Ameris Bancorp

Good morning. Welcome to Ameris Bancorp's second quarter 2020 financial results conference call. Our participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then 2. Please note this event is being recorded. I would now like to turn the conference over to Nicole Stokes, Chief Financial Officer. Please go ahead.

Great. Thank you, Kate. And thank you to all who have joined our call today. During the call, we will be referencing the press release and the financial highlights that are available on the investor relations section of our website at amairsbank.com. I'm joined today by Palmer Proctor, our CEO, and John Edwards, our Chief Credit Officer. Palmer will begin with some opening general comments, and then I'll discuss the details of our financial results before we open it up for Q&A. I think I'm supposed to mention here that we're social distancing. Although we are in the same room, we're social distancing for sure. Before we begin, I'll remind you that our comments may include forward-looking statements. These statements are subject to risks and uncertainties. The actual results could vary materially. We list some of the factors that may cause results to differ in our press release and our SEC filings, which are available on our website. We do not assume any obligation to update any forward-looking statements as a result of new information, early developments, or otherwise, except as required by law. Also during the call, we will discuss certain non-GAAP financial measures in reference to the company's performance. You can see our reconciliation of these measures and GAAP financial measures in the appendix to our presentation. and with that, I'll turn it over to Palmer for opening comments.

Thank you, Nicole, and thank you to everyone who's joining our call today. I'm excited to share with you our second quarter results as we successfully navigate in this new environment. Nicole's going to update you on the detailed financial results in a few minutes, but I wanted to hit just a few of the highlights. For the second quarter, we've reported net income of $32.2 million, or 47 cents per diluted share, and that's inclusive of an $88 million provision for loan loss expense. We're pleased with our operating ratios as they moved in a positive direction this quarter. Our net interest margin improved by 13 basis points to 3.83% as we lowered interest-bearing deposit costs by 43 basis points during the quarter. We also saw significant improvement in our adjusted efficiency ratio, which improved to 51.08%. Most of that was due to the efficiencies we garnered in our mortgage division during the quarter. We continue to identify additional cost saves as a way for us to self-fund future technology and innovation costs. We'll discuss some of this and these initiatives later on in the discussion today. On the loan front, we exhibited cautious but solid growth in the second quarter. We extended over $1 billion in PPP loans to about 8,200 customers and originated a record $2.9 billion in single-family mortgages. Excluding PPP loans, organic loan growth was just over $384 million. We also saw significant growth in deposit accounts. Non-interest-bearing deposits now account for over 35% of total deposits. Next, I want to give you an update on business in this new environment. We've adapted to have another 75% of our staff working remotely and our lobbies remain closed except for appointments. We do continue to successfully serve our customers through digital channels and through the drive-through capabilities. In fact, we're still opening more new DDA accounts in the current environment than we did in prior quarters despite our lobbies being closed, and we continue to see an increase in the number of mobile banking customers. We view this as a real opportunity going forward. And while our customers are also learning the new norm in this COVID-19 world, they are persevering. As I previously mentioned, we continue to see loan demand, and to date we have experienced marginal impact on our credit quality ratios. On our last earnings call, we said we had provided payment relief to almost 5,400 customers, totaling $2.2 billion of outstanding loans across all loan types and markets, and that equated to about 17% of total loans. Those were the first of the 90-day modifications. The speed and level of requests have slowed down through July 15th We have provided payment relief of $80 billion with outstanding loans. Thus far, customers requesting a 90-day extension totaled just over $290 million, with a high concentration of that being our hotel borrowers. But what is encouraging to see is that customers reverting back to the pre-COVID terms of their agreements now exceed $1 billion through July 15th. As it pertains to capital, we remain highly focused on capital preservation and growing tangible book. And as for dividends, we are very comfortable with where we are with our dividends today and do not anticipate any reduction at this time, but obviously we continue to monitor this as an option. And finally, as you're aware, our stock buyback program remains suspended. John Edwards, our Chief Credit Officer, is with us today and he's available for questions after our remarks. But I wanted to hit a few highlights in terms of credit. As previously mentioned, we recorded an $88 million revision for loan loss expense in the second quarter, primarily due to the updated economic forecast. As you can see on slide 17 of our investor deck, this brings our allowance coverage, including unfunded commitments, to 1.52% net of the PPP loans. Our annualized net charge-off ratio was 27 basis points of total loans. are non-performing assets as a percentage of total assets decreased slightly to 59 basis points compared to 61 basis points prior quarter. We have no direct exposure as we've stated before to the oil and gas sector and we've included additional details in our hotel and restaurant exposure in the slide deck as well as details on the diversification across loan types within our loan portfolio.