Ameris Bancorp reported net income of $73.5 million, or $1.98 per diluted share, for the year ended December 31, 2017, compared with $72.1 million, or $2.08 per diluted share, for 2016.  For the quarter ending December 31, 2017, reported results include net income of $9.2 million, or $0.24 per diluted share, compared with $18.2 million, or $0.52 per diluted share, for the same period in 2016.  The financial results include a charge of $13.4 million to income tax expense related to the valuation of the Company's deferred tax asset, due to the recent tax legislation that reduces the future corporate tax rate for the Company.

The Company reported adjusted operating net income of $92.3 million, or $2.48 per diluted share, for the year ended December 31, 2017, compared with $80.6 million, or $2.32 per diluted share, for 2016.  Adjusted operating net income for the fourth quarter of 2017 was $23.6 million, or $0.63 per diluted share, compared with $22.2 million, or $0.63 per diluted share, for the same quarter of 2016.

For the year ended December 31, 2017, the Company's adjusted operating return on average assets was 1.26%, compared with 1.31% for 2016.  For the fourth quarter of 2017, the Company's adjusted operating return on average assets was 1.20%, compared with 1.34% in the same quarter of 2016.  Commenting on the Company's earnings, Edwin W. Hortman, Jr., Executive Chairman, President and Chief Executive Officer of the Company, said, "Our successes in 2017 show the strength of our team and dedication our bankers have to growing our bank in the communities we serve.  During 2017, we grew loans 20% from organic growth within our existing markets and grew core deposits 16%, all while improving our margin by five basis points, exclusive of accretion from prior acquisitions, and improving asset quality."

Following is a summary of the adjustments between reported net income and adjusted operating net income:

Highlights of the Company's results for 2017 include the following:

• Growth in operating net earnings of 14.4%

• Organic growth in loans of $941.0 million, or 20.3%, compared to $660.4 million, or 20.8%, in 2016

• Adjusted operating return on average assets of 1.26%, compared with 1.31% in 2016, with the decline almost entirely related to lower contribution to earnings from retail mortgage

• Adjusted operating return on average tangible common equity of 14.66%, compared with 16.85% in 2016

• Improvement in adjusted operating efficiency ratio to 60.3%, compared with 61.6% for 2016

• Increase in tangible book value per share of 23.9% to $17.86 at December 31, 2017

• Excluding accretion, increases in net interest margin of 5 bps during 2017 compared to 2016

• Loan to deposit ratio at the end of 2017 of 91.3% compared to 94.4% at the end of 2016

• Increase in total revenue of 12.1% to $364.6 million

• Annualized net charge-offs of 0.12% of average total loans and 0.13% of average non-purchased loans

Increase in Net Interest Income
Net interest income on a tax-equivalent basis increased 19.4% in 2017 to $267.1 million, up from $223.6 million for 2016.  Growth in earning assets from internal sources contributed to the increase.  Average earning assets increased 20.7% in 2017 to $6.76 billion, compared with $5.60 billion for 2016.  Although the Company's net interest income increased, net interest margin for 2017, including accretion, declined to 3.95%, compared with 3.99% for 2016.  Yields on earning assets in 2017 were 4.46%, compared with 4.35% in 2016.

Accretion income for 2017 decreased to $10.6 million or 2.9% of total revenue, compared with $14.1 million or 4.3%, respectively, for 2016.  Excluding the effect of accretion, the Company's margin for 2017 was 3.79%, compared with 3.74% for 2016.  Yields on all loans, excluding the effect of accretion, increased to 4.63% in 2017, compared with 4.50% in 2016.

The Company's net interest margin was 3.94% for the fourth quarter of 2017, down slightly from 3.95% reported for both the third quarter of 2017 and for the fourth quarter of 2016.  Accretion income for the fourth quarter of 2017 decreased to $2.2 million, compared with $2.7 million for the third quarter of 2017, and from $3.4 million reported for the fourth quarter of 2016.  Excluding the effect of accretion, the Company's margin for the fourth quarter of 2017 was 3.82%, an improvement compared with 3.80% for the third quarter of 2017 and 3.73% for the fourth quarter of 2016.

Yields on all loans, excluding the effect of accretion, increased to 4.70% during the fourth quarter of 2017, compared with 4.65% in the third quarter of 2017.  Loan production in the banking division during the fourth quarter of 2017 totaled $419.8 million, with weighted average yields of 4.89%, compared with $409.2 million and 4.74%, respectively, in the third quarter of 2017 and $498.7 million and 4.37%, respectively, in the fourth quarter of 2016.  Loan production in the lines of business (to include retail mortgage, warehouse lending, SBA and premium finance) amounted to an additional $1.5 billion during the fourth quarter of 2017, compared to $1.3 billion during the fourth quarter of 2016.

Total interest expense for 2017 was $34.2 million, compared with $19.7 million for 2016.  Deposit costs increased during 2017 to 0.34%, compared with 0.24% for 2016.  Noninterest-bearing deposits represented 28.6% of the total average deposits for 2017, compared with 29.1% for 2016.  During the last quarter of the year, the Company regularly sees larger balances in the accounts of its larger commercial and municipal accounts, which accounted for approximately $335 million of the fourth quarter growth.  The Company's deposit costs have grown at such a pace to produce a flat margin but the Company has been successful in generating an aggressive amount of new account growth, which management believes was a successful strategy in 2017.  Anticipated rate increases are likely to move the Company's asset yields higher and allow the Company to continue being aggressive on deposit growth without negatively impacting the margin.

Noninterest Income
Noninterest income decreased 1.3% in 2017 to $104.5 million, compared with $105.8 million for 2016, the result of flat mortgage and service charges during 2017.  Noninterest retail mortgage revenues were essentially flat during the year at $48.5 million despite an increase in mortgage volume of approximately $93.7 million or 6.7%.  Gain on sale margins tightened during 2017, as they moved from 3.36% in the fourth quarter of 2016 to 3.17% in the fourth quarter of 2017 because of more industry focus on purchase business and higher rates to borrowers.  The Company increased volume sufficient to make up for the tighter gains on sale, but late season hiring of mortgage bankers impacted profitability which increased by only 10.8%.  Management expects faster growth in profitability in 2018 from higher volumes, steady levels of operating expense and full utilization of its government loan program endorsement.  During 2017, the Company originated approximately $547 million of government loans with only 11.9% being in the Company's own GNMA securities.

Service charges for the year were also flat, coming in at $42.1 million compared to $42.7 million for 2016.  Declining counts of consumer oriented accounts with the associated balances and revenues were offset by larger commercial accounts, generally with enough balances to offset the analysis charges.  Management believes the Company's service charge routines on consumer and commercial accounts is competitive but is focused more heavily on attracting the balances to fund anticipated loan growth in the coming quarters.

Revenues from the Company's warehouse lending division decreased slightly during the year, from $7.8 million for 2016 to $7.6 million for 2017, while net income for the division increased 4.8%, from $4.1 million for 2016 to $4.3 million for 2017.  Revenues and profitability slowed for the retail mortgage division in the fourth quarter, which is traditionally a slower time of the year.  Net income for the Company's retail mortgage division was $2.2 million for the fourth quarter of 2017, compared with $3.0 million in the third quarter of 2017 and $1.9 million for the fourth quarter of 2016.  Net income for the Company's warehouse lending division was $1.4 million for the fourth quarter of 2017, compared with $1.1 million for the third quarter of 2017 and $904,000 for the fourth quarter of 2016.

Revenues from the Company's SBA division continued to increase during 2017, rising from $8.9 million for 2016 to $10.0 million for 2017.  Net income for the division increased to $3.9 million for 2017, compared to $2.8 million for 2016.

Noninterest Expense
Noninterest expense increased $16.1 million, or 7.5%, to $231.9 million for the year ended December 31, 2017, compared with $215.8 million for the year 2016.  However, the Company incurred various expenses related to the new premium finance division that was added late in 2016, compliance-related charges due to exiting the Bank Secrecy Act ("BSA") consent order, losses on the sale of bank premises, merger-related charges and Hurricane Irma expenses.  Excluding these amounts, expenses in 2017 increased by only $7.5 million, or 3.7%, compared with 2016 levels.  Growth of noninterest expense in the retail mortgage, warehouse lending and SBA lines of business account for 41% of that increase, leaving core bank noninterest expense increasing only $4.4 million, or 2.8%. The following table shows the detail of these charges and analysis:

Salaries and benefits increased $13.2 million, or 12.3%, during 2017.  The majority of this increase is attributable to $4.5 million salary and benefit expense in the new premium finance division, $3.3 million salary and benefit expense related to the strengthening of the Company's BSA department, and $2.3 million additional salary and benefits in the retail mortgage division.  Exclusive of these three areas, salary and benefits increased $3.0 million, or 4.0%.

