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 June 30, ~~2021~~2022

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

For the transition period from __________ to __________

Commission File Number: 001-38534

Amerant Bancorp ~~Inc.~~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)
N/A
(Former name, former address and former fiscal year, if changed since last ~~report: N/A)~~report)

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


Title of each class	Trading ~~Symbols~~Symbol (s)	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 ýNo ¨

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes☒ No ☐

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”~~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 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 ☒

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 ~~Outstanding as of~~ July ~~26, 2021~~28, 2022
Class A Common Stock, $0.10 par value per share						~~29,010,321~~33,776,579 shares of Class A Common Stock
~~Class B Common Stock, $0.10 par value per share~~						~~8,471,120 shares of Class B Common Stock~~

AMERANT BANCORP INC. AND SUBSIDIARIES

FORM 10-Q

June 30, ~~2021~~2022

INDEX


		Page
PART I.	FINANCIAL INFORMATION
Item 1	Financial Statements	43
	Consolidated Balance Sheets as of June 30 ~~2021~~, 2022 (Unaudited) and December 31, ~~2020~~2021	43
	Consolidated Statements of Operations and Comprehensive (Loss) Income for the three and six month periods ended June 30, ~~2021~~2022 and ~~2020~~2021 (Unaudited)	54
	Consolidated Statements of Changes in Stockholders’ Equity for the three and six month periods ended June 30, ~~2021~~2022 and ~~2020~~2021 (Unaudited)	76
	Consolidated Statements of Cash Flows for ~~the~~ six months ended June 30, ~~2021~~2022 and ~~2020~~2021 (Unaudited)	98
	Notes to Interim Consolidated Financial Statements (Unaudited)	1116

















Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4650
	Cautionary Notice Regarding Forward-Looking Statements	4650
	Overview	5054
	Results of Operations	5966
	Financial Condition	7989
Item 3	Quantitative and Qualitative Disclosures About Market Risk	~~101~~111
Item 4	Controls and Procedures	~~101~~115
PART II	OTHER INFORMATION
Item 1	Legal Proceedings	~~102~~116
Item 1A	Risk Factors	~~102~~116
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	~~103~~117
Item 3	Defaults Upon Senior Securities	~~103~~117
Item 4	Mine Safety Disclosures	~~103~~117
Item 5	Other Information	~~103~~117
Item 6	Exhibits	~~104~~118
	Signatures	~~105~~119

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) June 30, 2021		December 31, 2020		(in thousands, except share data)	(Unaudited) June 30, 2022		December 31, 2021

Assets	Assets					Assets
Cash and due from banks	Cash and due from banks	$	45,198	$	30,179	Cash and due from banks	$	29,217	$	33,668
Interest earning deposits with banks	Interest earning deposits with banks	126,314		184,207		Interest earning deposits with banks	303,030		240,540
Restricted cash						Restricted cash	21,808		—
Cash and cash equivalents	Cash and cash equivalents	171,512		214,386		Cash and cash equivalents	354,055		274,208
Securities	Securities					Securities
Debt securities available for sale	Debt securities available for sale	1,194,068		1,225,083		Debt securities available for sale	1,124,801		1,175,319
Debt securities held to maturity	Debt securities held to maturity	93,311		58,127		Debt securities held to maturity	238,621		118,175
Trading securities	Trading securities	198		0		Trading securities	103		—
Equity securities with readily determinable fair value not held for trading	Equity securities with readily determinable fair value not held for trading	23,988		24,342		Equity securities with readily determinable fair value not held for trading	10,767		252
Federal Reserve Bank and Federal Home Loan Bank stock	Federal Reserve Bank and Federal Home Loan Bank stock	47,675		65,015		Federal Reserve Bank and Federal Home Loan Bank stock	48,187		47,495
Securities	Securities	1,359,240		1,372,567		Securities	1,422,479		1,341,241
Mortgage loans held for sale (at fair value)		1,775		0
Loans held for sale, at lower of cost or fair value						Loans held for sale, at lower of cost or fair value	66,390		143,195
Mortgage loans held for sale, at fair value						Mortgage loans held for sale, at fair value	54,863		14,905
Loans held for investment, gross	Loans held for investment, gross	5,606,773		5,842,337		Loans held for investment, gross	5,726,131		5,409,440
Less: Allowance for loan losses	Less: Allowance for loan losses	104,185		110,902		Less: Allowance for loan losses	52,027		69,899
Loans held for investment, net	Loans held for investment, net	5,502,588		5,731,435		Loans held for investment, net	5,674,104		5,339,541
Bank owned life insurance	Bank owned life insurance	220,271		217,547		Bank owned life insurance	225,682		223,006
Premises and equipment, net	Premises and equipment, net	108,708		109,990		Premises and equipment, net	39,091		37,860
Deferred tax assets, net	Deferred tax assets, net	13,516		11,691		Deferred tax assets, net	33,265		11,301
Operating lease right-of-use assets						Operating lease right-of-use assets	139,358		141,139
Goodwill	Goodwill	19,506		19,506		Goodwill	19,506		19,506
Accrued interest receivable and other assets	Accrued interest receivable and other assets	135,728		93,771		Accrued interest receivable and other assets	122,449		92,497
Total assets	Total assets	$	7,532,844	$	7,770,893	Total assets	$	8,151,242	$	7,638,399
Liabilities and Stockholders' Equity	Liabilities and Stockholders' Equity					Liabilities and Stockholders' Equity
Deposits	Deposits					Deposits
Demand	Demand					Demand
Noninterest bearing	Noninterest bearing	$	1,065,622	$	872,151	Noninterest bearing	$	1,298,954	$	1,183,251
Interest bearing	Interest bearing	1,293,626		1,230,054		Interest bearing	2,019,661		1,507,441
Savings and money market	Savings and money market	1,682,619		1,587,876		Savings and money market	1,629,830		1,602,339
Time	Time	1,633,041		2,041,562		Time	1,254,409		1,337,840
Total deposits	Total deposits	5,674,908		5,731,643		Total deposits	6,202,854		5,630,871
Advances from the Federal Home Loan Bank	Advances from the Federal Home Loan Bank	808,614		1,050,000		Advances from the Federal Home Loan Bank	830,524		809,577
Senior notes	Senior notes	58,736		58,577		Senior notes	59,052		58,894
Subordinated notes						Subordinated notes	29,199		—
Junior subordinated debentures held by trust subsidiaries	Junior subordinated debentures held by trust subsidiaries	64,178		64,178		Junior subordinated debentures held by trust subsidiaries	64,178		64,178
Operating lease liabilities						Operating lease liabilities	137,808		136,595
Accounts payable, accrued liabilities and other liabilities	Accounts payable, accrued liabilities and other liabilities	127,340		83,074		Accounts payable, accrued liabilities and other liabilities	116,177		106,411
Total liabilities	Total liabilities	6,733,776		6,987,472		Total liabilities	7,439,792		6,806,526
Contingencies (Note 16)		0		0
Contingencies (Note 17)						Contingencies (Note 17)	0		0

Stockholders’ equity	Stockholders’ equity					Stockholders’ equity
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)		853		904
Class A common stock, $0.10 par value, 250 million shares authorized; 33,759,604 shares issued and outstanding (2021 - 35,883,320 shares issued and outstanding)						Class A common stock, $0.10 par value, 250 million shares authorized; 33,759,604 shares issued and outstanding (2021 - 35,883,320 shares issued and outstanding)	3,375		3,589

Additional paid in capital	Additional paid in capital	299,547		305,569		Additional paid in capital	190,337		262,510

Retained earnings	Retained earnings	472,823		442,402		Retained earnings	570,588		553,167
Accumulated other comprehensive income		23,758		31,664
Accumulated other comprehensive (loss) income						Accumulated other comprehensive (loss) income	(50,959)		15,217
Total stockholders' equity before noncontrolling interest	Total stockholders' equity before noncontrolling interest	799,885		783,421		Total stockholders' equity before noncontrolling interest	713,341		834,483
Noncontrolling interest	Noncontrolling interest	(817)		0		Noncontrolling interest	(1,891)		(2,610)
Total stockholders' equity	Total stockholders' equity	799,068		783,421		Total stockholders' equity	711,450		831,873
Total liabilities and stockholders' equity	Total liabilities and stockholders' equity	$	7,532,844	$	7,770,893	Total liabilities and stockholders' equity	$	8,151,242	$	7,638,399

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 June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	(in thousands)	2021		2020		2021		2020		(in thousands)	2022		2021		2022		2021
Interest income	Interest income									Interest income
Loans	Loans	$	53,612	$	53,483	$	106,383	$	113,271	Loans	$	61,514	$	53,612	$	117,852	$	106,383
Investment securities	Investment securities	7,499		10,628		15,006		21,693		Investment securities	9,135		7,499		17,763		15,006
Interest earning deposits with banks	Interest earning deposits with banks	62		56		113		518		Interest earning deposits with banks	518		62		650		113
Total interest income	Total interest income	61,173		64,167		121,502		135,482		Total interest income	71,167		61,173		136,265		121,502

Interest expense	Interest expense									Interest expense
Interest bearing demand deposits	Interest bearing demand deposits	123		104		236		239		Interest bearing demand deposits	1,034		123		1,324		236
Savings and money market deposits	Savings and money market deposits	945		1,569		1,925		4,835		Savings and money market deposits	1,365		945		2,110		1,925
Time deposits	Time deposits	6,327		12,406		13,687		25,890		Time deposits	4,503		6,327		8,784		13,687
Advances from the Federal Home Loan Bank	Advances from the Federal Home Loan Bank	2,255		3,110		5,013		7,522		Advances from the Federal Home Loan Bank	3,341		2,255		5,822		5,013
Senior notes	Senior notes	942		84		1,884		84		Senior notes	942		942		1,884		1,884
Subordinated notes										Subordinated notes	361		—		449		—
Junior subordinated debentures	Junior subordinated debentures	609		571		1,216		1,360		Junior subordinated debentures	676		609		1,302		1,216
Securities sold under agreements to repurchase	Securities sold under agreements to repurchase	1		0		1		0		Securities sold under agreements to repurchase	—		1		—		1
Total interest expense	Total interest expense	11,202		17,844		23,962		39,930		Total interest expense	12,222		11,202		21,675		23,962
Net interest income	Net interest income	49,971		46,323		97,540		95,552		Net interest income	58,945		49,971		114,590		97,540
(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		54,971		(2,297)		102,540		24,932
Provision for (reversal of) loan losses										Provision for (reversal of) loan losses	—		(5,000)		(10,000)		(5,000)
Net interest income after provision for (reversal of) loan losses										Net interest income after provision for (reversal of) loan losses	58,945		54,971		124,590		102,540

Noninterest income	Noninterest income									Noninterest income
Deposits and service fees	Deposits and service fees	4,284		3,438		8,390		7,728		Deposits and service fees	4,577		4,284		9,197		8,390
Brokerage, advisory and fiduciary activities	Brokerage, advisory and fiduciary activities	4,431		4,325		9,034		8,458		Brokerage, advisory and fiduciary activities	4,439		4,431		9,035		9,034
Loan-level derivative income										Loan-level derivative income	1,009		1,293		4,161		1,525
Change in cash surrender value of bank owned life insurance	Change in cash surrender value of bank owned life insurance	1,368		1,427		2,724		2,841		Change in cash surrender value of bank owned life insurance	1,334		1,368		2,676		2,724
Securities gains, net		1,329		7,737		3,911		17,357
Securities (losses) gains, net										Securities (losses) gains, net	(2,602)		1,329		(1,833)		3,911
Cards and trade finance servicing fees	Cards and trade finance servicing fees	388		273		727		668		Cards and trade finance servicing fees	508		388		1,098		727
Loss on early extinguishment of advances from the Federal Home Loan Bank, net		(2,488)		(66)		(2,488)		(73)

Gain (loss) on early extinguishment of advances from the Federal Home Loan Bank, net										Gain (loss) on early extinguishment of advances from the Federal Home Loan Bank, net	2		(2,488)		(712)		(2,488)
Derivative gains (losses), net										Derivative gains (losses), net	855		—		(490)		—
Other noninterest income	Other noninterest income	6,422		2,619		7,599		4,684		Other noninterest income	2,809		5,129		3,824		6,074
Total noninterest income	Total noninterest income	15,734		19,753		29,897		41,663		Total noninterest income	12,931		15,734		26,956		29,897

Noninterest expense	Noninterest expense									Noninterest expense
Salaries and employee benefits	Salaries and employee benefits	30,796		21,570		57,223		50,896		Salaries and employee benefits	30,212		30,796		60,615		57,223
Occupancy and equipment	Occupancy and equipment	5,342		4,220		9,830		8,023		Occupancy and equipment	7,760		5,342		14,485		9,830
Telecommunication and data processing	Telecommunication and data processing	3,515		3,157		7,242		6,621		Telecommunication and data processing	3,214		3,515		7,252		7,242
Professional and other services fees	Professional and other services fees	4,693		3,965		8,477		6,919		Professional and other services fees	6,746		4,693		13,928		8,477
Advertising expenses										Advertising expenses	3,253		827		6,225		1,143
Other real estate owned valuation expense										Other real estate owned valuation expense	3,174		—		3,174		—
Depreciation and amortization	Depreciation and amortization	1,872		1,960		3,658		3,919		Depreciation and amortization	1,294		1,872		2,446		3,658
FDIC assessments and insurance	FDIC assessments and insurance	1,702		1,240		3,457		2,358		FDIC assessments and insurance	1,526		1,702		2,922		3,457
Loans held for sale valuation (reversal) expense										Loans held for sale valuation (reversal) expense	(300)		—		159		—
Contract termination costs										Contract termination costs	2,802		—		6,814		—
Other operating expenses	Other operating expenses	3,205		628		4,863		2,871		Other operating expenses	2,560		2,378		5,039		3,720
Total noninterest expenses	Total noninterest expenses	51,125		36,740		94,750		81,607		Total noninterest expenses	62,241		51,125		123,059		94,750
Income (loss) before income tax expense (benefit)		19,580		(19,284)		37,687		(15,012)
Income tax (expense) benefit		(4,435)		4,005		(8,083)		3,115
Net income (loss) before attribution of noncontrolling interest		15,145		(15,279)		29,604		(11,897)
Income before income tax expense										Income before income tax expense	9,635		19,580		28,487		37,687
Income tax expense										Income tax expense	(2,033)		(4,435)		(6,011)		(8,083)
Net income before attribution of noncontrolling interest										Net income before attribution of noncontrolling interest	7,602		15,145		22,476		29,604
Noncontrolling interest	Noncontrolling interest	(817)		0		(817)		0		Noncontrolling interest	(72)		(817)		(1,148)		(817)
Net income (loss) attributable to Amerant Bancorp Inc.		$	15,962	$	(15,279)	$	30,421	$	(11,897)
Net income attributable to Amerant Bancorp Inc.										Net income attributable to Amerant Bancorp Inc.	$	7,674	$	15,962	$	23,624	$	30,421

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 June 30, Six Months Ended June 30,
(in thousands, except per share data) 2021 2020 2021 2020
Other comprehensive income (loss), net of tax
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 (29) (160) 7 (1,674)
Reclassification adjustment for items included in net income (1,059) (5,591) (3,384) (12,896)
Other comprehensive income (loss) 3,849 3,610 (7,906) 21,493
Comprehensive income (loss) $ 19,811 $ (11,669) $ 22,515 $ 9,596
Earnings Per Share (Note 18):
Basic earnings (loss) per common share $ 0.43 $ (0.37) $ 0.81 $ (0.28)
Diluted earnings (loss) per common share $ 0.42 $ (0.37) $ 0.81 $ (0.28)


	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands, except per share data)	2022		2021		2022		2021

Other comprehensive loss, net of tax
Net unrealized holding (losses) gains on debt securities available for sale arising during the period	$	(26,442)	$	4,937	$	(66,079)	$	(4,529)
Net unrealized holding gains (losses) on cash flow hedges arising during the period	54		(29)		178		7
Reclassification adjustment for items included in net income	(147)		(1,059)		(275)		(3,384)
Other comprehensive (loss) income	(26,535)		3,849		(66,176)		(7,906)
Comprehensive (loss) income	$	(18,861)	$	19,811	$	(42,552)	$	22,515

Earnings Per Share (Note 19):
Basic earnings per common share	$	0.23	$	0.43	$	0.69	$	0.81
Diluted earnings per common share	$	0.23	$	0.42	$	0.68	$	0.81

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 Six Month Periods Ended June 30, ~~2021~~2022

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) Shares Outstanding Issued Shares - Par Value
Class A Class B Class A Class B
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 — (116,037) — — — (1,855) — — (1,855) — (1,855)
Treasury stock retired — — — (12) (1,843) 1,855 — — 0 — 0
Restricted stock issued 196,015 — 22 — (22) — — — 0 — 0
Restricted stock surrendered (713) — — — (13) — — — (13) — (13)
Stock-based compensation expense — — — — 757 — — — 757 — 757
Net income attributable to Amerant Bancorp Inc. — — — — — — 14,459 — 14,459 — 14,459
Other comprehensive loss — — — — — — — (11,755) (11,755) — (11,755)
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 — (386,195) — — — (6,540) — — (6,540) — (6,540)
Treasury stock retired — — — (39) (6,501) 6,540 — — 0 — 0
Restricted stock forfeited (7,270) — (2) — 2 — — — 0 — 0
Restricted stock units vested 33,780 — 2 — (2) — — — 0 — 0
Performance share units vested 1,729 — — — — — — — 0 — 0
Restricted stock surrendered (1,213) — — — (26) — — — (26) — (26)
Stock-based compensation expense — — — — 1,626 — — — 1,626 — 1,626
Net income attributable to Amerant Bancorp Inc. — — — — — — 15,962 — 15,962 — 15,962
Net loss attributable to noncontrolling-interest shareholders — — — — — — — — 0 (817) (817)
Other comprehensive income — — — — — — — 3,849 3,849 — 3,849
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


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

Balance at December 31, 2021	35,883,320		$	3,589			$	262,510		$	—		$	553,167		$	15,217		$	834,483		$	(2,610)	$	831,873

Repurchase of Class A common stock	(1,643,480)		—				—			(54,820)			—			—			(54,820)			—		(54,820)
Treasury stock retired	—		(165)				(54,655)			54,820			—			—			—			—		—
Restricted stock issued	104,762		10				(10)			—			—			—			—			—		—
Restricted stock surrendered	(15,174)		(2)				(994)			—			—			—			(996)			—		(996)
Restricted stock forfeited	(1,000)		—				—			—			—			—			—			—		—
Restricted stock units vested	22,394		2				(2)			—			—			—			—			—		—
Stock-based compensation expense	—		—				1,260			—			—			—			1,260			—		1,260
Net income attributable to Amerant Bancorp Inc.	—		—				—			—			15,950			—			15,950			—		15,950
Dividends paid	—		—				—			—			(3,154)			—			(3,154)			—		(3,154)
Net loss attributable to noncontrolling-interest shareholders	—		—				—			—			—			—			—			(1,076)		(1,076)
Other comprehensive loss	—		—				—			—			—			(39,641)			(39,641)			—		(39,641)
Balance at March 31, 2022	34,350,822		$	3,434			$	208,109		$	—		$	565,963		$	(24,424)		$	753,082		$	(3,686)	$	749,396
Repurchase of Class A common stock	(611,525)		—				—			(17,240)			—			—			(17,240)			—		(17,240)
Treasury stock retired	—		(61)				(17,179)			17,240			—			—			—			—		—
Restricted stock issued	37,938		4				(4)			—			—			—			—			—		—
Restricted stock forfeited	(28,586)		(3)				3			—			—			—			—			—		—
Restricted stock units vested	10,955		1				(1)			—			—			—			—			—		—
Stock-based compensation expense	—		—				1,276			—			—			—			1,276			—		1,276
Net income attributable to Amerant Bancorp Inc.	—		—				—			—			7,674			—			7,674			—		7,674
Dividends paid	—		—				—			—			(3,049)			—			(3,049)			—		(3,049)
Transfer of subsidiary shares from noncontrolling interest	—		—				(1,867)			—			—			—			(1,867)			1,867		—
Net loss attributable to noncontrolling-interest shareholders	—		—				—			—			—			—			—			(72)		(72)
Other comprehensive loss	—		—				—			—			—			(26,535)			(26,535)			—		(26,535)
Balance at June 30, 2022	33,759,604		$	3,375			$	190,337		$	—		$	570,588		$	(50,959)		$	713,341		$	(1,891)	$	711,450

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 Six Month Periods Ended June 30, ~~2020~~2021

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


	Common Stock						Additional Paid in Capital		Treasury Stock		Retained Earnings		Accumulated Other Comprehensive Income (loss)		Total Stockholders' Equity Before Noncontrolling Interest		Noncontrolling interest		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, 2020	28,806,344	9,036,352	$	2,882	$	904	$	305,569	$	—	$	442,402	$	31,664	$	783,421	$	—	$	783,421

Repurchase of Class B common stock	—	(116,037)	—		—		—		(1,855)		—		—		(1,855)		—		(1,855)
Treasury stock retired	—	—	—		(12)		(1,843)		1,855		—		—		—		—		—
Restricted stock issued	196,015	—	22		—		(22)		—		—		—		—		—		—
Restricted stock surrendered	(713)	—	—		—		(13)		—		—		—		(13)		—		(13)


Stock-based compensation expense	—	—	—		—		757		—		—		—		757		—		757
Net income	—	—	—		—		—		—		14,459		—		14,459		—		14,459
Other comprehensive loss	—	—	—		—		—		—		—		(11,755)		(11,755)		—		(11,755)
Balance at March 31, 2021	29,001,646	8,920,315	$	2,904	$	892	$	304,448	$	—	$	456,861	$	19,909	$	785,014	$	—	$	785,014
Repurchase of Class B common stock	—	(386,195)	—		—		—		(6,540)		—		—		(6,540)		—		(6,540)
Treasury stock retired	—	—	—		(39)		(6,501)		6,540		—		—		—		—		—
Restricted stock forfeited	(7,270)	—	(2)		—		2		—		—		—		—		—		—
Restricted stock units vested	33,780	—	2		—		(2)		—		—		—		—		—		—
Performance share units vested	1,729	—	—		—		—		—		—		—		—		—		—
Restricted stock surrendered	(1,213)	—	—		—		(26)		—		—		—		(26)		—		(26)
Stock-based compensation expense	—	—	—		—		1,626		—		—		—		1,626		—		1,626
Net income attributable to Amerant Bancorp Inc.	—	—	—		—		—		—		15,962		—		15,962		—		15,962
Net loss attributable to noncontrolling-interest shareholders	—	—	—		—		—		—		—		—		—		(817)		(817)

Other comprehensive income	—	—	—		—		—		—		—		3,849		3,849		—		3,849
Balance at June 30, 2021	29,028,672	8,534,120	$	2,904	$	853	$	299,547	$	—	$	472,823	$	23,758	$	799,885	$	(817)	$	799,068

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)


		Six Months Ended June 30,					Six Months Ended June 30,
(in thousands)	(in thousands)	2021		2020		(in thousands)	2022		2021
Cash flows from operating activities	Cash flows from operating activities					Cash flows from operating activities
Net income (loss) before attribution of noncontrolling interest		$	29,604	$	(11,897)
Net income before attribution of noncontrolling interest						Net income before attribution of noncontrolling interest	$	22,476	$	29,604

Adjustments to reconcile net income (loss) to net cash provided by operating activities
(Reversal of) provision for loan losses		(5,000)		70,620
Adjustments to reconcile net income to net cash (used in) provided by operating activities						Adjustments to reconcile net income to net cash (used in) provided by operating activities
Reversal of loan losses						Reversal of loan losses	(10,000)		(5,000)
Net premium amortization on securities	Net premium amortization on securities	6,999		7,448		Net premium amortization on securities	4,587		6,999
Depreciation and amortization	Depreciation and amortization	3,658		3,919		Depreciation and amortization	2,446		3,658
Stock-based compensation expense	Stock-based compensation expense	2,383		1,142		Stock-based compensation expense	2,536		2,383
Change in cash surrender value of bank owned life insurance	Change in cash surrender value of bank owned life insurance	(2,724)		(2,841)		Change in cash surrender value of bank owned life insurance	(2,676)		(2,724)
Securities gains, net		(3,911)		(17,357)

Gains on sale of loans, net		(3,806)		0
Securities losses (gains), net						Securities losses (gains), net	1,833		(3,911)
Derivative losses, net						Derivative losses, net	490		—
Loss (gain) on sale of loans, net						Loss (gain) on sale of loans, net	302		(3,824)
Deferred taxes and others	Deferred taxes and others	1,225		(16,934)		Deferred taxes and others	4,737		1,200
Loss on early extinguishment of advances from the FHLB, net	Loss on early extinguishment of advances from the FHLB, net	2,488		73		Loss on early extinguishment of advances from the FHLB, net	712		2,488
Net increase in mortgage loans held for sale (at fair value)		(1,775)		0
Proceeds from sales and repayments of loans held for sale (at fair value)						Proceeds from sales and repayments of loans held for sale (at fair value)	74,999		899
Originations and purchases of loans held for sale (at fair value)						Originations and purchases of loans held for sale (at fair value)	(130,748)		(2,631)
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	(1,224)		(6,551)		Accrued interest receivable and other assets	(14,117)		(1,224)
Accounts payable, accrued liabilities and other liabilities	Accounts payable, accrued liabilities and other liabilities	4,103		(652)		Accounts payable, accrued liabilities and other liabilities	(6,321)		4,103
Net cash provided by operating activities		32,020		26,970
Net cash (used in) provided by operating activities						Net cash (used in) provided by operating activities	(48,744)		32,020

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	(214,273)		(293,027)		Available for sale	(169,383)		(214,273)
Held to maturity securities	Held to maturity securities	(50,274)		0		Held to maturity securities	(129,996)		(50,274)

Equity securities with readily determinable fair value not held for trading						Equity securities with readily determinable fair value not held for trading	(12,656)		—
Federal Home Loan Bank stock	Federal Home Loan Bank stock	(19)		(8,538)		Federal Home Loan Bank stock	(15,199)		(19)
		(264,566)		(301,565)			(327,234)		(264,566)
Maturities, sales, calls and paydowns 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	232,518		383,073		Available for sale	127,125		232,518
Held to maturity	Held to maturity	14,733		7,886		Held to maturity	9,200		14,733
Federal Home Loan Bank stock	Federal Home Loan Bank stock	17,360		16,486		Federal Home Loan Bank stock	14,507		17,360
Equity securities with readily determinable fair value not held for trading						Equity securities with readily determinable fair value not held for trading	252		—
							151,084		264,611
		264,611		407,445
Net decrease (increase) in loans		131,882		(146,318)
Net (increase) decrease in loans						Net (increase) decrease in loans	(302,056)		131,882
Proceeds from loan sales	Proceeds from loan sales	105,771		15,235		Proceeds from loan sales	70,132		105,771

Net purchases of premises and equipment and others	Net purchases of premises and equipment and others	(2,268)		(3,331)		Net purchases of premises and equipment and others	(4,493)		(2,268)
Cash paid in business acquisition	Cash paid in business acquisition	(1,037)		0		Cash paid in business acquisition	—		(1,037)
Net cash provided by (used in) investing activities		234,393		(28,534)
Net cash (used in) provided by investing activities						Net cash (used in) provided by investing activities	(412,567)		234,393

Cash flows from financing activities	Cash flows from financing activities					Cash flows from financing activities
Net increase in demand, savings and money market accounts	Net increase in demand, savings and money market accounts	351,786		253,821		Net increase in demand, savings and money market accounts	655,414		351,786
Net (decrease) increase in time deposits		(408,521)		13,738
Net decrease in time deposits						Net decrease in time deposits	(83,431)		(408,521)

Proceeds from Advances from the Federal Home Loan Bank	Proceeds from Advances from the Federal Home Loan Bank	285,500		700,000		Proceeds from Advances from the Federal Home Loan Bank	580,000		285,500
Repayments of Advances from the Federal Home Loan Bank	Repayments of Advances from the Federal Home Loan Bank	(529,618)		(885,073)		Repayments of Advances from the Federal Home Loan Bank	(560,712)		(529,618)
Proceeds from issuance of Senior Notes, net of issuance costs		0		58,412
Proceeds from issuance of subordinated notes, net of issuance costs						Proceeds from issuance of subordinated notes, net of issuance costs	29,146		—
Repurchase of common stock - Class A						Repurchase of common stock - Class A	(72,060)		—

Redemption of junior subordinated debentures		0		(28,068)
Dividend paid						Dividend paid	(6,203)		—

Repurchase of common stock - Class B	Repurchase of common stock - Class B	(8,395)		(15,239)		Repurchase of common stock - Class B	—		(8,395)
Common stock retired to cover tax withholding		(39)		(2)
Net cash (used in) provided by financing activities		(309,287)		97,589
Net increase in cash and cash equivalents		(42,874)		96,025
Common stock surrendered						Common stock surrendered	(996)		(39)
Net cash provided by (used in) financing activities						Net cash provided by (used in) financing activities	541,158		(309,287)
Net increase (decrease) in cash and cash equivalents						Net increase (decrease) in cash and cash equivalents	79,847		(42,874)

Cash and cash equivalents
Cash, cash equivalents and restricted cash						Cash, cash equivalents and restricted cash
Beginning of period	Beginning of period	214,386		121,324		Beginning of period	274,208		214,386
End of period	End of period	$	171,512	$	217,349	End of period	$	354,055	$	171,512

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)


	Six Months Ended June 30,
(in thousands)	2022		2021
Supplemental disclosures of cash flow information
Cash paid:
Interest	$	19,461	$	26,106
Income taxes	19,614		8,398
Right-of-use assets obtained in exchange for new lease obligations	4,480		—
Initial recognition of operating lease right-of-use assets	—		55,670
Initial recognition of operating lease liabilities	—		56,024
Noncash investing activities:
Mortgage loans held for sale (at fair value) transferred to loans held for investment	16,056		—

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)~~

Six Months Ended June 30,
(in thousands) 2021 2020
Supplemental disclosures of cash flow information
Cash paid:
Interest $ 26,106 $ 41,037
Income taxes 8,398 948
Initial recognition of operating lease right-of-use assets 55,670 0
Initial recognition of operating lease liabilities 56,024 0

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

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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 (“BHC Act”), as a result of its 100% indirect ownership of Amerant Bank, N.A. (the “Bank”). The Company’s principal office is in the City of Coral Gables, Florida. The Bank is a member of the Federal Reserve Bank of Atlanta (“Federal ~~Reserve Bank”~~Reserve”) and the Federal Home Loan Bank of Atlanta (“FHLB”). The Bank has 3 operating subsidiaries, Amerant Investments, Inc., a securities broker-dealer (“Amerant Investments”), Amerant Mortgage, LLC (“Amerant Mortgage”), a ~~51% owned~~80.0%-owned mortgage lending company domiciled in Florida, and Elant Bank & Trust, a Grand-Cayman based trust company acquired in November 2019 (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~~is listed and ~~trade~~traded on the Nasdaq Global Select Market under the ~~symbols~~symbol “AMTB” ~~and “AMTBB,” respectively.~~.

Restructuring Activities

The Company continues to work on better aligning its operating structure and resources with its business activities. ~~As part of these efforts,~~During the six months ended June 30, 2022, the Company ~~decided~~recorded estimated contract termination and related costs of approximately $6.8 million in connection with the implementation of the multi-year outsourcing agreement with a recognized third party financial technology services provider entered into in 2021. The Company currently expects to ~~cease~~incur no additional significant contract termination costs in connection with the ~~origination~~implementation of ~~loans in New York and closed its New York City loan production office (the “NY LPO”). In addition,~~this agreement.

During the six months ended June 30, 2022, the Company ~~decided~~recorded severance costs of approximately $1.4 million primarily related to ~~outsource~~ the ~~internal audit function and eliminated various other support positions. Additionally,~~reorganization of its business-generating units in 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~~period ($3.3 million in the ~~second quarter~~six months ended June 30, 2021 primarily in connection with the departure of ~~2021. Severance~~the Company’s COO and elimination of various support function positions in the period). These costs ~~were mostly recorded~~are included in “salaries and employees benefits expense” in the Company’s consolidated statement of operations and comprehensive ~~income.. Additionally,~~(loss) income. Other restructuring expenses during the six months ended June 30, 2022 and 2021 included: (i) a lease impairment charge of $1.6 million and $0.8 million in the ~~second quarter of~~six months ended June 30, 2022 and 2021, ~~the Company recorded a $0.8 million right-of-use asset (“ROUA”) impairment associated with~~respectively, mainly related to the closing of a branch in Pembroke Pines, Florida in 2022, and in connection with the ~~NY LPO. The impairment was recorded~~closure of the loan production office in ~~“occupancy~~New York in 2021, and ~~equipment expense”~~(ii) consulting and other professional fees of $1.3 million and $0.2 million, respectively, in the ~~Company’s consolidated statement of operations~~six months ended June 30, 2022 and ~~comprehensive income..~~2021, respectively, mainly related to consulting services received in the period and other expenses.

Stock Repurchase ~~Program~~Programs

In January 2022, the Company repurchased an aggregate of 652,118 shares of Class A common stock at a weighted average price of $33.96 per share, under a stock repurchase program to repurchase up to $50 million of the Company’s Class A common stock authorized by the Board of Directors in September 2021 (the “2021 Class A Common Stock Repurchase Program”). The aggregate purchase price for these transactions was approximately $22.1 million, including transaction costs. On January 31, 2022, the Company announced the completion of the 2021 Class A Common Stock Repurchase Program.

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Amerant Bancorp Inc. and Subsidiaries

Notes to Interim Consolidated Financial Statements (Unaudited)

On ~~March 10, 2021,~~January 31, 2022, the Company announced that the Board of Directors authorized a new repurchase program pursuant to which the Company may purchase, from time to time, up to an aggregate amount of $50 million of its shares of Class A common stock (the “New Common Stock Repurchase Program”). In the six months ended June 30, 2022, the Company repurchased an aggregate of 1,602,887 shares of Class A common stock at a weighted average price of $31.14 per share, under the New Common Stock Repurchase Program. The aggregate purchase price for these transactions was approximately $49.9 million, including transaction costs. On May 19, 2022, the Company announced the completion of the New Common Stock Repurchase Program.

In the six months ended June 30, 2022, the Company’s Board of Directors ~~approved a stock repurchase program which provides for~~authorized the ~~potential repurchase~~cancellation of ~~up to $40 million of~~all shares of ~~the Company’s~~ Class BA common stock ~~(the “2021 Stock Repurchase Program”).~~ stock repurchased in the first half of 2022. As of June 30, 2022, there were no shares of Class A common stock held as treasury stock.

For more information about ~~the 2021 Stock Repurchase Program,~~these repurchase programs, see Note 1517 to ~~our unaudited interim~~the Company’s consolidated financial statements in ~~this~~the Company’s annual report on Form ~~10-Q.~~10-K for the year ended December 31, 2021, filed with the Securities and Exchange Commission (“SEC”), on March 4, 2022 (the “Form 10-K”).

Amerant Mortgage

On March 31, 2022, the Company contributed $1.5 million in cash to Amerant Mortgage, increasing its ownership interest to 57.4% as of March 31, 2022 from 51% as of December 31, 2021. This additional contribution had no material impact to the Company’s share of the results of operations of Amerant Mortgage for the three months ended March 31, 2022. In addition, in the three months ended June 30, 2022, the Company increased its ownership interest in Amerant Mortgage to 80% from 57.4% at March 31, 2022. This change was the result of: (i) two former principals of Amerant Mortgage surrendering their interest in Amerant Mortgage to the Company, when they became full time employees of the Bank (the “Transfer of Subsidiary Shares From Noncontrolling Interest”), and (ii) an additional contribution made by the Company of $1 million, in cash, to Amerant Mortgage in the three months ended June 30, 2022. As a result of the Transfer of Subsidiary Shares From Noncontrolling Interest, the Company reduced its Additional Paid-in Capital by a total of 1.9 million with a corresponding increase to the equity attributable to Noncontrolling Interest.

Employee Stock Purchase Plan

On June 8, 2022, the shareholders of the Company approved the Amerant Bancorp Inc. 2021 Employee Stock Purchase Plan (the “ESPP” or the “Plan”). The purpose of the Plan is to provide eligible employees of the Company and its designated subsidiaries with the opportunity to acquire a stock ownership interest in the Company on favorable terms and to pay for such acquisitions through payroll deductions. All named executive officers, and all other executive officers of the Company who were eligible as of the enrollment deadline for the first offering period elected to participate in the Plan. For further information, see the Company’s proxy statement for the annual meeting of shareholders held on June 8, 2022, filed with the SEC on April 28, 2022.

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Amerant Bancorp Inc. and Subsidiaries

Notes to Interim Consolidated Financial Statements (Unaudited)

~~Acquisition~~

Amerant Florida Merger

On ~~May 12, 2021 (the “Acquisition Date”~~July 20, 2022, the Company’s Board of Directors approved an intercompany transaction of entities under common control, pursuant to which the Company’s wholly owned subsidiary, Amerant Florida Bancorp Inc. (“Amerant Florida”), ~~Amerant Mortgage completed~~would merge with and into the ~~acquisition of First Mortgage~~ Company, ~~(“FMC”~~with the Company as sole survivor (the “Amerant Florida Merger”). In connection with the Amerant ~~Mortgage~~Florida Merger, the Company will assume all assets and ~~FMC were ultimately merged, allowing~~liabilities of Amerant ~~Mortgage~~Florida, including its direct ownership of the Bank, the common capital securities issued by the 5 trust subsidiaries, and the junior subordinated debentures issued by Amerant Florida and related agreements. The Amerant Florida Merger will have no impact to ~~operate its business nationally with direct access~~the Company’s consolidated financial condition and results of operations. See Note 10 to ~~federal housing agencies. We refer to these transactions as~~ the “FMC Acquisition”. The FMC Acquisition was recorded as a business acquisition using the acquisition method of accounting. The purchase price of approximately $1.0 million was paid in cash and represented the fair value of $0.5 million in mortgage servicing rights (“MSR”) acquired, plus a premium of $0.5 million. No liabilities were assumed in the transaction. The Company allocated the premium paidCompany’s consolidated financial statements on the ~~purchase to an indefinite-lived intangible license which was recorded at its fair value of $0.5 million as of~~Form 10-K, for additional information on the ~~Acquisition Date. The MSRs~~common capital securities issued by the 5 trust subsidiaries, and ~~premium assigned to an intangible asset were recorded in “Other assets” in~~ the ~~consolidated balance sheets. The transaction resulted in 0 goodwill.~~junior subordinated debentures.

COVID-19 Pandemic

CARES Act

On March 11, 2020, the World Health Organization recognized an outbreak of a novel strain of the coronavirus, COVID-19, as a pandemic. ~~The~~Prior to 2022, the COVID-19 pandemic adversely affected the economy, ~~resulting~~including lower interest rates, and resulted in ~~a 150-basis-point reduction in the federal funds rate, and~~ the enactment of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). The CARES Act provided emergency economic relief to individuals, small businesses, mid-size companies, large corporations, hospitals and other public health facilities, and state and local governments, and allocated the Small Business Administration, or SBA, $350.0 billion to provide loans of up to $10.0 million per small business as defined in the CARES Act.

On April 2, 2020, the Bank began participating in the SBA’s Paycheck Protection Program, or PPP, by providing loans to these businesses to cover payroll, rent, mortgage, healthcare, and utilities costs, among other essential expenses. In early January 2021, a third round of PPP loans provided additional stimulus relief to small businesses and individuals who are self-employed or independent contractors. As of June 30, 2021, total PPP loans 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. 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 servicing rights.

Loan Loss Reserve and Modification Programs

On March 26, 2020, the Company began offering loan payment relief options to customers impacted by the COVID-19 pandemic, including ~~interest-only~~interest only and/or forbearance options. These programs continued throughout 2020 and in the ~~six months ended June 30,~~first half of 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 December 31, 2020. As of June 30, ~~2021, modified~~2022, there were no 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~~options. At December 31, 2021, there were $37.1 million of loans under the deferral and/or forbearance options. In accordance with accounting and regulatory guidance, ~~temporary modifications granted under~~loans to borrowers benefiting from these ~~programs~~measures are not considered troubled debt ~~restructurings,~~restructuring (“TDRs”). See Note 1 to the Company’s consolidated financial statements on the Form 10-K for more details on loan modification programs.

The COVID-19 pandemic has severely restricted the level of economic activity in the U.S. and around the world since March 2020. At the outset of the pandemic, several states and cities across the United States, including the states of Florida, and Texas and cities where we have banking centers, loan production offices (“LPOs”) and where our principal place of business is located, implemented quarantines, restrictions on travel, “shelter at home” orders, and restrictions on types of business that may continue to operate. While most of these measures and restrictions have been lifted, and many businesses reopened, the Company cannot predict when circumstances may change and whether restrictions that have been lifted will need to be imposed or ~~TDRs.~~tightened in the future if viewed as necessary due to public health concerns. Given the uncertainty regarding the spread and severity of the COVID-19 pandemic and its adverse effects on the U.S. and global economies, the impact to the Company’s financial statements cannot be accurately predicted at this time.

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Amerant Bancorp Inc. and Subsidiaries

Notes to Interim Consolidated Financial Statements (Unaudited)

b) Basis of Presentation and Summary of Significant Accounting Policies

Emerging Growth Company

Section 107 of the JOBS Act provides that, as an “emerging growth company”, or EGC, the Company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. Therefore, an EGC can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. In 2019, the Federal bank regulators recognized or permitted public companies that are EGCs to delay the adoption of accounting pronouncements until those standards would otherwise apply to private companies. Since we became a publicly traded company, the Company has been taking advantage of the benefits of this extended transition period, and will continue to do so for as long as it is available and it is consistent with bank regulatory requirements. Based on the aggregate worldwide market value of the voting and non-voting common stock held by the Company’s non-affiliates as of the last business day of the second quarter of 2022, the Company determined that it will be deemed a large accelerated filer effective as of December 31, 2022. Consequently, the Company will no longer be able to benefit from any extended transition period for complying with new or revised accounting standards, beginning as of December 31, 2022, and applied retroactively effective January 1, 2022.

Significant Accounting Policies

The accompanying unaudited interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of 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 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, ~~2020~~2021 and ~~2019~~2020 and for each of the three years in the period ended December 31, ~~2020~~2021 and the accompanying footnote disclosures for the Company, which are included in the ~~Company’s annual report on~~ Form ~~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”).~~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 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~~

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Amerant Bancorp Inc. and Subsidiaries

Notes to Interim Consolidated Financial Statements (Unaudited)

In the ~~level~~six months ended June 30, 2022, noninterest expenses include $6.8 million of ~~economic activity~~estimated contract termination costs associated with third party vendors resulting from the Company’s transition to our new technology provider. Contract termination costs represent estimated expenses to terminate contracts before the end of their terms, and are recognized when the Company terminates a contract in accordance with its terms, generally considered the time when the Company gives written notice to the counterparty within the notification period contractually established. Contract termination costs also include expenses associated with the abandonment of existing capitalized projects which are no longer expected to be completed as a result of a contract termination. Changes to initial estimated expenses to terminate contracts resulting from revisions to timing or the amount of estimated cash flows are recognized in the ~~U.S.~~period of the changes.

