AMERIS BANCORP, today reported unaudited operating net income of $23.6 million for the year ended December 31, 2013, compared to $14.4 million in 2012.  Operating net income excludes $3.6 million of after-tax merger charges from the Company's net income for 2013. On an operating basis, net income available to common shareholders increased 101% to $21.9 million and $0.90 per share in 2013, compared to $10.9 million and $0.46 per share in 2012.

Net income available to common shareholders, on an operating basis, was $4.3 million and $0.18 per share in the fourth quarter of 2013, compared to $3.6 million and $0.15 in the same quarter in 2012.   Results in the fourth quarter of 2013 were adversely impacted by higher than normal credit costs and lower profitability associated with mortgage operations.  Additionally, because the merger with The Prosperity Banking Company occurred on December 23, 2013, the acquisition's impacts to the Company's revenue and net income were minimal.

Highlights of the Company's results for 2013 include the following:

• Completed the acquisition of The Prosperity Banking Company, increasing total assets by $744.9 million.
• Total revenue (excluding gains on investments and FDIC-assisted transactions) increased by 7.2% to $162.6 million as compared to 2012.
• Internally driven growth in non-covered loans totaled $167.8 million, or 11.6%.
• Net interest margin increased slightly to 4.74% in 2013 from 4.60% in 2012.
• Return on average assets and return on average tangible equity (excluding merger-related charges) improved to 0.82% and 9.51%, respectively.
• Annualized net charge-offs for the year declined to 0.69% of total loans, compared to 2.76% for the year ended December 31, 2012.
• Credit costs (provision and problem loan and OREO expenses) declined to $27.0 million in 2013, compared to $53.5 million in 2012.
• Non-performing legacy assets declined 20.6% during 2013, ending the year at $62.6 million, compared to $78.7 million at the end of December 31, 2012.
• Noninterest income, excluding gains on FDIC-assisted transactions, increased $8.7 million, or 23.0%, from $37.8 million in 2012 to $46.5 million in 2013.

Acquisition of The Prosperity Banking Company 
The Company successfully completed the acquisition of The Prosperity Banking Company on December 23, 2013.  Highlights of the merger are as follows:

• Added $744.9 million in total assets and 12 retail offices in northern Florida.
• Added $449.7 million in loans and $473.7 million in total deposits.
• The Company recorded $34.1 million in additional goodwill and $4.4 million in core deposit intangibles associated with the merger.
• Non-accretable credit marks totaling $37.7 million were recorded on the loan portfolio.  An additional $1.3 million was recorded against OREO balances.
• A total of 1,168,918 shares were issued, with a closing price of $21.07 per share on the merger date,  in exchange for the outstanding stock of The Prosperity Banking Company.

Increase in Net Interest Income 
Net interest income increased in 2013 to $116.2 million, up from $114.4 million reported in 2012.  Lower levels of accretion on covered assets were more than offset by lower deposit costs, pushing the Company's net interest margin higher in 2013 to 4.74%, compared to 4.60% during 2012.  Yields on earning assets in 2013 declined only slightly to 5.15%, compared to 5.20% in 2012.  Better allocation of earning assets helped mitigate the impact to overall yields on earning assets from lower yields on loans and investments.  Average loans comprised 82.6% of total earning assets during 2013, compared to 79.0% during 2012.  Short-term assets fell to 4.0% of earning assets during 2013 compared to 6.2% during 2012.

Non-covered loan yields decreased during the year, averaging 5.41% in 2013, compared to 5.58% in 2012.  Yields on new loan production in the fourth quarter of 2013 were 4.87%, compared to 4.94% in the fourth 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 a recent increase in interest rates.  Covered loan yields increased from 7.33% in 2012 to 7.62% in 2013, as adjustments made to certain fair value determinations and resolutions of problem credit positively impacted the covered loan yield.  As expected cash flow on covered loans improves, a portion of the loan discount that was previously attributable to credit problems is reclassified into interest income.  This reclassification occurs over the estimated life of the loan. 

The Company has offset the declines in earning asset yields with corresponding declines in funding costs.  Deposit costs, the Company's largest funding expense, declined from 0.51% in 2012 to 0.34% in 2013.  That decline relates to continued shifts in deposit mix, favoring lower cost transaction accounts and non-interest bearing balances, and lower market rates in the Company's communities.  Savings on time deposits were most significant, with CD costs falling from 1.06% in 2012 to 0.73% in 2013.  Additional savings have been achieved from improvement in the deposit mix, with average time deposits representing only 27.0% of total deposits in 2013, compared to 32.0% in 2012.

Non-Interest Income 
Excluding gains on FDIC-assisted transactions, non-interest income increased by 23.0% in 2013 to $46.5 million, compared to $37.8 million in 2012.  The majority of the growth resulted from the Company's mortgage operations, although additional revenues were recorded on SBA activities and bank owned life insurance.

Mortgage revenue increased by 47.3% in 2013, to $19.1 million, compared to 2012.  However, on a quarterly basis, mortgage revenue declined 15.1% against the third quarter of 2013. The decline in mortgage revenue relates to a slower quarter in loan closings and a measurable drop in the Company's open pipeline.  Loan production declined in the fourth quarter by $2.7 million to $149.3 million and the open pipeline declined from $72.5 million at September 30, 2013 to $40.5 million at December 31, 2013.  Pipelines are refilling rapidly in the first quarter of 2014, despite the aggressive restructuring actions taken in the fourth quarter. 

During 2013, the Company recorded pre-tax gains of approximately $1.5 million on sales of SBA loans, compared to $264,000 during 2012.  During the fourth quarter of 2013, the Company began hiring dedicated development officers, and the Company expects to continue hiring for most of 2014.  Management believes that combined production from the dedicated SBA officers and the existing branch referrals pose a meaningful opportunity for revenue growth in 2014 and beyond.

Non-Interest Expense 
Total operating expenses increased 2.0% in 2013 to $121.9 million, compared to $119.5 million for 2012.  Excluding the effect of credit-related costs in both years and merger charges in 2013, operating expenses would have reflected an increase of 9.7% to $106.5 million in 2013, compared to $97.1 million in 2012.  This growth in operating expenses relates almost entirely to the increased costs associated with the Company's mortgage operations, which reflected 63.8% growth in total revenue.  Costs associated with this growth in revenues totaled $18.1 million in 2013, compared to $9.9 million in 2012.