KBRA Affirms Ratings for Amerant Bancorp Inc.

KBRA affirms the senior unsecured debt rating of BBB- and the short-term debt rating of K3 for Coral Gables, Florida-based Amerant Bancorp Inc. (NYSE: AMTB) (“the company”). In addition, KBRA affirms the deposit and senior unsecured debt ratings of BBB, the subordinated debt rating of BBB-, and the short-term deposit and debt ratings of K3 for its subsidiary, Amerant Bank, N.A. The Outlook for all long-term ratings is Stable.

Key Credit Considerations

The ratings reflect management’s efforts to stabilize the bank’s operating foundation following the leadership transition over the past months, including the implementation of a recalibrated strategy centered on enhanced risk management practices. Following several years of transformative initiatives, AMTB is pursuing a renewed strategic direction focused on strengthening the franchise and restoring sustainable profitability. Under its board-approved three-year strategic plan, management is prioritizing credit transformation initiatives aimed at improving resilience and asset quality, optimizing the balance sheet, and enhancing operational efficiency.

The credit profile remains pressured, as reflected by an elevated NPA ratio of 2.91% and criticized loans representing approximately 7% of total loans. AMTB completed comprehensive third-party and internal credit reviews covering approximately 85% of its commercial and CRE portfolios throughout 2025, with most reviews completed in the second half of the year. The review resulted in several downgrades of larger relationships, contributing to the increase in NPAs. In addition, management has pursued timely resolution strategies for troubled credits, which, together with elevated charge-offs, contributed to an increase in loans held for sale as the company executes targeted loan exits. Additional resolutions are expected through mid-2Q26. Management’s balance sheet derisking strategy remains focused on reducing larger and out-of-footprint exposures that no longer align with the bank’s revised risk appetite. Given ongoing credit headwinds associated with proactive credit migration, geographic concentration risks, continued workout activity, and the strategic repositioning toward higher-quality and more granular lending exposures, we expect provision expense to remain elevated and potentially volatile over the coming quarters.

Operational efficiency has shown improvement, supported by a more favorable cost structure resulting from vendor contract renegotiations and terminations. Noninterest expense declined to 2.70% of average assets in 1Q26, improving from the historical trend of approximately 3.0%. Management expects to realize approximately $30 million of cost savings during 2026 through broader operational efficiency initiatives, which should support improved earnings generation over time.

Funding and liquidity remain sound, supported by a well-diversified deposit base and stable, low-cost international deposits, which represented 34% ($2.7 billion) of total deposits at period-end. Deposit growth has benefited from the reactivation of the Venezuelan economy and the bank’s longstanding regional relationships. Venezuela accounted for 62% of total deposit growth in 1Q26 and contributed to a lower overall international cost of deposits of 1.04%, compared to 3.00% for domestic deposits. Liquidity is supported by a largely unencumbered securities portfolio yielding 4.76% with an average duration of approximately five years.

Capital levels remained relatively stable despite ongoing balance sheet repositioning activities. The CET1 ratio was 11.8%, tracking modestly below similarly rated peers, while the TCE ratio declined to 9.0%, primarily reflecting pressure from AOCI. We expect capital ratios to remain under moderate pressure over the near term due to projected loan growth of approximately 7% in 2026, continued asset resolution and workout activity, and the potential for increased share repurchases under the company’s active buyback program.

Rating Sensitivities

Restoration of sustainable profitability, together with continued execution of the company’s credit transformation initiatives that strengthen the operating foundation and improve asset quality metrics toward levels more consistent with similarly rated peers, could support positive rating momentum over time. Conversely, further material deterioration in asset quality, driven by localized economic pressures and amplified by the company’s geographic concentrations, that weakens profitability and erodes capital could result in rating pressure. From a credit perspective, failure to effectively resolve problem assets and sustained weakening in asset quality that materially reduces risk-based capital ratios, including a CET1 ratio declining to below 11% over the next several quarters and remaining meaningfully below similarly rated peers, would be viewed negatively and could lead to negative rating action.

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