Ameris Bancorp : Announces Financial Results For First Quarter 2018

MOULTRIE, Ga., April 20, 2018 /PRNewswire/ -- Ameris Bancorp (Nasdaq: ABCB) (the "Company") today reported net income of $26.7 million, or $0.70 per diluted share, for the quarter ended March 31, 2018, compared with $21.2 million, or $0.59 per diluted share, for the quarter ended March 31, 2017.  The Company reported adjusted net income of $27.8 million, or $0.73 per diluted share, for the first quarter of 2018, compared with $21.6 million, or $0.60 per diluted share, for the first quarter of 2017.  Adjusted net income excludes after-tax merger and acquisition costs and loss on the sale of former bank premises.

For the quarter ended March 31, 2018, the Company's adjusted return on average assets was 1.44%, compared with 1.27% for the first quarter of 2017.  Commenting on the Company's earnings, Edwin W. Hortman, Jr., Executive Chairman, President and Chief Executive Officer of the Company, said, "I am proud of the solid financial results our bankers continue to produce.  We had an impressive first quarter on loan growth, which was ahead of last year's pace, and our pipelines grew consistently throughout the quarter.  Our adjusted efficiency ratio improved as well, falling back below 60% in the quarter, and our credit quality improved slightly."

Following is a summary of the adjustments between reported net income and adjusted net income:

Highlights of the Company's performance and results for the first quarter of 2018 include the following:

• Growth in adjusted net earnings of 28.6% compared with the first quarter of 2017
• Organic growth in loans of $153.8 million, or 10.8%, compared with $98.5 million, or 8.5%, in the first quarter of 2017
• Adjusted return on average assets of 1.44%, compared with 1.27% in the first quarter of 2017
• Adjusted return on average tangible common equity of 17.09%, compared with 15.84% in the first quarter of 2017
• Adjusted efficiency ratio of 59.95%, compared with 60.88% in the fourth quarter of 2017 and 59.67% in the first quarter of 2017
• Excluding accretion, increases in net interest margin of 2 bps during the first quarter of 2018 compared with the fourth quarter of 2017 and 5 bps compared with the first quarter of 2017
• Increase in total revenue to $95.3 million for the quarter
• Annualized net charge-offs of 0.09% of average total loans and 0.14% of average non-purchased loans

Pending Acquisitions
During the fourth quarter of 2017, the Company announced its intent to acquire Atlantic Coast Financial Corporation ("Atlantic"), the parent company of Atlantic Coast Bank, Jacksonville, Florida.  Atlantic Coast Bank operates 12 full-service banking locations, eight of which are located in the Jacksonville, Florida MSA, three of which are located in the Waycross, Georgia MSA, and one of which is located in the Douglas, Georgia MSA.  The acquisition will further expand the Company's existing Southeastern footprint in the attractive Jacksonville market, where the Company will be the largest community bank by deposit market share after the acquisition.  The transaction is expected to close in the second quarter of 2018 and is subject to customary closing conditions, including receipt of regulatory approval.  The merger has been approved by Atlantic's stockholders.

Additionally, during the first quarter of 2018, the Company announced its intent to acquire Hamilton State Bancshares, Inc. ("Hamilton"), the parent company of Hamilton State Bank, Hoschton, Georgia.  Hamilton currently operates 28 banking locations, 24 of which are located within the Atlanta MSA, two of which are located in the Gainesville, Georgia MSA and the other two of which are located in Georgia just outside the Atlanta MSA.  Combined with the Company's existing Atlanta location, the combined bank will have approximately $1.4 billion of deposits in the Atlanta MSA and will be the thirteenth largest bank in the market.  The transaction is expected to close in the third quarter of 2018 and is subject to customary closing conditions, including receipt of regulatory approval and the approval of Hamilton's shareholders.

Upon completion of these transactions, the combined company will have approximately $11.3 billion in assets and a branching network across four states.

