Ameris Bancorp reported net income of $39.9 million, or $0.84 per diluted share, for the quarter ended March 31, 2019, compared with $26.7 million, or $0.70 per diluted share, for the quarter ended March 31, 2018.  The Company reported adjusted net income of $42.6 million, or $0.90 per diluted share, for the quarter ended March 31, 2019, compared with $27.8 million, or $0.73 per diluted share, for the same period in 2018.  Adjusted net income excludes after-tax merger and conversion charges, restructuring charges related to recently announced branch consolidations, loss on sale of bank premises and expenses related to Hurricane Michael.

Commenting on the Company's earnings, Dennis J. Zember Jr., the Company's President and Chief Executive Officer, said, "We started the year with solid growth in deposits and an impressive increase in net interest margin.  Compared with the same quarter a year ago, we have held the line on operating expenses while we have grown revenues over 37%.  Loan growth was not at the level we were budgeting, but our control of expenses and solid financial results within our lines of businesses almost made up the entire difference.  Looking ahead, I see pipelines and unfunded commitments that should move loan balances higher in the coming quarter."

Highlights of the Company's results for the first quarter of 2019 include the following:

Increase in tangible book value per share to $19.73, or a 16.7% increase, at March 31, 2019, compared with $16.90 at March 31, 2018

Net interest margin expansion of 3 basis points to 3.95% against the same period in 2018, despite reduction in loans to deposits from 96.0% at March 31, 2018 to 86.5% at March 31, 2019

Deposit growth over the last 12 months of $3.4 billion, which outpaced loan growth of $2.3 billion over the same period

Increase of $2.7 million in noninterest income from mortgage banking activities to $13.8 million for the first quarter of 2019, compared with $11.1 million in the fourth quarter of 2018 and $11.9 million in the first quarter of 2018

Reduction of 11 branch locations pursuant to our previously announced branch consolidation plan

Adjusted return on average assets of 1.51%, compared with 1.44% in the first quarter of 2018

Adjusted return on average tangible common equity of 18.82%, compared with 17.09% in the first quarter of 2018

Following is a summary of the adjustments between reported net income and adjusted net income:

Pending Acquisition 
During the fourth quarter of 2018, the Company announced its intent to acquire Fidelity Southern Corporation ("Fidelity"), the parent company of Fidelity Bank, Atlanta, Georgia.  Fidelity operates 70 full-service banking locations, 51 of which are located in Georgia and 19 of which are located in Florida.  The acquisition will further expand the Company's existing Southeastern footprint in the attractive Atlanta market, where the Company will be the largest community bank by deposit share after the acquisition.  The transaction is expected to close in the second quarter of 2019 and is subject to customary closing conditions, including receipt of regulatory approval and the approval of Fidelity and Ameris Bancorp shareholders.

Net Interest Income and Net Interest Margin 
Net interest income on a tax-equivalent basis for the first quarter of 2019 totaled $99.4 million, compared with $100.6 million for the fourth quarter of 2018 and $69.8 million for first quarter of 2018.  The Company's net interest margin, excluding the effects of accretion income, increased during the quarter to 3.83%, compared with 3.75% in the fourth quarter of 2018 and decreased slightly from 3.84% in the first quarter of 2018.  The linked quarter increase was primarily attributable to an increase in the yield on loans, excluding purchased loans, of 32 basis points compared with the linked quarter.

The Company's net interest margin was 3.95% for the first quarter of 2019, up from 3.91% reported for the fourth quarter of 2018 and 3.92% reported for the first quarter of 2018.  Accretion income for the first quarter of 2019 decreased to $2.9 million, compared with $4.1 million for the fourth quarter of 2018, and increased from $1.4 million reported for the first quarter of 2018.  Yields on all loans, excluding the effect of accretion, increased to 5.22% during the first quarter of 2019, compared with 5.00% for the fourth quarter of 2018 and 4.75% during the first quarter of 2018.  Loan production in the banking division during the first quarter of 2019 totaled $613.5 million, with weighted average yields of 5.78%, compared with $604.9 million and 5.74%, respectively, in the fourth quarter of 2018 and $365.0 million and 5.19%, respectively, in the first quarter of 2018.  Loan production in the lines of business (including retail mortgage, warehouse lending, SBA and premium finance) amounted to an additional $1.9 billion during the first quarter of 2019, with weighted average yields of 5.47%, compared with $1.8 billion and 5.56%, respectively, during the fourth quarter of 2018 and $1.6 billion and 4.96%, respectively, during the first quarter of 2018.

Interest expense during the first quarter of 2019 increased to $25.5 million, compared with $23.2 million in the fourth quarter of 2018 and $10.7 million in the first quarter of 2018.  The Company's total cost of funds moved 11 basis points higher to 1.05% in the first quarter of 2019,  as compared with the fourth quarter of 2018.  Deposit costs increased 13 basis points during the first quarter of 2019 to 0.92%, compared with 0.79% in the fourth quarter of 2018.  Costs of interest-bearing deposits increased during the quarter from 1.09% in the fourth quarter of 2018 to 1.25% in the first quarter of 2019, with the material portion of the increase relating to NOW and MMDA accounts.

