Ameris Bancorp (ABCB) Q4 2017 Earnings Conference Call Transcript

Ameris Bancorp (NASDAQ: ABCB) Q4 2017 Earnings Conference CallJan. 26, 2018 10:00 a.m. ET

Prepared Remarks:

Operator

Hello, everyone, and welcome to the Ameris Bancorp Fourth-Quarter 2017 Financial Results Conference Call. All participants will be in the listen-only mode. Should you need assistance, please signal a conference specialist by pressing the * key followed by 0. After today's presentation, there will be an opportunity to ask questions.

To ask a question, you may press *, then 1 on your telephone keypad. To withdraw your question, please press *, then 2. Please note that this event is being recorded. I would now like to turn the conference over to Nicole Stokes.

Please go ahead.

Nicole Stokes -- Chief Financial Officer

Thank you, Steven, and thank you for all who joined our call today. During the call, we will be referencing the press releases and the financial highlights that are available on the Investor Relations section of our website at amerisbanc.com. I'm joined today by Ed Hortman, our executive chairman, president, and CEO; and Dennis Zember, our executive vice president and chief operating officer. Ed will make opening comments about the quarter and the acquisition announcement made this morning, I'll spend some time going over the details of the financial results, and then Dennis will further discuss the acquisitions and our strategy going forward.

Before we begin, I need to remind everybody that our comments may include forward-looking statements. These statements are subject to risks and uncertainties and the actual results could vary materially. We will list some of the factors that might cause results to differ in our press release and in our SEC filings, which are available on our website. We do not assume any obligation to update or [Inaudible] our forward-looking statements as a result of new information, early developments, or otherwise, except as required by law.

10 stocks we like better than Ameris BancorpWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Ameris Bancorp wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of January 2, 2018

Also during the call, we will discuss certain non-GAAP financial measures in reference to our company's performance. You can see our reconciliation of these measures and GAAP financial measures in the appendix to our presentation. And with that, I'll turn it over to Ed Hortman for opening comments.

Ed Hortman -- Executive Chairman, Chief Executive Officer of Ameris Bancorp

Thank you, Nicole, and good morning, everyone. Not to correct Nicole but I will add that Dennis Zember is also the CEO of Ameris Bank and is the chief operating officer of the company, and Nicole, who you just heard, our new chief financial officer, has assumed the new role today after her much-deserved promotion on January 1, 2018. So, I'll make some opening comments about the quarter and then discuss the acquisition announcement that was made earlier today.Before I do that, I want to talk a little about your BSA and AMA program. The last investor call we had on November 17, I told you that we had a very high degree of confidence that the consent order was going to be lifted soon, and I'm proud to say that the order was officially listed on December 14, 2017, less than one year after we entered into the order.

I want to reinforce how proud I am of our team and our whole company for coming together and working through the consent order in record time. Not only did we comply with the order but we built the scalable program that's positioned to feed our needs as we continue to grow the bank. And additionally, we achieved that without losing our focus on our core bank and continued our positive momentum delivering outstanding financial results. For the fourth quarter, we reported operating earnings of $0.63 per share, which excludes adjustment of $0.36 attributable to reevaluation for deferred-tax assets from the lower federal tax rates as well as a few small items, merger charges, final expenses related to BSA, and a loss on the sale of a portion of the mortgage pool.

Including these charges we reported earnings of $9.2 million, or $0.24 per share. For the full year 2017, our operating earnings were $92.3 million, compared to $80.6 million in 2016. I really like the way we grew earnings in 2017, managing just a slight uptick in the margin, [Inaudible] credit cost and a very small decrease in operating efficiency despite continuing to invest where we needed to continue to grow our company. We grew earnings the way we anticipated by relying on our growth engine and managing as tight as we could on the operating expenses.

