Q1 2025 Ameris Bancorp Earnings Call
Operator: Good day and welcome to the Ameris Bancorp first 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.
Good day and welcome to the American Bancorp first quarter conference call.
All participants will be in listen only mode.
Speaker Change: So do you need assistance, please signal like conference specialist by pressing the Starkey followed by zero.
Operator: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on your telephone keypad. To withdraw your question, please press star then 2. Please note, this event is being recorded.
Speaker Change: After todays presentation, there will be an opportunity to ask a question.
Speaker Change: To ask a question you May press Star then one on your telephone keypad.
Speaker Change: You withdraw your question. Please press Star then two.
Speaker Change: Please note this event is being recorded.
Nicole Stokes: I would now like to hand the call to Nicole Stokes, Chief Financial Officer. Please go ahead. Thank you, Andrea, and thank you to all who have joined our call today.
Nicole Stokes: I would now like to hand, the culture, Nicole Stokes Chief Financial Officer. Please go ahead.
Speaker Change: Thank you Andrea and thank you all 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 I'm joined today by Palmer Proctor, our CEO and Dev strained our chief Credit Officer Palmer will begin with an opening general comment.
Nicole Stokes: 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.
Nicole Stokes: I'm joined today by Palmer Proctor, our CEO, and Doug Strange, our Chief Credit Officer.
Nicole 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. But before we begin, I'll remind you that our comments may include forward-looking statements. These statements are subject to risks and uncertainties. The actual results could vary materially. We list some of the factors that might cause results to differ in our press release and in our SEC filings, which are available on our website. We do not assume any obligation to update any forward-looking statement as a result of new information, early developments, or otherwise, except as required by law.
Speaker Change: And then I will discuss the details of our financial results before we open up for Q&A.
Speaker Change: Before we begin I'll remind you that our comments may include forward looking statements. These statements are subject to risks and uncertainties. The actual results could vary materially we list some of the factors that might cause results to differ in our press release and in our SEC filings, which are available on our website, we do not assume any.
Speaker Change: The obligation to update any forward looking statement as a result of new information early developments or otherwise except as required by law also during the call. We will discuss certain non-GAAP financial measures in reference to the company's performance you can see our reconciliation of these measures and GAAP financial measures in the appendix to our.
Nicole 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.
Palmer Proctor: And with that, I'll turn it over to Palmer for opening comments. Thank you, Nicole, and good morning, everyone. We appreciate you taking the time to join our call today. Our first quarter financial results represent a strong start to 2025. Our last earnings call, I highlighted four strategic focus areas for us, and our first quarter results are right in line with those. Our first focus was maintaining top-tier profitability, and we succeeded there with a 136 ROA, another quarter above 2% PPNR ROA, and a return on tangible common equity over 13%. Our margin expanded during the quarter while we grew core deposits.
Speaker Change: Patients and with that I'll turn it over to Palmer for opening comments. Thank you Nicole and good morning, everyone. We appreciate you taking the time to join our call today, our first quarter financial results represent a strong start to 2025, our last earnings call I highlighted four strategic focus areas for us in our first quarter results are right in line.
Speaker Change: Those are first focus was maintaining top tier profitability and we succeeded there with a 136 ROA.
Speaker Change: Another quarter above 2% P P and or our OE and a return on tangible common equity over 13% our margin expanded during the quarter. While we grew core deposits are $3 73, net interest margin is well above most peer levels. Thanks in part to our strong 30% level of noninterest bearing deposits.
Palmer Proctor: Our 373 net interest margin is well above most peer levels, thanks in part to our strong 30% level of non-interest-bearing deposits. Second, we focused on enhancing revenue generation and positive operating leverage. We continue to focus on maximizing earnings per share through effective balance sheet management. To reiterate my point from the fourth quarter call, when we saw external dynamics that created uncertainty, we pivoted to optimizing margin versus driving growth. We focused on profitability fundamentals such as asset mix, duration, and risk profiles. In fact, we were able to reduce quarterly expense levels in a quarter that normally sees seasonally higher expenses.
Speaker Change: Second we focused on enhancing revenue generation and positive operating leverage we continue to focus on maximizing earnings per share through effective balance sheet management.
Speaker Change: To reiterate my point from the fourth quarter call. When we saw external dynamics that created uncertainty, we've pivoted to optimizing margin versus driving growth, we focused on profitability fundamentals, such as asset mix duration and risk profiles.
Speaker Change: We were able to reduce quarterly expense levels in a quarter that normally see seasonally higher expenses, our expense control led to an efficiency ratio 281 basis points better than first quarter last year.
Palmer Proctor: Our expense control led to an efficiency ratio of 281 basis points better than first quarter last year. We continue to strategically lower our loan to deposit ratio, which is now down to 94% from 98% a year ago. Our CRE and construction concentrations continue to move lower, now down to 261 and 57 respectively. Third, we said we would sustain a strong capital position to stay prepared for changing macroeconomic conditions. We did that through strong first quarter earnings and capital generation, which pushed our common equity Tier 1 to 12.9 percent and our TCE to 10.8 percent, and our reserve was strengthened to 167.
Speaker Change: We continued to strategically lower our loan to deposit ratio, which is now down to 94% from 98% a year ago, our CRE and construction concentrations continue to move lower now down to $2 61 in 57, respectively.
Speaker Change: Third we said, we would sustain our strong capital position to stay prepared for changing macroeconomic conditions, we did that through strong first quarter earnings and capital generation, which pushed our common equity tier one to 12, 9% and our TCE to 10, 8% and our reserve was strengthened to one.
Speaker Change: <unk> 67, this excess capital position gives us optionality going forward to execute growth strategies within our attractive southeastern footprint. When we feel the time is right. We grew tangible book value this quarter by over 12, and a half per cent. We also took advantage of our share buyback repurchasing $15 million of stock in the quarter.