Occupancy costs decreased $328,000 during 2017, principally as a result of management's cost saving efforts during the year.  Data processing and IT-related costs increased $3.3 million, or 13.3%, in 2017 due to increased number of accounts and products, as well as customer's increased reliance on mobile and internet oriented products and services.

Credit resolution related expenses decreased $2.7 million, or 43.4%, year over year as credit quality continues to improve.  Other noninterest expenses increased $7.6 million, or 19.6% during 2017, mostly attributable to costs associated with the new premium finance division.  Excluding the other noninterest expense in that division and the BSA compliance resolution charges in both years, other noninterest expense decreased $168,000, or 0.5% to $32.7 million during 2017, when compared to $32.9 million in 2016.

Balance Sheet Trends
Total assets increased $964.2 million, or 14.0%, during 2017.  Total loans, including loans held for sale, purchased loans and purchased loan pools, were $6.24 billion at the end of 2017, compared with $5.37 billion at the end of 2016.  Organic growth in loans totaled $941.0 million, or 20.3%, during 2017, compared with $660.4 million, or 20.8%, in 2016.  As expected, loan growth rates in the fourth quarter of 2017 slowed to 10.1% on an annualized basis, compared with 12.1% on an annualized basis in the same quarter of 2016.

During the quarter, the Company sold or reclassified to loans held for sale approximately $119.5 million of mortgage loans from purchased loan pools, reducing the investment in purchased loan pools to $328.2 million, down 42% compared to the same period in the year ago period.  Management expects the reinvestment of these funds at current yields to boost the margin by approximately three basis points and the Company's return on assets by two basis points.

Loan production and growth associated with the new premium finance division continue to meet forecasted levels.  Loans outstanding for the division grew $112.0 million, or 30.2%, from $370.6 million at the end of 2016 to $482.5 million at the end of 2017.  Relationship development of larger agencies and mid-tier insurance companies began producing volumes at the end of the year that gives management confidence in the continued growth of this line of business.  Yields in the business were mostly steady during the year despite rising rates, the Company's aggressive growth posture and the increasing volume of larger loans with established agencies and commercial customers.

Deposits increased $1.05 billion during 2017 to end the year at $6.63 billion, from $5.58 billion at the end of 2016.  At December 31, 2017, noninterest-bearing deposit accounts were $1.78 billion, or 26.8% of total deposits, compared with $1.57 billion, or 28.2% of total deposits, at December 31, 2016.  Non-rate sensitive deposits grew $342.4 million or 10.8% to $3.52 billion at December 31, 2017, compared with $3.17 billion at the end of 2016.  These funds represented 53.1% of the Company's total deposits at the end of 2017, compared with 56.9% at the end of 2016.

Growth in deposits at the end of the year, along with the Company's sale of mortgage loans from purchased loan pools lowered the loan to deposit ratio from 101.0% at the end of the third quarter of 2017 to 91.3% at December 31, 2017.  Accelerating growth in deposits has continued for several quarters and management is increasingly confident that organic growth in existing markets, augmented by the anticipated growth achievable in the Atlanta MSA will provide adequate core funding to allow for continued growth without impacting our current operating ratios.

Stockholders' equity at December 31, 2017 totaled $804.5 million, an increase of $158.0 million, or 24.4%, from December 31, 2016.  The increase in stockholders' equity was the result of the issuance of shares of common stock in the Company's public offering in the first quarter of 2017, plus earnings of $73.5 million during 2017, offset by dividends paid to shareholders of $14.9 million.  Tangible book value per share was $17.86 at the end of 2017, up 23.9% from $14.42 at the end of 2016.  Tangible common equity as a percentage of tangible assets was 8.62% at the end of 2017, compared with 7.46% at the end of 2016.