Ameris Bancorp
Annual Report
2010
amerisbank.com
2010
Annual
Report
Principles, Practices, People
Ameris Bancorp 2010 Annual Report
Ameris Bancorp
Annual Report
2010
The 2010 Annual Report to Shareholders will outline how continued
commitment to our Mission and Vision through three prevailing avenues
– principles, practices and people – has allowed Ameris Bancorp to be
well-positioned to remain competitive in a challenging economy.
Table of
Contents
Principles
President and Chief Executive Officer, Edwin W. Hortman, Jr., provides an overview of Ameris Bancorp’s
achievements for the year and an optimistic outlook regarding future challenges.
Practices
Dennis J. Zember Jr., CPA, Ameris Bancorp’s Executive Vice President and Chief Financial Officer, pro-
vides a high-level overview of the financial condition of Ameris Bancorp and Ameris Bank.
People
At Ameris Bank, our success is a direct reflection of the talent, expertise, enthusiasm, devotion and support
exhibited by our customers, employees and shareholders.
Leadership
The experience and depth of knowledge held by our organization’s leaders are evidenced by their ability to
inspire and motivate.
Form 10-K
A comprehensive overview of Ameris Bancorp’s financial statements for the fiscal year ended December 31, 2010.
Community Boards of Directors
Common Stock and Dividend Information
PHOTOS - CLOCKWISE FROM BOTTOM LEFT: Bankers Briley Edwards and Misty McKee
discuss an upcoming visit with a prospective customer in Ameris Bank’s Cordele, GA
location. Ameris Bank’s experienced Agricultural Lenders work with numerous farmers
throughout our four-state footprint to ensure they have the financing needed throughout
the year. Ann Hoffman and Ronnie Marchant from Ameris Bank’s Moultrie Main location
work closely with Clint Kadel and his wife, Alane, owners of Bud K Worldwide, to make
sure all of their business and personal banking needs are met. Virginia Grant, Branch
Manager from Donalsonville, GA has been a dedicated Bank employee for many years.
She serves her customers with the same commitment to excellence today as she did
when she started. Ameris Bank’s Town Center location, one of our newer offices in the
Jacksonville area, provides an Exceptional Customer Experience to its business custom-
ers who share space in the bustling retail hub of St. John’s Town Center.
Without sound, applicable PRINCIPLES, success and progress
can prove elusive. Through a combination of dedication to core values,
community involvement, and strong and conservative leadership, Ameris Bancorp
has weathered even the most challenging environments and circumstances.
Dear Shareholders:
I believe 2010 and the preceding few years
will be defining moments for our Company.
The operating environment has undoubtedly
been difficult, and many letters written to
shareholders this season will chronicle the
economy’s impact on results. But we see
building long-term value for shareholders
and customers as our challenge in every
environment, even the difficult ones, and
on this basis, I can report that we were
successful.
We built long-term value inside our Company
through several initiatives. Most notably, we
issued $90 million of common stock in April,
2010 at 99% of pro forma tangible book
value. Capital strength in any environment
is an advantage, but in the current
environment even more so. At December
31, 2010, our Tier 1 leverage capital was
11.2%, approximately 80% above regulatory
guidelines. This capital allows us to continue
organic growth in existing markets and
employ strategies that expand our footprint
and customer base, while many of our
competitors are distracted with defensive
strategies or plans to deleverage.
Externally, we built long-term value through
four more FDIC-assisted acquisitions. These
acquisitions provided the opportunity
to gain the number one or number two
market position in three markets, as well
as a four-branch footprint in Savannah,
Georgia, pushing total assets to almost $3
billion. These acquisitions have added over
20,000 core customers with approximately
$500 million in loans and deposits in an
environment when asset growth has been
hard to achieve. Integrating these new
markets and new employees into Ameris
Bank is not an easy task or one that is
completed in haste. We anticipate systems
conversions in April 2011 that will bring
significant additional revenue and efficiency
opportunities.
During 2010, we increased our core earnings
substantially, by 38% over 2009 levels,
allowing aggressive management of credit
quality without impairing tangible book value
or regulatory capital ratios. We increased
core earnings in 2010 through several
initiatives, including reductions in operating
expenses that involved additional reductions
in employee benefits, staff reductions, and
suspension of corporate and local board
fees. In 2009 and 2010, we challenged our
bankers to be creative and imaginative
in delivering quality service with fewer
resources. They responded and, in 2010, we
grew average assets by 20% with no growth
in salaries and benefits expenses over 2009
levels. Our passion for excellence is not
temporary or a short-term measure. While
some of the foregone benefits will return, our
mental attitude and discipline will survive the
current cycle and will drive us to constantly
re-invent our delivery systems and practices.
Core earnings also benefited from margin
expansion. Our balance sheet is almost
completely funded with retail deposits from
customers who walk through our front doors.
This very stable source of funding has been
important in the current cycle, and when our
industry emerges out of the current cycle and
into a period of real growth, this advantage
will yield even higher levels of profitability.
Despite successes with increasing core
earnings, consolidated operating results
were still negative at $0.25 per share. Credit
costs associated with restoring quality more
than offset the increases in core earnings
throughout 2010, but we are encouraged
by the credit trends that developed in the
second half of the year. At the end of 2010,
non-performing loans had declined 20% from
their peak and stood at $78 million. Total
criticized and classified loans had declined
even further, down 34% from their peak levels
in 2009. It is our belief that credit costs will
moderate in 2011 as a result of improved
quality and stabilizing real estate values,
providing a more visible path to earnings that
increases tangible book value and provides
internal fuel for growth in our balance sheet.
Going forward, we do not plan to significantly
alter our strategic plan or focus. Short-
term, while the economic recovery gains
momentum, we will remain focused on
restoring the kind of balance sheet quality
that can withstand economic downturns and
market events. We have invested, and will
continue to invest, significant resources in
credit administration to find the equilibrium
that allows for loan growth and market
expansion, while protecting quality and
our shareholders’ capital. In addition to
understanding this relationship, we are also
focused on restoring positive operating
Ameris Bancorp
Ameris Bancorp
Annual Report
Annual Report
2010
2010
results that expand tangible book value and
allow us to restore some of the foregone
compensation to our employees and to
those on our boards.
Our success hinges on people. As we look
at our longer-term strategies, we believe
that we can leverage our talented managers
and Board of Directors with additional
assets, whether internally generated or
through acquisitions, to build value for our
shareholders. Acquisitions do not emerge
from the closing automatically producing
peak revenues with a minimal burden on
resources and properly managed levels
of risk. Ameris Bank employees make this
success possible by quickly instilling our
sales and risk management cultures into
the acquired institution, such that our
shareholders can benefit from the increase
in value. Consequently, we are committed to
continuing to hire and develop exceptional
talent that we believe will make the
difference in creating value.
I cannot finish this letter without commenting
on our Corporate Board’s and our
Community Board’s support and enthusiasm
for our Company. When we call ourselves
a community bank, we do not believe it
is a cliché. We understand how important
vibrant communities are to our mission,
and we understand our role in contributing
to the success of the communities we
serve. Merging the interests of all of our
constituencies is difficult, but, now more than
ever, I see more like-mindedness among
our constituencies. I am thankful that our
local boards remain passionate about our
Company by continuing to represent us in
their communities with pride and by helping
us move forward with the vision we have for
our Bank.
No doubt the economic recovery for our
nation and our Company is on track, but it is
in its infancy. A lot of hard work is ahead of
us. Although it is comforting to see signs of
progress, we remain cautious in our optimism
and steadfastly on watch. We will work with
the same sense of urgency as we carefully
study and execute our strategic plans. It is my
sincere pleasure to thank our team for living
our core values as we fulfill our Vision, and to
thank you, our customers and shareholders,
for continued loyal support. Your trust is a
mark of distinction that we honor and hold in
high regard.
Respectfully,
Edwin W. Hortman, Jr.
President and Chief Executive Officer
While smart business decisions and acute attention to detail were integral to
Ameris Bancorp’s resilience in 2010, our PRACTICES – offering a welcoming atmosphere,
demonstrating a genuine desire to help customers manage and make the most of their
money, and developing personal relationships – ultimately make the
difference when creating value for our customers and shareholders.
Total Asset Growth
Core Deposits
Strong Capital Position
A review of industry reports shows that
only 4% of the nation’s publicly traded
banking companies were able to grow
their total assets at double-digit rates in
2010. Approximately 85% of these banks
shrunk their balance sheets, providing
Ameris Bancorp with a rare opportunity
to acquire certain customers that our
competition could no longer bank. We
combined this in-market growth with four
FDIC-assisted acquisitions having total
assets of $982 million as of the acquisition
date. These acquisitions provided us with
the opportunity to gain the number one or
number two market-share position in three
communities and substantially completed
our coastal footprint with four branches in
Savannah, Georgia. These two successful
strategies allowed Ameris Bancorp to
experience 23% growth in total assets,
further distinguishing our Company and
positioning us for the future.
Our sales culture starts with retail deposits,
which we define as individuals or small
businesses that walk through our front
doors to do business with our bankers.
At the end of 2010, approximately 91%
of our balance sheet is funded with retail
deposits. This stability in core deposits
allows Ameris Bancorp to operate
with very little reliance on the more
volatile brokered deposits or wholesale/
institutional borrowings. During 2010, total
deposits grew 19% as we continued to take
advantage of the marketplace disruption
and opportunities through FDIC-assisted
acquisitions. Most importantly for future
profitability, our low-cost transaction and
savings deposits grew over 30% during
2010, helping to improve our net interest
margin in the current periods, and even
more so when strong loan demand returns
to our markets.
During 2010, we completed a successful
public offering of approximately $90 million
of Ameris Bancorp common stock at
approximately 99% of pro forma tangible
book value. This successful capital raise,
coupled with the gains we recorded on
the four FDIC-assisted transactions during
2010, positioned us at year-end with top-
tier regulatory capital ratios of 19.45%
Total Capital to Risk Weighted Assets and
11.34% Tier 1 Capital to Average Assets.
Tangible common equity as a percentage
of tangible assets improved 26% during
2010, from 5.84% at December 31, 2009
to 7.35% at December 31, 2010. Most
importantly, we have emerged from several
years of economic downturn with only
minimal dilution to tangible book value
and capital levels, allowing us to remain
offensive in our markets.
Ameris Bancorp
Annual Report
2010
Rhianna Felder at Ameris Bank in Charleston, SC helps the son of long-time
customers deposit funds into his Minor Savings Account – the start of another
long-lasting banking relationship. This Ameris Bank family appreciates the all-
encompassing banking relationship they have established with Ameris Bank,
fulfilling both their personal and business financial needs.
Ameris Bank’s total asset strength
now exceeds $2.9 billion.
TOTAL ASSETS
(In thousands of dollars)
2010
2009
2008
2007
2006
$2,972,168
$2,423,970
$2,407,090
$2,112,063
$2,047,542
DEPOSITS
(In thousands of dollars)
2010
2009
2008
2007
2006
$2,535,426
$2,123,116
$2,013,525
$1,757,265
$1,710,163
TANGIBLE COMMON EQUITY
(In thousands of dollars)
2010
2009
2008
2007
2006
$218,069
$141,367
$131,887
$131,634
$118,268
At Ameris Bancorp, we recognize that PEOPLE come first, and every person is a
customer – traditional branch-level customers, employees at every organizational level,
and shareholders who have invested confidence and trust in our Company. We believe in
developing lifelong relationships with our customers; and we take pride in ensuring every step is
taken, with respect and integrity, to meet and exceed our customers’ individual needs.
The cornerstone of our strategy aimed at
fulfilling our Vision is our employees. Our vast
suite of products and services, convenient
branch locations, competitive interest rates
and sound underwriting standards are
obviously important elements in attracting
and retaining customers, but our people
make the difference. Our belief, becoming
more and more apparent over time, is that the
easiest and most efficient way to differentiate
ourselves and drive consistently exceptional
results is to hire and retain bankers at the top
of their game. These employees are self-
motivated, with a passion to improve the lives
of their coworkers and customers with hard
work, enthusiasm and creativity.
Our Company’s dedication to an “Exceptional
Customer Experience” is important. While
for many the term “Community Banking”
may have become a cliché, we use this term
sincerely and with meaning, for our style of
banking recognizes the inherent differences
in the markets we serve and, even deeper,
the individual needs of each business and
consumer customer that calls Ameris Bank
home. Progressive products and services that
are convenient to the customer are critical, but
we go further, because our bankers uncover
our customer’s needs and then customize the
solutions we offer to meet and exceed the
customer’s expectations. In return, we have
a loyal customer base whose confidence in
Ameris Bank is displayed through regular
referrals of friends and family.
Lastly, we are motivated to improve our
local markets. Our employees are not just
exceptional bankers, but leaders in their
communities, where they invest their spare
time through volunteering. In October, 2010,
Ameris Bank launched its first “Helping Fight
Hunger” campaign aimed at strengthening
local food banks with a month-long food drive.
Our customers and employees responded,
collecting over 70,000 non-perishable food
items that improved the lives of our neighbors.
In addition to this bank-wide project, individual
locations volunteer time and resources to
support other local community development
projects. Market President Marty Stubblefield,
from our Crawfordville, Florida location,
served on a loan committee alongside
representatives from four other banks in the
area, approving loan applications for small
businesses affected by the Gulf Oil Spill.
This program helped to provide short-term,
working capital loans to viable, established
Florida small businesses that had experienced
hardship as a result of the Deepwater
Horizon Oil Spill, giving these small business
owners the opportunity to receive financing
to continue business production until they
received reimbursement from BP. Because
of efforts like these, over 2,800 hours of total
service were donated by our employees, with
participation in 104 different service projects,
resulting in community development activity
in every Ameris Bank market throughout 2010.
Our bank-wide project, coupled with personal
volunteer initiatives completed by employees
throughout our franchise, differentiated
Ameris Bank from all others – we have
employees that care for both the financial and
social well-being of those in our communities.
Our employees are focused on the needs of
our customers and communities, constantly
looking to further develop personal
relationships and community ties. This focus
is what makes Ameris Bank a preferred
choice for those seeking sound, honest,
banking services.
Ameris Bancorp
Annual Report
2010
FROM LEFT: From Albany, GA, Calvin McMillan, Business Banker, Don Monk, Regional President and Debbie Dominey, Branch Manager and Retail Market Leader, discuss ways to
further develop a customer’s banking relationship. Ameris Bancorp calls Moultrie, GA home. From small communities like Moultrie to large metropolitan cities like Jacksonville,
Ameris Bank employees consistently roll out the red carpet to customers with varying needs. Richard Sturm, Regional President, and Mze Wilkins, Market President, stop in the
lobby of our Columbia location to speak about a renewing business loan. Ameris Bank employees help make financial dreams a reality and take pride in serving families and
individuals who are our neighbors and members of our communities.
Ameris Bank employees worked
together to gather over 70,000 non-
perishable food items during Ameris
Bank’s 2010 Helping Fight Hunger
community involvement campaign.
Ameris Bank’s Alabama area locations
collected over 11,000 food items for
Wiregrass United Way Foodbank.
Here, David Hanks from Wiregrass
shows some of the food items in their
warehouse to Ameris Bank employees
Pam Bynum, Harry Pittman, Brittany
Logan and Kelli Pylant.
TOP RIGHT: Long-time customer, Don
Horne meets with his Bankers, Ronnie
Marchant and Frank Cox to show
off one of his newer pieces of farm
equipment.
BOTTOM RIGHT: Ameris Bank
customers, young and old, let us know
just how much they love Ameris Bank
during Ameris Bank’s 2010 “I ‘heart’
Ameris Bank” campaign.
AMERIS BANCORP EXECUTIVE OFFICERS
TOP ROW FROM LEFT: Edwin W. Hortman, Jr., President and Chief Executive Officer; Andrew B. Cheney, Executive Vice President
and Banking Group President; Dennis J. Zember, Jr. CPA, Executive Vice President and Chief Financial Officer; BOTTOM ROW FROM
LEFT: Marc J. Bogan, Executive Vice President and Chief Retail Officer; Jon S. Edwards, Executive Vice President and Director of Credit
Administration; Cindi H. Lewis, Executive Vice President, Chief Administrative Officer and Corporate Secretary
AMERIS BANCORP BOARD OF DIRECTORS
STANDING FROM LEFT: V. Wayne Williford, J.B. Coxwell Contracting Co. (Heavy Highway Construction); R. Dale Ezzell, Wisecards Printing
(Print Services); Chairman Daniel B. Jeter, Standard Discount Corp. (Consumer Finance); Edwin W. Hortman, Jr., President and CEO, Ameris
Bancorp; Robert P. Lynch, Lynch Management Company (Automobile Sales); SEATED FROM LEFT: Brooks Sheldon, Retired Banker;
J. Raymond Fulp, Harvey’s Pharmacy (Pharmacy); Jimmy D. Veal, The Beachview Club (Hospitality)
Ameris Bancorp
Annual Report
2010
Strong leadership and sound business practices afford
us the opportunity to rise above every challenge.
Our corporate Board of Directors and
our Executive Officers have been laser
focused on strengthening our Company
and keeping it in a position to benefit
from the opportunities in the current
environment. We developed plans early in
the cycle to ensure that capital and liquidity
ratios remained strong enough to warrant
offensive strategies. Further, we continue to
regularly recruit top-tier bankers, develop
creative approaches to value creation, and
keep a keen eye towards risk management.
Leadership, however, is not a term
we reserve for our corporate Board of
Directors or our Executive Officers. We
expect leadership in our market leaders,
our segment managers, our community
boards and in employees who volunteer
locally with charitable organizations.
When we combine the backgrounds and
the business successes of this leadership
group, we find that our judgment and
decision making abilities are greatly
improved, and we believe that our
ability to deliver attractive financial
results is enhanced.
Looking back over the past few years, it is
clear that this leadership team has regularly
challenged our strategies and made bold
adjustments when necessary. Having the
right team in place allowed us to make the
right decisions quickly. As we emerge from
the credit cycle of the past few years, this
same team will continue to fine tune our
business model and challenge our Company
to embrace change and exhibit the
leadership that our constituencies deserve.
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 Sec-
tion 21E of the Securities Exchange Act of 1934, as amended. The words “believe”, “estimate”, “expect”, “intend”, “anticipate” and similar expressions and variations there-
of 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
⌧ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 2010, or
� 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 � 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 � 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 �
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File
required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such files). Yes � No �
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. �
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
�
Accelerated filer
Non-accelerated filer �
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act). Yes � No ⌧
Smaller reporting company
⌧
�
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 $233.6 million.
As of March 9, 2011, the registrant had outstanding 23,766,044 shares of common stock, $1.00 par value per share.
Portions of the registrant’s Proxy Statement for the 2011 Annual Meeting of Shareholders are incorporated herein into Part III by reference.
DOCUMENTS INCORPORATED BY REFERENCE
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.
(Removed and Reserved)
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
Item 6.
Selected Financial Data
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 8.
Financial Statements and Supplementary Data
Item 9.
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
Item 9A. Controls and Procedures
Item 9B. Other Information
PART III
Item 10. Directors, Executive Officers and Corporate Governance
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Item 13. Certain Relationships and Related Transactions, and Director Independence
Item 14. Principal Accounting Fees and Services
PART IV
Item 15. Exhibits, Financial Statement Schedules
Page
1
16
24
24
24
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25
27
29
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47
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49
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 Ameris Bancorp
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 “SEC”) 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 Annual 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 Annual Report, or after the respective dates on which such
statements otherwise are made, whether as a result of new information, future events or otherwise.
As used in this Annual Report, the terms “we,” “us,” “our,” “Ameris” and the “Company” refer to Ameris Bancorp and its subsidiaries
(unless the context indicates another meaning).
PART I
ITEM 1. BUSINESS
OVERVIEW
We are a financial holding company whose business is conducted primarily through our wholly-owned banking subsidiary, Ameris
Bank (the “Bank”), which provides a full range of banking services to its retail and commercial customers who are primarily
concentrated in select markets in Georgia, Alabama, 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, our telephone number
is (229) 890-1111 and our internet address is www.amerisbank.com. We operate 59 domestic banking offices with no foreign
activities. At December 31, 2010, we had approximately $2.97 billion in total assets, $1.93 billion in total loans, $2.54 billion in total
deposits and stockholders’ equity of $273.4 million. Our deposits are insured, up to applicable limits, by the Federal Deposit Insurance
Corporation (the “FDIC”).
We make our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those
reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act available free of charge on our website at
www.amerisbank.com as soon as reasonably practicable after we electronically file such material with the SEC. These reports are also
available without charge on the SEC’s website at www.sec.gov.
The Parent Company
Our primary business as a bank holding company is to manage the business and affairs of 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.
1
1
Ameris Bank
Our principal subsidiary is the Bank, which is headquartered in Moultrie, Georgia and operates branches primarily concentrated in
select markets in Georgia, Alabama, 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 the 3-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. (“FNB”). In 2004, FNB’s wholly-owned subsidiary, First
National Banc Statutory Trust I, issued $5,000,000 in 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. See the Notes to our Consolidated
Financial Statements included in this Annual Report for a further discussion regarding the issuance of these trust preferred securities.
Strategy
We seek to increase our presence and grow the “Ameris” brand in the markets that we currently serve in Georgia, Alabama, Florida
and South Carolina and in neighboring communities that present attractive opportunities for expansion. Management has pursued this
objective through an acquisition-oriented growth strategy and a prudent operating strategy. Our community banking philosophy
emphasizes personalized service and building broad and deep customer relationships, which has provided us with a substantial base of
low cost core deposits. 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 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, including acquisitions of
failed institutions in FDIC-assisted transactions. We expect to continue to take advantage of the consolidation in the financial services
industry and enhance our franchise through future acquisitions, including additional acquisitions of failed or problem financial
institutions in FDIC-assisted transactions. 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 have not
made or participated in foreign, energy-related or subprime type loans. In addition, the Company does not buy loan participations or
portions of national credits but from time to time, may acquire balances subject to participation agreements through acquisition.
Excluding covered loans, less than 1% of the Company’s loan portfolio was subject to loan participation agreements at December 31,
2010 and 2009.
At December 31, 2010, our loan portfolio totaled $1.93 billion, representing approximately 64.9% of our total assets. For additional
discussion of our loan portfolio, see “Management’s Discussion of Financial Condition and Results of Operations – Loan Portfolio.”
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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, if any.
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, poultry producers, livestock and timber growers. 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 is guaranteed by
the FSA Guaranteed Loan Program.
Commercial and Industrial Loans. Generally, commercial and industrial loans consist of loans made primarily to manufacturers,
wholesalers and retailers of goods, service companies and other industries. These loans are made for acquisition, expansion and
working capital purposes and may be secured by real estate, accounts receivable, inventory, equipment, personal guarantees or other
assets. The Company monitors these loans by requesting submission of corporate and personal financial statements and income tax
returns. The Company has also generated loans which are guaranteed by the U.S. Small Business Administration (the “SBA”). SBA
loans are generally underwritten in the same manner as conventional loans generated for the Bank’s portfolio. Periodically, a portion
of the loans that are secured by the guaranty of the SBA will be sold in the secondary market. Management believes that making such
loans helps the local community and also provides Ameris with a source of income and solid future lending relationships as such
businesses grow and prosper. The primary repayment risk for commercial loans is the failure of the business due to economic or
financial factors.
Consumer Loans. Our consumer loans include motor vehicle, home improvement, home equity, student and signature loans and small
personal credit lines. The terms of these loans typically range from 12 to 60 months and vary based upon the nature of collateral and
size of the loan. These loans are generally secured by various assets owned by the consumer.
Credit Administration
We have sought to maintain a comprehensive lending policy that meets the credit needs of each of the communities served by the
Bank, including low and moderate-income customers, and to employ lending procedures and policies consistent with this
approach. All loans are subject to our corporate loan policy, which is reviewed annually and updated as needed. The loan policy
provides that lending officers have sole authority to approve loans of various amounts commensurate with their seniority and
experience. Our local market Presidents have discretion to approve loans in varying principal amounts up to established limits, and our
regional credit officers review and approve loans that exceed such limits.
Individual lending authority is 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
requests for extensions of credit in excess of any of these limits are reviewed by one of three 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 monthly 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 our monthly internal loan review process
which is independent of the originating loan officer, or by our independent external loan review firm.
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, our loan committee will approve making a loan outside of the market areas of the Bank, provided the Bank has
a prior 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.
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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.
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
Enterprises (“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, the United States Department of the Treasury (the “Treasury”) and the Federal Reserve implemented several
programs and initiatives aimed at reducing the liquidity risks in the United States economy. In addition to these governmental actions,
loan demand in the Company’s markets fell considerably during 2009 for many banks and further reduced the demand for
deposits. Because of these events, the Company was able to significantly reduce deposit costs and force a migration from higher cost
term deposits into lower cost money market and NOW deposits.
Brokered time deposits are deposits obtained by utilizing an outside broker that is paid a fee. The Bank utilizes 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.
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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. During 2010, the Company benefited from an interest rate swap with a notional amount of
$37.1 million and an interest rate floor with a notional amount of $35.0 million. At December 31, 2010, the interest rate floor was
classified as a cash flow hedge against certain variable rate loans on the Company’s balance sheet. The hedge is indexed to the prime
rate as are the variable rate loans and has a strike rate of 7.00%. During 2010, the Company received approximately $1.3 million of
interest payments on the interest rate floor, which have been classified as interest income on loans.
CORPORATE RESTRUCTURING AND BUSINESS COMBINATIONS
Tifton Banking Company
On November 12, 2010, the Bank purchased substantially all of the assets and assumed substantially all of the liabilities of Tifton
Banking Company (“TBC”) from the FDIC, as Receiver of TBC. TBC operated one branch in Tifton, Georgia, with $118.4 million in
loans and $132.9 million in deposits. The Company’s agreements with the FDIC included a loss-sharing agreement which affords the
Bank significant protection from losses associated with loans and other real estate owned (“OREO”). Under the terms of the loss-
sharing agreement, the FDIC will absorb 80% of losses and share 80% of loss recoveries during the term of the agreement. The term
for loss sharing on residential real estate loans is ten years, while the term for loss sharing on all other loans is five years.
The Company’s acquisition of TBC resulted in the Bank recording $956,000 of goodwill related to the purchase. The bid resulted in a
cash payment to the FDIC totaling $10.3 million to settle the transaction.
Darby Bank & Trust Co.
On November 12, 2010, the Bank purchased substantially all of the assets and assumed substantially all of the liabilities of Darby
Bank & Trust Co. (“DBT”) from the FDIC, as Receiver of DBT. DBT operated seven branches in Vidalia, Lyons, Savannah and
Pooler, Georgia, with $393.3 million in loans and $387.0 million in deposits. The Company’s agreements with the FDIC included a
loss-sharing agreement which affords the Bank significant protection from losses associated with loans and OREO. Under the terms of
the loss-sharing agreement, the FDIC will absorb 80% of losses and share 80% of loss recoveries during the term of the agreement up
to $131.8 million of cumulative loss. The FDIC will absorb 30% of losses and share 30% of loss recoveries during the term of the
agreement for cumulative losses between $131.8 million and $193.1 million. The FDIC will absorb 80% of losses and share 80% of
loss recoveries during the term of the agreement on cumulative losses over $193.1 million. The term for loss sharing on residential
real estate loans is ten years, while the term for loss sharing on all other loans is five years.
The Company’s bid to acquire DBT included a discount on the book value of the assets totaling $45.0 million. The bid resulted in a
cash payment to the FDIC totaling $149.9 million.
First Bank of Jacksonville
On October 22, 2010, the Bank purchased substantially all of the assets and assumed substantially all of the liabilities of First Bank of
Jacksonville (“FBJ”) from the FDIC, as Receiver of FBJ. FBJ operated two branches in Jacksonville, Florida, with $51.1 million in
loans and $71.9 million in deposits. The Company’s agreements with the FDIC included a loss-sharing agreement which affords the
Bank significant protection from losses associated with loans and OREO. Under the terms of the loss-sharing agreement, the FDIC
will absorb 80% of losses and share 80% of loss recoveries during the term of the agreement. The term for loss sharing on residential
real estate loans is ten years, while the term for loss sharing on all other loans is five years.
The Company’s bid to acquire FBJ included a discount on the book value of the assets totaling $4.8 million. The bid resulted in a cash
payment from the FDIC totaling $8.1 million.
Satilla Community Bank
On May 14, 2010, the Bank purchased substantially all of the assets and assumed substantially all of the liabilities of Satilla
Community Bank (“SCB”) from the FDIC, as Receiver of SCB. SCB operated one branch in St. Marys, Georgia, the southernmost
city on the Georgia coast and a northern suburb of Jacksonville, Florida, with $68.8 million in loans and $75.5 million in deposits. The
Company’s agreements with the FDIC included a loss-sharing agreement which affords the Bank significant protection from losses
associated with loans and OREO. Under the terms of the loss-sharing agreement, the FDIC will absorb 80% of losses and share 80%
of loss recoveries during the term of the agreement. The term for loss sharing on residential real estate loans is ten years, while the
term for loss sharing on all other loans is five years.
The Company’s bid to acquire SCB included a discount on the book value of the assets totaling $14.4 million. Also included in the bid
was a premium of approximately $92,000 on SCB’s deposits. Because SCB’s brokered deposits did not pass to the Bank, the
acquisition resulted in significantly more assets being purchased than liabilities assumed. As a result, the Bank made a cash payment
to the FDIC totaling $35.7 million to settle the transaction.
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United Security Bank
On November 6, 2009, the Bank purchased substantially all of the assets and assumed substantially all of the liabilities of United
Security Bank (“USB”) from the FDIC, as Receiver of USB. USB operated one branch in Woodstock, Georgia and one branch in
Sparta, Georgia, with total loans of $108.4 million and $140.0 million of total deposits. The Company’s agreements with the FDIC
included a loss-sharing agreement which affords the Bank significant protection from losses associated with loans and OREO. Under
the terms of the loss-sharing agreement the FDIC will absorb 80% of losses and share 80% of loss recoveries on the first $46 million
of losses and absorb 95% of losses and share in 95% of loss recoveries on losses exceeding $46 million. The term for loss sharing on
residential real estate loans is ten years, while the term for loss sharing on all other loans is five years.
The Company’s bid to acquire USB included a discount on the book value of the assets totaling $32.6 million. Also included in the bid
was a premium of approximately $228,000 on USB’s deposits. The bid resulted in a cash payment from the FDIC totaling $24.2
million.
American United Bank
On October 23, 2009, the Bank purchased substantially all of the assets and assumed substantially all of the liabilities of American
United Bank (“AUB”) from the FDIC, as Receiver of AUB. AUB operated only one branch in Lawrenceville, Georgia, a northeast
suburb of Atlanta, Georgia, with $85.7 million in loans and $100.3 million in deposits. The Company’s agreements with the FDIC
included a loss-sharing agreement which affords the Bank significant protection from losses associated with loans and OREO. Under
the terms of the loss-sharing agreement, the FDIC will absorb 80% of losses and share 80% of loss recoveries on the first $38 million
of losses and absorb 95% of losses and share in 95% of loss recoveries on losses exceeding $38 million. The term for loss sharing on
residential real estate loans is ten years, while the term for loss sharing on all other loans is five years.
The Company’s bid to acquire AUB included a discount on the book value of the assets totaling $19.6 million. Also included in the
bid was a premium of approximately $262,000 on AUB’s deposits. The bid resulted in a cash payment from the FDIC totaling $17.1
million.
Capital Purchase Program
On November 21, 2008, the Company, pursuant to the Capital Purchase Program (the “CPP”) established under the Economic
Stabilization Act of 2008 (“EESA”), in connection with the Troubled Asset Relief Program (“TARP”), issued and sold to 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 our common stock, par value $1.00 per share (the “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 considered its
common equity and earnings stream to be sufficient to withstand certain severe recessionary trends, management was unsure at the
time of evaluating the Company’s CPP participation 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.
Islands Bancorp
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 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 Common Stock with a value of approximately $13.9 million.
