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Ameris Bancorp (NASDAQ:ABCB)
Q4 2019 Earnings Call
Jan 24, 2020, 9:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day, and welcome to the Ameris Bancorp Fourth Quarter 2019 Financial Results Conference Call. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Nicole Stokes, Chief Financial Officer. Please go ahead.

Nicole S. Stokes -- Executive Vice President & Chief Financial Officer

Thank you, Sarah, and thank you to all who have joined our call today. During the call, we will be referencing the press release and the financial highlights that are available on the Investor Relations section of our website at amerisbank.com.

I'm joined today by Palmer Proctor, our CEO; and Jon Edwards, our Chief Credit Officer. Palmer will begin with some opening general comments and I will discuss the details of our financial results before we open up for Q&A.

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 may cause result 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 any forward-looking statements as a result of new information, early development or otherwise, except as required by law.

Also during the call, we will discuss certain non-GAAP financial measures in reference to the 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 Palmer for opening comments.

H. Palmer Proctor Jr. -- President & Chief Executive Officer

Thank you, Nicole, and thank you to everybody who's joined our call this morning. I'm excited to share a few highlights about the quarter in the year and then I'd like to spend some time discussing the plan and opportunities we have going into 2020.

For the quarter, we earned $66.6 million, or $0.96 per diluted share on an adjusted basis. This represents a 1.47% return on average assets and an 18.45% return on tangible equity. As expected, our efficiency ratio improved this quarter to 55.61% as we continue to realize our cost saves from the Fidelity acquisition. And for the year 2019, we earned $22.9 million, or $3.80 per diluted share on an adjusted basis and this is up 12% over 2018. This represents a year-to-date return on assets of 1.52% and an improvement from the 1.50% reported last year. I'm also pleased to report that our efficiency ratio improved during the year from 56.19% last year to 55.67% this year.

On our third quarter call, I reviewed, what we said we were going to do when we announced the Ameris and Fidelity merger and how we were tracking with those plans. And I'm pleased to say that we continue to be on track with the plans. The core data conversion, as many of you know was completed in November. It was planned as any conversion. We certainly identified some things we can do better next time, but overall, the conversion went very well. We also closed two additional branches in the fourth quarter, bringing the total branches closed to 29. We've had very little to no attrition of core deposits from these closures.

And one final example I want to share on how close we are to the stated plan is, we previously guided, we expected double-digit growth in tangible book value in 2019 and that's even with the Fidelity dilution. And our actual growth in tangible book value was 10.5% for the year. That announcement we had modeled our tangible book value would be right at $20.80 and at the end of the year, we came in at $20.81, which was exactly in line with projections and this is quite an accomplishment and we remain focused on that tangible book growth.

Now I'd like to turn our attention to the current plans. We recently spent several days with our Board of Directors on our strategic planning, and I have to say, we all walked away extremely energized about the future. When you look at the markets we operate in, we have critical mass and we've got tremendous opportunity. In many of our markets, as you know are high-growth areas with estimate growth rates of anywhere from 9% to 11% such as the Atlanta, Orlando, Jacksonville, Colombia, of course, the list goes on. Yet we still have the stability in the core strength of our non-metro stable markets as well. Everyone keeps talking about disruption and how they're going to capitalize on it, and while we remain opportunistic and our markets are fully aware that we are in control of our own destiny.

We continue to look for and recruit top talent that also had the luxury of knowing that we can be successful on 2020 with our current A-Team [Phonetic] that we have in place. So our focus remains for the execution of our organic growth strategy without distraction of M&A at this time. And that focus really includes four core strategies. First one, being the core deposit funding; second is asset quality; third is operating efficiencies; and last but not least is growth in the tangible book value. And these are all strategies that will continue to drive shareholder value for the Company.

And I'll stop there now and turn it over to Nicole to discuss our financial results in more detail.

