Ameris Bancorp (ABCB) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call reveals strong loan production, strategic market positioning, and a new $200 million share repurchase plan, indicating positive growth prospects. Despite some margin compression and higher initial expenses, the overall financial health and optimistic guidance outweigh these concerns. The company's strategic focus on Southeastern markets and capital management further supports a positive outlook, suggesting a stock price increase of 2% to 8% over the next two weeks.
Key Financial Performance
Net Income (Full Year 2025) $412.2 million, a record high, with a diluted EPS of $6 per share, marking a 15% year-over-year increase. This growth was achieved organically.
Net Income (Q4 2025) $108.4 million or $1.59 per diluted share. Return on assets (ROA) was 1.57%, and return on tangible common equity (ROTCE) was 14.5%.
Revenue Growth (Full Year 2025) 6% year-over-year increase, driven by consistent core profitability and positive operating leverage.
Expenses (Full Year 2025) Declined by 1% year-over-year, contributing to an improved efficiency ratio of 50% for the year.
Tangible Book Value (Full Year 2025) Increased by 14.5%, or $5.59 per share, ending at $44.18.
Net Interest Income (Full Year 2025) Increased by $87.7 million or 10.3% year-over-year, with a margin expansion from 3.56% to 3.79%.
Loan Growth (Q4 2025) Almost 5% growth, despite elevated CRE payoffs of over $500 million. Loan production reached $2.4 billion, a 16% increase from Q3 2025.
Allowance for Loans (Q4 2025) Remained strong at 1.62% of total loans, consistent with the previous quarter.
Noninterest Income (Full Year 2025) Increased by $1.4 million year-over-year, despite seasonal declines in Q4.
Noninterest Expense (Full Year 2025) Decreased by $3.8 million or almost 1% year-over-year, primarily due to lower variable costs in the mortgage division.
Efficiency Ratio (Full Year 2025) Improved to 50%, down from 53.2% in 2024, reflecting better cost management.
Asset Growth (Full Year 2025) 4.8% growth, with earning assets growing by 5.5%.
Deposits (Q4 2025) Increased by $148 million, with noninterest-bearing deposits representing 28.7% of total deposits.
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Operating Highlights
Southeastern market growth: The company operates in the best Southeastern markets, which are growing faster than the national average. This provides a strong foundation for future growth.
Record earnings: Achieved record earnings of over $412 million for 2025, with diluted EPS reaching $6 per share, a 15% year-over-year increase.
Efficiency improvements: Efficiency ratio improved to 50% for the year, driven by a 6% revenue growth and a 1% decline in expenses.
Loan growth: Loans grew by almost 5% in Q4, despite elevated CRE payoffs of over $500 million. Loan production reached $2.4 billion for the quarter, a 16% increase from Q3.
Net interest margin: Net interest margin expanded to 3.85% in Q4, with a 10 basis point positive impact on the funding side.
Asset quality: Asset quality remained strong with net charge-offs improving to 18 basis points for the year and allowance for loans at 1.62%.
Share repurchase program: Repurchased $77 million worth of shares in 2025, representing 2% of the company, at an average price under $67.
Capital structure simplification: Paid off all subordinated debt in 2025, resulting in a simplified common stock capital structure.
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Risk or Challenges
CRE Portfolio Payoffs: Unusually high payoffs in the CRE portfolio, amounting to over $500 million, impacted net loan growth. This could pose challenges to achieving consistent loan growth in the future.
Deposit Cost Pressure: Anticipated margin compression due to pressure on deposit costs as loan growth increases in 2026. This could affect profitability.
Seasonal Declines in Mortgage Revenue: Seasonal declines in mortgage and premium finance revenue were noted, which could impact noninterest income.
Asset Liability Sensitivity: The company is positioned to be mostly neutral from an asset liability sensitivity perspective, but slight margin compression is expected in the next few quarters.
Net Charge-Offs: Net charge-offs are anticipated to normalize in the 20 to 25 basis point range in 2026, which could indicate potential credit quality challenges.
Noninterest Income Volatility: Adjusted noninterest income decreased by $10.5 million in the quarter, driven by seasonal declines in mortgage revenue, indicating potential volatility in this income stream.
Loan and Deposit Growth Dependency: Longer-term deposit growth is expected to govern loan growth, which could limit the company's ability to expand its loan portfolio if deposit growth does not meet expectations.
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Guidance & Outlook
Future Growth Expectations: The company is positioned well for growth in 2026, with strong momentum from organic growth strategies and opportunities in Southeastern markets. Loan and deposit growth are expected to continue in the mid-single-digit range, with deposit growth being a key factor for loan growth.
