Ameris Bancorp(US:ABCB)2021-07-23 15:42Financial Data and Key Metrics Changes - The company reported net income of $88 million, or $0.25 per diluted share on an adjusted basis, reflecting a return on average assets of 1.63% and a return on tangible equity of 19.46% [5][13] - The adjusted efficiency ratio improved from 54.62% in the first quarter to 54.07% in the second quarter [5][20] - Tangible book value increased by $1.18 per share or 4.7% during the second quarter, with a year-to-date increase of $2.76 or over 11% [8][14] Business Line Data and Key Metrics Changes - Annualized net loan growth was approximately 5% for the quarter, with significant growth of $100 million in Commercial and Industrial (C&I) loans [6][22] - Non-interest income declined due to decreases in mortgage banking, with production in the Retail Mortgage Group down 9% to $2.4 billion [18][19] - Total non-interest expense decreased by $13 million from $148.8 million in the previous quarter to $135.8 million [20] Market Data and Key Metrics Changes - Non-performing assets as a percentage of total assets improved to 32 basis points, down from 40 basis points last quarter [9] - The company experienced continued deposit growth, with non-interest-bearing deposits approaching 40% of total deposits [7][23] Company Strategy and Development Direction - The company is focused on growing tangible book value and capital position, with a TCE ratio of 8.83%, close to the 9% goal [8][14] - Management emphasized the importance of core funding growth during the current low-rate environment, anticipating that this will distinguish leaders in the industry as rates rise [7] - The company remains opportunistic regarding M&A, focusing on cultural fit and accretive transactions while also pursuing organic growth opportunities [33][34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the economic recovery, noting that businesses are reopening and traffic patterns are returning to normal [10] - The company anticipates mid to upper-single-digit loan growth for the year, despite challenges from PPP loan runoff [24] - Management highlighted the importance of technology and efficiency improvements, particularly in the mortgage sector, to maintain competitive advantage [66][67] Other Important Information - The company published its first Corporate Social Responsibility Report in May, aligning with sustainability standards [11] - The company has approximately $2.5 billion of excess liquidity on its balance sheet, which negatively impacted the TCE ratio by 120 basis points [14][23] Q&A Session Summary Question: Expense management in light of declining mortgage revenue - Management indicated that they expect to continue reducing expenses in line with declining mortgage production, particularly in variable costs such as commissions and IT [26][28] Question: Capital base and share buyback considerations - Management acknowledged the attractive stock price and indicated that share buybacks are a consideration if the stock continues to pull back [30][31] Question: M&A interest and market dynamics - Management noted that they remain disciplined in M&A, focusing on cultural fit and accretive opportunities, while also capitalizing on organic growth [32][34] Question: Core margin outlook - Management guided for mid single-digit compression in core margin for the next quarter, with expectations of improvement as excess liquidity is deployed [35][36] Question: Mortgage production trends and inventory issues - Management expressed optimism about stable mortgage production despite inventory shortages, driven by strong demand [37][38] Question: Core expenses and hiring dynamics - Management explained that expense reductions have been achieved through strategic hiring and reallocating resources, despite ongoing recruitment efforts [41][43]