BUILDING VALUE OVER TIME THROUGH CUSTOMER
RELATIONSHIPS IN LOCAL MARKETS.
Ameris Bancorp 2008 Annual Report
EVERY DAY IS AN
OPPORTUNITY TO
BETTER.get
Edwin W. Hortman, Jr.
PRESIDENT AND CHIEF EXECUTIVE OFFICER
Valued Shareholder:
The banking industry has experienced unprecedented events in the past year. Companies that have been financial icons have been forced out of
business or into mergers with others. This environment is one we have never before seen.
Although operating in the worst recession since the Great Depression, our Company did experience growth in 2008, and we are forecasting minimal
growth in 2009. Our efforts remain centered on continued strength during this crisis. We plan to grow our Company with sound, profitable
relationships. Successful campaigns in 2008 resulted in new deposit accounts and many opportunities to deliver exceptional customer experiences.
Reported earnings for 2008 were negative; however, we are proud of our core earnings stream which was sufficient to cover the majority of
historic highs in credit losses. We continue our conservative approach related to the loan loss reserve, accruing provisions that were 50% more than
net charge-offs in 2008. We make no excuses for our portfolio quality. Credit costs are exorbitant, and steps for immediate improvement are
underway. The right lending philosophy is in place, backed by strong credit administration that is focused on managing and minimizing risk.
Actions to restructure and improve our Company in recent years have proven to be very important and timely. These included workforce reductions,
closing unprofitable branches, consolidating operational functions across our entire footprint, a reduction in common dividends, and a formalized
leadership development initiative for over one-third of our management. The media has enhanced the spotlight on several companies regarding
executive compensation, especially in the face of these difficult times. Salaries of all executive officers remain frozen – no salary increases have been
administered or bonuses paid for the past two years.
Late in the year, we participated in the U.S. Treasury’s Capital Purchase Program to help stabilize the banking industry. Although the Company’s
financial strength and capital levels were deemed sufficient for most recessionary trends, management decided to accept the new capital in order to
provide additional strength to continue growing and lending in our local markets. Management was cautious and prudent about the length and
severity of the economic downturn and believed that the capital would provide a cushion if economic activity did not improve. With a conservative
approach, our Company is in a “do-business” mode, and Ameris Bank is acquiring customers in four states and 39 southeastern communities.
However, we will not increase risk on our balance sheet or burden our resources.
We remain committed to our community-banking model that creates a win-win-win for shareholders, customers and employees. We believe that
we have positioned the Company well, creating a solid foundation that will be a springboard into the future.
I am proud to serve as your Chief Executive Officer and of my association with the outstanding team of employees and directors who comprise
our Ameris Bancorp family. We take pride in knowing that our Company is strong and our customers’ deposits are safe, and we believe we will
survive this economic chaos to emerge as a stronger company. We will be better bankers knowing that we have learned valuable lessons that will be
remembered and lead us to a higher level of performance.
We are respectful of the trust shareholders place in Ameris Bancorp through your investments, a trust that will never be taken for granted.
We sincerely thank you.
Respectfully,
Edwin W. Hortman, Jr. / President and Chief Executive Officer
FINANCIAL HIGHLIGHTS 2008
Deposits
(In thousands of dollars)
2004
2005
2006
2007
2008
Liquidity Pressures Eased by
Growth in Local Market Deposits.
Ameris Bank’s focus on growing local market deposits was
particularly important in 2008 as liquidity pressures in the
banking industry reached record levels. Total deposits grew 15%
during 2008, approximately three times faster than growth in loans.
This support and vote of confidence from our local customers sets
Ameris Bank apart from the competition and underscores the
importance of relationships in our business model.
$986,224
$1,375,232
$1,710,163
$1,757,265
$2,013,525
Loan Growth, Despite a
Challenging Environment.
Ameris Bank is still in a “do-business” mode. Although the
economic environment yielded fewer quality deals than in the past,
we still grew our loan portfolio 5%. Every dollar that the Company
loaned in 2008 was invested in our local markets. We believe the
local market knowledge our bankers possess gives us an edge on
deal selection and risk management.
Improved Capital Strength.
Economic forecasting and risk management led the Company to
strengthen its capital ratios for several years. This added strength,
together with a reduced dividend, allowed the Company to avoid
a dilutive common offering during the harshest part of the recent
downturn and carried the Company through to its participation in
the U.S. Treasury’s Capital Purchase Program. The stronger levels
of common equity along with the new preferred stock investment
placed the Company’s capital strength at the 78th percentile
against our FDIC peer group.
Loans
(In thousands of dollars)
2004
2005
2006
2007
2008
$877,074
$1,186,601 $1,442,951
$1,614,048
$1,695,777
Shareholders’ Equity
(In thousands of dollars)
2004
2005
2006
2007
2008
$120,939
$148,703
$178,732
$191,249
$239,359
T OTA L A S S ET S - $ 2 . 4 1 B I L L I O N
This Annual Report contains statements that constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E
of the Securities Exchange Act of 1934, as amended. The words “believe”, “estimate”, “expect”, “intend”, “anticipate” and similar expressions and variations thereof identify certain of such
forward-looking statements, which speak only as of the dates which they were made. Ameris Bancorp undertakes no obligation to publicly update or revise any forward-looking statements,
whether as a result of new information, future events, or otherwise. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve
risks and uncertainties, and that actual results may differ materially from those indicated in the forward-looking statements as a result of various factors. Readers are cautioned not to place
undue reliance on these forward-looking statements.
_____________________________________________________________________________________________________
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(cid:31) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2008
or
(cid:31) 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.)
310 FIRST ST., 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: Common Stock, Par Value $1 Per Share
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes (cid:31) No ⌧
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:31) No ⌧
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 ⌧ No (cid:31)
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:31)
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 ⌧
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:31) No ⌧
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 $160.4 million.
1
As of February 10, 2008, the registrant had outstanding 13,573,440 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.
2
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
Page
5
18
23
23
24
24
PART II
Item 5.
Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
24
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
26
28
48
48
49
50
52
53
54
54
54
54
55
3
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.
4
PART I
As used in this Annual Report, the terms “we,” “us,” “our,” “Ameris” and the “Company” mean Ameris Bancorp and its
subsidiaries (unless the context indicates another meaning).
ITEM 1. BUSINESS
GENERAL OVERVIEW
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 was incorporated on December 18, 1980 as a Georgia corporation. The Company’s
executive office is located at 310 First St., S.E., Moultrie, Georgia 31768, its telephone number is (229) 890-1111 and its internet
address is http://www.amerisbank.com. We operate 50 domestic banking offices with no foreign activities. At December 31,
2008, we had approximately $2.41 billion in total assets, $1.70 billion in total loans, $2.01 billion in total deposits and
stockholders’ equity of $239.4 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, the Company 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,
beginning in April, 2009. 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.
5
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 substantial resources in front of customers when 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 larger competitors. 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 our focus on a long-term focus on a strategy of 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 generally enters into a commitment to sell these loans in
the secondary market. We make no foreign or energy-related loans.
At December 31, 2008, Ameris’ loan portfolio totaled $1.70 billion, representing approximately 70.5% of our total assets of $2.41
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 segment 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 balance
fluctuations. 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.
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.
6
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’s Senior Credit Officer, as is the maximum limit of new extensions of
credit that may be approved in each market. These 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 one of two regional credit officers. When
the request for approval exceeds the authority level of the regional credit officer, the approval of the Company’s Director of Credit
Administration and/or the Company’s loan committee are required. All new loans or modifications to existing loans in excess of
$250,000 are reviewed quarterly by the Company’s credit administration department with the lender responsible for the credit. In
addition, our ongoing loan review program subjects the portfolio 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.
7
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 management 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 “investment-grade” as determined by either Moody’s or Standard and
Poor’s. Investment securities where the Company has determined a certain level of credit risk are periodically reviewed to
determine the financial condition of the issuer and to support the Company’s decision to continue holding the security. 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. During the fourth quarter of 2008,
management realigned a small portion of the portfolio into securities with more favorable terms which were the result of market
conditions.
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 Board of
Directors each month. Once a year, the written investment policy is reviewed by the Company’s Board of Directors and updated
as needed.
The Company’s securities are held in safekeeping accounts at approved 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.
Generally, our Bank has not needed to offer rates significantly higher than our competition to attract new deposits or to retain
existing business. During 2008, interest costs on deposits did not fall commensurately with the indices that they normally track as
liquidity issues have affected banks of all sizes. In the future as liquidity concerns ease, increasing competition among banks in
our market areas may keep these costs higher than levels historically experienced.
Brokered time deposits are deposits obtained by utilizing an outside broker that is paid a fee. 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 increase or 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.
Use of Derivatives
The Company seeks to provide a stable net interest income despite changes in interest rates. In its review of interest rate risk, the
Company regularly considers the use of derivatives to protect interest income on loans or to create a structure in institutional
borrowings that limits the Company’s cost. At December 31, 2008, the Company had two interest rate swaps with notional
amounts totaling $70 million. These interest rate floors are classified as cash flow hedges against certain variable rate loans on the
Company’s balance sheet. The hedges are indexed to prime rate as are the variable rate loans and have a strike rate of 7.00%.
During 2008, the Company received approximately $1.3 million of interest payments which have been classified as interest
income on loans.
8
CORPORATE RESTRUCTURING AND BUSINESS COMBINATIONS
On November 21, 2008, the Company, pursuant to the Capital Purchase Plan (the “CPP”) established under the Economic
Stabilization Act of 2008 (“EESA”), issued and sold to the U.S. Department of the Treasury (the “Treasury”), for an aggregate
cash purchase price of $52 million, (i) 52,000 shares (the “Preferred Shares”) of the Company’s Fixed Rate Cumulative Perpetual
Preferred Stock, Series A, having a liquidation preference of $1,000 per share, and (ii) a ten-year warrant (the “Warrant”) to
purchase up to 679,443 shares of Common Stock, at an exercise price of $11.48 per share. Proceeds from the issuance of the
Preferred Shares and the Warrant have been allocated based on the relative market values of each. As a result of the Company’s
participation in the CPP, the Company is subject to the rules and regulations promulgated under the EESA. These rules and
regulations include certain limitations on compensation for senior executives, dividend payments and payments to senior
executives upon termination of employment, as well as certain obligations of the Company to increase its efforts to reduce the
number of foreclosures of primary residences.
The Company considered several factors when deciding whether to participate in the CPP. Although the Company’s common
equity and earnings stream was deemed sufficient to withstand certain severe recessionary trends, management was unsure how
deep the economic downturn would be or how severe its impact would be on the Company. Also, certain strategies concerning
growth and continued customer acquisition efforts might have been reduced had opportunities for additional capital strength, such
as the opportunity presented by the CPP, not materialized. The limitations on executive compensation imposed by the EESA are
substantially those that management had accepted as practical prior to the Company’s participation in the CPP. These limitations
include the reduction of cash incentives, limitations on excessive severance payments and the implementation of a system
allowing for the “claw back” of bonuses received while relying on financial performance later determined to be erroneous.
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 common stock valued at $22.2 million.
On November 30, 2004, Ameris acquired Citizens Bancshares, Inc., a $54.3 million 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 however, 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. Over the past few
years, our Bank has faced strong competition in attracting deposits at profitable levels. In addition, intense demand for loans has
not only impacted the interest rates and fees normally earned, but has also impacted underwriting criteria thought to be safe from
historical standards such as debt to income and loan to value. 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.
9
Competition for loans comes from other commercial banks, thrift institutions, savings banks, insurance companies, consumer
finance companies, credit unions and other institutional lenders. In order to remain competitive, our Bank has varied interest rates
and loan fees to some degree as well as increased the number and complexity of services provided. We have not varied or altered
our underwriting standards in response to competitor willingness to do so and in some markets have not been able to experience
the growth in loans that we would have preferred. 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.
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
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.”
institutions, while strengthening
regional and
local
the
EMPLOYEES
At December 31, 2008, the Company employed approximately 595 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 2008. 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, 2008, we had $1.7 billion in total loans outstanding of which $8.3 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 elsewhere 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.
11
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%. There were no amounts of retained earnings of our Bank available for payment of cash dividends under
applicable regulations without obtaining governmental approval as of December 31, 2008.
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.
Furthermore, under rules and regulations of the EESA to which the Company is subject, no dividends may be declared or paid on
the Common Stock unless the dividends due with respect to Preferred Shares have been paid in full. Moreover, the consent of the
Treasury will be required for any increase in the per share dividends on the Common Stock beyond the per share dividend
declared prior to October 14, 2008 ($0.05 per share per quarter) until the third anniversary of the date of the Treasury’s investment
in the Preferred Shares, unless prior to the third anniversary, the Preferred Shares are redeemed or the Treasury has transferred all
of its Preferred Shares to third parties.
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.
12
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, 2008, all of our
trust preferred securities were included in Tier 1 Capital. At December 31, 2008, Ameris’ total risk-based capital ratio and its Tier
1 risk-based capital ratio were 13.25% and 11.99%, 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, 2008 was 9.42% and at December 31, 2007 was 8.39%. The guidelines also
provide that bank holding companies experiencing internal growth or making acquisitions will be expected to maintain strong
capital positions substantially above
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.
the minimum supervisory
levels without significant
reliance on
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, 2008.
Neither Ameris nor its Bank has been advised by any federal banking agency of any specific minimum capital ratio requirement
applicable to it.
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.
13
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. The Company’s insurance assessment during 2008, 2007 and 2006 was $932,000, $201,000 and $239,000.
The Company is reasonably sure that 2009’s assessment will represent a significant increase over the assessment in 2008 due to
the increasing level of bank failures and the resulting claims on the BIF. 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.
14
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, 2008, 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 FDIC 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.
15
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.
16
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.
17
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 could decline significantly, and you could lose all or
part of your investment.
18
Recent negative developments in the financial services industry and U.S. and global credit markets may adversely impact the
Company’s operations and results.
Negative developments in the capital markets since the latter half of 2007 and the expectation of the general economic downturn
continuing through 2009 have resulted in uncertainty in the financial markets in general. Loan portfolio performances have
deteriorated at many institutions resulting from, among other factors, a weak economy and a decline in the value of the collateral
supporting their loans. The competition for the Company’s deposits has increased significantly due to liquidity concerns at many
of these same institutions. Stock prices of bank holding companies, like Ameris, have been negatively affected by the current
condition of the financial markets, as has the Company’s ability, if needed, to raise capital or borrow in the debt markets. As a
result, there is a potential for new federal or state laws and regulations regarding lending and funding practices and liquidity
standards, and financial institution regulatory agencies are expected to be very aggressive in responding to concerns and trends
identified in examinations. Negative developments in the financial services industry and the impact of new legislation in response
to those developments could adversely impact the Company’s operations, including the Company’s ability to originate or sell
loans, and adversely impact the Company’s financial performance.
The soundness of other financial institutions could adversely affect Ameris.
