Ameris Bancorp Aktie

Good day, and welcome to the Ameris Bancorp First Quarter Conference Call. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Nicole Stokes, Chief Financial Officer. Please go ahead.

Thank you, Bailey, and thank you to all who 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 with Palmer Proctor, our CEO; and Doug Strange, our Chief Credit Officer.

Palmer will begin with some 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 statements as a result of new information, later developments or otherwise, except as required by law. Also during the call, we will discuss certain non-GAAP financial measures in reference to our 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 for his comments.

Thank you, Nicole. Good morning, everyone. We appreciate you taking the time to join our first quarter call. I'm proud of our performance to start the year, primarily from three things. First, we operated at a high level of core profitability with an ROA above 1.60%, PPNR ROA at 2.30% and our return on tangible common equity of almost 15%. Second, we experienced good growth in loans, deposits, earning assets and revenue. And third, we actively managed our capital by repurchasing 1.4% of the company in the quarter at about a 7.5% discount to yesterday's closing price.

In addition to those 3 positives, I want to revisit something I said on our first quarter call last year. I said we were focused on enhancing revenue generation and positive operating leverage. And once again, we executed on our plan compared to the first quarter of 2025, our quarterly revenue is up 10%, with expenses up only 4%. That's about a 21% efficiency ratio on our growth due to our focus on efficient organic profitable growth.

More specifically, on an annualized basis, we grew loans and deposits by 5% to 6%, along with earning assets at nearly 10%, revenue increased 9.5%, driven by an uptick in fee income, which represented a strong 22% of total revenue for the quarter. Our continued focus on expense discipline across the company results in an efficiency ratio of just under 50% despite some seasonal revenue and expense headwinds in the first quarter. Our net interest margin expanded 3 basis points to 3.88% in the quarter and remains well above peer level.

Loan production was $2.2 billion in the first quarter, a 45% increase over first quarter last year. Our loan pipeline remained robust at $2.8 billion. On the deposit front, we continue to focus on core granular deposits and relationship banking with total deposits up 5% annualized in the quarter. Our noninterest-bearing deposits grew $323 million in the quarter recapturing some of the seasonal decline of last quarter. Our noninterest-bearing deposits returned to 30% of total deposits, and we have minimal reliance on brokered funds.

We increased our capital return in the quarter by repurchasing $75 million or 1.4% of shares outstanding, which is the highest level of buybacks we have had in any 1 quarter. Capital levels remain robust with CET1 finishing at roughly 13% and our TCE ratio slightly above 11%. These capital levels position us well for any type of environment.

Credit quality was stable. Our 1.62% reserve was unchanged and both net charge-offs and non-performing assets, excluding government-guaranteed mortgages, improved modestly in the quarter. CRE and construction concentrations were relatively stable at 265% and 46%, respectively. Overall, we remain well positioned for future growth, and this growth should be positively impacted by the continued disruption in our Southeastern footprint.

I'll stop there and turn it over to Nicole to discuss our financial results in more detail.

Great. Thank you, Palmer. So we reported net income of $110.5 million or $1.63 per diluted share in the first quarter. Our return on assets was 1.62%. Our PPNR ROA was 2.3%, and our return on tangible common equity was 14.75% for the quarter. Our tangible book value increased to $44.79 and that's about 12.5% higher than a year ago.

As Palmer said, capital levels remain robust, and we were notably active in our share buybacks during the quarter, repurchasing $74.9 million of common stock or 950,400 shares at an average price of $78.76. Combined with our full year 2025 share buybacks, we've repurchased just over 3% of the company over the last 5 quarters. Our remaining share repurchase authorization was $84.3 million at the end of the first quarter.

Our net interest margin expanded 3 basis points to a strong 3.88%. The expansion came from 6 basis point positive impact on the funding side, more than offsetting the 3 basis point decline from the lower asset yields. Our margin level is well above peer and it's 100% core without any purchase accounting accretion from M&A. Our asset liability sensitive is effectively neutral and has really served us well through this macroeconomic environment. That said, we do anticipate we could have some slight margin compression over the next few quarters, and that's really due to pressure on the deposit costs as we fund our balance sheet growth.

We believe the margin could decline a few basis points per quarter, probably 5 to 10 total basis points lower over the next few quarters. But we will continue to focus on growth in net interest income, both through earning asset growth and margin management.

Non-interest income increased $8.1 million this quarter, mostly from better mortgage fees as well as an increase in our equipment finance fees. Total non-interest expense increased about $14 million in the quarter, partially driven by seasonally higher compensation costs, specifically higher payroll taxes, 401(k) matching expense and incentive accruals. Comparing cyclical first quarters, our efficiency ratio this year was 49.97%, an improvement from 52.83% first quarter of last year. This improvement was driven by the positive operating leverage as year-over-year quarterly revenue growth was $28.5 million, and our expense growth was only $6 million for that same period.

Going forward, I anticipate the efficiency ratio to be slightly above 50% for the rest of the year. During the quarter, we recorded $16.6 million of provision expense, annualized net charge-offs this quarter decreased to 21 basis points. We continue to anticipate net charge-offs in the 20 to 25 basis point range for 2026. Our reserve remained strong at 1.62% of loans, as seen as last quarter and overall asset quality trends remain strong with non-performing assets, excluding government-guaranteed mortgages and net charge-offs down in the quarter and both classified and criticized remain well below peer.

Looking at our balance sheet. We ended the quarter at $28.1 billion of total assets compared to $27.5 billion at year-end. Earning assets grew $607.8 million or 9.7% annualized as we grew both the loan book and the bond portfolio. Loans grew $314.5 million or about 5.9% annualized. And as Palmer mentioned, our loan production and our pipelines remain strong. The real big win for the quarter was our core deposit growth. Deposits grew $261 million or 4.7% annualized, and that was really strong growth in both our consumer and commercial customers of $547 million. As expected, we had the seasonal outflows of about $430 million of public funds and our noninterest-bearing to total deposit ratio improved back up to 29.8% from 28.7% at year-end.

We project our loan and deposit growth to be in the mid-single-digit range for the rest of the year. And as I previously mentioned, we expect longer-term deposit growth will be the governor on loan growth.

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

[Operator Instructions] Our first question comes from Will Jones with KBW.

So Nicole, I just wanted to start just with the margin. You guys have just perpetually continued to outperform your guidance and kind of outperform your expectations there, although the forward outlook, the messaging has really been the same that you kind of see a couple of basis point headwind just as becomes more competitive to fund some of your growth, although it feels like that messaging hasn't particularly changed much either. So maybe just a backward-looking question, what has kind of differed from your expectations with that dynamic? And maybe more forward-looking. Where are you seeing new loan yields today coming on just relative to new deposits?

Yes. Great question. So I'll start with kind of the look back. And we've said all of our guidance when we talk about our ALM modeling and where our margin guidance is going, we've said all along that, that had to do with some of our guidance we added was deposit pressure and also the funding and the mix of the deposits as we fund the growth.

So where is the growth coming from? Certainly in the first quarter, something that really helped the margin was the deposit growth of the noninterest-bearing. So $323 million of noninterest-bearing growth absolutely help the margin. And I understand that every quarter, I say that there could be some slight compression coming. But I did want to mention that our March -- for the month of March, our month of March margin was slightly below the 3.88 that we reported for the quarter. So we really do see they're kind of coming down a little bit in the quarter. In the future quarters, again, not huge amounts, but just some slight compression coming in, but we will continue to remain focused on the growth in NII and the profitability.

And then when you talk about -- and I think the second part of your question was loan and deposit production. And that feeds in exactly to the first part of the question. When we look at our loan coming on yields and production for the quarter versus our deposits, our loans is still accretive when you take in all deposits. When you take in interest-bearing and non-interest-bearing, loans came in for the quarter, total loan production at about 6.13%. And and then total deposit production, including noninterest-bearing came in at about 1.90%. So that's still coming in at a positive accretive spread to margin. However, if you take out the interest the noninterest-bearing and you look at just interest-bearing deposits, our interest-bearing total deposit production was at 2.74%.

So as we don't continue to get that noninterest-bearing growth the spread between loans and interest-bearing deposits are slightly dilutive to margin. It just goes back on how key that noninterest-bearing deposit growth is for us.

Yes. Okay. That's very helpful color. We like margin beats for what it's worth. I guess, on [indiscernible] just a little bit more. If we think about an environment where we don't get rate cuts for the rest of the year, is it possible that deposit costs could actually creep up throughout the year, just as we think about this 5 to 10 basis point margin headwind that you kind of see?

So if rates stay flat -- there's a couple of moving targets there. Tactically speaking, we have all of our -- our retail CDs are all pretty short. We've got about 35% of our CDs that reprice or that mature in the second quarter. And those are coming off at about a 3.48% and you compare that to our first quarter production of 3.44%. So it's very close. I mean, new production was a little bit accretive compared to what is expected to come off. And then when you look at the whole book, 83% will mature the rest of this year. And that is about a 3.39% versus production of 3.44%. So there's definitely that head -- that tailwind that was coming in on CDs has certainly slowed, which is feeding into my guidance.

So on overall deposit cost, a lot of that, I think, is going to be contingent upon competition. And on the loan growth and the opportunities that we have for loan growth, we are going to protect our relationships and protect our customers, but we are definitely after the relationship not just a transaction. And so we like having noninterest-bearing included in -- we like the operating accounts for our loan customers as well. So that blend is really what's going to help keep our deposit costs.

Yes. Okay. That's great. And lastly, I just wanted to talk -- touch on fee income a little bit, particularly the equipment finance business. I feel like maybe we've underappreciated a little bit some of the growth that's happened there in that business and that revenue stream. Maybe if you could talk about any drivers or initiatives that you've taken there in that business? And then just what an appropriate growth rate for the equipment finance revenue stream is going forward?

Yes. So the equipment finance, we do like that business. And I think everybody knows that we've got that credit box where we like it. And so the non-interest income that comes from that, that's really service charges and some fees on those loans. We like that. We think that that's going to grow pretty commensurate with the rest of the balance sheet. They're actually down to about 6.9% of total loans. They kind of peaked out at about 7.2%. I would consider the growth of the equipment finance to be in line with the growth of the rest of the company, and those fees should grow similarly to the loan growth.