Nicole S. Stokes -- Executive Vice President & Chief Financial Officer

Thank you, Palmer. As you mentioned, we're reporting adjusted earnings of $66.6 million, or $0.96 per share for the fourth quarter compared to $45.9 million, or $0.96 for the fourth quarter of last year. These adjusted results primarily exclude the merger charges, the losses on the sale of branch buildings, a partial reversal of the gain on BOLI, MSR impairment and expenses related to the government investigations that we announced in the fourth quarter. Including these items we're reporting GAAP earnings of $61.2 million, or $0.88 per share. The $66 million of adjusted net income represents a 45% increase over the fourth quarter of last year and the 96% -- $0.96 per share EPS is consistent with what we reported last year. Our adjusted return on assets in the fourth quarter was 1.47%, which was a slight decrease from the 1.57% reported last quarter and the 1.61% reported in the fourth quarter of last year. Our return on assets was negatively impacted during this quarter by elevated loans held for sale balances as we integrated our mortgage delivery teams and they had record production levels.

For the full year 2019, our adjusted ROA was 1.52%, compared to 1.50% last year. Our adjusted return on tangible common equity was 18.45% in the fourth quarter of '19, compared to 18.95% last quarter and 20.95% in the fourth quarter of last year. For the full year, our 2019 adjusted return on tangible common equity is 18.74%, compared to 19.18% last year. As Palmer mentioned, we remain focused on tangible book value. For the quarter, we saw an increase in tangible book of $0.52 in the quarter to $20.81. Ironically, this is the exact table book value per share that we had at June 30, 2019, the day before the Fidelity acquisition. For the full year of 2019, we had over 10% increase in tangible book value of $1.98 per share from $18.83 at the end of last year to $20.81 at the end of this year. We're pleased with the increase in tangible book value, considering it absorbed the Fidelity as well as the repurchase of about $18.5 million of stock during the year.

During the fourth quarter, our net interest margin increased by 2 basis points from 3.84% to 3.86%. This increase is mostly due to additional accretion income during the quarter related to the workout of a problem loans that had a large discount tied to it and also early payoffs from acquisitions. I don't think the future in accretion income will be as high as the fourth quarter and I think it will normalize in 2020 to about an average of $3 million per quarter. Also in the fourth quarter, the elevated mortgage loans held for sale negatively impacted our margin by 8 basis points.

I know I said last quarter that we expected to shrink that during the fourth quarter, but based on production, it actually increased. Basically, our mortgage group refill the bucket faster than they were selling. I don't want to sound like a broken record. So we are monitoring that level daily, and we have sales currently pending to bring that balance down by the middle of the first quarter. I believe the ongoing balance going forward to be in the closer to the $900 million range, as previously guided that in the $500 million to $600 million range, but I think with the two mortgage companies coming together and our elevated level of production will stay in that $900 million range going forward.

During the fourth quarter, our yield on earning assets declined by 4 basis points while our interest-bearing deposits and total funding costs both decreased by 10 basis points. And for the year-to-date, our margin declined 4 basis points from 3.92% to 3.88% even with the three Fed cuts throughout the year. And during the year, our yield on earning assets increased by 17 basis points, while our funding costs increased by 34 basis points. Non-interest income grew over 80% from the fourth quarter of '18 to the fourth quarter of '19. The increase in service charge income due to the additional deposit account from Fidelity was partially offset by the Durbin impact and our mortgage revenue grew over 179% this quarter, compared to fourth quarter last year. Mortgage production was strong in the fourth quarter at $1.6 billion, compared to $414 million in fourth quarter last year. We saw a slight decline in the gain on sale percentage and we anticipate that we'll return to higher levels in 2020 as we continue to manage product mix and pricing models between Fidelity and Ameris.

