Q2 2024 Ameris Bancorp Earnings Call
Operator: Good day, and welcome to the Ameris Bancorp second quarter conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on a touchtone phone. Please note that this event is being recorded. I would now like to turn the conference over to Nicole Stokes, Chief Financial Officer. Please go ahead.
Speaker Change: Good day and welcome to the Ameris Bancorp second quarter conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions.
Speaker Change: To ask a question, you may press star then 1 on a touchtone phone. Please note, this event is being recorded. I would now like to turn the conference over to Nicole Stokes, Chief Financial Officer. Please go ahead.
Nicole S. Stokes: Thank you, Alan, and thank you to all who have joined our call today. During the call, we will be referencing the press release and the financial highlights that are available on the Investor Relations section of our website at AmerisBank.com. I'm joined today by Palmer Proctor, our CEO, and Doug Strange, our Chief Credit Officer.
Nicole S. Stokes: Thank you, Alan, and thank you to all who have joined our call today. During the call, we will be referencing the press release and the financial highlights that are available on the investor relations section of our website at amerisbank.com. I'm joined today by Palmer Proctor, our CEO , and Doug Strange, our Chief Credit Officer.
Nicole S. Stokes: Palmer will begin with some opening general comments, and then I will discuss the details of our financial results before we open up for Q&A. Before we begin, I'll remind you that our comments may include: The actual results could vary materially We list some of the factors that might cause results to differ in our press release and in our SEC filings, which are available on our website. We do not assume any obligation to update any forward-looking statements as a result of new information, early development, or otherwise, except as required by law.
Speaker Change: Palmer will begin with some opening general comments and then I will discuss the details of our financial results before we open up for Q&A. Before we begin, I'll remind you that our comments may include forward-looking statements. These statements are subject to risks and uncertainties.
Speaker Change: The actual results could vary materially. We list some of the factors that might cause results to differ in our press release and in our SEC filings, which are available on our website.
Speaker Change: We do not assume any obligation to update any forward-looking statements as a result of new information, early development, or otherwise, except as required by law.
Speaker Change: 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 for opening comments.
Nicole S. Stokes: 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 for opening comments.
Palmer Proctor: Thank you, Nicole. And good morning, everyone. I appreciate you taking the time to join our call today. I'm very pleased with the outstanding second quarter financial performance we reported yesterday as well as our strong year-to-date metrics. I really want to highlight three major successes for the quarter. First, we grew deposits by $446 million, or over 8%, while reducing broker deposits at the same time. Second, we grew our earning assets by over 14%. And, last but not least, we did all of this while expanding our margin.
Palmer: Thank you, Nicole, and good morning, everyone. I appreciate you taking the time to join our call today. I'm very pleased with the outstanding second quarter financial performance we reported yesterday, as well as our strong year-to-date metrics.
Palmer Proctor: These three components are reflective of a franchise that continues to show discipline and focus on growing long-term shareholder value. Our top-tier core profitability, the strength of our balance sheet, and our strong southeastern markets really set us apart. For the second quarter, we reported net income of over $90 million, or $1.32 per diluted share. This represents an ROA of 141 and a PPNR ROA of over 2.25%.
Palmer: I really want to highlight three major successes for the quarter. First, we grew deposits by $446 million, or over 8%.
Palmer: while reducing broker deposits at the same time. Second, we grew earning assets by over 14%.
Palmer: And last but not least, we did all of this while expanding our margin.
Palmer: These three components are reflective of a franchise that continues to show discipline and focus on growing long-term shareholder value.
Palmer: Our top-tier core profitability, the strength of our balance sheet, and our strong southeastern markets is really what sets us apart.
Palmer: For the second quarter, we reported net income of over $90 million, or $1.32 per diluted share. This represents an ROA of 141 and a PPNR ROA of over 2.25%.
Palmer Proctor: Our margin expanded to $3.58 this quarter, and our net interest income increased by over $10 million for the quarter. Our strong balance sheet includes a diversified loan portfolio with healthy reserves, funded by strong core deposits. Loans grew over $392 million, with approximately 46% of that growth in cyclical mortgage warehouse lines. As I said earlier, to fund the loan growth, we grew core deposits over $446 million without increasing broker deposits.
Palmer: Our margin expanded to $3.58 this quarter, and our net interest income increased by over $10 million for the quarter.
Palmer: Our strong balance sheet includes a diversified loan portfolio with healthy reserves, funded by strong core deposits. Loans grew over $392 million, with approximately 46% of that growth in cyclical mortgage warehouse lines.
Palmer: As I said earlier, to fund the loan growth, we grew core deposits over $446 million without increasing broker deposits.
Palmer Proctor: We increased our CRE concentration to capital ratio down to 274%, and our allowance for credit losses represents a healthy 160 coverage ratio. Capital remains strong at the bank with tangible book value increasing to $35.79 per share, and our TCE ratio is 9.72 at the end of the quarter. Ameris continues to be located, as you know, in some of the most attractive markets nationwide, with our five-state southeastern footprint expected to grow at approximately 1.7 times the national average.
Palmer: We improved our CRE concentration to capital ratio down to 274% and our allowance for credit losses represents a healthy 160 coverage ratio.
Palmer: Capital remains strong in the bank with tangible book value increasing to $35.79 per share, and our TCE ratio is 972 at the end of the quarter.
Speaker Change: Ameris continues to be located, as you know, in some of the most attractive markets nationwide, with our five-state southeastern footprint expected to grow at approximately 1.7 times the national average.
Palmer Proctor: These robust markets continue to give us the opportunity to grow organically at industry-leading levels, which is evidenced by the second quarter's annualized growth of approximately 7-8% in both loans and core deposits. Given our growth and success over the years, we also moved the listing of our shares to the New York Stock Exchange on Tuesday, July 23rd.
Speaker Change: These robust markets continue to give us the opportunity to grow organically at industry-leading levels, which is evidenced by the second quarter's annualized growth of approximately 7-8% in both loans and core deposits.
Speaker Change: Given our growth and success over the years, we also moved the listing of our shares to the New York Stock Exchange on Tuesday, July 23rd. We like the exchange's reputation for listing well-established companies and believe our listing helps to elevate our presence in the marketplace.
Palmer Proctor: We like the exchange's reputation for listing well-established companies and believe our listing helps to elevate our presence in the marketplace. Before I turn it over to Nicole for more details on the financials, I want to summarize why I remain positive about our future and our ability to return shareholder value. First, we remain focused on growing tangible book value, which is evidenced by our over 14 percent annualized growth rate in tangible book value per share this quarter.
