Ameris Bancorp reported net income of $20.2 million, or $0.54 per diluted share, for the quarter ended September 30, 2017, compared with $21.6 million, or $0.61 per diluted share, for the quarter ended September 30, 2016.  For the year-to-date period ending September 30, 2017, the Company reported net income of $64.4 million, or $1.74 per diluted share, compared with $53.9 million, or $1.56 per diluted share, for the same period in 2016.  Results for the quarter were affected by additional charges associated with Bank Secrecy Act compliance, as well as expenses from the impact of Hurricane Irma.

The Company reported adjusted operating net income of $23.6 million, or $0.63 per diluted share, for the quarter ended September 30, 2017, compared with $21.7 million, or $0.62 per diluted share, for the third quarter of 2016.  The Company reported adjusted operating net income of $68.7 million, or $1.86 per diluted share, for the nine months ended September 30, 2017, compared with $58.4 million, or $1.69 per diluted share, for the same period of 2016.  Adjusted operating net income excludes certain after-tax costs associated with compliance-resolution charges, expenses resulting from Hurricane Irma and acquisitions and sales of premises, as shown in the following summary of the adjustments between reported net income and adjusted operating net income:

Commenting on the Company's quarterly results, Edwin W. Hortman, Jr., the Company's President and Chief Executive Officer, said, "During the quarter, we incurred a substantial amount of expense to resolve BSA compliance issues in an accelerated fashion.  Excluding this expense, our operating results were strong.  Our margin, excluding accretion income, expanded by approximately three basis points, we had core loan growth of almost $313 million, or 24% annualized, and our average deposits were 12% higher in the current quarter than a year ago."

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

• Adjusted operating return on average assets of 1.26% and adjusted return on average tangible equity of 14.28%

• Organic loan growth of $312.9 million for the quarter, reflecting an annualized growth rate of 24.3%

• Excluding accretion, increases in net interest margin of 3 bps to 3.80% in the third quarter of 2017, from 3.77% in the second quarter of 2017 and 5 bps improvement from 3.75% in the third quarter of 2016

• Growth in average deposits during the third quarter of 2017 to $5.84 billion, an increase of 11.8%, or $615.9 million, over the same period in 2016

• 9.2% increase in total revenue, to $93.9 million, in the third quarter of 2017, compared with total revenue of $85.9 million in the third quarter of 2016

• Increase in tangible book value per share to $17.78, compared with $17.24 per share at June 30, 2017

• Adjusted operating efficiency ratio, on a tax-equivalent basis, essentially flat at 61.09% in the third quarter of 2017

• Steady capital ratios despite strong growth rates, with tangible common equity to tangible assets equal to 8.81% at September 30, 2017, compared with 8.84% at June 30, 2017

Net Interest Income and Net Interest Margin
The Company's net interest margin, excluding the effect of accretion, improved during the quarter to 3.80%, compared with 3.77% in the second quarter of 2017.  Compared with the same quarter in 2016, net interest margin has improved by five basis points while average earning assets grew $1.11 billion over this period. 

Net interest income (taxable equivalent) for the third quarter of 2017 totaled $68.7 million, an increase of $10.6 million, or 18.3%, compared with $58.0 million reported for the third quarter of 2016.  Accretion income in the current quarter decreased to $2.7 million, compared with $2.9 million in the second quarter of 2017 and $3.6 million in the third quarter of 2016.  Higher levels of net interest income resulted mostly from growth in average loans outstanding of approximately $1.09 billion since the third quarter of 2016.  Average balances of short-term assets and investments, as a percentage of average earning assets, decreased to 14.1% for the current quarter, from 16.4% for the same quarter in 2016.  At the current quarter's end, loans outstanding represented 86.1% of total earning assets, compared with 83.9% at September 30, 2016.