Palmer Proctor: This excess capital position gives us optionality going forward to execute growth strategies within our attractive southeastern footprint when we feel the time is right. We grew tangible book value this quarter by over 12.5 percent. We also took advantage of our share buyback, repurchasing $15 million of stock in the quarter. And finally, we said we would leverage growth opportunities within our dynamic footprint. We certainly did that through our strong deposit growth this quarter of 4 percent annualized with much of that non-interest bearing. Loan balances were stable in the quarter as we continue to gauge our outlook on the economy and the changes coming from the new administration.
Speaker Change: And finally, we said we would leverage growth opportunities within our dynamic footprint. We certainly did that through our strong deposit growth this quarter, a 4% annualized much that noninterest bearing.
Speaker Change: Loan balances were stable in the quarter as we continue to gauge our outlook on the economy and the changes coming from the New administration. We believe the back half of 2025 will likely allow for more growth opportunities than the first half.
Palmer Proctor: We believe the back half of 2025 will likely allow for more growth opportunities than the first half. On a lookout for the remainder of 2025, even with the macroeconomic uncertainty, I remain encouraged as we continue to benefit from a solid core deposit base, a healthy margin, a diversified revenue stream, strong capital and liquidity positions which provide optionality for strategic opportunities that may come up in an uncertain economy, a well-capitalized balance sheet, a proven culture of expense control, and seasoned bankers in top southeastern markets. Our discipline in creating diversification in both the loan and deposit franchise as well as our revenue streams has us very well positioned.
Speaker Change: When I look out for the remainder of 2025, even with the macroeconomic uncertainty I remain encouraged as we continue to benefit from a solid core deposit base, a healthy margin a diversified revenue stream strong capital and liquidity positions, which provide optionality for strategic opportunities that may come up.
Speaker Change: And uncertain economy, a well capitalized balance sheet, our proven culture of expense control and seasoned bankers and top south eastern markets are.
Speaker Change: Our discipline and creating diversification in both the loan and deposit franchise as well as our revenue streams has is very well positioned combined with our top financial performance stable asset quality strong reserves and capital levels have a lot of optimism and how we're set up for a successful remainder of 2025 and beyond.
Palmer Proctor: Combined with our top financial performance, stable asset quality, strong reserves and capital levels, I have a lot of optimism in how we're set up for the successful remainder of 2025 and beyond.
Nicole Stokes: I'll stop there now and turn it over to Nicole to discuss our financial results in more detail. Great. Thank you, Palmer. For the first quarter, we reported net income of $87.9 million or $1.27 per diluted share. That's a 17% increase over the first quarter of last year. One of the things that I'm really proud of is the fact that that increase is fully from our growth in net interest income. Our net interest income increased $20 million this quarter compared to the first quarter of last year, while our provision and non-interest expense remained relatively flat over the same period.
Speaker Change: I'll stop there now ill turn it over to cole to discuss our financial results in more detail.
Cole: Great. Thank you Palmer for the first quarter, we reported net income of $87 9 million or $1 27 per diluted share. That's a 17% increase over the first quarter of last year and one of the things that I'm really proud of is the fact that that increase is fully from our growth in net interest income.
Cole: Net interest income increased $20 million this quarter compared to the first quarter of last year, while our provision and non interest expense remained relatively flat over the same period. So our efficiency ratio improved to 52.83% this quarter compared to 55.64% in the first quarter of last year.
Nicole Stokes: Our efficiency ratio improved to 52.83% this quarter compared to 55.64% the first quarter of last year. This quarter, our return on assets remained strong at $136, our PPNR ROA was at 2.08%, and our adjusted return on tangible common equity was 13.16%. We continue to build capital and we remain focused on growing shareholder value. We grew tangible book value per share by $1.19 to end the quarter at $39.78 and our tangible common equity ratio increased to $10.78 at the end of the quarter. We did repurchase approximately 15 million of common stock or 253,000 shares during the first quarter, and we have approximately 85 million remaining available to purchase through the end of October.
Cole: This quarter our return on assets remained strong at 136 or P. P and our ROA was at two point L, 8% and our adjusted return on tangible common equity was $13 16%.
Cole: We continue to build capital.
Cole: We remain focused on growing shareholder value. We grew tangible book value per share by $1 19 to end the quarter at $39 78, and our tangible common equity ratio increased to 10.78 at the end of the quarter.
Cole: We did repurchase approximately $15 million of common stock for 253000 shares during the first quarter and we have approximately 85 million remaining available for purchase through the end of October.
Nicole Stokes: On the revenue side of things, our net interest income for the quarter was relatively flat, which is a nice positive because of the reduced day count in the first quarter. Both interest income and interest expense both decreased about $12.5 million, but that was a decline of only six basis points on the asset side and a much stronger 23 basis point decline on the interest-bearing deposit. Our net interest margin expanded nine basis points to a strong 373. I need to remind everyone that this margin is a core margin. You know, we don't have any accretion left in the margin that we have to worry about going away and backfilling.
Cole: On the revenue side of things our net interest income for the quarter was relatively flat, which is a nice positive because of the reduced day count in the first quarter does interest income and interest expense both decreased about 12, and a half million dollars, but that was a decline of only six basis points on the asset side and a much stronger at 23 basis point decline.
Interest bearing deposit side.
Cole: Our net interest margin expanded nine basis points to a strong 373 I need to remind everyone that this margin is a core margin. We don't have any accretion left in the margin that we have to worry about going away and back filling.
Nicole Stokes: The expansion this quarter came from six basis points on the asset side, as well as three basis points from the positive deposit mix. Our bankers did a great job protecting and growing deposits this quarter. The cyclical outflow of public funds was slower than expected during the quarter, and we were able to fund what did flow out with core deposit growth rather than all wholesale funding of predicted funds. also proving to be better than expected on the margin with the recent market disruption. We did not see the deposit pricing pressure that we expected due to slower than expected loan growth.
Cole: The expansion this quarter came from six basis points on the asset side as well as three basis points from the positive deposit mix, our bankers did a great job protecting and growing deposits. This quarter. The cyclical outflow of public funds was slower than expected during the quarter and we were able to fund what did flow out with core deposit growth rather than a wholesale.
