Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited consolidated financial statements and related notes included elsewhere in this Form 10-K. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Certain risks, uncertainties and other factors, including but not limited to those set forth under “Cautionary Note Regarding Forward-Looking Statements,” “Risk Factors” and elsewhere in this Form 10-K, may cause actual results to differ materially from those projected in the forward looking statements.
The emphasis of this discussion will be on changes in the year ended December 31, 2025 with respect to 2024 . See our Annual Report on Form 10-K for the year ended December 31, 2024 for additional details on the Company’s financial condition and results of operations in 2024 and changes in the Company’s financial condition and results of operations from 2023 to 2024 .
Overview
Our Company
We are a bank holding company headquartered in Coral Gables, FL. We provide individuals and businesses a comprehensive array of deposit, credit, investment, wealth management, retail banking, mortgage services, and fiduciary services. We serve customers in our United States markets and select international customers. These services are offered through our main subsidiary, Amerant Bank, which is also headquartered in Coral Gables, FL, as well as our other subsidiary, Amerant Investments. Fiduciary, investment, wealth management and mortgage lending services are provided by the Bank and the Bank’s securities broker-dealer, Amerant Investments. The Bank’s primary markets are South Florida, where we are headquartered and operate 21 banking centers in Miami-Dade, Broward and Palm Beach counties; and Tampa, Florida where we have a regional headquarters office and currently operate two banking centers. See “Item1. Business” for recent developments.
Amerant Mortgage is a subsidiary of the Bank. In April 2025, considering its strategic decision to focus on Florida, the Company announced it would transition its mortgage business from a national mortgage originator model to in-footprint focused approach, emphasizing mortgage lending that supports the Company’s retail and private banking customers. Since April 2025, the Company progressively reduced the mortgage-focused FTE count from 77 FTEs to 3 at the close of 2025. In addition, in January 2026, loans owned by the Bank and sub-serviced by a third party have been transferred into the Bank’s core platform, and remaining existing vendor contracts are expected to be terminated or modified. The Company expects to complete winding down Amerant Mortgage in the first half of 2026.
The Cayman Bank is a subsidiary of the Bank. The Company is executing a plan for the dissolution of the Cayman Bank and, as of the date of this Annual Report on Form 10-K, the Cayman Bank no longer had any trust relationships, many of which were transferred to the Bank. The dissolution of the Cayman Bank, is expected to be completed in 2026, once regulatory approval from the applicable regulatory agency is received.
Primary Factors Used to Evaluate Our Business
Results of Operations. In addition to net income or loss, the primary factors we use to evaluate and manage our results of operations include net interest income, noninterest income and expenses, and indicators of financial performance including return on assets (“ROA”) and return on equity (“ROE”). We also use certain non-GAAP financial measures in the internal evaluation and management of our businesses.
Net Interest Income. Net interest income represents interest income less interest expense. We generate interest income from interest, dividends and fees received on interest-earning assets, including loans and investment securities we own. We incur interest expense from interest paid on interest-bearing liabilities, including interest-bearing deposits, and borrowings such as advances from the Federal Home Loan Bank of Atlanta (“FHLB”) and other borrowings such as repurchase agreements, notes, debentures and other funding sources we may have from time to time. Net interest income typically is the most significant contributor to our revenues and net income. To evaluate net interest income, we measure and monitor: (i) yields on our loans and other interest-earning assets; (ii) the costs of our deposits and other funding sources; (iii) our net interest spread; (iv) our net interest margin, or NIM; and (v) our provisions for credit losses. Net interest spread is the difference between rates earned on interest-earning assets and rates paid on interest-bearing liabilities. NIM is calculated by dividing net interest income for the period by average interest-earning assets during that same period. Because noninterest-bearing sources of funds, such as noninterest-bearing deposits and stockholders’ equity, also fund interest-earning assets, NIM includes the benefit of these noninterest-bearing sources of funds. Non-refundable loan origination fees, net of direct costs of originating loans, as well as premiums or discounts paid on loan purchases, are deferred and recognized over the life of the related loan as an adjustment to interest income in accordance with generally accepted accounting principles (“GAAP”).
Changes in market interest rates and the interest we earn on interest-earning assets, or which we pay on interest-bearing liabilities, as well as the volumes and the types of interest-earning assets, interest-bearing and noninterest-bearing liabilities and stockholders’ equity, usually have the largest impact on periodic changes in our net interest spread, NIM and net interest income. We measure net interest income before and after the provision for credit losses.
Noninterest Income. Noninterest income consists of, among other revenue streams: (i) service fees on deposit accounts; (ii) income from brokerage, advisory and fiduciary activities; (iii) benefits from and changes in cash surrender value of bank-owned life insurance, or BOLI, policies; (iv) card and trade finance servicing fees; (v) securities gains or losses; (vi) net gains and losses on early extinguishment of FHLB advances, which we may execute from time to time as part of asset/liability management activities; (vii) income from derivative transactions with customers; (viii) derivative gains or losses; and (ix) other noninterest income which includes mortgage banking revenue and gains or losses on the sale of loans originated for investment. See “Item 1. Business” for more details.
Our income from service fees on deposit accounts is primarily affected by the volume, growth and mix of deposits we hold, as well as the volume of transactions initiated by customers (e.g., wire transfers). These are affected by prevailing market pricing of deposit services, interest rates, our marketing efforts and other factors.
Our income from brokerage, advisory and fiduciary activities consists of brokerage commissions related to our customers’ trading volume, fiduciary and investment advisory fees generally based on a percentage of the average value of assets under management and custody (“AUM”), and account administrative services and ancillary fees during the contractual period.
Income from changes in the cash surrender value of our BOLI policies represents the amounts that may be realized under the contracts with the insurance carriers, which are nontaxable. In the fourth quarter of 2023, the Company restructured certain of its BOLI contracts, by surrendering existing lower-yielding policies and reinvesting the proceeds in higher-yielding policies. This transaction increased income from this source beginning in 2024.
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Interchange fees, other fees and revenue sharing are recognized when earned. Trade finance servicing fees, which primarily include commissions on letters of credit, are generally recognized over the service period on a straight line basis. Card servicing fees include credit and debit card interchange fees and other fees. We have also entered into referral arrangements with recognized U.S.-based card issuers, which permit us to serve our customers and earn referral fees and share interchange revenue without exposure to credit risk. In 2024, the Company discontinued one of these arrangements which served international customers, primarily. This is expected to cause a decrease in this revenue source prospectively.
Our gains and losses on sales of securities are derived from sales from our securities portfolio and are primarily dependent on changes in U.S. Treasury interest rates and asset liability management activities. Generally, as U.S. Treasury rates increase, our securities portfolio decreases in market value, and as U.S. Treasury rates decrease, our securities portfolio increases in value. We also recognize unrealized gains or losses on changes in the valuation of trading securities and marketable equity securities not held for trading.
Our fee income generated on customer interest rate swaps and other loan level derivatives are primarily dependent on volume of transactions completed with customers and are included in noninterest income.
Derivatives unrealized net gains and derivatives unrealized net losses are primarily derived from changes in market value of uncovered interest rate caps with clients.
Other noninterest income includes mortgage banking income/loss generated through our mortgage banking operation comprised of Amerant Mortgage through the early part of the fourth quarter of 2025, and later through the Bank, and consists of gain on sale of loans, gain on loans market valuation, other fees and smaller sources of income. Mortgage banking income was $0.7 million and $6.9 million in 2025 and 2024, respectively. Other income in 2025 includes approximately $3.4 million of net gain on sale of loans originated for investment.
Non-core noninterest income items include other non-core noninterest income which include the effect of items such as derivative losses, securities gains and losses, gains on sale of loans previously originated for investment , amongst other items non-recurrent in nature. See “Non-GAAP Financial Measures” for more information on non-core noninterest income items.
Noninterest Expense. Noninterest expenses generally increase as our business grows and whenever necessary to implement or enhance policies and procedures for regulatory compliance, and other purposes.
Noninterest expense consists of: (i) salaries and employee benefits; (ii) occupancy and equipment expenses; (iii) professional and other services fees; (iv) loan-level derivative expenses; (v) FDIC deposit and business insurance assessments and premiums; (vi) telecommunication and data processing expenses; (vii) depreciation and amortization; (viii) advertising and marketing expenses; (ix) other real estate and repossessed assets, net; (x) losses on sale of assets; (xi) contract termination costs; and (xii) other operating expenses.
Salaries and employee benefits include compensation (including severance expenses which we generally consider non-routine), employee benefits and employer tax expenses for our personnel. Salaries and employee benefits are partially offset by costs directly related to the origination of loans, which are deferred and amortized over the life of the related loans as adjustments to interest income in accordance with GAAP.
Occupancy expenses consists of lease expense on our leased properties, including right-of-use or ROU asset impairment charges, and other occupancy-related expenses. Equipment expense includes furniture, fixtures and equipment-related expenses. Rental income associated with subleasing portions of the Company’s headquarters building and the subleasing of the New York office space, primarily, is included as a reduction to rent expense under lease agreements under occupancy and equipment cost.
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Professional and other services fees include the cost of outsourced services, including technology infrastructure and banking processing services from our new technology provider; other professional consulting fees associated with our transition to a new core banking platform; legal, accounting and related consulting fees; card processing fees; directors’ fees; regulatory agency fees, such as OCC examination fees; and other fees related to our business operations.
Loan-level derivative expenses are incurred in back-to-back derivative transactions with commercial loan clients and with brokers. The Company pays a fee upon inception of the back-to-back derivative transactions, corresponding to the spread between a wholesale rate and a retail rate.
Contract termination costs represent estimated expenses to terminate contracts before the end of their terms, and are recognized when the Company terminates a contract in accordance with its terms, generally considered the time when the Company gives written notice to the counterparty within the notification period contractually established, or when Company determines that it no longer derives economic benefits from the contracts. Contract termination costs also include expenses associated with the abandonment of existing capitalized projects which are no longer expected to be completed as a result of a contract termination. Changes to initial estimated expenses to terminate contracts resulting from revisions to timing or the amount of estimated cash flows are recognized in the period of the changes.
Advertising expenses include the costs of promoting the Amerant brand, as well as the costs associated with promoting the Company’s products and services to create positive awareness, or consideration to buy the Company’s products and services. These costs include expenses to produce, deliver and communicate advertisements using available media and technologies, primarily streaming and other digital advertising platforms. Advertising expenses are expensed as incurred, except for media production costs which are expensed upon the first airing of the advertisement.
FDIC deposit and business insurance assessments and premiums include deposit insurance, net of any credits applied against these premiums, corporate liability and other business insurance premiums.
Telecommunication and data processing expenses include expenses paid to our third-party data processing system providers and other telecommunication and data service providers, as well as expenses related to the disposition of fixed assets due to the write off of in-development software in 2023.
Depreciation and amortization expense includes the value associated with the depletion of the value on our owned properties and equipment, including leasehold improvements made to our leased properties.
OREO and repossessed assets expense includes expenses and revenue (rental income) from the operation of foreclosed property/assets as well as fair value adjustments and gains/losses from the sale of OREO and repossessed assets.
Other operating expenses include earnings credits, business development expenses, community engagement, charitable contributions, mortgage loan origination and servicing expenses, postage and courier expenses, debits which mirror the valuation income on the investment balances held in the non-qualified deferred compensation plan in order to adjust the liability to participants of the deferred compensation plan, and other small operational expenses. Earnings credits are provided to certain commercial depositors primarily in the mortgage banking industry to help offset deposit service charges incurred.
Noninterest expenses in 2025 and 2024 include salaries and employee benefits, mortgage lending costs and professional and other service fees in connection with the operation and wind down of Amerant Mortgage’s origination business.
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Non-core noninterest expense items include restructuring expenses and other non-core noninterest expenses. Restructuring expenses are those incurred for actions designed to implement the Company’s business strategy. These actions include, but are not limited to reductions in workforce, streamlining operational processes, decommissioning of legacy technologies, enhanced sales tools and training, expanded product offerings and improved customer analytics to identify opportunities. Other non-core noninterest expenses include the effect of non-core items such as the valuation of OREO and loans held for sale, the sale of repossessed assets, impairment of investments, losses on sale of loans previously held for investment, expenses in connection with the Houston Sale Transaction, staff separation costs, amongst other items non-recurrent in nature. See “ Non-GAAP Financial Measures” for more information on non-core noninterest expense items.
Primary Factors Used to Evaluate Our Financial Condition
The primary factors we use to evaluate and manage our financial condition include asset quality, capital and liquidity.
Asset Quality. We manage the diversification and quality of our assets based upon factors that include the level, distribution and risks in each category of assets. Problem assets may be categorized as classified, delinquent, nonaccrual, nonperforming and restructured assets. We also manage the adequacy of our allowance for credit losses, or the allowance, the diversification and quality of loan and investment portfolios, the extent of counterparty risks, credit risk concentrations and other factors.
We review and update our allowance for expected credit losses periodically to calibrate loss estimation models based on our loan volumes, and credit and economic conditions in our markets. The models may differ among our loan segments to reflect their different asset types, and includes qualitative factors, which are updated periodically based on the type of loan and other factors.
Capital. Financial institution regulators have established minimum capital ratios for banks and bank holding companies. We manage capital based upon factors that include: (i) the level and quality of capital and our overall financial condition; (ii) the trend and volume of problem assets; (iii) the adequacy of reserves; (iv) the level and quality of earnings; (v) the risk exposures in our balance sheet under various scenarios, including stressed conditions; (vi) the Tier 1 capital ratio, the total capital ratio, the Tier 1 leverage ratio, and the CET1 capital ratio; (vii) the tangible equity ratio; and (viii) other factors, including market conditions.
Liquidity. Our deposit base consists primarily of personal and commercial accounts maintained by individuals and businesses in our primary markets and select international core depositors. The Company is focused on relationship-driven core deposits. The Company may also use third party providers of domestic sources of deposits as part of its balance sheet management strategies. We define core deposits as total deposits excluding all time deposits. This definition of core deposits differs from the Federal Financial Institutions Examination Council’s (the “FFIEC”) Uniform Bank Performance Report (the “UBPR”) definition of “core deposits,” which exclude brokered time deposits and retail time deposits of more than $250,000. See “Core Deposits” discussion for more details.
We manage liquidity based upon factors that include the amount of core deposit relationships as a percentage of total deposits, the level of diversification of our funding sources, the allocation and amount of our deposits among deposit types, the short-term funding sources used to fund assets, the amount of non-deposit funding used to fund assets, the availability of unused funding sources, off-balance sheet obligations, the amount of cash and liquid securities we hold, the availability of assets readily convertible into cash without undue loss, the characteristics and maturities of our assets when compared to the characteristics of our liabilities and other factors.
Seasonality. Our loan production, generally, is subject to seasonality, with the lowest volume typically in the first quarter of each year.
Summary Results
Results for the year ended December 31, 2025 were as follows:
• Total assets were $9.8 billion at December 31, 2025, down $124.7 million, or 1.3%, compared to $9.9 billion at December 31, 2024.
• Total gross loans, which include loans held for sale, were $6.7 billion at December 31, 2025, a decrease of $574.1 million compared to $7.3 billion at December 31, 2024.
• Cash and cash equivalents were $470.2 million at December 31, 2025, down $120.2 million, or, 20.4%, compared to $590.4 million at December 31, 2024.
• Total deposits were $7.8 billion at December 31, 2025, down $67.7 million, or 0.9%, compared to $7.9 billion at December 31, 2024.
• Total advances from FHLB were $712.0 million as of December 31, 2025, down $33.0 million, or 4.4%, compared to $745.0 million as of December 31, 2024.
• NIM was 3.82% in 2025, compared to 3.58% in 2024.
• Average yield on loans in 2025 was 6.85%, down compared to 7.06% in 2024.
• Average cost of total deposits in 2025 was 2.47% compared to 2.94% in 2024.
• Loan to deposit ratio was 86.01% as of December 31, 2025 compared to 92.57% as of December 31, 2024.
• Asset Quality and ACL:
◦ Total non-performing assets were $186.9 million as of December 31, 2025, up $64.7 million, or 53.0%, compared to $122.2 million as of December 31, 2024. As of December 31, 2025, non-performing assets consist of $171.4 million in non-performing loans and $15.5 million in OREO.
◦ Allowance for credit losses (“ACL”) was $79.3 million as of December 31, 2025 down $5.7 million, or 6.7%, compared to $85.0 million as of December 31, 2024.
◦ Classified loans as of December 31, 2025 were $354.8 million, up by $188.3 million, or 113.1% compared to $166.5 million as of December 31, 2024, and non-performing loans increased by $67.3 million, or 64.6%, to $171.4 million compared to $104.1 million as of December 31, 2024, while special mention loans increased by $131.0 million, or 2423.2% to $136.5 million as of December 31, 2025 from $5.4 million as of December 31, 2024.
• Core deposits were $5.8 billion, at December 31, 2025, up $170.7 million, or 3.0%, compared to $5.6 billion at December 31, 2024.
• Assets Under Management and custody (“AUM”) totaled $3.3 billion as of December 31, 2025 an increase of $366.7 million, or 12.7%, compared to $2.9 billion as of December 31, 2024.
• Pre-provision net revenue (“PPNR”) 1 was $108.7 million in 2025, an increase of $72.4 million, or 198.9%, compared to $36.4 million in 2024. Core PPNR 1 was $133.7 million in 2025, an increase of $8.2 million, or 6.5%, compared to $125.6 million in 2024.
• Net interest income (“NII”) was $360.7 million in 2025, up $34.7 million, or 10.7%, from $326.0 million in 2024.
• Provision for credit losses was $42.6 million in 2025, compared to $60.5 million in 2024.
• Non-interest income was $78.6 million in 2025, up $68.7 million, or 693.3%, from $9.9 million in 2024. Core non-interest income (1) was $70.7 million in 2025, a decrease of $2.0 million, or 2.7%, compared to $72.7 million in 2024.
• Non-interest expense was $330.6 million in 2025, up $31.1 million, or 10.4%, from $299.5 million in 2024. Core non-interest expense (1) was $297.7 million in 2025, an increase of $24.6 million, or 8.99%, compared to $273.1 million in 2024.
• The efficiency ratio was 75.25% in 2025 compared to 89.17% in 2024. Core efficiency ratio (1) was 69.00% in 2025, compared to 68.51% in 2024.
• Return on average asse ts (“ROA”) was positive 0.51% in 2025 compared to negative 0.16% in 2024 . Core ROA (1) was 0.71% in 2025 compared to 0.51% in 2024.
• Return on average equity (“ROE”) was positive 5.62% in 2025 compared to negative 1.99% in 2024 . Core ROE (1) was 7.75% in 2025 compared to 6.37% in 2024.
