Amerant Bancorp Inc.AMTB
Amerant Bancorp Inc. Fair Value Disclosure
Fair Value Measurements
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Assets and liabilities measured at fair value on a recurring basis are summarized below:
December 31, 2025 | |||||||||||||||||||||||
(in thousands) | Quoted Prices in Active Markets for Identical Assets (Level 1) | Third-Party Models with Observable Market Inputs (Level 2) | Internal Models with Unobservable Market Inputs (Level 3) | Total Carrying Value in the Consolidated Balance Sheet | |||||||||||||||||||
Assets | |||||||||||||||||||||||
Cash and Cash equivalents | |||||||||||||||||||||||
Other short-term investments | $ | — | $ | 7,233 | $ | — | $ | 7,233 | |||||||||||||||
Securities | |||||||||||||||||||||||
Debt Securities available for sale | |||||||||||||||||||||||
U.S. Treasury Securities | — | 1,000 | — | 1,000 | |||||||||||||||||||
U.S. Government agency and sponsored enterprise residential MBS | — | 1,824,510 | — | 1,824,510 | |||||||||||||||||||
U.S. Government agency and sponsored enterprise commercial MBS | — | 152,249 | — | 152,249 | |||||||||||||||||||
U.S. Government agency and sponsored enterprise obligations | — | 45,455 | — | 45,455 | |||||||||||||||||||
Non-agency commercial MBS | — | — | — | — | |||||||||||||||||||
Municipal Bonds | — | 1,669 | — | 1,669 | |||||||||||||||||||
— | 2,024,883 | — | 2,024,883 | ||||||||||||||||||||
| Equity securities with readily determinable fair values not held for trading | 2,548 | — | — | 2,548 | |||||||||||||||||||
2,548 | 2,024,883 | — | 2,027,431 | ||||||||||||||||||||
Mortgage loans held for sale (at fair value) | — | 2,932 | — | 2,932 | |||||||||||||||||||
Bank owned life insurance | — | 260,644 | — | 260,644 | |||||||||||||||||||
Mortgage servicing rights (MSRs) | — | — | 1,314 | 1,314 | |||||||||||||||||||
Derivative instruments | — | 36,539 | — | 36,539 | |||||||||||||||||||
$ | 2,548 | $ | 2,332,231 | $ | 1,314 | $ | 2,336,093 | ||||||||||||||||
Liabilities | |||||||||||||||||||||||
Derivative instruments | $ | — | $ | 36,053 | $ | — | $ | 36,053 | |||||||||||||||
| December 31, 2024 | |||||||||||||||||||||||
| (in thousands) | Quoted Prices in Active Markets for Identical Assets (Level 1) | Third-Party Models with Observable Market Inputs (Level 2) | Internal Models with Unobservable Market Inputs (Level 3) | Total Carrying Value in the Consolidated Balance Sheet | |||||||||||||||||||
| Assets | |||||||||||||||||||||||
Cash and Cash equivalents | |||||||||||||||||||||||
Other short-term investments | $ | — | 6,944 | — | $ | 6,944 | |||||||||||||||||
| Securities | |||||||||||||||||||||||
| Debt Securities available for sale | |||||||||||||||||||||||
| U.S. treasury securities | — | 1,933 | — | 1,933 | |||||||||||||||||||
U.S. Government agency and sponsored enterprise residential MBS | — | 1,262,640 | $ | — | 1,262,640 | ||||||||||||||||||
| U.S. Government agency and sponsored enterprise commercial MBS | — | 142,538 | — | 142,538 | |||||||||||||||||||
| U.S. Government agency and sponsored agency obligations | — | 16,682 | — | 16,682 | |||||||||||||||||||
| Non-agency commercial MBS | — | 11,792 | — | 11,792 | |||||||||||||||||||
| Municipal bonds | — | 1,585 | — | 1,585 | |||||||||||||||||||
| — | 1,437,170 | — | 1,437,170 | ||||||||||||||||||||
| Equity securities with readily determinable fair values not held for trading | 2,477 | — | — | 2,477 | |||||||||||||||||||
2,477 | 1,437,170 | — | 1,439,647 | ||||||||||||||||||||
| Mortgage loans held for sale (at fair value) | — | 42,911 | — | 42,911 | |||||||||||||||||||
| Bank owned life insurance | — | 243,547 | — | 243,547 | |||||||||||||||||||
| Mortgage servicing rights (MSRs) | — | — | 1,491 | 1,491 | |||||||||||||||||||
| Derivative instruments | — | 48,011 | — | 48,011 | |||||||||||||||||||
| $ | 2,477 | $ | 1,778,583 | $ | 1,491 | $ | 1,782,551 | ||||||||||||||||
| Liabilities | |||||||||||||||||||||||
| Derivative instruments | $ | — | $ | 47,615 | $ | — | $ | 47,615 | |||||||||||||||
Level 2 Valuation Techniques