This was a challenging year, with the margin pressures from the flat yield curve and the normal operating expense pressures a fast-growing bank faces, but we managed through that and posted impressive operating results and stable-to-improving operating ratios across the board. Nicole will talk more about our earnings for the year and the quarter in a moment. So, I'll shift quickly to the other announcements we made this morning. First, we're on track with our Atlantic Coast transaction with our application submitted and being worked by the regulatory agencies.

I still anticipate that this will close on time near the end of the first quarter of 2018. Today, we're announcing that we've negotiated to buy the remainder of US Premium Finance, which we've been operating together with [Inaudible] for the past year. The vast majority of lift in earnings per share came when we entered into the joint marketing agreement, and this transaction will only slightly impact our earnings per share in 2019 that is increasingly accreted over the coming years with its impressive growth rate. Bill has agreed to continue working with us for an extended period to help us keep building the business and we're excited to be in this position with him and his outstanding team.

Lastly, we announced morning signing of a definitive agreement with Hamilton State Bank shares in Atlanta. This acquisition is important for several reasons. First, the deal will take us over $10 billion at closing and our economics on the deal were strong enough to more than pay for that cost using our normally conservative estimates and modeling assumptions. Second, maybe more importantly, the deal leverages us in one of the best markets in the Southeast.

We're already growing at a very respectable pace and this deal and this market assures our investors that our attractive growth rates will continue for the foreseeable future. Dennis will talk more about our vision for Atlanta shortly but as we put this deal together, I was remembering the success we've had executing our vision for our company's growth in the past decade with attractive deals and hard work and my confidence is really bolstered that this vision for the Atlanta market will be really meaningful for us and investors as we move forward. Lastly about the integration, Hamilton State operates a community bank model which fits very nicely with the Ameris Bank model and we believe will help in quick and effective integration of their employees and customers. We anticipate that this deal will close sometime in the third quarter this year after the appropriate regulatory approvals are received and the conversion will be completed soon thereafter.

Nicole, I'll stop here and turn the call over to you to review the financial results.

Nicole Stokes -- Chief Financial Officer

Thank you. As Ed mentioned earlier, we're reporting earnings of $0.24 per share and operating earnings of $0.63 per share for the fourth quarter, which excludes the $13.4 million tax expense or $0.36 per share attributable to the deferred-tax remeasurement related to the change in our future tax rate as well as a few small items that are discussed in detail in our press release. Outside of these charges we recorded operating net income of approximately $23.6 million, or $0.63 per share, compared to $22.5 million, or $0.63, in the same quarter last year. For the full year, we grew our operating earnings by 25%, to $2.48.

Our full year-to-date operating earnings [Inaudible] the same amounts for the quarter, and there's a reconciliation at the early part of the press release that you can reference that we detail out those numbers. During the fourth quarter, we recorded a reduction in our deferred-tax asset, or DTA, of $13.4 million, or $0.36 per share. That was due to the passing of the Tax Cut and Jobs Act. We expect that the lower tax rate will increase our EPS by about $0.44 to $0.46 per share in 2018, meaning about a nine-month earn-back on this write-off.

We do expect a slightly lower margin going forward from the impact of our [Inaudible] book by approximately 6 basis points and I considered all this in our EPS adjustment that we're projecting. During the fourth quarter, we sold approximately $120 million of the purchased loan pool that will be yielding around $290, expecting to reinvest those funds in loan products at the current production yield, which is about 200 basis points higher. The loan sale impacted earnings by about $475,000 during the fourth quarter because of accelerated amortization but it gives us some room on the loan-to-deposit ratio and positions us for a stronger margin and return on asset once those funds are reinvested, which we believe will be about a quarter. One of the key metrics we've focused on in 2017 is the operating efficiency ratio.

Our operating efficiency ratio for the fourth quarter was 60.88 and the ratio of the full year was 60.27. This is an improvement compared to our 2016 operating ratio of 61.55. However, we continue to press for a better ratio at the sub-60 level on a consistent basis. We believe the additional USPF purchase along with the efficiency we gained from our recently announced acquisitions of Atlantic Coast and Hamilton will get us where we want to be.

