Amerant Bancorp's Florida Focus: Can Regional Strength Drive Sustainable Growth?

As Amerant Bancorp Inc. (NYSE: AMTB) prepares to release its Q2 2025 earnings on July 23, investors are closely watching how the bank's Florida-centric strategy is weathering economic headwinds. With 20 banking centers concentrated in South Florida and Tampa, the bank's fate is deeply tied to the Sunshine State's economic health. Let's dissect the key metrics, risks, and opportunities shaping its growth trajectory.

Florida Dominance: A Strategic Pivot

Amerant's recent shift to scale back national residential mortgage operations and focus on Florida reflects a deliberate bet on its core market. In Q1 2025, total deposits rose 3.8% to $8.2 billion, with core deposits (a proxy for customer loyalty) surging 6.6% to $6.0 billion. This deposit growth, fueled by Florida's thriving real estate and tourism sectors, is a critical buffer for the bank's liquidity. Meanwhile, the loan-to-deposit ratio improved to 88.5%, down from 92.6%, signaling better balance between lending and savings.

However, loan growth stagnated at $7.2 billion, as payoffs outpaced production—a trend likely tied to higher mortgage rates and cautious borrower behavior. The bank's Florida-centric strategy aims to offset this by focusing on commercial lending and wealth management, where demand remains robust.

Key Metrics to Watch in Q2 2025 Earnings

When the earnings drop on July 23, investors should scrutinize:
1. Non-Performing Assets (NPAs): In Q1, NPAs rose 15.2% to $140.8 million, driven by commercial loan defaults. The allowance for credit losses grew to $98.3 million, but coverage remains at 79.7%, which is manageable but requires scrutiny.
2. Net Interest Margin (NIM): The NIM held steady at 3.75% despite declining loan volumes. Management's ability to offset loan stagnation with deposit cost management will be key.
3. Florida Loan Portfolio Performance: With 80% of branches in South Florida, the regional economy's health—particularly real estate and small business activity—will dictate loan quality.

Strengths and Risks

Strengths:
- Deposit Resilience: Florida's population growth and tourism influx continue to bolster core deposits.
- Cost Discipline: Q1 non-interest expenses fell 14.2% to $71.6 million, improving the efficiency ratio to 67.9%.
- Dividend Sustainability: The $0.09 quarterly dividend has remained stable, though payout ratios (-95% in TTM) suggest reliance on capital reserves.

Risks:
- Loan Demand Slump: Elevated mortgage rates and cautious borrowers could prolong flat loan growth.
- NPA Risks: Rising commercial defaults, particularly in Florida's hospitality sector, could strain reserves.
- Competition: Florida's banking market is crowded, with giants like BB&T and local rivals like SunTrust Bank exerting pricing pressure.

Investment Takeaways

Amerant's Florida strategy offers a compelling “moat” in a state with 23% annual population growth and booming real estate. However, the bank's reliance on regional performance makes it vulnerable to localized downturns.

• Buy Signal: A Q2 earnings beat with improving NPA trends and loan growth could push shares above $20, especially if deposits continue to outpace the industry.
• Hold Signal: Current valuation (trading at 40.9% below its estimated fair value) suggests some skepticism about growth, but stability in Florida could justify a hold.
• Sell Signal: Weak deposit growth, rising NPA coverage ratios, or a dividend cut would warrant caution.

Final Analysis

Amerant's future hinges on executing its Florida-first strategy while navigating macroeconomic risks. Investors should monitor the July 23 earnings closely for clues on loan demand, deposit retention, and NPA management. For now, the bank remains a speculative play on Florida's economic resilience—but one that requires patience and a watchful eye.

Bottom Line: Florida's economic engine could power Amerant's recovery, but the bank must prove it can sustain growth in a slowing economy. Stay tuned for July's results.