The Company’s ability to engage in routine funding transactions could be adversely affected by the actions and commercial
soundness of other financial institutions. Financial services institutions are interrelated as a result of trading, clearing,
counterparty, or other relationships. The Company has exposure to many different industries and counterparties, and it routinely
executes transactions with counterparties in the financial industry, including brokers and dealers, commercial banks, investment
banks, mutual and hedge funds, and other institutional clients. As a result, defaults by, or even rumors or questions about, one or
more financial services institutions, or the financial services industry generally, have led to market-wide liquidity problems and
could lead to losses or defaults by the Company or by other institutions. Many of these transactions expose the Company to credit
risk in the event of default of a counterparty or client. In addition, the Company’s credit risk may be exacerbated when the
collateral held by the Company cannot be realized upon or is liquidated at prices not sufficient to recover the full amount of the
financial instrument exposure due to the Company. There is no assurance that any such losses would not materially and adversely
affect the Company’s results of operations.
There can be no assurance that enacted legislation or any proposed federal programs will stabilize the U.S. financial system and
such legislation and programs may adversely affect Ameris.
On October 3, 2008, President George W. Bush signed into law the EESA. The legislation was the result of a proposal by
Treasury Secretary Henry Paulson to the U.S. Congress in response to the financial crises affecting the banking system and
financial markets and threats to investment banks and other financial institutions. In addition, on October 14, 2008, the Treasury
established the CPP, pursuant to which the Treasury would make senior preferred stock investments in participating financial
institutions.
The Company has elected to participate in the CPP. There can be no assurance, however, as to the actual impact that the EESA
and its implementing regulations or any other governmental program will have on the financial markets or the Company’s
participation in the CPP. The failure of the EESA or the U.S. government to stabilize the financial markets and a continuation or
worsening of current financial market conditions could materially and adversely affect the Company’s business, financial
condition, results of operations and access to credit or the trading price of the Common Stock.
Contemplated and proposed legislation, state and federal programs, and increased government control or influence may adversely
affect the Company by increasing the uncertainty in the Company’s lending operations and expose the Company to increased
losses, including legislation that would allow bankruptcy courts to permit modifications to mortgage loans on a debtor’s primary
residence, moratoriums on a mortgagor’s right to foreclose on property, and requirements that fees be paid to register other real
estate owned property. Statutes and regulations may be altered that may potentially increase the Company’s costs to service and
underwrite mortgage loans. Additionally, federal intervention and operation of formerly private institutions may adversely affect
the Company’s rights under contracts with such institutions and the way in which the Company conducts business in certain
markets.
The impact on the Company of recently enacted legislation, in particular the EESA and its implementing regulations, cannot be
predicted at this time.
The programs established or to be established under the EESA and the Troubled Asset Relief Program may have adverse effects
upon the Company. Because the Company participates in the CPP, the Company is subject to increased regulation, and the
Company may face additional regulations or changes to regulations to which the Company is subject as a result of its
participation. Compliance with such regulation may increase the Company’s costs and limit the Company’s ability to pursue
business opportunities. For example, participation in the CPP limits (without the consent of the Treasury) the Company’s ability to
19
increase its dividend or to repurchase the Common Stock for so long as any securities issued under the CPP remain outstanding.
Also, the cumulative dividend payable under the Preferred Shares that the Company issued to the Treasury pursuant to the CPP
increases from 5% to 9% after five (5) years. Additionally, the Company may not deduct interest paid on the Preferred Shares for
income tax purposes. Participating in the CPP also subjects the Company to additional executive compensation restrictions. These
restrictions are discussed in greater detail in the Company’s definitive Proxy Statement for the Annual Meeting of Shareholders to
be held in 2009 (the “Proxy Statement”), portions of which are incorporated by reference into Part III, Item 11 “Executive
Compensation” of this Annual Report.
Treasury “stress tests” and other actions may adversely affect bank operations and the value of the Common Stock.
On February 10, 2009, the Secretary of the Treasury outlined a plan to restore stability to the financial system. This announcement
included reference to a plan by the Treasury to conduct “stress tests” of banks which received funds under the CPP and similar
Treasury programs. The methods and procedures to be used by the Treasury in conducting its “stress tests,” how these methods
and procedures will be applied, and the significance or consequence of such tests presently are not known. Any of these or their
consequences could adversely affect the Company, its bank operations and the value of the Common Stock, among other things.
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, 2008,
approximately 83.9% 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
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 2008, 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.
the value of collateral and ability
to sell
impair
20
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 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 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 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.
21
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.
22
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.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
Ameris’ corporate headquarters is located at 310 First St. SE, Moultrie, Georgia 31768. The Company occupies approximately
6,300 square feet at this location plus an additional 37,248 square feet used for 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 50 office or branch locations, of which 37 are owned and 13 are subject to either building or ground leases. At
December 31, 2008, there were no significant encumbrances on the offices, equipment or other operational facilities owned by
Ameris and the Bank.
23
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 December 12, 2008, the Supreme Court of Alabama reversed and dismissed a judgment against Ameris Bank (f/k/a Southland
Bank) entered previously on June 15, 2006 in the amount of $7.1 million. It was the Supreme Court’s conclusion that Ameris
Bank and other defendants in the case were entitled to a judgment as a matter of law and as such, the case should not have been
submitted to the jury. It is the opinion of management and our legal counsel that the matter is closed.
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 2008.
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
“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 sales prices for the Common Stock as quoted on NASDAQ during 2008 and 2007; and (ii)
the amount of quarterly dividends declared on the Common Stock during the periods indicated. The high and low sales prices
reflect inter-dealer prices, without retail mark-up, mark-down or commission, and may not necessarily represent actual
transactions.
Quarter Ended 2008
High
Low
Close
Dividend
March 31
June 30
September 30
December 31
Quarter Ended 2007
March 31
June 30
September 30
December 31
Dividends
$
$
$
16.55
16.48
15.07
14.21
12.60
8.70
7.82
7.19
$
$
16.06
8.70
14.85
11.85
.14
.14
.05
.05
High
Low
Close
Dividend
$
28.48
25.74
23.22
18.81
23.38
21.89
17.85
13.83
$
$
24.48
22.47
18.08
16.85
.14
.14
.14
.14
Restrictions on the Company’s payment of dividends in respect of the Common Stock are discussed in Part 1, Item 1 “Business”
of this Annual Report.
Holders of Common Stock
As of February 11, 2009, there were approximately 2,380 holders of record of the 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.
24
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, 2003, and ending December 31, 2008. This line graph assumes an investment of $100 on
December 31, 2003 and reinvestment of dividends and other distributions to shareholders.
Ameris Bancorp (ABCB)
Comparison of 5 Year Cumulative Total Return
(Assumes Initial Investment of $100)
$250
$200
$150
$100
$50
$0
12/31/2003
12/31/2004
12/31/2005
12/31/2006
12/31/2007
12/31/2008
Ameris Bancorp
NASDAQ Stock Market (US Companies)
NASDAQ Banks
Source: Zack’s Investment Research
25
Pursuant to the regulations of the Commission, this performance graph is not “soliciting material,” is not deemed filed with the
Commission and is not to be incorporated by reference in any filing of the Company under the Securities Act or the Exchange Act
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.
Year Ended December 31,
2008
2007
2006
2005
2004
(Dollars in Thousands, Except Per Share Data)
Selected Balance Sheet Data:
Total assets
Total loans, gross
Total deposits
$ 2,407,090 $
2,112,063 $
2,047,542 $ 1,697,209 $
1,267,993
1,695,777 1,614,048 1,442,951 1,186,601
877,074
2,013,525 1,757,265 1,710,163 1,375,232
986,224
Investment Securities Available for Sale
367,894
289,382
283,192
235,145
213,948
Stockholders’ equity
239,359
191,249
178,732
148,703
120,939
Selected Income Statement Data:
Interest income
Interest expense
Net interest income
$
129,008 $
146,077 $
124,111 $
79,539 $
56,343
70,999
54,150
26,934
64,365
19,375
72,665
75,078
69,961
52,605
44,990
Provision for loan losses
35,030
11,321
2,837
1,651
Other income
Other expenses
19,149
17,592
19,262
13,530
62,753
58,896
53,129
43,607
1,786
13,023
36,505
Income/(loss) before income taxes
(5,969)
22,453
33,257
20,877
19,722
Income tax expense/(benefit)
(2,053)
7,300
11,129
7,149
6,621
Net income/(loss)
$
(3,916) $
15,153 $
22,128 $
13,728 $
13,101
Preferred stock dividends
Net income/(loss) available
328
-
-
-
-
to common shareholders
$
(4,244) $
15,153 $
22,128 $
13,728 $
13,101
Per Share Data:
Net income - basic
Net income – diluted
Common Book value
Tangible common book value
Common Dividends
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
7.90
0.47
$
(0.31) $
(0.31)
14.06
9.74
0.38
26
Year Ended December 31,
2008
2007
2006
2005
2004
(Dollars in Thousands, Except Per Share Data)
Profitability Ratios:
Net income to average total assets
(0.19) %
0.74 %
1.22 %
1.04 %
1.12%
Net income to average
common stockholders’ equity
Net interest margin
Efficiency ratio
Loan Quality Ratios:
(2.22)
3.65
68.35
8.13
4.02
63.55
13.9
4.25
59.55
10.87
4.31
65.94
11.19
4.15
62.93
Net charge-offs to total loans
1.36 %
0.53 %
0.09 %
0.03 %
0.22%
Reserve for loan losses to total loans
and OREO
Nonperforming assets to total loans
and OREO
Reserve for loan losses to
nonperforming loans
Reserve for loan losses to total
2.33
4.13
1.71
1.60
1.72
0.61
1.88
0.90
1.77
0.70
60.62
145.72
361.54
232.57
274.7
nonperforming assets
56.52
106.47
281.93
207.68
253.32
Liquidity Ratios:
Loans to total deposits
Average loans (TE) to average
earnings assets (TE)
Noninterest-bearing deposits to
total deposits
Capital Adequacy Ratios:
Common stockholders’ equity to
84.22 %
91.85 %
84.38 %
86.28 %
88.93%
82.32
10.36
81.72
9.36
79.39
12.96
77.32
80.91
14.6
15.22
total assets
7.91 %
9.06 %
8.73 %
8.76 %
Common stock dividend payout ratio
NM
50.00
32.94
48.7
9.54%
41.96
27
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OVERVIEW
The Company’sAmeris Bancorp’s performance in 2008 was impacted by a number of significant items. Credit costs (net charge-
offs and provisions for loan losses) were at record high levels for the Bank in 2008 as residential real estate values continued to
fall. Our Florida markets were especially vulnerable to declining values and activity and accounted for more than 50% of 2008’s
provision for loan losses.
In addition to a general slow-down in real estate activity, our industry dealt with tighter liquidity than had been seen in prior
years. The lower levels of available liquidity in the marketplace led to unusually high borrowing costs that kept interest expense
at elevated levels through most of 2008.
Balance sheet growth was limited in 2008 compared to recent years. The combination of fewer loan opportunities and the
Company’s efforts to reduce its exposure in certain loan concentrations caused the growth in loans to be held to approximately
5%. The majority of the Company’s deposit growth was limited to time deposits although some markets enjoyed success selling a
high yield checking account. The Company has focused a significant amount of resources towards improving its deposit mix and
funding a significant majority of its future growth with low-cost or transaction based deposit accounts.
The importance of strong capital and liquidity was highlighted in the last half of the year as a growing number of larger regional
banks and investment banks suffered and were in some cases, merged with other institutions. Ameris had managed strong
liquidity and capital levels proactively for several years before the crisis began. In the fourth quarter of 2008, the Company took
steps to further bolster its capital and liquidity positions. On the capital front, the Company elected to participate in the CPP and
issued $52 million of preferred shares to the Treasury. This transaction with the Treasury is discussed in detail elsewhere in this
Annual Report. For liquidity, the Company adopted an aggressive stance on local deposits and had several fourth quarter
campaigns that raised approximately $200 million in incremental, local market deposits.
For the year ended December 31, 2008, Ameris reported a net loss available to common stockholders of $4.2 million or $0.31 per
diluted share, compared to net income of $15.2 million, or $1.11 per diluted share in 2007.
Net interest income decreased during the year ended December 31, 2008 by 3.2% to $72.7 million compared to $75.1 million for
year ended December 31, 2007. The Company’s net interest margin decreased from 4.02% in 2007 to 3.65% in 2008. The
decline was primarily related to borrowing costs that remained somewhat elevated as asset yields fell commensurately with
national indices that reached historic lows.
Non-interest income grew during the year 8.5% to $19.1 million from $17.6 million during 2007. The majority of this increase
related to increases in service charges on deposit accounts which increased to $13.9 million in 2008 compared to $12.5 million in
2007. This increase in service charges related to increases in the number of account holders subject to charges as well as minor
increases in various fee schedules.
Total operating expenses grew 6.6% in 2008 to $62.8 million, compared to $58.9 million in 2007. Salaries and benefits during
2008 were $31.7 million, an increase of 6.2% as compared to $29.8 million in 2007. These increases are mostly the result of
expansion efforts in larger markets where the Company opened nine offices during 2008. Occupancy and equipment expense
increased during 2008 to $8.1 million, an increase of 7.0% as compared to 2007. This increase also relates to expansion efforts in
larger markets, the costs of which were offset to some degree by savings from branch closings during 2008.
Provisions for loan losses in 2008 were significantly higher than levels incurred in 2007 as the economic conditions of our local
economies were affected by slowing real estate activity and lower real estate values. For the year ended December 31, 2008, the
Company recorded $35.0 million in provision for loan losses compared to $11.3 million in 2007, an increase of $23.7
million. Net charge-offs were also higher in 2008 at $23.0 million or 1.36% of average loans, compared to $8.5 million or 0.53%
of average loans in 2007.
28
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.
29
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 two credit relationships that exceed our in-house credit limit of $5.0 million. Total exposure to
these two credits is $14.8 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 areas. 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 $10.9 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.
30
Long-Lived Assets, Including Intangibles
In our financial statements, we have recorded $58.4 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.
During 2008, the Company determined there was the potential for impairment due to significant declines in the Company’s
market value. As a result, the Company engaged an independent party who reviewed business strategies as well as current and
forecasted levels of earnings and capital. The study indicated that the Company’s goodwill was not impaired and as a result, no
adjustments were made to the carrying value of goodwill.
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 goodwill
was expensed in 2008, 2007 or 2006.
NET INCOME/(LOSS) AND EARNINGS PER SHARE
In 2008, we reported a net loss available to common stockholders of $4.2 million, or $0.31 per diluted share, compared to net
income of $15.2 million, or $1.11 per diluted share in 2007 and $22.1 million, or $1.68 per diluted share, in 2006. Our return on
average assets was (0.19%), 0.74% and 1.22% in 2008, 2007 and 2006, respectively. Our return on average stockholders’ equity
was (2.22%), 8.14% and 13.90% in 2008, 2007 and 2006, respectively.
EARNING ASSETS AND LIABILITIES
Average earning assets in 2008 increased 7.8% to $2.03 billion as compared to 2007. The earning asset and interest-bearing
liability mix is constantly 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.
