Ameris Bancorp reported operating net income of $20.0 million, or $0.57 per diluted share, for the quarter ended June 30, 2016, compared with $12.3 million, or $0.38 per diluted share, for the quarter ended June 30, 2015.  For the year-to-date period ending June 30, 2016, the Company reported operating net income of $36.5 million, or $1.07 per diluted share, compared with $22.1 million, or $0.70 per share, for the same period in 2015.  

Commenting on the Company's quarterly results, Edwin W. Hortman, Jr., the Company's President and Chief Executive Officer, said, "We indicated earlier in the year that we were operating with more momentum around our key metrics than I had seen in the past few years.  That momentum carried us to an outstanding quarter in virtually every part of the Company.  Organic growth has been increasingly reliable and with our improved efficiency ratios, we expect more profits to hit the bottom line.  Our lines of business continue to grow net earnings and credit quality is trending back to levels we have not seen in a decade.  I am proud of the work our Company has done to achieve these results."

Although the second quarter of 2016 contained no merger or non-recurring items, the same quarter of 2015 and the year to-date periods include non-operating amounts.  Reported earnings, including merger and credit charges totaled $20.0 million, or $0.57 per share, for the second quarter of 2016, compared with $1.3 million, or $0.04 per share, for the same quarter in 2015.  For the year to-date period ending June 30, 2016, the Company reported earnings of $32.4 million, or $0.95 per share, compared with $11.1 million, or $0.35 per share, for the quarter ending June, 2015.

Highlights of the Company's performance and results for the second quarter of 2016 include the following:

• Operating return on average assets of 1.31%, compared with 1.11% in the same quarter in 2015 
• Operating return on tangible common equity of 17.03%, compared with 12.83% in the second quarter of 2015 
• Operating efficiency ratio (excluding intangible amortization) of 61.52% in the second quarter of 2016, down from 64.07% in the same quarter of 2015 
• Organic loan growth of $233.4 million, reflecting an annualized growth rate of 25.5% 
• Successful system and data conversion of the eight retail offices acquired in the Company's acquisition of Jacksonville Bancorp, Inc. ("JAXB") 
• Total revenue (FTE) of $83.9 million, an increase of 35.5% from the same quarter in 2015 
• Tangible book value per share of $13.89 at June 30, 2016, compared with $11.81 per share at June 30, 2015 
• Tangible common equity to tangible assets increased to 7.96% at June 30, 2016, compared with 7.68% at March 31, 2016 
• Net income from mortgage and SBA lines of businesses totaling $6.2 million in the second quarter, compared with $4.0 million in the same quarter of 2015.

Operating Performance
For the quarter ending June 30, 2016, the Company reported operating return on assets of 1.31%, compared with 1.11% in the same quarter of 2015.  Return on tangible common equity during the quarter rose to 17.03%, compared with 12.83% in the second quarter of 2015, despite higher capital levels.  

The improved operating ratios result primarily from significantly improved efficiency and overhead ratios.  During the second quarter, the Company's operating efficiency ratio net of intangible amortization was 61.52%, compared with 64.07% in the same quarter of 2015.  The Company's net overhead ratio has improved as well to 1.57% in the second quarter of 2016, compared with 1.86% in the second quarter of 2015.  Initiatives designed to reallocate resources to needed areas versus incremental spending has been sufficient to hold total expenses steady while revenue has continued to grow.  

Net Interest Income and Net Interest Margin
Net interest income (taxable equivalent) for the second quarter of 2016 totaled $55.5 million, an increase of $14.3 million, or 34.6%, compared with $41.3 million for the second quarter of 2015.  Strong growth in the spread income resulted primarily from higher levels of earning assets, funded almost entirely with growth in very low cost deposits.  Additionally, loans have increased as a percentage of earning assets from 77.8% during the second quarter of 2015 to 82.8% in the current quarter, with the majority of the increase coming from short-term assets.

