Ameris Bancorp (NASDAQ:ABCB) Q1 2024 Earnings Call Transcript April 27, 2024

Ameris Bancorp  isn't one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good day, and welcome to the Ameris Bancorp First Quarter 2024 Conference Call. All participants will be in a listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Nicole Stokes, Chief Financial Officer. Please go ahead.

Nicole Stokes: Great. Thank you, Danielle, and thank you to all who have joined our call today. During the call, we will be referencing the press release and the financial highlights that are available on the Investor Relations section of our website at amerisbank.com. I'm joined today by Palmer Proctor, our CEO; and Doug Strange, our Chief Credit Officer. Palmer will begin with some opening general comments, and then I will discuss the details of our financial results before we open up for Q&A. But before we begin, I'll remind you that our comments may include forward-looking statements. These statements are subject to risks and uncertainties. The actual results could vary materially. We would list some of the factors that might cause results to differ in our press release and in our SEC filings, which are available on our website.

We do not assume any obligation to update any forward-looking statements as a result of new information, early developments or otherwise, except as required by law. Also, during the call, we will discuss certain non-GAAP financial measures in reference to the company's performance. You can see our reconciliation of these measures and GAAP financial measures in the appendix to our presentation. And with that, I'll turn it over to Palmer for opening comments.

Palmer Proctor: Thank you, Nicole. Good morning, everyone. We appreciate you taking the time to join our call today. On our last earnings call, I reminded everyone how we spent 2023, strengthening our balance sheet to prepare ourselves for 2024 with a healthy margin, strong capital, and increased reserves. In the first quarter of 2024, results were evidence of those efforts. Excluding the cyclical and special items, we continue to operate at a 2% PPNR ROA. Our discipline in creating diversification in both the loan and deposit franchise as well as our revenue streams has us well positioned. We grew deposits this quarter by 5.6% annualized and over $46 million of that deposit growth was in noninterest bearing. This supported our loan growth of 6.5% annualized while maintaining the same loan-to-deposit ratio and an above-peer net interest margin of 3.51% for the quarter.

Our balance sheet remains strong with a healthy reserve for credit losses. During the first quarter, we recorded $21 million provision for credit losses, bringing our coverage ratio up to 1.55% of loans and 325% of portfolio NPAs. Once again, this provisioning was growth and model driven and not related to credit deterioration. I'm very pleased with our capital position. We grew tangible book this quarter by over 10.5% annualized to end the quarter at $34.52 per share. Our TCE ratio is well over our stated goal of 9%, now coming in at 9.71%. And when I look out for the remainder of 2024, I remain encouraged as we continue to benefit from several things. First, obviously a solid core deposit base, a healthy margin, a diversified revenue stream, strong capital and liquidity positions, which certainly provides us with a lot of the optionality we keep talking about for economic changes that may occur, a well-capitalized balance sheet with a healthy allowance.

And when you add that in with a proven culture of expense control and seasoned bankers in top Southeastern markets, that's really what helps drive our optimism. I'm going to stop there now and turn it over to Nicole to discuss our financial results in more detail.

Nicole Stokes: Great. Thank you, Palmer. For the first quarter, we're reporting net income of $74.3 million, or $1.08 per diluted share. On an adjusted basis, we earned $75.6 million, or $1.10 per diluted share when you exclude the FDIC special assessment and the gain on BOLI proceeds. Our adjusted return on assets improved to 1.20% this quarter, and our adjusted return on tangible common equity improved to 12.88%. We continue to build capital and we remain focused on growing shareholder value. We also purchased approximately $2.1 million of common stock during the first quarter, and we have approximately $94.7 million remaining available through the end of October. On the revenue side of things, our interest income for the quarter decreased $2.8 million over last quarter, almost all from day count, with February being a short month.

In addition, most of the loan growth for the quarter came in March, so we didn't get the full benefit of that growth on the income statement for the quarter. As expected, deposit costs rose this quarter, causing our net interest income to decline about $4.7 million. But the pace of the deposit cost increases continue to moderate as the cycle matures. Our net interest margin remains strong at 3.51%. We were pleased with just 3 basis points of margin compression this quarter and very excited to still be above a 3.50% margin this late in the cycle. Our yield on earning assets increased by 4 basis points while our total funding cost increased only 9 basis points. Now, I want to remind everyone that we continue to be close to neutral on our assets liability sensitivity as we've programmatically repositioned our balance sheet over the past two years to be ready for unclear Fed decisions.

We're prepared for the next Fed decision, whatever and whenever that is. We've updated the interest rate sensitivity information in our presentation on slide five. Kind of moving on to noninterest income that increased $9.6 million this quarter, mostly in the mortgage division due to the increase in gain on sale margins improving. And then moving into expense, our total adjusted noninterest expense increased about $6.5 million in the first quarter, most of which was due to the cyclical payroll taxes and 401(k) matching contributions. Our adjusted efficiency ratio was 54.56% this quarter and was elevated because of those cyclical payroll items, but we do anticipate maintaining an efficiency ratio below 55% for the remainder of the year. On the balance sheet side, we ended the quarter with total assets of $25.7 billion, compared to $25.2 billion at the end of the year.

Loans increased about $330 million this quarter, and deposits increased $289 million. That represents a 6.5% annualized loan growth and a 5.6% annualized deposit growth. We continue to anticipate 2024 loan and deposit growth in the mid-single digits and we expect that deposit growth will be the governor on loan growth. We remain focused on a successful 2024 due to our well-positioned balance sheet and our strong market. And with that, I'm going to wrap it up and turn the call back over to Danielle for any questions from the group.

See also

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12 Countries with the Largest Slum Population in Europe.

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