Ameris Bancorp reported operating net income of $15.9 million, or $0.49 per diluted share, for the quarter ended September 30, 2015, compared with $12.0 million, or $0.44 per diluted share, for the quarter ended September 30, 2014.  Operating earnings for the quarter exclude $75,000 of after-tax gains on the sale of securities and $283,000 of after-tax costs associated with the conversion of the Company's recently completed acquisitions.  For the year-to-date period ending September 30, 2015, the Company reported operating net income of $38.0 million, or $1.19 per diluted share, compared with $30.4 million, or $1.16 per share, for the same period in 2014.  Earnings per share for 2015 reflect an additional 5.3 million common shares issued in the Company's private placement completed in January 2015.  Commenting on the Company's quarterly results, Edwin W. Hortman, Jr., the Company's President and Chief Executive Officer, said, "We had a great third quarter at Ameris Bank highlighted by solid loan growth, higher revenue than our target numbers, credit quality expenses greatly reduced from past quarters and several expense initiatives that are in place that should help continue moving earnings higher.  The integration of our two recent acquisitions has been completed, and we look forward to completing the acquisition of Jacksonville Bancorp, Inc. early in 2016."

Including the recently announced acquisition, non-recurring credit charges and gains on the sale of securities, the Company reported net income of $15.6 million, or $0.48 per share, in the third quarter of 2015, compared with $11.7 million, or $0.43 per share, in the same quarter in 2014, and for the year-to-date period in 2015, the Company's earnings totaled $26.7 million, or $0.84 per share, compared with $27.9 million, or $1.07 per share, in 2014.

Highlights of the Company's performance and results for the third quarter of 2015 include the following:

• Announcement of an agreement to acquire Jacksonville Bancorp, Inc., which will add $502 million in total assets and eight additional locations within the Jacksonville MSA

• Operating return on average assets and operating return on average tangible equity of 1.21% and 16.23%, respectively

• Successful data conversion of the 13 branches acquired in the acquisition of Merchants and Southern Bank in Gainesville, Florida

• Total loan growth (including mortgage loans held for sale) of $203.7 million in the third quarter of 2015, or 22.7% annualized

• Organic loan growth of $78.2 million, or 10.4% (annualized), during the third quarter of 2015

• 27% increase in total recurring revenue to $72.3 million in the third quarter of 2015 as compared with the same quarter in 2014, with recurring revenue defined as net interest income plus noninterest income, but excluding gain on sale of securities

• 15.3% increase in tangible book value per share to $12.31, compared with $10.68 per share at September 30, 2014

• 39.5% increase in noninterest income to $25.0 million, compared with $17.9 million in the third quarter of 2014

• 73.4% increase in profitability from mortgage, SBA and warehouse lines of business to $4.7 million, compared with $2.7 million in the same quarter in 2014.

Pending Acquisition

During the third quarter of 2015, the Company announced its intent to acquire Jacksonville Bancorp, Inc., the parent company of The Jacksonville Bank.  Upon completion of the transaction, the combined company will have approximately $5.7 billion in assets, $4.0 billion in loans and $4.9 billion in deposits.  The acquisition will further expand Ameris's existing Southeastern footprint in the attractive Jacksonville, Florida market.  The Jacksonville Bank currently operates eight banking locations, all of which are located within the Jacksonville MSA.  After the acquisition, Ameris will become the largest community bank by deposit market share in the Jacksonville, Florida market. The transaction is expected to close in the first quarter of 2016 and is subject to customary closing conditions, regulatory approvals and approval by Jacksonville Bancorp shareholders.

Net Interest Income and Net Interest Margin

Net interest income (taxable equivalent) for the third quarter of 2015 totaled $48.1 million, an increase of $8.5 million, or 21.5%, compared with $39.6 million reported for the third quarter of 2014.  Accretion income in the current quarter increased to $3.0 million, compared with $2.6 million in the second quarter of 2015, and was consistent with the $3.0 million recorded in the third quarter of 2014.  Higher levels of interest income resulted mostly from growth in average loans outstanding of approximately $742.5 million as compared with the third quarter of 2014. 

The Company's net interest margin decreased during the quarter to 4.07%, compared with 4.50% during the third quarter of 2014.  This decline in net interest margin was expected and resulted from the excess liquidity and short-term investment strategy for the funds in the second and third quarters.  Excluding accretion on purchased loans, the Company's net interest margin was 3.81% in the third quarter of 2015, compared with 4.17% in the third quarter of 2014. 

Yields on earning assets in the third quarter of 2015 were 4.39%, compared with 4.96% in the third quarter of 2014.  The decline in earning asset yields relates almost entirely to the short-term investment strategy associated with the Company's recent acquisitions.  Current yields on the invested funds were approximately 2.80%, consisting of shorter duration mortgage pools, investment securities and some federal funds sold.  Current yields on all loans (including purchased non-covered and covered loans and excluding accretion income) declined in the third quarter of 2015 to 4.75%, compared with 5.11% in the same quarter in 2014.  Higher yielding covered loans as a percentage of total loans has declined from 11.2% in the third quarter of 2014 to only 6.2% for the current quarter of 2015.  Additionally, some of the growth in the legacy portfolio has been in both municipal loans and adjustable rate mortgages that have a significantly better risk profile but lower yields than consolidated levels seen in the past. 