Our next question comes from David Feaster with Raymond James.

I wanted to start. I appreciate your commentary on the deposits or the governor for growth, still targeting mid-single-digit growth. You've done a phenomenal job driving core deposit growth and funding growth with core deposits. Could you talk about the strategy to grow core deposits? And would you be willing to utilize more non-core funding to support growth if needed? And then just how the competitive landscape for deposits is playing into some of that?

Yes. I think if you look at our investments and talent over the last several years, we focused a lot, as I've said before, on treasury management. That's been a huge help for us when it comes to operating accounts, payroll accounts And obviously, we remain focused on just even consumer checking accounts. But that's kind of in our DNA. That's where our focus will continue to slide. We'd be willing to sacrifice some of that for growth, we would for the right kind of growth. I mean, our growth will always be measured. We don't like erratic growth, but we will certainly remain competitive and capitalize on opportunities that come before us. So the answer to that would be, yes, we'd be willing to sacrifice some of that for future growth.

Okay. And maybe just -- there's obviously been a lot of disruption across your footprint kind of a 2-part question, I guess. First off, how has that disruption impacted the competitive landscape in your footprint? And secondarily, have you seen much dislocation from any of this M&A yet? And is it on the client acquisition side or the hiring front, where are you seeing the most opportunities?

Well, our focus remains on the client acquisition side because as we've said before, we have the talent. We're very selective in the talent we have, and then we'll continue to obviously look at new talent. But in terms of our ability to execute on our mid-single-digit kind of growth, we've got everybody we need on board to do that. So our focus remains on the client. I think the benefit we probably have, David, is by being an overlap market with a lot of the disruptions going on and already having a present -- a lot of our competition that just doesn't have the same presence we had in some of those overlapping markets.

So I view that as a potential accelerator for us where we're not having to introduce the bank. They already know the bank. And in some situations, we already have, as I mentioned, some of the business. Now, the objective is to get -- become the primary business and primary wallet shareholder. And so I think that's where you'll see our growth from the disruption continue to accelerate. But we clearly stay focused on the customer acquisition side, and that's where that focus will remain.

That makes sense. And then you've got a lot of excess capital, you're continuing to generate a lot of organic capital. Wanted to get the thoughts -- I just want to get your thoughts on the regulatory relief here, specifically on the capital relief side. Have you done any work around what that could mean for you all, especially around the treatment of MSRs. Does that change your strategy at all? And just how do you think about capital deployment? Obviously, the buyback has been a focus. Just kind of curious your thoughts on capital at this point.

Yes. Because we have so much capital right now in terms of the relief it really doesn't change our direction at all, because we're already well capitalized, especially when it comes to any efforts for growth. Our capital priorities will remain intact in terms of what the opportunities are. And first would be the organic growth that we stay concentrated on, then I do think that depending on the macro environment, if it presents opportunities, there's additional buyback opportunities perhaps.

And then third, you've got dividends, which we're pleased with where those are. And then last but not least would be M&A. But like we've said before, M&A is really not on our radar just because we've got so much opportunity in front of us, and we don't need to distract ourselves from the great organic opportunities that are in our disruptive markets.

And Nicole, anything you want to add on that.

Sure. On the regulatory changes. So, I think the Fed has estimated that CET1 capital is probably going to fall by about 8% for banks and about an 8% reduction in risk-weighted assets. And our preliminary analysis shows that we're going to be very close in line with the Fed estimates.

Our next question comes from Gary Tenner with D.A. Davidson.

I'm Ahmad Hasan on for Gary Tenner here. First question on maybe loan growth trends. I saw that unfunded commitments increased. Can you comment on the pipelines and what we could potentially see in 2Q?

Yes. We remain obviously driven by our markets, and we were very encouraged by the start of the year. And more importantly, we saw robust pipelines throughout all the different verticals. It wasn't any 1 vertical. So that's more encouraging than anything to me in terms of diversification and opportunity. Any growth that accelerates or decelerates is really going to be driven more by the macro environment than it is anything internally here. But structurally, we're well positioned to capitalize on those tailwinds or headwinds. But I will tell you, we remain encouraged by the existing pipelines across the board.

Got it. And maybe on mortgage banking income, it rebounded strongly despite lower production volumes and narrower gain on sale margins. Can you talk about the different puts and takes there and maybe outlook on that segment?

Absolutely. So when we look at fourth quarter, we had some seasonality in the fourth quarter, and so revenue was actually down in the fourth quarter is the anomaly there based on some wholesale versus retail mix. And so really, the first quarter was just a rebound back to normal profitability as we had expected. And then I think that continues. The first quarter was a good strong quarter. Now a lot of that is dependent on rates and rate loss, but we are in good markets for the mortgage group.

In that sector, as you know, it's just so rate driven and tied to that 10-year. We did see an increase in apps, obviously, January, February when rates dipped. And then, of course, they rebounded backwards the other way. So it's primarily driven by the rate environment.

All right. That makes sense. And maybe [indiscernible] can you talk about your AI strategy and how -- what that means for your expense levels and perhaps how that is impacting different contract negotiations with your vendors? Just kind of curious...

Yes. I would tell you that AI here is more of an evolution than a revolution. And the way we look at it is utilizing it to build capacity, not so much to cut out expense. And so what we have done is spend a considerable amount of time looking through process here throughout the company, especially in some of our higher-volume areas and how we can create automation for that. And with that, you're going to build efficiencies. And with that, you're going to build capacity. So as the bank grows, we won't have to layer in additional expense. But that's the way we look at it. We don't look at it as a true cost saving measure. We look at it as an ability to build capacity for the company as it continues to grow.

Got it. That makes sense. Maybe just the second part of that question. Is it getting easier to negotiate contracts with your software vendors or...

Well, it is, it depends on the software. And obviously, the best part of AI is being able to utilize it to look through some of those contracts, and help you identify some opportunities. But yes, a lot of software vendors are getting very fancy right now and trying to lock you in for longer-term contracts, which we're not a big fan of because technology changes so quickly. And the last thing you want to be is beholden to something that becomes antiquated in short order. So we are able to negotiate within reason, but they are becoming more aggressive on the other side, knowing that they need to lock in some of their customers in anticipation of disruption in their own world. So that kind of works both ways.

Our next question comes from Russell Gunther with Stephens.

Maybe just a follow-up on the expense question. Really great improvement year-over-year on an already stellar efficiency ratio. Nicole, you tend to level set us relative to consensus expectations for the year. So hoping you could get in there and then perhaps just address the cadence of non-interest expense as well.

Sure. So I think consensus right now is really a good number. When you look at kind of the 2025 actual and 2026 consensus, that's about a $35 million increase. And remember, fourth quarter was a little bit low last year. So it's about a 6% increase. And if you take in a little bit extra mortgage, I think that expense run rate looks reasonable. You kind of have a 4% to 5% increase in overall expenses, majority of that being salaries and benefits. And then you add in a little bit extra for mortgage, you kind of get to that $30 million to $35 million increase. So that's kind of where I would guide.

So I feel like consensus is good in that. I think it's running about $160 million, $162 million a quarter for the next 3 quarters. And then remember, second and third quarter is typically our cyclically higher quarters because of that extra mortgage expense.

Okay. Excellent. And then a similar follow-up on fees. So I appreciate the comments around mortgage as well as the Balboa gain on sale. In the past, you've kind of helped us think about core fee income growth at the mortgage vertical. And so any insight there for the year would be helpful as well.

Yes. So -- and I apologize, I didn't hear, did you say ex mortgage or for mortgage?

Well, I'll take you that. But I was really focused on the ex mortgage piece in particular.

Yes. So for the ex mortgage piece, I think that you can expect kind of service charges on deposit accounts to really kind of follow the growth of deposits. So if we're expecting mid-single-digit deposit growth, I would say, mid-single-digit service charge growth. And then same with equipment finance activity, I would say that the loan growth that, that fee activity should follow the loan growth for that group. So again, kind of mid-single digit as well there. And then other non-interest income, that really includes kind of our BOLI income, which is pretty stable. And then it also includes some SBA gains.

And so typically, second and third quarter are a little bit higher than first quarter. But I think kind of tying it in consensus seems to have -- be really close, I think, to expectations.

Our next question comes from Christopher Marinac with Brean.

Palmer and Nicole, I wanted to ask a little bit more about the deposits per account and the information you've given us now for several quarters. Probably $1 billion ago on deposits, you used to have interest bearing checking in the 80s per account. Now it's well over 100,000. And I'm curious, is that a reflection of change of behavior of your customers? Or is it that you're focusing on slightly bigger small businesses within the footprint?

I think it's -- what is a reflection of is our customer base has grown, the existing customer base and then the customers that we're calling on -- and a lot of customers, they just have more liquidity on their balance sheet. So I think that's really the primary driver of that differential.

And in terms of kind of net new accounts, the pace seems to have been kind of mid-single digits for Wild Palmers. Is that still something you're kind of looking at as a consistent piece going forward?

Yes. That is the objective. And when you look at -- especially our noninterest-bearing, we continue have been very pleased with not only the growth there, but also the unit growth, not just dollar growth. and the team remains laser-focused on that opportunity. And if you can lead with that opportunity and then follow with the loans, that's the preferred method. So many times banks have historically led with the loans and a cheap rate on the loan and then asked for deposits. We try and turn that on its head and ask for the deposits and then consider doing a loan. But in competitive environments, it gets more and more difficult to do.

Understood. And then just a quick question on the mortgage business. Do you see the change in the rates in the past maybe 6 to 8 weeks? Does that impact at all profitability as the rest of this year, particularly in the seasonally strong in Q2 and Q3. Does that play out any differently than you would have thought?

I think it came exactly as we expected. We knew that fourth quarter was a little bit low because of the mix and the first quarter came in. I think what was maybe a little bit better than expected was production, it was a little bit better than expected because typically, first is a little bit cyclically slower. And it did drop a little bit, but it was coming off of a really strong fourth quarter. So we would have expected it to drop a little bit more than it did. So it was definitely a good quarter for mortgage.

And then looking into these next few quarters, we could still use sort of past history as a reasonable guidepost for the moment.

