Ameris Bancorp Announces $6.7 Million Of Net Income In The Third Quarter, 2013

The following excerpt is from the company's SEC filing.

AMERIS BANCORP (NASDAQ-GS: ABCB), Moultrie, Georgia, today reported net income available to common shareholders of $6.2 million, or $0.26 per diluted share, for the quarter ended September 30, 2013, compared to $1.1 million, or $0.04 per diluted share, for the quarter ended September 30, 2012. For the year to date period ending September 30, 2013, the Company reported net income available to common shareholders of $17.3 million, or $0.71 per diluted share, compared to $7.3 million, or $0.30 per diluted share, for the same period in 2012. Commenting on the Company’s quarterly results, Edwin W. Hortman, Jr., the Company’s President and Chief Executive Officer, said, “I’m pleased with another good quarter, highlighted by stable earnings, modest growth in our total revenues and strong non-covered loan growth. We anticipate closing the Prosperity transaction in the fourth quarter and believe we can complete our expense savings and balance sheet restructuring before the end of 2013.”

  •   Non-covered loans increased $33.4 million during the third quarter, representing an 8.62% annualized growth rate for the quarter and 12.82% for the year to date period.

  •   Total revenue increased to $44.0 million in the third quarter of 2013 compared to $41.5 million in the third quarter in 2012.

  •   The Company’s net interest margin was 4.80% in the third quarter of 2013, compared to 4.52% in the third quarter of 2012 and 4.96% in the second quarter of 2013.

  •   Annualized net charge-offs for the current quarter declined to 0.70% of total loans, compared to 2.76% for the year ended December 31, 2012.

  •   Noninterest income was $12.3 million for the third quarter of 2013, compared to $9.8 million in the third quarter of 2012.

Net income in the third quarter of 2013 totaled $6.7 million before preferred dividends, an increase of $4.8 million compared to the same quarter in 2012. For the year to date period, the Company’s earnings before preferred dividends were $18.6 million, compared to $9.8 million in the year to date period in 2012. Return on average assets and average common equity were 0.94% and 10.75%, respectively, in the third quarter of 2013 compared to 0.26% and 3.12%, respectively, in the same quarter of 2012. Slightly larger levels of total revenue coupled with lower levels of credit expense combined to improve the Company’s results.

Net interest income for the third quarter of 2013 totaled $29.3 million, an increase of $1.1 million, or 3.8%, compared to the $28.2 million reported for the third quarter of 2012. The Company’s net interest margin during the current quarter was 4.80%, compared to 4.52% during the third quarter of 2012.

Yields on earning assets in the third quarter of 2013 were 5.20%, compared to 5.06% in the third quarter of 2012. An improving mix of earning assets, more heavily concentrated in loans, helped offset declining yields on the Company’s loan portfolio. Earning assets totaled $2.46 billion at the end of the third quarter of 2013, compared to $2.44 billion at the end of the third quarter of 2012. Average loans comprised 84.1% of average earning assets in the third quarter of 2013, compared to 80.1% in the third quarter of 2012, while investment securities reduced from 14.9% of total earning assets at September 30, 2012 to 13.1% at September 30, 2013.

Yields on non-covered loans for the third quarter of 2013 were 5.36%, compared to 5.68% in the same quarter in 2012. Covered loan yields increased from 6.19% in the third quarter of 2012 to 7.65% in the third quarter of 2013. The covered loan yields continue to be positively impacted by fair value adjustments and the resolution of problem credits. Production yields in the most recent quarter were 4.86%, compared to 5.33% in the third quarter of 2012. While yields on production of new and renewed loans are below current portfolio yields, management anticipates the revenue impact to be muted as they expect continued growth in total loans and less interest rate pressure due to recent increases in interest rates.

The Company continued to experience savings on deposit costs as in recent quarters. Total costs of deposits fell to 0.33%, compared to 0.34% in the second quarter of 2013 and 0.46% in the third quarter of 2012. Savings on time deposits were most significant, with CD costs falling from 0.97% in the third quarter of 2012 to 0.69% in the third quarter of 2013. Additional savings have been achieved from improvement in the deposit mix, with time deposits representing only 26.8% of total deposits in the current quarter in 2013, compared to 32.0% in the third quarter of 2012.