Our operating ROA for the year came in at 126, down from the 132 that we reported in 2016. The main driver in our slightly low ROA was mortgage's lower overall contribution to earnings, given the core bank's outside growth during the year. Our return on tangible common equity was $13.91 in the fourth quarter, compared to $17.25 for the same period last year. Its decline is attributable to our increased capital levels, as we have over $158 million more capital, or a 24% increase this year over last year.

Part of that increase comes from capital raised in the first quarter of this year and the remainder is due to our earning stream less dividends paid to shareholders. Our net-interest margin exclusive of accretion improved by 5 basis points during 2017 from 374 in 2016 to 379 in '17. For the year, our yield on loans increased by 13 basis points while our total cost of deposits increased by 60 basis points. We're going to talk about loan and deposit growth in a minute, but I want to mention here how important this increase in margin is considering how we grew the balance sheet organically during 2017 in the current interest rate environment.

The spreads between short- and long-term rates continue to tighten. So, I'm very pleased with our bankers and the effort that they've made to produce these positive results on our margin in this rate environment. Our impact on margin due to incremental asset growth is 469, which is exceptionally good in our current rate environment. Moving on to noninterest expense, noninterest expense increased $16.1 million in 2017.

However, if you remove some of those unusual items, like merger charges, Hurricane Irma, and also we have $14 million of expenses in the premium finance division in '17 that we didn't have in 2016. When you exclude those items, our noninterest expense actually increased only $7.5 million, or 3.7%. Of that increase, retail mortgage, warehouse lending, and SBA lines of business accounted for 41% of that increase. So, excluding those lines of business, our noninterest expense increased almost $4.4 million, or 2.8%.

While I know some of that was technical, my point here is that we were able to spend money where we needed to spend, such as [Inaudible] the strength in BSA group and building the infrastructure of the new equipment-finance division while controlling expenses in other parts of the bank. On the balance sheet side, we grew earning assets by $1 billion to $7.3 billion. We grew core deposits by approximately $665 million as well, with a good bit of that growth coming in the fourth quarter. The fact that we handled this many customers and this much growth and still moved a few basis points higher on the margin is commendable.

Going forward we expect the same amount of growth in 2018 except that we believe the momentum we're developing on the deposit side will come closer to fully funding our loan growth. We continue to see a fairly even split of growth between the lines of business that we operate versus the core bank. We still believe that this is sustainable going into 2018. As far as geography, our strongest and fastest-growing markets have been the Atlanta MSA, which supports the announcement we're making today.

For the year we also had really strong growth in Tallahassee, St. Augustine, Jacksonville, Florida, as well as Greenville, Charleston, and Columbia in South Carolina. Just a few comments on asset quality. Our asset quality remained strong, as our [Inaudible] net charge-off ratio was 12 basis points of total loans and 13 basis points of nonpurchased loans.

Our nonperforming assets as a percentage of total assets decreased to 68 basis points and we were able to reduce our nonperforming assets by $11.4 million, or over 17%, during 2017.With that, Dennis, I'll turn the call over to you for details on our acquisitions and continued strategy.

Dennis Zember -- Chief Executive Officer of Ameris Bank, Chief Operating Officer of Ameris Bancorp

Great. Thank you, Nicole, I'm going to be referencing the investor presentation that we filed this morning as an 8-K and it can be found again on the SEC's website or on our website at amerisbank.com. Let's start with the acquisition of the remainder of US Premium Finance. Our agreement to purchase the business, I believe, is a win-win for us and the company's owners.

In total, including the 5% that we purchased at the end of 2016, our purchase price of approximately $77 million equates to about 5.8 times what we expect 2018 earnings to be from this division. Ed mentioned and I'll second how pleased we've been with the division's growth, the quality of their sales and support staff, the depth of the relationships they have with their insurance agency customers, their consistently strong asset quality, their historical growth rate. Ed mentioned that the additional purchase will not materially affect our go-forward EPS since most of the benefit is already in our earnings, but the purchase will move almost all of the management fee out of our expense load and should reduce our efficiency ratio by about 100 basis points and increase our return on assets accordingly. We're also announcing the acquisition of Hamilton State Bank today.

