Q3 2019 Earnings Call
Good morning, and welcome to the Ameris Bank Corp. third quarter 2019 financial results Conference call. All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the star Keith followed by zero. After today's presentation, there will be an opportunity to ask a question too.
Good question you May Press Star then one on your Touchtone phone to withdraw your question. Please press Star then to please note. This event is being recorded I would now like turn the conference over to Nicole Stokes Chief Financial Officer. Please go ahead.
Thank you Ali and thank you all have joined our call today.
During the call we will be referencing the press release in the financial highlights that are available on the Investor Relations section of our website at Ameris Bank Dot com.
On Sunday polymer Proctor, our CEO and John Edwards, our Chief Credit Officer.
I'll begin with the opening general comments, and then I will discuss the details of our financial results before we open up for today.
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 with some other factors that might cause results to differ in our press release, <unk> SEC filings, which are available on our website, we do not assume any obligation to update any forward looking.
These statements as a result of new information or we 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 her presentation.
With that I'll turn it over to Palmer I couldn't comment.
Thank you Nicole and good morning to everyone Who's joined our call today I wanted to share a few highlights another quarter and why we're excited about the rest of 2019 and then the opportunities we see coming into 2020.
Quarter, we earned 68.5 million or 98 cents per diluted share on on adjusted basis, which is up over 8% compared to third quarter last year.
This represents a 157 return on average assets and 18.95% return on tangible equity.
Efficiency ratio increased to just over 57%, which was expected as the cost saves from the fidelity acquisition aren't fully realized yet and we're still running two core systems until November of this year with the conversion.
For the year to date period, we earned 156.3 million or $2, an 85 cents per diluted share on an adjusted basis, which is actually up 19% over 2018 results.
This represents a year our year to date return on assets of 155, and 7% improvement from the same period last year.
We've been very pleased with our organic growth on both the loan and the deposit side our loan deposit ratio is it's been very stable at 94%.
And if you exclude the fidelity acquisition.
It's actually grew over 283 million almost 13% annualized during the third quarter alone.
So that leaves our year to date annualized loan growth at 13.75% for the year and our annualized noninterest bearing deposit growth at 13.58% for the year, which is pretty impressive our loan production and the banking segment was up 151% this quarter over the third quarter last year.
Yields of course were down on the new production as we would all expect with the recent that cuts, but ER. The pipelines are encouraging their strong as we look into the fourth quarter. So we feel very encouraged about that.
As expected, we did see some dilution to tangible book value this quarter compared to last quarter, and that's really due to the fidelity acquisition, but we anticipate that consistent growth and tangible book that you will see going forward. It's we're still.
I haven't pause on M&A activity, but even with the dilution from the acquisition.
We have tangible book growth over 14% growth since September of last year, which are certainly no noteworthy.
Nicole is going to get into financial details in a few minutes, but I didn't want to hit all of a few things first and looking back at and we'd like to do look backs you know what do we say versus what we did and looking back what we said we were going to do last December when the Americas Fidelity merger was announced in where we are today I'm really proud of our teams accomplishments.
Well, we announced the deal we had pro forma branches at about 199 branches combined by the end of third quarter, we're down to 172, which is net reduction of 27 branches since the announcement of the merger and we've done this very strategically aligned with very little attrition in terms of our our core.
Andy.
And then also at announcement.
Oh the deal we said there'd be 18 cents dilution on the E. P. S. During 2019, but with then bring single digit accretion at 2020, but the built and cost saves and we've actually had better than expected result, so far based on our execution, an accelerated execution of some of the cost save strategies early.
We are than we had initially expected.
We projected our pro forma TCV, the tangible asset ratio to be at 8.37 post acquisition, and we're reporting 8.43% Tc ratio today, which is slightly above our projections.
And I mentioned, all these things really to reinforce how serious we are about executing the strategy and ensuring that we're on track with the plans that we had outlined so far we've hit all the targets were looking for and we delivered on the goal we've established and we're confident that hitting our targets is what's going to continue to creep franchise value for.
