Ameris Bancorp - Earnings Call - Q3 2025

Executive Summary

• Ameris delivered another above-peer quarter: diluted EPS $1.54, ROA 1.56%, ROTCE 14.6%, NIM (TE) 3.80%, and efficiency ratio 49.19%.
• Versus S&P Global consensus, EPS beat ($1.54 vs $1.47*) while revenue missed on S&P’s taxonomy ($291.6M actual vs $306.6M*), noting definitional differences with Ameris-reported “total revenue” of $314.2M; we anchor estimate comparisons to S&P data and explain the divergence below.
• Management signaled slight NIM compression ahead given deposit competition and loan growth, and expects the efficiency ratio to move back above 50% in Q4, while reaffirming mid‑single‑digit loan/deposit growth.
• Capital return is a clear catalyst: $8.5M repurchases in Q3 and a new $200M buyback authorization through Oct‑2026; sub debt redemptions at 8.22% and 3.875% further reduce funding costs.

What Went Well and What Went Wrong

What Went Well

• Strong profitability and operating leverage: revenue grew ~18% annualized with a modest expense decline, pushing the efficiency ratio below 50%; CEO highlighted “above peer performance” across ROA, NIM, and efficiency.
• Core deposit franchise remains a differentiator: noninterest-bearing deposits stayed over 30% (30.4%), supporting a robust 3.80% core NIM; loan and deposit growth tracked mid‑single‑digit guidance.
• Capital actions and balance sheet optimization: $8.5M buybacks in Q3; board authorized $200M repurchase program; investment portfolio rebuilding toward 9–10% provides optionality while sub debt redemptions lower funding costs.

What Went Wrong

• Revenue miss versus S&P consensus: S&P Global recorded revenue at $291.6M vs $306.6M consensus*, which screens as a miss despite Ameris’ reported “total revenue” at $314.2M; taxonomy differences likely drive the discrepancy (see Estimates Context).
• Provision elevated: $22.6M provision with ~51% linked to unfunded commitments; while constructive for future growth, it pressured net interest income after provision.
• Management flagged emerging NIM headwinds: retail CDs maturing near 3.71% and new production at 3.89% amid deposit competition; efficiency ratio expected to revert >50% in Q4.

Transcript

Operator (participant)

Good day and welcome to the Ameris Bancorp third 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 your telephone keypad. To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Nicole S. Stokes, CFO. Please go ahead.

Nicole S. Stokes (CFO)

Great, thank you, Valentina, 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 Douglas D. Strange, our Chief Credit Officer. Palmer will begin with some opening comments, and then I will discuss the results of our financials 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 for comments.

H. Palmer Proctor Jr. (CEO)

Thank you, Nicole, and good morning, everyone. We appreciate you taking the time to join our earnings call today. Third quarter results again beat expectations with above peer performance across the board, including return on assets, PP&R ROA, return on tangible common equity, net interest margin, and efficiency ratio. Two of our top focuses have long been growing our core deposit base and tangible book value per share. I'm proud to see our deposit growth at 5% annualized and tangible book value per share growth at over 15% annualized, both very strong metrics. We remain focused on generating revenue growth and positive operating leverage. This is evidenced by our 18% annualized revenue growth in the quarter, and when coupled with a modest decline in expenses and slight increase in margin, pushed our efficiency ratio below 50%.

Our margin continued to expand during the quarter while we grew loan 4% annualized, which is within our mid-single-digit guidance. Our 3.80% NIM remains above most peer levels, particularly thanks to our strong 30% level of non-interest-bearing deposits. Capital ratios grew again in the quarter, which positions us well for future growth opportunities. Our third quarter earnings and capital generation increased our common equity tier one to 13.2% and TCE to 11.3%. Asset quality remains stable with net charge-offs and NPAs, excluding government-guaranteed mortgages at low levels. We grew tangible book value this quarter by over 15% annualized, almost $43 per share, and we're active in repurchasing stock, buying back $8.5 million. Our CRE and construction concentrations remain low at 261% and 42%, respectively. Our 4% annualized loan growth was driven mostly by a good mix of C&I and CRE.

