Ameris Bancorp

Good day and welcome to the Ameris Bancorp second quarter conference call. All 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 a touchtone phone. To withdraw your question, please press star and then two. 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, Dave. 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 AmerisBank.com. I'm joined today by Palmer Proctor, our CEO, and Doug Strange, our Chief Credit Officer. Palmer will begin with some opening comments and then I will discuss the details of our financial results before we open up for Q&A. 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 might cause results to differ in our press release and in 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.

Thank you, Nicole. Good morning, everyone. I appreciate you taking the time to join our second quarter earnings call today. Core fundamentals at Ameris remain strong in the second quarter, highlighted by several key metrics. First, we achieved core profitability levels well ahead of the industry with adjusted ROA of 153, adjusted PPNR ROA of 224, and adjusted return on TCE of over 14%, even with our high capital levels. Second, we experienced profitable growth this quarter with average earning assets increasing 8.5% annualized and loans over 6% annualized. For the first six months of the year, we've organically grown the balance sheet by almost a billion dollars while improving our margin. Third, our balance sheet remains strong, funded with almost 50% checking accounts and over 11% tangible common equity. Finally, our continued expense focus kept our adjusted efficiency ratio at 50%. Year over year, we grew adjusted revenue by 6% while keeping adjusted expense growth at just 3%, which highlights our ability to generate organic, profitable growth and positive operating leverage. In addition to these positives, and our loan production was 2.4 billion in the second quarter, which represents a 24% increase over the second quarter last year. Our loan pipeline remained robust at 2.7 billion. On the deposit side, our average deposits grew 4.4% annualized for the quarter. While we saw any balances down, it's related to some quarter-end customer movement and not related to any loss of relationships. Our focus continues to be on core granular deposits and relationship banking with our non-interest-bearing deposits remaining strong at 30% of total deposits. Reported expenses were impacted by an $82.5 million litigation accrual related to a jury verdict in an employment case in California. Despite our plan to appeal, we accrued the full amount of the verdict plus related costs this quarter in accordance with appropriate accounting guidance. With this being ongoing litigation, we are unable to comment any further on that. Despite this accrual, we had positive earnings and we grew tangible book value per share in the quarter due to our strong core profitability. Moving on, we continued returning capital in the quarter by repurchasing $19 million of our common stock, which brings year-to-date buybacks to approximately $94 million, or roughly 1.7% of our shares outstanding. Our capital levels remain robust, with CET1 at almost 13% and our TCE ratio above 11%. These capital levels position us well for future growth in our attractive southeastern markets.