KBRA Assigns Ratings to Amerant Bancorp Inc.

Kroll Bond Rating Agency (KBRA) assigns a senior unsecured debt rating of BBB- and a short-term debt rating of K3 for Coral Gables, Florida-based Amerant Bancorp Inc. AMTB ("the company"). In addition, KBRA assigns deposit and senior unsecured debt ratings of BBB, a subordinated debt rating of BBB-, and short-term deposit and debt ratings of K3 for Amerant Bank, National Association, the lead subsidiary. The Outlook for all long-term ratings is Stable.

The ratings reflect the company's size, tenured and experienced management team, and relative stability in earnings. AMTB has executed its plan to restructure and rebrand the bank and is in the early stages of operating as an independently run bank having completed the spin-off less than eighteen months ago. The new strategy is focused on building a domestic deposit franchise, though maintaining its international customer base, and addressing the company's below peer net interest margin, high efficiency ratio, reliance on wholesale funding, and internationally driven declining core deposit funding profile. The ratings benefit from AMTB's above peer noninterest income as a percentage of operating revenue which includes the company's wealth management and trust services ($1.6 billion AUM/C). The company maintains solid capital levels at 250-350 bps above peer medians. Ratings are constrained by below peer core deposit funding and elevated lending exposures to industries sensitive to COVID-19, which are above peer levels at ~30% of loans, including retail-CRE (20.4%), hotels (4.6%), services (2.7% - includes restaurant, entertainment, oil and gas, and recreation), and retail trade (2.6%). Phase 1 exposures represent 185% of risk-based capital (RBC) and 290% of RBC including multifamily exposure.

KBRA continues to monitor the potential direct and indirect effects of the coronavirus on the banking and other sectors. Please refer to our publication U.S. Bank 1Q 2020 Ratings Compendium for our latest thoughts.

The ratings are based on KBRA's Bank & Bank Holding Company Global Rating Methodology published on October 16, 2019.

Click here to view the report. To access ratings and relevant documents, click here.

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• KBRA Monitors COVID-19 Credit Impact by Sector

Disclosures

Further information on key credit considerations, sensitivity analyses that consider what factors can affect these credit ratings and how they could lead to an upgrade or a downgrade, and ESG factors (where they are a key driver behind the change to the credit rating or rating outlook) can be found in the full rating report referenced above.

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the U.S. Information Disclosure Form located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the U.S. Information Disclosure Form referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

KBRA is a full-service credit rating agency registered as an NRSRO with the U.S. Securities and Exchange Commission. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider and is a certified Credit Rating Agency (CRA) with the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.

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