Amerant Bancorp Q3 2026 Earnings Call Transcript

Amerant Bancorp (NYSE:AMTB) reported third-quarter financial results on Friday. The transcript from the company’s third-quarter earnings call has been provided below.

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Summary

Amerant Bancorp reported a net income increase to $25.7 million, diluted earnings per share of $0.65 and a return on assets of 1%, driven by stronger net interest income and margin expansion.

The company is progressing on four strategic initiatives: enhancing credit quality, improving operational efficiency, boosting client profitability and growing the bank’s loan and deposit base.

Amerant Bancorp’s assets under management increased significantly by $77.9 million, reflecting growth in the wealth management business as a source of fee income.

The net interest margin improved to 3.77%, driven by higher interest income on loans and investment securities and a decrease in interest expenses.

Total assets slightly decreased to $10.2 billion due to lower interest-bearing deposits, while total loans grew to $7.1 billion, primarily in single-family residential and commercial loans.

The company completed a $50 million offering of 7% senior notes, enhancing liquidity and securing attractive long-term funding.

Non-performing loans and criticized exposures decreased, indicating progress in credit quality improvement efforts.

Amerant Bancorp authorized a share repurchase program of up to $50 million through December 31, 2027, reflecting a strong capital position and commitment to returning shareholder value.

Guidance for the fourth quarter includes expectations for loans to reach $7.3 billion and deposits to reach $8.5 billion, with a net interest margin between 3.65% and 3.70%.

Full Transcript

OPERATOR

Greetings and welcome to the Amerant third quarter 2026 earnings conference call. At this time, all participants are in listen-only mode. A question-and-answer session will follow the formal presentation. You may be placed into the question queue at any time by pressing star one on your telephone keypad. As a reminder, this conference is being recorded. If anyone should require operator assistance, please press star zero. It’s now my pleasure to turn the call over to Laura Rossi, Executive Vice President, Head of Investor Relations.

Laura, please go ahead.

Laura Rossi

Thank you, operator. Good morning, everyone, and thank you for joining us to review Amerant Bancorp’s third quarter 2026 results. On today’s call are Carlos Yafiliola, our President and CEO, and Sharymar Calderón, our Chief Financial Officer. As we begin, please note that discussions on today’s call contain forward-looking statements within the meaning of the Securities Exchange Act. In addition, we will also refer to non-GAAP financial measures. Please refer to the Company’s earnings release for a statement regarding forward-looking statements as well as for information and reconciliation of non-GAAP financial measures to GAAP measures.

I will now turn it over to our CEO, Carlos Yafiliola.

Carlos Yafiliola

Thank you, Laura. Good morning, everyone, and thank you for joining us today to discuss Amerant third quarter 2026 results. This quarter represents another step forward in building a more profitable and resilient franchise. Our net income increased to 25.7 million, or 65 cents per diluted share, and our return on assets reached 1%. That progress reflects stronger net interest income and margin expansion, disciplined expense management, continued balance sheet optimization, and improving credit quality.

Just as importantly, we continue advancing the strategic priorities that are moving Amerant from stabilization towards sustainable growth. Following our annual Board strategy session, our direction remains clear: deliver on our financial and credit quality commitments, continue simplifying our operating model, focus investment toward the market and capabilities where Amerant has a distinct competitive advantage, and deploy capital and resources toward the most attractive opportunities.

In that context, I would like to update you on the evolution of our four strategic initiatives during the quarter. First, Transform Credit. This initiative is about strengthening credit selection, portfolio monitoring, and the credit operating model to enable profitable growth with greater consistency and predictability and within established risk appetite. During the third quarter, the work completed earlier in the year began to show more clearly in our results.

Non-performing loans continued to decline and classified balances also moved lower. We continue actively resolving criticized exposures while advancing workflow enhancements and automation of the credit approval process to improve data integrity, accountability, and consistency. Aligning lending stakeholders. With the credit foundation strengthened, our focus is increasingly on pairing disciplined underwriting with growth in more granular and higher-quality relationships.

Second, Operational Efficiency. This initiative is about simplifying how we operate, optimizing structural cost, increasing capacity, and creating a more scalable platform that can deliver consistent service and stronger returns. We continue disciplined expense management while improving our earnings generation path. This resulted in a significant improvement in the efficiency ratio, narrowing the gap to the 60% we have been targeting. We are now moving from identifying opportunities to making clear decisions across the organization.

