Ameris Bancorp (NYSE:ABCB) Q2 2020 Results Conference Call July 27, 2020 9:00 AM ET Company Participants Nicole Stokes - Chief Financial Officer Palmer Proctor - Chief Executive Officer Jon Edwards - Chief Credit Officer Conference Call Participants David Feaster - Raymond James Christopher Marinac - Janney Montgomery Scott Brady Gailey - KBW Jennifer Demba - SunTrust Kevin Fitzsimmons - D.A. Davidson Operator Good morning. And welcome to the Ameris Bancorp Second Quarter 2020 Financial Results Conference C ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q Atlanta Georgia 30305 (Address of principal executive offices) Emerging growth company ☐ (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 001-13901 AMERIS BANCORP (Exact name of registrant as specified in its chart ...

Ameris Bancorp (NYSE:ABCB) Q1 2020 Results Conference Call April 24, 2020 9:00 AM ET Company Participants Nicole Stokes - CFO Palmer Proctor - CEO Jon Edwards - Chief Credit Officer Conference Call Participants Tyler Stafford - Stephens David Feaster - Raymond James Woody Lay - KBW Christopher Marinac - Janney Montgomery Scott Operator Good day. And welcome to the Ameris Bancorp First Quarter 2020 Financial Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] After ...

Part I [Business](index=6&type=section&id=Item%201.%20Business) Ameris Bancorp operates Ameris Bank, a financial holding company with **$18.24 billion** in assets, offering diversified banking services and pursuing acquisition-led growth, subject to extensive regulation Key Financial Metrics as of December 31, 2019 | Metric | Value (Billions) | | :--- | :--- | | Total Assets | $18.24 | | Total Loans | $14.48 | | Total Deposits | $14.03 | | Shareholders' Equity | $2.47 | - The company operates **170** full-service domestic banking offices primarily in Georgia, Alabama, Florida, and South Carolina, with no foreign operations[10](index=10&type=chunk) - Ameris's growth strategy is heavily oriented towards acquisitions, having completed several significant mergers, including Fidelity in **2019**, Hamilton and Atlantic in **2018**, and ten FDIC-assisted transactions between **2009** and **2012**[25](index=25&type=chunk) - After crossing the **$10 billion** asset threshold in June **2018**, the company became subject to heightened regulatory requirements, including supervision by the Consumer Financial Protection Bureau (CFPB) and caps on debit card interchange fees under the Durbin Amendment[76](index=76&type=chunk)[77](index=77&type=chunk) [Overview](index=6&type=section&id=Item%201.%20Business-OVERVIEW) - Ameris Bancorp is a Georgia-based financial holding company conducting business through its wholly-owned subsidiary, Ameris Bank. The bank provides a full range of services to retail and commercial customers[10](index=10&type=chunk) - The company has assumed significant obligations related to trust preferred securities through a series of acquisitions, including those of Fidelity (**2019**), Hamilton (**2018**), JAXB (**2016**), Merchants (**2015**), Coastal (**2014**), Prosperity (**2013**), and FNB (**2005**)[15](index=15&type=chunk)[16](index=16&type=chunk)[22](index=22&type=chunk) [Strategy](index=8&type=section&id=Item%201.%20Business-Strategy) - The company's strategy involves increasing its brand presence in its current markets (Georgia, Alabama, Florida, South Carolina) and expanding into attractive neighboring communities[24](index=24&type=chunk) - Growth is pursued through an acquisition-oriented strategy, complemented by a prudent operating strategy and a decentralized community banking philosophy that emphasizes personalized service[24](index=24&type=chunk)[25](index=25&type=chunk) [Banking Services](index=8&type=section&id=Item%201.%20Business-BANKING%20SERVICES) - The company maintains a diversified loan portfolio of **$14.48 billion**, representing **79.3%** of total assets, with services including commercial, agricultural, real estate, and consumer lending[26](index=26&type=chunk)[27](index=27&type=chunk) - Commercial Real Estate loans represent the largest segment of the loan portfolio[27](index=27&type=chunk) - The company originates residential mortgage loans, a majority of which are sold in the secondary market. It also holds a portfolio of purchased residential mortgage loans totaling **$213.2 million** as of year-end **2019**[28](index=28&type=chunk) - Funding sources are diverse, including customer deposits, advances from the Federal Home Loan Bank (FHLB), federal funds lines, and subordinated notes. In **2019**, the company issued **$120.0 million** in **4.25%** Fixed-To-Floating Rate Subordinated Notes due **2029**[44](index=44&type=chunk)[45](index=45&type=chunk) - Derivatives, such as forward sale commitments and interest rate lock commitments (IRLCs), are used to manage interest rate and pricing risk associated with mortgage lending activities[50](index=50&type=chunk) [Corporate Restructuring and Business Combinations](index=12&type=section&id=Item%201.%20Business-CORPORATE%20RESTRUCTURING%20AND%20BUSINESS%20COMBINATIONS) - On July 1, **2019**, Ameris completed its acquisition of Fidelity Southern Corporation, issuing **22.2 million** shares of common stock valued at **$869.3 million**. This expanded its presence with **62** additional branches in Georgia and Florida[51](index=51&type=chunk) - In **2018**, Ameris completed three major acquisitions: Hamilton State Bancshares, Inc. for approximately **$397.1 million**, Atlantic Coast Financial Corporation for approximately **$169.3 million**, and the remaining **70%** of US Premium Finance Holding Company (USPF) for an aggregate price of **$83.0 million**[52](index=52&type=chunk)[54](index=54&type=chunk) [Supervision and Regulation](index=14&type=section&id=Item%201.%20Business-SUPERVISION%20AND%20REGULATION) - As a financial holding company, Ameris is regulated by the Federal Reserve and its state-chartered bank is supervised by the FDIC and the Georgia Department of Banking and Finance (GDBF)[66](index=66&type=chunk)[75](index=75&type=chunk) - The company must comply with Basel III capital adequacy standards. As of December 31, **2019**, both Ameris and the Bank were considered "well capitalized" under these regulations[93](index=93&type=chunk)[100](index=100&type=chunk) Capital Ratios as of December 31, 2019 | Ratio | Ameris Bancorp (Consolidated) | Ameris Bank | | :--- | :--- | :--- | | Total Risk-Based Capital | 12.94% | 12.18% | | Tier 1 Risk-Based Capital | 9.93% | 11.39% | | Common Equity Tier 1 Capital | 9.93% | 11.39% | | Leverage Ratio | 8.48% | 9.73% | - Since crossing **$10 billion** in assets, the Bank's FDIC deposit insurance assessment is based on a large institution classification, using a scorecard system that combines CAMELS ratings and financial measures[112](index=112&type=chunk)[113](index=113&type=chunk) - The company is subject to various consumer protection laws enforced by the CFPB, anti-money laundering regulations under the Bank Secrecy Act and USA PATRIOT Act, and economic sanctions administered by OFAC[119](index=119&type=chunk)[126](index=126&type=chunk)[128](index=128&type=chunk) [Risk Factors](index=27&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks from economic conditions, interest rate volatility, real estate lending concentration, regulatory changes, operational issues, and its acquisition strategy - The company's financial performance is highly dependent on economic conditions in its geographically concentrated markets of Georgia, Alabama, Florida, and South Carolina[147](index=147&type=chunk)[161](index=161&type=chunk) - A significant risk is the upcoming adoption of the Current Expected Credit Loss (CECL) accounting standard, which is expected to materially increase the allowance for loan losses by an estimated **$85 million** to **$120 million**[174](index=174&type=chunk)[175](index=175&type=chunk) - A material weakness in internal control over financial reporting was identified as of December 31, **2019**, related to deficiencies in general ledger account reconciliations following the Fidelity core platform conversion[194](index=194&type=chunk)[195](index=195&type=chunk) - The transition away from LIBOR presents a significant risk, as the company had approximately **$2.81 billion** of loans and **$57.8 million** of derivatives indexed to LIBOR as of year-end **2019**[186](index=186&type=chunk) - Cyberattacks and security breaches pose a material risk due to the sensitive customer information the company handles and its reliance on third-party service providers for technology and transaction processing[189](index=189&type=chunk)[190](index=190&type=chunk)[191](index=191&type=chunk) [Unresolved Staff Comments](index=42&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - None[218](index=218&type=chunk) [Properties](index=42&type=section&id=Item%202.