We've been talking to Hamilton for a couple of years, all along developing our vision for being a significant player in the Atlanta market. We believe that there's real incremental value that we can build for our shareholders with this vision and the acquisition of Hamilton positions us to start realizing that quickly. The deal terms are 90% stock and 10% cash. Shareholders of Hamilton will receive 0.16 shares of Ameris stock and about $0.93 per share of cash.

Using our stock price as of last night, the shareholders of Hamilton will save about $9.47 per share, which work out to roughly about 2.05 times potential book. Our economics are pretty attractive. The deal is break-even to tangible book value and about 3% to 4% accretive to earnings after considering all of the costs and lost revenue for going over $10 billion. Outside of that and on a stand-alone basis, the deal would have been about 6% to 7% accretive to our 2019 EPS estimates.

Our strategy to hit these economics are very realistic and we expect very it's doable. Three main assumptions to discuss here: First, we're assuming growth of the acquired balance sheet of 10%. Nicole mentioned how strong our Atlanta bank is and in Atlanta already we have an outstanding commercial bank that consistently exceeds all of our growth and production goals. Their growth alone in 2017 would have amounted to about 75% of the forecasted pro forma growth that we have for this market and this deal.

Secondly, we're assuming cost savings of 35%, which can be achieved almost entirely with back-room consolidation and for which we have a road map to achieve. We're modeling and are confident that we can complete the conversion and integration before year-end and that 2019 will be a clean year with respect to our operating expense run rate. Lastly, we are assuming virtually no revenue synergies. This is our strong suit, especially in Atlanta, where we have our mortgage, SBA, and Premium Finance groups headquartered.

There's no doubt in my mind that these groups and our commercial bank will work together well and that our footprint here will afford us the opportunity to move the needle on noninterest income. Other financial metrics of the deal support our enthusiasm as well. Our pro forma capital levels after both deals are about 8.1% TCE, climbing to about 8.6% by the end of the year. The deal is slightly accretive to our net-interest margin by a few basis points and importantly it lowers our pro forma loan-to-deposit ratio by about 200 basis points.

Once we've done integrating, the deal will be accretive to our return on assets, our efficiency ratio, and our credit quality. Lastly, before I turn the call back to the operator, let me talk a little about going over $10 billion and give you some assurances on what that means for Ameris Bank and how prepared we are. First, we have been preparing and planning to go over $10 billion for almost two years. Last year's pause on M&A and our intense investment in compliance, BSA infrastructure, and systems better positions us today for being successful in this new chapter.

I look across the company, we are modeling about $1.5 million of additional operating expense, almost all of that centered in data-management and credit-analyst roles that would support the DFAST testing and modeling that we are already well under way with. Outside of that, all the cost of going over $10 billion are already baked into our current run rate. So, with that, I'll turn it back over to Steven for any questions.

Questions and Answers:

Operator

Thank you, sir. We will now begin the question-and-answer session. To ask a question, you may press *, then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys.

To withdraw your question, please press *, then 2. And our first question comes from Brady Gailey with KBW. Please go ahead.

Brady Gailey -- KBW -- Analyst

Hey, good morning, guys. So, maybe let's start with talking about the kind of five-year vision for a robust community bank in Atlanta that you talk about in the slides. So, you have $1.4 billion in Atlanta deposits right now. Where are you in Atlanta assets and do you have a goal in mind? Do you want to be $5 billion or some number five years out when you think about the Atlanta market?

Ed Hortman -- Executive Chairman, Chief Executive Officer of Ameris Bancorp

Brady, this is Ed. Thank you. Right now in Atlanta we have about $0.5 billion of total assets before this deal and it's almost all commercially oriented assets. I think when we say when we want to be material, when we look across Atlanta, we want to be material in enough of Atlanta so that we have a recognizable brand.