31
The following tables set forth the amount of 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,
2008
Interest
Average
Income/
Balance Expense
Average
Yield/
Rate Paid
Average
Balance
2007
Interest
Income/
Expense
Average
Yield/
Rate Paid
Average
Balance
2006
Interest
Income/
Expense
Average
Yield/
Rate Paid
(Dollars in Thousands)
8.24%
4.69
5.32
7.54
2.18%
4.42
4.32
4.66
8.20
3.76
3.78%
4.25%
ASSETS
Interest-earning assets:
Loans
Investment securities
Short-term assets
$ 1,667,483 $114,186
309,109 15,517
507
49,082
6.85 % $ 1,536,243 $ 129,376
14,785
298,036
5.02
2,349
45,634
1.03
8.42% $ 1,308,405 $107,809
12,550
267,343
4.96
3,843
72,183
5.15
Total earning assets 2,025,674 130,210
6.43
1,879,913
146,510
7.79
1,647,931
124,202
Non-earning assets
175,362
175,015
165,839
Total assets
$ 2,201,036
$ 2,054,928
$ 1,813,770
LIABILITIES
AND STOCKHOLDERS’ EQUITY
$
Interest-bearing liabilities:
Savings and interest-bearing
demand deposits
Time deposits
Other borrowings
FHLB advances
Trust preferred securities
Total interest-bearing
liabilities
656,876 $ 11,611
968,124 40,331
497
22,294
1,500
102,641
2,404
42,269
1.77 % $
4.17
2.22
1.46
5.69
634,287 $ 18,014
44,367
874,609
16,425
722
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
1,792,204 56,343
3.14
1,660,160
70,999
4.28
1,439,742
54,150
Demand deposits
Other liabilities
Stockholders’ equity
198,422
13,566
196,844
Total liabilities and
stockholders’ equity $ 2,201,036
192,575
15,880
186,313
194,150
20,684
159,194
$ 2,054,928
$ 1,813,770
Interest rate spread
Net interest income
Net interest margin
3.29 %
$ 73,867
$ 75,511
3.65 %
3.52%
4.02%
$ 70,052
32
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.
2008 compared with 2007:
For the year ended December 31, 2008, interest income was $129.0 million, a decrease of $17.1 million, or 11.7%, compared to
the same period in 2007. Average earning assets increased $145.8 million, or 7.8%, to $2.03 billion for the year ended December
31, 2008 compared to $1.88 billion as of December 31, 2007. Yield on average earning assets on a taxable equivalent basis for
2007 decreased to 6.43% compared to 7.79% for the year ended December 31, 2007. The change in yields on earning assets
during 2008 resulted from a lower interest rate environment in 2008 than in 2007 with benchmark interest rates falling to historic
lows as well as increased levels of non-accrual loans where foregone interest income was approximately $4.6 million.
Interest expense on deposits and other borrowings for the year ended December 31, 2008 was $56.3 million, compared to $71.0
million for the year ended December 31, 2007. During 2008, average funding increased $137.9 million or 7.4%. The majority of
this growth in average total funding was in time deposits which increased 10.7%. Average non-deposit borrowings increased
10.5% during 2008 as the Company used these lines more aggressively to counter the higher costs of deposits.
During 2008, yields on average deposit borrowings fell to 2.85% from 3.67% in 2007. Although the fall in deposit yields was
significant, its level relative to falling interest income was not sufficient to preserve normal levels of net interest margin. As the
year came to a close, yields on deposit borrowings began to react positively to government intervention aimed at increasing
liquidity levels. Non-deposit borrowings decreased substantially from 5.70% in 2007 to 2.63% in 2008 as the majority of these
deposits are tied to national rate indices that fell during 2008 to historically low levels.
On a taxable-equivalent basis, net interest income for 2008 was $74.0 million compared to $75.5 million in 2007, a decrease of
2.0%. The Company’s net interest margin, on a tax equivalent basis, decreased to 3.65% for the year ended December 31, 2008
compared to 4.02% in the prior year.
2007 compared with 2006:
Interest income for the year ended December 31, 2007 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. The 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.
33
Year Ended December 31,
2008 vs. 2007
2007 vs. 2006
Increase
(Decrease)
Changes Due To
Rate
Volume
Increase
(Decrease)
Changes Due To
Rate
Volume
(Dollars in Thousands)
$
$
(15,190) $ (26,284)
185
(2,019)
(28,118)
732
(1,842)
(16,300)
$
11,094
547
177
11,818
$
$
21,567
2,235
(1,494)
22,308
18,798
1,434
(1,416)
18,816
2,769
801
(78)
3,492
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
(6,403)
(4,035)
(225)
(3,232)
(760)
(14,656)
(7,045)
(8,776)
(483)
(3,747)
(760)
(20,811)
642
4,741
258
515
-
6,156
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
Net interest income
$ (1,644) $
(7,307)
$ 5,662
$
5,460
$ 11,590
$
(6,130)
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 during 2008 resulted in a provision for loan losses of $35.0 million, compared to $11.3 million for
2007 and $2.8 million in 2006. Net charge-offs in 2008 were also elevated from historical levels at 1.36% of average loans
compared to 0.53% in 2007 and 0.10% in 2006.
At December 31, 2008, non-performing assets amounted to $70.2 million or 4.13% of total loans and OREO compared to 1.58%
at December 31, 2007. Other real estate was approximately $4.7 million as of December 31, 2008, reflecting a 32.2% decline
from the year ago period. The Company’s reserve for loan losses at December 31, 2008 was $39.7 million or 2.34% of total
loans, compared to $27.6 million and 1.71% and 1.72% at December 31, 2007 and 2006, respectively
Non-interest income
Following is a comparison of non-interest income for 2008, 2007 and 2006.
2008
2006
Years Ended December 31,
2007
(Dollars in Thousands)
12,455 $
3,093
(297)
2,341
17,592 $
13,916 $
3,180
316
1,737
19,149 $
11,538
2,208
(308)
5,824
19,262
Service charges on deposit accounts
Mortgage banking activities
Gain (loss) on sale of securities
Other income
$
$
34
2008 compared with 2007:
Total non-interest income in 2008 was $19.1 million compared to $17.6 million in 2007, an increase of 8.9%. The majority of the
increase in non-interest income related to growth in service charges on deposit accounts. For the year ended December 31, 2008,
service charges increased to $13.9 million, an increase of 11.7% as compared to 2007. During 2008, the Company significantly
increased the numbers of deposit accounts subject to service charges and made minor changes to certain fees schedules. Mortgage
income increased only slightly to $3.2 million in 2008 as compared to $3.1 million in 2007. Mortgage activity in 2008 was
impacted measurably by the declining economic conditions that impacted residential real estate.
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.
Non-interest expense
Following is a comparison of non-interest expense for 2008, 2007 and 2006.
Salaries and employee benefits
Equipment and occupancy
Amortization of intangible assets
Data processing and communication costs
Business restructuring
Advertising and public relations
Postage & Delivery
Printing & Supplies
Legal Fees
Other Professional Fees
Directors fees
Other expense
2008
Years Ended December 31,
2007
(Dollars in Thousands)
2006
$
$
31,700 $
8,069
1,170
6,457
-
3,091
1,420
1,270
537
1,306
743
6,990
62,753 $
29,844 $
7,540
1,297
6,496
-
2,536
1,336
1,060
527
1,307
787
6,166
58,896 $
27,043
6,836
1,107
7,273
1,452
2,040
1,240
895
376
1,541
793
2,533
53,129
35
2008 compared with 2007:
For the year ended December 31, 2008, total operating expenses were $62.8 million compared to $59.0 million in 2007, an
increase of 6.4%. Salaries and benefits increased 6.2% in 2008 to $31.7 million compared to $29.8 million in 2007. Continued
expansion in certain metro markets during 2008 led to additional staff and personnel costs. Offsetting some of this expense was
the Company’s previous announcements to close four branches in smaller markets. Equipment and occupancy expenses increased
to $8.1 million in 2008 as a result of the expansion efforts. This level of equipment and occupancy expenses was 8.0% higher
than the $7.5 million recorded during 2007. Data processing and communications costs remained unchanged at $6.5 million
during 2008 and 2007. Advertising and marketing expenses increased substantially as the Company worked to significantly
increase deposit levels. During 2008, total advertising and marketing costs were $3.1 million, compared to $2.5 million in 2007.
The Company’s advertising efforts were successful in significantly increasing deposit levels and liquidity ratios during 2008.
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 $500,000 to $2.5 million as the Company expanded its marketing efforts 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 and communications costs decreased 10.7% during 2007. In 2007, the Company re-
negotiated certain portions of its communications contracts with its provider that allowed for improved network capacity at more
attractive levels.
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. For the year ended December 31, 2008, the Company reported an income tax benefit of $2.05 million.
This compares to income tax expenses of $7.30 million and $11.13 million for the years ended 2007 and 2006, respectively. The
Company’s effective tax rate was 34%, 33% and 33% for the years ended December 31, 2008, 2007 and 2006.
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. As of December 31, 2008, approximately 83.9% of our loan portfolio was
secured by real estate. The amount of loans outstanding at the indicated dates is shown in the following table according to type of
loans.
December 31,
2008
2007
2006
2005
2004
(Dollars in Thousands)
Commercial, financial & agricultural
$
Real estate – construction & development
Real estate – commercial & farmland
Real estate - residential
Consumer installment loans
Other
Less reserve for possible loan losses
200,421 $
162,887
1,070,483
189,203
64,707
8,076
1,695,777
39,652
205,141 $
174,576
996,517
157,334
69,099
11,381
171,904 $
161,050 $
157,260
883,583
147,789
73,218
9,197
73,639
719,367
142,609
79,239
10,697
1,614,048
27,640
1,442,951
1,186,601
24,863
22,294
Loans, net
$
1,656,125 $
1,586,408 $
1,418,088 $
1,164,307 $
128,303
39,516
504,335
126,985
66,779
11,156
877,074
15,493
861,581
36
Total loans as of December 31, 2008 are shown in the following table according to their contractual maturity.
Contractual Maturity in:
One Year or
Less
Over One Year
through Five
Years
Over Five
Years
(Dollars in Thousands)
Total
Commercial, financial & agricultural
$
Real estate – construction & development
Real estate – commercial & farmland
Real estate - residential
Consumer installment loans
Other
100,032 $
114,059
426,049
39,277
15,999
3,328
74,463 $
26,014
515,295
80,491
43,103
3,538
25,926 $
22,814
129,139
69,435
5,605
1,210
200,421
162,887
1,070,483
189,203
64,707
8,076
698,744
742,904
254,129
1,695,777
The following table summarizes loans at December 31, 2008 with maturity 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)
$
$
561,990
435,043
997,033
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. 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. The calculation of the allowance for loan losses, including underlying data and assumptions, is reviewed
regularly by the Company’s Chief Financial Officer as well as the Director of Internal Audit.
During periodic reviews of the Company’s methodology, the Company determined that additional reserves were potentially
necessary to compensate for an increasingly negative economic outlook that prompted a few loan relationships to move to non-
performing status very quickly. The Company established an unallocated, economic related reserve in the amount of $5 million
that represents only that portion of the allowance for loan losses not allocated to specific loans. While the Company is confident
in the reserve methodology and its application relative to loan grades assigned to individual credits, management believed it was
appropriate and prudent to establish the unallocated, economic oriented reserve component through a charge to the provision for
loan losses.
37
R/E Commercial &
Farmland
R/E Construction &
Development
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.
2008
2007
At December 31,
2006
(Dollars in Thousands)
2005
2004
% of
Total
Loans
Amount
Amount
% of
Total
Loans
Amount
% of
Total
Loans
% of
Total
Loans
Amount
Amount
% of
Total
Loans
Commercial, financial,
and agricultural
$
4,675
11 % $
3,830
13 % $ 3,792
12 % $ 4,215
14 % $ 3,030
15 %
20,770
63
17,199
62
14,307
61
12,713
61
8,314
58
4,907
10
3,487
11
3,293
11
1,270
6
553
Total Commercial
30,352
84
24,516
86
21,392
84
18,198
81
11,897
R/E Residential
Consumer Installment
Unallocated
3,285
11
1,015
5,000
5
-
2,078
1,046
-
10
4
-
2,325
1,146
-
10
2,585
12
1,986
6
1,511
-
-
7
-
1,610
-
5
78
14
8
-
$ 39,652
100 % $ 27,640
100 % $ 24,863
100 % $ 22,294
100 % $ 15,493
100 %
The following table presents an analysis of our loan loss experience for the periods indicated:
2008
2007
2006
2005
2004
(Dollars in Thousands)
December 31,
Average amount of loans outstanding
$
1,667,483
$
1,536,243 $ 1,308,174
$
952,647
$
855,205
Balance of reserve for possible loan
losses at beginning of period
$
27,640
$
24,863 $
22,294
$
15,493
$
14,963
Charge-offs:
Commercial real estate, financial and agricultural
(18,711)
Residential real estate
Consumer Installment
Recoveries:
Commercial real estate, financial and agricultural
Residential real estate
Consumer Installment
Net charge-offs
(4,514)
(1,115)
733
199
390
(8,735)
(623)
(1,057)
(1,726 )
(1,444 )
(967 )
1,339
1,595
120
412
745
505
(649 )
(543 )
(963 )
601
644
532
(1,639)
(382)
(1,555)
464
483
718
(23,018)
(8,544)
(1,292 )
(378 )
(1,911)
Additions to reserve charged to operating expenses
35,030
11,321
2,837
Allowance for loan losses of acquired subsidiary
-
-
1,024
1,651
5,528
1,786
655
Balance of reserve for possible
loan losses at end of period
$
39,652
$
27,640 $
24,863
$
22,294
$
15,493
Ratio of net loan charge-offs to average loans
1.36%
0.53 %
0.10%
0.04 %
0.22%
38
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.
2008
2007
December 31,
2006
(Dollars in Thousands)
2005
2004
Loans accounted for on a non-accrual basis
$ 65,414 $ 18,468 $ 6,877 $ 9,586 $ 5,640
Installment loans and term loans contractually past due ninety days
or more as to interest or principal payments and still accruing
2
4
-
-
44
During 2008, loans tied to the housing industry, (Acquisition, Development and Construction loans) came under severe strain as
housing prices fell sharply and sales activity slowed. Certain markets, where housing prices had risen sharply in recent years,
suffered greater corrections than others. The Company’s exposure to certain housing related loans primarily in northern Florida
resulted in deteriorating credit quality and caused most of the increase in non-accrual loans seen above.
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
including the FHLB and FRB, which could provide funds 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.
39
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 66.5% 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, 15.5% of
the investment portfolio has a contractual maturity within one year or less although a higher percentage has the possibility of a
call.
The following table sets forth the distribution of the repricing of our earning assets and interest-bearing liabilities as of December
31, 2008, 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.
