ANNUAL
REPORT
2016
LEADING TOGETHER
YEARS
CELEBRATING
Dear Shareholder:
We entered 2016 experiencing real momentum in asset growth and
profitability. Reliable growth in all of our revenue sources combined with
successful control of operating expenses led us to a record-setting year
of financial performance. This financial performance put us solidly in the
top quartile of banks our size with respect to our growth rate, our return
on assets and our return on tangible equity. Our goal of becoming a top
quartile performing bank in the country was achieved as our Company
grew total assets to $6.9 billion in size. Operating return on assets and
return on tangible common equity were outstanding at 1.30% and 16.71%,
respectively.
Our growth and expansion efforts in 2016 were designed to ensure that
desirable growth rates and operating performance are sustainable. We
completed the Jacksonville Bancorp acquisition that positioned us as the largest community bank in a
key North Florida market. Our partnership and ownership stake in US Premium Finance allows us to offer
attractive financing terms nationwide for commercial entities that wish to finance their annual insurance
premiums. Lastly, our venture into equipment finance puts us in position to bank well established mid-
market businesses in the construction, transportation and manufacturing sectors of the U.S. economy.
All three moves are expected to improve our long-term growth rates in earnings per share, return on
assets and efficiency, and add further stability to the kind of growth and operating performance that our
shareholders appreciate.
Risk management played a very prominent role in our activities in 2016 as we invested heavily in controls
around the Bank Secrecy Act (BSA) and our compliance infrastructure. Our rapid growth dictates that
we constantly restructure and reengineer our systems to accommodate the bank we see five years from
now, and our efforts are designed to have us ready for what the future holds. The current initiative on
strengthening BSA and Anti-Money Laundering is on track to be completed by the middle of this year.
These financial successes are important, but customer service remains a top priority for our Company.
Our entire culture centers on creating an exceptional experience for our customer. Our work defining
“The Ameris Approach” allows us to rapidly integrate new employees and new markets with an operating
style that resonates strongly with the industry’s best bankers.
We opened for business on October 1, 1971, in Moultrie, Georgia. Now, 45 years later, we are recognized
as one of the most successful financial services institutions in the Southeast. This would not have been
possible without the faithful shareholders, customers, corporate and community board members and
friends that appreciate and value the relationship style of banking that has become our way of life. Your
partnership with us creates a meaningful impact on our communities and our citizens. We value this
legacy and look forward to continuing our efforts to be exceptional in all that we do.
And to the heartbeat of Ameris Bank, I am grateful for our many talented colleagues who share a
common passion to be high-performing, who make a difference serving our customers and who
unselfishly give back to our communities. It is a privilege to be on the Ameris Bank Team!
With sincere appreciation,
Edwin W. Hortman Jr.
President and Chief Executive Officer
ANNUAL REPORT 2016 | 5
“Our transition to Jacksonville reaches far beyond an executive team headquarters, new branches and our logo joining the downtown skyline. Our presence
in this larger market will enhance our ability to attract the additional highly skilled professionals Ameris Bank needs as it continues to grow,” states Edwin W.
Hortman Jr., Ameris Bancorp President and CEO, at the ribbon cutting ceremony for our new executive headquarters.
ENTHUSIASM FOR OUR VISION
2016 was a banner, high-performing year for Ameris Bank. Yet our true enthusiasm lies not in
the celebrations of this year’s noteworthy performance and incredible growth in shareholder
value, but rather in our focus on solid performance that is sustainable and consistent in the
marketplace year over year. Our Company’s focus on strategic planning creates a robust and
renewed energy for how we will accomplish our desired growth and achievements for the
future. Our leaders are team-driven, competitive and have an earnest desire to succeed—
they have the heart and compassion of champions. As a result of their leadership, coaching
and emphasis on career development, we are able to recruit and retain skilled colleagues
that fully believe in our culture. Our colleagues have a deep and innate understanding
of how best to serve our shareholders, our customers and each other. This is our formula
for success. Enthusiasm for consistent performance, team-driven leadership, exceptional
customer experiences and colleague growth—it is The Ameris Approach, which is bringing
our Vision to life.
Left to Right: Ameris Bank colleagues from our Jacksonville, Florida executive, learning and development, IT and
customer care center teams joined together to volunteer at Camp I Am Special, a summer camp for children and adults
with physical, emotional, development and behavioral-related disabilities.
Ameris Bank proudly supports our local businesses, and in Tifton, Georgia, the Tifton Downtown Merchant Association
awarded our local banking team with the Best Outstanding Corporate Sponsor 2016 Award. Chamber representatives
presented the award to Branch Manager Susan McBrayer and Business Banker Jared Ross.
Eight colleagues from our Greater Savannah, Georgia market, including Treasury Solutions Officer Anna Puckett, Business
Banker Kristi Dolan and Regional Sales and Service Manager Candace Adkins, traveled to Atlanta to participate in the
Savannah-Chatham Day. They met with other Savannah business professionals and local and state elected officials to help
the Chamber advocate for its 2017 legislative agenda.
ANNUAL REPORT 2016 | 7
Financing over $31 million in 2016 for new home construction, Construction Lender Terri Sherman focuses on providing exceptional service, customizable
solutions and competitive rates to her clients, residential builders and developers, located throughout Greater Savannah, Georgia.
PASSION FOR HIGH PERFORMANCE
Throughout 2016, our focus on maintaining a steady pace of organic growth, while also
maintaining a strong level of operating results, placed us in the top quartile of banks in our
peer group. We grew our lending portfolio over 33%, improved non-interest income over
23%, and increased shareholders’ equity by $131.7 million. In May, The Jacksonville Bank
fully transitioned to Ameris Bank, creating a greater size and scope in the market. Later in
the year, we welcomed US Premium Finance, a nationwide leader in insurance premium
financing, and we hired a team of accomplished equipment finance industry veterans to
launch a new division, Ameris Bank Equipment Finance.
High performance is the foundation for delivering our exceptional customer experiences.
Our solid performance is why people are more confident banking with us. It is the key to
maintaining our customers’ trust and creates happy, profitable and sustainable customer
relationships. Consistently generating strong revenue, appropriately managing operating
expenses, and successfully integrating new teams and divisions are the catalysts that drive
our high performance.
Left to Right: The Vidalia, Lyons and Dublin, Georgia teams joined together to participate in the Toombs-Montgomery
Chamber Business Expo. Alongside Vidalia City President Jake Cleghorn, this is one of many activities that supported
Jake’s success in capturing the most commercial deposit relationships of any banker in 2016, totaling over $21.6 million in
new deposits.
In Jacksonville, Florida, one of our fastest growing banking markets, Universal Banker CJ Chevalier, Branch Manager Heidi
Roberts, and Universal Banker Errol Daniels welcome customers to our newest branch, located in downtown Jacksonville,
with coffee, resources and boutique concierge-level service.
The Ameris Bank retail mortgage and warehouse lending teams contributed $67.8 million to revenue in 2016, funding over
$4.8 billion for the purchase of over 22,000 homes. These teams, led by Mortgage Banking President Robert Odom, also
push the limits outside the office, with their participation in the Savage Race run and obstacle course.
ANNUAL REPORT 2016 | 9
“Every week during the school year, with the support of many local organizations, we supply SNACKPACKS to over 650 students in six Midlands school districts,
and once a month we supply every school in Richland-Lexington School District 5. October is our primary fundraising month, and for the last 6 years, Ameris
Bank has matched each food item we collect. In the last 2 years alone, together we have collected over 600,000 food items and Ameris Bank in turn donated
over $72,000. Please take a minute to realize that every school weekend, a child/family will have at least 16 food items that they would have gone without.”
shares Stuart Stout, the SNACKPACK Program Coordinator in Irmo, South Carolina.
DEVOTION TO OUR COMMUNITIES AND COLLEAGUES
At Ameris Bank, we build relationships with our customers and members of the
communities in a unique way; we are a bank that considers itself to be a people business.
We genuinely care about our communities and give back. This starts with our dedication
to Ameris Bank colleagues. Their individual contributions make Ameris Bank what it is
today, and what we strive to be tomorrow. Our colleagues create the connections with our
communities through outreach and sincere dedication to countless civic and philanthropic
organizations, collection drives, community activities and business events. Our community
commitment was showcased during our 7th annual companywide Helping Fight Hunger
food drive. During the month of October, over 825,900 non-perishable food items were
collected and distributed to local food banks across our footprint. The people, local
organizations and businesses contribute to our communities’ vibrancy and success, and we
are honored to be part of these efforts.
Left to Right: Branch and enterprise support colleagues in Moultrie, Georgia served lunch to over 200 law enforcement,
fire, emergency medical technicians and other public servants to say thank you for their support of our growing Moultrie
community.
Head Teller Ashley Burnsed and Personal Banker Tori Rhett-Johnson from our Rincon, Georgia location supported over
800 students who attended the Effingham County Ready2Connect program, which helps students prepare for the new
school year.
For eleven consecutive years, our St. Augustine, Florida team has participated in the annual Tips for Kids fundraiser for
the Big Brothers and Big Sisters of St. Johns County. This year our team raised $8,700 in a single night, the largest amount
raised out of the 43 participating teams.
ANNUAL REPORT 2016 | 11
2012
2013
2014
2015
2016
2012
2013
2014
2015
2016
2012
2013
2014
2015
2016
$152,242
$162,734
$212,722
$261,123
$325,172
NET INTEREST INCOME
PLUS NON-INTEREST INCOME
(EXCLUDING GAINS ON ACQUISITIONS)
(In thousands of dollars)
$2,007,133
$2,524,722
$2,930,158
$4,020,105
$5,370,250
TOTAL LOANS
(In thousands of dollars)
$247,359
$247,641
$294,260
$407,619
$503,477
TANGIBLE COMMON EQUITY
(In thousands of dollars)
12 | AMERIS BANCORP
FINANCIALS FOR 2016
REVENUE (NET INTEREST INCOME PLUS NON-INTEREST INCOME)
Total recurring revenue increased 24.5% during 2016. Net interest income increased 25.0% due to
the continued growth in earning assets as we deployed our excess liquidity throughout the year. In
addition, noninterest income increased 23.6% as a result of significant increases in our mortgage
and warehouse lending divisions, as well as increased service charge income due to core deposit
growth and acquisition activity.
LOANS
Our growth in total loans, including loans held for sale, purchased non-covered loans and loan
pools and covered loans, was 33.6% during 2016. Organic growth in loans totaled over $660
million, while our acquisition strategies produced the remaining growth, including the acquisition
of The Jacksonville Bank in the first quarter and US Premium Finance loans in the fourth quarter.
Our lenders are relationship bankers and their commitment to meeting our customers’ needs has
positioned us to expect similar organic growth rates in 2017.
TANGIBLE COMMON EQUITY
We finished 2016 with approximately $503.5 million of tangible common equity, which is more
than double the level we reported at the end of 2012. Tangible book value per share increased to
$14.42 at December 31, 2016. Top-quartile profitability ratios, along with our acquisition activity,
have allowed us to grow tangible book value to its current level. Capital strength is an important
foundation for our Company as we seek to differentiate ourselves with our growth rate; therefore,
we are diligent in how we deploy capital through our various strategies.
ANNUAL REPORT 2016 | 13
AMERIS BANCORP LEADERSHIP
BOARD OF DIRECTORS
PICTURED FROM LEFT TO RIGHT. TOP ROW: CHAIRMAN DANIEL B. JETER, STANDARD DISCOUNT
CORPORATION (CONSUMER FINANCE); EDWIN W. HORTMAN JR., PRESIDENT AND CHIEF EXECUTIVE
OFFICER, AMERIS BANCORP; WILLIAM I. BOWEN JR., BOWEN DONALDSON HOME FOR FUNERALS
(FUNERAL SERVICES). MIDDLE ROW: R. DALE EZZELL, WISECARDS PRINTING (PRINT SERVICES); LEO J.
HILL, TRANSAMERICA MUTUAL FUNDS (LEAD INDEPENDENT DIRECTOR); ROBERT P. LYNCH, LYNCH
MANAGEMENT COMPANY (AUTOMOBILE SALES). BOTTOM ROW: ELIZABETH A. MCCAGUE, MCCAGUE
AND COMPANY, LLC (CONSULTING AND MEDIATION); WILLIAM H. STERN, STERN AND STERN &
ASSOCIATES (REAL ESTATE); JIMMY D. VEAL, BEACHVIEW TENT RENTALS, INC. (EVENT SERVICES).
14 | AMERIS BANCORP
EXECUTIVE OFFICERS
PICTURED FROM LEFT TO RIGHT. TOP ROW: EDWIN W. HORTMAN JR., PRESIDENT AND CHIEF
EXECUTIVE OFFICER; DENNIS J. ZEMBER JR., CPA, EXECUTIVE VICE PRESIDENT, CHIEF OPERATING
OFFICER AND CHIEF FINANCIAL OFFICER; ANDREW B. CHENEY, EXECUTIVE VICE PRESIDENT AND
CHIEF BANKING EXECUTIVE. MIDDLE ROW: LAWTON E. BASSETT III, EXECUTIVE VICE PRESIDENT AND
BANKING GROUP PRESIDENT; JON S. EDWARDS, EXECUTIVE VICE PRESIDENT AND CHIEF CREDIT
OFFICER; JOSEPH B. KISSEL, EXECUTIVE VICE PRESIDENT AND CHIEF INFORMATION OFFICER. BOTTOM
ROW: JAMES A. LAHAISE, EXECUTIVE VICE PRESIDENT AND CORPORATE BANKING EXECUTIVE;
CINDI H. LEWIS, EXECUTIVE VICE PRESIDENT, CHIEF ADMINISTRATIVE OFFICER AND CORPORATE
SECRETARY; STEPHEN A. MELTON, JD, EXECUTIVE VICE PRESIDENT AND CHIEF RISK OFFICER.
ANNUAL REPORT 2016 | 15
COMMUNITY BOARDS OF DIRECTORS
The Ameris Bank Leadership team remains committed to providing the vision and
opportunities necessary for our Company to grow consistently and strategically year after
year. Supporting our executive team is Ameris Bank’s unique structure, one with local market
leadership and support from local community boards of directors.
Jacksonville, FL
Ocilla, GA
Regional President:
Michael T. Lee
Market President:
David B. Batchelor
Directors:
Gary H. Paulk, Chairman
Howard C. McMahan, MD
Wesley T. Paulk
Directors Emeritus:
Loran A. Pate
Daniel M. Paulk
Savannah, GA
Regional President:
H. Richard Sturm
Market President:
Jenny Gentry
Directors:
Matthew A. West,
Chairman
Nina T. Gompels
J. Mason Heidt, CLTC
Thomas Lawhorne III, Ph.D.
Christopher J. Peters
John L. Reynolds
Regional President:
Kendall Spencer
Directors:
Joseph P. Helow,
Chairman
Robert M. Bradley Jr.
Phillip H. Cury
John A. Delaney
A. Hugh Greene
Major B. Harding Jr.
Robert P. Lynch
J. Charles Wilson, CPA
Moultrie, GA
President:
Lawton E. Bassett III
Market President:
Ronnie F. Marchant
Directors:
Thomas W. Rowell,
Chairman
Thomas L. Estes, MD
Robert A. Faircloth
R. Plenn Hunnicutt
Daniel B. Jeter
Lynn L. Jones Jr.
J. Mark Mobley Jr.
Director Emeritus:
Brooks Sheldon
Albany & Cordele, GA
Regional President:
Michael T. Lee
Market President :
Calvin L. McMillan
Directors:
Reid E. Mills, Chairman
Bonny B. Dorough
Gregory R. Garland
Y. Duncan Moore Jr.
J. Austin Turner
Cairo, GA
Market President:
Austen Carroll
City President:
Marty Cannington
Directors:
Jeffrey F. Cox, Chairman
Kevin S. Cauley
Cuy Harrell III
G. Ashley Register, MD
Donalsonville &
Colquitt, GA
Market President:
Tracy Pickle
Directors:
N. Ed King Jr., Chairman
D. Glenn Heard
Kenneth R. Massey
Dan E. Ponder Jr.
Danny S. Shepard
Directors Emeritus:
H. Wayne Carr
John B. Clarke Sr.
Joseph S. Hall
Jerry G. Mitchell
Dothan, AL
Market President:
Tracy Pickle
Directors:
R. Dale Ezzell, Chairman
Robert E. Crowder
Ronald E. Dean
John D. DeLoach
C. Phillip Hayes
Alan Wells
Douglas, GA
Regional President:
Michael T. Lee
Market President:
David B. Batchelor
Directors:
Donnie H. Smith,
Chairman
Kevin L. Gilliard
Faye H. Hennesy
Alfred Lott Jr.
Gainesville & Ocala, FL
Regional President:
Kendall Spencer
Market President:
James Stewart
Directors:
Thomas McIntosh,
Chairman
R. Dale Barron
Adra B. Kennard
Kenneth Kirkpatrick
G. Thomas Mallini
James D. Salter
Breck A. Weingart
COMMUNITY BOARDS OF DIRECTORS
Southeast Georgia Coast
St. Augustine, FL
Thomasville, GA
Valdosta, GA
Regional President:
H. Richard Sturm
Market President:
Michael D. Hodges
Directors:
Jimmy D. Veal, Chairman
Michael L. Davis
Stephen V. Kinney
John W. McDill
G. Tony Sammons
Directors Emeritus:
C. Ray Acosta
Thomas I. Stafford Jr.
J. Thomas Whelchel
State of South Carolina
Regional President:
H. Richard Sturm
Directors:
William H. Stern, Chairman
Kirkman Finlay III
Edward G. McDonnell
William Weston J. Newton
Laurens C. Nicholson
A. Rae Phillips
Regional President:
Kendall Spencer
Market President:
Cecil Gibson
Directors:
Mark F. Bailey Sr.,
Chairman
Harvey E. Stringer
Tracy W. Upchurch
Directors Emeritus:
Melvin A. McQuaig
Tallahassee, FL
President:
Lawton E. Bassett III
Market President:
Robert D. Vice
Directors:
Halsey Beshears, Chairman
Jeff Hartley
Hector Mejia, MD
Ruben R. Rowe III
Brent Sparkman
President:
Lawton E. Bassett III
Market President:
Austen Carroll
Directors:
L. Maurice Chastain,
Chairman
Dale E. Aldridge
S. Mark Brewer, MD
Kenneth E. Hickey
Terrel M. Solana, Ph.D.
Tifton, GA
Regional President:
Michael T. Lee
Market President:
Charles T. Bargeron III
Directors:
William I. Bowen Jr.,
Chairman
Austin L. Coarsey
Scott R. Fulp, DDS
John Alan Lindsey
Fortson B. Turner
Clifford A. Walker Sr., DMD
Director Emeritus:
J. Raymond Fulp
Regional President:
Michael T. Lee
Directors:
Charles E. Smith,
Chairman
Bart T. Mizell
M. Alan Wheeler
T. Eddie York
Directors Emeritus:
Doyle Weltzbarker
Henry C. Wortman
Vidalia, GA
Regional President:
Michael T. Lee
Market President:
David B. Batchelor
City President:
Jacob Cleghorn
Directors:
Christopher A. Hopkins,
Chairman
Pollyann F. Martin
Britton J. McDade
Jeffery S. McLain
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. ANNUAL REPORT 2016
FORM 10-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 2016, or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to .
Commission File Number
001-13901
AMERIS BANCORP
(Exact name of registrant as specified in its charter)
GEORGIA
(State of incorporation)
58-1456434
(IRS Employer ID No.)
310 FIRST ST., SE, MOULTRIE, GA 31768
(Address of principal executive offices)
(229) 890-1111
(Registrant’s telephone number)
Securities registered pursuant to Section 12(b) of the Act: Common Stock, Par Value $1 Per Share
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities Exchange
Act. Yes No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File
required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such files). Yes No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting
company. See definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Non-accelerated filer
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act). Yes No
Smaller reporting company
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 $1,001,965,021.
As of February 21, 2017, the registrant had outstanding 35,118,792 shares of common stock, $1.00 par value per share.
Portions of the registrant’s Proxy Statement for the 2017 Annual Meeting of Shareholders are incorporated into Part III hereof by reference.
DOCUMENTS INCORPORATED BY REFERENCE
1
AMERIS BANCORP
TABLE OF CONTENTS
PART I
Item 1.
Business
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
Item 2.
Properties
Item 3.
Legal Proceedings
Item 4. 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
4
20
27
27
27
27
28
30
32
60
61
61
61
61
61
61
62
62
62
62
2
CAUTIONARY NOTE
REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K (this “Annual Report”) and the documents incorporated by reference herein may contain certain
“forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, forward-
looking statements can be identified by the use of words such as “may,” “might,” “will,” “would,” “should,” “could,” “expect,” “plan,”
“intend,” “anticipate,” “believe,” “estimate,” “predict,” “probable,” “potential,” “possible,” “target,” “continue,” “look forward,” or
“assume,” and words of similar import. Forward-looking statements are not historical facts but instead express only management’s
beliefs regarding future results or events, many of which, by their nature, are inherently uncertain and outside of management’s control.
It is possible that actual results and events may differ, possibly materially, from the anticipated results or events indicated in these
forward-looking statements. Forward-looking statements are not guarantees of future performance, and we caution you not to place
undue reliance on these statements.
You should understand that important factors, including the following, in addition to those described in Part I, Item 1A., “Risk Factors,”
and elsewhere in this Annual Report, as well as in the documents which are incorporated by reference into this Annual Report, and those
described from time to time in our future reports filed with the Securities and Exchange Commission (the “SEC”) under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), could cause actual results to differ materially from those expressed in such
forward-looking statements:
•
•
•
•
•
•
•
•
•
the risks of any acquisitions, mergers or divestitures which we may undertake in the future, including, without limitation, the
related time and costs of implementing such transactions, integrating operations as part of these transactions and possible
failures to achieve expected gains, revenue growth, expense savings and/or other results from such transactions;
the effects of future economic, business and market conditions and changes, including seasonality;
legislative and regulatory changes, including changes in banking, securities and tax laws, regulations and policies and their
application by our regulators;
changes in accounting rules, practices and interpretations;
the risks of changes in interest rates on the levels, composition and costs of deposits, loan demand, and the values and liquidity
of loan collateral, securities and interest-sensitive assets and liabilities;
changes in borrower credit risks and payment behaviors;
changes in the availability and cost of credit and capital in the financial markets;
changes in the prices, values and sales volumes of residential and commercial real estate;
the effects of concentrations in our loan portfolio;
• our ability to resolve nonperforming assets;
•
•
•
the failure of assumptions and estimates underlying the establishment of reserves for possible loan losses and other estimates
and valuations;
changes in technology or products that may be more difficult, costly or less effective than anticipated; and
the effects of war or other conflicts, acts of terrorism, hurricanes, floods, tornados or other catastrophic events that may affect
economic conditions.
Our management believes the forward-looking statements about us are reasonable. However, you should not place undue reliance on
them. Any forward-looking statements in this Annual Report and the documents incorporated by reference herein are not guarantees of
future performance. They involve risks, uncertainties and assumptions, and actual results, developments and business decisions may
differ from those contemplated by those forward-looking statements, and such differences may be material. Many of the factors that
will determine these results are beyond our ability to control or predict. We disclaim any duty to update any forward-looking statements,
all of which are expressly qualified by the statements in this section.
3
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 97 domestic banking offices. We do not operate in any
foreign countries. At December 31, 2016, we had approximately $6.89 billion in total assets, $5.37 billion in total loans, $5.58 billion
in total deposits and $646.4 million of stockholders’ equity. 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.
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 $36,000,000 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 I, issued $5,000,000 in principal amount of trust preferred securities at a rate per annum equal to the 3-Month
LIBOR plus 2.57%; (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 3-Month 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 3-Month 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.
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On June 30, 2014, Ameris acquired Coastal Bankshares, Inc. (“Coastal”) by merger. In connection with such transaction, Ameris
assumed the obligations of Coastal related to the following issuances of trust preferred securities: (i) in 2003, Coastal’s statutory trust
subsidiary, Coastal Bankshares 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 3.15%; and (ii) in 2005, Coastal’s statutory trust subsidiary, Coastal Bankshares Statutory Trust II,
issued $10,000,000 in principal amount of trust preferred securities at a rate per annum equal to the 3-Month LIBOR plus 1.60%. 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.
On May 22, 2015, Ameris acquired Merchants & Southern Banks of Florida, Incorporated (“Merchants”) by merger. In connection
with such transaction, Ameris assumed the obligations of Merchants related to the following issuances of trust preferred securities: (i)
in 2005, Merchants’ statutory trust subsidiary, Merchants & Southern Statutory Trust I, issued $3,000,000 in principal amount of trust
preferred securities at a rate per annum equal to the 3-Month LIBOR plus 1.90%; and (ii) in 2006, Merchants’ statutory trust subsidiary,
Merchants & Southern Statutory Trust II, issued $3,000,000 in principal amount of trust preferred securities at a rate per annum equal
to the 3-Month LIBOR plus 1.50%. 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.
On March 11, 2016, Ameris acquired Jacksonville Bancorp, Inc. (“JAXB”) by merger. In connection with such transaction, Ameris
assumed the obligations of JAXB related to the following issuances of trust preferred securities: (i) in 2004, JAXB’s statutory trust
subsidiary, Jacksonville Statutory Trust I, issued $4,000,000 in principal amount of trust preferred securities at a rate per annum equal
to the 3-Month LIBOR plus 2.63%; (ii) in 2006, JAXB’s statutory trust subsidiary, Jacksonville Statutory Trust II, issued $3,000,000 in
principal amount of trust preferred securities at a rate per annum equal to the 3-Month LIBOR plus 1.73%; (iii) in 2008, JAXB’s statutory
trust subsidiary, Jacksonville Bancorp, Inc. Statutory Trust III, issued $7,550,000 in principal amount of trust preferred securities at a
rate per annum equal to the 3-Month LIBOR plus 3.75%; and (iv) in 2005, JAXB’s statutory trust subsidiary, Atlantic BancGroup, Inc.
