Ameris Bancorp Announces Financial Results For First Quarter 2021

ATLANTA, April 22, 2021 /PRNewswire/ -- Ameris Bancorp (Nasdaq: ABCB) (the "Company") today reported net income of $125.0 million, or $1.79 per diluted share, for the quarter ended March 31, 2021, compared with $19.3 million, or $0.28 per diluted share, for the quarter ended March 31, 2020.  The increase in net income is primarily attributable to a reduction in provision for credit losses of $69.6 million and an increase in mortgage banking activity for the quarter of $63.2 million.  The Company reported adjusted net income of $115.7 million, or $1.66 per diluted share, for the quarter ended March 31, 2021, compared with $39.2 million, or $0.56 per diluted share, for the same period in 2020.  Adjusted net income excludes after-tax merger and conversion charges, servicing right valuation adjustments, certain legal expenses, gain on bank owned life insurance ("BOLI") proceeds, (gain)/loss on sale of bank premises and expenses related to the COVID-19 pandemic.

Commenting on the Company's results, Palmer Proctor, the Company's Chief Executive Officer, said, "We are pleased with our first quarter results, where we saw solid loan growth, increases in core deposits, stable credit, robust fees and continued momentum in our banking division efficiency initiatives.  An improving economy, which resulted in a reversal of provision expense and a recovery of previous MSR (mortgage servicing right) impairment, along with the tremendous core earnings power of Ameris, resulted in tangible book value growth of 6.7% this quarter.  Our teammates have continued to remain focused on our key initiatives of superior and innovative customer service, which delivers top-in-class financial results.  We are excited about the opportunities we see in our markets and the strength that we have going into the remainder of 2021."

Significant items from the Company's results for the first quarter of 2021 include the following:

• Net income of $125.0 million, or $1.79 per diluted share, compared with $94.3 million, or $1.36 per diluted share, in the fourth quarter of 2020
• Growth in tangible book value of 6.7%, or $1.58 per share, to $25.27 at March 31, 2021, compared with $23.69 at December 31, 2020
• Growth in total revenue of $7.4 million, or 2.7%, compared with the fourth quarter of 2020
• Adjusted return on average assets of 2.26%, compared with 2.04% in the fourth quarter of 2020
• Mortgage production remained strong and retail mortgage pipeline ended $326.7 million higher than at December 31, 2020
• Adjusted efficiency ratio of 54.62%, compared with 52.67% in the fourth quarter of 2020 and 59.87% in the first quarter of 2020
• Net interest margin of 3.57%, compared with 3.64% in the fourth quarter of 2020
• Continued growth in noninterest bearing deposits representing 38.07% of total deposits, up from 36.27% at December 31, 2020 and 30.53% a year ago
• Annualized net charge-offs of 0.12% of average total loans

Following is a summary of the adjustments between reported net income and adjusted net income:

Net Interest Income and Net Interest Margin
Net interest income on a tax-equivalent basis for the first quarter of 2021 totaled $166.2 million, compared with $164.8 million for the fourth quarter of 2020 and $149.0 million for the first quarter of 2020.  The Company's net interest margin was 3.57% for the first quarter of 2021, down from 3.64% reported for the fourth quarter of 2020 and 3.70% reported for the first quarter of 2020.  The decrease in net interest margin in the current quarter is attributable to excess liquidity held on the balance sheet, as the average balance in interest-bearing deposits in banks increased materially during the quarter.  The yield on earning assets declined 13 basis points due to this excess liquidity, and the decline was partially offset by improvement in the cost of interest-bearing liabilities of 9 basis points during the quarter. Accretion income for the first quarter of 2021 increased to $6.1 million, compared with $4.7 million for the fourth quarter of 2020, and decreased from $6.6 million for the first quarter of 2020.  The increase in accretion income for the first quarter is primarily attributable to increased payoffs of acquired loans during the first quarter of 2021. 

Yields on loans increased to 4.53% during the first quarter of 2021, compared with 4.41% for the fourth quarter of 2020, and decreased from 5.02% reported for the first quarter of 2020.  Contributing to interest income on loans for the first quarter of 2021 was $9.2 million related to accelerated fee income on Paycheck Protection Program ("PPP") loan forgiveness, compared with $6.3 million in the fourth quarter of 2020.  Loan production in the banking division during the first quarter of 2021 was $600.6 million, with weighted average yields of 3.80%, compared with $785.0 million and 3.86%, respectively, in the fourth quarter of 2020, but was below pre-pandemic levels seen in the first quarter last year of $918.4 million and 4.55%, respectively.  Loan production in the lines of business (including retail mortgage, warehouse lending, SBA and premium finance) amounted to an additional $7.5 billion during the first quarter of 2021, with weighted average yields of 3.15%, compared with $7.7 billion and 3.25%, respectively, during the fourth quarter of 2020 and $4.0 billion and 4.15%, respectively, during the first quarter of 2020.  Loan production yields in the lines of business were negatively impacted 11 basis points during the first quarter of 2021 by originations of PPP loans in our SBA division. 

