Ameris Bancorp(ABCB) - 2023 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION This part presents the unaudited consolidated financial statements and management's discussion and analysis for Ameris Bancorp Item 1. Financial Statements This section presents the unaudited consolidated financial statements of Ameris Bancorp, including balance sheets, income statements, statements of shareholders' equity, and cash flow statements, along with detailed notes explaining the basis of presentation, accounting policies, and specific financial line items for the periods ended June 30, 2023, and December 31, 2022 Consolidated Balance Sheets This table presents the consolidated balance sheets, detailing assets, liabilities, and equity as of June 30, 2023, and December 31, 2022 | Metric (dollars in thousands) | June 30, 2023 | December 31, 2022 | | :---------------------------- | :------------ | :---------------- | | Total assets | $25,800,618 | $25,053,286 | | Total liabilities | $22,515,988 | $21,855,886 | | Total shareholders' equity | $3,284,630 | $3,197,400 | | Loans, net | $20,199,688 | $19,649,576 | | Total deposits | $20,443,125 | $19,462,738 | Consolidated Statements of Income and Comprehensive Income This table provides the consolidated statements of income and comprehensive income for the three and six months ended June 30, 2023 and 2022 | Metric (dollars in thousands) | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :---------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total interest income | $321,952 | $202,568 | $617,668 | $385,942 | | Total interest expense | $112,412 | $11,204 | $196,476 | $22,034 | | Net interest income | $209,540 | $191,364 | $421,192 | $363,908 | | Provision for credit losses | $45,516 | $14,924 | $95,245 | $21,155 | | Total noninterest income | $67,349 | $83,841 | $123,399 | $170,752 | | Total noninterest expense | $148,403 | $142,196 | $287,824 | $286,016 | | Net income | $62,635 | $90,066 | $123,056 | $171,764 | | Basic EPS | $0.91 | $1.30 | $1.78 | $2.48 | | Diluted EPS | $0.91 | $1.30 | $1.78 | $2.47 | Consolidated Statements of Shareholders' Equity This section details changes in shareholders' equity, including retained earnings and accumulated other comprehensive loss, for the periods presented | Metric (dollars in thousands) | June 30, 2023 | December 31, 2022 | | :---------------------------- | :------------ | :---------------- | | Total Shareholders' Equity | $3,284,630 | $3,197,400 | | Retained Earnings | $1,414,742 | $1,311,258 | | Accumulated Other Comprehensive Loss, Net of Tax | $(50,618) | $(46,507) | - Dividends on common shares were $0.15 per share for the three months ended June 30, 2023, and $0.30 per share for the six months ended June 30, 2023[8][9] Consolidated Statements of Cash Flows This table outlines the consolidated cash flows from operating, investing, and financing activities for the six months ended June 30, 2023 and 2022 | Metric (dollars in thousands) | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :---------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $224,164 | $713,868 | | Net cash used in investing activities | $(627,587) | $(2,130,922) | | Net cash provided by (used in) financing activities | $604,421 | $(340,767) | | Net increase (decrease) in cash, cash equivalents and restricted cash | $200,998 | $(1,757,821) | | Cash, cash equivalents and restricted cash at end of period | $1,319,130 | $2,306,836 | Notes to Consolidated Financial Statements This section provides detailed notes explaining the basis of presentation, accounting policies, and specific financial line items NOTE 1 – BASIS OF PRESENTATION AND ACCOUNTING POLICIES This note describes the company's operations, financial holding company status, and significant accounting policy adoptions - Ameris Bancorp is a financial holding company headquartered in Atlanta, Georgia, operating 164 branches in Georgia, Alabama, Florida, North Carolina, and South Carolina through its wholly-owned subsidiary, Ameris Bank[18] - The Company adopted ASU 2022-02 (Troubled Debt Restructurings and Vintage Disclosures) effective January 1, 2023, resulting in a $1.7 million reduction to the allowance for credit losses and a $1.3 million increase to retained earnings[23] NOTE 2 – INVESTMENT SECURITIES This note details the company's investment securities portfolio, including available-for-sale and held-to-maturity debt securities | Metric (dollars in thousands) | June 30, 2023 (Fair Value) | December 31, 2022 (Fair Value) | | :---------------------------- | :------------------------- | :----------------------------- | | Total debt securities