I think that's probably is something closer to $4 billion to 5 billion of total assets. We think, given our growth rate, that we can probably get half of that with just organic growth and probably another half of that with M&A opportunities that we think exist in Atlanta.

Brady Gailey -- KBW -- Analyst

OK. All right, that's all. And then, I think, when Hamilton raised some capital, they brought on some private equity holders. Can you just remind us how much of Hamilton is private equity-owned and if there's any sort of agreements or lock-up with those shareholders?

Ed Hortman -- Executive Chairman, Chief Executive Officer of Ameris Bancorp

About two-thirds of the shareholder base is private equity. As far as lock-ups, I don't believe we have, we do not have any formal lock-ups. I don't think we have any formal lock-ups. We've had quite a few conversations with them and got to understand their time horizons and have been comfortable with that.

Brady Gailey -- KBW -- Analyst

All right. Just lastly on capital, with this deal TCE will be kind of knocked back down into the 8% range. I know you guys accrete capital at a very fast pace just in your profitability nowadays, but just any update on how you're thinking about capital, would you like to have a little more excess capital for future M&A or do you think that you'll just let your capital kind of grow organically post-deal-close?

Ed Hortman -- Executive Chairman, Chief Executive Officer of Ameris Bancorp

I think what we want to do is see tangible capital growth by about 9%. I think the 9%, especially given how active we want to be in M&A, I think it's important that we stay on upper 8s, low 9s on TCE. The deferred-tax asset write-off and the final acquisition of US Premium Finance negatively affected that, but both of those sort of accrete capital back pretty quickly. I think what we do is probably stand close to pat on the dividend and just accrete capital all the way back.

Again, by the end of the year we think we're gonna be about 860. So, probably early next year we should see getting back close to about the 9% range.

Brady Gailey -- KBW -- Analyst

OK, great. Thanks for the color. Congrats on the deals.

Operator

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

Jennifer Demba -- SunTrust -- Analyst

Good morning. How long does the Hamilton State acquisition keep you on the M&A sidelines as you integrate this transaction?

Ed Hortman -- Executive Chairman, Chief Executive Officer of Ameris Bancorp

Jennifer, typically the way we look at that is, how long does it take us internally to prepare and then how long does it take to do the [Inaudible] conversion and complete all that integration? And I think one thing that helps us with Hamilton, and I mentioned it in my comment, was being very similar, like-minded about how we treat customers and how we approach customers, and the community bank model will help expedite the culture transition. So, I would expect as soon as we get the conversion done, we would be mentally prepared to be [Inaudible]. So, to really answer your question, we would continue to have conversations through the process and hopefully in 2019 we will greenlight ourselves to execute another opportunity.

Jennifer Demba -- SunTrust -- Analyst

OK. You've got an ambitious goal for Atlanta bank size. Do you anticipate adding any de novo branches inside, more inside the city limits or the business centers inside Atlanta?

Ed Hortman -- Executive Chairman, Chief Executive Officer of Ameris Bancorp

I appreciate you saying that but we don't think it's too ambitious. From what we've done in the past, we think that's really reasonable, and our expectation is we'll use the branches that we have and our business bankers. As you probably know, Hamilton kind of circles around Atlanta, not a lot of downtown presence. What we have now in Atlanta is midtown.

So, it'll complement each other but I don't think you'll see us doing a lot of de novo branching, no.

Jennifer Demba -- SunTrust -- Analyst

Thank you very much.

Operator

Our next question comes from Will Curtis with Piper Jaffray. Please go ahead.

Will Curtis -- Piper Jaffray -- Analyst

Hey, good morning, everyone. Maybe just talk a little bit about the earnings. The other expenses, I believe, you mentioned in the release, the increase is related to the Premium Finance. So, curious if there was anything else that may have been a little unusual this quarter in that line and how you're thinking about that line going forward?

