Ameris Bancorp(ABCB) - 2022 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION Item 1. Financial Statements. This section presents the unaudited consolidated financial statements and detailed notes for Ameris Bancorp Consolidated Balance Sheets Consolidated Balance Sheet Highlights (June 30, 2022 vs. December 31, 2021) | Metric (in thousands) | June 30, 2022 | December 31, 2021 | Change (%) | |:----------------------|:--------------|:------------------|:-----------| | Total assets | $23,687,470 | $23,858,321 | -0.72% | | Cash and cash equivalents | $2,306,836 | $4,064,657 | -43.27% | | Loans, net | $17,388,380 | $15,706,676 | +10.71% | | Total deposits | $19,684,982 | $19,665,553 | +0.10% | | Total liabilities | $20,614,094 | $20,891,870 | -1.33% | | Total shareholders' equity | $3,073,376 | $2,966,451 | +3.60% | Consolidated Statements of Income and Comprehensive Income Consolidated Statements of Income Highlights (Three Months Ended June 30) | Metric (in thousands) | 2022 | 2021 | Change (%) | |:----------------------|:------------|:------------|:-----------| | Total interest income | $202,568 | $173,751 | +16.58% | | Total interest expense| $11,204 | $11,899 | -5.84% | | Net interest income | $191,364 | $161,852 | +18.23% | | Provision for credit losses | $14,924 | $142 | +10410% | | Total noninterest income | $83,841 | $89,240 | -6.05% | | Total noninterest expense | $142,196 | $135,761 | +4.74% | | Net income | $90,066 | $88,327 | +1.97% | | Basic EPS | $1.30 | $1.27 | +2.36% | | Diluted EPS | $1.30 | $1.27 | +2.36% | Consolidated Statements of Income Highlights (Six Months Ended June 30) | Metric (in thousands) | 2022 | 2021 | Change (%) | |:----------------------|:------------|:------------|:-----------| | Total interest income | $385,942 | $351,701 | +9.74% | | Total interest expense| $22,034 | $24,872 | -11.41% | | Net interest income | $363,908 | $326,829 | +11.33% | | Provision for credit losses | $21,155 | $(28,449) | N/A | | Total noninterest income | $170,752 | $207,213 | -17.69% | | Total noninterest expense | $286,016 | $284,559 | +0.51% | | Net income | $171,764 | $213,289 | -19.47% | | Basic EPS | $2.48 | $3.07 | -19.19% | | Diluted EPS | $2.47 | $3.06 | -19.28% | Consolidated Statements of Shareholders' Equity Shareholders' Equity Changes (Three Months Ended June 30, 2022) | Item (in thousands) | Amount | |:--------------------|:------------| | Balance, March 31, 2022 | $3,007,159 | | Net income | $90,066 | | Dividends on common shares | $(10,432) | | Other comprehensive loss | $(10,794) | | Balance, June 30, 2022 | $3,073,376 | Shareholders' Equity Changes (Six Months Ended June 30, 2022) | Item (in thousands) | Amount | |:--------------------|:------------| | Balance, December 31, 2021 | $2,966,451 | | Net income | $171,764 | | Dividends on common shares | $(20,841) | | Other comprehensive loss | $(28,225) | | Balance, June 30, 2022 | $3,073,376 | Consolidated Statements of Cash Flows Consolidated Cash Flow Highlights (Six Months Ended June 30) | Activity (in thousands) | 2022 | 2021 | |:------------------------|:--------------|:--------------| | Net cash provided by (used in) operating activities | $713,868 | $(92,227) | | Net cash provided by (used in) investing activities | $(2,130,922) | $3,575 | | Net cash provided by (used in) financing activities | $(340,767) | $1,275,870 | | Net increase (decrease) in cash, cash equivalents and restricted cash | $(1,757,821) | $1,187,218 | | Cash, cash equivalents and restricted cash at end of period | $2,306,836 | $3,304,524 | Notes to Consolidated Financial Statements NOTE 1 – BASIS OF PRESENTATION AND ACCOUNTING POLICIES - Ameris Bancorp operates as a financial holding company through its wholly-owned subsidiary, Ameris Bank, with 164 branches across Georgia, Alabama, Florida, North Carolina, and South Carolina as of June 30, 2022[14] - The unaudited interim financial statements are prepared in accordance with GAAP and Regulation S-X, reflecting normal recurring adjustments and should be read in conjunction with the 2021 Annual Report on Form 10-K[15] - The Company is evaluating the impact of new accounting standards ASU 