AnnuAl RepoR t 2013
MOVING FORWARD
Ameris Bancorp 2
The merger between Ameris Bank and Prosperity Bank was finalized on Monday,
December 23, 2013. St. Augustine, Florida, the former headquarters for Prosperity
Bank, is home to four of the twelve Florida locations acquired during this merger.
The other eight newly acquired locations are located in Jacksonville, Lynn Haven,
Ormond Beach, Palatka, Palm Coast and Panama City, Florida.
INNOVATION AND GROWTH:
A YEAR OF
OUTSTANDING
RESULTS.
Dear Shareholders:
With great pleasure, I can report that 2013 was our Company’s best year.
From an earnings perspective, we reported net income, exclusive of merger
charges, totaling $23.6 million, or $0.90 per common share. We announced, and
closed, the prosperity Bank acquisition, which was the largest acquisition in our
Company’s history. this acquisition helped us grow total assets substantially, as
assets grew 21.5% to $3.67 billion on December 31, 2013. We began the year
having repaid almost half of our tARp obligation, which we repaid in full in the
first quarter of 2014. We experienced our sixth consecutive year of growth in non-interest bearing
deposits, exceeding 22% of total deposits by the end of 2013. lastly, credit quality improved
significantly, with non-performing assets to total assets declining by 23.4% during 2013.
We began laying the groundwork for the outstanding results of 2013 several years ago when
we determined that the future deserved planning and investment. Many saw the opportunity for
Ameris Bancorp to be a “bigger” company, but we wanted to be a “better” company as well.
For that reason, we have been thoughtful and intentional about our re-engineering efforts,
looking at everything from credit culture to customer service. these efforts have re-energized
our Company and created momentum going into 2014.
one of the early results we saw from these efforts was the development of what we call the
“Ameris Approach.” the Ameris Approach is an internal branding effort that defines our
operating style and clarifies the expectations we have when working with each other and our
customers. the harmonizing effect from our employees adopting this “brand” has been powerful,
and I believe it will serve us well as we bring new employees and acquisitions into our Company.
to our talented and dedicated bankers, our Corporate and Community Boards, and our
shareholders, please accept my sincere thanks for your interest in and support of our Company.
We remain committed to Moving Forward!
Respectfully,
edwin W. Hortman, Jr.
president and Chief executive officer
3
Annual Report 2013
NEW ACCOUNT OPENING AND MAINTENANCE SYSTEM
our two newly implemented platforms for deposit origination and service request
maintenance are transforming our account opening and maintenance processes.
the deposit origination platform offers a more automatic and efficient method for
opening new accounts, which translates to a positive customer experience. the
introduction of advanced workflows streamlines our sales and services procedures and
provides a standardized electronic and paperless account maintenance experience.
CORPORATE WEBSITE REDESIGN
the redesign of amerisbank.com modernized our corporate website both visually
and technologically. online visitors can explore our website with easy-to-use
navigation, take advantage of over thirty financial calculators, access an abundant
amount of financial planning and protection information, and customize their
homepage. our website now resides on a robust hosting environment, supporting
more dynamic functionality, such as a fully-featured online location finder, giving
users an interactive map and the ability to text directions and location information
to their phones. Redesigning amerisbank.com enhances the user experience and is
foundational in growing our online presence.
TWO NEW INDUSTRY STANDARD DATA CENTERS
the implementation of two new industry standard data centers, to replace an aging
infrastructure, greatly improves our information technology efficiencies, while also
increasing our Bank’s data and telecom bandwidth. this initiative also produced
data and telecom cost reductions, while simultaneously providing the infrastructure for
the deployment of several leading edge technologies. these technologies enable our
Bank to capitalize on new and emerging trends in banking channels, such as mobile
banking, remote deposit and remote system access.
Ameris Bancorp 4
the new account opening and
maintenance systems are the primary
applications used by Holli Reynolds,
Branch Manager in our Dothan,
Alabama office.
Alex Bunkley, Head teller in our
Richmond Hill, Georgia office,
encourages customers to visit
amerisbank.com for online account
access, as well as product and financial
information.
Shan Venable, Vp and System
Architect Manager for our Information
technology Division, is installing a server
management appliance in one of our
data centers.
5
Annual Report 2013
ENHANCED COMPLIANCE SOFTWARE
A newly implemented, comprehensive and enhanced CRA, HMDA and Fair lending
software solution is now used by the Ameris Bank Compliance division to manage data
collection and reporting, as required by the Community Reinvestment Act and the
Home Mortgage Disclosure Act. It is an integrated software solution, which enables our
Bank to consistently manage data integrity, reporting and analysis. this software is a
key resource in ensuring our Bank remains sound and compliant with each regulation.
CUSTOMIzABLE COMMERCIAL PRICING PLATFORM
our Commercial pricing platform, known internally as extended Account Analysis, is
synonymous with relationship, customized pricing and account opening for business
customers with complex account needs. the launch of the extended Account
Analysis platform gives Business and Commercial Bankers advanced functionality
when opening and monitoring large volume, multifaceted, commercial checking
accounts. Customers are provided detailed, easy-to-understand statements outlining
all pricing and transactions associated with these more complex accounts. Bankers
can easily access the information needed to service and support our treasury and cash
management customers.
MOBILE BANkING
the launch of Mobile Banking, for both business and personal account holders, gives
our customers an advanced, convenient and remote banking channel. Customers
have the ability to make deposits, pay bills and access balance and transactional history,
all from mobile or tablet devices. text Banking, a derivative of Mobile Banking, gives
customers the option to text a request and then quickly receive a text response. Mobile
and text Banking are additions to Ameris Bank’s existing suite of electronic account
access solutions, including online Banking, Remote Deposit and telephone Banking.
Ameris Bancorp 6
Sybrena Jacobs, a Regional Compliance
Specialist, along with the entire
Compliance team, accesses our new
compliance software daily to pull
analytics, review reports and manage
data dictated by regulations.
Focusing on building a relationship,
providing customized pricing and Remote
Cash Deposit, Commercial Banker, Brad
Brookshire (left), along with treasury
and Cash Management officer, lori
putman (right), earned the business of
Whit Hollowell (center), Ceo of Coastal
electric, an electric cooperative in
Richmond Hill, Georgia.
Customers enjoy convenient, easy and
quick account access when utilizing
Mobile Banking from any Apple, Android
or tablet device.
7
Annual Report 2013
COHESIVE LOAN SYSTEM SOFTWARE
the implementation of three new software platforms has enhanced and streamlined
the Ameris Bank loan process. We now utilize a nationally recognized document
preparation system, a customized, state-of-the-art business loan production system
and an automated consumer loan production system, which provides compliance with
fair lending requirements and a more timely response to consumer loan requests. the
integration and usage of all three new platforms creates a cohesive loan System for
Ameris Bank Consumer and Business lenders.
INTERNAL COMMUNICATION: AMERISCONNECT
AmerisConnect is our new internal website designed to enable, empower and inform
each Ameris Bank employee. this robust communication tool is a primary source
for information and gives employees the ability to connect, collaborate and share
knowledge. through target messaging, employees are able to view announcements
most relevant to their position. team Sites, specific and unique to various divisions,
offer a secure site to house and collectively work on division specific documents and
projects. AmerisConnect is a unifying and enhanced communication channel.
ADVANCED HUMAN RESOURCES SOFTWARE
Ameris Bank selected a new human resources partner to provide a progressive
human capital management and HR information software solution. Ameris Bank
now has access to a collection of best practices, policies, procedures, tools and
templates used to implement HR related products and services. the transition from
Ameris Bank’s previous HR software provider took place throughout the fourth quarter
of 2013, with the first payroll using our new software occurring on January 15, 2014.
throughout 2014, additional modules will be introduced, including modules specific
to recruitment, onboarding, open enrollment and performance reviews.
Ameris Bancorp 8
Inside the recently constructed Fellowship
Building, Dr. William Shiel (left) of the First
Baptist Church of tallahassee, Florida,
reviews the church’s loan statements with
tallahassee Market president, Robert Vice
(right).
using AmerisConnect, Debbie
Dominey (center), SVp for Retail Branch
optimization, collaborates with Branch
Manager Mary Jane Alonzo (left)
and Casey McIntyre (right), a Senior
operations Clerk in Deposit Services.
From left to right, Wanda Autrey, Vp
and Corporate HR Manager, works with
project Manager Heather Szczesny, HRIS
Clerk pat Gay and payroll Administrator
Sheryl Hall to introduce the new HR
software to Andy Driver, a member of our
electronic Banking team.
9
Annual Report 2013
GROWTH AND REVENUE
REVENUE
We gauge our success in many ways, but consistent growth in total revenue confirms that employees
representing us with our chosen products and services resonate with new and existing customers. our
Company has an entrepreneurial spirit that is uncommon for institutions that are as mature as Ameris
Bancorp, but this attitude towards customer acquisition has fueled years of consistent growth in total revenue
that is noteworthy. In 2013, total recurring revenue (excluding acquisition or securities gains) increased to
$172.7 million, an increase of 3.5% over 2012. Additionally, our compounded growth rate in total revenue for
the last 10 years increased to 8.4%, notable in that the majority of the last decade has produced less than
ideal economic trends.
LOANS
In 2013, we grew non-covered loans to approximately $1.62 billion, an increase of 11.6% compared with
2012. the growth was the result of several strategies, the most significant being the successful acquisition
of prosperity Bank in December of 2013. this acquisition added approximately $449.7 million in total loans,
mostly in the Jacksonville and St. Augustine, Florida markets. In addition to the growth we enjoyed from
merger activity, we experienced robust growth in non-covered loans in virtually all of our existing markets.
Significant investments that we made in our larger markets (Jacksonville, Atlanta, Savannah, Charleston and
Columbia) in 2012 began to yield results as these markets ended the year with real momentum on growth.
TANGIBLE COMMON EqUITY
Ameris Bancorp finished 2013 with approximately $247.6 million of tangible common equity and $9.87
in tangible book value per common share. this modest increase compared with 2012 is reflective of the
investment we made in the prosperity Banking Company in the fourth quarter. We are driven to be good
stewards of our resources and clearly understand the advantages that accompany a strong capital position.
We anticipate building our capital positions further in the coming years and believe we can differentiate
ourselves with both the pace at which we build capital and the manner in which we deploy it.
$162,734
$152,242
$139,464
$2,524,722
$247,641
$2,007,133
$1,915,138
$247,359
$238,837
$109,874
$1,929,748
$218,069
$93,810
$1,721,607
$141,367
2009
2010
2011
2012
2013
2009
2010
2011
2012
2013
2009
2010
2011
2012
2013
Gross revenue net
of Interest expense
(excludInG GaIns on acquIsItIons)
(In thousands of dollars)
total loans
(In thousands of dollars)
tanGIBle coMMon equItY
(In thousands of dollars)
Ameris Bancorp 10
Led by Market President David Batchelor, Ameris Bank originally entered the Douglas,
Georgia market through the acquisition of a branch of NationsBank in 1997, and then
opened a second location in July 2006. Continually growing market share, the two
Ameris Bank Douglas offices reported a 19.9% net loan growth and an 8.6% deposit
growth, with 22% of the deposits being noninterest-bearing, for the year 2013.
11
Annual Report 2013
AMERIS BANCORP
BOARD OF DIRECTORS AND ExECUTIVE OFFICERS
JIMMY D. VEAL
LEO J. HILL
The Beachview
Club
(Hospitality)
Transamerica
IDEX Mutual
Funds
(Independent
Director)
BROOkS
SHELDON
R. DALE
EzzELL
WILLIAM H.
STERN
J. RAYMOND
FULP
ROBERT P.
LYNCH
Retired Banker
Wisecards
Printing
(Print Services)
Stern and Stern
& Associates
(Real Estate)
Harvey’s
Pharmacy
(Pharmacy)
Lynch
Management
Company
(Automobile
Sales)
CHAIRMAN
DANIEL B.
JETER
Standard
Discount
Corporation
(Consumer
Finance)
Ameris Bancorp 12
AMERIS BANCORP
BOARD OF DIRECTORS AND ExECUTIVE OFFICERS
EDWIN W.
HORTMAN, JR.
ANDREW B.
CHENEY
President and
Chief Executive
Officer
Executive Vice
President and
Chief Operating
Officer
CINDI H. LEWIS
Executive Vice
President,
Chief
Administrative
Officer and
Corporate
Secretary
DENNIS J.
zEMBER, JR. CPA
STEPHEN A.
MELTON
JON S.
EDWARDS
THOMAS S.
LIMERICk
Executive Vice
President and
Chief Financial
Officer
Executive Vice
President
and Chief Risk
Officer
Executive Vice
President and
Chief Credit
Officer
Executive Vice
President and
Chief Information
Officer
13
Annual Report 2013
LOCAL BOARDS OF DIRECTORS
Moultrie, GA
Market president:
Ronnie F. Marchant
Regional president:
lawton e. Bassett, III
Directors:
Brooks Sheldon, Chairman
lawton e. Bassett, III
thomas l. estes, M.D.
Robert A. Faircloth
R. plenn Hunnicutt
Daniel B. Jeter
lynn l. Jones, Jr.
Ronnie F. Marchant
J. Mark Mobley, Jr.
thomas W. Rowell
Ocilla, GA
Market president:
David B. Batchelor
Regional president:
lawton e. Bassett, III
Directors:
Gary H. paulk, Chairman
lawton e. Bassett, III
David B. Batchelor
Howard C. McMahan, M.D.
Wesley t. paulk
Jake V. Walters
Directors Emeritus:
Wycliffe Griffin
loran A. pate
Daniel M. paulk
Savannah, GA
Market president:
Austen D. Carroll
Regional president:
Mark D. Walker
Directors:
Matthew A. West,
Chairman
Austen D. Carroll
nina t. Gompels
J. Mason Heidt, CltC
thomas lawhorne, III, ph.D.
Christopher J. peters
Mark D. Walker
South Carolina
Regional president:
H. Richard Sturm
Directors:
William H. Stern, Chairman
Charles S. Altman
Kirkman Finlay, III
edward G. McDonnell
William Weston J. newton
A. Rae phillips
H. Richard Sturm
Southeast Georgia Coast
Market president:
Michael D. Hodges
Regional president:
Mark D. Walker
Directors:
Jimmy D. Veal, Chairman
Michael l. Davis
Michael D. Hodges
Stephen V. Kinney
John W. McDill
G. tony Sammons
Mark D. Walker
Directors Emeritus:
C. Ray Acosta
thomas I. Stafford, Jr.
J. thomas Whelchel
St. Augustine, FL
Regional president:
James e. Creamer, Jr.
Directors:
Mark F. Bailey, Sr.,
Chairman
James e. Creamer, Jr.
Major B. Harding, Jr.
David e. lee
Melvin A. McQuaig
Melissa C. Miller
Allan B. Roberts
Ron J. Szymanski
Karen M. taylor
tracy W. upchurch,
Co-Chairman
Albert G. Volk, M.D.
Albany & Cordele, GA
Market president:
Calvin l. McMillan
Dothan, AL
Market president:
nancy S. Jernigan
Regional president:
lawton e. Bassett, III
Regional president:
Harris o. pittman, III
Directors:
R. Dale ezzell, Chairman
Robert e. Crowder
Ronald e. Dean
John D. Deloach
Jerry l. Gulledge
C. phillip Hayes
nancy S. Jernigan
Harris o. pittman, III
Alan Wells
Douglas, GA
Market president:
David B. Batchelor
Regional president:
lawton e. Bassett, III
Directors:
Donnie H. Smith, Chairman
lawton e. Bassett, III
David B. Batchelor
Kevin l. Gilliard
Faye H. Hennesy
Alfred lott, Jr.
oscar J. Street
Jacksonville, FL
Regional president:
Mark D. Walker
Directors:
Joseph p. Helow, Chairman
Robert M. Bradley, Jr.
phillip H. Cury
Robert l. Jones, III
Robert p. lynch
Mark D. Walker
J. Charles Wilson, C.p.A.
Directors:
Reid e. Mills, Chairman
lawton e. Bassett, III
Bonny B. Dorough
Gregory R. Garland
Calvin l. McMillan
Y. Duncan Moore, Jr.
J. Austin turner
Cairo, GA
Market president:
Robert D. Vice
Regional president:
Harris o. pittman, III
Directors:
Jeffrey F. Cox, Chairman
Kevin S. Cauley
Cuy Harrell, III
Harris o. pittman, III
G. Ashley Register, M.D.
Robert D. Vice
Donalsonville &
Colquitt, GA
Market president:
tracy D. pickle
Regional president:
Harris o. pittman, III
Directors:
n. ed King, Jr., Chairman
D. Glenn Heard
Kenneth R. Massey
tracy D. pickle
Harris o. pittman, III
Dan e. ponder, Jr.
Danny S. Shepard
Directors Emeritus:
H. Wayne Carr
John B. Clarke, Sr.
Joseph S. Hall
Jerry G. Mitchell
Ameris Bancorp 14
LOCAL BOARDS OF DIRECTORS
Trenton, FL
Market president:
Michael e. Mcelroy
Regional president:
Mark D. Walker
Directors:
Doug Crawford, Chairman
Adra B. Kennard
Michael e. Mcelroy
Kelly J. philman
Mark D. Walker
Tifton, GA
Market president:
Charles t. Bargeron, III
Regional president:
lawton e. Bassett, III
Directors:
J. Raymond Fulp, Chairman
Charles t. Bargeron, III
lawton e. Bassett, III
William Bowen, Jr.
Austin l. Coarsey
Stewart D. Gilbert, Sr., M.D.
John Alan lindsey
Fortson B. turner
Clifford A. Walker, Sr., D.M.D.
Valdosta, GA
Market president:
Michael t. lee
Regional president:
lawton e. Bassett, III
Directors:
Charles e. Smith, Chairman
lawton e. Bassett, III
Michael t. lee
Bart t. Mizell
M. Alan Wheeler
t. eddie York
Directors Emeritus:
Doyle Weltzbarker
Henry C. Wortman
Tallahassee, FL
Market president:
Robert D. Vice
Regional president:
Harris o. pittman, III
Directors:
Harris o. pittman, III
Robert D. Vice
Thomasville, GA
Market president:
Ronnie F. Marchant
Regional president:
lawton e. Bassett, III
Directors:
l. Maurice Chastain,
Chairman
Dale e. Aldridge
lawton e. Bassett, III
S. Mark Brewer, M.D.
Kenneth e. Hickey
Ronnie F. Marchant
terrel M. Solana, ph.D.
In June 2013, the Columbia, South Carolina main office relocated to a highly visible, downtown location in the heart of the Columbia
business district. This new location provides second floor office space for Business and Commercial Bankers, along with colleagues in
our Mortgage, Marketing, Compliance and Treasury Services departments, and a first floor storefront for a full-service banking location.
Moving Forward
Form 10 ‑K
Cautionary Note Regarding Forward-Looking StatementsThis Annual Report contains statements that constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The words “believe”, “estimate”, “expect”, “intend”, “anticipate” and similar expressions and variations thereof identify certain of such forward-looking statements, which speak only as of the dates which they were made. Ameris Bancorp undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those indicated in the forward-looking statements as a result of various factors. Readers are cautioned not to place undue reliance on these forward-looking statements. Moving Forward
Form 10 ‑K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
UNITED STATES
WASHINGTON, D.C. 20549
SECURITIES AND EXCHANGE COMMISSION
FORM 10-K
WASHINGTON, D.C. 20549
Senior
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
FORM 10-K
ACT OF 1934
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
For the fiscal year ended December 31, 2013, or
ACT OF 1934
For the fiscal year ended December 31, 2013, or
ACT OF 1934
For the transition period from to
ACT OF 1934
.
For the transition period from to
Commission File Number
.
001-13901
Commission File Number
001-13901
AMERIS BANCORP
AMERIS BANCORP
(Exact name of registrant as specified in its charter)
(Exact name of registrant as specified in its charter)
58-1456434
(IRS Employer ID No.)
GEORGIA
(State of incorporation)
GEORGIA
(State of incorporation)
310 FIRST ST., SE, MOULTRIE, GA 31768
(Address of principal executive offices)
58-1456434
(IRS Employer ID No.)
(229) 890-1111
310 FIRST ST., SE, MOULTRIE, GA 31768
(Registrant’s telephone number)
(Address of principal executive offices)
(229) 890-1111
Securities registered pursuant to Section 12(b) of the Act: Common Stock, Par Value $1 Per Share
(Registrant’s telephone number)
Securities registered pursuant to Section 12(g) of the Act: None
Securities registered pursuant to Section 12(b) of the Act: Common Stock, Par Value $1 Per Share
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No
Securities registered pursuant to Section 12(g) of the Act: None
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 if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities 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
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
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
Act. Yes No
filing requirements for the past 90 days. 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
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File
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
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
filing requirements for the past 90 days. Yes No
shorter period that the registrant was required to submit and post such files). 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
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
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
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
shorter period that the registrant was required to submit and post such files). Yes No
amendment to this Form 10-K.
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
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting
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
company. See definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
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
Large accelerated filer
company. See definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Non-accelerated filer
Large 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
Non-accelerated filer
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 $387.4 million.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act). Yes No
As of February 28, 2014, the registrant had outstanding 25,167,502 shares of common stock, $1.00 par value per share.
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 $387.4 million.
Smaller reporting company
Accelerated filer
Smaller reporting company
Accelerated filer
As of February 28, 2014, the registrant had outstanding 25,167,502 shares of common stock, $1.00 par value per share.
Portions of the registrant’s Proxy Statement for the 2014 Annual Meeting of Shareholders are incorporated herein into Part III by reference.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s Proxy Statement for the 2014 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. Mine Safety Disclosures
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
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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 68 domestic banking offices with no foreign
activities. At December 31, 2013, we had approximately $3.67 billion in total assets, $2.52 billion in total loans, $3.00 billion in total
deposits and stockholders’ equity of $316.7 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 the Bank.
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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 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 became redeemable at the Company’s option on September 15, 2011.
On December 16, 2005, Ameris acquired First National Banc, Inc. (“FNB”) by merger. In connection with such transaction, Ameris
assumed the obligations of FNB related to its prior issuance of trust preferred securities. In 2004, FNB’s statutory trust 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.
On December 23, 2013, Ameris acquired The Prosperity Banking Company (“Prosperity”) by merger. In connection with such
transaction, Ameris assumed the obligations of Prosperity related to the following issuances of trust preferred securities: (i) in 2003,
Prosperity’s statutory trust subsidiary, Prosperity Bank Statutory Trust II, issued $4,500,000 in principal amount of trust preferred
securities at a rate per annum equal to the 3-Month LIBOR plus 3.15%; (ii) in 2004, Prosperity’s statutory trust subsidiary, Prosperity
Banking Capital Trust 1, issued $5,000,000 in principal amount of trust preferred securities at a rate per annum equal to the 90-Day
LIBOR plus 2.57%; (iii) in 2006, Prosperity’s statutory trust subsidiary, Prosperity Bank Statutory Trust III, issued $10,000,000 in
principal amount of trust preferred securities at a rate per annum equal to the 90-Day LIBOR plus 1.60%; and (iv) in 2007,
Prosperity’s statutory trust subsidiary, Prosperity Bank Statutory Trust IV, issued $10,000,000 in principal amount of trust preferred
securities at a rate per annum equal to the 90-Day LIBOR plus 1.54%. Each of the foregoing issuances was consummated 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 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 the acquisition
of Prosperity in 2013 and ten acquisitions of failed institutions in FDIC-assisted transactions between 2009 and 2012. 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.
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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,
2013 and 2012.
At December 31, 2013, our loan portfolio totaled approximately $2.52 billion, representing approximately 68.9% of our total
assets. For additional discussion of our loan portfolio, see “Management’s Discussion and Analysis of Financial Condition and Results
of Operations – Loans.”
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 in the secondary 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 producers 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 Farm Service Agency 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, municipalities 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.
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Individual lending authority is assigned by the Company’s Chief 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 Chief Credit Officer 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.
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, securities issued by
Government-Sponsored Enterprises (“GSEs”) 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.
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. The written investment policy is reviewed annually 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.
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 (i) 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 (ii) acquiring certain maturities and dollar amounts to help
manage interest rate risk.
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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 Company’s balance sheet as such.
Use of Derivatives
The Company seeks to provide a stable net interest income despite changes in interest rates. In its review of interest rate risk, the
Company 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 2012 and 2013, the Company had an interest rate swap with a notional amount of $37.1 million for
the purpose of converting from variable to fixed interest rate on the junior subordinated debentures on the Company’s balance sheet.
The interest rate swap, which is classified as a cash flow hedge, is indexed to LIBOR. During 2011, the Company also benefited from
an interest rate floor with a notional amount of $35.0 million. The interest rate floor, which was classified as a cash flow hedge against
certain variable rate loans on the Company’s balance sheet, expired in August 2011. The hedge was indexed to the prime rate, as are
the variable rate loans, and had a strike rate of 7.00%. During 2011, the Company received approximately $825,000 of interest
payments on the interest rate floor, which payments have been classified as interest income on loans.
Additionally, in the second quarter of 2012, the Company began maintaining a risk management program to manage interest rate risk
and pricing risk associated with its mortgage lending activities. This program includes the use of forward contracts and other
derivatives that are used to offset changes in value of the mortgage inventory due to changes in market interest rates. As a normal part
of its operations, the Company enters into derivative contracts such as forward sale commitments and interest rate lock commitments
(“IRLCs”) to economically hedge risks associated with overall price risk related to IRLCs and mortgage loans held for sale carried at
fair value. The fair value of these instruments amounted to an asset of approximately $1,180,000 and $1,169,000 at December 31,
2012 and 2013, respectively.
CORPORATE RESTRUCTURING AND BUSINESS COMBINATIONS
The Prosperity Banking Company
On December 23, 2013, Ameris acquired Prosperity by merger, at which time Prosperity’s wholly-owned banking subsidiary,
Prosperity Bank (“Prosperity Bank”), also was merged with and into the Bank. Prosperity was headquartered in Saint Augustine,
Florida and it operated 12 banking locations in St. Johns, Duval, Flagler, Bay, Putnam and Volusia Counties in northeast Florida and
the Florida panhandle. The acquisition of Prosperity was significant to the Company, as it expanded our existing Southeastern
footprint in several attractive Florida markets. The consideration for the acquisition was a combination of cash and our common
stock, par value $1.00 per share (the “Common Stock”), with an aggregate purchase price of approximately $24.6 million. The total
consideration consisted of $162,000 in cash and approximately 1,169,000 shares of Common Stock with a value of approximately
$24.5 million.
Montgomery Bank & Trust
On July 6, 2012, the Bank purchased certain assets and assumed substantially all of the liabilities of Montgomery Bank & Trust
(“MBT”) from the FDIC, as Receiver of MBT. MBT operated two branches in Ailey and Vidalia, Georgia. The Bank assumed
approximately $156.7 million in customer deposits and acquired approximately $18.1 million in assets, including approximately $16.7
million in cash and cash equivalents and approximately $1.2 million in deposit-secured loans. The assets were acquired without a
discount and the deposits were assumed with no premium. To settle the transaction, the FDIC made a cash payment to the Bank
totaling approximately $138.7 million, based on the differential between liabilities assumed and assets acquired.
Central Bank of Georgia
On February 24, 2012, the Bank purchased substantially all of the assets and assumed substantially all of the liabilities of Central
Bank of Georgia (“CBG”) from the FDIC, as Receiver of CBG. CBG operated five branches in Ellaville, Buena Vista, Butler, Cusseta
and Macon, Georgia, with approximately $182.6 million in loans and approximately $261.0 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 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 bid to acquire CBG included a discount on the book value of the assets totaling $33.9 million. The bid resulted in a
cash payment from the FDIC totaling $31.9 million.
5
High Trust Bank
On July 15, 2011, the Bank purchased substantially all of the assets and assumed substantially all of the liabilities of High Trust Bank
(“HTB”) from the FDIC, as Receiver of HTB. HTB operated two branches in Stockbridge and Leary, Georgia, with approximately
$133.5 million in loans and approximately $175.9 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 HTB included a discount on the book value of the assets totaling $33.5 million. The bid resulted in a
cash payment from the FDIC totaling $30.2 million.
One Georgia Bank
On July 15, 2011, the Bank purchased substantially all of the assets and assumed substantially all of the liabilities of One Georgia
Bank (“OGB”) from the FDIC, as Receiver of OGB. OGB operated one branch in Midtown Atlanta, Georgia, with approximately
$120.8 million in loans and approximately $136.1 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 OGB included a discount on the book value of the assets totaling $22.5 million. The bid resulted in a
cash payment to the FDIC totaling $5.7 million.