Nicole Stokes -- Chief Financial Officer

So, in the, you mean the noninterest expense?

Will Curtis -- Piper Jaffray -- Analyst

Correct.

Nicole Stokes -- Chief Financial Officer

So are you asking about the items that were already excluded, some of those in the first table, such as the merger-related charges? And then we have that reconciliation in the press release. Maybe I'm not understanding your question, I'm sorry.

Will Curtis -- Piper Jaffray -- Analyst

Sure. I mean, I guess when I back those out, I've got other expenses at around a little over $11 million.

Nicole Stokes -- Chief Financial Officer

So, you backed out the US Premium Finance as well? And then we also have the build-out of the equipment-finance division that we had in 2017 that we did not have in 2016 and then we also have the strengthening of the BSA Group. So, on our financial tables where we exclude the BSA charges, we're only excluding the one-time charges to get it out of the consent order, like the look-back expense. We did not exclude the ongoing costs of building out that staff and that group. So, that increased in '17 versus '16.

Will Curtis -- Piper Jaffray -- Analyst

OK. And then maybe kind of sticking with expenses, are you guys planning on accelerating any planned projects, reinvesting any of the tax savings that may add to the expense base outside of the deals that you guys have pending?

Ed Hortman -- Executive Chairman, Chief Executive Officer of Ameris Bancorp

As of right now, Will, we don't. As of right now, we intend to just accrete capital back with that but for right now, no. Outside of the, any strategies or infrastructure field to accommodate the $10 billion cost, no, we don't.

Will Curtis -- Piper Jaffray -- Analyst

OK. And then maybe, Nicole, just to clarify the comment on kind of around the margins. You mentioned that the reinvestment will add 3 basis points and you expect that to be done in a quarter. Is that first quarter or is that second quarter when we will see that?

Nicole Stokes -- Chief Financial Officer

Probably by the second quarter to see all of that flow back in.

Will Curtis -- Piper Jaffray -- Analyst

OK and then you have the 6 basis point negative tax adjustment. All right. OK, that's it for me. Thank you.

Nicole Stokes -- Chief Financial Officer

Great. Thank you.

Operator

Once again, if you have a question, please press *, then 1 on your telephone keypad. And our next question comes from Christopher Marinac with FIG Partners. Please go ahead.

Christopher Marinac -- FIG Partners -- Analyst

Hey, thanks. Good morning. Just wanted to ask the Durbin Crossing [Inaudible] the curve for you or the Durbin charge should begin in the third quarter of '19. Is that right?

Ed Hortman -- Executive Chairman, Chief Executive Officer of Ameris Bancorp

That's right.

Christopher Marinac -- FIG Partners -- Analyst

OK, that's what I thought. And then from a strategic standpoint, I know you're talking in the slides a little bit about the sort of metro versus nonmetro. But can you talk a little about the loan side? How much in Atlanta are you doing that is closer to the city center? It's kind of like getting a look back to Jenny's question a few minutes ago.

Ed Hortman -- Executive Chairman, Chief Executive Officer of Ameris Bancorp

How much of our lending right now is in the Atlanta market?

Christopher Marinac -- FIG Partners -- Analyst

Correct and I guess, if you really refined it closer in to where midtown is and also to the sort of the main thoroughfares and in the marketplace.

Ed Hortman -- Executive Chairman, Chief Executive Officer of Ameris Bancorp

Our Atlanta group focus is really in DeKalb, Fulton, and Cobb counties. The vast majority of everything we do is in those markets. Really the further out you go, all of our lenders live probably 2 or 3 miles from our office there in midtown. The majority of the growth is definitely inside the perimeter.

Some of it, again, I'll tell you, is out in the Cobb County area but the vast majority is there in town.

Christopher Marinac -- FIG Partners -- Analyst

OK. So, with Hamilton's footprint as the map shown in the presentation, does that push the lending further out or do you simply use that as a funding mechanism to keep doing what you're doing with the current lending strategy?

