Amerant Bancorp Inc. Reports Fourth Quarter and Full-Year Results
01/29/2021 - 06:30 AM
CORAL GABLES, Fla., Jan. 29, 2021 (GLOBE NEWSWIRE) -- Amerant Bancorp Inc. (NASDAQ: AMTB and AMTBB) (the “Company” or “Amerant”) today reported net income of $8.5 million in the fourth quarter of 2020, compared to net income of $1.7 million reported in the third quarter of 2020 and net income of $13.5 million reported in the fourth quarter of 2019. Net loss for the full-year 2020 was $1.7 million , compared to net income of $51.3 million for the full-year 2019. Net loss for the full-year 2020 was primarily driven by $88.6 million in provision for loan losses during the period. Operating income was $7.5 million in the fourth quarter of 2020, compared to $11.5 million in the third quarter of 2020 and $14.8 million in the fourth quarter of 2019. Operating income was $57.3 million in the full-year 2020, compared to $58.3 million in the full-year 2019.
Annualized return on assets (“ROA”) and return on equity (“ROE”) were positive 0.42% and 4.09% , respectively, in the fourth quarter of 2020, compared to positive 0.08% and 0.81% , respectively, in the third quarter of 2020, and positive 0.68% and 6.44% , respectively, in the fourth quarter of 2019. ROA and ROE were negative 0.02% and 0.21% for the full-year 2020, respectively, compared to positive 0.65% and 6.43% , respectively, for the full-year 2019.
Millar Wilson, Vice Chairman and Chief Executive Officer, remarked, “During the fourth quarter Amerant greatly capitalized on the momentum and strength built throughout the year. Our credit quality is most impressive, especially in light of the current operating environment, with no provision for loan losses recorded in the fourth quarter, and the lowest level of loan deferrals and forbearance in 2020. We also saw encouraging profitability recovery with a significant rebound on our net interest margin (“NIM”) from the third quarter of 2020. Backed by the strength of our capital and business, we successfully launched and completed a modified Dutch auction tender offer for Amerant’s shares of Class B common stock at the end of the fourth quarter. Also, to further support our profitability efforts going forward, in the fourth quarter we incorporated Amerant Mortgage, LLC, an entity led by a group of best-in-class real estate executives, where Amerant is the majority owner, that will allow us to better capture the growing nationwide demand for residential loans on a significantly larger scale.”
Mr. Wilson added, “While 2020 presented unique challenges for Amerant, our industry and the world, I am extraordinarily proud of the resilience demonstrated by our team during these times. At Amerant, we navigated a challenging market environment by adapting nimbly to continuous change, acting proactively across business initiatives and focusing on our long-term strategic plan. The continuity of our long-term plan positions Amerant for success in ramping up our relationship-driven customer strategy, driving digital transformation, improving profitability and efficiency, optimizing our core market footprint, and increasing shareholder value. Most importantly and core to Amerant’s role as a leading community bank, we were able to provide the banking support to our local communities when they needed us most, while ensuring the health and safety of employees and customers. Looking ahead, Amerant remains committed to our long-term strategic goals and I am confident we are well-positioned to enter 2021 with great impulse.”
Summary Results
The summary results of the fourth quarter and full-year 2020 include:
Net income of $8.5 million for the fourth quarter of 2020, up 397.8% from $1.7 million in the third quarter of 2020 and down 37.1% from $13.5 million in the fourth quarter of 2019. Net loss for the full-year 2020 was $1.7 million , down 103.4% from net income of $51.3 million in the full-year 2019. Net loss for the full-year 2020 was primarily driven by $88.6 million in provision for loan losses during the period. Diluted earnings per share was $0.20 for the fourth quarter of 2020, compared to $0.04 in the third quarter of 2020 and $0.31 in the fourth quarter of 2019. Diluted loss per share was $0.04 in the full-year 2020, compared to diluted earnings per share of $1.20 in the full-year 2019. Net interest income (“NII”) was $48.7 million , up 7.3% from $45.3 million in the third quarter of 2020, and down 5.1% compared to $51.3 million in the fourth quarter of 2019. Net interest income for the full-year 2020 was $189.6 million , down 11.0% compared to $213.1 million in 2019. The NIM for the fourth quarter was 2.61% , up 22 basis points from 2.39% in the third quarter of 2020 and down 13 basis points from 2.74% in the fourth quarter of 2019. NIM for the full-year 2020 decreased to 2.52% from 2.85% . There was no provision for loan losses recorded during the fourth quarter of 2020, compared to $18.0 million in the third quarter of 2020, and a $0.3 million release in the fourth quarter of 2019. We recorded a provision for loan losses of $88.6 million in the full-year 2020 compared to a release of $3.2 million in the full-year 2019. The ratio of allowance for loan losses (“ALL”) to total loans was 1.90% as of December 31, 2020, down from 1.97% as of September 30, 2020, and up from 0.91% at the end of 2019. The ratio of net charge-offs to average total loans in the fourth quarter of 2020 was 0.40% , down from 1.41% in the third quarter and up from 0.08% in the fourth quarter of 2019. The ratio of net charge-offs to average total loans in the full-year 2020 was 0.52% , up from 0.11% in the full-year 2019. Noninterest income was $11.5 million for the fourth quarter of 2020, down 43.3% from $20.3 million in the third quarter of 2020, and down 27.9% compared to $16.0 million in the fourth quarter of 2019. Noninterest income was $73.5 million in the full-year 2020, an increase of $16.4 million , or 28.6% , compared to $57.1 million in the full-year 2019. Noninterest expense was $51.6 million for the fourth quarter of 2020, up 13.5% compared to $45.5 million in the third quarter of 2020, and virtually flat compared to $51.7 million in the fourth quarter of 2019. Noninterest expense was $178.7 million in the full-year 2020, a decrease of $30.6 million , or 14.6% , compared to $209.3 million in the full-year 2019. Adjusted noninterest expense was $43.2 million in the fourth quarter of 2020, down 1.0% from $43.7 million in the third quarter of 2020, and down 16.3% from $51.6 million in the fourth quarter of 2019. Adjusted noninterest expense for the full-year 2020 was $166.8 million , down 18.3% compared to $204.3 million for 2019. The efficiency ratio was 85.8% (69.8% adjusted for selected items) in the fourth quarter of 2020, compared to 69.3% (66.5% adjusted for selected items) during the third quarter of 2020, and 76.9% (80.1% adjusted for selected items) for the same period of 2019. For the full-year 2020 the efficiency ratio was 68.0% (63.0% adjusted for selected items), compared to 77.5% (76.4% adjusted for selected items) for 2019. Total loans were $5.8 billion on December 31, 2020, down $82.3 million or 1.4% , compared to September 30, 2020, and up $98.0 million or 1.7% compared to December 31, 2019. Total deposits were $5.7 billion on December 31, 2020, down $145.9 million , or 2.5% , from $5.9 billion as of September 30, 2020, and down $25.5 million , or 0.4% from $5.8 billion at year-end 2019. Stockholders’ book value per common share increased to $20.70 at December 31, 2020, up 5.2% from $19.68 at September 30, 2020, and up 7.0% , from $19.35 at December 31, 2019. Tangible book value per common share rose to $20.13 at December 31, 2020, up 5.0% from $19.17 at September 30, 2020, and up 6.8% compared to $18.84 at year-end 2019, which includes accretion of $0.75, or 3.85% , to the Company’s tangible book value per common share at the close of 2020 as a result of the Tender Offer. Update on Amerant’s Participation in Paycheck Protection Program (PPP) & Main Street Lending Program
The Company continued to process PPP loan forgiveness requests in the fourth quarter of 2020. As of December 31, 2020, total PPP loans outstanding were $198.5 million , or 3.4% of total loans, compared to $223.5 million , or 3.8% of total loans at September 30, 2020. The Company estimates as of December 31, 2020, there were $95.4 million of deposits related to the PPP compared to $97.2 million as of September 30, 2020.
Amerant also originated loans as part of the Main Street Lending Program in the fourth quarter of 2020. Under this program, which ran through January 8, 2021, the Federal Reserve purchased 95% of each qualifying loan originated by the Company under such program to small and mid-sized businesses. In the fourth quarter of 2020, the Company received fees of approximately $0.5 million from the origination of $56.3 million of loans in this program as of December 31, 2020.
Additionally, during January 2021, Amerant started to process new applications and obtain approvals from the SBA in round three of the PPP authorized under a new law enacted on December 27, 2020.
Credit Quality
The ALL was $110.9 million at the close of fourth quarter of 2020, compared to $116.8 million at the close of the third quarter of 2020 and $52.2 million at the close of the fourth quarter of 2019. The Company recorded no provision for loan losses during the fourth quarter of 2020, compared to $18.0 million in the third quarter of 2020. In the fourth quarter of 2019, the Company released $0.3 million from the ALL.
The Company recorded no provisions for loan losses during the fourth quarter of 2020 mainly driven by the significant decline of the estimated allowance for loan losses associated with the COVID-19 pandemic reflecting lower-than-initially-estimated credit deterioration, as well as improvements in economic conditions. The ALL associated with the COVID-19 pandemic dropped to $14.8 million at December 31, 2020 from $26.2 million at the end of the third quarter of 2020. The decrease was offset by additional specific reserves allocated to a Miami-based U.S. coffee trader (“the Coffee Trader”) as well as specific reserves for other smaller loans which deteriorated during the fourth quarter 2020. Year-to-date the Company recorded $88.6 million in provisions for loan losses mainly driven by specific reserves allocated to the Coffee Trader and other loans deteriorated during the year, and reserves allocated for the estimate losses associated with the COVID-19 pandemic.