2022-02 (Troubled Debt Restructurings and Vintage Disclosures) and ASU 2021-01/ASU 2020-04 (Reference Rate Reform) on its consolidated financial statements[19][20][21][22] NOTE 2 – INVESTMENT SECURITIES Debt Securities Available-for-Sale (June 30, 2022 vs. December 31, 2021) | Metric (in thousands) | June 30, 2022 | December 31, 2021 | |:----------------------|:--------------|:------------------| | Amortized Cost | $1,068,350 | $572,887 | | Estimated Fair Value | $1,052,268 | $592,621 | | Gross Unrealized Gains| $689 | $19,929 | | Gross Unrealized Losses| $(16,683) | $(195) | Debt Securities Held-to-Maturity (June 30, 2022 vs. December 31, 2021) | Metric (in thousands) | June 30, 2022 | December 31, 2021 | |:----------------------|:--------------|:------------------| | Amortized Cost | $111,654 | $79,850 | | Estimated Fair Value | $97,144 | $78,206 | | Gross Unrealized Gains| $— | $4 | | Gross Unrealized Losses| $(14,510) | $(1,648) | - As of June 30, 2022, 331 out of 433 available-for-sale securities were in an unrealized loss position, totaling $16.7 million, with $88,000 attributed to credit impairment, and the Company does not intend to sell these securities prior to recovery or maturity[28][32] NOTE 3 – LOANS AND ALLOWANCE FOR CREDIT LOSSES Loan Portfolio Balances (June 30, 2022 vs. December 31, 2021) | Loan Category (in thousands) | June 30, 2022 | December 31, 2021 | |:-----------------------------|:--------------|:------------------| | Commercial, financial and agricultural | $2,022,845 | $1,875,993 | | Consumer installment | $167,237 | $191,298 | | Indirect automobile | $172,245 | $265,779 | | Mortgage warehouse | $949,191 | $787,837 | | Municipal | $529,268 | $572,701 | | Premium finance | $942,357 | $798,409 | | Real estate – construction and development | $1,747,284 | $1,452,339 | | Real estate – commercial and farmland | $7,156,017 | $6,834,917 | | Real estate – residential | $3,874,578 | $3,094,985 | | Total Loans | $17,561,022 | $15,874,258 | Nonaccrual Loans (June 30, 2022 vs. December 31, 2021) | Loan Category (in thousands) | June 30, 2022 | December 31, 2021 | |:-----------------------------|:--------------|:------------------| | Commercial, financial and agricultural | $11,742 | $14,214 | | Real estate – commercial and farmland | $21,158 | $15,365 | | Real estate – residential | $88,896 | $53,772 | | Total Nonaccrual Loans | $122,912 | $85,266 | Allowance for Credit Losses (ACL) Activity (Six Months Ended June 30) | Metric (in thousands) | 2022 | 2021 | |:----------------------|:------------|:------------| | Balance, beginning of period | $167,582 | $199,422 | | Provision for loan losses | $10,493 | $(17,478) | | Total charge-offs | $15,432 | $14,712 | | Total recoveries | $9,999 | $7,838 | | Balance, end of period| $172,642 | $175,070 | - The ACL increased to $172.6 million (0.98% of total loans) at June 30, 2022, from $167.6 million (1.06% of total loans) at December 31, 2021, primarily due to organic loan growth, partially offset by improved macroeconomic forecasts[74][79] - Troubled Debt Restructurings (TDRs) decreased to $41.8 million at June 30, 2022, from $76.6 million at December 31, 2021, with an allocated allowance for credit losses of $2.5 million[64] NOTE 4 – SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE Securities Sold Under Agreements to Repurchase (in thousands) | Date | Amount | |:--------------|:------------| | June 30, 2022 | $953 | | December 31, 2021 | $5,845 | - All securities sold under repurchase agreements mature daily and are collateralized by state, county, municipal, and mortgage-backed securities[83][85] NOTE 5 – OTHER BORROWINGS Other Borrowings (in thousands) | Category | June 30, 2022 | December 31, 2021 | |:--------------------------|:--------------|:------------------| | FHLB borrowings | $48,707 | $48,790 | | Subordinated notes payable| $376,885 | $427,158 | | Securitization Facilities | $— | $263,931 | | Total Other Borrowings| $425,592 | $739,879 | - FHLB borrowings are collateralized by eligible first mortgage loans and FHLB stock, with $4.19 billion available for borrowing at June 30, 2022[86] - The Bank has credit arrangements