Cole: Funding is predicted on.
Cole: So pretty big any better than expected on the margin with the recent market disruption, we did not see the deposit pricing pressure than we expected due to slower than expected loan growth. We believe that we will see still see a margin normalize above $3 60 over the next few quarters as the remaining public fund cycle out we replace those with.
Nicole Stokes: We believe that we will still see a margin normalize above $360,000 over the next few quarters as the remaining public funds cycle out, we replace those with wholesale funding, and we expect pressure on deposits as we see loan growth pick up the second half of the year. We continue to be close to neutral on asset liability sensitivity. During the first quarter, we recorded a $21.9 million provision for credit losses, increase on our reserve to 1.67% of loans, and improving to 342% of portfolio NPL. Our total non-performing assets as a percentage of assets improved to 44 basis points, and our charge-offs were stable again this quarter at 18 basis points.
Cole: Wholesale funding and we expect pressure on deposits as we see loan growth pick up second half of the year.
Cole: We continue to be close to neutral and asset liability sensitivity.
Cole: During the first quarter, we recorded a $21 9 million provision for credit losses increase on our reserve to 167% of loans and improving is 342% of portfolio NPL. Our total nonperforming assets as a percentage of assets improved to 44 basis points and our charge offs were.
Cole: Stable again this quarter at 18 basis points.
Nicole Stokes: Non-interest income decreased $4.9 million this quarter, mostly with reduced gains on sale of SBA loans of $3.2 million, and then a small decline in revenue in the mortgage division of $1.4 million as we've seen tightness in the housing market with volatile rates. A real win was our total non-interest expense. It decreased $915,000 in the first quarter, which was great to see, because we usually have that first quarter bump from cyclical payroll taxes and 401k matching contributions. As I previously mentioned, our efficiency ratio was strong at 52.83% this quarter. On the balance sheet side, we ended the quarter with total assets of $26.5 billion, compared to $26.3 billion at the end of the year.
Cole: Noninterest income decreased $4 9 million this quarter, mostly with reduced gains on sale of SBA loans of $3 2 million and then a small decline in revenue in the mortgage division of $1 4 million as we've seen tightness in the housing market with volatile right.
Cole: A real land with our total noninterest expense decreased 915000 in the first quarter, which was great to see because we usually have that first quarter bump from cyclical payroll taxes and four one K matching contributions.
Cole: As I previously mentioned our efficiency ratio was strong at $52 eight 3% this quarter.
Cole: On the balance sheet side, we ended the quarter with total assets of $26 5 billion compared to $26 3 billion at the end of the year lows were roughly stable this quarter and deposits increased to 190 million that represents a 4% annualized deposit growth interest bearing deposits fell slightly in the quarter.
Nicole Stokes: Loans were roughly stable this quarter, and deposits increased $190 million. That represents a 4% annualized deposit growth. Interest-bearing deposits fell slightly in the quarter, although we were able to grow non-interest-bearing deposits at a nice 15% annualized growth rate. This quarter's deposit growth included the headwind of the seasonal outflow of about 406 million of our cyclical municipal deposits. Brokered CDs increased only 246 million to offset those, so we grew our non-brokered, non-municipal deposits by 349 million. Loan balances declined slightly during the quarter, reflecting continued seasonality in our mortgage warehouse and mortgage portfolio. Total loan production in the first quarter was $1.5 billion, down slightly from the fourth quarter due to seasonality, but higher than our year-ago level.
Cole: Although we were able to grow noninterest bearing deposits at a nice 15% annualized growth rate. This.
Cole: This quarter's deposit growth included the headwind of the seasonal outflow of about 406 million of our cyclical municipal deposits.
Cole: For Cds increased only 246 million to offset those so we grew our non brokered non municipal deposits by $349 million.
Cole: Loan balances declined slightly during the quarter, reflecting continued seasonality in our mortgage warehouse and mortgage portfolio total loan production in the first quarter was $1 5 billion down slightly from the fourth quarter due to seasonality, but higher than a year ago level.
Nicole Stokes: Our non-interest bearing deposits represent a healthy 30.8% of total deposits, and our brokered CDs represent less than 5% of total deposits. We continue to anticipate 2025 loan and deposit growth in the mid single digit.
Cole: Our noninterest bearing deposits represent a healthy 38% of total deposits and our brokered Cds represent less than 5% of total deposits. We continue to anticipate 2025 loan and deposit growth in the mid single digits.
Nicole Stokes: I want to close by reiterating how well positioned we are and how focused we are on a successful 2025.
Cole: I wanted to close by reiterating how well positioned we are and how focused we are on a successful 2025 and with that I'll wrap it back up and turn the call over to Andrea for any questions from the group. Thank you Adrian.
Nicole Stokes: And with that, I'll wrap it back up and turn the call over to Andrea for any questions from the group. Thank you, Andrea.
Cole: Yeah.
Operator: We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then 2.
Cole: We will now begin the question and answer session.
Cole: To ask a question you May press Star then one on your telephone keypad.
Cole: If youre using a speakerphone please pick up your handset before pressing mckee.
Cole: To withdraw your question. Please press Star then two.
Operator: At this time, we will pause momentarily to assemble the roster.
Cole: At this time, we will pause momentarily to assemble the roster.
Cole: Yeah.
Catherine Mealor: And our first question will come from Catherine Mealor of KBW. Please go ahead. Good morning. Good morning, Catherine. I wanted to start with the margin, and I was looking at loan yields, and your loan yields have just been so resilient over the past few quarters, just kind of curious what was driving that. Is there any kind of mixed shift in maybe where new production is, or any kind of early payments that are impacting that? Just trying to kind of get a sense as to what's keeping the loan yields as high as they have been, which has been awesome to see.
Speaker Change: And our first question will come from Catherine Mealor, Oh Gee VW. Please go ahead.
Catherine Mealor: Good morning.
Speaker Change: Good morning Catherine.
Speaker Change: I Wonder if you start with the margin and I was looking at loan yields and that your loan yields have just been so resilient over the past few quarters, just kind of curious a.