Speaker Change: Before I turn it over to Nicole for more details on the financials, I want to summarize why I remain positive on our future and our ability to return shareholder value. First, we remain focused on growing tangible book value, which is evidenced by our over 14 percent annualized growth rate in tangible book value per share this quarter.
Palmer Proctor: Next, we have core profitability with an average above-peer PPNR ROA of over 2%. Our strong balance sheet is well capitalized with diversified earning assets in the strongest markets in the Southeast. We have a healthy allowance for credit losses to absorb potential economic challenges. If you look at our funding base, it's very granular and has an above average level of non-interest-bearing deposits, and we have a proven culture of expense control. All these components, along with our focus on discipline, are what drive our optimism for the remainder of 2024 and into 2025. I'll stop there and turn it over to Nicole to discuss our financial results in more detail.
Speaker Change: Next, we have core profitability with an average above-peer PPNR ROA of over 2%.
Nicole S. Stokes: Great. Thank you, Palmer.
Speaker Change: Our strong balance sheet is well capitalized with diversified earning assets in the strongest markets in the Southeast.
Speaker Change: And we have a healthy allowance for credit losses to absorb potential economic challenges.
Nicole S. Stokes: If you look at our funding base, it's very granular and above average level of non-interest bearing deposits.
Nicole S. Stokes: and we have a proven culture of expense control.
Nicole S. Stokes: All of these components, along with our focus on discipline, are what drive our optimism for the remainder of 2024 and into 2025.
Nicole S. Stokes: As you mentioned, for the second quarter, we're reporting net income of $90.8 million, or $1.32 per diluted share. Additionally, during the quarter, we recorded a $12.6 million gain on the conversion of our VISA Class B shares. And then we also strategically sold a portion of our MSR portfolio for a $4.7 million gain. We used some of that capital to restructure our BOLI investments. The BOLI transaction will more than offset the lost revenue from the MSR sale, and we have the ability to regenerate additional MSR revenue going forward. This also reduces our asset sensitivity in a down environment.
Nicole S. Stokes: I'll stop there and turn it over to Nicole to discuss our financial results in more detail. Great. Thank you, Palmer. As you mentioned, for the second quarter, we're reporting net income of $90.8 million or $1.32 per diluted share.
Nicole S. Stokes: During the quarter, we recorded a $12.6 million gain on the conversion of our VISA Class B shares.
Speaker Change: And then we also strategically sold a portion of our MSR portfolio for a $4.7 million gain.
Speaker Change: We used some of that capital to restructure our BOLI investments. The BOLI transaction will more than offset the lost revenue from the MSR sale, and we have the ability to regenerate additional MSR revenue going forward. These also reduced our asset sensitivity in a down environment.
Nicole S. Stokes: Excluding these items, our adjusted net income was $80.8 million, or $1.17 per diluted share. Our adjusted return on assets improved to $125,000, and our adjusted return on tangible common equity improved to $1335,000. We remain focused on growing shareholder value. As Palmer mentioned, we ended the quarter with a tangible book value of $35.79, which was an increase of $1.27 or 14.8% annualized this quarter. We repurchased approximately $3 million of common stock during the quarter at an average price of $47.12.
Speaker Change: Excluding these items, our adjusted net income was $80.8 million, or $1.17 per diluted share. Our adjusted return on assets improved to $125, and our adjusted return on tangible common equity improved to $13.35.
Speaker Change: We remain focused on growing shareholder value. As Palmer mentioned, we ended the quarter with tangible book value of $35.79, which was an increase of $1.27, or 14.8% annualized this quarter.
Palmer: We repurchased approximately $3 million of common stock during the quarter at an average price of $47.12, and we have approximately $91.7 million remaining through the end of October .
Nicole S. Stokes: And we have approximately $91.7 million remaining through the end of October. On the revenue side, our interest income for the quarter increased $17.9 million, and our interest expense only increased $7.3 million, so that allowed our net interest income to increase by $10.5 million. Included in interest income this quarter was $2.3 million of bond income related to the accelerated accretion on early payoffs and then also some positive inflation adjustments on some TIPS bonds. We were really pleased with our margin this quarter.
Palmer: On the revenue side, our interest income for the quarter increased $17.9 million, and our interest expense only increased $7.3 million, so that allowed our net interest income to increase by $10.5 million.
Palmer: Included in interest income this quarter was $2.3 million of bond income related to the accelerated accretion on early payoffs and then also some positive inflation adjustments on some TIPS bonds.
Nicole S. Stokes: It expanded seven basis points to 358 from 351 last quarter. But our margin for the quarter, excluding the four basis point width from the one-time bond income, would have been 354, which is right in line with our previous guidance of two to three basis points of expansion. A few more quick details on the seven-point change. The one-time bond income was four basis points positive.
Palmer: We were really pleased with our margin this quarter. It expanded 7 basis points to 358 from 351 last quarter.
Palmer: But our margin for the quarter excluding the four basis point lift from those one-time bond income would have been 354, which is right in line with our previous guidance of two to three basis points of expansion.
Palmer: A few more quick details on the seven-point change. The one-time bond income was four basis points positive. Our asset sensitivity and asset mix changes were eight basis points positive, and then those were offset by four basis points of beta catch-up and one basis point of deposit mix change.
Nicole S. Stokes: Our asset sensitivity and asset mix changes were eight basis points positive, and then those were offset by four basis points of beta catch-up and one basis point of deposit mix change. During the second quarter, we recorded a $19 million provision for credit losses, bringing our coverage ratio up to 160 of loans and 330% of portfolio NPLs. And while I'm on credit, let me just mention real quick our NPA ratio at just 39 basis points, excluding the Ginnie Mains, and our charge-offs improved to just 18 basis points compared to 25 basis points last quarter.
Palmer: During the second quarter, we recorded a $19 million provision for credit losses, bringing our coverage ratio up to 160 of loans and 330% of portfolio NPLs.
Speaker Change: And while I'm on credit, let me just mention real quick our NPA ratio at just 39 basis points, excluding the Ginnie Mains, and our charge-offs improved to just 18 basis points compared to 25 basis points last quarter.
