Release Date: July 26, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Ameris Bancorp (ABCB, Financial) reported strong second-quarter financial performance with net income of over $90 million, translating to $1.32 per diluted share.
- The company achieved significant deposit growth, increasing by $446 million or over 8%, while simultaneously reducing broker deposits.
- Earning assets grew by over 14%, and the company successfully expanded its margins to 3.58%.
- Ameris Bancorp (ABCB) maintained a strong balance sheet with a diversified loan portfolio and healthy reserves, with loans growing by $392 million.
- The company operates in robust Southeastern markets, which are expected to grow at approximately 1.7 times the national average, providing opportunities for organic growth.
Negative Points
- The company recorded a $19 million provision for credit losses, indicating potential concerns about future economic challenges.
- There is an expectation of seasonality affecting mortgage production in the third and fourth quarters, which may impact overall performance.
- The adjusted efficiency ratio increased to 55%, with expectations to moderate downward, indicating potential cost management challenges.
- Ameris Bancorp (ABCB) faces ongoing pressure from deposit costs, which could impact net interest margin stability.
- The company has a high CRE concentration to capital ratio, although it has improved to 274%, it remains a focus for further reduction.
Q & A Highlights
Q: Can you provide an outlook for the margin expansion for the rest of the year?
A: Nicole Stokes, CFO, stated that they are proud of the margin expansion this quarter and expect it to remain stable or slightly expand by 2 to 3 basis points, staying in the range of 3.52% to 3.55% for the next two quarters.
Q: What is driving the strong performance in the mortgage sector, and what is the outlook for the rest of the year?
A: CEO H. Proctor noted that while mortgage has been a strong performer, seasonality will likely affect the third and fourth quarters. They do not anticipate a surge in mortgage production due to the current market environment.
Q: How do you plan to manage capital retention going forward?
A: CEO H. Proctor mentioned that they are comfortable with their current capital position, which provides optionality. They do not plan to change their approach before the end of the year but may revisit the dividend or buyback options if the environment stabilizes.
Q: Why is your Allowance for Credit Losses (ACL) increasing while others are decreasing?
A: CEO H. Proctor explained that they incorporated a 25% downside in their Moody's modeling, reflecting a higher-for-longer interest rate approach. The increase in reserves is not due to portfolio weakness but to prepare for potential stress from prolonged high rates.
Q: What are the new loan yields and marginal cost of deposits?
A: Nicole Stokes, CFO, reported that new loan production yields were around 10.10% in June, consistent with May, while deposit production costs were approximately 2.2%.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