Speaker Change: What was driving that was there any kind of mix shift and maybe where new production is there any kind of early payments that are that are impacting that just trying to kind of get a sense as to what's keeping the loan yields as high as they have been which has been awesome to see thanks.
Nicole Stokes: Thanks.
Nicole Stokes: Sure. So, you know, our loan production for the quarter came in for the whole company right at about 6.86%. And that was really the bank kind of coming in right around 8%, premium finance right about 6.75, mortgage at 6.64, and then the warehouse lines coming in around 6.71. So when you really kind of look at all those averages, you can see that, you know, the core bank coming in at 8% has definitely helped, as well as, you know, the mortgage rate staying high where they are. So that has been great for us. And then I would also remind everybody that, you know, as things are rolling off, like our premium finance division, you know, those have about a 10-month maturity.
Speaker Change: Sure. So you know our loan production for the quarter came in for the whole company right at about 6.86% and that was really the the bank kind of coming in right around 8% premium finance right about 675 mortgage at 664, and then the warehouse lines coming in around 671, So when you really kind of.
Speaker Change: Look at all those averages you can see that you know the the core bank coming in at a has definitely helped as well as you know the the mortgage rate staying staying high where they are so that that would have been great for us and then I would also remind everybody that you know as things are rolling off like our premium Finance Division you do you have.
Speaker Change: Without a 10 month maturity so while they are technically fixed rate and they're acting a little bit more variable. So they are coming on strong similar to what they were 10 months ago, we haven't really seen that decline which has been great.
Nicole Stokes: So while they are technically fixed rate and they're acting a little bit more variable, so they're coming on strong, similar to what they were 10 months ago. We haven't really seen that decline, which has been great.
Nicole Stokes: Okay, great, and so absent any rate cuts, do you think, would you expect loan yields to actually improve from these levels? I think, Catherine, I think that the loan yields are pretty consistent. They've been fairly consistent. I think the bigger driver of a margin compression is going to come from the deposit side. I think as we see loan growth pick up the second half of the year, that we'll start seeing a little bit more competition on the deposit side. But right now, we've been very happy with where our margin has been accretive to growth up to this point.
Speaker Change: Okay, great and so absent any rate cuts.
Speaker Change: Do you think would you expect colonial to actually improve from these levels.
Speaker Change: I think Catherine I think that the loan yields are pretty consistent they've been fairly consistent I think the bigger driver of our margin compression is going to come from the deposit side and I think as we see loan growth pick up the second half of the year that we'll start seeing a little bit more competition on the deal.
Speaker Change: Harvest side, but right now we've been very happy with where our kind of our margin has been accretive to gross up to this point when you look at the production for the quarter you know long production kind of it kind of came in around that $6 86, and then our interest bearing deposit came in at 313. So that's right at a 373 spread.
Nicole Stokes: When you look at the production for the quarter, loan production kind of came in around that $6.86, and then our interest bearing deposit came in at $3.13. So that's right out of $3.73 spread, which is in line with where our margin was for the quarter. Okay, that's great. And I know the margin came in a lot better than your guidance, so it seems like you're saying the surprise is more on the funding side, but as growth improves, that will normalize back to that 360 kind of margin range. That's right. And we had previously been cautious to guide, and last quarter when we were at 364, and I did guide down, I think we thought the deposit pressure was going to be a little bit tighter, and we didn't see that.
Speaker Change: Which is in line with where our margin was for the quarter.
Speaker Change: Okay, that's great and I know the Martin and the margin came in a lot better than your guidance. So you're it seems like you're saying that surprises more on the funding side, but as growth improves that will normalize back to that pre 60 on kind of margin range. That's right and you know we had previously been cautious to guide and last quarter. When we were at $3 64, and I I did guide down I think we.
Speaker Change: The deposit pressure was gonna be a little bit tighter and we didn't see that and then we also in our modeling had all of those cyclical public funds that we're rolling out we expected to replenish those with wholesale and we really only had to go about half wholesale the rest with core deposit and then we had those noninterest bearing said those were all wins our bank.
Nicole Stokes: And then we also, in our modeling, had all of those cyclical public funds that were rolling out. We expected to replenish those with wholesale, and we really only had to go about half wholesale. The rest was core deposit, and then we had those non-interest bearings. So those were all wins. Our bankers did a great job there. So we're still saying, and you have our March margin, just for comparison, was at 369. So our quarter to date was higher than the March number, so that's why we're kind of guiding back down a little bit that we have some of that normalizing with our deposit.
Speaker Change: Chris did a great job there and so we're still saying any of our March margin just for a comparison with at 369, So our quarter to date was higher than the March number. So that's why we're kind of guiding back down a little bit that we know we have and we have some of that normalizing with our deposit base.
Nicole Stokes: Great. Okay, very helpful. Thanks, Nicole. Sure.
Nicole Stokes: Great very helpful. Thanks Nichol sure.
Speaker Change: Hi.
Stephen Skelton: The next question comes from Stephen Skelton of Piper Sandler. Please go ahead. Yeah, good morning, everyone. I just want to start maybe kind of high level, you know, I think, Nicole, you said you guys feel like you're very well positioned for 2025. And I would definitely agree. I mean, a lot of capital, high reserves.
Speaker Change: The next question comes from Stephen Scouten of Piper Sandler. Please go ahead.
Speaker Change: Yeah. Good morning, everyone. I just wanted to start maybe kind of high level. You know go you said you guys feel like Youre very well positioned for 2025, and I would definitely agree I mean, a lot of capital I reserves. How do you think about this the balance of the economic uncertainty that we have and then probably some desire to be rare.
Palmer Proctor: How do you think about this balance of the economic uncertainty that we have, and then probably some desire to be relatively aggressive, given how you guys are positioned for success, whether that's hiring activity, ramping up loan growth, just kind of maybe just high level, how you guys are thinking about that balance of aggressiveness versus patience, given the uncertainty. Yeah, good question. I think the when we look at it, I don't I don't think you're going to see us be aggressive in this kind of environment will be measured, which is exactly what we've been over the last couple quarters in our in our comments and in our delivery.