Interest income on a tax-equivalent basis increased to $78.1 million in the third quarter of 2017, an increase of $15.0 million, or 23.7%, from the same quarter in 2016.  Yields on total earning assets moved higher during the quarter to 4.50%, compared with 4.45% for the second quarter of 2017 and 4.35% for the third quarter of 2016.  Yields on all loans, excluding the effect of accretion, increased to 4.65% in the current quarter of 2017, compared with 4.59% in the second quarter of 2017 and 4.49% in the third quarter of 2016.  Loan production in the banking division during the third quarter of 2017 totaled $463.7 million, with weighted average yields of 4.77%, compared with $527.8 million and 4.56%, respectively, in the second quarter of 2017 and $568.3 million and 4.14%, respectively, in the third quarter of 2016.  Loan production in the lines of business (to include retail mortgage, warehouse lending, SBA and premium finance) amounted to an additional $1.6 billion during the third quarter of 2017.

Interest expense during the current quarter of 2017 increased to $9.5 million, compared with $5.1 million in the same quarter in 2016.  The Company's cost of funds increased slightly to 0.57% in the third quarter of 2017 as compared with 0.52% in the second quarter of 2017.  The cost of deposits increased to 0.35% in the third quarter of 2017, compared with 0.32% in the second quarter of 2017.  Interest expense on non-deposit borrowings increased during the quarter to $4.3 million, compared with $3.7 million in the second quarter of 2017.  Overall costs on these funding sources decreased from a rate standpoint over the quarter, but the Company's use of these sources has increased from 10.6% of total funding in the second quarter of 2017 to 11.9% in the third quarter of 2017.  Management is comfortable with the current level of non-deposit borrowings, particularly in light of an accelerating pace of deposit growth and the shorter incremental duration of the loan portfolio in certain specialty lines of business.

Non-interest Income
Non-interest income in the third quarter of 2017 was $27.0 million, a decrease from the $28.9 million reported in the third quarter of 2016.  Service charges in the third quarter of 2017 were $10.5 million, a decrease of $823,000, or 7.3%, compared with the same quarter in 2016.  Service charge-related revenues on commercial and consumer accounts increased, while NSF fee income continued to decline.

Revenue from the Company's retail mortgage operations was $16.5 million, an increase of 4.4% compared with the same quarter in 2016, but flat compared with the second quarter of 2017.  Net income for the Company's retail mortgage division increased 6.9% during the third quarter of 2017 to $3.0 million, compared with $2.8 million in the third quarter of 2016.   However, profitability for the retail mortgage division in the third quarter declined compared with the second quarter of 2017 due to increased compensation costs and recruiting costs associated with hiring 15 additional mortgage production officers during the quarter.  Total retail production during the current quarter was $401.7 million, compared with $410.8 million in the third quarter of 2016.  Spreads (gain on sale) on the Company's production decreased to 3.30% in the current quarter, compared with 3.69% in the same quarter of 2016.  Open pipelines at the end of the quarter were $158.4 million, compared with $174.3 million at the beginning of the third quarter of 2017 and $145.4 million at the end of the third quarter of 2016. 

Net income for the Company's warehouse lending division decreased during the quarter, from $1.4 million in the third quarter of 2016 to $1.1 million in the third quarter of 2017.  Loan production decreased from $1.1 billion in the third quarter of 2016 to approximately $957.3 million in the current quarter.  The decline in profitability is attributable to an increase of $121,000 in the division's provision for loan loss expense and $262,000 of additional cost of funds allocated to the division.

Revenues from the Company's SBA division were $2.1 million during the third quarter of both 2017 and 2016.  However, primarily due to reduced provision for loan loss expense, net income for the division increased 9.7% from $668,000 for the third quarter of 2016 to $734,000 for the third quarter of 2017. 

Revenues from the Company's premium finance division were strong, increasing 49.6% (annualized) to $6.5 million in the third quarter of 2017.  Growth in the premium finance division's outstanding balances as well as quarterly production have exceeded management's expectations and contributed to the division's net income for the current quarter of $1.8 million.  The Company continues to recruit sales officers and support staff to support the division and believes that these attractive growth rates can be sustained into 2018 and 2019.

Non-interest Expense
During the third quarter of 2017, the Company recorded $5.3 million of management adjusted non-operating expenses, most of which were centered in an additional $4.7 million of compliance-related charges and $410,000 of hurricane-related charges, compared with an aggregate of $238,000 for similar expenses recorded in the third quarter of 2016.  Excluding these charges, operating expenses increased approximately $5.4 million, to $58.4 million, from $53.0 million in the third quarter of 2016.  The additional compliance-related charges resulted from the completion of certain look-back procedures that were required by the FDIC for the Company's compliance with its consent order relating to Bank Secrecy Act matters.