As of December 31, 2020, the loan relationship with the Coffee Trader had an outstanding balance of approximately $19.6 million unchanged from September 30, 2020, after recording the $19.3 million charge-off reported in the third quarter of 2020. Based on the evaluation of additional information from the assignee leading the liquidation procedure for the Coffee Trader, management of the Bank and the Company considered it necessary and prudent to provide for an additional $5.8 million specific loan loss reserve for these loans in the fourth quarter of 2020. As a result, the Company now maintains a specific loan loss reserve of $12.2 million as of December 31, 2020, compared to $6.5 million as of September 30, 2020 on this relationship. We continue to closely monitor the liquidation process and, as more information becomes available, management may decide to adjust the loan loss reserve for this indebtedness.
Classified loans increased $1.0 million , or 1.1% , during the fourth quarter of 2020 compared to the third quarter of 2020, and $52.8 million , or 147.8% when compared to the same quarter in 2019. The increase this quarter is primarily driven by the downgrade of two multifamily loans totaling approximately $10 million , offset by charge-offs of $5 million of a commercial loan that was previously reserved and by loan paydowns during the period. Special mention loans as of December 31, 2020 were $88.9 million , an increase of $3.3 million , or 3.8% , from $85.6 million as of September 30, 2020, and $55.9 million , or 169.6% when compared to the same period in 2019. The increase in special mention loans this quarter is mainly due to the downgrades of two commercial loans totaling $17.6 million , offset by payoffs and pay downs. All special mention loans remain current. Non-performing assets increased $1.6 million , or 1.9% , quarter-over-quarter and $55.2 million , or 167.3% , compared to the year-ago period, totaling $88.1 million at the end of the fourth quarter of 2020. The ratio of non-performing assets to total assets was 113 basis points, up 5 basis points from the third quarter of 2020 and up 72 basis points year-over-year.
In the fourth quarter of 2020, loans modified due to COVID-19 still under deferral and/or forbearance continued declining significantly. As of December 31, 2020, $43.4 million , or 0.7% of total loans, were still under the deferral and/or forbearance period, significantly down from $101.2 million , or 1.7% of total loans, at the end of the third quarter of 2020, and from $1.1 billion , or 19.3% of total loans, at the beginning of the program in April 2020. The balance as of December 31, 2020 includes $15.8 million of loans under a second deferral and $26.8 million under a third deferral, which the Company began to selectively offer as additional temporary loan modifications under programs that allow it to extend the deferral and/or forbearance period beyond 180 days.
Additionally, 97.5% of the loans under deferral and/or forbearance are backed by real estate collateral with average Loan to Value (“LTV”) of 61.7% and 99.6% of loans out of forbearance have resumed regular payments. Notably, Amerant now has no deferrals and/or forbearance in its hotel loan portfolio. As of December 31, 2020 this portfolio represented 4.8% of total loans. The Company continues to closely monitor the performance of the remaining loans under the terms of the temporary relief granted.
The concentration of the loan portfolio remains stable compared to the third quarter of 2020. Except for loans to the real estate industry, the loan portfolio remains well diversified with the highest industry concentration representing 10.3% of total loans, down from 10.4% as of September 30, 2020. At December 31, 2020, the Company’s Commercial Real Estate (“CRE”) loan portfolio represented 48.6% of total loans, down from 50.4% at September 30, 2020. These loans had an estimated weighted average LTV of 60% and an estimated weighted average Debt Service Coverage Ratio (DSCR) of 1.7x at December 31, 2020. Importantly, CRE loans to top tier customers, which are those considered to have the greatest strength and credit quality, represented approximately 41% of the CRE loan portfolio at that date, down slightly from 43% in the third quarter.
Loans and Deposits
Total loans as of December 31, 2020 were $5.8 billion , $82.3 million , or 1.4% , lower compared to September 30, 2020. Total loans increased $98.0 million , or 1.7% , compared to December 31, 2019.
As fourth quarter loan production across all segments continued to be challenged much like in previous quarters, Amerant continued to purchase higher yielding consumer loans. Consumer loans increased $57.1 million , or 30% , quarter-over-quarter, and $158.7 million , or 179.3% , compared to December 31, 2019. This includes $68.2 million and $165.8 million in high-yield consumer loans purchased during the fourth quarter of 2020 and full-year 2020, respectively. In addition, single-family residential loans increased $42.3 million , or 7.1% , quarter-over-quarter and $100.5 million or 18.6% , compared to December 31, 2019 mainly driven by a significant increase in refinancing demand of loans originated by other institutions as a result of low market rates. PPP loans as of December 31, 2020 were $198.5 million , a decline of $25.0 million , or 11.2% , compared to $223.5 million as of September 30, 2020.
Total deposits at December 31, 2020 were $5.7 billion , down $145.9 million , or 2.5% , from $5.9 billion at September 30, 2020. Total deposits decreased $25.5 million , or 0.4% , compared to $5.8 billion at December, 31, 2019. As of December 31, 2020, domestic deposits were $3.2 billion , down $107.4 million , or 3.2% , compared to $3.3 billion at September 30, 2020, and up $81.1 million , or 2.6% , compared to $3.1 billion at December 31, 2019. At December 31, 2020, foreign deposits were $2.5 billion , down $38.5 million , or 1.5% , compared to $2.6 billion at September 30, 2020, and down $106.6 million , or 4.0% , compared to $2.6 billion at December 31, 2019. The quarter-over-quarter decrease in foreign deposits represents an annualized decay rate of 6.0% in the fourth quarter, compared to an annualized decay rate of 3.8% during the third quarter of 2020, as economic activity in Venezuela picked up after its compression in the earlier months of the pandemic, and an annualized decay rate of 8.6% in the fourth quarter of 2019, as the company’s sales efforts have resulted in diminished decay rates. For the full year 2020 the foreign deposits decay rate was 4.0% compared to 13.1% in 2019 driven by the aforementioned efforts.
The quarter-over-quarter decline in deposits is primarily attributable to a $219.8 million , or 12.4% , reduction in customer CDs compared to the prior quarter as the Company continued to aggressively lower CD rates and focus on increasing lower-cost core deposits. Specifically, Amerant continued to prioritize multi-product relationships, which are not based on single product high-cost CDs. This decline in CDs includes a $17.3 million , or 8.0% , reduction in online CD balances. The decline in total deposits was partially offset by an increase in third-party interest-bearing brokered deposits, which totaled $140.3 million as of December 31, 2020 compared to $21.6 million as of September 30, 2020. The decrease in deposits compared to December 31, 2019 was mainly driven by a reduction of $210.6 million , or 12.0% , in customer CDs and a reduction of $168.2 million , or 25.4% , in brokered CDs. These reductions were partially offset by the aforementioned $140.3 million in third-party interest-bearing brokered deposits and $95.2 million in deposits related to PPP loans. The decrease in customer CDs compared to December 31, 2019 was partially offset by an increase of $61.1 million , or 44.5% , in online CDs.
Net Interest Income and Net Interest Margin
Fourth quarter 2020 net interest income was $48.7 million , up $3.3 million or 7.3% from $45.3 million in the third quarter of 2020 and down 5.1% from $51.3 million in the fourth quarter of 2019. The quarter-over-quarter increase was driven by lower overall deposit costs and average balances on CDs and brokered deposits, as well as higher interest income due to higher average yields and volumes in loans during the fourth quarter of 2020. Increased prepayment penalty fees during the fourth quarter of 2020, also contributed to the increase in NII during the period. Partially offsetting this increase in NII was lower average balances on available for sale securities due to prepayments during the same period. The year-over-year decline was primarily due to the significantly lower market rates considering the asset sensitivity profile of our balance sheet, partially offset by lower costs on deposits, wholesale funds, and other borrowings as well as lower average balances in customer time and broker deposits, wholesale funds and other borrowings. Fourth quarter 2020 NIM was 2.61% , up 22 basis points from 2.39% in the third quarter of 2020 and down 13 basis points from 2.74% in the fourth quarter of 2019.
Full year 2020 net interest income was $189.6 million , down 11.0% compared to $213.1 million in full-year 2019. This decline was mainly driven by lower interest income due to the aforementioned lower interest rate environment partially offset by lower cost of funds. Full year 2020 NIM was 2.52% , down 33 basis points from 2.85% in full-year 2019, primarily attributed to lower average balances and yields on interest earning assets, partially offset by lower costs of deposits and wholesale funding. During 2020, Amerant proactively managed its investment securities portfolio as an economic hedge against the declining NII. This resulted in an annual increase in securities gains of $24.4 million , which exceeded the decline of $23.5 million in annual NII.
During the fourth quarter of 2020, Amerant continued to focus on growing interest income and offset ongoing NIM pressure by i) looking for additional opportunities through indirect lending programs; ii) proactively repricing customer time and relationship money market deposits at lower rates; and iii) proactive management of its professional funding sources as liquidity remained high during the period.