Reclassifications

In the three 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, 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 or may be reinstatedsix month periods ended June 30, 2022, advertising expenses are presented separately in the ~~future. While most~~Company’s consolidated statement of operations and comprehensive (loss) income. Prior to 2022, these ~~measures and restrictions have been lifted and businesses have begun to reopen, the Company cannot predict whether restrictions that have been lifted will need to be imposed or tightened~~expenses were presented as a component of other noninterest expenses in the ~~future if viewed as necessary due to public health concerns. Given the uncertainty regarding the spread~~Company’s consolidated statement of operations 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.~~

comprehensive (loss) income.

c) Recently Issued Accounting Pronouncements

The Company adopted no new accounting pronouncements as of and for the six months ended June 30, 2022.

Issued and Not Yet Adopted

For a complete summary of accounting guidance, see Note 1 to the Company’s audited consolidated financial statements in the Form 10-K.

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

In ~~December 2018,~~June 2016, the Financial Accounting Standards Board (“FASB”) issued the new guidance on accounting for current expected credit losses on financial instruments (“CECL”) The new guidance introduces an approach based on expected losses to estimate credit losses on various financial instruments, including loans. It also modifies the impairment model for available-for-sale debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination.

In November 2018, the FASB issued amendments to pending new guidance ~~issued in February 2016~~on CECL to, among other things, align the implementation date for private companies’ annual financial statements with the ~~recognition~~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 ~~measurement~~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 ~~all leases. The~~the new guidance on CECL. Previously, the amendments ~~address certain lessor’s issues associated with: (i) sales taxes~~ and ~~other similar taxes collected from lessees, (ii) certain lessor costs,~~related new guidance on CECL was effective for fiscal years beginning after December 15, 2021, and ~~(iii) recognition of variable payments~~interim periods within those years, for ~~contracts with lease and nonlease components.~~private companies. The new guidance on ~~leases issued in February 2016 requires lessees to recognize a ROUA~~CECL is now effective for fiscal years beginning after December 15, 2022, and ~~a lease liability~~interim periods within those years. Early adoption is still permitted. The new guidance on CECL is effective for ~~most leases~~fiscal years beginning after December 15, 2019, and interim periods within the scope of the guidance. The Company adopted this standard on January 1, 2021 using the modified retrospective transition approach. Upon adoption of this standard, the Company recorded an ROUA and a lease liability of $54.5 million and $54.0 million, respectively, which are presented in other assets and other liabilities as of June 30, 2021, respectively.those years, for public companies.

The Company determines if an arrangement is or contains a lease at the inception of the contract. Operating lease ROUAs and liabilities are recognized at the inception date based on the present value of lease payments over the lease term. At lease inception, when the rate implicit in each lease is not readily available, the Company is required to 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 market rates. Additionally, the Company also considers lease renewal options reasonably certain of exercise for purposes of determining the lease term.

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Amerant Bancorp Inc. and Subsidiaries

Notes to Interim Consolidated Financial Statements (Unaudited)

The Company will no longer be deemed an EGC effective as of December 31, 2022. Therefore, adoption of the new guidance on CECL will be required on the Company’s consolidated financial statements as of and for the reporting period ending that date. In preparation for adoption of CECL in the fourth quarter of 2022, the Company formed a working group in 2021 comprised of individuals from various functional areas, including, but not limited to, credit, risk management and finance. The working group continues to work through its implementation plan which includes documentation and assessment of processes, data inputs and necessary internal controls; validation and refinement of credit loss estimation techniques; and documentation of policies and procedures. The Company selected a third-party software and advisory service provider to aid with the implementation of CECL. The Company is currently conducting runs of the CECL model and the incurred-loss model in parallel, and a third-party vendor has performed the first validation of the model. A second validation of the CECL model is expected to be completed in the fourth quarter of 2022. The new ~~leasing standard provides several optional expedients~~model will include additional assumptions used to calculate credit losses over the estimated life of financial assets and will include the impact of forecasted economic conditions. Based on preliminary modeling results, the Company expects to recognize an increase in ~~transition.~~the allowance for credit losses (“ACL”) as of January 1, 2022, the beginning of the reporting period of adoption, which may range from $12 million to $25 million. This estimate is subject to further refinement based on continuing reviews of the model, testing and validation of credit loss estimation techniques; the composition of the Company’s loan and debt securities portfolios; and current and forecasted macroeconomic conditions. Under the CECL model, the Company does not expect a material ACL to be recorded on debt securities held to maturity upon adoption, as these securities are issued or guaranteed by the U.S. government or U.S. government-sponsored entities and agencies. The Company ~~elected certain practical expedients, which allows~~expects to finalize the estimated impact of adopting CECL as of January 1, 2022, during the third quarter of 2022. Upon adoption in the fourth quarter of 2022, the Company will record the final impact of CECL as a one-time cumulative effect adjustment to ~~not reassess prior conclusions on lease classification, embedded leases and initial indirect costs. The Company elected to exclude short-term leases up to 12 months from~~retained earnings as of January 1, 2022, the ~~recognition~~beginning of ~~right-of-use assets and lease liabilities.~~the reporting period of adoption. Additionally, the Company ~~elected~~will record the final impact of CECL in the Company’s previous credit loss estimates recorded during each of the quarters in the year ending December 31, 2022 as an adjustment to ~~separate lease~~its ACL in the Company’s consolidated balance sheet as of December 31, 2022, and ~~non-lease cost~~a credit loss provision in the Company’s consolidated statement of income for the year then ended. See Note 5 Allowance for Loan Losses for summarized information on the allocation of the allowance for loans losses by impairment methodology and ~~account~~loan segment as of June 30, 2022 and 2021. In addition, the Company does not expect a material ACL to be recorded as of January 1, 2022 on debt securities available for ~~them separately.~~sale with respect to the evaluation of impairment due to credit losses, as the majority of these securities are issued or guaranteed by the U.S. government or U.S. government-sponsored entities and agencies, or otherwise are of high credit quality when issued by private corporates.

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Amerant Bancorp Inc. and Subsidiaries

Notes to Interim Consolidated Financial Statements (Unaudited)

~~Targeted Improvements to Accounting for Hedging Activities~~New Guidance on Fair Value Hedges

In ~~August 2017,~~March 2022, the FASB issued ~~targeted amendments~~amended guidance to ~~the guidance for recognition, presentation and disclosure of hedging activities. These targeted amendments~~ expand and ~~refine~~clarify existing guidance on fair value hedge accounting of interest rate risk for portfolios of financial assets. The amendments clarify, among others, the “last-of-layer” method for making the fair value hedge accounting for ~~both nonfinancial~~these portfolios more accessible. The amendment also improves the last-of-layer concepts and expands them to nonprepayable financial ~~risk components and align the recognition and presentation of the effects of the hedging instrument and the hedged item~~assets, allowing more flexibility in the ~~financial statements.~~structure of derivatives used to hedge interest rate risk. The ~~amendments also simplify~~amended guidance is effective for public business entities for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. For all other entities, the ~~application of hedge accounting guidance. In June 2020, the FASB~~ amended ~~the effective date of the new guidance on hedging. This~~ guidance is effective for fiscal years beginning after December 15, ~~2018,~~2023. The amended guidance is available for early adoption. The Company is in the process of reviewing this new guidance to determine whether it would have a material impact on the Company’s consolidated financial statements when adopted.

New Guidance on Troubled Debt Restructurings

In March 2022, the FASB issued guidance that eliminates the recognition and ~~interim~~measurement guidance on troubled debt restructurings for creditors, and aligns it with existing guidance to determine whether a loan modification results in a new loan or a continuation of an existing loan. The new guidance also requires enhanced disclosures about certain loan modifications by creditors when a borrower is experiencing financial difficulty. The amended guidance is effective in periods ~~within those fiscal years~~beginning after December 15, 2022 using either a prospective or modified retrospective transition approach. Early adoption is permitted if an entity has already adopted the guidance on accounting for CECL. The Company is in the process of reviewing this new guidance, as part of its CECL implementation efforts, to determine whether it would have a material impact on the Company’s consolidated financial statements when adopted.

New Guidance for Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions

On June 30, 2022, the FASB issued new guidance to improve fair value guidance for equity securities subject to contractual sale restrictions. These amendments clarify that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The amendments also clarify that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. The amendments also require additional disclosures for equity securities subject to contractual sale restrictions. For public business ~~entities. For all other~~ entities, the amendments are effective for fiscal years beginning after December 15, ~~2020,~~2023, and interim periods within those fiscal ~~years beginning after December 15, 2021.~~years. The ~~adoption~~Company is in the process of evaluating the impact of this guidance ~~in the first quarter of 2021 did not have an effect~~ on ~~the Company’s~~its consolidated financial ~~statements.~~statements when adopted.

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 and Restricted Cash

At June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, interest earning deposits with banks are mainly comprised of deposits with the Federal Reserve and other U.S. banks of approximately ~~$126~~$303 million and ~~$184~~$241 million, respectively. At June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the average interest rate on these deposits was approximately ~~0.10%~~0.54% and ~~0.31%~~0.12%, respectively. These deposits ~~mature within one year.~~have no stated maturity dates.

At June 30, 2022, the Company had restricted cash balances of $21.8 million. These balances include cash pledged as collateral, by other banks to us, to secure derivatives’ margin calls. In addition, we have cash balances pledged as collateral to secure the issuance of letters of credit by other banks on behalf of our customers. We had no restricted cash balances as of December 31, 2021.

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Amerant Bancorp Inc. and Subsidiaries

Notes to Interim Consolidated Financial Statements (Unaudited)

3.Securities

a) Debt Securities

Debt securities available for sale

Amortized cost and approximate fair values of debt securities available for sale are summarized as follows:


		June 30, 2021									June 30, 2022
		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		$	530,324	$	14,580	$	(1,321)	$	543,583
U.S. government-sponsored enterprise debt securities (1) (2)										U.S. government-sponsored enterprise debt securities (1) (2)	$	452,019	$	548	$	(25,286)	$	427,281
Corporate debt securities(2)	Corporate debt securities(2)	348,370		13,076		(720)		360,726		Corporate debt securities(2)	352,603		350		(18,937)		334,016
U.S. government agency debt securities		283,187		3,474		(2,256)		284,405
U.S. government agency debt securities (1) (2)										U.S. government agency debt securities (1) (2)	385,081		167		(29,404)		355,844

Collateralized loan obligations										Collateralized loan obligations	5,000		—		(225)		4,775
Municipal bonds(1)										Municipal bonds(1)	1,917		—		(22)		1,895
U.S. treasury securities	U.S. treasury securities	2,503		4		0		2,507		U.S. treasury securities	994		—		(4)		990
Municipal bonds(1)		2,707		140		0		2,847

Total debt securities available for sale (1)		$	1,167,091	$	31,274	$	(4,297)	$	1,194,068
Total debt securities available for sale										Total debt securities available for sale	$	1,197,614	$	1,065	$	(73,878)	$	1,124,801

__________________

(1)Includes residential mortgage-backed securities. As of June 30, ~~2021, includes residential and commercial mortgage-backed~~2022, we had total residential-mortgage backed securities, included as part of total debt securities available for sale, with amortized cost of ~~$633.4~~$708.8 million ~~and $129.4 million, respectively,~~ and fair value of ~~$646.5~~$661.4 million.

(2)Includes commercial mortgage-backed securities. As of June 30, 2022, we had total commercial mortgage-backed securities, included as part of total debt securities available for sale, with amortized cost of $112.0 million and ~~$131.8 million, respectively.~~fair value of $104.1 million.


	December 31, 2021
	Amortized Cost		Gross Unrealized				Estimated Fair Value
(in thousands)			Gains		Losses
U.S. government sponsored enterprise debt securities (1) (2)	$	443,892	$	9,319	$	(2,438)	$	450,773
Corporate debt securities (2)	348,576		10,143		(929)		357,790
U.S. government agency debt securities (1) (2)	362,323		1,953		(2,370)		361,906

U.S. treasury securities	2,501		1		—		2,502
Municipal bonds (1)	2,252		96		—		2,348
Total debt securities available for sale	$	1,159,544	$	21,512	$	(5,737)	$	1,175,319

__________________

(1)Includes residential mortgage-backed securities. As of December 31, 2021, we had total residential-mortgage backed securities, included as part of total debt securities available for sale, with amortized cost of $654.7 million and fair value of $661.3 million.

(2)Includes residential mortgage-backed securities. As of December 31, 2021, we had total commercial mortgage-backed securities, included as part of total debt securities available for sale, with amortized cost of $123.5 million and fair value of $123.8 million.

The Company had investments in foreign corporate debt securities available for sale, primarily in Canada, of $10.1 million and $12.5 million at June 30, 2022 and December 31, 2021, respectively. At June 30, 2022 and December 31, 2021, the Company had no foreign sovereign or foreign government agency debt securities available for sale. Investments in foreign corporate debt securities available for sale are denominated in U.S. Dollars.

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Amerant Bancorp Inc. and Subsidiaries

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 six month periods ended June 30, ~~2021~~2022 and ~~2020,~~2021, proceeds from sales, redemptions and calls, gross realized gains, gross realized losses of debt securities available for sale were as follows:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	(in thousands)	2021		2020		2021		2020		(in thousands)	2022		2021		2022		2021
Proceeds from sales, redemptions and calls of debt securities available for sale	Proceeds from sales, redemptions and calls of debt securities available for sale	$	29,261	$	100,666	$	73,115	$	239,738	Proceeds from sales, redemptions and calls of debt securities available for sale	$	145	$	29,261	$	14,158	$	73,115

Gross realized gains	Gross realized gains	$	1,254	$	7,537	4,201		16,803		Gross realized gains	$	—	$	1,254	$	49	$	4,201
Gross realized losses	Gross realized losses	0		0		0		(23)		Gross realized losses	—		—		—		—
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	Realized gains, net on sales of debt investment securities	$	—	$	1,254	$	49	$	4,201

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:


		June 30, 2021													June 30, 2022
		Less Than 12 Months				12 Months or More				Total					Less Than 12 Months					12 Months or More					Total
(in thousands)		Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss
(in thousands, except securities count)														(in thousands, except securities count)	Number of Securities	Estimated Fair Value		Unrealized Loss		Number of Securities	Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss
U.S. government-sponsored enterprise debt securities	U.S. government-sponsored enterprise debt securities	$	71,184	$	(1,176)	$	6,861	$	(145)	$	78,045	$	(1,321)	U.S. government-sponsored enterprise debt securities	214	$	358,450	$	(20,844)	59	$	27,285	$	(4,442)	$	385,735	$	(25,286)
Corporate debt securities	Corporate debt securities	14,249		(114)		8,350		(606)		22,599		(720)		Corporate debt securities	59	281,759		(17,673)		3	9,695		(1,264)		291,454		(18,937)
U.S. government agency debt securities	U.S. government agency debt securities	97,821		(696)		68,631		(1,560)		166,452		(2,256)		U.S. government agency debt securities	68	233,494		(20,012)		83	112,706		(9,391)		346,200		(29,404)
Municipal bonds														Municipal bonds	3	1,895		(22)		—	—		—		1,895		(22)

U.S. treasury securities														U.S. treasury securities	1	991		(4)		—	—		—		991		(4)
Collateralized loan obligations														Collateralized loan obligations	1	4,775		(225)		—	—		—		4,775		(225)
															346	$	881,364	$	(58,780)	145	$	149,686	$	(15,097)	$	1,031,050	$	(73,878)

		$	183,254	$	(1,986)	$	83,842	$	(2,311)	$	267,096	$	(4,297)

1718

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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)


	December 31, 2021
	Less Than 12 Months					12 Months or More					Total
(in thousands, except securities count)	Number of Securities	Estimated Fair Value		Unrealized Loss		Number of Securities	Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss
U.S. government sponsored enterprise debt securities	29	$	54,562	$	(1,434)	59	$	25,526	$	(1,004)	$	80,088	$	(2,438)
Corporate debt securities	8	52,672		(259)		3	10,286		(670)		62,958		(929)
U.S. government agency debt securities	35	200,051		(1,177)		69	52,109		(1,193)		252,160		(2,370)



	72	$	307,285	$	(2,870)	131	$	87,921	$	(2,867)	$	395,206	$	(5,737)

At June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, 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.

Investments in corporate debt available for sale as of June 30, 2022 include securities considered “investment-grade-quality” primarily issued by financial institutions, with a fair value of $257.0 million ($43.4 million at December 31, 2021), which had total unrealized losses of $15.2 million at that date ($0.3 million at December 31, 2021); and securities considered “non-investment-grade-quality” from issuers in the mortgage, communications, and technology industries, with a fair value of $34.5 million ($19.6 million at December 31, 2021), which had total unrealized losses of $3.7 million at that date ($0.6 million at December 31, 2021). Unrealized losses on corporate debt securities and municipal bonds 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.~~

~~Table of Contents~~

~~Amerant Bancorp Inc. and Subsidiaries~~

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

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

Available for Sale Held to Maturity
(in thousands) Amortized
Cost Estimated
Fair Value Amortized
Cost Estimated
Fair Value
Within 1 year $ 25,786 $ 26,080 $ 0 $ 0
After 1 year through 5 years 121,784 125,084 12,589 12,534
After 5 years through 10 years 299,231 311,735 11,299 11,782
After 10 years 720,290 731,169 69,423 70,318
$ 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 $24.0 million and $24.3 million as of June 30, 2021 and December 31, 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 $0.4 million and unrealized gains of $0.6 million in the six months ended June 30, 2021 and 2020, respectively, related to the change in fair value of these mutual funds and recorded in results of operations.

4.~~Loans~~

~~The loan portfolio consists of the following loan classes:~~

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

Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Interim Consolidated Financial Statements (Unaudited)

Debt securities held to maturity

Amortized cost and approximate fair values of debt securities held to maturity are summarized as follows:


	June 30, 2022
	Amortized Cost		Gross Unrealized				Estimated Fair Value
(in thousands)			Gains		Losses
U.S. government agency debt securities (1)	$	61,818	$	—	$	(5,512)	$	56,306
U.S. government sponsored enterprise debt securities(1) (2)	176,803		—		(6,585)		170,218
Total debt securities held to maturity	$	238,621	$	—	$	(12,097)	$	226,524

__________________

(1)Includes residential mortgage-backed securities. As of June 30, 2022, we had total residential mortgage-backed securities, included as part of total debt securities held to maturity, with amortized cost of $210.1 million and fair value of $199.8 million.

(2)Includes commercial mortgage-backed securities. As of June 30, 2022, we had total commercial mortgage-backed securities, included as part of total debt securities held to maturity, with amortized cost of $28.5 million and fair value of $26.6 million.


	December 31, 2021
	Amortized Cost		Gross Unrealized				Estimated Fair Value
(in thousands)			Gains		Losses
U.S. government agency debt securities (1)	$	66,307	$	62	$	(363)	$	66,006
U.S. government sponsored enterprise debt securities (1) (2)	51,868		1,581		(378)		53,071
Total debt securities held to maturity	$	118,175	$	1,643	$	(741)	$	119,077

__________________

(1)Includes residential mortgage-backed securities. As of December 31, 2021,we had total residential mortgage-backed securities, included as part of total debt securities held to maturity, with amortized cost of $89.4 million and fair value of $88.7 million.

(2)Includes commercial mortgage-backed securities. As of December 31, 2021, includes total commercial mortgage-backed securities with amortized cost of $28.8 million and fair value of $30.4 million.

The ~~amounts above include loans under syndication facilities~~Company’s investment in debt securities held to maturity with unrealized losses that are deemed temporary, aggregated by length 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.time that individual securities have been in a continuous unrealized loss position, are summarized below:

~~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.


	June 30, 2022
	Less Than 12 Months					12 Months or More					Total
(in thousands)	Number of Securities	Estimated Fair Value		Unrealized Loss		Number of Securities	Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss
U.S. government agency debt securities	11	$	54,810	$	(5,459)	1	$	1,496	$	(53)	$	56,306	$	(5,512)
U.S. government sponsored enterprise debt securities	33	161,295		(4,326)		1	8,923		(2,259)		170,218		(6,585)
	44	$	216,105	$	(9,785)	2	$	10,419	$	(2,312)	$	226,524	$	(12,097)

Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Interim Consolidated Financial Statements (Unaudited)


	December 31, 2021
	Less Than 12 Months					12 Months or More					Total
(in thousands)	Number of Securities	Estimated Fair Value		Unrealized Loss		Number of Securities	Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss
U.S. government agency debt securities	11	$	61,037	$	(363)	—	$	—	$	—	$	61,037	$	(363)
U.S. government sponsored enterprise debt securities	2	22,669		(378)		—	—		—		22,669		(378)
	13	$	83,706	$	(741)	—	$	—	$	—	$	83,706	$	(741)

Contractual maturities

Contractual maturities of debt securities at June 30, 2022 are as follows:


	Available for Sale				Held to Maturity
(in thousands)	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Within 1 year	$	20,380	$	20,391	$	—	$	—
After 1 year through 5 years	91,671		89,715		7,170		6,366
After 5 years through 10 years	307,508		290,983		13,339		12,732
After 10 years	778,055		723,712		218,112		207,426

	$	1,197,614	$	1,124,801	$	238,621	$	226,524

b) Equity securities with readily available fair value not held for trading

As of June 30, 2022 and December 31, 2021, the Company had equity securities with readily available fair value not held for trading with an original cost of $12.7 million and $0.3 million, and fair value of $10.8 million $0.3 million, respectively. These equity securities have no stated maturities. The Company recognized net unrealized losses of $2.6 million and gains of $22 thousand in the three months ended June 30, 2022 and 2021, respectively, and unrealized losses of $1.9 million and unrealized losses of $0.4 million in the six months ended June 30, 2022 and 2021, respectively, related to the change in market value of these equity securities.

c)Securities Pledged

As of June 30, 2022 and December 31, 2021, the Company had $179.5 million and $142.8 million, respectively, in securities pledged as collateral. These securities were pledged to secure advances from the Federal Home Loan Bank, public funds and for other purposes as permitted by law.

Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Interim Consolidated Financial Statements (Unaudited)

4.Loans

a) Loans held for investment

Loans held for investment consist of the following loan classes:


(in thousands)	June 30, 2022		December 31, 2021
Real estate loans
Commercial real estate
Non-owner occupied	$	1,530,293	$	1,540,590
Multi-family residential	532,066		514,679
Land development and construction loans	288,581		327,246
	2,350,940		2,382,515
Single-family residential	727,712		661,339
Owner occupied	954,538		962,538
	4,033,190		4,006,392
Commercial loans	1,122,248		965,673
Loans to financial institutions and acceptances	13,250		13,710
Consumer loans and overdrafts	557,443		423,665
Total loans held for investment	$	5,726,131	$	5,409,440

At June 30, 2022 and December 31, 2021, loans with an outstanding principal balance of $1.1 billion were pledged as collateral to secure advances from the FHLB.

The amounts above include loans under syndication facilities of approximately $322 million and $373 million at June 30, 2022 and December 31, 2021, respectively, which include Shared National Credit facilities and agreements to enter into credit agreements with other lenders (club deals) and other agreements. In addition, consumer loans and overdrafts in the table above include indirect consumer loans purchased totaling $477.3 million and $297.0 million at June 30, 2022 and December 31, 2021, respectively.

International loans included above were $93.3 million and $99.6 million at June 30, 2022 and December 31, 2021, respectively. These loans are net of collateral of cash, cash equivalents or other financial instruments totaling $53.5 million and $21.1 million as of June 30, 2022 and December 31, 2021, respectively.

Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Interim Consolidated Financial Statements (Unaudited)

The age analysis of the loan portfolio held for investment by class, including nonaccrual loans, as of June 30, ~~2021~~2022 and December 31, ~~2020~~2021 are summarized in the following tables:


		June 30, 2021																		June 30, 2022
		Total Loans, Net of Unearned Income				Past Due								Total Loans in Nonaccrual Status			Total Loans 90 Days or More Past Due and Accruing			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)	(in thousands)			Current		30-59 Days		60-89 Days		Greater than 90 Days		Total Past Due				(in thousands)			Current				30-59 Days		60-89 Days		Greater than 90 Days		Total Past Due
Real estate loans	Real estate loans																					Real estate loans
Commercial real estate	Commercial real estate																		Commercial real estate
Non-owner occupied	Non-owner occupied	$	1,699,876	$	1,676,197	$	5,247	$	18,432	$	0	$	23,679	$	48,347		$	0	Non-owner occupied	$	1,530,293		$	1,530,293	$	—	$	—	$	—	$	—	$	1,251	$	—
Multi-family residential	Multi-family residential	658,022		658,022		0		0		0		0		9,928			0		Multi-family residential	532,066			532,066		—		—		—		—		—		—
Land development and construction loans	Land development and construction loans	361,077		361,077		0		0		0		0		0			0		Land development and construction loans	288,581			288,581		—		—		—		—		—		—
		2,718,975		2,695,296		5,247		18,432		0		23,679		58,275			0			2,350,940			2,350,940		—		—		—		—		1,251		—
Single-family residential	Single-family residential	616,545		610,588		653		1,393		3,911		5,957		7,174			20		Single-family residential	727,712			726,283		—		347		1,082		1,429		2,755		162
Owner occupied	Owner occupied	943,342		939,235		253		178		3,676		4,107		11,277			0		Owner occupied	954,538			950,121		4,034		—		383		4,417		9,558		—
		4,278,862		4,245,119		6,153		20,003		7,587		33,743		76,726			20			4,033,190			4,027,344		4,034		347		1,465		5,846		13,564		162
Commercial loans	Commercial loans	1,003,411		963,026		2,186		22		38,177		40,385		43,876			295		Commercial loans	1,122,248			1,115,115		54		485		6,594		7,133		8,987		—
Loans to financial institutions and acceptances	Loans to financial institutions and acceptances	13,672		13,672		0		0		0		0		0			0		Loans to financial institutions and acceptances	13,250			13,250		—		—		—		—		—		—
Consumer loans and overdrafts	Consumer loans and overdrafts	310,828		310,764		17		20		27		64		198			4		Consumer loans and overdrafts	557,443			557,380		12		5		46		63		2,398		42
		$	5,606,773	$	5,532,581	$	8,356	$	20,045	$	45,791	$	74,192	$	120,800		$	319		$	5,726,131		$	5,713,089	$	4,100	$	837	$	8,105	$	13,042	$	24,949	$	204


		December 31, 2020																		December 31, 2021
		Total Loans, Net of Unearned Income				Past Due								Total Loans in Nonaccrual Status			Total Loans 90 Days or More Past Due and Accruing			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)	(in thousands)			Current		30-59 Days		60-89 Days		Greater than 90 Days		Total Past Due				(in thousands)			Current				30-59 Days		60-89 Days		Greater than 90 Days		Total Past Due
Real estate loans	Real estate loans																					Real estate loans
Commercial real estate	Commercial real estate																		Commercial real estate
Non-owner occupied	Non-owner occupied	$	1,749,839	$	1,741,862	$	1,487	$	0	$	6,490	$	7,977	$	8,219		$	0	Non-owner occupied	$	1,540,590		$	1,540,590	$	—	$	—	$	—	$	—	$	7,285	$	—
Multi-family residential	Multi-family residential	737,696		737,696		0		0		0		0		11,340			0		Multi-family residential	514,679			514,679		—		—		—		—		—		—
Land development and construction loans	Land development and construction loans	349,800		349,800		0		0		0		0		0			0		Land development and construction loans	327,246			327,246		—		—		—		—		—		—
		2,837,335		2,829,358		1,487		0		6,490		7,977		19,559			0			2,382,515			2,382,515		—		—		—		—		7,285		—
Single-family residential	Single-family residential	639,569		631,801		3,143		671		3,954		7,768		10,667			0		Single-family residential	661,339			657,882		990		412		2,055		3,457		5,126		—
Owner occupied	Owner occupied	947,127		941,566		439		0		5,122		5,561		12,815			220		Owner occupied	962,538			961,132		—		—		1,406		1,406		8,665		—
		4,424,031		4,402,725		5,069		671		15,566		21,306		43,041			220			4,006,392			4,001,529		990		412		3,461		4,863		21,076		—
Commercial loans	Commercial loans	1,154,550		1,113,469		3,675		1,715		35,691		41,081		44,205			0		Commercial loans	965,673			939,685		277		1,042		24,669		25,988		28,440		—
Loans to financial institutions and acceptances	Loans to financial institutions and acceptances	16,636		16,636		0		0		0		0		0			0		Loans to financial institutions and acceptances	13,710			13,710		—		—		—		—		—		—
Consumer loans and overdrafts	Consumer loans and overdrafts	247,120		246,997		85		6		32		123		233			1		Consumer loans and overdrafts	423,665			423,624		22		7		12		41		257		8
		$	5,842,337	$	5,779,827	$	8,829	$	2,392	$	51,289	$	62,510	$	87,479		$	221		$	5,409,440		$	5,378,548	$	1,289	$	1,461	$	28,142	$	30,892	$	49,773	$	8

2123

Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Interim Consolidated Financial Statements (Unaudited)

b) Loans held for sale

Loans held for sale consist of the following loan classes:


(in thousands)	June 30, 2022		December 31, 2021
Loans held for sale at the lower of cost or fair value
Real estate loans
Commercial real estate
Non-owner occupied	$	44,568	$	110,271
Multi-family residential	20,684		31,606

	65,252		141,877

Owner occupied	1,297		1,318
Total real estate loans	66,549		143,195
Less: valuation allowance	159		—
Total loans held for sale at the lower of fair value or cost	66,390		143,195

Loans held for sale at fair value
Land development and construction loans	2,366		—
Single-family residential	52,497		14,905

Total loans held for sale at fair value (1)	54,863		14,905




Total loans held for sale (2)	$	121,253	$	158,100

_______________

(1)Loans held for sale in connection with Amerant Mortgage’s ongoing business.

(2)Remained current and in accrual status as of June 30, 2022.

In the first quarter of 2022, the Company completed the sale of approximately $57.3 million in loans held for sale carried at the lower of fair value or cost related to the New York portfolio, at their par value.

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 (“ALL”) for the three and six month periods ended June 30, ~~2021~~2022 and ~~2020,~~2021, and its allocation by impairment methodology and the related investment in loans, net as of June 30, ~~2021~~2022 and ~~2020~~2021 are summarized in the following tables:

Three Months Ended June 30, 2021
(in thousands) Real Estate Commercial Financial
Institutions Consumer
and Others Total
Balances at beginning of the period $ 48,291 $ 49,202 $ 1 $ 13,446 $ 110,940
(Reversal of) provision for loan losses (9,713) 5,017 0 (304) (5,000)
Loans charged-off
Domestic 0 (1,688) 0 (844) (2,532)
International 0 0 0 0 0
Recoveries 70 517 0 190 777
Balances at end of the period $ 38,648 $ 53,048 $ 1 $ 12,488 $ 104,185


		Six Months Ended June 30, 2021											Three Months Ended June 30, 2022
(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		$	50,227	$	48,130	$	1	$	12,544	$	110,902
(Reversal of) provision for loan losses		(11,649)		5,719		0		930		(5,000)
Balance at beginning of the period												Balance at beginning of the period	$	12,362	$	33,419	$	41	$	10,229	$	56,051
Provision for (reversal of) loan losses												Provision for (reversal of) loan losses	1,794		(564)		(41)		(1,189)		—
Loans charged-off	Loans charged-off											Loans charged-off
Domestic	Domestic	0		(1,923)		0		(1,275)		(3,198)		Domestic	—		(4,605)		—		(915)		(5,520)
International	International	0		0		0		0		0		International	—		—		—		—		—
Recoveries	Recoveries	70		1,122		0		289		1,481		Recoveries	10		1,396		—		90		1,496
Balances at end of the period		$	38,648	$	53,048	$	1	$	12,488	$	104,185
Balance at end of the period												Balance at end of the period	$	14,166	$	29,646	$	—	$	8,215	$	52,027

~~Table of Contents~~

~~Amerant Bancorp Inc. and Subsidiaries~~

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

June 30, 2021
(in thousands) Real Estate Commercial Financial
Institutions Consumer
and Others Total
Allowance for loan losses by impairment methodology:
Individually evaluated $ 11,665 $ 22,869 $ 0 $ 1,232 $ 35,766
Collectively evaluated 26,983 30,179 1 11,256 68,419
$ 38,648 $ 53,048 $ 1 $ 12,488 $ 104,185
Investment in loans, net of unearned income:
Individually evaluated $ 58,342 $ 58,076 $ 0 $ 7,627 $ 124,045
Collectively evaluated 2,633,318 2,049,944 15,333 784,133 5,482,728
$ 2,691,660 $ 2,108,020 $ 15,333 $ 791,760 $ 5,606,773

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

~~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 the recorded investment amount of loan sales by portfolio segment:~~

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 is a summary of impaired loans as of June 30, 2021 and December 31, 2020:~~

June 30, 2021
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 $ 37,522 $ 10,892 $ 48,414 $ 18,361 $ 48,418 $ 11,665
Multi-family residential 0 9,928 9,928 8,530 9,839 0
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 5,350 2,081 7,431 10,189 7,351 1,107
Owner occupied 603 10,674 11,277 12,789 11,120 200
43,475 33,575 77,050 49,869 76,728 12,972
Commercial loans 33,138 13,661 46,799 46,823 68,545 22,669
Consumer loans and overdrafts 195 1 196 200 195 125
$ 76,808 $ 47,237 $ 124,045 $ 96,892 $ 145,468 $ 35,766

~~_______________~~

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


	Six Months Ended June 30, 2022
(in thousands)	Real Estate		Commercial		Financial Institutions		Consumer and Others		Total
Balance at beginning of the period	$	17,952	$	38,979	$	42	$	12,926	$	69,899
Reversal of loan losses	(3,800)		(3,149)		(42)		(3,009)		(10,000)
Loans charged-off
Domestic	—		(7,880)		—		(1,958)		(9,838)
International	—		—		—		(4)		(4)
Recoveries	14		1,696		—		260		1,970
Balance at end of the period	$	14,166	$	29,646	$	—	$	8,215	$	52,027

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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



	June 30, 2022
(in thousands)	Real Estate		Commercial		Financial Institutions		Consumer and Others		Total
Allowance for loan losses by impairment methodology:
Individually evaluated	$	453	$	4,820	$	—	$	2,438	$	7,711
Collectively evaluated	13,713		24,826		—		5,777		44,316
	$	14,166	$	29,646	$	—	$	8,215	$	52,027
Investment in loans, net of unearned income:
Individually evaluated	$	1,251	$	21,043	$	—	$	5,394	$	27,688
Collectively evaluated	2,317,371		2,219,390		13,250		1,148,432		5,698,443
	$	2,318,622	$	2,240,433	$	13,250	$	1,153,826	$	5,726,131


	Three Months Ended June 30, 2021
(in thousands)	Real Estate		Commercial		Financial Institutions		Consumer and Others		Total
Balance at beginning of the period	$	48,291	$	49,202	$	1	$	13,446	$	110,940
(Reversal of) provision for loan losses	(9,713)		5,017		—		(304)		(5,000)
Loans charged-off
Domestic	—		(1,688)		—		(844)		(2,532)
International	—		—		—		—		—
Recoveries	70		517		—		190		777
Balance at end of the period	$	38,648	$	53,048	$	1	$	12,488	$	104,185

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Amerant Bancorp Inc. and Subsidiaries

Notes to Interim Consolidated Financial Statements (Unaudited)


	Six Months Ended June 30, 2021
(in thousands)	Real Estate		Commercial		Financial Institutions		Consumer and Others		Total
Balances at beginning of the period	$	50,227	$	48,130	$	1	$	12,544	$	110,902
(Reversal of) provision for loan losses	(11,649)		5,719		—		930		(5,000)
Loans charged-off
Domestic	—		(1,923)		—		(1,275)		(3,198)
International	—		—		—		—		—
Recoveries	70		1,122		—		289		1,481
Balances at end of the period	$	38,648	$	53,048	$	1	$	12,488	$	104,185



	June 30, 2021
(in thousands)	Real Estate		Commercial		Financial Institutions		Consumer and Others		Total
Allowance for loan losses by impairment methodology:
Individually evaluated	$	11,665	$	22,869	$	—	$	1,232	$	35,766
Collectively evaluated	26,983		30,179		1		11,256		68,419
	$	38,648	$	53,048	$	1	$	12,488	$	104,185
Investment in loans, net of unearned income:
Individually evaluated	$	58,342	$	58,076	$	—	$	7,627	$	124,045
Collectively evaluated	2,633,318		2,049,944		15,333		784,133		5,482,728
	$	2,691,660	$	2,108,020	$	15,333	$	791,760	$	5,606,773

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Amerant Bancorp Inc. and Subsidiaries

Notes to Interim Consolidated Financial Statements (Unaudited)

The following is a summary of net proceeds from sales of loans held for investment by portfolio segment:


Three Months Ended June 30, (in thousands)	Real Estate		Commercial		Financial Institutions		Consumer and others		Total
2022	$	11,566	$	—	$	—	$	—	$	11,566
2021	$	—	$	102,247	$	—	$	2,351	$	104,598


Six Months Ended June 30, (in thousands)	Real Estate		Commercial		Financial Institutions		Consumer and others		Total
2022	$	11,566	$	—	$	—	$	1,313	$	12,879
2021	$	—	$	102,247	$	—	$	3,524	$	105,771

The following is a summary of impaired loans as of June 30, 2022 and December 31, 2021:


	June 30, 2022
	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	$	1,251	$	—	$	1,251	$	12,469	$	1,313	$	453
Multi-family residential	—		—		—		—		—		—
Land development and construction loans	—		—		—		—		—		—
	1,251		—		1,251		12,469		1,313		453
Single-family residential	1,330		1,666		2,996		4,734		2,970		251
Owner occupied	382		9,177		9,559		10,009		9,410		127
	2,963		10,843		13,806		27,212		13,693		831
Commercial loans	8,345		3,139		11,484		25,908		13,427		4,693
Consumer loans and overdrafts	2,398		—		2,398		868		2,398		2,187
	$	13,706	$	13,982	$	27,688	$	53,988	$	29,518	$	7,711

_______________

(1)Average using trailing four quarter balances.

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Amerant Bancorp Inc. and Subsidiaries

Notes to Interim Consolidated Financial Statements (Unaudited)


	December 31, 2021
	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	$	1,452	$	5,833	$	7,285	$	23,185	$	7,349	$	546
Multi-family residential	—		—		—		5,324		—		—
Land development and construction loans	—		—		—		—		—		—
	1,452		5,833		7,285		28,509		7,349		546
Single-family residential	3,689		1,689		5,378		7,619		5,316		618
Owner occupied	516		8,149		8,665		10,877		8,491		170
	5,657		15,671		21,328		47,005		21,156		1,334
Commercial loans	21,353		9,767		31,120		40,626		59,334		10,292
Consumer loans and overdrafts	256		—		256		268		256		165
	$	27,266	$	25,438	$	52,704	$	87,899	$	80,746	$	11,791

_______________

(1)Average using trailing four quarter balances.

Troubled Debt Restructurings

The following table shows information about loans modified in TDRs as of June 30, ~~2021~~2022 and December 31, ~~2020:~~2021:


		As of June 30, 2021			As of December 31, 2020				As of June 30, 2022			As of December 31, 2021
(in thousands)	(in thousands)	Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment		(in thousands)	Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment
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	$	1,592	1	$	1,729	Non-owner occupied	1	$	1,313	1	$	1,452

Single-family residential	Single-family residential	2	260		2	267		Single-family residential	1	267		1	258
Owner occupied	Owner occupied	4	6,508		4	6,784		Owner occupied	4	5,915		4	6,213
		7	8,360		7	8,780			6	7,495		6	7,923
Commercial loans	Commercial loans	11	5,048		11	3,851		Commercial loans	11	4,192		11	5,005

Total ~~(1)~~(2)	Total ~~(1)~~(2)	18	$	13,408	18	$	12,631	Total ~~(1)~~(2)	17	$	11,687	17	$	12,928

______________

(1)~~Balances as~~As of June 30, ~~2021~~2022 and December 31, ~~2020 include~~2021, includes a multiple loan relationship with a South Florida customer consisting of CRE, owner occupied and commercial loans totaling ~~$9.6~~$8.3 million and ~~$8.4~~$9.1 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~~2022 and December 31, ~~2020,~~2021, this relationship included 2 ~~and 4~~ residential loans totaling ~~$1.5~~$1.4 million and 1 commercial loan of $0.7 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~~$0.5 million and $0.8 million at June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively, are adequate to cover probable losses given current facts and circumstances.

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Notes to Interim Consolidated Financial Statements (Unaudited)

~~During~~(2)There were no new TDRs in the ~~six~~three 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~~2022. In addition, during the ~~second quarter of 2021. There were 0 new TDRs during the six~~three months ended June 30, ~~2020. During the six months ended June 30, 2021,~~2022, there were no 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.restructuring.

Loans by Credit Quality Indicators

Loans by credit quality indicators as of June 30, ~~2021~~2022 and December 31, ~~2020~~2021 are summarized in the following tables:


		June 30, 2021													June 30, 2022
		Credit Risk Rating													Credit Risk Rating
		Nonclassified				Classified									Nonclassified				Classified
(in thousands)	(in thousands)	Pass		Special Mention		Substandard		Doubtful		Loss		Total		(in thousands)	Pass		Special Mention		Substandard		Doubtful		Loss		Total
Real estate loans	Real estate loans													Real estate loans
Commercial real estate	Commercial real estate													Commercial real estate
Non-owner occupied	Non-owner occupied	$	1,618,672	$	32,858	$	36,040	$	12,306	$	0	$	1,699,876	Non-owner occupied	$	1,499,237	$	29,799	$	—	$	1,257	$	—	$	1,530,293
Multi-family residential	Multi-family residential	648,094		0		9,928		0		0		658,022		Multi-family residential	532,066		—		—		—		—		532,066
Land development and construction loans	Land development and construction loans	361,077		0		0		0		0		361,077		Land development and construction loans	288,581		—		—		—		—		288,581
		2,627,843		32,858		45,968		12,306		0		2,718,975			2,319,884		29,799		—		1,257		—		2,350,940
Single-family residential	Single-family residential	609,351		0		7,194		0		0		616,545		Single-family residential	724,701		—		3,011		—		—		727,712
Owner occupied	Owner occupied	912,511		19,456		11,375		0		0		943,342		Owner occupied	944,889		—		9,649		—		—		954,538
		4,149,705		52,314		64,537		12,306		0		4,278,862			3,989,474		29,799		12,660		1,257		—		4,033,190
Commercial loans	Commercial loans	917,659		40,151		23,055		22,546		0		1,003,411		Commercial loans	1,104,108		7,873		9,663		604		—		1,122,248
Loans to financial institutions and acceptances	Loans to financial institutions and acceptances	13,672		0		0		0		0		13,672		Loans to financial institutions and acceptances	13,250		—		—		—		—		13,250
Consumer loans and overdrafts	Consumer loans and overdrafts	310,627		0		201		0		0		310,828		Consumer loans and overdrafts	555,045		—		2,398		—		—		557,443
		$	5,391,663	$	92,465	$	87,793	$	34,852	$	0	$	5,606,773		$	5,661,877	$	37,672	$	24,721	$	1,861	$	—	$	5,726,131

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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.


