AMERIS BANCORP today reported operating net income of $9.8 million, or $0.32 per diluted share, for the quarter ended March 31, 2015, compared to $8.1 million, or $0.32 per diluted share, for the quarter ended March 31, 2014. Commenting on the Company's quarterly results, Edwin W. Hortman, Jr., the Company's President and Chief Executive Officer, said, "In the first quarter of 2015, we announced two highly accretive acquisitions and a supporting capital raise. We had our strongest quarter in new loan originations with better than expected yields. Our mortgage group had its strongest quarter of profitability and finished the quarter with very robust pipelines. As we move into the second quarter and the last half of 2015, our challenge is to continue developing the pipelines and investment opportunities for the liquidity in our two pending acquisitions while limiting the impact on operating expenses."
Highlights of the Company's performance and results for the first quarter of 2015 include the following:
Net income available to common shareholders increased 21.1% compared to the first quarter of 2014
The Company completed a private placement of 5,320,000 shares of common stock during the quarter
The Company announced agreements to acquire Merchants & Southern Banks of Florida, Inc. and 18 additional branches located in North Florida and South Georgia
Loans, excluding purchased non-covered and covered loans, increased by $109.5 million during the quarter, reflecting an annualized growth rate of 23.5%
Return on assets and return on average tangible equity were 0.97% and 8.76%, respectively
Total revenue increased to $59.9 million in the first quarter of 2015, compared to $50.6 million in the first quarter of 2014
The Company's net interest margin remained strong at 4.39%
Noninterest income increased 37.8% in the first quarter of 2015 to $17.6 million, compared to $12.8 million in the first quarter of 2014
Tangible common equity to tangible assets increased to 10.26%, a 38.3% increase compared to December 31, 2014
Tangible book value per share increased to $13.01, compared to $10.99 at December 31, 2014
Pending Acquisitions
During the first quarter of 2015, the Company announced its intent to acquire Merchants & Southern Banks of Florida, Inc., the largest non-regional bank operating in Gainesville, Florida. The Company has received regulatory approval and anticipates an estimated closing date of May 22, 2015.
Additionally, the Company announced its intention to acquire 18 branches in its existing footprint from Bank of America. The branches, located in South Georgia and North Florida, include approximately $864 million of total deposits and a small amount of performing loans. The Company anticipates that the closing of this acquisition will occur during the second quarter of 2015.
The acquisitions, combined with the supporting capital raise, are expected to be over 15% accretive to 2016 earnings per share and 4.50% accretive to tangible book value reported at December 31, 2014.
Operating Results
Net income available to common shareholders in the first quarter of 2015 totaled $9.8 million, an increase of 21.1% compared to the same quarter in 2014. Revenue during the first quarter totaled $59.9 million, an increase of 18.4% compared to the first quarter of 2014. Increases in revenue resulted from the addition of The Coastal Bank, as well as strong organic growth in loans, excluding purchased non-covered and covered loans. Returns on average assets and average tangible common equity were 0.97% and 8.76%, respectively, in the first quarter of 2015 compared to 0.96% and 11.66%, respectively, in the same quarter of 2014. The capital raise was completed in the first quarter of 2015, but the Company does not expect to have the capital fully deployed until the second half of 2015, at which time management believes return on average tangible common equity will approach historical levels.
Net Interest Income and Net Interest Margin
Net interest income for the first quarter of 2015 totaled $38.8 million, an increase of $4.3 million, or 12.6%, compared to the $34.5 million reported for the first quarter of 2014. The Company's net interest margin decreased during the quarter to 4.39%, compared to 4.57% during the first quarter of 2014. Excluding accretion on purchased assets, the Company's net interest margin was 4.05% in the first quarter of 2015, compared to 4.17%% in the fourth quarter of 2014 and 4.21% in the first quarter of 2014. The Company's net interest margin was negatively impacted by 10bps due to the higher level of short-term assets as a percentage of earning assets. The Company intends to be fully invested in either investment securities or loans by the end of the year and to maintain minimal levels of short-term assets as it has in the past.