The Company's net interest margin decreased slightly during the quarter to 4.01%, compared with 4.03% during the first quarter of 2016.  Higher levels of accretion income on purchased assets were offset by lower yields on the purchased mortgage pools.  Accretion income was impacted in the quarter from certain prepayments that increased accretion by $1.1 million over scheduled amounts.  The Company's mortgage pools were negatively affected by approximately $900,000 relating to accelerated prepayments and an adjustment on the remaining life of the pools and associated premiums.  Because of the shorter estimated life, management expects the yields on these assets to trend closer to 2.85%-3.00% than the 3.00%-3.25% previously recorded.

Yields on earning assets in the second quarter of 2016 were 4.35%, compared with 4.36% in the first quarter of 2016 and 4.49% in the second quarter of 2015.  Interest income on loans on a tax-equivalent basis increased during the second quarter of 2016 to $54.9 million, compared with $49.8 million in the first quarter of 2016 and $40.2 million in the second quarter of 2015.  Excluding accretion income, yields on all loans were 4.42% in the second quarter of 2016, reflecting a decline of 0.43% from the second quarter of 2015.  Excluding the effect of purchased mortgage pools, the Company's loan yields declined by only 0.11% from the second quarter of 2015, reflecting success in the Company's pricing efforts on new and renewed credits in the current rate environment. 

Total interest expense for the second quarter of 2016 was $4.8 million, compared with $3.5 million in the same quarter of 2015.  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 of funds were only slightly lower during the second quarter of 2016 at 0.22%, compared with 0.23% during the first quarter of 2016 and 0.24% during the second quarter of 2015.  Continued improvement in the Company's mix of deposits, primarily toward non-interest bearing deposits, has allowed for more aggressive retention efforts on MMDA and CDs without negatively impacting overall deposit costs.  Non-interest bearing deposits were 30.0% of the total average deposits during the second quarter of 2016, compared with 28.9% for the second quarter of 2015.  Management does not expect deposit costs or overall funding costs to decrease materially in the coming quarters despite tightening liquidity ratios and stronger forecasts for asset growth.

Non-interest Income
Non-interest income in the second quarter of 2016 improved to $28.4 million, an increase of $7.8 million, or 37.6%, compared with the same quarter in 2015.  Service charges on deposit accounts increased by $3.3 million to $10.4 million during the quarter, an increase of 45.9% compared with the same quarter in 2015.  Stronger growth in commercial and treasury management accounts contributed to the growth in income, as did growth in balances that resulted from the Company's acquisitions during 2015 and the first quarter of 2016.

Levels of non-interest income benefited from continued growth and profitability in the Company's mortgage operations.  Revenue from mortgage operations increased to $14.1 million, an increase of 45.4% compared with the same quarter in 2015.  Net income for the Company's retail mortgage division increased 82.6% during the second quarter of 2016 to $4.1 million, compared with $2.2 million in the second quarter of 2015.   Total retail production increased to $375.7 million in the quarter, compared with $285.6 million in the second quarter of 2015, while spreads (gain on sale) increased to 3.90% in the current quarter compared with 3.67% in the same quarter of 2015.  Open pipelines at the end of the quarter were $162.6 million, compared with $161.5 million at the beginning of the second quarter of 2016 and $115.9 million at the end of the second quarter of 2015.  

Net income for the Company's SBA division increased 3.0% during the second quarter of 2016 to $880,000, compared with $854,000 during the second quarter of 2015.  SBA pipelines improved significantly at the end of the second quarter of 2016, growing to $65.4 million, compared with $49.4 million at the beginning of the quarter.  Total principal of closed loans in the second quarter of 2016 amounted to $17.9 million, an increase of $7.9 million from the first quarter of 2016 and an increase of $8.3 million compared with the second quarter of 2015.

Non-interest Expense
Operating expenses, excluding merger and non-recurring credit charges, increased $12.5 million during the second quarter of 2016, from $39.9 million in the second quarter of 2015 to $52.4 million in the second quarter of 2016.  The growth in operating expenses that resulted from the Company's two acquisitions that were completed late in the second quarter of 2015, as well as the JAXB acquisition completed in the first quarter of 2016, account for almost all of the increase in total operating expenses.