Statutory Trust I, issued $3,000,000 in principal amount of trust preferred securities at a rate per annum equal to the 3-Month LIBOR
plus 1.50%. 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 purchase of
JAXB in 2016, 18 retail branches from Bank of America in 2015 and the acquisition of Merchants in 2015, Coastal in 2014, Prosperity
in 2013 and ten 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. We intend to grow within our
existing markets, to branch into or acquire financial institutions in existing markets as well as financial institutions in other markets
consistent with our capital availability and management abilities.
BANKING SERVICES
Lending Activities
General. The Company maintains a diversified loan portfolio by providing a broad range of commercial and retail lending services to
business entities and individuals. We provide agricultural loans, commercial business loans, commercial and residential real estate
construction and mortgage loans, consumer loans, revolving lines of credit and letters of credit. The Company also originates first
mortgage residential mortgage loans and generally enters into a commitment to sell these loans in the secondary market. We have not
made or participated in foreign, energy-related or subprime loans. In addition, the Company does not regularly buy loan participations
or portions of national credits but from time to time, may acquire balances subject to participation agreements through acquisition. Less
than 1% of the Company’s loan portfolio was a loan participation purchased at December 31, 2016 and 2015.
At December 31, 2016, our loan portfolio totaled approximately $5.37 billion, representing approximately 77.9% 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.”
5
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 20- to 30-year period with three-
to five-year maturity or repricing. In addition, during 2015 and 2016, the Company purchased residential mortgage loan pools
collateralized by properties located outside our Southeast markets, specifically in California, Washington and Illinois.
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. During 2016, the Bank purchased a pool of commercial insurance premium finance
loans made to borrowers throughout the United States and began a division to originate, administer and service these types of loans.
Consumer Loans. Our consumer loans include motor vehicle, home improvement, home equity, loans secured by savings accounts and
small unsecured personal credit lines. The terms of these loans typically range from 12 to 72 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. In addition, during 2016, the
Bank began purchasing consumer installment home improvement loans made to borrowers throughout the United States.
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, experience and needs within the
market. Our local market presidents have discretion to approve loans in varying principal amounts up to established limits, and our
regional credit officers review and approve loans that exceed such limits.
Individual lending authority is assigned by the Company’s 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 five 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 ongoing internal loan review process which is independent of the originating loan
officer.
Each lending officer has authority to make loans only in the market area in which his or her Bank office is located and its contiguous
counties. Occasionally, 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.
The Bank has purchased loans outside of its market area. These include residential mortgage loan pools collateralized by properties
located outside our Southeast markets, specifically in California, Washington and Illinois, and commercial insurance premium finance
loans made to borrowers throughout the United States. These purchases were reviewed and approved by the Chief Credit Officer.
6
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 and lending officers 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. Loans that are serviced by others, such as the purchased loan pools,
home improvement loans and insurance premium loans, are monitored by the Company’s credit officers, although ultimate collection
of past due amounts is the responsibility of the servicing agents.
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.
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
loans secured by real estate, including residential mortgage loans, home equity lines of credit and commercial real estate loans. The
Company has a revolving credit agreement with a regional bank, secured by subsidiary bank stock, and the Company maintains credit
arrangements with various other financial institutions to purchase federal funds. The Company participates in the Federal Reserve
discount window borrowings.
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.
7
Use of Derivatives
The Company seeks to provide 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 2015 and 2016, the Company had an interest rate swap with a notional amount of $37.1 million for the purpose
of converting from a variable to a fixed interest rate on certain 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.
The Company maintains 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 the 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 $4,314,000 and $2,687,000 at December 31, 2016 and 2015, respectively, and a derivative liability of
approximately $0 and $137,000 at December 31, 2016 and 2015, respectively.
CORPORATE RESTRUCTURING AND BUSINESS COMBINATIONS
US Premium Finance
On December 15, 2016, the Bank entered into a Management and License Agreement with William J. Villari and US Premium Financing
Holding Company, a Florida corporation (“USPF”), pursuant to which Mr. Villari will manage a division of the Bank operated under
the name “US Premium Finance” and which is engaged in the business of soliciting, originating, servicing, administering and collecting
loans made for purposes of funding insurance premiums and other loans made to persons engaged in the insurance business. Also on
December 15, 2016, Ameris entered into a Stock Purchase Agreement with Mr. Villari pursuant to which the Company agreed to
purchase from him 4.99% of the outstanding shares of common stock of USPF. As consideration for those shares, the Company agreed
to issue to Mr. Villari 128,572 unregistered shares of Common Stock in a private placement transaction pursuant to the exemptions from
registration provided in Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Rule 506 of Regulation D
promulgated thereunder. Those transactions closed on January 18, 2017, and a registration statement was filed with the SEC on February
13, 2017 to register the resale or other disposition of the shares of Common Stock that were issued to Mr. Villari.
At the time of closing, the Company also entered into a Shareholders Agreement with USPF and all other shareholders of USPF under
which the Company will be obligated to purchase from Mr. Villari, and Mr. Villari will be obligated to sell to the Company, an additional
25.01% of the outstanding shares of common stock of USPF on or before December 31, 2017, subject to the receipt of all necessary
regulatory approvals, in exchange for consideration to Mr. Villari of $12,000,000 in cash and an additional 114,285 unregistered shares
of the Company’s Common Stock (with such number of shares to be increased as provided in the Shareholders Agreement if the average
trading price of the Common Stock for a period of 30 days immediately prior to closing is less than $35.00 per share). If the parties
agree to consummate such transactions at a later date, the cash payable to Mr. Villari for the additional USPF shares will increase by
$200,000 for each calendar month or portion thereof beginning January 1, 2018 and continuing through and including June 30, 2018.
Jacksonville Bancorp, Inc.
On March 11, 2016, Ameris acquired JAXB by merger, at which time JAXB’s wholly owned banking subsidiary, The Jacksonville
Bank (“Jacksonville Bank”), also was merged with and into the Bank. JAXB was headquartered in Jacksonville, Florida and it operated
eight full-service branches located in Jacksonville and Jacksonville Beach, Duval County, Florida. The acquisition expanded the
Company’s existing market presence in the Jacksonville market. The consideration for the acquisition was a combination of cash and
our Common Stock, with an aggregate purchase price of approximately $96.4 million. The total consideration consisted of $23.9 million
in cash and 2,549,469 shares of Common Stock with a value of approximately $72.5 million.
Merchants & Southern Banks of Florida, Inc.
On May 22, 2015, Ameris acquired Merchants by merger, at which time Merchants’ wholly owned banking subsidiary, Merchants and
Southern Bank, also was merged with and into the Bank. Merchants was headquartered in Gainesville, Florida and operated thirteen
banking locations in Alachua, Marion and Clay Counties in Florida. The acquisition of Merchants was significant to the Company’s
growth strategy, as it expanded our existing footprint in several attractive Florida markets. Ameris paid an aggregate purchase price of
$50.0 million to acquire the stock of Merchants.
Acquisition of 18 Branches in North Florida and South Georgia
On June 12, 2015, Ameris completed the acquisition of 18 branches from Bank of America, National Association located in Calhoun,
Columbia, Dixie, Hamilton, Suwanee and Walton Counties, Florida and Ben Hill, Colquitt, Dougherty, Laurens, Liberty, Thomas, Tift
and Ware Counties, Georgia. Ameris acquired approximately $644.7 million in deposits and paid a deposit premium of $20.0 million,
equal to 3.00% of the average daily deposits for the 15 calendar-day period immediately prior to the acquisition date. In addition,
Ameris acquired approximately $4.0 million in loans and $10.7 million in premises and equipment.
8
Coastal Bankshares, Inc.
On June 30, 2014, Ameris acquired Coastal by merger, at which time Coastal’s wholly owned banking subsidiary, The Coastal Bank
(“Coastal Bank”), also was merged with and into the Bank. Coastal was headquartered in Savannah, Georgia and it operated six banking
locations in Chatham, Liberty and Effingham Counties in Georgia. The acquisition of Coastal grew the Company’s existing market
presence in the Savannah, Georgia market. The consideration for the acquisition was our common stock, par value $1.00 per share (the
“Common Stock”), with an aggregate purchase price of approximately $37.3 million. The total consideration consisted of approximately
1,599,000 shares of Common Stock with a value of approximately $34.5 million and $2.8 million cash in exchange for outstanding
warrants.
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, 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.
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.
9
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 was 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. The loss-sharing agreements for residential real estate loans and for all other loans are separately structured with reimbursement
percentages dependent on the losses incurred under the specific agreement. Under the residential real estate agreement, losses up to $8.4
million are reimbursed at 80%, losses between $8.4 million and $11.8 million are reimbursed at 30%, and losses in excess of $11.8
million are reimbursed at 80%. Under the all other agreement, losses up to $123.4 million are reimbursed at 80%, losses between $123.4
million and $181.3 million are reimbursed at 30%, and losses in excess of $181.3 million are reimbursed at 80%. The term for loss
sharing on residential real estate loans is ten years, while the term for loss sharing on all other loans was 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 was five years.
The Company’s bid to acquire FBJ included a discount on the book value of the assets totaling $4.8 million. The bid resulted in a cash
payment from the FDIC totaling $8.1 million.
Satilla Community Bank
On May 14, 2010, the Bank purchased substantially all of the assets and assumed substantially all of the liabilities of Satilla Community
Bank (“SCB”) from the FDIC, as Receiver of SCB. SCB operated one branch in St. Marys, Georgia, the southernmost city on the
Georgia coast and a northern suburb of Jacksonville, Florida, with 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 was 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 was 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.
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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 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 loss-sharing
agreement for residential real estate loans was terminated in 2012 with two remaining loans, while the term for loss sharing on all other
loans was 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.
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 did 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 redeemed 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, interest rates near zero 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, savings banks, internet banks, credit unions, and brokerage and investment banking
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, mortgage companies, leasing companies 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, 2016, the Company employed approximately 1,298 full-time-equivalent employees. We consider our relationship with
our employees to be good.
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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. 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,
2016, we had approximately $5.37 billion in total loans outstanding, of which approximately $3.2 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. Set forth below 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.
FDIC Consent Order
On December 16, 2016, the Bank entered into a Stipulation to the Issuance of a Consent Order with its bank regulatory agencies, the
FDIC and the Georgia Department of Banking and Finance (the “GDBF”), consenting to the issuance of a consent order (the “Order”)
relating to the Bank’s Bank Secrecy Act (together with its implementing regulations, the “BSA”) compliance program. In consenting to
the issuance of the Order, the Bank did not admit or deny any charges of unsafe or unsound banking practices related to its BSA
compliance program.
Under the terms of the Order, the Bank or its board of directors is required to take certain affirmative actions to comply with the Bank’s
obligations under the BSA. These include, but are not limited to, the following: strengthening the board of directors’ oversight of BSA
activities; enhancing and adopting a revised BSA compliance program; completing a BSA risk assessment; developing a revised system
of internal controls designed to ensure full compliance with the BSA; reviewing and revising customer due diligence and risk assessment
processes, policies and procedures; developing, adopting and implementing effective BSA training programs; assessing BSA staffing
needs and resources and appointing a qualified BSA officer; establishing an independent BSA testing program; ensuring that all reports
required by the BSA are accurately and properly filed; and engaging an independent firm to review past account activity to determine
whether suspicious activity was properly identified and reported.
Prior to implementation, certain of the actions required by the Order are subject to review by, and approval or non-objection from, the
FDIC and the GDBF. The Order will remain in effect and be enforceable until it is modified, terminated, suspended or set aside by the
FDIC and the GDBF. The Bank began taking corrective actions prior to the entry of the Order after communicating with its regulators
and expects that it will be able to undertake and implement all required actions within the time periods specified in the Order.
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 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.
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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.
By statute and regulation, 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, 2016, there was approximately $39.0 million of retained earnings of our Bank available for payment of cash
dividends under applicable regulations without obtaining regulatory approval.
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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.
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.
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 established new
higher capital ratio requirements, narrowed the definitions of capital, imposed new operating restrictions on banking organizations with
insufficient capital buffers and increased the risk weighting of certain assets. The Company and the Bank were required to comply with
the new capital requirements beginning January 1, 2015.
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The regulatory changes found in the new final rule include the following:
The final rule established a new capital measure called “Common Equity Tier 1 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 prior rules which excluded 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; however, pursuant to a one-time, permanent election made available to most FDIC-supervised
institutions, the Bank elected to opt out of the requirement to include most components of accumulated other comprehensive
income in its regulatory capital. Depository institutions and their holding companies are now required to maintain Common
Equity Tier 1 Capital equal to 4.5% of risk-weighted assets. Additionally, the regulations increased the required ratio of Tier 1
Capital to risk-weighted assets from 4% to 6%. Tier 1 Capital consists of Common Equity Tier 1 Capital plus Additional Tier
1 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 qualify as Additional Tier 1 Capital, but they may be
included in Tier 2 Capital along with qualifying subordinated debt. The new regulations also require a minimum Tier 1 leverage
ratio of 4% for all institutions, while the minimum required ratio of total capital to risk-weighted assets remains at 8%.
In addition to increased capital requirements, depository institutions and their holding companies will be required to maintain
a capital conservation 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 is being 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 (1.25% for 2017)
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 1 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 is required to have at least an 8% Total Risk-Based Capital Ratio, a 6%
Tier 1 Risk-Based Capital Ratio, a 4.5% Common Equity Tier 1 Risk Based Capital Ratio and a 4% Tier 1 Leverage Ratio. As
of December 31, 2016, the minimum risk-based capital requirements including the 0.625% capital conservation buffer are as
follows: 8.625% Total Risk-Based Capital Ratio, 6.625% Tier 1 Risk-Based Capital Ratio, and 5.125% Common Equity Tier
1 Risk Based Capital Ratio. To be well capitalized, a banking organization is required to have at least a 10% Total Risk-Based
Capital Ratio, an 8% Tier 1 Risk-Based Capital Ratio, a 6.5% Common Equity Tier 1 Risk-Based Capital Ratio and a 5% Tier
1 Leverage Ratio.
Since 2001, our consolidated capital ratios have increased due to the issuance of trust preferred securities. At December 31, 2016, all of
our trust preferred securities were included in Tier 1 Capital. At December 31, 2016, our total risk-based capital ratio, our Tier 1 risk-
based capital ratio and our common equity Tier 1 capital ratio were 10.11%, 9.69% and 8.32%, 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.
At December 31, 2016, our leverage ratio was 8.68%, compared with 8.70% at December 31, 2015. Federal Reserve guidelines 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. 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, Common Equity Tier
1 Capital ratio and leverage ratio. Under the regulations, an FDIC-insured bank will be:
•
“well capitalized” if it has a Total Capital ratio of 10% or greater, a Tier 1 Capital ratio of 8% or greater, a Common Equity
Tier 1 Capital ratio of 6.5% 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;
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•
•
•
•
“adequately capitalized” if it has a Total Capital ratio of 8% or greater, a Tier 1 Capital ratio of 6% or greater, a Common
Equity Tier 1 Capital ratio of 4.5% 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 6%, a Common Equity
Tier 1 Capital ratio of less than 4.5% or a leverage ratio of less than 4%;
“significantly undercapitalized” if it has a Total Capital ratio of less than 6%, a Tier 1 Capital ratio of less than 4%, a
Common Equity 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, 2016, 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.”
“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.
FDIC Insurance Assessments
The Bank’s deposits are insured to the maximum extent permitted by the Deposit Insurance Fund (the “DIF”). As insurer, the FDIC is
authorized to conduct examinations of, and to require reporting by, insured institutions. It also may prohibit any insured institution from
engaging in any activity determined by regulation or order to pose a serious threat to the FDIC.
Pursuant to the Dodd-Frank Act, the FDI Act was amended to increase the maximum deposit insurance amount per depositor per
depository institution from $100,000 to $250,000.
The FDIC manages the DIF in part through the DIF’s reserve ratio and sets assessment rates to achieve a “designated reserve ratio” (the
“DRR”), the ratio at which the FDIC believes the DIF can withstand a future banking crisis. The FDIC has set the DRR at 2.0% as a
long-range minimum target. The Dodd-Frank Act requires the reserve ratio of the DIF to reach 1.35% by September 30, 2020. As of
June 30, 2016, the reserve ratio for the DIF was 1.17%. The FDIC has adopted a risk-based premium system that provides for quarterly
assessments. In addition, all institutions with deposits insured by the FDIC are required to pay assessments to fund interest payments
on bonds issued by the Financing Corporation, a mixed-ownership government corporation established to recapitalize the predecessor
to the Deposit Insurance Fund. These assessments will continue until the Financing Corporation bonds mature in 2019.
Through June 30, 2016, the Bank’s assessment rate was based on a methodology adopted by the FDIC for the quarter beginning April
1, 2011. This methodology was in response to a provision in the Dodd-Frank Act that changed the calculation of the assessment base
and that entailed changes to the risk-based pricing system. Under the methodology adopted for 2011, the assessment base became an
insured depository institution’s average consolidated total assets less average tangible equity. The overall range of initial base
assessment rates was 5 basis points to 45 basis points. Institutions, such as the Bank, that are not large and highly complex institutions
were placed in one of four risk categories depending on the institution’s capital level (using the same thresholds as in the prompt
corrective action regime) and supervisory evaluations by the institution’s primary federal regulator. The risk category with the highest-
rated and well-capitalized institutions included a range of assessment rates, and a specific rate was assigned to a particular institution
based on a variety of financial factors and the institution’s component CAMELS ratings. Each of the remaining three risk categories
imposed the same rate on all institutions in the category.
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In April 2016, the FDIC adopted new assessment rates and a new methodology for the assignment of rates that would become effective
when the reserve ratio of the DIF rose above 1.15%. This event occurred when the FDIC announced that as of June 30, 2016, the reserve
ratio was 1.17%. Accordingly, for the last two quarters of 2016, the Bank’s assessment rate has been determined differently. The range
of initial base assessment rates shifted down to 3 basis points to 30 basis points (subject to certain adjustments for unsecured debt and
brokered deposits). Insured depository institutions other than large and highly complex institutions were assigned to one of three (rather
than four) risk categories based solely on composite CAMELS rating. Each of the three risk categories has a range of rates, and the rate
for a particular institution is determined based on seven financial ratios and the weighted average of its component CAMELS ratings.
Under the new assessment rule, further downward adjustments of assessment rates are possible as the DRR exceeds 2.0% and higher
levels.
Future changes in insurance premiums could have an adverse effect on the operating expenses and results of operations, and we cannot
predict what insurance assessment rates will be in the future.
The FDIC may terminate the deposit insurance of any insured depository institution, including the Bank, if the FDIC determines after a
hearing that the institution has engaged or is engaging in unsafe or unsound practices, is in an unsafe or unsound condition to continue
operations, or has violated any applicable law, regulation, order or any condition imposed by an agreement with the FDIC. The FDIC
also may suspend deposit insurance temporarily during the hearing process for the permanent termination of insurance, if the institution
has no tangible capital. Management is not aware of any existing circumstances that would result in termination of our deposit insurance.
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.
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.
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.
In addition, the Dodd-Frank Act created a new agency, the Consumer Financial Protection Bureau (“CFPB”), which has been given the
power to promulgate and enforce federal consumer protection laws. Depository institutions are subject to the CFPB’s rulemaking
authority, while existing federal bank regulatory agencies retain examination and enforcement authority for such institutions. The focus
of the CFPB is on the following: (i) risks to consumers and compliance with the federal consumer financial laws; (ii) the markets in
which firms operate and risks to consumers posed by activities in those markets; (iii) depository institutions that offer a wide variety of
consumer financial products and services; (iv) depository institutions with a more specialized focus; and (v) non-depository companies
that offer one or more consumer financial products or services.
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Financial Privacy
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.
The federal banking agencies pay close attention to the cybersecurity practices of banks, bank holding companies and their affiliates.
The interagency council of the agencies, the Federal Financial Institutions Examination Council (the “FFIEC”), has issued several policy
statements and other guidance for banks as new cybersecurity threats arise. The FFIEC has recently focused on such matters as
compromised customer credentials and business continuity planning. Examinations by the banking agencies now include review of an
institution’s information technology and its ability to thwart cyber attacks.
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.
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.
The FHLB offers 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 the 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.
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.
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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, 2016, excluding purchased non-covered and covered assets, our C&D concentration as a percentage of capital
totaled 62.7% and our CRE concentration, net of owner-occupied loans, as a percentage of capital totaled 204.7%. Including purchased
non-covered and covered loans subject to loss-sharing agreements with the FDIC, the Company’s C&D concentration as a percentage
of capital totaled 76.7% and our CRE concentration, net of owner-occupied loans, as a percentage of capital totaled 269.4%.
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. The federal bank regulatory agencies have issued guidance
on incentive compensation policies, which covers all employees who have the ability to materially affect the risk profile of an institution,
either individually or as part of a group, that is based upon the key principles that a financial institution’s incentive compensation
arrangements should (i) provide incentives that do not encourage risk-taking beyond the institution’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 institution’s board of directors and appropriate policies, procedures and
monitoring.
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.
In April 2016, the FDIC, the other federal banking agencies and other financial regulatory agencies proposed guidance on incentive-
based compensation arrangements. As applied to banks with total assets between $1 billion and $50 billion, the proposal would (i)
prohibit types and features of incentive-based compensation arrangements that encourage inappropriate risks because they are excessive
or could lead to material financial loss, (ii) require such arrangements to strike a balance between risk and reward, to be subject to
effective risk management and controls, and to be subject to effective governance and (iii) require appropriate board of directors (or
committee) oversight and recordkeeping and disclosure to the appropriate agency. The federal agencies have not finalized the proposal,
and we do not know whether or when they may do so.
The scope and content of federal bank regulatory agencies’ policies on executive compensation are continuing to develop and are likely
to continue evolving in the near future. It cannot be determined at this time whether compliance with such policies will adversely affect
the Company’s ability to hire, retain and motivate its key employees.
Evolving Legislation and Regulatory Action
The Dodd-Frank Act implements many new changes in the way financial and banking operations are regulated in the United States.
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.
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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
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 2016, net interest income made up 67.5% 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.
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 deteriorated and depressed real estate values in recent years,
the collateral value of the portfolio and the revenue stream from those loans came under stress and 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 several years.
The Company and the Bank are operating under enhanced regulatory supervision that could materially and adversely affect our
business.
On December 16, 2016, the Bank entered into a Stipulation to the Issuance of a Consent Order with its bank regulatory agencies, the
FDIC and the GDBF, consenting to the issuance of a consent order (the “Order”) relating to weaknesses in the Bank’s Bank Secrecy
Act (together with its implementing regulations, the “BSA”) compliance program. In consenting to the issuance of the Order, the Bank
did not admit or deny any charges of unsafe or unsound banking practices related to its BSA compliance program.
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Under the terms of the Order, the Bank or its board of directors is required to take certain affirmative actions to comply with the Bank’s
obligations under the BSA. These include, but are not limited to, the following: strengthening the board of directors’ oversight of BSA
activities; enhancing and adopting a revised BSA compliance program; completing a BSA risk assessment; developing a revised system
of internal controls designed to ensure full compliance with the BSA; reviewing and revising customer due diligence and risk assessment
processes, policies and procedures; developing, adopting and implementing effective BSA training programs; assessing BSA staffing
needs and resources and appointing a qualified BSA officer; establishing an independent BSA testing program; ensuring that all reports
required by the BSA are accurately and properly filed; and engaging an independent firm to review past account activity to determine
whether suspicious activity was properly identified and reported.
The Order is expected to result in additional BSA compliance expenses for the Bank and the Company. It may also have the effect of
limiting or delaying the Bank’s and the Company’s ability to obtain regulatory approval for certain expansionary activities, to the extent
desired by the Company.
Our failure to comply with the Order may result in additional regulatory action, including civil money penalties against the Bank and
its officers and directors or enforcement of the Order through court proceedings, which could have a material and adverse effect on our
business, results of operations, financial condition, cash flows and stock price.
Greater loan losses than expected may materially adversely affect our earnings.
We, as lenders, are exposed to the risk that our customers will be unable to repay their loans in accordance with their terms and that any
collateral securing the payment of their loans may not be sufficient to assure repayment. Credit losses are inherent in the business of
making loans and could have a material adverse effect on our operating results. Our credit risk with respect to our real estate and
construction loan portfolio will relate principally to the creditworthiness of business entities and the value of the real estate serving as
security for the repayment of loans. Our credit risk with respect to our commercial and consumer loan portfolio will relate principally
to the general creditworthiness of businesses and individuals within our local markets.
We make various assumptions and judgments about the collectability of our loan portfolio and provide an allowance for estimated loan
losses based on a number of factors. We believe that our current allowance for loan losses is adequate. However, if our assumptions or
judgments prove to be incorrect, the allowance for loan losses may not be sufficient to cover actual loan losses. We may have to increase
our allowance in the future in response to the request of one of our primary banking regulators, to adjust for changing conditions and
assumptions, or as a result of any deterioration in the quality of our loan portfolio. The actual amount of future provisions for loan losses
cannot be determined at this time and may vary from the amounts of past provisions.
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 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;
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.
