AN NU AL RE PORT
7
0
0
2
In many respects, 2007 proved to be a very challenging year for our industry and for Ameris Bancorp. Although it was the second highest net
income year in our Company’s history, financial results were a disappointment. I am confident in our business strategy and the capabilities of our
experienced bankers to show improved financial results as we move forward into 2008 and beyond.
Our disappointing financial results were mainly the result of two factors. First, our exposure to a drastic slowdown in real estate activity and values
caused higher than normal levels of non-performing assets requiring additional loan loss provisions. Most of our quality issues have been centered
in a handful of larger loans where the borrowers’ capacity to service the debt became stressed when properties could not be sold. Aggressive
efforts to move through the collection process are underway and we believe the negative trends will soon moderate.
Second, our net interest margins came under severe pressure during the year as the inverted yield curve made it difficult to obtain higher yields
on loans and investment securities. Intense competition for core deposits and our growth strategy in larger metropolitan markets caused an
increase in our cost of funds that could not be offset with higher loan yields. Late in the year, the Federal Reserve began to reduce short-term
rates and helped restore a traditionally shaped yield curve. Although the rapid reductions in short-term rates are initially dilutive, a normalized
yield curve will help the Company return to historically healthy margins.
Even through the tough times, we succeeded in several key areas. Our growth strategy into South Carolina is ahead of schedule and less
dilutive than we anticipated. This initiative has proven that our commitment to allow seasoned and successful bankers to be decision makers
will attract top talent. As we become more successful with this style of management, utilizing this strategy in other markets, such as
Jacksonville, Florida, will accelerate the growth of our footprint.
Our Company’s efforts to streamline backroom operations are substantially complete. Banking offices are now staffed with teams of
bankers who are focused on sales and service. Staffed with exceptional talent, backroom operations associated with loans and deposits have
This is a difficult time in our economy, but we believe it will be short-lived. Disciplines around risk management and product pricing have
been centralized in centers close to our headquarters.
been sharpened by the environment in which we are operating. With a diversified portfolio across geographic regions and loan types, we
are positioned well to take advantage of opportunities that will be available. We will weather this period knowing that facing these
challenges will cause us to become better bankers. With honesty and integrity, we will continue to focus on our customers.
Our approach to managing risk will be deliberate. We will maintain our high standards as we provide exceptional customer experiences.
Again, I am confident in our business strategy and our Company’s direction. Our employees are empowered to be decision makers and
to be leaders in their communities – creating a positive community impact. Our customer base is growing and most have long-standing
relationships with their bankers. Our management team is dedicated to delivering a competitive shareholder return through our drive
We are very aware and appreciative of the trust you, our shareholders, have placed in our Company with your investment.
to be high-performing.
Respectfully,
Edwin W. Hortman, Jr.
President & Chief Executive Officer
WE WILL
MAINTAIN
OUR HIGH
STANDARDS
AS WE
PROVIDE
EXCEPTIONAL
CUSTOMER
EXPERIENCES.
U N I T E D B Y O U R A S P I R A T I O N S .
D I S T I N G U I S H E D B Y O U R C H A R A C T E R .
The world’s full of banks: big ones, small ones, corporate and locally owned. And while many are capable of handling
their customers’ money, few are in touch with what their customers – and their communities – really need to thrive.
Since our earliest beginnings, Ameris Bancorp has been dedicated to creating the kind of bank that stands out in a crowd.
Through employee empowerment, community involvement and diligent service, we’ve done just that. And with each new
bank location we open, that dedication grows. Today, we’re proud to have a strong presence in four states: Georgia,
Florida, Alabama and South Carolina, and are staying true to our goal of opening new locations at a progressive rate.
Deposits
4
2
5
6
0
9
,
4
2
2
6
8
9
,
,
2
3
2
5
7
3
1
,
,
3
6
1
0
1
7
1
,
,
5
6
2
7
5
7
1
,
(dollars in thousands)
18.0% compounded annual growth in total deposits.
O U R V I S I O N .
What it all comes down to is performance: the ability to
serve our customers quickly, effectively – with an unsurpassed
level of understanding and enthusiasm. To that end,
we’ve empowered each of our employees to deliver
what our customers need on a local level – eliminating
the layers of bureaucracy and unnecessary processes
that so many banks fall victim to. Every one of our
employees is encouraged to make the right decisions for
the right reasons – right on site, while providing an
exceptional customer experience.
O U R M I S S I O N .
Growth – personal, professional or community – can’t happen
in a vacuum. That’s why we’re constantly re-evaluating the
fundamentals of our everyday operations and the motivations
behind them. Growth is also multi-faceted; in order to be
authentic, it must benefit all aspects of a business or community.
And at Ameris Bancorp, that means running a business that
empowers employees, positively impacts our communities and
delivers on our responsibility to our shareholders.
Loans
9
3
5
,
0
4
8
4
7
0
,
7
7
8
8
4
0
,
4
1
6
,
1
1
5
9
,
2
4
4
,
1
1
0
6
,
6
8
1
,
1
(dollars in thousands)
17.7% compounded annual growth in loans outstanding.
CUSTOMER SERVICE ISN’T ABOUT
COMPLETING TRANSACTIONS OR
ANSWERING PHONE CALLS. IT’S ABOUT
RECOGNIZING FACES, ANTICIPATING
NEEDS, AND HELPING PEOPLE MAKE
THE MOST OF THEIR MONEY.
OUR EMPLOYEES ARE EMPOWERED
WITH THE ABILITY TO MAKE DECISIONS
THAT STRENGTHEN RELATIONSHIPS
AND ENCOURAGE GROWTH – FOR OUR
COMPANY AND OUR CUSTOMERS.
B O A R D O F D I R E C T O R S
Standing, From Left:
ROBERT P. LYNCH Occupation: Automobile Dealer | Main Employer: Lynch Management Company
GLENN A. KIRBO Occupation: Attorney | Main Employer: Kirbo & Kirbo, P.C.
J. RAYMOND FULP Occupation: Pharmacist | Main Employer: Harvey’s Pharmacy
BROOKS SHELDON Occupation: Retired Banker
Seated, From Left:
HENRY C. WORTMAN Occupation: Dairyman | Main Employer: Jackson & Wortman
EDWIN W. HORTMAN, JR. President & Chief Executive Officer | Occupation: Banker | Main Employer: Ameris Bancorp
DANIEL B. JETER Chariman | Occupation: Consumer Finance | Main Employer: Standard Discount
JOHNNY W. FLOYD Occupation: Timber and Realty | Main Employer: Floyd Timber Company & Cordele Realty, Inc.
Not Pictured:
EUGENE M. VEREEN, JR. Chairman Emeritus | Occupation: Investments | Main Employer: M.I.A., Co.
E X E C U T I V E O F F I C E R S
EDWIN W. HORTMAN, JR. President & Chief Executive Officer
DENNIS J. ZEMBER JR. Executive Vice President & Chief Financial Officer
CINDI H. LEWIS Executive Vice President, Chief Administrative Officer & Corporate Secretary
JON S. EDWARDS Executive Vice President & Director of Credit Administration
JOHNNY R. MYERS Executive Vice President & Regional Executive
C. JOHN HIPP, III Executive Vice President & Group President
MARC J. BOGAN Retail Banking & South Carolina Regional Executive
“
OUR COMPANY’S VISION IS TO BE A HIGH-PERFORMING
COMMUNITY BANK PROVIDING AN EXCEPTIONAL CUSTOMER
EXPERIENCE WITH WELL-TRAINED, EMPOWERED EMPLOYEES.”
- Daniel B. Jeter and Edwin W. Hortman, Jr.
F I N A N C I A L H I G H L I G H T S
7
0
0
2
T O T A L A S S E T S $ 2 . 1 1 B I L L I O N
S T R E N G T H I N T O T A L C A P I T A L
Shareholders’ Equity
A focus for the Company has been to provide adequate
capital to support growth. Along with Ameris Bank’s
double-digit growth in loans and deposits, Ameris
Bancorp has grown in total capital at a compounded
annual rate of 13.9% since 2003.
3
1
6
3
1
1
,
9
3
9
0
2
1
,
3
0
7
8
4
1
,
9
4
2
,
1
9
1
2
3
7
8
7
1
,
(dollars in thousands)
P E R S H A R E G R O W T H
I N C A P I T A L L E V E L S
Book Value
Tangible
Book Value
N E T I N C O M E $ 1 5 . 2 M I L L I O N
A M E R I S B A N C O R P
THIS PAGE LEFT INTENTIONALLY BLANK.
_____________________________________________________________________________________________________
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(cid:55) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2007
or
(cid:134) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to_______________.
Commission File Number
001-13901
AMERIS BANCORP
(Exact name of registrant as specified in its charter)
GEORGIA
(State of incorporation)
58-1456434
(IRS Employer ID No.)
24 SECOND AVE., SE MOULTRIE, GA 31768
(Address of principal executive offices)
(229) 890-1111
(Registrant’s telephone number)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock, Par Value $1 Per Share
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes (cid:134) No (cid:55)
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act. Yes (cid:134) No (cid:55)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90 days. Yes (cid:55) No (cid:134)
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will
not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in
Part III of this Form 10-K or any amendment to this Form 10-K. (cid:134)
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller
reporting company. See definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-
2 of the Exchange Act.
Large accelerated filer (cid:31)
Accelerated filer (cid:55)
Non-accelerated filer (cid:31)
Smaller reporting company (cid:31)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act).
Yes (cid:134) No (cid:55)
As of the last business day of the registrant’s most recently completed second fiscal quarter, the aggregate market value of the
voting and non-voting common equity held by nonaffiliates of the registrant was approximately $304.3 million.
As of February 22, 2008, the registrant had outstanding 13,556,770 shares of common stock, $1.00 par value per share.
DOCUMENTS INCORPORATED BY REFERENCE
The information required by Part III of this Annual Report is incorporated by reference from the Registrant’s definitive proxy
statement to be filed with the Securities and Exchange Commission pursuant to Regulation 14A not later than 120 days after the
end of the fiscal year covered by this Annual Report.
1
AMERIS BANCORP
TABLE OF CONTENTS
PART I
Item 1.
Business
Item 1a.
Risk Factors
Item 1b.
Unresolved Staff Comments
Item 2.
Properties
Item 3.
Legal Proceedings
Item 4.
Submission of Matters to a Vote of Shareholders
PART II
Item 5.
Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
Item 6.
Selected Financial Data
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
Item 8.
Financial Statements and Supplementary Data
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A.
Controls and Procedures
Item 9B.
Other Information
PART III
Item 10.
Directors, Executive Officers and Corporate Governance
Item 11.
Executive Compensation
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Item 13.
Certain Relationships and Related Transactions, and Director Independence
Item 14.
Principal Accountant Fees and Services
PART IV
Item 15.
Exhibits and Financial Statement Schedules
Page
4
17
21
21
22
22
22
24
26
44
44
44
45
47
48
49
49
49
49
51
2
CAUTIONARY NOTICE
REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained in this Annual Report on Form 10-K (this “Annual Report”) under the caption “Management’s
Discussion and Analysis of Financial Condition and Results of Operations,” and elsewhere, including information incorporated
herein by reference to other documents, are “forward-looking statements” within the meaning of, and subject to the protections of,
Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of
1934, as amended (the “Exchange Act”).
Forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations, anticipations,
assumptions, estimates, intentions and future performance and involve known and unknown risks, uncertainties and other factors,
many of which may be beyond our control and which may cause the actual results, performance or achievements of the Company
to be materially different from future results, performance or achievements expressed or implied by such forward-looking
statements.
All statements other than statements of historical fact are statements that could be forward-looking statements. You can identify
these forward-looking statements through our use of words such as “may,” “will,” “anticipate,” “assume,” “should,” “indicate,”
“would,” “believe,” “contemplate,” “expect,” “estimate,” “continue,” “plan,” “point to,” “project,” “predict,” “could,” “intend,”
“target,” “potential” and other similar words and expressions of the future. These forward-looking statements may not be realized
due to a variety of factors, including, without limitation, those described in Part I, Item 1A. “Risk Factors,” and elsewhere in this
report and those described from time to time in our future reports filed with the Securities and Exchange Commission (the
“Commission”) under the Exchange Act.
All written or oral forward-looking statements that are made by or are attributable to us are expressly qualified in their entirety by
this cautionary notice. Our forward-looking statements apply only as of the date of this report or the respective date of the
document from which they are incorporated herein by reference. We have no obligation and do not undertake to update, revise or
correct any of the forward-looking statements after the date of this report, or after the respective dates on which such statements
otherwise are made, whether as a result of new information, future events or otherwise.
3
As used in this document, the terms “we,” “us,” “our,” “Ameris Bancorp,” “Ameris” and the “Company” mean Ameris Bancorp
and its subsidiaries (unless the context indicates another meaning).
PART I
GENERAL OVERVIEW
ITEM 1. BUSINESS
We are a financial holding company whose business is conducted primarily through our wholly-owned banking subsidiary, which
provides a full range of banking services to its retail and commercial customers located primarily in Georgia, Alabama, northern
Florida and South Carolina. Ameris Bancorp (“Ameris” or the “Company”) was incorporated on December 18, 1980 as a Georgia
corporation. The Company’s executive office is located at 24 2nd Avenue, S.E., Moultrie, Georgia 31768, its telephone number is
(229) 890-1111 and its Internet address is http://www.amerisbank.com. We operate 46 domestic banking offices with no foreign
activities. At December 31, 2007, we had approximately $2.11 billion in total assets, $1.61 billion in total loans, $1.76 billion in
total deposits and shareholders’ equity of $191.2 million. Ameris’ deposits are insured, up to applicable limits, by the Federal
Deposit Insurance Corporation.
THE PARENT COMPANY
Our primary business as a bank holding company is to manage the business and affairs of our banking subsidiary, Ameris Bank
(the “Bank”). As a bank holding company, we perform certain shareholder and investor relations functions and seek to provide
financial support, if necessary, to our subsidiary.
AMERIS BANK
Our principal subsidiary is the Bank. The Bank, headquartered in Moultrie, Georgia, operates branches in Georgia, Alabama,
northern Florida and South Carolina. These branches serve distinct communities in our business areas with autonomy but do so as
one bank, leveraging our favorable geographic footprint in an effort to acquire more customers.
CAPITAL TRUST SECURITIES
On September 20, 2006, Ameris completed a private placement of an aggregate of $36 million of trust preferred securities. The
placement occurred through a newly formed Delaware statutory trust subsidiary of Ameris, Ameris Statutory Trust I (the
“Trust”). The trust preferred securities carry a quarterly adjustable interest rate of 1.63% over three-month LIBOR. The trust
preferred securities mature on December 15, 2036 and are redeemable at the Company’s option beginning September 15,
2011. The terms of the trust preferred securities are set forth in that certain Amended and Restated Declaration of Trust dated as
of September 20, 2006 among Ameris, Wilmington Trust Company, as institutional trustee and Delaware trustee, and the
administrators named therein. The payments of distributions on and redemption or liquidation of the trust preferred securities
issued by the Trust are guaranteed by Ameris pursuant to a Guarantee Agreement dated as of September 20, 2006 between Ameris
and Wilmington Trust Company, as trustee.
The net proceeds to Ameris from the placement of the trust preferred securities by the Trust were primarily used to redeem
outstanding trust preferred securities issued by Ameris on November 8, 2001. These trust preferred securities were redeemed on
September 30, 2006 for $35.6 million.
On December 16, 2005, Ameris purchased First National Banc, Inc. which had formed during 2004 First National Banc Statutory
Trust I, a subsidiary whose sole purpose was to issue $5,000,000 principal amount of trust preferred securities at a rate per annum
equal to the 3-Month LIBOR plus 2.80% through a pool sponsored by a national brokerage firm. These trust preferred securities
have a maturity of 30 years and are redeemable at the Company’s option on any quarterly interest payment date after five
years. There are certain circumstances (as described in the trust documents) under which the securities may be redeemed within
the first five years at the Company’s option. See Notes to Ameris’ Consolidated Financial Statements included in this Annual
Report for a further discussion regarding the issuance of these trust preferred securities.
4
BUSINESS STRATEGY
Our business strategy is to establish Ameris as a major financial institution in Georgia, Alabama, northern Florida and South
Carolina. Management has pursued this objective through an acquisition-oriented growth strategy and a prudent operating
strategy. Our operating model allows the Company to put as many resources in front of customers as possible with efforts to
minimize the expense of our operations. We are continuously evaluating our structure to maximize opportunities to perfect the
balance between efficiency and customer service. Our markets are managed by senior level, experienced decision makers in a
decentralized structure that differentiates us from our competition. Management believes that this structure, along with
involvement in and knowledge of our local markets, will continue to provide growth and assist in managing risk throughout our
Company.
We have maintained a long-term focus on a strategy that includes expanding and diversifying our franchise in terms of revenues,
profitability and asset size. Our growth over the past several years has been enhanced significantly by bank acquisitions. We
expect to continue to take advantage of the consolidation in the financial services industry and enhance our franchise through
future acquisitions. We intend to grow within our existing markets, to branch into or acquire financial institutions in existing
markets and to branch into or acquire financial institutions in other markets consistent with our capital availability and
management abilities.
BANKING SERVICES
Lending Activities
General. The Company maintains a diversified loan portfolio by providing a broad range of commercial and retail lending
services to business entities and individuals. We provide agricultural loans, commercial business loans, commercial and
residential real estate construction and mortgage loans, consumer loans, revolving lines of credit and letters of credit. The
Company also originates first mortgage residential mortgage loans and enters into a commitment to sell these loans in the
secondary market. We make no foreign or energy-related loans.
At December 31, 2007, Ameris’ loan portfolio totaled $1.61 billion, representing approximately 76.3% of our total assets of $2.11
billion. For additional discussion of our loan portfolio, see “Management’s Discussion of Financial Condition and Results of
Operations – Loan Portfolio.”
Commercial Real Estate Loans. This portion of our loan portfolio has grown significantly over the past few years and represents
the largest portion of our loan portfolio. These loans are generally extended for acquisition, development or construction of
commercial properties. The loans are underwritten with an emphasis on the viability of the project, the borrower’s ability to meet
certain minimum debt service requirements and an analysis and review of the collateral and guarantors.
Residential Real Estate Mortgage Loans. Ameris originates adjustable and fixed-rate residential mortgage loans. These mortgage
loans are generally originated under terms and conditions consistent with secondary market guidelines. Some of these loans will
be placed in the Company’s loan portfolio; however, a majority are sold to the secondary mortgage market. The residential real
estate mortgage loans that are included in the Company’s loan portfolio are usually owner-occupied and generally amortized over
a 10 to 20 year period with three to five year maturity or repricing.
Agricultural Loans. Our agricultural loans are extended to finance crop production, the purchase of farm-related equipment or
farmland and the operations of dairies and poultry producers. Agricultural loans typically involve seasonal fluctuations in
amounts. Although we typically look to an agricultural borrower’s cash flow as the principal source of repayment, agricultural
loans are also generally secured by a security interest in the crops or the farm-related equipment and, in some cases, an assignment
of crop insurance and mortgage on real estate. The lending officer visits the borrower regularly during the growing season and re-
evaluates the loan in light of the borrower’s updated cash flow projections. A portion of our agricultural loans are guaranteed by
the FSA Guaranteed Loan Program.
5
Commercial and Industrial Loans. General commercial and industrial loans consist of loans made primarily to manufacturers,
wholesalers and retailers of goods, service companies and other industries. These loans are made for acquisition, expansion and
working capital purposes and may be secured by real estate, accounts receivable, inventory, equipment, personal guarantees or
other assets. The Company monitors these loans by requesting submission of corporate and personal financial statements and
income tax returns. The Company has also generated loans which are guaranteed by the U.S. Small Business Administration (the
“SBA”). SBA loans are generally underwritten in the same manner as conventional loans generated for the Bank’s
portfolio. Periodically, a portion of the loans that are secured by the guaranty of the SBA will be sold in the secondary
market. Management believes that making such loans helps the local community and also provides Ameris with a source of
income and solid future lending relationships as such businesses grow and prosper. The primary repayment risk for commercial
loans is the failure of the business due to economic or financial factors.
Consumer Loans. Our consumer loans include motor vehicle, home improvement, home equity, student and signature loans and
small personal credit lines. The terms of these loans typically range from 12 to 60 months and vary based upon the nature of
collateral and size of the loan. These loans are generally secured by various assets owned by the consumer.
Credit Administration
We have sought to maintain a comprehensive lending policy that meets the credit needs of each of the communities served by the
Bank, including low- and moderate-income customers, and to employ lending procedures and policies consistent with this
approach. All loans are subject to our corporate loan policy, which is reviewed annually and updated as needed. The loan policy
provides that lending officers have sole authority to approve loans of various amounts commensurate with their seniority and
experience. Our local market Presidents have discretion to approve loans in varying principal amounts up to established
limits. Our regional credit officers review and approve loans that exceed each President’s lending authority.
Individual lending authorities are assigned by the Company, as is the maximum limit of new extensions of credit that may be
approved in each market. Those approval limits are reviewed annually by the Company and adjusted as needed. All extensions of
credit in excess of a market’s approval limit are reviewed by the appropriate Regional Executive. Further approval by Ameris’
Senior Credit Officer or the Company’s Loan Committee may also be needed. Under our ongoing loan review program, all loans
are subject to sampling and objective review by an assigned loan reviewer who is independent of the originating loan officer.
Each lending officer has authority to make loans only in the market area in which his or her Bank office is located and its
contiguous counties. Occasionally, Ameris’ Loan Committee will approve a loan for purposes outside of the market areas of the
Bank, provided the Bank has a previously established relationship with the borrower. Our lending policy requires analysis of the
borrower’s projected cash flow and ability to service the debt.
We actively market our services to qualified lending customers in both the commercial and consumer sectors. Our commercial
lending officers actively solicit the business of new companies entering the market as well as longstanding members of that
market’s business community. Through personalized professional service and competitive pricing, we have been successful in
attracting new commercial lending customers. At the same time, we actively advertise our consumer loan products and
continually seek to make our lending officers more accessible.
The Bank continually monitors its loan portfolio to identify areas of concern and to enable management to take corrective action
when necessary. Local market Presidents, lending officers and local boards meet periodically to review all past due loans, the
status of large loans and certain other credit or economic related matters. Individual lending officers are responsible for collection
of past due amounts and monitoring any changes in the financial status of the borrowers.
6
Investment Activities
Our investment policy is designed to maximize income from funds not needed to meet loan demand in a manner consistent with
appropriate liquidity and risk objectives. Under this policy, our Company may invest in federal, state and municipal obligations,
corporate obligations, public housing authority bonds, industrial development revenue bonds, Government Sponsored Entities
(“GSEs”) securities and satisfactorily rated trust preferred obligations. Investments in our portfolio must satisfy certain quality
criteria. Our Company’s investments must be rated at least “BAA” by either Moody’s or Standard and Poor’s. Securities rated
below “A” are periodically reviewed for creditworthiness. Our Company may purchase non-rated municipal bonds only if the
issuer of such bonds is located in the Company’s general market area and such bonds are determined by the Company to have a
credit risk no greater than the minimum ratings referred to above. Industrial development authority bonds, which normally are not
rated, are purchased only if the issuer is located in the Company’s market area and if the bonds are considered to possess a high
degree of credit soundness. Traditionally, the Company has purchased and held investment securities with very high levels of
credit quality, favoring investments backed by direct or indirect guarantees of the U.S. Government.
While our investment policy permits our Company to trade securities to improve the quality of yields or marketability or to realign
the composition of the portfolio, the Bank historically has not done so to any significant extent.
Our investment committee implements the investment policy and portfolio strategies and monitors the portfolio. Reports on all
purchases, sales, net profits or losses and market appreciation or depreciation of the bond portfolio are reviewed by our Boards of
Directors each month. Once a year, the written investment policy is reviewed by the Company’s board of directors.
The Company’s securities are kept in safekeeping accounts at correspondent banks.
Deposits
The Company provides a full range of deposit accounts and services to both retail and commercial customers. These deposit
accounts have a variety of interest rates and terms and consist of interest-bearing and noninterest-bearing accounts, including
commercial and retail checking accounts, regular interest-bearing savings accounts, money market accounts, individual retirement
accounts and certificates of deposit. Our Bank obtains most of its deposits from individuals and businesses in its market areas.
Our Bank has not had to attract new or retain old deposits by paying depositors rates of interest on certificates of deposit, money
market and other interest-bearing accounts significantly above rates paid by other banks in our market areas. In the future,
increasing competition among banks in our market areas may cause our Bank’s net interest margins to shrink.
Brokered time deposits are deposits obtained by utilizing an outside broker that is paid a fee. These deposits usually have a higher
interest rate than the deposits obtained locally. The Bank utilizes the brokered deposits to accomplish several purposes, such as
(1) acquiring a certain maturity and dollar amount without repricing the Bank’s current customers which could decrease the
overall cost of deposits, and (2) acquiring certain maturities and dollar amounts to help manage interest rate risk.
Other Funding Sources
The Federal Home Loan Bank (“FHLB”) allows the Company to obtain advances through its credit program. These advances are
secured by securities owned by the Company and held in safekeeping by the FHLB, FHLB stock owned by the Company and
certain qualifying residential mortgages.
The Company also enters into repurchase agreements. These repurchase agreements are treated as short term borrowings and are
reflected on the balance sheet as such.
7
CORPORATE RESTRUCTURING AND BUSINESS COMBINATIONS
On December 29, 2006, Ameris acquired by merger Islands Bancorp and its banking subsidiary, Islands Community Bank, N.A.
(collectively, “Islands”). Islands was headquartered in Beaufort, South Carolina where it operated a single branch with satellite
loan production offices in Bluffton, South Carolina and Charleston, South Carolina. The acquisition of Islands was significant to
the Company, as Ameris had recruited senior level talent that would be instrumental in executing a growth strategy designed to
build a meaningful franchise in South Carolina’s top markets. The consideration for the acquisition was a combination of cash
and Ameris common stock with an aggregate purchase price of approximately $19.0 million. The total consideration consisted of
$5.1 million in cash and approximately 494,000 shares of Ameris common stock with a value of approximately $13.9
million. Islands’ results of operations for 2006 are not included in Ameris’ consolidated financial results because the acquisition’s
effective time was after the close of business on the last day of the fiscal year.
On December 16, 2005, Ameris acquired all the issued and outstanding common shares of First National Banc, Inc., the parent
company of First National Bank, in St. Mary’s, Georgia and First National Bank, in Orange Park, Florida (collectively
“FNB”). The acquisition was accounted for using the purchase method of accounting, and, accordingly, the results from FNB’s
operations have been included in the consolidated financial statements beginning December 17, 2005. The aggregate purchase
price for FNB was $35.3 million, including cash of $13.1 million and the Company’s common stock valued at $22.2 million.
On November 30, 2004, Ameris acquired Citizens Bancshares, Inc., a $54.3 million asset holding company headquartered in
Crawfordville, Florida (“Citizens”). Citizens’ banking offices in Crawfordville, Panacea and Sopchoppy gave the Bank a
presence in the panhandle of Florida. Cash exchanged in this transaction for 100% of the stock of Citizens was $11.5 million.
On August 31, 2005, Ameris announced its intentions to begin consolidating its subsidiary bank charters across Georgia, Alabama
and northern Florida into a single charter. In addition to the charter consolidation effort, the Company announced its intentions to
re-brand the Company and its surviving bank subsidiary with a single identity - Ameris Bank. The re-branding process was
completed during 2006. During 2007, the Company consolidated its loan processing and maintenance functions as well as all
deposit operations into service centers close to our corporate headquarters. This effort centralized mostly non-customer contact
rolls and allows our banks to focus almost entirely on sales, customer service and acquisition of new customers.
MARKET AREAS AND COMPETITION
The banking industry in general and in the southeastern United States specifically, is highly competitive and dramatic changes
continue to occur throughout the industry. Our market areas of Georgia, Alabama, northern Florida and South Carolina have
experienced strong economic and population growth over the past twenty to thirty years. In recent years, intense market demands,
economic pressures, fluctuating interest rates and increased customer awareness of product and service differences among
financial institutions have forced banks to diversify their services and become more cost effective. Our Bank faces strong
competition in attracting deposits and making loans. Its most direct competition for deposits comes from other commercial banks,
thrift institutions, mortgage bankers, finance companies, credit unions and issuers of securities such as brokerage firms. Interest
rates, convenience of office locations and marketing are all significant factors in our Bank’s competition for deposits.
