ABCB - Earnings call transcript Q3 2017

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, and welcome to the Ameris Bancorp Third Quarter 2017 Financial Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note today’s event is being recorded. I would now like to turn the conference over to Dennis Zember, Chief Operating Officer. sir. ahead go Please

Dennis Zember

and today. all Rocco, joined you our call thanks you, of to who Thank

call, were then quarter will on the Bank. some I’m CEO; financial section During opening make as we our spend joined highlights Stokes, and press of Chief and Hortman, of going that few the today release well Nicole by are President some at as will available website over the who’s Ed and Financial of Relations Ed Officer be Investor amerisbank.com. focused referencing and the time some the items about I’ll of the on Ameris a comments details. the

that We cause results we the The website. and release include assume as will required comments of might uncertainties. may These list non-GAAP Also available factors our developments in results that in to differ Before and certain except you new otherwise, We filings, forward-looking result vary could the some measures in risks are the performance. I’ll to SEC call, or actual Company’s begin, of materially. our press our statements remind to statements. are subject during do reference information, a financial to our any update by forward-looking as not discuss on early statements any we obligation law. which

it that, turn GAAP in the measures I’ll financial to appendix our and presentation. You measures see our And these can with of reconciliation Ed to over Hortman.

Ed Hortman

morning, quarter call. this to third morning you, everyone. earnings appreciate time the join Dennis, I Thank and you good taking our

regulatory and results earnings On some M&A provide discuss the call our we’ll then today, update comments. and

results. our First, about

the small additional additional $X.XX $X.XX the share, first per once which the The and our earnings two a BSA was as time amount opportunity related the believe from operating onetime we we’re for charge the merged after-tax and the really given share as have a For was of per order. the the Hurricane impact. million for consent for items: project result bank as reporting Irma look-back greatly took compressed of well we $X.X excludes was to quarter, earnings charge we of frame. existed the BSA look-back that It

the was Secondly, made that with appropriate project I of less look-back and would combined that prolong couple of process. the is process, believe unexpected, our but but our to late very of add were was were expedite invested exam report have summer expanded, timeframe, expensive full We as expected scope action. a the we expenses not today not the was which, did also completed look-back course was look-back that a the and I completed planned in can we What ago. soundness these were the could that safety weeks one. significantly and

support While final outstanding I’m we the we’ve also an have be we larger today. able and with report, are will the very M&A confident an we have promised report will that announce I’m bank delivered prior now program to much preliminary pleased transaction received what that BSA/AML we’ve satisfied that year-end. not and remain to than

recorded included we stated, $X.XX Hurricane we XXXX. per or million the about compared to or after-tax $XX.X due charge, closings to as share of accommodations storm. late the of for customers made same million net the approximately fees incurred also income result $X.XX I of Outside As This centered affected that a quarter a $XXX these on – Irma. $XXX,XXX we’ve basically and service small by charges, in charges of waived $XX.X

in year return Operating flat relates the the on have quarter down by in in they reported XXXX. earnings same X.XX% mortgage, approximately return period XX% assets for rev decline in average be last to higher in Our to continued against assets. mostly same The in from the on we at assets just has the operating quarters. share came as quarter impressive recent X.XX%

for quarter ratio press year. we compared on and XXXX sub-XX% from essentially the levels for was period levels year. return XX.XX% of efficiency tangible at just efficiency XX.XX% capital The better last last same Our flat first to our continuing common equity over capital the on reflects quarter in at third significantly consistent the higher third in a of to in at this year that the to compared XX.XX% resulted raise basis. the And was XX% quarter are

or loans We continue annualized. core to have $XXX.X with million XX.X% in growth totaling growth impressive assets in earning

the rate we’ve a million, annualized. loans core $XXX For which growth is grown year, of XX%

positive fourth the production, right come be rate Dennis as quarters. posting will about in slower we’re we’ll we’ve with production recent can so yields quarter I provide in the warehouse of growth, expect source on as on were with seen we projected agricultural more growth tell items But believe of details seasonally the the and you, top lower these where about shortly. XX%. initially to annual We I at and