	December 31, 2021
	Credit Risk Rating
	Nonclassified				Classified
(in thousands)	Pass		Special Mention		Substandard		Doubtful		Loss		Total
Real estate loans
Commercial real estate
Non-owner occupied	$	1,499,100	$	34,205	$	5,890	$	1,395	$	—	$	1,540,590
Multi-family residential	514,679		—		—		—		—		514,679
Land development and construction loans	327,246		—		—		—		—		327,246
	2,341,025		34,205		5,890		1,395		—		2,382,515
Single-family residential	656,118		—		5,221		—		—		661,339
Owner occupied	946,350		7,429		8,759		—		—		962,538
	3,943,493		41,634		19,870		1,395		—		4,006,392
Commercial loans	903,400		32,452		20,324		9,497		—		965,673
Loans to financial institutions and acceptances	13,710		—		—		—		—		13,710
Consumer loans and overdrafts	423,395		—		270		—		—		423,665
	$	5,283,998	$	74,086	$	40,464	$	10,892	$	—	$	5,409,440

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6.Time Deposits

Time deposits in denominations of $100,000 or more amounted to approximately $0.7 billion and $0.8 billion at June 30, 2022 and December 31, 2021, respectively. Time deposits in denominations of more than $250,000 amounted to approximately $346 million and $423 million at June 30, 2022 and December 31, 2021, respectively. As of June 30, 2022 and December 31, 2021, brokered time deposits amounted to $318 million and $290 million, respectively.

7.Advances from the Federal Home Loan Bank

At June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the Company had outstanding advances from the FHLB as follows:


				Outstanding Balance							Outstanding Balance
Year of Maturity	Year of Maturity	Interest Rate	Interest Rate Type	At June 30, 2021		At December 31, 2020		Year of Maturity	Interest Rate	Interest Rate Type	At June 30, 2022		At December 31, 2021
				(in thousands)							(in thousands)

2022		0.65%	Fixed	0		50,000
2023	2023	0.62% to 1.06%	Fixed	104,063		70,000		2023	0.62% to 1.06%	Fixed	104,566		104,317
2024 and after (1)		0.62% to 2.42%	Fixed	704,551		930,000
2024								2024	1.68%	Fixed	100,000		—
2025 and after (1)								2025 and after (1)	0.62% to 3.07%	Fixed	625,958		705,260
				$	808,614	$	1,050,000				$	830,524	$	809,577

_______________

(1)AsThere were no callable advances from the FHLB as of June 30, ~~2021 and~~2022. As of December 31, ~~2020, includes~~2021, there were $530 million ~~(fixed~~in callable advances from the FHLB with fixed interest rates raging from 0.62% to 0.97%~~) in advances from the FHLB that are callable prior to maturity.~~.

In ~~May 2021,~~the first quarter of 2022, 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.

~~During the second quarter of 2021, the Company had~~ a loss of ~~$2.5~~$0.7 million on the early repayment of ~~$235~~$180 million in callable advances from the FHLB. In the second quarter of 2022, the Company repaid $350.0 million in callable advances from the FHLB ~~advances.~~which did not result in any gains or losses recorded during the period.

~~Table of 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 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 June 30, ~~2021,~~2022, these Senior Notes amounted to ~~$58.7~~$59.1 million, net of direct unamortized issuance costs of ~~$1.3~~$0.9 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~~Florida.

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Amerant Bancorp ~~(“Amerant Florida”).~~Inc. and Subsidiaries

Notes to Interim Consolidated Financial Statements (Unaudited)

9.Subordinated Notes

On March 9, 2022, the Company entered into a Subordinated Note Purchase Agreement (the “Purchase Agreement”) with Amerant Florida (the “Guarantor”), and qualified institutional buyers pursuant to which the Company sold and issued $30.0 million aggregate principal amount of its 4.25% Fixed-to-Floating Rate Subordinated Notes due March 15, 2032 (the “Subordinated Notes”). Net proceeds were $29.1 million, after estimated direct issuance costs of approximately $0.9 million. Unamortized direct issuance costs are deferred and amortized over the term of the Subordinated Notes of 10 years. As of June 30, 2022, these Subordinated Notes amounted to $29.2 million, net of direct unamortized issuance costs of $0.8 million.

The Subordinated Notes will initially bear interest at a fixed rate of 4.25% per annum, from and including March 9, 2022, to but excluding March 15, 2027, with interest payable semi-annually in arrears. From and including March 15, 2027, to but excluding the stated maturity date or early redemption date, the interest rate will reset quarterly to an annual floating rate equal to the then-current benchmark rate, which will initially be the three-month Secured Overnight Financing Rate (“SOFR”) plus 251 basis points, with interest during such period payable quarterly in arrears. If the three-month SOFR cannot be determined during the applicable floating rate period, a different index will be determined and used in accordance with the terms of the Subordinated Notes.

These Subordinated Notes are unsecured, subordinated obligations of the Company and rank junior in right of payment to all of the Company’s current and future senior indebtedness. Prior to March 15, 2027, the Company may redeem the Subordinated Notes, in whole but not in part, only under certain limited circumstances. On or after March 15, 2027, the Company may, at its option, redeem the Subordinated Notes, in whole or in part, on any interest payment date, subject to the receipt of any required regulatory approvals. The Notes are fully and unconditionally guaranteed by the Guarantor (the “Guarantee”). The Subordinated Notes have been structured to qualify as Tier 2 capital of the Company for regulatory capital purposes, and rank equally in right of payment to all of our existing and future subordinated indebtedness.

The Subordinated Notes were offered and sold by the Company in a private placement offering in reliance on exemptions from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), pursuant to Section 4(a)(2) of the Securities Act and Rule 506(b) of Regulation D under the Securities Act. In connection with the sale and issuance of the Subordinated Notes, the Company entered into a registration rights agreement, pursuant to which the Company agreed to take certain actions to provide for the exchange of the Subordinated Notes for subordinated notes that are registered under the Securities Act and will have substantially the same terms.

On June 21, 2022, the Company successfully completed the exchange of all of its outstanding Subordinated Notes for an equal principal amount of its registered 4.25% Fixed-to-Floating Rate Subordinated Notes due 2032 (the “Registered Subordinated Notes”). The terms of the Registered Subordinated Notes are substantially identical to the terms of the Subordinated Notes, except that the Registered Subordinated Notes are not subject to the transfer restrictions, registration rights and additional interest provisions (under the circumstances described in the registration rights agreement relating to our fulfillment of our registration obligations) applicable to the Subordinated Notes.

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Amerant Bancorp Inc. and Subsidiaries

Notes to Interim Consolidated Financial Statements (Unaudited)

10. 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 June 30, ~~2021~~2022 and December 31, ~~2020:~~2021:


		June 30, 2021				December 31, 2020								June 30, 2022				December 31, 2021
(in thousands)	(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	(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	Commercebank Capital Trust VI	9,250		9,537		9,250		9,537		2002	3-M LIBOR + 3.35%	2033	Commercebank Capital Trust VI	$	9,250	$	9,537	$	9,250	$	9,537	2002	3-M LIBOR + 3.35%	2033
Commercebank Capital Trust VII	Commercebank Capital Trust VII	8,000		8,248		8,000		8,248		2003	3-M LIBOR + 3.25%	2033	Commercebank Capital Trust VII	8,000		8,248		8,000		8,248		2003	3-M LIBOR + 3.25%	2033
Commercebank Capital Trust VIII	Commercebank Capital Trust VIII	5,000		5,155		5,000		5,155		2004	3-M LIBOR + 2.85%	2034	Commercebank Capital Trust VIII	5,000		5,155		5,000		5,155		2004	3-M LIBOR + 2.85%	2034
Commercebank Capital Trust IX	Commercebank Capital Trust IX	25,000		25,774		25,000		25,774		2006	3-M LIBOR + 1.75%	2038	Commercebank Capital Trust IX	25,000		25,774		25,000		25,774		2006	3-M LIBOR + 1.75%	2038
Commercebank Capital Trust X	Commercebank Capital Trust X	15,000		15,464		15,000		15,464		2006	3-M LIBOR + 1.78%	2036	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					$	62,250	$	64,178	$	62,250	$	64,178

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Notes to Interim Consolidated Financial Statements (Unaudited)

~~10.~~11.Derivative Instruments

At June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the fair values of the Company’s derivative instruments were as follows:


		June 30, 2021				December 31, 2020					June 30, 2022				December 31, 2021
(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	$	1,230	$	0	$	1,658	Interest rate swaps designated as cash flow hedges	$	77	$	17	$	—	$	615
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	26,453		980		39,715		0		Customers	1,090		34,582		18,858		1,923
Third party broker	Third party broker	980		26,453		0		39,715		Third party broker	34,582		1,090		1,923		18,858
		27,433		27,433		39,715		39,715			35,672		35,672		20,781		20,781
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		140		0		58		Customers	—		3,969		—		764
Third party broker	Third party broker	6		0		6		0		Third party broker	3,191		—		477		—
		6		140		6		58			3,191		3,969		477		764
Mortgage derivatives not designated as hedging instruments:	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		Interest rate lock commitments	745		0		581		—
Forward contracts										Forward contracts	78		41		31		38
		$	27,475	$	28,803	$	39,721	$	41,431		823		41		612		38
											$	39,763	$	39,699	$	21,870	$	22,198

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 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~~2022 and December 31, ~~2020,~~2021, the Company had 5 interest rate swap contracts with notional amounts totaling $64.2 million, ~~that~~maturing in the second half of 2022. These contracts were designated as 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~~2022 and December 31, ~~2020~~2021 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. InThe Company recognized unrealized losses related to these interest rate swap contracts of $0.1 million and $0.2 million in the ~~second quarter~~three months ended June 30, 2022 and 2021, respectively, and $0.4 million in each of the six months ended June 30, ~~2021, we recognized~~2022 and 2021. These 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 second quarter and six months ended 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 comprehensive income. As of June 30, ~~2021,~~2022, the estimated net unrealized losses in accumulated other comprehensive income expected to be reclassified into expense in the next ~~twelve~~six months amounted to ~~$0.8~~$0.4 million.

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Amerant Bancorp Inc. and Subsidiaries

Notes to Interim Consolidated Financial Statements (Unaudited)

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 in each of the three months ended June 30, 2022 and 2021, and $0.7 million in each of 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~~2022 and ~~$0.7 million, in the second quarter and six months ended June 30, 2020, respectively),~~2021, 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 June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the Company had 89125 and 76109 interest rate swap contracts with customers, respectively, with a total notional ~~amount~~amounts of ~~$523.4~~$769.1 million and ~~$475.6~~$595.4 million, respectively. These instruments involve the Company’s payment of variable-rate amounts to customers in exchange for the Company receiving fixed-rate ~~amounts~~payments from customers over the life of the ~~contract.~~contracts without exchange of the underlying notional amount. In addition, atas of June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the Company had ~~89 and 76~~ interest rate swap mirror contracts ~~respectively,~~ with third party brokers with similar terms.

~~In 2019, the~~

The Company ~~entered~~enters into swap participation agreements with other financial institutions to manage the credit risk exposure on certain interest rate swaps with customers. Under these agreements, the Company, as the beneficiary or guarantor, will receive or make payments from/to the counterparty if the borrower defaults on the related interest rate swap contract. As of June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the Company had 2 swap participation agreements with total notional amounts of approximately $32.0 million. The notional amount of these agreements is based on the Company’s pro-rata share of the related interest rate swap contracts. As of June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the fair value of swap participation agreements was not significant.

Interest Rate Caps

At June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the Company had 2116 and 2319 interest rate cap contracts with customers with a total notional ~~amount~~amounts of ~~$437.9~~$280.7 million and ~~$486.5~~$432.0 million, respectively. These instruments involve the Company making payments if an interest rate exceeds the agreed strike price. In addition, at June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the Company had 610 and 89 interest rate cap mirror contracts, respectively, with ~~various~~a third party broker with total notional amounts of $156.9 million and $190.7 million, respectively.

In April 2022, the Company entered into 4 interest rate cap contracts with various third-party brokers with total notional amounts of ~~$108.2~~$140.0 million ~~and $152.2 million, respectively.~~at June 30, 2022. These interest rate caps serve to partially offset changes in the estimated fair value of interest rate cap contracts with customers at June 30, 2022.

~~Credit Risk-Related Contingent Features~~Mortgage Derivatives

~~Some agreements may require~~Since the ~~posting~~second quarter of ~~pledged securities when~~2021, the ~~valuation of the~~Company has entered into interest rate ~~swap falls below a certain amount.~~

lock commitments and forward sale contracts to manage the risk exposure in the mortgage banking area. At June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the ~~derivative~~Company had interest rate lock commitments with notional amounts of $83.0 million and $17.9 million, respectively, and forward contracts ~~subject~~with notional amounts of $30.7 million and $16.5 million, respectively. Interest rate lock commitments guarantee the funding of residential mortgage loans originated for sale, at specified interest rates and times in the future. Forward sale contracts consist of commitments to ~~credit-risk related contingent features~~deliver mortgage loans, originated and/or purchased, in the secondary market at a future date. The change in the fair value of these instruments was an unrealized loss of $0.1 million and $36 thousand in the three months ended June 30, 2022 and 2021, respectively, and an unrealized gain of $0.2 million and an unrealized loss of $36 thousand in the six moths ended June 30, 2022 and 2021, respectively. These amounts were recorded 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)

part of other noninterest income in the consolidated statements of operations and comprehensive income.

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Notes to Interim Consolidated Financial Statements (Unaudited)

~~11.~~

Credit Risk-Related Contingent Features

As of June 30, 2022 and December 31, 2021, the aggregate fair value of interest rate swaps in a liability position was $35.7 million and $21.4 million, respectively.

Some agreements may require pledging of securities when the valuation of a interest rate swap falls below a certain amount. At June 30, 2022 and December 31, 2021, there were $0.7 million and $2.0 million, respectively, in debt securities held for sale pledged as collateral to secure interest rate swaps designated as cash flow hedges, with a fair value of $17 thousand and $0.6 million, respectively. In addition, at December 31, 2021, there were $23.4 million in debt securities available for sale pledged as collateral to secure interest rate swaps with third-party brokers not designated as hedging instruments, with a fair value of $18.9 million. As of June 30, 2022, there were no collateral requirements related to interest rate swaps with third-party brokers not designated as hedging instruments.

12.Leases

The Company leases certain premises and equipment under operating leases. The leases have remaining lease terms ranging from less than one year to 4544 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~~$0.4 million and ~~$0.7~~$0.3 million in variable lease payments during the three months ended June 30, 2022 and 2021, respectively, and $0.9 million and $0.7 million during the six months ended June 30, 2022 and 2021, respectively, which include mostly common area maintenance and taxes, included in occupancy and equipment on the consolidated statements of income. ~~Additionally,~~In addition, the Company recorded a$1.6 million and $0.8 million, respectively, of ROU asset impairment ~~of ROUA~~charges associated with the ~~closing~~closure of a branch in Pembroke Pines, Florida in 2022, and in connection with the closure of the ~~NY LPO. This impairment was~~NYC loan production office in 2021. These impairments were recorded as occupancy and equipment expense on the consolidated statements of income.

~~The following table presents lease~~Lease costs for the three and six month periods ended June 30, 2022 and 2021 were as follows:


(in thousands)	Three months ended June 30,				Six months ended June 30,
	2022		2021		2022		2021
Lease cost
Operating lease cost	$	4,368	$	1,914	$	8,730	$	3,823
Short-term lease cost	22		21		44		176
Variable lease cost	443		334		890		667
Sublease income	(866)		—		(1,637)		(108)
Total lease cost, net	$	3,967	$	2,269	$	8,027	$	4,558

Beginning in the three months ended March 31, 2022, rental income associated with the subleasing of portions of the Company’s headquarters building is presented as a reduction to rent expense under lease agreements under occupancy and equipment cost (included as part of other noninterest income in 2021 in connection with the previously-owned headquarters building). Rental income from this source was $0.7 million in each of the three 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

2022 and 2021, respectively, and $1.4 million and $1.3 million in the six months ended June 30, 2022 and 2021, respectively.

As of June 30, 2022 and December 31, 2021, the Company had a right-of-use asset of ~~$52.5~~$139.4 million and an$141.1 million and total operating lease liability of ~~$54.0~~$143.5 million ~~were~~and $143.0 million, respectively. As of June 30, 2022 and December 31, 2021, the Company had a short-term lease liability of $5.7 million and $6.4 million, respectively, included in ~~“Other assets” and “Other liabilities”, respectively, on~~other liabilities in 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~~	%

sheet.

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Notes to Interim Consolidated Financial Statements (Unaudited)

The following table provides supplemental information to leases as of and for the three and six months ended June 30, 2022 and 2021:


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
(in thousands, except weighted average data)
Cash paid for amounts included in the measurement of operating lease liabilities	3,672		1,771		7,312		3,536
Operating lease right-of-use asset obtained in exchange for operating lease liability	1,629		1,038		3,223		2,082
Weighted average remaining lease term for operating leases	18.7 years		21.0 years		18.7 years		21.0 years
Weighted average discount rate for operating leases	5.92	%	5.75	%	5.92	%	5.75	%

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
2022. Presented below is the remaining six months of 2022 shown and thereafter:


(in thousands)
For the remaining six months of 2022	$	7,156
2023	12,457
2024	12,453
2025	12,398
2026	12,589
Thereafter	191,688
Total undiscounted cash flows	248,741
Less: implied interest	(105,241)
Total lease obligations	$	143,500

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Notes to Interim Consolidated Financial Statements (Unaudited)

~~12.~~13.Stock-based Incentive Compensation Plan

The Company sponsors the 2018 Equity and Incentive Compensation Plan (the “2018 Equity Plan”). See Note 1113 to the Company’s audited consolidated financial statements onin the Form 10-K for more information on the 2018 Equity Plan, the Long-Term Incentive (LTI) Plan and stock-based compensation awards for the year ended December 31, ~~2020,~~2021, including restricted ~~stocks and~~stock awards (“RSAs”), restricted stock units (“RSUs”) and performance share units (“PSUs”).

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 six months ended June 30, ~~2021:~~2022:


		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	210,423	$	13.55	Non-vested shares, beginning of year	229,779	$	18.61
Granted	Granted	196,015	16.65		Granted	142,700	32.68
Vested	Vested	(2,630)	14.91		Vested	(58,210)	16.59
Forfeited	Forfeited	(7,270)	16.65		Forfeited	(29,586)	23.46
Non-vested shares at June 30, 2021		396,538	$	15.02
Non-vested shares at June 30, 2022					Non-vested shares at June 30, 2022	284,683	$	25.57

~~On February 16, 2021,~~In the first quarter of 2022, the Company granted ~~194,492 shares~~an aggregate of ~~restricted Class A common stock~~105,912 RSAs to ~~certain of its~~various executive officers and other 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~~RSAs 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~~$33.98 per ~~share.~~RSA. These RSAs will vest in three equal installments on each of the first three anniversaries of the grant date.

~~On March 2, 2021,~~In the second quarter of 2022, the Company granted ~~1,523 shares~~an aggregate of ~~restricted Class A common stock~~36,788 RSAs 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.~~various employees, under the LTI Plan. The weighted average fair value of the ~~restricted stock~~RSAs granted was based on the market price of the shares of the Company’s Class A common stock at the grant date which was ~~$16.41~~$28.95 per ~~share.~~RSA. These RSAs will vest in three equal installments on each of the first three anniversaries of the grant date.

The Company recorded compensation expense related to the restricted stock awards of ~~$0.9~~$0.8 million and ~~$0.6~~$0.9 million during the three months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively and ~~$1.4~~$1.6 million and ~~$1.0~~$1.4 million during the six months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively. The total unamortized deferred compensation expense of ~~$2.8~~$5.0 million for all unvested restricted stock outstanding at June 30, ~~2021~~2022 will be recognized over a weighted average period of ~~1.6~~1.7 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 six months ended June 30, ~~2021:~~2022:


		Stock-settled RSUs			Cash-settled RSUs			Total RSUs			Stock-settled PSUs				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 PSUs	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	38,327	$	13.45	20,766	$	13.45	59,093	$	13.72	0	0		Nonvested, beginning of year	121,739	$	17.21	6,573	$	22.82	128,312	$	17.62	110,784	$	13.57
Granted	Granted	137,376	17.20		6,573	22.82		143,949	17.46		120,513	13.82		Granted	51,839	31.82		—	—		51,839	31.82		26,415	33.63
Vested	Vested	(33,780)	13.75		(11,151)	13.45		(44,931)	13.68		(1,729)	16.67		Vested	(47,883)	18.06		(6,573)	22.82		(54,456)	18.63		—	—
Forfeited	Forfeited	(8,378)	16.65		0	0		(8,378)	16.65		(8,000)	16.67		Forfeited	—	—		—	—		—	—		—	—
Non-vested, end of year	Non-vested, end of year	133,545	$	17.03	16,188	$	17.25	149,733	$	17.16	110,784	$	13.57	Non-vested, end of year	125,695	$	22.91	—	$	—	125,695	$	23.04	137,199	$	17.43

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~~2022, the Company granted an aggregate of 29,414 RSUs, including: (i) 26,414 RSUs granted to various executive officers under the LTI Plan, and (ii) 3,000 RSUs granted to one executive officer as a one-time recognition award, under 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.~~2018 Equity Plan. 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~~$33.98 per RSU. These RSUs will vest in three equal installments on each of the first three anniversaries of the grant date.

On February 16, ~~2021, in connection with a sign-on grant,~~2022, 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.~~ 26,415 PSUs to various executive officers under the LTI Plan. These PSUs generally vest at the end of a ~~three-year~~three-year performance period, but only ~~results~~result 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%~~Company used an option pricing model to ~~100% of the target PSUs. The~~estimate fair value of the PSUs granted which was ~~$11.15~~$33.63 per ~~PSU based on the results of a Monte Carlo simulation to estimate the fair value of the PSUs as of the grant date.~~PSU.

On ~~February 16, 2021, in connection with a sign-on grant,~~June 8, 2022, the Company ~~entered into a RSU Agreement with~~granted 5,175 stock-settled RSUs to 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.~~officer. 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~~$28.98 per RSU. These RSUs will vest in three equal installments on each of the first three anniversaries of the grant date.

On June 9, ~~2021,~~2022, the Company granted ~~19,719~~17,250 stock-settled RSUs to its independent ~~directors, including 13,146 stock-settled RSUs and 6,573 cash-settled RSUs.~~directors. 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~~$28.98 per RSU. These RSUs will vest ~~on June 9, 2022.~~within one year.

~~Table of Contents~~

~~Amerant Bancorp Inc. and Subsidiaries~~

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

The Company recorded compensation expense related to RSUs and PSUs of ~~$0.9~~$0.5 million and ~~$0.1~~$0.9 million during the three months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively, and ~~$1.2~~$1.0 million and ~~$0.2~~$1.2 million during the six months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively. The total unamortized deferred compensation expense of ~~$3.0~~$3.5 million for all unvested stock-settled RSUs and PSUs outstanding at June 30, ~~2021~~2022 will be recognized over a weighted average period of ~~2.0~~1.7 years.

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Amerant Bancorp Inc. and Subsidiaries

Notes to Interim Consolidated Financial Statements (Unaudited)

~~13.~~14.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 six months ended June 30, 2022 and 2021 were 21.10% and ~~2020 were~~ 21.45% ~~and 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, forecasted permanent non-deductible expenses, and the effect of corporate state taxes.

~~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:~~

June 30, 2021 December 31, 2020
(in thousands) Before Tax
Amount Tax
Effect Net of Tax
Amount Before Tax
Amount Tax
Effect Net of Tax
Amount
Net unrealized holding gains on debt securities available for sale $ 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 4,352 (1,064) 3,288 4,605 (1,126) $ 3,479
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 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)

15. Accumulated Other Comprehensive (loss) Income (“AOCL/AOCI”):

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


	June 30, 2022						December 31, 2021
(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	$	(72,813)	$	18,685	$	(54,128)	$	15,775	$	(3,788)	$	11,987
Net unrealized holding gains on interest rate swaps designated as cash flow hedges	4,270		(1,101)		3,169		4,275		(1,045)		$	3,230
Total (AOCL) AOCI	$	(68,543)	$	17,584	$	(50,959)	$	20,050	$	(4,833)	$	15,217

The components of other comprehensive loss for the periods presented are summarized as follows:


	Three Months Ended June 30,
	2022						2021
(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	$	(35,546)	$	9,104	$	(26,442)	$	6,401	$	(1,464)	$	4,937
Reclassification adjustment for net gains included in net income	—		—		—		(1,254)		294		(960)
	(35,546)		9,104		(26,442)		5,147		(1,170)		3,977
Net unrealized holding losses on interest rate swaps designated as cash flow hedges:
Change in fair value arising during the period	73		(19)		54		(39)		10		(29)
Reclassification adjustment for net interest income included in net income	(198)		51		(147)		(130)		31		(99)
	(125)		32		(93)		(169)		41		(128)
Total other comprehensive (loss) income	$	(35,671)	$	9,136	$	(26,535)	$	4,978	$	(1,129)	$	3,849

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

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Amerant Bancorp Inc. and Subsidiaries

Notes to Interim Consolidated Financial Statements (Unaudited)


	Six Months Ended June 30,
	2022						2021
(in thousands)	Before Tax Amount		Tax Effect		Net of Tax Amount		Before Tax Amount		Tax Effect		Net of Tax Amount
Net unrealized holding losses on debt securities available for sale:
Change in fair value arising during the period	$	(88,539)	$	22,460	$	(66,079)	$	(6,127)	$	1,598	$	(4,529)
Reclassification adjustment for net gains included in net income	(49)		13		(36)		(4,201)		1,015		(3,186)
	(88,588)		22,473		(66,115)		(10,328)		2,613		(7,715)
Net unrealized holding losses on interest rate swaps designated as cash flow hedges:
Change in fair value arising during the period	317		(139)		178		8		(1)		7
Reclassification adjustment for net interest income included in net income	(322)		83		(239)		(261)		63		(198)
	(5)		(56)		(61)		(253)		62		(191)
Total other comprehensive loss	$	(88,593)	$	22,417	$	(66,176)	$	(10,581)	$	2,675	$	(7,906)

Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Interim Consolidated Financial Statements (Unaudited)

~~15.~~16. Stockholders’ Equity

a) ~~Class A~~ Common Stock

Shares of the Company’s Class A common stock issued and outstanding as of June 30, ~~2021~~2022 and December 31, ~~2020~~2021 were ~~29,028,672~~33,759,604 and ~~28,806,344,~~35,883,320, respectively. ~~The Company had 0~~

In the six months ended June 30, 2022, the Company’s Board of Directors authorized the cancellation of all shares of Class A common stock stock repurchased in the first half of 2022. As of June 30, 2022 and December 31, 2021, there were no shares of Class A common stock held as treasury stock.

~~b) Class B Common Stock and Treasury Stock~~Stock-Based Compensation Awards

~~Shares of~~

The Company grants, from time to time, stock-based compensation awards which are reflected as changes in the Company’s ~~Class B~~Stockholders’ equity. See Note 13 “Stock-Based Incentive Compensation Plan” for additional information about common stock ~~issued and outstanding as of June 30, 2021 and December 31, 2020 were 8,534,120 and 9,036,352, respectively. As of June 30, 2021 and December 31, 2020,~~transactions under the ~~Company had 0 shares of Class B common stock held as treasury stock.~~Company’s 2018 Equity Plan.

b) Dividends

On ~~March 10, 2021,~~January 19, 2022, the Company’s Board of Directors ~~approved~~declared a ~~stock repurchase program which provides for the potential repurchase~~cash dividend of ~~up to $40 million of shares~~$0.09 per share of the Company’s Class BA common stock. ~~Under~~The dividend was paid on February 28, 2022 to shareholders of record at the ~~2021 Stock Repurchase Program, the Company may repurchase shares~~close 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.

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.business on February 11, 2022. The aggregate ~~purchase price for these transactions~~amount in connection with this dividend was ~~approximately $8.4 million, including transaction costs. In the six months ended June 30, 2021,~~$3.2 million.

On April 13, 2022, the Company’s Board of Directors ~~authorized~~declared a cash dividend of $0.09 per share of the ~~cancellation~~Company’s Class A common stock. The dividend was paid on May 31, 2022 to shareholders of ~~those 502,232 shares~~record at the close of business on May 13, 2022. The aggregate amount in connection with this dividend was $3.0 million.

On July 20, 2022, the Company’s Board of Directors declared a cash dividend of $0.09 per share of the Company’s Class BA common stock.

The dividend is payable on August 31, 2022 to shareholders of record at the close of business on August 17, 2022.

~~16.~~17. 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.

Financial instruments whose contract amount represents off-balance sheet credit risk at June 30, ~~2021~~2022 are generally short-term and are as follows:


(in thousands)	Approximate Contract Amount
Commitments to extend credit	$	~~749,185~~917,158

Standby letters of credit	~~10,456~~17,101
Commercial letters of credit	~~826~~244
	$	~~760,467~~934,503

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Notes to Interim Consolidated Financial Statements (Unaudited)

~~17.~~18. Fair Value Measurements

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


		June 30, 2021									June 30, 2022
(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
Securities										Securities
Debt securities available for sale	Debt securities available for sale									Debt securities available for sale
U.S. government-sponsored enterprise debt securities	U.S. government-sponsored enterprise debt securities	$	0	$	543,583	$	0	$	543,583	U.S. government-sponsored enterprise debt securities	$	—	$	427,281	$	—	$	427,281
Corporate debt securities	Corporate debt securities	0		360,726		0		360,726		Corporate debt securities	—		334,016		—		334,016
U.S. government agency debt securities	U.S. government agency debt securities	0		284,405		0		284,405		U.S. government agency debt securities	—		355,844		—		355,844
Collateralized loan obligations										Collateralized loan obligations	0		4,775		0		4,775
Municipal bonds	Municipal bonds	0		2,847		0		2,847		Municipal bonds	—		1,895		—		1,895
U.S treasury securities	U.S treasury securities	0		2,507		0		2,507		U.S treasury securities	—		990		—		990
		0		1,194,068		0		1,194,068			—		1,124,801		—		1,124,801
Trading securities										Trading securities	103		—		—		103
Equity securities with readily determinable fair values not held for trading	Equity securities with readily determinable fair values not held for trading	0		23,988		0		23,988		Equity securities with readily determinable fair values not held for trading	10,767		—		—		10,767
Trading securities		198		0		0		198
											10,870		1,124,801		—		1,135,671
Mortgage loans held for sale (at fair value)	Mortgage loans held for sale (at fair value)	0		1,775		0		1,775		Mortgage loans held for sale (at fair value)	—		54,863		—		54,863
Bank owned life insurance										Bank owned life insurance	—		225,682		—		225,682
Other assets										Other assets
Mortgage servicing rights (MSRs)	Mortgage servicing rights (MSRs)	0		0		537		537		Mortgage servicing rights (MSRs)	—		—		935		935
Bank owned life insurance		0		220,271		0		220,271
Derivative instruments	Derivative instruments	0		27,475		0		27,475		Derivative instruments	—		39,763		—		39,763
		$	198	$	1,467,577	$	537	$	1,468,312		$	10,870	$	1,445,109	$	935	$	1,456,914
Liabilities	Liabilities									Liabilities
Other liabilities										Other liabilities
Derivative instruments	Derivative instruments	$	0	$	28,803	$	0	$	28,803	Derivative instruments	$	—	$	39,699	$	—	$	39,699

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Notes to Interim Consolidated Financial Statements (Unaudited)


		December 31, 2020									December 31, 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
Securities										Securities
Debt securities available for sale	Debt securities available for sale									Debt securities available for sale
U.S. government-sponsored enterprise debt securities	U.S. government-sponsored enterprise debt securities	$	0	$	661,335	$	0	$	661,335	U.S. government-sponsored enterprise debt securities	$	—	$	450,773	$	—	$	450,773
Corporate debt securities	Corporate debt securities	0		301,714		0		301,714		Corporate debt securities	—		357,790		—		357,790
U.S. government agency debt securities	U.S. government agency debt securities	0		204,578		0		204,578		U.S. government agency debt securities	—		361,906		—		361,906
U.S treasury securities	U.S treasury securities	0		2,512		0		2,512		U.S treasury securities	—		2,502		—		2,502
Municipal bonds	Municipal bonds	0		54,944		0		54,944		Municipal bonds	—		2,348		—		2,348
		0		1,225,083		0		1,225,083			—		1,175,319		—		1,175,319
Equity securities with readily determinable fair values not held for trading	Equity securities with readily determinable fair values not held for trading	0		24,342		0		24,342		Equity securities with readily determinable fair values not held for trading	—		252		—		252
											0		1,175,571		—		1,175,571
Mortgage loans held for sale (at fair value)										Mortgage loans held for sale (at fair value)	—		14,905		—		14,905
Bank owned life insurance	Bank owned life insurance	0		217,547		0		217,547		Bank owned life insurance	—		223,006		—		223,006
Other assets										Other assets
Mortgage servicing rights (MSRs)										Mortgage servicing rights (MSRs)	—		—		636		636
Derivative instruments	Derivative instruments	0		39,721		0		39,721		Derivative instruments	—		21,870		—		21,870
		$	0	$	1,506,693	$	0	$	1,506,693		$	—	$	1,435,352	$	636	$	1,435,988

Liabilities	Liabilities									Liabilities
Other liabilities										Other liabilities
Derivative instruments	Derivative instruments	$	0	$	41,431	$	0	$	41,431	Derivative instruments	$	—	$	22,198	$	—	$	22,198

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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~~2022 and December 31, ~~2020:~~2021:


		June 30, 2021											June 30, 2022
(in thousands)	(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		(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	Description											Description
Loans held for investment measured for impairments using the fair value of the collateral	Loans held for investment measured for impairments using the fair value of the collateral	$	39,625	$	0	$	0	$	39,625	$	19,838	Loans held for investment measured for impairments using the fair value of the collateral	$	8,662	$	—	$	—	$	8,662	$	—
Other Real Estate Owned												Other Real Estate Owned	6,545		—		—		6,545		3,254
Loans held for sale at the lower cost or fair value												Loans held for sale at the lower cost or fair value	66,390		—		66,390		—		159
													$	81,597	$	—	$	66,390	$	15,207	$	3,413


	December 31, 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	$	24,753			$	—	$	—	$	24,753	$	26,334
Other Real Estate Owned	9,720				—		—		9,720		80
	$	34,473	$	—	$	—	$	—	$	34,473	$	26,414

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
The following table presents the significant unobservable inputs (Level 3) used in the valuation of assets measured at fair value on a nonrecurring basis.

Financial Instrument

Unobservable Inputs

Valuation Methods

Discount Range

Typical Discount

Collateral dependent loans

Discount to fair value

Appraisal value, as adjusted

0-30%

6-7%

Inventory

0-100%

30-50%

Accounts receivables

0-100%

20-30%

Equipment

0-100%

20-30%

Other Real Estate Owned

Discount to fair value

Appraisal value, as adjusted

N/A

6-7%

Table of Contents

Amerant Bancorp Inc. and Subsidiaries

Notes to Interim Consolidated Financial Statements (Unaudited)

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”.~~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.

Loans Held for Sale, at Lower of Cost or Fair Value

For loans held for sale that are carried at the lower of fair value or cost, the fair value is generally based on quoted market prices of similar loans and is considered to be Level 2.

Other Real Estate Owned

The Company values OREO at the lower of cost or fair value of the property, less cost to sell. The fair value of the property is generally based upon recent appraisal values of the property, less cost to sell. The Company primarily uses third party appraisals to assist in measuring the valuation of OREO. Period revaluations are classified as level 3 as the assumptions used may not be observable.

There were 0no other significant assets or liabilities measured at fair value on a nonrecurring basis at June 30, ~~2021~~2022 and December 31, ~~2020.~~2021.

~~Table of Contents~~

~~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:


		June 30, 2021				December 31, 2020					June 30, 2022				December 31, 2021
(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:
Debt securities held to maturity										Debt securities held to maturity	$	238,621	$	226,524	$	118,175	$	119,077
Loans	Loans	$	2,709,554	$	2,640,886	$	2,884,550	$	2,801,279	Loans	2,774,848		2,739,496		2,619,461		2,559,280
Financial liabilities:	Financial liabilities:									Financial liabilities:
Time deposits	Time deposits	1,242,693		1,258,659		1,547,396		1,569,897		Time deposits	936,848		926,891		1,048,078		1,057,759
Advances from the FHLB	Advances from the FHLB	808,614		823,321		1,050,000		1,078,786		Advances from the FHLB	830,524		810,692		809,577		819,268
Senior notes	Senior notes	58,736		61,985		58,577		61,528		Senior notes	59,052		60,438		58,894		63,214
Subordinated notes										Subordinated notes	29,199		28,481		—		—
Junior subordinated debentures	Junior subordinated debentures	64,178		54,256		64,178		55,912		Junior subordinated debentures	64,178		63,835		64,178		61,212

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Notes to Interim Consolidated Financial Statements (Unaudited)

~~18.~~19.Earnings Per Share

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


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
(in thousands, except per share data)		2021		2020		2021		2020
(in thousands, except share data and per share amounts)										(in thousands, except share data and per share amounts)	2022		2021		2022		2021
Numerator:	Numerator:									Numerator:
Net income (loss) before attribution of noncontrolling interest		$	15,145	$	(15,279)	$	29,604	$	(11,897)
Net income before attribution of noncontrolling interest										Net income before attribution of noncontrolling interest	$	7,602	$	15,145	$	22,476	$	29,604
Noncontrolling interest	Noncontrolling interest	(817)		0		(817)		0		Noncontrolling interest	(72)		(817)		(1,148)		(817)
Net income (loss) attributable to Amerant Bancorp Inc.		$	15,962	$	(15,279)	$	30,421	$	(11,897)
Net income (loss) available to common stockholders		$	15,962	$	(15,279)	$	30,421	$	(11,897)
Net income attributable to Amerant Bancorp Inc.										Net income attributable to Amerant Bancorp Inc.	$	7,674	$	15,962	$	23,624	$	30,421
Net income available to common stockholders										Net income available to common stockholders	$	7,674	$	15,962	$	23,624	$	30,421
Denominator:	Denominator:			`						Denominator:
Basic weighted average shares outstanding	Basic weighted average shares outstanding	37,330		41,720		37,473		41,953		Basic weighted average shares outstanding	33,675,930		37,330,000		34,244,797		37,473,144
Dilutive effect of share-based compensation awards	Dilutive effect of share-based compensation awards	363		0		295		0		Dilutive effect of share-based compensation awards	238,599		362,982		266,329		295,326
Diluted weighted average shares outstanding	Diluted weighted average shares outstanding	37,693		41,720		37,768		41,953		Diluted weighted average shares outstanding	33,914,529		37,692,982		34,511,126		37,768,470

Basic earnings (loss) per common share		$	0.43	$	(0.37)	$	0.81	$	(0.28)
Diluted earnings (loss) per common share		$	0.42	$	(0.37)	$	0.81	$	(0.28)
Basic earnings per common share										Basic earnings per common share	$	0.23	$	0.43	$	0.69	$	0.81
Diluted earnings per common share										Diluted earnings per common share	$	0.23	$	0.42	$	0.68	$	0.81

As of June 30, 2022 and 2021, potential dilutive instruments consisted of unvested shares of restricted stock, restricted stock units and performance share units totaling 521,162 and 638,676, ~~(June 30, 2020 - 491,360 unvested shares of restricted stock and restricted stock units).~~respectively. In the three and six month periods ended June 30, 2022 and 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 three and six month periods ended 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 operating subsidiaries, Amerant Investments, Inc., a securities broker-dealer (“Amerant Investments”), Amerant Mortgage, LLC (“Amerant Mortgage”), a ~~51%~~80% owned mortgage lending company domiciled in Florida, and Elant Bank & Trust, a Grand-Cayman based trust company (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~~Annual Report on Form 10-K for the ~~Form 10-K.~~year ended December 31, 2021 (the “Form 10-K”).

Cautionary 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”).

Forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations, anticipations, assumptions, estimates, intentions and future performance and condition, and involve known and unknown risks, uncertainties and other factors, which may be beyond our control, and which may cause the actual results, performance, achievements, or financial condition of the Company to be materially different from future results, performance, achievements, or financial condition expressed or implied by such forward-looking statements. You should not expect us to update any forward-looking ~~statements.~~statements, except as required by law. These forward-looking statements should be read together with the “Risk Factors” included in the Form 10-K, in the Form 10-Q for the quarter ended March 31, 2022, and in this Form 10-Q, and in 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” and other similar words and expressions of the future. These forward-looking statements may not be realized due to a variety of factors, including, without limitation:

•Our profitability is subject to interest rate risk;

•We may be adversely affected by the transition of LIBOR as a reference rate;

•Our concentration of ~~CRE loans;~~commercial real estate (“CRE”) loans could result in increased loan losses, and adversely affect our business, earnings and financial condition;

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

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

•The collateral securing our loans may not be sufficient to protect us from a partial or complete ~~loss;~~loss if we are required to foreclose;

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•Liquidity risks could affect our operations and jeopardize our financial condition and certain funding sources could increase our interest rate expense;

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

•Our strategic plan and growth strategy may not be achieved as quickly or as fully as we seek;

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

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

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

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

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

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

•~~Our historical consolidated financial data~~We may incur losses due to minority investments in fintech and specialty finance companies;

•We are ~~not necessarily representative of the results we would have achieved as a separate company and may not be a reliable indicator~~subject to risks associated with sub-leasing portions of our ~~future results;~~corporate headquarters building;

•Our success depends on our ability to ~~raise additional capital~~compete effectively in ~~the future;~~highly competitive markets;

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

•Conditions in Venezuela could adversely affect our operations;

•The COVID-19 pandemic and actions taken by governmental authorities to mitigate its spread ~~has~~have 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;

•As a participating lender in the U.S. Small Business Administration Paycheck Protection Program, we are subject to additional risks of litigation from the Bank’s customers or other parties regarding the Bank’s processing of loans for the PPP and risks that the SBA may not fund some or all PPP loan guaranties;

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

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

•Technological changes affect our business including potentially impacting the revenue stream of traditional products and services, and we may have fewer resources than many competitors to invest in technological improvements;

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

•Many of our major systems depend on and are operated by third-party vendors, and any systems failures or interruptions could adversely affect our operations and the services we provide to our customers;

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

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

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

•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 debt;~~the Senior Notes and the Subordinated 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 and the Subordinated Notes;

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

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

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

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

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

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

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

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

•~~A limited market exists for the Company's shares of Class B common stock;~~

•~~Holders of shares of Class B common stock have limited voting rights. As a result, holders of shares of Class B common stock will have limited~~Our ability to ~~influence shareholder decisions;~~receive dividends from our subsidiaries could affect our liquidity and our ability to pay dividends;

•Certain of our existing shareholders could exert significant control over the Company;

•If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, the price of our common stock and trading volume could decline;

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

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

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

•~~We do not currently intend to pay dividends on our~~Class A common stock;

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

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

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

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

•The other factors and information included in the Form 10-K and other filings that we make with the SEC under the Exchange Act and Securities Act. See “Risk Factors” in the Form 10-K for the year ended December 31, 2021, the Form 10-Q for the quarter ended March 31, 2022, and in this Form 10-Q.

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

Any forward-looking statement speaks only as of the date on which it is made, and we do not undertake any obligation to update, revise or correct any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law. All written or oral forward-looking statements that are made by us or are attributable to us are expressly qualified in their entirety by this cautionary notice, together with those risks and uncertainties described in “Risk ~~factors”~~Factors” in the Form 10-K, the Form 10-Q for the quarter ended March 31, 2022, the Form 10-Q for the quarter ended March 31, 2022, in this Form 10-Q, and in our other filings with the SEC, which are available at the SEC’s website www.sec.gov.