Our loan portfolio production also topped $2 billion in the quarter, the best level we've seen since 2022, and deposits grew at a similar pace at 5% annualized with non-interest-bearing deposits remaining over 30%. Our bankers are well-positioned to take advantage of growth opportunities and disruption within our attractive Southeastern markets. Overall, we continue to stay focused on what we can control and look at the end of 2025 and toward 2026.

I'm very encouraged as we continue to benefit from a history of notable tangible book value growth as good stewards of shareholder value, a granular deposit base, a robust margin and diversified revenue stream, strong capital and liquidity, a healthy allowance and asset quality, and a proven culture of expense control and positive operating leverage, and a notable scarcity value given our size and scale in the Southeast top markets, which really allows us to take advantage of the banking disruption the Southeast continues to experience. Overall, I'm very optimistic and confident about our franchise as we near the end of 2025 and look forward to 2026 and beyond. I'll stop there and turn it over to Nicole now to discuss our financial results in more detail.

Great, thank you, Palmer. We reported net income of $106 million, or $1.54 per diluted share in the third quarter. As Palmer mentioned, our profitability remained at levels well ahead of the industry, with our return on assets at 1.56% and our return on tangible common equity at 14.6%, both very robust levels. This quarter, our PP&R ROA was at 2.35%, which was an improvement from 2.18% last quarter. Our efficiency ratio improved to 49.19% this quarter compared to 51.63% last quarter, as we saw a modest decrease in expenses but a really strong 17.8% annualized revenue growth, which is what fueled that positive operating leverage. Capital levels continued to increase, with our tangible book value per share grew to $42.90 a share, which was a strong 15.2% annualized growth, or $1.58 per share in the quarter. Our tangible common equity ratio increased to 11.31%.

We repurchased about $8.5 million of common stock. That was about 126,000 shares at an average price of $67.36 during the quarter. Our board recently also approved a new share repurchase plan of $200 million, which is double our last authorization of $100 million. Our strong revenue growth was driven by increases in both net interest income and fee income. Our spread income grew by $6 million in the quarter, or 10.5% annualized. That growth came from interest income growth at $7 million, which outpaced our interest expense growth of only $1 million. Our net interest margin continued to expand up three basis points to a strong 3.80%, and remember that's a core margin as it includes zero accretion. The NIM expansion this quarter really came from a two basis point positive impact on the asset side and a one basis point benefit from the funding side.

We continue to believe we'll have some slight margin compression over the next few quarters due to the expected pressure of deposit costs as we see loan growth really pick up in 2026. We continue to be fairly neutral on asset sensitivity. Non-interest income increased $7.4 million this quarter, mostly from better equipment finance fees and also a $1.6 million non-recurring gain on securities. Our mortgage production was approximately $1.1 billion, with mortgage gain on sale at 2.20%. Our total non-interest expense decreased about $700,000 in the quarter, mostly driven by lower compensation costs in the lines of business, offset by some increased incentives and benefits in the banking division. As I previously mentioned, our efficiency ratio was strong at 49.19%.

While we did have positive operating leverage this quarter, the expanded net interest margin and non-interest income growth was the real driver of that lower efficiency ratio and not necessarily an expense savings initiative. I do anticipate the efficiency ratio to return above 50% in the fourth quarter. During the third quarter, our provision for credit losses was $22.6 million, with over half of that provision related to reserves for unfunded commitments, which is a really positive sign for our future loan growth potential. Our reserve remains strong at 162%, the same as last quarter. Overall, asset quality trends remain good, with non-performing assets, net charge-offs, and both classifieds and criticized all remaining low for the quarter. Annualized net charge-offs were stable at 14 basis points. Looking at our balance sheet, we ended the quarter with $27.1 billion of total assets compared to $26.7 billion last quarter.