1 Non-GAAP measure, see “Non-GAAP Financial Measures” for a reconciliation to GAAP.
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Results of Operations - Comparison of Results of Operations for the Years Ended December 31, 2025 and 2024
Net income (loss)
The table below sets forth certain results of operations data for the years ended December 31, 2025, 2024 and 2023:
(in thousands, except per share amounts and percentages)
Years Ended December 31,
Change
Net interest income
Provision for credit losses
Net interest income after provision for credit losses
Noninterest income
Noninterest expense
Income before income tax expense
Income tax (expense) benefit
Net income (loss) before attribution of noncontrolling interest
Less: noncontrolling interest
Net income (loss) attributable to Amerant Bancorp Inc.
Basic earnings (loss) per common share
Diluted earnings (loss) per common share (1)
(1) See Note 23 to our audited annual consolidated financial statements in this Form 10-K for details on the dilutive and anti-dilutive effects of the issuance of restricted stock, restricted stock units and performance stock units on earnings per share in 2025, 2024 and 2023. There were no dilutive shares included in earnings per share calculation in 2024 as the Company reported a net loss from operations and their inclusion would have had an anti-dilutive effect.
2025 compared to 2024
In 2025, net income attributable to the Company was $52.4 million, or $1.26 income per diluted share, compared to net loss of $15.8 million, or $0.44 loss per diluted share, in 2024. The increase of $68.2 million, or 432.8% , in 2025 compared to 2024 was primarily due to: (i) higher noninterest income in 2025 as 2024 had a net loss due to the incurred losses on securities as a result of the investment portfolio repositioning initiated during that same period; (ii) higher net interest income; and (iii) lower provision for credit losses. The increase was partially offset by higher noninterest expense in the year compared to 2024.
Net interest income was $360.7 million in 2025, an increase of $34.7 million, or 10.7%, from $326.0 million in 2024. This was primarily due to: (i) an increase of $353.4 million, or 3.88%, in the total average balance of total interest-earning assets mainly in debt securities available for sale, deposits with banks and debt securities held for trading; (ii) an increase of 44 basis points in the average yield on debt securities available for sale; (iii) an overall decrease in the average yields of total interest-bearing liabilities mainly in total deposits; and (iv) a decrease in the average balances of the Senior Notes and FHLB advances. The increase was partially offset by: (i) decreases in the average balances of debt securities held for maturity and loans; (ii) an overall decrease in the average yield of total interest-earnings assets; and (iii) net increase in the average balances of interest bearing demand, savings and money market deposits. See “Net interest Income ” for more details.
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Noninterest income was $78.6 million in 2025, an increase of $68.7 million, or 693.3%, compared to $9.9 million in 2024. These results were mainly due to: (i) higher securities gains compared to losses in the previous year; (ii) higher brokerage, advisory and fiduciary fees; (iii) higher loan-level derivative income; (iv) higher change in cash surrender value of BOLI; and (v) higher cards and trade finance servicing fees. These increases were partially offset by: (i) the absence of the gain on the sale of the Houston franchise in 2024; (ii) higher derivative losses; (iii) lower gains on early extinguishment of FHLB advances; and (iv) lower other noninterest income. See “Noninterest Income ” for more details.
In 2025, noninterest income included non-core noninterest income items of $7.9 million, while in 2024 included a loss of $62.8 million. See “Non-GAAP Financial Measures” for more information on non-core noninterest income items.
Noninterest expense was $330.6 million in 2025, an increase of $31.1 million, or 10.4%, from $299.5 million in 2024. These results were mainly due to: (i) higher professional and other service fees; (ii) higher other operating expenses; (iii) higher contract termination costs; (iv) higher salaries and employee benefits; (v) higher losses on loans held for sale carried at the lower cost of fair value; (vi) higher loan-level derivative expenses; (vii) higher advertising expenses; and (viii) higher telecommunications and data processing expenses. These increases were partially offset by: (i) lower occupancy and equipment expenses; and (ii) lower OREO and repossessed assets expense. See “Noninterest Expense” for more details.
In 2025, noninterest expense included non-core items of $32.9 million, compared to $26.4 million in 2024. Non-core items in noninterest expense in 2025 include: (i) $15.7 million in losses in loans held for sale carried at the lower cost or fair value; (ii) $7.5 million in contract termination costs; (iii) $3.8 million in staff separation costs; (iv) $2.5 million in impairment charge on an investment; (v) $1.9 million in net losses on sale and valuation expense on OREO; (vi) $1.0 million in expenses related to the downsizing of Amerant Mortgage; and (vii) $0.5 million in intangible assets impairment. See “Non-GAAP Financial Measures” for more information on non-core items in noninterest expense.
In 2025 and 2024, total noninterest expenses related to Amerant Mortgage were $9.2 million and $14.1 million, respectively. These expenses included: (i) $6.3 million and $10.7 million in 2025 and 2024, respectively, related to salaries and employee benefits expenses and (ii) $2.9 million and $3.4 million in 2025 and 2024, respectively, related to mortgage lending costs, professional fees and other noninterest expenses. As of December 31, 2025, Amerant Mortgage had 3 FTEs compared to 80 FTEs at December 31, 2024.
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Average Balance Sheet, Interest and Yield/Rate Analysis
The following tables present average balance sheet information, interest income, interest expense and the corresponding average yields earned and rates paid for the years ended December 31, 2025, 2024 and 2023. The average balances for loans include both performing and nonperforming balances. Interest income on loans includes the effects of discount accretion and the amortization of non-refundable loan origination fees, net of direct loan origination costs as well as the amortization of net premiums/discounts on loan purchases, accounted for as yield adjustments. Average balances represent the daily average balances for the periods presented.
Years Ended December 31,
(in thousands, except percentages)
Average
Balances
Income/
Expense
Yield/
Rates
Average
Balances
Income/
Expense
Yield/
Rates
Average
Balances
Income/
Expense
Yield/
Rates
Interest-earning assets:
Loan portfolio, net (1) (2)
Debt securities available for sale (3)(4)
Debt securities held to maturity (5)
Debt securities held for trading
Equity securities with readily determinable fair value not held for trading
Federal Reserve Bank and FHLB stock
Deposits with banks
Other short-term investments
Total interest-earning assets
Total non-interest-earning assets (6)
Total assets
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Years Ended December 31,
(in thousands, except percentages)
Average
Balances
Income/
Expense
Yield/
Rates
Average
Balances
Income/
Expense
Yield/
Rates
Average
Balances
Income/
Expense
Yield/
Rates
Interest-bearing liabilities:
Interest bearing demand, savings and money market deposits (7)
Time deposits
Total deposits
Securities sold under agreements to repurchase
Advances from the FHLB and other borrowings (8)
Senior notes
Subordinated notes
Junior subordinated debentures
Total interest-bearing liabilities
Non-interest-bearing liabilities:
Non-interest bearing demand deposits
Accounts payable, accrued liabilities and other liabilities
Total non-interest-bearing liabilities
Total liabilities
Stockholders' equity
Total liabilities and stockholders' equity
Excess of average interest-earning assets over average interest-bearing liabilities
Net interest income
Net interest rate spread
Net interest margin (9)
Cost of total deposits (10)
Ratio of average interest-earning assets to average interest-bearing liabilities
Average non-performing loans/ average total loans
(1) Includes loans held for investment net of the allowance for credit losses, and loans held for sale. The average balance of the allowance for credit losses was $91.6 million, $90.0 million and $90.0 million in the years ended December 31, 2025, 2024 and 2023, respectively. The average balance of total loans held for sale was $28.0 million, $353.9 million and $77.8 million in the years ended December 31, 2025, 2024 and 2023, respectively.
(2) Includes average non-performing loans of $105.7 million, $74.9 million and $34.3 million for the years ended December 31, 2025, 2024 and 2023, respectively.
(3) Includes the average balance of net unrealized gains and losses in the fair value of debt securities available for sale. The average balance includes average net unrealized losses of $32.1 million, $84.5 million and $118.5 million in December 31, 2025, 2024, and 2023 respectively.
(4) Includes nontaxable securities with average balances of $54.4 million, $29.4 million and $17.8 million for the years ended December 31, 2025, 2024 and 2023, respectively. The tax equivalent yield for these nontaxable securities was 4.64%, 4.45% and 4.83% for the years ended December 31, 2025, 2024 and 2023, respectively. In 2025, 2024 and 2023, the tax equivalent yield was calculated by assuming a 21% tax rate and dividing the actual yield by 0.79.
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(5) We had no held to maturity securities at any point in the year ended December 31, 2025. Includes nontaxable securities with average balances of $35.2 million and $49.8 million for the years ended December 31, 2024 and 2023, respectively. The tax equivalent yield for these nontaxable securities was 4.29% and 4.22% for the years ended December 31, 2024 and 2023, respectively. In 2024 and 2023, the tax equivalent yield was calculated assuming a 21% tax rate and dividing the actual yield by 0.79.
(6) Excludes the allowance for credit losses.
(7) To emphasize material items, certain line items that were presented separately in prior years have been aggregated into a single line item in this table. This includes interest-bearing demand, savings, and money market deposits. Prior periods have been conformed to this presentation for comparability.
(8) The terms of the advance agreement require the Bank to maintain certain investment securities or loans as collateral for these advances.
(9) Net interest margin or NIM: defined as net interest income divided by average interest-earning assets, which are loans, securities, deposits with banks and other financial assets, which yield interest or similar income.
(10) Cost of total deposits: calculated based upon the average balance of total noninterest bearing and interest bearing deposits, which includes time deposits.
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Interest Rates and Operating Interest Differential
Increases and decreases in interest income and interest expense result from changes in average balances (volume) of interest-earning assets and interest-bearing liabilities, as well as changes in average interest rates. In this table, we present for the periods indicated, the changes in interest income and the changes in interest expense attributable to the changes in interest rates and the changes in the volume of interest-earning assets and interest-bearing liabilities. For each category of assets and liabilities, information is provided on changes attributable to: (i) change in volume (change in volume multiplied by prior year rate); (ii) change in rate (change in rate multiplied by prior year volume); and (iii) change in both volume and rate which is allocated to rate. See “ Risk Factors— Our profitability is subject to interest rate risk.”
Increase in Net Interest Income
Attributable to
Attributable to
(in thousands)
Volume
Rate
Total
Volume
Rate
Total
Interest income attributable to:
Loan portfolio, net
Debt securities available for sale
Debt securities held to maturity
Debt securities held for trading (1)
Equity securities with readily determinable fair value not held for trading
Federal Reserve Bank and FHLB stock
Deposits with banks
Other short-term investments
Total interest-earning assets
Interest expense attributable to:
Checking and saving accounts:
Interest bearing demand, savings and money market deposits (2)
Time deposits
Total deposits
Securities sold under agreements to repurchase
Advances from the FHLB and other borrowings
Senior notes
Subordinated notes
Junior subordinated debentures
Total interest-bearing liabilities
Increase (Decrease) in net interest income
(1) There was no trading portfolio activity in 2024, therefore, volume was zero. The total change for 2025 is attributable to volume and was calculated by multiplying the change in volume by the 2025 rate.
(2) To emphasize material items, certain line items that were presented separately in prior years have been aggregated into a single line item in this table. This includes interest-bearing demand, savings, and money market deposits. Prior periods have been conformed to this presentation for comparability.
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In 2023, the Federal Reserve had four interest rate increases which totaled 100 basis points. Meanwhile, in 2024, the Federal Reserve cut the benchmark interest rate three times during the year which resulted in a decrease of 100 basis points in 2024. Lastly, in 2025, the Federal Reserve cut rates three times during the year, totaling 75 basis points.
In 2025, we had lower average balance and lower yields on loans compared to the same period last year. To partially offset this, we were able to reprice the cost of our interest-bearing deposits during the year. Additionally, we continued investing in higher-yielding debt securities available-for-sale while maintaining a high average balance in funds at the Federal Reserve. See discussions further below for more details.
Net interest income
2025 compared to 2024
In 2025, net interest income was $360.7 million, an increase of $34.7 million, or 10.7%, from $326.0 million in 2024. This was mainly driven by: (i) an increase of $353.4 million, or 3.88%, in the total average balance of total interest-earning assets mainly in debt securities available for sale, deposits with banks and debt securities held for trading; (ii) an increase of 44 basis points in the average yield on debt securities available for sale; (iii) an overall decrease in the average yields of total interest-bearing liabilities, mainly in total deposits; and (iv) a decrease in the average balances of the Senior Notes and FHLB advances. The increase was partially offset by: (i) decreases in the average balances of debt securities held for maturity and loans; (ii) an overall decrease in the average yield of total interest-earnings assets; and (iii) net increase in the average balances of interest bearing demand, savings and money market deposits. Net interest margin was 3.82% in 2025, an increase of 24 basis points from 3.58% in 2024. See discussions further below for more details.
Interest Income. Total interest income was $597.4 million in 2025, an increase of $1.8 million, or 0.3% compared to $595.6 million in 2024. This was mainly driven by: (i) an increase of $353.4 million, or 3.88%, in the total average balance of total interest-earning assets mainly in debt securities available for sale, deposits with banks and debt securities held for trading, as well as, (ii) an increase in the average yield on debt securities available for sale. These increases were offset by decreases in the average balances of debt securities held for maturity and loans, as well as an overall decrease in the average yield of total interest-earnings assets. See “Average Balance Sheet, Interest and Yield/Rate Analysis” for detailed information.
Interest income on loans in 2025 was $479.4 million, a decrease of $26.1 million, or 5.2%, compared to $505.5 million in 2024. This result was primarily due to: (i) a 21 basis points decrease in average yields, mainly attributable to lower market rates; and (ii) a decrease of $156.9 million, or 2.2%, in the average balance of loans mainly in mortgage loans and consumer loans compared to 2024. See “Average Balance Sheet, Interest and Yield/Rate Analysis” for detailed information.
Interest income on debt securities available for sale was $89.0 million in 2025, an increase of $31.3 million, or 54.4%, compared to $57.6 million in 2024. This was mainly due to: (i) an increase of $524.0 million, or 40.6%, in the average balance of these securities, as well as, (ii) an increase of 44 basis points in average yields, primarily driven by new purchases of higher-yielding, fixed rate investments during the year.
In 2025, the average balance of accumulated net unrealized loss included in the carrying value of these securities was $32.1 million compared to $84.5 million in 2024. As of December 31, 2025, floating rate investments represent 10.3% of our total investment portfolio compared to 16.8% at December 31, 2024. In addition, the overall duration decreased to 4.4 years at December 31, 2025 from 5.2 years at December 31, 2024, which was primarily due to higher estimated prepayment assumptions. See “Average Balance Sheet, Interest and Yield/Rate Analysis” for detailed information.
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Interest income on debt securities held for trading was $3.1 million in 2025, an increase of $3.1 million, 100.0%, which was mainly due to the increase of $60.4 million in the average balances of these securities compared to having none in the same period of 2024. In the fourth quarter of 2025, we sold the entire trading portfolio for net proceeds of $113.2 million and realized a gain of approximately $2.8 million in connection with the transaction. See “Note 3. Securities” for more details on the trading portfolio.
We had no interest income on debt securities held to maturity in 2025 compared to $5.6 million in 2024, as the Company no longer carried these types of debt securities following the Securities Repositioning in 2024. See “Note 3. Securities” for more details on the Securities Repositioning.
Interest Expense. Interest expense was $236.7 million in 2025, an decrease of $32.9 million, or 12.2%, compared to $269.6 million in 2024. This was primarily due to (i) an overall decrease in the average yields of total interest-bearing liabilities mainly in total deposits, and (ii) a decrease in the average balances of the Senior Notes and FHLB advances. The decrease was offset by a net increase in the average balances of interest bearing demand, savings and money market deposits.
Interest expense on interest-bearing deposits was $200.9 million in 2025, an decrease of $30.0 million or 13.0%, compared to $230.9 million in 2024. This decrease was mainly driven by a decrease of 52 basis points in the average rates paid on total interest-bearing deposits, which was partially offset by an increase of $97.3 million, or 1.5%, in their average balance. See below for a detailed explanation of changes by major deposit category:
• Time deposits . Interest expense on total time deposits decreased $18.9 million, or 17.9%, in 2025 compared to 2024. This was mainly driven by a decrease of 51 basis points in the average cost of total time deposits. In addition, there was a decrease of $175.2 million, or 7.6%, in the average balance of these deposits, which includes a decrease of $108.3 million in the average balances of brokered time deposits, and $66.9 million in the average balances of customer CDs.
• Interest bearing checking, savings and money market deposit accounts . Interest expense on total interest bearing checking and savings accounts decreased $11.1 million, or 8.9%, in 2025 compared to 2024, mainly due to a net decrease of 44 basis points in the average cost of interest bearing demand, savings and money market deposits. The decrease was partially offset by a net increase of $272.5 million, or 6.6% in the average balances of these deposits.
Interest expense on Senior Notes decreased $2.7 million, or 72.92%, in 2025 compared to 2024, mainly due to the Company’s redemption of $60.0 million in aggregate principal amount of its 5.75% Senior Notes in April 2025. See “ Note 9. Senior Notes” for additional information.
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Analysis of the Allowance for Credit Losses
Set forth in the table below are the changes in the allowance for loan losses for each of the periods presented.
Years Ended December 31,
(in thousands)
Balance at the beginning of the period
Cumulative effect of adoption of accounting principle (1)
Charge-offs
Real estate loans
Commercial real estate (CRE)
Nonowner occupied
Multi-family residential
Single-family residential
Owner occupied
Commercial
Consumer and others
Total Charge-offs
Recoveries
Real estate loans
Commercial real estate (CRE)
Nonowner occupied
Multi-family residential
Land development and construction loans
Single-family residential
Owner occupied
Commercial
Consumer and others
Total Recoveries (2)
Net charge-offs
Provision for (reversal of) credit losses - loans
Balance at the end of the period
(1) Amounts reflect impact of the adoption of CECL effective January 1, 2022. See Note 1 to our audited annual consolidated financial statements in the 2023 Form 10-K for details on the adoption of the new accounting standard on estimating expected credit losses on financial instruments (CECL).
(2) Total recoveries related to international loans in the years ended December 31, 2023, 2022 and 2021 were $5.1 million, $1.0 million and $0.9 million, respectively. There were no recoveries related to international loans in the years ended December 31, 2025 and 2024.
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2025 compared to 2024
The Company recorded a provision for credit losses on loans of $38.8 million in 2025, compared to $57.6 million in 2024. The $38.8 million provision for credit losses on loans includes $37.7 million to cover charge-offs, $22.8 million in new specific reserves for non-performing loans, $4.7 million due to model adjustments for macroeconomic factors, and $0.3 million due to credit quality and other macroeconomic updates. These increases were partially offset by releases of $8.1 million due to lower loan balances and $18.6 million due to recoveries.
In 2025, charge-offs totaled $63.0 million, a decrease of $13.3 million, or 17.4% compared to $76.4 million in 2024. Charge-offs in 2025 included: (i) 39.2 million related to ten commercial loans; (ii) $12.6 million related to multiple smaller commercial loans, (iii) $9.0 million related to consumer and overdraft loans, primarily purchased indirect consumer loans, and (iv) $2.2 million related to one CRE loan. Charge-offs in 2025 were partially offset by $18.6 million in recoveries, (i) $15.8 million in commercial loan recoveries, including an $8.5 million recovery related to a charge‑off recorded in the third quarter of 2025; (ii) $2.6 million in consumer loan recoveries, primarily associated with purchased indirect consumer loans; and (iii) $0.2 million in multiple smaller recoveries.