Speaker Change: It could be aggressive given how you guys are positioned for success, whether that's hiring activity ramping up loan growth.
Speaker Change: Maybe just high level, how you guys are thinking about that balance of aggressiveness versus patients given the uncertainty.
Speaker Change: Yeah. Good question I think the when we look at it I don't I don't think you're going to see us be aggressive in this kind of environment will be measured which is exactly what we've done over the last couple of quarters in her comments and in our delivery I do think that environments. Like this do create opportunity if that's where you're going so we're certainly well positioned there from a cat.
Palmer Proctor: I do think that environments like this do create opportunity, if that's where you're going. So we're certainly well positioned there from a capital standpoint, liquidity standpoint, and an opportunistic standpoint. The the growth side of it, as we have said all along, we've got the right people in the right places to hit the accelerator when we we deem appropriate. This this quarter, we hired another eight bankers, net up to, because we one of the things we keep focusing on is making sure that we're, we're getting the production out of the bankers that we have. So we've been very efficient in that.
Speaker Change: [laughter] standpoint liquidity standpoint, and an opportunistic standpoint, the growth side of it as we have said all along.
Speaker Change: We've got the right people in the right places to hit the accelerator when we deem appropriate. This this quarter. We hired another eight bankers are net up to because we one of the things we keep focusing on is making sure that where we're getting the production out of the bankers that we have so we've been very.
Speaker Change: Fishing in that and that's reflected obviously in our our overhead and expenses but.
Palmer Proctor: And that's reflected, obviously, in our, our the way we're positioned right now. So to your point, when we start seeing a little more clarity out there, or we see any sort of opportunity, we're probably in a better position we've ever been in terms of being able to capitalize on that. With the balance sheet management we have and with the team we already have in place, we don't we're not, we don't have to go out and hire teams of people to, to hit our growth targets. Or in the meantime, we've got the ability to continue and to deliver.
Speaker Change: But I think the I love the way we're positioned right now so to your point when we start seeing a little more clarity out there or we see any sort of opportunity, we're probably in a better position we've ever been in terms of being able to capitalize on that with the balance sheet management, we had him with the team we already have in place we don't we're not we.
Speaker Change: We don't have to go out and hire teams of people to to hit our growth targets or and in the meantime, we've got the ability to continuing to deliver.
Stephen Skelton: That's perfect. Yeah, that was definitely along the lines of what I was asking. Thanks, Palmer.
Speaker Change: That's perfect Yeah that was definitely along the lines of what I was asking Mike Palmer.
Palmer Proctor: And then on the expense side, really nice quarter here. Is there anything in terms of whether it's incentive comp or other things that kind of kept that number below what you were expecting, maybe even seasonally, that that should pick back up in the rest of the year? Or is this kind of a fair run rate to work from as we move forward? So, I think on the expense side, we did have a great quarter as far as expense control, but I wouldn't say there's anything necessarily like a big credit or reduced incentive comp, anything that drove that.
Speaker Change: And then on the expense side really nice quarter here is there anything.
Speaker Change: In terms of whether it's incentive comp or other things that kind of kept that number below what you were expecting maybe even seasonally that that should pick back up in the rest of the year or is this kind of a fair run rate to work for them as we report.
Speaker Change: That's I think on the expense side, we did have a great quarter as far as expense control, but I wouldn't say there's anything.
Speaker Change: Necessarily like a big credit or reduced incentive comp anything that drove that it was just overall expense control you know I look at kind of the expense guide here for the quarter. We came in at about 151 consensus had it a little bit higher than that but our mortgage revenues were a little bit below consensus. So when I look out kind of the second and third quarter.
Nicole Stokes: It was just overall expense control. You know, I look at kind of the expense guide. So, for the quarter, we came in at about 151. Consensus had it a little bit higher than that, but our mortgage revenues were a little bit below consensus. So, when I look out kind of just second and third quarter, I think second quarter consensus is good, especially with the increased mortgage revenue in consensus, and I think the expenses match that. And then we also do our merit increases in April. So, we've got about 1.7 million a quarter of merit increases that are going to kick in.
Speaker Change: Second quarter consensus is is good, especially with the increased mortgage revenue in consensus and I think the expenses match that and then we also do our merit increases in April. So we've got about $1 7 million a quarter of merit increases that are going to kick in so that'll help offset some of the higher pay.
Nicole Stokes: So, that'll help offset some of the higher payroll taxes in the first quarter. So, I feel like the second quarter consensus is pretty close to expectation.
Speaker Change: Taxes in the first quarter, so I feel like the second quarter consensus is is pretty pretty close to expectations.
Stephen Skelton: Got it. That's very helpful.
Speaker Change: Got it that's very helpful. And then last one for me just on the on the reserve.
Stephen Skelton: And then last thing for me, just on the, on the reserve, you know, I was kind of surprised to see it tick up, to be honest with you, given how strong the actual underlying metrics appear. Were there any changes in either how you guys handle your weightings on your scenarios or qualitative reserves embedded within that? And based on what you've seen, maybe with April data and April scenarios, any expected changes from what you're seeing so far this quarter?
Speaker Change: It was kind of surprised to see it tick up to be honest with you given how strong the actual underlying metrics appear were there any changes in either how're you guys handle your weightings on your scenarios or qualitative reserves embedded within that.
Speaker Change:
Speaker Change: And based on what you've seen maybe where the April data in April scenario any any expected changes from what you're seeing so far this quarter.
Douglas Strange: Stephen, this is Doug, good question. So you're right, the reserve bill had nothing to do with asset quality. I'm sure as you saw, we improved MPAs, criticized and classifieds for the quarter. However, you know, there was some pretty extraordinary economic data that hit us the last week of the quarter. So the reserve is purely model driven, and it was influenced by our weightings on the economic forecast. We moved to a one third baseline, two thirds down downside in in that scenario. Got it. Extremely helpful.
Speaker Change: So even though this is a good question so.
