Ameris Bancorp reported net income of $61.2 million, or $0.88 per diluted share, for the quarter ended December 31, 2019, compared with $43.5 million, or $0.91 per diluted share, for the quarter ended December 31, 2018.  The Company reported adjusted net income of $66.6 million, or $0.96 per diluted share, for the quarter ended December 31, 2019, compared with $45.9 million, or $0.96 per diluted share, for the same period in 2018.  Adjusted net income excludes after-tax merger and conversion charges, executive retirement benefits, servicing right valuation adjustments, restructuring charges related to previously announced branch consolidations, gain on bank owned life insurance ("BOLI") proceeds, expenses related to the previously announced investigation being conducted by the Securities and Exchange Commission and the Department of Justice, loss on sale of bank premises and expenses related to hurricanes.

For the year ended December 31, 2019, the Company reported net income of $161.4 million, or $2.75 per diluted share, compared with $121.0 million, or $2.80 per diluted share, for the year ended December 31, 2018.  The Company reported adjusted net income of $222.9 million, or $3.80 per diluted share, for the year ended December 31, 2019, compared with $146.2 million, or $3.38 per diluted share, for the year ended December 31, 2018.  Adjusted net income for the year excludes the same items listed above for the fourth quarter. 

Commenting on the Company's record results, Palmer Proctor, the Company's Chief Executive Officer, said, "We are proud of our bankers and the successes we had this year.  Not only did our Company go through the largest acquisition and system conversion in our history, but we also produced record earnings and record earnings per share this year.  To do both of those things simultaneously is quite an accomplishment.  Organic loan growth was over 9% for the year while our credit quality metrics continued to improve.  Our diverse lines of business continue to produce solid financial results and provide positive momentum for 2020."

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

Improvement in adjusted efficiency ratio to 55.61%, compared with 57.25% in the third quarter of 2019

Adjusted return on average assets of 1.47%, compared with 1.57% in the third quarter of 2019 and 1.61% in the fourth quarter of 2018

Growth in adjusted net income of $20.7 million, representing a 45% increase over the fourth quarter of 2018

Increase in net interest margin of 2 basis points, to 3.86% in the fourth quarter, from 3.84% in the third quarter of 2019

Improvement in deposit mix such that noninterest bearing deposits represent 29.94% of total deposits, up from 26.12% a year ago

Annualized net charge-offs of 0.09% of average total loans and 0.17% of average non-purchased loans

Improvement in non-performing assets, decreasing to 0.56% of total assets, compared with 0.73% at the end of the third quarter of 2019

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

Successfully completed the acquisition and integration of Fidelity Southern Corporation, the holding company for Fidelity Bank ("Fidelity")

Growth in adjusted net earnings of 52.5%, from $146.2 million in 2018 to $222.9 million in 2019

Improvement in adjusted efficiency ratio to 55.67% in 2019, compared with 56.19% in 2018

Organic growth in loans of $751.8 million, or 9.2%

Adjusted return on average assets of 1.52%, compared with 1.50% in 2018

Growth in tangible book value of 10.5%, from $18.83 at the end of 2018 to $20.81 at the end of 2019

Enhanced shareholder value through an increase in our annual dividend rate to $0.60 per common share and disciplined repurchases under our common stock repurchase plan

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

Net Interest Income and Net Interest Margin
Net interest income on a tax-equivalent basis for 2019 totaled $509.5 million, compared with $347.5 million for 2018.  The Company's net interest margin was 3.88% for 2019, down from 3.92% reported for 2018.  Accretion income for 2019 increased to $19.9 million, compared with $11.8 million for 2018.  The decrease in net interest margin is primarily attributable to an increase in funding costs, partially offset by an increase in the yield on earning assets. 