Profitability Projections: The company anticipates slight margin compression in the next few quarters due to deposit cost pressures. However, strong core profitability and diversified revenue streams are expected to continue growing tangible book value, franchise value, and shareholder value in 2026 and beyond.
Loan Growth and Asset Quality: Loan growth is expected to increase, supported by strong pipelines and a positive signal from reserves for unfunded commitments. Net charge-offs are anticipated to normalize in the 20 to 25 basis point range in 2026, with overall asset quality trends remaining strong.
Efficiency Ratio: The efficiency ratio is expected to return above 50% in the first quarter of 2026 due to seasonally heavy payroll taxes and 401(k) contributions.
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Shareholder Return Plan
Share Repurchase Program: During the fourth quarter, the company announced an increased share repurchase program and actively repurchased almost 1% of its stock at an average price of $72. For the year, the company repurchased $77 million or 2% of the company at an average price under $67. The remaining share repurchase authorization was $159.2 million at the end of the year.
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Key Q&A
Q:Can you talk about what sort of visibility you have into future payoffs and what caused some of the elevated paydowns this quarter?
A:H. Proctor explained that the fourth quarter is typically a busy period for payoffs, which was reflected in the elevated paydowns. He noted that this trend is expected to moderate in the first and second quarters of the new year. He also mentioned that activity across all pipelines is improving, and the bank remains optimistic about future loan growth.
Q:Would a decrease in rates accelerate paydowns or increase production and activity?
A:H. Proctor stated that a decrease in rates would likely accelerate opportunities for the bank rather than causing significant outward migration for refinancing. He noted that prepayment and refinance penalties help retain customers, and the bank is optimistic about increased production and activity.
Q:Can you elaborate on your approach to new hiring activity and how it differs from others in the industry?
A:H. Proctor emphasized that the bank does not feel the need to hire aggressively. Instead, they focus on upgrading talent and retaining existing employees. He noted that while they hired 21 lenders this year, the net increase was only 3, as they consistently upgrade talent to reduce churn and avoid unnecessary expense increases.
Q:Can you provide a range for your margin expectations for the year?
A:Nicole Stokes stated that the margin is expected to decrease by 5 to 10 basis points over the next few quarters, depending on deposit costs and growth. She noted that the margin expansion in the fourth quarter was primarily due to a sub-debt payoff and that longer-term expectations depend on the interest rate environment.
Q:Can you provide a range for expenses in the first quarter and the year?
A:Nicole Stokes explained that first-quarter expenses are expected to be higher due to payroll taxes and 401(k) matches, estimating a starting point of $154 million to $155 million. She noted that expenses might be heavier in the first quarter but could level out later in the year as growth accelerates.
Q:Can you discuss the margin trends and the relationship between new production and deposit costs?
A:Nicole Stokes reported that loan production in the fourth quarter had a blended yield of 6.35%, while deposit production came in at 2%, resulting in a 4.35% spread. She noted that the margin was consistent at 3.85% throughout the quarter, with no significant swings.
Q:What are your capital priorities and targets for CET1 and TCE levels?
A:H. Proctor stated that the bank's capital priorities include organic growth, opportunistic buybacks, dividends, and external activities as a last resort. The target CET1 level is around 12%, and the TCE target is approximately 10% to 10.5%.
Q:What drove the net charge-off activity this quarter, and what is the guidance for the year?
A:Douglas Strange explained that charge-offs were driven by consumer medical notes and equipment finance, which remained consistent. He noted that charge-offs tend to vary quarterly but were below the prior year and consensus for the full year. The guidance for 2026 remains at 20 to 25 basis points.
Q:Can you provide more color on deposit trends and the outlook for deposit growth?
A:Nicole Stokes noted that the fourth quarter saw a decline in noninterest-bearing deposits due to cyclicality, mortgage escrow outflows, and tax planning by customers. However, she mentioned that many of these funds have already returned. The bank remains focused on growing core deposits and relationships, with a mid-single-digit growth outlook for both loans and deposits.
Q:What is the relationship between loan growth and deposit growth in your forecast?
A:Nicole Stokes explained that while core loan growth is tied to core deposit growth, some loan segments do not have a deposit feature. The bank focuses on funding core loan growth with core deposits but may use brokered or wholesale funding for other segments.
Q:What drove the provision build this quarter, and how should we think about it going forward?
A:Nicole Stokes stated that the provision build was driven by growth in unfunded commitments, particularly in CRE and construction loans. She noted that this is a positive indicator of future loan growth and that the provision build should normalize as the unfunded bucket stabilizes.
Q:What drove the decline in mortgage fee income this quarter?
