Ameris Bancorp(ABCB) - 2021 Q4 - Annual Report

PART I Item 1. Business Ameris Bancorp is a financial holding company operating through its subsidiary, Ameris Bank, with an acquisition-oriented growth strategy Company Snapshot (as of December 31, 2021) | Metric | Value | | :--- | :--- | | Total Assets | $23.86 billion | | Total Loans | $17.13 billion | | Total Deposits | $19.67 billion | | Shareholders' Equity | $2.97 billion | | Full-Service Banking Offices | 165 | - The company's growth strategy is acquisition-oriented, aiming to expand its presence in the Southeast, with recent key acquisitions including Balboa Capital Corporation in 2021[17][18][20] - The loan portfolio is diversified, with Commercial Real Estate representing the largest segment, alongside residential mortgages, agricultural, commercial/industrial, and consumer loans[21][22] - As of December 31, 2021, the company employed 2,865 full-time-equivalent employees, with females representing 66% of the workforce and minorities representing 31%[49][60] Banking Services The company offers a diversified loan portfolio, varied funding sources, and uses derivatives to manage interest rate risk - The company maintains a diversified loan portfolio of approximately $17.13 billion, representing 71.8% of total assets at year-end 2021[21][22] - Funding sources are varied, including a full range of deposit accounts, advances from the Federal Home Loan Bank (FHLB), and several issues of subordinated notes[37][39][40] - Derivatives, such as forward sale commitments and interest rate lock commitments, are used to manage interest rate and pricing risk associated with mortgage lending activities[45] Supervision and Regulation The company and its bank subsidiary are subject to extensive regulation by multiple federal and state authorities - The company and its bank subsidiary are extensively regulated by the Federal Reserve, FDIC, Georgia Department of Banking and Finance (GDBF), and the CFPB[61][63] - The company participated in the Paycheck Protection Program (PPP) under the CARES Act and offered loan modifications to customers impacted by the COVID-19 pandemic[108][109][110] Consolidated Capital Ratios (as of December 31, 2021) | Ratio | Company Actual | Bank Actual | | :--- | :--- | :--- | | Common Equity Tier 1 (CET1) | 10.46% | 11.50% | | Tier 1 Capital | 10.46% | 11.50% | | Total Capital | 13.78% | 12.45% | | Tier 1 Leverage | 8.63% | 9.50% | Item 1A. Risk Factors The company faces material risks from interest rate sensitivity, real estate loan concentration, cybersecurity threats, and the LIBOR transition - The company's revenues are highly correlated to market interest rates, with net interest income comprising 64.2% of total revenue in 2021[119][120] - A majority of the loan portfolio is secured by real estate, exposing the company to risks from declines in real estate values[130][131] - The company has significant exposure to the LIBOR transition, with approximately $2.06 billion of loans and $304.4 million of debt securities indexed to LIBOR as of December 31, 2021[164] - As a participating lender in the SBA's Paycheck Protection Program (PPP), the company is subject to added credit, compliance, fraud, and litigation risks[137][139][140] Item 1B. Unresolved Staff Comments The company reports no unresolved staff comments from the SEC - None[188] Item 2. Properties The company owns or leases 165 branch locations and 35 mortgage and loan production offices, with its headquarters in Atlanta, Georgia - The company operates 165 branch locations, with 136 owned and 29 leased, and also leases 35 mortgage and loan production offices[189] Item 3. Legal Proceedings Information regarding legal proceedings is incorporated by reference from Note 20 of the Consolidated Financial Statements - Disclosure concerning legal proceedings can be found in Item 8, Note 20, under "Litigation and Regulatory Contingencies"[190] Item 4. Mine Safety Disclosures This item is not applicable to the company - Not applicable[190] PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's common stock trades on Nasdaq (ABCB) and a share repurchase program is active through October 2022 - The company has a share repurchase program authorizing up to $100.0 million of its common stock, effective through October 31, 2022, with $22.1 million repurchased as of year-end 2021[194] 5-Year Cumulative Total Shareholder Return (Assuming $100 Investment on 12/31/2016) | Index | 12/31/2016 | 12/31/2017 | 12/31/2018 | 12/31/2019 | 12/31/2020 | 12/31/2021 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Ameris Bancorp | $100.00 | $111.50 | $73.93 | $100.60 | $92.25 | $121.79 | | NASDAQ Stock Market (US) | $100.00 | $129.64 | $125.96 | $172.18 | $249.51 | $304.85 | | KBW NASDAQ Bank Stocks | $100.00 | $118.59 | $97.58 | $132.84 | $119.14 | $164.80 | Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Net income increased significantly in 2021 due to a provision release, despite a lower net interest margin and reduced noninterest income Key Financial Performance (2021 vs. 2020) | Metric | 2021 | 2020 | | :--- | :--- | :--- | | Net Income | $376.9 million | $262.0 million | | Diluted EPS | $5.40 | $3.77 | | Return on Average Assets (ROA) | 1.73% | 1.36% | | Return on Average Equity (ROE) | 13.33% | 10.35% | | Provision for Credit Losses | ($35.4 million) | $145.4 million | - Organic loan growth was $727.5 million, or 5.0% in 2021; excluding PPP loans, organic growth was $1.43 billion, or 10.5%[200] - Tangible book value per share grew 10.8% to $26.26 at the end of 2021 from $23.69 at the end of 2020[200][203] Results of Operations Performance was driven by a large provision release, while lower rates compressed margins and mortgage banking income normalized - Net interest income (taxable-equivalent) increased 2.6% to $659.9 million in 2021, but the net interest margin decreased by 38 basis points to 3.32%[232] - The company recorded a provision release for credit losses of $35.1 million in 2021, a significant reversal from the $125.5 million provision in 2020[238] - Noninterest income decreased by 18.1% to $365.5 million in 2021, mainly driven by an $88.2 million (23.6%) decline in mortgage banking activity[243][245] - Total noninterest expense decreased by 6.4% to $560.1 million in 2021, primarily due to a $22.5 million reduction in salaries and benefits[254][255] Balance Sheet Comparison The balance sheet reflects loan growth, a reduced allowance for credit losses, and a significant decrease in COVID-19 loan deferrals - The allowance for credit losses on loans decreased to $167.6 million (1.06% of loans) at year-end 2021 from $199.4 million (1.38% of loans) at year-end 2020[240][285] - Loans remaining in COVID-19 payment deferral programs decreased significantly to $41.7 million at December 31, 2021, from $332.8 million at the end of 2020[303][600][601] - The company and bank remained well-capitalized, with all regulatory capital ratios comfortably exceeding minimum requirements[337][747] Loan Portfolio Composition (in thousands) | Loan Category | Dec 31, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Real estate - commercial and farmland | $6,834,917 | $5,300,006 | | Real estate - residential | $3,094,985 | $2,796,057 | | Commercial, financial and agricultural | $1,875,993 | $1,627,477 | | Real estate - construction and development | $1,452,339 | $1,606,710 | | Other | $2,616,925 | $3,229,975 | | Total Loans | $15,874,258 | $14,480,925 | Item 7A. Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate risk, and it is asset-sensitive, expecting higher net interest income in a rising rate environment - The company is asset sensitive in the one-year and two-year time horizons, which would result in net interest income increasing in a rising rate environment[349] Earnings Simulation Model Results (% Change in Projected Net Interest Income) | Change in Rates (bps) | 12 Months | 24 Months | | :--- | :--- | :--- | | +400 | +26.0% | +41.1% | | +200 | +13.1% | +21.0% | | +100 | +6.4% | +10.5% | | -100 | (5.7)% | (10.1)% | Item 8. Financial Statements and Supplementary Data This section contains the company's audited consolidated financial statements and accompanying notes for the fiscal year ended December 31, 2021 - The financial statements for the year ended December 31, 2021 were audited by KPMG LLP, which issued an unqualified opinion[411] - The financial statements for the two years ended December 31, 2020 were audited by Crowe LLP, which issued an unqualified opinion[429][430] Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[355] Item 9A. Controls and Procedures Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2021 - The CEO and CFO concluded that disclosure controls and procedures were effective as of the end of the period covered by the report[356] - There were no material changes in internal control over financial reporting during the fourth quarter of 2021[357] PART III Item 10. Directors, Executive Officers and Corporate Governance Information regarding directors, officers, and corporate governance is incorporated by reference from the 2022 Proxy Statement - Required information is incorporated by reference from the Proxy Statement for the 2022 Annual Meeting of Shareholders[360] Item 11. Executive Compensation Information regarding executive compensation is incorporated by reference from the 2022 Proxy Statement - Required information is incorporated by reference from the Proxy Statement for the 2022 Annual Meeting of Shareholders[362] Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Information regarding security ownership is incorporated by reference from the 2022 Proxy Statement - Required information is incorporated by reference from the Proxy Statement for the 2022 Annual Meeting of Shareholders[363] Equity Compensation Plan Information (as of Dec 31, 2021) | Plan Category | Securities to be issued upon exercise (a) | Weighted-average exercise price (b) | Securities available for future issuance (c) | | :--- | :--- | :--- | :--- | | Equity compensation plans approved by security holders | 238,405 | $28.79 | 2,824,364 | Item 13. Certain Relationships and Related Transactions, and Director Independence Information regarding related party transactions and director independence is incorporated by reference from the 2022 Proxy Statement - Required information is incorporated by reference from the Proxy Statement for the 2022 Annual Meeting of Shareholders[366] Item 14. Principal Accounting Fees and Services Information regarding principal accounting fees and services is incorporated by reference from the 2022 Proxy Statement - Required information is incorporated by reference from the Proxy Statement for the 2022 Annual Meeting of Shareholders[367] PART IV Item 15. Exhibits and Financial Statement Schedules This section lists the financial statements, schedules, and exhibits filed as part of the Annual Report - This section lists all financial statements and exhibits filed with the report, including parent company only financial information located in Note 23[368] Item 16. Form 10-K Summary No Form 10-K summary is provided - None[369]