available-for-sale | $1,460,356 | $1,500,060 | | Total debt securities held-to-maturity | $121,891 | $114,538 | - As of June 30, 2023, 423 out of 429 available-for-sale securities were in an unrealized loss position, totaling $64.4 million in unrealized losses attributed to factors other than credit impairment, with an allowance for credit losses of $82 thousand recorded for credit impairment[31][36] - All 27 held-to-maturity securities were in an unrealized loss position as of June 30, 2023, with no expected credit losses[34][37] NOTE 3 – LOANS AND ALLOWANCE FOR CREDIT LOSSES This note provides a breakdown of loan categories, nonaccrual loans, and the allowance for credit losses | Loan Category (dollars in thousands) | June 30, 2023 | December 31, 2022 | | :----------------------------------- | :------------ | :---------------- | | Commercial, financial and agricultural | $2,718,831 | $2,679,403 | | Real estate – commercial and farmland | $7,815,779 | $7,604,867 | | Real estate – residential | $4,702,134 | $4,420,306 | | Total Loans | $20,471,759 | $19,855,253 | | Nonaccrual Loans (dollars in thousands) | June 30, 2023 | December 31, 2022 | | :-------------------------------------- | :------------ | :---------------- | | Real estate – residential | $106,249 | $109,222 | | Total nonaccrual loans | $126,680 | $134,808 | - The allowance for credit losses on loans increased to $272.07 million at June 30, 2023, from $205.68 million at December 31, 2022, primarily due to a decline in forecasted macroeconomic factors and organic loan growth[64][67] | Allowance for Credit Losses (dollars in thousands) | June 30, 2023 | December 31, 2022 | | :------------------------------------------------- | :------------ | :---------------- | | Total allowance for credit losses | $272,071 | $205,677 | - The Company modified $4.70 million in loans for borrowers experiencing financial difficulty during the six months ended June 30, 2023, primarily through payment deferrals and term extensions[73] NOTE 4 – OTHER BORROWINGS This note details the company's other borrowings, including FHLB advances and available borrowing capacity | Other Borrowings (dollars in thousands) | June 30, 2023 | December 31, 2022 | | :-------------------------------------- | :------------ | :---------------- | | Total other borrowings | $1,536,989 | $1,875,736 | - FHLB borrowings include fixed-rate advances with various maturities and interest rates, with significant amounts maturing in July 2023, and the Bank had $3.30 billion available for borrowing on lines with the FHLB and $2.63 billion available at the Federal Reserve discount window as of June 30, 2023[79][80] NOTE 5 – ACCUMULATED OTHER COMPREHENSIVE INCOME This note explains the components and changes in accumulated other comprehensive income, net of tax | Metric (dollars in thousands) | June 30, 2023 | December 31, 2022 | | :---------------------------- | :------------ | :---------------- | | Accumulated Other Comprehensive Loss, Net of Tax | $(50,618) | $(46,507) | - The accumulated other comprehensive loss, net of tax, increased by $4.11 million during the six months ended June 30, 2023, primarily due to unrealized holding losses on debt securities available-for-sale[82] NOTE 6 – WEIGHTED AVERAGE SHARES OUTSTANDING This note presents the basic and diluted weighted average common shares outstanding for EPS calculation | Metric (share data in thousands) | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Basic weighted average common shares outstanding | 68,990 | 69,136 | 69,085 | 69,246 | | Diluted weighted average common shares outstanding | 69,035 | 69,316 | 69,192 | 69,485 | - For the three months ended June 30, 2023, 345,576 anti-dilutive nonvested restricted share grants and performance stock units were excluded from EPS computation[84] NOTE 7 – FAIR VALUE MEASURES This note outlines fair value measurements for assets and liabilities, including loans held for sale and derivative instruments | Loans Held for Sale (dollars in thousands) | June 30, 2023 | December 31, 2022 | | :--------------------------------------- | :------------ | :---------------- | | Mortgage loans held for sale | $391,212 | $390,583 | | SBA loans held for sale | $260 | $1,495 | | Total loans held for sale | $391,472 | $392,078 | - The Company recorded a net loss of $3.3 million from changes in fair value of mortgage loans held for sale for the three months ended June 30, 2023, and a net gain of $2.3 million for the six months ended June 30, 2023[88] | Recurring Basis Fair Value Measurements (dollars in thousands) | June 30, 2023 (Fair Value) | December 31, 2022 (Fair