AMERIS BANCORP reported operating net income of $53.3 million, or $1.66 per share, for the year ended December 31, 2015, compared with $41.2 million, or $1.57 per share, for 2014.  Operating net income excludes $12.5 million and $2.8 million of after-tax acquisition-related costs and non-recurring credit charges in 2015 and 2014, respectively.  Commenting on the Company's earnings, Edwin W. Hortman, Jr., President and Chief Executive Officer of the Company, said, "I am pleased with our improvement in 2015 compared with our 2014 results.  We spent 2015 integrating the acquisitions completed in the second quarter of the year and preparing for consistent earnings in 2016.  Our achievements in 2015 include organic loan growth of 13.5%, organic growth in non-interest bearing deposits of 26.1% and a 15.1% improvement in tangible book value.  I am confident that the momentum we have in balance sheet growth and resulting revenue is what we need to meet our goals for this year."

Operating net income for the fourth quarter of 2015 was $15.3 million, or $0.47 per share, compared with $10.6 million, or $0.39 per share, for the same quarter of 2014.  Operating results for the fourth quarter exclude acquisition costs totaling $1.8 million and $255,000, before tax, in the fourth quarter of 2015 and 2014, respectively.  "Highlights for the fourth quarter include very strong loan production augmented by additional purchases of select mortgage pools and strong growth in non-interest bearing deposits.  Seasonality in our mortgage operations resulted in lower profitability for the fourth quarter of 2015 than for the third quarter, by approximately $0.04 per share.  Additionally, we had approximately $2.2 million of loss-share related expenses associated with three expiring agreements that we anticipate will decline to normal levels in the first quarter of 2016."

Including acquisition and conversion costs and non-recurring credit resolution expenses, the Company reported net income of $14.1 million, or $0.43 per share, for the fourth quarter of 2015, compared with $10.6 million, or $0.39 per share, for the same quarter of 2014.  For the year, the Company's earnings totaled $40.8 million, or $1.27 per share, compared with $38.4 million, or $1.46 per share, for 2014.

Highlights of the Company's results for 2015 include the following:

• operating return on average assets of 1.11% and operating return on average tangible equity of 13.66%

• growth in total assets to $5.59 billion, an increase of 38.4% over 2014

• organic growth in total assets of 10.1%, or $406.0 million

• organic growth in loans totaled $344.2 million, or 13.4%

• total growth in non-interest bearing demand deposits of $490.5 million, or 58.4%, to end the year at 27.3% of total deposits

• increase in total recurring revenue over 2014 of 22.8% to $261.0 million, with "recurring revenue" defined as net interest income plus non-interest income, but excluding gain on the sale of securities

• decline in annualized net charge-offs to 0.20% of total loans, compared with 0.31% for 2014

• increase in tangible book value per share of 15.1% to $12.65, compared with $10.99 per share at December 31, 2014

• increase in non-interest income of 35.8% to $85.2 million, compared with $62.7 million for 2014

• increase in profitability from mortgage, SBA and warehouse lines of business of 79.3% to $15.2 million, compared with $8.5 million for 2014

Pending Acquisition
During the third quarter of 2015, the Company announced the execution of an agreement to acquire Jacksonville Bancorp, Inc., the parent company of The Jacksonville Bank.  The Jacksonville Bank currently operates eight banking locations, all of which are located within the Jacksonville, Florida MSA.  The acquisition will further expand the Company's existing Southeastern footprint in the attractive Jacksonville market, where the Company will be the largest community bank by deposit market share after the acquisition.  Upon completion of the transaction, the combined company will have approximately $6.0 billion in assets, $4.2 billion in loans and $5.2 billion in deposits.  The transaction is expected to close in the first quarter of 2016 and is subject to customary closing conditions, including receipt of the approval of the shareholders of Jacksonville Bancorp, Inc.

Increase in Net Interest Income
Net interest income on a tax-equivalent basis increased 17.5% in 2015 to $178.1 million, up from $151.5 million for 2014.  Growth in earning assets from internal sources, as well as from acquisition activity, contributed to the increase.  Average earning assets increased 30.8% in 2015 to $4.32 billion, compared with $3.30 billion for 2014.   Although the Company's net interest income increased, its net interest margin was affected by historically low interest rates, as well as unusually high levels of lower yielding short-term assets acquired in the Company's recent bank and branch acquisitions, as well as the recent loan pool purchases.  For the year ended December 31, 2015, the Company's net interest margin, including accretion, fell to 4.12%, compared with 4.59% for 2014.  