The valuation of short-term securities, debt securities available for sale, equity securities not held for trading, and derivative instruments is performed through a monthly pricing process using data provided by generally recognized providers of independent data pricing services (the “Pricing Providers”). These Pricing Providers collect, use and incorporate descriptive market data from various sources, quotes and indicators from leading broker dealers to generate independent and objective valuations. The fair value of mortgage loans held for sale is generally determined using observable market information including pricing from actual market transactions, investor commitment prices or broker quotations on similar loans. The fair value of bank-owned life insurance policies is based on the cash surrender values of the policies as reported by the insurance companies.
The valuation techniques and the inputs used in our consolidated financial statements to measure the fair value of our recurring Level 2 financial instruments consider, among other factors, the following:
•Similar securities actively traded which are selected from recent market transactions;
•Observable market data which includes spreads in relationship to SOFR and other relevant interest rate benchmarks that may become available from time to time, such as swap curve, and prepayment speed rates, as applicable.
•The captured spread and prepayment speed is used to obtain the fair value for each related security.
On a quarterly basis, the Company evaluates the reasonableness of the monthly pricing process for the valuation of short-term securities, debt securities available for sale and equity securities not held for trading and derivative instruments. When appropriate, this evaluation includes challenging a random sample of the different types of securities in the investment portfolio as of the end of the quarter selected. This challenge consists of obtaining from the Pricing Providers a document explaining the methodology applied to obtain their fair value assessments for each type of investment included in the sample selection. The Company then analyzes in detail the various inputs used in the fair value calculation, both observable and unobservable (e.g., prepayment speeds, yield curve benchmarks, spreads, delinquency rates). Management considers that the consistent application of this methodology allows the Company to understand and evaluate the categorization of its investment portfolio.
The methods described above may produce a fair value calculation that may differ from the net realizable value or may not be reflective of future fair values. Furthermore, while the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of its financial instruments could result in different estimates of fair value at the reporting date.
Level 3 Valuation Techniques
Mortgage Servicing Rights
MSRs are initially and subsequently measured at fair value, with changes in fair value recorded as part of noninterest income. The Company estimates the fair value of MSRs through the use of prevailing market participants assumptions and market participant valuation processes. This valuation is periodically tested and validated against other third-party firm valuations.
There were no transfers in or out of level 3 in the years ended December 31, 2025, 2024 and 2023.
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
The following tables present the major categories of assets measured at fair value on a non-recurring basis at December 31, 2025 and 2024:
| December 31, 2025 | |||||||||||||||||||||||||||||
| (in thousands) | Carrying Amount | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total Write Downs | ||||||||||||||||||||||||
| Description | |||||||||||||||||||||||||||||
Loans held for sale, at lower of cost or fair value | $ | 80,912 | $ | — | $ | — | $ | 80,912 | 13,752 | ||||||||||||||||||||
| Loans held for investment measured for credit deterioration using the fair value of the collateral (1) (2) | $ | 7,497 | $ | — | $ | — | $ | 7,497 | $ | 3,328 | |||||||||||||||||||
Other Real Estate Owned (3) | 15,542 | — | — | 15,542 | 1,114 | ||||||||||||||||||||||||
| Cash flow dependent loans measured for expected credit losses (4) | 60,397 | — | — | 60,397 | 15,989 | ||||||||||||||||||||||||
| $ | 164,348 | $ | — | $ | — | $ | 164,348 | $ | 34,183 | ||||||||||||||||||||
(1)Consists entirely of commercial loans with a carrying amount of $7.5 million, at December 31, 2025.
