Good morning and welcome to the Ameris Bancorp third quarter conference call. All participants will be in a 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 and then one using a touch-tone telephone. To withdraw your questions, you may press star and two. Please also note today's event is being recorded. At this time, I'd like to turn the floor over to Nicole Stokes, Chief Financial Officer. Ma'am, please go ahead.

Great. Thank you, Jamie. 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 opening comments and then I will discuss the details of our financial results before we open up for Q&A. But 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 statement 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 third quarter earnings call today. Our focus at Ameris continues to be on building core franchise value through profitable growth, strong profitability metrics, and disciplined balance sheet management, including our priority of tangible book value growth. And this quarter, again, supported all of these core fundamentals and resulted in a five-year record high EPS of $1.73 per diluted share. During the quarter, we experienced good organic growth and average earning assets at approximately 5% annualized. and deposits at 6% annualized. And importantly, we were able to drive this growth while protecting our above average margin of 387 in the quarter. All profitability metrics remain strong, including our ROA of over 160, our PPNR ROA of 227 and our return on tangible common equity of 15%, even with our strong capital levels. We continue to concentrate on profitable growth and positive operating leverage which is evident in the improvement in our efficiency ratio hovering around 50% for the year. Our discipline management of the balance sheet has us well positioned for the future. Our reserve coverage is strong at 162 of total loans which represents 315% of portfolio MPAs. Our capital level with over 13% common equity tier one positions us well for future organic growth in our attractive southeastern markets. We will also consider additional share buybacks as our board recently approved another $200 million repurchase authorization. On an annualized basis, reported tangible book value per share grew 5% in the quarter, excluding the impact of AOCI tangible book value growth would have been over 14%. Our loan growth production was $2.3 billion in the quarter, which was consistent with last quarter's remaining at a very healthy level. And our profitable loan growth was driven by a mix of C&I, residential mortgage, and construction was partially offset by elevated CRE payoffs. On the deposit side, we saw growth in the mid single digit range with our focus being on core deposits and relationship banking. We have a granular deposit base and almost 30% of our funding from non-interest bearing accounts and almost 48% of our accounts are checking, both non-interest bearing and now accounts. Credit quality normalized some in the quarter but remains very favorable compared to peer CRE and construction concentrations finished the quarter at 251% and 50% respectively. Overall, I'm very pleased with our financial performance in the third quarter. We're well positioned as we go into 2027 as we continue to focus on organic and profitable growth in our attractive southeastern footprint. I'll stop there and turn it over to Nicole to discuss our third quarter financial results.

Great. Thank you, Palmer. In the third quarter, we reported net income of $116.1 million. or $1.73 per diluted share. Our return on assets was a 161, our PP&R ROA was 227 and our return on tangible common equity was 15.01 for the quarter. Our adjusted efficiency ratio improved 49.15% this quarter from 50.42% last quarter as we saw an increase in revenue and a decrease in expenses. For the year, our adjusted efficiency ratio is 49.84% and I anticipate ending the year around that 50% ratio. Capital levels continue to increase and tangible book value per share grew to 4565 during the quarter. Our tangible common equity ratio increased to 11.14% and our total risk-based capital was back up to 15%. While we were not active in the buyback this quarter, our board has recently approved another 200 million share repurchase plan. Net interest income increased 5.2 million this quarter for a total of 257.7 million. We were pleased with our net interest margin of 387, just one basis point below the 388 we reported last quarter. Our loan yield improvement was offset by the increase in funding costs and our bond portfolio declined slightly as expected as we had a bump in the bond yield last quarter from the inflation bonds. Our asset liability sensitivity is very close to neutral, but we do believe that some margin compression is possible over the next few quarters due to higher deposit costs and competition. We continue to focus on profitable growth and we expect that our net interest income will continue to grow through that earning asset growth. Adjusted non-interest income decreased approximately 2 million this quarter, mostly from lower mortgage revenue as the production fell. Mortgage production declined about 13.7%. but our fees only declined about 10.1% this quarter. Again, another testament to our focus on profitable production and profitable growth. Adjusted non-interest expense also decreased this quarter by approximately 2.5 million, driven mostly by lower mortgage-related compensation. Overall asset quality remains strong with non-performing assets and net charge-offs at low levels. Annualized net charge-offs improved to 19 basis points this quarter. We continue to anticipate net charge-offs in that 20 to 25 basis point range near term. On the provision, we recorded about 12.6 million of provision in the third quarter, which was a decline of about 4.7 million compared to last quarter. And our reserve coverage remained strong at a 162. Looking at our balance sheet, we ended the quarter with about 28.5 billion of total assets, up slightly from the second quarter, but our average earning assets grew $300.5 million in the quarter or 4.5% annualized. Loans grew $173.1 million or about 3% annualized with our loan pipelines and production remaining at healthy levels. Total deposits grew $319.4 million partially helped by the beginning of our seasonal inflows of public funds and our non-interest bearing mix remains strong at 29.2%. We project loan and deposit growth in the mid-single digit range near term and expect that longer term deposit growth will be the governor of loan growth. Overall, it was another outstanding quarter for us. And with that, I'm going to wrap it up and turn it over to the operator for any questions from the group. Jamie, please go ahead.