Total interest expense for the third quarter of 2015 was $3.8 million, compared with $4.1 million in the same quarter of 2014.  Decreases in total interest expense were driven primarily by the deposit mix in the portfolio, both from acquisition activity and organic growth.  Noninterest bearing deposits were 28.7% of the total average deposits in the third quarter of 2015, compared with 23.9% in the same period in 2014.  Deposit costs of funds were lower during the third quarter of 2015 at 0.22%, compared with 0.30% during the third quarter of 2014.  Management does not expect deposit costs or overall funding costs to change materially in the coming quarters despite tightening liquidity and increasingly stronger forecasts for asset growth.

Non-interest Income

Non-interest income in the third quarter of 2015 improved to $25.0 million, an increase of $7.1 million, or 39.5%, compared with the same quarter in 2014.  Continued growth and profitability in the Company's mortgage operations provided most of the improvement, with revenue from mortgage operations increasing to $10.4 million, an increase of 38.8% compared with the same quarter of 2014.  Total mortgage loan production increased to $311.0 million in the quarter, compared with $217.7 million in the third quarter of 2014, while spreads (gain on sale) were relatively unchanged at 3.51% in the current quarter compared with 3.46% in the same quarter of 2014. 

Service charges on deposit accounts increased by $4.1 million to $10.8 million during the quarter, an increase of 61.7% compared with the same quarter in 2014.  Service charge increases associated with the recently closed acquisitions totaled $2.7 million in the third quarter of 2015, or $10.9 million annually. 

Non-interest Expense

Non-interest expenses totaled $48.4 million in the third quarter of 2015, compared with $38.6 million in the third quarter of 2014.  Substantially all of the increase in operating expenses in the third quarter of 2015 over the third quarter of 2014 relates to additional expenses associated with recently acquired branches, as well as increased expenses in the Company's non-interest lines of business.  Line of business operating expenses increased $1.5 million during the current quarter as compared with the same quarter in 2014.  Growth in line of business revenue more than eclipsed the growth in related operating expenses, contributing to a measurable increase in profitability.

Salaries and benefits increased to $24.9 million in the current quarter of 2015, compared with $22.5 million in the second quarter of 2015 and $20.2 million in the same quarter in 2014.  Increases in compensation costs derive from the staffing additions resulting from the acquisition of Merchants and Southern Bank and 18 Bank of America branches in the second quarter of 2015.

Non-provision credit resolution-related costs decreased from $3.2 million in the third quarter of 2014 to $1.1 million in the third quarter of 2015.  Occupancy and equipment costs increased from $4.7 million in the third quarter of 2014 to $5.9 million in the third quarter of 2015 due to the increased number of branches that are now operated by the Company.  Data processing and telecommunications expenses increased from $3.9 million in the third quarter of 2014 to $5.3 million in the third quarter of 2015 for the same reason.

Balance Sheet Trends

Total assets at September 30, 2015 were $5.22 billion, compared with $4.04 billion reported at December 31, 2014.  The growth in total assets was driven by the acquisitions of Merchants and Southern Bank and 18 additional retail branches during the second quarter of 2015. 

Loans, including loans held for sale, totaled $3.77 billion at September 30, 2015, compared with $2.90 billion at December 31, 2014.  During the third quarter, organic growth in loans amounted to $78.2 million, or 10.4% on an annualized basis.  Purchased, non-covered loans (excluding loan pools) decreased $40.8 million during the quarter to $767.5 million, down from $808.3 million at June 30, 2015.  Purchased, non-covered loan pools increased $141.1 million during the quarter, to $410.1 million, as the Company purchased additional whole-loan, adjustable rate mortgage pools to invest its excess cash.  Covered loans continued to decline and ended the quarter at $191.0 million, a decrease of $18.6 million during the quarter.

Investment securities at the end of the quarter amounted to $820.7 million, or 19.1% of earning assets, compared with $552.1 million, or 15.5% of earning assets, at December 31, 2014. 

At September 30, 2015, total deposits amounted to $4.53 billion, or 98.0% of total funding, compared with $3.43 billion and 95.8%, respectively, at December 31, 2014.  Non-interest bearing deposits at the end of the current quarter were $1.28 billion, or 28.2% of total deposits, compared with $839.4 million, or 24.5%, at December 31, 2014.

Stockholders' equity at September 30, 2015 totaled $502.3 million, compared with $366.0 million reported at December 31, 2014.  The increase in stockholders' equity was the result of the issuance of $114.9 million of common shares in the first quarter of 2015 and earnings of $26.7 million during the first nine months of 2015.  Tangible book value increased during the first nine months of 2015, from $10.99 per share at December 31, 2014 to $12.31 per share at September 30, 2015. 

Tangible common equity as a percentage of tangible assets increased to 7.76% at the end of the third quarter of 2015, compared with 7.42% at the end of 2014.