ABCB - Earnings call transcript Q2 2020

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Operator

Good morning. And welcome to the Ameris Bancorp Second Quarter 2020 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. to Officer. conference like Stokes, to now Financial Chief would turn over the Nicole I ahead. go Please

Nicole Stokes

Great. Thank and call you, Kate, today. joined all our who’ve thank you to

the referencing comments During Investor financial the by of amerisbank.com. press will Palmer call, at the our will section that up Q&A. be website joined the release begin before available we Relations opening and I’m general financial our on CEO; details Proctor, open Palmer highlights with are the today discuss will our Officer. and and Chief Jon it I Credit results Edwards, we of then some for our

I we sure. think we although are that in here a with pleased I for to same mention distancing distancing, are at social room, am social

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

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

Palmer Proctor

results successfully in the Nicole you results highlights. share of our few detail today. thank on Nicole, in environment. I'm just few and joined we can but excited you, wanted to navigate quarter you second the a you I with to call new minutes, update financial to hit who’s everyone a this our Thank as

operating with For loss share income million We're direction that's quarter. positive pleased for or quarter, in moved diluted loan provision reported as we've expense. per they an ratios and of a of the our net this million $X.XX $XX.X inclusive $XX second

points Our to quarter. XX interest net basis deposit bearing basis costs the during interest lowered we as XX X.XX%, margin improved by by points

significant adjusted our improved of during mortgage to we've also efficiency the garnered We the ratio, to in our in efficiencies XX.XX%. due was quarter. division saw which that Most improvement

We as us continue later costs to self-fund additional discuss of innovation today. way this technology saved and for costs, identify and on to discussion a in some initiatives these the future we'll

On $X.X customers growth PPP $X the extended loan billion we second record over in in quarter. but single and solid originated in family billion X,XXX that front, to exhibited We mortgages. cautious the loans

organic loans, PPP Excluding loan over growth $XXX million. just was

over deposit We also bearing of now saw significant deposits. growth account deposits for XX% Non-interest in accounts. total

in staff to except and want you closed our successfully update new remotely, customers serve through another environment. appointments. for XX% We've have working on this to give remain channels adapted of the capabilities. I drive-through an our and do through lobbies our We Next, business to digital continue

to than customers. forward. mobile see prior in still we're number this did our lobbies continue closed and quarters as opportunity current real accounts We fact, being despite DDA an we environment of the opening In new going view in a banking we in more increase a

new persevering. world, learning are our the While they norm also this are in customers COVID-XX

we July our totaling loans. XX% slowed across down of the loan on to customers, total X,XXX relief we $X.X of in Those that continue the we we billion The impact As I quality said modifications. types marginal have and demand and in equated credit XX. outstanding level experienced loans XX-day call, first about of previously through all have our were last speed markets, request mentioned, to payment earnings provided loan and On to-date have see ratios. almost

extension exceed loans. $XXX now to see is totaled Thus July payment concentration to But We [audio $X million provided encouraging a of is XX. back terms additional that that, with with outstanding reverting their borrowers. our XX-day just in what billion relief customers hotel agreements over through the customers break] have to far, of high pre-COVID requesting the

pertains John highly at suspended. Credit and book. he's focused option. is for growing are Chief monitor to with on comfortable in remain we're few tangible an continue terms with it a but credit. not we as capital As Officer and time, us but aware, for buyback our obviously, I do program finally, anticipate where wanted capital, available today questions to And dividends as dividends, stock as this Edwards, any preservation we hit our with we very our And to you're highlights of remarks, remains today our reduction and this after

previously million to an primarily updated for the $XX loss expense quarter, we recorded As second the provision loan in forecast. mentioned, economic due

loans. see XX our of As to brings this including deck, allowance commitments you our investor can PPP X.XX%, net on Slide of un-funded the coverage

total net basis of charge annualized ratio loans. was XX off points Our

assets non-performing compared assets basis percentage as a basis points slightly total to XX Our quarter. decreased XX to prior points of

before Nicole in uncertainty back over get the started COVID we get restaurant for you some but direct financials. to what into ready further wait oil the And right on the the questions slide will day the in exposure when and our sector. ready for of hotel we've and I'll closely we're and we We've the will be and now as some turn deck comes. our the there loan tell regarding across opportunity, general to I'll M&A types watching stop game, that updates it within market gas to and economy, loan to we're along and We portfolio. as diversification included whether and stated no as have the well exposure, the We've details additional details