And at this time, we'll begin the question and answer session. If you would like to ask a question, please press star and then one using a touch tone telephone. If you are using a speakerphone, we do ask that you please pick up the handset prior to pressing the keys to ensure the best sound quality. If you would like to withdraw your question for any reason, you may do so by pressing star and two. Once again, that is star and then one to join the question queue. We'll pause momentarily to assemble the roster. Our first question today comes from Russell Gunther from Stevens. Please go ahead with your question.

Hey, good morning, guys.

Good morning.

Morning, Palmer. Wanted to start off on the loan growth discussion. Nicole, appreciate the kind of mid-single-digit near-term outlook. I guess maybe could we start with sort of how you're thinking about the mix of that growth in the fourth quarter, you know, perhaps what the CRE paydown ease might contribute there. and then just stepping back, bigger picture, you know, with the backup in rates and anticipated future hikes, is there an absolute level of rates where demand destruction occurs and that general target of mid-single-digit growth becomes at risk?

So, I would start by saying that the mix of the loan growth, I think, will be very consistent with what you saw this quarter, assuming that loan, that the CRE payoffs, if they slow a little bit, you could see some growth there as well. you know when we look at our production we were really pleased with the production as diversified it is as it was and some of that production will fund in future quarters so again you know looking at CRE the premium finance residential we really have a lot of opportunity for diversification so I think it will be very consistent with what you saw this quarter hopefully you know there's I always say I'm a split personality on these CRE payoffs I certainly like seeing The payoffs that shows a healthy market. And again, when the payoffs are coming off 100 basis points less than our production, that's good for the margins. So I like it from that side. But then the other side of me as a CFO, I hate to lose earning assets. But again, if we can refill them at 100 basis points higher, we certainly will take that. So assuming CRE payoffs level off, we could see a little bit of growth in CRE next quarter as well. But I think it will be pretty diversified. And then I think your second question was on the loan rates and at what point do we start seeing some pullback? You know, I think for us, we've been so focused on profitable growth and that we've said for many, many quarters now that we don't think we need to get bigger just to get bigger. We need to get bigger to get better. And so we've been focused on that profitable growth, and I think that'll continue into next quarter. So those loans, you know, whatever we, on the loan side, we expect the deposit side to be commensurate. and so we'll continue to focus on that profitable growth and kind of mid single digit loan growth going forward.

Got it. Okay. Excellent. Very helpful. Thank you. And then maybe just switching gears onto the expense side of things. You kind of gave us where you'd expect the efficiency to shake out for the year. How are you thinking about 27? What's a reasonable kind of growth rate as you guys contemplate continued investments in lending talent and tech?