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OVERVIEW

Our Company

We are a bank holding company headquartered in Coral Gables, Florida. We provide individuals and businesses a comprehensive array of deposit, credit, investment, wealth management, retail banking, mortgage services, and fiduciary services. We serve customers in our United States markets and select international customers. These services are offered through the Bank, which is also headquartered in Coral Gables, Florida, and its subsidiaries. Fiduciary, investment, wealth management and mortgage lending services are provided by the Bank’s securities broker-dealer, Amerant Investments, the Bank’s Grand-Cayman based trust company, ~~subsidiary,~~ the Cayman Bank, and the ~~newly formed~~ mortgage company, Amerant Mortgage. The Bank’s ~~two~~ primary markets are South Florida, where we are headquartered and operate 18seventeen banking centers in Miami-Dade, Broward and Palm Beach ~~counties; the greater~~counties, and Houston, Texas, ~~area,~~ where we ~~have 7~~operate seven banking centers that serve the nearby areas of Harris, Montgomery, Fort Bend and Waller counties. ~~See “Business Developments” below~~In addition, we have a loan production office (“LPO”) in Tampa, Florida.

Emerging Growth Company Status

We are an “emerging growth company,” or EGC, as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. As such, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies,” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.

In addition, Section 107 of the JOBS Act also provides that an EGC can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an ~~update~~EGC can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. In 2019, the Federal bank regulators recognized or permitted public companies that are EGCs to delay the adoption of accounting pronouncements until those standards would otherwise apply to private companies. Since we became a publicly traded company, the Company has been taking advantage of the benefits of this extended transition period, and will continue to do so for as long as it is available and it is consistent with bank regulatory requirements.

We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the date of the first sale of our common equity securities pursuant to an effective registration statement under the Securities Act and (b) in which we have total annual gross revenue of at least $1.07 billion, (2) once we are deemed to be a large accelerated filer (determined as of the end of the fiscal year), which means the aggregate worldwide market value of the voting and non-voting common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, and (3) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period. References herein to “emerging growth company” have the meaning provided in the JOBS Act.

Based on the ~~New York City area LPO.~~aggregate worldwide market value of the voting and non-voting common stock that is held by the Company’s non-affiliates as of the last business day of the second quarter of 2022, the Company determined that it will be deemed a large accelerated filer effective as of December 31, 2022. Consequently, the Company will be required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and requirements of holding a non-binding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. In addition, the Company will no longer be able to benefit from any extended transition period for complying with new or revised accounting standards, beginning as of December 31, 2022, and applied retroactively effective January 1, 2022.

See Note 1 to the Company’s unaudited interim consolidated financial statements in this Form 10-Q for more details on the adoption of the pending new accounting guidance on current estimated credit losses, or CECL.

Business Developments

For more information on the progress of these initiatives in 2021, see Item 1. Business section included in the Form 10-K.

Amerant Mortgage

In the three months ended June 30, 2022, the Company increased its ownership interest in Amerant Mortgage to 80% from 57.4%. This change was the result of: (i) two former principals surrendering their interest in Amerant Mortgage to the Company, when they became full time employees of the Bank (the “Transfer of Subsidiary Shares From Noncontrolling Interest”), and (ii) an additional contribution made by the Company of $1 million, in cash, to Amerant Mortgage in the three months ended June 30, 2022. As a result of the Transfer of Subsidiary Shares From Noncontrolling Interest, the Company reduced its additional paid-in capital for a total of $1.9 million with a corresponding increase to the equity attributable to noncontrolling interests.

Amerant Mortgage reported improved results and reached breakeven on a stand-alone basis in the three months ended June 30, 2022. Rising interest rates coupled with declining refinance demand, along with other market factors, has led to the reassessment of staffing needs, which resulted in a decline of 12 FTEs to 67 as of June 30, 2022 compared to 79 as of March 31, 2022.

Employee Stock Purchase Plan

On June 8, 2022, the shareholders of the Company approved the Amerant Bancorp Inc. 2021 Employee Stock Purchase Plan (the “ESPP” or the “Plan”), which had been previously approved by the Compensation Committee and the Board of Directors on October 19 and 20, 2021, respectively. The Plan became effective on February 14, 2022, subject to obtaining shareholder approval. An aggregate of one million (1,000,000) shares of the Company’s Class A Common Stock (“Common Stock”) have been reserved for issuance under the Plan.

The purpose of the Plan is to provide eligible employees of the Company and its designated subsidiaries with the opportunity to acquire a stock ownership interest in the Company on favorable terms and to pay for such acquisitions through payroll deductions.

The first offering under the Plan for purposes of buying shares of Common Stock began on February 14, 2022 and ends on November 30, 2022 (the “First Offering Period”). All named executive officers, and all other executive officers of the Company who were eligible as of the enrollment deadline for the First Offering Period elected to participate in the Plan.

For further information, see the Company’s proxy statement for the annual meeting of shareholders held on June 8, 2022, filed with the SEC on April 28, 2022.

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 select 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~~December 2021, Amerant became a strategic lead investor in the JAM FINTOP Blockchain fund, a fund that will initially focus its investments on the blockchain “infrastructure layer” that will help regulated financial institutions compliantly operate blockchain-powered applications in areas such as lending, payments and exchanges. More recently, the Company ~~made~~became 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 includedlimited partner 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,~~BankTech Venture Fund, a fund focused in investing in technology companies that are developing solutions aimed at supporting community banks and ~~the Federal Deposit Insurance Corporation, or FDIC, seeking approval~~their end-customers. These funds also provide access 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~~to a network of banks and ~~Chief Executive Officer~~technology companies that are focused on developing solutions for community banks in the areas of deposit growth and ~~the appointment of Gerald P. Plush, as the Company’s Vice-Chairman~~customer acquisition, cyber security, digital platforms, process improvement, RegTech, data analytics 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~~artificial intelligence, payment processing, and ~~served as Executive Vice-Chairman from~~mortgage related technology.

USDF Consortium

In 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~~2022, the Company, ~~appointed Gerald P. Plush as President~~through its Bank subsidiary, was admitted to the USDF Consortium, a membership-based association of FDIC-insured banks whose mission is to further the ~~Company effective July 1, 2021~~adoption and ~~since~~interoperability of a bank-minted tokenized deposit (USDF™), aimed at facilitating the compliant transfer of value on the blockchain, removing friction in the financial system and unlocking the financial opportunities that ~~date, Mr. Plush has been serving as~~blockchain and digital transactions can provide to a greater network of users. Amerant is taking one step forward toward unlocking the ~~Company’s Vice-Chairman, President~~financial opportunities that blockchain and ~~Chief Executive Officer.~~digital transactions can provide to a greater network of users.

Progress on Near and Long-Term Initiatives

~~As previously disclosed,~~The Company is dedicated to finding new ways to increase efficiencies and profitable growth across the Company while simultaneously providing an enhanced banking experience for customers. Below is the detail of actions taken by the Company in the ~~coming weeks~~three and ~~months we intend~~six month periods of 2022 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:~~achieve these goals:

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~~as well as targeting other sources of deposits such as municipal accounts and wealth management.

We have continued ~~work~~working on implementing/enhancing a completely digital onboarding ~~platform, adding talent~~platform. In the first and second quarter of 2022, we made additions to ~~our~~the treasury management, ~~sales force~~retail and ~~support team~~private banking teams which contributed to increasing deposit levels. We have also realigned compensation strategies across all business lines to appropriately reward increased deposit growth. We remain focused in ~~both Florida and Texas, as well as adding additional treasury management capabilities, and we have seen improvement in~~these three key ~~measures quarter over quarter:~~measures: the ~~loan~~average cost of total deposits increased to ~~deposit ratio at June 30, 2021 was 98.8% compared to101.9% at~~0.48% from 0.41% in December 31, ~~2020;~~2021; non-interest bearing deposits to total deposits ratio was ~~18.8%~~20.94% at June 30, ~~2021~~2022 compared to ~~15.2%~~21.01% at December 31, ~~2020;~~2021, and the ratio of brokered deposits to total deposits decreased slightly to ~~9.4%~~5.9% at June 30, ~~2021~~2022 compared to ~~11.1%;~~6.9% at December 31, ~~2020.~~2021.

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. FIS, Numerated, Marstone, Alloy and ClickSWITCH® implementations are all in progress. See details on all progress in Item 1. Business in the Form 10-K.

In July 2022, the ~~second quarter of 2021, we continued accelerating our digital transformation. We executed agreements~~Company appointed a new Chief Digital Office with ~~leading fintechs, Numerated Growth Technologies, Inc. (“Numerated”) and Marstone. We expect Numerated's platform~~extensive experience in bringing to ~~significantly improve~~life enterprise platforms that serve multi-faceted purposes within 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.

services industry.

Improving Amerant's brand awareness. ~~We will be~~Since the beginning of 2021, we have been 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,~~

In July 2022, we ~~consider that~~announced a multi-year agreement to become the ~~recent hiring~~official bank of the NBA’s Miami Heat. Through this strategic partnership, we are redefining the meaning of our bank being an integral part of the community, which is one that supports and aligns with those businesses and organizations that are well-known and deeply rooted in South Florida.

Also in July 2022, we announced a new ~~chief marketing officer~~multi-year agreement as the official helmet branding partner of the NHL’s Florida Panthers. We continue to leverage our recently disclosed multi-year partnership with the University of Miami’s Department of Intercollegiate Athletics, making Amerant the official “Hometown Bank” of the Miami Hurricanes. We also continue to focus on raising brand awareness through impactful campaigns such as, out-of-home advertising and ~~the engagement of Zimmerman Advertising, a leading agency in the US, as our new marketing agency, can help us elevate the Amerant brand~~various campaigns via social media and ~~drive business growth.~~public relations.

Rationalizing our lines of business and geographies. We ~~plan~~continued to ~~expand~~evaluate our ~~treasury management, wealth management,~~go-to-market strategy and ~~develop specialty finance capabilities in order~~implemented a new business organizational model, focused on consumer and commercial banking to ~~grow the bank's revenue streams and fee opportunities. At the same time, we curtailed loan originations~~drive performance in the ~~New York market~~geographies we serve. Our branch strategy is in progress with one branch in Florida scheduled to close in the fourth quarter of 2022. In the first quarter of 2022, we received approval from the Office of the Comptroller of the Currency (“OCC”) for a new location of one branch in Houston, and ~~closed our New York City LPO, which was a commercial real estate loan production office with minimal deposit relationships.~~the relocation of an existing branch there is now slated to take place in the third quarter of 2022. The new branch in downtown Miami is scheduled to open early 2023. We ~~will focus on growing in our core markets while~~are also ~~looking for opportunities~~refreshing branches to ~~grow in contiguous markets.~~update and standardize the look and feel across all branches. In the second quarter of ~~2021,~~2022, we have completed the ~~Company recorded a $0.8 million ROUA impairment associated with the closing~~build out of the NYteam for the Tampa LPO.

~~During~~ Lastly, the syndication desk is in place actively seeking opportunities and the recently announced equipment financing business, which will provide an efficient white label solution to drive sales and provide underwriting capabilities, has launched with two out of the three planned business development representatives in place and generated $10 million in new originated loans in 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 (“FMC”) into which Amerant Mortgage was ultimately merged. This acquisition enabled Amerant Mortgage to operate its business nationally with direct access to federal housing agencies.

2022.

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 continued to work on better aligning its operating structure and resources with its business activities.

The Company continued to work on better aligning its operating structure and resources with its business activities. ~~During~~Effective January 1, 2022, there were 80 employees who moved from the ~~second~~Company to FIS® as a result of the Company’s transition to our new technology provider. In addition, other HR efficiencies were also implemented during the first 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 2021.2022.

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 terminationthree 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,six months ended June 30, 2022, the Company repaid ~~$235~~$350.0 million ~~of its~~and $530 million, respectively, in FHLB callable advances, ~~incurring a loss of $2.5 million.~~and borrowed $200.0 million and $550 million, respectively in long-term fixed advances. These events ~~reduce our~~effectively increased the duration of financial liabilities under a scenario of an imminent increase in 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.rates.

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Optimizing capital structure. ~~We successfully~~On March 9, 2022, the Company completed ~~in June 2020~~ a ~~$60.0~~$30.0 million offering of ~~5.75% senior~~subordinated notes with at 4.25% fixed-to-floating rate and due ~~2025~~on March 15, 2032 (the “Subordinated Notes”). The Subordinated Notes will initially bear interest at a fixed rate of 4.25% per annum, from and including March 9, 2022, to but excluding March 15, 2027, with interest payable semi-annually in ~~December 2020~~arrears. From and including March 15, 2027, to but excluding the stated maturity date or early redemption date, the interest rate will reset quarterly to an annual floating rate equal to the then-current benchmark rate, which will initially be the three-month Secured Overnight Financing Rate (“SOFR”) plus 251 basis points, with interest during such period payable quarterly in arrears. If the three-month SOFR cannot be determined during the applicable floating rate period, a ~~modified Dutch auction tender offer~~different index will be determined and used in accordance with the terms of the Subordinated Notes. The Subordinated Notes are presented net of direct issuance costs which are deferred and amortized over 10 years. The Subordinated Notes have been structured to qualify as Tier 2 capital of the Company for regulatory capital purposes, and rank equally in right of payment to all of our existing and future subordinated indebtedness.

The Subordinated Notes were offered and sold by the Company in a private placement offering in reliance on exemptions from the registration requirements of the Securities Act. In connection with the sale and issuance of the Subordinated Notes, the Company entered into a registration rights agreement, pursuant to which ~~we purchased approximately $54 million~~the Company agreed to take certain actions to provide for the exchange of ~~shares~~the Subordinated Notes for subordinated notes that are registered under the Securities Act and will have substantially the same terms.

On June 21, 2022, the Company successfully completed the exchange of ~~Class B common stock. In March~~all of ~~2021, we announced a repurchase program~~its outstanding Subordinated Notes for an equal principal amount of its registered 4.25% Fixed-to-Floating Rate Subordinated Notes due 2032 (the “Registered Subordinated Notes”). The terms of the Registered Subordinated Notes are substantially identical to ~~purchase up~~the terms of the Subordinated Notes, except that the Registered Subordinated Notes are not subject to ~~$40 million~~the transfer restrictions, registration rights and additional interest provisions (under the circumstances described in the registration rights agreement relating to our fulfillment of ~~shares of Class B common stock which is currently underway.~~ our registration obligations) applicable to the Subordinated Notes.

In the ~~six months ended June 30, 2021,~~first quarter of 2022, the Company repurchased an aggregate of ~~502,232~~652,118 shares of Class BA common stock at a weighted average price of $33.96 per share, ~~of $16.71~~ under the 2021 Class A Common Stock Repurchase Program. The aggregate purchase price for these transactions was approximately ~~$8.4~~$22.1 million, including transaction costs. AsOn January 31, 2022, the Company announced the completion of ~~July 20,~~the 2021 Class A Common Stock Repurchase Program. In addition, in the first quarter of 2022, the Company announced a new repurchase program pursuant to which the Company may purchase, from time to time, up to an ~~additional 63,000~~aggregate amount of $50 million of its shares of Class BA common stock (the “New Common Stock Repurchase Program”). In the first and second quarter of 2022, the Company repurchased an aggregate of 1,602,887 shares of Class A common stock at a weighted average price of $31.14 per share, ~~of $18.50~~ under the ~~2021~~New Common Stock Repurchase Program. The aggregate purchase price for these transactions was approximately $49.9 million, including transaction costs.

We will continue to evaluate our capital structure and ways to optimize it in the future.

Environmental, Social and Governance (“ESG”). ~~Since early~~In 2021 and throughout the first half of 2022, 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~~community These efforts lead to the ~~last few months~~Company’s publication of its first annual ESG report in ~~developing~~April 2022, demonstrating our ESG strategy and program and, recently, our Board of Directors approved the ESG framework that we will used to develop specific ESG initiatives to be implemented in the coming months and years. We expect to share the material tenets of our ESG program and the progress our Company is making in each relevant area as part of an annual corporate social responsibility report starting next year.commitment towards being a sustainable institution.

5358

COVID-19 Pandemic

CARES Act

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

On April 2, 2020, the Bank began participating in the SBA’s Paycheck Protection Program, or “PPP”, by providing loans to qualifying businesses to cover payroll, rent, mortgage, healthcare, and utilities costs, among other essential expenses. In early January 2021, a third round of PPP loans provided additional stimulus relief to small businesses and individuals who are self-employed or independent contractors. The Company continues to focus on providing funding to customers and communities by actively participating in the PPP and related government sponsored programs. As of June 30, 2021, total PPP loans 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. 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. In the second quarter of 2021, the Company sold to a third party, in cash, PPP loans with an outstanding balance of approximately $95.1 million, and realized a pretax gain on sale of $3.8 million. The Company retained no loan servicing rights on these PPP loans.

Loan Loss Reserve and Modification Programs

On March 26, 2020, the Company began offering loan payment relief options to customers impacted by theCOVID-19 pandemic, including ~~deferral~~interest only and/or forbearance options. These programs continued throughout 2020 and in the ~~six months ended June 30, 2021.Loans which have been modified under these programs totaled $1.1 billion as~~first half of ~~June 30,~~ 2021. As of June 30, ~~2021, $54.4 million, or 1.0% of total~~2022, there were no loans ~~were still~~ under the deferral and/or forbearance ~~period, an increase from $43.4 million, or 0.7% at~~options. At December 31, ~~2020. This increase was primarily due to new modifications granted to two CRE retail loans in New York totaling~~2021, there were $37.1 million ~~partially offset by $26.1 million in~~of loans ~~that resumed regular payments after deferral and/or forbearance periods ended. The Company began to selectively offer additional temporary loan modifications~~ under ~~programs that allow it to extend~~ the deferral and/or forbearance period beyond 180 days. The 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.options. In accordance with accounting and regulatory guidance, loans to borrowers benefiting from these measures are not considered ~~TDRs. The Company continues to closely monitor the performance of the remaining loans in deferral and/or forbearance periods under the terms of the temporary relief granted.~~troubled debt restructuring (“TDRs”).

See

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, 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 or may be reinstated in the future. While most of these measures and restrictions have been lifted and businesses have begun to reopen, the Company cannot predict whether restrictions that have been lifted will need to be imposed or tightened in the future if viewed as necessary due to public health concerns. Given the uncertainty regarding the spread and severity of the COVID-19 pandemic and its adverse effects on the U.S. and global economies, the impact Note 1 to the Company’s consolidated financial statements ~~cannot be accurately predicted at this time.~~on the Form 10-K for more details on loan modification programs.

5459

Primary Factors Used to Evaluate Our Business

Results of Operations. In addition to net income ,or loss, the primary factors we use to evaluate and manage our results of operations include net interest income, noninterest income and expenses, and 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 FHLB advances ~~from the Federal Home Loan Bank (“FHLB”)~~ and other borrowings such as repurchase agreements, ~~senior~~ notes, debentures and ~~junior subordinated debentures.~~other funding sources we may have from time to time. 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, as well as premiums or discounts paid on loan purchases, are deferred and recognized over the life of the related loan as an adjustment to interest income in accordance with generally accepted accounting principles in the United States of America (“GAAP”).

Changes in market interest rates and the interest we earn on interest-earning assets, or which we pay on interest-bearing liabilities, as well as the volumes and the types of interest-earning assets, interest-bearing and noninterest-bearing liabilities and 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; (vii) income from derivative transaction with customers, (viii) derivatives gains or losses, (ix) gains or losses on the sale of properties, and ~~(vii)~~(x) other noninterest income.

Our income from service fees on deposit accounts is affected primarily by the volume, growth and mix of deposits we 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.

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~~include credit and debit card interchange fees 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~~have also 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. ~~We ceased to be a direct card issuer early in 2020.~~

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. We also recognize unrealized gains or losses on changes in the valuation of marketable equity securities not held for trading.

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 and other loan level derivatives are ~~reported~~primarily dependent on volume of transactions complete with customers and are included in noninterest income.

In the first quarter and second quarter of 2022, the derivatives unrealized loss of $1.3 million and unrealized gains on derivative valuation of $0.9 million, respectively, were derived from changes in market value of uncovered interest rate caps with clients.

Mortgage banking income, which includes revenue related to Amerant Mortgage, primarily consists of gain on sale of loans, gain on loans market valuation, other fees and smaller sources of income, was $2.4 million and $3.1 million in the three and six month periods ended June 30, 2022, Amerant Mortgage commenced operations in May 2021 and is included as part of other noninterest income.

Noninterest Expense. Noninterest expenses generally increase as our business grows and whenever necessary to implement or enhance policies and procedures for regulatory compliance, and other purposes.

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; (vii) advertising and ~~(vii)~~marketing expenses, and (viii) other operating expenses.

Salaries and employee benefits include compensation (including severance expenses), employee benefits and employer tax expenses for our personnel. Salaries and employee benefits are partially offset by costs 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 GAAP.

Occupancy expense includes lease expense on our leased properties and other occupancy-related expenses. Equipment expense includes furniture, fixtures and equipment related expenses. In the three and six months ended June 30, 2022, rental income associated with the subleasing of portions of the Company’s headquarters building is included as a reduction to rent expense under lease agreements under occupancy and equipment cost. Prior to 2022, rental income in connection with the previously-owned headquarters building is included as part of other noninterest income.

Professional and other services fees include legal, accounting and consulting fees, card processing fees, director’s fees, regulatory agency fees, such as OCC examination fees, and other fees related to our business ~~operations,~~operations. In the three and six months ended June 30, 2022, professional fees include ~~director’s fees~~expenses associated with the outsourcing of our internal audit function which began in the second quarter of 2021.

Contract termination costs represent estimated expenses to terminate contracts before the end of their terms, and ~~regulatory agency fees, such~~are recognized when the Company terminates a contract in accordance with its terms, generally considered the time

when the Company gives written notice to the counterparty within the notification period contractually established. Contract termination costs also include expenses associated with the abandonment of existing capitalized projects which are no longer expected to be completed as ~~OCC examination fees.~~a result of a contract termination. Changes to initial estimated expenses to terminate contracts resulting from revisions to timing or the amount of estimated cash flows are recognized in the period of the changes.

Advertising expenses include the costs of promoting the Amerant brand, as well as the costs associated with promoting the Company’s products and services to create positive awareness, or consideration to buy the Company’s products and services. These costs include expenses to produce, deliver and communicate advertisements using available media and technologies, primarily streaming and other digital advertising platforms. Advertising expenses are expensed as incurred, except for media production costs which are expensed upon the first airing of the advertisement.

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,~~ community engagement and other operational ~~expenses.~~expenses such as the costs of derivative transactions. 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 GAAP.

Noninterest expenses generally increase as our business grows and whenever necessary to implement or enhance policies and procedures for regulatory compliance. We had restructuring expenses of approximately $4.2 million and $4.4 million 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 three and six month periods ended June 30, 2021, restructuring costs 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 and six ~~month periods~~months ended June 30, ~~2020)~~2022 include additional salaries and employee benefits, mortgage lending costs and professional and other service fees in connection with Amerant Mortgage’s ongoing business.

In the three and six months ended June 30, 2022, noninterest expenses include: i) $2.8 million and $6.8 million, respectively, of estimated contract termination costs associated with third party vendors resulting from the Company’s transition to our new technology provider; ii) a non-routine charge of $3.2 million resulting from the market valuation adjustment of one OREO property in New York; iii) a lease impairment charge of $1.6 million in connection with the closure of a banking center in Florida; and iv) staff reduction costs of $0.7 million and $1.5 million, respectively, in connection with restructuring activities. Noninterest expenses in the six months ended June 30, 2022 also include $1.3 million in legal and consulting fees in connection with restructuring activities.

As of June 30, 2022, the Company had a valuation allowance derived from our NY loans held for sale carried at the lower of cost or fair value of $0.2 million (none as of December 31, 2021). In the three months ended June 30 and March 31, 2022, noninterest expenses include a release of $0.3 million and an expense of $0.5 million, respectively, in connection with the change in the fair value of the NY loans held for sale carried at the lower of cost of fair value.

Restructuring expenses ~~consist of~~are those incurred for actions designed to implement the Company’s ~~strategy as a new independent company.~~strategic initiatives. These actions include, but are not limited to, reductions in workforce, streamlining operational processes, ~~rolling out~~promoting the Amerant brand, implementation of new technology system applications, enhanced sales tools and training, expanded product offerings and improved customer analytics to identify opportunities.

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 allowance~~ (“ALL”), the diversification and quality of loan and investment portfolios, the extent of counterparty risks, credit risk concentrations and other factors.

We review and update our ALL ~~for loan loss~~ model annually 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.

The Company will no longer be deemed an EGC effective as of December 31, 2022. Therefore, adoption of the pending new accounting guidance on current expected credit losses, or CECL,will be required on the Company’s consolidated financial statements as of and for the reporting period ending that date, with retroactive application as of January 1, 2022, the beginning of the adoption period. See Note 1 to the Company’s unaudited interim consolidated financial statements in this Form 10-Q for more details on the pending adoption of CECL by the Company.

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. In addition, in 2020, the~~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 remainis 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”,~~deposits,” which exclude brokered time deposits and retail time deposits of more than $250,000. See ~~“Core~~“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.

Seasonality. Our loan production, generally, is subject to seasonality, with the lowest volume typically in the first quarter of each year.

Summary Results

The summary results for the three and six month periods ended June 30, ~~2021~~2022 include the following:

•Net income attributable to the Company was $7.7 million in the second quarter of 2022, down 51.9%, from $16.0 million in the second quarter of 2021, ~~compared to a net loss~~and $23.6 million in the first half of ~~$15.3~~2022, down 22.3%, from $30.4 million in the first half of 2021.

•Net interest income was $58.9 million in the second quarter of ~~2020, and net income of $30.4~~2022, up $8.9 million, ~~in the six months ended June 30, 2021 compared to a net loss of $11.9 million in the six months ended June 30, 2020.~~

•~~NII was~~or 18.0%, from $50.0 ~~million, up 7.9% from $46.3~~ million in the second quarter of ~~2020. NIM~~2021, and $114.6 million in the first half of 2022, up $17.1 million, or 17.5%, from $97.5 million in the first half of 2021.

• Net interest margin was 3.28% in the second quarter of 2022, up 47 basis points from 2.81% in the second quarter of 2021, and 3.23% in the first half of 2022, up 3749 basis points from ~~2.44%~~2.74% in the first half of 2021.

•The Company had no provision or release from the ALL in the second quarter of ~~2020, and 2.74% in~~2022, compared to a release from the ~~six months ended June 30, 2021, up 19 basis points from 2.55% in the six months ended June 30, 2020.~~

•~~A release~~ALL of $5.0 million ~~from the ALL was recorded during the second quarter of 2021, compared to a $48.6 million provision recorded~~ in the second quarter of ~~2020, and a~~2021. The Company released $10.0 million from the ALL in the first half of 2022, compared to $5.0 million ~~release~~ in the ~~six months ended June 30, 2021, compared to a provision~~first half of ~~loan losses of $70.6 million recorded in the six months ended June 30, 2020.~~2021. The ratio of ~~ALL~~allowance for loan losses to total loans held for investment was ~~1.86%~~0.91% as of June 30, ~~2021, down from 1.90% as of~~2022, compared to 1.29% at December 31, ~~2020.~~2021. The ratio of net charge-offs to average total loans held for investment was 0.29% in the second quarter of 2022, up from 0.12% in the second quarter of 2021, and 0.29% in the first half of 2022, up from 0.06% in the first half of 2021. The ALL coverage of non-performing loans increased to 2.1x at June 30, 2022, up from 1.4x at December 31, 2021.

•Non-interest income was ~~0.12% compared to 0.13%~~$12.9 million in the second quarter of ~~2020, and 0.06% in the six months ended June 30, 2021, compared to 0.11% in the six months ended June 30, 2020.~~

•~~Noninterest income was~~2022, down 17.8% from $15.7 million in the second quarter of 2021, primarily driven by net unrealized losses on marketable equity securities of $2.6 million. Non-interest income was $27.0 million in the first half of 2022, down ~~20.4%~~9.8% from ~~$19.8~~$29.9 million in the first half of 2021, primarily driven by net unrealized losses on marketable equity securities of $1.9 million.

•Non-interest expense was $62.2 million in the second quarter of ~~2020, and $29.9 million in the 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~~2022, up 21.7% from $51.1 million in the second quarter of 2021, ~~up 17.2% from $43.6 million, up 39.2% from $36.7 million in~~as the second quarter of ~~2020,~~2022 included a total of $8.0 million in restructuring and non-routine charges, including an expense of $3.2 million related to the market valuation of an OREO property in New York, $2.8 million in estimated contract termination costs in connection with the conversion to FIS, and a lease impairment charge of $1.6 million related to the closing of a banking center in Florida. Non-interest expense was $123.1 million in the first half of 2022, up 29.9% from $94.8 million in the ~~six months ended June 30, 2021, up $13.1 million, or 16.1%, from $81.6 million in the six months ended June 30, 2020.~~first half of 2021.

•The efficiency ratio was 86.6% in the second quarter of 2022 compared to 77.8% in the second quarter of 2021, and 86.9% in the first half of 2022, compared to ~~55.6% for the second quarter of 2020, and~~ 74.4% in the ~~six months ended June 30, 2021 compared to 59.5% in the six months ended June 30, 2020.~~first half of 2021.

•Total gross loans, which include loans held for sale, were ~~$5.6~~$5.85 billion at June 30, ~~2021, down $233.8~~2022 up $279.8 million, or ~~4.0%~~5.0%, compared to December 31, ~~2020.~~2021. Total deposits were ~~$5.7~~$6.20 billion at June 30, ~~2021, down $56.7~~2022 up by $572.0 million, or ~~1.0%~~10.2%, compared to December 31, ~~2020.~~2021.

•Stockholders’ book value per common share attributable to the Company ~~increased to $21.27~~was $21.07 at June 30, ~~2021,~~2022, compared to ~~$20.70~~$23.18 at December 31, ~~2020.~~

•2021. Tangible stockholders’ equity book value per common share, ~~(“TBV”) (non-GAAP) increased to $20.67~~which is a non-GAAP measure, was $20.40 as of June 30, ~~2021,~~2022 compared to ~~$20.13~~$22.55 at December 31, ~~2020. TBV is the result~~2021. The decline in stockholders’ book value per common share reflects an accumulated after-tax unrealized loss of ~~total stockholders’ equity less goodwill and other intangible assets divided by total shares outstanding. At~~$51.0 million at June 30, ~~2021 and~~2022 compared to an accumulated after-tax unrealized gain of $15.2 million at December 31, ~~2020, total stockholders’ equity was $799.1 million~~2021 primarily on the valuation of the Company’s debt securities available for sale. See “Tangible Common Equity Ratio and $783.4 million, respectively, goodwill and other intangible assets totaled $22.5 million and $21.6 million, respectively, and total shares outstanding were 37,562,792 and 37,842,696, respectively. Our management believes that thisTangible Book Value Per Common Share” for a reconciliation of these non-GAAP ~~measure is useful to investors since 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.~~financial measures.

5865

Results of Operations - Comparison of Results of Operations for the Three and Six Month Periods Ended June 30, ~~2021~~2022 and ~~2020~~2021

Net income

The table below sets forth certain results of operations data for the three and six month periods ended June 30, ~~2021~~2022 and ~~2020:~~2021:

Three Months Ended June 30, Change Six Months Ended June 30, Change
(in thousands, except per share amounts and percentages) 2021 2020 2021 vs 2020 2021 2020 2021 vs 2020
Net interest income $ 49,971 $ 46,323 $ 3,648 7.9 % $ 97,540 $ 95,552 $ 1,988 2.1 %
(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 54,971 (2,297) 57,268 2,493.2 % 102,540 24,932 77,608 311.3 %
Noninterest income 15,734 19,753 (4,019) (20.4) % 29,897 41,663 (11,766) (28.2) %
Noninterest expense 51,125 36,740 14,385 39.2 % 94,750 81,607 13,143 16.1 %
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 (4,435) 4,005 (8,440) 210.7 % (8,083) 3,115 (11,198) 359.5 %
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 (817) — (817) NM (817) — (817) NM
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 $ 0.43 $ (0.37) $ 0.80 216.2 % $ 0.81 $ (0.28) $ 1.09 389.3 %
Diluted earnings (loss) per common share (1) $ 0.42 $ (0.37) $ 0.79 213.5 % $ 0.81 $ (0.28) $ 1.09 389.3 %


	Three Months Ended June 30,				Change				Six Months Ended June 30,				Change
(in thousands, except per share amounts and percentages)	2022		2021		2022 vs 2021				2022		2021		2022 vs 2021
Net interest income	$	58,945	$	49,971	$	8,974	18.0	%	$	114,590	$	97,540	$	17,050	17.5	%
Provision for (reversal of) loan losses	—		(5,000)		5,000		NM		(10,000)		(5,000)		(5,000)		(100.0)	%
Net interest income after provision (reversal of) for loan losses	58,945		54,971		3,974		7.2	%	124,590		102,540		22,050		21.5	%
Noninterest income	12,931		15,734		(2,803)		(17.8)	%	26,956		29,897		(2,941)		(9.8)	%
Noninterest expense	62,241		51,125		11,116		21.7	%	123,059		94,750		28,309		29.9	%
Income before income tax expense	9,635		19,580		(9,945)		(50.8)	%	28,487		37,687		(9,200)		(24.4)	%
Income tax expense	(2,033)		(4,435)		2,402		54.2	%	(6,011)		(8,083)		2,072		25.6	%
Net income before attribution of noncontrolling interest	7,602		15,145		(7,543)		(49.8)	%	22,476		29,604		(7,128)		(24.1)	%
Noncontrolling interest	(72)		(817)		745		NM		(1,148)		(817)		(331)		(40.5)	%
Net income attributable to Amerant Bancorp Inc.	$	7,674	$	15,962	$	(8,288)	(51.9)	%	$	23,624	$	30,421	$	(6,797)	(22.3)	%
Basic earnings per common share	$	0.23	$	0.43	$	(0.20)	(46.5)	%	$	0.69	$	0.81	$	(0.12)	(14.8)	%
Diluted earnings per common share (1)	$	0.23	$	0.42	$	(0.19)	(45.2)	%	$	0.68	$	0.81	$	(0.13)	(16.1)	%

__________________

(1) In the ~~second quarter~~three and six ~~months~~month periods ended June 30, ~~2021,~~2022, 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 in the second quarter and six months ended June 30, 2020).~~units. See Note 1819 to our unaudited interim consolidated financial statements in this Form 10-Q for details on the dilutive effects of the issuance of restricted stock, restricted stock units and performance share units on earnings per share for the three and six month periods ended June 30, ~~2021~~2022 and ~~2020.~~2021.

NM - means not meaningful

Three Months Ended June 30, ~~2021~~2022 and ~~2020~~2021

In the ~~second quarter of 2021, we reported~~three months ended June 30, 2022, net income was $7.7 million, or $0.23 per diluted share, compared to net income of $16.0 million, or $0.42 ~~earnings per diluted share, compared to a net loss of $15.3 million, or $0.37 loss~~ per diluted share, in the same quarter of ~~2020,~~2021. The decrease of $8.3 million or 51.9%, in the three months ended June 30, 2022 was mainly due to: (i) higher noninterest expenses; (ii) lower noninterest income, and (iii) the ~~5.0~~absence of a $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 second quarter of 2020 and (ii) higher net interest income.~~three months ended June 30, 2021. These results were partially offset by ~~lower noninterest income~~higher net interest income. In the three months ended June 30, 2022 and ~~higher noninterest expenses. Net~~2021, net income excludes ana loss of $0.1 million and $0.8 million, ~~loss~~respectively, attributable to a ~~49% non-controlling~~noncontrolling interest ofin Amerant Mortgage which commenced operations in May 2021. ~~The~~In the three months ended June 30, 2022 and 2021, the Company attributed a net loss of $0.1 million and $0.8 million, respectively, to the non-controlling interest on the basis of a ~~$1.7 million~~ net loss for Amerant Mortgage ~~for~~of $0.1 million and $1.7 million in the ~~six-months~~three months ended June 30, 2022 and 2021, respectively, primarily derived from salary and employee benefits which are included in our consolidated results of operations. In the first quarter of 2022, the minority interest share in Amerant Mortgage changed from 49% to 42.6%. In addition, in the second quarter of 2022, the minority interest share in Amerant Mortgage changed from 42.6% to 20%. See “Business Developments” in this Form 10-Q for more details on these changes with respect to our subsidiary Amerant Mortgage.

Net interest income was $58.9 million in the three months ended June 30, 2022, an increase of $9.0 million, or 18.0%, from $50.0 million in the three months ended June 30, 2021. This was primarily the result of: (i) higher average yields on loans, debt securities available for sale and interest earning deposits with banks; (ii) higher average balance of loans and debt securities held to maturity; (iii) lower average balances and rates on customer time deposits; and (iv) lower average balances of brokered time deposits and advances from the FHLB. These results were partially offset by: (i) higher cost of interest bearing deposits, money market deposits, brokered time deposits and FHLB advances, and (ii) the cost of the subordinated notes issued in March 2022. See “Net interest Income” for more details.

Noninterest income was $12.9 million in the three months ended June 30, 2022, a decrease of $2.8 million, or 17.8%, compared to $15.7 million in the three months ended June 30, 2021. This was mainly due to: (i) net unrealized losses on marketable equity securities of $2.6 million in the three months ended June 30, 2022; (ii) the absence of a gain of $3.8 million on the sale of $95.1 million of PPP loans in the six months ended June 30, 2021, and (iii) lower loan-level derivative income. The decrease in noninterest income was partially offset by: (i) the absence of a loss of $2.5 million on the early extinguishment of $235.0 million of FHLB advances in the three months ended June 30, 2021; (ii) higher mortgage banking income; (iii) net unrealized gains on derivative valuation of $0.9 million in the three months ended June 30, 2022 related to interest rate caps with clients, and (iii) higher deposit and service fees. See “Noninterest Income” for more details.

Noninterest expense increased $11.1 million, or 21.7%, in the three months ended June 30, 2022 compared to the same period in 2021, mainly due to: (i) a non-routine charge of $3.2 million resulting from the market valuation adjustment of one OREO property in New York, and (ii) $2.8 million of estimated contract termination costs associated with third party vendors resulting from the Company’s transition to our new technology provider. In addition, in the three months ended June 30, 2022, we had higher advertising and marketing expenses, occupancy and equipment expenses and professional and other service fees. These results were partially offset by: (i) lower total salaries and employee benefits; (ii) lower depreciation and amortization expenses; (iii) lower FDIC assessments and insurance expenses, and (iv) a$0.3 million reversal from the valuation allowance related to the change in fair value of New York loans held for sale. See “Noninterest Expense” for more details.

In the three months ended June 30, 2022 and 2021, noninterest expense included non-routine items of $8.0 million and $4.2 million, respectively. Non-routine items in noninterest expense include $5.1 million and $4.2 million of restructuring costs in the three months ended June 30, 2022 and 2021, respectively. In addition, in the three months ended June 30, 2022, non-routine items in noninterest expense include: (i) a non-routine charge of $3.2 million resulting from the market valuation adjustment of one OREO property in New York, and (ii) a$0.3 million reversal from the valuation allowance related to the change in fair value of New York loans held for sale.

Noninterest expense in the three months ended June 30, 2022 included additional salaries and employee benefits expense, mortgage lending costs and professional and other services fees related to Amerant Mortgage, which commenced operations in May 2021 and had 67 full time equivalent employees (“FTEs”) at June 30, 2022.

Six Months Ended June 30, 2022 and 2021

In the six months ended June 30, 2022, net income was $23.6 million, or $0.68 per diluted share, compared to net income of $30.4 million, or $0.81 per diluted share, in the same period of 2021. The decrease of $6.8 million or 22.3%, was primarily due to higher noninterest expenses and lower noninterest income. These results were partially offset by: (i) higher net interest income, and (ii) the $10.0 million reversal of loan losses in the six months ended June 30, 2022, compared to $5.0 million in the same period last year. In the six months ended June 30, 2022 and 2021, net income excludes a loss of $1.1 million and $0.8 million, respectively, attributable to the non-controlling interest in Amerant Mortgage, which commenced operations in May 2021. In the six months ended June 30, 2022 and 2021, the Company attributed a net loss of $1.1 million and $0.8 million, respectively, to the non-controlling interest on the basis of a net loss for Amerant Mortgage of $2.3 million and $1.7 million in the six months ended June 30, 2022 and 2021, respectively, primarily derived from salary and employee benefits which are included in our consolidated results of operations.

Net interest income was ~~$50.0~~$114.6 million in the three months ended June 30, 2021, an increase of $3.6 million, or 7.9%, from $46.3 million in the three months ended June 30, 2020. This was primarily 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 total interest earning assets. The increase in net interest income was partially offset by a decline in the average balance of total interest earning assets and higher average balance of Senior Notes which were issued late in the second quarter of 2020. See “-~~Net interest Income”~~ ~~for more details.~~

Noninterest income was $15.7 million in the three months ended June 30, 2021, a decrease of $4.0 million, or 20.4%, compared to $19.8 million in the three months ended June 30, 2020. This was mainly due to a $6.4 million decrease 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 $95.1 million in PPP loans in the second quarter of 2021 and (ii) higher deposit and service fees. See “-~~Noninterest Income”~~ ~~for more details.~~

Noninterest expense was $51.1 million in the three months ended June 30, 2021, an increase of $14.4 million, or 39.2%, from $36.7 million in the three months ended June 30, 2020. This was primarily driven by: (i) higher salary and employee benefits 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; (ii) higher severance expenses; (iii) higher other operating expenses; (iv) higher occupancy and equipment expenses; (v) higher professional and other service fees, and (vi) higher FDIC assessments and insurance. See “-~~Noninterest Expense”~~ ~~for more details.~~

In the three months ended June 30, 2021 and 2020, noninterest expense included $4.2 million and $1.3 million, respectively, in restructuring costs. In the second quarter of 2021, restructuring costs 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 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 June 30, 2021, we reported net income of $30.4 million, or $0.81 earnings per diluted share, compared to a net loss of $11.9 million, or $0.28 loss per diluted share,~~ in the six months ended June 30, ~~2020, mainly due to: (i) the $5.0~~2022, an increase of $17.1 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 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~~or 17.5%, from $97.5 million in the six months ended June 30, ~~2021, an increase of $2.0 million, or 2.1%, from $95.6 million in the six months ended June 30, 2020.~~2021. This was ~~mainly due to lower interest expense as a~~primarily the result of: (i) higher average yields on loans, debt securities available for sale and held to maturity and interest earning deposits with banks; (ii) higher average of debt securities held to maturity; (iii) lower average balances and rates on customer time deposits; and (iv) lower average balances of brokered time deposits and advances from the FHLB. These results were partially offset by: (i) higher cost of ~~total~~interest bearing deposits, money market deposits, brokered time deposits and FHLB ~~advances, and~~advances; (ii) lower average balance of ~~time deposits~~loans, and ~~FHLB advances. These results were partially offset~~(ii) the cost of the subordinated notes issued in March 2022. The increase in average yields on interest earning assets includes the effect of the Federal Reserve’s actions to manage inflation in 2022 which consisted of raising its benchmark rate by a ~~decrease in interest income due~~total of 150 basis points year to ~~lower yields and average balance of total interest earning assets.~~ date. See “-Net interest Income” for more details.