Competition for loans comes from other commercial banks, thrift institutions, savings banks, insurance companies, consumer
finance companies, credit unions and other institutional lenders. Our Bank competes for loan originations through the interest
rates and loan fees charged and the efficiency and quality of services provided. Competition is affected by the general availability
of lendable funds, general and local economic conditions, current interest rate levels and other factors that are not readily
predictable.
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Competition among providers of financial products and services continues to increase with consumers having the opportunity to
select from a growing variety of traditional and nontraditional alternatives. The industry continues to rapidly consolidate, which
affects competition by eliminating some regional and local institutions, while strengthening the franchise of
acquirers. Management expects that competition will become more intense in the future due to changes in state and federal laws
and regulations and the entry of additional bank and nonbank competitors. See “Supervision and Regulation.”
EMPLOYEES
At December 31, 2007, the Company employed approximately 620 full time equivalent employees. We consider our relationship
with our employees to be satisfactory.
We have adopted one retirement plan for our employees, the Ameris Bancorp 401(k) Profit Sharing Plan. This plan provides
deferral of compensation by our employees and contributions by Ameris. Ameris and our Bank made contributions for all eligible
employees in 2007. We also maintain a comprehensive employee benefits program providing, among other benefits,
hospitalization and major medical insurance and life insurance. Management considers these benefits to be competitive with those
offered by other financial institutions in our market areas. Our employees are not represented by any collective bargaining group.
RELATED PARTY TRANSACTIONS
The Company makes loans to our directors and their affiliates and to banking officers. These loans are made on substantially the
same terms as those prevailing at the time for comparable transactions and do not involve more than normal credit risk. At
December 31, 2007, we had $1.6 billion in total loans outstanding of which $6.3 million were outstanding to certain directors and
their affiliates. Company policy provides for no loans to executive officers.
SUPERVISION AND REGULATION
General
We are extensively regulated under federal and state law. Generally, these laws and regulations are intended to protect depositors
and not shareholders. The following is a summary description of certain provisions of certain laws that affect the regulation of
bank holding companies and banks. The discussion is qualified in its entirety by reference to applicable laws and
regulations. Changes in such laws and regulations may have a material effect on our business and prospects.
Federal Bank Holding Company Regulation and Structure
As a bank holding company, we are subject to regulation under the Bank Holding Company Act and to the supervision,
examination and reporting requirements of the Federal Reserve Board of Governors. Our Bank has a Georgia state charter and is
subject to regulation, supervision and examination by the Federal Deposit Insurance Corporation (the “FDIC”) and the Georgia
Department of Banking and Finance (the “GDBF”).
The Bank Holding Company Act requires every bank holding company to obtain the prior approval of the Federal Reserve before:
• it may acquire direct or indirect ownership or control of any voting shares of any bank if, after the acquisition, the bank
holding company will directly or indirectly own or control more than 5% of the voting shares of the bank;
• it or any of its subsidiaries, other than a bank, may acquire all or substantially all of the assets of any bank; or
• it may merge or consolidate with any other bank holding company.
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The Bank Holding Company Act further provides that the Federal Reserve may not approve any transaction that would result in a
monopoly or that would substantially lessen competition in the banking business, unless the public interest in meeting the needs of
the communities to be served outweighs the anti-competitive effects. The Federal Reserve is also required to consider the
financial and managerial resources and future prospects of the bank holding companies and banks involved and the convenience
and needs of the communities to be served. Consideration of financial resources generally focuses on capital adequacy, and
consideration of convenience and needs issues focuses, in part, on the performance under the Community Reinvestment Act of
1977, both of which are discussed in more detail.
The Bank Holding Company Act generally prohibits a bank holding company from engaging in activities other than banking;
managing or controlling banks or other permissible subsidiaries and acquiring or retaining direct or indirect control of any
company engaged in any activities other than activities closely related to banking or managing or controlling banks.
The activities in which holding companies and their affiliates are permitted to engage were substantially expanded by the Gramm-
Leach-Bliley Act, which was signed on November 12, 1999. The Gramm-Leach-Bliley Act repeals the anti-affiliation provisions
of the Glass-Steagall Act to permit the common ownership of commercial banks, investment banks and insurance companies. The
Gramm-Leach-Bliley Act also amends the Bank Holding Company Act to permit a financial holding company to, among other
things, engage in any activity that the Federal Reserve determines to be (i) financial in nature or incidental to such financial
activity or (ii) complementary to a financial activity and not a substantial risk to the safety and soundness of depository
institutions or the financial system generally. The Federal Reserve must consult with the Secretary of the Treasury in determining
whether an activity is financial in nature or incidental to a financial activity. Holding companies may continue to own companies
conducting activities which had been approved by federal order or regulation on the day before the Gramm-Leach-Bliley Act was
enacted. Effective August 24, 2000, pursuant to a previously-filed election with the Federal Reserve, Ameris became a financial
holding company.
In determining whether a particular activity is permissible, the Federal Reserve considers whether performing the activity can be
expected to produce benefits to the public that outweigh possible adverse effects, such as undue concentration of resources,
decreased or unfair competition, conflicts of interest or unsound banking practices. The Federal Reserve has the power to order a
bank holding company or its subsidiaries to terminate any activity or control of any subsidiary when the continuation of the
activity or control constitutes a serious risk to the financial safety, soundness or stability of any bank subsidiary of that bank
holding company.
Our Bank is also subject to numerous state and federal statutes and regulations that affect its business, activities and operations
and is supervised and examined by state and federal bank regulatory agencies. The FDIC and the GDBF regularly examine the
operations of our Bank and are given the authority to approve or disapprove mergers, consolidations, the establishment of
branches and similar corporate actions. These agencies also have the power to prevent the continuance or development of unsafe
or unsound banking practices or other violations of law.
Payment of Dividends and Other Restrictions
Ameris is a legal entity separate and distinct from its subsidiaries. While there are various legal and regulatory limitations under
federal and state law on the extent to which our Bank can pay dividends or otherwise supply funds to Ameris, the principal source
of Ameris’ cash revenues is dividends from our Bank. The prior approval of applicable regulatory authorities is required if the
total dividends declared by the Bank in any calendar year exceeds 50% of the Bank’s net profits for the previous year. The
relevant federal and state regulatory agencies also have authority to prohibit a state member bank or bank holding company, which
would include Ameris and the Bank, from engaging in what, in the opinion of such regulatory body, constitutes an unsafe or
unsound practice in conducting its business. The payment of dividends could, depending upon the financial condition of the
subsidiary, be deemed to constitute an unsafe or unsound practice in conducting its business.
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Under Georgia law, the prior approval of the GDBF is required before any cash dividends may be paid by a state bank if: (i) total
classified assets at the most recent examination of such bank exceed 80% of the equity capital (as defined, which includes the
reserve for loan losses) of such bank; (ii) the aggregate amount of dividends declared or anticipated to be declared in the calendar
year exceeds 50% of the net profits (as defined) for the previous calendar year; or (iii) the ratio of equity capital to adjusted total
assets is less than 6%.
Retained earnings of our Bank available for payment of cash dividends under all applicable regulations without obtaining
governmental approval were approximately $9.1 million as of December 31, 2007.
In addition, our Bank is subject to limitations under Section 23A of the Federal Reserve Act with respect to extensions of credit to,
investments in and certain other transactions with Ameris. Furthermore, loans and extensions of credit are also subject to various
collateral requirements.
The Federal Reserve has issued a policy statement on the payment of cash dividends by bank holding companies, which expresses
the Federal Reserve’s view that a bank holding company should pay cash dividends only to the extent that the holding company’s
net income for the past year is sufficient to cover both the cash dividends and a rate of earning retention that is consistent with the
holding company’s capital needs, asset quality and overall financial condition. The Federal Reserve also indicated that it would
be inappropriate for a holding company experiencing serious financial problems to borrow funds to pay dividends. Furthermore,
under the prompt corrective action regulations adopted by the Federal Reserve, the Federal Reserve may prohibit a bank holding
company from paying any dividends if one or more of the holding company’s bank subsidiaries are classified as undercapitalized.
Bank holding companies are required to give the Federal Reserve prior written notice of any purchase or redemption of its
outstanding equity securities if the gross consideration for the purchase or redemption, when combined with the net consideration
paid for all such purchases or redemptions during the preceding 12 months, is equal to 10% or more of their consolidated net
worth. The Federal Reserve may disapprove such a purchase or redemption if it determines that the proposal would constitute an
unsafe or unsound practice or would violate any law, regulation, Federal Reserve order or any condition imposed by, or written
agreement with, the Federal Reserve. This notification requirement does not apply to any company that meets the well-capitalized
standard for commercial banks, has a safety and soundness examination rating of at least a “2” and is not subject to any
unresolved supervisory issues. As of December 31, 2007, Ameris met these requirements.
Capital Adequacy
We must comply with the Federal Reserve’s established capital adequacy standards, and our Bank is required to comply with the
capital adequacy standards established by the FDIC. The Federal Reserve has promulgated two basic measures of capital
adequacy for bank holding companies: a risk-based measure and a leverage measure. A bank holding company must satisfy all
applicable capital standards to be considered in compliance.
The risk-based capital standards are designed to make regulatory capital requirements more sensitive to differences in risk profile
among banks and bank holding companies, account for off-balance-sheet exposure and minimize disincentives for holding liquid
assets.
Assets and off-balance-sheet items are assigned to broad risk categories, each with appropriate weights. The resulting capital
ratios represent capital as a percentage of total risk-weighted assets and off-balance-sheet items.
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The minimum guideline for the ratio of total capital to risk-weighted assets is 8%. At least half of total capital must be comprised
of Tier 1 Capital, which is common stock, undivided profits, minority interests in the equity accounts of consolidated subsidiaries
and noncumulative perpetual preferred stock, less goodwill and certain other intangible assets. The remainder may consist of Tier
2 Capital, which is subordinated debt, other preferred stock and a limited amount of loan loss reserves. Since 2001, our
consolidated capital ratios have been increased due to the issuance of trust preferred securities. At December 31, 2007, all of our
trust preferred securities were included in Tier 1 Capital. At December 31, 2007, Ameris’ total risk-based capital ratio and its Tier
1 risk-based capital ratio were 11.59% and 10.34%, respectively.
In addition, the Federal Reserve has established minimum leverage ratio guidelines for bank holding companies. These guidelines
provide for a minimum ratio of Tier 1 Capital to average assets, less goodwill and certain other intangible assets, of 3% for bank
holding companies that meet specified criteria. All other bank holding companies generally are required to maintain a minimum
leverage ratio of 4%. Ameris’ ratio at December 31, 2007 was 8.39% and at December 31, 2006 was 8.58%. The guidelines also
provide that bank holding companies experiencing internal growth or making acquisitions will be expected to maintain strong
capital positions substantially above the minimum supervisory levels without significant reliance on intangible
assets. Furthermore, the Federal Reserve has indicated that it will consider a “tangible Tier 1 Capital leverage ratio” and other
indicia of capital strength in evaluating proposals for expansion or new activities. The Federal Reserve has not advised Ameris of
any specific minimum leverage ratio or tangible Tier 1 Capital leverage ratio applicable to it.
Our Bank is subject to risk-based and leverage capital requirements adopted by the FDIC that are substantially similar to those
adopted by the Federal Reserve for bank holding companies. Our Bank was in compliance with applicable minimum capital
requirements as of December 31, 2007.
Neither Ameris nor its Bank has been advised by any federal banking agency of any specific minimum capital ratio requirement
applicable to it.
In January 2001, the Basel Committee on Banking Supervision issued a consultative paper entitled “Proposal for a New Basel
Capital Accord” and, subsequently, the Basel Committee, which is comprised of bank supervisors and central banks from the
major industrialized countries, issued a number of working papers supplementing various aspects of the 2001 paper (the “New
Accord”). Based on these documents, the New Accord would adopt a three-pillar framework for addressing capital
adequacy. These pillars would include minimum capital requirements, more emphasis on supervisory assessment of capital
adequacy and greater reliance on market discipline. Under the New Accord, minimum capital requirements would be more
differentiated based upon perceived distinctions in creditworthiness. Such requirements would be based either on ratings assigned
by rating agencies or, in the case of a banking organization that met certain supervisory standards, on the organization’s internal
credit ratings. The minimum capital requirements in the New Accord would also include a separate capital requirement for
operational risk. In June 2004, the Basel Committee published new international guidelines for calculating regulatory capital, and
since that time the U.S. banking regulators have published draft guidance of their interpretation of the new guidelines. At the
beginning of 2007, we were required to calculate regulatory capital under the New Accord, in parallel with the existing capital
rules. In 2008, we will calculate regulatory capital solely under the New Accord.
Failure to meet capital guidelines could subject a bank to a variety of enforcement remedies, including issuance of a capital
directive, the termination of deposit insurance by the FDIC, a prohibition on taking brokered deposits and certain other restrictions
on its business. As described below, the FDIC can impose substantial additional restrictions upon FDIC-insured depository
institutions that fail to meet applicable capital requirements.
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Acquisitions
As an active acquirer, we must comply with numerous laws related to our acquisition activity. Under the Bank Holding Company
Act, a bank holding company may not directly or indirectly acquire ownership or control of more than 5% of the voting shares or
substantially all of the assets of any bank or merge or consolidate with another bank holding company without the prior approval
of the Federal Reserve. Current federal law authorizes interstate acquisitions of banks and bank holding companies without
geographic limitation. Furthermore, a bank headquartered in one state is authorized to merge with a bank headquartered in
another state, as long as neither of the states has opted out of such interstate merger authority prior to such date, and subject to any
state requirement that the target bank shall have been in existence and operating for a minimum period of time, not to exceed five
years, and to certain deposit market-share limitations. After a bank has established branches in a state through an interstate
merger transaction, the bank may establish and acquire additional branches at any location in the state where a bank headquartered
in that state could have established or acquired branches under applicable federal or state law.
FDIC Insurance Assessments
The FDIC insures the deposits of the Bank up to prescribed limits for each depositor. The amount of FDIC assessments paid by
each Bank Insurance Fund (BIF) member institution is based on its relative risks of default as measured by regulatory capital
ratios and other factors. Specifically, the assessment rate is based on the institution’s capitalization risk category and supervisory
subgroup category. An institution’s capitalization risk category is based on the FDIC’s determination of whether the institution is
well capitalized, adequately capitalized or less than adequately capitalized. An institution’s supervisory subgroup category is
based on the FDIC’s assessment of the financial condition of the institution and the probability that FDIC intervention or other
corrective action will be required. The FDIC may terminate insurance of deposits upon a finding that a institution has engaged in
unsafe and unsound practices, is in an unsafe or unsound condition to continue operations, or has violated any applicable law,
regulation, rule, order or condition imposed by the FDIC.
The Federal Deposit Insurance Act (or “FDI Act”) requires the federal regulatory agencies to take “prompt corrective action” if a
depository institution does not meet minimum capital requirements. The FDI Act establishes five capital tiers: “well capitalized”,
“adequately capitalized”, “undercapitalized”, “significantly undercapitalized” and “critically undercapitalized”. A depository
institution’s capital tier will depend upon how its capital levels compare to various relevant capital measures and certain other
factors, as established by regulation.
The federal bank regulatory agencies have adopted regulations establishing relevant capital measurers and relevant capital levels
applicable to FDIC-insured banks. The relevant capital measures are the Total Capital ratio, Tier 1 Capital ratio and the leverage
ratio. Under the regulations, a FDIC-insured bank will be:
· “well capitalized” if it has a Total Capital ratio of 10% or greater, a Tier 1 Capital ratio of 6% or greater and a leverage ratio
of 5% or greater and is not subject to any order or written directive by the appropriate regulatory authority to meet and maintain a
specific capital level for any capital measure;
· “adequately capitalized” if it has a Total Capital ratio of 8% or greater, a Tier 1 Capital ratio of 4% or greater and a leverage
ratio of 4% or greater (3% in certain circumstances) and is not “well capitalized”;
· “undercapitalized” if it has a Total Capital ratio of less than 8%, a Tier 1 Capital ratio of less than 4% or a leverage ratio of
less than 4% (3% in certain circumstances);
· “significantly undercapitalized” if it has a Total Capital ratio of less than 6%, a Tier 1 Capital ratio of less than 3% or a
leverage ratio of less than 3%; and
· “critically undercapitalized” if its tangible equity is equal to or less than 2% of average quarterly tangible assets.
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An institution may be downgraded to, or deemed to be in, a capital category that is lower than is indicated by its capital ratios if it
is determined to be in an unsafe or unsound condition or if it receives an unsatisfactory examination rating with respect to certain
matters. As of December 31, 2007, our Bank had capital levels that qualify as “well capitalized” under such regulations.
The Gramm-Leach-Bliley Act allows bank holding companies that are “well managed” and “well capitalized” and whose
depositor subsidiaries have “satisfactory” or better Community Reinvestment Act ratings to become financial holding companies
that may engage in a substantially broader range of non-banking activities than is otherwise permissible, including insurance
underwriting and securities activities. As previously stated, Ameris became a financial holding company effective August 24,
2000.
The FDI Act generally prohibits an FDIC-insured bank from making a capital distribution (including payment of a dividend) or
paying any management fee to its holding company if the bank would thereafter be “undercapitalized.” “Undercapitalized” banks
are subject to growth limitations and are required to submit a capital restoration plan. The federal regulators may not accept a
capital plan without determining, among other things, that the plan is based on realistic assumptions and is likely to succeed in
restoring the bank’s capital. In addition, for a capital restoration plan to be acceptable, the bank’s parent holding company must
guarantee that the institution will comply with such capital restoration plan. The aggregate liability of the parent holding company
is limited to the lesser of: (i) an amount equal to 5% of the bank’s total assets at the time it became “undercapitalized”; and (ii) the
amount which is necessary (or would have been necessary) to bring the institution into compliance with all capital standards
applicable with respect to such institution as of the time it fails to comply with the plan. If a bank fails to submit an acceptable
plan, it is treated as if it is “significantly undercapitalized.”
“Significantly undercapitalized” insured banks may be subject to a number of requirements and restrictions, including orders to
sell sufficient voting stock to become “adequately capitalized”, requirements to reduce total assets and the cessation of receipt of
deposits from correspondent banks. “Critically undercapitalized” institutions are subject to the appointment of a receiver or
conservator. A bank that is not “well capitalized” is also subject to certain limitations relating to so-called “brokered” deposits.
Community Reinvestment Act
The Community Reinvestment Act requires federal bank regulatory agencies to encourage financial institutions to meet the credit
needs of low- and moderate-income borrowers in their local communities. An institution’s size and business strategy determines
the type of examination that it will receive. Large, retail-oriented institutions are examined using a performance-based lending,
investment and service test. Small institutions are examined using a streamlined approach. All institutions may opt to be
evaluated under a strategic plan formulated with community input and pre-approved by the bank regulatory agency.
The Community Reinvestment Act regulations provide for certain disclosure obligations. Each institution must post a notice
advising the public of its right to comment to the institution and its regulator on the institution’s Community Reinvestment Act
performance and to review the institution’s Community Reinvestment Act public file. Each lending institution must maintain for
public inspection a file that includes a listing of branch locations and services, a summary of lending activity, a map of its
communities and any written comments from the public on its performance in meeting community credit needs. The Community
Reinvestment Act requires public disclosure of a financial institution’s written Community Reinvestment Act evaluations. This
promotes enforcement of Community Reinvestment Act requirements by providing the public with the status of a particular
institution’s community reinvestment record.
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The Gramm-Leach-Bliley Act made various changes to the Community Reinvestment Act. Among other changes, Community
Reinvestment Act agreements with private parties must be disclosed and annual Community Reinvestment Act reports must be
made available to a bank’s primary federal regulator. A bank holding company will not be permitted to become a financial
holding company and no new activities authorized under the Gramm-Leach-Bliley Act may be commenced by a holding company
or by a bank financial subsidiary if any of its bank subsidiaries received less than a “satisfactory” Community Reinvestment Act
rating in its latest Community Reinvestment Act examination.
Consumer Protection Laws
The Bank is subject to a number of federal and state laws designed to protect borrowers and promote lending to various sectors of
the economy and population. These laws include the Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Truth in
Lending Act, the Home Mortgage Disclosure Act, the Real Estate Settlement Procedures Act and state law counterparts.
Federal law currently contains extensive customer privacy protection provisions. Under these provisions, a financial institution
must provide to its customers, at the inception of the customer relationship and annually thereafter, the institution’s policies and
procedures regarding the handling of customers’ nonpublic personal financial information. These provisions also provide that,
except for certain limited exceptions, an institution may not provide such personal information to unaffiliated third parties unless
the institution discloses to the customer that such information may be so provided and the customer is given the opportunity to opt
out of such disclosure. Federal law makes it a criminal offense, except in limited circumstances, to obtain or attempt to obtain
customer information of a financial nature by fraudulent or deceptive means.
Additional Legislative and Regulatory Matters
On October 26, 2001, President Bush signed into law the Uniting and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism Act of 2001 (the “USA PATRIOT Act”). Among its other provisions, the USA
PATRIOT Act requires each financial institution: (i) to establish an anti-money laundering program; (ii) to establish due diligence
policies, procedures and controls with respect to its private banking accounts involving foreign individuals and certain foreign
banks; and (iii) to avoid establishing, maintaining, administering or managing correspondent accounts in the United States for, or
on behalf of, foreign banks that do not have a physical presence in any country. The USA PATRIOT Act also requires the
Secretary of the Treasury to prescribe by regulation minimum standards that financial institutions must follow to verify the
identity of customers, both foreign and domestic, when a customer opens an account. In addition, the USA PATRIOT Act
contains a provision encouraging cooperation among financial institutions, regulatory authorities and law enforcement authorities
with respect to individuals, entities and organizations engaged in, or reasonably suspected of engaging in, terrorist acts or money
laundering activities.
On July 30, 2002, the President signed into law the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”), which mandated a variety of
reforms intended to address corporate and accounting fraud. Sarbanes-Oxley also provided for the establishment of the Public
Company Accounting Oversight Board (“PCAOB”), which enforces auditing, quality control and independence standards for
firms that audit Securities and Exchange Commission (“SEC”) reporting companies. Sarbanes-Oxley imposes higher standards
for auditor independence and restricts provision of consulting services by auditing firms to companies they audit and in addition,
certain audit partners must be rotated periodically. Sarbanes-Oxley requires chief executive officers and chief financial officers,
or their equivalents, to certify to the accuracy of periodic reports filed with the SEC, subject to civil and criminal penalties if they
knowingly or willfully violate this certification requirement. In addition, under Sarbanes-Oxley, counsel is required to report
specific violations. Directors and executive officers must report most changes in their ownership of a company’s securities and
executives have restrictions on trading and loans. Sarbanes-Oxley also increases the oversight and authority of audit committees
of publicly traded companies. Although Ameris has incurred and will continue to incur additional expense in complying with the
provisions of Sarbanes-Oxley and the related rules, management does not expect that such compliance will have a material impact
on Ameris’ financial condition or results of operation.
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Fiscal and Monetary Policy
Banking is a business which depends on interest rate differentials for success. In general, the difference between the interest paid
by a bank on its deposits and its other borrowings, and the interest received by a bank on its loans and securities holdings,
constitutes the major portion of a bank’s earnings. Thus, our earnings and growth will be subject to the influence of economic
conditions generally, both domestic and foreign, and also to the monetary and fiscal policies of the United States and its agencies,
particularly the Federal Reserve. The Federal Reserve regulates the supply of money through various means, including open
market dealings in United States government securities, the discount rate at which banks may borrow from the Federal Reserve
and the reserve requirements on deposits. The nature and timing of any changes in such policies and their effect on Ameris cannot
be predicted.
Current and future legislation and the policies established by federal and state regulatory authorities will affect our future
operations. Banking legislation and regulations may limit our growth and the return to our investors by restricting certain of our
activities.
In addition, capital requirements could be changed and have the effect of restricting our activities or requiring additional capital to
be maintained. We cannot predict what changes, if any, will be made to existing federal and state legislation and regulations or
the effect that such changes may have on our business.
Federal Home Loan Bank System
Our Company has a correspondent relationship with the Federal Home Loan Bank of Atlanta (“FHLB”), which is one of 12
regional Federal Home Loan Banks (or “FHLBs”) that administer the home financing credit function of savings companies. Each
FHLB serves as a reserve or central bank for its members within its assigned region. FHLBs are funded primarily from proceeds
derived from the sale of consolidated obligations of the FHLB system and make loans to members (i.e., advances) in accordance
with policies and procedures, established by the board of directors of the FHLB which are subject to the oversight of the Federal
Housing Finance Board. All advances from the FHLB are required to be fully secured by sufficient collateral as determined by
the FHLB. In addition, all long-term advances are required to provide funds for residential home financing.
FHLB provides certain services to our Company such as processing checks and other items, buying and selling federal funds,
handling money transfers and exchanges, shipping coin and currency, providing security and safekeeping of funds or other
valuable items and furnishing limited management information and advice. As compensation for these services, our Company
maintains certain balances with FHLB in interest-bearing accounts.
Under federal law, the FHLBs are required to provide funds for the resolution of troubled savings companies and to contribute to
low- and moderately-priced housing programs through direct loans or interest subsidies on advances targeted for community
investment and low- and moderate-income housing projects.
Title 6 of the Gramm-Leach-Bliley Act, entitled the Federal Home Loan Bank System Modernization Act of 1999 (called the
“FHLB Modernization Act”), amended the Federal Home Loan Bank Act to allow voluntary membership and modernized the
capital structure and governance of the FHLBs. The capital structure established under the FHLB Modernization Act sets forth
leverage and risk-based capital requirements based on permanence of capital. It also requires some minimum investment in the
stock of the FHLBs of all member entities. Capital includes retained earnings and two forms of stock: Class A stock redeemable
within six months upon written notice and Class B stock redeemable within five years upon written notice. The FHLB
Modernization Act also reduced the period of time in which a member exiting the FHLB system must stay out of the system.
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Real Estate Lending Evaluations
The federal regulators have adopted uniform standards for evaluations of loans secured by real estate or made to finance
improvements to real estate. Banks are required to establish and maintain written internal real estate lending policies consistent
with safe and sound banking practices and appropriate to the size of the institution and the nature and scope of its operations. The
regulations establish loan to value ratio limitations on real estate loans. Our Company’s loan policies establish limits on loan to
value ratios that are equal to or less than those established in such regulations.
Changing Regulatory Structure
The laws and regulations affecting banks and bank holding companies are in a state of change. The rules and the regulatory
agencies in this area have changed significantly over recent years, and there is reason to expect that similar changes will continue
in the future. It is not possible to predict the outcome of these changes.
One of the major additional burdens imposed on the banking industry is the increased authority of federal agencies to regulate the
activities of federal and state banks and their holding companies. The Federal Reserve and the FDIC have extensive authority to
police unsafe or unsound practices and violations of applicable laws and regulations by depository institutions and their holding
companies. These agencies can assess civil money penalties. Other laws such as Sarbanes-Oxley have expanded the agencies’
authority in recent years, and the agencies have not yet fully tested the limits of their powers. In addition, the GDBF possesses
broad enforcement powers to address violations of Georgia’s banking laws by banks chartered in Georgia.
Economic Environment
The policies of regulatory authorities, including the monetary policy of the Federal Reserve, have a significant effect on the
operating results of bank holding companies and their subsidiaries. Among the means available to the Federal Reserve to affect
the money supply are open market operations in U.S. government securities, changes in the discount rate on member bank
borrowings and changes in reserve requirements against member bank deposits. These means are used in varying combinations to
influence overall growth and distribution of bank loans, investments and deposits, and their use may affect interest rates charged
on loans or paid on deposits.
The Federal Reserve’s monetary policies have materially affected the operating results of commercial banks in the past and are
expected to continue to do so in the future. The nature of future monetary policies and the effect of these policies on the business
and earnings of our Company cannot be predicted.
ITEM 1A. RISK FACTORS
An investment in the common stock of Ameris is subject to risks inherent in the Company’s business. The material risks and
uncertainties that management believes affect Ameris are described below. Before making an investment decision, you should
carefully consider the risks and uncertainties described below, together with all of the other information included or incorporated
by reference in this Annual Report. The risks and uncertainties described below are not the only ones facing the
Company. Additional risks and uncertainties that management is not aware of or focused on or that management currently deems
immaterial may also impair the Company’s business operations. This Annual Report is qualified in its entirety by these risk
factors.