Net interest income on a tax-equivalent basis for the fourth quarter of 2019 totaled $156.5 million, compared with $149.9 million for the third quarter of 2019 and $100.6 million for the fourth quarter of 2018.  The Company's net interest margin was 3.86% for the fourth quarter of 2019, up from 3.84% reported for the third quarter of 2019 and down from 3.91% reported for the fourth quarter of 2018.  The increase in net interest margin in the current quarter is primarily attributable to an increase in accretion income and a decrease in cost of interest-bearing liabilities.  Accretion income for the fourth quarter of 2019 increased to $9.7 million, compared with $4.2 million for the third quarter of 2019 and $4.1 million for the fourth quarter of 2018.  The increase in accretion income in the fourth quarter is primarily attributable to the successful resolution of an acquired non-performing loan that had a substantial discount, as well as an overall increase in the level of payoffs of acquired loans. 

Yields on all loans decreased to 5.11% during the fourth quarter of 2019, compared with 5.16% for the third quarter of 2019 and 5.19% reported for the fourth quarter of 2018.  Loan production in the banking division during the fourth quarter of 2019 totaled $1.1 billion, with weighted average yields of 4.70%, compared with $1.2 billion and 5.08%, respectively, in the third quarter of 2019 and $604.9 million and 5.74%, respectively, in the fourth quarter of 2018.  Loan production in the lines of business (including retail mortgage, warehouse lending, SBA and premium finance) amounted to an additional $4.1 billion during the fourth quarter of 2019, with weighted average yields of 4.29%, compared with $4.2 billion and 4.51%, respectively, during the third quarter of 2019 and $1.8 billion and 5.56%, respectively, during the fourth quarter of 2018.

Interest expense for 2019 increased to $131.2 million, compared with $69.9 million in 2018.  The Company's total cost of funds moved 23 basis points higher to 1.05% in 2019 as compared with 2018.  Costs of interest-bearing deposits increased 37 basis points in 2019 to 1.23%, compared with 0.86% in 2018. 

Interest expense during the fourth quarter of 2019 decreased to $38.7 million, compared with $39.6 million in the third quarter of 2019, and increased from $23.2 million in the fourth quarter of 2018.  The Company's total cost of funds moved seven basis points lower to 1.00% in the fourth quarter of 2019 as compared with the third quarter of 2019.  Deposit costs also decreased six basis points during the fourth quarter of 2019 to 0.80%, compared with 0.86% in the third quarter of 2019.  Costs of interest-bearing deposits decreased during the quarter from 1.23% in the third quarter of 2019 to 1.13% in the fourth quarter of 2019.

Noninterest Income
Noninterest income increased 67.3% in 2019 to $198.1 million, compared with $118.4 million for 2018, as a result of increased service charges and mortgage banking activity.  Service charge revenue increased to $50.8 million in 2019, compared with $46.1 million in 2018 due to the Company's increased number of deposit accounts from organic growth and completion of the Fidelity acquisition. In addition, other noninterest income increased during the year because the Company recorded a $3.6 million gain on BOLI proceeds during the year, due to the unfortunate death of a former officer of Fidelity, and increases of $2.5 million in loan servicing income and $3.3 million in gain on sale of SBA loans.

Mortgage banking activity increased 122.6% to $119.4 million in 2019, compared with $53.7 million for 2018.  This increase was a result of both the Fidelity acquisition and additional growth from the low interest rate environment during the second half of 2019. Total production in the retail mortgage division increased to $4.3 billion for 2019, compared with $1.8 billion for 2018.  Gain on sale spreads decreased in 2019 to 2.75% from 2.92% for 2018. The gain on sale spread during the quarter continued to be impacted by a shift in product mix and the transition of the pricing models through conversion.   

Noninterest income from the SBA division increased to $8.9 million in 2019, compared with $4.9 million for 2018.  Net income for the division increased over 91% from 2018 to $6.8 million in 2019.