Non-interest income in the third quarter of 2013 improved to $12.3 million, compared to $9.8 million in the same quarter of 2012. The Company’s mortgage operations continued to grow during the third quarter of 2013, as mortgage revenues increased to $5.2 million for the quarter, compared to $3.7 million for the same quarter of 2012. The Company continues to focus on recruiting and retaining higher volume producers with concentrations in purchase transactions but anticipates a slower pace of hiring in the coming quarters. Volumes in the third quarter of 2013 were 77% centered on purchase transactions compared to 62% in the same quarter in 2012.

Also, during the third quarter, the Company recorded pre-tax gains of approximately $695,000 on sales of SBA loans. There were no gains recorded in the same period of 2012 and total pre-tax gains recorded for the current year are $1.3 million. Up until the end of the third quarter of 2013, the Company had relied on the production through branch referrals and had not recruited development officers focused on SBA production. The Company anticipates hiring producers with the goal of building a material revenue source associated with SBA.

Total operating expenses for the third quarter of 2013 were $28.7 million, compared to $28.8 million for the third quarter of 2012. Salaries and benefits increased to $14.4 million in the current quarter of 2013, compared to $13.8 million in the same quarter in 2012, as commissions and support costs in the Company’s mortgage operations increased commensurate with the increase in revenues. Excluding compensation costs in the Company’s mortgage operations, salaries and benefits declined to $10.8 million in the third quarter of 2013, compared to $11.4 million in the third quarter of 2012. Included in operating expenses during the third quarter was approximately $413,000 of merger and conversion costs associated with the acquisition of the Prosperity Banking Company.

Increases in compensation costs were offset by declines in non-provision credit-related costs, which fell from $3.7 million in the third quarter of 2012 to $3.0 million in the third quarter of 2013. Occupancy and equipment costs, declined when compared to prior year levels, while data processing and telecommunications expense increased during the same time period. Other operating expenses for the current quarter of 2013 were $4.4 million, compared to $4.6 million in the third quarter of 2012.

Total assets at September 30, 2013 were $2.82 billion, a decrease of $200.6 million when compared to $3.02 billion reported at December 31, 2012. Declines in total asset levels were expected and are associated mostly with the Company’s restructuring efforts, which resulted in the closing of thirteen existing retail facilities since the third quarter of 2012. Similarly, earning assets declined as well, although the mix of earning assets has improved. Earning assets fell from $2.55 billion at December 31, 2012 to $2.46 billion at September 30, 2013. Total loans increased during that period from $2.01 billion at the end of 2012 to $2.08 billion at the end of the third quarter and now represent 84.3% of total earning assets, compared to 78.8% at the end of the year.

Total non-covered loans increased $138.6 million during the first nine months of 2013 to end at $1.59 billion at September 30, 2013, compared to $1.45 billion at December 31, 2012. Seasonal borrowings from agricultural customers as well as successful sales efforts contributed to the 12.8% annualized increase in loans. Additionally, covered loans fell by $25.9 million during the third quarter of 2013 to $417.6 million compared to balances reported at June 30, 2013. Management, noting that this is a much slower pace of quarterly run-off than has been experienced in several years, is optimistic that the trends in non-covered loan growth and covered loan run-off will continue.

Total deposits decreased $181.2 million to $2.44 billion during the first nine months of 2013, compared to $2.62 billion at December 31, 2012. Year-end deposit levels contain unusually high liquidity levels from local municipalities and agricultural customers, and decreases from this level are not indicative of current trends. Decreases in deposit accounts associated with the closed branches have been unexpectedly low, totaling only $44.3 million at September 30, 2013. Additional declines in future quarters may occur as there are $23.2 million of time deposits in the affected branches that have not yet matured. Management originally estimated a potential for a decline of 5% in the Company’s deposits associated with the consolidation effort, but management now believes the run-off will be much less.