Value) | | :------------------------------------------------------------- | :------------------------- | :----------------------------- | | Total recurring assets at fair value | $1,868,030 | $1,900,651 | | Total recurring liabilities at fair value | $7,400 | $4,574 | | Nonrecurring Basis Fair Value Measurements (dollars in thousands) | June 30, 2023 (Fair Value) | December 31, 2022 (Fair Value) | | :---------------------------------------------------------------- | :------------------------- | :----------------------------- | | Collateral-dependent loans | $26,902 | $31,972 | NOTE 8 – COMMITMENTS AND CONTINGENCIES This note details the company's commitments, contingencies, and the resolution of significant legal actions | Commitments (dollars in thousands) | June 30, 2023 | December 31, 2022 | | :--------------------------------- | :------------ | :---------------- | | Commitments to extend credit | $5,398,013 | $6,318,039 | | Unused home equity lines of credit | $376,944 | $345,001 | | Financial standby letters of credit | $39,096 | $33,557 | | Mortgage interest rate lock commitments | $302,208 | $148,148 | | Allowance for Unfunded Commitments (dollars in thousands) | June 30, 2023 | December 31, 2022 | | :-------------------------------------------------------- | :------------ | :---------------- | | Balance at end of period | $54,630 | $52,411 | - All pending legal actions and claims related to William J. Villari and his companies were dismissed with prejudice on April 24, 2023, with the settlement terms not having a material adverse effect on the Company's financial condition[112] NOTE 9 – SEGMENT REPORTING This note provides financial information for the company's five reportable business segments - The Company operates five reportable segments: Banking Division, Retail Mortgage Division, Warehouse Lending Division, SBA Division, and Premium Finance Division, each managed as separate business units[116][117] | Segment Net Income (dollars in thousands) | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :---------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Banking Division | $36,038 | $56,409 | $76,408 | $97,752 | | Retail Mortgage Division | $17,014 | $21,736 | $28,053 | $47,376 | | Warehouse Lending Division | $4,835 | $5,059 | $9,040 | $11,001 | | SBA Division | $1,302 | $3,067 | $1,982 | $8,492 | | Premium Finance Division | $3,446 | $3,795 | $7,573 | $7,143 | | Total Net Income | $62,635 | $90,066 | $123,056 | $171,764 | NOTE 10 – LOAN SERVICING RIGHTS This note details the company's residential mortgage and SBA loan servicing rights and related income | Loan Servicing Rights (dollars in thousands) | June 30, 2023 | December 31, 2022 | | :------------------------------------------- | :------------ | :---------------- | | Residential mortgage | $160,021 | $147,014 | | SBA | $3,097 | $3,443 | | Total loan servicing rights | $163,118 | $150,457 | - Residential mortgage servicing rights increased to $160.02 million at June 30, 2023, from $147.01 million at December 31, 2022, with servicing fee income for residential mortgages at $15.0 million for Q2 2023 and $29.2 million for H1 2023[125][127] - SBA servicing rights decreased to $3.10 million at June 30, 2023, from $3.44 million at December 31, 2022, with servicing fee income for SBA loans at $0.76 million for Q2 2023 and $1.5 million for H1 2023[130][131] NOTE 11 – GOODWILL This note discusses the goodwill balances for the Banking and Premium Finance Divisions and the results of impairment testing - Goodwill for the Banking Division and Premium Finance Division remained at $951.1 million and $64.5 million, respectively, at June 30, 2023, and December 31, 2022[133] - Despite a sustained decline in stock price triggering an impairment assessment in Q2 2023, quantitative analysis using discounted cash flow and market approaches indicated that the fair value of both divisions exceeded their carrying value, thus no impairment was recognized[134][135] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on Ameris Bancorp's financial performance and condition, analyzing key factors that influenced results for the three and six months ended June 30, 2023, compared to the prior year, and the financial position as of June 30, 2023, versus December 31, 2022. It covers earnings, net interest income, credit quality, noninterest income/expense, and capital management Cautionary Note Regarding Forward-Looking Statements This section highlights that the report contains forward-looking statements subject to various risks and uncertainties - The report contains forward-looking statements subject to various risks and uncertainties, including