Ameris Bancorp 2023 Q3 SEC Filing Summary
Business Context and Reporting Period
Ameris Bancorp is an Atlanta-based financial holding company operating primarily through Ameris Bank. At September 30, 2023, the Bank operated 164 branches across Georgia, Alabama, Florida, North Carolina and South Carolina. The unaudited Form 10-Q covers the three and nine months ended September 30, 2023, with comparisons to 2022 and December 31, 2022 balance-sheet data.
Key Financial Metrics
| Metric | Q3 2023 | Q3 2022 | Change |
|---|
| Total interest income | $330.6 million | $234.3 million | +41.1% |
| Net interest income | $207.8 million | $213.0 million | -2.5% |
| Provision for credit losses | $24.5 million | $17.7 million | +$6.8 million |
| Noninterest income | $63.2 million | $65.3 million | -3.3% |
| Noninterest expense | $141.4 million | $139.6 million | +1.3% |
| Net income | $80.1 million | $92.6 million | -13.4% |
| Diluted EPS | $1.16 | $1.34 | -13.4% |
| Net interest margin | 3.54% | 3.97% | -43 basis points |
| Return on average assets | 1.25% | 1.56% | Down 31 basis points |
| Return on average equity | 9.56% | 11.76% | Down 220 basis points |
| Metric | Nine Months 2023 | Nine Months 2022 | Change |
|---|
| Total interest income | $948.2 million | $620.2 million | +52.9% |
| Net interest income | $628.9 million | $576.9 million | +9.0% |
| Provision for credit losses | $119.7 million | $38.8 million | +$80.9 million |
| Noninterest income | $186.6 million | $236.1 million | -21.0% |
| Noninterest expense | $429.3 million | $425.6 million | +0.9% |
| Net income | $203.2 million | $264.3 million | -23.1% |
| Diluted EPS | $2.94 | $3.81 | -22.8% |
| Net interest margin | 3.63% | 3.67% | -4 basis points |
| Return on average assets | 1.07% | 1.51% | Down 44 basis points |
| Return on average equity | 8.26% | 11.57% | Down 331 basis points |
Balance Sheet, Credit, Debt and Liquidity
- Total assets were $25.70 billion, up from $25.05 billion at December 31, 2022.
- Loans, net of unearned income, increased 1.7% to $20.20 billion. Growth was concentrated in residential real estate, commercial and farmland real estate, and construction and development loans.
- Total deposits increased 5.8% to $20.59 billion. Noninterest-bearing deposits declined 16.9% to $6.59 billion, while interest-bearing deposits increased 21.4% to $14.00 billion. Short-term brokered CDs totaled approximately $1.47 billion at quarter-end, versus none at year-end 2022.
- Other borrowings declined to $1.21 billion from $1.88 billion. Available borrowing capacity was $3.62 billion from the FHLB and $2.63 billion through the Federal Reserve discount window.
- Cash and cash equivalents were $1.55 billion, compared with $1.12 billion at December 31, 2022. Loans-to-deposits were 98.11%, versus 102.02% at year-end.
- The allowance for credit losses on loans increased to $290.1 million, or 1.44% of loans, from $205.7 million, or 1.04%. The increase reflected loan growth and a less favorable economic forecast, particularly for residential and commercial real estate prices.
- Net charge-offs were $12.1 million in the third quarter and $37.0 million for the first nine months, compared with $5.2 million and $10.7 million, respectively, in the comparable periods.
- Nonaccrual loans were $134.6 million, essentially unchanged from year-end. Total nonperforming assets declined to $149.9 million, or 0.58% of assets, from $153.5 million, or 0.61%.
- Commercial real estate excluding owner-occupied properties represented approximately 40% of total loans. Construction and development loans were 79% of the Bank's internal capital-based limit, and total CRE loans were 283% of that measure versus an internal limit of 300%.
- Regulatory capital remained above minimum requirements. The consolidated CET1, total capital and Tier 1 leverage ratios were 10.82%, 14.01% and 9.62%, respectively. Ameris Bank was considered well capitalized under all regulatory measures.
Cash Flow and Capital Allocation
- For the nine months, operating activities provided $356.1 million of cash, investing activities used $342.3 million and financing activities provided $413.9 million.
- Net cash and cash equivalents increased $427.6 million to $1.55 billion.
- Dividends paid totaled $31.3 million, and treasury-stock purchases totaled $17.1 million. The company had repurchased $13.5 million of shares under its prior authorization as of September 30, 2023.
- On October 26, 2023, the Board renewed and replenished the repurchase authorization to $100 million through October 31, 2024; the program does not require any specific repurchase amount.
Material Changes Versus Prior Comparable Period
- Higher market rates increased asset yields but caused funding costs to rise substantially. Third-quarter deposit costs increased to 2.00% from 0.29%, and the net interest margin declined 43 basis points to 3.54%.
- Provision expense rose materially because of updated macroeconomic assumptions and loan growth. The nine-month provision increased to $119.7 million from $38.8 million.
- Mortgage banking income declined 10.1% in the third quarter and 33.1% year to date. Nine-month mortgage production fell to $3.45 billion from $4.52 billion, and gain-on-sale spread declined to 2.11% from 2.48%.
- Nine-month noninterest income was reduced by the absence of a $21.8 million mortgage servicing-right recovery recognized in 2022. There were no merger and conversion charges in 2023 compared with $977,000 in 2022.
- Noninterest expense remained relatively stable, although data-processing costs and FDIC insurance expense increased.
- Accumulated other comprehensive loss increased to $60.8 million from $46.5 million, primarily from unrealized losses on available-for-sale debt securities. Management attributed $78.1 million of the securities losses to noncredit factors and recorded an allowance of $80,000 for credit impairment.
Outlook, Risks, Contingencies and Unusual Items
- The filing does not provide quantitative earnings guidance or a formal full-year outlook. Management cautions that interim results are not necessarily indicative of full-year results.
- Key risks include deposit repricing and liquidity pressure, interest-rate movements, commercial real estate concentration, declining real estate values, borrower credit deterioration, mortgage-market weakness, regulatory changes and the transition from LIBOR.
- Goodwill totaled $1.02 billion. A second-quarter 2023 quantitative impairment analysis was triggered by the sustained decline in the stock price, but management concluded that reporting-unit fair values exceeded carrying values. No impairment test was required at September 30, 2023; the annual test is scheduled for December 31, 2023.
- On October 19, 2023, Ameris Bank reached a Department of Justice settlement concerning alleged fair-lending violations in the Jacksonville metropolitan area during 2016–2021. The Bank committed to $7.5 million of mortgage subsidies, $900,000 of advertising and outreach, $600,000 of community-development partnerships over five years, and a new full-service branch. No civil penalties were imposed.
- Management stated that it was not aware of legal or regulatory matters expected to have a material adverse effect, while noting that outcomes could materially affect a particular period.
- Management determined that disclosure controls and procedures were effective and reported no material change in internal control over financial reporting during the quarter.
Most Important Facts for Investors to Verify
- Whether deposit pricing and the use of brokered CDs continue to pressure net interest margin and funding costs.
- Whether the elevated allowance, charge-offs and macroeconomic assumptions adequately address risks in the commercial real estate portfolio.
- Trends in mortgage production, gain-on-sale margins and the $623.9 million retail mortgage pipeline.
- The composition and liquidity value of uninsured deposits, available borrowing capacity and securities collateral.
- The December 31, 2023 goodwill impairment test and any effects from changes in stock price, discount rates or valuation assumptions.
- Implementation and financial reporting effects of the Jacksonville fair-lending settlement and related branch and community commitments.