Yields on earning assets in the first quarter of 2015 were 4.79%, compared to 5.01% in the first quarter of 2014. Yields on total loans outstanding, excluding accretion, in the first quarter were 5.01%, compared to 5.05% in the fourth quarter of 2014. New loan production in the first quarter totaled $254.0 million, with weighted average yields of 4.55%, compared to $228.6 million and 4.65% in the fourth quarter of 2014.
Total interest expense for the first quarter of 2015 was $3.5 million, compared to $3.4 million in the same quarter of 2014. Increases in total interest expense were driven primarily by increases in total deposits and other borrowings resulting from both acquisition activity and organic growth. Deposit costs were lower during the first quarter of 2015 at 0.27%, compared to 0.30% during the first quarter of 2014. Yields on each deposit class were essentially unchanged from the prior year. Management does not expect deposit costs or overall funding costs to decrease materially in the coming quarters given tightening liquidity and increasingly stronger forecasts for asset growth.
Non-interest Income
Non-interest income in the first quarter of 2015 was $17.6 million, an increase of $4.8 million, or 37.8%, compared to the same quarter in 2014. The Company's mortgage operations continued to make improvements in revenues and net income, reporting its best quarter ever for the Company. Total revenue in the mortgage group grew to $10.3 million, an improvement of 64% compared to the same quarter in 2014. Net income improved at a faster pace to $2.5 million, compared to $947,000 in the first quarter of 2014. Total production in the first quarter of 2015 amounted to $188.3 million (83% retail and 17% wholesale), compared to $130.8 million in the same quarter of 2014 (80% retail and 20% wholesale). Relationships with larger builders and real estate firms continue to drive the Company's production from this division. Open pipelines finished the first quarter of 2015 at $110.9 million, compared to $57.0 million at the beginning of the first quarter of 2015 and $75.2 million at the end of the first quarter of 2014.
Service charges in the first quarter of 2015 were $6.4 million, an increase of $843,000, or 15.1%, compared to the same quarter in 2014. Stronger growth in commercial and treasury management accounts contributed to the growth in income, as did strong growth in balances that resulted from the Company's acquisition of The Coastal Bank in June 2014.
During the quarter, the Company recorded approximately $1.5 million of revenue from its SBA division, compared to $685,000 in the same quarter in 2014. Expenses related to SBA lending also increased, from $400,000 in the first quarter of 2014 to $705,000 in the first quarter of 2015. The pipeline of opportunities and closed loans going into the second quarter indicate a much stronger second quarter in revenue than what the Company experienced in the first quarter.
Non-interest Expense
During the first quarter of 2015, operating expenses decreased approximately $906,000 to $40.8 million from $41.7 million in the fourth quarter of 2014. Excluding merger and credit related costs, the Company's total operating expenses increased approximately $0.7 million during the current quarter of 2015 as compared to the fourth quarter of 2014. These increases related to the Company's aggressive investment in the scale of its operations, particularly in information technology and customer care centers. Additional costs are anticipated in the coming quarters as the Company approaches the closing of the acquisitions announced early in the first quarter of 2015.
Salaries and benefits increased to $20.6 million in the current quarter of 2015, compared to $17.4 million in the same quarter in 2014. Increases in compensation costs relate to staffing additions from the acquisition of The Coastal Bank in June 2014, as well as increases associated with higher mortgage revenue and originations in the current quarter compared to the same quarter in 2014.
Non-provision credit resolution-related costs increased from $2.2 million in the first quarter of 2014 to $3.2 million in the first quarter of 2015. During the quarter, the Company brought several larger non-performing assets closer to resolution and incurred higher than normal expenses associated with these efforts. Legal fees associated with OREO and non-accrual loans totaled $754,000 in the first quarter of 2015 compared to $403,000 in the first quarter of 2014.
Occupancy and equipment costs increased from $4.1 million in the first quarter of 2014 to $4.6 million in the first quarter of 2015, due to the increased number of branches operated by the Company since its acquisition of The Coastal Bank. Data processing and telecommunications expenses increased from $3.5 million in the first quarter of 2014 to $4.3 million in the first quarter of 2015. During the quarter, the Company renegotiated a series of contracts with its core service provider that should provide some savings in the coming quarters on a relative basis with the anticipated acquisitions.