Nicole S. Stokes: Adjusted non-interest income increased $6.3 million, mostly in the mortgage division due to the increase in production. Our total adjusted non-interest expense increased $10.5 million, split evenly between the banking unit and the lines of business. The increases were mostly related to variable comp from increased production, less deferred costs in our equipment finance division, some strategic marketing expenses for a new deposit campaign, and increases in fraud losses. Our efficiency ratio was 51.68 for the quarter, and our adjusted efficiency ratio was 55%. We expect the adjusted efficiency ratio to moderate back downward for the remainder of the year.
Speaker Change: Adjusted non-interest income increased $6.3 million, mostly in the mortgage division due to the increase in production.
Speaker Change: Our total adjusted non-interest expense increased $10.5 million, split evenly between the banking unit and the lines of business.
Speaker Change: The increases were mostly related to variable comp from increased production, less deferred costs in our equipment finance division, some strategic marketing expenses for a new deposit campaign, and increases in fraud losses.
Speaker Change: Our efficiency ratio was 51.68 for the quarter, and our adjusted efficiency ratio was 55%. We expect the adjusted efficiency ratio to moderate back downward for the remainder of the year.
Nicole S. Stokes: On the balance sheet side, we ended the quarter with total assets of $26.5 billion compared with $25.2 billion at the end of the year, and total earning assets increased $865 million to end at $24.4 billion. We have approximately $310 million of bonds maturing in the third quarter, and we pre-funded roughly half of those maturities this quarter. The new bonds came in at about 115 basis points higher than the soon-to-be maturing bonds.
Speaker Change: On the balance sheet side, we ended the quarter with total assets of $26.5 billion, compared with $25.2 billion at the end of the year, and total earning assets increased $865 million to end at $24.4 billion.
Speaker Change: We have approximately $310 million of bonds maturing in the third quarter, and we pre-funded roughly half of those maturities this quarter. The new bonds came in at about 115 basis points higher than the soon-to-be maturing bonds.
Nicole S. Stokes: Loans held for sale increased about $206 million due to the summer seasonality. Portfolio loans increased $392.3 million, or 7.7% annualized, and deposits increased $446.8 million, or 8.6% annualized. Our non-interest-bearing deposits still represent a healthy 31% of total deposits, and our broker CDs actually declined $5.2 million this quarter. We continue to anticipate 2024 loan and deposit growth in the mid-single digits, and we expect that deposit growth will continue to be the governor on loan growth. And with that, I'll wrap it up and turn the call back over to Alan for any questions from the group.
Speaker Change: Loans held for sale increased about $206 million due to the summer seasonality, portfolio loans increased $392.3 million or 7.7% annualized, and deposits increased $446.8 million or 8.6% annualized.
Speaker Change: Our non-interest bearing deposits still represent a healthy 31% of total deposits, and our brokered CDs actually declined $5.2 million this quarter.
Speaker Change: We continue to anticipate 2024 loan and deposit growth in the mid-single digit, and we expect that deposit growth will continue to be the governor on loan growth. And with that, I'll wrap it up and turn the call back over to Alan for any questions from the group.
Operator: We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been answered and you would like to withdraw it, please press star, then 2. At this time, we will pause momentarily to assemble our roster. Our first question comes from Katherine Mueller of KBW.
Speaker Change: We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touch-tone phone.
Speaker Change: If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw it, please press star then 2. At this time, we will pause momentarily to assemble our roster.
Speaker Change: Our first question comes from Katherine Mueller of KBW.
Operator: Please go ahead. Thanks. Thanks. Good morning. I want to start with the margin, which has seen a really nice margin expansion this quarter. I wanted to see if you could give us kind of an outlook for what you're seeing for the back half of the year. Sure.
Catherine Mueller: Please go ahead. Thanks. Thanks. Good morning. Good morning
Catherine Mueller: I want to start with the margin. Really nice margin expansion this quarter. I wanted to see if you could give us kind of an outlook for what you're seeing for the back half of the year.
Nicole S. Stokes: Sure. I want to agree with you. We're really proud of our margin this quarter. You know, we still model to be slightly asset sensitive, and so a lot of our guidance is based on deposit costs. You know, we said last quarter that when we were at $351,000, we thought about kind of bouncing around that $351,000, up or down two to three basis points, and that's really where we came in on the positive side of that.
Speaker Change: Sure. I want to agree with you. We're really proud of our margin this quarter. You know, we still model to be slightly asset sensitive, and so really a lot of our guidance is based on deposit costs.
Speaker Change: You know, we said last quarter that when we were at 351 that we thought kind of bouncing around that 351 up or down two to three basis points, and that's really where we came in on the positive side of that.
Nicole S. Stokes: So, you know, we are still saying that same low single-digit, maybe two to three basis points of expansion or compression, so kind of hanging in that $352,000 to $355,000 range for the back half of the year is what we anticipate.
Catherine Mueller: So, you know, we are still saying that same low single digit, maybe two to three basis points expansion or compression, so kind of hanging in that 352 to 355 range for the back half of the, for the next two quarters of the back half of the year is what we anticipate.
Nicole S. Stokes: Okay, and what do you think would bring, is it just higher deposit costs in the back half of the year, just more than expected, would bring that down, or what's the case, let's just assume we don't have cuts. I mean, if we don't have cuts, why wouldn't it continue to expand or maybe even, you know, kind of stay more stable?
Speaker Change: Okay, and what do you think would bring, is it just higher deposit costs in the back half of the year, just more than expected, would bring that lower, or what's the case, let's just assume we don't have cuts. I mean, if we don't have cuts...
Speaker Change: Why wouldn't it continue to expand or maybe even, you know, kind of stay more stable?
Nicole S. Stokes: Yep, so I do think kind of that stable to expansion when you model it out It does look that way But I'll tell you one of the things that we're focused on is the growth of net interest income And not just the ratio and so we've said that our deposit growth is going to be the governor on loan growth And so if we have to give up a little bit on the margin To be able to grow continue to grow our core deposits and to protect our deposit base We would do that and then use that deposit base To grow our loan so while we might see some expansion or maybe a stable to low NIM But we would use that to you know use that to fund the deposit cost to be able to grow net interest income
Speaker Change: Yep, so I do think kind of that stable to expansion when you model it out It does look that way But I'll tell you one of the things that we're focused on is the growth of net interest income And not just the ratio and so we've said that our deposit growth is going to be the governor on loan growth
Speaker Change: And so if we have to give up a little bit on the margin to be able to grow, continue to grow our core deposits.
Speaker Change: And to protect our deposit base, we would do that and then use that deposit base to grow our loans. So while we might see some expansion or maybe a stable to low NIM, but we would use that to, you know, use that to fund the deposit cost to be able to grow net interest income.