Net Interest Income and Net Interest Margin
Net interest income on a tax-equivalent basis for the first quarter of 2018 totaled $69.8 million, compared with $62.1 million for the first quarter of 2017, an increase of $7.7 million, or 12.4%.  The Company's net interest margin, excluding the effects of accretion income, increased during the quarter to 3.84%, compared with 3.82% in the fourth quarter of 2017.  Increasing margins against the linked quarter resulted from higher loan yields, reduced levels of short-term assets and steady deposit costs which, offset approximately six basis points of margin dilution associated with lower yields on tax-preferred assets.  Accretion income in the first quarter of 2018 declined materially to $1.4 million, compared with $2.2 million in the fourth quarter of 2017.  Including accretion income and reflecting this decrease, the Company's net interest margin declined to 3.92% compared with 3.94% in the fourth quarter of 2017.

Yields on earning assets in the first quarter of 2018 increased to 4.52%, compared with 4.49% in the fourth quarter of 2017 and 4.38% in the first quarter of 2017.  Interest income on legacy loans on a tax-equivalent basis increased during the first quarter of 2018 to $58.8 million, compared with $57.2 million in the fourth quarter of 2017 and $43.2 million in the first quarter of 2017.  Excluding accretion income, yields on total loans were 4.75% in the first quarter of 2018, an increase from 4.70% in the fourth quarter of 2017 and 4.56% in the first quarter of 2017.  Increased loan yields reflect several quarters of increased variable rate production as well as continued increases in yields on quarterly loan production.  Loan production yields in the first quarter averaged 5.19%, compared with 4.44% in the same quarter of 2017.

Total interest expense for the first quarter of 2018 was $10.7 million, compared with $6.5 million for the same quarter of 2017.  Higher borrowing costs and continued increases in deposit costs were the primary reasons for this increase.  Deposit costs increased in the first quarter of 2018 to 0.43%, a modest increase of three basis points compared with the fourth quarter of 2017.  Borrowing costs increased to 2.89% in the first quarter of 2018, compared with 2.60% in the fourth quarter of 2017.

Non-interest Income
Non-interest income in the first quarter of 2018 was $26.5 million, an increase of $758,000, or 2.9%, compared with the same quarter in 2017.  The Company experienced mostly stable levels of service charge revenue in the first quarter of 2018 as compared with prior quarters.

The Company's mortgage division continued to grow, in both revenues and net income. Revenue in the retail mortgage group totaled $16.6 million in the first quarter of 2018, an increase of 22.9% compared with $13.5 million in the first quarter of 2017.  Net income for the Company's retail mortgage division increased 67.4% during the first quarter of 2018 to $4.7 million, compared with $2.8 million in the first quarter of 2017.  Total production in the first quarter of 2018 for the retail mortgage group amounted to $356.1 million (86% retail and 14% wholesale), compared with $311.8 million in the same quarter of 2017 (85% retail and 15% wholesale).  The Company's open pipeline increased in the first quarter of 2018 to $153.3 million, compared with $119.6 million at the end of 2017 and $146.3 million at the end of the first quarter of 2017.

Revenues from the Company's warehouse lending division increased by $828,000, or 58.1%, during the first quarter of 2018 compared with the same period in 2017.  The division experienced increased profitability due to stabilized expenses, allowing the net income for the division to increase 70.2% from $942,000 in the first quarter of 2017 to $1.6 million in the first quarter of 2018.  Loan production increased from $647.4 million in the first quarter of 2017 to approximately $887.7 million in the current quarter.

Non-interest Expense
Non-interest expense decreased $239,000 to $59.1 million during the first quarter of 2018, compared with $59.3 million in the fourth quarter of 2017.  During the first quarter of 2018 and the fourth quarter of 2017, the Company incurred pre-tax merger and conversion charges of $835,000 and $421,000, respectively, as well as losses on the sale of premises totaling $583,000 and $308,000, respectively.  In addition, the Company incurred $434,000 of charges in the fourth quarter of 2017 in connection with exiting the consent order relating to Bank Secrecy Act ("BSA") compliance.  Excluding these charges, operating expenses decreased approximately $494,000 to $57.7 million in the first quarter of 2018, down from $58.2 million in the fourth quarter of 2017.

