Good day and welcome to the Ameris Bancorp’s Third Quarter 2015 Financial Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Mr. Dennis Zember, Executive Vice President and Chief Financial Officer. Please go ahead.

Thank you, Colyn. And thank you all for joining us today on the call. During the call, we’ll be referencing the slides and the press release that are available on the Investor Relations section of our website at amerisbank.com and also on SEC website in the 8-K that we filed this morning. Ed Hortman, President and CEO and myself, will be the presenters and available after our prepared comments to answer any specific questions you might have. Before we begin, I’ll remind you that our comments may include forward-looking statements. These statements are subject to risks and uncertainties. The actual results could vary materially. We list some of the factors that might cause results to differ materially in our Press Release and in our SEC filings, which are available on our website. We do not assume any obligation to update any of the forward-looking statements as a result of new information, early developments or otherwise, except as maybe required by the law. Also during the call, we will discuss certain non-GAAP financial measures in reference to the company’s performance. And we’ve got a reconciliation of these measures and our GAAP financial measures in the appendix to our presentation. And now I’ll turn it over to Ed Hortman.

Thank you, Dennis, and good morning everyone. And thank you for joining our third quarter earnings call. I’m going to review the highlights of our quarterly results, then give an update on our recent acquisitions, and make a few comments about M&A in general. First on the results front, we reported operating earnings per share of $0.49 which is up 13% from the $0.43 per share we reported in the same quarter in 2014. Total operating earnings for the quarter totaled $15.9 million, which is an increase of 35% from the third quarter of last year. Of course earnings per share growth is less than the growth in nominal [ph] earnings because of the additional 5.3 million shares we issued in first quarter of this year. Our operating results practically mirror the accrual results; we’re only excluding the net amount of 209,000 from actual earnings which included the combination of investment security gains and some larger conversion related costs that we incurred. Actual earnings for the quarter came in at $15.6 million compared to $11.7 million in the second quarter last year. Our operating return on average assets for the third quarter was 1.22, 1 basis point from where we were year ago. Operating return intangible capital was 16.3% which is down from 17% in the third quarter last year. Our return on tangible equity is lower in the current period, obviously due to the additional tangible equity compared to the year ago period. For the third quarter, we reported an increase in tax equivalent spread income of about $8.5 million or 21.5% when compared to the same quarter in 2014. We picked up about 800 million of liquidity when we closed the two acquisitions in the second quarter and we’re about two-thirds of the way through the initial efforts…

Okay, thank you Ed. I am going to add just a few comments about our results. And again, I’ll be referencing the slides that we published this morning. Ed covered most of our operating results through page five of the presentation. So, let’s move to slide six, concerning total revenue for the quarter. Total revenue for the quarter, excluding accretion, came in at $69.7 million. We are excluding about $3 million of accretion in the third quarter of this year which is almost exactly what it was in the same quarter a year ago. Against the first quarter of this year, before there was any impact from the two acquisitions, this is about $15.9 million quarterly increase in total revenue or about 30%. Approximately $10.7 million of that increase relates to the increase in revenue from the two deals that spread and non-interest income, so $10.7 million per quarter. There is about $2.5 million per quarter that relates to stronger mortgage results which is what we expect in the third quarter, especially relative to the first quarter of the year. And $1.9 million is the net improvement we’ve had in our core bank revenue which includes about $800,000 in lower covered loans revenue. We’re showing another pick up in the fourth quarter total revenue to $72.1 million. And again most of that is just what Ed mentioned in our ability finish the deployment of the liquidity we picked up in those two deals. Mortgage normally does slow in the fourth quarter; we expect that to happen but we expect slightly higher commercial loan fee as well as the slightly better quarter with SBA gain. Regarding our net interest margin, we came in at 3.81% in the quarter, when you exclude accretion income which is down 6 basis points from the…

I’ll start with on SBA. There’s been a lot of talk about that this quarter just as results have come out a little weaker than I think the Street had forecast. I know that GOS, gain on sale margin was down little bit, nothing huge but 100 basis points. Can you just comment on that business and what are you seeing as far as demand by that paper and again on sale spreads?

We are not seeing really any pullback in the gain on sale levels. For us, it was just not getting enough loans sold. I mean we show on one of our slides, we sold $8.8 million. We produced a good bit of loans that are not fully funded. So, we’ve been building a pipeline of SBA loans that were waiting to be fully funded before we can sale. And that’s again why we think fourth quarter will be better. For us, this year will probably be somewhere closer to 65 million to 75 million in total production. And we think each business development officer ought to be doing somewhere in the $10 million range. So again, for us, this business just hinges on recruiting the right people. And we’re doing that but it’s just we’re pretty selective on both the loan officer and the credits we’re putting out.