Noninterest income was $27.0 million in the six months ended June 30, 2022, a decrease of $2.9 million, or 9.8%, compared to $29.9 million in the six months ended June 30, ~~2021, a decrease~~2021. This was mainly due to: (i) net unrealized losses on marketable equity securities of ~~$11.8 million, or 28.2%, compared to $41.7~~$1.9 million in the six months ended June 30, ~~2020. This was mainly due to: (i) a $13.4 million decrease in net gains on securities;~~2022; (ii) the ~~previously mentioned net loss~~absence of ~~$2.5~~a gain of $3.8 million on the ~~early termination~~sale of ~~FHLB advances in the second quarter~~$95.1 million of ~~2021, and (iii) lower derivative income~~PPP loans in the six months ended June 30, ~~2021.~~2021, and (iii) net unrealized losses on derivative valuation of $0.5 million in the six months ended June 30, 2022 related to interest rate caps with clients. The decrease in noninterest income was partially offset by: (i) higher ~~other noninterest income mainly due to a gain of $3.8 million~~mortgage banking income; (ii) higher loan-level derivative income; (iii) lower losses on the ~~previously mentioned sale~~early extinguishment of ~~PPP loans in the second quarter~~FHLB advances of ~~2021; (ii)~~$1.8 million, and (iv) higher deposit and service ~~fees, and (iii) higher brokerage, advisory and fiduciary~~ fees. In the first half of 2022, the Company recorded a loss of $0.7 million on the early extinguishment of around $180.0 million of FHLB advances. In the first half of 2021, the Company recorded a loss of $2.5 million on the early extinguishment of around $235 million of FHLB advances. See “-Noninterest Income” for more details.

Noninterest expense was $123.1 million in the six months ended June 30, 2022, an increase of $28.3 million, or 29.9%, from $94.8 million in the six months ended June 30, ~~2021, an increase~~2021. This was primarily driven by: (i) $6.8 million of ~~$13.1~~estimated contract termination costs associated with third party vendors resulting from the Company’s transition to our new technology provider; (ii) a non-routine charge of $3.2 million ~~or 16.1%,~~resulting from ~~$81.6~~the market valuation adjustment of one OREO property in New York, and (iii) a valuation expense of $0.2 millionrelated to the change in fair value of New York loans held for sale. In addition, in the six months ended June 30, 2020. This was primarily driven by: (i) higher salary and employee benefits 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; (ii) higher severance expenses in the six months ended June 30, 2021; (iii) higher other operating expenses; (iv) higher occupancy and equipment expenses; (v) higher FDIC assessments and insurance, and (vi)2022, we had higher professional and other service ~~fees.~~ fees, advertising and marketing expenses, occupancy and equipment expenses, salary and employee benefits and other expenses. These increases were partially offset by lower depreciation and amortization expenses and FDIC assessments and insurance expenses. See “-Noninterest Expense” for more details.

In the six months ended June 30, ~~2021~~2022 and ~~2020,~~2021, noninterest expense included non-routine items of $14.6 million and $4.4 million, respectively. Non-routine items in noninterest expense include $11.2 million and ~~$1.7~~$4.4 million ~~respectively, in restructuring costs. In the six months ended June 30, 2021,~~of restructuring costs 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 six months ended June 30, ~~2020).~~2022 and 2021, respectively. In addition, in the six months ended June 30, 2022, non-routine items in noninterest expense include: (i) a non-routine charge of $3.2 million resulting from the market valuation adjustment of one OREO property in New York, and (ii) a valuation allowance of $0.2 million related to the change in fair value of New York loans held for sale.

Noninterest expense in the six months ended June 30, ~~2021~~2022 included ~~increased~~additional salaries and employee benefits expense, mortgage lending costs and ~~higher recruitment~~professional and other services fees ~~mostly~~ related to Amerant Mortgage, which commenced operations in May 2021 and ~~now has 38~~had 67 FTEs at June 30, ~~2021.~~2022.

Net interest income

Three Months Ended June 30, ~~2021~~2022 and ~~2020~~2021

In the three months ended June 30, ~~2021,~~2022, net interest income was ~~$50.0~~$58.9 million, an increase of ~~$3.6~~$9.0 million, or ~~7.9%~~18.0%, from ~~$46.3~~$50.0 million in the same period of ~~2020.~~2021. 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:driven by: (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 751 basis points in the yield on total interest earning ~~assets.~~assets, mainly loans, debt securities available for sale and interest earning deposits with banks; (ii) increases of $108.4 million, or 1.96%, and $80.3 million, or 82.6%, in the average balance of loans and debt securities held to maturity, respectively, and (iii) a decline of $299.5 million, or 5.2%, in the average balance of total interest bearing liabilities, mainly time deposits and FHLB advances. In addition, in the three months ended June 30, 2022, there was decline in the interest expense on customer time deposits. The increase in net interest income was partially offset by: (i) ~~a decline~~higher cost of ~~$514.9 million, or 6.7%,~~interest bearing deposits, money market deposits, brokered time deposits and FHLB advances, and (ii) the cost of the Subordinated Notes issued in ~~the~~March 2022. The increase in average ~~balance of total~~yields on interest earning assets ~~and (ii) higher average balance~~includes the effect of ~~Senior Notes~~the Federal Reserve’s actions to manage inflation in 2022, which ~~were issued late in the second quarter~~consisted of ~~2020.~~raising its benchmark rate by a total of 150 basis points year to date. Net interest margin was 3.28% in the three months ended June 30, 2022, an increase of 47 basis points from 2.81% in the three months ended June 30, ~~2021, an~~2021. See discussions further below for more details.

During the second quarter of 2022, the Company: (i) continued making efforts to increase its loan origination volumes, and (ii) continued seeking additional opportunities to improve NIM through the purchase of ~~37 basis point from 2.44%~~consumer loans under indirect lending programs. Additionally, in the second quarter of 2022, the Company repaid $350.0 million in FHLB callable advances and borrowed $200.0 million in long-term fixed advances to extend duration of this portfolio and lock-in fixed interest rates.

The increase in the cost of FHLB advances in the three months ended June 30, ~~2020.~~ 2022 is mainly attributable to changes in the composition of the Company’s outstanding FHLB advances beginning in the first quarter of 2022. In the first quarter of 2022, in light of the rising rate environment, the Company actively managed the duration of its liabilities by: (i) repaying $180.0 million in callable FHLB advances, and (ii) borrowing $350.0 million in longer-term advances to extend the duration of this portfolio and lock-in fixed interest rates. In addition, in the first quarter of 2022, we completed a private placement of $30 million of 4.25% fixed-to-floating rate subordinated notes due 2032. See discussions further below for more ~~details.~~

~~During~~details on 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.subordinated notes.

In May 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, in the second quarter of 2021, the Company repaid $235 million of FHLB advances, which also contributed to the decline in the average balance of interest bearing liabilities. As a result of this repayment, the Company incurred a loss of $2.5 million recorded as part of noninterest income. These transactions combined will represent annual savings of approximately $3.6 million.Interest Income

~~Interest Income.~~Total interest income was ~~$61.2~~$71.2 million in the three months ended June 30, ~~2021, a decline~~2022, an increase of ~~$3.0~~$10.0 million, or ~~4.7%~~16.3%, compared to ~~$64.2~~$61.2 million for the same period of ~~2020.~~2021. 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 loans. The decrease in total interest income was partially offsetdriven by a 751 basis points increase in the average yield on total interest earning assets, mainly driven by higher yields on ~~loans.~~loans, debt securities available for sale and interest earning deposits with banks. In addition, there were increases of $108.4 million, or 1.96%, and $80.3 million, or 82.6%, in the average balance of loans and debt securities held to maturity, respectively. These increases were partially offset by a decrease of $66.8 million, or 5.7%, in the average balance of debt securities available for sale.

Interest income on loans in the three months ended June 30, ~~2021~~2022 was ~~$53.6~~$61.5 million, an increase of ~~$0.1~~$7.9 million, or ~~0.2%~~14.7%, compared to ~~$53.5~~$53.6 million ~~for~~in the ~~comparable~~same period ~~of 2020. This result was~~last year, primarily due toto: (i) a 1249 basis points increase in average yields, mainly attributable to higher market rates, and (ii) an increase of $108.4 million, or 2.0%, in the average balance of loans which include the effect of higher volumes of commercial loans. The increase in average yields and volumes also includes the effect of higher-yielding consumer loans purchased throughout ~~2020~~2021 and the ~~six~~first half of 2022. In addition, in the three months ended June 30, ~~2021. The~~2022, there was an increase in ~~interest income on loans was partially offset by a decline~~prepayment penalties of ~~$185.8~~$0.3 million ~~or 3.3%, in the average balance in the second quarter of 2021 over~~compared to the same period ~~in 2020, mainly attributable to loan prepayments.~~last year. See ~~“—Average~~“-Average Balance Sheet, Interest and Yield/Rate Analysis” for detailed information.

Interest income on debt securities available for sale was ~~$6.4~~$7.6 million in the ~~second quarter~~three months ended June 30, 2022, an increase of ~~2021, a decrease of $2.9~~$1.2 million, or ~~31.1%~~19.1%, compared to ~~$9.3~~$6.4 million in the same period of ~~2020.~~2021. This was mainly due to an increase of 57 basis points in average yields, primarily driven by higher market rates. This was partially offset by a decrease of ~~$364.6~~$66.8 million, or ~~23.6%~~5.7%, in the average balance ~~and a 25 basis points decline in average yields on~~of these securities. The decline in the average balance was ~~mainly driven by high prepayment activity~~primarily due to a decrease in carrying value due to market rates increasing throughout the first half of ~~mortage-backed securities as well as sales completed throughout 2020 and~~2022. In the ~~six~~three months ended June 30, ~~2021.~~2022, the average balance of accumulated net unrealized net loss included in the carrying value of these securities was $58.0 million compared to accumulated net unrealized gain of $24.1 million in the same period last year. As of June 30, ~~2021,~~2022, corporate debt securities comprised ~~30.2%~~29.7% of the available-for-sale portfolio, updown from ~~25.4%~~30.2% at June 30, ~~2020.~~2021. We continue with our strategy to insulate the investment portfolio from prepayment risk. As of June 30, ~~2021,~~2022, floating rate investments represent ~~only 11.9%~~15.3% of our total 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%~~11.9% at June 30, ~~2020.~~2021. In addition, ~~recomposition towards high duration, and natural extension of the mortgage portfolio, has increased~~ the overall duration increased to 4.9 years at June 30, 2022 from 3.0 years at June 30, 2021, ~~from 2.6 years at June 30, 2020.~~which was mainly due to lower expected prepayment speeds recorded in our mortgage-backed securities portfolio in light of rising interest rates.

Interest ~~Expense.~~ ~~Interest expense~~income on debt securities held to maturity was ~~$11.2~~$1.0 million in the three months ended June 30, ~~2021, a decrease~~2022, an increase of ~~$6.6~~$0.5 million, or ~~37.2%~~104.0%, compared to ~~$17.8~~$0.5 million in the same period of ~~2020.~~2021. This was mainly due to an increase of $80.3 million, or 82.6% in the average balance of these securities. In addition, there was an increase of 24 basis points in average yields, primarily driven by higher market rates.

Interest Expense

Interest expense was $12.2 million in the three months ended June 30, 2022, an increase of $1.0 million, or 9.1%, compared to $11.2 million in the same period of 2021. This was primarily due to: (i) ~~lower average~~higher cost of interest bearing deposits, money market deposits, brokered time deposits and FHLB advances, and (ii) the cost of the subordinated notes issued in March 2022. This increase was partially offset by a ~~decrease~~decline of ~~$461.1~~$299.5 million, or ~~7.4%~~5.2%, in the average balance of total interest bearing liabilities, mainly time deposits and FHLB advances. ~~These results were partially offset by an increase~~In addition, there was a decrease of 5 basis points in the average ~~balance of Senior Notes which were issued late in the second quarter of 2020.~~yields on customer time deposits.

Interest expense on interest-bearing deposits was ~~$7.4~~$6.9 million in the three months ended June 30, ~~2021,~~2022, a decrease of ~~$6.7~~$0.5 million, or ~~47.5%~~6.7%, compared to ~~$14.1~~$7.4 million for the same period of ~~2020,~~2021. This decline was mainly driven by a decrease in interest expense on time deposits, primarily due to: (i) a ~~50 basis points decline in the average rates paid, and (ii) a decline~~decrease of ~~$273.6~~$533.4 million, or ~~5.4%~~29.8%, in the average balance of total ~~interest bearing~~time deposits, ~~mainly~~and (ii) 5 basis points decrease in the average rates paid on customer time deposits. These declines were partially offset by a higher average ~~balance of~~rates paid on total interest bearing checking and savings ~~accounts.~~ accounts and brokered time deposits. See below for a detailed explanation of changes by major deposit category:

•Time deposits. Interest expense on total time deposits decreased ~~$6.1~~$1.8 million, or ~~49.0%~~28.8%, in the ~~second quarter of 2021~~three months ended June 30, 2022 compared to the ~~second quarter of 2020.~~same period in 2021. This was mainly due toto: (i) a decline of ~~$694.7~~$533.4 million, or ~~28.0%~~29.8%, in the average balance, including a decrease of $131.5 million in the average balance of international time deposits, and (ii) a decline of 595 basis points in the average cost on ~~these~~customer time deposits. These declines were partially offset by an increase of 28 basis points in the average cost of brokered time deposits. The decline in the average balance of total time deposits include decreases of ~~$456.9~~$317.0 million, $149.7 million and ~~$158.0~~$66.7 million, in customer certificate of deposits (“CDs”), brokered deposits and ~~brokered~~online 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 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.

6270

•Interest bearing checking and savings accounts. Interest expense on checking and savings accounts ~~decreased $0.6~~increased $1.3 million, or ~~36.2%~~124.6%, in the ~~second quarter of 2021~~three months ended June 30, 2022 compared to the same period ~~last~~one year ago, mainly due to ~~a decrease~~an increase of 1216 basis points in the average costs on these deposits. ~~This~~In addition, there was ~~partially offset by~~ an increase of ~~$421.1~~$259.3 million, or ~~16.5%~~8.7% in the average balance of total interest bearing checking and savings accounts in the ~~second quarter of 2021~~three months ended June 30, 2022 compared to the same period in ~~2020,~~2021, 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; (ii) new domestic deposits from municipalities and funds from escrow accounts in the three months ended June 30, 2022, and (iii) an increase of ~~$60.4~~$102.4 million, or ~~3.7%~~5.0%, in the average balance of international accounts, including ~~an increase~~increases of ~~$61.1~~$73.2 million, or ~~3.7%~~4.3%, and $29.1 million, or 8.4%, in personal and commercial accounts, respectively. These increases in average balances were partially offset by a ~~decrease~~decline of ~~$0.7~~$79.5 million ~~or 0.2%,~~ in ~~commercial accounts.~~the average balance of third-party interest-bearing domestic brokered deposits in the three months ended June 30, 2022 compared to the same period in 2021, as the Company continued to focus on reducing reliance on this source of funding.

Interest expense on FHLB advances ~~decreased by $0.9~~increased $1.1 million, or ~~27.5%~~48.2%, in the three months ended June 30, ~~2021~~2022 compared to the same period of ~~2020, mainly as a result~~2021, primarily driven by an increase of 56 basis points in the average rate paid on these borrowings. This was partially offset by a decline of ~~$241.0~~$54.5 million, or ~~20.7%~~5.9%, 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 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 completed the ~~previously mentioned~~restructuring of $285 million of its fixed-rate FHLB advances ~~restructuring.~~ and 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. In the three months ended June 30, 2022, we recognized $0.5 million, included as part of interest expense resulting from this amortization. Additionally, in the first quarter of 2022, we repaid $180 million in callable FHLB advances and borrowed $350.0 million in longer-term FHLB advances. Furthermore, during the second quarter of 2022, the Company repaid $350.0 million in FHLB callable advances and borrowed $200.0 million in long-term fixed advances to extend duration of this portfolio and lock-in fixed interest rates.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~~$285 million FHLB advances restructuring completed in ~~April 2020.~~May 2021.

~~Interest~~On March 9, 2022, the Company sold and issued $30.0 million aggregate principal amount of its 4.25% Fixed-to-Floating Rate Subordinated Notes due on March 15, 2032. The Subordinated Notes will initially bear interest at a fixed rate of 4.25% per annum, from and including March 9, 2022, to but excluding March 15, 2027, with interest payable semi-annually in arrears. In the three months ended June 30, 2022 interest expense on ~~Senior Notes increased to $0.9 million in the second quarter of 2021 compared to $0.1 million in the second quarter of 2020. This result~~these subordinated notes was ~~mainly driven by an increase of $53.6 million in the average balance, as these Senior Notes were issued late in the second quarter of 2020.~~$0.4 million. See ~~“—Capital~~“Capital Resources and Liquidity Management” in this Form 10-Q for ~~detailed~~more information on the ~~issuance of Senior~~Subordinated Notes.

Six Months Ended June 30, ~~2021~~2022 and ~~2020~~2021

In the six months ended June 30, ~~2021,~~2022, net interest income was ~~$97.5~~$114.6 million, an increase of ~~$2.0~~$17.1 million, or ~~2.1%~~17.5%, from ~~$95.6~~$97.5 million in the same period of ~~2020.~~2021. This was ~~primarily due to a decline in interest expense on total interest bearing liabilities, including declines~~mainly driven by: (i) an increase of 4643 basis points in the yield on total interest earning assets, mainly loans and debt securities available for sale and held to maturity and interest earnings deposits with banks; (ii) higher average ~~cost,~~balance of debt securities held to maturity, and ~~$389.0~~(iii) a decline of $383.2 million, or ~~6.2%~~6.52%, in the ~~average balance. These declines were 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.~~advances, and (iii) a decline of 16 basis points in the average costs of customer time deposits. The increase in net interest income was partially offset by: (i) ~~a decline~~higher cost of ~~20 basis points in the average yield~~interest bearing deposits, money market deposits, brokered time deposits and ~~a decrease~~FHLB advances, and (ii) decreases of ~~$367.4~~$37.9 million, or ~~4.9%~~0.7%, and $50.3 million, or 4.2%, in the average balance of loans and debt securities available for sale, respectively. In addition, the six months ended June 30, 2022 include the additional interest expense associated with subordinated notes issued in March 2022. The increase in average yields on interest earning assets ~~and (ii) a higher average balance~~includes the effect of ~~Senior Notes which were issued late~~the aforementioned increase in the Federal reserve’s benchmark interest rate in 2022. Net interest margin was 3.23% in the six months ended June 30, ~~2020. Net interest margin was~~2022, an increase of 49 basis points from 2.74% in the six months ended June 30, ~~2021, an increase of 19 basis points from 2.55% in the six months ended June 30, 2020.~~ 2021. See discussions further below for more details.

Interest ~~Income.~~Income

Total interest income was ~~$121.5~~$136.3 million in the six months ended June 30, ~~2021, a decline~~2022, an increase of ~~$14.0~~$14.8 million, or ~~10.3%~~12.2%, compared to ~~$135.5~~$121.5 million for the same period of ~~2020, mainly due to~~2021. This was primarily driven by a ~~decline of 20~~43 basis points increase in the average yield ofon total interest earning ~~assets.~~assets, mainly driven by higher market rates on loans and debt securities available for sale and held to maturity and interest earning deposits with banks. In addition, there was ~~a decrease~~an increase of ~~$367.4~~$63.7 million, or ~~4.9%~~77.2%, in the average balance of ~~total interest earning assets, mainly~~debt securities held to maturity. These increases were partially offset by decreases of $37.9 million, or 0.7%, and $50.3 million, or 4.2%, in the average balance of loans and debt securities available for ~~sale.~~ sale, respectively.

~~See~~ ~~“—Average Balance Sheet, Interest and Yield/Rate Analysis” for detailed information.~~

Interest income on loans in the six months ended June 30, ~~2021~~2022 was ~~$106.4~~$117.9 million, ~~a decrease~~an increase of ~~6.9~~$11.5 million, or ~~6.1%~~10.8%, compared to ~~$113.3~~$106.4 million for the comparable period of ~~2020.~~2021. This ~~decrease~~result was primarily due to a 2144 basis ~~point decline~~points increase in average yields, ~~which~~mainly attributable to higher market rates as well as higher-yielding consumer loans purchased throughout 2021 and the first half of 2022. In addition, the increase in average yields includes the ~~full~~ effect of an increase in prepayment penalties of $0.7 million in the ~~Federal Reserve’s emergency rate cuts in March 2020. In addition, there~~six months ended June 30, 2022 compared to the same period last year. This increase was partially offset by a slight decrease of ~~$40.9~~$37.9 million, or 0.7%, in the average balance of loans ~~in the six months ended June 30, 2021 over~~compared to the same period in ~~2020.~~2021, mainly attributable to loan prepayments, the sale of and forgiveness of PPP loans and the sale of New York real estate loans. The decrease in the average balance of loans was partially offset by: (i) higher volumes of commercial loans driven by our loan origination and cross-sale efforts during the first half of 2022, and (ii) purchases of consumer loans as discussed above. See ~~“—Average~~“-Average Balance Sheet, Interest and Yield/Rate Analysis” for detailed information.

Interest income on ~~the~~ debt securities available for sale was ~~$12.9~~$15.0 million in the six months ended June 30, ~~2021, a decrease~~2022, an increase of ~~$5.9~~$2.1 million, or ~~31.4%~~16.3%, compared to ~~$18.8~~$12.9 million in the same period of ~~2020.~~2021. This was mainly due to an increase of 47 basis points in average yields, primarily on lower prepayments and higher market rates. This was partially offset by a decrease of ~~$355.1~~$50.3 million, or ~~22.9%~~4.2%, in the average balance of these securities. The decline in the average balance was due to prepayments and a ~~26 basis point decline~~decrease in ~~average yields. These results were mainly driven by a high prepayment activity~~carrying value due to market rates increasing throughout the first half of ~~mortgage-backed securities and sales completed throughout 2020 and~~2022. In the six months ended June 30, ~~2021, and lower reinvestment rates.~~ ~~See~~ ~~“—Average Balance Sheet,~~ 2022, the average balance of accumulated net unrealized net loss included in the carrying value of these securities was $28.0 million compared to accumulated net unrealized gain of $28.7 million in the same period last year.

Interest ~~and Yield/Rate Analysis” for detailed information.~~

~~Interest Expense.~~ ~~Interest expense~~income on debt securities held to maturity was ~~$24.0~~$1.7 million in the six months ended June 30, ~~2021, a decrease~~2022, an increase of ~~$16.0~~$0.9 million, or ~~40.0%~~115.1%, compared to ~~$39.9~~$0.8 million in the same period of ~~2020.~~2021. This was mainly due to an increase of $63.7 million, or 77.2% in the average balance of these securities. In addition, there was an increase of 41 basis points in average yields, primarily driven by higher market rates.

Interest Expense

Interest expense was $21.7 million in the six months ended June 30, 2022, a decrease of $2.3 million, or 9.5%, compared to $24.0 million in the same period of 2021. This was primarily due ~~to: (i) lower average cost of total deposits and FHLB advances and (ii)~~to a decrease of ~~$389.0~~$383.2 million, or ~~6.2%~~6.52%, in the average balance of total interest bearing liabilities, mainly time deposits and FHLB advances. In addition, there was a decline of 16 basis points in the average costs of customer time deposits. This was partially offset by: (i) higher cost of interest bearing deposits, money market deposits, brokered time deposits and FHLB advances, and (ii) the additional interest expense associated with the subordinated notes issued in March 2022.

Interest expense on interest-bearing deposits was ~~$15.8~~$12.2 million in the six months ended June 30, ~~2021,~~2022, a decrease of ~~$15.1~~$3.6 million, or ~~48.8%~~22.9%, compared to ~~$31.0~~$15.8 million for the same period of ~~2020.~~2021. This decline was ~~primarily due to~~mainly driven by: (i) a ~~57 basis point decline in the average rates paid on deposits. In addition, there was a decline~~decrease of ~~$600.1~~$597.0 million, or ~~24.3%~~31.9%, in the average balance of total time deposits, and (ii) a decline of 16 basis points in the average cost of customer time deposits. These declines were partially offset by a higher average ~~balance of~~rates paid on total interest bearing checking and savings accounts. See below for a detailed explanation of changes by major deposit category:

•Time ~~deposits~~deposit.s. Interest expense on total time deposits decreased ~~$12.2~~$4.9 million, or ~~47.1%~~35.8%, in the six months ended June 30, ~~2021~~2022 compared to the same period ~~last year.~~in 2021. This was mainly ~~driven by~~due to: (i) a decline of $597.0 million, or 31.9%, in the average balance, including a decrease of 64$141.1 million in the average balance of international time deposits, and (ii) decline of 16 basis points in the average cost ~~and a decrease~~on customer time deposits. These declines were partially offset by an increase of ~~$600.1 million, or 24.3%,~~27 basis points in the average ~~balance of~~cost on brokered time deposits. The decline in the average balance of total time deposits ~~includes~~include decreases of ~~$411.9~~$338.6 million, $181.1 million and ~~$148.7~~$77.3 million, in customer ~~CDs~~certificate of deposits (“CDs”), brokered deposits and ~~brokered~~online 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.

•Interest bearing checking and savings accounts. Interest expense on ~~total interest bearing~~ checking and savings accounts ~~decreased $2.9~~increased $1.3 million, or ~~57.4%~~58.9%, in the six months ended June 30, ~~2021~~2022 compared to the ~~six months ended June 30, 2020,~~same period one year ago, mainly due to ~~a decrease~~an increase of 2513 basis points in the average ~~cost. This~~costs on interest bearing demand deposit accounts. In addition, there was ~~partially offset by~~ an increase of ~~$353.2~~$288.8 million, or ~~13.9%,~~10.0% in the average balance of total interest bearing checking and savings accounts in the six months ended June 30, ~~2021~~2022 compared to the same period in ~~2020,~~2021, mainly driven by: (i) ~~third-party interest-bearing~~higher average domestic ~~brokered~~personal accounts; (ii) new domestic deposits ~~with an average balance of $117.1 million~~from municipalities and funds from escrow accounts in the ~~six~~three 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,~~2022, and (iii) an increase of ~~$60.1~~$111.6 million, or ~~3.0%~~5.46%, in the average balance of international accounts, including ~~an increase~~increases of ~~$60.7~~$75.0 million, or ~~3.7%~~4.4%, and $36.6 million, or 10.7%, in personal and commercial accounts, respectively. These increases in average balances were partially offset by a ~~decrease~~decline of ~~$0.7~~$64.2 million ~~or 0.2%,~~ in ~~commercial accounts.~~the average balance of third-party interest-bearing domestic brokered deposits in the six months ended June 30, 2022 compared to the same period in 2021, as the Company continued to focus on reducing reliance on this source of funding.

Interest expense on FHLB advances ~~decreased $2.5~~increased $0.8 million, or ~~33.4%~~16.1%, in the six months ended June 30, ~~2021~~2022 compared to the same period of ~~2020. This was~~2021, mainly ~~as a result~~due to an increase of ~~a decrease of $193.7 million, or 16.4%, in the average balance and a decline of 25~~29 basis points in the average rate paid on these borrowings. ~~These changes include~~This increase was partially offset by a decline of $93.5 million, or 9.5%, in the ~~effects of: (i)~~average balance on this funding source which includes the effect of the repayment of ~~$235~~$235.0 million of ~~these borrowings~~FHLB advances in the second quarter of 2021. In May 2021, the Company completed the restructuring of $285 million of its fixed-rate FHLB advances and 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. In the six months ended June 30, ~~2021,~~2022, we recognized $0.9 million, included as part of interest expense resulting from this amortization. Additionally, in the first quarter of 2022, we repaid $180 million in callable FHLB advances and ~~(ii) a $420~~borrowed $350.0 million ~~restructuring completed~~ in ~~April 2020. In addition, in May 2021,~~longer-term FHLB advances. Furthermore, during the second quarter of 2022, the Company ~~completed the previously mentioned $285~~repaid $350.0 million in FHLB callable advances ~~restructuring.~~ and borrowed $200.0 million in long-term fixed advances to extend duration of this portfolio and lock-in fixed interest rates.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~~$285 million FHLB advances restructuring completed in ~~April 2020.~~

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

Interest expense on ~~Senior Notes increased to $1.9~~subordinated notes was $0.4 million in the six months ended June 30, ~~2021 compared to $0.1 million~~2022. We had no interest expense on subordinated notes 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.~~2021. See ~~“—Capital~~“Capital Resources and Liquidity Management” in this Form 10-Q for ~~detailed~~more information on the ~~issuance of Senior~~Subordinated Notes.

6573

Average Balance Sheet, Interest and Yield/Rate Analysis

The following tables present average balance sheet information, interest income, interest expense and the corresponding average yields earned and rates paid for the three and six ~~months~~month periods ended June 30, ~~2021~~2022 and ~~2020.~~2021. 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 June 30,													Three Months Ended June 30,
		2021						2020							2022						2021
(in thousands, except percentages)	(in thousands, except percentages)	Average Balances		Income/ Expense		Yield/ Rates		Average Balances		Income/ Expense		Yield/ Rates		(in thousands, except percentages)	Average Balances		Income/ Expense		Yield/ Rates		Average Balances		Income/ Expense		Yield/ Rates
Interest-earning assets:	Interest-earning assets:													Interest-earning assets:
Loan portfolio, net ~~(1)~~(2)	Loan portfolio, net ~~(1)~~(2)	$	5,526,727	$	53,612	3.89	%	$	5,712,548	$	53,483	3.77	%	Loan portfolio, net ~~(1)~~(2)	$	5,635,147	$	61,514	4.38	%	$	5,526,727	$	53,612	3.89	%
Debt securities available for sale (2)		1,180,766		6,393		2.17	%	1,545,335		9,283		2.42	%
Debt securities available for sale (3) (4)														Debt securities available for sale (3) (4)	1,113,994		7,614		2.74	%	1,180,766		6,393		2.17	%
Debt securities held to maturity ~~(3)~~(5)	Debt securities held to maturity ~~(3)~~(5)	97,208		481		1.98	%	68,237		308		1.82	%	Debt securities held to maturity ~~(3)~~(5)	177,483		981		2.22	%	97,208		481		1.98	%
Debt securities held for trading	Debt securities held for trading	258		2		3.11	%	—		—		—	%	Debt securities held for trading	101		1		3.97	%	258		2		3.11	%
Equity securities with readily determinable fair value not held for trading	Equity securities with readily determinable fair value not held for trading	24,010		75		1.25	%	24,303		121		2.00	%	Equity securities with readily determinable fair value not held for trading	12,407		—		—	%	24,010		75		1.25	%
Federal Reserve Bank and FHLB stock	Federal Reserve Bank and FHLB stock	51,764		548		4.25	%	69,801		916		5.28	%	Federal Reserve Bank and FHLB stock	49,476		539		4.37	%	51,764		548		4.25	%
Deposits with banks	Deposits with banks	239,951		62		0.10	%	215,406		56		0.10	%	Deposits with banks	224,751		518		0.92	%	239,951		62		0.10	%
Total interest-earning assets	Total interest-earning assets	7,120,684		61,173		3.45	%	7,635,630		64,167		3.38	%	Total interest-earning assets	7,213,359		71,167		3.96	%	7,120,684		61,173		3.45	%
Total non-interest-earning assets less allowance for loan losses	Total non-interest-earning assets less allowance for loan losses	559,807						512,569						Total non-interest-earning assets less allowance for loan losses	635,871						559,807
Total assets	Total assets	$	7,680,491					$	8,148,199					Total assets	$	7,849,230					$	7,680,491

6674

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 %


	Three Months Ended June 30,
	2022							2021
(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	$	1,654,232		$	1,034	0.25	%	$	1,292,612		$	123	0.04	%
Money market	1,262,566			1,351		0.43	%	1,310,133			931		0.29	%
Savings	318,967			14		0.02	%	373,723			14		0.02	%
Total checking and saving accounts	3,235,765			2,399		0.30	%	2,976,468			1,068		0.14	%
Time deposits	1,256,112			4,503		1.44	%	1,789,517			6,327		1.42	%
Total deposits	4,491,877			6,902		0.62	%	4,765,985			7,395		0.62	%
Securities sold under agreements to repurchase	60			—		—	%	440			1		0.91	%
Advances from the FHLB and other borrowings (6)	867,573			3,341		1.54	%	922,050			2,255		0.98	%
Senior notes	59,013			942		6.40	%	58,697			942		6.44	%
Subordinated notes	29,178			361		4.96	%	—			—		—	%
Junior subordinated debentures	64,178			676		4.22	%	64,178			609		3.81	%
Total interest-bearing liabilities	5,511,879			12,222		0.89	%	5,811,350			11,202		0.77	%
Non-interest-bearing liabilities:
Non-interest-bearing demand deposits	1,309,520							937,275
Accounts payable, accrued liabilities and other liabilities	283,721							142,226
Total non-interest-bearing liabilities	1,593,241							1,079,501
Total liabilities	7,105,120							6,890,851
Stockholders’ equity	744,110							789,640
Total liabilities and stockholders' equity	$	7,849,230						$	7,680,491
Excess of average interest-earning assets over average interest-bearing liabilities	$	1,701,480						$	1,309,334
Net interest income				$	58,945						$	49,971
Net interest rate spread						3.07	%						2.68	%
Net interest margin (7)						3.28	%						2.81	%
Cost of total deposits (8)						0.48	%						0.52	%
Ratio of average interest-earning assets to average interest-bearing liabilities	130.87		%					122.53		%
Average non-performing loans/ Average total loans	0.56		%					1.84		%

6775


	Six Months Ended
	June 30, 2022					June 30, 2021
(in thousands, except percentages)	Average Balances			Income/ Expense		Yield/ Rates		Average Balances			Income/ Expense		Yield/ Rates
Interest-earning assets:
Loan portfolio, net (1)(2)	$	5,564,362		$	117,852	4.27	%	$	5,602,218		$	106,383	3.83	%
Debt securities available for sale (3)(4)	1,142,087			14,992		2.65	%	1,192,342			12,888		2.18	%
Debt securities held to maturity (5)	146,243			1,684		2.32	%	82,550			783		1.91	%
Debt securities held for trading	68			2		5.93	%	181			3		3.34	%
Equity securities with readily determinable fair value not held for trading	6,885			—		—	%	24,117			159		1.33	%
Federal Reserve Bank and FHLB stock	50,485			1,085		4.33	%	57,650			1,173		4.10	%
Deposits with banks	241,893			650		0.54	%	222,749			113		0.10	%
Total interest-earning assets	7,152,023			136,265		3.84	%	7,181,807			121,502		3.41	%
Total non-interest-earning assets less allowance for loan losses	626,501							532,232
Total assets	$	7,778,524						$	7,714,039

Interest-bearing liabilities:
Checking and saving accounts
Interest bearing DDA	$	1,605,626		$	1,324	0.17	%	$	1,302,603		$	236	0.04	%
Money market	1,257,955			2,084		0.33	%	1,273,284			1,897		0.30	%
Savings	322,027			26		0.02	%	320,903			28		0.02	%
Total checking and saving accounts	3,185,608			3,434		0.22	%	2,896,790			2,161		0.15	%
Time deposits	1,275,587			8,784		1.39	%	1,872,577			13,687		1.47	%
Total deposits	4,461,195			12,218		0.55	%	4,769,367			15,848		0.67	%
Securities sold under agreements to repurchase	30			—		—	%	221			1		0.91	%
Advances from the FHLB and other borrowings (6)	892,170			5,822		1.32	%	985,672			5,013		1.03	%
Senior notes	58,974			1,884		6.44	%	58,658			1,884		6.48	%
Subordinated notes	18,375			449		4.93	%	—			—		—	%
Junior subordinated debentures	64,178			1,302		4.09	%	64,178			1,216		3.82	%
Total interest-bearing liabilities	5,494,922			21,675		0.80	%	5,878,096			23,962		0.82	%
Non-interest-bearing liabilities:
Non-interest-bearing demand deposits	1,254,948							931,291
Accounts payable, accrued liabilities and other liabilities	257,559							118,021
Total non-interest-bearing liabilities	1,512,507							1,049,312
Total liabilities	7,007,429							6,927,408
Stockholders’ equity	771,095							786,631
Total liabilities and stockholders' equity	$	7,778,524						$	7,714,039
Excess of average interest-earning assets over average interest-bearing liabilities	$	1,657,101						$	1,303,711
Net interest income				$	114,590						$	97,540
Net interest rate spread						3.04	%						2.59	%
Net interest margin (7)						3.23	%						2.74	%
Cost of total deposits (8)						0.43	%						0.56	%
Ratio of average interest-earning assets to average interest-bearing liabilities	130.16		%					122.18		%
Average non-performing loans/ Average total loans	0.63		%					1.69		%

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~~Includes loans held for investment net of the allowance for loan losses and loans held for sale. The average balance of the allowance for loan losses was $55.9 million and $110.8 million in the three months ended June 30, 2022 and 2021, respectively, and $61.7 million and $110.9 million in the six months ended June 30, 2022 and 2021, respectively. The average balance of total loans held for sale was $112.2 million and $296 thousand in the three months ended June 30, 2022 and 2021, respectively, and $123.6 million and $0.2 million in the six months ended June 30, 2022 and 2021, respectively.

(2) Includes average non-performing loans of ~~$103.6~~$32.7 million and ~~$50.4~~$103.6 million for the three months ended June 30, 2022 and 2021, respectively, and ~~2020, respectively,~~$36.0 million and $96.4 million for the six months ended June 30, 2022 and ~~$41.6~~2021, respectively. Interest income that would have been recognized on outstanding non-performing loans at June 30, 2022 and 2021 was $0.1 million and $0.9 million in the three months ended June 30, 2022 and 2021, respectively, and $0.6 million and $1.7 million in the six months ended June 30, 2022 and 2021, respectively.

(3) Includes average balance of accumulated net unrealized gains and ~~2020, respectively, are included~~losses in the fair value of debt securities available for sale. The average ~~loan portfolio, net. Interest income that would have been recognized on these non-performing loans totaled $0.9~~balance includes average accumulated net unrealized loss of $58.0 million and ~~$0.6~~accumulated net unrealized gain of $24.1 million in the three months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively, and ~~$1.7~~average accumulated net unrealized loss of $28.0 million and ~~$1.1~~average accumulated net unrealized gain of $28.7 million in the six months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively.

~~(2)~~(4) Includes nontaxable securities with average balances of ~~$27.3~~$14.8 million and ~~$62.2~~$27.3 million for the three months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively, and ~~$47.9~~$15.7 million and ~~$55.8~~$47.9 million in the six months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively. The tax equivalent yield for these nontaxable securities was ~~2.15%~~2.97% and ~~3.77%~~2.15% for the three months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively, and ~~2.77%~~2.85% and ~~3.82%~~2.77% for the six months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively. In ~~2021~~2022 and ~~2020,~~2021, the tax equivalent yields were calculated by assuming a 21% tax rate and dividing the actual yield by 0.79.

~~(3)~~(5) Includes nontaxable securities with average balances of ~~$52.2~~$42.7 million and ~~$68.2~~$52.2 million for the three months ended June 30, 2022 and 2021, respectively, and ~~2020, respectively,~~$43.4 million and $54.4 million ~~and $70.4 million for~~in the six months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively. The tax equivalent yield for these nontaxable securities was ~~2.19%~~3.31% and ~~2.30%~~2.19% for the three months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively, and 3.22% and 2.30% ~~and 2.56% for~~in the six months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively. In ~~2021~~2022 and ~~2020,~~2021, the tax equivalent yields were calculated by assuming a 21% tax rate and dividing the actual yield by 0.79.

~~(4)~~(6) The terms of the FHLB advance agreements require the Bank to maintain certain investment securities or loans as collateral for these advances.

~~(5)~~(7) 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)~~(8) Calculated based upon the average balance of total noninterest bearing and interest bearing deposits.

6977

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 June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	(in thousands)	2021		2020		2021		2020		(in thousands)	2022		2021		2022		2021

Balance at the beginning of the period	Balance at the beginning of the period	$	110,940	$	72,948	$	110,902	$	52,223	Balance at the beginning of the period	$	56,051	$	110,940	$	69,899	$	110,902

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

Commercial Real Estate (CRE)										Commercial Real Estate (CRE)

Single-family residential	Single-family residential	(58)		—		(58)		—		Single-family residential	—		(58)		(10)		(58)
Owner occupied		—		—		—		(27)

Commercial	Commercial	(1,688)		(2,075)		(1,923)		(3,149)		Commercial	(4,605)		(1,688)		(7,880)		(1,923)
Consumer and others	Consumer and others	(786)		(44)		(1,217)		(266)		Consumer and others	(915)		(786)		(1,948)		(1,217)
		(2,532)		(2,119)		(3,198)		(3,442)			(5,520)		(2,532)		(9,838)		(3,198)

International Loans (1):	International Loans (1):									International Loans (1):
Commercial		—		—		—		(34)
Consumer and others (1)		—		(7)		—		(258)
Single-family residential										Single-family residential	—		—		(4)		—

		—		(7)		—		(292)
Total Charge-offs	Total Charge-offs	$	(2,532)	$	(2,126)	$	(3,198)	$	(3,734)	Total Charge-offs	$	(5,520)	$	(2,532)	$	(9,842)	$	(3,198)

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)									Commercial Real Estate (CRE)

Land development and construction loans	Land development and construction loans	$	70	$	—	$	70	$	—	Land development and construction loans	$	10	$	70	$	14	$	70

Single-family residential	Single-family residential	53		40		79		70		Single-family residential	76		53		110		79

Commercial	Commercial	303		50		750		111		Commercial	1,058		303		1,259		750
Consumer and others	Consumer and others	108		2		152		19		Consumer and others	2		108		132		152
		534		92		1,051		200			1,146		534		1,515		1,051

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

Commercial	Commercial	214		—		372		124		Commercial	338		214		437		372
Consumer and others	Consumer and others	29		118		58		219		Consumer and others	12		29		18		58
		243		118		430		343			350		243		455		430
Total Recoveries	Total Recoveries	$	777	$	210	$	1,481	$	543	Total Recoveries	$	1,496	$	777	$	1,970	$	1,481

Net charge-offs	Net charge-offs	(1,755)		(1,916)		(1,717)		(3,191)		Net charge-offs	(4,024)		(1,755)		(7,872)		(1,717)
(Reversal of) provision for loan losses		(5,000)		48,620		(5,000)		70,620
Provision for (reversal of) provision for loan losses										Provision for (reversal of) provision for loan losses	—		(5,000)		(10,000)		(5,000)
Balance at the end of the period	Balance at the end of the period	$	104,185	$	119,652	$	104,185	$	119,652	Balance at the end of the period	$	52,027	$	104,185	$	52,027	$	104,185

__________________

(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.

7078

Three Months Ended June 30, ~~2021~~2022 and ~~2020~~2021

~~The Company released $5.0 million~~There was no provision expense or release 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~~2022, compared to a release from the ALL of $5.0 million in the same period last year. During the second quarter of 2022, we had releases from the ALL of: (i) $1.0 million due to upgrades, payoffs and pay-downs of non-performing loans and special mention loans, (ii) $5.1 million as a result of improved macro-economic conditions, and (iii) $1.5 million due to recoveries. These releases from the ALL in the second quarter of 2022 were offset by $6.0 million in additional reserves requirements for charge-offs and $1.6 million in reserves requirements due to loan growth. The ALL release in the second quarter of 2021 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~~continued to recover from the COVID-19 ~~pandemic.~~pandemic in the second quarter of 2021. In addition, the decrease in the loan portfolio outstanding balance ~~when~~in the second quarter of 2021, compared to the close of 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~~2022 was $2.7 million compared to ~~$32.9~~$14.8 million atas of June 30, ~~2020.~~2021. This reduction in the ALL associated with the COVID-19 pandemic is the result of improved macro-economic conditions, while still taking into account the impact of supply chain disruptions, inflationary pressures and labor shortages prevalent in the current economic environment.