This includes reviewing team structures, client coverage, and productivity of our channels while advancing in digitization and deploying practical AI use cases. Third, Client Profitability. This initiative is about managing the full relationship return, not simply individual products, and directing our people and capital toward the clients and businesses where we can create the greatest value. During the quarter, we continue strengthening referral discipline and coordination across commercial banking, private banking, treasury management, and wealth management. Following the strategy session, we are taking this work further by assessing relationships based on profitability, aligning service models and pricing within client needs, and identifying targeted opportunities to cross-sell single-product relationships.

Fourth, Grow the Bank. This initiative is about growing loans, deposits, assets under management, and fee income in the markets and businesses where Amerant has differentiated capabilities while remaining aligned with our risk appetite and return objectives. We are focused on building scale in priority verticals and client segments including more granular C&I, residential lending, practice finance, logistics and wholesale, asset-based and supply chain finance, and selected CRE opportunities with experienced sponsors.

We will also continue to use our syndication capacity to manage larger new and existing exposures. Our international business remains a distinctive source of low-cost funding and an important platform for relationship growth. We remain focused on deepening wallet share across international clients through wealth, treasury management, and specialized personal and commercial lending solutions. As we continue to optimize our deposit mix by reducing higher-cost deposits and selectively exiting non-profitable single-product relationships, the overall quality and economics of our deposit franchise will continue to strengthen.

With this in mind, we have migrated certain low-cost interest-bearing balances to DDAs, which improve our ratio of noninterest-bearing deposits to total deposits without any impact to the retention of these accounts in our domestic markets. We are prioritizing Florida, where our brand, market position, and client relationships give us a clear right to win, and refining our branch and coverage model to support profitable growth. Taken together, these initiatives are producing measurable progress. Return on assets reached our target 1%, return on equity improved, net interest margin expanded, and capital remained strong. These results are creating a new baseline for our company and reinforce our confidence that Amerant is moving in the right direction. Our strong capital position also provides us with the flexibility to continue returning value to shareholders. Accordingly, on October 21, our Board authorized a share repurchase program for up to 50 million through December 31, 2027.

Our priorities remain the same: disciplined loan growth, continued credit improvement, greater operating efficiency, deeper and more profitable client relationships, and thoughtful capital allocation. We have more work ahead, but we enter the final quarter of the year with a stronger foundation, clear choices, and growing momentum. With that strategic context, I will turn it to Shari to walk through the quarter’s financial results in more detail.

Sharymar Calder3n, CPA

Thank you, Carlos, and good morning, everyone. Let’s turn to Slide 4, where you will see our balance sheet highlights. Total assets were $10.2 billion as of the end of the third quarter, a decrease from $10.3 billion as of the end of the second quarter. The decrease was primarily driven by lower interest-bearing deposits. Cash and cash equivalents were $361.5 million, up by $60.3 million compared to $301.1 million in the second quarter, reflecting higher liquidity balances during the quarter.

Total investment securities were $2.2 billion, down by $382.8 million compared to $2.6 billion in the previous quarter. This was primarily driven by lower debt securities available for sale. Total gross loans were $7.1 billion, up by $207.8 million compared to $6.9 billion in the second quarter. Growth was driven primarily by increases in single-family residential and commercial loans. These were partially offset by decreases in CRE loans to non-depository financial institutions as well as owner-occupied loans.

Additionally, elevated payoffs partially offset loan production, including several repayments that also contributed to improved asset quality. On the deposit side, total deposits were $8.2 billion, down by $109.6 million compared to $8.4 billion in the second quarter, primarily driven by decreases in interest-bearing demand deposits as well as savings and money market deposits. These were partially offset by increases in noninterest-bearing demand deposits and time deposits.

Also relevant for this quarter, on September 17, 2026, the company completed a registered offering of $50 million of 7% senior notes due in 2031. The offering added attractive long-term funding in a rising rate environment while also enhancing liquidity at the holding company. We are pleased to report that our assets under management increased $77.9 million to $3.45 billion in the third quarter, driven primarily by net new assets of $76.5 million.

This is a strong result that reflects the growing momentum in our wealth management business, which we continue to view as an increasingly important source of fee income. During the quarter, we made meaningful progress by onboarding new talent and deepening cross-sell activity with commercial clients, both of which contributed to our growth. This reinforces our conviction that this business can play a significant and expanding role in diversifying our income stream over time.