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 approximately
$118.4 million in loans and approximately $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 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 approximately $393.3 million in loans and approximately $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 approximately
$51.1 million in loans and approximately $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.
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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 approximately $68.8 million in loans and approximately
$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.
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 approximately $108.4 million and approximately $141.1 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 approximately $85.7 million in loans and approximately $100.5 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 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 United
States Department of the Treasury (the “Treasury”), for an aggregate cash purchase price of $52 million, (i) 52,000 shares (the
“Preferred Shares”) of the Company’s Fixed Rate Cumulative Perpetual Preferred Stock, Series A, having a liquidation preference of
$1,000 per share, and (ii) a ten-year warrant (the “Warrant”) to purchase up to 679,443 shares of Common Stock, at an exercise price
of $11.48 per share. Proceeds from the issuance of the Preferred Shares and the Warrant were allocated based on the relative market
values of each. As a result of the Company’s participation in the CPP, the Company was subject to the rules and regulations
promulgated under the EESA. These rules and regulations included 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.
7
On June 14, 2012, the Preferred Shares were sold by the Treasury through a registered public offering as part of the Treasury’s efforts
to wind down its remaining TARP bank investments. While the sale of the Preferred Shares to new investors did not result in any
accounting entries and does not change the Company’s capital position, it eliminated the executive compensation and corporate
governance restrictions that were applicable to the Company during the period in which the Treasury held its investment in the
Preferred Shares. Subsequently, on August 22, 2012, the Company repurchased the Warrant from the Treasury for $2.67 million and
in December 2012, the Company repurchased 24,000 of the outstanding Preferred Shares. The Company intends to redeem the
remaining 28,000 outstanding Preferred Shares on March 24, 2014.
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 population growth over the past 20 to 30 years, but have endured significant economic challenges in recent years. Intense
market demands, national and local 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 much more cost
effective. Over the past few years, our Bank has faced strong competition in attracting deposits at profitable levels. 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 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, 2013, the Company employed approximately 984 full-time-equivalent employees. We consider our relationship with
our employees to be good.
We have adopted the Ameris Bancorp 401(k) Profit Sharing Plan, as a retirement plan for our employees. This plan provides deferral
of compensation by our employees and contributions by Ameris. As a result of the Company’s financial performance, it did not make
any contributions for eligible employees during 2011; however, the Company reinstated contributions into the plan during 2012. 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,
2013, we had approximately $2.52 billion in total loans outstanding, of which approximately $3.3 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.
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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”).
The Bank Holding Company Act requires every bank holding company to obtain the prior approval of the Federal Reserve before:
•
•
•
it may acquire direct or indirect ownership or control of any voting shares of any bank if, after the acquisition, the bank
holding company will directly or indirectly own or control more than 5% of the voting shares of the bank;
it or any of its subsidiaries, other than a bank, may acquire all or substantially all of the assets of any bank; or
it may merge or consolidate with any other bank holding company.
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, 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:
•
•
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 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.
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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.
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%. As of December 31, 2013, there was approximately $10.9 million of retained earnings of our Bank available for
payment of cash dividends under applicable regulations without obtaining regulatory approval.
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.
A bank holding company is 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 its 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.
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.
10
The minimum guideline for the ratio of total capital to risk-weighted assets is 8%. At least one-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, 2013, all of our trust preferred securities
were included in Tier 1 Capital. At December 31, 2013, our total risk-based capital ratio and our Tier 1 risk-based capital ratio were
15.32% and 14.35%, respectively. Neither Ameris nor the 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%. At December 31, 2013, our ratio was 11.33%, compared to 10.34% at December 31, 2012. 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:
•
•
•
•
•
“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, 2013, 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 has changed, and is expected to continue 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 includes certain provisions concerning the capital regulations of U.S. banking regulators. These provisions are intended to
subject bank holding companies to the same capital requirements as their bank subsidiaries and to eliminate or significantly reduce the
use of hybrid capital instruments, especially trust preferred securities, as regulatory capital. Although a significant number of the rules
and regulations mandated by the Dodd-Frank Act have been finalized, many of the new requirements called for have yet to be
implemented and will likely be subject to implementing regulations over the course of several years. Given the uncertainty associated
with the manner in which the provisions of the Dodd-Frank Act will be implemented by the various regulatory agencies, the full extent
of the impact such requirements will have on financial institutions’ operations is unclear. The changes resulting from the Dodd-Frank
Act may impact the profitability of our business activities, require changes to certain of our business practices, impose upon us more
stringent capital, liquidity and leverage ratio requirements or otherwise adversely affect our business. These changes may also require
us to invest significant management attention and resources to evaluate and make necessary changes in order to comply with new
statutory and regulatory requirements.
In July 2013, the federal banking agencies approved an interim final rule that adopts a series of previously proposed rules to conform
U.S. regulatory capital rules with the international regulatory standards agreed to by the Basel Committee on Banking Supervision in
the accord referred to as “Basel III” and to implement requirements of the Dodd-Frank Act. The adopted regulations establish new
higher capital ratio requirements, narrow the definitions of capital, impose new operating restrictions on banking organizations with
insufficient capital buffers and increase the risk weighting of certain assets. The Company and the Bank will be required to comply
with the new capital requirements beginning January 1, 2015.
The regulatory changes found in the new final rule include the following:
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•
•
The final rule establishes a new capital measure called “Common Equity Tier I Capital” consisting of common stock and
related surplus, retained earnings, accumulated other comprehensive income and, subject to certain adjustments, minority
common equity interests in subsidiaries. Unlike the current rules which exclude unrealized gains and losses on available for
sale debt securities from regulatory capital, the final rule generally requires accumulated other comprehensive income to
flow through to regulatory capital. Depository institutions and their holding companies will be required to maintain
Common Equity Tier I Capital equal to 4.5% of risk-weighted assets by 2015. Additionally, the regulations will increase the
required ratio of Tier I Capital to risk-weighted assets from the current 4% to 6% by 2015. Tier I Capital consists of
Common Equity Tier I Capital plus Additional Tier I Capital which includes non-cumulative perpetual preferred stock.
Neither cumulative preferred stock (other than certain preferred stock issued to the U.S. Treasury) nor trust preferred
securities will qualify as Additional Tier I Capital but may be included in Tier II Capital along with qualifying subordinated
debt. The new regulations also require a minimum Tier I leverage ratio of 4% for all institutions, while the minimum
required ratio of total capital to risk-weighted assets will remain at 8%.
In addition to increased capital requirements, depository institutions and their holding companies will be required to
maintain a capital buffer of at least 2.5% of risk-weighted assets over and above the minimum risk-based capital
requirements in order to avoid limitations on the payment of dividends, the repurchase of shares or the payment of
discretionary bonuses. The capital conservation buffer requirement will be phased in, beginning January 1, 2016, requiring
during 2016 a buffer amount greater than 0.625% in order to avoid these limitations, and increasing the amount each year
until beginning January 1, 2019, the buffer amount must be greater than 2.5% in order to avoid the limitations.
The prompt corrective action regulations, under the final rule, incorporate a Common Equity Tier I Capital requirement and
raise the capital requirements for certain capital categories. In order to be adequately capitalized for purposes of the prompt
corrective action regulations, a banking organization will be required to have at least an 8% Total Risk-Based Capital Ratio,
a 6% Tier I Risk-Based Capital Ratio, a 4.5% Common Equity Tier I Risk Based Capital Ratio and a 4% Tier I Leverage
Ratio. To be well capitalized, a banking organization will be required to have at least a 10% Total Risk-Based Capital Ratio,
an 8% Tier I Risk-Based Capital Ratio, a 6.5% Common Equity Tier I Risk-Based Capital Ratio and a 5% Tier I Leverage
Ratio.
We have conducted a pro forma analysis of these new requirements as of December 31, 2013 and have determined that if these
requirements were in effect on that date, the Company and the Bank would be considered well-capitalized and each would have a
capital conservation buffer greater than 2.5%.
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Acquisitions
As an active acquirer, we must comply with numerous laws related to our acquisition activity. Under the Bank Holding Company Act,
a bank holding company may not directly or indirectly acquire ownership or control of more than 5% of the voting shares or
substantially all of the assets of any bank or merge or consolidate with another bank holding company without the prior approval of
the Federal Reserve. Current federal law authorizes interstate acquisitions of banks and bank holding companies without geographic
limitation. Furthermore, a bank headquartered in one state is authorized to merge with a bank headquartered in another state, as long
as neither of the states has opted out of such interstate merger authority prior to such date, and subject to any state requirement that the
target bank shall have been in existence and operating for a minimum period of time, not to exceed five years, and to certain deposit
market-share limitations. After a bank has established branches in a state through an interstate merger transaction, the bank may
establish and acquire additional branches at any location in the state where a bank headquartered in that state could have established or
acquired branches under applicable federal or state law.
FDIC Insurance Assessments
The FDIC insures the deposit accounts of the Bank up to the maximum amount provided by law. The general insurance limit is
$250,000. 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 noninterest 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. This increase to coverage was originally in effect through December 31, 2009, but
was extended several times until it expired on December 31, 2012.
The FDIC assesses deposit insurance premiums on each insured institution quarterly based on annualized rates for one of four risk
categories. Under the rules in effect through March 31, 2011, these rates are applied to the institution’s deposits. Each institution is
assigned to one of four risk categories based on its capital, supervisory ratings and other factors. Well capitalized institutions that are
financially sound with only a few minor weaknesses are assigned to Risk Category I. Risk Categories II, III and IV present
progressively greater risks to the DIF. A range of initial base assessment rates applies to each risk category, subject to adjustments
based on an institution’s unsecured debt, secured liabilities and brokered deposits, such that the total base assessment rates after
adjustments range from 7 to 24 basis points for Risk Category I, 17 to 43 basis points for Risk Category II, 27 to 58 basis points for
Risk Category III, and 40 to 77.5 basis points for Risk Category IV.
As required by the Dodd-Frank Act, the FDIC adopted rules effective April 1, 2011 under which insurance premium assessments are
based on an institution’s total assets minus its tangible equity (defined as Tier 1 capital) instead of its deposits. Under these rules, an
institution with total assets of less than $10 billion will be assigned to a risk category as described above, and a range of initial base
assessment rates will apply to each category, subject to adjustment downward based on unsecured debt issued by the institution and,
except for an institution in Risk Category I, adjustment upward if the institution’s brokered deposits exceed 10% of its domestic
deposits, to produce total base assessment rates. Total base assessment rates range from 2.5 to 9 basis points for Risk Category I, 9 to
24 basis points for Risk Category II, 18 to 33 basis points for Risk Category III, and 30 to 45 basis points for Risk Category IV, all
subject to further adjustment upward if the institution holds more than a de minimis amount of unsecured debt issued by another
FDIC-insured institution. The FDIC may increase or decrease its rates by 2.0 basis points without further rulemaking. In an
emergency, the FDIC may also impose a special assessment.
The Company’s insurance assessments during 2013, 2012 and 2011 were approximately $2.3 million, $1.5 million and $4.5 million,
respectively. Because of the growing number of bank failures and costs to the DIF, the FDIC required that we prepay the assessments
that would normally have been paid during 2010 to 2012. This prepaid assessment amounted to approximately $12.3 million during
2009. During 2013, the FDIC refunded the remaining portion of the assessment to the Company; therefore, there was no remaining
prepaid balance on the Company’s consolidated balance sheet as of December 31, 2013.
Pursuant to the Dodd-Frank Act, the FDIC has established 2.0% as the designated reserve ratio (“DRR”), which is the ratio of the DIF
to insured deposits. The FDIC has adopted a plan under which it will meet the statutory minimum DRR of 1.35% by September 30,
2020, the deadline imposed by the Dodd-Frank Act. The Dodd-Frank Act requires the FDIC to offset the effect of the increase in the
statutory minimum DRR to 1.35% on institutions with assets of less than $10 billion from the former statutory minimum of 1.15%.
The FDIC has not yet announced how it will implement this offset or how larger institutions will be affected by it.
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 2013 was $0.62 - $0.64 per $100 of
assessable deposits. These assessments will continue until the debt matures in 2017 through 2019.
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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.
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 Practices 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.
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 known at this time.
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.
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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.
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. The federal banking regulators previously issued guidance reminding 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:
•
•
total reported loans for construction, land development and other land (“C&D”) represent 100% or more of the
institution’s total capital; or
total CRE loans represent 300% or more of the institution’s total capital, and the outstanding balance of the institution’s
CRE loan portfolio has increased by 50% or more.
As of December 31, 2013, excluding purchased non-covered and covered assets, our C&D concentration as a percentage of capital
totaled 46.2% and our CRE concentration, net of owner-occupied loans, as a percentage of capital totaled 159.2%. Including
purchased non-covered and covered loans subject to loss-share agreements with the FDIC, the Company’s C&D concentration as a
percentage of capital totaled 69.7% and our CRE concentration, net of owner-occupied loans, as a percentage of capital totaled
232.1%.
15
Limitations on Incentive Compensation
The Dodd-Frank Act requires the federal banking regulators and other agencies, including the SEC, to issue regulations or guidelines
requiring disclosure to the regulators of incentive-based compensation arrangements and to prohibit incentive-based compensation
arrangements for directors, officers or employees that encourage inappropriate risks by providing excessive compensation, fees or
benefits or that could lead to material financial loss to a financial institution. Proposed regulations for this purpose have been
published, which are based upon the key principles that incentive compensation arrangements should (i) provide incentives that 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 and appropriate policies, procedures and monitoring. The proposed regulations are consistent
with the Guidance on Sound Incentive Compensation Policies issued by the Federal Reserve, the FDIC and other regulators in June
2010.
As part of the regular, risk-focused examination process, the incentive compensation arrangements of banking organizations will be
reviewed, and the regulator’s findings will be incorporated into the organization’s supervisory ratings, which can affect the
organization’s ability to make acquisitions and take other actions. 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 any deficiencies.
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 known at this time.
Evolving Legislation and Regulatory Action
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 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. 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.
In addition, from time to time, various other legislative and regulatory initiatives are introduced in Congress and state legislatures, as
well as by regulatory agencies, that may impact the Company or the Bank. Such initiatives may include proposals to expand or
contract the powers of bank holding companies and depository institutions or proposals to substantially change the financial institution
regulatory system. Such legislation could change banking statutes and the operating environment of Ameris in substantial and
unpredictable ways. If enacted, such legislation could increase or decrease the cost of doing business, limit or expand permissible
activities or affect the competitive balance among banks, savings associations, credit unions and other financial institutions. The
Company cannot predict whether any such legislation will be enacted, and, if enacted, the effect that it, or any implementing
regulations, would have on the financial condition or results of operations of the Company. A change in statutes, regulations or
regulatory policies applicable to the Company or the Bank could have a material effect on the business of the Company.
16
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 or uncertainties 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 over five 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 defensive strategies, including seeking additional
capital.. 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 institutions 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 this may result in increased regulatory
scrutiny.
• We may expect to face increased regulation of our industry, including as a result of 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.
17
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 2013, net interest income made up 71.5% 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.
The downgrade of the U.S. credit rating could have a material adverse effect on our business, financial condition and liquidity.
Standard & Poor’s lowered its long-term sovereign credit rating on the United States of America from AAA to AA+ in 2011 and
affirmed that rating in 2013. A further downgrade by Standard & Poor’s or one or more other rating agencies could have a material
adverse impact on financial markets and economic conditions in the United States and worldwide. Any such adverse impact could
have a material adverse effect on our liquidity, financial condition and results of operations.
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 five 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.
18
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.
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:
•
•
•
•
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.
We face additional risks due to our increased mortgage banking activities that could negatively impact net income and profitability.
We sell substantially all of the mortgage loans that we originate. The sale of these loans generates noninterest income and can be a
source of liquidity for the Bank. Disruption in the secondary market for residential mortgage loans as well as continued declines in
real estate values could result in one or more of the following:
•
•
•
•
•
our inability to sell mortgage loans on the secondary market, which could negatively impact our liquidity position;
continued declines in real estate values could decrease the potential of mortgage originations, which could negatively
impact our earnings;
if it is determined that loans were made in breach of our representations and warranties to the secondary market, we could
incur losses associated with the loans;
increased compliance requirements could result in higher compliance costs, higher foreclosure proceedings or lower loan
origination volume, all which could negatively impact future earnings; and
a rise in interest rates could cause a decline in mortgage originations, which could negatively impact our earnings.
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 acquisitions 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.
19
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 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:
•
•
•
•
•
•
•
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.
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. 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, 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.
20
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
uncertain conditions in the national economy and in the money markets, we cannot predict with certainty possible future changes in
interest rates, deposit levels, loan demand or our business and earnings.
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 (“NASDAQ”). 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.
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.
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.
21
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.
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.
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 will likely need to make
additional investments 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.
22
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 many of 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.
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:
•
•
•
•
•
•
•
•
•
•
•
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.
23
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 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. In 2010, in response to anticipated increases in corporate risks, our Board suspended the payment of
dividends on our Common Stock.
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 shareholders 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 68 office or branch locations, of which 56 are owned and 12 are subject to either building or ground leases, and eight
mortgage production offices, all of which are subject to building leases. At December 31, 2013, 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. MINE SAFETY DISCLOSURES
Not applicable.
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 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 2013 and 2012, 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 2013
March 31
June 30
September 30
December 31
Quarter Ended 2012
March 31
June 30
September 30
December 31
High
Low
Dividend
$ 14.51
16.94
19.79
21.42
$12.79
13.16
17.35
17.69
High
Low
Dividend
$ 13.32
13.40
12.88
12.71
$10.34
10.88
11.27
10.50
-
-
-
-
-
-
-
-
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 its sole discretion. During 2010, the Board suspended the payment of dividends. Should the Board determine to declare a cash
dividend in the future, 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 28, 2014, there were approximately 2,219 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.
25
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, 2008, and ending December 31, 2013. This line graph assumes an investment of $100 on
December 31, 2007, and reinvestment of dividends and other distributions to shareholders.
Total Return Performance
Ameris Bancorp
NASDAQ Stock Market (US Companies)
NASDAQ BANK
350
300
250
200
150
100
50
0
l
e
u
a
V
x
e
d
n
I
12/31/08
12/31/09
12/31/10
12/31/11
12/31/12
12/31/13
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.
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. Acquisitions, including the FDIC-assisted transactions completed between 2009
and 2012 and the acquisition of Prosperity completed in 2013, significantly affected the comparability of selected financial
data. Specifically, since the FDIC-assisted 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 3, “Assets
Acquired in FDIC-Assisted Acquisitions,” 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,
2013
2012
2011
2010
2009
(Dollars in Thousands, Except Per Share Data)
Selected Balance Sheet Data:
Total assets
Total non-covered loans
Covered assets (loans and OREO)
Investment securities available for sale
FDIC loss-share receivable
Total deposits
Stockholders’ equity
$ 3,666,746
2,067,207
436,130
486,235
65,441
2,999,231
315,796
$ 3,019,052
1,450,635
595,985
346,909
159,724
2,624,663
279,017
$ 2,994,307
1,332,086
650,106
339,967
242,394
2,591,566
293,770
$ 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
Selected Income Statement Data:
Interest income
Interest expense
Net interest income
Provision for loan losses
Other income
Other expenses
Income/(loss) before income taxes
Income tax expense/(benefit)
Net income/(loss)
Preferred stock dividends
Net income/(loss) available to
common shareholders
Per Share Data:
Net income/(loss) – basic
Net income/(loss) – diluted
Common book value
Common dividends – cash
Common dividends – stock
$ 126,322
10,137
116,185
$ 129,479
15,074
114,405
$ 141,071
27,547
113,524
$ 119,071
29,794
89,277
$ 114,573
40,550
74,023
11,486
46,549
121,945
29,303
9,285
20,018
1,738
18,280
0.76
0.75
11.50
-
-
$
$
$
31,089
57,874
119,470
21,720
7,285
14,435
3,577
10,858
0.46
0.46
10.56
-
-
$
$
$
32,729
52,807
101,953
31,649
10,556
21,093
3,241
17,852
0.76
0.76
10.23
-
-
$
$
$
50,521
35,248
81,188
(7,184)
(3,195)
(3,989)
42,068
58,353
124,800
(34,492)
7,297
(41,789)
$
3,213
3,161
(7,202)
$
(44,950)
(0.35)
(0.35)
9.44
-
3 for 157
$
(3.27)
(3.27)
10.52
.10
2 for 130
$
$
$
27
Year Ended December 31,
2013
2012
2011
2010
2009
(Dollars in Thousands, Except Per Share Data)
0.70% 0.49% 0.60% (0.37)% (0.52)%
8.06
4.74
74.94
(6.25)
3.52
74.61
(4.44)
4.11
65.20
5.99
4.60
69.35
7.21
4.57
61.30
0.69% 2.76% 2.23% 3.33% 2.77%
2.64
1.38
8.76
3.49
2.26
6.87
2.52
8.38
1.63
5.28
81.94% 74.61% 73.45% 76.11% 84.09%
76.72
78.08
15.26
22.29
79.26
11.16
76.50
11.91
77.83
19.46
8.63% 9.24% 9.81% 9.20% 8.04%
NM
NM
NM
NM
NM
Profitability Ratios:
Net income (loss) to average total assets
Net income (loss) to average common stockholders’ equity
Net interest margin
Efficiency ratio
Loan Quality Ratios:
Net charge-offs to average loans*
Allowance for loan losses to total loans *
Nonperforming assets to total loans and OREO*
Liquidity Ratios:
Loans to total deposits
Average loans to average earnings assets
Noninterest-bearing deposits to total deposits
Capital Adequacy Ratios:
Stockholders’ equity to total assets
Common stock dividend payout ratio
* Excludes covered assets.
28
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
OVERVIEW
During 2013, the Company reported net income available to common shareholders of approximately $18.3 million, or $0.76 per share,
compared to $10.9 million, or $0.46 per share, in 2012. The Company’s net income as a percentage of average assets for 2013 and
2012 was 0.70% and 0.49%, respectively, while the Company’s net income as a percentage of average shareholders’ equity was
8.06% and 6.00%, respectively.
Highlights of the Company’s performance in 2013 include the following:
•
•
•
•
•
The Company completed the acquisition of Prosperity, increasing total assets by approximately $744.9 million, total loans
by approximately $449.7 million and total deposits by approximately $473.7 million. The acquisition added 12 retail
offices and increased the Company’s presence in northern Florida. The Company recorded $34.1 million in additional
goodwill and $4.4 million in core deposit intangibles associated with the merger. A total of 1,168,918 shares of Common
Stock were issued to the former shareholders of Prosperity.
Excluding the non-accrual loans acquired in the Prosperity acquisition, nonperforming loans decreased approximately
$9.7 million, or 24.9%, to $29.2 million during 2013. Legacy OREO (excluding the OREO acquired in the Prosperity
acquisition) decreased approximately $6.5 million, or 16.3%, to $33.4 million during 2013. Net charge-offs for 2013
declined to 0.69% of total legacy loans, compared to 2.76% for 2012. Excluding the bulk sale in the first quarter of 2012,
net charge-offs would have been 2.04% of total legacy loans for 2012.
Total credit costs for the year ended December 31, 2013 decreased approximately $26.8 million, or 49.5%, compared to
2012. 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. Provision for loan loss expense for 2013 amounted to approximately $11.5 million,
compared to $31.1 million for 2012. The provision expense in 2012 includes $10.4 million related to the bulk sale during
the first quarter of 2012.
• Tangible common equity to tangible assets decreased from 8.20% at December 31, 2012 to 6.83% at December 31, 2013.
Tangible common book value per share decreased 5.0% from $10.39 at December 31, 2012 to $9.87 at December 31,
2013.
Total assets increased $648.6 million during 2013, ending the year at $3.7 billion. During 2013, the Company continued
to use the cash flows from covered assets (including loans, OREO and the indemnification asset from FDIC-assisted
acquisitions) to grow traditional earning assets. As such, the Company reduced covered assets by approximately $159.9
million and grew legacy loans and investment securities by $154.9 million during 2013.
The Company’s net interest margin increased slightly to 4.74% in 2013, from 4.60% in 2012. Lower yields on most
earning asset classes were offset by lower funding costs. Deposit costs, the Company’s largest funding expense,
continued to decline from 0.51% in 2012 to 0.34% in 2013, due to shifts in the deposit mix.
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 (“GAAP”) 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
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, 2013, we did not have any non-covered loans with an outstanding balance that exceeded our
in-house credit limit of $10.0 million. We did have four relationships consisting of 17 different non-covered loans that exceeded our
$10.0 million in-house credit limit. Total exposure resulting from these four relationships was $68.2 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
GAAP requires 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, 2013, the percentage of the Company’s assets measured at fair value was 41%. See Note
20, “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.
30
Business Combinations
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.
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 14, “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 $16.5 million as of December 31, 2013. Purchase
accounting adjustments related to the Prosperity acquisition, totaling $18.9 million, and allowances for loan losses associated with
loans where no loss has yet been recorded for tax purposes, totaling $7.8 million, represent the Company’s largest deferred tax assets.
Deferred gains on FDIC-assisted transactions represent the Company’s largest deferred tax liability, totaling $12.2 million.
Long-Lived Assets, Including Intangibles
During 2013, the Bank recorded new goodwill totaling $34.1 million related to the acquisition of Prosperity. During 2010, the Bank
recorded new goodwill totaling $956,000 related to the acquisition of TBC. No goodwill was expensed or amortized during 2013 or
2012 in accordance with GAAP. At December 31, 2013, the Company’s balance of intangible assets totaled $6.0 million and is being
amortized over its previously determined useful life. During 2013, the Bank recorded new core deposit intangibles totaling $4.4
million in the acquisition of Prosperity and during 2012, the Bank recorded new core deposit intangibles totaling $1.1 million in the
acquisition of CBG.
NET INCOME/(LOSS) AND EARNINGS PER SHARE
The Company’s net income available to common shareholders during 2013 was approximately $18.3 million, or $0.75 per diluted
share, compared to $10.9 million, or $0.46 per diluted share, in 2012, and $17.9 million, or $0.76 per diluted share, in 2011.
For the fourth quarter of 2013, the Company recorded net income available to common shareholders of approximately $966,000, or
$0.04 per diluted share, compared to $3.6 million, or $0.15 per diluted share, for the quarter ended December 31, 2012, and $322,000,
or $0.01 per diluted share, for the quarter ended December 31, 2011.
31
EARNING ASSETS AND LIABILITIES
Average earning assets were approximately $2.47 billion in 2013, compared to approximately $2.50 billion in 2012. The earning asset
and interest-bearing liability mix is regularly 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 Consolidated Financial Statements and related notes included elsewhere in this
Annual Report and in the documents incorporated herein by reference.
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,
2013
Interest
Income/
Expense
Average
Yield/
Rate Paid
2012
Interest
Income/
Expense
Average
Balance
Average
Balance
Average
Yield/
Rate Paid
Average
Balance
2011
Interest
Income/
Expense
Average
Yield/
Rate Paid
(Dollars in Thousands)
ASSETS
Interest-earning assets:
Loans
Investment securities
Short-term assets
$ 2,041,346 $ 118,045
9,041
278
332,413
98,945
5.78% $ 1,975,863 $ 119,420
10,241
369,734
2.72
444
155,501
0.28
6.04% $ 1,919,276 $ 129,044
12,277
338,736
2.77
655
243,615
0.29
6.72%
3.62
0.27
Total interest-
earning assets
2,472,704
127,364
5.15
2,501,098
130,105
5.20
2,501,627
141,976
5.68
Noninterest-earning
assets
375,825
Total assets
$ 2,848,529
LIABILITIES AND STOCKHOLDERS’ EQUITY
470,862
$ 2,971,960
464,172
$ 2,965,799
Interest-bearing liabilities:
Savings and interest-
bearing demand deposits
Time deposits
Other borrowings
FHLB advances
Subordinated deferrable interest
$ 1,327,205 $
671,083
28,935
2,400
3,521
4,878
307
63
0.27% $ 1,320,188 $
0.73
1.06
2.63
830,541
26,563
3,635
4,556
8,771
155
110
0.35% $ 1,233,346 $
1.06
0.58
3.03
1,013,817
22,275
18,008
9,310
16,196
168
460
0.75%
1.60
0.75
2.55
debentures
43,276
1,368
3.16
42,269
1,482
3.51
42,269
1,413
3.34
Total interest-bearing
liabilities
2,072,899
10,137
0.49
2,223,196
15,074
0.68
2,329,715
27,547
1.18
Demand deposits
Other liabilities
Stockholders’ equity
489,613
8,844
277,173
447,111
8,253
293,400
344,021
9,540
282,523
Total liabilities and
stockholders’
equity
Interest rate spread
Net interest income
Net interest margin
$ 2,848,529
$ 2,971,960
$ 2,965,799
$ 117,227
4.66%
4.74%
32
$ 115,031
4.52%
4.60%
$ 114,429
4.50%
4.57%
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.
