Ameris Bancorp is facing 2024 with cautious optimism. Analysts are eagerly anticipating the impact of potential Fed rate cuts on the bank's mortgage division, a potential revenue rocket if rates fall significantly. But nestled within the Q1 2024 earnings call transcript lies a subtler, potentially more powerful engine for growth: the bank's laser focus on Non-Interest Bearing deposits (NIB), specifically those stemming from small and medium businesses (SMBs). While the mortgage narrative is alluring, Ameris' dedication to deepening its SMB relationships, a strategy quietly humming in the background, could ultimately prove the more sustainable and profitable path to long-term success.

On the surface, Ameris seems prepared for whatever the Fed decides. They've meticulously sculpted their balance sheet to be rate-neutral, proud of their ability to maintain a 3.51% net interest margin this late in the cycle. But Nicole Stokes, EVP and CFO, hints at a deeper play. She emphasizes the deliberate shortening of brokered and retail CDs, positioning the bank for rapid liability sensitivity if rate cuts materialize. This is astute balance sheet management, but the real magic is in the NIB growth, a quiet triumph in a quarter when public funds, typically a source of deposit volatility, showed their seasonal fickleness.

Ameris grew deposits by an annualized 5.6% in Q1, with over $46 million of that growth residing in the coveted NIB category. This isn't a fluke. CEO Palmer Proctor confirms a conscious, long-standing strategic emphasis on "being deposit hounds," a philosophy evident in their current deposit mix. 37% consumer and 42% commercial, with a particular focus on small business banking and C&I efforts – the sweet spot for those precious operating and payroll accounts that drive NIB growth.

Proctor further reveals that recent investments have targeted treasury management, the backbone of strong SMB relationships. This strategy is bearing fruit. Ameris has built momentum by actively attracting new SMB relationships, capitalizing on a landscape where many banks are still internally focused. They're prioritizing deposit relationships first, a shift in mindset that emphasizes enduring partnerships rather than transactional loan-centric interactions.

Now, here's where the "parking tickets" come in. It's not a literal connection, but a metaphorical one, highlighting the granular, hyperlocal nature of Ameris' SMB strategy. Imagine a thriving Main Street bustling with small businesses - cafes, bookstores, the local dry cleaner. Each business generates a steady flow of transactions – payments, payroll, even the occasional dreaded parking ticket paid through the city's online portal. This constant churn of small sums flowing through local business accounts forms the lifeblood of Ameris' NIB growth strategy.

Deposit Growth Breakdown (Q1 2024)

This chart illustrates the composition of Ameris Bancorp's deposit growth in Q1 2024, highlighting the significant contribution of Non-Interest Bearing deposits.

Here's a hypothesis: Ameris is on the cusp of cracking a code that eludes many regional banks – unlocking consistent, low-cost NIB deposit growth by cultivating deep, sticky relationships with the engine of local economies - SMBs. While the prospect of a mortgage refi boom is tempting, the inherent volatility of that market makes it a less dependable source of long-term profitability.

The numbers support this hypothesis. Ameris has maintained a 31% NIB deposit mix even amidst significant liquidity pressures in 2023. Their Q1 results demonstrate their ability to keep growing this crucial deposit base even without significant help from rate cuts. If they can maintain this momentum, the impact on profitability will be profound. A robust NIB deposit base creates a buffer against margin compression, fuels loan growth without resorting to expensive wholesale funding, and ultimately drives a higher PPNR ROA, a key measure of core banking profitability.

While the world fixates on potential Fed rate cuts and their potential impact on Ameris' mortgage division, a different story is unfolding. A story of meticulous relationship building, treasury management expertise, and a laser focus on the small, steady streams of NIB deposits that fuel local economies – a strategy as ubiquitous and dependable as the parking tickets issued on Main Street. This quiet revolution in Ameris' deposit franchise, a story largely unnoticed by the market, could be the hidden key to the bank's future success.

"Fun Fact: Non-Interest Bearing deposits are sometimes referred to as "core deposits" because they represent a stable, low-cost source of funding for banks. These deposits are typically "stickier" than interest-bearing deposits because they are tied to a customer's operating needs rather than a desire for high interest rates."