(2)Include loans with specific reserves of $0.3 million total write downs of $3.3 million at December 31, 2025.
(3)Includes $14.0 million and $1.6 million in commercial real estate and residential real estate property, respectively.
(4)Consists entirely of commercial loans with a carrying amount of $60.4 million and specific reserves of $2.3 million at December 31, 2025.
| December 31, 2024 | |||||||||||||||||||||||||||||
| (in thousands) | Carrying Amount | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total Write Downs | ||||||||||||||||||||||||
| Description | |||||||||||||||||||||||||||||
| Loans held for investment measured for credit deterioration using the fair value of the collateral (1) (2) | $ | 23,265 | $ | — | $ | — | $ | — | $ | 11,889 | |||||||||||||||||||
Other Real Estate Owned (3) | 18,074 | — | — | 18,074 | 5,672 | ||||||||||||||||||||||||
| $ | 41,339 | $ | — | $ | — | $ | 18,074 | $ | 17,561 | ||||||||||||||||||||
(1) Includes commercial and owner-occupied loans with a carrying amount of $23.0 million and $0.1 million, respectively, at December 31, 2024.
(2) Include loans with specific reserves of $2.5 million and total write downs of $5.1 million at December 31, 2024.
(3) Includes $17.7 million and $0.4 million in commercial and residential real estate property, respectively.
The following table presents the significant unobservable inputs (Level 3) used in the valuation of assets measured at fair value on a nonrecurring basis.
| Financial Instrument | Unobservable Inputs | Valuation Methods | Discount Range | Typical Discount | ||||||||||
| Collateral dependent loans | Discount to fair value | Appraisal value, as adjusted | 0-30% | 6-7% | ||||||||||
| Inventory | 0-100% | 30-50% | ||||||||||||
| Accounts receivables | 0-100% | 20-30% | ||||||||||||
| Equipment | 0-100% | 20-30% | ||||||||||||
| Other Real Estate Owned | Discount to fair value | Appraisal value, as adjusted | N/A | 6-7% | ||||||||||
There were no other significant assets or liabilities measured at fair value on a nonrecurring basis at December 31, 2025 and 2024.
Loans Held for Sale, at Lower of Fair Value or Cost
The fair value used for loans held for sale that are carried at the lower of cost or fair value is generally based on quoted market prices of similar loans less estimated cost to sell and is considered to be Level 3.
Cash Flow Dependent Loans Measured For Expected Credit Losses
The carrying amount of individually evaluated loans where repayment is expected to be provided through cash flows is estimated using the present value discounted cash flow method. The estimated cash flows are based on the borrower’s repayment capacity, using available financial information. In certain circumstances, management may utilize probability‑weighted scenarios to reflect different reasonable and supportable expectations of future cash collections. Because this approach incorporates significant unobservable inputs, such as borrower‑specific cash flow estimates, discount rates, and probability‑of‑default assumptions, the fair value of these loans is classified as a Level 3 valuation.
Collateral Dependent Loans Measured For Expected Credit Losses
The carrying amount of collateral dependent loans is typically based on the fair value of the underlying collateral less cost to sell. The Company primarily uses third party appraisals to assist in measuring expected credit losses on collateral dependent loans. The Company also uses third party appraisal reviewers for loans with an outstanding balance of $1 million and above. These appraisals generally use the market or income approach valuation technique and use market observable data to formulate an opinion of the fair value of the loan’s collateral. However, the appraiser uses professional judgment in determining the fair value of the collateral or properties and may also adjust these values for changes in market conditions subsequent to the appraisal date. When current appraisals are not available for certain loans, the Company uses judgment on market conditions to adjust the most current appraisal. The sales prices may reflect prices of sales contracts not closed and the amount of time required to sell out the real estate project may be derived from current appraisals of similar projects. As a consequence, the fair value of the collateral is considered a Level 3 valuation.