Our adjusted efficiency ratio improved to 55.61% this quarter from 57.25% last quarter. And for the full year 2019, our adjusted efficiency ratio improved from 56.19% to 55.67%. We completed, as Palmer said, the core system conversion in November and we anticipate the realization of all cost saves by the end of the first quarter 2020 as we still had some administrative cost overhang in the fourth quarter numbers. However, some of these costs in the first quarter will be offset by typical first quarter cyclicality such as the increased payroll taxes that we will see in the first quarter. Total non-interest expenses were $122.6 million for the quarter. However, when you remove the management adjusted such as the merger and conversion charges that I already mentioned, our adjusted non-interest expenses totaled $118.3 million, down $8.5 million from the third quarter. Approximately half of that decrease within the core bank and administrative functions while the other half within the mortgage line of business, mostly in salaries and commissions.

On the balance sheet side, we ended the year with total assets of $18.2 billion, compared to $17.8 billion last quarter and $11.4 billion last year. We were pleased with our organic growth both on the loan and deposit side. Excluding the Fidelity acquisition, organic loan growth was $751 million, or 9.16% for the year. Organic loan growth this quarter slowed mostly due to seasonality and the continued repositioning of various portfolios. Total loan production in the bank was actually $1.1 billion, up over 81% from the fourth quarter of last year. Yields were down on new production, which was we expected due to the recent Fed cuts.

On the deposit side, we continued the momentum on non-interest-bearing deposits and improved our mix, so the non-interest bearing deposits now represent 29.94% of total deposits, compared to 26.12% a year ago. And for the full year of 2019, our non-interest bearing deposit growth was just over 15%, as our bankers continue to be focused on core deposit growth to fund the overall bank growth. At the end of 2019, our loan to deposit ratio was 91%, compared to 94% at the end of the third quarter and 88% at the end of last year. And credit quality remained strong. As you recall from our last call, we saw a slight bump in NPAs due to the Fidelity acquisition during the third quarter.

Our team was able to liquidate a significant portion of Ginnie Maes that caused that bump. So we're pleased to report that our non-performing assets as a percentage of total assets decreased 17 basis points, down to 56 basis points at the end of the year. This compares to 73 basis points last quarter and 55 basis points this time. For the quarter, our annualized net charge-off ratio was 9 basis points of total loans, 17 basis points of non-purchased loans. For the full-year 2019, our annualized net charge-off ratio was 10 basis points of total loans and 15 basis points of non-purchased loans, compared to 18 basis points of total loans last year and 27 basis points of non-purchased.

With that -- that was a lot of numbers. With that, I'll turn the call back over to Palmer.

H. Palmer Proctor Jr. -- President & Chief Executive Officer

Great. Thank you, Nicole. As said in the earnings release and I'll mention it again here, we went through a tremendous amount of change this year, including the largest conversion and integration in our Company's history. And to execute on our plan and deliver these types of financial results while having the distraction of everything that's happened this year is quite an accomplishment and I couldn't be more proud of our team. From the support staff to our customer facing teammates, these results are truly a group effort of the new combined Ameris team. And as we look forward into 2020, we remain up optimistic about the opportunities for growth and especially in the diversified lines of business that we have. However, that being said, we do operate in a very competitive market and we will not compromise the asset quality for the sake of growth.

So I'll close with this message again is that, you will see the Ameris continue to become more and more active but not more aggressive I'd like to thank everyone for listening to our fourth quarter earnings results and we look forward to 2020.

Now, I'll turn it back over to Sarah for any questions from the group.

Questions and Answers:

Operator

We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Tyler Stafford with Stephens. Please go ahead.

Tyler Stafford -- Stephens -- Analyst

Hey, good morning, guys and thanks for taking the questions.

Nicole S. Stokes -- Executive Vice President & Chief Financial Officer

Good morning, Tyler.

Tyler Stafford -- Stephens -- Analyst

I hopped on a couple minutes late, so I apologize if you covered this in the prepared comments, but Nicole just I did hear the outlook about the held for sale balance is coming back down toward around $900 million. So my question is, one, how quickly do you think it will get back toward that level? Is that to happen in the first quarter? And then, just in terms of the held for investment growth expectations for the year, can you guys comment on what you are expecting there?