for federal funds up to $127.0 million and $2.21 billion available for borrowing at the Federal Reserve discount window[87] NOTE 6 – ACCUMULATED OTHER COMPREHENSIVE INCOME Accumulated Other Comprehensive Income (Loss) (in thousands) | Period | Balance, Beginning | Current Year Changes (Net of Tax) | Balance, End | |:----------------------------|:-------------------|:----------------------------------|:-------------| | Three Months Ended June 30, 2022 | $(1,841) | $(10,794) | $(12,635) | | Six Months Ended June 30, 2022 | $15,590 | $(28,225) | $(12,635) | - Accumulated other comprehensive income primarily consists of changes in net unrealized gains and losses on available-for-sale investment securities[88] NOTE 7 – WEIGHTED AVERAGE SHARES OUTSTANDING Weighted Average Common Shares Outstanding (in thousands) | Period | Basic (2022) | Diluted (2022) | Basic (2021) | Diluted (2021) | |:----------------------------|:-------------|:---------------|:-------------|:---------------| | Three Months Ended June 30, | 69,136 | 69,316 | 69,497 | 69,792 | | Six Months Ended June 30, | 69,246 | 69,485 | 69,448 | 69,765 | - For the three months ended June 30, 2022, 33,536 anti-dilutive performance stock units were excluded from EPS computation[90] NOTE 8 – FAIR VALUE MEASURES Loans Held for Sale at Fair Value (in thousands) | Loan Type | June 30, 2022 | December 31, 2021 | |:----------------------|:--------------|:------------------| | Mortgage loans held for sale | $555,039 | $1,247,997 | | SBA loans held for sale | $626 | $6,635 | | Total | $555,665 | $1,254,632 | Fair Value Measurements of Recurring Assets (June 30, 2022) | Asset (in thousands) | Fair Value | Level 1 | Level 2 | Level 3 | |:---------------------|:------------|:------------|:------------|:----------| | Investment securities available-for-sale | $1,052,268 | $312,889 | $737,999 | $1,320 | | Loans held for sale | $555,665 | $— | $555,665 | $— | | Mortgage banking derivative instruments | $10,079 | $— | $10,079 | $— | | Total | $1,618,012| $312,889| $1,303,803| $1,320 | Fair Value Measurements of Non-Recurring Assets (June 30, 2022) | Asset (in thousands) | Fair Value | Level 1 | Level 2 | Level 3 | |:---------------------|:------------|:--------|:--------|:----------| | Collateral-dependent loans | $36,033 | $— | $— | $36,033 | | Other real estate owned | $702 | $— | $— | $702 | | Mortgage servicing rights | $257,112 | $— | $— | $257,112 | | Total | $293,847| $— | $— | $293,847 | - The Company records mortgage loans held for sale at fair value to align reported results with underlying economic changes and related hedge instruments, with mark-to-market adjustments captured in mortgage banking activities[93][94] NOTE 9 – COMMITMENTS AND CONTINGENCIES Loan Commitments (in thousands) | Commitment Type | June 30, 2022 | December 31, 2021 | |:------------------------------|:--------------|:------------------| | Commitments to extend credit | $5,420,227 | $4,328,749 | | Unused home equity lines of credit | $303,428 | $272,029 | | Financial standby letters of credit | $30,272 | $36,184 | | Mortgage interest rate lock commitments | $320,320 | $417,126 | Allowance for Unfunded Commitments (in thousands) | Period | Balance, Beginning | Provision for Unfunded Commitments | Balance, End | |:----------------------------|:-------------------|:-----------------------------------|:-------------| | Three Months Ended June 30, 2022 | $42,194 | $1,779 | $43,973 | | Six Months Ended June 30, 2022 | $33,185 | $10,788 | $43,973 | - The Company is subject to various legal proceedings and regulatory examinations in the ordinary course of business, but management does not believe current liabilities will have a material adverse effect on financial condition[111][112] - The COVID-19 pandemic continues to pose risks, particularly to industries like hotels, restaurants, and retail, potentially impacting loan delinquencies and collateral values[113][114] NOTE 10 – SEGMENT REPORTING Net Income by Segment (Three Months Ended June 30, 2022, in thousands) | Segment | Net Income | |:--------------------------|:-----------| | Banking Division | $56,409 | | Retail Mortgage Division | $21,736 | | Warehouse Lending Division| $5,059 | | SBA Division | $3,067 | | Premium Finance Division | $3,795 | | Total | $90,066| Net Income by Segment (Six Months Ended June 30, 2022, in thousands) | Segment | Net Income | |:--------------------------|:-----------| | Banking Division | $97,752 | | Retail Mortgage Division | $47,376 | | Warehouse Lending Division| $11,001 | | SBA Division | $8,492 | | Premium Finance Division | $7,143 | | Total | $171,764| - Ameris Bancorp operates five reportable segments: Banking Division, Retail Mortgage Division, Warehouse Lending Division, SBA Division, and Premium Finance Division[115][116] NOTE 11 – LOAN SERVICING RIGHTS Loan Servicing Rights Carrying Value (in thousands) | Loan Type | June 30, 2022 | December 31, 2021 | |:----------------------|:--------------|:------------------| | Residential mortgage | $257,112 | $206,944 | | SBA | $4,954 | $5,556 | | Total | $262,066 | $212,500 | Residential Mortgage Servicing Rights Activity (Six Months Ended June 30) | Metric (in thousands) | 2022 | 2021 | |:----------------------|:------------|:------------| | Beginning carrying value, net | $206,944 | $130,630 | | Additions | $43,252 | $65,244 | | Amortization | $(13,576) | $(14,681) | | Recoveries | $20,492 | $10,482 | | Ending carrying value, net | $257,112 | $191,675 | - Residential mortgage servicing fee income increased to $35.8 million for the six months ended June 30, 2022, from $21.5 million in the prior year, reflecting growth in the serviced portfolio[126] - SBA loan servicing fee income was $1.9 million for the six months ended June 30, 2022, slightly down from $2.0 million in the prior year[130] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Management discusses the company's financial performance, condition, and key operational factors Cautionary Note Regarding Forward-Looking Statements - The report contains forward-looking statements subject to various risks and uncertainties, including economic conditions, interest rate movements, and the impact of the COVID-19 pandemic[136][137] - The Company does not undertake to update or revise any forward-looking statements after the report date[138] Overview - This discussion analyzes the Company's financial condition and results of operations for the periods ended June 30, 2022, and December 31, 2021[139] - The discussion includes non-GAAP measures like adjusted net income, which management uses to evaluate performance and efficiency[140] Critical Accounting Policies - There have been no significant changes to the Company's critical accounting policies from those disclosed in its 2021 Annual Report on Form 10-K[141] Results of Operations for the Three Months Ended June 30, 2022 and 2021 Consolidated Earnings and Profitability Consolidated Earnings and Profitability (Three Months Ended June 30) | Metric (in thousands, except per share) | 2022 | 2021 | Change (%) | |:----------------------------------------|:------------|:------------|:-----------| | Net income available to common shareholders | $90,066 | $88,327 | +1.97% | | Diluted EPS | $1.30 | $1.27 | +2.36% | | Return on average assets | 1.54% | 1.64% | -0.10 pp | | Return on average shareholders' equity | 11.87% | 12.66% | -0.79 pp | | Adjusted net income | $81,473 | $87,548 | -6.94% | | Adjusted diluted EPS | $1.18 | $1.25 | -5.60% | - Net income increased slightly, but adjusted net income decreased, indicating a decline in core profitability[142][143] Net Interest Income and Margins Net Interest Income and Margin (Three Months Ended June 30) | Metric (tax-equivalent, in thousands) | 2022 | 2021 | Change (%) | |:--------------------------------------|:------------|:------------|:-----------| | Net interest income | $192,334 | $163,013 | +18.0% | | Net interest margin | 3.66% | 3.34% | +32 bps | | Average interest earning assets | $21,055,701 | $19,592,686 | +7.5% | | Yields on earning assets | 3.88% | 3.58% | +30 bps | | Yield on total interest-bearing liabilities | 0.37% | 0.41% | -4 bps | | Total funding costs | 0.22% | 0.26% | -4 bps | | Deposit costs | 0.10% | 0.13% | -3 bps | - Higher net interest income and margin were driven by growth