Ameris Bancorp (ABCB) Q3 2026 earnings review
Ameris Bancorp grows lending profit, but problem loans climb
Ameris Bancorp, a Southeastern bank running 163 branches, grew core lending profit while problem loans climbed and mortgage activity shrank. Profit per share excluding one-offs rose 14% from a year ago to $1.73, as higher loan yields kept its lending spread at 3.87% and lower payroll costs brought expenses below half of revenue. Chief executive Palmer Proctor praised the bank's underwriting, yet loans showing early credit weakness jumped by $36 million in the quarter.
| Net interest income (tax-equivalent) | $258.6M +8.2% from a year ago |
|---|---|
| Profit per share, excluding one-offs | $1.73 +13.8% from a year ago |
| Net interest margin (lending spread) | 3.87% -0.01 percentage points from Q2 |
| Share buyback authorization | Renewed $200M through October 2027 |
⚖️ Verdict: ⚪ Neutral
The story is unchanged because resilient lending spreads and tighter cost control were offset by deteriorating loan grades and pricier deposit funding. Deposits grew faster than loans again, but the bank leaned on high-cost brokered certificates of deposit while noninterest-bearing balances shrank, leaving a steep fourth-quarter deposit hurdle by our math.
The question now is whether rising deposit costs and problem loans will finally squeeze lending spreads and force higher credit provisions. Either higher loan yields keep absorbing funding costs while downgraded loans stabilize, or brokered deposit reliance and commercial real estate downgrades cut into fourth-quarter earnings. The third-quarter 10-Q credit tables and fourth-quarter margin will decide.
🐂 Bull Case
Core Spreads Hold Up as Interest Income Grows
Ameris earns most of its money from net interest income, the gap between what it charges on loans and what it pays on deposits. Chief executive Palmer Proctor highlighted the bank's "consistent focus on profitable growth, expense discipline and prudent balance sheet management". Last quarter, a one-time bond gain added about 0.03 percentage points to its net interest margin (the profit spread on lending), so losing that boost tested the core spread.
The Atlanta-based lender passed the test, as its net interest margin slipped just 0.01 percentage points from last quarter to 3.87%, and rose 0.07 points from a year ago. Higher loan rates offset rising deposit costs: the yield on portfolio loans rose 0.03 points to 5.84%, while average earning assets grew $300.5 million. Because the asset base expanded and spreads held steady, tax-equivalent net interest income rose 8.2% from a year ago to $258.6 million.
What to watch: fourth-quarter net interest margin against the 3.78% to 3.83% range management previously indicated for year-end. Holding above 3.83% would confirm that loan repricing is still outrunning deposit cost pressure.
Lower Payroll and Legal Bills Cut Cost Ratio
Banks track operating cost control through the efficiency ratio, which measures noninterest expenses as a share of total revenue. Management had previously indicated that this ratio, excluding one-offs, would stay slightly above 50% for the rest of the year. In the second quarter, a $82.5 million legal verdict pushed reported expenses up, while the underlying efficiency ratio sat at 50.42%.
In the third quarter, Ameris brought its efficiency ratio excluding one-offs down by 1.27 percentage points to 49.15%. Operating expenses excluding one-offs fell 1.5% from last quarter to $157.8 million, driven by "decreased mortgage compensation and legal expenses", the company said. By our math, salaries and employee benefits fell by 0.65 percentage points of underlying revenue to 28.1%, while full-time staff dropped by 32 employees to 2,618.
What to watch: fourth-quarter operating expenses excluding one-offs. Keeping the efficiency ratio below 50% in the fourth quarter, when seasonal mortgage revenue is typically weaker, would show that the lower cost base is permanent.
🐻 Bear Case
Brokered Funding Drives the Deposit Rebound
Management has called deposit growth the limit on how fast Ameris can lend, while bulls point out that wholesale funding has allowed the bank to keep growing its earning assets anyway. After deposits shrank in the second quarter, the bank needed a second-half rebound to meet its full-year target of mid-single-digit deposit growth.
Period-end deposits rose $319.4 million (5.6% annualized) to $22.91 billion, outpacing loan growth of $173.1 million and trimming the loan-to-deposit ratio to 97.6% by our math. However, the mix shifted toward higher-cost funding, pushing total deposit costs up 0.05 percentage points to 1.82%:
- Noninterest-bearing deposits: fell $87.8 million to $6.70 billion (29.2% of total deposits)
- Money market accounts: rose $399.7 million, with average rates up 0.07 points to 2.74%
- Brokered certificates of deposit (CDs): rose $129.5 million, with average balances up $177.4 million at a 3.99% cost
- Other borrowings: fell $322.0 million to $928.0 million as the bank paid down short-term advances
What to watch: fourth-quarter period-end deposit additions. By our math, Ameris must add $364 million to $812 million in the fourth quarter (6.4% to 14.2% annualized) to reach its full-year deposit target.