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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 select market areas in Georgia, Alabama, Florida and South Carolina have experienced
strong economic and population growth over the past 20 to 30 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.
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 any material respect 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 regional and local institutions, while strengthening the franchise of acquirers. Management expects
that competition will become more intense in the future due to changes in state and federal laws and regulations and the entry of
additional bank and nonbank competitors. See “Supervision and Regulation” under this Item.
EMPLOYEES
At December 31, 2010, the Company employed approximately 709 full-time-equivalent employees. We consider our relationship with
our employees to be good.
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. As a result of the Company’s net loss from operations, it did not
make any contributions for eligible employees in 2010. 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,
2010, we had $1.93 billion in total loans outstanding, of which $7.6 million were outstanding to certain directors and their
affiliates. Company policy prohibits 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 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 Board of Governors of the Federal Reserve System (the “Federal Reserve”). Our Bank has a
Georgia state charter and is subject to regulation, supervision and examination by the FDIC and the Georgia Department of Banking
and Finance (the “GDBF”).
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The Bank Holding Company Act requires every bank holding company to obtain the prior approval of the Federal Reserve before:
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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.
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.
Subject to various exceptions, the Bank Holding Company Act and the Change in Bank Control Act, together with related regulations,
require Federal Reserve approval prior to any person or company acquiring “control” of a bank holding company. Control is
conclusively presumed to exist if an individual or company acquires 25% or more of any class of voting securities of a bank holding
company. Control is also presumed to exist, although rebuttable, if a person or company acquires 10% or more, but less than 25%, of
any class of voting securities and either:
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the bank holding company has registered securities under Section 12 of the Exchange Act; or
no other person owns a greater percentage of that class of voting securities immediately after the transaction.
Our Common Stock is registered under Section 12 of the Exchange Act. The regulations provide a procedure for challenging
rebuttable presumptions of control.
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. 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.
Under the Bank Holding Company Act, a bank holding company may file an election with the Federal Reserve to be treated as a
financial holding company and engage in an expanded list of financial activities. The election must be accompanied by a certification
that all of the company’s insured depository institution subsidiaries are “well capitalized” and “well managed.” Additionally, the
Community Reinvestment Act of 1977 rating of each subsidiary bank must be satisfactory or better. Effective August 24, 2000,
pursuant to a previously-filed election with the Federal Reserve, Ameris became a financial holding company. As such, we may
engage in activities that are financial in nature or incidental or complementary to financial activities, including insurance underwriting,
securities underwriting and dealing, and making merchant banking investments in commercial and financial companies. If the Bank
ceases to be “well capitalized” or “well managed” under applicable regulatory standards, the Federal Reserve may, among other
things, place limitations on our ability to conduct these broader financial activities. In addition, if the Bank receives a rating of less
than satisfactory under the Community Reinvestment Act, we would be prohibited from engaging in any additional activities other
than those permissible for bank holding companies that are not financial holding companies. If, after becoming a financial holding
company and undertaking activities not permissible for a bank holding company, the company fails to continue to meet any of the
prerequisites for financial holding company status, including those described above, the company must enter into an agreement with
the Federal Reserve to comply with all applicable capital and management requirements. If the company does not return to compliance
within 180 days, the Federal Reserve may order the company to divest its subsidiary banks or the company may discontinue or divest
investments in companies engaged in activities permissible only for a bank holding company that has elected to be treated as a
financial holding company.
Under Federal Reserve policy, we are expected to act as a source of financial strength for the Bank and to commit resources to support
the Bank. This support may be required at times when, without this Federal Reserve policy, we might not be inclined to provide it. In
addition, any capital loans made by us to the Bank will be repaid only after its deposits and various other obligations are repaid in full.
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.
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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
our cash revenues is dividends from our Bank. The prior approval of applicable regulatory authorities is required if the total amount of
all 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.
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 regulatory approval as of December 31, 2010.
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.
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The minimum guideline for the ratio of total capital to risk-weighted assets is 8%. At least half of total capital must be comprised of
Tier 1 Capital, which is common stock, undivided profits, minority interests in the equity accounts of consolidated subsidiaries and
noncumulative perpetual preferred stock, less goodwill and certain other intangible assets. The remainder may consist of Tier 2
Capital, which is subordinated debt, other preferred stock and a limited amount of loan loss reserves. Since 2001, our consolidated
capital ratios have increased due to the issuance of trust preferred securities. At December 31, 2010, all of our trust preferred securities
were included in Tier 1 Capital. At December 31, 2010, our total risk-based capital ratio and our Tier 1 risk-based capital ratio were
19.45% and 18.19%, respectively. Neither Ameris nor its Bank has been advised by any federal banking agency of any additional
specific minimum capital ratio requirement applicable to it.
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%. Our ratio at December 31, 2010 was 11.34% compared to 9.35% at December 31, 2009. The guidelines also
provide that bank holding companies experiencing internal growth or making acquisitions will be expected to maintain strong capital
positions substantially above the minimum supervisory levels without significant reliance on intangible assets. Furthermore, the
Federal Reserve has indicated that it will consider a “tangible Tier 1 Capital leverage ratio” and other indications of capital strength in
evaluating proposals for expansion or new activities. The Federal Reserve has not advised Ameris of any additional specific minimum
leverage ratio or tangible Tier 1 Capital leverage ratio 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.
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:
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“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.
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, 2010, our Bank had capital levels that qualify as “well capitalized” under such regulations.
The FDI Act generally prohibits an FDIC-insured bank from making a capital distribution (including payment of a dividend) or paying
any management fee to its holding company if the bank would thereafter be “undercapitalized.” “Undercapitalized” banks are subject
to growth limitations and are required to submit a capital restoration plan. The federal regulators may not accept a capital plan without
determining, among other things, that the plan is based on realistic assumptions and is likely to succeed in restoring the bank’s
capital. In addition, for a capital restoration plan to be acceptable, the bank’s parent holding company must guarantee that the
institution will comply with such capital restoration plan. The aggregate liability of the parent holding company is limited to the lesser
of: (i) an amount equal to 5% of the bank’s total assets at the time it became “undercapitalized”; and (ii) the amount which is
necessary (or would have been necessary) to bring the institution into compliance with all capital standards applicable with respect to
such institution as of the time it fails to comply with the plan. If a bank fails to submit an acceptable plan, it is treated as if it is
“significantly undercapitalized.”
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“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 brokered deposits.
The regulatory capital framework under which we operate is expected to change in significant respects as a result of the Dodd-Frank
Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), which was enacted in July 2010, and other regulation,
including a separate regulatory capital initiative known as “Basel II.” Currently, the Company and the Bank are now governed by a set
of capital rules that the Federal Reserve and the FDIC have had in place since 1988, with some subsequent amendments and revisions.
These rules are popularly known as “Basel I.” Before the current financial crisis began to have a dramatic effect on the banking
industry, the U.S. regulators had participated in an effort by the Basel Committee on Banking Supervision to develop Basel II. Basel II
provides several options for determining capital requirements for credit and operational risk. In December 2007, the agencies adopted
a final rule implementing Basel II’s “advanced approach” for “core banks” – U.S. banking organizations with over $250 billion in
banking assets or on-balance-sheet foreign exposures of at least $10 billion. For other banking organizations, the U.S. banking
agencies proposed a rule in July 2008 that would have enabled these organizations to adopt the Basel II “standardized approach.” As a
result of the financial crisis that has adversely affected global credit markets and increases in credit, liquidity, interest rate and other
risks, in September 2009, the Treasury issued principles for stronger capital and liquidity standards for banking firms, which included
recommendations for higher capital standards for all banking organizations to be implemented as part of a broader reconsideration of
international risk-based capital standards developed by Basel II. In December 2010, Basel III was finalized, with new standards that,
when fully phased in, would require bank holding companies and their bank subsidiaries to maintain substantially more capital, with a
greater emphasis on common equity. The Basel III requirements also call for a capital conservation buffer, designed to absorb losses
during periods of economic stress. Basel III emphasizes quality of capital rather than the appropriate allocation of capital to bank
assets based on credit risk, and it does not purport to replace or overrule Basel II.
Compliance by the Company and the Bank with these new capital requirements will likely affect our operations. However, the extent
of that impact cannot be known until there is greater clarity regarding the specific requirements applicable to the Company and the
Bank. While the Dodd-Frank Act was enacted in 2010, many of its provisions will require additional implementing rules before
becoming effective, and while the Basel III requirements have been endorsed by U.S. banking regulators, they have yet to be
translated into official regulation for U.S. financial institutions. It is anticipated that banking regulators will adopt new regulatory
capital requirements similar to those proposed by the Basel Committee, with a phase-in for compliance beginning in 2013. It is also
widely anticipated that the capital requirements for most bank and financial holding companies and insured depository institutions will
increase as a result.
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. Effective November 21, 2008 and until
December 31, 2010, the FDIC expanded deposit insurance limits for certain accounts under the Temporary Liquidity Guarantee
Program (“TLGP”). Provided an institution did not opt out of the TLGP, the FDIC would fully guarantee funds deposited in non-
interest bearing transaction accounts, including interest on lawyer trust accounts (or “IOLTA” accounts) and negotiable order of
withdrawal accounts (or “NOW” accounts), with rates no higher than 0.50% through June 30, 2010 and no higher than 0.25% after
June 30, 2010, if the institution committed to maintain the interest rate at or below that rate. In conjunction with the increased deposit
insurance coverage, the amount of FDIC assessments paid by each Deposit Insurance Fund (“DIF”) member institution also increased.
The Dodd-Frank Act now provides temporary, unlimited deposit insurance for all non-interest bearing transaction accounts. In January
2011, the FDIC issued final rules implementing this provision of the Dodd-Frank Act by including IOLTAs within the definition of
non-interest bearing transaction accounts. Under the FDIC’s final rules, all funds held in IOLTA accounts, together with all other non-
interest bearing transaction account deposits, are fully insured, without limit, from December 31, 2010 through December 31, 2012.
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The assessment paid by each DIF 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 assessments during 2010, 2009 and 2008 were $5.1 million, $3.5 million and $932,000,
respectively. Because of the growing number of bank failures and costs to the DIF, the FDIC required a special assessment during
2009 totaling $1.1 million and further required that we prepay the assessments that would normally have been paid during 2010 –
2012. This prepaid assessment amounted to $12.3 million during 2009. The remaining prepaid balance at December 31, 2010 was $8.4
million and is included in other assets on the company’s consolidated balance sheets. 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 an 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.
In February 2009, the FDIC issued new risk based assessment rates that took effect April 1, 2009. For insured depository institutions
in the lowest risk category, the annual assessment rate ranges from 7 to 24 cents for every $100 of domestic deposits. For institutions
assigned to higher risk categories, the new assessment rates range from 17 to 77.5 cents per $100 of domestic deposits. These ranges
reflect a possible downward adjustment for unsecured debt outstanding and possible upward adjustments for secured liabilities and, in
the case of institutions outside the lowest risk category, brokered deposits.
As part of its revised plan to return the DIF to its statutorily mandated minimum reserve ratio of 1.15% by the end of 2016, the FDIC
in October 2009 adopted a uniform increase in risk-based assessment rates of three basis points to be effective January 1, 2011.
However, in October 2010, the FDIC concluded that, given the continuing stresses on the earnings of insured depository institutions
and the additional time afforded by the Dodd-Frank Act to reach the reserve ratio required by the Dodd-Frank Act, it would forego
this uniform three basis point increase in assessment rates. The FDIC stated that it intends to pursue further rulemaking in 2011
regarding the method that will be used to assess insured depository institutions with total consolidated assets of $10 billion or more to
offset the effect of the Dodd-Frank Act’s requirement that the reserve ratio reach 1.35% by September 30, 2020, rather than 1.15% by
the end of 2016. At least semiannually, the FDIC will update its income and loss projections for the DIF and, if necessary, propose
rules to further increase assessment rates.
The FDIC also collects a deposit-based assessment from insured financial institutions on behalf of the Financing Corporation (the
“FICO”). The funds from these assessments are used to service debt issued by FICO in its capacity as a financial vehicle for the
Federal Savings & Loan Insurance Corporation. The FICO assessment rate is set quarterly and in 2010 ranged from 1.02 cents to 1.04
cents per $100 of assessable deposits. These assessments will continue until the debt matures in 2017 through 2019.
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.
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.
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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, the Fair Debt Collection 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
The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001
(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.
The Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”) mandates a variety of reforms intended to address corporate and accounting
fraud and provides for the establishment of the Public Company Accounting Oversight Board (“PCAOB”), which enforces auditing,
quality control and independence standards for firms that audit SEC- reporting companies. Sarbanes-Oxley imposes higher standards
for auditor independence and restricts the provision of consulting services by auditing firms to companies they audit and requires that
certain audit partners be rotated periodically. It also requires chief executive officers and chief financial officers, or their equivalents,
to certify the accuracy of periodic reports filed with the SEC, subject to civil and criminal penalties if they knowingly or willfully
violate this certification requirement, and increases the oversight and authority of audit committees of publicly traded companies.
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 with certainty 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 FHLB of Atlanta, which is one of 12 regional 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.
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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.
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.
Commercial Real Estate Concentrations
Our lending operations may be subject to enhanced scrutiny by federal banking regulators based on our concentration of commercial
real estate loans. On December 6, 2006, the federal banking regulators issued final guidance to remind financial institutions of the risk
posed by commercial real estate (“CRE”) lending concentrations. CRE loans generally include land development, construction loans,
and loans secured by multifamily property, and nonfarm, nonresidential real property where the primary source of repayment is
derived from rental income associated with the property. The guidance prescribes the following guidelines for its examiners to help
identify institutions that are potentially exposed to significant CRE risk and may warrant greater supervisory scrutiny:
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total reported loans for construction, land development and other land (“C&D”) represent 100% or more of the
institution’s total capital; or
total commercial real estate loans represent 300% or more of the institution’s total capital, and the outstanding balance of
the institution’s commercial real estate loan portfolio has increased by 50% or more.
As of December 31, 2010 and excluding covered assets, our C&D concentration as a percentage of capital totaled 59.5% and our CRE
concentration, net of owner-occupied loans, as a percentage of capital totaled 147.9%. Including loans subject to loss-share
agreements with the FDIC, the Company’s C&D concentration as a percentage of capital totaled 92.3% and our CRE concentration,
net of owner-occupied loans, as a percentage of capital totaled 160.2%
TARP Regulations
Under the EESA, Congress has the ability to impose additional terms and conditions on TARP participants. As a participant in the
CPP under TARP, we are subject to any such retroactive legislation. On February 10, 2009, the Treasury announced the Financial
Stability Plan under the EESA (the “Financial Stability Plan”), which is intended to further stabilize financial institutions and
stimulate lending across a broad range of economic sectors. On February 18, 2009, President Obama signed the American Recovery
and Reinvestment Act (“ARRA”), a broad economic stimulus package that includes additional restrictions on, and potential additional
regulation of, financial institutions.
On June 10, 2009, under the authority granted to it under ARRA and EESA, the Treasury issued an interim final rule under
Section 111 of EESA, as amended by ARRA, regarding compensation and corporate governance restrictions that would be imposed
on TARP participants, effective June 15, 2009. As a TARP participant with currently outstanding obligations under TARP, we are
subject to the compensation and corporate governance restrictions and requirements set forth in the interim final rule, which, among
other things: (i) prohibit us from paying or accruing bonuses, retention awards or incentive compensation, except for certain long-term
stock awards, to our senior executives; (ii) prohibit us from making severance payments to any of our senior executive officers or next
five most highly compensated employees; (iii) require us to conduct semi-annual risk assessments to assure that our compensation
arrangements do not encourage “unnecessary and excessive risks” or the manipulation of earnings to increase compensation;
(iv) require us to recoup or “claw back” any bonus, retention award or incentive compensation paid by us to a senior executive officer
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or any of our next 20 most highly compensated employees, if the payment was based on financial statements or other performance
criteria that are later found to be materially inaccurate; (v) prohibit us from providing tax gross-ups to any of our senior executive
officers or next 20 most highly compensated employees; (vi) require us to provide enhanced disclosure of perquisites, and the use and
role of compensation consultants; (vii) required us to adopt a corporate policy on luxury and excessive expenditures; (viii) require our
chief executive officer and chief financial officer to provide period certifications about our compensation practices and compliance
with the interim final rule; (ix) require us to provide enhanced disclosure of the relationship between our compensation plans and the
risk posed by those plans; and (x) require us to provide an annual nonbinding shareholder vote, or “say-on-pay” proposal, to approve
the compensation of our executives, consistent with regulations promulgated by the SEC. On January 12, 2010, the SEC adopted final
regulations setting forth the parameters for such say-on-pay proposals for public company TARP participants.
Additional regulations applicable to TARP recipients adopted as part of EESA, the Financial Stability Plan, ARRA or other legislation
may subject us to additional regulatory requirements.
Limitations on Incentive Compensation
In October 2009, the Federal Reserve issued proposed guidance designed to help ensure that incentive compensation policies at
banking organizations do not encourage excessive risk-taking or undermine the safety and soundness of the organization. In
connection with the proposed guidance, the Federal Reserve announced that it would review our incentive compensation arrangements
as part of the regular, risk-focused supervisory process.
In June 2010, the Federal Reserve issued the incentive compensation guidance in final form and was joined in the by the FDIC, the
Office of the Comptroller of the Currency and the Office of Thrift Supervision. The final guidance, which covers all employees that
have the ability to materially affect the risk profile of an organization, either individually or as part of a group, is based upon the key
principles that a banking organization’s incentive compensation arrangements should (i) provide employees incentives that
appropriately balance risk and reward and, thus, do not encourage risk-taking beyond the organization’s ability to effectively identify
and manage risks, (ii) be compatible with effective internal controls and risk management, and (iii) be supported by strong corporate
governance, including active and effective oversight by the organization’s board of directors. Any deficiencies in compensation
practices that are identified may be incorporated into the organization’s supervisory ratings, which can affect its ability to make
acquisitions or perform other actions. The guidance provides that enforcement actions may be taken against a banking organization if
its incentive compensation arrangements or related risk-management control or governance processes pose a risk to the organization’s
safety and soundness and the organization is not taking prompt and effective measures to correct the deficiencies.
Due to our participation in the CPP, we are also subject to additional executive compensation limitations, as discussed above.
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.
Evolving Legislation and Regulatory Action
In 2009, many emergency government programs enacted in 2008 in response to the financial crisis and the recession slowed or wound
down, and global regulatory and legislative focus has generally moved to a second phase of broader regulatory reform and a
restructuring of the entire financial regulatory system. The Dodd-Frank Act was signed into law in 2010 and implements many new
changes in the way financial and banking operations are regulated in the United States, including through the creation of a new
resolution authority, mandating higher capital and liquidity requirements, requiring banks to pay increased fees to regulatory agencies
and numerous other provisions intended to strengthen the financial services sector. The Dodd-Frank Act provides for the creation of
the Financial Stability Oversight Council (“FSOC”), which is charged with overseeing and coordinating the efforts of the primary U.S.
financial regulatory agencies (including the Federal Reserve, the FDIC and the SEC) in establishing regulations to address systemic
financial stability concerns. The Dodd-Frank Act also provides for the creation of the Consumer Financial Protection Bureau (the
“CFPB”), a new consumer financial services regulator. The CFPB is authorized to prevent unfair, deceptive and abusive practices and
ensure that consumers have access to markets for consumer financial products and services and that such markets are fair, transparent
and competitive.
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New laws or regulations or changes to existing laws and regulations, including changes in interpretation or enforcement, could
materially adversely affect our financial condition or results of operations. Many aspects of the Dodd-Frank Act are subject to further
rulemaking and will take effect over several years, with the result that the overall financial impact on the Company and the Bank
cannot be anticipated at this time.
ITEM 1A. RISK FACTORS
An investment in our Common Stock is subject to risks inherent in our 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.
RISKS RELATED TO OUR COMPANY AND INDUSTRY
Difficult market conditions have adversely affected the industry in which we operate.
The capital and credit markets have been experiencing volatility and disruption for approximately three years. Declines in the housing
market over this period, with falling home prices and increasing foreclosures, unemployment and under-employment, have negatively
impacted the credit performance of mortgage loans and resulted in significant write-downs of asset values by financial institutions,
including government-sponsored entities as well as major commercial and investment banks. As a result of the broad based economic
decline and the troubled economic conditions, financial institutions have pursued strategies that include seeking additional capital or
merging with larger and stronger institutions. In some cases, financial institutions that did not pursue defensive strategies or did not
succeed in those strategies, have failed. Reflecting concern about the stability of the financial markets generally and the strength of
counterparties, many lenders and institutional investors have reduced or ceased providing funding to borrowers, including to other
financial institutions. Additionally, the market disruptions have increased the level of commercial and consumer delinquencies, lack of
consumer confidence, increased market volatility and widespread reduction of business activity generally. We do not expect that the
difficult conditions in the financial markets are likely to improve materially in the near future and are managing the Company with
numerous defensive strategies. A worsening of the current conditions would exacerbate the adverse effects of these difficult market
conditions on us and others in the financial institution industry. In particular, we may face the following risks in connection with these
events:
• Unreliable market conditions with significantly reduced real estate activity may adversely affect our ability to determine
the fair value of the assets we hold. If we determine that a significant portion of our assets have values that are
significantly below their recorded carrying value, we could recognize a material charge to earnings in the quarter during
which such determination was made, our capital ratios would be affected and may result in increased regulatory scrutiny.
• We may expect to face increased regulation of our industry, including as a result of the EESA or the Dodd-Frank
Act. Compliance with such regulation may increase our costs and limit our ability to pursue business opportunities.
• Market developments and the resulting economic pressure on consumers may affect consumer confidence levels and may
cause increases in delinquencies and default rates, which, among other effects, could affect our charge-offs and provision
for loan losses.
• Competition in the industry could intensify as a result of the increasing consolidation of financial services companies in
connection with current market conditions.
Recent legislation and regulatory proposals in response to recent turmoil in the financial markets may materially adversely affect
our business and results of operations.
The banking industry is heavily regulated. We are subject to examinations, supervision and comprehensive regulation by various
federal and state agencies. Our compliance with these regulations is costly and restricts certain of our activities. Banking regulations
are primarily intended to protect the federal deposit insurance fund and depositors, not shareholders. The burden imposed by federal
and state regulations puts banks at a competitive disadvantage compared to less regulated competitors such as finance companies,
mortgage banking companies and leasing companies. Changes in the laws, regulations and regulatory practices affecting the banking
industry may increase our costs of doing business or otherwise adversely affect us and create competitive advantages for others.
Federal economic and monetary policies may also affect our ability to attract deposits and other funding sources, make loans and
investments and achieve satisfactory interest spreads.
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The Dodd-Frank Act represents a significant overhaul of many aspects of the regulation of the financial-services industry, including
new or revised regulation of such things as systemic risk, capital adequacy, deposit insurance assessments and consumer financial
protection. In addition, the federal banking regulators have issued joint guidance on incentive compensation and the Treasury and the
federal banking regulators have issued statements calling for higher capital and liquidity requirements for banking organizations.
Complying with these and other new legislative or regulatory requirements, and any programs established thereunder, could have a
material adverse impact on our results of operations, our financial condition and our ability to fill positions with the most qualified
candidates available.
Our revenues are highly correlated to market interest rates.
Our assets and liabilities are primarily monetary in nature, and as a result, we are subject to significant risks tied to changes in interest
rates. Our ability to operate profitably is largely dependent upon net interest income. In 2010, net interest income made up 81.4% of
our recurring revenue. Unexpected movement in interest rates, that may or may not change the slope of the current yield curve, could
cause our net interest margins to decrease, subsequently decreasing net interest income. In addition, such changes could materially
adversely affect the valuation of our assets and liabilities.
At present our one-year interest rate sensitivity position is mildly liability sensitive, such that a gradual increase in interest rates during
the next twelve months should have a slightly negative impact on net interest income during that period. However, as with most
financial institutions, our results of operations are affected by changes in interest rates and our ability to manage this risk. The
difference between interest rates charged on interest-earning assets and interest rates paid on interest-bearing liabilities may be
affected by changes in market interest rates, changes in relationships between interest rate indices, and changes in the relationships
between long-term and short-term market interest rates. In addition, the mix of assets and liabilities could change as varying levels of
market interest rates might present our customer base with more attractive options.
Certain changes in interest rates, inflation, deflation or the financial markets could affect demand for our products and our ability
to deliver products efficiently.
Loan originations, and potentially loan revenues, could be materially adversely impacted by sharply rising interest rates. Conversely,
sharply falling rates could increase prepayments within our securities portfolio lowering interest earnings from those investments. An
unanticipated increase in inflation could cause our operating costs related to salaries and benefits, technology and supplies to increase
at a faster pace than revenues.
The fair market value of our securities portfolio and the investment income from these securities also fluctuate depending on general
economic and market conditions. In addition, actual net investment income and/or cash flows from investments that carry prepayment
risk, such as mortgage-backed and other asset-backed securities, may differ from those anticipated at the time of investment as a result
of interest rate fluctuations.
Our concentration of real estate loans subjects the Company to risks that could materially adversely affect our results of operations
and financial condition.
The majority of our loan portfolio is secured by real estate. As the economy has deteriorated and depressed real estate values, the
collateral value of the portfolio and the revenue stream from those loans has come under stress and has required additional provision
to the allowance for loan losses. Our ability to dispose of foreclosed real estate and resolve credit quality issues is dependent on real
estate activity and real estate prices, both of which have been unpredictable for more than three years.
Greater loan losses than expected may materially adversely affect our earnings.
We, as lenders, are exposed to the risk that our customers will be unable to repay their loans in accordance with their terms and that
any collateral securing the payment of their loans may not be sufficient to assure repayment. Credit losses are inherent in the business
of making loans and could have a material adverse effect on our operating results. Our credit risk with respect to our real estate and
construction loan portfolio will relate principally to the creditworthiness of business entities and the value of the real estate serving as
security for the repayment of loans. Our credit risk with respect to our commercial and consumer loan portfolio will relate principally
to the general creditworthiness of businesses and individuals within our local markets.
We make various assumptions and judgments about the collectability of our loan portfolio and provide an allowance for estimated
loan losses based on a number of factors. We believe that our current allowance for loan losses is adequate. However, if our
assumptions or judgments prove to be incorrect, the allowance for loan losses may not be sufficient to cover actual loan losses. We
may have to increase our allowance in the future in response to the request of one of our primary banking regulators, to adjust for
changing conditions and assumptions, or as a result of any deterioration in the quality of our loan portfolio. The actual amount of
future provisions for loan losses cannot be determined at this time and may vary from the amounts of past provisions.
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Our business is highly correlated to local economic conditions in a geographically concentrated part of the United States.
Unlike larger organizations that are more geographically diversified, our banking offices are primarily concentrated in select markets
in Georgia, Alabama, Florida and South Carolina. As a result of this geographic concentration, our financial results depend largely
upon economic conditions in these market areas. Deterioration in economic conditions in the markets we serve could result in one or
more of the following:
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an increase in loan delinquencies;
an increase in problem assets and foreclosures;
a decrease in the demand for our products and services; and
a decrease in the value of collateral for loans, especially real estate, in turn reducing customers’ borrowing power, the
value of assets associated with problem loans and collateral coverage.
Our growth and financial performance may be negatively impacted if we are unable to successfully execute our growth plans.
Economic conditions and other factors, such as our ability to identify appropriate markets for expansion, our ability to recruit and
retain qualified personnel, our ability to fund earning asset growth at a reasonable and profitable level, sufficient capital to support our
growth initiatives, competitive factors and banking laws, will impact our success.
We may seek to supplement our internal growth through acquisitions. We cannot predict with certainty the number, size or timing of
acquisitions, or whether any such acquisition will occur at all. Our acquisition efforts have traditionally focused on targeted banking
entities in markets in which we currently operate and markets in which we believe we can compete effectively. However, as
consolidation of the financial services industry continues, the competition for suitable acquisition candidates may increase. We may
compete with other financial services companies for acquisition opportunities, and many of these competitors have greater financial
resources than we do and may be able to pay more for an acquisition than we are able or willing to pay. We also may need additional
debt or equity financing in the future to fund acquisitions. We may not be able to obtain additional financing or, if available, it may
not be in amounts and on terms acceptable to us. If we are unable to locate suitable acquisition candidates willing to sell on terms
acceptable to us, or we are otherwise unable to obtain additional debt or equity financing necessary for us to continue making
acquisitions, we would be required to find other methods to grow our business and we may not grow at the same rate we have in the
past, or at all.
Generally, we must receive federal regulatory approval before we can acquire a bank or bank holding company. In determining
whether to approve a proposed bank acquisition, federal bank regulators will consider, among other factors, the effect of the
acquisition on the competition, financial condition and future prospects. The regulators also review current and projected capital ratios
and levels, the competence, experience and integrity of management and its record of compliance with laws and regulations, the
convenience and needs of the communities to be served (including the acquiring institution’s record of compliance under the
Community Reinvestment Act) and the effectiveness of the acquiring institution in combating money laundering activities. We cannot
be certain when or if, or on what terms and conditions, any required regulatory approvals will be granted. We may also be required to
sell banks or branches as a condition to receiving regulatory approval, which condition may not be acceptable to us or, if acceptable to
us, may reduce the benefit of any acquisition.
In the recent past, we have utilized de novo branching in new and existing markets as a way to supplement our growth. De novo
branching and any acquisition carry with it numerous risks, including the following:
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the inability to obtain all required regulatory approvals;
significant costs and anticipated operating losses associated with establishing a de novo branch or a new bank;
the inability to secure the services of qualified senior management;
the local market may not accept the services of a new bank owned and managed by a bank holding company
headquartered outside of the market area of the new bank;
economic downturns in the new market;
the inability to obtain attractive locations within a new market at a reasonable cost; and
the additional strain on management resources and internal systems and controls.
We have experienced to some extent many of these risks with our de novo branching to date.
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We rely on dividends from the Bank for most of our 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 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 materially adversely affected. At December 31, 2010, our Bank subsidiary’s earnings were not sufficient to allow
for a dividend to Ameris without the prior approval of regulatory agencies. Consequently, cash-based activities, including further
investments in or support of, the Bank could require borrowings or additional issuances of common or preferred stock.
We are subject to regulation by various federal and state entities.
We are subject to the regulations of the SEC, the Federal Reserve Board, the FDIC and the GDBF. New regulations issued by these
agencies may adversely affect our ability to carry on our business activities. We are subject to various federal and state laws and
certain changes in these laws and regulations may adversely affect our operations. Noncompliance with certain of these regulations
may impact our business plans, including our ability to branch, offer certain products or execute existing or planned business
strategies.
We are also subject to the accounting rules and regulations of the SEC and the Financial Accounting Standards Board. Changes in
accounting rules could materially adversely affect the reported financial statements or our results of operations and may also require
extraordinary efforts or additional costs to implement. Any of these laws or regulations may be modified or changed from time to
time, and we cannot be assured that such modifications or changes will not adversely affect us.
We are subject to industry competition which may have an impact upon our success.
Our profitability depends on our ability to compete successfully. We operate in a highly competitive financial services environment.
Certain competitors are larger and may have more resources than we do. We face competition in our regional market areas from other
commercial banks, savings and loan associations, credit unions, internet banks, finance companies, mutual funds, insurance
companies, brokerage and investment banking firms, and other financial intermediaries that offer similar services. Some of our
nonbank competitors are not subject to the same extensive regulations that govern us or our bank subsidiary and may have greater
flexibility in competing for business.
Another competitive factor is that the financial services market, including banking services, is undergoing rapid changes with frequent
introductions of new technology-driven products and services. Our future success may depend, in part, on our ability to use
technology competitively to provide products and services that provide convenience to customers and create additional efficiencies in
our operations.
Changes in the policies of monetary authorities and other government action could materially adversely affect our profitability.