in investment securities and loans, coupled with disciplined deposit repricing[149] - Loan production in lines of business amounted to $5.3 billion with weighted average yields of 4.29% in Q2 2022, down from $6.4 billion and 3.36% in Q2 2021[149] Provision for Credit Losses Provision for Credit Losses (Three Months Ended June 30, in thousands) | Item | 2022 | 2021 | |:----------------------|:------------|:------------| | Provision for credit losses | $14,924 | $142 | | - Loans | $13,227 | $(899) | | - Unfunded commitments| $1,779 | $1,300 | | - Other credit losses | $(82) | $(258) | - The significant increase in provision for credit losses was primarily due to organic loan growth[153] - Non-performing assets as a percentage of total assets increased from 0.43% at December 31, 2021, to 0.56% at June 30, 2022, mainly due to an increase in nonaccruing loans[153] Noninterest Income Noninterest Income (Three Months Ended June 30, in thousands) | Item | 2022 | 2021 | Change (%) | |:----------------------|:------------|:------------|:-----------| | Total noninterest income | $83,841 | $89,240 | -6.05% | | Mortgage banking activity | $58,761 | $70,231 | -16.33% | | Service charges on deposit accounts | $11,148 | $11,007 | +1.28% | | Other noninterest income | $12,686 | $6,945 | +82.67% | - The decrease in total noninterest income was primarily driven by a $11.5 million (16.3%) decline in mortgage banking activity[154] - Other noninterest income significantly increased by $5.7 million (82.7%), mainly due to fee income from Balboa Capital and higher BOLI income[155] Noninterest Expense Noninterest Expense (Three Months Ended June 30, in thousands) | Item | 2022 | 2021 | Change (%) | |:----------------------|:------------|:------------|:-----------| | Total noninterest expense | $142,196 | $135,761 | +4.74% | | Salaries and employee benefits | $81,545 | $85,505 | -4.64% | | Occupancy and equipment | $12,746 | $10,812 | +17.89% | | Amortization of intangible assets | $5,144 | $4,065 | +26.54% | | Loan servicing expense| $9,920 | $4,914 | +101.88% | - Salaries and employee benefits decreased due to lower variable compensation in mortgage production, partially offset by expenses related to the Balboa Capital acquisition[156] - Loan servicing expenses more than doubled, primarily due to additional mortgage loans serviced from strong production in the previous year[157] Income Taxes Income Tax Expense and Effective Tax Rate (Three Months Ended June 30) | Metric | 2022 | 2021 | |:----------------------|:------------|:------------| | Income tax expense | $28,019 | $26,862 | | Effective tax rate | 23.7% | 23.3% | - The increase in the effective tax rate was primarily due to increased state taxes resulting from shifts in apportionment related to the Balboa Capital acquisition[158] Results of Operations for the Six Months Ended June 30, 2022 and 2021 Consolidated Earnings and Profitability Consolidated Earnings and Profitability (Six Months Ended June 30) | Metric (in thousands, except per share) | 2022 | 2021 | Change (%) | |:----------------------------------------|:------------|:------------|:-----------| | Net income available to common shareholders | $171,764 | $213,289 | -19.47% | | Diluted EPS | $2.47 | $3.06 | -19.28% | | Return on average assets | 1.48% | 2.03% | -0.55 pp | | Return on average shareholders' equity | 11.47% | 15.66% | -4.19 pp | | Adjusted net income | $156,512 | $203,294 | -23.01% | | Adjusted diluted EPS | $2.25 | $2.91 | -22.68% | - Net income and adjusted net income significantly decreased for the six months ended June 30, 2022, compared to the prior year, indicating a decline in overall profitability[160][161] Net Interest Income and Margins Net Interest Income and Margin (Six Months Ended June 30) | Metric (tax-equivalent, in thousands) | 2022 | 2021 | Change (%) | |:--------------------------------------|:------------|:------------|:-----------| | Net interest income | $365,891 | $329,170 | +11.15% | | Net interest margin | 3.51% | 3.45% | +6 bps | | Average interest earning assets | $21,044,269 | $19,229,371 | +9.44% | | Yields on earning assets | 3.72% | 3.71% | +1 bp | | Yield on