As of December 31, 2020, Amerant has a meaningful $523.7 million of time deposits maturing in the first three months of 2021, which the Company expects to reprice at lower market rates. This is expected to decrease the average cost of CDs by approximately 30bps.
Noninterest income
In the fourth quarter of 2020, noninterest income was $11.5 million , down $8.8 million , or 43.3% , compared to $20.3 million in the third quarter of 2020. The decrease was primarily due to lower net gains on sales of securities of $7.6 million , a $1.7 million one-time loss on the sale of the Beacon operations center during the fourth quarter of 2020 and a decrease in rental income due to lease terminations in the third quarter of 2020. Partially offsetting this decrease was a $0.7 million increase in derivative income as customer activity increased in the fourth quarter, and a $0.5 million increase in other income in relation to fees received from the origination of loans under the Main Street Lending Program.
Noninterest income declined $4.5 million or 27.9% , from $16.0 million in the fourth quarter of 2019. The year-over-year decrease was primarily driven by: (i) the absence of a $2.8 million gain on the sale of vacant Beacon land recorded in the fourth quarter of 2019; (ii) the $1.7 million loss on the sale of the Beacon operations center recorded in the fourth quarter of 2020; (iii) lower derivative income resulting from slower economic activity in 2020; (iv) lower cards and trade finance servicing fee income due to the closing of the credit card product in April 2019; and (v) a decline in wire transfer fees and service charges on deposit accounts. Partially offsetting these results were (i) the absence of a $1.4 million net loss on the early extinguishment of FHLB advances recorded in the fourth quarter of 2019; (ii) an increase in other income related to fees received for loans originated under the Main Street Lending Program in the fourth quarter of 2020, as previously mentioned; (iii) higher brokerage, advisory and fiduciary activities fees; and (iv) a $0.3 million net gain on the sale of securities.
In full-year 2020, noninterest income increased $16.4 million , or 28.6% , compared to full-year 2019. This increase was mainly due to (i) higher net gains on securities of $24.4 million in 2020; (ii) an increase in brokerage, advisory and fiduciary activity fees; (iii) the absence of a net loss on early extinguishment of FHLB advances recorded in 2019; and (iv) higher service fees from annual credit card referral fees received in 2020. Partially offsetting these results were (i) the absence of a $2.8 million gain on the sale of vacant Beacon land as described above; (ii) the aforementioned $1.7 million loss on the sale of the Beacon operations center in the fourth quarter of 2020; (iii) lower cards fees due to the closing of the credit card product; (iv) lower derivative income; (v) lower deposit and service fees; and (vi) lower fees for other services previously provided to the former parent.
The Company’s assets under management and custody (“AUM”) totaled $2.0 billion at December 31, 2020, increasing $209.5 million , or 11.9% , from $1.76 billion as of September 30, 2020 and $156.5 million , or 8.6% , from $1.8 billion at December 31, 2019. From these increases in AUM net new assets represent $46.0 million , or 2.6% , compared to the third quarter of 2020 and $105.0 million , or 5.8% , compared to the fourth quarter of the previous year, as a result of the Company’s client-focused and relationship-centric strategy and the remainder is due to market valuation effect.
Adjusted noninterest income was $13.2 million in the fourth quarter of 2020, relatively flat compared to the fourth quarter of 2019. Adjusted noninterest income for the full-year 2020 was $75.2 million , up $20.9 million , or 38.4% , compared to $54.3 million for the full-year 2019. Adjusted noninterest income in the fourth quarter of 2020 and full-year 2020, excludes a one-time loss of $1.7 million on the sale of the Beacon operations center. Adjusted noninterest income in the fourth quarter of 2019 and full-year 2019, excludes a one-time gain of $2.8 million on the sale of vacant Beacon land. No adjustment to noninterest income was recorded in the third quarter of 2020.
Noninterest expense
Fourth quarter 2020 noninterest expense was $51.6 million , up $6.1 million , or 13.5% , from the third quarter of 2020, driven primarily by higher severance expenses in relation with the adoption in October of a voluntary early retirement plan and involuntary severance plan. Also, contributing to this increase were higher salaries resulting from lower deferred loan origination costs, occupancy and equipment, as well as depreciation and amortization expenses resulting from branch closures during the fourth quarter of 2020. Lower variable compensation and employee benefits expenses associated with the decline in the number of employees from 2019 in connection with the Company’s ongoing transformation and efficiency improvement efforts as well as lower digital transformation expenses partially offset this quarter-over-quarter increase in noninterest expense.
Noninterest expense for the fourth quarter of 2020, slightly increased $0.1 million , or 0.2% , compared to $51.7 million in the same period of 2019, driven primarily by the aforementioned increase in severance costs, depreciation and amortization, occupancy and equipment and FDIC assessments and insurance expenses in the most recent quarter. This overall increase was partially offset by lower salaries and employee benefits expenses associated with previous and most recent staff reductions, in addition to lower professional and other service fees in the fourth quarter.
Noninterest expense for the year ended December 31, 2020 decreased 14.6% , or $30.6 million , compared to full-year 2019, largely due to lower salaries and employee benefits expenses resulting from staff reductions, changes to variable and long-term compensation programs and deferred PPP loan origination costs earlier this year. Additionally, Amerant recorded lower marketing, legal, and accounting fees this year compared to the prior year. Higher FDIC assessments and insurance, depreciation and amortization, and occupancy and equipment expenses mostly related to 2020 branch closures partially offset this overall year-over-year decrease in noninterest expense.
Adjusted noninterest expense was $43.2 million in the fourth quarter of 2020, slightly down 1.0% from $43.7 million in the third quarter of 2020, and down 16.3% from $51.6 million in the fourth quarter of 2019. Adjusted noninterest expense for the full-year 2020 was $166.8 million , down 18.3% compared to $204.3 million for 2019. Restructuring expenses in the fourth quarter of 2020 totaled $8.4 million , an increase of $6.6 million , or 355.4% , compared to the third quarter of 2020 due to higher severance and branch closure expenses. The closure of the two branches had associated one-time costs of $2.4 million but will reduce our noninterest expenses by approximately $1.6 million per year, allowing us to redirect those funds into our digital transformation efforts. Restructuring expenses increased $8.3 million compared to the same period of 2019 due to the aforementioned reasons above as well as digital transformation expenses incurred in the most recent quarter. Restructuring expenses for the full-year 2020 totaled $11.9 million , up $6.9 million , or 136.3% , from $5.0 million reported in the full-year 2019.
The efficiency ratio was 85.8% (69.8% adjusted for restructuring costs and a one-time loss on sale of the Beacon operation center) in the fourth quarter of 2020, compared to 69.3% (66.5% adjusted for restructuring costs) during the third quarter of 2020, and 76.9% (80.1% adjusted for restructuring costs and a one-time gain on sale of vacant land) for the same period of 2019. The quarter-over-quarter increase in the efficiency ratio is mainly driven by expenses incurred in connection with the adoption of the voluntary and the involuntary plans previously mentioned. For the full-year 2020 the efficiency ratio was 68.0% (63.0% adjusted for restructuring costs and a one-time loss on sale of the Beacon operations center), compared to 77.5% (76.4% adjusted for restructuring costs and spin-off costs) for 2019. The year-over-year decline is mainly attributable to a reduction of 14.0% in the Company’s headcount during the period in connection with the Company’s ongoing transformation and efficiency improvement efforts including the voluntary and the involuntary plans adopted during the fourth quarter 2020.
Capital Resources and Liquidity
The Company’s capital continues to be strong and well in excess of the minimum regulatory requirements to be considered “well-capitalized” at December 31, 2020.
Stockholders’ equity was $783.4 million on December 31, 2020, down $46.1 million , or 5.6% , from $829.5 million on September 30, 2020, and down $51.3 million , or 6.1% , from $834.7 million on December 31, 2019. The decline in stockholder’s equity during the fourth quarter 2020 is mainly the result of the repurchase of 4.2 million shares of Class B Common Stock or $53.3 million , excluding fees and expenses, pursuant to the modified Dutch auction tender offer (the “Tender Offer”) completed during the fourth quarter of 2020.
The decrease of $51.3 million , or 6.1% , compared to December 31, 2019 was the result of an aggregate of $69.4 million in connection with the repurchases of Class B Common Stock completed in the first and fourth quarters of 2020, and the net loss for full-year 2020. These changes were partially offset by higher valuations of debt securities available for sale at the close of December 31, 2020 compared to December 31, 2019. Book value per common share was $20.70 at December 31, 2020 compared to $19.68 at September 30, 2020 and $19.35 at December 31, 2019. Tangible book value per common share was $20.13 at December 31, 2020 compared to $19.17 at September 30, 2020 and $18.84 at December 31, 2019. The completion of the Tender Offer resulted in an increase of $0.75, or 3.85% , in the Company’s tangible book value per common share at the close of 2020.
Amerant’s liquidity position continues to be strong and includes cash and cash equivalents of $214.4 million at the close of the fourth quarter of 2020, compared to $227.2 million as of September 30, 2020 and $121.3 million as of December 31, 2019. Additionally, the Company has $1.2 billion in investment securities that could be used as collateral for borrowings and $1.3 billion in borrowing capacity with the FHLB.
