2020, unchanged from December 31, 2020. ~~The~~As of June 30, 2021, the Company ~~maintains~~had a specific loan loss reserve of ~~$6.5~~$12.3 million ~~as of September 30, 2020, compared to $20.0 million as of June 30, 2020~~(unchanged from December 31, 2020) on this relationship. We continue to closely monitor the liquidation process and have been in close contact with the liquidation agent regarding the collection process and prospective distribution. So far, cash collected by the liquidation agent is approximately $95 million. Timing for distributions are pending to be defined as allocation of liquidation proceeds may be subject to objection from lenders. See “Item 7. Management’s Discussion and Analysis Of Financial Condition And Results Of Operations” included in the Form 10-K for more ~~information becomes available, management may decide to increase or decrease~~details on the loan relationship with the Coffee Trader.

During the second quarter of 2021, consistent with the Company’s applicable policy, the Company obtained independent third-party collateral valuations on most non-performing loans supporting current ALL levels. No additional loan loss ~~reserve for this indebtedness.~~

reserves were deemed necessary as a result of these valuations.

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.

7071

Six Months Ended June 30, 2021 and 2020

The ~~concentration~~Company released $5.0 million from the ALL during the six months ended June 30, 2021, compared to a provision of loan losses of $70.6 million recorded during the six months ended June 30, 2020. The $5.0 million release was mainly driven by a decrease in reserves associated with the COVID-19 pandemic, as a result of improved macro-economic conditions and credit outlook, as the Florida and Texas economies continue to recover from the COVID-19 pandemic. In addition, the decrease in the loan portfolio ~~remains stable~~outstanding balance when compared to ~~December 31, 2019. As of September~~the six months ended June 30, 2020, ~~the outstanding~~also contributed to lower reserve requirements. These results were partially offset by loan ~~portfolio that was tied to industries, or~~downgrades and additional reserves allocated in connection with ~~collateral values, that are potentially more vulnerable to the financial impact of~~ the COVID-19 pandemic, ~~was approximately 45%, flat from~~primarily due to slower economic recovery of the New York market in the six months ended June 30, 2020. Approximately 70% of these loans are secured with real estate collateral, flat from June 30, 2020. Except for loans to the real estate industry, the loan portfolio remains well diversified with the highest industry concentration representing 10.4% of total loans, down from 11.0% as of June 30, 2020. At September 30, 2020, the Company’s CRE loan portfolio represented 50.4% of total loans, up slightly from 50.2% at June 30, 2020. These loans had an estimated weighted average Loan to Value (LTV) of 60% and an estimated weighted average Debt Service Coverage Ratio (DSCR) of 1.7x at September 30, 2020. Importantly, CRE loans to top tier customers, which are those considered to have the greatest strength and credit quality, represented approximately 43% of the CRE loan portfolio at that date, up slightly from 42% in the second quarter as credit quality continues to improve amongst the customer base.

~~Nine Months Ended September 30, 2020 and 2019~~2021.

During the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, charge-offs ~~increased by $18.5~~decreased $0.5 million, or ~~293.4%~~14.4%, compared to the same period of the prior year. ~~Charge-offs during~~This was mainly driven by the ~~first nine months~~absence of ~~2020 included: (i)~~ a ~~$19.3 million charge off related to the Coffee Trader; (ii)~~ $1.9 million charge-off on a commercial loan to a South Florida food wholesale borrower ~~disclosed~~as well as an aggregate of $1.2 million in ~~previous quarters; (iii) $1.4 million~~charge-offs related to ~~two unsecured~~five commercial loans ~~and (iv) $0.4~~in six months ended June 30, 2020. This result was partially offset by an aggregate of $0.7 million of charge-offs in the six months ended June 30, 2021 related to multiple credit cards due to the discontinuation of the Company’s credit card products. The aforementioned $0.4 million in credit card charge-offs had already been reserved and the Company did not experience any unanticipated losses during the first nine months of 2020.consumer loans under indirect lending programs. The ratio of net charge-offs over the average total loan portfolio ~~during~~was 0.06% in the ~~nine~~six months ended ~~September~~June 30, ~~2020, increased 44 basis point to 0.56% from 0.12%~~2021 compared to ~~the same period in 2019.~~

~~The Company recorded a provision for loan losses of $88.6 million during the first nine months of 2020, compared to a reversal of loan losses of $2.9 million~~0.11% in the ~~first nine~~six months of 2019. The increase in provision during the first nine months of 2020 was mainly driven by estimated probable losses reflecting deterioration in the macro-economic environment as a result of the COVID-19 pandemic across multiple impacted sectors. In addition, the increase in provision during the first nine months of 2020 includes specific reserves as a result of loan portfolio deterioration and downgrades during the period. These specific reserves requirements include: (i) $25.8 million related to the aforementioned Coffee Trader loan relationship; (ii) $6.6 million related to a commercial loan to a food wholesaler in the cruise industry, and (iii) $5.5 million related to a commercial loan to a building contractor.ended June 30, 2020.

7172

Noninterest Income

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


		Three Months Ended September 30,								Change					Three Months Ended June 30,								Change
		2020				2019				2020 vs 2019					2021				2020				2021 vs 2020
		Amount		%		Amount		%		Amount		%			Amount		%		Amount		%		Amount		%
(in thousands, except percentages)	(in thousands, except percentages)													(in thousands, except percentages)
Deposits and service fees	Deposits and service fees	$	3,937	19.4	%	$	4,366	31.6	%	$	(429)	(9.8)	%	Deposits and service fees	$	4,284	27.2	%	$	3,438	17.4	%	$	846	24.6	%
Brokerage, advisory and fiduciary activities	Brokerage, advisory and fiduciary activities	4,272		21.1	%	3,647		26.4	%	625		17.1	%	Brokerage, advisory and fiduciary activities	4,431		28.2	%	4,325		21.9	%	106		2.5	%
Change in cash surrender value of bank owned life insurance (“BOLI”)(1)	Change in cash surrender value of bank owned life insurance (“BOLI”)(1)	1,437		7.1	%	1,449		10.5	%	(12)		(0.8)	%	Change in cash surrender value of bank owned life insurance (“BOLI”)(1)	1,368		8.7	%	1,427		7.2	%	(59)		(4.1)	%
Securities gains, net (2)	Securities gains, net (2)	8,600		42.4	%	906		6.6	%	7,694		N/M		Securities gains, net (2)	1,329		8.5	%	7,737		39.2	%	(6,408)		(82.8)	%
Cards and trade finance servicing fees	Cards and trade finance servicing fees	345		1.7	%	1,034		7.5	%	(689)		(66.6)	%	Cards and trade finance servicing fees	388		2.5	%	273		1.4	%	115		42.1	%
Loss on early extinguishment of FHLB advances, net														Loss on early extinguishment of FHLB advances, net	(2,488)		(15.8)	%	(66)		(0.3)	%	(2,422)		N/M

Data processing and fees for other services		—		—	%	70		0.5	%	(70)		(100.0)	%
Other noninterest income (3)	Other noninterest income (3)	1,701		8.3	%	2,364		16.9	%	(663)		(28.1)	%	Other noninterest income (3)	6,422		40.8	%	2,619		13.2	%	3,803		145.2	%
Total noninterest income	Total noninterest income	$	20,292	100.0	%	$	13,836	100.0	%	$	6,456	46.7	%	Total noninterest income	$	15,734	100.0	%	$	19,753	100.0	%	$	(4,019)	(20.4)	%

Nine Months Ended September 30, Change
2020 2019 2020 over 2019
Amount % Amount % Amount %
(in thousands, except percentages)
Deposits and service fees $ 11,665 18.8 % $ 12,793 31.1 % $ (1,128) (8.8) %
Brokerage, advisory and fiduciary activities 12,730 20.6 % 11,071 26.9 % 1,659 15.0 %
Change in cash surrender value of bank owned life insurance (“BOLI”)(1) 4,278 6.9 % 4,272 10.4 % 6 0.1 %
Securities gains, net (2) 25,957 41.9 % 1,902 4.6 % 24,055 N/M
Cards and trade finance servicing fees 1,013 1.6 % 3,368 8.2 % (2,355) (69.9) %
(Loss) gain on early extinguishment of FHLB advances, net (73) (0.1) % 557 1.4 % (630) (113.1) %
Data processing and fees for other services — — % 955 2.3 % (955) (100.0) %
Other noninterest income (3) 6,385 10.3 % 6,221 15.1 % 164 2.6 %
Total noninterest income $ 61,955 100.0 % $ 41,139 100.0 % $ 20,816 50.6 %


	Six Months Ended June 30,								Change
	2021				2020				2021 vs 2020
	Amount		%		Amount		%		Amount		%
(in thousands, except percentages)
Deposits and service fees	$	8,390	28.1	%	$	7,728	18.6	%	$	662	8.6	%
Brokerage, advisory and fiduciary activities	9,034		30.2	%	8,458		20.3	%	576		6.8	%
Change in cash surrender value of bank owned life insurance (“BOLI”)(1)	2,724		9.1	%	2,841		6.8	%	(117)		(4.1)	%
Securities gains, net (2)	3,911		13.1	%	17,357		41.7	%	(13,446)		(77.5)	%
Cards and trade finance servicing fees	727		2.4	%	668		1.6	%	59		8.8	%
Loss on early extinguishment of FHLB advances, net	(2,488)		(8.3)	%	(73)		(0.2)	%	(2,415)		NM

Other noninterest income (3)	7,599		25.4	%	4,684		11.2	%	2,915		62.2	%
Total noninterest income	$	29,897	100.0	%	$	41,663	100.0	%	$	(11,766)	(28.2)	%

___________

(1) Changes in cash surrender value of BOLI are not taxable.

(2) Includes net gain on sale of debt securities of ~~$8.6~~$1.3 million and ~~$25.4~~$7.5 million during the three months ended June 30, 2021 and ~~nine month periods~~2020, respectively, and $4.2 million and $16.8 million in the six months ended ~~September~~June 30, 2021 and 2020, respectively. In addition, includes unrealized gains of $22 thousand and $0.2 million during the three months ended June 30, 2021 and 2020, respectively, and unrealized ~~loss~~losses of ~~$44.0 thousand~~$0.4 million and unrealized ~~gain~~gains of ~~$0.5~~$0.6 million ~~during~~in the ~~three~~six months ended June 30, 2021 and ~~nine months periods ended September 30,~~ 2020, respectively, related to the change in market value of mutual funds.

(3) Includes a gain of $3.8 million on the sale of PPP loans in the three and six month periods ended June 30, 2021. In addition, includes income from derivative transactions with customers totaling ~~$27 thousand~~$1.3 million and ~~$1.3~~$1.5 million in the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively, and ~~$2.5~~$1.5 million and ~~$2.7~~$2.4 million in the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively. Other sources of income in the periods shown consist of rental income, income from foreign currency exchange transactions with customers and valuation income on the investment balances held in the non-qualified deferred compensation plan.

N/M Means not meaningful

~~Three Months Ended September 30, 2020 and 2019~~

Total noninterest income increased $6.5 million, or 46.7%, in the three months ended September 30, 2020 compared to the same period of 2019. The increase was mainly driven by: (i) a $7.7 million increase in net securities gains driven by a $8.6 million net gain on the sale of debt securities in the third quarter of 2020 and (ii) higher income from brokerage, advisory and fiduciary activities. These results were partially offset by: (i) lower cards and trade finance servicing fees; (ii) lower deposits and service fees, and (iii) lower other noninterest income.

7273

~~Brokerage, advisory~~Three Months Ended June 30, 2021 and ~~fiduciary activities increased $0.6~~2020

Total noninterest income decreased $4.0 million, or ~~17.1%~~20.4%, in the three months ended ~~September~~June 30, 2021 compared to the same period of 2020, mainly due to: (i) a $6.4 million decrease in net gains on sale of securities and (ii) a net loss of $2.5 million on the early termination of $235 million in FHLB advances in the three months ended June 30, 2021. The decrease in noninterest income was partially offset by higher other noninterest income and deposit and service fees.

Other noninterest income increased $3.8 million, or 145.2%, in the three months ended June 30, 2021 compared to the same period in 2020. The increase other noninterest income was mainly driven by a gain of $3.8 million on the sale of around $95.1 million in PPP loans in the three months ended June 30, 2021. This was partially offset by a decrease of $0.2 million, or 15.0%, in income from derivative transactions with customers.

Deposits and service fees increased $0.8 million, or 24.6%, in the three months ended June 30, 2021 compared to the same period last year, primarily due to an increase in wire transfer fees from increased activity and higher service charge fee income.

Six Months Ended June 30, 2021 and 2020

Total noninterest income decreased $11.8 million, or 28.2%, in the six months ended June 30, 2021 compared to the same period last year. ~~This was primarily~~These results were mainly due to a $13.4 million decrease in net gains on the ~~increase in~~sale of securities, and the previously mentioned net loss of $2.5 million on the early termination of FHLB advances during the period. These decreases were partially offset by higher other noninterest income, deposit and service fees, and brokerage, advisory ~~services executed as well as higher volume of customer trading activity following~~and fiduciary fees.

Other noninterest income increased ~~market volatility mainly attributable to the COVID-19 pandemic in 2020.~~

~~Cards and trade finance servicing fees declined $0.7~~$2.9 million, or ~~66.6%~~62.2%, in the ~~three~~six months ended ~~September~~June 30, ~~2020~~2021 compared to the same period last year, mainly due to the ~~previously announced changes to~~net gain of $3.8 million on sale of PPP loans of $95 million in the ~~Company's international credit card program.~~three months ended June 30, 2021. This was partially offset by a decrease of $0.9 million, or 37.7%, in income from derivative transactions with customers.

~~Other noninterest income declined by~~Deposits and service fees increased $0.7 million, or ~~28.1%~~8.6%, in the ~~third quarter of 2020~~six months ended June 30, 2021 compared to the same period last year, mainly ~~due to a decrease of $1.2 million in income from derivative transactions with customers primarily due to a decline in CRE customer activity. This was partially offset~~driven by ~~an increase in rental income of $0.2 million in connection with a lease termination payment received in the third quarter of 2020.~~

~~Deposit and other service fees decreased by $0.4 million or 9.8% in the three moths ended September 30, 2020 compared to the same period last year mainly due to lower~~higher wire transfer fees ~~primarily driven by the COVID-19 pandemic-related economic slowdown as well as the implementation of Zelle® in October 2019.~~

~~Nine Months Ended September 30, 2020~~from increased activity and ~~2019~~

Total noninterest income increased $20.8 million, or 50.6%, in the nine months ended September 30, 2020 compared to the same period of 2019, mainly driven by: (i) $25.4 million net gain on the sale of debt securities in the first nine months of 2020 compared to $1.9 million in the same period in 2019, and (ii) higher ~~income from brokerage, advisory and fiduciary activities. These results were partially offset by: (i) lower cards and trade finance servicing fees; (ii) lower deposits and~~ service fees; (iii) the absence of $1.0 million in data processing and fees for other services previously provided to the Former Parent and its affiliates, and (iv) the absence of the $0.6 million gain on early extinguishment of FHLB advances in the first nine months of 2019.charge fee income.

Brokerage, advisory and fiduciary activities increased ~~$1.7~~$0.6 million or ~~15.0%~~6.8%, in the ~~first nine~~six months ~~of 2020~~ended June 30, 2021 compared to the ~~same period last year.~~six months ended June 30, 2020, mainly driven by an increase in AUMs in our clients’ advisory accounts as we continue to grow products in that line of business.

Our AUMs totaled $2.13 billion at June 30, 2021, an increase of $160.2 million, or 8.1%, from $1.97 billion at December 31, 2020, primarily driven by increased market value. In addition, net new assets in the six months ended June 30, 2021 totaled $37.9 million, representing 1.9% of the total increase in AUMs compared to December 31, 2020. This was ~~primarily due to the increase in advisory services executed as well as higher volume of customer trading activity following increased market volatility~~ mainly ~~attributable to the COVID-19 pandemic in 2020.~~

Cards and trade finance servicing fees declined $2.4 million or 69.9%, in the nine months ended September 30, 2020 compared to the same period last year, mainly due to the previously announced changes to the Company's international credit card program.

~~Deposit and other service fees decreased by $1.1 million or 8.8% in the nine months ended September 30, 2020 compared to the same period in 2019, mainly as a result of lower wire transfer fees~~ driven by continued execution of the ~~COVID-19 pandemic-related economic slowdown as well as the implementation of Zelle® in October 2019.~~

Company’s client-focused and relationship-centric strategy. The Company remains focused on growing AUMs, both domestically and internationally.

7374

Noninterest Expense

The table below presents a comparison for each of the categories of noninterest expense for the periods presented.