Palmer Proctor: Great. That's very helpful. Thank you, Nicole. And maybe one more on mortgages. This has just been a really nice story for you, the first half of the year. Can you just talk a little bit about what you're seeing there and your outlook for the rest of the year?
Speaker Change: Great, that's very helpful. Thank you, Nicole. And maybe one other on mortgage has just been a really nice story for you the first half of the year. Can you talk a little bit about what you're seeing there and your outlook for the rest of the year?
Palmer Proctor: Yeah, good morning, Catherine. I think mortgages have certainly been a big performer for us this year, the first half of the year. Keeping in mind, too, there's a lot of seasonality historically and obviously in today's environment as it pertains to the housing market. So I think seasonality will start kicking in really in the third and fourth quarters. Mortgage will still be a major contributor for us because they're just performing on all cylinders. But at the same time, I don't see a surge in mortgage production between now and the end of the year, just given the environment that we're in and given the seasonality of the business.
Speaker Change: Yeah, good morning, Catherine. I think with mortgage, it certainly has been a big performer for us this year, the first half of the year.
Speaker Change: Keeping in mind, too, there's a lot of seasonality historically and obviously in today's environment as it pertains to
Speaker Change: Seasonality will start kicking in, really, in the third and fourth quarter. Mortgage will still be a major contributor for us, because they're just performing on all cylinders. But at the same time, I don't see a surge in mortgage production between now and the end of the year, just given the environment that we're in and given the seasonality of the business.
Palmer Proctor: Great. Thank you. Great quarter, guys.
Speaker Change: Great. Thank you. Great quarter, guys.
Operator: The next question comes from Christopher Marinac of FIG Partners. Please go ahead.
Speaker Change: Thank you.
Speaker Change: The next question comes from Christopher Marinac of FIG Partners.
Operator: Hey, good morning. I wanted to ask about the kind of retention of capital going forward. Is there a point, Palmer or Nicole, where there's sort of too much capital? Maybe not too much, but just sort of how do you manage that as you continue to build each quarter?
Speaker Change: Please go ahead.
Christopher William Marinac: Hey, good morning. I wanted to ask about the kind of retention of capital going forward. Is there a point, Palmer or Nicole, where there's sort of too much capital, maybe not too much, but just sort of how do you manage that as you continue to build each quarter and each year?
Palmer Proctor: Thank you, Chris. I would tell you, in this environment, we feel very comfortable with the capital position we're in right now, and it gives us great optionality. I don't see us changing anything between now and the end of the year, if that's your question. But there's certainly an opportunity to revisit the dividend. Obviously, you have the buybacks in place. But right now, I think given the environment we're in and given the volatility in the environment we're in, we feel very good about how we're positioned. But it also gives us a lot of offensive capital as we move forward if things stabilize on a go-forward basis once we get into 2025.
Palmer Proctor: Thank you, Chris.
Speaker Change: Yeah, thank you, Chris. I would tell you in this environment, we feel very comfortable and
Speaker Change: of the capital position we're in right now, and it gives us great optionality. I don't see us changing anything between now and the end of the year, if that's your question.
Speaker Change: There's certainly an opportunity to revisit the dividend, obviously you have the buybacks in place, but right now, I think given the environment we're in, and given the volatility in the environment we're in, we feel very good about how we're positioned, but it also gives us
Speaker Change: A lot of offensive type of capital as we move forward if things stabilize on a go-forward basis once we get into 2025.
Palmer Proctor: Great, and just one kind of credit question, you know, good results this quarter, both on the credit side and even in equipment finance. Is there anything out there that you see that would just be challenging in the next year, whether it's on the maturity side, just other changes in the marketplace?
Speaker Change: Great, and just one kind of credit question, you know good results this quarter both on the credit side and even in equipment finance. Is there anything out there that you see that would just be challenging in the next year whether it's on the maturity side or just other changes in the marketplace?
Douglas D. Strange: Chris, actually, no, we don't. You mentioned Equipment Finance. They had a really good quarter in terms of their charge-offs. In terms of overall charge-offs at 18 basis points for the quarter, you know, that you can see on the slide provided. That's a low watermark on the slide, and we would probably expect that net charge-off number to normalize a bit going forward.
Speaker Change: Chris, actually, no, we don't. You mentioned Equipment Finance. They had a really good
Speaker Change: Good quarter in terms of their charge-offs.
Speaker Change: In terms of overall charge-offs at 18 basis points for the quarter, you can see on the slide provided, that's a low watermark on the slide, and we would probably expect that net charge-off number to normalize a bit going forward.
Douglas D. Strange: Great Doug. Thank you very much. I appreciate it.
Chris: Great Doug. Thank you very much. I appreciate it.
Speaker Change: Thank you.
Operator: The next question comes from Brandon King of Truist. Please go ahead.
Speaker Change: The next question comes from Brandon King of Truist.
Speaker Change: Please go ahead.
Operator: So a follow-up on credit, your ACO continues to creep higher, but you're seeing a lot of other banks on a percentage basis as their ACL move blower. So is... Did you just square what the disconnect potentially is or maybe what you're seeing differently or how your seasonal modeling is flowing through to the...
Brandon Thomas King: Hey, good morning. Good morning.
Brandon Thomas King: So a follow-up on credit, your ACO continues to creep higher, but you're seeing a lot of the banks on a percentage basis see their ACO move lower, so is...
Speaker Change: Could you just square what the disconnect potentially is and maybe what you're seeing differently or how your seasonal modeling is flowing through to the reserve?
Douglas D. Strange: Yeah, Brandon, thank you. We did blend in a 25% downside in our Moody's modeling this quarter. We've always maintained a higher-for-longer approach when it comes to interest rates, and we felt that blending in that downside was more reflective of that mindset that we've had now for about a part of a year. So the increase in the reserve is not a sign of a weakness in our portfolio, but as you consider higher-for-longer interest rates, that's going to put more stress on the portfolio. And at some point, that could translate into some losses, but certainly nothing that would have a material impact on the portfolio.
Speaker Change: Yeah Brandon, thank you. We did blend in a 25% downside in our Moody's modeling this quarter. We've always maintained a higher for longer approach when it came to interest rates and we felt that blending in that downside was more reflective of that mindset that we've had now for about a part of a year.
Speaker Change: So the increase in the reserve is not a sign of a weakness in our portfolio, but as you consider higher for longer interest rates, that's going to put more stress on the portfolio. And at some point that could translate into some losses, but certainly nothing that would have a material impact on the company.