Interest expense during the first quarter of 2021 decreased to $13.0 million, compared with $15.3 million in the fourth quarter of 2020 and $34.8 million in the first quarter of 2020.  The Company's total cost of funds moved six basis points lower to 0.30% in the first quarter of 2021 as compared with the fourth quarter of 2020.  Deposit costs also decreased six basis points during the first quarter of 2021 to 0.16%, compared with 0.22% in the fourth quarter of 2020.  Costs of interest-bearing deposits decreased during the quarter from 0.34% in the fourth quarter of 2020 to 0.25% in the first quarter of 2021.

Noninterest Income
Noninterest income increased $5.8 million, or 5.2%, in the first quarter of 2021 to $118.0 million, compared with $112.1 million for the fourth quarter of 2020, primarily as a result of increased mortgage banking activity and other noninterest income, as further discussed below.

Mortgage banking activity increased $3.3 million, or 3.5%, to $98.5 million in the first quarter of 2021, compared with $95.2 million for the fourth quarter of 2020.  This increase was the result of a recovery of previously recorded servicing right impairment, partially offset by a decrease in gain on sale of loans. Gain on sale spreads decreased to 3.95% in the first quarter of 2021 from 4.34% for the fourth quarter of 2020. Total production in the retail mortgage division decreased to $2.64 billion in the first quarter of 2021, compared with $2.81 billion for the fourth quarter of 2020. Mortgage banking activity was positively impacted during the first quarter of 2021 by a $9.7 million servicing right recovery, compared with an impairment of $9.1 million for the fourth quarter of 2020. The retail mortgage open pipeline was $2.33 billion at the end of the first quarter of 2021, compared with $2.00 billion at December 31, 2020.

Service charge revenue decreased $636,000, or 5.5%, to $10.8 million in the first quarter of 2021, compared with $11.5 million for the fourth quarter of 2020, resulting from a decrease in volume. Other noninterest income increased $3.1 million, or 69.3%, in the first quarter of 2021 to $7.7 million, compared with $4.5 million for the fourth quarter of 2020, primarily as a result of a SBA servicing right recovery of $906,000 in the first quarter of 2021, compared with an impairment of $355,000 for the fourth quarter of 2020, a gain on BOLI proceeds of $603,000 and an increase in gain on sale of loans of $765,000.

Noninterest Expense
Noninterest expense decreased $2.3 million, or 1.5%, to $148.8 million during the first quarter of 2021, compared with $151.1 million for the fourth quarter of 2020.  During the first quarter of 2021, the Company recorded a net gain of $264,000 related to sale of premises.  During the fourth quarter of 2020, the Company recorded $258,000 in charges to earnings related to certain legal expenses and natural disaster and pandemic charges, partially offset by a gain on sale of premises.  Excluding these charges, adjusted expenses decreased approximately $1.8 million, or 1.2%, to $149.1 million in the first quarter of 2021, from $150.9 million in the fourth quarter of 2020.  The majority of this decrease is attributable to a $765,000 expense related to the final termination of the remaining loss-share agreements with the FDIC and a $1.0 million donation to the Ameris Bank Foundation recorded in the fourth quarter of 2020.  The adjusted efficiency ratio was 54.62% in the first quarter of 2021, compared with 52.67% in the fourth quarter of 2020.

Income Tax Expense
The Company's effective tax rate for the first quarter of 2021 was 23.2%, compared with 25.2% in the fourth quarter of 2020. The decreased rate for the first quarter of 2021 was primarily a result of a large return to provision adjustment made when the Company filed its 2019 income tax returns in the fourth quarter of 2020.

Balance Sheet Trends
Total assets at March 31, 2021 were $21.43 billion, compared with $20.44 billion at December 31, 2020.  Total loans, including loans held for sale, were $16.11 billion at March 31, 2021, compared with $15.65 billion at December 31, 2020.  Total loans held for investment were $14.60 billion at March 31, 2021, compared with $14.48 billion at December 31, 2020, an increase of $118.9 million, or 0.8%.  Loan production in the banking division during the first quarter of 2021 was down 23% from the fourth quarter of 2020 and 35% from the first quarter of 2020. 

At March 31, 2021, total deposits amounted to $17.88 billion, or 97.0% of total funding, compared with $16.96 billion and 96.8%, respectively, at December 31, 2020.  At March 31, 2021, noninterest-bearing deposit accounts were $6.80 billion, or 38.1% of total deposits, compared with $6.15 billion, or 36.3% of total deposits, at December 31, 2020.  Non-rate sensitive deposits (including noninterest-bearing, NOW and savings) totaled $10.99 billion at March 31, 2021, compared with $10.23 billion at December 31, 2020.  These funds represented 61.5% of the Company's total deposits at March 31, 2021, compared with 60.3% at the end of 2020.