Nicole S. Stokes -- Executive Vice President & Chief Financial Officer

Sure. Hey, first, I'll talk about the mortgage loans held for sale. So we have sales in progress today. So we anticipate that will come down by the end of the first quarter, and I realize that I said that at the end of the third quarter that we have allocated some additional resources to make sure that does happen in the first quarter. And like I said, we are monitoring that daily. We're still funding that with short-term FHLB advances. So as soon as that comes down, the FHLB advances can go back to normal levels as well. And I don't no, just to reiterate that that was about an 8 basis point decrease on the margin in the fourth quarter, having those lines go up instead of down.

So, and then your second question was on loan growth. And I think this goes a little bit to what Palmer has has alluded to, is that we are going to become more active but not more aggressive and then we are very cognizant of credit quality. So as we see things in the market changing, we will react accordingly. So I think in the past, we have guided loan growth in the 7% to 9%. I think that will soften a little bit, and could come more in the 5% to 7%. I think all of the -- all of our analysts are close to that 7%, but I definitely think that could come down a little bit from those 7% to 9% that I previously guided. We'll be closer in the, say, 5% to 7%, 6% to 7%.

Tyler Stafford -- Stephens -- Analyst

And just to be clear Nicole, is that 5% to 7% solely for held for investment growth or is that in the totality point to point total loan growth, which includes the run-off or the declines in held for sale?

Nicole S. Stokes -- Executive Vice President & Chief Financial Officer

No, that is just the held for investment.

Tyler Stafford -- Stephens -- Analyst

Okay. All right, perfect. Thanks for clearing that up. So with that, I guess reversion of the held for investment, excuse me, held for sale balances by the end of the first quarter, can you just talk about the kind of margin expectations given continued if there is continued funding cost relief with -- you guys were funding that held for investment I think with FHLB advances, I assume those are going to come down and then the held for sale balances will come down. So lots of kind of moving pieces there. Can you just give us a little bit of color on where you see the margin from here?

Nicole S. Stokes -- Executive Vice President & Chief Financial Officer

Sure. And I think that's a great question, and you said that very well. So you've got several components. So we've got the mortgage loans held for sale piece, if that comes down and the FHLB borrowings come down, again, that was 8 basis points in the fourth quarter, assuming that we get that for at least half the quarter. So I think that could be a 3 basis point to 4 basis point pick up in the first quarter based on when I think those loans -- when I think our balance is going to normalize in the first quarter.

Again, that's on --- we were talking about GAAP margin. And I don't necessarily focus on the margin, excluding accretion just because that's a non-GAAP measure, but when you look at our core margin -- I'm sorry, when you look at our GAAP margin this quarter that went up 2 basis points. We did have that elevated accretion in the quarter that we observed. We also had the loan for sale hit. So the net of those two was the positive two. When you look at our margin, excluding accretion that fell during the quarter by 11 basis points, but that had -- did not have the accretion pick up, but it only had the held for sale pick up or decline. So our margin excluding accretion could potentially increase next quarter because that accretion bound is already out of that number, but we will have to pick up from held for sale.

And when we look at our balance sheet, we really do you have, especially if the Fed hold with no additional rate, we are very much asset neutral in both the short-term and the long term. We actually have some positive momentum coming in on the deposit side. We were pleased with our reduction in rates there. But to give you an example, we have about 62% of our upcoming CDs that are maturing are greater than wholesale funding cost today. And just to give you an update on December, as an example, our CD production in December -- so our maturing CDs that rolled into new CDs they averaged 56 basis point decline in those CDs. So that is, when you think about fourth quarter, really we absorb two Fed cuts, we absorb the September Fed cut and the December because September was so late and then also the December. So, to be able to say that our December CDs reprice 56 basis points, that's a greater than 100% data on this repricing of CDs, which we were very pleased with. That was probably too many details, but just to kind of give you some color on the momentum that we have going in.

Tyler Stafford -- Stephens -- Analyst

Yes. Okay. So maybe just to summarize the margin excluding the accretion as we head into 2020 should have a few basis points of upward movement giving the lower held for sale balances. Is that -- is that few basis points of tailwind the right kind of way to think about that for the first quarter?

