AMERIS BANCORP, Ameris Bancorp ("Ameris" or the "Company") today announced earnings and operating results for the quarter and twelve months ended December 31, 2014, and simultaneously announced the signing of definitive agreements to purchase Merchants & Southern Banks of Florida, Inc. and eighteen Bank of America branches. 

Ameris reported operating net income of $41.0 million, or $1.56 per share, for the year ended December 31, 2014, compared to $21.4 million, or $0.89 per share, in 2013.  Operating net income excludes $2.6 million and $3.2 million of after-tax merger charges in 2014 and 2013, respectively. Commenting on the Company's record earnings, Edwin W. Hortman, Jr., President and CEO, said, "We are proud of the efforts of our bankers in 2014 whose collective success produced record earnings and record earnings per share.  Our profitability ratios improved again in 2014, with our operating return on assets and operating return on tangible capital moving significantly higher.  Organic growth in loans came in at 10% with our bankers continuing to manage stronger than average loan yields.  Our growth in non-interest bearing deposits provided funding to exceed the loan growth in part due to our treasury sales efforts.  In addition, our non-interest income divisions continue to manage highly profitable operations and contributed 20.7% of our 2014 net income."

For the fourth quarter of 2014, net income available to common shareholders, on an operating basis, was $10.6 million and $0.39 per share, compared to $3.8 million and $0.16, respectively, in the same quarter in 2013.

Acquisition of Merchants & Southern Banks of Florida, Inc.
Ameris announced today the signing of a stock purchase agreement under which Ameris will acquire Merchants & Southern Banks of Florida, Inc. ("Merchants & Southern"), the parent company of Merchants and Southern Bank, Gainesville, Florida. As of December 31, 2014, Merchants & Southern had assets of $473 million, gross loans of $214 million and deposits of $336 million.

The acquisition strengthens the Company's North Florida franchise by providing entry points into the Gainesville and Ocala markets, as well as further enhancing the Company's presence in the greater Jacksonville Metropolitan Statistical Area. 

"We are very excited about the Merchants & Southern acquisition and the opportunities that we believe are present in the Gainesville, Ocala and Jacksonville markets," said Hortman.  "Additionally, it allows us to more effectively align our resources in what we believe is the premier community bank operating in those North Florida markets."

Under the terms of the purchase agreement, Ameris will pay $50 million in cash for all of the issued and outstanding shares of Merchants & Southern. The transaction is expected to close during the second quarter of 2015 and is subject to customary closing conditions and regulatory approvals.

Sandler O'Neill + Partners, L.P. served as financial advisor and Rogers & Hardin LLP provided legal counsel to Ameris. Hovde Group served as financial advisor and Smith Mackinnon, PA provided legal counsel to Merchants & Southern.

Acquisition of 18 Branches in North Florida and South Georgia
Ameris also announced today the signing of a purchase and assumption agreement under which Ameris will purchase certain fixed assets and assume the deposits of eighteen branches from Bank of America Corporation.

"With this transaction, Ameris will further strengthen its Georgia and Florida market presence with the acquisition of a low-cost funding source and an attractive customer base, as well as expand the Ameris team with experienced and talented associates, with a minimal amount of integration and execution risk.  This will position Ameris as the largest independent community bank operating in our South Georgia and North Florida footprint," stated Hortman.

Ten of the branches are located in South Georgia and will add an estimated $424 million of deposits, while eight of the branches are located in North Florida and will contribute an estimated $388 million of deposits.  The transaction is expected to close during the second quarter of 2015 and is subject to customary closing conditions and regulatory approvals.

Ameris was advised in the transaction by Sandler O'Neill + Partners, L.P. as financial advisor and Rogers & Hardin LLP as legal counsel.

Financial Results for 2014
Highlights of the Company's results for 2014 include the following:

• Ameris completed the acquisition of Coastal Bankshares, Inc., increasing total assets by $449.0 million. 
• The Company declared cash dividends of $0.15 per common share. 
• Profitability ratios improved significantly, with operating return on assets increasing to 1.10% and operating return on tangible common equity increasing to 15.51%. 
• Total recurring revenue increased 30.8% to $212.6 million as compared to 2013. 
• Organic growth in non-purchased loans totaled $202 million, or 9.8%. 
• Non-interest bearing demand deposits increased 25.6% during 2014 to finish at 24.5% of total deposits. 
• Annualized net charge-offs for 2014 declined to 0.31% of total loans, compared to 0.69% for the year ended December 31, 2013. 
• Credit costs (provision and problem loan resolution and OREO expenses) declined to $19.2 million in 2014, compared to $27.0 million in 2013. 
• Noninterest income, excluding gains in investment securities, increased 35.2% to $62.7 million during 2014. 
• Net income from the Company's mortgage division increased 94.4% during 2014 to $6.2 million. Net income increased at more than twice the rate of revenue growth for this division.

Increase in Net Interest Income
Net interest income on a tax equivalent basis increased 29.3% in 2014 to $151.5 million, up from $117.2 million reported in 2013.  Growth in earning assets from internal sources as well as acquisition activity contributed to the increase.  Average earning assets in 2014 increased 33.6% to $3.3 billion, compared to $2.5 billion for 2013.   Although net interest income increased favorably, the Company's net interest margin continued to be adversely affected by historically low interest rates.  For the year ended December 31, 2014, the Company's net interest margin declined to 4.59%, compared to 4.74% during 2013.  

Margins and yields were more stable during the most recent quarter.  For the quarter ended December 31, 2014, the Company's net interest margin was 4.64%, compared to 4.50% in the third quarter of 2014.  Excluding the effect of accretion, the Company's margin remained flat compared to the third quarter of 2014 at 4.17%.  Yields on earning assets, excluding accretion, were 4.60% in the fourth quarter of 2014, compared to 4.63% in the third quarter of 2014.  