The results of our operations are affected by credit policies of monetary authorities, particularly the Federal Reserve. The instruments
of monetary policy employed by the Federal Reserve include open market operations in U.S. government securities, changes in the
discount rate or the federal funds rate on bank borrowings and changes in reserve requirements against bank deposits. In view of
changing conditions in the national economy and in the money markets, particularly in light of the continuing threat of terrorist attacks
and the current military operations and other instances of unrest in the Middle East, we cannot predict with certainty possible future
changes in interest rates, deposit levels, loan demand or our business and earnings. Furthermore, the actions of the U.S. government
and other governments in responding to such terrorist attacks or events in the Middle East may result in currency fluctuations,
exchange controls, market disruption and other adverse effects.
We may need to rely on the financial markets to provide needed capital.
Our Common Stock is listed and traded on the NASDAQ Global Select Market. Although we anticipate that our capital resources will
be adequate for the foreseeable future to meet our capital requirements, at times we may depend on the liquidity of the NASDAQ
market to raise equity capital. If the market should fail to operate, or if conditions in the capital markets are adverse, we may be
constrained in raising capital. Downgrades in the opinions of the analysts that follow our Company may cause our stock price to fall
and significantly limit our ability to access the markets for additional capital requirements. Should these risks materialize, our ability
to further expand our operations through internal growth or acquisition may be limited.
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We may invest or spend the proceeds in stock offerings in ways with which you may not agree and in ways that may not earn a
profit.
We may choose to use the proceeds of future stock offerings for general corporate purposes, including for possible acquisition
opportunities that may become available, such as future FDIC-assisted transactions. It is not known whether suitable acquisition
opportunities may become available or whether we will be able to successfully complete any such acquisitions. We may use the
proceeds of an offering only to focus on sustaining our organic, or internal, growth or for other purposes. In addition, we may use all
or a portion of the proceeds of an offering to support our capital. You may not agree with the ways we decide to use the proceeds of
any stock offerings, and our use of the proceeds may not yield any profits.
Our inability to use a short form registration statement on Form S-3 may affect our short-term ability to access the capital markets.
The ability to conduct primary offerings under a registration statement on Form S-3 has benefits to issuers who are eligible to use this
short form registration statement. Form S-3 permits an eligible issuer to incorporate by reference its past and future filings and reports
made under the Exchange Act. In addition, Form S-3 enables eligible issuers to conduct primary offerings “off the shelf” under Rule
415 of the Securities Act. The shelf registration process under Form S-3, combined with the ability to incorporate information on a
forward basis, allows issuers to avoid additional delays and interruptions in the offering process and to access the capital markets in a
more expeditious and efficient manner than raising capital in a standard registered offering on Form S-1. One of the requirements for
Form S-3 eligibility is for an issuer to have timely filed its Exchange Act reports (including Form 10-Ks, Form 10-Qs and certain
Form 8-Ks) for the 12-month period immediately preceding either the filing of the Form S-3 or a subsequent determination date. If the
Company does not satisfy this requirement of Form S-3, we may experience delays in our ability to raise capital in the capital markets.
Any such delay may result in offering terms that may not be advantageous to us.
We face risks related to our operational, technological and organizational infrastructure.
Our ability to grow and compete is dependent on our ability to build or acquire the necessary operational and technological
infrastructure and to manage the cost of that infrastructure while we expand. Similar to other large corporations, in our case,
operational risk can manifest itself in many ways, such as errors related to failed or inadequate processes, faulty or disabled computer
systems, fraud by employees or persons outside of our Company and exposure to external events. We are dependent on our
operational infrastructure to help manage these risks. In addition, we are heavily dependent on the strength and capability of our
technology systems which we use both to interface with our customers and to manage our internal financial and other systems. Our
ability to develop and deliver new products that meet the needs of our existing customers and attract new customers depends in part on
the functionality of our technology systems. Additionally, our ability to run our business in compliance with applicable laws and
regulations is dependent on these infrastructures.
We continuously monitor our operational and technological capabilities and make modifications and improvements when we believe it
will be cost effective to do so. In some instances, we may build and maintain these capabilities ourselves. We also outsource some of
these functions to third parties. These third parties may experience errors or disruptions that could adversely impact us and over which
we may have limited control. We also face risk from the integration of new infrastructure platforms and/or new third party providers
of such platforms into our existing businesses.
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.
Reputational risk and social factors may impact our results.
Our ability to originate and maintain accounts is highly dependent upon customer and other external perceptions of our business
practices and our financial health. Adverse perceptions regarding our business practices or our financial health could damage our
reputation in both the customer and funding markets, leading to difficulties in generating and maintaining accounts as well as in
financing them. Adverse developments with respect to the consumer or other external perceptions regarding the practices of our
competitors, or our industry as a whole, may also adversely impact our reputation. In addition, adverse reputational impacts on third
parties with whom we have important relationships may also adversely impact our reputation. Adverse impacts on our reputation, or
the reputation of our industry, may also result in greater regulatory or legislative scrutiny, which may lead to laws, regulations or
regulatory actions that may change or constrain the manner in which we engage with our customers and the products we offer.
Adverse reputational impacts or events may also increase our litigation risk. We carefully monitor internal and external developments
for areas of potential reputational risk and have established governance structures to assist in evaluating such risks in our business
practices and decisions.
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We 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.
The FDIC has imposed a special assessment on all FDIC-insured institutions, which decreased our earnings in 2009, and future
special assessments could materially adversely affect our earnings in future periods.
In May 2009, the FDIC announced that it had voted to levy a special assessment on insured institutions in order to facilitate the
rebuilding of the Deposit Insurance Fund. During 2009, we were required to pay a special assessment totaling $1.1 million and also to
prepay the assessments that would normally have been paid during 2010-2012. The FDIC has indicated that future special assessments
are possible, although it has not determined the magnitude or timing of any future assessments. Any such future assessments will
decrease our earnings.
The terms governing the issuance of the Preferred Shares and the Warrant to the Treasury may be changed, the effect of which
may have an adverse effect on our operations.
The terms of the Securities Purchase Agreement – Standard Terms incorporated by reference therein (collectively, the “Purchase
Agreement”), which we entered into with the Treasury in connection with its purchase of the Preferred Shares and the Warrant,
provides that the Treasury may unilaterally amend any provision of the Purchase Agreement to the extent required to comply with any
changes in applicable federal law that may occur in the future. We have no control over any change in the terms of the transaction that
may occur in the future. Such changes may place restrictions on our business or results of operation, which may adversely affect the
market price of our Common Stock.
RISKS RELATED TO FDIC-ASSISTED TRANSACTIONS
Our Company is subject to certain risks related to FDIC-assisted transactions.
The success of past FDIC-assisted transactions, including the acquisitions of AUB, USB, SCB, FBJ, TBC and DBT, and any FDIC-
assisted transaction in which the Company may participate in the future will depend on a number of factors, including, but not limited
to, the following:
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our ability to fully integrate, and to integrate successfully, the branches acquired into the Bank’s operations;
our ability to limit the outflow of deposits held by our new customers in the acquired branches and to successfully retain
and manage interest-earning assets (loans) acquired in FDIC-assisted transactions;
our ability to retain existing deposits and to generate new interest-earning assets in the geographic areas previously served
by the acquired banks;
our ability to effectively compete in new markets in which we did not previously have a presence;
our success in deploying the cash received in the FDIC-assisted transactions into assets bearing sufficiently high yields
without incurring unacceptable credit or interest rate risk;
our ability to control the incremental non-interest expense from the acquired branches in a manner that enables us to
maintain a favorable overall efficiency ratio;
our ability to retain and attract the appropriate personnel to staff the acquired branches; and
our ability to earn acceptable levels of interest and non-interest income, including fee income, from the acquired branches.
As with any acquisition involving a financial institution, particularly one involving the transfer of a large number of bank branches as
is often the case with FDIC-assisted transactions, there may be higher than average levels of service disruptions that would cause
inconveniences or potentially increase the effectiveness of competing financial institutions in attracting our customers. Integrating the
acquired branches would not be an operation of substantial size and expense that Ameris is not familiar with, but we anticipate unique
challenges and opportunities because of the nature of the transaction. Integration efforts will also likely divert our management’s
attention and resources. It is not known whether we will be able to integrate acquired branches successfully, and the integration
process could result in the loss of key employees, the disruption of ongoing business or inconsistencies in standards, controls,
procedures and policies that adversely affect our ability to maintain relationships with clients, customers, depositors and employees or
to achieve the anticipated benefits of the FDIC-assisted transactions. We may also encounter unexpected difficulties or costs during
the integration that could materially adversely affect our earnings and financial condition, perhaps materially. Additionally, we may be
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unable to achieve results in the future similar to those achieved by our existing banking business, to compete effectively in the market
areas previously served by the acquired branches or to manage any growth resulting from FDIC-assisted transactions effectively.
Our willingness and ability to grow the acquired branches following FDIC-assisted transactions depend on several factors, most
importantly the ability to retain certain key personnel that we hire or transfer in connection with such transactions. Our failure to retain
these employees could adversely affect the success of such transactions and our future growth.
We engage in acquisitions of other businesses from time to time, including FDIC-assisted acquisitions. These acquisitions may not
produce revenue or earnings enhancements or cost savings at levels or within timeframes originally anticipated and may result in
unforeseen integration difficulties.
When appropriate opportunities arise, we will engage in acquisitions of other businesses. Difficulty in integrating an acquired business
or company may cause us not to realize expected revenue increases, cost savings, increases in geographic or product presence or other
anticipated benefits from any acquisition. The integration could result in higher than expected deposit attrition (run-off), loss of key
employees, disruption of our business or the business of the acquired company, or otherwise adversely affect our ability to maintain
relationships with customers and employees or achieve the anticipated benefits of the acquisition. We are likely to need to make
additional investment in equipment and personnel to manage higher asset levels and loan balances as a result of any significant
acquisition, which may materially adversely impact our earnings. Also, the negative effect of any divestitures required by regulatory
authorities in acquisitions or business combinations may be greater than expected.
In evaluating potential acquisition opportunities, we may seek to acquire failed banks through FDIC-assisted transactions. While the
FDIC may, in such transactions, provide assistance to mitigate certain risks, such as sharing in exposure to loan losses, and providing
indemnification against certain liabilities, of the failed institution, we may not be able to accurately estimate our potential exposure to
loan losses and other potential liabilities, or the difficulty of integration, in acquiring such institution.
Depending on the condition of any institution that we may acquire, any acquisition may, at least in the near term, materially adversely
affect our capital and earnings and, if not successfully integrated following the acquisition, may continue to have such effects.
FDIC-assisted acquisition opportunities may not become available and increased competition may make it more difficult for us to
bid on failed bank transactions on terms we consider to be acceptable.
Our near-term business strategy includes consideration of potential acquisitions of failing banks that the FDIC plans to place in
receivership. The FDIC may not place banks that meet our strategic objectives into receivership. Failed bank transactions are attractive
opportunities in part because of loss-sharing arrangements with the FDIC that limit the acquirer’s downside risk on the purchased loan
portfolio and, apart from our assumption of deposit liabilities, we have significant discretion as to the nondeposit liabilities that we
assume. In addition, assets purchased from the FDIC are marked to their fair value and in many cases there is little or no addition to
goodwill arising from an FDIC-assisted transaction. The bidding process for failing banks could become very competitive, and the
increased competition may make it more difficult for us to bid on terms we consider to be acceptable.
Changes in national and local economic conditions could lead to higher loan charge-offs in connection with past FDIC-assisted
transactions, all of which may not be supported by loss-sharing agreements with the FDIC.
Although loan portfolios acquired in past FDIC-assisted transactions have initially been accounted for at fair value, we do not yet
know whether the loans we acquired will become impaired, and impairment may result in additional charge-offs to the portfolio. The
fluctuations in national, regional and local economic conditions, including those related to local residential, commercial real estate and
construction markets, may increase the level of charge-offs that we make to our loan portfolio, and, consequently, reduce our net
income, and may also increase the level of charge-offs on the loan portfolios that we have acquired such acquisitions and
correspondingly reduce our net income. These fluctuations are not predictable, cannot be controlled and may have a material adverse
impact on our operations and financial condition even if other favorable events occur.
Although we have entered into loss-sharing agreements with the FDIC which provide that a significant portion of losses related to
specified loan portfolios that we have acquired in connection with the FDIC-assisted transactions will be borne by the FDIC, we are
not protected for all losses resulting from charge-offs with respect to those specified loan portfolios. Additionally, the loss-sharing
agreements have limited terms; therefore, any charge-off of related losses that we experience after the term of the loss-sharing
agreements will not be reimbursable by the FDIC and will negatively impact our net income. The loss-sharing agreements also impose
standard requirements on us which must be satisfied in order to retain loss share protections.
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RISKS RELATED TO OUR COMMON STOCK
The price of our Common Stock is volatile and may decline.
The trading price of our Common Stock may fluctuate widely as a result of a number of factors, many of which are outside our
control. In addition, the stock market is subject to fluctuations in the share prices and trading volumes that affect the market prices of
the shares of many companies. These broad market fluctuations have adversely affected and may continue to adversely affect the
market price of our Common Stock. Among the factors that could affect our stock price are:
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actual or anticipated quarterly fluctuations in our operating results and financial condition;
changes in revenue or earnings estimates or publication of research reports and recommendations by financial analysts or
actions taken by rating agencies with respect to our securities or those of other financial institutions;
failure to meet analysts’ revenue or earnings estimates;
speculation in the press or investment community;
strategic actions by us or our competitors, such as acquisitions or restructurings;
actions by institutional shareholders;
fluctuations in the stock price and operating results of our competitors;
general market conditions and, in particular, developments related to market conditions for the financial services industry;
proposed or adopted regulatory changes or developments;
anticipated or pending investigations, proceedings or litigation that involve or affect us; or
domestic and international economic factors unrelated to our performance.
A significant decline in our stock price could result in substantial losses for individual shareholders and could lead to costly and
disruptive securities litigation.
Securities issued by us, including our Common Stock, are not FDIC insured.
Securities issued by us, including our Common Stock, are not savings or deposit accounts or other obligations of any bank and are not
insured by the FDIC, the Deposit Insurance Fund or any other governmental agency or instrumentality, or any private insurer, and are
subject to investment risk, including the possible loss of principal.
We may issue debt and equity securities or securities convertible into equity securities, any of which may be senior to our Common
Stock as to distributions and in liquidation, which could negatively affect the value of our Common Stock.
In the future, we may attempt to increase our capital resources by entering into debt or debt-like financing that is unsecured or secured
by all or up to all of our assets, or by issuing additional debt or equity securities, which could include issuances of secured or
unsecured commercial paper, medium-term notes, senior notes, subordinated notes, preferred stock or securities convertible into or
exchangeable for equity securities. In the event of our liquidation, our lenders and holders of our debt and preferred securities would
receive a distribution of our available assets before distributions to the holders of our Common Stock. Because our decision to incur
debt and issue securities in our future offerings will depend on market conditions and other factors beyond our control, we cannot
predict or estimate with certainty the amount, timing or nature of our future offerings and debt financings. Further, market conditions
could require us to accept less favorable terms for the issuance of our securities in the future.
You may not receive dividends on the Common Stock.
Holders of our Common Stock are only entitled to receive such dividends as our Board of Directors may declare out of funds legally
available for such payments. During 2008 and in response to anticipated increases in corporate risks, our Board reduced our dividend
from $0.56 per common share annually to $0.20 per common share annually. During 2009, the Board took further action, replacing
the cash dividend with stock dividends, and in 2010, the Board suspended the stock dividends.
23
23
Sales of a significant number of shares of our Common Stock in the public markets, or the perception of such sales, could depress
the market price of our Common Stock.
Sales of a substantial number of shares of our Common Stock in the public markets and the availability of those shares for sale could
adversely affect the market price of our Common Stock. In addition, future issuances of equity securities, including pursuant to
outstanding options, could dilute the interests of our existing stockholders and could cause the market price of our Common Stock to
decline. We may issue such additional equity or convertible securities to raise additional capital. Depending on the amount offered and
the levels at which we offer the stock, issuances of common or preferred stock could be substantially dilutive to shareholders of our
Common Stock. Moreover, to the extent that we issue restricted stock, phantom shares, stock appreciation rights, options or warrants
to purchase our Common Stock in the future and those stock appreciation rights, options or warrants are exercised or as shares of the
restricted stock vest, our shareholders may experience further dilution. Holders of our shares of Common Stock have no preemptive
rights that entitle holders to purchase their pro rata share of any offering of shares of any class or series and, therefore, such sales or
offerings could result in increased dilution to our shareholders. We cannot predict with certainty the effect that future sales of our
Common Stock would have on the market price of our Common Stock.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
The Company’s 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 59 office or branch locations, of which 42 are owned and 17 are subject to either building or ground leases. At December 31,
2010, there were no significant encumbrances on the offices, equipment or other operational facilities owned by Ameris and the Bank.
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. 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.
ITEM 4. (REMOVED AND RESERVED)
24
24
PART II
ITEM 5. MARKET FOR 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 2010 and 2009, as adjusted for stock
dividends; 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 2010
March 31
June 30
September 30
December 31
Quarter Ended 2009
March 31
June 30
September 30
December 31
High
Low
Dividend
$ 10.19
11.64
10.59
11.15
$ 6.88
8.90
7.75
8.69
1 for 130
1 for 210
—
—
High
Low
Dividend
$ 11.62
7.16
7.33
7.49
$ 3.36
4.41
5.65
4.97
$
.05
.05
1 for 130
1 for 130
Dividends
The amount of and nature of any dividends declared on our Common Stock in the future will be determined by our Board of Directors
in their sole discretion. During 2008, the Board reduced our dividend rate from $0.56 per share of Common Stock annually to $0.20
per share annually. Beginning with the third quarter of 2009, the Board also replaced our cash dividend with a stock dividend, and
during 2010, the stock dividend was suspended as well. Should the Board determine to declare a cash dividend in the future, the
consent of the Treasury would 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). This limitation is in effect 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. In addition, the Company would be required to comply with the
restrictions on the payment of dividends in respect of the Common Stock discussed in the section of Part I, Item 1. of this Annual
Report captioned “Payment of Dividends and Other Restrictions.”
Holders of Common Stock
As of February 24, 2011, there were approximately 2,278 holders of record of the Common Stock. The Company believes 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.
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, 2005, and ending December 31, 2010. This line graph assumes an investment of $100 on
December 31, 2005 and reinvestment of dividends and other distributions to shareholders.
25
25
Comparison of 5 Year Cumulative Total Return
Assumes Initial Investment of $100
December 2010
2005
2006
2007
2008
2009
2010
Ameris Bancorp
NASDAQ Stock Market (US Companies)
NASDAQ Banks Index
Pursuant to the regulations of the SEC, this performance graph is not “soliciting material,” is not deemed filed with the SEC and is
not to be incorporated by reference in any filing of the Company under the Securities Act or the Exchange Act.
160.00
140.00
120.00
100.00
80.00
60.00
40.00
20.00
0.00
26
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 six FDIC assisted transactions completed in 2009 and 2010 and the
acquisition of Islands on December 31, 2006 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 the
business have been included in the Company’s results since the respective dates 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 I, Item 1. of this Annual Report and in Note 2, “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,
2010
2009
2008
2007
2006
(Dollars in Thousands, Except Per Share Data)
Selected Balance Sheet Data:
Total assets
Total loans, gross
Covered assets (loans and OREO)
Investment securities available for sale
FDIC loss-share receivable
Total deposits
Stockholders’ equity
$ 2,972,168
1,374,757
609,922
322,581
177,187
2,535,426
273,407
$ 2,423,970
1,584,359
146,585
245,556
45,840
2,123,116
194,964
$ 2,407,090
1,695,777
—
367,894
—
2,013,525
239,359
$ 2,112,063
1,614,048
—
289,382
—
1,757,265
191,249
$ 2,047,542
1,442,951
—
283,192
—
1,710,163
178,732
Selected Income Statement Data:
Interest income
Interest expense
Net interest income
$ 119,071
29,794
89,277
$ 114,573
40,550
74,023
$ 129,008
56,343
72,665
$ 146,077
70,999
75,078
$ 124,111
54,150
69,961
Provision for loan losses
Other income
Other expenses
Income/(loss) before income taxes
Income tax expense/(benefit)
Net income/(loss)
50,521
35,248
81,188
(7,184 )
(3,195 )
(3,989 )
42,068
58,353
124,800
(34,492 )
7,297
(41,789))
$
35,030
19,149
62,753
(5,969 )
(2,053 )
(3,916 )
$
$
$
Preferred stock dividends
3,213
3,161
328
11,321
17,592
58,896
22,453
7,300
15,153
—
2,837
19,262
53,129
33,257
11,129
22,128
—
$
Net income/(loss) available to
common shareholders
$
(7,202 )
$
(44,950 )
$
(4,244 )
$
15,153
$
22,128
Per Share Data:
Net income/(loss) – basic
Net income/(loss) – diluted
Common book value
Common dividends – cash
Common dividends – stock
$
(0.35 )
(0.35 )
9.44
—
3 for 157
$
(3.27 )
(3.27 )
10.52
.10
2 for 130
$
(0.31 )
(0.31 )
14.06
0.38
—
$
1.12
1.11
14.12
0.56
—
$
1.71
1.68
13.19
0.56
—
27
27
Year Ended December 31,
2010
2009
2008
2007
2006
(Dollars in Thousands, Except Per Share Data)
(0.37)% (0.52)% (0.19)% 0.74% 1.22%
(2.22)
(4.44)
3.65
4.11
68.35
65.20
(6.25)
3.52
74.61
8.13
4.02
63.55
13.9
4.25
59.55
3.33% 2.77% 1.36% 0.53% 0.09%
2.33
2.52
4.13
8.38
2.26
6.87
1.72
0.61
1.71
1.60
54.22% 74.62% 84.22% 91.85% 84.38%
82.32
76.50
10.36
10.89
81.72
9.36
79.26
11.16
79.39
12.96
9.20% 8.04% 7.91% 9.06% 8.73%
NM
NM
NM
32.94
50.00
Profitability Ratios:
Net income to average total assets
Net income to average common stockholders’ equity
Net interest margin
Efficiency ratio
Loan Quality Ratios:
Net charge-offs to average loans*
Reserve for loan losses to total loans *
Nonperforming assets to total loans and OREO*
Liquidity Ratios:
Loans to total deposits
Average loans (TE) to average earnings assets (TE)
Noninterest-bearing deposits to total deposits
Capital Adequacy Ratios:
Stockholders’ equity to total assets
Common stock dividend payout ratio
* Excludes covered assets.
28
28
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
OVERVIEW
During 2010, the Company reported a net loss available to common shareholders of $7.2 million, or $0.35 per share, compared to a
net loss available to common shareholders in 2009 of $45.0 million, or $3.27 per share. The Company’s loss as a percentage of
average assets for 2010 and 2009 was 0.37% and 0.52%, respectively, while the Company’s loss as a percentage of average
shareholders’ equity was 4.44% and 6.25%, respectively.
The Company’s performance in 2010 was impacted by a number of significant items. The major influences are:
•
The Company participated in four FDIC-assisted acquisitions during 2010. These transactions resulted in after-tax gains
of $9.6 million, representing the difference between the fair values of the assets acquired and the liabilities assumed. In
addition, the initial estimate of fair values in the TBC transaction yielded goodwill totaling approximately $956,000 after
tax.
• Credit costs increased during 2010 as the Company’s level of nonperforming assets remained elevated throughout the
year. However, nonperforming assets declined for the first time in this economic cycle during the fourth quarter of 2010
as sales of OREO continued and in-migration of problem loans slowed. During 2010, the Company recorded $69.5
million of credit costs compared to $53.7 million in 2009. Credit costs include the loan loss provision, losses on the sale of
problem loans or OREO and legal costs associated with problem loans or OREO.
•
•
•
The Company’s net interest margin expanded in 2010 to 4.11% from 3.52% in 2009 because of the improvement in
interest expense and cost of funds. The Company’s yield on earning assets for 2010 increased only slightly to 5.47%
compared to 5.43% for the year ended December 31, 2009, while the Company’s cost of funding declined more
significantly, from 2.20% in 2009 to 1.93% in 2010.
Total assets increased $548.2 million, or 22.6%, to $2.97 billion at December 31, 2010 when compared to balances at
December 31, 2009. A significant portion of the growth in 2010 came through the four FDIC-assisted transactions
completed in 2010 with assets initially totaling $981.9 million.
The Company’s deposit mix remained favorable during 2010 with 58.2% of total deposits in non-CD accounts at
December 31, 2010 compared to 58.6% at December 31, 2009. Growth in deposits came through acquisitions and through
the continued efforts of our seasoned bankers. At December 31, 2010, low-cost transaction and savings deposits (costing
less than 0.50%) totaled $726.4 million, representing growth of 30.5% over balances at December 31, 2009.
• At December 31, 2010, the Bank had only $43 million of non-deposit borrowings outstanding and $118 million of
brokered deposits, representing only 6.1% of the Bank’s total funding. This is compared to $2 million of non-deposit
borrowings outstanding and $164 million of brokered deposits, representing only 7.6% of the Bank’s total funding at
December 31, 2009.
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 Note 1 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 our 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.
29
29
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.
Certain economic and interest rate factors could have a material impact on the determination of the allowance for loan losses. An
improving economy could result in the expansion of businesses and creation of jobs which would positively affect our 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. At December 31, 2010, we had two loans that exceed our in-house credit limit of $5.0 million. Total exposure
to these two credits is $11.7 million. Additional disclosure concerning the Company’s largest loan relationships is provided below.
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 our primary market areas. A substantial portion of OREO is located in those same markets. Therefore, the ultimate
collectability of a substantial portion of our loan portfolio and the recoverability of a substantial portion of the carrying amount of
OREO are susceptible to changes to market conditions in our primary market area.
Fair Value Accounting Estimates
Generally accepted accounting principles (“GAAP”) require the use of fair values in determining the carrying values of certain assets
and liabilities, as well as for specific disclosures. The most significant include impaired loans, OREO, and the net assets acquired in
business combinations. Certain of these assets do not have a readily available market to determine fair value and require an estimate
based on specific parameters. When market prices are unavailable, we determine fair values utilizing estimates, which are constantly
changing, including interest rates, duration, prepayment speeds and other specific conditions. In most cases, these specific parameters
require a significant amount of judgment by management. At December 31, 2010, the percentage of the Company’s assets measured at
fair value was 36%. See Note 19, “Fair Value of Financial Instruments,” in the Notes to Consolidated Financial Statements herein for
additional disclosures regarding the fair value of our assets and liabilities.
When a loan is considered impaired, a specific valuation allowance is allocated, if necessary, so that the loan is reported net, at the
present value of estimated future cash flows using the loan’s existing rate or at the fair value of collateral if repayment is expected
solely from the collateral. In addition, foreclosed assets are carried at the net realizable value, following foreclosure. The Company’s
impaired loans and foreclosed property are concentrated in markets and areas where the determination of fair value through market
research (recent sales and/or qualified appraisals) is difficult. Accordingly, the determination of fair value in the current environment
is difficult and more subjective than it would be in traditionally stable real estate environments. Although management believes its
processes for determining the value of these assets are appropriate and allow Ameris to arrive at a fair value, the processes require
management judgment and assumptions and the value of such assets at the time they are revalued or divested may be different from
management’s determination of fair value.
Assets purchased and liabilities assumed in a business combination are recorded at their fair value. The fair value of a loan portfolio
acquired in a business combination requires greater levels of management estimates and judgment than the remainder of purchased
assets or assumed liabilities. On the date of acquisition, when the loans have evidence of credit deterioration since origination and it is
probable at the date of acquisition that the Company will not collect all contractually required principal and interest payments, the
difference between contractually required payments at acquisition and the cash flows expected to be collected at acquisition is referred
to as the non-accretable difference. The Company must estimate expected cash flows at each reporting date. Subsequent decreases to
the expected cash flows will generally result in a provision for loan losses. Subsequent increases in cash flows result in a reversal of
the provision for loan losses to the extent of prior charges and adjusted accretable yield which will have a positive impact on interest
income. In addition, purchased loans without evidence of credit deterioration are also handled under this method.
30
30
Income Taxes
GAAP 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 13, “Income Taxes,” in 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 gains on FDIC-assisted transactions 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 $887,000 as of December 31, 2010. Deferred gains on
FDIC-assisted transactions represent the Company’s largest deferred tax liability, totaling $14.5 million. Allowances for loan losses
associated with loans where no loss has yet been recorded for tax purposes represent the Company’s largest deferred tax asset, totaling
$12.1 million. The Company has deferred tax assets of $3.0 million related to certain loss carryforwards. For these assets, Ameris
believes there will be sufficient taxable income in the future to allow utilization of these loss carryforwards in the tax jurisdictions
where they exist.
Long-Lived Assets, Including Intangibles
During 2009, the Company engaged an independent third party to evaluate the carrying value of goodwill, and it was determined that
the balance of goodwill was impaired. As such, the Company recorded an impairment charge of $54.8 million, representing the entire
balance of goodwill during the fourth quarter of 2009. No goodwill was expensed or amortized during 2010 or 2008 in accordance
with GAAP. During 2010, the Bank recorded new goodwill totaling $956,000 related to the acquisition of TBC.
The Company’s balance of intangible assets at December 31, 2010 totaled $4.3 million and is being amortized over its previously
determined useful life. During 2010, the Bank recorded new core deposit intangibles totaling $1.7 million related to the acquisitions of
SCB, FBJ, TBC and DBT.
NET INCOME/(LOSS) AND EARNINGS PER SHARE
The Company’s net loss available to common shareholders during 2010 was $7.2 million, or $0.35 per diluted share. This is compared
to a net loss available to common shareholders during 2009 of $45.0 million, or $3.27 per diluted share and a net loss available to
common shareholders during 2008 of $4.2 million, or $0.31 per diluted share. During the fourth quarter of 2009, the Company
recorded a non-cash charge for goodwill impairment totaling $54.8 million. Excluding this non-cash charge for goodwill impairment
that did not affect the Company’s tangible equity or liquidity, the Company reported net income available to common shareholders of
$9.9 million, or $0.72 per diluted share, for the year ended December 31, 2009.
For the fourth quarter of 2010, the Company recorded net income available to common shareholders of $1.1 million, or $0.04 per
diluted share, compared to a net loss available to common shareholders of $39.2 million, or $2.82 per diluted share, for the quarter
ended December 31, 2009 and to a net loss available to common shareholders of $10.7 million, or $0.78 per diluted share, for the
quarter ended December 31, 2008. Excluding the $54.8 million goodwill impairment recorded in the fourth quarter of 2009, net
income available to common shareholders for the fourth quarter of 2009 totaled $15.7 million, or $1.14 per diluted share.
EARNING ASSETS AND LIABILITIES
Average earning assets in 2010 increased 3.7% to $2.20 billion as compared to 2009. 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 the remainder of “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
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 interest margin 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,
2010
Interest
Income/
Expense
Average
Yield/
Rate Paid
2009
Interest
Income/
Expense
Average
Balance
Average
Yield/
Rate Paid
Average
Balance
2008
Interest
Income/
Expense
Average
Yield/
Rate Paid
Average
Balance
(Dollars in Thousands)
ASSETS
Interest-earning assets:
Loans
Investment securities
Short-term assets
$ 1,686,162 $ 108,315
259,652 11,691
551
258,366
6.42% $ 1,684,910 $ 101,559
4.50
0.21
289,320 13,505 4.67
334 0.22
151,318
6.03% $ 1,667,483 $ 114,186
6.85%
309,109 15,517 5.02
507 1.03
9
4 ,082
Total earning
assets
2,204,180 120,557
5.47
2,125,548 115,398
5.43
2,025,674 130,210
6.43
Non-earning assets
288,116
Total assets
$ 2,492,296
145,791
$ 2,271,339
175,362
$ 2,201,036
LIABILITIES
AND STOCKHOLDERS’
EQUITY
Interest-bearing liabilities:
Savings and interest-
bearing demand deposits $ 1,005,240 $ 10,601
905,418 18,046
186
82
879
Time deposits
Other borrowings
FHLB advances
Trust preferred securities
28,368
7,738
,269
42
1.05% $ 865,001 $ 11,107 1.28% $ 656,876 $ 11,611 1.77%
1.99
0.66
1.06
2.08
900,744 27,399 3.04
272 0.88
104 1.30
1,668 3.95
968,124 40,331 4.17
497 2.22
1,500 1.46
2,404 5.69
22,294
102,641
4 ,269
30,799
7,974
42,269
2
Total interest-bearing
liabilities
1,9
89
,033
29,794
1.50
1,846,787 40,550 2.20
2
1,79 ,204
56,343 3.14
Demand deposits
Other liabilities
Stockholders’ equity
242,533
17,881
242,849
213,786
9,472
201,294
198,422
13,566
196,844
Total liabilities
and
stockholders’
equity
Interest rate spread
Net interest income
Net interest margin
$ 2,492,296
$ 2,271,339
$ 2,201,036
$ 90,763
3.97%
4.11%
3.23%
3.29%
$ 74,848
$ 73,867
3.52%
3.65%
32
32
RESULTS OF OPERATIONS
Net Interest Income
Net interest income represents the amount by which interest income on interest-earning 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.