A:Nicole Stokes attributed the decline to a heavier mix of wholesale production, which is less profitable than retail originations, and the cyclicality of the fourth quarter. She noted that for the full year, mortgage revenue and expenses were in line with expectations.
Q:What was the unpaid principal balance of the servicing portfolio at year-end?
A:Nicole Stokes reported that the unpaid principal balance was $8.7 billion, which is about 4% of Tier 1 capital and well below the 25% regulatory threshold.
Q:How do you balance stock buybacks with capital accretion and price levels?
A:H. Proctor stated that the bank remains selective and opportunistic with buybacks, considering the value of investing in itself compared to acquiring another bank. He emphasized a balanced approach to capital management.
Q:What is driving the strong loan production, and how does competition impact your strategy?
A:H. Proctor attributed strong loan production to focused bankers, market disruption, and high-growth markets. He noted that competition is primarily on pricing, with structure holding up well. The bank remains confident in its ability to adapt and capture opportunities.
Q:What are the growth expectations and opportunities in the premium finance segment?
A:H. Proctor stated that premium finance is a stable performer with full pipelines. While it will not consume much more of the balance sheet, it will continue to provide meaningful earnings and growth opportunities.
Q:How are you incentivizing deposit growth and managing deposit pricing?
A:Nicole Stokes and H. Proctor explained that the bank focuses on growing relationships and accounts, leveraging treasury management, and maintaining competitive pricing. They prioritize core relationships over attracting hot money with high rates.
Q:Review of Unclear Management Responses
A:Management avoided providing a specific range for margin expectations beyond a general 5 to 10 basis point decrease. Additionally, they did not provide detailed insights into the competitive landscape for lending beyond general comments on pricing and structure. Similarly, the response on stock buybacks lacked specific price sensitivity details, and the discussion on premium finance growth was broad without concrete numerical targets.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
CRE payoff
CRE portfolio
Capital
NPAs allowance
Officer comment
Palmer detail
Palmer record
QA measure
ROA margin
Southeastern market
Tier equity
allowance loan
asset generation
asset payoff
average banker
banker franchise
banking deposit
capital planning
capital return
capital structure
comment core
concentration funding
conference Chief
core profitability
debt stock
deposit relationship
deposit seasonality
detail financials
digit pipeline
economy loan
expectation front
financials minute
franchise detail
franchise value
front asset
generation asset
history increase
increase PPNR
increase level
law Corporate
level Asset
level comment
loan CRE
payoff CRE
price
shareholder value
ABCB Transcript
Ameris Bancorp (ABCB) Q4 2025 Earnings Call Transcript
Positive1-30
The earnings call reveals strong loan production, strategic market positioning, and a new $200 million share repurchase plan, indicating positive growth prospects. Despite some margin compression and higher initial expenses, the overall financial health and optimistic guidance outweigh these concerns. The company's strategic focus on Southeastern markets and capital management further supports a positive outlook, suggesting a stock price increase of 2% to 8% over the next two weeks.
Ameris Bancorp (ABCB) Q3 2025 Earnings Call Transcript
Positive10-28
The earnings call presents strong financial performance with increased income and improved efficiency ratios. Loan and deposit growth are robust, and noninterest income is rising. Share repurchases and a stable outlook for expenses further bolster confidence. Despite some competitive pressures and potential margin compression, the overall sentiment is positive, with opportunities for accelerated loan growth and strong market positioning. The market cap suggests moderate stock price sensitivity, aligning with a positive outlook.
Ameris Bancorp (ABCB) Q2 2025 Earnings Call Transcript
Positive7-29
The earnings call summary indicates strong financial performance with increased loan production, deposit growth, and robust credit reserves. The Q&A session provided additional insights, highlighting organic growth, increased dividends, and stock buybacks, which are positive indicators. The management's cautious optimism about future growth, despite competition, and the potential for reduced deposit costs if Fed rates cut further support a positive sentiment. Given the market cap, these factors are likely to result in a positive stock price movement of 2% to 8% over the next two weeks.
Earnings call transcript: Ameris Bancorp beats Q1 2025 forecasts, stock rises
Unknown4-29
The earnings call presents a mixed picture. Strong financial metrics, such as net income growth and improved efficiency ratio, are offset by concerns over market volatility and cautious credit risk management. The Q&A section reveals uncertainties in economic forecasts and management's vague responses, which may cause investor unease. Despite a solid shareholder return plan with stock repurchases, the lack of clear guidance on growth strategy and potential expense increases tempers optimism. Given the company's mid-cap status, the stock is likely to experience a neutral reaction, fluctuating within a small range.
ABCB Slides
ABCB Report
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