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Cost-Saving Initiatives to Boost Ameris Bancorp's Efficiency

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Ameris Bancorp ABCB has announced its plans to undertake cost-saving initiatives in a bid to lower annual operating expenses. As part of its efforts, the company intends to consolidate certain branches and trim data-processing fees. These efforts will help the bank slash costs by $20 million in 2019.

These initiatives will enable Ameris Bancorp to reinvest the savings for achieving its long-term growth targets without impacting earnings in 2018 and 2019. Also, these will help the bank increase its loan and deposit growth by pursuing a new commercial lending and deposit sales strategy. Moreover, this move will assist the company in investing in risk and data management.

Considering the fact that Ameris Bancorp’s operating expenses witnessed a compound annual growth rate of 17.4% over the last five years (2013-2017), the above-mentioned move is a strategic fit for the company. Further, while the company’s buyout of Atlantic Coast Financial Corporation resulted in $15.7 million of cost savings, Hamilton State Bancshares’ acquisition will likely result in savings of $15.3 million, once it is fully integrated.
Talking about the impact of these initiatives, Dennis J. Zember, Jr., Ameris Bancorp's president and chief executive officer, stated, “We have invested substantially in mobile and on-line delivery systems that increasingly mirror our customers' behaviors.  The convenience that we provide customers with these products and services, combined with the proximity to other Ameris Bank branches, gives me confidence that we are not impacting our growth rates or our ability to deliver an exceptional customer experience."

Despite the positives, shares of Ameris Bancorp fell 1.5%, following the announcement. 

Nonetheless, the bank has witnessed loan growth over the last five years. This, along with the cost-efficiency measures, is anticipated to combat the negative investor sentiment resulting from the bank’s decreasing net interest margin.

The company's shares have rallied 7.2% over the past year compared with 15.6% growth recorded by the industry.

Currently, Ameris Bancorp carries a Zacks Rank #3 (Hold).

Key Picks

A few better-ranked stocks in the same space are CBTX, Inc. CBTX, The First Bancshares, Inc. FBMS and American National Bankshares, Inc. AMNB. While CBTX and The First Bancshares flaunt a Zacks Rank of 1 (Strong Buy), American National carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Over the last 60 days, the Zacks Consensus Estimate for CBTX’s current-year earnings has been revised 8% upward. Its share price has gained 29.6% in the past year.

The First Bancshares’ earnings estimates for 2018 have been revised 2.3% upward over the past 60 days. Its shares have rallied 35.9% in a year’s time.

Over the last 60 days, American National’s 2018 earnings estimate moved 3.5% north. Over the past year, its share price has appreciated 1.4%.

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American National Bankshares, Inc. (AMNB) : Free Stock Analysis Report
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