Fourth Quarter 2020 Earnings Conference Call
As previously announced, the Company will hold an earnings conference call on Friday, January 29th, 2021 at 9:30 a.m. (Eastern Time) to discuss its fourth quarter and full-year 2020 results. The conference call and presentation materials can be accessed via webcast by logging on to the Investor Relations section of the company’s website at https://investor.amerantbank.com. The online replay will remain available for approximately one month following the call through the above link.
About Amerant Bancorp Inc.
The Company is a bank holding company headquartered in Coral Gables, Florida. The Company operates through its main subsidiaries, Amerant Bank, N.A. (the “Bank”), Amerant Investments, Inc., Amerant Trust, N.A. and Elant Bank and Trust Ltd. The Company provides individuals and businesses in the U.S., as well as select international clients, with deposit, credit and wealth management services. The Bank, which has operated for over 40 years, is the second largest community bank headquartered in Florida. The Bank operates 25 banking centers—18 in South Florida and 7 in the Houston, Texas area—and loan production offices in Dallas, Texas and New York, New York.
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Visit our investor relations page at https://investor.amerantbank.com for additional information.
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Forward-looking statements, including those as to our beliefs, plans, objectives, goals, expectations, anticipations, estimates and intentions, involve known and unknown risks, uncertainties and other factors, which may be beyond our control, and which may cause the Company’s actual results, performance, achievements, or financial condition to be materially different from future results, performance, achievements, or financial condition expressed or implied by such forward-looking statements. You should not rely on any forward-looking statements as predictions of future events. You should not expect us to update any forward-looking statements, except as required by law. All written or oral forward-looking statements attributable to us are expressly qualified in their entirety by this cautionary notice, together with those risks and uncertainties described in “Risk factors” in our annual report on Form 10-K for the fiscal year ended December 31, 2019, in our quarterly report on Form 10-Q for the fiscal quarter ended June 30, 2020 and in our other filings with the U.S. Securities and Exchange Commission (the “SEC”), which are available at the SEC’s website www.sec.gov.
Interim Financial Information
Unaudited financial information as of and for interim periods, including the three and twelve month periods ended December 31, 2020 and the three month period ended December 31, 2019, may not reflect our results of operations for our fiscal year ended, or financial condition as of December 31, 2020, or any other period of time or date.
Explanation of Certain Non-GAAP Financial Measures
The Company supplements its financial results that are determined in accordance with accounting principles generally accepted in the United States of America (“GAAP”) with non-GAAP financial measures, such as “adjusted noninterest income”, “adjusted noninterest expense”, “adjusted net income (loss)”, “operating income”, “adjusted net income (loss) per share (basic and diluted)”, “adjusted return on assets (ROA)”, “adjusted return on equity (ROE)”, and other ratios. This supplemental information is not required by, or is not presented in accordance with, U.S. generally accepted accounting principles (“GAAP”). The Company refers to these financial measures and ratios as “non-GAAP financial measures” and they should not be considered in isolation or as a substitute for the GAAP measures presented herein.
We use certain non-GAAP financial measures, including those mentioned above, both to explain our results to shareholders and the investment community and in the internal evaluation and management of our businesses. Our management believes that these non-GAAP financial measures and the information they provide are useful to investors since these measures permit investors to view our performance using the same tools that our management uses to evaluate our past performance and prospects for future performance, especially in light of the additional costs we have incurred in connection with the Company’s restructuring activities that began in 2018 and continued into 2020, the one-time loss on sale of the Beacon operations center in the fourth quarter of 2020, the one-time gain on sale of the vacant Beacon land in the fourth quarter of 2019, the Company’s increases of its allowance for loan losses and net gains on sales of securities in the first, second and third quarters of 2020. While we believe that these non-GAAP financial measures are useful in evaluating our performance, this information should be considered as supplemental and not as a substitute for or superior to the related financial information prepared in accordance with GAAP. Additionally, these non-GAAP financial measures may differ from similar measures presented by other companies. See Appendix 1 “Non-GAAP Financial Measures Reconciliations” of the earnings presentation for a reconciliation of these non-GAAP financial measures to their GAAP counterparts.
Exhibit 2 reconciles these non-GAAP financial measures to reported results.
Exhibit 1- Selected Financial Information
The following table sets forth selected financial information derived from our unaudited and audited consolidated financial statements.
(in thousands) December 31, September 30, June 30, March 31, December 31, Consolidated Balance Sheets Total assets $ 7,770,893 $ 7,977,047 $ 8,130,723 $ 8,098,810 $ 7,985,399 Total investments 1,372,567 1,468,796 1,674,811 1,769,987 1,739,410 Total gross loans(1) 5,842,337 5,924,617 5,872,271 5,668,327 5,744,339 Allowance for loan losses 110,902 116,819 119,652 72,948 52,223 Total deposits 5,731,643 5,877,546 6,024,702 5,842,212 5,757,143 Advances from the FHLB and other borrowings 1,050,000 1,050,000 1,050,000 1,265,000 1,235,000 Senior notes (2) 58,577 58,498 58,419 — — Junior subordinated debentures(3) 64,178 64,178 64,178 64,178 92,246 Stockholders' equity (4) 783,421 829,533 830,198 841,117 834,701 Assets under management and custody (5) 1,972,321 1,762,803 1,715,804 1,572,322 1,815,848
Three Months Ended Years Ended (in thousands, except percentages and per share amounts) December 31, September 30, June 30, March 31, December 31, 2020 2019 Consolidated Results of Operations Net interest income $ 48,652 $ 45,348 $ 46,323 $ 49,229 $ 51,262 $ 189,552 $ 213,088 Provision for (reversal of) loan losses — 18,000 48,620 22,000 (300 ) 88,620 (3,150 ) Noninterest income 11,515 20,292 19,753 21,910 15,971 73,470 57,110 Noninterest expense 51,629 45,500 36,740 44,867 51,730 178,736 209,317 Net income (loss) 8,473 1,702 (15,279 ) 3,382 13,475 (1,722 ) 51,334 Effective income tax rate 0.76 % 20.47 % 20.77 % 20.83 % 14.73 % 60.27 % 19.83 % Common Share Data Stockholders' book value per common share $ 20.70 $ 19.68 $ 19.69 $ 19.95 $ 19.35 $ 20.70 $ 19.35 Tangible stockholders' equity (book value) per common share(6) $ 20.13 $ 19.17 $ 19.18 $ 19.43 $ 18.84 $ 20.13 $ 18.84 Basic earnings (loss) per common share $ 0.21 $ 0.04 $ (0.37 ) $ 0.08 $ 0.32 $ (0.04 ) $ 1.21 Diluted earnings (loss) per common share $ 0.20 $ 0.04 $ (0.37 ) $ 0.08 $ 0.31 $ (0.04 ) $ 1.20 Basic weighted average shares outstanding 41,326 41,722 41,720 42,185 42,489 41,737 42,543 Diluted weighted average shares outstanding(7) 41,688 42,065 41,720 42,533 43,050 41,737 42,939