So, the purchase of the pooled arms, I think I’m reading you right that that will be done by the end of the year and that book should max out at about 550 at year-end and then from there on, the plan is to transition that into the regular loan book. Is that the right way to think about that?

Yes. I think 550 maybe a little higher than that. We picked up -- in the two deals we picked a 1 billion and 50 million of earnings asset, some portion of that we loaned. Well, 195 million of that was in loans, so it really left us with call it 850 million of real liquidity to invest. And we are debating internally and we like these purchase mortgage pools a little better than we thought we would. The cash flows are more reliable, actually faster than what we thought the yields are better relative to bonds. But I think somewhere between 500 million and 600 million is probably the right way I think.

And then the guidance for the core margin to be that’s 3.80 to 3.85, you add the accretion to that to get sure your reported margin accretion has been running around 3 million a quarter year-to-date. Do you think that’s ballpark kind of the right number over the next year or so? And once Jax becomes online, will that accretion -- will that quarterly accretion number pick up at all or will stay pretty much the same?

On Jax, we did -- we have a pretty conservative credit market, just under 5%, higher than their loan loss reserves. There could be some non-accretable debt flow over from that but we’re not as much -- we understand investor angst with the level of accretion. And again we’re not trying -- Ed and I’ve said several times that we’re serious about book value. So, where in the past we amount [ph] traded some book value in an M&A deal for a good credit mark, we’re not doing that as much. I don’t think you’ll see as much accretion coming of the Jax Bank deal, as you have the others. $3 million, I would say it’s somewhere $2.5 million to $3 million a quarter, maybe 20 basis points is what I would add for the pickup from accretion.

Okay, great. Congrats on the quarter and congrats on getting the stock in the 30s, well done.

Our next question comes from Tyler Stafford with Stephens Incorporated. Please go ahead.

Just a follow-up on Brady’s question on the purchase mortgage portfolio. How much cash flow should that throw off in ‘16?

At 500 million, we had forecasted about 150 million a year. So, if we say we take it to 600 million, that’s maybe 200 million a year.

And then with the remix that you guys are doing over the next couple of quarters and absent the impact from JAXB be, how much actual earning asset growth will we see in 2016 roughly?

We’re probably something into 5% range. And again that’s going to be -- we’re not wanted to standstill on the deposit side, but we’re not going to be aggressive given where we are on the mix of earning assets. So, 5% or so. It goes back to one thing what Ed had mentioned about the kind of capital build we expect, a lot of that comes from -- not a lot of growth in total assets just more of the remix.

Did you guys recognize any of the previously discussed cost saves in 3Q or should all that be coming over next couple of quarters?

There was some -- there was about probably $300,000 of the cost saves from Merchants & Southern, so on an annual basis about 1.2 million out of Merchants & Southern, the rest of it is personnel, system; most of that being realized this month, so probably have a full run rate going into the first quarter.

So with everything that you guys are doing on the expense side and earning asset side or mixing that, clearly going to make some good progress on the profitability and the efficiency ratio here in the next few quarters. Any commentary or thoughts on where profitability and efficiency could trend as we kind of get through this remix and cost cuts by year-end call it?

Our efficiency ratio is 60% and forecasting when we get that is difficult, but between these cost savings and the additional pick-up on revenue and the way we’re getting the revenue really is not -- there is no new expense load for that, probably second or third quarter that we get closer to that. Profitability ratios I think probably all way in the 1 in a quarter to 1.30 range and the capital build -- we probably not going to be doing 17% and 18% return on intangible capital but 15% or so is long-term I guess what we would forecast. What we did this quarter from an ROA standpoint, we feel pretty comfortable with. Obviously, we’ll pick up some with what you said the cost savings and the additional revenue, but probably 1.25 to 1.30.

And maybe one last one if I could sneak in, do you have the new purchase refi mix within mortgage this quarter?

I don’t have it for the whole quarter, but one of the marks was 91% purchase, 9% refi. And I can’t remember it was either July or August, but I don’t have it for the whole quarter but I’ll get that. Again it’s -- what we have been -- what it has been for quite a while driven with our construction lending with brokers -- excuse me with construction firms or with real estate brokers or real estate agencies, not really focused at all on refis.

Our next question comes from Christopher Marinac from FIG Partners. Please go ahead.