During the second quarter, operating expenses increased $3.1 million from the first quarter of 2016.  The acquisition of JAXB at the end of the first quarter of 2016 was the primary driver of the additional operating expenses.  The conversion and substantially all of the integration for the JAXB transaction have been completed, and the Company expects to see a reduction of approximately $500,000 in operating expenses in the coming quarter as a result.

Salaries and benefits increased to $27.5 million in the current quarter of 2016, compared with $26.2 million in the first quarter of 2016 and $22.5 million in the same quarter in 2015.  Increases in compensation costs from the first quarter reflect an increase of $2.0 million in higher levels of commissions for mortgage and SBA personnel, as well as the impact of staffing additions from the acquisition of JAXB in March 2016.

Occupancy and equipment costs increased from $5.7 million in the first quarter of 2015 to $6.4 million in the second quarter of 2016 due to the additional JAXB branches acquired in March.    Data processing and telecommunications costs decreased slightly to $6.0 million in the second quarter of 2016, compared with $6.1 million for the first quarter of 2016.

Total credit costs (provision and non-provision credit resolution-related costs) totaled $2.7 million in the second quarter of 2016, compared with $2.5 million in the first quarter of 2016 and $13.9 million in the same quarter in 2015.  During the second quarter of 2015, the Company recorded a non-recurring charge of $11.2 million to aggressively mark certain non-performing assets in a manner that would facilitate quick disposition.  Excluding that charge, total credit costs would have been consistent at $2.7 million for the second quarter of 2015.

Balance Sheet Trends
Total assets at June 30, 2016 were $6.22 billion, compared with $5.59 billion reported at December 31, 2015 and $6.10 billion reported at March 31, 2016.  

Loans, including loans held for sale, totaled $4.73 billion at June 30, 2016, compared with $3.57 billion at June 30, 2015.  During the quarter, growth in legacy loans (loans and purchased non-covered loans) amounted to $233.4 million, or 25.5% on an annualized basis.  Growth in loans was diversified across product type, with CRE at 28% of incremental growth, municipal at 35%, C&I and agriculture at 12% and mortgage lending, including warehouse lines, at 25% of the total.

Purchased non-covered loan pools declined during the current quarter to $610.4 million, compared with $656.7 million at March 31, 2016.  No additional purchases of mortgage loan pools were made during the quarter, although management anticipates maintaining purchased loan pool balances between $600 million and $700 million.

Investment securities at the end of the quarter amounted to $862.8 million, or 17.2% of earning assets, compared with $792.5 million, or 15.6% of earning assets, at December 31, 2015.  

At June 30, 2016, total deposits amounted to $5.18 billion, or 93.1% of total funding, compared with $4.88 billion and 96.6%, respectively, at December 31, 2015.  Non-interest bearing deposits at the end of the current quarter were $1.55 billion, or 30.0% of total deposits, compared with $1.33 billion, or 27.3%, at December 31, 2015.  Non-rate sensitive deposits (including NIB, NOW and savings) totaled $2.90 billion at June 30, 2016, compared with $2.71 billion at the end of 2015.  These funds represented 56.0% of the Company's total deposits at June 30, 2016, compared with 55.6% at the end of 2015.

Stockholders' equity at June 30, 2016 totaled $625.9 million, compared with $514.8 million reported at December 31, 2015.  The increase in stockholders' equity was the result of the issuance of shares of common stock in the JAXB acquisition during the first quarter of 2016, plus earnings of $32.4 million during the first six months of 2016.  Tangible book value at June 30, 2016 was $13.89 per share, up 9.8% from $12.65 per share at the end of 2015.  Tangible common equity as a percentage of tangible assets increased to 7.96% at the end of the second quarter of 2016, compared with 7.44% at the end of 2015.