Ameris Bancorp reported operating net income of $21.6 million, or $0.61 per diluted share, for the quarter ended September 30, 2016, a 35% increase when compared with $15.9 million, or $0.49 per diluted share, for the quarter ended September 30, 2015.  Operating earnings and reported earnings for the third quarter of 2016 are identical, though operating earnings for the third quarter of 2015 exclude $290,000, or $0.01 per diluted share, of after-tax merger costs.

For the year-to-date period ending September 30, 2016, the Company reported operating net income of $58.1 million, or $1.68 per diluted share, compared with $38.0 million, or $1.19 per diluted share, for the same period in 2015.  Operating earnings for 2016 exclude $4.1 million, or $0.12 per diluted share, of after-tax merger costs while operating earnings for 2015 exclude $11.3 million, or $0.35 per diluted share, of after-tax merger costs and nonrecurring credit resolution expenses.

Commenting on the Company's quarterly results, Edwin W. Hortman, Jr., the Company's President and Chief Executive Officer, said, "In the third quarter, we continued to see reliable trends in the growth of both our balance sheet and our net earnings.  The growth initiatives we began in recent years to invest our excess liquidity have been successful, and our Company is experiencing a pace of organic growth that we have not seen in many years.  I am proud of the work our team has done producing another record quarter for Ameris Bank and am confident that our momentum will propel us to a strong 2017."

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

• Operating return on assets and operating return on average tangible equity of 1.35% and 17.18%, respectively

• Organic growth in loans of $222.8 million, or 22.9% annualized

• Total revenue growth of $13.6 million, or 18.7%, compared with the same quarter of 2015

• Continued improvement in non-performing assets, decreasing to 0.92% of total assets

• Net charge-offs on non-purchased loans of 0.05% annualized

• Growth in net income from the retail mortgage, warehouse lending and SBA lines of business, increasing to $5.7 million, or 26.5% of total net income

Net Interest Income and Net Interest Margin

Net interest income (taxable equivalent) for the third quarter of 2016 totaled $58.0 million, an increase of $9.9 million, or 20.6%, compared with $48.1 million reported for the third quarter of 2015.  Accretion income in the current quarter increased to $3.6 million, compared with $3.0 million in the third quarter of 2015, but decreased compared with $4.2 million reported in the second quarter of 2016.  Higher levels of net interest income resulted mostly from growth in average loans outstanding of approximately $1.2 billion since the third quarter of 2015.  Average balances of short-term assets and investments shrank over the past year by 10.5%, from $1.06 billion in the third quarter of 2015 to $948 million in the current quarter.  At the current quarter end, loans outstanding represented 83.9% of total earning assets, compared with 80.0% at September 30, 2015.

Despite the persistent low interest rate environment and continued deterioration of loan and investment yield opportunities, the Company has maintained a generally consistent net interest margin.  During the current quarter, the Company reported a net interest margin, excluding accretion income, of 3.75%, compared with 3.70% in the prior quarter and 3.81% in the same quarter of 2015.  Trends in the margin over the past year include the effects of yield deterioration on loans and investments resulting from a persistently low interest rate environment, offset by stable costs of deposits and an improved mix of earning assets, more heavily weighted toward loans than short-term assets or investments. 

Non-interest Income

Non-interest income in the third quarter of 2016 improved to $28.9 million, an increase of $3.9 million, or 15.6%, compared with the same quarter in 2015.  Continued growth and profitability in the Company's mortgage operations provided most of the improvement, with revenue from mortgage operations increasing to $14.1 million, a 35% increase compared with the same quarter of 2015.  Total retail mortgage loan production increased to $410.8 million in the current quarter, compared with $311.0 million in the third quarter of 2015, while spreads (gain on sale) improved to 3.69% in the current quarter, compared with 3.52% in the same quarter of 2015. 

Service charges on deposit accounts increased by $592,000 to $11.4 million during the current quarter, an increase of 5.5% compared with the same quarter in 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. 