Nicole Stokes

Great. Thank you, Palmer.

net million For the income we've $X.XX second reported quarter, diluted per share. or $XX.X is

restructuring per the the premises. expenses, portfolio. COVID-XX loan from we you On fees sale our impairment, this an asset within and $XX earn charges, the of or $X.XX to million not losses the and $XX.X includes SEC adjusted primarily any specific mentioned, share, investigation economic servicing of expense, merger basis, our ongoing of Palmer legal update for million As exclude to the related provision loss credits forecasts when bank related on

XX.XX. Our in on to loss Both XX.XX to quarter provision the common value adjusted slight on than assets and to increased during loan return second due quarter, of Tangible was which our ratios $X.XX the a are the historical less adjusted reported from for book levels with these the XX.XX XX increase from was increased equity quarter. XX.XX expense. return tangible XX, last compared

from impacted basis that the from points tangible points. Our decreased by loans X.XX to X.XX last asset end the PPP equity negatively XX growth common basis of XX from quarter; ratio however,

our So the would rebound were X.XX at assets, have total June loans PPP excluding from our margin We pleased ratio with XXth. extremely this quarter. the in positive TCE been

interest quickly net by were cost. reducing XX funding quarter, we margin basis as during the successful Our points and improved X.XX from to X.XX

in portfolio fed quarters. to don't the some Fidelity saw seen an on income delay comparative see yield our assets total the in last our decreased XX basis quarter, the in XX as points, costs the compared didn't March really XX points that payoffs funding the increase to pricing future accretive deposit we During basis and anticipate stay earning interest by points, costs our the We but cuts and our we've by bearing we because declined on recur past. that focused quarter we with to basis decreased of continue in

gradually and that XX.X the Our improved side, off deposits bearing in bank And we against total yields compared now to quarter for non-interest model our deposits production deposit this XX.X related on X.XX such outlook core increase this declined deposit quarter. quarter portion X.XX continue last the mix we of and that on the A and and momentum at our time at last XX.XX% the our bearing large to anticipate year. last the end represents PPP of we modeling. is running of non-interest

provision I unfunded approximately million expense previously second quarter We quarter. the was related approximately and commitments. charge had $XX offs net loss mentioned, million, increase $XX As an was of that for for of was to million million loan $X.X $XX our our

end June was million end last in XXth at to XXX loss the loan $XXX.X and the for quarter allowance at of compared ending of million $XX Our the year.

credit our X end of end of compared at at for the the un-funded million the the at $XX reserve, quarter first end add XXX last was If quarter to allowance commitments in $XXX you the the million of total year. losses and

on, income our and was quarter. Moving non-interest close exceptional the during second

over quarter; loss the federal the production for from the the billion quarter. three X.X attorney $XXX.X increased had the interest Our production up expense merger fees remove million and just however, the the COVID-XX X.XX mortgage record you totaled record increased on the up million last the that non-interest from the of quarter, our to for quarter. expenses the expense Mortgage over division restructure, a to investigation sale SEC Total environment. hit when efficiency Net retail half million gain and in and quarter. at and percent, $XXX last levels $XX.X income group non-interest the was to for mortgage million, adjusted fees, earnings were on branches, due rate $XX.X

as However, with variable volume expenses costs in increased the such the the retail associated million commissions. $XX.X mortgage segment due increased to

in expensive bank call discussed we the So as more And pleased the increased led excluding by in to as are increase you than core of are this expenses on extremely quarter by be the lines and see the our functions of us of the efficiency offset business as to all on business, ratio. and can million decreased XX, and related our lines X.X last quarter. This Slide during administrative we revenue. expected with