Efforts to improve and stabilize the Company's efficiency ratio and net overhead ratio have been successful.  During the first quarter of 2018, the Company's adjusted efficiency ratio declined to 59.95%, compared with 60.88% in the fourth quarter of 2017.  The Company's adjusted net overhead ratio also declined to 1.62% in the first quarter of 2018, compared with 1.77% in the fourth quarter of 2017.  Management expects to continue improving efficiency and overhead ratios from the Company's expected organic growth in 2018, as well as from the movement expected to result from the Company's pending acquisitions.

Salaries and benefits were stable in the first quarter of 2018 at $$32.1 million, compared with $30.5 million in the fourth quarter of 2017.  Compared with the same quarter in 2017, compensation costs have increased by $4.3 million, which relates to higher incentive pay, increased investment in the Company's BSA function and new positions in the premium and equipment finance divisions.

Occupancy costs increased $321,000, or 5.5%, in the first quarter of 2018 to $6.2 million, from $5.9 million in the same quarter of 2017.  Data processing and telecommunications costs for the quarter were $7.1 million, an increase of $563,000, or 8.6%, over the first quarter of 2017.  Total credit costs (provision and non-provision credit resolution-related costs) totaled $2.4 million in the first quarter of 2018, compared with $2.8 million in the same quarter in 2017 and $3.2 million in the fourth quarter of 2017.

Income Tax Expense
The Company's effective tax rate for the first quarter of 2018 was 22.4%, compared with 32.6% during the same period last year.  The decrease is a result of the Tax Cuts and Jobs Act that was enacted in the fourth quarter of 2017.  This reduction in the federal tax rate positively impacted the Company's diluted earnings per share by $0.08 and return on assets by 17 bps during the first quarter of 2018.  The Company expects that future effective tax rates will be consistent with its effective tax rate for the first quarter of 2018.

Balance Sheet Trends
Total assets at March 31, 2018 were $8.02 billion, compared with $7.86 billion at December 31, 2017.  Loans, including loans held for sale, totaled $6.30 billion at March 31, 2018, compared with $6.24 billion at December 31, 2017.  During the quarter, growth in core loans (legacy and purchased non-covered loans) increased by $153.8 million, or 10.8% on an annualized basis.  This loan growth was diversified across our markets and types of loans, with all categories of legacy loans showing increases.

Loan production and growth associated with the new premium finance division continue to be strong.  Loans outstanding grew from $482.5 million at the end of 2017 to $501.8 million at the end of the first quarter of 2018.  Production during the first quarter of 2018 was $289.5 million in the division, compared with $241.7 million in the fourth quarter of 2017 and $251.6 million in the first quarter of 2017.  The Company believes it can sustain annualized growth rates in the division of 10% - 15% for the next few years, with strong credit quality and steady profitability levels.

Investment securities at the end of the first quarter of 2018 were $880.8 million, or 11.9% of earning assets, compared with $853.1 million, or 11.7% of earning assets, at December 31, 2017.

The Company experienced a normal and seasonal decline in deposit balances of approximately $180 million with total deposits ending the quarter at $6.45 billion.  Compared with the same period in 2017, deposits have increased by $803.8 million, or 14.2%, as the Company has aggressively pursued balances to fund its loan growth, despite being careful with respect to pricing and margins.  Relative to total loan growth of $874.2 million, the Company has funded approximately 92% of its incremental loan growth with related deposit growth and has seen the pace of deposit growth regularly increase.  Management believes that the pending mergers, which will give the Company a presence in Atlanta, Orlando and Tampa, will provide additional opportunities to increase deposit growth rates over already impressive levels.

