Q3 2023 Ameris Bancorp Earnings Call

Speaker 1: Good morning everyone and welcome to Ameris Bancorp's third quarter conference call. All participants will be in a listen-only mode. Should you need assistance, please send to a conference specialist by pressing the star key followed by zero.

Good morning, everyone and welcome to Marin Bancorp's third quarter Conference call.

All participants will be in a listen only mode should you need assistance. Please signal conference specialist by pressing the star key followed by zero.

Speaker 1: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star and then one using a touch-tone telephone. To withdraw your questions, you may press star and two. Please also note today's event is...

After todays presentation, there will be an opportunity to ask questions to.

To ask a question you May press Star and then one using a touchtone telephone to withdraw your question you May press star and two.

Please also note today's event is being recorded.

At this time I'd like to turn the floor over to Nicole Stokes Chief Financial Officer Ma'am. Please go ahead.

Speaker 1: At this time, I'd like to turn the floor over to Nicole Stokes, Chief Financial Officer. Ma'am, please go ahead.

Great. Thank you Jamie and thank you to all who have joined our call today during the call we will be referencing the press release and the financial highlights that are available on the Investor Relations section of our website at <unk> Dot com.

Speaker 2: Great, thank you, Jamie. And thank you, 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 amarisbank.com. I'm joined today by Palmer Proctor, our CEO , and John Edwards, our Chief Credit Officer. Palmer will begin with some opening general comments, and then I'm gonna discuss the details of our financial results before we open it up for Q&A. But before we begin, I'll remind you that our comments may include forward-looking statements.

And today by Palmer Proctor, our CEO and Jon Edwards, our Chief Credit Officer Palmer will begin with some opening general comment and then I'm going to discuss the details of our financial results before we open it 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 reserve.

Speaker 2: These statements are subject to risks and uncertainty. 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 families, which are available on our website.

<unk> 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.

Speaker 2: 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.

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 a 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 and good morning, everyone. I. Appreciate you taking the time to join our call today I am proud to talk.

Speaker 2: 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.

Speaker 3: Thank you, Nicole and good morning everyone. I appreciate you taking the time to join our call today. I am proud to talk about our solid third quarter financial results that we reported yesterday.

About our solid third quarter financial results that we reported yesterday this quarter really was a testament to our discipline and core profitability and it's what creates the positive outlook, we have for the future. So for the third quarter, we reported net income of $80 million or $1 16 per diluted share because of the strong core earnings.

Speaker 3: This quarter really was a testament to our discipline and core profitability, and it's what creates the positive outlook we have for the future. So for the third quarter, we reported net income of $80 million, or $1.16 per diluted share, because of these strong core earnings and the minimal impact AOCI from our bond portfolio, counter to most of the industry, we grew tangible book value by over 12% annualized, and moved our TCE ratio to above 9%.

And the minimal impact Aoc off from our bond portfolio counter to most of the industry. We grew tangible book value by over 12% annualized and moved our TCE ratio to above 9%, we recorded 24 and a half million dollars in provision for credit losses, bringing our coverage ratio up to $1 44.

Speaker 3: We recorded $24.5 million in provision for credit losses, bringing our coverage ratio up to 144 loans, and 420% of portfolio NPA.

Loans and 420% of portfolio M. P. As this provision was model driven and not related to credit deterioration as our credit metrics actually improved once again this quarter, our net charge off ratio improved to just 23 basis points and our NPA ratio, excluding Ginnie mae's improved to 27.

Speaker 3: This provision was modeled driven and not related to credit deterioration as our credit match shirks actually improved once again this quarter. Our net charge off ratio improved to just 23 basis points and our NPA ratio, excluding Genie Maze, improved to 27 basis points.

Basis points.

Speaker 3: On the balance sheet side, assets decline slightly. So they expected this quarter to 25.7 billion from 25.8 billion last quarter. Deposits or, as I should say, core deposits increased 147 million while loans declined by 271 million. All within the mortgage warehouse lines as we had expected and discussed last quarter.

On the balance sheet side assets declined slightly as expected this quarter to $25 7 billion from $25 8 billion last quarter deposits are as I should say core deposits increased $147 million, while loans declined by 271 million all within the mortgage warehouse lines as we.

As expected and discussed last quarter.

Speaker 3: We're still lending, but we are being more discerning and deliberate with our pricing and structure. And because of these shifts, our loan deposit ratio actually improved to 98% and our loans plus securities deposits improved to 166%.

We're still lending, but we are being more discerning and deliberate with our pricing and structure and because of these shifts our loan to deposit ratio actually improved to 98% and our loans plus securities deposits improved to 106% brokerage Cds remained relatively flat and we successfully reduced our S. H L b advances.

Speaker 3: Brokered CDs remained relatively flat, and we successfully reduced our FHLB advances by 325 million this quarter. We continue to be well capitalized and feel comfortable with our capital and our dividend levels. We also announced yesterday the approval of another 100 million share repurchase program through October of next year.

About 325 million this quarter, we continued to be well capitalized and feel comfortable with our capital and our dividend levels. We also announced yesterday the approval of another 100 million share repurchase program through October of next year.

We have strong balance sheet with diversified earning assets some of the strongest markets in the southeast along with a healthy allowance for credit losses to absorb potential economic challenges, we remain focused on core profitability and balance sheet management and this focus includes core deposit growth controlled asset growth.

Speaker 3: We have strong balance sheet with diversified earning assets and some of the strongest markets in the southeast, along with a healthy allowance for credit losses to absorb potential economic challenges. We remain focused on core profitability and balance sheet management. And this focus includes core deposit growth, controlled asset growth, stable margin, expense control, and tangible value growth.

Stable margin expense control and tangible book value growth.

I'm extremely proud of our team and the financial results for the quarter and I'd be remiss, if I didn't take time on today's call to thank each and every one of our teammates for their contribution to our success with that I'll turn it over Nicole who'll discuss our financial results in more detail great. Thank you Palmer as you mentioned for the third quarter, we're reporting net income.

Speaker 3: I'm extremely proud of our team and the financial results for the quarter. And I'd be remiss if I didn't take time on today's call to thank each and every one of our teammates for their contribution to our success.

Speaker 3: With that, I'll turn it over to Nicole to discuss our financial results in more detail.

Speaker 2: Great, thank you Palmer. As you mentioned for the third quarter, we're reporting net income of 80.1 million or $1.16 per delusage share. Our return on assets with a 125 and on a pre-provision pre-tax basis, our PPRROA was just over 2%.

At $80 1 million or $1 16 per diluted share our return on assets with a $1 25 and on a pre provision pre tax basis or P. P and Oh I was just over 2% our return on tangible common equity improved to 14 35 for the quarter.

Speaker 2: Our return on tangible common equity improved to 1435 for the quarter.

Speaker 2: We ended the quarter, a tangible book value of $32.38. That's an increase of 96 cents or 12.2% annualized. Our tangible common equity ratio, as you mentioned, increased to 9.11 at the end of the quarter, compared to 880 at the end of last quarter. You know, we've said for several quarters, there are actually probably several years, that our capital goal was to get to 9% TCE and we finally did it. So.

We ended the quarter with tangible book value of $32 and 38%. That's an increase of 96 cents, a 12.2% annualized our tangible common equity ratio as you mentioned increased to $9. One one at the end of the quarter compared to a 80 at the end of last quarter. You know we've said for several quarters are actually probably several years at our capital.

All of us to get to 9% TCE them every time they get it.

Speaker 2: On the revenue side of things, our interest income continues to increase. We were up about 8.6 million this quarter to 330.6 million. But again, due to rising deposit costs, our net interest income declined slightly, just about 1.8 million down to 207.8 million for the quarter.

And on the revenue side of things our interest income continues to increase we were up about $8 6 million this quarter too.

$336 million, but again due to rising deposit costs. Our net interest income declined slightly just about $1 8 million down to $207 8 million for the quarter.

Speaker 2: Our margin came in higher than anticipated at 354, down just six basis points from the 360 reported last quarter. You know, all of this compression was really due to money market rates and that data catch up on money market rate. And our year-to-date margin remains strong at 363. That's only four basis points of compression from last year's 367 for the first nine months.

Our margin came in higher than anticipated at 354 down just six basis points from the 360 reported last quarter. You know all of this compression was really due to money market rates in that day to catch up on money market rate.

And our year to date margin remained strong at $3 63, that's the only four basis points of compression from last year's $3 67 for the first nine months.

Speaker 2: You know, we're really encouraged by the fact that the pace of rising deposit costs flow significantly in the third quarter. As interest bearing deposit costs only increased 33 basis points this quarter, while last quarter it is increased 82 basis points. So we see that slowly.

So we're really encouraged by the fact that the pace of rising deposit costs.

Significantly in the third quarter as interest bearing deposit costs only increased 33 basis points. This quarter well last quarter. It has increased 82 basis points. So we see that falling.

We continue to be very close to asset liability sensitive neutral, which positions us well for the next day decision whatever that whether that's a move or not we've updated the interest rate sensitivity information on our presentation slide 11.

Speaker 2: We continue to be very close to asset liability sensitive neutral, which positions as well for the next step decision, whatever that, whether that's a move or not. We've updated the interest rate sensitivity information on our presentation slide 11.

Speaker 2: Non-interest income decreased about 4.2 million for the quarter that was all in the mortgage division. That was about an 11% decline in mortgage revenue. Production declined slightly to about 1.2 billion. And again on sale, margin came in right at two.

Noninterest income decreased about $4 2 million for the quarter that was all in the mortgage division that was about an 11% decline in mortgage revenue production declined slightly to about 1.2 billion and the gain on sale margin came in right at two P. M.

And then I saved the best for last that's expense control and efficiency ratio total noninterest expense decreased $7 million. This quarter almost all on the banking division and that's highlighted on page 10 of the Investor presentation. Now this drove our adjusted efficiency ratio down to an impressive 52.02% for the quarter an improvement.