do and compared the in adjusted in to last The believe we revenue XX.XX mortgage significantly quarters, as don't and we ratio division efficiency the quarter. be ratio, Our efficiency slightly sustainable. the future anticipate this in and increase gain ratio mortgage impacted of improved revenue mortgage to XX.XX increase level this efficiency will to

the eliminate lease view only the already addition as ends, often that we've We've nine banking This Palmer for be remain Fidelity from initiative branches already areas cost our efficiency additional our maintain we cost and ratio innovation in culture that to as pay after we're the way third reduce pandemic other employees. We've going will to low-XXs. for technology -- new is acquisition. non-retail that and have annual share the quarter. branches or can spaces we an We've continue the of of cost for As several program saves is closed identified negotiated to expense for into opportunities. the to over our and forward, out million XX $X.X really that we've to incentive an saves of will all drive initiated in for the going we've the closing in consolidate us facilities. on branches saves can or employee more this offices saves to XX and cost terminated several these drive-through growth in We sides, we while with a forward, identified identified an mentioned, look cost mid lease to

we side, side. sheet of billion balance billion, the were pleased PPP including the Loan was growth with deposit X.X On quarter growth this loans. and both organic the X.X loan on

excluding just organic that's So loan about million, XX% XXX those over was loans, growth annualized. about our

was for anticipate growth we production which Slide approximately later the loan found However, the of of growth be can year More estimates line, the warehouse loan of in our presentation. and seasonal our line XX XX details about investor half our growth with bring in X% back on in will our that in loan normalize year. and and ag

quarter, increased we of PPP was impacted deposits the X.X by by discussed during as non-interest total a deposit was earlier. X.X Our positively which and billion bearing billion

deposit quarter. the first end XX.X% Our the ended at at to compared to ratio loan of XX%

feel over and level we comfortable the Palmer Q&A. with continue And remains our position that, to As capitalized, Palmer closing strong. our capital comments to turn it with for we be mentioned, I'll liquidity for well

Palmer Proctor

for our a again a to together, of well Thank campaign to customers our you, that quarter communities. share marketing I our closing, In that's XXXX. view results. think second business and And thank into second we coming like our and are company everyone the up strategy as I'd Nicole. to and fitting moving for with as half back obviously we're listening

the the even oriented had going anticipated, that's all is these our we're the think core of about our the we back be we and I than While and business COVID-XX primarily to get last very to knowing optimistic adapting pandemic future, and ability business of longer we operation. in uncertain just as we to remain from times together. team continue power

the continue to group. for over remain with future. We from focused that, positioned diligent, on well will turn I'll it And and questions to any the Kate back

Operator

first Our question session. now the from will [Operator is We David Raymond question-and-answer from begin James. Instructions] Feaster

David Feaster

risk if it, commentary low if I I that re-deferral going at XX% early good, mean, it's re-deferrals of I guess, appreciate additional any the guess I on thoughts doing forward? And adjust on I re-deferral did look collateral you you just going the think rate ratings do you how loans? forward? require In the those or kind personal rates. correctly. did to for re-deferral a any any guarantees, reads trends math I'm

Palmer Proctor

re-deferrals, the of them very well was coming. at individually. with primarily, as well were On that knew the our in they we And because we've knew stayed looked sector each hotel pretty folks touch we in closely. We pretty

just and it there. Orlando, yet. hotels additional Universal know guarantees though and Disney We hotels, That come not collateral impacted in anyway. pretty more yet. in a even is, I and is function So, this get surprise didn't really, think haven't that it's wasn't And a out on well open hotels and back are go the you personal are of

So, right time on they just to get needed footing. back more the

that's round so, really designed to second And the is what do.