2010 compared to 2009. For the year ended December 31, 2010, interest income was $119.1 million, an increase of $4.5 million, or
3.9%, compared to the same period in 2009. Average earning assets increased $78.6 million, or 3.70%, to $2.20 billion for the year
ended December 31, 2010 compared to $2.13 billion as of December 31, 2009. Yield on average earning assets on a taxable
equivalent basis increased slightly during 2010 to 5.47% compared to 5.43% for the year ended December 31, 2009. Higher yields on
covered loans offset the lower yield on investment securities.
Interest expense on deposits and other borrowings for the year ended December 31, 2010 was $29.8 million, compared to $40.6
million for the year ended December 31, 2009. During 2010, average funding increased $171.0 million, or 8.3%. Average balances of
time deposits increased $4.7 million, or 0.5%, from 2009 to 2010. The average balance of non-interest bearing deposit accounts
increased by $28.7 million, or 13.4%, from 2009 to 2010. This shift of balances from higher cost time deposits into non-interest
bearing accounts helped reduce the cost of average deposits from 1.95% in 2009 to 1.57% in 2010. Average non-deposit borrowings
decreased 3.3% during 2010, from $81.0 million at December 31, 2009 to $78.4 million at December 31, 2010.
On a taxable-equivalent basis, net interest income for 2010 was $90.6 million compared to $74.8 million in 2009, an increase of $15.7
million, or 21.0%. The Company’s net interest margin, on a tax equivalent basis, increased to 4.11% for the year ended December 31,
2010 compared to 3.52% for the year ended December 31, 2009.
2009 compared to 2008. During 2009, the Company saw several significant trends in earning assets and in its funding mix. With
regard to earning assets, short-term assets (federal funds sold and interest bearing deposits) averaged $151.3 million during 2009
compared to $49.3 million in 2008. Traditionally, the Company’s year-end balance sheet contains significant amounts of excess
deposits from municipalities and businesses. Expected declines in these balances will reduce the Company’s position in short-term
assets and further improve capital ratios. Loans decreased during 2009 to $1.58 billion from $1.70 billion at the end of 2008. The
decrease in loans resulted from the combination of continued reductions in construction and development loans and reduced demand
over our entire footprint. Investment securities decreased substantially during 2009, from $367.9 million at the end of 2008 to $245.6
million at the end of 2009, because management has not invested material amounts of short-term assets in the current interest rate
environment.
The Company’s funding mix improved dramatically during 2009, leading to significant savings in cost of funds. At December 31,
2009, demand deposits (interest-bearing and non-interest bearing) amounted to $1.2 billion and comprised 58.6% of total deposits
compared to $878 million, or 43.6% of total deposits, at December 31, 2008. During the same time, the Company’s time deposits fell
to $871 million, or 38.4% of total deposits, compared to $1.1 billion, or 56.4% of total deposits, at the end of 2008. Aggressive efforts
marketing the Company’s treasury management platform as well as retail deposit sales efforts were successful, particularly in the
fourth quarter of 2009.
In 2009, the Company reported $74.0 million in net interest income, a modest increase of $1.3 million, or 1.9%, from levels reported
in 2008. Declines in interest income and yields on earning assets were offset by savings on interest expense realized from substantial
improvements in the Company’s funding mix. Yields on earning assets declined to 5.43% in 2009 compared to 6.43% in 2008.
Declines in loan yields and the Company’s concentration in low-yielding short-term assets accounted for the majority of the declines.
Loan yields in 2009 were 6.03% compared to 6.85% in 2008. The concentration in short-term assets during 2009 amounted to 7.1% of
earning assets, compared to 2.4% in 2008. The average yield on this higher level of liquidity in 2009 was 0.22%, a decline from
1.03% in 2008.
33
33
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
2010 vs. 2009
2009 vs. 2008
Increase
(Decrease)
Changes Due To
Increase
Changes Due to
Rate
Volume
(Decrease)
Rate
Volume
$
6,756
(1,814)
217
5,159
$ 6,680
(429)
(19)
6,232
$
76
(1,385)
236
(1,073)
$ (12,627)
(2,012)
(173)
(14,812)
$ (13,857)
(1,019)
(1,225)
(16,101)
$ 1,230
(993)
1,052
1,289
deposits
Interest on time deposits
Interest on other borrowings
Interest on FHLB advances
Interest on trust preferred securities
Total interest expense
(506)
(9,353)
(86)
(22)
(789)
(10,756)
(2,307)
(9,495)
(65)
(19)
(789)
(12,674)
1,801
142
(21)
(3)
—
1,918
(504)
(12,932)
(225)
(1,396)
(736)
(15,793)
(4,204)
(10,162)
(412)
(12)
(737)
(15,527)
3,700
(2,770)
187
(1,384)
1
(266)
Net interest income
$ 15,915
$ 18,906
$ (2,991)
$
981
$
(574)
$ 1,555
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.
Continued declines in credit quality during 2010 resulted in a provision for loan losses of $50.5 million, compared to $42.1 million for
2009 and $35.0 million in 2008. Net charge-offs in 2010 remained elevated from historical levels at 3.33% of average loans, excluding
the loans covered in the FDIC-loss sharing agreements, compared to 2.26% in 2009 and 1.36% in 2008.
At December 31, 2010, non-performing assets, excluding assets covered in the FDIC-loss sharing agreements, amounted to $137.2
million, or 6.72% of total loans and OREO, compared to 6.73% at December 2009. Other real estate was approximately $57.9 million
as of December 31, 2010, reflecting a significant increase from the $23.3 million reported at December 31, 2009. The Company’s
reserve for loan losses at December 31, 2010 was $34.6 million, or 2.52% of total loans, compared to $35.8 million, or 2.26%, and
$39.7 million, or 2.34%, for December 2009 and 2008, respectively.
Non-Interest Income
Following is a comparison of non-interest income for 2010, 2009 and 2008.
Service charges on deposit accounts
Mortgage banking activities
Gain on sale of securities
Gain on acquisitions
Other income
Years Ended December 31,
2010
2009
2008
(Dollars in Thousands)
$ 13,593
3,050
871
38,566
2,273
$ 58,353
$ 15,143
2,748
200
14,651
2,506
$ 35,248
$ 13,916
3,180
316
—
1,737
$ 19,149
2010 compared to 2009. Total non-interest income in 2010 was $35.2 million compared to $58.4 million in 2009, a decrease of $23.2
million. The majority of the decrease in non-interest income related to gains realized on the FDIC-assisted transactions. In determining
the gain from these transactions, the Company evaluated the fair value of the assets acquired and the liabilities assumed. Because the
Company’s bid to acquire the assets included discounts totaling $68.2 million and because the anticipated losses were covered by loss-
sharing agreements with the FDIC, Ameris determined that the fair value of the assets acquired exceeded the liabilities assumed.
34
34
Income from mortgage banking activities continued to decline during 2010. Although mortgage rates are at historically low levels, real
estate activity and stricter underwriting guidelines from the guaranteeing agencies have limited the production to levels much lower
than would have been anticipated.
Service charges on deposit accounts represent the largest component of recurring non-interest income. In 2010, excluding gains on
securities and on acquisitions, service charges were 74% of total non-interest income, compared to 72% in 2009. The increase in
service charges was due to the increased number of deposit accounts as a result of the FDIC-assisted transactions.
2009 compared to 2008. Total non-interest income in 2009 was $58.4 million compared to $19.1 million in 2008, an increase of
$39.3 million. The majority of the increase in non-interest income related to gains realized on the FDIC-assisted transactions. In
determining the gain from these transactions, the Company evaluated the fair value of the assets acquired and the liabilities assumed.
Because the Company’s bid to acquire the assets included discounts totaling $52.2 million and because the anticipated losses were
covered by loss-sharing agreements with the FDIC, Ameris determined that the fair value of the assets acquired exceeded the
liabilities assumed.
Service charges on deposit accounts represent the largest component of recurring non-interest income. In 2009, excluding gains on
securities and on acquisitions, service charges were 72% of total non-interest income, compared to 74% in 2008. This decrease was
due to a decline in the number of accounts from 2008 to 2009.
Non-Interest Expense
Following is a comparison of non-interest expense for 2010, 2009 and 2008.
Salaries and employee benefits
Equipment and occupancy
Amortization of intangible assets
Data processing and communication costs
Advertising and public relations
Postage & delivery
Printing & supplies
Legal fees
Other professional fees
Directors fees
FDIC assessments
OREO and problem loan expenses
Goodwill impairment charge
Other expense
Years Ended December 31,
2010
2009
2008
$ 31,918
8,212
988
7,644
566
1,248
924
647
1,116
150
5,133
16,412
—
6,230
$ 81,188
(Dollars in Thousands)
$ 31,939
8,914
617
6,878
1,661
1,245
1,020
445
803
709
3,452
7,643
54,813
4,661
$ 124,800
$ 31,700
8,069
1,170
6,457
3,083
1,420
1,270
537
1,306
743
932
1,043
—
5,023
$ 62,753
2010 compared to 2009. Operating expenses in 2010 increased from $70.0 million in 2009, excluding the $54.8 million of goodwill
impairment recorded in 2009, to $81.2 million in 2010. Problem loan and OREO expenses increased $8.8 million in 2010, as the level
of OREO and problem loans remained elevated throughout 2010. This $8.8 million increase included a $3.7 million increase in losses
on the sale of OREO and a $5.1 million increase in carrying costs on problem loans and OREO. Reductions in marketing and
advertising expense totaled $1.1 million, or 65.9%, as the Company reduced print and radio advertisements and focused more heavily
on lower cost advertising in its local markets.
Although the Company’s assets increased 22.6% during 2010, salaries and employee benefits remained stable at $31.9 million for
both 2009 and 2010. Expenses associated with occupancy and equipment decreased by 7.9% in 2010 to $8.2 million due to lower
maintenance and depreciation expense. At the end of 2010, the Company has no branch projects planned or under development and
notes that all costs associated with its recent de novo activity in South Carolina have been incurred.
Data processing and communication costs increased to $7.6 million in 2010, an increase of 11.1% compared to $6.9 million in 2009.
This increase is attributable to the FDIC-assisted transactions, as well as growth in customer accounts. The Company anticipates data
processing costs to stabilize as the banks acquired through FDIC-assisted transactions are converted to the Ameris core operating
system.
35
35
2009 compared to 2008. Total operating expenses in 2009 included the charge associated with the impairment of goodwill totaling
$54.8 million. Excluding this charge, operating expenses totaled $70.0 million, an increase of $7.2 million over levels recorded in
2008. Increases in problem loan and OREO expenses and FDIC insurance premiums more than accounted for the increase in operating
expenses, together totaling $9.1 million. Salaries and benefits were only slightly higher than in 2008 as the Company reallocated
personnel from production positions to problem loan and OREO workout positions. Expenses associated with occupancy and
equipment increased by 10.4% in 2009 to $8.9 million as the Company completed work on several branches in South Carolina and in
its legacy footprint. Data processing and communication costs increased 6.5% during 2009 despite renegotiation of certain contracts
and agreements with the Company’s major vendors. These increases relate partially to costs associated with the acquisitions of AUB
and USB in the fourth quarter of 2009.
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, 2010, the Company recorded an income tax benefit of $3.2 million. This
compares to an income tax expense of $7.3 million for the year ended December 31, 2009 and an income tax benefit of $2.1 million
for the year ended December 31, 2008. The Company’s effective tax rate was 44%, 36% and 34% for the years ended December 31,
2010, 2009 and 2008, respectively. The Company has excluded the goodwill impairment charge of $54.8 million for purposes of
calculating the 2009 effective tax rate. The Company’s higher effective tax rate for 2010 was due to the impact of tax-exempt income
compared to total taxable income for the year.
BALANCE SHEET COMPARISON
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, 2010, approximately 86.7% 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.
Commercial, financial & agricultural
Real estate – construction & development
Real estate – commercial & farmland
Real estate – residential
Consumer installment loans
Other
Less reserve for possible loan losses
Loans, net
2010
2009
2008
2007
2006
(Dollars in Thousands)
December 31,
$ 142,312
162,594
683,974
344,830
34,293
6,754
1,374,757
34,576
$ 1,340,181
$ 169,280
234,403
749,029
380,080
40,984
10,583
1,584,359
35,762
$ 1,548,597
$ 184,187
342,161
718,821
395,372
47,160
8,076
1,695,777
39,652
$ 1,656,125
$ 194,629
382,171
624,582
352,695
52,736
7,235
1,614,048
27,640
$ 1,586,408
$ 209,922
330,621
519,767
317,790
57,815
7,036
1,442,951
24,863
$ 1,418,088
The following table provides additional disclosure on the various loan types comprising the subgroup “Real estate – commercial &
farmland” at December 31, 2010 (in thousands):
Owner-Occupied
Farmland
Land
Apartments
Hotels / Motels
Auto Dealers
Offices / Office Buildings
Strip Centers (Anchored & Non-Anchored)
Convenience Stores
Retail Properties
Warehouse Properties
All Other
36
Average
Maturity
(Months)
Average Rate
% non-accrual
45
30
11
39
57
19
39
28
69
38
81
61
44
6.12%
6.42%
6.25%
5.96%
6.18%
5.65%
6.25%
5.74%
5.15%
6.13%
6.07%
5.56%
6.10%
2.69%
4.13%
22.42%
—
13.03%
—
9.50%
8.85%
—
3.09%
7.52%
2.76%
4.49%
Outstanding
Balance
$ 253,197
106,263
8,110
44,235
43,408
20,270
46,233
29,552
4,315
45,986
30,380
52,025
$ 683,974
36
Assets Covered by Loss-Sharing Agreements with the FDIC - Loans that were acquired in FDIC-assisted transactions that are covered
by the loss-sharing agreements with the FDIC (“covered loans”) totaling $555.0 million and $137.2 million at December 31, 2010 and
2009, respectively, are not included in the preceding table. OREO that is covered by the loss-sharing agreements with the FDIC
totaled $54.9 million and $9.3 million at December 31, 2010 and 2009, respectively. The loss-sharing agreements are subject to the
servicing procedures as specified in the agreements with the FDIC. The expected reimbursements under the loss-sharing agreements
were recorded as an indemnification asset at their estimated fair value of $168.9 million and $45.8 million on the 2010 and 2009
acquisition dates, respectively. The FDIC loss-share receivable reported at December 31, 2010 and 2009 was $177.2 million and $45.8
million, respectively.
The Bank recorded the loans at their fair values, taking into consideration certain credit quality, risk and liquidity marks. The
Company is confident in its estimation of credit risk and its adjustments to the carrying balances of the acquired loans. If the Company
determines that a loan or group of loans has deteriorated from its initial assessment of fair value, a reserve for loan losses will be
established to account for that difference. For the year ended December 31, 2010, the Company recorded approximately $1.7 million
of provision for loan losses to account for decreases in estimated cash flows on loans acquired in FDIC-assisted transactions. If the
Company determines that a loan or group of loans has improved from its initial assessment of fair value, the increase in cash flows
over those expected at the acquisition date are recognized as interest income prospectively. Covered loans are shown below according
to loan type as of the end of the years shown (in thousands):
Commercial, financial & agricultural
Real estate – construction & development
Real estate – commercial & farmland
Real estate – residential
Consumer installment loans
Total Covered Loans
2010
$ 47,309
89,781
257,428
149,226
11,247
$ 554,991
2009
$ 22,854
11,454
65,087
23,168
14,685
$ 137,248
The Company seeks to diversify its loan portfolio across its geographic footprint and in various loan types. Also, the Company’s
stated in-house legal lending limit for a single loan is $5 million which would normally prevent a concentration with a single loan
project. Certain lending relationships may contain more than one loan and consequently, exceed the in-house lending limit. The
Company regularly monitors its largest loan relationships to avoid a concentration with a single borrower. The largest 25 loan
relationships are summarized below by type and compared to the Bank’s loan portfolio taken as a whole (in thousands):
Balance
Average Rate
Average
Maturity
(months)
% unsecured
% in non-
accrual status
Commercial, financial & agricultural
Real estate – construction & development
Real estate – commercial & farmland
Real estate – residential
Consumer installment loans
Total
Ameris Bank Loan Portfolio
$
5,489
13,489
110,448
3,303
136
$ 132,865
$ 1,374,757
5.67%
6.82%
5.53%
5.96%
7.00%
5.58%
6.27%
28
5
51
24
11
45
39
36.1%
—
—
—
100.0%
1.6%
1.1%
—
18.34%
—
—
—
1.86%
5.77%
Total loans as of December 31, 2010 are shown in the following table according to their contractual maturity.
Commercial, financial & agricultural
Real estate – construction & development
Real estate – commercial & farmland
Real estate – residential
Consumer installment loans
Other
Contractual Maturity in:
One Year or
Less
Over One Year
through Five
Years
Over Five
Years
Total
(Dollars in Thousands)
$
$
59,080
46,034
321,170
140,613
24,253
—
591,150
$ 12,016
9,231
133,224
81,329
1,511
—
$ 237,311
$ 142,312
162,594
683,974
344,830
34,293
6,754
$ 1,374,757
$ 71,216
107,329
229,580
122,888
8,529
6,754
$ 546,296
37
37
The following table summarizes loans at December 31, 2010 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
Covered loans as of December 31, 2010, are shown below according to their contractual maturity:
(Dollars in
Thousands)
$ 508,578
319,883
$ 828,461
Contractual Maturity in:
One Year or
Less
Over One Year
through Five
Years
Over Five
Years
Total
(Dollars in Thousands)
Covered loans
$ 401,848
$ 132,118
$ 21,025
$ 554,991
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.
38
38
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.
At December 31,
2010
2009
2008
2007
2006
(Dollars in Thousands)
% of
Loans
to
Total
Loans
% of
Loans
to
Total
Loans
Amount
% of
Loans
to
Total
Loans
% of
Loans
to
Total
Loans
% of
Loans
to
Total
Loans
Amount
Amount
Amount
Amount
$ 2,779
10% $ 3,375 11% $ 4,675
11% $ 3,830
13% $ 3,792
12%
14,971
50
25,304 67
20,770
63
17,199
62
14,307
61
7,705
25,455
8,664
457
—
$ 34,576
6
3,552
32,231 84
2,636 12
4
895
—
12
4,907
72
30,352
25
3,285
3
1,015
5,000
—
100% $ 35,762 100% $ 39,652
—
10
3,487
84
24,516
11
2,078
5
1,046
—
—
100% $ 27,640
11
11
3,293
86
21,392 84
10
2,325 10
4
1,146
6
—
—
—
100% $ 24,863 100%
Commercial, financial, and
agricultural
R/E Commercial &
Farmland
R/E Construction &
Development
Total Commercial
R/E Residential
Consumer Installment
Unallocated
The following table presents an analysis of our loan loss experience, excluding covered loans, for the periods indicated:
2010
2009
December 31,
2008
(Dollars in Thousands)
2007
2006
Average amount of loans outstanding
$ 1,686,162
$ 1,684,910
$ 1,667,483
$ 1,536,243
$ 1,308,174
Balance of reserve for possible loan
losses at beginning of period
Charge-offs:
Commercial real estate, financial
and agricultural
Residential real estate
Consumer Installment
Recoveries:
Commercial real estate, financial
and agricultural
Residential real estate
Consumer Installment
Net charge-offs
Additions to reserve charged to
operating expenses
Allowance for loan losses of acquired
subsidiary
Balance of reserve for possible
loan losses at end of period
Ratio of net loan charge-offs to average
non-covered loans
$
35,762
$
39,652
$
27,640
$
24,863
$
22,294
(41,442)
(10,091)
(1,090)
2,097
186
315
(50,025)
(35,231)
(10,859)
(1,041)
742
278
153
(45,958)
(18,711)
(4,514)
(1,115)
733
199
390
(23,018)
(8,735)
(623)
(1,057)
1,339
120
412
(8,544)
(1,726)
(1,444)
(967)
1,595
745
505
(1,292)
48,839
42,068
35,030
11,321
2,837
—
—
—
—
1,024
$
34,576
$
35,762
$
39,652
$
27,640
$
24,863
3.33%
2.73%
1.38%
0.56%
0.10%
39
39
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. The following table presents an
analysis of loans accounted for on a non-accrual basis.
Commercial, financial & agricultural
Real estate – construction & development
Real estate – commercial & farmland
Real estate – residential
Consumer installment loans
Total
December 31,
2010
2009
2008
2007
2006
(Dollars in Thousands)
$ 8,648
7,887
55,170
6,376
1,208
$ 4,774
15,787
67,172
6,965
1,433
$ 4,810
10,522
44,235
4,730
1,117
$ 1,736
3,754
11,037
1,076
865
$ 928
2,137
2,358
715
739
$ 79,289
$ 96,131
$ 65,414
$ 18,468
$ 6,877
Installment loans and term loans contractually past due ninety days or
more as to interest or principal payments and still accruing
—
—
2
4
—
During 2008 and continuing through 2009, 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 and coastal Georgia and South Carolina resulted in deteriorating credit quality and caused most of the increase in
non-accrual loans shown above. As the deterioration in the real estate market slowed and indications of recovery in these markets
emerged during the second half of 2010, our levels of non-accrual loans have seen slight improvement.
LIQUIDITY AND INTEREST 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 our 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.
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.
40
40
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 balance
sheet due to the rate variability and short-term maturities of its earning assets. In particular, approximately 61.1% of earning assets
mature or reprice within one year or less. Mortgage loans, generally our loan with the longest maturity, are usually made with five to
fifteen year maturities, but with either a variable interest rate or a fixed rate with an adjustment between origination date and maturity
date.
The following table sets forth the distribution of the repricing of our interest-earning assets and interest-bearing liabilities as of
December 31, 2010, the interest rate sensitivity gap (i.e., interest rate sensitive assets minus interest rate sensitive liabilities), the
cumulative interest rate sensitivity gap, the interest rate sensitivity gap ratio (i.e., interest rate sensitive assets divided by interest rate
sensitive liabilities) and the cumulative interest rate 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.
Interest-earning assets:
Short-term assets
Investment securities
Loans
Covered loans
Interest-bearing liabilities:
Interest-bearing demand deposits
Savings
Time deposits
Short-term borrowings
FHLB advances
Trust preferred securities
At December 31, 2010
Maturing or Repricing Within
Zero to
Three
Months
Three
Months to
One Year
One to
Five
Years
Over
Five
Years
Total
(Dollars in Thousands)
$ 261,262
12,940
696,047
321,000
1,291,249
$
—
1,305
170,132
80,848
252,285
$
—
44,469
413,883
132,118
590,470
$ —
276,307
94,695
21,025
392,027
$ 261,262
335,021
1,374,757
554,991
2,526,031
1,062,856
134,128
258,828
68,184
12,014
5,155
1,541,165
—
—
586,051
—
—
—
586,051
—
—
216,954
—
31,481
—
248,435
—
—
554
—
—
37,114
37,668
1,062,856
134,128
1,062,387
68,184
43,495
42,269
2,413,319
Interest rate sensitivity gap
$ (249,916)
$ (333,766)
$ 342,035
$ 354,359
$ 112,712
Cumulative interest rate sensitivity gap
$ (249,916)
$ (583,682)
$ (241,647)
$ 112,712
Interest rate sensitivity gap ratio
Cumulative interest rate sensitivity gap ratio
0.84
0.84
0.43
0.73
2.38
0.90
NM
1.05
41
41
INVESTMENT PORTFOLIO
Following is a summary of the carrying value of investment securities available for sale as of the end of each reported period:
U. S. Government sponsored agencies
State, county and municipal securities
Corporate debt securities
Mortgage-backed securities
December 31,
2010
2009
2008
(Dollars in Thousands)
$ 35,468
57,696
10,786
218,631
$ 39,525
38,156
8,675
159,200
$ 132,646
18,302
11,618
205,328
$ 322,581
$ 245,556
$ 367,894
The amounts of securities available for sale in each category as of December 31, 2010 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.
One year or less
After one year through five
years
After five years through ten
years
After ten years
U.S. Government
Sponsored Agencies
State, County and
Municipal
Corporate debt
Mortgage-backed
Amount
Yield(1)
Amount
Yield(1)(2)
Amount
Yield(1)
Amount
Yield (1)
$ —
— % $ 1,805
(Dollars in Thousands)
3.74% $ —
— % $ —
— %
24,272
0.53
14,994
4.52
2,503
6.76
1,699
3.56
7,216
3,980
4.13
1.88
29,029
11,868
4.29
4.76
2,965
5,318
5.96
6.30
4,433
212,499
3.40
4.04
$ 35,468
1.38% $ 57,696
4.43% $ 10,786
6.31% $ 218,631
4.02%
(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 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. The Company’s investments in subordinated debt include investments in regional and super-regional banks on which the
Company conducts regular analysis through review of financial information or credit ratings. Investments in preferred securities are
also concentrated in the preferred obligations of regional and super-regional banks through non-pooled investment structures.
Investments in “pooled” trust preferred securities are limited to a single issue totaling $317,000 December 31, 2010.
42
42
DEPOSITS
Average amount of various deposit classes and the average rates paid thereon are presented below:
Noninterest-bearing demand
NOW
Money Market
Savings
Time
Total deposits
Year Ended December 31,
2010
2009
Amount
Rate
Amount
Rate
(Dollars in Thousands)
$ 242,533
498,433
442,589
64,218
905,418
$ 2,153,191
0.00%
0.91
1.29
0.56
1.99
1.38%
$ 213,786
458,104
349,073
57,824
900,744
$ 1,979,531
0.00%
1.14
1.57
0.73
3.04
1.95%
We have a large, stable base of time deposits with little or no dependence on what we consider volatile deposits. Volatile deposits, in
management’s opinion, are those deposit accounts that are overly rate sensitive and apt to move if our rate offerings are not at or near
the top of the market. Generally speaking, these are brokered deposits or time deposits in amount greater than $100,000.
The amounts of time certificates of deposit issued in amounts of $100,000 or more as of December 31, 2010, 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)
$ 140,564
335,456
149,051
$ 625,071
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, 2010 and 2009.
Commitments to extend credit
Financial standby letters of credit
December 31,
2010
2009
(Dollars in Thousands)
$ 166,845
7,874
$ 174,719
$ 143,868
3,921
$ 147,789
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43
The following table summarizes short-term borrowings for the periods indicated:
Years Ended December 31,
2010
2009
2008
(Dollars in Thousands)
Average
Balance
Average
Rate
Average
Balance
Average
Rate
Average
Balance
Average
Rate
Federal funds purchased and securities sold under
agreement to repurchase
$ 28,368
0.65% $ 25,813
0.67% $ 17,294
2.05%
Total maximum short-term borrowings outstanding at
any month-end during the year
$ 68,184
$ 55,254
$ 63,973
Total
Balance
Total
Balance
Total
Balance
The following table sets forth certain information about contractual cash obligations as of December 31, 2010.
Time certificates of deposit
Federal Home Loan Bank advances
Subordinated debentures
Payments Due After December 31, 2010
Total
1 Year
Or Less
1-3
Years
4-5
Years
5
Years
(Dollars in Thousands)
$ 1,062,387
43,495
42,269
$ 844,935
12,014
—
$ 201,892
31,481
—
$ 15,006
—
—
554
$
—
42,269
Total contractual cash obligations
$ 1,148,151
$ 856,949
$ 233,373
$ 15,006
$ 42,823
Our operating leases represent short-term obligations, normally with maturities of less than three years. 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, 2010, we had immaterial amounts of binding commitments for capital expenditures.
CAPITAL ADEQUACY
Capital Purchase Program
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.
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
Federal Reserve, the Preferred Shares are redeemable at the option of the Company at 100% of their liquidation preference.
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 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 and related
regulations.
44
44
Capital Regulations
The capital resources of our Company are monitored on a periodic basis by state and federal regulatory authorities. During 2010, our
Company’s capital increased $78.4 million due to the successful capital raise of $85.3 million, partially offset by the net loss available
to common shareholders of $7.2 million. During 2009, our Company’s capital decreased $44.4 million, mostly the result of the loss
available to common shareholders totaling the same amount. The loss was driven primarily by the goodwill impairment charge that
did not affect the Company’s regulatory capital or liquidity. 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, 2010.
Leverage capital
Consolidated
Ameris Bank
Risk-based capital:
Core capital
Consolidated
Ameris Bank
Total capital
Consolidated
Ameris Bank
INFLATION
Actual
Required
Excess
Amount
Percent
Amount
Percent
Amount
Percent
(Dollars in Thousands)
$ 306,818
296,301
11.34% $ 108,198
107,303
11.05
4.00% $ 198,620
188,998
4.00
7.34%
7.05
306,818
296,301
18.19
17.62
67,465
67,255
328,074
317,485
19.45
18.88
134,931
134,509
4.00
4.00
8.00
8.00
239,353
229,046
193,143
182,976
14.19
13.62
11.45
10.88
The consolidated financial statements and related consolidated financial data presented herein have been prepared in accordance with
GAAP 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.
45
45
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.
Selected Income Statement Data:
Interest income
Interest expense
Net interest income
Provision for loan losses
Quarters Ended December 31, 2010
4
3
2
1
(Dollars in Thousands, Except Per Share Data)
$ 30,811
7,805
23,006
11,404
$ 29,173
7,173
22,000
9,740
$ 31,097
7,238
23,859
18,608
$ 27,991
7,578
20,413
10,770
Net interest income after provision for loan
losses
Noninterest income
Noninterest expense
Income (loss) before income taxes
Income tax
Net income (loss)
Preferred stock dividends
Net income (loss) available to common stockholders
$
Per Share Data:
Net income – basic and diluted
Common Dividends (Cash)
Common Dividends (Stock)
Selected Income Statement Data:
Interest income
Interest expense
Net interest income
Provision for loan losses
Net interest income after provision for loan
losses
Noninterest income
Noninterest expense
Income (loss) before income taxes
Income tax
Net income (loss)
Preferred stock dividends
Net income (loss) available to common stockholders
11,602
12,303
21,946
1,959
98
1,861
811
1,050
0.04
—
—
12,260
5,011
18,928
(1,657)
(760)
(897)
807
(1,704)
$
5,251
13,049
23,383
(5,083)
(1,664)
(3,419)
799
(4,218)
$
9,643
4,885
16,931
(2,403)
(869)
(1,534)
796
(2,330)
$
(0.07)
—
—
(0.20)
—
1 for 210
(0.17)
—
1 for 130
Quarters Ended December 31, 2009
4
3
2
1
(Dollars in Thousands, Except Per Share Data)
$ 27,831
8,130
19,701
16,468
3,233
43,739
75,982
(29,010)
9,323
(38,333)
665
$ (39,192)
$ 28,022
9,210
18,812
8,298
$ 29,100
10,561
18,539
9,390
$ 29,617
12,649
16,968
7,912
10,514
4,521
15,360
(325)
(198)
(127)
664
(791)
9,149
4,596
17,729
(3,984)
(1,290)
(2,694)
804
(3,498)
(0.25)
0.05
—
9,056
5,496
15,727
(1,175)
(539)
(636)
701
(1,337)
(0.10)
0.05
—
Per Share Data:
Net income – basic and diluted
Common Dividends (Cash)
Common Dividends (Stock)
(2.84 )
—
1 for 130
(0.07 )
—
1 for 130
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46
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
trading. 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 liability sensitive in relation to changes in market interest rates. Being liability sensitive would result in net
interest income decreasing in a rising rate environment and increasing 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 model projects net interest income would decrease slightly if rates rise 200 basis points gradually over the next year. A
scenario involving a 200 basis points decrease is irrelevant at this time with current market rates being at or near zero since the last
reduction of the federal funds target rate by the Federal Reserve on December 16, 2008.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets – December 31, 2010 and 2009
Consolidated Statements of Operations – Years ended December 31, 2010, 2009 and 2008
Consolidated Statements of Comprehensive Income (Loss) – Years ended December 31, 2010, 2009 and 2008
Consolidated Statements of Changes in Stockholders’ Equity – Years ended December 31, 2010, 2009 and 2008
Consolidated Statements of Cash Flows – Years ended December 31, 2010, 2009 and 2008
Notes to Consolidated Financial Statements
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
During the past two fiscal years, there have been no changes in our accountants or disagreements with our accountants on any matter
of accounting principles or practices for financial statement disclosure.
