Ameris Bancorp (NASDAQ:ABCB) Q3 2023 Earnings Call Transcript
Ameris Bancorp (NASDAQ:ABCB) Q3 2023 Earnings Call Transcript October 27, 2023
Operator: Good morning, everyone, and welcome to Ameris Bancorp's Third Quarter Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please also note today's event is being recorded. At this time, I'd like to turn the floor over to Nicole Stokes, Chief Financial Officer. Ma'am, please go ahead.
Nicole Stokes: Great. Thank you, Jamie, 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 Jon Edwards, our Chief Credit Officer. Palmer will begin with some opening general comments, and then I'm going to discuss the details of our financial results before we open it 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 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 his comments.
Palmer Proctor: Thank you, Nicole, and good morning, everyone. I appreciate you taking the time to join our call today. I am proud to talk about our solid third quarter financial results that we reported yesterday. This quarter really was a testament to our discipline and core profitability, and it's what creates the positive outlook we have for the future. So for the third quarter, we reported net income of $80 million or $1.16 per diluted share. Because of these strong core earnings and the minimal impact to AOCI from our bond portfolio, counter to most of the industry, we grew tangible book value by over 12% annualized and moved our TCE ratio to above 9%. We recorded $24.5 million in provision for credit losses, bringing our coverage ratio up to 1.44% of loans and 420% of portfolio NPAs. This provision was model driven and not related to credit deterioration as our credit metrics actually improved once again this quarter.
Our net charge-off ratio improved to just 23 basis points, and our NPA ratio, excluding Ginnie Mae's, improved to 27 basis points. On the balance sheet side, assets declined slightly as expected this quarter to $25.7 billion from $25.8 billion last quarter. Deposits or, as I should say, core deposits increased to $147 million, while loans declined by $271 million, all within the mortgage warehouse lines as we had expected and discussed last quarter. We're still lending, but we are being more discerning and deliberate with our pricing and structure. And because of these shifts, our loan-to-deposit ratio actually improved to 98% and our loans plus securities deposits improved to 106%. Brokered CDs remain relatively flat, and we successfully reduced our FHLB advances by $325 million this quarter.
We continue to be well capitalized and feel comfortable with our capital and our dividend levels. We also announced yesterday the approval of another $100 million share repurchase program through October of next year. We have a strong balance sheet with diversified earning assets in some of the strongest markets in the Southeast, along with a healthy allowance for credit losses to absorb potential economic challenges. We remain focused on core profitability and balance sheet management, and this focus includes core deposit growth, controlled asset growth, stable margin, expense control and tangible book value growth. And I'm extremely proud of our team and the financial results for the quarter, and I'd be remiss, if I didn't take time on today's call to thank each and every one of our teammates for their contribution to our success.
With that, I'll turn it over to Nicole to discuss our financial results in more detail.
Nicole Stokes: Great. Thank you, Palmer. As he mentioned, for the third quarter, we're reporting net income of $80.1 million or $1.16 per diluted share. Our return on assets was 1.25% and on a pre-provision pretax basis, our PPNR ROA was just over 2%. Our return on tangible common equity improved to 14.35% for the quarter. We ended the quarter with tangible book value of $32.38, that's an increase of $0.96 or 12.2% annualized. Our tangible common equity ratio, as he mentioned, increased to 9.11% at the end of the quarter compared to 8.80% at the end of last quarter. We've said for several quarters or actually probably several years that our capital goal was to get to 9% TCE and we finally did it. On the revenue side of things, our interest income continues to increase.
We were up about $8.6 million this quarter to $330.6 million. But again, due to rising deposit costs, our net interest income declined slightly, just about $1.8 million down to $207.8 million for the quarter. Our margin came in higher than anticipated at 3.54%, down just 6 basis points from the 3.60% reported last quarter. All of this compression was really due to money market rates and that data catch up on money market rate. And our year-to-date margin remained strong at 3.63%. That's only 4 basis points of compression from last year's 3.67% for the first nine months. We're really encouraged by the fact that the pace of rising deposit costs slowed significantly in the third quarter, as interest-bearing deposit costs only increased 33 basis points this quarter, while last quarter, it was increased 82 basis points.
So we see that slowing. We continue to be very close to asset liability sensitive neutral, which positions us well for the next to that decision. Whatever that, whether that's a move or not. We've updated the interest rate sensitivity information on our presentation, Slide 11. Non-interest income decreased to about $4.2 million for the quarter. That was all in the mortgage division, that was about an 11% decline in mortgage revenue. Production declined slightly to about $1.2 billion and the gain on sale margin came in right at 2.15. And then I save the best for last, that expense control and efficiency ratio. Total non-interest expense decreased $7 million this quarter, almost all in the banking division, and that is highlighted on Page 10 of the investor presentation.
This drove our adjusted efficiency ratio down to an impressive 52.02% for the quarter, an improvement from the 53.41% last quarter. I wanted to take just a minute to talk about expense control. It's not an initiative around here. It really is a discipline and a part of our culture. We continuously look for ways to be more efficient, and we make sure that, that next dollar spent is spent in the right way. As an example, if you look at our headcount, we've reduced our head count by 3.5% over the past year through diligent analysis and the rehiring and staffing model and without announcing major layoffs and without disruption to move round. I want to close by reiterating how focused we are on discipline and core fundamentals as we look forward to 2024 and beyond.
And with that, I'm going to turn the call back over to Jamie for any questions from the group and we really appreciate everyone’s time today.
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