Ameris Bancorp reported net income of $23.1 million, or $0.62 per diluted share, for the quarter ended June 30, 2017, compared with $20.0 million, or $0.57 per diluted share, for the quarter ended June 30, 2016.  For the year-to-date period ending June 30, 2017, the Company reported net income of $44.2 million, or $1.20 per diluted share, compared with $32.4 million, or $0.95 per share, for the same period in 2016.

Commenting on the Company's quarterly results, Edwin W. Hortman, Jr., the Company's President and Chief Executive Officer, said, "We are pleased to announce solid second quarter financial results, including an adjusted operating ROA of 1.32% and an adjusted operating efficiency ratio of 59.37%.  Additionally, we grew loans organically by approximately $391 million, or 33% annualized in the second quarter of 2017 in the same diversified manner as in past quarters.  As we move into the second half of 2017, we see enough momentum and opportunity to give us confidence in our initial loan growth goals in the 20% range."

The Company reported adjusted operating net income of $23.5 million, or $0.63 per diluted share, for the quarter ended June 30, 2017, compared with $20.3 million, or $0.58 per diluted share, for the second quarter of 2016.  The Company reported adjusted operating net income of $45.1 million, or $1.23 per diluted share, for the six months ended June 30, 2017, compared with $36.7 million, or $1.08 per diluted share, for the same period of 2016.  Adjusted operating net income for the periods excludes certain after-tax costs associated with acquisitions and sales of premises, as shown in the following summary of the adjustments between reported net income and adjusted operating net income:

Highlights of the Company's performance and results for the second quarter of 2017 include the following:

• Adjusted operating return on average assets of 1.32% and adjusted return on average tangible equity of 14.86%

• Increase in tangible book value per share to $17.24, compared with $16.60 per share at March 31, 2017

• Organic loan growth of $391.3 million for the quarter, reflecting an annualized growth rate of 32.9%

• 10.1% increase in total revenue, to $91.3 million, in the second quarter of 2017, compared with total revenue of $83.0 million in the second quarter of 2016

• Improvement in adjusted operating efficiency ratio, on a tax-equivalent basis, to 59.37% in the second quarter of 2017, compared with 61.93% in the same quarter in 2016

• Tangible common equity to tangible assets of 8.84% at June 30, 2017, compared with 8.86% at March 31, 2017 and 7.46% at December 31, 2016

• Net income from mortgage, Small Business Administration ("SBA") and premium finance lines of business totaling $7.3 million in the second quarter, compared with $6.2 million in the first quarter of 2017

Net Interest Income and Net Interest Margin
Interest income on a tax-equivalent basis increased to $73.0 million in the current quarter of 2017, an increase of $12.8 million, or 21.2%, from the same quarter in 2016.  Yields on total earning assets moved higher during the quarter to 4.45%, compared with 4.38% for the first quarter in 2017.  Yields on all loans excluding the effect of accretion increased to 4.59% in the current quarter of 2017, compared with 4.56% in the first quarter of 2017 and 4.42% in the second quarter of 2016.  Past increases in overall loan yields were attributable primarily to moves in short-term rates, while incremental loan production yields generally trailed the portfolio yield.  In the second quarter of 2017, incremental production yields increased to such a point that the dilutive effect to overall yields was very small.  Management believes production yields going forward will be accretive to overall yields and will combine with rate movements to produce a faster pace of yield improvements.

Interest expense during the second quarter of 2017 moved higher to $8.3 million, compared with $4.8 million in the same quarter in 2016.  The Company's cost of funds moved higher to 0.52% in the second quarter of 2017 as compared with the first quarter of 2017.  This relatively material move in cost of funds was impacted by the Company's issuance of $75 million of subordinated debt late in the first quarter of 2017.  Additionally, the Company adopted a more aggressive posture on deposit pricing that drove the cost of deposits in the second quarter of 2017 higher to 0.32%.  As of the end of the quarter, the Company's largest deposit customers are more aggressively priced and management believes that future moves in the cost of deposits will be less dramatic.

Interest expense on non-deposit borrowings increased during the quarter to $3.7 million, compared with $1.8 million in the same quarter in 2016.  Overall costs on these funding sources have decreased from a rate perspective over the past year, but the Company's use of these sources has increased from 4.4% of total funding in the first half of 2016 to 10.9% in the first half of 2017.  Management is comfortable with the reliance on non-deposit borrowings at its current level but expects to manage the usage to a lower level over time with a higher velocity of deposit growth.

Non-interest Income
Non-interest income in the second quarter of 2017 was $28.2 million, a slight decrease from the $28.4 million reported in the second quarter of 2016.  Service charges in the second quarter of 2017 were $10.6 million, an increase of $180,000, or 1.7%, compared with the same quarter in 2016.  Service charge-related revenues on commercial and consumer accounts increased, while NSF fee income declined.

Operational efficiency continued to improve the financial results of the Company's retail mortgage group.  Revenue from mortgage operations increased to $16.5 million, an increase of 4.2% compared with the same quarter in 2016.  However, net income for the Company's retail mortgage division increased 13.3% during the second quarter of 2017 to $4.1 million, compared with $3.6 million in the second quarter of 2016.   Total retail production increased to $400.2 million in the quarter, compared with $375.7 million in the second quarter of 2016, while spread (gain on sale) decreased to 3.46% in the current quarter compared with 3.90% in the same quarter of 2016.  Open pipelines at the end of the quarter were $174.3 million, compared with $146.3 million at the beginning of the second quarter of 2017 and $162.6 million at the end of the second quarter of 2016. 