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 Report on Internal Control Over Financial Reporting
Management’s Report on Internal Control Over Financial Reporting is set forth on page F-3 of this Annual Report.
Changes in Internal Control Over Financial Reporting
During the quarter ended December 31, 2010 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.
ITEM 9B. OTHER INFORMATION
None.
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47
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information set forth under the captions “Proposal 1 – Election of Directors,” “Board and Committee Matters,” “Executive
Officers” and “Section 16(a) Beneficial Ownership Reporting Compliance” in the Proxy Statement to be used in connection with the
solicitation of proxies for the Company’s 2011 Annual Meeting of Shareholders, to be filed with the SEC, 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 to be used in connection with the
solicitation of proxies for the Company’s 2011 Annual Meeting of Shareholders, to be filed with the SEC, 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 caption “Security Ownership of Certain Beneficial Owners and Management” in the Proxy
Statement to be used in connection with the solicitation of proxies for the Company’s 2011 Annual Meeting of Shareholders, to be
filed with the SEC, is incorporated herein by reference.
Equity Compensation Plans
The following table sets forth certain information with respect to securities to be issued under our equity compensation plans as of
December 31, 2010.
Plan Category
Equity compensation plans approved
by security holders (1)
Number of
securities to be
issued upon exercise
of outstanding
options, warrants
and rights
Weighted average
exercise price of
outstanding options,
warrants and rights
Number of securities
remaining available for
future issuance under equity
compensation plans
851,828
$
14.19
316,514
(1) Consists of our (i) 2005 Omnibus Stock Ownership and Long-Term Incentive Plan, which provides for the granting to officers
and certain other employees of qualified or nonqualified stock options, restricted stock, stock appreciation rights, long-term
incentive compensation units consisting of a combination of cash and Common Stock or any combination thereof, and (ii) the
ABC Bancorp Omnibus Stock Ownership and Long-Term incentive Plan that was adopted in 1997, which now is operative only
with respect to the exercise of options that remain outstanding under such plan and under which no further awards may be
granted. All securities remaining for future issuance represent awards that may be granted under the 2005 Omnibus Stock
Ownership and Long-Term Incentive Plan.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information set forth under the captions “Certain Relationships and Related Transactions” and “Proposal 1 – Election of
Directors” in the Proxy Statement to be used in connection with the solicitation of proxies for the Company’s 2011 Annual Meeting of
Shareholders, to be filed with the SEC, is incorporated herein by reference.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The information set forth under the caption “Proposal 2 – Ratification of Appointment of Independent Auditor” in the Proxy
Statement to be used in connection with the solicitation of proxies for the Company’s 2011 Annual Meeting of Shareholders, to be
filed with the SEC, is incorporated herein by reference.
48
48
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
1.
Financial statements:
(a) Ameris Bancorp and Subsidiaries:
PART IV
(i) Consolidated Balance Sheets – December 31, 2010 and 2009;
(ii) Consolidated Statements of Operations – Years ended December 31, 2010, 2009 and 2008;
(iii) Consolidated Statements of Comprehensive Income (Loss) – Years ended December 31, 2010, 2009 and 2008;
(iv) Consolidated Statements of Changes in Stockholders’ Equity – Years ended December 31, 2010, 2009 and 2008;
(v) Consolidated Statements of Cash Flows – Years ended December 31, 2010, 2009 and 2008; and
(vi) Notes to Consolidated Financial Statements.
(b) Ameris Bancorp (parent company only):
Parent company only financial information has been included in Note 20 of the 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 Annual Report is shown on the “Exhibit
Index” filed herewith.
49
49
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.
SIGNATURES
Date: March 16, 2011
AMERIS BANCORP
By:
/s/ Edwin W. Hortman, Jr.
Edwin W. Hortman, Jr.,
President and Chief Executive Officer
(principal 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 16, 2011
/s/ Edwin W. Hortman, Jr.
Edwin W. Hortman, Jr., President, Chief Executive Officer and Director
(principal executive officer)
Date: March 16, 2011
/s/ Dennis J. Zember Jr.
Dennis J. Zember Jr., Executive Vice President and Chief Financial Officer
(principal accounting and financial officer)
Date: March 16, 2011
/s/ R. Dale Ezzell
R. Dale Ezzell, Director
Date: March 16, 2011
/s/ J. Raymond Fulp
J. Raymond Fulp, Director
Date: March 16, 2011
/s/ Daniel B. Jeter
Daniel B. Jeter, Director and Chairman of the Board
Date: March 16, 2011
/s/ Robert P. Lynch
Robert P. Lynch, Director
Date: March 16, 2011
/s/ Brooks Sheldon
Brooks Sheldon, Director
Date: March 16, 2011
/s/ Jimmy D. Veal
Jimmy D. Veal, Director
Date: March 16, 2011
/s/ V. Wayne Williford
V. Wayne Williford, Director
50
50
Exhibit No.
2.1
2.2
2.3
2.4
2.5
2.6
3.1
3.2
3.3
3.4
3.5
3.6
3.7
3.8
3.9
4.1
EXHIBIT INDEX
Description
Purchase and Assumption Agreement dated as of October 23, 2009 among the Federal Deposit Insurance Corporation,
Receiver of American United Bank, Lawrenceville, Georgia, Ameris Bank and the Federal Deposit Insurance
Corporation acting in its corporate capacity (incorporated by reference to Exhibit 2.1 to Ameris Bancorp’s Current
Report on Form 8-K/A filed with the SEC on March 15, 2010).
Purchase and Assumption Agreement dated as of November 6, 2009 among the Federal Deposit Insurance Corporation,
Receiver of United Security Bank, Sparta, Georgia, Ameris Bank and the Federal Deposit Insurance Corporation acting
in its corporate capacity (incorporated by reference to Exhibit 2.2 to Ameris Bancorp’s Annual Report on Form 10-K
filed with the SEC on March 16, 2010).
Purchase and Assumption Agreement dated as of May 14, 2010 by and among the Federal Deposit Insurance
Corporation, Receiver of Satilla Community Bank, St. Marys, Georgia, Ameris Bank and the Federal Deposit Insurance
Corporation acting in its corporate capacity (incorporated by reference to Exhibit 2.1 to Ameris Bancorp’s Current
Report on Form 8-K filed with the SEC on May 20, 2010).
Purchase and Assumption Agreement dated as of October 22, 2010 by and among the Federal Deposit Insurance
Corporation, Receiver of First Bank of Jacksonville, Jacksonville, Florida, Ameris Bank and the Federal Deposit
Insurance Corporation acting in its corporate capacity (incorporated by reference to Exhibit 2.1 to Ameris Bancorp’s
Current Report on Form 8-K filed with the SEC on October 27, 2010).
Purchase and Assumption Agreement dated as of November 12, 2010 by and among the Federal Deposit Insurance
Corporation, Receiver of Darby Bank & Trust Co., Vidalia, Georgia, Ameris Bank and the Federal Deposit Insurance
Corporation acting in its corporate capacity (incorporated by reference to Exhibit 2.1 to Ameris Bancorp’s Current
Report on Form 8-K filed with the SEC on November 18, 2010).
Purchase and Assumption Agreement dated as of November 12, 2010 by and among the Federal Deposit Insurance
Corporation, Receiver of Tifton Banking Company, Tifton, Georgia, Ameris Bank and the Federal Deposit Insurance
Corporation acting in its corporate capacity (incorporated by reference to Exhibit 2.2 to Ameris Bancorp’s Current
Report on Form 8-K filed with the SEC on November 18, 2010).
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 with the SEC on 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 with the SEC on 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 SEC 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 SEC 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 SEC 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 SEC 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 SEC 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 SEC 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 SEC 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 SEC on October 27, 2006).
51
51
4.2
4.3
4.4
4.5
4.6
4.7
4.8
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
10.9
10.10
10.11
10.12
10.13
10.14
10.15
52
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 SEC 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 Ameris Bancorp’s Registration Statement on Form S-4 (Registration No.
333-138252) filed with the SEC on October 27, 2006).
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 SEC 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 SEC on
October 27, 2006).
Guarantee Agreement between Ameris Bancorp and Wilmington Trust Company dated September 20, 2006
(incorporated by reference to Exhibit 4.6 to Ameris Bancorp’s Registration Statement on Form S-4 (Registration No.
333-138252) filed with the SEC on October 27, 2006).
Floating Rate Junior Subordinated Deferrable Interest Debenture dated September 20, 2006 issued to Ameris Statutory
Trust I (incorporated by reference to Exhibit 4.7 to Ameris Bancorp’s Registration Statement on Form S-4 (Registration
No. 333-138252) filed with the SEC on October 27, 2006).
Warrant to Purchase 679,443 shares of Common Stock of Ameris Bancorp, issued to the U.S. Department of Treasury
on November 21, 2008 (incorporated by reference to Exhibit 3.2 to Ameris Bancorp’s Form 8-K filed with the SEC 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 SEC 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 SEC 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 SEC 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 SEC on March 29, 2000).
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 SEC 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 SEC on March 15, 2004).
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 SEC 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 SEC 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 SEC 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 SEC on May 11, 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 SEC 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 SEC 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 SEC on January 24, 2006).
52
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 SEC 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 SEC on January 24, 2006).
10.16
Executive Employment Agreement with 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 SEC on June 6, 2007).
10.17
Executive Employment Agreement with C. Richard Sturm 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 SEC on June 6, 2007).
10.18
Letter Agreement, dated November 21, 2008, including Securities Purchase Agreement – Standard Terms incorporated
by reference therein, between Ameris Bancorp and the U.S. Department of Treasury (incorporated by reference to
Exhibit 10.1 to Ameris Bancorp’s Form 8-K filed with the SEC on November 21, 2008).
10.19
Form of Senior Executive Officer Waiver, executed by each of Messrs. Edwin W. Hortman, Jr., Dennis J. Zember Jr.,
Jon S. Edwards, C. Johnson Hipp, III and Marc J. Bogan (incorporated by reference to Exhibit 10.2 to Ameris Bancorp’s
Form 8-K filed with the SEC on November 21, 2008).
10.20
Form of Executive Compensation Letter Agreement, executed by Ameris Bancorp and each of Messrs. Edwin W.
Hortman, Jr., Dennis J. Zember Jr., Jon S. Edwards, C. Johnson Hipp, III and Marc J. Bogan (incorporated by reference
to Exhibit 10.3 to Ameris Bancorp’s Form 8-K filed with the SEC on November 21, 2008).
10.21
Second Amendment to Executive Employment Agreement dated December 30, 2008, by and between Ameris Bancorp
and Edwin W. Hortman, Jr. (incorporated by reference to Exhibit 10.1 to Ameris Bancorp’s Current Report on Form 8-
K filed with the SEC on December 30, 2008).
10.22
First Amendment to Executive Employment Agreement dated December 30, 2008, by and between Ameris Bancorp and
Dennis J. Zember Jr. (incorporated by reference to Exhibit 10.2 to Ameris Bancorp’s Current Report on Form 8-K filed
with the SEC on December 30, 2008).
10.23
First Amendment to Executive Employment Agreement dated December 30, 2008, by and between Ameris Bancorp and
Jon S. Edwards (incorporated by reference to Exhibit 10.4 to Ameris Bancorp’s Current Report on Form 8-K filed with
10.24
First Amendment to Executive Employment Agreement dated December 30, 2008, by and between Ameris Bancorp and
Marc J. Bogan (incorporated by reference to Exhibit 10.5 to Ameris Bancorp’s Current Report on Form 8-K filed with
the SEC on December 30, 2008).
the SEC on December 30, 2008).
10.25
First Amendment to Executive Employment Agreement dated December 30, 2008, by and between Ameris Bancorp and
H. Richard Sturm (incorporated by reference to Exhibit 10.6 to Ameris Bancorp’s Current Report on Form 8-K filed
with the SEC on December 30, 2008).
10.26
First Amendment to Executive Employment Agreement dated December 30, 2008, by and between Ameris Bancorp and
Cindi H. Lewis (incorporated by reference to Exhibit 10.7 to Ameris Bancorp’s Current Report on Form 8-K filed with
the SEC on December 30, 2008).
10.27
Executive Employment Agreement with Andrew B. Cheney, dated as of February 18, 2009 (incorporated by reference
to Exhibit 10.1 to Ameris Bancorp’s Form 8-K filed with the SEC on February 23, 2009).
Schedule of Subsidiaries of Ameris Bancorp.
Consent of Porter Keadle Moore, LLP.
21.1
23.1
24.1
31.1
Power of Attorney relating to this Form 10-K is set forth on the signature pages of this Form 10-K.
Rule 13a-14(a)/15d-14(a) Certification by Chief Executive Officer.
53
10.12
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 SEC on December 20, 2005).
10.13
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 SEC on January 24, 2006).
10.14
10.15
10.16
10.17
10.18
10.19
10.20
10.21
10.22
10.23
10.24
10.25
10.26
10.27
21.1
23.1
24.1
31.1
31.2
32.1
32.2
99.1
99.2
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 SEC 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 SEC on January 24, 2006).
Executive Employment Agreement with 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 SEC on June 6, 2007).
Executive Employment Agreement with C. Richard Sturm 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 SEC on June 6, 2007).
Letter Agreement, dated November 21, 2008, including Securities Purchase Agreement – Standard Terms incorporated
by reference therein, between Ameris Bancorp and the U.S. Department of Treasury (incorporated by reference to
Exhibit 10.1 to Ameris Bancorp’s Form 8-K filed with the SEC on November 21, 2008).
Form of Senior Executive Officer Waiver, executed by each of Messrs. Edwin W. Hortman, Jr., Dennis J. Zember Jr.,
Jon S. Edwards, C. Johnson Hipp, III and Marc J. Bogan (incorporated by reference to Exhibit 10.2 to Ameris Bancorp’s
Form 8-K filed with the SEC on November 21, 2008).
Form of Executive Compensation Letter Agreement, executed by Ameris Bancorp and each of Messrs. Edwin W.
Hortman, Jr., Dennis J. Zember Jr., Jon S. Edwards, C. Johnson Hipp, III and Marc J. Bogan (incorporated by reference
to Exhibit 10.3 to Ameris Bancorp’s Form 8-K filed with the SEC on November 21, 2008).
Second Amendment to Executive Employment Agreement dated December 30, 2008, by and between Ameris Bancorp
and Edwin W. Hortman, Jr. (incorporated by reference to Exhibit 10.1 to Ameris Bancorp’s Current Report on Form 8-
K filed with the SEC on December 30, 2008).
First Amendment to Executive Employment Agreement dated December 30, 2008, by and between Ameris Bancorp and
Dennis J. Zember Jr. (incorporated by reference to Exhibit 10.2 to Ameris Bancorp’s Current Report on Form 8-K filed
with the SEC on December 30, 2008).
First Amendment to Executive Employment Agreement dated December 30, 2008, by and between Ameris Bancorp and
Jon S. Edwards (incorporated by reference to Exhibit 10.4 to Ameris Bancorp’s Current Report on Form 8-K filed with
the SEC on December 30, 2008).
First Amendment to Executive Employment Agreement dated December 30, 2008, by and between Ameris Bancorp and
Marc J. Bogan (incorporated by reference to Exhibit 10.5 to Ameris Bancorp’s Current Report on Form 8-K filed with
the SEC on December 30, 2008).
First Amendment to Executive Employment Agreement dated December 30, 2008, by and between Ameris Bancorp and
H. Richard Sturm (incorporated by reference to Exhibit 10.6 to Ameris Bancorp’s Current Report on Form 8-K filed
with the SEC on December 30, 2008).
First Amendment to Executive Employment Agreement dated December 30, 2008, by and between Ameris Bancorp and
Cindi H. Lewis (incorporated by reference to Exhibit 10.7 to Ameris Bancorp’s Current Report on Form 8-K filed with
the SEC on December 30, 2008).
Executive Employment Agreement with Andrew B. Cheney, dated as of February 18, 2009 (incorporated by reference
to Exhibit 10.1 to Ameris Bancorp’s Form 8-K filed with the SEC on February 23, 2009).
Schedule of Subsidiaries of Ameris Bancorp.
Consent of Porter Keadle Moore, LLP.
Power of Attorney relating to this Form 10-K is set forth on the signature pages of this Form 10-K.
Rule 13a-14(a)/15d-14(a) Certification by Chief Executive Officer.
Rule 13a-14(a)/15d-14(a) Certification by Chief Financial Officer.
Section 1350 Certification by Chief Executive Officer.
53
Section 1350 Certification by Chief Financial Officer.
Certification of Chief Executive Officer pursuant to the Emergency Economic Stabilization Act of 2008.
Certification of Chief Financial Officer pursuant to the Emergency Economic Stabilization Act of 2008.
53
54
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
Report of Independent Registered Public Accounting Firm
Management’s Report on Internal Control Over Financial Reporting
Consolidated Balance Sheets – December 31, 2010 and 2009
Consolidated Statements of Operations – Years ended December 31, 2010, 2009 and 2008
Consolidated Statements of Comprehensive Income (Loss) – Years ended December 31, 2010, 2009 and 2008
Consolidated Statements of Changes in Stockholders’ Equity – Years ended December 31, 2010, 2009 and 2008
Consolidated Statements of Cash Flows – Years ended December 31, 2010, 2009 and 2008
Notes to Consolidated Financial Statements
Page
F-2
F-3
F-4
F-5
F-6
F-7
F-8
F-10
F-1
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders
Ameris Bancorp
Moultrie, Georgia
We have audited the accompanying consolidated balance sheets of Ameris Bancorp and subsidiaries, (the “Company”) as of
December 31, 2010 and 2009, and the related statements of operations, comprehensive income/(loss), changes in stockholders’ equity,
and cash flows for each of the three years in the period ended December 31, 2010. We also have audited the Company’s internal
control over financial reporting as of December 31, 2010, based on criteria established in Internal Control — Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for
these financial statements, 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 Control Over
Financial Reporting. Our responsibility is to express an opinion on these financial statements and an opinion on the Company’s
internal control over financial reporting based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of
material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our
audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall
financial statement presentation. Our audit of internal control over financial reporting 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 audits also included performing such other procedures as we
considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
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 accounting principles generally
accepted in the United States of America. A company’s internal control over financial reporting includes those policies and procedures
that (a) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of
the assets of the company; (b) provide reasonable assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the company;
and (c) 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, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of
Ameris Bancorp and subsidiaries as of December 31, 2010 and 2009, and the results of their operations and their cash flows for each
of the years in the three-year period ended December 31, 2010, in conformity with accounting principles generally accepted in the
United States of America. Also in our opinion, Ameris Bancorp and subsidiaries maintained, in all material respects, effective internal
control over financial reporting as of December 31, 2010, based on criteria established in Internal Control — Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Atlanta, Georgia
March 16, 2011
F-2
F-2
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
The management of Ameris Bancorp (the “Company”) 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, 2010. 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, 2010.
Porter Keadle Moore, LLP, 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 Annual Report on page F-2.
/s/ Edwin W. Hortman, Jr.
Edwin W. Hortman, Jr.
President and
Chief Executive Officer
/s/ Dennis J. Zember, Jr.
Dennis J. Zember, Jr.
Executive Vice President and
Chief Financial Officer
F-3
F-3
AMERIS BANCORP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2010 AND 2009
(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
Covered loans
Less allowance for loan losses
Loans, net
Other real estate owned
Covered other real estate owned
Total other real estate owned
Premises and equipment, net
FDIC loss-share receivable
Intangible assets
Goodwill
Other assets
Liabilities and Stockholders’ Equity
Liabilities
Deposits
Noninterest-bearing
Interest-bearing
Total deposits
Securities sold under agreements to repurchase
Other borrowings
Subordinated deferrable interest debentures
Other liabilities
Total liabilities
Commitments and contingencies
Stockholders’ equity
Preferred stock, stated value $1,000; 5,000,000 shares authorized; 52,000 shares issued and
outstanding
Common stock, par value $1; 30,000,000 shares authorized; 24,982,911 and
15,379,131 shares issued
Capital surplus
Retained earnings
Accumulated other comprehensive income, net of tax
Less cost of 1,336,174 and 1,334,224 treasury shares acquired
Total stockholders’ equity
See Notes to Consolidated Financial Statements.
F-4
2010
2009
$
74,326
232,717
28,545
322,581
12,440
1,374,757
554,991
34,576
1,895,172
57,915
54,931
112,846
66,589
177,187
4,261
956
44,548
$ 2,972,168
$
81,060
195,038
25,325
245,556
7,260
1,584,359
137,248
35,762
1,685,845
23,316
9,337
32,653
67,637
45,840
3,586
—
34,170
$ 2,423,970
$ 301,971
2,233,455
2,535,426
68,184
43,495
42,269
9,387
2,698,761
$ 236,962
1,886,154
2,123,116
55,254
2,000
42,269
6,367
2,229,006
50,121
49,552
24,983
165,930
37,000
6,204
284,238
(10,831)
273,407
15,379
89,389
44,216
7,240
205,776
(10,812)
194,964
$ 2,972,168
$ 2,423,970
F-4
AMERIS BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 2010, 2009 AND 2008
(Dollars in Thousands)
2010
2009
2008
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 on sales of securities
Gain on acquisitions
Other
Other expenses
Salaries and employee benefits
Occupancy and equipment expense
Advertising and marketing expense
Amortization of intangible assets
Data processing and communications costs
Goodwill impairment
Other operating expenses
Loss before income taxes
Applicable income tax benefit/(expense)
Net loss
Preferred stock dividends
$ 107,484
9,821
1,215
462
89
119,071
28,647
1,147
29,794
89,277
50,521
38,756
15,143
2,748
805
200
14,651
1,701
35,248
31,918
8,212
566
988
7,644
—
31,860
81,188
$ 101,312
11,858
1,070
262
71
114,573
38,506
2,044
40,550
74,023
42,068
31,955
13,593
3,050
531
871
38,566
1,742
58,353
31,939
8,914
1,661
617
6,878
54,813
19,978
124,800
(7,184)
(34,492)
3,195
(7,297)
$ 113,335
14,469
685
514
5
129,008
51,942
4,401
56,343
72,665
35,030
37,635
13,916
3,180
708
316
—
1,029
19,149
31,700
8,069
3,083
1,170
6,457
—
12,274
62,753
(5,969)
2,053
$ (3,989)
$ (41,789)
$ (3,916)
3,213
3,161
328
Net loss available to common stockholders
$ (7,202)
$ (44,950)
$ (4,244)
Basic loss per share
Diluted loss per share
See Notes to Consolidated Financial Statements.
$
$
(0.35)
(0.35)
$
$
(3.27)
(3.27)
$
$
(0.31)
(0.31)
F-5
F-5
AMERIS BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)
YEARS ENDED DECEMBER 31, 2010, 2009 AND 2008
(Dollars in Thousands)
Net loss
Other comprehensive income/(loss):
2010
2009
2008
$ (3,989) $ (41,789)
$ (3,916)
Net unrealized holding gains/(losses) arising during period on investment securities
available for sale, net of tax of $780, $143 and $2,108
(1,449)
(265)
3,915
Reclassification adjustment for gains on investment securities included in operations, net
of tax of $70, $305 and $107
Net unrealized gains/(losses) on cash flow hedge (interest rate floor) during the period,
net of tax of $296, $604, and $813
Net unrealized gains on cash flow hedge (interest rate swap) during the period, net of tax
of $588, $1,440, and $0
Total other comprehensive income (loss)
Comprehensive income/(loss)
(130)
(566)
(209)
(550)
(1,121)
1,509
1,093
(1,036)
2,674
722
—
5,215
$ (5,025) $ (41,067)
$ 1,299
See Notes to Consolidated Financial Statements.
F-6
F-6
AMERIS BANCORP
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(Dollars in thousands, except share data)
2010
2009
Year Ended December 31,
Shares
Amount
Shares
Amount
Shares
2008
Amount
PREFERRED STOCK
Balance at beginning of period
Issued during period
Accretion of fair value of warrant
Balance at end of period
COMMON STOCK
52,000
—
—
$
49,552
—
569
52,000
—
—
52,000
$
50,121
52,000
Balance at beginning of period
Issuance of common stock
Issuance of restricted shares
Cancellation of restricted shares
Proceeds from exercise of stock options
15,379,131
9,473,125
121,300
(8,500)
17,855
15,379
9,473
121
(8 )
18
15,289,625
—
88,750
—
756
$
$
$
49,028
—
524
—
52,000
—
$
—
48,975
53
49,552
52,000
$
49,028
15,289
—
89
—
1
15,293,846
—
—
(33,164)
28,943
$
15,293
—
—
(33)
29
Balance at end of period
CAPITAL SURPLUS
24,982,911
$
24,983
15,379,131
$
15,379
15,289,625
$
15,289
Balance at beginning of period
Issuance of common stock
Stock-based compensation
Warrants issued
Proceeds from exercise of stock options
Issuance of restricted shares
Cancellation of restricted shares
Tax adjustment for vesting of restricted shares
$
89,389
75,797
724
—
132
(121 )
9
—
$
88,771
—
701
—
6
(89)
—
—
$
85,483
—
(97 )
3,025
305
—
33
22
Balance at end of period
RETAINED EARNINGS
Balance at beginning of period
Net loss
Dividends on preferred shares
Accretion of fair value warrant
Cash dividends on common shares
Balance at end of period
ACCUMULATED OTHER COMPREHENSIVE INCOME,
NET OF TAX
Unrealized gains on securities:
Balance at beginning of period
Change during period
Balance at end of period
Unrealized gains on interest rate floors:
Balance at beginning of period
Change during period
Balance at end of period
Unrealized gain on interest rate swap:
Balance at beginning of period
Change during period
Balance at end of period
Balance at end of period
TREASURY STOCK
Balance at beginning of period
Purchase of treasury shares
1,334,224
1,950
$ 165,930
$
89,389
$
88,771
$
44,216
(3,989 )
(2,636 )
(569 )
(22 )
$
90,540
(41,789)
(2,583)
(578)
(1,374)
$
99,939
(3,916)
(328)
—
(5,155)
$
37,000
$
44,216
$
90,540
$
$
$
$
$
$
$
$
3,392
(1,579 )
1,813
1,109
(550 )
559
2,739
1,093
3,832
6,204
(10,812 )
(19 )
1,331,102
3,122
$
$
$
$
$
$
$
$
4,288
(896)
3,392
2,230
(1,121)
1,109
—
739
2,
2,739
7,240
(10,787)
(25)
1,329,939
1,163
$
$
$
$
$
$
$
$
582
3,706
4,288
721
1,509
2,230
—
—
—
6,518
(10,769)
(18)
Ba ance at end of period
l
1,336,174
$
(10,831 )
1,334,224
$
(1 ,812)
0
1,331,102
$
(10,787)
TOTAL STOCKHOLDERS’ EQUITY
$ 273,407
$ 194,964
$ 239,359
F-7
F-7
AMERIS BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2010, 2009 AND 2008
(Dollars in Thousands)
OPERATING ACTIVITIES
Net loss
Adjustments to reconcile net loss to net cash provided by operating activities:
$ (3,989)
$ (41,789)
$ (3,916)
2010
2009
2008
Depreciation and amortization
Amortization of intangible assets
Goodwill impairment charge
Net gain on securities available for sale
Stock based compensation expense
Net (gain) loss on sale or disposal of premises and equipment
Net (gain)/loss on sale of other real estate owned
Gain on acquisitions
Provision for loan losses
Provision for deferred taxes
(Increase)/decrease in interest receivable
Increase/(decrease) in interest payable
Decrease in taxes payable
(Increase)/decrease in prepaid FDIC assessments
Net other operating activities
Total adjustments
Net cash provided by operating activities
INVESTING ACTIVITIES, net of effects of business combinations
(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
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
Decrease in FDIC indemnification asset
Net cash proceeds received from (paid for) FDIC-assisted acquisitions
Net cash provided by (used in) investing activities
FINANCING ACTIVITIES, net of effects of business combinations
Increase/(decrease) in deposits
Increase/(decrease) in federal funds purchased and securities sold under
agreements to repurchase
Proceeds from other borrowings and debentures
Repayment of other borrowings and debentures
Deferred gain on termination of interest rate swap
Cash dividends on preferred stock
Cash dividends on common stock
Proceeds allocated to issuance of preferred stock
Proceeds allocated to warrants issued
Proceeds from issuance of common stock
Proceeds from exercise of stock options
Purchase of treasury shares
Net cash provided by (used in) financing activities
3,330
999
—
(200)
724
(388)
7,956
(14,651)
50,521
(1,788)
(1,724)
1,534
(45)
4,709
(1,978)
48,999
45,010
92,636
(52,780)
91,648
6,662
834
(3,220)
97,615
(5,061)
1,582
48,288
29,949
(187,683)
120,470
3,621
617
54,813
(871)
701
144
4,249
(38,566)
42,068
10,480
851
(4,140)
(3,184)
(12,795)
7,749
65,737
23,948
(93,050)
(77,020)
150,210
67,317
2,398
19,675
32,158
(6,884)
1,714
16,022
—
67,942
180,482
3,360
1,170
—
(316)
(97)
627
(233)
—
35,030
(4,650)
3,688
(691)
(1,512)
(311)
(6,548)
29,517
25,601
(87,361)
(168,711)
75,327
20,805
720
(45,000)
(115,447)
(10,154)
390
13,181
—
—
(316,250)
(255,160)
(131,973)
256,260
2,202
—
(2,000)
—
(2,636)
(21)
—
—
85,270
150
(19)
(172,214)
27,838
—
(79,306)
(2,739)
(2,583)
(1,375)
—
—
—
6
(25)
(190,157)
12,711
220,600
(239,100)
—
—
(5,155)
48,975
3,025
—
334
(18)
297,632
F-8
F-8
AMERIS BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2010, 2009 AND 2008
(Dollars in Thousands)
Net increase (decrease) in cash and due from banks
Cash and due from banks at beginning of period
Cash and due from banks at end of period
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid/(received) during the year for:
Interest
Income taxes
NONCASH TRANSACTIONS
2010
2009
2008
(6,734)
81,060
14,273
66,787
6,983
59,804
$ 74,326
$ 81,060
$ 66,787
$ 28,260
$ 44,690
$ 57,308
$ (1,171)
$ (5,248)
$ 4,207
Loans transferred to other real estate owned
$ 105,651
$ 39,212
$ 13,632
Assets acquired in business combinations
$ 742,394
$ 290,166
$ —
Liabilities assumed in business combinations
$ 728,549
$ 251,600
$ —
Change in unrealized gain (loss) on securities available for sale
$ (1,579)
$
(896)
$ 3,706
Change in unrealized gain (loss) on cash flow hedge (interest rate
floor)
$
(550)
$ (1,121)
$ 1,509
Change in unrealized gain on cash flow hedge (interest rate swap)
$ 1,093
$ 2,739
$ —
See Notes to Consolidated Financial Statements.