David Feaster

And been the you reserve most I modest heavy continue see think expect largely of has half re-deferrals additional pre-migration, But taking about account, builds some downgrade of done. seems back I do how going maybe see can It the rating the that year? in you and build forward? to some risk like then mean, as guess lifting reserve would into and to you

Palmer Proctor

are been going heavy the and more see what I on you here absolutely side. think thing, lifting be you I from has individual think is to said what right the the done

the you But been the be it'll have I absolutely feet. the get the that and economics one-offs it'll in forth. So, is model, from their forward on Timely, has going forecast we'll that TDR and so back what do lifting can't and right our heavy that CECL be the done. we to think on thing, modeling have, said so

David Feaster

forward the a market, And Were strategic? PPP mean, the then your any just of were decline quarter, you thoughts originations obviously much was originations the the activity curious just on of thoughts and concern tightening any but but in going distraction program for origination appetite pulse increases And seeing to compared spiked demand pretty and I South the the major versus where just box on you where investor good increase too. cadence really here, your demand? are credit the Florida. in given is Florida, is in limited the Obviously footprint how

thoughts any credit for loan your growth in on appetite curious origination, activity markets? Just

Palmer Proctor

by Dave, by to residential absorption absorption different kind our demand in we C&I. is still now, still and would will Residential -- said, loan mentioned we Customers being cautious. remains is as more that will will expect strong Yes, good demand as Palmer solid initiatives in this you will of construction But I there banks obviously here. we've Right continued mortgage I see question. continue and states. line got that to and obviously solid family individual we of demographics across on be of break lending before, obviously I there. you there's commercial in down very But business out the new robust tell with see board. have know, is some single all markets new hires the some and board, lending growth it

the side, so watching consumer that And we're very closely. on obviously

delinquencies of to in to continues continues Our but off, indirect terms and extremely well perform there. offs it portfolio run charge

all, solid to in as loan still in year. all look into have the we abilities half we So growth this confident of but feel second our cautious

Operator

ahead. Montgomery Our is from from next Janney Marinac Scott. question Christopher Go

Christopher Marinac

sale? near talk Palmer and term and mortgage go under you longer-term it was morning. this the then kind over where How more that down of the the you it of sort of the quarter could Good circumstances? and do on strong in settle where maybe Nicole, about kind Thanks. can should gain think normal

Nicole Stokes

Sure.

we and like what be in our And percentage coming we've volume sale That cyclicality quarter, down the that down. quarter. XXX. ratio, that to going -- first but well. what I on see as revenue, will back XXs like lot do off. see elevated seen cognizant low gain did the we so the coming that's some coming my anticipate and work can the get mortgage were keep right then definitely then, the in July, efficiency But that and of in for feel excited And a that take on strong resume far as quarter down. of of we very Diligent to our comments that. in, in just That for in was XX% to very quarter ratio. as about fourth that just quarter that of And we the I a around we on as that, $X.X So, I the preparing was feel definitely so billion back rolls came work wanted and mid know third that we volume definitely everybody it's third we're the efficiency get side

Christopher Marinac

larger Okay, guess, for Fidelity? Company go to because less I is or the still because risks just margin entity be downside now than Does efficiencies that as of better much it Ameris while combined later. down for And sort it the Thanks and allow year be have a was you historically that a may can that. natural great.

Nicole Stokes

Yes.

Christopher Marinac

you I do great. just last that do had? continue Or And we've local next success deposits quarters? few activity. with of of may question positive the back has some guess you be think sort will Okay, think Do give the to to deposits deposit get

Nicole Stokes

great a that's question. think I Now,

what about funding our and of PPP would base. So, in still we call our, do we we deposit probably have XX% have the effect PPP

that under out funds of be PPP So and between will anticipate bank. those used $XXX million the PPP program of $XXX flow the we million deposits eventually are and will

that LF can PPP we the through have that, have basis been so program, -- for that -- approved we program, loans XX in we're are points. find those So, prepared for we that

billion run of coming going That's points impacted. from Those points when basis basis compression points. XX a coming out on was margin, of margin out it do on you into So, course, basis of as at that math on of X deposits expected. $X points bearing XX the or the non-interest X income about and deposits roughly non-interest out the basis