Douglas D. Strange: Okay, is that predicated more on short rates or the entire curve?
Speaker Change: Okay, is that predicated more on short rates or the entire curve?
Douglas D. Strange: I think that's predicated more on short rates.
Speaker Change: I think that's predicated more on the short rates.
Palmer Proctor: Okay, and then in regards to mortgage, it looks like the efficiency ratio improved kind of to that mid-50% range. Should we expect continued improvement if we continue to have strong production quarters, I guess, seemingly strong quarters in the second or third quarter?
Speaker Change: Okay, okay. And then, in regards to mortgage, it looks like the efficiency ratio improved kind of to that mid-50% range. Should we expect continued improvement if, you know, continue to have, you know, strong production quarters, I guess, seasonally strong quarters in the second or third quarter?
Palmer Proctor: Well, I would kind of characterize it more as stabilization there. You know, one of the things we look at is that gain on sale margin, which has continued to improve and stabilize. I don't see a lot of lift above and beyond where we are today, but as you can see, it's still a strong contributor. You do get in, as I said earlier, into seasonality, but the operation is very efficient. Obviously, as production comes in and increases, as we saw this quarter, we've already got the infrastructure in place to leverage that.
Speaker Change: Well, I would kind of characterize it more as stabilization there. One of the things we look at is that gain on sale margin, which...
Speaker Change: has continued to improve and stabilize.
Speaker Change: I don't see a lot of lift above and beyond where we are today.
Speaker Change: But, as you can see, it's still a strong contributor.
Speaker Change: You do get in, as I said earlier, into seasonality, but the operation is very efficient, and obviously as production comes in and increases, as we saw this quarter, we've already got the infrastructure in place to leverage that up.
Palmer Proctor: So, in terms of our positioning, we feel very good about it, and if and when rates start to pull back and there is a refinance opportunity, we are well positioned to ride that wave and capitalize on it. But in terms of our crystal ball looking out between now and the end of the year, I think seasonality will start kicking in between now and the end of the year, but it will still finish strong.
Speaker Change: So, I think in terms of our positioning, we feel very good about it.
Speaker Change: If and when rates start to pull back and there is a refinance opportunity.
Speaker Change: We are well positioned to ride that wave and capitalize on it, but in terms of our crystal ball, looking out between now and the end of the year, I think the seasonality will start kicking in between now and the end of the year, but it will still finish strong.
Palmer Proctor: Thanks for taking my questions.
Speaker Change: Okay, thanks for taking my questions. Mm-hmm. Thank you.
Operator: Our next question comes from Russell Gunther of Stevens. Please go ahead.
Speaker Change: Our next question comes from Russell Gunther of Stevens. Please go ahead.
Operator: Hey, good morning guys. Good morning.
Russell Elliott Teasdale Gunther: Hi, good morning guys. Good morning.
Nicole S. Stokes: Our first question for me was on the CRE concentration ratio. You guys pointed out that it continues to move lower, around 274 today. Just give us a sense, if you could, in terms of where you'd like that to shake out. Are we around a current comfort level, or should we expect that to continue to move lower?
Russell Elliott Teasdale Gunther: Our first question for me was on the CRE concentration ratio. You guys pointed out that continues to move lower around 274 today. Just give us a sense, if you could, in terms of where you'd like that to shake out. Are we around a current comfort level or should we expect that to continue to work lower?
Nicole S. Stokes: Well, we will say that we will do everything we can to keep it below 300, so we're certainly below that. You know, 274 is a good spot for us. We feel like somewhere, you know, we're close to kind of in the middle of 250, 300, to somewhere kind of around that 274 is a good spot for us.
Speaker Change: Well, we will say that we will do everything we can to keep it below 300, so we're certainly below that. You know, 274 is a good spot for us. We feel like somewhere, you know, we're close to kind of in that middle of 250, 300, so somewhere kind of around that 274 is a good spot for us.
Nicole S. Stokes: Okay, great. Thanks, Nicole. And then a follow-up on the margin discussion. I appreciate the commentary around securities cash flows and the impact going forward. Could you just remind us what the fixed repricing opportunity is on the loan side over the next couple of quarters? Sure.
Speaker Change: Okay, great, thanks, Nicole. And then a follow-up on the Margin discussion, I'd appreciate.
Speaker Change: The commentary around securities cash flows and the impact going forward, could you just remind us what the fixed repricing opportunity is on the loan side over the next couple quarters?
Nicole S. Stokes: Sure, so we've got about 37% of our loans that are repricing in the next year. And then, was there a second part to that question?
Speaker Change: So we've got about 37% of our loans that are repricing in the next year.
Speaker Change: And then, was there a second part to that question?
Nicole S. Stokes: It'd be helpful just to get a sense for what the potential pickup in loan yield would be versus the maturing rake.
Speaker Change: It would be helpful just to get a sense for what the potential pickup in loan yield would be versus the maturing rate.
Nicole S. Stokes: Yes, give me one second. So we've got in the next quarter, we've got about 32% that's coming off at 833. And then after that, in the next nine months, we've got about a billion three coming off at 724. And remember, and some people have questioned why that isn't as large of an increase because included in that is our mortgage warehouse, and those those reprice, you know, every 20 days.
Nicole S. Stokes: And also, our premium finance, when you look at premium finance, even though they are fixed rate, they have a 10 month production or 10 month average maturity. So a lot of those have already repriced up. But again, I think that maybe answers the question about where they're coming off and then where the repricing is coming back on.
Speaker Change: So we've got, in the next quarter, we've got about 32% that's coming off at an 833.
Speaker Change: And then after that, in the next nine months, we've got about $1.3 billion coming off at $7.24 billion.
Speaker Change: And remember included and you know some people have questioned why that isn't
Speaker Change: as large of an increase because included in that is our mortgage warehouse and those reprice
Speaker Change: 20 days.
Speaker Change: and then also our premium finance. When you look at premium finance.
Speaker Change: They have a 10-month average maturity, so a lot of those have already repriced up. But again, I think that maybe answers the question about where they're coming off and where the repricing is coming back on.
Nicole S. Stokes: Very similar. That's good. Understood. Thank you for that. And then would it be possible to put a finer point on the strategic actions taken within fee income in terms of lost revenue on MSR servicing but to pick up in BOLI? I understand a net positive, but any additional color?
Speaker Change: Very similar. Yep.
