Ameris Bancorp - Q2 2023
July 28, 2023
Transcript
Operator (participant)
Thank you for standing by. My name is Ellie, and I will be your conference operator for today. At this time, I would like to welcome you to the Ameris Bancorp conference call. All lines have been placed on mute to prevent background noises. For now, I would like to hand you over to our first speaker for today, Nicole Stokes. You may now begin the conference.
Nicole Stokes (CFO)
Great. Thank you, Ellie, 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 Jon Edwards, our Chief Credit Officer. Palmer will begin with some opening comments, 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. With that, I'll turn it over to Palmer.
Palmer Proctor (CEO)
Thank you, Nicole. Good morning, everyone. I appreciate you taking the time to join our call today. I'm very pleased with the Q2 financial results that we reported yesterday. I want to focus on three main things this morning. First, our core profitability, second, our improving credit metrics, including a strong allowance, and third, the strength of our diversified balance sheet. These three measures really reflect the strong quarter we had and summarize the value in our company. It's what creates the positive outlook we have for the future. For the Q2, we reported net income of $62.6 million or $0.91 per diluted share. We recorded a $45.5 million provision for credit losses, where we once again prudently set aside reserves due to our economic model, specifically for forecasted future decline in commercial real estate pricing.
Even with this elevated provision expense, our ROA was almost 1%, and our PPNR ROA continued to be above 2%. This is the Q2 in a row where we had a large provision expense driven by our forecast model and not related to credit deterioration in our loan portfolio. Our credit metrics improved this quarter, which is evidenced by our lower NPA ratio of just 30 basis points, excluding the Ginnie Maes. After the provision this quarter, our allowance for credit losses, excluding unfunded commitments, represents a healthy 133 coverage ratio and 355% of net NPAs. Our charge-offs are 28 basis points this quarter compared to 28 basis points last quarter, but we had two extraordinary items, which we've got in our slide deck on page 21.
If you exclude these two items, our charge-offs actually declined for the quarter. On the balance sheet, we said last quarter we were going to use deposit growth as a governor for our loan growth, and that's exactly what we did. Deposits grew $546 million, and loans grew $474 million. Approximately 40% or $189 million of that growth was in the mortgage warehouse lines, which we are expected to decline back down towards the end of the year. We continue to have a strong capital position, in addition to having minimal impact to AOCI from our bond portfolio. Our TCE ratio improved to 8.80% at the end of the quarter. Before I turn over to Nicole for more details on the financials, I'd like to summarize several reasons why we're confident in our future and ability to return shareholder value.
It really begins with our continued focus on growing tangible book value, which is evidenced by our 8% annualized growth rate in tangible book value this quarter. Our core profitability with an above-peer PPNR ROA of over 2%, a strong balance sheet with diversified earning assets in the strongest markets in the Southeast, a healthy allowance for credit losses to absorb potential economic challenges. Of course, we've got a solid and granular core deposit base with low levels of uninsured, uncollateralized funding, and then, more importantly, a proven culture of expense control, which is evidenced by our 53% efficiency ratio, even in the current margin environment. Last but not least, is our solid capital and liquidity position. With that, I'll turn it over to Nicole to discuss our financial results in more detail.
Nicole Stokes (CFO)
Great. Thank you, Palmer. You know, as you mentioned, the Q2, we're reporting net income of $62.6 million or $0.91 per diluted share. Our return on assets was 98 basis points, and our return on tangible common equity was 11.53%. These were both after the $45.5 million provision expense. As Palmer mentioned, on a PPNR basis, we're still above 2% ROA. We ended the quarter with tangible book value of $31.42 a share. That's an increase of $0.63 or 8.2% annualized. Our tangible common equity ratio increased to 8.80% at the end of the quarter. That's compared to 8.55% at the end of last quarter. We continue to be well-capitalized, and we feel very comfortable with our capital and our dividend levels.