Noninterest Expense
Noninterest expense increased $178.3 million, or 60.7%, to $471.9 million in 2019, compared with $293.6 million for 2018.  During 2019, the Company recorded $79.8 million of charges to earnings, the majority of which was related to merger and conversion charges and loss on sale of premises, compared with $31.8 million in charges in 2018 that were related principally to merger and conversion charges and executive retirement benefits.  Excluding these charges, adjusted expenses increased approximately $130.3 million, or 49.8%, to $392.1 million in 2019, from $261.8 million in 2018.  The majority of this increase is attributable to the acquisitions of Atlantic Coast Bank, Hamilton State Bank and Fidelity, as well as variable expenses related to increased mortgage production. The Company continues to focus on its operating efficiency ratio. The Company's adjusted efficiency ratio improved from 56.19% in 2018 to 55.67% in 2019.

Income Tax Expense
The Company's effective tax rate for the fourth quarter of 2019 was 25.5%, compared with 21.0% in the third quarter of 2019 and 13.9% for the fourth quarter of 2018. The increased rate for the fourth quarter of 2019 was a result of return to provision adjustments when the Company filed its 2018 income tax returns during the fourth quarter of 2019 and additional tax expense related to merger-related compensation and acquired BOLI.  The reduced rate in the fourth quarter of 2018 was a result of a large return to provision adjustment when the Company filed its 2017 income tax returns in the fourth quarter of 2018.

Balance Sheet Trends
Total assets at December 31, 2019 were $18.2 billion, compared with $11.4 billion at December 31, 2018.  Total loans, including loans held for sale, purchased loans and purchased loan pools, were $14.48 billion at December 31, 2019, compared with $8.62 billion at December 31, 2018.  Total loans held for investment were $12.82 billion at December 31, 2019, compared with $8.51 billion at December 31, 2018.  Loans held for investment, exclusive of loans acquired from Fidelity, increased $794.9 million, or 9.3%, compared with December 31, 2018.  Loan production remained strong in the fourth quarter, which helped offset the impact of the strategic runoff of certain acquired portfolios as we continue to reposition the balance sheet from the recent acquisitions.  Loan production in the banking division during the fourth quarter of 2019 was 81% higher than the fourth quarter of 2018, but was 7% lower than the third quarter of 2019 due to usual seasonal trends. 

At December 31, 2019, total deposits amounted to $14.03 billion, or 90.1% of total funding, compared with $9.65 billion and 97.4%, respectively, at December 31, 2018.  The increase in total deposits during 2019 was materially impacted by the Company's acquisition of Fidelity.  Excluding the acquisition, deposits increased $334.4 million, or 3.5%, in 2019.  At December 31, 2019, noninterest-bearing deposit accounts were $4.20 billion, or 29.9% 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 $7.21 billion at December 31, 2019, compared with $4.60 billion at December 31, 2018.  These funds represented 51.4% of the Company's total deposits at December 31, 2019, compared with 47.6% at the end of 2018.

Shareholders' equity at December 31, 2019 totaled $2.47 billion, an increase of $1.01 billion, or 69.5%, from December 31, 2018.  The increase in shareholders' equity was primarily the result of the issuance of shares of common stock in the Company's acquisition of Fidelity plus earnings of $161.4 million during 2019, offset by dividends declared of $30.3 million and treasury stock purchases of $18.4 million.  Tangible book value per share was $20.81 at December 31, 2019, up from $18.83 at December 31, 2018.  Tangible common equity as a percentage of tangible assets was 8.40% at December 31, 2019, compared with 8.22% at the end of the 2018.

Credit Quality
Credit quality remains strong in the Company.  During the fourth quarter of 2019, the Company recorded provision for loan loss expense of $5.7 million, compared with $6.0 million in the third quarter of 2019.  Nonperforming assets as a percentage of total assets decreased by 17 basis points to 0.56% during the quarter.  The decrease in nonperforming assets is primarily a result of the sale of certain nonperforming assets acquired from Fidelity.  The net charge-off ratio for non-purchased loans was 17 basis points for the fourth quarter of 2019, compared with nine basis points in the third quarter of 2019 and 21 basis points in the fourth quarter of 2018.