I do. I think so. I mean second -- I would say that first quarter, because it was seasonally strong. I think second quarter could be consistent with first quarter. And then depending upon what we see with the 10-year, there's certainly, I think, some pent-up demand if we get some movement. If not, then I think we're going to be similar to where we are for the first quarter. But people are -- and again, we're close to 90% purchased. So we're not a refi shop. So you're really going to -- our business is going to be consistent with just like events that people are moving and buying houses and that the tailwind for us could really be if rates come down if we get kind of a refi boom later in the year.

Our next question comes from Stephen Scouten with Piper Sandler. .

Jumped on here a little late, so apologies if I'm hitting anything you've already covered. But Palmer, it feels like you've been pretty bullish about the organic growth opportunities in the bank for some time. What do you think it would take to get kind of above and beyond the mid- to high single-digit growth? Because it feels like the potential maybe is there for even faster growth. Is it really just deposits? Or is there something else aside that you need to see happen to get maybe even stronger growth?

Well, the capacity is certainly there, but so much of that is driven by the macro environment. And -- the thing that we can assure the market is that if it's prudent to do so, we will hit the accelerator. I think right now, growth we're encouraged by what we see. But historically, we're accustomed to growing at double digits. And that's obviously where we would all like to get back to. But only if it's prudent to do. So while we like mid-single digits better than what historically the banks have seen over the last couple of years, we do hope that we can get back to to higher single digits or double digits in general on a go-forward basis, but that's just going to be driven by the macro economy.

And then in terms of the pace of the repurchase from here potentially, how price sensitive would you guys be with the continued outperformance of the shares? And how should we think about excess capital? Is there CET1 level you think about? Is there a total payout ratio? What would be kind of the marker that we should look at there?

Yes. So our TCE target, we've kind of said around 10%, 10.5%. We're above that currently. And then our CET1, we've kind of targeted around 12%, and we're currently above that. So in our total risk base, we're we're targeting about 14% to 15%, and we're right in that at 14.8%. So all of that being said, we like where our capital is. When you think about the buyback, we were more aggressive. We've been more aggressive, and we doubled the buyback last October, and then we're aggressive. When we look at kind of balancing our buyback versus growth and how to utilize our capital, we could -- we have about $84 million left. So we could do the remaining $84 million, which would be the full $200 million buyback and have about 9% asset growth and keep our capital ratios pretty consistent to where they are today.

We could do about $34 million more. So that would be about $150 million of the $200 million, so 70% of the authorization and do about 11% asset growth and keep our capital levels kind of flat. So I'm saying that to say that I think you could see us being opportunistic, but we definitely felt we went pretty aggressive in the first quarter, knowing that, that kind of strategy and we have that runway in our capital numbers.

Seemingly helpful, Nicole. And then maybe just last thing for me, maybe a more philosophical question here. I mean you guys have been pretty adamant that M&A is very low on the priority list really not on the table or of interest today. But when you guys have run the bank so efficiently and are putting up such great returns, at what point do you say, hey, if we're putting up a 1.60% ROA, it'd be great to put that on a much bigger pool of assets? And does that philosophically drive any thoughts around M&A at some point down the line?

Well, for us, as long as that pool of assets is generated organically, we're fine with that. But in terms of M&A itself, it -- to your point, it's -- we have a high bar that allows us to be a little more discerning because most of the deals that are out there are obviously -- they're all dilutive to a certain degree. And then we look at -- our biggest priorities are deposits. So when you try and look for deposit-rich banks that could be accretive, it narrows down the plane field pretty quickly.

And then furthermore, with all the opportunity in front of us, there's just very little interest in getting distracted with an M&A deal. So it remains low on our priority list. And now if we didn't have the organic ground game or didn't see the opportunity for growth, maybe reconsider or step back or move it up the priority stack. But right now, we just don't see the benefit in getting distracted with that.

This concludes our question-and-answer session. I would like to turn the call over to Palmer Proctor for any closing remarks.

Great. Thank you, Bailey. One of our key internal priorities for 2026 has been operating as 1 bank, 1 team. and a commitment clearly reflected in our strong first quarter results. And I'd like to thank all my Ameris teammates for their contributions to this outstanding start to the year. Looking ahead, we're going to remain focused on controlling what we can control and driving profitable organic growth and top-tier performance metrics while enhancing shareholder value through continued growth in our core deposit base, and tangible book value per share.

I want to thank you once again for joining our call. We appreciate your continued interest in Ameris.

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

Good day, and welcome to the Ameris Bancorp Fourth Quarter Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Nicole Stokes, Chief Financial Officer. Please go ahead.

Thank you, Megan, 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, 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 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.

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 call this morning. I'm proud of our fourth quarter performance and our record-setting results for the full year of 2025. We continue to operate at a high level of consistent core profitability while remaining focused on capital returns and accretive growth to enhance our shareholder value. We're positioned extremely well going into 2026, both from a growth and profitability level. Not only are we in the best southeastern markets that are growing faster than the national average, but we also have as bankers who are focused on servicing our customers and growing our franchise organically. The call is going to talk about the details of our financials in just a minute, but I did want to give you just a few top-level comments about our core profitability. .

We reported record earnings for 2025 at over $412 million for the year with our diluted EPS hitting $6 per share for the first time in our history. That's a 15% increase in EPS year-over-year, and we did it organically. Our PPNR ROA was consistently above 2% this year. Our margin expanded every quarter, and our efficiency ratio improved throughout the year. We remain focused on generating revenue growth and positive operating leverage. We reported a 6% growth in revenue for the year, while our expenses declined by 1%. Combined, this positive operating leverage pushed our efficiency ratio to 50% for the year. This core profitability led to tangible book value growth of over 14% for this year.

We remain diligent with our capital planning and are focused on generating shareholder returns. We paid off all of our sub debt during 2025, and as a result, have a very simple common stock capital structure going forward. During the fourth quarter, we announced an increased share purchase repurchase program, and we were active in the fourth quarter buying back almost 1% of our stock at an average price of $72. For the year, we repurchased $77 million or 2% of the company at an average price under $67. Capital ratios remained strong, ending the year with common equity Tier 1 at 13.2% and tangible common equity ratio growing to 11.4%.

Capital at this level positions us well for future growth expectations. On the growth front, we were very pleased with our asset generation during the fourth quarter, growing earning assets by almost 6%. We experienced unusually high payoffs in the CRE portfolio this quarter, which is indicative of a healthy economy, but does affect our net loan growth. Notwithstanding, we grew loans almost 5% in the fourth quarter, even with the elevated CRE payoffs of over $500 million. Under normal CRE payoffs, our loan growth would have approached double digits.

Our pipelines remain strong, and we saw the highest level of loan production since 2022, coming in at $2.4 billion for the quarter, which was a 16% increase above third quarter levels. Asset quality for the year remained strong with net charge-offs and NPAs improving from the prior year. Our allowance remains healthy at 1.62% of loans. CRE and construction concentrations were consistent at 262% and 43%, respectively. On the funding side, we remain focused on core deposits and relationship banking. Our noninterest-bearing deposits represent a strong 29% of total deposits, even with typical seasonality of the fourth quarter. We're well positioned for future growth, both from the strength of our balance sheet and our fundamental operating model.

We have strong momentum into 2026 on our organic growth strategies, which will be complemented by the disruption with our growing Southeastern markets. We have strong core profitability with diversified and durable revenue streams. These will continue to grow tangible book value, franchise value and shareholder value in 2026 and beyond.

I'll stop there and turn it over to Nicole to discuss our financial results in more detail.

Thank you, Palmer. We reported net income of $108.4 million or $1.59 per diluted share in the fourth quarter. Our return on assets was 157%. Our PPNR ROA was 2.38%, and our return on tangible common equity was 14.5% for the quarter. For the full year 2025, we reported record net income of $412.2 million or $6 per diluted share. That brings our full year ROA to $1.54 compared to $1.38 last year. Our year-to-date PPNR ROA was $2.25 compared to $2.05 in 2024, and our full year ROTCE improved to [ 14.51 ] from [ 14.41 ] last year. Tangible book value increased by $1.28 during the fourth quarter to end at [indiscernible].

For the full year, we grew tangible book value by $5.59 per share or 14.5%. As Palmer mentioned, our capital levels remain strong. We were active in our buyback, buying back $40.8 million of common stock or about 564,000 shares at an average price of $72.36 during the quarter. Our remaining share repurchase authorization was $159.2 million at the end of the year. On the revenue side, our net interest income increased $7.3 million in the quarter or 12.2% annualized. The core bank grew by about $8.7 million, while mortgage and premium finance both saw some seasonal declines in spread revenue. For the first time this year, we saw improvements on both components of spread revenue, not only did our interest income grow by $3 million, but our interest expense also improved by $4.3 million.

Our net interest margin expanded 5 basis points to a robust 3.85% for the fourth quarter, and that expansion came from a 10 basis point positive impact on the funding side and more than offsetting the 5 basis point decline on the asset side. For the full year, net interest income increased $87.7 million or 10.3% from 2024 and our margin expanded from 3.56% last year to 3.79% for the full year. Although we have positioned ourselves to be mostly neutral from an asset liability sensitivity perspective, we anticipate we could see some slight margin compression over the next few quarters due to the pressure on deposit costs.

As we see loan growth increasing, we believe there will be additional deposit pressure as we fund that growth in '26. During the fourth quarter, we reported $23 million of provision expense with $6.3 million of that relating to reserves for unfunded commitments. That's a real positive signal for future loan growth. And our reserve remained strong at 1.62% of total loans, which was the same as last quarter. Annualized net charge-offs this quarter normalized to 26 basis points. For the full year, net charge-offs improved from 19 basis points down to 18 basis points. We anticipate net charge-offs in the 20 to 25 basis point range in 2026.

Overall, asset quality trends remain good with nonperforming assets, net charge-offs and both classified and criticized remaining low for the quarter. Moving on to noninterest income. Adjusted noninterest income decreased $10.5 million this quarter, mostly from seasonal declines in mortgage. And for the full year 2025, adjusted noninterest income actually increased $1.4 million year-over-year. Total noninterest expense decreased $11.5 million a quarter, mostly driven by lower compensation costs and also some lower marketing and advertising costs. For the full year 2025, our total noninterest expense declined $3.8 million or almost 1% year-over-year.