Ed Hortman -- Executive Chairman, Chief Executive Officer of Ameris Bancorp

Exactly. I think we'll use that primarily as a funding mechanism. I think we anticipate being able to be very aggressive on the deposit side with a much larger footprint in Atlanta, which we've not been able to do. Hamilton does lending kind of in lines of business.

So, it's similar to what we do on the line-of-business side around here. We will do lending in some of those markets but the majority of our lending will continue to be focused the way we have it right now and we'll use that footprint for kind of really intense efforts on deposit-gather.

Christopher Marinac -- FIG Partners -- Analyst

Got it, OK. And then just from the timing standpoint, could you remind us of the sort of integration and systems conversions on Atlantic Coast and then how the timing will go with Hamilton?

Nicole Stokes -- Chief Financial Officer

Right now we have the regulatory approval pending. We still believe it will close in the first quarter, late in the first quarter. We have a data conversion plan for the second quarter. And then Hamilton we expect to close in the third quarter and then we'll start working on that conversion plan and typically it's [Inaudible] possible after the legal close.

Christopher Marinac -- FIG Partners -- Analyst

OK. So, hopefully, by year-end you'll have that one done so that finishes the year. OK, got it.

Ed Hortman -- Executive Chairman, Chief Executive Officer of Ameris Bancorp

Chris, historically, we've been able to do those conversions within 90 days and being the end of the year, it might be a little tricky but we would expect it to be within 90 days, which is what we've accomplished in every other transaction.

Christopher Marinac -- FIG Partners -- Analyst

OK. And there's still capacity to do additional transactions. You obviously just time it differently in terms of what you do with something else down the road?

Ed Hortman -- Executive Chairman, Chief Executive Officer of Ameris Bancorp

Exactly. It's not quite as easy as it sounds. There's an awful lot of work that goes into mapping and work ahead of time. So, it's very detailed and time-consuming but, as you know, with the number of deals that we've done, we have the procedure down fairly well and typically don't run into any big problems.

So, we'd expect it to be smooth.

Christopher Marinac -- FIG Partners -- Analyst

Sounds good, guys. Thank you for additional color. Appreciate it.

Ed Hortman -- Executive Chairman, Chief Executive Officer of Ameris Bancorp

Thank you.

Operator

And as a reminder, if you'd like to ask a question, please press *, then 1 on your telephone keypad. And our next question comes from Tyler Stafford from Stephens. Please go ahead.

Tyler Stafford -- Stephens -- Analyst

Hey, good morning, guys. Nice quarter and congratulations on the deal. I just hopped on a couple of minutes ago, so I apologize if you've already covered any of this. In terms of Hamilton, can you just talk about the revenue synergy potential here? What could be kind of incremental to the EPS accretion that you guys laid out that's not embedded in that?

Ed Hortman -- Executive Chairman, Chief Executive Officer of Ameris Bancorp

There are several things. One is, we get a good bit of our SBA opportunity from our existing branch network and from our existing bankers. So, we think there's a real opportunity there. The big opportunity is mortgage.

Hamilton has a pretty successful and pretty profitable reach on residential construction. When you look across Atlanta, there's several reports that showed them No. 3 or 4 in residential lending. Everybody on the call knows what percentage of our residential lending we capture in our mortgage group.

It's very high. So, I think that alone provides a pretty significant lift. If you look at what we do in Savannah, Jacksonville, St. Augustine, really all over South Carolina, we're No. 1 or 2 in mortgage originations in all of those markets, and that's what we expect in Atlanta. Although our group is headquartered in Atlanta, we do most of our mortgage production outside of that. So, this is all sort of a de novo opportunity for us. Hamilton does not have a very strong mortgage banking activity.

And so, we think that alone is pretty profitable. One more thing, Tyler. If you go back to all the other deals we've done, we really never model in mortgage revenues, we never model in SBA revenues, service charge synergy. We get those in virtually every deal.