Our relationship-first model and the depth of our domestic and international client base position us well to capture that opportunity, and we remain excited about deepening advisory relationships across both markets. Let’s turn to Slide 5, looking at the income statement. Diluted earnings per share for the third quarter were $0.65 per share compared to $0.53 per share in the second quarter. Net interest income was $90.5 million, up $7.9 million from $82.6 million in the second quarter. The increase was primarily driven by higher interest income on loans and investment securities combined with lower total interest expense on deposits and FHLB advances due to lower average balances and average rates.

Net interest margin was 3.77% compared to 3.52% in the second quarter. The increase reflected a lower cost of funds from noninterest-bearing deposits and shorter-term advances we took during the quarter, as well as benefits from additional interest on loan repayments previously in nonaccrual status that was recorded during the quarter. Provision for credit losses was $6.2 million compared to $4.8 million in the second quarter, reflecting higher specific reserves in the commercial portfolio, partially offset by lower collectively evaluated reserves driven by changes in portfolio composition and macroeconomic assumptions.

Noninterest income was $18.3 million, up by $177,000 from $18.2 million. This increase was primarily driven by higher deposit and service fees and higher gains on the early extinguishment of FHLB advances. These were partially offset by lower loan-level derivative income and lower other noninterest income. During the quarter, noninterest expense was $69.1 million, up by $221,000, or 3%, from $68.9 million in the second quarter. The increase in noninterest expense was primarily driven by higher professional fees and higher salaries and employee benefits.

These were partially offset by a decrease of $1.9 million in advertising expenses, as well as an increase of $1.1 million in OREO income. Pretax, pre-provision net revenue reached $39.7 million, which is the highest quarterly result recorded since 4Q22, compared to $31.9 million in the second quarter of this year. This increase was primarily driven by higher net interest income and noninterest income, partially offset by the increase in noninterest expense.

You can also see that ROA and ROE this quarter were 1% and 11.29%, which are the highest quarterly results reported since 3Q22 and 4Q21, respectively, compared to 0.84% and 9.23%, respectively, in the prior quarter. Our efficiency ratio was 63.51% compared to 68.37% in the second quarter. The improvement reflected stronger revenue and stable operating expenses as cost-saving initiatives offset higher personnel and professional fees. Turning now to Slide 6 to discuss our capital metrics. Our CET1 increased to 12.07% from 11.94% in the prior quarter, mainly driven by higher net income during the quarter while partially offset by $3.6 million in shareholder dividends and $2 million in share repurchases. Tangible common equity declined during the quarter, primarily driven by unrealized losses in the available-for-sale investment portfolio. Market yields rose by more than 100 basis points, well beyond the single Federal Reserve rate increase, as markets priced in additional tightening.

The decline in TCE was partially offset by higher earnings and lower share repurchases. Importantly, the valuation of the AFS portfolio has significantly improved compared to quarter-end as market rates have dropped since quarter-end. We paid a cash dividend of $0.09 per share of common stock on August 28, 2026, and our Board of Directors just approved a quarterly dividend of $0.09 per share payable on November 27 of this year. During the third quarter, we repurchased approximately 70,592 shares at a weighted average price of $28.47 per share compared to tangible book value per share of $20.94 as of September 30, 2026.

This represented 1.36 times tangible book value and 1.32 times book value. On Slide 7, we show our well-diversified deposit mix along with the composition of our loan portfolio. Total deposits for the quarter were $8.2 billion, down $109.6 million, or 1.3%, compared to $8.4 billion in the previous quarter. The decrease was primarily driven by lower balances from large domestic commercial fund providers and was partially offset by higher balances in private banking deposits. International deposits were stable, with a slight decline of $9.5 million, or 0.3%, from the previous quarter.

Also, as part of our strategic diversification efforts, while deposits from customers domiciled in Venezuela decreased $96.8 million, or 3.9%, deposits from countries other than Venezuela increased $87.3 million, or 12%, a testament to the value of our international customer relationships. In terms of deposit mix, brokered deposits remained mostly stable quarter over quarter at $497.4 million. Core deposits decreased by $125.8 million, or 2%, driven by decreases in higher-cost interest-bearing demand, savings, and money market deposits.

