Ameris Bancorp reported net income of $38.9 million, or $0.82 per diluted share, for the quarter ended June 30, 2019, compared with $9.4 million, or $0.24 per diluted share, for the quarter ended June 30, 2018.  The Company reported adjusted net income of $45.2 million, or $0.96 per diluted share, for the quarter ended June 30, 2019, compared with $29.2 million, or $0.74 per diluted share, for the same period in 2018.  Adjusted net income excludes after-tax merger and conversion charges, executive retirement benefits, mortgage servicing right ("MSR") valuation adjustments, restructuring charges related to previously announced branch consolidations, loss on sale of bank premises and expenses related to hurricanes.

For the year-to-date period ending June 30, 2019, the Company reported net income of $78.8 million, or $1.66 per diluted share, compared with $36.0 million, or $0.92 per diluted share, for the same period in 2018.  The Company reported adjusted net income of $87.8 million, or $1.85 per diluted share for the six months ended June 30, 2019, compared with $57.0 million, or $1.46 per diluted share, for the same period in 2018.  Adjusted net income for the year-to-date period excludes the same items listed above for the Company's quarter-to-date period.

Commenting on the Company's results, Palmer Proctor, the Company's Chief Executive Officer, said, "The positive financial results from the second quarter are reflective of the hard work and dedication of our bankers.  Strong momentum on integration, growing pipelines and unique market opportunities reinforce our commitment to an organic growth strategy."

Highlights of the Company's results for the second quarter of 2019 include the following:

• Increase of 5.5% in tangible book value per share to $20.81 at June 30, 2019, compared with $19.73 at March 31, 2019

• Improvement in adjusted efficiency ratio to 53.77%, compared with 55.12% in the first quarter of 2019 and 57.53% in the second quarter of 2018

• Adjusted return on average assets of 1.56%, compared with 1.51% in the first quarter of 2019 and 1.38% in the second quarter of 2018

• Adjusted return on average tangible common equity of 18.79%, compared with 18.82% in the first quarter of 2019 and 17.26% in the second quarter of 2018

• Growth in adjusted net income of $16.0 million, representing a 55% increase over second quarter of 2018

• Organic growth in loans of $581.4 million, or 28% annualized

• Annualized net charge-offs of 0.07% of average total loans and 0.11% of average non-purchased loans

• Improvement in nonperforming assets, decreasing to 0.51% of total assets

• Repurchase of 296,335 shares under the Company's previously announced common stock repurchase program

• Received required approvals to complete the acquisition of Fidelity Southern Corporation effective July 1, 2019

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

Acquisition of Fidelity
On July 1, 2019, the Company completed its acquisition of Fidelity Southern Corporation ("Fidelity"), the parent company of Fidelity Bank, Atlanta, Georgia.  Fidelity operated 62 full-service banking locations, 46 of which were located in Georgia and 16 of which were located in Florida.  The acquisition further expands the Company's existing Southeastern footprint in the attractive Atlanta market, where the Company is the largest community bank by deposit share after the acquisition.  At June 30, 2019, Fidelity had total loans of $3.9 billion, total assets of $4.8 billion and total deposits of $4.0 billion.  The conversion of Fidelity's systems to the Company's is scheduled to be completed during the fourth quarter of 2019, after which management expects to fully realize operating efficiencies from the acquisition.

Net Interest Income and Net Interest Margin
Net interest income on a tax-equivalent basis for the second quarter of 2019 totaled $102.7 million, compared with $100.5 million for the first quarter of 2019 and $76.9 million for second quarter of 2018.  The Company's net interest margin was 3.91% for the second quarter of 2019, down from 3.95% reported for the first quarter of 2019 and 3.95% reported for the second quarter of 2018.  Accretion income for the second quarter of 2019 increased to $3.1 million, compared with $2.9 million for the first quarter of 2019, and $2.7 million reported for the second quarter of 2018.  The Company's net interest margin, excluding the effects of accretion income, also decreased slightly during the quarter to 3.79%, compared with 3.83% in the first quarter of 2019 and 3.81% in the second quarter of 2018.  The linked quarter decrease was primarily attributable to an increase in deposit costs, as the total earning asset yield was stable at 4.95% for both the first and second quarters of 2019.

Yields on all loans, excluding the effect of accretion, decreased to 5.18% during the second quarter of 2019, compared with 5.22% for the first quarter of 2019 and increased from 4.81% during the second quarter of 2018.  Loan production in the banking division during the second quarter of 2019 totaled $854.7 million, with weighted average yields of 5.49%, compared with $613.5 million and 5.78%, respectively, in the first quarter of 2019 and $439.3 million and 5.46%, respectively, in the second quarter of 2018.  Loan production in the lines of business (including retail mortgage, warehouse lending, SBA and premium finance) amounted to an additional $2.6 billion during the second quarter of 2019, with weighted average yields of 5.20%, compared with $1.9 billion and 5.47%, respectively, during the first quarter of 2019 and $2.1 billion and 5.25%, respectively, during the second quarter of 2018.

Interest expense during the second quarter of 2019 increased to $27.4 million, compared with $25.5 million in the first quarter of 2019 and $13.9 million in the second quarter of 2018.  The Company's total cost of funds moved five basis points higher to 1.10% in the second quarter of 2019 as compared with the first quarter of 2019.  Deposit costs also increased five basis points during the second quarter of 2019 to 0.97%, compared with 0.92% in the first quarter of 2019.  Costs of interest-bearing deposits increased during the quarter from 1.25% in the first quarter of 2019 to 1.34% in the second quarter of 2019, with the material portion of the increase relating to MMDA and CD accounts.