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Legislation and regulatory proposals enacted in response to market and economic conditions 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.
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 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.
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.
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We rely on dividends from the Bank for most of our revenue.
Ameris is a separate and distinct legal entity from its subsidiaries. It receives substantially all of its revenue from dividends from the
Bank. These dividends are the principal source of funds to pay dividends on the Common Stock and interest and principal on the
Company’s debt. Various federal and state laws and regulations limit the amount of dividends that the Bank may pay to the Company.
Also, the Company’s right to participate in a distribution of assets upon a subsidiary’s liquidation or reorganization is subject to the
prior claims of the subsidiary’s creditors. In the event the Bank is unable to pay dividends to the Company, the Company may not be
able to service debt, pay obligations or pay dividends on the Common Stock and its business, financial condition and results of operations
may be materially adversely affected. Consequently, cash-based activities, including further investments in the Bank or in 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, mortgage companies, finance companies, mutual funds,
insurance companies, brokerage and investment banking firms, and other financial intermediaries that offer similar services. Some of
our nonbank competitors are not subject to the same extensive regulations that govern us or our bank subsidiary and may have greater
flexibility in competing for business.
Another competitive factor is that the financial services market, including banking services, is undergoing rapid changes with frequent
introductions of new technology-driven products and services. Our future success may depend, in part, on our ability to use technology
competitively to provide products and services that provide convenience to customers and create additional efficiencies in our operations.
Changes in the policies of monetary authorities and other government action could materially adversely affect our profitability.
The results of our operations are affected by credit policies of monetary authorities, particularly the Federal Reserve. The instruments
of monetary policy employed by the Federal Reserve include open market operations in U.S. government securities, changes in the
discount rate or the federal funds rate on bank borrowings and changes in reserve requirements against bank deposits. In view of
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”). If the liquidity of the NASDAQ market
should fail to operate at a time when we may seek to raise equity capital, 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. 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. 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.
23
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.
A security breach, cyber-attack or interruption of our technology systems may impact our financial results and customer retention.
We rely on data processing systems on a variety of computing platforms and networks. While we believe we have implemented
appropriate measures to mitigate potential risks to our operations and technology functions, we cannot be certain that a security breach,
cyber-attack or interruption will not occur. Such an interruption or security breach could disrupt our operations or result in the disclosure
of sensitive, personal customer information. This could have a negative impact on our financial results through damage to our reputation,
costs to remediate the situation, potential civil litigation, additional regulatory scrutiny, loss of customers and potential financial liability.
Financial services companies depend on the accuracy and completeness of information about customers and counterparties.
In deciding whether to extend credit or enter into other transactions, the Company may rely on information furnished by or on behalf of
customers and counterparties, including financial statements, credit reports and other financial information. The Company may also rely
on representations of those customers, counterparties or other third parties, such as independent auditors, as to the accuracy and
completeness of that information. Reliance on inaccurate or misleading financial statements, credit reports or other financial information
could have a material adverse impact on the Company’s business and, in turn, the Company’s financial condition and results of
operations.
Reputational risk and social factors may impact our results.
Our ability to originate and maintain accounts is highly dependent upon customer and other external perceptions of our business practices
and our financial health. Adverse perceptions regarding our business practices or our financial health could damage our reputation in
both the customer and funding markets, leading to difficulties in generating and maintaining accounts as well as in financing them.
Adverse developments with respect to the consumer or other external perceptions regarding the practices of our competitors, or our
industry as a whole, may also adversely impact our reputation. In addition, adverse reputational impacts on third parties with whom we
have important relationships may also adversely impact our reputation. Adverse impacts on our reputation, or the reputation of our
industry, may also result in greater regulatory or legislative scrutiny, which may lead to laws, regulations or regulatory actions that may
change or constrain the manner in which we engage with our customers and the products we offer. Adverse reputational impacts or
events may also increase our litigation risk. We carefully monitor internal and external developments for areas of potential reputational
risk and have established governance structures to assist in evaluating such risks in our business practices and decisions.
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.
24
We engage in acquisitions of other businesses from time to time. 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.
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.
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 in 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, some of which have already expired; 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.
Hurricanes or other adverse weather events could disrupt our operations or negatively affect economic conditions in the markets we
serve, which could have an adverse effect on our business or results of operations.
Our market areas, located in the southeastern United States, are susceptible to natural disasters, such as hurricanes, tropical storms, other
severe weather events and related flooding and wind damage. These natural disasters could negatively impact regional economic
conditions, cause a decline in the value of mortgage properties or the destruction of mortgaged properties, cause an increase in the risk
of delinquencies, foreclosures or losses on loans originated by us, damage our banking facilities and offices and negatively impact our
growth strategy. We cannot predict with certainty whether or to what extent damage that may be caused by severe weather events will
affect our operations or assets or the economies in our current or future market areas.
The value of the Company’s deferred tax assets could be reduced if corporate income tax rates are reduced or as a result of other
changes in the United States corporate tax system.
Governmental officials have recently made public statements regarding potential reductions in United States federal corporate income
tax rates. While the Company’s income tax expense may benefit from a reduction in applicable income tax rates, such a reduction could
negatively impact the value of the Company’s deferred tax assets and result in a reduction in the Company’s net income for the period
in which the change is enacted. Statements have also been made publicly by governmental officials regarding possible other, more
sweeping changes to the United States tax system generally. We cannot predict with certainty whether any such tax rate reductions or
other tax reform proposals will be enacted into law or whether or how they may affect the Company.
25
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, including changes in accounting policies;
proposed or adopted changes or developments in tax policies or rates;
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.
Holders of our junior subordinated debentures have rights that are senior to those of our common shareholders.
We have supported a portion of our growth through the issuance of trust preferred securities from special purpose trusts and
accompanying junior subordinated debentures. Also, in connection with our acquisitions of other financial institutions, we assumed
junior subordinated debentures issued by those institutions. At December 31, 2016, we had trust preferred securities and accompanying
junior subordinated debentures with a carrying value of $84.2 million. Payments of the principal and interest on the trust preferred
securities of these trusts are conditionally guaranteed by us. Further, the junior subordinated debentures we issued to the trusts are senior
to our shares of Common Stock. As a result, we must make payments on the junior subordinated debentures before any dividends can
be paid on our Common Stock and, in the event of our bankruptcy, dissolution or liquidation, the holders of the junior subordinated
debentures must be satisfied before any distributions can be made on our Common Stock. We have the right to defer distributions on
our junior subordinated debentures (and the related trust preferred securities) for up to five years, during which time no dividends may
be paid on our Common Stock.
We may borrow funds or issue additional debt and equity securities or securities convertible into equity securities, any of which may
be senior to our Common Stock as to distributions and in liquidation, which could negatively affect the value of our Common Stock.
In the future, we may attempt to increase our capital resources by entering into debt or debt-like financing that is unsecured or secured
by all or up to all of our assets, or by issuing additional debt or equity securities, which could include issuances of secured or unsecured
commercial paper, medium-term notes, senior notes, subordinated notes, preferred stock, common 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. In addition, the borrowing of funds or issuance
of debt would increase our leverage and decrease our liquidity, and the issuance of additional equity securities would dilute the interests
of our existing shareholders.
26
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. In 2014, our Board reinstated the payment of dividends on our Common Stock; however, the payment
of dividends could be suspended again at any time.
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 37,200 square feet used for support services for banking operations, including credit,
sales and operational support, as well as audit and loan review services. The Company also leases approximately 63,900 square feet in
Jacksonville, Florida used for additional corporate support services. In addition to its corporate headquarters, Ameris operates 97 office
or branch locations. Of the 97 branch locations, 75 are owned and 22 are subject to either building or ground leases. Ameris also
operates 11 mortgage production offices, all of which are subject to building leases. At December 31, 2016, 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, as a normal incident of the nature and kind of business in which the Company is engaged, various claims or charges
are asserted against the Company or the Bank. In the ordinary course of business, the Company and the Bank are also subject to
regulatory examinations, information gathering requests, inquiries and investigations. Other than ordinary routine litigation incidental
to the Company’s business, management believes based on its current knowledge and after consultation with legal counsel that there are
no pending or threatened legal proceedings that will, individually or in the aggregate, have a material adverse effect on the consolidated
results of operations or financial condition of the Company.
A former borrower of the Company has filed a claim related to a loan previously made by the Company asserting lender liability. The
case was tried without a jury and an order was issued by the court against the Company awarding the borrower approximately $2.9
million on August 8, 2013. The order is currently on appeal to the South Carolina Court of Appeals and the Company is asserting it had
no fiduciary responsibility to the borrower. As of December 31, 2016, the Company believes that it has valid bases in law and fact to
overturn the verdict on appeal. As a result, the Company believes that the likelihood that the amount of the judgment will be affirmed
is not probable, and, accordingly, that the amount of any loss cannot be reasonably estimated at this time. Because the Company believes
that this potential loss is not probable or estimable, it has not recorded any reserves or contingencies related to this legal matter. In the
event that the Company's assumptions used to evaluate this matter as neither probable nor estimable change in future periods, it may be
required to record a liability for an adverse outcome.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
27
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 2016 and 2015; 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 2016
March 31
June 30
September 30
December 31
Quarter Ended 2015
March 31
June 30
September 30
December 31
Dividends
High
Low
Dividend
$ 33.81
32.76
36.20
47.70
$ 24.96
27.73
28.90
34.61
$ 0.05
0.05
0.10
0.10
High
Low
Dividend
$26.89
27.01
28.99
35.21
$ 22.71
24.01
24.67
27.30
$ 0.05
0.05
0.05
0.05
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. The Board reinstated a quarterly cash dividend of $0.05 per share per quarter in June 2014 which was increased
to $0.10 per share per quarter in September 2016. The Company is 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 15, 2017, there were approximately 2,390 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.
28
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, the index of NASDAQ Bank Stocks and the index of SNL
U.S. Bank NASDAQ Stocks for the five-year period commencing December 31, 2011, and ending December 31, 2016. This line graph
assumes an investment of $100 on December 31, 2011, and reinvestment of dividends and other distributions to shareholders.
Index
Ameris Bancorp
NASDAQ Stock Market (US Companies)
NASDAQ Bank
SNL U.S. Bank NASDAQ
12/31/11
100.00
100.00
100.00
100.00
12/31/12
121.50
117.45
118.69
119.19
12/31/13
205.35
164.57
168.21
171.31
12/31/14
251.03
188.84
176.48
177.42
12/31/15
335.13
201.98
192.08
191.53
12/31/16
433.59
219.89
265.02
265.56
Period Ending
Source: SNL Financial
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.
29
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,
the acquisition of Prosperity in 2013, the acquisition of Coastal in 2014, the branch acquisition in 2015, the acquisition of Merchants in
2015, and the acquisition of JAXB in 2016 significantly affected the comparability of selected financial data. Specifically, since the
acquisitions were accounted for using the acquisition method of accounting, the assets of the acquired institutions were recorded at their
fair values, the excess purchase price over the net fair value of the assets was recorded as goodwill and the results of operations for the
business have been included in the Company’s results since the respective dates these acquisitions were completed. Accordingly, the
level of our assets and liabilities and our results of operations for these acquisitions have significantly affected the Company’s financial
position and results of operations. Discussion of these acquisitions can be found in the “Corporate Restructuring and Business
Combinations” section of Part I, Item 1. of this Annual Report and in Note 2, “Business Combinations,” and 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.
Selected Balance Sheet Data:
Total assets
Earning assets
Mortgage loans held for sale
Loans, net of unearned income
Purchased non-covered loans
Purchased loan pools
Covered loans
Investment securities available for sale
FDIC loss-share receivable, net of clawback
Total deposits
FDIC loss-share payable including clawback
Stockholders’ equity
Selected Average Balances:
Total assets
Earning assets
Mortgage loans held for sale
Loans, net of unearned income
Purchased non-covered loans
Purchased loan pools
Covered loans
Investment securities available for sale
Total deposits
Stockholders’ equity
Selected Income Statement Data:
Interest income
Interest expense
Net interest income
Provision for loan losses
Noninterest income
Noninterest expense
Income before income taxes
Income tax expense
Net income
Preferred stock dividends
Net income available to common
shareholders
Year Ended December 31,
2016
2015
2014
2013
2012
(dollars in thousands, except per share data)
$ 6,892,031
6,293,670
105,924
3,626,821
1,011,031
568,314
58,160
822,735
-
5,575,163
6,313
646,437
$ 6,166,714
5,598,077
97,995
2,777,505
1,019,093
619,440
108,672
842,886
5,200,241
613,435
$ 5,588,940
5,084,658
111,182
2,406,877
771,554
592,963
137,529
783,185
6,301
4,879,290
-
514,759
$ 4,804,245
4,320,948
87,952
2,161,726
712,022
201,689
206,774
731,165
4,126,885
492,242
$ 4,037,077
3,574,561
94,759
1,889,881
674,239
-
271,279
541,805
31,351
3,431,149
-
366,028
$ 3,731,281
3,303,467
71,231
1,753,013
557,708
-
339,417
508,383
3,200,622
316,400
$ 3,667,649
3,232,769
67,278
1,618,454
448,753
-
390,237
486,235
65,441
2,999,231
-
316,699
$ 2,848,529
2,472,704
110,542
1,478,816
11,065
-
440,923
332,413
2,487,901
277,173
$ 3,019,052
2,554,551
48,786
1,450,635
-
-
507,712
346,909
159,724
2,624,663
-
279,017
$ 2,971,960
2,501,098
29,194
1,393,012
-
-
553,657
369,734
2,597,840
293,400
$ 239,065
19,694
219,371
$ 190,393
14,856
175,537
$ 164,566
14,680
149,886
$ 126,322
10,137
116,185
$ 129,479
15,074
114,405
4,091
105,801
215,835
105,246
33,146
72,100
$
5,264
85,586
199,115
56,744
15,897
40,847
$
5,648
62,836
150,869
56,205
17,482
38,723
$
11,486
46,549
121,945
29,303
9,285
20,018
$
31,089
57,874
119,470
21,720
7,285
14,435
$
-
-
286
1,738
3,577
$
72,100
$
40,847
$
38,437
$
18,280
$
10,858
30
Per Share Data
Net income – basic
Net income – diluted
Common book value
Tangible book value
Common dividends – cash
Profitability Ratios
Year Ended December 31,
2016
2015
2014
2013
2012
(dollars in thousands, except per share data)
$ 2.10
2.08
18.51
14.42
0.30
$ 1.29
1.27
15.98
12.65
0.20
$ 1.48
1.46
13.67
10.99
0.15
$ 0.76
0.75
11.50
9.87
-
$ 0.46
0.46
10.56
10.39
-
Net income to average total assets
Net income to average common stockholders’ equity
Net interest margin
Efficiency ratio
1.17%
11.75
3.99
66.38
0.85%
8.37
4.12
76.25
1.08%
12.40
4.59
70.92
0.70%
8.06
4.74
74.94
0.49%
5.99
4.60
69.35
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 purchased non-covered and covered assets.
** Excludes covered assets.
0.11%
0.56
1.12
0.22%
0.85
1.60
0.34%
1.12
3.35
0.75%
1.38
3.49
2.87%
1.63
5.28
94.42%
80.83
28.22
80.11%
75.96
27.26
82.64%
80.22
24.46
81.94%
78.08
22.29
74.61%
77.83
19.46
9.38%
14.29
9.21%
15.50
9.07%
10.14
8.63%
9.24%
-
-
31
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
OVERVIEW
During 2016, the Company reported net income available to common shareholders of $72.1 million, or $2.08 per diluted share, compared
with $40.8 million, or $1.27 per diluted share, in 2015. The Company’s net income as a percentage of average assets for 2016 and 2015
was 1.17% and 0.85%, respectively, while the Company’s net income as a percentage of average shareholders’ equity was 11.75% and
8.37%, respectively.
Highlights of the Company’s performance in 2016 include the following:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
In March 2016, the Company completed the acquisition of Jacksonville Bancorp, Inc., the parent company of The Jacksonville
Bank, increasing total assets by $526.0 million, total loans by $402.1 million and total deposits by $401.4 million. The JAXB
acquisition added eight retail banking locations, all of which are located in the Jacksonville, Florida MSA. The acquisition
further expanded the Company’s existing Southeastern footprint in the attractive Jacksonville market. The Company recorded
$35.5 million in additional goodwill and $4.7 million in core deposit intangibles associated with the JAXB acquisition.
Total assets were $6.89 billion at December 31, 2016, an increase of $1.30 billion, or 23.3%, from December 31, 2015.
Organic growth in loans amounted to $660.4 million for 2016, or 20.8% of December 31, 2015 loans excluding purchased loan
pools and covered loans.
Total deposits were $5.58 billion at December 31, 2016, an increase of $695.9 million, or 14.3%, from December 31, 2015.
Non-interest bearing demand deposits grew $243.5 million, or 18.3%, during 2016 to end the year at 28.2% of total deposits.
Total revenue increased 24.5% to $325.2 million.
The Company’s net interest margin decreased to 3.99% in 2016, from 4.12% in 2015. This decrease was primarily attributable
to lower yields on substantially all earning asset classes. Deposit costs, the Company’s largest funding expense, increased
slightly from 0.23% in 2015 to 0.24% in 2016. Non-deposit funding yields decreased from 3.03% in 2015 to 2.26% in 2016,
due to an increase in short-term FHLB borrowings.
Net income from retail mortgage, warehouse lending and SBA lines of business increased 35.7% to $20.6 million, compared
with $15.2 million in 2015.
Non-accrual loans, excluding purchased loans, increased approximately $1.3 million, or 7.4%, to $18.1 million during 2016.
However, non-accrual loans, excluding purchased loans expressed as a percentage of loans, excluding purchased loans,
declined from 0.70% at December 31, 2015 to 0.50% at December 31, 2016.
Legacy OREO (excluding purchased OREO and OREO sourced from purchased loans) decreased from $16.1 million at
December 31, 2015 to $10.9 million at December 31, 2016.
Non-performing assets excluding covered assets to total assets continued to improve during 2016, decreasing from 1.09% at
December 31, 2015 to 0.85% at December 31, 2016.
Net charge-offs for 2016 declined to 0.11% of average total legacy loans, compared with 0.22% for 2015. Net charge-offs for
2016 declined to 0.03% for average total loans, compared with 0.16% for 2015.
Tangible common equity to tangible assets increased slightly from 7.44% at December 31, 2015 to 7.46% at December 31,
2016. Tangible common book value per share increased 14.0% from $12.65 at December 31, 2015 to $14.42 at December 31,
2016.
Adjusted operating return on average assets increased to 1.30%, compared with 1.11% in 2015.
Adjusted operating return on average tangible common equity increased to 16.71%, compared with 13.66% in 2015.
Adjusted operating efficiency ratio improved to 62.7%, compared with 68.9% for 2015.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
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 its 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.
32
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
incurred losses in the Company’s loan portfolio. Calculation of the allowance for loan losses represents a critical accounting estimate
due to the significant judgment, assumptions and estimates related to the amount and timing of estimated losses, consideration of
subjective environmental factors and the amount and timing of cash flows related to impaired loans.
Management believes that the allowance for loan losses is adequate. While management uses available information to recognize losses
on loans, future additions to the allowance for loan losses may be necessary based on changes in economic conditions. In addition,
various regulatory agencies, as an integral part of their examination processes, periodically review the Company’s allowance for loan
losses. Such agencies may require the Company to recognize additions to the allowance for loan losses based on their judgments about
information available to them at the time of their examination.
Considering current information and events regarding a borrower’s ability to repay its obligations, management considers a loan to be
impaired when the ultimate collectability of all amounts due, according to the contractual terms of the loan agreement, is in doubt. When
a loan is considered to be impaired, the amount of impairment is measured based on the present value of expected future cash flows
discounted at the loan’s effective interest rate or if the loan is collateral-dependent, the fair value of the collateral is used to determine
the amount of impairment. Impairment losses are included in the allowance for loan losses through a charge to the provision for loan
losses.
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, 2016, we had six individual loans that exceeded our in-house credit limit of $25.0 million. We
had eight relationships consisting of 12 different non-covered loans that exceeded our $25.0 million in-house credit limit. Total exposure
resulting from these eight relationships was $298.7 million. Additional disclosure concerning the Company’s largest loan relationships
is provided in the “Balance Sheet Comparison” section below.
A substantial portion of our loan portfolio is in the commercial real estate and residential real estate sectors. The majority of these 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, 2016, the percentage of the Company’s assets measured at fair value was 14%. See Note 21, “Fair Value Measures”,
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 sometimes
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.
33
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 nonaccretable 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 future interest
income. In addition, purchased loans without evidence of credit deterioration are also handled under this method.
Income Taxes
As required by GAAP, 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 15, “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.
Long-Lived Assets, Including Intangibles
Intangible assets consist of goodwill and core deposit intangibles. Goodwill represents the excess purchase price over the fair value of
net assets acquired in business acquisitions. Core deposit intangibles represent premiums paid for deposits acquired via acquisition and
are being amortized over its estimated useful life, typically five to ten years.
NET INCOME/(LOSS) AND EARNINGS PER SHARE
The Company’s net income available to common shareholders during 2016 was $72.1 million, or $2.08 per diluted share, compared
with $40.8 million, or $1.27 per diluted share, in 2015, and $38.4 million, or $1.46 per diluted share, in 2014.
For the fourth quarter of 2016, the Company recorded net income available to common shareholders of $18.2 million, or $0.52 per
diluted share, compared with $14.1 million, or $0.43 per diluted share, for the quarter ended December 31, 2013, and $10.6 million, or
$0.39 per diluted share, for the quarter ended December 31, 2014.
EARNING ASSETS AND LIABILITIES
Average earning assets were approximately $5.60 billion in 2016, compared with approximately $4.32 billion in 2015. 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.
34
The following tables set forth the amount of average balance, interest income or interest expense, and average interest rate for each
category of interest-earning assets and 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,
2016
Interest
Income/
Expense
Average
Yield/
Rate Paid
2015
Interest
Income/
Expense
Average
Balance
Average
Yield/
Rate Paid
Average
Balance
2014
Interest
Income/
Expense
Average
Yield/
Rate Paid
Average
Balance
(dollars in thousands)
ASSETS
Interest-earning assets:
Mortgage loans held for sale $
97,995 $ 3,391
2,777,505 131,305
Loans
Purchased non-covered loans 1,019,093 63,860
619,440 17,170
Purchased loan pools
108,672
Covered loans
6,503
842,886 20,229
Investment securities
860
132,486
Short-term assets
3.46% $
4.73
6.27
2.77
5.98
2.40
0.65
87,952 $ 3,466
2,161,726 103,206
712,022 46,208
201,689
6,481
206,774 14,128
731,165 18,657
823
219,620
3.94% $
4.77
6.49
3.21
6.83
2.55
0.37
71,231 $ 2,593
1,753,013 87,727
557,708 40,020
-
339,417 21,355
508,383 14,281
244
73,715
-
3.64%
5.00
7.18
-
6.29
2.81
0.33
Total interest-
earning assets
5,598,077 243,318
4.35
4,320,948 192,969
4.47
3,303,467 166,220
5.03
Noninterest-earning
assets
568,637
Total assets
$ 6,166,714
LIABILITIES AND STOCKHOLDERS’ EQUITY
Interest-bearing liabilities:
Savings and interest-
483,297
$ 4,804,245
427,814
$ 3,731,281
bearing demand deposits
Time deposits
Other borrowings
FHLB advances
Federal funds purchased and
securities sold under
agreements to repurchase
Subordinated deferrable interest
$ 2,793,713 $ 6,984
5,427
1,765
899
890,757
45,526
150,879
0.25% $ 2,088,859 $ 4,848
4,905
810,344
0.61
1,363
40,931
3.88
31
8,444
0.60
0.23% $ 1,680,328 $ 4,435
5,054
768,420
0.61
1,760
39,850
3.33
140
46,986
0.37
0.26%
0.66
4.42
0.30
44,324
98
0.22
50,988
173 0.34
47,136
164 0.35
debentures
80,952
4,522
5.59
67,962
3,536
5.20
60,298
3,127
5.19
Total interest-bearing
liabilities
4,006,151 19,695
0.49
3,067,528 14,856
0.48
2,643,018 14,680
0.56
Noninterest-bearing
demand deposits
Other liabilities
Stockholders’ equity
1,515,771
31,357
613,435
1,227,682
16,793
492,242
751,874
19,989
316,400
Total liabilities and
stockholders’
equity
Interest rate spread
Net interest income
Net interest margin
$ 6,166,714
$ 4,804,245
$ 3,731,281
$ 223,623
3.86%
3.99%
$ 178,113
3.99%
4.12%
$ 151,540
4.47%
4.59%
35
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, other investments, interest-bearing deposits in banks and federal funds sold. Our interest-bearing liabilities include
deposits, securities sold under agreements to repurchase, other borrowings and subordinated debentures.
2016 compared with 2015. For the year ended December 31, 2016, interest income was $239.1 million, an increase of $48.7 million,
or 25.6%, compared with the same period in 2015. Average earning assets increased $1.28 billion, or 29.6%, to $5.60 billion for the
year ended December 31, 2016, compared with $4.32 billion as of December 31, 2015. Yield on average earning assets on a taxable
equivalent basis decreased during 2016 to 4.35%, compared with 4.47% for the year ended December 31, 2015. The decline is mostly
due to the short-term investment strategy associated with the Company’s 2015 acquisitions. Yields on the funds invested in purchased
mortgage pools decreased to 2.77% during 2016, compared with 3.21% during 2015, as a result of increased purchase premium
amortization.