		Three Months Ended September 30,								Change					Three Months Ended June 30,								Change
		2020				2019				2020 vs 2019					2021				2020				2021 vs 2020
		Amount		%		Amount		%		Amount		%			Amount		%		Amount		%		Amount		%
(in thousands, except percentages)	(in thousands, except percentages)													(in thousands, except percentages)
Salaries and employee benefits(1)	Salaries and employee benefits(1)	$	28,268	62.1	%	$	33,862	64.2	%	$	(5,594)	(16.5)	%	Salaries and employee benefits(1)	$	30,796	60.2	%	$	21,570	58.7	%	$	9,226	42.8	%
Occupancy and equipment(2)	Occupancy and equipment(2)	4,281		9.4	%	3,878		7.4	%	403		10.4	%	Occupancy and equipment(2)	5,342		10.4	%	4,220		11.5	%	1,122		26.6	%
Professional and other services fees(3)	Professional and other services fees(3)	3,403		7.5	%	4,295		8.1	%	(892)		(20.8)	%	Professional and other services fees(3)	4,693		9.2	%	3,965		10.8	%	728		18.4	%
Telecommunications and data processing	Telecommunications and data processing	3,228		7.1	%	3,408		6.5	%	(180)		(5.3)	%	Telecommunications and data processing	3,515		6.9	%	3,157		8.6	%	358		11.3	%
Depreciation and amortization	Depreciation and amortization	1,993		4.4	%	1,928		3.7	%	65		3.4	%	Depreciation and amortization	1,872		3.7	%	1,960		5.3	%	(88)		(4.5)	%
FDIC assessments and insurance	FDIC assessments and insurance	1,898		4.2	%	597		1.1	%	1,301		217.9	%	FDIC assessments and insurance	1,702		3.3	%	1,240		3.4	%	462		37.3	%
Other operating expenses ~~(1)~~(4)	Other operating expenses ~~(1)~~(4)	2,429		5.3	%	4,769		9.0	%	(2,340)		(49.1)	%	Other operating expenses ~~(1)~~(4)	3,205		6.3	%	628		1.7	%	2,577		410.4	%
Total noninterest expenses	Total noninterest expenses	$	45,500	100.0	%	$	52,737	100.0	%	$	(7,237)	(13.7)	%	Total noninterest expenses	$	51,125	100.0	%	$	36,740	100.0	%	$	14,385	39.2	%


		Nine Months Ended September 30,								Change					Six Months Ended June 30,								Change
		2020				2019				2020 vs 2019					2021				2020				2021 vs 2020
		Amount		%		Amount		%		Amount		%			Amount		%		Amount		%		Amount		%
(in thousands, except percentages)	(in thousands, except percentages)													(in thousands, except percentages)
Salaries and employee benefits(1)	Salaries and employee benefits(1)	$	79,164	62.3	%	$	101,356	64.3	%	$	(22,192)	(21.9)	%	Salaries and employee benefits(1)	$	57,223	60.4	%	$	50,896	62.4	%	$	6,327	12.4	%
Occupancy and equipment(2)	Occupancy and equipment(2)	12,304		9.7	%	12,152		7.7	%	152		1.3	%	Occupancy and equipment(2)	9,830		10.4	%	8,023		9.8	%	1,807		22.5	%
Professional and other services fees(3)	Professional and other services fees(3)	10,322		8.1	%	11,693		7.4	%	(1,371)		(11.7)	%	Professional and other services fees(3)	8,477		9.0	%	6,919		8.5	%	1,558		22.5	%
Telecommunications and data processing	Telecommunications and data processing	9,849		7.8	%	9,667		6.1	%	182		1.9	%	Telecommunications and data processing	7,242		7.6	%	6,621		8.1	%	621		9.4	%
Depreciation and amortization	Depreciation and amortization	5,912		4.7	%	5,880		3.7	%	32		0.5	%	Depreciation and amortization	3,658		3.9	%	3,919		4.8	%	(261)		(6.7)	%
FDIC assessments and insurance	FDIC assessments and insurance	4,256		3.4	%	3,167		2.0	%	1,089		34.4	%	FDIC assessments and insurance	3,457		3.7��	%	2,358		2.9	%	1,099		46.6	%
Other operating expenses ~~(1)~~(4)	Other operating expenses ~~(1)~~(4)	5,300		4.0	%	13,672		8.8	%	(8,372)		(61.2)	%	Other operating expenses ~~(1)~~(4)	4,863		5.1	%	2,871		3.5	%	1,992		69.4	%
Total noninterest expenses	Total noninterest expenses	$	127,107	100.0	%	$	157,587	100.0	%	$	(30,480)	(19.3)	%	Total noninterest expenses	$	94,750	100.0	%	$	81,607	100.0	%	$	13,143	16.1	%

~~________~~_______

(1) In the second quarter and six months ended June 30, 2021, includes $3.3 million of severance expenses, mainly in connection with the departure of Chief Operations Officer and other actions. In addition, the second quarter and six months ended June 30, 2021, includes $1.0 million and $1.5 million, respectively, in connection with a Long Term Incentive Compensation Program adopted in the first quarter of 2021.

(2) Includes $0.8 million of ROUA impairment associated with a lease in NYC for a loan production office.

(3) Other service fees include expense on derivative contracts.

(4) Includes advertising, marketing, 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 our liability to participants of the deferred compensation plan.

Three Months Ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020

Noninterest expense ~~decreased by $7.2~~increased $14.4 million, or ~~13.7%~~39.2%, in the three months ended ~~September~~June 30, ~~2020~~2021 compared to the same period in ~~2019,~~2020. This was primarily driven by ~~lower~~higher salary and employee benefits, other operating expenses, occupancy and equipment expenses, professional and other service fees, and FDIC assessments and insurance.

Salaries and employee benefits increased $9.2 million, or 42.8%, in the second quarter of 2021 compared to the same period one year ago. This increase was mainly due to the absence of the $7.8 million deferral of expenses directly related to PPP loan originations, in accordance with GAAP, in the second quarter of 2020. In addition, there was an increase in severance expenses of $3.0 million compared to the second quarter of 2020, mainly driven by: (i) the departure of the Chief Operations Officer in the second quarter of 2021; (ii) the closing of the NY LPO, as the Company ceased to originate loans there, and (iii) costs in connection with various other support functions. These results were partially offset by decreases in salaries and employee benefits ~~lower other~~in connection with the Company’s ongoing transformation and efficiency improvement efforts. At June 30, 2021, our FTEs were 719, a decrease of 12.8% compared to 825 at June 30, 2020. The 719 FTEs include the staff associated with Amerant Mortgage, which had 38 FTEs at June 30, 2021.

Other operating expenses ~~and lower professional and other services fees. These decreases were partially offset by higher FDIC assessments and insurance expenses~~increased $2.6 million, or 410.4%, in the ~~third quarter of 2020~~three months ended June 30, 2021 compared to the same period last ~~year.~~year, mainly due to: (i) a $0.9 million increase in advertising expenses, and (ii) the absence of the $0.7 million deferral of other operating expenses directly related to PPP loan originations in the second quarter of 2020.

~~Salaries~~Occupancy and ~~employee benefits decreased by $5.6~~equipment costs increased $1.1 million, or ~~16.5%~~26.6%, in the three months ended ~~September~~June 30, ~~2020~~2021 compared to the same period last year. This was mainly ~~due~~driven by: (i) a lease impairment of $0.8 million in connection with the previously mentioned closing of the NY LPO, and (ii) the additional rent expense associated with the Beacon Operations Center in the second quarter of 2021. The Company sold its Beacon Operations Center in the fourth quarter of 2020. Following the sale of the Beacon Operations Center, we leased-back the property for a two-year term. In the second quarter of 2021, the rent expense linked to the decrease in incentives associated with variable and long-term bonus programs, lower regular salary expenses due to staff reductions in 2019 and 2018 and lower stock-based compensation expense.These declines wereBeacon Operations Center was partially offset by staff reduction costs in the third quarter of 2020 which increased to $0.2 million, or 43.6% to $0.6 million compared to $0.5 million during the same period one year ago. These staff reduction costs were directly related to the Company’s ongoing transformation and efficiency improvement efforts.

Other operating expenses decreased by $2.3 million or 49.1%, in the three months ended September 30, 2020 compared to the same period last year. This was mainly due to a decline of $1.8 million in marketing expenses driven by: (i) the absence of ~~rebranding costs in the third quarter of 2020 compared to $0.8~~$0.2 million of ~~rebranding costs~~depreciation expense recorded in the same period last year, ~~related to~~when we still owned the ~~Company’s transformation efforts~~property. This depreciation expense of $0.2 million is included as part of “Depreciation and ~~(ii) slowed down marketing activity due to~~amortization” in the ~~COVID-19 pandemic.~~table above.

Professional and other services fees ~~declined by $0.9~~increased $0.7 million, or ~~20.8%~~18.4%, in the ~~third~~second quarter of ~~2020~~2021 compared to the same ~~quarter~~period one year ago, ~~mostly~~mainly driven by ~~a year-over-year decline in legal and accounting fees, partially offset by~~ higher ~~consulting fees in connection with the Company’s digital transformation.~~recruitment fees.

FDIC assessments and insurance expenses increased ~~$1.3~~$0.5 million, or ~~217.9%~~37.3%, in the ~~third~~second quarter of ~~2020~~2021 compared to the same period last year, mainly due to ~~higher FDIC assessment rates and~~ the absence of credits received in the ~~third~~second quarter of ~~2019.~~2020.

~~During the three months ended September 30, 2020,~~ ~~the Company remained focused on driving~~We remain dedicated to finding new ways to increase efficiencies across the ~~organization~~Company while ~~improving the~~simultaneously providing an enhanced banking ~~journey and~~ experience for customers. As part of these continued efforts, the Company signed partnerships with leading fintech firms in the second quarter of 2021, Numerated and Marstone, Inc., driving forward the Company's digital transformation. Numerated's platform is expected to improve the business lending and deposit account opening processes while Marstone's online wealth management platform is expected to further improve banking relationships by empowering Amerant customers ~~particularly through improved digital capabilities. The Company expects~~ to ~~achieve a number of near-term digital transformation milestones, including a full rollout~~fully understand their financial position, plans and outlook. Additionally, as part of the ~~Salesforce® Customer Relationship Management (“CRM”)~~Company’s keen focus on profitable growth, in July 2021, we engaged Zimmerman Advertising as our new marketing partner demonstrating its commitment to driving brand awareness and ~~nCino® loan origination platforms for~~ ~~commercial use by~~business development. Finally, the ~~end of 2020. nCino for Retail use~~Company recently determined to close its banking center in Wellington, FL which is expected to be ~~rolled out in 2021.~~ Salesforce is a customizable platform that will enable the Company to integrate its initial marketing campaigns, onboarding processes and customer service. Once fully operational, the program has the potential to create efficiency gains of 15-20%completed in the Company’s sales and service processes. nCino will be fully integrated with Salesforce and will enable customers, portfolio managers and underwriters to collaborate in real-time, potentially creating efficiency gainsthird quarter of 15-20% in the loan origination process. These important launches provide the digital foundation for the Company’s relationship-driven growth strategy and maximize efficiency and productivity seamlessly in the loan origination process.Restructuring costs for the three months ended September 30, 2020 include digital transformation expenses of $1.2 million and staff reduction costs of $0.6 million ($0.5 million of staff reduction costs and $0.8 million of rebranding costs in the three months ended September 30, 2019). Digital transformation expenses during the three months ended September 30, 2020 consisted of $0.8 million of professional and service fees and $0.4 million of telecommunication and data processing expenses. We had no digital transformation expenses in the same period of 2019. In addition, ~~as part of these efficiency efforts, the Company closed one banking center in Fort Lauderdale, FL and another in Woodlands, TX on October 30, 2020.These closures are the result of~~2021. This closure results from extensive profitability analyses of the Company’s retail banking network and current and expected individual branch contributions towards the Company's strategic goals.

~~Nine~~Six Months Ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020

Noninterest expense ~~decreased by 30.5~~increased $13.1 million, or ~~19.3%~~16.1%, in the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 compared to the same period in ~~2019,~~2020, primarily driven by ~~lower~~higher salaries and employee benefits, ~~lower~~ other operating expenses, occupancy and ~~lower other~~equipment expenses, professional and ~~services fees. These decreases~~other service fees and FDIC assessments and insurance.

Salaries and employee benefits increased $6.3 million, or 12.4%, in the six months ended June 30, 2021 compared to the same period in 2020. This increase was mainly due to the absence of the $7.8 million deferral of expenses directly related to PPP loan originations, in accordance with GAAP, in the three months ended June 30, 2020. In addition, in the six months ended June 30, 2021, there was an increase in severance expenses of $3.0 million compared to the six months ended June 30, 2020, mainly driven by: (i) the departure of the Chief Operations Officer in the second quarter of 2021; (ii) the closing of the NY LPO, as the Company ceased to originate loans there, and (iii) costs in connection with the elimination of various other support functions.These results were partially offset by ~~higher FDIC assessments~~decreases in salaries and ~~insurance~~employee benefits in connection with the Company’s ongoing transformation and efficiency improvement efforts. At June 30, 2021, our full-time equivalent employees were 719, a decrease of 12.8% compared to 825 at June 30, 2020. The 719 FTEs include the staff associated with Amerant Mortgage, which had 38 FTEs at June 30, 2021.

Other operating expenses increased $2.0 million, or 69.4%, in the ~~first nine~~six months ~~of 2020~~ended June 30, 2021 compared to the same period last ~~year.~~

~~Salaries and employee benefits decreased by $22.2 million or 21.9%, in the nine months ended September 30, 2020 compared to the same period last year. This was~~year, mainly due to: (i) ~~staff reductions completed~~a $0.6 million increase in ~~2019~~advertising expenses, and ~~2018 as well as lower stock-based compensation expense in the first nine months of 2020,~~ (ii) the deferral in accordance with GAAP of $7.8 million during the second quarter of 2020 of expenses directly related to the origination of PPP loans, and (iii) lower incentives associated with variable and long-term bonus programs. In addition, in the first nine months of 2020, the staff reduction costs associated with the Company’s restructuring activities decreased by $0.3 million, or 21.9%, to $1.1 million compared to $1.4 million during the same period one year ago.

Other operating expenses decreased by $8.4 million or 61.2%, in the nine months ended September 30, 2020 compared to the same period last year. This was mainly due a decline of $6.8 million in makerketing expenses driven by: (i) the absence of ~~rebranding costs in~~ the ~~first nine months of 2020 compared to $3.6~~$0.7 million of rebranding costs in the same period last year related to the Company’s transformation efforts and (ii) slowed down marketing activity due to the COVID-19 pandemic in 2020. In addition, the first nine months of 2020 includes a decrease of $0.9 million compared to the same period of 2019 mainly driven by the deferral of other operating expenses directly related to PPP loan originations in the ~~first nine~~second quarter of 2020.

Occupancy and equipment costs increased $1.8 million, or 22.5%, in the six months ended June 30, 2021 compared to the same period last year. This was mainly driven by: (i) a lease impairment of $0.8 million in connection with the previously mentioned closing of the NY LPO and (ii) the $1.0 million additional rent expense associated with the Beacon Operations Center in the six months ended June 30, 2021. As explained above, the Beacon Operations Center was sold and leased-back in the fourth quarter of 2020. In the six months ended June 30, 2021, the additional rent expense linked to the Beacon Operations Center was partially offset by the absence of $0.4 million of depreciation expense recorded in the same period last year, when we still owned the property. This depreciation expense of $0.4 million is included as part of “Depreciation and amortization” in the table above.

Professional and other services fees ~~declined by $1.4~~increased $1.6 million, or ~~11.7%~~22.5%, in the ~~first nine~~six months ~~of 2020~~ended June 30, 2021 compared to the same period one year ~~ago, mostly~~ago. This increase was mainly driven by ~~a year-over-year decline in legal and accounting fees, partially offset by~~ higher ~~consulting~~ fees in connection ~~with~~with: (i) the design of the Company’s ~~digital transformation.~~new compensation programs; (ii) renegotiation of certain contracts with vendors, and (iii) higher recruitment fees.

FDIC assessments and insurance expenses increased $1.1 million, or ~~34.4%~~46.6%, in the ~~first nine~~six months ~~of 2020~~ended June 30, 2021 compared to the same period last year, mainly due to ~~higher FDIC assessment rates and higher average total assets.~~the absence of credits received in the six months ended June 30, 2020.

Restructuring costs in the first nine months of 2020 include staff reductions of $1.1 million and digital transformation expenses of $2.5 million, compared to staff reduction costs of $1.4 million and rebranding costs of $3.6 million in the same period in 2019. Digital transformation expenses during the nine months ended September 30, 2020 consisted of $1.4 million of professional and service fees and $1.0 million of telecommunication and data processing expense. We had no digital transformation expenses in the same period of 2019.

Income Taxes

The table below sets forth information related to our income taxes for the periods presented.