Speaker Change: You're right the reserve Bill had nothing to do with asset quality is I'm sure. As you saw we improved our NPA as criticized and classified assets for the quarter.
Speaker Change: Over you know there were some pretty extraordinary economic data that hit us the last week of the quarter. So the reserve is purely model driven and it was influenced by our weightings on economic forecasts, we moved to a one third baseline two thirds down downside.
Speaker Change: In that scenario.
Speaker Change: Got it extremely helpful. Thanks for all the time with them on a great quarter.
Stephen Skelton: Thanks for all the time this morning. Great quarter. Thank you.
Speaker Change: Thank you.
Speaker Change: Yeah.
Russell Gunther: The next question comes from Russell Gunther of Stevens, please go ahead. Hey, good morning, guys. I wanted to follow up on the margin discussion, if I could, particularly around the the loan yield resilience this quarter. Could you guys share just where Balboa loan balances ended up for the quarter? And then your guys expectation for related balance sheet growth? Yes, so Balboa ended right at about one... I want to make sure I'm giving you the right number, give me one second. Yes, Balboa was up to $1.5 billion, and that's about 7.2% of our total. And then, you know, we are still saying that loan growth for the year is going to come kind of mid-single digit.
Russell Gunther: The next question comes from Russell Gunther of Stephens. Please go ahead.
Russell Gunther: Hey, good morning, guys.
Russell Gunther: I wanted to good morning, Nicole I wanted to follow up on the margin discussion, if I could particularly around the the loan yield resilient to this quarter.
Russell Gunther: Could you guys share just wear Balboa loan balances ended up for the quarter.
Russell Gunther: And then your guys expectation for related balance sheet growth.
Russell Gunther: Yes, so dabo it ended right at about one.
Russell Gunther: I want to make sure I'm, giving you the right number give me one second.
Russell Gunther: Yeah.
Russell Gunther: Yeah.
Russell Gunther: [noise], yes, Saba with up to $1 5 billion and that's about seven 2% of our total and then you know we are still saying that loan growth for the year is going to come in kind of mid single digit. So you know that five to six range and then we think this is gonna be.
Nicole Stokes: So, you know, that five to six range, and we think that this is going to be back half of the year loaded. you know, third, fourth quarter. Okay, and would Balboa kind of continue to track along those lines just trying to get a sense for the contribution of that five to six percent growth? Yeah, I mean, we, they would grow kind of in line with the company, you know, so they've been hanging right around that 6.8 to 7.2% of the total portfolio for the last two or three quarters. So, you know, if we see significant pickups in, you know, some of the CRE, which we've been a little bit gun-shy there, and we've been hanging back on some CRE growth, though, but if we saw that, if we started getting comfortable there and seeing, you know, liking what we see in the market and we got more into some CRE growth, you could see the Balboa growth be not as quite, so you could see that 7.2 become a little bit diluted.
Russell Gunther: The back half of the year loaded.
Russell Gunther: You know third third and fourth quarter.
Russell Gunther: Okay.
Russell Gunther: But what kind of continue to track along.
Russell Gunther: Along those lines, just trying to get a sense for.
Russell Gunther: The contribution to that 5% to 6% growth.
Russell Gunther: Yeah, I mean, we they they would grow kind of in line with the company. He has.
Russell Gunther: They've been hanging right around that six eight to seven 2% of the total portfolio for the last two or three quarters. So if we see significant pick up in you know some of the CRE, which we've been a little bit gun shy, there and we've been hanging back on some CRE growth. So, but if we saw that if we started getting comfortable there and seeing you know like.
Russell Gunther: What we see in the market and we got more interest in CRE growth you could see the download growth be not it's quite so you can see that seven point to become a little bit diluted that for right now they're kind of growing in proportion to the company.
Nicole Stokes: But for right now, they're kind of growing in proportion. The other thing to remember too, if we start seeing an improvement in the market in terms of that type of opportunity and that vertical, we also have the ability with conduits we have set up to start doing some of the loan sales. And so that would always keep it from a balance sheet management standpoint intact and in line with our expectations.
Russell Gunther: And the other thing to remember too if we start seeing an improvement in the market in terms of that type of opportunity in that vertical but we also have the ability with conduits, we have set up to start doing some of the loan sales.
Russell Gunther: And so that would always keep it from a balance sheet management standpoint intact and in line with with.
Russell Gunther: Our expectations.
Palmer Proctor: Okay, great. Thank you both for that. And then just last one for me switching gears to capital deployment, you know, understand that growth is expected to pick up here. For you guys, you did put some buyback to work. So just love to get a sense for how you're thinking about that going forward, as well as the likelihood of taking a look at the subject that will flip the float and become callable. Yeah, no, there's a lot of, once again, optionality there. First and foremost, we prefer the organic growth and grow into that capital. Then we do have the sub-debt, as you mentioned, that'll be coming due.
Speaker Change: Okay, great. Thank you both for that and then just last one for me switching gears to capital deployment, you know understand that our growth is expected to pick up here.
For you guys you did put some buyback the west I, just I'd love to get a sense for how you're thinking about that going forward.
Speaker Change: As well as the likelihood of us taking a look at the sub debt that will flip to float and become callable.
Speaker Change: Yeah, I know, there's a lot of once again optionality. There are first and foremost we prefer the organic growth and grow into that capital than.
Speaker Change: And then we do have the sub debt as she mentioned that'll be coming due we'll be able to take a look at that and then buybacks. You know we were active this past quarter, we will see what happens this quarter, but that's certainly an option as well, but I will tell you we feel very good about the capital that we've been able to accrete and then also more importantly in this type of environment to have.
Palmer Proctor: We'll be able to take a look at that. And then buybacks. We were active this past quarter. We'll see what happens this quarter, but that's certainly an option as well. But I will tell you, we feel very good about the capital that we've been able to create. And then also, more importantly, in this type of environment, to have it for offensive as well as defensive purposes.
Speaker Change: At four offensive as well as defensive purposes.
Russell Gunther: All right, great. Very good. That's it for me, guys. Thanks for taking my questions.