Interest expense on deposits and other borrowings for the year ended December 31, 2016 was $19.7 million, compared with $14.9
million for the year ended December 31, 2015. During 2016, average noninterest-bearing accounts amounted to $1.52 billion and
comprised 29.1% of average total deposits, compared with $1.23 billion, or 29.2% of average total deposits, during 2015. Average
balances of time deposits amounted to $890.8 million and comprised 17.1% of average total deposits during 2016, compared with $810.3
million, or 19.3% of average total deposits, during 2015.
On a taxable-equivalent basis, net interest income for 2016 was $223.6 million, compared with $178.1 million in 2015, an increase of
$45.5 million, or 25.6%. The Company’s net interest margin, on a tax equivalent basis, decreased to 3.99% for the year ended
December 31, 2016, compared with 4.12% for the year ended December 31, 2015. Accretion income for 2016 increased to $14.1
million, compared with $11.7 million for 2015. Excluding the effect of accretion, the Company’s net interest margin for 2016 was
3.74%, compared with 3.85% for 2015.
2015 compared with 2014. For the year ended December 31, 2015, interest income was $190.4 million, an increase of $25.8 million,
or 15.7%, compared with the same period in 2014. Average earning assets increased $1.02 billion, or 30.8%, to $4.32 billion for the
year ended December 31, 2015, compared with $3.30 billion as of December 31, 2014. Yield on average earning assets on a taxable
equivalent basis decreased during 2015 to 4.47%, compared with 5.03% for the year ended December 31, 2014. However, lower yields
on most earning assets have been partially offset by lower funding costs.
Interest expense on deposits and other borrowings for the year ended December 31, 2015 was $14.9 million, compared with $14.7
million for the year ended December 31, 2014. The Company’s funding mix continued to improve during 2015, leading to savings in
cost of funds. During 2015, average noninterest-bearing accounts amounted to $1.23 billion and comprised 29.2% of average total
deposits, compared with $751.9 million, or 23.5% of average total deposits, during 2014. Average balances of time deposits amounted
to $810.3 million and comprised 19.3% of average total deposits during 2015, compared with $768.4 million, or 24.0% of average total
deposits, during 2014.
On a taxable-equivalent basis, net interest income for 2015 was $178.1 million, compared with $151.5 million in 2014, an increase of
$26.6 million, or 17.5%. The Company’s net interest margin, on a tax equivalent basis, decreased to 4.12% for the year ended
December 31, 2015, compared with 4.59% for the year ended December 31, 2014.
36
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, 2016 and 2015
are shown in the following table:
2016 vs. 2015
2015 vs. 2014
Increase
(Decrease)
Changes Due To
Rate
Volume
Increase
(Decrease)
Changes Due To
Rate
Volume
(dollars in thousands)
Increase (decrease) in:
Income from earning assets:
Interest on mortgage loans held for sale
Interest and fees on loans
Interest on purchased non-covered loans
Interest on purchased loan pools
Interest on covered loans
Interest on securities
Interest on short-term assets
$
(75)
28,099
17,652
10,689
(7,625)
1,572
37
$
(471)
(1,300)
(2,276)
(2,735)
(922)
(1,279)
364
$ 396
29,399
19,928
13,424
(6,703)
2,851
(327)
$
873
15,479
6,188
6,481
(7,227)
4,376
579
$
264
(4,974)
(4,885)
-
1,118
(1,882)
96
$
609
20,453
11,073
6,481
(8,345)
6,258
483
Total interest income
50,349
(8,619)
58,968
26,749
(10,263)
37,012
Expense from interest-bearing liabilities:
Interest on savings and interest-bearing
demand deposits
Interest on time deposits
Interest on other borrowings
Interest on FHLB advances
Interest on federal funds purchased and
securities sold under agreements to
repurchase
Interest on trust preferred securities
Total interest expense
2,136
522
402
868
500
35
249
345
1,636
487
153
523
413
(149)
(397)
(109)
(665)
(425)
(446)
6
1,078
276
49
(115)
(75)
986
4,839
(52)
310
1,387
(23)
676
3,452
9
409
176
(4)
12
(1,522)
13
397
1,698
Net interest income
$ 45,510
$(10,006)
$ 55,516
$ 26,573
$ (8,741)
$ 35,314
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 2016 amounted to $4.1 million, compared with $5.3 million for 2015 and $5.6 million
in 2014. Net charge-offs in 2016 were 0.03% of average loans compared with 0.16% in 2015 and 0.26% in 2014. Net charge-offs in
2016 were 0.11% of average loans, excluding purchased loans and the loans covered by the FDIC-loss-sharing agreements, compared
with 0.22% in 2015 and 0.34% in 2014.
At December 31, 2016, non-performing assets, excluding assets covered by the FDIC-loss-sharing agreements, amounted to $58.7
million, or 0.85% of total assets, compared with $60.7 million, or 1.09% of total assets, at December 31, 2015. Legacy non-performing
assets totaled $29.0 million and acquired, non-covered non-performing assets totaled $29.7 million at December 31, 2016. Legacy other
real estate was approximately $10.9 million as of December 31, 2016, reflecting a 32.7% decrease from the $16.1 million reported at
December 31, 2015. Purchased non-covered other real estate was $11.3 million at December 31, 2016, compared with $14.3 million at
December 31, 2015.
The Company’s allowance for loan losses at December 31, 2016 was $23.9 million, or 0.45% of loans compared with $21.1 million, or
0.54%, and $21.2 million, or 0.75%, at December 31, 2015 and 2014, respectively. Excluding purchased non-covered and covered
loans, the Company’s allowance for loan losses at December 31, 2016 was $20.5 million, or 0.56% of loans excluding purchased non-
covered and covered loans compared with $20.4 million, or 0.85%, and $21.2 million, or 1.12%, at December 31, 2015 and 2014,
respectively. A significant portion of the Company’s loan growth during 2016 consisted of municipal loans, residential mortgages and
commercial insurance premium loans, each of which presents a lower risk of default than other loan types, such as acquisition,
construction and development or investor commercial real estate loans. The growth in lower-risk loans during 2016, combined with the
improved historical loss rates and qualitative factors, are the primary reasons the allowance for loan losses as a percentage of loans,
excluding purchased loans, decreased during the year.
37
Noninterest Income
Following is a comparison of noninterest income for 2016, 2015 and 2014.
Service charges on deposit accounts
Mortgage banking activities
Other service charges, commissions and fees
Net gains on sales of securities
Gain on sale of SBA loans
Other noninterest income
Years Ended December 31,
2016
2015
2014
$ 42,745
48,298
3,575
94
3,974
7,115
$105,801
(dollars in thousands)
$ 34,465
36,800
3,754
137
4,522
5,908
$ 85,586
$ 24,614
25,986
2,647
138
3,896
5,555
$ 62,836
2016 compared with 2015. Total noninterest income in 2016 was $105.8 million, compared with $85.6 million in 2015, an increase of
$20.2 million. This increase is due primarily to an $11.5 million increase in mortgage banking activity and an $8.3 million increase in
service charges on deposit accounts.
Service charges on deposit accounts increased by $8.3 million to $42.7 million during 2016, an increase of 24.0% compared with 2015.
Growth in service charge related revenues on commercial and consumer accounts was responsible for most of the increase in service
charges, while NSF and debit card revenues were mostly flat.
Income from mortgage banking activities continued to increase during 2016, from $36.8 million in 2015 to $48.3 million in 2016. Retail
mortgage revenues increased 36.8% during 2016, from $43.3 million for 2015 to $59.3 million for 2016. Net income for the Company’s
retail mortgage division grew 42.3% during 2016 to $13.2 million. Revenues from the Company’s warehouse lending division increased
54.1% during the year, from $5.5 million for 2015 to $8.5 million for 2016, and net income for the division increased 48.3%, from $3.1
million for 2015 to $4.6 million for 2016.
2015 compared with 2014. Total noninterest income in 2015 was $85.6 million, compared with $62.8 million in 2014, an increase of
$22.8 million. This increase is due to a $10.8 million increase in mortgage banking activity, a $9.9 million increase in service charges
on deposit accounts, a $1.1 million increase in other service charges, a $626,000 increase in gain on the sale of SBA loans and a $353,000
increase in other income.
Income from mortgage banking activities continued to increase during 2015, from $26.0 million in 2014 to $36.8 million in 2015, as
the Company’s mortgage division reached a mature stage with a team of long-tenured mortgage bankers producing strong results.
Service charges on deposit accounts increased $9.9 million, or 40.0%, in 2015 as a result of acquisition activity and successful efforts
on commercial deposit accounts. Other service charges increased $1.1 million, or 41.8%, in 2015 due to acquisitions and increased
sales efforts. Since 2011, the Company has devoted significant resources to both treasury deposit products and treasury sales
professionals, which contributed significantly to the Company’s growth in non-interest bearing deposits.
Gains on sales of SBA loans increased $626,000 to $4.5 million during 2015, as the Company continued its efforts to build an SBA
division.
38
Noninterest Expense
Following is a comparison of noninterest expense for 2016, 2015 and 2014.
Salaries and employee benefits
Occupancy and equipment
Amortization of intangible assets
Data processing and communications expenses
Advertising and public relations
Postage & delivery
Printing & supplies
Legal fees
Other professional fees
Directors fees
FDIC insurance
Merger and conversion charges
Credit resolution-related expenses
Other noninterest expenses
Years Ended December 31,
2016
2015
2014
$ 106,837
24,397
4,376
24,591
4,181
1,906
2,158
1,374
8,511
1,060
3,712
6,376
6,172
20,184
$ 215,835
(dollars in thousands)
$ 94,003
21,195
3,741
19,849
3,312
1,810
2,554
942
2,506
1,203
3,475
7,980
17,707
18,838
$199,115
$ 73,878
17,521
2,330
15,551
2,869
1,392
1,331
743
2,349
810
2,972
3,940
13,506
11,677
$150,869
2016 compared with 2015. Operating expenses increased from $199.1 million in 2015 to $215.8 million in 2016. Total expenses in
2016 include approximately $6.4 million in merger-related charges and $5.75 million in compliance-related charges, while total
expenses in 2015 include approximately $8.0 million in merger-related charges. Excluding these amounts, expenses in 2016 increased
by only $12.6 million, or 6.6%, compared with 2015 levels.
Salaries and benefits increased $12.8 million during 2016, driven by $2.5 million associated with the Company’s acquisition of JAXB
in March 2016 and $8.2 million relating to higher compensation levels in the Company’s mortgage and SBA divisions.
Occupancy costs increased $3.2 million, or 15.1%, during 2016, principally as a result of the increased number of retail branches
operated during the year, as well as additional expenses for administrative offices. Data processing and IT-related costs increased $4.7
million, or 23.9%, in 2016. Growth in accounts associated with the acquisition of The Jacksonville Bank accounted for a portion of this
increase, while the majority of the increase related to much higher online and mobile banking adoption.
Other professional fees increased $6.0 million in 2016, mostly due to the compliance-related charges recorded in the fourth quarter of
2016. Postage and delivery, legal fees and other noninterest expense all increased during 2016 to support the larger operations of the
Company.
Merger and conversion charges of $6.4 million in 2016 relate to the JAXB acquisition, compared with $8.0 million recorded in 2015
related to the Merchants and branch acquisitions. Credit resolution-related expenses decreased $11.5 million in 2016. During the second
quarter of 2015, the Company recorded $11.2 million of pre-tax OREO write-downs and other credit resolution-related expenses related
to an aggressive write-down on remaining non-performing assets in order to expedite their liquidation.
2015 compared with 2014. Operating expenses increased from $150.9 million in 2014 to $199.1 million in 2015. The primary drivers
of the increase in operating expenses are the increased number of branch locations and continued growth and expansion in the
Company’s mortgage and SBA divisions. Salaries and employee benefits increased 27.2% from $73.9 million in 2014 to $94.0 million
in 2015. Occupancy and equipment expense increased 21.0% from $17.5 million in 2014 to $21.2 million in 2015. Data processing
and communications expense increased during 2015 to $19.8 million, an increase of 27.6% compared with the $15.6 million reported
for 2014. These expense increases are principally attributable to the additional branches acquired during 2014 and 2015. Postage and
delivery, printing and supplies, legal fees and other professional fees all increased during 2015 to support the larger operations of the
Company.
Merger and conversion charges of $8.0 million in 2015 relate to the Merchants and branch acquisitions, compared with the $3.9 million
recorded in 2014 related to the Coastal acquisition. Credit resolution-related expenses increased $4.2 million in 2015. During the
second quarter of 2015, the Company recorded $11.2 million of pre-tax OREO write-downs and other credit resolution-related expenses
related to an aggressive write-down on remaining non-performing assets in order to expedite their liquidation. Excluding merger and
conversion charges and credit resolution-related expenses, total operating expenses were $173.4 million for the year ended December
31, 2015, compared with $133.4 million for 2014. Expressed as a percentage of average assets, total operating expense net of merger
and conversion charges and credit resolution-related expenses was 3.61% in 2015, a slight increase from 3.58% reported for 2014.
39
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, 2016, the Company recorded income tax expense of approximately $33.1 million,
compared with $15.9 million recorded in 2015 and $17.5 million recorded in 2014. The Company’s effective tax rate was 31%, 28%
and 31% for the years ended December 31, 2016, 2015 and 2014, 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, 2016, approximately 70.3% of our legacy loan portfolio was secured by real
estate, reflecting a reduction from 79.8% at December 31, 2015 as the Company continues to diversify its legacy loan portfolio. 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 and agricultural
Real estate – construction and development
Real estate – commercial and farmland
Real estate – residential
Consumer installment
Other
Loans, net of unearned income
2016
2015
2014
2013
2012
(dollars in thousands)
December 31,
$ 967,138
363,045
1,406,219
781,018
96,915
12,486
$ 3,626,821
$ 449,623
244,693
1,104,991
570,430
31,125
6,015
$ 2,406,877
$ 319,654
161,507
907,524
456,106
30,782
14,308
$ 1,889,881
$ 244,373
146,371
808,323
351,886
34,249
33,252
$ 1,618,454
$ 174,217
114,199
732,322
346,480
40,178
43,239
$ 1,450,635
The following table provides additional disclosure on the various loan types comprising the subgroup “Real estate – commercial &
farmland” at December 31, 2016 (in thousands):
Owner-occupied
Farmland
Apartments
Hotels and motels
Auto dealers
Offices and office buildings
Strip centers (anchored & non-anchored)
Convenience stores
Retail properties
Warehouse properties
All other
Outstanding
Balance
$ 429,731
155,069
104,363
92,655
141
197,092
134,684
13,408
149,553
86,801
42,722
$1,406,219
Average
Maturity
(Months)
Average Rate
% Nonaccrual
51
32
52
94
20
57
53
39
53
54
30
47
5.00%
5.16%
4.61%
4.86%
5.00%
4.73%
4.50%
5.00%
4.79%
4.95%
5.63%
4.99%
0.85%
2.08%
1.44%
-
-
0.02%
-
0.62%
0.02%
0.14%
0.25%
0.62%
The Company seeks to diversify its loan portfolio across its geographic footprint and in various loan types. Also, the Company’s in-
house lending limit for a single loan is $25.0 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 as of December
31, 2016 based on committed amount are summarized below by type (in thousands):
Commercial, financial and agricultural
Real estate – construction and development
Real estate – commercial and farmland
Real estate – residential
Mortgage warehouse lines
Total
Committed
Amount
$ 177,290
151,602
121,925
24,845
215,000
$ 690,662
Average Rate
Average
Maturity
(months)
% Unsecured
% in
Nonaccrual
Status
2.58%
3.41%
3.84%
3.65%
4.06%
3.48%
172
41
57
40
1
65
0.04%
-
-
-
-
0.01%
-
-
-
-
-
-
40
Total legacy loans, excluding purchased non-covered and covered loans, as of December 31, 2016, are shown in the following table
according to their contractual maturity:
Commercial, financial and agricultural
Real estate – construction and development
Real estate – commercial and farmland
Real estate – residential
Consumer installment
Other
Contractual Maturity in:
One Year or
Less
Over One Year
through Five
Years
Over Five
Years
Total
(dollars in thousands)
$ 438,756
113,275
181,126
252,054
14,286
12,486
$1,011,983
$
140,582
171,982
676,588
176,765
47,173
-
$ 1,213,090
$ 387,800
77,788
548,505
352,199
35,456
-
$1,401,748
$ 967,138
363,045
1,406,219
781,018
96,915
12,486
$ 3,626,821
Purchased Non-Covered Assets
Loans that were acquired in transactions and are not covered by the loss-sharing agreements with the FDIC (“purchased non-covered
loans”) totaled $1.01 billion and $771.6 million at December 31, 2016 and 2015, respectively. OREO that was acquired in transactions
and is not covered by the loss-sharing agreements with the FDIC totaled $11.3 million and $14.3 million at December 31, 2016 and
2015, respectively. Purchased non-covered assets include assets that were acquired in FDIC-assisted transactions but that are no longer
covered by the loss-sharing agreements due to the expiration of the loss sharing portion of such agreements.
The Bank initially recorded the loans at their fair values, taking into consideration certain credit quality and interest rate risk. The
Company believes its estimation of credit risk and its adjustments to the carrying balances of the acquired loans is adequate. If the
Company determines that a loan or group of loans has deteriorated from its initial assessment of fair value, the identified loss will be
charged off and provision expense is recorded for that difference. During the years ended December 31, 2016 and 2015, the Company
recorded a net recovery of $657,000 and $237,000, respectively, to account for loans where there was an increase in cash flows from
the initial estimates on purchased non-covered loans. During the year ended December 31, 2014, the Company recorded provision for
loan loss expense of $84,000 to account for losses where there was a decrease in cash flows from the initial estimates on purchased non-
covered loans. If the Company determines that a loan or group of loans has improved from its initial assessment of fair value, then the
increase in cash flows over those expected at the acquisition date is recognized as interest income prospectively.
The amount of purchased non-covered loans outstanding, at the indicated dates, is shown in the following table according to type of
loan.
Commercial, financial and agricultural
Real estate – construction and development
Real estate – commercial and farmland
Real estate – residential
Consumer installment
Other
Total purchased non-covered loans
2016
2015
2014
2013
2012
(dollars in thousands)
December 31,
$
95,743
78,376
563,438
268,888
4,586
-
$ 1,011,031
$
45,462
72,080
390,755
258,153
5,104
-
$ 771,554
$
38,041
58,362
306,706
266,342
4,788
-
$ 674,239
$
32,141
31,176
179,898
200,851
4,687
-
$ 448,753
$
$
-
-
-
-
-
-
-
Purchased loans as of December 31, 2016, are shown below according to their contractual maturity:
Purchased non-covered loans
Purchased non-covered loan pools
Covered loans
Total purchased loans
Contractual Maturity in:
One Year or
Less
Over One Year
through Five
Years
Over Five
Years
Total
(dollars in thousands)
$ 179,262
14,525
15,693
$ 209,480
$ 302,495
231,265
32,932
$529,274
322,524
9,535
$1,011,031
568,314
58,160
$ 566,692
$861,333
$1,637,505
41
Total loans (legacy loans, purchased non-covered loans, purchased non-covered loan pools, and covered loans) which have maturity
dates after one year are summarized below by those loans that have predetermined interest rates and those loans that have floating or
adjustable interest rates.
Predetermined interest rates
Floating or adjustable interest rates
Purchased Loan Pools
(Dollars in
Thousands)
$ 2,437,349
1,605,514
$ 4,042,863
Purchased loan pools are defined as groups of residential mortgage loans that were not acquired in bank acquisitions or FDIC-assisted
transactions. As of December 31, 2016, purchased loan pools totaled $568.3 million and consisted of whole-loan, adjustable rate
residential mortgages on properties outside the Company’s markets, with principal balances totaling $559.4 million and $8.9 million of
remaining purchase premium paid at acquisition. As of December 31, 2015, purchased loan pools totaled $593.0 million and consisted
of whole-loan, adjustable rate residential mortgages on properties outside the Company’s markets, with principal balances totaling
$580.7 million and $12.3 million of remaining purchase premium paid at acquisition. At December 31, 2016 and 2015 the Company
has allocated approximately $1.8 million and $581,000, respectively, of the allowance for loan losses to the purchased loan pools. The
Company did not have any purchased loan pools prior to 2015.
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 $58.2 million and $137.5 million at December 31, 2016 and 2015, respectively, are not included in the preceding tables. OREO
that is covered by the loss-sharing agreements with the FDIC totaled $1.2 million and $5.0 million at December 31, 2016 and 2015,
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 net FDIC loss-share payable reported at December 31, 2016 was $6.3 million which includes the
clawback liability the Bank expects to pay to the FDIC. The net FDIC loss-share receivable reported at December 31, 2015 was $6.3
million which is net of the clawback liability the Bank expects to pay to the FDIC.
The Company recorded the loans at their fair values, taking into consideration certain credit quality and interest rate risk. If the Company
determines that a loan or group of loans has deteriorated from its initial assessment of fair value, the identified loss is charged off and a
provision for loan loss is recorded. During 2016, the Company recorded a credit to provision for loan loss expense of $957,000 to
account for loans where there was an increase in cash flows from the initial estimates on loans acquired in FDIC-assisted transactions.
For the years ended December 31, 2015 and 2014, the Company recorded approximately $751,000 and $843,000, 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 and agricultural
Real estate – construction and development
Real estate – commercial and farmland
Real estate – residential
Consumer installment
Other
Total covered loans
2016
2015
2014
2013
2012
(dollars in thousands)
December 31,
$
$
794
2,992
12,917
41,389
68
-
58,160
$
5,546
7,612
71,226
53,038
107
-
$ 137,529
$
21,467
23,447
147,627
78,520
218
-
$ 271,279
$
26,550
43,179
224,451
95,173
884
-
$ 390,237
$
32,606
70,184
278,506
125,056
1,360
-
$ 507,712
42
ALLOWANCE AND PROVISION FOR LOAN LOSSES
The allowance for loan losses represents a reserve for probable incurred 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 the total loan portfolio. Warehouse
lines of credit, overdraft protection loans and certain consumer and mortgage loans serviced by outside processors 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. Assigned risk ratings can be adjusted 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 independent internal loan review department.
The primary contributor to the allowance for loan losses is historical losses by loan type. The Company’s look-back period for historical
losses is 16 quarters. Current period losses are substantially lower than those incurred four years ago, which has reduced the need in
the allowance for loan losses, as a percentage of loans, at December 31, 2016, as compared to prior periods. The Company’s trends for
most of the qualitative factors currently utilized in the allowance for loan losses are positive compared to prior periods, which also
contributes to a lower current need in the allowance for loan losses. Additionally, a significant portion of the Company’s loan growth
during 2016 consisted of municipal loans, residential mortgages and commercial insurance premium loans, each of which presents a
lower risk of default than other loan types, such as acquisition, construction and development or investor commercial real estate loans.
The growth in lower-risk loans during 2016, combined with the improved historical loss rates and qualitative factors, are the primary
reasons the allowance for loan losses as a percentage of loans, excluding purchased loans, decreased during the year.
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,
2016
2015
2014
2013
2012
% of
Loans
to
Total
Loans
Amount
% of
Loans
to
Total
Loans
(dollars in thousands)
% of
Loans
to
Total
Loans
Amount
Amount
% of
Loans
to
Total
Loans
% of
Loans
to
Total
Loans
Amount
Amount
$
2,192
27%
$
1,144
19% $
2,004
17% $
1,823
15 % $
2,439
12%
7,662
2,990
12,844
6,786
827
39
10
76
21
3
7,994
5,009
14,147
4,760
1,574
46
10
75
24
1
8,823
5,030
15,857
4,129
1,171
48
9
74
24
2
8,393
5,538
15,754
6,034
589
50
9
74
22
4
9,157
50
5,343
16,939
5,898
756
8
70
24
6
$
20,457
100%
$
20,481
100% $
21,157
100% $
22,377
100 % $
23,593
100%
3,219
244
$
23,920
581
-
$
21,062
-
-
-
-
-
-
$
21,157
$
22,377
$
23,593
43
Commercial, financial, and
agricultural
Real estate – commercial and
farmland
Real estate construction &
development
Total Commercial
Real estate - residential
Consumer installment and Other
Total excluding purchased
non-covered loans and
covered loans
Purchased non-covered loans,
including pools
Covered loans
The following table provides an analysis of the allowance for loan losses, provision for loan losses and net charge-offs for the years ended December
31, 2016, 2015, 2014, 2013 and 2012.
Balance of allowance for loan losses at beginning of
period
Provision charged to operating expense
Charge-offs:
Commercial, financial and agricultural
Real estate - residential
Real estate – commercial and farmland
Real estate – construction and development
Consumer installment and Other
Purchased non-covered loans, including
pools
Covered loans
Total charge-offs
Recoveries:
Commercial, financial and agricultural
Real estate - residential
Real estate – commercial and farmland
Real estate – construction and development
Consumer installment and Other
Purchased non-covered loans, including
pools
Covered loans
Total recoveries
Net charge-offs
Balance of allowance for loan losses at end of
2016
2015
December 31,
2014
(dollars in thousands)
2013
2012
$ 21,062
4,091
$ 21,157
5,264
$ 22,377
5,648
$ 23,593
11,486
1,999
1,122
708
588
351
1,066
493
6,327
400
391
269
490
127
1,723
1,694
5,094
1,233
1,438
1,587
2,367
622
410
950
1,759
9,133
651
151
317
323
137
1,187
1,008
3,774
5,359
1,567
1,707
3,288
592
471
84
1,851
9,560
321
254
274
349
486
-
1,008
2,692
6,868
1,759
5,215
3,571
2,020
719
-
1,539
14,823
432
888
30
473
298
-
-
2,121
12,702
$ 35,156
31,089
1,451
8,722
20,551
9,380
1,059
-
2,638
43,801
157
225
482
40
245
-
-
1,149
42,652
period
$ 23,920
$ 21,062
$ 21,157
$ 22,377
$ 23,593
44
The following table provides an analysis of the allowance for loan losses and net charge-offs for legacy loans, purchased non-covered loans including
pools, covered loans and total loans held of investment.