In 2024, charge-offs included: (i) $39.6 million related to seven commercial loans; (ii) $24.4 million related to multiple consumer and overdraft loans, primarily purchased indirect consumer loans, and (iii) $12.4 million in connection with multiple smaller commercial and real estate loans. Charge-offs in 2024 were partially offset by $8.2 million in recoveries, which include $4.2 million related to three commercial loans, $2.6 million related to purchased indirect consumer loans, and $1.4 million related to multiple commercial and consumer loan recoveries.
The ratio of net charge-offs over the average total loan portfolio held for investment was 0.63% in 2025 compared to 0.99% in 2024.
In 2025, the Company collected a total of $11.8 million on a commercial loan, including an amount that had been previously charged off. The collection of this loan resulted in a loan recovery of $8.5 million.
We proactively and carefully monitor the Company’s credit quality practices, including examining and responding to patterns or trends that may arise across certain industries or regions.
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Noninterest Income
The table below sets forth a comparison for each of the categories of noninterest income for the periods presented.
Years Ended December 31,
Change
(in thousands, except percentages)
Amount
Amount
Amount
Amount
Amount
Deposits and service fees
Brokerage, advisory and fiduciary activities
Change in cash surrender value of bank owned life insurance (BOLI) (1)
Loan-level derivative income (2)
Cards and trade finance servicing fees
Securities gains (losses), net (3)
Gain on early extinguishment of FHLB advances, net
Gain on sale of Houston Franchise
Derivatives (losses) gains, net (4)
Other noninterest income (5)
Total noninterest income
(1) Changes in cash surrender value of BOLI are not taxable.
(2) Income from interest rate swaps and other derivative transactions with customers. The Company incurred expenses related to derivative transactions with customers which are included as part of noninterest expenses under loan-level derivative expense. See “ Noninterest Expense” section for more details.
(3) In 2025, the results include a realized gain on the sale of debt securities available for sale of $2.2 million. Additionally in 2025, includes losses from the market valuation of trading securities, partially offset by realized gains resulting from the sale of the entire trading securities portfolio in the fourth quarter of 2025. In 2024, includes a total net loss of $76.7 million as a result of the investment portfolio repositioning.
(4) In 2025, includes net unrealized losses in connection with TBA MBS derivative contracts. We enter into these contracts to economically offset changes in market valuation on the trading securities portfolio. Additionally, the Company has terminated these TBA MBS derivative contracts during the fourth quarter of 2025. In 2024 and 2023, amounts are in connection with net unrealized gains and losses related to uncovered interest rate caps with clients.
(5) Includes: (i) mortgage banking income of $0.7 million, $6.9 million and $4.5 million in 2025, 2024 and 2023, respectively, primarily consisting of net gains/losses on sale, valuation and derivative transactions associated with mortgage loans held for sale activity, and other smaller sources of income related to the operations of Amerant Mortgage. In 2025, also includes $3.3 million on the sale and leaseback of two banking centers located in South Florida. In addition, includes $0.5 million in BOLI death benefits received in 2024. Other sources of income in the periods shown include income from foreign currency exchange transactions with customers and valuation income on the investment balances held in the non-qualified deferred compensation plan.
2025 compared to 2024
Total noninterest income increased $68.7 million, or 693.3%, in 2025 compared to 2024. These results were mainly due to: (i) higher securities gains; (ii) higher brokerage, advisory and fiduciary fees; (iii) higher loan-level derivative income; (iv) higher change in cash surrender value of BOLI; and (v) higher cards and trade finance servicing fees. These increases were partially offset by: (i) the absence of the gain on the sale of the Houston franchise in 2024; (ii) higher derivative losses; (iii) lower gains on early extinguishment of FHLB advances; and (iv) lower other noninterest income.
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In 2025, securities gains were $5.1 million, an increase of $82.0 million, or 106.6%, compared to securities losses of $76.9 million in 2024. The increase included a realized gain of approximately $2.8 million on the sale of the Company’s entire trading securities portfolio. The Company initiated trading activities earlier in the year, and later sold the entire trading securities portfolio during the fourth quarter of 2025, ceasing all related trading activities as part of its liquidity management strategy. Additionally, the Company had entered into TBA MBS derivative contracts to mitigate changes in the market valuation of the trading securities held during the period. In 2025, the net realized loss on these instruments was $3.4 million, which was included in the derivative losses, net, in the Company’s consolidated statement of operations and comprehensive income.
Additionally, the Company recognized a gain of approximately $2.2 million from the sale of some available-for-sale securities. Other valuation activity resulted in gain of approximately $0.1 million.
Lastly, in 2024, the Company recorded a total pre-tax loss of approximately $76.7 million related to the repositioning of its investment portfolio in the year ended December 31, 2024. See “Note 3. Securities” for additional information on the repositioning of the portfolio.
Brokerage, advisory and fiduciary activity fees increased $2.0 million, or 11.3%, in 2025 compared to 2024, primarily driven by: (i) higher fees from equity and structured product trading in 2025; (ii) higher advisory income due to increased valuations; and (iii) higher fiduciary income due to increase in management and service fees.
Loan-level derivative income increased $1.4 million, or 20.4%, in 2025 compared to 2024, mainly driven by new swap contracts this year along with additional income from swap modifications and terminations.
In 2025, BOLI income increased $0.8 million, or 8.8%, compared to 2024, mainly due to additional income stemming from new BOLI policies purchased during the year.
Cards and trade finance servicing fees increased $0.5 million, or 9.2%, in 2025 compared to 2024, mainly driven by higher commissions from the issuance of letters of credits. This increase was partially offset by a decrease in cards fee income.
Other noninterest income decreased $0.6 million, or 4.7%, in 2025 compared to 2024, primarily due to: (i) lower mortgage banking income compared to 2024, and (ii) lower loan fees and other smaller sources of income. These decreases were partially offset by a net gain of $2.8 million on the sale of loans originated for investment in the first quarter of 2025, as well as a gain of $3.3 million that the Company recognized on the sale and leaseback of two banking centers located in South Florida in 2025.
Our AUMs totaled $3.3 billion at December 31, 2025, an increase of $366.7 million, or 12.7%, from $2.9 billion at December 31, 2024, primarily driven by increased market valuations as well as net new assets to a lesser extent.
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Noninterest Expense
The table below presents a comparison for each of the categories of noninterest expense for the periods presented.
Years Ended December 31,
Change
(in thousands, except percentages)
Amount
Amount
Amount
Amount
Amount
Salaries and employee benefits (1)
Professional and other services fees (2)
Occupancy and equipment (3)
Advertising expenses
Losses on loans held for sale carried at the lower cost or fair value (4)
Telecommunications and data processing
FDIC assessments and insurance
Contract termination costs (5)
Depreciation and amortization (6)
Loan-level derivative expense (7)
Other real estate owned and repossessed assets (income) expense, net (8)
Other operating expenses (9)
Total noninterest expenses (10)
(1) In 2025, includes non-core staff separation costs of $3.7 million. Additionally in 2025, includes $1.0 million, in expenses in connection with the Amerant Mortgage downsizing. In 2024, includes additional compensation in connection with the Houston Sale Transaction. Additionally, includes severance expense of $4.0 million in 2023 in connection with staff reduction costs primarily related to organizational rationalization.
(2) In 2025, includes non-core advisory costs associated with staff separation of $0.1 million. In 2024,includes $0.4 million in legal expenses in connection with the Houston Sale Transaction. In 2023, includes additional, nonrecurrent expenses of $5.8 million related to the engagement of FIS. Lastly, includes recurring service fees in connection with the engagement of FIS in all periods shown.
(3) In 2024, includes fixed assets impairment charge of $3.4 million in connection with the Houston Sale Transaction. In 2023, includes a rent termination fee of $0.3 million in connection with the closure of a branch in Houston, Texas, as well as an aggregate of $1.1 million related to ROU asset impairments in connection with the closure of two branches in 2023 (one branch in Miami, FL and another branch in Houston, Texas).
(4) In 2025, 2024 and 2023, includes losses on valuation on loans transferred into the held for sale category and/or losses recognized on the sale of such loans.
(5) In 2025, includes termination costs associated with certain contracts. See further discussion below for more details.
(6) In 2023, includes a charge of $0.9 million for the accelerated depreciation of leasehold improvements in connection with the closure of a branch in Miami, FL in 2023.
(7) Includes service fees in connection with our loan-level derivative income generation activities.
(8) In 2025, includes OREO valuation expense of $1.2 million and a net loss on the sale of two OREO properties of $0.8 million. In 2024, includes OREO valuation expense of $5.7 million. In 2023, includes a loss on sale of repossessed assets in connection with our equipment-financing activities of $2.6 million.
(9) In 2025, includes $3.0 million of non-core expenses for an impairment charge of $2.5 million related to an investment carried at cost, and an impairment of an intangible asset of $0.5 million related to Amerant Mortgage. In 2024, includes broker fees of $1.3 million in connection with the Houston Sale Transaction. In 2023, includes goodwill and intangible assets impairments totaling $1.7 million related to two of our subsidiaries (Amerant Mortgage and the Cayman Bank). Also in 2023, includes additional costs of $1.1 million in connection with the restructuring of the Company’s BOLI as well as an impairment charge of $2.0 million related to an investment carried at cost and included in other assets.
(10) Includes $9.2 million, $14.1 million and $14.4 million in 2025, 2024 and 2023, respectively, related to Amerant Mortgage, primarily consisting of salaries and employee benefits, mortgage lending costs and professional and other services fees.
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2025 compared to 2024
Noninterest expense increased $31.1 million, or 10.4%, in 2025 compared to 2024, mainly due to: (i) higher professional and other service fees; (ii) higher other operating expenses; (iii) higher contract termination costs; (iv) higher salaries and employee benefits; (v) higher losses on loans held for sale carried at the lower cost of fair value;(vi) higher loan-level derivative expenses; (vii) higher advertising expenses; and (viii) higher telecommunications and data processing. These increases were partially offset by: (i) lower occupancy and equipment expenses; and (ii) lower OREO and repossessed assets expense.
Professional and other services fees increased $10.0 million, or 19.6%, in 2025 compared to 2024, mainly driven by an overall increase in other professional fees related to outsourced core software and technology services, mortgage servicing expenses, consulting and legal fees related to various projects and professional fees in connection with outsourced audits.
Other operating expenses increased $9.9 million, or 54.6%, in 2025 compared to 2024 , mainly driven by: (i) earning credits of $10.8 million in 2025 compared to not having earnings credits in 2024; (ii) a $2.5 million impairment on investments carried at cost which are presented in other assets of the balance sheet; and (iii) impairment on intangible assets related to Amerant Mortgage of $0.5 million. These increases were partially offset by: (i) a decrease of approximately $1.7 million in combined costs in loan origination and servicing costs; (ii) a decrease of approximately $1.3 million in expenses related to the Houston Sale Transaction; and (iii) a decrease of $0.9 million in combined expenses related to operating charge-offs, banking fees and stationary expenses.
Contract termination costs increased $7.5 million, or 100.0%, in 2025 compared to 2024, primarily due to costs associated with certain advertising contracts that were terminated as well as the termination of a third-party loan origination agreement under a white-label program.
Salaries and employee benefits increased $6.2 million, or 4.5%, in 2025 compared to 2024 mainly driven by: (i) higher staff separation costs incurred during the fourth quarter related to the CEO’s departure, costs associated with the departure of other key employees as well as expenses related to the downsizing of Amerant Mortgage during the year; (ii) higher salary expense related to the new and existing workforce; and (iii) higher health insurance expenses. These increases were partially offset by: (i) lower bonus variable compensation attributable to lower performance; (ii) lower commissions due to lower loan production in connection with the Amerant Mortgage downsizing; and (iii) the absence of compensation expense in connection with the Houston Sale Transaction in 2024.
Losses on loans held for sale carried at the lower cost or fair value, increased $1.8 million, or 13.2%, in 2025 compared to 2024. In 2025, losses include a loss of $13.8 million related to the valuation of loans held for sale carried at cost or fair value. These were in connection to five loans, which had an outstanding principal balance of $93.7 million, that were transferred into held-for-sale loan category. In addition, we also incurred a loss on the sale of loans associated with our white-label equipment finance solution program of $1.1 million.
Loan-level derivative expense increased $1.8 million, or 74.6%, in 2025 compared to 2024, due to higher expenses during the period associated with payments for opening and terminations of new swaps and caps with clients throughout the year.
Advertising expenses increased $1.5 million, or 10.3%, in 2025 compared to 2024, which was mainly driven by higher expenses related to traditional media and professional sports agreements, higher expenses related to community engagement events and higher marketing professional fees.
Telecommunications and data processing fees increased $0.9 million, or 7.4%, in 2025 compared to 2024. This was primarily due to higher computer expenses during the period compared to last year.
Occupancy and equipment expenses decreased $4.5 million, or 16.5%, in 2025 compared to 2024. This was mainly due to 2024 having impairment charges associated with the sale of the Houston franchise.
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Other real estate owned and repossessed assets expenses decreased $4.0 million, or 82.4%, in 2025 compared to 2024, due to 2024 having higher valuation allowances recorded on OREO properties.
Income Taxes
The table below sets forth information related to our income taxes for the periods presented.
(in thousands, except percentages)
Years Ended December 31,
Change
Income (loss) before income tax expense (benefit)
Current tax expense (benefit):
Federal
State
Deferred tax expense (benefit)
Income tax expense (benefit)
Effective income tax rate
2025 compared to 2024
We recorded an income tax expense of $13.7 million in 2025 compared to an income tax benefit of $8.3 million in 2024. The increase in 2025 was mainly driven by higher income before income taxes in 2025 compared to a net loss in the previous year.
As of December 31, 2025, the Company’s net deferred tax asset was $35.6 million, a decrease of $18.0 million, or 33.6% compared to $53.5 million as of December 31, 2024. This decrease was mainly driven by the tax effect of: (i) a decrease of $52.6 million in net unrealized holding losses on debt securities available for sale in 2025 and (ii) a decrease of $71.2 million in the carryover of federal and state net operating losses. This was partially offset by the tax effect of an increase of $13.8 million in the valuation allowance of loans held for sale carried at the lower of cost or fair value.
On July 4, 2025, federal legislation generally referred to as H.R. 1 - One Big Beautiful Bill Act (the “Act”) was signed into law. The Act includes a variety of tax provisions including permanently extending and modifying certain key aspects of existing tax law. U.S. GAAP requires the effects of changes in tax laws and rates to be recognized in its financial statements in the period in which legislation is enacted. The Company evaluated the impact of the Act on its consolidated financial statements and determined there is not a material impact resulting from the Act.
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Non-GAAP Financial Measures
The Company supplements its financial results that are determined in accordance with accounting principles generally accepted in the United States of America (“GAAP”) with non-GAAP financial measures, such as “pre-provision net revenue (PPNR)”, “core pre-provision net revenue (Core PPNR)”, “core noninterest income”, “core return on assets (“ROA”), “core return on equity (“ROE”), “tangible common equity ratio”, “tangible stockholders’ equity (book value) per common share”, and “core noninterest expense”. This supplemental information is not required by, or is not presented in accordance with GAAP. The Company refers to these financial measures and ratios as “non-GAAP financial measures”.
We use certain non-GAAP financial measures, including those mentioned above, both to explain our results to shareholders and the investment community and in the internal evaluation and management of our business. Management believes that these supplementary non-GAAP financial measures and the information they provide are useful to investors since these measures permit investors to view our performance using the same tools that our management uses to evaluate our past performance and prospects for future performance. These non-GAAP financial measures have been adjusted for the effect of non-core banking activities such as the sale of loans and securities and other repossessed assets, the Amerant Mortgage downsizing, the Houston Sale Transaction, the valuation of securities, derivatives, loans held for sale and other real estate owned and repossessed assets, the early repayment of FHLB advances, and other non-core actions intended to improve customer service and operating performance. While we believe that these non-GAAP financial measures are useful in evaluating our performance, this information should be considered as supplemental and not as a substitute for or superior to the related financial information prepared in accordance with GAAP. Additionally, these non-GAAP financial measures may differ from similar measures presented by other companies.
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The following table is a reconciliation of the Company’s PPNR and Core PPNR, ROA and Core ROA, ROE and Core ROE, non-GAAP financial measures, as of the dates presented:
December 31,
(in thousands)
Net income (loss) attributable to Amerant Bancorp Inc.
Plus: provision for credit losses (1)
Plus: provision for income tax expense (benefit)
Pre-provision net revenue (PPNR)
Plus: non-core noninterest expense items (2)
Plus (less): non-core noninterest income items (2)
Core pre-provision net revenue (Core PPNR)
Total noninterest income
Less: non-core noninterest income items (2) :
Derivative (losses) gains, net (3)
Securities gains (losses), net (4)
Bank owned life insurance charge (5)
Gain on sale of Houston Franchise (6)
Gain on early extinguishment of FHLB advances, net
Gain on sale of loans (7)
Gain on the sale and lease back of branches (8)
Total non-core noninterest income items (2)
Core noninterest income
Total noninterest expenses
Less: non-core noninterest expense items (2) :
Restructuring costs (9)
Staff reduction costs (10)
Contract termination costs (11)
Consulting and other professional fees and software expenses (12)
Disposition of fixed assets (13)
Branch closure and related charges (14)
Total restructuring costs
Other non-core noninterest expense items (2) :
Losses on loans held for sale carried at the lower cost or fair value (6)(15)
Net losses on sale and valuation expense on other real estate owned (16)
Goodwill and intangible assets impairment (6)(17)
Fixed assets impairment (6)(18)
Legal, broker fees, and other costs (6)
Bank owned life insurance enhancement costs (5)
Impairment charge on investment carried at cost
Amerant Mortgage downsizing costs (19)
Staff separation costs (20)
Total non-core noninterest expense items (2)
Core noninterest expenses
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December 31,
Net income (loss) attributable to Amerant Bancorp Inc.
Plus after-tax non-core items in noninterest expense:
Non-core items in noninterest expense before income tax effect
Income tax effect (21)
Total after-tax non-core items in noninterest expense
(Less) plus: before-tax non-core items in noninterest income:
Non-core items in noninterest income before income tax effect
Income tax effect (21)
Total after-tax non-core items in noninterest income
Core net income
Net income (loss) / Average total assets (ROA)
Plus: after tax impact of non-core items in noninterest expense
(Less) plus: after tax impact of non-core items in noninterest income
Core net income / Average total assets (Core ROA)
Net income (loss) / Average stockholders' equity (ROE)
Plus: after tax impact of non-core items in noninterest expense
(Less) plus: after tax impact of non-core items in noninterest income
Core net income / Average stockholders' equity (Core ROE)
(1) Includes provision for credit losses on loans and provision for loan contingencies.