Our company or investors and it's going to position us exceptionally well for any economic environment that we operate in.
One other noteworthy milestones that I'll mention and our company's history is that we we had officially moves the bank charter and the holding company offices to Atlanta and will become the largest bank holding company headquartered in Atlanta, Georgia After the true as deal close.
We initiated the formal launch of our rebranding hopefully some of you have seen that in terms of our strategy. There. This mark it's been very well received and we remained a deliberate in terms of our efforts to drive that Brandon and all of our markets.
One big point dimension as the integration.
It's in full swing is going going well, we've already the B.S.J. group has already been through conversion or the mortgage integration is about 75% complete as I sit here today and it'll be fully completed by the time, we do our our core system conversion that first weekend in November .
But the way our operations and technology colleagues and work through this integration.
Been amazing and we're right on track and as I've said in our press release.
Being able to deliver these kind of financial results that we did this quarter. While also working through one of the largest integrations that our company has done is really a true direct reflection of the team and how hard all our bankers are working and I look forward to have an integration behind us in the fourth quarter. So we can get back to business to spend 100 per.
Listen to our time on the organic growth opportunities and continuing to execute the strategies that we have in front of us, but I'll stop there now and then turn it over Nicole and let her discuss financial results in more detail great. Thank you Palmer.
You mentioned Palmer today, we're reporting adjusted earnings of 68.5 million or 98 cents per share for the third quarter, and that's compared to 43.3 million or 91 fans for the third quarter of last year.
These adjusted results, primarily worried about $65 million of merger charges of 4 million dollar gain on a BOLI proceeds about a million dollars recovery of MSR impairment from prior quarters and $889000 of loss on branch sale building our branch that failed banks building.
[noise], including these items were reporting total GAAP earnings at about 21.4 million or 31 cents per share.
And 98 cents per share adjusted EPS represents an eight in half percent increase over the 91 cents. We earned in the third quarter last year and the income to $68 million income represents a 58% increase over the third quarter of 2018 adjusted earnings.
Our adjusted return on assets in the second quarter with 157, which was an increase from the 156 reported last quarter and the 153 reporting a third quarter of last year.
For the year to date period, our adjusted our way, it's 155 compared to 146 last year to date and as previously stated we continue to aim for an ROI between 155 and 165 going forward.
Our adjusted return on tangible common equity was 80 95 in the third quarter compared to 18 79 last quarter and 2050 in the third quarter of last year.
For the year to date period or 2019 adjusted return on tangible common equity is 18 87 compared to 18 47 last year.
As expected we saw a decline in tangible book value this quarter due to the fidelity acquisition.
We ended the quarter with tangible book value per share at $20.29 down 52 cents from the 2081 at the end of June while this dilution in tangible book value was larger than anticipated and and as a result of additional contract termination fees from certain vendor contract tangible book value is still.
Up over 14% from this time last year.
All of our additional merger expense expenses that are related to the contract terminations will result in future cost savings as we work to improve processes going forward.
We believe that all significant merger and conversion targets have been recorded during the third quarter and no material additional expenses are anticipated going forward related to the fidelity integration.
Our tangible common equity ratio decreased 25 basis 0.8, 43 from 68 at the end of the second quarter, which was also in line with our projections.
We expect that our capital build will continue and we still plan on finishing 2019 with double digit growth intangible book value per share.
Our GAAP net interest margin declined by seven basis point from 391 to 384 during the quarter. There was a lot of moving parts. So I'm going to try to take this flow.
And I apologize some of this is going to be repeat from from last quarter, but I just want to make sure that I'm clear on the margin.
So if you go back to last quarter, we anticipated the fidelity acquisition, we're going to negatively impact our margin by 11 basis points.
We anticipated that every 25 basis point cut or to reduce our margin by another five to six basis point, except for that first cut in July because we had enough tailwind to absorb that.
Well, we did a little better than expected the fidelity merger it impacted our margin by approximately nine basis point and the first that cut in July impacted our margin by approximately three basis points you notice on the balance sheet, we had extra loans held for sale and we also used FHLB borrowings to fund that.