Operator

Brady ahead. Our next Go question from is KBW. Gailey from

Brady Gailey

from to lot So, see. I cost saw that actually was mean, great expansion that deposits. of are came the of of this A quarter, reduction the few you Maybe the which of the in then cost talk for one and NIM ability was to about the continue the margin? PPP to interest reduce your the how from deposits net NIM just impacted this quarter? just outlook much And,

Nicole Stokes

great a it. is question, I This Sure. Brady, appreciate

So is protect deposit greatest on NIM that to the as far as place NIM, side. the the have we the

I did really -- quarter, a our past. in deposit great in pricing. single said, expanding all do didn't digit have the up I and expecting ended said that So got margin. know out last then and we little of of bit felt a who the some the bankers that And to we compression the to shout job competitive And I sometimes we've the really, a pressure as margin controlling

I boat with the same are all cuts. So Fed banks in think the

of rates. So reducing a great we did job deposit

-- money those improve room there's markets, Going really, those. our think very I are a little to forward, our savings,

Our on improve real our place to CDs. is

over at XXX. next our the We CDs remainder six will XX% of are XX% priced have $X currently right or be months, the Those this a of billion about year. is about

April June production, our our production was basis quarter points. So XX through second at so in

another That's just about of I've then So another XX% another at CDs at about XXX. portfolio -- $X off billion. of XXX. got currently CD again, $X rolling over the got about And XXXX, I've billion

was cost our was basis production So, XX points. XXX, our total about a second quarter

it. I the to control really where that's the So biggest market ability affect have and

we to kind additional happens, loans, we And is defense So, of expect have my reprice loans is, CD some lower. costs. do that as those

say half of some digit that. digit, would margin of all single I into So, potential for single be quarter, I but second a compression summarize the repeat the last going still hate year. to

Brady Gailey

accretion and Okay, will you then kind of sounds up. where this that's I like think you discount pushed know which That's, some it be helpful. color going forwards? repayments it's had one-time lumpy all And quarter, right. any on

Going yield of any prepayments forward, where outside run? accretable of will large idea any sort

Nicole Stokes

you how will normally say I income? yield, on I about I accretion accretable I'll think give even kind guidance if the some what that that's give guidance.

to said for previously So year. $XX that We've already hit of because those we $XX million have the million prepayments.

for about $X we a quarter forward. going $X million anticipate So, to million

Brady Gailey

your right. like M&A the the that on, ready. lastly just be update for sounds All us when size target comments, longer specific And will would for would does term? industry, But interested M&A then any And maybe Ameris? me. be ideal you listening for to what that you guys back come geographies Palmer in be

Palmer Proctor

our lot Yes, opportunity. Brady, of if at you a look current footprint, there's

I cover our our banking footprint states. the throughout pretty at look core southeast. takes you traditional loan the within that And for through think existing us operations different then up bank in the just much we as if production offices,

some think our it in be to So, desire those of terms Eastern nature I grow would South in obviously markets. of

deal for low $X.X I we right terms expect anywhere on where billion X.X the up, deal from would In just a now of us size, end. are, given

we spot. So would what that's kind be in our of sweet

Operator

Demba Our is Jennifer from ahead. Go SunTrust. next question from

Jennifer Demba

from questions Two me.

out recently. give those that? on color on terms Can talked is you the individuals? growth some my you is outlook hired Palmer, in of talent And more second all, loan us about of expenses. question And First the of what

consolidation I or Are announced. had next lower looking quarter $XXX branch think sequentially quarter you in the quarter? second million you the expenses at with core in we in expenses third

Palmer Proctor

mentioned. proactive pretty continue the at the our addition in approach on have look we'll and Nicole to and that, saved leases some calls to branch there were that optimization in We we

of board we lines to to new groups. Atlanta. and running here comes was weeks amount of breadth with He's experience a SunTrust banker. markets excited a have ago. in few of him former Todd he special on with specialty Shutley, We're opportunities and the a He knowledge of hires, had vast and terms hired us In lending capital of our

market well. he's got excited Florida, Florida us SunTrust. of Bennett, running run been also for new of as former announce there a head to just going the the we've to part state SunTrust We the And banker for are big