The majority of this decline is from the mortgage division as variable cost declined with the decreased production due to the current interest rate environment. For the fourth quarter, our efficiency ratio improved to 46.6%, and for the full year '25, our efficiency ratio was 50%, an improvement from the 53.2% reported last year. I do anticipate the efficiency ratio to return above 50% in the first quarter especially when you consider our seasonally heavy first quarter payroll taxes and 401(k) contributions. Looking at our balance sheet. We ended the quarter with $27.5 billion of total assets compared to $27.1 billion last quarter and $26.3 billion at the end of Q4. For the year, that reflects a 4.8% balance sheet growth, and we had a 5.5% earning asset growth.

Profitability, looking at NII and EPS, they grew over 10% during that same time, really reinforcing our focus on profitable growth and positive operating leverage. Deposits increased $148 million with strong seasonal growth in our public funds, partially offset by some usual seasonal outflows of mortgage-related escrow deposits that will sit back over the year. Because of the seasonality of deposits, our NIB to total deposit ratio is usually lowest at year-end. And this year, it remains at a strong 28.7%. And then broker deposits were stable in the quarter, representing only 5% of total deposits at the end of the year.

We continue to anticipate loan and deposit growth going forward in that mid-single-digit range and expect that longer-term deposit growth will be the governor of loan growth.

And with that, I'm going to wrap it up and turn the call back over to Megan for any questions from the group. Megan, go ahead, please.

[Operator Instructions]. The first question comes from Stephen Scouten with Piper Sandler.

Great quarter on loan production, obviously. And Palmer, you noted if payoffs have been more normal, you think loan growth could have been in the double-digit range. Can you talk about what sort of visibility you have into future payoffs and maybe how those are -- maybe how they were surprisingly high this quarter and kind of what you're seeing as loans maybe mature and renew or are those maturing and renewing at the same pace or kind of what caused some of the elevated paydowns and how we can think about the progression of that into the new year?

Yes, 2 things there, Stephen. We are encouraged by the pipeline we continue to see building. And then more importantly, too, when you look at the payoffs, fourth quarter is typically for us, one of the busier quarters in terms of payoffs, and I think that's reflected in a lot of banks that have reported. So we see that moderating as we move into the first quarter and second quarter of the year. So that's encouraging. I will tell you, activity is -- continues to improve. And we like what we're seeing throughout the entire bank, not just in certain pipelines, but all the pipelines across the board. .

Now mortgage, we'll see what happens there within 10-year. So that could be a real tailwind for us depending on what transpires. But all in all, we feel pretty bullish.

Okay. And with rates kind of -- well, we'll see -- if they continue to trend down, I guess, would you think that would accelerate paydowns even further? Or would you be more excited about for a pickup in production and activity kind of to ofset potential phenomenon?

Yes. I think for us, where we are in our business development stage, I don't think the -- I think the increase or decrease in rates would actually accelerate our opportunity. And in terms of payoffs, I don't see that causing any migration out refinance and elsewhere because most people either depending on the conditions of the loan or the term loans are locked in. And like a lot of banks, we've got prepayment penalties, refinance penalties and so forth. So I don't see that being a big contributor to outward movement. .

Got it. Makes sense. That's great. And then I guess, in terms of thoughts around new hiring activity, I mean this has come up on every earnings call. I think I've been on the Southeast this quarter and people are calling it somewhat of a generational opportunity. I think your approach to it maybe has sounded different in terms of just improving your talent throughout the spectrum of your bank, but maybe not adding just pure head count quite as aggressively. Can you talk a little further about that if I'm hearing you right when I summarize that and kind of how you're thinking about it in the new year with the opportunity set?

Yes. I think ours is very different. And like we've said for several years, when I look at the budget and our expectations, we do not have the compulsion and the need to have to go out and hire massive amounts of people to accomplish what we want to do here. We've been very fortunate with the level of talent that we have. We've been very fortunate with the retention, and we stay focused on that. But in perspective, I mean, we hired 21 lenders this year. But net-net, we were up 3. So what we do a constant view of is looking at the talent how it's progressing or not.

And so what we've been able to do is upgrade talent on a consistent basis, thereby eliminating a lot of the churn and the constant need to have to add additional bankers. We've got a -- we've got great bankers and they can help us deliver on what we need to deliver on. And that being said, we obviously will remain selective and if there's opportunities out there. But in terms of having a need to drive up noninterest expense and add on a bunch of bankers each quarter, we're in a very fortunate position, which we don't have to do that.

The next question comes from Catherine Mealor with KBW.

I wanted to ask about the margin. Nicole, appreciate your caution on just thinking that the margin will come down next year just as deposit costs accelerate, but we're coming from such a higher level than maybe your -- historically, I think you've kind of talked about a margin like a 360 to 365 range, but we're a lot higher than that today. So just kind of curious if you could put a range on your margin expectations for the year. .

Yes, absolutely. And I know this is yet another quarter of saying that it's going to go down and then it went up. But real quickly on that 5 basis points of expansion, 2 basis points of that expansion really came from our sub debt payoff. So really, we only had kind of 3 basis points from both the loan and deposit side. So when I look out over the next few quarters, so much of our guidance is dependent on those deposit costs and the deposit pressure that we see as we see growth accelerating. So I feel like 5 to 10 basis points over the next few quarters. And then longer term, it's really going to depend kind of on growth and interest rate environment and where we are after that kind of 1-year horizon.

Okay. And that's 5 to 10 basis points from today's level or the full year '25?

That would be kind of where we are today. .

Got it. Okay. Great. And then maybe on expenses, I know there was a big reduction in expenses this quarter just from personnel. Can you help us get a range as for where a good starting point is for 1Q just given the increase in payroll taxes and things like that?

Absolutely. So when you look at the fourth quarter and the first quarter, there's always some big wins. So when you look at the fourth quarter, the difference in payroll taxes and 401(k) match. We have -- a lot of that is kind of front loaded in the first quarter. And so that's about a $5 million swing that we expect to come back in, in the first quarter. And then we also had some less incentive accrual in the fourth quarter based on truing up all those accruals based on end of year numbers. So that's about another $2.5 million.

So I know that the fourth quarter, we were at $143 million. If you add back in that $7.5 million, you kind of get us back in that $150 million, $151 million range. And then I think kind of a guide is probably for the year, I think consensus is really good, but I feel like maybe the first order might be a little bit heavy. So maybe the year-to-date consensus number is good, but it might be a little bit heavy in the first quarter. Some of it may come in later in the year as we see growth accelerate throughout the year. Some of those expenses, commissions, et cetera, could come in as well. So probably $154 million, somewhere between $154 million, $155 million is a good starting point for first quarter.

The next question comes from Russell Gunther from Stephens.

I wanted to start with just a margin follow-up, if I could. Nicole, could you give us a sense of where kind of new production is coming online relative to the incremental cost of deposits and sort of along that question set, just the cadence of the fourth quarter margin over the course quarter of that quarter, kind of where we exited?

Sure. So the fourth quarter kind of when you look at loan production, it came in right at about $635 million for the quarter. And that's with all divisions. That's with the bank, premium finance, warehouse, all of that kind of blended yield was about $635 million. And that's compared to the deposit production, all deposits came in right around 2%. So we're looking at about a [ 435 ] spread on production, which is accretive to growth -- I'm sorry, which growth is accretive to margin. .

However, if you look at that loan spread compared to the interest-bearing deposits only, it was a little bit dilutive. And so that really says where the -- where our focus continues to be on the growth in NIB and really those core deposit growth to be able to help with the interest-bearing spread that we see the pressure on. And then I think the second part of your question was kind of the quarter -- we were very consistent the $385 million for the quarter. I mean it was up or down each month by 1 or 2 basis points, but there were no significant swings over the quarter.

Okay. Very helpful, Nicole. And then maybe just switching gears to capital. Very robust position here. You got reserve levels that are incredibly healthy. Just level set us in terms of your kind of CET1 bogey in order to get a sense of what you guys might consider excess? And then given how quickly you accrete capital, how do you guys plan to put a dent in that over the course of the year?

Our capital priorities have not changed. I mean obviously, first and foremost, it's growing into organic and levering it up. Then as you saw, we were active in the buybacks, we will remain opportunistic there. Then the dividend and then obviously, last would be any sort of external activity. But given the markets we're in now and the opportunities we see, that would be far, far down the list. In terms of target for us, I think we would be looking more on the TCE level, probably around 10%, 10.5%. And then on the CET1 target of around 12%, if you wanted to look at longer term. .

That's really helpful, Palmer. And guys, just last one for me. Curious on the charge-off guide for the year. Fourth quarter results were kind of at the high end of that. Could you just discuss quickly the drivers of the net charge-off activity this quarter and perhaps [indiscernible] contribution specifically?

Well, Russell, this is Doug. First of all, Equipment Finance really was -- they were in line and consistent for the whole year. We did have some consumer medical notes that we charged off, but our charge-offs, they tend to ebb and flow from quarter-to-quarter and fourth quarter was preceded by 2 very low charge-off quarters, that being at 14 basis points. But as Nicole framed it, when you look at it for the year at 18 basis points, we were below the prior year and below consensus. And just to reiterate, for this year, we're still in that 20 to 25 basis point guidance.

The next question comes from John McDonald with Truist Securities.

Nicole, I was wondering if you could give us a little more color on the puts and takes on deposit trends in the fourth quarter. There's a little bit of a decline in NIB and wondering if you've seen some of that come back? And then just as you think about your mid-single digit outlook for this year, what kind of mix evolution are you planning for in the overall deposit mix?

Sure. So we did have, and there is some cyclicality in our balance sheet every year, and this year was no different. We have kind of the fourth quarter, we have public funds that roll in. And then at the same time, we kind of have the mortgage escrow deposits that roll out. So fourth quarter is always kind of our lowest point for that NIB mix. So we were pleased that it ended up close to 29%. What we also saw this year was a little bit different to your point about how any of it come back? And the answer is yes.