Held for sale activity.
Because of the mortgage were going to talk about that a little bit later, but the impact of having those extra held for sale loans, the holding those loans longer at us.
Smaller spread that impacted our margin by about four basis points, and then we had tailwinds, including purchase accounting in the quarter that offset about nine basis points of margin compression. So we ended up with really only seven basis points of margin compression rather than the 11 that we had anticipated.
During the third quarter, our yield on earning assets declined by nine basis points, while our funding costs on the decreased four basis point. However, our total interest bearing deposit cost decreased 11 places point as we continue to face that stay focused on our deposit costs.
And we continue to believe that every 25 basis point cut by the fed will squeeze on margin by five to six basis points that we plan, our hope to manage to four to five basis point.
Our core bank production yields declined to five a wait for the quarter against 549 in the second quarter on the deposit side. We continued the momentum on noninterest bearing deposits and improved our mix that's that noninterest bearing now represent 29.85% of our total deposit compared to 28.9 at the end of second quarter.
And 25.4 this time last year noninterest bearing deposit production was over 13% of our total deposit production.
Growth in noninterest income was exceptional during the third quarter.
We talked about just a second ago. In addition to the increase in service charges because of the additional deposit account for fidelity and that was partially offset by the durbin impact this quarter, but our combined mortgage group had record production and earnings due to the interest rate environment.
During the third quarter mortgage revenue grew over 186% compared to the second quarter of this year and over 276% from the same period last year and a large portion of that is with the addition of the new fidelity team.
Mortgage production continued to hit record levels that we saw a decline in the gain on sale. The to 67 down from 311 last quarter and that gain on sale spread was impacted by shifting product mix as well as the transition of the stability pricing model in the Americas pricing model.
Loan production in the retail mortgage segment was 278% higher than the third quarter because of the addition of those fidelity bankers to the team as well as the increased productivity from the low interest rate environment, we do not anticipate mortgage activity to stay at this high level and we believe will return to a more normal historical volume in the fourth quarter.
Historically Ameris did about 2 billion of production a year and fidelity did about 3 billion a year for a combined production of 5 billion. They did 1.8 billion just in the third quarter, which is about a 48% combined increase in production over historical third quarter levels.
And they did this production robbing distracted with the integration.
Because of this volume and operational strain of the integration we ended the quarter with higher than anticipated mortgage loans held for sale, which we funded with short term FHLB advances. We believe these ones will be packages installed as quickly as possible in the fourth quarter and are held for sale numbers as well as wholesale borrowings to fund those will come back down during the fourth quarter and I've already discussed.
That will.
Help with the margin in the fourth quarter.
As Tom already mentioned the mortgage integration is approximately 75% complete.
Our adjusted efficiency ratio increased to 57.25 this quarter, because we do not have the full system integration complete and we still have administrative cost overhang from the fidelity acquisition.
We previously guided that we plan to maintain an efficiency ratio below 60% for the remainder of 2019, and we're well in line with that without expectation, we actually did a little better than expected because of earlier execution of some of the coffee.
Total noninterest spent 192.7 million for the quarter. However, when you remove the merger and conversion charges and the loss on sale branches. Our adjusted noninterest expense was about 127 million, which is a 50 51 and half million from the second quarter, approximately 26 million or half of that increase within the core.
Right and administrative functions due to the fidelity acquisition.
Income in this area also increased by about 42 million equating to a 62% efficiency ratio and that growth without a fully realized cost sites that will realize after data conversion in the fourth quarter.
Most of the remaining 25 million increase in noninterest expense was in the retail mortgage division, mostly in salaries and commissions.
This increase is attributable to increase production, both because of the fidelity acquisition as well as the low interest rate cycle. This quarter as I already stated production increased by over 200% in that division and revenue increase over 39 million, which is more than enough to cover this increase expense.
On the balance sheet thawed organic loan growth was about 283 million or just over 12% annualize.
The details of this production had been included in the Investor presentation, but it was split among our bank segment and our lines of business with approximately 35% of the growth in the core bank and the remaining gross split evenly between mortgage in warehouse premium finance and specialty line.