As Carlos mentioned, noninterest-bearing demand deposits increased as we continued optimizing our deposit base. During the quarter, we migrated approximately $270 million in low-cost interest-bearing deposits to noninterest-bearing demand deposits without affecting client retention. This migration provides a clearer view of the strength of our noninterest-bearing deposit base and the underlying value of these stable relationships. Total loans were $7.1 billion, up $207.8 million, or 3%, compared to $6.9 billion in the second quarter.

As mentioned earlier, this increase was driven by increases in single-family residential and commercial loans. These were partially offset by decreases in CRE loans to financial institutions as well as owner-occupied loans. As a reminder, we use our international funding to support domestic loan growth, as we don’t currently take credit risk outside of the U.S. Next, on Slide 8, you can see the evolution of our net interest income. NII increased $7.9 million from the prior quarter to $90.5 million in 3Q. This increase was primarily driven by higher interest income on loans and investment securities combined with lower total interest expense on deposits and FHLB advances due to lower average balances and rates. Net interest margin was 3.77% compared to 3.52% in the second quarter. Cost of total deposits declined to 2.07% from 2.21% in the prior quarter, and cost of funds declined to 2.23% from 2.38%.

Moving to Slide 9, here we show the drivers of the 25 basis point increase in net interest margin from 3.52% in the second quarter to 3.77% in the third quarter. Loans were the largest contributor, adding 18 basis points, primarily as a result of the repricing of our variable-rate portfolio, the timing within the quarter when we redeployed our liquidity into yielding assets, and fees upon early loan exits. Additional interest collected on NPLs that we exited during the quarter contributed an additional 6 basis points.

Securities contributed 3 basis points, and cost of funds added 2 basis points. These positive contributions were partially offset by a 4 basis point reduction from other earning assets. Taken together, these components reconcile the quarter-over-quarter expansion in net interest margin and demonstrate the benefit of our continued and disciplined loan growth efforts. Now turning to asset quality as shown on Slide 10. Nonperforming loans were down $21.6 million, or 12.6%, to $149.5 million, or 1.46% of total assets. During the third quarter, criticized loans decreased, primarily driven by the payoff of three commercial and CRE relationships, partially offset by downgrades of four relationships across commercial, owner-occupied, and CRE loans, as well as several smaller commercial and residential loans. Subsequent to quarter-end, a $5 million commercial loan that was downgraded during the quarter was also paid off, further improving our NPL-to-total loans and NPL-to-total assets ratios.

In the next slide, we provide a similar view of our classified portfolio. During the third quarter, downgrades to classified loans were primarily driven by four relationships across commercial, owner-occupied, and CRE loans. At the same time, we continued to make progress reducing balances in this category, with payoffs and paydowns totaling $80.3 million, which includes the payoff of four large relationships during the period. Now moving to Slide 12, we discuss special mention loans and their key characteristics, including portfolio composition and collateral coverage. During the quarter, downgrades to special mention were primarily driven by two relationships and were partially offset by paydowns. Overall, third quarter results demonstrate continued progress in our credit enhancement efforts. Nonperforming and overall criticized loans declined during the quarter, supported by disciplined monitoring, timely identification of emerging credit risk, and continued resolution activity through payoffs and paydowns.

While we continue to closely monitor developments across the portfolio, the reductions this quarter reflect the actions we have taken to improve portfolio quality and enhance visibility over time. Now moving on to Slide 13. Here we show the drivers of the provision recorded this quarter and impact to the allowance for credit losses. The provision for credit losses was $6.2 million in the third quarter. The provision was driven by a $12.6 million net increase in specific reserve, primarily due to four commercial relationships, $2 million in requirements for charge-offs, and $600,000 due to loan growth. This was partially offset by a $6.4 million release mainly attributable to changes in macroeconomic factors and a $2.7 million release in reserve for contingencies as lines of credit were funded.

In addition, the bank recorded a $2.5 million reserve due to recently acquired seasoned loans. During the third quarter of 2026, gross charge-offs totaled $3.9 million, composed mainly of one commercial loan, and the remaining charge-offs were related to indirect consumer loans and smaller commercial and consumer loans. These charge-offs were partially offset by $1.9 million in recoveries. We estimate gross charge-offs to be in the range of 30 to 35 basis points for the fourth quarter, including some possible write-offs of existing specific reserves.