If any of the following risks actually occurs, the Company’s financial condition and results of operations could be materially and
adversely affected. If this were to happen, the value of the common stock of Ameris could decline significantly, and you could
lose all or part of your investment.
17
Changes in interest rates could adversely impact the Company’s financial condition and results of operations.
The Company’s earnings and cash flows are largely dependent upon its net interest income. Net interest income is the difference
between interest income earned on interest-earning assets, such as loans and securities, and interest expense paid on interest-
bearing liabilities, such as deposits and borrowed funds. Interest rates are highly sensitive to many factors that are beyond the
control of Ameris, including general economic conditions and policies of various governmental and regulatory agencies and, in
particular, the Federal Reserve Board of Governors. Changes in monetary policy, including changes in interest rates, could
influence not only the interest the Company receives on loans and securities and the amount of interest it pays on deposits and
borrowings, but such changes could also affect the Company’s ability to originate loans and obtain deposits, the fair value of the
Company’s financial assets and liabilities and the average duration of the Company’s mortgage-backed securities portfolio. If the
interest rates paid on deposits and other borrowings increase at a faster rate than the interest rates received on loans and other
investments, the Company’s net interest income and, therefore, its earnings, could be adversely affected. Earnings could also be
adversely affected if the interest rates received on loans and other investments fall more quickly than the interest rates paid on
deposits and other borrowings. Although management believes it has implemented effective asset and liability management
strategies to reduce the potential effects of changes in interest rates on the Company’s results of operations, any substantial,
unexpected, prolonged change in market interest rates could have a material adverse effect on the Company’s financial condition
and results of operations.
If the Company has higher loan losses than it has allowed for, its earnings could materially decrease.
The Company’s loan customers may not repay loans according to their terms, and the collateral securing the payment of loans
may be insufficient to assure repayment. Ameris may therefore experience significant credit losses which could have a material
adverse effect on its operating results. Ameris makes various assumptions and judgments about the collectability of its loan
portfolio, including the creditworthiness of borrowers and the value of the real estate and other assets serving as collateral for the
repayment of loans. In determining the size of the allowance for loan losses, the Company relies on many factors including
its previous experience and its evaluation of economic conditions. If assumptions prove to be incorrect, the current allowance for
loan losses may not be sufficient to cover losses inherent in the loan portfolio and adjustment may be necessary to allow for
different economic conditions or adverse developments in the loan portfolio. Consequently, a problem with one or more loans
could require the Company to significantly increase the level of its provision for loan losses. In addition, federal and state
regulators periodically review the Company’s allowance for loan losses and may require it to increase its provision for loan losses
or recognize further loan charge-offs. Material additions to the allowance would materially decrease the Company’s net income.
Ameris has a high concentration of loans secured by real estate and a downturn in the real estate market, for any reason, could
result in losses and materially and adversely affect business, financial condition, results of operations and future prospects.
A significant portion of the Company’s loan portfolio is dependent on real estate. In addition to the financial strength and cash
flow characteristics of the borrower in each case, often loans are secured with real estate collateral. At December 31, 2007,
approximately 78.2% of loans have commercial or residential real estate as a component of collateral. The real estate in each case
provides an alternate source of repayment in the event of default by the borrower and may deteriorate in value during the time the
credit is extended. Further adverse changes in the economy affecting values of real estate generally or in Ameris’ primary
markets specifically could significantly impair the value of collateral and ability to sell the collateral upon
foreclosure. Furthermore, it is likely that, in a decreasing real estate market, Ameris would be required to increase its allowance
for loan losses as occurred in 2007, causing material strain on recurring levels of net income. If the Company is required to
liquidate the collateral securing a loan to satisfy the debt during a period of reduced real estate values or to increase its allowance
for loan losses, its profitability and financial condition could be adversely impacted.
18
Ameris operates in a highly regulated environment and may be adversely impacted by changes in law and regulations.
Ameris, primarily through its Bank, is subject to extensive federal and state regulation and supervision. Banking regulations are
primarily intended to protect depositors’ funds, federal deposit insurance funds and the banking system as a whole, not
shareholders. These regulations affect the Company’s lending practices, capital structure, investment practices, dividend policy
and growth, among other things. Congress and federal regulatory agencies continually review banking laws, regulations and
policies for possible changes. Changes to statutes, regulations or regulatory policies, including changes in interpretation or
implementation of statutes, regulations or policies, could affect the Company in substantial, unpredictable and adverse
ways. Such changes could subject the Company to additional costs, limit the types of financial services and products the
Company may offer and/or increase the ability of non-banks to offer competing financial services and products, among other
things. Failure to comply with laws, regulations or policies could result in sanctions by regulatory agencies, civil money penalties
and/or reputation damage, which could have a material adverse effect on the Company’s business, financial condition and results
of operations. While the Company has policies and procedures designed to prevent any such violations, there can be no assurance
that such violations will not occur.
Ameris relies on dividends from its banking subsidiary for most of its revenue.
Ameris Bancorp is a separate and distinct legal entity from its subsidiaries. It receives substantially all of its revenue from
dividends from the Bank. These dividends are the principal source of funds to pay dividends on the Company’s common stock
and interest and principal on the Company’s debt. Various federal and/or state laws and regulations limit the amount of dividends
that the Bank may pay to the Company. Also, the Company’s right to participate in a distribution of assets upon a subsidiary’s
liquidation or reorganization is subject to the prior claims of the subsidiary’s creditors. In the event the Bank is unable to pay
dividends to the Company, the Company may not be able to service debt, pay obligations or pay dividends on the Company’s
common stock and its business, financial condition and results of operations may be adversely affected.
Ameris’ Articles of Incorporation and Bylaws may prevent or delay a takeover by another company.
Ameris’ Articles of Incorporation permit Ameris’ board of directors to issue preferred stock without shareowner action. The
ability to issue preferred stock could discourage a company from attempting to obtain control of Ameris by means of a tender
offer, merger, proxy contest or otherwise. Additionally, Ameris’ Articles of Incorporation and Bylaws divide Ameris’ board of
directors into three classes, as nearly equal in size as possible, with staggered three-year terms. One class is elected each
year. The classification of Ameris’ board of directors could make it more difficult for a company to acquire control of
Ameris. Ameris is also subject to certain provisions of the Georgia Business Corporation Code and Ameris’ Articles of
Incorporation which relate to business combinations with interested shareholders.
Ameris operates in a highly competitive industry and market areas.
Ameris faces substantial competition in all areas of its operations from a variety of different competitors, many of whom are
larger and may have more financial resources. Such competitors primarily include national, regional and community banks within
the various markets in which the Bank operates. Ameris also faces competition from many other types of financial institutions,
including, without limitation, savings and loan institutions, credit unions, finance companies, brokerage firms, insurance
companies, factoring companies and other financial intermediaries. The financial services industry could become even more
competitive as a result of legislative, regulatory and technological changes and continued consolidation. Banks, securities firms
and insurance companies can merge under the umbrella of a financial holding company, which can offer virtually any type of
financial service, including banking, securities underwriting, insurance (both agency and underwriting) and merchant
banking. Also, technology has lowered barriers to entry and made it possible for non-banks to offer products and services
traditionally provided by banks, such as automatic transfer and automatic payment systems. Many of the Company’s competitors
have fewer regulatory constraints and may have lower cost structures. Additionally, due to their size, many competitors may be
able to achieve economies of scale and, as a result, may offer a broader range of products and services as well as better pricing for
those products and services than the Company can.
19
The Company’s ability to compete successfully depends on a number of factors, including, among other things:
·
the ability to develop, maintain and build upon long-term customer relationships based on quality service, high
ethical standards and safe, sound assets;
·
the ability to expand the Company’s market position;
·
the scope, relevance and pricing of products and services offered to meet customer needs and demands;
·
the rate at which the Company introduces new products and services relative to its competitors;
·
customer satisfaction with the Company’s level of service; and
·
industry and general economic trends.
Failure to perform in any of these areas could significantly weaken the Company’s competitive position, which could adversely
affect the Company’s growth and profitability, which, in turn, could have a material adverse effect on the Company’s financial
condition and results of operations.
Potential acquisitions may disrupt the Company’s business and dilute shareholder value.
Acquiring other banks, businesses or branches involves various risks commonly associated with acquisitions, including, among
other things:
· potential exposure to unknown or contingent liabilities of the target company;
· exposure to potential asset quality issues of the target company;
· difficulty and expense of integrating the operations and personnel of the target company;
· potential disruption to the Company’s business;
· potential diversion of the Company’s management’s time and attention;
·
the possible loss of key employees and customers of the target company;
· difficulty in estimating the value of the target company; and
· potential changes in banking or tax laws or regulations that may affect the target company.
Ameris has recently acquired other financial institutions and often evaluates additional merger and acquisition opportunities
related to possible transactions with other financial institutions and financial services companies. As a result, merger or
acquisition discussions and, in some cases, negotiations may take place and future mergers or acquisitions involving cash, debt or
equity securities of the Company may occur at any time. Acquisitions typically involve the payment of a premium over book and
market values, and, therefore, some dilution of the Company’s tangible book value and net income per common share may occur
in connection with any future transaction. Furthermore, failure to realize the expected revenue increases, cost savings, increases
in geographic or product presence and/or other projected benefits and synergies from an acquisition could have a material adverse
effect on the Company’s financial condition and results of operations.
20
Ameris continually encounters technological change.
The financial services industry is continually undergoing rapid technological change with frequent introductions of new
technology-driven products and services. The effective use of technology increases efficiency and enables financial institutions to
better serve customers and to reduce costs. The Company’s future success depends, in part, upon its ability to address the needs
of its customers by using technology to provide products and services that will satisfy customer demands, as well as to create
additional efficiencies in the Company’s operations. Many of the Company’s competitors have substantially greater resources to
invest in technological improvements. The Company may not be able to effectively implement new technology-driven products
and services or be successful in marketing these products and services to its customers. Failure to successfully keep pace with
technological change affecting the financial services industry could have a material adverse impact on the Company’s business
and, in turn, the Company’s financial condition and results of operations.
Ameris may not be able to attract and retain skilled people.
The Company’s success depends, in large part, on its ability to attract and retain key people. Competition for the best people in
most activities engaged in by the Company can be intense and the Company may not be able to hire people or to retain them. The
unexpected loss of services of one or more of the Company’s key personnel could have a material adverse impact on the
Company’s business because of their skills, knowledge of the Company’s market, years of industry experience and the difficulty
of promptly finding qualified replacement personnel.
Financial services companies depend on the accuracy and completeness of information about customers and counterparties.
In deciding whether to extend credit or enter into other transactions, the Company may rely on information furnished by or on
behalf of customers and counterparties, including financial statements, credit reports and other financial information. The
Company may also rely on representations of those customers, counterparties or other third parties, such as independent auditors,
as to the accuracy and completeness of that information. Reliance on inaccurate or misleading financial statements, credit reports
or other financial information could have a material adverse impact on the Company’s business and, in turn, the Company’s
financial condition and results of operations.
None.
ITEM 1B. UNRESOLVED STAFF COMMENTS
ITEM 2. PROPERTIES
Ameris’ corporate headquarters is located at 24 Second Avenue, SE, Moultrie, Georgia 31768. The Company occupies
approximately 43,348 square feet at this location including 3,524 square feet used by the Bank. In addition to executive offices
and the Bank, the corporate headquarters includes mostly support services for banking operations including credit, sales and
operational support, as well as audit and loan review services.
In addition to its corporate headquarters, Ameris operates 46 office or branch locations, of which 39 are owned and seven are
subject to either building or ground leases. At December 31, 2007, there were no significant encumbrances on the offices,
equipment or other operational facilities owned by Ameris and the Bank.
21
ITEM 3. LEGAL PROCEEDINGS
From time to time, the Company and the Bank are parties to legal proceedings arising in the ordinary course of our business
operations, including the case described below. Management, after consultation with legal counsel, does not anticipate that
current litigation will have a material adverse effect on the Company’s financial position or results of operations or cash flows.
On June 15, 2006, a Houston County, Alabama jury entered a verdict in a civil action against Southland Bank, a former subsidiary
of the Company that in 2006 was merged with and into the Bank, and one of Southland Bank’s employees in the amount of
approximately $7.1 million. The plaintiffs in this action had unsuccessfully applied to Southland Bank for a business loan. The
plaintiffs sued Southland Bank and the employee for actual and punitive damages alleging a number of purported causes of action,
including breach of contract, negligent failure to provide a loan and fraud, among other things, based on Southland Bank’s denial
of the loan application. The verdict assesses compensatory damages in the amount of $2.1 million and punitive damages against
Southland Bank in the amount of $5 million. The defendants have filed post-trial motions with the Supreme Court of the State of
Alabama and expect a ruling during 2008. It is anticipated that any potential financial obligation that we or our subsidiaries might
have to the plaintiffs in this action will be covered by existing insurance.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS
No matters were submitted to a vote of our shareholders during the fourth quarter of 2007.
PART II
ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
Market Price of Common Stock
Ameris’ common stock, $1.00 par value per share (the “Common Stock”), is listed on the NASDAQ Global Select Market
(“NASDAQ”) under the symbol “ABCB”. The following table sets forth: (i) the high and low bid prices for the Common Stock
as quoted on NASDAQ during 2007 and 2006; and (ii) the amount of quarterly dividends declared on the Common Stock during
the periods indicated. The high and low bid prices reflect inter-dealer prices, without retail mark-up, mark-down or commission,
and may not necessarily represent actual transactions.
Quarter Ended 2007
High
Low
Close
Dividend
March 31
June 30
September 30
December 31
$
27.73 $
25.58
23.05
18.67
23.11 $
21.76
17.72
13.73
24.33 $
22.47
18.08
16.85
.14
.14
.14
.14
Quarter Ended 2006
High
Low
Close
Dividend
March 31
June 30
September 30
December 31
Holders of Common Stock
$
22.87 $
23.01
27.77
28.99
19.26 $
20.03
20.99
25.77
22.87 $
22.91
27.07
28.18
.14
.14
.14
.14
As of February 22, 2007, there were approximately 2,000 holders of record of the Company’s Common Stock. The Company
believes that a portion of Common Stock outstanding is held either in nominee name or street name brokerage accounts; therefore,
the Company is unable to determine the number of beneficial owners of the Common Stock.
22
Performance Graph
Set forth below is a line graph comparing the change in the cumulative total shareholder return on the Common Stock against the
cumulative return of the NASDAQ Stock Market (U.S. Companies) Index and the index of NASDAQ Bank Stocks for the five-
year period commencing December 31, 2002, and ending December 31, 2007. This line graph assumes an investment of $100 on
December 31, 2002 and reinvestment of dividends and other distributions to shareholders.
23
ITEM 6. SELECTED FINANCIAL DATA
The following table presents selected consolidated financial information for Ameris. The data set forth below is derived from the
audited consolidated financial statements of Ameris. The acquisitions of Citizens on November 30, 2004, FNB on December 15,
2005 and Islands on December 31, 2006 have significantly affected the comparability of selected financial data. Specifically,
since these acquisitions were accounted for using the purchase method, the assets of the acquired institutions were recorded at
their fair values, the excess purchase price over the net fair value of the assets was recorded as goodwill and the results of
operations for these businesses have been included in the Company’s results since the date these acquisitions were
completed. Accordingly, the level of our assets and liabilities and our results of operations for these acquisitions have
significantly affected the Company’s financial position and results of operations. Discussion of these acquisitions can be found in
the “Corporate Restructuring and Business Combinations” section of Part 1, Item 1. of this Annual Report and in Note 3 –
Business Combinations in the Notes to Consolidated Financial Statements. The selected financial data should be read in
conjunction with, and is qualified in its entirety by, the Consolidated Financial Statements and the Notes thereto and
Management’s Discussion and Analysis of Financial Condition and Results of Operations included elsewhere herein.
Selected Balance Sheet Data:
Total assets
Total loans
Total deposits
Investment securities
Shareholders’ equity
Selected Income Statement Data:
Interest income
Interest expense
Net interest income
Year Ended December 31,
2007
2006
2005
2004
2003
(Dollars in Thousands, Except Per Share Data)
$ 2,112,063 $ 2,047,542 $ 1,697,209 $ 1,267,993 $ 1,169,111
1,614,048 1,442,951 1,186,601
877,074
840,539
1,757,265 1,710,163 1,375,232
986,224
906,524
298,729
290,207
243,742
221,741
196,289
191,249
178,732
148,703
120,939
113,613
$
146,077 $
124,111 $
79,539 $
64,365 $
70,999
54,150
26,934
19,375
64,479
22,141
75,078
69,961
52,605
44,990
42,338
Provision for loan losses
11,321
2,837
1,651
1,786
Other income
Other expenses
Income before tax
Income tax expense
Net income
Per Share Data:
Net income - basic
Net income – diluted
Book value
Tangible book value
Dividends
17,592
19,262
13,530
13,023
58,896
53,129
43,607
36,505
3,945
14,718
35,147
22,453
33,257
20,877
19,722
17,964
7,300
11,129
7,149
6,621
5,954
$
15,153 $
22,128 $
13,728 $
13,101 $
12,010
$
1.12 $
1.11
1.71 $
1.68
1.15 $
1.14
1.12 $
1.11
14.06
13.19
11.48
10.28
9.67
0.56
8.73
0.56
7.64
0.56
7.9
0.47
1.03
1.02
9.68
7.76
0.43
24
Year Ended December 31,
2007
2006
2005
2004
2003
(Dollars in Thousands, Except Per Share Data)
Profitability Ratios:
Net income to average total assets
0.74%
1.22%
1.04%
1.12 %
1.04%
Net income to average
stockholders’ equity
Net interest margin
Efficiency ratio
Loan Quality Ratios:
8.13
4.02
63.55
13.9
4.25
59.55
10.87
4.31
65.94
11.19
4.15
62.93
10.85
3.96
61.6
Net charge-offs to total loans
0.53%
0.09%
0.03%
0.22 %
0.46%
Reserve for loan losses to total loans
and OREO
1.71
1.72
1.88
1.77
1.78
Nonperforming assets to total loans
and OREO
Reserve for loan losses to
nonperforming loans
Reserve for loan losses to total
1.6
0.61
0.9
0.7
0.95
145.72
361.54
232.57
274.7
231.2
nonperforming assets
106.47
281.93
207.68
253.32
187.58
Liquidity Ratios:
Loans to total deposits
Average loans to average
earnings assets
Noninterest-bearing deposits to
91.85%
84.38%
86.28%
88.93 %
92.72%
81.72
79.39
77.32
80.91
78.63
total deposits
9.36
12.96
14.6
15.22
15.63
Capital Adequacy Ratios:
Common stockholders’ equity to
total assets
Dividend payout ratio
9.06%
50.00
8.73%
32.94
8.76%
48.7
9.54 %
41.96
9.72%
41.75
25
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OVERVIEW
Ameris Bancorp’s performance in 2007 was highlighted by a number of significant items. The Bank exceeded forecasts for
loans and deposits in South Carolina in our first year of expansion strategy while at the same time containing operating
expenses despite substantial start-up costs associated with these expansion efforts. In addition to expansion, the Company
completed consolidation of backroom operations across our four-state footprint and grew revenue 7.6% despite negative
pressures from interest rate environment and industry trends on service charges. Although the Company made great strides
during the year, an increase in the provision for loan loss was required due to deteriorating real estate environments along
coastal areas of Florida.
For the year ended December 31, 2007, Ameris reported net income of $15.2 million, or $1.11 per diluted share compared to
net income in 2006 of $22.1 million, or $1.68 per diluted share. Net income for the fourth quarter of 2007 was $1.2 million
or $0.09 per diluted share compared to $5.8 million or $0.43 per diluted share in the fourth quarter of 2006.
Recurring total revenue (net interest income and non-interest income) grew 7.6% during 2007 to $92.7 million. The net interest
income component of total revenue grew 7.4% to $75.1 million in 2007. Loan growth of $171.1 million or 11.9% during 2007
was the primary factor behind the growth in net interest income and more than offset the negative pressures from declining net
interest margins. The Company’s net interest margin in 2007 declined to 4.02% from 4.27% in 2006 as the industry dealt with
historically thin spreads and flat to inverted interest rate environments.
The non-interest income component of total revenue grew 8.6% to $17.9 million in 2007 (excluding gains on sales of charters in
2006 and losses on investment sales in both years). Service charges and fees on deposit accounts grew 7.9% to $12.5 million as
the Company increased certain fees and charges. In addition, the Company significantly increased the number of low-cost deposit
accounts in every market. Mortgage origination and related fees increased substantially during 2007 as the Company more than
doubled its sales force, mostly in the last half of 2007. While total revenue from mortgage related activities increased 40.1% to
$3.1 million during 2007, contribution to net earnings was limited due to various start-up costs.
Total operating expenses grew 10.9% in 2007 to $58.9 million compared to $53.1 million in 2006. Several factors impacted
operating expenses in 2007, the largest factor being the Company’s South Carolina initiative, which accounted for approximately
$4.5 million in incremental costs during 2007. Total net operating losses associated with the South Carolina strategy in 2007 were
$0.10 per share, which compares favorably with the $0.13 per share amount that was initially forecasted. Equipment and
occupancy expenses increased approximately 9.3% to $7.5 million as additional offices in South Carolina and Florida were
opened in 2007. Marketing costs are not expected to moderate or fall in 2008 as the Company has planned events surrounding
openings in several new markets across its footprint and increased marketing around mortgage and treasury services.
Decreases in credit quality, particularly in the second half of 2007, were significant enough to mitigate improvements elsewhere in
the Company. The majority of the decline, as well as the resulting provisions and net charge-offs resulted from declines in the
values of real estate collateral along the coastal areas of north Florida. Provisions for loan loss in the fourth quarter of 2007
amounted to $6.9 million compared to $713,000 in the same quarter of 2006. For the year, Ameris Bank recorded $11.3 million
in total provision for loan loss, a significant increase over the $2.8 million recorded in 2006. Net charge-offs in 2007 amounted to
0.53% of average loans compared to 0.09% in 2006.
At December 31, 2007, non-performing assets amounted to $26.0 million or 1.60% of total loans compared to 1.38% of total loans
at September 30, 2007. Other real estate increased approximately $4.5 million during the last quarter as the Company foreclosed
on several larger properties which are being marketed aggressively. The Company’s reserve for loan losses at December 31, 2007
was $27.6 million or 1.71% of total loans, compared to $24.9 million and 1.72%, respectively, at December 31, 2006.
26
CRITICAL ACCOUNTING POLICIES
Ameris has established certain accounting and financial reporting policies to govern the application of accounting principles
generally accepted in the United States of America in the preparation of our financial statements. Our significant accounting
policies are described in the Notes to the Consolidated Financial Statements. Certain accounting policies involve significant
judgments and assumptions by management which have a material impact on the carrying value of certain assets and liabilities;
management considers these accounting policies to be critical accounting policies. The judgments and assumptions used by
management are based on historical experience and other factors which are believed to be reasonable under the
circumstances. Because of the nature of the judgments and assumptions made by management, actual results could differ from the
judgments and estimates adopted by management which could have a material impact on the carrying values of assets and
liabilities and the results of Ameris’ operations. We believe the following accounting policies applied by Ameris represent critical
accounting policies.
Allowance for Loan Losses
We believe the allowance for loan losses is a critical accounting policy that requires the most significant judgments and estimates
used in the preparation of our consolidated financial statements. The allowance for loan losses represents management’s estimate
of probable loan losses inherent in the Company’s loan portfolio. Calculation of the allowance for loan losses represents a critical
accounting estimate due to the significant judgment, assumptions and estimates related to the amount and timing of estimated
losses, consideration of subjective environmental factors and the amount and timing of cash flows related to impaired loans.
Management believes that the allowance for loan losses is adequate. While management uses available information to recognize
losses on loans, future additions to the allowance for loan losses may be necessary based on changes in economic conditions. In
addition, various regulatory agencies, as an integral part of their examination processes, periodically review the Company’s
allowance for loan losses. Such agencies may require the Company to recognize additions to the allowance for loan losses based
on their judgments about information available to them at the time of their examination.
Considering current information and events regarding a borrower’s ability to repay its obligations, management considers a loan
to be impaired when the ultimate collectability of all amounts due, according to the contractual terms of the loan agreement, is in
doubt. When a loan is considered to be impaired, the amount of impairment is measured based on the present value of expected
future cash flows discounted at the loan’s effective interest rate or if the loan is collateral-dependent, the fair value of the collateral
is used to determine the amount of impairment. Impairment losses are included in the allowance for loan losses through a charge
to the provision for losses on loans.
Subsequent recoveries are credited to the allowance for loan losses. Cash receipts for accruing loans are applied to principal and
interest under the contractual terms of the loan agreement. Cash receipts on impaired loans for which the accrual of interest has
been discontinued are applied first to principal and then to interest income.
27
Certain economic and interest rate factors could have a material impact on the determination of the allowance for loan losses. An
increase in interest rates by the Federal Reserve would favorably impact our net interest margin. An improving economy could
result in the expansion of businesses and creation of jobs which would positively affect Ameris’ loan growth and improve our
gross revenue stream. Conversely, certain factors could result from an expanding economy which could increase our credit costs
and adversely impact our net earnings. A significant rapid rise in interest rates could create higher borrowing costs and shrinking
corporate profits which could have a material impact on a borrower’s ability to pay. We will continue to concentrate on
maintaining a high quality loan portfolio through strict administration of our loan policy.
Another factor that we have considered in the determination of the allowance for loan losses is loan concentrations to individual
borrowers or industries. We had one credit relationship that exceeded our in-house credit limit of $10.0 million. The exposure to
that credit relationship was approximately $12.2 million.
A substantial portion of our loan portfolio is in the commercial real estate and residential real estate sectors. Those loans are
secured by real estate in Ameris’ primary market area. A substantial portion of other real estate owned is located in those same
markets. Therefore, the ultimate collectability of a substantial portion of our loan portfolio and the recovery of a substantial
portion of the carrying amount of other real estate owned are susceptible to changes to market conditions in Ameris’ primary
market area.
Income Taxes
SFAS No. 109, “Accounting for Income Taxes,” requires the asset and liability approach for financial accounting and reporting
for deferred income taxes. We use the asset and liability method of accounting for deferred income taxes and provide deferred
income taxes for all significant income tax temporary differences. See Note 12 to the Notes to Consolidated Financial Statements
for additional details.
As part of the process of preparing our consolidated financial statements we are required to estimate our income taxes in each of
the jurisdictions in which we operate. This process involves estimating our actual current tax exposure together with assessing
temporary differences resulting from differing treatment of items, such as depreciation and the provision for loan losses, for tax
and financial reporting purposes. These differences result in deferred tax assets and liabilities that are included in our
consolidated balance sheet.
We must also assess the likelihood that our deferred tax assets will be recovered from future taxable income, and to the extent we
believe that recovery is not likely, we must establish a valuation allowance. Significant management judgment is required in
determining our provision for income taxes, our deferred tax assets and liabilities and any valuation allowance recorded against
our net deferred tax assets. To the extent we establish a valuation allowance or adjust this allowance in a period, we must include
an expense within the tax provisions in the statement of income.
We have recorded on our consolidated balance sheet net deferred tax assets of $5.20 million, which includes amounts relating to
loss carryforwards. We believe there will be sufficient taxable income in the future to allow us to utilize these loss carryforwards
in the tax jurisdictions where they exist.
28
Long-Lived Assets, Including Intangibles
In our financial statements, we have recorded $59.6 million of goodwill and other intangible assets, which represents the amount
by which the price we paid for acquired businesses exceeds the fair value of tangible assets acquired plus the liabilities
assumed. We evaluate long-lived assets, such as property and equipment, specifically identifiable intangibles and goodwill, when
events or changes in circumstances indicate that the carrying value of such assets might not be recoverable. Factors that could
trigger impairment include significant underperformance relative to historical or projected future operating results, significant
changes in the manner of our use of the acquired assets and significant negative industry or economic trends.
The determination of whether impairment has occurred is based on an estimate of undiscounted cash flows attributable to the
assets as compared to the carrying value of the assets. If impairment has occurred, the amount of the impairment loss recognized
would be determined by estimating the fair value of the assets and recording a loss if the fair value was less than the book value.