I sound like a broken record on quite a credit quality, but it remains strong I'm sitting next to John Edwards, Our Chief Credit Officer, who is available to take any questions during the Q and <unk>, but I will hit just a few high point.
Our annualized net charge off ratio was 77 basis points, the total loans and 19 basis points of non purchased loans.
Our nonperforming assets as a percent of total assets increased to 73 basis points compared to 51 basis points last quarter and this was due to the fidelity acquisition.
At quarter end NPK number was 19 basis points less than the projected number from our original due diligence.
And also the diversification across one type and geography can be seen in the loan size as well.
And then the final thing I'd like to telephone and touch on before I turn it back over Palmer is the integration, but not just the data conversion, but the actual team integration and I have to tell you that things are going very well as Paul mentioned earlier, we needed the holding company headquarters to Atlanta earlier this month.
The majority of executive team members are living in Atlanta, with several of us relocating ourselves and our families. There recently I personally closed on my home last week in Atlanta.
Boston had more stress on quarter end by by buying a new home and I'm learning all about what real traffic really what traffic really mean, [laughter], but honestly and seriously. We're all committed to a marriage and what the future holds for US the relationship we have as a team and the leadership, we foresee from Palmer has really made the team dynamic and this transition.
Easier than any of us anticipated.
With that I'll turn it back over to Palmer for closing comments.
Thank you Nicole.
I'd like to conclude with this comment yes, as you know so much of life and opportunities, but timing and I can tell you that our timing for bringing everything together here at ameris, whether it be our teammates our board our system. So the overall Leonard gration it couldn't be better as we position the bank to take advantage of the Trump.
Turning to we have in front of us in the markets in which we operate and we're definitely in the right place after right.
And more importantly, we have the right teammates to to make it happen so with that I'd like to thank everyone again for listening in for our third quarter earnings results as we look forward to the rest of 2019 and to what 2020 holds for US I'll turn it back over now to I leave for any questions from the group.
We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone. If you are using a speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press Star then too.
The first question comes from Casey Whitman with Sandler O'neill.
Good morning.
Casey.
Great quarter.
Just a few questions with regards to loan growth just more broadly I was wondering if you just talk to us about.
Yeah like loan growth at the Bank segment and production. This quarter is a lot of that being driven by the Atlantic Mark Atlanta market or are you seeing good growth throughout your markets. I guess my question would just be a what markets are growing more than others are there more opportunities in particular markets fee that.
Yes Casey.
Good morning, right now we're seeing most the loan growth the problem for loan growth as last quarter in activity in terms of production is coming out of Atlanta, and then parts of our Florida market and in that order.
Okay, Alright, and then also you referenced the sale of I think a corporate finance group portfolio in the quarter can you just give us an idea the of the timing of that sale in the and kind of the decision there.
Sure Casey that was the corporate finance division that we have the got with the Hamilton acquisition last year and from a credit in a risk we really were not.
Big fans of that portfolio. So that had been plan for a while to dispose of that and actually sell those loans. They had been moved to held for sale at the end during the second quarter.
And then we closed on that up during the third quarter.
[laughter] Tomorrow right helpful. Thank you.
Lastly on loan growth would just be indirect auto I guess, how is the the run off and trending in that and can you just remind us of what we can expect the run off to be per quarter in that book.
Sure. So when we did the acquisition of Fidelity. It was about one 1.2 1.3 billion today, it's a month or at the end of September It was down to 1.5 billion.
And we the run off on that is about 130 onto 150 million a quarter.
And it's paying off just as we had as it always has that's one thing about that line of business is very predictable in terms of cash flow and and it continues to perform that way.
And asset quality remains persisting.
Great. Thank you I'd I'll just ask one more in let somebody else jump on just with regard to expenses. You you mentioned some accelerated cost saves in your prepared remarks. It can you just sort of remind us or walk us through how much more on cost savings you have to come out of line between the fourth and first quarter here between the bank in the mortgage groups and just sort of.