Speaker 2: And then I saved the best for last, that's expense control and efficiency ratio. Total non-interest expense decreased $7 million this quarter almost all in the banking division. And that's highlighted on page 10 of the investor presentation. You know, this drove our adjusted efficiency ratio down to an impressive 52.02% for the quarter, an improvement from the 53.41% last quarter.

The $53 four 1% last quarter.

Speaker 2: You know, I wanted to take just a minute to talk about expense control. It's not an initiative around here. It really is a discipline and a part of our culture. We continuously look for ways to be more efficient, and we make sure that that next dollar spent is spent in the right way. As an example, if you look at our headcount, we've reduced our headcount by 3.5% over the past year through diligent analysis and the rehiring and staffing model and without announcing major layoffs and without disruption to morale.

If you take just a minute to talk about expense control, it's not as initiatives around here. It really is a discipline and a part of our culture we.

We continuously look for ways to be more efficient and we make sure that that next dollar spent and spending the right way as an example, if you look at our head count we've reduced our head count by three and a half per cent over the past year through diligent analysis, and every hiring and staffing model and without announcing major layoffs and without disruption to them around.

Speaker 2: I want to close by reiterating how focused we are on discipline and core fundamentals as we look forward to 2024 and beyond. And with that, I'm going to turn the call back over to Jamie for any questions from the group. And we really appreciate everyone.

I want to close by reiterating how focused we are on discipline in core fundamentals as we look forward to 2024 and beyond and with that I'm going to turn the call back over to Jamie for any questions from the group and we really appreciate everyone's time today.

Ladies and gentlemen at this time, we'll begin the question and answer session to ask a question you May Press Star and then one on your Touchtone telephone.

Speaker 1: Ladies and gentlemen, at this time we'll begin that question and answer session. To ask a question you may press star and then one on your touch tone telephones. If you are using a speaker phone, we do ask you please pick up your handset prior to pressing the keys to ensure the best sound quality.

You are using a speaker phone we do as you. Please pick up your handset prior to pressing the keys to ensure the best sound quality.

Speaker 1: So with your all your questions you may press star in two. Once again that is star in then one to join the question queue, we'll pause momentarily to assemble the roster.

What's your all your questions you May press star two.

Once again that is star and then wanted to join the question queue, we'll pause momentarily to assemble the roster.

Speaker 1: Our first question today comes from Brady Gailey from KBW. Please go ahead with your question. Hey, thanks. Good morning, guys.

Our first question today comes from Brady Gailey from K B W. Please go ahead with your question.

Hey, Thanks, good morning, guys.

Morning Brady.

So the net interest margin has really held in quite well, especially relative to peers, but maybe just talk about how you're thinking about the margin.

Speaker 4: So the net interest margin has really held in quite well, especially relative to peers. Maybe just talk about how you're thinking about the margin into the fourth quarter and maybe into 2024 and maybe hit on non-interest bearing. Non-interest bearing deposits were down just a little bit. 32% is still a great level, but how does that factor into how you're thinking about the margin?

The fourth quarter.

And maybe into 'twenty 'twenty, four and maybe hit on the noninterest bearing noninterest bearing deposits were down just a little bit 32% still a great level, but how how does that factor into how you're thinking about the margin.

Speaker 2: Sure, great. No, I think those are all tied together for sure. So first, kind of, I'll talk about the margin and as I mentioned in my prepared remarks that.

Sure Great No I think those are all tied together for sure. So first of all talk about the margin and as I mentioned in my prepared remarks that the the whole six basis points of compression really was money market did the change in money market. You know we had a positive move from our deposit mix for the first time this quarter that actually.

Speaker 2: the whole six basis points of compression really was money market, the change in money market.

Speaker 2: You know, we had a positive move from our deposit mix for the first time this quarter that actually was about two basis points up.

It's about two basis points up.

Speaker 2: But then we had some asset sensitivity, kind of some one-off compression from some sounds kind of intuitive by paying off the home loan bank advances, you lose the dividend and so kind of some one-offs there that they kind of offset that positive move from the deposit mix that was kind of overshadowed by that money market data.

But then we had some asset sensitivity kind of some one off compression from some sounds counterintuitive, but by paying off the home loan bank advances you'd lose the dividend so kind of some one offs there that they kind of offset that positive news from the deposit mix. It was kind of overshadowed by that money market data. So when I think about margin going forward I'm very cautious to say that we've talked.

Speaker 2: So when I think about margin going forward, I'm very cautious to say that we've troughed. I know a couple banks have said that they feel like we've troughed.

I know a couple of banks and said that they feel like neutral I'm not ready to declare victory, yet and I'm not ready to say that we trough, but certainly a six basis point compression compared to what we thought we were pretty excited about that and I think really when I think about margin guidance. There's probably three components. You know typically when we give margin guidance, we look at our model.

Speaker 2: I'm not ready to declare victory yet, and I'm not ready to say that we've trothed.

Speaker 2: but certainly a six basis point compression compared to what we thought. We were pretty excited about that.

Speaker 2: And I think really when I think about margin guidance, there's probably three components, you know, typically when we give margin guidance, we look at a model and we give very specific. And I think there's some behavioral issues this right now that affect margin more so than what the, you know, asset liability model says.

And we get very specific and I think theres. Some behavioral issues. This right now that affect margin more so than what the asset liability model does and the first one being kind of that noninterest bearing mix and how much of our noninterest bearing news to interest bearing and we certainly saw that slowed this quarter.

Speaker 2: and the first one being kind of that non-interest bearing mix and how much of our non-interest bearing moves to interest bearing. And we certainly saw that slow this quarter. You know, we were 33% last quarter, 32% this quarter. You know, when you kind of go back and you look post-fidelity, pre-COVID, where were we? And I went back and pulled those numbers and you have September of 19, we were at 29.9%. December of 19, we were at 29.9%.

You know we were 33% last quarter, 32%. This quarter you know when you kind of go back and you look.

Fidelity pre.

Covid, where where are we and I went back and pull those numbers and yet September of 19, we were at 29.9% December of 19, we were at 29.9 and then March in 2020, we were at 30 points off so I really do you feel like somewhere between the 30 and 32, 33% is where we stabilize and I've kind of said that.

Speaker 2: And then March of 2020, we were at 30.5. So I really do feel like somewhere between the 30 and the 32, 33 percent is where we stabilize.

Speaker 2: You know, I've kind of said that now a quarter or two, and I still believe that to be true, seeing the customer behavior that we saw this quarter.

Now a quarter or two and I still believe that to be true being the the customer behavior that we saw this quarter.

And then the second part of margin Guy just going forward would really be that incremental growth you know when we're we've said that we're going to have them you know.

Speaker 2: And then the second part of margin guidance going forward would really be that incremental growth. You know, when we've said that we're going to use core deposit growth as a governor for loan growth, so that really comes down to the question of if we grow core deposits, can we grow 30% of our, or 32% of our core deposit growth be in non-interest bearing next year?

Core deposit growth with the governor for loan growth and that really comes down to the question is if we grow core deposits can we grow 30% of our or 32% of our core deposit growth being in noninterest bearing next year. We think we can but obviously that can tweak that that mix down you know somewhere in that 29 to 30, where we'd like to keep it more in that 30 to 32.

Speaker 2: We think we can, but obviously that can tweak that mix down, you know, somewhere in that 29 to 30, where we'd like to keep it more in that 30 to 32. And then the third piece that's affecting margin is what I would call competitive behavior, and we've seen that certainly stabilize. We've seen some of the erratic high customer deposits or competitor deposit rates kind of stabilize.

And then the third piece is affecting margin is what I would call competitive behavior, and we've seen that certainly stabilized and we've seen some of the erotic high customer deposits are our competitor deposit rates kind of stabilize so having said all that the summary version is I would expect a little bit more compression.

Speaker 2: Having said all that, the summary version is, I would expect a little bit more compression. You know, I think I said last quarter, and I still agree with it, that if we can come out of this cycle above a 350, that would be a huge victory. And we still have a very strong margin compared to peers.

You know I think I said last quarter and I still agree with it but if we can come out of this cycle above the 350 that would be a huge victory and we still have a very strong margin compared to peers. So.

Speaker 3: And Brady, to your question on non-interest bearing, you know, there's two sides of the equation. One is retention of existing accounts, and then the other is focusing your efforts on attracting new deposits, non-interest bearing deposits. So when you look at our, whether it's our incentive plans, our treasury management efforts, or our commercial banking efforts, those all are and have been centered around that. So I think that helps mitigate some of the additional downside that we're not feeling that some others are.

And Brady to your question on noninterest bearing.

There's two sides to the equation one is retention of existing accounts and then the other is focusing your efforts on attracting new deposits noninterest bearing deposits. So when you look at our whether it's our incentive plans our treasury management efforts of our commercial banking effort. Those all are and have been centered around that so.

That helps mitigate some of the additional downside that that are that we're not feeling that some others are at this point.

Okay, Alright, and then moving on to expenses I mean, Nikola just had great expense control with expenses down linked quarter and three Q, but how are you thinking about expense creep as we head into <unk> and next year.

Speaker 4: Okay, all right, and then moving on to expenses, I mean, Nicola, as you said, great expense control with expenses down, link quarter and 3Q. How are you thinking about expense creep as we head into 4Q and next year?

Yeah. So there is I mean, I I hope everybody saw that in the in the presentation that we did have part of the expense control or the reduction in expenses was actually a gain on a piece of Oreo that was about one and a half million dollars credit or benefit, but I don't necessarily expect the only forward and so I think that has to be added back.

Speaker 2: Yeah, so there is, and I hope everybody saw that in the presentation, that we did have part of the expense control or the reduction expenses was actually a gain on a piece of OREO. That was about one and a half million dollars credit or benefit that I don't necessarily expect going forward. And so I think that has to be added back almost immediately. And so if you look at kind of our year-to-date run rate of about 429 million, if you annualize that, that kind of comes us to about a 574.

Most immediately and so if you look at kind of our year to date run rate of about $429 million. If you annualize that that can encompass to about a <unk> 74 and that leaves about 140, 544, and a half and are $45 million for the fourth quarter. I think that's right where consensus has us and I think that's about right and then if you take that I think I've.