		Three Months Ended September 30,						Change				Nine Months Ended September 30,						Change					Three Months Ended June 30,						Change				Six Months Ended June 30,						Change
		2020			2019			2020 vs 2019				2020			2019			2020 vs 2019					2021			2020			2021 vs 2020				2021			2020			2021 vs 2020
(in thousands, except effective tax rates and percentages)	(in thousands, except effective tax rates and percentages)																					(in thousands, except effective tax rates and percentages)

Income (loss) before income tax (expense) benefit																						Income (loss) before income tax (expense) benefit	$	19,580		$	(19,284)		$38,864		201.5	%	$	37,687		$	(15,012)		$52,699		351.1	%
Income tax (expense) benefit	Income tax (expense) benefit	$	(438)		$	(3,268)		$2,830		(86.60)	%	$	2,677		$	(10,369)		$13,046		(125.82)	%	Income tax (expense) benefit	$	(4,435)		$	4,005		$8,440		210.7	%	$	(8,083)		$	3,115		$11,198		359.5	%
Effective income tax rate	Effective income tax rate	20.47		%	21.50		%	(1.03)	%	(4.79)	%	20.80		%	21.50		%	(0.70)	%	(3.26)	%	Effective income tax rate	22.65		%	20.77		%	1.88	%	9.1	%	21.45		%	20.75		%	0.70	%	3.4	%

In the second quarter and six months ended June 30, 2021, income tax expense increased to $4.4 million and $8.1 million, respectively, from income tax benefit of $4.0 million and $3.1 million in the second quarter and six months ended June 30, 2020, respectively. This was mainly driven by higher income before income taxes in the second quarter and six months ended June 30, 2021. As of ~~September~~June 30, ~~2020,~~2021, the Company’s net deferred tax assets were ~~$16.2~~$13.5 million, an increase of ~~$10.7~~$1.8 million, or ~~195.7%~~15.6%, compared to ~~$5.5~~$11.7 million as of December 31, ~~2019.~~2020. This ~~result~~increase was mainly driven by ~~the~~a decrease of $10.3 million in net ~~increase in the allowance~~unrealized holding gains on debt securities available for ~~loan losses of $64.6 million, or 123.7%, recorded~~sale during the ~~first nine~~six months ~~of 2020.~~ended June 30, 2021.

Financial Condition - Comparison of Financial Condition as of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019~~2020

Assets. Total assets were ~~flat at $8.0~~$7.5 billion as of ~~September~~June 30, ~~2020~~2021, a decrease of $238.0 million, or 3.1%, compared to $7.8 billion at December 31, ~~2019.~~2020. In the ~~first nine~~six months ~~of 2020,~~ended June 30, 2021, total loans held for investment, net of the allowance for loan losses, and cash and cash equivalents ~~increased by $115.7~~decreased $228.8 million, or ~~2.0%~~4.0%, and ~~$105.8~~$42.9 million, or ~~87.2%~~20.0%, respectively. These ~~increases~~results were partially offset by ~~a decrease~~an increase of ~~$270.6~~$42.0 million, or ~~15.6%~~44.7%, in ~~total investments.~~other assets, mainly driven by the adoption of the new accounting guidance on leases. See “—Average Balance Sheet, Interest and Yield/Rate Analysis” for detailed information, including changes in the composition of our interest-earning ~~assets.~~assets, and Note 1 to our 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 ~~increased~~decreased to ~~$227.2~~$171.5 million at ~~September~~June 30, ~~2020~~2021 from ~~$121.3~~$214.4 million at December 31, ~~2019.~~2020. The ~~increase~~decrease of ~~$105.8~~$42.9 million or ~~87.2%~~20.0%, iswas mainly attributable to ~~higher~~lower balances at the Federal Reserve as a part of preventive business measures to mitigate the potential negative impact of the COVID-19 pandemic, and include the net proceeds of $58.4 million from the issuance of Senior Notes due 2025 completed during the second quarter of 2020.Reserve.

Cash flows provided by operating activities ~~were $50.3~~was $32.0 million in the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, mainly driven by the net ~~loss~~income before attribution of ~~$10.2~~non-controlling interest of $29.6 million ~~which included~~recorded during the non-cash provision for loan losses of $88.6 million. Operating income was $49.8 million in the first nine months of 2020, which excludes the non-cash provision for loan losses and other items. See “Non-GAAP Financial Measures Reconciliation” for a reconciliation of these non-GAAP financial measures to their U.S. GAAP counterparts.period.

Net cash provided by investing activities was ~~$105.1~~$234.4 million during the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, mainly driven byby: (i) maturities, sales, calls and ~~calls~~paydowns of securities available for sale and FHLB stock totaling ~~$673.8~~$232.5 million and ~~$16.5~~$17.4 million, ~~respectively,~~respectively; (ii) a net decrease in loans of $131.9 million, and (iii) proceeds from loan ~~portfolio~~ sales ~~totaling $17.1~~of $105.8 million. These proceeds were partially offset by purchases of available for sale and held to maturity securities ~~and FHLB stock~~ totaling ~~$380.2~~$214.3 million and ~~$8.6~~$50.3 million, ~~respectively, and a net increase in loans of $221.4 million.~~

respectively.

In the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, net cash used in financing activities was ~~$49.6~~$309.3 million. These activities included: (i) ~~$185.1~~a $408.5 million decrease in time deposits; (ii) $244.1 million in net repayments of FHLB ~~advances; (ii) a $166.4 million decrease in time deposits,~~advances, and (iii) the ~~redemption of $28.1 million in junior subordinated debentures in the first quarter of 2020, and (iv) the $15.2~~$8.4 million repurchase of shares of Class B common stock in the ~~first quarter of 2020.~~six months ended June 30, 2021, under the 2021 Stock Repurchase Program. These disbursements were partially offset ~~by: (i)~~by a ~~$286.8~~$351.8 million net increase in total demand, savings and money market deposit ~~balances and (ii) $58.4 million in net proceeds from the issuance of Senior Notes during the second quarter of 2020.~~balances. See “—Capital Resources and Liquidity Management” for more ~~information~~details on changes in FHLB advances and the ~~Senior Notes.~~2021 Stock Repurchase Program.

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.


		September 30, 2020			December 31, 2019				June 30, 2021			December 31, 2020
(in thousands, except percentages)	(in thousands, except percentages)							(in thousands, except percentages)
Total loans, gross (1)	Total loans, gross (1)	$	5,924,617		$	5,744,339		Total loans, gross (1)	$	5,608,548		$	5,842,337
Total loans, gross / total assets	Total loans, gross / total assets	74.3		%	71.9		%	Total loans, gross / total assets	74.5		%	75.2		%

Allowance for loan losses	Allowance for loan losses	$	116,819		$	52,223		Allowance for loan losses	$	104,185		$	110,902
Allowance for loan losses / total loans, gross (1) (2)	Allowance for loan losses / total loans, gross (1) (2)	1.97		%	0.91		%	Allowance for loan losses / total loans, gross (1) (2)	1.86		%	1.90		%

Total loans, net (3)	Total loans, net (3)	$	5,807,798		$	5,692,116		Total loans, net (3)	$	5,504,363		$	5,731,435
Total loans, net / total assets	Total loans, net / total assets	72.8		%	71.3		%	Total loans, net / total assets	73.1		%	73.8		%

_______________

(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 June 30, 2021, the Company had $1.8 million in mortgage loans held for sale. There were no loans held for sale ~~for the periods presented.~~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, 2019~~ and Note 5 of these unaudited interim consolidated financial statements for more details on our impairment models.

(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 ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019~~2020 is depicted in the following table:


(in thousands)	(in thousands)	September 30, 2020		December 31, 2019		(in thousands)	June 30, 2021		December 31, 2020
Retail (1)	Retail (1)	$	1,109,008	$	1,143,565	Retail (1)	$	1,069,862	$	1,097,329
Multifamily	Multifamily	853,159		801,626		Multifamily	658,022		737,696
Office space	Office space	409,096		453,328		Office space	369,172		390,295
Land and construction	Land and construction	335,184		278,688		Land and construction	361,077		349,800
Hospitality	Hospitality	192,014		198,807		Hospitality	182,316		191,750
Industrial and warehouse	Industrial and warehouse	87,112		96,102		Industrial and warehouse	78,526		70,465
		$	2,985,573	$	2,972,116		$	2,718,975	$	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.

7880

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 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)	(in thousands)	September 30, 2020		December 31, 2019		(in thousands)	June 30, 2021		December 31, 2020
Domestic Loans:	Domestic Loans:					Domestic Loans:
Real Estate Loans	Real Estate Loans					Real Estate Loans
Commercial real estate (CRE)	Commercial real estate (CRE)					Commercial real estate (CRE)
Non-owner occupied	Non-owner occupied	$	1,797,230	$	1,891,802	Non-owner occupied	$	1,699,876	$	1,749,839
Multi-family residential	Multi-family residential	853,159		801,626		Multi-family residential	658,022		737,696
Land development and construction loans	Land development and construction loans	335,184		278,688		Land development and construction loans	361,077		349,800
		2,985,573		2,972,116			2,718,975		2,837,335
Single-family residential	Single-family residential	496,614		427,431		Single-family residential	535,582		543,076
Owner occupied	Owner occupied	937,946		894,060		Owner occupied	943,342		947,127
		4,420,133		4,293,607			4,197,899		4,327,538
Commercial loans	Commercial loans	1,152,665		1,190,193		Commercial loans	968,038		1,103,501
Loans to depository institutions and acceptances (1)	Loans to depository institutions and acceptances (1)	16,608		16,547		Loans to depository institutions and acceptances (1)	13,669		16,629
Consumer loans and overdrafts (2) (3)	Consumer loans and overdrafts (2) (3)	183,895		72,555		Consumer loans and overdrafts (2) (3)	306,050		241,771
Total Domestic Loans	Total Domestic Loans	5,773,301		5,572,902		Total Domestic Loans	5,485,656		5,689,439

International Loans:	International Loans:					International Loans:
Real Estate Loans	Real Estate Loans					Real Estate Loans
Single-family residential (4)	Single-family residential (4)	100,666		111,671		Single-family residential (4)	80,963		96,493
Commercial loans	Commercial loans	44,491		43,850		Commercial loans	35,373		51,049
Loans to depository institutions and acceptances	Loans to depository institutions and acceptances	15		5		Loans to depository institutions and acceptances	3		7
Consumer loans and overdrafts (3) (5)		6,144		15,911
Consumer loans and overdrafts (5)						Consumer loans and overdrafts (5)	4,778		5,349
Total International Loans	Total International Loans	151,316		171,437		Total International Loans	121,117		152,898
Total Loan Portfolio	Total Loan Portfolio	$	5,924,617	$	5,744,339	Total Loan Portfolio	$	5,606,773	$	5,842,337

__________________

(1) Mostly comprised of loans secured by cash or U.S. Government securities.

(2) Includes customers’ overdraft balances totaling ~~$0.5~~$1.4 million and ~~$1.3~~$0.7 million as of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively.

(3) ~~There were no outstanding credit card balances as~~Includes indirect lending loans purchased with a principal balance of ~~September~~$220.9 million and $166.0 million at June 30, ~~2020. At~~2021 and December 31, 2019, balances were mostly comprised of credit card extensions of credit to customers with deposits with the Bank. The Company phased out its legacy credit card products to further strengthen its credit quality.2020, respectively.

(4) Secured by real estate properties located in the U.S.

(5) International customers’ overdraft balances were de minimis at each of the dates presented.

7981

As of ~~September~~June 30, ~~2020, the loan portfolio increased $180.3~~2021, total loans were $5.6 billion, down $233.8 million, or ~~3.1%~~4.0%, ~~to $5.9 billion, compared to $5.7 billion at December 31, 2019. Loans to international customers, primarily from Latin America, declined by $20.1 million, or 11.7%, as of September 30, 2020,~~ compared to December 31, ~~2019.~~2020. Domestic loans ~~increased $200.4~~decreased $203.8 million, or 3.6%, as of ~~September~~June 30, ~~2020,~~2021, compared to December 31, ~~2019.~~2020. The ~~increase~~decrease in total domestic loans includes net ~~increases~~decreases of ~~$111.3~~$118.4 million, ~~$69.2~~$135.5 million, ~~$43.9~~$3.8 million and ~~$13.5~~$7.5 million in ~~consumer~~domestic CRE loans, ~~single-family residential~~commercial loans, owner occupied loans and ~~CRE~~single-family residential loans, respectively. ~~This~~The decrease in the loan portfolio in the six months ended June 30, 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. In addition, there was a decrease in connection with the closing of the NYC CRE loan production office, as the Company ceased to originate loans there in the six months ended June 30, 2021. These decreases were partially offset by ~~a decline~~an increase of ~~$37.5~~$64.3 million in domestic commercial loans mainly driven by a reduction in lower yielding non-relationship loans, and lower economic activity and more stringent credit underwriting standards associated with the COVID-19 pandemic.consumer loans. The decrease in commercial loans ~~was partially offset by approximately $223.5~~during the six months ended June 30, 2021 includes PPP loan prepayments of around $171 million in ~~PPP loans, originated during~~ the ~~first nine~~six months ended June 30, 2021 as a result of ~~2020.~~forgiveness. The increase in consumer loans includes ~~$115~~$123.7 million in high-yield indirect consumer loans purchased during the ~~first nine~~six months ended June 30, 2021.

The Company originated $91.7 million in new PPP loans during the six months ended June 30, 2021, and received $171 million of ~~2020.~~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. In addition, during the six months ended June 30, 2021, the Company sold to a third party, in cash, PPP loans with an outstanding balance of approximately $95.1 million, and realized a pre-tax gain on sale of approximately $3.8 million. The ~~increase in single-family residential loans was mainly attributable to the growth in jumbo mortgages.~~

Company retained no loan servicing rights on these PPP loans. As of ~~September~~June 30, ~~2020,~~2021, total PPP loans outstanding were $23.6 million, or 0.4% of total loans, compared to $198.5 million, or 3.4% of total loans as of December 31, 2020.

As of June 30, 2021, loans under syndication facilities ~~declined $104.6~~were $397.3 million, a decline of $57.6 million, or ~~18.6%~~12.7%, compared to $454.9 million at December 31, ~~2019,~~2020, mainly as driven by a ~~result of paydowns and the sale of a $11.9 million~~reduction in lower-yielding non-relationship ~~syndicated loan.~~loans. As of ~~September~~June 30, ~~2020,~~2021, syndicated loans that financed highly leveraged transactions were ~~$14.6~~$18.3 million, or ~~0.2%~~0.3%, of total loans, compared to ~~$35.7~~$19.2 million, or ~~0.6%~~0.3%, of total loans as of December 31, ~~2019.~~2020.

Loans to international customers, primarily from Venezuela and other customers in Latin America, declined $31.8 million, or 20.8%, during the second quarter of 2021 compared to December 31, 2020, mainly driven by a $15.7 million decrease in commercial loans which matured during the first quarter of 2021, and a $16.0 million decrease in residential loans from Venezuela primarily due to payoffs in the first half 2021.

Foreign Outstanding

The table below summarizes the composition of our international loan portfolio by country of risk for the periods presented. All of our foreign loans are denominated in U.S. Dollars, and bear fixed or variable rates of interest based upon different market benchmarks plus a spread.


		September 30, 2020				December 31, 2019					June 30, 2021				December 31, 2020
		Net Exposure (1)		% Total Assets		Net Exposure (1)		% Total Assets			Net Exposure (1)		% Total Assets		Net Exposure (1)		% Total Assets
(in thousands, except percentages)	(in thousands, except percentages)									(in thousands, except percentages)
Venezuela (2)	Venezuela (2)	$	91,004	1.1	%	$	112,297	1.4	%	Venezuela (2)	$	70,383	0.9	%	$	86,930	1.1	%
Other (3)	Other (3)	60,312		0.8	%	59,140		0.7	%	Other (3)	50,734		0.7	%	65,968		0.9	%

Total	Total	$	151,316	1.9	%	$	171,437	2.1	%	Total	$	121,117	1.6	%	$	152,898	2.0	%

_________________

(1) Consists of outstanding principal amounts, net of collateral of cash, cash equivalents or other financial instruments totaling ~~$12.4~~$20.8 million and ~~$15.2~~$13.3 million as of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively.

(2) Includes mortgage loans for single-family residential properties located in the U.S. totaling ~~$90.8~~$70.3 million and ~~$104.0~~$86.7 million as of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~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.

8083

The maturities of our outstanding international loans were:


		September 30, 2020								December 31, 2019									June 30, 2021								December 31, 2020
		Less than 1 year		1-3 Years		More than 3 years		Total		Less than 1 year		1-3 Years		More than 3 years		Total			Less than 1 year		1-3 Years		More than 3 years		Total		Less than 1 year		1-3 Years		More than 3 years		Total
(in thousands)	(in thousands)																	(in thousands)
Venezuela (1)	Venezuela (1)	$	82	$	7,836	$	83,086	$	91,004	$	8,141	$	3,617	$	100,539	$	112,297	Venezuela (1)	$	532	$	6,673	$	63,178	$	70,383	$	420	$	7,199	$	79,311	$	86,930
Other (2)	Other (2)	7,240		17,015		36,057		60,312		6,146		9,282		43,712		59,140		Other (2)	6,404		22,254		22,076		50,734		16,098		15,226		34,644		65,968

Total (3)	Total (3)	$	7,322	$	24,851	$	119,143	$	151,316	$	14,287	$	12,899	$	144,251	$	171,437	Total (3)	$	6,936	$	28,927	$	85,254	$	121,117	$	16,518	$	22,425	$	113,955	$	152,898

_________________

(1) Includes mortgage loans for single-family residential properties located in the U.S. totaling ~~$90.8~~$70.3 million and ~~$104.0~~$86.7 million as of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~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) Consists of outstanding principal amounts, net of cash collateral, cash equivalents or other financial instruments totaling ~~$12.4~~$20.8 million and ~~$15.2~~$13.3 million as of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively.

8184

Loan Quality

Allocation of Allowance for Loan Losses

In the following table, we present the allocation of the ALL 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 ALL 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.