(2) Beginning in the fourth quarter of 2025, we updated the terminology used to describe non‑GAAP adjustments, referring to them as “non‑core’” rather than “non‑routine.” This change reflects a labeling update only; the methodology used for these adjustments remains unchanged from prior periods.
(3) In 2025, includes net unrealized losses in connection with to-be announced (TBA) mortgage back-securities (MBS) derivative contracts. We enter into these contracts to economically offset changes in market valuation on the trading securities portfolio. The Company terminated these TBA MBS trading derivative contracts during the fourth quarter of 2025.
(4) In 2025, the results include a realized gain on the sale of debt securities available for sale of $2.2 million. Additionally, includes losses from the market valuation of trading securities, partially offset by realized gains resulting from the sale of the entire trading securities portfolio in the fourth quarter of 2025. In the third quarter of 2024, the Company executed an investment portfolio repositioning which resulted in a total pre-tax net loss of $68.5 million during the same period. The investment portfolio repositioning was completed in early October 2024 resulting in an additional $8.1 million in losses in the fourth quarter of 2024.
(5) In 2023, the Company completed a restructuring of its bank-owned life insurance (“BOLI”) program. This was executed through a combination of a 1035 exchange and a surrender and reinvestment into higher-yielding general account with a new investment grade insurance carrier. This transaction allowed for higher team member participation through an enhanced split-dollar plan. Estimated improved yields resulting from the enhancement have an earn-back period of approximately 2 years. Also in 2023, the Company recorded total additional expenses and charges of $4.6 million in connection with this transaction, including: (i) a reduction of $0.7 million to the cash surrender value of BOLI; (ii) transaction costs of $1.1 million, and (iii) income tax expense of $2.8 million.
(6) In 2024, amount shown are in connection with the Houston Sale Transaction completed in 2024.
(7) In 2025, includes gain on sale of $3.2 million, related to the sale of a loan that had been charged off in the prior period.
(8) In 2025, amount were gains that resulted from the sale and lease back of two banking centers located in South Florida.
(9) In 2025, restructuring costs primarily relate to cost reduction initiatives intended to improve the Company’s cost structure and efforts to de-risk the loan portfolio. These initiatives include terminating certain advertising contracts and a third-party loan origination agreement under a white-label program. In 2023, restructuring costs included expenses incurred for actions designed to implement the Company’s strategy. These actions included, but were not limited to, reductions in workforce, streamlining operational processes, implementation of new technology system applications, enhanced sales tools and training, expanded product offerings and improved customer analytics to identify opportunities.
(10) Staff reduction costs consist of severance expenses related to organizational rationalization.
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(11) In 2025, primarily includes costs related to the termination of advertising contracts and a third-party loan origination agreement under a white-label program. In 2023, includes contract termination and related costs associated with third party vendors resulting from the Company’s engagement of FIS.
(12) In 2023, includes an aggregate of $6.4 million of nonrecurrent expenses in connection with the engagement of FIS and, to a lesser extent, software expenses related to legacy applications running in parallel to new core banking applications. The transition to FIS was completed in 2023, therefore, there were no significant nonrecurrent expenses in connection with the engagement of FIS in 2024.
(13) In 2023, includes expenses in connection with the disposition of fixed assets due to the write-off of in-development software.
(14) In 2023, includes expenses of $0.3 million in connection with the closure of a branch in Houston, Texas in 2023. In addition, in 2023, includes $0.9 million of accelerated amortization of leasehold improvements and $0.6 million of right-of-use or “ROU” asset impairment associated with the closure of a branch in Miami, FL. Also in 2023, includes $0.5 million of ROU asset impairment associated with the closure of a branch in Houston, Texas in 2023.
(15) In 2025, amounts include a loss of $13.8 million related to the valuation of loans held for sale carried at the lower of cost or fair value, which had an outstanding principal balance of $93.7 million as of December 31, 2025. In addition, 2025 amount include a $1.1 million loss on the sale of loans associated with our white‑label equipment finance solution. In 2024, includes loss on sale of $12.6 million, including transaction costs, related to the sale of a portfolio of 323 business-purpose, investment property, residential mortgage loans with a balance of approximately $71.4 million. In 2023, includes: (i) a fair value adjustment of $35.5 million related to an aggregate of $401 million in Houston-based CRE loans held for sale which are carried at the lower of cost or fair value, and (ii) a loss on sale of $2.0 million related to a New York-based CRE loan previously carried at the lower of fair value or cost. Lastly, in 2023, includes a fair value adjustment of $5.6 million related to a New York-based CRE loan held for sale carried at the lower of cost or fair value.
(16) In 2025, includes OREO valuation expenses of $1.1 million and a net loss on the sale of two OREO properties of $0.8 million. In 2023, amount represents the loss on sale of repossessed assets in connection with our equipment-financing activities. There were no non-core items of OREO in 2024. .
(17) In 2025, amount shown is in connection with an intangible asset impairment related to Amerant Mortgage.
(18) In 2024, related to Houston branches and included as part of occupancy and equipment expenses. See “ Noninterest Expenses” for additional information.
(19) In 2025, includes salaries and employee benefit expenses in connection with the Amerant Mortgage downsizing during the year. See “Item 1. Business” for more information.
(20) In 2025, includes severance, accelerated stock-based compensation and related reversals, and other expenses associated with the leadership transition completed in early November 2025. See “Item 1. Business” for more information. These costs also include severance related to the departure of other senior positions in 2025.
(21) In 2025, amount was calculated based upon the effective tax rate for those periods of 20.75%. For all of the other periods shown, amounts represent the difference between the prior and current period year-to-date tax effect. In 2024, income tax effect amounts on non-core items of noninterest income and expense were calculated using estimated tax rates of 27.14% and 22.50%, respectively.
The following table is a reconciliation of the Company’s tangible common equity and tangible assets, non GAAP financial measures, to total equity and total assets, respectively, as of the dates presented:
(in thousands, except percentages and per share amounts)
December 31, 2025
December 31, 2024
Stockholders' equity
Less: goodwill and other intangibles (1)
Tangible common stockholders' equity
Total assets
Less: goodwill and other intangibles (1)
Tangible assets
Common shares outstanding
Tangible common equity ratio
Stockholders' book value per common share
Tangible stockholders' book value per common share
(1) Other intangible assets primarily consist of naming rights and mortgage servicing rights (“MSRs”). Other intangible assets are included in other assets in the Company’s consolidated balance sheets.
Financial Condition - Comparison of Financial Condition as of December 31, 2025 and December 31, 2024
Assets. Total assets were $9.8 billion as of December 31, 2025, a decrease of $124.7 million, or 1.3%, compared to $9.9 billion at December 31, 2024. This result was primarily driven by: (i) a decrease of $568.4 million , or 7.9%, in total loans held for investment, net of the allowance for credit losses, and loans held for sale at the lower of cost or fair value and mortgage loans held for sale; (ii) a decrease of $120.2 million, or 20.4%, in cash and cash equivalents; (iii) a decrease of $32.4 million , or 15.4%, in accrued interest receivable and other assets mainly in decreases in the valuation of derivative instruments receivables; and (iv) a decrease of $18.0 million , or 33.6% , in net deferred tax assets. These decreases was partially offset by: (i) increase of $587.7 million, or 40.9%, in debt securities available for sale; (ii) an increase in BOLI of $17.1 million, or 7.0% due to the change in their value during the period, as well as a $7.0 million purchase during the period; and (iii) an increase of $10.6 million, or 10.6%, in operating lease right-of-use assets mainly driven by the sale and leaseback of two banking centers in South Florida in 2025, See “Average Balance Sheet, Interest and Yield/Rate Analysis” for detailed information, including changes in the composition of our interest-earning assets.
Cash and Cash Equivalents
2025 compared to 2024
Cash and cash equivalents totaled $470.2 million at December 31, 2025, a decrease of $120.2 million, or 20.4%, from $590.4 million at December 31, 2024, primarily as a result of a decrease in interest earning cash balances. At December 31, 2025 and December 31, 2024, interest earning deposits with banks, mainly cash balances held at the Federal Reserve, were $409.4 million and $519.9 million, respectively. In addition, at December 31, 2025 and December 31, 2024, the Company’s cash and cash equivalents included restricted cash of $6.2 million and $24.4 million, respectively, which were held primarily to cover margin calls on derivative transactions with certain brokers. Furthermore, at December 31, 2025 and 2024, the Company’s cash and cash equivalents included other short-term investments of $7.2 million and $6.9 million, respectively, which consists of U.S. Treasury Bills that mature in 90 days or less.
Cash flows provided by operating activities was $137.0 million in the year ended December 31, 2025, primarily driven by: (i) net income of $52.4 million; (ii) a non-cash adjustment of $42.6 million for the provision for credit losses; (iii) a non-cash adjustment of $15.7 million for losses on loans held for sale carried at the lower of cost or fair value; (iv) net proceeds from the sale of mortgage loans held for sale at fair value of $36.2 million; and (v) other non-cash adjustments of $7.5 million. These changes were partially offset by net decreases in operating assets and liabilities of $12.3 million.
Net cash used in investing activities was $47.8 million during the year ended December 31, 2025, mainly driven purchases of investment securities totaling $1.2 billion, primarily comprised of: (i) debt securities available for sale and trading securities; (ii) purchase of premises and equipment of $7.7 million, and (iii) purchases of BOLI of $7.0 million. These disbursements were partially offset by: (i) maturities, sales, calls and paydowns of investment securities totaling $654.4 million; (ii) a net decrease in loans originated for investment of $343.4 million; (iii) proceeds from the sale of loans originated for investment of $137.9 million; and (iv) proceeds from the sale of premises and equipment of $14.1 million.
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In the year ended December 31, 2025, net cash used by financing activities was $209.4 million. These activities included: (i) a net decrease of $238.4 million in time deposits; (ii) the redemption of $60.0 million of senior notes that were due June 30, 2025; (iii) net repayments of FHLB advances of $33.4 million; (iv) an aggregate of $33.0 million in connection with the repurchase of shares of Class A common stock in 2025, and (v) $15.1 million of dividends declared and paid by the Company in 2025. These disbursements were partially offset by a net increase in total demand, savings and money market deposit balances of $170.7 million. See “Capital Resources and Liquidity Management” for more details on changes in FHLB advances in 2024 and the stock repurchase programs.
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Loans
Loans are our largest component of interest-earning assets. The table below depicts the trend of loans as a percentage of total assets and the allowance for loan losses as a percentage of total loans held for investment for the periods presented.
December 31,
(in thousands, except percentages)
Total loans, gross (1)
Total loans, gross (1) / Total assets
Allowance for credit losses
Allowance for credit losses / Total loans held for investment, gross (1)
Total loans, net (2)
Total loans, net (2) / Total assets
(1) Total loans, gross is the principal balance of outstanding loans, including loans held for investment, loans held for sale at the lower of cost or fair value, and mortgage loans held for sale, net of unamortized deferred nonrefundable loan origination fees and loan origination costs, and unamortized premiums paid on purchased loans, excluding the allowance credit loan losses. At December 31, 2025 and 2024, there were $2.9 million and $42.9 million, respectively, in loans held for sale carried at fair value in connection with the Company’s mortgage banking activities. At December 31, 2025, there were $80.9 million in loans held for sale at the lower of cost or fair value. There were no loans held for sale at the lower of cost or fair value at December 31, 2024.
(2) Total loans, net is the principal balance of outstanding loans, including loans held for investment, loans held for sale carried at the lower of cost or fair value, and mortgage loans held for sale, net of unamortized deferred nonrefundable loan origination fees and loan origination costs, and unamortized premiums paid on purchased loans, adjusted by the allowance for credit losses.
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The table below summarizes the composition of loans held for investment by type of loan as of the end of each period presented. International loans include transactions in which the debtor or customer is domiciled outside the U.S., even when the collateral is U.S. property. All international loans are denominated and payable in U.S. Dollars.
December 31,
(in thousands)
Domestic Loans:
Real estate loans
Commercial real estate (CRE)
Nonowner occupied
Multi-family residential
Land development and construction loans
Single-family residential
Owner occupied
Commercial loans (1)
Loans to financial institutions and acceptances (2)
Consumer loans and overdrafts (3)
Total Domestic Loans
International Loans:
Real estate loans
Single-family residential (4)
Commercial loans
Consumer loans and overdrafts (5)
Total International Loans (6)
Total Loans Held For Investment
(1) In December 31, 2024, we had approximately $46.4 million in commercial loans and leases originated under a white‑label equipment financing solution launched in the second quarter of 2022. During the fourth quarter of 2025, the Company sold these loans; therefore, no balances were outstanding as of December 31, 2025. See the discussion below for additional details.
(2) In 2025, this portfolio consists of loans to non-depository financial institutions, such as mortgage companies and other financial intermediaries. In 2024, the portfolio primarily consists of such loans and, to a lesser extent, other loan facilities secured by cash or U.S. Government securities. In all other periods shown, the amounts consist of other loan facilities secured by cash or U.S. Government securities.
(3) Includes customers’ overdraft balances totaling $4.4 million, $4.4 million, $2.6 million, $4.7 million and $0.6 million at each of the dates presented.
(4) Secured by real estate properties located in the U.S.
(5) International customers’ overdraft balances were de minimis at each of the dates presented.
(6) Mainly consist of loans for which the country of risk is Venezuela.
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The composition of our CRE loan portfolio held for investment by industry segment at December 31, 2025, 2024, 2023, 2022 and 2021 is depicted in the following table:
December 31,
(in thousands)
Retail (1)
Multifamily
Office space
Specialty (2)
Land and construction
Hospitality
Industrial and warehouse
Total CRE Loans Held For Investment
(1) Includes loans generally granted to finance the acquisition or operation of non-owner occupied properties such as retail shopping centers, free-standing single-tenant properties, and mixed-use properties primarily dedicated to retail, where the primary source of repayment is derived from the rental income generated from the use of the property by its tenants.
(2) Includes marinas, nursing and residential care facilities, and other specialty type CRE properties.
At December 31, 2025, our commercial real estate loans held for investment based in South Florida, Tampa and Central Florida (which we consider one region), New York, Texas and other regions were $1.7 billion, $213.0 million, $189.0 million, $137.0 million and $241.0 million, respectively. At December 31, 2024, our commercial real estate loans held for investment based in South Florida, Tampa and Central Florida, New York, Houston and other regions were $1.8 billion, $189.2 million, $221.8 million, $191.0 million and $121.1 million, respectively.
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The table below summarizes the composition of our loans held for sale by type of loan as of the end of each period presented
(in thousands)
December 31,
December 31,
December 31,
December 31,
December 31,
Loans held for sale at the lower of cost or fair value
Real estate loans
Commercial real estate
Non-owner occupied
Multi-family residential
Land development and construction loans (1)
Owner occupied
Total loans held for sale at the lower of cost or fair value (2)
Mortgage loans held for sale at fair value
Land development and construction loans
Single family residential
Total mortgage loans held for sale, at fair value (2)
Total loans held for sale
(1) Includes two non-accrual loans with an outstanding balance of $16.2 million as of December 31, 2025. Of these loans, $3.2 million were categorized as 60-89 days past due and $13.0 million as greater than 90 days past due, respectively.
(2) Mortgage loans held for sale at fair value in periods prior to December 31, 2025 were in connection with Amerant Mortgage’s business.
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As of December 31, 2025, total loans held for investment were $6.6 billion, down $615.0 million, or 8.5%, compared to $7.2 billion at December 31, 2024. Domestic loans held for investment decreased $607.4 million, or 8.5%, as of December 31, 2025, compared to December 31, 2024. The decrease in total domestic loans held for investment includes net decreases of: (i) $305.2 million, or, 17.4%, in domestic commercial loans; (ii) $197.7 million, or 19.6%, in domestic owner occupied loans; (iii) $49.6 million, or, 2.0%, in domestic CRE loans; (iv) $27.3 million, or 10.0% in domestic consumer loans; (v) $21.8 million, or 12.8%, in loans to financial institutions and acceptances, and (vi) $5.8 million, or 0.4%, in domestic single-family residential loans. The decrease in domestic consumer loans was primarily related to indirect consumer loans, as the Company discontinued purchases of such loans in 2023 and this indirect lending portfolio is expected to run off over time. The decreases in domestic commercial, CRE and owner‑occupied loans were mainly driven by prepayments and paydowns, which offset loan production in 2025. In addition, the decreases in domestic CRE and owner‑occupied loans include the transfer, in 2025, of various loans classified as Substandard to held for sale at the lower of cost or fair value. Lastly, the decrease in commercial loans includes the sale of loans originated under a white‑label equipment finance solution in 2025. See further discussion below for additional details.
Loans to international customers, primarily from Latin America, decreased $7.6 million, or 18.8% to $33.1 million as of December 31, 2025, compared to December 31, 2024, mainly driven by paydowns totaling $7.1 million to existing single-family residential loans.
At December 31, 2025 and 2024, there were $2.9 million and $42.9 million, respectively, of mortgage loans held for sale carried at their estimated fair value. In 2025, in connection with mortgage loans held for sale, we originated approximately $107.5 million and had proceeds of approximately $143.7 million, mainly from the sale of these loans.
In 2025, the Company added approximately $94.9 million in single-family residential and construction loans through Amerant Mortgage which includes loans originated and purchased from different channels.
In 2025, the Company transferred five loan relationships from held for investment to held for sale, measured at the lower of cost or fair value. These loans were classified as Substandard. Upon transfer, the loans had an aggregate principal balance of $93.7 million, and the Company recorded a valuation allowance of $13.8 million in connection with these loans. In January 2026, the Company subsequently sold four of the five loans referenced above, which had an aggregate carrying value of $65.7 million at the time of sale, and recognized no additional losses on the transactions. Also, in 2025, the Company transferred to held for sale and sold loans associated with our former white‑label equipment finance solution, received net proceeds of $54.3 million and realized a loss of $1.1 million in connection with the transaction. Additionally, during the year ended December 31, 2025, the Company transferred a $40.6 million commercial loan from held for investment to held for sale, at the lower of cost or fair value, and transferred it back to held for investment. The Company subsequently sold this loan in 2025 for net proceeds of $29.5 million and recognized a loss on sale of $0.9 million.
As of December 31, 2024, the Company had no loans held for sale carried at the lower of cost or fair value. In 2024, the Company transferred an aggregate of $497.3 million in connection with the Houston Sale Transaction. The Company recorded a valuation allowance of $1.3 million as a result of the transfer in the same period. In the fourth quarter of 2024, the Houston Sale Transaction closed and as a result, the Company sold, at par, all loans held for sale carried at the lower of cost or fair value at the time of sale. The carrying value of the loans at the time of sale was approximately $473.9 million. In addition, on December 27, 2024, the Company transferred to held for sale and sold business-purpose, investment property, residential mortgage loans with a carrying value of $71.1 million. These loans had collateral across several states and average interest rate of 7.13%. We recorded a loss on sale of $12.6 million including estimated transaction costs.