total interest-bearing liabilities | 0.37% | 0.44% | -7 bps | | Total funding costs | 0.22% | 0.28% | -6 bps | | Deposit costs | 0.09% | 0.14% | -5 bps | - Net interest income increased due to growth in average earning assets and disciplined deposit pricing, while net interest margin saw a slight improvement[167] - Loan production in lines of business decreased to $10.0 billion with weighted average yields of 3.98% in H1 2022, from $13.9 billion and 3.25% in H1 2021[167] Provision for Credit Losses Provision for Credit Losses (Six Months Ended June 30, in thousands) | Item | 2022 | 2021 | |:----------------------|:------------|:------------| | Provision for credit losses | $21,155 | $(28,449) | | - Loans | $10,493 | $(17,478) | | - Unfunded commitments| $10,788 | $(10,540) | | - Other credit losses | $(126) | $(431) | - The provision for credit losses significantly increased from a release in the prior year, primarily due to organic loan growth in 2022 and a release of reserves in 2021[172] - Non-performing assets as a percentage of total assets increased to 0.56% at June 30, 2022, from 0.43% at December 31, 2021[172] Noninterest Income Noninterest Income (Six Months Ended June 30, in thousands) | Item | 2022 | 2021 | Change (%) | |:----------------------|:------------|:------------|:-----------| | Total noninterest income | $170,752 | $207,213 | -17.69% | | Mortgage banking activity | $121,699 | $168,717 | -27.90% | | Other noninterest income | $24,689 | $14,599 | +69.11% | - Total noninterest income decreased significantly, primarily due to a $47.0 million (27.9%) decline in mortgage banking activities[173] - Other noninterest income increased by $10.1 million (69.1%), mainly from fee income from Balboa Capital, higher BOLI income, and increased trust income[174] Noninterest Expense Noninterest Expense (Six Months Ended June 30, in thousands) | Item | 2022 | 2021 | Change (%) | |:----------------------|:------------|:------------|:-----------| | Total noninterest expense | $286,016 | $284,559 | +0.51% | | Salaries and employee benefits | $165,826 | $181,490 | -8.52% | | Occupancy and equipment | $25,473 | $22,593 | +12.75% | | Amortization of intangible assets | $10,325 | $8,191 | +26.05% | | Loan servicing expenses | $18,839 | $10,814 | +74.21% | | Merger and conversion charges | $977 | $— | N/A | - Salaries and employee benefits decreased due to lower variable compensation in mortgage production, partially offset by increased expenses from the Balboa Capital acquisition[175] - Loan servicing expenses increased significantly by $8.0 million (74.2%), driven by additional mortgage loans serviced[175] Income Taxes Income Tax Expense and Effective Tax Rate (Six Months Ended June 30) | Metric | 2022 | 2021 | |:----------------------|:------------|:------------| | Income tax expense | $55,725 | $64,643 | | Effective tax rate | 24.5% | 23.3% | - The effective tax rate increased primarily due to a discrete charge to state tax liability and nondeductible merger and conversion charges incurred in the first six months of 2022[176] Financial Condition as of June 30, 2022 Securities Investment Portfolio Summary (in thousands) | Security Type | June 30, 2022 (Fair Value) | December 31, 2021 (Fair Value) | |:------------------------------|:---------------------------|:-------------------------------| | Debt securities available-for-sale | $1,052,268 | $592,621 | | Debt securities held-to-maturity | $97,144 | $78,206 | | Total Investment Portfolio| $1,149,412 | $670,827 | - Available-for-sale securities are recorded at fair value with unrealized gains/losses in OCI, while held-to-maturity securities are at amortized cost[179][181] - At June 30, 2022, $88,000 of unrealized loss in available-for-sale securities was attributed to credit impairment, with the remaining $16.7 million due to non-credit factors[181] Loans and Allowance for Credit Losses Gross Loans Outstanding (in thousands) | Date | Amount | |:--------------|:------------| | June 30, 2022 | $18,116,687 | | December 31, 2021 | $17,128,890 | | Change | +$987,797 | - Gross loans outstanding increased by $987.8 million, primarily driven by organic