Yeah, I think that right now consensus has us growing at about 6.8% to 7%. I think that might be a little bit aggressive, but I think the first quarter is very close. I think where we start getting into maybe consensus being a little bit high is when we kind of look going into the second, third, and fourth quarter. that right now I think consensus has expenses going up, but they also have mortgage revenue going up. So assuming mortgage revenue, again, kind of take that noise out for a minute. and assume just core expenses. I think probably somewhere in the 165 to 169 a quarter for the year. And so I think consensus might be a little bit high there as we're getting more into our budget season. But I do think that mortgage, of course, could change that. So if something happened in the right environment and we were surprised and we saw some room for mortgage to grow, you'd see some expenses grow there. but we're at this point anticipating mortgage to be pretty consistent, maybe even down a little bit next year so those expenses would be affected as well.

Okay, understood. That's really helpful. Thank you guys for taking my question.

Thank you.

Our next question comes from Woody Lay from KBW. Please go ahead with your question.

Hey, good morning. Maybe a follow-up on the profitable growth. We saw a pretty big move in rates this past quarter. We got the Fed rate hike. Are you all seeing the benefit of that on new loan production, or is competition impacting some of that benefit?

Woody, good morning. Yeah, I would tell you, when you look at the growth in our markets, which are very competitive markets, but growth markets... Jody Spencer, William McKendry then be foolish and trying to compete with some of the rates that we're seeing out there there is a lot of disruption if that is part of your question and so that does present opportunities but then how those deals are priced will come down to our disciplines here at the bank and we're pretty disciplined got it that's helpful and then maybe shifting over to deposit costs and was just interested if if

How y'all were thinking about deposit betas in an up rate cycle, you know, especially if we got additional rate hikes and then kind of where, you know, if y'all had a spot deposit cost at the end of September, you know, with the September hike.

We do. So when we look at betas, you know, the rate hike was so late in the quarter. I hate to even give the betas out because I think a lot of that's going to happen kind of in the first kind of month of the fourth quarter, kind of in October is really we're going to see that. So when you look at kind of our prior up cycle betas and then our down cycle betas, we would expect this cycle to be very similar to the prior cycles. And right now we're beating that a little bit. But again, I think some of that could come out kind of in the fourth quarter. and then when you look at our spot deposit rates for the end of the quarter, our production for the quarter on new production, so I think there's two questions there, production versus spot rates. New production was just slightly higher than the second quarter, but when you look at September production versus June production, they were actually almost exactly the same. And then when you look at spot deposit costs for the last month, just for the month of September, It was about three basis points higher than the quarter, but our assets were about five basis points higher. So there was definitely a positive trend that we liked at the end of the quarter.

That's great to hear. I mean, I guess with deposit costs increasing quarter over quarter, I'm just curious if the increase is a reflection of the competition driving it up. I mean, it feels like the industry might have front ran the hike a little bit. But it sounds like there will be that catch up in the fourth quarter as you talked about.

I do. I think you're actually right on both accounts, if that's possible. So I do think that it would deposit competition. And, you know, when we kind of look at our margin, we've got some headwinds and some tailwinds. And it's always that way. You know, from a tailwind perspective, we are slightly asset sensitive. So every 25 basis point hike should be about one basis point of margin from a modeling perspective. The steeper curve and Fed increasing helps us with our balance sheet. But then the headwind against that, which is exactly what you said, is that competitive pressure. We feel it definitely on the deposit side of the asset spread and the deposit pricing. So we're watching both of those very, very closely. and then the other piece of that is that deposit mix. If we start seeing migration from non-interest bearing into interest bearing. Both of those two things would affect the deposit cost. The mix as well as competitive pricing which is why my margin guidance is down a little bit. I think we're going to bump around a few basis points up and down for a few quarters as all this settles.

One other point on that I think is important to remember from an industry perspective is that We like to talk about all these increasing deposit costs, but what you need to remember is, assuming you've got discipline, most people are going to also price up on the loan side to offset a lot of that deposit cost. I think people are on the assumption that loan rates are going to stay the same and deposit rates are going to go up. If you're running that model, it's going to be short-lived. I would tell you that the way to look at it is any increase you see in deposit costs, hopefully the majority of that will be passed along in the loan costs too. So there'll be a balance there as we go forward as an industry.

Yeah, that's a really helpful color. Well, that's all for me. Thanks for taking my questions.

Thanks, Woody.