		September 30, 2020					December 31, 2019						June 30, 2021					December 31, 2020
		Allowance			% 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		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											Domestic Loans
Real estate	Real estate	$	55,757		50.0	%	$	25,040		51.7	%	Real estate	$	38,648		48.0	%	$	50,227		48.2	%
Commercial	Commercial	47,527			37.8	%	22,132			38.1	%	Commercial	52,583			37.0	%	48,035			38.0	%
Financial institutions	Financial institutions	—			0.3	%	42			0.3	%	Financial institutions	—			0.2	%	—			0.3	%
Consumer and others (1)	Consumer and others (1)	11,217			9.4	%	1,677			6.9	%	Consumer and others (1)	11,038			12.6	%	10,729			6.9	%
		114,501			97.4	%	48,891			97.0	%		102,269			97.8	%	108,991			97.4	%

International Loans (2)	International Loans (2)											International Loans (2)
Commercial	Commercial	313			0.8	%	350			0.8	%	Commercial	465			0.6	%	95			0.9	%
Financial institutions	Financial institutions	—			—	%	—			—	%	Financial institutions	1			—	%	1			—	%
Consumer and others (1)	Consumer and others (1)	2,005			1.8	%	2,982			2.2	%	Consumer and others (1)	1,450			1.6	%	1,815			1.7	%
		2,318			2.6	%	3,332			3.0	%		1,916			2.2	%	1,911			2.6	%

Total Allowance for Loan Losses	Total Allowance for Loan Losses	$	116,819		100.0	%	$	52,223		100.0	%	Total Allowance for Loan Losses	$	104,185		100.0	%	$	110,902		100.0	%
% of Total Loans	% of Total Loans	1.97		%			0.91		%			% of Total Loans	1.86		%			1.90		%

__________________

(1) ~~Includes: (i) credit card receivables to cardholders for whom charge privileges have been stopped as of December 31, 2019; and (ii)~~Includes mortgage loans for and secured by single-family residential properties located in the U.S. The total allowance for loan losses, after the charge-offs, for credit card receivables totaled $1.8 million at December 31, 2019. Outstanding credit card balances were repaid during the first quarter of 2020, therefore, there is no allowance for the credit card product as of September 30, 2020.

(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 nine~~six months ~~of 2020,~~ended June 30, 2021, the ~~shift~~changes in the allocation of the ALL ~~was~~were driven by loan composition changes, primarily as a result of: (i) the increase in domestic consumer loans in the six months ended June 30, 2021 and (ii) the reduction of the CRE portfolio in the six months ended June 30, 2021. In addition, the change in allocation of the ALL in the six months ended June 30, 2021, includes changes in the allocation of the loan loss provisions ~~increase~~ due to the estimated impact of the COVID-19 pandemic among the respective impacted portfolios, ~~mostly~~mainly domestic real estate, ~~domestic~~ commercial and ~~domestic~~ consumer. ~~In addition,~~The ALL associated with the ~~shift in the allocation~~COVID-19 pandemic was $14.8 million as of ~~the ALL reflects loan composition changes, primarily driven by the purchase of domestic consumer loans and the reduction of the international credit cards.~~June 30, 2021, unchanged from December 31, 2020.

8285

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 90 days or more contractually past due as to interest or principal; and (iii) restructured loans that are considered TDRs.


		September 30, 2020		December 31, 2019			June 30, 2021		December 31, 2020
(in thousands)	(in thousands)					(in thousands)
Non-Accrual Loans (1)	Non-Accrual Loans (1)					Non-Accrual Loans (1)
Domestic Loans:	Domestic Loans:					Domestic Loans:
Real Estate Loans	Real Estate Loans					Real Estate Loans
Commercial real estate (CRE)	Commercial real estate (CRE)					Commercial real estate (CRE)
Non-owner occupied	Non-owner occupied	$	8,289	$	1,936	Non-owner occupied	$	48,347	$	8,219
Multi-family residential	Multi-family residential	1,484		—		Multi-family residential	9,928		11,340
		9,773		1,936			58,275		19,559
Single-family residential	Single-family residential	8,844		5,431		Single-family residential	5,251		8,778
Owner occupied	Owner occupied	14,539		14,130		Owner occupied	11,277		12,815
		33,156		21,497			74,803		41,152
Commercial loans (2)	Commercial loans (2)	50,991		9,149		Commercial loans (2)	43,876		44,205
Consumer loans and overdrafts	Consumer loans and overdrafts	82		390		Consumer loans and overdrafts	188		219
Total Domestic	Total Domestic	84,229		31,036		Total Domestic	118,867		85,576

International Loans: (3)	International Loans: (3)					International Loans: (3)
Real Estate Loans	Real Estate Loans					Real Estate Loans
Single-family residential	Single-family residential	2,227		1,860		Single-family residential	1,923		1,889

Consumer loans and overdrafts	Consumer loans and overdrafts	22		26		Consumer loans and overdrafts	10		14
Total International	Total International	2,249		1,886		Total International	1,933		1,903
Total Non-Accrual Loans	Total Non-Accrual Loans	$	86,478	$	32,922	Total Non-Accrual Loans	$	120,800	$	87,479

Past Due Accruing Loans (4)	Past Due Accruing Loans (4)					Past Due Accruing Loans (4)
Domestic Loans:	Domestic Loans:					Domestic Loans:
Real Estate Loans	Real Estate Loans					Real Estate Loans

Single-family residential	Single-family residential	$	1	$	—	Single-family residential	$	20	$	—
Owner occupied						Owner occupied	—		220
Commercial						Commercial	295		—
Consumer loans and overdrafts	Consumer loans and overdrafts	1		—		Consumer loans and overdrafts	4		1
Total Domestic	Total Domestic	2		—		Total Domestic	319		221

International Loans:
Real Estate Loans
Single-family residential		—		—
Consumer loans and overdrafts		—		5
Total International		—		5

Total Past Due Accruing Loans	Total Past Due Accruing Loans	$	2	$	5	Total Past Due Accruing Loans	$	319	$	221

Total Non-Performing Loans	Total Non-Performing Loans	$	86,480	$	32,927	Total Non-Performing Loans	$	121,119	$	87,700
Other Real Estate Owned	Other Real Estate Owned	42		42		Other Real Estate Owned	400		427
Total Non-Performing Assets	Total Non-Performing Assets	$	86,522	$	32,969	Total Non-Performing Assets	$	121,519	$	88,127

__________________

(1) Includes loan modifications that met the definition of TDRs that may be performing in accordance with their modified loan terms. As of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, non-performing TDRs include ~~$7.0~~$9.6 million and ~~$9.8~~$8.4 million, respectively, in a multiple loan relationship to a South Florida borrower.

(2) As of ~~September~~June 30, 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 ~~September~~June 30, ~~2020,~~2021, non-performing assets increased ~~$53.6~~$33.4 million, or ~~162.4%~~37.9%, compared to December 31, ~~2019. The increase~~2020. This was primarily driven by the placement in ~~non-performing assets was mainly due to the placing in non-accrual~~non accrual status of: (i) ~~the previously mentioned Coffee Trader loan relationship~~four owner occupied loans totaling ~~$19.6~~$41.0 million, ~~at September 30, 2020;~~primarily in New York due to increased vacancies; (ii) one commercial loan for $13.4 million to a food wholesaler with exposure to the cruise industry (with $6.8 million in specific reserves at September 30, 2020); (iii) a $7.7 million loan relationship to a building contractor (composed of twofour commercial loans totaling ~~$5.5~~$2.7 million, ~~that are fully reserved~~ and ~~one owner occupied loan for $2.2 million); (iv) one CRE retail loan for $6.5 million; (v) multiple single family residential~~(iii) five single-family loans totaling ~~$5.0 million and (vi) one multi-family residential loan for $1.5~~$2.1 million. These increases were partially offset by ~~$24.8 million in charge-offs~~loan paydowns and payoffs during the ~~period, including the aforementioned $19.3 million related to the Coffee Trader, $1.9 million related to the South Florida food wholesale relationship, and multiple charge-offs of smaller loans.~~six months ended June 30, 2021.

In July 2021, the Company received one CRE property guaranteeing a New York loan with a carrying amount of $12.1 million , which was among the loans placed in non accrual status in the six months ended June 30, 2021, and transferred it to OREO at the net of its fair value less cost to sell of approximately $9.4 million at June 30, 2021. As a result of this transaction, the Company charged-off $2.7 million against the allowance for loan losses in July 2021.

We recognized no interest income on ~~nonaccrual~~non accrual loans during the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019.~~2020. Additional interest income that we would have recognized on these loans had they been performing in accordance with their original terms in the ~~nine~~six months ended ~~September~~June 30, 2021 and 2020 ~~and 2019~~ was ~~$2.0~~$1.7 million and ~~$1.1~~$1.1 million, respectively. There were $7.5 million in loans which were placed back in accrual status as of June 30, 2021, and the Company will recognize, as an adjustment to the yield, $1.6 million for the remaining maturity.

The Company’s loans by credit quality indicators are summarized in the following table. We have no purchased-credit-impaired loans.


		September 30, 2020								December 31, 2019									June 30, 2021								December 31, 2020
(in thousands)	(in thousands)	Special Mention		Substandard		Doubtful		Total (1)		Special Mention		Substandard		Doubtful		Total (1)		(in thousands)	Special Mention		Substandard		Doubtful		Total (1)		Special Mention		Substandard		Doubtful		Total (1)
Real Estate Loans	Real Estate Loans																	Real Estate Loans
Commercial Real Estate (CRE)	Commercial Real Estate (CRE)																	Commercial Real Estate (CRE)
Non-owner occupied	Non-owner occupied	$	16,780	$	7,236	$	1,798	$	25,814	$	9,324	$	762	$	1,936	$	12,022	Non-owner occupied	$	32,858	$	36,040	$	12,306	$	81,204	$	46,872	$	4,994	$	3,969	$	55,835
Multi-family residential	Multi-family residential	—		1,484		—		1,484		—		—		—		—		Multi-family residential	—		9,928		—		9,928		—		11,340		—		11,340
Land development and construction loans	Land development and construction loans	7,201		—		—		7,201		9,955		—		—		9,955		Land development and construction loans	—		—		—		—		7,164		—		—		7,164
		23,981		8,720		1,798		34,499		19,279		762		1,936		21,977			32,858		45,968		12,306		91,132		54,036		16,334		3,969		74,339
Single-family residential	Single-family residential	—		11,072		—		11,072		—		7,291		—		7,291		Single-family residential	—		7,194		—		7,194		—		10,667		—		10,667
Owner occupied	Owner occupied	34,556		14,643		—		49,199		8,138		14,240		—		22,378		Owner occupied	19,456		11,375		—		30,831		22,343		12,917		—		35,260
		58,537		34,435		1,798		94,770		27,417		22,293		1,936		51,646			52,314		64,537		12,306		129,157		76,379		39,918		3,969		120,266
Commercial loans (2)	Commercial loans (2)	27,111		37,338		13,856		78,305		5,569		8,406		2,669		16,644		Commercial loans (2)	40,151		23,055		22,546		85,752		42,434		21,152		23,256		86,842

Consumer loans and overdrafts	Consumer loans and overdrafts	—		111		—		111		—		67		357		424		Consumer loans and overdrafts	—		201		—		201		—		238		—		238
		$	85,648	$	71,884	$	15,654	$	173,186	$	32,986	$	30,766	$	4,962	$	68,714		$	92,465	$	87,793	$	34,852	$	215,110	$	118,813	$	61,308	$	27,225	$	207,346

__________

(1) There are no loans categorized as a “Loss” as of the dates presented.

(2) As of ~~September~~June 30, 2021 and December 31, 2020, includes $19.6 million in a commercial relationship placed in ~~nonaccrual~~non accrual status and downgraded during the second quarter of 2020. As of ~~September~~June 30, 2021 and December 31, 2020, Substandard ~~and Doubtful~~ loans include ~~$13.1~~$7.3 million, and ~~$6.5~~doubtful loans include $12.3 million, ~~respectively,~~ 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.

8487

~~At September~~Classified loans, which includes substandard and doubtful loans, totaled $122.6 million at June 30, ~~2020, special mention loans increased $52.7~~2021, compared to $88.5 million at December 31, 2020. This increase of $34.1 million, or ~~159.6%~~38.5%, compared to December 31, ~~2019, mainly due to downgrades to special mention of: (i) one commercial loan for $23.8 million related to a service provider in~~2020, was primarily driven by the airline industry; (ii) one CRE retail loan for $11.9 million; (iii) one owner occupied relationship totaling $11.4 million in the jewelry wholesale industry; (iv) one owner occupied loan for $7.6 million in the graphic design industry; (v) one owner occupied loan for $7.0 million to a bowling entertainment center and (vi) other smaller loans. This increase was partially offset by: (i) threedowngrade of four CRE loans totaling ~~$9.3~~$41.0 million, ~~upgraded during the period; (ii) a decrease of $3.6 million~~primarily in commercial loans ($1.4 million in paydowns, $0.8 million in upgrades and $0.9 million in charge offs); (iii) a decrease in one construction loan of $2.6 million and (iv) three owner occupied loans totaling $1.4 million. All special mention loans remain current.

~~At September 30, 2020, substandard loans increased $41.1 million, or 133.6%, compared to December 31, 2019. This increase was mainly~~New York due to the downgrade of a $39.8 million the Coffee Trader loan relationship (out of which $25.8 million were further downgraded to doubtful classification and $0.9 million reflects a partial paydown, as a result $13.1 million remained in substandard classification at September 30, 2020). Additional downgrades during the period included: (i) one commercial loan for $13.4 million to a food wholesaler with exposure to the cruise industry; (ii) a $7.7 million loan relationship to a building contractor (composed of twoincreased vacancies, nine commercial loans totaling ~~$5.5~~$4.7 million, and ~~one owner occupied loan for $2.2 million); (iii) one CRE retail loan for $6.5 million disclosed in the second quarter of 2020; (iv) multiple single family~~six single-family loans totaling $5.0 million; (v) one relationship to an airline service provider totaling $2.6 million (consisting of one commercial loan for $1.8 million and one owner occupied loan of $0.8 million) and (vi) one multi-family loan for $1.5$2.1 million. ~~These~~In the six months ended June 30, 2021, these increases were partially offset by: (i) ~~the further downgrade to doubtful~~upgrades of $5.0 million corresponding to one of the commercial loans to the building contractor mentioned above; (ii) the payoff of one owner occupied loan for $1.9 million; (iii) the charge-off of five commercialthree loans totaling ~~$1.3 million and (iv) other multiple paydowns and charge-offs of smaller loans.~~

At September 30, 2020, doubtful loans increased by $10.7 million, or 215.6%, mainly driven by the downgrade to doubtful of $25.8 million included in the aforementioned Coffee Trader loan relationship (of which $19.3 million were charged-off, therefore, $6.5 million remained in the doubtful classification at September 30, 2020). Other main increases correspond to: (i) one commercial loan for $5.0 million tied to the $7.7 million building contractor relationship mentioned in the previous section and (ii) one commercial loan of $1.2 million to an electronics distributor. The increase in doubtful loans was partially offset by: (i) $1.9 million commercial loan charge-off tied to the South Florida food wholesale relationship previously mentioned, and$6.2 million; (ii) the charge-off of ~~one commercial~~two loans totaling $1.4 million, and (iii) loan ~~for $0.9 million.~~paydowns and payoffs.

AtSpecial mention loans as of June 30, 2021 totaled $92.5 million, a decrease of $26.3 million, or 22.2%, from $118.8 million as of December 31, ~~2019, approximately 95%~~2020. This decrease was primarily due to: (i) the downgrade to substandard of our credit card holders were foreign, mostly Venezuelan, and the card receivables were reflecting the stresses in the Venezuelan economy. Since late 2016, and consistent with industry practice, credit cards held by Venezuelan residents with outstanding balances above the corresponding customer’s average deposit balances with the Bank were classified substandard and charging privileges were suspended. In April 2019, we revised our credit card program to further strengthen the Company’s overall credit quality. We stopped charge privileges to our riskiest cardholders and required repayment of their balances by November 2019. In October 2019, we curtailed charge privileges to the remaining cardholders and required repayment of their balances by January 2020. All amounts deemed uncollectible were charged off during 2019. At December 31, 2019, the outstanding balance and the assigned allowance forone CRE loan ~~losses after the charge-offs was $11.1~~totaling $12.1 million and ~~$1.8~~two commercial loans totaling $1.6 million ~~respectively. At December 31, 2019, there were no credit cards classified as substandard. There were no outstanding credit card balances as~~and (ii) paydowns and payoffs of ~~September~~approximately $11.1 million. This was partially offset by the downgrade of one commercial loan relationship of $2.6 million to special mention. All special mention loans remained current at June 30, ~~2020.~~2021.

Due to the changes to our credit card products previously discussed, credit card charge-offs during the first nine months of 2020 totaled $0.4 million, all of which were already reserved. The Company experienced no unanticipated losses during the first nine months of 2020 as a result of the discontinuation of its credit card products.

