Amerant Bancorp Inc. (NASDAQ:AMTB) Q1 2023 Earnings Call Transcript - Page 4 of 5 - InvestingChannel

Amerant Bancorp Inc. (NASDAQ:AMTB) Q1 2023 Earnings Call Transcript

We added a very good disclosure on the rate logs of the pipeline of Amerant Mortgage. You see how that amount has continued to increase. Now we have or as of the end of Q1 more than $100 million in rate logs. So, all that production is to be sold to agencies, and that’s a great accomplishment, getting these teams to work on the qualified mortgage space, and getting into the secondary market has been a great addition, and we expect that to continue to be accretive to other income.Feddie Strickland Got it. Now that’s really helpful. And just one quick follow-up on that. I know the mortgage is more of a — it’s a national base. But does being in South Florida and in Texas kind of help you, when you are talking to your regular commercial customers or consumer customer, whoever, just given the population inflow, do you think that’s a piece of it, when it comes to mortgage?Jerry Plush Yes.

Say absolutely. I think the private banking team here in South Florida, we have added a producer in private banking in Tampa and frankly looking for more. And we think there is tremendous opportunities now with Caroline in place is our new Market President to add not only strong producers potentially even teams of people there. For Private banking purposes, I think we think it’s really critical to be able to give that concierge level. And I think our team on the Amerant Mortgage side does a really good job supporting our Private Bank team. And remember, they tend to be chunkier mortgages. They tend to be seconds, right vacation homes, et cetera. And so, all of that is definitely a positive by having those capabilities around.Carlos Iafigliola I guess a very good way to look into our mortgage platform is the fact that our national footprint helps us to keep the per unit cost of mortgage origination at a lower level, as we continue to expand and that will help us to originate lower cost mortgages to our customers within the bank.

So, you don’t have a specific unit just to originate loans for private banking, but they leverage on a platform that originates nationwide to have a lower per-cost unit production.Feddie Strickland Got it. That’s helpful. Thanks for taking my question.Operator Our next question comes in a line of Matt Olney with Stephens. Your line is open. Please go ahead.Matt Olney Thanks. Good morning. Just want to follow-up on Feddie’s question around fees more of a forecasting question. Any numbers you can help put behind the outlook there? I think you said the core fees in the first quarter were around $60 million. It sounds like you got some momentum and mortgage and wealth, any numbers you can put behind that?Carlos Iafigliola Yes, we are projecting other income on the 16th for this upcoming quarter.

There’s more, there actually is a possibility that that would get even better with the new additions that we’re getting into the mortgage business and getting more into the other income. So yes, you can definitely see that being under $16 million other income potentially even in the $17 million range, 16 to 17 range.Jerry Plush Matt, I would say I think you could see that just ratcheting up each quarter.Matt Olney And then mortgage and wealth being the primary drivers, I would assume?Jerry Plush Yes. I would tell you that our view on well called the traditional fee sources for banks. We’ve actually gone through, and we’ve probably never covered it enough in the past, but we’ve been very customer friendly, in terms of what we’ve done with overdrafts, and with our cover me program and not having any of the nuisance ones that are like $100 or less, and we’ve reduced those charges.So, we’re not relying for fee income off of sort of the I’ll call it the nuisance deposit charges as much as we’re relying on our build here.

As you just said, more around wealth and mortgage banking.Carlos Iafigliola And derivatives for customers.Jerry Plush Yes, of course technologies. Derivatives are a critical part.Matt Olney Okay. And then I guess switching over to the margin, and just kind of following up there. I think I heard you mentioned that the margin could be down up to 10 bps in the second quarter. Did I hear that correctly? And if so, what kind of deposit beta does that assume?Jerry Plush Matt, I’m getting we’re both jumping on that one. Let me just say yes, it is the projection is that it can be downtown. What Carlos and I have looked at is where the majority of the time deposit that will reprice and we think the biggest piece is coming in the second quarter. And if you just look at the delta, of those rolling over, that’s going to create some of that decline there.

I think as it relates to the betas. Carlos, you want to?Carlos Iafigliola Sure. So, no complementing what Jerry was mentioning out of the time deposit portfolio for customers who already had a significant amount of repricing. When you look at the average cost, its already reflective of the different higher rate than it used to be before. And particularly, we have Q2 and Q3 that we will have a combine of maybe $350 million that they are at a blended rate of 1.6% that they will come and reprice at a higher rate that’s factoring into the minus 10 basis points that Jerry was mentioning.But I don’t think you should be able to see this particular quarter a beta as high as the one that we have reported just because of this effect and the case that already most have the money market transactions — money market accounts, and order different interest-bearing accounts already reflected a higher rate.

So, I will go into specific beta for the second quarter closer to the 0.5 to 0.60, as opposed of the one that we saw in the Q1. So Q1 was a very, I would say it’s specific quarter with a lot of repricing and money markets, a lot of maturities in term deposits that created this particular effect of having a beta of one. But in the second quarter, we should diminish that being the 0.5 to 0.60 beta.Matt Olney Okay. That is helpful, Carlos thank you for that. And then I guess, kind of related topic around on balance sheet liquidity or call it overnight liquidity. I think you mentioned you carried a higher level at the end of the quarter, like a lot of your peer banks did. I’m just curious, kind of what your thoughts are today, understand that could change.

What are your thoughts on kind of carrying, higher liquidity? is it’s going to be kind of a permanent change for the bank or is it more temporary?Jerry Plush Yes, so no, we are carefully looking into liquidity all the time, we definitely going to carry higher levels of liquidity. We believe it’s prudent in terms of this environment. Obviously, the 485 that we reported was significantly higher compared to the structural amounts that we carry, we are typically between the $200 million to $300 million cash in hand. So we progressively should be going that, but we believe we have a very liquidity management infrastructure in place to monitor that. Carlos Iafigliola Yes, and I think Matt if you want to use the targeted, it makes sense to think we took what we think were the prudent actions pulled $200 million immediately when the morning that all that volatility started, and kept that throughout the end of the quarter.

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