Also, recoveries may occur as our special assets team continues efforts toward resolution of previously charged-off loans. Lastly, the allowance for credit losses ratio was up slightly to 1.36% from 1.27% in the second quarter, primarily due to increases in coverage of individually evaluated loans. On Slide 14, you can see our expectations for the fourth quarter of 2026. We expect total loans to reach approximately $7.3 billion by the fourth quarter of 2026. Following the work completed in the first half of the year to strengthen our credit foundation, we are seeing increased momentum in loan production, including opportunities primarily through C&I lending programs supported by residential lending, as we focus on building a more granular, higher-quality portfolio.

On the funding side, we are revising our total deposit guidance to approximately $8.5 billion by the fourth quarter of 2026. As noted earlier, exits by large commercial fund providers during the quarter are weighing on our expected domestic deposit balance at year-end. We are also refining our outlook for international deposit growth to reflect the expected pace of balance formation. The progress we saw during the quarter and the increased activity we observed among commercial and corporate clients across a range of industries in Venezuela continues to reflect the gradual pickup in economic activity and reinforces our confidence in this as a meaningful source of growth and in our ability to capture funds across the client ecosystem. The pace of realization reflects the timing of inflows, the conversion of commercial activity into personal liquidity, and compliance and due diligence timelines that vary with the complexity of each account and relationship.

We are revising our expectations for the net interest margin to be in the range of 3.65% to 3.70% in the fourth quarter. Although the interest rate environment will place upward pressure on our cost of funds, we expect the repricing of the variable-rate loan portfolio, our deposit repricing discipline, and the continued growth in lower-cost deposits to provide more than an offset. From an expense perspective, we expect fourth quarter noninterest expense to be approximately $68 million as we continue making progress toward a target efficiency ratio of approximately 60%.

In terms of capital management, we will continue to optimize our approach by balancing capital retained to support growth with share repurchases and dividends designed to enhance shareholder returns, and with that, I will pass it back to Carlos for additional comments and closing remarks.

Carlos Yafiliola

Thank you, Shari. As we move through the last quarter of the year, we remain focused on executing against our strategic priorities with discipline and purpose, translating the strategic progress we have made into measurable financial results. First, we will sustain our loan growth momentum with a continued focus on risk-adjusted returns and balancing asset quality. The growth we pursue must be purposeful, granular, and consistent with our risk architecture, with capital directed toward the markets, industries, and client relationships where Amerant Bancorp is best positioned to create value.

Second, we will continue advancing on credit quality. We’re deepening our credit culture through consistent underwriting standards, relationship-based decision-making, and proactive portfolio oversight. At the same time, we are cultivating a high-quality pipeline with greater transparency into risk-adjusted returns and stronger accountability throughout the credit process. Third, we will continue to realize the benefits of the efficiency initiatives we announced earlier this year. Recurring cost reductions and incremental revenue are strengthening operating leverage, and we will continue simplifying processes, improving productivity, and aligning resources with our highest-return opportunities.

Fourth, we will continue advancing our relationship-first approach to deepen client engagement and support lower-cost deposits growth across both domestic and international markets. This means bringing the full capabilities of Amerant Bancorp to our clients, increasing share of wallet, and managing relationships based on their total profitability and long-term potential. Finally, we remain committed to preserving strong capital ratios while balancing capital retained to support growth with dividends and share repurchases that return value to shareholders. We have a stronger foundation, clear priorities, and a disciplined execution plan. We are encouraged by the progress reflected in this quarter’s results and remain focused on converting that momentum into sustainable value for our shareholders.

With that, Shari and I will take questions. Operator, please open the line for Q&A.

OPERATOR

Certainly. We’ll now be conducting a question-and-answer session. If you’d like to be placed in the question queue, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you’d like to remove your question from the queue. One moment, please. While we poll for questions, our first question is coming from Michael Rose from Raymond James. Your line is now live.

Michael Rose

Hey, good morning, everyone. Thanks for taking my questions. Wanted to start on deposits. Was a little bit surprised to see the Venezuelan deposits down as much as they were just given all the progress and momentum that you’ve talked about. Carlos, can you just describe kind of what happened there and then as it relates to the fourth quarter and the growth that you’re expecting there? How much of that is coming from kind of the international piece versus the domestic piece?