Other Real Estate Owned
The Company values OREO at the lower of cost or fair value of the property, less cost to sell. The fair value of the property is generally based upon recent appraisal values of the property, less cost to sell. The Company primarily uses third party appraisals to assist in measuring the valuation of OREO. Period revaluations are classified as Level 3 as the assumptions used may not be observable. The fair value of non-real estate repossessed assets is provided by a third party based on their assumptions and quoted market prices for similar assets, when available. In 2025, the Company sold two OREO properties for an aggregate of $2.7 million and recognized a total net loss on sale $0.8 million in connection with these transactions. In 2025 and 2024, the Company recorded valuation expenses of $1.1 million and $5.7 million, respectively, on OREO properties, as result of the fair value adjustment. The Company had OREO balances of $15.5 million and $18.1 million as of December 31, 2025 and 2024, respectively.
Fair Value of Financial InstrumentsThe fair value of a financial instrument represents the price that would be received from its sale in an orderly transaction between market participants at the measurement date. The best indication of the fair value of a financial instrument is determined based upon quoted market prices. However, in many cases, there are no quoted market prices for the Company’s various financial instruments. As a result, the Company derives the fair value of the financial instruments held at the reporting period-end, in part, using present value or other valuation techniques. Those techniques are significantly affected by management’s assumptions, the estimated amount and timing of future cash flows and estimated discount rates included in present value and other techniques. The use of different assumptions could significantly affect the estimated fair values of the Company’s financial instruments. Accordingly, the net realized values could be materially different from the estimates presented below.
The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value:
•Because of their nature and short-term maturities, the carrying values of the following financial instruments were used as a reasonable estimate of their fair value: cash and cash equivalents, interest earning deposits with banks, variable-rate loans with re-pricing terms shorter than twelve months, demand and savings deposits, short-term time deposits and other borrowings.
•The fair value of mortgage loans held for sale at fair value and loans held for sale carried at the lower of cost or fair value, debt and equity securities, bank owned life insurance and derivative instruments, are based on quoted market prices, when available. If quoted market prices are unavailable, fair value is estimated using the pricing process described in Note 20.
•The fair value of commitments and letters of credit is based on the assumption that the Company will be required to perform on all such instruments. The commitment amount approximates estimated fair value.
•The fair value of fixed-rate loans, advances from the FHLB, senior notes, subordinated notes and junior subordinated debentures are estimated using a present value technique by discounting the future expected contractual cash flows using the current rates at which similar instruments would be issued with comparable credit ratings and terms at the measurement date.
•The fair value of long-term time deposits, including certificates of deposit, is determined using a present value technique by discounting the future expected contractual cash flows using current rates at which similar instruments would be issued at the measurement date.
The estimated fair value of financial instruments where fair value differs from carrying value are as follows:
| December 31, 2025 | December 31, 2024 | ||||||||||||||||||||||
| (in thousands) | Carrying Value | Estimated Fair Value | Carrying Value | Estimated Fair Value | |||||||||||||||||||
| Financial assets | |||||||||||||||||||||||
| Loans | 2,432,890 | 2,412,723 | 3,187,223 | 3,113,807 | |||||||||||||||||||
| Financial liabilities | |||||||||||||||||||||||
| Time deposits | 1,560,429 | 1,559,565 | 1,532,563 | 1,532,002 | |||||||||||||||||||
Advances from the FHLB | 711,984 | 729,053 | 745,000 | 743,910 | |||||||||||||||||||
| Senior notes | — | — | 59,843 | 59,714 | |||||||||||||||||||
| Subordinated notes | 29,795 | 26,530 | 29,624 | 28,481 | |||||||||||||||||||
| Junior subordinated debentures | 64,178 | 64,690 | 64,178 | 63,255 | |||||||||||||||||||
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.