margin, impressive margin the is accretion. a X.X%, in Another of our we’re an current of which was X about basis points. higher the year-ago against quarter, by in quarter recently reporting exclusive factor quarter period expanding most In the interest net

asset deposits our points. by earning of only while total yield basis increased cost X increased Our X points, basis

came has around So it deposit than which price, recent is in XX%, bid been lower which calculate against we quarters. data average

we’ve long-term when deposits XXXX. of aggressively and down grow operating third in between was interest period noteworthy while highlights during This environment have you quarter $X.X Non-interest accomplished lower One trying grown same compared in short risk XXXX, earnings but our the of a how mix rate been have and margin in the presentation changing record slightly to by we that and the where tighter. to that spread the consider rates particularly tighter still by basis the the the getting profile. a in, we’re items is keeps assets period that strong from income increased quarter is X earning in billion we and asset investor about this Dennis points

For year. reported million compared quarter totaling quarter, income we the $XX third of $XX.X the to non-interest million, in last

modestly, income $X million net group mortgage from current the increased to albeit Although slightly quarter. from million revenues lower, in the $XX.X were

I earlier, net in outpaced in our As asset for has mortgage our some get during our has and growth ROA we moderated income the mortgage mentioned growth boost so XXXX. materially

On the the earlier. quarter million, BSA expenses operating look-back includes third expense for we’re I reporting in total which the the side, of discussed $XX.X charge

that provide bonuses very sets Premium our third than better be signing BSA for operating and total including which to few next and additional Most being $XXX,XXX systems $X.X the expenses which that $XX the quarter compared current totaling includes quarter this last new was which both amount, up in growth of Incremental expect mortgage mortgage items would growth Premium our a commissions is the of when XXXX hit new us this sales totaling group year. to U.S. to $X Finance that groups U.S. Excluding expenses quarter million Finance Higher in but the that added a higher same more were addition guaranteed to we compared increase million to included in profitability $X.X officers, and group due hiring staffing year. phase with expenses relates successful and higher of million, expenses in the million, in XXXX. quarter. commensurate in in some

systems. M&A while said conversations we’ve to working our had previously, improve continuing I’ve As BSA/AML

difference on are value the a opportunities, shareholders were there kind EPS solid there While [indiscernible] on of book accretion working our remains between and that dilution. deals many several economics have expect: minimal-to-no

there but to opportunities will believe in remain disciplined be in approach, short-term the continue our We Bank for Ameris this area. in

ask to of and I’ll cover details, the more you Dennis, stop there please. some So

Dennis Zember

All with a our summary right, I’ll of loan start growth.

Finance, just we growth, been in about across as it about bank, was municipal, our lines in core quarter lending the consumer XX% and which XX%. grew the include that million, about you our by loans small where Inside CRE side warehouse, getting million lines For both the typically and look the past When the quarters, we and about quarter, about of has X%. $XX $XX operate of $XX at are business C&I growth, grew mortgage X% XX% which the our million C&I about represented Residential bucket, the XX-XX. to of it represented product about oriented for grew accounted at while versus and grew about million. Premium $XXX we was growth. we’re which – diversified the both

us growth XX% from this of think XX% core growth, the been Ed the which So Ed and the for pretty that’s lines year, about next saying, briefly has about from we’re we year. this that really growth we’re getting or growth deposit into was pleased focus and of a real that for specialty rest rate the we which half of half sustainable bank Ed well, operate, – that business and going mentioned year. that with, the of

the it pleased mentioned we’re The when able have slower on is growth, this and the strongest with power Our deposit for I think behind the loan year moving Combining a really the to higher slowly which I balances the you believe on you over is during loan pleased moved X deposit ago, going a seasonally fourth ratio, can better also real our to which think year on Page in are am quarter quarter growth. we on to which finish up deposit be seasonal, strong like we’ll and rest production, of investor we’re of industry, provide to Ed is going be yields seems which year. with. growth, I quarter compare up with. XX%, we’re see margin just a relief presentation. the what to the The loan-to-deposit little margin, the