In determining the existence of impairment factors, our assessment is based on market conditions, operational performance and
legal factors of our Company. Our review of factors present and the resulting appropriate carrying value of our goodwill,
intangibles and other long-lived assets are subject to judgments and estimates that management is required to make. Future events
could cause us to conclude that impairment indicators exist and that our goodwill, intangibles and other long-lived assets might be
impaired. In accordance with accounting rules promulgated by the Financial Accounting Standards Board (“FASB”), no amount
of goodwill was expensed in 2007, 2006 or 2005.
NET INCOME AND EARNINGS PER SHARE
In 2007, we reported net income of $15.2 million, or $1.11 per diluted share, compared to $22.1 million, or $1.68 per diluted share
in 2006 and $13.7 million, or $1.14 per diluted share, in 2005. Our return on average assets was 0.74%, 1.22% and 1.04% in
2007, 2006 and 2005, respectively. Our return on average stockholders’ equity was 8.14%, 13.90% and 10.87% in 2007, 2006
and 2005, respectively.
EARNING ASSETS AND LIABILITIES
Average earning assets in 2007 increased 14.1% over 2006 levels principally due the Company’s de novo efforts in South
Carolina. The earning asset and interest-bearing liability mix is consistently monitored to maximize the net interest margin and
therefore increase return on assets and shareholders equity.
The following statistical information should be read in conjunction with “Management’s Discussion and Analysis of Financial
Condition and Results of Operation” and the financial statements and related notes included elsewhere in this Annual Report and
in the documents incorporated herein by reference.
29
The following tables set forth the amount of the our interest income or interest expense for each category of interest-earning assets
and interest-bearing liabilities and the average interest rate for total interest-earning assets and total interest-bearing liabilities, net
interest spread and net yield on average interest-earning assets. Federally tax-exempt income is presented on a taxable-equivalent
basis assuming a 35% federal tax rate.
Year Ended December 31,
2007
2006
2005
Interest Average
Income/ Yield/
Average
Average
Balance Expense Rate Paid Balance
Interest Average
Income/ Yield/
Average
Expense Rate Paid Balance
Interest Average
Income/ Yield/
Expense Rate Paid
(Dollars in Thousands)
7.27%
3.93
3.71
6.53
1.02%
3.02
1.58
4.28
9.80
2.60
3.93%
4.32%
ASSETS
Interest-earning assets:
Loans
Investment securities
Short-term assets
$ 1,536,243 $ 129,376
298,036 14,785
2,349
45,634
8.42% $ 1,308,405 $ 107,809
12,550
267,343
4.96
3,843
72,183
5.15
8.24% $
4.69
5.32
952,647 $ 69,238
8,794
223,633
1,591
42,884
Total earning assets 1,879,913 146,510
7.79
1,647,931
124,202
7.54
1,219,164 79,623
Non-earning assets
175,015
165,839
103,431
Total assets
$ 2,054,928
$ 1,813,770
$ 1,322,595
LIABILITIES
AND STOCKHOLDERS’ EQUITY
Interest-bearing liabilities:
Savings and interest-bearing
demand deposits
Time deposits
Other borrowings
FHLB advances
Trust preferred securities
$
634,287 $ 18,014
874,609 44,367
722
16,425
4,732
92,570
3,164
42,269
2.84% $
5.07
4.40
5.11
7.49
521,783 $ 11,397
34,202
773,089
514
11,910
4,246
91,119
3,791
41,841
2.18% $
4.42
4.32
4.66
8.20
393,592 $
4,013
498,036 15,016
103
4,296
3,506
6,521
100,456
35,779
Total interest-bearing
liabilities
1,660,160 70,999
3.83
1,439,742
54,150
3.74
1,034,084 26,934
Demand deposits
Other liabilities
Stockholders’ equity
192,575
15,880
186,313
Total liabilities and
stockholders’ equity $ 2,054,928
Interest rate spread
Net interest income
Net interest margin
194,150
20,684
159,194
154,326
7,895
126,290
$ 1,813,770
$ 1,322,595
3.96%
3.80%
$ 75,511
$ 70,052
$ 52,689
4.02%
4.25%
30
RESULTS OF OPERATIONS
Net Interest Income
Net interest income represents the amount by which interest income on interest-bearing assets exceeds interest expense incurred
on interest-bearing liabilities. Net interest income is the largest component of our income and is affected by the interest rate
environment and the volume and composition of interest-earning assets and interest-bearing liabilities. Our interest-earning assets
include loans, investment securities, interest-bearing deposits in banks and federal funds sold. Our interest-bearing liabilities
include deposits, other short-term borrowings, FHLB advances and subordinated debentures.
2007 compared with 2006:
For the year ended December 31, 2007, interest income was $146.1 million, an increase of $22.0 million, or 17.7%, compared to
the same period in 2006. Average earning assets increased $232.0 million, or 14.1%, to $1.88 billion for the year ended
December 31, 2007 compared to $1.65 billion as of December 31, 2006. Yield on average earning assets on a taxable equivalent
basis for 2007 increased to 7.79% compared to 7.54% and 6.53% for the years ended December 31, 2006 and 2005,
respectively. The increase in yields on earning assets during 2007 is primarily attributed to better pricing opportunities on fixed
rate loans with steady levels of benchmark interest rates for variable rate loans.
Interest expense on deposits and other borrowings for the year ended December 31, 2007 was $71.0, a $16.9 million increase from
the year ended December 31, 2006. Average interest-bearing liabilities increased by $217.9 million, or 13.3% to end the year at
$1.85 billion. Rates on average interest-bearing liabilities rose to 3.83% from 3.29% and 2.60% as of December 31, 2006 and
2005, respectively. Our Company aggressively manages our cost of funds to achieve a balance between high levels of
profitability and acceptable levels of growth.
On a taxable-equivalent basis, net interest income for 2007 was $75.5 million compared to $70.1 million in 2006, an increase of
7.7%. The Company’s net interest margin, on a tax equivalent basis, decreased to 4.02% for the year ended December 31, 2007
compared to 4.25% as of December 31, 2006. Opportunities to improve the net interest margin proved limited during the year due
to an interest rate environment dominated by an inverted yield curve, that gave way to falling short term rates late in 2007.
2006 compared with 2005:
Interest income for the year ended December 31, 2006 was $124.2 million, an increase of $44.6 million, or 56.0%, compared to
the same period in 2005. Average earning assets increased $428.8 million, or 35.2%, to $1.64 billion for the year ended
December 31, 2006 compared to $1.22 billion as of December 31, 2005. Yield on average earning assets on a taxable equivalent
basis for 2006 increased to 7.54% from 6.53% and 5.98% for the years ended December 31, 2005 and 2004, respectively. The
Company’s increase in interest income is equally attributable to both an increase in average earning assets and a higher rate
environment for most of 2006 than what was seen in previous years.
Interest expense on deposits and other borrowings for the year ended December 31, 2006 was $54.2 million, a $27.2 million
increase from the year ended December 31, 2005. While average interest-bearing liabilities increased substantially, by $405.7
million, the higher rate environment and, consequently, higher rates on those liabilities contributed to the higher level of interest
expense. Rates on average interest-bearing liabilities increased to 3.74% from 2.60% and 2.11% as of December 31, 2005 and
2004, respectively. Our Company aggressively manages our cost of funds to achieve a balance between high levels of
profitability and acceptable levels of growth.
Net interest income for 2006, on a taxable-equivalent basis, was $70.1 million compared to $52.7 million in 2005, an increase of
33.0%. The Company’s net interest margin, on a tax equivalent basis, decreased slightly to 4.25% for the year ended
December 31, 2006 compared to 4.32% as of December 31, 2005.
31
Year Ended December 31,
2007 vs. 2006
Changes Due To
Increase
(Decrease)
Rate
2006 vs. 2005
Increase
(Decrease)
Changes Due To
Rate
Volume
Volume
(Dollars in Thousands)
Increase (decrease) in:
Income from earning assets:
Interest and fees on loans
Interest on securities:
Short-term assets
Total interest income
Expense from interest-bearing liabilities:
Interest on savings and interest-
bearing demand deposits
Interest on time deposits
Interest on other borrowings
Interest on FHLB advances
Interest on trust preferred securities
Total interest expense
$ 21,567
2,235
(1,494)
22,308
$ 18,798
1,434
(1,416)
18,816
$ 2,769
801
(78)
3,492
$ 38,321
3,992
2,259
44,572
$ 12,275
2,038
1,165
15,478
$ 26,046
1,954
1,094
29,094
6,617
10,164
208
486
(627)
16,848
2,444
4,484
195
68
35
7,226
4,173
5,680
13
418
(662)
9,622
7,384
19,186
411
(50)
285
27,216
6,077
10,879
335
323
(667)
16,947
1,307
8,307
76
(373)
952
10,269
Net interest income
$ 5,460
$ 11,590
$ (6,130)
$ 17,356
$ (1,469)
$ 18,825
Provision for Loan Losses
The allowance for loan losses is a reserve established through charges to earnings in the form of a provision for loan losses. The
provision for loan losses is based on management’s evaluation of the size and composition of the loan portfolio, the level of non-
performing and past due loans, historical trends of charged-off loans and recoveries, prevailing economic conditions and other
factors management deems appropriate. As these factors change, the level of loan loss provision may change.
Decreases in credit quality, particularly in the second half of 2007, were significant enough to mitigate improvements elsewhere in
the Company. The majority of the decline, as well as the resulting provisions and net charge-offs resulted from declines in the
values of real estate collateral along the coastal areas of north Florida. Provisions for loan loss in the fourth quarter of 2007
amounted to $6.9 million compared to $713,000 in the same quarter of 2006. For the year, Ameris Bank recorded $11.3 million
in total provision for loan loss, a significant increase over the $2.8 million recorded in 2006. Net charge-offs in 2007 amounted to
0.53% of average loans compared to 0.10% in 2006 and 0.04% in 2005.
At December 31, 2007, non-performing assets amounted to $26.0 million or 1.60% of total loans compared to 0.60% of total loans
at December 31, 2006. Other real estate increased approximately $5.7 million during the year as the Company worked
aggressively to resolve several larger non-performing loans. The Company’s reserve for loan losses at December 31, 2007 was
$27.6 million or 1.71% of total loans, compared to $24.9 million and 1.72%, respectively, at December 31, 2006 and 1.95% at
December 31, 2005.
Non-interest income
Following is a comparison of non-interest income for 2007, 2006 and 2005.
2007
2005
Years Ended December 31,
2006
(Dollars in Thousands)
11,538 $
2,208
(308)
5,824
19,262 $
12,445 $
3,093
(297)
2,351
17,592 $
10,428
1,614
(391)
1,879
13,530
Service charges on deposit accounts
Mortgage banking activities
Gain (loss) on sale of securities
Other income
$
$
32
2007 compared with 2006:
The non-interest income component of total revenue grew 8.4% to $17.9 million in 2007 (excluding gains on sales of charters in
2006 and losses on investment sales in both years). Service charges and fees on deposit accounts grew 7.9% to $12.5 million as
the Company increased certain fees and charges. In addition to increasing fees, the Company significantly increased the number
of low-cost deposit accounts in virtually every market. Mortgage origination and related fees increased substantially during 2007
as the Company more than doubled its sales force, mostly in the last half of 2007. While total revenue from mortgage related
activities increased 40.1% to $3.1 million during 2007, contribution to net earnings was limited due to various start-up costs.
2006 compared with 2005:
Total non-interest income during 2006 increased substantially to $19.3 million, an increase of 42.4% over 2005 levels. Service
charges on deposit accounts increased by 10.6% during 2006 to $11.5 million as the Company experienced strong increases in
demand deposits and sought to maximize this area of income with certain changes to its deposit account fee structure. Mortgage
fees increased by 36.8% during 2006 to $2.2 million as the Company expanded its mortgage production staff in most of its
geographic footprint. Other income during 2006 includes $3.1 million of gains recognized from the Company’s successful efforts
to sell three banking charters to unrelated parties.
Non-interest expense
Following is a comparison of non-interest expense for 2007, 2006 and 2005.
Salaries and employee benefits
Equipment and occupancy
Amortization of intangible assets
Data processing fees
Business restructuring
Other expense
2007
Years Ended December 31,
2006
(Dollars in Thousands)
2005
$
$
29,844 $
7,540
1,297
2,579
-
17,636
58,896 $
27,043 $
6,836
1,107
2,136
1,452
14,555
53,129 $
22,483
4,931
819
1,899
2,838
10,637
43,607
33
2007 compared with 2006:
Total operating expenses grew 10.9% in 2007 to $58.9 million compared to $53.1 million in 2006. Several factors impacted
operating expenses in 2007, the largest factor being the Company’s South Carolina initiative, which accounted for approximately
$4.5 million in incremental costs during 2007. Equipment and occupancy expenses increased approximately 10.3% to $7.5
million as additional offices in South Carolina and Florida were opened in 2007. Advertising-related expenses in 2007 increased
approximately $460,000 to $2.1 million as the Company expanded its marketing in existing markets and promoted its products in
new and existing markets. Marketing costs are not expected to moderate or fall in 2008 as the Company has planned events
surrounding openings in several new markets across its footprint and increased marketing around mortgage and treasury services.
Expenses associated with data processing increased approximately 20.7% during 2007. These expenses fluctuate in proportion to
business volumes (loans and deposits) and branch officers. The Company’s expansion efforts over the past few years, as well as
acquisition activity, have resulted in higher levels of expense.
2006 compared with 2005:
Non-interest expense increased during 2006 largely as a result of the FNB acquisition. Expenses for these two banks were not
included in our results for 2005 as the acquisition was consummated at the end of the year. The assets assumed in this acquisition
amounted to approximately 18.5% of our total assets at the end of 2005. In addition to the necessary costs assumed with this
acquisition, the Company’s level of operating costs has been influenced by the need to renovate several existing offices and efforts
to hire talented bankers when the opportunity exists.
Business restructuring costs of $1.5 million in 2006 relate to the restructuring announced during 2005. Additional costs were
necessary as the Company began to streamline it support functions and finalize its efforts to create a single bank with a uniform
and recognizable brand.
Income Taxes:
Federal income tax expense is influenced by the amount of taxable income, the amount of tax-exempt income and the amount of
non-deductible expenses. Income taxes totaled $7.3 million, $11.1 million and $7.1 million in 2007, 2006 and 2005,
respectively. The Company’s effective tax rate was 33%, 33% and 34% for the years ended December 31, 2007, 2006 and 2005.
LOANS
Management believes that our loan portfolio is adequately diversified. The loan portfolio contains no foreign or energy-related
loans or significant concentrations in any one industry, with the exception of residential and commercial real estate mortgages,
which constituted approximately 54.7% of our loan portfolio as of December 31, 2007. The amount of loans outstanding at the
indicated dates is shown in the following table according to type of loans.
December 31,
2007
2006
2005
2004
2003
(Dollars in Thousands)
Commercial and financial
$
164,708
$
137,290
$
129,612
$
100,585 $
Agricultural
Real estate - construction
Real estate - mortgage, farmland
Real estate - mortgage, commercial
Real estate - mortgage, residential
Consumer installment loans
Other
40,433
174,576
83,789
912,728
157,334
69,099
11,381
34,614
157,260
79,931
803,652
147,789
73,218
9,197
31,438
73,639
65,052
654,315
142,609
79,239
10,697
Less reserve for possible loan losses
1,614,048
27,640
1,442,951
24,863
1,186,601
22,294
Loans, net
$
1,586,408
$
1,418,088
$
1,164,307
$
27,718
39,516
55,910
448,425
126,985
66,779
11,156
877,074
15,493
861,581 $
95,514
22,242
26,581
57,024
420,896
131,181
72,461
14,640
840,539
14,963
825,576
34
Total loans as of December 31, 2007 are shown in the following table according to maturity or repricing opportunities.
Maturity or Repricing Within:
One year or less
After one year through five years
After five years
(Dollars in
Thousands)
$
725,355
714,869
173,824
$ 1,614,048
The following table summarizes loans at December 31, 2007 with due dates after one year which (1) have predetermined interest
rates and (2) have floating or adjustable interest rates.
Predetermined interest rates
Floating or adjustable interest rates
(Dollars in
Thousands)
$
$
495,837
392,857
888,694
Records were not available to present the above information in each category listed in the first paragraph above and could not be
reconstructed without undue burden.
ALLOWANCE AND PROVISION FOR LOAN LOSSES
The allowance for loan losses represents a reserve for inherent losses in the loan portfolio. The adequacy of the allowance for loan
losses is evaluated periodically based on a review of all significant loans, with a particular emphasis on non-accruing, past due and
other loans that management believes might be potentially impaired or warrant additional attention. We segregate our loan
portfolio by type of loan and utilize this segregation in evaluating exposure to risks within the portfolio. In addition, based on
internal reviews and external reviews performed by independent auditors and regulatory authorities, we further segregate our loan
portfolio by loan grades based on an assessment of risk for a particular loan or group of loans. Certain reviewed loans are assigned
specific allowances when a review of relevant data determines that a general allocation is not sufficient or when the review affords
management the opportunity to fine tune the amount of exposure in a given credit. In establishing allowances, management
considers historical loan loss experience but adjusts this data with a significant emphasis on data such as current loan quality
trends, current economic conditions and other factors in the markets where the Bank operates. Factors considered include among
others, current valuations of real estate in our markets, unemployment rates, the effect of weather conditions on agricultural
related entities and other significant local economic events, such as major plant closings.
We have developed a methodology for determining the adequacy of the loan loss reserve which is monitored by the Company’s
Senior Credit Officer and internal audit staff. Procedures provide for the assignment of a risk rating for every loan included in our
total loan portfolio, with the exception of credit card receivables and overdraft protection loans which are treated as pools for risk
rating purposes. The risk rating schedule provides eight ratings of which four ratings are classified as pass ratings and four ratings
are classified as criticized ratings. Each risk rating is assigned a percent factor to be applied to the loan balance to determine the
adequate amount of reserve. Many of the larger loans require an annual review by an independent loan officer and are often
reviewed by independent third parties. As a result of these loan reviews, certain loans may be assigned specific reserve
allocations. Other loans that surface as problem loans may also be assigned specific reserves. Past due loans are assigned risk
ratings based on the number of days past due. Risk ratings are subject to periodic review by internal and external loan review staff.
35
The following table sets forth the breakdown of the allowance for loan losses by loan category for the periods indicated.
Management believes the allowance can be allocated only on an approximate basis. The allocation of the allowance to each
category is not necessarily indicative of future losses and does not restrict the use of the allowance to absorb losses in any other
category.
2007
2006
% of
Total
Loans
Amount
% of
Total
Loans
Amount
At December 31,
2005
(Dollars in Thousands)
% of
Total
Loans
Amount
2004
2003
% of
Total
Loans
Amount
% of
Total
Loans
Amount
Commercial, financial,
industrial and
agricultural
$
3,830
13 % $
3,792
13 % $
4,215
14 % $
3,030
16 % $ 2,332
Commercial R/E
16,049
Total Commercial
19,879
Residential R/E
Agricultural R/E
Construction
Consumer Installment
2,078
1,150
3,487
1,046
57
70
10
5
11
4
12,976
16,768
2,325
1,331
3,293
1,146
55
11,354
55
7,344
51
7,857
68
15,569
69
10,374
67
10,189
10
6
11
5
2,585
1,359
1,270
1,511
12
6
6
7
1,986
14
2,180
970
553
1,610
6
5
8
884
364
1,346
16 %
50
66
16
7
3
9
$ 27,640
100 % $ 24,863
100 % $ 22,294
100 % $ 15,493
100 % $ 14,963
100 %
The following table presents an analysis of our loan loss experience for the periods indicated:
2007
2006
2005
2004
2003
(Dollars in Thousands)
December 31,
Average amount of loans outstanding
$
1,536,243
$
1,308,174
$
952,647
$
855,205
$
841,857
Balance of reserve for possible loan
losses at beginning of period
$
24,863
$
22,294
$
15,493
$
14,963
$
14,868
Charge-offs:
Commercial real estate, financial and agricultural
Residential real estate
Consumer
Recoveries:
Commercial real estate, financial and agricultural
Residential real estate
Consumer
Net charge-offs
(8,735)
(623)
(1,057)
1,339
120
412
(8,544)
(1,712)
(1,444)
(874)
1,528
745
477
(1,292)
(649 )
(543 )
(963 )
601
644
532
(1,639 )
(382 )
(1,555 )
464
483
718
(3,114)
(781)
(1443)
963
46
479
(378 )
(1,911 )
(3,850)
Additions to reserve charged to operating expenses
11,321
2,837
1,651
1,786
3,945
Allowance for loan losses of acquired subsidiary
-
1,024
5,528
655
-
Balance of reserve for possible
loan losses at end of period
$
27,640
$
24,863
$
22,294
$
15,493
$
14,963
Ratio of net loan charge-offs to average loans
0.53%
0.10%
0.04 %
0.22 %
0.46%
36
NONPERFORMING LOANS
A loan is placed on non-accrual status when, in management’s judgment, the collection of the interest income appears doubtful.
Interest receivable that has been accrued in prior years and is subsequently determined to have doubtful collectability is charged to
the allowance for possible loan losses. Interest on loans that are classified as non-accrual is recognized when received. Past due
loans are loans whose principal or interest is past due 90 days or more. In some cases, where borrowers are experiencing financial
difficulties, loans may be restructured to provide terms significantly different from the original contractual terms.
2007
2006
December 31,
2005
(Dollars in Thousands)
2004
2003
Loans accounted for on a non-accrual basis
$ 18,968 $
6,877 $
9,586 $ 5,640 $
6,472
Installment loans and term loans contractually past due ninety days
or more as to interest or principal payments and still accruing
4
-
-
44
25
In the opinion of management, any loans classified by regulatory authorities as doubtful, substandard or special mention that have
not been disclosed above do not (i) represent or result from trends or uncertainties which management reasonably expects will
materially impact future operating results, liquidity or capital resources, or (ii) represent material credits about which management
is aware of any information which causes management to have serious doubts as to the ability of such borrowers to comply with
the loan repayment terms. Any loans classified by regulatory authorities as loss have been charged off.
LIQUIDITY AND RATE SENSITIVITY
Liquidity management involves the matching of the cash flow requirements of customers, who may be either depositors desiring
to withdraw funds or borrowers needing assurance that sufficient funds will be available to meet their credit needs, and the ability
of our Company to meet those needs. We seek to meet liquidity requirements primarily through management of short-term
investments (principally interest-bearing deposits in banks) and monthly amortizing loans. Another source of liquidity is the
repayment of maturing single payment loans. In addition, our Company maintains relationships with correspondent banks which
could provide funds to them on short notice, if needed.
A principal objective of our asset/liability management strategy is to minimize its exposure to changes in interest rates by
matching the maturity and repricing horizons of interest-earning assets and interest-bearing liabilities. This strategy is overseen in
part through the direction of our Asset and Liability Committee (the “ALCO Committee”) which establishes policies and monitors
results to control interest rate sensitivity.
37
As part of our interest rate risk management policy, the ALCO Committee examines the extent to which its assets and liabilities
are “interest rate sensitive” and monitors its interest rate-sensitivity “gap”. An asset or liability is considered to be interest rate
sensitive if it will reprice or mature within the time period analyzed, usually one year or less. The interest rate-sensitivity gap is
the difference between the interest-earning assets and interest-bearing liabilities scheduled to mature or reprice within such time
period. A gap is considered positive when the amount of interest rate-sensitive assets exceeds the amount of interest rate-sensitive
liabilities. A gap is considered negative when the amount of interest rate-sensitive liabilities exceeds the interest rate-sensitive
assets. During a period of rising interest rates, a negative gap would tend to adversely affect net interest income, while a positive
gap would tend to result in an increase in net interest income. During a period of falling interest rates, a negative gap would tend
to result in an increase in net interest income, while a positive gap would tend to adversely affect net interest income. If our assets
and liabilities were equally flexible and moved concurrently, the impact of any increase or decrease in interest rates on net interest
income would be minimal.
A simple interest rate “gap” analysis by itself may not be an accurate indicator of how net interest income will be affected by
changes in interest rates. Accordingly, the ALCO Committee also evaluates how the repayment of particular assets and liabilities
is impacted by changes in interest rates. Income associated with interest-earning assets and costs associated with interest-bearing
liabilities may not be affected uniformly by changes in interest rates. In addition, the magnitude and duration of changes in
interest rates may have a significant impact on net interest income. For example, although certain assets and liabilities may have
similar maturities or periods of repricing, they may not react identically to changes in market interest rates. Interest rates on
certain types of assets and liabilities fluctuate in advance of changes in general market interest rates, while interest rates on other
types may lag behind changes in general market rates. In addition, certain assets, such as adjustable rate mortgage loans, have
features (generally referred to as “interest rate caps”) which limit changes in interest rates on a short-term basis and over the life of
the asset. In the event of a change in interest rates, prepayment and early withdrawal levels also could deviate significantly from
those assumed in calculating the interest rate gap. The ability of many borrowers to service their debts also may decrease in the
event of an interest rate increase.
We manage the mix of asset and liability maturities in an effort to control the effects of changes in the general level of interest
rates on net interest income. Except for its effect on the general level of interest rates, inflation does not have a material impact on
the portfolio due to the rate variability and short-term maturities of its earning assets. In particular, approximately 44.9% of the
loan portfolio is comprised of loans which mature or reprice within one year or less. Mortgage loans, primarily with five to fifteen
year maturities, are also made on a variable rate basis with rates being adjusted every one to five years. Additionally, 1.5% of the
investment portfolio matures or reprices within one year or less.
The following table sets forth the distribution of the repricing of our earning assets and interest-bearing liabilities as of December
31, 2007, the interest rate sensitivity gap (i.e., interest rate sensitive assets divided by interest rate sensitivity liabilities), the
cumulative interest rate sensitivity gap ratio (i.e., interest rate sensitive assets divided by interest rate sensitive liabilities) and the
cumulative sensitivity gap ratio. The table also sets forth the time periods in which earning assets and liabilities will mature or
may reprice in accordance with their contractual terms. However, the table does not necessarily indicate the impact of general
interest rate movements on the net interest margin since the repricing of various categories of assets and liabilities is subject to
competitive pressures and the needs of our customers. In addition, various assets and liabilities indicated as repricing within the
same period may in fact reprice at different times within such period and at different rates.
38
At December 31, 2007
Maturing or Repricing Within
Zero to
Three
Months
Three
Months to
One Year
One to
Five
Years
Over
Five
Years
Total
(Dollars in Thousands)
$
12,022 $
2,766
262,685
- $
1,800
462,669
- $
147,262
714,869
- $
139,342
173,825
12,022
291,170
1,614,048
277,473
464,469
862,131
313,167
1,917,240
624,479
53,834
235,936
19,705
80,000
42,269
-
-
518,530
-
-
-
-
-
127,135
-
5,500
-
-
-
6
-
-
-
624,479
53,834
881,607
19,705
85,500
42,269
1,056,223
518,530
132,635
6
1,707,394
(778,750)
$
(54,061)
$
729,496 $
313,161 $
209,846
(778,750)
$ (832,811)
$ (103,315) $
209,846
Earning assets:
Short-term assets
Investment securities
Loans
Interest-bearing liabilities:
Interest-bearing demand deposits
Savings
Time deposits
Other borrowings
FHLB advances
Trust preferred securities
Interest rate sensitivity gap
Cumulative interest rate sensitivity gap
$
$
Interest rate sensitivity gap ratio
0.26
0.90
6.5
N/A
Cumulative interest rate sensitivity gap ratio
0.26
0.47
2.04
1.13
INVESTMENT PORTFOLIO
Following is a summary of the carrying value of investments, including restricted equity securities, as of the end of each reported
period:
December 31,
2007
2006
2005
(Dollars in Thousands)
U. S. Government sponsored agencies
State and municipal securities
Corporate debt securities
Mortgage-backed securities
Marketable equity securities
Restricted equity securities
$
69,923 $ 101,863 $
18,320
18,934
9,498
9,829
191,641 151,818
748
1,788
7,559
7,015
92,461
7,968
7,113
126,870
733
8,597
$
298,729 $ 290,207 $
243,742
39
The amounts of securities available for sale in each category as of December 31, 2007 are shown in the following table according
to contractual maturity classifications: (1) one year or less, (2) after one year through five years, (3) after five years through ten
years and (4) after ten years.