Speaker Change: That's good, understood. Thank you for that. And then, would it be possible to put a finer point on the strategic actions taken within fee income in terms of...
Speaker Change: You know, lost revenue on MSR servicing, but the pickup in Bolli, I understand, a net positive, but any additional color?
Nicole S. Stokes: Yeah, absolutely. So, the MSR transaction where we took about a $4.7 million gain on the MSR, and our lost revenue is just a little over $2 million on that for the year. And then we took that $4.7 million gain and used that to restructure BOLI. In our BOLI, we restructured about $106 million of the BOLI. That was at a current 241 yield, and we are reinvesting that in a 450 yield, which gives us about $2.2 million of income. So they are almost a perfect match.
Speaker Change: Yeah, absolutely. So the MSR transaction where we took about a $4.7 million gain on the MSR and our lost revenue is just a little over $2 million on that for the year.
Speaker Change: And then we took the $4.7 million gain and used that to restructure the BOLI. Our BOLI, we restructured about $106 million of the BOLI.
Speaker Change: That was at a current $2.41 yield, and we are reinvesting that in a $4.50 yield, which gives us about $2.2 million of income. So they are almost a perfect match.
Nicole S. Stokes: The BOLI restructure did not come through non-interest income; that came through tax. So, when you're looking at the balance sheet or the income statement, the MSR sale and the Visa gain were both in non-interest income, and then the – I'm sorry, the MSR and the Visa were in non-interest income. The BOLI was through the tax line. So, we really also impacted our ALM sensitivity and got us into a down rate environment and helped us out. So, those were kind of the benefits, being able to help the ALM modeling, help the risk-weighted assets, and being able to do that with no impact on the income statement going forward.
Speaker Change: The BOLI restructure did not come through non-interest income, that came through tax. So when you're looking at the balance sheet, or the income statement, the MSR sale and the Visa gain were both in non-interest income, and then the...
Speaker Change: I'm sorry, the MSR and the Visa were in non-interest income, the Foley was through the tax line. But those almost offset each other perfectly. And what we really did was swap out 250% risk-weighted assets. So we picked up some regulatory capital.
Speaker Change: And then the other thing is, when you looked at our ALM modeling, the most volatile part of our ALM modeling was the MSR, and in a down scenario, the repricing and the early payoff of those, so the valuation of those, so we really also impacted our ALM sensitivity and got us in a down rate environment, helped us out. So those were kind of the benefits, being able to help the ALM modeling, help the risk-weighted assets, and being able to do that with no impact to the income statement going forward.
Douglas D. Strange: Okay, that's great, Nicole. Super helpful. I appreciate the clarification. And then last one for me, it did, as mentioned, Balboa Trends improved in the quarter. Would you just have the dollar charge-offs this quarter and then your expectations for... loss rates within that portfolio going forward?
Nicole S. Stokes: Okay, that's great, Nicole, super helpful. I appreciate the clarification. And then last one for me, it did, as mentioned, Balboa Trends improved on the quarter. Would you just have the dollar charge-offs this quarter and then your expectations for loss rates within that portfolio going forward?
Douglas D. Strange: The charge-off for Balboa for the second quarter was a little over $7 million. We made a lot of changes to the credit box for Balboa throughout 2023, and overall, we do expect the charge-offs to decline compared to 2023. We don't think it's going to happen necessarily in a nice, linear fashion, so that number could bounce around a little bit, but certainly, in the long haul, those are going to decline.
Speaker Change: The charge off for Balboa for the second quarter was a little over $7 million.
Speaker Change: We've made a lot of changes to the credit box for Valboa throughout 2023, and overall we do expect the charge-offs to decline compared to 2023. We don't think it's going to be necessarily in a nice, linear fashion, so that number could bounce around a little bit, but certainly in the long haul, those are going to decline over time.
Douglas D. Strange: All right, excellent. Thank you guys. I appreciate it. Thanks for taking my question. Sure. Thank you.
Speaker Change: All right, excellent. Thank you guys. I appreciate it. Thanks for taking my question. Sure. Thank you.
Operator: The next question comes from Manuel Navas of D.A. Davis. Please go ahead.
Speaker Change: The next question comes from Manuel Navas of DA Davidson. Please go ahead.
Operator: Can I dig into the NIM a little bit more? What are the new loan yields coming out? And what is kind of like your marginal cost of deposits right now? Sure, so our new
Manuel Navas: Can I dig into the NIM a little bit more? What are new loan yields coming on and what is kind of like your marginal cost of deposits right now?
Nicole S. Stokes: Sure. So our new loan production for June was at about 10.10%. That was consistent with the previous month. So both May and June were right at around 10%. And then our deposit production for the month of June came in right at 2.2%.
Speaker Change: Sure. So our new loan production for June was at about a 10.10%. That was consistent with the previous month. So both May and June were right at around 10%. And then our deposit production for the month of June came in right at 2.2%.
Nicole S. Stokes: Is deposit competition, is it the right way to frame deposits costs as maybe the deposit cost pressures are leveling out, but you just might need more if your loan growth continues to be so strong? Is that kind of the right way to think about it?
Speaker Change: Is deposit competition, is it the right way to frame deposits, costs, as...
Speaker Change: Maybe the deposit cost pressures are leveling out, but you just might need more if your loan growth continues to be so strong. Is that kind of the right way to think about it?
Nicole S. Stokes: That's exactly right, and you know, we are pleased with our margin, and we certainly want to protect that margin, but more importantly, we want to protect our customer base. We are really proud of our deposit base as well, and so we will certainly protect that. And then we've said that our loan growth, deposit growth, was going to be the governor on loan growth. So if we end up giving up a little bit on margin to be able to grow the loan portfolio and still be accretive to net interest income, I feel like when we are at a 354 margin above peer, if we give up a few basis points on that to be able to grow NII, that's really So even if we give up a little bit and use that to protect our growth, we feel like we can do that.
Speaker Change: That's exactly right, and you know, we are pleased with our margin, and we certainly want to protect the margin, but more importantly, we want to protect our customer base.
Speaker Change: You know, we are really proud of our deposit base as well, and so we will certainly protect that.
Speaker Change: And then we've said that our loan growth deposit growth was going to be the governor on loan growth So if we end up giving up a little bit on margin to be able to grow the loan portfolio and still be accretive to net interest income I feel like when we're at a 354 margin above peer if we give up a few basis points on that to be able to grow NII that's really what's going to grow You know EPS, ROA
Speaker Change: efficiency, all of these other things is by growing that NII. So even if we give up a little bit and use that to protect our growth, we feel like we can do that.