Help us out with how we should think about the timing of of of all those those cost saves hitting.
Sure. So we had anticipated about 20% of those coming into the third quarter coming out of the third quarter I should say again about 30% coming out in the another 30% coming out in the in the fourth quarter and then the rest of it coming out in 2020. So we have our data conversion set for the first weekend of November and so we still.
What I call kind of some of that that overhang of expenses from running two system and so that's really the pick up in the in the fourth quarter over the third quarter is that we'll have a you know a lot of those administrative costs go on and the duplicate systems by the end of November on the we were a little bit ahead of our cost saves we had projected 20% workload.
For the 25 to 30, and then we anticipate another 20% to 25% in the third quarter, which is entering the fourth quarter, which is similar to what we had said before it's just we picked up five 5% more in the in the third quarter and then the rest still coming out in the in the first quarter.
Very helpful. Thank you guys for the questions but.
Okay.
Right.
Our next question comes from Jennifer Demba with Suntrust.
[noise]. Thank you good morning.
Morning.
Question will any of this mortgage production activity bleed into fourth quarter.
Jennifer the piece that might lead to we have its the bundling in the selling of that but we have those market fair value. So we don't anticipate now there could still be I mean, I don't think all of the volume just shut off September 30, So there will be some overhang some a little bit, but we really think the fourth quarter is going.
To come back to more normal volume the biggest impact in the fourth quarter is going to be the bundling in selling of those loans, but there shouldn't be an income statement impact for that.
That does Nicole set to Jennifer the momentum.
Certainly there and so that will carry us into the fourth quarter, but it will be at a much more normalized rate than what we've experienced this quarter.
Okay.
Nicole do you guys have a preliminary.
[noise] estimate for your loan loss reserve adjustment for Cecil.
That's a great question and Jennifer and what we have not giving out guidance in the past with a specific number with a fidelity acquisition coming on we have run that that third quarter run and we're still analyzing that I think there will be some additional guidance in the 10-Q about that what we what we have said and we'll continue to say either.
And with this is knowing that it's only October the 18th into get all of the fidelity data from two systems on into the CECO model is that we still are not surprised and that what the model.
<unk> is showing is still in line with our projections. So we're certainly not surprised with the result, and I think there'll be more and guidance in our third quarter key that we filed with the SEC.
Okay. One last question any any hiring a done during the third quarter, you mentioned disruption opportunities just get some more color there.
Well you know for us Fortunately, just given our position in the market. The disruption, we're able to take advantage of with our existing teammates without having a really bring in a lot of new folks, but that being said we're constantly in front of a lot of folks right. Now I think we'll start seeing more movement there as we move into the fourth quarter, we have made.
A few new hires couple down in Florida in particular, but that that we've got a very active pipeline to answer your question.
Thanks, so much.
Thank you Jennifer.
Our next question comes from Tyler Stafford Steven.
Hey, good morning, guys.
Good morning, Tyler.
Hey, I wanted to start on the mortgage business and you mentioned a couple times, you know expecting fourth quarter to return to more normalized levels just to be clear or you are you kind of thing go forward is roughly 5 billion, but with the normal kind of don't perceive it seasonality in the summer months.
So then we should see a 5 billion roughly annually with fourth quarter kind of dropping off seasonal that's right. That's right into the third quarter results were about 43% elevated over if you look at the historical third quarter a marathon the third quarter Fidelity you put those together were elevated I'm sorry were elevated about 60%.
And we think about 43% of that is related to the kind of the low rate environment, we sell a little bump in our repurchase amount to refinance as opposed to purchase.
So fourth quarter were expecting to go back down to if you took the fidelity fourth quarter run rate is that Tim and the Americas fourth quarter run rate historically kind of go back to that plus maybe a 10% to 15% Bob just because of the year over year growth.
Okay got it and then Nicole do you have what that the purchase versus refi mix wasn't much in the third quarter.
I do so we typically both run about 85%.