F-9
F-9
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 banking 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 concentrated in select markets in Georgia, Alabama, 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, the valuation of foreclosed assets and the carrying value of our deferred tax 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. In evaluating the Company’s deferred tax assets,
management considers the level of future revenues and their capacity to fully utilize the current levels of deferred tax assets.
Acquisition Accounting
Acquisitions are accounted for under the purchase method of accounting. Purchased assets and assumed liabilities are recorded at their
estimated fair values as of the purchase date. Any identifiable intangible assets are also recorded at fair value. When the fair value of
the assets purchased exceeds the fair value of liabilities assumed, it results in a “bargain purchase gain.” If the consideration given
exceeds the fair value of the net assets received, goodwill is recognized. Fair values are subject to refinement for up to one year after
the closing date of an acquisition as information relative to closing date fair values becomes available.
Purchased loans acquired in a business combination are recorded at estimated fair value on their purchase date and prohibit the
carryover of the related allowance for loan losses. When the loans have evidence of credit deterioration since origination and it is
probable at the date of acquisition that the Company will not collect all contractually required principal and interest payments, the
difference between contractually required payments at acquisition and the cash flows expected to be collected at acquisition is referred
to as the non-accretable discount. The Company must estimate expected cash flows at each reporting date. Subsequent decreases to the
expected cash flows will generally result in a provision for loan losses. Subsequent increases in cash flows result in a reversal of the
provision for loan losses to the extent of prior provisions and adjust accretable discount if no prior provisions have been made. This
increase in accretable discount will have a positive impact on interest income. In addition, purchased loans without evidence of credit
deterioration are also handled under this method.
All identifiable intangible assets that are acquired in a business combination are recognized at fair value on the acquisition date.
Identifiable intangible assets are recognized separately if they arise from contractual or other legal rights or if they are separable (i.e.,
capable of being sold, transferred, licensed, rented, or exchanged separately from the entity). Because deposit liabilities and the related
customer relationship intangible assets may be exchanged in a sale or exchange transaction, the intangible asset associated with the
depositor relationship is considered identifiable. Accordingly, the Company recorded a core deposit intangible asset in 2010 associated
with the Satilla Community Bank, First Bank of Jacksonville, Tifton Banking Company and Darby Bank & Trust Co. acquisitions
totaling $1,672,000. The Company recorded a core deposit intangible asset in 2009 associated with the American United Bank and
United Security Bank acquisitions totaling $573,000.
F-10
F-10
Indemnification assets are recognized when the seller contractually indemnifies, in whole or in part, the buyer for a particular
uncertainty. The recognition and measurement of an indemnification asset is based on the related indemnified item. That is, the
acquirer recognizes an indemnification asset at the same time that it recognizes the indemnified item, measured on the same basis as
the indemnified item, subject to collectability or contractual limitations on the indemnified amount. Therefore, if the indemnification
relates to an asset or a liability that is recognized at the acquisition date and measured at its acquisition-date fair value, the acquirer
recognizes the indemnification asset at its acquisition-date fair value on the acquisition date. If an indemnification asset is measured at
fair value, a separate valuation allowance is not necessary, because its fair value measurement will reflect any uncertainties in future
cash flows. The loans purchased in the six FDIC-assisted transactions during 2010 and 2009 (American United Bank, United Security
Bank, Satilla Community Bank, First Bank of Jacksonville, Tifton Banking Company and Darby Bank & Trust Co.) are covered by
loss-sharing agreements with the FDIC. The Company has recorded an estimated receivable from the FDIC of $177.2 million which
represents the fair value of the FDIC’s portion of the losses that are expected to be incurred and reimbursed to the Company.
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 $11.4 million and $12.0 million for the years ended 2010 and 2009,
respectively.
Securities
The Company classifies its securities in one of three categories: held to maturity, available for sale, or trading. Trading securities are
bought and held principally for the purpose of selling them in the near term. Held to maturity securities are those securities for which
the Company has the ability and intent to hold until maturity. All other securities are classified as available for sale. At December 31,
2010 and 2009, all securities were classified as available for sale.
Held to maturity securities are recorded at cost, adjusted for the amortization or accretion of premiums or discounts. Available for sale
securities are recorded at fair value. Unrealized holding gains and losses, net of the related tax effect, on available for sale securities
are excluded from net income and are reported in other comprehensive income as a separate component of shareholders’ equity until
realized. Transfers of securities between categories are recorded at fair value at the date of transfer. Unrealized holding gains or losses
associated with transfers of securities from held to maturity to available for sale are recorded as a separate component of shareholders’
equity. These unrealized holding gains or losses are amortized into income over the remaining life of the security as an adjustment to
the yield in a manner consistent with the amortization or accretion of the original purchase premium or discount on the associated
security.
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. A decline in the market value of any available-for-sale or held-to-maturity investment
below cost that is deemed other than temporary is charged to earnings and establishes a new cost basis for the security for the decline
in value deemed to be credit related. The decline in value attributed to non-credit related factors is recognized in other comprehensive
income.
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 costs 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 and in the process of collection. Past due status is based on contractual terms of the
loan. In all cases, loans are placed on nonaccrual or charged off 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.
F-11
F-11
Allowance for Loan Losses
The allowance for loan losses is established 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.
The allowance for loan losses 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 three to 20 years and the lives of software and computer related equipment range from three to five
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.
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 performs its annual test of impairment in the fourth quarter of each year, and during the fourth quarter of 2009, it was
determined that the entire carrying value of the Company’s goodwill was impaired. Therefore, an impairment charge of $54.8 million
was recognized as an expense in the fourth quarter of 2009. During the fourth quarter of 2010, the Company recorded $956,000 of
goodwill on the Tifton Banking Company transaction.
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 an estimated useful life of three to ten years. Amortization periods are reviewed annually in
connection with the annual impairment testing of goodwill.
F-12
F-12
Other Real Estate Owned
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, 2010 and 2009 was $55.4 million and $21.6 million, respectively.
Bank owned real estate includes land acquired directly by the Bank for its purpose and now held for sale at its fair value less estimated
cost to sell. The carrying amount of bank owned real estate at December 31, 2010 and 2009 was $2.5 million and $1.8 million,
respectively. The Company does not hold any other real estate owned (“OREO”) for investment purposes.
Income Taxes
Deferred income tax assets and liabilities are determined using the liability 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.
In the event the future tax consequences of differences between the financial reporting bases and the tax bases of the assets and
liabilities results in deferred tax assets, an evaluation of the probability of being able to realize the future benefits indicated by such
assets is required. A valuation allowance is provided for the portion of the deferred tax asset when it is more likely than not that some
portion or all of the deferred tax asset will not be realized. In assessing the realizability of the deferred tax assets, management
considers the scheduled reversals of deferred tax liabilities, projected future taxable income and tax planning strategies.
The Company currently evaluates income tax positions judged to be uncertain. A loss contingency reserve is accrued if it is probable
that the tax position will be challenged, it is probable that the future resolution of the challenge will confirm that a loss has been
incurred, and the amount of such loss can be reasonably estimated.
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 $724,000, $701,000 and ($97,000) of stock-based compensation cost in 2010, 2009 and
2008, respectively.
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.
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 stock options and warrants for the years ended December 31, 2010, 2009 and 2008,
and are determined using the treasury stock method.
F-13
F-13
Presented below is a summary of the components used to calculate basic and diluted earnings per share:
Years Ended December 31,
2010
2009
2008
(Dollars in Thousands)
Net loss available to common shareholders
$ (7,202)
$ (44,950)
$ (4,244)
Weighted average number of common shares outstanding
Effect of dilutive warrants
Effect of dilutive options
21,969
—
—
13,741
—
—
13,723
—
—
Weighted average number of common shares outstanding used to
calculate diluted earnings per share
21,969
13,741
13,723
Due to losses in 2010, 2009 and 2008, the Company has excluded the effects of options and warrants as these would have been 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.
The Company had cash flow hedges with notional amounts totaling $35.0 million at December 31, 2010 and 2009, for the purpose of
converting floating rate loans to fixed rate. The Company had a cash flow hedge with notional amount of $37.1 million at
December 31, 2010 for the purpose of converting the variable rate on the junior subordinated debentures to fixed rate. The fair value
of these instruments amounted to approximately $936,000 and $1.9 million as of December 31, 2010 and 2009, respectively, and was
recorded as an asset. No hedge ineffectiveness from cash flow hedges was recognized in the statement of operations. 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, unrealized gain or loss on the effective portion of the cash flow hedge and the realized gain or loss recognized due
to the sale or unwind of cash flow hedge prior to their contractual maturity date. These amounts are carried in other comprehensive
income (loss) on the consolidated statements of stockholders’ equity and are presented net of taxes.
New Accounting Standards
FASB Accounting Standards Codification (“ASC”) Topic 105 – Generally Accepted Accounting Principles (Statement No. 168, The
FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles – a replacement of FASB
Statement No. 162) (“ASC 105”). This accounting guidance was originally issued in June 2009 and is now included in ASC 105. The
guidance identifies the FASB Accounting Standards Codification (the “Codification”) as the single source of authoritative
U.S. Generally Accepted Accounting Principles (“GAAP”) recognized by the FASB to be applied by nongovernmental entities. The
Codification reorganizes all previous GAAP pronouncements into roughly 90 accounting topics and displays all topics using a
consistent structure. All existing standards that were used to create the Codification have been superseded, replacing the previous
references to specific Statements of Financial Accounting Standards (“SFAS”) with numbers used in the Codification’s structural
organization. The guidance is effective for interim and annual periods ending after September 15, 2009. After September 15, 2009,
only one level of authoritative GAAP exists, other than guidance issued by the Securities and Exchange Commission (the “SEC”). All
other accounting literature excluded from the Codification is considered non-authoritative. The adoption of the Codification did not
have a material impact on the Company’s consolidated financial statements.
F-14
F-14
ASC Topic 805 – Business Combinations (Statement No. 141 (Revised 2008), Business Combinations) (“ASC 805”). This accounting
guidance was originally issued in December 2007 and is now included in ASC 805. The guidance requires an acquirer to recognize the
assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree at the acquisition date, measured at their fair
values as of that date, with limited exceptions. The guidance requires prospective application for business combinations consummated
in fiscal years beginning on or after December 15, 2008. The federally assisted transactions described in Note 2 were accounted for
under this guidance.
Accounting Standards Update (“ASU”) 2010-01 – Accounting for Distributions to Shareholders with Components of Stock and Cash
(“ASU 2010-01”). ASU 2010-01 provides guidance on the accounting for distributions offering shareholders the choice of receiving
cash or stock. Under such guidance, the stock portion of the distribution is not considered to be a stock dividend, and for purposes of
calculating earnings per share it is deemed a new share issuance not requiring retroactive restatement. The guidance is effective for the
first reporting period, including interim periods, ending after December 15, 2009. The update did not have a material impact on the
Company’s results of operations, financial position or disclosures.
ASU 2010-06 – Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements
(“ASU 2010-06”). ASU 2010-06 amends Subtopic 820-10 to require additional information to be disclosed principally regarding
Level 3 measurements and transfers to and from Level 1 and 2. In addition, enhanced disclosure is required concerning inputs and
valuation techniques used to determine Level 2 and Level 3 measurements. This guidance is generally effective for interim and annual
reporting periods beginning after December 15, 2009; however, requirements to disclose separately purchases, sales, issuances and
settlements in the Level 3 reconciliation are effective for fiscal years beginning after December 15, 2010 (and for interim periods
within such years). The update has not had a material impact on the Company’s results of operations or financial position and has had
a minimal impact on its disclosures. (See Note 19).
ASU 2010-09 – Amendments to Certain Recognition and Disclosure Requirements (“ASU 2010-09”). ASU 2010-09 amends Subtopic
855-10, Subsequent Events, to remove the requirement for a registrant to disclose the date through which subsequent events have been
evaluated in both issued and revised financial statements. This change alleviates potential conflicts between ASC Subtopic 855-10 and
the SEC’s requirements. The update was effective in February 2010 and did not have a material impact on the Company’s results of
operations or financial position or disclosures.
ASU 2010-18 – Effect of a Loan Modification When the Loan is Part of a Pool that is Accounted for as a Single Asset (“ASU 2010-
18”). ASU 2010-18 provides guidance on the accounting for loan modifications when the loan is part of a pool of loans accounted for
as a single asset such as acquired loans that have evidence of credit deterioration upon acquisition that are accounted for under the
guidance in ASC 310-30. ASU 2010-18 addresses diversity in practice on whether a loan that is part of a pool of loans accounted for
as a single asset should be removed from that pool upon a modification that would constitute a troubled debt restructuring or remain in
the pool after modification. ASU 2010-18 clarifies that modifications of loans that are accounted for within a pool under ASC 310-30
do not result in the removal of those loans from the pool even if the modification of those loans would otherwise be considered a
troubled debt restructuring. An entity will continue to be required to consider whether the pool of assets in which the loan is included
is impaired if the expected cash flows for the pool change. The amendments in this update do not require any additional disclosures
and are effective for modifications of loans accounted for within pools under ASC 310-30 occurring in the first interim or annual
period ending on or after July 15, 2010. ASU 2010-18 will not have a material impact on the Company’s results of operations,
financial position or disclosures.
ASU 2010-20 – Disclosures about the Credit Quality of Financing Receivable and the Allowance for Credit Losses (“ASU 2010-20”).
ASU 2010-20 amends existing disclosure guidance to require an entity to provide a greater level of disaggregated information about
the credit quality of its financing receivables and its allowance for credit losses. ASU 2010-20 is effective for fiscal and interim
periods ending after December 15, 2010. ASU 2010-20 is not expected to have a material impact on the Company’s results of
operations or financial position and had a significant impact on the disclosures found in Note 4.
ASU 2010-28 – When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying
Amounts (“ASU 2010-28”). ASU 2010-28 requires entities with reporting units with zero or negative carrying amounts to perform
Step 2 of the goodwill impairment test if it is more likely than not that a goodwill impairment exists. In doing so, entities should
consider whether there are any adverse qualitative factors indicating that an impairment may exist. For public companies this guidance
is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. It is not expected to have a
material impact on the Company’s results of operations, financial position or disclosures.
F-15
F-15
ASU 2010-29 – Disclosure of Supplementary Pro Forma Information for Business Combinations (“ASU 2010-29”). ASU 2010-29
specifies that if a public entity presents comparative financial statements, the entity should disclose revenue and earnings of the
combined entity as though the business combination that occurred during the current year had occurred as of the beginning of the
comparable prior annual reporting period only. ASU No. 2010-29 is effective prospectively for business combinations for which the
acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010. It is not
expected to have a material impact on the Company’s results of operations, financial position or disclosures.
ASU 2011-01 – Deferral of the Effective Date of Disclosures about Troubled Debt Restructurings in Update No. 2010-20 (“ASU
2011-01”). ASU 2011-01 temporarily delays the effective date of the disclosures surrounding troubled debt restructurings in Update
2010-20 for public companies. The FASB is deliberating on what constitutes a troubled debt restructuring and will coordinate that
guidance with the effective date of the new disclosures, which is anticipated to be effective for interim and annual periods ending after
June 15, 2011. It is not expected to have a material impact on the Company’s results of operations, financial position, or disclosures.
Reclassifications
Certain reclassifications of prior year amounts have been made to conform with the current year presentations.
NOTE 2. BUSINESS COMBINATIONS
Since October 2009, the Company has participated in six FDIC-assisted acquisitions (the “acquisitions”) whereby the Company
purchased certain failed institutions out of the FDIC’s receivership. These institutions include:
Bank Acquired
Location:
Branches:
Date Acquired
American United Bank (“AUB”)
United Security Bank (“USB”)
Satilla Community Bank (“SCB”)
First Bank of Jacksonville (“FBJ”)
Tifton Banking Company (“TBC”)
Darby Bank & Trust (“DBT”)
Lawrenceville, Ga.
Sparta, Ga.
St. Marys, Ga.
Jacksonville, Fl.
Tifton, Ga.
Vidalia, Ga.
1
2
1
2
1
7
October 23, 2009
November 6, 2009
May 14, 2010
October 22, 2010
November 12, 2010
November 12, 2010
Each acquisition was unrelated to the others and separately bid and negotiated with the FDIC. The following table summarizes the
total assets purchased and liabilities assumed, as well as key elements of the purchase and assumption agreements between the FDIC
and the Bank (in thousands):
Acquisition date
Assets, fair value
Deposits, fair value
Other borrowings
Discount bid
Deposit premium
Cash received/(paid)
Gain / (Goodwill)
FDIC loss sharing - Tranche 1
Cumulative Loss threshold
Percentage retained by FDIC
FDIC loss sharing - Tranche 2
Cumulative Loss threshold
Percentage retained by FDIC
FDIC loss sharing - Tranche 3
Cumulative Loss threshold
Percentage retained by FDIC
AUB
10/23/09
$ 120,994
$ 100,470
$ 7,802
$ 19,645
$
262
$ 17,100
$ 12,445
USB
11/06/09
169,172
141,094
1,504
32,615
228
24,200
26,121
SCB
05/14/10
84,342
75,530
—
14,395
92
(35,657)
8,208
FBJ
10/22/10
77,709
71,869
2,613
4,810
—
8,117
2,385
TBC
11/12/10
132,036
132,939
—
3,973
—
(10,251)
(956)
$ 38,000
46,000
All
losses
All
losses
All
losses
80%
80%
80%
80%
80%
$ >38,000
>46,000
95%
n/a
n/a
95%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
F-16
DBT
11/12/10
448,311
386,958
54,418
45,002
—
(149,893)
4,211
131,772
80%
193,068
30%
>193,068
80%
F-16
The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of the acquisitions
(in thousands):
Assets acquired:
Cash
Investment securities
Federal funds sold
Loans
Foreclosed property
FDIC loss share asset
Core deposit intangible
Other assets
Total assets acquired
Liabilities assumed:
Deposits
FHLB advances
Other liabilities
AUB
USB
SCB
FBJ
TBC
DBT
$ 26,452
10,242
—
56,482
2,165
24,200
187
1,266
$ 41,490
8,335
2,605
83,646
8,069
21,640
386
3,001
$ (33,093)
10,814
12,661
68,751
2,012
22,400
185
612
$ 10,669
7,343
5,690
40,454
1,816
11,307
132
298
$ 4,862
7,060
—
92,568
3,472
22,807
175
1,092
$ (58,158)
105,562
—
261,340
22,026
112,404
1,180
3,957
$ 120,994
$ 169,172
$ 84,342
$ 77,709
$ 132,036
$ 448,311
$ 100,470
7,802
277
$ 141,094
1,504
453
$ 75,530
0
604
$ 71,869
2,613
842
$ 132,939
0
53
$ 386,958
2,724
54,418
Total liabilities assumed
$ 108,549
$ 143,051
$ 76,134
$ 75,324
$ 132,992
$ 444,100
Net assets acquired
$ 12,445
$ 26,121
$ 8,208
$ 2,385
$
(956)
$ 4,211
The results of operations of AUB, USB, SCB, FBJ, TBC and DBT subsequent to the acquisition date are included in the Company’s
consolidated statements of operations. The following unaudited pro forma information reflects the Company’s estimated consolidated
results of operations as if the acquisitions had occurred on December 31, 2009 and 2008, unadjusted for potential cost savings (in
thousands).
Net interest income and noninterest income
Net loss
Net loss available to common stockholders
Loss per common share available to common stockholders – basic and
diluted
Year Ended December 31,
Unaudited
2010
2009
$ 129,141
$ (52,008)
$ (48,813)
$ 158,753
$ (99,460)
$ (102,621)
$
(2.38)
$
(7.47)
Average number shares outstanding, basic and diluted
21,969
13,741
Based upon the acquisition date fair values of the net assets acquired, $956,000 of goodwill was recorded on the TBC acquisition in
2010. The SCB, FBJ and DBT acquisitions resulted in a gain of $14.7 million, before tax, which is included in the Company’s
December 31, 2010 consolidated statements of operations. Due to the difference in tax bases of the assets acquired and liabilities
assumed, the Bank recorded a deferred tax liability of $5.2 million, resulting in an after-tax gain of $9.6 million during 2010. The
AUB and USB transactions resulted in a gain of $38.6 million, before tax, which is included in the Company’s December 31, 2009
consolidated statements of operations. Due to the difference in tax bases of the assets acquired and liabilities assumed, the Bank
recorded a deferred tax liability of $13.5 million, resulting in an after-tax gain of $25.1 million during 2009.
The Company considers the determination of the initial fair value of loans at the acquisition and the initial fair value of the related
FDIC indemnification asset involves a high degree of judgment and complexity. The carrying value of the acquired loans and the
FDIC indemnification asset reflect management’s best estimate of the fair value of each of these assets as of the date of acquisition.
However, the amount that the Company realizes on these assets could differ materially from the carrying value reflected in these
financial statements, based upon the timing and amount of collections on the acquired loans in future periods. Because of the loss-
sharing agreement with the FDIC on these assets, the Company should not incur any significant losses. To the extent the actual values
realized for the acquired loans are different from the estimate, the indemnification asset will generally be affected in an offsetting
manner due to the loss-sharing support from the FDIC.
F-17
F-17
In its assumption of the deposit liabilities in the acquisitions, the Company believed that the customer relationships associated with
these deposits have intangible value. The Company determined the fair value of a core deposit intangible asset totaling approximately
$1,672,000 and $573,000 in 2010 and 2009, respectively. In determining the valuation amount, deposits were analyzed based on
factors such as type of deposit, deposit retention, interest rates, age of deposit relationships, and the maturities of time deposits.
FASB ASC 310 – 30, Loans and Debt Securities Acquired with Deteriorated Credit Quality (“ASC 310”), applies to a loan with
evidence of deterioration of credit quality since origination, acquired by completion of a transfer for which it is probable, at
acquisition, that the investor will be unable to collect all contractually required payments receivable. ASC 310 prohibits carrying over
or creating an allowance for loan losses upon initial recognition for loans which fall under the scope of this statement. At the
acquisition dates, a majority of these loans were valued based on the liquidation value of the underlying collateral because the future
cash flows are primarily based on the liquidation of underlying collateral. There was no allowance for credit losses established related
to these ASC 310 loans at the acquisition dates, based on the provision of this statement. Over the life of the acquired loans, the
Company continues to estimate cash flows expected to be collected. If the expected cash flows expected to be collected increases, the
Company adjusts the amount of accretable yield recognized on a prospective basis over the loan’s remaining life. If the expected cash
flows expected to be collected decreases, the Company records a provision for loan loss in its consolidated statement of operations.
For the year ended December 31, 2010, the Company recorded $1.7 million of provision for loan losses to account for losses where
the initial estimates of cash flows were found to be excessive on loans acquired in FDIC-assisted transactions.
On the acquisition date, the preliminary estimate of the contractually required payments receivable for all ASC 310 loans acquired in
the acquisitions were $505.1 million and the estimated fair value of the loans were $273.1 million, net of an accretable yield of $38.8
million, the difference between the value of the loans on the Company’s balance sheet and the cash flows they are expected to
produce. These amounts were determined based upon the estimated remaining life of the underlying loans, which include the effects
of estimated prepayments. As of December 31, 2010, $4.2 million of the accretable differences had been amortized into interest
income.
At the acquisition dates, a majority of these loans were valued based on the liquidation value of the underlying collateral because the
future cash flows are primarily based on the liquidation of underlying collateral. There was no allowance for credit losses established
related to these ASC 310 loans at the acquisition dates, based on the provisions of this statement.
Loans acquired for which it was probable at acquisition that all contractually required payments would not be collected are as follows.
The covered loans with deterioration of credit quality on the respective acquisition dates are presented in the following table:
SCB
FBJ
TBC
DBT
AUB
USB
Total Loans
with
Deterioration
of Credit
Quality
Construction and development
Real estate secured
Commercial, industrial, agricultural
Consumer
$ 8,976
16,422
73
—
4,821
13,279
886
252
2,435
20,305
7,134
99
(Dollars in thousands)
21,800
111,973
5,379
666
16,513
8,460
12,102
2
16,086
3,987
769
633
70,631
174,426
26,343
1,652
$ 25,471
19,238
29,973
139,818
37,077
21,475
273,052
The covered loans without deterioration of credit quality on the respective acquisition dates are presented in the following table:
SCB
FBJ
TBC
DBT
AUB
USB
Total Loans
without
Deterioration
of Credit
Quality
Construction and development
Real estate secured
Commercial, industrial, agricultural
Consumer
$ 7,824
33,160
1,568
728
3,163
17,040
526
487
4,513
34,056
22,260
1,766
(Dollars in thousands)
15,571
91,097
11,891
2,963
991
3,583
14,393
438
14,190
37,100
6,135
4,746
46,252
216,036
56,773
11,128
$ 43,280
21,216
62,595
121,522
19,405
62,171
330,189
F-18
F-18
The total covered loans on the respective acquisition dates are presented in the following table:
Construction and development
Real estate secured
Commercial, industrial, agricultural
Consumer
SCB
FBJ
TBC
DBT
AUB
USB
$ 16,800
49,582
1,641
728
7,984
30,319
1,412
739
6,948
54,361
29,394
1,865
(Dollars in thousands)
37,371
203,070
17,270
3,629
17,504
12,043
26,495
440
30,276
41,087
6,904
5,379
$ 68,751
40,454
92,568
261,340
56,482
83,646
Total Covered
Loans
116,883
390,462
83,116
12,780
603,241
The following table presents the loans receivable (in thousands) at the acquisition date for loans with deterioration in credit quality.
2010 Acquisitions:
Contractually required principal payments receivable
Non-accretable difference
Present value of cash flows expected to be collected
Accretable difference
SCB
FBJ
TBC
DBT
Total
$ 49,864
22,885
26,979
1,508
29,474
6,672
(Dollars in thousands)
51,908
20,569
225,262
56,637
22,802
3,564
31,339
1,366
168,625
28,807
356,508
106,763
249,745
35,245
Fair value of loans acquired with deterioration of credit quality
$ 25,471
19,238
29,973
139,818
214,500
2009 Acquisitions:
AUB
USB
Total
Contractually required principal payments receivable
Non-accretable difference
Present value of cash flows expected to be collected
Accretable difference
$ 65,438
26,416
(Dollars in thousands)
44,372
21,292
109,810
47,708
39,022
1,945
23,080
1,605
62,102
3,550
Fair value of loans acquired with deterioration of credit quality
$ 37,077
21,475
58,552
The following table summarizes components of all covered assets at December 31, 2010 and their origin:
Covered loans
Less adjustments related to credit risk
Less adjustments related to liquidity
and yield
Total Covered Loans
OREO
Less fair value adjustments
Covered OREO
Total covered assets
SCB
FBJ
TBC
DBT
AUB
USB
Total Covered
Loans
$ 76,472
12,336
$ 48,632
10,532
$ 113,283
25,388
(Dollars in thousands)
$ 380,238
130,769
$ 53,203
4,332
$ 77,188
7,593
$ 749,016
190,950
506
$ 63,630
$ 8,311
1,373
$ 6,938
$ 70,568
151
$ 37,949
$ 2,799
2,500
$
299
$ 38,248
458
$ 87,437
$ 4,178
2,031
$ 2,147
$ 89,584
1,199
$ 248,270
$ 42,724
21,000
$ 21,724
$ 269,994
214
$ 48,657
$ 13,207
783
$ 12,424
$ 61,081
547
$ 69,048
$ 11,473
74
$ 11,399
$ 80,447
3,075
$ 554,991
82,692
$
27,761
$
54,931
$ 609,922
FDIC loss share receivable
$ 14,333
$ 11,944
$ 27,436
$ 112,404
$ 4,208
$ 6,862
$ 177,187
F-19
F-19
On the dates of acquisition, the Company estimated the future cash flows on each individual loan and made the necessary adjustments
to reflect the asset at fair value. At each quarter end subsequent to the acquisition dates, the Company revises the estimates of future
cash flows based on current information and makes the necessary adjustments to continue reflecting the assets at fair value. The
adjustments to fair value are performed on a loan-by-loan basis and have resulted in the following:
Adjustments needed where the Company’s initial estimate of cash
flows were underestimated: (recorded with a reclassification
from non-accretable difference to accretable yield)
Adjustments needed where the Company’s initial estimate of cash
flows were overstated: (recorded through a provision for loan
losses)
Total
amounts
through
December 31,
2010
Amounts
reflected in the
Company’s
Statement of
Operations in
2010
(Dollars in thousands)
$
30,448
$
8,410
$
$
4,245
1,682
A rollforward of acquired loans with deterioration of credit quality for the years ended December 31, 2010 and 2009 is shown below:
Balance, beginning of year
Change in estimate of cash flows, net of charge-offs or recoveries
Additions due to acquisitions
Other (loan payments, transfers, etc.)
Balance, end of year
2010
2009
(Dollars in thousands)
$ 56,793
(8,081)
214,500
(10,677)
$ —
—
58,552
(1,759)
$ 252,535
$ 56,793
The following is a summary of changes in the accretable yields of acquired loans during the years ended December 31, 2010 and
2009.
Balance, beginning of year
Additions due to acquisitions
Transfers from nonaccretable difference to accretable yield
Accretion
Balance, end of year
2010
2009
(Dollars in thousands)
$ 3,550
35,245
6,090
(7,502)
$ 37,383
$ —
3,550
—
—
$ 3,550
The loss-sharing agreements are subject to the servicing procedures as specified in the agreement with the FDIC. The expected
reimbursements under the loss-sharing agreements were recorded as an indemnification asset at their estimated fair value of $168.9
million and $45.8 million on the 2010 and 2009 acquisition dates, respectively. Changes in the FDIC loss-share receivable are as
follows:
Beginning balance
Indemnification asset recorded in acquisitions
Payments received from FDIC
Effect of change in expected cash flows on covered assets
Ending balance
For the Years Ended
cember 31,
De
2010
2009
(Dollars in Thousands)
$ 45,840
$ —
168,918
(26,522)
(11,049)
45,840
—
—
$ 177,187
$ 45,840
F-20
F-20
NOTE 3. SECURITIES
The amortized cost and fair value of securities available for sale with gross unrealized gains and losses are summarized as follows:
December 31, 2010:
U. S. Government sponsored agencies
State, county and municipal securities
Corporate debt securities
Mortgage-backed securities
Total debt securities
December 31, 2009:
U. S. Government sponsored agencies
State, county and municipal securities
Corporate debt securities
Mortgage-backed securities
Total debt securities
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
(Dollars in Thousands)
Fair
Value
$ 35,128
57,385
13,540
213,737
$
448
928
123
6,732
$
(108)
(617)
(2,877)
(1,838)
$ 35,468
57,696
10,786
218,631
$ 319,790
$ 8,231
$ (5,440)
$ 322,581
$ 39,194
37,133
12,178
151,833
$
416
1,048
36
7,536
$
(85)
(25)
(3,539)
(169)
$ 39,525
38,156
8,675
159,200
$ 240,338
$ 9,036
$ (3,818)
$ 245,556
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, 2010 and 2009.
Description of Securities
December 31, 2010:
U. S. Government sponsored agencies
State, county and municipal securities
Corporate debt securities
Mortgage-backed securities
Less Than 12 Months
12 Months or More
Total
Fair
Value
Unrealized
Losses
Fair
Value
Unrealized
Losses
Fair
Value
Unrealized
Losses
(Dollars in Thousands)
$ 25,017
17,563
1,048
64,549
$
(108)
(617)
(20)
(1,838)
$ —
—
5,078
15
$ —
—
(2,857)
—
$ 25,017
17,563
6,126
64,564
$
(108)
(617)
(2,877)
(1,838)
Total temporarily impaired securities
$ 108,177
$ (2,583)
$ 5,093
$ (2,857)
$ 113,270
$ (5,440)
December 31, 2009:
U. S. Government sponsored agencies
State, county and municipal securities
Corporate debt securities
Mortgage-backed securities
$ 14,908
3,200
861
—
$
(85)
(22)
(139)
—
$ —
613
4,722
1,408
$ —
(3)
(3,400)
(169)
$ 14,908
3,813
5,583
1,408
$
(85)
(25)
(3,539)
(169)
Total temporarily impaired securities
$ 18,969
$
(246)
$ 6,743
$ (3,572)
$ 25,712
$ (3,818)
Additional information concerning the Company’s investments in corporate debt securities is included in the following table.