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As of December 31, 2025, loans under syndication facilities were $434.9 million, an increase of $41.2 million, or 10.5%,compared to $393.7 million at December 31, 2024. This was mainly driven by a net increase of $69.2 million in club deals partially offset by a net decrease of $28.0 million of Shared National Credit Facilities (“SNC”). As of December 31, 2025 and 2024, there were no SNC loans that financed highly leveraged transactions. At December 31, 2025 and December 31, 2024, loans under syndication facilities held for investment include SNCs of $53.5 million and $81.5 million, respectively.
The following is a brief description of the composition of our loan classes:
Commercial Real Estate (CRE) loans. We provide a mix of variable and fixed rate CRE loans. These are loans secured by non-owner occupied real estate properties and land development and construction loans.
Loans secured by non-owner occupied real estate properties are generally granted to finance the acquisition or operation of CRE properties. The main source of repayment of these real estate loans is derived from cash flows or conversion of productive assets and not from the income generated by the disposition of the property held as collateral. These mainly include rental apartment (multifamily) properties, office, retail, warehouses and industrial facilities, and hospitality (hotels and motels) properties mainly in South and Central Florida, Tampa, the greater Houston, Texas area and the greater New York City area, especially the five New York City boroughs. Concentrations in these non-owner occupied CRE loans are subject to heightened regulatory scrutiny. See “Risk Factors— Our concentration of CRE loans could result in further increased loan losses, and adversely affect our business, earnings, and financial condition.”
Land development and construction loans includes loans for land acquisition, land development, and construction (single or multiple-phase development) of single residential or commercial buildings, loans to reposition or rehabilitate commercial properties, and bridge loans mainly in the South Florida, and the greater Houston, Texas area. There were no land development and construction loans in the New York City area as of December 31, 2025. Typically, construction lines of credit are funded based on construction progress and generally have a maturity of three years or less.
Owner-occupied. Loans secured by owner-occupied properties are typically working capital loans made to businesses in the South Florida and the greater Houston, Texas markets. The source of repayment of these commercial owner-occupied loans primarily comes from the cash flow generated by the occupying business and the real estate collateral serves as an additional source of repayment. These loans are assessed, analyzed, and structured essentially in the same manner as commercial loans.
Single-Family Residential. These loans include loans to domestic and foreign individuals and businesses secured by single-family residences in the U.S., including first mortgages on properties mainly located in Florida, home equity and home improvement loans, mainly in South Florida and the greater Houston, Texas markets. These loans have terms common in the industry. However, loans to foreign clients have more conservative underwriting criteria and terms.
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Commercial loans. We provide a mix of variable and fixed rate C&I loans. These loans are made to a diverse range of business sizes, from the small-to-medium-sized to middle market and large companies. These businesses cover a diverse range of economic sectors, including manufacturing, wholesale, retail, primary products and services. We provide loans and lines of credit for working capital needs, business expansions and for international trade financing. These loans include working capital loans, asset-based lending, participations in SNCs (loans of $100 million or more that are shared by two or more institutions), purchased receivables and SBA loans, among others. The tenors may be either short term (one year or less) or long term, and they may be secured, unsecured, or partially secured. Typically, lines of credit have a maturity of one year or less, and term loans have maturities of five years or less. Through the fourth quarter of 2025, the Company provided specialized equipment financing using a variety of loan and lease structures, as part of its commercial lending activities, through a third party originator. These equipment loans and leases were originated under a white-label equipment financing solution launched in the second quarter of 2022. In December 2025, the Company terminated the third‑party white‑label agreement and sold all related loans. Commercial loans to borrowers in similar businesses or products with similar characteristics or specific credit requirements are generally evaluated under a standardized commercial credit program. Commercial loans outside the scope of those programs are evaluated on a case-by-case basis, with consideration of any exposure under an existing commercial credit program. The Bank maintains several commercial credit programs designed to standardize underwriting guidelines, and risk acceptance criteria, in order to streamline the granting of credits to businesses with similar characteristics and common needs. Some programs also allow loans that deviate from credit policy underwriting requirements and allocate maximum exposure buckets to those loans. Loans originated through a program are monitored regularly for performance over time and to address any necessary modifications.
Loans to financial institutions and acceptances. These loans primarily include loans to financial institutions and acceptances which are granted mainly to non-depository financial institutions such as mortgage companies and other financial intermediaries. Loans in this portfolio segment are generally granted for terms not exceeding three years and on a secured basis under the terms of each credit agreement.
Consumer loans and overdrafts. These loans include open and closed-end loans extended to domestic and foreign individuals for household, family and other personal expenditures. These loans include automobile loans, personal loans, or loans secured by cash or securities and revolving credit card agreements. These loans have terms common in the industry for these types of loans, except that loans to foreign clients have more conservative underwriting criteria and terms. Beginning in 2020, consumer loans include indirect unsecured personal loans to well qualified individuals we purchased from recognized third parties personal loan originators. However, we are focusing on organic growth and have not been purchasing any new indirect consumer loan production since the end of 2022. All consumer loans are denominated and payable in U.S. Dollars.
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The tables below set forth the unpaid principal balance of loans held for investment by type, by interest rate type (fixed-rate and variable-rate) and by original contractual loan maturities as of December 31, 2025:
(in thousands)
Due in
one year
or less
Due after
one year
through five
Due after
five
years (1)
Total
Fixed-Rate
Real estate loans
Commercial real estate (CRE)
Nonowner occupied
Multi-family residential
Land development and construction loans
Single-family residential
Owner occupied
Commercial loans
Loans to financial institutions and acceptances
Consumer loans and overdrafts
Variable-Rate
Real estate loans
Commercial real estate (CRE)
Nonowner occupied
Multi-family residential
Land development and construction loans
Single-family residential
Owner occupied
Commercial loans
Loans to financial institutions and acceptances
Consumer loans and overdrafts
Total Loans Held For Investment
Real estate loans
Commercial real estate (CRE)
Nonowner occupied
Multi-family residential
Land development and construction loans
Single-family residential
Owner occupied
Commercial loans
Loans to financial institutions and acceptances
Consumer loans and overdrafts
(1) Includes a total of $654.0 million of fixed-rate loans (mainly comprised of 88% single-family residential and 3% owner occupied), and $690.0 million of variable-rate loans (mainly comprised of 98% single-family residential and 1% owner occupied), maturing in 10 years or more. Fixed-rate and variable-rate loans maturing in 15 years or more represent 94% of total fixed-rate and 92% of total variable-rate loans maturing in 10 years or more, respectively, and correspond primarily to single-family residential loans.
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The tables below set forth the unpaid principal balance of total loans held for sale by type, by interest rate type (fixed-rate and variable-rate) and by original contractual loan maturities as of December 31, 2025:
(in thousands)
Due in
one year
or less
Due after
one year
through five
Due after
five
years
Total
Fixed-Rate
Real estate loans
Commercial real estate (CRE)
Nonowner occupied
Multi-family residential
Land development and construction loans
Single-family residential (1)
Owner occupied
Variable-Rate
Real estate loans
Commercial real estate (CRE)
Nonowner occupied
Multi-family residential
Land development and construction loans
Single-family residential
Owner occupied
Commercial loans
Loans to financial institutions and acceptances
Consumer loans and overdrafts
Total Loans Held For Sale
Real estate loans
Commercial real estate (CRE)
Nonowner occupied
Multi-family residential
Land development and construction loans
Single-family residential (1)
Owner occupied
Total loans held for sale (2)
(1) Loans held for sale carried at their estimated fair value.
(2) Includes two non-accrual loans with an outstanding balance of $16.2 million as of December 31, 2025.
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Loans by Economic Sector
The table below summarizes the concentration in our loans held for investment by economic sector as of the end of the periods presented.
December 31,
(in thousands, except percentages)
Amount
% of Total
Amount
% of Total
Amount
% of Total
Financial Sector (1)
Construction and real estate (2)
Manufacturing:
Foodstuffs, apparel
Metals, computer, transportation and other
Chemicals, oil, plastics, cement and wood/paper
Total manufacturing
Wholesale
Retail trade (3)
Services:
Non-financial public sector
Communication, transportation, health and other
Accommodation, restaurants, entertainment
Electricity, gas, water, supply and sewage
Total services
Primary Products:
Agriculture, Livestock, Fishing, and forestry
Mining
Other loans (4)
(1) Consists mainly of domestic non-bank financial services companies.
(2) Comprised mostly of CRE loans throughout South and Central Florida, Tampa, Texas and New York.
(3) Gasoline stations represented approximately 38%, 37% and 57% of the retail trade sector at year-end 2025, 2024 and 2023, respectively.
(4) Primarily loans belonging to industrial sectors not included in the above sectors, which do not individually represent more than 1 percent of the total loan portfolio, and consumer loans which represented approximately 24.4%, 23.2% and 20.6% of the total in 2025, 2024 and 2023, respectively.
As of December 31, 2025, the Company had $65.7 million of loans held for sale in the construction and real estate economic sector and $15.2 million of loans held for sale in other sectors. At December 31, 2024, the Company had $10.8 million of loans held for sale in the construction and real estate economic sector and $32.1 million of loans held for sale in other sectors. At December 31, 2023, the Company had $378.0 million of loans held for sale in the construction and real estate economic sector and $13.4 million of loans held for sale in other sectors.
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Loan Quality
We use what we believe is a comprehensive methodology to monitor credit quality and manage credit concentrations within our loan portfolio. Our underwriting policies and practices govern the risk profile and credit and geographic concentrations of our loan portfolio. We also believe we employ a comprehensive methodology to monitor our intrinsic credit quality metrics, including a risk classification system that identifies possible problem loans based on risk characteristics by loan type, as well as the early identification of deterioration at the individual loan level. We also consider the evaluation of loan quality by the OCC, our primary regulator.
Analysis of the Allowance for Credit Losses
In 2022, the Company adopted Accounting Standards Codification Topic 326 - Financial Instruments - Credit Losses (ASC Topic 326), which replaced the incurred loss methodology for estimated probable loan losses with an expected credit loss methodology that is referred to as the current expected credit loss (“CECL”) methodology. See “Critical Accounting Policies and Estimates” later in this document for more details on the methodology for measuring credit losses under the CECL guidance.
The allowance for credit losses, or ACL, is a valuation account that is deducted from the amortized cost basis of loans held for investment to present the net that is expected to be collected throughout the life of the loan. The estimated ACL is recorded through a provision for credit losses charged against income. Management periodically evaluates the adequacy of the ACL to maintain it at a level it believes to be reasonable.
The Company develops and documents its methodology to determine the ACL at the portfolio segment level. The Company determines its loan portfolio segments based on the type of loans it carries and their associated risk characteristics. The measurement of expected credit losses considers information about historical events, current conditions, reasonable and supportable forecasts and other relevant information. Determining the amount of the ACL is complex and requires extensive judgment by management about matters that are inherently uncertain. Re-evaluation of the ACL estimate in future periods, in light of changes in composition and characteristics of the loan portfolio, changes in the reasonable and supportable forecast and other factors then prevailing may result in material changes in the amount of the ACL and credit loss expense in those future periods.
Expected credit losses are estimated on a collective basis for groups of loans that share similar risk characteristics. Factors that may be considered in aggregating loans for this purpose include but are not necessarily limited to, product or collateral type, industry, geography, internal risk rating, credit characteristics such as credit scores or collateral values, and historical or expected credit loss patterns. For loans that do not share similar risk characteristics with other loans such as collateral dependent loans, expected credit losses are estimated on an individual basis.
With respect to modifications made to borrowers experiencing financial difficulty, a significant change to the ACL is generally not recorded upon modification since the effect of these modifications is already included in the ACL given the measurement methodologies used to estimate the ACL. From time to time, the Company may modify loans related to borrowers experiencing financial difficulties by providing multiple types of concessions. Typically, one type of concession, such as a term extension, may be granted initially. If the borrower continues to experience financial difficulty, another concession, such as principal forgiveness, may be granted. When and if principal forgiveness is provided, the amortized cost basis of the asset is written off against the ACL. The amount of the principal forgiveness is deemed to be uncollectible; therefore, that portion of the loan is written off, resulting in a reduction of the amortized cost basis and a corresponding adjustment to the ACL.
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Problem Loans. Loans are considered delinquent when principal or interest payments are past due 30 days or more. Loans on which the accrual of interest has been discontinued are designated as nonaccrual loans. Once a loan to a single borrower has been placed in nonaccrual status, management reviews all loans to the same borrower to determine their appropriate accrual status. When a loan is placed in nonaccrual status, accrual of interest and amortization of net deferred loan fees or costs are discontinued, and any accrued interest receivable is reversed against interest income. Typically, the accrual of interest on loans is discontinued when principal or interest payments are past due 90 days or when, in the opinion of management, there is a reasonable doubt as to collectability in the normal course of business. When loans are placed on nonaccrual status, all interest previously accrued but not collected is reversed against current period interest income. Payments received on a loan in nonaccrual status are generally applied to its outstanding principal amount, unless there are no doubts on the full collection of the remaining recorded investment in the loan. When there are no doubts on the full collection of the remaining recorded investment in the loan, and there is sufficient documentation to support the collectability of that amount, payments of interest received may be recorded as interest income. A loan in nonaccrual status is returned to accrual status when none of the conditions noted when first placed in nonaccrual status are currently present, none of its principal and interest is past due, and management believes there are reasonable prospects of the loan performing in accordance with its terms. For this purpose, management generally considers there are reasonable prospects of performance in accordance with the loan terms when at least six months of principal and interest payments or principal curtailments have been received, and current financial information of the borrower demonstrates that the borrower has the capacity to continue to perform into the near future.
Allocation of Allowance for Credit Losses
In the following table, we present the allocation of the ACL by loan segment at the end of the periods presented. The amounts shown in this table should not be interpreted as an indication that charge-offs in future periods will occur in these amounts or percentages. These amounts represent our best estimates of expected credit losses to be collected throughout the life of the loans, at the reported dates, derived from historical events, current conditions and reasonable and supportable forecasts at the dates reported. Our allowance for credit losses is established using estimates and judgments, which also consider the views of our regulators in their periodic examinations. Re-evaluation of the ACL estimate in future periods, in light of changes in composition and characteristics of the loan portfolio, changes in the reasonable and supportable forecast and other factors then prevailing may result in material changes in the amount of the ACL and credit loss expense in those future periods. We also show the percentage of each loan class, which includes loans in nonaccrual status.
December 31,
(in thousands, except percentages)
Allowance
% of Loans in Each Category to Total Loans
Allowance
% of Loans in Each Category to Total Loans
Allowance
% of Loans in Each Category to Total Loans
Allowance
% of Loans in Each Category to Total Loans
Allowance
% of Loans in Each Category to Total Loans
Total Loans
Real estate
Commercial
Financial institutions
Consumer and others (1)
Total Allowance for Credit Losses
% Total Loans held for investment
(1) Includes (i) indirect consumer loans purchased, and (ii) mortgage loans secured by single-family residential properties located in the U.S in all years presented.
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In 2025, the changes in the allocation of the ACL were primarily attributed to reserve requirements for loan charge-offs, specific reserves requirements, loan composition and credit quality changes as well as updated macroeconomic factors.
The ratio of ACL to total loans held for investment increased in 2025 primarily due to increased reserves requirements from changes in loan composition and macroeconomic factors on performing loans, partially offset by lower reserve requirements as of December 31, 2025 compared to December 31, 2024, as well as higher net charge offs recorded during 2025 vs 2024.
Non-Performing Assets
In the following table, we present a summary of our non-performing assets by loan class, which includes non-performing loans by portfolio segment, both domestic and international, and OREO, at the dates presented. Non-performing loans consist of (1) nonaccrual loans where the accrual of interest has been discontinued; (2) accruing loans ninety days or more contractually past due as to interest or principal; and (3) restructured loans that are considered Troubled Debt Restructurings, or TDR, for periods prior to 2023.
December 31,
(in thousands)
Non-Accrual Loans
Real estate loans
Commercial real estate (CRE)
Nonowner occupied
Multifamily residential
Land development and construction loans
Single-family residential
Owner occupied
Commercial loans
Consumer loans and overdrafts (1)
Total Non-Accrual Loans
Past Due Accruing Loans
Real estate loans
Single-family residential
Owner occupied
Commercial loans
Consumer loans and overdrafts
Total Past Due Accruing Loans (2)
Total Non-Performing Loans (3)
Other real estate owned
Total Non-Performing Assets
(1) In the second quarter of 2025, the Company changed its charge-off policy for unsecured consumer loans from 90 days to 120 days past due. This change in policy had no material impact to the Company’s consolidated financial statements in the twelve months of 2025.
(2) Loans past due 90 days or more but still accruing.
(3) Prior to 2023 and before adoption of guidance related to CECL, included loan modifications that met the definition of TDRs, which may be performing in accordance with their modified loan terms. As of December 31, 2021 non-performing TDRs include $9.1 million in a multiple loan relationship to a South Florida borrower. In the third quarter of 2022, this loan relationship was upgraded and placed back in accrual status.
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The following table presents the activity of non-performing assets in 2025:
Year Ended December 31, 2025
(in thousands)
Commercial Real Estate
Single-family Residential
Owner-occupied
Commercial
Financial Institutions
Consumer and Others
OREO
Total
Balance at beginning of period
Plus: loans placed in nonaccrual status
Less: nonaccrual loan charge-offs
Less: nonaccrual loans sold, net of charge offs
(Less) Plus: nonaccrual loan collections and others
Plus: decrease in past-due accruing loans (1)
Less: loans returned to accrual status
Transferred from Loans to OREO
Loans held for sale valuation expense
OREO sales and write downs
Balances at end of period
(1) Loans past due 90 days or more but still accruing.
The increase in non-performing assets in 2025 was primarily due to downgrades resulting from the receipt of new financial information on borrowers, missed contractual milestones, and CRE properties with debt coverage below contractual terms. In 2025, the Company performed enhanced credit-quality reviews, supported by a third‑party firm engaged to support timely evaluations of updated financial information and risk ratings.
All non-performing loans are rated Classified. See discussion on Classified and Special Mention Loans below for more details, including details about new loans downgraded, transfers to held for sale and loans sold during period.
We recognized no interest income on nonaccrual loans during 2025, 2024 and 2023.
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We utilize an asset risk classification system in compliance with guidelines established by the U.S. federal banking regulators as part of our efforts to monitor and improve asset quality. In connection with examinations of insured institutions, examiners have the authority to identify problem assets and, if appropriate, classify them or require a change to the rating assigned by our risk classification system. There are four classifications for problem assets: “special mention,” “substandard,” “doubtful,” and “loss.” Special mention loans are loans identified as having potential weakness that deserve management’s close attention. If left uncorrected, these potential weaknesses may, at some future date, result in the deterioration of the repayment prospects of the loan. Substandard assets have one or more defined weaknesses and are characterized by the distinct possibility that the insured institution will sustain some loss if the deficiencies are not corrected. Doubtful assets have the weaknesses of substandard assets with the additional characteristic that the weaknesses make collection or liquidation in full questionable and there is a high probability of loss based on currently existing facts, conditions and values. An asset classified as loss is not considered collectable and is of such little value that the continuance of carrying a value on the books is not warranted.