We do have a share repurchase program outstanding until October 31st of this year. We repurchased about $8 million during the Q2 at an average price of $30.18. That leaves about $86.5 million left on the program. We don't necessarily anticipate aggressively purchasing in the next few months. We also redeemed about $9.5 million of our subordinated debt at a discount this quarter after receiving regulatory approval to do so. On the revenue side of things, our interest income for the quarter increased $26.2 million over last quarter and $119.4 million from the Q2 of last year. In comparison, our interest expense increased $28.3 million compared to last quarter and $101.2 million compared to the Q2 of last year.
You know, due to the rising deposit costs, our net interest margin declined 16 basis points from 376 last quarter to a still strong 360 this quarter. It actually came in on the higher side of our guidance. Our yield on earning assets increased 27 basis points, while our cost of interest-bearing liabilities increased 58 basis points. Kind of a contributing factor to that 16 basis point margin compression or 19 basis points of the negative deposit mix, that's non-interest-bearing, transitioning to interest-bearing. We had 7 basis points of beta catch-up on the deposit side, and then all of that was offset by 10 basis points of expansion due to the higher loan yields and average balances.
Total noninterest income increased by $11.3 million, and total noninterest expense increased this quarter by $9 million, and that's really explained in 3 categories. First, we had a decline in our deferred FAS 91 costs of about $2.5 million. Second, we had about $2.2 million increase in variable compensation related to the mortgage division, which was more than offset by their increased revenues. Then finally, we had an increase of $3.1 million in fraud, forgery, and litigation resolution expenses. You know, we really continue to do a good job maintaining other controllable expenses. Our adjusted efficiency ratio was 53.41% this quarter. Even with the margin compression, we were within our 52% to 55% target range.
On the balance sheet side, assets declined as expected to $25.8 million from $26.1 billion last quarter. Total loans increased $473.9 million, or 9.5% annualized. We reduced excess liquidity by about $700 million by paying off $875 million of FHLB advances early this quarter. Our total deposits increased by $545.7 million during the quarter, and that's core deposits increasing about $187.9 million, and brokered CDs increasing $357.8 million. With that, I will wrap it up by reiterating how we remain disciplined and focused on operating performance. We're optimistic about the remainder of 2023. I certainly appreciate everyone's time today, and I'm going to turn the call back over to Ellie for questions from the group. Thank you, Ellie.
Operator (participant)
Thank you very much, Nicole. If you want to ask any questions, please press star and 1 on your telephone keypad. We have our first question from Eric Spector, from Raymond James. Your line is now open.
Eric Spector (Equity Research Associate)
Hey, good morning, everybody. congrats-
Nicole Stokes (CFO)
Good morning.
Eric Spector (Equity Research Associate)
On a great quarter. I'm just dialing in for, for David Feaster here. Just wanted to get some more color on, the funding side and some of the trends throughout the quarter, and the timing of the non-interest-bearing outflows earlier in the quarter, and whether they started to stabilize in May or June, and how they're trending early, early here in July.
Nicole Stokes (CFO)
Yep. You're exactly right. We did see the more aggressive movement early on in the quarter, because remember, kind of all the Silicon and Signature and all of that noise that came in in March, we certainly kind of saw that settle down. What we're starting to see is that not the big, the big movements. I would say now we're more in the, in the aspect of some of our larger customers, kind of refining the balances that they need in their operating account and maybe moving just a little bit of that excess. We've certainly seen that, that slow, but that's really the, you know, the 90-day question here is what is where, where does non-interest bearing stabilize? You know, we're still 33% of our total deposits are non-interest bearing, which is very robust.
We feel like if we can continue to keep that in that 30 to 33 range, that that would be, that would be a win.
Eric Spector (Equity Research Associate)
Got it. I appreciate the color. Just wanted to get your thoughts on, on loan growth and where you're still seeing risk-adjusted returns and how new loan yields are trending. Do you expect to continue to see loan growth throughout the year and into next year? Just curious if you could provide any color on, on that end.