Speaker 2: That leaves about $144.5 million for the fourth quarter. I think that's right where consensus has us, and I think that's about right.

Speaker 2: And then if you take that, I think I've guided at three to five percent increase in expenses, excluding mortgage for next year. So if you assume mortgage production is flat and you assume mortgage expenses are flat and you kind of take that out.

Got it at 3% to 5%.

Increase in expenses, excluding mortgage for next year. So if you assume mortgage production is flat and you assumed mortgage expenses are flat and you kind of take that out.

You know kind of a 3% growth on that is about $590 million. That's right in line with current consensus. So I think my messaging on expenses has been well received or understood in everybody's model and kind of that 3% to 5% expense growth that I mentioned last quarter I still think that kind of three three to four Isabelle.

Speaker 2: You know, kind of a 3% growth on that is about $590 million. That's right in line with current consensus.

Speaker 2: So I think my messaging on expenses has been well received or understood in everybody's model. And kind of that three to 5% expense growth that I mentioned last quarter, I still think that kind of three to four is about right. If you want to break it down a little bit further, I think salaries and benefits is probably three to 5%, everything else is 2%. So that kind of blends out to be about a 3% total increase in expenses next year, which I think is in line with current consensus.

Right. If you wanted to break it down a little bit further I think salaries and benefits, it's probably 3% to 5% everything else is 2% so that kind of blends out to be about a 3% total increase in expenses next year, which I think is in line with current consensus.

Alright, that's helpful and then finally for me.

Speaker 4: All right, that's helpful. Then finally, for me, you hit the 9% plus TCE. The stock is cheap at $1.1 a tangible book value. You've repurchased a little bit of stock here today, but not a ton. Should we think about the buyback becoming a little more active here, or do you think you're still in capital growth mode?

You you hit the 9% plus T C. The stock is cheap at one one tangible book value.

You know you've repurchased a little bit of stock year to date, but not not a ton I mean should we think about the buyback would come in a little more active here or do you think you're still on capital you know growth mode.

Well I would tell you that we kind of remain opportunistic in that regard and that's why we've renewed the program obviously in and if it will when we feel appropriate we will certainly take advantage of that.

Speaker 3: Well I would tell you that we kind of remained opportunistic in that regard and that's why we've renewed the program obviously and and if and when we feel appropriate we will certainly take advantage of that.

Alright, great. Thanks for the color guys.

Our next question comes from Casey Whitman from Piper Sandler. Please go ahead with your question.

Speaker 1: Our next question comes from Casey Whitman from Piper Sandler. Please go ahead with your question.

Okay.

Hey, good morning good.

Good morning Casey.

Hi.

Speaker 5: Hi. Okay, so Palmer, appreciate that there was some seasonality this quarter in just the warehouse balances, but can you speak to sort of how you're seeing loan growth in this environment? Do you see that slowing a bit? Just an update as to where you see growth over the next year or so?

Okay. So Palmer appreciate that there was some seasonality this quarter and just the warehouse AR balances, but can you speak just sort of how you're seeing loan growth.

In this environment do you see that slowing a bit I'm, just an update as to where you see growth over the next year or so.

Yeah, Casey I think with all banks, which you've heard us just kind of as I mentioned earlier people are just being more discerning and then obviously the opportunity that the industry has right now is to really take advantage of the upside of rates on the asset side of the balance sheet due to the rapid increase we've seen him a liability.

Speaker 3: Yeah, Casey, I think with all banks, what you've heard is just kind of, as I mentioned earlier, people just being more discerning and then obviously the opportunity that

Speaker 3: The industry has right now is to really take advantage of the upside of rates on the asset side of the balance.

Speaker 3: due to the rapid increase we see on the liability side. So we're kind of utilizing this time to reprise accordingly to hold margin and build margin as we go forward. And I think that we're being far more selective in our credits. Obviously we've said from the very beginning that we're not gonna allow our loan growth to outpace our deposit.

So were kind of utilizing this time to reprice accordingly to hold margin in and build margin as we go forward and I think that we're being far more selective in our credits. Obviously, we've said from the very beginning that we're not going to allow our loan growth to outpace our deposit growth and that disk.

Speaker 3: And that discipline will continue. And obviously, when you take that approach, it will slow down growth. But what it does allow you to do is the growth you have is, in my opinion, it's better priced.

One we will continue and obviously when you when you take that approach it will it will slow down growth, but what it does allow you to do is the growth you have is in my opinion, it's better priced its a stronger credits even in an environment like today and that's kind of the mode that we will continue with as we go forward mortgage vol.

Speaker 3: stronger credits, even in an environment like today. And that's kind of the mode that we'll continue with as we get forward. Mortgage volume will obviously pull back. We pull back intentionally on CRE. And you've seen that loan deposit ratio pulling back. So I think you'll continue to see that discipline for the remainder of the year.

Well, obviously, a pullback we pulled back intentionally on CRE.

And you've seen that that loan deposit ratio pulling back. So I think you'll continue to see that discipline for the remainder of the year.

Okay.

Are there particular markets that you're in where you're seeing more opportunities or less opportunities than others or is it pretty broad based across your footprint.

Speaker 5: Are there particular markets that you're in where you're seeing more opportunities or less opportunities than others, or is it pretty broad-based across your...

Speaker 3: Well, for us, you know, Atlanta's always been a consistent performer, and then we're seeing a lot of opportunities in our Florida markets, too, and the Carolinas. And so if you looked at the opportunity, I'd tell you that probably Tampa and Jacksonville are some real bright spots for us, in addition to certain pockets of the Carolinas.

Well for US you know Atlanta has always been a consistent performer and then we're seeing a lot of opportunities in our Florida markets too and the Carolinas and so if you looked at the opportunity I would tell you that probably Tampa and Jacksonville are some real bright spots for us in addition to a certain pockets of the Carolinas and then.

Speaker 3: And then Atlanta's always been kind of our stable provider of a lot of activity. So I think those are probably the primary opportunities as we look out.

Land has always been kind of our our stable provider of a lot of activity. So I think those are probably the primary.

Opportunities as we look out and look forward.

Okay.

Speaker 5: Okay, just one credit question. Can you just talk about what you're seeing in that watch list bucket? It looks like there's some assisted living in there. Is there any office in there? Just sort of, can you give us any color on the watch list, which I appreciate didn't move much this quarter, but maybe you can give us some help.

Just a quick one credit question can you just talk about what you're seeing in that watch list bucket. It looks like Theres. Some assisted living in their is there any office and Theyre just sort of can you give us any color on on the watch list, which I appreciate didnt move much this quarter, but maybe you can give us would be helpful. Thanks.

Speaker 3: Yeah, you see, we did add that just to see if that would help to kind of give you a little bit. I mean, 85% of the watch list is in those six categories there. So as far as office is concerned, specifically, there's really just one non-owner occupied.

You see we did add that just to see if that would help to kind of give you a little bit I mean, 85% of the watch list is in those six categories. There. So.

As far as office is concerned specifically, there's really just a wash.

One.

Non owner occupied.

Speaker 6: Credit it's on the watch list and and You know in the non accrual bucket right now. It's 3.6 million. So it's it's not really anything speak up You know and those being the top five or six that we noted there You didn't see an office category because it's not on there so the ALF has been and I think I mentioned it maybe starting in the first of the year is We had some downgrades in that category

Credit is on the watch list and.

In the non accrual bucket right now is $3 6 million. So it's not really anything to speak of.

You know and those being the top five or six that we noted there you didn't see an office category because it's not on there. So the E. L. F has been and I think I mentioned it maybe starting the first of the year as well.

We had some downgrades in that.

Category.

And so we've got really kind of two larger deals on there that are on the watch list.

Speaker 6: And so we've got really kind of two larger deals on there that are on the watch list.

Speaker 6: At least one of which I have pretty good confidence might correct itself this or be paid off actually this quarter. But yeah, we've had a little bit of stress on the ALF side and that watch list for ALF has kind of been there now for about nine months or so. Thank you. Thank you.

At least one of which I have pretty good confidence that might.

Correct itself this or be paid off actually this quarter, but yeah. We've we've had a little bit of stress on the E. L F side and that but that watch list for E. L. F has kind of been there now for for about nine months or so.

Okay.

Thank you great quarter. Thank you.

Our next question comes from Chris Meronek from Janney Montgomery Scott. Please go ahead with your question. Thanks. Good morning wanted to go a little deeper on the C&I, our net charge offs and first just wanted to clarify can we adjust those charge offs for the want equipment finance loan that was called out and then what would be a I guess a good run rate for <unk>.

Speaker 7: Our next question goes on Chris Maranac from Jenny Malcolmery Scott. Please go with your question. Thanks, good morning. Wanted to go a little deeper on the C&I net charge offs. And first, just wanted to clarify, can we adjust those charge offs for the one equipment finance loan that was called out? And then what would be, I guess, a good run rate for general C&I losses going forward?

General C&I losses going forward.

Well the C&I losses that that is where the equipment finance loans roll up so.

Speaker 6: Well, the C&I losses, that is where the equipment finance loans roll up. So

Speaker 6: Pretty much everything that you see in there is related to the Equipment Finance Group.

Pretty much everything that you see in there is related to the equipment Finance group and to say one loan I. If if you took that away from the slide deck I'm curious that probably my fault because it was a group of pre acquisition loans.

Speaker 6: And to say one loan, if you took that away from the slide deck, Chris, that's probably my fault because it was a group of pre-acquisition loans that the

The extraordinary items were a group of pre acquisition N P. As that we had.

Speaker 6: The extraordinary items were a group of pre-acquisition NPAs that we had acquired at the merger. So we had determined that we'd reached a bit of our end on the near-term collections on some of those. And so we went ahead and took the losses.

I had acquired at the merger. So we had determined that you know them.

We've kind of reached a bit of our end on the near term collections on some of those and so we went ahead and took the losses on that this quarter. It was up about $3 $2 million. So the run rate for that for the rest of our equipment finance and really the C&I was it was about mid eights.

Speaker 6: On that this quarter it was about 3.2 million dollars.