December 31, 2016
Allowance for loan losses at end of period
Net charge-offs (recoveries) for the period
Loan balances:
End of period
Average for the period
Net charge-offs as a percentage of average loans
Allowance for loan losses as a percentage of end of period loans
December 31, 2015
Allowance for loan losses at end of period
Net charge-offs (recoveries) for the period
Loan balances:
End of period
Average for the period
Net charge-offs as a percentage of average loans
Allowance for loan losses as a percentage of end of period loans
December 31, 2014
Allowance for loan losses at end of period
Net charge-offs (recoveries) for the period
Loan balances:
End of period
Average for the period
Net charge-offs as a percentage of average loans
Allowance for loan losses as a percentage of end of period loans
December 31, 2013
Allowance for loan losses at end of period
Net charge-offs (recoveries) for the period
Loan balances:
End of period
Average for the period
Net charge-offs as a percentage of average loans
Allowance for loan losses as a percentage of end of period loans
December 31, 2012
Allowance for loan losses at end of period
Net charge-offs (recoveries) for the period
Loan balances:
End of period
Average for the period
Net charge-offs as a percentage of average loans
Allowance for loan losses as a percentage of end of period loans
Purchased
non-covered
loans,
including
pools
Legacy
loans
(dollars in thousands)
Covered
loans
Total
$ 20,457
3,091
$ 3,219
(657)
$ 244
(1,201)
$ 23,920
1,233
1,579,345
1,638,533
(0.04)%
0.20%
58,160
108,672
(1.11)%
0.42%
5,264,326
4,524,710
0.03%
0.45%
3,626,821
2,777,505
0.11%
0.56%
$ 20,481
4,845
2,406,877
2,161,726
0.22%
0.85%
$ 581
(237)
1,364,517
913,711
(0.03)%
0.04%
$ 21,157
5,941
$ -
84
1,889,881
1,753,013
0.34%
1.12%
674,239
557,708
0.02%
0.00%
$ 22,377
11,163
$ -
-
1,618,454
1,478,816
0.75%
1.38%
$ 23,593
40,014
1,450,635
1,393,012
2.87%
1.63%
448,753
11,065
0.00%
0.00%
$ -
-
-
-
0.00%
0.00%
$ -
751
137,529
206,774
0.36%
0.00%
$ -
843
271,279
339,417
0.25%
0.00%
$ -
1,539
390,237
440,923
0.35%
0.00%
$ -
2,638
507,712
553,657
0.48%
0.00%
$ 21,062
5,359
3,908,923
3,282,211
0.16%
0.54%
$ 21,157
6,868
2,835,399
2,650,138
0.26%
0.75%
$ 22,377
12,702
2,457,444
1,930,804
0.66%
0.91%
$ 23,593
42,652
1,958,347
1,946,669
2.19%
1.20%
At December 31, 2016, the allowance for loan losses allocated to legacy loans totaled $20.5 million, or 0.56% of legacy loans, compared
with $20.5 million, or 0.85% of legacy loans, at December 31, 2015. The decrease in the allowance for loan losses as a percentage of
legacy loans reflects the change in credit risk of our portfolio, both from the mix of loan and collateral types, as well as the overall
improvement in credit quality of the loan portfolio. Our legacy nonaccrual loans increased from $16.9 million at December 31, 2015 to
$18.1 million at December 31, 2016; however, legacy nonaccrual loans as a percentage of legacy loans decreased from 0.70% to 0.50%.
For the year ended December 31, 2016, our legacy net charge off ratio as a percentage of average legacy loans decreased to 0.11%,
compared with 0.22% for the year ended December 31, 2015. For the year ended December 31, 2016, the Company recorded legacy
net charge-offs totaling $3.1 million, compared with $4.8 million for the year ended December 31, 2015.
The provision for loan losses for the year ended December 31, 2016 decreased to $4.1 million, compared with $5.3 million for the year
ended December 31, 2015. Our ratio of nonperforming assets to total assets decreased from 1.41% at December 31, 2015 to 0.94% at
December 31, 2016.
45
The balance of the allowance for loan losses allocated to loans collectively evaluated for impairment increased 3.4%, or $582,000,
during the year ended December 31, 2016, while the balance of loans collectively evaluated for impairment increased 36.7%, or $1.4
billion during the same period. A significant portion of the loan growth was concentrated in lower risk categories such as municipal
lending and commercial insurance premium loans which did not require as large of an allowance for loan losses as other categories of
loans because the inherent risk and historical losses are less than traditional loans, such as acquisition and development loans. Purchased
non-covered loans, including purchased loan pools, accounted for 12% of the increase in loans and these loans generally require an
initial allowance for loan loss that is less than the allowance required on legacy loans due to seasoning and loan to value characteristics
of the portfolio. In addition to the change of type of loan growth, we also experienced a decline in our historical loss rates on all loan
portfolios. We consider a four year loss rate on all loan categories and our charge off ratio has been steadily declining over that period.
We have adjusted the qualitative factors to account for the inherent risks in the portfolio that are not captured in the historical loss rates,
such as commodity prices for agriculture products, growth rates of certain loan types and other factors management deems appropriate.
As a percentage of all loans collectively evaluated for impairment, the allowance allocated to those loans decreased 11 basis points,
from 0.46% at December 31, 2015 to 0.35% at December 31, 2016. The allowance allocated to real estate construction and development
loans evaluated collectively for impairment decreased from 1.75% at December 31, 2015 to 0.75% at December 31, 2016. The reason
for this decline is the positive trend in net losses within this loan category.
The balance of the allowance for loan losses allocated to loans individually evaluated for impairment increased 55.1%, or $2.3 million,
during the year ended December 31, 2016, while the balance of loans individually evaluated for impairment decreased 12.1%, or $8.3
million during the same period. The majority of this increase in the allowance for loan losses allocated to loans individually evaluated
for impairment is attributable to purchased non-covered loans and covered loans. At December 31, 2016, we had $1.4 million allocated
to purchased non-covered loans, including loan pools and $244,000 allocated to covered loans. We did not have any allowance allocated
to purchased non-covered loans, including loan pools, and covered loans at December 31, 2015.
NONPERFORMING LOANS
A loan is placed on non-accrual status when, in management’s judgment, the collection of the interest income appears doubtful. Interest
receivable that has been accrued in prior years and is subsequently determined to have doubtful collectability is charged to the allowance
for 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 and agricultural
Real estate – construction and development
Real estate – commercial and farmland
Real estate – residential
Consumer installment
Total
December 31,
2016
2015
2014
2013
2012
(dollars in thousands)
$ 1,814
547
8,757
6,401
595
$ 1,302
1,812
7,019
6,278
449
$ 1,672
3,774
8,141
7,663
478
$ 4,103
3,971
8,566
12,152
411
$ 4,138
9,281
11,962
12,595
909
$ 18,114
$ 16,860
$ 21,728
$ 29,203
$38,885
Loans contractually past due ninety days or more as to interest or
principal payments and still accruing
$
-
$
-
$
1
$
-
$
-
The following table presents an analysis of purchased non-covered loans accounted for on a non-accrual basis.
December 31,
2016
2015
2014
2013
2012
(dollars in thousands)
Commercial, financial & agricultural
Real estate – construction and development
Real estate – commercial and farmland
Real estate – residential
Consumer installment
Total
$
564
2,536
8,698
6,609
13
$ 1,064
1,106
4,920
6,168
72
$
175
1,119
10,242
6,644
69
$
11
325
1,653
4,658
12
$ 18,420
$ 13,330
$ 18,249
$ 6,659
Loans contractually past due ninety days or more as to interest or
principal payments and still accruing
$
-
$
-
$
-
$
-
$
$
$
-
-
-
-
-
-
-
46
The following table presents an analysis of covered loans accounted for on a non-accrual basis.
Commercial, financial and agricultural
Real estate – construction and development
Real estate – commercial and farmland
Real estate – residential
Consumer installment
Total
December 31,
2016
2015
2014
2013
2012
(dollars in thousands)
$
128
75
1,476
2,867
-
$ 2,803
1,701
5,034
3,663
37
$ 8,541
7,601
12,584
6,595
91
$ 7,257
14,781
33,495
13,278
341
$ 10,765
20,027
55,946
28,672
302
$ 4,546
$ 13,238
$ 35,412
$ 69,152
$115,712
Loans contractually past due ninety days or more as to interest or
principal payments and still accruing
$
-
$
-
$
714
$
346
$ 3,301
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.
As of December 31, 2016 and 2015, the Company had a balance of $18.2 million and $16.4 million, respectively, in troubled debt
restructurings, excluding purchased non-covered and covered loans. 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, 2016 and 2015.
As of December 31, 2016
Accruing Loans
Loan class
Commercial, financial and agricultural
Real estate – construction and development
Real estate – commercial and farmland
Real estate – residential
Consumer installment
Total
As of December 31, 2015
Loan class
Commercial, financial and agricultural
Real estate – construction and development
Real estate – commercial and farmland
Real estate – residential
Consumer installment
Total
Balance
(in thousands)
$ 47
686
4 119
9 340
17
$ 14,209
Accruing Loans
Balance
(in thousands)
$ 240
792
5,766
7,574
46
$ 14,418
#
4
8
16
82
7
117
#
4
11
16
51
12
94
Non-Accruing Loans
Balance
(in thousands)
$ 114
34
2,970
739
130
$ 3,987
Non-Accruing Loans
Balance
(in thousands)
$ 110
63
596
1,123
94
$ 1,986
#
15
2
5
15
32
69
#
10
3
3
20
23
59
47
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 (defined as 30 days past
due) under restructured terms at December 31, 2016 and 2015.
As of December 31, 2016
Loans Currently Paying Under
Restructured Terms
Loan class
Commercial, financial and agricultural
Real estate – construction and development
Real estate – commercial and farmland
Real estate – residential
Consumer installment
Total
#
12
8
16
84
25
145
Balance
(in thousands)
$ 82
686
4,119
9,248
76
$ 14,211
As of December 31, 2015
Loans Currently Paying Under
Restructured Terms
Loan class
Commercial, financial and agricultural
Real estate – construction and development
Real estate – commercial and farmland
Real estate – residential
Consumer installment
Total
#
11
10
16
49
20
106
Balance
(in thousands)
$ 314
771
5,739
7,086
75
$ 13,985
Loans that have Defaulted Under
Restructured Terms
Balance
(in thousands)
$ 79
34
2,970
831
71
$ 3,985
#
7
2
5
13
14
41
Loans that have Defaulted Under
Restructured Terms
Balance
(in thousands)
$ 37
83
624
1,610
65
$ 2,419
#
3
4
3
22
15
47
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, 2016 and 2015.
As of December 31, 2016
Accruing Loans
Type of Concession
Forbearance of interest
Forgiveness of principal
Forbearance of principal
Rate reduction only
Rate reduction, forbearance of interest
Rate reduction, forbearance of principal
Rate reduction, forgiveness of interest
Rate reduction, forgiveness of principal
Total
As of December 31, 2015
Type of Concession
Forbearance of interest
Forgiveness of principal
Forbearance of principal
Rate reduction only
Rate reduction, forbearance of interest
Rate reduction, forbearance of principal
Rate reduction, forgiveness of interest
Rate reduction, forgiveness of principal
Total
Balance
(in thousands)
$ 1,685
1,303
2,210
1,573
2,618
1,734
3,086
-
$ 14,209
Accruing Loans
Balance
(in thousands)
$ 1,891
1,241
2,798
1,869
2,504
3,316
795
4
$ 14,418
#
11
3
8
12
38
8
37
-
117
#
10
2
6
15
39
12
9
1
94
Non-Accruing Loans
Balance
(in thousands)
$ 146
-
315
29
1,647
1,506
341
3
$ 3,987
Non-Accruing Loans
Balance
(in thousands)
$ 247
357
158
226
383
256
359
-
$ 1,986
#
5
-
9
1
21
29
3
1
69
#
8
1
8
2
23
15
2
-
59
48
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, 2016 and 2015.
As of December 31, 2016
Accruing Loans
Collateral Type
Warehouse
Raw land
Apartment
Hotel and motel
Office
Retail, including strip centers
1-4 family residential
Church
Automobile/equipment/CD
Unsecured
Total
#
5
9
-
3
3
4
82
-
10
1
117
Balance
(in thousands)
$ 763
742
-
1,525
477
1,298
9,340
-
61
3
$ 14,209
As of December 31, 2015
Accruing Loans
Collateral Type
Warehouse
Raw land
Apartment
Hotel and motel
Office
Retail, including strip centers
1-4 family residential
Church
Automobile/equipment/CD
Unsecured
Total
#
4
6
1
3
3
3
58
-
15
1
94
Balance
(in thousands)
$ 608
165
1,314
1,882
499
1,335
8,329
-
61
225
$ 14,418
Non-Accruing Loans
Balance
(in thousands)
$ -
34
1,505
-
-
-
746
1,465
233
4
$ 3,987
Non-Accruing Loans
Balance
(in thousands)
$ 198
62
-
-
-
42
1,139
357
184
4
$ 1,986
#
-
2
3
-
-
-
17
2
44
1
69
#
1
3
-
-
-
1
22
1
30
1
59
As of December 31, 2016 and 2015, the Company had a balance of $13.6 million and $10.0 million, respectively, in troubled debt
restructurings included in purchased non-covered loans. 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, 2016 and 2015.
As of December 31, 2016
Accruing Loans
Loan Class
Commercial, financial and agricultural
Real estate – construction and development
Real estate – commercial and farmland
Real estate – residential
Consumer installment
Total
As of December 31, 2015
Loan Class
Commercial, financial and agricultural
Real estate – construction and development
Real estate – commercial and farmland
Real estate – residential
Consumer installment
Total
Balance
(in thousands)
$ 1
540
6,551
3,906
6
$ 11,004
Accruing Loans
Balance
(in thousands)
$ 2
363
6,214
2,789
5
$ 9,373
#
1
2
15
25
2
45
#
1
1
14
13
2
31
Non-Accruing Loans
Balance
(in thousands)
$ 15
30
1,844
662
-
$ 2,551
Non-Accruing Loans
Balance
(in thousands)
$ 21
42
412
180
3
$ 658
#
1
3
4
6
1
15
#
2
3
3
4
2
14
49
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 (defined as 30 days past due) under
restructured terms at December 31, 2016 and 2015.
As of December 31, 2016
Loans Currently Paying Under
Restructured Terms
Loan Class
Commercial, financial and agricultural
Real estate – construction and development
Real estate – commercial and farmland
Real estate – residential
Consumer installment
Total
#
2
4
19
25
3
53
Balance
(in thousands)
$ 16
561
8,395
3,708
6
$ 12,686
As of December 31, 2015
Loans Currently Paying Under
Restructured Terms
Loan Class
Commercial, financial and agricultural
Real estate – construction and development
Real estate – commercial and farmland
Real estate – residential
Consumer installment
Total
#
3
2
15
9
3
32
Balance
(in thousands)
$ 23
374
6,570
2,086
7
$ 9,060
Loans that have Defaulted Under
Restructured Terms
Balance
(in thousands)
$ -
9
-
860
-
$ 869
#
-
1
-
6
-
7
Loans that have Defaulted Under
Restructured Terms
Balance
(in thousands)
$ -
30
57
883
1
$ 971
#
-
2
2
8
1
13
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, 2016 and 2015.
As of December 31, 2016
Accruing Loans
Type of Concession
Forbearance of interest
Forbearance of principal
Forbearance of principal, extended amortization
Rate reduction only
Rate reduction, forbearance of interest
Rate reduction, forbearance of principal
Rate reduction, forgiveness of interest
Total
As of December 31, 2015
Type of Concession
Forbearance of interest
Forbearance of principal
Payment modification only
Forbearance of principal, extended amortization
Rate reduction only
Rate reduction, forbearance of interest
Rate reduction, forbearance of principal
Rate reduction, forgiveness of interest
Total
Balance
(in thousands)
$ 1,735
2,003
78
4,295
649
929
1,315
$ 11,004
Accruing Loans
Balance
(in thousands)
$ 1,465
574
892
86
4,054
1,011
1,139
152
$ 9,373
#
5
7
1
9
8
3
12
45
#
4
2
2
1
8
8
4
2
31
Non-Accruing Loans
Balance
(in thousands)
$ 64
1,495
323
73
365
231
-
$ 2,551
Non-Accruing Loans
Balance
(in thousands)
$ 87
-
-
355
77
118
21
-
$ 658
#
1
2
1
2
6
3
-
15
#
2
-
-
1
2
8
1
-
14
50
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, 2016 and 2015.
As of December 31, 2016
Accruing Loans
Collateral Type
Warehouse
Raw land
Hotel and motel
Retail, including strip centers
Office
1-4 family residential
Church
Automobile/equipment/CD
Total
As of December 31, 2015
Collateral Type
Warehouse
Raw land
Hotel and motel
Retail, including strip centers
Office
1-4 family residential
Automobile/equipment/inventory
Total
Balance
(in thousands)
$ 1,532
562
154
3,964
499
4,287
-
6
$ 11,004
Accruing Loans
Balance
(in thousands)
$ 1,722
-
158
3,421
530
3,535
7
$ 9,373
#
4
2
1
5
2
28
-
3
45
#
3
-
1
5
2
17
3
31
Non-Accruing Loans
Balance
(in thousands)
$ -
86
-
197
-
955
1,298
15
$ 2,551
Non-Accruing Loans
Balance
(in thousands)
$ -
63
-
-
-
571
24
$ 658
#
-
4
-
1
-
7
1
2
15
#
-
4
-
-
-
6
4
14
As of December 31, 2016 and 2015, the Company had a balance of $14.6 million and $15.5 million, respectively, in troubled debt
restructurings included in covered loans. 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, 2016 and 2015.
As of December 31, 2016
Accruing Loans
Loan Class
Commercial, financial and agricultural
Real estate – construction and development
Real estate – commercial and farmland
Real estate – residential
Consumer installment
Total
As of December 31, 2015
Loan Class
Commercial, financial and agricultural
Real estate – construction and development
Real estate – commercial and farmland
Real estate – residential
Consumer installment
Total
Balance
(in thousands)
$ -
818
1,909
9,807
5
$ 12,539
Accruing Loans
Balance
(in thousands)
$ -
779
1,967
10,529
8
$ 13,283
#
-
4
5
98
1
108
#
-
4
4
97
2
107
Non-Accruing Loans
Balance
(in thousands)
$ 76
-
558
1,415
-
$ 2,049
Non-Accruing Loans
Balance
(in thousands)
$ 1
-
1,067
1,116
-
$ 2,184
#
3
-
1
27
-
31
#
2
-
3
26
-
31
51
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 (defined as 30 days past due) under restructured terms at
December 31, 2016 and 2015.
As of December 31, 2016
Loans Currently Paying Under
Restructured Terms
Loan Class
Commercial, financial and agricultural
Real estate – construction and development
Real estate – commercial and farmland
Real estate – residential
Consumer installment
Total
#
1
4
6
101
1
113
Balance
(in thousands)
$ 0
817
2,467
9,776
5
$ 13,065
As of December 31, 2015
Loans Currently Paying Under
Restructured Terms
Loan Class
Commercial, financial and agricultural
Real estate – construction and development
Real estate – commercial and farmland
Real estate – residential
Consumer installment
Total
#
2
4
5
95
2
108
Balance
(in thousands)
$ -
779
2,890
9,057
8
$ 12,734
Loans that have Defaulted Under
Restructured Terms
Balance
(in thousands)
$ 76
-
-
1,446
-
$ 1,522
#
2
-
-
24
-
26
Loans that have Defaulted Under
Restructured Terms
Balance
(in thousands)
$ -
-
144
2,589
-
$ 2,733
#
-
-
2
28
-
30
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, 2016 and 2015.
As of December 31, 2016
Accruing Loans
Type of Concession
Forbearance of interest
Forbearance of principal
Rate reduction only
Rate reduction, forbearance of interest
Rate reduction, forbearance of principal
Rate reduction, forgiveness of interest
Total
As of December 31, 2015
Type of Concession
Forbearance of interest
Forbearance of principal
Rate reduction only
Rate reduction, forbearance of interest
Rate reduction, forbearance of principal
Rate reduction, forgiveness of interest
Total
Balance
(in thousands)
$ 1,818
-
8,415
738
688
880
$ 12,539
Accruing Loans
Balance
(in thousands)
$ 1,347
-
10,270
564
708
394
$ 13,283
#
7
-
69
12
8
12
108
#
5
-
84
8
7
3
107
Non-Accruing Loans
Balance
(in thousands)
$ 143
33
1,312
267
-
294
$ 2,049
Non-Accruing Loans
Balance
(in thousands)
$ 88
4
744
422
926
-
$ 2,184
#
3
3
11
13
-
1
31
#
4
2
7
16
2
-
31
52
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, 2016 and 2015.
As of December 31, 2016
Accruing Loans
Collateral Type
Raw land
Hotel and motel
Retail, including strip centers
Office
1-4 family residential
Automobile/equipment/CD
Total
As of December 31, 2015
Collateral Type
Raw land
Hotel and motel
Retail, including strip centers
1-4 family residential
Automobile/equipment/inventory
Total
Balance
(in thousands)
$ 1,357
-
525
468
10,183
6
$ 12,539
Accruing Loans
Balance
(in thousands)
$ 1,321
620
537
10,742
63
$ 13,283
#
5
-
2
1
99
1
108
#
5
1
2
97
2
107
Non-Accruing Loans
Balance
(in thousands)
$ -
558
-
-
1,363
128
$ 2,049
Non-Accruing Loans
Balance
(in thousands)
$ -
923
6
1,255
-
$ 2,184
#
-
1
-
-
26
4
31
#
-
1
1
27
2
31
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.
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.
53
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 33.9% 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, 2016, 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
Mortgage loans held for sale
Loans
Purchased non-covered loans
Purchased non-covered loan pools
Covered loans
Interest-bearing liabilities:
Interest-bearing demand deposits
Money market deposit accounts
Savings
Time deposits
Federal funds purchased and securities
sold under agreements to repurchase
FHLB advances
Other borrowings
Trust preferred securities
At December 31, 2016
Maturing or Repricing Within
Zero to
Three
Months
Three
Months to
One Year
One to
Five
Years
Over
Five
Years
Total
(dollars in thousands)
$
71,221
28,824
105,924
1,291,552
249,810
11,958
10,929
1,770,218
1,339,742
1,442,862
261,605
201,531
53,505
446,502
40,813
47,114
3,833,674
$ -
5,975
-
198,560
133,470
13,599
11,644
363,248
-
-
-
506,407
-
5,006
-
-
511,413
$
-
73,202
-
1,187,378
382,491
228,216
32,040
1,903,327
-
-
-
245,861
-
-
-
-
245,861
$ -
744,198
-
949,331
245,260
314,541
3,547
2,256,877
-
-
-
3,766
-
-
-
37,114
40,880
$ 71,221
852,199
105,924
3,626,821
1,011,031
568,314
58,160
6,293,670
1,339,742
1,442,862
261,605
957,565
53,505
451,508
40,813
84,228
4,631,828
Interest rate sensitivity gap
$(2,063,456)
$ (148,165)
$1,657,466
$2,215,997
$ 1,661,842
Cumulative interest rate sensitivity gap
$(2,063,456)
$ (2,211,621)
$ (554,155)
$1,661,842
Interest rate sensitivity gap ratio
0.46
0.71
7.74
55.21
Cumulative interest rate sensitivity gap
ratio
0.46
0.49
0.88
1.36
54
INVESTMENT PORTFOLIO
Following is a summary of the carrying value of investment securities available for sale as of the end of each reported period:
U.S. government sponsored agencies
State, county and municipal securities
Corporate debt securities
Mortgage-backed securities
December 31,
2016
2015
2014
$ 1,020
152,035
32,172
637,508
(dollars in thousands)
$ 14,890
161,316
6,017
600,962
$ 14,678
141,375
11,040
374,712
$ 822,735
$ 783,185
$ 541,805
The amounts of securities available for sale in each category as of December 31, 2016 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
Mortgage-backed
Amount
Yield(1)
Amount
Yield(1)(2)
Amount
Yield(1)
Amount
Yield (1)
$ 1,020
3.20% $ 4,295
(dollars in thousands)
2.41% $ 1,523
4.75% $
-
- %
-
-
-
-
-
-
44,185
3.05
20,931
2.37
6,583
2.35
54,340
49,215
2.83
2.69
6,817
2,901
4.73
4.40
111,493
519,432
2.16
2.13
$ 1,020
3.20% $152,035
2.84% $ 32,172
3.17% $ 637,508
2.14%
(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 amortized cost 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 or underlying collateral of the security, 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, 2016.