40
At December 31, 2008
Maturing or Repricing Within
Zero to
Three
Months
Three
Months to
One Year
One to
Five
Years
Over
Five
Years
Total
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
$
$
$
(Dollars in Thousands)
- $
- $
144,383 $
411
965,319
57,116
160,390
63,105
499,843
249,050
70,225
- $
144,383
369,682
1,695,777
1,110,113
217,506
562,948
319,275
2,209,842
616,724
52,991
304,597
32,416
65,000
42,269
-
-
725,816
-
2,000
-
-
-
104,859
-
-
-
-
-
6
-
-
-
616,724
52,991
1,135,278
32,416
67,000
42,269
1,113,997
727,816
104,859
6
1,946,678
(3,884)
$ (510,310)
$ 458,089 $ 319,269 $
263,164
(3,884)
$ (514,194)
$
(56,105) $ 263,164
Interest rate sensitivity gap ratio
0.99
0.30
5.37
NM
Cumulative interest rate sensitivity gap ratio
0.99
0.72
1.02
1.13
INVESTMENT PORTFOLIO
Following is a summary of the carrying value of investment securities available for sale as of the end of each reported period:
December 31,
2008
2007
2006
(Dollars in Thousands)
U. S. Government sponsored agencies
State and municipal securities
Corporate debt securities
Mortgage-backed securities
$
132,646 $
18,302
11,618
205,328
18,320
9,498
191,641
18,934
9,829
151,818
69,923 $
101,863
$
367,894 $ 289,382 $
282,444
41
The amounts of securities available for sale in each category as of December 31, 2008 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)
$
56,037
46,673
29,936
-
1.42% $
3.61
4.85
-
1,268
9,701
4,217
3,116
$
132,646
2.94% $
18,302
3.75%
3.70
3.83
3.96
3.78%
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%.
The investment portfolio consists of securities, including equity securities with readily determinable fair values, which 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.
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.
The Company’s methodology for determining whether other-than-temporary impairment losses exist include management
considering (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.
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.
42
DEPOSITS
Average amount of various deposit classes and the average rates paid thereon are presented below:
Year Ended December 31,
2008
2007
Amount
Rate
Amount
Rate
(Dollars in Thousands)
Noninterest-bearing demand
NOW
Money Market
Savings
Time
Total deposits
$
198,422
278,217
324,311
54,348
968,124
$ 1,823,422
$ 192,575
250,364
324,236
0.00 %
1.05
2.48
0.90
4.16
2.84 % $ 1,701,472
59,687
874,610
0.00%
1.33
4.35
1.04
5.07
3.67%
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.
The amounts of time certificates of deposit issued in amounts of $100,000 or more as of December 31, 2008, 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) greater than one year.
Three months or less
Three months to one year
One year or greater
Total
(Dollars in
Thousands)
$
$
207,046
394,173
76,536
677,755
43
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, 2008 and 2007.
Commitments to extend credit
Financial standby letters of credit
The following table summarizes short-term borrowings for the periods indicated:
December 31,
2008
2007
(Dollars in Thousands)
$ 159,114
6,358
$ 165,472
$ 177,410
7,426
$ 184,836
2008
Average
Balance
Average
Rate
Years Ended December 31,
2007
(Dollars in Thousands)
Average
Average
Rate
Balance
2006
Average
Rate
Average
Balance
Federal funds purchased and securities sold
under agreement to repurchase
$ 17,294
2.05% $ 16,411
2.15 % $ 6,910
2.68 %
Total maximum short-term borrowings
outstanding at any month-end during the year
$ 63,973
$ 32,359
$ 16,024
Total
Balance
Total
Balance
Total
Balance
44
The following table sets forth certain information about contractual cash obligations as of December 31, 2008.
Payments Due After December 31, 2008
Total
1 Year
Or Less
1-3
Years
4-5
Years
5
Years
(Dollars in Thousands)
Time certificates of deposit
Borrowings under revolving credit agreement
Federal Home Loan Bank advances
Subordinated debentures
$
1,135,278 $ 1,030,413 $ 97,571 $ 7,294 $
5,000
67,000
42,269
5,000
67,000
-
-
-
-
-
-
-
-
-
-
42,269
Total contractual cash obligations
$
1,249,547 $ 1,102,413 $ 97,571 $ 7,294 $ 42,269
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, 2008 we had immaterial amounts of binding commitments for capital expenditures.
CAPITAL ADEQUACY
Capital Purchase Plan
On November 21, 2008, the Company, elected to participate in the CPP established by the EESA. Accordingly, on such date, the
Company issued and sold to the Treasury, for an aggregate cash purchase price of $52 million, (i) 52,000 “Preferred Shares”
having a liquidation preference of $1,000 per share, and (ii) a ten-year “Warrant” to purchase up to 679,443 shares of Common
Stock, at an exercise price of $11.48 per share. The issuance and sale of these securities was a private placement exempt from
registration pursuant to Section 4(2) of the Securities Act of 1933, as amended.
Cumulative dividends on the Preferred Shares will accrue on the liquidation preference at a rate of 5% per annum for the first five
years and at a rate of 9% per annum thereafter, but such dividends will be paid only if, as and when declared by the Company’s
Board of Directors. The Preferred Shares have no maturity date and rank senior to the Common Stock (and pari passu with the
Company’s other authorized preferred stock, of which no shares are currently designated or outstanding) with respect to the
payment of dividends and distributions and amounts payable upon liquidation, dissolution and winding up of the Company.
Subject to the approval of the Board of Governors of the Federal Reserve System, the Preferred Shares are redeemable at the
option of the Company at 100% of their liquidation preference, provided that the Preferred Shares may be redeemed prior to the
first dividend payment date falling after the third anniversary of the Closing Date (February 15, 2012) only if (i) the Company has
raised aggregate gross proceeds in one or more Qualified Equity Offerings (as defined in the Letter Agreement dated November
21, 2008 between the Company and the Treasury, including the Securities Purchase Agreement – Standard Terms incorporated by
reference therein (collectively, the “Purchase Agreement”)) in excess of $13 million and (ii) the aggregate redemption price does
not exceed the aggregate net proceeds from such Qualified Equity Offerings.
The Treasury may not transfer a portion or portions of the Warrant with respect to, and/or exercise the Warrant for more than one-
half of, the 679,443 shares of Common Stock issuable upon exercise of the Warrant, in the aggregate, until the earlier of (i) the
date on which the Company has received aggregate gross proceeds of not less than $52 million from one or more Qualified Equity
Offerings and (ii) December 31, 2009. If the Company completes one or more Qualified Equity Offerings on or prior to
December 31, 2009 that result in the Company receiving aggregate gross proceeds of not less than $52 million, then the number of
the shares of Common Stock underlying the portion of the Warrant then held by the Treasury will be reduced by one-half of the
number of shares of Common Stock originally covered by the Warrant. For purposes of the foregoing, as provided in the
Purchase Agreement, “Qualified Equity Offering” is defined as the sale and issuance for cash by the Company to persons other
than the Company or any Company subsidiary after the Closing Date of shares of perpetual Preferred Stock, Common Stock or
any combination of such stock, that, in each case, qualify as and may be included in Tier I capital of the Company at the time of
issuance under the applicable risk-based capital guidelines of the Company’s federal banking agency (other than any such sales
and issuances made pursuant to agreements or arrangements entered into, or pursuant to financing plans which were publicly
announced, on or prior to October 13, 2008).
The Purchase Agreement pursuant to which the Preferred Shares and the Warrant were sold contains limitations on the payment of
dividends on the Common Stock (including with respect to the payment of cash dividends in excess of $0.05 per share, which was
45
the amount of the last regular dividend declared by the Company prior to October 14, 2008) and on the Company’s ability to
repurchase its Common Stock, and subjects the Company to certain of the executive compensation limitations included in the
EESA.
Capital Regulations
The capital resources of our Company are monitored on a periodic basis by state and federal regulatory authorities. During 2008,
we increased our capital by $48.1 million or 25.2%. The increase is attributed to the issuance of the Preferred Shares under the
CPP. Other capital related transactions, such as Common Stock issuances through the 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, 2008.
Actual
Required
Excess
Amount
Percent
Amount
Percent Amount
Percent
(Dollars in Thousands)
Leverage capital
Risk-based capital:
Core capital
Total capital
$ 215,400
9.42% $
91,465
4.00 % $ 123,935
5.42%
215,400 11.99
238,069 13.25
71,860
143,740
4.00
8.00
143,540
94,329
7.99
5.25
46
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, 2008
4
1
(Dollars in Thousands, Except Per Share Data)
2
3
Selected Income Statement Data:
Interest income
$ 30,558
$ 32,112
$ 32,249 $ 34,089
Net interest income
15,972
19,177
19,056
18,460
Net income (loss) available to common
stockholders
(10,724)
366
3,149
2,966
Per Share Data:
Net income – basic
Net income – diluted
Common Dividends
(0.79)
(0.79)
0.03
0.23
0.22
0.03
0.23
0.22
0.05
0.05
0.14
0.14
Quarters Ended December 31, 2007
4
1
(Dollars in Thousands, Except Per Share Data)
2
3
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 available to common
stockholders
1,186
3,570
5,373
5,024
Per Share Data:
Net income – basic
Net income – diluted
Common Dividends
0.09
0.26
0.40
0.37
0.09
0.26
0.39
0.37
0.14
0.14
0.14
0.14
47
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 0.49% if rates rise 200 basis points
gradually over the next year. A down 200 basis points scenario is irrelevant at this time due to current market rates being at or
near zero since the last FOMC reduction of the Fed target rate on December 16, 2008.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets - December 31, 2008 and 2007
Consolidated Statements of Operations - Years ended December 31, 2008, 2007 and 2006
Consolidated Statements of Comprehensive Income - Years ended December 31, 2008, 2007 and 2006
Consolidated Statements of Stockholders’ Equity - Years ended December 31, 2008, 2007 and 2006
Consolidated Statements of Cash Flows - Years ended December 31, 2008, 2007 and 2006
Notes to Consolidated Financial Statements.
48
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
Previous Independent Accountants
Mauldin & Jenkins, Certified Public Accountants, LLC (“Mauldin & Jenkins”) was previously the principal accountants for the
Company. On August 28, 2008, the Company dismissed Mauldin & Jenkins as its principal accountants. The Company’s Audit
Committee and Board of Directors participated in and approved the decision to change independent accountants. Mauldin &
Jenkins’ audit reports on the consolidated financial statements of the Company and its subsidiaries as of and for the fiscal years
ended December 31, 2007 and 2006 did not contain any adverse opinion or disclaimer of opinion nor were they qualified or
modified as to uncertainty, audit scope or accounting principles.
In connection with Mauldin & Jenkins’ audits for the two fiscal years ended December 31, 2007 and 2006 and the subsequent
interim period through August 28, 2008, there have been no disagreements with Mauldin & Jenkins on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to the
satisfaction of Mauldin & Jenkins, would have caused it to make reference to the subject matter of the disagreements in
connection with its audit reports on the Financial Statements. Additionally, during the two most recent fiscal years and through
August 28, 2008, there have been no reportable events, as such term is defined in Item 304(a)(1)(v) of Registration S-K.
New Independent Accountants
On August 28, 2008, the Company engaged Porter Keadle Moore, LLP (“PKM”) as the Company’s new independent accountants
to audit the Company’s consolidated financial statements for the fiscal year ending December 31, 2008. The Audit Committee of
the Company’s Board of Directors approved the Company’s engagement of PKM.
During the two most recent fiscal years and through August 28, 2008, the Company has not consulted with PKM regarding either
(i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion
that might be rendered on the Company’s financial statements, and neither a written report nor oral advice was provided to the
Company that PKM concluded was an important factor considered by the Company in reaching a decision as to the accounting,
auditing or financial reporting issue; or (ii) any matter that was the subject of either a disagreement (as defined in Item 304
(a)(1)(iv) of Regulation S-K or the related instructions thereto) or a reportable event (as defined in Item 304 (a)(1)(v) of
Regulation S-K).
49
ITEM 9A. CONTROLS AND PROCEDURES
Disclosure 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 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 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 Exchange Act. 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, 2008. 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.
PKM, the Company’s independent auditors, has issued an attestation report on 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, 2008 there was no 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.
50
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
Ameris Bancorp
Moultrie, Georgia
We have audited Ameris Bancorp and subsidiaries’ (the “Company”) internal control over financial reporting as of December 31,
2008, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (“COSO”). The Company’s 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 Report on Internal Controls 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 effective internal control over financial reporting as of December 31,
2008, based on criteria established in Internal Control-Integrated Framework issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the
consolidated balance sheet of Ameris Bancorp and subsidiaries as of December 31, 2008, and the related statements of operations,
comprehensive income, stockholders’ equity and cash flows for the year then ended, and our report dated March 6, 2009,
expressed an unqualified opinion on those consolidated financial statements.
Atlanta, Georgia
March 6, 2009
51
ITEM 9B. OTHER INFORMATION
None.
52
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 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 12, 2009.
Name, Age and
Term as Officer
Position with Ameris
and Other Directorships
Principal Occupation for the Last Five Years
Edwin W. Hortman, Jr.; 55
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.; 39
Officer since 2005
Executive Vice President
and Chief Financial Officer
Executive Vice President and Chief Financial Officer 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.
Jon S. Edwards; 47
Officer since 1999
Executive
Vice
and Director
Administration
of
President
Credit
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; 57
Officer since 2006
Cindi H. Lewis; 55
Officer since 1987
Marc J. Bogan; 42
Officer since 2006
Banking Group President
Officer since June 2006. Chief Executive Officer of South
Carolina Bank and Trust from 1994 to 2004.
Executive Vice President, Chief
and
Administrative Officer
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.
Executive Vice President and
Chief Operating Officer
Executive Vice President and Chief Operating Officer since
June 2008. Coastal Region Executive from September 2006
to June 2008. Sales Executive with South Carolina Bank and
Trust from April 2004 to September 2006. Regional President
for South Carolina Bank and Trust from June 2001 to April
2004.
Officers serve at the discretion of the Company’s board of directors.
53
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 310 First St., SE, 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 information set forth under the caption “Proposal 2: Ratification of Independent Auditors” in the Proxy Statement is
incorporated herein by reference in response to this Item.
54
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
1. Financial statements:
(a)
Ameris Bancorp and Subsidiaries:
(i)
(ii)
Consolidated Balance Sheets - December 31, 2008 and 2007;
Consolidated Statements of Operations - Years ended December 31, 2008, 2007 and 2006
(iii)
Consolidated Statements of Comprehensive Income - Years ended December 31, 2008, 2007 and 2006;
(iv)
Consolidated Statements of Stockholders’ Equity - Years ended December 31, 2008, 2007 and 2006;
(v)
Statements of Cash Flows - Years ended December 31, 2008, 2007 and 2006; 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.
55
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 12, 2009
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 12, 2009
/s/ Edwin W. Hortman, Jr.
Edwin W. Hortman, Jr., President, Chief Executive Officer and Director
Date: March 12, 2009
/s/ Dennis J. Zember, Jr.