During the three months ended June 30, ~~2021,~~2022, charge-offs ~~decreased $0.4~~increased $3.0 million, or ~~19.1%~~118.0%, compared to the same period of the prior year. ~~This was mainly driven by~~In the ~~absence of a $1.9~~three months ended June 30, 2022, charge-offs included: (i) $4.1 million ~~charge-off on a~~related to two commercial ~~loan~~loans, primarily including $3.6 million related to a ~~South Florida food wholesale borrower~~loan relationship with a Miami-based U.S. coffee trader (“the Coffee Trader”), and (ii) an aggregate of $0.9 million in consumer loans. In the ~~second quarter of 2020. This result was partially offset by~~three months ended June 30, 2021, the Company charged-off an aggregate of $0.7 million ~~of charge-offs in the second quarter of 2021~~ related to consumer loans under indirect lending ~~programs. The~~programs.The ratio of net charge-offs over the average total loan portfolio held for investment was 0.29% in the second quarter of 2022, compared to 0.12% in the second quarter of ~~2021 compared to 0.13% in the second quarter of 2020.~~2021.

As of ~~June 30,~~December 31, 2021, the ~~loan relationship with a Miami-based U.S. coffee trader (“~~Coffee ~~Trader”)~~Trader had an outstanding balance of approximately ~~$19.6 million, net of a $19.3 million charge off recorded in~~$9.1 million. In the ~~third~~second quarter of ~~2020, unchanged from December 31, 2020. As~~2022, the Company collected a partial principal payment of $5.5 million and charged off the remaining balance of $3.6 million against the allowance for loans losses. Therefore, as of June 30, ~~2021, the Company had a specific~~2022, there were no outstanding balances associated with this loan ~~loss reserve of $12.3 million (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 details on the ~~loan relationship with the~~ Coffee Trader.

During the second quarter of ~~2021,~~2022, consistent with the Company’s applicable policy, the Company obtained independent third-party collateral valuations on ~~most~~all real estate securing non-performing loans ~~supporting~~with existing valuations older than 12-months, to support current ALL levels. No additional loan loss 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~~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.

7179

Six Months Ended June 30, ~~2021~~2022 and ~~2020~~

2021

The Company released ~~$5.0~~$10.0 million from the ALL ~~during~~in the six months ended June 30, ~~2021,~~2022, compared to ~~a provision of loan losses of $70.6 million recorded during the six months ended June 30, 2020. The~~ $5.0 million in the same period last year. The ALL release in the first half of 2022 was primarily attributed to releases of: (i) $4.4 million due to upgrades, payoffs and pay-downs of non-performing loans and special mention loans; (ii) $12.3 million as a result of improved macro-economic conditions, and (iii) $2.0 million due to recoveries. These releases from the ALL in the first half of 2022 were partially offset by $5.8 million in additional reserve requirements for charge-offs and $2.9 million in reserve requirements due to loan growth.The ALL release in the first half of 2021 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~~continued to recover from the COVID-19 ~~pandemic.~~pandemic in the second quarter of 2021. In addition, the decrease in the loan portfolio outstanding balance ~~when~~in the second quarter of 2021, compared to the ~~six months ended June 30, 2020,~~close of 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 ~~six months ended June 30,~~second quarter of 2021.

During the six months ended June 30, ~~2021,~~2022, charge-offs ~~decreased $0.5~~increased $6.6 million, or ~~14.4%~~207.8%, compared to the same period of the prior year. This was mainly driven by the absence of a $1.9 million charge-off on a commercial loan to a South Florida food wholesale borrower as well as an aggregate of $1.2 million in charge-offs related to five commercial loans in six months ended June 30, 2020. This result was partially offset by an aggregate of $0.7 million of charge-offs inIn the six months ended June 30, 2022, charge-offs included: (i) $7.4 million related to four commercial loans, including $3.6 million related to the Coffee Trader and $2.5 million related to a nonaccrual loan paid off during the period, and (ii) an aggregate of $1.9 million in consumer loans. In the six months ended June 30, 2021, the Company charged-off an aggregate of $1.9 million related to consumer loans under indirect lending programs. The ratio of net charge-offs over the average total loan portfolio held for investment was 0.29% in the first half of 2022, compared to 0.06% in the ~~six months ended June 30, 2021 compared to 0.11% in the six months ended June 30, 2020.~~first half of 2021.

7280

Noninterest Income

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


		Three Months Ended June 30,								Change					Three Months Ended June 30,								Change
		2021				2020				2021 vs 2020					2022				2021				2022 vs 2021
		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	$	4,284	27.2	%	$	3,438	17.4	%	$	846	24.6	%	Deposits and service fees	$	4,577	35.4	%	$	4,284	27.2	%	$	293	6.8	%
Brokerage, advisory and fiduciary activities	Brokerage, advisory and fiduciary activities	4,431		28.2	%	4,325		21.9	%	106		2.5	%	Brokerage, advisory and fiduciary activities	4,439		34.3	%	4,431		28.2	%	8		0.2	%
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)		1,329		8.5	%	7,737		39.2	%	(6,408)		(82.8)	%
Loan-level derivative income (1)														Loan-level derivative income (1)	1,009		7.8	%	1,293		8.2	%	(284)		(22.0)	%
Change in cash surrender value of bank owned life insurance (“BOLI”)(2)														Change in cash surrender value of bank owned life insurance (“BOLI”)(2)	1,334		10.3	%	1,368		8.7	%	(34)		(2.5)	%
Cards and trade finance servicing fees	Cards and trade finance servicing fees	388		2.5	%	273		1.4	%	115		42.1	%	Cards and trade finance servicing fees	508		3.9	%	388		2.5	%	120		30.9	%
Loss on early extinguishment of FHLB advances, net		(2,488)		(15.8)	%	(66)		(0.3)	%	(2,422)		N/M

Other noninterest income (3)		6,422		40.8	%	2,619		13.2	%	3,803		145.2	%
Gain (loss) on early extinguishment of FHLB advances, net														Gain (loss) on early extinguishment of FHLB advances, net	2		—	%	(2,488)		(15.8)	%	2,490		100.1	%
Securities (losses) gains, net (3)														Securities (losses) gains, net (3)	(2,602)		(20.1)	%	1,329		8.5	%	(3,931)		(295.8)	%
Derivative gains, net (4)														Derivative gains, net (4)	855		6.6	%	—		—	%	$	855	N/M
Other noninterest income (5) (6)														Other noninterest income (5) (6)	2,809		21.8	%	5,129		32.5	%	(2,320)		(45.2)	%
Total noninterest income	Total noninterest income	$	15,734	100.0	%	$	19,753	100.0	%	$	(4,019)	(20.4)	%	Total noninterest income	$	12,931	100.0	%	$	15,734	100.0	%	$	(2,803)	(17.8)	%


	Six Months Ended June 30,								Change
	2022				2021				2022 over 2021
	Amount		%		Amount		%		Amount		%
(in thousands, except percentages)
Deposits and service fees	$	9,197	34.1	%	$	8,390	28.1	%	$	807	9.6	%
Brokerage, advisory and fiduciary activities	9,035		33.5	%	9,034		30.2	%	1		—	%
Loan-level Derivative income (1)	4,161		15.4	%	1,525		5.1	%	2,636		172.9	%
Change in cash surrender value of bank owned life insurance (“BOLI”)(2)	2,676		9.9	%	2,724		9.1	%	(48)		(1.8)	%
Cards and trade finance servicing fees	1,098		4.1	%	727		2.4	%	371		51.0	%
Loss on early extinguishment of FHLB advances, net	(712)		(2.6)	%	(2,488)		(8.3)	%	1,776		71.4	%
Securities (losses) gains, net (3)	(1,833)		(6.8)	%	3,911		13.1	%	(5,744)		(146.9)	%
Derivative losses, net (4)	(490)		(1.8)	%	—		—	%	(490)		NM

Other noninterest income (5) (6)	3,824		14.2	%	6,074		20.3	%	(2,250)		(37.0)	%
Total noninterest income	$	26,956	100.0	%	$	29,897	100.0	%	$	(2,941)	(9.8)	%

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) Income from interest rate swaps and other derivative transactions with customers. The Company incurred expenses related to derivative transactions with customers of $2.0 million and $0.2 million in the three months ended June 30, 2022 and 2021, respectively, and $3.1 million and $0.2 million in the six months ended June 30, 2022 and 2021, respectively, which are included as part of noninterest expenses under professional and other services fees.

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

~~(2) Includes~~(3) Includes: (i) net gain on sale of debt securities of $1.3 million ~~and $7.5 million during~~in the three months ended June 30, 2021, and ~~2020, respectively,~~$49 thousand and $4.2 ~~million and $16.8~~ million in the six months ended June 30, 2022 and 2021, respectively, (ii) unrealized losses of $2.6 million and ~~2020, respectively. In addition, includes~~ unrealized gains of $22 thousand ~~and $0.2 million during~~in the three months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively, and unrealized losses of ~~$0.4~~$1.9 million and ~~unrealized gains of $0.6~~$0.4 million in the six months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively, related to the change in ~~market~~fair value of ~~mutual funds.~~marketable equity securities not held for trading.

~~(3)~~(4) Net unrealized gains and losses related to uncovered interest rate caps with clients.

(5) Includes ~~a gain~~mortgage banking revenue related to Amerant Mortgage of ~~$3.8~~$2.4 million ~~on the sale of PPP loans~~and $3.1 million in the three and six month periods ended June 30, ~~2021. In addition, includes income from derivative transactions with customers totaling $1.3 million~~2022, respectively, primarily consisting of gain on sale of loans, gain on loans market valuation, other fees and ~~$1.5 million in the three months ended June 30, 2021 and 2020, respectively, and $1.5 million and $2.4 million in the six months ended June 30, 2021 and 2020, respectively.~~smaller sources of income. Other sources of income in the periods shown ~~consist of rental income,~~include income from foreign currency exchange transactions with customers and valuation income on the investment balances held in the non-qualified deferred compensation plan.

(6) Beginning in the three months ended March 31, 2022, rental income associated with the subleasing of portions of the Company’s headquarters building is presented as a reduction to rent expense under lease agreements under occupancy and equipment cost (included as part of other noninterest income in 2021 in connection with the previously-owned headquarters building). Rental income from subleases was $0.7 million in each of the three months ended June 30, 2022 and 2021, respectively, and $1.4 million and $1.3 million, in the six months ended June 30, 2022 and 2021, respectively.

N/M Means not meaningful

Three Months Ended June 30, ~~2021~~2022 and ~~2020~~2021

Total noninterest income decreased ~~$4.0~~$2.8 million, or ~~20.4%~~17.8%, in the three months ended June 30, ~~2021~~2022 compared to the same period of ~~2020,~~2021, mainly due to: (i) ~~a $6.4~~net unrealized losses on marketable equity securities of $2.6 million in the three months ended June 30, 2022; (ii) lower other noninterest income, and (iii) lower loan-level derivative income. The decrease in ~~net gains on sale~~noninterest income was partially offset by: (i) the absence of ~~securities and (ii)~~ a ~~net~~ loss of $2.5 million on the early ~~termination~~extinguishment of ~~$235~~$235.0 million inof FHLB advances in the three months ended June 30, ~~2021. The decrease~~2021; (ii) net unrealized gains on derivative valuation of $0.9 million in ~~noninterest income was partially offset by~~the three months ended June 30, 2022 related to interest rate caps with clients, and (iii) higher ~~other noninterest income and~~ deposit and service fees.

Other noninterest income ~~increased $3.8~~decreased $2.3 million, or ~~145.2%~~45.2%, in the three months ended June 30, ~~2021~~2022 compared to the same period in ~~2020. The increase other noninterest income was~~2021, mainly ~~driven by~~due to the absence of a gain of $3.8 million on the sale of ~~around~~ $95.1 million inof PPP loans in the three months ended June 30, 2021. This was partially offset by mortgage banking income of $2.4 million related to Amerant Mortgage in the three months ended June 30, 2022 (mortgage banking income in the three months ended June 30, 2021 was not significant). Beginning in the three months ended March 31, 2022, rental income associated with the subleasing of portions of the Company’s headquarters building is presented as a ~~decrease~~reduction to rent expense under lease agreements under occupancy and equipment cost (included as part of ~~$0.2~~other noninterest income in 2021 in connection with the previously-owned headquarters building). In each of the three months ended June 30, 2022 and 2021 rental income from subleases was $0.7 million.

Amerant Mortgage continues to execute on its growth strategy. In the second quarter of 2022, the Company increased its ownership interest in Amerant Mortgage to 80% from 57.4% at March 31, 2022, due to two former principals surrendering their interest in Amerant Mortgage to the Company when they became full time employees of the Bank, and an additional $1 million capital contribution made by the Company to Amerant Mortgage in the second quarter of 2022. Total mortgage loans held for sale were $54.9 million as of June 30, 2022, compared to $14.9 million at December 31, 2021.

Loan-level derivative income decreased $0.3 million, or ~~15.0%, in income from derivative transactions with customers.~~

~~Deposits and service fees increased $0.8 million, or 24.6%~~22.0%, in the three months ended June 30, 2022 compared to the same period in 2021, mainly driven by a lower volume of interest rate swap transactions with clients.

Deposits and service fees increased $0.3 million, or 6.8%, in the three months ended June 30, 2022 compared to the same period last year, primarily due to ~~an increase in~~higher service charge fee income. In addition, we received higher wire transfer fees from increased activity in the three months ended June 30, 2022.

Brokerage, advisory and fiduciary activities remained relatively flat in the three months ended June 30, 2022 compared to the same period last year, as an increase of $0.2 million in brokerage fees was offset by a decrease of $0.2 million in advisory and fiduciary fees. The increase in brokerage fees was mainly driven by higher ~~service charge fee income.~~fixed income trading revenues coupled with higher administrative fees. The decrease in advisory fees is mainly the result of lower market valuations of AUM in our client’s advisory accounts.

Our AUM totaled $1.9 billion at June 30, 2022, a decrease of $353.1 million, or 15.9%, from $2.2 billion at December 31, 2021, primarily driven by lower market valuations, due to decreased valuations in equity and fixed income markets.

Six Months Ended June 30, ~~2021~~2022 and ~~2020~~2021

Total noninterest income decreased ~~$11.8~~$2.9 million, or ~~28.2%~~9.8%, in the six months ended June 30, ~~2021~~2022 compared to the same period ~~last year. These results were~~of 2021, mainly due to: (i) net unrealized losses on marketable equity securities of $1.9 million in the six months ended June 30, 2022; (ii) lower noninterest income, and (iii) net unrealized losses on derivative valuation of $0.5 million in the six months ended June 30, 2022 related to ~~a $13.4 million~~interest rate caps with clients. The decrease in ~~net gains~~noninterest income was partially offset by: (i) higher loan-level derivative income; (ii) lower losses on the ~~sale~~early extinguishment of ~~securities,~~FHLB advances, which decreased $1.8 million in the period, and (iii) higher deposit and service fees. In the ~~previously mentioned net~~first half of 2022, the Company recorded a loss of $0.7 million on the early extinguishment of around $180.0 million of FHLB advances. In the first half of 2021, the Company recorded a loss of $2.5 million on the early ~~termination~~extinguishment of around $235 million of FHLB ~~advances during the period. These decreases were partially offset by higher other noninterest income, deposit and service fees, and brokerage, advisory and fiduciary fees.~~advances.

Other noninterest income ~~increased $2.9~~decreased $2.3 million, or ~~62.2%~~37.0%, in the six months ended June 30, ~~2021~~2022 compared to the same period ~~last year,~~in 2021, mainly due to the ~~net~~absence of a gain of $3.8 million on the sale of $95.1 million of PPP loans ~~of $95 million~~ in the ~~three~~six months ended June 30, 2021. This was partially offset by mortgage banking income of $3.1 million related to Amerant Mortgage in the six months ended June 30, 2022 (mortgage banking income in the six months ended June 30, 2021 was not significant). Beginning in the three months ended March 31, 2022, rental income associated with the subleasing of portions of the Company’s headquarters building is presented as a ~~decrease~~reduction to rent expense under lease agreements under occupancy and equipment cost (included as part of ~~$0.9~~other noninterest income in 2021 in connection with the previously-owned headquarters building). In the six months ended June 30, 2022 and 2021 rental income from subleases was $1.4 million and $1.3 million, respectively.

Loan-level derivative income increased $2.6 million, or ~~37.7%, in income from derivative transactions with customers.~~

~~Deposits and service fees increased $0.7 million, or 8.6%~~172.9%, in the six months ended June 30, ~~2021~~2022 compared to the same period ~~last year,~~in 2021, mainly driven by a higher ~~wire transfer~~volume of interest rate swap transactions with clients.

Deposits and service fees ~~from~~ increased ~~activity and higher service charge fee income.~~

~~Brokerage, advisory and fiduciary activities increased $0.6~~$0.8 million, or ~~6.8%~~9.6%, in the six months ended June 30, ~~2021~~2022 compared to the ~~six months ended June 30, 2020, mainly driven by an increase in AUMs in our clients’ advisory accounts as we continue~~same period last year, primarily due 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.~~higher service charge fee income. In addition, ~~net new assets~~we received higher wire transfer fees from increased activity in the six months ended June 30, ~~2021 totaled $37.9~~2022.

Brokerage, advisory and fiduciary activities remained relatively flat in the six months ended June 30, 2022 compared to the same period last year, as an increase of $0.1 million ~~representing 1.9%~~in brokerage fees was offset by an increase of ~~the total~~$0.1 million in advisory and fiduciary fees. The increase in ~~AUMs compared to December 31, 2020. This~~brokerage fees was mainly driven by ~~continued execution~~higher fixed income trading revenues coupled with higher administrative fees. The decrease in advisory fees is mainly the result of ~~the Company’s client-focused and relationship-centric strategy. The Company remains focused on growing AUMs, both domestically and internationally.~~lower market valuations of AUM in our client’s advisory accounts.

7483

Noninterest Expense

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

Three Months Ended June 30, Change
2021 2020 2021 vs 2020
Amount % Amount % Amount %
(in thousands, except percentages)
Salaries and employee benefits (1) $ 30,796 60.2 % $ 21,570 58.7 % $ 9,226 42.8 %
Occupancy and equipment (2) 5,342 10.4 % 4,220 11.5 % 1,122 26.6 %
Professional and other services fees (3) 4,693 9.2 % 3,965 10.8 % 728 18.4 %
Telecommunications and data processing 3,515 6.9 % 3,157 8.6 % 358 11.3 %
Depreciation and amortization 1,872 3.7 % 1,960 5.3 % (88) (4.5) %
FDIC assessments and insurance 1,702 3.3 % 1,240 3.4 % 462 37.3 %
Other operating expenses (4) 3,205 6.3 % 628 1.7 % 2,577 410.4 %
Total noninterest expenses $ 51,125 100.0 % $ 36,740 100.0 % $ 14,385 39.2 %


	Three Months Ended June 30,								Change
	2022				2021				2022 vs 2021
	Amount		%		Amount		%		Amount		%
(in thousands, except percentages)
Salaries and employee benefits (1)	$	30,212	48.5	%	$	30,796	60.2	%	$	(584)	(1.9)	%
Occupancy and equipment (2) (3)	7,760		12.5	%	5,342		10.4	%	2,418		45.3	%
Professional and other services fees (4) (5)	6,746		10.8	%	4,693		9.2	%	2,053		43.8	%
Telecommunications and data processing	3,214		5.2	%	3,515		6.9	%	(301)		(8.6)	%
Advertising expenses	3,253		5.2	%	827		1.6	%	2,426		293.4	%
Depreciation and amortization (6)	1,294		2.1	%	1,872		3.7	%	(578)		(30.9)	%
FDIC assessments and insurance	1,526		2.5	%	1,702		3.3	%	(176)		(10.3)	%
Loans held for sale valuation reversal (7)	(300)		(0.5)	%	—		—	%	(300)		NM
Other real estate owned valuation expense (8)	3,174		5.10	%	—		—	%	3,174		NM
Contract termination costs (9)	2,802		4.5	%	—		—	%	2,802		NM
Other operating expenses (10)	2,560		4.1	%	2,378		4.7	%	182		7.7	%
Total noninterest expenses (11)	$	62,241	100.0	%	$	51,125	100.0	%	$	11,116	21.7	%

Six Months Ended June 30, Change
2021 2020 2021 vs 2020
Amount % Amount % Amount %
(in thousands, except percentages)
Salaries and employee benefits (1) $ 57,223 60.4 % $ 50,896 62.4 % $ 6,327 12.4 %
Occupancy and equipment (2) 9,830 10.4 % 8,023 9.8 % 1,807 22.5 %
Professional and other services fees (3) 8,477 9.0 % 6,919 8.5 % 1,558 22.5 %
Telecommunications and data processing 7,242 7.6 % 6,621 8.1 % 621 9.4 %
Depreciation and amortization 3,658 3.9 % 3,919 4.8 % (261) (6.7) %
FDIC assessments and insurance 3,457 3.7�� % 2,358 2.9 % 1,099 46.6 %
Other operating expenses (4) 4,863 5.1 % 2,871 3.5 % 1,992 69.4 %
Total noninterest expenses $ 94,750 100.0 % $ 81,607 100.0 % $ 13,143 16.1 %




	Six Months Ended June 30,								Change
	2022				2021				2022 vs 2021
	Amount		%		Amount		%		Amount		%
(in thousands, except percentages)
Salaries and employee benefits (1)	$	60,615	49.3	%	$	57,223	60.4	%	$	3,392	5.9	%
Occupancy and equipment (2) (3)	14,485		11.8	%	9,830		10.4	%	4,655		47.4	%
Professional and other services fees (4) (5)	13,928		11.3	%	8,477		8.9	%	5,451		64.3	%
Telecommunications and data processing	7,252		5.9	%	7,242		7.6	%	10		0.1	%
Advertising Expenses	6,225		5.1	%	1,143		1.2	%	5,082		444.6	%
Depreciation and amortization (6)	2,446		2.0	%	3,658		3.9	%	(1,212)		(33.1)	%
FDIC assessments and insurance	2,922		2.4	%	3,457		3.6	%	(535)		(15.5)	%
Loans held for sale valuation allowance (7)	159		0.1	%	—		—	%	159		NM
Other real estate owned valuation expense (8)	3,174		2.6	%	—		—	%	3,174		NM
Contract Termination Costs (9)	6,814		5.5	%	—		—	%	6,814		NM
Other operating expenses (10)	5,039		4.0	%	3,720		3.9	%	1,319		35.5	%
Total noninterest expenses (11)	$	123,059	100.0	%	$	94,750	100.0	%	$	28,309	29.9	%

_______

(1) In the ~~second quarter~~three and six ~~months~~month periods ended June 30, 2022, includes $0.7 million and $1.4 million, respectively, of severance expenses, mainly in connection with the restructuring of business lines and the elimination of certain support functions. In the three and six month periods ended June 30, 2021, includes $3.3 million of severance expenses, mainly related to the departure of the Company’s COO and elimination of various support function positions.

(2) In the three months ended June 30, 2022 and 2021, includes ROU asset impairment charges of $1.6 million and $0.8 million, respectively, in connection with the ~~departure~~closure of ~~Chief Operations Officer~~a branch in Pembroke Pines, Florida in 2022, and ~~other actions.~~the close of our NY loan production office in 2021. In addition, in the ~~second quarter and~~ six months ended June 30, 2022, includes $47 thousand related to the lease termination of a branch in Fort Lauderdale, Florida in 2021.

(3) Beginning in the three months ended March 31, 2022, rental income associated with the subleasing of portions of the Company’s headquarters building is presented as a reduction to rent expense under lease agreements under occupancy and equipment cost (included as

part of other noninterest income in 2021 ~~includes $1.0~~in connection with the previously-owned headquarters building). Rental income from subleases was $0.7 million in each of the three months ended June 30, 2022 and 2021, and $1.4 million and ~~$1.5~~$1.3 million, in the six months ended June 30, 2022 and 2021, respectively.

(4) In the six months ended June 30, 2022, includes additional expenses of $1.2 million: including (i) $0.8 million resulting from the Company’s transition to our new technology provider; (ii) $0.2 million in connection with certain search and recruitment expenses, and (iii) $0.1 million of costs associated with the subleasing of the New York office space.

(5) Other services fees include expenses of $2.0 million and $0.2 million in the three months ended June 30, 2022 and 2021, respectively, and $3.1 million and $0.2 million in the six months ended June 30, 2022 and 2021, respectively, in connection with ~~a Long Term Incentive Compensation Program adopted~~our loan-level derivative income generation activities. See “Noninterest income” for more details.

(6) In the three and six month periods ended June 30, 2021, includes $0.5 million and $1.1 million, respectively, of depreciation expense associated with the Company’s previously owned headquarters building. No depreciation expense related to the headquarters building was recorded in the ~~first~~three and six month periods ended June 30, 2022 as this property was sold and leased-back in the fourth quarter of 2021.

~~(2) Includes $0.8 million~~(7) Valuation allowance as a result of ~~ROUA impairment~~changes in the fair value of loans held for sale carried at the lower of cost or fair value.

(8) Fair value adjustment related to one OREO property in New York.

(9) Estimated contract terminations and related costs associated with ~~a lease in NYC for a loan production office.~~third party vendors resulting from the Company’s transition to our new technology provider.

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

~~(4)~~(10) 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.

(11) Includes $3.7 million and $1.2 million in the three months ended June 30, 2022 and 2021, respectively, and $7.1 million and $1.5 million in the six months ended June 30, 2022 and 2021, respectively, related to Amerant Mortgage, primarily consisting of salaries and employee benefits, mortgage lending costs and professional and other services fees.

NM Means not meaningful

Three Months Ended June 30, ~~2021~~2022 and ~~2020~~2021

Noninterest expense increased ~~$14.4~~$11.1 million, or ~~39.2%~~21.7%, in the three months ended June 30, ~~2021~~2022 compared to the same period in ~~2020. This was primarily driven by~~2021, mainly due to: (i) a non-routine charge of $3.2 million resulting from the market valuation adjustment of one OREO property in New York, and (ii) $2.8 million of estimated contract termination costs associated with third party vendors resulting from the Company’s transition to our new technology provider. In addition, in the three months ended June 30, 2022, we had higher ~~salary~~advertising and ~~employee benefits, other operating~~marketing expenses, occupancy and equipment expenses and professional and other service ~~fees,~~fees. These results were partially offset by: (i) lower total salaries and employee benefits; (ii) lower depreciation and amortization expenses; (iii) lower FDIC assessments and ~~insurance.~~insurance expenses, and (iv) a$0.3 million reversal from the valuation allowance related to the change in fair value of New York loans held for sale.

~~Salaries and employee benefits~~Advertising expenses increased ~~$9.2~~$2.4 million, or ~~42.8%~~293.4%, in the three months ended June 30, 2022 compared to the same period last year, mainly as a result of the Company’s efforts to build brand awareness as well as account opening campaigns and different market efforts to drive or increase digital and branch traffic. These impactful campaigns include out-of-home advertising and various campaigns via social media and public relations. Additionally, in July 2022, we entered into a new multi-year agreement to become the official bank of the NBA’s Miami Heat. We also entered into a new multi-year agreement as a proud partner of the NHL’s Florida Panthers. We also continue to leverage other local partnerships with the University of Miami Athletics, United Way, and Habitat for Humanity.

Occupancy and equipment costs increased $2.4 million, or 45.3%, in the three months ended June 30, 2022 compared to the same period last year, mainly driven by additional rent expense of $2.5 million associated with the previously-owned headquarters building, as this property was sold and leased-back in the fourth quarter of 2021. In addition, in the second quarter of 2022, the Company recorded a lease impairment charge of $1.6 million related to the closure of a branch, in Pembroke Pines, Florida. These increases were partially offset by the absence of a lease impairment of $0.8 million in the second quarter of 2021 in connection with the closing of the NY LPO. Additionally, beginning in the three months ended March 31, 2022, rental income associated with the subleasing of portions of the Company’s headquarters building is presented as a reduction to rent expense under lease agreements under occupancy and equipment cost (included as part of other noninterest income in 2021 in connection with the previously-owned headquarters building). In each of the three months ended June 30, 2022 and 2021 rental income from subleases was $0.7 million.

Professional and other services fees increased $2.1 million, or 43.8%, in the three months ended June 30, 2022 compared to the same period last year. This increase was mainly driven by higher expenses in connection with our loan-level derivative income generation activities (derivative transactions with clients).

Salaries and employee benefits decreased $0.6 million, or 1.9%, in the three months ended June 30, 2022 compared to the same period one year ~~ago.~~ago, mainly due to: (i) lower severance expenses, as the second quarter of 2021 included $3.3 million in connection with the departure of the Company’s Chief Operating Officer and elimination of various support functions, and (ii) decreases in salaries and employee benefits associated with the Company’s ongoing transformation and efficiency improvement efforts. These results were partially offset by: (i) higher non-equity variable compensation; (ii) commissions paid primarily related to loan origination efforts in the mortgage banking business, and (iii) higher equity variable compensation in connection with the long term incentive program which has been in place since 2021. At June 30, 2022, our FTEs were 680, a net decrease of 39 FTEs, or 5.4% compared to 719 FTEs at June 30, 2021. The 680 FTEs at June 30, 2022 include the new staff associated with Amerant Mortgage, which had 67 FTEs at June 30, 2022, compared to 38 FTEs at June 30, 2021. In the second quarter of 2022, the company rebalanced its workforce in the mortgage banking business in light of current market conditions. In addition, as a result of the Company’s agreement with FIS, there were 80 FTEs who moved to FIS effective in January 2022.

Depreciation and amortization expenses decreased $0.6 million, or 30.9%, in the three months ended June 30, 2022 compared to the same period last year. This ~~increase~~ was mainly due to the absence of ~~the $7.8 million deferral of expenses directly~~depreciation expense related to ~~PPP loan originations,~~the Company’s previously-owned headquarters building, as this property was sold and leased-back in ~~accordance~~the fourth quarter of 2021. In the three months ended June 30, 2021, the Company recorded $0.5 million of depreciation expense associated with ~~GAAP,~~the headquarters building.

FDIC assessments and insurance expenses decreased $0.2 million, or 10.3%, in the three months ended June 30, 2022 compared to the same period one year ago, mainly due to lower FDIC assessment rates.

Six Months Ended June 30, 2022 and 2021

Noninterest expense increased $28.3 million, or 29.9%, in the three months ended June 30, 2022 compared to the same period in 2021, mainly due to additional expenses in the six months ended June 30, 2022, including: (i) $6.8 million of estimated contract termination costs associated with third party vendors resulting from the Company’s transition to our new technology provider; (ii) a non-routine charge of $3.2 million resulting from the market valuation adjustment of one OREO property in New York, and (iii) a valuation expense of $0.2 million related to the change in fair value of New York loans held for sale. In addition, in the six months ended June 30, 2022, we had higher professional and other service fees, advertising and marketing expenses, occupancy and equipment expenses, salary and employee benefits and other expenses. These increases were partially offset by lower depreciation and amortization expenses and FDIC assessments and insurance expenses.

Professional and other services fees increased $5.5 million, or 64.3%, in the six months ended June 30, 2022 compared to the same period last year. This increase was mainly driven by: (i) higher expenses in connection with our loan-level derivative income generation activities (derivative transactions with clients); (ii) $0.8 million of consulting fees resulting from the Company’s transition to our new technology provider; (iii) higher expenses related to the onboarding of a new firm as a result of the outsourcing of the Company’s internal audit function late in the second quarter of ~~2020. In addition, there was an increase~~2021, and (iv) higher search and recruitment expenses.

Advertising expenses increased $5.1 million, or 444.6%, in ~~severance expenses of $3.0 million~~the six months ended June 30, 2022 compared to the ~~second~~same period last year, mainly as a result of the Company’s efforts to build brand awareness as well as account opening campaigns and different market efforts to drive or increase digital and branch traffic. These impactful campaigns include out-of-home advertising and various campaigns via social media and public relations. In addition, in July 2022, we entered into a new multi-year agreement to become the official bank of the NBA’s Miami Heat and we also entered into a new multi-year agreement as a proud partner of the NHL’s Florida Panthers. We continue to leverage other local partnerships with the University of Miami Athletics, United Way and Habitat for Humanity.

Occupancy and equipment costs increased $4.7 million, or 47.4%, in the six months ended June 30, 2022 compared to the same period last year, mainly driven by additional rent expense of $5.0 million associated with the previously-owned headquarters building, as this property was sold and leased-back in the fourth quarter of ~~2020, mainly driven by: (i) the departure of the Chief Operations Officer~~2021. In addition, in the ~~second quarter~~first half of ~~2021; (ii)~~2022, the Company recorded a lease impairment charge of $1.6 million related to the closure of a branch, in Pembroke Pines, Florida. These increases were partially offset by the absence of a lease impairment of $0.8 million in the first half of 2021 in connection with the closing of the ~~NY LPO,~~New York LPO. Additionally, beginning in the three months ended March 31, 2022, rental income associated with the subleasing of portions of the Company’s headquarters building is presented as ~~the Company ceased~~a reduction to ~~originate loans there,~~rent expense under lease agreements under occupancy and ~~(iii) costs~~equipment cost (included as part of other noninterest income in 2021 in connection with ~~various other support functions.~~the previously-owned headquarters building). In the six months ended June 30, 2022 and 2021 rental income from subleases was $1.4 million and $1.3 million, respectively.

Salaries and employee benefits increased $3.4 million, or 5.9%, in the six months ended June 30, 2022 compared to the same period one year ago, mainly due to: (i) higher non-equity variable compensation; (ii) commissions paid primarily related to loan origination efforts in the mortgage banking area; (ii) higher equity variable compensation in connection with the long term incentive program which has been in place since 2021, and (iii) higher salaries and employee benefits in connection with new hires, primarily in Amerant Mortgage. These results were partially offset byby: (i) lower severance expenses, as the first half of 2021 included $3.3 million in connection with the departure of the Company’s Chief Operating Officer and elimination of various support functions; and (ii) decreases in salaries and employee benefits ~~in connection~~associated with the Company’s ongoing transformation and efficiency improvement efforts. At June 30, ~~2021,~~2022, our FTEs were ~~719,~~680, a net decrease of ~~12.8%~~39 FTEs, or 5.4% compared to ~~825~~719 FTEs at June 30, ~~2020.~~2021. The ~~719~~680 FTEs at June 30, 2022 include the new staff associated with Amerant Mortgage, which had 67 FTEs at June 30, 2022, compared to 38 FTEs at June 30, 2021. In addition, as a result of the Company’s agreement with FIS, there were 80 FTEs who moved to FIS effective in January 2022.

Other operating expenses increased ~~$2.6~~$1.3 million, or ~~410.4%~~35.5%, in the ~~three~~six months ended June 30, ~~2021~~2022 compared to the same period last ~~year, mainly due to: (i) a $0.9 million increase~~year. This includes increases in ~~advertising~~public relations/sponsorships expenses, ~~and (ii) the absence of the $0.7 million deferral of other operating expenses directly~~new mortgage lending cost related to ~~PPP loan originations in the second quarter of 2020.~~Amerant Mortgage and other smaller expenses.

~~Occupancy~~Depreciation and ~~equipment costs increased $1.1~~amortization expenses decreased $1.2 million, or ~~26.6%~~33.1%, in the ~~three~~six months ended June 30, ~~2021~~2022 compared to the same period last year. This was mainly ~~driven by: (i) a lease impairment~~due to the absence of ~~$0.8 million in connection with~~depreciation expense related to the ~~previously mentioned closing of the NY LPO,~~Company’s previously-owned headquarters building, as this property was sold 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~~leased-back in the fourth quarter of ~~2020. Following the sale of the Beacon Operations Center, we leased-back the property for a two-year term.~~2021. In the ~~second quarter of~~six months ended June 30, 2021, the ~~rent expense linked to the Beacon Operations Center was partially offset by the absence of $0.2~~Company recorded $1.1 million of depreciation expense ~~recorded in~~associated with the ~~same period last year, when we still owned the property. This depreciation expense of $0.2 million is included as part of “Depreciation and amortization” in the table above.~~headquarters building.

~~Professional~~FDIC assessments and ~~other services fees increased $0.7~~insurance expenses decreased $0.5 million, or ~~18.4%~~15.5%, in the ~~second quarter of 2021~~six months ended June 30, 2022 compared to the same period one year ago, mainly ~~driven by higher recruitment fees.~~

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

We remain dedicated to finding new ways to increase efficiencies across the Company while simultaneously providing an enhanced banking experience for customers. As part of these continued efforts, the Company 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 to fully understand their financial position, plans and outlook. Additionally, as part of the 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 business development. Finally, the Company recently determined to close its banking center in Wellington, FL which is expected to be completed in the third quarter 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.lower FDIC assessment rates.

~~Six Months Ended June 30, 2021 and 2020~~

Noninterest expense increased $13.1 million, or 16.1%, in the six months ended June 30, 2021 compared to the same period in 2020, primarily driven by higher salaries 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 $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 decreases in salaries and 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 six months ended June 30, 2021 compared to the same period last year, mainly due to: (i) a $0.6 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.

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 increased $1.6 million, or 22.5%, in the six months ended June 30, 2021 compared to the same period one year ago. This increase was mainly driven by higher fees in connection with: (i) the design of the Company’s 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 46.6%, in the six months ended June 30, 2021 compared to the same period last year, mainly due to the absence of credits received in the six months ended June 30, 2020.

Income Taxes

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

Three Months Ended June 30, Change Six Months Ended June 30, Change
2021 2020 2021 vs 2020 2021 2020 2021 vs 2020
(in thousands, except effective tax rates and percentages)
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 $ (4,435) $ 4,005 $8,440 210.7 % $ (8,083) $ 3,115 $11,198 359.5 %
Effective income tax rate 22.65 % 20.77 % 1.88 % 9.1 % 21.45 % 20.75 % 0.70 % 3.4 %


	Three Months Ended June 30,						Change				Six Months Ended June 30,						Change
	2022			2021			2022 vs 2021				2022			2021			2022 vs 2021
(in thousands, except effective tax rates and percentages)





Income before income tax expense	$	9,635		$	19,580		($9,945)		(50.8)	%	$	28,487		$	37,687		($9,200)		(24.4)	%
Income tax expense	$	2,033		$	4,435		($2,402)		(54.2)	%	$	6,011		$	8,083		($2,072)		(25.6)	%
Effective income tax rate	21.10		%	22.65		%	(1.55)	%	(6.8)	%	21.10		%	21.45		%	(0.35)	%	(1.6)	%

In the second quarter and ~~six months ended June 30, 2021,~~the first half of 2022, income tax expense ~~increased~~decreased to $2.0 million and $6.0 million, respectively, from $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,~~first half of 2021, respectively. This was mainly driven by ~~higher~~lower income before income taxes in the second quarter and ~~six months ended June 30, 2021.~~ first half of 2022 compared to the same periods last year.

As of June 30, ~~2021,~~2022, the Company’s net deferred tax assets were ~~$13.5~~$33.3 million, an increase of ~~$1.8~~$22.0 million, or ~~15.6%~~194.4%, compared to ~~$11.7~~$11.3 million as of December 31, ~~2020.~~2021. This ~~increase~~ was mainly driven by ~~a decrease~~an increase of ~~$10.3~~$22.5 million in connection with $88.6 million in net unrealized holding ~~gains~~losses on debt securities available for sale during the six months ended June 30, ~~2021.~~2022.

7888

Financial Condition - Comparison of Financial Condition as of June 30, ~~2021~~2022 and December 31, ~~2020~~2021

Assets. Total assets were ~~$7.5~~$8.2 billion as of June 30, ~~2021, a decrease~~2022, an increase of ~~$238.0~~$512.8 million, or ~~3.1%~~6.7%, compared to ~~$7.8~~$7.6 billion at December 31, ~~2020.~~2021. In the six months ended June 30, ~~2021,~~2022, total loans held for investment and held for sale, net of the allowance for loan losses, debt securities held to maturity, and cash and cash equivalents ~~decreased $228.8~~increased $297.7 million, or ~~4.0%~~5.4%, $120.4 million, or 101.9%, and ~~$42.9~~$79.8 million, or ~~20.0%~~29.1%, respectively. ~~These results were partially offset by an increase of $42.0 million, or 44.7%, in other assets, mainly driven by the adoption of the new accounting guidance on leases.~~ See ~~“—Average~~“-Average Balance Sheet, Interest and Yield/Rate Analysis” for detailed information, including changes in the composition of our interest-earning ~~assets, and Note 1 to our unaudited interim financial statements in this Form 10-Q for more details on the new guidance on leases.~~assets.

Cash and Cash Equivalents. Cash and cash equivalents ~~decreased~~increased to ~~$171.5~~$354.1 million at June 30, ~~2021~~2022 from ~~$214.4~~$274.2 million at December 31, ~~2020. The decrease~~2021. At June 30, 2022, the Company’ cash and cash equivalents included restricted cash of ~~$42.9~~$21.8 million, ~~or 20.0%,~~which was ~~mainly attributable~~held primarily to ~~lower~~cover margin calls on derivative transactions with certain brokers. There were no restricted cash balances at ~~the Federal Reserve.~~December 31, 2021.

Cash flows ~~provided by~~used in operating activities ~~was $32.0~~were $48.7 million in the six months ended June 30, ~~2021,~~2022, primarily driven by: (i) higher volume of originations of mortgage loans held for sale, and (ii) a reduction in operating liabilities mainly ~~driven by~~as the ~~net income before attribution of non-controlling interest of $29.6 million recorded~~Company paid amounts due from variable compensation plans and other liabilities during the period.

Net cash ~~provided by~~used in investing activities was ~~$234.4~~$412.6 million during the six months ended June 30, ~~2021,~~2022, mainly driven by: (i) a net increase in loans of $302.1 million, and (ii) purchases of investment securities totaling $327.2 million. These disbursements were partially offset by: (i) maturities, sales, calls and paydowns of investment securities ~~available for sale and FHLB stock~~ totaling ~~$232.5~~$151.1 million, and ~~$17.4 million, respectively;~~ (ii) ~~a net decrease in loans of $131.9 million, and (iii)~~ proceeds from loan sales of ~~$105.8~~$70.1 million. ~~These proceeds were partially offset by purchases of available for sale and held to maturity securities totaling $214.3 million and $50.3 million, respectively.~~

In the six months ended June 30, ~~2021,~~2022, net cash ~~used in~~provided by financing activities was ~~$309.3~~$541.2 million. These activities included: (i) a $408.5 million decrease in time deposits; (ii) $244.1 million in net repayments of FHLB advances, and (iii) the $8.4 million repurchase of shares of Class B common stock in the six months ended June 30, 2021, under the 2021 Stock Repurchase Program. These disbursements were partially offset by a $351.8 million net increase of $655.4 million in total demand, savings and money market deposit ~~balances.~~balances; (ii) net proceeds from the issuance of subordinated notes of $29.1 million, and (iii) net proceeds from FHLB advances of $19.3 million. These proceeds were partially offset by: (i) a decrease of $83.4 million in time deposits; (ii) an aggregate $72.1 million in connection with the repurchase of shares of Class A common stock under repurchase programs launched in 2021 and in 2022; and (iii) $6.2 million of dividends declared and paid by the Company in the first half of 2022. See ~~“—Capital~~“-Capital Resources and Liquidity Management” for more details on changes in FHLB advances, issuance of subordinated notes and the stock repurchase programs launched in 2021 ~~Stock Repurchase Program.~~and 2022.

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.