2013 compared to 2012. For the year ended December 31, 2013, interest income was $126.3 million, a decrease of $3.2 million, or
2.4%, compared to the same period in 2012. Average earning assets decreased $28.4 million, or 1.14%, to $2.47 billion for the year
ended December 31, 2013, compared to $2.50 billion as of December 31, 2012. Yield on average earning assets on a taxable
equivalent basis decreased during 2013 to 5.15%, compared to 5.20% for the year ended December 31, 2012. However, lower yields
on most earning assets have been offset by lower funding costs.
Interest expense on deposits and other borrowings for the year ended December 31, 2013 was $10.1 million, compared to $15.1
million for the year ended December 31, 2012. The Company’s funding mix continued to improve during 2013, leading to significant
savings in cost of funds. During 2013, average noninterest-bearing accounts amounted to $489.6 million and comprised 19.7% of
average total deposits, compared to $447.1 million, or 17.2% of average total deposits, during 2012. Average balances of time
deposits amounted to $671.1 million and comprised 27.0% of average total deposits during 2013, compared to $830.5 million, or
32.0% of average total deposits, during 2012. This shift of balances from higher cost time deposits into noninterest-bearing accounts
helped reduce the cost of average interest-bearing liabilities from 0.68% in 2012 to 0.49% in 2013.
On a taxable-equivalent basis, net interest income for 2013 was $117.2 million compared to $115.0 million in 2012, an increase of
$2.2 million, or 1.91%. The Company’s net interest margin, on a tax equivalent basis, increased to 4.74% for the year ended
December 31, 2013, compared to 4.60% for the year ended December 31, 2012.
2012 compared to 2011. For the year ended December 31, 2012, interest income was $129.5 million, a decrease of $11.6 million, or
8.2%, compared to the same period in 2011. Average earning assets of $2.50 billion for the year ended December 31, 2012 were
relatively unchanged from December 31, 2011. Yield on average earning assets on a taxable equivalent basis decreased during 2012 to
5.20%, compared to 5.68% for the year ended December 31, 2011. However, lower yields on most earning assets have been offset by
lower funding costs.
Interest expense on deposits and other borrowings for the year ended December 31, 2012 was $15.1 million, compared to $27.5
million for the year ended December 31, 2011. The Company’s funding mix continued to improve during 2012, leading to significant
savings in cost of funds. During 2012, average noninterest-bearing accounts amounted to $447.1 million and comprised 17.2% of
average total deposits, compared to $344.0 million, or 13.3% of average total deposits, during 2011. Average balances of time
deposits amounted to $830.5 million and comprised 32.0% of average total deposits during 2012, compared to $1.01 billion, or 39.1%
of average total deposits, during 2011. This shift of balances from higher cost time deposits into noninterest-bearing accounts helped
reduce the cost of average interest-bearing liabilities from 1.18% in 2011 to 0.68% in 2012.
On a taxable-equivalent basis, net interest income for 2012 was $115.0 million compared to $114.4 million in 2011, an increase of
$596,000, or 0.5%. The Company’s net interest margin, on a tax equivalent basis, increased to 4.60% for the year ended December 31,
2012, compared to 4.57% for the year ended December 31, 2011.
33
The summary of changes in interest income and interest expense on a fully taxable equivalent basis resulting from changes in volume
and changes in rates for each category of earning assets and interest-bearing liabilities for the years ended December 31, 2013 and
2012 are shown in the following table:
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
2013 vs. 2012
2012 vs. 2011
Increase
(Decrease)
Changes Due To
Increase
Changes Due to
Rate
Volume
(Decrease)
Rate
Volume
(Dollars in Thousands)
$ (1,375)
(1,200)
(166)
(2,741)
$ (5,333)
(166)
(5)
(5,504)
$ 3,958
(1,034)
(161)
2,763
$ (9,624)
(2,036)
(211)
(11,871)
$ (13,429)
(3,159)
26
(16,562)
$ 3,805
1,123
(237)
4,691
deposits
Interest on time deposits
Interest on other borrowings
Interest on FHLB advances
Interest on trust preferred securities
Total interest expense
(1,035)
(3,893)
152
(47)
(114)
(4,937)
(1,059)
(2,209)
138
(10)
(149)
(3,289)
24
(1,684)
14
(37)
35
(1,648)
(4,754)
(7,425)
(13)
(350)
69
(12,473)
(5,410)
(4,497)
(45)
17
69
(9,866)
656
(2,928)
32
(367)
-
(2,607)
Net interest income
$
2,196
$ (2,215)
$ 4,411
$
602
$ (6,696)
$ 7,298
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.
The Company’s provision for loan losses during 2013 amounted to $11.5 million, compared to $31.1 million for 2012 and $32.7
million in 2011. Net charge-offs in 2013 were 0.69% of average loans, excluding the loans covered in the FDIC-loss sharing
agreements, compared to 2.76% in 2012 and 2.23% in 2011.
At December 31, 2013, non-performing assets, excluding assets covered in the FDIC-loss sharing agreements, amounted to $73.5
million, or 2.00% of total assets, compared to 2.61% at December 31, 2012. Legacy non-performing assets totaled $62.6 million and
acquired, non-covered non-performing assets totaled $10.9 million at December 31, 2013. Legacy other real estate was approximately
$33.4 million as of December 31, 2013, reflecting a 16.3% decrease from the $39.9 million reported at December 31, 2012.
Purchased, non-covered other real estate was $4.3 million at December 31, 2013. The Company’s allowance for loan losses at
December 31, 2013 was $22.4 million, or 1.38% of loans, excluding purchased non-covered and covered loans, compared to $23.6
million, or 1.63%, and $35.2 million, or 2.64%, at December 31, 2012 and 2011, respectively. During the first quarter of 2012, the
Company reduced nonperforming loans by approximately $16.1 million, OREO by $13.3 million and classified loans by $1.8 million
through a bulk sale of nonperforming assets.
34
Noninterest Income
Following is a comparison of noninterest income for 2013, 2012 and 2011.
Service charges on deposit accounts
Mortgage banking activities
Other service charges, commissions and fees
Gain on sales of securities
Gain on acquisitions
Other income
Years Ended December 31,
2013
2012
2011
(Dollars in Thousands)
$ 19,576
12,989
1,431
322
20,037
3,519
$ 57,874
$ 19,545
19,128
2,151
171
-
5,554
$ 46,549
$ 18,081
2,971
1,247
238
26,867
3,403
$ 52,807
2013 compared to 2012. Total noninterest income in 2013 was $46.5 million, compared to $57.9 million in 2012, a decrease of $11.3
million. Excluding the gain on acquisition recorded in 2012, total noninterest income increased $8.7 million. The majority of this
increase relates to a $6.1 million increase in mortgage banking activity, a $2.0 million increase in other income, and a $720,000
increase in other service charges.
Other income increased 57.8%, from $3.5 million in 2012 to $5.6 million in 2013. This increase is due to increased earnings on bank
owned life insurance and a $1.2 million increase in the gain on the sale of SBA loans in 2013.
Income from mortgage banking activities continued to increase during 2013, from $13.0 million in 2012 to $19.1 million in 2013, as
the Company continued to grow the line of business through the addition of new producers and new services.
Service charges on deposit accounts remained stable during 2013, while other service charges, commissions and fees increased 50.3%
in 2013, from $1.4 million in 2012, to $2.2 million in 2013. Service charges on deposit accounts represent the largest component of
recurring noninterest income. In 2013, excluding gains on securities and on acquisitions, service charges were 42% of total noninterest
income, compared to 52% in 2012.
2012 compared to 2011. Total noninterest income in 2012 was $57.9 million, compared to $52.8 million in 2011, an increase of $5.1
million. The majority of the increase in noninterest income relates to a $10.0 million increase in mortgage banking activity and a $1.5
million increase in service charges on deposit accounts, partially offset by the $6.8 million decrease in 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 $33.9 million in 2012 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.
Income from mortgage banking activities increased substantially during 2012, from $3.0 million in 2011 to $13.0 million in 2012.
The Company’s efforts to grow the line of business through the addition of new producers and new services were successful. The
Company anticipates continued growth in mortgage banking revenues due to recent recruiting efforts and further implementation of
new services within the mortgage banking industry.
Service charges on deposit accounts increased 8.3% in 2012, from $18.1 million in 2011, to $19.6 million in 2012. This growth is the
result of deposit growth from FDIC-assisted acquisitions, as well as strong internal growth in transaction accounts.
35
Noninterest Expense
Following is a comparison of noninterest expense for 2013, 2012 and 2011.
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
Acquisition expenses
OREO and problem loan expenses
Other expense
Years Ended December 31,
2013
2012
2011
$ 56,670
12,286
1,414
11,539
1,620
1,017
962
615
1,526
722
2,323
4,389
15,486
11,376
$121,945
(Dollars in Thousands)
$ 53,122
13,208
1,360
10,683
1,622
1,061
1,460
721
1,925
475
1,489
-
22,416
9,928
$119,470
$ 40,210
11,390
1,011
10,315
722
1,528
1,312
311
1,493
19
4,537
-
22,448
6,657
$101,953
2013 compared to 2012. Operating expenses increased from $119.5 million in 2012 to $121.9 million in 2013. Salaries and employee
benefits increased 6.7% from $53.1 million in 2012 to $56.7 million in 2013. Equipment and occupancy expense decreased 7.0%
from $13.2 million in 2012 to $12.3 million in 2013. Data processing and telecommunications expense increased during 2013 to
$11.5 million, an increase of 8.0% compared to the $10.7 million reported in 2012. Postage and delivery, printing and supplies, legal
fees and other professional fees all decreased during 2013 due to the efforts to reduce core operating expenses.
Acquisition expenses of $4.4 million in 2013 relate to the Prosperity acquisition. Problem loan and OREO expenses decreased $6.9
million in 2013, as the level of OREO and problem loans declined and general economic conditions improved. Excluding acquisition
and credit related expenses, total operating expenses were $102.1 million for the year ended December 31, 2013, compared to $97.1
million for 2012. Expressed as a percentage of average assets, total operating expense net of credit related and non-recurring
acquisition costs in 2013 was 3.47%, a slight increase from 3.25% reported in 2012.
2012 compared to 2011. Operating expenses increased from $102.0 million in 2011 to $119.5 million in 2012. Expenses related to
the Company’s growing mortgage banking business were $7.3 million during 2012 and account for 41.4% of the total increase in
operating expenses. These expenses are included in the categories listed in the table above, such as salaries and employee benefits,
equipment and occupancy and data processing and communication costs. Salaries and employee benefits increased 32.1% from $40.2
million in 2011 to $53.1 million in 2012. During 2012, the Company reinstated various employee and board benefits that had been
suspended in prior years.
Equipment and occupancy expense increased 16.0% from $11.4 million in 2011 to $13.2 million in 2012. This increase is due to the
growth in personnel and branch locations as a result of recent FDIC-assisted transactions, as well as the growth in the mortgage
banking business. Advertising and public relations increased $900,000 during 2012, as the Company incurred these costs to support
various revenue and growth strategies throughout the year. The $3.0 million decrease in FDIC assessments is due to a fourth quarter
true-up of the prepaid FDIC insurance premiums.
During the fourth quarter of 2012, the Company announced a major restructuring effort aimed at reducing core operating expenses in
future periods. These plans included lower headcount in both the retail bank and corporate functions and the closing of thirteen
branches in 2013. The Company recorded $2.1 million in restructuring charges in the fourth quarter of 2012 related to these activities.
36
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, 2013, the Company recorded income tax expense of approximately $9.3
million, compared to $7.3 million recorded in 2012 and $10.6 million recorded in 2011. The Company’s effective tax rate was 32%,
34% and 33% for the years ended December 31, 2013, 2012 and 2011, respectively.
BALANCE SHEET COMPARISON
LOANS
Management believes that our loan portfolio is adequately diversified. The loan portfolio contains no foreign loans or significant
concentrations in any one industry. As of December 31, 2013, approximately 80.7% of our legacy loan portfolio was secured by real
estate. The amount of loans outstanding, excluding purchased non-covered and covered loans, 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 allowance for loan losses
Loans, net
2013
2012
2011
2010
2009
(Dollars in Thousands)
December 31,
$ 244,373
146,371
808,323
351,886
34,249
33,252
1,618,454
22,377
$ 1,596,077
$ 174,217
114,199
732,322
346,480
40,178
43,239
1,450,635
23,593
$ 1,427,042
$ 142,960
130,270
672,765
330,727
37,296
18,068
1,332,086
35,156
$ 1,296,930
$ 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
The following table provides additional disclosure on the various loan types comprising the subgroup “Real estate – commercial &
farmland” at December 31, 2013 (in thousands):
Owner-Occupied
Farmland
Apartments
Hotels / Motels
Auto Dealers
Offices / Office Buildings
Strip Centers (Anchored & Non-Anchored)
Convenience Stores
Retail Properties
Warehouse Properties
All Other
Outstanding
Balance
$ 312,175
132,566
58,646
36,305
4,895
79,995
52,023
5,380
73,198
43,886
9,254
$ 808,323
Average
Maturity
(Months)
Average Rate
% non-accrual
43
29
36
45
30
42
41
25
41
41
28
37
5.56%
5.74%
5.19%
5.16%
4.67%
5.37%
4.81%
5.38%
5.55%
5.52%
6.19%
5.59%
1.25%
0.57%
2.15%
0.88%
-
0.14%
-
-
1.14%
2.21%
4.68%
1.06%
37
The amount of purchased, non-covered 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 allowance for loan losses
Loans, net
2013
2012
2011
2010
2009
(Dollars in Thousands)
December 31,
$
32,141
31,176
179,898
200,851
4,687
-
448,753
-
$ 448,753
$
$
-
-
-
-
-
-
-
-
-
$
$
-
-
-
-
-
-
-
-
-
$
$
-
-
-
-
-
-
-
-
-
$
$
-
-
-
-
-
-
-
-
-
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 $390.2 million and $507.7 million at December 31, 2013 and
2012, respectively, are not included in the preceding tables. OREO that is covered by the loss-sharing agreements with the FDIC
totaled $45.9 million and $88.3 million at December 31, 2013 and 2012, 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 at the respective acquisition dates. The FDIC loss-share
receivable reported at December 31, 2013 and 2012 was $65.4 million and $159.7 million, respectively.
The Company 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 years ended December 31, 2013, 2012 and 2011, the Company recorded
approximately $1.5 million, $2.6 million and $2.4 million, respectively, 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
2013
$ 26,550
43,179
224,451
95,173
884
$ 390,237
2012
$ 32,606
70,184
278,506
125,056
1,360
$ 507,712
38
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 $10.0 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
Total
Ameris Bank Loan Portfolio
$
46,412
16,701
111,118
6,418
$ 180,649
$ 1,618,454
3.63%
4.14%
4.49%
5.48%
4.30%
6.42%
62
40
44
63
49
21
36.6%
-
-
-
9.4%
1.1%
-
-
-
-
-
1.80%
Total legacy loans, excluding purchased non-covered and covered loans, as of December 31, 2013 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
One Year or
Less
$ 84,515
59,079
159,246
80,785
8,697
33,252
$ 425,574
Contractual Maturity in:
Over One Year
through Five
Years
Over Five
Years
Total
(Dollars in Thousands)
$
$
107,771
68,011
430,208
153,847
24,542
-
784,379
$ 52,087
19,281
218,869
117,254
1,010
-
$ 408,501
$ 244,373
146,371
808,323
351,886
34,249
33,252
$ 1,618,454
The following table summarizes loans at December 31, 2013, with maturity dates after one year which (i) have predetermined interest
rates and (ii) have floating or adjustable interest rates.
Predetermined interest rates
Floating or adjustable interest rates
Covered loans as of December 31, 2013, are shown below according to their contractual maturity:
(Dollars in
Thousands)
$
939,084
253,797
$ 1,192,881
Contractual Maturity in:
One Year or
Less
Over One Year
through Five
Years
Over Five
Years
Total
(Dollars in Thousands)
Covered loans
$ 200,935
$
112,656
$76,646
$ 390,237
39
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 loan reviewers 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 allowance for loan losses which is monitored by the
Company’s Chief 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 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 allowance. 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 allowance allocations. Other loans
that surface as problem loans may also be assigned specific allowance allocations. 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.
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,
2013
2012
2011
2010
2009
(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
Commercial, financial, and
agricultural
R/E Commercial &
Farmland
R/E Construction &
Development
Total Commercial
R/E Residential
Consumer Installment
Unallocated
$ 1,823
15% $ 2,439
12% $ 2,918
11% $ 2,779
10% $ 3,428
11%
8,393
50
9,157
50
14,226
50
14,971
50
11,296
67
5,538
15,754
6,034
589
-
$ 22,377
9
74
22
4
-
5,343
16,939
5,898
756
-
100% $ 23,593
8
70
24
6
-
9,438
26,582
8,128
446
-
100% $ 35,156
10
71
25
4
-
7,705
25,455
8,664
457
-
100% $ 34,576
12
72
25
3
-
13,098
27,822
7,391
549
-
100% $ 35,762
6
84
12
4
-
100%
40
The following table presents an analysis of our loan loss experience, excluding purchased non-covered and covered loans, for the
periods indicated:
2013
2012
December 31,
2011
(Dollars in Thousands)
2010
2009
Average amount of non-covered loans
outstanding
$ 1,478,816
$ 1,393,012
$ 1,348,557
$ 1,448,662
$ 1,662,061
Balance of allowance for loan losses at
beginning of period
$
23,593
$
35,156
$
34,576
$
35,762
$
39,652
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 allowance charged to
operating expenses
Balance of allowance for loan
losses at end of period
Ratio of net loan charge-offs to average
non-covered loans
NONPERFORMING LOANS
(7,350)
(5,215)
(719)
935
888
298
(11,163)
(31,382)
(8,722)
(1,059)
679
225
245
(40,014)
(25,475)
(5,399)
(749)
1,593
146
123
(29,761)
(41,442)
(10,091)
(1,090)
2,097
186
315
(50,025)
(35,231)
(10,859)
(1,041)
742
278
153
(45,958)
9,947
28,451
30,341
48,839
42,068
$
22,377
$
23,593
$
35,156
$
34,576
$
35,762
0.75%
2.87%
2.21%
3.45%
2.77%
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 loan losses. Interest on loans that are classified as non-accrual is recognized when received. Past due loans are placed on
non-accrual status when 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, excluding purchased non-covered and covered loans.
Commercial, financial & agricultural
Real estate – construction & development
Real estate – commercial & farmland
Real estate – residential
Consumer installment loans
Total
December 31,
2013
2012
2011
2010
2009
(Dollars in Thousands)
$ 4,103
3,971
8,566
12,152
411
$ 4,138
9,281
11,962
12,595
909
$ 3,987
15,020
35,385
15,498
933
$ 8,648
7,887
55,170
6,376
1,208
$ 4,774
15,787
67,172
6,965
1,433
$ 29,203
$ 38,885
$ 70,823
$ 79,289
$96,131
Loans contractually past due ninety days or more as to interest or
principal payments and still accruing
-
-
-
-
-
41
During 2008 and 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. 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
improvement.
The following table presents an analysis of purchased, non-covered 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
2013
2012
2011
2010
2009
December 31,
$
$
11
325
1,653
4,658
12
$ 6,659
$
(Dollars in Thousands)
-
-
-
-
-
-
$
$
-
-
-
-
-
-
$
$
-
-
-
-
-
-
$
$
-
-
-
-
-
-
The following table presents an analysis of covered 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,
2013
2012
2011
2010
2009
(Dollars in Thousands)
$ 7,257
14,781
33,495
13,278
341
$ 10,765
20,027
55,946
28,672
302
$ 11,952
30,977
75,458
41,139
473
$ 5,756
25,810
29,519
25,946
1,122
$ 1,398
9,155
8,109
4,602
2,527
$ 69,152
$115,712
$159,999
$ 88,153
$25,791
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
the Federal Reserve Bank of Atlanta, 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.
42
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 35.0% 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, 2013, 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
Purchased, non-covered loans
Covered loans
Interest-bearing liabilities:
Interest-bearing demand deposits
Savings
Time deposits
Short-term borrowings
Trust preferred securities
At December 31, 2013
Maturing or Repricing Within
Zero to
Three
Months
Three
Months to
One Year
One to
Five
Years
Over
Five
Years
Total
(Dollars in Thousands)
$ 204,984
-
235,346
136,422
205,685
782,437
$
-
2,740
258,263
7,200
74,798
343,001
$
-
39,828
878,214
58,641
87,260
1,063,943
$
-
443,667
313,909
246,490
22,494
1,026,560
$ 204,984
486,235
1,685,732
448,753
390,237
3,215,941
1,441,059
138,805
197,831
248,516
-
2,026,211
-
-
413,982
-
-
413,982
-
-
138,700
29,572
-
168,272
-
-
323
-
55,466
55,789
1,441,059
138,805
750,836
278,088
55,466
2,664,254
Interest rate sensitivity gap
$(1,243,774)
$ (70,981)
$ 895,671
$970,771
$ 551,687
Cumulative interest rate sensitivity gap
$(1,243,774) $ (1,314,755)
$ (419,084)
$551,688
Interest rate sensitivity gap ratio
Cumulative interest rate sensitivity gap ratio
0.39
0.39
0.83
0.46
6.32
0.84
18.40
1.21
43
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
Collateralized debt obligations
Mortgage-backed securities
December 31,
2013
2012
2011
(Dollars in Thousands)
$ 13,926
112,754
10,325
1,480
347,750
$
6,870
114,390
10,328
-
215,321
$ 14,937
79,133
11,401
-
234,496
$ 486,235
$ 346,909
$ 339,967
The amounts of securities available for sale in each category as of December 31, 2013 are shown in the following table according to
contractual maturity classifications: (i) one year or less, (ii) after one year through five years, (iii) after five years through ten years
and (iv) 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
Collateralized debt obligations
Mortgage-backed
Amount
Yield(1)
Amount
Yield (1)
Yield (1)
Yield(1)
Amount
Yield (1)
Amount
Yield (1)
$
-
-
-% $ 2,740
1.57% $
-
- % $
-
36,094
2.82
3,499
5.79
-
-
- %
$
-
-%
-
235
4.42
(Dollars in Thousands)
13,926
-
1.84
-
53,962
19,958
2.92
3.42
-
6,826
-
6.60
-
1,480
-
11.76
29,141
318,374
2.58
2.75
$ 13,926
1.84% $112,754
2.94% $ 10,325
6.33 % $
1,480
11.76%
$
347,750
2.74%
(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 trade 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
(i) the length of time and the extent to which the fair value has been less than cost, (ii) the financial condition and near-term prospects
of the issuer and (iii) 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, the Company has the intent and ability to hold
such securities until maturity and it is more likely than not that the Company will not be required to sell these securities prior to
recovery or 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. The Company did not hold any investments in “pooled” trust preferred securities at December 31, 2013.
44
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,
2013
2012
Amount
Rate
Amount
Rate
$ 489,613
597,490
625,085
104,630
671,083
$ 2,487,901
(Dollars in Thousands)
0.00%
0.18
0.37
0.11
0.73
0.34%
$ 447,111
610,399
613,296
96,493
830,541
$ 2,597,840
0.00%
0.26
0.46
0.14
1.06
0.51%
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, 2013, are shown below by
category, which is based on time remaining until maturity of (i) three months or less, (ii) over three through twelve months and
(iii) greater than one year.
Three months or less
Three months to one year
One year or greater
Total
(Dollars in
Thousands)
$ 82,345
204,943
86,621
$ 373,909
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.
The following is a summary of the commitments outstanding at December 31, 2013 and 2012:
Commitments to extend credit
Financial standby letters of credit
December 31,
2013
2012
(Dollars in Thousands)
$ 257,195
7,665
$ 264,860
$ 180,733
6,788
$ 187,521
45
DEPOSITS
NOW
Money Market
Savings
Time
Total deposits
Year Ended December 31,
2013
2012
Amount
Rate
Amount
Rate
(Dollars in Thousands)
597,490
625,085
104,630
671,083
0.18
0.37
0.11
0.73
610,399
613,296
96,493
830,541
0.26
0.46
0.14
1.06
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, 2013, are shown below by
category, which is based on time remaining until maturity of (i) three months or less, (ii) over three through twelve months and
(iii) greater than one year.
Three months or less
Three months to one year
One year or greater
Total
(Dollars in
Thousands)
$ 82,345
204,943
86,621
$ 373,909
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.
The following is a summary of the commitments outstanding at December 31, 2013 and 2012:
Commitments to extend credit
Financial standby letters of credit
December 31,
2013
2012
(Dollars in Thousands)
$ 257,195
$ 180,733
7,665
6,788
$ 264,860
$ 187,521
Average amount of various deposit classes and the average rates paid thereon are presented below:
The following table summarizes short-term borrowings for the periods indicated:
Noninterest-bearing demand
$ 489,613
0.00%
$ 447,111
0.00%
Federal funds purchased and securities sold under
agreement to repurchase
$ 26,908
0.54% $ 26,563
0.58% $ 22,275
0.75%
$ 2,487,901
0.34%
$ 2,597,840
0.51%
Total maximum short-term borrowings outstanding at
any month-end during the year
Total
Balance
$ 83,516
Total
Balance
$ 50,120
Total
Balance
$ 37,665
The following table sets forth certain information about contractual cash obligations as of December 31, 2013.
Years Ended December 31,
2013
2012
2011
(Dollars in Thousands)
Average
Balance
Average
Rate
Average
Balance
Average
Rate
Average
Balance
Average
Rate
Time certificates of deposit
Subordinated debentures
Payments Due After December 31, 2013
Total
1 Year
Or Less
1-3
Years
4-5
Years
5
Years
(Dollars in Thousands)
$ 750,836
55,466
$ 611,813
-
$ 115,667
-
$ 23,333
-
$
23
55,466
Total contractual cash obligations
$ 806,302
$ 611,813
$ 115,667
$ 23,333
$ 55,489
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, 2013, 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. On June 14, 2012, the Preferred Shares were sold by the Treasury through a registered public
offering. On August 22, 2012, the Company repurchased the Warrant from the Treasury for $2.67 million, and in December 2012, the
Company repurchased 24,000 of the outstanding Preferred Shares. The Company intends to redeem the remaining 28,000 outstanding
Preferred Shares on March 24, 2014.
Cumulative dividends on the Preferred Shares that remain outstanding 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.
45
46
Capital Regulations
The capital resources of the Company are monitored on a periodic basis by state and federal regulatory authorities. During 2013, the
Company’s capital increased $37.7 million, primarily due to the proceeds of issuance of Common Stock of $24.6 million related to the
Prosperity acquisition and net income available to common shareholders of $18.3 million, partially offset by other comprehensive
losses of $6.9 million. Other capital related transactions, such as Common Stock issuances through the exercise of stock options and
restricted stock account for only a small change in the capital of the Company. During 2012, the Company’s capital decreased by
$14.8 million, primarily due to the repurchase of 24,000 Preferred Shares for $24.0 million and the repurchase of the Warrant for $2.7
million, as partially offset by net income available to common shareholders of $10.9 million.
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, 2013:
Actual
Required
Excess
Amount
Percent
Amount
Percent
Amount
Percent
(Dollars in Thousands)
$ 331,400
347,010
11.33% $ 117,025
116,372
11.93
4.00% $ 214,375
230,638
4.00
7.33%
7.93
331,400
347,010
353,777
369,387
14.35
15.06
15.32
16.03
92,392
92,175
184,784
184,349
4.00
4.00
8.00
8.00
239,008
254,835
168,993
185,038
10.35
11.06
7.32
8.03
Leverage capital
Consolidated
Ameris Bank
Risk-based capital:
Core capital
Consolidated
Ameris Bank
Total capital
Consolidated
Ameris Bank
INFLATION
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.