So from a noninterest-bearing perspective, our number of accounts has continued to increase. And so what we saw in that decline of NIB were 2 things, some of that mortgage escrow deposits. And then also, we had some customers, and I'm not talking about 2 lumpy customers. It's spread across 20 to 30 customers that moved money out at the end of the year. And some of that, we believe, was used for some tax planning purposes with some of One Beautiful Bill items. And then also some of it was used because -- do their balance sheet management at the end of the year. And we've seen a lot of that come back in already.

So while it looks a little bit like an anomaly, I think it's -- our underlying focus continues to be on noninterest-bearing. And based on the number of accounts that we're opening and that net growth in number of accounts, we still feel positive about NIB growth. So that kind of leads right into the second part of your question is where do we see that growth. We are so focused on growing core deposits and being the relationship banker. And that's where we see some of the excitement of the market potential market disruption or the potential from the market disruption where we continue to grow those core deposits with the relationship.

So we would focus on the operating accounts as well as their money market accounts. And then backfill any of that was broker, but we're pleased to be able to keep brokered at 5% year-over-year.

Great. And just to follow up on the idea that deposit growth is a governor of loan growth. Are they -- if you're looking at mid-single-digit growth on both, is it a related forecast? Or are they impendent -- because as Palmer mentioned, it feels like the loan growth paydowns normalized would be better than mid-single digits. Just kind of wondering if those are connected as a forecast.

So we do actually forecast -- I mean we budget and we forecast for core deposit growth. But when you look at our balance sheet, there's several components of our loan portfolio that don't necessarily have a deposit feature with it. So really one of the -- if you kind of look at where we get core loan growth for the bank, core deposit growth and then some of the other lines of business. So if we ended up funding some of those other lines of business with either brokered or wholesale, as long as we are continuing to focus on that margin.

So that's where you may see from our kind of forecast perspective. But from a core bank, core growth, we are definitely focused on funding that with core deposits.

Great. And one last follow-up. On the provision build this quarter, some of it was for unfunded commitments. Is that relationship of growth to provision build something that had anything unique about it this quarter? Or is that how we should think about it going forward?

So I think a lot of that unfunded commitment and this is actually the second quarter in a row that we've seen that. And when you look back over our -- we kind of put a governor on our -- some of our CRE and some of -- all of our constructions whether that was homebuilder as well as CRE. So that bucket of unfunded kind of hit a wall. And now we're building that bucket back up. So as we're building that bucket, in a normal environment that, that stays consistent, you don't have that refill. So kind of we're starting from a much lower point of filling it, and we've got it about full.

Now if we had a really big quarter of production that unfunded, you could see it go up, but we also see that as opportunistic. That means we've produced loans. We've closed loans. They just haven't funded. So every time we see a growth in unfunded, we feel like that's a good driver for future loan growth because we know we have those in the pipeline.

The next question comes from Gary Tenner with D.A. Davidson. .

I've got a couple of questions on the mortgage segment. You had the $2 million net revenue decline from the MSR sale and the valuation change. But given the flattish production and gain on sale margins. Can you talk about kind of what draw the remainder of that $10 million quarter-over-quarter decline in fee income in the division?

Absolutely. So while mortgage production and gain on sales were fairly stable. The fourth quarter had a heavier mix of wholesale production, and that's a little less profitable than the retail origination. And you always have a little bit of cyclicality in the fourth quarter because your pipelines are down. So that gain on -- I'm sorry, your market value of your pipeline is as well. So -- but when you look at the year-to-date, if you take out that MSR gain last year, you kind of level the playing field for that noise.

And you look, mortgage revenue was down about $13 million or about 8% from '24 to '25. And that our expenses were down $6 million or about 4%. So it's right in line with our expectations of running kind of that additional road or pullback in the mortgage group at that 50% efficiency ratio. So while there were some anomalies in the fourth quarter, it evens out for the year.

Okay. Great. And then the second mortgage question, I guess, is can you give us -- because I didn't see -- and I apologize if I missed it, but the unpaid principal balance of the servicing portfolio at year-end?

Yes, at the end of the year, our unpaid principal balance was about $8.7 billion, which is about 4% of Tier 1 capital. So well below the 25% regulatory threshold. .

Great. And then last question for me, just a follow-up on the capital side. Proctor, you talked about your remaining opportunistic there. I'm just curious if you're willing to talk about any kind of sensitivities around price levels. I mean the stock is up 15% from where you repurchased in the fourth quarter. Obviously, the capital accretion outlook remains very strong. So just wondering how you balance kind of the relative price versus your appetite there?

Yes. No, it is a balancing act. But the way we look at it right or wrong is if you see a lot of M&A out there in the market. And if there was a mini Ameris Bancorp sale out there, what would we be willing to pay for it is another way to look at it and who better to invest in than yourself. So we'll still be selective there in terms of buyback opportunities. .

The next question comes from David Feaster with Raymond James.

I wanted to circle back to the production side. I mean, [Audio Gap] was real the strongest in the past 3 years. I wonder if you can give us a sense of how that is increase [Audio Gap] productivity from your bankers versus the shift in demand. And just curious if the [Audio Gap] markets that you're maybe more shift [Audio Gap] more opportunities? .

David, this is Palmer. I'll try and answer your question. You're kind of coming in and out. There's a bad connection. But I would answer it this way. I would say it's all of the above. We've got a lot of focused individuals that are here and generating great production regardless of additional market disruption from M&A. And then you compound that with recent activities that I think will continue to deliver additional opportunities for us. And then also given how we're positioned in just high-growth markets, that bodes well for us as we look out. And if the macro environment continues to improve, what you'll see is our -- we're well positioned to grow at a faster pace.

And we're not going to stretch on our assumptions because to put another way, we prefer to earn the upside rather than promise it.

Yes Okay. And maybe just staying on the loan side, I mean, anecdotally, we hear a lot about increasing competition. It [Audio Gap] primarily on the [indiscernible]. But I'm just curious, what's the competitive landscape lending like from your standpoint? Has it primarily just been on the prior [Audio Gap] or are you starting to see more pressure on standards and structures as well?

No, it's mainly been on pricing. I mean structure, fortunately for us and for the industry, which is a good sign, has held up relatively well. You'd have some folks get a little more aggressive than others. But good for us. We've grown up in a very competitive environment when you're in these high-growth markets. So the competition is nothing new to us to have to adapt and adjust to, and we will get our fair share of the opportunities.

Okay. And then premium finance. You talked about -- this is a segment I know you all have been pretty excited about. You talked about some of the seasonality in the prepared remarks. Just kind of curious what are you seeing about within that segment and growth expectations and any other opportunities there?

No. Thank you for the question. Premium Finance has been a good, steady, stable performer for us. I don't think you're going to see -- in terms of balance sheet composition, it's not going to consume a lot more of the balance sheet, but what it will do is continue to provide meaningful earnings to the company on a go-forward basis. And the pipelines there remain full. There are additional opportunities, I think, that we will see in the market, but we're -- we like that space and are committed to that space, and it's obviously delivered for us. .

Our next question comes from Christopher Marinac with Janney Montgomery Scott.

Palmer and Nicole, I wanted to look at just the growth over the last couple of years in terms of the accounts of DDAs and noninterest and the NOW accounts. It seems that you're up about 4% or 5% in both those categories and in money markets, too. And I'm curious, as you look at new -- net new accounts being higher, is there a way that you are incenting to get balances to grow faster? And does it start with getting the account in the first place on a net basis?

Yes, Chris, sorry. We had a little technical difficulty here. So we do focus on -- I mean, you're exactly right. The first part is getting a customer in the door and getting the account opened. And then the second aspect is how do you grow that relationship and you start with one account and then how do you get more. And I think that's where we look forward to some of the disruption in our markets because maybe right now, we're we have one account, but not the whole account.

And so as they maybe have some disruption in their banking relationship with the other bank, we might be able to pick up some of those other deposits as well as grow the current relationship. So we see it as 2 to -- kind of 2-pronged. One, you have to grow the number of accounts and you have to grow the number of relationships and then you also have to grow those relationships within it -- within it -- within the relationship. So yes, it's absolutely both of those.

And Chris, just to add a further comment, our incentive plans are geared around that, too, and motivate that type of behavior. And one of the things I think that a lot of folks in the industry, the exception of a few, overlook is a lot of the value of the consumer accounts. And while they may not add as much in the way of total deposits and funding, what they do add are meaningful, sticky, stable relationships. So we have not lost focus on the consumer, and we're able to leverage our branches and the retail land extremely well, and we'll continue to do that.

And then a lot of the additive to with us is the investments we made in treasury management over the last several years. A lot of people talk about lenders that they've hired, but we like to focus on the deposit side and on the treasury side, equally, if not more. And so I think that's been a big driver for us as we look forward into opportunities for good commercial deposit growth.

Is the treasury success going to show up in just the NOW accounts or will it show up in money market to some extent, too?

Both. You're right, both. I mean you got your operating payroll accounts. And then obviously, any excess funds will be swept into a money market type of account or higher interest-bearing account. .

And you've had success dropping the cost of funds we see every quarter here. And I'm just curious, do you have any opportunity to kind of tweak deposit pricing to get more dollars in and still keep your margin where you are trying to manage?

It's becoming more and more competitive. Obviously, when you look out there at the rates that are being offered by banks and nonbanks, and you compound that with the fact that we've got a lot of new entrants coming in with splashy rates. But most of those are going to be at your -- those are going to be more your, I call it, hot money where people are just chasing the yield. What we try and stay focused on is garnering opportunities to bring in more core relationships and less on that. But that doesn't mean at some point, we don't have to participate and have to be competitive. But our focus remains on the relationship side.

And then I'd rather pay an existing relationship customer, a higher rate on their CD than just lower people then with high rate funding.

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

Great. Thank you, Megan. Finally, I'd like to also thank all of our Ameris teammates for their contributions to a record year 2025. I'd also like to thank everybody again for listening to our fourth quarter and full year 2025 earnings call. We're proud of another solid quarter of performance, and we're really looking forward to 2026. And please note that we remain focused on core profitability, organic growth and enhancing value through our core deposit base and tangible book value growth. We appreciate your continued interest in Ameris Bank. Thank you.

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

Good day, and welcome to the Ameris Bancorp Third Quarter Conference Call. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Nicole Stokes, CFO. Please go ahead.

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 Doug 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.

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, PPNR 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 loans 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 noninterest-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 1 to 13.2% and TCE to 11.3%. Asset quality remained 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 of 5% annualized with noninterest-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. When I look out 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 Southeast continues to experience.

So 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 PPNR ROA was at 2.35%, which is 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 continue 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 of $7 million, which outpaced our interest expense growth of only $1 million. Our net interest margin continued to expand, up 3 basis points to a strong 3.80%. And remember, that's a core margin as it includes 0 accretion. The NIM expansion this quarter really came from a 2 basis point positive impact on the asset side and a 1 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 on deposit costs as we see loan growth really pick up in 2026.

We continue to be fairly neutral on asset sensitivity. Noninterest income increased $7.4 million this quarter, mostly from better equipment finance fees and also a $1.6 million nonrecurring gain on securities. Our mortgage production was approximately $1.1 billion with mortgage gain on sale at 2.20%. Our total noninterest 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.

And 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 noninterest income growth was the real driver of that lower efficiency ratio and not necessarily an expense savings initiative. And 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 remained strong at 1.62%, the same as last quarter. Overall, asset quality trends remain good with nonperforming assets, net charge-offs in 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 investor 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 noninterest-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.

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

[Operator Instructions] The first question comes from David Feaster with Raymond James.

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 how payoffs and paydowns are trending and how that's impacting growth near term?

Yes. 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.

But 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 '25 and into '26. So all in, payoffs, it's just a necessary evil, if you will, but it's also a sign of a healthy market. So we continue to remain very bullish.

Okay. And maybe just staying on that kind of -- 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 is -- it seems like competition is 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?

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. But I will tell you, one of the mitigants to that, even though the pricing will continue to be a pressure point, I think the disruption will help us in terms of garnering additional volume. So we are well positioned for that and ready to capitalize on any disruption that might come.

So 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.

And then just touching on the Equipment Finance side of the business. Could you touch on how production has been, how demand is trending there? And what segments of Equipment Finance you're seeing the most demand for? And then 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.

Yes. I'll touch on the overall sentiment and then Doug can talk about the credit. But the -- I would tell you, I think it's a good reflection of -- these are small business operators. And so 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. So that seems to be a bright spot for us as we go forward and the economy seems to be holding up. So I think it's a bigger, broader reflection of how well the small business operators are performing at this stage.

And Doug, do you want to talk about the credit side of it and the metrics there?

Yes, sure. Thank you. David, the credit box, we retooled that at the end of '23 and into '24. 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.

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

Yes. 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 are -- 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. So that could be a real contributor as we go forward in terms of prepayment penalties, late fees and everything else associated with the servicing. So that is an add to us in terms of that particular line of business.

The next question comes from Catherine Mealor with KBW.

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 will probably increase next quarter. And so 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?

And then 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 so I was just curious if there was anything going on that's run ratable if that's just a onetime event.

Perfect. Thank you, Catherine. So I'll start kind of with general expenses, and I'll say that the efficiency ratio be down in the 49% is really driven from the revenue side, the fact that we had the margin expansion and we had some noninterest income growth there. So 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. And then when you look into 2026, again, kind of -- I hear your question on mortgage, and I'll take that in just a second. So kind of with regular expenses, I think consensus has us right now at about a 5.5% increase. And I think that looks a little -- I mean, I think that looks reasonable. 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. So kind of blending all that into that 5%, 5.5% rate for noninterest 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. And 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. So as modeling out that growth, I would model out about a 55% efficiency ratio on the growth, if that helps.

Yes, that's awesome. Okay. And then maybe my second question, just on the margin. As you 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. And so within that, maybe if you could talk a little bit about just on the deposit side, where you think deposits will go? And 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.

Absolutely. So my margin guidance has said compression for several quarters now, and we haven't seen it. But I will say that we're starting to see it. And so 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. So 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. And every time the Fed cuts, it kind of just pushes that lag out a little bit. So I do feel like it's eventually coming from that side.

And then the second piece of my margin guide really comes from the competition that I think we will see and we are 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. And so we're starting to see that on the deposit side. So 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. But our third quarter production for CDs is at 3.89%. So 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 noninterest-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% ]. But if you add in that noninterest-bearing growth, we flip from being dilutive to being accretive to margin. So the real answer there is can we continue to grow noninterest-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.

But I will tell you that we stay very much focused on growth of NII. So even if we have a little margin compression, I would expect NII to continue to grow.

Next question comes from Russell Gunther from Stephens.

I wanted to follow up on loan growth commentary here on the mid-single digits. 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?

That's certainly what we hope and would like to anticipate. And I think the most important thing is being in a position to capitalize on that, which is where we are. So 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. We're accustomed to growing at a 10% rate in a healthy environment. And given -- it depends on the macro economy, too, and what happens there. But 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 and then you compound that with disruption, that will be a huge opportunity for us to capitalize in our primary markets.

So 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.

And then kind of in that scenario or perhaps maybe more near term, how should we think about the size of the investment portfolio going forward?

So our investment portfolio, as you know, we let it get down to about 3%. We're back up now to right at 9.3%. So we could maybe go up. 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 to the 10% range. But I think that's really where we feel comfortable.

Although I will say we like the fact that we have the optionality that if we -- which keeps us focused on the deposit growth because we -- if we can grow the deposits, then we have some optionality between both loans and securities.

Got it. Okay. And then 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 for depositories on the buy-side front that makes sense for you guys? Or is the organic, again, opportunity set sort of more of a priority at this point?

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've probably got far more opportunities organically going forward as we look out than getting distracted by an M&A deal.

The next question comes from Stephen Scouten with Piper Sandler.

So 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 64 new lenders, but maybe -- and I know you tend to talk about that number in net and gross terms. So 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.

Yes. Our focus has and will remain -- we're focused on garnering customers more than we are having to have the dependency on doing lift-outs of teams to capitalize on that. And 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.

But 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. So if you look at what we've done just this year, net, I think we're up 3 people in the commercial group, but that includes 10 new commercial hires. So 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. And so that's really -- I think if you do that as you go along, you avoid potential pitfalls as you go forward.

So we are certainly in a position to capitalize on what we see out there with our existing teammates. But if we see selective opportunities to bring in new talent, we will certainly consider that. But we are not dependent on that to capitalize on the opportunities we see going forward.

Got it. Appreciate that. And then you guys are kind of, in a lot of ways, in my mind, like tip of the spear around mortgage activity and inflection points. I'm wondering what you're seeing given where the 10-year has been moving and if 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?

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. But I think if we can get down, if we talked about last time, something with a 5 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.

And once again, we're well positioned to capitalize on that. We've got a lot of heavy purchase volume right now. But 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.

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

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 Southeastern footprint. We appreciate your interest in Ameris Bank. Have a great day.

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

Good morning, and welcome to the Ameris Bancorp Second Quarter Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Nicole Stokes, CFO. Please go ahead.

Thank you, Ryan, 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 some opening comments, and 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.

And with that, I'll turn it over to Palmer.

Thank you, Nicole. Good morning, everyone. We appreciate you joining our call today. I am very proud of our second quarter results, which again beat expectations and resulted in an increase in our return on assets PPNR, ROA, return on tangible common equity and an improved efficiency ratio. As you can see, we remain focused on enhancing revenue generation and positive operating leverage. This is evidenced by our 20-plus percent annualized revenue growth in the quarter, which was almost double our expense growth, which pushed our efficiency ratio to below 52%. Our margin continued to expand during the quarter while we grew loans 6.5% annualized, which is within our mid-single-digit guidance.

Our 377 NIM remains well above most peer levels, particularly thanks to our strong 31% level of noninterest-bearing deposits. Capital ratios grew again in the quarter, which positions us well for future growth opportunities. Our strong second quarter earnings and capital generation increased our common equity Tier 1 to 13% and TCE to over 11%. We also saw improvement across the board in all aspects of asset quality. We grew tangible book value this quarter by 15.5% annualized, passing through the $40 level for the first time to finish the quarter over $41 per share. We now have $50 of tangible book value on our sites.

We were active in repurchasing stock, buying back $12.8 million in the quarter. Our CRE and construction concentrations remain low at 261% and 45%, respectively. Our strong loan growth was driven mostly by C&I. Deposits grew as well but at a smaller pace. Noninterest-bearing deposits remained our core focus with those balances growing over 3% annualized. Our bankers are well positioned to take advantage of growth opportunities and disruption within our attractive southeastern markets. In fact, production increased 29% from the first quarter, with this quarter having the highest loan production since 2022.

Overall, we continue to stay focused on what we can control. When I look out for the back half of 2025, I'm encouraged as we continue to benefit from a robust margin, a solid noninterest-bearing deposit base, a diversified revenue stream, strong capital and liquidity, a healthy allowance and asset quality, a proven culture of expense control and positive operating leverage, experienced local bankers in to Southeast markets and obviously notable scarcity value, given our size and scale in those markets, which allows us to take advantage of the banking disruption the Southeast continues to experience. Overall, I'm extremely optimistic for the remainder of 2025 and into 2026.

I'll stop there and turn it over to Nicole to discuss our financial results in more detail.

Great. Thank you, Palmer. We reported net income of $109.8 million or $1.60 per diluted share in the second quarter, which is a notable 21% increase over the year ago quarter. As Palmer mentioned, our profitability improved to levels well ahead of our recent path with an ROA and return on tangible common equity, both moving higher. Our efficiency ratio improved to 51.63% this quarter compared to 52.83% last quarter as we continue to focus on positive operating leverage, evidenced by our revenue growth of 20.9% annualized well outpacing our expense growth.

This quarter, our return on assets was robust at 1.65%. Our PPNR ROA was [ 218 ], and our return on tangible common equity was 15.8%. All of these profitability metrics remain top of class. Capital levels continue to strengthen and tangible book value per share increased to $41.32 per share, which was a strong 15.5% annualized grade growth or $1.54 per share in the quarter. Our tangible common equity ratio increased to 11.09% at the end of the quarter. And we did repurchase about $12.8 million of common stock or about 212,000 shares during the second quarter. We've got about $72 million remaining through the end of October available to purchase. Our strong revenue growth was driven by increases in both net interest income and fee income. Our spread income grew by $10 million in the quarter or 18% annualized.

And I'll note here that our average earning assets increased $564 million or over 9% annualized this quarter. In addition to that, our net interest margin continued expanding, up 4 basis points this quarter to a strong 3.77. And remember, this margin is a core margin. We have 0 accretion in that margin. The modest margin expansion came mostly from the asset side with a 3 basis point positive impact in our loans and a 1 basis point from a higher bond yield. The previous benefit to our margin from the lower funding cost has been fully realized with our total cost of funds remaining flat during the quarter. We believe that we will see margin normalize above the 3.60% to 3.65% range over the next few quarters as we expect pressure on deposits as we see loan growth pick up the second half of the year.

We continue to be close to [ neutral ] asset sensitivity. Noninterest income increased about $4.9 million this quarter, mostly from better mortgage. Our mortgage production grew 36% in the quarter to approximately $1.3 million, and our mortgage gain on sale climbed 5 basis points to 2.22%. Total noninterest expense increased $4.2 million in the second quarter, mostly driven by higher salaries and employee benefits, which related to the stronger mortgage production and our annual merit increases. As I previously mentioned, our efficiency ratio was strong at 51.63%. During the second quarter, our provision for credit losses was $2.8 million. Our reserve remains strong at 162% of loans or 408% of our portfolio NPLs. Overall asset quality trends were favorable with nonperforming assets, net charge-offs and both classified and criticized all improving in the quarter. Our annualized net charge-off improved 14 basis points.

Looking at our balance sheet. We ended the quarter with $26.7 billion of total assets compared to $26.5 billion last quarter. Loan growth returned with an increase of $335 million or 6.5% annualized, in line with our loan growth guidance. Loan growth was mostly from C&I loans this quarter, particularly mortgage warehouse and premium finance. Total loan production in the quarter was $1.9 billion, up nicely from last quarter's $1.5 billion of production. And deposits increased $20 million with the continued seasonal decline in cyclical municipal deposits of $77 million, offset by an increase in broker deposits of $82 million. We were able to grow noninterest-bearing deposits, increasing our percentage to 31% of total deposits from 30.8% last quarter 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 continue to be the governor of loan growth.

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

[Operator Instructions] Our first question will come from Stephen Scouten with Piper Sandler.

I guess maybe my first question would be around kind of loan growth trends, what you're seeing from your customers maybe any sort of color into the existing pipelines and maybe within that, the mortgage warehouse lending, if this should be kind of the seasonal peak for that component of the loan book and how we should think about maybe the competition moving forward a little bit.

Yes, I'll answer that question. This is Palmer in reverse order, but the mortgage warehouse, certainly, there's seasonality to that. This was a very strong quarter for that. That being said, as it pertains to the other lines and pipelines and production, I think it's probably very reflective of what we're seeing in the market. There is a, I would call, a resurgence of activity much better than what we saw in the first quarter. And I think that we're hopeful that, that will continue throughout the remainder of the year and into 2026. At the same time, I think there's a bit of caution that still remains out there. But our bankers are seeing more opportunities. It's certainly becoming more competitive, which is always a good sign of that increased competition in terms of activity. So I would expect that third quarter would end up being very similar to second quarter in terms of activities that we're seeing unless there's some unforeseen event that takes place.

Okay. Great. That's helpful. And then maybe thinking about kind of future growth opportunities, capital continues to build rapidly I think you've said in the past kind of a measured approach to kind of how you would deploy that excess capital. But any kind of change in terms of maybe preferences, order of operations there whether that's new hires, potential M&A, additional balance sheet kind of remixing and the like?

Sure. And I don't want to sound like a broken record, but as we've said all along, when I look at our bankers and how we're positioned in the growth markets we're in. We have got the right talent in the right place to execute on our plan in terms of what we have. That doesn't mean we're not actively looking or won't look for new talent that comes in. We're, as you know, very consequential with talent, and we expect it to produce. And year-to-date, when you look at our revenue generators, we brought in about 64 new revenue generators. At the same time, we're very consequential moving out those that aren't generating revenue.

But what I see now is the opportunity to really accelerate because of how we're already positioned, not what we do -- not something we need to do to get positioned but how we're already positioned in the key southeastern growth market. So I think when you look at the opportunities that are out there as it obtains capital, our first and foremost, is growing organically. And then after that, there's certainly especially where we're trading today, I wouldn't tell you that stock buybacks aren't off the table because relative to where we trade today and the value we're creating, the stock is cheap, in my opinion. And then also, we've got the dividend. We increased the dividend before. So I don't see a whole lot of changes there. And then the preverbal M&A question, it would take a lot to distract us. It'd have to be something very, very special because right now, we're firing on all cylinders and so to distract us from something like that as well positioned as we are on a go-forward basis. I think we will remain focused as we have been for the last 5.5 years on organic growth.

Great. And maybe just one follow-up to that question is on the new hire activity, and that seems to be the going trend at an accelerating pace. I mean, if you like, relative to 5 years ago, 6 years ago, everyone now is talking about team lift-outs or new hires versus maybe M&A in the past. How do you differentiate yourself? And how do you convince people to come to Ameris versus XYZ bank that might also be trying to bring that banker?

Yes. I think what salespeople on our model is we're focused on market share, not just having a pin on a map. So when you look at the density we have in a lot of our key growth markets, bankers like is a presence and a commitment to a market, which we certainly make and everyone that we're in. They also like to see that we've got some stability in those markets. They'd like to see that we've got an organic engine that can grow. And in today's world, they like an environment that's not as volatile in terms of the work environment that they're in. Our plans are very clear in terms -- especially for the revenue generators on the core banking side, it's very heavy on the deposit side focus relative to a lot of peer plans.

And so they come in with clear expectations. For those expectations also allow them to understand that they need to deliver. And if they deliver, they're well compensated for. If they don't, we try to do what we can to coach them up. But I think it all comes down to accountability here. But I think to be able to work for a company that's been around for 50 years, it's got a clear business model. There's not any noise out there, and you can go ahead and focus on what you need to focus on and not get distracted by a lot of changes. That's probably the biggest selling point we have in today's market.

Congrats on a fantastic quarter.

Our next question will come from Catherine Mealor with KBW.

Maybe talk about the margin and maybe the balance sheet, maybe just to circle back first on the balance sheet side. I noticed that you added some securities this quarter. And so curious, you've talked about mid-single-digit growth in loans, and that was still great to see this quarter better than I had expected. But in terms of the bond book, do you expect to continue to build that through the back half of the year? Or as loan growth improves, does that kind of pare back a little bit?

Catherine, we like the optionality that we have there. And this is kind of what I would call the tail end of that strategy of going back and not getting into the bond book and having the AOCI issue several years ago. So we still -- historically, we would be about 9% of earning assets pre pandemic would be in our bond portfolio. So we could still add about another $200 million to the portfolio to get there. We could add another $400 million to get to about 10%. So we like that optionality we have there that we have both the loan book that we can grow and the bond book. So I would definitely say that we could do either place. What we do have also in the for the rest of the year, we have about $71 million that's going to mature out, and that's coming out at a [ $350 million ] rate. And what we're putting on right now is coming in much higher than that, almost 4.75%, 5%. So as we're circling that out, we like doing that in the bond book. And if we have some opportunities to put some 4.75%, 5% bonds in there with a good duration, we'll capitalize on that opportunity when we see it.

Great. Super helpful. And then maybe then to cling back to the margin. You had another margin beat and you're guiding for that to be, I think you said normalized above the [ 3.60%, 3.65% ] range. just because of deposit costs. So I guess I'm just kind of curious your view on deposit costs, maybe how we think about that in stable rate environment. So maybe in the third quarter if we don't see rate cuts this quarter, it seems like you still think that will increase a little bit this quarter and then how you're thinking about deposit costs as we start to see cuts?

Yes. So assuming the Fed stays flat, we don't see any cuts. I just feel like there's going to be some pressure on that deposit cost. Everybody is talking about the loan growth in the second half of the year. So I think as we start to see that loan growth demand pick up, we're going to see just as much demand because everybody is going to be competing on the deposit side. So when you look at the second quarter, we brought in our interest-bearing came in at $2.99 kind of spot production for the quarter, and that's compared to a book of $2.83. So we already see that new production coming on a little bit higher than the current mix. And I just think that, that's going to get more aggressive and more pressure as we see the loan growth demand come in.

And then assuming that the Fed did cut we think that we would be just as aggressive as we have been in the past on reducing those. So if the Fed were to cut, I think we could maybe see a little bit of bump in the margin just from getting that head -- getting ahead of the curve there on the deposit side, knowing that the loan side would eventually catch up, but we could see a small little pop if the -- on the deposit side, if the Fed cuts.

Great quarter, guys. Appreciate it.

Our next question will come from David Feaster with Raymond James.

I just wanted to follow up maybe on the commentary on the growth side. It sounds like the increase in your origination activity that you saw this quarter is really more of a function of your bankers being increasingly productive and gaining share versus a real improvement in demand. Is that a fair characterization? And then I was hoping you could elaborate on your commentary on the competitive landscape. Are there any segments or markets that are notably challenging? And whether competition is primarily centered on pricing? Or have you seen competition shift towards more underwriting structure and standards too?

Yes, I think it depends on the business line. I would say across the board, we're seeing more activity. And I don't know if it's -- I think it's more of a reflection of customers and prospects becoming more active. Our bankers have been out actively calling. So it's not like anybody who's sitting on the sidelines. I think people are just now moving forward whatever initiatives they've got, especially in the middle market space. And along those same lines, the middle market-type lending -- the nice thing about our company is we've got the scale and the size to do what we need to do in terms of accommodating borrowing needs, treasury management needs. So we focus heavily, especially on treasury management, calling, that's been very helpful on our deposit growth.

