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Jax Daily Record Monday, Jan. 30, 201712:00 PM EST

Ameris Bancorp optimist about growth potential

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by: Mark Basch Contributing Writer

Ameris Bancorp had to put merger and acquisition activity on hold for the next few months because of a regulatory issue, but CEO Edwin Hortman remains optimistic about the bank’s growth potential this year.

“We haven’t done an M&A deal in nine months but if you look at the earnings gain that we’re going to have from our (new) line of businesses, I don’t know of an M&A deal that we could have done that would have given us that kind of earnings accretion,” Hortman said during the company’s quarterly conference call with analysts.

The new lines of business he was talking about include an equipment finance division to serve clients in the construction, transportation and manufacturing equipment sectors.

The company also last month announced a joint venture to provide credit on property and casualty insurance premiums.

Hortman said those two businesses could add 25 cents to 30 cents per share in earnings to Ameris, which reported adjusted operating earnings of $2.30 a share for 2016, up from $1.66 in 2015.

Ameris last month said it had to put a hold on any merger activity because it was in violation of the Bank Secrecy Act, a federal law requiring financial institutions to help the government prevent money laundering.

The bank blamed software issues for the problem and said it is already working to fix it by about midyear, but bank regulators issued an order preventing it from pursuing acquisitions until it regains compliance.

Hortman is optimistic that Ameris will resolve those problems soon.

“We’re still on track with our aggressive timeline and remain confident that we’ll be in a position by the middle of this year to get this lifted and be back participating in M&A activity,” he said.

“So as we look into the middle part of the year and start seriously talking about an M&A deal, layering that on (to the new businesses) makes me really optimistic,” he said.

Ameris last year completed a big acquisition when it acquired Jacksonville Bancorp Inc. and moved its executive offices to Jacksonville.

Helped by that acquisition, Ameris’ total assets grew by 23 percent last year to $6.9 billion.

EverBank Financial earnings flat

All of Jacksonville’s publicly traded banks reported earnings over the last 10 days.

EverBank Financial Corp. reported adjusted fourth-quarter earnings of $44.1 million, or 34 cents a share, little change from 2015 fourth-quarter earnings of $42.9 million, or 34 cents.

During the quarter, EverBank stockholders approved the company’s proposed acquisition by Teachers Insurance and Annuity Association of America, or TIAA.

With the merger pending, EverBank did not hold a conference call to discuss the results or provide commentary in its news release.

Atlantic Coast Financial triples earnings

Atlantic Coast Financial Corp. reported fourth-quarter earnings of 13 cents a share, up from 4 cents in the fourth quarter of 2015.

During the fourth quarter, the company’s Atlantic Coast Bank completed its conversion from a federally chartered savings bank to a Florida-chartered commercial bank.

“This conversion will allow us to work with regulators in Florida going forward in a more expedient and efficient way,” CEO John Stephens said in a news release.

Bob Ramsey of FBR & Co., the only analyst following Atlantic Coast Financial, said operating earnings were 2 cents higher than his forecast.

“We continue to like ACFC given its good loan growth, scaling profitability, and scarcity value as one of only two community banks remaining in Jacksonville,” Ramsey said in a research note.

FirstAtlantic Financial earnings up 3 percent

The other remaining Jacksonville community bank, FirstAtlantic Financial Holdings, reported earnings rose 3 percent for all of 2016 to $3.7 million, or 62 cents a share.

The company said its FirstAtlantic Bank subsidiary’s asset quality continues to improve, with its ratio of nonperforming assets to total assets dropping from 0.83 percent to 0.63 percent.

Nonperforming assets includes overdue loans and loans that are not being repaid at all.

CSX rumors continue

Speculation about CSX Corp.’s future continued last week after former Canadian Pacific Railway Ltd. CEO Hunter Harrison indicated interest in taking over the Jacksonville-based railroad company.

Harrison retired from Canadian Pacific nearly two weeks ago and the Wall Street Journal reported he is teaming with fund manager Paul Hilal and his Mantle Ridge fund to take on CSX CEO Michael Ward.