Shareholders' equity at March 31, 2018 totaled $868.9 million, compared with $804.5 million at December 31, 2017.  The increase in shareholders' equity was the result of the issuance of shares of common stock in the Company's purchase of the remainder of US Premium Finance Holding Company, plus earnings of $26.7 million during the quarter, partially offset by an increase in accumulated other comprehensive loss of $9.5 million during the quarter.  Tangible book value per share at March 31, 2018 was $16.90, up slightly compared with $16.60 per share at the end of the same quarter in 2017.

Conference Call
The Company will host a teleconference at 10:00 a.m. Eastern time today (April 20, 2018) to discuss the Company's results and answer appropriate questions.  The conference call can be accessed by dialing 1-877-504-1190 (or 1-855-669-9657 for participants in Canada and 1-412-902-6630 for other international participants).  The conference ID name is Ameris Bancorp ABCB.   A replay of the call will be available one hour after the end of the conference call until May 4, 2018.  To listen to the replay, dial 1-877-344-7529 (or 1-855-669-9658 for participants in Canada and 1-412-317-0088 for other international participants).  The conference replay access code is 10119157.  The conference call replay and the financial information discussed will also be available on the Investor Relations page of the Ameris Bank website at www.amerisbank.com.

About Ameris Bancorp
Ameris Bancorp is a bank holding company headquartered in Moultrie, Georgia.  The Company's banking subsidiary, Ameris Bank, had 97 locations in Georgia, Alabama, northern Florida and South Carolina at the end of the most recent quarter.

This news release contains certain performance measures determined by methods other than in accordance with accounting principles generally accepted in the United States of America ("GAAP"). Management of Ameris Bancorp (the "Company") uses these non-GAAP measures in its analysis of the Company's performance. These measures are useful when evaluating the underlying performance and efficiency of the Company's operations and balance sheet. The Company's management believes that these non-GAAP measures provide a greater understanding of ongoing operations, enhance comparability of results with prior periods and demonstrate the effects of significant gains and charges in the current period. The Company's management believes that investors may use these non-GAAP financial measures to evaluate the Company's financial performance without the impact of unusual items that may obscure trends in the Company's underlying performance. These disclosures should not be viewed as a substitute for financial measures determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.

This news release contains statements that constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  The words "believe", "estimate", "expect", "intend", "anticipate" and similar expressions and variations thereof identify certain of such forward-looking statements, which speak only as of the dates on which they were made.  The forward-looking statements in this news release are based on current expectations and are provided to assist in the understanding of potential future performance.  Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties and that actual results may differ materially from those indicated in the forward-looking statements as a result of various factors, including, without limitation, the following:  general competitive, economic, political and market conditions and fluctuations, including, without limitation, movements in interest rates; competitive pressures on product pricing and services; the ability of the parties to the proposed Atlantic and Hamilton merger transactions to consummate the proposed merger transactions or satisfy the conditions to the completion of the proposed merger transactions, including, without limitation, the receipt of shareholder approval and the receipt of required regulatory approvals on the terms expected or on the anticipated schedule; the ability of the parties to the proposed Atlantic and Hamilton merger transactions to meet expectations regarding the timing, completion and accounting and tax treatments of the proposed merger transactions; the businesses of the Company and Atlantic and/or Hamilton may not be integrated successfully or such integration may take longer to accomplish than expected; the expected cost savings and any revenue synergies from the proposed merger transactions may not be fully realized within the expected timeframes; disruption from the proposed merger transactions may make it more difficult to maintain relationships with customers, employees or others; diversion of management time to merger-related issues; dilution caused by the Company's issuance of additional shares of its common stock in connection with the proposed merger transactions; and success and timing of other business strategies.  For a discussion of some of the other risks and other factors that may cause such forward-looking statements to differ materially from actual results, please refer to the Company's filings with the Securities and Exchange Commission (the "SEC"), including its Annual Report on Form 10-K for the year ended December 31, 2017 and subsequently filed Current Reports on Form 8-K.  Forward-looking statements speak only as of the date they are made, and none of the Company, Atlantic or Hamilton undertakes any obligation to update or revise forward-looking statements.