And so, if there was one deal that I think we could have justified, it probably would have been this one.

Tyler Stafford -- Stephens -- Analyst

Got it. OK, helpful. Thanks. Dennis, on the USPF, can you just remind us of the mechanics now that you own 100% of that? What the financial impact on Ameris will be that we should see on our side?

Dennis Zember -- Chief Executive Officer of Ameris Bank, Chief Operating Officer of Ameris Bancorp

Right now we pay somewhere between $5.5 million and $6 million of management fees, which will be going away and in 2018. So, the pre-tax impact would probably be $5.5 million to $6 million. Nicole's confirming. And then the after-tax aspect of that.

Really that's the only difference and that's in the other noninterest expense line, I guess, that Will was asking about earlier. So, that's how we're forecasting the decrease in operating efficiency. From a revenue standpoint there's not going to be a margin or revenue lift because, again, all those revenues are already coming to us. Now that we're the 100% owner, we're not going to have to pay the management fees.

Tyler Stafford -- Stephens -- Analyst

OK, got it. And then all in with ACFC and Hamilton. Again, apologize if you already covered this. Is your loan-to-deposit ratio moving down or, I guess, stayed now, call it, in the low 90s?

Ed Hortman -- Executive Chairman, Chief Executive Officer of Ameris Bancorp

Yeah. As of the end of the year, our pro forma loan-to-deposit ratio with Atlantic Coast was about 93.5 and pro forma with Hamilton dropped about 200 basis points.

Tyler Stafford -- Stephens -- Analyst

Got it, OK. And then on the loan growth outlook side of things, the 15%-plus loan growth, can you just talk about the portfolios, I guess, the mix of that that you expect to see this year. What portfolios are going to kind of make up that 15%-plus growth?

Ed Hortman -- Executive Chairman, Chief Executive Officer of Ameris Bancorp

Yeah. I'll start with US Premium Finance. I think we would see just as much growth as we saw last year or about. I would say US Premium Finance and equipment finance will be probably about 25% to 30% of the growth.

I think that the core bank, what we do kind of commercially, just our bread-and-butter commercial real estate will probably end up being about higher which is about what it was this year. We're a little better on consumer than we've been, not that we're going to develop a lot of momentum there, but consumer and residential lending probably will make up the difference there, probably another 15% to 20%.

Tyler Stafford -- Stephens -- Analyst

OK. And just last within that, the mortgage loan pool expectations, could we see more one-off sales or will that just kind of naturally cash-flow off?

Nicole Stokes -- Chief Financial Officer

We think that that will naturally cash-flow off, going forward.

Tyler Stafford -- Stephens -- Analyst

Got it. OK, that's it for me. Thanks again.

Nicole Stokes -- Chief Financial Officer

Great, thank you.

Operator

There are no further questions at this time. I'd like to turn the conference back over Dennis Zember for any closing remarks.

Dennis Zember -- Chief Executive Officer of Ameris Bank, Chief Operating Officer of Ameris Bancorp

All right, thank you again for all that joined us. If you have any questions or comments, please feel free to call or email me or Ed or Nicole. Thank you. Have a great day.

Duration: 40 minutes

Call Participants:

Nicole Stokes -- Chief Financial Officer

Ed Hortman -- Executive Chairman of Ameris Bank, Chief Executive Officer of Ameris Bancorp

Dennis Zember -- Chief Executive Officer of Ameris Bank, Chief Operating Officer of Ameris Bancorp

Brady Gailey -- KBW -- Analyst

Jennifer Demba -- SunTrust -- Analyst

Will Curtis -- Piper Jaffray -- Analyst

Christopher Marinac -- FIG Partners -- Analyst

Tyler Stafford -- Stephens -- Analyst

More ABCB analysis

This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability.

Click here to learn about these picks!

*Stock Advisor returns as of January 2, 2018

The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Contents:

Prepared Remarks:

Questions and Answers:

Call Participants: