ABCB Ameris Bancorp

MOULTRIE, Ga., Jan. 20, 2017 /PRNewswire/ -- Ameris Bancorp (Nasdaq: ABCB) (the "Company") today reported net income of $72.1 million, or $2.08 per share, for the year ended December 31, 2016, compared with $40.8 million, or $1.27 per share, for 2015.  For the quarter ending December 31, 2016, reported results include net income of $18.2 million, or $0.52 per diluted share, compared with $14.1 million, or $0.43 per diluted share, for the same period in 2015.

The Company reported adjusted operating net income of $80.0 million, or $2.30 per share, for the year ended December 31, 2016, compared with $53.3 million, or $1.66 per share, for 2015.  Adjusted operating net income for the fourth quarter of 2016 increased 43% to $21.9 million, or $0.62 per share, compared with $15.3 million, or $0.47 per share, for the same quarter of 2015. 

For the year ended December 31, 2016, the Company's adjusted operating return on average assets improved to 1.30%, compared with 1.11% for 2015.  For the fourth quarter of 2016, the Company's adjusted operating return on average assets improved to 1.33%, compared with 1.12% in the same quarter of 2015.  Commenting on the Company's earnings, Edwin W. Hortman, Jr., President and Chief Executive Officer of the Company, said, "In 2016, we delivered a 39% increase in adjusted operating earnings per share by driving strong growth in revenue and managing operating expenses.  We grew organic loans by approximately 21% in 2016, up significantly from the 13% that we experienced during 2015.  For 2017, we are focused on maintaining this pace of organic growth while also maintaining a level of operating results that puts us in the top quartile of our peer group."

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

Highlights of the Company's results for 2016 include the following:

• Adjusted operating return on average assets of 1.30%, compared with 1.11% in 2015
• Adjusted operating return on average tangible common equity of 16.71%, compared with 13.66% in 2015
• Improvement in adjusted operating efficiency ratio to 62.7%, compared with 68.9% for 2015
• Organic growth in loans of $660.4 million, or 20.8%
• Total growth in non-interest bearing demand deposits of $243.5 million, or 18.3%, to end the year at 28.2% of total deposits
• Increase in total revenue of 24.5% to $325.2 million
• Decline in the growth rate of operating expenses (less one-time oriented charges)
• Decline in annualized net charge-offs to 0.03% of total loans and 0.11% of non-purchased loans
• Increase in tangible book value per share of 14.0% to $14.42, compared with $12.65 per share at December 31, 2015
• Continued improvement in non-performing assets, decreasing to 0.85% of total assets
• Increase in net income from retail mortgage, warehouse lending and SBA lines of business of 35.7% to $20.6 million, compared with $15.2 million in 2015

Increase in Net Interest Income
Net interest income on a tax-equivalent basis increased 25.6% in 2016 to $223.6 million, up from $178.1 million for 2015.  Growth in earning assets from internal sources, as well as from acquisition activity, contributed to the increase.  Average earning assets increased 29.6% in 2016 to $5.60 billion, compared with $4.32 billion for 2015.  Although the Company's net interest income increased, net interest margin for 2016, including accretion, declined to 3.99%, compared with 4.12% for 2015.  The Company's net interest margin was 3.95% for the fourth quarter of 2016, down from 3.99% reported for the third quarter of 2016 and 3.98% reported for the fourth quarter of 2015. 

Accretion income for 2016 increased to $14.1 million, compared with $11.7 million for 2015.  Accretion income for the fourth quarter of 2016 decreased slightly to $3.4 million, compared with $3.6 million for the third quarter of 2016, but increased from $2.9 million reported for the fourth quarter of 2015.  Excluding the effect of accretion, the Company's margin for 2016 was 3.74%, compared with 3.85% for 2015.  Excluding the effect of accretion, the Company's margin for the fourth quarter of 2016 was 3.73%, a slight decline compared with 3.75% for the third quarter of 2016 and 3.74% for the fourth quarter of 2015.  

Yields on earning assets in 2016 were 4.35%, compared with 4.47% in 2015.  This decline relates principally to the short-term investment strategy associated with the Company's 2015 acquisitions.  Yields on the funds invested in purchased mortgage pools were 2.77% during 2016, compared with 3.21% during 2015.  Interest income on loans on a tax-equivalent basis increased substantially during 2016 to $218.8 million, compared with $170.0 million for 2015.  During the quarter ended December 31, 2016, interest income on loans increased to $58.4 million, compared with $57.3 million for the third quarter of 2016 and $46.9 million for the fourth quarter of 2015.

Total interest expense for 2016 was $19.7 million, compared with $14.9 million for 2015.  Deposit costs were stable for most of 2016, ending the year at 0.24%, compared with 0.23% for 2015.  Deposit costs increased slightly in the fourth quarter of 2016 to 0.27%, compared with 0.23% for the third quarter of 2016.  Non-interest bearing deposits represented 29.1% of the total average deposits for 2016, compared with 29.2% for 2015.

Non-Interest Income
Non-interest income increased 23.6% in 2016 to $105.8 million, compared with $85.6 million for 2015.  Service charges on deposit accounts increased by $8.3 million to $42.7 million during 2016, an increase of 24.0% compared with 2015.  Growth in service charge related revenues on commercial and consumer accounts was responsible for most of the increase in service charges, while NSF and debit card revenues were mostly flat. 