Problem Loans Rise Across Risk Grades
"We remain measured in our approach to growth, maintaining disciplined underwriting and carefully allocating capital," Proctor said. He added that "credit reserves remain strong, providing a solid foundation as macroeconomic conditions evolve." The headline loss figure backed him up, as annualized net charge-offs (loans written off as uncollectible) edged down to 0.19% of average loans from 0.20%, cutting the quarterly credit provision to $12.6 million.
However, early-stage and nonperforming problem loans rose across the board in the loan tables, cutting against the calm headline. Nonperforming portfolio assets (excluding government-guaranteed mortgages) climbed 16.0% from last quarter to $115.2 million, or 0.40% of total assets. Loans graded "special mention" (those showing early credit weaknesses) jumped 59.2% in a single quarter to $97.1 million, while lower-graded "substandard" loans rose 13.4% to $197.7 million. Despite $60.7 million of new criticized loans, the allowance for loan losses held flat at 1.62% of loans.
What to watch: the commercial real estate breakdown of special mention and substandard loans in the third-quarter 10-Q filing. A concentration in office loans would require higher credit provisions in upcoming quarters.
Mortgage Pipeline Shrinks, Cutting Division Profit
Ameris runs a large retail mortgage division that originates home loans and sells them for fee income. Because high interest rates have held back home buying and refinancing, management had already stopped counting on a second-half mortgage rebound.
Even so, the third-quarter drop was steep. Retail mortgage loan production fell 13.7% from last quarter to $994.4 million, and mortgage banking fee income dropped 10.1% to $29.2 million despite gain-on-sale spreads ticking up 0.05 percentage points to 2.09%. Worse for the coming quarter, the open pipeline of locked mortgage loans fell 27.8% from June (and 44.1% from a year ago by our math) to $439.9 million. Net income in the Retail Mortgage Division fell by more than half from last quarter to $6.2 million.
What to watch: fourth-quarter mortgage banking activity income. With the starting pipeline at a multi-year low of $439.9 million, fourth-quarter fee income will likely drop below the $29.2 million just recorded.
👓 Other Themes
Board Renews $200M Buyback After Q3 Pause
On October 16, the board authorized up to $200.0 million in share buybacks through October 2027, a "continuation and replenishment of the Company's previously announced share repurchase program", Ameris said. The bank bought back $134.6 million over the past 12 months, reducing diluted shares by 2.4% from a year ago. However, treasury stock rose just $38,000 in the third quarter by our math, showing management paused purchases after spending $93.8 million in the first half.
💲 Other KPIs
Total portfolio loans grew $173.1 million, or 3.1% annualized, down from 6.4% annualized in the second quarter and 5.8% in the first. Growth came from insurance premium finance loans (+$166.5 million) and residential mortgages (+$119.6 million), while commercial real estate loans shrank by $152.8 million.
Tangible book value — shareholders' equity per share excluding goodwill and other intangible assets — rose $0.55 in the quarter (4.8% annualized) and 6.4% from a year ago. Quarterly earnings added to equity, but interest-rate swings on the bond portfolio caused a $72.8 million quarterly drop in accumulated other comprehensive income, slowing the gain.
Specialty lending offset part of the retail mortgage slowdown. Net income in the Warehouse Lending Division (short-term credit lines to mortgage lenders) rose 10.3% from last quarter and 30.2% from a year ago to $7.6 million. Fee income from equipment finance rose 15.7% from last quarter to $10.4 million.
🔮 Guidance
Unchanged. The board renewed its $200.0 million buyback ceiling for another 12 months through October 31, 2027, replacing the October 2025 authorization that was set to expire with $65.4 million unused. After spending $74.9 million in the first quarter and $19.0 million in the second, the Southeast lender bought back virtually no stock in the third quarter.
❓ Key Questions
What drove the 59% jump in special mention loans?
Loans graded special mention rose by $36.1 million to $97.1 million in Q3, and nonaccrual portfolio loans rose $15.6 million to $102.4 million. Investors need to know whether these downgrades sit in non-owner-occupied office buildings or specific commercial borrowers.
How much of Q4 deposit growth will come from brokered CDs?
By our math, Ameris needs $364 million to $812 million of fourth-quarter deposits to hit its 4% to 6% full-year growth target. Relying on brokered CDs (costing 3.99% in Q3) rather than seasonal public funds would pressure the net interest margin.
Why did the earnings release omit a chief financial officer?
Like the prior three releases, the third-quarter announcement quotes only chief executive Palmer Proctor and lists corporate development director Brady Gailey as the contact. Clarification on finance leadership and commentary on the Q4 margin and expense trajectory await the conference call.
What is the status of the $82.5 million employment verdict appeal?
Ameris booked another $1.7 million of litigation accruals in the third quarter following the $82.5 million whistleblower verdict in June, bringing the nine-month total to $84.2 million. Management has not yet detailed the appeal timeline or potential cost recovery.
How much loan and deposit volume has the Nashville team added?
Ameris announced its expansion into Nashville in the second quarter, but the third-quarter release gave no regional balances or hiring headcount for the new market.