Shareholders' equity at March 31, 2021 totaled $2.76 billion, an increase of $110.5 million, or 4.2%, from December 31, 2020.  The increase in shareholders' equity was primarily the result of earnings of $125.0 million during the first quarter of 2021, partially offset by dividends declared.  Tangible book value per share was $25.27 at March 31, 2021, compared with $23.69 at December 31, 2020.  Tangible common equity as a percentage of tangible assets was 8.62% at March 31, 2021, compared with 8.47% at the end of 2020.

Credit Quality
Credit quality remains strong in the Company.  During the first quarter of 2021, the Company recorded a provision for credit losses reversal of $28.6 million, compared with a provision reversal of $1.5 million in the fourth quarter of 2020.  This decrease in provision was primarily attributable to improvements in forecast economic conditions, particularly levels of unemployment, home prices and commercial real estate prices, compared with forecast conditions during the fourth quarter of 2020.  The positive impact of the improved economic forecast was partially offset, however, by growth in adverse qualitative factors in our commercial real estate and consumer installment portfolios.  The Company has been prudently working with borrowers to support their credit needs during the challenging economic conditions and monitoring the level of modifications on an ongoing basis, such that loans remaining on deferral at the end of the first quarter of 2021 equaled approximately 1.9% of total loans, down from approximately 2.9% and 19.0% of total loans at the end of the fourth and second quarters of 2020, respectively.  Nonperforming assets as a percentage of total assets decreased by eight basis points to 0.40% during the quarter.  The net charge-off ratio was 12 basis points for the first quarter of 2021, compared with 70 basis points in the fourth quarter of 2020 and 14 basis points in the first quarter of 2020.

Conference Call
The Company will host a teleconference at 9:00 a.m. Eastern time on Friday, April 23, 2021, to discuss the Company's results and answer appropriate questions. The conference call can be accessed by dialing 1-877-504-1190 (or 1-855-669-9657 for participants in Canada and 1-412-902-6630 for other international participants).  The conference ID name is Ameris Bancorp ABCB.  A replay of the call will be available one hour after the end of the conference call until May 7, 2021.  To listen to the replay, dial 1-877-344-7529 (or 1-855-669-9658 for participants in Canada and 1-412-317-0088 for other international participants).  The conference replay access code is 10153876.  The conference call replay and the financial information discussed will also be available on the Investor Relations page of the Ameris Bank website at ir.amerisbank.com.

About Ameris Bancorp
Ameris Bancorp is a bank holding company headquartered in Atlanta, Georgia.  The Company's banking subsidiary, Ameris Bank, had 165 locations in Georgia, Alabama, Florida, North Carolina and South Carolina at the end of the most recent quarter.

This news release contains certain performance measures determined by methods other than in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The Company's management uses these non-GAAP measures in its analysis of the Company's performance. These measures are useful when evaluating the underlying performance and efficiency of the Company's operations and balance sheet. The Company's management believes that these non-GAAP measures provide a greater understanding of ongoing operations, enhance comparability of results with prior periods and demonstrate the effects of significant gains and charges in the current period. The Company's management believes that investors may use these non-GAAP financial measures to evaluate the Company's financial performance without the impact of unusual items that may obscure trends in the Company's underlying performance. These disclosures should not be viewed as a substitute for financial measures determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.

This news release contains forward-looking statements, as defined by federal securities laws, including, among other forward-looking statements, certain plans, expectations and goals.  Words such as "may," "believe," "expect," "anticipate," "intend," "will," "should," "plan," "estimate," "predict," "continue" and "potential" or the negative of these terms or other comparable terminology, as well as similar expressions, are meant to identify forward-looking statements.  The forward-looking statements in this news release are based on current expectations and are provided to assist in the understanding of potential future performance.  Such forward-looking statements involve numerous assumptions, risks and uncertainties that may cause actual results to differ materially from those expressed or implied in any such statements, including, without limitation, the following:  general competitive, economic, unemployment, political and market conditions and fluctuations, including real estate market conditions, and the effects of such conditions and fluctuations on the creditworthiness of borrowers; collateral values, asset recovery values and the value of investment securities; movements in interest rates and their impacts on net interest margin; expectations on credit quality and performance; legislative and regulatory changes; changes in U.S. government monetary and fiscal policy; the impact of the COVID-19 pandemic on the general economy, our customers and the allowance for loan losses; the benefits that may be realized by our customers from government assistance programs and regulatory actions related to the COVID-19 pandemic; the potential impact of the proposed phase-out of the London Interbank Offered Rate ("LIBOR") or other changes involving LIBOR; competitive pressures on product pricing and services; the cost savings and any revenue synergies expected to result from acquisition transactions, which may not be fully realized within the expected timeframes if at all; the success and timing of other business strategies; our outlook and long-term goals for future growth; and natural disasters, geopolitical events, acts of war or terrorism or other hostilities, public health crises and other catastrophic events beyond our control. For a discussion of some of the other risks and other factors that may cause such forward-looking statements to differ materially from actual results, please refer to the Company's filings with the Securities and Exchange Commission, including the Company's Annual Report on Form 10-K for the year ended December 31, 2020 and its subsequently filed periodic reports and other filings.  Forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update or revise forward-looking statements.