Palmer Proctor (CEO)
Yeah, good question. I think what you'll see is a lot of our growth is, is, is reflected in the slide deck, came from some of the increased lending we had in our mortgage warehouse. That's-- that reflects more the seasonality in the business, which we kind of touched on last quarter, that the mortgage volume has a tendency to kind of revert back to more historical times where we have more seasonality.Q2 and Q3 are generally very strong for that business. In the Q4, I, I would expect that to moderate. That was really-- if you back that out of our, our run rate there in terms of production, it puts us right back in that kind of mid-single digit growth rate, which is where we'll probably end up around the end of the year.
I don't expect to see any, any increased growth above and beyond that. In terms of the yields on the portfolios, yes, I think, which is similar to what you're probably hearing from a lot of other peer banks, we're getting a lot better yields on the portfolio across the board. You name the vertical, and we're all getting better yields and getting better deposits. I think that discipline is, is in place and has been, but that's certainly a relief to us, just given all the deposit pressures that are out in the market.
Eric Spector (Equity Research Associate)
Got it. Got it. Thanks. I guess, just going off of funding costs and loan growth, obviously, margin's not an output, not an input, but just given rapidly rising funding costs, just curious how you think about NII and NIM trajectory here going forward. I guess assuming no more rate hikes, I don't know what you guys have in your assumptions, but just curious how you think about the NIM trajectory from here?
Nicole Stokes (CFO)
Yep. We do not have any more rate-- we don't have any rate assumptions, built into our guidance, this is based on flat rate. We have programmatically, gotten our balance sheet to be about as close to neutral as what we can get. We are of about 1% ±, in both the ±100, 100 fields. Very, very close to neutral. I would say that the, the real question of driver of margin is exactly your first one, is that non-interest-bearing mix. For us, about every $100 million that goes from non-interest-bearing, and you have to assume it goes somewhere.
Whether that goes in, you know, like a, a higher rate CD or an FHLB advance, or even higher money market, assuming that it goes into the, the higher of that, kind of a higher CD, every $100 million of movement there is about 2 basis points on the margin. I certainly do not think, you know, I think we're very pleased with the 3.60 margin, but I don't, I'm not ready to say that we've troughed, even though we're very close to neutral. I just think that that movement from non-interest-bearing to interest-bearing, as well as competitor pressure and what some of our competitors are doing, can still cause some, some pressure on the deposit side.
I feel like anything that we're going to get, that we're going to gain on the, on the loan repricing side, we will probably be giving up on the deposit side. I, again, don't, don't think that we've hit the bottom yet, even though the model may show it. I think the practicality of what's going on in the market can cause a little bit more compression over the next few quarters.
Eric Spector (Equity Research Associate)
Got it. I, I appreciate the color. Just one last question, and then I'll step back. just on expenses, how do you think about a good core expense run rate and how you've jumped these costs at this point, obviously, with NII pressures, versus continued investment in the franchise? Thanks for, thanks for taking the questions.
Nicole Stokes (CFO)
Sure. There are, there are definitely some things that are on the move. What where we've seen kind of wage inflation stabilize over the last, you know, nine months. What we are anticipating, and it's probably more of a 2024 expense, is some of the benefit side, just with healthcare costs. You know, we anticipate some of the, the benefit costs going up for next year. We're already in that, that modeling. While we do a really good job of controlling expenses, I do see kind of a, you know, I think we've guided really no different than we've guided before, kind of that 3% to 5% increase in expenses next year.
That, again, we do a good job controlling what we can, but between the increased FDIC insurance costs and then also, kind of health insurance and some of those benefit costs, we're, we're still in that kind of 3% to 5%. Again, that's excluding kind of the variable cost of mortgage. If you kind of take out the mortgage and look at everything else, that's where I would guide that 3% to 5% increase in noninterest expense.
Eric Spector (Equity Research Associate)
Got it. Thank you. Congrats again on a good quarter.
Nicole Stokes (CFO)
Great. Thank you.
Operator (participant)
We have our next question coming from Brady Gailey from KBW. Your line is now open.
Brady Gailey (Managing Director)
Hey, thanks. Good morning, guys.
Palmer Proctor (CEO)
Good morning, Brady.