Additional Information and Where to Find It

Atlantic Coast Financial Corporation
In connection with the proposed merger of the Company with Atlantic, the Company has filed with the Securities and Exchange Commission a Registration Statement on Form S-4 (No. 333-222563) and a definitive Proxy Statement of Atlantic and a Prospectus of the Company, as well as other relevant documents concerning the proposed Atlantic transaction.  The proposed transaction has been submitted to Atlantic's stockholders for their consideration.  This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval.  STOCKHOLDERS OF ATLANTIC ARE URGED TO READ THE REGISTRATION STATEMENT AND THE PROXY STATEMENT/PROSPECTUS REGARDING THE TRANSACTION AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY DO AND WILL CONTAIN IMPORTANT INFORMATION.  Stockholders may obtain free copies of these documents and other documents filed with the SEC on its website at http://www.sec.gov.  Stockholders may also obtain free copies of the documents filed with the SEC by the Company on its website at http://www.AmerisBank.com and by Atlantic on its website at https://www.AtlanticCoastBank.net/.

Participants in the Merger Solicitation
The Company and Atlantic, and certain of their respective directors, executive officers and other members of management and employees, may be deemed to be participants in the solicitation of proxies from the stockholders of Atlantic in respect of the proposed merger transaction.  Information regarding the directors and executive officers of Atlantic is available in its definitive proxy statement, which was filed with the SEC on February 20, 2018.  Information about Atlantic's directors and executive officers can also be found in Atlantic's definitive proxy statement in connection with its 2017 annual meeting of stockholders, which was filed with the SEC on April 18, 2017, and other documents subsequently filed by Atlantic with the SEC.  Information regarding the Company's directors and executive officers is available in its definitive proxy statement in connection with its 2018 annual meeting of shareholders, which was filed with the SEC on April 2, 2018, and other documents subsequently filed by the Company with the SEC.  Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, are contained in the definitive proxy statement/prospectus and other relevant materials filed with the SEC, which may be obtained as described in the preceding paragraph.

Hamilton State Bancshares, Inc.
The Company intends to file a registration statement on Form S-4 with the SEC to register the shares of the Company's common stock that will be issued to Hamilton's shareholders in connection with the proposed Hamilton transaction.  The registration statement will include a proxy statement/prospectus and other relevant materials in connection with the proposed Hamilton transaction.  This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval.  SHAREHOLDERS OF HAMILTON ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS REGARDING THE MERGER AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC CAREFULLY IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE MERGER.  Shareholders may obtain free copies of these documents and other documents filed with the SEC on its website at http://www.sec.gov.  Shareholders may also obtain free copies of the documents filed with the SEC by the Company on its website at http://www.AmerisBank.com.

Participants in the Merger Solicitation
The Company and Hamilton, and certain of their respective directors, executive officers and other members of management and employees, may be deemed to be participants in the solicitation of proxies from the shareholders of Hamilton in respect of the proposed merger transaction.  Information regarding the directors and executive officers of the Company and Hamilton and other persons who may be deemed participants in the solicitation of the shareholders of Hamilton in connection with the proposed transaction will be included in the proxy statement/prospectus for Hamilton's special meeting of shareholders, which will be filed by the Company with the SEC.  Information about the Company's directors and executive officers can also be found in the Company's definitive proxy statement in connection with its 2018 annual meeting of shareholders, which was filed with the SEC on April 2, 2018, and other documents subsequently filed by the Company with the SEC.  Additional information regarding the interests of such participants will be included in the proxy statement/prospectus and other relevant documents regarding the proposed merger transaction filed with the SEC when they become available.