Three Months Ended, Years Ended December 31, September 30, June 30, March 31, December 31, 2020 2019 Other Financial and Operating Data (8) Profitability Indicators (%) Net interest income / Average total interest earning assets (NIM)(9) 2.61 % 2.39 % 2.44 % 2.65 % 2.74 % 2.52 % 2.85 % Net income (loss) / Average total assets (ROA)(10) 0.42 % 0.08 % (0.75 )% 0.17 % 0.68 % (0.02 )% 0.65 % Net income (loss) / Average stockholders' equity (ROE)(11) 4.09 % 0.81 % (7.21 )% 1.61 % 6.44 % (0.21 )% 6.43 % Capital Indicators Total capital ratio(12) 13.96 % 14.56 % 14.34 % 14.54 % 14.78 % 13.96 % 14.78 % Tier 1 capital ratio(13) 12.71 % 13.30 % 13.08 % 13.38 % 13.94 % 12.71 % 13.94 % Tier 1 leverage ratio(14) 10.11 % 10.52 % 10.39 % 10.82 % 11.32 % 10.11 % 11.32 % Common equity tier 1 capital ratio (CET1)(15) 11.73 % 12.34 % 12.13 % 12.42 % 12.60 % 11.73 % 12.60 % Tangible common equity ratio(16) 9.83 % 10.16 % 9.97 % 10.14 % 10.21 % 9.83 % 10.21 % Asset Quality Indicators (%) Non-performing assets / Total assets(17) 1.13 % 1.08 % 0.95 % 0.41 % 0.41 % 1.13 % 0.41 % Non-performing loans /Total loans(1) (18) 1.50 % 1.46 % 1.32 % 0.59 % 0.57 % 1.50 % 0.57 % Allowance for loan losses / Total non-performing loans(19) 126.46 % 135.09 % 154.87 % 218.49 % 158.60 % 126.46 % 158.60 % Allowance for loan losses / Total loans(1) (19) 1.90 % 1.97 % 2.04 % 1.29 % 0.91 % 1.90 % 0.91 % Net charge-offs/ Average total loans(20) 0.40 % 1.41 % 0.13 % 0.09 % 0.08 % 0.52 % 0.11 % Efficiency Indicators Noninterest expense / Average total assets (10) 2.59 % 2.24 % 1.81 % 2.27 % 2.60 % 2.23 % 2.64 % Salaries and employee benefits / Average total assets (10) 1.62 % 1.39 % 1.06 % 1.48 % 1.81 % 1.39 % 1.73 % Other operating expenses / Average total assets (10)(21) 0.97 % 0.85 % 0.75 % 0.79 % 0.79 % 0.84 % 0.91 % Efficiency ratio(22) 85.81 % 69.32 % 55.60 % 63.07 % 76.94 % 67.95 % 77.47 % Full-Time-Equivalent Employees (FTEs) 713 807 825 825 829 713 829 Three Months Ended, Years Ended December 31, (in thousands, except percentages and per share amounts) December 31, September 30, June 30, March 31, December 31, 2020 2019 Adjusted Selected Consolidated Results of Operations and Other Data (6) Adjusted noninterest income $ 13,244 $ 20,292 $ 19,753 $ 21,910 $ 13,176 $ 75,199 $ 54,315 Adjusted noninterest expense 43,222 43,654 35,422 44,513 51,616 166,811 204,271 Adjusted net income (loss) 11,112 3,163 (14,234 ) 3,662 11,407 3,703 53,138 Operating income 7,505 11,540 21,599 16,652 14,800 57,296 58,276 Adjusted earnings (loss) per common share $ 0.27 $ 0.08 $ (0.34 ) $ 0.09 $ 0.27 $ 0.09 $ 1.25 Adjusted earnings (loss) per diluted common share(7) $ 0.27 $ 0.08 $ (0.34 ) $ 0.09 $ 0.26 $ 0.09 $ 1.24 Adjusted net income (loss) / Average total assets (Adjusted ROA)(10) 0.56 % 0.16 % (0.70 )% 0.19 % 0.57 % 0.05 % 0.67 % Adjusted net income (loss)/ Average stockholders' equity (Adjusted ROE)(11) 5.36 % 1.51 % (6.72 )% 1.74 % 5.45 % 0.44 % 6.66 % Adjusted noninterest expense / Average total assets (10) 2.16 % 2.15 % 1.75 % 2.25 % 2.59 % 2.08 % 2.57 % Adjusted salaries and employee benefits / Average total assets (10) 1.35 % 1.36 % 1.05 % 1.48 % 1.80 % 1.31 % 1.71 % Adjusted other operating expenses / Average total assets(10)(21) 0.94 % 0.79 % 0.70 % 0.77 % 0.79 % 0.80 % 0.86 % Adjusted efficiency ratio(23) 69.83 % 66.51 % 53.61 % 62.57 % 80.10 % 63.01 % 76.39 %
_______$60 million offering of Senior Notes with a coupon rate of 5.75% . Senior Notes are presented net of direct issuance cost which is deferred and amortized over 5 years.$26.8 million of its 8.90% trust preferred securities. The Company simultaneously redeemed the junior subordinated debentures associated with these trust preferred securities.$15.2 million , including $0.3 million in broker fees and other expenses. During the fourth quarter of 2020, the Company completed a modified “Dutch auction” tender offer to purchase, for cash, up to $50.0 million of shares of its Class B common stock, and accepted to purchase 4,249,785 shares of Class B common stock in the tender offer at a price of $12.55 per share. The purchase price for this transaction was approximately $54.1 million , including $0.8 million in related fees and other expenses.$62.3 million at December 31, 2020, September 30, 2020, June 30, 2020 and March 31, 2020, and $89.1 million as of December 31, 2019. See footnote 3 for more information about trust preferred securities redemption transactions in the first quarter of 2020.$88.1 million ,$86.5 million , $77.3 million , $33.4 million and $33.0 million as of December 31, 2020, September 30, 2020, June 30, 2020, March 31, 2020 and December 31, 2019, respectively.$87.7 million , $86.5 million , $77.3 million , $33.4 million and $32.9 million as of December 31, 2020, September 30, 2020, June 30, 2020, March 31, 2020 and December 31, 2019, respectively.$110.9 million , $116.8 million , $119.7 million , $72.9 million and $52.2 million as of December 31, 2020, September 30, 2020, June 30, 2020, March 31, 2020 and December 31, 2019, respectively.$19.3 million against the allowance for loan losses as result of the deterioration of one commercial loan relationship.
Exhibit 2- Non-GAAP Financial Measures Reconciliation
The following table sets forth selected financial information derived from the Company’s interim unaudited and annual audited consolidated financial statements, adjusted for certain costs incurred by the Company in the periods presented related to tax deductible restructuring costs. These adjustments also reflect the after-tax loss of $0.7 million on the sale of the Beacon operations center in the fourth quarter of 2020, the after-tax gain of $2.2 million on the sale of vacant Beacon land in the fourth quarter of 2019, the Company’s increases of its allowance for loan losses in the first, second and third quarters of 2020 and net gains on sales of securities for each of the periods presented. The Company believes these adjusted numbers are useful to understand the Company’s performance absent these transactions and events.
Three Months Ended, Years Ended (in thousands) December 31, September 30, June 30, March 31, December 31, 2020 2019 Total noninterest income $ 11,515 $ 20,292 $ 19,753 $ 21,910 $ 15,971 $ 73,470 $ 57,110 Plus: loss on sale of the Beacon operations center (1) 1,729 — — — — 1,729 — Less: gain on sale of vacant Beacon land — — — — (2,795 ) — (2,795 ) Adjusted noninterest income $ 13,244 $ 20,292 $ 19,753 $ 21,910 $ 13,176 $ 75,199 $ 54,315 Total noninterest expenses $ 51,629 $ 45,500 $ 36,740 $ 44,867 $ 51,730 $ 178,736 $ 209,317 Less: Restructuring costs (2) : Staff reduction costs (3) 5,345 646 360 54 114 6,405 1,471 Branch closure expenses 2,404 — — — — 2,404 — Digital transformation expenses 658 1,200 958 300 — 3,116 — Rebranding costs — — — — — — 3,575 Total restructuring costs $ 8,407 $ 1,846 $ 1,318 $ 354 $ 114 $ 11,925 $ 5,046 Adjusted noninterest expenses $ 43,222 $ 43,654 $ 35,422 $ 44,513 $ 51,616 $ 166,811 $ 204,271 Net income (loss) $ 8,473 $ 1,702 $ (15,279 ) $ 3,382 $ 13,475 $ (1,722 ) $ 51,334 Plus after-tax restructuring costs: Restructuring costs before income tax effect 8,407 1,846 1,318 354 114 11,925 5,046 Income tax effect (6,455 ) (385 ) (273 ) (74 ) 59 (7,187 ) (1,001 ) Total after-tax restructuring costs 1,952 1,461 1,045 280 173 4,738 4,045 Less after-tax loss on sale of the Beacon operations center: Loss on sale of the Beacon operations center before income tax effect 1,729 — — — — 1,729 — Income tax effect (1,042 ) — — — — (1,042 ) — Total after-tax loss on sale of Beacon operations center 687 — — — — 687 — Less after-tax gain on sale of vacant Beacon land: Gain on sale of vacant Beacon land before income tax effect — — — — (2,795 ) — (2,795 ) Income tax effect — — — — 554 — 554 Total after-tax gain on sale of vacant Beacon land — — — — (2,241 ) — (2,241 ) Adjusted net income (loss) $ 11,112 $ 3,163 $ (14,234 ) $ 3,662 $ 11,407 $ 3,703 $ 53,138