Carlos Yafiliola

Thanks. Thank you, Michael, and good morning, everyone. I believe what you have seen during the third quarter is that the reactivation of the Venezuelan economy has needed additional capex and additional distributions between commercial and corporate accounts within the country. So the money is starting to move in order to create the necessary investments within the economy to be able to support the reactivation. So I see it more as a transactional decline more than a structural decline.

We still believe the momentum is extremely positive, and we will continue to see a positive momentum. I’m not sure if you also noticed the AUM increase, so I believe you should look into the bundle between deposits and AUM. So even though the deposits took a little drop during the quarter, you know, also some funds ended up in AUM as well at the same time. As I mentioned before, the operational activity and nature of these accounts is creating this fluctuation. Shari.

Michael Rose

That’s very helpful, Carlos. I appreciate the thorough response. Maybe Shari, just switching to the margin. The guide assumes some contraction. I assume some of that has to do with just the decline in Venezuelan deposits this quarter and then the notes that you issued as well. As we think about the fourth quarter, how much of the impact is from those two items versus just core compression? Just trying to get a better understanding of the bridge between third and fourth.

Carlos Yafiliola

There is also something to be said that the growth on the international side has allowed us to lower dependency on high-cost deposits. So the blended rate has definitely helped us.

Michael Rose

Appreciate all that color. And if I could just slip one more in. Carlos, you hit the 1% target. I guess the simple way to ask it is what’s next? And, you know, with the efficiency expected to continue to come down to your target, you know, how should we think about the opportunity for ROA expansion into next year? Thanks.

Carlos Yafiliola

No, thank you for the question. So as you can imagine, Q4, there is a lot of planning for 2027. We are conducting capacity analysis on the business. As you know, we’re coming from a period of recalibrating risk, exiting relationships that are not accretive for the bank nor the income or the risk side of the house. So we’re very optimistic about the 27. Again, I believe the 1% ROA is a new baseline that we have from now on. And now what we believe will happen is that our operating expenses would need to reflect the impact of the hiring of more business people as we are trying to retool the whole commercial and the domestic side of the house for steady loan growth. And that will definitely help us to achieve a better return on assets for 2027.

So we have been very active projecting balance sheet for next year and what will be the impact. But we definitely remain committed to improve the 1%. So if you think, the Amerant Bancorp of the future should be definitely trying to target the 120 in the longer term.

Michael Rose

Okay, I appreciate all the color. Thanks, everyone.

Carlos Yafiliola

Thank you, thank you, thank you.

OPERATOR

Next question today is coming from Russell Guenther from Stevens. Your line is now live.

Nick

Hey, good morning, guys. This is Nick filling in for Russell. Just wanted to go back on the—hey, good morning. I just wanted to go back on the deposit side. You know, NIBs were up pretty meaningful this quarter. How much of that was tied to new relationships versus existing customer moving balances, and should we think about that current mix as sustainable, or was there anything unusual about the quarter?

Carlos Yafiliola

Well, the combination—and thank you for the question. So we have analyzed our interest-bearing base over the past year or so, and we identified several accounts that were carrying a very low interest expense. And what we did—this is a project that took us a couple of quarters to complete—we classified those as non-interest bearing, evidently by dropping the rate to zero. So the change was approximately $270 million going into that category due to the reclass.

But at the same time, we were able to grow $100 million into the non-interest-bearing category. So that is pretty much the combination. I believe it’s a reflection of who we really are as a bank. Those are non-sensitive deposits that should have been DDAs since the beginning, and due to different, you know, product characteristics over time they were interest-bearing. So going forward, there will be an additional migration that should be expected. But at the same time, we continue to grow within that category, and we are very focused on making sure we can expand share of wallet of existing customers.

That’s part of the relationship-first approach. But we’re also making sure that we can capture new accounts. In slide 23 of our presentation, we included some information related to new accounts, and you’re going to see that around 1,200 accounts were opened on the international side and almost the same amount on the domestic side. So we’re very confident and optimistic of what we’re seeing for new accounts as well as increase of existing.

Nick

Okay, great, thank you. And lastly, just moving to expenses real quick. I know I saw 4Q is expected to be around $68 million. How should we think about the 2027 expense trajectory though? Is the goal to hold that run rate flat, or should we still expect, you know, continued investment alongside those efficiency initiatives you mentioned? Great. I’ll step back. Thank you.

Carlos Yafiliola

Thank you. Thank you, thank you.