Brady Gailey (Managing Director)
I heard the expense guidance for next year, but I was just wondering, when you look at expenses in the Q2, they, they were a little heavy. I know you call out a couple of one-timers, like I, I think fraud was up. When you look at the back half of this year, how, how do you think about expenses? Like, could expenses take a step down in dollars in the Q3 relative to 2Q, just because 2Q had a couple of one-timers?
Nicole Stokes (CFO)
Yes. I'm glad that is exactly the messaging, is that we did have these, you know, 3 one-timers or 2. I don't know that the deferred FAS 91 fee, I think that will continue. As far as, you know, the mortgage was variable, so when mortgage production comes back down kind of in the Q4. I think Q3 would be similar to Q2, then stepping down in the Q4. The fraud, forgery, and again, the litigation resolution, that would be a nonrecurring or not expected to recur.
Brady Gailey (Managing Director)
Okay. All right. Then I, I know you guys have guided to an efficiency ratio of 52% to 55%. But, you know, as, as the margin has been coming down, like even the last 3 quarters, the efficiency ratio has gone from 50 to 52, now 54. Like, it feels like just given the revenue headwinds, I mean, for you guys and for the industry, but it feels like that efficiency ratio could potentially slip above that range in the near term. Do you think that's possible, or is there stuff you can do, like cost cutting on the expense side to keep it, you know, at 55 or below?
Nicole Stokes (CFO)
Yep, our target is still that 55%. While it did creep up a little bit more, and I think even when you go back to last year when we gave the guidance and started at, you know, 52 to 55, people said, "That's a really big range. What is the difference there?" We even said that's really where we see our margin. You know, 52 would be depending upon what rates do and a really stronger margin. 55 would be depending upon rates and a lower margin. Our forecast still has us in that 52 to 55, obviously closer to the 55. When you take out some of these one-offs this quarter, that 53.5 kind of comes down closer to a 53. We're halfway between the...
We're actually on the lower end of the 52 to 55. Goal is still to stay under that 55 by the end of the year, for the remainder of this year.
Brady Gailey (Managing Director)
Okay. Then finally for me, I mean, the reserve, you know, took another step up this quarter. At a pretty robust level now. You know, how, how do you think about continued reserve build from here? Do you think that, you know, if, if macro factors continue to decline a little bit, you'll see some more reserve build, or do, or do you feel like you really kind of front-loaded it and, and you're going to be happy with where it's at for the near term?
Nicole Stokes (CFO)
Yeah, no, you know, our 98% of our provision is for this quarter is really model driven. That's coming from those CRE pricing index. You know, we use a one-year economic forecast, so I feel like until the forecast model starts showing some improvement versus declining CRE prices, and, you know, until it starts showing improving economic conditions, reserve builds could continue depending upon the forecast. Again, it's all driven kind of by that forecast. This was not qualitative factors that drove this. This was model driven.
Brady Gailey (Managing Director)
All right, great. Thanks for the color.
Palmer Proctor (CEO)
You bet.
Operator (participant)
We have our next question from, Casey Whitman from Piper Sandler. Your line is now open.
Casey Whitman (Analyst)
Hey, good morning.
Palmer Proctor (CEO)
Good morning.
Casey Whitman (Analyst)
Piggybacking on some of the earlier questions, we may not have hit the bottom for the margin, but do you think that with loan growth, that we maybe have reached an inflection point where we might see NII stabilize or start to grow from the Q2 level in the back half of the year? Or do you think that's a little too optimistic?
Nicole Stokes (CFO)
I think that we should definitely see NII stabilizing and potentially increasing. Again, so much of that is based on that, on the deposit side. I would say 80% of my guidance is unhesitant because of the shift of non-interest-bearing to interest-bearing. That's really the wild card in all this. If we could maintain the mix that we have and grow deposits at that mix, then even margin could not take as deep of a trough. I think we're on NII as a trough and potential growth, but again, it's really that deposit cost side is where we're more focused. We're seeing the pickup on the asset side as expected. I think what wasn't expected was all of the deposit pressure and the media pressure on the deposit side.
I don't think that's any different than what you're hearing from your other banks, probably.
Palmer Proctor (CEO)
The good news there is, too, Casey, what we're seeing, at least in, in most of our markets, which are heavy growth markets, as you know, is that the rate wars in terms of a lot of the specials that were offered out there, those are all maturing or expiring in terms of the sign-up dates for those, for some of the more aggressive banks out there. That, that funding pressure, at least in most of our urban markets, is subsided. So with that, and most people that have moved money have already moved it. I think that we're hopefully getting towards the end of that, that era, which should benefit all of us in terms of a more relaxed deposit environment in terms of pricing.
Casey Whitman (Analyst)
Yes. Okay, good. Good to hear. Then, Palmer, can you walk us through just how you're thinking about and weighing use of capital here now with the stock rebound?
Palmer Proctor (CEO)
Yeah, I think, you know, you all saw we did have a buyback this quarter, which is hard not to do when we're trading below tangible book value at the time, and it's, you know, accretive to tangible book and obviously non-dilutive. We did have a small buyback. For us, it's, you know, the capital preservation. We're very comfortable with where the dividend is. We do have the buybacks in place. You know, that arrow is in our quiver, but I don't anticipate any activity there this quarter. Right now, it's more about the capital preservation as we go forward.
Casey Whitman (Analyst)
Okay. Thank you, guys.
Palmer Proctor (CEO)
You bet.
Nicole Stokes (CFO)
Ellie, our operator, are we ready for the next question?
Operator (participant)
Your next question comes from Brandon King with Truist Securities. Your line is open.
Brandon King (Analyst)
Hey, good morning. Thanks for taking my questions.
Nicole Stokes (CFO)
Good morning.
Brandon King (Analyst)
I wanted to get more insight into your funding strategy going forward. What is kind of the expectation for brokered deposits from here? Are you looking to kind of grow brokered deposits, or do you think you can achieve more of your growth through more of those core deposits?
Nicole Stokes (CFO)
The goal and the intent is absolutely to grow core deposits. You know, as we've, we've talked about kind of the mortgage warehouse line and how those grew and about 40% of our loan growth was that, to kind of think about that being funded by some of the brokered. Really the core, we've said that within our company, that we are going to let deposit growth kind of be the governor on loan growth, and we are aiming for core deposit growth, not necessarily brokered. Said that, we're still only at about 8% brokered, so there's room if we needed it from a liquidity standpoint, but the intent is to grow core deposits.
Brandon King (Analyst)
Got you. Just assuming, you know, mortgage warehouse is, is stronger again in the Q3, we could see an uptick in brokers, right?
Nicole Stokes (CFO)
We would look at brokered or FHLB, and then remember on our balance sheet, typically near the end of the Q3 and Q4, we end up having a lot of cyclical, municipal money come in. That would kind of start to flow in the remainder of this year as well, kind of in the Q3 and Q4. That's another funding source for us.
Brandon King (Analyst)
Okay. Could you also remind us, for the municipal money, what sort of rates would that, that come on, on the balance sheet?
Nicole Stokes (CFO)
Yeah, we typically it's very competitive with what our current, you know, spot cost would be. You know, money markets in that 2.5% to 3%, now, you know, that 1.50% to 1.75% savings, around 1%, so it'll only be savings. Those were kind of our spot costs at quarter end. Assuming that those stay fairly level with no change in Fed rates, we would expect those municipals to maybe a little bit less because they are collateralized.
Brandon King (Analyst)
Okay, I'm assuming those will help maybe potentially pay down some brokered deposits. What is kind of the duration of the brokered deposits, and what are you expecting to mature later this year?
Nicole Stokes (CFO)
Yep, we have those structured, so they're very structured, and we have a certain amount maturing every month, so that as we're able to grow core deposits, we can pay those off. We have them structured. It's not like one big lumpy broker. We have them staggered from now to the end of the year. To be able to (inaudible)keep our ratio kind of in that 11% is where we're targeting.
Brandon King (Analyst)
Okay, that's helpful. I wanted to ask about the office loan that was charged off. Could you give us a sense of how large that loan was, and kind of what were the potential unique factors regarding that situation compared to the rest of your office portfolio?
Palmer Proctor (CEO)
Well, okay, Brandon, the, the loan itself is something that we've been, kind of, in one part of collection or another for a little over a year, so it, it really has been, something we've dealt with for a while. The original loan amount was, in excess or right around the $10 million mark. So it's a, you know, a, a smaller, property, you know, relative to maybe what you have in mind, but it was, it was an acquired loan. When we got down to the final, foreclosure on it, we updated our appraisal as a, an empty building, as sort of a conservative approach on that, even though there is a tenant in there.
At the time that we did that and moved it finally into for- into, OREO, we took that write-down on it. It is something that's been in, I guess, the difference maker there is, is, is that the collection efforts on that started really, over a year ago. It's not really indicative of kind of where office is overall.
Brandon King (Analyst)
Okay. That's very helpful. That's, that's all I had. Thanks for taking my questions.
Nicole Stokes (CFO)
Thank you, Brandon.
Operator (participant)
Your next question comes from Russell Gunther with Stephens. Your line is open.
Russell Gunther (Managing Director)
Hey, good morning, guys. Just a quick follow-up on the loan growth discussion. I think you had mentioned sort of a mid-single digit core target for the back half of the year. Just any color you could share in terms of what's going to drive that from a mix perspective?
Palmer Proctor (CEO)
I think what you'll see is, is obviously, the mortgage warehouse will moderate towards the end of the year, which is a big part of the growth you saw that was in excess of the, the mid-single digits. It'll be pretty even across the board. We're still seeing and still have good opportunities in, in C&I, and some unoccupied CRE, and then obviously, mortgage and, and some of the equipment finance. I think it's the growth in all those areas is gonna be pretty consistent. It won't be concentrated in any one area other than, as we talked about, with the mortgage warehouse.
Russell Gunther (Managing Director)
Okay, great. Thanks, Palmer. Just switching gears, last couple for me, from a net charge-offs perspective. Just curious on what came out of Balboa this quarter. Was it just that, you know, the 2 to 3 that was charged off, or was there kind of additional losses there? As a follow-up, would be curious as a reminder as to what you think from a kind of lifetime loss perspective is for that portfolio.
Palmer Proctor (CEO)
Yeah, the losses in the equipment finance division, actually, in the Q2 were almost spot on what they were in the Q1, which was about $9.9 million. The two-three was extraordinary, as Palmer mentioned earlier, that it really was a group of non-performing loans that were 100% reserved at the acquisition date. We went through collection efforts over that since that time and decided that that had kind of run its course, and that we decided that those loans, the remaining balance of those loans, we had to charge those off. You know, they didn't really impact earnings in that regard, and so the net of that particular extraordinary item would really drive the losses in the Q2 in equipment finance down.
You know, the whole portfolio is somewhat of a barometer of the business cycle. That's a little bit reason why we've got a little higher amount of charge-offs run rate today than we saw last year. But, you know, I don't anticipate that it's... It certainly would grow from this point. I think it's stable to probably trending a little bit lower going forward. So, it certainly is well managed and somewhat anticipated. Well, it was anticipated when we did due diligence back 18 months ago, that we would bring on additional losses. I guess the opposite side of the ad, just to be fair about it, is that the going-on rate for new business is, you know, a little bit sub 13.
We do have the offset revenue side, which is what is contributing to keeping us above 2% PPNR. You need to kind of balance the one against the other.
Russell Gunther (Managing Director)
Yep, understood, I appreciate the color there. Just last one as a follow-up. As you think about the, the bank as a whole, how are you guys thinking about potential net charge-offs range for kind of this year and next?
Palmer Proctor (CEO)
That's a great question, and, and, you know, the, the pre-pandemic normal, I guess, if, if you tried to pull out , a bit of normal for us, pre-pandemic was around 19 basis points for the 5 years or so that preceded the pandemic. You know, I think that, 18 to 25 basis points is likely to be, kind of normal for us, in a normal business environment. I think that's sort of what I would, would look at, as a normalized rate.