Harrison has a reputation as a cost-cutter who improved earnings at Canadian Pacific and before that at Canadian National Railway Co.

The Wall Street Journal reported over the weekend that Harrison and Hilal were trying to negotiate a deal to get several seats on CSX’s board.

Bloomberg News last week reported Harrison has the backing of other fund managers in his attempt to become CSX’s chief executive, including Sandy Pomeroy of Neuberger Berman Group.

Meanwhile, The Associated Press reported Harrison’s separation agreement with Canadian Pacific prohibits him from working at Canadian National, Union Pacific Corp. or BNSF railroads.

However, it does allow him to go to CSX or two other major railroads, Norfolk Southern Corp. and Kansas City Southern.

Since Harrison hasn’t made a public statement about his plans, everything is speculative, but CSX’s stock has been rising on sentiment that a major move is coming.

BMO capital analyst Fadi Chamoun raised his rating on CSX from “market perform” to “outperform,” expecting Harrison to get his way.

“Our constructive thesis is predicated on Mantle Ridge LP being successful in its effort to install Hunter Harrison as CEO of CSX. We believe that the probability of this occurring is fairly high without going down the road of a bruising proxy battle,” he said in a research note.

Wolfe Research analyst Scott Group said it won’t be so easy.

“Given Hunter’s tremendous track record at CNI and CP, we imagine that investors would overwhelmingly support Hunter if they become comfortable with his health and plan,” Group said in a research note.

“That said, CSX was mostly successful in defending itself against activist investors back in 2008, and Mantle’s implied stake in CSX of about 3 percent isn’t overwhelming,” he said.

ParkerVision again faces delisting

After saying it was looking for potential acquisitions, ParkerVision Inc. said it once again is in danger of losing its Nasdaq stock listing.

The Jacksonville-based company, which is developing wireless technology, said in a Securities and Exchange Commission filing it was notified it could lose its listing because the total market value of its stock has been below the minimum $35 million required for inclusion on the Nasdaq Capital Market.

It can regain compliance if the market value exceeds $35 million for 10 consecutive business days during the next six months.

ParkerVision was threatened with delisting a year ago because the trading price of its stock had been below $1, but it enacted a 1-for-10 reverse split that lifted the price above $3.

The stock has been trading between about $2 and $2.50 for the past month.

A delisting would make it difficult for ParkerVision to pursue an acquisition strategy because any deals would likely involve an exchange of stock.

J&J Vision Care revenue up 11%

Johnson & Johnson last week reported its Jacksonville-based Vision Care subsidiary increased revenue by 11.3 percent in the fourth quarter to $721 million.

The contact lens maker is getting ready to expand its business with the acquisition of Abbott Medical Optics, which will add $1.1 billion in annual sales and three ophthalmic products. That acquisition is expected to be completed during the first quarter.

Johnson & Johnson CEO Alex Gorsky said in the company’s quarterly conference call last week the acquisition will make the Vision Care unit a global leader in the industry.

“If you look at the growth rates, I mean, we ended up with a double-digit growth rate in Q4 by that team and they’ve introduced more than five new product launches,” he said.

“When you think about the broader capabilities that we have in our surgical space and the potential to marry those up with our Vision Care business, of course when AMO became available, we just thought that was a very good match, strategically and from an operational standpoint.”

FIS raises dividend

Fidelity National Information Services Inc., or FIS, announced a dividend increase last week.

The Jacksonville-based provider of bank technology services said its board approved an increase in the quarterly cash payment from 26 cents a share to 29 cents.

Analyst upgrades

Regency Centers

SunTrust Robinson Humphrey analyst Ki Bin Kim last week upgraded his rating on Regency Centers Corp. from “hold” to “buy,” saying “we see renewed upside in the pro forma combined company” as Jacksonville-based Regency seeks to complete its merger with Equity One Inc.

“The combined company will become one of the bellwether stocks in retail, in our view, supported by high quality assets, high quality management, excellent balance sheet, which is deserving of a premium valuation,” Kim said in his research report.

The merger of the two shopping center developers which specialize in grocery-anchored centers is expected to be completed late in the first quarter or early in the second quarter.

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