Dennis J. Zember, Jr., Executive Vice President and Chief Financial Officer
(Principal Accounting Officer)
Date: March 12, 2009
Date: March 12, 2009
/s/ Johnny W. Floyd
Johnny W. Floyd, Director
/s/ J. Raymond Fulp
J. Raymond Fulp, Director
Date: March 12, 2009
/s/ Daniel B. Jeter
Daniel B. Jeter, Director and Chairman of the Board
Date: March 12, 2009
/s/ Glenn A. Kirbo
Glenn A. Kirbo, Director
Date: March 12, 2009
/s/ Robert P. Lynch
Robert P. Lynch, Director
Date: March 12, 2009
/s/ Brooks Sheldon
Brooks Sheldon, Director
Date: March 12, 2009
/s/ Jimmy D. Veal
Jimmy D. Veal, Director
56
EXHIBIT INDEX
Exhibit No. Description
3.1
3.2
3.3
3.4
3.5
3.6
3.7
3.8
3.9
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).
Articles of Amendment to the Articles of Incorporation (incorporated by reference to Exhibit 3.1 to
Ameris Bancorp’s Form 8-K filed with the Commission on November 21, 2008.
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).
57
EXHIBIT INDEX
Exhibit No. Description
4.4
4.5
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).
4.6
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).
4.7
4.8
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
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).
Warrant to Purchase 679,443 shares of Common Stock of Ameris Bancorp, issued to the U.S.
Department of Treasury November 21, 2008 (incorporated by reference to Exhibit 3.2 to Ameris
Bancorp’s Form 8-K filed with the Commission on November 21, 2008).
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).
58
EXHIBIT INDEX
Exhibit No. Description
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).
59
EXHIBIT INDEX
Exhibit No. Description
21.1
Schedule of subsidiaries of Ameris Bancorp.
23.1
Consent of Porter Keadle Moore, LLP
23.2
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.
60
Exhibit 21.1
REGISTRANT’S SUBSIDIARIES
Following is a list of the Registrant’s subsidiaries and the state of incorporation or other jurisdiction.
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.
First National Banc Statutory Trust I
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
State of Delaware
Each subsidiary conducts business under the name listed above.
61
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We have issued our report dated March 6, 2009, accompanying the consolidated financial statements incorporated by
reference in the Annual Report on Form 10-K of Ameris Bancorp for the year ended December 31, 2008. We hereby consent to
the incorporation by reference of said report in the Registration Statements of Ameris Bancorp on Forms S-8 (File No. 333-
131244) and on Form S-3 (File Number 333-156367).
Atlanta, Georgia
March 13, 2009
62
Exhibit 23.2
CONSENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in the Registration Statement on Form S-3 (No. 333-
156367) of Ameris Bancorp of our reports dated March 5, 2008, relating to the consolidated financial
statements as of December 31, 2007 and for the two years then ended, which is incorporated by reference in
this Annual Report on Form 10-K.
/s/ Mauldin & Jenkins, LLC
Albany, Georgia
March 13, 2009
63
Exhibit 31.1
CERTIFICATION
I, Edwin W. Hortman, Jr., certify that:
1.
2.
3.
4.
I have reviewed this Annual Report on Form 10-K for the year ended December 31, 2008, 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 16, 2009
/s/ Edwin W. Hortman, Jr.
Edwin W. Hortman, Jr.,
President and Chief Executive Officer
64
Exhibit 31.2
CERTIFICATION
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, 2008, 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 16, 2009
/s/ Dennis J. Zember Jr.
Dennis J. Zember Jr.,
Executive Vice President and Chief Financial Officer
65
Exhibit 32.1
SECTION 1350 CERTIFICATION
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, 2008 (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 16, 2009
/s/ Edwin W. Hortman, Jr.
Edwin W. Hortman, Jr.,
President and Chief Executive Officer
66
Exhibit 32.2
SECTION 1350 CERTIFICATION
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, 2008 (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 16, 2009
/s/ Dennis J. Zember Jr.
Dennis J. Zember Jr.,
Executive Vice President and Chief Financial Officer
67
AMERIS BANCORP
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
Consolidated financial statements:
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets - December 31, 2008 and 2007
Consolidated Statements of Operations - Years ended December 31, 2008, 2007 and 2006
Consolidated Statements of Comprehensive Income - Years ended December 31, 2008, 2007 and 2006
Consolidated Statements of Stockholders’ Equity - Years ended December 31, 2008, 2007 and 2006
Consolidated Statements of Cash Flows - Years ended December 31, 2008, 2007 and 2006
Notes to Consolidated Financial Statements
68
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
Ameris Bancorp
Moultrie, Georgia
We have audited the accompanying consolidated balance sheet of Ameris Bancorp and subsidiaries (“the Company”)
as of December 31, 2008, and the related consolidated statements of operations, comprehensive income, stockholders’
equity and cash flows for the year then ended. 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 audit. The
consolidated financial statements of Ameris Bancorp and subsidiaries as of December 31, 2007 and 2006 were audited
by other auditors whose report dated March 5, 2008, expressed an unqualified opinion on those statements.
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 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 audit provides a reasonable basis for our opinion.
In our opinion, the 2008 consolidated financial statements referred to above present fairly, in all material respects, the
financial position of Ameris Bancorp and subsidiaries as of December 31, 2008, and the results of their operations and
their cash flows for the year then ended in conformity with accounting principles generally accepted in the United
States of America.
We have also 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, 2008, based on
criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations
of the Treadway Commission and our report dated March 6, 2009, expressed an unqualified opinion on the
effectiveness of Ameris Bancorp internal control over financial reporting.
Atlanta, Georgia
March 6, 2009
69
AMERIS BANCORP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2008 AND 2007
(Dollars in Thousands)
Assets
Cash and due from banks
Interest-bearing deposits in banks
Federal funds sold
Securities available for sale, at fair value
Other investments
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
Stockholders' equity
Preferred stock, par value $1,000; 5,000,000 shares authorized;
52,000 shares issued
Common stock, par value $1; 30,000,000 shares authorized;
14,865,703 and 14,869,924 shares issued
Capital surplus
Retained earnings
Accumulated other comprehensive income, net of tax
Less cost of 1,331,102 and 1,329,939 treasury shares acquired
Total stockholders' equity
See Notes to Consolidated Financial Statements.
70
2008
2007
$
$
66,787
99,383
45,000
367,894
8,627
59,804
12,022
-
289,382
9,347
1,695,777
39,652
1,656,125
1,614,048
27,640
1,586,408
66,107
3,631
54,813
38,723
59,132
4,802
54,813
36,353
$
2,407,090
$ 2,112,063
$
208,532
1,804,993
2,013,525
27,416
72,000
42,269
12,521
2,167,731
$
197,345
1,559,920
1,757,265
14,705
90,500
42,269
16,075
1,920,814
49,028
-
14,866
86,038
93,696
6,518
250,146
(10,787 )
239,359
14,870
82,750
103,095
1,303
202,018
(10,769)
191,249
$
2,407,090
$ 2,112,063
AMERIS BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 2008, 2007 AND 2006
(Dollars in Thousands)
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
Mortgage origination fees
Other service charges, commissions and fees
Gain/(loss) on sales of securities
Other
Other expenses
Salaries and employee benefits
Occupancy and equipment expense
Advertising and marketing expense
Amortization of intangible assets
Data processing and communications costs
Business restructuring costs
Other operating expenses
2008
2007
2006
$
113,335 $ 128,869 $ 107,559
12,147
14,469 14,171
555
688
3,589
2,306
261
43
124,111
129,008 146,077
685
514
5
51,942 62,380
8,619
4,401
56,343 70,999
45,599
8,551
54,150
72,665 75,078
35,030 11,321
37,635 63,757
69,961
2,837
67,124
13,916 12,455
3,093
3,180
1,268
708
316
(297 )
1,073
1,029
19,149 17,592
11,538
2,208
997
(308)
4,827
19,262
31,700 29,844
7,540
8,069
2,546
3,083
1,297
1,170
6,496
6,457
-
-
12,274 11,173
62,753 58,896
27,043
6,836
2,029
1,107
7,273
1,452
7,389
53,129
(Loss)/income before income taxes
(5,969) 22,453
33,257
Applicable income tax
(benefit)/expense
Net (loss)/income
Preferred stock dividends
(2,053)
7,300
11,129
$
(3,916)
$ 15,153
$ 22,128
328
-
-
Net (loss)/income available to common stockholders
$
(4,244)
$ 15,153
$ 22,128
Basic (loss)/earnings per share
Diluted (loss)/earnings per share
See Notes to Consolidated Financial Statements.
71
$
$
(0.31) $
1.12
(0.31) $
1.11
$
$
1.71
1.68
AMERIS BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
YEARS ENDED DECEMBER 31, 2008, 2007 AND 2006
(Dollars in Thousands)
2008
2007
2006
Net (loss)/income
$
(3,916 ) $ 15,153 $ 22,128
Other comprehensive income/(loss):
Net unrealized holding gains/(losses) arising during period on investment
securities available for sale, net of tax
Net unrealized gains/(losses) on cash flow hedge during the period, net of tax
Reclassification adjustment for losses/(gains) included in net
income, net of tax of $107, $101 and $105
Total other comprehensive income
3,915
1,509
(209 )
5,215
2,907
729
196
3,832
(67)
(40)
203
96
Comprehensive income
$
1,299 $ 18,985
$ 22,224
See Notes to Consolidated Financial Statements.
72
AMERIS BANCORP
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Dollars in thousands, except share data)
2008
Year Ended December 31,
2007
2006
Shares
Amount
Shares
Amount
Shares
Amount
52,000 $
-
48,975
53
52,000 $
49,028
- $
-
- $
-
-
-
- $
-
- $
-
-
-
PREFERRED STOCK
Issued during period
Accretion of fair value of warrant
Issued at end of period
COMMON STOCK
Issued at beginning of period
Issuance of restricted shares
Cancellation of restricted shares
Proceeds from exercise of stock options
Adjustment to record acquisition
14,869,924
$
-
(33,164)
28,943
-
14,870
-
(33)
29
-
14,850,237 $
4,200
-
15,487
-
14,850
4
-
16
-
14,270,783 $
44,150
-
40,977
494,327
14,271
44
-
41
494
Issued at end of period
14,865,703 $
14,866
14,869,924 $
14,870
14,850,237 $
14,850
CAPITAL SURPLUS
Balance at beginning of period
Stock-based compensation
Warrants issued
Proceeds from exercise of stock options
Issuance of restricted shares
Cancellation of restricted shares
Tax adjustment due to vesting of restricted shares
Adjustment for adoption of SFAS 123(R)
Adjustment to record acquisition
$
82,750
(97)
3,025
305
-
33
22
-
-
$
81,481
1,095
-
160
(4)
-
18
-
-
$
67,381
823
-
367
(44)
-
40
(526)
13,440
Balance at end of period
$
86,038
$
82,750
$
81,481
RETAINED EARNINGS
Balance at beginning of period
Net (loss)/income available to common
shareholders
Dividends on preferred shares*
Dividends on common shares**
Balance at end of period
UNEARNED COMPENSATION
Balance at beginning of period
Adjustment for adoption of SFAS 123(R)
Balance at end of period
OTHER COMPREHENSIVE INCOME/(LOSS)
Unrealized gains (losses) on securities:
Balance at beginning of period
Accumulated other comprehensive income
Balance at end of period
TREASURY STOCK
Issued at beginning of period
Purchase of treasury shares
Issued at end of period
$
103,095
(3,916)
$
95,523
15,153
$
80,683
22,128
(328)
(5,155)
-
(7,581)
-
(7,288)
$
93,696
$
103,095
$
95,523
$
-
-
$
-
-
$
-
$
-
$
(526)
526
$
-
$
1,303
5,215
$
6,518
$
(2,529)
3,832
$
1,303
$
(2,625)
96
$
(2,529)
1,329,939 $
1,163
(10,769)
(18)
1,322,717 $
7,222
(10,593)
(176)
1,318,465 $
4,252
(10,481)
(112)
1,331,102 $
(10,787)
1,329,939 $
(10,769)
1,322,717 $
(10,593)
TOTAL STOCKHOLDER'S EQUITY
$
239,359
$
191,249
$
178,732
*Dividend on Preferred shares: 5% per annum
**Dividend on Common shares: $0.38, $0.56 and $0.56 per share, respectively
See Notes to Consolidated Financial Statements.
73
AMERIS BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2008, 2007 AND 2006
(Dollars in Thousands)
OPERATING ACTIVITIES
Net (loss)/income
Adjustments to reconcile net (loss)/income to net cash
provided by operating activities:
Depreciation and amortization
Amortization of intangible assets
Stock-based compensation expense
Net loss/(gain) on sale of securities available for sale
Net loss on sale or disposal of premises and equipment
Net loss/(gain) on sale of other real estate owned
Provision for loan losses
Provision for deferred taxes
Increase/(decrease) in interest receivable
Increase/(decrease) in interest payable
Increase (decrease) in taxes payable
Net other operating activities
Total adjustments
Net cash provided by operating activities
INVESTING ACTIVITIES
(Increase)/decrease 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
(Increase)/decrease in federal funds sold
(Increase)/decrease 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 paid for acquisitions and divestitures
2008
2007
2006
$
(3,916)
$
15,153 $
22,128
3,360
1,170
(97)
(316)
627
(233)
35,030
(4,650)
3,688
(691)
(1,512)
(6,859)
29,517
25,601
(87,361)
(168,711)
75,327
20,805
720
(45,000)
(115,447)
(10,154)
390
13,181
-
3,061
1,297
1,095
297
63
656
11,321
(1,522 )
(854 )
33
(600 )
(6,975 )
7,872
2,919
1,113
823
308
107
227
2,837
(296)
(4,051)
3,636
2,423
2,523
12,569
23,025
34,697
113,771
(137,268 )
70,748
62,912
(544 )
9,439
(189,913 )
(15,878 )
225
3,067
-
(54,939)
(98,512)
38,589
14,775
1,813
18,646
(196,335)
(6,363)
19
877
(199)
Net cash used in investing activities
(316,250)
(83,441 )
(281,629)
FINANCING ACTIVITIES
Increase/(decrease) in deposits
Increase/(decrease) in federal funds purchased and securities
sold under agreements to repurchase
Proceeds from other borrowings
Repayment of other borrowings
Dividends paid on common stock
Proceeds allocated to issuance of preferred stock
Proceeds allocated to warrants issued
Proceeds from exercise of stock options
Purchase of treasury shares
Net cash provided by financing activities
Net increase (decrease) in cash and due from banks
Cash and due from banks at beginning of year
256,260
47,102
270,709
12,711
220,600
(239,100)
(5,155)
48,975
3,025
334
(18)
297,632
6,983
59,804
(1,228 )
216,500
(201,500 )
(7,510 )
-
-
176
(176 )
5,626
102,114
(132,089)
(7,288)
-
-
408
(112)
53,364
239,368
(7,052 )
66,856
(7,564)
74,420
Cash and due from banks at end of year
$
66,787
$
59,804
$
66,856
74
AMERIS BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2008, 2007 AND 2006
(Dollars in Thousands)
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION
Cash paid during the year for:
Interest
Income taxes
NONCASH TRANSACTIONS
2008
2007
2006
$
57,308
$ 70,966 $ 50,514
$
4,207
$
9,573 $ 9,002
Loans transferred to other real estate owned
$
13,632
$ 10,272 $ 1,237
Change in unrealized gain (loss) on securities available for sale
$
3,706
$
4,667 $
206
Change in unrealized gain (loss) on cash flow hedge
$
1,509
$
1,105 $
(62)
See Notes to Consolidated Financial Statements.
