Ameris Bancorp Reports Net Income of $3.1 Million for Second Quarter of 2008

PRNewswire-FirstCall -- AMERIS BANCORP (NASDAQ:ABCB) , reported net income of $3.1 million, or $0.23 per share, for the quarter ended June 30, 2008, compared to net income for the same quarter in 2007 of $5.4 million, or $0.39 per share. Net income for the year-to-date period totaled $6.1 million, or $0.45 per share, compared to $10.4 million, or $0.76 per share for the same period in 2007. Continued weakness in general economic conditions in several of the Company's markets led to higher levels of loan provisions and negatively impacted the results for both the quarter and year-to-date period. Commenting on the quarter's results, Edwin W. Hortman, Jr. said, "Given the current operating environment, I am encouraged by our Company's performance. During the most recent quarter, we dealt quickly and aggressively with credit quality issues and recorded provisions at levels that should not persist. We continue to experience dilution from the investment in our De Novo strategy and expect profitability to improve significantly as we move forward. Lastly, despite four quarters in this difficult environment, Ameris Bank has protected its capital base and remains well capitalized with approximately $30 million of excess capital."

The Company's provision for loan losses during the second quarter amounted to $3.7 million, an increase of $2.8 million over the $936,000 recorded in the second quarter of 2007. Similarly, provision for loan losses for the year-to-date period increased $5.5 million to $6.9
million for the first six months of 2008 compared to 2007. The high levels of provision for loan losses reflect the Company's efforts to quickly address problem credits and are the result of very weak real estate conditions in a few of the Company's markets. As in previous quarters, the majority of the deterioration in credit quality is concentrated in a small number of larger credits. The Company continues to benefit from a loan portfolio that is well diversified over four states and various loan categories.

Non-performing assets increased slightly during the current quarter to 2.08% of total loans, compared to 2.00% for the first quarter of 2008, and 1.57% at December 31, 2007. Net charge-offs on loans during the second quarter of 2008 were similar to levels experienced during the first quarter of 2008 at 0.75% of total loans. The Company's reserve for loan losses at June 30, 2008 was flat compared to December 31, 2007, at 1.71% of total loans.

Trends in Net Interest Margin

In spite of drastically lower short-term rates and intense competition for core deposits, the Company's net interest margin declined only slightly during the second quarter of 2008 to 3.98%, compared to 4.03% in the same quarter in 2007. For the six-month period ending June 30, 2008, the Company's net interest margin was 3.95%, compared to 4.08% in the same period in 2007.

Loan yields during the quarter decreased to 6.97%, compared to 8.46% in the same quarter in 2007. In the most recent quarter, loan yields decreased from the 7.56% reported in the first quarter of 2008. This decline in the most recent quarter was partially attributed to accelerated renegotiation of interest rates in the Company's fixed rate loan portfolio as customers have opportunities to significantly reduce expenses or accelerate repayment of principal.

The Company's cost of funds during the current quarter was 2.72%, compared to 3.84% in the same quarter in 2007, and 3.30% in the first quarter of 2008. During the quarter, deposit costs declined to 2.78% from 3.68% in the same quarter in 2007 and from 3.25% in the first quarter of 2008. The decline against the linked quarter resulted from continued repricing of all deposit accounts but the majority of the savings resulted from material savings on time deposit maturities. Non-deposit borrowing costs also declined in the second quarter of 2008 to 2.10% from 5.81% in the second quarter of 2007 due to the Company's restructure of these borrowings and the use of interest rate floors on several of the advances. Efforts continue to reduce interest expense and are focused primarily on time deposit maturities and improving the Company's overall funding mix.

Operating Income and Operating Expense Trends

For the year-to-date period ending June 30, 2008, net interest income increased 1.6% to $37.5 million, when compared to net interest income for the year-to-date period ending June 30, 2007. Non-interest income increased 17.4% to $5.3 million during the second quarter of 2008, when compared to the same quarter in 2007. Continued growth in service charges and mortgage fees led to the increase in non-interest income. Service charges on deposit accounts increased 19.3% to $3.7 million in the current quarter, when compared to the second quarter of 2007. Income from mortgage loan activities also increased primarily as a result of hiring and training efforts during the last half of 2007. Mortgage income rose to $855,000, an increase of 6.9% over the second quarter of 2007. The Company's mortgage lending activities do not subject the Company to appreciably higher levels of risk, as all loans are closed with guaranteed takeouts and are underwritten by the purchaser.

Operating expense increased during the quarter by 16.6% to $16.0 million, when compared to the same quarter in 2007. Year to date, operating expenses increased to $31.6 million, an increase of 11.9% when compared to the same period in 2007. As stated in past quarters, increases in salaries and benefits as well as in occupancy and equipment are largely the result of the Company's expansion efforts. While meaningful accretion to profitability levels and earnings per share are not expected for the next several quarters, the Company does not foresee additional dilution to current profitability and earnings levels.

Ameris Bancorp is headquartered in Moultrie, Georgia, and at the end of the most recent quarter, had 48 locations in Georgia, Alabama, northern Florida and South Carolina.
Ameris Bancorp Common Stock is quoted on the NASDAQ Global Select Market under the symbol "ABCB".

The preceding release contains statements that constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The words "believe", "estimate", "expect", "intend", "anticipate" and similar expressions and variations thereof identify certain of such forward-looking statements, which speak only as of the dates which they were made. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those indicated in the forward-looking statements as a result of various factors. Readers are cautioned not to place undue reliance on these forward-looking statements.