Earning assets increased $470 million, or 7.6% annualized, with the bond portfolio growing $287 million and loans growing $217 million, or about 4% annualized, which is in line with our loan growth guidance. Loan growth was mostly from C&I and investors' CRE this quarter. Deposits increased $295 million, with really strong growth in our core bank of $355 million, a small increase in broker deposits of $67 million, and those were offset by a continued seasonal decline in those cyclical municipal deposits of $127 million. We were able to maintain our non-interest-bearing deposits at over 30%, finishing the quarter at 30.4%, and our brokered CDs represent only 5% of total deposits. We continue to anticipate loan and deposit growth going forward in the mid-single-digit range and expect that longer-term deposit growth will be the governor of our loan growth.

With that, I'll wrap it up and turn the call back over to our operator for any questions from the group.

Operator (participant)

We will now begin the question and answer session. To ask a question, you may press star, then one on your telephone keypad. If you're using a speaker phone, please pick up your handset before pressing the key. If at any time your question has been addressed and you would like to withdraw your question, please press star, then two. At this time, we'll pause momentarily to assemble our roster. The first question comes from David Pfister with Raymond James. Please go ahead.

David Pfister (Senior Research Analyst)

Hey, good morning, everybody.

H. Palmer Proctor Jr. (CEO)

Morning, David.

David Pfister (Senior Research Analyst)

I wanted to start maybe on the loan side. It sounds like production remains pretty strong. We saw unfunded commitments increase. I'm curious, maybe first just touching on demand. How is demand in the pipeline trending as we look forward? I know you reiterated the mid-single-digit guidance, but just kind of curious about the pipeline and the complexion of that, and then just kind of how payoffs and paydowns are trending and how that's impacting growth near term.

H. Palmer Proctor Jr. (CEO)

Yeah, I think one of the things that drives our optimism for the fourth quarter is the demand, and that's really across the board in all of our verticals that we're seeing. I will tell you, payoffs for the industry remain pretty steady, and we'll see the same thing in the fourth quarter. In terms of the demand and the outlook going forward, that's where we really garner most of our optimism as we look into the end of 2025 and into 2026. All in, you know, payoffs, that's just a necessary evil, if you will, but it's also a sign of a healthy market. We continue to remain very bullish.

David Pfister (Senior Research Analyst)

Okay. Maybe just staying on that to some degree, could you touch on competition and how the landscape is today? On one hand, you touched on a lot of the disruption and the opportunities that come out of that, but at the same time, everybody's, it seems like competition's heating up for deals. Curious, some of the push-pull between those dynamics and where you're seeing competition. Is it primarily on pricing, or are you seeing that creep into structure as well?

H. Palmer Proctor Jr. (CEO)

It's primarily on pricing, and fortunately for us, we're accustomed to a very competitive environment with our footprint, a lot of it being in high-growth areas. I will tell you, one of the mitigants to that, even though the pricing will continue to be a pressure point, is I think the disruption will help us in terms of garnering additional volume. We are well-positioned for that and ready to capitalize on any disruption that might come. Right now at this stage, I don't see a whole lot of compromise on structure, which is good for the industry, but I do see a lot of pressure on pricing.

David Pfister (Senior Research Analyst)

Wow. Just touching on the equipment finance side of the business, could you touch on how production's been, how demand's trending there, and what segments of equipment finance you're seeing the most demand for? Again, just any underlying credit trends within that business and some of the fee income opportunities that could come out of there as well. I know it's a lot, but just elaborate a bit on the equipment finance side.

H. Palmer Proctor Jr. (CEO)

Yeah, I'll touch on the overall sentiment, and then Doug can talk about the credit. I would tell you, I think it's a good reflection of, you know, these are small business operators. What we're encouraged to see is the demand there. It's obviously picking up. Our credit box is, we're very pleased with, and you can see that in the declining charge-offs and NPAs. That seems to be a bright spot for us as we go forward, and the economy seems to be holding up. I think it's a bigger, broader reflection of how well the small business operators are performing at this stage. Doug, you want to talk about the credit side of it and the metrics there?

Douglas D. Strange (Chief Credit Officer)

Yeah, sure. Thank you. David, the credit box, you know, we retooled that at the end of 2023 and into 2024, and I think we have it about right now where we want it, and we've seen very good results, and we've seen charge-offs over the recent quarters, kind of right in that target zone that we were looking at.

David Pfister (Senior Research Analyst)

Okay. Just kind of the last part of that question was the fee income opportunities coming out of that business. You saw nice growth this quarter. Just kind of curious some of the fee income opportunities you're seeing there.

Douglas D. Strange (Chief Credit Officer)

Yeah, I think the fee income, we had a very strong fee income in that sector, in that vertical this quarter, and I think that will moderate. You can expect anywhere probably around 75% of that fee income to continue on a go-forward recurring basis. The other thing that we are excited about with increasing volume is we've got the ability now and are finalizing the opportunity to start securitizing that paper, and that way we can increase production and still maintain some servicing and fee income there. That could be a real contributor as we go forward in terms of prepayment penalties, late fees, and everything else associated with the servicing. That is an add to us in terms of that particular line of business.

David Pfister (Senior Research Analyst)

Okay, that's terrific. Thanks, everybody.

Douglas D. Strange (Chief Credit Officer)

You bet.

Operator (participant)

The next question comes from Catherine Mealor with KBW. Please go ahead.

Catherine Mealor (Analyst)

Thanks. Good morning.

H. Palmer Proctor Jr. (CEO)

Good morning.

David Pfister (Senior Research Analyst)

Good morning.

Catherine Mealor (Analyst)

I wanted to start first on expenses. It was nice to see the decline this quarter, but I assume per your comment that the efficiency ratio will move up next quarter, that that'll probably increase next quarter. Maybe kind of the big picture question on expenses is, can you talk about a good growth rate to think about for expenses going into next year, just with loan growth being better? The second part of that is, how should we think about how the mortgage expense line looks as mortgage revenue also increases next year? I noticed the mortgage comp line relative to mortgage revenue this quarter declined, and I was just curious if there was anything going on that's unreadable, if that's just a one-time event. Thanks.

Nicole S. Stokes (CFO)

Yep. Perfect. Thank you, Catherine. I'll start kind of with general expenses, and I'll say that the efficiency ratio, being down in the 49s, is really driven from the revenue side, the fact that we had the margin expansion and we had some non-interest income growth there. I don't necessarily think that expenses were unreasonably low. I think when we look at next quarter, consensus has us about the same as 3Q, and I think that looks very reasonable. When you look into 2026, again, I hear your question on mortgage, and I'll take that in just a second. With regular expenses, I think consensus has us right now at about a 5.5% increase, and I think that looks a little bit, I mean, I think that looks reasonable.

You know, when you kind of think about salaries and benefits kind of increasing in that 4% to 5% range, other expenses coming in about 3%, and then maybe some increased mortgage revenue or increased mortgage expenses with that increased revenue. Blending all that into that 5%, 5.5% rate for non-interest expense growth next year looks very reasonable to me. On the mortgage expense side, I would say that if we see that tenure come down and we get some real strong tailwind into the mortgage production and we see mortgage pick up, we would have some additional mortgage expenses. I think the easiest way to probably model that out is through an efficiency ratio specialized in mortgage. They're currently running about a 60% efficiency ratio, 60% to 62% efficiency ratio.

As they get the volume back up, their fixed cost stay and the variable cost, which is really the compensation, will probably drive them into closer to a 55% efficiency ratio. As modeling out that growth, I would model out about a 55% efficiency ratio on the growth, if that helps.

Catherine Mealor (Analyst)

Yeah, that's awesome. Okay. Thank you, Nicole. Maybe my second question just on the margin. Gosh, you've just beat us on the margin every quarter this quarter, or every quarter this year. It's been really special, but I know you think that it's coming down next year, which I appreciate. Within that, maybe if you could talk a little bit about just on the deposit side, where you think deposits will go. I don't know if it's easier to talk about it on like a beta for the next 100 basis points, maybe how that looks relative to the past 100 basis points, but help us just think about where deposit costs can go as we see rate cuts.

