Ameris Bancorp Announces Financial Results For Second Quarter 2021

ATLANTA, July 22, 2021 /PRNewswire/ -- Ameris Bancorp (Nasdaq: ABCB) (the "Company") today reported net income of $88.3 million, or $1.27 per diluted share, for the quarter ended June 30, 2021, compared with $32.2 million, or $0.47 per diluted share, for the quarter ended June 30, 2020.  The Company reported adjusted net income of $87.5 million, or $1.25 per diluted share, for the quarter ended June 30, 2021, compared with $42.4 million, or $0.61 per diluted share, for the same period in 2020.  Adjusted net income excludes after-tax merger and conversion charges, servicing right valuation adjustments, restructuring charges related to branch consolidations and efficiency initiatives, certain legal expenses, gain on bank owned life insurance ("BOLI") proceeds, (gain)/loss on sale of bank premises and expenses related to the COVID-19 pandemic.

For the year-to-date period ending June 30, 2021, the Company reported net income of $213.3 million, or $3.06 per diluted share, compared with $51.6 million, or $0.74 per diluted share, for the same period in 2020. The Company reported adjusted net income of $203.3 million, or $2.91 per diluted share, for the six months ended June 30, 2021, compared with $81.6 million, or $1.18 per diluted share, for the same period in 2020. Adjusted net income for the year-to-date period excludes the same items listed above for the Company's quarter-to-date period.

Commenting on the Company's results, Palmer Proctor, the Company's Chief Executive Officer, said, "Our positive second quarter results are a clear testament to our focus and discipline over the past year.  I am proud of our  bankers, being able to report 5% annualized net loan growth for the quarter, with the headwinds of PPP forgiveness, and 14% annualized loan growth exclusive of the PPP reductions.  We are in some of the best markets in the Southeast, and we continue to see real organic opportunities within these markets.  We are pleased with the disciplined improvement in our efficiency ratio compared to last quarter, and we are excited to report 4.7% growth in tangible book value for the quarter.  We continue to remain focused on delivering top-of-class results and are optimistic about the remainder of 2021, and we look forward to 2022."

Significant items from the Company's results for the second quarter of 2021 include the following:

• Net income of $88.3 million, or $1.27 per diluted share, compared with $125.0 million, or $1.79 per diluted share, in the first quarter of 2021
• Growth in tangible book value of 4.7%, or $1.18 per share, to $26.45 at June 30, 2021, compared with $25.27 at March 31, 2021
• Organic growth in loans of $181.0 million, or 5.0% annualized (and $485.1 million, or 14.1% annualized, exclusive of PPP loans), during the second quarter of 2021
• Adjusted return on average assets of 1.63%, compared with 2.26% in the first quarter of 2021
• Adjusted efficiency ratio of 54.07%, compared with 54.62% in the first quarter of 2021 and 51.08% in the second quarter of 2020
• Net interest margin of 3.34%, compared with 3.57% in the first quarter of 2021
• Continued growth in noninterest bearing deposits, representing 38.25% of total deposits, up from 36.27% at December 31, 2020 and 35.89% a year ago
• Non-performing assets decreased eight basis points to 0.32% of total assets, compared with 0.40% at March 31, 2021

Net Interest Income and Net Interest Margin
Net interest income on a tax-equivalent basis for the second quarter of 2021 totaled $163.0 million, compared with $166.2 million for the first quarter of 2021 and $165.2 million for the second quarter of 2020.  The Company's net interest margin was 3.34% for the second quarter of 2021, down from 3.57% reported for the first quarter of 2021 and 3.83% reported for the second quarter of 2020.  The decrease in net interest margin in the current quarter is attributable to excess liquidity held on the balance sheet, as the average balance in interest-bearing deposits in banks continued to increase during the quarter.  The yield on earning assets declined 27 basis points due to this excess liquidity, as well as declines in accretion income and Paycheck Protection Program ("PPP") loan fee income, and the decline was partially offset by improvement in the cost of interest-bearing liabilities of five basis points during the quarter and increases in average loans. Accretion income for the second quarter of 2021 decreased to $4.5 million, compared with $6.1 million for the first quarter of 2021, and $9.6 million for the second quarter of 2020.  The decrease in accretion income for the second quarter is primarily attributable to decreased payoffs of acquired loans during the second quarter of 2021. 

Yields on loans decreased to 4.33% during the second quarter of 2021, compared with 4.53% for the first quarter of 2021 and 4.70% reported for the second quarter of 2020.  Contributing to interest income on loans for the second quarter of 2021 was $6.1 million related to accelerated fee income on PPP loan forgiveness, compared with $9.2 million in the first quarter of 2021.  Loan production in the banking division during the second quarter of 2021 was $911.3 million, with weighted average yields of 3.75%, compared with $600.6 million and 3.80%, respectively, in the first quarter of 2021 and $472.1 million and 4.16%, respectively, in the second quarter of 2020.  Loan production in the lines of business (including retail mortgage, warehouse lending, SBA and premium finance) amounted to an additional $6.4 billion during the second quarter of 2021, with weighted average yields of 3.36%, compared with $7.5 billion and 3.15%, respectively, during the first quarter of 2021 and $7.2 billion and 3.17%, respectively, during the second quarter of 2020.  Loan production yields in the lines of business were negatively impacted three basis points during the second quarter of 2021 by originations of PPP loans in our SBA division. 