We use the term “classified loans” to describe loans that are substandard and doubtful, and we use the term “criticized loans” to describe loans that are special mention and classified loans.
The Company’s loans by credit quality indicators at December 31, 2025, 2024 and 2023 are summarized in the following table. We have no purchased credit-impaired loans.
(in thousands)
Special Mention
Substandard
Doubtful
Total (1)
Special Mention
Substandard
Doubtful
Total (1)
Special Mention
Substandard
Doubtful
Total (1)
Loans held for investment
Real estate loans
Commercial real estate (CRE)
Non-owner occupied
Multi-family residential
Land development and construction loans
Single-family residential
Owner occupied
Commercial loans
Consumer loans and overdrafts
Loans held for sale at the lower of cost or fair value
Non-owner occupied
Land development and construction loans
Owner occupied
Total loans held for sale (2)
Total
(1) There were no loans categorized as “Loss” as of the dates presented.
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Classified Loans . Classified loans includes substandard and doubtful loans. The following table presents the activity of classified loans in 2025:
(in thousands)
Year Ended December 31, 2025
Commercial Real Estate
Single-family Residential
Owner-occupied
Commercial
Financial Institutions
Consumer and Others
Total
Balance at beginning of period
Plus: loans downgraded to substandard and doubtful
Less: classified loan charge-offs
Less: classified loans sold, net of charge offs
Plus: classified loan collections and others
Less: loans upgraded
Loans held for sale valuation expense
Transferred from Loans to OREO
Balances at end of period
Classified loans increased by $188.3 million, or 113.1%. During 2025, nine CRE loans totaling $139.9 million were downgraded to substandard‑accrual, and three CRE loans totaling $10.0 million were downgraded to non‑performing. Additionally, one land development loan totaling $19.6 million was downgraded to non‑performing. These downgrades were primarily due to the loss of tenants, missed contractual milestones, or debt‑service coverage ratios falling below required covenant levels. In addition, eight commercial loans totaling $87.8 million were downgraded to substandard‑accrual, while sixteen commercial loans totaling $119.7 million were downgraded to non‑performing. The downgrades to commercial loans were primarily driven by updated borrower financial information and missed contractual milestones. Furthermore, three owner‑occupied loan relationships totaling $38.9 million were downgraded to substandard‑accrual, and two owner‑occupied loans totaling $23.7 million were downgraded to non‑performing. Finally, one private banking relationship consisting of a residential loan and a loan collateralized by a vehicle totaling $24.1 million was downgraded to non‑performing. The remaining downgrades involved other smaller classified relationships. These downgrades include five loans classified as held for sale at the lower of cost or fair value totaling $80.9 million as of December 31, 2025.
Downgrades reflect the Company’s enhanced review efforts, supported by a third‑party firm engaged to provide timely evaluations of updated financial information and risk ratings.
Composition of Classified Loans at December 31, 2025
Classified (Accruing) Loans
Classified accruing loans totaled $186.7 million and include 14 large‑balance relationships totaling $184.8 million that remain in accruing status. Classified accruing loans include: (i) seven CRE loans totaling $101.9 million, composed of two hotel loans totaling $43.4 million, one CRE retail totaling $10.9 million, one CRE multi-family totaling $22.4 million, one CRE office totaling $13.6 million, one land development totaling $6.1 million, and one CRE specialty totaling $5.4 million; (ii) four commercial relationships totaling $45.3 million, across the finance and insurance, restaurant, and wholesale industries; (iii) three owner‑occupied relationships totaling $37.6 million; and (iv) smaller balance loans (less than $1 million) totaling $1.9 million.
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Non‑Accrual Classified Loans
Non‑accrual classified loans totaled $168.3 million and include 19 large‑balance relationships totaling $150.7 million. Non‑performing classified loans include: (i) three CRE relationships totaling $20.2 million, composed of two CRE retail totaling $4.0 million and one land development relationship totaling $16.2 million; (ii) thirteen commercial relationships totaling $81.4 million across the service, healthcare, construction, wholesale, and retail industries. (iii) four owner‑occupied relationships totaling $24.9 million; (iv) one consumer relationship consisting of a residential home and a vehicle loan totaling $24.1 million; and (v) smaller balance loans (less than $1 million) totaling $17.7 million.
The $16.2 million land development loan relationship discussed above was transferred to held for sale, at the lower of cost or fair value, in the fourth quarter of 2025 and subsequently sold in January 2026. This loan had a principal balance of $19.8 million upon transfer to held for sale and a carrying value of $16.2 million at the time of sale, net of a valuation allowance of $3.6 million recognized in 2025.
Significant New Downgrades to Substandard Accrual and Subsequent Activity
In the fourth quarter of 2025, the Company transferred four loan relationships classified as Substandard and in accrual status from held for investment to held for sale, measured at the lower of cost or fair value. Upon transfer, these loans had an aggregate principal balance of $74 million, and the Company recorded a valuation allowance of $10.2 million in connection with the transfer. In January 2026, the Company subsequently sold three of the four loans referenced above, which had an aggregate carrying value of $49.5 million at the time of sale, and recognized no additional losses on the transaction. Lastly, in the fourth quarter the Company downgraded to Substandard accrual five loan relationships totaling $77.9 million, including commercial loans, CRE and owner occupied, which remained as Substandard as of December 31, 2025.
In the third quarter 2025, the Company downgraded to substandard accrual a total of $55.6 million, which included one CRE loan from Pass, one CRE loan from Special Mention, and two commercial loans from Pass. Additionally, the Company collected a total of $53.0 million in full satisfaction, which included two CRE accruing loans and one commercial non-performing loan. There were no additional charges as a result of this activity.
In the second quarter of 2025, the Company downgraded two loan relationships totaling $21.8 million to Substandard accrual, consisting of equipment finance loans. These loans were subsequently sold in the fourth quarter of 2025. See the “Loans” discussion for additional details on the sale of loans under our former white‑label equipment finance solution in the fourth quarter of 2025.
In the first quarter of 2025, the Company downgraded a $40.6 million owner-occupied loan to a customer in the restaurant services sector in Florida to Substandard accrual status. In February 2025, the Company decided to sell the loan. As a result, the loan was transferred from loans held for investment to loans held for sale at the lower of cost or fair value. At the time of transfer, we determined that no valuation allowance was required. In April 2025, the Company decided not to proceed with the sale and reclassified the loan back to its held-for-investment portfolio. Subsequently, in the third quarter of 2025, we collected a partial payment of $10.1 million and sold the remaining balance of $30.4 million. The Company recognized a loss of $0.9 million in connection with this transaction in the third quarter and the first nine months of 2025.
All nonaccrual loans are classified as Substandard or Doubtful. We had no loans in the Loss Category at December 31, 2025.
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Special Mention Loans. The following table presents the activity of special mention loans by type of loan in 2025:
Year Ended December 31, 2025
(in thousands)
Commercial Real Estate
Single-family Residential
Owner-occupied
Commercial
Financial Institutions
Consumer and Others
Total
Balance at beginning of period
Downgrades to Special Mention
Upgrades to Pass
Downgrades to Substandard
Special Mention loans sold
Payoffs/Paydowns
Balances at end of period
All special mention loans remained current at December 31, 2025.
As of December 31, 2025, the increase in Special Mention loans was mainly driven by 11 commercial loans and 6 owner-occupied loans in multiple industries totaling $181.6 million and $44.7 million, respectively, 12 CRE loans totaling $177.1 million. These loans were downgraded based on receipt of recent financial information, or missed contractual milestones. While certain milestones were missed by the borrowers, there are acceptable mitigating factors in place, such as adequate loan-to-value, interest reserves or other structural enhancements. These increases were partially offset by $109.6 million in payoffs, $160.4 million in downgrades to Substandard and $2.4 million upgrades to Pass.
Potential problem loans, which are accruing loans classified as substandard and are less than 90 days past due, at December 31, 2025, 2024 and 2023 included:
(in thousands)
Real estate loans
Commercial real estate (CRE)
Nonowner occupied
Multi-family residential
Land development and construction loans
Single-family residential
Owner occupied
Commercial loans
(1) Corresponds to international consumer loans.
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At December 31, 2025, total potential problem loans increased $124.2 million compared to 2024. This increase was primarily driven by the downgrade to substandard of nine CRE relationships totaling $139.9 million, composed of two hotel loans totaling $47.0 million, two CRE retail loans totaling $33.3 million, one CRE multifamily loan totaling $22.4 million, two CRE office loans totaling $21.9 million, one land development loan totaling $10.0 million, and one CRE specialty loan totaling $5.4 million. Additional increases included nine commercial relationships totaling $88.9 million across the restaurant, finance and insurance, transportation, and wholesale industries; four owner-occupied relationships totaling $39.7 million and $0.9 million in smaller balance loans.
These downgrades were partially offset by: (i) paydowns of three CRE loans totaling $43.4 million; (ii) one commercial loan totaling $1.3 million; (iii) the partial payoff and sale of an owner-occupied loan totaling $39.6 million; (iv) the sale of two commercial loans totaling $20.6 million; (v) the further downgrade to non-performing of three commercial relationships totaling $20.2 million; (vi) one CRE loan totaling $8.3 million, and (vii) $1.6 million in smaller‑balance paydowns. In addition, the Company recorded a valuation allowance of $10.2 million on loans transferred to held for sale.
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Securities
Our investment decision process is based on an approved investment policy and several investment programs. We seek a consistent risk adjusted return through consideration of the following four principles:
• investment quality;
• liquidity requirements;
• interest-rate risk sensitivity; and
• potential returns on investment
The Bank’s Board of Directors approves the Bank’s and related companies ALCO investment policy and programs which govern the investment process. The ALCO oversees the investment process monitoring compliance to approved limits and targets. The Company’s investment decisions are based on the above-mentioned four principles, other factors considered relevant to particular investments and strategies, market conditions and the Company’s overall balance sheet position. ALCO regularly evaluates the investments’ performance within the approved limits and targets. The Company proactively manages its investment securities portfolio as a source of liquidity and as an economic hedge against declining interest rates whenever appropriate.
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The following table sets forth the book value and percentage of each category of securities at December 31, 2025, 2024 and 2023. The book value for debt securities classified as available for sale and equity securities with readily determinable fair value not held for trading represents fair value. The book value for debt securities classified as held to maturity represents amortized cost less allowance for credit losses (“ACL”), if any. The Company determined that an ACL on its debt securities held to maturity as of December 31, 2023 was not required. The Company held no securities as held to maturity as of December 31, 2025 or 2024.
Amount
Amount
Amount
(in thousands, except percentages)
Debt securities available for sale:
U.S. Government agency and sponsored enterprise residential MBS
U.S. Government agency and sponsored enterprise commercial MBS
Non-agency commercial MBS (1)
U.S. Government agency and sponsored enterprise obligations
Municipal Bonds
Collateralized Loan Obligations
Corporate Bonds (2)(3)
U.S. Treasury Securities
Debt securities held to maturity (4)
Equity securities with readily determinable fair value not held for trading (5)
Other securities (6) :
(1) Issued by a financial institution.
(2) In 2024, as a result of the Company’s Securities Repositioning strategy, the Company sold its corporate bonds including subordinated debt securities issued by financial institutions. As of December 31, 2023, corporate bonds in the financial services sector represent 1.9% of our total assets, respectively.
(3) As of December 31, 2023, corporate bonds include $10.5 million in “investment-grade” quality securities issued by foreign corporate entities. The securities issuers were from Canada in two different sectors in 2023. The Company limits exposure to foreign investments based on cross border exposure by country, risk appetite and policy. All foreign investments are denominated in U.S. Dollars.
(4) Includes securities issued by U.S. government and U.S. government sponsored agencies. In 2024, the Company executed the Securities Repositioning and transferred all its debt securities held to maturity to the available for sale category.
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(5) In 2023, the Company sold its marketable equity securities with a total fair value of $11.2 million at the time of sale, and recognized a net loss of $0.2 million in connection with this transaction. Also in 2023, the Company purchased an investment in an open-end fund incorporated in the U.S with an original cost of $2.5 million. The Fund's objective is to provide a high level of current income consistent with the preservation of capital and investments deemed to be qualified under the Community Reinvestment Act.
(6) Includes investments in FHLB and Federal Reserve Bank stock. Amounts correspond to original cost at the date presented. Original cost approximates fair value because of the nature of these investments.
As of December 31, 2025, total securities increased $586.6 million, or 39.2%, to $2.1 billion compared to $1.5 billion as of December 31, 2024. The increase in 2025 was mainly driven by: (i) purchases of debt securities available for sale, trading securities and FHLB stock totaling $1.2 billion and (ii) net pre-tax unrealized holding gains on debt securities available for sale of $52.6 million primarily attributable to changes in market interest rates during the period. The increase was partially offset by maturities, sales, calls and pay downs totaling $654.4 million. In the fourth quarter of 2025, we sold the entire trading portfolio for net proceeds of $113.2 million and realized a gain of approximately $2.8 million in connection with the transaction. The Company did not hold investments in trading securities as of December 31, 2025 and 2024.
Debt securities available for sale had net unrealized holding losses of $23.9 million and net unrealized holding gains of $21.7 million at December 31, 2025, compared to net unrealized holding losses of $55.7 million and net unrealized holding gains of $0.9 million at December 31, 2024. In 2025, the Company recorded pre-tax net unrealized holding gains of $52.6 million which are included in accumulated other comprehensive (loss) income for the period. The Company does not intend to sell these debt securities with net unrealized holding losses, and it is more likely than not that it will not be required to sell the securities before their anticipated recovery. The Company believes these securities are not credit-impaired because the change in fair value is attributable to changes in interest rates and investment securities markets, generally, and not credit quality. As a result, the Company did not record an allowance for credit losses on these securities as of December 31, 2025 and 2024.
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The following table sets forth the book value, scheduled maturities and weighted average yields for our securities portfolio at December 31, 2025. Similar to the table above, the book value for debt securities classified as available for sale and equity securities with readily determinable fair value not held for trading is equal to fair market value. The book value for debt securities classified as held to maturity is equal to amortized cost.
December 31, 2025
(in thousands, except percentages)
Total
Less than a year
One to five years
Five to ten years
Over ten years
No maturity
Amount
Yield
Amount
Yield
Amount
Yield
Amount
Yield
Amount
Yield
Amount
Yield
Debt securities available for sale
U.S. Government Agency and Sponsored Enterprise Obligations
Municipal Bonds
U.S. Treasury Securities
U.S. Government Agency and Sponsored Enterprise Commercial MBS
U.S. Government Agency and Sponsored Enterprise Residential MBS
Equity securities with readily determinable fair value not held for trading
Other securities
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The investment portfolio’s average effective duration in years was 4.4, 5.2 and 5.0 as of December 31, 2025, 2024 and 2023, respectively. The increase in effective duration in 2025 compared to 2024 primarily due to higher estimated prepayment assumptions. These estimates are computed using multiple inputs that are subject, among other things, to changes in interest rates and other factors that may affect prepayment speeds. Contractual maturities of investment securities are adjusted for anticipated prepayments of amortizing U.S. government sponsored agency debt and enterprise debt securities, which shorten the average lives of these investments.
Goodwill. Goodwill was $19.2 million as of December 31, 2025 and 2024. Goodwill mainly represents the excess of consideration paid over the fair value of the net assets of a savings bank acquired in 2006.
Liabilities
Total liabilities were $8.8 billion at December 31, 2025, a decrease of $173.1 million, or 1.9%, compared to $9.0 billion at December 31, 2024. This was primarily driven by: (i) a decrease of $238.4 million, or 10.7%, in time deposits; (ii) the redemption of $60.0 million of senior notes in April 2025 that were due on June 30, 2025; (iii) a decrease of $33.0 million, or 4.4%, in advances from the FHLB; and (iv) a net decrease of $24.1 million, or 15.9% in accounts payable and accrued and other liabilities, mainly due to a decrease in the valuation of derivative instrument liabilities. These decreases were partially offset by: (i) a net increase of $102.2 million, or 2.5%, in interest-bearing, savings and money market deposits; (ii) an increase of $68.5 million, or 4.6%, in noninterest bearing demand deposits; and (iii) an increase of $11.4 million, or 10.7%, in operating lease liabilities mainly driven by the sale and leaseback of two banking centers in South Florida in 2025. See “Capital Resources and Liquidity Management” for more details on the changes of FHLB advances and subordinated notes and “Deposits” for more details on the changes of total deposits.
Deposits
We continue with our efforts to grow what we define as Core Deposits. Our efforts include the additions of new team members to our business development teams across South Florida and Tampa in 2025. See “ Primary Factors Used to Evaluate Our Financial Condition” for more details on Core Deposits.
Total deposits were $7.8 billion at December 31, 2025, a decrease of $67.7 million, or 0.9%, compared to December 31, 2024. The decrease in deposits was mainly due to a net decrease of $238.4 million, or 10.7%, in time deposits. The decrease was partially offset by: (i) a net increase of $102.2 million, or 2.5%, in interest-bearing demand, savings and money market deposits and (ii) an increase of $68.5 million, or 4.6% in noninterest bearing demand deposits.
The net decrease of $238.4 million or 10.7%, in time deposits in 2025 compared to 2024, includes a decrease of $266.4 million, or 38.0%, in brokered time deposits, which was partially offset by an increase of $27.9 million, or 1.8%, in customer CDs.
As of December 31, 2025, brokered deposits were $435.7 million, a decrease of $266.2 million, or 37.9%, compared to $701.9 million at December 31, 2024.
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CDARS and ICS reciprocal deposits are offered through the Company’s participation in the IntraFi Network. The network facilitates the placement of customer funds into certificates of deposit, demand deposit, or money market accounts issued by other member banks in increments of less than $250,000. This structure enables customers to receive full FDIC insurance coverage on large balances while the Company retains the relationship. In exchange, the Company accepts reciprocal deposits from other network banks, maintaining overall deposit levels. As of December 31, 2025 and 2024, reciprocal deposits in the Intrafi Network amounted to $939.5 million and $761.7 million, respectively.
In December 2025, we used non-reciprocal deposit placement services through the IntraFi Network. These arrangements allow us to place excess customer deposits to other network participants while maintaining the customer relationship. Under these non-reciprocal placement transactions, customer deposit funds are transferred to other participating institutions. In December 2025, we placed approximately $162.6 million of deposits to other participating institutions. As a result, these deposits were excluded from the Company’s consolidated balance sheets.
Deposits by Country of Domicile
The following table sets forth the deposits by country of domicile of the depositor as of the dates presented.
December 31,
(in thousands)
Domestic (1)
Foreign:
Venezuela (2)
Others
Total foreign (3)
Total deposits
(1) Includes brokered deposits of $435.7 million, $701.9 million, $736.9 million, $629.3 million and $387.3 million at December 31, 2025, 2024, 2023, 2022, and 2021, respectively.
(2) Based upon the diligence we customarily perform to "know our customers" for anti-money laundering, OFAC and sanctions purposes, we believe that the current U.S. economic embargo on certain Venezuelan persons will not adversely affect our Venezuelan customer relationships, generally.