Speaker 6: So the run rate for the rest of equipment finance and really the C&I was about mid-eight.

Speaker 6: And that is consistent pretty much with what the year has been like so far in 23. I think that is, as we've talked about before, a bit on the high side as far as the long-term average for the equipment group. And so I do expect that to kind of ebb back some as we go into next year.

And that is consistent pretty much with what the year Ed has been like so far in 'twenty. Three I think that is as we've talked about it for a bit on the high side as far as the long term average for the equipment group and so I do expect that to kind of add back some.

We go into next year.

Great. That's very helpful. Thanks for that detail and is the equipment finance group growing at a similar pace as the last few quarters or would you look for that pace to change in the next year.

Speaker 7: Great John , that's very helpful. Thanks for that detail. And is the Equipment Synance Group growing at a similar pace as the last few quarters, or would you look for that pace to change in the next year?

Speaker 6: Well, it is moderated some in the last couple of quarters, as Palmer said.

Well it is moderated some in the last couple of quarters.

Palmer said, it's you know big picture is that we're not going to let the loans outpace deposits and so that is across the board.

Speaker 6: You know, big picture is that we're not going to let the loans outpace deposits. And so that is across the board. The decline in loans that happened during the quarter, especially in the mortgage warehouse lines.

The decline in loans that happened during the quarter, especially in the mortgage warehouse lines kind of took the denominator down so it looks like the portfolio as a greater percentage of the whole now because it's up to 6%, but that's really just sort of end of period numbering it it's still.

Speaker 6: kind of took the denominator down. So it looks like that the portfolio is a greater percentage of the whole now and it could have up to 6%, but that's really just sort of end-of-period numbering. It's still not outpacing the growth of the whole portfolio when you look at it a little bit better than just that one day in time. So it's going to be pretty much the same kind of growth that we see the whole portfolio.

Will you know not outpacing the growth of the whole portfolio. When you look at it a little bit better than just that one day in time so.

It it it's going to be pretty much the same kind of growth that we see the whole portfolio yeah, Chris we're not looking to accelerate that growth. If that's your question in that particular sector.

Speaker 3: Yeah, Chris, we're not looking to accelerate that growth, but that's your question in that particular sector.

Above and beyond what it already is.

Speaker 7: Okay, great. And then just one quick, expense question. As you think about expenses next year, should we see a handful of new branches as you continue to look for new deposits?

Okay, Great and then just one quick expense question as you think about expenses next year should we see a handful of new branches as you continue to do to look for new deposits.

You know, where we're all about branch optimization and a lot of that has to do not necessarily with closing branches or new branches, but we may repurpose. Some in terms of relocating to better better locations and so it will be more optimization in that regard there are a couple of markets, where we clearly.

Speaker 3: You know, we're all about branch optimization and a lot of that has to do, not necessarily with.

Speaker 3: Closing branches or new branches, but we may repurpose some in terms of relocating to better better locations.

Operator: Good morning, everyone, and welcome to Ameris Bancorp's third quarter conference call. All participants will be in a listen-only mode. Should you need assistance, please can you know a conference specialist by pressing the star key, followed by zero?

Operator: Good morning, everyone, and welcome to Ameris Bancorp's third quarter conference call. All participants will be in a listen-only mode. Should you need assistance, please can you know a conference specialist by pressing the star key, followed by zero?

Speaker 3: So be more optimization in that regard. There are a couple markets where we clearly have a void in branching in our Tampa market. For instance, we need a little more presence there. But other than one or two branches, I wouldn't expect much in that regard.

Or avoiding branching in our Tampa market for instance, we need a little more presence there, but other than one or two branches I wouldn't I wouldn't expect much.

After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, and then one using a touch-done telephone to withdraw your questions, you may press star and two.

Operator: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, and then one using a touch-done telephone to withdraw your questions, you may press star and two.

In that regard.

Great. Thanks for taking my questions. Thank you.

Speaker 1: Our next question comes from Kevin Fitzsimmons from DA Davidson. Please go ahead with your question. Hey. Hey.

Our next question comes from Kevin Fitzsimmons from D. A Davidson. Please go ahead with your question.

Operator: There's also note today's event is being recorded.

Nicole Stokes: At this time, I'd like to turn the floor over to Nicole Stokes, Chief Financial Officer. Ma'am, please go ahead. Great, thank you, Jamie.

Hey, good morning, everyone.

Good morning, Kevin.

Just you know it seems like I don't know if it's three or four quarters seems like a number of quarters in a row you guys have a you know it seems like from from our vantage point had been deliberately you're proactively building the reserve sacrificing some of your.

Speaker 8: Just, you know, it seems like, I don't know if it's three or four quarters, seems like a number of quarters in a row, you guys have, you know, it seems like from our vantage point, it's been deliberately or proactively building the reserve. So it's half-crafting some of your...

Nicole Stokes: 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 AmerisBanc.com.

Nicole Stokes: I'm joined today by Palmer Proctor, our CEO, and Jon Edwards, our Chief Credit Officer. Palmer will begin with some opening general comments, and then I'm going to discuss the details of our financial results before we open it 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 risk and uncertainty. 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 family, which are available on our website.

Speaker 8: your near term earnings to do that. And I'm just curious what your outlook, you know, I know there's the model and there's the inputs to the model, but there's also, you know, with, you know, from a top level, and if you wear, you want to.

Your your near term earnings to do that and I'm just curious what your outlook you know I know, there's the model and Theres the inputs to the model, but Theres also.

What you know from a top level point of view, where you want it.

Speaker 8: take that ultimately and I'm just curious how many, if things kind of stay where they are right now and we don't have any massive shift, do we have more quarters of building the reserve ahead of us or are you getting close to a point where you're getting comfortable with what you see out there today?

Take that ultimately and I'm just curious how many if things kind of stay where they are right now and we don't have any massive shift.

Do we have more quarters of building. The preserve ahead of us or are you getting close to a point, where you're getting comfortable with what you see out there today. Thanks.

Nicole Stokes: 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-gap financial measures in reference to the company's performance. You can see our reconciliation of these measures and gap financial measures in the appendix to our presentation.

Well, Kevin I would say that as you pointed out that it is model driven and therefore you know we are following.

Speaker 6: Well Kevin I would say that as you pointed out that it is model driven and therefore you know we are following the forecast models that we look at. Part of the answer I think was found in the third quarter actually because the provision was half or thereabouts what it was in the second quarter. So that in and of itself tells you that the forecast were moderating.

Following the forecast models that we.

Look at the part of the answer I think it was founded in the third quarter actually because the provision.

Palmer Proctor: And with that, I'll turn it over to Palmer for his comments. Thank you, Nicole. Good morning, everyone. I appreciate you taking the time to join our call today. I am proud to talk about our solid third-quarter financial results that we reported yesterday. This quarter really was a testament to our discipline and core profitability, and it's what creates the positive outlook we have for the future. So for the third quarter, we reported net income of $80 million or $1.16 per diluted share because of these strong core earnings and the minimal impact AOCI from our bond portfolio.

It was half or thereabouts, what it was in the second quarter, so that in and of itself tells you that the forecast we're moderating.

Speaker 6: the level of change, which is what really creates reserve one way or the other is slowing so it seems like that you want to kind of envision a hockey stick maybe that's the

The the level of change, which is what really creates reserve one way or the other is slowing so it seems like that you want.

On a kind of envision a hockey stick, maybe that's the way it sort of began to look in the in the third quarter. So I think that you know I wouldnt anticipate that it would be a you know back to the level. It was in the early part of the year given that kind of forecast model, but.

Speaker 6: the way it sort of began to look in the third quarter. So I think that, you know, I wouldn't anticipate that it would be a, you know, back to the level it was in the early part of the year, given that kind of forecast model, but, you know.

Palmer Proctor: Counter to most of the industry, we grew tangible book value by over 12% annualized and moved our TCE ratio to above 9%. We recorded $24.5 million in provision for credit losses, bringing our coverage ratio up to 144 loans and 420% of portfolio NPAs. This provision was modeled driven and not related to credit deterioration as our credit metrics actually improved once again this quarter. Our net charge off ratio improved to just 23 basis points, and our NPA ratio, excluding Jenny Mays, improved to 27 basis points.

You know things in the world is changing and and you.

Speaker 6: things in the world are changing and things do have a tendency to change, but as it's fans right now, I would anticipate that we're kind of moderating from the high levels early in the year.

Things do have a tendency to change, but as it stands right now I.

I would anticipate that where we're kind of moderating from the high levels early in the year.

Okay, Great. That's helpful. And then just a follow up on the margin I totally understand the Nicole your not wanting to declare a victory on on it.

Speaker 8: Just to follow up on the margin, I totally understand that Nicole's you're not wanting to declare victory calling a trough. But if we, you know, say we're getting close to that, maybe, you know, we have some, you know, a moderating taste of compression, maybe call it the next quarter or two, as we look into 24.

Calling a trough, but if we you now say, we're getting close to that maybe you know we have some you know a moderating pace of compression maybe call. It the next quarter or two as we look into 'twenty four do we hit a point in early 'twenty four in your view, where the fixed as the fixed asset repricing should start to outpace.

Palmer Proctor: On the balance sheet side, assets declined slightly to the expected this quarter to $25.7 billion from $25.8 billion last quarter. Deposits or, as I should say, core deposits increased $147 million while loans declined by $271 million. All within the mortgage warehouse lines as we had expected and discussed last quarter. We're still lending, but we are being more discerning and deliberate with our pricing and structure. And because of these shifts, our loan deposit ratio actually improved to 98%, and our loans plus securities deposits improved to $206 million.

Speaker 8: Do we hit a point in early 24 in your view where the fixed assets that repricing should start to outpace?

Speaker 8: the rising deposit cost. And I know a lot of that hinges on that non-intersparing shift.

The rising deposit costs and I know a lot of that hinges on does that noninterest bearing shift.

Speaker 8: really slow down and come to a halt. But assuming that's slowing also, do we anticipate kind of modest margin compression, maybe starting in second quarter through 24?