growth in loans, while loans held for sale decreased[186] - The ACL on loans totaled $172.6 million (0.98% of loans) at June 30, 2022, up from $167.6 million (1.06% of loans) at December 31, 2021[193] - Nonaccrual loans increased to $122.9 million at June 30, 2022, from $85.3 million at December 31, 2021, mainly due to rebooked GNMA loans and one commercial real estate loan[193] Non-Performing Assets Non-Performing Assets (in thousands) | Item | June 30, 2022 | December 31, 2021 | |:------------------------------|:--------------|:------------------| | Nonaccrual loans | $122,912 | $85,266 | | Accruing loans delinquent 90 days or more | $8,542 | $12,648 | | Repossessed assets | $122 | $84 | | Other real estate owned | $835 | $3,810 | | Total Non-Performing Assets| $132,411 | $101,808 | - Total non-performing assets increased to $132.4 million at June 30, 2022, from $101.8 million at December 31, 2021, representing 0.56% of total assets[200][201] - The increase in nonaccrual loans was partially offset by a decrease in accruing loans delinquent 90 days or more and a significant decrease in Other Real Estate Owned (OREO)[200] Troubled Debt Restructurings Troubled Debt Restructurings (TDRs) (in thousands) | Status | June 30, 2022 | December 31, 2021 | |:--------------|:--------------|:------------------| | Accruing Loans| $36,100 | $65,582 | | Non-Accruing Loans| $5,657 | $11,006 | | Total TDRs| $41,757 | $76,588 | - Total TDRs decreased from $76.6 million at December 31, 2021, to $41.8 million at June 30, 2022[204] - The most common types of concessions for TDRs include forbearance of principal, rate reduction only, and rate reduction with forbearance of principal[207] Commercial Lending Practices CRE Loan Concentrations vs. Internal Limits | Loan Category | Internal Limit | June 30, 2022 (Actual) | December 31, 2021 (Actual) | |:----------------------------------|:---------------|:-----------------------|:---------------------------| | Construction and development loans to Tier I capital + ACL | 100% | 72% | 66% | | Total CRE loans (excluding owner-occupied) to Tier I capital + ACL | 300% | 288% | 291% | - The Company exhibits a concentration in Commercial Real Estate (CRE) loans, with total CRE loans representing 40% of total loans at June 30, 2022[214][216] - The Company's CRE loan concentrations remain within its internal limits, but construction and development loans as a percentage of capital increased[217] Short-Term Investments Short-Term Investments (in thousands) | Item | June 30, 2022 | December 31, 2021 | |:----------------------|:--------------|:------------------| | Federal funds sold and interest-bearing deposits in banks | $1,961,209 | $3,756,844 | - Short-term investments decreased significantly from $3.76 billion at December 31, 2021, to $1.96 billion at June 30, 2022[218] Derivative Instruments and Hedging Activities Fair Value of Derivative Instruments (in thousands) | Item | June 30, 2022 | December 31, 2021 | |:----------------------|:--------------|:------------------| | Asset fair value | $10,079 | $11,940 | | Liability fair value | $0 | $710 | - The Company uses forward contracts and Interest Rate Lock Commitments (IRLCs) to hedge changes in mortgage inventory value due to interest rate fluctuations[219] Capital Regulatory Capital Ratios (June 30, 2022 vs. December 31, 2021) | Ratio | June 30, 2022 | December 31, 2021 | |:------------------------------|:--------------|:------------------| | Consolidated Tier 1 Leverage Ratio | 9.01% | 8.63% | | Consolidated CET1 Ratio | 10.11% | 10.46% | | Consolidated Tier 1 Capital Ratio | 10.11% | 10.46% | | Consolidated Total Capital Ratio | 13.27% | 13.78% | | Ameris Bank Tier 1 Leverage Ratio | 10.30% | 9.50% | | Ameris Bank CET1 Ratio | 11.54% | 11.50% | | Ameris Bank Tier 1 Capital Ratio | 11.54% | 11.50% | | Ameris Bank Total Capital Ratio | 12.61% | 12.45% | - The Board of Directors authorized a common stock repurchase program of up to $100.0 million, with $41.7 million repurchased as of June 30, 2022[220] - Ameris Bank was considered 'well capitalized' under all regulatory capital measurements at June 30, 2022[224] Interest Rate