OPERATOR

Next question is coming from Steven Scouten from Piper Sandler. Your line is now live.

Steven Scouten

Yeah, good morning, everyone. Appreciate it. Maybe just on the deposits for one more question on my end, the international deposit growth, which was impressive—can you give me a feel for, with Venezuela declining slightly, where the other geographic regions were that led to that nice growth?

Carlos Yafiliola

Yeah, thank you and good morning. So the growth came from other countries that we typically manage under the international division. So there is a combination between Argentina and other Central American countries that our team also has experience and has been growing over the past few years. So definitely there is an experience that has been acquired over the course of the year. Again, we’re very strategic when we attack these countries. We are not, you know, we just don’t cast a net and get whatever.

We’re very specific, and we need to have specific knowledge to go into specific countries. So I can tell you that it’s a hand—probably it’s about five countries—the ones that we target the most, obviously Venezuela being the most important.

Steven Scouten

Okay, great. And then I think Shar, you noted probably future deposit growth kind of similar to the existing competition. I mean, composition there, 60/40 or so. Is there a limit for you guys on international deposits as a concentration, or, I mean, given their advantage cost, would you allow them to grow as much as they could? I mean, kind of talk to me about if there’s any regulatory pushback or BSA or anything else that would cause you to limit that growth in any way.

Sharymar Calderón, CPA

Yeah, no, that’s a great question. And what I can tell you is that Amerant Bancorp, evidently by being headquartered in South Florida, this is a very international jurisdiction. It is natural for market players in this region to be exposed to international deposits. Our BSA program and our BSA team is very consolidated and ingrained within the culture of the bank. We have a very solid BSA program, and we have been enforcing and creating technology around controls and everything that pertains to these complex jurisdictions, or, more, I would say, jurisdictions that merit more due diligence.

So with this said, I believe we are very well prepared, and actually we have been used as a reference by other institutions and regulatory agencies as an example of having a great AML and BSA program. So I’m very comfortable with the way that we have been managing these deposits and the controls that we have in place.

Steven Scouten

Okay, great. So don’t feel like there’s any kind of internal cap that you’d need to enforce on the size of the international deposits at any point, right?

Sharymar Calderón, CPA

So there is no set cap. I believe that’s important. For the time being, we are 40/60; we definitely have room to grow. Again, the way that we manage this is on a relative basis, and at the same time we manage larger provider concentrations through ALCO. So we keep an eye on the largest exposures from the liquidity standpoint at ALCO and make sure that we have specific targets and limits for those types of exposures. So, yeah, we’re very judicious in the way that we see all these flows.

Steven Scouten

Got it. That’s fantastic. And maybe last thing for me, just curious around the use of the repurchase moving forward. If the movement in AFCL and where TC is, if that impacts your maybe willingness to be as aggressive on that repurchase or kind of how we should think about the pace and maybe constraints from any capital ratios or otherwise.

Sharymar Calderón, CPA

So I will take two different approaches, or two different pieces of this explanation. So the first one is that we believe in the weighted average cost of capital. So we have definitely declined our weighted average cost of capital when we did the debt issuance earlier in September. So that’s one. Getting the debt at 7% combined with the other pieces of the capital composition definitely helps us. And part of that being redeployed in the retirement of some shares is definitely accretive to existing shareholders.

That’s something that our board understands and is very actively involved in those discussions. So getting the $50 million blanket until 2027 represents the strong belief that our shares still have room to go and still constitute a good opportunity at the level that we trade. So being between the 138 to 145, I believe, still represents a very attractive valuation. And we’ll keep a close attention. But the fact that we already have that approval in place will give us the flexibility to get into the market and get in some at those levels.

Steven Scouten

And part of that conversation is that capital is healthy and provides us the opportunity to balance both growth and the buyback program. Fantastic. Appreciate the comprehensive answer there. Thanks so much.

Sharymar Calderón, CPA

Thank you.

OPERATOR

Thank you. We’ve reached the end of our question and answer session. I’d like to turn the floor back over for any further closing comments.

Carlos Yafiliola

Thank you everyone for connecting today and have a great day.

OPERATOR

Thank you. That does conclude today’s teleconference. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.

Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company’s SEC filings and official press releases. Corporate participants’ and analysts’ statements reflect their views as of the date of this call and are subject to change without notice.