On March 26, 2020, the Company began offering ~~customized~~ loan payment relief options ~~as a result of~~to customers impacted by the ~~impact of~~ COVID-19 pandemic, including ~~interest payment~~ deferral ~~and~~and/or forbearance options. ~~Initial deferrals were mainly for 90 days, second deferrals for an additional 90 days~~These programs continued throughout 2020 and ~~third deferrals above 180 days.~~ in the six months ended June 30, 2021.Loans which have been modified under these programs totaled $1.1 billion as of ~~September~~June 30, ~~2020, relatively flat compared to balances reported as~~2021. As of June 30, ~~2020. In accordance with accounting and regulatory guidance,~~2021, $54.4 million, or 1.0% of total loans, ~~to borrowers benefiting from these measures are not considered Troubled Debt Restructurings (“TDRs”).~~

~~As of September 30, 2020, loans which~~ were still under the ~~interest-only~~ deferral and/or forbearance period, ~~declined to $101.2~~an increase from $43.4 million, or ~~1.7% of total~~0.7% at December 31, 2020. This increase was primarily due to new modifications granted to two CRE retail loans ~~significantly down from $654.4~~in New York totaling $37.1 million, ~~at June 30, 2020 and from $1.1 billion at the beginning of the program~~partially offset by $26.1 million in ~~April 2020. As of October 23, 2020,~~ loans ~~under~~that resumed regular payments after deferral and/or forbearance ~~further decreased to $71.8 million, or 1.2% of total loans. This includes $55.2 million of loans under a second deferral and $15.7 million under third deferral.~~periods ended. The Company began to selectively offer ~~the third deferral program as~~ additional temporary loan modifications under programs that allow it to extend the deferral and/or forbearance period beyond 180 days.

The previously mentioned $54.4 million in loans includes: (i) $12.1 million of loans that matured in the second quarter of 2021 and will be transferred to OREO the third quarter of 2021; (ii) $5.2 million that mature in the third quarter of 2021, and (iii) $37.1 million that mature in the first quarter of 2022. Additionally, ~~as of September 30, 2020, 93.0%~~100% of the loans under deferral and/or forbearance are ~~backed~~secured by real estate collateral with average ~~LTV~~Loan to Value (“LTV”) of ~~64.7% and 99.9% of~~83.1%. All loans that have moved out of forbearance status have resumed regular payments. ~~Notably,~~In accordance with accounting and regulatory guidance, loans to borrowers benefiting from these measures are not considered TDRs. The Company ~~now has no deferrals~~continues to closely monitor the performance of the remaining loans in deferral and/or forbearance ~~in its hotel loan portfolio, one~~periods under the terms of the ~~most impacted industries by the pandemic.~~temporary relief granted.

Potential problem loans, which are accruing loans classified as substandard and are less than 90 days past due, at ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, are as follows:


(in thousands)	(in thousands)	September 30, 2020		December 31, 2019		(in thousands)	June 30, 2021		December 31, 2020
Real estate loans	Real estate loans					Real estate loans
Commercial real estate (CRE)	Commercial real estate (CRE)					Commercial real estate (CRE)
Non-owner occupied	Non-owner occupied	$	746	$	762	Non-owner occupied	$	—	$	744

Owner occupied	Owner occupied	104		110		Owner occupied	98		102
		850		872			98		846
Commercial loans	Commercial loans	198		1,926		Commercial loans	1,429		198

Consumer loans and overdrafts (1)	Consumer loans and overdrafts (1)	—		9		Consumer loans and overdrafts (1)	4		—
		$	1,048	$	2,807		$	1,531	$	1,044

__________

(1) Corresponds to international consumer loans.

At ~~September~~June 30, ~~2020,~~2021, total potential problem loans ~~decreased $1.8~~increased $0.5 million, or ~~62.7%~~46.6%, compared to December 31, ~~2019.~~2020. The ~~decrease is~~increase was mainly ~~attributed~~due to one commercial loan ~~for $1.8~~of $1.4 million downgraded to ~~a food wholesaler becoming non-accrual during~~ the ~~period.~~

substandard classification in the six months ended June 30, 2021. This commercial loan remained current and in accrual status at June 30, 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 six months ended June 30, 2021.

8689

Securities

The following table sets forth the book value and percentage of each category of securities at ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019.~~2020. The book value for debt securities classified as available for sale, equity securities and ~~equity~~trading securities, represents fair value, and the book value for debt securities classified as held to maturity represents amortized cost.


		September 30, 2020				December 31, 2019					June 30, 2021				December 31, 2020
		Amount		%		Amount		%			Amount		%		Amount		%
(in thousands, except percentages)	(in thousands, except percentages)									(in thousands, except percentages)
Debt securities available for sale:	Debt securities available for sale:									Debt securities available for sale:
U.S. government agency debt	U.S. government agency debt	$	215,091	14.6	%	$	228,397	13.1	%	U.S. government agency debt	$	284,405	20.9	%	$	204,578	14.9	%
U.S. government-sponsored enterprise debt	U.S. government-sponsored enterprise debt	735,043		50.0	%	933,112		53.6	%	U.S. government-sponsored enterprise debt	543,583		40.0	%	661,335		48.1	%
Corporate debt (1) (2)	Corporate debt (1) (2)	310,056		21.1	%	252,836		14.5	%	Corporate debt (1) (2)	360,726		26.5	%	301,714		22.0	%

U.S. Treasury debt	U.S. Treasury debt	2,514		0.2	%	104,236		6.0	%	U.S. Treasury debt	2,507		0.2	%	2,512		0.2	%
Municipal bonds	Municipal bonds	55,020		3.7	%	50,171		2.9	%	Municipal bonds	2,847		0.2	%	54,944		4.0	%

		$	1,317,724	89.6	%	$	1,568,752	90.1	%		$	1,194,068	87.8	%	$	1,225,083	89.2	%

Debt securities held to maturity (3)	Debt securities held to maturity (3)	$	61,676	4.2	%	$	73,876	4.3	%	Debt securities held to maturity (3)	$	93,311	6.9	%	$	58,127	4.2	%

Equity securities with readily determinable fair value not held for trading (4)	Equity securities with readily determinable fair value not held for trading (4)	24,381		1.7	%	23,848		1.4	%	Equity securities with readily determinable fair value not held for trading (4)	23,988		1.8	%	24,342		1.8	%

Trading securities										Trading securities	198		—	%	—		—	%

Other securities (5):	Other securities (5):	$	65,015	4.5	%	$	72,934	4.2	%	Other securities (5):	$	47,675	3.5	%	$	65,015	4.8	%
		$	1,468,796	100.0	%	$	1,739,410	100.0	%		$	1,359,240	100.0	%	$	1,372,567	100.0	%

__________________

(1) ~~September~~As of June 30, ~~2020~~2021 and December 31, ~~2019 include $16.8~~2020 corporate debt includes $16.5 million and ~~$5.2~~$17.1 million, respectively, in “investment-grade” quality debt securities issued by foreign corporate entities. The ~~securities~~securities’ issuers were from Canada and Japan in three different sectors at ~~September~~June 30, ~~2020,~~2021 and ~~from Japan in the financial services sector at~~ December 31, ~~2019. The~~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 ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, debt securities in the financial services sector issued by domestic corporate entities represent ~~2.6%~~3.2% and ~~1.3%~~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 ~~September~~June 30, ~~2020,~~2021, total securities decreased by ~~$270.6~~$13.3 million, or ~~18.4%~~1.0%, to ~~$1.5~~$1.4 billion compared to ~~$1.7 billion as of~~ December 31, ~~2019.~~2020. This decrease in the ~~first nine~~six months ~~of 2020,~~ended June 30, 2021, was mainly driven byby: (i) maturities, sales and calls totaling ~~$702.0~~$264.6 million, mainly debt securities available for ~~sale.~~sale and (ii) net unrealized holding losses on debt securities available for sale of $10.3 million. These results were partially offset by purchases of ~~388.8~~$264.6 million, including the purchase ~~$247.3~~of $214.3 million in debt securities available for sale and the purchase of ~~higher yielding corporate securities. Included~~$50.3 million in ~~the aforementioned $247.3 million are $124.6 million consisting of financial institutions subordinated debt.~~debt securities held to maturity.

8790

The following tables set forth the book value, scheduled maturities and weighted average yields for our securities portfolio at ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019.~~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.


September 30, 2020
June 30, 2021																								June 30, 2021
(in thousands, except percentages)	(in thousands, except percentages)	Total				Less than a year				One to five years				Five to ten years				Over ten years				No maturity						(in thousands, except percentages)		Total						Less than a year						One to five years						Five to ten years						Over ten years						No maturity
		Amount		Yield		Amount		Yield		Amount		Yield		Amount		Yield		Amount		Yield		Amount				Yield				Amount			Yield			Amount			Yield			Amount			Yield			Amount			Yield			Amount			Yield			Amount		Yield

Debt securities available for sale	Debt securities available for sale																								Debt securities available for sale
U.S. Government sponsored enterprise debt	U.S. Government sponsored enterprise debt	$	735,043	2.47	%	$	102	0.50	%	$	26,088	2.28	%	$	101,238	2.53	%	$	607,615	2.47	%	$	—			—	%	U.S. Government sponsored enterprise debt		$	543,583		2.37	%		$	4,523		2.16	%		$	36,380		2.47	%		$	59,558		3.04	%		$	443,122		2.28	%		$	—	—	%
Corporate debt-domestic	Corporate debt-domestic	293,241		3.61	%	22,142		3.36	%	99,647		2.25	%	149,039		4.45	%	22,413		4.33	%	—				—	%	Corporate debt-domestic		344,237			3.56	%		15,593			2.42	%		77,969			2.51	%		224,627			3.94	%		26,048			4.05	%		—		—	%
U.S. Government agency debt	U.S. Government agency debt	215,091		2.07	%	113		4.78	%	12,824		1.92	%	15,475		1.80	%	186,679		2.10	%	—				—	%	U.S. Government agency debt		284,405			2.23	%		46			2.55	%		9,179			1.90	%		16,028			1.63	%		259,152			2.28	%		—		—	%
Municipal bonds	Municipal bonds	55,020		3.09	%	—		—	%	—		—	%	35,908		3.37	%	19,112		2.56	%	—				—	%	Municipal bonds		2,847			2.72	%		—			—	%		—			—	%		—			—	%		2,847			2.72	%		—		—	%
Corporate debt-foreign	Corporate debt-foreign	16,815		2.87	%	2,670		1.29	%	2,563		1.06	%	11,582		3.63	%	—		—	%	—				—	%	Corporate debt-foreign		16,489			2.82	%		3,411			0.88	%		1,556			0.95	%		11,522			3.64	%		—			—	%		—		—	%

U.S. treasury securities	U.S. treasury securities	2,514		0.34	%	—		—	%	2,514		0.34	%	—		—	%	—		—	%	—				—	%	U.S. treasury securities		2,507			0.34	%		2,507			0.34	%		—			—	%		—			—	%		—			—	%		—		—	%

		$	1,317,724	2.69	%	$	25,027	3.13	%	$	143,636	2.17	%	$	313,242	3.54	%	$	835,819	2.44	%	$	—			—	%			$	1,194,068		2.68	%		$	26,080		1.97	%		$	125,084		2.43	%		$	311,735		3.64	%		$	731,169		2.34	%		$	—	—	%

Debt securities held to maturity	Debt securities held to maturity	$	61,676	2.22	%	$	—	—	%	$	—	—	%	$	11,463	2.92	%	$	50,213	2.06	%	$	—			—	%	Debt securities held to maturity		$	93,311		2.29	%		$	—		—	%		$	12,589		2.45	%		$	11,299		2.92	%		$	69,423		2.16	%		$	—	—	%

Equity securities with readily determinable fair value not held for trading	Equity securities with readily determinable fair value not held for trading	24,381		1.72	%	—		—		—		—		—		—		—		—		24,381				1.72	%	Equity securities with readily determinable fair value not held for trading		23,988			1.15	%		—			—			—			—			—			—			—			—			23,988		1.15	%

Trading securities																								Trading securities	198				3.28		%	—			—			—			—			—			—			198			3.28			—			—		%

Other securities	Other securities	$	65,015	4.71	%	$	—	—	%	$	—	—	%	$	—	—	%	$	—	—	%	$	65,015			4.71	%	Other securities		$	47,675		4.35	%		$	—		—	%		$	—		—	%		$	—		—	%		$	—		—	%		$	47,675	4.35	%
		$	1,468,796	2.74	%	$	25,027	3.13	%	$	143,636	2.17	%	$	324,705	3.52	%	$	886,032	2.42	%	$	89,396			3.89	%			$	1,359,240		2.69	%		$	26,080		1.97	%		$	137,673		2.44	%		$	323,034		3.61	%		$	800,790		2.33	%		$	71,663	3.28	%

8891

December 31, 2019
(in thousands, except percentages) Total Less than a year One to five years Five to ten years Over ten years No maturity
Amount Yield Amount Yield Amount Yield Amount Yield Amount Yield Amount Yield
Debt securities available for sale
U.S. government sponsored enterprise debt 933,112 2.76 % 2,296 3.81 % 23,781 2.51 % 113,341 2.83 % 793,694 2.75 % — — %
Corporate debt-domestic 247,602 2.97 38,270 2.59 140,945 2.90 68,387 3.34 — — — —
U.S. government agency debt 228,397 2.76 133 2.46 9,903 2.53 28,195 2.82 190,166 2.76 — —
U.S. Treasury debt securities 104,236 2.07 6,765 1.61 — — — — 97,471 2.10 — —
Municipal bonds 50,171 3.29 — — — — 29,371 3.23 20,800 3.38 — —
Corporate debt-foreign 5,234 2.82 — — 5,234 2.82 — — — — — —
1,568,752 2.76 47,464 2.51 179,863 2.83 239,294 3.02 1,102,131 2.71 — —
Debt securities held to maturity 73,876 2.50 % — — — — — — 73,876 2.50 % — —
Equity securities with readily determinable fair value not held for trading 23,848 2.13 % — — — — — — — — 23,848 2.13 %
Other securities 72,934 6.02 % — — — — — — — — 72,934 6.02 %
$ 1,739,410 2.88 % $ 47,464 2.51 % $ 179,863 2.83 % $ 239,294 3.02 % $ 1,176,007 2.69 % $ 96,782 5.06 %


December 31, 2020
(in thousands, except percentages)	Total				Less than a year				One to five years				Five to ten years				Over ten years				No maturity
	Amount		Yield		Amount		Yield		Amount		Yield		Amount		Yield		Amount		Yield		Amount		Yield

Debt securities available for sale
U.S. government sponsored enterprise debt	661,335		2.41	%	2,512		0.53	%	19,859		2.23	%	92,259		2.77	%	546,705		2.37	%	—		—	%
Corporate debt-domestic	284,645		3.52		7,664		2.02		99,741		2.22		169,264		4.29		7,976		4.74		—		—
U.S. government agency debt	204,578		2.03		153		2.11		11,581		1.92		15,967		1.76		176,877		2.06		—		—
U.S. Treasury debt securities	2,512		0.34		—		—		2,512		0.34		—		—		—		—		—		—
Municipal bonds	54,944		2.86		—		—		—		—		35,840		3.02		19,104		2.55		—		—
Corporate debt-foreign	17,069		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 maturity	58,127		2.20		—		—		—		—		11,409		2.92		46,718		2.02		—		—

Equity securities with readily determinable fair value not held for trading	24,342		1.52	%	—		—		—		—		—		—		—		—		24,342		1.52	%




Other securities	65,015		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 ~~2.4~~3.0 years at ~~September~~June 30, ~~2020~~2021 and ~~3.8~~2.4 years at December 31, ~~2019. In the first nine months of 2020, the decrease~~2020. The increase in duration was mainly ~~driven by accelerated mortgage~~due to lower expected prepayments and longer-duration securities prepayment speeds resulting from historically low interest rates. These estimates are computed using multiple inputs that are subject, among other things, to changes in interest rates and other factors that may affect prepayment speeds. Contractual maturities of investment securities are adjusted for anticipated prepayments of amortizing U.S. Government sponsored agency debt securities and U.S. Government sponsored enterprise debt securities, which shortenpurchased during the ~~average lives of these investments.~~six months ended June 30, 2021.

Liabilities

Total liabilities ~~decreased $3.2 million to $7.1~~were $6.7 billion at ~~September~~June 30, ~~2020~~2021, a decrease of $253.7 million, or 3.6% compared to ~~$7.2 billion at~~ December 31, ~~2019.~~2020. This was primarily driven by ~~a $185.0~~decreases of: (i) $241.4 million, or ~~15.0%~~23.0%, in FHLB advances, mainly due to the early repayment of $235 million of these borrowings in May 2021 and (ii) and $56.7 million, or 1.0%, in total deposits, mainly due to a decrease in advances from the FHLB and the $28.1 million redemption of junior subordinated debentures in the first quarter of 2020. These decreases were partially offset by $120.4 million, or 2.1%, in higher total deposits, and the $58.5 million outstanding amount of Senior Notes issued in the second quarter of 2020. time deposits. See “~~See~~ ~~“Capital~~Capital Resources and Liquidity Management” and “Deposits”for more ~~detail~~details on the ~~issuance~~changes of ~~Senior Notes~~FHLB advances and total deposits.

The decrease in total liabilities was partially offset by an increase in other liabilities of $44.3 million. or 53.3%, mainly as a result of the ~~redemption~~adoption of ~~trust preferred securities and related junior subordinated debt.~~the new accounting guidance on leases. See Note 1 to our unaudited interim consolidated financial statements in this Form 10-Q for more details on the new guidance on leases.