The Company's net interest margin was 3.98% for the fourth quarter of 2015, compared with 4.07% for the third quarter of the year.  The Company's margin in the fourth quarter was affected by seasonal inflows of municipal deposits and short-term funds from commercial enterprises, which increased the percentage of short-term assets to earning assets to 6.02% for the quarter from 4.36% for the third quarter of 2015.  Management of the Company estimates the negative impact of these short-term inflows to its net interest margin to be approximately 0.07%.

Accretion income for the fourth quarter decreased slightly to $2.9 million, compared with $3.0 million for the third quarter of 2015, and was significantly less than the $4.3 millionreported for the fourth quarter of 2014.  Excluding the effect of accretion, the Company's margin for the fourth quarter of 2015 was 3.74%, compared with 3.81% for the third quarter of 2015 and 4.17% for the fourth quarter of 2014.   

Interest income on loans on a tax-equivalent basis increased substantially during 2015 to $170.0 million, compared with $149.1 million for 2014.  Much of the growth in loan revenues occurred late in the year, such that the increase should provide greater loan revenues for subsequent periods.  During the quarter ended December 31, 2015, interest income on loans increased to $46.9 million, compared with $45.4 million for the third quarter of 2015 and $40.6 million for the fourth quarter of 2014.  Loan yields (including loans held for sale but excluding accretion income) were 4.68% in the fourth quarter of 2015, compared with 4.73% in the third quarter of 2015 and 5.05% in the fourth quarter of 2014.  The majority of the decline in loan yields resulted from growth in the Company's investment in whole loan mortgage pools, which increased to 11.9% of total loans during the quarter, with yields slightly below 3.00%.

Yields on earning assets in 2015 were 4.47%, compared with 5.03% in 2014.  The decline in earning asset yields relates principally to the short-term investment strategy associated with the Company's recent acquisitions.  Yields on the invested funds in purchased mortgage pools were 3.21% during 2015.  Current yields on all other loans (including purchased non-covered and covered loans) were 5.31% during 2015, compared with 5.63% in 2014.  Higher yielding covered loans as a percentage of total loans has declined from 9.6% at the end of 2014 to only 3.5% at December 31, 2015.  Additionally, a portion of the growth in the Company's legacy portfolio has been in both municipal loans and adjustable-rate mortgages that have a significantly better risk profile but produce lower yields than consolidated levels typically earned by the Company in recent years.  Yields on loans, excluding accretion, declined during 2015 to 4.90%, compared with 5.11% for 2014.  For the fourth quarter, loan yields, excluding accretion, increased nine basis points to 4.92%, compared with 4.83% for the third quarter of 2015.  

Total interest expense for 2015 was $14.9 million, compared with $14.7 million for 2014.  Deposit costs were stable for most of 2015, ending the year at 0.23%, compared with 0.30% for 2014.  Deposit costs increased slightly in the fourth quarter of 2015 to 0.23% , compared with 0.22% for the third quarter of 2015.  Continued improvement in the Company's mix of deposits, primarily toward non-interest bearing deposits, has allowed for more aggressive retention efforts on MMDA and CDs without negatively impacting overall deposit costs.  Non-interest bearing deposits were 29.2% of the total average deposits for 2015, compared with 23.5% for 2014.  The Company does not expect deposit costs or overall funding costs to change materially in the coming quarters despite tightening liquidity and strengthening forecasts for asset growth.

Non-Interest Income
Excluding gains on investment securities, non-interest income increased 35.8% in 2015 to $85.2 million, compared with $62.7 million for 2014.  Growth rates were notably strong for each source of non-interest income.  Retail mortgage revenues increased 42.9% during 2015, from $30.3 million for 2014 to $43.3 million for 2015, as the Company's mortgage division reached a mature stage with highly seasoned and experienced mortgage bankers producing strong results from referral sources.  Net income for the Company's retail mortgage division grew 88.4% during 2015 to $9.3 million.  Revenues from the Company's warehouse lending division increased 106.0% during the year, from $2.7 million for 2014 to $5.5 million for 2015, and net income for the division increased 141.6%, from $1.3 million for 2014 to $3.1 million for 2015.  