Really slow down and come to a halt but assuming that slow them also do we anticipate kind of modest margin compression.

Maybe starting in second quarter through 'twenty four.

Speaker 2: So I would guide that there is some stabilization, absolutely. And I think you said, is there some mild compression after second quarter?

Palmer Proctor: Percent. Broker CDs remained relatively flat and we successfully reduced our FHLB advances by $325 million this quarter. We continue to be well capitalized and feel comfortable with our capital and our dividend levels. We also announced yesterday the approval of another 100 million share repurchase program through October of next year. We have strong balance sheet with diversified earning assets and some of the strongest markets in the southeast along with a healthy allowance for credit losses to absorb potential economic challenges. We remain focused on core profitability and balance sheet management and this focus includes core deposit growth, controlled asset growth, stable margin, expense control, intangible value growth.

So I I.

I would guide that there is some stabilization absolutely and I think you said is there some mild compression after second quarter and I'm not necessarily saying that there's more compression coming but there may not be a lot of expansion coming so I think it stabilizes and kind of in that higher for longer.

Speaker 2: I'm not necessarily saying that there's more compression coming, but there may not be a lot of expansion coming. So I think it stabilizes, and kind of in that higher-for-longer mentality, it stabilizes. And then again, a lot of that has to do with competitors, and if there's some sort of liquidity issue that all of a sudden starts...

Mentality. It stabilizes and then again a lot of that has to do with with competitors and if there are some sort of liquidity issue that all of a sudden start driving not liquid easy without the liquidity issue in the market or with other competitors. It causes.

Speaker 2: driving up and not liquidity issue with us but liquidity issue in the market or with other competitors that causes you know People to start paying up for those deposits. It could we could start receive a trek a little fact But from a repricing standpoint, you know, we've got 36% of our loans that repriced

People could start paying up for those deposit it could we could certainly see the trickle effect, but from a repricing standpoint, we've got 36% of our loans that reprice them definitely within the next 12 months and so there's definitely some upward movement on me on the asset side that that should help I just I'm very hesitant because of what we're seeing on that.

Speaker 9: Um, that within the next 12 months, and so there's definitely some upward movement on the, on the asset side that that should help. I just am very hesitant because of what we're seeing on the. On the deposit side, and some erratic, uh. Competition okay, but it sounds like.

Palmer Proctor: I'm extremely proud of our team and the financial results for the quarter and I'd be remiss if I didn't take time on today's call to thank each and every one of our teammates for their contribution to our success.

On the deposit side and in some erotic.

Nicole Stokes: With that, I'll turn it over to Nicole to discuss our financial results in more detail. Great, thank you Palmer. As you mentioned for the third quarter, we're reporting net income of 80.1 million or $1.16 per delusage share. Our return on assets with a 125 and on a pre-provision pre-tax basis, our PP and RRA was just over 2%. Our return on tangible common equity improved to 1435 for the quarter. We ended the quarter with tangible value of $32.38. That's an increase of 96 cents or 12.2% annualized. Our tangible common equity ratio, as you mentioned, increased to 9.11 at the end of the quarter compared to 880 at the end of last quarter.

Competition.

Okay, but it sounds like you're saying that that's really going to serve to help.

Keep it stable not necessarily outpace it over the course of 'twenty four is that right yes.

Speaker 2: keep it stable, not necessarily outpiece it over the course of 24. Is that fair? Yes, that is fair and that is absolutely the goal in the target. Okay.

Yes that is fair and that is absolutely the goal.

Okay.

Speaker 8: Great. And I'm just, Tom, we're just throwing one out there. I know there hasn't been a lot of M&A activity, and obviously you guys are not in this situation that a lot of banks are in terms of having the bond portfolios quite underwater and that's slowing down activity. But what's your view on that in terms of?

Okay, Great and I'm just.

Tom or just throw in one out there I know there hasn't been a lot of M&A activity and obviously you.

You guys are not in this situation that a lot of banks are in terms of having a bond portfolios quite under water and that's slowing down activity.

But how what's your view on that in terms of.

Nicole Stokes: You know, we've said for several quarters there are actually probably several years that our capital goal was to get to 9% TCE and we finally did it. So on the revenue side of things, our interest income continues to increase. We were up about 8.6 million this quarter to 303.6 million. But again, due to rising deposit costs, our net interest income declined slightly just about 1.8 million down to 207.8 million for the quarter.

You know pace of conversations your interest your appetite.

Speaker 8: you know pace of conversations, your interest, your appetite, what could of anything happening over the next year or two.

But anything happening over the next year or two.

Yeah, I think over the next year or two you're going to see them.

Speaker 3: Yeah, I think over the next year or two you're going to see a wave of consolidation. We've had a couple deals announced just recently as you know in the industry and I think you'll continue to see that accelerate.

A wave of consolidation and we've got a couple of deals announced just recently as you know.

And the industry and I think you'll continue to see that accelerate.

When you look at you look at the industry going forward I do think I don't even like to see higher for longer I, just think rates will stay where they are because there really aren't that high right now relative to historical measures and I think we all just need to kind of adapt and adjust to that but what that means is a lot of a lot of banks are going to remain under pressure for the earnings they they don't.

Speaker 3: You know, when you look at the industry going forward, I do think I don't even like to say higher for longer. I just think Rachel will stay where they are because they really aren't that high right now relative to historical measures. And I think we all just need to kind of adapt and adjust to that. But what that means is a lot of, a lot of banks are gonna remain under pressure for the earnings. They don't have the core deposit base or they don't have the diversification in their asset generation.

Nicole Stokes: Our margin came in higher than anticipated at 354 down just six basis points from the 360 reported last quarter. You know, all of this compression was really due to money market rates and that data catch up on money market rates. And our year-to-date margin remains strong at 363. That's only four basis points of compression from last year's 367 for the first nine months. You know, we're really encouraged by the fact that the pace of rising deposit costs flow significantly in the third quarter. As interest bearing deposit costs only increased 33 basis points this quarter. While last quarter, it is increased 82 basis points. So we see that slowing.

The core deposit base. So they don't have the diversification in there asset generation and so it's going to create a hardship. So I think they're going to be more and more people looking to partner together and so as we see that and assuming they can they can get.

Speaker 3: So it's going to create a hardships. I think they're going to be more and more people looking to partner together.

Speaker 3: And so as we see that, and assuming they can, they can

Speaker 3: get regulatory approval, which right now is a big timing issue and a big up all the way around. I think aside from that, there should be a lot of activity taking place of the next as we look out into the next year and into the following year.

To get regulatory approval.

Which right now is as a big timing issue and a big enough all the way around.

Nicole Stokes: We continue to be very close to asset liability sensitive neutral, which positions as well for the next said decision, whatever that, whether that's a move or not. We've updated the interest rate sensitivity information on our presentation slide 11. Non-interest income decreased about 4.2 million for the quarter. That was all in the mortgage division. That was about an 11% decline in mortgage revenue production declined slightly to about 1.2 billion. And the gain on sale margin came in right at 2.5.

I think aside from that there should be a lot of activity taking place over the next as we look out into the into next year and into the following year.

Great. Thanks very much.

Our next question comes from Russell Gunther from Stephens. Please go ahead with your question.

Speaker 1: Our next question comes from Russell Gunther from Stevens. Please go ahead with your question.

Hey, Good morning, guys just a quick one at this point on the mortgage outlook. So it looks like the MBA forecast is pretty optimistic for next year from an origination volume perspective that would be helpful to get your guys thoughts in terms of what you're seeing both on originations and gain on sale as you look out into next quarter and 24.

Speaker 10: Hey, good morning guys. Just a quick one at this point on the mortgage outlook. So it looks like the MBA forecast is pretty optimistic the next year from an origination volume perspective. We'll be helpful to get your guy's thoughts in terms of what you're seeing but found originations and gain on sale as you look out in the next quarter and 24.

Nicole Stokes: Team. And then I say the best for last, that's expense control and efficiency ratio, total non interest expense decreased $7 million this quarter, almost all in the banking division, and that's highlighted on page 10 of the investor presentation. This drove our adjusted efficiency ratio down to an impressive 52.02% for the quarter in improvement from the 53.41% last quarter.

Speaker 3: Yeah, I'm more pleased to say that, you know, when you look at the gain on sale margin, it's stabilized. And so because for a while there, we, like many other start to see deterioration that margin and it seems to stabilize, when you look at production, say, last quarter for this quarter, second quarter, we were at 1.3 billion, this quarter we're at 1.175 billion. And I think that's kind of a good run rate for us as we look out. There is, keep in mind as we said last time, see.

Yeah. We're pleased to say that you know when you look at the gain on sale margin, it's stabilized and so because for a while there we like many others starting to see deterioration in that margin and it seems to have stabilized. When you look at production say last quarter versus this quarter second quarter. We were at $1 3 billion. This quarter. We're at 1.1 dollars 75 billion.

Nicole Stokes: I wanted to take just a minute to talk about expense control. It's not an initiative around here. It really is a discipline and a part of our culture. We continuously look for ways to be more efficient and we make sure that that next dollar is spent in the right way. As an example, if you look at our head count, we've reduced our head count by 3.5% over the past year through diligent analysis and the retiring and staffing model. It was out announcing major layoffs and without disruption to morale.

And I think that's kind of a good run rate for us as we look out there is keep in mind as we said last time seasonality in this space I think it's it's it's going back to historical seasonality type of activity as opposed to you know the math pandemic rush, we had some of the other refi crazes, but that being said we will get.

Speaker 3: in this space. I think it's going back to historical seasonality type activity as opposed to the mad pandemic rush we had and some of the other re-fire crazes. But that being said, we'll get our fair share of the volume. We feel comfortable with our current run rate.

Nicole Stokes: I want to close by iterating how focused we are on discipline and core fundamentals as we look forward to 2024 and beyond.

Our fair share of the volume, we feel we feel comfortable with our current run rate and more importantly, we feel comfortable of our ability to adjust expenses. Accordingly, the biggest fall off we saw obviously this quarter as we had predicted was in the warehouse space, but in terms of retail origination I think theres going to be.

Speaker 3: And more importantly, we're comfortable with our ability to adjust the expenses accordingly.

Jamie: And with that, I'm going to turn the call back over to Jamie for any questions from the group and we really appreciate everyone's time today.

Speaker 3: The biggest fall off we saw obviously this quarter as we had predicted was in the warehouse space. But in terms of retail originally...

Jamie: Ladies and gentlemen, at this time, we'll begin that question and answer session. To ask a question, you may press star and then one on your touch tone telephones. If you are using a speaker phone, we do ask the police to get your hands set prior to pressing the keys to ensure the best sound quality. To withdraw your questions, you may press star and two. Once again, that is star and then one to join the question queue.

Speaker 3: I think there's going to be some opportunities there, especially if we start seeing some improvement in rates.

Some opportunities there, especially if we start seeing some improvement in rates towards the end of next year. You know, we always look for tail wins as much as we do for headwinds and I think that's one where we're very well positioned to take advantage of that so I would tell you that our I think our current run rate is pretty good.

Speaker 3: towards the end of next year. We always look for tailwinds as much as we do for headwinds, and I think that's one where we're very well positioned to take advantage of that. So I would tell you that I think our current run rate is a pretty good barometer for what we see as we go into fourth quarter end next year, aside from just normal seasonality.

Operator: We'll pause now entirely to assemble the roster.

Brady Galey: Our first question today comes from Brady Galey from KBW. Please go ahead with your question. Hey, thanks. We want to go. Good morning, Brady. The net interest margin has really held in quite well, especially relative to peers that maybe just talk about how you're thinking about the margin into the fourth quarter and maybe into 2024 and maybe hit on, you know, non-interest spirit, non-interest spirit deposits were down just a little bit.

Barometer for what we see as we go into fourth quarter and next year aside from just normal seasonality.

No I appreciate that product Palmer and you touched on the expense side of things. It's really what's my follow up so I'm just curious if the earlier conversation around expenses considered any further.

Speaker 10: I appreciate that, Palmer, and you touched on the expense side of things. It's really what's my follow-up. So just curious if the earlier conversation around expenses considered any further reduction in the mortgage vertical for 24.

The reduction in the mortgage vertical for 'twenty four.

Speaker 3: No, I think we've got that positioned well enough now that, you know, you have a core run rate of overhead and expenses you have to have to operate the business.

No I think we've got that positioned well up now that you know you have a core run rate of of overhead and expenses you have to have to operate the business and where there are what we've got is the ability to scale and it's a very scalable business. If you make sure you scale on both sides going up and coming down and our management team has done excellent job of it.

Brady Galey: 32% still a great level, but how does that factor in the how you're thinking about the margin? Sure, great. I think those are all tied together for sure. So first, I'm going to talk about the margin and as I mentioned in my prepared remarks, that the whole six basis points of compression really was money market, the change in money market. You know, we had a positive move from our deposit mix for the first time in the school, or that actually was about two basis points up.

Speaker 3: And we're there. What we've got is the ability to scale, and it's a very scalable business if you...

Brady Galey: But then we had some asset sensitivity kind of some one-off compression from some sound kind of intuitive, but by paying off the home-owned vacant dances, you lose the dividend and the kind of some one-off there that they kind of offset that positive move from the deposit mix. It was kind of overshadowed by that money market data.

Speaker 3: Make sure you scale on both sides going up and coming down. And our management team has done an excellent job of doing that. And I think it's positioned us well to be able to, as I said, take advantage of...

Doing that and I think has positioned us well to be able to as I said take advantage of of Oh, the tail winds in and obviously deal with any headwinds that come. So just just know and I think you do that that we're pretty disciplined in that regard and consequential in that regard and if we see pullback in revenue then you're going to see a pullback in <unk>.

Speaker 3: with the tailwinds and obviously deal with any headwinds that come. So just knowing I think you do that we're pretty disciplined in that regard and consequential in that regard. If we see pullback in revenues and you're going to see a pullback in expenses. Understood. Alright guys.

<unk>.

Understood Alright, guys. Thank you that's it for me.

Nicole Stokes: So when I think about margin going forward, I'm very cautious to say that we've troughed. I know a couple banks have said that they feel like we've troughed. I'm not ready to declare victory yet and I'm not ready to say that we've troughed, but certainly a six basis point compression compared to what we thought we were we were pretty excited about that. And I think really when I think about margin guidance, there's there's probably three components, you know, typically when we give margin guidance, we look at a model and we give very specific and I think there's some behavioral issues this right now that have set margin more so than what the, you know, asset liability model says.

Thank you.

And ladies and gentlemen, our final question today comes from Brandon King from True Securities. Please go ahead with your question.

Speaker 1: And ladies and gentlemen, our final question today comes from Brandon King from Truus Securities. Please go ahead with your question.

Hey, good morning.

Good morning.

Speaker 11: So loan yields thought I felt like increasing the quarter despite the slow sling of loan growth So Nicole could you Participate quantify kind of your expectations for what acid yields could do over next couple of quarters

So loan you so saw a nice increase in the quarter despite.

Slow slowing of loan growth. So the call could you potentially quantify kind of your expectations for what acid yields could do over the next couple of quarters.

Sure. So I'll tell you that we've got and yeah. It was about $5 4 million of our loans that are going to reprice in the next three months or less and that was at a like a 7.7. So there's definitely some room for that to move up and then kind of in the three to 12 month window, we've got another.

Speaker 2: Sure, so I'll tell you that we've got, you know, about 5.4 million of our loans that are going to reprise.

Nicole Stokes: And the first one being kind of that non-intersparing mix and how much of our non-intersparing moves to interest bearing. And we certainly saw that slow this quarter. You know, we were 33% last quarter, 32% this quarter. You know, when you kind of go back and you look post fidelity pre COVID, where were we? And I went back and pulled those numbers and you said September of 19, we were at 29.9%. December of 19, we were at 29.9.

Speaker 2: in the next three months or less and that was at like a 7.7. So there's definitely some room for that to move up.

Nicole Stokes: And then March of 2020, we were at 30.5. So I really do feel like somewhere between the 30 and the 32, 33% is where we stabilized. You know, I kind of said that now a quarter or two and I still believe that to be true seeing the customer behavior that we saw this quarter, and then the second part of margin, guys is going forward, would really be that incremental growth. You know, when we've said that we're going to, you know, use core deposit growth as a governor for long growth.

Speaker 2: And then kind of in the three to 12 month window, we've got another

Speaker 2: Billion nine and that's kind of at an eight eight and a half percent. So there's a little bit of room there

1 billion nine and that's kind of at an 885% so there's a little bit of room there.

Speaker 2: And then that's really kind of over the next four quarters where you can see some of that coming in on the asset side that should certainly help offset the deposit side, which is why kind of my margin guidance says outside of

And again, it's that that's really kind of over the next four quarters, where you can see see some of that coming in on the asset side that should certainly help offset the deposit Dod which is why I kind of my margin guidance says outside of.

Speaker 2: competition and that non-interest-bearing move, next change, we really should kind of see that margin stabilizing over the next.

Competition and that noninterest bearing news mix change, we really should kind of see that margin.

Stabilizing over.

Over the next two quarters or so.

Okay very helpful. And then on deposits I know, we've talked a lot about the mixed change between non interest bearing to interest bearing but what about within interest bearing I notice interest checking were lower quarter over quarter are you seeing any mix change in your interest bearing deposit accounts.

Speaker 11: Okay, very helpful. And then on the positive, I know if we talked a lot about the mixed change between not interest bearing and interest bearing, but what about within interest bearing? I noticed interest checking where the lower quarter of a quarter, are you saying getting mixed change within your interest bearing deposit accounts as like people moving to more towards money market or CD?

Nicole Stokes: So that really comes down to the question, if we grow core deposits, can we grow 30% of our, or 32% of our core deposit growth, be in non interest very next year? We think we can, but obviously that can tweak that mix down, you know, to somewhere in that 29 to 30, where we'd like to keep it more in that 30 to 32. And then the third piece of defecting margin is, what I would call, competitive behavior. And we've seen that certainly stabilize. We've seen some of the erratic high customer deposits, or competitor deposit rates kind of stabilize.

As like people will move into more and more towards money market or Cds.

Speaker 2: Now those have been fairly consistent and I will say the one thing that we will have coming in in the fourth quarter is that cyclical public funds that comes in kind of in the fourth quarter. We have no reason to think that that's not going to come in again this quarter. That's typically about 15% not interfering and about 85% interfering.

So those have been fairly consistent and I will say the one thing that we will have coming in in the fourth quarter is that cyclical public funds that comes out in kind of in the fourth quarter. We have no reason to think that that's not going to come in again this quarter, that's typically about 15% noninterest bearing and about 85% interest bearing typically.

Nicole Stokes: So having said all that, the summary version is, I would expect a little bit more compression. You know, I think I said last quarter, and I still agree with it that if we can come out of this cycle above a 350, that would be a huge victory. And we still have a very strong margin compared to peers. And Brady, to your question on non interest bearing, you know, there's two sides of equation one is retention of existing accounts.

Speaker 2: typically all in money market and now. So you may actually see a little shift in the fourth quarter from a blend there, but know that that's that public fund money that comes in.

All in money market and now so you may actually see a little shift in the fourth quarter from a sort of a blend there, but noted that that cyclical money public fund money that comes in.

Okay. Okay.

Speaker 11: And how are you thinking about broker deposits from here? Do you have any upcoming maturities? And do you think you can move that down over the next couple of quarters?

And how are you thinking about broker deposits from here do you have any upcoming maturity. Then do you think you can move that down over the next couple of quarters.

Speaker 2: So we have our brokerage CDs and our SNHLB advances kind of staggered. And then again, some of that will change kind of temporarily in the fourth quarter and first quarter as we see those public funds come in. So that we've positioned ourselves well to be able to manage the margin and not have a lot of that excess borrowings or brokerage out there. So I think we'll be okay there. We certainly continue to like to look from an RLA and margin perspective between FHLB advances and brokerage CDs. We have ample liquidity, ample availability at both of those places. So we like to look at it from kind of an RLA margin perspective is which way we would go if we needed it. But potentially in the fourth quarter as those public funds money comes in, you could see some of those.