Well actually fidelity with little bit higher Americas ran about 85% purchase and 15% refined fidelity ran about 89% purchase and this quarter. It dropped to 70 about 70, 172% purchase.
On Oh, my combined basis on a combined basis, that's right got it.
And is this kind of to 67 gain on sale margin that you saw in the third quarter is that what you'd expect going forward as a normalized level.
I think it will it will normalize over time, so that in 2020, it will get closer on back to normal a little bit higher closer to the Americas gain on sale number.
I don't think that'll be instantaneous and the fourth quarter.
Okay got it.
And then the mortgage business had I think a 1.3 million servicing right recovery.
So how much servicing income did you realize this quarter and then any thoughts on what you plan to do it that servicing portfolio.
The servicing portfolio at this point, we've looked at several different functions of opportunities to do that and as of right. Now I'm. The plan is to retain that and to continue to service that.
Through today in Colorado, the does that number right in front of me I'll have to that's come through on that.
[laughter].
Separately.
Hi.
I guess lastly, just on kind of mortgage related.
You mentioned that held for sale balances coming back down is there any normalized level HF ask that you plan to keep now with fidelity interval.
Yes, we think that that normalized level is somewhere between 400 and fourfifty would be a normalized number combined and just to kind of a great. Great. It's not really nestle your question, but I'm going it's a great time for me talk about that one of the things with our mortgage companies coming together going through the integration one thing that they really focused on with continuing to service the.
Customer so they didn't slow production they were able to continue and the piece that did get I'm kind of slowed down the that back room of packaging and getting them sold.
That's that's really why that number grew but again, we expect that to go down probably a more normalized numbers between four and fourfifty.
Perfect, Okay, I'll hop out thanks.
Thank you Todd.
Our next question comes from David Feaster with Raymond James.
Hi, good morning, guys.
Right.
So I'd like to just start on the margin. So I guess, what can look into the fourth quarter with the held for sale wind down that you talked about being about four basis point.
Help and then the indirect run off.
Offset by a September cut it sounds like you think you couldn't hold your core NIM fairly steady here.
So well and you think about that September cut that really was even though it was a third quarter event. We don't have the really impact of that in the third quarter. Because it was so late in the third quarter and then if we had another cut so no we're still guiding that we could have.
Four to four basis 0.4 to five basis points of margin compression in the fourth quarter.
And then there could potentially be another cut.
Okay. Okay.
That's helpful. And then do you have any expectation could you just give us some thoughts on your accretion expectations going forward.
Sure. So the only guidance that we've given it for 2019, because we're being cautious because of seasonal impact for next year, So and you'll see that are accretion from went up this quarter by about a million 1.1 million and could that that's about the normal run rate for for the fourth quarter as well.
Okay.
And then just following up on the on the loan origination strength that you're seeing in Atlanta, obviously, there's there's a lot of disruption there as you've mentioned could you just talk about we've talked before about you you want to get more on that middle market, there, which is a huge opportunity.
How's that going what Ics what success have you seen in the middle market in Atlanta.
Yeah Tyler.
We're starting to see success or you know, obviously theres a lead time on those relationships and lot of them good locked down for years, but we're starting to see us some movement, there and it's on the lower middle market and and that's where we're we're really focused so I think as we move into especially in 2020, that's or start seeing more that lift but.
The migration of those relationships certainly is there's a lead time with that we're encouraged by they not just the opportunities, but the execution on that especially in the Atlanta market.
Okay, and then I guess just high level could you just talk about what you're seeing in the markets. You know anecdotally, we've heard that pricing competition is increase in that.
Underwriting standards are loosening with less recourse and lower levels of leverage.
Are you seeing a similar phenomenon and are there any segments are markets, where you're seeing that more.
No I will tell you competition is fierce in terms of pricing, but but.
I will tell you that all the banks, we run into in terms of competition nobody is compromising on the asset quality, Phil structures are getting a little bit loser in terms of duration and pricing, but there aren't any deals out there that we're seeing other banks do that they just don't make sense, which is encouraging.
For us as an industry.