Nicole S. Stokes (CFO)

Absolutely. My margin guidance has said compression for several quarters now when we haven't seen it, but I will say that we're starting to see it. When you look at, and I say that based on a couple of things. One, we know that our deposits have repriced a little bit faster than our loans and that they were starting to catch up, and then the Fed moved again. We know we have some built-in compression in the future in the margin just from that lag of the loans catching up to deposits. Every time the Fed cuts, it kind of just pushes that lag out a little bit. I do feel like it's eventually coming from that side. The second piece of my margin guide really comes from the competition that I think we will see and we're starting to see on the deposit side.

As everybody is really starting to fight for the growth on the asset side, they have to fund it. We're starting to see that on the deposit side. An example, when you look at our retail CDs in the fourth quarter, this is the first time that we've seen this where we have almost $1 billion of CDs maturing, and they're coming off at a 3.71% rate. Our third quarter production for CDs is a 3.89%. Where we've had kind of some tailwind coming into that CD rate up to this point, this is the first time that they're very close to not having that tailwind and maybe actually having a little bit of headwind thanks to the competition. I will say that our overall growth is still accretive to margin, and it really has to do with that growth in non-interest-bearing.

If you look at our loan production coming on at a 6.77% and our blended deposit rate of our interest-bearing deposits, that spread is about a 3.52%. If you add in that non-interest-bearing growth, we flip from being dilutive to being accretive to margin. The real answer there is, can we continue to grow non-interest-bearing deposits? If we don't and we are only able to grow interest-bearing, then we will absolutely have some compression on the margin. I will tell you that we stay very much focused on growth of NII. Even if we have a little margin compression, I would expect NII to continue to grow.

Catherine Mealor (Analyst)

Okay, great. Thank you. Appreciate that.

Operator (participant)

The next question comes from Russell Gunther from Stephens. Please go ahead.

Russell Gunther (Managing Director and Equity Research Analyst)

Hey, good morning, guys.

H. Palmer Proctor Jr. (CEO)

Good morning.

Nicole S. Stokes (CFO)

Morning.

Russell Gunther (Managing Director and Equity Research Analyst)

I wanted to follow up on loan growth commentary. Hear you on the mid-single digits. I'm just curious in terms of a potential upside scenario given the strength of your markets and considerable dislocation occurring within them. Is there a scenario where we could start to see that begin to accelerate next year from kind of the mid to the high single-digit rate?

H. Palmer Proctor Jr. (CEO)

That's certainly what we hope and would like to anticipate. I think the most important thing is being in a position to capitalize on that, which is where we are. That's what gives us a lot of confidence in our ability to take it from mid-single digits to upper single digits or maybe even double digits. You know, we're accustomed to growing at a 10% rate in a healthy environment. Given, you know, it depends on the macro economy too and what happens there. If things start lining up and improving like we're seeing, whether it be in terms of foreign trade, tariffs, employment, GDP, I think you could see an elevated loan growth opportunity. You compound that with disruption, that will be a huge opportunity for us to capitalize in our primary markets.

We remain, as I said last time, we're in the optimistic camp and not just cautiously optimistic, but we're very optimistic about what we see in front of us.

Russell Gunther (Managing Director and Equity Research Analyst)

Thank you, Palmer. In that scenario, or perhaps maybe more near term, how should we think about the size of the investment portfolio going forward?

Nicole S. Stokes (CFO)

Our investment portfolio, as you know, we let it get down to about 3%. We're back up now to right at 9.3%. Our goal is probably that 9% to 10%, so we're very close to being there. We could add about another $175 million or so to get us to that 10% range. I think that's really where we feel comfortable. I will say we like the fact that we have the optionality, which keeps us focused on the deposit growth, because if we can grow the deposits, then we have some optionality between both loans and securities.