8992

Deposits

Total deposits ~~increased $120.4~~were $5.7 billion at June 30, 2021, a decrease of $56.7 million, or ~~2.1%~~1.0%, ~~to $5.9 billion at September 30, 2020~~ compared to ~~$5.8 billion at~~ December 31, ~~2019. In~~2020. The decline in deposits in the ~~nine~~six months ended ~~September~~June 30, ~~2020, increases~~2021 was mainly driven by a decrease of ~~$153.7~~$408.5 million, or ~~20.1%~~20.0%, in time deposits. This was partially offset by: (i) an increase of $193.5 million, or 22.2%, in noninterest bearing transaction accounts, ~~$112.3~~including an increase in PPP-related customer deposits; (ii) an increase of $94.7 million, or ~~10.2%, in interest bearing deposits, and $20.9 million, or 1.4%~~6.0%, in savings and money market deposit accounts, ~~were partially offset by a decrease~~and (iii) an increase of ~~$166.4~~$63.6 million, or ~~6.9%~~5.2% in interest bearing transaction accounts. The decline in time ~~deposits.~~deposits was primarily attributable to a $304.7 million, or 19.7%, reduction in customer CDs compared to December 31, 2020, as the Company 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 $73.9 million, or 37.2%, reduction in online CD balances. During the six months ended June 30, 2021 total brokered deposits also decreased $103.5 million, or 16.3%, as the Company continued to focus on reduced reliance on this source of funding.

The increase in deposits in the nine months ended September 30, 2020 was mainly driven by the funds from the PPP loans primarily originated in the second quarter of 2020, which the Company estimates small business customers have not fully utilized. The Company estimates these deposits totaled $97.2 million as of September 30, 2020. In addition, during the first nine months of 2020, the Company increasingly offered reciprocal deposits products to certain customers who want to make their deposits in excess of $250,000 fully eligible for FDIC insurance. The increase in deposits during the period includes $63.0 million in reciprocal deposit account balances. Lastly, ~~in the third quarter of 2020, the Company began offering interest-bearing deposit products to broker-dealer firms through a third-party deposit broker network. These deposits reached $21.6 million at~~ ~~September 30, 2020.~~

These increases were partially offset by declines in deposits from Venezuelan resident customers, as discussed below, and the aforementioned decrease in time deposits. The $166.4 million decrease in time deposits since December 31, 2019 includes a decline of $175.7 million in brokered time deposits partially offset by an increase of $9.3 million in retail time deposits. The increase in retail time deposits was mainly due to an increase of $78.4 million, or 57.1%, in online deposits compared to December 31, 2019. We continue to focus our efforts to retain customers with higher probabilities of renewal at lower market rates. These efforts led to time deposit renewals of approximately $321.8 million in the first nine months of 2020 at rates that were lower than the highest rates paid in our markets.

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									Change

(in thousands, except percentages)	(in thousands, except percentages)	September 30, 2020		December 31, 2019		Amount		%		(in thousands, except percentages)	June 30, 2021		December 31, 2020		Amount		%
Deposits	Deposits									Deposits
Domestic (1) (2)	Domestic (1) (2)	$	3,310,343	$	3,121,827	$	188,516	6.0	%	Domestic (1) (2)	$	3,140,541	$	3,202,936	$	(62,395)	(1.9)	%
Foreign:	Foreign:									Foreign:
Venezuela (3)	Venezuela (3)	2,169,621		2,270,970		(101,349)		(4.5)	%	Venezuela (3)	2,075,658		2,119,412		(43,754)		(2.1)	%
Others (4)	Others (4)	397,582		364,346		33,236		9.1	%	Others (4)	458,709		409,295		49,414		12.1	%
Total foreign	Total foreign	2,567,203		2,635,316		(68,113)		(2.6)	%	Total foreign	2,534,367		2,528,707		5,660		0.2	%
Total deposits	Total deposits	$	5,877,546	$	5,757,143	$	120,403	2.1	%	Total deposits	$	5,674,908	$	5,731,643	$	(56,735)	(1.0)	%

_________________

(1) Includes brokered deposits of ~~$508.3~~$531.0 million and ~~$682.4~~$634.5 million at ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively.

(2) Domestic deposits, excluding brokered, were up ~~$362.6~~$41.1 million or ~~14.9%~~2.7%, compared to December 31, ~~2019.~~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 ~~have~~decreased $62.4 million, or 1.9%, in the six months ended June 30, 2021. However, domestic deposits increased almost every year since 2014 to 2020, while our total foreign deposits, especially deposits from Venezuelan residents, ~~have~~ declined during the same period. Most of the Venezuelan withdrawals from deposit accounts at the Bank are believed to be due to the effect of adverse economic conditions in Venezuela on our Venezuelan resident customers. ~~In the first nine months of 2020, the pace of utilization of deposits from Venezuelan residents decreased compared to the year ended December 31, 2019, primarily attributable to lower economic activi~~

~~ty in Venezuela due to~~

~~health measures implemented in the country as a result of the COVID-19 pandemic.~~

During the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, deposits from customers domiciled in Venezuela decreased by ~~$101.3~~$43.8 million, or ~~4.5%~~2.1%, to ~~$2.2~~$2.1 billion, compared to December 31, 2019. While customers in Venezuela continue to use their deposits to cover every day expenses, the pace of utilization of these deposits declined during the first nine months of 2020 compared to the year ended December 31, 2019. This decline is primarily attributable to lower economic activity in Venezuela due to the COVID-19 pandemic.

2020. During the ~~first nine~~six months ~~of 2020,~~ended June 30, 2021, foreign deposits, which include deposits from other countries in addition to Venezuela, ~~decreased~~increased by ~~$68.1~~$5.7 million or ~~2.6%, compared to December 31, 2019, representing an annualized decline rate of 7.8% in~~0.2%. In the ~~first nine~~six months ~~of 2020 compared to an annualized decline rate of 13.1% during 2019.~~ ~~While there was a decline in foreign deposits in the first nine months of 2020, the pace of such decline continues to slow compared to year~~ ended December 31, 2019. This improvement reflects the Company’s increased engagement with customers and sales efforts which continued to strengthen existing relationships and the expansion of the Company’s banking products and services. In addition, during the first nine months of 2020, the pace of utilization ofJune 30, 2021, deposits from ~~Venezuelan residents decreased compared to the year ended December 31, 2019, primarily attributable to lower economic activity in~~ Venezuela ~~due to~~ ~~health measures implemented in the country as a result of the COVID-19 pandemic.~~

~~The Company continued to focus on deepening existing customer relationships to capture additional share of wallet in the first nine months of 2020. New strategies geared towards increasing profitability include a focus on cross selling~~ ~~treasury management products and fees charged.~~ Like in previous quarters in 2020, the Company executed on initiatives such as improving customer engagement through targeted call campaigns and daily customer contact as well as training sales teams to ensure alignment. Notably, during the third quarter of 2020, Amerant made significant progress by providing training on Salesforce to enable over 80% of users to be activeremained pressured mainly by the ~~end~~continued outflow of ~~October. Additionally, the Company’s participation~~funds from our Venezuelan customers as difficult conditions in the SBA’s PPP has opened the door to a number of prospective commercial lending opportunities and new customer deposit relationships that Amerant is well-positioned to capture. The Company has begun to see the benefits of these initiatives to win additional share of wallet materialize.

their country persist.

The Bank uses 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. Core Deposits

Our core deposits were ~~$4.6~~$4.0 billion and ~~$4.3~~$3.7 billion as of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively. Core deposits represented ~~78.4%~~71.2% and ~~75.4%~~64.4% of our total deposits at those dates, ~~respectively.~~respectively.The increase of $351.8 million, or 9.5%, in core deposits in the six months ended June 30, 2021 was mainly driven by the previously mentioned increase in noninterest bearing deposits. Core deposits consist of total deposits excluding all time deposits.

Brokered Deposits

We utilize brokered deposits and, as of ~~September~~June 30, ~~2020,~~2021, we had ~~$508.3~~$531.0 million in brokered deposits, which represented ~~8.6%~~9.4% of our total deposits at that date. As of ~~September~~June 30, ~~2020,~~2021, brokered deposits were down ~~$174.1~~$103.5 million, or ~~25.5%~~16.3%, compared to ~~$682.4~~$634.5 million as of December 31, ~~2019,~~2020, mainly due to ~~the matured~~a decline in brokered ~~CDs which were not replaced during the first nine months~~time deposits. As of ~~2020. In addition, in the third quarter~~June 30, 2021 and December 31, 2020, brokered deposits included time deposits of ~~2020, the Company began offering interest-bearing deposit products to broker-dealer firms through a third-party deposit broker network. These deposits reached $21.6 million at~~ ~~September 30, 2020, including $17.8~~$390.4 million and ~~$3.9~~$494.2 million, ~~in brokered~~respectively, and third party interest bearing ~~demand~~ deposits of $140.7 million and ~~money market deposits, respectively. The~~$140.3 million, respectively.The Company has not historically sold brokered CDs in denominations over $100,000.

Large Fund Providers

At ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, our large fund providers, defined as third-party customer relationships with balances of over $10 million, included twelve and ~~eight~~eleven deposit relationships, respectively, with total balances of ~~$270.1~~$418.2 million and ~~$116.9~~$349.0 million, respectively. In the first nine months of 2020, new third-party customer relationships with balances of over $10 million mainly included: (i) $50.1 million in reciprocal deposits;(ii) $28.0 million in deposits from trust accounts, and (iii) $22.2 million related to the aforementioned offering of interest-bearing deposit products to broker-dealer firms.The $50.1 million in reciprocal deposits are part of the previously mentioned $63.0 million growth in reciprocal deposit account balancesThe increase in the ~~first nine months~~balance of ~~2020. Additionally,~~these deposits was mainly driven by additional funding from ~~the Company’s Former Parent or its non-U.S. affiliates at September~~existing relationships, and a new relationship with a balance of $27.8 million as of June 30, ~~2020 and December 31, 2019 totaled $6.2 million and $7.9 million, respectively.~~2021.

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 ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019:~~2020:


		September 30, 2020				December 31, 2019					June 30, 2021				December 31, 2020
(in thousands, except percentages)	(in thousands, except percentages)									(in thousands, except percentages)
Less than 3 months	Less than 3 months	$	417,277	28.8	%	$	291,075	20.4	%	Less than 3 months	$	286,056	28.7	%	$	433,918	34.6	%
3 to 6 months	3 to 6 months	327,072		22.6	%	358,061		25.1	%	3 to 6 months	165,652		16.6	%	261,683		20.8	%
6 to 12 months	6 to 12 months	357,608		24.7	%	393,555		27.6	%	6 to 12 months	249,647		25.0	%	241,367		19.2	%
1 to 3 years	1 to 3 years	240,425		16.6	%	181,105		12.7	%	1 to 3 years	286,043		28.7	%	268,934		21.4	%
Over 3 years	Over 3 years	104,069		7.3	%	204,303		14.2	%	Over 3 years	10,177		1.0	%	49,948		4.0	%
Total	Total	$	1,446,451	100.0	%	$	1,428,099	100.0	%	Total	$	997,575	100.0	%	$	1,255,850	100.0	%

As of June 30, 2021, the Company had $364 million of time deposits maturing in the third quarter of 2021. This is expected to decrease the average cost of CDs by approximately 12bps and the overall cost of deposits by 3bps.

9294

Short-Term Borrowings

In addition to deposits, we use short-term borrowings from time to time, such as FHLB advances and borrowings 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. There were no outstanding short-term borrowings at ~~September~~June 30, ~~2020. All of our outstanding short-term borrowings at~~2021 and December 31, ~~2019 correspond to FHLB advances.~~2020.

The following table sets forth information about the outstanding amounts of our short-term borrowings at the close of, and for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and for the year ended December 31, ~~2019.~~2020. There were no repurchase agreements outstanding as of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019.~~2020.


		September 30, 2020			December 31, 2019				June 30, 2021			December 31, 2020
(in thousands, except percentages)	(in thousands, except percentages)							(in thousands, except percentages)
Outstanding at period-end	Outstanding at period-end	$	—		$	285,000		Outstanding at period-end	$	—		$	—
Average amount	Average amount	111,667			478,333			Average amount	16,750			83,750
Maximum amount outstanding at any month-end	Maximum amount outstanding at any month-end	300,000			600,000			Maximum amount outstanding at any month-end	50,500			300,000
Weighted average interest rate:	Weighted average interest rate:							Weighted average interest rate:
During period	During period	1.45		%	2.29		%	During period	0.64		%	1.45		%
End of period	End of period	—		%	1.93		%	End of period	—		%	—		%

9395

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 September 30,						Nine Months Ended September 30,							Three Months Ended June 30,						Six Months Ended June 30,
		2020			2019			2020			2019				2021			2020			2021			2020
(in thousands, except percentages and per share data)	(in thousands, except percentages and per share data)													(in thousands, except percentages and per share data)
Net income (loss)	Net income (loss)	$	1,702		$	11,931		$	(10,195)		$	37,859		Net income (loss)	$	15,962		$	(15,279)		$	30,421		$	(11,897)
Basic earnings (loss) per common share	Basic earnings (loss) per common share	0.04			0.28			(0.24)			0.89			Basic earnings (loss) per common share	0.43			(0.37)			0.81			(0.28)
Diluted earnings (loss) per common share (1)	Diluted earnings (loss) per common share (1)	0.04			0.28			(0.24)			0.88			Diluted earnings (loss) per common share (1)	0.42			(0.37)			0.81			(0.28)

Average total assets	Average total assets	$	8,082,913		$	7,917,404		$	8,060,606		$	7,948,746		Average total assets	$	7,680,491		$	8,148,199		$	7,714,039		$	8,049,526
Average stockholders' equity	Average stockholders' equity	833,156			814,163			842,803			787,171			Average stockholders' equity	789,640			852,040			786,631			847,875
Net income (loss) / Average total assets (ROA)	Net income (loss) / Average total assets (ROA)	0.08		%	0.60		%	(0.17)		%	0.64		%	Net income (loss) / Average total assets (ROA)	0.83		%	(0.75)		%	0.80		%	(0.30)		%
Net income (loss) / Average stockholders' equity (ROE)	Net income (loss) / Average stockholders' equity (ROE)	0.81		%	5.81		%	(1.62)		%	6.43		%	Net income (loss) / Average stockholders' equity (ROE)	8.11		%	(7.21)		%	7.80		%	(2.82)		%

Average stockholders' equity / Average total assets ratio	Average stockholders' equity / Average total assets ratio	10.31		%	10.28		%	10.46 %			9.90		%	Average stockholders' equity / Average total assets ratio	10.28		%	10.46		%	10.20		%	10.53		%

Adjusted net income (loss) (2)		$	3,163		$	12,923		$	(7,409)		$	41,731
Adjusted earnings (loss) per common share (2)		0.08			0.30			(0.18)			0.98
Adjusted earnings (loss) per diluted common share (2)		0.08			0.30			(0.18)			0.97

Adjusted net income (loss) / Average total assets (Adjusted ROA) (2)		0.16		%	0.65		%	(0.12)		%	0.70		%
Adjusted net income (loss) / Average stockholders' equity (Adjusted ROE) (2)		1.51		%	6.30		%	(1.17)		%	7.09		%

__________________

(1) ~~As of September~~In the second quarter and six months ended June 30, ~~2020 and 2019~~2021, potential dilutive instruments consisted of unvested shares of restricted stock, restricted stock units and performance share units (unvested shares of restricted stock and restricted stock units ~~mainly related to~~in the ~~Company’s IPO in 2018, totaling 478,587~~second quarter and ~~789,652, respectively. During the three~~six months ended ~~September~~June 30, ~~2020~~2020). 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 ~~2019, and the nine months ended September 30, 2019, potential dilutive instruments were included in the diluted~~restricted stock units on earnings per share ~~computation because, when~~for the ~~unamortized deferred compensation cost related to these shares was divided by the average market price per share in those~~three and six month 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,ended June 30, 2021 and had a dilutive effect in per share earnings. During the nine months ended September 30, 2020, potential dilutive instruments were not included in the diluted earnings per share computation because the Company reported a net loss and their inclusion would have an antidilutive effect.2020.

~~(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 non-GAAP financial measures to their GAAP counterparts.~~

During the three ~~months~~and six month periods ended ~~September~~June 30, ~~2020,~~2021, basic and diluted earnings per share ~~decreased~~increased as a result of ~~lower~~higher net income earned compared to the same ~~period~~periods one year ago. During the nine months ended September 30, 2020, basic and diluted loss per share is the result of the net loss recorded during the period. During the nine months ended September 30, 2019, basic and diluted earnings per share is the result of the net income earned in the period.

9496

Capital Resources and Liquidity Management

Capital ~~Resources.~~Resources

Stockholders’ equity is influenced primarily by earnings, dividends, if any, and changes in accumulated other comprehensive income (AOCI) caused primarily by fluctuations in unrealized holding gains or losses, net of taxes, on debt securities available for sale. AOCI is not included for purposes of determining our capital for bank regulatory purposes. Also, repurchases in connection with the existing and future plans.

~~Stockholders’~~Total stockholders’ equity ~~decreased $5.2 million, or 0.6%, to $829.5~~was $799.1 million as of ~~September~~June 30, ~~2020~~2021, an increase of $15.6 million, or 2.0%, compared to ~~$834.7~~$783.4 million as of December 31, ~~2019,~~2020. This increase was primarily ~~due to: (i) $10.2~~driven by $30.4 million of net ~~loss~~income attributable to the Company in the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021. This was partially offset by: (i) a $7.9 million decrease in AOCI, primarily as a result of lower valuation of the Company’s debt securities available for sale as a result of market increases in long-term yield curves and (ii) ~~$15.2 million~~the repurchase of shares of Class B common stock ~~completed~~totaling $8.4 million in the ~~first quarter~~six months ended June 30, 2021, under the 2021 Stock Repurchase Program. See discussion below for more details on the 2021 Stock Repurchase Program.