Our next question comes from Steven Scouten from Piper Sandler. Please go ahead with your question.

Yeah, good morning. Thanks. Maybe jumping a little bit off that last comment that you made, the ability to get higher loan rates as rates move higher and deposit costs seem to be going up. What do you feel like is the appetite for your customer base in your markets today? Maybe kind of the economic stability and ability to kind of absorb slightly higher rates on the borrowing side.

Yeah, I think it's there. I think there's a lot of capacity there, not just for our bank, but for the industry. Because when you look at the sponsorship behind a lot of deals today and equity in the deals today and the cash in a lot of the deals today and debt service coverage more importantly under stress scenarios there's a lot of capacity there unlike what we've had in prior times especially during recessionary times so I think a lot of customers and especially if it's gradual you know there's 25 basis points and 50 basis points now if it's erratic and we jump up 75 basis points to 100 basis points in short order that does have a shock effect but in terms of our especially our CNI group to be able to absorb that additional rate increase that capacity is there the way we underwrite I think the most important thing is just making sure you're being disciplined not chasing deals in terms of getting tight on that debt service coverage from the start because if you're already tight from the beginning and then you do have an increase in rates which we all expect then that's where things can get a little a little heated but Right now, based on our book and what we're seeing under the stress scenarios, which Doug and his team run, we've got plenty of capacity there, which is encouraging to see.

Okay, great. That's helpful. And you guys, maybe if we could talk about the mortgage business a little bit, have always had a really stable, strong mortgage business, even in the face of a lot of volatility. Can you talk about maybe how the purchase business in particular is trending as of late? And if you expect any material help from if it holds, of course, this move back down slightly in the 10-year?

Yeah, I mean, you know, it's all relative, right, in terms of timing in the mortgage industry. And we are getting ready to move into some seasonably slower quarters in terms of fourth quarter and first quarter. But, you know, what we've also done, as you've seen this quarter, is you've got to make sure that the expense side is – portion to the revenue decline. And that's what we've done a good job of is managing those expenses. I think right now there's limited inventory. Our purchase mix right now still runs 90 plus percent purchase versus refi. But when you're in transient markets like we are in some of the higher growth markets, there's still opportunity there. I think a lot of folks, what we're going to find is if there is a pullback in the 10 year that Most folks are going to go ahead and take advantage of that because I think people have come to the realization that rates are going to remain relatively or higher in a higher rate environment for an extended period of time. So what we're encouraging borrowers to do is go ahead and make that purchase and allow us to fund that, and then we can always refi later. So I think any pullback we see could be very helpful to the volume, which for all of us has moderated considerably, especially as we move into fourth and first quarter.

Yeah, that makes sense. And how, just at a high level, how do you guys think about the efficiency ratio on average for that business versus the rest of the bank?

Well, you know, it's running higher now than we would like. Typically for us, it runs in the 60 range. And then, you know, now it's considerably higher than that just given where we are. You know, we have been able to maintain, we had a little improvement in the gain on sale this quarter too. But I think the key to having that efficiency there is making sure that as your revenue declines, your expenses are also declining at the same time. And back to my earlier point, that's what's been evident in how we've operated our mortgage company and will continue to. And then on the flip side of that is you garner some benefit from technology and automating everything you've got in terms of being able to lever up the platform. So we spend equally as much time on trying to figure out how we can build capacity into the platform with what we have as opposed to just, you know, whacking expenses.

Yeah, that's very helpful. Great. Thanks so much for all the color. Congrats on a really good quarter. Thank you.

And our next question comes from Christopher Maranac from Breen Capital. Please go ahead with your question.

Hey, thanks. Good morning. Just wanted to ask about a scenario where deposits grow faster than loans. and would you tend to kind of put the excess liquidity just in the short-term cash or could you do more in securities portfolio over time?

We could definitely do more in the bond book. You know, we're at about 10% of earning assets and so we definitely have some room that if our deposit growth outpaced our loan growth, we could definitely put it in the bond book and when you look at what our Well, our purchases for the quarter in the bond book versus some coming on rates of some loan categories, we would definitely feel comfortable going into the bond book.