(3) Our other foreign deposits do not include deposits from Venezuelan resident customers.
The following table shows the increase or (decrease), during the year of our domestic and foreign deposits, including Venezuelan resident customer deposits:
Years Ended December 31,
(in thousands, except percentages)
Amount
Amount
Amount
Amount
Domestic (1)
Foreign:
Venezuela
Others
Total foreign
Total deposits
(1) Domestic deposits, excluding brokered deposits, increased $156.3 million and decreased $116.8 million in 2025 and 2024, respectively, and increased $701.5 million and $1.2 billion in 2023, and 2022, respectively.
Domestic deposits decreased $109.9 million, or 2.1%, in 2025 to $5.2 billion at December 31, 2025 from $5.3 billion at December 31, 2024. This was primarily driven by a decrease of $276.3 million in domestic time deposits mainly in brokered time deposits. The decrease was offset by: (i) a net increase of $158.0 million, in domestic interest-bearing demand, savings and money market deposits and (ii) an increase of $8.4 million in domestic noninterest bearing deposits.
Foreign deposits increased $42.3 million, or 1.6%, in 2025 to $2.6 billion at December 31, 2025 from $2.6 billion at December 31, 2024, primarily driven by increases of: (i) $60.2 million in foreign noninterest bearing deposits, of which $41.0 million are deposits from customers domiciled in Venezuela; and (ii) $37.9 million in foreign time deposits. These increases were partially offset by a net decrease of $55.8 million in foreign interest-bearing demand, savings and money market deposits, of which $26.1 million are deposits from customers domiciled in Venezuela.
Core deposits
Core deposits were $5.8 billion, $5.6 billion and $5.6 billion as of December 31, 2025, 2024 and 2023, respectively. Core deposits represented 74.4%, 71.6% and 70.9% of our total deposits at those dates, respectively. The increase of $170.7 million, or 3.0%, in core deposits in 2025 was mainly driven by the previously mentioned net increase in interest-bearing, savings and money market deposits as well as an increase in non-interest bearing deposits. We define “core deposits” as total deposits excluding all time deposits. The Company remains focused on relationship-driven deposit gathering activities.
Brokered deposits
We utilize brokered deposits primarily as an asset/liability management tool. As of December 31, 2025 and 2024, we had $435.7 million and $701.9 million in brokered deposits, which represented 5.6% and 8.9%, respectively, of our total deposits. Brokered deposits decreased $266.2 million, or 37.9%, in 2025 compared to December 31, 2024, mainly resulting from our planned strategy of reducing these high-cost deposits.
Deposits by Type: Average Balances and Average Rates Paid
The following table sets forth the average daily balance amounts and the average rates paid on our deposits for the periods presented.
Years Ended December 31,
(in thousands, except percentages)
Amount
Rates
Amount
Rates
Amount
Rates
Non-interest bearing demand deposits
Interest bearing deposits:
Interest bearing demand, savings and money market deposits (1) (2)
Time Deposits (3)
(1) To emphasize material items, certain line items that were presented separately in prior years have been aggregated into a single line item in this table. This includes interest-bearing demand, savings, and money market deposits. Prior periods have been conformed to this presentation for comparability.
(2) In the years ended December 31, 2025, 2024 and 2023 includes reciprocal deposits with a total average balance of $1.0 billion (average rate - 3.88%) , $684.3 million (average rate - 5.05%), and $584.0 million (average rate - 5.23%), respectively. In the years ended December 31, 2025, 2024 and 2023, includes brokered deposits with a total average balance of $0.1 million (average rate - 5.22%), $2.9 million (average rate - 5.40%), and $13.3 million (average rate - 5.07%), respectively.
(3) In the years ended December 31, 2025, 2024 and 2023, includes brokered deposits with average balances of $583.0 million, $691.3 million, and $673.2 million, respectively, with average rates of 4.43%, 5.05%, and 4.36%, respectively.
Large Fund Providers
Large fund providers consists of third party relationships with balances over $20 million. At December 31, 2025 and 2024, our large fund providers, included 20 deposit relationships, respectively, with total balances of $962.3 million and $942.3 million, respectively. The increase in balances from large fund providers in December 31, 2025 was mainly driven by an increase in large deposits from commercial customers as the Company continues its strategic focus on depository relationships.
Large Time Deposits by Maturity
The following table sets forth the maturities of our time deposits with individual balances equal to or greater than $100,000 as of the dates presented.
December 31,
(in thousands, except percentages)
Less than 3 months
3 to 6 months
6 to 12 months
1 to 3 years
Over 3 years
Total
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Short-Term Borrowings.
In addition to deposits, we use short-term borrowings, such as FHLB advances, and less frequently, advances from other banks, as a source of funds to meet the daily liquidity needs of our customers and fund growth in earning assets. Short-term borrowings have maturities of 12 months or less as of the reported period-end.
There were no outstanding short-term borrowings at December 31, 2025. Of the $100 million short-term borrowings we had during the year, $20 million matured in the fourth quarter of 2025 and the rest have been repaid. Short-term borrowings outstanding at December 31, 2024, and 2023 matured in January 2025, and 2024, respectively. All of our outstanding short-term borrowings at December 31, 2024 and 2023 corresponded to FHLB advances. There were no other borrowings or repurchase agreements outstanding as of December 31, 2025, 2024 and 2023.
The following table sets forth information about the outstanding amounts of our short-term borrowings at the close of and for years ended December 31, 2025, 2024 and 2023.
Years Ended December 31,
(in thousands, except percentages)
Outstanding at period-end
Average amount
Maximum amount outstanding at any month-end
Weighted average interest rate:
During period
End of period
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Return on Equity and Assets
The following table shows return on average assets, return on average equity, and average equity to average assets ratio for the periods presented:
Years Ended December 31,
(in thousands, except percentages and per share data)
Net income (loss) attributable to the Company
Basic earnings (loss) per common share
Diluted earnings (loss) per common share (1)
Average total assets
Average stockholders' equity
Net income (loss) attributable to the Company/ Average total assets (ROA)
Net income (loss) attributable to the Company / Average stockholders' equity (ROE)
Average stockholders' equity / Average total assets ratio
(1) See Note 23 to our audited consolidated financial statements in this Form 10-K for details on the dilutive effects of the issuance of restricted stock, restricted stock units and performance share units on earnings per share in 2025, 2024 and 2023.
In 2025 the Company had a net income, compared to a net loss in 2024, as a result, the Company had basic and diluted earnings per share in 2025 and 2023, compared to loss per share in 2024. These results were partially offset by an increase in the weighted average number of shares as a result of the Company’s public offering of its Class A common stock that was completed in September 2024.
Capital Resources and Liquidity Management
Capital Resources
Stockholders’ equity is influenced primarily by earnings, dividends, if any, and changes in Accumulated Other Comprehensive Income or Loss (“AOCI” or “AOCL”) caused primarily by fluctuations in unrealized holding gains or losses, net of taxes, on debt securities available for sale and derivative instruments. AOCI or AOCL are not included for purposes of determining our capital for holding and bank regulatory purposes.
Stockholders’ equity was $938.8 million as of December 31, 2025, an increase of $48.3 million, or 5.4%, compared to $890.5 million as of December 31, 2024. The increase was primarily driven by: (i) net income of $52.4 million in 2025; (ii) a decrease of $38.9 million in total AOCL mainly due to lower after-tax net unrealized holding losses on debt securities available for sale; and (iii) a net aggregate of $5.0 million in stock-based incentive compensation programs. The increase was offset by: (i) an aggregate of $33.0 million of Class A common stock repurchased during the year; and (ii) $15.1 million of dividends declared and paid by the Company in 2025. See more details on the stock repurchase program launched in 2023 further below.
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Non-controlling Interest
The Company records net loss attributable to Non-controlling interests in its condensed consolidated statement of operations and comprehensive income (loss) equal to the percentage of the economic or ownership interest retained in the interest of Amerant Mortgage, and presents non-controlling interests as a component of stockholders’ equity on the consolidated balance sheets. At December 31, 2024 and 2023, the Company had an ownership interest of 100% in Amerant Mortgage. On December 31, 2023, Amerant Mortgage became a wholly-owned subsidiary of the Company as it increased its ownership interest to 100% effective as of December 31, 2023. Therefore, the Company did not record any loss or gain attributable to non-controlling interest in 2024 and had no equity attributable to the non-controlling interest at December 31, 2025 and 2024. See Note 1 to our audited annual consolidated financial statements in this Form 10-K for detailed information on changes in ownership interest in Amerant Mortgage.
Common Stock Transactions
Public Offering
On September 27, 2024, the Company completed a public offering of 8,684,210 shares of its Class A voting common stock, at a price to the public of $19.00 per share, which included 784,210 shares issued upon the exercise in full by the underwriters of their option to purchase additional shares of common stock (the “Public Offering”). The total gross proceeds from the offering were approximately $165.0 million, with net proceeds of approximately $155.8 million after deducting underwriting discounts and commissions and estimated offering expenses payable by the Company. The intended use of the net proceeds of the Public Offering is general corporate purposes to support its continued organic growth, which may include, among other things, working capital, investments in the Bank, resolution of non-performing loans, and balance sheet optimization strategies.
Common Stock Repurchases and cancellation of Treasury Shares .
Stock Repurchase Plans Details
On December 19, 2022, the Company announced that the Board of Directors authorized a new repurchase program pursuant to which the Company may purchase, from time to time, up to an aggregate amount of $25 million of its shares of Class A common stock (the “2023 Class A Common Stock Repurchase Program”). On May 29, 2025, the Company announced that the Board of Directors approved an increase in the amount available for repurchases of the Company’s shares of Class A common stock under the 2023 Class A Common Stock Repurchase Program to $25 million. This repurchase program expired on December 31, 2025.
On January 22, 2026, the Company announced that its Board of Directors authorized a new repurchase program (the “2026 Repurchase Program”), pursuant to which the Company may purchase, from time to time, up to an aggregate amount of $40 million of its shares of Class A common stock. The 2026 Repurchase Program will be effective until December 31, 2026.
In 2025 and 2024, the Company repurchased an aggregate of 1,716,084 and 344,326 shares, respectively, of Class A common stock at a weighted average price of $19.23 and $21.94 per share, under the 2023 Class A Common Stock Repurchase Program. The aggregate purchase price for these transactions was $33.0 million and $7.6 million, respectively, in the years ended December 31, 2025 and 2024, including transaction costs. At December 31, 2024, the Company had $12.4 million remaining under this repurchase program, which was fully utilized prior to its expiration on December 31, 2025.
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In 2025, 2024 and 2023, the Company’s Board of Directors authorized the cancellation of all shares of Class A common stock and Class B common stock previously held as treasury stock, including all shares repurchased in 2025, 2024 and 2023. Therefore, the Company had no shares of common stock held in treasury stock at December 31, 2025, 2024 and 2023.
Stock-Based Compensation Awards
The Company grants, from time to time, stock-based compensation awards which are reflected as changes in the Company’s Stockholders’ equity. See “Note 14. Incentive Compensation and Benefit Plan” for additional information about common stock transactions under the Company’s 2018 Equity Plan.
Dividends
Set forth below are the details of dividends declared and paid by the Company for the periods ended December 31, 2025, 2024 and 2023.
Declaration Date
Record Date
Payment Date
Dividend Per Share
Dividend Amount
$3.7 million
$3.8 million
$3.8 million
$3.8 million
$3.8 million
$3.0 million
$3.0 million
$3.0 million
$3.0 million
$3.0 million
$3.0 million
$3.0 million
On January 22, 2026, the Company’s Board of Directors declared a cash dividend of $0.09 per-share of the Company’s Class A common stock. The dividend was paid on February 27, 2026, to shareholders of record at the close of business on February 13, 2026.
Liquidity Management
Advances from the FHLB, other borrowings and borrowing capacity
At December 31, 2025 and 2024, the Company had $0.7 billion of outstanding advances from the FHLB. During the year ended December 31, 2025, the Company repaid $0.4 billion of outstanding FHLB advances, and borrowed $0.4 billion from this source. In the third quarter of 2025, the Company restructured $210.0 million of its fixed-rate FHLB advances. This restructuring consisted of changing the original maturity at lower interest rates. The new maturity for each contract was approximately three years. The Company incurred an early termination and modification penalty of $3.4 million which was deferred and is being amortized over the term of the new advances, as an adjustment to the yields. The Company recognized $0.4 million, included as part of interest expense, as a result of this amortization. The modifications were not considered a substantial modification in accordance with GAAP.
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At December 31, 2025 and 2024 advances from the FHLB had maturities through 2028 and 2029, respectively. At December 31, 2025, advances from the FHLB had fixed interest rates ranging from 3.45% to 4.45% and, a weighted average rate of 4.06% (fixed interest rates ranging from 3.45% to 5.46%, and a weighted average rate of 4.10% at December 31, 2024).
We had $2.1 billion and $1.6 billion of additional borrowing capacity with the FHLB as of December 31, 2025 and 2024, respectively. This additional borrowing capacity is determined by the FHLB. We also maintain borrowing capacity with the Federal Reserve, and relationships in the capital markets with brokers and dealers to issue FDIC-insured interest-bearing deposits, including certificates of deposits. We also have available uncommitted federal funds credit lines with several banks. At December 31, 2025 and 2024, we had no outstanding obligations on uncommitted federal funds lines with banks.
There were no other borrowings as of December 31, 2025 and 2024.
Based on our current outlook, we believe that net income, deposits, advances from the FHLB and available other funding sources will be sufficient to fund liquidity requirements for the next twelve months.
Deposit Network
As part of our liquidity management strategies, we also utilize deposit placement services through the IntraFi Network. These arrangements allow us to place excess customer deposits to other network bank participants while maintaining the customer relationships. Under these placement transactions, the deposit funds are transferred to other participant institutions. As of December 31, 2025, the Company placed approximately $162.6 million of its customer deposits to other participant institutions. In January 2026, the Company no longer had placements of its customer deposits in other network participants through this arrangement.
Holding Company
We are a corporation separate and apart from the Bank and, therefore, must provide for our own liquidity. Historically, our main source of funding has been dividends declared and paid to us by the Bank. The Company is the obligor and guarantor on our junior subordinated debt and Subordinated Notes. As previously discussed, on September 27, 2024, the Company completed a public offering of its common stock, which resulted in net proceeds to the Company of $155.8 million recorded in 2024. Following the completion of this offering in 2024, the Company contributed cash totaling $90 million to its Bank subsidiary. The Company held cash and cash equivalents of $17.5 million as of December 31, 2025 and $99.5 million as of December 31, 2024, in funds available to service its Senior Notes, Subordinated Notes and junior subordinated debt and for general corporate purposes, as a separate stand-alone entity.
Based on our current outlook, we believe that available funding sources, including any dividends from the Bank, will be sufficient to fund liquidity requirements for the next twelve months.
Subsidiary Dividends
There are statutory and regulatory limitations that affect the ability of the Bank to pay dividends to the Company. These limitations exclude the effects of AOCI. Management believes that these limitations will not affect the Company’s ability to meet its ongoing short-term cash obligations. See “Supervision and Regulation” in this Form 10-K.
In December 2025, the Board of Directors of the Bank approved the payment of cash dividend of $20 million by the Bank to the Company. The Company received this dividend in the first quarter of 2026. In July 2025, the Board of Directors of the Bank approved the payment of a cash dividend of $40.0 million by the Bank to the Company.
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In December 2023, the Boards of Directors of the Bank approved the payment of a cash dividend of $20 million by the Bank to Amerant Bancorp. The Company received this dividend in the first quarter of 2024. The Bank did not declare any dividends payable to Amerant Bancorp in 2024.
Regulatory Capital Requirements
We are subject to various regulatory capital requirements administered by the Federal Reserve and OCC. Failure to meet regulatory capital requirements may result in certain discretionary, and possible mandatory actions by regulators that, if taken, could have a direct material effect on our business, financial condition and results of operation. Under the federal capital adequacy rules and the regulatory framework for “prompt corrective action”, we must meet specific capital guidelines that involve quantitative measures of our assets, liabilities and certain off-balance sheet items as calculated for regulatory capital purposes. Our capital amounts and classification are also subject to qualitative judgments by the regulators, including anticipated capital needs. Supervisory assessments of capital adequacy may differ significantly from conclusions based solely upon the regulations’ risk-based capital ratios. Quantitative measures established by regulation to ensure capital adequacy require us to maintain minimum CET1, Tier 1 leverage, Tier 1 risk-based capital and total risk-based capital ratios.
The Basel III rules became effective for the Company and the Bank on January 1, 2015 with full compliance with all of the requirements being phased in by January 1, 2019. The Company and the Bank opted to not include the AOCI in computing regulatory capital. As of December 31, 2025, management believes that the Company and the Bank meet all capital adequacy requirements to which they are subject, and are well-capitalized. In addition, Basel III rules required the Company and the Bank to hold a minimum capital conservation buffer of 2.50%. The Company’s capital conservation buffer at year end 2025 and 2024 was 6.1% and 5.4%, respectively, and therefore no regulatory restrictions exist under the applicable capital rules on dividends or discretionary bonuses or other payments. See “Supervision and Regulation - Capital” for more information regarding regulatory capital.
Our Company’s consolidated regulatory capital amounts and ratios are presented in the following table:
Actual
Required for Capital Adequacy Purposes
Regulatory Minimums To be Well Capitalized
(in thousands, except percentages)
Amount
Ratio
Amount
Ratio
Amount
Ratio
December 31, 2025
Total capital ratio
Tier 1 capital ratio
Tier 1 leverage ratio
CET1 capital ratio
December 31, 2024
Total capital ratio
Tier 1 capital ratio
Tier 1 leverage ratio
CET1 capital ratio
December 31, 2023
Total capital ratio
Tier 1 capital ratio
Tier 1 leverage ratio
CET1 capital ratio
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The Bank’s consolidated regulatory capital amounts and ratios are presented in the following table:
Actual
Required for Capital Adequacy Purposes
Regulatory Minimums to be Well Capitalized
(in thousands, except percentages)
Amount
Ratio
Amount
Ratio
Amount
Ratio
December 31, 2025
Total capital ratio
Tier 1 capital ratio
Tier 1 leverage ratio
CET1 capital ratio
December 31, 2024
Total capital ratio
Tier 1 capital ratio
Tier 1 leverage ratio
CET1 capital ratio
December 31, 2023
Total capital ratio
Tier 1 capital ratio
Tier 1 leverage ratio
CET1 capital ratio
The Basel III Capital Rules revised the definition of capital and describe the capital components and eligibility criteria for CET1 capital, additional Tier 1 capital and Tier 2 capital. See “ Item 1. Business - Supervision and Regulation” for detailed information.
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Effects of Inflation and Changing Prices
The consolidated financial statements and related consolidated financial data presented herein have been prepared in accordance with GAAP and practices within the banking industry, which require the measurement of financial position and operating results in terms of historical Dollars without considering the changes in the relative purchasing power of money over time due to inflation.
