Ameris Bancorp (NYSE: ABCB) (the "Company") today reported net income of $90.8 million, or $1.32 per diluted share, for the quarter ended June 30, 2024, compared with $62.6 million, or $0.91 per diluted share, for the quarter ended June 30, 2023. Excluding the gain on sale of mortgage servicing rights, gain on conversion of Visa Class B-1 stock, FDIC special assessment, gain on bank owned life insurance ("BOLI") proceeds and tax expense attributable to BOLI restructuring, adjusted net income⁽¹⁾ was $80.8 million, or $1.17 per diluted share, for the quarter ended June 30, 2024, compared with $62.6 million, or $0.91 per diluted share, for the quarter ended June 30, 2023.

For the year-to-date period ending June 30, 2024, the Company reported net income of $165.1 million, or $2.39 per diluted share, compared with $123.1 million, or $1.78 per diluted share, for the same period in 2023. The year-to-date period ending June 30, 2024 included a provision for credit losses of $39.9 million, compared with $95.2 million for the same period in 2023. 

Commenting on the Company's results, Palmer Proctor, the Company's Chief Executive Officer, said, "This quarter we achieved outstanding financial performance, marked by margin expansion, growth in net interest income, and an increase in core deposits, resulting in a PPNR ROA exceeding 2%.  We enhanced shareholder value, with tangible book value and earning assets both growing over 14% annualized.   Looking ahead, we remain optimistic about the rest of 2024 and beyond, driven by our strong balance sheet, thriving Southeastern markets, and disciplined focus on continuous improvement."

Net Interest Income and Net Interest Margin

Net interest income on a tax-equivalent basis (TE) was $212.9 million in the second quarter of 2024, an increase of $10.5 million, or 5.2%, from last quarter and $2.4 million, or 1.1%, compared with the second quarter of 2023. The Company's net interest margin was 3.58% for the second quarter of 2024, up from 3.51% reported for the first quarter of 2024 and down slightly from 3.60% reported for the second quarter of 2023. The increase in net interest margin this quarter compared with the first quarter of 2024 is primarily attributable to improved yield on loans and securities during the period, partially offset by increases in funding costs.  During the second quarter of 2024, the Company recognized approximately $2.3 million, or 0.04% to margin, related to positive inflation adjustments on Treasury Inflation-Protected Securities and accelerated accretion on an early bond payoff.  The decrease in net interest margin compared with the same period in 2023 is due to the effect of overall increases in deposit costs over the last year, partially offset by increased loan yields. The rate of change in deposit costs continues to slow as market interest rates stabilize.

Yields on earning assets increased 13 basis points during the quarter to 5.86%, compared with 5.73% in the first quarter of 2024, and increased 34 basis points from 5.52% in the second quarter of 2023.  Yields on loans increased to 6.00% during the second quarter of 2024, compared with 5.92% for the first quarter of 2024 and 5.66% for the second quarter of 2023.

The Company's total cost of funds was 2.48% in the second quarter of 2024, an increase of seven and 43 basis points compared with the first quarter of 2024 and second quarter of 2023, respectively.  Deposit costs increased only three basis points during the second quarter of 2024 to 2.32%, compared with 2.29% in the first quarter of 2024.  Costs of interest-bearing deposits increased during the quarter from 3.31% in the first quarter of 2024 to 3.37% in the second quarter of 2024, reflecting an increase in money market account balances and costs.

Noninterest Income

Noninterest income increased $22.8 million, or 34.7%, in the second quarter of 2024 to $88.7 million, compared with $65.9 million for the first quarter of 2024, primarily as a result of mortgage revenue and gain on securities. Mortgage banking activity increased by $7.0 million, or 17.7%, to $46.4 million in the second quarter of 2024, compared with $39.4 million for the first quarter of 2024.  Gain on sale spreads decreased slightly to 2.45% in the second quarter of 2024 from 2.49% for the first quarter of 2024. Total production in the retail mortgage division increased $417.1 million, or 45.8%, to $1.33 billion in the second quarter of 2024, compared with $910.2 million for the first quarter of 2024. The retail mortgage open pipeline was $802.2 million at the end of the second quarter of 2024, compared with $606.7 million for the first quarter of 2024.  Also included in noninterest income was a $4.7 million gain from the sale of mortgage servicing rights and a $12.6 million gain on the conversion of Visa Class B-1 shares during the quarter.