U. S. Treasury
and Other U. S.
Government Agencies
and Corporations
State and Political
Subdivisions
Amount
Yield
(1)
Amount
Yield
(1)(2)
(Dollars in Thousands)
$
479
63,829
40,952
167,590
$
272,850
3.59%
4.69
4.71
5.41
5.13%
$
571
5,637
8,535
3,577
$
18,320
5.35%
5.64
5.69
6.00
5.73%
Maturity:
One year or less
After one year through five years
After five years through ten years
After ten years
(1)
Yields were computed using coupon interest, adding discount accretion or subtracting premium amortization, as
appropriate, on a ratable basis over the life of each security. The weighted average yield for each maturity range was
computed using the acquisition price of each security in that range.
(2)
Yields on securities of state and political subdivisions are stated on a taxable-equivalent basis, using a tax rate of 35%.
DEPOSITS
Average amount of deposits and average rate paid thereon, classified as to noninterest-bearing demand deposits, interest-bearing
demand and savings deposits and time deposits, for the periods indicated are presented below.
Noninterest-bearing demand deposits
Interest-bearing demand and savings deposits
Time deposits
Total deposits
Year Ended December 31,
2007
Amount
Rate
2006
Amount Rate
(Dollars in Thousands)
$
192,575
634,287
874,610
$ 1,701,472
- %
2.84
5.07
$ 194,150
521,783
773,089
-%
2.18
4.42
$ 1,489,022
We have a large, stable base of time deposits with little or no dependence on what we consider volatile deposits of $100,000 or
more. These time deposits are principally certificates of deposit and individual retirement accounts obtained for individual
customers.
40
The amounts of time certificates of deposit issued in amounts of $100,000 or more as of December 31, 2007, are shown below by
category, which is based on time remaining until maturity of (1) three months or less, (2) over three through twelve months and
(3) over twelve months.
Three months or less
Over three through twelve months
Over twelve months
Total
(Dollars in
Thousands)
$
$
136,513
298,862
87,460
522,835
OFF-BALANCE SHEET ARRANGEMENTS AND CONTRACTUAL OBLIGATIONS
In the ordinary course of business, our Bank has granted commitments to extend credit to approved customers. Generally, these
commitments to extend credit have been granted on a temporary basis for seasonal or inventory requirements and have been
approved by the Bank’s local boards. Our Bank has also granted commitments to approved customers for financial standby letters
of credit. These commitments are recorded in the financial statements when funds are disbursed or the financial instruments
become payable. The Bank uses the same credit policies for these off-balance sheet commitments as it does for financial
instruments that are recorded in the consolidated financial statements. Commitments generally have fixed expiration dates or
other termination clauses and may require payment of a fee. Since many of the commitment amounts expire without being drawn
upon, the total commitment amounts do not necessarily represent future cash requirements.
Following is a summary of the commitments outstanding at December 31, 2007 and 2006.
Commitments to extend credit
Financial standby letters of credit
The following table summarizes short-term borrowings for the periods indicated:
December 31,
2007
2006
(Dollars in Thousands)
$ 177,410
7,426
$ 184,836
$ 179,727
6,139
$ 185,866
2007
Average
Balance
Average
Rate
Years Ended December 31,
2006
(Dollars in Thousands)
Average
Average
Rate
Balance
2005
Average
Balance
Average
Rate
Federal funds purchased and securities sold
under agreement to repurchase
$ 16,411
2.15 % $
6,910
2.68 %
$ 6,521
1.58 %
Total maximum short-term borrowings
outstanding at any month-end during the year
$ 32,359
$ 16,024
$ 15,545
Total
Balance
Total
Balance
Total
Balance
41
The following table sets forth certain information about contractual cash obligations as of December 31, 2007.
Payments Due After December 31, 2007
Total
1 Year
Or Less
1-3
Years
4-5
Years
5
Years
(Dollars in Thousands)
Short-term borrowings
Time certificates of deposit
Long-term debt
Federal Home Loan Bank advances
Subordinated debentures
Total contractual cash obligations
$
- $
881,607
5,000
85,500
42,269
$ 1,014,376 $
- $
-
- $
- $
6
5,085
754,465 122,051
-
-
5,000
-
-
85,500
- 42,269
-
754,465 $ 212,551 $ 5,085 $ 42,275
-
-
-
Our operating leases represent short-term obligations, normally with maturities of one year or less. Many of the operating leases
have thirty-day cancellation provisions. The total contractual obligations for operating leases do not require a material amount of
our cash funds.
At December 31, 2007 we had immaterial amounts of binding commitments for capital expenditures.
CAPITAL ADEQUACY
The capital resources of our Company are monitored on a periodic basis by state and federal regulatory authorities. During 2007,
we increased our capital by retaining net earnings of $7.2 million after payment of dividends. Other capital related transactions,
such as the issuance and exercise of stock options and restricted stock, changes in unrealized losses on investment securities and
repurchase of treasury shares combined to account for only a small change in the capital of the Company.
In accordance with risk capital guidelines issued by the Federal Reserve, we are required to maintain a minimum standard of total
capital to risk-weighted assets of 8%. Additionally, all member banks must maintain “core” or “Tier 1” capital of at least 4% of
total assets (“leverage ratio”). Member banks operating at or near the 4% capital level are expected to have well-diversified risks,
including no undue interest rate risk exposure, excellent control systems, good earnings, high asset quality and well managed on-
and off-balance sheet activities, and, in general, be considered strong banking organizations with a composite 1 rating under the
CAMEL rating system of banks. For all but the most highly rated banks meeting the above conditions, the minimum leverage
ratio is to be 4% plus an additional 1% to 2%.
The following table summarizes the regulatory capital levels of Ameris at December 31, 2007.
Actual
Required
Excess
Amount
Percent
Amount
Percent Amount
Percent
(Dollars in Thousands)
Leverage capital
Risk-based capital:
Core capital
Total capital
$ 171,331
8.39 % $
81,719
4.00 % $ 89,612
4.39 %
171,331 10.34
191,150 11.59
66,263
132,525
4.00
8.00
105,068
58,625
6.34
3.59
42
INFLATION
The consolidated financial statements and related consolidated financial data presented herein have been prepared in accordance
with generally accepted accounting principles and practices within the banking industry which require the measurement of
financial position and operating results in terms of historical dollars without considering the changes in the relative purchasing
power of money over time due to inflation. Unlike most industrial companies, virtually all the assets and liabilities of a financial
institution are monetary in nature. As a result, interest rates have a more significant impact on a financial institution’s
performance than the effects of general levels of inflation.
QUARTERLY FINANCIAL INFORMATION (Unaudited)
The following table sets forth certain consolidated quarterly financial information of the Company. This information is derived
from unaudited consolidated financial statements, which include, in the opinion of management, all normal recurring adjustments
which management considers necessary for a fair presentation of the results for such periods.
Quarters Ended December 31, 2007
4
3
2
1
(Dollars in Thousands, Except Per Share Data)
Selected Income Statement Data:
Interest income
$ 36,930
$ 37,451
$ 35,843
$ 35,410
Net interest income
19,248
19,081
18,330
18,419
Net income
Per Share Data:
Net income – basic
Net income – diluted
Dividends
1,186
3,570
5,373
5,024
0.09
0.09
0.14
0.26
0.26
0.14
0.40
0.39
0.14
0.37
0.37
0.14
Quarters Ended December 31, 2006
4
3
2
1
(Dollars in Thousands, Except Per Share Data)
Selected Income Statement Data:
Interest income
$ 34,524
$ 32,624
$ 29,822
$ 27,141
Net interest income
17,999
17,897
17,673
16,392
Net income
Per Share Data:
Net income – basic
Net income – diluted
Dividends
5,759
5,954
5,315
5,100
0.44
0.43
0.14
0.46
0.45
0.14
0.41
0.40
0.14
0.39
0.39
0.14
43
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed only to U. S. Dollar interest rate changes and, accordingly, we manage exposure by considering the possible
changes in the net interest margin. We do not have any trading instruments nor do we classify any portion of the investment
portfolio as held for trading. We do not engage in any hedging activities or enter into any derivative instruments with a higher
degree of risk than mortgage-backed securities, which are commonly, pass-through securities. Finally, we have no exposure to
foreign currency exchange rate risk, commodity price risk and other market risks.
Interest rates play a major part in the net interest income of a financial institution. The sensitivity to rate changes is known as
“interest rate risk.” The repricing of interest earning assets and interest-bearing liabilities can influence the changes in net interest
income. As part of our asset/liability management program, the timing of repriced assets and liabilities is referred to as gap
management. Our policy is to maintain a gap ratio in the one-year time horizon of .80 to 1.20. As indicated by the gap analysis
included in this Annual Report, we are somewhat asset sensitive in relation to changes in market interest rates. Being asset
sensitive would result in net interest income increasing in a rising rate environment and decreasing in a declining rate
environment.
We use simulation analysis to monitor changes in net interest income due to changes in market interest rates. The simulation of
rising, declining and flat interest rate scenarios allow management to monitor and adjust interest rate sensitivity to minimize the
impact of market interest rate swings. The analysis of the impact on net interest income over a twelve-month period is subjected
to a gradual 200 basis points increase or 200 basis points decrease in market rates on net interest income and is monitored on a
quarterly basis. Our most recent simulation model projects net interest income would increase 2.2% if rates rise 200 basis points
gradually over the next year. On the other hand, the model projects net interest income to decrease 5.8% if rates decline 200 basis
points over the next year.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets - December 31, 2007 and 2006
Consolidated Statements of Income - Years ended December 31, 2007, 2006 and 2005
Consolidated Statements of Comprehensive Income - Years ended December 31, 2007, 2006 and 2005
Consolidated Statements of Stockholders’ Equity - Years ended December 31, 2007, 2006 and 2005
Consolidated Statements of Cash Flows - Years ended December 31, 2007, 2006 and 2005
Notes to Consolidated Financial Statements.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
During 2007 and 2006, Ameris did not change its accountants and there was no disagreement on any matter of accounting
principles or practices for financial statement disclosure.
44
Disclosure Controls and Procedures
ITEM 9A. CONTROLS AND PROCEDURES
The Company’s Chief Executive Officer and Chief Financial Officer have evaluated the Company’s disclosure controls and
procedures (as such term is defined in Rules 13a-15(e) or 15d-15(e) promulgated under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”)), as of the end of the period covered by this Annual Report, as required by paragraph (b) of Rules
13a-15 or 15d-15 of the Exchange Act. Based on such evaluation, such officers have concluded that, as of the end of the period
covered by this Annual Report, the Company’s disclosure controls and procedures are effective.
Management’s Annual Report on Internal Control Over Financial Reporting
The management of Ameris Bancorp is responsible for establishing and maintaining adequate internal control over financial
reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. The company’s internal control
over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to
be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.
Management assessed the effectiveness of the company’s internal control over financial reporting as of December 31, 2007. In
making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO) in Internal Control-Integrated Framework. Based on this assessment and those criteria, management
believes that the company maintained effective internal control over financial reporting as of December 31, 2007.
Mauldin & Jenkins, Certified Public Accountants, LLC (“Mauldin & Jenkins”), the Company’s independent auditors, has issued
an attestation report on management’s assessment of the Company’s internal control over financial reporting. That report is
included in this Item under the heading “Report of Independent Registered Public Accounting Firm.”
Changes in Internal Control Over Financial Reporting
During the quarter ended December 31, 2007 there was not any change in the Company’s internal control over financial reporting
identified in connection with the evaluation required by paragraph (d) of Rules 13a-15 or 15d-15 of the Exchange Act that has
materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
45
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
Ameris Bancorp
Moultrie, Georgia
We have audited Ameris Bancorp and Subsidiaries' internal control over financial reporting as of December 31, 2007, based on
criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO). Ameris Bancorp and Subsidiaries' management is responsible for maintaining effective internal
control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in
the accompanying Management's Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an
opinion on the company's internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective
internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of
internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design
and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other
procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our
opinion.
A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that
(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of
the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the
company are being made only in accordance with authorizations of management and directors of the company; and (3) provide
reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's
assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, Ameris Bancorp and Subsidiaries maintained, in all material respects, effective internal control over financial
reporting as of December 31, 2007, based on criteria established in Internal Control—Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO).
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the
consolidated balance sheets of Ameris Bancorp and Subsidiaries as of December 31, 2007 and 2006 and the related consolidated
statements of income, comprehensive income, stockholders' equity and cash flows for each of the years ended in the three-year
period ended December 31, 2007, and our report dated March 5, 2008 expressed an unqualified opinion.
/s/ Mauldin & Jenkins, LLC
Albany, Georgia
March 5, 2008
46
None.
ITEM 9B. OTHER INFORMATION
47
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Directors and Nominees for Director
Information with respect to the Company’s directors and nominees for director is set forth in the Company’s Proxy
Statement for the Annual Meeting of Shareholders (the “Proxy Statement”) under the caption “Proposal I: Election of Directors”
and is incorporated herein by reference.
Executive Officers
The following table sets forth certain information with respect to the executive officers of Ameris as of March 10, 2007.
Name, Age and
Term as Officer
Position with Ameris
Principal Occupation for the Last Five Years
and Other Directorships
Edwin W. Hortman, Jr.; 54
Officer since 2002
Officer
President and Chief Executive
President and Chief Executive Officer since January 1,
2005. Director since November 2003. President and Chief
Operating Officer from November 2003 through December
2004. Executive Vice President and Regional Bank Executive
for Northern Division from August 2002 through November
2003. President, Chief Executive Officer and director of
Citizens Security Bank from April 1998 to November
2003. Director of each subsidiary bank in the Northern
Division from September 2002 through March 2004.
Dennis J. Zember, Jr.; 38
Officer since 2005
and Chief Financial Officer
Executive Vice President
Executive Vice President and Chief Financial Officer of
Jon S. Edwards; 46
Officer since 1999
Executive Vice President
and Director of Credit
Administration
Ameris since February 14, 2005. Senior Vice President and
Treasurer of Flag Financial Corporation and Senior Vice
President and Chief Financial Officer of Flag Bank from
January 2002 to February 2005. Vice President and Treasurer
of Century South Banks, Inc. from August 1997 to May 2001.
Executive Vice President and Director of Credit
Administration since May 2005. Executive Vice President and
Regional Bank Executive for Southern Division from August
2002 through April 2005. Director of Credit Administration
from March 1999 to July 2003. Senior Vice President from
March 1999 to August 2002. Director of each subsidiary bank
in the Southern Division from September 2002 through April
2005.
C. Johnson Hipp, III; 56
Officer since 2006
Group President for South
Officer since June 2006. Chief Executive Officer of South
Carolina and Mortgage Business
Division
Carolina Bank and Trust from 1994 to 2004.
Cindi H. Lewis; 54
Officer since 1987
Executive Vice President, Chief
Administrative Officer and
Corporate Secretary
Chief Administrative Officer since May 2006, Executive Vice
President since May 2002 and Corporate Secretary since May
2000. Director of Human Resources from May 2000 to May
2006 and Senior Vice President from May 2000 to May 2002.
Johnny R. Myers; 58
Officer since 2005
Executive Vice President and
South Regional Executive
Executive Vice President and South Regional Executive since
May 2005. Director of each subsidiary bank in the Southern
Division from May 2005 until each such bank was merged into
Ameris Bank.
Officers serve at the discretion of the Company’s board of directors.
48
The information set forth in the Proxy Statement under the caption “Section 16(a) Beneficial Ownership Reporting
Compliance” is incorporated herein by reference.
Code of Ethics
Ameris has adopted a code of ethics that is applicable to all employees, including its Chief Executive Officer and all
senior financial officers, including its Chief Financial Officer and principal accounting officer. Ameris shall provide to any
person without charge, upon request, a copy of its code of ethics. Such requests should be directed to the Corporate Secretary of
Ameris Bancorp at 24 2nd Avenue, S.E., Moultrie, Georgia 31768.
ITEM 11. EXECUTIVE COMPENSATION
The information set forth under the caption “Executive Compensation” in the Proxy Statement is incorporated herein by
reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS
The information set forth under the captions “Security Ownership of Certain Beneficial Owners and Management” and
“Equity Compensation Plans” in the Proxy Statement is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information set forth under the captions “Certain Relationships and Related Transactions” and “Proposal I: Election
of Directors” in the Proxy Statement is incorporated herein by reference.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The following is a summary of the fees billed to Ameris by Mauldin & Jenkins, the Company’s independent accountants,
for professional services rendered for the fiscal years ended December 31, 2007 and 2006:
Fee Category
Audit fees
Audit-related fees
Tax fees
Total fees
Fiscal 2007
Fees
Fiscal 2006
Fees
$
$
280,000
41,750
87,000
408,750
$
$
322,600
55,500
98,650
476,750
Audit Fees
The amounts consist of fees billed for professional services rendered for the audit of the Company’s annual consolidated
financial statements, internal control and review of the interim consolidated financial statements included in quarterly reports.
Audit-Related Fees
Audit-related fees are fees principally for the audits of the Company’s employee benefit plans, consultations
concerning financial accounting and reporting standards and assistance with SEC inquires.
49
Tax Fees
The amounts consist of fees billed for professional services for tax compliance, tax advice and tax planning. These
services include assistance regarding federal, state and local tax compliance and assistance with tax notices.
Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors
All services provided by Mauldin & Jenkins are subject to pre-approval by the Audit Committee of the Company’s board
of directors. The Audit Committee may authorize any member of the Audit Committee to approve services by Mauldin & Jenkins
in the event there is a need for such approval prior to the next full Audit Committee meeting. However, the Audit Committee
must review the decisions made by such authorized member of the Audit Committee at its next schedule meeting. Before granting
any approval, the Audit Committee gives due consideration to whether approval of the proposed service will have a detrimental
impact on Mauldin & Jenkins’ independence.
50
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
PART IV
1. Financial statements:
(a)
Ameris Bancorp and Subsidiaries:
(i)
(ii)
Consolidated Balance Sheets - December 31, 2007 and 2006;
Consolidated Statements of Income - Years ended December 31, 2007, 2006 and 2005
(iii)
Consolidated Statements of Comprehensive Income - Years ended December 31, 2007, 2006 and 2005;
(iv)
Consolidated Statements of Stockholders’ Equity - Years ended December 31, 2007, 2006 and 2005;
(v)
Statements of Cash Flows - Years ended December 31, 2007, 2006 and 2005; and
(vi)
Notes to Consolidated Financial Statements
(b)
Ameris Bancorp (parent company only):
Parent company only financial information has been included in Note 21 of Notes to Consolidated
Financial Statements.
2. Financial statement schedules:
All schedules are omitted as the required information is inapplicable or the information is presented in the financial
statements or related notes.
3. A list of the Exhibits required by Item 601 of Regulation S-K to be filed as a part of this report is shown on the “Exhibit
Index” filed herewith.
51
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly authorized.
AMERIS BANCORP
Date:
March 5, 2008
By:
/s/ Edwin W. Hortman, Jr.
Edwin W. Hortman, Jr., President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints
Edwin W. Hortman, Jr. as his attorney-in-fact, acting with full power of substitution for him in his name, place and stead, in any
and all capacities, to sign any amendments to this Form 10-K and to file the same, with exhibits thereto, and any other documents
in connection therewith, with the Securities and Exchange Commission and hereby ratifies and confirms all that said attorney-in-
fact, or his substitute or substitutes, may do or cause to be done by virtue thereof.
Pursuant to the requirements of the Exchange Act, this Form 10-K has been signed by the following persons in the
capacities and on the dates indicated.
Date: March 5, 2008
/s/ Edwin W. Hortman, Jr.
Edwin W. Hortman, Jr., President, Chief Executive Officer and Director
Date: March 5, 2008
/s/ Dennis J. Zember, Jr.
Dennis J. Zember, Jr., Executive Vice President and Chief Financial Officer
Date: March 5, 2008
Date: March 5, 2008
/s/ Johnny W. Floyd
Johnny W. Floyd, Director
/s/ J. Raymond Fulp
J. Raymond Fulp, Director
Date: March 5, 2008
/s/ Daniel B. Jeter
Daniel B. Jeter, Director and Vice Chairman of the Board
Date: March 5, 2008
/s/ Glenn A. Kirbo
Glenn A. Kirbo, Director
Date: March 5, 2008
/s/ Robert P. Lynch
Robert P. Lynch, Director
Date: March 5, 2008
/s/ Brooks Sheldon
Brooks Sheldon, Director
Date: March 5, 2008
/s/ Eugene M. Vereen, Jr.
Eugene M. Vereen, Jr., Director
Date: March 5, 2008
/s/ Henry C. Wortman
Henry C. Wortman, Director
52
Exhibit No. Description
EXHIBIT INDEX
3.1
3.2
3.3
3.4
3.5
3.6
3.7
3.8
4.1
4.2
4.3
Articles of Incorporation of Ameris Bancorp, as amended (incorporated by reference to Exhibit 2.1
to Ameris Bancorp’s Regulation A Offering Statement on Form 1-A filed August 14, 1987).
Amendment to Amended Articles of Incorporation (incorporated by reference to Exhibit 3.1.1 to
Ameris Bancorp’s Form 10-K filed March 28, 1996).
Amendment to Amended Articles of Incorporation (incorporated by reference to Exhibit 4.3 to
Ameris Bancorp’s Registration Statement on Form S-4 filed with the Commission on July 17,
1996).
Articles of Amendment to the Articles of Incorporation (incorporated by reference to Exhibit 3.5 to
Ameris Bancorp’s Annual Report on Form 10-K filed with the Commission on March 25, 1998).
Articles of Amendment to the Articles of Incorporation (incorporated by reference to Exhibit 3.7 to
Ameris Bancorp’s Annual Report on Form 10-K filed with the Commission on March 26, 1999).
Articles of Amendment to the Articles of Incorporation (incorporated by reference to Exhibit 3.9 to
Ameris Bancorp’s Annual Report on Form 10-K filed with the Commission on March 31, 2003).
Articles of Amendment to the Articles of Incorporation (incorporated by reference to Exhibit 3.1 to
Ameris Bancorp’s Current Report on Form 8-K filed with the Commission on December 1, 2005).
Amended and Restated Bylaws (incorporated by reference to Exhibit 3.1 to Ameris Bancorp’s
Current Report on Form 8-K filed with the Commission on March 14, 2005).
Placement Agreement between Ameris Bancorp, Ameris Statutory Trust I, FTN Financial Capital
Markets and Keefe, Bruyette & Woods, Inc. dated September 13, 2006 (incorporated by reference to
Exhibit 4.1 to Ameris Bancorp’s Registration Statement on Form S-4 (Registration No. 333-
138252) filed with the Commission on October 27, 2006).
Subscription Agreement between Ameris Bancorp, Ameris Statutory Trust I and First Tennessee
Bank National Association dated September 20, 2006 (incorporated by reference to Exhibit 4.2 to
Ameris Bancorp’s Registration Statement on Form S-4 (Registration No. 333-138252) filed with the
Commission on October 27, 2006).
Subscription Agreement between Ameris Bancorp, Ameris Statutory Trust I and TWE, Ltd. dated
September 20, 2006 (incorporated by reference to Exhibit 4.3 to the Ameris Bancorp’s Registration
Statement on Form S-4 (Registration No. 333-138252) filed with the Commission on October 27,
2006).
53
Exhibit No. Description
EXHIBIT INDEX
4.4
4.5
4.6
4.7
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
Indenture between Ameris Bancorp and Wilmington Trust Company dated September 20,
2006 (incorporated by reference to Exhibit 4.4 to Ameris Bancorp’s Registration Statement on Form
S-4 (Registration No. 333-138252) filed with the Commission on October 27, 2006).
Amended and Restated Declaration of Trust between Ameris Bancorp, the Administrators of Ameris
Statutory Trust I signatory thereto and Wilmington Trust Company dated September 20, 2006
(incorporated by reference to Exhibit 4.5 to Ameris Bancorp’s Registration Statement on Form S-4
(Registration No. 333-138252) filed with the Commission on October 27, 2006).
Guarantee Agreement between Ameris Bancorp and Wilmington Trust Company dated September
20, 2006 (incorporated by reference to Exhibit 4.6 to Ameris Bancorp’s Registration Statement on
Form S-4 (Registration No. 333-138252) filed with the Commission on October 27, 2006).
Floating Rate Junior Subordinated Deferrable Interest Debenture dated September 20, 2006 issued
to Ameris Statutory Trust I (incorporated by reference to Exhibit 4.7 to Ameris Bancorp’s
Registration Statement on Form S-4 (Registration No. 333-138252) filed with the Commission on
October 27, 2006).
Deferred Compensation Agreement for Kenneth J. Hunnicutt dated December 16, 1986
(incorporated by reference to Exhibit 5.3 to Ameris Bancorp’s Regulation A Offering Statement on
Form 1-A filed with the Commission on August 14, 1987).
Executive Salary Continuation Agreement dated February 14, 1984 (incorporated by reference to
Exhibit 10.6 to Ameris Bancorp’s Annual Report on Form 10-KSB filed with the Commission on
March 27, 1989).
Form of Omnibus Stock Ownership and Long-Term Incentive Plan (incorporated by reference to
Exhibit 10.17 to Ameris Bancorp’s Annual Report on Form 10-K filed with the Commission on
March 25, 1998).
Form of Rights Agreement between Ameris Bancorp and SunTrust Bank dated as of February 17,
1998 (incorporated by reference to Exhibit 10.18 to Ameris Bancorp’s Annual Report on Form 10-K
filed with the Commission on March 25, 1998).
ABC Bancorp 2000 Officer/Director Stock Bonus Plan (incorporated by reference to Exhibit 10.19
to Ameris Bancorp’s Annual Report on Form 10-K filed with the Commission on Mach 29, 2000).
Joint Marketing Agreement by and between Ameris Bancorp and MBNA America Bank, N.A. dated
as of December 19, 2002 (incorporated by reference to Exhibit 10.18 to Ameris Bancorp’s Annual
Report on Form 10-K filed with the Commission on March 31, 2003).
Executive Employment Agreement with Jon S. Edwards dated as of July 1, 2003 (incorporated by
reference to Exhibit 10.1 to Ameris Bancorp’s Quarterly Report on Form 10-Q filed with the
Commission on November 12, 2003).
Executive Employment Agreement with Edwin W. Hortman, Jr. dated as of December 31, 2003
(incorporated by reference to Exhibit 10.19 to Ameris Bancorp’s Annual Report on Form 10-K filed
with the Commission on March 15, 2004).
54
Exhibit No. Description
EXHIBIT INDEX
10.9
10.10
10.11
10.12
10.13
10.14
10.15
10.16
10.17
10.18
10.19
10.20
10.21
Executive Employment Agreement with Cindi H. Lewis dated as of December 31, 2003
(incorporated by reference to Exhibit 10.20 to Ameris Bancorp’s Annual Report on Form 10-K filed
with the Commission on March 15, 2004).
Amendment No. 1 to Executive Employment Agreement with Edwin W. Hortman, Jr. dated as of
March 10, 2005 (incorporated by reference to Exhibit 10.1 to Ameris Bancorp’s Current Report on
Form 8-K filed with the Commission on March 14, 2005).
Form of 2005 Omnibus Stock Ownership and Long-Term Incentive Plan (incorporated by reference
to Appendix A to Ameris Bancorp’s Definitive Proxy Statement filed with the Commission on April
18, 2005).
Executive Employment Agreement with Dennis J. Zember, Jr. dated as of May 5, 2005
(incorporated by reference to Exhibit 10.1 to Ameris Bancorp’s Current Report on Form 8-K/A filed
with the Commission on May 11, 2005).
Executive Employment Agreement with Johnny R. Myers dated as of May 11, 2005 (incorporated
by reference to Exhibit 10.1 to Ameris Bancorp’s Current Report on Form 8-K filed with the
Commission on May 16, 2005).
Revolving Credit Agreement with SunTrust Bank dated as of December 14, 2005 (incorporated by
reference to Exhibit 10.1 to Ameris Bancorp’s Current Report on Form 8-K filed with the
Commission on December 20, 2005).
Security Agreement with SunTrust Bank dated as of December 14, 2005 (incorporated by reference
to Exhibit 10.2 to Ameris Bancorp’s Current Report on Form 8-K filed with the Commission on
December 20, 2005).