Nicole S. Stokes -- Executive Vice President & Chief Financial Officer

That's exactly right. For the net interest margin, excluding accretion.

Tyler Stafford -- Stephens -- Analyst

Yes.

Nicole S. Stokes -- Executive Vice President & Chief Financial Officer

And then our GAAP margin, I anticipate being fairly consistent.

Tyler Stafford -- Stephens -- Analyst

Got it. Okay. I will hop out and let somebody ask questions. Thanks.

Nicole S. Stokes -- Executive Vice President & Chief Financial Officer

Great. Thank you, Tyler.

Operator

Our next question comes from Casey Whitman with Piper Sandler. Please go ahead.

Casey Whitman -- Piper Sandler -- Analyst

Good morning, Palmer and Nicole. How are you?

Nicole S. Stokes -- Executive Vice President & Chief Financial Officer

Good morning.

Casey Whitman -- Piper Sandler -- Analyst

Just I guess, first I'd touch on capital. So you bought back small amount of shares in the quarter, but maybe just update us on your thoughts around capital management here and the use of of buybacks as we think about 2020?

Nicole S. Stokes -- Executive Vice President & Chief Financial Officer

Sure. So our stock buyback, we did in -- to timber our Board renewed for another $100 million of stock buyback. And then we realize it and we are seeing, you're saying that we are very cognizant of tangible book value and we want to preserve the capital at this point. And so a stock buyback is a little bit counter intuitive that but I think we will be opportunistic, we like having that in our tool belt. I don't think that we will go out, if we have $100 million approved. Our plan is not to go out and buy $25 million a quarter. But if we can buy a little bit each quarter, bring back a little bit of shares, but be able to absorb that tangible book value along the way, that's kind of what we're doing again, it's not our Number 1 strategy, but we'll be opportunistic if the opportunity comes up to buy stock of $6 million [Phonetic] worth a quarter.

Casey Whitman -- Piper Sandler -- Analyst

Understood. And then just thinking about expenses. I guess my first question would be, are there more like one-time cost to come between additional merger charges sale of bank premises anything like that that you expect going forward or is a pretty clean kind of run rate going forward here?

Nicole S. Stokes -- Executive Vice President & Chief Financial Officer

We feel like it's a clean run rate going forward. The only thing that we still have, when you look at what we adjusted for management adjusted the things that will go forward unfortunately, or the government investigation legal fees concerning that will continue to be there and then also the branch sales. I mean, if we have empty branch buildings and we have an opportunity to sell, we have current appraisals on all those and we feel like they are valued correctly, but you always have the opportunity that if one came along and we had a sale on -- I mean a loss on that. But as far as merger and acquisition, we feel like all of that is behind us, we've got all of that accrued and recorded in 2019.

Casey Whitman -- Piper Sandler -- Analyst

Okay. And then just to be clear on just the remaining cost saves coming out, are those coming out of the bank segment, mortgage segment or kind of a combination of both?

Nicole S. Stokes -- Executive Vice President & Chief Financial Officer

It's a combination of both. We have still, I would say, of what's left, we've got, it's probably a split 70-30 in kind of what I'd say lines of business being whether that's mortgage and then the other 30%. Well, actually, I'd unlike the back and look at the numbers, it's closer to 60-40, 60 in mortgage and 40 in administrative and bank side.

Casey Whitman -- Piper Sandler -- Analyst

Okay. I guess, and then just one last question I'll ask on credit. Do you guys have a preliminary estimate for the loan loss adjustment for CECL or any kind of commentary around what the day to impact might be on provisioning levels?