47
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
Net interest income after provision for loan
losses
Noninterest income
Noninterest expense
Acquisition related expenses
Income before income taxes
Income tax
Net income
Preferred stock dividends
Net income available to common stockholders
Per Share Data:
Net income – basic
Net income – 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 before income taxes
Income tax
Net income
Preferred stock dividends
Net income available to common stockholders
Per Share Data:
Net income – basic
Net income – diluted
Common Dividends (Cash)
Common Dividends (Stock)
$
$
$
$
Quarters Ended December 31, 2013
4
3
2
1
(Dollars in Thousands, Except Per Share Data)
31,749
2,698
29,051
1,478
27,573
11,517
33,274
4,350
1,466
88
1,378
412
966
0.04
0.04
—
—
$
$
31,749
2,429
29,320
2,920
26,400
12,288
28,237
512
9,939
3,262
6,677
443
6,234
0.26
0.26
—
—
$
$
31,951
2,475
29,476
4,165
25,311
11,384
26,688
-
10,007
3,329
6,678
442
6,236
0.26
0.26
—
—
$
$
30,873
2,535
28,338
2,923
25,415
11,360
28,884
-
7,891
2,606
5,285
441
4,844
0.20
0.20
—
—
Quarters Ended December 31, 2012
4
3
2
1
(Dollars in Thousands, Except Per Share Data)
$
$
31,651
3,413
28,238
6,540
21,698
9,831
28,810
2,719
816
1,903
827
1,076
0.05
0.04
—
—
$
$
33,007
4,126
28,881
7,225
21,656
8,875
26,623
3,908
1,413
2,495
817
1,678
0.07
0.07
—
—
$
$
32,282
4,555
27,727
12,882
14,845
27,264
34,246
7,863
2,498
5,365
815
4,550
0.19
0.19
—
—
32,539
2,980
29,559
4,442
25,117
11,904
29,791
7,230
2,558
4,672
1,118
3,554
0.15
0.15
—
—
48
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 or 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, 2013 and 2012
Consolidated Statements of Income – Years ended December 31, 2013, 2012 and 2011
Consolidated Statements of Comprehensive Income/(Loss) – Years ended December 31, 2013, 2012 and 2011
Consolidated Statements of Changes in Stockholders’ Equity – Years ended December 31, 2013, 2012 and 2011
Consolidated Statements of Cash Flows – Years ended December 31, 2013, 2012 and 2011
Notes to Consolidated Financial Statements
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
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, 2013, 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
Not applicable.
49
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 2014 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 2014 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 2014 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, 2013.
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
486,459
$
16.79
158,172
(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 2014 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 2014 Annual Meeting of Shareholders, to be
filed with the SEC, is incorporated herein by reference.
50
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
1.
Financial statements:
(a) Ameris Bancorp and Subsidiaries:
PART IV
(i)
Consolidated Balance Sheets – December 31, 2013 and 2012;
(ii) Consolidated Statements of Income – Years ended December 31, 2013, 2012 and 2011;
(iii) Consolidated Statements of Comprehensive Income/(Loss) – Years ended December 31, 2013, 2012 and 2011;
(iv) Consolidated Statements of Changes in Stockholders’ Equity – Years ended December 31, 2013, 2012 and 2011;
(v) Consolidated Statements of Cash Flows – Years ended December 31, 2013, 2012 and 2011; and
(vi) Notes to Consolidated Financial Statements.
(b) Ameris Bancorp (parent company only):
Parent company only financial information has been included in Note 23 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.
51
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 14, 2014
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 14, 2014
/s/ Edwin W. Hortman, Jr.
Edwin W. Hortman, Jr., President, Chief Executive Officer and Director
(principal executive officer)
Date: March 14, 2014
/s/ Dennis J. Zember Jr.
Dennis J. Zember Jr., Executive Vice President and Chief Financial Officer
(principal accounting and financial officer)
Date: March 14, 2014
/s/ R. Dale Ezzell
R. Dale Ezzell, Director
Date: March 14, 2014
/s/ J. Raymond Fulp
J. Raymond Fulp, Director
Date: March 14, 2014
/s/ Leo J. Hill
Leo J. Hill, Director
Date: March 14, 2014
/s/ Daniel B. Jeter
Daniel B. Jeter, Director and Chairman of the Board
Date: March 14, 2014
/s/ Robert P. Lynch
Robert P. Lynch, Director
Date: March 14, 2014
/s/ Brooks Sheldon
Brooks Sheldon, Director
Date: March 14, 2014
/s/ William H. Stern
William H. Stern, Director
Date: March 14, 2014
/s/ Jimmy D. Veal
Jimmy D. Veal, Director
52
Exhibit No.
EXHIBIT INDEX
Description
3.1
3.2
3.3
3.4
3.5
3.6
3.7
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
4.9
4.10
4.11
4.12
4.13
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).
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).
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 November 21, 2008).
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 June 1, 2011).
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).
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).
Floating Rate Junior Subordinated Deferrable Interest Debenture dated September 20, 2006 (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).
Indenture between Ameris Bancorp (as successor to The Prosperity Banking Company) and U.S. Bank National
Association dated as of March 26, 2003.
First Supplemental Indenture dated as of December 23, 2013 by and among Ameris Bancorp, The Prosperity Banking
Company and U.S. Bank National Association.
Form of Floating Rate Junior Subordinated Deferrable Interest Debenture Due 2033 (included as Exhibit A to the
Indenture filed herewith as Exhibit 4.3).
Indenture between Ameris Bancorp (as successor to The Prosperity Banking Company) and Deutsche Bank Trust
Company Americas dated as of June 24, 2004.
First Supplemental Indenture dated as of December 23, 2013 by and among Ameris Bancorp, The Prosperity Banking
Company and Deutsche Bank Trust Company Americas.
Form of Floating Rate Junior Subordinated Deferrable Interest Note Due 2034.
Indenture between Ameris Bancorp (as successor to The Prosperity Banking Company) and Wilmington Trust
Company dated as of January 31, 2006.
First Supplemental Indenture dated as of December 23, 2013 by and among Ameris Bancorp, The Prosperity Banking
Company and Wilmington Trust Company (pertaining to Indenture dated as of January 31, 2006.
Form of Floating Rate Junior Subordinated Deferrable Interest Debenture Due 2036 (included as Exhibit A to the
Indenture filed herewith as Exhibit 4.9).
Indenture between Ameris Bank (as successor to Prosperity Bank) and Wilmington Trust Company dated as of May
11, 2006.
First Supplemental Indenture dated as of December 23, 2013 by and among Ameris Bank, Prosperity Bank and
Wilmington Trust Company (pertaining to Indenture dated as of May 11, 2006).
53
4.14
4.15
4.16
4.17
4.18
4.19
4.20
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
Form of Floating Rate Junior Subordinated Debenture Due 2016 (included as Exhibit A to the Indenture filed
herewith as Exhibit 4.12).
Indenture between Ameris Bancorp (as successor to The Prosperity Banking Company) and Wilmington Trust
Company dated as of June 30, 2006.
First Supplemental Indenture dated as of December 23, 2013 by and among Ameris Bancorp, The Prosperity Banking
Company and Wilmington Trust Company (pertaining to Indenture dated as of June 30, 2006).
Form of Floating Rate Junior Subordinated Debenture Due 2016 (included as Exhibit A to the Indenture filed
herewith as Exhibit 4.15).
Indenture between Ameris Bancorp (as successor to The Prosperity Banking Company) and Wilmington Trust
Company dated as of September 20, 2007.
First Supplemental Indenture dated as of December 23, 2013 by and among Ameris Bancorp, The Prosperity Banking
Company and Wilmington Trust Company (pertaining to Indenture dated as of September 20, 2007).
Form of Fixed/Floating Rate Junior Subordinated Deferrable Interest Debenture Due 2037 (included as Exhibit A
to the Indenture filed herewith as Exhibit 4.18).
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).
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).
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).
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 H. 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).
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).
54
10.15
10.16
10.17
10.18
10.19
10.20
10.21
10.22
10.23
10.24
10.25
21.1
23.1
24.1
31.1
31.2
32.1
32.2
101
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 Current Report on Form 8-K filed with the SEC on February 23, 2009).
Executive Employment Agreement with Thomas S. Limerick, dated as of June 26, 2012 (incorporated by reference to
Exhibit 10.1 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on June 28, 2012).
Supplemental Executive Retirement Agreement with Edwin W. Hortman, Jr., dated as of November 7, 2012
(incorporated by reference to Exhibit 10.1 to Ameris Bancorp’s Form 10-Q filed with the SEC on November 9, 2012).
Supplemental Executive Retirement Agreement with Dennis J. Zember Jr., dated as of November 7, 2012 (incorporated
by reference to Exhibit 10.2 to Ameris Bancorp’s Form 10-Q filed with the SEC on November 9, 2012).
Supplemental Executive Retirement Agreement with Jon S. Edwards, dated as of November 7, 2012 (incorporated by
reference to Exhibit 10.3 to Ameris Bancorp’s Form 10-Q filed with the SEC on November 9, 2012).
Supplemental Executive Retirement Agreement with Cindi H. Lewis, dated as of November 7, 2012 (incorporated by
reference to Exhibit 10.4 to Ameris Bancorp’s Form 10-Q filed with the SEC on November 9, 2012).
Loan Agreement dated as of August 28, 2013 by and between Ameris Bancorp and NexBank SSB (incorporated by
reference to Exhibit 10.1 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on August 29, 2013).
Revolving Promissory Note dated as of August 28, 2013 issued by Ameris Bancorp to NexBank SSB (incorporated by
reference to Exhibit 10.2 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on August 29, 2013).
Pledge and Security Agreement dated as of August 28, 2013 by and between Ameris Bancorp and NexBank SSB
(incorporated by reference to Exhibit 10.3 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on
August 29, 2013).
Schedule of Subsidiaries of Ameris Bancorp.
Consent of Porter Keadle Moore, LLC.
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.
Section 1350 Certification by Chief Financial Officer.
The following financial statements from Ameris Bancorp’s Form 10-K for the year ended December 31, 2013,
formatted as interactive data files in XBRL (eXtensible Business Reporting Language):
(i)
(ii)
(iii)
(iv)
(v)
(vi)
Consolidated Balance Sheets;
Consolidated Statements of Income;
Consolidated Statements of Comprehensive Income/(Loss);
Consolidated Statements of Changes in Stockholders’ Equity;
Consolidated Statements of Cash Flows; and
Notes to Consolidated Financial Statements.
55
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, 2013 and 2012
Consolidated Statements of Income – Years ended December 31, 2013, 2012 and 2011
Consolidated Statements of Comprehensive Income/(Loss) – Years ended December 31, 2013, 2012 and 2011
Consolidated Statements of Changes in Stockholders’ Equity – Years ended December 31, 2013, 2012 and 2011
Consolidated Statements of Cash Flows – Years ended December 31, 2013, 2012 and 2011
Notes to Consolidated Financial Statements
Page
F-2
F-3
F-4
F-5
F-6
F-7
F-8
F-10
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders
Ameris Bancorp
We have audited the accompanying consolidated balance sheets of Ameris Bancorp and subsidiaries, (the “Company”) as of
December 31, 2013 and 2012, and the related consolidated statements of income, comprehensive income, changes in stockholders'
equity, and cash flows for each of the three years in the period ended December 31, 2013. We also have audited the Company’s
internal control over financial reporting as of December 31, 2013, based on criteria established in Internal Control — Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 1992. 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 generally accepted accounting
principles. 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 generally accepted accounting principles, and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company; and (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, 2013 and 2012, and the results of their operations and their cash flows for each
of the years in the three-year period ended December 31, 2013, 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, 2013, based on criteria established in Internal Control — Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Atlanta, Georgia
March 14, 2014
235 Peachtree Street NE | Suite 1800 | Atlanta, Georgia 30303 | Phone 404.588.4200 | Fax 404.588.4222
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, 2013. 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, 2013.
Porter Keadle Moore, LLC, the Company’s independent auditors, has issued an attestation report on the effectiveness of 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
AMERIS BANCORP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2013 AND 2012
(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
Mortgage loans held for sale
Loans, net of unearned income
Purchased loans not covered by FDIC loss share agreements (“purchased non-covered loans”)
Purchased loans covered by FDIC loss share agreements (“covered loans”)
Less allowance for loan losses
Loans, net
Other real estate owned
Purchased, non-covered other real estate owned
Covered other real estate owned
Total other real estate owned
FDIC loss-share receivable
Premises and equipment, net
Intangible assets, net
Goodwill
Cash value of bank owned life insurance
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; 28,000 shares issued and
outstanding
Common stock, par value $1; 100,000,000 shares authorized; 26,461,769 and
25,154,818 shares issued
Capital surplus
Retained earnings
Accumulated other comprehensive income (loss), net of tax
Less cost of 1,363,342 and 1,355,050 treasury shares acquired
Total stockholders’ equity
See Notes to Consolidated Financial Statements.
F-4
$
2013
62,955
190,064
14,920
486,235
16,828
67,278
1,618,454
448,753
390,237
22,377
2,435,067
33,351
4,276
45,893
83,520
$
2012
80,256
193,677
-
346,909
6,832
48,786
1,450,635
-
507,712
23,593
1,934,754
39,850
-
88,273
128,123
65,441
103,188
6,009
35,049
49,432
51,663
$ 3,667,649
159,724
75,983
3,040
956
15,603
24,409
$ 3,019,052
$
668,531
2,330,700
2,999,231
83,516
194,572
55,466
18,165
3,350,950
$
510,751
2,113,912
2,624,663
50,120
-
42,269
22,983
2,740,035
28,000
27,662
26,462
189,722
83,991
(294)
327,881
(11,182)
316,699
$ 3,667,649
25,155
164,949
65,710
6,607
290,083
(11,066)
279,017
$ 3,019,052
AMERIS BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011
(Dollars in Thousands)
Interest income
Interest and fees on loans
Interest on taxable securities
Interest on nontaxable securities
Interest on deposits in other banks
Interest on federal funds sold
Interest expense
Interest on deposits
Interest on other borrowings
Net interest income
Provision for loan losses
Net interest income after provision for loan losses
Other income
Service charges on deposit accounts
Mortgage banking activity
Other service charges, commissions and fees
Gain on sales of securities
Gain on acquisitions
Other
Other expenses
Salaries and employee benefits
Occupancy and equipment
Advertising and marketing
Amortization of intangible assets
Data processing and communications
Other
Income before income taxes
Applicable income tax expense
Net income
Preferred stock dividends
2013
2012
2011
$ 117,497
7,134
1,413
276
2
126,322
$ 119,310
8,250
1,475
434
10
129,479
$ 128,841
10,254
1,321
617
38
141,071
8,400
1,737
10,137
116,185
11,486
104,699
19,545
19,128
2,151
171
-
5,554
46,549
56,670
12,286
1,620
1,414
11,539
38,416
121,945
29,303
(9,285)
20,018
1,738
13,327
1,747
15,074
114,405
31,089
83,316
19,576
12,989
1,431
322
20,037
3,519
57,874
53,122
13,208
1,622
1,359
10,683
39,476
119,470
21,720
(7,285)
14,435
3,577
25,506
2,041
27,547
113,524
32,729
80,795
18,081
2,971
1,247
238
26,867
3,403
52,807
40,210
11,390
722
1,011
10,315
38,305
101,953
31,649
(10,556)
21,093
3,241
Net income available to common stockholders
$ 18,280
$ 10,858
$ 17,852
Basic income per share
Diluted income per share
See Notes to Consolidated Financial Statements.
$
$
0.76
0.75
$
$
0.46
0.46
$
$
0.76
0.76
F-5
AMERIS BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011
(Dollars in Thousands)
Net income
Other comprehensive income/(loss):
2013
2012
2011
$20,018
$ 14,435
$ 21,093
Net unrealized holding gains/(losses) arising during period on investment securities
available for sale, net of tax (benefit) of ($4,421), $215 and $2,574
(8,210)
399
4,781
Reclassification adjustment for gains on investment securities included in operations, net
of tax of $60, $113 and $84
Net unrealized losses on cash flow hedge (interest rate floor) during the period, net of tax
of $0, $0 and $301
Net unrealized gains (losses) on cash flow hedge (interest rate swap) during the period,
net of tax (benefit) of $765, ($474) and ($1,602)
Total other comprehensive income (loss)
Comprehensive income
(111)
(209)
-
1,420
(6,901)
-
(879)
(689)
(154)
(559)
(2,976)
1,092
$13,117
$ 13,746
$ 22,185
See Notes to Consolidated Financial Statements.
F-6
AMERIS BANCORP
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(Dollars in Thousands, except share data)
PREFERRED STOCK
Balance at beginning of period
Repurchase of preferred stock
Accretion of fair value of warrant
Balance at end of period
COMMON STOCK
Balance at beginning of period
Issuance of common stock
Issuance of restricted shares
Cancellation of restricted shares
Proceeds from exercise of stock options
Balance at end of period
CAPITAL SURPLUS
Balance at beginning of period
Issuance of common stock
Repurchase of warrant
Stock-based compensation
Proceeds from exercise of stock options
Issuance of restricted shares
Cancellation of restricted shares
Balance at end of period
RETAINED EARNINGS
Balance at beginning of period
Net income
Dividends on preferred shares
Accretion of fair value warrant
Balance at end of period
ACCUMULATED OTHER COMPREHENSIVE INCOME
(LOSS), 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
2013
2012
Year Ended December 31,
Shares
Amount
Shares
Amount
Shares
2011
Amount
28,000
-
-
28,000
25,154,818
1,168,918
108,400
(4,000)
33,633
$
$
$
27,662
-
338
52,000
(24,000)
-
28,000
28,000
25,155
1,169
108
(4)
34
25,087,468
-
67,450
(500)
400
$
$
$
50,727
(24,000)
935
27,662
25,087
-
67
-
1
52,000
-
-
52,000
24,982,911
-
135,075
(34,150)
3,632
$
$
$
50,121
-
606
50,727
24,983
-
135
(34)
3
26,461,769
$
26,462
25,154,818
$
25,155
25,087,468
$
25,087
$ 164,949
23,460
-
1,041
376
(108)
4
$ 189,722
$
65,710
20,018
(1,399)
(338)
$
83,991
$
$
$
$
$
$
$
6,630
(8,321)
(1,691)
-
-
-
(23)
1,420
1,397
(294)
$ 166,639
-
(2,670)
1,044
2
(67)
1
$ 164,949
$
54,852
14,435
(2,642)
(935)
$
65,710
$
$
$
$
$
$
$
6,440
190
6,630
-
-
-
856
(879)
(23)
6,607
$ 165,930
-
-
785
25
(135)
34
$ 166,639
$
37,000
21,093
(2,635)
(606)
$
54,852
$
$
$
$
$
$
$
1,813
4,627
6,440
559
(559)
-
3,832
(2,976)
856
7,296
Balance at beginning of period
Purchase of treasury shares
1,355,050
8,292
$ (11,066)
(116)
1,336,174
18,876
$ (10,831)
(235)
1,336,174
-
$ (10,831)
-
Balance at end of period
TOTAL STOCKHOLDERS’ EQUITY
1,363,342
$ (11,182)
1,355,050
$ (11,066)
1,336,174
$ (10,831)
$ 316,699
$ 279,017
$ 293,770
See Notes to Consolidated Financial Statements.
F-7
AMERIS BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011
(Dollars in Thousands)
OPERATING ACTIVITIES
Net income
Adjustments to reconcile net income (loss) to net cash provided by operating
activities:
Depreciation and amortization
Amortization of intangible assets
Net gain on securities available for sale
Stock-based compensation expense
Net (gain) loss on sale or disposal of premises and equipment
Net 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
Increase/(decrease) in taxes payable
Net increase in mortgage loans held for sale
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
Decrease in interest-bearing deposits in banks
Purchases of securities available for sale
Proceeds from maturities of securities available for sale
Proceeds from sale of securities available for sale
(Increase)/decrease in restricted equity securities, net
Decrease in federal funds sold
(Increase)/decrease in loans, net
Purchase of premises and equipment
Proceeds from sale of premises and equipment
Purchase of bank owned life insurance
Proceeds from sale of other real estate owned
Decrease in FDIC indemnification asset
Net cash proceeds received from acquisitions
Net cash provided by investing activities
FINANCING ACTIVITIES, net of effects of business combinations
Decrease in deposits
Increase/(decrease) in federal funds purchased and securities sold under
agreements to repurchase
Repayment of other borrowings and debentures
Proceeds from other borrowings
Repurchase of warrant
Cash dividends on preferred stock
Repurchase of preferred stock
Proceeds from exercise of stock options
Purchase of treasury shares
Net cash used in financing activities
F-8
2013
2012
2011
$ 20,018
$ 14,435
$ 21,093
4,938
1,414
(171)
1,041
(55)
9,162
-
11,486
3,543
(1,395)
199
(1,420)
(18,492)
2,843
526
13,619
33,637
10,380
(90,033)
53,681
36,669
(1,269)
-
(103,073)
(5,634)
2,114
(30,000)
68,917
94,283
4,123
40,158
5,032
1,359
(322)
1,044
581
8,951
(20,037)
31,089
2,525
1,102
(1,708)
(5,941)
(37,223)
1,314
30,038
17,804
32,239
35,365
(146,847)
151,199
29,240
4,135
-
(47,367)
(9,065)
593
(15,506)
56,962
135,324
220,516
414,549
4,379
1,011
(238)
785
(167)
14,598
(26,867)
32,729
8,050
457
(1,608)
11,077
(11,563)
4,289
(11,859)
25,073
46,166
37,290
(143,654)
87,938
89,345
2,562
30
88,084
(12,023)
1,169
-
52,359
37,388
38,017
278,505
(99,115)
(384,638)
(255,848)
11,866
(177,741)
175,000
-
(1,400)
-
410
(116)
(91,096)
12,456
(30,334)
-
(2,670)
(2,642)
(24,000)
3
(235)
(432,060)
(30,519)
(44,495)
-
-
(2,635)
-
28
-
(333,469)
AMERIS BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011
(Dollars in Thousands)
Net change 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
2013
2012
2011
(17,301)
80,256
14,728
65,528
(8,798)
74,326
$ 62,955
$ 80,256
$ 65,528
$
9,938
$ 16,782
$ 29,155
$ 16,925
$
2,563
$ (1,109)
Loans transferred to other real estate owned
$ 40,970
$ 62,563
$ 65,515
Assets acquired in business combinations
$744,865
$450,056
$363,515
Liabilities assumed in business combinations
$720,236
$430,019
$336,648
Change in unrealized gain (loss) on securities available for sale
$ (8,321)
Change in unrealized loss on cash flow hedge (interest rate floor)
Change in unrealized gain on cash flow hedge (interest rate swap)
$
$
-
1,420
$
$
$
190
-
$
$
4,627
(559)
(879)
$ (2,976)
See Notes to Consolidated Financial Statements.
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, fair values of assets and liabilities acquired in business combinations 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, the fair value of assets and liabilities acquired in business combinations 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 expected 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.
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 FDIC-assisted transactions between 2009 and 2012 (American United Bank, United Security
Bank, Satilla Community Bank, First Bank of Jacksonville, Tifton Banking Company, Darby Bank & Trust Co., High Trust Bank,
One Georgia Bank and Central Bank of Georgia) are covered by loss-sharing agreements with the FDIC. The loans purchased in the
FDIC-assisted transaction pertaining to Montgomery Bank & Trust in 2012 are not covered by loss-sharing agreements with the
FDIC.
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 $11.6 million and $14.0 million for the years ended 2013 and 2012,
respectively.
Securities
The Company classifies its securities in one of three categories: (i) held to maturity, (ii) available for sale or (iii) 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, 2013 and 2012, 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. Trading securities
are bought and held principally for the purpose of selling them in the near term. 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 (i) the length of time and the extent to
which the fair value has been less than cost, (ii) the financial condition and near-term prospects of the issuer and (iii) the Company’s
intent to sell the security and whether it is more likely than not that the Company would be required to sell the security prior to its
anticipated recovery or maturity.
Mortgage Loans Held-for-Sale
Mortgage loans held-for-sale are carried at the estimated fair value, as determined by outstanding commitments from third party
investors in the secondary market. Adjustments to reflect unrealized gains and losses resulting from changes in fair value of mortgage
loans held-for-sale and realized gains and losses upon ultimate sale of the loans are classified as noninterest income in the
Consolidated Statements of Operation.
F-11
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.
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
is
life of
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.
improvements are amortized over
the related assets, whichever
the related
lease, or
the
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.
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
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.
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, 2013 and 2012 was $10.3 million and $3.6 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. The
Company recorded approximately $1.0 million, $1.0 million and $785,000 of stock-based compensation cost in 2013, 2012 and 2011,
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, restricted shares and warrants for the years ended December 31, 2013,
2012 and 2011, and are determined using the treasury stock method.
F-13
Presented below is a summary of the components used to calculate basic and diluted earnings per share:
Years Ended December 31,
2013
2012
2011
(Dollars in Thousands)
Net income available to common shareholders
$18,280
$10,858
$ 17,852
Weighted average number of common shares outstanding
Effect of dilutive restricted grants
Effect of dilutive options
Weighted average number of common shares outstanding used to
calculate diluted earnings per share
23,918
378
169
23,816
-
41
23,446
63
29
24,465
23,857
23,538
For the years ended December 31, 2013, 2012 and 2011, the Company has excluded 324,000, 418,000 and 414,000, respectively,
potential common shares with strike prices that would cause them to be anti-dilutive.
Derivative Instruments and Hedging Activities
The goal of the Company’s interest rate risk management process is to minimize the volatility in the net interest margin caused by
changes in interest rates. Derivative instruments are used to hedge certain assets or liabilities as a part of this process. The Company is
required to recognize certain contracts and commitments as derivatives when the characteristics of those contracts and commitments
meet the definition of a derivative. All derivative instruments are required to be carried at fair value on the balance sheet.
The Company’s current hedging strategies involve utilizing interest rate swaps 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 a cash flow hedge with notional amount of $37.1 million at December 31, 2013, 2012 and 2011 for the purpose of
converting the variable rate on the junior subordinated debentures to a fixed rate. The fair value of these instruments amounted to
approximately ($370,000) and ($3.0 million) as of December 31, 2013 and 2012, respectively, and was recorded as a liability. No
hedge ineffectiveness from cash flow hedges was recognized in the statement of income. All components of each derivative’s gain or
loss are included in the assessment of hedge effectiveness.
During 2012, the Company began maintaining a risk management program to manage interest rate risk and pricing risk associated
with its mortgage lending activities. This program includes the use of forward contracts and other derivatives that are used to offset
changes in value of the mortgage inventory due to changes in market interest rates. As a normal part of its operations, the Company
enters into derivative contracts such as forward sale commitments and interest rate lock commitments (“IRLCs”) to economically
hedge risks associated with overall price risk related to IRLCs and mortgage loans held for sale carried at fair value. The fair value of
these instruments amounted to an asset of approximately $1,180,000 and $1,169,000 at December 31, 2013 and 2012, respectively.
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.
F-14
New Accounting Standards
ASU 2014-04 – Receivables – Troubled Debt Restructurings by Creditors (“ASU 2014-04”). ASU 2014-04 clarifies when a creditor
should reclassify mortgage loans collateralized by residential real estate from loans to other real estate owned. It defines when an in-
substance repossession or foreclosure has occurred and when a creditor is considered to have received physical possession of
residential real estate collateralizing a mortgage loan. ASU 2014-04 is effective for fiscal years beginning after December 31, 2014,
and early adoption is permitted. It can be applied either prospectively or using a modified retrospective transition method. The
Company is evaluating the impact this standard may have on the Company’s results of operations, financial position or disclosures.
ASU 2013-11 - Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax
Credit Carryforward Exists (“ASU 2013-11”). ASU 2013-11 requires that an unrecognized tax benefit, or a portion of an
unrecognized tax benefit, be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss
carryforward, a similar tax loss or a tax credit carryforward. However, if a net operating loss carryforward, a similar tax loss or a tax
credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income
taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity
to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented
in the financial statements as a liability and should not be combined with deferred tax assets. The amendments are effective for fiscal
years, and interim periods within those years, beginning after December 15, 2013. The amendments are not expected to have a
material impact on the Company’s results of operations, financial position or disclosures.
ASU 2013-02 - Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (“ASU 2013-02”). ASU 2013-
02 requires an entity to provide information about the amounts reclassified from accumulated other comprehensive income by
component. In addition, an entity is required to present, either on the face of the statement where net income is presented or in the
notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but
only if the amount reclassified is required under United States generally accepted accounting principles to be reclassified to net
income in its entirety in the same reporting period. For all other amounts, an entity is required to cross-reference to other disclosures
that provide additional details about these amounts. The amendments are effective prospectively for reporting periods beginning after
December 15, 2012. It did not have a material effect on the Company’s results of operations, financial position or disclosures.
ASU 2012-06 - Subsequent Accounting for an Indemnification Asset Recognized at the Acquisition Date as a Result of a Government-
Assisted Acquisition of a Financial Institution (“ASU 2012-06”). When an entity recognizes an indemnification asset and
subsequently a change in the cash flows expected to be collected on the indemnification asset occurs as a result of a change in the cash
flows expected to be collected on the indemnified asset, ASU 2012-06 requires the entity to recognize the change in the measurement
of the indemnification asset on the same basis as the indemnified assets. Any amortization of changes in value of the indemnification
asset should be limited to the lesser of the term of the indemnification agreement and the remaining life of the indemnified assets.
