ABCB
#Thank you, <UNK> and good morning everyone and thank you for taking the time to join our first quarter earnings call.
I'm excited about the results that we reported this quarter and even more excited about the momentum we have going into the second quarter and the remainder of the year.
We reported operating earnings of $0.60 per share, which is up 20% from the $0.50 per share we reported in the same quarter last year.
Total operating earnings for the quarter were up 32% to $21.6 million, which reflect the additional shares we've issued in acquisitions as well as in the recent capital raise.
Our results for this quarter reflect the additional earnings from the Jacksonville Bancorp acquisition that was not reflected in the first quarter results for 2016.
Additionally, earnings contribution from our joint venture with US Premium Finance was part of our growth story in the first quarter.
Those collectively represent about half of our growth.
The rest of the growth in earnings is from organic growth in the balance sheet coupled with really impressive management of operating expenses.
Our organic growth with lower efficiency ratio is going to continue to be an impressive earnings driver that should hold our operating ratios in the favorable place they are today.
Speaking of operating ratios, operating return on assets for the first quarter came in at 1.27% compared to [1.18%] in the same quarter of last year.
Our return on tangible capital was up slightly at 15.8% compared to 15.4% in the first quarter of 2016.
Our margin excluding the effect of accretion was up about 6 basis points against the linked quarter which resulted primarily from the acquisition of the loan portfolio of US Premium Finance.
I guess the year-ago period were down about 1 basis point, which I consider a success given that we've grown earning assets by [over $1 billion or 19%] over the last year.
Yields on earning assets improved about 4 basis points to 4.38% over the linked quarter, which mirrored the increase in our cost of funds which moved higher to 0.42%.
Our biggest win on the operating front was in our operating efficiency ratio, which fell to 60% compared to 65% in the first quarter last year.
We've been able to manage this level in what is our slowest and most challenging quarter of the year.
It gives me more confidence that we can hold efficiency at this level and that the EPS growth that we expect from our growth will materialize.
On the growth side, we had [just over $100 million of growth in loans or about 8% annualized].
This is somewhat skewed because of a sizable drop in outstanding loans in our warehouse division, which saw really outsized balances at the end of 2016.
We finished the quarter with pretty solid growth in commercial bank and in US Premium Finance.
Pipelines across the Company in the bank and our lines of business are very strong and we're confident in our previous growth targets of something approaching 20% for the entire year.
We finished the quarter with stronger capital ratios than we've seen it sometime thanks to the successful capital raise earlier this year.
Tangible book value increased to [$16.52 per share, up 26% from this time last year while tangible common equity to tangible assets increased to 8.85%].
Even with our return on assets in the 1.25% to 1.35% range, I expect that our balance sheet growth this year will bring the capital ratios down a bit, but we're in a great position to capitalize on the organic and M&A opportunities that are ahead of us with our stronger capital position.
I'll give you a quick update on BSA/AML.
We continue to make excellent progress there and we remain on track to have every item of the consent order completed by June 30 as we've talked about previously.
Currently, we only have the look-back process to complete and that's underway.
We're working feverishly with the best consultants in the country to have that completed on schedule and we certainly expect to do that.
While we obviously don't know what the findings will be, we're confident that there will be nothing of substance that will delay the project completion on our timeline.
On the M&A front, there continues to be a number of discussions around the M&A opportunities.
So we're pushing hard to get back to that arena.
Although we are excited about our organic growth for the foreseeable future, we're anxious to layer on some of the M&A opportunities that we see to further augment our strong profitability.
<UNK>, I think I'll stop there and ask you to take us through some more of the details on our results.
<UNK>, the last thing I'd want to do is be critical, but we had a slight delay getting FDIC to approve, to act on to give us their non-objection.
So that took too much, but our timeline is still intact.
We are, on other parts of the project, we're 30 days ahead.
So all-in-all, the look-back is the final piece, but you don't know what you're going to find on the look-back.
We certainly don't expect anything, but that's the only unknown at this point and we've heard comments from others that other banks are not getting out from under their order as quickly as we will have finished ours, but I would tell you, we've been working on it for almost a year, since August, we had our action plan in place in August of last year.
So we've been working feverishly on it and we still expect to be totally finished with our part by June 30.
I can't speak to what the FDIC timing will be, but they've indicated that they will be in on the visitation in June.
So my expectation is, it won't be longer drawn out, but that's it in a nutshell.
We'd be open to do both honestly.
I mean we've had significant conversations with conventional banks like we've done in the past and I think that's a real opportunity.
We work in, as <UNK> mentioned on as we approach the $10 billion and go beyond that, what gaps do we have, what resources do we need, we've been working on that and investing in that and we will continue to do that.
As well, there is opportunity to leverage our premium finance business and other equipment finance business.
So we'll look at those opportunities as well.
I would just reiterate what we said, our number one focus is BSA, number two is organic and making sure we can execute the way we have this quarter, last quarter, last several quarters, but we absolutely intend to augment that with M&A.