Non-controlling Interest

Non-controlling interests on the consolidated financial statements includes a 49% non-controlling interest of ~~2020. This~~Amerant Mortgage. The Company records net loss attributable to non-controlling interests in its condensed consolidated statement of operations equal to the percentage of the economic or ownership interest retained in the interest of Amerant Mortgage, and presents non-controlling interests as a component of stockholders’ equity on the consolidated balance sheets. As of June 30, 2021, non-controlling interest included as a reduction to total stockholders’ equity was ~~partially offset by~~$0.8 million, and a ~~$18.6~~net loss of $0.8 million ~~increase~~attributed to the non-controlling interest is presented in ~~AOCI resulting primarily from a higher valuation~~the statement of ~~debt securities available for sale compared to December 31, 2019.~~operations.

Class B Common Stock ~~Repurchase.~~ Repurchases and Cancellation of Treasury Shares

On ~~February 14~~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 ~~February 21, 2020,~~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 six months ended June 30, 2021, 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 932,459502,232 shares of Class B common stock ~~were recorded as treasury stock~~at a weighted average price per share of $16.71 under the ~~cost method.~~2021 Stock Repurchase Program. The ~~Company used available cash to fund~~aggregate purchase price for these ~~repurchases.~~

~~Cancellation of Treasury Shares~~.transactions was approximately $8.4 million, including transaction costs. In ~~March 2020,~~the six months ended June 30, 2021, the Company’s Board of Directors authorized the cancellation of ~~all 4,464,916~~those 502,232 shares of Class B ~~Common Stock previously held as treasury stock, including shares repurchased during 2018, 2019 and 2020, effective March 31, 2020.~~common stock.

Liquidity ~~Management.~~Management

At ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, the Company had ~~$1.05~~$0.82 billion and ~~$1.24~~$1.05 billion, respectively, of outstanding advances from the FHLB. At ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, we had an additional ~~$1.4~~$1.5 billion and ~~$1.1~~$1.3 billion, respectively, available borrowing capacity under FHLB facilities. ~~During~~In the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, the Company repaid ~~$885 million~~$0.5 billion of outstanding FHLB advances, ~~from the FHLB,~~ and borrowed ~~$700 million~~$0.3 billion from this source. There were no other borrowings as of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019.~~

~~The following table summarizes the composition of our FHLB advances by type of interest rate:~~

September 30, 2020 December 31, 2019
(in thousands)
Advances from the FHLB and other borrowings:
Fixed rate ranging from 0.62% to 2.42% (December 31, 2019 - 0.71% to 3.23%) (1) $ 1,050,000 $ 1,085,000
Floating rate three-month LIBOR ranging from 1.84% to 2.03% — 150,000
$ 1,050,000 $ 1,235,000

~~__________________~~

~~(1)As of September 30, 2020 and December 31, 2019, includes $530 million (fixed interest rate raging from 0.62% to 0.97%) in advances from the FHLB that are callable prior to maturity.~~

2020.

9597

~~At December 31, 2018, we had designated certain interest rate swaps as cash flow hedges to manage this variable interest rate exposure.~~ In ~~the first quarter of 2019,~~May 2021, the Company ~~terminated~~restructured $285 million of its fixed-rate FHLB advances. This restructuring consisted of changing the original maturity at lower interest rates. The new maturities of these ~~interest rate swap contracts. As a result, the~~FHLB advances range from 2 to 4 years compared to original maturities ranging from 2 to 8 years. The Company ~~received cash equal to the contracts’ fair value at the date~~incurred an early termination and modification penalty of ~~termination of approximately $8.9~~$6.6 million which ~~is recorded in AOCI. This amount~~was deferred and is being amortized over the ~~original remaining lives~~term of the ~~contracts~~new advances, as an ~~offset~~adjustment to ~~interest expense on~~ the ~~Company’s FHLB advances.~~yields. The ~~Company recorded a credit~~modifications were not considered substantial in accordance with GAAP. In addition, during the second quarter of approximately $1.0 million against interest expense on FHLB advances in the first nine months of 2020 ($0.9 million in the first nine months of 2019) and expects to record a credit of approximately $0.3 million in the rest of 2020.

~~In early April 2020,~~2021, the Company ~~restructured $420.0 million of its fixed-rate FHLB advances extending their original maturities from 2021 to 2023 at lower interest rates. The Company incurred~~had a loss of ~~$17.0~~$2.5 million ~~as a result~~on the early repayment of ~~the restructuring~~$235 million of FHLB advances which was ~~blended into the new interest rates~~recorded as part of ~~these advances, affecting the yields through their remaining maturities. The Company accounted for these~~noninterest income. These transactions ~~as the modification~~combined will represent annual savings of ~~existing debt in accordance with U.S. GAAP.~~approximately $3.6 million.

At September 30, 2020, advances from the FHLB had maturities through 2030 with interest rates ranging from 0.62% to 2.42%. We expect to continue taking FHLB funding, as needed, in short duration maturities.

We also ~~maintain~~have available uncommitted federal funds lines with several banks, and had ~~$115.0~~$80.0 million and ~~$65.0~~$70.0 million of availability under these lines at ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively.

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. The net proceeds, after direct issuance costs of $1.6 million, totaled $58.4 million. The Senior Notes are presented net of direct issuance costs in the consolidated financial statements. These costs are deferred and amortized over 5 years. The Senior Notes, which are fully and unconditionally guaranteed by the Company’s wholly-owned subsidiary, Amerant Florida Bancorp Inc., or Amerant Florida, provided the Company with a new source of funding as we continue to navigate the COVID-19 pandemic.

We and our subsidiary, Amerant Florida, are corporations separate and apart from the Bank and, therefore, must provide for our own liquidity. ~~Our~~Historically, our main source of funding ishas been dividends declared and paid to us and Amerant Florida by the ~~Bank.~~Bank, 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 ~~$99.3~~$28.5 million as of ~~September~~June 30, ~~2020~~2021 and ~~$57.8~~$43.0 million as of December 31, ~~2019,~~2020, in funds available to service its Senior Notes and for general corporate purposes, as a separate stand-alone entity. Our subsidiary, Amerant Florida, which is an intermediate bank holding company, the obligor on our junior subordinated debt and the guarantor of the Senior Notes, held cash and cash equivalents of ~~$18.8~~$17.3 million as of ~~September~~June 30, ~~2020~~2021 and ~~$48.9~~$16.6 million as of December 31, ~~2019,~~2020, in funds available to service its junior subordinated debt and for general corporate purposes, as a separate stand-alone entity. In the first quarter of 2020, we used $27.1 million of Amerant Florida’s cash to redeem the outstanding trust preferred securities issued by its Statutory Trust I and the related junior subordinated debt issued by Amerant Florida.

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.

~~COVID-19 Pandemic~~

Our deposits and wholesale funding operations, including advances from the FHLB, Senior Notes and other short-term borrowings, have historically supplied us with a significant source of liquidity. These sources have been sufficient to fund our operations while allowing us to invest in activities that support the long-term growth of our business. We evaluate our funding requirements on a regular basis to cover any potential shortfall in our ability to generate sufficient cash from operations to meet our capital requirements. We may consider funding alternatives to

provide additional liquidity when necessary. There is some uncertainty surrounding the potential impact of the COVID-19 outbreak on our results of operations and cash flows. As a result, we proactively took steps to increase cash available on-hand, including, but not limited to, the repositioning of our investment portfolio, and seeking to extend the duration of and reduce the cost on, our long-term debt, primarily advances from the FHLB. Cash and cash equivalents increased $105.8 million or 87.2% in the nine months ended September 30, 2020 attributable to higher balances at the Federal Reserve and include the net proceeds of $58.4 million from the aforementioned issuance of Senior Notes completed during the three months ended June 30, 2020. See —~~Cash and Cash Equivalents. In addition, in early April 2020, the Company modified maturities on $420.0 million fixed-rate FHLB advances. See earlier discussion in this section.~~

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. ~~This redemption reduced total cash~~See “Item 7. Management’s Discussion and ~~cash equivalents by $27.1 million, financial liabilities by $28.1 million, other assets by $3.4 million, and other liabilities by $2.2 million at that date. In addition,~~Analysis Of Financial Condition And Results Of Operations” included in the ~~Company recorded a charge of $0.3 million during the first quarter of 2020~~Form 10-K for ~~the unamortized issuance costs. This redemption reduced the Company’s Tier 1 equity capital at that date by a net of $24.7 million and pretax annual interest expense by $2.4 million.~~more details.

Dividends

There are statutory and regulatory limitations that affect the ability of the Bank to pay dividends to the Company. These limitations exclude the effects of AOCI. Management believes that these limitations will not affect the Company’s ability, and Amerant Florida’s ability, to meet their ongoing short-term cash obligations. See “Supervision and Regulation” in the Form ~~10-K~~10-K.

In July 2021, the Boards of Directors of the Bank and Amerant Florida approved the payment of cash dividends from the Bank and Amerant Florida to Amerant Bancorp, and declared dividend payments of: (i) $40.0 million from Amerant Florida to Amerant Bancorp, and (ii) $30.0 million from the Bank to Amerant Florida.

The Company has access to sufficient cash, dividends and borrowing capacity to fund its liquidity needs for ~~the year ended December 31, 2019.~~2021 and beyond.

9798

Regulatory Capital Requirements

~~Our~~The Company’s consolidated regulatory capital amounts and ratios are presented in the following table:


		Actual				Required for Capital Adequacy Purposes				Regulatory Minimums To be Well Capitalized					Actual			Required for Capital Adequacy Purposes				Regulatory Minimums To be Well Capitalized
(in thousands, except percentages)	(in thousands, except percentages)	Amount		Ratio		Amount		Ratio		Amount		Ratio		(in thousands, except percentages)	Amount		Ratio	Amount		Ratio		Amount		Ratio
September 30, 2020
June 30, 2021														June 30, 2021
Total capital ratio	Total capital ratio	$	923,671	14.56 %		$	507,596	8.00	%	$	634,495	10.00	%	Total capital ratio	$	901,160	14.17 %	$	508,766	8.00	%	$	635,957	10.00	%
Tier 1 capital ratio	Tier 1 capital ratio	843,873		13.30 %		380,697		6.00	%	507,596		8.00	%	Tier 1 capital ratio	821,336		12.92 %	381,574		6.00	%	508,766		8.00	%
Tier 1 leverage ratio	Tier 1 leverage ratio	843,873		10.52 %		321,008		4.00	%	401,260		5.00	%	Tier 1 leverage ratio	821,336		10.75 %	305,655		4.00	%	382,069		5.00	%
Common Equity Tier 1 (CET1)	Common Equity Tier 1 (CET1)	782,758		12.34 %		285,523		4.50	%	412,422		6.50	%	Common Equity Tier 1 (CET1)	760,257		11.95 %	286,181		4.50	%	413,372		6.50	%

December 31, 2019
December 31, 2020														December 31, 2020
Total capital ratio	Total capital ratio	$	945,310	14.78	%	$	511,760	8.00	%	$	639,699	10.00	%	Total capital ratio	$	876,966	13.96 %	$	502,463	8.00	%	$	628,078	10.00	%
Tier 1 capital ratio	Tier 1 capital ratio	891,913		13.94	%	383,820		6.00	%	511,760		8.00	%	Tier 1 capital ratio	798,033		12.71 %	376,847		6.00	%	502,463		8.00	%
Tier 1 leverage ratio	Tier 1 leverage ratio	891,913		11.32	%	315,055		4.00	%	393,819		5.00	%	Tier 1 leverage ratio	798,033		10.11 %	315,770		4.00	%	394,713		5.00	%
Common Equity Tier 1 (CET1)	Common Equity Tier 1 (CET1)	806,050		12.60	%	287,865		4.50	%	415,805		6.50	%	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
September 30, 2020
Total capital ratio $ 863,963 13.62 % $ 507,510 8.00 % $ 634,388 10.00 %
Tier 1 capital ratio 784,178 12.36 % 380,633 6.00 % 507,510 8.00 %
Tier 1 leverage ratio 784,178 9.77 % 320,907 4.00 % 401,133 5.00 %
Common Equity Tier 1 (CET1) 784,178 12.36 % 285,474 4.50 % 412,352 6.50 %
December 31, 2019
Total capital ratio $ 841,305 13.15 % $ 511,638 8.00 % $ 639,547 10.00 %
Tier 1 capital ratio 787,908 12.32 % 383,728 6.00 % 511,638 8.00 %
Tier 1 leverage ratio 787,908 10.01 % 314,800 4.00 % 393,500 5.00 %
Common Equity Tier 1 (CET1) 787,908 12.32 % 287,796 4.50 % 415,706 6.50 %

~~In the first nine months of 2020, the Company redeemed all $26.8 million of its outstanding 8.90% trust preferred capital securities issued by Capital Trust I.~~ ~~See~~ ~~“Capital Resources and Liquidity Management” for more detail on the redemption of trust preferred securities and related junior subordinated debt.~~


	Actual				Required for Capital Adequacy Purposes				Regulatory Minimums to be Well Capitalized
(in thousands, except percentages)	Amount		Ratio		Amount		Ratio		Amount		Ratio
June 30, 2021
Total capital ratio	$	909,897	14.32	%	$	508,429	8.00	%	$	635,536	10.00	%
Tier 1 capital ratio	830,125		13.06	%	381,322		6.00	%	508,429		8.00	%
Tier 1 leverage ratio	830,125		10.88	%	305,311		4.00	%	381,639		5.00	%
Common Equity Tier 1 (CET1)	830,125		13.06	%	285,991		4.50	%	413,098		6.50	%

December 31, 2020
Total capital ratio	$	873,152	13.91	%	$	502,214	8.00	%	$	627,768	10.00	%
Tier 1 capital ratio	794,257		12.65	%	376,661		6.00	%	502,214		8.00	%
Tier 1 leverage ratio	794,257		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	%

9899

The Board of Governors of the Federal Reserve System (the “Federal Reserve”), the Office of the Comptroller of the Currency (“OCC”), and the Federal Deposit Insurance Corporation (the “FDIC”, and collectively with the Federal Reserve and the OCC, the “Federal Banking Agencies”), published a final rule on July 22, 2019 that simplifies existing regulatory capital rules for non-advanced approaches institutions, such as the Company. Non-advanced approaches institutions will be permitted to implement the Capital Simplifications Final Rule as of its revised effective date in the quarter beginning January 1, 2020, or wait until the quarter beginning April 1, 2020. As of the date of implementation, the required deductions from regulatory capital CET1 elements for mortgage servicing assets (“MSAs”) and temporary difference deferred tax assets (“DTAs”) are only required to the extent these assets exceed 25% of CET1 capital elements, less any adjustments and deductions (the “CET1 Deduction Threshold”). MSAs and temporary difference DTAs that are not deducted from capital are assigned a 250% risk weight. Investments in the capital instruments of unconsolidated financial institutions are deducted from capital when these exceed the 25% CET1 Deduction Threshold. Minority interests in up to 10% of the parent banking organization’s CET1, Tier capital and total capital, after deductions and adjustments are permitted to be included in capital effective October 1, 2019. Also effective October 1, 2019, the final rule made various technical amendments, including reconciling a difference in the capital rules and the bank holding company rules that permits the redemption of bank holding company common stock without prior Federal Reserve approval under the capital rules. Such redemptions remain subject to other requirements, including the Bank Holding Company Act and Federal Reserve Regulation Y. The Company adopted these simplified capital rules during the first quarter of 2020 and had no material effect on the Company’s regulatory capital and ratios.

The Federal Banking Agencies issued final rules on October 29, 2019 that provide simplified capital measures, including a simplified measure of capital adequacy for qualifying community banking organizations consistent with section 201 of the Economic Growth, Regulatory Relief, and Consumer Protection Act (the “Growth Act”). Qualifying community banking organizations with less than $10 billion of assets that comply with, and elect to use, the community bank leverage ratio (“CBLR”) and that maintain a CBLR greater than 9% would be considered to be “well-capitalized” and would no longer be subject to the other generally applicable capital rules. The CBLR would be used and applied for purposes of compliance with the Federal Banking Agencies’ prompt corrective action rules, and Federal Reserve Regulation O and W compliance, as well as in calculating FDIC deposit insurance assessments. The CBLR, among other proposals, reflects the Federal banking agencies’ focus on appropriately tailoring capital requirements to an institution’s size, complexity and risk profile. The CBLR will first be available for banking organizations to use in their March 31, 2020 Call Report or Form FR Y-9C. Non-advanced approaches banking organizations will also be able to take advantage of simpler regulatory capital requirements for mortgage servicing assets, certain deferred tax assets arising from temporary differences and investments in unconsolidated financial institutions. As of March 31, 2020, the Company determined to opt out of adopting the new “community bank leverage ratio” given that the perceived benefits provided by the new regulation did not exceed the potential costs considering the Company’s current and projected size and operations.

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 1617 to our audited consolidated financial statements included in the Form ~~10-K for the year ended December 31, 2019.~~10-K.