economic conditions, interest rate movements, competitive pressures, and regulatory changes, which could cause actual results to differ materially[138][139] Overview This discussion analyzes the Company's financial condition and operating results for the periods ended June 30, 2023, and December 31, 2022, including non-GAAP measures - This discussion analyzes the Company's financial condition and operating results for the periods ended June 30, 2023, and December 31, 2022, including non-GAAP measures used by management to evaluate performance[141][142] Critical Accounting Policies This section notes no significant changes to critical accounting policies, emphasizing goodwill impairment testing and intangible asset amortization - No significant changes to critical accounting policies from the 2022 Annual Report on Form 10-K, except as noted, with goodwill tested annually for impairment and intangible assets amortized over their estimated useful lives, involving significant forward-looking assumptions[143][144][145] Results of Operations for the Three Months Ended June 30, 2023 and 2022 This section analyzes the company's financial performance for the second quarter of 2023 compared to the same period in 2022 Consolidated Earnings and Profitability This section reviews the company's net income, EPS, and profitability ratios for the three months ended June 30, 2023 and 2022 | Metric | Q2 2023 | Q2 2022 | | :----- | :------ | :------ | | Net income available to common shareholders | $62.6 million | $90.1 million | | Diluted EPS | $0.91 | $1.30 | | Return on average assets | 0.98% | 1.54% | | Return on average shareholders' equity | 7.63% | 11.87% | | Adjusted net income (non-GAAP) | $62.6 million | $81.5 million | | Adjusted diluted EPS (non-GAAP) | $0.91 | $1.18 | - Net income decreased due to higher provision for credit losses and increased funding costs, partially offset by growth in interest-earning assets[147][155] Net Interest Income and Margins This section examines net interest income, average earning assets, and net interest margin for the three months ended June 30, 2023 and 2022 | Metric | Q2 2023 | Q2 2022 | | :----- | :------ | :------ | | Net interest income (tax-equivalent) | $210.5 million | $192.3 million | | Average interest earning assets | $23.48 billion | $21.06 billion | | Net interest margin | 3.60% | 3.66% | | Yields on earning assets | 5.52% | 3.88% | | Yield on total interest-bearing liabilities | 2.96% | 0.37% | | Total funding costs | 2.05% | 0.22% | | Deposit costs | 1.76% | 0.10% | - Net interest income increased by 9.4% YoY, driven by growth in investment securities and loans, but net interest margin slightly decreased by 6 basis points due to increased cost of funds[155] Provision for Credit Losses This section details the provision for credit losses, net charge-offs, and allowance for credit losses for the three months ended June 30, 2023 and 2022 | Metric | Q2 2023 | Q2 2022 | | :----- | :------ | :------ | | Provision for credit losses | $45.5 million | $14.9 million | | Net charge-offs on loans | $14.2 million | $1.8 million | | Net charge-offs as % of average loans (annualized) | 0.28% | 0.04% | | Allowance for credit losses on loans as % of total loans | 1.33% | 1.04% (Dec 31, 2022) | - The significant increase in provision for credit losses was due to an updated economic forecast and organic loan growth, while non-performing assets as a percentage of total assets decreased to 0.57% from 0.61% at December 31, 2022[159] Noninterest Income This section analyzes the components of noninterest income, including mortgage banking activity, for the three months ended June 30, 2023 and 2022 | Metric | Q2 2023 | Q2 2022 | | :----- | :------ | :------ | | Total noninterest income | $67.3 million | $83.8 million | | Mortgage banking activity | $40.7 million | $58.8 million | | Service charges on deposit accounts | $11.3 million | $11.1 million | | Other noninterest income | $14.3 million | $12.7 million | - Total noninterest income decreased by 19.7% YoY, primarily due to a 30.7% decrease in mortgage banking activity, which was negatively impacted by lower production and spread, and the absence of a servicing right impairment recovery seen in Q2 2022[160] Noninterest Expense This section reviews the company's noninterest expenses, including salaries, data processing, and other operating costs, for the three months ended June 30, 2023 and 2022 | Metric | Q2 2023 | Q2 2022 | | :----- | :------ | :------ | | Total noninterest expense | $148.4 million | $142.2 million | | Salaries and employee benefits | $81.3 million | $81.5 million | | Data processing and communications expenses | $13.5 million | $12.2 million | | Other noninterest expenses | $24.2 million | $17.1 million | - Total noninterest expense increased by 4.4% YoY, driven by increases in data processing, FDIC insurance, loan-related expenses, and legal fees, partially offset by decreases in variable commissions and mortgage production-related expenses[162][163] Income Taxes This section discusses income tax expense and the effective tax rate for the three months ended June 30, 2023 and 2022 | Metric | Q2 2023 | Q2 2022 | | :----- | :------ | :------ | | Income tax expense | $20.3 million | $28.0 million | | Effective tax rate | 24.5% | 23.7% | - The effective tax rate increased to 24.5% from 23.7% YoY, primarily due to increased nondeductible FDIC insurance and compensation expenses[164] Results of Operations for the Six Months Ended June 30, 2023 and 2022 This section analyzes the company's financial performance for the first half of 2023 compared to the same period in 2022 Consolidated Earnings and Profitability This section reviews the company's net income, EPS, and profitability ratios for the six months ended June 30, 2023 and 2022 | Metric | H1 2023 | H1 2022 | | :----- | :------ | :------ | | Net income available to common shareholders | $123.1 million | $171.8 million | | Diluted EPS | $1.78 | $2.47 | | Return on average assets | 0.98% | 1.48% | | Return on average shareholders' equity | 7.58% | 11.47% | | Adjusted net income (non-GAAP) | $122.6 million | $156.5 million | | Adjusted diluted EPS (non-GAAP) | $1.77 | $2.25 | - Net income decreased by 28.4% YoY, primarily due to higher provision for credit losses and reduced noninterest income from mortgage banking activities[166][178][179] Net Interest Income and Margins This section examines net interest income, average earning assets, and net interest margin for the six months ended June 30, 2023 and 2022 | Metric | H1 2023 | H1 2022 | | :----- | :------ | :------ | | Net interest income (tax-equivalent) | $423.1 million | $365.9 million | | Average interest earning assets | $23.21 billion | $21.04 billion | | Net interest margin | 3.68% | 3.51% | | Yields on earning assets | 5.38% | 3.72% | | Yield on total interest-bearing liabilities | 2.68% | 0.37% | | Total funding costs | 1.82% | 0.22% | | Deposit costs | 1.46% | 0.09% | - Net interest income increased by 15.6% YoY, and net interest margin improved by 17 basis points, driven by growth in average earning assets and increased market rates, despite higher funding costs[173] Provision for Credit Losses This section details the provision for credit losses, net charge-offs, and allowance for credit losses for the six months ended June 30, 2023 and 2022 | Metric | H1 2023 | H1 2022 | | :----- | :------ | :------ | | Provision for credit losses | $95.2 million | $21.2 million | | Net charge-offs on loans | $24.9 million | $5.4 million | | Net charge-offs as % of average loans (annualized) | 0.25% | 0.07% | | Allowance for credit losses on loans as % of total loans | 1.33% | 0.98% (Dec 31, 2022) | - The provision for credit losses significantly increased by 349% YoY, primarily due to an updated economic forecast and organic loan growth, while non-performing assets as a percentage of total assets decreased to 0.57% from 0.61% at December 31, 2022[178] Noninterest Income This section analyzes the components of noninterest income, including mortgage banking activity, for the six months ended June 30, 2023 and 2022 | Metric | H1 2023 | H1 2022 | | :----- | :------ | :------ | | Total noninterest income | $123.4 million | $170.8 million | | Mortgage banking activity | $72.1 million | $121.7 million | | Other noninterest income | $27.1 million | $24.7 million | - Total noninterest income decreased by 27.7% YoY, mainly due to a 40.7% decrease in mortgage banking activities, which was impacted by lower production and the absence of a significant mortgage servicing right impairment recovery seen in H1 2022[179] Noninterest Expense This section reviews the company's noninterest expenses, including salaries, data processing, and other operating costs, for the six months ended June 30, 2023 and 2022 | Metric | H1 2023 | H1 2022 | | :----- | :------ | :------ | | Total noninterest expense | $287.8 million | $286.0 million | | Salaries and employee benefits | $162.2 million | $165.8 million | | Data processing and communications expenses | $26.5 million | $24.7 million | | Credit resolution-related expenses | $1.3 million | $(0.47) million | | Other noninterest expenses | $39.6 million | $35.2 million | - Total noninterest expenses increased by 