Noninterest Income
Noninterest income in the second quarter of 2019 was $35.2 million, compared with $30.8 million in the first quarter of 2019 and $31.3 million in the second quarter of 2018.  The increase for both the linked quarter and year over year is a result of increased service charges and mortgage banking activity.  Service charge revenue increased to $12.2 million in the second quarter of 2019, compared with $11.6 million in the first quarter of 2019 and $10.6 million in the second quarter of 2018 due to the Company's increased number of deposit accounts from organic growth and the acquisitions completed in 2018.

Mortgage banking activity increased to $18.5 million in the second quarter of 2019, compared with $14.7 million for the first quarter of 2019 and $15.4 million for the second quarter of 2018.  Total production in the retail mortgage division increased to $585.1 million for the second quarter of 2019, compared with $356.0 million for the first quarter of 2019 and $522.1 million for the second quarter of 2018.  Gain on sale spreads decreased slightly in the second quarter of 2019, moving to 3.11% from 3.18% in the linked quarter, but increased from 2.94% for the second quarter of 2018. Mortgage banking activity for the second quarter of 2019 was impacted by an unfavorable MSR valuation adjustment of $1.5 million.

Noninterest income from our SBA division increased to $1.9 million in the second quarter of 2019, compared with $1.7 million in the first quarter of 2019 and $1.3 million in the second quarter of 2018.  Net income for the division increased over 22% from the first quarter of 2019 and over 52% from the second quarter of 2018 to $1.4 million in the second quarter of 2019.

Noninterest Expense
Noninterest expense increased $5.8 million, or 7.7%, to $81.3 million during the second quarter of 2019, compared with $75.4 million for the first quarter of 2019.  During the second quarter of 2019, the Company recorded $6.3 million of charges to earnings, the majority of which was related to merger and conversion activity and loss on sale of premises, compared with $3.1 million in the first quarter of 2019 that were related principally to merger and conversion activity and loss on sale of premises.  Excluding these charges, adjusted expenses increased approximately $2.6 million, or 3.6%, to $74.9 million in the second quarter of 2019, from $72.3 million in the first quarter of 2019.  The majority of this increase is attributable to an increase in mortgage commissions of $3.9 million related to increased production compared with the first quarter of 2019.   The Company continues to focus on its operating efficiency ratio. The Company's adjusted efficiency ratio declined from 57.53% in the second quarter of 2018 and 55.12% in the first quarter of 2019 to 53.77% in the second quarter of 2019.

Income Tax Expense
The Company's effective tax rate for the second quarter of 2019 was 23.7%, compared with 22.3% in the first quarter of 2019 and 20.5% for the second quarter of 2018. The increased rate for the second quarter of 2019 was attributable to certain non-deductible merger expenses and increased state tax expense.

Balance Sheet Trends
Total assets at June 30, 2019 were $11.9 billion, compared with $11.4 billion at December 31, 2018.  Total loans, including loans held for sale, purchased loans and purchased loan pools, were $9.31 billion at June 30, 2019, compared with $8.62 billion at December 31, 2018.  Strong loan production in the second quarter of 2019 helped offset the impact of early pay downs and pay offs experienced during the first quarter of 2019.  Loan production in the banking division during the second quarter of 2019 was 39% higher than the first quarter of 2019 and was 95% higher than the second quarter of 2018.

At June 30, 2019, total deposits amounted to $9.58 billion, or 93.6% of total funding, compared with $9.65 billion and 97.4%, respectively, at December 31, 2018.  The decrease in total deposits in the second quarter was primarily due to the maturity of approximately $310.0 million of brokered deposits as part of our liquidity management strategy.  Excluding those maturities, non-brokered deposits increased $91.4 million, or 3.9% annualized, in the second quarter.  At June 30, 2019, noninterest-bearing deposit accounts were $2.77 billion, or 28.9% of total deposits, compared with $2.52 billion, or 26.1% of total deposits, at December 31, 2018.  Non-rate sensitive deposits (including non-interest bearing, NOW and savings) totaled $4.71 billion at June 30, 2019, compared with $4.60 billion at December 31, 2018.  These funds represented 49.1% of the Company's total deposits at June 30, 2019, compared with 47.6% at the end of 2018.

Shareholders' equity at June 30, 2019 totaled $1.54 billion, an increase of $80.8 million, or 5.5%, from December 31, 2018.  The increase in shareholders' equity was primarily the result of earnings of $78.8 million during the first six months of 2019, offset by dividends declared of $9.5 million and treasury stock purchases of $11.6 million.  Tangible book value per share was $20.81 at June 30, 2019, up from $18.83 at December 31, 2018.  Tangible common equity as a percentage of tangible assets was 8.68% at June 30, 2019, compared with 8.22% at the end of the 2018.

Credit Quality
Credit quality remains strong in the Company.  During the second quarter of 2019, the Company recorded provision for loan loss expense of $4.7 million, compared with $3.4 million in the first quarter of 2019.  Nonperforming assets as a percentage of total assets decreased by three basis point to 0.51% during the quarter.  The net charge-off ratio for non-purchased loans was 11 basis points for the second quarter of 2019, compared with 27 basis points in the first quarter of 2019 and 26 basis points in the second quarter of 2018.