55
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,
2016
2015
Amount
Rate
Amount
Rate
(dollars in thousands)
$ 1,515,771
1,141,206
1,390,948
261,559
890,757
$ 5,200,241
0.00%
0.17
0.35
0.07
0.61
0.24%
$ 1,227,682
877,949
1,074,349
209,206
810,344
$ 4,199,530
0.00%
0.17
0.30
0.08
0.61
0.23%
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, 2016, 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)
$ 97,308
267,082
146,515
$ 510,905
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
within the Bank’s credit guidelines. 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, 2016 and 2015:
Commitments to extend credit
Unused lines of credit
Financial standby letters of credit
Mortgage interest rate lock commitments
Mortgage forward contracts with positive fair value
December 31,
2016
2015
(dollars in thousands)
$ 1,101,257
62,586
14,257
91,426
150,000
$ 1,419,526
$ 548,898
52,798
14,712
77,710
-
$ 694,118
56
The following table summarizes short-term borrowings for the periods indicated:
Years Ended December 31,
2016
2015
2014
(dollars in thousands)
Average
Balance
Average
Rate
Average
Balance
Average
Rate
Average
Balance
Average
Rate
Federal funds purchased and securities sold under
agreement to repurchase
$ 44,324
0.22% $ 50,988
0.34% $ 47,136
0.35%
Total maximum short-term borrowings outstanding at
any month-end during the year
$ 56,203
$ 68,300
$ 73,310
Total
Balance
Total
Balance
Total
Balance
In addition, the Company had a cash flow hedge that matures September 15, 2020 with a notional amount of $37.1 million at December
31, 2016 and 2015, for the purpose of converting the variable rate on the junior subordinated debentures to a fixed rate of 4.11%. The
interest rate swap, which is classified as a cash flow hedge, is indexed to LIBOR.
The following table sets forth certain information about contractual cash obligations as of December 31, 2016.
Payments Due After December 31, 2016
Total
1 Year
Or Less
1-3
Years
4-5
Years
>5
Years
Time certificates of deposit
Deposits without a stated maturity
Repurchase agreements with customers
Operating lease obligations
Other borrowings
Subordinated deferrable interest debentures
$ 957,565
4,617,598
53,505
22,124
492,321
110,059
$ 707,938
4,617,598
53,505
4,638
490,358
-
(dollars in thousands)
$ 217,203
-
-
7,412
77
-
$ 28,657
-
-
4,839
-
-
$ 3,767
-
-
5,235
1,886
110,059
Total contractual cash obligations
$ 6,253,172
$ 5,874,037
$ 224,692
$ 33,496
$120,947
At December 31, 2016, estimated costs to complete construction projects in progress and other binding commitments for capital
expenditures were not a material amount.
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. In March 2014, the Company redeemed the remaining 28,000 outstanding
Preferred Shares.
Capital Regulations
The capital resources of the Company are monitored on a periodic basis by state and federal regulatory authorities. During 2016, the
Company’s capital increased $131.7 million, primarily due to the issuance of Common Stock of $72.5 million, net income available to
common shareholders of $72.1 million, partially offset by the cash dividends paid on common shares of $10.5 million. Other capital
related transactions, such as stock-based compensation, Common Stock issuances through the exercise of stock options and issuances
of shares of restricted stock, account for only a small change in the capital of the Company. During 2015, the Company’s capital
increased $148.7 million, primarily due to the issuance of Common Stock of $114.9 million and net income available to common
shareholders of $40.8 million, partially offset by the cash dividends paid on common shares of $6.4 million. For both 2016 and 2015,
other capital related transactions, such as other comprehensive income, stock-based compensation, Common Stock issuances through
the exercise of stock options, issuances of shares of restricted stock, and treasury stock transactions accounted for only a small change
in the capital of the Company.
57
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 final rules implementing Basel Committee on Banking Supervision’s capital guidelines for U.S. banks (“Basel III rules”) became
effective for the Company on January 1, 2015 with full compliance with all of the requirements being phased in over a multi-year
schedule, and fully phased in by January 1, 2019. Under the Basel III rules, the Company must hold a capital conservation buffer above
the adequately capitalized risk-based capital ratios. The capital conservation buffer is being phased in from 0.0% for 2015 to 2.50% by
2019. The capital conservation buffer for 2016 is 0.625%.
The following table summarizes the regulatory capital levels of Ameris at December 31, 2016:
Tier 1 Leverage Ratio (tier 1 capital to average assets)
Consolidated
Ameris Bank
CET1 Ratio (common equity tier 1 capital to risk weighted assets)
Consolidated
Ameris Bank
Tier 1 Capital Ratio (tier 1 capital to risk weighted assets)
Consolidated
Ameris Bank
Total Capital Ratio (total capital to risk weighted assets)
Consolidated
Ameris Bank
Actual
Required
Excess
Amount
Percent
Amount
Percent
Amount
Percent
(dollars in thousands)
$ 555,447
592,641
8.675%
9.266
$ 256,106
255,828
4.000%
4.000
$ 299,341
336,813
476,806
592,641
555,447
592,641
579,367
616,561
8.317
10.351
9.689
10.351
10.106
10.769
293,811
293,422
379,804
379,301
494,462
493,807
5.125
5.125
6.625
6.625
8.625
8.625
182,995
299,219
175,643
213,340
84,905
122,754
4.675%
5.266
3.192
5.226
3.064
3.726
1.481
2.144
The required CET1 Ratio, Tier 1 Capital Ratio, and the Total Capital Ratio reflected in the table above include a capital conservation
buffer of 0.625%.
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.
58
QUARTERLY FINANCIAL INFORMATION
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
Merger and conversion charges
Income before income taxes
Income tax
Net income
Per Share Data:
Net income – basic
Net income – diluted
Common dividends - cash
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
Merger and conversion charges
Income before income taxes
Income tax
Net income
Per Share Data:
Net income – basic
Net income – diluted
Common dividends - cash
Quarters Ended December 31, 2016
4
3
2
1
(dollars in thousands, except per share data)
$ 62,956
5,677
57,279
1,710
55,569
24,272
54,660
17
25,164
6,987
$ 18,177
$ 62,210
5,143
57,067
811
56,256
28,864
53,199
-
31,921
10,364
$ 21,557
$ 59,340
4,751
54,589
889
53,700
28,379
52,359
-
29,720
9,671
$ 20,049
$ 54,559
4,123
50,436
681
49,755
24,286
49,241
6,359
18,441
6,124
$ 12,317
$
0.52
0.52
0.10
$
0.62
0.61
0.10
$
0.58
0.57
0.05
$
0.38
0.37
0.05
Quarters Ended December 31, 2015
4
3
2
1
(dollars in thousands, except per share data)
$ 52,601
3,983
48,618
553
48,065
22,407
51,221
1,807
17,444
3,296
$ 14,148
$ 51,195
3,796
47,399
986
46,413
24,978
47,950
446
22,995
7,368
$ 15,627
$
0.44
0.43
0.05
$
0.49
0.48
0.05
$ 44,229
3,541
40,688
2,656
$ 42,368
3,536
38,832
1,069
38,032
20,626
51,152
5,712
1,794
486
1,308
0.04
0.04
0.05
$
$
37,763
17,575
40,812
15
14,511
4,747
9,764
0.32
0.32
0.05
$
$
59
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 management-adjusted gap ratio in the one-year time horizon of .80 to 1.20. As indicated by the table below, we are
slightly liability sensitive in relation to changes in market interest rates in the one-year time horizon, but we become asset sensitive over
a two-year time horizon. 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.
The following table presents the earnings simulation model’s projected impact of a change in interest rates on the projected baseline net
interest income for the 12- and 24-month periods commencing January 1, 2017. This change in interest rates assumes parallel shifts in
the yield curve and does not take into account changes in the slope of the yield curve.
Earnings Simulation Model Results
Change in
Interest Rates
(in bps)
+400
+300
+200
+100
-100
-200
-300
-400
% Change in Projected Baseline
Net Interest Income
12 Months
-2.9%
-1.8%
-1.0%
-0.5%
Neutral
Not meaningful
Not meaningful
Not meaningful
24 Months
3.6%
3.6%
3.0%
1.7%
Neutral
Not meaningful
Not meaningful
Not meaningful
In the event of a shift in interest rates, we may take certain actions intended to mitigate the negative impact to net interest income or to
maximize the positive impact to net interest income. These actions may include, but are not limited to, restructuring of interest earning
assets and interest bearing liabilities, seeking alternative funding sources or investment opportunities and modifying the pricing or terms
of loans, leases and deposits.
Impact of Inflation and Changing Prices
The consolidated financial statements and related notes presented elsewhere in this report have been prepared in accordance with GAAP.
This requires 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, the vast majority of our assets
and liabilities are monetary in nature. As a result, interest rates have a greater impact on our performance than do the effects of general
levels of inflation. Interest rates do not necessarily move in the same direction or to the same extent as the prices of goods and services.
60
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets – December 31, 2016 and 2015
Consolidated Statements of Income – Years ended December 31, 2016, 2015 and 2014
Consolidated Statements of Comprehensive Income – Years ended December 31, 2016, 2015 and 2014
Consolidated Statements of Changes in Stockholders’ Equity – Years ended December 31, 2016, 2015 and 2014
Consolidated Statements of Cash Flows – Years ended December 31, 2016, 2015 and 2014
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, 2016, 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.
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 2017 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 will 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 2017 Annual Meeting of Shareholders, to be filed with the SEC, is incorporated herein by
reference.
61
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 2017 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, 2016.
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
201,513
$
14.97
968,749
(1) Consists of (i) our 2014 Omnibus Equity Compensation Plan, which provides for the granting to directors, officers and certain
other employees of qualified or nonqualified stock options, stock units, stock awards, stock appreciation rights, dividend
equivalents and other stock-based awards; and (ii) the 2005 Omnibus Stock Ownership and Long-Term Incentive Plan and the
ABC Bancorp Omnibus Stock Ownership and Long-Term incentive Plan that was adopted in 1997, both of which are now
operative only with respect to the exercise of options that remain outstanding under such plans and under which no further awards
may be granted. All securities remaining for future issuance represent awards that may be granted under the 2014 Omnibus Equity
Compensation 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 2017 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 2017 Annual Meeting of Shareholders, to be filed with the
SEC, is incorporated herein by reference.
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
1.
Financial statements:
(a) Ameris Bancorp and Subsidiaries:
PART IV
(i) Consolidated Balance Sheets – December 31, 2016 and 2015;
(ii) Consolidated Statements of Income – Years ended December 31, 2016, 2015 and 2014;
(iii) Consolidated Statements of Comprehensive Income – Years ended December 31, 2016, 2015 and 2014;
(iv) Consolidated Statements of Changes in Stockholders’ Equity – Years ended December 31, 2016, 2015 and 2014;
(v) Consolidated Statements of Cash Flows – Years ended December 31, 2016, 2015 and 2014; and
(vi) Notes to Consolidated Financial Statements.
(b) Ameris Bancorp (parent company only):
Parent company only financial information has been included in Note 25 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.
62
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, hereunto duly authorized.
SIGNATURES
Date: February 27, 2017
AMERIS BANCORP
By:
/s/ Edwin W. Hortman, Jr.
Edwin W. Hortman, Jr.,
President and Chief Executive Officer
(principal executive officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons
on behalf of the registrant and in their capacities indicated on February 27, 2017.
/s/ Edwin W. Hortman, Jr.
Edwin W. Hortman, Jr., President, Chief Executive Officer
and Director
(principal executive officer)
/s/ Dennis J. Zember Jr.
Dennis J. Zember Jr., Executive Vice President, Chief
Financial Officer and Chief Operating Officer
(principal accounting and financial officer)
/s/ William I. Bowen, Jr.
William I. Bowen, Jr., Director
/s/ R. Dale Ezzell
R. Dale Ezzell, Director
/s/ Leo J. Hill
Leo J. Hill, Director
/s/ Daniel B. Jeter
Daniel B. Jeter, Director and Chairman of the Board
/s/ Robert P. Lynch
Robert P. Lynch, Director
/s/ Elizabeth A. McCague
Elizabeth A. McCague, Director
/s/ William H. Stern
William H. Stern, Director
/s/ Jimmy D. Veal
Jimmy D. Veal, Director
63
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
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 of Ameris Bancorp (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 of Ameris Bancorp (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 of Ameris Bancorp (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 of Ameris Bancorp (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 of Ameris Bancorp (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 of Ameris Bancorp (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 (incorporated by reference to Exhibit 4.3 to Ameris Bancorp’s Annual Report
on Form 10-K filed with the SEC on March 14, 2014).
First Supplemental Indenture dated as of December 23, 2013 by and among Ameris Bancorp, The Prosperity Banking
Company and U.S. Bank National Association (incorporated by reference to Exhibit 4.4 to Ameris Bancorp’s Annual
Report on Form 10-K filed with the SEC on March 14, 2014).
Form of Floating Rate Junior Subordinated Deferrable Interest Debenture Due 2033 (included as Exhibit A to the
Indenture filed as Exhibit 4.3 to Ameris Bancorp’s Annual Report on Form 10-K filed with the SEC on March 14,
2014).
Indenture between Ameris Bancorp (as successor to The Prosperity Banking Company) and Deutsche Bank Trust
Company Americas dated as of June 24, 2004 (incorporated by reference to Exhibit 4.6 to Ameris Bancorp’s Annual
Report on Form 10-K filed with the SEC on March 14, 2014).
First Supplemental Indenture dated as of December 23, 2013 by and among Ameris Bancorp, The Prosperity Banking
Company and Deutsche Bank Trust Company Americas (incorporated by reference to Exhibit 4.7 to Ameris Bancorp’s
Annual Report on Form 10-K filed with the SEC on March 14, 2014).
Form of Floating Rate Junior Subordinated Deferrable Interest Note Due 2034 (incorporated by reference to Exhibit
4.8 to Ameris Bancorp’s Annual Report on Form 10-K filed with the SEC on March 14, 2014).
Indenture between Ameris Bancorp (as successor to The Prosperity Banking Company) and Wilmington Trust
Company dated as of January 31, 2006 (incorporated by reference to Exhibit 4.9 to Ameris Bancorp’s Annual Report
on Form 10-K filed with the SEC on March 14, 2014).
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) (incorporated by
reference to Exhibit 4.10 to Ameris Bancorp’s Annual Report on Form 10-K filed with the SEC on March 14, 2014).
Form of Floating Rate Junior Subordinated Deferrable Interest Debenture Due 2036 (included as Exhibit A to the
Indenture filed as Exhibit 4.9 to Ameris Bancorp’s Annual Report on Form 10-K filed with the SEC on March 14,
2014).
Indenture between Ameris Bank (as successor to Prosperity Bank) and Wilmington Trust Company dated as of May
11, 2006 (incorporated by reference to Exhibit 4.12 to Ameris Bancorp’s Annual Report on Form 10-K filed with the
SEC on March 14, 2014).
64
Exhibit No.
4.13
4.14
4.15
4.16
4.17
4.18
4.19
4.20
4.21
4.22
4.23
4.24
4.25
4.26
4.27
4.28
4.29
4.30
Description
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) (incorporated by reference to Exhibit
4.13 to Ameris Bancorp’s Annual Report on Form 10-K filed with the SEC on March 14, 2014).
Form of Floating Rate Junior Subordinated Debenture Due 2016 (included as Exhibit A to the Indenture filed as
Exhibit 4.12 to Ameris Bancorp’s Annual Report on Form 10-K filed with the SEC on March 14, 2014).
Indenture between Ameris Bancorp (as successor to The Prosperity Banking Company) and Wilmington Trust
Company dated as of June 30, 2006 (incorporated by reference to Exhibit 4.15 to Ameris Bancorp’s Annual Report on
Form 10-K filed with the SEC on March 14, 2014).
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) (incorporated by
reference to Exhibit 4.16 to Ameris Bancorp’s Annual Report on Form 10-K filed with the SEC on March 14, 2014).
Form of Floating Rate Junior Subordinated Debenture Due 2016 (included as Exhibit A to the Indenture filed as
Exhibit 4.15 to Ameris Bancorp’s Annual Report on Form 10-K filed with the SEC on March 14, 2014).
Indenture between Ameris Bancorp (as successor to The Prosperity Banking Company) and Wilmington Trust
Company dated as of September 20, 2007 (incorporated by reference to Exhibit 4.18 to Ameris Bancorp’s Annual
Report on Form 10-K filed with the SEC on March 14, 2014).
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) (incorporated by
reference to Exhibit 4.19 to Ameris Bancorp’s Annual Report on Form 10-K filed with the SEC on March 14, 2014).
Form of Fixed/Floating Rate Junior Subordinated Deferrable Interest Debenture Due 2037 (included as Exhibit A to
the Indenture filed as Exhibit 4.18 to Ameris Bancorp’s Annual Report on Form 10-K filed with the SEC on March 14,
2014).
Indenture between Ameris Bancorp (as successor to Coastal Bankshares, Inc.) and Wells Fargo Bank, National
Association dated as of August 27, 2003 (incorporated by reference to Exhibit 4.1 to Ameris Bancorp’s Current Report
on Form 8-K filed with the SEC on July 1, 2014).
First Supplemental Indenture dated as of June 30, 2014 by and among Ameris Bancorp and Wells Fargo Bank,
National Association (pertaining to Indenture dated as of August 27, 2003) (incorporated by reference to Exhibit 4.2 to
Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on July 1, 2014).
Form of Junior Subordinated Debt Security Due 2033 (included as Exhibit A to the Indenture filed as Exhibit 4.1 to
Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on July 1, 2014).
Indenture between Ameris Bancorp (as successor to Coastal Bankshares, Inc.) and U.S. Bank National Association
dated as of December 14, 2005 (incorporated by reference to Exhibit 4.4 to Ameris Bancorp’s Current Report on Form
8-K filed with the SEC on July 1, 2014).
First Supplemental Indenture dated as of June 30, 2014 by and among Ameris Bancorp, Coastal Bankshares, Inc. and
U.S. Bank National Association (pertaining to Indenture dated as of December 14, 2005) (incorporated by reference to
Exhibit 4.5 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on July 1, 2014).
Form of Junior Subordinated Debt Security Due 2035 (included as Exhibit A to the Indenture filed as Exhibit 4.4 to
Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on July 1, 2014).
Indenture between Ameris Bancorp (as successor to Merchants & Southern Banks of Florida, Incorporated) and
Wilmington Trust Company dated as of March 17, 2005 (incorporated by reference to Exhibit 4.1 to Ameris Bancorp’s
Current Report on Form 8-K filed with the SEC on May 27, 2015).
First Supplemental Indenture dated as of May 22, 2015 by and among Ameris Bancorp, Merchants & Southern Banks of
Florida, Incorporated and Wilmington Trust Company (pertaining to Indenture dated as of March 17, 2005)
(incorporated by reference to Exhibit 4.2 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on
May 27, 2015).
Form of Floating Rate Junior Subordinated Deferrable Interest Debenture Due 2035 (incorporated by reference to
Exhibit 4.3 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on May 27, 2015).
Indenture between Ameris Bancorp (as successor to Merchants & Southern Banks of Florida, Incorporated) and
Wilmington Trust Company dated as of March 30, 2006 (incorporated by reference to Exhibit 4.4 to Ameris Bancorp’s
Current Report on Form 8-K filed with the SEC on May 27, 2015).
65
Exhibit No.
4.31
4.32
4.33
4.34
4.35
4.36
4.37
4.38
4.39
4.40
4.41
4.42
4.43
4.44
10.1*
10.2*
10.3*
10.4*
10.5*
10.6*
10.7*
Description
First Supplemental Indenture dated as of May 22, 2015 by and among Ameris Bancorp, Merchants & Southern Banks of
Florida, Incorporated and Wilmington Trust Company (pertaining to Indenture dated as of March 30, 2006)
(incorporated by reference to Exhibit 4.5 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on
May 27, 2015).
Form of Floating Rate Junior Subordinated Deferrable Interest Debenture Due 2036 (incorporated by reference to
Exhibit 4.6 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on May 27, 2015).
Indenture between Ameris Bancorp (as successor to Jacksonville Bancorp, Inc.) and Wilmington Trust Company dated
as of June 17, 2004 (incorporated by reference to Exhibit 4.1 to Ameris Bancorp’s Current Report on Form 8-K filed
with the SEC on March 14, 2016).
First Supplemental Indenture dated as of March 11, 2016 by and among Ameris Bancorp, Jacksonville Bancorp, Inc. and
Wilmington Trust Company (incorporated by reference to Exhibit 4.2 to Ameris Bancorp’s Current Report on Form 8-K
filed with the SEC on March 14, 2016).
Form of Floating Rate Junior Subordinated Deferrable Interest Debenture Due 2034 (incorporated by reference to
Exhibit 4.3 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on March 14, 2016).
Indenture between Ameris Bancorp (as successor to Jacksonville Bancorp, Inc.) and Wilmington Trust Company dated
as of September 15, 2005 (incorporated by reference to Exhibit 4.4 to Ameris Bancorp’s Current Report on Form 8-K
filed with the SEC on March 14, 2016).
Second Supplemental Indenture dated as of March 11, 2016 by and among Ameris Bancorp, Jacksonville Bancorp, Inc.
and Wilmington Trust (incorporated by reference to Exhibit 4.5 to Ameris Bancorp’s Current Report on Form 8-K filed
with the SEC on March 14, 2016).
Form of Fixed/Floating Rate Junior Subordinated Deferrable Interest Debenture Due (incorporated by reference to
Exhibit 4.6 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on March 14, 2016).
Indenture between Ameris Bancorp (as successor to Jacksonville Bancorp, Inc.) and Wilmington Trust Company dated
as of December 14, 2006 (incorporated by reference to Exhibit 4.7 to Ameris Bancorp’s Current Report on Form 8-K
filed with the SEC on March 14, 2016).
First Supplemental Indenture dated as of March 11, 2016 by and among Ameris Bancorp, Jacksonville Bancorp, Inc. and
Wilmington Trust Company (incorporated by reference to Exhibit 4.8 to Ameris Bancorp’s Current Report on Form 8-K
filed with the SEC on March 14, 2016).
Form of Floating Rate Junior Subordinated Deferrable Interest Debenture Due 2036 (incorporated by reference to
Exhibit 4.9 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on March 14, 2016).
Indenture between Ameris Bancorp (as successor to Jacksonville Bancorp, Inc.) and Wells Fargo Bank, National
Association dated as of June 20, 2008 (incorporated by reference to Exhibit 4.10 to Ameris Bancorp’s Current Report on
Form 8-K filed with the SEC on March 14, 2016).
First Supplemental Indenture dated as of March 11, 2016 by and between Ameris Bancorp and Wells Fargo Bank,
National Association (incorporated by reference to Exhibit 4.11 to Ameris Bancorp’s Current Report on Form 8-K filed
with the SEC on March 14, 2016).
Form of Junior Subordinated Debt Security Due 2038 (incorporated by reference to Exhibit 4.12 to Ameris Bancorp’s
Current Report on Form 8-K filed with the SEC on March 14, 2016).
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).
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).
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).
66
Exhibit No.
10.8*
10.9*
10.10*
10.11*
10.12*
10.13
10.14
10.15*
10.16
10.17*
10.18*
10.19*
10.20*
10.21*
10.22*
10.23*
10.24*
10.25*
10.26*
10.27*
10.28*
Description
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).
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).
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).
Executive Employment Agreement by and between Ameris Bancorp and James A. LaHaise dated as of June 30, 2014
(incorporated by reference to Exhibit 10.1 to Ameris Bancorp’s Form 10-Q filed with the SEC on August 8, 2014).
First Amendment to Loan Agreement dated as of September 26, 2014 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
September 29, 2014).
Ameris Bancorp 2014 Omnibus Equity Compensation Plan (incorporated by reference to Appendix A to Ameris
Bancorp’s Definitive Proxy Statement filed with the SEC on April 17, 2014).
Form of Incentive Stock Option Grant Agreement (incorporated by reference to Exhibit 99.2 to Ameris Bancorp’s
Registration Statement on Form S-8 filed with the SEC on November 26, 2014).
Form of Nonqualified Stock Option Grant Agreement (incorporated by reference to Exhibit 99.3 to Ameris Bancorp’s
Registration Statement on Form S-8 filed with the SEC on November 26, 2014).
Form of Restricted Stock Grant Agreement (incorporated by reference to Exhibit 99.4 to Ameris Bancorp’s Registration
Statement on Form S-8 filed with the SEC on November 26, 2014).
Executive Employment Agreement by and among Ameris Bancorp, Ameris Bank and Edwin W. Hortman, Jr. dated as
of December 15, 2014 (incorporated by reference to Exhibit 99.1 to Ameris Bancorp’s Current Report on Form 8-K
filed with the SEC on December 18, 2014).
Executive Employment Agreement by and among Ameris Bancorp, Ameris Bank and Dennis J. Zember Jr. dated as of
December 15, 2014 (incorporated by reference to Exhibit 99.2 to Ameris Bancorp’s Current Report on Form 8-K filed
with the SEC on December 18, 2014).
Executive Employment Agreement by and among Ameris Bancorp, Ameris Bank and Andrew B. Cheney dated as of
December 15, 2014 (incorporated by reference to Exhibit 99.3 to Ameris Bancorp’s Current Report on Form 8-K filed
with the SEC on December 18, 2014).
Executive Employment Agreement by and among Ameris Bancorp, Ameris Bank and Jon S. Edwards dated as of
December 15, 2014 (incorporated by reference to Exhibit 99.4 to Ameris Bancorp’s Current Report on Form 8-K filed
with the SEC on December 18, 2014).
Executive Employment Agreement by and among Ameris Bancorp, Ameris Bank and Stephen A. Melton dated as of
December 15, 2014 (incorporated by reference to Exhibit 99.5 to Ameris Bancorp’s Current Report on Form 8-K filed
with the SEC on December 18, 2014).