Speaker Change: Alright, great very good that's it for me guys. Thanks for taking my questions.
Speaker Change: Thank you.
Manuel Navas: The next question comes from Manuel Nava of D.A. Davidson. Please go ahead. Hey, if on the reserve build, if it skewed even more to the to the worst scenario, what would you drop the baseline? What would the increase to reserves roughly be? Manuel, good question. The last week of the quarter, we subscribed to Moody's and their economic forecast, and they issued an addendum to their forecast that week, and basically, the tariffs that were announced were, I guess, broader and deeper than they had originally contemplated in their forecast, which were issued some two or three weeks earlier.
Manuel novel: The next question comes from Manuel novel of D. A Davidson. Please go ahead.
Speaker Change: Yeah.
Speaker Change: Hey, if.
Speaker Change: On the reserve build is it.
Speaker Change: Skewed even more to the to the worst scenario what would.
Speaker Change: Drop the baseline, but what would the increase to reserves roughly be.
Speaker Change: Good question so.
Speaker Change: The last week of the quarter, we we subscribe the moodys in their economic forecast and they issued an addendum to their forecast that weekend and and basically the tariffs that were announced where I guess broader and deeper than originally contemplated in their forecast, which were issued some two or three weeks earlier and then.
Douglas Strange: In that addendum, my interpretation, or our interpretation, was there was more wrong than right in the baseline, and so we took that to heart, and so we did reduce our weighting to the baseline as a result. and if there was no waiting to the baseline. You mean if we did a 100% baseline? No, 100% worse. Oh, 100% adverse. So right now we have a third baseline, a third adverse S2, and then a third adverse S3. So you're saying if we went kind of 50-50 adverse two and three? Sure, or, yeah.
Speaker Change: Addendum.
Speaker Change: My interpretation of our interpretation was there was more wrong than right in the baseline and so we took that to heart and so we did reduce our weighting to the baseline as a result of that.
Speaker Change: And if there was no waiting to the baseline.
Speaker Change: You mean, if it was it was we did 100% baseline.
Speaker Change: No 100% worse.
Speaker Change: 100% adverse so right now we have a third baseline or a third adverse F. Two and then a third adverse at three so you're saying if we went kind of 50 50 adverse two and three.
Speaker Change: Sure.
Speaker Change: Yeah.
Speaker Change: Okay.
Douglas Strange: I mean obviously it would have increased the provisioning, I don't know what the calculation comes out to but it would have been considerably more than what we had. And there are some things in the baseline that we still feel are accurate. We did not totally remove the baseline but there were just certain key components in there that again Moody's came out and said hey we didn't think it was going to be this deep on the tariffs and then you get the domino impact of the tariffs through a lot of other economic data. So that's why we moved down to a third as opposed to moving We still thought it had some...
Speaker Change: And.
Speaker Change: Well I mean, obviously would've increased the provisioning.
Speaker Change: I don't know what the calculation comes out to bid when considerably.
Speaker Change: Yeah, Yeah, and there are some things in the baseline that we still feel yeah yeah.
Speaker Change: Yeah, we did not totally removed the baseline, but they were just certain key components in there that again Moody's came out and said Hey, we we didn't think it's gonna be this deep on the tariffs and then you get the Domino impact of the tariffs through you know a lot of other economic data. So that's why we moved down to a third as opposed to moving it to zero, we still thought it had some.
Speaker Change: Some merit.
Douglas Strange: How much sentiment around tariffs, is it even showing up in any of your pipelines to date, in your customer base? It's not really. It's, I mean, Manuel, it's really too soon to tell. The jury's still out, if you will. That narrative on the tariffs seems to change daily. So, but now we've had extensive conversations with customers. We keep in touch with them. And that's the narrative we're getting back. We just don't know yet.
Speaker Change: How much sentiment around tariffs are you is even showing up in any of your pipelines to date and your customer base is not really.
Speaker Change: I mean, Manuel it's really too soon to tell the jury's still out if you will that narrative volunteer seem to change daily So, but now we've had extensive conversations with customers, we keep in touch with them and that's the narrative, we're getting but we just don't know yet so, but we did feel we needed to.
Douglas Strange: So, but we did feel, you know, we needed to consider that, some of our reserves.
Speaker Change: To consider that some of our reserve data.
Douglas Strange: Okay, and then my last question is on the security build. Can you just talk about the balance sheet for a moment and kind of where where you're adding and if you could like what what the new securities yields are? Sure, so if you remember back, you know, back in the 2022-ish, 2021, when rates were so anemic, we did not go in the bond portfolio. So we had let our bond portfolio run down to about 3% of earning assets. And we've gradually been building that back up. So we did take some of that deposit growth this quarter and go, you know, as our mortgages pay down, we put that back into the bond portfolio.
Speaker Change: Okay and then my last question is on the Securities build can you just talk about the balance sheet for a moment and kind of where where you're adding in.
Speaker Change: If you could like what the new Securities book yields are.
Speaker Change: Sure. So if you remember back you know back in the 2022 ish 2021 when rates were so anemic and we did not win the bond portfolio. So we have let our bond portfolio run down to about 3% of earning assets and we've gradually been building that back up. So we did take some of that deposit growth this quarter and go you know either.
Speaker Change: Mortgages pay down we put that back into the bond portfolio. So we had and we bought about 285 million and that came in at about a $4 62, and we had about 26 million mature off at 375. So that certainly helps and then looking forward into the next quarter and we have about 200.
Douglas Strange: So we had, we bought about 285 million and that came in at about a 462. And we had about 26 million mature off at 375. So that certainly helped. And then looking forward into the next quarter, we have about 293 million maturing in the second quarter and that's at a 283. So we definitely have a little bit of room to pick up some extra margin and some extra interest income on the bond portfolio. We have about 430 million maturing in the whole year at a 318 with again, 293 of it. So a little over half maturing in the second quarter.
And 93 million maturing in the second quarter and that's at at 283, So we definitely have a little bit of room to pick up some extra.