(in thousands)	(in thousands)	September 30, 2020		December 31, 2019		(in thousands)	June 30, 2021		December 31, 2020
Commitments to extend credit	Commitments to extend credit	$	764,621	$	820,380	Commitments to extend credit	$	749,185	$	763,880

Letters of credit	Letters of credit	12,430		17,414		Letters of credit	11,282		11,157
		$	777,051	$	837,794		$	760,467	$	775,037

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. Set~~arrangements.Set forth below are ~~material~~significant changes to our existing contractual obligations previously disclosed in the Form 10-K. Other than the changes shown below, there have been no material changes to the contractual obligations previously disclosed in the Form ~~10-K~~

~~FHLB Advances Restructuring~~10-K.

In ~~early April 2020,~~May 2021, the Company restructured ~~$420.0~~$285 million of its fixed-rate FHLB ~~advances extending their~~advances. This restructuring consisted of changing the original ~~maturities from 2021 to 2023~~maturity at lower interest rates. The ~~Company incurred a loss of $17.0 million as a result of the restructuring which was blended into the~~ new ~~interest rates~~maturities of these FHLB advances ~~affecting~~range from 2 to 4 years compared to original maturities ranging from 2 to 8 years. In addition, during the ~~yields through their remaining maturities. The Company accounted for these transactions as the modification~~second quarter of ~~existing debt in accordance with U.S. GAAP.~~

~~Senior Notes Issuance~~

~~On June 23, 2020,~~2021, the Company ~~completed a $60.0~~repaid $235 million ~~offering~~ of ~~Senior Notes with a coupon rate of 5.75%~~FHLB advances. See “Capital Resources and due 2025. The net proceeds, after direct issuance costs of $1.6 million, totaled $58.4 million. The Senior Notes are presented net of direct issuance costs in the consolidated financial statements. These costs will be deferred and amortized over 5 years. The Senior Notes, which are fully and unconditionally guaranteed by the Company’s wholly-owned subsidiary, Amerant Florida, provided the Company with a new source of funding as we continue to navigate the COVID-19 pandemic.Liquidity Management” for additional information.

In the first half of 2021, total time deposits decreased by $408.5 million, or 20.0%, including decreases of $304.7 million, or 19.7%, in customer time deposits and $103.8 million, or 21.0%, in brokered time deposits, respectively. See “Deposits” for additional information.

Critical Accounting Policies and Estimates

For our critical accounting policies and estimates disclosure, see the Form 10-K where such matters are disclosed for the Company’s latest fiscal year ended December 31, ~~2019.~~2020.

The preparation of our consolidated financial statements in accordance with GAAP requires us to make estimates and judgments that affect our reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under current circumstances, results of which form the basis for making judgments about the carrying value of certain assets and liabilities that are not readily available from other sources. We evaluate our estimates on an ongoing basis. Actual results may differ from these estimates under different assumptions or conditions.

Accounting policies, as described in detail in the notes to our consolidated financial statements, are an integral part of those consolidated financial statements. A thorough understanding of these accounting policies is essential when reviewing our reported results of operations and our financial position. We believe that the critical accounting policies and estimates discussed below require us to make difficult, subjective or complex judgments about matters that are inherently uncertain. Changes in these estimates, that are likely to occur from period to period, or using different estimates that we could have reasonably used in the current period, would have a material impact on our financial position, results of operations or liquidity.

~~100~~

The three and nine months ended September 30, 2020 were characterized by heightened uncertainty due to the COVID-19 pandemic, which could impact estimates and assumptions made by management, especially with respect to the adequacy of the Company’s allowance for loan losses and the Company’s evaluation of goodwill for impairment.

~~Allowance for Loan Losses.~~ The allowance for loan losses represents an estimate of the current amount of principal that we will be unlikely to collect given facts and circumstances as of the evaluation date, and includes amounts arising from loans individually and collectively evaluated for impairment. Loan losses are charged against the allowance when we believe the un-collectability of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. We estimate the allowance balance required using past loan loss experience, the nature and volume of the portfolio, information about specific borrower situations and estimated collateral values, economic conditions, and other factors to ensure the current allowance balance is maintained at a reasonable level to provide for recognized and unrecognized but inherent losses in the loan portfolio. Allocations of the allowance are made for loans considered to be individually impaired, but the entire allowance is available for any loan that, in management’s judgment, should be charged-off. Amounts are charged-off when available information confirms that specific loans or portions thereof, are uncollectible. This methodology for determining charge-offs is applied consistently to each segment.

We determine a separate allowance for losses for each loan portfolio segment. The allowance for loan losses consists of specific and general reserves. Specific reserves relate to loans that are individually classified as impaired. A loan is impaired when, based on current information and events, it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreement. Factors considered in determining impairment include payment status, collateral value and the probability of collecting all amounts when due. Measurement of impairment is based on the excess of the carrying value of the loan over the present value of expected future cash flows at the measurement date, or the fair value of the collateral in the case where the loan is considered collateral-dependent. We select the measurement method on a loan-by-loan basis except that collateral-dependent loans for which foreclosure is probable are measured at the fair value of the collateral.

We recognize interest income on impaired loans based on our existing method of recognizing interest income on nonaccrual loans. Loans, generally classified as impaired loans, for which the terms have been modified resulting in a concession, and for which the borrower is experiencing financial difficulties, are considered TDRs with measurement of impairment as described above.

If a loan is impaired, a portion of the allowance is allocated so that the loan is reported, net, at the present value of estimated future cash flows using the loan’s effective interest rate or at the fair value of collateral if repayment is expected solely from the collateral.

~~101~~

General reserves cover non-individually-impaired loans and are based on historical loss rates for each loan portfolio segment, adjusted for the effects of qualitative factors that in management’s opinion are likely to cause estimated credit losses as of the evaluation date to differ from the portfolio segment’s historical loss experience. Qualitative factors include consideration of the following: changes in lending policies and procedures; changes in economic conditions, changes in the nature and volume of the portfolio; changes in the experience, ability and depth of lending management and other relevant staff; changes in the volume and severity of past due balances, nonaccrual and other adversely graded loans; changes in the loan review system; changes in the value of the underlying collateral for collateral-dependent loans; concentrations of credit and the effect of other external factors such as competition and legal and regulatory requirements, and beginning in the nine month period ended September 30, 2020, the probable deterioration in the loan portfolio as a result of the COVID-19 pandemic.

Concentrations of credit risk can affect the level of the allowance and may involve loans to one borrower, borrowers engaged in or dependent upon the same industry, or a group of borrowers whose loans are predicated on the same type of collateral. We are also subject to a geographic concentration of credit because we primarily operate in South Florida, the greater Houston, Texas area and the New York City area. In addition, during the three and nine months ended September 30, 2020, the evaluation of credit risk concentrations on our loan portfolio is subject to current economic conditions associated with the COVID-19 pandemic, especially on loans to borrowers in certain industries identified as being more sensitive to the negative impact of deteriorating economic conditions such as restaurants and hotels.

Our estimate for the allowance for loan losses is sensitive to the loss rates from our loan portfolio segments, and to our evaluation of uncertainties associated with current economic conditions derived from the COVID-19 pandemic. We believe the risk ratings, loss severities currently in use, and our evaluation of the uncertainties associated with current economic conditions derived from the COVID-19 pandemic are appropriate. The process of determining the level of the allowance for credit losses requires a high degree of judgment. It is possible that others, given the same information, may at any point in time reach different reasonable conclusions.

~~Goodwill.~~ Goodwill is evaluated for impairment at least annually and on an interim basis if an event or circumstance indicates that it is likely an impairment has occurred. Based on this evaluation, we concluded goodwill was not considered impaired as of December 31, 2019.

The Company considered events or circumstances indicators of potential goodwill impairment as of September 30, 2020, and concluded it was more likely than not that goodwill was not impaired at that date and, therefore, no impairment test was cosidered necessary. We apply significant judgment for interim and annual goodwill impairment testing purposes. Future negative changes may result in potential impairments of goodwill in future periods.

Determining the fair value of the reporting unit for goodwill impairment testing is considered a critical accounting estimate because it requires significant management judgment and the use of subjective measurements. Variability in the market and changes in assumptions or subjective measurements used to determine fair value are reasonably possible and may have a material impact on our financial position, liquidity or results of operations.

Recently Issued Accounting Pronouncements. ~~There~~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 to our unaudited interim consolidated financial statements in this Form 10-Q for more details on the new guidance on leases.

~~102~~

100

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 to our unaudited interim consolidated financial statements in this Form 10-Q for additional information.

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 effects 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. There have been no material changes in our market risk exposure as compared to those discussed in ~~our~~the Form 10-K, see Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” ~~and our quarterly report on Form 10-Q for the period ended June 30, 2020, see Part I, Item 3, “Quantitative and Qualitative Disclosures About Market Risk.”~~.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Company maintains a set of disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange 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 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 quarterly report on Form 10-Q to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

Changes in Internal Control Over Financial Reporting

There were no changes in our 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 Form 10-Q that has materially affected, or is reasonably likely to materially affect, our 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.

~~103~~101

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.

ITEM 1A. RISK FACTORS

~~In evaluating an investment~~For detailed information about certain risk factors that could materially affect our business, financial condition or future results see “Risk Factors” in Part I, Item 1A of the Form 10-K. Set forth below are material changes to our existing risk factors previously disclosed in the ~~Company's common stock, investors should consider carefully, among other things,~~Form 10-K. Other than the risk factor set forth below, there have been no material changes to the risk factors previously disclosed in ~~Part I, Item 1A~~the Form 10-K

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

From time to time, we may make or consider making minority investments in fintech and specialty finance companies. If we do so, we may not be able to influence the activities of companies in which we invest and may suffer losses due to these activities. For example, in June 2021, we made a $2.5 million equity investment in Marstone, a digital wealth management fintech company we have partnered with to provide digital wealth management and financial planning capabilities to new and existing customers. Minority investments involve risks, including the possibility that a company we invest in may experience financial difficulties, resulting in a negative impact on such investment, may have economic or business interests or goals which are inconsistent with ours, or may be in a position to take or block action in a manner contrary to our investment objectives or the increased possibility of default by, diminished liquidity or insolvency of, such company due to a sustained or general economic downturn. Minority investments present additional risks, including the potential disproportionate distraction to our management team relative to the potential financial benefit, the potential for a conflict of interest, and the damage to our reputation of associating with and investing in a brand that may take actions inconsistent with our values. In addition, although we may seek board representation in connection with certain investments, there is no assurance that such representation, if sought, will be obtained.

If the companies we invest in seek additional financing in the future to fund their growth strategies, these financing transactions may result in dilution to our ownership stakes and these transactions may occur at lower valuations than the investment transaction through which we acquired such ownership interest, which could significantly decrease the fair value of our ~~Annual Report on Form 10-K, for the year ended December 31, 2019,~~investment in those entities. We may also be unable to dispose of our minority investments within our contemplated time horizon or at all. Our inability to dispose of our minority investment in an entity or a downward adjustment to or impairment of an equity investment could adversely impact our results of operations and ~~Part II, Item 1A of the Company's Quarterly Reports on Form 10-Q for the quarters ended March 31, 2020 and June 30 2020, and in our other filings with the U.S. Securities and Exchange Commission.~~financial condition.

102

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table provides information regarding repurchases of the Company’s common stock by the Company during the three months ended June 30, 2021:


	(a)	(b)		(c)	(d)
Period	Total Number of Shares Purchased	Average 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
April 1 - April 30	139,835	$	16.19	139,835	$	35,881,847
May 1 - May 31	62,299	16.58		62,299	34,849,235
June 1 - June 30	184,061	17.62		184,061	31,605,307
Total	386,195	$	16.93	386,195	$	31,605,307

~~None.~~

(1) On March 10, 2021, the Company announced that its 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 June 30, 2021, under the 2021 Stock Repurchase Program, the Company had repurchased a total of $8.4 million or 502,232 shares of Class B common stock at a weighted average price of $16.71 per share.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

~~104~~103

ITEM 6. EXHIBITS


Exhibit Number			Description
3.3.			Amended and Restated Bylaws, as amended, of Amerant Bancorp Inc., effective July 22, 2021 (incorporated by reference to Exhibit 3.3 to Form 8-K , filed on July 21, 2021)
10.1			Separation Agreement and G eneral Release , dated June 30, 2021, between Amerant Bank, N.A., Amerant Bancorp Inc. and Alfonso Figueredo (incorporated by reference to Exhibit 10.1 to Form 8-K /A , filed on July 2, 2021).
31.1			Certification Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, As Adopted Pursuant To Section 302 of the Sarbanes-Oxley Act of 2002, by ~~Millar Wilson,~~Gerald P. Plush, Vice-Chairman, President and Chief Executive Officer.
31.2			Certification Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, As Adopted Pursuant To Section 302 of the Sarbanes-Oxley Act of 2002, by Carlos Iafigliola, Executive Vice President and Chief Financial Officer.
32.1			Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 of the Sarbanes-Oxley Act of 2002, by ~~Millar Wilson,~~Gerald P. Plush, Vice-Chairman, President and Chief Executive Officer. (*)
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 Carlos Iafigliola, Executive Vice President and Chief Financial Officer. (*)
101.INS			XBRL Instance Document
101.SCH			XBRL Taxonomy Extension Schema Document
101.CAL			XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB			XBRL Taxonomy Extension Label Linkbase Document
101.PRE			XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF			XBRL Taxonomy Extension Definition Linkbase Document
104			Cover Page Interactive Data (embedded within XBRL documents)

(*) Furnished herewith

~~105~~

104

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:

~~November 6, 2020~~July 30, 2021

By:

/s/ ~~Millar Wilson~~Gerald P. Plush

~~Millar Wilson~~Gerald P. Plush

Vice-Chairman, President and Chief Executive Officer

(Principal Executive Officer)

Date:

~~November 6, 2020~~July 30, 2021

By:

/s/ Carlos Iafigliola

Carlos Iafigliola

Executive ~~Vice President~~Vice-President and Chief Financial Officer

(Principal Financial Officer)

~~106~~105


	Three Months Ended September 30, 2019
(in thousands)	Real Estate		Commercial		Financial Institutions		Consumer and Others		Total
Balances at beginning of the period	$	21,900	$	25,824	$	60	$	9,620	$	57,404
Provision for (reversal of) loan losses	487		(388)		(2)		(1,597)		(1,500)
Loans charged-off
Domestic	0		(907)		0		(98)		(1,005)
International	0		0		0		(1,661)		(1,661)
Recoveries	0		190		0		212		402
Balances at end of the period	$	22,387	$	24,719	$	58	$	6,476	$	53,640


	Nine Months Ended September 30, 2019
(in thousands)	Real Estate		Commercial		Financial Institutions		Consumer and Others		Total
Balances at beginning of the period	$	22,778	$	30,018	$	445	$	8,521	$	61,762
(Reversal of) provision for loan losses	(391)		(3,065)		(387)		993		(2,850)
Loans charged-off
Domestic	0		(2,773)		0		(504)		(3,277)
International	0		(61)		0		(2,961)		(3,022)
Recoveries	0		600		0		427		1,027
Balances at end of the period	$	22,387	$	24,719	$	58	$	6,476	$	53,640


Program Detail	October 23, 2020		September 30, 2020		June 30, 2020		May 1, 2020
(in thousands)
90-day payment deferral; interest added to principal balance upon modification and continues to accrue each month	$	64,249	$	73,400	$	349,166	$	451,076
90-day interest payment deferral with no escrow payments	4,887		23,049		133,761		441,212
90-day interest payment deferral including escrow payments	2,614		4,748		150,464		196,809
180-day interest payment deferral	—		—		20,973		29,906
	$	71,750	$	101,197	$	654,364	$	1,119,003


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands, except per share amounts)	2020		2019		2020		2019

Total noninterest expenses	$	45,500	$	52,737	$	127,107	$	157,587
Less: restructuring costs (1):
Staff reduction costs	646		450		1,060		1,357
Digital transformation expenses	1,200		—		2,458		—
Rebranding costs	—		813		—		3,575

Total restructuring costs	1,846		1,263		3,518		4,932






Adjusted noninterest expenses	$	43,654	$	51,474	$	123,589	$	152,655

Net income (loss)	$	1,702	$	11,931	$	(10,195)	$	37,859
Plus after-tax restructuring costs:
Restructuring costs before income tax effect	1,846		1,263		3,518		4,932
Income tax effect	(385)		(271)		(732)		(1,060)
Total after-tax restructuring costs	1,461		992		2,786		3,872




Adjusted net income (loss)	$	3,163	$	12,923	$	(7,409)	$	41,731

Net income (loss)	$	1,702	$	11,931	$	(10,195)	$	37,859
Plus: income tax expense (benefit)	438		3,268		(2,677)		10,369
Plus: provision for (reversal of) loan losses	18,000		(1,500)		88,620		(2,850)
Less: securities gains, net	8,600		906		25,957		1,902
Operating income	$	11,540	$	12,793	$	49,791	$	43,476

Basic earnings (loss) per share	$	0.04	$	0.28	$	(0.24)	$	0.89
Plus: after tax impact of restructuring costs	0.04		0.02		0.06		0.09

Total adjusted basic earnings (loss) per common share	$	0.08	$	0.30	$	(0.18)	$	0.98

Diluted earnings (loss) per share (2)	$	0.04	$	0.28	$	(0.24)	$	0.88
Plus: after tax impact of restructuring costs	0.04		0.02		0.06		0.09

Total adjusted diluted earnings (loss) per common share	$	0.08	$	0.30	$	(0.18)	$	0.97