		June 30, 2021			December 31, 2020				June 30, 2022			December 31, 2021
(in thousands, except percentages)	(in thousands, except percentages)							(in thousands, except percentages)
Total loans, gross (1)	Total loans, gross (1)	$	5,608,548		$	5,842,337		Total loans, gross (1)	$	5,847,384		$	5,567,540
Total loans, gross / total assets	Total loans, gross / total assets	74.5		%	75.2		%	Total loans, gross / total assets	71.7		%	72.9		%

Allowance for loan losses	Allowance for loan losses	$	104,185		$	110,902		Allowance for loan losses	$	52,027		$	69,899
Allowance for loan losses / total loans, gross (1) (2)		1.86		%	1.90		%
Allowance for loan losses / total loans held for investment, gross (1) (2)								Allowance for loan losses / total loans held for investment, gross (1) (2)	0.91		%	1.29		%

Total loans, net (3)	Total loans, net (3)	$	5,504,363		$	5,731,435		Total loans, net (3)	$	5,795,357		$	5,497,641
Total loans, net / total assets	Total loans, net / total assets	73.1		%	73.8		%	Total loans, net / total assets	71.1		%	72.0		%

_______________

(1) Total loans, gross are outstanding ~~loan~~loans principal balance, net of unamortized deferred nonrefundable loan origination fees and loan origination costs, as well as unamortized premiums paid on purchased loans, excluding the allowance for loan losses. At June 30, 2022 and

December 31, 2021, the Company had ~~$1.8~~$66.4 million and $143.2 million in ~~mortgage loans held for sale. There were no~~ loans held for sale carried at ~~December 31, 2020.~~the lower of cost or estimated fair value, respectively, and $54.9 million and $14.9 million, in loans held for sale carried at fair value in connection with Amerant Mortgage’s ongoing business, respectively.

(2) See Note 5 of our audited consolidated financial statements included in the Form 10-K and ~~Note 5 of these~~our unaudited interim consolidated financial statements included in this Form 10-Q for more details on our impairment models.

(3) Total loans, net are outstanding ~~loan~~loans principal balance, net of unamortized deferred nonrefundable loan origination fees and loan origination costs, as well as unamortized premiums paid on purchased loans and net of the allowance for loan losses.

The table below summarizes the composition of our loans held for investment by type of loan as of the end of each period presented. International loans include transactions in which the debtor or customer is domiciled outside the U.S., even when the collateral is U.S. property. All international loans are denominated and payable in U.S. Dollars.


(in thousands)	June 30, 2022		December 31, 2021
Domestic Loans:
Real Estate Loans
Commercial real estate (CRE)
Non-owner occupied	$	1,530,293	$	1,540,590
Multi-family residential	532,066		514,679
Land development and construction loans	288,581		327,246
	2,350,940		2,382,515
Single-family residential	664,818		586,783
Owner occupied	954,538		962,538
	3,970,296		3,931,836
Commercial loans	1,094,287		942,781
Loans to depository institutions and acceptances (1)	13,250		13,710
Consumer loans and overdrafts (2) (3)	555,036		421,471
Total Domestic Loans	5,632,869		5,309,798

International Loans:
Real Estate Loans
Single-family residential (4)	62,894		74,556
Commercial loans	27,961		22,892

Consumer loans and overdrafts (5)	2,407		2,194
Total International Loans	93,262		99,642
Total Loans held for investment	$	5,726,131	$	5,409,440

__________________

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

(2) Includes customers’ overdraft balances totaling $5.9 million and $0.6 million as of June 30, 2022 and December 31, 2021, respectively.

(3) Includes indirect lending loans purchased with an outstanding balance of $477.3 million and $297.0 million at June 30, 2022 and December 31, 2021, respectively. As of June 30, 2022 and December 31, 2021, the outstanding balance of indirect lending loans includes unamortized premiums paid of $13.0 million and $9.1 million, 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.

The composition of our CRE loan portfolio held for investment by industry segment at June 30, ~~2021~~2022 and December 31, ~~2020~~2021 is depicted in the following table:


(in thousands)	(in thousands)	June 30, 2021		December 31, 2020		(in thousands)	June 30, 2022		December 31, 2021
Retail (1)	Retail (1)	$	1,069,862	$	1,097,329	Retail (1)	$	731,696	$	751,202
Multifamily	Multifamily	658,022		737,696		Multifamily	532,066		514,679
Office space	Office space	369,172		390,295		Office space	352,523		361,921
Land and construction	Land and construction	361,077		349,800		Land and construction	288,581		327,246
Hospitality	Hospitality	182,316		191,750		Hospitality	242,663		241,336
Industrial and warehouse	Industrial and warehouse	78,526		70,465		Industrial and warehouse	116,741		100,001
		$	2,718,975	$	2,837,335
Specialty (2)						Specialty (2)	86,670		86,130
Total CRE (3)						Total CRE (3)	$	2,350,940	$	2,382,515

_________

(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. As of December 31, 2021, these balances were revised to exclude the Specialty industry segment which is now disclosed separately.

(2) Includes marinas, nursing and residential care facilities, and other specialty type CRE properties.

(3) Includes loans held for investment in the NY loan portfolio, which were $287.0 million at June 30, 2022 and $346.3 million at December 31, 2021.

The table below summarizes the composition of our ~~loan portfolio~~loans held for sale by type of loan as of the end of each period ~~presented. International loans include transactions~~presented:


(in thousands)	June 30, 2022		December 31, 2021
Loans held for sale at the lower of cost or fair value
Real estate loans
Commercial real estate
Non-owner occupied	$	44,568	$	110,271
Multi-family residential	20,684		31,606

	65,252		141,877

Owner occupied	1,297		1,318
Total real estate loans	66,549		143,195
Less: valuation allowance	159		—
Total loans held for sale at the lower of cost or fair value	66,390		143,195

Loans held for sale at fair value (1)
Land development and construction loans	2,366		—
Single-family residential	52,497		14,905

Total loans held for sale at fair value	54,863		14,905




Total loans held for sale (2)	$	121,253	$	158,100

_______________

(1)Loans held for sale 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~~connection with Amerant Mortgage’s ongoing business.

(2)Remained current and ~~payable~~ in ~~U.S. Dollars.~~

(in thousands) June 30, 2021 December 31, 2020
Domestic Loans:
Real Estate Loans
Commercial real estate (CRE)
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 535,582 543,076
Owner occupied 943,342 947,127
4,197,899 4,327,538
Commercial loans 968,038 1,103,501
Loans to depository institutions and acceptances (1) 13,669 16,629
Consumer loans and overdrafts (2) (3) 306,050 241,771
Total Domestic Loans 5,485,656 5,689,439
International Loans:
Real Estate Loans
Single-family residential (4) 80,963 96,493
Commercial loans 35,373 51,049
Loans to depository institutions and acceptances 3 7
Consumer loans and overdrafts (5) 4,778 5,349
Total International Loans 121,117 152,898
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 $1.4 million and $0.7 million~~accrual status as of June 30, ~~2021~~2022 and December 31, ~~2020, respectively.~~2021.

~~(3) Includes indirect lending loans purchased with a principal balance of $220.9 million and $166.0 million at June 30, 2021 and December 31, 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.~~

8191

In 2021, in connection with the closing of our former NYC LPO, the Company elected to market and sell a portion of the loan portfolio held for investment to shorten duration and significantly reduce the number of loans being serviced. Therefore, in 2021, the Company classified certain New York real estate loans as held for sale carried at the lower of cost or estimated fair value. These loans had been previously carried at their original cost. At June 30, 2022 these loans were $66.4 million, net of a $0.2 million valuation allowance resulting from their fair value measurement during the period, compared to $143.2 million at December 31, 2021. During the first half of 2022, the Company sold $57.3 million of these loans at their par value, and collected approximately $19.5 million in full or partial satisfaction of these loans.

As of June 30, 2022 and December 31, 2021, CRE loans held for sale carried at the lower of cost or estimated fair value include $25.7 million and $85.4 million in the retail segment, respectively, $20.7 million and $31.6 million in the multifamily segment, respectively, and $18.9 million and $25.0 million, in the office segment, respectively.

During May 2021, Amerant Mortgage started taking loan applications. It also acquired an Idaho-based mortgage operation which allows it to operate its mortgage business nationally with direct access to important federal housing agencies. At June 30, 2022 and December 31, 2021, there were $54.9 million and $14.9 million, respectively, of primarily single-family residential loans held for sale carried at their estimated fair value.

As of June 30, 2022, total loans, including loans held for sale, were ~~$5.6~~$5.8 billion, ~~down $233.8~~up $279.8 million, or ~~4.0%~~5.0%, compared to December 31, ~~2020.~~2021. Domestic loans ~~decreased $203.8~~increased $286.2 million, or ~~3.6%~~5.2%, as of June 30, ~~2021,~~2022, compared to December 31, ~~2020.~~2021. The ~~decrease~~increase in total domestic loans includes net ~~decreases~~increases of ~~$118.4~~$151.5 million, ~~$135.5~~or 16.1%, $133.6 million, ~~$3.8~~or 31.7%, and $115.6 million, or 19.7%, in domestic commercial loans, consumer loans and ~~$7.5~~single-family residential loans. These increases were partially offset by a net decrease of $105.8 million, or 4.2%, in domestic CRE loans, including $76.6 million in domestic CRE loans ~~commercial~~held for sale related to our New York loan portfolio. These increases in domestic loans ~~owner occupied loans and single-family residential loans, respectively. The decrease~~ in the ~~loan portfolio~~first half of 2022 were primarily driven by origination and cross-sale efforts 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 originatecommercial loans, ~~there in the six months ended June 30, 2021. These decreases were~~ partially offset by ~~an increase~~loan prepayments. In addition, the domestic loan growth was complemented with purchases of ~~$64.3~~approximately $254 million ~~in domestic~~under indirect consumer ~~loans. The decrease in commercial loans~~lending programs. Also during the ~~six months ended June 30, 2021 includes PPP loan prepayments~~second quarter of around $171 million in the six months ended June 30, 2021 as a result of forgiveness. The increase in consumer loans includes $123.7 million in high-yield indirect consumer loans purchased during the 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 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, 2021,2022, the Company ~~sold to~~launched 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 Company retained no loan servicing rights on these PPP loans. new white label equipment finance solution.

As of June 30, ~~2021, total PPP~~2022, loans ~~outstanding~~under syndication facilities, including loans held for investment and held for sale, were ~~$23.6~~$338.1 million, a decline of $50.9 million, or ~~0.4% of total loans,~~13.1%, compared to ~~$198.5~~$389.0 million ~~or 3.4% of total loans as of~~at December 31, ~~2020.~~

2021. This decline was primarily driven by payoffs totaling $52.0 million in connection with two CRE construction loans, including: (i) $31.0 million related to one construction loan in the hotel industry in New York, and (ii) $21.0 million related to a construction multifamily loan in Florida. As of June 30, ~~2021, loans under syndication facilities were $397.3 million, a decline of $57.6 million, or 12.7%, compared to $454.9 million at December 31, 2020, mainly driven by~~ ~~a reduction in lower-yielding non-relationship loans. As of June 30, 2021,~~2022, syndicated loans that financed highly leveraged transactions were ~~$18.3~~$13.7 million, or ~~0.3%~~0.2%, of total loans, compared to ~~$19.2~~$17.1 million, or 0.3%, of total loans as of December 31, ~~2020.~~2021.

Loans to international customers, primarily from Venezuela and other customers in Latin America, ~~declined $31.8~~decreased $6.4 million, or ~~20.8%~~6.4%, ~~during~~in the ~~second quarter of 2021 compared to December 31, 2020,~~six months ended June 30, 2022, mainly driven by a ~~$15.7~~$11.7 million ~~decrease~~in residential loan payoffs from Venezuelan borrowers. This was partially offset by an increase of $5.1 million in commercial loans ~~which matured during the first quarter of 2021,~~ and ~~a $16.0~~$0.2 million ~~decrease~~ in ~~residential loans from Venezuela primarily due to payoffs in the first half 2021.~~consumer loans.

8292

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.


		June 30, 2021				December 31, 2020					June 30, 2022				December 31, 2021
		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)	$	70,383	0.9	%	$	86,930	1.1	%	Venezuela (2)	$	53,979	0.7	%	$	64,636	0.9	%
Other (3)	Other (3)	50,734		0.7	%	65,968		0.9	%	Other (3)	39,283		0.4	%	35,006		0.4	%

Total	Total	$	121,117	1.6	%	$	152,898	2.0	%	Total	$	93,262	1.1	%	$	99,642	1.3	%

_________________

(1) Consists of outstanding principal amounts, net of collateral of cash, cash equivalents or other financial instruments totaling ~~$20.8~~$53.5 million and ~~$13.3~~$21.1 million as of June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively.

(2) Includes mortgage loans for single-family residential properties located in the U.S. totaling ~~$70.3~~$54.0 million and ~~$86.7~~$64.6 million as of June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, 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.

The maturities of our outstanding international loans were:


		June 30, 2021								December 31, 2020									June 30, 2022								December 31, 2021
		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)	$	532	$	6,673	$	63,178	$	70,383	$	420	$	7,199	$	79,311	$	86,930	Venezuela (1)	$	2,561	$	2,477	$	48,941	$	53,979	$	961	$	4,987	$	58,688	$	64,636
Other (2)	Other (2)	6,404		22,254		22,076		50,734		16,098		15,226		34,644		65,968		Other (2)	12,986		17,886		8,411		39,283		416		14,690		19,900		35,006

Total (3)	Total (3)	$	6,936	$	28,927	$	85,254	$	121,117	$	16,518	$	22,425	$	113,955	$	152,898	Total (3)	$	15,547	$	20,363	$	57,352	$	93,262	$	1,377	$	19,677	$	78,588	$	99,642

_________________

(1) Includes mortgage loans for single-family residential properties located in the U.S. totaling ~~$70.3~~$54.0 million and ~~$86.7~~$64.6 million as of June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, 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 ~~$20.8~~$53.5 million and ~~$13.3~~$21.1 million as of June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively.

8493

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.


		June 30, 2021					December 31, 2020						June 30, 2022					December 31, 2021
		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 Held for Investment		Allowance			% of Loans in Each Category to Total Loans Held for Investment
(in thousands, except percentages)	(in thousands, except percentages)											(in thousands, except percentages)
Domestic Loans	Domestic Loans											Domestic Loans
Real estate	Real estate	$	38,648		48.0	%	$	50,227		48.2	%	Real estate	$	14,166		40.5	%	$	17,952		43.5	%
Commercial	Commercial	52,583			37.0	%	48,035			38.0	%	Commercial	29,323			38.6	%	38,616			38.7	%
Financial institutions	Financial institutions	—			0.2	%	—			0.3	%	Financial institutions	—			0.2	%	41			0.3	%
Consumer and others (1)	Consumer and others (1)	11,038			12.6	%	10,729			6.9	%	Consumer and others (1)	7,787			19.1	%	11,762			15.7	%
		102,269			97.8	%	108,991			97.4	%		51,276			98.4	%	68,371			98.2	%

International Loans (2)	International Loans (2)											International Loans (2)
Commercial	Commercial	465			0.6	%	95			0.9	%	Commercial	323			0.5	%	363			0.4	%
Financial institutions	Financial institutions	1			—	%	1			—	%	Financial institutions	—			—	%	1			—	%
Consumer and others (1)	Consumer and others (1)	1,450			1.6	%	1,815			1.7	%	Consumer and others (1)	428			1.1	%	1,164			1.4	%
		1,916			2.2	%	1,911			2.6	%		751			1.6	%	1,528			1.8	%

Total Allowance for Loan Losses	Total Allowance for Loan Losses	$	104,185		100.0	%	$	110,902		100.0	%	Total Allowance for Loan Losses	$	52,027		100.0	%	$	69,899		100.0	%
% of Total Loans		1.86		%			1.90		%
% of Total Loans held for investment												% of Total Loans held for investment	0.91		%			1.29		%

__________________

(1) Includes (i) unsecured indirect consumer loans (domestic) to qualified individuals purchased in 2022, 2021 and 2020; and (ii) mortgage loans for and secured by single-family residential properties located in the U.S.

(2) Includes transactions in which the debtor or customer is domiciled outside the U.S. and all collateral is located in the U.S.

In the six months ended June 30, ~~2021,~~ 2022, the changes in the allocation of the ALL were ~~driven~~primarily attributed to improved macro-economic conditions and loan upgrades, as well as loan payoffs and pay-downs of non-performing loans and special mention loans, as well as sales of non-performing loans. This was partially offset by additional reserve requirements for charge-offs, commercial, CRE and consumer loan ~~composition changes, primarily as a result of: (i)~~growth and loans downgraded to non-performing during 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 due to the estimated impact of the COVID-19 pandemic among the respective impacted portfolios, mainly domestic real estate, commercial and consumer.period. The ALL associated with the COVID-19 pandemic was ~~$14.8~~reduced to $2.7 million as of June 30, ~~2021, unchanged~~2022 from $14.1 million as of December 31, ~~2020.~~

2021. The reduction reflects improved macro-economic conditions, partially offset by the impact of supply chain disruptions, inflationary pressures and labor shortages prevalent in the current economic environment.

8594

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 ofof: (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.

June 30, 2021 December 31, 2020
(in thousands)
Non-Accrual Loans (1)
Domestic Loans:
Real Estate Loans
Commercial real estate (CRE)
Non-owner occupied $ 48,347 $ 8,219
Multi-family residential 9,928 11,340
58,275 19,559
Single-family residential 5,251 8,778
Owner occupied 11,277 12,815
74,803 41,152
Commercial loans (2) 43,876 44,205
Consumer loans and overdrafts 188 219
Total Domestic 118,867 85,576
International Loans: (3)
Real Estate Loans
Single-family residential 1,923 1,889
Consumer loans and overdrafts 10 14
Total International 1,933 1,903
Total Non-Accrual Loans $ 120,800 $ 87,479
Past Due Accruing Loans (4)
Domestic Loans:
Real Estate Loans
Single-family residential $ 20 $ —
Owner occupied — 220
Commercial 295 —
Consumer loans and overdrafts 4 1
Total Domestic 319 221
Total Past Due Accruing Loans $ 319 $ 221
Total Non-Performing Loans $ 121,119 $ 87,700
Other Real Estate Owned 400 427
Total Non-Performing Assets $ 121,519 $ 88,127


	June 30, 2022		December 31, 2021
(in thousands)
Non-Accrual Loans (1)
Domestic Loans:
Real Estate Loans
Commercial real estate (CRE)
Non-owner occupied	$	1,251	$	7,285


Single-family residential	2,733		3,349
Owner occupied	9,558		8,665
	13,542		19,299
Commercial loans (2)	8,987		28,440
Consumer loans and overdrafts	2,394		251
Total Domestic	24,923		47,990

International Loans: (3)
Real Estate Loans
Single-family residential	22		1,777


Consumer loans and overdrafts	4		6
Total International	26		1,783
Total Non-Accrual Loans	$	24,949	$	49,773

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


Single-family residential	$	162	$	—


Consumer loans and overdrafts	42		8
Total Domestic	204		8






Total Past Due Accruing Loans	204		8

Total Non-Performing Loans	$	25,153	$	49,781
Other Real Estate Owned	6,545		9,720
Total Non-Performing Assets	$	31,698	$	59,501

__________________

(1) Includes loan modifications that met the definition of TDRs that may be performing in accordance with their modified loan terms. As of June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, non-performing TDRs include ~~$9.6~~$8.3 million and ~~$8.4~~$9.1 million, respectively, in a multiple loan relationship to a South Florida borrower.

(2) As of ~~June 30, 2021 and~~ December 31, ~~2020,~~2021, includes $9.1 million in a ~~$19.6 million~~ commercial relationship placed in nonaccrual status during the second quarter of 2020. During the third ~~quarter~~quarters of 2021 and 2020, the Company charged off $5.7 million and $19.3 million, respectively, against the allowance for loan losses as a result of the deterioration of this commercial relationship.

In addition, in connection with this loan relationship, the Company collected a partial principal payment of $4.8 million in the fourth quarter of 2021. Furthermore, In the second quarter of 2022, the Company collected an additional partial principal payment of $5.5 million and charged off the remaining balance of $3.6 million against the allowance for loans losses. Therefore, as of June 30, 2022, there were no outstanding balances associated with this loan relationship.

(3) In the first quarter of 2022, the Company collected a partial payment of around $9.8 million on one commercial nonaccrual loan of $12.4 million. Also, in the first quarter of 2022, the Company charged-off the remaining balance of this loan of $2.5 million against its specific reserve at December 31, 2021.

(4) 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)~~(5) Loans past due 90 days or more but still accruing.

At June 30, ~~2021,~~2022, non-performing assets ~~increased $33.4~~decreased $27.8 million, or ~~37.9%~~46.7%, compared to December 31, ~~2020.~~2021. This was primarily driven by: (i) loan payoffs totaling $20.2 million, including $16.2 million related to three commercial loans, $1.0 million related to one owner occupied loan, $0.9 million related to one single-family residential loan and a total of $2.1 million related to smaller loans; (ii) loans sales totaling $12.9 million, including $11.6 million related to two non-owner occupied loans and a total of $1.3 million related to multiple single-family residential loans; (iii) charge-offs against the ALL of $9.5 million, including $6.1 million related to two commercial nonaccrual loans paid off during the period, $1.5 million related to multiple commercial loans and an aggregate $1.9 million related to multiple consumer loans, and (iv) a decrease of $3.2 million resulting from the market valuation adjustment of one OREO property in New York. These decreases were partially offset by the placement in non accrual status ~~of:~~of loans totaling $18.0 million: (i) ~~four owner~~one commercial loan relationship with a South Florida borrower in the construction industry totaling $9.1 million, including a commercial loan of $5.0 million, two non-owner occupied loans totaling ~~$41.0~~$2.4 million, ~~primarily in New York due to increased vacancies; (ii) four commercial~~and multiple consumer loans totaling ~~$2.7~~$1.8 million; (ii) one non-owner occupied loan of $5.7 million ~~and (iii) five single-family loans totaling $2.1 million. These increases were partially offset by loan paydowns and payoffs during the 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~~sold during the period, and (iii) an aggregate of $3.2 million 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.smaller loans.

We recognized no interest income on non accrual loans during the six months ended June 30, ~~2021~~2022 and ~~2020. Additional interest income that we would have recognized~~2021.

In January 2022, the Company collected a partial payment of approximately $9.8 million on ~~these~~one commercial nonaccrual loan with a carrying value of $12.4 million and charged-off the remaining balance of this loan of $2.5 million against its allocated specific reserve at December 31, 2021.

In April 2022, the Company completed the sale of two non-owner occupied nonaccrual loan of around $11.6 million, at its par value. In addition in January 2022, the Company completed the sale of multiple single-family residential nonaccrual loans ~~had they been performing~~of around $1.3 million at its par value.

In the second quarter of 2022, in ~~accordance~~connection with ~~their original terms in~~ the ~~six months ended June 30, 2021 and 2020 was $1.7~~loan relationship with the Coffee Trader, the Company collected an additional partial principal payment of $5.5 million and~~$1.1~~ charged off the remaining balance of $3.6 million ~~respectively. There were $7.5 million in~~against the allowance for loans ~~which were placed back in accrual status~~losses. Therefore, as of June 30, ~~2021, and the Company will recognize, as an adjustment to the yield, $1.6 million for the remaining maturity.~~2022, there were no outstanding balances associated with this loan relationship.

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


		June 30, 2021								December 31, 2020									June 30, 2022								December 31, 2021
(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	$	32,858	$	36,040	$	12,306	$	81,204	$	46,872	$	4,994	$	3,969	$	55,835	Non-owner occupied	$	29,799	$	—	$	1,257	$	31,056	$	34,205	$	5,890	$	1,395	$	41,490
Multi-family residential		—		9,928		—		9,928		—		11,340		—		11,340
Land development and construction loans		—		—		—		—		7,164		—		—		7,164

		32,858		45,968		12,306		91,132		54,036		16,334		3,969		74,339
Single-family residential	Single-family residential	—		7,194		—		7,194		—		10,667		—		10,667		Single-family residential	—		3,011		—		3,011		—		5,221		—		5,221
Owner occupied	Owner occupied	19,456		11,375		—		30,831		22,343		12,917		—		35,260		Owner occupied	—		9,649		—		9,649		7,429		8,759		—		16,188
		52,314		64,537		12,306		129,157		76,379		39,918		3,969		120,266			29,799		12,660		1,257		43,716		41,634		19,870		1,395		62,899
Commercial loans (2)	Commercial loans (2)	40,151		23,055		22,546		85,752		42,434		21,152		23,256		86,842		Commercial loans (2)	7,873		9,663		604		18,140		32,452		20,324		9,497		62,273

Consumer loans and overdrafts	Consumer loans and overdrafts	—		201		—		201		—		238		—		238		Consumer loans and overdrafts	—		2,398		—		2,398		—		270		—		270
		$	92,465	$	87,793	$	34,852	$	215,110	$	118,813	$	61,308	$	27,225	$	207,346		$	37,672	$	24,721	$	1,861	$	64,254	$	74,086	$	40,464	$	10,892	$	125,442

__________

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

(2) As of ~~June 30, 2021 and~~ December 31, ~~2020,~~2021, includes ~~$19.6~~$9.1 million in a commercial relationship placed in ~~non accrual~~nonaccrual status ~~and downgraded~~ during the second quarter of 2020. ~~As of June 30, 2021 and December 31, 2020, Substandard loans include $7.3 million, and doubtful loans include $12.3 million, related to this commercial relationship.~~ During the third ~~quarter~~quarters of 2021 and 2020, the Company charged off $5.7 million and $19.3 million, respectively, against the allowance for loan losses as a result of the deterioration of this commercial relationship.

In addition, in connection with this loan relationship, the Company collected a partial principal payment of $4.8 million in the fourth quarter of 2021. Furthermore, in the second quarter of 2022, the Company collected an additional partial principal payment of $5.5 million and charged off the remaining balance of $3.6 million against the allowance for loan losses. Therefore, as of June 30, 2022, there were no outstanding balances associated with this loan relationship.

8796

Classified loans, which includes substandard and doubtful loans, totaled ~~$122.6~~$26.6 million at June 30, ~~2021,~~2022, compared to ~~$88.5~~$51.4 million at December 31, ~~2020.~~2021. This ~~increase~~decrease of ~~$34.1~~$24.8 million, or ~~38.5%~~48.2%, compared to December 31, ~~2020,~~2021, was primarily driven ~~by the downgrade of four CRE loans~~by: (i) loan payoffs totaling ~~$41.0~~$20.4 million, ~~primarily in New York due~~including $16.2 million related to ~~increased vacancies, nine~~three commercial loans, $1.0 million related to one owner occupied loan, $0.9 million related to one single-family residential loan and a total of $2.3 million related to smaller loans; (ii) loans sales totaling ~~$4.7~~$12.9 million, including $11.6 million related to two non-owner occupied loans and ~~six~~a total of $1.3 million related to multiple single-family residential loans, ~~totaling $2.1 million. In~~and (iii) charge-offs against the ~~six months ended June 30, 2021, these increases~~ALL of $9.5 million, including $6.1 million related to two commercial nonaccrual loans paid off during the period, $1.5 million related to multiple commercial loans and an aggregate $1.9 million related to multiple consumer loans. These decreases were partially offset ~~by: (i) upgrades~~by the placement in non accrual status of ~~three~~ loans totaling ~~$6.2~~$18.0 million: (i) one commercial loan relationship with a South Florida borrower in the construction industry totaling $9.1 million, including a commercial loan of $5.0 million, two non-owner occupied loans totaling $2.4 million, and multiple consumer loans totaling $1.8 million; (ii) one non-owner occupied loan of $5.7 million which was among the ~~charge-off of two~~ loans ~~totaling $1.4 million,~~sold during the period, and (iii) ~~loan paydowns and payoffs.~~an aggregate of $3.2 million in smaller loans.

Special mention loans as of June 30, ~~2021~~2022 totaled ~~$92.5~~$37.7 million, a decrease of ~~$26.3~~$36.4 million, or ~~22.2%~~49.2%, from ~~$118.8~~$74.1 million as of December 31, ~~2020.~~2021. This decrease was primarily due to: (i) a decrease of $40.8 million due to the ~~downgrade to substandard~~upgrade of one ~~CRE~~non-owner occupied loan ~~totaling $12.1~~of $24.9 million, and two commercial loans totaling ~~$1.6~~$15.8 million, (ii) paydowns/payoffs of $18.2 million, including one non-owner occupied loan of $2.6 million, one commercial loan of $8.3 million, and ~~(ii) paydowns~~one owner-occupied loan of $7.4 million. In addition, there was a non-owner occupied loan of $5.7 million further downgraded to substandard and ~~payoffs of approximately $11.1 million. This was~~sold during the period. These decreases were partially offset by one non-owner occupied loan of $29.0 million which was downgraded during the ~~downgrade of one commercial loan relationship of $2.6 million to special mention.~~period. All special mention loans remained current at June 30, ~~2021.~~2022.

On March 26, 2020, the Company began offering loan payment relief options to customers impacted by theCOVID-19 pandemic, including ~~deferral~~interest only and/or forbearance options. These programs continued throughout 2020 and in the ~~six months ended June 30,~~first half of 2021.~~Loans which have been modified under~~ In the third quarter of 2021, the Company ceased to offer these ~~programs totaled $1.1 billion as of June 30, 2021.~~loan payment relief options, including interest-only and/or forbearance options. As of ~~June 30, 2021, $54.4 million, or 1.0% of total~~March 31, 2022, there were no loans ~~were still~~ under the deferral and/or forbearance ~~period, an increase from $43.4 million, or 0.7% at~~periods. At December 31, ~~2020. This increase was primarily due to new modifications granted to~~2021, there were $37.1 million of loans under the deferral and/or forbearance periods consisting of two CRE retail loans in New York. During the first quarter of 2022, the renewal of those two CRE retail loans in New York totaling $37.1 million, partially offset by $26.1 million in loans that resumed regular payments after deferral and/or forbearance periods ended. The Company began to selectively offer additional temporary loan modifications under programs that allow it to extend the deferral and/or forbearance period beyond 180 days. The 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%.was completed. All loans that have moved out of forbearance status have resumed regular ~~payments.~~payments, except for one CRE loan of $12.1 million that was transferred to OREO during the third quarter of 2021. In accordance with accounting and regulatory guidance, loans to borrowers benefiting from these measures are not considered TDRs. ~~The Company continues~~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 $12.1 million loan transferred to ~~closely monitor the performance of the remaining loans~~OREO in ~~deferral and/or forbearance periods under the terms of the temporary relief granted.~~2021.

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.

8897

Potential problem loans, which are accruing loans classified as substandard and are less than 90 days past due, at June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, are as follows:

(in thousands) June 30, 2021 December 31, 2020
Real estate loans
Commercial real estate (CRE)
Non-owner occupied $ — $ 744
Owner occupied 98 102
98 846
Commercial loans 1,429 198
Consumer loans and overdrafts (1) 4 —
$ 1,531 $ 1,044


(in thousands)	June 30, 2022		December 31, 2021
Real estate loans
Commercial real estate (CRE)


Land development and construction loans	$	—	$	94

Single-family residential	95		95
Owner occupied	90		—
	185		189
Commercial loans	1,280		1,380
Loans to depository institutions and acceptances			—
Consumer loans and overdrafts (1)	—		13
	$	1,465	$	1,582

__________

(1) Corresponds to international consumer loans.

At June 30, ~~2021,~~2022, total potential problem loans ~~increased $0.5~~decreased $0.1 million, or ~~46.6%~~7.4%, compared to December 31, ~~2020. The increase~~2021. This was mainly due to the paydown of one commercial loan of ~~$1.4 million downgraded~~$0.1 million. No new additions of potential problems loans were recorded during the period.

The Company will no longer be deemed an EGC effective as of December 31, 2022. Therefore, adoption of the pending new accounting guidance on CECL, will be required on the Company’s consolidated financial statements as of and for the reporting period ending that date, with retroactive application as of January 1, 2022, the beginning of the adoption period. See Note 1 to the ~~substandard classification~~Company’s unaudited interim consolidated financial statements in this Form 10-Q for more details on 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~~pending adoption of CECL by ~~one owner-occupied loan of $0.7 million that became non-performing in~~ the ~~six months ended June 30, 2021.~~Company.

8998

Securities

The following table sets forth the book value and percentage of each category of securities at June 30, ~~2021~~2022 and December 31, ~~2020.~~2021. The book value for debt securities classified as available for sale, equity securities and trading securities, represents fair value, and the book value for debt securities classified as held to maturity represents amortized cost.


		June 30, 2021				December 31, 2020					June 30, 2022				December 31, 2021
		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		$	284,405	20.9	%	$	204,578	14.9	%
U.S. government-sponsored enterprise debt	U.S. government-sponsored enterprise debt	543,583		40.0	%	661,335		48.1	%	U.S. government-sponsored enterprise debt	$	427,281	30.1	%	$	450,773	33.6	%
Corporate debt (1) (2)	Corporate debt (1) (2)	360,726		26.5	%	301,714		22.0	%	Corporate debt (1) (2)	334,016		23.5	%	357,790		26.7	%

U.S. government agency debt										U.S. government agency debt	355,844		25.0	%	361,906		27.0	%
Collateralized loan obligations										Collateralized loan obligations	4,775		0.3	%	—		—	%
U.S. Treasury debt	U.S. Treasury debt	2,507		0.2	%	2,512		0.2	%	U.S. Treasury debt	990		0.1	%	2,502		0.2	%
Municipal bonds	Municipal bonds	2,847		0.2	%	54,944		4.0	%	Municipal bonds	1,895		0.1	%	2,348		0.2	%

		$	1,194,068	87.8	%	$	1,225,083	89.2	%		$	1,124,801	79.1	%	$	1,175,319	87.7	%

Debt securities held to maturity (3)	Debt securities held to maturity (3)	$	93,311	6.9	%	$	58,127	4.2	%	Debt securities held to maturity (3)	$	238,621	16.8	%	$	118,175	8.8	%

Equity securities with readily determinable fair value not held for trading ~~(4)~~	Equity securities with readily determinable fair value not held for trading ~~(4)~~	23,988		1.8	%	24,342		1.8	%	Equity securities with readily determinable fair value not held for trading ~~(4)~~	$	10,767	0.8	%	$	252	—	%

Trading securities	Trading securities	198		—	%	—		—	%	Trading securities	$	103	—	%	—		—	%

Other securities (4):										Other securities (4):	$	48,187	3.3	%	$	47,495	3.5	%
											$	1,422,479	100.0	%	$	1,341,241	100.0	%
Other securities (5):		$	47,675	3.5	%	$	65,015	4.8	%
		$	1,359,240	100.0	%	$	1,372,567	100.0	%

__________________

(1) As of June 30, ~~2021~~2022 and December 31, ~~2020~~2021 corporate debt includes ~~$16.5~~$10.1 million and ~~$17.1~~$12.5 million, respectively, in “investment-grade” quality debt securities issued by foreign corporate entities. The securities’ issuers were from Canada in two different sectors at June 30, 2022, and from Canada and Japan in three different sectors at ~~June 30, 2021 and~~ December 31, ~~2020.The~~2021. 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 June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, debt securities in the financial services sector issued by domestic corporate entities represent ~~3.2%~~2.9% and ~~2.7%~~3.1% 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 June 30, ~~2021,~~2022, total securities ~~decreased~~increased by ~~$13.3~~$81.2 million, or ~~1.0%~~6.1%, to $1.4 billion compared to December 31, ~~2020. This decrease~~2021. The increase in the six months ended June 30, ~~2021,~~2022 was mainly driven by purchases of $327.2 million, primarily debt securities available for sale and held to maturity. This was partially offset by: (i) maturities, sales and calls totaling ~~$264.6~~$151.1 million, ~~mainly~~primarily debt securities available for sale, and (ii) net unrealized holding ~~losses~~loss on debt securities available for sale of ~~$10.3 million. These results were partially offset by purchases of $264.6~~$88.6 million ~~including~~attributable to increases in market interest rates during the ~~purchase of $214.3 million in debt securities available for sale and the purchase of $50.3 million in debt securities held to maturity.~~period.

9099

Debt securities available for sale had net unrealized holding losses of $73.9 million and net unrealized holding gains of $1.1 million at June 30, 2022 and December 31, 2021, respectively. During the six months ended June 30, 2022, the Company recorded net unrealized holding losses of $88.6 million which are included in accumulated other comprehensive (loss) income for the period. This was attributable to increases in market interest rates during the period which translated into a decline in the estimated fair value of debt securities markets.

See Note 3 to the Company’s unaudited interim consolidated financial statements included in this Form 10-Q for more details on the composition of the Company’s investment portfolio.

The following tables set forth the book value, scheduled maturities and weighted average yields for our securities portfolio at June 30, ~~2021~~2022 and December 31, ~~2020.~~2021. Similar to the table above, the book value for securities available for sale, equity securities and ~~equity~~trading securities is equal to fair market value and the book value for debt securities held to maturity is equal to amortized cost.

June 30, 2021
(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 $ 543,583 2.37 % $ 4,523 2.16 % $ 36,380 2.47 % $ 59,558 3.04 % $ 443,122 2.28 % $ — — %
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 284,405 2.23 % 46 2.55 % 9,179 1.90 % 16,028 1.63 % 259,152 2.28 % — — %
Municipal bonds 2,847 2.72 % — — % — — % — — % 2,847 2.72 % — — %
Corporate debt-foreign 16,489 2.82 % 3,411 0.88 % 1,556 0.95 % 11,522 3.64 % — — % — — %
U.S. treasury securities 2,507 0.34 % 2,507 0.34 % — — % — — % — — % — — %
$ 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 $ 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 23,988 1.15 % — — — — — — — — 23,988 1.15 %
Trading securities 198 3.28 % — — — — — — 198 3.28 — — %
Other securities $ 47,675 4.35 % $ — — % $ — — % $ — — % $ — — % $ 47,675 4.35 %
$ 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 %


June 30, 2022
(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	$	427,281	2.90	%	$	234	2.29	%	$	34,906	2.47	%	$	37,972	3.51	%	$	354,169	2.88	%	$	—	—	%
Corporate debt-domestic	323,964		3.48	%	19,142		2.77	%	51,047		2.98	%	234,105		3.58	%	19,670		4.25	%	—		—	%
U.S. Government agency debt	355,844		2.43	%	25		3.69	%	3,762		2.43	%	8,461		2.20	%	343,596		2.44	%	—		—	%
Municipal bonds	1,895		2.50	%	—		—	%	—		—	%	393		2.05	%	1,502		2.62	%	—		—	%
Corporate debt-foreign	10,052		3.64	%	—		—	%	—		—	%	10,052		3.64	%	—		—	%	—		—	%

Collateralized loan obligations	4,775		3.91	%	—		—	%	—		—	%	—		—	%	4,775		3.91	%	—		—	%
U.S. treasury securities	990		1.33	%	990		1.33	%	—		—	%	—		—	%	—		—	%	—		—	%

	$	1,124,801	2.91	%	$	20,391	2.70	%	$	89,715	2.76	%	$	290,983	3.53	%	$	723,712	2.69	%	$	—	—	%

Debt securities held to maturity	$	238,621	3.77	%	$	—	—	%	$	7,170	2.50	%	$	13,339	2.90	%	$	218,112	3.87	%	$	—	—	%

Equity securities with readily determinable fair value not held for trading	10,767		—	%	—		—		—		—		—		—		—		—		10,767		—	%

Trading securities	103		6.90	%	—		—		64		6.12		39		8.17	%	—		—		—		—	%




Other securities	$	48,187	4.37	%	$	—	—	%	$	—	—	%	$	—	—	%	$	—	—	%	$	48,187	4.37	%
	$	1,422,479	3.08	%	$	20,391	2.70	%	$	96,949	2.74	%	$	304,361	3.50	%	$	941,824	2.96	%	$	58,954	3.57	%

91100


December 31, 2020
December 31, 2021																								December 31, 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		661,335		2.41	%	2,512		0.53	%	19,859		2.23	%	92,259		2.77	%	546,705		2.37	%	—					—	%
U.S. Government sponsored enterprise debt																								U.S. Government sponsored enterprise debt	$	450,773				2.51		%	$	3,613		1.76		%	$	36,223		2.47		%	$	45,879		3.39		%	$	365,058		2.41		%	$	—		—		%
Corporate debt-domestic	Corporate debt-domestic	284,645		3.52		7,664		2.02		99,741		2.22		169,264		4.29		7,976		4.74		—					—		Corporate debt-domestic		345,262			3.40	%		25,539			2.65	%		76,052			2.59	%		222,739			3.69	%		20,932			4.11	%		—		—	%
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		—		—		—		—		—					—
U.S. Government agency debt																								U.S. Government agency debt	361,906					2.41		%	52			4.54		%	4,700			2.41		%	9,617			2.00		%	347,537			2.42		%	—			—		%
Municipal bonds	Municipal bonds	54,944		2.86		—		—		—		—		35,840		3.02		19,104		2.55		—					—		Municipal bonds		2,348			2.55	%		—			—	%		—			—	%		486			2.08	%		1,862			2.67	%		—		—	%
Corporate debt-foreign	Corporate debt-foreign	17,069		0.55		2,665		1.26		2,562		1.03		11,842		0.28		—		—		—					—		Corporate debt-foreign		12,528			3.43	%		1,000			1.06	%		—			—	%		11,528			3.64	%		—			—	%		—		—	%
		1,225,083		2.59		12,994		1.58		136,255		2.14		325,172		3.45		750,662		2.33		—					—

U.S. treasury securities																								U.S. treasury securities	2,502					0.34		%	2,502			0.34		%	—			—		%	—			—		%	—			—		%	—			—		%

																									$	1,175,319				2.75		%	$	32,706		2.33		%	$	116,975		2.55		%	$	290,249		3.58		%	$	735,389		2.46		%	$	—		—		%

Debt securities held to maturity	Debt securities held to maturity	58,127		2.20		—		—		—		—		11,409		2.92		46,718		2.02		—					—		Debt securities held to maturity		$	118,175		2.52	%		$	—		—	%		$	9,343		2.48	%		$	11,189		2.92	%		$	97,643		2.48	%		$	—	—	%

Equity securities with readily determinable fair value not held for trading	Equity securities with readily determinable fair value not held for trading	24,342		1.52	%	—		—		—		—		—		—		—		—		24,342					1.52	%	Equity securities with readily determinable fair value not held for trading		252			—	%		—			—			—			—			—			—			—			—			252		—	%

Other securities	Other securities	65,015		4.39		—		—		—		—		—		—		—		—		65,015					4.39		Other securities		$	47,495		4.17	%		$	—		—	%		$	—		—	%		$	—		—	%		$	—		—	%		$	47,495	4.17	%
		$	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	%			$	1,341,241		2.78	%		$	32,706		2.33	%		$	126,318		2.54	%		$	301,438		3.56	%		$	833,032		2.47	%		$	47,747	4.15	%

The investment portfolio’s weighted average effective duration was ~~3.0~~4.9 years at June 30, ~~2021~~2022 and ~~2.4~~3.6 years at December 31, ~~2020.~~2021. The increase in duration was mainly due to actual and expected lower ~~expected~~ prepayments ~~and longer-duration~~in our mortgage-backed securities ~~purchased during~~portfolio related to the increase in interest rates in the six months ended June 30, ~~2021.~~2022.

101

Liabilities

Total liabilities were ~~$6.7~~$7.4 billion at June 30, ~~2021, a decrease~~2022, an increase of ~~$253.7~~$633.3 million, or ~~3.6%~~9.3%, compared to December 31, ~~2020.~~2021. This was primarily driven by ~~decreases~~net increases of: (i) ~~$241.4~~$572.0 million, or ~~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%~~10.2%, in total deposits, mainly due to an increase in interest bearing demand deposits; (ii) the issuance of $30 million of 4.25% fixed-to-floating subordinated notes due in 2032 in the first quarter of 2022, and (iii) a ~~decrease~~net increase of $20.9 million, or 2.6%, in ~~time deposits.~~ FHLB advances, including the addition of $580.0 million long-term fix-rate advances which were partially offset by the repayment of $560.7 million of these borrowings in the first half of 2022. See “Capital Resources and Liquidity Management” and “Deposits” for more details on the changes of FHLB advances, total deposits and ~~total deposits.~~subordinated notes.

