Executive Summary / Key Takeaways

• Amerant Bancorp (NYSE:AMTB) is undergoing a strategic transformation, shedding non-core assets and focusing intensely on becoming a leading regional bank in Florida, driven by disciplined organic growth and a strengthened risk culture.
• Despite a challenging macroeconomic backdrop and a recent increase in non-performing assets, management is proactively addressing credit quality with comprehensive reviews, increased personnel, and aggressive downgrades, aiming for resolution and normalization of charge-offs.
• The company is investing in digital transformation and talent to enhance operational efficiency, drive core deposit growth, and achieve a 60% efficiency ratio by the second half of 2025, with further expense reductions planned for 2026.
• Strong capital levels, a robust net interest margin, and a clear roadmap for loan and deposit growth, supported by strategic branch expansion and a new syndications program, underpin the long-term investment thesis.
• Investors should monitor the efficacy of asset quality resolutions, the impact of macroeconomic shifts, and the realization of efficiency gains as Amerant executes its Florida-centric growth strategy.

A Regional Bank's Strategic Evolution in Florida's Dynamic Market

Amerant Bancorp Inc. (NYSE:AMTB) is strategically repositioning itself as a Florida-focused regional bank, a transformation rooted in its history and refined to capitalize on the vibrant economic landscape of its core markets. Operating primarily through Amerant Bank, N.A., the company offers a comprehensive suite of banking, credit, investment, wealth management, and fiduciary services to individuals and businesses across South Florida and Tampa. This strategic pivot, which saw the company transition from Mercantil Bank Holding Corporation in 2019, has involved significant divestitures and focused investments, all aimed at cultivating a more resilient and profitable enterprise.

The company's journey has been marked by decisive actions, including the sale of its Houston, Texas banking operations in 2024 to MidFirst Bank, signaling a clear intent to concentrate resources within Florida. Concurrently, Amerant has initiated the dissolution of its Cayman Bank subsidiary and is winding down its national mortgage origination business, Amerant Mortgage, by the first half of 2026, shifting to an in-footprint model supporting retail and private banking customers. These moves underscore a disciplined approach to capital allocation, prioritizing strategic growth initiatives within its chosen geographic focus.

In a highly competitive regional banking landscape, Amerant faces rivals such as Regions Financial Corporation (RF), Truist Financial Corporation (TFC), Fifth Third Bancorp (FITB), and Comerica Incorporated (CMA). While these larger institutions boast broader geographic footprints and greater scale, Amerant differentiates itself through strong regional presence, deep community ties, and a focus on personalized services, particularly in wealth management and specialized lending. This localized expertise fosters customer loyalty and enables agile service delivery, providing a unique value proposition in its niche markets. However, its smaller scale compared to peers like TFC and RF can present challenges in broad market reach and the pace of technological innovation.

Technological Advancement and Operational Efficiency

Amerant's strategic evolution is intrinsically linked to its commitment to technological advancement, not through proprietary "deep tech" in the traditional sense, but through digital transformation aimed at enhancing customer experience, driving efficiency, and strengthening risk management. The company is actively investing in a new treasury management platform and a digital account opening tool, which are identified as key drivers for achieving its ambitious deposit growth targets. These platforms streamline customer interactions and operational processes, allowing Amerant to compete more effectively with larger, more technologically advanced regional banks and nimble fintechs.

Further demonstrating its commitment to a robust operational framework, Amerant is building out its AI governance and enhancing its Enterprise Risk Management (ERM) capabilities. While these initiatives incurred higher consulting expenses in the third quarter of 2025, they represent a strategic investment in future efficiency and risk oversight. The recent partnership with SavvyMoney to launch comprehensive financial wellness solutions in 2025 further underscores Amerant's focus on leveraging technology to provide value-added services and deepen customer relationships. These technological efforts, though not "core differentiated technology" in a manufacturing sense, are foundational to Amerant's strategy, contributing to its competitive moat by improving operational execution, driving core deposit growth, and bolstering its risk management framework.

Strategic Pillars: Growth, Efficiency, and Asset Quality

Amerant's strategic narrative is built upon three interconnected pillars: disciplined growth, enhanced efficiency, and rigorous asset quality management. The company is actively expanding its physical presence within Florida, with new regional headquarters and banking centers recently opened in West Palm Beach and Miami Beach, and a second downtown Tampa location opening in October 2025. A new St. Petersburg banking center is also anticipated by mid-2026. These expansions are complemented by strategic talent acquisitions, including a new Head of Credit of C&I, Head of Loan Syndications and Sales, and a Managing Executive Director for the Miami-Dade market, all aimed at bolstering business development and risk oversight.

On the funding side, Amerant's "deposit machine" continues to perform robustly, with core deposits increasing by 10.4% to $6.20 billion as of September 30, 2025, from $5.60 billion at December 31, 2024. This growth is a testament to its relationship-focused strategy and the effectiveness of its new digital tools. The company aims for 14-15% annual deposit growth by year-end 2025, matching its projected loan growth and maintaining a loan-to-deposit target of 95%. Brokered deposits have been strategically reduced by 21.6% to $550.2 million in Q3 2025, reflecting a deliberate effort to lower funding costs.