ASU 2012-06 is effective for fiscal years beginning on or after December 15, 2012, and early adoption is permitted. It is to be applied
prospectively to any new indemnification assets acquired after the date of adoption and to indemnification assets existing as of the
date of adoption arising from a government-assisted acquisition of a financial institution. ASU 2012-06 did not have a material effect
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
On December 23, 2013, the Company completed its acquisition of The Prosperity Banking Company (“Prosperity”), a bank holding
company headquartered in Saint Augustine, Florida. At that time, Prosperity’s wholly-owned banking subsidiary, Prosperity Bank
(“Prosperity Bank”), was merged with and into the Bank. Prosperity Bank had a total of 12 banking locations, with the majority of the
franchise concentrated in northeast Florida. Upon consummation of the acquisition, Prosperity was merged with and into the
Company, with Ameris as the surviving entity in the merger. Prosperity’s common shareholders were entitled to elect to receive either
3.125 shares of the Company's common stock or $41.50 in cash in exchange for each share of Prosperity’s voting common stock. As
a result, the Company issued 1,168,918 common shares at a fair value of $24.6 million.
The acquisition of Prosperity was accounted for using the purchase method of accounting in accordance with FASB ASC 805,
Business Combinations. Assets acquired, liabilities assumed and consideration exchanged were recorded at their respective
acquisition date fair values. Determining the fair value of assets and liabilities is a complicated process involving significant judgment
regarding methods and assumptions used to calculate estimated fair values. Fair values are preliminary and subject to refinement for
up to one year after the closing date of the acquisition as additional information regarding the closing date fair values becomes
available.
F-15
The following table presents the assets acquired and liabilities of Prosperity assumed as of December 23, 2013 at their initial fair value
estimates:
(Dollars in Thousands)
Assets
Cash and cash equivalents
Federal funds sold and interest-bearing balances
Investment securities
Other investments
Loans
Less allowance for loan losses
Loans, net
Other real estate owned and repossessed assets
Premises and equipment
Intangible assets
Other assets
Total assets
Liabilities
Deposits:
Noninterest-bearing
Interest-bearing
Total deposits
Federal funds purchased and securities sold under agreements to repurchase
Other borrowings
Other liabilities
Subordinated deferrable interest debentures
Total liabilities
Net identifiable assets acquired over (under) liabilities assumed
Goodwill
Net assets acquired over (under) liabilities assumed
Consideration:
Ameris Bancorp common shares issued
Purchase price per share of the Company's common stock
Company common stock issued
Cash exchanged for shares
Fair value of total consideration transferred
Explanation of fair value adjustments
As Recorded by
Prosperity
Fair Value
Adjustments
As Recorded
by Ameris
$
-
-
411 (a)
-
(37,662)(b)
6,811 (c)
(30,851)
(1,260)(d)
-
4,383 (e)
1,192 (f)
(26,125)
-
-
-
-
12,313 (g)
455 (h)
(16,303)(i)
(3,535)
(22,590)
34,093
11,503
$
$
$
4,285
21,687
152,274
8,727
449,696
-
449,696
5,623
36,293
4,557
27,792
710,934
149,242
324,441
473,683
21,530
197,313
14,513
13,197
720,236
(9,302)
34,093
24,791
$
$
$
$
$
$
4,285
21,687
151,863
8,727
487,358
(6,811)
480,547
6,883
36,293
174
26,600
737,059
149,242
324,441
473,683
21,530
185,000
14,058
29,500
723,771
13,288
-
13,288
$
$
$
$
1,168,918
21.07
24,629
162
24,791
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
Adjustment reflects the fair value adjustments of the available for sale portfolio as of the acquisition date.
Adjustment reflects the fair value adjustments based on the Company’s evaluation of the acquired loan portfolio.
Adjustment reflects the elimination of Prosperity’s allowance for loan losses.
Adjustment reflects the fair value adjustment based on the Company’s evaluation of the acquired OREO portfolio.
Adjustment reflects the recording of core deposit intangible on the acquired core deposit accounts.
Adjustment reflects the adjustment to write-off the non-realizable portion of Prosperity’s deferred tax asset of ($6.644
million), to record the deferred tax asset generated by purchase accounting adjustments of $8.435 million and to record
the fair value adjustment of other assets of ($0.599 million) at the acquisition date.
Adjustment reflects the fair value adjustment (premium) to the FHLB borrowings of $12.741 million and the fair value
adjustment to the subordinated debt of $0.428 million.
Adjustment reflects the fair value adjustment of other liabilities at the acquisition date.
Adjustment reflects the fair value adjustment to the subordinated deferrable interest debentures s at the acquisition date.
F-16
The results of operations of Prosperity subsequent to the acquisition date are included in the Company’s consolidated statements
of income. The following unaudited pro forma information reflects the Company’s estimated consolidated results of income as if
the acquisition had occurred on January 1, 2013 and 2012, unadjusted for potential cost savings (in thousands).
Net interest income and noninterest income
Net income
Net income available to common shareholders
Net income common share available to common shareholders – basic
Net income per common share available to common shareholders –
diluted
Average number shares outstanding, basic
Average number shares outstanding, diluted
Year Ended December 31,
Unaudited
2013
2012
$ 187,927
$ 19,927
$ 18,189
.73
$
$ 199,089
$ 15,604
$ 12,027
.48
$
$
.71
$
.48
25,087
25,634
24,985
25,026
NOTE 3. ASSETS ACQUIRED IN FDIC-ASSISTED ACQUISITIONS
From October 2009 through July 2012, the Company has participated in ten 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”)
High Trust Bank (“HTB”)
One Georgia Bank (“OGB”)
Central Bank of Georgia (“CBG”)
Montgomery Bank & Trust (“MBT”)
Lawrenceville, Ga.
Sparta, Ga.
St. Marys, Ga.
Jacksonville, Fl.
Tifton, Ga.
Vidalia, Ga.
Stockbridge, Ga.
Atlanta, Ga.
Ellaville, Ga.
Ailey, Ga.
1
2
1
2
1
7
2
1
5
2
October 23, 2009
November 6, 2009
May 14, 2010
October 22, 2010
November 12, 2010
November 12, 2010
July 15, 2011
July 15, 2011
February 24, 2012
July 6, 2012
F-17
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):
FBJ
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):
AUB
OGB
CBG
DBT
HTB
USB
TBC
SCB
MBT
Acquisition date...........................
10/23/09
11/06/09
05/14/10
10/22/10
11/12/10
11/12/10
07/15/11
07/15/11
02/24/12
07/06/12
Assets, fair value..........................$ 120,994
Deposits, fair value ......................$ 100,470
7,802
Other borrowings .........................$
AUB
10/23/09
Acquisition date...........................
Discount bid..................................$
19,645
262
Deposit premium .........................$
Assets, fair value..........................$ 120,994
Cash received/(paid) ...................$
17,100
Deposits, fair value ......................$ 100,470
12,445
Gain/(Goodwill)...........................$
7,802
Other borrowings .........................$
$ 169,172
$ 141,094
USB
1,504
$
11/06/09
$
32,615
228
$
$ 169,172
$
24,200
$ 141,094
26,121
$
1,504
$
$ 84,342
$ 75,530
SCB
-
$
$ 77,709
$ 71,869
FBJ
2,613
$
$ 132,036
$ 132,939
TBC
-
$
$ 448,311
$ 386,958
DBT
$ 54,418
$ 197,463
$ 175,887
HTB
-
$
$ 166,052 $ 293,189
$ 136,101 $ 261,036
CBG
OGB
$ 21,107 $
10,334
10/22/10
05/14/10
4,810
$ 14,395
$
-
$
92
$
$ 77,709
$ 84,342
8,117
$ (35,657 ) $
$ 71,869
$ 75,530
2,385
$
8,208
$
2,613
$
-
$
11/12/10
$
3,973
-
$
$ 132,036
$ (10,251)
$ 132,939
(956)
$
-
$
07/15/11
11/12/10
33,500
$ 45,002
$
-
$
-
$
$ 197,463
$ 448,311
30,228
$(149,893) $
$ 175,887
$ 386,958
18,922
$
$
4,211
-
$
$ 54,418
02/24/12
07/15/11
33,900
$ 22,500 $
-
- $
$
$ 166,052 $ 293,189
$ (5,658) $
31,900
$ 136,101 $ 261,036
20,037
$
7,945 $
10,334
$ 21,107 $
19,645
38,000
262
80%
17,100
12,445
FDIC loss sharing – Tranche 1
Discount bid..................................$
Cumulative Loss threshold ..........$
Deposit premium .........................$
Percentage retained by FDIC ........
Cash received/(paid) ...................$
Gain/(Goodwill)...........................$
FDIC loss sharing – Tranche 2
Cumulative Loss threshold ..........$ >38,000
FDIC loss sharing – Tranche 1
95%
Percentage retained by FDIC .......
38,000
Cumulative Loss threshold ..........$
80%
Percentage retained by FDIC ........
FDIC loss sharing – Tranche 3
Cumulative Loss threshold ..........
n/a
FDIC loss sharing – Tranche 2
Percentage retained by FDIC .......
n/a
Cumulative Loss threshold ..........$ >38,000
95%
Percentage retained by FDIC .......
$
$
$
$
$
32,615
46,000
228
80%
24,200
26,121
$
3,973
$
$ 14,395
All losses All losses
All losses
$
-
$
$
92
80%
80%
$ (10,251)
$ (35,657 ) $
(956)
$
$
8,208
$
4,810
-
80%
8,117
2,385
33,900
$
$ 45,002
All losses All losses All losses
$ 131,772
-
$
-
$
80%
80%
31,900
$(149,893) $
20,037
$
4,211
$
$ 22,500 $
$
- $
$ (5,658) $
7,945 $
$
33,500
-
80%
30,228
18,922
80%
$ >46,000
95%
46,000
80%
$
n/a
n/a
$ >46,000
95%
n/a
n/a
All losses
80%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
All losses All losses
80%
80%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
$ 193,068
30%
$ 131,772
80%
$>193,068
80%
$ 193,068
30%
n/a
n/a
n/a
n/a
All losses All losses All losses
80%
n/a
n/a
80%
80%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
$ 156,867
$ 156,699
MBT
-
$
07/06/12
$
-
-
$
$ 156,867
$ 138,740
$ 156,699
-
$
-
$
$
-
n/a
$
-
n/a
$ 138,740
-
$
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of the acquisitions
FDIC loss sharing – Tranche 3
(in thousands):
Cumulative Loss threshold ..........
Percentage retained by FDIC .......
$>193,068
80%
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
n/a
n/a
n/a
n/a
AUB
USB
SCB
FBJ
TBC
DBT
HTB
OGB
CBG
MBT
$
$
$
$
26,452
10,242
-
AUB
56,482
2,165
24,200
26,452
187
10,242
1,266
-
56,482
120,994
2,165
24,200
187
100,470
1,266
7,802
277
120,994
108,549
$ (33,093) $ 10,669
7,343
5,690
FBJ
40,454
1,816
11,307
$ (33,093) $ 10,669
132
7,343
298
5,690
40,454
77,709
1,816
11,307
132
298
Assets acquired
The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of the acquisitions
Cash ..........................................$
(in thousands):
Investment securities ................
Federal funds sold.....................
Loans ........................................
Foreclosed property ..................
Assets acquired
FDIC loss share asset................
Cash ..........................................$
Core deposit intangible .............
Investment securities ................
Other assets...............................
Federal funds sold.....................
Loans ........................................
Total assets acquired ..............
Foreclosed property ..................
FDIC loss share asset................
Liabilities assumed
Core deposit intangible .............
Deposits ....................................
Other assets...............................
FHLB advances ........................
Other liabilities .........................
Total assets acquired ..............
Total liabilities assumed .........
Liabilities assumed
Net assets acquired .................$
Deposits ....................................
FHLB advances ........................
Other liabilities .........................
Total liabilities assumed .........
$ (58,158) $
105,562
-
DBT
261,340
22,026
112,404
$ (58,158) $
1,180
105,562
3,957
-
261,340
448,311
22,026
112,404
1,180
3,957
36,432
14,770
-
HTB
84,732
10,272
49,485
36,432
-
14,770
1,772
-
84,732
197,463
10,272
49,485
-
175,887
1,772
-
2,654
197,463
178,541
4,862
7,060
-
TBC
92,568
3,472
22,807
4,862
175
7,060
1,092
-
92,568
132,036
3,472
22,807
175
132,939
1,092
-
53
132,036
132,992
1,585 $
28,891
5,070
OGB
74,843
7,242
45,488
1,585 $
-
28,891
2,933
5,070
74,843
166,052
7,242
45,488
-
2,933
10,814
12,661
SCB
68,751
2,012
22,400
185
10,814
612
12,661
68,751
84,342
2,012
22,400
185
75,530
612
-
604
84,342
76,134
65,050
39,920
-
CBG
124,782
6,177
52,654
65,050
1,149
39,920
3,457
-
124,782
293,189
6,177
52,654
1,149
261,036
3,457
10,334
1,782
293,189
273,152
41,490
8,335
2,605
USB
83,646
8,069
21,640
41,490
386
8,335
3,001
2,605
83,646
169,172
8,069
21,640
386
141,094
3,001
1,504
453
169,172
143,051
$ 155,466
-
-
MBT
1,218
-
-
$ 155,466
-
-
183
-
1,218
156,867
-
-
-
156,699
183
-
168
156,867
156,867
26,121 $
141,094
1,504
453
143,051
386,958
2,724
54,418
448,311
444,100
136,101
21,107
899
166,052
158,107
71,869
2,613
842
77,709
75,324
(956)
132,939
-
53
132,992
7,945
136,101
21,107
899
158,107
12,445
100,470
7,802
277
108,549
20,037
261,036
10,334
1,782
273,152
-
156,699
-
168
156,867
4,211
386,958
2,724
54,418
444,100
18,922
175,887
-
2,654
178,541
8,208
75,530
-
604
76,134
2,385
71,869
2,613
842
75,324
$
$
$
$
$
$
$
$
$
$
Net assets acquired .................$
12,445
$
26,121 $
8,208
$
2,385
$
(956)
$
4,211
$
18,922
$
7,945
$
20,037
$
-
F-18
F-18
The results of operations of HTB, OGB, CBG and MBT subsequent to the acquisition date are included in the Company’s
consolidated statements of income. The following unaudited pro forma information reflects the Company’s estimated consolidated
results of operations as if the acquisitions had occurred on January 1, 2012 and 2011, unadjusted for potential cost savings (in
thousands).
Net interest income and noninterest income
Net loss
Net loss available to common shareholders
Loss per common share available to common shareholders – basic and
diluted
Average number shares outstanding, basic
Average number shares outstanding, diluted
Year Ended December 31,
Unaudited
2012
2011
$ 176,262
$ (10,233)
$ (13,810)
$ 187,826
$ (17,744)
$ (20,985)
$
(0.58)
$
(0.90)
23,816
23,857
23,446
23,538
The CBG acquisition resulted in a gain of $20.0 million, before tax, which is included in the Company’s December 31, 2012
consolidated statement of income. Due to the difference in tax bases of the assets acquired and liabilities assumed, the Bank recorded
a deferred tax liability of $7.0 million, resulting in an after-tax gain of $13.0 million during 2012. The MBT acquisition did not result
in a gain or loss during 2012. The HTB and OGB acquisitions resulted in a gain of $26.9 million, before tax, which is included in the
Company’s December 31, 2011 consolidated statement of income. Due to the difference in tax bases of the assets acquired and
liabilities assumed, the Bank recorded a deferred tax liability of $9.4 million, resulting in an after-tax gain of $17.5 million during
2011.
The determination of the initial fair values of loans at the acquisition date and the initial fair values of the related FDIC
indemnification assets involves a high degree of judgment and complexity. The carrying values of the acquired loans and the FDIC
indemnification assets 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 values reflected in the
financial statements included in this report, based upon the timing and amount of collections on the acquired loans in future
periods. Because of the loss-sharing agreements with the FDIC on these assets, the Company does not expect to incur any significant
losses. To the extent the actual values realized for the acquired loans are different from the estimates, the indemnification assets will
generally be affected in an offsetting manner due to the loss-sharing support from the FDIC.
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 provisions 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 increase, the Company adjusts the
amount of accretable yield recognized on a prospective basis over the loan’s remaining life. If the expected cash flows decrease, the
Company records a provision for loan loss in its consolidated statement of income.
F-19
Loans acquired for which it was probable at acquisition that all contractually required payments would not be collected are as follows.
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:
The covered loans with deterioration of credit quality on the respective acquisition dates are presented in the following table:
Construction and
development
Construction and
Real estate secured
development
Commercial, industrial,
Real estate secured
agricultural
Commercial, industrial,
Consumer
agricultural
Consumer
AUB
AUB
$ 16,513
8,460
$ 16,513
8,460
12,102
2
12,102
$ 37,077
2
USB
USB
$16,086
3,987
$16,086
3,987
769
633
769
$21,475
633
SCB
SCB
$8,976
16,422
$8,976
16,422
73
—
73
$25,471
—
FBJ
FBJ
$ 4,821
13,279
$ 4,821
13,279
886
252
886
$19,238
252
TBC
TBC
DBT
HTB
(Dollars in Thousands)
HTB
DBT
(Dollars in Thousands)
20,305
$ 2,435 $ 21,800
111,973
$ 2,435 $ 21,800
111,973
5,379
666
5,379
$29,973 $ 139,818
666
20,305
7,134
99
7,134
99
$ 6,508
67,497
$ 6,508
67,497
153
58
153
$74,216
58
OGB
OGB
$ 4,783
35,621
$ 4,783
35,621
9,263
253
9,263
$49,920
253
CBG
CBG
$15,038
56,847
$15,038
56,847
1,256
273
1,256
$73,414
273
$ 37,077
$21,475
$25,471
$19,238
$29,973 $ 139,818
$74,216
$49,920
$73,414
Total Loans
with
Total Loans
Deterioration
with
of Credit
Deterioration
Quality
of Credit
Quality
$
$
$
$
96,960
334,391
96,960
334,391
37,015
2,236
37,015
470,602
2,236
470,602
The covered loans without deterioration of credit quality on the respective acquisition dates are presented in the following table:
The covered loans without deterioration of credit quality on the respective acquisition dates are presented in the following table:
Total Loans
without
Total Loans
Deterioration
without
of Credit
Deterioration
Quality
of Credit
Quality
$
$
$
$
55,158
277,926
55,158
277,926
64,774
19,138
64,774
416,996
19,138
416,996
Total Covered
Loans
Total Covered
Loans
$ 152,118
612,317
$ 152,118
612,317
101,789
21,374
101,789
$ 887,598
21,374
$ 887,598
Construction and
development
Construction and
Real estate secured
development
Commercial, industrial,
Real estate secured
agricultural
Commercial, industrial,
Consumer
agricultural
Consumer
AUB
AUB
$
$
991
3,583
991
3,583
14,393
438
14,393
$ 19,405
438
USB
USB
$14,190
37,100
$14,190
37,100
6,135
4,746
6,135
$62,171
4,746
SCB
SCB
$ 7,824
33,160
$ 7,824
33,160
1,568
728
1,568
$43,280
728
FBJ
FBJ
$ 3,163
17,040
$ 3,163
17,040
526
487
526
$21,216
487
TBC
TBC
DBT
HTB
(Dollars in Thousands)
DBT
HTB
(Dollars in Thousands)
$ 4,513 $ 15,571
34,056
91,097
$ 4,513 $ 15,571
91,097
34,056
11,891
22,260
1,766
2,963
22,260
11,891
$62,595 $121,522
2,963
1,766
$
$
53
9,423
53
9,423
242
798
242
$10,516
798
OGB
OGB
CBG
CBG
19,716
$ 3,346 $ 5,507
32,751
$ 3,346 $ 5,507
32,751
6,288
6,822
6,288
$24,923 $51,368
6,822
19,716
1,471
390
1,471
390
$ 19,405
$62,171
$43,280
$21,216
$62,595 $121,522
$10,516
$24,923 $51,368
The total covered loans on the respective acquisition dates are presented in the following table:
The total covered loans on the respective acquisition dates are presented in the following table:
Construction and
development
Construction and
Real estate secured
development
Commercial, industrial,
Real estate secured
agricultural
Commercial, industrial,
Consumer
agricultural
Consumer
AUB
AUB
$ 17,504
12,043
$ 17,504
12,043
26,495
440
26,495
$ 56,482
440
$ 56,482
USB
USB
$30,276
41,087
$30,276
41,087
6,904
5,379
6,904
$83,646
5,379
SCB
SCB
$16,800
49,582
$16,800
49,582
1,641
728
1,641
$68,751
728
FBJ
FBJ
$ 7,984
30,319
$ 7,984
30,319
1,412
739
1,412
$40,454
739
TBC
TBC
DBT
HTB
(Dollars in Thousands)
DBT
HTB
(Dollars in Thousands)
$ 37,371
$ 6,948
203,070
54,361
$ 37,371
$ 6,948
203,070
54,361
17,270
29,394
3,629
1,865
29,394
17,270
$92,568 $261,340
3,629
1,865
$ 6,561
76,920
$ 6,561
76,920
395
856
395
$84,732
856
OGB
OGB
CBG
CBG
55,337
$ 8,129 $ 20,545
89,598
$ 8,129 $ 20,545
89,598
7,544
7,095
7,544
$74,843 $124,782
7,095
55,337
10,734
643
10,734
643
$83,646
$68,751
$40,454
$92,568 $261,340
$84,732
$74,843 $124,782
F-20
F-20
The following table presents the loans receivable (in thousands) at the acquisition date for loans with deterioration in credit quality.
2012 Acquisitions:
Contractually required principal payments receivable
Non-accretable difference
Present value of cash flows expected to be collected
Accretable difference
CBG
MBT
Total
(Dollars in Thousands)
$137,407
53,603
$ -
-
$ 137,407
53,603
83,804
10,390
-
-
-
83,804
10,390
$ 73,414
Fair value of loans acquired with deterioration of credit quality
$ 73,414
$
2011 Acquisitions:
Contractually required principal payments receivable
Non-accretable difference
Present value of cash flows expected to be collected
Accretable difference
HTB
OGB
Total
(Dollars in Thousands)
$136,928 $104,858 $ 241,786
95,076
45,629
49,447
87,481
13,265
59,229
9,309
146,710
22,574
Fair value of loans acquired with deterioration of credit quality
$ 74,216
$49,920 $ 124,136
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
$ 29,474
6,672
(Dollars in Thousands)
$ 51,908
20,569
$ 225,262 $ 356,508
106,763
56,637
26,979
1,508
22,802
3,564
31,339
1,366
168,625
28,807
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:
Contractually required principal payments receivable
Non-accretable difference
Present value of cash flows expected to be collected
Accretable difference
AUB
USB
Total
(Dollars in Thousands)
$ 65,438
26,416
$ 44,372 $ 109,810
47,708
21,292
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
F-21
The following table summarizes components of all covered assets at December 31, 2013 and 2012 and their origin:
Covered loans
Less Credit risk
adjustments
Less
Liquidity
and rate
adjustments
Total
covered
loans
Less Fair
value
adjustments
Total
covered
OREO
Total
covered
assets
FDIC
indemnification
asset
OREO
As of December 31, 2013:
(Dollars in thousands)
AUB.....................................$
15,787
$
231
$
USB .....................................
18,504
SCB .....................................
34,637
FBJ ......................................
25,891
1,427
1,483
3,730
DBT .....................................
105,157
17,819
TBC .....................................
32,590
HTB .....................................
67,126
OGB.....................................
58,512
2,340
7,321
4,969
CBG.....................................
85,118
13,535
-
-
-
-
-
14
38
98
80
$
15,556
$
4,264
$
-
$
4,264
$
19,820
$
1,452
17,077
33,154
22,161
2,865
3,461
1,880
141
303
242
2,724
3,158
1,638
19,801
36,312
23,799
889
3,175
3,689
87,338
17,023
1,282
15,741
103,079
18,724
30,236
59,767
53,445
71,503
4,844
6,374
7,506
7,610
745
2,304
2,984
1,933
4,099
34,335
4,070
63,837
4,522
5,677
57,967
77,180
3,721
9,325
9,645
14,821
Total..............................$
443,322
$
52,855
$
230
$
390,237
$
55,827
$
9,934
$
45,893
$
436,130
$
65,441
Covered loans
Les s : Credit ris k adjus tments
Les s : Liquidity and rate adjus tments
Total covered loans
OREO
Les s : Fair value adjus tments
Total covered OREO
Total covered as s ets
FDIC indemni fication as s et
As of December 31, 2012:
AUB.....................................$
27,169
$
2,481
$
USB .....................................
27,286
SCB .....................................
41,389
FBJ ......................................
32,574
4,320
3,285
6,204
DBT .....................................
169,527
41,631
TBC .....................................
46,796
HTB .....................................
90,602
OGB.....................................
81,908
CBG.....................................
124,200
4,979
16,072
17,127
36,884
-
-
-
27
207
173
52
136
161
$
24,688
$
10,636
$
102
$
10,534
$
35,222
$
2,905
22,966
7,087
38,104
10,686
26,343
3,260
127,689
30,395
41,644
11,089
74,478
13,980
64,645
87,155
9,168
9,046
99
654
526
2,160
1,381
4,954
4,078
3,120
6,988
29,954
10,032
48,136
2,734
29,077
6,619
6,133
6,589
28,235
155,924
47,012
9,708
51,352
8,073
9,026
83,504
20,020
5,090
5,926
69,735
93,081
16,871
45,502
Total..............................$
641,451
$
132,983
$
756
$
507,712
$ 105,347
$
17,074
$
88,273
$
595,985
$
159,724
F-22
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. The adjustments to estimated cash flows are performed on a loan-by-loan basis and have
resulted in the following:
Total Amounts
December 31,
2013
December 31,
2012
(Dollars in Thousands)
Adjustments needed where the Company’s initial estimate of
cash flows were underestimated (recorded with a
reclassification from non-accretable difference to
accretable discount) ............................................................ $
Adjustments needed where the Company’s initial estimate of
cash flows were overstated (recorded through a provision
for loan losses).................................................................... $
51,003
7,695
$
$
23,050
13,190
Amounts reflected in the Company’s Statement of Income
Adjustments needed where the Company’s initial estimate of
cash flows were underestimated (recorded with a
reclassification from non-accretable difference to
accretable discount) ............................................................ $
Adjustments needed where the Company’s initial estimate of
cash flows were overstated (recorded through a provision
for loan losses).................................................................... $
December 31,
2013
December 31,
2012
(Dollars in Thousands)
10,201
1,539
$
$
4,610
2,638
A rollforward of acquired covered loans with deterioration of credit quality for the years ended December 31, 2013 and 2012 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
2013
2012
(Dollars in Thousands)
$ 282,737
35,306
-
(100,996)
$ 307,790
(17,712)
73,414
(80,755)
$ 217,047
$ 282,737
A rollforward of acquired covered loans without deterioration of credit quality for the years ended December 31, 2013 and 2012 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
2013
2012
(Dollars in Thousands)
$ 228,602
13,471
-
(68,883)
$ 266,966
1,376
51,368
(91,108)
$ 173,190
$ 228,602
F-23
The following is a summary of changes in the accretable discounts of acquired covered loans during the years ended December 31,
2013 and 2012:
Balance, beginning of year
Additions due to acquisitions
Accretion
Other activity, net
Balance, end of year
2013
2012
(Dollars in Thousands)
$ 16,698
-
(42,208)
51,003
$ 29,537
9,863
(45,752)
23,050
$ 25,493
$ 16,698
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 values of $52.7
million on the 2012 acquisition dates. 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
December 31,
2013
2012
(Dollars in Thousands)
$ 159,724
$ 242,394
-
(68,822)
(25,461)
52,654
(128,730)
(6,594)
$ 65,441
$ 159,724
NOTE 4. SECURITIES
The amortized cost and estimated fair value of securities available for sale with gross unrealized gains and losses are summarized as
follows:
December 31, 2013:
U.S. Government sponsored agencies
State, county and municipal securities
Corporate debt securities
Collateralized debt obligations
Mortgage-backed securities
Total debt securities
December 31, 2012:
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)
Estimated
Fair
Value
$ 14,947
112,659
10,311
1,480
349,441
$
-
2,269
275
-
2,347
$ (1,021)
(2,174)
(261)
-
(4,038)
$ 13,926
112,754
10,325
1,480
347,750
$ 488,838
$ 4,891
$ (7,494)
$ 486,235
$
6,605
109,736
10,545
209,824
$
271
4,864
330
5,701
$
(6)
(210)
(547)
(204)
$
6,870
114,390
10,328
215,321
$ 336,710
$ 11,166
$
(967)
$ 346,909
F-24
The following table shows the gross unrealized losses and estimated fair value of securities aggregated by category and length of time
that securities have been in a continuous unrealized loss position at December 31, 2013 and 2012.