Form of Incentive Stock Option Agreement (incorporated by reference to Exhibit 4.2 to Ameris
Bancorp’s Registration Statement on Form S-8 filed with the Commission on January 24, 2006).
Form of Non-Qualified Stock Option Agreement (incorporated by reference to Exhibit 4.3 to
Ameris Bancorp’s Registration Statement on Form S-8 filed with the Commission on January 24,
2006).
Form of Restricted Stock Agreement (incorporated by reference to Exhibit 4.4 to Ameris Bancorp’s
Registration Statement on Form S-8 filed with the Commission on January 24, 2006).
Executive Employment Agreement with C. Johnson Hipp, III dated as of September 5, 2006
(incorporated by reference to Exhibit 10.1 to Ameris Bancorp’s Current Report on Form 8-K filed
with the Commission on September 8, 2006).
Executive Employment Agreement with C. Marc J. Bogan dated as of May 31, 2007 (incorporated
by reference to Exhibit 10.1 to Ameris Bancorp’s Current Report on Form 8-K filed with the
Commission on June 6, 2007).
Executive Employment Agreement with C. Richard Strum dated as of May 31, 2007 (incorporated
by reference to Exhibit 10.1 to Ameris Bancorp’s Current Report on Form 8-K filed with the
Commission on June 6, 2007).
55
Exhibit No. Description
EXHIBIT INDEX
21.1
Schedule of subsidiaries of Ameris Bancorp.
23.1
Consent of Mauldin & Jenkins, LLC.
24.1
Power of Attorney relating to this Form 10-K is set forth on the signature pages of this Form 10-K.
31.1
Rule 13a-14(a)/15d-14(a) Certification by Ameris Bancorp’s Chief Executive Officer.
31.2
Rule 13a-14(a)/15d-14(a) Certification by Ameris Bancorp’s Chief Financial Officer.
32.1
Section 1350 Certification by Ameris Bancorp’s Chief Executive Officer.
32.2
Section 1350 Certification by Ameris Bancorp’s Chief Financial Officer.
56
Following is a list of the Registrant’s subsidiaries and the state of incorporation or other jurisdiction.
REGISTRANT’S SUBSIDIARIES
Exhibit 21.1
Name of Subsidiary
Ameris Bank
Ameris Statutory Trust I
Ameris Sub Holding Company, Inc.
Moultrie Real Estate Holdings, Inc.
Quitman Real Estate Holdings, Inc.
Thomas Real Estate Holdings, Inc.
Citizens Real Estate Holdings, Inc.
Cairo Real Estate Holdings, Inc.
Southland Real Estate Holdings, Inc.
Cordele Real Estate Holdings, Inc.
First National Real Estate Holdings, Inc.
M&F Real Estate Holdings, Inc.
Tri-County Real Estate Holdings, Inc.
Citizens Bancshares, Inc.
State of Incorporation or
Other Jurisdiction
State of Georgia
State of Delaware
State of Delaware
State of Delaware
State of Delaware
State of Delaware
State of Delaware
State of Delaware
State of Alabama
State of Delaware
State of Delaware
State of Delaware
State of Delaware
State of Florida
Each subsidiary conducts business under the name listed above.
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the use in Registration Statement (File Number 333-131244) on Form S-8 of Ameris
Bancorp of our reports dated March 5, 2008 relating to our audits of the consolidated financial statements
and internal control over financial reporting, which appear in this Annual Report on Form 10-K of Ameris
Bancorp for the year ended December 31, 2007.
/s/ MAULDIN & JENKINS, LLC
Albany, Georgia
March 12, 2008
Exhibit 31.1
I, Edwin W. Hortman, Jr., certify that:
CERTIFICATION
1.
2.
3.
4.
I have reviewed this Annual Report on Form 10-K for the year ended December 31, 2007, of Ameris Bancorp;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report,
fairly present in all material respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
(b)
(c)
(d)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures
to be designed under our supervision, to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
Disclosed in this report any change in the registrant’s internal control over financial reporting that
occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the
case of an annual report) that has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting.
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s
board of directors (or persons performing the equivalent functions):
(a)
(b)
All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information; and
Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant’s internal control over financial reporting.
Dated: March 12, 2008
/s/ Edwin W. Hortman, Jr.
Edwin W. Hortman, Jr.,
President and Chief Executive Officer
CERTIFICATION
Exhibit 31.2
I, Dennis J. Zember, Jr., certify that:
1.
2.
3.
4.
I have reviewed this Annual Report on Form 10-K for the year ended December 31, 2007, of Ameris Bancorp;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report,
fairly present in all material respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
(b)
(c)
(d)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures
to be designed under our supervision, to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
Disclosed in this report any change in the registrant’s internal control over financial reporting that
occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the
case of an annual report) that has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting.
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s
board of directors (or persons performing the equivalent functions):
(a)
(b)
All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information; and
Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant’s internal control over financial reporting.
Dated: March 12, 2008
/s/ Dennis J. Zember Jr.
Dennis J. Zember Jr.,
Executive Vice President and Chief Financial Officer
SECTION 1350 CERTIFICATION
Exhibit 32.1
I, Edwin W. Hortman, Jr., President and Chief Executive Officer of Ameris Bancorp (the “Company”), do hereby
certify, in accordance with 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
that, to my knowledge:
1.
2.
The Annual Report on Form 10-K of the Company for the year ended December 31, 2007 (the “Periodic
Report”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as
amended; and
The information contained in the Periodic Report fairly presents, in all material respects, the financial
condition and results of operations of the Company.
Dated: March 12, 2008
/s/ Edwin W. Hortman, Jr.
Edwin W. Hortman, Jr.,
President and Chief Executive Officer
SECTION 1350 CERTIFICATION
Exhibit 32.2
I, Dennis J. Zember, Jr., Executive Vice President and Chief Financial Officer of Ameris Bancorp (the “Company”),
do hereby certify, in accordance with 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002, that, to my knowledge:
1.
2.
The Annual Report on Form 10-K of the Company for the year ended December 31, 2007 (the “Periodic
Report”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as
amended; and
The information contained in the Periodic Report fairly presents, in all material respects, the financial
condition and results of operations of the Company.
Dated: March 12, 2008
/s/ Dennis J. Zember Jr.
Dennis J. Zember Jr.,
Executive Vice President and Chief Financial Officer
AMERIS BANCORP
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
Consolidated financial statements:
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets - December 31, 2007 and 2006
Consolidated Statements of Income - Years ended December 31, 2007, 2006 and 2005
Consolidated Statements of Comprehensive Income - Years ended December 31, 2007, 2006 and 2005
Consolidated Statements of Stockholders’ Equity - Years ended December 31, 2007, 2006 and 2005
Consolidated Statements of Cash Flows - Years ended December 31, 2007, 2006 and 2005
Notes to Consolidated Financial Statements
57
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders
Ameris Bancorp
We have audited the accompanying consolidated balance sheets of Ameris Bancorp and Subsidiaries as of December 31, 2007
and 2006, and the related consolidated statements of income, comprehensive income, stockholders' equity and cash flows for each
of the three years in the period ended December 31, 2007. These financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position
of Ameris Bancorp and Subsidiaries as of December 31, 2007 and 2006, and the results of their operations and their cash flows for
each of the three years in the period ended December 31, 2007, in conformity with accounting principles generally accepted in the
United States of America.
We have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Ameris
Bancorp and Subsidiaries’ internal control over financial reporting as of December 31, 2007, based on criteria established in
Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO) and our report dated March 5, 2008, expressed an unqualified opinion of Ameris Bancorp and Subsidiaries’ internal
control over financial reporting..
/s/ Mauldin & Jenkins, LLC
Albany, Georgia
March 5, 2008
58
AMERIS BANCORP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2007 AND 2006
(Dollars in Thousands)
Assets
Cash and due from banks
Interest-bearing deposits in banks
Federal funds sold
Securities available for sale, at fair value
Restricted equity securities, at cost
Loans, net of unearned income
Less allowance for loan losses
Loans, net
Premises and equipment, net
Intangible assets
Goodwill
Other assets
Liabilities and Stockholders' Equity
Deposits
Noninterest-bearing
Interest-bearing
Total deposits
Securities sold under agreements to repurchase
Other borrowings
Subordinated deferrable interest debentures
Other liabilities
Total liabilities
Commitments and contingencies
Stockholders' equity
Common stock, par value $1; 30,000,000 shares authorized;
14,869,924 and 14,850,237 shares issued
Capital surplus
Retained earnings
Accumulated other comprehensive income(loss)
Less cost of 1,329,939 and 1,322,717 shares acquired for the treasury
Total stockholders' equity
See Notes to Consolidated Financial Statements.
59
2007
2006
$
$
59,804
12,022
-
291,170
7,559
66,856
125,793
9,439
283,192
7,015
1,614,048
27,640
1,586,408
1,442,951
24,863
1,418,088
59,132
4,802
54,813
36,353
46,604
6,099
54,365
30,091
$
2,112,063
$
2,047,542
$
$
197,345
1,559,920
1,757,265
14,705
90,500
42,269
16,075
1,920,814
221,592
1,488,571
1,710,163
15,933
75,500
42,269
24,945
1,868,810
14,870
82,750
103,095
1,303
202,018
(10,769 )
191,249
14,850
81,481
95,523
(2,529)
189,325
(10,593)
178,732
$
2,112,063
$
2,047,542
AMERIS BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005
(Dollars in Thousands)
2007
2006
2005
Interest income
Interest and fees on loans
Interest on taxable securities
Interest on nontaxable securities
Interest on deposits in other banks
Interest on federal funds sold
Interest expense
Interest on deposits
Interest on other borrowings
Net interest income
Provision for loan losses
Net interest income after provision for loan losses
Other income
Service charges on deposit accounts
Other service charges, commissions and fees
Mortgage origination fees
Losses on sales of securities
Other
Other expenses
Salaries and employee benefits
Equipment expense
Occupancy expense
Amortization of intangible assets
Data processing fees
Business restructuring costs
Other operating expenses
$
$
128,869
14,171
688
2,306
43
146,077
$ 107,559
12,147
555
3,589
261
124,111
62,380
8,619
70,999
75,078
11,321
63,757
12,455
1,268
3,093
(297 )
1,073
17,592
29,844
3,499
4,041
1,297
2,579
-
17,636
58,896
45,599
8,551
54,150
69,961
2,837
67,124
11,538
997
2,208
(308 )
4,827
19,262
27,043
3,530
3,306
1,107
2,136
1,452
14,555
53,129
69,238
8,547
163
1,502
89
79,539
19,029
7,905
26,934
52,605
1,651
50,954
10,428
926
1,614
(391)
953
13,530
22,483
2,331
2,600
819
1,899
2,838
10,637
43,607
Income before income taxes
22,453
33,257
20,877
Applicable income taxes
Net income
Basic earnings per share
Diluted earnings per share
See Notes to Consolidated Financial Statements.
7,300
11,129
7,149
$
$
$
15,153
$
22,128
1.12
$
1.71
1.11
$
1.68
$
$
$
13,728
1.15
1.14
60
AMERIS BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005
(Dollars in Thousands)
Net income
$
15,153
$ 22,128
$ 13,728
2007
2006
2005
Other comprehensive income (loss):
Net unrealized holding gains(losses) arising during period,
net of tax of ($1,498), $35 and $1,366
Unrealized gain(loss) on cash flow hedge during the period,
net of tax of ($376) and $22
Reclassification adjustment for losses included in net
income, net of tax of $101, $105 and $133
Total other comprehensive income(loss)
2,907
(67)
(2,653)
729
196
3,832
(40)
203
96
-
258
(2,395)
Comprehensive income
$
18,985
$ 22,224
$ 11,333
See Notes to Consolidated Financial Statements.
61
AMERIS BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005
(Dollars in Thousands)
Common Stock
Capital
Par Value Surplus
Shares
Balance, December 31, 2004
Net income
Cash dividends declared, $.56 per share
Adjustments to record acquisition of purchased
subsidiaries, net of direct costs
Issuance of restricted shares of common stock
under employee incentive plan
Stock-based compensation
Proceeds from exercise of stock options
Payment for fractional shares
Reduction in income taxes payable resulting
from vesting of restricted shares
Purchase of shares for treasury
Other comprehensive loss
Balance, December 31, 2005
Net income
Cash dividends declared, $.56 per share
Adjustments to record acquisition of purchased
subsidiaries, net of direct costs
Issuance of restricted shares of common stock
under employee incentive plan
Transition adjustment for the adoption of SFAS 123(R)
Stock-based compensation
Proceeds from exercise of stock options
Reduction in income taxes payable resulting
from vesting of restricted shares
Purchase of shares for treasury
Other comprehensive income
Balance, December 31, 2006
Net income
Cash dividends declared, $0.56 per share
Issuance of restricted shares of common stock
under employee incentive plan
Stock-based compensation
Proceeds from exercise of stock options
Reduction in income taxes payable resulting
from vesting of restricted shares
Purchase of shares for treasury
Other comprehensive income
Balance, December 31, 2007
See Notes to Consolidated Financial Statements.
62
13,070,578 $
-
-
13,071 $
-
-
45,073
-
-
1,083,718
1,084
21,103
17,300
-
100,129
(942 )
-
-
-
14,270,783
-
-
17
-
100
(1)
-
-
-
14,271
-
-
307
-
845
-
53
-
-
67,381
-
-
494,327
494
13,440
44,150
-
-
40,977
-
-
-
14,850,237
-
-
4,200
-
15,487
44
-
-
41
-
-
-
14,850
-
-
4
-
16
-
-
-
14,869,924 $
-
-
-
$
14,870
(44)
(526)
823
367
40
-
-
81,481
-
-
(4)
1,095
160
18
-
-
82,750
Accumulated
Other
Retained Comprehensive
Income (Loss)
Earnings
Unearned
Compensation
Treasury Stock
Shares
Cost
Total
$
73,768 $
13,728
(6,795 )
$
(230 )
-
-
-
-
-
-
(18 )
-
-
-
80,683
22,128
(7,288 )
-
-
-
-
-
-
-
-
95,523
15,153
(7,581 )
-
-
-
-
-
$
103,095 $
-
-
-
-
-
-
-
(2,395 )
(2,625 )
-
-
-
-
-
-
-
-
-
96
(2,529 )
-
-
-
-
3,832
1,303
$
1,304,430
-
-
$
(10,220 )
-
-
$
120,939
13,728
(6,795)
-
-
-
-
-
-
14,035
-
1,318,465
-
-
-
-
-
-
-
-
-
-
-
-
-
(261 )
-
(10,481 )
-
-
-
-
-
-
-
-
4,252
-
1,322,717
-
(112 )
-
(10,593 )
-
-
-
-
-
-
7,222
-
1,329,939
(176 )
-
(10,769 )
$
$
22,187
-
321
945
(19)
53
(261)
(2,395)
148,703
22,128
(7,288)
13,934
-
-
823
408
40
(112)
96
178,732
15,153
(7,581)
-
1,095
176
18
(176)
3,832
191,249
(523)
-
-
-
(324)
321
-
-
-
-
-
(526)
-
-
-
-
526
-
-
-
-
-
-
-
-
-
-
-
-
63
AMERIS BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005
(Dollars in Thousands)
OPERATING ACTIVITIES
Net income
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization
Amortization of intangible assets
Stock-based compensation expense
Net losses on sale of securities available for sale
Net losses on sale or disposal of premises and equipment
Provision for loan losses
Provision for deferred taxes
Increase in interest receivable
Increase in interest payable
Increase (decrease) in taxes payable
Net other operating activities
Total adjustments
Net cash provided by operating activities
INVESTING ACTIVITIES
Increase in interest-bearing deposits in banks
Purchases of securities available for sale
Proceeds from maturities of securities available for sale
Proceeds from sale of securities available for sale
(Increase) decrease in restricted equity securities, net
Decrease in federal funds sold
Increase in loans, net
Purchase of premises and equipment
Proceeds from sale of premises and equipment
Proceeds from sale of other real estate owned
Net cash received (paid) for acquisitions and divestitures
2007
2006
2005
$
15,153
$
22,128 $
13,728
3,061
1,297
1,095
297
63
11,321
(1,522)
(854)
33
(600)
(6,319)
7,872
23,025
113,771
(137,268)
70,748
62,912
(544)
9,439
(189,913)
(15,878)
225
3,067
-
2,919
1,113
823
308
107
2,837
(249 )
(4,051 )
3,636
2,423
2,593
2,153
819
321
391
36
1,651
(35)
(2,290)
911
(400)
4,414
12,569
7,971
34,697
21,699
(54,939 )
(98,512 )
38,589
14,775
1,813
18,646
(196,335 )
(6,363 )
19
877
(199 )
(10,888)
(80,495)
49,066
20,451
647
13,413
(116,295)
(2,954)
-
-
5,125
Net cash used in investing activities
(83,441)
(281,629 )
(121,930)
FINANCING ACTIVITIES
Increase in deposits
Increase (decrease) in federal funds purchased and securities
sold under agreements to repurchase
Proceeds from other borrowings and debentures
Repayment of other borrowings and debentures
Dividends paid
Proceeds from exercise of stock options
Payment for fractional shares
Purchase of treasury shares
47,102
270,709
147,569
(1,228)
216,500
(201,500)
(7,510)
176
-
(176)
5,626
102,114
(132,089 )
(7,288 )
408
-
(112 )
2,777
5,000
(15,344)
(6,355)
945
(19)
(261)
Net cash provided by financing activities
53,364
239,368
134,312
Net increase (decrease) in cash and due from banks
(7,052)
(7,564 )
34,081
Cash and due from banks at beginning of year
66,856
74,420
40,339
Cash and due from banks at end of year
$
59,804
$
66,856 $
74,420
64
AMERIS BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005
(Dollars in Thousands)
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION
Cash paid during the year for:
Interest
Income taxes
NONCASH TRANSACTIONS
Principal balances of loans transferred to other
real estate owned
Change in unrealized gain (loss) on securities available for sale
Change in unrealized gain (loss) on cash flow hedge
See Notes to Consolidated Financial Statements.
2007
2006
2005
$
70,966
$
50,514
$ 25,821
$
9,573
$
9,002
$ 7,584
$
10,272
$
1,237
$ 1,153
$
$
4,667
$
206
$ (3,656)
1,105
$
(62 ) $
-
65
AMERIS BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
Ameris Bancorp (the "Company") is a financial holding company whose primary business is presently
conducted by its subsidiary bank (the "Bank"). Through the Bank, the Company operates a full service
banking business and offers a broad range of retail and commercial banking services to its customers
located in a market area which includes Georgia, Alabama, Northern Florida and South Carolina. The
Company and the Bank are subject to the regulations of certain federal and state agencies and are
periodically examined by those regulatory agencies.
Basis of Presentation and Accounting Estimates
The consolidated financial statements include the accounts of the Company and its subsidiaries. Significant
intercompany transactions and balances have been eliminated in consolidation.
In preparing the consolidated financial statements in conformity with accounting principles generally
accepted in the United States of America, management is required to make estimates and assumptions that
affect the reported amounts of assets and liabilities as of the date of the balance sheet and the reported
amounts of revenues and expenses during the reporting period. Actual results could differ from those
estimates.
Material estimates that are particularly susceptible to significant change in the near-term relate to the
determination of the allowance for loan losses and the valuation of foreclosed assets. The determination of
the adequacy of the allowance for loan losses is based on estimates that are susceptible to significant
changes in the economic environment and market conditions. In connection with the determination of the
estimated losses on loans and the valuation of foreclosed assets, management obtains independent
appraisals for significant collateral or assets.
Cash, Due from Banks and Cash Flows
For purposes of reporting cash flows, cash and due from banks includes cash on hand, cash items in process
of collection and amounts due from banks. Cash flows from federal funds sold, deposits, interest-bearing
deposits in banks, federal funds purchased, restricted equity securities, loans and securities sold under
agreements to repurchase are reported net.
The Bank is required to maintain reserve balances in cash or on deposit with the Federal Reserve
Bank. The total of those reserve balances was approximately $4.5 million and $9.3 million at December
31, 2007 and 2006, respectively.
Securities
Securities, including equity securities with readily determinable fair values, are classified as available for
sale and recorded at fair value with unrealized gains and losses excluded from earnings and reported in
accumulated other comprehensive income, net of the related deferred tax effect. Equity securities,
including restricted equity securities, without a readily determinable fair value are classified as available for
sale and recorded at cost.
66
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Securities (Continued)
The amortization of premiums and accretion of discounts are recognized in interest income using methods
approximating the interest method over the life of the securities. Realized gains and losses, determined on
the basis of the cost of specific securities sold, are included in earnings on the settlement date. Declines in
the fair value of securities below their cost that are deemed to be other than temporary are reflected in
earnings as realized losses.
In determining whether other-than-temporary impairment losses exist, management considers (1) the length
of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-
term prospects of the issuer and (3) the intent and ability of the Company to retain its investment in the
issuer for a period of time sufficient to allow for any anticipated recovery in fair value.
Loans
Loans are reported at their outstanding principal balances less unearned income, net of deferred fees and
origination cost and the allowance for loan losses. Interest income is accrued on the outstanding principal
balance.
The accrual of interest on loans is discontinued when, in management's opinion, the borrower may be
unable to make payments as they become due, unless the loan is well-secured. Past due status is based on
contractual terms of the loan. In all cases, loans are placed on nonaccrual or charged off at an earlier date if
collection of principal or interest is considered doubtful. All interest accrued, but not collected for loans
that are placed on nonaccrual or charged off, is reversed against interest income, unless management
believes that the accrued interest is recoverable through the liquidation of collateral. Interest income on
nonaccrual loans is subsequently recognized only to the extent cash payments are received until the loans
are returned to accrual status. Loans are returned to accrual status when all the principal and interest
amounts contractually due are brought current and future payments are reasonably assured.
67
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Allowance for Loan Losses
The allowance for loan losses is established as losses are estimated to have occurred through a provision for
loan losses charged to expense. Loan losses are charged against the allowance when management believes
the collectability of the principal is unlikely. Subsequent recoveries are credited to the allowance.
The allowance is an amount that management believes will be adequate to absorb estimated losses relating
to specifically identified loans, as well as probable credit losses inherent in the balance of the loan
portfolio. The allowance for loan losses is evaluated on a regular basis by management and is based upon
management's periodic review of the collectability of loans in light of historical experience, the nature and
volume of the loan portfolio, overall portfolio quality, review of specific problem loans, current economic
conditions that may affect the borrower's ability to pay, estimated value of any underlying collateral and
prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are
susceptible to significant revision as more information becomes available.
This evaluation does not include the effects of expected losses on specific loans or groups of loans that are
related to future events or expected changes in economic conditions. While management uses the best
information available to make its evaluation, future adjustments to the allowance may be necessary if there
are significant changes in economic conditions. In addition, regulatory agencies, as an integral part of their
examination process, periodically review the Banks’ allowance for loan losses and may require the Banks to
make additions to the allowance based on their judgment about information available to them at the time of
their examinations.
The allowance consists of specific and general components. The specific component includes loans
management considers impaired and other loans or groups of loans that management has classified with
higher risk characteristics. For such loans that are classified as impaired, an allowance is established when
the discounted cash flows, collateral value or observable market price of the impaired loan is lower than the
carrying value of that loan. The general component covers non-classified loans and is based on historical
loss experience adjusted for qualitative factors.
Premises and Equipment
Land is carried at cost. Premises and equipment are carried at cost, less accumulated depreciation
computed on the straight-line method over the estimated useful lives of the assets. In general, estimated
lives for buildings are up to 40 years, furniture and equipment useful lives range from 3 to 20 years and the
lives of software and computer related equipment range from 3 to 5 years. Leasehold improvements are
amortized over the life of the related lease, or the related assets, whichever is shorter. Expenditures for
major improvements of the Company’s premises and equipment are capitalized and depreciated over their
estimated useful lives. Minor repairs, maintenance and improvements are charged to operations as
incurred. When assets are sold or disposed of, their cost and related accumulated depreciation are removed
from the accounts and any gain or loss is reflected in earnings.
68
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Goodwill and Intangible Assets
Goodwill represents the excess of cost over the fair value of the net assets purchased in business
combinations. Goodwill is required to be tested annually for impairment or whenever events occur that
may indicate that the recoverability of the carrying amount is not probable. In the event of an impairment,
the amount by which the carrying amount exceeds the fair value is charged to earnings. The Company
performed its annual test of impairment in the fourth quarter and determined that there was no impairment
in the carrying value of goodwill assigned to its subsidiary bank as of December 31, 2007.
Intangible assets consist of core deposit premiums acquired in connection with business combinations and
are based on the established value of acquired customer deposits. The core deposit premium is initially
recognized based on a valuation performed as of the consummation date and is amortized over the
estimated average remaining life of the acquired customer deposits, or five to ten years. Amortization
periods are reviewed annually in connection with the annual impairment testing of goodwill.
Foreclosed Assets
Foreclosed assets acquired through or in lieu of loan foreclosure are held for sale and are initially recorded
at fair value less estimated disposal costs. Any write-down to fair value at the time of transfer to foreclosed
assets is charged to the allowance for loan losses. Subsequent to foreclosure, valuations are periodically
performed by management and the assets are carried at the lower of carrying amount or fair value less cost
to sell. Costs of improvements are capitalized, whereas costs relating to holding foreclosed assets and
subsequent adjustments to the value are charged to operations. The carrying amount of foreclosed assets at
December 31, 2007 and 2006 was $7.0 million and $1.9 million, respectively.
Income Taxes
Deferred income tax assets and liabilities are determined using the balance sheet method. Under this
method, the net deferred tax asset or liability is determined based on the tax effects of the temporary
differences between the book and tax bases of the various balance sheet assets and liabilities and gives
current recognition to changes in tax rates and laws.
69
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Stock-Based Compensation
On January 1, 2006, Ameris adopted the fair value recognition provisions of FASB Statement No. 123(R),
Share-Based Payment ("SFAS 123(R)"), using the modified prospective-transition method. Under that
transition method, compensation cost recognized beginning in 2006 includes: (a) the compensation cost for
all share-based payments granted prior to, but not yet vested as of January 1, 2006, based on the grant date
fair value estimated in accordance with the original provisions of FASB Statement No. 123, and (b) the
compensation cost for all share-based payments granted subsequent to January 1, 2006, based on the grant-
date fair value estimated in accordance with the provisions of SFAS 123(R). Results for prior periods have
not been restated.
Prior to the adoption of Statement 123(R), the Company had elected to continue measuring stock-based
compensation costs using the intrinsic value based method of accounting prescribed by Accounting
Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, whereby compensation cost is
the excess, if any, of the quoted market price of the stock at the grant date over the amount an employee
must pay to acquire the stock. Because of this election, no stock-based employee compensation cost is
reflected in net income for years prior to 2006, as all options granted under the plans had an exercise price
equal to the market value of the underlying stock on the date of grant.
As a result of the adoption of SFAS 123 (R), the Company recorded approximately $444,000 and $339,000
of stock-based compensation cost in 2007 and 2006, respectively. In December 2005, the Company
accelerated the vesting of 7,332 options to purchase its common stock to avoid the income statement impact
of adopting FASB Statement 123R in future years for those options.
Treasury Stock
The Company’s repurchases of shares of its common stock are recorded at cost as treasury stock and result
in a reduction of stockholders’ equity.
70
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Earnings Per Share
Basic earnings per common share are computed by dividing net income by the weighted-average number of
shares of common stock outstanding during the year. Diluted earnings per common share are computed by
dividing net income, by the effect of the issuance of potential common shares that are dilutive, by the sum
of the weighted-average number of shares of common stock outstanding and dilutive potential common
shares. Potential common shares consist of only stock options for the years ended December 31, 2007,
2006 and 2005, and are determined using the treasury stock method.
Presented below is a summary of the components used to calculate basic and diluted earnings per share:
2007
Years Ended December 31,
2006
(Dollars in Thousands)
2005
Net income
$
15,153
$
22,128
$ 13,728
Weighted average number of
common shares outstanding
Effect of dilutive options
Weighted average number of common
shares outstanding used to calculate
dilutive earnings per share
13,479
152
12,928
301
11,933
113
13,631
13,229
12,046
At December 31, 2007, approximately 190,000 common shares were excluded from the calculation of
diluted earnings per share because of anti-dilution. At December 31, 2006 and 2005, there were immaterial
amounts of potential common shares that were not included in the calculation of diluted earnings per share
because the exercise of such shares would be anti-dilutive.