Expenses associated with the Company's new division, US Premium Finance, were $3.6 million in the third quarter of 2017 and represented the majority of the total increase in operating expenses against the same quarter of 2016.  Additionally, the Company incurred approximately $488,000 of operating expenses related to the new equipment finance line of business and approximately $1 million of recurring operating expenses (compensation and consulting charges) associated with the expanded staffing and processes in BSA. 

Salaries and benefits increased by $4.6 million, or 16.4%, to $32.6 million in the current quarter of 2017, compared with $28.0 million in the third quarter of 2016.  Increases in salaries and benefits from the third quarter of 2016 to the third quarter of 2017 relating to the Company's ongoing Bank Secrecy Act compliance efforts, expenses associated with the addition of the premium finance division and expenses resulting from the addition of the equipment finance line of business were $1.1 million, $1.3 million and $421,000, respectively.  Higher incentive accruals for the Company's production staff, as well as increased commissions in the mortgage and SBA divisions, accounted for the remaining increase in compensation costs. 

Occupancy costs were flat at approximately $6.0 million during the current quarter of 2017 compared with the same quarter in 2016.  Tighter controls on expenses were the principal drivers of minimal increases in these costs.  Data processing and telecommunications costs remained stable, at approximately $7.0 million, compared with the second quarter of 2017, but increased by 14.0% compared with the third quarter of 2016. 

Total credit costs (provision and non-provision credit resolution-related costs) totaled $3.1 million in the third quarter of 2017, compared with $2.3 million in the same quarter in 2016 and $2.8 million in the second quarter of 2017.

Balance Sheet Trends
Total assets at September 30, 2017 were $7.65 billion, compared with $6.89 billion at December 31, 2016 and $7.40 billion at June 30, 2017. 

Loans, including loans held for sale, totaled $6.09 billion at September 30, 2017, compared with $5.37 billion at December 31, 2016 and $5.82 billion at June 30, 2017.  During the quarter, growth in core loans (legacy and purchased non-covered loans) increased by $312.9 million, or 24.3%, on an annualized basis.  Growth in core loans (legacy and purchased non-covered loans) for the year-to-date period in 2017 totaled $802.8 million, or 23.1% on an annualized basis, compared with $534.6 million, or an annualized growth rate of 22.4%, for the same period in 2016.  The Company's efforts to manage a diversified loan portfolio have resulted in concentration levels that are solidly below the regulatory guidance.  Loans held for sale, which includes both residential mortgage and SBA-guaranteed loans, decreased $9.4 million during the third quarter of 2017. 

Loan production and growth associated with the new premium finance division continue to meet forecasted levels.  Loans outstanding for the division grew $11.3 million, or 9.5% annualized, from $476.6 million at the end of the second quarter of 2017 to $487.9 million at the end of the third 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, increased during the third quarter of 2017, resulting in outstanding balances of $49.4 million at the end of the quarter, compared with $15.9 million at the end of the second quarter of 2017.  The line of business finished the quarter with approved and unfunded credit totaling $92.2 million, with an additional active pipeline of $90.3 million.  Management expects additional approvals through the remainder of the year and that usage on approved lines will increase and support the Company's overall growth goals for the remainder of 2017 and into early 2018.

Investment securities at the end of the third quarter of 2017 were $867.6 million, or 12.3% of earning assets, compared with $852.2 million, or 13.5% of earning assets, at December 31, 2016. 

At September 30, 2017, total deposits amounted to $5.90 billion, or 86.7% 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 $1.72 billion, or 29.1% 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 $3.21 billion at September 30, 2017, compared with $3.17 billion at the end of 2016.  These funds represented 54.4% of the Company's total deposits at September 30, 2017, compared with 56.9% at the end of 2016.

Shareholders' equity at September 30, 2017 totaled $801.9 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 in the first quarter of 2017, plus earnings of $64.4 million during the first nine months of 2017.  Tangible book value per share at September 30, 2017 was $17.78, up 23.3% from $14.42 at the end of 2016.  Tangible common equity as a percentage of tangible assets was 8.81% at the end of the third quarter of 2017, compared with 7.46% at the end of 2016.