Class
Subordinated debt
Preferred securities
Total
F-21
Amortized
Cost
Fair Value
(Dollars in Thousands)
$ 5,558
7,982
$ 5,468
5,318
$ 13,540
$ 10,786
Average
Maturity
(years)
5.1
17.2
12.2
Average
Book Yield
6.33%
6.30%
6.31%
F-21
During 2010 and 2009, the Company received timely and current interest and principal payments on all of the securities classified as
corporate debt securities, except for one security that deferred interest during the fourth quarter of 2010. The Company’s investments
in subordinated debt include investments in regional and super-regional banks on which the Company prepares regular analysis
through review of financial information or credit ratings. Investments in preferred securities are also concentrated in the preferred
obligations of regional and super-regional banks through non-pooled investment structures. Investments in “pooled” trust preferred
securities are limited to a single issue totaling $317,000 and $514,000 at December 31, 2010 and 2009, respectively.
Management and the Company’s Asset and Liability Committee (the “ALCO Committee”) evaluate 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. Occasionally, management engages independent third
parties to evaluate the Company’s position in certain corporate debt securities to aid management and the ALCO Committee in its
determination regarding the status of impairment. The Company believes that each investment poses minimal credit risk and further,
that the Company has the intent and ability to hold these investments to their maturity date. Therefore, at December 31, 2010, these
investments are not considered impaired on an other-than-temporary basis.
At December 31, 2010 and 2009, all of the Company’s mortgage-backed securities were obligations of government-sponsored
agencies.
The amortized cost and fair value of debt securities available for sale as of December 31, 2010, 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)
$ 1,789
42,355
38,887
23,022
213,737
$ 1,805
42,770
39,209
20,166
218,631
$ 319,790
$ 322,581
Securities with a carrying value of approximately $125.1 million and $156.7 million at December 31, 2010 and 2009, respectively,
serve as collateral to secure public deposits and for other purposes required or permitted by law.
Gains and losses on sales of securities available for sale consist of the following:
Gross gains on sales of securities
Gross losses on sales of securities
Net realized gains on sales of securities available for sale
December 31,
2010
2009
2008
(Dollars in Thousands)
$ 201
(1)
$ 200
$ 894
(23)
$ 871
$ 329
(13)
$ 316
NOTE 4. LOANS AND ALLOWANCE FOR LOAN LOSSES
The Bank makes commercial, residential, construction, agricultural, agribusiness and consumer loans to customers primarily in
Georgia, Alabama, Florida 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 Bank’s loans are secured by real estate in the Bank’s primary market area. In addition, a substantial
portion of the OREO is located in those same markets. Accordingly, the ultimate collectability of a substantial portion of the Bank’s
loan portfolio and the recovery of a substantial portion of the carrying amount of OREO are susceptible to changes in real estate
conditions in the Bank’s primary market area.
F-22
F-22
The composition of loans is summarized as follows:
Commercial, financial and agricultural
Real estate – construction and development
Real estate – commercial and farmland
Real estate – residential
Consumer installment
Other
Allowance for loan losses
Loans, net
December 31,
2010
2009
(Dollars in Thousands)
$ 142,312
162,594
683,974
344,830
34,293
6,754
1,374,757
34,576
$ 169,280
234,403
749,029
380,080
40,984
10,583
1,584,359
35,762
$ 1,340,181
$ 1,548,597
Covered loans are defined as loans that were acquired in FDIC-assisted transactions that are covered by a loss-sharing agreement with
the FDIC. Covered loans totaling $555.0 million and $137.2 million at December 31, 2010 and 2009, respectively, are not included in
the above schedule.
Covered loans are shown below according to loan type as of the end of the years shown:
Commercial, financial & agricultural
Real estate – construction & development
Real estate – commercial & farmland
Real estate – residential
Consumer installment loans
2010
2009
(Dollars in Thousands)
$ 47,309
89,781
257,428
149,226
11,247
$ 22,854
11,454
65,087
23,168
14,685
$ 554,991
$ 137,248
Nonaccrual and Past Due 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 and is subsequently determined to have doubtful collectability is charged to interest
income. 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. Loans on nonaccrual status amounted to approximately
$79.3 million, $96.1 million and $65.4 million at December 31, 2010, 2009 and 2008, respectively. The following table presents an
analysis of loans accounted for on a nonaccrual basis.
Commercial, financial & agricultural
Real estate – construction & development
Real estate – commercial & farmland
Real estate – residential
Consumer installment loans
Total
December 31,
2010
2009
2008
2007
2006
(Dollars in Thousands)
$ 8,648
7,887
55,170
6,376
1,208
$ 4,774
15,787
67,172
6,965
1,433
$ 4,810
10,522
44,235
4,730
1,117
$ 1,736
3,754
11,037
1,076
865
$ 928
2,137
2,358
715
739
$ 79,289
$ 96,131
$ 65,414
$ 18,468
$ 6,877
F-23
F-23
The following table presents an analysis of past due loans as of December 31, 2010.
Loans
30-59
Days Past
Due
Loans
60-89
Days
Past Due
Loans 90
or More
Days Past
Due
Total
Loans
Past Due
Current
Loans
Total
Loans
(Dollars in Thousands)
Loans 90
Days or
More Past
Due and
Still
Accruing
Commercial, financial & agricultural
Real estate – construction &
development
Real estate – commercial & farmland
Real estate – residential
Consumer installment loans
Other
$ 898
$ 120
$ 6,746
$ 7,764
$ 134,548
$ 142,312
$ —
2,121
1,740
3,384
493
—
2,039
3,725
3,066
142
—
19,458
25,914
14,393
475
—
23,618
31,379
20,843
1,110
—
138,976
652,595
323,987
33,183
6,754
162,594
683,974
344,830
34,293
6,754
—
—
—
3
—
Total
$ 8,636
$ 9,092
$ 66,986
$ 84,714
$ 1,290,043
$ 1,374,757
$
3
There were no material amounts of loans past due ninety days or more and still accruing interest at December 31, 2010, 2009 or 2008.
Impaired Loans
Loans are considered impaired when, based on current information and events, it is probable the Company will be unable to collect all
amounts due in accordance with the original contractual terms of the loan agreements. Impaired loans include loans on nonaccrual
status and troubled debt restructurings. If a loan is deemed impaired, a specific valuation allowance is allocated, if necessary, so that
the loan is reported net, at the present value of estimated future cash flows using the loan’s existing rate or at the fair value of
collateral if repayment is expected solely from the collateral. Interest payments on impaired loans are typically applied to principal
unless collectability of the principal amount is reasonably assured, in which case interest is recognized on as cash basis.
The following is a summary of information pertaining to impaired loans:
Nonaccrual loans
Troubled debt restructurings not included above
Total impaired loans
As of and For the Years Ended
December 31,
2010
2009
2008
$ 79,289
21,972
(Dollars in Thousands)
$ 96,131
20,341
$ 65,414
—
$ 101,261
$ 116,472
$ 65,414
Impaired loans not requiring a related allowance
$ —
$ —
$ —
Impaired loans requiring a related allowance
$ 101,261
$ 116,472
$ 65,414
Allowance related to impaired loans
Average investment in impaired loans
Interest income recognized on impaired loans
Foregone interest income on impaired loans
$ 16,688
$ 15,081
$ 9,078
$ 86,849
$ 75,784
$ 40,940
$
$
545
3,828
$
$
523
$
323
6,253
$ 4,643
F-24
F-24
The following table presents an analysis of information pertaining to impaired loans as of December 31, 2010.
Unpaid
Contractual
Principal
Balance
Recorded
Investment
With No
Allowance
Recorded
Investment
With
Allowance
Total
Recorded
Investment
Related
Allowance
Average
Recorded
Investment
(Dollars in Thousands)
$ 9,983
38,060
57,224
22,819
738
$ —
—
—
—
—
$ 5,336
19,462
43,831
15,547
397
$ 5,336
19,462
43,831
15,547
397
$ 1,649
4,023
6,795
4,085
136
$ 5,411
30,226
33,882
16,785
545
$ 128,824
$ —
$ 84,573
$ 84,573
$ 16,688
$ 86,849
Commercial, financial & agricultural
Real estate – construction & development
Real estate – commercial & farmland
Real estate – residential
Consumer installment loans
Total
Credit Quality Indicators
The Company uses a nine category risk grading system to assign a risk grade to each loan in the portfolio. Following is a description
of the general characteristics of the grades:
Grade 10 – Prime Credit – This grade represents loans to the Company’s most creditworthy borrowers or loans that are secured by
cash or cash equivalents.
Grade 15 – Good Credit – This grade includes loans that exhibit one or more characteristics better than that of a Satisfactory Credit.
Generally, debt service coverage and borrower’s liquidity is materially better than required by the Company’s Loan Policy.
Grade 20 – Satisfactory Credit – This grade is assigned to loans to borrowers who exhibit satisfactory credit histories, contain
acceptable loan structures and demonstrate ability to repay.
Grade 25 – Minimum Acceptable Credit – This grade includes loans which exhibit all the characteristics of a Satisfactory Credit, but
warrant more than normal level of banker supervision due to (i) circumstances which elevate the risks of performance (such as start-up
operations, untested management, heavy leverage, interim losses); (ii)adverse, extraordinary events that have affected, or could affect,
the borrower’s cash flow, financial condition, ability to continue operating profitability or refinancing (such as death of principal, fire,
divorce); (iii) loans that require more than the normal servicing requirements (such as any type of construction financing, acquisition
and development loans, accounts receivable or inventory loans and floor plan loans); (iv) existing technical exceptions which raise
some doubts about the Bank’s perfection in its collateral position or the continued financial capacity of the borrower; or
(v) improvements in formerly criticized borrowers, which may warrant banker supervision.
Grade 28 – Performing, Under-Collateralized Credit – This grade is assigned to loans that are currently performing and supported by
adequate financial information that reflects repayment capacity, but exhibits a loan-to-value ratio greater than 110%, based on a
documented collateral valuation.
Grade 30 – Other Asset Especially Mentioned – This grade includes loans that exhibit potential weaknesses that deserve
management’s close attention. If left uncorrected, these weaknesses may result in deterioration of the repayment prospects for the
asset or in the Company’s credit position at some future date.
Grade 40 – Substandard – This grade represents loans which are inadequately protected by the current sound worth and paying
capacity of the borrower or of the collateral pledged, if any. These assets exhibit a well-defined weakness or are characterized by the
distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. These weaknesses may be characterized
by past due performance, operating losses or questionable collateral values.
Grade 50 – Doubtful – This grade includes loans which exhibit all of the characteristics of a substandard loan with the added provision
that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly
questionable or improbable.
Grade 60 – Loss – This grade is assigned to loans which are considered uncollectible and of such little value that their continuance as
active assets of the Bank is not warranted. This classification does not mean that the loss has absolutely no recovery or salvage value,
but rather it is not practical or desirable to defer writing it off.
F-25
F-25
The following table presents the loan portfolio by risk grade as of December 31, 2010.
Risk Grade
10
15
20
25
28
30
40
50
60
Commercial,
financial &
agricultural
Real estate -
construction &
development
Real estate -
commercial &
farmland
Real estate -
residential
$
$ 17,739
11,191
48,738
53,957
2,246
998
6,633
810
—
(Dollars in Thousands)
211
3,006
39,407
73,589
7,696
6,437
32,009
239
—
$
1,109
145,376
274,817
168,273
9,159
29,029
56,090
120
1
$
110
40,783
118,179
137,416
6,197
17,069
25,076
—
—
Consumer
installment
loans
$ 5,507
858
18,566
8,261
31
273
791
6
—
Other
Total
$ —
—
6,754
—
—
—
—
—
—
$
24,676
201,214
506,461
441,496
25,329
53,806
120,599
1,175
1
Total
$ 142,312
$ 162,594
$ 683,974
$ 344,830
$ 34,293
$ 6,754
$ 1,374,757
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. The Company segregates the loan
portfolio by type of loan and utilizes 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, the Company further segregates the 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 Company operates. Factors considered include, among others, current
valuations of real estate in their markets, unemployment rates, the effect of weather conditions on agricultural related entities and
other significant local economic events.
The Company has developed a methodology for determining the adequacy of the allowance for loan losses which is monitored by the
Company’s Senior Credit Officer. Procedures provide for the assignment of a risk rating for every loan included in the 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 nine ratings of which five 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.
Changes in the allowance for loan losses for the years ended December 31, 2010, 2009 and 2008 are as follows:
Balance, beginning of year
Provision for loan losses
Loans charged off
Recoveries of loans previously charged off
Balance, end of year
December 31,
2010
2009
2008
(Dollars in Thousands)
$ 35,762
48,839
(52,623)
2,598
$ 39,652
42,068
(47,129)
1,171
$ 27,640
35,030
(24,340)
1,322
$ 34,576
$ 35,762
$ 39,652
During 2010, the Company recorded provision for loan loss expense of $1.7 million to account for losses where the initial estimate of
cash flows was found to be excessive on loans acquired in FDIC-assisted transactions. These amounts are excluded from the
rollforwards above and below but are reflected in the Company’s Consolidated Statements of Operations.
F-26
F-26
The following table details activity in the allowance for loan losses by portfolio segment for the year ended December 31, 2010.
Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.
Balance, beginning of year
Provision for loan losses
Loans charged off
Recoveries of loans previously charged
off
Balance, end of year
$
$
3,428
4,265
(5,481)
567
2,779
$
$
13,098
13,776
(19,853)
684
7,705
$
$
Commercial,
financial &
agricultural
Real estate -
construction &
development
Real estate -
commercial &
farmland
Real estate -
residential
Consumer
installment
loans and
Other
$
549
683
(1,090)
(Dollars in thousands)
11,296
18,937
(16,108)
$
7,391
11,178
(10,091)
846
14,971
186
8,664
$
315
457
$
Total
$
$
35,762
48,839
(52,623)
2,598
34,576
Period-end amount allocated to:
Loans individually evaluated for
impairment
Loans collectively evaluated for
impairment
Ending balance
Loans:
Individually evaluated for impairment
Collectively evaluated for impairment
Ending balance
Related Party Loans
$
677
$
3,554
$
6,300
$
2,554
$ —
$
13,085
2,102
2,779
$
$
4,151
7,705
8,671
14,971
$
6,110
8,664
$
457
457
21,491
34,576
$
$
$
3,930
138,382
$ 142,312
$
22,838
139,756
$ 162,594
$
50,179
633,795
$ 683,974
$ 14,740
330,090
$ 344,830
$ —
41,047
$ 41,047
$
91,687
1,283,070
$ 1,374,757
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 prohibits 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
NOTE 5. PREMISES AND EQUIPMENT
Premises and equipment are summarized as follows:
Land
Buildings
Furniture and equipment
Construction in progress
Accumulated depreciation
F-27
F-27
December 31,
2010
2009
(Dollars in Thousands)
$ 8,336
782
(1,500)
—
$ 7,618
$ 8,274
3
(93)
152
$ 8,336
December 31,
2010
2009
(Dollars in Thousands)
$ 22,737
50,927
31,790
722
106,176
(39,587)
$ 66,589
$ 24,745
48,334
29,459
283
102,821
(35,184)
$ 67,637
Estimated costs to complete construction projects under progress were less than $1 million at December 31, 2010 and 2009.
Depreciation expense was approximately $3.3 million, $3.6 million and $3.4 million for the years ended December 31, 2010, 2009
and 2008, 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 three years with one two-year renewal option.
The Company has various operating leases with unrelated parties on 14 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 $880,000, $752,000 and $813,000 for the years ended December 31, 2010, 2009 and 2008,
respectively. Future minimum lease commitments under the Company’s operating leases, excluding any renewal options, are
summarized as follows:
2011
2012
2013
2014
2015
Thereafter
$ 443,506
404,439
365,690
317,371
201,816
250,454
$ 1,983,276
NOTE 6. GOODWILL AND INTANGIBLE ASSETS
The Company recorded a core deposit intangible asset of $1,672,000 associated with the acquisitions of SCB, FBJ, DBT and TBC
during 2010 and recorded a core deposit intangible of $573,000 associated with the acquisitions of AUB and USB during 2009. The
amortization period used for core deposit intangibles ranges from three to 10 years. Following is a summary of information related to
acquired intangible assets:
As of December 31, 2010
As of December 31, 2009
Gross
Amount
Accumulated
Amortization
Gross
Amount
Accumulated
Amortization
(Dollars in Thousands)
Amortized intangible assets Core deposit premiums
$ 16,675
$ 12,414
$ 15,003
$ 11,417
The aggregate amortization expense for intangible assets was approximately $999,000, $616,000 and $1,170,000 for the years ended
December 31, 2010, 2009 and 2008, respectively.
The estimated amortization expense for each of the next five years is as follows (in thousands):
2011
2012
2013
2014
2015
Thereafter
$ 893
1,021
862
862
543
80
$ 4,261
F-28
F-28
Changes in the carrying amount of goodwill are as follows:
Beginning balance
Goodwill recorded in acquisition
Impairment of goodwill
Ending balance
For the Years Ended
De mber 31,
ce
2010
2009
(Dollars in Thousands)
$ —
956
—
$ 54,813
—
(54,813)
$
956
$
—
During the annual assessment of goodwill in the fourth quarter of 2009, the Company concluded that the carrying value of goodwill
was impaired. GAAP requires that goodwill be reviewed for impairment at least annually. Impairment is a condition that exists when
the carrying amount of the goodwill exceeds its fair value. Two tests were performed by a third party using three valuation
approaches: the market approach, the income approach and the cost approach. Based on the testing, it was determined that the entire
carrying value of goodwill was impaired. The loss on impairment of goodwill in the amount of $54.8 million was recorded as an other
expense in the statement of operations for the year ended December 31, 2009. During the fourth quarter of 2010, the Company
recorded $956,000 of goodwill on the TBC transaction.
NOTE 7. DEPOSITS
The aggregate amount of time deposits in denominations of $100,000 or more at December 31, 2010 and 2009 was $625.1 million and
$504.3 million, respectively. The scheduled maturities of time deposits at December 31, 2010 are as follows:
2011
2012
2013
2014
2015
Thereafter
(Dollars in
Thousands)
$ 844,935
167,786
34,106
11,009
3,997
554
$ 1,062,387
The Company had brokered deposits of approximately $118.3 million and $164.3 million at December 31, 2010 and 2009,
respectively. The scheduled maturities of brokered deposits at December 31, 2010 and their weighted average costs are as follows:
2011
2012
2013
2014
Balance
Average
Cost
(Dollars in Thousands)
$ 50,461
40,081
21,799
6,000
3.46%
3.20
3.35
3.24
$ 118,341
3.34%
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, 2010 and 2009 were $68.2 million and $55.3 million, respectively.
F-29
F-29
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 12
months of employment with a minimum of 1,000 hours and have attained an age of 21.
During 2009, the Company reduced contributions to the plan because of the net loss from operations and the Company did not
contribute to the plan during 2010 for the same reason. Therefore, there was not an expense recorded under the plan in 2010 and the
aggregate expense under the plan charged to operations during 2009 and 2008 amounted to $548,000 and $1.6 million, respectively.
NOTE 10. DEFERRED COMPENSATION PLANS
The Company and the Bank have entered into separate deferred compensation arrangements with certain former 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 $2.33 million and $2.27 million at
December 31, 2010 and 2009, respectively, is included in other assets. Accrued deferred compensation of $899,000 and $964,000 at
December 31, 2010 and 2009, respectively, is included in other liabilities. Aggregate compensation expense under the plans was
$95,000 per year for 2010, 2009 and 2008, which is included in other operating expenses.
NOTE 11. OTHER BORROWINGS
Other borrowings consist of the following:
Convertible advance from Federal Home Loan Bank due January 18, 2011 with an effective
weighted-average rate of 1.03%.
Convertible advances from Federal Home Loan Bank due October 4, 2012 and November 9,
2012 with an effective weighted-average rate of 1.03%.
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.
December 31,
2009
2010
(Dollars in Thousands)
$ 12,014
$ —
31,481
—
—
$ 43,495
2,000
$ 2,000
The advances from the Federal Home Loan Bank (“FHLB”) are collateralized by a blanket lien on all first mortgage loans and other
specific loans in addition to FHLB stock. At December 31, 2010, $7.7 million was available for borrowing on lines with the FHLB.
As of December 31, 2010, the Company maintained credit arrangements with various financial institutions to purchase federal funds
up to $60 million.
The Company also participates in the Federal Reserve discount window borrowings. At December 31, 2010, the Company had $374.5
million of loans pledged at the Federal Reserve discount window and had $233.6 million available for borrowing.
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 as a portion of the preferred
stock dividends in the consolidated statements of operations to arrive at net income (loss) available to common stockholders.
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.
F-30
F-30
NOTE 13. INCOME TAXES
The income tax (expense) benefit in the consolidated statements of operations consists of the following:
Current
Benefit of operating loss carryforward
Deferred
For the Years Ended December 31,
2010
2009
2008
(Dollars in Thousands)
$ 1,407
2,958
(1,170)
$ 3,183
—
(10,480)
$ (2,597)
—
4,650
$ 3,195
$ (7,297)
$ 2,053
As of December 31, 2010, the Company has Federal and State net operating loss carryforwards totaling approximately $8.5 million
that will begin to expire in 2030 unless previously utilized.
The Company’s income tax (expense) benefit 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
Goodwill Impairment
Other
Provision for income taxes
For the Years Ended December 31,
2010
2009
2008
(Dollars in Thousands)
$ 2,514
$ 12,073
$ 2,030
577
—
104
$ 3,195
485
(19,058)
(797)
364
(341)
$ (7,297)
$ 2,053
Net deferred income tax assets (liabilities) of $887,000 and ($2.0 million) at December 31, 2010 and 2009, respectively, are included
in other assets (liabilities). The components of deferred income taxes are as follows:
Deferred tax assets:
Allowance for loan losses
Deferred compensation
Deferred gain on interest rate swap
Nonaccrual interest
Other real estate owned
Net operating loss carry-forward
Capitalized costs, deferred gains and other
Deferred tax liabilities:
Depreciation and amortization
Intangible assets
Stock based compensation
Deferred gain on FDIC-assisted transactions
Unrealized gain on securities available for sale
Unrealized gain on cash flow hedge
De
cember 31,
2010
2009
(Dollars in Thousands)
$ 12,122
316
465
964
3,583
2,958
395
20,803
3,447
476
202
14,514
976
301
19,916
$ 12,524
337
959
804
1,704
—
572
16,900
3,679
671
245
11,929
1,806
597
18,927
Net deferred tax asset (liability)
$
887
$ (2,027)
F-31
F-31
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% (3.10% at December 31, 2010) 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, 2010,
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% (1.93% at December 31,
2010). 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 sheets. In addition, the related interest expense continues to be included in
the consolidated statements of operations. For regulatory capital purposes, the trust preferred securities qualify as a component of Tier
1 Capital.
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, 2010, the Company has 201,650 outstanding restricted shares granted under the plans as compensation to certain
employees. These shares carry dividend and voting rights. Sales of these shares are 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 2010 and 2009, compensation expense related to these grants was approximately $327,000 and $201,000, 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 approximately $397,000, $500,000 and $334,000 for 2010, 2009 and 2008,
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 2010 or 2009. As of December 31, 2010, there was approximately $11,000 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 three months.
F-32
F-32
A summary of the activity of non-performance based and performance based options as of December 31, 2010 is presented below:
Non-Performance Based
Weighted-
Average
Exercise
Price
Weighted
Average
Contractual
Term
Aggregate
Intrinsic
Value
$ (000)
$ 13.63
—
8.49
9.59
23
Performance Based
Weighted-
Average
Exercise
Price
Weighted
Average
Contractual
Term
Aggregate
Intrinsic
Value
$ (000)
$ 16.65
—
—
18.76
—
Shares
485,533
—
—
(44,348)
Shares
261,206
—
(17,889)
(34,324)
208,993
$ 14.73
207,312
$ 13.61
4.21
4.20
$
$
26
441,185
$ 16.43
26
348,547
$ 18.16
6.22
5.82
$
$
397
159
Under option,
beginning of year
Granted
Exercised
Forfeited
Under option, end of
year
Exercisable at end of
year
A summary of the activity of non-performance based and performance based options as of December 31, 2009 is presented below:
Non-Performance Based
Weighted-
Average
Exercise
Price
Weighted
Average
Contractual
Term
Aggregate
Intrinsic
Value
$ (000)
Shares
295,330
—
—
(34,124)
$ 13.34
—
—
11.18
—
Shares
379,122
128,516
—
(22,105)
$ 20.14
7.15
—
21.42
Performance Based
Weighted-
Average
Exercise
Price
Weighted
Average
Contractual
Term
Aggregate
Intrinsic
Value
$ (000)
261,206
$ 13.63
4.44
$ —
485,533
$ 16.65
230,446
$ 12.49
—
$ —
315,618
$ 18.72
—
6.22
—
$
$
397
6
Under option,
beginning of year
Granted
Exercised
Forfeited
Under option, end of
year
Exercisable at end of
year
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-
Average
Exercise
Price
Weighted
Average
Contractual
Term
Aggregate
Intrinsic
Value
$ (000)
$ 12.48
14.72
11.23
13.75
Performance Based
Weighted-
Average
Exercise
Price
Weighted
Average
Contractual
Term
Aggregate
Intrinsic
Value
$ (000)
$ 20.23
13.47
—
19.71
—
Shares
437,726
10,281
—
(68,885)
Shares
239,124
112,374
(29,757)
(26,411)
295,330
$ 13.34
158,750
$ 11.06
5.33
3.83
$
$
242
379,122
$ 20.14
7.56
$ —
242
104,561
$ 19.71
7.25
$ —
Under option,
beginning of year
Granted
Exercised
Forfeited
Under option, end of
year
Exercisable at end of
year
The Company did not grant any options during 2010. The weighted-average grant date fair value of options granted was $1.88 and
$3.01 during 2009 and 2008, respectively. As of December 31, 2010, there was approximately $303,000 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 two years.
F-33
F-33
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. There were no stock-based compensation grants made in 2010.
Dividend yield
Expected life
Expected volatility
Risk-free interest rate
Years Ended December 31,
2009
2008
2.60-3.50%
3.69-4.61%
8 years
29.18-36.17%
2.35-2.84%
8 years
27.10-32.80%
3.57-3.88%
A summary of the status of the Company’s restricted stock awards as of December 31, 2010 and changes during the year then ended is
presented below:
Nonvested shares at beginning of year
Granted
Vested
Forfeited
2010
2009
2008
Weighted-
Average
Grant-Date
Fair Value
$
8.04
9.69
17.67
9.63
Shares
16,100
89,250
(9,900)
(8,000)
Weighted-
Average
Grant-Date
Fair Value
$ 22.57
6.97
21.58
8.63
Shares
53,430
—
(4,000)
(33,330)
Weighted-
Average
Grant-Date
Fair Value
$ 20.83
—
20.84
19.99
Shares
87,450
121,300
(6,100)
(1,000)
Nonvested shares at end of year
201,650
$
8.73
87,450
$
8.04
16,100
$ 22.57
The balance of unearned compensation related to restricted stock grants as of December 31, 2010 and 2009 was approximately
$1,230,000 and $833,000, respectively.
NOTE 16. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
During 2006, the Company purchased two 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. Each instrument had a notional
amount of $35 million, indexed to the prime rate with a 7% strike rate. One instrument matured in August 2009 while the other
instrument matures in August 2011. The premium paid for these contracts was $497,000.
During 2010, the Company entered into an interest rate swap to lock in a fixed rate as opposed to the contractual variable interest rate
on the junior subordinated debentures. The interest rate swap contract has a notional amount of $37.1 million and is hedging the
variable rate on the junior subordinated debentures described in Note 14 of the consolidated financial statements. The Company
receives a variable rate of the 90 day LIBOR rate plus 1.63% and pays a fixed rate of 4.11%. The swap matures in September 2020.
These contracts are classified as cash flow hedges of an exposure to changes in the cash flow of a recognized asset. At December 31,
2010, the fair value of the remaining instrument totaled $936,000, compared to $1.9 million at December 31, 2009. 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, 2010, the hedge is deemed to be highly effective.
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.
F-34
F-34
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,
2010
2009
(Dollars in Thousands)
$ 166,845
7,874
$ 143,868
3,921
$ 174,719
$ 147,789
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.
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, 2010 and 2009.
At December 31, 2010, the Company had guaranteed the debt of certain officers’ liabilities at another financial institution totaling
approximately $377,000. 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 performed on
approximately $75,000 of the guarantees during the year ended December 31, 2010.
Contingencies
In the normal course of business, the Company is involved in various legal proceedings. In the opinion of management, any liability
resulting from such proceedings would not have a material effect on the Company’s financial statements.
NOTE 18. 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, 2010, 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 that, as of December 31, 2010 and 2009, the Company and the Bank met all capital
adequacy requirements to which they are subject.
As of December 31, 2010, 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.
F-35
F-35
The Company’s and Bank’s actual capital amounts and ratios are presented in the following table.
As of December 31, 2010
Total Capital to Risk Weighted Assets
Consolidated
Ameris Bank
Tier I Capital to Risk Weighted Assets:
Consolidated
Ameris Bank
Tier I Capital to Average Assets:
Consolidated
Ameris Bank
As of December 31, 2009
Total Capital to Risk Weighted Assets
Consolidated
Ameris Bank
Tier I Capital to Risk Weighted Assets:
Consolidated
Ameris Bank
Tier I Capital to Average Assets:
Consolidated
Ameris Bank
Actual
For Capital
Adequacy
Purposes
To Be Well Capitalized
Under Prompt Corrective
Action Provisions
Amount
Ratio
Amount
Ratio
Amount
Ratio
(Dollars in Thousands)
$ 328,074
$ 317,485
19.45% $ 134,931
18.88% $ 134,509
8.00%
8.00% $ 168,136
—N/A—
10.00%
$ 306,818
$ 296,301
18.19% $ 67,465
17.62% $ 67,255
4.00%
4.00% $ 100,882
—N/A—
6.00%
$ 308,818
$ 296,301
11.34% $ 108,198
11.05% $ 107,303
4.00%
4.00% $ 134,129
—N/A—
5.00%
$ 245,615
$ 240,870
14.79% $ 132,866
14.51% $ 132,798
8.00%
8.00% 165,997
—N/A—
10.00%
$ 224,670
$ 219,967
13.53% $ 66,483
13.25% $ 66,399
4.00%
4.00% 99,598
—N/A—
6.00%
$ 224,670
$ 219,967
9.35% $ 96,122
9.61% $ 91,579
4.00%
4.00% 114,473
—N/A—
5.00%
NOTE 19. FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company utilizes fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair
value disclosures. Securities available-for-sale and derivatives are recorded at fair value on a recurring basis. From time to time, the
Company may be required to record at fair value other assets on a nonrecurring basis, such as impaired loans and OREO.
Additionally, the Company is required to disclose, but not record, the fair value of other financial instruments.
Fair Value Hierarchy
The Company groups assets and liabilities at fair value in three levels, based on the markets in which the assets and liabilities are
traded and the reliability of the assumptions used to determine fair value. These levels are:
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.
The following methods and assumptions were used by the Company in estimating the fair value of its financial instruments and other
accounts recorded or disclosed 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 , interest-bearing deposits in banks and federal funds sold approximates fair value.
F-36
F-36
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. The level 2 fair value pricing is provided by an independent third party and is
based upon similar securities in an active market. 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.
Other Investments: FHLB stock is included in other investment securities at its original cost basis, as cost approximates fair value
and there is no ready market for such investments.
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 “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.