Derivative Instruments and Hedging Activities
The goal of the Company’s interest rate risk management process is to minimize the volatility in the net
interest margin caused by changes in interest rates. Derivative instruments are used to hedge certain assets
or liabilities as a part of this process. The Company is required to recognize certain contracts and
commitments as derivatives when the characteristics of those contracts and commitments meet the
definition of a derivative. Under the guidelines of SFAS 133, Accounting for Derivative Instruments and
Hedging Activities, as amended, all derivative instruments are required to be carried at fair value on the
balance sheet.
The Company’s current hedging strategies involve utilizing interest floors classified as Cash Flow
Hedges. Cash flows related to floating-rate assets and liabilities will fluctuate with changes in an
underlying rate index. When effectively hedged, the increases or decreases in cash flows related to the
floating rate asset or liability will generally be offset by changes in cash flows of the derivative instrument
designated as a hedge. The fair value of derivatives is recognized as assets or liabilities in the financial
statements. The accounting for the changes in the fair value of a derivative depends on the intended use of
the derivative instrument at inception. The change in fair value of the effective portion of cash flow hedges
is accounted for in other comprehensive income rather than net income.
71
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Derivative Instruments and Hedging Activities (Continued)
As of December 31, 2007, the Company had cash flow hedges with a notional amount of $70 million for
the purpose of converting floating rate assets to fixed rate. The fair value of these instruments amounted to
approximately $1.5 million and $435,000 as of December 31, 2007 and 2006, respectively, and was
recorded as an asset. No hedge ineffectiveness from cash flow hedges was recognized in the statement of
income. All components of each derivative’s gain or loss are included in the assessment of hedge
effectiveness.
Comprehensive Income
Accounting principles generally require that recognized revenue, expenses, gains and losses be included in
net income. Although certain changes in assets and liabilities, such as unrealized gains and losses on
securities available for sale and unrealized gains and losses on effective cash flow hedges, are reported as a
separate component of the equity section of the balance sheet, such items, along with net income, are
components of comprehensive income.
Accounting Standards
New Accounting Pronouncements. In September 2006, the FASB issued SFAS 157, Fair Value
Measurements, which replaces the different definitions of fair value in existing accounting literature with a
single definition, sets out a framework for measuring fair value, and requires additional disclosures about
fair value measurements. SFAS 157 is required to be applied whenever another financial accounting
standard requires or permits an asset or liability to be measured at fair value. The Company will adopt the
guidance of SFAS 157 beginning January 1, 2008, and does not expect it to have a material impact on the
Company’s consolidated financial statements.
In February 2007, the FASB issued Statement of Financial Accounting Standard (“SFAS”) No. 159, The
Fair Value Option for Financial Assets and Financial Liabilities – Including an Amendment of FASB
Statement No. 115. This standard permits an entity to choose to measure many financial instruments and
certain other items at fair value. This option is available to all entities. Most of the provisions in SFAS 159
are elective; however, the amendment to SFAS 115, Accounting for Certain Investments in Debt and Equity
Securities, applies to all entities with available-for-sale and trading securities. SFAS 159 is effective as of
the beginning of an entity’s first fiscal year that begins after November 15, 2007. The Company will adopt
SFAS 159 beginning January 1, 2008 and is currently evaluating the impact SFAS 159 will have on the
Company’s consolidated financial statements.
In December 2007, the FASB issued SFAS No. 141-R, "Business Combinations" (SFAS No. 141-R) which
revised SFAS No. 141, "Business Combinations" (SFAS No. 141). This pronouncement is effective for the
Company as of January 1, 2009. Under SFAS No. 141, organizations utilized the announcement date as the
measurement date for the purchase price of the acquired entity. SFAS No. 141-R requires measurement at
the date the acquirer obtains control of the acquiree, generally referred to as the acquisition date. SFAS
No. 141-R will have a significant impact on the accounting for transaction costs, restructuring costs as well
as the initial recognition of contingent assets and liabilities assumed during a business combination. Under
SFAS No. 141-R, adjustments to the acquired entity's deferred tax assets and uncertain tax position
balances occurring outside the measurement period are recorded as a component of the income tax expense,
rather than goodwill. As the provisions of SFAS No. 141-R are applied prospectively, the impact to the
Company cannot be determined until a transaction occurs.
Reclassifications. Certain reclassifications of prior year amounts have been made to conform with the
current year presentations.
72
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2. CORPORATE RESTRUCTURE
During 2005, the Company initiated a corporate restructuring plan to create a single brand name for the
Company and each of its thirteen bank subsidiaries. In addition to the single brand name, the Company
announced its intentions to consolidate its bank subsidiaries into a single bank subsidiary. To effect this
corporate restructuring, management identified several costs that would be incurred. These restructuring costs
included approximately $838,000 for the branding initiative and $2,000,000 to standardize and streamline the
data processing functions of each subsidiary. The branding initiative and consolidation of the Bank subsidiaries
was substantially completed during 2006.
NOTE 3. BUSINESS COMBINATIONS AND DIVESTITURES
On December 29, 2006, Ameris acquired 100 percent of the outstanding common shares of Islands Bancorp and
its banking subsidiary, Islands Community Bank, NA (collectively, “Islands”). Islands was headquartered in
Beaufort, South Carolina where it operated a single branch with satellite loan production offices in Bluffton,
South Carolina and Charleston, South Carolina. The consideration for the acquisition was a combination of
cash and common stock with an aggregate purchase price of approximately $19,055,000. The total
consideration consisted of $5,121,000 in cash, and approximately 494,000 shares of Ameris Bancorp common
stock with a value of approximately $13,934,000. The value of the shares of common stock issued of $28.18
was based on the average closing price of Ameris common stock for the 10 trading days immediately preceding
the merger. Islands results of operations for 2006 are not included in Ameris’ consolidated financial results as
the merger date occurred after close of business on the last day of the fiscal year.
On December 16, 2005, Ameris acquired all the issued and outstanding common shares of First National Banc,
Inc., the parent company of First National Bank, in St. Marys, Georgia and First National Bank, in Orange Park,
Florida (collectively “FNB”). The acquisition was accounted for using the purchase method of accounting and
accordingly, the results from FNB’s operations have been included in the consolidated financial statements
beginning December 17, 2005. The aggregate purchase price for FNB was $35,333,000, including cash of
$13,085,000 and the Company’s common stock valued at $22,248,000. The value of the 1,083,718 common
shares was determined based on the closing price of the Company’s common stock on December 14, 2005, the
first date on which the number of shares became fixed.
73
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3. BUSINESS COMBINATIONS AND DIVESTITURES (Continued)
The following table summarizes the estimated fair values of the assets acquired and liabilities assumed on the
acquisition dates (in thousands):
(In Thousands)
Islands
as of
FNB
as of
December 29, December 16,
2006
2005
$
Cash and due from banks
Interest-bearing deposits and federal funds sold
Investments
Loans, net
Premises and equipment
Core deposits intangible asset
Goodwill
Other assets
Total assets acquired
Deposits
Other borrowings
Subordinated deferrable interest debentures
Other liabilities
Total liabilities assumed
$
1,100
9,439
3,249
62,331
4,597
800
10,312
580
92,408
71,510
1,000
-
843
73,353
18,210
32,690
15,688
189,235
11,069
3,525
18,251
3,456
292,124
241,439
6,000
5,155
4,197
256,791
Net assets acquired
$
19,055
$
35,333
Unaudited proforma consolidated results of operations for the years ended December 31, 2006 and 2005 as
though Islands and FNB had been acquired as of January 1, 2005 follows:
Net interest income
Net income
Basic earnings per share
Diluted earnings per share
(Dollars in Thousands)
2006
2005
$
$
$
$
73,101
21,939
1.63
1.60
$
$
$
$
64,723
9,807
0.72
0.72
During 2006, Ameris negotiated contracts for the sale of three stand-alone bank charters to other banks. The
Company recognized gains of approximately $3.1 million, $1.9 million after tax, as a result of these sales. Total
assets, loans and deposits were reduced by approximately $11.3 million, $1.0 million and $7.3 million,
respectively, as a result of these sales.
74
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4. SECURITIES
The amortized cost and fair value of securities available for sale with gross unrealized gains and losses are
summarized as follows:
Gross
Amortized Unrealized Unrealized
Gains
Losses
Gross
Cost
Fair
Value
December 31, 2007:
U. S. Government sponsored agencies
State and municipal securities
Corporate debt securities
Mortgage-backed securities
$
Total debt securities
Equity securities
Total securities
(Dollars in Thousands)
69,562 $
18,232
9,812
190,896
288,502
1,788
366 $
181
37
1,281
1,865
-
(5) $
(93)
(351)
(536)
69,923
18,320
9,498
191,641
(985)
-
289,382
1,788
$
290,290
$
1,865 $
(985) $
291,170
December 31, 2006:
U. S. Government sponsored agencies
State and municipal securities
Corporate debt securities
Mortgage-backed securities
$
Total debt securities
Equity securities
103,207 $
19,364
9,852
153,768
286,191
788
31 $
42
40
194
307
-
(1,375 ) $
(472 )
(63 )
(2,144 )
(4,054 )
(40 )
101,863
18,934
9,829
151,818
282,444
748
Total securities
$
286,979 $
307 $
(4,094
) $
283,192
The amortized cost and fair value of debt securities available for sale as of December 31, 2007 by contractual
maturity are shown below. Maturities may differ from contractual maturities in mortgage-backed securities
because the mortgages underlying the securities may be called or repaid without penalty. Therefore, these
securities are not included in the maturity categories in the following maturity summary.
Due in one year or less
Due from one year to five years
Due from five to ten years
Due after ten years
Mortgage-backed securities
Amortized
Cost
Fair
Value
(Dollars in Thousands)
$
$
570
48,662
38,037
10,337
190,896
571
48,891
38,242
10,037
191,641
$
288,502
$ 289,382
Securities with a carrying value of approximately $247,190,000 and $192,951,000 at December 31, 2007 and
2006, respectively, were pledged to secure public deposits and for other purposes required or permitted by law.
75
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4. SECURITIES (Continued)
Gains and losses on sales of securities available for sale consist of the following:
December 31,
2006
2007
2005
(Dollars in Thousands)
Gross gains on sales of securities
$
26 $
- $
61
Gross losses on sales of securities
(323
)
(308
)
(452
)
Net realized gains (losses) on sales of securities available for sale
$
(297
) $
(308
) $
(391
)
The following table shows the gross unrealized losses and fair value of securities aggregated by category and
length of time that securities have been in a continuous unrealized loss position at December 31, 2007 and 2006.
Less Than 12 Months
12 Months or More
Total
Fair
Unrealized
Fair
Unrealized Fair
Unrealized
Description of Securities
Value
Losses
Value
Losses
Value
Losses
(Dollars in Thousands)
December 31, 2007:
U. S. Government sponsored agencies
$
-
$
- $
-
$
- $
- $
State and municipal securities
Corporate debt securities
Mortgage-backed securities
Subtotal, debt securities
Equity securities
2,466
5,910
29,214
37,590
-
(17)
3,012
(81)
5,478
(334)
1,494
(17)
7,404
(37)
37,902
(499)
67,116
(388)
42,408
(597)
79,998
-
-
-
-
-
(98)
(351)
(536)
(985)
-
Total temporarily impaired securities
$
37,590
$
(388) $
42,408
$
(597) $
79,998 $
(985)
December 31, 2006:
U. S. Government sponsored agencies
$
18,869
$
(75) $
72,520
$
(1,300) $
91,389 $
(1,375)
State and municipal securities
Corporate debt securities
Mortgage-backed securities
Subtotal, debt securities
Equity securities
9,658
-
69,148
97,675
-
(300)
4,884
(172)
14,542
-
1,935
(63)
1,935
(472)
(63)
(359)
69,642
(1,785) 138,791
(2,144)
(734) 148,981
(3,320) 246,657
(4,054)
-
567
(40)
567
(40)
Total temporarily impaired securities
$
97,675
$
(734) $ 149,548
$
(3,360) $ 247,224 $
(4,094)
Management evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more
frequently when economic or market concerns warrant such evaluation. Substantially all of the unrealized
losses on debt securities are related to changes in interest rates and do not affect the expected cash flows of the
issuer or underlying collateral. All unrealized losses are considered temporary because each security carries an
acceptable investment grade and the Company has the intent and ability to hold to maturity.
76
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5. LOANS AND ALLOWANCE FOR LOAN LOSSES
The composition of loans is summarized as follows:
Commercial and financial
Agricultural
Real estate - construction
Real estate - mortgage, farmland
Real estate - mortgage, commercial
Real estate - mortgage, residential
Consumer installment loans
Other
Allowance for loan losses
Loans, net
The following is a summary of information pertaining to impaired loans:
$
December 31,
2007
2006
(Dollars in Thousands)
151,029 $
37,623
383,317
96,505
495,672
386,736
55,114
8,052
174,852
33,980
340,325
91,650
397,837
339,843
59,422
5,042
1,614,048
27,640
1,442,951
24,863
$
1,586,408 $
1,418,088
As of and For the Years Ended
December 31,
2007
2006
2005
(Dollars in Thousands)
Impaired loans
Valuation allowance related to impaired loans
Average investment in impaired loans
Interest income recognized on impaired loans
$
$
$
$
18,468 $
2,978 $
16,247 $
314 $
6,834
1,034
8,181
15
$
$
$
$
Forgone interest income on impaired loans
$
1,340 $
404 $
9,586
1,749
5,236
26
527
Loans on nonaccrual status amounted to approximately $18.5 million, $6.8 million and $9.6 million at
December 31, 2007, 2006 and 2005, respectively. There were no material amounts of loans past due ninety
days or more and still accruing interest at December 31, 2007, 2006 or 2005.
77
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5. LOANS AND ALLOWANCE FOR LOAN LOSSES (Continued)
Changes in the allowance for loan losses for the years ended December 31, 2007, 2006 and 2005 are as follows:
Balance, beginning of year
Provision for loan losses
Loans charged off
Recoveries of loans previously charged off
Acquired loan loss reserve
Balance, end of year
December 31,
2007
2006
2005
(Dollars in Thousands)
$
24,863 $
11,321
(10,418 )
1,874
-
$
22,294
2,837
(3,198)
1,906
1,024
15,493
1,651
(2,155)
1,777
5,528
$
27,640 $
24,863
$
22,294
In the ordinary course of business, the Company has granted loans to certain directors and their affiliates. The
interest rates on these loans were substantially the same as rates prevailing at the time of the transaction and
repayment terms are customary for the type of loan. Company policy provides for no loans to executive
officers. Changes in related party loans are summarized as follows:
Balance, beginning of year
Advances
Repayments
Transactions due to changes in related parties
Balance, end of year
December 31,
2007
2006
(Dollars in Thousands)
$
$
5,912
864
(1,176 )
646
40,349
6,986
(4,939)
(36,484)
$
6,246
$
5,912
78
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6. PREMISES AND EQUIPMENT
Premises and equipment are summarized as follows:
Land
Buildings
Furniture and equipment
Construction in progress; estimated cost to complete, $9,600,000
Accumulated depreciation
Leases
December 31,
2007
2006
(Dollars in Thousands)
$
13,966 $
36,947
22,482
15,048
12,054
37,344
21,496
3,208
88,443
(29,311 )
74,102
(27,498)
$
59,132 $
46,604
The Company has a noncancelable operating lease on its operations center with its Chairman of the Board. The
lease has an initial term of five years with one five year renewal option.
The Company has various operating leases with unrelated parties on three branches. Generally, these leases are
on smaller locations with initial lease terms under ten years and up to two renewal options.
Rental expense amounted to approximately $335,000, $147,000 and $140,000 for the years ended December 31,
2007, 2006 and 2005, respectively. Future minimum lease commitments under the Company’s operating leases,
excluding any renewal options, are summarized as follows:
2008
2009
2010
2011
Thereafter
$
330,465
204,525
123,805
87,147
43,395
$
789,337
79
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7. INTANGIBLE ASSETS
Following is a summary of information related to acquired intangible assets:
As of December 31, 2007
Gross
Amount
Accumulated
Amortization
As of December 31, 2006
Gross
Amount
Accumulated
Amortization
(Dollars in Thousands)
Amortized intangible assets
Core deposit premiums
$ 14,430 $ 9,628 $ 14,430 $ 8,331
The aggregate amortization expense for intangible assets was approximately $1,297,000, $1,107,000 and
$819,000 for the years ended December 31, 2007, 2006 and 2005, respectively.
The estimated amortization expense for each of the next five years is as follows:
2008
2009
2010
2011
2012
Changes in the carrying amount of goodwill are as follows:
Beginning balance
Adjustment of previously acquired goodwill based
on final allocations
Goodwill acquired through business combinations
Ending balance
NOTE 8. DEPOSITS
$
1,170,000
584,000
547,000
547,000
493,000
For the Years Ended
December 31,
2007
2006
(Dollars in Thousands)
$
54,365 $
43,304
448
-
749
10,312
$
54,813 $
54,365
The aggregate amount of time deposits in denominations of $100,000 or more at December 31, 2007 and 2006
was $522.9 million and $501.9 million, respectively. The scheduled maturities of time deposits at December 31,
2007 are as follows:
2007
2008
2009
2010
2011
80
(Dollars in
Thousands)
$
754,465
102,400
13,369
6,282
5,091
$
881,607
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8. DEPOSITS (Continued)
The Company had brokered deposits of $128.0 million and $147.9 million at December 31, 2007 and 2006. At
year end 2007, $91.2 million of the brokered deposits mature in 2008, and $36.8 million mature in 2009.
NOTE 9. SECURITIES SOLD UNDER REPURCHASE AGREEMENTS
Securities sold under repurchase agreements, which are secured borrowings, generally mature within one to four
days from the transaction date. Securities sold under repurchase agreements are reflected at the amount of cash
received in connection with the transactions. The Company may be required to provide additional collateral
based on the fair value of the underlying securities. The Company monitors the fair value of the underlying
securities on a daily basis. Securities sold under repurchase agreements at December 31, 2007 and 2006 were
$14.7 million and $15.9 million, respectively.
NOTE 10. EMPLOYEE BENEFIT PLANS
The Company has established a retirement plan for eligible employees. The Ameris Bancorp 401(k) Profit
Sharing Plan allows a participant to defer a portion of his compensation and provides that the Company will
match a portion of the deferred compensation. The Plan also provides for non-elective and discretionary
contributions. All full-time and part-time employees are eligible to participate in the Plan provided they have
met the eligibility requirements. Generally, a participant must have completed twelve months of employment
with a minimum of 1,000 hours and have attained an age of 21.
Aggregate expense under the plan charged to operations during 2007, 2006 and 2005 amounted to $1.3 million,
$1.4 million and $1.2 million, respectively.
NOTE 11. DEFERRED COMPENSATION PLANS
The Company and the Bank have entered into separate deferred compensation arrangements with certain
executive officers and directors. The plans call for certain amounts payable at retirement, death or
disability. The estimated present value of the deferred compensation is being accrued over the expected service
period. The Company and Banks have purchased life insurance policies which they intend to use to finance this
liability. Cash surrender value of life insurance of $2.1 million and $2.2 million at December 31, 2007 and
2006, respectively, is included in other assets. Accrued deferred compensation of $1.1 million at December 31,
2007 and 2006, is included in other liabilities. Aggregate compensation expense under the plans was $119,000,
$112,000 and $60,000 for 2007, 2006 and 2005, respectively, and is included in other operating expenses.
81
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 12. OTHER BORROWINGS
Other borrowings consist of the following:
December 31,
2007
2006
(Dollars in Thousands)
Advances under revolving credit agreement with a regional bank with interest at
thirty day LIBOR plus 1.35% (5.95% at December 31, 2007) due in December
2009, secured by subsidiary bank stock.
$
5,000 $
5,000
Advances from the FHLB with adjustable interest at three month LIBOR plus
0.32% (5.53% at December 31, 2007) maturing August 2009.
65,000
65,000
Advance from Federal Home Loan Bank with a fixed interest rate of 3.64%, due
September 2008.
1,000
1,000
Advances from Federal Home Loan Bank with interest at fixed rates (weighted
average rate of 4.67%) convertible to a variable rate at the option of the lender, due
at various dates through May 2010.
19,500
4,500
$
90,500 $
75,500
The advances from Federal Home Loan Bank are collateralized by the pledging of a blanket lien on all first
mortgage loans and other specific loans, as well as FLHB stock.
Other borrowings at December 31, 2007 have maturities in future years as follows:
2008
2009
2010
(Dollars in
Thousands)
$
$
18,500
70,000
2,000
90,500
The Company and subsidiaries have available unused lines of credit with various financial institutions totaling
approximately $111,183,000 at December 31, 2007.
82
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 13. INCOME TAXES
The income tax expense in the consolidated statements of income consists of the following:
Current
Deferred
For the Years Ended December 31,
2007
2006
2005
(Dollars in Thousands)
$
8,822 $
(1,522 )
11,425 $
(296)
7,184
(35)
$
7,300 $
11,129 $
7,149
The Company's income tax expense differs from the amounts computed by applying the federal income tax
statutory rates to income before income taxes. A reconciliation of the differences is as follows:
Tax at federal income tax rate
Increase (decrease) resulting from:
Tax-exempt interest
Amortization of intangible assets
Other
Provision for income taxes
For the Years Ended December 31,
2007
2006
2005
(Dollars in Thousands)
$
7,859 $ 11,640 $
7,098
(403 )
-
(156 )
(318)
-
(193)
(182)
2
231
$
7,300 $ 11,129 $
7,149
Net deferred income tax assets of $5,535,000 and $5,971,000 at December 31, 2007 and 2006, respectively, are
included in other assets. The components of deferred income taxes are as follows:
Deferred tax assets:
Loan loss reserves
Deferred compensation
Stock based compensation
Nonaccrual interest
Net operating loss carryforward
Unrealized loss on securities available for sale
Other real estate owned
Capitalized costs
Deferred tax liabilities:
Depreciation and amortization
Intangible assets
Unrealized gain on securities available for sale
Unrealized gain on cash flow hedge
December 31,
2007
2006
(Dollars in Thousands)
$
$
9,306
372
41
253
90
-
221
216
10,499
2,560
1,733
299
372
4,964
8,036
390
120
248
652
1,287
2
246
10,981
2,878
2,132
-
-
5,010
Net deferred tax assets
$
5,535
$
5,971
83
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 14. SUBORDINATED DEFERRABLE INTEREST DEBENTURES
In 2001, the Company formed a statutory business trust, ABC Bancorp Capital Trust I, which existed for the
exclusive purposes of (i) issuing Trust Securities representing undivided beneficial interests in the assets of the
Trust; (ii) investing the gross proceeds of the Trust securities in junior subordinated deferrable interest
debentures (subordinated debentures); and (iii) engaging in only those activities necessary or incidental
thereto. The trust preferred securities in the amount of $34,500,000 issued through ABC Bancorp Capital Trust
I and the related Debentures in the amount of $35,567,000 bore interest at 9%, and were redeemable in whole or
in part at any time after September 30, 2006. The Company redeemed all outstanding trust preferred certificates
issued under the Trust during 2006.
During 2005, the Company acquired First National Banc Statutory Trust I, a subsidiary of First National Banc,
Inc., whose sole purpose was to issue $5,000,000 principal amount of Trust Preferred Securities at a rate per
annum equal to the 3-Month LIBOR plus 2.80% (7.63% at December 31, 2007) through a pool sponsored by a
national brokerage firm. The Trust Preferred Securities have a maturity of 30 years and are redeemable at the
Company’s option on any quarterly interest payment date after five years. There are certain circumstances (as
described in the Trust agreement) in which the securities may be redeemed within the first five years at the
Company’s option. The aggregate principal amount of trust preferred certificates outstanding at December 31,
2007 was $5,000,000. The aggregate principal amount of Debentures outstanding was $5,155,000.
During 2006, the Company formed Ameris Statutory Trust I, issuing trust preferred certificates in the aggregate
principal amount of $36,000,000. The related debentures issued by the Company were in the aggregate
principal amount of $37,114,000. Both the trust preferred securities and the related Debentures bear interest at
3-Month LIBOR plus 1.63% (6.62% at December 31, 2007). Distributions on the trust preferred securities are
paid quarterly, with interest on the Debentures being paid on the corresponding dates. The trust preferred
securities mature on December 15, 2036 and are redeemable at the Company’s option beginning September 15,
2011.
Under applicable accounting standards, the assets and liabilities of such trusts, as well as the related income and
expenses, are excluded from the Company’s Consolidated Financial Statements. However, the subordinated
debentures issued by the Company and purchased by the trusts remain on the Consolidated Balance Sheet. In
addition, the related interest expense continues to be included in the Consolidated Statement of Income. For
regulatory capital purposes, the Trust Securities qualify as a component of Tier 1 Capital.
84
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 15. STOCK-BASED COMPENSATION
Ameris awards its employees various forms of stock-based incentives under certain plans approved by its
shareholders. Awards granted under the plans may be in the form of qualified or nonqualified stock options,
restricted stock, stock appreciation rights (“SARs”), long-term incentive compensation units consisting of cash
and common stock, or any combination thereof within the limitations set forth in the plans. The plans provide
that the aggregate number of shares of the Company’s common stock which may be subject to award may not
exceed 1,785,000 subject to adjustment in certain circumstances to prevent dilution.
All stock options have an exercise price that is equal to the closing fair market value of Ameris’ stock on the
date the options were granted. Options granted under the plans generally vest over a five year period and have a
10 year maximum term. Most options granted since 2005 contain performance-based vesting conditions.
As of December 31, 2007, the Company has outstanding a total of 53,430 restricted shares granted under the
plans as compensation to certain employees. These shares carry dividend and voting rights. Sale of these shares
is restricted prior to the date of vesting, which is three to five years from the date of the grant. Shares issued
under the plans are recorded at their fair market value on the date of their grant. The compensation expense is
recognized on a straight-line basis over the related vesting period. Compensation expense related to these grants
was $651,000, $484,000 and $321,000 for 2007, 2006 and 2005, respectively.
It is Ameris’ policy to issue new shares for stock option exercises and restricted stock rather than issue treasury
shares. Ameris recognizes stock-based compensation expense on a straight-line basis over the options’ related
vesting term.
Stock-based compensation expense related to stock options was approximately $444,000 and $339,000 in 2007
and 2006, respectively.
A summary of non-performance-based option activity as of December 31, 2007, 2006 and 2005 and changes
during the years then ended is presented below:
December 31, 2007
Weighted- Weighted
Average
Average
Contractual Value
Exercise
Aggregate
Intrinsic
December 31, 2006
December 31, 2005
Weighted- Weighted
Average
Average
Contractual Value
Exercise
Aggregate
Intrinsic
Weighted- Weighted Aggregate
Average
Average
Intrinsic
Contractual Value
Exercise
Shares
Price
Term
$
(000) Shares
Price
Term
$ (000) Shares
Price
Term
$
(000)
Under option,
beginning of
year
252,068 $
11.82
296,235 $
11.59
390,042 $
10.87
Granted
-
-
-
-
14,000
16.92
Exercised
(15,382)
11.20
(40,987)
6.94
(100,129)
9.43
Forfeited
(4,105)
13.45
(3,180)
16.43
(7,678)
13.53
Under option,
end of year
Exercisable at
end of year
Weighted-
average fair
value per
option
granted
during year
232,581 $
12.83
3.91 $
1,167
252,068 $
11.82
4.90 $
4,123
296,235 $
13.89
5.64 $
1,763
205,412 $
11.34
3.57 $
1,113
206,917 $
11.23
4.47 $
3,505
207,851 $
10.50
4.79 $
1,941
N/A
N/A
$
4.90
85
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 15. STOCK-BASED COMPENSATION (Continued)
As of December 31, 2007, there was $100,000 of total unrecognized compensation cost related to nonvested
share-based compensation arrangements for non-performance-based options. That cost is expected to be
recognized over a weighted-average period of 0.89 years. The total intrinsic value of those shares vested during
the year ended December 31, 2007 and 2006 was $365,000 and $1,094,000, respectively.
