Ameris Bancorp Announces Highly Accretive Joint Venture With USPF and an Agreement With Regulators Concerning BSA

Staff Report From Georgia CEO

Tuesday, December 20th, 2016

Ameris Bancorp announced that its wholly owned banking subsidiary, Ameris Bank, has entered into a joint venture with US Premium Finance under which Ameris Bank will be the exclusive provider of credit on USPF's nationwide platform. USPF, the nation's sixth largest provider of credit on property and casualty premiums, currently has approximately 1,000 insurance agency customers in 50 states and approximately $400 million in outstanding loans originated and serviced, of which approximately 92% are fully cash-secured with average durations of ten months. The parties intend to close the joint venture transaction on January 3, 2017.

Commenting on the opportunity with USPF, Edwin W. Hortman, Jr., the Company's President and Chief Executive Officer, said, "We are delighted to have the opportunity to join with USPF and its principal, Bill Villari. Our joint venture with USPF will be accretive to our return on assets, return on tangible capital, credit quality, net interest margin and, most importantly, long-term growth rate in earnings per share. Equally as exciting as what this relationship will do for our operating ratios and 2017 earnings per share is the team that we are bringing on board. Mr. Villari is as entrepreneurial as our other successful managers, and his team's energy and passion for premium finance and profitability will fit in perfectly with our Company's culture."

The Company anticipates an after-tax return under the USPF joint venture agreements of approximately 1.40%-1.45% on the average outstanding loans, which Ameris Bank acquired at par from USPF's former funding source. Upon closing of the transactions, Ameris Bank's loans and average assets are expected to increase by approximately $400 million. The Company expects earnings accretion in the first year of approximately 7%-8%.

The Company also announced that, on December 16, 2016, Ameris Bank entered into a Stipulation to the Issuance of a Consent Order with its bank regulatory agencies, the Federal Deposit Insurance Corporation and the Georgia Department of Banking and Finance, in which Ameris Bank has consented to the issuance of a consent order relating to weaknesses in its Bank Secrecy Act compliance program. In consenting to the issuance of the consent order, Ameris Bank did not admit or deny any charges of unsafe or unsound banking practices related to its BSA compliance program.

Commenting on the consent order, Mr. Hortman said, "I am determined to remedy the matters that the FDIC has taken issue with concerning our BSA compliance program, and to do so quickly. Fortunately, we have organic and non-acquisition strategies that will still deliver top quartile growth in earnings per share and operating returns while we direct our energies toward resolving this issue, which is the principal hurdle that prevents us from implementing an acquisition strategy that would see the Company reach $10 billion in assets. The pause in our M&A activity in 2016 has been good for our Company in that we have built stronger support systems and better production capabilities, while at the same time moving our operating results to reliably strong levels. We will meet all of the FDIC's timelines and will quickly succeed on this initiative." 

The consent order, which remains in effect and is enforceable until it is modified or terminated by the bank regulatory agencies, will require Ameris Bank to take certain affirmative actions to comply with its BSA obligations, including, among other things, strengthening oversight of BSA activities by Ameris Bank's board of directors, enhancing and adopting a revised BSA compliance program, completing a BSA risk assessment, implementing effective BSA training and testing programs and appointing a qualified BSA officer. Ameris Bank began taking corrective actions in August 2016 after communicating with its regulators and expects that it will be able to undertake and implement all required actions within the time periods specified in the consent order. Ameris Bank will incur additional non-interest expenses associated with the implementation of corrective actions; however, these expenses are not expected to have a material impact on the results of operations or financial position of Ameris Bank or the Company. The Company expects to incur a charge for a one-time expense of approximately $0.10 per share in the fourth quarter of 2016, and minimal impact to operating results is expected for 2017.