Description of Securities
December 31, 2013:
U. S. Government sponsored agencies
State, county and municipal securities
Corporate debt securities
Collateralized debt obligations
Mortgage-backed securities
Less Than 12 Months
12 Months or More
Total
Estimated
Fair
Value
Unrealized
Losses
Estimated
Fair
Value
Unrealized
Losses
(Dollars in Thousands)
Estimated
Fair
Value
Unrealized
Losses
$ 13,926
47,401
-
-
94,989
$ (1,021)
(1,882)
-
-
(2,493)
$
-
3,794
4,826
-
23,388
$
-
(292)
(261)
-
(1,545)
$ 13,926
51,195
4,826
-
118,377
$ (1,021)
(2,174)
(261)
-
(4,038)
Total temporarily impaired securities
$156,316
$ (5,396)
$ 32,008
$ (2,098)
$188,324
$ (7,494)
December 31, 2012:
U. S. Government sponsored agencies
State, county and municipal securities
Corporate debt securities
Mortgage-backed securities
$
4,994
15,595
-
23,951
$
(6)
(199)
-
(181)
$
-
505
4,560
3,617
$
-
(11)
(547)
(23)
$
4,994
16,100
4,560
27,568
$
(6)
(210)
(547)
(204)
Total temporarily impaired securities
$ 44,540
$
(386)
$8,682
$
(581)
$ 53,222
$
(967)
Additional information concerning the Company’s investments in corporate debt securities is included in the following table.
Class
Subordinated debt
Preferred securities
Total
Amortized
Cost
Estimated
Fair Value
(Dollars in Thousands)
$ 3,225
7,086
$ 10,311
$ 3,499
6,826
$ 10,325
Average
Maturity
(years)
Average
Book Yield
2.9
15.9
11.8
5.72%
6.64%
6.35%
During 2013 and 2012, 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 began deferring 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. The Company did not have
investments in “pooled” trust preferred securities at December 31, 2013 or 2012.
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 does not intend to sell these investment securities at an unrealized loss position at December 31, 2013, and it is
more likely than not that the Company will not be required to sell these securities prior to recovery or maturity. Therefore, at
December 31, 2013, these investments are not considered impaired on an other-than-temporary basis.
At December 31, 2013 and 2012, all of the Company’s mortgage-backed securities were obligations of government-sponsored
agencies.
F-25
The amortized cost and estimated fair value of debt securities available for sale as of December 31, 2013, 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
Estimated
Fair
Value
(Dollars in Thousands)
$
2,726
38,378
69,252
29,041
349,441
$
2,740
39,593
67,888
28,264
347,750
$ 488,838
$ 486,235
Securities with a carrying value of approximately $399.0 million and $240.5 million at December 31, 2013 and 2012, 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
NOTE 5. LOANS AND ALLOWANCE FOR LOAN LOSSES
Loans
December 31,
2013
2012
2011
(Dollars in Thousands)
$ 353
(182)
$ 420
(98)
$ 171
$ 322
$1,401
(1,163)
$238
The Bank engages in a full complement of lending activities, including real estate-related loans, agriculture-related loans, commercial
and financial loans and consumer installment loans within select markets in Georgia, Alabama, Florida and South Carolina. The Bank
concentrates the majority of its lending activities in real estate loans. While risk of loss in the Company’s portfolio is primarily tied to
the credit quality of the various borrowers, risk of loss may increase due to factors beyond the Company’s control, such as local,
regional and/or national economic downturns. General conditions in the real estate market may also impact the relative risk in the real
estate portfolio.
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.
Commercial, financial and agricultural loans include both secured and unsecured loans for working capital, expansion, crop
production, and other business purposes. Short-term working capital loans are secured by non-real estate collateral such as accounts
receivable, crops, inventory and equipment. The Company evaluates the financial strength, cash flow, management, credit history of
the borrower and the quality of the collateral securing the loan. The Bank often requires personal guarantees and secondary sources of
repayment on commercial, financial and agricultural loans.
Real estate loans include construction and development loans, commercial and farmland loans and residential loans. Construction and
development loans include loans for the development of residential neighborhoods, construction of one-to-four family residential
construction loans to builders and consumers, and commercial real estate construction loans, primarily for owner-occupied properties.
The Company limits its construction lending risk through adherence to established underwriting procedures. Commercial real estate
loans include loans secured by owner-occupied commercial buildings for office, storage, retail, farmland and warehouse space. They
also include non-owner occupied commercial buildings such as leased retail and office space. Commercial real estate loans may be
larger in size and may involve a greater degree of risk than one-to-four family residential mortgage loans. Payments on such loans are
often dependent on successful operation or management of the properties. The Company's residential loans represent permanent
mortgage financing and are secured by residential properties located within the Bank's market areas.
F-26
Consumer installment loans and other loans include automobile loans, boat and recreational vehicle financing, and both secured and
unsecured personal loans. Consumer loans carry greater risks than other loans, as the collateral can consist of rapidly depreciating
assets such as automobiles and equipment that may not provide an adequate source of repayment of the loan in the case of default.
Loans are stated at unpaid balances, net of unearned income and deferred loan fees. Balances within the major loans receivable
categories are presented in the following table:
Commercial, financial & agricultural
Real estate – construction & development
Real estate – commercial & farmland
Real estate – residential
Consumer installment
Other
Allowance for loan losses
Loans, net
December 31,
2013
2012
(Dollars in Thousands)
$ 244,373
146,371
808,323
351,886
34,249
33,252
1,618,454
22,377
$ 174,217
114,199
732,322
346,480
40,178
43,239
1,450,635
23,593
$1,596,077
$1,427,042
Purchased non-covered loans are defined as loans that were acquired in bank acquisitions that are not covered by a loss-sharing
agreement with the FDIC. Purchased non-covered loans totaling $448.8 million at December 31, 2013 are not included in the above
schedule.
Purchased non-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
2013
2012
(Dollars in Thousands)
$
$ 32,141
31,176
179,898
200,851
4,687
$448,753
$
-
-
-
-
-
-
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 $390.2 million and $507.7 million at December 31, 2013 and 2012, 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
2013
2012
(Dollars in Thousands)
$ 26,550
43,179
224,451
95,173
884
$ 32,606
70,184
278,506
125,056
1,360
$ 390,237
$ 507,712
F-27
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, excluding purchased non-
covered and covered loans, amounted to approximately $29.2 million, $38.9 million and $70.8 million at December 31, 2013, 2012
and 2011, respectively. Purchased non-covered loans on nonaccrual status amounted to approximately $6.7 million at December 31,
2013.
The following table presents an analysis of loans accounted for on a nonaccrual basis, excluding purchased non-covered and covered
loans:
Commercial, financial & agricultural
Real estate – construction & development
Real estate – commercial & farmland
Real estate – residential
Consumer installment loans
Total
December 31,
2013
2012
2011
2010
2009
(Dollars in Thousands)
$ 4,103
3,971
8,566
12,152
411
$ 4,138
9,281
11,962
12,595
909
$ 3,987
15,020
35,385
15,498
933
$ 8,648
7,887
55,170
6,376
1,208
$ 4,774
15,787
67,172
6,965
1,433
$ 29,203
$ 38,885
$ 70,823
$ 79,289
$ 96,131
The following table presents an analysis of purchased non-covered 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,
2013
2012
2011
2010
2009
(Dollars in Thousands)
$
$
11
325
1,653
4,658
12
$
6,659
$
-
-
-
-
-
-
$
$
-
-
-
-
-
-
$
$
-
-
-
-
-
-
$
$
-
-
-
-
-
-
The following table presents an analysis of covered 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,
2013
2012
2011
2010
2009
(Dollars in Thousands)
$
7,257
14,781
33,495
13,278
341
$ 10,765
20,027
55,946
28,672
302
$ 11,952
30,977
75,458
41,139
473
$ 5,756
25,810
29,519
25,946
1,122
$ 1,398
9,155
8,109
4,602
2,527
$ 69,152
$115,712
$159,999
$ 88,153
$ 25,791
F-28
The following table presents an analysis of loans, excluding purchased non-covered and covered past due loans as of December 31,
2013 and 2012.
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
As of December 31, 2013:
Commercial, financial & agricultural
Real estate – construction &
development
Real estate – commercial & farmland
Real estate – residential
Consumer installment loans
Other
$10,893
$ 272
$ 4,081
$15,246
$ 229,127
$ 244,373
$
1,026
3,981
5,422
568
-
69
1,388
1,735
197
-
3,935
7,751
11,587
305
-
5,030
13,120
18,744
1,070
-
141,341
795,203
333,142
33,179
33,252
146,371
808,323
351,886
34,249
33,252
Total
$21,890
$ 3,661
$27,659
$53,210
$ 1,565,244
$ 1,618,454
$
-
-
-
-
-
-
-
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
As of December 31, 2012:
Commercial, financial & agricultural
Real estate – construction &
development
Real estate – commercial & farmland
Real estate – residential
Consumer installment loans
Other
$
258
$ 312
$ 3,969
$ 4,539
$ 169,678
$ 174,217
$
347
2,867
7,651
702
-
332
2,296
2,766
391
-
8,969
9,544
10,990
815
-
9,648
14,707
21,407
1,908
-
104,551
717,615
325,073
38,270
43,239
114,199
732,322
346,480
40,178
43,239
Total
$11,825
$ 6,097
$34,287
$52,209
$ 1,398,426
$ 1,450,635
$
-
-
-
-
-
-
-
The following table presents an analysis of purchased non-covered past due loans as of December 31, 2013. There were no purchased
non-covered loans as of December 31, 2012.
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)
As of December 30, 2013:
Commercial, financial &
agricultural ..................................... $
370 $
70 $
11 $
451 $
31,690 $
32,141 $
Real estate – construction &
development ....................................
Real estate – commercial &
farmland ..........................................
Real estate – residential .......................
Consumer installment loans .................
1,008
6,851
4,667
7
89
325
1,422
29,754
31,176
2,064
1,074
17
1,516
3,428
9
10,431
9,169
33
169,467
191,682
4,654
179,898
200,851
4,687
Total..................................................... $ 12,903 $
3,314 $
5,289 $ 21,506 $
427,247 $
448,753 $
Loans 90
Days or
More Past
Due and
Still
Accruing
-
-
-
-
-
-
F-29
The following table presents an analysis of covered past due loans as of December 31, 2013 and 2012:
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)
As of December 30, 2013:
Commercial, financial &
agricultural ..................................... $
3,966 $
12 $
6,165 $ 10,143 $
16,407 $
26,550 $
Real estate – construction &
development ....................................
843
144
14,055
15,042
28,137
43,179
Real estate – commercial &
farmland ..........................................
Real estate – residential .......................
Consumer installment loans .................
8,482
7,648
51
4,350
1,914
14
26,428
10,244
305
39,260
19,806
370
185,191
75,367
514
224,451
95,173
884
Total..................................................... $ 20,990 $
6,434 $ 57,197 $ 84,621 $
305,616 $
390,237 $
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
-
-
346
-
-
346
Loans 90
Days or
More Past
Due and
Still
Accruing
As of December 31, 2012:
Commercial, financial &
agricultural ...................................... $
2,390 $
1,105 $ 10,612 $ 14,107 $
18,499 $
32,606 $
98
Real estate – construction &
development ....................................
1,584
2,592
19,656
23,832
46,352
70,184
1,077
Real estate – commercial &
farmland ..........................................
Real estate – residential .......................
Consumer installment loans .................
11,451
6,066
45
7,373
3,396
13
52,570
24,976
258
71,394
34,438
316
207,112
90,618
1,044
278,506
125,056
1,360
1,347
779
-
Total..................................................... $ 21,536 $ 14,479 $ 108,072 $ 144,087 $
363,625 $
507,712 $
3,301
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. When determining if the Company will be
unable to collect all principal and interest payments due in accordance with the contractual terms of the loan agreement, the Company
considers the borrower’s capacity to pay, which includes such factors as the borrower’s current financial statements, an analysis of
global cash flow sufficient to pay all debt obligations and an evaluation of secondary sources of repayment, such as guarantor support
and collateral value. Impaired loans include loans on nonaccrual status and troubled debt restructurings. The Company individually
assesses for impairment all nonaccrual loans greater than $200,000 and rated substandard or worse and all troubled debt restructurings
greater than $100,000. 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 a cash basis.
F-30
The following table presents an analysis of covered past due loans as of December 31, 2013 and 2012:
The following is a summary of information pertaining to impaired loans, excluding purchased non-covered and covered loans:
Loans 90
Days or
More Past
Due and
Still
Accruing
-
-
-
-
346
Loans 90
Days or
More Past
Due and
Still
Accruing
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)
As of December 30, 2013:
Commercial, financial &
Real estate – construction &
Real estate – commercial &
farmland ..........................................
Real estate – residential .......................
Consumer installment loans .................
agricultural ..................................... $
3,966 $
12 $
6,165 $ 10,143 $
16,407 $
26,550 $
development ....................................
843
144
14,055
15,042
28,137
43,179
Total..................................................... $ 20,990 $
6,434 $ 57,197 $ 84,621 $
305,616 $
390,237 $
346
8,482
7,648
51
4,350
1,914
14
26,428
10,244
305
39,260
19,806
370
185,191
75,367
514
224,451
95,173
884
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)
agricultural ...................................... $
2,390 $
1,105 $ 10,612 $ 14,107 $
18,499 $
32,606 $
98
development ....................................
1,584
2,592
19,656
23,832
46,352
70,184
1,077
Total..................................................... $ 21,536 $ 14,479 $ 108,072 $ 144,087 $
363,625 $
507,712 $
3,301
11,451
6,066
45
7,373
3,396
13
52,570
24,976
258
71,394
34,438
316
207,112
90,618
1,044
278,506
125,056
1,360
1,347
779
-
As of December 31, 2012:
Commercial, financial &
Real estate – construction &
Real estate – commercial &
farmland ..........................................
Real estate – residential .......................
Consumer installment loans .................
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. When determining if the Company will be
unable to collect all principal and interest payments due in accordance with the contractual terms of the loan agreement, the Company
considers the borrower’s capacity to pay, which includes such factors as the borrower’s current financial statements, an analysis of
global cash flow sufficient to pay all debt obligations and an evaluation of secondary sources of repayment, such as guarantor support
and collateral value. Impaired loans include loans on nonaccrual status and troubled debt restructurings. The Company individually
assesses for impairment all nonaccrual loans greater than $200,000 and rated substandard or worse and all troubled debt restructurings
greater than $100,000. 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 a cash basis.
Nonaccrual loans
Troubled debt restructurings not included above
Total impaired loans
As of and For the Years Ended
December 31,
2013
2012
2011
$ 29,203
17,214
(Dollars in Thousands)
$ 38,885
18,744
$ 70,823
17,951
$ 46,417
$ 57,629
$ 88,774
Impaired loans not requiring a related allowance
$
-
$
-
$
-
Impaired loans requiring a related allowance
Allowance related to impaired loans
Average investment in impaired loans
Interest income recognized on impaired loans
Foregone interest income on impaired loans
$ 46,417
$ 57,629
$ 88,774
$
3,871
$
5,115
$ 18,478
$ 51,721
$ 70,209
$ 88,320
$
$
522
418
$
$
495
718
$
$
637
613
The following table presents an analysis of information pertaining to impaired loans, excluding purchased non-covered and covered
loans as of December 31, 2013 and 2012.
As of December 31, 2013:
Commercial, financial & agricultural
Real estate – construction & development
Real estate – commercial & farmland
Real estate – residential
Consumer installment loans
Total
As of December 31, 2012:
Commercial, financial & agricultural
Real estate – construction & development
Real estate – commercial & farmland
Real estate – residential
Consumer installment loans
Total
Unpaid
Contractual
Principal
Balance
Recorded
Investment
With No
Allowance
Recorded
Investment
With
Allowance
Total
Recorded
Investment
Related
Allowance
Average
Recorded
Investment
(Dollars in Thousands)
$
$
6,240
11,363
18,456
24,342
623
$ 61,024
$
-
-
-
-
-
-
$ 4,618
5,867
15,479
19,970
483
$ 4,618
5,867
15,479
19,970
483
$
435
512
1,443
1,472
9
$ 4,844
8,341
17,559
20,335
642
$ 46,417
$ 46,417
$ 3,871
$ 51,721
Unpaid
Contractual
Principal
Balance
Recorded
Investment
With No
Allowance
Recorded
Investment
With
Allowance
Total
Recorded
Investment
Related
Allowance
Average
Recorded
Investment
(Dollars in Thousands)
$
$
8,024
20,316
25,076
24,155
1,187
$ 78,758
$
-
-
-
-
-
-
$ 4,940
11,016
20,910
19,848
915
$ 4,940
11,016
20,910
19,848
915
$
743
910
2,191
1,246
25
$ 4,968
11,706
30,638
21,813
1,084
$ 57,629
$ 57,629
$ 5,115
$ 70,209
F-30
F-31
The following is a summary of information pertaining to purchased non-covered impaired loans:
Nonaccrual loans
Troubled debt restructurings not included above
Total impaired loans
Impaired loans not requiring a related allowance
Impaired loans requiring a related allowance
Allowance related to impaired loans
Average investment in impaired loans
Interest income recognized on impaired loans
Foregone interest income on impaired loans
As of and For the Years Ended
December 31,
2013
2012
2011
(Dollars in Thousands)
$
6,659
5,938
$ 12,597
$ 12,597
$
$
$
$
$
-
-
242
-
-
$
$
$
$
$
$
$
$
-
-
-
-
-
-
-
-
-
$
$
$
$
$
$
$
$
-
-
-
-
-
-
-
-
-
The following table presents an analysis of information pertaining to purchased non-covered impaired loans as of December 31, 2013.
There were no purchased non-covered loans as of December 31, 2012.
As of December 31, 2013:
Commercial, financial & agricultural
Real estate – construction & development
Real estate – commercial & farmland
Real estate – residential
Consumer installment loans
Total
Unpaid
Contractual
Principal
Balance
Recorded
Investment
With No
Allowance
Recorded
Investment
With
Allowance
Total
Recorded
Investment
Related
Allowance
Average
Recorded
Investment
(Dollars in Thousands)
$
$
19
5,719
4,563
9,612
57
$
11
3,690
2,881
5,978
37
$ 19,970
$ 12,597
$
-
-
-
-
-
-
$
$
11
3,690
2,881
5,978
37
$ 12,597
$
-
-
-
-
-
-
$
$
-
71
55
115
1
242
F-32
The following is a summary of information pertaining to covered impaired loans:
Nonaccrual loans
Troubled debt restructurings not included above
Total impaired loans
As of and For the Years Ended
December 31,
2013
2012
2011
$ 69,152
22,243
(Dollars in Thousands)
$ 115,712
17,090
$ 159,999
19,884
$ 91,395
$ 132,802
$ 179,883
Impaired loans not requiring a related allowance
$ 91,395
$ 132,802
$ 179,883
Impaired loans requiring a related allowance
Allowance related to impaired loans
Average investment in impaired loans
Interest income recognized on impaired loans
Foregone interest income on impaired loans
$
$
-
-
$
$
-
-
$
$
-
-
$ 110,830
$ 163,825
$ 138,950
$
$
968
330
$
$
849
491
$
$
526
202
The following table presents an analysis of information pertaining to covered impaired loans as of December 31, 2013 and 2012.
As of December 31, 2013:
Commercial, financial & agricultural
Real estate – construction & development
Real estate – commercial & farmland
Real estate – residential
Consumer installment loans
Total
As of December 31, 2012:
Commercial, financial & agricultural
Real estate – construction & development
Real estate – commercial & farmland
Real estate – residential
Consumer installment loans
Total
Unpaid
Contractual
Principal
Balance
Recorded
Investment
With No
Allowance
Recorded
Investment
With
Allowance
Total
Recorded
Investment
Related
Allowance
Average
Recorded
Investment
(Dollars in Thousands)
$
$
9,680
20,915
46,612
29,089
394
$
7,270
18,037
40,749
24,998
341
$106,690
$ 91,395
$
-
-
-
-
-
-
$
$
7,270
18,037
40,749
24,998
341
$ 91,395
$
-
-
-
-
-
-
$
8,696
21,794
51,584
28,452
304
$110,830
Unpaid
Contractual
Principal
Balance
Recorded
Investment
With No
Allowance
Recorded
Investment
With
Allowance
Total
Recorded
Investment
Related
Allowance
Average
Recorded
Investment
(Dollars in Thousands)
$
$ 15,888
30,979
84,124
45,464
373
$ 10,802
22,948
62,415
36,335
302
$176,828
$132,802
$
-
-
-
-
-
-
$
$ 10,802
22,948
62,415
36,335
302
$132,802
$
-
-
-
-
-
-
$ 12,506
29,970
78,790
42,061
498
$163,825
F-33
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 23 – 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 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 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-34
The following table presents the loan portfolio, excluding purchased non-covered and covered loans, by risk grade as of December 31,
2013 and 2012.
As of December 31, 2013:
Risk Grade
Commercial,
financial &
agricultural
Real estate -
construction &
development
Real estate -
commercial &
farmland
Real estate -
residential
Consumer
installment
loans
Other
Total
10
15
20
23
25
30
40
50
60
$ 66,983
24,789
93,852
127
50,373
2,111
6,011
127
-
$
-
4,655
45,195
8,343
78,736
2,876
6,566
-
-
(Dollars in Thousands)
$
265
147,157
431,790
10,219
181,645
11,849
25,398
-
-
$
419
52,335
150,343
12,641
103,427
13,558
19,153
10
-
$ 6,714
1,276
18,619
274
6,310
197
859
-
-
$
-
-
33,252
-
-
-
-
-
-
$
74,382
230,212
773,049
31,605
420,491
30,591
57,987
137
-
Total
$ 244,373
$
146,371
$ 808,323
$ 351,886
$ 34,249
$33,252
$ 1,618,454
As of December 31, 2012:
Risk Grade
10
15
20
23
25
30
40
50
60
Commercial,
financial &
agricultural
Real estate -
construction &
development
Real estate -
commercial &
farmland
Real estate -
residential
$
$ 24,623
11,316
79,522
42
49,071
2,343
7,200
100
-
(Dollars in Thousands)
-
4,373
31,413
8,521
52,577
3,394
13,765
156
-
$
309
147,966
351,997
9,012
176,395
19,401
27,242
-
-
$
464
71,254
114,418
13,788
113,591
9,672
23,292
1
-
Consumer
installment
loans
$ 7,597
1,591
21,361
70
7,576
488
1,495
-
-
Other
Total
$
-
-
43,239
-
-
-
-
-
-
$
32,993
236,500
641,950
31,433
399,210
35,298
72,994
257
-
Total
$ 174,217
$
114,199
$ 732,322
$ 346,480
$ 40,178
$43,239
$ 1,450,635
F-35
The following table presents the purchased non-covered loan portfolio by risk grade as of December 31, 2013. There were no
purchased non-covered loans as of December 31, 2012.
As of December 31, 2013:
Risk Grade
Commercial,
financial &
agricultural
Real estate -
construction &
development
Real estate -
commercial &
farmland
Real estate -
residential
Consumer
installment
loans
Other
Total
10
15
20
23
25
30
40
50
60
$
1,865
4,606
5,172
-
19,638
576
284
-
-
$
-
7
3,960
-
20,733
1,760
4,716
-
-
(Dollars in Thousands)
$
-
12,998
43,802
-
102,260
9,554
11,284
-
-
$
289
16,160
34,576
-
129,923
10,878
9,025
-
-
$
$
451
703
1,383
-
1,888
194
68
-
-
Total
$ 32,141
$
31,176
$ 179,898
$ 200,851
$ 4,687
$
-
-
-
-
-
-
-
-
-
-
$
2,605
34,474
88,893
-
274,442
22,962
25,377
-
-
$ 448,753
The following table presents the covered loan portfolio by risk grade as of December 31, 2013 and 2012.
As of December 31, 2013:
Risk Grade
Commercial,
financial &
agricultural
Real estate -
construction &
development
Real estate -
commercial &
farmland
Real estate -
residential
Consumer
installment
loans
Other
Total
10
15
20
23
25
30
40
50
60
$
-
-
2,184
134
7,508
5,125
11,599
-
-
$
-
16
8,549
1,085
9,611
2,006
21,912
-
-
$
(Dollars in Thousands)
$
-
1,048
34,674
17,037
101,657
21,297
48,738
-
-
$
-
638
21,363
4,748
38,427
6,979
23,018
-
-
Total
$ 26,550
$
43,179
$ 224,451
$ 95,173
$
-
-
193
51
235
17
388
-
-
884
$
$
As of December 31, 2012:
Risk Grade
10
15
20
23
25
30
40
50
60
Commercial,
financial &
agricultural
Real estate -
construction &
development
Real estate -
commercial &
farmland
Real estate -
residential
Consumer
installment
loans
$
-
-
3,997
28
10,013
4,294
14,274
-
-
$
-
39
12,194
1,174
19,216
7,214
30,347
-
-
(Dollars in Thousands)
$
-
1,640
37,098
9,576
114,849
38,665
76,678
-
-
$
-
644
31,337
2,052
40,194
11,883
38,946
-
-
$
-
-
292
-
558
50
460
-
-
Other
$
Total
$ 32,606
$
70,184
$ 278,506
$ 125,056
$ 1,360
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
-
1,702
66,963
23,055
157,438
35,424
105,655
-
-
$ 390,237
$
Total
-
2,323
84,918
12,830
184,830
62,106
160,705
-
-
$ 507,712
F-36
Troubled Debt Restructurings
The restructuring of a loan is considered a “troubled debt restructuring” if both (i) the borrower is experiencing financial difficulties
and (ii) the Company has granted a concession. Concessions may include interest rate reductions to below market interest rates,
principal forgiveness, restructuring amortization schedules and other actions intended to minimize potential losses. The Company has
exhibited the greatest success for rehabilitation of the loan by a reduction in the rate alone (maintaining the amortization of the debt)
or a combination of a rate reduction and the forbearance of previously past due interest or principal. This has most typically been
evidenced in certain commercial real estate loans whereby a disruption in the borrower’s cash flow resulted in an extended past due
status, of which the borrower was unable to catch up completely as the cash flow of the property ultimately stabilized at a level lower
than its original level. A reduction in rate, coupled with a forbearance of unpaid principal and/or interest, allowed the net cash flows
to service the debt under the modified terms.
The Company’s policy requires a restructure request to be supported by a current, well-documented credit evaluation of the
borrower’s financial condition and a collateral evaluation that is no older than six months from the date of the restructure. Key factors
of that evaluation include the documentation of current, recurring cash flows, support provided by the guarantor(s) and the current
valuation of the collateral. If the appraisal in file is older than six months, an evaluation must be made as to the continued
reasonableness of the valuation. For certain income-producing properties, current rent rolls and/or other income information can be
utilized to support the appraisal valuation, when coupled with documented cap rates within our markets and a physical inspection of
the collateral to validate the current condition.
The Company’s policy states in the event a loan has been identified as a troubled debt restructuring, it should be assigned a grade of
substandard and placed on nonaccrual status until such time that the borrower has demonstrated the ability to service the loan
payments based on the restructured terms – generally defined as six months of satisfactory payment history. Missed payments under
the original loan terms are not considered under the new structure; however, subsequent missed payments are considered non-
performance and are not considered toward the six month required term of satisfactory payment history. The Company’s loan policy
states that a nonaccrual loan may be returned to accrual status when (i) none of its principal and interest is due and unpaid, and the
Company expects repayment of the remaining contractual principal and interest, or (ii) when it otherwise becomes well secured and in
the process of collection. Restoration to accrual status on any given loan must be supported by a well-documented credit evaluation of
the borrower’s financial condition and the prospects for full repayment, approved by the Company’s Chief Credit Officer.
In the normal course of business, the Company renews loans with a modification of the interest rate or terms that are not deemed as
troubled debt restructurings because the borrower is not experiencing financial difficulty. The Company modified loans in 2013 and
2012 totaling $30.4 million and $40.3 million, respectively, under such parameters. In addition, the Company offers consumer loan
customers an annual skip-a-pay program that is based on certain qualifying parameters and not based on financial difficulties. The
Company does not treat these as troubled debt restructurings.