Non-interest Expense

Non-interest expense totaled $53.2 million in the third quarter of 2016, an increase of $4.8 million compared with $48.4 million in the third quarter of 2015.  Substantially all of the increase in operating expenses related to additional compensation and occupancy costs associated with the acquisition of Jacksonville Bancorp, Inc. during the first quarter of 2016, as well as additional compensation related to mortgage and SBA lines of business. 

Salaries and benefits increased to $28.0 million in the current quarter of 2016, compared with $24.9 million in the third quarter of 2015.  Higher incentive accruals for the Company's production staff, as well as increased commissions in the mortgage and SBA divisions, accounted for the majority of the increase in compensation costs.  Management anticipates lower compensation costs in the fourth quarter of 2016 due to seasonally slower commercial and agricultural loan production and generally slower originations in retail mortgage.

Occupancy costs were flat at approximately $6.0 million during the current quarter of 2016 as compared with the same quarter in 2015.  Reduction in branch offices and tighter controls on other non-depreciation expenses were the principal drivers of minimal increases in these costs.  Data processing and telecommunications costs increased by 16.1% during the quarter, mostly due to higher customer counts and continued implementation of mobile and electronic initiatives.  Other operating costs increased by $574,000 to $9.3 million in the third quarter of 2016, primarily as a result of increases in professional fees associated with several reengineering efforts in various administrative cost centers.

Balance Sheet Trends

Total assets at September 30, 2016 were $6.49 billion, compared with $5.59 billion at December 31, 2015.  Commenting on the growth in total assets, Mr. Hortman said, "The pace of loan growth during 2016 has quickened as a result of several strategies.  First, our bankers are deepening existing relationships, and our efforts to bank selectively larger relationships have put us in front of new customers that we might have passed on before because of their size.  Second, our efforts at developing lending expertise and niches that diversify our sales efforts away from commercial real estate were initially needed to help deploy the liquidity from acquisitions in 2015.  These niches and lending efforts have reached maturity and are producing reliable incremental growth at profitability levels that are equal to or greater than our existing return on assets.  Looking forward, we expect pay-downs in our warehouse and agricultural lines of credit that normally slow our growth in the fourth quarter, but we believe that our current pace of growth for 2016 can be sustained or even improved upon as we move into 2017."

Loans, including loans held for sale, totaled $4.97 billion at September 30, 2016, compared with $4.02 billion at December 31, 2015.  During the third quarter of 2016, organic growth in loans totaled $222.8 million, or 22.9% on an annualized basis.  Organic growth in loans for the year-to-date period in 2016 totaled $534.6 million, or 22.5%, compared with $419.2 million, or a growth rate of 21.9%, for the same period in 2015.  The Company's efforts to manage a diversified loan portfolio have resulted in concentration levels that are solidly below the regulatory guidance. 

Investment securities at the end of the current quarter amounted to $838.1 million, or 14.1% of earning assets, compared with $783.2 million, or 15.4% of earning assets, at December 31, 2015. 

At September 30, 2016, total deposits amounted to $5.31 billion, or 91.4% of total funding, compared with $4.88 billion and 96.6%, respectively, at December 31, 2015.  Growth in total deposits during the quarter quickened relative to prior quarters, with total growth of $126.6 million, or 9.8%, annualized.  The Company has increased efforts to match deposit growth rates with loan growth rates, increasing interest rates where needed and reviewing other opportunities in anticipation of continued growth in earning assets.

Tangible common equity at September 30, 2016 totaled $501.6 million, compared with $407.6 million reported at December 31, 2015.  Increases in stockholders' equity are primarily the result of net earnings and the issuance of shares of common stock in the acquisition of Jacksonville Bancorp, Inc. during the first quarter of 2016, less an increased dividend payout ratio as of the most recent quarter.  Tangible book value increased at an annualized pace of 18.3% during the first nine months of 2016, up from $12.65 per share at December 31, 2015 to $14.38 per share at September 30, 2016.