We have our brokered Cds in our I think there'll be advances kind of staggered them and then again some of that would change kind of temporarily in the fourth quarter and first quarter as we see those public fine come in to that we've we've positioned ourselves well to be able to manage the margin them and not have a lot of that excess borrowings or broker out there. So.

Nicole Stokes: And then the other is focusing your efforts on attracting new deposits, non interest bearing deposits. So when you look at our, whether it's our incentive plans or our Treasury management efforts or our commercial banking efforts, those all are and have been centered around that. So I think that helps mitigate some of the additional downside that we're not feeling that some others are at this point.

Brady Galey: Okay, all right.

People will be okay. There, we certainly continue to want to work for them and I'll relay and margin perspective between S. H L. B, a bakers and brokered Cds, we have ample liquidity ample availability of both of those places. So we like to look at it from that from kind of an oral a margin perspective, as which way we would go if we need it but but potentially in the <unk>.

Nicole Stokes: And then moving on to expenses. I mean, at the college, you said great expense control with expenses down, link quarter and three queue. How are you thinking about expense creep as we head into four queue and next year? Yeah, so there is, I mean, I hope everybody saw that in the presentation that we did have part of the expense control or the reduction expenses was actually again on a piece of Oreo.

Fourth quarter I did public fund money comes down and you could see some of the pay that down but just remember this when he comes back you know second quarter when that public fund money runs back out what kind of I'll say it that way.

Speaker 2: pay that down. But just remember this when it comes back, you know, second quarter when the public fund money runs back out, we'll kind of offset that.

Nicole Stokes: So that was about one and a half million dollars credit or benefit that I don't necessarily expect going forward. And so I think that has to be added back almost immediately. And so if you look at kind of our year-to-date run rate of about 429 million, if you annualize that that kind of comes with to about a 574, that leaves about 145, 144 and a half, 145 million for the fourth quarter.

Speaker 11: Okay. Make sense. That's all I had. Thanks for taking my questions. Great. Thank you, Braden.

Okay.

Makes sense, that's all I had thanks for taking my questions great. Thank you Brandon.

Speaker 1: Ladies and gentlemen, that will conclude our question and answer session. I'd like to turn the floor back over to Paul Merproktor, our CEO for an closing remarks.

Ladies and gentlemen that will conclude our question and answer session like to turn the floor back over to Palmer Proctor, our CEO for any closing remarks.

Speaker 3: Great, thank you very much and I'd like to thank everyone again for listening to our third quarter earnings call. Our focus, as you can tell, remains on the things that we can control, which include core profitability, capital growth, and our controlled asset growth. And this is what continues to position us well for the future. So, thank you for your time and your interest in the mirrors. Thank you very much.

Great. Thank you very much and I'd like to thank everyone again for listening to our third quarter earnings call. Our focus as you can tell remains on the things that we can control which include core profitability capital growth in our controlled asset growth and this is what continues to position us well for the future. So thank you for your time and your interest in the mirrors thing.

Nicole Stokes: I think that's right where consensus has us and I think that's about right. And then if you take that, I think I've guided a 3 to 5% increase in expenses, excluding mortgage for next year. So if you assume mortgage production is flat and you assume mortgage expenses are flat and you kind of take that out, you know, kind of a 3% growth on that is about $590 million. That's right in line with current consensus.

Okay.

Speaker 1: Ladies and gentlemen, the conference has now concluded we thank you for joining today's presentation. May now disconnect your lines.

Ladies and gentlemen, the conference has now concluded we thank you for joining today's presentation may now disconnect your lines.

Nicole Stokes: So I think my messaging on expenses has been well received or understood in everybody's model. And kind of that 3 to 5% expense growth that I mentioned last quarter, I still think that kind of 3 to 4 is about right. And if you want to break it down a little bit further, I think salaries and benefits is probably 3 to 5%. Everything else is 2%. So it kind of blends out to be about a 3% total increase in expenses next year, which I think is in line with current consensus.

Brady Galey: All right, that's helpful. Then finally, for me, you hit the 9% plus TCE. The stock is cheap at 1.1 at the end of book value. You've repurchased a little bit of stock here today, but not a ton. I mean, should we think about the buyback becoming a little more active here? Or do you think you're still in capital growth mode? Well, I would tell you that we kind of remained opportunistic in that regard, and that's why we renewed the program obviously. And if and when we feel appropriate, we will certainly take advantage of that.

Brady Galey: All right, great. Thanks for the color, guys.

Casey Whitman: Our next question comes from Casey Whitman from Piper Sandler. Please go ahead with your question. Hey, good morning. Good morning, Casey. Hey, um, okay. So Palmer, appreciate that there was some seasonalities quarter in just the warehouse balances, but can you speak to sort of how you're seeing long growth in this environment? Do you see that slowing a bit just an update as to where you see growth over the next year or so?

Casey Whitman: Yeah, Casey, I think with with all banks which you've heard is just kind of as I mentioned earlier, people just being more discerning and then obviously the the opportunity that the industry has right now is to really take advantage of the upside of rates on the asset side of the balance sheet due to the rapid increase we see on the liability side. So we're kind of utilizing this time to reprise accordingly, to hold margin and build margin as we go forward.

Casey Whitman: And I think that we're being far more selective in our credits. Obviously, we've said from the very beginning that we're not going to allow our long growth to outpace our deposit growth. And that discipline will continue. And obviously when you take that approach, it will slow down growth. But what it does allow you to do is the growth you have is in my opinion, it's better priced. It's stronger credits, even in an environment like today.

Casey Whitman: And that's kind of the mode that we'll continue with as we get forward. Mortgage volume will obviously pull back, we pull back intentionally on CRE. And you've seen that that loan deposit ratio pulling back. So I think you'll continue to see that discipline for the remainder of the year. Okay.

Casey Whitman: Are there particular markets that you're in where you're seeing more opportunities or less opportunities than others or is it pretty broad based across your footprint? Well, for us, you know, Atlanta's always been a consistent performer. And then we're seeing a lot of opportunities in our Florida markets, too, and the Carolinas. And so if you looked at the opportunity, I tell you that probably Tampa and Jacksonville are some real bright spots for us, in addition to certain pockets of the Carolinas. And then Atlanta's always been kind of our stable provider of a lot of activity. So I think those are probably the primary opportunities as we look out and look forward. Okay.

Casey Whitman: Just one credit question. Can you just talk about what you're seeing in that watch list bucket? It looks like there's some assisted living in there. Is there any office in there? Just sort of can you give us any color on the watch list, which I appreciate didn't move much this quarter, but they didn't give us any helpful things. Yeah, you see, we did add that just to see if that would help to kind of give you a little bit.

Casey Whitman: I mean, 85% of the watch list is in those six categories there. So as far as office is concerned specifically, there's really just one non-owner occupied credit is on the watch list and in the not a cruel bucket right now, it's 3.6 May. So it's not really anything speak of. And those being the top five or six that we noted there, you didn't see an office category because it's not on there.

Casey Whitman: So the ALF has been, and I think I mentioned it maybe starting in the first of the year is we had some downgrades in that category. And so we've got really kind of two larger deals on there that are on the watch list.

Casey Whitman: At least one of which I have pretty good confidence might correct itself this or be paid off actually this quarter, but yeah, we've had a little bit of stress on the ALF side and that, but that watch list for ALF has kind of been there now for about nine months or so. Thank you. Great Clair. Thank you.

Christopher Marinac: Our next question goes on Chris Marinac from Jenny Malcolmery Scott. Please go with your question. Thanks.

Jon Edwards: Good morning. I wanted to go a little deeper on the CNI net charge-offs and first just wanted to clarify, can we adjust those charge-offs for the one equipment finance loan that was called out and then what would be, I guess, a good run rate for general CNI losses going forward? Well, the CNI losses, that is where the equipment finance loans roll up, so pretty much everything that you see in there is related to the equipment finance group.

Jon Edwards: And to say one loan, if you took that away from the slide deck, Chris, that probably my fault because it was a group of pre-acquisition loans, the extraordinary items were a group of pre-acquisition NPAs that we had acquired at the merger. So we had determined that we'd kind of reached a bit of our end on the near-term collections on some of those and so we went ahead and took the losses on that this quarter, it was about $3.2 million.

Jon Edwards: So the run rate for the rest of equipment finance and really the CNI was about mid-eighths. And that is consistent pretty much with what the year has been like so far in 23. I think that is, as we've talked about before, a bit on the high side as far as the long-term average for the equipment group and so I do expect that to kind of add back some as we go into next year.

Jon Edwards: Great, John, that's very helpful. Thanks for that detail and is the equipment finance group growing at a similar pace as the last few quarters or would you look for that pace to change in the next year? Well, it is moderated some in the last couple of quarters. As Palmer said, it's a big picture is that we're not going to let the loans outpaste deposits and so that is across the board. The declining loans that happened during the quarter, especially in the mortgage warehouse lines, kind of took the denominator down so it looks like that the portfolio is a greater percentage of the whole now and it gets up to 6%, but that's really just sort of end-of-period numbering.

Jon Edwards: It's still not outpacing the growth of the whole portfolio when you look at it a little bit better than just that one day in time. So it's going to be pretty much the same kind of growth that we see the whole portfolio. Chris, we're not looking to accelerate that growth if that's your question in that particular sector above and young what it already is.

Jon Edwards: Okay, great.

Palmer Proctor: And then just one quick expense question. As you think about expenses next year, should we see a handful of new branches as you continue to look for new deposits? You know, we're all about branch optimization and a lot of that has to do not necessarily with closing branches or new branches, but we may repurpose some in terms of relocating to better locations and so be more optimization in that regard. There are a couple markets where we clearly have a void in branching.

Palmer Proctor: In our Tampa market, for instance, we need a little more presence there, but other than one or two branches, I wouldn't expect much in that regard. Great. Thanks for taking my questions. Thank you.