Balance Sheet Trends
Total assets at March 31, 2015 were $4.15 billion, compared to $4.04 billion at December 31, 2014. Loans, including loans held for sale, totaled $2.96 billion at March 31, 2015, compared to $2.93 billion at December 31, 2014. During the first quarter, growth in legacy loans (loans excluding purchased non-covered and covered loans) amounted to $109.5 million, or 23.5% on an annualized basis. Growth during the first quarter of 2015 was spread evenly across most loan types, including agriculture, municipal, commercial real estate and mortgage.
Funding sources continued to improve over year end levels. At March 31, 2015, total deposits amounted to $3.48 billion, or 95.5% of total funding, compared to $3.43 billion and 94.0%, respectively, at December 31, 2014. Non-interest bearing deposits reflected the largest growth, ending the current quarter at $967.0 million, or 27.8% of total deposits, compared to $839.4 million, or 24.5%, at December 31, 2014. Aggressive sales efforts on both commercial and consumer balances, as well as the Coastal Bank acquisition, were the reason for the 38.4% growth in noninterest bearing deposits from March 31, 2014 to March 31, 2015.
Stockholders' equity at March 31, 2015 totaled $489.8 million, compared to $366.0 million reported at December 31, 2014. The increase in stockholders' equity was the result of the issuance of $114.9 million of common shares in the first quarter of 2015, together with earnings of $9.8 million during the quarter.
Tangible common equity as a percentage of tangible assets increased to 10.26% at the end of the first quarter of 2015, compared to 7.42% at the end of 2014. The additional common equity associated with the private placement completed during the quarter, together with net income for the quarter, account for the majority of the increase in the Company's capital ratios. Tangible book value increased to $13.01 per share at March 31, 2015, compared to $10.99 per share at December 31, 2014. On a pro forma basis, assuming the impacts of the pending mergers, the Company's tangible common equity to tangible assets ratio would be 7.04% and tangible book value would be $11.74 per share.
AMERIS BANCORP
FINANCIAL HIGHLIGHTS
(unaudited)
(dollars in thousands except per share data and FTE headcount)
Three Months Ended
Mar.
Dec.
Sept.
Jun.
Mar.
2015
2014
2014
2014
2014
EARNINGS
Net Income Available to Common Shareholders
$ 9,764
$ 10,580
$ 11,663
$ 8,130
$ 8,064
PER COMMON SHARE DATA
Earnings per share available to common shareholders:
Basic
$ 0.32
$ 0.40
$ 0.44
$ 0.32
$ 0.32
Diluted
$ 0.32
$ 0.39
$ 0.43
$ 0.32
$ 0.32
Cash Dividends per share
$ 0.05
$ 0.05
$ 0.05
$ 0.05
$ -
Book value per share (period end)
$ 15.22
$ 13.67
$ 13.22
$ 12.83
$ 11.93
Tangible book value per share (period end)
$ 13.01
$ 10.99
$ 10.68
$ 10.26
$ 10.31
Weighted average number of shares:
Basic
30,442,998
26,771,636
26,773,033
25,180,665
25,144,342
Diluted
30,796,148
27,090,293
27,160,886
25,633,130
25,573,320
Period-end number of shares
32,182,143
26,773,863
26,774,402
26,771,821
25,159,073
Market data:
High closing price
$ 26.55
$ 26.48
$ 24.04
$ 23.90
$ 24.00
Low closing price
$ 22.75
$ 21.95
$ 21.00
$ 19.73
$ 19.86
Period end closing price
$ 26.39
$ 25.64
$ 21.95
$ 21.56
$ 23.30
Average daily volume
105,152
111,473
79,377
79,038