Executive Employment Agreement by and among Ameris Bancorp, Ameris Bank and Cindi H. Lewis dated as of
December 15, 2014 (incorporated by reference to Exhibit 99.6 to Ameris Bancorp’s Current Report on Form 8-K filed
with the SEC on December 18, 2014).
Executive Employment Agreement by and among Ameris Bancorp, Ameris Bank and Lawton Bassett, III dated as of
December 15, 2014 (incorporated by reference to Exhibit 10.29 to Ameris Bancorp’s Annual Report on Form 10-K filed
with the SEC on February 29, 2016).
Supplemental Executive Retirement Agreement by and between Ameris Bank and Edwin W. Hortman, Jr. dated as of
November 7, 2016 (incorporated by reference to Exhibit 10.1 to Ameris Bancorp’s Form 10-Q filed with the SEC on
November 9, 2016).
67
Exhibit No.
10.29*
10.30*
10.31
10.32
10.33
10.34
21.1
23.1
31.1
31.2
32.1
32.2
101
Description
First Amendment to Supplemental Executive Retirement Agreement by and between Ameris Bank and Cindi H. Lewis
dated as of November 7, 2016 (incorporated by reference to Exhibit 10.2 to Ameris Bancorp’s Form 10-Q filed with the
SEC on November 9, 2016).
Executive Employment Agreement by and among Ameris Bancorp, Ameris Bank and Joseph B. Kissel dated as of July
25, 2016 (incorporated by reference to Exhibit 10.3 to Ameris Bancorp’s Form 10-Q filed with the SEC on November
9, 2016).
Management and License Agreement dated as of December 15, 2016 by and among Ameris Bank, William J. Villari
and US Premium Finance Holding Company (incorporated by reference to Exhibit 10.1 to Ameris Bancorp’s Current
Report on Form 8-K filed with the SEC on December 19, 2016).
Stock Purchase Agreement dated as of December 15, 2016 by and between Ameris Bancorp and William J. Villari
(incorporated by reference to Exhibit 10.2 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on
December 19, 2016).
Limited Waiver and Second Amendment to Loan Agreement dated as of December 28, 2016 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 December 29, 2016).
Second Amended and Restated Revolving Promissory Note dated as of December 28, 2016 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 December 29, 2016).
Schedule of Subsidiaries of Ameris Bancorp.
Consent of Crowe Horwath LLP.
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, 2016,
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.
* Management contract or a compensatory plan or arrangement.
68
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, 2016 and 2015
Consolidated Statements of Income – Years ended December 31, 2016, 2015 and 2014
Consolidated Statements of Comprehensive Income – Years ended December 31, 2016, 2015 and 2014
Consolidated Statements of Changes in Stockholders’ Equity – Years ended December 31, 2016, 2015 and 2014
Consolidated Statements of Cash Flows – Years ended December 31, 2016, 2015 and 2014
Notes to Consolidated Financial Statements
Page
F-2
F-3
F-4
F-5
F-6
F-7
F-8
F-10
F-1
Crowe Horwath LLP
Independent Member Crowe Horwath International
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Stockholders
Ameris Bancorp
Moultrie, GA
We have audited the accompanying consolidated balance sheets of Ameris Bancorp and subsidiaries (the “Company”) as of December
31, 2016 and 2015, and the related consolidated statements of income, comprehensive income, changes in stockholders' equity, and
cash flows for each of the years in the three-year period ended December 31, 2016. We also have audited the Company’s internal
control over financial reporting as of December 31, 2016, based on criteria established in the 2013 Internal Control – Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). 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 (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect
on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, 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, 2016 and 2015, and the results of its operations and its cash flows for each of the
years in the three-year period ended December 31, 2016 in conformity with accounting principles generally accepted in the United
States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial
reporting as of December 31, 2016, based on criteria established in the 2013 Internal Control – Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Atlanta, Georgia
February 27, 2017
/s/ Crowe Horwath LLP
F-2
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
The management of Ameris Bancorp and subsidiaries (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, 2016. In
making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway
Commission (2013 framework) (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, 2016.
Crowe Horwath LLP, the Company’s independent registered public accounting firm, 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
(principal executive officer)
/s/ Dennis J. Zember Jr.
Dennis J. Zember Jr.,
Executive Vice President, Chief Financial Officer
and Chief Operating Officer
(principal accounting and financial officer)
F-3
AMERIS BANCORP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2016 AND 2015
(dollars in thousands, except share data)
Assets
Cash and due from banks
Interest-bearing deposits in banks
Federal funds sold
Investment securities available for sale, at fair value
Other investments
Mortgage loans held for sale, at fair value
Loans, net of unearned income
Purchased loans not covered by FDIC loss-sharing agreements (“purchased non-covered loans”)
Purchased loan pools not covered by FDIC loss-sharing agreements (“purchased loan pools”)
Purchased loans covered by FDIC loss-sharing agreements (“covered loans”)
Less: allowance for loan losses
Loans, net
Other real estate owned, net
Purchased non-covered other real estate owned, net
Covered other real estate owned, net
Total other real estate owned, net
Premises and equipment, net
FDIC loss-share receivable, net
Other intangible assets, net
Goodwill
Cash value of bank owned life insurance
Deferred income taxes, net
Other assets
Total assets
Liabilities
Deposits
Noninterest-bearing
Interest-bearing
Total deposits
Securities sold under agreements to repurchase
FDIC loss-share payable, net
Other borrowings
Subordinated deferrable interest debentures, net
Other liabilities
Total liabilities
Commitments and Contingencies (Note 19)
Stockholders’ Equity
Preferred stock, stated value $1,000; 5,000,000 shares authorized; 0 shares issued and
outstanding
Common stock, par value $1; 100,000,000 shares authorized; 36,377,807 and 33,625,162 shares
issued
Capital surplus
Retained earnings
Accumulated other comprehensive income (loss), net of tax
Treasury stock, at cost, 1,456,333 and 1,413,777 shares
Total stockholders’ equity
Total liabilities and stockholders’ equity
See notes to consolidated financial statements.
F-4
2016
2015
$ 127,164
71,221
-
822,735
29,464
105,924
3,626,821
1,011,031
568,314
58,160
(23,920)
5,240,406
10,874
11,332
1,208
23,414
$ 118,518
266,545
5,500
783,185
9,323
111,182
2,406,877
771,554
592,963
137,529
(21,062)
3,887,861
16,147
14,333
5,011
35,491
121,217
-
17,428
125,532
78,053
40,776
88,697
$ 6,892,031
121,639
6,301
17,058
90,082
64,251
19,459
52,545
$ 5,588,940
$ 1,573,389
4,001,774
5,575,163
53,505
6,313
492,321
84,228
34,064
6,245,594
$ 1,329,857
3,549,433
4,879,290
63,585
-
39,000
69,874
22,432
5,074,181
-
-
36,378
410,276
214,454
(1,058)
(13,613)
646,437
$ 6,892,031
33,625
337,349
152,820
3,353
(12,388)
514,759
$ 5,588,940
AMERIS BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(dollars in thousands, except share data)
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
Total interest income
Interest expense
Interest on deposits
Interest on other borrowings
Total interest expense
Net interest income
Provision for loan losses
Net interest income after provision for loan losses
Noninterest income
Service charges on deposit accounts
Mortgage banking activity
Other service charges, commissions and fees
Net gains on sales of securities
Gain on sale of SBA loans
Other noninterest income
Total noninterest income
Noninterest expense
Salaries and employee benefits
Occupancy and equipment
Advertising and marketing
Amortization of intangible assets
Data processing and communications expenses
Legal and other professional fees
Credit resolution-related expenses
Merger and conversion charges
FDIC insurance
Other noninterest expenses
Total noninterest expense
Income before income tax expense
Income tax expense
Net income
Preferred stock dividends
2016
2015
2014
$ 218,659
17,824
1,722
827
33
239,065
12,410
7,284
19,694
219,371
4,091
215,280
42,745
48,298
3,575
94
3,974
7,115
105,801
106,837
24,397
4,181
4,376
24,591
9,885
6,172
6,376
3,712
25,308
215,835
$ 171,567
16,134
1,869
790
33
190,393
9,752
5,104
14,856
175,537
5,264
170,273
34,465
36,800
3,754
137
4,522
5,908
85,586
94,003
21,195
3,312
3,741
19,849
3,448
17,707
7,980
3,475
24,405
199,115
$ 150,611
12,086
1,626
236
7
164,566
9,488
5,192
14,680
149,886
5,648
144,238
24,614
25,986
2,647
138
3,896
5,555
62,836
73,878
17,521
2,869
2,330
15,551
3,092
13,506
3,940
2,972
15,210
150,869
105,246
56,744
56,205
(33,146)
(15,897)
(17,482)
72,100
40,847
38,723
-
-
286
Net income available to common stockholders
$ 72,100
$ 40,847
$ 38,437
Basic earnings per common share
Diluted earnings per common share
Dividends declared per common share
Weighted average common shares outstanding
Basic
Diluted
$
$
$
2.10
2.08
0.30
$
$
$
1.29
1.27
0.20
$
$
$
1.48
1.46
0.15
34,347
34,702
31,762
32,127
25,974
26,259
See notes to consolidated financial statements.
F-5
AMERIS BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(dollars in thousands)
Net income
Other comprehensive income (loss):
2016
2015
2014
$ 72,100
$ 40,847
$ 38,723
Net unrealized holding gains (losses) arising during period on investment securities
available for sale, net of tax expense (benefit) of ($2,355), ($1,239) and $3,969
Reclassification adjustment for gains on investment securities included in
(4,374)
(2,300)
7,371
operations, net of tax of $33, $48 and $48
(61)
(89)
(90)
Net unrealized gains (losses) on cash flow hedge during the period, net of tax
(benefit) of $13, ($192) and ($479)
Total other comprehensive income (loss)
Comprehensive income
24
(4,411)
(356)
(2,745)
(889)
6,392
$ 67,689
$ 38,102
$ 45,115
See notes to consolidated financial statements.
F-6
AMERIS BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(dollars in thousands, except share data)
PREFERRED STOCK
Balance at beginning of period
Repurchase of preferred stock
Balance at end of period
COMMON STOCK
Balance at beginning of period
Issuance of common stock
Issuance of restricted shares
Forfeitures of restricted shares
Exercise of stock options
Balance at end of period
CAPITAL SURPLUS
Balance at beginning of period
Issuance of common stock, net of issuance cost
of $0, $4,811 and $0
Stock-based compensation
Stock-based compensation net tax benefit
Exercise of stock options
Issuance of restricted shares
Forfeitures of restricted shares
Balance at end of period
RETAINED EARNINGS
Balance at beginning of period
Net income
Dividends on preferred shares
Dividends on common shares
Balance at end of period
ACCUMULATED OTHER COMPREHENSIVE INCOME
(LOSS), NET OF TAX
Unrealized gains (losses) on securities:
Balance at beginning of period
Change during period
Balance at end of period
Unrealized gain (loss) on interest rate swap:
Balance at beginning of period
Change during period
Balance at end of period
Balance at end of period
TREASURY STOCK
Balance at beginning of period
Purchase of treasury shares
Balance at end of period
2016
2015
2014
Shares
Amount
Shares
Amount
Shares
Amount
-
-
-
$
$
-
-
-
-
-
-
33,625,162
2,549,469
155,751
(7.085)
54,510
$ 33,625
2,549
156
(7)
55
28,159,027
5,320,000
71,000
-
75,135
$
$
$
-
-
-
28,000
(28,000)
-
28,159
5,320
71
-
75
26,461,769
1,598,998
77,047
(10,571)
31,784
$
$
$
28,000
(28,000 )
-
26,462
1,599
77
(11 )
32
36,377,807
$ 36,378
33,625,162
$
33,625
28,159,027
$
28,159
$ 337,349
69,906
2,261
-
909
(156 )
7
$ 410,276
$ 152,820
72,100
-
(10,466 )
$ 214,454
$ 3,201
(4,435)
$ (1,234)
$ 152
24
$ 176
$ (1,058)
1,413,777
42,556
1,456,333
$ (12,388)
(1,225)
(13,613 )
$
1,385,164
28,613
1,413,777
$ 225,015
$ 189,722
109,569
1,485
235
1,116
(71 )
-
32,875
2,057
-
427
(77 )
11
$ 337,349
$ 225,015
$ 118,412
40,847
-
(6,439 )
$ 152,820
$
$
$
$
$
$
$
5,590
(2,389 )
3,201
508
(356 )
152
3,353
(11,656 )
(732)
(12,388 )
1,363,342
21,822
1,385,164
$
83,991
38,723
(286 )
(4,016 )
$ 118,412
$
$
$
$
$
$
$
(1,691 )
7,281
5,590
1,397
(889 )
508
6,098
(11,182 )
(474)
(11,656 )
TOTAL STOCKHOLDERS’ EQUITY
$ 646,437
$ 514,759
$ 366,028
See notes to consolidated financial statements.
F-7
AMERIS BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(dollars in thousands)
OPERATING ACTIVITIES
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
2016
2015
2014
$ 72,100
$ 40,847
$ 38,723
Depreciation
Net (gains) losses on sale or disposal of premises and equipment
Provision for loan losses
Net write-downs and losses on sale of other real estate owned
Stock based compensation expense
Amortization of intangible assets
Provision for deferred taxes
Net amortization of investment securities available for sale
Net gains on securities available for sale
Accretion of discount on purchased non-covered loans
Amortization of premium on non-covered loan pools
Accretion of discount on covered loans
Net accretion of other borrowings
Amortization of subordinated deferrable interest debentures
Originations of mortgage loans held for sale
Payments received on mortgage loans held for sale
Proceeds from sales of mortgage loans held for sale
Net gains on mortgage loans held for sale
Originations of SBA loans
Proceeds from sales of SBA loans
Net gains on sales of SBA loans
Increase in cash surrender value of BOLI
Changes in FDIC loss-share receivable/payable, net of cash payments
received
Decrease (increase) in interest receivable
Increase (decrease) in interest payable
Increase (decrease) in taxes payable
Change attributable to other operating activities
Net cash provided by (used in) operating activities
INVESTING ACTIVITIES, net of effects of business combinations
Purchases of securities available for sale
Proceeds from maturities of securities available for sale
Proceeds from sale of securities available for sale
Net decrease (increase) in other investments
Net increase in loans, excluding purchased non-covered and covered loans
Payments received on purchased non-covered loans
Purchases of non-covered loan pools
Payments received on non-covered loan pools
Payments received on covered loans
Purchases of premises and equipment
Proceeds from sale of premises and equipment
Proceeds from sales of other real estate owned
Purchase of bank owned life insurance
Payments received from FDIC under loss-sharing agreements
Net cash proceeds received (paid) from acquisitions
Net cash provided by (used in) investing activities
9,519
992
4,091
1,953
2,261
4,376
847
7,057
(94)
(13,284)
5,653
(3,353)
(76)
1,453
(1,403,954)
1,390
1,340,668
(52,198)
(69,512)
28,268
(3,974)
(1,734)
11,798
(1,004)
446
(8,328)
(5,128)
(69,767)
(200,823)
131,390
75,990
(17,936)
(1,063,345)
215,958
(152,091)
171,087
31,494
(10,977)
295
22,483
-
816
(7,206)
(802,865)
8,058
184
5,264
15,696
1,485
3,741
(344)
5,881
(137)
(10,590)
1,165
(9,658)
-
1,043
(1,038,691)
1,331
989,979
(40,389)
(54,594)
39,484
(4,522)
(1,384)
5,777
(4,251)
(327)
9,033
10,696
(25,223)
(249,115)
89,030
72,528
1,824
(442,180)
154,666
(622,533)
28,405
79,372
(12,576)
244
43,269
(4,000)
19,273
673,933
(167,860)
6,642
(516)
5,648
4,950
2,057
2,330
6,516
3,666
(138)
(9,745)
-
(22,188)
401
807
(687,090)
1,299
694,130
(28,532)
(58,089)
32,782
(3,896)
(1,623)
11,596
(1,952)
(49)
(7,221)
3,896
(5,596)
(126,909)
51,215
94,051
8,028
(251,955)
74,931
-
-
102,996
(5,709)
1,213
43,793
-
22,494
17,022
31,170
(Continued)
F-8
AMERIS BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(dollars in thousands)
FINANCING ACTIVITIES, net of effects of business combinations
Net increase (decrease) in deposits
Net increase (decrease) in securities sold under agreements to repurchase
Proceeds from other borrowings
Repayment of other borrowings
Dividends paid - preferred stock
Redemption of preferred stock
Issuance of common stock
Proceeds from exercise of stock options
Dividends paid - common stock
Purchase of treasury shares
Net cash provided by (used in) financing activities
Net increase (decrease) in cash and due from banks
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
2016
2015
2014
294,513
(10,080)
635,886
(231,020)
-
-
-
964
(8,584)
(1,225)
680,454
(192,178)
390,563
$ 198,385
353,984
(9,725)
-
(39,881)
-
-
114,889
1,191
(6,439)
(732)
413,287
220,204
170,359
$ 390,563
62,894
(15,634)
118,963
(257,060)
(286)
(28,000)
-
459
(4,016)
(474)
(123,154)
(97,580)
267,939
$ 170,359
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest
Income taxes
Loans (excluding purchased non-covered and covered loans) transferred to other
real estate owned
Purchased non-covered loans transferred to other real estate owned
Covered loans transferred to other real estate owned
Loans transferred from mortgage loans available for sale to loans
Loans provided for the sales of other real estate owned
Assets acquired in business combinations
Liabilities assumed in business combinations
Issuance of common stock in acquisitions
Change in unrealized gain (loss) on securities available for sale, net
Change in unrealized gain (loss) on cash flow hedge (interest rate swap), net
$ 19,248
$ 40,575
$ 15,183
$ 5,828
$ 14,667
$ 19,281
$ 3,203
$ 4,419
$ 2,810
$ 119,352
$ 1,942
$ 561,440
$ 465,048
$ 72,455
$ (4,435)
$ 24
$ 11,261
$ 4,473
$ 7,910
$ 71,347
$ 4,826
$ 1,169,990
$ 1,099,988
$ -
$ (2,389)
$ (356)
$ 11,972
$ 4,160
$ 13,650
$ -
$ 1,109
$ 448,971
$ 411,701
$ 34,474
$ 7,281
$ (889)
(Concluded)
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 and subsidiaries (the “Company” or “Ameris”) is a financial holding company headquartered in Moultrie, Georgia, and
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 also engages in mortgage banking
activities and SBA lending, and, as such, originates, acquires, sells and services one-to-four family residential mortgage loans and SBA
loans in the Southeast. 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.
Acquisition Accounting
Acquisitions are accounted for under the acquisition 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 consideration
given is less than the fair value of the net assets received, the acquisition 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 additional information regarding the closing date fair values becomes available.
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.
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 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 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.
Transfer of financial assets
Transfers of financial assets are accounted for as sales, when control over the assets has been relinquished. Control over transferred
assets is deemed to be surrendered when the assets have been isolated from the Company, the transferee obtains the right (free of
conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and the Company does not
maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.
Cash and Cash Equivalents
For purposes of reporting cash flows, cash and cash equivalents include cash on hand, cash items in process of collection, amounts due
from banks, interest-bearing deposits in banks and federal funds sold. Net cash flows are reported for customer loan and deposit
transactions, securities sold under agreements to repurchase and federal funds purchased.
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 $37.8 million and $27.8 million for the years ended December 31, 2016 and 2015, respectively.
F-10
Investment Securities
The Company classifies its investment securities in one of three categories: (i) trading, (ii) held to maturity or (iii) available for sale.
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 investment securities are classified as
available for sale. At December 31, 2016 and 2015, all securities were classified as available for sale.
Trading securities are carried at fair value. Unrealized gains and losses on trading securities are recorded in earnings as a component of
other noninterest income. Held to maturity securities are recorded initially at cost and subsequently adjusted for paydowns and
amortization of premium recorded when purchased or accretion of discount recorded when purchased. Available for sale securities are
carried at fair value. Unrealized holding gains and losses, net of the related tax effect, on available for sale securities are excluded from
earnings 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 expected 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. A decline in the market value of any available for sale or held to maturity investment below
cost that is deemed other than temporary establishes a new cost basis for the security. Other than temporary impairment deemed to be
credit related is charged to earnings. Other than temporary impairment 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 or underlying collateral of
the security and (iii) the Company’s 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.
Other Investments
Other investments include Federal Home Loan Bank (“FHLB”) and Federal Reserve Bank stock. The investments do not have readily
determinable fair values and are carried at cost. They are periodically evaluated for impairment based on ultimate recovery of par value.
Both cash and stock dividends are reported as income.
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 mortgage banking activity in the consolidated
statements of income.
Servicing Rights
When mortgage and SBA loans are sold with servicing retained, servicing rights are initially recorded at fair value with the income
statement effect recorded in mortgage banking activity or gains on sales of SBA loans accordingly. Fair value is based on market prices
for comparable servicing contracts, when available or alternatively, is based on a valuation model that calculates the present value of
estimated future net servicing income. All classes of servicing assets are subsequently measured using the amortization method which
requires servicing rights to be amortized into non-interest income in proportion to, and over the period of, the estimated future net
servicing income of the underlying loans.
Servicing fee income, which is reported on the income statement as other noninterest income, is recorded for fees earned for servicing
loans. The fees are based on a contractual percentage of the outstanding principal or a fixed amount per loan and are recorded as income
when earned. The amortization of servicing rights is netted against loan servicing fee income. Servicing fees totaled $1,708,000 and
$1,268,000, and $1,011,000 for the years ended December 31, 2016, 2015 and 2014, respectively. Late fees and ancillary fees related
to loan servicing are not material.
Servicing rights are evaluated for impairment based upon the fair value of the rights as compared to carrying amount. Impairment is
determined by stratifying rights into strata based on predominant risk characteristics, such as interest rate, loan type and investor type.
Impairment is recognized for a particular stratum through a valuation allowance, to the extent that fair value is less than the carrying
amount. If the Company later determines that all or a portion of the impairment no longer exists for a particular stratum, a reduction of
the valuation allowance may be recorded as an increase to income. Changes in valuation allowances related to servicing rights are
reported in other noninterest income on the income statement. The fair values of servicing rights are subject to significant fluctuations
as a result of changes in estimated and actual prepayment speeds and default rates and losses.
F-11
Loans
Loans, excluding loans covered by FDIC loss-sharing agreements (“covered loans”), purchased loans not covered by FDIC loss-sharing
agreements (“purchased non-covered loans”) and purchased loan pools not covered by FDIC loss-sharing agreements (“purchased loan
pools”) are reported at their outstanding principal balances less unearned income, net of deferred fees and origination costs. Interest
income is accrued on the outstanding principal balance. For all classes of loans, 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. Interest income on mortgage and commercial loans is discontinued and placed on non-accrual status at the time
the loan is 90 days delinquent unless the loan is well secured and in process of collection. Mortgage loans and commercial loans are
charged off to the extent principal or interest is deemed uncollectible. Consumer loans continue to accrue interest until they are charged
off, generally between 90 and 120 days past due, unless the loan is in the process of collection. Non-accrual loans and loans past due 90
days still on accrual include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually
classified impaired loans. All interest accrued, but not collected for loans that are placed on nonaccrual or charged off, is reversed
against interest income. Interest income on nonaccrual loans is applied against principal 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.
Purchased Loans
Purchased loans include loans acquired in FDIC-assisted acquisitions (“covered loans”) and other acquisitions (“purchased non-covered
loans”) and are initially recorded at fair value on the date of the purchase. Purchased loans that contain evidence of credit deterioration
(“purchased credit impaired loans”) on the date of purchase are carried at the net present value of expected future proceeds. All other
purchased loans are recorded at their initial fair value, adjusted for subsequent advances, pay downs, amortization or accretion of any
premium or discount on purchase, charge-offs and any other adjustment to carrying value. There is no carryover of the seller’s allowance
for loan losses. After acquisition, losses are recognized by recording a charge-off of the loss and a corresponding provision expense.
In determining the initial fair value of purchased loans without evidence of credit deterioration at the date of acquisition, management
includes (i) no carryover of any previously recorded ALLL and (ii) an adjustment of the recorded investment to reflect an appropriate
market rate of interest, given the risk profile and grade assigned to each loan. This adjustment is accreted into earnings as a yield
adjustment, using methods approximating the effective yield method, over the remaining life of each loan.
Purchased credit impaired loans are accounted for individually. The Company estimates the amount and timing of expected cash flows
for each loan, and the expected cash flows in excess of the amount paid is recorded as interest income over the remaining life of the loan
(accretable yield). The excess of the loan’s contractual principal and interest over expected cash flows is not recorded (nonaccretable
difference).
Over the life of the loan, expected cash flows continue to be estimated. If the present value of expected cash flows is less than the
carrying amount, an impairment loss is recorded as a provision for loan losses. If the present value of expected cash flows is greater
than the carrying amount, it is recognized as part of future interest income through an increase in accretable yield.
Purchased Loan Pools
Purchased loan pools include groups of residential mortgage loans that were not acquired in bank acquisitions or FDIC-assisted
transactions (“purchased loan pools”). Purchased loan pools are reported at their outstanding principal balances plus purchase premiums,
net of accumulated amortization. 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.
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 incurred losses 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.
F-12
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.
The allowance for loan losses represents a reserve for probable incurred 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. 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.
Warehouse lines of credit, overdraft protection loans and certain consumer and mortgage loans serviced by outside processors 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, calculated by loan
type, and adjusted for qualitative factors to be applied to the balance of loans by risk rating and loan type, to determine the adequate
amount of reserve. Many of the larger loans require an annual review by an independent loan officer in the Company’s internal loan
review department. Assigned risk ratings are adjusted based on various factors including changes in borrower’s financial condition, the
number of days past due and general economic conditions. The calculation of the allowance for loan losses, including underlying data
and assumptions, is reviewed quarterly by the independent internal loan review department.