75
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 Ameris Bank, its wholly owned subsidiary (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. The Bank is required to maintain reserve balances in cash or on
deposit with the Federal Reserve Bank. The total of the average daily required reserve was approximately
$3.9 million and $3.8 million for the years ended 2008 and 2007, 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, are classified as available for sale and recorded at their fair market
value.
76
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.
77
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 collection of a loan’s 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 various risks in the loan portfolio highlighted by 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 Bank’s allowance for loan losses and may require the Bank 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. Other 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.
78
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, 2008.
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 useful life of between five and 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 cost to sell. 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 up to the fair value of the property, 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, 2008 and 2007 was $4.7 million and $7.0 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.
79
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Stock-Based Compensation
The Company accounts for its stock compensation plans using a fair value based method whereby
compensation cost is measured at the grant date based on the value of the award and is recognized over the
service period, which is usually the vesting period.
During 2008, the Company determined that certain stock grants would not vest and as a result reversed
amounts expensed in prior years. The Company recorded approximately ($97,000), $444,000 and $339,000
of stock-based compensation cost in 2008, 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.
80
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 and by the
sum of the weighted-average number of shares of common stock outstanding. Potential common shares
consist of only stock options for the years ended December 31, 2008, 2007 and 2006, 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:
2008
Years Ended December 31,
2007
(Dollars in Thousands)
2006
Net income (loss) available to
common shareholders
$
(4,244)
$
15,153
$
22,128
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
13,514
-
13,479
152
12,928
301
13,514
13,631
13,229
Due to the loss in 2008, the Company has excluded the effects of options as these would have been anti-
dilutive. 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, 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. All derivative instruments are required to be carried at fair value on the balance
sheet.
The Company’s current hedging strategies involve utilizing interest rate 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.
81
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Derivative Instruments and Hedging Activities (Continued)
As of December 31, 2008, the Company had cash flow hedges with notional amounts totaling $70 million
for the purpose of converting floating rate assets to fixed rate. The fair value of these instruments amounted
to approximately $3.7 million and $1.5 million as of December 31, 2008 and 2007, 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
The Company's comprehensive income consists of net income, changes in the net unrealized holding gains
and losses of securities available for sale, and the unrealized gain or loss on the effective portion of the cash
flow hedge. Accumulated other comprehensive income (loss) on the consolidated statements of
stockholders' equity is presented net of taxes.
Accounting Standards
New Accounting Pronouncements. In September 2006, the FASB issued SFAS No. 157, “Fair Value
Measurements” (“SFAS 157”), 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
adopted the guidance of SFAS 157 beginning January 1, 2008. As expected, the adoption had no material
impact on the Company’s consolidated financial statements.
In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and
Financial Liabilities” (“SFAS 159”). SFAS 159 would allow the Company to make an irrevocable election
to measure certain financial assets and liabilities at fair value, with unrealized gains and losses on the
elected items recognized in earnings at each reporting period. The fair value option may only be elected at
the time of initial recognition of a financial asset or financial liability or upon the occurrence of certain
specified events. The election is applied on an instrument by instrument basis, with a few exceptions, and is
applied only to entire instruments and not to portions of instruments. SFAS 159 also provides expanded
disclosure requirements regarding the effects of electing the fair value option on the financial statements.
SFAS 159 is effective prospectively for fiscal years beginning after November 15, 2007. The Company
evaluated SFAS 159 and determined that the fair value option would not be elected for any financial asset
or liability reported on the Company’s consolidated statement of financial condition as of January 1, 2008
(date of adoption), nor has the Company applied the provisions of SFAS 159 to any financial asset or
liability recognized during the twelve-month period ended December 31, 2008.
In December 2007, the FASB issued SFAS No. 141(R), "Business Combinations" (“SFAS 141(R)”) which
revised SFAS No. 141, "Business Combinations" (“SFAS 141”). This pronouncement is effective for the
Company as of January 1, 2009. Under SFAS 141, organizations utilized the announcement date as the
measurement date for the purchase price of the acquired entity. SFAS 141(R) requires measurement at the
date the acquirer obtains control of the acquiree, generally referred to as the acquisition date. SFAS 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
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 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.
82
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2. BUSINESS COMBINATIONS AND DIVESTITURES
On December 29, 2006, the Company 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 the Company’s consolidated
statements of income as the merger date occurred after close of business on the last day of the fiscal year.
83
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2. 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
December 29,
2006
$
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
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
Net assets acquired
$
19,055
Unaudited proforma consolidated results of operations for the years ended December 31, 2006 as though Islands
had been acquired as of January 1, 2006 follows:
Net interest income
Net income
Basic earnings per share
Diluted earnings per share
(Dollars in
Thousands)
2006
$
$
$
$
73,101
21,939
1.63
1.60
During 2006, the Company 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.
84
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3. SECURITIES
The amortized cost and fair value of securities available for sale with gross unrealized gains and losses are
summarized as follows:
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
(Dollars in Thousands)
Fair
Value
December 31, 2008:
U. S. Government sponsored agencies
State and municipal securities
Corporate debt securities
Mortgage-backed securities
$
130,966 $
18,095
12,209
200,128
1,680 $
330
186
5,332
- $ 132,646
18,302
11,618
205,328
(123)
(777)
(132)
Total debt securities
$
361,398
$
7,528
$
(1,032) $ 367,894
December 31, 2007:
U. S. Government sponsored agencies
State and municipal securities
Corporate debt securities
Mortgage-backed securities
$
69,562 $
18,232
9,812
190,896
366 $
181
37
1,281
(5) $
(93)
(351)
(536)
69,923
18,320
9,498
191,641
Total debt securities
$
288,502 $
1,865 $
(985) $ 289,382
The amortized cost and fair value of debt securities available for sale as of December 31, 2008 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)
$
55,559
57,717
36,583
11,411
200,128
$
55,739
58,492
37,471
10,864
205,328
$
361,398
$ 367,894
Securities with a carrying value of approximately $260,799,000 and $247,190,000 at December 31, 2008 and
2007, respectively, were pledged to secure public deposits and for other purposes required or permitted by law.
85
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3. SECURITIES (Continued)
Gains and losses on sales of securities available for sale consist of the following:
December 31,
2007
2008
2006
(Dollars in Thousands)
Gross gains on sales of securities
$
329 $
26 $
-
Gross losses on sales of securities
(13 )
(323
)
(308
)
Net realized gains (losses) on sales of securities available for sale
$
316 $
(297
) $
(308
)
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, 2008 and 2007.
Description of Securities
Less Than 12 Months
12 Months or More
Total
Fair
Value
Unrealized
Losses
Fair
Value
Unrealized Fair
Value
Losses
Unrealized
Losses
(Dollars in Thousands)
December 31, 2008:
U. S. Government sponsored agencies
State and municipal securities
Corporate debt securities
Mortgage-backed securities
$
$
-
3,715
2,178
7,264
- $
(80)
(777)
(83)
-
981
-
2,408
$
- $
- $
(43)
-
(49)
4,696
2,178
9,672
-
(123)
(777)
(132)
Total temporarily impaired securities $ 13,157
$
(940)
$ 3,389
$
(92) $ 16,546
$ (1,032)
December 31, 2007:
U. S. Government sponsored agencies
State and municipal securities
Corporate debt securities
Mortgage-backed securities
$
$
-
2,466
5,910
29,214
- $
(17)
(334)
(37)
-
3,012
1,494
37,902
$
- $
- $
(81)
(17)
(499)
5,478
7,404
67,116
Total temporarily impaired securities $ 37,590
$
(388) $ 42,408
$
(597) $ 79,998 $
-
(98)
(351)
(536)
(985)
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. While the majority of the unrealized
losses on debt securities relate to changes in interest rates, corporate debt securities have also been affected by
reduced levels of liquidity and higher risk premiums. Management believes that each investment poses minimal
credit risk and that the Company has the intent and ability to hold to maturity. Therefore, at December 31,
2008, these investments are not considered impaired on an other-than-temporary basis.
86
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4. LOANS AND ALLOWANCE FOR LOAN LOSSES
The composition of loans is summarized as follows:
Commercial, financial and agricultural
Real estate - residential
Real estate – commercial and farmland
Real estate – construction and development
Consumer installment
Other
Allowance for loan losses
Loans, net
The following is a summary of information pertaining to impaired loans:
$
December 31,
2008
2007
(Dollars in Thousands)
200,421 $
189,203
1,070,483
162,887
64,707
8,076
205,141
157,334
996,517
174,576
69,099
11,381
1,695,777
39,652
1,614,048
27,640
$
1,656,125 $
1,586,408
Impaired loans
Valuation allowance related to impaired loans
Average investment in impaired loans
Interest income recognized on impaired loans
As of and For the Years Ended
December 31,
2008
2007
2006
(Dollars in Thousands)
$
$
$
$
65,414 $ 18,468
9,078 $
2,978
40,940 $ 16,247
323 $
314
$
$
$
$
6,834
1,034
8,181
15
Foregone interest income on impaired loans
$
4,643 $
1,340 $
404
Loans on nonaccrual status amounted to approximately $65.4 million, $18.5 million and $6.8 million at
December 31, 2008, 2007 and 2006, respectively. There were no material amounts of loans past due ninety
days or more and still accruing interest at December 31, 2008, 2007 or 2006.
87
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4. LOANS AND ALLOWANCE FOR LOAN LOSSES (Continued)
Changes in the allowance for loan losses for the years ended December 31, 2008, 2007 and 2006 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,
2008
2007
2006
(Dollars in Thousands)
$
27,640 $ 24,863
11,321
35,030
(10,418 )
(24,340 )
1,874
1,322
-
-
$ 22,294
2,837
(3,198)
1,906
1,024
$
39,652 $ 27,640
$ 24,863
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,
2008
2007
(Dollars in Thousands)
$
$
6,246
282
(205 )
1,951
5,912
864
(1,176 )
646
$
8,274
$
6,246
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.
88
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5. PREMISES AND EQUIPMENT
Premises and equipment are summarized as follows:
Land
Buildings
Furniture and equipment
Construction in progress
Accumulated depreciation
December 31,
2008
2007
(Dollars in Thousands)
$
20,231 $
43,350
26,307
8,067
97,955
(31,848 )
13,966
36,947
22,482
15,048
88,443
(29,311 )
$
66,107 $
59,132
Estimated costs to complete construction projects under progress were $3.8 million and $9.6 million at
December 31, 2008 and 2007, respectively. Depreciation expense was $3.4 million, $3.1 million and $3.1
million for the years ended December 31, 2008, 2007 and 2006, respectively.
Leases
The Company has a non-cancellable operating lease on its operations center with a former 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 twelve banking offices. Generally, these
leases are on smaller locations with initial lease terms under ten years with up to two renewal options.
Rental expense amounted to approximately $813,000, $335,000 and $147,000 for the years ended December 31,
2008, 2007 and 2006, respectively. The total rental expense increased $478,000 from 2007, of which,
approximately $55,000 is related to the acceleration of lease payments on two non-cancellable leases. Future
minimum lease commitments under the Company’s operating leases, excluding any renewal options, are
summarized as follows:
2009
2010
2011
2012
2013
Thereafter
$
534,785
386,923
278,747
217,395
174,000
174,000
$
1,765,850
89
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6. INTANGIBLE ASSETS
Following is a summary of information related to acquired intangible assets:
As of December 31, 2008
Gross
Amount
Accumulated
Amortization
As of December 31, 2007
Gross
Amount
Accumulated
Amortization
(Dollars in Thousands)
Amortized intangible assets
Core deposit premiums
$ 14,430
10,799 $ 14,430 $ 9,628
The aggregate amortization expense for intangible assets was approximately $1,170,000, $1,297,000 and
$1,107,000 for the years ended December 31, 2008, 2007 and 2006, respectively.
The estimated amortization expense for each of the next five years is as follows:
2009
2010
2011
2012
2013
Thereafter
Changes in the carrying amount of goodwill are as follows:
$
$
584,000
547,000
547,000
493,000
493,000
967,000
3,631,000
For the Years Ended
December 31,
2008
2007
(Dollars in Thousands)
Beginning balance
Adjustment of previously acquired goodwill based on final allocations
Ending balance
$
$
54,813 $
-
54,813 $
54,365
448
54,813
NOTE 7. DEPOSITS
The aggregate amount of time deposits in denominations of $100,000 or more at December 31, 2008 and 2007
was $677.8 million and $522.9 million, respectively. The scheduled maturities of time deposits at December 31,
2008 are as follows:
2009
2010
2011
2012
2013
Thereafter
90
(Dollars in
Thousands)
$
1,030,413
40,115
40,932
16,524
7,288
6
$
1,135,278
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7. DEPOSITS (Continued)
The Company had brokered deposits of $195.3 million and $128.0 million at December 31, 2008 and 2007. The
scheduled maturities of brokered deposits at December 31, 2008 and their weighted average costs are as follows:
2009
2010
2011
2012
2013
Wgt Avg
Cost
Balance
(Dollars in Thousands)
$
$
146,335
3,000
30,461
10,581
4,945
195,322
3.78%
4.09
4.35
4.69
4.49
3.94%
NOTE 8. 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, 2008 and 2007 were
$27.4 million and $14.7 million, respectively.
NOTE 9. 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 2008, 2007 and 2006 amounted to $1.6 million,
$1.3 million and $1.4 million, respectively.
NOTE 10. 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 the Bank have purchased life insurance policies which they intend to use to finance
this liability. Cash surrender value of life insurance of $2.1 million at December 31, 2008 and 2007, is included
in other assets. Accrued deferred compensation of $1.3 million at December 31, 2008 and 2007, is included in
other liabilities. Aggregate compensation expense under the plans was $95,000, $119,000 and $112,000 for
2008, 2007 and 2006, respectively, and is included in other operating expenses.
91
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 11. OTHER BORROWINGS
Other borrowings consist of the following:
December 31,
2008
2007
(Dollars in Thousands)
Advances under revolving credit agreement with a regional bank with interest at
thirty day LIBOR plus 1.35% (3.25% at December 31, 2008) 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% (1.74% at December 31, 2008) maturing August 2009.
65,000
65,000
Advance from Federal Home Loan Bank with a fixed interest rate of 3.64%,
matured September 2008.
0
1,000
Advances from Federal Home Loan Bank with interest at fixed rates (weighted
average rate of 6.12%) convertible to a variable rate at the option of the lender, due
at various dates through May 2010.