%20Properties) The company's corporate headquarters is in Atlanta, Georgia, operating **170** owned and leased branch locations and **31** leased mortgage and loan production offices - The company operates **170** branch locations, with **148** owned and **22** leased. It also has **31** leased mortgage and loan production offices[219](index=219&type=chunk) [Legal Proceedings](index=42&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in legal disputes with a former owner and received subpoenas from the SEC and U.S. Attorney's Office, with management expecting no material adverse financial effect - The company is engaged in ongoing legal disputes with William J. Villari, former owner of USPF, regarding his termination and related compensation claims[220](index=220&type=chunk) - In November **2019**, the company received subpoenas from the SEC and the U.S. Attorney's Office for the Northern District of Georgia requesting documents related to the USPF acquisition and the sale of certain loans to CEBV[224](index=224&type=chunk) - Management does not currently believe that the liabilities arising from these legal matters will have a material adverse effect on the company's consolidated financial condition, results of operations, or cash flows[225](index=225&type=chunk) [Mine Safety Disclosures](index=43&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[226](index=226&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=44&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Ameris Bancorp's common stock trades on Nasdaq under "ABCB"; the company authorized a **$100.0 million** share repurchase program in **2019**, with a five-year shareholder return of **73.09%** - The company's common stock is listed on Nasdaq under the symbol "ABCB"[228](index=228&type=chunk) - A new stock repurchase program was authorized in September **2019** for up to **$100.0 million**. By December 31, **2019**, the company had repurchased **158,248** shares for **$6.8 million** under this program[230](index=230&type=chunk) Five-Year Cumulative Total Shareholder Return (2014-2019) | Index | 12/31/2014 | 12/31/2019 | Cumulative Return | | :--- | :--- | :--- | :--- | | Ameris Bancorp | $100.00 | $173.09 | 73.09% | | NASDAQ Stock Market (US Companies) | $100.00 | $200.49 | 100.49% | | SNL U.S. Bank NASDAQ | $100.00 | $166.75 | 66.75% | [Selected Financial Data](index=46&type=section&id=Item%206.%20Selected%20Financial%20Data) Selected financial data shows significant growth from **2015** to **2019**, with total assets reaching **$18.24 billion** and net income **$161.4 million**, though comparability is affected by acquisitions Selected Financial Data (2015-2019) | (in thousands) | 2019 | 2018 | 2017 | 2016 | 2015 | | :--- | :--- | :--- | :--- | :--- | :--- | | **Total Assets** | $18,242,579 | $11,443,515 | $7,856,203 | $6,892,031 | $5,588,940 | | **Total Loans** | $12,818,476 | $8,511,914 | $6,046,355 | $5,264,326 | $3,908,923 | | **Total Deposits** | $14,027,073 | $9,649,313 | $6,625,845 | $5,575,163 | $4,879,290 | | **Net Income** | $161,441 | $121,027 | $73,548 | $72,100 | $40,847 | | **Diluted EPS** | $2.75 | $2.80 | $1.98 | $2.08 | $1.27 | - The comparability of financial data across years is significantly affected by numerous acquisitions, including Fidelity (**2019**), USPF, Atlantic, and Hamilton (**2018**), JAXB (**2016**), and Merchants and a branch acquisition (**2015**)[236](index=236&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=49&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In **2019**, Ameris reported net income of **$161.4 million**, with total assets reaching **$18.24 billion**, driven by the Fidelity acquisition, while maintaining stable loan quality and strong capital ratios 2019 vs. 2018 Performance Highlights | Metric | 2019 | 2018 | | :--- | :--- | :--- | | Net Income | $161.4M | $121.0M | | Diluted EPS | $2.75 | $2.80 | | Merger & Conversion Charges | $73.1M | $20.5M | | Return on Average Assets (ROA) | 1.10% | 1.24% | | Return on Average Equity (ROE) | 8.19% | 10.27% | | Net Interest Margin | 3.88% | 3.92% | - Organic loan growth was strong at **$751.8 million**, or **9.2%**, in **2019**[243](index=243&type=chunk) - The deposit mix improved, with noninterest-bearing deposits representing **29.9%** of total deposits at year-end **2019**[243](index=243&type=chunk) [Critical Accounting Policies and Estimates](index=50&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations-CRITICAL%20ACCOUNTING%20POLICIES%20AND%20ESTIMATES) - The allowance for loan losses is a critical accounting policy requiring significant management judgment regarding probable incurred losses in the loan portfolio[247](index=247&type=chunk) - Accounting for business combinations requires significant estimates, particularly in determining the fair value of acquired loan portfolios and identifying purchased credit-impaired loans[255](index=255&type=chunk) - Goodwill is tested for impairment annually, and the valuation of other intangible assets like core deposit premiums involves significant forward-looking assumptions[260](index=260&type=chunk)[264](index=264&type=chunk) [Results of Operations](index=57&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations-RESULTS%20OF%20OPERATIONS) Net Interest Income Analysis (2018 vs. 2019) | (in millions) | 2019 | 2018 | % Change | | :--- | :--- | :--- | :--- | | Interest Income | $636.4 | $413.3 | +54.0% | | Interest Expense | $131.2 | $69.9 | +87.6% | | Net Interest Income | $505.2 | $343.4 | +47.1% | | Net Interest Margin (Tax-Equiv.) | 3.88% | 3.92% | -4 bps | - The provision for loan losses increased to **$19.8 million** in **2019** from **$16.7 million** in **2018**, while net charge-offs as a percentage of average legacy loans decreased to **0.15%** from **0.27%**[283](index=283&type=chunk) - Noninterest income grew **67.3%** to **$198.1 million**, driven by a **122.6%** increase in mortgage banking income to **$119.4 million**, resulting from the Fidelity acquisition and a favorable interest rate environment[287](index=287&type=chunk)[290](index=290&type=chunk) - Noninterest expense rose **60.7%** to **$471.9 million**, primarily due to **$73.1 million** in merger-related charges and a **50.2%** increase in salaries and benefits from staff additions via the Fidelity acquisition[299](index=299&type=chunk)[300](index=300&type=chunk) - The effective tax rate was **23.7%** in **2019**, compared to **20.1%** in **2018** and **40.8%** in **2017**. The **2017** rate was elevated due to a **$13.6 million** charge from the remeasurement of deferred tax assets following federal tax legislation[314](index=314&type=chunk) [Balance Sheet Comparison](index=64&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations-BALANCE%20SHEET%20COMPARISON) Loan Portfolio Composition (Legacy Loans) | Loan Type | 2019 Balance (in thousands) | 2018 Balance (in thousands) | | :--- | :--- | :--- | | Commercial, financial and agricultural | $1,646,438 | $1,316,359 | | Real estate – construction & development | $1,083,564 | $671,198 | | Real estate – commercial and farmland | $2,447,834 | $1,814,529 | | Real estate – residential | $1,901,352 | $1,403,000 | | Consumer installment | $450,799 | $455,371 | | **Total** | **$7,529,987** | **$5,660,457** | - Purchased loans (acquired in mergers) increased to **$5.08 billion** at year-end **2019** from **$2.59 billion** at year-end **2018**, primarily due to the Fidelity acquisition[322](index=322&type=chunk) - The allowance for loan losses (ALLL) was **$38.2 million**, or **0.30%** of total loans. Excluding purchased loans, the ALLL was **0.46%** of loans, stable compared to **2018**, as growth in lower-risk loan categories offset other factors[286](index=286&type=chunk)[334](index=334&type=chunk) - Nonperforming loans, excluding purchased loans, increased to **$29.3 million** (**0.39%** of legacy loans) in **2019** from **$18.0 million** (**0.32%** of legacy loans) in **2018**[340](index=340&type=chunk)[345](index=345&type=chunk) - The investment portfolio, classified as available-for-sale, grew to **$1.40 billion** in **2019** from **$1.19 billion** in **2018**, consisting primarily of mortgage-backed securities[374](index=374&type=chunk) - Total deposits increased to **$14.03 