Three Months Ended, Years Ended (in thousands, except percentages and per share amounts) December 31, September 30, June 30, March 31, December 31, 2020 2019 Net Income (loss) 8,473 1,702 (15,279 ) 3,382 13,475 (1,722 ) 51,334 Plus: provision for income tax expense (benefit) 65 438 (4,005 ) 890 2,328 (2,612 ) 12,697 Plus: provision for (reversal of) loan losses — 18,000 48,620 22,000 (300 ) 88,620 (3,150 ) Less: securities gains, net 1,033 8,600 7,737 9,620 703 26,990 2,605 Operating income $ 7,505 $ 11,540 $ 21,599 $ 16,652 $ 14,800 $ 57,296 $ 58,276 Basic earnings (loss) per share $ 0.21 $ 0.04 $ (0.37 ) $ 0.08 $ 0.32 $ (0.04 ) $ 1.21 Plus: after tax impact of restructuring costs 0.04 0.04 0.03 0.01 — 0.11 0.09 Plus: after tax loss on sale of the Beacon operations center 0.02 — — — — 0.02 — Less: after tax gain on sale of vacant Beacon land — — — — (0.05 ) — (0.05 ) Total adjusted basic earnings (loss) per common share $ 0.27 $ 0.08 $ (0.34 ) $ 0.09 $ 0.27 $ 0.09 $ 1.25 Diluted earnings (loss) per share (4) $ 0.20 $ 0.04 $ (0.37 ) $ 0.08 $ 0.31 $ (0.04 ) $ 1.20 Plus: after tax impact of restructuring costs 0.05 0.04 0.03 0.01 — 0.11 0.09 Plus: after tax loss on sale of the Beacon operations center 0.02 — — — — 0.02 — Less: after tax gain on sale of vacant Beacon land — — — — (0.05 ) — (0.05 ) Total adjusted diluted earnings (loss) per common share $ 0.27 $ 0.08 $ (0.34 ) $ 0.09 $ 0.26 $ 0.09 $ 1.24 Net income (loss) / Average total assets (ROA) 0.42 % 0.08 % (0.75 )% 0.17 % 0.68 % (0.02 )% 0.65 % Plus: after tax impact of restructuring costs 0.11 % 0.08 % 0.05 % 0.02 % 0.01 % 0.06 % 0.05 % Plus: after tax loss on sale of the Beacon operations center 0.03 % — % — % — % — % 0.01 % — % Less: after tax gain on sale of vacant Beacon land — % — % — % — % (0.12 )% — % (0.03 )% Adjusted net income (loss) / Average total assets (Adjusted ROA) 0.56 % 0.16 % (0.70 )% 0.19 % 0.57 % 0.05 % 0.67 % Net income (loss)/ Average stockholders' equity (ROE) 4.09 % 0.81 % (7.21 )% 1.61 % 6.44 % (0.21 )% 6.43 % Plus: after tax impact of restructuring costs 0.94 % 0.70 % 0.49 % 0.13 % 0.08 % 0.57 % 0.51 % Plus: after tax loss on sale of the Beacon operations center 0.33 % — % — % — % — % 0.08 % — % Less: after tax gain on sale of vacant Beacon land — % — % — % — % (1.07 )% — % (0.28 )% Adjusted net income (loss) / Average stockholders' equity (Adjusted ROE) 5.36 % 1.51 % (6.72 )% 1.74 % 5.45 % 0.44 % 6.66 % Efficiency ratio 85.81 % 69.32 % 55.60 % 63.07 % 76.94 % 67.95 % 77.47 % Less: impact of restructuring costs (13.97 )% (2.81 )% (1.99 )% (0.50 )% (0.17 )% (4.51 )% (1.89 )% Less: loss on sale of the Beacon operations center (2.01 )% — % — % — % — % (0.43 )% — % Plus: gain on sale of vacant Beacon land — % — % — % — % 3.33 % — % 0.81 % Adjusted efficiency ratio 69.83 % 66.51 % 53.61 % 62.57 % 80.10 % 63.01 % 76.39 % Noninterest expense / Average total assets 2.59 % 2.24 % 1.81 % 2.27 % 2.60 % 2.23 % 2.64 % Less: impact of restructuring costs (0.43 )% (0.09 )% (0.06 )% (0.02 )% (0.01 )% (0.15 )% (0.07 )% Adjusted noninterest expense / Average total assets 2.16 % 2.15 % 1.75 % 2.25 % 2.59 % 2.08 % 2.57 % Salaries and employee benefits / Average total assets 1.62 % 1.39 % 1.06 % 1.48 % 1.81 % 1.39 % 1.73 % Less: impact of restructuring costs (0.27 )% (0.03 )% (0.01 )% — % (0.01 )% (0.08 )% (0.02 )% Adjusted salaries and employee benefits / Average total assets 1.35 % 1.36 % 1.05 % 1.48 % 1.80 % 1.31 % 1.71 % Other operating expenses / Average total assets 0.97 % 0.85 % 0.75 % 0.79 % 0.79 % 0.84 % 0.91 % Less: impact of restructuring costs (0.03 )% (0.06 )% (0.05 )% (0.02 )% — % (0.04 )% (0.05 )% Adjusted other operating expenses / Average total assets 0.94 % 0.79 % 0.70 % 0.77 % 0.79 % 0.80 % 0.86 % Stockholders' equity $ 783,421 $ 829,533 $ 830,198 $ 841,117 $ 834,701 $ 783,421 $ 834,701 Less: goodwill and other intangibles (21,561 ) (21,607 ) (21,653 ) (21,698 ) (21,744 ) (21,561 ) (21,744 ) Tangible common stockholders' equity $ 761,860 $ 807,926 $ 808,545 $ 819,419 $ 812,957 $ 761,860 $ 812,957 Total assets $ 7,770,893 $ 7,977,047 $ 8,130,723 $ 8,098,810 $ 7,985,399 $ 7,770,893 $ 7,985,399 Less: goodwill and other intangibles (21,561 ) (21,607 ) (21,653 ) (21,698 ) (21,744 ) (21,561 ) (21,744 ) Tangible assets $ 7,749,332 $ 7,955,440 $ 8,109,070 $ 8,077,112 $ 7,963,655 $ 7,749,332 $ 7,963,655 Common shares outstanding 37,843 42,147 42,159 42,166 43,146 37,843 43,146 Tangible common equity ratio 9.83 % 10.16 % 9.97 % 10.14 % 10.21 % 9.83 % 10.21 % Stockholders' book value per common share $ 20.70 $ 19.68 $ 19.69 $ 19.95 $ 19.35 $ 20.70 $ 19.35 Tangible stockholders' book value per common share $ 20.13 $ 19.17 $ 19.18 $ 19.43 $ 18.84 $ 20.13 $ 18.84
__________________$3.5 million and $1.8 million in one-time termination costs in the fourth quarter of 2020 in connection with the voluntary and involuntary plans, respectively, the majority of which will be paid over time in the form of installment payments until December 2021. The Company estimates that the voluntary and involuntary plans will yield estimated annual savings of approximately $4.2 million and $5.5 million , respectively, for combined estimated annual savings of approximately $9.7 million beginning in 2021.
Exhibit 3 - 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 periods presented. The average balances for loans include both performing and nonperforming balances. Interest income on loans includes the effects of discount accretion and the amortization of net deferred loan origination costs accounted for as yield adjustments. Average balances represent the daily average balances for the periods presented.
Three Months Ended December 31, 2020 September 30, 2020 December 31, 2019 (in thousands, except percentages) Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/ Balances Expense Rates Balances Expense Rates Balances Expense Rates Interest-earning assets: Loan portfolio, net(1) $ 5,809,246 $ 54,891 3.76 % $ 5,768,471 $ 52,736 3.64 % $ 5,627,641 $ 63,370 4.47 % Securities available for sale(2) 1,274,493 7,126 2.22 % 1,409,768 8,096 2.28 % 1,528,916 9,814 2.55 % Securities held to maturity(3) 60,084 311 2.06 % 63,844 324 2.02 % 75,989 419 2.19 % Equity securities with readily determinable fair value not held for trading 24,354 96 1.57 % 24,447 103 1.68 % 23,912 141 2.34 % Federal Reserve Bank and FHLB stock 65,426 677 4.12 % 64,998 597 3.65 % 71,902 1,044 5.76 % Deposits with banks 195,347 54 0.11 % 225,320 61 0.11 % 105,060 449 1.70 % Total interest-earning assets 7,428,950 $ 63,155 3.38 % 7,556,848 $ 61,917 3.26 % 7,433,420 $ 75,237 4.02 % Total non-interest-earning assets less allowance for loan losses 516,346 526,065 472,556 Total assets $ 7,945,296 $ 8,082,913 $ 7,905,976 Interest-bearing liabilities: Checking and saving accounts: Interest bearing demand $ 1,218,536 $ 103 0.03 % $ 1,193,920 $ 97 0.03 % $ 1,098,532 $ 159 0.06 % Money market 1,257,239 1,001 0.32 % 1,154,795 1,190 0.41 % 1,147,539 3,802 1.31 % Savings 322,077 14 0.02 % 321,657 88 0.11 % 337,338 16 0.02 % Total checking and saving accounts 2,797,852 1,118 0.16 % 2,670,372 1,375 0.20 % 2,583,409 3,977 0.61 % Time deposits 2,131,085 9,001 1.68 % 2,367,534 10,874 1.83 % 2,317,052 13,180 2.26 % Total deposits 4,928,937 10,119 0.82 % 5,037,906 12,249 0.97 % 4,900,461 17,157 1.39 % Securities sold under agreements to repurchase 533 1 0.75 % — — — % 497 2 1.60 % Advances from the FHLB and other borrowings(4) 1,060,217 2,826 1.06 % 1,050,000 2,820 1.07 % 1,214,728 5,575 1.82 % Senior notes 58,539 942 6.40 % 58,460 942 6.41 % — — — % Junior subordinated debentures 64,178 615 3.81 % 64,178 558 3.46 % 92,246 1,241 5.34 % Total interest-bearing liabilities 6,112,404 14,503 0.94 % 6,210,544 16,569 1.06 % 6,207,932 23,975 1.53 % Non-interest-bearing liabilities: Non-interest bearing demand deposits 902,799 936,349 788,666 Accounts payable, accrued liabilities and other liabilities 105,160 102,864 79,804 Total non-interest-bearing liabilities 1,007,959 1,039,213 868,470 Total liabilities 7,120,363 7,249,757 7,076,402 Stockholders' equity 824,933 833,156 829,574 Total liabilities and stockholders' equity $ 7,945,296 $ 8,082,913 $ 7,905,976 Excess of average interest-earning assets over average interest-bearing liabilities $ 1,316,546 $ 1,346,304 $ 1,225,488 Net interest income $ 48,652 $ 45,348 $ 51,262 Net interest rate spread 2.44 % 2.20 % 2.49 % Net interest margin(5) 2.61 % 2.39 % 2.74 % Ratio of average interest-earning assets to average interest-bearing liabilities 121.54 % 121.68 % 119.74 %