But I would tell you, there is a lot of competition out there, and it's starting to go beyond pricing now. There is some structural changes that are -- we're starting to see out there with people getting aggressive. Nothing crazy, but it is different. And so I think that's a sign just that more people are needing that growth, wanting that growth. And fortunately, hopefully, it will continue to come as we look out and look at the pipelines that we see. And if you break ours down by vertical, clearly, the equipment finance and the premium finance, mortgage warehouse has done well, retail mortgage volume just due to rates has been a little bit subdued but if we see some rate improvement towards the end of the year there or next year, that's certainly something that we can ramp up very quickly and capitalize on. I think the most encouraging thing for us, though, is the continued growth we're seeing in our focus on deposits and leading with deposits instead of just leading with loans and pricing. So I would kind of give it an overall a more positive outlook for going into third quarter than what we had seen, obviously, in the first quarter.

Does that answer your question?

Yes. No, that's super helpful. And then maybe, Nicole, as you talk about that [ 360 to 365 ] margin guide, is that purely a function of higher marginal funding costs to support the growth or does that incorporate any Fed cuts in that? And just kind of how do you think about the time line of hitting that range? Is that kind of a step change that you would expect here in the third or fourth quarter? Just kind of curious some of your thoughts on that.

Yes. So that assumes no rate cuts. That kind of is a flat environment. And like I said, if the Fed did cut, we could actually see a little bit of a bump because we feel like we would be aggressive on the deposit repricing side. And then eventually, the loans would catch up to it. That 360, 365 guide is over the longer term. So I don't think that's a sudden drop in the third or fourth quarter. I think that's just a longer-term margin guide looking out 18 months or so to say that we feel like there's going to be some deposit pressure as we see the loan growth come back, and there's going to be, again, that competitive pressure. So I think we're going to see some pressure on the deposit side paying up. We might see a little bit on the loan side as well as people get competitive for that. So I just -- I think that we're going to get it squeezed a little bit and that we're in a spot to compete with a margin as strong as we have if we give up a little bit for the growth. We continue to focus on the growth in net interest income and then the growth in earning assets.

And then maybe just last one, just touching on the mortgage segment. Nice to see the seasonal increase still primarily purchase driven. Just kind of curious, maybe some of the underlying trends you're seeing there. How -- and how your capacity is today? I know you've made a lot of efficiency improvements but how is your capacity today if we do get a refi wave as rates potentially decline, we've seen what that can -- how quickly that can move? And then just any thoughts on the gain on sale side as we look forward.

Sure. So for mortgage, I would say that the third quarter, I would see it being consistent with the second quarter, maybe down a little bit, just some of the trends that we're seeing. But when I say a little bit, 5%, 10% down on production, we've seen the gain on sale pick up from that [ 217 to the 222 ]. I think kind of we've seen that kind of hold. I mean we're only 3 weeks in. But assuming that, that kind of holds in that [ $215 million to $225 million ] range. And then as far -- so I think well, third quarter will be consistent with second quarter. As far as what we could do if we saw a refi boom, our team is ready to go. We don't need to add people and we've got the resources that if a refi boom were to happen, rates come down and we see that opportunity, our folks are ready to go with it.

And David, as we've said, the nice thing about mortgage, when you look at the profitability of it as it stands today relative to peers, it's really the phenomenal how well they've done. And this is kind of a baseline. So any improvement we get in rates from here would just be icing on the cake.

Our next question will come from Russell Gunther with Stephens.

I had a margin follow-up question to start, please. Nicole, it would be helpful to get a sense for the cadence of the NIM over the course of the quarter from that kind of [ 369 ] March start to where we ended up at [ 3.77% ] And if possible, any commentary on where the June...

Yes. So the margin was kind of growing throughout the quarter. it was just a steady growth month-over-month. And then for the month of June, there were some anomalies. So I hate to get this number out because it was higher than the [ 377 ], but there were some anomalies in that margin. So kind of bring me back to saying kind of that flat [ 3.77% ] margin maybe a few basis points up or down in the third quarter, but eventually, over the long term, being willing to give up a little bit of our margin to get the growth.

Okay. That's very helpful. I appreciate the color. And then switching gears back to sort of the loan growth side. You guys mentioned strength in equipment finance. It would be helpful to get a sense for kind of where those related loan balances are this quarter versus last, similarly on the charge-off front? And then just what's your related balance sheet growth versus gain on sale expectations are there?

On Balboa, we ended at about $1.5 billion -- or sorry, equipment finance, about 7.2% of our loans. The charge-offs overall for the company which equipment finance has contributed to -- once we retooled their credit box in 2023, it's performed as we expected. And for the last rolling 4 quarters, we now have that in the target range that we were seeking for equipment finance for those charge offs.

Okay. Got it. And then just last one for me. Great expense results, both this quarter and on a year-over-year basis, efficiency ratio lower on both those data points. On the call it would be helpful to just get a sense for how you're thinking 3Q looks from a noninterest expense perspective?

Yes. I think 3Q, when you think about what the bump in second quarter compared to first quarter was really related to that increased production and mortgage. And so if we see that production come in consistent those expenses should be consistent. And then we also have the merit increases that we go into effect April 1 for us. So we had a full quarter of merit increases. So I see the third quarter being consistent with the second quarter. I think consensus has it bumping up just a little bit. And I think that kind of makes sense. That's reasonable to me. So I would say some are in that [ 156 to 158 ], which is right kind of where consensus is and consistent with the second quarter.

Our next question will come from Christopher Marinac with Janney Montgomery Scott.

Nicole and Palmer, I wanted to dig into the deposits. I think it's Slide 11 in terms of just the numbers of accounts as well as sort of the average. What's the right way to think about that over time, not just quarter-to-quarter but thinking of it from last year and the prior year, you've been giving us this data for a while.

Yes. No, we have been very consistent. I think that's one of the things that we probably don't brag on ourselves enough about is our very, very granular deposit base and that -- you don't get this kind of deposit base overnight. So this is a 50-year history franchise of growing our deposits. And when you look back at our deposits, we did a kind of back look of how many have been since the Fidelity acquisition, how many were -- came in from Fidelity and then how many prior to that. And we have a really, really strong core deposit base that have been here for a long, long time. Even through our acquisitions, those have -- they've had a long history, and we've been able to retain those deposits. So I think this is very, very consistent, the very granular deposit base that we've had. This is not a new thing.

Great. And do you think that the pace of deposits will look different in the next couple of quarters? I know part of the margin guide kind of implies that. So I'm just trying to think about if we should see an acceleration in the next few quarters?

We continue to look and lead with deposits. And I'm so proud of our bankers for that, that we don't just have loan officers we have bankers and then they're asking for the deposits and growing deposits. So I think the big question there for us is we know that we can grow deposits, but it's at what rate can we grow deposits. And then really, we've been so focused on the noninterest-bearing and to have 31% of our franchise in noninterest-bearing. The question is, can 31% of our growth to be in noninterest-bearing. So while we continue to focus on that growth in noninterest-bearing, the percentage to the total may change a little bit.

And then obviously, coming in kind of the end of the third quarter into the fourth quarter, we have all those cyclical municipal funds that flow back in. So that always kind of makes us look a little bloated on deposits at the end of the year. But again, we remain focused on growing deposits. And we have some runway with FHLB advances, our brokered CDs, their brokered CDs are only 5% of our funding. But we've really focused on those growing those core deposits, and that's definitely the goal is to continue to grow that. Hence, why my guidance is that we are willing to maybe pay up for that growth if we need to.

Okay. Great. That's great. And then I had a question on the reserve. Just curious on if there's any qualitative changes to some of the factors behind the scenes this quarter or some of those possibilities as drivers of your reserve in the next several quarters?

Yes, Chris, we did a little bit of a key factor as it relates to investor office. And the office slide. We now have that reserve at about 3.8% for that sector now.

And then in general, given just the low level of charge-offs and overall low level criticized, does that give you flexibility to simply grow into the reserve? Or do you think of it any differently?

No, we do. I mean having a robust reserve, which we do at the [ 162 million ], we consider that among top of class amongst our peer and you look at it through 2 different lenses. One, the offensive strategy and that we grow into it, which is what we want to do. But if you turn into a credit cycle, it's there as a defensive position as well.

Our next question will come from Manuel Navas with D.A. Davidson.

Getting back to that kind of long-term NIM range of [ 360 to 365 ], you're going to sit above it for some time. What could bring that range higher? Is this just like a steeper yield curve, success on deposits? Just kind of some of the drivers there.

I'll go with all of the above. So yes, I think that success on the deposit side would absolutely drive it higher if the Fed cuts and we are able to reduce the deposit side as we typically would or historically would. That would give us a little margin comp. And then also right now, all of our growth is margin accretive right now. When you look at the second quarter, what our loan coming on rate loan production rate versus our deposit production rate, all of our growth is margin accretive. But I'll tell you for this quarter, if you look at our loan rate of [ $6.76 ] kind of all-in production and our interest-bearing deposits were at [ $299 ]. So that's right out of [ 3.77% ]. So what really is going to drive that is that growth in noninterest-bearing deposits. So if we get the growth in noninterest-bearing deposits that brings down our total production of deposits, that's really what could also kind of helped the margin there. But we are still proud to say that our growth is margin accretive at this point.

I was going to ask you about loan yields. I appreciate that kind of description of the marginal NIM. How are noninterest-bearing pipelines right now? I know they're lumpy, it's hard to project, but just kind of some thoughts on that side of the deposit base?

Yes. I would tell you that they're accelerating. It's very similar. It kind of mirrors our loan production. And a lot of that, as I mentioned earlier, is attributed to our treasury management efforts. In addition, obviously, just the bankers. But we're seeing more and more opportunities. And leading with deposits has really been helpful in our approach there. And I think that's really what's driving the opportunities that we're seeing as of recent. So I would tell you that we're encouraged by what we're seeing as we move into the second half of the year.

Right. I appreciate that. The securities yield increase -- was there like a onetime adjustment in anything securities? Or is that just you're adding those higher-yielding securities this quarter?

That is adding our securities. So during the quarter, we bought about $200 million that came on at $488 million, and we matured out about $260 million that was at $277 million.

This will conclude our question-and-answer session. I would like to turn the conference back over to Palmer Proctor for any closing remarks.

Great. Thank you, Wyatt. I want to thank all of our teammates for another outstanding quarter. We remain focused on producing top-of-class results, growing our tangible book value per share and maintaining our strong core deposit base. We are very well positioned to take advantage of future growth opportunities in our attractive Southeastern markets, and we certainly appreciate your interest in Ameris Bank.

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