AMERIS BANCORP, today reported operating net income of $12.0 million, or $0.44 per diluted share, for the quarter ended September 30, 2014, compared to $6.6 million, or $0.27 per diluted share, for the quarter ended September 30, 2013.  For the year to date period ending September 30, 2014, the Company reported operating net income of $30.5 million, or $1.17 per diluted share, compared to $17.3 million, or $0.71 per diluted share, for the same period in 2013.  During the third quarter of 2014, the Company completed the conversion of Coastal Bankshares, Inc. ("Coastal") and recorded additional merger expenses totaling approximately $383,000, or $0.01 per share, on an after-tax basis.  Including these charges, the Company reported net income for the third quarter of 2014 of $11.7 million, or $0.43 per share. Commenting on the Company's quarterly results, Edwin W. Hortman, Jr., the Company's President and Chief Executive Officer, said, "Our bankers turned in an outstanding quarter resulting in an 87% improvement in net earnings available to common shareholders compared to the same quarter in 2013.  Additionally, our system conversion of Coastal was successful and we are working diligently to ensure that the cost savings we identified are realized and in place during the fourth quarter of 2014."

Highlights of the Company's performance and results for the third quarter of 2014 include the following:

• Successful conversion of the Coastal customer accounts during August 2014 
• Net income available to common shareholders increased 87.1% compared to the same quarter in 2013 
• The Company declared a cash dividend of $0.05 per common share 
• On an operating basis, return on assets and return on average tangible equity were 1.20% and 17.10%, respectively (including merger-related charges, return on assets and return on average tangible equity were 1.17% and 13.19%, respectively) 
• Total revenue increased to $61.1 million for the third quarter of 2014, compared to $44.0 million for the same quarter in 2013 
• The Company's net interest margin remained strong at 4.50%, reflecting the lowest level of contribution from accretion income in several years 
• Non-covered loans increased by $78.7 million during the quarter, reflecting an annualized growth rate of 17.6% 
• Tangible common equity to tangible assets increased to 7.27%, a 6.4% increase compared to levels reported at December 31, 2013 
• Noninterest income totaled $17.9 million, compared to $12.3 million for the third quarter of 2013 
• Net income from the Company's mortgage operations increased to $1.9 million, compared to $1.3 million for the same quarter in 2013 
• SBA loan premium and servicing income increased to $1.8 million in the third quarter of 2014, compared to $884,000 in the same quarter in 2013

Operating Results
Net income for the third quarter of 2014 totaled $11.7 million, an increase of 87.1% compared to the same quarter in 2013.  For the year to date period, the Company's earnings before preferred dividends totaled $27.9 million, compared to $17.3 million for the year to date period in 2013.  Return on average assets and average tangible common equity were 1.17% and 16.50%, respectively, for the third quarter of 2014 compared to 0.94% and 10.90%, respectively, for the same quarter of 2013.

Net Interest Income and Net Interest Margin
Net interest income for the third quarter of 2014 totaled $39.1 million, an increase of $9.8 million, or 33.5%, compared to the $29.3 million reported for the third quarter of 2013.  The Company's net interest margin decreased during the quarter to 4.50%, compared to 4.80% during the third quarter of 2013.  The decline in the Company's net interest margin resulted from continued repricing of the loan portfolio in the current low interest rate environment and lower relative amounts of accretion income.  Excluding accretion income, the Company's net interest income and net interest margin were $36.2 million and 4.17%, respectively, for the third quarter of 2014, compared to $26.9 million and 4.50% for the third quarter of 2013.  Additionally, the portion of earning assets concentrated in investment securities, mortgage loans held for sale and loans to municipalities increased to 20.8% during the third quarter of 2014 from 15.6% during the third quarter of 2013.  This transition into higher grade assets with lower associated operating expense has been profitable but reduced the margins by approximately 14basis points.

Yields on earning assets for the third quarter of 2014 were 4.96%, compared to 5.20% for the third quarter of 2013.  Total loan yields (including loans held for sale) reflected market pressures and the low rate environment, falling from 5.75% for the third quarter of 2013 to 5.48% for the third quarter of 2014.  Excluding the impact of accretion income, overall loan yields fell to 5.08% for the third quarter of 2014, compared to 5.28% for the same quarter of 2013.   Loan production yields in the third quarter of 2014 were 4.94%, or 0.12% lower than the portfolio's quarterly yield.  In the same quarter of 2013, loan production yields were 4.89%, or 0.39% lower than the portfolio yield.

The Company's yield on investment securities during the third quarter of 2014 was 2.75%, compared to 2.72% in the same quarter in 2013.   Yield opportunities have been generally higher over the past year and allowed for some expansion in yields and total balances of investment securities.

Total interest expense for the third quarter of 2014 was $4.1 million, compared to $2.5 million for the same quarter of 2013.  Increases in total interest expense were driven primarily by increases in total deposits and other borrowings resulting from both acquisition activity and organic growth.  Deposit costs were lower during the third quarter of 2014 at 0.30%, compared to 0.33% during the third quarter of 2013.  Yields on each deposit class were substantially unchanged over the past year.  Management does not expect deposit costs or overall funding costs to decrease materially in the coming quarters given tightening liquidity and increasingly stronger forecasts for asset growth.