At September 30, 2013, the Company’s FDIC loss-sharing receivable totaled $81.8 million, which is comprised of $55.4 million in indemnification asset (for reimbursements associated with anticipated losses in future quarters) and $26.4 million in current charge-offs and expenses already incurred but not yet submitted for reimbursement. This is a significant decrease from the $105.5 million FDIC loss-sharing receivable recorded at June 30, 2013, which was comprised of $75.7 million in indemnification asset and $29.8 million in current charge-offs and expenses.

Non-performing assets declined to $69.7 million, a decrease of $9.0 million, from $78.7 million reported at December 31, 2012. Nonaccrual loans declined $7.2 million to $31.7 million at September 30, 2013, compared to $38.9 million at December 31, 2012. The Company’s balances in non-covered OREO (other real estate owned) decreased $1.9 million to $38.0 million at September 30, 2013, compared to $39.9 million at December 31, 2012. Classified assets to total regulatory capital declined to 28.6% at the end of the third quarter of 2013, compared to 32.3% at the same time in 2012.

The Company’s quarterly provision for loan losses was $2.9 million in the third quarter of 2013, compared to $6.5 million in the same quarter in 2012. Net charge-offs on loans during the third quarter of 2013 were $2.8 million, compared to $2.9 million during the second quarter of 2013 and $6.0 million during the third quarter of 2012. As a percentage of loans, net charge-offs were 0.70% of average loans on an annualized basis for the third quarter of 2013, compared to 0.74% during the second quarter of 2013 and 1.65% during the third quarter of 2012.

As announced on May 2, 2013, the Company has a pending acquisition of the Prosperity Banking Company, a bank holding company headquartered in Saint Augustine, Florida. The acquisition is subject to customary conditions, to include regulatory approval and approval by Prosperity’s shareholders at their scheduled meeting on November 20, 2013. Management expects to close the transaction during the fourth quarter of 2013. The acquisition will add 12 banking locations to the Ameris footprint in northeast Florida and will expand the Company’s presences in the Florida panhandle. The acquisition will add approximately $740.8 million in total assets and $492.7 million in deposits to the current Ameris franchise.

Ameris Bancorp is headquartered in Moultrie, Georgia, and at the end of the most recent quarter had 57 locations in Georgia, Alabama, northern Florida and South Carolina.

This news release contains certain performance measures determined by methods other than in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Management of Ameris Bancorp (the “Company”) uses these non-GAAP measures in its analysis of the Company’s performance. These measures are useful when evaluating the underlying performance and efficiency of the Company’s operations and balance sheet. The Company’s management believes that these non-GAAP measures provide a greater understanding of ongoing operations, enhance comparability of results with prior periods and demonstrate the effects of significant gains and charges in the current period. The Company’s management believes that investors may use these non-GAAP financial measures to evaluate the Company’s financial performance without the impact of unusual items that may obscure trends in the Company’s underlying performance. These disclosures should not be viewed as a substitute for financial measures determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.

This news release contains statements that constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The words “believe”, “estimate”, “expect”, “intend”, “anticipate” and similar expressions and variations thereof identify certain of such forward-looking statements, which speak only as of the dates which they were made. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties and that actual results may differ materially from those indicated in the forward-looking statements as a result of various factors. Readers are cautioned not to place undue reliance on these forward-looking statements and are referred to the Company’s periodic filings with the Securities and Exchange Commission for a summary of certain factors that may impact the Company’s results of operations and financial condition.

(1) Asset quality information is presented net of covered assets where the Company’s risk exposure is limited substantially by loss sharing agreements with the FDIC.

(2) During 2011 and 2012, the Company recorded provision for loan loss expense to account for losses where the initial estimate of cash flows was found to be excessive on loans acquired in FDIC assisted acquisitions. These amounts are excluded from the calculation above but reflected in the Company’s Consolidated Statement of Operations.

The above information was disclosed in a filing to the SEC. To see this filing in its entirety, click here. Ameris Bancorp next reports earnings on October 25, 2013.

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Other recent filings from the company include the following:

Other definitive proxy statements - April 17, 2014
Additional definitive proxy soliciting materials and Rule 14(a)(12) material - April 17, 2014

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