Speaker Change: Margin in some extra interest income on the bond portfolio, we have about 430 million maturing in the whole year at a 318 with again 293 of it so a little over half maturing in the second quarter. So we'll have a little bit of pick up there.
Douglas Strange: So we'll have a little bit of pickup there. That's great. I appreciate the color.
Speaker Change: That's great I appreciate the color and I'll step back into the queue.
Douglas Strange: I'll step back into the queue.
Christopher Marinac: Thank you.
Speaker Change: Okay. Thank you.
Christopher Marinac: The next question comes from Christopher Marinac of J. Montgomery Scott. Please go ahead. Hey, thanks. Good morning. Nicole, you mentioned the higher deposit costs possibly through the competition as this year rolls on. And I'm curious kind of how you think about the trade off between a lower margin and faster balance sheet growth. And it's not just this year, but also, I guess, as you think about that, as Ameris goes the next few years.
Christopher Merrimack: The next question comes from Christopher Merrimack of Janney Montgomery Scott. Please go ahead.
Christopher Merrimack: Hey, Thanks, Good morning, Nicole you mentioned, the higher deposit costs, possibly to the competition as this year rolls on and I'm curious kind of how you think about the trade off between a lower margin and faster balance sheet growth and it's not just this year, but also I guess as you think about that as a marriage goes next few years.
Nicole Stokes: No, I think that's one of the biggest things in our mind is that we want profitable growth, and so we're looking at that every day of, you know, what, and I also think that being at a 373 margin, we have the availability that if we need to compete on margin, and so what we're seeing right now is that we haven't had to necessarily compete and give it away, and we don't always want to be the low-cost leader either, and so we do think that there could be some deposit pressure, you know, our deposit rates have come in really, really well.
Christopher Merrimack: No I think that's one of the biggest things in our mind is that we want profitable growth and so we're looking at that every day of you know what and I also think that being at a 373 margin we have the availability that if we need to compete on margin.
Christopher Merrimack: What we're seeing right now is that we haven't had to necessarily compete and give it away and we don't always want to be the low cost leader either and so we do think that there could be some deposit pressure you know our to our deposit rates have come in really really well we were very aggressive on the front end as soon as the fed cut to go down such that I think there's still a little bit.
Nicole Stokes: We were very aggressive on the front end as soon as the Fed cut to go down, such that I think there's still a little bit of a loan lag to pick up, which is kind of in my margin guidance as well, you know, but when you look at the quarter deposits, the spot deposit rates, We were pleased with them. The March number was very similar to the quarter number, so we kind of saw those stabilize throughout the quarter as well.
Christopher Merrimack: Lone lag to pick up which is kind of in my Martin got margin guidance as well, yeah, but when you look at the quarter deposits the spot deposit rate.
Christopher Merrimack: We were pleased with them.
March number was very similar to the quarter number so we kind of saw those stabilized throughout the quarter as well.
Christopher Marinac: Great, thank you for that.
Speaker Change: Great. Thank you for that and then Doug just a question for you is actually commitment lines build over time is that going to further drive the allowance build in future quarters or could that actually be another area, where you're conservative and perhaps that could give you flexibility down the road.
Douglas Strange: And then, Doug, just a question for you. As the commitment lines build over time, is that going to further drive the allowance build in future quarters? Or could that actually be another area where you're conservative and perhaps that could give you flexibility down the road? Yeah, well, I mean, as we grow commitments, it does impact the reserve as well. So you kind of, you know, you grow into that through through long growth. So yeah, Chris, that's a great, very insightful. Because when you look at what happened over the last 18 months with the economic uncertainty, and as we kind of backed off a little bit from construction, and some of those construction unfunded came down, that reserve kind of moved out of the unfunded and went over.
Speaker Change: Yeah, well I mean, as we grow commitments it does impact the reserve as well. So you kind of you know you grow into that through through loan growth. So yeah. The answer is sure.
Christopher Merrimack: Chris that's a great very insightful because when you look at what happened over the last 18 months with the economic uncertainty as we kind of backed off a little bit from construction and some of those construction unfunded came down that that reserve kind of moved out of the unfunded win over and he's kind of pick up the accelerator and start rebuilding.
Douglas Strange: And as you kind of pick up the accelerator and start rebuilding those unfunded, you will see that reserve kind of come back on the unfunded. So that was a very insightful question. Good deal.
Christopher Merrimack: Unfunded you will see that reserve kind of come back on the unfunded. So that was a very insightful question.
Christopher Merrimack: Good deal. Thank you so much for all the background this morning.
Christopher Marinac: Thank you so much for all the background this morning.
Operator: Thank you.
Chris: Thank you Chris.
Operator: This concludes our question and answer session.
Chris: This concludes our question and answer session I'd like to turn the conference back over to Palmer Proctor for any closing remarks.
Palmer Proctor: I'd like to turn the conference back over to Palmer Proctor for any closing remarks. Great. Thank you, Andrea. And once again, I want to thank everybody for joining our call today, and I also want to thank our teammates for another incredible quarter. We remain focused on producing top-tier results, growing our strong core deposit base, and maintaining strong levels of capital reserves given the current economic uncertainty.
Palmer Proctor: Great. Thank you Andrea and once again I want to thank everybody for joining our call today and I also want to thank our teammates for another incredible quarter, we remain focused on producing top tier results growing our strong core deposit base and maintaining a strong level of capital reserves given the current economic uncertainty.
Palmer Proctor: Ameris is very well positioned to take advantage of our attractive southeastern markets and grow organically over the long term, and we appreciate your participation in today's call, and we thank you for your time and your interest in Ameris Bancorp.
Palmer Proctor: The merits as very well position to take advantage of our attractive southeastern markets and grew organically over the long term and we appreciate your participation in today's call and we thank you for your time and your interest in <unk> Bank.
Operator: The conference is now concluded. Thank you for attending today's presentation and you may now disconnect.
Palmer Proctor: The conference has now concluded. Thank you for attending today's presentation and you may now disconnect.
Palmer Proctor: [music].
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