this loan event, proud to at at the which that hard the working year that week, did Non-interest really a was in the mentioned driven ago, items. to by on and moving was both result in really higher of in production but yield our in in X.XX%. bankers our this balance not Earlier compared year. occurring a a quarter this naturally margin are year I’m two against the of of quarter, quarter X.XX% ago – quarter sheet, the outstanding. our what board is I quarter came our this bankers came income third come little did sides a For

we’re $XX little as deposit any the When really tweaking do service look good to a we being source and cautious approach smart our average, line billion. don’t industry level charges, – deposit I past growth. a or a of I higher thing and at bottom about at level from is fees of the we I in believe more on than the we’re this income First, income portfolio, have the of

we landed really Greenville. of but or to solid relates from in year, Ed’s including the has mortgage with, project expenses, to rates while operating given going about relates that’s against higher and doesn’t too that charges XX our Irma line XXXX half national but this for the help been and we net any the so new how been, where away, won’t in business charges. earlier quarter ago, and look-back but And to so to on include and but bottom several mentioned ROA, decline tough this in which line accounts. against just is and mostly points mortgage, us the growing mentioned the this markets Ed if were about are a going other we quarter growth the X% than year more with bankers you with refunds and last about quarter XX% pretty source and of want portion Hurricane say revenues these year, more On and we the that Ed refi same I we been quarter the XX provide at unreliable. resulted first I that made and business took comments, the for revenues, grow don’t wholly the we by and accommodations Charleston look were generally aggressive much just up bankers in associated color, key income already basis operating income, Jacksonville, have the balance repeat these has And pleased down Some really, in overdrafts customer we attrition markets, with balance the pace a lower of come at a for are in. year, will think charge and recurring in will non-interest victims, reliable I we sheet recruiting in BSA discussed from

– run-rate said any in With charges will way, quarter, or don’t our this And and increases is owned I a expect none for will in different we of be look-back it BSA BSA. to run-rate in So one-time additional that Rocco turn future questions. given quarters. don’t a from that expect any back our in the complete, amount exam any or we had full that,

Operator

session. first you. go today’s We’ll Instructions] Brady question-and-answer Please And KBW. from [Operator Thank begin of now the question Gailey ahead. comes

Brady Gailey

guys. morning, good Hey,

Dennis Zember

Good morning.

Ed Hortman

Good morning, Brady.

Brady Gailey

provisioning. You much of I quarter. wasn’t that Or charge notable peers that’s third all all the hurricanes needed? to exposed Is we of aside of the that really didn’t see a your in in that kind have Irma you that take felt of quarter? amount been you think just a know related something Hurricane in set more some do that may fourth something have

Ed Hortman

by really every the at our We you end impacted homes. guess, so of best the think of huge storm, to Brady, disaster recovery. of day, quarter. tested the two. the processes see we storm. damage fourth employees, I asked us, of any was it X,XXX report pleasant. a had out offices you’ll day, Almost one to give our that their of I our X,XXX for I of end that that can were the such don’t the employees the – pleasantly, and and of employees, It it at personal But in one things surprised all the is some analogy our was

were know I least house was other. didn’t there report. included. at I Now My one

of – So people impacted to closed we the limited of expected. out a we in up saw our the a and what had and while that that three five damage places we most days more customers we were in was our days couple four, couple so than damage, places,

Brady Gailey

you happens. type right, M&A, great. BSA size just the to deal what’s to what as us, of are that this like What’s then we All remind to all hopefully an the bank would the it and you pulling And good That’s wrapping like comes that close when you on prefer? close trigger once it to Can hear. up get geography sounds issue, M&A range to you acquire?

Ed Hortman

I Brady, really that our I’m guess, challenges people. would I with start of proud

is teamwork and through us culture us. seriousness displayed board, this for just get way very department. And staff the and the our in not is thankful the all and that BSA minds, BSA/AML remarkable, project Our that. they the front-line the to It’s I’m from it to the behind was

M&A be said, that did that’s examination. the where with the market. very saves stands, we’re that necessarily opportunities pretty provides not because with program Obviously, results perspective, as preferrable a call share, gives preliminary the some and our to increase I would top deposits, advantages We’re share comments a but market we’d depth increasing make close. could and very pleased I you of pleased From have have In-market and within those particular market and we priority. an like bank our

So the so. got the what not larger And or million in-market is to markets we’ve we $X would changed from – where it before focus. from $XXX size to billion has

Brady Gailey

for then think XX%. little helpful. have some really That’s tax the run And a great. lower forward Dennis. one around expected, noticed than for you right, All What for did rate rate taxes? do I was last you one

Dennis Zember

Nicole The goodness Thank adjustment this restricted was the bit in quarter is a room. on little stock. Nicole?