Years Ended December 31, 2020 2019 (in thousands, except percentages) Average Balances Income/ Expense Yield/ Rates Average Balances Income/ Expense Yield/ Rates Interest-earning assets: Loan portfolio, net(1) $ 5,716,371 $ 220,898 3.86 % $ 5,658,196 $ 263,011 4.65 % Securities available for sale(2) 1,444,213 34,001 2.35 % 1,508,203 40,420 2.68 % Securities held to maturity(3) 66,136 1,343 2.03 % 80,761 1,946 2.41 % Equity securities with readily determinable fair value not held for trading 24,290 452 1.86 % 23,611 558 2.36 % Federal Reserve Bank and FHLB stock 67,840 3,227 4.76 % 68,525 4,286 6.25 % Deposits with banks 202,026 633 0.31 % 125,671 2,753 2.19 % Total interest-earning assets 7,520,876 $ 260,554 3.46 % 7,464,967 $ 312,974 4.19 % Total non-interest-earning assets less allowance for loan losses 510,673 473,412 Total assets $ 8,031,549 $ 7,938,379 Interest-bearing liabilities: Checking and saving accounts: Interest bearing demand $ 1,154,166 $ 439 0.04 % $ 1,177,031 $ 925 0.08 % Money market 1,165,447 7,070 0.61 % 1,150,459 15,625 1.36 % Savings 321,766 58 0.02 % 361,069 65 0.02 % Total checking and saving accounts 2,641,379 7,567 0.29 % 2,688,559 16,615 0.62 % Time deposits 2,360,367 45,765 1.94 % 2,344,587 51,757 2.21 % Total deposits 5,001,746 53,332 1.07 % 5,033,146 68,372 1.36 % Securities sold under agreements to repurchase 252 1 0.40 % 220 5 2.27 % Advances from the FHLB and other borrowings(4) 1,116,899 13,168 1.18 % 1,134,551 24,325 2.14 % Senior notes 30,686 1,968 6.41 % — — — % Junior subordinated debentures 66,402 2,533 3.81 % 108,765 7,184 6.61 % Total interest-bearing liabilities 6,215,985 71,002 1.14 % 6,276,682 99,886 1.59 % Non-interest-bearing liabilities: Non-interest bearing demand deposits 876,393 791,239 Accounts payable, accrued liabilities and other liabilities 100,932 72,558 Total non-interest-bearing liabilities 977,325 863,797 Total liabilities 7,193,310 7,140,479 Stockholders' equity 838,239 797,900 Total liabilities and stockholders' equity $ 8,031,549 $ 7,938,379 Excess of average interest-earning assets over average interest-bearing liabilities $ 1,304,891 $ 1,188,285 Net interest income $ 189,552 $ 213,088 Net interest rate spread 2.32 % 2.60 % Net interest margin(5) 2.52 % 2.85 % Ratio of average interest-earning assets to average interest-bearing liabilities 120.99 % 118.93 %
____________$91.7 million , $84.4 million and $33.0 million for the three months ended December 31, 2020, September 30, 2020 and December 31, 2019, respectively, and $64.8 million and $27.4 million for the years ended December 31, 2020 and 2019, respectively, are included in the average loan portfolio, net. Interest income that would have been recognized on these non-performing loans totaled $0.7 million , $1.0 million and $0.3 million , in the three months ended December 31, 2020, September 30, 2020 and December 31, 2019, respectively, and $2.7 million and $1.4 million in the years ended December 31, 2020 and 2019, respectively.$75.8 million , $82.9 million and $65.3 million for the three months ended December 31, 2020, September 30, 2020 and December 31, 2019, respectively, and $72.2 million and $121.0 million for the years ended December 31, 2020 and 2019, respectively. The tax equivalent yield for these nontaxable securities was 0.37% , 3.14% and 3.65% for the three months ended December 31, 2020, September 30, 2020 and December 31, 2019, respectively, and 2.94% and 3.60% for the years ended December 31, 2020 and 2019, respectively. In 2020 and 2019, the tax equivalent yields were calculated by assuming a 21% tax rate and dividing the actual yield by 0.79.$60.1 million , $63.8 million and $76 million for the three months ended December 31, 2020, September 30, 2020 and December 31, 2019, respectively, and $66.1 million and $80.8 million for the years ended December 31, 2020 and 2019, respectively. The tax equivalent yield for these nontaxable securities was 2.61% , 2.55% and 2.77% for the three months ended December 31, 2020, September 30, 2020 and December 31, 2019, respectively, and 2.57% and 3.05% for the years ended December 31, 2020 and 2019, respectively. In 2020 and 2019, the tax equivalent yields were calculated assuming a 21% tax rate and dividing the actual yield by 0.79.
Exhibit 4 - Noninterest Income
This table shows the amounts of each of the categories of noninterest income for the periods presented.
Three Months Ended Years Ended December 31, December 31, September 30, December 31, 2020 2019 (in thousands, except percentages) Amount % Amount % Amount % Amount % Amount % Deposits and service fees $ 4,173 36.2 % $ 3,937 19.4 % $ 4,274 26.8 % $ 15,838 21.6 % $ 17,067 29.9 % Brokerage, advisory and fiduciary activities 4,219 36.6 % 4,272 21.1 % 3,865 24.2 % 16,949 23.1 % 14,936 26.2 % Change in cash surrender value of bank owned life insurance (“BOLI”)(1) 1,417 12.3 % 1,437 7.1 % 1,438 9.0 % 5,695 7.8 % 5,710 10.0 % Cards and trade finance servicing fees 333 2.9 % 345 1.7 % 557 3.5 % 1,346 1.8 % 3,925 6.9 % (Loss) gain on early extinguishment of FHLB advances, net — — % — — % (1,443 ) (9.0 )% (73 ) (0.1 )% (886 ) (1.6 )% Data processing and fees for other services — — % — — % — — % — — % 955 1.7 % Securities gains (losses), net (2) 1,033 9.0 % 8,600 42.4 % 703 4.4 % 26,990 36.7 % 2,605 4.6 % Other noninterest income (3) 340 3.0 % 1,701 8.3 % 6,577 41.1 % 6,725 9.1 % 12,798 22.3 % Total noninterest income $ 11,515 100.0 % $ 20,292 100.0 % $ 15,971 100.0 % $ 73,470 100.0 % $ 57,110 100.0 %
__________________$1.1 million and $8.6 million during the three months ended December 31, 2020 and September 30, 2020, respectively, and $26.5 million and $1.9 million in the years ended December 31, 2020 and 2019, respectively, and unrealized losses of $0.1 million and $44 thousand and unrealized gains of $0.7 million , in three months ended December 31, 2020, September 30, 2020 and December 31, 2019, respectively, and unrealized gains of $0.5 million and $0.7 million in the years ended December 31, 2020 and 2019, respectively, related to the change in market value of mutual funds.$1.7 million on the sale of the Beacon operations center in the fourth quarter 2020, a gain of $2.8 million on the sale of vacant Beacon land in the fourth quarter of 2019, rental income, income from derivative and foreign currency exchange transactions with customers, and valuation income on the investment balances held in the non-qualified deferred compensation plan.
Exhibit 5 - Noninterest Expense
This table shows the amounts of each of the categories of noninterest expense for the periods presented.
Three Months Ended Years Ended December 31, December 31, September 30, December 31, 2020 2019 (in thousands, except percentages) Amount % Amount % Amount % Amount % Amount % Salaries and employee benefits (1) $ 32,305 62.6 % $ 28,268 62.1 % $ 36,024 69.6 % $ 111,469 62.4 % $ 137,380 65.6 % Occupancy and equipment (2) 5,320 10.3 % 4,281 9.4 % 4,042 7.8 % 17,624 9.9 % 16,194 7.7 % Professional and other services fees(3) 3,137 6.1 % 3,403 7.5 % 4,430 8.6 % 13,459 7.5 % 16,123 7.7 % Telecommunications and data processing 3,082 6.0 % 3,228 7.1 % 3,396 6.6 % 12,931 7.2 % 13,063 6.2 % Depreciation and amortization(4) 3,473 6.7 % 1,993 4.4 % 1,214 2.3 % 9,385 5.3 % 7,094 3.4 % FDIC assessments and insurance 1,885 3.7 % 1,898 4.2 % 876 1.7 % 6,141 3.4 % 4,043 1.9 % Other operating expenses(5) 2,427 4.6 % 2,429 5.3 % 1,748 3.4 % 7,727 4.3 % 15,420 7.5 % Total noninterest expenses $ 51,629 100.0 % $ 45,500 100.0 % $ 51,730 100.0 % $ 178,736 100.0 % $ 209,317 100.0 %
___________$5.3 million and $6.4 million in staff reduction costs in the fourth quarter of 2020 and full-year 2020, respectively, mainly related to the voluntary and involuntary plans approved in October 2020.$1.1 million for the remaining lease obligation in connection with the closure of two of our branches in the fourth quarter of 2020 and full-year 2020, respectively.$1.3 million for the accelerated amortization of leasehold improvements in connection with the closure of one our branches in the fourth quarter of 2020 and full-year 2020.
