AMERIS BANCORP ANNOUNCES FINANCIAL RESULTS FOR SECOND QUARTER 2023

Highlights of Ameris's results for the second quarter of 2023 include the following:

• Net income of $62.6 million, or $0.91 per diluted share
• Pre-tax, pre-provision net revenue (PPNR) ROA⁽¹⁾ of 2.01%
• Growth in tangible book value⁽¹⁾ of $0.63 per share, or 8.2% annualized, to $31.42 at June 30, 2023
• Increase in the allowance for credit losses to 1.33% of loans, from 1.21% at March 31, 2023, due to forecasted economic conditions, particularly related to commercial real estate price levels
• Adjusted efficiency ratio⁽¹⁾ of 53.41%, compared with 53.66% in the second quarter of last year
• Nonperforming assets, excluding government-guaranteed loans, as a percentage of total assets improved three basis point to 0.30% at June 30, 2023, compared with 0.33% at March 31, 2023
• Net interest margin of 3.60% for the second quarter of 2023
• Organic growth in loans of $473.9 million, or 9.5% annualized
• Growth in total deposits of $545.7 million or 11.0% annualized
• TCE ratio⁽¹⁾ of 8.80%, compared with 8.55% at March 31, 2023 and 8.58% one year ago

ATLANTA, July 27, 2023 /PRNewswire/ -- Ameris Bancorp (Nasdaq: ABCB) (the "Company") today reported net income of $62.6 million, or $0.91 per diluted share, for the quarter ended June 30, 2023, compared with $90.1 million, or $1.30 per diluted share, for the quarter ended  June 30, 2022. Included in the Company's second quarter results was a $45.5 million provision for credit losses related to the updated economic forecast, compared with $14.9 million in the second quarter of last year.

For the year-to-date period ending June 30, 2023, the Company reported net income of $123.1 million, or $1.78 per diluted share, compared with $171.8 million, or $2.47 per diluted share, for the same period in 2022. The year-to-date period ending June 30, 2023 included a provision for credit losses of $95.2 million, compared with $21.2 million for the same period in 2022.  The year-to-date period ending June 30, 2022 included a recovery of servicing right impairment $20.5 million, with no such recovery in the same period in 2023.

Commenting on the Company's results, Palmer Proctor, the Company's Chief Executive Officer, said, "We are pleased with our second quarter financial results.  We continue to operate at a PPNR ROA above 2% with an efficiency ratio of 53.4%, while growing tangible book value by over 8% annualized.  We increased our allowance for credit losses to 1.33% of loans, all due to the economic modeling forecast.  Our credit metrics improved this quarter such that nonperforming assets now represent only 0.30% of total assets. We also grew core deposits in one of the most competitive margin scenarios imaginable.  The diversification in our loan portfolio, combined with the core funding of our liabilities and our multiple revenue streams, gives us momentum as we move into the second half of 2023."

Net Interest Income and Net Interest Margin

Net interest income on a tax-equivalent basis (TE) was $210.5 million in the second quarter of 2023, a decrease of $2.1 million, or 1.0%, from last quarter and an increase of $18.2 million, or 9.4%, compared with the second quarter of 2022.  The Company's net interest margin was 3.60% for the second quarter of 2023, down from 3.76% reported for the first quarter of 2023 and 3.66% reported for the second quarter of 2022. The decrease in net interest margin this quarter is primarily attributable to rising deposit costs in the current interest rate environment.

Yields on earning assets increased 27 basis points during the quarter to 5.52%, compared with 5.25% in the first quarter of 2023, and increased 164 basis points from 3.88% in the second quarter of 2022.  Yields on loans increased to 5.66% during the second quarter of 2023, compared with 5.44% for the first quarter of 2023 and 4.32% for the second quarter of 2022.

Loan production in the banking division during the second quarter of 2023 was $544.3 million, with weighted average yields of 9.35%, compared with $563.0 million and 8.72%, respectively, in the first quarter of 2023 and $1.07 billion and 5.24%, respectively, in the second quarter of 2022.  Loan production in the lines of business (including retail mortgage, warehouse lending, SBA and premium finance) amounted to an additional $4.7 billion during the second quarter of 2023, with weighted average yields of 6.83%, compared with $3.4 billion and 6.57%, respectively, during the first quarter of 2023 and $5.3 billion and 4.29%, respectively, during the second quarter of 2022.   

The Company's total cost of funds was 2.05% in the second quarter of 2023, an increase of 46 basis points compared with the first quarter of 2023.  Deposit costs increased 63 basis points during the second quarter of 2023 to 1.76%, compared with 1.13% in the first quarter of 2023.  Costs of interest-bearing deposits increased during the quarter from 1.82% in the first quarter of 2023 to 2.64% in the second quarter of 2023, reflecting a shift in mix to CDs in the rising rate environment.

Noninterest Income

Noninterest income increased $11.3 million, or 20.2%, in the second quarter of 2023 to $67.3 million, compared with $56.1 million for the first quarter of 2023, primarily as a result of increased mortgage banking activity, which increased by $9.4 million, or 29.8%, to $40.7 million in the second quarter of 2023, compared with $31.4 million for the first quarter of 2023.  Gain on sale spreads increased to 2.18% in the second quarter of 2023 from 1.96% for the first quarter of 2023. Total production in the retail mortgage division increased $386.4 million, or 40.8%, to $1.33 billion in the second quarter of 2023, compared with $946.4 million for the first quarter of 2023. The retail mortgage open pipeline was $652.1 million at the end of the second quarter of 2023, compared with $725.9 million for the first quarter of 2023.  Other noninterest income increased $1.6 million, or 12.5%, in the second quarter of 2023, compared with $12.7 million for the first quarter of 2023, primarily resulting from an increase in gain on sale of SBA loans of $880,000 and a gain on debt redemption of $1.0 million. 

Noninterest Expense

Noninterest expense increased $9.0 million, or 6.4%, to $148.4 million during the second quarter of 2023, compared with $139.4 million for the first quarter of 2023. The increase in noninterest expenses was driven by a decrease in deferred loan origination costs of $2.5 million, a $2.2 million increase in variable compensation related to mortgage production and a $3.1 million increase in fraud/forgery and litigation resolution expenses.  Management continues to focus on operating efficiency, and the adjusted efficiency ratio⁽¹⁾ increased to 53.41% in the second quarter of 2023, compared with 51.99% in the first quarter of 2023.

Income Tax Expense

The Company's effective tax rate for the second quarter of 2023 was 24.5%, compared with 23.1% for the first quarter of 2023.  The increased rate for the second quarter of 2023 was primarily a result of increased permanent differences related to nondeductible compensation and FDIC insurance premiums and a reduction in tax benefits related to stock compensation vesting, compared with the first quarter of 2023.

Balance Sheet Trends

Total assets at June 30, 2023 were $25.80 billion, compared with $25.05 billion at December 31, 2022.  Cash and cash equivalents increased 18.0% to $1.32 billion at June 30, 2023, compared with $1.12 billion at December 31, 2022.  Debt securities available-for-sale decreased to $1.46 billion, compared with $1.50 billion at December 31, 2022.  Loans, net of unearned income, increased $616.5 million, or 6.3% annualized, to $20.47 billion at June 30, 2023, compared with $19.86 billion at December 31, 2022. Loans held for sale decreased slightly to $391.5 million at June 30, 2023 from $392.1 million at December 31, 2022.

Investment securities remained consistent at $1.60 billion, or 6.8% of earning assets at the end of the second quarter of 2023, compared with $1.63 billion, or 7.2% of earning assets at December 31, 2022.  This compares with $1.16 billion, or 5.5% of earning assets at the end of the second quarter of 2022.  The Company did not deploy excess liquidity into the securities portfolio until after rates began rising during 2022; as a result, the unrealized loss position in the Company's available-for-sale securities portfolio remains modest at just 4.2% of the portfolio.

At June 30, 2023, total deposits amounted to $20.44 billion, compared with $19.46 billion at December 31, 2022.  During the second quarter of 2023, deposits grew $545.7 million, with interest bearing demand accounts increasing $358.0 million, retail CDs increasing $268.6 million and brokered CDs increasing $357.8 million, with such increases offset in part by a $591.0 million decrease in noninterest bearing accounts.  Due to the increased interest rate environment, the Company continued to see the shift of customer deposits from noninterest bearing accounts into interest bearing accounts, such that at June 30, 2023, noninterest bearing deposit accounts represented $6.71 billion, or 32.8% of total deposits, compared with $7.93 billion, or 40.7% of total deposits, at December 31, 2022.  

During the second quarter of 2023, utilizing existing liquidity, the Company reduced borrowings with the FHLB by $875.0 million and redeemed $9.5 million in principal amount, at a discount, of its 4.25% Fixed-to-Floating Rate Subordinated Notes Due 2029.

Shareholders' equity at June 30, 2023 totaled $3.28 billion, an increase of $87.2 million, or 2.7%, from December 31, 2022.  The increase in shareholders' equity was primarily the result of earnings of $123.1 million during the first six months of 2023, partially offset by dividends declared, share repurchases and an increase in other comprehensive loss of $4.1 million resulting from changes in interest rates on the Company's investment portfolio.  Tangible book value per share⁽¹⁾ increased $1.50 per share, or 10.1% annualized, during the first six months of 2023 to $31.42 at June 30, 2023.  The Company recorded dilution of $0.06 per share, or 0.2%, to tangible book value⁽¹⁾ from other comprehensive loss related to the increase in net unrealized losses on the securities portfolio during this same period.  Tangible common equity as a percentage of tangible assets was 8.80% at June 30, 2023, compared with 8.67% at the end of 2022.

Credit Quality

Credit quality remains strong in the Company.  During the second quarter of 2023, the Company recorded a provision for credit losses of $45.5 million, compared with a provision of $49.7 million in the first quarter of 2023.  The second quarter provision was primarily attributable to the updated economic forecast and loan growth of $473.9 million during the quarter.  Nonperforming assets as a percentage of total assets were down four basis points to 0.57% during the quarter.  Approximately $69.7 million, or 47.6%, of the nonperforming assets at June 30, 2023 were GNMA-guaranteed mortgage loans, which have minimal loss exposure.  Excluding these government-guaranteed loans, nonperforming assets as a percentage of total assets improved three basis points to 0.30% at June 30, 2023, compared with 0.33% at the first quarter of 2023. The net charge-off ratio was 28 basis points for the second quarter of 2023, compared with 22 basis points in the first quarter of 2023.

Conference Call

The Company will host a teleconference at 9:00 a.m. Eastern time on Friday, July 28, 2023, to discuss the Company's results and answer appropriate questions. The conference call can be accessed by dialing 1-888-550-5279.  The conference call access code is 9375737.  A replay of the call will be available one hour after the end of the conference call until August 11, 2023.  To listen to the replay, dial 1-800-770-2030.  The conference replay access code is 9375737.  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 164 locations in Georgia, Alabama, Florida, North Carolina and South Carolina at the end of the most recent quarter.

⁽¹⁾ Considered non-GAAP financial measure - See reconciliation of GAAP to non-GAAP financial measures in tables 9A - 9E.

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 financial 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 financial 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 financial 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, investment security valuations and other performance measures; expectations on credit quality and performance; legislative and regulatory changes; changes in U.S. government monetary and fiscal policy; 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, 2022 and the Company's 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.