Nicole S. Stokes: That's great. I appreciate that.
Speaker Change: That's great, I appreciate that. Where do commercial pipelines stand now? What's the mix currently? Just kind of thinking through that as we get closer to a rate cut. Has that mix shifted at all? Any updated thoughts on kind of where loan growth is going to come from?
Nicole S. Stokes: Where do commercial pipelines stand now? What's the mix currently? Just kind of thinking through that as we get closer to a rate cut. Has that mix shifted at all? Any updated thoughts on kind of where loan growth is going to come from?
Nicole S. Stokes: Sure, and so I think that's a valid point when you look at kind of the second quarter loan growth, about 45% of it was mortgage warehouse lines. And so, and then we talked about our CRE concentration coming down, and some of that was because of payoff. When you look at the chart, you can see that CRE actually came down this quarter.
Speaker Change: Sure, and so I think that's a valid point when you look at kind of the second quarter loan growth, about 45% of it was mortgage warehouse lines. And so, and then we talked about our CRE concentration came down and some of that was because of payoff.
Nicole S. Stokes: So, you know, one of the things that we like about our balance sheet is how diversified we are. So between, you know, the premium finance division, the equipment finance division, mortgage and warehouse, and then core bank, CRE, and C&I, we have a lot of opportunities. But we feel like our loan growth going forward is going to be diversified. We do think that mortgage warehouse lines will come back down by the end of the year, just because of the typical cyclicality of it. And so we still feel like we'll blend out to kind of that mid-single loan growth by the end of the year, but it'll be diversified among categories.
Speaker Change: When you look at the chart, you can see that CRE actually came down this quarter.
Speaker Change: So, you know, that's one of the things that we like about our balance sheet is how diversified we are. So between, you know, the premium finance division, between the equipment finance division, between mortgage and warehouse, and then core bank, CRE, CNI, we have a lot of opportunities, but we feel like our loan growth going forward is going to be diversified.
Speaker Change: We do think that the mortgage warehouse lines will come back down by the end of the year, just the typical cyclicality of it. And so we still feel like we'll blend out to kind of that mid-single loan growth by the end of the year, but it'll be diversified among categories.
Nicole S. Stokes: I appreciate that. Just one follow-up on mortgage banking, where the fees are really strong. The pipeline is up quarter over quarter. It seems like you're thinking more of stability there next quarter. And did the MSR gain run through that line, or was it another one? Just kind of geography there, just wanted to confirm it. Yeah.
Speaker Change: I appreciate that. Just one follow-up on mortgage banking where the fees are really strong. The pipeline is up quarter over quarter.
Speaker Change: It seems like you're thinking more of stability there next quarter and did the MSR gain run through that line or was it in other just kind of geography there just want to confirm it. Yep the MSR line is in other.
Nicole S. Stokes: Yep, the MSR line is in the other. And then we typically have our strongest mortgage quarters in the second and third quarters, while the fourth quarter typically declines a little bit. So that cyclicality, and we don't have any reason to believe that normal cyclicality won't happen this year.
Speaker Change: And then, we typically have second and third quarter our strongest mortgage quarters. Fourth quarter typically does decline a little bit.
Speaker Change: So that cyclicality, and we don't have any reason to believe that normal cyclicality won't happen this year.
Nicole S. Stokes: I appreciate that. I'll step back into the queue.
Speaker Change: Thank you.
Operator: The next question comes from David Feaster of Raymond James. Please go ahead.
Speaker Change: The next question comes from David Feaster of Raymond James.
Operator: Good morning, everybody. Good morning. One of the most impressive things in the quarter was the NIB growth. Could you touch a bit on what's driving that, what's allowing you to be so successful, and some of the trends throughout the quarter, and just how you think about NIB going forward?
Speaker Change: Please go ahead.
David Pipkin Feaster: Good morning, everybody. Good morning.
David Pipkin Feaster: You know one of the most impressive things in the quarter was was the NIB growth Could you touch a bit on what's driving that? What's what's allowing you to be so successful and some of the the trends throughout the quarter and just how you think about NIB going forward
Palmer Proctor: Yeah, our mindset on that, David, has not shifted, and it's been pretty consistent for years. I mean, we've always put a high emphasis and value on deposits, and that's reflected in everything from our incentive plans to, obviously, our budgeting and forecasting. So I think what we're seeing now is the results of a lot of efforts that have happened over the last, or since the beginning of the year, in terms of business development and treasury initiatives.
David Pipkin Feaster: Yeah, our mindset on that, David, has not shifted, and it's been pretty consistent for years. I mean, we've always put a high emphasis and value on deposits, and that's...
David Pipkin Feaster: reflected and everything from our incentive plans to obviously our budgeting and forecasting so
Speaker Change: I think what we're seeing now is the results of a lot of efforts that have happened.
Speaker Change: Over the last or since the beginning of the year in terms of business development and Treasury initiatives You know we've mentioned on a couple calls back how in the investments we've made in overhead and expense This year primarily been focused on Treasury
Palmer Proctor: You know, we mentioned on a couple calls back how the investments we've made in overhead and expense this year have primarily been focused on treasury. And so between the treasury initiatives and our CNI initiatives, that's really where we're seeing the biggest lift on that core funding, and we hope to see that continue. So we're very pleased with it. We did have some... Expenses associated with that and some marketing efforts that have obviously paid off, as you can see this quarter. We've been very happy with the results and hope that trend will continue between now and the end of the year.
Speaker Change: And so between the Treasury initiatives and our C&I initiatives, that's really where we're seeing the biggest lift on that core funding, and we hope to see that continue. So we're very pleased with it. We did have some...
Speaker Change: expenses associated with that with some marketing efforts that they've obviously paid off as you can see this quarter. So we've been very happy with the results and hope that trend will continue between now and the end of the year.
Palmer Proctor: Okay, that's great. And then I just wanted to touch on Balboa.
Speaker Change: Okay, that's great. And then, just wanted to touch on Balboa. We talked about the strength that you're seeing there and tightening the credit box.
Palmer Proctor: We talked about the strength that you're seeing there and tightening the credit box. Curious, maybe, how do you think about the growth outlook there? And then whether there are any other opportunities in that segment as you take a higher look at it, whether there are opportunities to expand that platform. I don't know whether to different asset classes or anything like that, or even potentially to drive some deposits from that group.