Nicole S. Stokes -- Executive Vice President & Chief Financial Officer

Sure. We actually have got, we are working on the disclosures for the 10-K so that will be much more robust. So I'm going to be a little bit hesitant until we get all of that out in the 10-K in just a few weeks. But we have all of our day one, day two entry. So we have a lower boundary and upper boundary. In our lower boundary, we're going to give a range is about $30 million range that we'll put in the 10-K. In that range, the lower range of that is very, very close to what we said all along being our total allowance plus our total discounts. However, there is a portion of those discount that are not on PCI, PCD loans. So that will continue into our accretion. And that rolls into that $3 million accretion number I gave. So there will be a day one entry to retained earnings for the portion of going into the CECL allowance that was not in our discounts. Just to get -- I will say on our unfunded commitments, that's a new component for CECL that range we believe it's $12 million to $17 million and that was not covered in our allowance or our discounts previously. So that is definitely a day one. And then we also had an additional that will come in as well in the first quarter, but we believe that the total adjust -- we know that the total adjustment in the first quarter is in line with our expectations and will be absorbed by earnings in the first quarter. We shouldn't see capital go down at the end of the first quarter like some banks might.

Casey Whitman -- Piper Sandler -- Analyst

Okay. Great, thank you for taking my questions.

Nicole S. Stokes -- Executive Vice President & Chief Financial Officer

Thank you, Casey.

Operator

Our next question comes from Brady Gailey with KBW. Please go ahead.

Brady Gailey -- KBW -- Analyst

Hey, thanks, good morning guys.

H. Palmer Proctor Jr. -- President & Chief Executive Officer

Good morning.

Brady Gailey -- KBW -- Analyst

When we're talking about 5% to 7% loan growth just held for investment loans, does that include the impact of continued shrinkage of the indirect auto book?

Nicole S. Stokes -- Executive Vice President & Chief Financial Officer

It does. That 5% to 7% is net of that run-off.

Brady Gailey -- KBW -- Analyst

Okay, great. And then looking at mortgage fees, I know fourth quarter is a seasonally soft quarter for mortgage, but we've seen some mortgage peers have relatively good mortgage quarters this quarter. Looking at your mortgage fees, they were down about 37% linked quarter on an annualized, but was there anything -- is there anything to note that would be included in those mortgage fees, I thought they would come a little better. So is there anything one time or anything to know within that mortgage fee line?

Nicole S. Stokes -- Executive Vice President & Chief Financial Officer

No, I think it's actually at the third quarter was such an anomaly. The third quarter was very, very high for us. I mean it was higher than we had projected with the Ameris and the Fidelity combined and so I think fourth quarter was in line. I know that there was an article that there is another bank that picked up some of our mortgage bankers and I think I have that number right in front of me of what our Florida production lies. But there was not a decline in our Florida production. When you look at production in a mortgage, our overall -- I mentioned, it is also well -- I'm jumping around a little bit, I don't need to do that. So fourth -- third quarter, our production was $1.8 billion and our fourth quarter production was $1.6 billion. So that's a very small decline and a lot of that is just fourth -- normal fourth quarter cyclicality. Our gain on sale percentage dropped from about 7 basis points. So, that accounted for some of that. And like I said, we anticipate that going back up, if we kind of work through some of the product mix and the pricing.

Brady Gailey -- KBW -- Analyst

All right.

H. Palmer Proctor Jr. -- President & Chief Executive Officer

More specifically, your question -- mortgage is still extremely robust for us and the Florida production this month was a record high. With that we did more volumes this month and for this quarter in Florida than we have historically in Florida. With the exit of several of those operations folks and a few of the originators. So we feel good about the production. And if you look more importantly, one of the things we always focused on and pride ourselves on is the purchase originations and if you compare last year's purchase origination volume fourth quarter to this year's is almost triple. So that kind of gives you an idea of the magnitude of the volume that we've been able to generate, especially, when you combine two large mortgage operation. So Robert Odom and his team have done an excellent job of doing the just that.

Brady Gailey -- KBW -- Analyst

All right, that's helpful. And then finally for me Palmer, I hear you on that M&A pause. We have seen several notable Southern merger of equals, and it's not the traditional one bank by another but kind of a MOE style deal. Is that -- when you say an M&A pause, are you more talking about you guys just continuing to buy other banks or would you consider some sort of a big picture strategic MOE with a life-size bank at this point?