Dennis and Ed, I want to ask you about the risk management team and sort of what you have in place prior to the JAXB merger and what you have to do in addition to that as to sort of either meet standards or just bring them on board, you need a lot of additional team for that?

Chris, we have a really strong risk management team, we don’t need any bill there but I would tell you there is some -- every transaction we have anticipated, we have had a conservative effort and have the resources in place prior to seeking approval for those. And so in that vein, I think over the next six months or so, 12 months, you will see us building a little in compliance particularly in our key security areas that are not real gaps out but I think as we continue to grow, we’ll need more expertise. So, from a risk management perspective with Jacksonville Bank, we’re in good shape; we don’t need any bill there at all.

And would you envision as Jacksonville gets integrated next year that you consider additional external moves or will 2016 be more of an organic focus to you?

I mean if you look at our history, you can just kind of assume that we are going to continue M&A. There are still plenty of targets that meet our criteria. But I’ll reiterate what I already said, our focus, our number one focus is going to be delivering 2016 results and making sure our core machine is running smoothly and we’re making a progress we need to make on expense control disciplines. So, I guess the short answer to your question is yes, but let’s -- one of strategy as opposed to one strategy.

And just I guess one last question just to -- want to build a little bit more to look at your growth here in Atlanta. From the standpoint of sort of what you are seeing, have you been pleased to what the growth there and I guess elaborate on opportunity here locally?

We are very pleased with our production there. As we look around and see where opportunities are, that market is clearly an opportunity market. But with our large footprint, we’ve got opportunities -- similar opportunities in other markets. Atlanta is clearly the biggest market and we will continue to look at opportunities there.

Our next question comes from Peyton Green with Piper Jaffray. Please go ahead.

Good morning. Certainly congratulations on a very fine quarter. Just wondered, maybe Dennis, if you could comment a little bit more, as we get out kind of into the middle of 2016 and kind of what your thoughts are. I mean if we look at the bank separating out mortgage and SBA, certainly the mortgage and SBA businesses have been doing very, very well. The bank is still kind of operating with an efficiency ratio of around 70%. And another cost save initiatives that you’ve highlighted, really don’t kick in until 2016. But what is the core goal, from an efficiency prospective for the bank; what’s kind of the business model perspective of where you think the company should be, as of five plus billion asset entity business model going forward?

There is several -- I’ll give you several initiatives that we are working on and sort of highlight what you’ve mentioned in the core bank. We’ve made a big deal internally about the fact that we’ve been getting all of our growth really from M&A and from what you mentioned the non-interest income line of the business. And really our core bank is still 80%, has been struggling with economic situations. There is a lot of refinance business and it’s sort of hard to keep the assets on your balance sheet; a lot of banks are doing that. But for us additionally, the covered loan runoff are replacing that; 2014 was 70% and this year -- of our incremental revenue this year, it will probably be about 35% of our incremental. Going forward, I’d maybe point; I don’t think that’s going to be the case. Remixing the earning assets from purchase mortgage pools into commercial assets, there is a real pick-up in the company on production goals and production standards and fee income and fee income standards. And that we believe we are in the right economic period to be a little more aggressive. If you look at deposits, we’ve been growing non-interest bearing deposits in our company at right -- more than 20% organically and then probably another 20% through M&A, so we’ve built a really nice book of non-interest bearing deposits. But when you look at the rest of our deposit portfolio, we’re kind of -- we’re down or flat and so total growth in deposits without M&A is really in the single-digit. And so that’s not made our branches look as efficient as we wanted to. We’ve got initiatives to change that to see internal growth be -- in the deposit side to be better, like I was telling someone earlier, at least 5%. So, I think some of the growth initiatives that we’re expecting in the core bank is something that we’ve not seen growth in core bank revenues and at least the same feel on core bank operating expenses. When you back out the operating expense pick up that we’ve had from the M&A and you look at just what the bank’s done, it’s really not been that it’s not been that much. There is some discipline on operating expenses in the core bank and most of that’s just been because of more of a flat line on core bank revenues. I think that’s going to change.

So, if we looked at year-over-year and we saw $9 million increase in revenue and 7 and change million increase in expenses, is that what you are really talking about, keeping expenses flat than revenue growing?

I mean at least ought to be increasing. I mean revenue ought to be increasing. If we are increasing revenue at 9, we’re seeing maybe 4.5 million or 5 million increase in expenses, something that’s more closer to our 60% maybe even little accretive to that.

Our next question comes from Jennifer Demba with SunTrust. Please go ahead.