Unlike most industrial companies, virtually all the assets and liabilities of a financial institution are monetary in nature. As a result, interest rates have a more significant impact on a financial institution’s performance than the effects of general levels of inflation. However, inflation also affects a financial institution by increasing its cost of goods and services purchased, as well as the cost of salaries and benefits, occupancy expense, and similar items. Inflation and related increases in interest rates generally decrease the market value of investments and loans held and may adversely affect liquidity, earnings, and shareholders’ equity. Loan originations and re-financings also tend to slow as interest rates increase, and higher interest rates may reduce a financial institution’s earnings from such origination activities. Similarly, lower inflation and rate decreases increase the fair value of securities and loan origination and refinancing tend to accelerate.
Off-Balance Sheet Arrangements
We may engage in a variety of financial transactions in the ordinary course of business that, under GAAP, may not be recorded on the balance sheet. Those transactions may include contractual commitments to extend credit in the ordinary course of our business activities to meet the financing needs of customers. Such commitments involve, to varying degrees, elements of credit, market and interest rate risk in excess of the amount recognized in the balance sheets. These commitments are legally binding agreements to lend money at predetermined interest rates for a specified period of time and generally have fixed expiration dates or other termination clauses. We use the same credit and collateral policies in making these credit commitments as we do for on-balance sheet instruments.
We evaluate each customer’s creditworthiness on a case-by-case basis and obtain collateral, if necessary, based on our credit evaluation of the borrower. In addition to commitments to extend credit, we also issue standby letters of credit that are commitments to a third-party in specified amounts of payment or performance, if our customer fails to meet its contractual obligation to the third-party. The credit risk involved in the underwriting of letters of credit is essentially the same as that involved in extending credit to customers.
The following table shows the outstanding balance of our off-balance sheet arrangements as of the end of the periods presented. Except as disclosed below, we are not involved in any other off-balance sheet contractual relationships that are reasonably likely to have a current or future material effect on our financial condition, a change in our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
December 31,
(in thousands)
Commitments to extend credit
Letters of credit
Commitments to extend credit increased $215.4 million, or 15.5%, as of December 31, 2025 compared to December 31, 2024. This was mainly driven by an increase in commercial real estate loan commitments.
The Company uses interest rate swaps and other derivative instruments as part of its normal business operations. See “Note 12- Derivative Instruments” to our consolidated financial statements for details.
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Contractual Obligations
In the normal course of business, we and our subsidiaries enter into various contractual obligations that may require future cash payments. Significant commitments for future cash obligations include capital expenditures related to operating leases, certain binding agreements we have entered into for services including outsourcing of technology services, advertising and other services, and other borrowing arrangements which are not material to our liquidity needs. We currently anticipate that our available funds, credit facilities, and cash flows from operations will be sufficient to meet our operational cash needs for the foreseeable future. Other than the changes discussed herein, there have been no material changes to the contractual obligations previously disclosed in the 2024 Form 10-K.
The table below summarizes, by remaining maturity, our significant contractual cash obligations as of December 31, 2025. Amounts in this table reflect the minimum contractual obligation under legally enforceable contracts with terms that are both fixed and determinable. All other contractual cash obligations on this table are reflected in our consolidated balance sheet.
As of December 31, 2025 we had the following contractual cash obligations:
Payments Due Date
(in thousands)
Total
Less than one year
One to three years
Over three to five years
More than five years
Operating lease obligations
Time deposits
Borrowings:
FHLB advances
Subordinated notes
Junior subordinated debentures
Contractual interest payments (1)
(1) Calculated assuming a constant interest rate as of December 31, 2025.
We believe that we will be able to meet our contractual obligations as they come due through the maintenance of adequate liquidity. We expect to maintain adequate liquidity through the results of operations, loan and securities repayments and maturities and continued deposit gathering activities. We also have various borrowing facilities at the Bank to satisfy both short-term and long-term liquidity needs.
On October 21, 2025, the Company entered into a Wind-down and Settlement Agreement (the “Wind-down Agreement”) with a commercial borrower to resolve an existing loan participation agreement. Under the Wind-down Agreement, the Company assumes the risk of future credit losses under the participation agreement, up to a cumulative cap of $7.7 million through June 30, 2026 (the “Loss Cap”). If actual credit losses are below the Loss Cap as of that date, the Company will pay the difference to the borrower by June 30, 2026. The Company is currently unable to estimate the difference between the actual credit losses that may be incurred through June 30, 2026 and the Loss Cap. As of December 31, 2025, the amount remaining to be covered towards the "Loss Cap" was $4.6 million. As part of the Wind-down Agreement, the borrower has agreed to irrevocably and unconditionally guarantee the full and timely payment of all amounts due to the Company under the loan participation agreement that exceed the Loss Cap, up to a maximum of $13.9 million.
In December 2021, the Company became a strategic lead investor in the JAM FINTOP Blockchain fund (the “Fund”). The Company is currently committed to making future contributions to the Fund for a total of $4.6 million at December 31, 2025.
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Critical Accounting Policies and Estimates
The preparation of our consolidated financial statements in accordance with GAAP requires us to make estimates and judgments that affect our reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under current circumstances, results of which form the basis for making judgments about the carrying value of certain assets and liabilities that are not readily available from other sources. We evaluate our estimates on an ongoing basis. Actual results may differ from these estimates under different assumptions or conditions.
Accounting policies, as described in detail in the notes to our consolidated financial statements, are an integral part of our financial statements. A thorough understanding of these accounting policies is essential when reviewing our reported results of operations and our financial position. We believe that the critical accounting policies and estimates discussed below require us to make difficult, subjective or complex judgments about matters that are inherently uncertain. Changes in these estimates, that are likely to occur from period to period, or using different estimates that we could have reasonably used in the current period, would have a material impact on our financial position, results of operations or liquidity.
Securities. Securities generally must be classified as held to maturity, or HTM, debt securities available-for-sale, or AFS, trading or, equity securities with readily available fair values. Securities classified as HTM, if any, are securities we have both the ability and intent to hold until maturity and are carried at amortized cost, less any allowance for credit losses. Trading securities, if we had any, would be held primarily for sale in the near term to generate income. Debt securities that do not meet the definition of trading or HTM are classified as AFS.
The classification of investment securities is significant since it directly impacts the accounting for unrealized gains and losses on these securities. Unrealized gains and losses on trading securities, if we had any, and equity securities with readily available fair values, would flow directly through earnings during the periods in which they arise. AFS securities are measured at fair value each reporting period. Unrealized gains and losses on AFS securities are recorded as a separate component of shareholders’ equity (accumulated other comprehensive income or loss) and do not affect earnings until realized or deemed to be credit-impaired. Investment securities that are classified as HTM are recorded at amortized cost, and reduced by an estimated amount of expected credit loss during the life of the investment, if any.
For debt securities available for sale, the Company evaluates whether: (i) the fair value of the securities is less than the amortized costs basis; (ii) it intends to sell, or it is more likely than not that it will be required to sell, the security before recovery of its amortized cost basis, and (iii) the decline in fair value has resulted from credit losses or other factors. The Company estimates credit losses on debt securities available for sale using a discounted cash flow model. The present value of an impaired debt security results from estimating future cash flows that are expected to be collected, discounted at the debt security’s effective interest rate. The Company develops its estimates about cash flows expected to be collected and determines whether a credit loss exists, generally using information about past events, current conditions, reasonable and supportable forecasts and other qualitative factors including the extent to which fair value is less than amortized cost basis, adverse conditions specifically related to the security, industry or geographic area, changes in conditions of any collateral underlying the securities, changes in credit ratings, failure of the issuer to make scheduled payments, among other qualitative factors specific to the applicable security. If a credit loss exists, the Company records an allowance for the credit losses, limited to the amount by which the fair value is less than the amortized cost basis. The Company recognizes in AOCI/AOCL a decline in fair value over the carrying amount of AFS securities that has not been recorded through an allowance for credit losses.
Debt securities available for sale are charged off to the extent that there is no reasonable expectation of recovery of amortized cost basis. Debt securities available for sale are placed on non-accrual status if the Company does not reasonably expect to receive interest payments in the future and interest accrued is reversed against interest income. Securities are returned to accrual status only when collection of interest is reasonably assured.
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Fair Value of Financial Instruments. We are, under applicable accounting guidance, required to maximize the use of observable inputs and minimize the use of unobservable inputs in measuring fair value. We classify fair value measurements of financial instruments based on the three-level fair value hierarchy in the guidance. We carry mortgage loans, AFS debt and other securities, BOLI policies and derivative assets and liabilities at fair value. From time to time, we also have loans held for sale carried at the lower of cost or fair value.
The fair values of assets and liabilities may include adjustments for various factors, such as market liquidity and credit quality, where appropriate. Valuations of products using models or other techniques are sensitive to assumptions used for the significant inputs. Where market data is available, the inputs used for valuation reflect that information as of our valuation date. Inputs to valuation models are considered unobservable if they are supported by little or no market activity. In periods of extreme volatility, lessened liquidity or in illiquid markets, there may be more variability in market pricing or a lack of market data to use in the valuation process. In keeping with the prudent application of estimates and management judgment in determining the fair value of assets and liabilities, we have in place various processes and controls including validation controls, for which we utilize both broker and pricing service inputs. Data from these services may include both market-observable and internally-modeled values and/or valuation inputs. Our reliance on this information is affected by our understanding of how the broker and/or pricing service develops its data with a higher degree of reliance applied to those that are more directly observable and lesser reliance applied to those developed through their own internal modeling. Similarly, broker quotes that are executable are given a higher level of reliance than indicative broker quotes, which are not executable. These processes and controls are performed independently of the business. For additional information, see Note 20 of our audited consolidated financial statements.
Allowance for Credit Losses
Under the CECL accounting guidance, the Allowance for Credit Losses, or ACL, is a valuation account that is deducted from the amortized cost basis of financial assets, including loans held for investments and debt securities held to maturity, to present the net amount that is expected to be collected throughout the life of those financial assets. The estimated ACL is recorded through a provision for credit losses charged against income. Management periodically evaluates the adequacy of the ACL to maintain it at a level it believes to be reasonable. The Company uses the same methods used to determine the ACL to assess any reserves needed for off-balance sheet credit risks such as unfunded loan commitments and contingent obligations on letters of credit. These reserves for off-balance sheet credit risks are presented in the liabilities section in the consolidated balance sheets.
The Company develops and documents its methodology to determine the ACL at the portfolio segment level. The Company determines its loan portfolio segments based on the type of loans it carries and their associated risk characteristics. The measurement of expected credit losses considers information about historical events, current conditions, reasonable and supportable forecasts and other relevant information. Determining the amount of the ACL is complex and requires extensive judgment by management about matters that are inherently uncertain. Re-evaluation of the ACL estimate in future periods, in light of changes in composition and characteristics of the loan portfolio, changes in the reasonable and supportable forecast and other factors then prevailing may result in material changes in the amount of the ACL and credit loss expense in those future periods.
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Expected credit losses are estimated on a collective basis for groups of loans that share similar risk characteristics. Factors that may be considered in aggregating loans for this purpose include but are not necessarily limited to, product or collateral type, industry, geography, internal risk rating, credit characteristics such as credit scores or collateral values, and historical or expected credit loss patterns. For loans that do not share similar risk characteristics with other loans such as collateral dependent loans and modifications to borrowers experiencing financial difficulties, expected credit losses are estimated on an individual basis.
Expected credit losses are estimated over the contractual terms of the loans, adjusted for expected prepayments. Expected prepayments for commercial and commercial real estate loans are generally estimated based on the Company's historical experience. For residential loans, expected prepayments are estimated using a model that incorporates industry prepayment data, calibrated to reflect the Company's experience. The contractual term excludes expected extensions, renewals, and modifications unless either of the following applies: management has a reasonable expectation at the reporting date a modification related to a borrower experiencing financial difficulty will be executed, or the extension or renewal options are included in the original or modified contract at the reporting date and are not unconditionally cancellable by the Company.
With respect to modifications made to borrowers experiencing financial difficulty, a significant change to the ACL is generally not recorded upon modification since the effect of these modifications is already included in the ACL given the measurement methodologies used to estimate the ACL. From time to time, the Company modifies loans by providing principal forgiveness on certain of its real estate loans. When principal forgiveness is provided, the amortized cost basis of the asset is written off against the ACL. The amount of the principal forgiveness is deemed to be uncollectible; therefore, that portion of the loan is written off, resulting in a reduction of the amortized cost basis and a corresponding adjustment to the ACL.
For the largest portfolio segments, including commercial and commercial real estate loans, expected credit losses are estimated using probability of default (“PD”) and loss given default (“LGD”) bottom-up approach, which derives the expected losses from borrower's and market or industry specific risk characteristics. For smaller-balance homogeneous loans with similar risk characteristics, including residential, consumer and small business loans, the models estimate lifetime loan losses based on the portfolio’s historical behavior. In order to incorporate forward-looking expectations, the ACL for these portfolios is adjusted based on macroeconomic factors proven to have effects on the performance of the credit quality of each respective portfolio. The models incorporate a probability-weighted blend of macroeconomic scenarios by ingesting numerous national, regional and metropolitan statistical area (“MSA”) level variables and data points. Some of the more impactful include both current and forecasted unemployment rates, home price index, CRE property forecasts, stock market and market volatility indices, real gross domestic product growth, and a variety of interest rates and spreads. The macroeconomic forecast process is complex and varies from period to period and therefore may results in increased volatility in the ACL and earnings.
All loss estimates are conditioned as applicable on changes in current conditions and the reasonable and supportable economic forecast. Additionally, the Company makes qualitative adjustments to the ACL when, based on management’s judgment, there are factors impacting expected credit losses not taken into account by the quantitative calculations. Potential qualitative adjustments include economic factors, including material trends and developments that, in management's judgment, may not have been considered in the reasonable and supportable economic forecast, credit policy and staffing, including the nature and level of policy and procedural exceptions or changes in credit policy not reflected in quantitative results, changes in the quality of underwriting and portfolio management and staff and issues identified by credit review, internal audit or regulators that may not be reflected in quantitative results, concentrations, considering whether the quantitative estimate adequately accounts for concentration risk in the portfolio, model imprecision and model validation findings; and other factors not adequately considered in the quantitative estimate or other qualitative categories identified by management that may materially impact the amount of expected credit losses.
The Company expects to collect the amortized cost basis of government insured residential loans due to the nature of the government guarantee and, therefore generally have no expected credit losses.
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Expected credit losses on loans to borrowers that are domiciled in foreign countries, primarily loans in the Consumer and Financial Institutions portfolios are generally estimated by assessing available cash or other types of collateral, and the probability of losses arising from the Company’s exposure to those collateral assets. Loans in this portfolio are generally fully collateralized with cash, securities and other assets and, therefore, generally have no expected credit losses.
Commercial real estate, commercial and financial institution loans are charged off against the ACL when they are considered uncollectable. These loans are considered uncollectable when a loss becomes evident to management, which generally occurs when the following conditions are present, among others: (1) a loan or portions of a loan are classified as “loss” in accordance with the internal risk grading system; (2) a collection attorney has provided a written statement indicating that a loan or portions of a loan are considered uncollectible; and (3) when there is a loss of value represented by the carrying value of a collateral-dependent loan exceeding the appraised value of the asset held as collateral. Consumer and other retail loans are charged off against the ACL at the earlier of (1) when management becomes aware that a loss has occurred, or (2) when closed-end retail loans become past due 90 days or open-end retail loans become past due 180 days from the contractual due date. For open and closed-end retail loans secured by residential real estate, any outstanding loan balance in excess of the fair value of the property, less cost to sell, is charged off no later than when the loan is 180 days past due from the contractual due date. Consumer and other retail loans may not be charged off when management can clearly document that a past due loan is well secured and in the process of collection such that collection will occur regardless of delinquency status in accordance with regulatory guidelines applicable to these types of loans.
Recoveries on loans represent collections received on amounts that were previously charged off against the ACL. Recoveries are credited to the ACL when received, to the extent of the amount previously charged off against the ACL on the related loan. Any amounts collected in excess of this limit are first recognized as interest income, then as a reduction of collection costs, and then as other income.
Goodwill. Goodwill is evaluated for impairment at least annually and on an interim basis if an event or circumstance indicates that it is likely an impairment has occurred.
Goodwill primarily represents the excess of consideration paid over the fair value of the net assets acquired in transactions recorded as business combinations. Goodwill is not amortized but is reviewed for potential impairment at the reporting unit level on an annual basis in the fourth quarter, or on an interim basis if events or circumstances indicate a potential impairment. As part of its testing, the Company may elect to first assess qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount which includes goodwill (“Step 0”). If the results of Step 0 indicate that more likely than not the reporting unit’s fair value is less than its carrying amount, the Company determines the fair value of the reporting unit relative to its carrying amount, including goodwill (“Step 1”). The Company may also elect to bypass Step 0 and begin with Step 1. If the fair value of the reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired. However, if the carrying amount of the reporting unit exceeds its fair value, then an impairment loss exists and is recognized in an amount equal to that excess, limited to the total amount of goodwill. As a result of this evaluation, the Company concluded that goodwill was not impaired as of December 31, 2025. We have applied significant judgment for annual goodwill impairment testing purposes. Future negative changes may result in potential impairments in future periods.
Determining the fair value of the reporting unit to which goodwill is allocated to (the Company as a whole since we report using a single-segment concept) is considered a critical accounting estimate because it requires significant management judgment and the use of subjective measurements. Variability in the market and changes in assumptions or subjective measurements used to determine fair value are reasonably possible and may have a material impact on our financial position, liquidity or results of operations.
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Deferred Income Taxes. We use the balance sheet method of accounting for income taxes as prescribed by GAAP. Under this method, DTAs and deferred tax liabilities, or DTLs, are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. If current available information raises doubt as to the realization of the DTAs a valuation allowance is established. DTAs and DTLs are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Accounting for deferred income taxes is a critical accounting estimate because we exercise significant judgment in evaluating the amount and timing of recognition of the resulting tax assets and liabilities. Management’s determination of the realization of DTAs is based upon management’s judgment of various future events and uncertainties, including the timing and amount of future income, reversing temporary differences which may offset, and the implementation of various tax plans to maximize realization of the DTAs. These judgments and estimates are inherently subjective and reviewed on a continual basis as regulatory and business factors change. Any reduction in estimated future taxable income may require us to record a valuation allowance against our DTAs. A DTA valuation allowance would result in additional income tax expense in such period, which would negatively affect earnings. Conversely, the reversal of a valuation allowance previously recorded against a DTA would result in lower tax expense.
Recently Issued Accounting Pronouncements. We have evaluated new accounting pronouncements that have recently been issued and have determined that certain of these new accounting pronouncements should be described in this section because, upon their adoption, there could be a significant impact to our operations, financial condition or liquidity in future periods. Please refer to Note 1 of our audited consolidated financial statements in this Form 10-K for a detailed discussion of recently issued accounting pronouncements that have been adopted by us that will require enhanced disclosures in our financial statements in future periods.]
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