2,000
19,500
$ 72,000 $
90,500
The advances from Federal Home Loan Bank are collateralized by a blanket lien on all first mortgage loans and
other specific loans in addition to FHLB stock. At December 31, 2008, $70.3 million was available for
borrowing on lines with the FHLB.
Other borrowings at December 31, 2008 have maturities in future years as follows:
2009
2010
(Dollars in
Thousands)
$
$
70,000
2,000
72,000
As of December 31, 2008, the Company maintained credit arrangements with various financial institutions to
purchase federal funds up to $55 million. The Company also maintained a line of credit with a financial
institution to borrow up to $20 million, with interest indexed by LIBOR, adjusted monthly. As of December 31,
2008, there was $15 million available for borrowing. The Company also participates in the Federal Reserve
discount window borrowings.
NOTE 12. PREFERRED STOCK
On November 21, 2008, Ameris sold 52,000 shares of preferred stock with a warrant to purchase 679,443 shares
of the Company’s common stock, to the U. S. Treasury under the Treasury's Capital Purchase Program. The
proceeds from the sale of $52 million were allocated between the preferred stock and the warrant based on their
relative fair values at the time of the sale. Of the $52 million in proceeds, $48.98 million was allocated to the
preferred stock and $3.02 million was allocated to the warrant. The discount recorded on the preferred stock
that resulted from allocating a portion of the proceeds to the warrant is being accreted directly to retained
earnings over a 5 year period applying a level yield.
The preferred stock qualifies as Tier I capital and will pay cumulative dividends at a rate of 5% per annum for
the first five years and 9% per annum thereafter. The preferred stock is redeemable at any time at $1,000 per
share plus any accrued and unpaid dividends with the consent of the Company’s primary federal regulator.
92
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,
2008
2007
2006
(Dollars in Thousands)
$
$
2,597
(4,650 )
8,822 $
(1,522)
11,425
(296)
$ (2,053 ) $
7,300 $
11,129
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
Other
Provision for income taxes
For the Years Ended December 31,
2008
2007
2006
(Dollars in Thousands)
$
(2,030 ) $ 7,859 $ 11,640
(364 )
341
(403 )
(156 )
(318 )
(193 )
$
(2,053 ) $ 7,300 $ 11,129
Net deferred income tax assets of $7,498,000 and $5,535,000 at December 31, 2008 and 2007, 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
Other real estate owned
Capitalized costs and deferred gains
Deferred tax liabilities:
Depreciation and amortization
Intangible assets
Stock based compensation
Unrealized gain on securities available for sale
Unrealized gain on cash flow hedge
December 31,
2008
2007
(Dollars in Thousands)
$
13,862 $
355
-
411
-
349
243
15,220
3,231
985
148
2,209
1,149
7,722
9,306
372
41
253
90
221
216
10,499
2,560
1,733
-
299
372
4,964
Net deferred tax assets
$
7,498 $
5,535
93
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 14. SUBORDINATED DEFERRABLE INTEREST DEBENTURES
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% (4.23% at December 31, 2008) 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 beginning in April, 2009. 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, 2008 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% (3.06% at December 31, 2008). 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 Operations. For
regulatory capital purposes, the Trust Securities qualify as a component of Tier 1 Capital.
94
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 15. STOCK-BASED COMPENSATION
The Company 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 the Company’s 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, 2008, the Company has outstanding a total of 16,100 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. In 2008, certain performance based grants
with different vesting structures failed to vest and the Company reversed amounts previously expensed
amounting to $431,000. In 2007 and 2006, compensation expense related to these grants was $651,000 and
$484,000, respectively.
It is the Company’s policy to issue new shares for stock option exercises and restricted stock rather than issue
treasury shares. The Company 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 $334,000,
$444,000 and $339,000 for 2008, 2007 and 2006, respectively.
The weighted-average grant date fair value of non-performance based options granted during 2008 was $3.40
per share. No non-performance based options were issued during 2007 or 2006. As of December 31, 2008,
there was $280,000 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 approximately 2 years. The total intrinsic value of those shares vested during the year ended
December 31, 2008 and 2007 was $69,000 and $365,000, respectively.
A summary of the activity of non-performance based and performance based options as of December 31,
2008 is presented below:
Non-Performance Based
Weighted- Weighted Aggregate
Average
Average
Contractual
Exercise
Term
Price
Intrinsic
Value
$ (000)
Performance Based
Weighted- Weighted Aggregate
Average
Intrinsic
Average
Contractual
Value
Exercise
(000)
Term
Price
$
Shares
Shares
Under option, beginning
of year
232,581 $
12.83
424,750
$
20.80
Granted
Exercised
Forfeited
109,300
15.13
10,000
13.85
(28,943)
11.55
-
-
(25,688)
14.14
(67,000)
20.26
Under option, end of year
287,250 $
13.72
5.33 $
242 368,750
$
20.71
7.56 $
Exercisable at end of year
154,407 $
11.37
3.83 $
242
101,700
$
20.26
7.25 $
-
-
95
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 15. STOCK-BASED COMPENSATION (Continued)
Additional information pertaining to non-performance based options outstanding at December 31, 2008 is as
follows:
Options Outstanding
Options Exercisable
Range of
Exercise
Prices
Weighted-
Average
Number
Contractual
Outstanding Life in Years
Weighted-
Average
Exercise
Price
Weighted-
Average
Exercise
Price
Number
Outstanding
$
8.25 – 9.33
$ 11.04 – 16.88
74,950
212,300
287,250
1.35 $
6.74 $
8.69
14.45
74,950 $
79,457 $
8.69
13.89
154,407
The weighted-average grant date fair value of options granted during the years was $3.01, $5.53 and $3.48
during 2008, 2007 and 2006, respectively. As of December 31, 2008, there was $371,000 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 approximately 3.22
years.
Additional information pertaining to performance-based options outstanding at December 31, 2008 is as
follows:
Options Outstanding
Options Exercisable
Range of
Exercise
Prices
Weighted-
Average
Number
Contractual
Outstanding Life in Years
Weighted-
Average
Exercise
Price
Weighted-
Average
Exercise
Price
Number
Outstanding
$ 13.85 - 20.12
$ 20.76 - 28.53
138,500
230,250
368,750
6.69 $
8.08 $
17.78
22.47
53,500 $
48,200 $
18.12
22.64
101,700
96
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 15. STOCK-BASED COMPENSATION (Continued)
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:
Years Ended December 31,
2008
2007
2006
Dividend yield
Expected life
Expected volatility
Risk-free interest rate
3.69-4.61%
8 years
27.10-32.80%
3.57-3.88%
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%
A summary of the status of the Company’s restricted stock awards as of December 31, 2008 and changes during
the year then ended is presented below:
Nonvested shares at January 1, 2008
Granted
Vested
Forfeited
Nonvested shares at December 31, 2008
Weighted-
Average
Grant-Date
Fair Value
Shares
53,430 $
-
(4,000 )
(33,330 )
16,100 $
20.83
-
20.84
19.99
22.57
The balance of unearned compensation related to restricted stock grants as of December 31, 2008 and 2007 was
approximately $223,000 and $451,000 respectively.
97
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, 2008, the hedge is deemed to be highly effective.
Notional
Amount
Rate of
Floor
Fair Value
Fair Value
December 31, December 31,
Index
2008
2007
Cash flow hedges:
Floor - 5 year
Floor - 3 year
$
35,000,000
35,000,000
$
70,000,000
7% Prime
7% Prime
$
2,825,000 $ 1,144,000
396,000
872,000
$
3,697,000 $ 1,540,000
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,
2008
2007
(Dollars in Thousands)
$
159,114 $ 177,410
7,426
6,358
$
165,472 $ 184,836
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.
98
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, 2008 and
2007.
At December 31, 2008, the Company had guaranteed the debt of certain officers’ liabilities at another financial
institution totaling approximately $514,000. 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, 2008.
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.
99
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 18. 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, 2008, no amounts 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, 2008 and 2007, the Company and the Bank met all capital adequacy requirements to which they
are subject.
As of December 31, 2008, 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, 2008
Total Capital to Risk Weighted Assets
Consolidated
Ameris Bank
$
$
Tier I Capital to Risk Weighted Assets:
$
$
Consolidated
Ameris Bank
238,069
188,594
13.25 % $
10.41 % $
143,740
144,933
8.00 %
8.00 % $
- - -N/A - - -
10.00%
181,166
215,400
165,748
11.99 % $
9.15 % $
71,860
72,458
4.00 %
4.00 % $
- - -N/A - - -
6.00%
108,687
Tier I Capital to Average Assets:
Consolidated
Ameris Bank
$
$
215,400
165,748
9.42 % $
7.25 % $
91,465
91,447
4.00 %
4.00 % $
- - -N/A - - -
5.00%
114,309
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 - - -
10.00%
166,679
Tier I Capital to Risk Weighted Assets:
Consolidated
Ameris Bank
Tier I Capital to Average Assets:
$
$
171,331
172,630
10.34 % $
10.44 % $
66,263
66,172
4.00 %
4.00 % $
- - -N/A - - -
6.00%
99,258
Consolidated
Ameris Bank
$
$
171,331
172,630
8.39 % $
8.47 % $
81,719
81,566
4.00 %
4.00 % $
- - -N/A - - -
5.00%
101,958
100
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 19. FAIR VALUE OF FINANCIAL INSTRUMENTS
Effective January 1, 2008, the Company adopted SFAS No. 157, “Fair Value Measurements”, (“SFAS
157”). SFAS 157 defines fair value, establishes a framework for measuring fair value, and expands disclosures
about fair value measurements. SFAS 157 has been applied prospectively as of the beginning of the period.
SFAS 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in
an orderly transaction between market participants at the measurement date. SFAS 157 also establishes a fair
value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of
unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used
to measure fair value:
Level 1 - Quoted prices in active markets for identical assets or liabilities.
Level 2 - Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities;
quoted prices in active markets that are not active; or other inputs that are observable or can be corroborated by
observable market data for substantially the full term of the assets or liabilities.
Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair
value of the assets or liabilities.
Additionally, in accordance with SFAS No. 107, “Disclosures about Fair Value of Financial Instruments”
(“SFAS 107”), certain financial instruments and all nonfinancial instruments are excluded from its disclosure
requirements. SFAS 107 requires the disclosure of information about financial instruments, whether or not
recognized on the face of the balance sheet, for which it is practical to estimate that value. Where quoted prices
are not available, fair values are based on estimates using discounted cash flows and other valuation techniques.
The use of discounted cash flows are significantly affected by the estimates of future cash flows and discount
rates. The following disclosures are not a calculation of the liquidation value of the Company, but rather a good
faith estimate of the increase or decrease in value of financial instruments held by the Company.
The following methods and assumptions were used by the Company in estimating the fair value of its financial
instruments and other accounts recorded based on their fair value:
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 Available For Sale: The fair value of securities available for sale is determined by various valuation
methodologies. Where quoted market prices are available in an active market, securities are classified within
Level 1 of the valuation hierarchy. If quoted market prices are not available, then fair values are estimated by
using pricing models, quoted prices of securities with similar characteristics, or discounted cash flows. Level 2
securities include certain U.S. agency bonds, collateralized mortgage and debt obligations, and certain municipal
securities. In certain cases where Level 1 or Level 2 inputs are not available, securities are classified within
Level 3 of the hierarchy and include certain residual municipal securities and other less liquid securities. Fair
value of securities is based on available quoted market prices.
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. A loan is determined to be impaired if the Company believes
it is probable that all principal and interest amounts due according to the terms of the note will not be collected
as scheduled. The fair value of impaired loans is determined in accordance with SFAS No. 114, “Accounting by
Creditors for Impairment of a Loan” and generally results in a specific reserve established through a charge to
the provision for loan losses. Losses on impaired loans are charged to the allowance when management believes
the uncollectability of a loan is confirmed. Management has determined that the majority of impaired loans are
Level 2 assets due to the extensive use of market appraisals. To the extent that market appraisals or other
methods do not produce reliable determinations of fair value, these assets are deemed to be Level 3.
101
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 19. FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)
Deposits: The carrying amount of demand deposits, savings deposits and variable-rate certificates of deposits
approximates fair value. The fair value of fixed-rate certificates of deposits is estimated based on discounted
contractual cash flows using interest rates currently being offered for certificates of similar maturities.
Repurchase Agreements and/or 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.
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.
Derivatives – The Company’s current hedging strategies involve utilizing interest rate floors. 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. As of
December 31, 2008, the Company had cash flow hedges with a notional amount of $70 million for the purpose
of converting floating rate assets to fixed rate.
Other Real Estate Owned – The fair value of other real estate owned ("OREO") is determined using certified
appraisals that value the property at its highest and best uses by applying traditional valuation methods common
to the industry. The Company does not hold any OREO for profit purposes and all other real estate is actively
marketed for sale. Management has determined that in most cases the valuation method for other real estate
produces reliable estimates of fair value and has classified these assets as Level 2.
102
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 19. FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)
The following table presents the fair value measurements of assets and liabilities measured at fair value on a
recurring basis and the level within the FAS 157 fair value hierarchy in which the fair value measurements fall
as of December 31, 2008:
Fair Value Measurements on a Recurring Basis
As of December 31, 2008
Quoted
Prices
in Active
Significant
Markets for Other
Significant
Fair Value
$
$
367,894 $
3,697
371,591 $
Identical
Assets
(Level 1)
Observable Unobservable
Inputs
(Level 2)
Inputs
(Level 3)
(Dollars in Thousands)
5,031 $
-
360,863 $
3,697
5,031 $
364,560 $
2,000
-
2,000
Securities available for sale
Derivative financial instruments
Total recurring assets at fair value
Following is a description of the valuation methodologies used for instruments measured at fair value on a
nonrecurring basis, as well as the general classification of such instruments pursuant to the valuation hierarchy.
Fair Value Measurements on a Nonrecurring Basis
As of December 31, 2008
Quoted
Prices
in Active
Markets for
Identical
Assets
(Level 1)
Significant
Other
Significant
Observable Unobservable
Inputs
(Level 2)
(Dollars in Thousands)
$
Inputs
(Level 3)
1,387
64,027 $
4,742
- $
68,769 $
1,387
Fair Value
Impaired loans carried at fair value
Other real estate owned
$
Total nonrecurring assets at fair value $
65,414 $
4,742
70,156 $
103
NOTE 19. FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)
Below is the Company’s reconciliation of Level 3 assets as of December 31, 2008. Gains or losses on impaired
loans are recorded in the provision for loan losses.