H. Palmer Proctor Jr. -- President & Chief Executive Officer

Well, I think we've been pretty consistent in our response there. Our focus remains on the organic opportunities we've got in the incredible markets we're blessed to be in. So, we just don't need that distraction right now. We're getting the Fidelity acquisition fully integrated, we've got all of our right people in the right seats, and there's just tremendous opportunity here and we just don't need any distract from the M&A right now. And that's very consistent with the four to six quarters that we had said from the inception. So nothing has changed there.

Brady Gailey -- KBW -- Analyst

Okay. Got it. Thanks for the color guys.

Operator

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

Jennifer Demba -- SunTrust -- Analyst

Thank you. Good morning.

Nicole S. Stokes -- Executive Vice President & Chief Financial Officer

Good morning, Jennifer.

Jennifer Demba -- SunTrust -- Analyst

Nicole, question on expenses, you said, obviously there is seasonality in first quarter every year. But you'll realize the rest of your cost savings from LION. So as a result, do you think expenses will be flattish sequentially between fourth and first quarter?

Nicole S. Stokes -- Executive Vice President & Chief Financial Officer

I don't -- I think there is still room for a slight decline from the second -- from the fourth quarter of this year to the first quarter of next year. I do think it will be a slight decline as we continue to have -- like I said, we had an administrative overhang, so even though conversion was November 1, we held a lot of employees -- retained a lot of employees to make sure that that was all clear before they were displaced. And so, we do anticipate, but I just wanted to warn everybody, we always seems like every first quarter there is always -- you've got payroll taxes and some various other things that increase. One thing I wanted to -- maybe it will help when we were looking back and kind of going through some of our budgeting and strategic planning, when you look at Ameris and Fidelity combined, from 2018 to the 2020 expectations, our non-interest expense is about a 6% to 7% increase, but our revenue growth is greater than 15%. And I think that's really where we are working really hard to make sure that we execute on all of those cost saves. And then we continue to drive revenue, but there were a little -- there are a few other projects that will help efficiencies where we're reallocating some resource, and so we're definitely working to keep that efficiency ratio in the 54% range, to continue to drive that down below 54%.

Jennifer Demba -- SunTrust -- Analyst

Yes. Okay. And can I had to hop on a few minutes late. Can you talk about any merger disruption opportunities you guys have been able to capitalize on thus far?

H. Palmer Proctor Jr. -- President & Chief Executive Officer

Yes. We remain, Jennifer, focused on the customer side of that equation. Obviously, we continue to look and interview for opportunities with talent. But as I mentioned earlier, we were just fortunate to already have boots on the ground and talent in place to capitalize from the customer side. So a lot of the growth you're seeing, we've had some really good success on the core deposit funding side from the disruption and the loan side remains extremely competitive, but we are getting a lot of looks at deals, some are probably a little too rich for us in terms of pricing but those opportunities I think will continue to exist as we move forward with the disruption in the market. We did hire, just -- this quarter, we focused -- the new hires we had on the lending side has been predominantly on the C&I side, and there are a couple down in Florida and then we've got two or three in Georgia that we hire this quarter.

Jennifer Demba -- SunTrust -- Analyst

Okay. Great, thank you.

Operator

[Operator Instructions] Our next question comes from David Feaster with Raymond James. Please go ahead.

David Feaster -- Raymond James -- Analyst

Hey, good morning, guys.

Nicole S. Stokes -- Executive Vice President & Chief Financial Officer

Good morning, David.

David Feaster -- Raymond James -- Analyst

Just a quick one. Following up on the seasonal expenses, do you have a -- could you quantify what the FICA and the payroll taxes are just kind of on a combined basis? The expectations for the first quarter?

Nicole S. Stokes -- Executive Vice President & Chief Financial Officer

We can. I need to -- give me one second. Maybe I should sing and dance. I don't have it right in front of me, but I will have it in just a few...