billion** in **2019** from **$9.65 billion** in **2018**, with brokered deposits decreasing to **$452.7 million** from **$846.7 million**[380](index=380&type=chunk)[695](index=695&type=chunk) [Capital Adequacy](index=87&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations-CAPITAL%20ADEQUACY) - The company's capital increased by **$1.01 billion** in **2019**, primarily due to the issuance of **$869.3 million** in common stock for the Fidelity acquisition and net income of **$161.4 million**[388](index=388&type=chunk) - Both the Company and the Bank met all capital adequacy requirements and were categorized as "well capitalized" as of December 31, **2019**[821](index=821&type=chunk)[822](index=822&type=chunk) Consolidated Capital Ratios vs. Requirements (as of Dec 31, 2019) | Ratio | Actual | Required for Adequacy* | | :--- | :--- | :--- | | CET1 Ratio | 9.925% | 7.000% | | Tier 1 Capital Ratio | 9.925% | 8.500% | | Total Capital Ratio | 12.940% | 10.500% | | Tier 1 Leverage Ratio | 8.476% | 4.000% | *Includes 2.50% capital conservation buffer. [Quantitative and Qualitative Disclosures About Market Risk](index=90&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is U.S. Dollar interest rate changes, managed by ALCO, with simulation showing a **1.7%** net interest income increase for a **+100** bps rate shift and a **1.1%** decrease for **-100** bps - The company is exposed only to U.S. Dollar interest rate risk and has no trading instruments or exposure to foreign currency, commodity, or other market risks[398](index=398&type=chunk) Projected Impact of Interest Rate Changes on Net Interest Income (as of Jan 1, 2020) | Rate Change (bps) | Impact over 12 Months | Impact over 24 Months | | :--- | :--- | :--- | | +200 | +3.1% | +9.4% | | +100 | +1.7% | +5.0% | | -100 | -1.1% | -4.2% | - The company is managing the transition away from LIBOR, as it has material contracts indexed to this rate. A working committee has been established to develop a transition plan[371](index=371&type=chunk) [Financial Statements and Supplementary Data](index=92&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section lists the consolidated financial statements and the Report of Independent Registered Public Accounting Firm included in the filing - This item refers to the full consolidated financial statements and related notes, which are included in the report[407](index=407&type=chunk) [Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](index=92&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[407](index=407&type=chunk) [Controls and Procedures](index=92&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls were ineffective due to a material weakness in internal control over financial reporting, stemming from general ledger reconciliation issues post-Fidelity core system conversion - A material weakness was identified in the company's internal control over financial reporting as of December 31, **2019**[413](index=413&type=chunk)[414](index=414&type=chunk) - The deficiency related to certain general ledger account reconciliations where items, principally from the acquired indirect auto loan portfolio, were not researched and resolved in a timely manner after the Fidelity core platform conversion[415](index=415&type=chunk) - Management has developed a remediation plan that includes additional staff training, more detailed procedures, increased personnel, and a review of the system interface to the general ledger[416](index=416&type=chunk) - The company's independent registered public accounting firm, Crowe LLP, issued an audit report expressing an adverse opinion on the effectiveness of the company's internal control over financial reporting[417](index=417&type=chunk)[462](index=462&type=chunk) [Other Information](index=93&type=section&id=Item%209B.%20Other%20Information) This item is not applicable to the company - Not applicable[419](index=419&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=94&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information regarding directors, executive officers, and corporate governance is incorporated by reference from the company's Proxy Statement for the 2020 Annual Meeting of Shareholders - The required information is incorporated by reference from the registrant's Proxy Statement for the **2020** Annual Meeting of Shareholders[421](index=421&type=chunk) [Executive Compensation](index=94&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive compensation is incorporated by reference from the company's Proxy Statement for the 2020 Annual Meeting of Shareholders - The required information is incorporated by reference from the registrant's Proxy Statement for the **2020** Annual Meeting of Shareholders[423](index=423&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=94&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Security ownership information is incorporated by reference from the **2020** Proxy Statement, with **387,193** securities from outstanding options and **699,992** available for future issuance - The required information is incorporated by reference from the registrant's Proxy Statement for the **2020** Annual Meeting of Shareholders[424](index=424&type=chunk) Equity Compensation Plan Information (as of Dec 31, 2019) | Description | Number of Securities | | :--- | :--- | | To be issued upon exercise of outstanding options, warrants and rights | 387,193 | | Available for future issuance under equity compensation plans | 699,992 | [Certain Relationships and Related Transactions, and Director Independence](index=94&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information regarding certain relationships, related transactions, and director independence is incorporated by reference from the company's Proxy Statement for the 2020 Annual Meeting of Shareholders - The required information is incorporated by reference from the registrant's Proxy Statement for the **2020** Annual Meeting of Shareholders[427](index=427&type=chunk) [Principal Accounting Fees and Services](index=95&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information regarding principal accounting fees and services is incorporated by reference from the company's Proxy Statement for the 2020 Annual Meeting of Shareholders - The required information is incorporated by reference from the registrant's Proxy Statement for the **2020** Annual Meeting of Shareholders[428](index=428&type=chunk) Part IV [Exhibits, Financial Statement Schedules](index=95&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists the financial statements, schedules, and exhibits filed as part of the Annual Report, including consolidated financial statements and an index of key corporate documents - This section contains the list of financial statements and schedules filed with the report, including the consolidated balance sheets, statements of income, comprehensive income, shareholders' equity, and cash flows[429](index=429&type=chunk) - An index of exhibits is provided, listing key corporate documents such as merger agreements with Fidelity, Hamilton, and Atlantic, as well as various indentures related to subordinated debt and trust preferred securities[431](index=431&type=chunk)[432](index=432&type=chunk)[434](index=434&type=chunk)

Ameris Bancorp (NYSE:ABCB) Q4 2019 Results Conference Call January 24, 2020 9:30 AM ET Company Participants Nicole Stokes - Chief Financial Officer Palmer Proctor - Chief Executive Officer Jon Edwards - Chief Credit Officer Conference Call Participants Tyler Stafford - Stephens Casey Whitmen - Piper Sandler Brady Gailey - KBW Jennifer Demba - SunTrust David Feaster - Raymond James Operator Good day. And welcome to the Ameris Bancorp Fourth Quarter 2019 Financial Results Conference Call [Operator Instruction ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2019 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 001-13901 AMERIS BANCORP (Exact name of registrant as specified in its charter) Georgia 58-1456434 (State of incorporation) (IRS Employer ID No.) 3490 Piedmont R ...

Ameris Bancorp (NYSE:ABCB) Q3 2019 Results Earnings Conference Call October 18, 2019 9:00 AM ET Company Participants Palmer Proctor - CEO Nicole Stokes - CFO Jon Edwards - Chief Credit Officer Conference Call Participants Casey Whitman - Sandler O'Neill Jennifer Demba - SunTrust Tyler Stafford - Stephens David Feaster - Raymond James Woody Lay - KBW Christopher Marinac - Janney Montgomery Operator Good morning and welcome to the Ameris Bancorp Third Quarter 2019 Financial Results Conference Call. [Operator ...