So, relatively us he'll also in we've having new that we'll soon on will shortly. release that out initiatives, be got coming is ran former commercial Remer who for us banker State for the market build the who join Augusta and a new prior Augusta, a Brinson. banking up press And going the Georgia, coming Bank to for bank. Cadence, then, Augusta and a be start is in initiative, out Remer for

So, that have obviously, expectation core for those we're on move commercial we to with excited And three as growth. individuals us is are deposit growth the continued focused forward. that, of

Jennifer Demba

And Nicole. on the expense side,

Nicole Stokes

expenses on about when core that, that, you was look the that said that income. you side, was at because XX mortgage to elevated origination of about XX of and the of XX So, the XXX, about expense of

I blue So looking mortgage bar and that's about are segment, just you at running that at what -- a fluctuate. then kind And where XX, and if the I'm the good look makes of that of Slide I of business look really banking number. XX, think kind lines

innovation, identified a fund, will technology, have we've to pay. costs finding lot that a have reinvested of As saves, our we that self-fund additional kind We're way cost to we to some of these be grown. as our

be will flat. the think I core So, fairly side

Jennifer Demba

us give investments more a you're you Okay. Can making, that talking you detail about? are on what little

Nicole Stokes

Sure.

So those the are across board.

improving. on a we're have working We technology that digital

And our a personnel innovation are some well. will invested there as treasury doing also ATMs then, their compatible. ATM risk as some be well as significant new we so practices in with more our of allocating innovating upgrade we -- and resources We've some also treasury are We products.

Palmer Proctor

for hired, Jennifer the be -- coming spearheading Regions release And us. too initiative a putting that he's to will for someone that that is let name, press of Bank. Treasury that I'll also from we've one Head going be out us

Operator

[Operator Kevin Fitzsimmons ahead. Go is from Davidson. D.A. next Instructions] question Our from

Kevin Fitzsimmons

we PPP closer can Just know out an update but if to crystal get would guests what the that PPP-related if would on on you as those get you -- just And I on remaining in expect on through the clear, it's the margin the toward And not be? there's outlook wanted quarter, a time? we as fourth forgiveness forgiven and fees loans in best your loans say get that at roll that occurs, and when to would your occur? and fees see wanted look period to

Nicole Stokes

to I'll and great get my out still the the year that about taken fees income a loans that's ball. we million X% five no, have we've have About a Kevin, $XX PPP But crystal question. maturity. maturity XX% try year have of And about not of into two yet.

than number $XXX,XXX. the loans, one about or there XX% idea of of Slide bullet of XX% an we that total We think So you number the those do I forgiveness and have no about not of less of how and the gives points, kind if when have in on would of and this and were is that the XX roll in. loans but it dollar

there fast. chunk piece, will a a come if pretty good forgiveness blanket is of in ours So, will that be there

a forgiveness year. modeled coming have we I our about So, duration to in. anticipate be that

next quarter year. I of quarter into quarter, think first pushing maybe second fourth and

sheer and modeling all from a were kind has Did ours majority on I all all May Did it that by answer of use for of duration, one-year Just we of your XXXX, so May coming help? the in questions? of rolling, XXXX. what

Kevin Fitzsimmons

on, COVID very more what going? senses estate, I there assume about one watching that that Thank Yes, just follow very would talked how and your real commercial and sensitive you you, the curious. you. you're just closely see beyond broad-based things how And just we buckets helpful.

Palmer Proctor

a That's good question.

active markets. Our customer are base, we have still a in fairly really customers good our they base, quality

are we seeing deals do. that opportunity to so, good And have we

underwriting a a our couple are our bucket, sort of up. of payment interest haven't and to changed asking put reserves we of little Although, more in have become that we conservative areas down we customers certainly

to still active pencil continues more customer and conservative then some whereas our of little be sharpening our active, base we have So, underwriting. we're think in we the to be

Operator

questions, has for The presentation. call. Thank concluded. concludes you this the now second quarter attending further conference conference no With today's

disconnect. now You may

Ameris Bancorp (ABCB) 27 Jul 202020 Q2 Earnings call transcript