0.6% YoY, driven by higher data processing, credit resolution-related expenses, FDIC insurance, and legal fees, partially offset by reductions in mortgage commissions and merger charges[181][182] Income Taxes This section discusses income tax expense and the effective tax rate for the six months ended June 30, 2023 and 2022 | Metric | H1 2023 | H1 2022 | | :----- | :------ | :------ | | Income tax expense | $38.5 million | $55.7 million | | Effective tax rate | 23.8% | 24.5% | - The effective tax rate decreased to 23.8% from 24.5% YoY, primarily due to a discrete charge to state tax liability and nondeductible merger and conversion charges incurred in H1 2022[183] Financial Condition as of June 30, 2023 This section provides an overview of the company's financial position, including assets, liabilities, and equity, as of June 30, 2023 Securities This section details the company's investment securities portfolio, including available-for-sale and held-to-maturity debt securities | Security Type (dollars in thousands) | June 30, 2023 (Fair Value) | December 31, 2022 (Fair Value) | | :----------------------------------- | :------------------------- | :----------------------------- | | Total debt securities available-for-sale | $1,460,356 | $1,500,060 | | Total debt securities held-to-maturity | $121,891 | $114,538 | - The Company does not intend to sell available-for-sale securities at an unrealized loss position and does not expect to be required to sell them prior to recovery or maturity, with an allowance for credit losses of $82 thousand established for credit impairment on available-for-sale securities[187] Loans and Allowance for Credit Losses This section provides an overview of gross loans outstanding and the allowance for credit losses as of June 30, 2023 | Metric (dollars in thousands) | June 30, 2023 | December 31, 2022 | | :---------------------------- | :------------ | :---------------- | | Gross loans outstanding | $20.86 billion | $20.25 billion | | Loans | $20.47 billion | $19.86 billion | | Allowance for credit losses on loans | $272,071 | $205,677 | | ACL on loans as % of end of period loans | 1.33% | 1.04% | | Net charge-offs for the period | $24,914 | $5,433 | | Net charge-offs as % of average loans (annualized) | 0.25% | 0.07% | - Gross loans increased by $615.9 million, or 3.04%, from December 31, 2022, primarily due to organic growth, and the ACL on loans increased due to a decline in macroeconomic factors and organic loan growth[192][198] Loans This table presents a detailed breakdown of the company's loan portfolio by category as of June 30, 2023, and December 31, 2022 | Loan Category (dollars in thousands) | June 30, 2023 | December 31, 2022 | | :----------------------------------- | :------------ | :---------------- | | Commercial, financial and agricultural | $2,718,831 | $2,679,403 | | Real estate – commercial and farmland | $7,815,779 | $7,604,867 | | Real estate – residential | $4,702,134 | $4,420,306 | | Total Loans | $20,471,759 | $19,855,253 | Non-Performing Assets This section details non-performing assets, including nonaccrual loans and other real estate owned, as of June 30, 2023 | Non-Performing Assets (dollars in thousands) | June 30, 2023 | December 31, 2022 | | :------------------------------------------- | :------------ | :---------------- | | Nonaccrual loans | $126,680 | $134,808 | | Accruing loans delinquent 90 days or more | $13,424 | $17,865 | | Other real estate owned | $6,170 | $843 | | Total non-performing assets | $146,283 | $153,544 | | Total non-performing assets as % of total assets | 0.57% | 0.61% | - Total non-performing assets decreased by $7.26 million, or 4.7%, from December 31, 2022, primarily due to decreases in nonaccrual loans and accruing loans delinquent 90 days or more, partially offset by an increase in other real estate owned[207] Commercial Lending Practices This section outlines the company's commercial real estate loan concentrations and adherence to internal limits | CRE Loan Category (dollars in thousands) | June 30, 2023 (Balance) | June 30, 2023 (% of Total Loans) | December 31, 2022 (Balance) | December 31, 2022 (% of Total Loans) | | :--------------------------------------- | :---------------------- | :------------------------------- | :-------------------------- | :----------------------------------- | | Construction and development loans | $2,217,744 | 11% | $2,086,438 | 11% | | Multi-family loans | $814,461 | 4% | $779,027 | 4% | | Nonfarm non-residential loans (excluding owner-occupied) | $4,812,547 | 24% | $4,796,358 | 24% | | Total CRE Loans (excluding owner-occupied) | $7,844,752 | 38% | $7,661,823 | 39% | | CRE Concentration Ratios | Internal Limit | June 30, 2023 (Actual) | December 31, 2022 (Actual) | | :----------------------- | :------------- | :--------------------- | :------------------------- | | Construction and development loans to Tier I capital + ACL | 100% | 80% | 79% | | Total CRE loans (excluding owner-occupied) to Tier I capital + ACL | 300% | 283% | 292% | - The Company maintains a concentration in the CRE loan category but remains within its internal concentration limits for construction and development loans (80% vs. 100% limit) and total CRE loans (283% vs. 300% limit) as of June 30, 2023[214] Short-Term Investments This section details the company's short-term investments, primarily federal funds sold and interest-bearing deposits in banks | Short-Term Investments (dollars in thousands) | June 30, 2023 | December 31, 2022 | | :-------------------------------------------- | :------------ | :---------------- | | Federal funds sold and interest-bearing deposits in banks | $1.03 billion | $833.6 million | - Short-term investments increased to $1.03 billion at June 30, 2023, from $833.6 million at December 31, 2022, primarily held as interest-bearing deposits[215] Derivative Instruments and Hedging Activities This section describes the company's use of derivative instruments for hedging mortgage inventory and managing interest rate risk | Derivative Instruments (dollars in thousands) | June 30, 2023 (Asset) | December 31, 2022 (Asset) | | :-------------------------------------------- | :-------------------- | :------------------------ | | Forward contracts and IRLCs | $9.0 million | $3.9 million | | Interest rate derivative agreements (asset) | $6.8 million | $4.6 million | | Interest rate derivative agreements (liability) | $7.0 million | $4.6 million | - The Company uses forward contracts and interest rate lock commitments (IRLCs) to hedge mortgage inventory value and enters into offsetting interest rate swap agreements for client risk management[216] Deposits This section provides a breakdown of total deposits, including noninterest-bearing and interest-bearing categories, as of June 30, 2023 | Deposits (dollars in thousands) | June 30, 2023 | December 31, 2022 | | :------------------------------ | :------------ | :---------------- | | Total deposits | $20.44 billion | $19.46 billion | | Noninterest-bearing deposits | $6.71 billion | $7.93 billion | | Interest-bearing deposits | $13.74 billion | $11.53 billion | | Uninsured deposits (estimated) | $8.34 billion | $9.15 billion | - Total deposits increased by $980.4 million, or 5.0%, from December 31, 2022, driven by a $2.20 billion increase in interest-bearing deposits, offsetting a $1.22 billion decrease in noninterest-bearing deposits due to a shift in consumer behavior[217] Capital This section discusses the company's capital position, including regulatory capital ratios and common stock repurchase program - The Board of Directors authorized a common stock repurchase program of up to $100.0 million through October 31, 2023, with $13.5 million (405,233 shares) repurchased as of June 30, 2023[218] - The Company and Ameris Bank elected a five-year transition relief for CECL's impact on regulatory capital, effective March 31, 2020[221][222] | Regulatory Capital Ratios | June 30, 2023 | December 31, 2022 | | :------------------------ | :------------ | :---------------- | | Consolidated Tier 1 Leverage Ratio | 9.27% | 9.36% | | Ameris Bank Tier 1 Leverage Ratio | 10.30% | 10.56% | | Consolidated CET1 Ratio | 10.25% | 9.86% | | Ameris Bank CET1 Ratio | 11.38% | 11.12% | | Consolidated Total Capital Ratio | 13.40% | 12.90% | | Ameris Bank Total Capital Ratio | 12.96% | 12.28% | - As of June 30, 2023, Ameris Bank was considered 'well capitalized' under all regulatory capital measurements[222] Interest Rate Sensitivity and Liquidity This section outlines the company's management of interest rate risk and its liquidity position, including available borrowing capacity - The Company manages interest rate risk through its Asset Liability Management Policy, aiming to keep net interest income changes within 20% for a 200 basis point interest rate shift over 24 months[224][227] | Liquidity Ratios | June 30, 2023 | December 31, 2022 | | :---------------- | :------------ | :---------------- | | Investment securities available-for-sale to total deposits | 7.14% | 7.71% | | Loans (net of unearned income) to total deposits | 100.14% | 102.02% | | Interest-earning assets to total assets | 91.51% | 91.11% | | Interest-bearing deposits to total deposits | 67.19% | 59.26% | - The Company's liquidity ratios were