Great. Thank you for that. And then just a quick question about sort of hiring updates, whether it's on the loan side or other parts of the company in terms of how you see your team building out in the future.

Yeah, I hate to sound like a broken record here, Chris, but You know, when I look at what our expectations are internally and for consensus out there in terms of mid-single-digit growth, we feel very comfortable with that with the existing team. And we're always in a mode of being able to upskill and train our employees to make sure that the production is where it needs to be. But in terms of our necessity to have to go out and hire and load up on expensive new hires to obtain our objectives, that's not something we have to do we're very fortunate we've got a stable group of wonderful bankers that have been on board and they know how to produce and so for us we try and maintain that kind of net zero which is how we were this quarter we make some upgrades as we go but don't feel the compulsion nor the need to have to go out and do excessive hiring we're always looking for good talent that being said and we'll continue to be selective there but that's kind of where we stand right now and we feel very comfortable with with the existing team we have in terms of maintaining and exceeding goal.

That's very helpful, Palmer. I appreciate that. And I guess that just reinforces that there's still positive operating leverage that we should expect in the future.

Absolutely.

Thanks for taking my questions. I appreciate it.

Thank you. And our next question comes from David Feaster from Raymond James. Please go ahead with your question.

Hey, good morning, everybody.

morning David um I wanted to start maybe let's start on the on the capital side um look you got a fortress balance sheet right obviously that's a huge advantage a high quality um issue but you know just given your profitability you're going to continue to accrete capital quickly even even as growth accelerates back towards a big single digit pace I'm just kind of curious how do you think about priorities today it's obviously not burning a hole in your pocket but Curious how you think about the buyback or other opportunities for deploying that capital. Just wanted your thoughts.

Yeah, I would tell you that we've been very consistent in our response there, and that has not changed in terms of our priority stack. So, you know, first and foremost would be obviously organic growth. I will tell you, having excess capital in this type of environment with as many cross-currents as there are from a macro environment – and the economy as it stands today. We like where we are. And then if you look at our return on equity, it's still very solid, even given the excess capital we have, which is an important distinction. Then secondary to that, you've got the opportunity for buybacks. And as we said in our earlier statement, the board had renewed a $200 million buyback. So we'll continue to be opportunistic there. And then our dividend is very modest. I don't see a whole lot of change there with the dividend. and then last but not least would be Selective M&A but you know most of the targets that we like are not for sale and so it takes something very, it's got to be a cultural fit, it's got to be a financial fit and unless something like that unique unicorn kind of came along that would probably be last on our list. That's helpful.

and maybe just touching on credit. I was hoping you could touch on, you know, we saw criticized, classified, MPAs all tick a bit higher. Curious if you could talk about what you're seeing on the credit front, you know, what you're watching closely and then maybe just any underlying trends in the Balboa equipment finance business and what you're seeing there.

Yeah, David, this is Doug. Thank you. If I can start at the back, equipment finance is still performing where we want it. You know that a couple of years ago we retooled the credit box. I'm very happy where they're performing today. So that's going the way we want it to. If you look at the normalization, we had some migration in and out. of non-pass, and sometimes that can be lumpy, but we're working through that with customers as we speak. We don't see this as being systemic, and we are, as Nicole said, we're reiterating our guidance of charge-offs at 20 to 25 basis points. And, you know, if you step back and look at our criticized ratio at 115 basis points, you know, when you compare it to peer and the midpoint for our peer group, you know, we're less than half of where they are. So, and and I'll just end for you where you use your term. You said fortress balance sheet. We do a fortress balance sheet which does include a very good reserve as well.