Russell Gunther (Managing Director)
Okay, great. That's it for me, guys. Thanks for taking my questions.
Nicole Stokes (CFO)
Thank you.
Operator (participant)
Your next question comes from Christopher Marinac with Janney Montgomery Scott. Your line is open.
Christopher Marinac (Director of Research)
Thanks. Good morning. I just want to keep on the theme of, of Balboa. What should the risk-adjusted losses be for that portfolio as we go forward, as the, the charge-offs may modify a little bit, as you just said, and then also kind of as, as loan yields reset for the portfolio?
Palmer Proctor (CEO)
That's a great question. When we-- I guess there's a couple of different numbers to share with you on that, Chris. The, you know, we modeled it in the 1.5 range, which is kind of the five years preceding the acquisition date. Last year, the, you know, we, we achieved much less than that. But if you take sort of the 19 months since the acquisition in early December of 2021, and take all of the losses we've had and annualize it back, it's, it's about 180. So, you know, when you take it in a longer outlook, I guess, than just the quarter or the month, that kind of thing, then you, you start seeing more normalized rates.
I, I think that, that, you know, on a 3 to 5 year sort of average, we're probably going to see that number, that kind of 1.8 to 2.2, as sort of a fluctuation, but sort of more normalized, especially from what we saw in the Q1 or first half of this year. Remember, we, you know, we did have the collateral, the primary losses were coming out of loans secured by trucks, medium-duty trucks. We did have a glut of those, which drove down the valuation of that when we took those to sell. You know, a little bit of strengthening there will, will impact losses also.
There's several things, but I think in terms of sort of longer run, you're probably looking at kind of that 1.8 to 2.2.
Christopher Marinac (Director of Research)
Great. That's really helpful. going back to 2021, this really was a surrogate for not buying securities, so you're still way ahead of that, from that, deployment of excess cash.
Palmer Proctor (CEO)
(inaudible) absolutely.
Christopher Marinac (Director of Research)
My follow-up just has to go back to the deposit base, and maybe Nicole, as, as deposits kind of stabilize in, in terms of rates over the next few quarters, what should the kind of average relationship be? Is it in that 4 or 5-year category on average for all of your customer relationships, or is it longer in some cases?
Nicole Stokes (CFO)
It is longer. We actually did an analysis, interestingly, it split almost 1/3, 1/3, 1/3. Is that 1/3 are very, very long-time customers. They go, you know, back many, many years. Then about 1/3 is kind of in the last, kind of in between, like, the last 5 years prior to the pandemic. Then the other 1/3 is kind of new since the pandemic. It's 1/3, 1/3, 1/3, almost evenly split. We definitely have some long tenure in our, in our deposit portfolio, which is part of why it's so granular and why our average balance is so small, and we don't have a large, you know, large lumpy deposits. I mean, we are just very much core funded.
Christopher Marinac (Director of Research)
Right.
Palmer Proctor (CEO)
You would expect a 50-year-old bank, you know, to have some of that. When you look at our 10-year plus, there's a huge swath of... That's about a third of it. Then, as Nicole said, then you have your 5 to 10 is another third and then less than that. It is very granular.
Christopher Marinac (Director of Research)
Super. Thank you for that. It's very helpful.
Nicole Stokes (CFO)
Thank you.
Operator (participant)
Seeing no further questions, I will now turn the call back over to the presenters.
Palmer Proctor (CEO)
Great. Thank you very much, and I'd like to thank everybody again for listening to our Q2 earnings call. Clearly, our discipline in creating strength in the balance sheet, the loans, deposits, and capital, as well as our core profitability and stable credit metrics, has positioned us well for the future. We've got the skill set, we've got the markets, and we certainly have the talent to execute on our strategies, and we remain committed to top-of-class results. I want to thank everybody again for your time and your interest in Ameris.
Operator (participant)
This concludes today's conference call. Thank you for your attendance. You may now disconnect.