Going still the right that typically we’re XX% been forward, we’ve at at.

Brady Gailey

Thanks, great. guys. Okay,

Operator

Tyler And our comes go ahead. from Stafford next question Please of today Stephens.

Tyler Stafford

Hey, guys. good morning,

Dennis Zember

morning. Good

Ed Hortman

Tyler. Good morning,

Tyler Stafford

to it’s you wanted and maybe for expenses, start then. I on Dennis,

with the on a expense compliance get Obviously, then of and run-rate to there’s better understanding trying the here. a lot Just Irma. noise from resolution

you’d pressure of from the well. lot around $XX.X things during would that, That those kind I guys of trajectory puts lower the on the quarter XQ, takes us as help million. and but two comp. you here? think, you the hired Obviously, If from should backed out lower you that mortgage terms Can out, then would seasonally expenses and in just get a well of as be

Dennis Zember

Yes.

one quarter, affects just thing me, and incentive that third really is comps. it, materially Second that excuse

third and incentive for Second comp. biggest our quarter’s accrual quarters

Commercial – production, is production’s then lower. production mortgage, And generally, forth, we so expect quarter, so into obviously, lower. lower and is fourth SBA going commissions

maybe quarter, side then expect were on couple maybe and be on commissions for we $XXX,XXX I’d us than lighter So probably this where a the incentive million to comp. $X.X lighter

– that quarter third quarter. compliance or expect I in group would year, expect million group, were think any full don’t $XX.X don’t third a again, we at a which the we any growth have in on is I So the in expect I And growth – clean the number. BSA the been all building we but that run-rate

there in and expect and I commission. $XXX,XXX or be So grow, don’t for a falloff to little I’d so comp that in expect maybe incentive – to $XXX,XXX,

Tyler Stafford

about release hires mentioned Okay, quarter, the Maybe on you And see producer in Ginnie XX margins, the made in your forward? press that Mae and might on and kind for got those gain-on-sale how impact this it. any then going of mortgage, expectations the the uptick we issuances what’s will an when comment your helpful. Very thinking you production, just margins? that hires, updated

Dennis Zember

each right. – All – probably hires, Robert do. you, would and I’m I not five particular, tell that or don’t know of that to million you kind about on producers $XXX producers, of year. additional to four X% know in $XXX do see what producers, that. I – put may expect I and be don’t than of so We even five million I I the it’s better given but little profitability – production generally and them four, them, XX the line. to bottom next their are we’d know year several a government a production The

it’s $XX hope really that going So we for next to Ginnie behind so Mae I issuances, little me, Ginnie it got Mae producers quarter the on – but the a they’ll of We $XXX,XXX bottom $XX better I our million be do then Ginnie it move be the – would. meaningful impact. numbers, in we those, you’d $XX probably quarter, in thought think less year, get than And think, than first say, we But government doing juice securities. million this what us that to going up up or securities. excuse up but Mae this us. the year, that really for million we is we basis I only that our of it all to do of didn’t that, just XX those year, alone We’ll got the next production the almost We’ve wanted – – feet under as get think, XX just probably real was ended to, we we this see XX points from line. power production wasn’t some

Tyler Stafford

Got it, okay.