As of December 31, 2013 and 2012, the Company had a balance of $20.9 million and $23.9 million, respectively, in troubled debt
restructurings, excluding purchased non-covered and covered loans. The Company has recorded $2.1 million and $1.9 million in
previous charge-offs on such loans at December 31, 2013 and 2012, respectively. The Company’s balance in the allowance for loan
losses allocated to such troubled debt restructurings was $432,000 and $640,000 at December 31, 2013 and 2012, respectively. At
December 31, 2013, the Company did not have any commitments to lend additional funds to debtors whose terms have been modified
in troubled restructurings.
F-37
The following table presents the amount of troubled debt restructurings by loan class, excluding purchased non-covered and covered
loans, classified separately as accrual and non-accrual at December 31, 2013 and 2012.
As of December 31, 2013
Accruing Loans
Loan class:
Commercial, financial & agricultural
Real estate – construction & development
Real estate – commercial & farmland
Real estate – residential
Consumer installment
Total
As of December 31, 2012
Loan class:
Commercial, financial & agricultural
Real estate – construction & development
Real estate – commercial & farmland
Real estate – residential
Consumer installment
Total
Balance
(in thousands)
$ 515
1,896
6,913
7,818
72
$ 17,214
Accruing Loans
Balance
(in thousands)
$ 802
1,735
8,947
7,254
6
$ 18,744
#
4
8
17
37
6
72
#
5
5
16
28
1
55
Non-Accruing Loans
Balance
(in thousands)
$ 525
32
2,273
834
19
3,683
$
#
3
2
4
8
3
20
Non-Accruing Loans
Balance
(in thousands)
$
-
-
4,149
1,022
-
5,171
$
#
-
-
3
2
-
5
The following table presents the amount of troubled debt restructurings by loan class, excluding purchased non-covered and covered
loans, classified separately as those currently paying under restructured terms and those that have defaulted under restructured terms at
December 31, 2013 and 2012.
As of December 31, 2013
Loan class:
Commercial, financial & agricultural
Real estate – construction & development
Real estate – commercial & farmland
Real estate – residential
Consumer installment
Total
As of December 31, 2012
Loan class:
Commercial, financial & agricultural
Real estate – construction & development
Real estate – commercial & farmland
Real estate – residential
Consumer installment
Total
Loans Currently Paying
Under Restructured Terms
Loans that have Defaulted
Under Restructured Terms
#
4
8
16
32
7
67
Balance
(in thousands)
$ 515
1,896
6,396
6,699
90
$ 15,596
#
3
2
5
13
2
25
Balance
(in thousands)
$
$
525
32
2,789
1,953
2
5,301
Loans Currently Paying
Under Restructured Terms
Loans that have Defaulted
Under Restructured Terms
#
5
5
16
28
-
54
Balance
(in thousands)
$ 802
1,735
8,947
7,254
-
$ 18,738
#
-
-
3
2
1
6
Balance
(in thousands)
$
$
-
-
4,149
1,022
6
5,177
F-38
The following table presents the amount of troubled debt restructurings, excluding purchased non-covered and covered loans, by types
of concessions made, classified separately as accrual and non-accrual at December 31, 2013 and 2012.
As of December 31, 2013
Accruing Loans
Type of Concession:
Forbearance of Interest
Forgiveness of Principal
Payment Modification Only
Rate Reduction Only
Rate Reduction, Forbearance of Interest
Rate Reduction, Forbearance of Principal
Rate Reduction, Payment Modification
Total
As of December 31, 2012
Type of Concession:
Forbearance of Interest
Forgiveness of Principal
Payment Modification Only
Rate Reduction Only
Rate Reduction, Forbearance of Interest
Rate Reduction, Forbearance of Principal
Rate Reduction, Payment Modification
Total
#
10
3
1
14
26
18
-
72
#
2
3
2
11
18
18
1
55
Balance
(in thousands)
$ 2,170
1,467
280
7,069
3,252
2,976
-
$ 17,214
Non-Accruing Loans
Balance
(in thousands)
$ 97
145
88
913
2,411
-
29
$ 3,683
Accruing Loans
Balance
(in thousands)
$ 1,873
1,518
376
7,075
4,061
3,798
43
$ 18,744
Non-Accruing Loans
Balance
(in thousands)
$ -
372
-
177
3,420
-
1,202
$ 5,171
#
-
1
-
1
2
-
1
5
The following table presents the amount of troubled debt restructurings, excluding purchased non-covered and covered loans, by
collateral types, classified separately as accrual and non-accrual at December 31, 2013 and 2012.
As of December 31, 2013
Accruing Loans
Collateral type:
Warehouse
Raw Land
Hotel & Motel
Office
Retail, including Strip Centers
1-4 Family Residential
Life Insurance Policy
Automobile/Equipment/Inventory
Unsecured
Total
As of December 31, 2012
Collateral type:
Warehouse
Raw Land
Hotel & Motel
Office
Retail, including Strip Centers
1-4 Family Residential
Life Insurance Policy
Automobile/Equipment/Inventory
Unsecured
Total
#
4
11
3
4
4
36
1
8
1
72
#
3
2
3
4
6
31
1
4
1
55
Balance
(in thousands)
1,346
$
2,345
2,185
1,909
1,095
7,747
250
92
245
$ 17,214
Accruing Loans
Balance
(in thousands)
$ 1,692
1,337
2,318
2,105
2,833
7,651
250
508
50
$ 18,744
F-39
Non-Accruing Loans
Balance
(in thousands)
$ 592
32
-
-
1,680
852
-
479
48
$ 3,683
Non-Accruing Loans
Balance
(in thousands)
$ 177
-
-
2,770
1,202
1,022
-
-
-
$ 5,171
#
1
-
-
1
1
2
-
-
-
5
#
2
1
1
3
12
-
1
20
#
2
2
-
-
2
9
-
4
1
20
As of December 31, 2013, the Company had a balance of $7.2 million in troubled debt restructurings included in purchased non-
covered loans. The Company did not have any troubled debt restructurings included in purchased non-covered loans at December 31,
2012. The Company has not recorded any previous charge-offs on such loans at December 31, 2013. At December 31, 2013, the
Company did not have any commitments to lend additional funds to debtors whose terms have been modified in troubled
restructurings.
The following table presents the amount of troubled debt restructurings by loan class of purchased non-covered loans, classified
separately as accrual and non-accrual at December 31, 2013.
As of December 31, 2013
Accruing Loans
Loan class:
Commercial, financial & agricultural
Real estate – construction & development
Real estate – commercial & farmland
Real estate – residential
Consumer installment
Total
#
-
10
3
8
3
24
$
Balance
(in thousands)
-
3,364
1,228
1,321
25
5,938
$
Non-Accruing Loans
Balance
(in thousands)
$
$
6
-
468
738
-
1,212
The following table presents the amount of troubled debt restructurings by loan class of purchased non-covered loans, classified
separately as those currently paying under restructured terms and those that have defaulted under restructured terms at December 31,
2013.
As of December 31, 2013
Loan class:
Commercial, financial & agricultural
Real estate – construction & development
Real estate – commercial & farmland
Real estate – residential
Consumer installment
Total
Loans Currently Paying
Under Restructured Terms
Loans that have Defaulted
Under Restructured Terms
#
-
1
8
-
7
16
$
Balance
(in thousands)
-
8
3,068
-
1,153
$ 4,229
#
1
2
2
4
9
18
Balance
(in thousands)
$
$
6
17
296
1,696
906
2,921
The following table presents the amount of troubled debt restructurings included in purchased non-covered loans, by types of
concessions made, classified separately as accrual and non-accrual at December 31, 2013.
Non-Accruing Loans
Balance
(in thousands)
$
-
-
-
707
505
$ 1,212
As of December 31, 2013
Accruing Loans
$
Balance
(in thousands)
300
425
75
2,170
2,968
5,938
$
Type of Concession:
Forbearance of Interest
Forgiveness of Principal
Payment Modification Only
Rate Reduction Only
Rate Reduction, Forbearance of Principal
Total
#
1
2
2
11
8
24
F-40
#
1
-
1
8
-
10
#
-
-
-
8
2
10
The following table presents the amount of troubled debt restructurings included in purchased non-covered loans, by collateral types,
classified separately as accrual and non-accrual at December 31, 2013.
As of December 31, 2013
Accruing Loans
Collateral type:
Warehouse
Raw Land
Office
Retail, including Strip Centers
1-4 Family Residential
Automobile/Equipment/Inventory
Total
#
-
6
1
2
13
2
24
Balance
(in thousands)
$ -
2,640
803
425
2,053
17
$ 5,938
Non-Accruing Loans
Balance
(in thousands)
$ 468
-
-
-
738
6
$ 1,212
As of December 31, 2013 and 2012, the Company had a balance of $27.3 million and $27.4 million, respectively, in troubled debt
restructurings included in covered loans. The Company has recorded $1.6 million and $6.4 million in previous charge-offs on such
loans at December 31, 2013 and 2012, respectively. At December 31, 2013, the Company did not have any commitments to lend
additional funds to debtors whose terms have been modified in troubled restructurings.
The following table presents the amount of troubled debt restructurings by loan class of covered loans, classified separately as accrual
and non-accrual at December 31, 2013 and 2012.
#
1
-
-
-
8
1
10
#
5
4
5
8
2
24
#
1
4
8
8
-
21
Non-Accruing Loans
Balance
(in thousands)
$ 71
52
3,946
942
10
$ 5,021
Non-Accruing Loans
Balance
(in thousands)
$ -
806
7,574
1,892
-
$ 10,272
As of December 31, 2013
Accruing Loans
Loan class:
Commercial, financial & agricultural
Real estate – construction & development
Real estate – commercial & farmland
Real estate – residential
Consumer installment
Total
As of December 31, 2012
Loan class:
Commercial, financial & agricultural
Real estate – construction & development
Real estate – commercial & farmland
Real estate – residential
Consumer installment
Total
Balance
(in thousands)
$ 13
3,256
7,255
11,719
-
$ 22,243
Accruing Loans
Balance
(in thousands)
$ 37
2,921
6,469
7,663
-
$ 17,090
#
1
3
13
83
-
100
#
1
6
9
46
-
62
F-41
The following table presents the amount of troubled debt restructurings by loan class of covered loans, classified separately as those
currently paying under restructured terms and those that have defaulted under restructured terms at December 31, 2013 and 2012.
As of December 31, 2013
Loan class:
Commercial, financial & agricultural
Real estate – construction & development
Real estate – commercial & farmland
Real estate – residential
Consumer installment
Total
As of December 31, 2012
Loan class:
Commercial, financial & agricultural
Real estate – construction & development
Real estate – commercial & farmland
Real estate – residential
Consumer installment
Total
Loans Currently Paying
Under Restructured Terms
Loans that have Defaulted
Under Restructured Terms
#
5
5
15
68
2
95
$
Balance
(in thousands)
45
3,273
7,543
9,206
10
$ 20,077
#
1
2
3
23
-
29
Balance
(in thousands)
$ 40
34
3,658
3,455
-
7,187
$
Loans Currently Paying
Under Restructured Terms
Loans that have Defaulted
Under Restructured Terms
#
2
5
7
42
-
56
$
Balance
(in thousands)
37
2,908
4,964
7,522
-
$ 15,430
#
-
5
10
12
-
27
Balance
(in thousands)
$
-
819
9,079
2,034
-
$ 11,932
The following table presents the amount of troubled debt restructurings included in covered loans, by types of concessions made,
classified separately as accrual and non-accrual at December 31, 2013 and 2012.
As of December 31, 2013
Accruing Loans
Type of Concession:
Forbearance of Interest
Forgiveness of Principal
Payment Modification Only
Rate Reduction Only
Rate Reduction, Forbearance of Interest
Rate Reduction, Forbearance of Principal
Rate Reduction, Payment Modification
Total
As of December 31, 2012
Type of Concession:
Forbearance of Interest
Forgiveness of Principal
Payment Modification Only
Rate Reduction Only
Rate Reduction, Forbearance of Interest
Rate Reduction, Forbearance of Principal
Rate Reduction, Payment Modification
Total
Balance
(in thousands)
$ -
-
-
18,687
88
2,613
855
$ 22,243
Accruing Loans
$
Balance
(in thousands)
245
-
-
14,402
461
1,982
-
$ 17,090
#
-
-
-
89
3
7
1
100
#
3
-
-
51
4
4
-
62
F-42
Non-Accruing Loans
Balance
(in thousands)
$
98
-
-
953
478
3,492
-
$ 5,021
$ 1,074
1,876
-
2,497
1,369
3,456
-
$ 10,272
Non-Accruing Loans
Balance
(in thousands)
#
3
-
-
9
8
4
-
24
#
5
1
-
11
2
2
-
21
The following table presents the amount of troubled debt restructurings included in covered loans, by collateral types, classified
separately as accrual and non-accrual at December 31, 2013 and 2012.
As of December 31, 2013
Accruing Loans
Collateral type:
Warehouse
Raw Land
Hotel & Motel
Office
Retail, including Strip Centers
1-4 Family Residential
Life Insurance Policy
Automobile/Equipment/Inventory
Unsecured
Total
#
-
1
6
1
6
85
-
-
1
100
Balance
(in thousands)
$ -
375
5,118
855
3,853
12,029
-
-
13
$ 22,243
As of December 31, 2012
Accruing Loans
Collateral type:
Warehouse
Raw Land
Hotel & Motel
Office
Retail, including Strip Centers
1-4 Family Residential
Life Insurance Policy
Automobile/Equipment/Inventory
Unsecured
Total
#
1
3
5
-
4
47
-
1
1
62
Balance
(in thousands)
$ 382
2,489
2,667
-
3,652
7,845
-
37
18
$ 17,090
Non-Accruing Loans
Balance
(in thousands)
$ 377
37
155
78
3,337
966
-
71
-
$ 5,021
$ -
791
-
90
7,484
1,907
-
-
-
$ 10,272
Non-Accruing Loans
Balance
(in thousands)
#
1
3
1
1
2
11
-
5
-
24
#
-
3
-
1
7
9
-
1
-
21
Related Party Loans
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
December 31,
2013
2012
(Dollars in Thousands)
$ 1,392
813
(923)
2,036
$ 3,318
$ 6,922
717
(1,041)
(5,206)
$ 1,392
F-43
Allowance 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. 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 loan reviewers 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. In establishing
allowances, management considers historical loan loss experience but adjusts this data with a significant emphasis on data such as risk
ratings, 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 Chief 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 percentage factor of historical losses 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 or an
independent third party loan review firm. 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 and the Director of Internal Audit.
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. Consumer loans are charged-off in accordance with the Federal Financial Institutions
Examination Council’s (“FFIEC”) Uniform Retail Credit Classification and Account Management Policy. Commercial loans are
charged-off when they are deemed uncollectible, which usually involves a triggering event within the collection effort. If the loan is
collateral dependent, the loss is more easily identified and is charged-off when it is identified, usually based upon receipt of an
appraisal. However, when a loan has guarantor support, the Company may carry the estimated loss as a reserve against the loan while
collection efforts with the guarantor are pursued. If, after collection efforts with the guarantor are complete, the deficiency is still
considered uncollectible, the loss is charged-off and any further collections are treated as recoveries. In all situations, when a loan is
downgraded to an Asset Quality Rating of 60 (Loss per the regulatory guidance), the uncollectible portion is charged-off.
During 2013, 2012 and 2011, the Company recorded provision for loan loss expense of $1.5 million, $2.6 million and $2.4 million,
respectively, 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 below but are reflected in the Company’s Consolidated
Statements of Income.
F-44
The following table details activity in the allowance for loan losses by non-covered portfolio segment for the years ended
December 31, 2013, 2012 and 2011. Allocation of a portion of the allowance to one category of loans does not preclude its availability
to absorb losses in other categories.
Commercial,
financial &
agricultural
Real estate -
construction &
development
Real estate -
commercial &
farmland
Real estate -
residential
(Dollars in thousands)
Consumer
installment
loans and
Other
$
2,439
711
(1,759)
$
5,343
1,742
(2,020)
$
9,157
2,777
(3,571)
$
5,898
4,463
(5,215)
$
756
254
(719)
Balance, January 1, 2013
Provision for loan losses
Loans charged off
Recoveries of loans previously charged
$
off
Balance, December 31, 2013
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
Balance, January 1, 2012
Provision for loan losses
Loans charged off
Recoveries of loans previously charged
$
off
Balance, December 31, 2012
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
432
1,823
356
1,467
1,823
$
$
$
$
3,457
240,916
$ 244,373
$
$
$
$
$
157
2,439
659
1,780
2,439
$
$
$
$
3,351
170,866
$ 174,217
$
$
$
$
$
Total
23,593
9,947
(13,284)
2,121
22,377
3,585
18,792
22,377
$
$
$
Total
35,156
28,451
(41,163)
1,149
23,593
4,554
19,039
23,593
$
$
$
473
5,538
407
5,131
5,538
$
$
$
30
8,393
888
6,034
$
1,427
$
1,395
6,966
8,393
4,639
6,034
$
298
589
-
589
589
$
$
$
3,581
142,790
146,371
$
15,240
793,083
$ 808,323
$ 16,925
334,961
$ 351,886
$
-
67,501
$ 67,501
$
39,203
1,579,251
$ 1,618,454
Commercial,
financial &
agricultural
Real estate -
construction &
development
Real estate -
commercial &
farmland
Real estate -
residential
$
2,918
815
(1,451)
$
9,438
5,245
(9,380)
(Dollars in thousands)
14,226
15,000
(20,551)
$
8,128
6,267
(8,722)
Consumer
installment
loans and
Other
$
$
446
1,124
(1,059)
40
5,343
611
4,732
5,343
$
$
$
482
9,157
225
5,898
$
2,228
$
1,056
6,929
9,157
4,842
5,898
$
245
756
-
756
756
$
$
$
7,617
106,582
114,199
$
21,332
710,990
$ 732,322
$ 13,020
333,460
$ 346,480
$
-
83,417
$ 83,417
$
45,320
1,405,315
$ 1,450,635
F-45
Balance, January 1, 2011
Provision for loan losses
Loans charged off
Recoveries of loans previously charged
$
off
Balance, December 31, 2011
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
174
2,918
766
2,152
2,918
$
$
$
$
2,831
140,129
$ 142,960
$
$
$
$
$
Commercial,
financial &
agricultural
Real estate -
construction &
development
Real estate -
commercial &
farmland
Real estate -
residential
$
2,779
5,772
(5,807)
$
7,705
11,354
(10,988)
(Dollars in thousands)
14,971
7,883
(8,680)
$
8,664
4,717
(5,399)
Consumer
installment
loans and
Other
$
$
457
615
(749)
Total
34,576
30,341
(31,623)
1,862
35,156
15,966
19,190
35,156
$
$
$
1,367
9,438
3,478
5,960
9,438
$
$
$
52
14,226
146
8,128
$
8,152
$
3,567
6,074
14,226
4,561
8,128
$
123
446
3
443
446
$
$
$
13,561
116,709
130,270
$
45,084
627,681
$ 672,765
$ 16,080
314,647
$ 330,727
$
17
55,347
$ 55,364
$
77,573
1,254,513
$ 1,332,086
NOTE 6. PREMISES AND EQUIPMENT
Premises and equipment are summarized as follows:
Land
Buildings
Furniture and equipment
Construction in progress
Accumulated depreciation
December 31,
2013
2012
(Dollars in Thousands)
$ 36,481
69,461
32,705
2,415
141,062
(37,874)
$ 103,188
$ 25,489
55,115
31,250
816
112,670
(36,687)
$ 75,983
Estimated costs to complete construction projects in progress were less than $1 million at December 31, 2013 and 2012. Depreciation
expense was approximately $4.8 million, $5.3 million and $4.5 million for the years ended December 31, 2013, 2012 and 2011,
respectively.
F-46
Leases
The Company has various operating leases with unrelated parties on 12 banking offices and eight mortgage 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 $1,777,000, $1,708,000 and $1,697,000 for the years ended December 31, 2013, 2012 and
2011, respectively. Future minimum lease commitments under the Company’s operating leases, excluding any renewal options, are
summarized as follows:
2014
2015
2016
2017
2018
Thereafter
$ 1,677,778
1,333,899
966,648
716,380
402,735
296,980
$ 5,394,420
NOTE 7. GOODWILL AND INTANGIBLE ASSETS
The Company recorded a core deposit intangible asset of $4,383,000 associated with the acquisition of Prosperity during 2013 and
recorded a core deposit intangible of $1,149,000 associated with the acquisitions of CBG and MBT during 2012. The Company did
not record a core deposit intangible asset during 2011 associated with the acquisitions of OGB and HTB. During 2013, the Company
recorded $34,093,000 of goodwill on the Prosperity acquisition and the Company recorded $956,000 of goodwill on the TBC
transaction during 2010. 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, 2013
As of December 31, 2012
Gross
Amount
Accumulated
Amortization
Gross
Amount
Accumulated
Amortization
(Dollars in Thousands)
Amortized intangible assets - core deposit premiums
$22,207
$
16,198
$17,824
$
14,784
The aggregate amortization expense for intangible assets was approximately $1,414,000, $1,359,000 and $1,011,000 for the years
ended December 31, 2013, 2012 and 2011, respectively.
The estimated amortization expense for each of the next five years is as follows (in thousands):
2014
2015
2016
2017
2018
Thereafter
$ 1,533
1,346
626
626
626
1,252
$ 6,009
F-47
NOTE 8. DEPOSITS
The aggregate amount of time deposits in denominations of $100,000 or more at December 31, 2013 and 2012 was $373.9 million and
$411.8 million, respectively. The scheduled maturities of time deposits at December 31, 2013 are as follows:
2014
2015
2016
2017
2018
2019
(Dollars in
Thousands)
$ 611,813
90,981
24,686
14,907
8,426
23
$ 750,836
The Company had brokered deposits of approximately $6.0 million and $27.8 million at December 31, 2013 and 2012,
respectively. All brokered deposits at December 31, 2013 mature in 2014, and their weighted average cost is 3.00%.
NOTE 9. SECURITIES SOLD UNDER REPURCHASE AGREEMENTS
Securities sold under repurchase agreements, which are secured borrowings, generally mature within one to four days from the
transaction date. Securities sold under repurchase agreements are reflected at the amount of cash received in connection with the
transactions. The Company may be required to provide additional collateral based on the fair value of the underlying securities. The
Company monitors the fair value of the underlying securities on a daily basis. Securities sold under repurchase agreements at
December 31, 2013 and 2012 were $83.5 million and $50.1 million, respectively.
NOTE 10. EMPLOYEE BENEFIT PLANS
The Company has established a retirement plan for eligible employees. The Ameris Bancorp 401(k) Profit Sharing Plan allows a
participant to defer a portion of his compensation and provides that the Company will match a portion of the deferred
compensation. The Plan also provides for non-elective and discretionary contributions. All full-time and part-time employees are
eligible to participate in the Plan provided they have met the eligibility requirements. Generally, a participant must have completed 12
months of employment with a minimum of 1,000 hours and have attained an age of 21.
The aggregate expense under the plan charged to operations during 2013 and 2012 amounted to $839,000 and $571,000, respectively.
Due to financial performance and general economic conditions, the Company reduced contributions to the plan and there was not an
expense recorded under the plan in 2011.
NOTE 11. DEFERRED COMPENSATION PLANS
The Company and the Bank have entered into separate deferred compensation arrangements with certain executive officers and
directors. The plans call for certain amounts payable at retirement, death or disability. The estimated present value of the deferred
compensation is being accrued over the expected service period. The Company and the Bank have purchased life insurance policies
which they intend to use to fund this liability. The cash surrender value of the life insurance was $18.7 million and $15.6 million at
December 31, 2013 and 2012, respectively. Accrued deferred compensation of $1,573,000 and $1,037,000 at December 31, 2013 and
2012, respectively, is included in other liabilities. Aggregate compensation expense under the plans was $601,000, $364,000 and
$95,000 per year for 2013, 2012 and 2011, respectively, which is included in salaries and employee benefits.
F-48
NOTE 12. OTHER BORROWINGS
Other borrowings consist of the following:
Advance from Federal Home Loan Bank with a fixed interest rate of 0.17%, due
January 24, 2014.
Advances under revolving credit agreement with a regional bank with interest at 90-
day LIBOR plus 4.00% (4.24% at December 31, 2013) due in August 2016,
secured by subsidiary bank stock.
Subordinated debt issued by Prosperity Bank due June 2016 with an interest rate of
90-day LIBOR plus 1.60% (1.84% at December 31, 2013).
Subordinated debt issued by The Prosperity Banking Company due September 2016
with an interest rate of 90-day LIBOR plus 1.75% (1.99% at December 31, 2013).
December 31,
2013
2012
(Dollars in Thousands)
$
165,000
$
10,000
5,000
14,572
$
194,572
$
-
-
-
-
-
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 the January 24, 2014 maturity date, the advance from the FHLB was converted to a daily
rate credit and had been reduced to $35.0 million as of February 28, 2014. At December 31, 2013, $182.8 million was available for
borrowing on lines with the FHLB.
As of December 31, 2013, 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, 2013, the Company had $414.4
million of loans pledged at the Federal Reserve discount window and had $330.8 million available for borrowing.
NOTE 13. 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 income to arrive at net income (loss) available to common shareholders.
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.
On June 14, 2012, the preferred stock was sold by the Treasury through a registered public offering. The sale of the preferred stock to
new investors did not result in any accounting entries and does not change the Company’s capital position. On August 22, 2012, the
Company repurchased the warrant from the Treasury for $2.67 million, and during the fourth quarter of 2012, the Company
repurchased 24,000 shares of the outstanding preferred stock, leaving 28,000 shares of preferred stock outstanding at December 31,
2012 and 2013.
F-49
NOTE 14. INCOME TAXES
The income tax expense in the consolidated statements of income consists of the following:
Current
Use of operating loss carryforward
Deferred
For the Years Ended December 31,
2013
2012
2011
(Dollars in Thousands)
$
$
5,742
-
3,543
$ 4,760
-
2,525
9,285
$ 7,285
$ 2,506
2,958
5,092
$ 10,556
The Company’s income tax expense differs from the amounts computed by applying the federal income tax statutory rates to income
before income taxes. A reconciliation of the differences is as follows:
Tax at federal income tax rate
Change resulting from:
Tax-exempt interest
Increase in cash value of bank owned life insurance
Other
Provision for income taxes
For the Years Ended December 31,
2013
2012
2011
(Dollars in Thousands)
$ 10,256
$ 7,602
$ 11,077
(841)
(446)
316
(675)
(34)
392
(585)
-
64
$
9,285
$
7,285
$ 10,556
Net deferred income tax assets of $16,451,000 and net deferred income tax liabilities of $9,533,000 at December 31, 2013 and 2012,
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
Unrealized loss on interest rate swap
Unrealized loss on securities available for sale
Nonaccrual interest
Purchase accounting adjustments
Other real estate owned
Capitalized costs, accrued expenses and other
Deferred tax liabilities:
Depreciation and amortization
Intangible assets
Purchase accounting adjustments
Deferred gain on FDIC-assisted transactions
Unrealized gain on securities available for sale
December 31,
2013
2012
(Dollars in Thousands)
$ 7,832
550
573
130
911
323
26,408
1,855
1,976
40,558
4,355
-
7,534
12,218
-
24,107
$ 8,258
276
686
1,042
-
891
-
3,803
1,155
16,111
4,758
60
-
17,256
3,570
25,644
Net deferred tax asset (liability)
$16,451
$(9,533)
F-50
NOTE 15. SUBORDINATED DEFERRABLE INTEREST DEBENTURES
During 2005, the Company acquired First National Banc Statutory Trust I, a statutory trust 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% (3.05% at December 31, 2013) 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,
2013, 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% (1.87% at December 31,
2013). 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.
During 2013, the Company acquired Prosperity Banking Capital Trust I, a statutory trust subsidiary of Prosperity, 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
2.57% (2.82% at December 31, 2013) 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 July 2009. The
aggregate principal amount of trust preferred certificates outstanding at December 31, 2013, was $5,000,000. The aggregate principal
amount of debentures outstanding was $5,155,000, and is being carried at fair value of $3,210,000 on the Company’s balance sheet.
During 2013, the Company acquired Prosperity Bank Statutory Trust II, a statutory trust subsidiary of Prosperity, whose sole purpose
was to issue $4,500,000 principal amount of trust preferred securities at a rate per annum equal to the 3-Month LIBOR plus
3.15% (3.40% at December 31, 2013) 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 March
2008. The aggregate principal amount of trust preferred certificates outstanding at December 31, 2013, was $4,500,000. The
aggregate principal amount of debentures outstanding was $4,640,000, and is being carried at fair value of $3,257,000 on the
Company’s balance sheet.