103,279
PERFORMANCE RATIOS
Return on average assets
0.97%
1.05%
1.17%
0.93%
0.96%
Return on average common equity
8.76%
11.57%
13.19%
10.53%
11.66%
Earning asset yield (TE)
4.79%
5.08%
4.96%
5.08%
5.01%
Total cost of funds
0.40%
0.43%
0.45%
0.42%
0.43%
Net interest margin (TE)
4.39%
4.64%
4.50%
4.65%
4.57%
Non-interest income excluding securities transactions,
as a percent of total revenue (TE)
29.06%
26.50%
28.86%
28.87%
25.02%
Efficiency ratio
72.38%
72.75%
67.64%
73.05%
70.36%
CAPITAL ADEQUACY (period end)
Stockholders' equity to assets
11.79%
9.07%
8.85%
8.64%
8.60%
Tangible common equity to tangible assets
10.26%
7.42%
7.27%
7.04%
7.53%
EQUITY TO ASSETS RECONCILIATION
Tangible common equity to tangible assets
10.26%
7.42%
7.27%
7.04%
7.53%
Effect of goodwill and other intangibles
1.54%
1.65%
1.58%
1.61%
1.07%
Equity to assets (GAAP)
11.79%
9.07%
8.85%
8.64%
8.60%
OTHER PERIOD-END DATA
Banking Division FTE
852
853
867
888
785
Mortgage Division FTE
170
174
176
175
161
Total Ameris Bancorp FTE Headcount
1,022
1,027
1,043
1,063
946
Assets per Banking Division FTE
$ 4,874
$ 4,733
$ 4,613
$ 4,474
$ 4,443
Branch locations
73
73
74
74
68
Deposits per branch location
$ 47,674
$ 47,002
$ 45,583
$ 45,798
$ 44,274
AMERIS BANCORP
FINANCIAL HIGHLIGHTS
(unaudited)
(dollars in thousands except per share data and FTE headcount)
Three Months Ended
Mar.
Dec.
Sept.
Jun.
Mar.
2015
2014
2014
2014
2014
INCOME STATEMENT
Interest income
Interest and fees on loans
$ 38,618
$ 41,235
$ 39,610
$ 35,297
$ 34,469
Interest on taxable securities
3,153
3,114
3,034
2,953
2,985
Interest on nontaxable securities
469
483
496
312
335
Interest on deposits in other banks
124
66
46
45
79
Interest on federal funds sold
4
2
-
-
5
Total interest income
42,368
44,900
43,186
38,607
37,873
Interest expense
Interest on deposits
$ 2,280
$ 2,560
$ 2,540
$ 2,205
$ 2,183
Interest on other borrowings
1,256
1,334
1,514
1,138
1,206
Total interest expense
3,536
3,894
4,054
3,343
3,389
Net interest income
38,832
41,006
39,132
35,264
34,484
Provision for loan losses
1,069
888
1,669
1,365
1,726
Net interest income after provision for loan losses
$ 37,763
$ 40,118
$ 37,463
$ 33,899
$ 32,758
Noninterest income
Service charges on deposit accounts
$ 6,429
$ 6,522
$ 6,659
$ 5,847
$ 5,586
Mortgage banking activity
8,083
6,476
7,498
6,944
5,068
Other service charges, commissions and fees
668
643
690
662
652
Gain(loss) on sale of securities
12
-
132
-
6
Other non-interest income
2,383
2,721
2,922
2,366
1,442
Total noninterest income
17,575
16,362
17,901
15,819
12,754
Noninterest expense
Salaries and employee benefits
20,632
19,316
20,226
16,942
17,394
Occupancy and equipment expenses
4,554
4,717
4,669
4,071
4,064
Data processing and telecommunications expenses
4,260
4,229
3,928
3,940
3,454
Credit resolution related expenses (1)
3,161
5,290
3,186
2,840
2,190
Advertising and marketing expenses
641
847
594
718
710
Amortization of intangible assets
630
662
698
437
533
Merger and conversion charges
15
67
551
2,872
450
Other non-interest expenses
6,934
6,605
4,727
5,498
4,444
Total noninterest expense
40,827
41,733
38,579
37,318
33,239
Income before income taxes
$ 14,511
$ 14,747
$ 16,785
$ 12,400
$ 12,273
Income tax expense
4,747
4,167
5,122
4,270
3,923
Net income
$ 9,764
$ 10,580
$ 11,663
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