Dennis Zember

basis still which It’s We production. about the points, is million end. about of low quarter $XXX running, government XX on Tyler, a do

could be could year. for be it next mean, I So meaningful – very that

Tyler Stafford

Okay. just a up. I then for me, want question clears just Dennis. to you sure that That clarification understood And earlier, make I

loan that going the It’s about growth talked about your still seeing correctly you’re you Did hear I as XX%. that expectation next – to You for be that year. tracking roughly, year pace well? is you growth this at say

Dennis Zember

still dialed or but that’s I’m The good got are and – that some the Finance. have so balances of we next beginning up just as I producing for solid, on with minutes got I now than here, feel you on year, more of like with going year, at one say XX% – would about actually, We’ve to we the and at just have we pushing I talked staff the level. side than to and the we’ve year, last bank really not municipal, the don’t think, we still room bank the where, really finish – mortgage solid. room yields fewer a in year mean, is XX%, producers, warehouse, two room to say again, I bank not it’s hard to and even. I started. Premium too on XX% got five said higher there lot I the than Ed Obviously, where before know, say. we’ll balances, what much we I

some probably I at that local and is XX%, niche come XX% need these mass critical rest kind CRE of core I XX%, are local XX% – then really would think and our XX%, the C&I bank, centered stuff – from out that not yet. – lines business growing growth we of think, of of which them, for mostly that around

Tyler Stafford

helpful. it. guys. Okay, Thanks, very Appreciate

Dennis Zember

All right.

Operator

of And the comes next Demba Please SunTrust. go ahead. question from Jennifer

Jennifer Demba

Good you. Thank morning.

Ed Hortman

morning. Good

Jennifer Demba

hiring on Have in acquisitions expectations opportunities the capitalize the next for with the on able And you’ve to now? disruption are that right your going Carolinas all have been year? or are what’s

Dennis Zember

answer of I is of mean, our Risk a that is – Chief disruption. some the, new of I Officer, Yes would the yes. result one say,

I’d from So yes. say, that standpoint,

tighter – would asking our production, South been I spreads of generally more and has yields, last that’s presentation, You’re is side. Carolina’s, of And you up of for thing the this really mean, look quarter. one you about it tell again, the year if reliable there, production it’s loan on investor the sources I bank kind at yields – but But X.XX% I’d X.XX% are. and loan to reference one most they from moving

we’re some production benefit, given price think less on and be. a definitely And Jennifer, as the it’s seeing not want – side. that – levels. to less that is to the yes, fewer that opposed it I’m say we competitors, yields of as little more especially probably there’s we’d that saying I’d But in I where some there’s CRE competition, probably the

As far hiring the second is question. this as – and

Beaufort now Head, or purpose. as be offense of than even – Carolina, at could somebody As primarily. really in not and play South of to than at more Hilton I those and again, hire we’d the think, said any Charleston But year, area. on our we happy Bluffton, It’s markets: far Columbia, Greenville, the hiring, that bankers fewer the have, two commercial one beginning I that’s just

you be always sure our would that I pretty prowl we’re yes, on more for and we’d to, somebody that the offense. run are So tell can than people happy our

Jennifer Demba

Great, thanks.

Operator

Whitman O’Neill. Casey question go ahead. next Sandler our from of comes And Please

Jeff Kitsis

Good morning.

Dennis Zember

morning. Good

Ed Hortman

morning. Good

Jeff Kitsis

for on This this morning. Casey, is Jeff Kitsis,

employees. specialty Finance on your Premium And XX hires? critical target of good, us give for full-time lines how example, reaching Division the we and those you Can about headcount currently also should be business. to thinking You a also, associated timeframe the expenses? and has mass make The mentioned then

Dennis Zember

Yes.

have in office I Finance, support, carry office that tell support. in are Premium could XX there’s But Premium the I’ll XX support – we’ve of of $X producers billion and outstanding. we XX that, to rest you, – XX, added think really another We added back and outside credit or don’t we of back us and the person structure need that Finance.

I think we ended the quarter just over XXX, right? XXX.

So would of producers, I that take the I probably producers quarter for want XX most or think XX hiring or one two we XX think do, – foreseeable to the and future. probably we to or XX a we’d

Jeff Kitsis

we about be Thank should to hires those you. And going how related forward? expense growth thinking

Dennis Zember

change. year me I pay with, we is or net assets going way. don’t we’re think, the would in let – think XX% say I believe basis, don’t don’t I outstanding there. it year, return I how would in successful on balances say, them, don’t I we be them if to think, million to would how that’s $XXX a – believe I million it what pay be and the Finance, I want growth we’ve to Premium going looking given on XX% for change, to been that moving this we’d I say next on our finish to don’t $XXX net basis, what well, a but – say – net

our In that confident fact, assets return won’t on change. I’m

a be can with I’d and about I’m offline to all about on of that. still assets $XXX you again, where I – up on is $XXX $XXX maybe and $XXX kind to, way think right the return not balances your million, it, move deferring go the call – now. posting million, million But from, say, to we it million pretax So

Jeff Kitsis

you. taking thank questions. Okay, Thank my you for

Dennis Zember

All right.