Russell Gunther (Managing Director and Equity Research Analyst)

Got it. Okay. Thank you, Nicole. I guess just last one for me, maybe going back to the optimism around organic growth. Given that opportunity set, is there anything from an M&A perspective, you know, for depositories on the buy-side front that makes sense for you guys? Is the organic, again, opportunity set sort of more of a priority at this point?

H. Palmer Proctor Jr. (CEO)

I would tell you it's even more of a priority now, the organic piece of it, just given the new opportunities with disruption. I think it would be a mistake for us to get distracted at a time where we probably got far more opportunities organically going forward as we look out than getting distracted by an M&A deal.

Russell Gunther (Managing Director and Equity Research Analyst)

Very good. Thanks, guys, for taking my question.

Operator (participant)

The next question comes from Stephen Scouten with Piper Sandler. Please go ahead.

Stephen Scouten (Managing Director and Senior Research Analyst)

Thanks. Good morning. I like this optimism around loan growth. I'm wondering what part of that optimism would come from potential additional hirings. I know, I think it was year to date, last quarter you'd hired, it was 64 new lenders, but maybe, and I know you tend to talk about that number in net and gross terms. Just kind of wondering what the scale of that opportunity might be and if that's a big focus and a push behind that organic growth optimism.

H. Palmer Proctor Jr. (CEO)

Yeah, our focus has and will remain. We're focused on garnering customers more than we are having to have the dependency on doing liftouts of teams to capitalize on that. Part of that is just because we're well-established in these markets where you've got the disruption. That doesn't mean we won't be opportunistic and look at talent as it comes available. The nice thing is, once again, for us to execute on our plan for growth, we have all the talent on board, and we're constantly assessing and reassessing that talent. If you look at what we've done just this year, net, I think we're up three people in the commercial group, but that includes 10 new commercial hires. I think it's important to constantly look at the caliber of the individuals you hire, not just the quantity, but look at the quality.

That's really, I think if you do that as you go along, you avoid potential pitfalls as you go forward. We are certainly in a position to capitalize on what we see out there with our existing teammates. If we see selective opportunities to bring in new talent, we will certainly consider that. We are not dependent on that to capitalize on the opportunities we see going forward.

David Pfister (Senior Research Analyst)

Got it. Appreciate that. You guys are kind of, in a lot of ways, in my mind, like tip of the spear around mortgage activity and, you know, inflection points. I'm wondering what you're seeing given where the 10-year has been moving and if, you know, there's any point where you think we could see a greater inflection around mortgage demand, both on the purchase side and the potential for a pickup in refinance activity.

H. Palmer Proctor Jr. (CEO)

We certainly hope so, and I think things are moving in that direction. Our applications are up tremendously, and I think people are realizing that it may move that direction. If we can get down, as we talked about last time, something with a five-handle on it in terms of the 30-year, I think you're going to see an accelerated activity in the industry in the mortgage space. Once again, we're well-positioned to capitalize on that. We've got a lot of heavy purchase volume right now, and I think that if we start seeing some improvement in the 10-year, that will definitely be a tailwind for us as we look into the end of this year and into 2026.

David Pfister (Senior Research Analyst)

Okay, great. The rest of my questions have really already been covered. Congrats on a great quarter.

H. Palmer Proctor Jr. (CEO)

Thank you.

Operator (participant)

This concludes our question and answer session. I would like to turn the conference back over to H. Palmer Proctor Jr., CEO, for any closing remarks.

H. Palmer Proctor Jr. (CEO)

Great, thank you. I want to thank our teammates again for another outstanding quarter. We remain focused on producing top-of-class metrics, maintaining our strong core deposit base, and growing our tangible book value per share. The bank remains well-positioned to take advantage of future growth opportunities and disruption in our attractive Southeast footprint. We appreciate your interest in Ameris Bancorp. Have a great day.

Operator (participant)

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.