Additional information pertaining to non-performance based options outstanding at December 31, 2007 is as
follows:
Options Outstanding
Options Exercisable
Range of
Exercise
Prices
Weighted-
Average
Contractual
Number
Outstanding Life in Years
Weighted-
Average
Exercise
Price
Weighted-
Average
Exercise
Price
Number
Outstanding
$
8.25 - 10.00
$ 11.04 - 18.16
87,006
145,575
232,581
2.35 $
4.83 $
8.68
13.72
87,006 $
118,456 $
205,462
8.68
13.29
A summary of the activity of performance-based options as of December 31, 2007, 2006 and 2005 and changes
during the years then ended is presented below:
December 31, 2007
December 31, 2006
December 31, 2005
Weighted- Weighted
Average
Average
Contractual Value
Exercise
Aggregate
Intrinsic
Weighted- Weighted
Average
Average
Contractual Value
Exercise
Aggregate
Intrinsic
Weighted- Weighted
Average
Average
Contractual Value
Exercise
Aggregate
Intrinsic
Shares
Price
Term
(000) Shares
Price
Term
(000) Shares
Price
Term
(000)
Under
option,
beginning
of year
259,750 $
19.71
163,000 $
18.07
- $
-
Granted
171,500
22.98
101,750
21.38
163,000
18.07
Exercised
(180)
18
Forfeited
(5,320)
20.94
-
(5,000)
-
18
-
-
-
-
Under
option,
end of
year
Exercisable
at end of
year
425,750 $
20.8
8.49 $
- 259,750 $
19.71
8.86 $
2,290 163,000 $
18.07
9.96 $
281
82,650 $
18.87
7.72 $
-
79,300 $
18.67
8.7 $
754
30,500 $
18.07
9.49 $
56
The weighted-average grant date fair value of options granted during the years 2007 and 2006 was $5.53 and
$3.48, respectively. As of December 31, 2007, there was $1.2 million of unrecognized compensation cost
related to nonvested share-based compensation arrangements granted related to performance-based
options. That cost is expected to be recognized over a weighted-average period of 2 years.
86
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 15. STOCK-BASED COMPENSATION (Continued)
Additional information pertaining to performance-based options outstanding at December 31, 2007 is as
follows:
Options Outstanding
Options Exercisable
Range of
Exercise
Prices
Weighted-
Average
Contractual
Number
Outstanding Life in Years
Weighted-
Average
Exercise
Price
Weighted-
Average
Exercise
Price
Number
Outstanding
$ 18.00 - 20.12
$ 20.76 - 28.53
156,500
269,250
425,750
7.50 $
9.06 $
18.07
22.39
62,600 $
20,050 $
82,650
18.87
21.39
The fair value of each stock-based compensation grant is estimated on the date of grant using the Black-Scholes
option-pricing model with the following assumptions:
1
Dividend yield
Expected life
Expected volatility
Risk-free interest rate
Years Ended December 31,
2007
2006
2005
1.99-2.52%
8 years
18.09-25.02%
4.59-5.20%
1.96-2.70 %
8 years
16.51-20.28 %
4.45-5.12 %
3.11%
8 years
30.05%
3.94%
A summary of the status of Ameris’ restricted stock awards as of December 31, 2007 and changes during the
year then ended is presented below:
Nonvested shares at January 1, 2007
Granted
Vested
Forfeited
Nonvested shares at December 31, 2007
Weighted-
Average
Grant-Date
Fair Value
19.02
22.83
17.28
13.32
20.83
Shares
$
89,770
4,800
(39,440 )
(1,700 )
53,430
$
The balance of unearned compensation related to restricted stock grants as of December 31, 2007 and 2006 was
approximately $451,000 and $1.0 million respectively.
87
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 16. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
During 2006, the Company entered into derivative instruments to minimize the volatility in its net interest
margin due to a reduction in the prime rate and the resulting effect on interest income from its variable rate loan
portfolio. The Company purchased two $35 million notional amount, 3 and 5-year, 7% prime rate floor
contracts to hedge against the exposure to the cash flow of these variable rate loans. The premium paid for these
contracts was $497,000. These contracts are classified as cash flow hedges of an exposure to changes in the
cash flow of a recognized asset. As a cash flow hedge, the change in fair value of a hedge that is deemed to be
highly effective is recognized in other comprehensive income and the portion deemed to be ineffective is
recognized in earnings. As of December 31, 2007, the hedge is deemed to be highly effective.
Notional
Amount
Rate of
Floor
Fair Value
Fair Value
December 31, December 31,
Index
2007
2006
Cash flow hedges:
Floor - 5 year
Floor - 3 year
$
35,000,000
35,000,000
$
70,000,000
7%
7%
Prime
Prime
$
1,144,000
396,000
$
328,000
107,000
$
1,540,000
$
435,000
NOTE 17. COMMITMENTS AND CONTINGENT LIABILITIES
Loan Commitments
The Company is a party to financial instruments with off-balance-sheet risk in the normal course of business to
meet the financing needs of its customers. These financial instruments include commitments to extend credit
and standby letters of credit. They involve, to varying degrees, elements of credit risk and interest rate risk in
excess of the amount recognized in the balance sheets.
The Company's exposure to credit loss is represented by the contractual amount of those instruments. The
Company uses the same credit policies in making commitments and conditional obligations as it does for on-
balance-sheet instruments. A summary of the Company's commitments is as follows:
Commitments to extend credit
Financial standby letters of credit
December 31,
2007
2006
(Dollars in Thousands)
$
177,410 $
7,426
179,727
6,139
$
184,836 $
185,866
Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any
condition established in the contract. Commitments generally have fixed expiration dates or other termination
clauses and may require payment of a fee. Since many of the commitments are expected to expire without being
drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The amount
of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management’s
credit evaluation of the customer.
88
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 17. COMMITMENTS AND CONTINGENT LIABILITIES (Continued)
Loan Commitments (Continued)
Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a
customer to a third party. Those guarantees are primarily issued to support public and private borrowing
arrangements. The credit risk involved in issuing letters of credit is essentially the same as that involved in
extending loans to customers. Collateral is required in instances which the Company deems necessary. The
Company has not been required to perform on any material financial standby letters of credit and the Company
has not incurred any losses on financial standby letters of credit for the years ended December 31, 2007 and
2006.
At December 31, 2007, the Company had guaranteed the debt of certain officers’ liabilities at another financial
institution totaling approximately $535,000. These guarantees represent the available credit line of those certain
officers for the purchase of Company stock. Any stock purchased under this program will be assigned to the
Company and held in safekeeping. The Company has not been required to perform on any of these guarantees
for the year ended December 31, 2007.
Contingencies
In the normal course of business, the Company is involved in various legal proceedings. In the opinion of
management, any liability resulting from such proceedings would not have a material effect on the Company's
financial statements.
NOTE 18. CONCENTRATIONS OF CREDIT
The Bank makes commercial, residential, construction, agricultural, agribusiness and consumer loans to
customers primarily in Georgia, northern Florida, Alabama and South Carolina. A substantial portion of the
customers' abilities to honor their contracts is dependent on the business economy in the geographical area
served by the Bank.
A substantial portion of the Company's loans are secured by real estate in the Company's primary market
area. In addition, a substantial portion of the other real estate owned is located in those same
markets. Accordingly, the ultimate collectability of a substantial portion of the Company's loan portfolio and
the recovery of a substantial portion of the carrying amount of other real estate owned are susceptible to changes
in real estate conditions in the Company's primary market area.
89
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 19. REGULATORY MATTERS
The Bank is subject to certain restrictions on the amount of dividends that may be declared without prior
regulatory approval. At December 31, 2007, approximately $9,100,000 of retained earnings were available for
dividend declaration without regulatory approval.
The Company and the Bank are subject to various regulatory capital requirements administered by the federal
banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly
additional discretionary, actions by regulators that, if undertaken, could have a direct material effect on the
Company's and Bank's financial statements. Under capital adequacy guidelines and the regulatory framework
for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve
quantitative measures of their assets, liabilities and certain off-balance-sheet items as calculated under
regulatory accounting practices. Capital amounts and classification are also subject to qualitative judgments by
the regulators about components, risk weightings and other factors.
Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank
to maintain minimum amounts and ratios of total and Tier I capital, as defined by the regulations, to risk-
weighted assets, as defined, and of Tier I capital to average assets, as defined. Management believes, as of
December 31, 2007 and 2006, the Company and the Bank met all capital adequacy requirements to which they
are subject.
As of December 31, 2007, the most recent notification from the regulatory authorities categorized the Bank as
well capitalized under the regulatory framework for prompt corrective action. To be categorized as well
capitalized, the Bank must maintain minimum total risk-based, Tier I risk-based and Tier I leverage ratios as set
forth in the following table. There are no conditions or events since that notification that management believes
have changed the Bank’s category. Prompt corrective action provisions are not applicable to bank holding
companies.
The Company’s and Bank’s actual capital amounts and ratios are presented in the following table.
Actual
For Capital
Adequacy
Purposes
To Be Well Capitalized
Under Prompt Corrective
Action Provisions
Amount
Ratio
Amount
Ratio
Amount
Ratio
(Dollars in Thousands)
As of December 31, 2007
Total Capital to Risk Weighted Assets
Consolidated
Ameris Bank
$
$
191,950
193,220
11.59% $
11.68% $
132,525
133,343
8.00 %
8.00 % $
- - -N/A - - -
166,679
10.00%
Tier I Capital to Risk Weighted Assets:
Consolidated
Ameris Bank
$
$
171,331
172,630
10.34% $
10.44% $
66,263
66,172
4.00 %
4.00 % $
- - -N/A - - -
99,258
6.00%
Tier I Capital to Average Assets:
Consolidated
Ameris Bank
$
$
171,331
172,630
8.39% $
8.47% $
81,719
81,566
4.00 %
4.00 % $
- - -N/A - - -
101,958
5.00%
Actual
For Capital Adequacy
Purposes
To Be Well Capitalized
Under Prompt Corrective
Action Provisions
Amount
Ratio
Amount
Ratio
Amount
Ratio
(Dollars in Thousands)
As of December 31, 2006
Total Capital to Risk Weighted Assets
Consolidated
Ameris Bank
$
$
180,676
180,675
11.92%
11.94%
$
$
121,305
121,089
8.00 %
8.00 % $
- - -N/A - - -
151,361
10.00%
Tier I Capital to Risk Weighted Assets:
Consolidated
Ameris Bank
Tier I Capital to Average Assets:
Consolidated
Ameris Bank
$
$
161,797
161,830
10.67%
10.69%
$
$
60,653
60,545
4.00 %
4.00 % $
- - -N/A - - -
90,817
6.00%
$
$
161,797
161,830
8.58%
8.64%
$
$
75,452
74,954
4.00 %
4.00 % $
- - -N/A - - -
93,693
5.00%
90
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 20. FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of a financial instrument is the current amount that would be exchanged between willing parties,
other than in a forced liquidation. Fair value is best determined based upon quoted market prices. However, in
many instances, there are no quoted market prices for the Company’s various financial instruments. In cases
where quoted market prices are not available, fair value is based on discounted cash flows or other valuation
techniques. These techniques are significantly affected by the assumptions used, including the discount rate and
estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate
settlement of the instrument. SFAS 107, Disclosures about Fair Value of Financial Instruments, excludes
certain financial instruments and all nonfinancial instruments from its disclosure requirements. Accordingly, the
aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Company.
The following methods and assumptions were used by the Company in estimating the fair value of its financial
instruments.
Cash, Due From Banks, Interest-Bearing Deposits in Banks and Federal Funds Sold: The carrying amount
of cash, due from banks and interest-bearing deposits in banks and federal funds sold approximates fair value.
Securities: Fair value of securities is based on available quoted market prices. The carrying amount of equity
securities with no readily determinable fair value approximates fair value.
Loans: The carrying amount of variable-rate loans that reprice frequently and have no significant change in
credit risk approximates fair value. The fair value of fixed-rate loans is estimated based on discounted
contractual cash flows, using interest rates currently being offered for loans with similar terms to borrowers with
similar credit quality. The fair value of impaired loans is estimated based on discounted contractual cash flows
or underlying collateral values, where applicable.
91
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 20. FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)
Deposits: The carrying amount of demand deposits, savings deposits and variable-rate certificates of deposit
approximates fair value. The fair value of fixed-rate certificates of deposit is estimated based on discounted
contractual cash flows using interest rates currently being offered for certificates of similar maturities.
Repurchase Agreements and Other Borrowings: The carrying amount of variable rate borrowings and
securities sold under repurchase agreements approximates fair value. The fair value of fixed rate other
borrowings is estimated based on discounted contractual cash flows using the current incremental borrowing
rates for similar type borrowing arrangements.
Subordinated Deferrable Interest Debentures: The carrying amount of the Company’s variable rate trust
preferred securities approximates fair value.
Accrued Interest: The carrying amount of accrued interest approximates fair value.
Off-Balance-Sheet Instruments: The carrying amount of commitments to extend credit and standby letters of
credit approximates fair value. The carrying amount of the off-balance-sheet financial instruments is based on
fees charged to enter into such agreements.
Interest Rate Floors: The cash flow hedges are carried at their fair value
The carrying amount and estimated fair value of the Company's financial instruments, not shown elsewhere in
these financial statements, were as follows:
Financial assets:
Loans, net
Financial liabilities:
Deposits
Other borrowings
December 31, 2007
Fair
Value
Carrying
Amount
December 31, 2006
Fair
Value
Carrying
Amount
(Dollars in Thousands)
$
1,586,408 $
1,592,465 $ 1,418,088 $ 1,410,168
1,760,069 1,710,163 1,710,074
75,554
75,500
89,558
1,757,265
90,500
92
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 21. CONDENSED FINANCIAL INFORMATION OF AMERIS BANCORP
(PARENT COMPANY ONLY)
CONDENSED BALANCE SHEETS
DECEMBER 31, 2007 AND 2006
(Dollars in Thousands)
Assets
Cash and due from banks
Investment in subsidiaries
Other assets
Total assets
Liabilities
Other borrowings
Other liabilities
Subordinated deferrable interest debentures
Total liabilities
Stockholders' equity
2007
2006
$
2,809 $
233,548
4,758
6,812
220,439
6,414
$
241,115 $
233,665
$
5,000 $
2,597
42,269
5,000
7,664
42,269
49,866
54,933
191,249
178,732
Total liabilities and stockholders' equity
$
241,115 $
233,665
93
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 21. CONDENSED FINANCIAL INFORMATION OF AMERIS BANCORP
(PARENT COMPANY ONLY) (Continued)
CONDENSED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005
(Dollars in Thousands)
Income
Dividends from subsidiaries
Interest on deposits in other banks
Fee income from subsidiaries
Other income
Total income
Expense
Interest
Amortization and depreciation
Business restructuring expense
Other expense
Total expense
Income before income tax benefits and
equity in undistributed earnings of subsidiaries
Income tax benefits
Income before equity in undistributed earnings
of subsidiaries
2007
2006
2005
$
9,000 $
-
-
277
6,840 $
-
2,777
3,386
11,952
254
11,244
1,936
9,277 13,003
25,386
3,534
-
-
1,255
4,122
-
-
2,668
3,530
736
2,838
15,362
4,789
6,790
22,466
4,488
6,213
2,920
1,526
175
3,258
6,014
6,388
6,178
Equity in undistributed earnings of subsidiaries
9,139 15,740
7,550
Net income
$
15,153 $ 22,128 $
13,728
94
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 21. CONDENSED FINANCIAL INFORMATION OF AMERIS BANCORP
(PARENT COMPANY ONLY) (Continued)
CONDENSED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005
(Dollars in Thousands)
OPERATING ACTIVITIES
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
Stock-based compensation expense
Undistributed earnings of subsidiaries
Decrease in interest receivable
Increase (decrease) in interest payable
Increase in tax receivable
Provision for deferred taxes
(Increase) decrease in due from subsidiaries
Other operating activities
Total adjustments
2007
2006
2005
$
15,153 $
22,128 $
13,728
-
1,095
(9,139 )
-
106
(1,658 )
61
(40 )
(2,089 )
-
823
(15,740)
-
(106)
(177)
201
166
1,296
736
321
(7,550)
3
10
(1,190)
(180)
(90)
3,169
(11,664 )
(13,537)
(4,771)
Net cash provided by operating activities
3,489
8,591
8,957
INVESTING ACTIVITIES
Decrease in interest-bearing deposits in banks
Purchases of premises and equipment
Proceeds from sale of fixed assets
Contribution of capital to subsidiary bank
Net cash paid for acquisitions
Net cash used in investing activities
FINANCING ACTIVITIES
Repayment of other borrowings
Proceeds from subordinated debentures, net
Purchase of treasury shares
Dividends paid
Reduction in income taxes payable resulting from
vesting of restricted shares
Payment for fractional shares
Proceeds from exercise of stock options
Net cash used in financing activities
Net increase (decrease) in cash and due from banks
Cash and due from banks at beginning of year
-
-
-
-
-
-
(3)
3,884
-
(5,120 )
4,546
(587)
-
(325)
(13,073 )
-
(1,239)
(9,439)
-
-
(176 )
(7,510 )
-
1,547
(112)
(7,288)
(219)
5,000
(261)
(6,355)
18
-
176
40
-
408
53
(19)
945
(7,492 )
(5,405)
(856)
(4,003 )
1,947
(1,338)
6,812
4,865
6,203
Cash and due from banks at end of year
$
2,809 $
6,812 $
4,865
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for interest
$
3,428 $
4,224 $
3,520
95
GEORGIA
Albany
Don Monk, President
Directors
Glenn A. Kirbo, Chairman
Willie Adams, Jr., MD
Robert V. Barkley, Sr.
Russell E. Martin
Reid E. Mills
W. Thomas Mitcham, MD
Don Monk
R. Douglas Oliver
W. Paul Wallace, Jr.
Brunswick
Michael D. Hodges, President
Directors
Jimmy D. Veal, Chairman
C. Ray Acosta
Joseph C. Fendig
Michael D. Hodges
C. Vance Leavy
Johnny R. Myers
G. Tony Sammons
Thomas I. Sublett
J. Thomas Whelchel, Director Emeritus
Cairo
Robert S. VanLandingham, President
Directors
Jeffrey (Jet) F. Cox, Chairman
Kevin S. Cauley
Nancy C. Clark
Cuy Harrell, III
Johnny R. Myers
G. Ashley Register, MD
Robert S. VanLandingham
C O M M U N I T Y D I R E C T O R Y
Colquitt
Directors
Walter W. Hays, Chairman
Terry S. Pickle
Harris O. Pittman, III
Danny S. Shepard
Cordele
Robert L. Evans, President
Directors
Johnny W. Floyd, Chairman
Charles W. Clark
Robert L. Evans
William H. Griffin, III
David N. Rainwater
Donalsonville
Nancy S. Jernigan, City President
Directors
Newton E. King, Jr., Chairman
David Glenn Heard
Nancy S. Jernigan
C. Willard Mims
Harris O. Pittman, III
Dan E. Ponder, Jr.
Charles R. Burke, Sr., Director Emeritus
H. Wayne Carr, Director Emeritus
John B. Clarke, Sr., Director Emeritus
Joseph S. Hall, Director Emeritus
Jerry G. Mitchell, Director Emeritus
Douglas
David B. Batchelor, City President
Directors
Donnie H. Smith, Chairman
Lawton E. Bassett, III
David B. Batchelor
J. Anthony Deal
William (Bill) H. Elliott
Faye Hennesy
Alfred Lott, Jr.
Ronnie Spivey
Oscar Street
Moultrie
Ronnie F. Marchant, President
Directors
Brooks Sheldon, Chairman
Robert M. Brown, MD
C. Wayne Cooper
Thomas L. Estes, MD
Robert A. Faircloth
Plenn Hunnicutt
Daniel B. Jeter
Lynn Jones, Jr.
Ronnie F. Marchant
J. Mark Mobley, Jr.
Thomas W. Rowell
Eugene M. Vereen, Jr., President Emeritus
Ocilla
Directors
Loran (Sonny) A. Pate, Chairman
Lawton E. Bassett, III
Howard C. McMahan, MD
Gary H. Paulk
Wesley Paulk
C. Larry Young
Wycliffe Griffin, Director Emeritus
W. C. Sams, MD, Director Emeritus
St. Marys
R. Edwin Haworth, President
Directors
William H. Gross, Chairman
Michael L. Davis
R. Edwin Haworth
Joseph P. Helow
James R. McCollum
John W. McDill
Johnny R. Myers
Daniel W. Simpson
Thomas I. Stafford, Jr.
J. Grover Henderson, Director Emeritus
Thomasville
Ronald K. Bell, Sr., President
Directors
L. Maurice Chastain, Chairman
Dale E. Aldridge
Ronald K. Bell, Sr.
C O M M U N I T Y D I R E C T O R Y
SOUTH CAROLINA
Beaufort
John R. Perrill, City President
Directors
John R. Perrill, Chairman
Marc J. Bogan
Louis O. Dore
Martha B. Fender
D. Martin Goodman
Carl E. Lipscomb
Frances K. Nicholson
J. Frank Ward
Bruce K. Wyles, DDS
C. John Hipp, III, ex officio
Orange Park
Timothy M. O’Keefe, President
Directors
V. Wayne Williford, Chairman
Vasant P. Bhide
Benny L. Cleghorn
Phillip H. Cury
Johnny R. Myers
Timothy M. O’Keefe
Trenton
Michael E. McElroy, President
Directors
John H. Ferguson, Chairman
Michael Hayes
Michael E. McElroy
Johnny R. Myers
Samuel Sanders
Norman Scoggins
ALABAMA
Dothan
Harris O. Pittman, III, President
Directors
R. Dale Ezzell, Chairman
Robert Crowder
Gerald B. Crowley
Ronald E. Dean
John D. DeLoach
Harris O. Pittman, III
Thomasville (continued)
S. Mark Brewer, MD
Gene Hickey
Johnny R. Myers
Terrel M. Solana, Ed.D.
F. Keith Wortman
Tifton
Lawton E. Bassett, III, President
Directors
J. Raymond Fulp, Chairman
Lawton E. Bassett, III
John R. Brownlee
Austin L. Coarsey
Stewart D. Gilbert, MD
Sandra S. Kemp
John Alan Lindsey
Loran (Sonny) A. Pate
Donnie H. Smith
Clifford A. Walker, Sr., DMD
Valdosta
Tim S. Jones, President
Directors
Henry C. Wortman, Chairman
John A. Baker
William P. Cooper, Jr.
Tim S. Jones
Sue D. Mink
Charles E. Smith
Thomas Eddie York
Doyle Weltzbarker, Director Emeritus
FLORIDA
Crawfordville
David D. Buckridge, President
Directors
L.F. Young, Jr., Chairman
Wade G. Brown
David D. Buckridge
William E. Mills
Johnny R. Myers
W. Mark Payne
A M E R I S B A N C O R P
COMMON STOCK AND DIVIDEND INFORMATION
Ameris Bancorp Common Stock is listed on the NASDAQ Global Select Market under the symbol “ABCB.”
The following table sets forth the low and high sales prices for the common stock as quoted on NASDAQ during 2007.
CALENDAR PERIOD
SALES PRICE
2007
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Low
High
$23.11 $27.73
$21.76 $25.58
$17.72 $23.05
$13.73 $18.67
Quarterly dividends of $0.14 per share were declared for first, second, third and fourth quarters of 2007.
AVAIL ABILIT Y OF INFORMATION
Upon written request, Ameris Bancorp will provide, without charge, a copy of the Annual Report on Form 10-K, including the
financial statements and the financial statement schedules, required to be filed with the Securities and Exchange Commission for
the fiscal year 2007.
Please direct requests to:
Ameris Bancorp, Attention: Dennis J. Zember Jr., CPA, EVP & CFO, P.O. Box 3668, Moultrie, GA 31776-3668.
ANNUAL MEETING OF SHAREHOLDERS
The 2008 Annual Meeting of Shareholders of Ameris Bancorp will be held at 4:15 p.m. E.S.T.,
Tuesday, April 29, 2008, at Sunset Country Club, located at 2730 South Main Street, Moultrie, Georgia.
24 Second Avenue SE, Moultrie GA 31768
P.O. Box 3668, Moultrie, GA 31776
Phone: 229.890.1111
Fax: 229.890.2235
www.amerisbank.com
AMERIS BANK LOCATIONS
FUTURE AMERIS BANK LOCATIONS
GEORGIA
(cid:129) Albany
2627 Dawson Road 229.888.5600
(cid:129) Brunswick Main
3440 Cypress Mill Road 912.267.9500
(cid:129) Brunswick North Glynn
5340 New Jesup Highway 912.264.9699
(cid:129) Cairo Main
201 South Broad Street 229.377.1110
(cid:129) Cairo Highway 84
40 38th Blvd. NE 229.758.3461
(cid:129) Colquitt
162 East Crawford St. 229.758.3461
(cid:129) Cordele Main
510 South 2nd Street 229.273.7700
(cid:129) Cordele Gazebo
1302 16th Avenue East 229.273.7700
(cid:129) Doerun
137 West Broad Avenue 229.782.5358
(cid:129) Donalsonville
109 West Third Street 229.524.2112
(cid:129) Douglas Bowens Mill Road
901 Bowens Mill Road 912.384.2701
(cid:129) Douglas South Pearl Avenue
100 South Pearl Avenue 912.384.2701
(cid:129) Jekyll Island
18-B Beachview Drive 912.635.9014
(cid:129) Kingsland Highway 40
1603 Highway 40 East 912.729.8878
(cid:129) Kingsland South Lee Street
120 South Lee Street 912.729.5611
(cid:129) Leesburg
1607 U.S. Highway 19 South 229.434.4550
(cid:129) Moultrie Main
225 South Main Street 229.985.2222
(cid:129) Moultrie Quitman Highway
1707 First Avenue SE 229.985.1111
(cid:129) Moultrie Sunset
(cid:129) Orange Park Blanding
(cid:129) Hilton Head
485 Blanding Boulevard 904.213.0883
2 Park Lane, Suite 200 843.686.2903
(cid:129) Tallahassee Royal Oak
(cid:129) Lexington
1989 Capital Circle NE 850.656.2110
5175 Sunset Blvd., Suite 3 803.808.4220
(cid:129) Trenton
FUTURE LOCATIONS
(cid:129) Georgia
Tifton
Valdosta
(cid:129) Florida
Gainesville
Jacksonville – 2 locations
(cid:129) Alabama
Dothan
(cid:129) South Carolina
Beaufort
Bluffton
Charleston – 3 locations
Columbia – 3 locations
Greenville
Myrtle Beach – 2 locations
305 South Main Street 229.873.4444
530 East Wade Street 352.463.7171
(cid:129) Ocilla
300 South Irwin Avenue 229.468.9411
(cid:129) Quitman
1000 West Screven Street 229.263.7525
(cid:129) St. Marys
ALABAMA
(cid:129) Abbeville
204 Kirkland Street 334.585.2265
2509 Osborne Road 912.882.3400
(cid:129) Clayton
(cid:129) St. Simons Island
33 Eufaula Avenue 334.775.3211
3811 Frederica Road 912.634.1270
(cid:129) Dothan Main
(cid:129) Thomasville
3299 Ross Clark Circle NW 334.671.4000
2484 East Pinetree Blvd. 229.226.5755
(cid:129) Dothan Southside
(cid:129) Tifton
1817 South Oates Street 334.677.3063
735 West Second Street 229.382.7311
(cid:129) Eufaula
(cid:129) Troupeville
1140 South Eufaula Ave. 334.687.3260
19540 Valdosta Highway 229.247.5376
(cid:129) Headland
(cid:129) Valdosta
3140 Inner Perimeter Rd. 229.241.2851
208 Main Street 334.693.5411
FLORIDA
(cid:129) Crawfordville
2628 Crawfordville Highway 850.926.5211
(cid:129) Jacksonville Perimeter Park
8705 Perimeter Park Blvd. Suite 4 904.996.9490
(cid:129) Newberry
SOUTH CAROLINA
(cid:129) Beaufort
2348 Boundary Street 843.521.1968
(cid:129) Bluffton (Loan Production Office)
10 Pinkney Colony Road, Bldg. 300 - Suite 310
843.815.8550
(cid:129) Charleston
25365 West Newberry Road 352.472.2162
49 Archdale Street 843.534.2940
(cid:129) Orange Park Main
(cid:129) Columbia Main
1775 Eagle Harbor Parkway 904.264.8840
1301 Gervais Street, Suite 700 803.765.1600