Yeah, I think credit always deserves scrutiny, David, but so does perspective and when you look at the asset quality which in ours is well above peer and remains really a clear strength for our franchise. Yeah, yeah, for sure.

maybe just one more quick one just wanted to get a pulse of your clients you know from your perspective you know you got a broad footprint across some really strong markets just curious you know it sounds like production was really good you know to your point I mean you know getting more payoffs and paydowns is indicative of a strong market but I'm curious how demand's trending how's the pipeline looking heading into fourth quarter are you starting to see anything fall out of the pipeline that may not pencil as rates are rising and then just any commentary on the competitive landscape from the lending standpoint

Yeah, I'll kind of take that in reverse order. The landscape remains competitive, but that's something we're accustomed to in our high growth markets. I will tell you just on calls that I've been on personally, the pipeline right now is, the good news is it was up at the end of the third quarter relative to where we were even in the second quarter. So the pipelines remain full. We're not seeing any fallout at this point. And I will tell you anything that's underway is still being pursued moving forward. The real question comes in on new projects and new opportunities and people having a little bit of cautious optimism, if that, in terms of moving forward. So I think it's really going to be predicated on the activity we see in the fourth quarter from a macro standpoint. But right now, I think existing pipelines are full and I don't see any fallout. But I think as we move into next year, it'll be interesting to see How much people start to, and typically around election time anyway, people use that as an excuse to maybe hold off on new initiatives. It doesn't mean that they still have a business to operate and run, but I think just based on what we're seeing right now, everything we have is in the pipeline, will remain in the pipeline, but I do think, to your point, we'll probably see some caution as we move into the fourth quarter, first quarter of next year.

If I could just ask one quick follow-on, just kind of curious how the Nashville teams, I mean, they've only been here three or four months, but curious how they're contributing to that.

You know, it's reminiscent of what we see in a lot of our high-growth Florida and Georgia markets. They're a small but mighty team, and as I told everybody earlier, you know, the way we're going to judge their success, if you will, over the short time they've been here at the end of the year is going to be on the number of relationships they're building. and that's probably what's most encouraging to me. When I look at the relationships they're building, they're leading with the deposit sides. When I look at the mix and the funding supporting the loan growth, it is exactly what we had hoped and it's measured in terms of the growth but what we're seeing, we're really encouraged by and hope that that trend continues to where it becomes a more meaningful part of our operation. That's great.

That's great.

Thanks, everybody.

And our next question comes from Gary Tenner from DA Davidson. Please go ahead with your question.

Thanks. Good morning. I just wanted to ask a follow-up on the rate sensitivity conversation from earlier. I know you provided the amount of loans that reprice in the next year, I think $13.3 billion. Nicole, can you be a little more specific for us just in terms of the actual floating rate piece of that just as we're modeling through changing rates?

Yes. So I think what you're asking is kind of over the next year, what do we have kind of repricing?

Well, I think you specified 13.3 billion repricing. I'm just kind of asking how much of that is actually kind of floating rate immediate. if you will, Prime or Sofer.

Oh, I got it. Got it. So about $8.5 million is within the next three months.

Okay, great. Thank you. And I think there was a question earlier and just to maybe repeat it or recast it. In terms of kind of the shift up in market rates and kind of banks competing away, are the tendency to compete away some of that benefit. Even if you're seeing an absolute increase in production yields, are the spreads a bit tighter?

The spreads are kind of, yep. So on the loan side, the spreads are, I mean, it is competitive. It is definitely competitive. And I think that goes back to Palmer's point that we don't have to compete on some of this crazy pricing that we're starting to see in the market and that we really are focused on profitable growth. And then from a spread perspective to deposit rates and deposit production, which is really where we also focus, our growth this quarter was still margin accretive because of our non-interest bearing mix. But if we had to fund all of our loan growth with just interest-bearing deposits, we would be slightly margin-dilutive. About 25 basis points kind of spread difference between that interest-bearing deposit growth and the loan growth production rates. And so that's really why we continue to focus on that core deposit growth and that non-interest-bearing mix.

Very helpful. Thank you.

And at this time, we'll be ending today's question and answer session. I'd like to turn the floor back over to Palmer Proctor for any closing remarks.

Great. Thank you, Jamie. And I'd like to thank our teammates for another outstanding quarter. We remain focused on our core fundamentals while serving our customers and growing our attractive Southeastern franchise. Thank you for listening to our third quarter call, and we appreciate your continued interest in Ameris Bank.

and with that ladies and gentlemen we'll conclude today's conference call and presentation. We thank you for joining. You may now disconnect your lines.