PART I – FINANCIAL INFORMATION [Item 1. Financial Statements.](index=4&type=section&id=Item%201.%20Financial%20Statements.) This section presents the unaudited consolidated financial statements and detailed notes for the periods ended June 30, 2019 [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets%20as%20of%20June%2030%2C%202019%20and%20December%2031%2C%202018) Total assets grew to $11.89 billion driven by loan growth, while shareholders' equity increased to $1.54 billion Key Balance Sheet Metrics | Metric | June 30, 2019 ($ thousands) | Dec 31, 2018 ($ thousands) | Change ($ thousands) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total Assets | 11,889,336 | 11,443,515 | 445,821 | 3.90% | | Loans, net | 9,018,077 | 8,483,095 | 534,982 | 6.31% | | Total Deposits | 9,582,370 | 9,649,313 | (66,943) | -0.69% | Shareholders' Equity | Metric | June 30, 2019 ($ thousands) | Dec 31, 2018 ($ thousands) | Change ($ thousands) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total Shareholders' Equity | 1,537,121 | 1,456,347 | 80,774 | 5.55% | [Consolidated Statements of Income and Comprehensive Income](index=5&type=section&id=Consolidated%20Statements%20of%20Income%20and%20Comprehensive%20Income%20for%20the%20Three%20and%20Six-Month%20Periods%20Ended%20June%2030%2C%202019%20and%202018) Net income significantly increased for both the three and six-month periods ending June 30, 2019, driven by higher interest income Three-Month Net Income | Metric | June 30, 2019 ($ thousands) | June 30, 2018 ($ thousands) | Change ($ thousands) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net Income | 38,904 | 9,387 | 29,517 | 314.45% | Six-Month Net Income | Metric | June 30, 2019 ($ thousands) | June 30, 2018 ($ thousands) | Change ($ thousands) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net Income | 78,809 | 36,047 | 42,762 | 118.63% | Key Income Metrics (Six Months) | Metric | June 30, 2019 | June 30, 2018 | Change | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Basic EPS per common share | $1.66 | $0.93 | $0.73 | 78.49% | | Total Interest Income | 253,957 | 169,458 | 84,499 | 49.87% | [Consolidated Statements of Shareholders' Equity](index=8&type=section&id=Consolidated%20Statements%20of%20Shareholders'%20Equity%20for%20the%20Three%20and%20Six-Month%20Periods%20Ended%20June%2030%2C%202019%20and%202018) Shareholders' equity grew to $1.54 billion, primarily due to net income and other comprehensive income gains Shareholders' Equity Growth | Metric | Dec 31, 2018 ($ thousands) | June 30, 2019 ($ thousands) | Change ($ thousands) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total Shareholders' Equity | 1,456,347 | 1,537,121 | 80,774 | 5.55% | Components of Change (Six Months Ended June 30, 2019) | Metric | June 30, 2019 ($ thousands) | | :--- | :--- | | Net Income | 78,809 | | Other Comprehensive Income (Loss) | 21,288 | [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20Six%20Months%20Ended%20June%2030%2C%202019%20and%202018) Operating cash flow improved significantly, while increased loan originations drove higher cash usage in investing activities Operating Activities | Metric | June 30, 2019 ($ thousands) | June 30, 2018 ($ thousands) | Change ($ thousands) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net Cash Provided by (Used in) Operating Activities | 28,876 | (55,465) | 84,341 | 152.08% | Investing Activities | Metric | June 30, 2019 ($ thousands) | June 30, 2018 ($ thousands) | Change ($ thousands) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net Cash Used in Investing Activities | (678,031) | (190,711) | (487,320) | 255.53% | Financing Activities | Metric | June 30, 2019 ($ thousands) | June 30, 2018 ($ thousands) | Change ($ thousands) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net Cash Provided by Financing Activities | 307,783 | 340,227 | (32,444) | -9.53% | [Notes to Unaudited Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) These notes provide crucial context on accounting policies, business combinations, and specific financial statement items [NOTE 1 – BASIS OF PRESENTATION AND ACCOUNTING POLICIES](index=13&type=section&id=NOTE%201%20%E2%80%93%20BASIS%20OF%20PRESENTATION%20AND%20ACCOUNTING%20POLICIES) The Company operates 114 branches and adopted a new lease accounting standard in Q1 2019 - Ameris Bancorp operates **114 branches** in Georgia, Alabama, Florida, and South Carolina through its wholly-owned subsidiary, Ameris Bank[22](index=22&type=chunk) - The adoption of ASU 2016-02 (Leases) in Q1 2019 resulted in the recognition of a **$27.3 million right-of-use asset** and a **$29.7 million lease liability**[26](index=26&type=chunk)[28](index=28&type=chunk) [NOTE 2 – SUBSEQUENT EVENT](index=15&type=section&id=NOTE%202%20%E2%80%93%20SUBSEQUENT%20EVENT) On July 1, 2019, the Company completed its acquisition of Fidelity Southern Corporation, expanding its market presence - Ameris Bancorp completed the acquisition of Fidelity Southern Corporation on **July 1, 2019**[34](index=34&type=chunk) - The acquisition involved issuing approximately **22.2 million common shares** at a fair value of **$869.3 million** as merger consideration[34](index=34&type=chunk) Fidelity Southern Corporation Key Metrics (at June 30, 2019) | Metric | Amount ($ billions) | | :--- | :--- | | Total Assets | 4.78 | | Gross Loans | 3.92 | | Deposits | 4.04 | [NOTE 3 – BUSINESS COMBINATIONS](index=16&type=section&id=NOTE%203%20%E2%80%93%20BUSINESS%20COMBINATIONS) This note details fair value adjustments and goodwill recognized for three acquisitions completed in 2018 - The Company uses the **acquisition method of accounting**, recording assets and liabilities at fair value and recognizing goodwill[36](index=36&type=chunk) - **Hamilton State Bancshares, Inc.** acquisition resulted in **$220.8 million in goodwill** from consideration of $349.4 million in shares and $47.8 million in cash[37](index=37&type=chunk)[42](index=42&type=chunk) - **Atlantic Coast Financial Corporation** acquisition resulted in **$90.3 million in goodwill** from consideration of $147.8 million in shares and $21.5 million in cash[47](index=47&type=chunk)[52](index=52&type=chunk) - **US Premium Finance Holding Company (USPF)** acquisition resulted in **$64.5 million in goodwill** from an aggregate purchase price of $83.0 million[56](index=56&type=chunk)[61](index=61&type=chunk) [NOTE 4 – INVESTMENT SECURITIES](index=25&type=section&id=NOTE%204%20%E2%80%93%20INVESTMENT%20SECURITIES) Investment securities available for sale increased to $1.27 billion, with unrealized losses deemed temporary - At June 30, 2019, **107 out of 485 securities** were in an unrealized loss position, but these are considered temporary due to interest rate changes and no intent to sell before recovery[71](index=71&type=chunk)[72](index=72&type=chunk)[75](index=75&type=chunk) Debt Securities Summary | Metric | June 30, 2019 ($ thousands) | Dec 31, 2018 ($ thousands) | Change ($ thousands) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total Debt Securities (Fair Value) | 1,273,244 | 1,192,423 | 80,821 | 6.78% | | Gross Unrealized Gains (June 30, 2019) | 22,794 | | | | | Gross Unrealized Losses (June 30, 2019) | (1,880) | | | | Realized Gains on Sales | Metric | June 30, 2019 ($ thousands) | June 30, 2018 ($ thousands) | Change ($ thousands) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net Realized Gains on Sales of Securities | 58 | 37 | 21 | 56.76% | [NOTE 5 – LOANS](index=28&type=section&id=NOTE%205%20%E2%80%93%20LOANS) The loan portfolio grew, driven by commercial and real estate loans, while the allowance for loan losses increased Originated Loan Portfolio | Loan Category | June 30, 2019 ($ thousands) | Dec 31, 2018 ($ thousands) | Change ($ thousands) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Commercial, financial and agricultural | 1,648,190 | 1,316,359 | 331,831 | 25.21% | | Real estate – construction and development | 788,409 | 671,198 | 117,211 | 17.46% | | Real estate – commercial and farmland | 2,046,347 | 1,814,529 | 231,818 | 12.78% | | Real estate – residential | 1,589,646 | 1,403,000 | 186,646 | 13.30% | | Consumer installment | 449,856 | 455,371 | (5,515) | -1.21% | | **Total (excluding purchased loans)** | **6,522,448** | **5,660,457** | **862,091** | **15.23%** | Purchased Loan Portfolio | Loan Category | June 30, 2019 ($ thousands) | Dec 31, 2018 ($ thousands) | Change ($ thousands) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Commercial, financial and agricultural | 252,621 | 372,686 | (120,065) | -32.22% | | Real estate – construction and development | 315,141 | 227,900 | 87,241 | 38.28% | | Real estate – commercial and farmland | 1,135,866 | 1,337,859 | (201,993) | -15.10% | | Real estate – residential | 558,458 | 623,199 | (64,741) | -10.39% | | Consumer installment | 24,339 | 27,188 | (2,849) | -10.48% | | **Total Purchased Loans** | **2,286,425** | **2,588,832** | **(302,407)** | **-11.68%** | Allowance for Loan Losses | Metric | June 30, 2019 ($ thousands) | Dec 31, 2018 ($ thousands) | Change ($ thousands) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Balance of allowance for loan losses | 31,793 | 28,819 | 2,974 | 10.32% | | Net Charge-offs (Six Months Ended June 30) | 5,102 | 5,170 | (68) | -1.32% | [NOTE 6 – OTHER REAL ESTATE OWNED](index=50&type=section&id=NOTE%206%20%E2%80%93%20OTHER%20REAL%20ESTATE%20OWNED) Other Real Estate Owned (OREO) decreased, while purchased OREO remained stable Other Real Estate Owned (Excluding Purchased) | Metric | June 30, 2019 ($ thousands) | Dec 31, 2018 ($ thousands) | Change ($ thousands) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Ending balance | 5,169 | 7,218 | (2,049) | -28.39% | Purchased Other Real Estate Owned | Metric | June 30, 2019 ($ thousands) | Dec 31, 2018 ($ thousands) | Change ($ thousands) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Ending balance | 9,506 | 9,535 | (29) | -0.30% | [NOTE 7 – SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE](index=51&type=section&id=NOTE%207%20%E2%80%93%20SECURITIES%20SOLD%20UNDER%20AGREEMENTS%20TO%20REPURCHASE) Securities sold under repurchase agreements, classified as short-term borrowings, decreased significantly - All securities underlying these agreements were comprised of **mortgage-backed securities**[156](index=156&type=chunk) Repurchase Agreements | Metric | June 30, 2019 ($ thousands) | Dec 31, 2018 ($ thousands) | Change ($ thousands) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Securities sold under agreements to repurchase | 3,307 | 20,384 | (17,077) | -83.78% | [NOTE 8 – OTHER BORROWINGS](index=52&type=section&id=NOTE%208%20%E2%80%93%20OTHER%20BORROWINGS) Other borrowings increased substantially due to new FHLB advances, with significant remaining borrowing capacity - At June 30, 2019, **$1.70 billion** was available for borrowing on lines with the FHLB[159](index=159&type=chunk) - At June 30, 2019, the Company had **$1.12 billion** available for borrowing at the Federal Reserve discount window[161](index=161&type=chunk) Total Other Borrowings | Metric | June 30, 2019 ($ thousands) | Dec 31, 2018 ($ thousands) | Change ($ thousands) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total Other Borrowings | 564,636 | 151,774 | 412,862 | 272.03% | [NOTE 9 – SHAREHOLDERS' EQUITY](index=52&type=section&id=NOTE%209%20%E2%80%93%20SHAREHOLDERS'%20EQUITY) Shareholders' equity increased, supported by a stock repurchase program and significant share issuances from 2018 acquisitions - As of June 30, 2019, **$10.6 million (296,335 shares)** of the Company's common stock had been repurchased under the $100.0 million repurchase program[162](index=162&type=chunk) - Common stock issuances for the Hamilton, Atlantic, and USPF acquisitions in 2018 significantly increased shareholders' equity by **$349.4 million**, **$147.8 million**, and **$44.5 million**, respectively[163](index=163&type=chunk)[164](index=164&type=chunk)[167](index=167&type=chunk) [NOTE 10 – ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)](index=54&type=section&id=NOTE%2010%20%E2%80%93%20ACCUMULATED%20OTHER%20COMPREHENSIVE%20INCOME%20(LOSS)) AOCI shifted from a loss to a gain, driven by unrealized gains on investment securities - Current year changes, net of tax, included **$21.79 million in unrealized gains** on securities and **($412) thousand in unrealized losses** on derivatives[170](index=170&type=chunk) AOCI Summary | Metric | Jan 1, 2019 ($ thousands) | June 30, 2019 ($ thousands) | Change ($ thousands) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Accumulated Other Comprehensive Income (Loss) | (4,826) | 16,462 | 21,288 | 441.07% | [NOTE 11 – WEIGHTED AVERAGE SHARES OUTSTANDING](index=56&type=section&id=NOTE%2011%20%E2%80%93%20WEIGHTED%20AVERAGE%20SHARES%20OUTSTANDING) Weighted average shares outstanding increased, reflecting share issuances related to acquisitions Weighted Average Shares | Metric | June 30, 2019 (thousands) | June 30, 2018 (thousands) | Change (thousands) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Weighted Average Common Shares Outstanding (Diluted) (3 Months) | 47,338 | 39,710 | 7,628 | 19.21% | | Weighted Average Common Shares Outstanding (Diluted) (6 Months) | 47,395 | 38,981 | 8,414 | 21.59% | [NOTE 12 – LEASES](index=56&type=section&id=NOTE%2012%20%E2%80%93%20LEASES) The Company recognized right-of-use assets and lease liabilities following the adoption of a new lease accounting standard - The weighted-average remaining lease term is **6.2 years**, and the weighted-average discount rate is **2.93%**[176](index=176&type=chunk) Lease Balances | Metric | June 30, 2019 ($ thousands) | | :--- | :--- | | Operating lease right-of-use assets | 24,519 | | Operating lease liabilities | 26,832 | [NOTE 13 – FAIR VALUE MEASURES](index=58&type=section&id=NOTE%2013%20%E2%80%93%20FAIR%20VALUE%20MEASURES) The Company measures certain assets at fair value, primarily using Level 2 inputs for recurring and Level 3 for non-recurring items - Total recurring assets measured at fair value were **$1,475,709 thousand** at June 30, 2019, with the majority classified as **Level 2 ($1,474,209 thousand)**[199](index=199&type=chunk) - Total nonrecurring assets measured at fair value were **$105,672 thousand** at June 30, 2019, with **$40,899 thousand classified as Level 3**[200](index=200&type=chunk) - Significant unobservable inputs for Level 3 assets included collateral discounts for impaired loans (**weighted average 26%**) and estimated costs to sell for OREO (**weighted average 24%-33%**)[204](index=204&type=chunk) [NOTE 14 – COMMITMENTS AND CONTINGENCIES](index=65&type=section&id=NOTE%2014%20%E2%80%93%20COMMITMENTS%20AND%20CONTINGENCIES) The Company has various off-balance-sheet commitments and is involved in legal proceedings not expected to have a material impact - The Company is involved in legal proceedings with William J Villari, former owner of USPF, but management believes these will not have a **material adverse effect** on the Company's financial condition or results of operations[373](index=373&type=chunk)[374](index=374&type=chunk)[375](index=375&type=chunk) Off-Balance-Sheet Instruments | Metric | June 30, 2019 ($ thousands) | Dec 31, 2018 ($ thousands) | | :--- | :--- | :--- | | Commitments to extend credit | 1,722,454 | 1,671,419 | | Unused home equity lines of credit | 108,910 | 112,310 | | Financial standby letters of credit | 25,419 | 24,596 | | Mortgage interest rate lock commitments | 204,087 | 81,833 | [NOTE 15 – SEGMENT REPORTING](index=67&type=section&id=NOTE%2015%20%E2%80%93%20SEGMENT%20REPORTING) The Company operates and reports on five business segments, with the Banking Division being the most profitable - The Company has five reportable segments: **Banking Division, Retail Mortgage Division, Warehouse Lending Division, SBA Division, and Premium Finance