Loan growth, while temporarily impacted by a focus on asset quality in Q3 2025, is expected to rebound. The company projects net loan growth of $125 million to $175 million in Q4 2025, driven by organic production and a newly launched syndications program. This program allows Amerant to participate in larger deals while maintaining prudent risk management through lower hold sizes, a strategic move to grow with customers without excessive concentration risk. Longer-term, Amerant anticipates a return to double-digit loan growth.

Efficiency is a critical focus, with management launching an expense reduction initiative targeting $2 million to $3 million in savings per quarter in 2026, with initial reductions expected in Q4 2025. This initiative involves stringent reviews of contracts, insourcing tasks, and outright expense elimination. The strategic goal is to achieve a 60% efficiency ratio in the second half of 2025, a significant improvement from the 69.84% reported in Q3 2025, driven by increased asset size and top-line growth.

Asset quality remains "job one" for Amerant. The third quarter of 2025 saw an increase in non-performing assets (NPA) to $139.9 million, up 14.5% from December 31, 2024, prompting a heightened focus on resolution. This increase was attributed to comprehensive loan-by-loan reviews of over $3.5 billion in loans, updated borrower financials, and missed contractual milestones. Management has responded with increased personnel, proactive efforts, and the use of independent third-party assistance to expedite risk rating and identify potential concerns. The company has adopted a more aggressive approach to downgrades, prioritizing "timeliness and being proactive" for better outcomes. The Allowance for Credit Losses (ACL) as a percentage of total loans held for investment increased to 1.37% at September 30, 2025, from 1.18% at December 31, 2024, reflecting increased specific reserves. A significant post-Q3 2025 loan recovery of $8.7 million further underscores active asset management. The outlook for net charge-offs is expected to normalize to around 30-35 basis points after a temporary increase in Q2 2025. The commercial real estate (CRE) portfolio exhibits conservative metrics, with a weighted average loan-to-value of 58% and debt service coverage of 1.5 times.

Financial Performance and Capital Strength

Amerant's financial performance in the third quarter of 2025 reflects the ongoing strategic transformation and the proactive management of asset quality. Net income attributable to the company was $14.8 million, or $0.35 per diluted share. Net interest income reached $94.2 million, an increase of 16.2% year-over-year, driven by higher average balances in debt securities and deposits with banks, coupled with a decrease in the cost of interest-bearing liabilities. The net interest margin (NIM) expanded to 3.92%, a 43 basis point increase from the prior year, demonstrating effective asset-liability management.

Total assets stood at $10.41 billion as of September 30, 2025, reflecting a 5.1% increase from December 31, 2024, driven by growth in securities, cash, and bank-owned life insurance (BOLI). Assets Under Management (AUM) also saw healthy growth, reaching $3.20 billion, up 9.7% from year-end 2024, primarily due to higher market valuations.

The company's capital position remains robust, with a Common Equity Tier 1 (CET1) ratio of 11.54% in Q3 2025, up from 11.24% in Q2 2025. This strong capital base supports both organic growth initiatives and shareholder returns, as evidenced by the company's intention to utilize the remaining $13 million in its share repurchase program and its consistent quarterly dividend of $0.09 per share.

Risks and Outlook

While Amerant's strategic direction is clear, several risks warrant investor attention. Macroeconomic uncertainty, including potential impacts from tariff policies and decelerating consumer spending, could influence loan demand and credit quality. The timing of asset quality resolutions, particularly for non-performing loans, remains a key variable, as management acknowledges its inherent unpredictability. Operational execution risks associated with the Amerant Mortgage wind-down and the Cayman Bank dissolution also exist, though these are actively being managed.

Looking ahead, Amerant has provided concrete guidance for Q4 2025, projecting net loan growth of $125 million to $175 million and deposit growth in line with loan growth. The NIM is expected to be approximately 3.75%, with noninterest income between $17.5 million and $18 million. Expenses are projected to decrease to $74 million to $75 million, leading to an efficiency ratio in the high 60s. Core Return on Average Assets (ROA) is anticipated to be in the mid-80s to low 90s, with potential to approach 1% driven by loan recoveries. The company's commitment to achieving a 1% ROA in the second half of 2025 and a 60% efficiency ratio is a clear signal of its focus on improved profitability.

Conclusion

Amerant Bancorp is in the midst of a profound strategic transformation, refocusing its energies and capital on becoming a dominant regional banking force in Florida. This journey, characterized by disciplined divestitures, targeted investments in talent and technology, and a rigorous approach to asset quality, is designed to unlock sustainable, profitable growth. While the recent uptick in non-performing assets presents a near-term challenge, management's proactive and aggressive stance on resolution, coupled with a strengthened risk management framework, provides a clear path forward.

The company's robust capital position, expanding net interest margin, and commitment to operational efficiency, driven by digital initiatives and expense reductions, underscore a compelling investment thesis. As Amerant continues to execute its Florida-centric growth strategy, leveraging its community ties and specialized service offerings, investors should closely monitor the progress of asset quality resolutions and the realization of efficiency gains. The strategic clarity and decisive actions taken position Amerant Bancorp for a stronger, more profitable future within its chosen markets.