Revenues and profitability slowed for both mortgage and warehouse lending in the fourth quarter, which is traditionally a slow time of the year.  Results were also negatively impacted by the implementation of new mortgage loan disclosure and delivery requirements, which became effective on October 3, 2015.  Management does not anticipate that the new requirements will adversely impact future quarters, and management further believes that revenues and profitability from mortgage operations will continue to grow steadily during 2016.

Revenues from the Company's SBA division continued to increase during 2015, rising from $7.0 million for 2014 to $8.3 million for 2015.  Net income for the division increased 24.7%, from $2.3 million for 2014 to $2.8 million for 2015.  

Service charges on deposit accounts increased by $9.9 million to $34.5 million during 2015, an increase of 40.0% compared with 2014.  Service charge increases associated with the Company's acquisitions during 2015 totaled $5.1 million, or approximately $9.2 million on an annualized basis.  

Non-Interest Expense
Total operating expenses, excluding credit charges and acquisition costs, increased $40.0 million during 2015 to $173.4 million.  The majority of the increase in operating expenses was associated with the operating expenses of the bank and branches acquired by the Company during 2015, which totaled $23.2 million, and an increase in operating expenses resulting from added lines of business, which totaled $7.2 million.  

Excluding acquisition costs, operating expenses increased $3.3 million in the fourth quarter of 2015 compared with the third quarter of 2015.  Compensation costs increased $1.0 million during the fourth quarter as a result of increased incentive accruals.  

Credit-related costs increased in the fourth quarter of 2015 to $2.2 million, compared with $1.1 million for the third quarter of 2015.  During the quarter, three of the Company's remaining commercial loss-share agreements with the FDIC expired, causing the Company to dispose of any related OREO that remained prior to expiration.  These costs accounted for approximately $800,000 of the additional credit costs incurred during the fourth quarter and are not considered recurring.

Other costs associated with expiring loss-share agreements relate primarily to the amortization of the indemnification asset.  Total costs incurred during the fourth quarter of 2015 and during the year-to-date period totaled $1.7 million and $4.8 million, respectively.  Scheduled amortization of the remaining indemnification asset is approximately $775,000 for the first quarter of 2016 and $1.6 million for all of 2016.

Balance Sheet Trends
Total assets increased $1.55 billion during 2015, ending the year at $5.59 billion, compared with $4.04 billion at December 31, 2014.  The growth in total assets was driven by the acquisitions of Merchants and Southern Bank and 18 additional retail branches during the second quarter of 2015.  

Total loans, excluding loans held for sale, purchased non-covered loan pools and covered loans, were $3.18 billion at the end of 2015, compared with $2.56 billion at the end of 2014.  Loans held for sale increased 17.3% to $111.2 million, the result of higher production levels in the Company's mortgage and SBA divisions.  Purchased non-covered loan pools were $593.0 million at December 31, 2015.  Covered loans declined $133.8 million, or 49.3%, during 2015 to end the year at $137.5 million.  At the end of 2015, covered loans represent only 3.5% of total loans, compared with 9.6% at the end of 2014.

Investment securities at the end of 2015 were $792.5 million, or 15.6% of earning assets, compared with $552.1 million, or 15.5% of earning assets, at December 31, 2014.  

Deposits increased $1.45 billion during 2015 to finish the year at $4.88 billion.  At December 31, 2015, non-interest bearing deposit accounts were $1.33 billion, or 27.3% of total deposits, compared with $839.4 million and 24.5%, respectively, at December 31, 2014.  Non-rate sensitive deposits (including NIB, NOW and savings) totaled $2.71 billion at December 31, 2015, compared with $1.82 billion at the end of 2014.  These funds represented 55.6% of the Company's total deposits at the end of 2015, compared with 53.2% at the end of 2014.

Stockholders' equity at December 31, 2015 totaled $514.8 million, an increase of $148.7 million, or 40.6%, from December 31, 2014.  The increase in stockholders' equity was the result of the Company's issuance of $114.9 million of common shares in the first quarter of 2015 and earnings of $40.8 million during 2015.  Tangible book value per share ended 2015 at $12.65 per share, up 15.1% from $10.99 per share at the end of 2014.