Noninterest Income 
Noninterest income in the first quarter of 2019 was $30.8 million, an increase of $4.3 million, or 16.3%, compared with the same period in 2018, as a result of increased service charges and mortgage banking activity.  Service charge revenue for the first quarter of 2019 increased $1.4 million, or 13.9%, compared with the same period in 2018 due to the Company's increased number of deposit accounts from organic growth and the acquisitions completed in 2018.

Revenue in the retail mortgage division totaled $20.0 million in the first quarter of 2019, an increase of $3.5 million, or 20.9%, compared with the same period in 2018.  Total production was flat at $356.0 million for the first quarter of 2019 compared with the same period in 2018.  Gain on sale spreads continued to improve in the first quarter of 2019, moving to 3.18% from 3.06% in the linked quarter and 2.62% for the first quarter of 2018. Net income for the Company's retail mortgage division was $6.9 million for the first quarter of 2019, compared with $4.0 million for the fourth quarter of 2018 and $4.7 million for the first quarter of 2018.

Profitability in the Company's warehouse lending division continued to improve as net income for the division was $2.2 million for the first quarter of 2019, compared with $2.0 million for the fourth quarter of 2018 and $1.6 million for the first quarter of 2018.  The Company has experienced no losses in this division over the past two years.

Revenue in the SBA division increased to $2.8 million in the first quarter of 2019, compared with $2.4 million in the fourth quarter of 2018 and $2.3 million in the first quarter of 2018.  Net income for the division increased over 20% from the fourth quarter of 2018 and over 97% from the first quarter of 2018 to $1.1 million in the first quarter of 2019.

Noninterest Expense 
Noninterest expense decreased $385,000, or 0.5%, to $75.4 million during the first quarter of 2019, compared with $75.8 million for the fourth quarter of 2018.  During the first quarter of 2019, the Company recorded $3.1 million of charges to earnings, the majority of which was related to merger and conversion activity and loss on sale of premises, compared with $4.9 million in the fourth quarter of 2018 that were mostly merger, executive retirement and hurricane related.  Excluding these charges, adjusted expenses increased approximately $1.4 million, or 1.9%, to $72.3 million in the first quarter of 2019, from $70.9 million in the fourth quarter of 2018.  The majority of this increase is attributable to $1.2 million in increased payroll taxes in the first quarter of 2019.   The Company continues to focus on its operating efficiency ratio. The Company's adjusted efficiency ratio declined from 59.95% in the first quarter of 2018 to 55.12% in the first quarter of 2019, but was increased slightly from the 54.10% reported in the fourth quarter of 2018.  The increased payroll taxes accounted for the majority of the increase in the efficiency ratio.

Income Tax Expense 
The Company's effective tax rate for the first quarter of 2019 was 22.3%, compared with 13.9% in the fourth quarter of 2018.  The reduced rate in the fourth quarter is a result of a large return to provision adjustment  made when the Company filed its 2017 income tax returns in the fourth quarter of 2018.  These factors, determined in the fourth quarter, impacted the overall expected tax rate for the year and the full impact was realized in the fourth quarter.  Excluding this benefit, the Company's tax rate for the fourth quarter of 21.4% was more consistent with the year-to-date tax rate of 20.1%.  The increased rate for the first quarter of 2019 was attributable to certain non-deductible merger and compensation expenses.

Balance Sheet Trends 
Total assets at March 31, 2019 were $11.7 billion compared with $11.4 billion at December 31, 2018.  Total loans, including loans held for sale, purchased loans and purchased loan pools, were $8.59 billion at March 31, 2019, compared with $8.62 billion at December 31, 2018.  Although loan production was strong in the first quarter of 2019, net loan growth was negatively impacted by early pay downs and pay offs throughout the quarter.  Loan production in the banking division during the first quarter of 2019 was slightly higher than the fourth quarter of 2018 and was 68% higher than the first quarter of 2018.

At March 31, 2019, total deposits amounted to $9.80 billion, or 97.6% of total funding, compared with $9.65 billion and 97.4%, respectively, at December 31, 2018.  At March 31, 2019, noninterest-bearing deposit accounts were $2.75 billion, or 28.1% of total deposits, compared with $2.52 billion, or 26.1% of total deposits, at December 31, 2018.  Non-rate sensitive deposits (including non-interest bearing, NOW and savings) totaled $4.71 billion at March 31, 2019, compared with $4.60 billion at December 31, 2018.  These funds represented 48.0% of the Company's total deposits at March 31, 2019, compared with 47.6% at the end of 2018.

Stockholders' equity at March 31, 2019 totaled $1.50 billion, an increase of $39.2 million, or 2.7%, from December 31, 2018.  The increase in stockholders' equity was primarily the result of earnings of $39.9 million during the first quarter of 2019.  Tangible book value per share was $19.73 at March 31, 2019, up from $18.83 at December 31, 2018.  Tangible common equity as a percentage of tangible assets was 8.46% at March 31, 2019, compared with 8.22% at the end of the 2018.

Credit Quality 
Credit quality remains strong.  During the first quarter of 2019, the Company recorded provision for loan loss expense of $3.4 million, compared with $3.7 million in the fourth quarter of 2018.  Nonperforming assets as a percentage of total assets decreased by one basis point to 0.54% during the quarter.  The net charge-off ratio for non-purchased loans was 27 basis points for the first quarter of 2019, compared with 21 basis points in the fourth quarter of 2018 and 14 basis points in the first quarter of 2018.