During 2013, the Company acquired Prosperity Bank Statutory Trust III, a statutory trust subsidiary of Prosperity, whose sole purpose
was to issue $10,000,000 principal amount of trust preferred securities at a rate per annum equal to the 3-Month LIBOR plus
1.60% (1.84% at December 31, 2013) 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 March
2011. The aggregate principal amount of trust preferred certificates outstanding at December 31, 2013, was $10,000,000. The
aggregate principal amount of debentures outstanding was $10,310,000, and is being carried at fair value of $5,034,000 on the
Company’s balance sheet.
During 2013, the Company acquired Prosperity Bank Statutory Trust IV, a statutory trust subsidiary of Prosperity, whose sole purpose
was to issue $10,000,000 principal amount of trust preferred securities at a rate per annum equal to the 3-Month LIBOR plus
1.54% (1.78% at December 31, 2013) 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 December
2012. The aggregate principal amount of trust preferred certificates outstanding at December 31, 2013, was $10,000,000. The
aggregate principal amount of debentures outstanding was $10,310,000, and is being carried at fair value of $1,696,000 on the
Company’s balance sheet.
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 income. For regulatory capital purposes, the trust preferred securities qualify as a component of Tier 1
Capital.
NOTE 16. 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.
F-51
As of December 31, 2013, the Company has 377,725 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 2013, 2012 and 2011,
compensation expense related to these grants was approximately $1,041,000, $947,000 and $569,000, 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. The Company
did not record any stock-based compensation expense related to stock options during 2013. Stock-based compensation expense
related to stock options was approximately $97,000 and $216,000 for 2012 and 2011, respectively.
No non-performance based options were issued during 2013, 2012 or 2011. As of December 31, 2013, there was no unrecognized
compensation cost related to nonvested share-based compensation arrangements for non-performance-based options.
A summary of the activity of non-performance based and performance based options as of December 31, 2013 is presented below:
Non-Performance Based
Performance Based
Weighted
Average
Contractual
Term
Aggregate
Intrinsic
Value
$ (000)
Weighted-
Average
Exercise
Price
$ 16.37
-
13.29
13.43
Shares
148,498
-
(27,657)
(5,382)
Weighted
Average
Contractual
Term
Aggregate
Intrinsic
Value
$ (000)
Weighted-
Average
Exercise
Price
$ 16.43
-
7.47
13.22
Shares
391,321
-
(4,524)
(15,797)
115,459
$ 17.24
115,459
$ 17.24
3.04
3.04
$
$
641
371,000
$ 16.67
3.12
$ 1,401
641
351,856
$ 17.27
3.01
$ 1,145
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, 2012 is presented below:
Non-Performance Based
Weighted-
Average
Exercise
Price
Weighted
Average
Contractual
Term
Aggregate
Intrinsic
Value
$ (000)
$ 15.32
-
-
11.28
Performance Based
Weighted-
Average
Exercise
Price
Weighted
Average
Contractual
Term
Aggregate
Intrinsic
Value
$ (000)
$ 16.45
-
-
19.67
Shares
393,891
-
-
(2,570)
Shares
187,032
-
-
(38,534)
148,498
$ 16.37
148,498
$ 16.37
3.34
3.34
$
$
1
1
391,321
$ 16.43
369,766
$ 17.05
4.16
4.05
$
$
774
435
Under option,
beginning of year
Granted
Exercised
Forfeited
Under option, end of
year
Exercisable at end of
year
F-52
A summary of the activity of non-performance based and performance based options as of December 31, 2011 is presented below:
Non-Performance Based
Performance Based
Weighted
Average
Contractual
Term
Aggregate
Intrinsic
Value
$ (000)
Weighted
Average
Contractual
Term
Aggregate
Intrinsic
Value
$ (000)
Weighted-
Average
Exercise
Price
$ 14.73
-
8.51
9.83
Shares
208,993
-
(1,234)
(20,727)
Under option,
beginning of year
Granted
Exercised
Forfeited
Under option, end of
year
Exercisable at end of
year
Weighted-
Average
Exercise
Price
$ 16.43
-
9.07
16.76
Shares
441,185
-
(2,468)
(44,826)
3
8
8
4
320
128
187,032
$ 15.32
182,945
$ 13.87
4.39
4.38
$
$
393,891
$ 16.45
324,271
$ 18.21
6.17
5.77
$
$
The Company did not grant any options during 2013, 2012 and 2011. As of December 31, 2013, there was no unrecognized
compensation cost related to nonvested share-based compensation arrangements granted related to performance-based options.
The fair value of each stock-based compensation grant is estimated on the date of grant using the Black-Scholes option-pricing model.
There were no stock-based compensation grants made in 2013, 2012 and 2011.
A summary of the status of the Company’s restricted stock awards as of and for the years ended December 31, 2013, 2012 and 2011 is
presented below:
Nonvested shares at beginning of year
Granted
Vested
Forfeited
Nonvested shares at end of year
2013
2012
2011
Weighted-
Average
Grant-Date
Fair Value
$ 10.47
14.77
9.31
9.88
Shares
301,775
62,450
(68,650)
(500)
11.78
295,075
Weighted-
Average
Grant-Date
Fair Value
$
9.14
13.15
7.06
9.96
10.47
Shares
295,075
108,400
(21,750)
(4,000)
377,725
Weighted-
Average
Grant-Date
Fair Value
$ 8.73
9.93
13.09
9.50
9.14
Shares
201,650
135,075
(800 )
(34,150 )
301,775
The balance of unearned compensation related to restricted stock grants as of December 31, 2013, 2012 and 2011 was approximately
$2,129,000, $1,608,000 and $1,679,000, respectively.
NOTE 17. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
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 15 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,
2013 and 2012, the fair value of the remaining instrument totaled a liability of $370,000 and $3.0 million, respectively. 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, 2013, the hedge is deemed to be highly effective.
During 2012, the Company began maintaining a risk management program to manage interest rate risk and pricing risk associated
with its mortgage lending activities. This program includes the use of forward contracts and other derivatives that are used to offset
changes in value of the mortgage inventory due to changes in market interest rates. As a normal part of its operations, the Company
enters into derivative contracts such as forward sale commitments and interest rate lock commitments (“IRLCs”) to economically
hedge risks associated with overall price risk related to IRLCs and mortgage loans held for sale carried at fair value. The fair value of
these instruments amounted to an asset of approximately $1,180,000 and $1,169,000 at December 31, 2013 and 2012, respectively.
F-53
NOTE 18. COMMITMENTS AND CONTINGENT LIABILITIES
Loan Commitments
The Company is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing
needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. They involve,
to varying degrees, elements of credit risk and interest rate risk in excess of the amount recognized in the balance sheets.
The Company’s exposure to credit loss is represented by the contractual amount of those instruments. The Company uses the same
credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments. A summary of the
Company’s commitments is as follows:
Commitments to extend credit
Financial standby letters of credit
December 31,
2013
2012
(Dollars in Thousands)
$ 257,195
7,665
$ 180,733
6,788
$ 264,860
$ 187,521
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, 2013 and 2012.
At December 31, 2013, the Company had guaranteed the debt of certain officers’ liabilities at another financial institution totaling
approximately $227,000. 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 was not
required to perform on any of these guarantees during the year ended December 31, 2013.
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 19. REGULATORY MATTERS
The Bank is subject to certain restrictions on the amount of dividends that may be declared without prior regulatory approval. At
December 31, 2013, $10.9 million 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, 2013 and 2012, the Company and the Bank met all capital
adequacy requirements to which they are subject.
F-54
As of December 31, 2013, the most recent notification from the regulatory authorities categorized the Bank as well capitalized under
the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Bank must maintain minimum total
risk-based, Tier I risk-based and Tier I leverage ratios as set forth in the following table. There are no conditions or events since that
notification that management believes have changed the Bank’s category. Prompt corrective action provisions are not applicable to
bank holding companies.
The Company’s and Bank’s actual capital amounts and ratios are presented in the following table.
As of December 31, 2013
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, 2012
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)
$ 353,777
$ 369,387
15.32% $ 184,784
16.03% $ 184,349
8.00%
8.00% $ 230,437
—N/A—
10.00%
$ 331,400
$ 347,010
14.35% $ 92,392
15.06% $ 92,175
4.00%
4.00% $ 138,262
—N/A—
6.00%
$ 331,400
$ 347,010
11.33% $ 117,025
11.93% $ 116,372
4.00%
4.00% $ 145,465
—N/A—
5.00%
$ 331,545
$ 329,578
18.74% $ 141,516
18.65% $ 141,374
8.00%
8.00% $ 176,717
—N/A—
10.00%
$ 309,415
$ 307,470
17.49% $ 70,758
17.40% $ 70,687
4.00%
4.00% $ 106,030
—N/A—
6.00%
$ 309,415
$ 307,470
10.34% $ 119,660
10.30% $ 119,440
4.00%
4.00% $ 149,299
—N/A—
5.00%
NOTE 20. 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-55
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.
Mortgage Loans Held-for-Sale: The fair value of mortgage loans held for sale is determined on outstanding commitments from third
party investors in the secondary markets and are classified within Level 2 of the valuation hierarchy.
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 ASC 310-10, 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 3 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.
Cash Value of Bank Owned Life Insurance: The carrying value of cash value of bank owned life insurance approximates fair value.
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.
F-56
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.
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, 2013 and 2012, 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, 2013 and 2012:
Fair Value Measurements on a Recurring Basis
As of December 31, 2013
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Fair Value
$ 13,926
112,754
1,480
10,325
347,750
67,278
(Dollars in Thousands)
$
-
-
1,480
-
182,461
-
$ 13,926
112,754
-
8,325
165,289
67,278
$ 553,513
$ 183,941
$ 367,572
$
$
$
$
-
-
-
2,000
-
-
2,000
-
-
U.S. government sponsored agencies
State, county and municipal securities
Collateralized debt obligations
Corporate debt securities
Mortgage-backed securities
Mortgage loans held for sale
Total recurring assets at fair value
Derivative financial instruments
Total recurring liabilities at fair value
$
$
370
370
$
$
-
-
$
$
370
370
F-57
Fair Value Measurements on a Recurring Basis
As of December 31, 2012
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
(Dollars in Thousands)
-
4,854
-
23,893
-
28,747
$
6,870
109,536
8,328
191,428
48,786
$ 364,948
-
-
$
$
2,978
2,978
$
$
$
$
$
$
$
$
-
-
2,000
-
-
2,000
-
-
Fair Value
$
6,870
114,390
10,328
215,321
48,786
$ 395,695
$
$
2,978
2,978
U.S. government sponsored agencies
State, county and municipal securities
Corporate debt securities
Mortgage backed securities
Mortgage loans held for sale
Total recurring assets at fair value
Derivative financial instruments
Total recurring liabilities at fair value
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, 2013 and 2012:
Fair Value Measurements on a Nonrecurring Basis
As of December 31, 2013
Impaired loans carried at fair value
Other real estate owned
Purchased, non-covered loans
Purchased, non-covered other real estate owned
Covered loans
Covered other real estate owned
Fair Value
$ 42,546
33,351
448,753
4,276
390,237
45,893
Total nonrecurring assets at fair value
$ 965,056
$
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
(Dollars in Thousands)
$
-
-
-
-
-
-
-
$
$
-
-
-
-
-
-
-
Significant
Unobservable
Inputs
(Level 3)
$
42,546
33,351
448,753
4,276
390,237
45,893
$ 965,056
Impaired loans carried at fair value
Other real estate owned
Covered loans
Covered other real estate owned
Total nonrecurring assets at fair value
Fair Value Measurements on a Nonrecurring Basis
As of December 31, 2012
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
(Dollars in Thousands)
$
$
-
-
-
-
-
$
$
-
-
-
-
-
Significant
Unobservable
Inputs
(Level 3)
$
52,514
39,850
507,712
88,273
$ 688,349
Fair Value
$ 52,514
39,850
507,712
88,273
$ 688,349
F-58
The inputs used to determine estimated fair value of impaired loans and covered loans include market conditions, loan term,
underlying collateral characteristics and discount rates. The inputs used to determine fair value of other real estate owned and covered
other real estate owned include market conditions, estimated marketing period or holding period, underlying collateral characteristics
and discount rates.
For the years ended December 31, 2013 and 2012, there was not a change in the methods and significant assumptions used to estimate
fair value.
The following table shows significant unobservable inputs used in the fair value measurement of Level 3 assets and liabilities.
Measurements
Nonrecurring:
Impaired loans
Fair Value at
December 31, 2013
Valuation
Technique
(Dollars in Thousands)
$42,546
Third party appraisals and
discounted cash flows
Other real estate owned
$33,351
Third party appraisals
Purchased, non-covered loans
$448,753
Third party appraisals and
discounted cash flows
Purchased non-covered other real estate owned
$4,276
Third party appraisals
Covered loans
$390,237
Third party appraisals and
discounted cash flows
Covered real estate owned
$45,893
Third party appraisals
Recurring:
Unobservable Inputs
Range
Collateral discounts and
discount rates
Collateral discounts and
estimated costs to sell
Collateral discounts and
discount rates
Collateral discounts and
estimated costs to sell
Collateral discounts
Discount rate
Collateral discounts and
estimated costs to sell
4.00% - 75.00%
10.00% - 74.00%
1.00% - 40.00%
15.00% - 63.00%
1.75% - 75.00%
10.00% - 86.00%
Investment securities available for sale
$2,000
Discounted par values
Credit quality of
underlying issuer
0.00%
The transfers between the fair value hierarchy levels during the years ended December 31, 2013 and 2012 involved the transferring of
loans to impaired loans, impaired loans to other real estate owned and covered loans to covered other real estate owned. These
transfers are reflected in the Company’s reconciliation of Level 3 assets below.
Investment
securities
available
for
sale
Impaired
loans
carried at
fair value
Other real
estate owned
Purchased,
non-covered
loans
Purchased,
non-covered
other real
estate owned
(Dollars in Thousands)
Covered
loans
Beginning balance, January 1, 2012
Total gains (losses) included in net income
Purchases, sales, issuances, and settlements, net
Transfers in or out of Level 3
Asset reclassification, within Level 3
Ending balance, December 31, 2012
Total gains (losses) included in net income
Purchases, sales, issuances, and settlements, net
Transfers in or out of Level 3
Asset reclassification, within Level 3
$
$
$
2,000
-
-
-
-
2,000
-
-
-
-
$
70,296
-
-
-
(17,782)
52,514
-
(831)
-
(9,137)
50,301
(11,843)
(20,428)
4,038
17,782
39,850
(5,883)
(9,753)
-
9,137
$
-
-
-
-
-
-
-
448,753
-
-
-
-
-
-
-
-
-
4,276
-
-
$
571,489
-
(20,479)
-
(43,298)
507,712
-
(85,642)
-
(31,833)
Covered
other
real
estate
owned
$
78,617
2,892
(36,534)
-
43,298
88,273
(3,280)
(57,818)
(13,115)
31,833
Ending balance, December 31, 2013
$
2,000
$
42,546
$
33,351
$
448,753
$
4,276
$
390,237
$
45,893
F-59
The carrying amount and estimated fair value of the Company’s financial instruments, not shown elsewhere in these financial
statements, were as follows:
Carrying
Amount
Fair Value Measurements at December 31, 2013 Using:
Level 1
Level 2
Level 3
Total
(Dollars in Thousands)
Financial assets:
Loans, net............................................ $
2,435,067
Financial liabilities:
Deposits .............................................. $
Other borrowings ................................ $
2,999,231
194,572
Carrying
Amount
Financial assets:
Loans, net............................................ $
1,934,754
Financial liabilities:
Deposits .............................................. $
2,624,663
$
$
$
$
$
- $
1,565,919 $
881,536 $
2,447,455
- $
- $
3,000,061 $
194,572 $
- $
- $
3,000,061
194,572
Fair Value Measurements at December 31, 2012 Using:
Level 1
Level 2
Level 3
Total
(Dollars in Thousands)
- $
1,406,366 $
560,226 $
1,966,592
- $
2,624,883 $
- $
2,624,883
F-60
NOTE 21 – ACCUMULATED OTHER COMPREHENSIVE INCOME
Accumulated other comprehensive income for the Company consists of changes in net unrealized gains and losses on investment
securities available for sale and interest rate swap derivatives. The following tables present a summary of the accumulated other
comprehensive income balances, net of tax, as of December 31, 2013 and 2012.
(Dollars in Thousands)
Unrealized Gain (Loss)
on Derivatives
Unrealized Gain (Loss)
on Securities
Accumulated Other
Comprehensive Income
(Loss)
Balance, January 1, 2013 .................................................... $
Reclassification for gains included in net income ...............
Current year changes...........................................................
Balance, December 31, 2013............................................... $
(23)
-
1,420
1,397
$
$
6,630
(111)
(8,210)
(1,691)
$
$
6,607
(111)
(6,790)
(294)
(Dollars in Thousands)
Unrealized Gain (Loss)
on Derivatives
Unrealized Gain (Loss)
on Securities
Accumulated Other
Comprehensive Income
(Loss)
Balance, January 1, 2012 .................................................... $
Reclassification for gains included in net income ...............
Current year changes...........................................................
Balance, December 31, 2012............................................... $
856
-
(879)
(23)
$
$
6,440
(209)
399
6,630
$
$
7,296
(209)
(480)
6,607
NOTE 22 – SEGMENT REPORTING
The following table presents selected financial information with respect to the Company’s reportable business segments for the years
ended December 31, 2013 and 2012. The Company did not have reportable business segments for the year ended December 31, 2011.
Net interest income
Provision for loan losses
Noninterest income
Noninterest expense:
Salaries and employee benefits
Equipment and occupancy expenses
Data processing and
telecommunications expenses
Other expenses
Total noninterest expense
Income before income tax expense
Income tax expense
Net income
Less preferred stock dividends
Net income available to common
shareholders
Year Ended
December 31, 2013
Mortgage
Banking
Retail
Banking
Year Ended
December 31, 2012
Total
Retail
Banking
Mortgage
Banking
Total
$ 112,302
11,486
27,419
$ 3,883
-
19,130
(Dollars in Thousands)
$ 116,185
11,486
46,549
$ 113,347
31,089
44,885
$ 1,058
-
12,989
44,155
11,655
10,966
37,064
103,840
24,395
7,567
16,828
1,738
12,515
631
573
4,386
18,105
4,908
1,718
3,190
-
56,670
12,286
11,539
41,450
121,945
29,303
9,285
20,018
1,738
45,456
12,726
10,341
41,056
109,579
17,564
5,831
11,733
3,577
7,666
482
342
1,401
9,891
4,156
1,454
2,702
-
$114,405
31,089
57,874
53,122
13,208
10,683
42,457
119,470
21,720
7,285
14,435
3,577
$ 15,090
$ 3,190
$ 18,280
$ 8,156
$ 2,702
$ 10,858
Total assets
Stockholders’ equity
$3,545,222
$ 314,594
$122,427
2,105
$
$ 3,667,649
316,699
$
$2,938,519
$ 278,901
$ 80,533
116
$
$ 3,019,052
279,017
$
F-61
NOTE 23. CONDENSED FINANCIAL INFORMATION OF AMERIS BANCORP (PARENT COMPANY ONLY)
CONDENSED BALANCE SHEETS
DECEMBER 31, 2013 AND 2012
(Dollars in Thousands)
Assets
Cash and due from banks
Investment in subsidiaries
Other assets
Total assets
Liabilities
Other liabilities
Other borrowings
Subordinated deferrable interest debentures
Total liabilities
Stockholders’ equity
Total liabilities and stockholders’ equity
2013
2012
$
3,550
386,377
6,824
$
1,639
319,364
4,440
$ 396,751
$ 325,443
$
14
24,572
55,466
$
4,157
-
42,269
80,052
46,426
316,699
279,017
$ 396,751
$ 325,443
F-62
CONDENSED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011
(Dollars in Thousands)
Income
Dividends from subsidiaries
Gain on sale of securities
Other income
Total income
Expense
Interest
Other expense
Total expense
Earnings (loss) before income tax benefit and dividends received in excess of
earnings of subsidiaries and equity in undistributed income (loss) of subsidiaries
Income tax benefit
Earnings (loss) before dividends received in excess of earnings of
subsidiaries and equity in undistributed income of subsidiaries
Dividends received in excess of earnings of subsidiaries
Equity in undistributed income of subsidiaries
Net income
Preferred stock dividend
2013
2012
2011
$ 2,200
-
26
$ 29,000
214
106
2,226
29,320
$
-
-
124
124
1,527
1,133
2,660
1,489
1,545
3,034
1,417
1,120
2,537
(434)
26,286
(2,413 )
921
921
785
487
27,207
(1,628 )
-
19,531
(12,772 )
-
-
22,721
20,018
14,435
21,093
1,738
3,577
3,241
Net income available to common shareholders
$18,280
$ 10,858
$17,852
F-63
CONDENSED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011
(Dollars in Thousands)
OPERATING ACTIVITIES
Net income
Adjustments to reconcile net income to net cash provided by (used in) operating
activities:
Stock-based compensation expense
Dividends received in excess of earnings of subsidiaries
Undistributed earnings of subsidiaries
(Increase) decrease in interest payable
Decrease in tax receivable
Provision for deferred taxes
Other operating activities
Total adjustments
2013
2012
2011
$ 20,018
$ 14,435
$ 21,093
1,041
-
(19,531)
(5,300)
(813)
39
(2,686)
(27,250)
1,044
12,772
-
(108)
(786)
14
(388)
12,548
785
-
(22,721)
54
(247)
(390)
(530)
(23,049)
Net cash provided by (used in) operating activities
(7,232)
26,983
(1,956)
INVESTING ACTIVITIES
Net cash proceeds received from acquisitions
Net cash provided by investing activities
FINANCING ACTIVITIES
Repurchase of warrant
Purchase of treasury shares
Dividends paid preferred stock
Proceeds from other borrowings
Repurchase of preferred stock
Proceeds from exercise of stock options
249
249
-
(116)
(1,400)
10,000
-
410
-
-
-
-
(2,670)
(235)
(2,642)
-
(24,000)
3
-
-
(2,635)
-
-
28
Net cash provided by (used in) financing activities
8,894
(29,544)
(2,607)
Net change in cash and due from banks
Cash and due from banks at beginning of year
1,911
1,639
(2,561)
4,200
(4,563)
8,763
Cash and due from banks at end of year
$ 3,550
$ 1,639
$ 4,200
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for interest
Cash paid during the year for income taxes
$ 1,523
-
$
$ 1,597
-
$
$ 1,363
-
$
NOTE 24 – SUBSEQUENT EVENTS
On February 18, 2014, the Company received the approval of the Board of Governors of the Federal Reserve System to redeem the
28,000 shares of the Company’s Fixed Rate Cumulative Perpetual Preferred Stock, Series A, that remain outstanding. The Company
intends to effect the redemption on March 24, 2014.
On March 11, 2014, the Company announced the signing of a definitive merger agreement under which the Company will acquire
Coastal Bankshares, Inc. (“Coastal”), the parent company of The Coastal Bank, Savannah, Georgia. Upon completion of the holding
company merger, The Coastal Bank will be merged with and into Ameris Bank. Coastal currently operates 6 banking locations in
Chatham, Liberty and Effingham counties, Georgia. As of December 31, 2013, Coastal reported assets of $433 million, loans of $295
million and deposits of $364 million.
Under the terms of the merger agreement, Coastal shareholders will receive 0.4671 shares of Ameris common stock in exchange for
each share of Coastal common stock. The transaction is expected to close in the third quarter of 2014 and is subject to customary
closing conditions, regulatory approvals and approval by the shareholders of Coastal.
Based on the closing price of the Company’s common stock on February 28, 2014, the transaction would be valued at approximately
$37.3 million, which represents 169% of Coastal’s tangible book value as of December 31, 2013. The purchase price will be allocated
among the assets of Coastal acquired as appropriate, with the remaining balance being reported as goodwill. The Company will not be
able to make the remaining disclosures required by purchase accounting standards until the transaction closes.
F-64
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 2013.
sales prIce
calendar perIod
______________________________________________________________________
low
High
2013
First Quarter
$12.79 $14.51
Second Quarter $13.16 $16.94
$17.35 $19.79
third Quarter
$17.69 $21.42
Fourth Quarter
the Company did not declare any dividends during 2013.
sHareHolder servIces
Computershare is Ameris Bancorp’s stock transfer agent and administers all matters related to our stock. please contact them via:
first class, registered or certified Mail:
courier service:
Computershare Investor Services
p.o. Box 30170
College Station, tX 77842-3170
Computershare Investor Services
211 Quality Circle, Suite 210
College Station, tX 77845
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 2013.
please direct requests to:
Ameris Bancorp
Attention: Cara Monfort, Investor Relations
p.o. Box 3668
Moultrie, GA 31776-3668
annual MeetInG of sHareHolders
the 2014 Annual Meeting of Shareholders of Ameris Bancorp will be held at 9:30 AM eDt, thursday, May 29, 2014, in the Company’s
offices located at 24 Second Avenue, Southeast, Moultrie, Georgia.
Mixed Sources: Produced
using sustainable methods with
materials from well-managed
forests, controlled sources or
recycled wood or fi ber.
AMERIS BANk LOCATIONS
FULL SERVICE BANkING OFFICES
MORTGAGE OFFICES
Duluth Mortgage
Marietta Mortgage
Alpharetta Mortgage
Stockbridge Mortgage
tallahassee Mortgage
tennessee Mortgage
Doerun
Donalsonville
Doulgas east
Douglas West
ellaville
Jekyll Island
lyons
Moultrie
Moultrie Quitman Highway
Moultrie Sunset
ocilla
pooler
Quitman
Richmond Hill
Savannah Desoto
Savannah Mall Boulevard
St. Marys
St. Simons Island
thomasville
tifton
tifton ocilla Road
Valdosta
Vidalia Downtown
Vidalia First Street
SOUTH CAROLINA
Beaufort
Charleston West Ashley
Columbia
Greenville
Hilton Head Island
Irmo
lexington
Mt. pleasant
Summerville
ALABAMA
Abbeville
Dothan
Dothan Highway 84
eufaula
Headland
FLORIDA
Crawfordville
Fleming Island
Jacksonville Julington Creek
Jacksonville lane Avenue
Jacksonville Mandarin
Jacksonville town Center
lynn Haven
orange park Blanding
ormond Beach
palatka
palatka West
palm Coast
panama City
panama City Beach
St. Augustine north
St. Augustine Beach
St. Augustine Shores
St. Augustine Southpark
tallahassee
trenton
GEORGIA
Albany
Atlanta Midtown
Brunswick
Brunswick north Glynn
Buena Vista
Butler
Cairo
Cairo Drive thru
Colquitt
Cordele
Ameris Bancorp 140
Scan the QR code or visit amerisbank.com
for a detailed listing of locations and hours.
N a s h v i
l e
l
t e
l o t
C h a r
G r e e n v i
l e
l
C o l u m b i a
A t l a n t a
M a c o n
A u g u s t a
B e a u f o r t
C h a r l e s t o n
l t o n H e a d
H i
S a v a n n a h
T i f t o n
H E A D Q U A R T E R S
M O U LT R I E ,
G A
V a l d o s t a
B r u n s w i c k
J a c k s o n v i
l e
l
l a h a s s e e
Ta l
A u g u s t i n e
S t .
G a i n e s v i
l e
l
M o n t g o m e r y
A l b a n y
M o b i
l e
D o t h a n
P a n a m a C i t y
O r l a n d o
Ta m p a
AMERIS BANk LOCATIONS
N a s h v i
l e
l
A t l a n t a
M a c o n
M o n t g o m e r y
A l b a n y
t e
l o t
C h a r
G r e e n v i
l e
l
C o l u m b i a
A u g u s t a
B e a u f o r t
C h a r l e s t o n
l t o n H e a d
H i
S a v a n n a h
T i f t o n
H E A D Q U A R T E R S
M O U LT R I E ,
V a l d o s t a
G A
B r u n s w i c k
l e
l
J a c k s o n v i
l a h a s s e e
Ta l
A u g u s t i n e
S t .
G a i n e s v i
l e
l
O r l a n d o
Ta m p a
M o b i
l e
D o t h a n
P a n a m a C i t y
Ameris Bank Locations
Moultrie Campus
310 First Street, Se
po Box 3668
Moultrie, GA 31776
(p) 229.890.1111 | (F) 229.890.2235
amerisbank.com
002CSn37A9 Annual Report