Noninterest Expense

Noninterest expense increased $6.6 million, or 4.5%, to $155.4 million during the second quarter of 2024, compared with $148.7 million for the first quarter of 2024.  During the second quarter of 2024, the Company recorded an adjustment of ($895,000) related to the FDIC special assessment, compared with $2.9 million in the first quarter of 2024.  Excluding this item, adjusted expenses⁽¹⁾ increased approximately $10.5 million, or 7.2%, to $156.3 million in the second quarter of 2024 from $145.8 million in the first quarter of 2024.  The increase in adjusted expenses⁽¹⁾ resulted from a $5.3 million increase in salaries and employee benefits primarily in variable compensation related to mortgage production. Also contributing to the increase in adjusted expenses was $2.6 million of less deferred origination costs in our equipment finance division. Advertising and marketing expense increased $1.0 million due to a new deposit marketing campaign initiated in the second quarter.  Management continues to focus on operating efficiency, and the adjusted efficiency ratio⁽¹⁾ increased to 55.00% in the second quarter of 2024, compared with 54.56% in the first quarter of 2024.

Income Tax Expense

The Company's effective tax rate for the second quarter of 2024 was 28.2%, compared with 23.7% for the first quarter of 2024.  Tax expense for the second quarter of 2024 included a $4.8 million expense related to the termination of certain BOLI policies during the quarter, the proceeds of which the Company will reinvest in higher yielding policies.

Balance Sheet Trends

Total assets at June 30, 2024 were $26.52 billion, compared with $25.20 billion at December 31, 2023.  Debt securities available-for-sale increased to $1.53 billion, compared with $1.40 billion at December 31, 2023.  Loans, net of unearned income, increased $723.3 million, or 7.2% annualized, to $20.99 billion at June 30, 2024, compared with $20.27 billion at December 31, 2023. Loans held for sale increased to $570.2 million at June 30, 2024from $281.3 million at December 31, 2023.

At June 30, 2024, total deposits amounted to $21.44 billion, compared with $20.71 billion at December 31, 2023.  During the second quarter of 2024, deposits grew $446.8 million, with noninterest bearing accounts increasing $110.9 million, money market accounts increasing $267.0 million, retail CDs increasing $23.6 million and interest bearing demand accounts increasing $65.6 million, with such increases offset in part by a $15.2 milliondecrease in savings accounts and a $5.2 million decrease in brokered CDs.  Noninterest bearing accounts as a percentage of total deposits was minimally changed, such that at June 30, 2024, noninterest bearing deposit accounts represented $6.65 billion, or 31.0% of total deposits, compared with $6.49 billion, or 31.3% of total deposits, at December 31, 2023.  

Shareholders' equity at June 30, 2024 totaled $3.57 billion, an increase of $139.9 million, or 4.1%, from December 31, 2023.  The increase in shareholders' equity was primarily the result of earnings of $165.1 million during the first six months of 2024, partially offset by dividends declared, share repurchases and an increase in other comprehensive loss of $2.1 million resulting from changes in interest rates on the Company's investment portfolio.  Tangible book value per share⁽¹⁾ increased $2.15 per share, or 12.9% annualized, during the first six months of 2024 to $35.79 at June 30, 2024.  Tangible common equity as a percentage of tangible assets was 9.72% at June 30, 2024, compared with 9.64% at the end of 2023. The Company repurchased 62,700 of its shares in the quarter ending June 30, 2024 at an average cost of $47.12 per share, equating to approximately $3.0 million.

Credit Quality

During the second quarter of 2024, the Company recorded a provision for credit losses of $18.8 million, bringing the allowance for credit losses on loans to a 1.60%, compared with a provision of $21.1 million in the first quarter of 2024.  Nonperforming assets as a percentage of total assets were up three basis points to 0.74% during the quarter.  Approximately $93.5 million, or 47.3%, of the nonperforming assets at June 30, 2024 were GNMA-guaranteed mortgage loans, which have minimal loss exposure.  Excluding these government-guaranteed loans, nonperforming assets as a percentage of total assets increased only one basis point to 0.39% at June 30, 2024, compared with 0.38% at the first quarter of 2024. The net charge-off ratio improved to 18 basis points for the second quarter of 2024, from 25 basis points in the first quarter of 2024.

Conference Call

The Company will host a teleconference at 9:00 a.m. Eastern time on Friday, July 26, 2024, to discuss the Company's results and answer appropriate questions. The conference call can be accessed by dialing 1-844-481-2939.  The conference call ID is Ameris Bancorp.  A replay of the call will be available beginning one hour after the end of the conference call until August 2, 2024.  To listen to the replay, dial 1-877-344-7529.  The conference replay access code is 8113235.  The financial information discussed will be available on the Investor Relations page of the Ameris Bank website at ir.amerisbank.com.  Participants also may listen to a live webcast of the presentation by visiting the link on the Investor Relations page of the Ameris Bank website.