Net income for the Company's warehouse lending division decreased during the quarter, from $1.1 million in the second quarter of 2016 to $837,000 in the second quarter of 2017.  However, loan production increased from $790.6 million in the second quarter of 2016 to approximately $966.8 million in the current quarter.  The decline in profitability is attributable to an increase of $176,000 in the Company's provision for loan loss expense and $219,000 of additional cost of funds allocated to the division.  The Company experienced a contraction in quarter-end balances at the end of the first quarter, but rebounded as expected during the second quarter, bringing average balances down quarter-over-quarter.

Revenues from the Company's SBA division were $2.6 million during the second quarter of 2017, compared with $2.4 million during the second quarter of 2016.  Net income for the division decreased slightly from $880,000 for the second quarter of 2016 to $875,000 for the second quarter of 2017, due to increased compensation costs. 

Revenues from the premium finance division continued to meet management's expectations, reporting $1.5 million of net income for the second quarter of 2017, compared with $1.3 million in the first quarter of 2017.  Management continues to be pleased with the profitability metrics and the franchise potential from this new partnership with US Premium Finance and believes that the management and sales talent in place are adequate to achieve the strong growth goals that were initially forecasted.

Non-interest Expense
During the second quarter of 2017 and 2016, the Company incurred pre-tax losses on the sale of premises totaling $570,000 in 2017 and $401,000 in 2016.  Excluding these charges, operating expenses increased approximately $3.2 million, to $55.2 million, from $52.0 million in the second quarter of 2016.  Additional operating expenses associated with the premium finance division impacted operating expenses by approximately $3.3 million in the second quarter of 2017.  During the second quarter of 2017, the Company incurred approximately $401,000 of operating expenses related to the new equipment finance line of business.  Management expects loan production to grow in the remainder of 2017 to offset these operating expenses.

Management continues to focus its efforts on improving the operating efficiency and the net overhead ratio of the Company.  During the second quarter of 2017, the Company's adjusted operating efficiency ratio declined to 59.37%, compared with 59.67% in the first quarter of 2017 and 61.93% in the second quarter of 2016.  The Company's adjusted operating net overhead ratio also declined, to 1.51% in the second quarter of 2017, compared with 1.57% in the first quarter of 2017.  

Salaries and benefits increased by $1.6 million to $29.1 million in the current quarter of 2017, compared with $27.5 million in the second quarter of 2016.  Increases in salaries and benefits from the second quarter of 2016 to the second quarter of 2017 relating to the Company's ongoing Bank Secrecy Act compliance efforts, the addition of the premium finance division and the addition of the equipment finance line of business were $863,000, $993,000 and $338,000, respectively. 

Total credit costs (provision and non-provision credit resolution-related costs) totaled $2.8 million in the second quarter of 2017, compared with $2.7 million in the same quarter in 2016 and $2.8 million in the first quarter of 2017.

Balance Sheet Trends
Total assets at June 30, 2017 were $7.40 billion, compared with $6.89 billion reported at December 31, 2016 and $7.09 billion reported at March 31, 2017.

Loans, including loans held for sale, totaled $5.82 billion at June 30, 2017, compared with $5.37 billion at December 31, 2016 and $5.43 billion at March 31, 2017.  During the quarter, growth in core loans (legacy and purchased non-covered loans) increased by $391.3 million, or 32.9% on an annualized basis.  Growth in legacy loans was diversified across product type, with commercial and industrial and agriculture at 35% of incremental growth, residential real estate at 29%, construction and development at 16%, CRE at 14%, and consumer and other loans at 6% of the total.  Loans held for sale, which includes both residential mortgage and SBA-guaranteed loans, increased $41.1 million during the second quarter of 2017. 

Loan production and growth associated with the new premium finance division continue to meet forecasted levels.  Loans outstanding grew $50.7 million, or 47.7% annualized, from $425.9 million at the end of the first quarter of 2017 to $476.6 million at the end of the second quarter of 2017. 

Lending activity in the Company's new equipment finance line of business, which provides financing for heavy equipment in the manufacturing, transportation and construction sectors, finished the quarter with approved credit totaling $126.7 million at a weighted average yield of approximately 4.18%.  Outstanding balances have been slower to book and ended the quarter at $15.9 million.  Management expects additional approvals throughout the remainder of the year and that usage on approved lines will increase and support the Company's overall growth goals in the second half of 2017.

Mortgage warehouse balances rebounded during the quarter to finish at $173.9 million at June 30, 2017, compared with $107.8 million at the end of the first quarter of 2017 and $150.5 million at the same time in 2016.  Loan production increased to $966.8 million, or 22.3%, from the same quarter in 2016. 

Investment securities at the end of the second quarter of 2017 were $861.2 million, or 12.6% of earning assets, compared with $852.2 million, or 13.5% of earning assets, at December 31, 2016. 

At June 30, 2017, total deposits amounted to $5.79 billion, or 88.1% of total funding, compared with $5.58 billion and 89.8%, respectively, at December 31, 2016.  Non-interest bearing deposits at the end of the current quarter were $1.67 billion, or 28.9% of total deposits, compared with $1.57 billion, or 28.2%, at December 31, 2016.  Non-rate sensitive deposits (including non-interest bearing, NOW and savings) totaled $3.10 billion at June 30, 2017, compared with $3.04 billion at the end of 2016.  These funds represented 53.6% of the Company's total deposits at June 30, 2017, compared with 54.6% at the end of 2016.

Shareholders' equity at June 30, 2017 totaled $782.7 million, compared with $646.4 million at December 31, 2016.  The increase in shareholders' equity was the result of the issuance of shares of common stock in the Company's public offering, plus earnings of $44.2 million during the first six months of 2017.  Tangible book value per share at June 30, 2017 was $17.24, up 19.6% from $14.42 at the end of 2016.  Tangible common equity as a percentage of tangible assets was to 8.84% at the end of the second quarter of 2017, compared with 7.46% at the end of 2016.