Non-interest Income
Non-interest income for the third quarter of 2014 improved to $17.9 million, an increase of $5.6 million, or 45.7%, compared to the same quarter in 2013.  The Company's mortgage operations continued to make improvements in revenues and net income, reporting its best quarter in history for the Company.  Total revenue in the mortgage group grew to $9.5 million, an improvement of 47% compared to the same quarter in 2013.  Net income improved at a slightly faster pace to $1.9 million, compared to $1.3 million in the third quarter of 2013.  Total production in the third quarter of 2014 amounted to $217.4 million (80.4% retail and 18.6% wholesale), compared to $152.1 million in the same quarter of 2013 (74.5% retail and 25.5% wholesale).  Relationships with larger builders and real estate firms continue to drive the Company's production from this division.  Open pipelines finished the third quarter of 2014 at $81.5 million, compared to $86.2 million at the beginning of the third quarter of 2014 and $72.5 million at the end of the third quarter of 2013.  

Income from service charges for the third quarter of 2014 was $6.7 million, an increase of $1.7 million, or 34.6%, compared to the same quarter in 2013.  Stronger growth in commercial and treasury management accounts contributed to the growth in income, as did strong growth in balances that resulted from the Company's acquisition of The Prosperity Banking Company ("Prosperity") in December 2013 and Coastal in June 2014.

During the quarter, the Company recorded approximately $1.8 million of SBA income, compared to $884,000 in the same quarter in 2013.  Expenses related to SBA lending also increased, from $247,000 in the third quarter of 2013 to $1.2 million in the third quarter of 2014.  The Company had several recruiting successes during the third quarter of 2014 on both the leadership and production side in this area and believes the recent momentum and success in government-guaranteed lending is sustainable. 

Non-interest Expense
Operating expenses for the third quarter of 2014 totaled $38.6 million, including approximately $551,000 of pre-tax merger-related charges associated with the acquisition of Coastal on June 30, 2014.  Excluding the merger charges, operating expenses totaled $38.0 million for the third quarter of 2014, compared to $28.2 million for the same quarter in 2013.  Growth in expenses over the prior year relates primarily to the acquisition of Prosperity in December 2013, the acquisition of Coastal in June 2014 and growth in the Company's mortgage operations over the past year. 

On a linked quarter basis, operating expenses exclusive of the merger-related charges reflected an increase of $3.6 million from $34.4 million in the second quarter of 2014 to $38.0 million in the third quarter of 2014.  Increases in salaries and benefits associated with higher commissions and incentive accruals were offset by reduced compensation resulting from conversion activity related to prosperity and Coastal that occurred during the first two quarters.  Salaries and benefits increased to $20.2 million for the current quarter of 2014, compared to $14.4 million for the same quarter in 2013, as commissions and support costs in the Company's mortgage operations increased commensurate with the increase in revenues.  Excluding compensation costs in the Company's mortgage operations, salaries and benefits were $15.8 million for the third quarter of 2014, compared to $13.0 million for the second quarter of 2014 and $10.8 million for the third quarter of 2013.  Total noninterest expenses in the Company's mortgage operations increased to $6.0 million for the third quarter of 2014, compared to $4.5 million for the third quarter of 2013. 

Non-provision credit resolution-related costs increased from $3.0 million for the third quarter of 2013 to $3.2 million for the third quarter of 2014.  Occupancy and equipment costs increased from $3.1 million for the third quarter of 2013 to $4.7 million for the third quarter of 2014 due to the increased number of branches operated by the Company after the acquisition of Prosperity and Coastal.  Data processing and telecommunications expenses increased from $3.1 million for the third quarter of 2013 to $3.9 million for the third quarter of 2014.    

Balance Sheet Trends
Total assets at September 30, 2014 were $4.00 billion, compared to $3.67 billion reported at December 31, 2013.  Loans, including loans held for sale, totaled $2.95 billion at September 30, 2014, compared to $2.52 billion at December 31, 2013.  During the third quarter, growth in non-covered loans amounted to $78.7 million, or 17.6% on an annualized basis.  Growth during the third quarter of 2014 was spread evenly across most loan types, including agriculture, municipal, commercial real estate and mortgage.

Investment securities at the end of the quarter amounted to $542.2 million, or 15.4% of earning assets, compared to $503.1 million, or 15.6% of earning assets, at December 31, 2013.  

Funding sources continued to improve over year end levels.  At September 30, 2014, total deposits amounted to $3.37 billion, or 93.2% of total funding, compared to $3.0 billion and 90.0%, respectively, at December 31, 2013.  Non-interest bearing deposits reflected the largest growth, ending the current quarter at $816.5 million, or 24.2% of total deposits, compared to $668.5 million, or 22.3%, at December 31, 2013.  Successful retention of acquired deposit accounts has positively impacted our deposit mix and total funding levels.  Reductions in borrowings with the FHLB of $65.0 million have occurred throughout the year and have been the primary driver of the Company's increased reliance on core deposits for its total funding.

Stockholders' equity at September 30, 2014 totaled $353.8 million, compared to $316.7 million reported at December 31, 2013.  The retirement of $28 million of preferred equity in the first quarter of 2014 has been more than offset by the Company's consolidated earnings and issuance of common stock associated with the acquisition of Coastal on June 30, 2014.  During the second quarter of 2014, the Company issued 1.6 million shares to complete the purchase of Coastal, increasing stockholders' equity by $34.5 million.  

Tangible common equity as a percentage of tangible assets increased to 7.27% at the end of the third quarter of 2014, compared to 6.83% at the end of 2013.  The combination of the Company's net earnings, additional common equity and intangibles associated with the Coastal acquisition account for the majority of the increase in the Company's capital ratios.  Tangible book value increased to $10.68 per share at September 30, 2014, compared to $9.87 per share at December 31, 2014.