This is Michael Young on for Jennifer. Dennis and Ed, I was just curious with all the liquidity on the balance sheet, if we do get a rate hike, say at the end of the year, what could we expect to see you all do differently with that liquidity or even elsewhere within the franchise if we start to see rates rising there?

I think if -- Michael, if we see rates rise, I don’t there is -- if we see rates rise, the 25 or even 50 basis points that’s been talked about. I don’t know if that would cause the change in our business plan. I think what it might do is it would hopefully increase -- there’d be some increase in say 5 or 10-year treasuries and spreads that would -- a lot more spreads that would slow down the pace of refinance activity in commercial assets and probably see more of our production hitting the balance sheet in the net fashion. That we might -- if that were the case, maybe we -- right now we are looking at the 12% to 15% growth in our organic loan book, maybe we be more careful with staying at the top end of that range.

And also just as we look out to next year, what areas maybe excluding SBA and mortgage but on the lender side, what geographies or product types are you targeting, maybe more hiring or growth in?

Right now, we have only got about $75 million of residential construction, that’s outstanding and then we’ve got lines that are obviously larger than that. But for our loan portfolio that sort of tracking to $4 billion that we feel like we could stand a little more concentration there, so the residential construction but it’s nothing we’d be looking at. And as far as market, our top five markets are what they have been Atlanta; Jacksonville; Savannah; Charleston; Columbia. With our M&S deal, we are in Gainesville, Florida; really that’s a pretty good market. We are Greenville, South Carolina, really that could be a good market for as well. That answer your question?

Sure. But any specific targeted plans on hiring in any of those markets specifically?

We are definitely looking to hire -- say, we are looking to hire really in all those markets. If we get an opportunity at the right cylinder, absolutely we’re looking all of those markets for a new hire.

Our next question comes from Peyton Green with Piper Jaffray. Please go ahead.

Dennis, I wanted to ask you a straight question the other way. Fed fund is flat through ‘16, and the loan income is down, how would that affect the margin guidance?

Maybe probably 5 to 10 basis points lower. It just -- if the tenure were to come down say into the 175 range, I guess it’s what you are asking -- if the tenure were to come down and we were to see what we would see as even faster payoff and refinance activity in the commercial assets. We would -- given our -- how much we want new commercial assets, we would probably track that even lower, so I would say probably -- I would say 5 to 10 basis points.

Okay, so core it’s 380, 385 would be…

370.

365, 370 somewhere in there. Okay, great. Thank you.

Our next question comes from Nancy Bush with NAB Research. Please go ahead.

I am looking at your last slide and I am looking at it as somebody who is new to your stock, so maybe I can take a fresh perspective here. When you talk about the discount to your peer group and the reasons for it, the overhangs causing the discount at TE and you note that lower volatility in earnings will drive higher multiples and you’ve got the Jacksonville conversion and acquisition coming up. And you are talking about conversations with companies in Atlanta. And I guess my question would be are you at that point of lower volatility and can you handle these announced acquisitions and ones that maybe announced in future without an added element of volatility that’s going to keep your valuation low?

Nancy, that’s a good question. I would just say that we’ve done quite a lot of M&A. We have done -- I guess we’ve average two transactions a year for the last seven years. So, we really understand how to manage that and what it takes to be successful and kind of the plateaus to avoid, and how to manage through that [indiscernible].

I mean I would say we are at a point especially doing the smaller deals, we have got to a point where we as Merchant and Southern, we did -- we announced the deal, we closed it, we got approval and closed it in about 100 days, did a conversion in the same quarter. So, I think we can defiantly on the smaller deals, announce one integrated sales risk management and all that and get the results.

The piece I think to the question is the discount valuation, when you look at the deals we have done, the last three, four deals we did were diluted to book value.

Right.

So as revenue, as earnings is ramped up, we’ve priced much differently on earnings than we are on book value. So, I think we’re being discounted because we diluted book value. So, going forward, what we’ve said for the last year or so, we’re not going to do any transaction that dilutes book value. We won’t bill book value back and we’re seeing that come back. So that we clearly have. The other overhang I believe is credit cost involved at brining credit. And we said in the second quarter that the large charge should help volatility there. And we came in less than that guidance number for the third quarter. But we think 2.5 million is still a good number going forward. So if we can remove those two overhangs, it will clearly help us.

This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Dennis Zember for any closing remarks.

I have no closing remarks. If you have any other questions or comments, you can call Ed or I directly. And with that we’ll say good bye, and have a good weekend.

The conference is now concluded. Thank you for attending today’s presentation. You may now disconnect.