Interest expense during the second quarter of 2021 decreased to $11.9 million, compared with $13.0 million in the first quarter of 2021 and $21.2 million in the second quarter of 2020.  The Company's total cost of funds moved four basis points lower to 0.26% in the second quarter of 2021 as compared with the first quarter of 2021.  Deposit costs decreased three basis points during the second quarter of 2021 to 0.13%, compared with 0.16% in the first quarter of 2021.  Costs of interest-bearing deposits decreased during the quarter from 0.25% in the first quarter of 2021 to 0.21% in the second quarter of 2021.

Noninterest Income
Noninterest income decreased $28.7 million, or 24.4%, in the second quarter of 2021 to $89.2 million, compared with $118.0 million for the first quarter of 2021, primarily as a result of decreased mortgage banking activity and other noninterest income, as further discussed below.

Mortgage banking activity decreased $28.3 million, or 28.7%, to $70.2 million in the second quarter of 2021, compared with $98.5 million for the first quarter of 2021.  This decrease was the result of a reduced recovery of previously recorded servicing right impairment, reduced production and a reduction in gain on sale margins.  Gain on sale spreads decreased to 2.77% in the second quarter of 2021 from 3.95% for the first quarter of 2021. Total production in the retail mortgage division decreased to $2.39 billion in the second quarter of 2021, compared with $2.64 billion for the first quarter of 2021. Mortgage banking activity was positively impacted during the second quarter of 2021 by a $749,000 servicing right recovery, compared with a recovery of $9.7 million for the first quarter of 2021. The retail mortgage open pipeline was $1.75 billion at the end of the second quarter of 2021, compared with $2.33 billion at March 31, 2021.

Service charge revenue increased $178,000, or 1.6%, to $11.0 million in the second quarter of 2021, compared with $10.8 million for the first quarter of 2021, resulting from an increase in interchange income. Other noninterest income decreased $709,000, or 9.3%, in the second quarter of 2021 to $6.9 million, compared with $7.7 million for the first quarter of 2021, primarily as a result of decreases in SBA servicing right recovery of $906,000 and gain on BOLI proceeds of $603,000, partially offset by an increase in BOLI income of $520,000.

Noninterest Expense
Noninterest expense decreased $13.0 million, or 8.8%, to $135.8 million during the second quarter of 2021, compared with $148.8 million for the first quarter of 2021.  During the second quarter of 2021, the Company recorded a net gain of $236,000 related to sale of premises, compared to a net gain of $264,000 during the first quarter of 2021.  Excluding these charges, adjusted expenses decreased approximately $13.1 million, or 8.8%, to $136.0 million in the second quarter of 2021, from $149.1 million in the first quarter of 2021.  The majority of this decrease is attributable to a $10.5 million reduction in salaries and employee benefits including payroll taxes, variable compensation related to mortgage production and increased deferred costs related to loan originations in the banking division.  Also contributing to the decrease were decreases in OREO losses, legal and other professional fees, and other variable expenses related to mortgage production.  The adjusted efficiency ratio was 54.07% in the second quarter of 2021, compared with 54.62% in the first quarter of 2021.

Balance Sheet Trends
Total assets at June 30, 2021 were $21.89 billion, compared with $20.44 billion at December 31, 2020.  Total loans, including loans held for sale, were $15.99 billion at June 30, 2021, compared with $15.65 billion at December 31, 2020.  Total loans held for investment were $14.78 billion at June 30, 2021, compared with $14.48 billion at December 31, 2020, an increase of $299.9 million, or 2.1%.  Loan production in the banking division during the second quarter of 2021 was up 52% from the first quarter of 2021 and 93% from the second quarter of 2020. 

At June 30, 2021, total deposits amounted to $18.26 billion, or 97.0% of total funding, compared with $16.96 billion and 96.8%, respectively, at December 31, 2020.  At June 30, 2021, noninterest-bearing deposit accounts were $6.98 billion, or 38.3% of total deposits, compared with $6.15 billion, or 36.3% of total deposits, at December 31, 2020.  Non-rate sensitive deposits (including noninterest-bearing, NOW and savings) totaled $11.39 billion at June 30, 2021, compared with $10.23 billion at December 31, 2020.  These funds represented 62.4% of the Company's total deposits at June 30, 2021, compared with 60.3% at the end of 2020.