Kevin Fitzsimmons: Our next question comes from Kevin Fitzsimmons from DA Davidson. Please go ahead with your question. Hey, good morning, everyone. Good morning, Kevin. Just, you know, it seems like, I don't know if it's three or four quarters, seems like a number of quarters in a row. You guys have, you know, it seems like from our vantage point, I've been deliberately or proactively building the reserve, so sacrificing some of your near-term earnings to do that.

Kevin Fitzsimmons: And I'm just curious what your outlook, you know, I know there's the model and there's the inputs to the model, but there's also, you know, you know, from a top level point of view, where you want to take that ultimately. And I'm just curious how many, if things kind of stay where they are right now, and we don't have any massive ship, do we have more quarters of building the reserve ahead of us, or are you getting close to a point where you're getting comfortable with what you see out there today?

Kevin Fitzsimmons: Thanks. Well, Kevin, I would say that as you pointed out that it is model driven and therefore, you know, we are following the forecast models that we look at. Part of the answer, I think, was found in the third quarter, actually, because the provision was half or thereabouts what it was in the second quarter. So that in and of itself tells you that the forecast were moderating, the level of change, which is what really creates reserve, one way or the other is slowing.

Kevin Fitzsimmons: So it seems like that you want to kind of envision a hockey stick, maybe that's the way it sort of began to look in the third quarter. So I think that, you know, I wouldn't anticipate that it would be a, you know, back to the level it was in the early part of the year, given that kind of forecast model. But, you know, things in the world are changing, and, you know, things do have a tendency to change, but as it's changed right now, I would anticipate that we're kind of moderating from the high levels early in the year.

Kevin Fitzsimmons: Okay, great. That's helpful. And then, just to follow up on the margin, I totally understand that Nicole's not wanting to declare victory on calling a trough. But if we, you know, say we're getting close to that, maybe, you know, we have some, you know, a moderating pace of compression, maybe call it the next quarter or two. As we look into 24, do we hit a point in early 24 in your view where the fixed, the fixed asset repricing should start to outpace the rising deposit costs.

Kevin Fitzsimmons: And I know a lot of that hinges on does the non-interest bearing shift really slow down and come to a halt. But assuming that's slow, and also do we anticipate kind of modest margin compression, maybe start in second quarter through 24? So, I would guide that there is some stabilization, absolutely. And I think you said there's some mild compression after second quarter. I'm not necessarily saying that there's more compression coming, but there may not be a lot of expansion coming.

Kevin Fitzsimmons: So, I think it stabilizes and kind of in that higher for longer mentality, it stabilizes. And if there's some sort of liquidity issue that all of a sudden starts driving up, not liquidity issue with us, but liquidity issue in the market or with other competitors that causes, you know, people to start paying up for those deposits, we could certainly see the trickle effect. But from a repricing standpoint, we've got 36% of our loans that repriced that she was in the next 12 months.

Kevin Fitzsimmons: And so, there's definitely some upward movement on the asset side that should help at just and very hesitant because of what we're seeing on the deposit side and some erratic competition. Okay, but it sounds like you're saying that's really going to serve to help keep it stable, not necessarily outpace it over the course of 24. Is that fair? Yes, that is fair and that is absolutely the goal in the target. Okay.

Kevin Fitzsimmons: Okay, great. And I'm just, I'm just throwing one out there. I know there hasn't been a lot of M&A activity and obviously you guys are not in this situation that a lot of banks are in terms of having to bond portfolios quite under water and that's slowing down activity. But what's your view on that in terms of pace of conversations, your interest, your appetite, what could have anything happening over the next year or two?

Kevin Fitzsimmons: Yeah, I think over the next year or two, you're going to steal a wave of consolidation. We've had a couple deals announced just recently as you know in the industry and I think you'll continue to see that accelerate. You know, when you look at the industry going forward, I do think I don't even like to say hire for longer. I just think racial state where they are because they really aren't that high right now relative to historical measures.

Kevin Fitzsimmons: I think we all just need to kind of adapt and adjust to that. But what that means is a lot of a lot of banks are going to remain under pressure for the earnings. They don't have the core deposit base or they don't have the diversification in their asset generation. And so it's going to create a hardships. I think they're going to be more and more people looking to partner together. And so as we see that and assuming they can they can get regulatory approval, which right now is a big timing issue and a big F all the way around. I think aside from that, there should be a lot of activity taking place over the next as we look out into into next year and into the following year. Great. Thanks very much.

Kevin Fitzsimmons: Our next question comes from Russell Gunther from Stevens. Please go ahead with your question. Hey, good morning, guys. Just a quick one at this point on mortgage outlook. So it looks like the MBA forecast is pretty optimistic for next year from an origination volume perspective. I will be helpful to get your guys up in terms of what you're seeing. But on originations and gain on sale as you look out in the next quarter and 24.

Kevin Fitzsimmons: Yeah, I'm we're pleased to say that you know, when you look at the gain on sale margin, it's stabilized. And so because for a while there, we like many other start to see deterioration that margin and it seems to stabilize. When you look at production, say last quarter for this quarter, second quarter, we were at 1.3 billion this quarter, we're at 1.175 billion. And I think that's kind of a good run rate for us as we look out.

Kevin Fitzsimmons: There is keep in mind as we said last time seasonality. In this space, I think it's going back to historical seasonality type activity as opposed to, you know, the mad pandemic rush we had some of the other refi crazy. But that being said, we'll get our fair share of the volume. We feel we feel comfortable with our current run rate. And more importantly, we're comfortable with our ability to adjust the expenses accordingly.

Kevin Fitzsimmons: The biggest fall off we saw obviously this quarter as we had predicted was in the warehouse space. But in terms of retail origination, I think there's going to be some opportunities there, especially if we start seeing some improvement rates towards the end of next year. We always look for tailwinds as much as we do for headwinds. And I think that's one where we're very well positioned to take advantage of that. So I would tell you that I think our current run rate is a pretty good barometer for what we see as we go into fourth quarter and next year aside from just normal seasonality.

Kevin Fitzsimmons: I appreciate that, Palmer, and you touched on the expense side of things, it's really what's my follow-up. So just curious if the earlier conversation around expenses considered any further reduction in the mortgage vertical for 24. No, I think we've got that positioned well enough now that you have a core run rate of overhead and expenses you have to have to operate the business and we're there. What we've got is the ability to scale and it's a very scalable business if you make sure you scale on both sides going up and coming down and our management team has done an excellent job of doing that.

Kevin Fitzsimmons: And I think it's positioned us well to be able to, as I said, take advantage of the tailwinds and obviously deal with any headwinds that come. So just know and I think you do that we're pretty disciplined in that regard and consequential in that regard if we see pullback in revenues and you're going to see a pullback in expenses. Understood. All right, guys, thank you. That's it for me. Thank you.

Brandon King: And ladies and gentlemen, our final question today comes from Brandon King from Truist Securities. Please go ahead with your question. Hey, good morning. Good morning. So loan yields saw a nice increase in the quarter despite the slow sling of loan growth.

Nicole Stokes: So Nicole, could you participate in quantify kind of your expectations for what asset yields could do over the next couple of quarters? Sure. So I'll tell you that we've got, you know, about 5.4 million of our loans that are going to reprise in the next three months or less. And that was at like a 7.7. So there's definitely some room for that to move up. And then kind of in the three to 12 month window, we've got another billion nine and that's kind of at an eight, eight and a half percent.

Nicole Stokes: So there's a little bit of room there. And then that that's really kind of over the next four quarters where you can see, see some of that coming in on the asset side that should certainly help offset the deposit side, which is why kind of my margin guidance says outside of competition and that non interest bearing move next change, we really should kind of see that margin stabilizing over the next, you know, two quarters or so. Okay. Very helpful. And then on the positive.

Nicole Stokes: I know if we talked a lot about the mix change between not interest bearing and just bearing, but what about within interest bearing? I noticed interest checking where the lower quarter quarter, are you saying any mix change within your interest bearing deposit accounts as like people moving to more towards money market or CDs. Now, those have been fairly consistent. And I will say the one thing that we will have coming in in the fourth quarter is those that cyclical public funds that comes in kind of in the fourth quarter.

Nicole Stokes: We have no reason to think that that's not going to come in again this quarter. That's typically about 15% non interest bearing and about 85% interest bearing typically all in money market and now. So you may actually see a little shift in the fourth quarter from a from a blend there, but know that that's that cyclical money public fund money that comes in. Okay.

Nicole Stokes: Okay, and how are you thinking about broker deposits from here? Do you have any upcoming maturity, then do you think you can move that down over the next couple of quarters? So we have our broker CDs and our SNHLB advances kind of staggered and then again some of that will change kind of temporarily in the fourth quarter and first quarter as we see those public funds come in so that we've positioned ourselves well to be able to manage the margin and not have a lot of that excess borrowings or brokerage out there.

Nicole Stokes: So I think we'll be okay there. We certainly continue to like to look from an RLA and margin perspective between FHLB advances and brokerage CDs. We have ample liquidity, ample availability of both of those places. So we like to look at it from a from kind of an RLA margin perspective is which way would we would go if we needed but but potentially in the fourth quarter as those public funds money comes in.

Nicole Stokes: You could see some of those pay that down. But just remember this when it comes back, you know, second quarter when the public fund money runs back out, we'll kind of offset that way. Okay. Makes sense. That's all I had. Thanks for taking my questions. Great. Thank you, Brandon.

Operator: Ladies and gentlemen, that will conclude our question and answer session.

Palmer Proctor: I'd like to turn the floor back over to Palmer Proctor, our CEO for any closing remarks. Great. Thank you very much. And I'd like to thank everyone again for listening to our third quarter earnings call. Our focus as you can tell remains on the things that we can control which include core priorities. Our profitability capital growth and our controlled asset growth. And this is what continues to position us well for the future. So thank you for your time and your interest in the mayor's fight.

Operator: Ladies and gentlemen, the conference has now concluded. We thank you for joining today's presentation. May now disconnect your lines. Thank you very much.