Other Real Estate Owned: The fair value of 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. In most cases, management has determined that additional write-downs
are required beyond what is calculable from the appraisal to carry the property at levels that would attract buyers. Because this
additional write-down is not based on observable inputs, management has determined that other real estate owned should be classified
as Level 3.
Covered Assets: Covered assets include loans and other real estate owned on which the majority of losses would be covered by loss-
sharing agreements with the FDIC. Management initially valued these assets at fair value using mostly unobservable inputs and, as
such, has classified these assets as Level 3.
Intangible Assets and Goodwill: 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 an estimated useful life of three to ten years.
Goodwill represents the excess of the purchase price over the fair value of the net identifiable assets acquired in a business
combination. Goodwill and other intangible assets deemed to have an indefinite useful life are not amortized but instead are subject to
an annual review for impairment.
FDIC Loss-Share Receivable: Because the FDIC will reimburse the Company for certain acquired loans should the Company
experience a loss, an indemnification asset is recorded at fair value at the acquisition date. The indemnification asset is recognized at
the same time as the indemnified loans, and measured on the same basis, subject to collectability or contractual limitations. The shared
loss agreements on the acquisition date reflect the reimbursements expected to be received from the FDIC, using an appropriate
discount rate, which reflects counterparty credit risk and other uncertainties. The shared loss agreements continue to be measured on
the same basis as the related indemnified loans, and the loss share receivable is impacted by changes in estimated cash flows
associated with these loans.
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: Because commitments to extend credit and standby letters of credit are typically made using
variable rates and have short maturities, the carrying value and fair value are immaterial for disclosure.
F-37
F-37
Derivatives: The Company has entered into derivative financial instruments to manage interest rate risk. The valuation of these
instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash
flows of the derivatives. This analysis reflects the contractual terms of the derivative, including the period to maturity, and uses
observable market-based inputs, including interest rate curves and implied volatilities. The fair value of the derivatives are determined
using the market standard methodology of netting the discounted future fixed cash receipts and the discounted expected variable cash
payments. The variable cash payments are based on an expectation of future interest rates (forward curves derived from observable
market interest rate curves).
The Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective
counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect
of nonperformance risk, the Company has considered the impact of netting any applicable credit enhancements such as collateral
postings, thresholds, mutual puts and guarantees.
Although the Company has determined that the majority of the inputs used to value its derivative fall within Level 2 of the fair value
hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit
spreads to evaluate the likelihood of default by itself or the counterparty. However, as of December 31, 2010 and 2009, the Company
has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and
has determined that the credit valuation adjustment is not significant to the overall valuation of its derivatives. As a result, the
Company has determined that its derivative valuation in its entirety is classified in Level 2 of the fair value hierarchy.
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 fair value hierarchy in which the fair value measurements fall as of December 31, 2010 and 2009:
U.S. government sponsored agencies
State, county and municipal securities
Corporate debt securities
Mortgage backed securities
Derivative financial instruments
Total recurring assets at fair value
U.S. government sponsored agencies
State, county and municipal securities
Corporate debt securities
Mortgage backed securities
Derivative financial instruments
Total recurring assets at fair value
Fair Value Measurements on a Recurring Basis
As of December 31, 2010
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
(Dollars in Thousands)
—
—
—
—
—
—
$
$ 35,468
54,951
8,786
218,631
936
$ 318,772
$
—
2,745
2,000
—
—
4,745
Fair Value
$ 35,468
57,696
10,786
218,631
936
$ 323,517
$
Fair Value Measurements on a Recurring Basis
As of December 31, 2009
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
(Dollars in Thousands)
$
$
Fair Value
$ 39,525
38,156
8,675
159,200
1,882
$ 247,438
$
F-38
—
—
—
—
—
—
$
$ 39,525
38,156
6,675
159,200
1,882
$ 245,438
$
—
—
2,000
—
—
2,000
F-38
The following table presents the fair value measurements of assets measured at fair value on a non-recurring basis, as well as the
general classification of such instruments pursuant to the valuation hierarchy as of December 31, 2010 and 2009:
Fair Value Measurements on a Nonrecurring Basis
As of December 31, 2010
Impaired loans carried at fair value
Other real estate owned
Covered loans
Covered other real estate owned
Fair Value
$ 79,289
57,915
554,991
54,931
Total nonrecurring assets at fair value
$ 747,126
$
Impaired loans carried at fair value
Other real estate owned
Covered loans
Covered other real estate owned
Fair Value
$ 96,131
23,316
137,248
9,337
Total nonrecurring assets at fair value
$ 266,032
$
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
(Dollars in Thousands)
—
—
—
—
—
$ 79,289
—
—
—
$
—
57,915
554,991
54,931
$ 79,289
$ 667,837
Fair Value Measurements on a Nonrecurring Basis
As of December 31, 2009
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
(Dollars in Thousands)
—
—
—
—
—
$ 96,131
—
—
—
$
—
23,316
137,248
9,337
$ 96,131
$ 169,901
$
$
Below is the Company’s reconciliation of Level 3 assets as of December 31, 2010 and 2009. Gains or losses on impaired loans are
recorded in the provision for loan losses.
Beginning balance, January 1, 2009
Total losses included in operations
Purchases, sales, issuances, and settlements, net
Transfers in or out of Level 3
Ending balance, December 31, 2009
Total losses included in operations
Purchases, sales, issuances, and settlements, net
Transfers in or out of Level 3
Investment
Securities
Available for
Sale
$
$
2,000
—
—
—
2,000
—
2,745
—
Other Real
Estate Owned
Covered Loans
$
$
$
(Dollars in Thousands)
6,507
(7,063)
(15,340)
39,212
—
—
—
137,248
23,316
(4,327)
(35,017)
73,943
$
137,248
(1,682)
419,425
—
Covered Other
Real Estate
Owned
$
$
—
—
—
9,337
9,337
(3,629)
16,373
32,850
Ending balance, December 31, 2010
$
4,745
$
57,915
$
554,991
$
54,931
F-39
F-39
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, 2010
December 31, 2009
Carrying
Amount
Fair
Value
Carrying
Amount
Fair
Value
(Dollars in Thousands)
$ 1,895,172
$ 1,905,346
$ 1,685,845
$ 1,698,431
2,535,426
43,495
2,542,767
43,685
2,123,116
2,000
2,125,834
2,040
NOTE 20. CONDENSED FINANCIAL INFORMATION OF AMERIS BANCORP (PARENT COMPANY ONLY)
CONDENSED BALANCE SHEETS
DECEMBER 31, 2010 AND 2009
(Dollars in Thousands)
Assets
Cash and due from banks
Investment in subsidiaries
Other assets
Total assets
Liabilities
Other liabilities
Subordinated deferrable interest debentures
Total liabilities
Stockholders’ equity
Total liabilities and stockholders’ equity
2010
2009
$ 8,763
304,109
3,922
$ 6,233
228,522
3,403
$ 316,794
$ 238,158
$ 1,118
42,269
925
$
42,269
43,387
43,194
273,407
194,964
$ 316,794
$ 238,158
F-40
F-40
CONDENSED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 2010, 2009 AND 2008
(Dollars in Thousands)
Income
Dividends from subsidiaries
Other income
Total income
Expense
Interest
Other expense (income)
Total expense
Income (loss) before income tax benefit and equity in undistributed loss of
subsidiaries
Income tax benefit
2010
2009
2008
$ —
59
$ —
221
$ 5,700
130
59
221
5,830
887
1,198
2,085
1,766
757
2,523
2,404
(87)
2,317
(2,026)
(2,302)
3,513
541
683
626
Income (loss) before equity in undistributed loss of subsidiaries
(1,485)
(1,619)
4,139
Equity in undistributed loss of subsidiaries
Net loss
Preferred stock dividend
(2,504)
(40,170)
(8,055)
$ (3,989)
$ (41,789)
$ (3,916)
3,213
3,161
328
Net loss available to common shareholders
$ (7,702)
$ (44,950)
$ (4,244)
F-41
F-41
CONDENSED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2010, 2009 AND 2008
(Dollars in Thousands)
OPERATING ACTIVITIES
Net loss
Adjustments to reconcile net loss to net cash provided by (used in) operating
activities:
Stock-based compensation expense
Undistributed losses of subsidiaries
Increase (decrease) in interest payable
Increase (decrease) in tax receivable
Provision for deferred taxes
(Increase) decrease in due from subsidiaries
Other operating activities
Total adjustments
2010
2009
2008
$ (3,989)
$ (41,789)
$ (3,916)
724
2,504
145
184
447
—
(229)
3,775
701
40,170
16
3,521
866
81
(536)
44,819
(97)
8,055
(37)
(1,373)
176
(122)
(1,053)
5,549
Net cash provided by (used in) operating activities
(214)
3,030
1,633
INVESTING ACTIVITIES
Contribution of capital to subsidiary bank
Net cash used in investing activities
FINANCING ACTIVITIES
Repayments of other borrowings and debentures
Purchase of treasury shares
Dividends paid preferred stock
Proceeds from issuance of common stock
Cash dividends paid common stock
Accretion of discount on preferred stock
Proceeds allocated to issuance of preferred stock
Proceeds allocated to issuance of warrant
Proceeds from exercise of stock options
(80,000)
(80,000)
(40,000)
(40,000)
—
—
—
(19)
(2,636)
85,270
(21)
—
—
—
150
(5,000)
(25)
(2,583)
—
(1,375)
524
—
—
6
—
(18)
—
—
(5,155)
53
48,975
3,025
334
Net cash provided by (used in) financing activities
82,744
(8,453)
47,214
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
2,530
6,233
(45,423)
51,656
48,847
2,809
$ 8,763
$ 6,233
$ 51,656
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for interest
Cash paid during the year for income taxes
742
$
$ —
$ 1,766
$ —
$ 2,441
$ —
F-42
F-42
REGISTRANT’S SUBSIDIARIES
REGISTRANT’S SUBSIDIARIES
Following is a list of the Registrant’s subsidiaries and the state of incorporation or other jurisdiction.
Following is a list of the Registrant’s subsidiaries and the state of incorporation or other jurisdiction.
Name of Subsidiary
Name of Subsidiary
State of Incorporation or
Other Jurisdiction
State of Incorporation or
Other Jurisdiction
Exhibit 21.1
Exhibit 21.1
Ameris Bank
Ameris Bank
State of Georgia
State of Georgia
Ameris Statutory Trust I
Ameris Statutory Trust I
State of Delaware
State of Delaware
Ameris Sub Holding Company, Inc.
Ameris Sub Holding Company, Inc.
State of Delaware
State of Delaware
Moultrie Real Estate Holdings, Inc.
Moultrie Real Estate Holdings, Inc.
State of Delaware
State of Delaware
Quitman Real Estate Holdings, Inc.
Quitman Real Estate Holdings, Inc.
State of Delaware
State of Delaware
Thomas Real Estate Holdings, Inc.
Thomas Real Estate Holdings, Inc.
State of Delaware
State of Delaware
Citizens Real Estate Holdings, Inc.
Citizens Real Estate Holdings, Inc.
State of Delaware
State of Delaware
Cairo Real Estate Holdings, Inc.
Cairo Real Estate Holdings, Inc.
State of Delaware
State of Delaware
Southland Real Estate Holdings, Inc.
Southland Real Estate Holdings, Inc.
State of Alabama
State of Alabama
Cordele Real Estate Holdings, Inc.
Cordele Real Estate Holdings, Inc.
State of Delaware
State of Delaware
First National Real Estate Holdings, Inc.
First National Real Estate Holdings, Inc.
State of Delaware
State of Delaware
M&F Real Estate Holdings, Inc.
M&F Real Estate Holdings, Inc.
State of Delaware
State of Delaware
Tri-County Real Estate Holdings, Inc.
Tri-County Real Estate Holdings, Inc.
State of Delaware
State of Delaware
First National Banc Statutory Trust I
First National Banc Statutory Trust I
State of Delaware
State of Delaware
Each subsidiary conducts business under the name listed above.
Each subsidiary conducts business under the name listed above.
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statement (No. 333-131244) on Form S-8 and in Registration Statement
(No. 333-156367) on Form S-3 of Ameris Bancorp and subsidiaries (the “Company”) of our report dated March 16, 2011, relating to
our audits of the consolidated financial statements and internal control over financial reporting of the Company, which appear in this
Annual Report on Form 10-K for the year ended December 31, 2010.
Exhibit 23.1
/s/ PORTER KEADLE MOORE, LLP
Atlanta, Georgia
March 16, 2011
Exhibit 31.1
I, Edwin W. Hortman, Jr., certify that:
CERTIFICATION
1.
2.
3.
4.
I have reviewed this Annual Report on Form 10-K for the year ended December 31, 2010, 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) 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;
(b) 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;
(c) 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
(d) 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;
and
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 the registrant’s board of directors (or persons
performing the equivalent functions):
(a) 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
(b) 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, 2011
/s/ Edwin W. Hortman, Jr.
Edwin W. Hortman, Jr.,
President and Chief Executive Officer
(principal executive officer)
Exhibit 31.2
I, Dennis J. Zember Jr., certify that:
CERTIFICATION
1.
2.
3.
4.
I have reviewed this Annual Report on Form 10-K for the year ended December 31, 2010, 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) 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;
(b) 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;
(c) 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
(d) 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;
and
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 the registrant’s board of directors (or persons
performing the equivalent functions):
(a) 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
(b) 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, 2011
/s/ Dennis J. Zember Jr.
Dennis J. Zember Jr.,
Executive Vice President and Chief Financial Officer
(principal accounting and financial officer)
SECTION 1350 CERTIFICATION
Exhibit 32.1
I, Edwin W. Hortman, Jr., President and Chief Executive Officer of Ameris Bancorp (the “Company”), do hereby certify, in
accordance with 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
1.
2.
The Annual Report on Form 10-K of the Company for the year ended December 31, 2010 (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, 2011
/s/ Edwin W. Hortman, Jr.
Edwin W. Hortman, Jr.,
President and Chief Executive Officer
(principal executive officer)
SECTION 1350 CERTIFICATION
Exhibit 32.2
I, Dennis J. Zember Jr., Executive Vice President and Chief Financial Officer of Ameris Bancorp (the “Company”), do hereby certify,
in accordance with 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
1.
2.
The Annual Report on Form 10-K of the Company for the year ended December 31, 2010 (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 , 2011
/s/ Dennis J. Zember Jr.
Dennis J. Zember Jr.,
Executive Vice President and Chief Financial Officer
(principal accounting and financial officer)
CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO THE
EMERGENCY ECONOMIC STABILIZATION ACT OF 2008
I, Edwin W. Hortman, Jr., President and Chief Executive Officer of Ameris Bancorp (“Ameris”), certify, based on my
knowledge, that:
Exhibit 99.1
(i) The compensation committee of Ameris has discussed, reviewed and evaluated with senior risk officers at least every
six months during any part of the most recently completed fiscal year that was a TARP period senior executive officer
(“SEO”) compensation plans and employee compensation plans and the risks these plans pose to Ameris;
(ii) The compensation committee of Ameris has identified and limited during any part of the most recently completed
fiscal year that was a TARP period any features of the SEO compensation plans that could lead SEOs to take unnecessary and
excessive risks that could threaten the value of Ameris and has identified any features of the employee compensation plans that
pose risks to Ameris and has limited those features to ensure that Ameris is not unnecessarily exposed to risks;
(iii) The compensation committee has reviewed, at least every six months during any part of the most recently completed
fiscal year that was a TARP period, the terms of each employee compensation plan and identified any features of the plan that
could encourage the manipulation of reported earnings of Ameris to enhance the compensation of an employee, and has limited
any such features;
(iv) The compensation committee of Ameris will certify to the reviews of the SEO compensation plans and employee
compensation plans required under (i) and (iii) above;
(v) The compensation committee of Ameris will provide a narrative description of how it limited during any part of the
most recently completed fiscal year that was a TARP period the features in
(A) SEO compensation plans that could lead SEOs to take unnecessary and excessive risks that could threaten
the value of Ameris;
(B) Employee compensation plans that unnecessarily expose Ameris to risks; and
(C) Employee compensation plans that could encourage the manipulation of reported earnings of Ameris to
enhance the compensation of an employee;
(vi) Ameris has required that bonus payments to SEOs or any of the next twenty most highly compensated employees, as
defined in the regulations and guidance established under Section 111 of EESA (“bonus payments”), be subject to a recovery or
“clawback” provision during any part of the most recently completed fiscal year that was a TARP period if the bonus payments
were based on materially inaccurate financial documents or any other materially inaccurate performance metric criteria;
(vii) Ameris has prohibited any golden parachute payment, as defined in the regulations and guidance established under
section 111 of EESA, to an SEO or any of the next five most highly compensated employees during any part of the most
recently completed fiscal year that was a TARP period;
(viii) Ameris has limited bonus payments to its applicable employees in accordance with Section 111 of EESA and the
regulations and guidance established thereunder during any part of the most recently completed fiscal year that was a TARP
period;
(ix) Ameris and its employees have complied with the excessive or luxury expenditures policy, as defined in the
regulations and guidance established under Section 111 of EESA, during any part of the most recently completed fiscal year that
was a TARP period; and any expenses that, pursuant to the policy, required approval of the board of directors, a committee of
the board of directors, an SEO or an executive officer with a similar level of responsibility were properly approved;
(x) Ameris will permit a non-binding shareholder resolution in compliance with any applicable Federal securities rules
and regulations on the disclosures provided under the Federal securities laws related to SEO compensation paid or accrued
during any part of the most recently completed fiscal year that was a TARP period;
(xi) Ameris will disclose the amount, nature and justification for the offering, during any part of the most recently
completed fiscal year that was a TARP period, of any perquisites, as defined in the regulations and guidance established under
Section 111 of EESA, whose total value exceeds $25,000 for any employee who is subject to the bonus payment limitations
identified in paragraph (viii);
(xii) Ameris will disclose whether Ameris, the board of directors of Ameris or the compensation committee of Ameris has
engaged during any part of the most recently completed fiscal year that was a TARP period a compensation consultant; and the
services the compensation consultant or any affiliate of the compensation consultant provided during this period;
(xiii) Ameris has prohibited the payment of any gross-ups, as defined in the regulations and guidance established under
Section 111 of EESA, to the SEOs and the next twenty most highly compensated employees during any part of the most recently
completed fiscal year that was a TARP period;
(xiv) Ameris has substantially complied with all other requirements related to employee compensation that are provided in
the agreement between Ameris and Treasury, including any amendments;
(xv) Ameris has submitted to Treasury a complete and accurate list of the SEOs and the twenty next most highly
compensated employees for the current fiscal year, with the non-SEOs ranked in descending order of level of annual
compensation, and with the name, title and employer of each SEO and most highly compensated employee identified; and
(xvi) I understand that a knowing and willful false or fraudulent statement made in connection with this certification may
be punished by fine, imprisonment or both.
Dated: March 16, 2011
/s/ Edwin W. Hortman, Jr.
Edwin W. Hortman, Jr.,
President and Chief Executive Officer
(principal executive officer)
CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO THE
EMERGENCY ECONOMIC STABILIZATION ACT OF 2008
I, Dennis J. Zember Jr., Executive Vice President and Chief Financial Officer of Ameris Bancorp (“Ameris”), certify, based on
my knowledge, that:
Exhibit 99.2
(i) The compensation committee of Ameris has discussed, reviewed and evaluated with senior risk officers at least every
six months during any part of the most recently completed fiscal year that was a TARP period senior executive officer
(“SEO”) compensation plans and employee compensation plans and the risks these plans pose to Ameris;
(ii) The compensation committee of Ameris has identified and limited during any part of the most recently completed
fiscal year that was a TARP period any features of the SEO compensation plans that could lead SEOs to take unnecessary and
excessive risks that could threaten the value of Ameris and has identified any features of the employee compensation plans that
pose risks to Ameris and has limited those features to ensure that Ameris is not unnecessarily exposed to risks;
(iii) The compensation committee has reviewed, at least every six months during any part of the most recently completed
fiscal year that was a TARP period, the terms of each employee compensation plan and identified any features of the plan that
could encourage the manipulation of reported earnings of Ameris to enhance the compensation of an employee, and has limited
any such features;
(iv) The compensation committee of Ameris will certify to the reviews of the SEO compensation plans and employee
compensation plans required under (i) and (iii) above;
(v) The compensation committee of Ameris will provide a narrative description of how it limited during any part of the
most recently completed fiscal year that was a TARP period the features in
(A) SEO compensation plans that could lead SEOs to take unnecessary and excessive risks that could threaten
the value of Ameris;
(B) Employee compensation plans that unnecessarily expose Ameris to risks; and
(C) Employee compensation plans that could encourage the manipulation of reported earnings of Ameris to
enhance the compensation of an employee;
(vi) Ameris has required that bonus payments to SEOs or any of the next twenty most highly compensated employees, as
defined in the regulations and guidance established under Section 111 of EESA (“bonus payments”), be subject to a recovery or
“clawback” provision during any part of the most recently completed fiscal year that was a TARP period if the bonus payments
were based on materially inaccurate financial documents or any other materially inaccurate performance metric criteria;
(vii) Ameris has prohibited any golden parachute payment, as defined in the regulations and guidance established under
section 111 of EESA, to an SEO or any of the next five most highly compensated employees during any part of the most
recently completed fiscal year that was a TARP period;
(viii) Ameris has limited bonus payments to its applicable employees in accordance with Section 111 of EESA and the
regulations and guidance established thereunder during any part of the most recently completed fiscal year that was a TARP
period;
(ix) Ameris and its employees have complied with the excessive or luxury expenditures policy, as defined in the
regulations and guidance established under Section 111 of EESA, during any part of the most recently completed fiscal year that
was a TARP period; and any expenses that, pursuant to the policy, required approval of the board of directors, a committee of
the board of directors, an SEO or an executive officer with a similar level of responsibility were properly approved;
(x) Ameris will permit a non-binding shareholder resolution in compliance with any applicable Federal securities rules
and regulations on the disclosures provided under the Federal securities laws related to SEO compensation paid or accrued
during any part of the most recently completed fiscal year that was a TARP period;
(xi) Ameris will disclose the amount, nature and justification for the offering, during any part of the most recently
completed fiscal year that was a TARP period, of any perquisites, as defined in the regulations and guidance established under
Section 111 of EESA, whose total value exceeds $25,000 for any employee who is subject to the bonus payment limitations
identified in paragraph (viii);
(xii) Ameris will disclose whether Ameris, the board of directors of Ameris or the compensation committee of Ameris has
engaged during any part of the most recently completed fiscal year that was a TARP period a compensation consultant; and the
services the compensation consultant or any affiliate of the compensation consultant provided during this period;
(xiii) Ameris has prohibited the payment of any gross-ups, as defined in the regulations and guidance established under
Section 111 of EESA, to the SEOs and the next twenty most highly compensated employees during any part of the most recently
completed fiscal year that was a TARP period;
(xiv) Ameris has substantially complied with all other requirements related to employee compensation that are provided in
the agreement between Ameris and Treasury, including any amendments;
(xv) Ameris has submitted to Treasury a complete and accurate list of the SEOs and the twenty next most highly
compensated employees for the current fiscal year, with the non-SEOs ranked in descending order of level of annual
compensation, and with the name, title and employer of each SEO and most highly compensated employee identified; and
(xvi) I understand that a knowing and willful false or fraudulent statement made in connection with this certification may
be punished by fine, imprisonment or both.
Dated: March 16, 2011
/s/ Dennis J. Zember Jr.
Dennis J. Zember Jr.,
Executive Vice President and Chief Financial Officer
(principal accounting and financial officer)
Community Boards of Directors
Community Boards of Directors
GEORGIA
Colquitt
Albany/Cordele
Don Monk
Regional President
Directors
Reid E. Mills, Chairman
Gregory R. Garland
W. Thomas Mitcham, MD
Don Monk
Y. Duncan Moore, Jr.
Brunswick
Michael (Mike) D. Hodges
Market President
Directors
Jimmy D. Veal, Chairman
C. Ray Acosta
Joseph C. Fendig
Michael D. Hodges
G. Tony Sammons
Thomas I. Sublett
Mark D. Walker, Regional President
Director Emeritus: J. Thomas Whelchel
Cairo
J. Philip Hester
Market President
Directors
Jeffrey (Jet) F. Cox, Chairman
Kevin S. Cauley
Cuy Harrell, III
J. Philip Hester
Don Monk, Regional President
G. Ashley Register, MD
Directors
Walter W. Hays, Chairman
Terry S. Pickle
Harris O. Pittman, III, Regional President
Danny S. Shepard
Donalsonville
Nancy S. Jernigan
Market President
Directors
Newton E. King, Jr., Chairman
D. Glenn Heard
Nancy S. Jernigan
Kenneth R. Massey
C. Willard Mims
Harris O. Pittman, III, Regional President
Dan E. Ponder, Jr.
Directors Emeritus:
H. Wayne Carr
John B. Clarke, Sr.
Joseph S. Hall
Jerry G. Mitchell
Douglas
David B. Batchelor
Market President
Directors
Donnie H. Smith, Chairman
Lawton E. Bassett, III, Regional President
David B. Batchelor
J. Anthony Deal
William (Bill) H. Elliott
Faye H. Hennesy
Alfred Lott, Jr.
Oscar J. Street
Moultrie
Ronnie F. Marchant
Market President
Directors
Brooks Sheldon, Chairman
Robert M. Brown, MD
Thomas L. Estes, MD
Robert (Robbie) A. Faircloth
R. Plenn Hunnicutt
Daniel (Dan) B. Jeter
Lynn (Lyndy) Jones, Jr.
Ronnie F. Marchant
J. Mark Mobley, Jr.
Don Monk, Regional President
Thomas (Tommy) W. Rowell
Ocilla
Directors
Gary H. Paulk, Chairman
Lawton E. Bassett, III, Regional President
Howard C. McMahan, MD
Wesley T. Paulk
Jake V. Walters, Business Banker
Directors Emeritus:
Wycliffe C. Griffin
Daniel (Danny) M. Paulk
Loran (Sonny) A. Pate
St. Marys
R. Edwin (Ed) Haworth
Market President
Directors
Thomas (Tom) I. Stafford, Jr., Chairman
Michael L. Davis
R. Edwin Haworth
Fareed Kadum, MD
John W. McDill
Daniel W. Simpson
Mark D. Walker, Regional President
Director Emeritus:
J. Grover Henderson
Trenton
Michael E. McElroy
Market President
Directors
Michael (Mike) Hayes
Michael E. McElroy,
Mark D. Walker, Regional President
SOUTH CAROLINA
Beaufort
Robert (Bob) L. McKinney
Market President
Directors
Martha B. Fender, Chairman
Darryl W. Gardner
Robert L. McKinney
H. Richard Sturm, Regional President
Community Boards of Directors
Thomasville
Ronnie F. Marchant
Market President
Directors
L. Maurice Chastain, Chairman
Dale E. Aldridge
S. Mark Brewer, MD
H. Eugene (Gene) Hickey
Ronnie F. Marchant
Don Monk, Regional President
Terrel M. Solana, Ed.D.
Tifton
Lawton E. Bassett, III
Regional President
Directors
J. Raymond Fulp, Chairman
Lawton E. Bassett, III
Austin (Butch) L. Coarsey
Stewart D. Gilbert, MD
John Alan Lindsey
Clifford (Buddy) A. Walker, Sr., DMD
Valdosta
Michael T. Lee
Market President
Directors
Charles (Chuck) E. Smith, Chairman
Lawton E. Bassett, III, Regional President
Michael T. Lee
Bart T. Mizell
T. Eddie York
Directors Emeritus:
Doyle Weltzbarker
Henry C. Wortman
ALABAMA
Dothan
Harris (Harry) O. Pittman, III
Regional President
Directors
R. Dale Ezzell, Chairman
Robert E. Crowder
Ronald (Ronnie) E. Dean
John D. DeLoach
Harris O. Pittman, III
FLORIDA
Jacksonville
Mark D. Walker
Regional President
Directors
V. Wayne Williford, Chairman
Vasant P. Bhide
Phillip H. Cury
Joseph (Joe) P. Helow
Mark D. Walker
Tallahassee
J. Martin (Marty) Stubblefield
Market President
Directors
Wade G. Brown
Don Monk, Regional President
J. Martin (Marty) 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 2010.
CALENDAR PERIOD
_____________________________________________________________________________
SALES PRICE
2010
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Low High
$6.88
$8.90
$7.75
$8.69
$10.19
$11.64
$10.59
$11.15
For the first quarter of 2010, stock dividends equaling one share for each 130 shares were declared. For the second quarter of 2010, stock dividends
equaling one share for each 210 shares were declared. The Company did not declare any dividends during the third and fourth quarters of 2010.
SHAREHOLDER SERVICES
Computershare is Ameris Bancorp’s stock transfer agent and administers all matters related to our stock. Please contact them:
First Class, Registered or Certified Mail:
Via courier service:
Computershare Investor Services
P.O. Box 43078
Providence RI 02940-3078
Computershare Investor Services
250 Royall St.
Canton, MA 02021
Shareholder Services Number(s): (800) 568-3476
Investor Centre™ portal: www.computershare.com/investor
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 2010.
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 2011 Annual Meeting of Shareholders of Ameris Bancorp will be held at 4:15 PM EDT, Thursday, May 26, 2011, at Sunset Country Club,
located at 2730 South Main Street, Moultrie, Georgia.
Ameris Bancorp
Annual Report
2010
Ameris Bank Retail Locations
Ameris Bancorp’s fiscal stability and capital strength have allowed expansion
for broader service offerings and greater customer convenience.
Alabama
Abbeville
Clayton
Dothan - Ross Clark Cir.
Dothan - Hwy. 84 E
Eufaula
Headland
Florida
Crawfordville
Flemming Island
Jacksonville - Lane Ave.
Jacksonville - Mandarin
Jacksonville - Town Ctr.
Newberry
Orange Park
Tallahassee
Trenton
Georgia
334.585.2265
334.775.3211
334.671.4000
334.677.3063
334.687.3260
334.693.5411
850.926.5211
904.264.8840
904.786.8224
904.262.1000
904.996.9490
352.472.2162
904.213.0883
850.656.2110
352.463.7171
Albany
229.888.5600
Brunswick - Cypress Mill Rd. 912.267.9500
912.264.9699
Brunswick - North Glynn
229.377.1110
Cairo - S. Broad St.
229.377.1110
Cairo - Hwy. 84 E*
229.758.3461
Colquitt
229.273.7700
Cordele - 2nd St. S
229.273.7700
Cordele - 16th Ave. E*
Doerun
Donalsonville
Douglas - S Pearl Ave.
Douglas - Bowens Mills Rd.
Jekyll Island
Kingsland
Leesburg
Lyons
Moultrie - S Main St.
Moultrie - 1st Ave. SE
Moultrie - Sunset
Ocilla
Pooler
Quitman
Savannah - DeSoto
Savannah - Mall Blvd.
Savannah - Whitemarsh
Sparta
St. Marys
St. Simons Island
Thomasville
Tifton - Old Ocilla Rd.
Tifton - W 2nd St.
Valdosta
Vidalia
Vidalia - Maple Dr.
Woodstock
229.782.5358
229.524.2112
912.384.2701
912.384.2701
912.635.9014
912.729.8878
229.434.4550
912.526.7007
229.985.2222
229.985.1111
229.873.4444
229.468.9411
912.748.6002
229.263.7525
912.238.1699
912.355.5052
912.898.2151
706.444.6572
912.882.3400
912.634.1270
229.226.5755
229.387.7225
229.382.7311
229.241.2851
912.537.8813
912.537.7139
770.592.6292
* Drive-thru only location
South Carolina
Beaufort
Columbia
Charleston - Savannah Hwy.
Charleston - Magnolia Dr.*
Greenville
Hilton Head
Irmo
Lexington
Mt. Pleasant
Summerville
843.521.1968
803.765.1600
843.573.8000
843.573.8000
864.286.5737
843.686.2903
803.749.5230
803.808.4220
843.375.4969
843.875.2663
310 First Street, SE
PO Box 3668
Moultrie, GA 31776
(P)229.890.1111
(F)229.890.2235
amerisbank.com