Speaker Change: Curious, maybe, how do you think about the growth outlook there? And then whether there's any other opportunities in that segment.
Speaker Change: As you take a higher look at it, whether there's opportunities to expand that platform, I don't know, whether it's different asset classes or anything like that, or even potentially drive some deposits from that group.
Palmer Proctor: Yeah, no, you know, Balboa is great, and Equipment Finance, in general, is just a great opportunity for us. It's obviously, you do incur higher losses, but you've got, as we all know, much higher yields too. So NetNet is an extremely profitable business to be in.
Speaker Change: Yeah, no, you know, Balboa is a great, and equipment finance in general, is just a great opportunity for us. It's obviously, you do incur higher losses, but you've got, as we all know, much higher yields, too.
Palmer Proctor: After tweaking the credit box, I think we have moderated most of the issues we have with transportation. In terms of the balance sheet, you will not see additional growth beyond the balance sheet because we told you it's capped at kind of 10% internally. They're about 6.7% right now.
Speaker Change: NetNet is an extremely profitable business to be in. After tweaking the credit box, I think we have moderated most of the issues we have with transportation.
Speaker Change: In terms of the balance sheet, you will not see additional growth beyond the balance sheet because we told you it's capped at kind of 10% internally. They're about 6.7% right now.
Palmer Proctor: So don't expect a big surge in balance sheet growth, but the opportunity there, too, remains to sell and securitize that paper. So that way, you could potentially increase the volume, potentially, assuming the market and the appetite are there, to crank back up loan sales and securitizations, which historically was what they did because they obviously didn't have a bank balance sheet in the past. So that is an initiative that we see as a real upside or a catalyst on a go-forward basis.
Speaker Change: So don't expect a big surge in the balance sheet growth, but the opportunity there too remains to sell and securitize that paper, so that way you could increase the volume potentially.
Speaker Change: Assuming the market and the appetite is there to crank back up loan sales and securitizations, which historically is what they did because they obviously didn't have a bank balance sheet in the past. So that is an initiative that we see as a real upside or a callus on a go-forward basis. So when you look at tailwinds,
Palmer Proctor: So when you look at tailwinds, that's one where we could keep the production engine running and actually increase production for as long as we have the conduits and ability to sell the paper. OK, that's terrific. Yeah, that generates great fee income, too, as you well know.
Speaker Change: That's one where we could keep the production engine running and actually increase the production for as long as we have the conduits and ability to sell the paper.
Speaker Change: Okay, that's terrific. Yeah, that generates great fee income too, as you well know.
Palmer Proctor: Yeah, that's terrific. And then, just last one for me, you've historically had a lot of success recruiting high-quality talent. I'm curious maybe what you're seeing on the hiring front, your appetite for producers here, where you would be looking to deepen your presence or potentially interested in market expansion, um, you know, just given that you're still open for business and growing while a lot of others are, you know, somewhat constrained right now.
Speaker Change: Yeah, that's terrific.
Speaker Change: And then just last one for me, you've historically had a lot of success recruiting high quality talent. I'm curious maybe what you're seeing on the hiring front, your appetite for producers here, where you'd be looking to deepen your presence or potentially interested in market expansion, you know, just given that you're still open for business and growing while a lot of others are, you know, somewhat constrained right now.
Palmer Proctor: Yeah, you know, our focus. We have been very fortunate to have some incredible talent here in the company. But our focus probably remains more on retention than on attraction, because, as we've said quarter after quarter, we don't have to go out and hire another person to be able to meet our budget and expectations. We're certainly opportunistic, and as we see talent out there and that's available, we'll certainly pursue that. The hires that we've made in Treasury have certainly paid off, and certainly on the CNI initiatives.
Speaker Change: Yeah, you know, our focus, we have been very fortunate to have some incredible talent here in the company, but our focus probably remains more on retention than on attraction because if we've said quarter after quarter, we don't have to go out and hire another person to be able to meet our budget and expectations.
Speaker Change: We're certainly opportunistic, and as we see talent out there and is available, we will certainly pursue that. The hires that we've made in Treasury have certainly paid off, and certainly on the C&I initiatives. But right now, I think the important thing for a lot of companies to do is focus internally on the retention of their talent.
Palmer Proctor: But right now, I think the important thing for a lot of companies to do is focus internally on the retention of their talent, because the worst thing that can happen is you lose that talent. So right now, in terms of aggressively going out and trying to hire teams, we don't need to do that. We don't need to incur that expense, and as you know, we're very expense conscious here at the company.
Speaker Change: because the worst thing that can happen is you lose that talent. So right now, in terms of...
Speaker Change: aggressively going out and trying to hire teams. We don't need to do that. We don't need to incur that expense. And as you know, we're very expense conscious.
Palmer Proctor: But at the same time, we will not pass up an opportunity. So as I look at 2024-2025, I don't see a huge surge in lifting out or bringing in additional expense other than selected. Okay, that makes sense.
Speaker Change: here at the company. But at the same time, we will not pass up an opportunity. So, as I look out to 2024, 2025, I don't see a huge surge in lifting out or bringing in additional expense other than selectively.
Palmer Proctor: Okay, that makes sense. All right. Thanks, everybody.
Speaker Change: Okay, that makes sense. Alright, thanks everybody. Thank you.
Operator: This concludes our question and answer session. I would like to turn the conference back over to Mr. Palmer Proctor for any closing remarks.
Speaker Change: This concludes our question and answer session. I would like to turn the conference back over to Mr. Palmer Proctor for any closing remarks.
Palmer Proctor: Great, thank you. We appreciate your participation in today's call, and we look forward to sharing our results with you next quarter. Our discipline in creating strength on the balance sheet in loans, deposits, and capital, as well as our core profitability and stable credit metrics, has positioned us extremely well as we look into the future. We certainly have the infrastructure in place, the markets, and the talent to execute on our strategies, and we remain committed to top-of-class results. I want to thank you again for your time and interest in Ameris.
Palmer Proctor: Great, thank you. We appreciate your participation in today's call and we look forward to sharing our results with you next quarter. Our discipline in creating strength on a balance sheet in loans, deposits, and capital as well as our core profitability and stable credit metrics has positioned us extremely well as we look into the future.
Palmer Proctor: We've certainly had the infrastructure in place, the markets, and the talent to execute on our strategies, and we remain committed to top-of-class results. I want to thank you again for your time and interest in Ameris.
Operator: The conference has now concluded.