Ameris Bancorp 2023 Form 10-K Summary
Business context and reporting period
Ameris Bancorp is a financial holding company whose primary subsidiary, Ameris Bank, provides retail and commercial banking, mortgage banking, warehouse lending, SBA lending, equipment finance and premium finance services. Its 164 banking offices are concentrated in Georgia, Alabama, Florida, North Carolina and South Carolina. The filing covers the fiscal year ended December 31, 2023, including fourth-quarter results.
| Balance-sheet measure | December 31, 2023 |
|---|---|
| Total assets | $25.20 billion |
| Total loans, before allowance | $20.27 billion |
| Total deposits | $20.71 billion |
| Shareholders’ equity | $3.43 billion |
| Full-time-equivalent employees | 2,765 |
Financial performance and key metrics
| Metric | 2023 | 2022 |
|---|---|---|
| Net income | $269.1 million | $346.5 million |
| Diluted EPS | $3.89 | $4.99 |
| Net interest income | $835.0 million | $801.0 million |
| Net interest margin, taxable-equivalent | 3.61% | 3.76% |
| Provision for credit losses | $142.7 million | $71.7 million |
| Noninterest income | $242.8 million | $284.4 million |
| Noninterest expense | $578.3 million | $560.7 million |
| Return on average assets | 1.06% | 1.47% |
| Return on average equity | 8.12% | 11.24% |
| Adjusted efficiency ratio | 52.58% | 52.48% |
| Operating cash flow | $569.0 million | $1.06 billion |
Fourth-quarter 2023 net income was $65.9 million, or $0.96 diluted EPS, compared with $82.2 million, or $1.18 diluted EPS, in the fourth quarter of 2022. Fourth-quarter net interest income was $206.1 million, provision for credit losses was $23.0 million and noninterest income was $56.2 million.
Average earning assets increased to $23.26 billion from $21.41 billion. The yield on average earning assets rose to 5.52%, but the cost of interest-bearing deposits increased to 2.69% from 0.49%, and the cost of non-deposit funding increased to 5.37% from 4.59%. These funding-cost increases compressed the net interest margin.
Material changes versus the prior comparable period
- Net income declined 22.3%, while diluted EPS declined 22.0%.
- Net interest income increased 4.2% on a taxable-equivalent basis, but the net interest margin declined 15 basis points.
- Provision for credit losses nearly doubled to $142.7 million, primarily reflecting updated economic forecasts, lower forecast commercial real estate prices and loan growth.
- Noninterest income decreased 14.6%, principally because mortgage banking income declined $45.0 million. Retail mortgage production fell to $4.3 billion from $5.5 billion, and gain-on-sale spreads declined to 2.07% from 2.27%.
- Deposits increased $1.25 billion, or 6.4%, but noninterest-bearing deposits declined 18.1% to $6.49 billion. Interest-bearing deposits increased 23.3% to $14.22 billion.
- Loans increased 2.1% on an organic basis. Commercial real estate and farmland loans increased to $8.06 billion, while consumer, indirect automobile, mortgage warehouse and premium finance balances declined.
- Tangible book value per share increased 12.4% to $33.64. Shareholders’ equity increased $229.3 million, despite $41.7 million of common dividends and $20.3 million of share repurchases.
Credit quality, capital, debt and liquidity
- The allowance for credit losses on loans increased to $307.1 million, or 1.52% of loans, from $205.7 million, or 1.04%.
- Net charge-offs increased to 0.25% of average loans from 0.08%. Excluding $5.6 million of charge-offs on acquired loans that were fully reserved at acquisition, the 2023 net charge-off rate was 0.22%.
- Total nonperforming assets increased to $174.3 million, or 0.69% of assets, from $153.5 million, or 0.61%. Excluding serviced GNMA-guaranteed loans, nonperforming portfolio assets were 0.33% of assets versus 0.34%.
- Commercial real estate mortgage loans represented approximately 39.8% of the loan portfolio. CRE concentration, net of owner-occupied loans, was 281.9% of capital; construction and development concentration was 74.0%.
- Estimated uninsured deposits were $9.13 billion, or approximately 43.7% of total deposits. Brokered deposits were $1.14 billion.
- Cash and cash equivalents were $1.17 billion. The Bank reported $4.28 billion of additional FHLB borrowing capacity and $2.67 billion available through the Federal Reserve discount window based on pledged loans.
- Other borrowings were $509.6 million, subordinated deferrable interest debentures were $130.3 million and subordinated notes were approximately $291.1 million in carrying value. The Company redeemed all $75.0 million of its 2027 subordinated notes and repurchased and redeemed $12.0 million of its 2029 subordinated notes during 2023.
- At year-end, the Company’s CET1, Tier 1, total capital and Tier 1 leverage ratios were 11.23%, 11.23%, 14.45% and 9.93%, respectively. The Bank’s corresponding ratios were 12.09%, 12.09%, 13.69% and 10.69%; the Bank was classified as well capitalized.
Guidance, outlook, commentary, risks and unusual items
The filing does not provide formal earnings or revenue guidance. Management describes an ongoing strategy of prioritizing organic growth, maintaining a diversified community-banking franchise and pursuing acquisitions when appropriate opportunities arise.
- Management reported that the one-year interest-rate position was asset sensitive and that its model projected a modest increase in net interest income under a 100-basis-point rate increase over the following 12 months. The filing also shows that larger or longer-lasting rate changes could adversely affect earnings.
- The Company recognized an $11.6 million FDIC special assessment in the fourth quarter related to the failures of Silicon Valley Bank and Signature Bank. Additional assessments were possible, but the amount was not estimable at filing.
- Management identified commercial real estate concentration, deposit competition, uninsured deposits, liquidity, interest-rate sensitivity, credit-loss estimation, mortgage-market conditions, cybersecurity and regulatory change as material risks.
- Available-for-sale securities had $44.7 million of unrealized losses at year-end, primarily attributable to interest-rate movements. Management did not expect to sell the securities before recovery or maturity; only $69,000 was attributed to credit impairment.
- Goodwill totaled $1.02 billion. A second-quarter stock-price decline triggered quantitative impairment testing, but no impairment was identified. The year-end qualitative assessment also concluded that impairment was not more likely than not.
- The Company reported no cybersecurity incidents that had materially affected, or were reasonably likely to materially affect, its business, results of operations or financial condition.
- Legal and regulatory matters arise in the ordinary course. Management did not believe known matters would materially affect consolidated results, but acknowledged that outcomes for particular periods could be material.
Most important facts for investors to verify
- Whether deposit costs and the mix shift away from noninterest-bearing deposits continue to pressure net interest margin.
- Whether commercial real estate trends lead to higher nonperforming assets, charge-offs or further allowance increases.
- The level and stability of uninsured and brokered deposits, available borrowing capacity and liquidity under stressed conditions.
- Mortgage banking production, gain-on-sale spreads and the valuation of mortgage servicing rights.
- Future FDIC special assessments and other regulatory costs.
- The effect of future interest-rate changes on net interest income, securities values and borrower repayment capacity.
- Whether capital ratios remain comfortably above regulatory minimums after dividends, repurchases, loan growth and potential credit deterioration.