Exhibit 6 - Consolidated Balance Sheets
(in thousands, except share data) December 31, September 30, June 30, March 31, December 31, Assets Cash and due from banks $ 30,179 $ 34,091 $ 35,651 $ 22,303 $ 28,035 Interest earning deposits with banks 184,207 193,069 181,698 248,750 93,289 Cash and cash equivalents 214,386 227,160 217,349 271,053 121,324 Securities Debt securities available for sale 1,225,083 1,317,724 1,519,784 1,601,303 1,568,752 Debt securities held to maturity 58,127 61,676 65,616 70,336 73,876 Equity securities with readily determinable fair value not held for trading 24,342 24,381 24,425 24,225 23,848 Federal Reserve Bank and Federal Home Loan Bank stock 65,015 65,015 64,986 74,123 72,934 Securities 1,372,567 1,468,796 1,674,811 1,769,987 1,739,410 Loans held for sale — — — — — Loans held for investment, gross 5,842,337 5,924,617 5,872,271 5,668,327 5,744,339 Less: Allowance for loan losses 110,902 116,819 119,652 72,948 52,223 Loans held for investment, net 5,731,435 5,807,798 5,752,619 5,595,379 5,692,116 Bank owned life insurance 217,547 216,130 214,693 213,266 211,852 Premises and equipment, net 109,990 126,895 128,327 128,232 128,824 Deferred tax assets, net 11,691 16,206 15,647 4,933 5,480 Goodwill 19,506 19,506 19,506 19,506 19,506 Accrued interest receivable and other assets 93,771 94,556 107,771 96,454 66,887 Total assets $ 7,770,893 $ 7,977,047 $ 8,130,723 $ 8,098,810 $ 7,985,399 Liabilities and Stockholders' Equity Deposits Demand Noninterest bearing $ 872,151 $ 916,889 $ 956,351 $ 779,842 $ 763,224 Interest bearing 1,230,054 1,210,639 1,186,613 1,088,033 1,098,323 Savings and money market 1,587,876 1,496,119 1,447,661 1,432,891 1,475,257 Time 2,041,562 2,253,899 2,434,077 2,541,446 2,420,339 Total deposits 5,731,643 5,877,546 6,024,702 5,842,212 5,757,143 Advances from the Federal Home Loan Bank and other borrowings 1,050,000 1,050,000 1,050,000 1,265,000 1,235,000 Senior notes 58,577 58,498 58,419 — — Junior subordinated debentures held by trust subsidiaries 64,178 64,178 64,178 64,178 92,246 Accounts payable, accrued liabilities and other liabilities 83,074 97,292 103,226 86,303 66,309 Total liabilities 6,987,472 7,147,514 7,300,525 7,257,693 7,150,698 Stockholders’ equity Class A common stock 2,882 2,886 2,887 2,888 2,893 Class B common stock 904 1,329 1,329 1,329 1,775 Additional paid in capital 305,569 359,553 359,028 358,277 419,048 Treasury stock — — — — (46,373 ) Retained earnings 442,402 433,929 432,227 447,506 444,124 Accumulated other comprehensive income 31,664 31,836 34,727 31,117 13,234 Total stockholders' equity 783,421 829,533 830,198 841,117 834,701 Total liabilities and stockholders' equity $ 7,770,893 $ 7,977,047 $ 8,130,723 $ 8,098,810 $ 7,985,399
Exhibit 7 - Loans
Loans by Type
The loan portfolio consists of the following loan classes:
(in thousands) December 31, September 30, 2020 June 30, 2020 March 31, 2020 December 31, 2019 Real estate loans Commercial real estate (“CRE”) Nonowner occupied $ 1,749,839 $ 1,797,230 $ 1,841,075 $ 1,875,293 $ 1,891,802 Multi-family residential 737,696 853,159 823,450 834,016 801,626 Land development and construction loans 349,800 335,184 284,766 225,179 278,688 2,837,335 2,985,573 2,949,291 2,934,488 2,972,116 Single-family residential 639,569 597,280 589,713 569,340 539,102 Owner occupied 947,127 937,946 938,511 923,260 894,060 4,424,031 4,520,799 4,477,515 4,427,088 4,405,278 Commercial loans 1,154,550 1,197,156 1,247,455 1,084,751 1,234,043 Loans to financial institutions and acceptances 16,636 16,623 16,597 16,576 16,552 Consumer loans and overdrafts 247,120 190,039 130,704 139,912 88,466 Total loans $ 5,842,337 $ 5,924,617 $ 5,872,271 $ 5,668,327 $ 5,744,339
Non-Performing Assets
This table shows a summary of our non-performing assets by loan class, which includes non-performing loans and other real estate owned, or OREO, at the dates presented. Non-performing loans consist of (i) nonaccrual loans; (ii) accruing loans 90 days or more contractually past due as to interest or principal; and (iii) restructured loans that are considered TDRs.
(in thousands) December 31, September 30, 2020 June 30, 2020 March 31, 2020 December 31, 2019 Non-Accrual Loans (1) Real Estate Loans Commercial real estate (CRE) Nonowner occupied $ 8,219 $ 8,289 $ 8,426 $ 1,936 $ 1,936 Multi-family residential 11,340 1,484 — — — 19,559 9,773 8,426 1,936 1,936 Single-family residential 10,667 11,071 7,975 7,077 7,291 Owner occupied 12,815 14,539 11,828 13,897 14,130 43,041 35,383 28,229 22,910 23,357 Commercial loans (2) 44,205 50,991 48,961 9,993 9,149 Consumer loans and overdrafts 233 104 70 467 416 Total-Non-Accrual Loans $ 87,479 $ 86,478 $ 77,260 $ 33,370 $ 32,922 Past Due Accruing Loans (3) Real Estate Loans Single-family residential $ — $ 1 $ — $ 5 $ — Owner occupied 220 — — — — Consumer loans and overdrafts 1 1 — 12 5 Total Past Due Accruing Loans 221 2 — 17 5 Total Non-Performing Loans 87,700 86,480 77,260 33,387 32,927 Other Real Estate Owned 427 42 42 42 42 Total Non-Performing Assets $ 88,127 $ 86,522 $ 77,302 $ 33,429 $ 32,969
__________________$8.4 million $9.0 million , $9.3 million , $9.7 million and $9.8 million , respectively, in a multiple loan relationship to a South Florida borrower.$19.6 million , $19.6 million and $39.8 million , respectively, in a commercial relationship placed in nonaccrual status during the second quarter of 2020. During the third quarter of 2020, the Company charged off $19.3 million against the allowance for loan losses as result of the deterioration of this commercial relationship.
Loans by Credit Quality Indicators
This tables shows the Company’s loans by credit quality indicators. We have no purchased credit-impaired loans.
December 31, 2020 September 30, 2020 December 31, 2019 (in thousands) Special Mention Substandard Doubtful Total (1) Special Mention Substandard Doubtful Total (1) Special Mention Substandard Doubtful Total (1) Real estate loans Commercial real estate (CRE) Nonowner occupied $ 16,991 $ 7,234 $ 1,729 $ 25,954 $ 16,780 $ 7,236 $ 1,798 $ 25,814 $ 9,324 $ 762 $ 1,936 $ 12,022 Multi-family residential — 11,340 — 11,340 — 1,484 — 1,484 — — — — Land development and construction loans 7,164 — — 7,164 7,201 — — 7,201 9,955 — — 9,955 24,155 18,574 1,729 44,458 23,981 8,720 1,798 34,499 19,279 762 1,936 21,977 Single-family residential — 10,667 — 10,667 — 11,072 — 11,072 — 7,291 — 7,291 Owner occupied 22,343 12,917 — 35,260 34,556 14,643 — 49,199 8,138 14,240 — 22,378 46,498 42,158 1,729 90,385 58,537 34,435 1,798 94,770 27,417 22,293 1,936 51,646 Commercial loans(2) 42,434 36,156 8,252 86,842 27,111 37,338 13,856 78,305 5,569 8,406 2,669 16,644 Consumer loans and overdrafts — 238 — 238 — 111 — 111 — 67 357 424 $ 88,932 $ 78,552 $ 9,981 $ 177,465 $ 85,648 $ 71,884 $ 15,654 $ 173,186 $ 32,986 $ 30,766 $ 4,962 $ 68,714
__________$19.6 million in a commercial relationship placed in nonaccrual status and downgraded during the second quarter of 2020. As of December 31, 2020 and September 30, 2020, Substandard loans include $13.1 million and doubtful loans include $6.5 million , related to this commercial relationship. During the third quarter of 2020, the Company charged off $19.3 million against the allowance for loan losses as result of the deterioration of this commercial relationship.
Exhibit 8 - Deposits by Country of Domicile
This tables shows the Company’s deposits by country of domicile of the depositor as of the dates presented.
(in thousands) December 31, 2020 September 30, 2020 June 30, 2020 March 31, 2020 December 31, 2019 Domestic $ 3,202,936 $ 3,310,343 $ 3,432,971 $ 3,253,972 $ 3,121,827 Foreign: Venezuela 2,119,412 2,169,621 2,202,340 2,224,353 2,270,970 Others 409,295 397,582 389,391 363,887 364,346 Total foreign 2,528,707 2,567,203 2,591,731 2,588,240 2,635,316 Total deposits $ 5,731,643 $ 5,877,546 $ 6,024,702 $ 5,842,212 $ 5,757,143