Division**[219](index=219&type=chunk) Segment Net Income | Segment | Net Income (Six Months Ended June 30, 2019, $ thousands) | | :--- | :--- | | Banking Division | 55,778 | | Retail Mortgage Division | 14,400 | | Warehouse Lending Division | 4,716 | | SBA Division | 2,477 | | Premium Finance Division | 1,438 | | **Total** | **78,809** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.](index=70&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) Management discusses financial performance, key acquisitions, and regulatory impacts for the periods ended June 30, 2019 [Cautionary Note Regarding Forward-Looking Statements](index=70&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) This section disclaims that forward-looking statements are subject to risks and uncertainties and will not be updated - Forward-looking statements are subject to known and unknown risks, uncertainties, and other factors that may cause **actual results to differ materially**[227](index=227&type=chunk)[228](index=228&type=chunk) - The Company has **no obligation to update, revise, or correct** any forward-looking statements after the report date[229](index=229&type=chunk) [Overview](index=70&type=section&id=Overview) Management's analysis emphasizes the use of non-GAAP measures to evaluate performance and efficiency - Management uses non-GAAP measures such as **tangible common equity, tangible book value per common share, and adjusted net income** to evaluate the Company's performance[231](index=231&type=chunk) [Fidelity Acquisition](index=73&type=section&id=Fidelity%20Acquisition) The acquisition of Fidelity Southern Corporation on July 1, 2019, expanded the Company's presence in Georgia and Florida - The acquisition of Fidelity Southern Corporation was completed on **July 1, 2019**, expanding Ameris Bank's presence in Georgia and Florida with **62 branches**[236](index=236&type=chunk) - Ameris issued approximately **22.2 million common shares** at a fair value of **$869.3 million** as merger consideration[236](index=236&type=chunk) Fidelity Southern Corporation Key Metrics (at June 30, 2019) | Metric | Amount ($ billions) | | :--- | :--- | | Total Assets | 4.78 | | Gross Loans | 3.92 | | Deposits | 4.04 | [Acquisitions Completed in 2018](index=73&type=section&id=Acquisitions%20Completed%20in%202018) Three acquisitions in 2018 significantly expanded the Company's operations and market presence - **USPF acquisition** (January 31, 2018): Total consideration of **$83.0 million**, including $55.9 million in common stock and $21.4 million in cash[240](index=240&type=chunk) - **Atlantic acquisition** (May 25, 2018): Consideration included **$147.8 million in common stock** and **$21.5 million in cash**, acquiring $875.0 million in assets[242](index=242&type=chunk)[243](index=243&type=chunk) - **Hamilton acquisition** (June 29, 2018): Consideration included **$349.4 million in common stock** and **$47.8 million in cash**, acquiring $1.79 billion in assets[244](index=244&type=chunk)[245](index=245&type=chunk) [Costs and Requirements for Exceeding $10 Billion in Total Assets](index=74&type=section&id=Costs%20and%20Requirements%20for%20Exceeding%20%2410%20Billion%20in%20Total%20Assets) Exceeding $10 billion in assets subjects the Company to increased regulatory oversight, costs, and revenue caps - Exceeding **$10 billion in total assets** subjects Ameris Bank to increased regulatory oversight, including enhanced risk management, stress testing, and CFPB examination authority[246](index=246&type=chunk)[247](index=247&type=chunk) - New regulations will lead to additional compliance costs and **reduced interchange revenue** due to a cap on debit card transaction fees[248](index=248&type=chunk) [Results of Operations for the Three Months Ended June 30, 2019 and 2018](index=75&type=section&id=Results%20of%20Operations%20for%20the%20Three%20Months%20Ended%20June%2030%2C%202019%20and%202018) Net income for Q2 2019 significantly increased to $38.9 million, with adjusted net income rising to $45.2 million [Consolidated Earnings and Profitability](index=75&type=section&id=Consolidated%20Earnings%20and%20Profitability) Net income available to common shareholders more than tripled in Q2 2019 compared to Q2 2018 Q2 Earnings Summary | Metric | June 30, 2019 ($ thousands) | June 30, 2018 ($ thousands) | Change ($ thousands) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net Income Available to Common Shareholders | 38,904 | 9,387 | 29,517 | 314.45% | | Adjusted Net Income | 45,210 | 29,239 | 15,971 | 54.62% | | Adjusted Net Income Per Diluted Share | $0.96 | $0.74 | $0.22 | 29.73% | [Net Interest Income and Margins](index=77&type=section&id=Net%20Interest%20Income%20and%20Margins) Net interest income grew 33.5%, driven by asset growth from acquisitions, though the net interest margin slightly decreased - Average interest-earning assets increased by **$2.73 billion**, or **34.9%**, to $10.55 billion in Q2 2019, primarily due to acquisitions and legacy loan growth[258](index=258&type=chunk) - Deposit costs increased from **0.47%** in Q2 2018 to **0.97%** in Q2 2019[262](index=262&type=chunk) Q2 Net Interest Income | Metric | June 30, 2019 ($ thousands) | June 30, 2018 ($ thousands) | Change ($ thousands) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Tax-Equivalent Net Interest Income | 102,713 | 76,943 | 25,770 | 33.49% | Q2 Net Interest Margin | Metric | June 30, 2019 | June 30, 2018 | Change (bps) | | :--- | :--- | :--- | :--- | | Net Interest Margin | 3.91% | 3.95% | -4 | [Provision for Loan Losses](index=79&type=section&id=Provision%20for%20Loan%20Losses) The provision for loan losses decreased in Q2 2019, and asset quality metrics improved - **Non-performing assets** as a percentage of total assets decreased from 0.55% at December 31, 2018, to **0.51%** at June 30, 2019[264](index=264&type=chunk) - **Net charge-offs on legacy loans** decreased to **0.11%** of average legacy loans (annualized) in Q2 2019, compared with 0.26% in Q2 2018[264](index=264&type=chunk) Q2 Provision | Metric | June 30, 2019 ($ thousands) | June 30, 2018 ($ thousands) | Change ($ thousands) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Provision for Loan Losses | 4,668 | 9,110 | (4,442) | -48.76% | [Noninterest Income](index=79&type=section&id=Noninterest%20Income) Noninterest income increased, driven by higher service charges and mortgage banking activity - Service charges on deposit accounts increased by **$1.6 million (14.7%)** to $12.2 million in Q2 2019[265](index=265&type=chunk) - Income from mortgage banking activity increased by **$3.1 million (20.3%)** to $18.5 million in Q2 2019[265](index=265&type=chunk) Q2 Noninterest Income | Metric | June 30, 2019 ($ thousands) | June 30, 2018 ($ thousands) | Change ($ thousands) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total Noninterest Income | 35,236 | 31,307 | 3,929 | 12.55% | [Noninterest Expense](index=80&type=section&id=Noninterest%20Expense) Noninterest expenses decreased due to lower merger charges, despite increases in other operational costs - Merger and conversion charges decreased from **$18.4 million** in Q2 2018 to **$3.5 million** in Q2 2019[267](index=267&type=chunk) - Salaries and employee benefits decreased by **$1.3 million (3.4%)** due to a **5.5% reduction** in full-time equivalent employees[267](index=267&type=chunk) Q2 Noninterest Expense | Metric | June 30, 2019 ($ thousands) | June 30, 2018 ($ thousands) | Change ($ thousands) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total Noninterest Expense | 81,251 | 86,386 | (5,135) | -5.94% | [Income Taxes](index=80&type=section&id=Income%20Taxes) Income tax expense increased significantly, raising the effective tax rate for Q2 2019 - The effective tax rate increased from **20.5%** in Q2 2018 to **23.7%** in Q2 2019[268](index=268&type=chunk) Q2 Income Tax Expense | Metric | June 30, 2019 ($ thousands) | June 30, 2018 ($ thousands) | Change ($ thousands) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Income Tax Expense | 12,064 | 2,423 | 9,641 | 397.89% | [Results of Operations for the Six Months Ended June 30, 2019 and 2018](index=81&type=section&id=Results%20of%20Operations%20for%20the%20Six%20Months%20Ended%20June%2030%2C%202019%20and%202018) Net income for the first six months of 2019 more than doubled to $78.8 million, with adjusted net income at $87.8 million [Consolidated Earnings and Profitability](index=81&type=section&id=Consolidated%20Earnings%20and%20Profitability) Net income available to common shareholders more than doubled in the first half of 2019 compared to the prior year Six-Month Earnings Summary | Metric | June 30, 2019 ($ thousands) | June 30, 2018 ($ thousands) | Change ($ thousands) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net Income Available to Common Shareholders | 78,809 | 36,047 | 42,762 | 118.63% | | Adjusted Net Income | 87,797 | 57,019 | 30,778 | 53.98% | | Adjusted Net Income Per Diluted Share | $1.85 | $1.46 | $0.39 | 26.71% | [Net Interest Income and Margins](index=83&type=section&id=Net%20Interest%20Income%20and%20Margins) Net interest income grew 38.5%, driven by strong growth in interest-earning assets, while the net interest margin remained stable - Average interest-earning assets increased by **$2.91 billion**, or **38.7%**, to $10.43 billion, driven by growth in legacy and purchased loans[277](index=277&type=chunk) - Total funding costs increased to **1.08%** in the first six months of 2019, up from 0.69% in the same period of 2018[280](index=280&type=chunk) Six-Month Net Interest Income | Metric | June 30, 2019 ($ thousands) | June 30, 2018 ($ thousands) | Change ($ thousands) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Tax-Equivalent Net Interest Income | 203,166 | 146,730 | 56,436 | 38.46% | Six-Month Net Interest Margin | Metric | June 30, 2019 | June 30, 2018 | Change (bps) | | :--- | :--- | :--- | :--- | | Net Interest Margin | 3.93% | 3.93% | 0 | [Provision for Loan Losses](index=85&type=section&id=Provision%20for%20Loan%20Losses) The provision for loan losses decreased for the six-month period, and asset quality metrics improved - **Non-performing assets** as a percentage of total assets decreased from 0.55% at December 31, 2018, to **0.51%** at June 30, 2019[282](index=282&type=chunk) - **Net charge-offs on legacy loans** decreased to **0.18%** of average legacy loans (annualized) for the first six months of 2019, compared with 0.20% in 2018[282](index=282&type=chunk) Six-Month Provision | Metric | June 30, 2019 ($ thousands) | June 30, 2018 ($ thousands) | Change ($ thousands) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Provision for Loan Losses | 8,076 | 10,911 | (2,835) | -25.98% | [Noninterest Income](index=85&type=section&id=Noninterest%20Income) Noninterest income grew, driven by higher service charges and mortgage-related activities - Service charges on deposit accounts increased by **$3.0 million (14.3%)** to $23.8 million for the first six months of 2019[283](index=283&type=chunk) - Income from mortgage-related activities increased by **$5.5 million (19.9%)** to $33.2 million for the first six months of 2019[283](index=283&type=chunk) Six-Month Noninterest Income | Metric | June 30, 2019 ($ thousands) | June 30, 2018 ($ thousands) | Change ($ thousands) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total Noninterest Income | 66,007 | 57,771 | 8,236 | 14.26% | [Noninterest Expense](index=86&type=section&id=Noninterest%20Expense) Noninterest expenses increased due to higher operational costs from acquisitions, partially offset by lower merger charges - Merger and conversion charges decreased from **$19.2 million** in the first six months of 2018 to **$5.5 million** in the same period of 2019[284](index=284&type=chunk) - Amortization of intangible assets increased by **$3.1 million (96.3%)** to $6.3 million, primarily due to acquisitions[284](index=284&type=chunk) Six-Month Noninterest Expense | Metric | June 30, 2019 ($ thousands) | June 30, 2018 ($ thousands) | Change ($ thousands) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total Noninterest Expense | 156,676 | 145,484 | 11,192 | 7.70% | [Income Taxes](index=86&type=section&id=Income%20Taxes) Income tax expense more than doubled, increasing the effective tax rate for the six-month period - The effective tax rate increased from **21.9%** in the first six months of 2018 to **23.0%** in the same period of 2019[285](index=285&type=chunk) Six-Month Income Tax Expense | Metric | June 30, 2019 ($ thousands) | June 30, 2018 ($ thousands) | Change ($ thousands) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Income Tax Expense | 23,492 | 10,129 | 13,363 | 131.93% | [Financial Condition as of June 30, 2019](index=86&type=section&id=Financial%20Condition%20as%20of%20June%2030%2C%202019) This section details the Company's financial position, including assets, liabilities, capital, and liquidity [Securities](index=86&type=section&id=Securities) The investment portfolio grew to $1.27 billion, with all unrealized losses considered temporary - All unrealized losses on debt securities are considered **temporary**, as the Company does not intend to sell these securities at an unrealized loss position[289](index=289&type=chunk) Debt Securities (Fair Value) | Metric | June 30, 2019 ($ thousands) | Dec 31, 2018 ($ thousands) | Change ($ thousands) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total Debt Securities (Fair Value) | 1,273,244 | 1,192,423 | 80,821 | 6.78% | [Loans and Allowance for Loan Losses](index=87&type=section&id=Loans%20and%20Allowance%20for%20Loan%20Losses) Gross loans increased to $9.31 billion, driven by legacy loan growth, while the allowance for loan losses also grew - **Legacy loans** increased by **$862.0 million**, or **15.2%**, to $6.52 billion at June 30, 2019[294](index=294&type=chunk) - **Purchased loans** decreased by **$302.4 million**, or **11.7%**, to $2.29 billion at June 30, 2019, primarily due to paydowns[294](index=294&type=chunk) - The allowance for loan losses totaled **$31.8 million** at June 30, 2019, representing **0.35% of total loans** and **0.44% of legacy loans**[300](index=300&type=chunk)[306](index=306&type=chunk) Gross Loans | Metric | June 30, 2019 ($ billions) | Dec 31, 2018 ($ billions) | Change ($ billions) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Gross Loans Outstanding | 9.31 | 8.62 | 0.69 | 8.00% | [Purchased Assets](index=91&type=section&id=Purchased%20Assets) Purchased loans decreased due to paydowns, while purchased OREO remained stable - Purchased loans decreased by **$302.4 million (11.7%)** to **$2.29 billion** at June 30, 2019, primarily due to paydowns[310](index=310&type=chunk) - Purchased OREO totaled **$9.5 million** at June 30, 2019, remaining stable compared to December 31, 2018[310](index=310&type=chunk) [Purchased Loan Pools](index=91&type=section&id=Purchased%20Loan%20Pools) Purchased loan pools decreased due to payments and premium amortization - Purchased loan pools decreased by **$21.6 million (8.2%)** to **$241.0 million** at June 30, 2019, primarily due to payments and premium amortization[313](index=313&type=chunk)[314](index=314&type=chunk) - An allowance for loan losses of **$671,000** was allocated to the purchased loan pools at June 30, 2019[314](index=314&type=chunk) [Non-Performing Assets](index=93&type=section&id=Non-Performing%20Assets) Total non-performing assets decreased, improving the ratio of non-performing assets to total assets - The ratio of total non-performing assets to total assets decreased from **0.55%** at December 31, 2018, to **0.51%** at June 30, 2019[317](index=317&type=chunk) Non-Performing Assets Summary | Metric | June 30, 2019 ($ thousands) | Dec 31, 2018 ($ thousands) | Change ($ thousands) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total Non-Performing Assets | 60,767 | 63,034 | (2,267) | -3.60% | [Troubled Debt Restructurings](index=93&type=section&id=Troubled%20Debt%20Restructurings) Troubled debt restructurings (TDRs) increased for legacy loans but decreased for purchased loans - Troubled debt restructurings (excluding purchased loans) increased to **$14.5 million** at June 30, 2019, from $11.1 million at December 31, 2018[320](index=320&type=chunk) - Troubled debt restructurings included in purchased loans decreased to **$21.3 million** at June 30, 2019, from $22.2 million at December 31, 2018[324](index=324&type=chunk) - The Company's policy requires TDRs to be assigned a **substandard grade** and placed on nonaccrual status until the borrower demonstrates six months of satisfactory payment history[126](index=126&type=chunk) [Commercial Lending Practices](index=100&type=section&id=Commercial%20Lending%20Practices) The Company has a concentration in Commercial Real Estate (CRE) loans, which remain within internal limits CRE Loan Concentration | Metric | June 30, 2019 ($ thousands) | % of Total Loans | | :--- | :--- | :--- | | Total CRE Loans (excluding owner-occupied) | 3,059,292 | 34% | CRE Concentration vs. Internal Limits | Metric | Internal Limit | June 30, 2019 Actual | | :--- | :--- | :--- | | Construction and development loans to total risk-based capital | 100% | 91% | | Total CRE loans (excluding owner-occupied) to total risk-based capital | 300% | 253% | [Short-Term Investments](index=102&type=section&id=Short-Term%20Investments) Short-term investments, including federal funds sold and bank deposits, decreased significantly Short-Term Investments Summary | Metric | June 30, 2019 ($ thousands) | Dec 31, 2018 ($ thousands) | Change ($ thousands) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Short-Term Investments | 187,000 | 507,500 | (320,500) | -63.15% | [Derivative Instruments and Hedging Activities](index=102&type=section&id=Derivative%20Instruments%20and%20Hedging%20Activities) The Company uses derivatives to manage interest rate risk for subordinated debentures and mortgage inventory - The Company has a cash flow hedge with a notional amount of **$37.1 million**, converting a variable rate to a fixed rate of 4.11%, which was a liability of **$249,000** at June 30, 2019[337](index=337&type=chunk) - Mortgage banking derivative instruments had a net asset value of approximately **$4.4 million** at June 30, 2019[338](index=338&type=chunk) [Capital](index=102&type=section&id=Capital) The Company and Ameris Bank were considered "well capitalized" under all regulatory measures - Ameris Bank was considered **"well capitalized"** under all regulatory capital measurements as of June 30, 2019[355](index=355&type=chunk) - As of June 30, 2019, **$10.6 million (296,335 shares)** had been repurchased under the $100.0 million common stock repurchase program[340](index=340&type=chunk) Consolidated Capital Ratios | Metric | Consolidated (June 30, 2019) | | :--- | :--- | | Tier 1 Leverage Ratio | 9.47% | | CET1 Ratio | 9.75% | | Tier 1 Capital Ratio | 10.66% | | Total Capital Ratio | 11.74% | [Interest Rate Sensitivity and Liquidity](index=104&type=section&id=Interest%20Rate%20Sensitivity%20and%20Liquidity) The Company manages interest rate risk through simulation modeling and maintains satisfactory liquidity ratios - The ALCO Committee aims to limit net interest income change to no more than **20%** given a **200 basis point** change in interest rates over any 24-month period[361](index=361&type=chunk) - The Company's and the Bank's liquidity ratios at June 30, 2019, were considered **satisfactory**[363](index=363&type=chunk) Key Liquidity Ratios | Metric | June 30, 2019 | | :--- | :--- | | Investment securities available for sale to total deposits | 13.29% | | Loans (net of unearned income) to total deposits | 94.44% | | Interest-earning assets to total assets | 90.87% | | Interest-bearing deposits to total deposits | 71.08% | [Item 3. Quantitative and Qualitative Disclosures About Market Risk.](index=106&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) The Company's primary market risk is interest rate risk, which is managed through an asset/liability program and hedging - The Company's primary market risk exposure is to **U.S. dollar interest rate changes**[364](index=364&type=chunk) - Hedging activities include a cash flow hedge for junior subordinated debentures and forward contracts for mortgage inventory, with a net asset value of approximately **$4.4 million**[365](index=365&type=chunk)[366](index=366&type=chunk) - The Company has **no exposure** to foreign currency exchange rate risk, commodity price risk, or other market risks[367](index=367&type=chunk) [Item 4. Controls and Procedures.](index=107&type=section&id=Item%204.%20Controls%20and%20Procedures.) Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls - The Company's Chief Executive Officer and Chief Financial Officer concluded that disclosure controls and procedures were **effective** as of June 30, 2019[371](index=371&type=chunk) - **No material changes** in internal control over financial reporting were identified during the quarter ended June 30, 2019[372](index=372&type=chunk) PART II – OTHER INFORMATION [Item 1. Legal Proceedings.](index=107&type=section&id=Item%201.%20Legal%20Proceedings.) The Company is involved in legal proceedings with a former business owner, which are not expected to have a material adverse effect - The Company is involved in multiple legal proceedings with William J Villari (former USPF owner), including claims for **fraudulent inducement and breach of contract**[373](index=373&type=chunk)[374](index=374&type=chunk) - Management believes the allegations are without merit and does not expect a **material adverse effect** on the Company's consolidated results or financial condition[375](index=375&type=chunk) [Item 1A. Risk Factors.](index=107&type=section&id=Item%201A.%20Risk%20Factors.) There have been no material changes to the risk factors previously disclosed in the Company's 2018 Annual Report - **No material changes** to the risk factors disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2018[377](index=377&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.](index=108&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds.) This section details common stock repurchases made during the quarter under the Company's repurchase program Stock Repurchase Activity (Q2 2019) | Metric | Value | | :--- | :--- | | Total Number of Shares Purchased | 296,630 | | Average Price Paid Per Share | $35.61 | | Shares Purchased Under Publicly Announced Program | 296,335 | | Approximate Dollar Value Remaining Under Program | $89,447,425 | [Item 3. Defaults Upon Senior Securities.](index=108&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities.) The Company reported no defaults upon senior securities - There were **no defaults** upon senior securities[381](index=381&type=chunk) [Item 4. Mine Safety Disclosures.](index=108&type=section&id=Item%204.%20Mine%20Safety%20Disclosures.) This item is not applicable to the Company - Mine Safety Disclosures are **not applicable** to the Company[381](index=381&type=chunk) [Item 5. Other Information.](index=108&type=section&id=Item%205.%20Other%20Information.) No other information was reported under this item - **No other information** was reported under this item[381](index=381&type=chunk) [Item 6. Exhibits.](index=109&type=section&id=Item%206.%20Exhibits.) This section lists all exhibits filed as part of the Form 10-Q - Exhibits include corporate governance documents, employment agreements, **CEO/CFO certifications**, and XBRL financial data files[384](index=384&type=chunk) [Signatures](index=110&type=section&id=Signatures) The report is duly signed on behalf of Ameris Bancorp by its Chief Financial Officer - The report was signed by **Nicole S Stokes, Executive Vice President and Chief Financial Officer**, on August 9, 2019[386](index=386&type=chunk)