David Feaster -- Raymond James -- Analyst

And I guess if there is -- on the FDIC credit if you guys have any remaining and when you expect that to normalize?

Nicole S. Stokes -- Executive Vice President & Chief Financial Officer

We do have a little bit remaining and we'll use that in the first quarter. And so you'll see that bump come in the first quarter as well. That is another thing that will come out.

David Feaster -- Raymond James -- Analyst

I guess just, I'll ask something on the hiring front. Have you seen any change in the tone of conversations or the pace of conversations? Anecdotally, I've heard that things that might have picked up now that some of the deals have closed. And I guess just what are your expectations for new hires in 2020?

H. Palmer Proctor Jr. -- President & Chief Executive Officer

I'll tell you, our expectations are probably different than others in terms of our dependencies. We have less of a dependency on having to hire lenders, as many others did, that are new entrants into the market just because, as I mentioned earlier, we've got so many people already in place to take advantage of the opportunity. But I do think, to your point there is some acceleration and discussions, a lot of these payouts with the larger disruption, meaning the Church hit, those are February and March, and so I think you'll start seeing some movement first quarter there, end of the first quarter, and that's something I think will start to shift a little bit more, but the -- right now, the main thing we've got our existing team focused on are the customer opportunities. In addition, obviously looking for new talent. But I think that shift will continue to accelerate this quarter.

David Feaster -- Raymond James -- Analyst

Got it.

Nicole S. Stokes -- Executive Vice President & Chief Financial Officer

And David, that payroll tax is a little shy of $2 million.

David Feaster -- Raymond James -- Analyst

Okay. Terrific. And then just kind of -- we talked about it briefly, but credit's been very benign for you all. But I'd be interested to hear your thoughts on credit, whether you're seeing anything in the market that's causing you any concern either in Florida or Atlanta, it just kind of the competitive landscapes in your markets?

Jon S. Edwards -- Executive Vice President & Chief Credit Officer

Sure, David. The market is still pretty robust in general, especially in our four-state footprint, and there are really very few lending opportunities that we are really looking at right now. But the competitiveness as Palmer put it, we are more active in less and not more aggressive. So the competitiveness of the landscape is may be on the more aggressive side and we've had to kind of really look hard at that. But from a market perspective, there's plenty of new investment going on, there's plenty of new growth, there's plenty of new folks coming in. So the market is still remain pretty robust.

David Feaster -- Raymond James -- Analyst

Are there any specific segments where you're seeing that aggressiveness? And do you see it more in Florida or Atlanta? And I guess, from whom? Is it the big guys or non-bank lenders?

H. Palmer Proctor Jr. -- President & Chief Executive Officer

I think you have to kind of define what the growth aggressiveness [Phonetic] is. I mean if it's pricing that's consistent throughout the markets in which we operate. A lot of that is because we are in some very competitive market. From an asset quality standpoint, most of the banks have been pretty disciplined from what we've seen out there. Where you start tinkering with structure though in terms of amortization or REIT non-recourse, that's where we're starting to see a little pickup on deals that we did not see in the past. But in terms of cash flow and operations and solid sponsors that seems to be pretty consistent throughout, I'm not seeing a large or small banks kind of get too aggressive on that front.

David Feaster -- Raymond James -- Analyst

Okay. Perfect.

H. Palmer Proctor Jr. -- President & Chief Executive Officer

It's mainly on the structure and terms.

David Feaster -- Raymond James -- Analyst

Okay. Thanks for the color.

Operator

[Operator Closing Remarks]

Duration: 38 minutes

Call participants:

Nicole S. Stokes -- Executive Vice President & Chief Financial Officer

H. Palmer Proctor Jr. -- President & Chief Executive Officer

Jon S. Edwards -- Executive Vice President & Chief Credit Officer

Tyler Stafford -- Stephens -- Analyst

Casey Whitman -- Piper Sandler -- Analyst

Brady Gailey -- KBW -- Analyst

Jennifer Demba -- SunTrust -- Analyst

David Feaster -- Raymond James -- Analyst

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