ABCB Q2 Deep Dive: Margin Pressures and Deposit Competition Shape Growth Outlook

Regional banking company Ameris Bancorp (NYSE:ABCB) fell short of the market’s revenue expectations in Q2 CY2026, but sales rose 5.5% year on year to $317.8 million. Its non-GAAP profit of $1.60 per share was 3.6% below analysts’ consensus estimates.

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StockStory’s Take

Ameris Bancorp’s second quarter results prompted a negative market reaction, with the company missing Wall Street’s revenue and adjusted profit expectations. Management attributed the quarter’s performance to strong organic loan growth and a stable net interest margin, despite rising deposit costs and a one-time litigation accrual. CEO Palmer Proctor highlighted that “we achieved core profitability levels well ahead of the industry,” and pointed to robust loan production and pipeline strength as key positives. However, increased legal costs and ongoing deposit competition weighed on profitability.

Looking ahead, management emphasized that future performance will hinge on the ability to maintain growth in earning assets while managing the rising cost of deposits. CFO Nicole Stokes noted that “we anticipate some slight margin compression over the next few quarters due to higher deposit costs to fund our balance sheet growth.” The company expects loan and deposit growth in the mid-single digits, but warns that persistent competition for deposit funding and continued pressure on mortgage and non-interest income could limit margin expansion until broader rate relief materializes.

Key Insights from Management’s Remarks

Ameris Bancorp’s management cited strong core profitability, stable asset quality, and continued balance sheet growth as bright spots, but acknowledged that deposit competition and one-time legal costs created headwinds this quarter.

• Organic loan growth momentum: Loan production increased 24% year-over-year, with management noting robust pipelines across all business lines and geographic regions in the Southeast. This momentum was credited with driving earnings asset growth and supporting net interest income despite broader industry slowdowns.

• Deposit funding mix shifts: Average deposits rose modestly, but ending balances declined due to quarter-end customer movement. Management emphasized a strategic focus on growing core, non-interest-bearing deposits, which now comprise 30% of total deposits, helping partially offset upward pressure on funding costs.

• Margin stability amid rising costs: Net interest margin held steady at 3.88% as higher asset yields were offset by increased deposit costs. A temporary boost from inflation-indexed bonds supported margin, but management cautioned that this benefit will not persist and expects minor compression going forward.

• Legal accrual impacts expense line: The company recorded an $82.5 million litigation accrual related to an employment case in California. Management confirmed the plan to appeal, but accrued the full amount, which significantly impacted reported expenses for the quarter.

• Nashville market expansion: Ameris announced entry into the Nashville, Tennessee market, hiring a local banking team. Management believes this move will enhance longer-term organic growth, noting that expansion into high-growth Southeastern markets remains a strategic priority.

Drivers of Future Performance

Ameris expects mid-single digit loan and deposit growth, but tighter margins and funding competition will be key themes influencing the outlook.

• Deposit competition persists: Management anticipates ongoing pressure on deposit costs as regional banks compete aggressively for funding. CFO Nicole Stokes stated that the company will need to pay up for deposits to support loan growth, likely resulting in a few basis points of margin compression each quarter.

• Loan growth guided by funding: CEO Palmer Proctor reiterated that loan growth will be governed by the ability to secure stable, core deposits. While pipelines remain robust across commercial and consumer segments, management cautioned that growth will not outpace the bank’s funding capabilities.

• Mortgage and non-interest income headwinds: Management flagged continued weakness in mortgage banking revenue due to high interest rates, and expects non-interest income to remain challenged until there is broader rate relief or improved market conditions. This could hinder bottom-line growth even as core lending activity remains healthy.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will be watching (1) whether Ameris can sustain loan growth while balancing deposit costs, (2) evidence of margin stability despite continued funding competition, and (3) the initial results from the Nashville market entry. Additionally, ongoing updates on the resolution of the California litigation and trends in non-interest income will be key markers for tracking execution against the company’s strategy.

Ameris Bancorp currently trades at $87.17, down from $89.16 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free).

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