Shareholders' equity at June 30, 2021 totaled $2.84 billion, an increase of $189.9 million, or 7.2%, from December 31, 2020.  The increase in shareholders' equity was primarily the result of earnings of $213.3 million during the first six months of 2021, partially offset by dividends declared.  Tangible book value per share was $26.45 at June 30, 2021, compared with $23.69 at December 31, 2020.  Tangible common equity as a percentage of tangible assets was 8.83% at June 30, 2021, compared with 8.47% at the end of 2020.

Credit Quality
Credit quality remains strong in the Company.  During the second quarter of 2021, the Company recorded a provision for credit losses of $142,000, compared with a provision reversal of $28.6 million in the first quarter of 2021.  This provision was primarily attributable to growth in unfunded commitments compared with the first quarter of 2021, partially offset by improvements in forecast economic conditions, particularly levels of home prices, commercial real estate prices and retail sales, compared with forecast conditions during the first quarter of 2021.  The Company has been prudently working with borrowers to support their credit needs during the challenging economic conditions and is monitoring the level of modifications on an ongoing basis, such that loans remaining on deferral at the end of the second quarter of 2021 equaled approximately 1.2% of total loans, down from approximately 1.9% and 19.0% of total loans at the end of the first quarter of 2021 and the second quarter of 2020, respectively.  Nonperforming assets as a percentage of total assets decreased by eight basis points to 0.32% during the quarter.  The net charge-off ratio was seven basis points for the second quarter of 2021, compared with 12 basis points in the first quarter of 2021 and 27 basis points in the second quarter of 2020.

Conference Call
The Company will host a teleconference at 9:00 a.m. Eastern time on Friday, July 23, 2021, to discuss the Company's results and answer appropriate questions. The conference call can be accessed by dialing 1-877-504-1190 (or 1-855-669-9657 for participants in Canada and 1-412-902-6630 for other international participants).  The conference ID name is Ameris Bancorp ABCB.  A replay of the call will be available one hour after the end of the conference call until August 6, 2021.  To listen to the replay, dial 1-877-344-7529 (or 1-855-669-9658 for participants in Canada and 1-412-317-0088 for other international participants).  The conference replay access code is 10158164.  The conference call replay and the financial information discussed will also be available on the Investor Relations page of the Ameris Bank website at ir.amerisbank.com.

About Ameris Bancorp
Ameris Bancorp is a bank holding company headquartered in Atlanta, Georgia.  The Company's banking subsidiary, Ameris Bank, had 165 locations in Georgia, Alabama, Florida, North Carolina and South Carolina at the end of the most recent quarter.

This news release contains certain performance measures determined by methods other than in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The Company's management uses these non-GAAP measures in its analysis of the Company's performance. These measures are useful when evaluating the underlying performance and efficiency of the Company's operations and balance sheet. The Company's management believes that these non-GAAP measures provide a greater understanding of ongoing operations, enhance comparability of results with prior periods and demonstrate the effects of significant gains and charges in the current period. The Company's management believes that investors may use these non-GAAP financial measures to evaluate the Company's financial performance without the impact of unusual items that may obscure trends in the Company's underlying performance. These disclosures should not be viewed as a substitute for financial measures determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.

This news release contains forward-looking statements, as defined by federal securities laws, including, among other forward-looking statements, certain plans, expectations and goals.  Words such as "may," "believe," "expect," "anticipate," "intend," "will," "should," "plan," "estimate," "predict," "continue" and "potential" or the negative of these terms or other comparable terminology, as well as similar expressions, are meant to identify forward-looking statements.  The forward-looking statements in this news release are based on current expectations and are provided to assist in the understanding of potential future performance.  Such forward-looking statements involve numerous assumptions, risks and uncertainties that may cause actual results to differ materially from those expressed or implied in any such statements, including, without limitation, the following:  general competitive, economic, unemployment, political and market conditions and fluctuations, including real estate market conditions, and the effects of such conditions and fluctuations on the creditworthiness of borrowers, collateral values, asset recovery values and the value of investment securities; movements in interest rates and their impacts on net interest margin; expectations on credit quality and performance; legislative and regulatory changes; changes in U.S. government monetary and fiscal policy; the impact of the COVID-19 pandemic on the general economy, our customers and the allowance for loan losses; the benefits that may be realized by our customers from government assistance programs and regulatory actions related to the COVID-19 pandemic; the potential impact of the proposed phase-out of the London Interbank Offered Rate ("LIBOR") or other changes involving LIBOR; competitive pressures on product pricing and services; the cost savings and any revenue synergies expected to result from acquisition transactions, which may not be fully realized within the expected timeframes if at all; the success and timing of other business strategies; our outlook and long-term goals for future growth; and natural disasters, geopolitical events, acts of war or terrorism or other hostilities, public health crises and other catastrophic events beyond our control. For a discussion of some of the other risks and other factors that may cause such forward-looking statements to differ materially from actual results, please refer to the Company's filings with the Securities and Exchange Commission, including the Company's Annual Report on Form 10-K for the year ended December 31, 2020 and its subsequently filed periodic reports and other filings.  Forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update or revise forward-looking statements.