Ameris Bancorp 2026 Q3 Earnings Call

Thank you, Jamie. 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, 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 statement as a result of new information, future 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.

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. 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. Importantly, we were able to drive this growth while protecting our above-average margin of 3.87% in the quarter. All profitability metrics remain strong, including our ROA of over 1.60%, our PPNROA of 2.27%, 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 disciplined 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 NPAs. Our capital level with over 13% Common Equity Tier 1 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.

Our profitable loan growth was driven by a mix of C&I, residential mortgage, and construction, and 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 am very pleased with our financial performance in the third quarter. We are well positioned as we go into 2027 as we continue to focus on organic and profitable growth in our attractive southeastern footprint.

I will 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 1.61%, our PPNROA was 2.27%, and our return on tangible common equity was 15.01% for the quarter. Our adjusted efficiency ratio improved to 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 $45.65 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 basis points, just one basis point below the 388 basis points 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 20-25 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. Our reserve coverage remains strong at 162 basis points.

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. 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. With that, I'm going to wrap it up and turn it over to the operator for any questions from the group.

Hey, good morning, guys. Good morning.