Sensitivity and Liquidity Liquidity Ratios | Ratio | June 30, 2022 | December 31, 2021 | |:------------------------------------------|:--------------|:------------------| | Investment securities available-for-sale to total deposits | 5.35% | 3.01% | | Loans (net of unearned income) to total deposits | 89.21% | 80.72% | | Interest-earning assets to total assets | 89.88% | 90.56% | | Interest-bearing deposits to total deposits | 58.02% | 60.46% | - The Company manages interest rate risk through an Asset Liability Management Policy and uses simulation modeling to assess its impact on net interest income[225][228][229] - The ALCO Committee aims to keep net interest income changes within 20% for a 200 basis point interest rate shift over a 24-month period[229] - The Company's liquidity ratios were considered satisfactory at June 30, 2022, with no events or trends expected to materially change liquidity[231] Item 3. Quantitative and Qualitative Disclosures About Market Risk. The company details its exposure to market risks, primarily interest rate changes, and its management strategies - The Company's primary market risk exposures are credit risk and interest rate risk, with no exposure to foreign currency exchange rate risk or commodity price risk[225][234] - Interest rate risk is managed through an asset/liability management program, using simulation analysis to monitor the impact of rate changes on net interest income[235][236] - Forward contracts and IRLCs are used to economically hedge changes in mortgage inventory value, with a net asset fair value of $10.1 million at June 30, 2022[233] Item 4. Controls and Procedures. Management confirms the effectiveness of disclosure controls and procedures as of the reporting date - The Company's disclosure controls and procedures were evaluated and deemed effective as of June 30, 2022[237] - No material changes in internal control over financial reporting were identified during the quarter ended June 30, 2022[238] PART II – OTHER INFORMATION Item 1. Legal Proceedings. Management does not believe current legal matters will materially affect the Company's financial condition - Disclosure on legal proceedings is incorporated by reference from Note 9 – Commitments and Contingencies[240] Item 1A. Risk Factors. No material changes to risk factors were disclosed since the Company's 2021 Annual Report - No material changes to risk factors were reported since the 2021 Annual Report on Form 10-K[241] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. This section details the Company's common stock repurchase activities during the second quarter of 2022 Issuer Purchases of Equity Securities (Three Months Ended June 30, 2022) | Period | Total Shares Purchased | Average Price Paid Per Share | |:------------------------------|:-----------------------|:-----------------------------| | April 1, 2022 through April 30, 2022 | — | $— | | May 1, 2022 through May 31, 2022 | 118,157 | $42.72 | | June 1, 2022 through June 30, 2022 | — | $— | | Total | 118,157 | $— | - As of June 30, 2022, $41.7 million (952,910 shares) had been repurchased under the $100.0 million share repurchase program, which is authorized through October 31, 2022[243] Item 3. Defaults Upon Senior Securities. The Company reported no defaults upon senior securities during the period - There were no defaults upon senior securities[244] Item 4. Mine Safety Disclosures. This item is not applicable to the Company - Mine Safety Disclosures are not applicable to the Company[244] Item 5. Other Information. No other information was reported under this item - No other information was reported[244] Item 6. Exhibits. This section lists all exhibits filed with the Form 10-Q, including certifications and XBRL documents - Exhibits include corporate governance documents, compensation plans, and regulatory certifications[246] - XBRL Instance Document, Taxonomy Extension Schema, and other interactive data files are also included[246] SIGNATURE SIGNATURE The report is duly signed by the Chief Financial Officer as the authorized signatory - The report was signed by Nicole S. Stokes, Chief Financial Officer, on August 5, 2022[248]