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 adoption of 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.

Deposits

Total deposits were ~~$5.7~~$6.2 billion at June 30, ~~2021, a decrease~~2022, an increase of ~~$56.7~~$572.0 million, or ~~1.0%~~10.2%, compared to December 31, ~~2020.~~2021. The ~~decline~~increase in deposits in the six months ended June 30, ~~2021~~2022 was mainly ~~driven by~~due to a ~~decrease~~net increase of ~~$408.5~~$655.4 million, or ~~20.0%~~15.3%, in ~~time deposits. This was partially offset by:~~core deposits, including increases of: (i) ~~an increase of $193.5~~$512.2 million, or ~~22.2%~~34.0%, in interest bearing transaction accounts, primarily due to new domestic deposits from escrow accounts and municipalities during the period; (ii) $115.7 million, or 9.8%, in noninterest bearing transaction accounts, ~~including an increase in PPP-related customer deposits;~~and (ii) ~~an increase of $94.7~~$27.5 million, or ~~6.0%~~1.7%, in savings and money market deposit accounts. The increase in transaction accounts ~~and (iii) an increase~~was partially offset by a decrease of ~~$63.6~~$83.4 million, or ~~5.2% in interest bearing transaction accounts. The decline~~6.2%, in time deposits, ~~was~~ primarily attributable to a ~~$304.7~~$111.2 million, or ~~19.7%~~10.6%, reduction in customer CDs compared to December 31, ~~2020,~~2021, 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~~Brokered time deposits increased slightly by $27.8 million, or ~~37.2%~~9.6%, ~~reduction~~compared to December 31, 2021. The increased transaction account balances includes $704.7 million, or 16.8%, in ~~online CD balances. During the six months ended~~higher customer account balances, partially offset by a total decrease of $49.3 million in brokered interest bearing and money market deposits. As of June 30, ~~2021~~2022 total brokered deposits ~~also decreased $103.5~~were $365.8 million, a decrease $21.5 million, or ~~16.3%~~5.6%, compared to $387.3 million at December 31, 2021, as the Company continued to focus on reduced reliance on this source of funding.

We continue to move closer toward achieving our stated deposit growth targets. Our efforts in the area of additions to Treasury Management, Retail and Private Banking teams contributed to increasing deposit levels in the three and six months ended June 30, 2022. See “Our Company- Business Developments” for additional information on new digital platforms.

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)	June 30, 2021		December 31, 2020		Amount		%		(in thousands, except percentages)	June 30, 2022		December 31, 2021		Amount		%
Deposits	Deposits									Deposits
Domestic (1) (2)	Domestic (1) (2)	$	3,140,541	$	3,202,936	$	(62,395)	(1.9)	%	Domestic (1) (2)	$	3,722,433	$	3,137,258	$	585,175	18.7	%
Foreign:	Foreign:									Foreign:
Venezuela (3)	Venezuela (3)	2,075,658		2,119,412		(43,754)		(2.1)	%	Venezuela (3)	1,964,796		2,019,480		(54,684)		(2.7)	%
Others (4)	Others (4)	458,709		409,295		49,414		12.1	%	Others (4)	515,625		474,133		41,492		8.8	%
Total foreign	Total foreign	2,534,367		2,528,707		5,660		0.2	%	Total foreign	2,480,421		2,493,613		(13,192)		(0.5)	%
Total deposits	Total deposits	$	5,674,908	$	5,731,643	$	(56,735)	(1.0)	%	Total deposits	$	6,202,854	$	5,630,871	$	571,983	10.2	%

_________________

(1) Includes brokered deposits of ~~$531.0~~$365.8 million and ~~$634.5~~$387.3 million at June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively.

(2) Domestic deposits, excluding brokered, ~~were up $41.1~~increased $606.7 million, or ~~2.7%~~22.1%, compared to December 31, ~~2020.~~2021.

102

(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 do not include deposits from Venezuelan resident customers.

Our domestic deposits ~~decreased $62.4~~increased $585.2 million, or ~~1.9%~~18.7%, 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, declined during~~2022, primarily driven by the ~~same period. Most of the Venezuelan withdrawals from~~aforementioned increase in interest bearing demand deposit ~~accounts at the Bank are believed to be due to the effect of adverse economic conditions in Venezuela on our Venezuelan resident customers.~~

accounts.

During the six months ended June 30, ~~2021,~~2022, total foreign deposits decreased by $13.2 million, or 0.5%, primarily driven by a decrease of $54.7 million, or 2.7%, in deposits from customers domiciled in ~~Venezuela decreased~~Venezuela. This was partially offset by ~~$43.8~~an increase of $41.5 million, or ~~2.1%~~8.8%, ~~to $2.1 billion, compared to December 31, 2020. During the six months ended June 30, 2021, foreign deposits, which include~~in deposits from countries other ~~countries in addition~~than Venezuela, primarily driven by our efforts to ~~Venezuela, increased by $5.7 million or 0.2%. In the six months ended June 30, 2021,~~grow deposits from ~~Venezuela remained pressured mainly by the continued outflow of funds from our Venezuelan~~ customers ~~as difficult conditions~~ in ~~their country persist.~~those other markets.

Core Deposits

Our core deposits were ~~$4.0~~$4.9 billion and ~~$3.7~~$4.3 billion as of June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. Core deposits represented ~~71.2%~~79.8% and ~~64.4%~~76.2% of our total deposits at those dates, ~~respectively.The~~respectively. The increase of ~~$351.8~~$655.4 million, or ~~9.5%~~15.3%, in core deposits in the six months ended June 30, ~~2021~~2022 was mainly driven by the previously mentioned increase in ~~noninterest~~interest bearing demand deposits. Core deposits consist of total deposits excluding all time deposits.

Brokered Deposits

We utilize brokered deposits and, as of June 30, ~~2021,~~2022, we had ~~$531.0~~$365.8 million in brokered deposits, which represented ~~9.4%~~5.9% of our total deposits at that date. As of June 30, ~~2021,~~2022, brokered deposits were down ~~$103.5~~$21.5 million, or ~~16.3%~~5.6%, compared to ~~$634.5~~$387.3 million as of December 31, ~~2020,~~2021, mainly due to a decline in brokered ~~time~~money market and interest bearing demand deposits. As of June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, brokered deposits included time deposits of ~~$390.4~~$317.6 million and ~~$494.2~~$289.8 million, respectively, and third party interest bearing demand and money market deposits of ~~$140.7~~$48.2 million and ~~$140.3~~$97.5 million, ~~respectively.The~~respectively. The Company has not historically sold brokered CDs in denominations over $100,000.

Large Fund Providers

In the first quarter of 2022, the Company changed its definition of large fund providers to include only third party relationships with balances over $20 million. As of December 31, 2021 and in prior periods, large fund providers were defined as third party deposit relationships with balances over $10 million. At June 30, ~~2021~~2022 and December 31, ~~2020, our large fund providers, defined as~~2021, third-party customer relationships with balances of over ~~$10~~$20 million, included ~~twelve~~fourteen and eleven deposit relationships, respectively, with total balances of ~~$418.2~~$844.3 million and ~~$349.0~~$376.3 million, respectively. The increase in large fund providers in the ~~balance of these deposits~~six months ended June 30, 2022 compared to December 31, 2021 was mainly driven by ~~additional funding~~new domestic deposits from ~~existing relationships,~~escrow accounts and ~~a new relationship with a balance of $27.8 million as of June 30, 2021.~~municipalities during the period.

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Large Time Deposits by Maturity

The following table sets forth the maturities of our time deposits with individual balances equal to or greater than $100,000 as of June 30, ~~2021~~2022 and December 31, ~~2020:~~2021:


		June 30, 2021				December 31, 2020					June 30, 2022				December 31, 2021
(in thousands, except percentages)	(in thousands, except percentages)									(in thousands, except percentages)
Less than 3 months	Less than 3 months	$	286,056	28.7	%	$	433,918	34.6	%	Less than 3 months	$	198,497	26.5	%	$	261,779	31.1	%
3 to 6 months	3 to 6 months	165,652		16.6	%	261,683		20.8	%	3 to 6 months	103,164		13.8	%	134,709		16.0	%
6 to 12 months	6 to 12 months	249,647		25.0	%	241,367		19.2	%	6 to 12 months	236,706		31.6	%	153,695		18.3	%
1 to 3 years	1 to 3 years	286,043		28.7	%	268,934		21.4	%	1 to 3 years	203,592		27.2	%	281,366		33.5	%
Over 3 years	Over 3 years	10,177		1.0	%	49,948		4.0	%	Over 3 years	7,446		0.9	%	8,902		1.1	%
Total	Total	$	997,575	100.0	%	$	1,255,850	100.0	%	Total	$	749,405	100.0	%	$	840,451	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.

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 June 30, ~~2021~~2022 and December 31, ~~2020.~~2021.

The following table sets forth information about the outstanding amounts of our short-term borrowings at the close of, and for the six months ended June 30, ~~2021~~2022 and ~~for the~~ year ended December 31, ~~2020.~~2021. There were no repurchase agreements outstanding as of June 30, ~~2021~~2022 and December 31, ~~2020.~~2021.


		June 30, 2021			December 31, 2020				June 30, 2022			December 31, 2021
(in thousands, except percentages)	(in thousands, except percentages)							(in thousands, except percentages)
Outstanding at period-end	Outstanding at period-end	$	—		$	—		Outstanding at period-end	$	104,566		$	—
Average amount	Average amount	16,750			83,750			Average amount	34,849			28,273
Maximum amount outstanding at any month-end	Maximum amount outstanding at any month-end	50,500			300,000			Maximum amount outstanding at any month-end	104,566			130,000
Weighted average interest rate:	Weighted average interest rate:							Weighted average interest rate:
During period	During period	0.64		%	1.45		%	During period	0.81		%	0.36		%
End of period	End of period	—		%	—		%	End of period	0.81		%	—		%

95104

Return on Equity and Assets

The following table shows annualized return on average assets, return on average equity, and average equity to average assets ratio for the periods presented:

Three Months Ended June 30, Six Months Ended June 30,
2021 2020 2021 2020
(in thousands, except percentages and per share data)
Net income (loss) $ 15,962 $ (15,279) $ 30,421 $ (11,897)
Basic earnings (loss) per common share 0.43 (0.37) 0.81 (0.28)
Diluted earnings (loss) per common share (1) 0.42 (0.37) 0.81 (0.28)
Average total assets $ 7,680,491 $ 8,148,199 $ 7,714,039 $ 8,049,526
Average stockholders' equity 789,640 852,040 786,631 847,875
Net income (loss) / Average total assets (ROA) 0.83 % (0.75) % 0.80 % (0.30) %
Net income (loss) / Average stockholders' equity (ROE) 8.11 % (7.21) % 7.80 % (2.82) %
Average stockholders' equity / Average total assets ratio 10.28 % 10.46 % 10.20 % 10.53 %


	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
(in thousands, except percentages and per share data)
Net income attributable to the Company	$	7,674		$	15,962		$	23,624		$	30,421
Basic earnings per common share	0.23			0.43			0.69			0.81
Diluted earnings per common share (1)	0.23			0.42			0.68			0.81

Average total assets	$	7,849,230		$	7,680,491		$	7,778,524		$	7,714,039
Average stockholders' equity	744,110			789,640			771,095			786,631
Net income attributable to the Company / Average total assets (ROA)	0.39		%	0.83		%	0.61		%	0.80		%
Net income attributable to the Company / Average stockholders' equity (ROE)	4.14		%	8.11		%	6.18		%	7.80		%

Average stockholders' equity / Average total assets ratio	9.48		%	10.28		%	9.91		%	10.20		%

__________________

(1)In the ~~second quarter~~three and six ~~months~~month periods ended June 30, ~~2021,~~2022, 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 in the second quarter and six months ended June 30, 2020).~~ units. S~~See~~ee Note 1819 to our unaudited interim consolidated 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 six month periods ended June 30, ~~2021~~2022 and ~~2020.~~2021.

During the three and six month periods ended June 30, ~~2021,~~2022, basic and diluted earnings per share ~~increased~~decreased compared to same periods one year ago, mainly due to lower net income earned. This was partially offset by lower weighted average number of basic and diluted shares primarily as a result of ~~higher net income earned compared to the same periods one year ago.~~

our capital structure optimization efforts.

96105

Capital Resources and Liquidity Management

Capital Resources

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

Total stockholders’ equity was ~~$799.1~~$711.5 million as of June 30, ~~2021, an increase~~2022, a decrease of ~~$15.6~~$120.4 million, or ~~2.0%~~14.5%, compared to ~~$783.4~~$831.9 million as of December 31, ~~2020.~~2021. This ~~increase~~decrease was primarily driven ~~by $30.4~~by: (i) an aggregate of $72.1 million of ~~net income attributable to the Company~~Class A common stock repurchased in the ~~six months ended June 30, 2021. This was partially offset by: (i) a $7.9~~first half of 2022, under the Class A repurchase programs launched in 2021 and 2022; (ii) after-tax net unrealized holding losses of $66.1 million ~~decrease~~from the change in ~~AOCI, primarily as a result~~the market value of ~~lower valuation of the Company’s~~ debt securities available for sale as a result of the increase of approximately over 150 basis points recorded in index market ~~increases in long-term yield curves and (ii) the repurchase of shares of Class B common stock totaling $8.4 million in~~rates during the six months ended June 30, ~~2021, under~~2022; and (iii) $6.2 million of dividends declared and paid by the ~~2021 Stock Repurchase Program. See discussion below for more details on~~Company in the ~~2021 Stock Repurchase Program.~~first half of 2022. These decreases were partially offset by net income of $23.6 million in the first half of 2022.

Non-controlling Interest

~~Non-controlling interests on the consolidated financial statements includes 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. ~~As of June 30, 2021,~~Equity attributable to the non-controlling interest ~~included as a reduction to total stockholders’ equity~~ was ~~$0.8 million, and~~ a net loss of ~~$0.8~~$1.9 million ~~attributed~~as of June 30, 2022, compared to a net loss of $2.6 million as of December 31, 2021. In the three and six months ended June 30, 2022, net loss attributable to the non-controlling interest ~~is presented~~was approximately $100 thousand and $1.2 million, respectively.

Non-controlling interests on the consolidated financial statements included a 49% non-controlling interest of Amerant Mortgage since May 2021, when this subsidiary commenced its operations, through March 30, 2022. Beginning March 31, 2022, the minority interest share changed from 49% to 42.6%. This change had no material impact to the Company’s financial condition or results of operations as of and for the three months ended March 31, 2022. In addition, in the ~~statement~~three months ended June 30, 2022, the Company increased its ownership interest in Amerant Mortgage to 80% from 57.4%. This change was the result of: (i) two former principals of ~~operations.~~Amerant Mortgage surrendering their interest in Amerant Mortgage to the Company, when they became full time employees of the Bank (the “Transfer of Subsidiary Shares From Non-controlling Interest”), and (ii) an additional contribution made by the Company of $1 million, in cash, to Amerant Mortgage in the three months ended June 30, 2022. As a result of the Transfer of Subsidiary Shares From Non-controlling Interest, the Company reduced its additional paid-in capital by a total of $1.9 million with a corresponding increase to the equity attributable to non-controlling Interest.

106

Common Stock Transactions

Class BA Common Stock Repurchases and Cancellation of Treasury ~~Shares~~

On March 10, 2021, the Company’s Board of Directors approved a stock repurchase program which provides for the potential repurchase of up to $40 million of shares of the Company’s Class B common stock (the “2021 Stock Repurchase Program”). Under the 2021 Stock Repurchase Program, the Company may repurchase shares of Class B common stock through open market purchases, by block purchase, in privately-negotiated transactions, or otherwise in compliance with Rule 10b-18 under the Exchange Act. The extent to which the Company repurchases its shares of Class B common stock and the timing of such purchases will depend upon market conditions, regulatory requirements, other corporate liquidity requirements and priorities and other factors as may be considered in the Company’s sole discretion. Repurchases may also be made pursuant to a trading plan under Rule 10b5-1 under the Exchange Act, which would permit shares to be repurchased when the Company might otherwise be precluded from doing so because of self-imposed trading blackout periods or other regulatory restrictions. The 2021 Stock Repurchase Program does not obligate the Company to repurchase any particular amount of shares of Class B common stock, and may be suspended or discontinued at any time without notice. During the six months ended June 30, 2021,Shares. In January 2022, the Company repurchased an aggregate of ~~502,232~~652,118 shares of Class BA common stock at a weighted average price of $33.96 per share, ~~of $16.71~~ under the ~~2021~~Class A Common Stock Repurchase Program. The aggregate purchase price for these transactions was approximately ~~$8.4~~$22.1 million, including transaction costs. On January 31, 2022, the Company announced the completion of the Class A Common Stock Repurchase Program.

Also, on January 31, 2022, the Company announced the New Common Stock Repurchase Program pursuant to which the Company may purchase, from time to time, up to an aggregate amount of $50 million of its shares of Class A common stock. In the ~~six months~~first half of 2022, the Company repurchased an aggregate of 1,602,887 shares of Class A common stock at a weighted average price of $31.14 per share, under the New Common Stock Repurchase Program. The aggregate purchase price for these transactions was approximately $49.9 million, including transaction costs. On May 19, 2022, the Company announced the completion of the New Class Common Stock Repurchase Program.

For more information about these repurchase programs, see Note 17 to the Company’s consolidated financial statements on Form 10-K for the year ended ~~June 30, 2021,~~December 31, 2021.

In the first half of 2022, the Company’s Board of Directors authorized the cancellation of ~~those 502,232~~all shares of Class BA common stock repurchased in the first half of 2022. As of June 30, 2022 and December 31, 2021, there were no shares of Class A common stock held as treasury stock.

Dividends. On January 19, 2022, the Company’s Board of Directors declared a cash dividend of $0.09 per share of the Company’s Class A common stock. The dividend was paid on or before February 28, 2022 to shareholders of record at the close of business on February 11, 2022. The aggregate amount in connection with this dividend was $3.2 million.

On April 14, 2022, the Company’s Board of Directors declared a cash dividend of $0.09 per share of the Company’s Class A common stock. The dividend was paid on May 31, 2022 to shareholders of record at the close of business on May 13, 2022. The aggregate amount in connection with this dividend was $3.0 million.

Liquidity Management

The Company’s liquidity position includes cash and cash equivalents of $354.1 million at June 30, 2022, compared to $274.2 million at December 31, 2021.

At June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the Company had ~~$0.82 billion~~$830.5 million and ~~$1.05 billion,~~$980.0 million, respectively, of outstanding advances from the FHLB. At June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, we had an additional $1.5 billion and ~~$1.3~~$1.4 billion, respectively, of available borrowing capacity under FHLB facilities. In the three and six months ended June 30, ~~2021,~~2022, the Company repaid ~~$0.5 billion of outstanding~~$530.0 million in callable FHLB advances, and borrowed ~~$0.3 billion from~~$550.0 million in longer-term advances, to extend the duration of this ~~source.~~ portfolio and lock-in fixed interest rates.

There were no other borrowings as of June 30, ~~2021~~2022 and December 31, ~~2020.~~

In May 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 had a loss of $2.5 million on the early repayment of $235 million of FHLB advances which was recorded as part of noninterest income. These transactions combined will represent annual savings of approximately $3.6 million.

2021.

We also have available uncommitted federal funds lines with several banks, and had ~~$80.0~~$102.7 million and ~~$70.0~~$105.0 million of availability under these lines at June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively.

107

On ~~June 23, 2020,~~March 9, 2022, the Company ~~completed~~entered into a ~~$60.0~~Subordinated Note Purchase Agreement (the “Purchase Agreement”) with the Company’s wholly-owned subsidiary Amerant Florida Bancorp Inc., and qualified institutional buyers pursuant to which the Company sold and issued $30.0 million ~~offering~~aggregate principal amount of ~~Senior~~its 4.25% Fixed-to-Floating Rate Subordinated Notes ~~with a coupon rate~~due March 15, 2032. Net proceeds were $29.1 million, after estimated direct issuance costs of ~~5.75%~~approximately $0.9 million. Unamortized direct issuance cost are deferred and ~~due 2025.~~amortized over the term of the Subordinated Notes of 10 years. These Subordinated Notes are unsecured, subordinated obligations of the Company and rank junior in right of payment to all of the Company’s current and future senior indebtedness. The Subordinated Notes have been structured to qualify as Tier 2 capital of the Company for regulatory capital purposes, and rank equally in right of payment to all of our existing and future subordinated indebtedness. See Note 9 “Subordinated Notes” in the Company’s unaudited interim consolidated financial statements in this Form 10-Q for more details.

We and our subsidiary, Amerant Florida, are corporations separate and apart from the Bank and, therefore, must provide for our own liquidity. Historically, our main source of funding has been dividends declared and paid to us and Amerant Florida by the 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 ~~$28.5~~$70.0 million as of June 30, ~~2021~~2022 and ~~$43.0~~$23.8 million as of December 31, ~~2020,~~2021, in funds available to service its Senior Notes and Subordinated 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 and Subordinated Notes, held cash and cash equivalents of ~~$17.3~~$7.0 million as of June 30, ~~2021~~2022 and ~~$16.6~~$6.3 million as of December 31, ~~2020,~~2021, in funds available to service its junior subordinated debt and for general corporate purposes, as a separate stand-alone entity.

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

~~Redemption of Junior Subordinated Debentures~~Amerant Florida Merger

On ~~January 30, 2020,~~July 20, 2022, the Company’s Board of Directors approved an intercompany transaction of entities under common control, pursuant to which the Company’s wholly owned subsidiary, Amerant Florida, would merge with and into the Company, ~~redeemed~~with the Company as sole survivor (the “Amerant Florida Merger”). In connection with the Amerant Florida Merger, the Company will assume all ~~$26.8 million~~assets and liabilities of Amerant Florida, including its ~~outstanding 8.90% trust preferred~~direct ownership of the Bank, the common capital securities issued by ~~Capital Trust I at a redemption price of 100%. The Company simultaneously redeemed all~~the 5 trust subsidiaries, and the junior subordinated debentures ~~held~~issued by ~~Capital Trust I as part~~Amerant Florida and related agreements. The Amerant Florida Merger will have no impact to the Company’s consolidated financial condition and results of ~~this redemption transaction.~~operations. See “~~Item 7. Management’s Discussion and Analysis Of Financial Condition And Results Of Operations” included in~~ Note 10 to the Company’s consolidated financial statements on the Form 10-K, for ~~more details.~~additional information on the common capital securities issued by the 5 trust subsidiaries, and the junior subordinated debentures. The Amerant Florida Merger is not subject to regulatory approvals. The Company expects to effect the Amerant Florida Merger in the third quarter of 2022.

Subsidiary Dividends

There are statutory and regulatory limitations that affect the ability of the Bank to pay dividends to the Company. These limitations exclude the effects of AOCI. 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.

In ~~July 2021,~~January and April 2022, the Boards of Directors of the Bank and Amerant Florida approved the payment of cash dividends ~~from~~of $40 million and $34 million, respectively on each date, by the Bank to Amerant Florida and in the same amounts by Amerant Florida to Amerant ~~Bancorp, 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 2021 and beyond.~~Bancorp.

98108

Based on our current outlook, we believe that net income, advances from the FHLB, available other borrowings and any dividends paid to us and Amerant Florida by the Bank will be sufficient to fund liquidity requirements for at least the next twelve months.

Regulatory Capital Requirements

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
June 30, 2021
June 30, 2022													June 30, 2022
Total capital ratio	Total capital ratio	$	901,160	14.17 %	$	508,766	8.00	%	$	635,957	10.00	%	Total capital ratio	$	891,818	13.21	%	$	539,935	8.00	%	$	674,919	10.00	%
Tier 1 capital ratio	Tier 1 capital ratio	821,336		12.92 %	381,574		6.00	%	508,766		8.00	%	Tier 1 capital ratio	808,934		11.99	%	404,951		6.00	%	539,935		8.00	%
Tier 1 leverage ratio	Tier 1 leverage ratio	821,336		10.75 %	305,655		4.00	%	382,069		5.00	%	Tier 1 leverage ratio	808,934		10.25	%	315,706		4.00	%	394,633		5.00	%
Common Equity Tier 1 (CET1)	Common Equity Tier 1 (CET1)	760,257		11.95 %	286,181		4.50	%	413,372		6.50	%	Common Equity Tier 1 (CET1)	747,907		11.08	%	303,713		4.50	%	438,697		6.50	%

December 31, 2020
December 31, 2021													December 31, 2021
Total capital ratio	Total capital ratio	$	876,966	13.96 %	$	502,463	8.00	%	$	628,078	10.00	%	Total capital ratio	$	934,512	14.56	%	$	513,394	8.00	%	$	641,742	10.00	%
Tier 1 capital ratio	Tier 1 capital ratio	798,033		12.71 %	376,847		6.00	%	502,463		8.00	%	Tier 1 capital ratio	862,962		13.45	%	385,045		6.00	%	513,394		8.00	%
Tier 1 leverage ratio	Tier 1 leverage ratio	798,033		10.11 %	315,770		4.00	%	394,713		5.00	%	Tier 1 leverage ratio	862,962		11.52	%	299,746		4.00	%	374,683		5.00	%
Common Equity Tier 1 (CET1)	Common Equity Tier 1 (CET1)	736,930		11.73 %	282,635		4.50	%	408,251		6.50	%	Common Equity Tier 1 (CET1)	801,907		12.50	%	288,784		4.50	%	417,133		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					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
June 30, 2021
June 30, 2022														June 30, 2022
Total capital ratio	Total capital ratio	$	909,897	14.32	%	$	508,429	8.00	%	$	635,536	10.00	%	Total capital ratio	$	856,800	12.73	%	$	538,441	8.00	%	$	673,051	10.00	%
Tier 1 capital ratio	Tier 1 capital ratio	830,125		13.06	%	381,322		6.00	%	508,429		8.00	%	Tier 1 capital ratio	803,115		11.93	%	403,830		6.00	%	538,441		8.00	%
Tier 1 leverage ratio	Tier 1 leverage ratio	830,125		10.88	%	305,311		4.00	%	381,639		5.00	%	Tier 1 leverage ratio	803,115		10.23	%	313,937		4.00	%	392,421		5.00	%
Common Equity Tier 1 (CET1)	Common Equity Tier 1 (CET1)	830,125		13.06	%	285,991		4.50	%	413,098		6.50	%	Common Equity Tier 1 (CET1)	803,115		11.93	%	302,873		4.50	%	437,483		6.50	%

December 31, 2020
December 31, 2021														December 31, 2021
Total capital ratio	Total capital ratio	$	873,152	13.91	%	$	502,214	8.00	%	$	627,768	10.00	%	Total capital ratio	$	957,852	14.94	%	$	512,780	8.00	%	$	640,976	10.00	%
Tier 1 capital ratio	Tier 1 capital ratio	794,257		12.65	%	376,661		6.00	%	502,214		8.00	%	Tier 1 capital ratio	886,301		13.83	%	384,585		6.00	%	512,780		8.00	%
Tier 1 leverage ratio	Tier 1 leverage ratio	794,257		10.07	%	315,569		4.00	%	394,461		5.00	%	Tier 1 leverage ratio	886,301		11.84	%	299,466		4.00	%	374,332		5.00	%
Common Equity Tier 1 (CET1)	Common Equity Tier 1 (CET1)	794,257		12.65	%	282,495		4.50	%	408,049		6.50	%	Common Equity Tier 1 (CET1)	886,301		13.83	%	288,439		4.50	%	416,634		6.50	%

99109

Tangible Common Equity Ratio and Tangible Book Value Per Common Share

Tangible common equity ratio and tangible book value per common share are non-GAAP financial measures, used 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 non-GAAP financial measures and the information they provide are useful to investors since these measures permit investors to view our performance using the same tools that our management uses to evaluate our past performance and prospects for future performance. Tangible common equity is calculated as the ratio of common equity less goodwill and other intangibles divided by total assets less goodwill and other intangible assets. Other intangible assets consist of, among other things, mortgage servicing rights and are included in other assets in the Company’s consolidated balance sheets.

The following table is a reconciliation of the Company’s tangible common equity and tangible assets, non GAAP financial measures, to total equity and total assets, respectively, as of the dates presented:







(in thousands, except percentages, share data and per share amounts)	June 30, 2022			December 31, 2021










































































Stockholders' equity	$	711,450		$	831,873
Less: goodwill and other intangibles (1)	(22,808)			(22,528)
Tangible common stockholders' equity	$	688,642		$	809,345
Total assets	8,151,242			7,638,399
Less: goodwill and other intangibles (1)	(22,808)			(22,528)
Tangible assets	$	8,128,434		$	7,615,871
Common shares outstanding	33,759,604			35,883,320
Tangible common equity ratio	8.47		%	10.63		%
Stockholders' book value per common share	$	21.07		$	23.18
Tangible stockholders' book value per common share	$	20.40		$	22.55

_________________

(1) Other intangible assets include mortgage servicing rights of $0.9 million and $0.6 million at June 30, 2022 and December 31, 2021, respectively, which are included in other assets in the Company’s consolidated balance sheets.

110

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 1718 to our audited consolidated financial statements included in the Form 10-K.


(in thousands)	(in thousands)	June 30, 2021		December 31, 2020		(in thousands)	June 30, 2022		December 31, 2021
Commitments to extend credit	Commitments to extend credit	$	749,185	$	763,880	Commitments to extend credit	$	917,158	$	899,016

Letters of credit	Letters of credit	11,282		11,157		Letters of credit	17,345		32,107
		$	760,467	$	775,037		$	934,503	$	931,123

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

In ~~May 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. In addition, during the second quarter of 2021,three and six month periods ended June 30, 2022, the Company repaid ~~$235~~$350.0 million and $530.0 million, respectively, in callable FHLB advances, and borrowed $200.0 million and $550.0 million, respectively, in longer-term advances to extend the duration of this portfolio and lock-in fixed rates.

In the six months ended June 30, 2022, total time deposits decreased by $83.4 million, or 6.2%, mainly as a result of a decrease in customer time deposits. See “Deposits” for additional information

In the three months ended June 30, 2022, we completed a private placement of $30.0 million of ~~FHLB advances.~~4.25% fixed-to-floating rate subordinated notes due 2032. See “Capital Resources and 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.~~more details.

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, ~~2020.~~2021.

Recently Issued Accounting Pronouncements. ~~Except as discussed below, there~~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, including the Company’s plan for the adoption of the Current Expected Credit Losses on financial instruments (“CECL”) guidance, see Note 1 “Business, Basis of Presentation and Summary of Significant Accounting Policies” in the Company’s unaudited 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.

~~100~~111

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~~Board of ~~directors~~Directors and monitored by management. ~~There have been no~~See discussions below for material changes in our market risk exposure as compared to those discussed in ~~the~~our Form 10-K,~~see~~ Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk”. and our Form 10-Q for the period ended March 31, 2022, Part I, Item 3, “Quantitative and Qualitative Disclosures About Market Risk”,

Earnings Sensitivity

The following table shows the sensitivity of our net interest income as a function of modeled interest rate changes:


	Change in earnings (1)
	June 30,				December 31,
(in thousands, except percentages)	2022				2021
Change in Interest Rates (Basis points)
Increase of 200	$	42,223	16.3	%	$	14,442	6.7	%
Increase of 100	25,662		9.9	%	9,441		4.4	%
Decrease of 25	(4,543)		(1.7)	%	(2,971)		(1.4)	%
Decrease of 50	(9,584)		(3.7)	%	(6,025)		(2.8)	%
Decrease of 100	(25,075)		(9.7)	%	—		—	%

__________________

(1) Represents the change in net interest income, and the percentage that change represents of the base scenario net interest income. The base scenario assumes (i) flat interest rates over the next 12 months, (ii) that total financial instrument balances are kept constant over time and (iii) that interest rate shocks are instant and parallel to the yield curve, for the various interest rates and indices that affect our net interest income.

Net interest income in the base scenario, increased to approximately $260 million in June 30, 2022 compared to $217.0 million in December 31, 2021. This increase is mainly due to: (i) higher floating loan rates on existing loans due to higher short term market rates repricing higher through the quarter; (ii) high cost maturing time deposits repricing to lower rates; (iii) the growth in the indirect lending portfolio that has average net fixed yields close to 7%, and (iv) the growth in the size of the balance sheet as total assets increased $512.8 million, or 6.7%, in the first half of 2022 compared to December 31. 2021.

The Company periodically reviews the scenarios used for earnings sensitivity to reflect market conditions.

112

Economic Value of Equity (EVE) Analysis

The following table shows the sensitivity of our EVE as a function of interest rate changes as of the periods presented:


	Change in equity (1)
	June 30,		December 31,
	2022		2021
Change in Interest Rates (Basis points)
Increase of 200	(2.70)	%	(9.60)	%
Increase of 100	(0.10)	%	(3.23)	%
Decrease of 25	0.90	%	0.16	%
Decrease of 50 (2)	1.60	%	—	%
Decrease of 100 (2)	(0.60)	%	—	%

__________________

(1) Represents the percentage of equity change in a static balance sheet analysis assuming interest rate shocks are instant and parallel to the yield curves for the various interest rates and indices that affect our net interest income.

(2) We resumed modeling this scenario in 2022 due to its higher probability in light of rising interest rates.

The improvements in the sensitivity of EVE from changes in interest rates as of June 30, 2022 for the 200 and 100 basis point increase buckets are principally attributed to the balance sheet becoming more asset sensitive compared to December 31, 2021. During the periods reported, the modeled effects on the EVE remained within established Company risk limits.

Available for Sale Portfolio mark-to-market exposure

The Company measures the potential change in the market price of its investment portfolio, and the resulting potential change on its equity for different interest rate scenarios. This table shows the result of this test as of June 30, 2022 and December 31, 2021:


	Change in market value (1)
	June 30,		December 31,
(in thousands)	2022		2021
Change in Interest Rates
(Basis points)
Increase of 200	$	(129,848)	$	(108,280)
Increase of 100	(65,757)		(50,320)
Decrease of 25	16,077		10,811
Decrease of 50	31,802		21,439
Decrease of 100 (2)	61,285		—

__________________

(1) Represents the amounts by which the investment portfolio mark-to-market would change assuming rate shocks that are instant and parallel to the yield curves for the various interest rates and indices that affect our net interest income.

(2) We resumed modeling this scenario in 2022 due to its higher probability in light of rising interest rates in 2022.

113

The average duration of our investment portfolio increased to 4.9 years at June 30, 2022 compared to 3.6 years at December 31, 2021.The increase in duration was mainly due to lower expected prepayment speeds recorded in our mortgage-backed securities portfolio in light of rising interest rates. Additionally, the floating rate portfolio increased to 15.3% at June 30, 2022 from 10.6% at December 31, 2021.

Limits Approval Process

The following table sets forth information regarding our interest rate sensitivity due to the maturities of our interest bearing assets and liabilities as of June 30, 2022. This information may not be indicative of our interest rate sensitivity position at other points in time.


	June 30, 2022
(in thousands except percentages)	Total		Less than one year			One to three years			Four to Five Years			More than five years			Non-rate
Earning Assets
Cash and cash equivalents	$	354,055	$	309,581		$	—		$	—		$	—		$	44,474
Securities:
Debt available for sale	1,124,801		194,707			179,398			174,780			575,916			—
Debt held to maturity	238,621		—			—			—			238,621			—
Equity securities with readily determinable fair value not held for trading	10,767		—			—			—			—			10,767
Federal Reserve and FHLB stock	48,187		37,159			—			—			—			11,028
Trading securities	103		103
Loan portfolio-performing (1)	5,822,231		4,022,170			884,490			564,176			351,395			—
Earning Assets	$	7,598,765	$	4,563,720		$	1,063,888		$	738,956		$	1,165,932		$	66,269
Liabilities
Interest bearing demand deposits	$	2,019,661	$	2,019,661		$	—		$	—		$	—		$	—
Saving and money market	1,629,830		1,629,830			—			—			—			—
Time deposits	1,254,409		920,617			263,106			61,460			9,226			—
FHLB advances	830,524		105,000			575,524			150,000			—			—
Senior Notes	59,052		—			—			59,052			—			—
Subordinated Notes	29,199		—			—			—			29,199			—
Junior subordinated debentures	64,178		64,178			—			—			—			—
Interest bearing liabilities	$	5,886,853	$	4,739,286		$	838,630		$	270,512		$	38,425		$	—
Interest rate sensitivity gap			(175,566)			225,258			468,444			1,127,507			66,269
Cumulative interest rate sensitivity gap			(175,566)			49,692			518,136			1,645,643			1,711,912
Earnings assets to interest bearing liabilities (%)			96.3		%	126.9		%	273.2		%	3,034.3		%	N/M

__________________

(1) “Loan portfolio-performing” excludes $25.2 million of non-performing loans (non-accrual loans and loans 90 days or more past-due and still accruing).

N/M Not meaningful

114

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.

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 constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

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.

~~101~~115

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

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~~10-K for the year ended December 31, 2021 (the “Form 10-K”) and Part II, Item 1A of our ~~existing risk factors previously disclosed in~~Form 10-Q for the ~~Form 10-K.~~quarter ended March 31, 2022. Other than the risk factor set forth below, there have been no material changes to the risk factors previously disclosed in the Form 10-K

~~We may incur losses due to minority investments in fintech~~ and ~~specialty finance companies~~the Form 10-Q for the quarter ended March 31, 2022.

~~From time~~Liquidity risks could affect our operations and jeopardize our financial condition and certain funding sources could increase our interest rate expense.

Liquidity is essential to ~~time, we~~our business. An inability to raise funds through deposits, borrowings, proceeds from loan repayments or sales, and other sources could have a substantial negative effect on our liquidity. Our funding sources include deposits (core and non-core), federal funds purchased, securities sold under repurchase agreements, short-and long-term debt, the Federal Reserve Discount Window (Discount Window) and Federal Home Loan Bank of Atlanta, or FHLB, advances. We also maintain a portfolio of securities that can be used as a source of liquidity.

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

Any significant restriction or disruption of our ability to obtain funding from these or other sources could have a negative effect on our ability to satisfy our current and ~~specialty~~future financial obligations, which could materially affect our financial condition or results of operations. Our access to funding sources in amounts adequate to finance ~~companies. If we do so, we may~~or capitalize our activities on terms which are acceptable to us could be impaired by factors that affect us specifically or the financial services industry or the economy in general, including but not ~~be able to influence~~limited to: a downturn in economic conditions in the ~~activities of companies~~geographic markets in which we ~~invest and may suffer losses due to these activities. For example,~~operate or in ~~June 2021, we made a $2.5 million equity investment~~the financial or credit markets 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, includinggeneral; increases in interest rates; the ~~possibility~~liquidity needs of our depositors as well as competition for deposits; the availability of sufficient collateral 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 relativeis acceptable to the ~~potential financial benefit, the potential for a conflict of interest,~~FHLB and the ~~damage to our reputation of associating with~~Federal Reserve Bank, fiscal and ~~investing in a brand that may take actions inconsistent with our values.~~monetary policy; and regulatory changes. In addition, ~~although we may seek board representation in connection with certain investments, there is no assurance that~~our ability to otherwise borrow money or issue and sell debt will depend on a variety of factors such ~~representation, if sought, will be obtained.~~as market conditions, the general availability of credit, our credit ratings, and our credit capacity.

Alternative funding to deposits may carry higher costs. If ~~the companies~~ we ~~invest in seek~~are required to rely more heavily on more expensive and potentially less stable funding sources or if additional financing ~~in the future to fund their growth strategies, these financing transactions may result in dilution to~~sources are unavailable or are not available on acceptable terms, our ~~ownership stakes~~profitability, liquidity, and ~~these transactions may occur at lower valuations than the investment transaction through which we acquired such ownership interest, which~~prospects could ~~significantly decrease the fair value of our investment in those entities. We may also~~ be unable to dispose of our minority investments within our contemplated time horizon or at all. Our inability to dispose of our minority investment in an entity or a downward adjustment to or impairment of an equity investment could adversely ~~impact our results of operations and financial condition.~~

affected.

~~102~~116

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

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:~~2022:


		(a)	(b)		(c)	(d)			(a)	(b)		(c)	(d)
Period	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		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 (2)
April 1 - April 30	April 1 - April 30	139,835	$	16.19	139,835	$	35,881,847	April 1 - April 30	194,855	$	29.78	194,855	$	11,525,135
May 1 - May 31	May 1 - May 31	62,299	16.58		62,299	34,849,235		May 1 - May 31	416,670	27.45		416,670	—
June 1 - June 30	June 1 - June 30	184,061	17.62		184,061	31,605,307		June 1 - June 30	—	—		—	—
Total	Total	386,195	$	16.93	386,195	$	31,605,307	Total	611,525	$	28.19	611,525	$	—

__________________

(1) On ~~March 10, 2021,~~January 31, 2022, the ~~Company announced that its~~Company’s Board of Directors ~~approved a stock repurchase program which provides for~~authorized 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~~New Common Stock Repurchase Program pursuant to which the Company may ~~repurchase~~purchase, from time to time, up to an aggregate amount of $50 million of its shares of Class BA common stock ~~through~~. Repurchases under the New Common Stock Repurchase Program may be made in the open market, ~~purchases,~~ by block purchase, in ~~privately-negotiated~~privately negotiated transactions or otherwise in compliance with Rule 10b-18 under the Securities Exchange ~~Act. The extent to which~~Act of 1934, as amended (the “Exchange Act”). Repurchases of the ~~Company repurchases its~~Company’s shares of Class BA common stock ~~and~~(and the timing ~~of such purchases~~thereof) 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~~New Common Stock Repurchase Program does not obligate the Company to repurchase any particular amount of ~~shares of~~ Class BA common stock and may be suspended or discontinued at any time without notice. AsOn May 19, 2022, the Company announced the completion of ~~June 30, 2021,~~the New Class A Common Stock repurchase program.

(2) The amount reflected in column (d) corresponds to the maximum dollar value of shares that may yet be purchased under the ~~2021~~New Common 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.~~described in footnote (1) above.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

~~103~~117

ITEM 6. EXHIBITS


Exhibit Number			Description
~~3.3.~~3.1			Amended and Restated Bylaws, as amended, of Amerant Bancorp Inc., effective ~~July 22, 2021~~April 14, 2022 (incorporated by reference to Exhibit ~~3.3~~3.1 to Form 8-K,, filed on ~~July 21, 2021)~~April 14, 2022).
10.1			~~Separation~~ ~~Agreement~~ ~~and General Release, dated June 30,~~ 2021 ~~between Amerant Bank, N.A., Amerant Bancorp Inc. and Alfonso Figueredo~~Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.1 to the Form 8-K,/A , filed on ~~July 2, 2021)~~June 8, 2022 ).
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 Gerald P. Plush, ~~Vice-Chairman,~~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 Gerald P. Plush, ~~Vice-Chairman,~~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

~~104~~118

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:

July ~~30, 2021~~29, 2022

By:

/s/ Gerald P. Plush

Gerald P. Plush

~~Vice-Chairman,~~Chairman, President and Chief Executive Officer
(Principal Executive Officer)

Date:

July ~~30, 2021~~29, 2022

By:

/s/ Carlos Iafigliola

Carlos Iafigliola

Executive Vice-President and Chief Financial Officer
(Principal Financial Officer)

~~105~~119


	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


	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


(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