Retail mortgage revenues increased 36.8% during 2016, from $43.3 million for 2015 to $59.3 million for 2016.  Net income for the Company's retail mortgage division grew 42.3% during 2016 to $13.2 million.  Revenues from the Company's warehouse lending division increased 54.1% during the year, from $5.5 million for 2015 to $8.5 million for 2016, and net income for the division increased 48.3%, from $3.1 million for 2015 to $4.6 million for 2016.  Revenues and profitability slowed for both mortgage and warehouse lending in the fourth quarter, which is traditionally a slower time of the year.  Net income for the Company's retail mortgage division was $2.6 million for the fourth quarter of 2016, compared with $3.5 million in the third quarter of 2016 and $2.0 million for the fourth quarter of 2015.  Net income for the Company's wholesale lending division was $1.1 million for the fourth quarter of 2016, compared with $1.5 million for the third quarter of 2015 and $731,000 for the fourth quarter of 2015.

Revenues from the Company's SBA division continued to increase during 2016, rising from $8.3 million for 2015 to $8.9 million for 2016.  Net income for the division remained stable at $2.8 million for both 2016 and 2015. 

Non-Interest Expense
Non-interest expense increased $16.7 million, or 8.4%, to $215.8 million for the year ended December 31, 2016, compared with $199.1 million for the year 2015.  Total expenses in 2016 include approximately $6.4 million in merger-related charges and $5.75 million in compliance-related charges, while total expenses in 2015 include approximately $8.0 million in merger-related charges.  Excluding these amounts, expenses in 2016 increased by only $12.6 million, or 6.6%, compared with 2015 levels. 

Salaries and benefits increased $12.8 million during 2016, driven by $2.5 million associated with the Company's acquisition of The Jacksonville Bank in March 2016 and $8.2 million relating to higher compensation levels in the Company's mortgage and SBA divisions.

Occupancy costs increased $3.2 million, or 15.1%, during 2016, principally as a result of the increased number of retail branches operated during the year, as well as additional expenses for administrative offices.

Data processing and IT-related costs increased $4.7 million, or 23.9%, in 2016.  Growth in accounts associated with the acquisition of The Jacksonville Bank accounted for a portion of this increase, while the majority of the increase related to much higher online and mobile banking adoption.

Other non-interest expenses, excluding $5.75 million in compliance-related charges in 2016, increased 5.8% to $33.2 million during the year. 

Balance Sheet Trends
Total assets increased $1.30 billion, or 23.3%, during 2016.  This growth includes $528.9 million resulting from the acquisition of The Jacksonville Bank in March 2016 and $373.0 million resulting from the acquisition of the loan portfolio of US Premium Finance in December 2016.    

Total loans, including loans held for sale, purchased non-covered loan pools and covered loans, were $5.37 billion at the end of 2016, compared with $4.02 billion at the end of 2015.  Organic growth in loans totaled $660.4 million, or 20.8%, during 2016, compared with $344.2 million, or 13.5%, in 2015.  As expected, loan growth rates in the fourth quarter of 2016 slowed, declining to 12.1% on an annualized basis, compared with 15.7% on an annualized basis in the same quarter of 2015.

Deposits increased $695.9 million during 2016 to end the year at $5.58 billion.  At December 31, 2016, non-interest bearing deposit accounts were $1.57 billion, or 28.2% of total deposits, compared with $1.33 billion, or 27.3% of total deposits, at December 31, 2015.  Non-rate sensitive deposits (including NIB, NOW and savings) totaled $3.17 billion at December 31, 2016, compared with $2.71 billion at the end of 2015.  These funds represented 56.9% of the Company's total deposits at the end of 2016, compared with 55.6% at the end of 2015.

Stockholders' equity at December 31, 2016 totaled $646.4 million, an increase of $131.7 million, or 25.6%, from December 31, 2015.  The increase in stockholders' equity was the result of the Company's issuance of $72.5 million of common shares in the acquisition of The Jacksonville Bank, plus earnings of $72.1 million during 2016, offset by dividends paid to shareholders of $10.5 million.  Tangible book value per share was $14.42 at the end of 2016, up 14.0% from $12.65 at the end of 2015.

Equipment Finance
In addition to reporting its operating results, the Company also announced that it has hired a team of accomplished equipment finance industry veterans to launch a new division of its bank, "Ameris Equipment Finance".  The team will be led by Chris Regas, who comes to the Company from Caterpillar Financial, which purchased a captive finance company that Mr. Regas had founded and grown successfully.  Joining Mr. Regas are other industry veterans with expertise in origination, capital markets, underwriting, risk management and servicing.

Ameris Equipment Finance will focus on a growing, yet underserved, client base across a wide range of equipment sectors, including construction, transportation and manufacturing.  Targeted transaction sizes will range from $500,000 to $10 million, with an average relationship size of approximately $1.5 million to $5.0 million.  Current and prospective corporate clients of Ameris Bank will benefit from the expanded product offerings, as the Company leverages its core competency of lending to qualified middle-market clients nationwide.

Commenting on the new group, Mr. Hortman said, "The team we have recruited has a proven track record in this industry, managing a very large portfolio and managing through several credit cycles with outstanding results.  We expect this strategy to further augment our organic growth rates and also be accretive to our credit quality, earnings per share growth rates and return on average assets.  We are excited to welcome Chris and his team to the Company and believe that this is a great opportunity to diversify our portfolio."

Conference Call
The Company will host a teleconference at 11:00 a.m. Eastern time today (January 20, 2017) 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 February 3, 2017.  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 10099453.  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 Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. 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. Readers are cautioned not to place undue reliance on these forward-looking statements and are referred to the Company's periodic filings with the Securities and Exchange Commission, including the Company's 2015 Annual Report on Form 10-K,  for a summary of certain factors that may impact the Company's results of operations and financial condition.