Beginning balance, January 1, 2008
Total gains/(losses) included in net income
Purchases, sales, issuances, and settlements, net
Transfers in or out of Level 3
Ending balance, December 31, 2008
Investment
Securities
Available
for Sale
(Dollars in Thousands)
Impaired
Loans
$
$
1,000 $
-
1,000
-
2,000 $
-
-
-
1,387
1,387
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, 2008
Fair
Value
Carrying
Amount
December 31, 2007
Fair
Value
Carrying
Amount
(Dollars in Thousands)
$
1,656,125 $
1,671,499 $ 1,586,408 $ 1,592,465
2,019,964 1,757,265 1,760,069
89,558
90,500
71,545
2,013,525
72,000
104
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 20. CONDENSED FINANCIAL INFORMATION OF AMERIS BANCORP
(PARENT COMPANY ONLY)
CONDENSED BALANCE SHEETS
DECEMBER 31, 2008 AND 2007
(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
2008
2007
$
51,656 $
230,708
5,833
2,809
233,548
4,758
$
288,197 $
241,115
$
5,000 $
1,569
42,269
5,000
2,597
42,269
48,838
49,866
239,359
191,249
Total liabilities and stockholders' equity
$
288,197 $
241,115
105
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 20. CONDENSED FINANCIAL INFORMATION OF AMERIS BANCORP
(PARENT COMPANY ONLY) (Continued)
CONDENSED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 2008, 2007 AND 2006
(Dollars in Thousands)
Income
Dividends from subsidiaries
Fee income from subsidiaries
Other income
Total income
Expense
Interest
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
2008
2007
2006
$
5,700 $ 9,000 $
-
130
-
277
6,840
2,777
3,386
5,830 9,277
13,003
2,404 3,534
(87 ) 1,255
2,317 4,789
4,122
2,668
6,790
3,513 4,488
6,213
626 1,526
175
4,139 6,014
6,388
Equity in undistributed earnings (loss) of subsidiaries
(8,055 ) 9,139
15,740
Net (loss)/ income
$
(3,916 ) $ 15,153 $
22,128
Preferred stock dividend
328
-
-
Net income available to common shareholders
$
(4,244 ) $ 15,153 $
22,128
106
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 20. CONDENSED FINANCIAL INFORMATION OF AMERIS BANCORP
(PARENT COMPANY ONLY) (Continued)
CONDENSED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2008, 2007 AND 2006
(Dollars in Thousands)
OPERATING ACTIVITIES
Net (loss)/income
Adjustments to reconcile net (loss)/income to net cash provided by operating
activities:
Stock-based compensation expense
Undistributed (earnings)/losses of subsidiaries
Increase (decrease) in interest payable
Increase in tax receivable
Provision for deferred taxes
Accretion of discount on preferred stock
(Increase) decrease in due from subsidiaries
Other operating activities
Total adjustments
2008
2007
2006
$
(3,916 ) $
15,153 $
22,128
(97 )
8,055
(37 )
(1,373 )
176
53
(122 )
(1,053 )
5,602
1,095
(9,139)
106
(1,658)
61
-
(40)
(2,071)
823
(15,740)
(106)
(177)
201
-
166
1,336
(11,646)
(13,497)
Net cash provided by operating activities
1,686
3,507
8,631
INVESTING ACTIVITIES
Purchases of premises and equipment
Proceeds from sale of fixed assets
Net cash paid for acquisitions
Net cash used in investing activities
FINANCING ACTIVITIES
Proceeds from subordinated debentures, net
Purchase of treasury shares
Proceeds allocated to issuance of preferred stock
Proceeds allocated to issuance of warrant
Dividends paid on common stock
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
Cash and due from banks at end of year
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for interest
-
-
-
-
-
-
-
(3)
3,884
(5,120)
-
(1,239)
-
(18 )
48,975
3,025
(5,155 )
334
-
(176)
-
-
(7,510)
176
1,547
(112)
-
-
(7,288)
408
47,161
(7,510)
(5,445)
48,847
(4,003)
1,947
2,809
6,812
4,865
51,656 $
2,809 $
6,812
2,441 $
3,428 $
4,224
$
$
107
Community Boards of Directors
GEORGIA
Albany
Don Monk, President
Directors
Glenn A. Kirbo, Chairman
Willie Adams, Jr., MD
Robert V. Barkley, Sr.
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
Andrew B. Cheney
Joseph C. Fendig
Michael D. Hodges
C. Vance Leavy
G. Tony Sammons
Thomas I. Sublett
J. Thomas Whelchel, Director Emeritus
Cairo
Robert S. VanLandingham, President
Directors
Jeffrey ( Jet) F. Cox, Chairman
Ronald K. Bell, Sr.
Kevin S. Cauley
Cuy Harrell, III
G. Ashley Register, MD
Robert S. VanLandingham
Colquitt
Directors
Walter W. Hays, Chairman
Ronald K. Bell, Sr.
Terry S. Pickle
Danny S. Shepard
Cordele
Robert L. Evans, President
Directors
Johnny W. Floyd, Chairman
Charles W. Clark
Robert L. Evans
William H. Griffin, III
Don Monk
David N. Rainwater
Donalsonville
Nancy S. Jernigan, City President
Directors
Newton E. King, Jr., Chairman
Ronald K. Bell, Sr.
David Glenn Heard
Nancy S. Jernigan
Kenneth R. Massey
C. Willard Mims
Dan E. Ponder, Jr.
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.
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
R. Plenn Hunnicutt
Daniel B. Jeter
Lynn Jones, Jr.
Ronnie F. Marchant
J. Mark Mobley, Jr.
Don Monk
Thomas W. Rowell
Ocilla
Directors
Loran (Sonny) A. Pate, Chairman
Lawton E. Bassett, III
Howard C. McMahan, MD
Gary H. Paulk
Wesley T. Paulk
Jake Walters
C. Larry Young
Wycliffe Griffin, Director Emeritus
Daniel (Danny) M. Paulk, Director Emeritus
W. C. Sams, MD, Director Emeritus
St. Marys
R. Edwin Haworth, President
Directors
Thomas I. Stafford, Jr., Chairman
Andrew B. Cheney
Michael L. Davis
R. Edwin Haworth
Joseph P. Helow
Fareed Kadum, MD
James R. McCollum
John W. McDill
Daniel (Danny) M. Simpson
J. Groover Henderson, Director Emeritus
Community Boards of Directors
SOUTH CAROLINA
Beaufort
John R. Perrill, City President
Directors
John R. Perrill, Chairman
Martha B. Fender
Darryl W. Gardner
D. Martin Goodman
Michael A. McFee
H. Richard Sturm
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
Andrew B. Cheney
Benny L. Cleghorn
Phillip H. Cury
Timothy M. O’Keefe
Trenton
Michael E. McElroy, President
Directors
John H. Ferguson, Chairman
Andrew B. Cheney
Michael Hayes
Michael E. McElroy
Samuel S. Sanders
Norman Scoggins
ALABAMA
Dothan
Harris O. Pittman, III, President
Directors
R. Dale Ezzell, Chairman
Robert Crowder
Gerald B. Crowley
Ronald Dean
John D. DeLoach
Harris O. Pittman, III
Thomasville
Ronald K. Bell, Sr., President
Directors
L. Maurice Chastain, Chairman
Dale E. Aldridge
Ronald K. Bell, Sr.
S. Mark Brewer, MD
H. Eugene (Gene) Hickey
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
Austen D. Carroll, President
Directors
Charles E. Smith, Chairman
Lawton E. Bassett, III
Austen D. Carroll
Sue D. Mink
Thomas Eddie York
Doyle Weltzbarker, Director Emeritus
Henry C. Wortman, Director Emeritus
FLORIDA
Crawfordville
J. Martin Stubblefield, President
Directors
L.F. Young, Jr., Chairman
Wade G. Brown
Andrew B. Cheney
William E. Mills
W. Mark Payne
J. Martin Stubblefield
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 2008.
CALENDAR PERIOD SALES PRICE
2008 Low High
First Quarter $12.60 $16.55
Second Quarter $8.70 $16.48
Third Quarter $7.82 $15.07
Fourth Quarter $7.19 $14.21
Quarterly dividends of $0.14 per share were declared for the first and second quarters of 2008.
For the third and fourth quarters of 2008, dividends of $0.05 were declared.
SHAREHOLDER SERVICES
Computershare is Ameris Bancorp’s stock transfer agent and administers all matters related to our stock.
Please contact them at: Computershare Investor Services, P.O. Box 43078, Providence, RI 02940-3078, 800.568.3476,
www.computershare.com. If your stock is held by a broker, please contact your broker.
AVAILABILITY 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 2008.
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 2009 Annual Meeting of Shareholders of Ameris Bancorp will be held at 4:15 p.m. E.S.T.,
Tuesday, May 19, 2009, at Sunset Country Club, located at 2730 South Main Street, Moultrie, Georgia.
Ameris Bancorp Board of Directors
Standing, from left:
Jimmy D. Veal
Occupation: Hospitality Industry
Employer: The Beachview Club
Brooks Sheldon
Occupation: Retired Banker
Robert P. Lynch
Occupation: Automobile Dealer
Employer: Lynch Management Company
Edwin W. Hortman, Jr., President and Chief Executive Officer
Occupation: Banker
Employer: Ameris Bancorp
Daniel B. Jeter, Chairman
Occupation: Consumer Finance
Employer: Standard Discount
Glenn A. Kirbo
Occupation: Attorney
Employer: Kirbo & Kirbo, P.C.
J. Raymond Fulp
Occupation: Pharmacist
Employer: Harvey’s Pharmacy
Johnny W. Floyd
Occupations: Timber and Realty
Employer: Floyd Timber Company & Cordele Realty, Inc.
Ameris Bancorp Executive Officers
Edwin W. Hortman, Jr.
President and Chief Executive Officer
Dennis J. Zember Jr.
Executive Vice President and Chief Financial Officer
Marc J. Bogan
Executive Vice President and Chief Operating Officer
Andrew B. Cheney
Executive Vice President and Florida/Coastal Georgia President
Jon S. Edwards
Executive Vice President and Director of Credit Administration
C. John Hipp, III
Executive Vice President and Banking Group President
Cindi H. Lewis
Executive Vice President, Chief Administrative Officer and Corporate Secretary
In Memory of
Eugene M. Vereen, Jr.
This year, with the passing of Eugene M. Vereen, Jr., Ameris Bancorp
lost a valued friend, family member, confidante and leader.
Gene was a man of multiple gifts and talents – many of which he contributed to the betterment
of his community and his businesses. As the Founder and first President of American Banking
Company (now Ameris Bank) beginning in 1971, Gene set a company standard for integrity
and service. As Chairman Emeritus, he served as a director of Ameris Bancorp since 1981, and
the first Board Chairman from 1981 until 1995. He also served as a Director of each of the
affiliated banks during the early stages.
A 1941 graduate of Davidson College, Gene served his country honorably during World War II
as Lieutenant Commander with the U.S. Navy on the USS Shoshone. He honed his skills in
business as an officer of the Moultrie Grocery Co., a Director of Riverside Manufacturing Co.
from 1969 to 1986, a Director of Moultrie Cotton Mills from 1969 to 1978, President of
Moultrie Insurance Agency from 1951 until its sale in 1983, and Chairman and Director of
M.I.A., Co., a real estate holding and investment company.
Gene was actively involved in many aspects of Moultrie life. He served as President of the
Moultrie Chamber of Commerce, Chairman of The United Way of Colquitt County, President
of Moultrie Rotary and President of the Moultrie YMCA. He enjoyed the fellowship of
good friends, hunting, golfing, the outdoors, and serving others.
His commitment to his community and his professional partners is surpassed only by his
devotion to his family: his wife, Nita, his children, Ellen, Joan, Leigh Ann, Michael, Cary,
and Doug, their spouses and his twelve grandchildren.
Gene’s extraordinary support for Ameris Bancorp and its growth during its early years,
his service to his community, and his fellowship, wisdom and generosity are irreplaceable.
We will miss our friend, Eugene M. Vereen, Jr., fondly remembered as “Big Daddy.”
310 First Street SE, Moultrie, GA 31768 • Post Office Box 3668, Moultrie, GA 31776
Phone: 229.890.1111 Fax: 229.890.2235 amerisbank.com
AMERIS BANK LOCATIONS
FUTURE AMERIS BANK LOCATIONS
ALABAMA
ABBEVILLE
204 Kirkland Street 334.585.2265
CLAYTON
33 Eufaula Avenue* 334.775.3211
DOTHAN
2200 East Main Street 334.677.3063
3299 Ross Clark Circle NW 334.671.4000
EUFAULA
1140 South Eufaula Avenue 334.687.3260
HEADLAND
208 Main Street 334.693.5411
GEORGIA
ALBANY
2627 Dawson Road 229.888.5600
BRUNSWICK
5340 New Jesup Highway 912.264.9699
3440 Cypress Mill Road 912.267.9500
CAIRO
40 Highway 84 East 229.377.1110
201 South Broad Street 229.377.1110
COLQUITT
162 East Crawford Street 229.758.3461
CORDELE
510 2nd Street South 229.273.7700
1302 16th Avenue East 229.273.7700
DOERUN
137 West Broad Avenue 229.782.5358
DONALSONVILLE
109 West Third Street 229.524.2112
DOUGLAS
901 Bowens Mill Road SW 912.384.2701
100 South Pearl Avenue 912.384.2701
JEKYLL ISLAND
18-B Beachview Drive 912.635.9014
KINGSLAND
1603 Highway 40 East 912.729.8878
LEESBURG
1607 U.S. Highway 19 South 229.434.4550
MOULTRIE
225 South Main Street 229.985.2222
1707 First Avenue SE 229.985.1111
2513 South Main Street 229.873.4444
OCILLA
300 South Irwin Avenue 229.468.9411
QUITMAN
1000 West Screven Street 229.263.7525
ST. MARYS
2509 Osborne Road 912.882.3400
ST. SIMONS ISLAND
3811 Frederica Road 912.634.1270
THOMASVILLE
2484 East Pinetree Boulevard 229.226.5755
TIFTON
735 West Second Street 229.382.7311
VALDOSTA
19540 Valdosta Highway 229.247.5376
3140 Inner Perimeter Road 229.241.2851
FLORIDA
CRAWFORDVILLE
2628 Crawfordville Highway 850.926.5211
JACKSONVILLE
888 Lane Avenue South 4 904.786.8224
8705 Perimeter Park Boulevard, Suite 4* 904.996.9490
NEWBERRY
25365 West Newberry Road 352.472.2162
ORANGE PARK
485 Blanding Boulevard 904.213.0883
1775 Eagle Harbor Parkway 904.264.8840
TALLAHASSEE
1989 Capital Circle NE, Suite 13 850.656.2110
TRENTON
530 East Wade Street 352.463.7171
SOUTH CAROLINA
BEAUFORT
2348 Boundary Street 843.521.1968
CHARLESTON
834 Savannah Highway 843.573.8000
COLUMBIA
1301 Gervais Street, Suite 700* 803.765.1600
GREENVILLE
1614 Woodruff Road 864.286.5737
109 Laurens Road, Suite A, Building 2* 864.282.3260
HILTON HEAD
2 Park Lane, Suite 200* 843.686.2903
IRMO
1200 Lake Murray Boulevard 803.749.5230
LEXINGTON
701 West Main Street 803.808.4220
MT. PLEASANT
966-C Houston Northcutt Boulevard* 843.375.4969
SUMMERVILLE
1708 Old Trolley Road, Suite C* 843.875.2663
FUTURE LOCATIONS:
Tifton, Georgia
Jacksonville, Florida
*No ATM at this location.