considered satisfactory at June 30, 2023, with $3.30 billion available from FHLB and $2.63 billion from the FRB Discount Window[229][230] Goodwill Impairment Testing This section details the quantitative goodwill impairment analysis performed for the Banking and Premium Finance Divisions - A quantitative goodwill impairment analysis was performed as of June 30, 2023, for the Banking and Premium Finance Divisions due to a sustained decline in stock price, confirming no impairment, with fair values exceeding carrying values by approximately 20% and 8% respectively[231][232] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section details the Company's exposure to market risks, primarily interest rate risk, and how it is managed through asset/liability management policies and simulation models. It also confirms no exposure to foreign currency, commodity price, or other market risks - The Company's primary market risk exposure is interest rate risk, managed by the ALCO Committee within an overall asset and liability framework[224][225][226] - The Company uses simulation analysis to monitor net interest income sensitivity to interest rate changes, with an acceptable risk level of no more than a 20% increase/decrease in net interest income for a 200 basis point rate change over 24 months[227][236] | Change in Interest Rates (in bps) | % Change in Projected Baseline Net Interest Income (12 Months) | % Change in Projected Baseline Net Interest Income (24 Months) | | :-------------------------------- | :------------------------------------------------------------- | :------------------------------------------------------------- | | 400 | (3.9)% | 6.3% | | 300 | (0.7)% | 6.2% | | 200 | 1.2% | 5.0% | | 100 | 0.9% | 2.7% | | (100) | (1.1)% | (2.9)% | | (200) | (2.3)% | (6.3)% | | (300) | (3.5)% | (9.8)% | | (400) | (4.3)% | (12.9)% | Item 4. Controls and Procedures The Company's CEO and CFO concluded that disclosure controls and procedures were effective as of June 30, 2023. No material changes to internal control over financial reporting were identified during the quarter - The Company's disclosure controls and procedures were effective as of June 30, 2023[239] - No material changes in internal control over financial reporting were identified during the quarter ended June 30, 2023[239] PART II – OTHER INFORMATION This part includes disclosures on legal proceedings, risk factors, equity security sales, and other miscellaneous information Item 1. Legal Proceedings This section refers to the disclosures on legal proceedings found in Note 8 of the financial statements, which details the resolution of litigation with William J. Villari and confirms no material adverse effect on the Company's financial condition - Information on legal proceedings is incorporated by reference from Note 8 – Commitments and Contingencies[241] Item 1A. Risk Factors There have been no material changes to the risk factors previously disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2022 - No material changes to risk factors from the 2022 Annual Report on Form 10-K[242] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section provides details on the Company's common stock repurchase program, including shares repurchased during the three months ended June 30, 2023, and the remaining authorization | Period | Total Number of Shares Purchased | Average Price Paid Per Share | | :----- | :------------------------------- | :--------------------------- | | May 1, 2023 through May 31, 2023 | 264,500 | $30.18 | | Total (Q2 2023) | 264,500 | $30.18 | - As of June 30, 2023, $86.50 million remained available for repurchase under the $100.0 million common stock repurchase program, authorized through October 31, 2023[244] Item 3. Defaults Upon Senior Securities The Company reported no defaults upon senior securities during the period - No defaults upon senior securities[245] Item 4. Mine Safety Disclosures This item is not applicable to the Company - Not applicable[245] Item 5. Other Information No director or Section 16 officer adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter ended June 30, 2023 - No director or Section 16 officer adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter[245] Item 6. Exhibits This section lists all exhibits filed with the 10-Q report, including organizational documents, compensation summaries, certifications, and XBRL interactive data files - Exhibits include Restated Articles of Incorporation, Bylaws, Summary of Director Compensation, Rule 13a-14(a)/15d-14(a) Certifications by CEO and CFO, Section 1350 Certifications by CEO and CFO, and various XBRL documents[246]