Operator

Marinac And from FIG go our Please Christopher next question ahead. Partners. of comes

Christopher Marinac

a quarter it there Ed there know if earlier that of charge didn’t it why this compliance reason spreading the I to and in was all out all the of quarter? came Thanks. versus parts in Dennis, morning. Good was year? background came one a

Dennis Zember

really timing was intense when year, part December the bit – was as we our Chris, first on scope we in, had on was Yes, charge – of fully on planned. just million, scope – of very guess, that yes, much answer we $X.XXX it it look-back, – greater we initial as last the tweaked it did and much on It the that way took look-back, what it until initially planned it the the and tweaked the that until was final the not your as wasn’t a quarter third I BSA, the when it got and timing costs as Does more good – wasn’t we that, more. than the was scope we it and question? wasn’t

Ed Hortman

that just Chris, clarify clarify – just that me let a me Let bit.

not get We participate outside would not – control understand, did and vendor. to look-back. we You the third-party in that. to the work their did that not the scope the we use only done. of That results was got with FDIC-defined was We

it we it bit bit than it later a little got was a was little later than more than we a little and detailed So expected. – expected, we

had choice to a either to that done frame to we – the within initial we or we were more spend thinking done and get quicker. get delay it, spend had and we it so it put make: more time and chose And to

Christopher Marinac

Got I helpful. appreciate that. it. Makes That’s sense.

or credit we reserves? of quarter-to-quarter should on the ultimately conditions, get much to year two? in new going the just loan And for should how it the think but based next of growth know think curious balances as portfolio provision. funded Next I how back incremental we just question goes forward, that about me about

Dennis Zember

math – I and and points do we line cannot just really equipments residentials me, little than on walking of between fine municipal around X to I really I Finance, a some more some – even we basis Ed I’m in residential of basis those lending, mean, to the mean, I justify excuse anything Premium XX. honestly grow that, XX SEC. when our or points this on and need quarter, always But and the

the in provision. the of loan-loss So by cash-secured portion backed municipality. just underfunded or it’s looks again, that growth But

I think reserve to going CRE the going traditional probably kind in you’ll expect. you’re And Chris, construction requirements all provisioning more have doing more us, and to of come us lending, to see over those are honestly, time, see that we have lending.

you’d more a a year. as what little percentage think bigger than next be it’s this a that’d year I see – been probably little

Ed Hortman

– us help all CISA to reserves love will will credit actually, – is longer-term, right good more because CISA help see now. know I’d really us help me. we will

doesn’t just allow but… And so it reserves the there, methodology, to lot us of build a

Dennis Zember

Yes.

probably built, more see and moving from provision going You’re the the over time, going by more it, see this we’ll some at credit side see $XX looking and think, cost you’re cost of is to This total cost, credit probably – so, operating have just expense somewhere going have to to size keep – reserve in $X to million portfolio. that still year. I moving going or million million a to higher up the you’re million without $XX of we’ll given the to couple year, dollars,

Christopher Marinac

okay. it, Got

for Sounds very, the is here background very helpful. Thank you great.

Ed Hortman

right. All

Operator

session. team Ladies the to any the I like turn and for gentlemen, this concludes closing to management remarks. our over question-and-answer conference back

Dennis Zember

all for again, you, of joined. Thank right. you All that

good get feel have or as free Thanks, to any we please right. or Nicole, have you and we’ll All a be If or Ed me questions glad to day. and fast or to call you comments, can. e-mail, call back as

Operator

in you, for today’s to conference we Today’s and tuning sir. all, concluded, presentation. you, thank now has And thank

You disconnect a and day. may lines now have wonderful your

Ameris Bancorp (ABCB) 19 Oct 172017 Q3 Earnings call transcript