Interest income on loans on a tax equivalent basis increased substantially during 2014 to $149.1 million.  During the quarter ended December 31, 2014, interest income on loans increased to $40.6 million, compared to $39.1 million in the third quarter of 2014 and $28.9 million in the same quarter of 2013.  Yields on loans, excluding accretion, declined during 2014 to 5.15%, compared to 5.49% in 2013.  For the current quarter, loan yields declined only two basis points to 5.09% compared to the third quarter of 2014.  Quarterly loan production yields have been increasingly close to the overall portfolio yields for several quarters.  Management believes that further declines in overall yields and margins should be more muted than in recent years.

Deposit costs were stable for most of 2014, ending the year at 0.30%, compared to 0.34% in 2013.  Deposit costs, at 0.30%, were flat in the current quarter of 2014 as compared to the third quarter in 2014.  Continued improvement in the Company's mix of deposits, mostly toward non-interest bearing deposits, has allowed for more aggressive retention efforts on MMDA and CDs without negatively impacting overall deposit costs.

Non-Interest Income
Excluding gains on investment securities, non-interest income increased 35.2% in 2014 to $62.7 million, compared to $46.4 million in 2013.  Growth rates were notably strong among most sources.  Mortgage revenues increased to $26.0 million as the Company's mortgage division reached a mature stage with a team of long-tenured mortgage bankers producing reliable results from referral sources.  Net income in the Company's mortgage division increased at more than twice the pace of total growth in revenue, reflecting a mature, well managed division.  The Company's recent efforts to build a SBA division resulted in significant gains in revenue and net income.  For the year ended December 31, 2014, the Company's net income from SBA activities increased to $2.3 million, compared to $1.2 million in 2013.  Total servicing income and gains on SBA production amounted to $4.9 million, up 128.6% from 2013.  Aggressive efforts to recruit seasoned bankers in this division continue and management believes there is a significant earnings opportunity as this division reaches maturity.

Service charges on deposit accounts increased 25.9% in 2014, the result of acquisition activity as well as successful efforts on commercial deposit accounts.  Since 2011, the Company has devoted significant resources to both treasury deposit products and treasury sales professionals.  During 2014, the treasury sales team booked new commercial deposit accounts totaling $90.8 million, contributing significantly to the Company's 25.6% growth rate in non-interest bearing deposits.  

Non-Interest Expense
Total operating expenses, excluding credit and merger charges, increased $31.3 million in 2014 to $133.4 million.  The primary drivers of the increase in operating expenses are the increased number of branch locations and continued growth and expansion in the Company's mortgage and SBA divisions.  During 2014, the Company integrated two acquisitions with total assets of $1.2 billion, increasing total assets by 40% compared to average assets in 2013.  Short periods of duplicative expenses occurred after each conversion in 2014 and partially inflated the level of operating expenses reported during the year.  

Continued investment in the Company's mortgage and SBA divisions resulted in increased operating expenses of $7.0 million, an increase of 37.0% compared to 2013.  Revenues from these divisions increased at a faster rate than did operating expenses and the contribution to net income and the Company's overall profitability ratios improved.

During the fourth quarter of 2014, the Company incurred certain one-time operating expenses that negatively impacted fourth quarter results.  During the fourth quarter, the Company restructured several administrative positions, accelerated the expensing of certain restricted shares and incurred consulting charges that management deems non-recurring.  These amounts, in the aggregate, totaled approximately $1.2 million before tax. Also, certain pieces of OREO were aggressively re-evaluated, resulting in write-downs totaling $2.2 million.  

Balance Sheet Trends
Total assets increased $369.9 million during 2014, ending the year at $4.0 billion, compared to $3.6 billion at December 31, 2013.  The Company successfully completed the acquisition of Coastal Bankshares, Inc. on June 30, 2014, which added $449.0 million in total assets. Continued redeployment of cash flows from non-performing assets and the Company's FDIC loss-share indemnification asset allowed the Company to limit growth in total assets while improving revenues and return on assets.

Total loans, excluding loans held for sale and covered loans, were $2.6 billion at the end of 2014, compared to $2.1 billion at the end of 2013.  Loans held for sale increased 40.9% to $94.8 million, the result of higher production levels in the Company's mortgage and SBA divisions.  Covered loans declined $103.5 million, or 26.5%, in 2014 to end the year at $286.8 million.  At the end of 2014, covered loans represent only 9.8% of total loans, compared to 15.5% at the same time in 2013.

Deposits increased $431.9 million to finish 2014 at $3.4 billion.  The Company's deposit sales focus has centered primarily on growth in non-interest bearing deposits and deposit accounts with lower levels of rate sensitivity.  At December 31, 2014, non-interest bearing deposit accounts represented 24.5% of total deposits, compared to 22.3% at December 31, 2013.  Non-rate sensitive deposits (NIB, NOW and Savings) totaled $1.8 billion at December 31, 2014, compared to $1.5 billion at the same time in 2013.  These funds represented 53.2% of the Company's total deposits at the end of 2014, compared to 50.4% at the end of 2013.

Common shareholders' equity at December 31, 2014 totaled $366.0 million, an increase of $77.3 million, or 26.8%, from the same time in 2013.  During 2014, the Company issued $34.5 million in new common shares associated with the acquisition of Coastal Bankshares, Inc. Ameris also recorded $28.6 million in intangible assets associated with the transaction.  Additionally, the Company re-instituted a common stock dividend during 2014 of $0.05 per quarter beginning in the second quarter of 2014.  Tangible book value per share ended 2014 at $10.99 per share, up 11.3% from $9.87 per share at the end of 2013.