That being said, there's still a lot of movement out there and in terms of the different sectors. We have certainly pull back a little bit just through a disciplined in a caution on a lot of our commercial construction, but that's more just us position ourselves in terms of the capital as a percentage of some of these construction loans not.
Because we're seeing any cracks are inherent cracks in any sectors out there. If you look at absorption of especially on the on the multifamily side and on the single family side. It's all still very strong theres actually a lack of inventory and a lot of our metro markets. So we still feel very encouraged by what we're seeing and right now.
Do not see any or anticipate any any cracks in the near future.
Okay. That's helpful. Thanks, guys.
Our next question comes from Woody Lee with KBW.
Morning, guys.
Good morning.
So it's good to see the interest bearing deposit cost come down I was just wondering what impact fidelity had on that number in sort of what impact was just legacy emeritus Casa deposits.
That's a great question. So the fidelity impact. It was was included in that they're they're deposit costs were about 25 basis points.
Less than ours, and then also we dropped deposits across the board. So it's a little bit hard to give an exact number because the ability we dropped to their rates with the July cut and the ameris rates at the July cut as well. So it was absolutely a blended of both item.
Got it and I think last quarter. You said you were assuming a 50% deposit beta and your margin guidance is that still holding true.
Oh, yes.
Okay. That's it for me thanks, guys.
Great. Thank you.
Again, if you have a question. Please press Star then one.
Our next question comes from Christopher Marinac with Janney Montgomery Scott.
Hi, good morning.
Tom on the call wanted to drill back down on the competition comment of a few minutes ago, how often do you have price concessions either on deposits are loans and and as you move relationships in the future is that going to be part of the equation or something that you can avoid.
Well, it's something we tried certainly try to avoid and I would tell you we have less concessions on the deposit side and more concessions on the loan side. So as a result, because we look at it from a relationship standpoint, Chris.
And so we are we do feel the person normal loan side than than people trying to beat us down on the on the deposit side, but we look at it holistically, but that being said.
I think the important thing is to make sure. We are looking to just transactions looking at the entire relationship which is how the bankers are we're getting floors in some of our deals wherever we can which Jeff on hard to believe I Didnt think we'd be saying that again, but we are getting floors and people now borrowers in particular more sensitive that in aware of that but we have.
Been successful and implementing some of the floors, especially if we're being competitive on the rate.
[noise] overtime is there a percentage of the portfolio that you think will have floors I know, it's kind of an evolution as you reset.
Well I would love for a higher percentage to have floors, but.
Right now I think where were eight where were more successful in obtaining the floors is obviously on the residential construction lending on the commercial side as we're trying to take business and take more market share and having to be more competitive that's where we're having less success in terms of the floors, but we're having more success and where you'll see it is on the liabilities.
Side in terms of bringing over that core funding.
So if you look at the balance there in terms of the NIM pressure, while we may be given a little bit a yield up on the loan side, we're hopefully garnering more on the low cost funding side to offset that.
Got it that's helpful. Okay great.
Last question just has to do with the systems conversion. Once that's behind you did to what extent of their new products and sales that you can implement other things kind of into wings that you will see next year.
Well the exciting part of that is more looking at the.
The efficiencies, we're big user Salesforce, and Encino, and Fortunately, both companies legacy fidelity and Ameris utilize that technology, and you'll see us leveraging more and more of that not only in specific areas throughout the bank.
Obviously, a new online account opening we're focused on streamlining that process of lot of what we're going to be focused on is.
Tweaking the current technology, we have just making it more efficient in the process more efficient and banks today still have way too much.
Bureaucracy in terms of execution and the fund thing about being up 17 $18 billion bank has been able to make small tweaks here and there that can be meaningful and the overall scheme of things, whether it's just production paper or just efficiency through less printer use just a lot of simple technologies, there that were going up.
We're zero and and now and so our chief Innovation Officer.
Which is our CIO. Obviously is that that is is sold mission right now.
Great. Thanks again, guys appreciate the color.
Thank you.
This concludes our question and answer session and concludes the conference call. Thank you for attending today's presentation. You may now disconnect.