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, and the guarantor demonstrates willingness and capacity to support the debt, 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.
Loan Commitments and Financial Instruments
Financial instruments include off-balance sheet credit instruments, such as commitments to make loans and standby letters of credit,
issued to meet customer financing needs. The face amount for these items represents the exposure to loss, before considering
customer collateral or ability to repay. Such financial instruments are recorded when they are funded.
Premises and Equipment
Land is carried at cost. Other premises and equipment are carried at cost, less accumulated depreciation computed on the straight-line
method over the estimated useful lives of the assets. In general, estimated lives for buildings are up to 40 years, furniture and equipment
useful lives range from three to 20 years and the lives of software and computer related equipment range from three to five
years. Leasehold improvements are amortized over the life of the related lease, or the related assets, whichever is shorter. Expenditures
for major improvements of the Company’s premises and equipment are capitalized and depreciated over their estimated useful
lives. Minor repairs, maintenance and improvements are charged to operations as incurred. When assets are sold or disposed of, their
cost and related accumulated depreciation are removed from the accounts and any gain or loss is reflected in earnings.
F-13
FDIC Loss-Share Receivable/Payable
In connection with the Company’s FDIC-assisted acquisitions, the Company has recorded an FDIC loss-share receivable to reflect the
indemnification provided by the FDIC. Since the indemnified items are covered loans and covered foreclosed assets, which are initially
measured at fair value, the FDIC loss-share receivable is also initially measured and recorded at fair value, and is calculated by
discounting the cash flows expected to be received from the FDIC. These cash flows are estimated by multiplying estimated losses by
the reimbursement rates as set forth in the loss-sharing agreements. The balance of the FDIC loss-share receivable and the accretion (or
amortization) thereof is adjusted periodically to reflect changes in expectations of discounted cash flows, expense reimbursements under
the loss-sharing agreements and other factors. The Company is accreting (or amortizing) its FDIC loss-share receivable over the shorter
of the contractual term of the indemnification agreement (ten years for the single family loss-sharing agreements, and five years for the
non-single family loss-sharing agreements) or the remaining life of the indemnified asset.
Pursuant to the clawback provisions of the loss-sharing agreements for the Company’s FDIC-assisted acquisitions, the Company may
be required to reimburse the FDIC should actual losses be less than certain thresholds established in each loss-sharing agreement. The
amount of the clawback provision for each acquisition is measured and recorded at fair value. It is calculated as the difference between
management’s estimated losses on covered loans and covered foreclosed assets and the loss threshold contained in each loss-sharing
agreement, multiplied by the applicable clawback provisions contained in each loss-sharing agreement. This clawback amount, which
is payable to the FDIC upon termination of the applicable loss-sharing agreement, is then discounted back to net present value, generally
over ten years. To the extent that actual losses on covered loans and covered foreclosed assets are less than estimated losses, the
applicable clawback payable to the FDIC upon termination of the loss-sharing agreements will increase. To the extent that actual losses
on covered loans and covered foreclosed assets are more than estimated losses, the applicable clawback payable to the FDIC upon
termination of the loss-sharing agreements will decrease. The balance of the FDIC clawback payable and the amortization thereof are
adjusted periodically to reflect changes in expected losses on covered assets and the impact of such changes on the clawback payable
and other factors. The FDIC loss-share receivable is reported net of the clawback liability.
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 seven to ten years. Amortization periods are reviewed annually in
connection with the annual impairment testing of goodwill.
Cash Value of Bank Owned Life Insurance
The Company has purchased life insurance policies on certain officers. The life insurance is recorded at the amount that can be realized
under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for other charges or other amounts due
that are probable at settlement.
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.
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 with a tax examination being presumed to occur, 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.
F-14
The Company recognizes interest and penalties related to income tax matters in other noninterest expenses.
Loss Contingencies
Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the
likelihood of loss is probable and an amount or range of 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 $2.3 million, $1.5 million, and $2.1 million of stock-based compensation cost in 2016, 2015 and 2014,
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 share are computed by dividing net income allocated to common stockholders by the weighted-average number of
shares of common stock outstanding during the period. Diluted earnings per common share are computed by dividing net income
allocated to common shareholders by the effect of the issuance of potential common shares that are dilutive and by the sum of the
weighted-average number of shares of common stock outstanding. Potential common shares consist of stock options and restricted
shares for the years ended December 31, 2016, 2015 and 2014, and are determined using the treasury stock method. The Company has
determined that its outstanding non-vested stock awards are participating securities, and all dividends on these awards are paid similar
to other dividends.
Presented below is a summary of the components used to calculate basic and diluted earnings per share:
Years Ended December 31,
2016
2015
2014
(dollars in thousands, shares in thousands)
Net income available to common shareholders
$ 72,100
$ 40,847
$ 38,437
Weighted average number of common shares outstanding
Effect of dilutive stock options
Effect of dilutive restricted stock awards
34,347
108
247
31,762
121
244
25,974
270
15
Weighted average number of common shares outstanding used to
calculate diluted earnings per share
34,702
32,127
26,259
For the years ended December 31, 2016 and 2015, the Company has not excluded any potential common shares with strike prices that
would cause them to be anti-dilutive. For the year ended December 31, 2014, the Company has excluded 6,000 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 hedging strategies include utilizing an interest rate swap classified as a cash flow hedge. Cash flow hedges relate to
converting the variability in future interest payments on a floating rate liability to fixed payments. When effective, the fair value of cash
flow hedges is carried as a component of other comprehensive income rather than an income statement item.
The Company had a cash flow hedge with notional amount of $37.1 million at December 31, 2016, 2015 and 2014 for the purpose of
converting the variable rate on certain junior subordinated debentures to a fixed rate. The fair value of this instrument amounted to a
liability of approximately $978,000 and $1,439,000 as of December 31, 2016 and 2015, respectively. No material 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.
F-15
Mortgage Banking Derivatives
The Company maintains a risk management program to manage interest rate risk and pricing risk associated with its mortgage lending
activities. Commitments to fund mortgage loans (interest rate locks) to be sold into the secondary market and forward commitments for
the future delivery of these mortgage loans are accounted for as free standing derivatives. The fair value of the interest rate lock is
recorded at the time the commitment to fund the mortgage loan is executed and is adjusted for the expected exercise of the commitment
before the loan is funded. In order to hedge the change in interest rates resulting from its commitments to fund the loans, the Company
enters into forward commitments for the future delivery of mortgage loans when interest rate locks are entered into. Fair values of these
mortgage derivatives are estimated based on changes in mortgage interest rates from the date the interest on the loan is locked. Changes
in the fair values of these derivatives are included in mortgage banking activity. The fair value of these instruments amounted to an
asset of approximately $4,314,000 and $2,687,000 at December 31, 2016 and 2015, respectively, and a derivative liability of
approximately $0 and $137,000 at December 31, 2016 and 2015, 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 cash flow hedges and the realized gain or loss recognized due to the
sale or unwind of cash flow hedges prior to their contractual maturity date. These amounts are carried in accumulated other
comprehensive income (loss) on the consolidated statements of comprehensive income and are presented net of taxes.
Fair Value Measures
Fair values of assets and liabilities are estimated using relevant market information and other assumptions, as more fully disclosed in a
separate note. Fair value estimates involve uncertainties and matters of significant judgment regarding interest rates, credit risk,
prepayments, and other factors, especially in the absence of broad markets for particular items. Changes in assumptions or in market
conditions could significantly affect these estimates.
Operating Segments
The Company has four reportable segments, the Banking Division, the Retail Mortgage Division, the Warehouse Lending Division and
the SBA Division. The Banking Division derives its revenues from the delivery of full service financial services to include commercial
loans, consumer loans and deposit accounts. The Retail Mortgage Division derives its revenues from the origination, sales and servicing
of one-to-four family residential mortgage loans. The Warehouse Lending Division derives its revenues from the origination and
servicing of warehouse lines to other businesses that are secured by underlying one-to-four family residential mortgage loans. The SBA
Division derives its revenues from the origination, sales and servicing of SBA loans. The Banking, Retail Mortgage, Warehouse Lending
and SBA Divisions are managed as separate business units because of the different products and services they provide. The Company
evaluates performance and allocates resources based on profit or loss from operations. There are no material intersegment sales or
transfers.
New Accounting Standards
ASU 2017-04 – Intangibles: Goodwill and Other: Simplifying the Test for Goodwill Impairment (“ASU 2017-04”). ASU 2017-04
eliminates Step 2 from the goodwill impairment test to simplify the subsequent measurement of goodwill. The annual, or interim,
goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount. An impairment charge
should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized
should not exceed the total amount of goodwill allocated to that reporting unit. In addition, the income tax effects of tax deductible
goodwill on the carrying amount of the reporting unit should be considered when measuring the goodwill impairment loss, if applicable.
ASU 2017-04 also eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform Step 2 of the
goodwill impairment test. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the
qualitative impairment test is necessary. The standard must be adopted using a prospective basis and the nature and reason for the change
in accounting principle should be disclosed upon transition. ASU 2017-04 is effective for annual or any interim goodwill impairment
tests in reporting periods beginning after December 15, 2019. Early adoption is permitted on testing dates after January 1, 2017. The
Company is currently evaluating the impact this standard will have on the Company’s results of operations, financial position and
disclosures, but it is not expected to have a material impact.
F-16
ASU 2017-01 – Business Combinations (Topic 805): Clarifying the Definition of a Business (“ASU 2017-01”). ASU 2017-01 provides
a framework to use in determining when a set of assets and activities is a business. The standard provides more consistency in applying
the business combination guidance, reduces the costs of application, and makes the definition of a business more operable. ASU 2017-
01 is effective for interim and annual periods within those annual periods beginning after December 15, 2017. The Company is currently
evaluating the impact this standard will have on the Company’s results of operations, financial position and disclosures, but it is not
expected to have a material impact.
ASU 2016-13 - Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU
2016-13”). ASU 2016-13 significantly changes how entities will measure credit losses for most financial assets and certain other
instruments that are not measured at fair value through net income. The standard will replace the current incurred loss approach with
an expected loss model, referred to as the current expected credit loss (“CECL”) model. The new standard will apply to financial assets
subject to credit losses and measured at amortized cost and certain off-balance-sheet credit exposures, which include, but are not limited
to, loans, leases, held-to-maturity securities, loan commitments and financial guarantees. ASU 2016-13 simplifies the accounting for
purchased credit-impaired debt securities and loans and expands the disclosure requirements regarding an entity’s assumptions, models
and methods for estimating the allowance for loan and lease losses. In addition, entities will need to disclose the amortized cost balance
for each class of financial asset by credit quality indicator, disaggregated by the year of origination. ASU 2016-13 is effective for interim
and annual reporting periods beginning after December 15, 2019. Early adoption is permitted for interim and annual reporting periods
beginning after December 15, 2018. Upon adoption, ASU 2016-13 provides for a modified retrospective transition by means of a
cumulative-effect adjustment to equity as of the beginning of the period in which the guidance is effective. While the Company is
currently evaluating the impact this standard will have on the results of operations, financial position and disclosures, the Company
expects to recognize a one-time cumulative effect adjustment to the allowance for loan losses as of the beginning of the first reporting
period in which the new standard is effective. The Company has established a steering committee which includes the appropriate
members of management to evaluate the impact this ASU will have on Company’s financial position, results of operations and financial
statement disclosures and determine the most appropriate method of implementing the amendments in this ASU as well as any resources
needed to implement the amendments.
ASU 2016-09 – Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”). ASU 2016-09 simplifies various
aspects of how share-based payments are accounted for and presented in the financial statements. Under ASU 2016-09, companies will
record all excess tax benefits and tax deficiencies as income tax expense or benefit in the income statement and will no longer record
excess tax benefits and certain tax deficiencies in additional paid-in capital. The standard eliminates the requirement that excess tax
benefits be realized before companies can recognize them. The excess tax benefits will be reported as an operating activity on the
statement of cash flows, and the cash paid to a tax authority when shares are withheld to satisfy a company’s statutory income tax
withholding obligation will be reported as a financing activity on its statement of cash. In addition, the standard increases the amount
an employer can withhold to cover income taxes on awards and still qualify for the exception to liability classification for shares used
to satisfy the employer’s statutory income tax withholding obligation. ASU 2016-09 permits companies to make an accounting policy
election for the impact of forfeitures on the recognition of expense for share-based payment awards. Forfeitures can be estimated, as
required today, or recognized when they occur. ASU 2016-09 became effective on January 1, 2017 and did not have a material impact
on the consolidated financial statements.
ASU 2016-02 – Leases (Topic 842) (“ASU 2016-02”). ASU 2016-02 amends the existing standards for lease accounting effectively
requiring most leases be carried on the balance sheets of the related lessees by requiring them to recognize a right-of-use asset and a
corresponding lease liability. ASU 2016-02 includes qualitative and quantitative disclosure requirements intended to provide greater
insight into the nature of an entity’s leasing activities. The standard must be adopted using a modified retrospective transition with a
cumulative-effect adjustment to equity as of the beginning of the period in which it is adopted. ASU 2016-02 is effective for annual
reporting periods beginning after December 15, 2018, and interim periods within those annual periods with early adoption permitted.
The Company is currently evaluating the impact this standard will have on the Company’s results of operations, financial position and
disclosures, but it is not expected to have a material impact.
ASU 2015-03 – Interest – Imputation of Interest (“ASU 2015-03”). ASU 2015-03 simplifies presentation of debt issuance costs by
requiring that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the
carrying amount of the debt liability, consistent with debt discounts. ASU 2015-03 is effective for annual periods and interim periods
within those annual periods beginning after December 15, 2015, and early adoption is permitted. It should be applied on a retrospective
basis. The adoption of this standard did not have a material effect on the Company’s results of operations, financial position or
disclosures.
ASU 2015-02 “Consolidation (Topic 810) - Amendments to the Consolidation Analysis” (“ASU 2015-02”). ASU 2015-02 includes
amendments that are intended to improve targeted areas of consolidation for legal entities including reducing the number of consolidation
models from four to two and simplifying the FASB Accounting Standards Codification. ASU 2015-02 is effective for annual and interim
periods within those annual periods, beginning after December 15, 2015. The amendments may be applied retrospectively in previously
issued financial statements for one or more years with a cumulative effect adjustment to retained earnings as of the beginning of the first
year restated. The adoption of this standard did not have a material effect on the Company’s results of operations, financial position or
disclosures.
F-17
ASU 2015-01- Income Statement – Extraordinary and Unusual Items (“ASU 2015-01”). ASU 2015-01 eliminates the concept of
extraordinary items by no longer allowing companies to segregate an extraordinary item from the results of operations, separately present
an extraordinary item on the income statement, or disclose income taxes or earnings-per-share data applicable to an extraordinary item.
ASU 2015-01 is effective for annual periods and interim periods within those annual periods beginning after December 15, 2015, and
early adoption is permitted. The adoption of this standard did not have a material effect on the Company’s results of operations, financial
position or disclosures.
ASU 2014-09 – Revenue from Contracts with Customers (“ASU 2014-09”). ASU 2014-09 provides guidance that an entity should
recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which
the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 is effective prospectively, for annual and interim
periods, beginning after December 15, 2017. The Company is currently evaluating the impact this standard will have on the Company’s
results of operations, financial position and disclosures, but it is not expected to have a material impact.
Reclassifications
Certain reclassifications of prior year amounts have been made to conform with the current year presentations.
NOTE 2– BUSINESS COMBINATIONS
Jacksonville Bancorp, Inc.
On March 11, 2016, the Company completed its acquisition of Jacksonville Bancorp, Inc. (“JAXB”), a bank holding company
headquartered in Jacksonville, Florida. Upon consummation of the acquisition, JAXB was merged with and into the Company, with
Ameris as the surviving entity in the merger. At that time, JAXB’s wholly owned banking subsidiary, The Jacksonville Bank
(“Jacksonville Bank”), was also merged with and into the Bank. The acquisition expanded the Company’s existing market presence, as
Jacksonville Bank had a total of eight full-service branches located in Jacksonville and Jacksonville Beach, Duval County, Florida.
Under the terms of the merger, JAXB’s common shareholders received 0.5861 shares of Ameris common stock or $16.50 in cash for
each share of JAXB common stock or nonvoting common stock they previously held, subject to the total consideration being allocated
75% stock and 25% cash. As a result, the Company issued 2,549,469 common shares at a fair value of $72.5 million and paid $23.9
million in cash to former shareholders of JAXB.
The acquisition of JAXB was accounted for using the acquisition 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. During the third
and fourth quarters of 2016, management revised its initial estimates regarding the valuation of loans, other real estate owned, premises
and equipment, core deposit intangible and other assets acquired. In addition, management assessed and recorded the deferred tax assets
resulting from differences in the carrying values of acquired assets and assumed liabilities for financial reporting purposes and their
basis for income tax purposes. This estimate also reflects acquired net operating loss carryforwards and other acquired assets with built-
in losses that are expected to be settled or otherwise recovered in future periods where the realization of such benefits would be subject
to applicable limitations under Section 382 of the Internal Revenue Code of 1986, as amended. Management continues to evaluate fair
value adjustments related to loans, other real estate owned and deferred tax assets.
F-18
The following table presents the assets acquired and liabilities of JAXB assumed as of March 11, 2016 and their fair value estimates.
The fair value adjustments shown in the following table continue to be evaluated by management and may be subject to further
adjustment:
(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
Premises and equipment
Intangible assets
Other assets
Total assets
Liabilities
Deposits:
Noninterest-bearing
Interest-bearing
Total deposits
Other borrowings
Other liabilities
Subordinated deferrable interest debentures
Total liabilities
Net identifiable assets acquired over (under) liabilities assumed
Goodwill
As Recorded
by
JAXB
Initial Fair
Value
Adjustments
Subsequent Fair
Value
Adjustments
As Recorded
by Ameris
$
9,704 $
7,027
60,836
2,458
416,831
(12,613)
404,218
2,873
4,798
288
14,141
$
-
-
(942)(a)
-
(15,746)(b)
12,613 (c)
(3,133)
(1,035)(d)
-
5,566 (e)
23,266 (f)
$
506,343 $
23,722
$
$
-
421(g)
421
84 (h)
-
(3,393)(i)
(2,888)
26,610
31,375
57,985
$
123,399 $
277,539
400,938
48,350
2,354
16,294
467,936
38,407
-
$
-
-
-
-
553 (j)
-
553
88 (k)
(119)(l)
(1,108)(m)
(3,524)(n)
9,704
7,027
59,894
2,458
401,638
-
401,638
1,926
4,679
4,746
33,883
(4,110)
$
525,955
-
-
-
-
-
-
-
(4,110)
4,110
$
123,399
277,960
401,359
48,434
2,354
12,901
465,048
60,907
35,485
$
-
$
96,392
Net assets acquired over (under) liabilities assumed
$
38,407 $
Consideration:
Ameris Bancorp common shares issued
Price per share of the Company's common stock
Company common stock issued
Cash exchanged for shares
Fair value of total consideration transferred
2,549,469
28.42
72,455
23,937
96,392
$
$
$
$
Explanation of fair value adjustments
(a)
(b)
(c)
(d)
(e)
Adjustment reflects the fair value adjustments of the portfolio of securities available for sale as of the acquisition date.
Adjustment reflects the fair value adjustments based on the Company’s evaluation of the acquired loan portfolio, net of
the reversal of JAXB remaining fair value adjustments from their prior acquisitions.
Adjustment reflects the elimination of JAXB’s allowance for loan losses.
Adjustment reflects the fair value adjustment based on the Company’s evaluation of the acquired OREO portfolio, which
is based largely on contracted sale prices.
Adjustment reflects the recording of core deposit intangible on the acquired core deposit accounts.
F-19
(f)
(g)
(h)
(i)
(j)
(k)
(l)
(m)
(n)
Adjustment reflects the deferred taxes on the difference in the carrying values of acquired assets and assumed liabilities
for financial reporting purposes and their basis for federal income tax purposes and the reversal of JAXB valuation
allowance established on their deferred tax assets.
Adjustment reflects the fair value adjustments based on the Company’s evaluation of the acquired deposits.
Adjustment reflects the fair value adjustments based on the Company’s evaluation of the liability for other borrowings.
Adjustment reflects the fair value adjustment to the subordinated deferrable interest debentures at the acquisition date,
net of the reversal of JAXB remaining fair value adjustments from their prior acquisitions.
Adjustment reflects additional recording of fair value adjustment of the acquired loan portfolio.
Adjustment reflects additional recording of fair value adjustment of other real estate owned.
Adjustment reflects recording of fair value adjustment of the premises and equipment.
Adjustment reflects adjustment to the core deposit intangible on the acquired core deposit accounts.
Adjustment reflects additional recording of deferred taxes on the difference in the carrying values of acquired assets and
assumed liabilities for financial reporting purposes and their basis for federal income tax purposes.
Goodwill of $35.5 million, which is the excess of the purchase price over the fair value of net assets acquired, was recorded in the JAXB
acquisition and is the result of expected operational synergies and other factors. This goodwill is not expected to be deductible for tax
purposes.
In the acquisition, the Company purchased $401.6 million of loans at fair value, net of $15.2 million, or 3.64%, estimated discount to
the outstanding principal balance. Of the total loans acquired, management identified $27.0 million that were considered to be credit
impaired and are accounted for under ASC Topic 310-30. The table below summarizes the total contractually required principal and
interest cash payments, management’s estimate of expected total cash payments and fair value of the loans as of acquisition date for
purchased credit impaired loans. Contractually required principal and interest payments have been adjusted for estimated prepayments.
(dollars in thousands)
Contractually required principal and interest
Non-accretable difference
Cash flows expected to be collected
Accretable yield
Total purchased credit-impaired loans acquired
$
$
42,314
(9,181)
33,133
(6,182)
26,951
The following table presents the acquired loan data for the JAXB acquisition.
Acquired receivables subject to ASC 310-30
Acquired receivables not subject to ASC 310-30
Branch Acquisition
Fair Value of
Acquired Loans at
Acquisition Date
Gross
Contractual
Amounts
Receivable at
Acquisition
Date
(Dollars in Thousands)
Best Estimate
at Acquisition
Date of
Contractual
Cash Flows
Not Expected
to be Collected
$
$
26,951
374,687
$
$
42,314
488,346
$
$
9,181
-
On June 12, 2015, the Company completed its acquisition of 18 branches from Bank of America, National Association located in
Calhoun, Columbia, Dixie, Hamilton, Suwanee and Walton Counties, Florida and Ben Hill, Colquitt, Dougherty, Laurens, Liberty,
Thomas, Tift and Ware Counties, Georgia. Under the terms of the Purchase and Assumption Agreement dated January 28, 2015, the
Company paid a deposit premium of $20.0 million, equal to 3.00% of the average daily deposits for the 15 calendar-day period
immediately prior to the acquisition date. In addition, the Company acquired approximately $4.0 million in loans and $10.7 million in
premises and equipment.
F-20
The acquisition of the 18 branches was accounted for using the acquisition 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. During the third and fourth quarters of 2015, management revised its
initial estimates regarding the valuation of loans, premises and intangible assets acquired.
The following table presents the assets acquired and liabilities assumed as of June 12, 2015 and their fair value estimates.
As Recorded by
Bank of America
Initial Fair
Value
Adjustments
Subsequent
Fair Value
Adjustments
As Recorded
by Ameris
(dollars in thousands)
Assets
Cash and cash equivalents
Loans
Premises and equipment
Intangible assets
Other assets
Total assets
Liabilities
Deposits:
Noninterest-bearing
Interest-bearing
Total deposits
Other liabilities
Total liabilities
Net identifiable assets acquired over (under) liabilities
assumed
Goodwill
Net assets acquired over (under) liabilities assumed
Consideration:
Cash paid as deposit premium
Fair value of total consideration transferred
Explanation of fair value adjustments
$
$
$
$
$
$
$
$
$
$
630,220
4,363
10,348
-
126
-
-
1,060 (a)
7,651 (b)
-
645,057
$
8,711
$
149,854
495,110
644,964
93
645,057
-
(215) (c)
(215)
-
(215)
8,926
11,076
$
20,002
$
(134)
134
-
-
-
-
20,002
20,002
-
(364)(d)
(755)(e)
985 (f)
-
(134)
$
630,220
3,999
10,653
8,636
126
$
653,634
-
-
-
-
-
$
149,854
494,895
644,749
93
644,842
8,792
11,210
$
20,002
(a)
(b)
(c)
(d)
(e)
(f)
Adjustment reflects the fair value adjustments of the premise and equipment as of the acquisition date.
Adjustment reflects the recording of core deposit intangible on the acquired core deposit accounts.
Adjustment reflects the fair value adjustments based on the Company’s evaluation of the acquired deposits.
Adjustment reflects the fair value adjustments based on the Company’s evaluation of the acquired loan portfolio.
Adjustment reflects additional recording of fair value adjustment of the premise and equipment.
Adjustment reflects additional recording of core deposit intangible on the acquired core deposit accounts.
Goodwill of $11.2 million, which is the excess of the purchase consideration over the fair value of net assets acquired, was recorded in
the branch acquisition and is the result of expected operational synergies and other factors.
In the acquisition, the Company purchased $4.0 million of loans at fair value. Management identified $364,000 of overdrafts that were
considered to be credit impaired and were subsequently charged off as uncollectible under ASC Topic 310-30.
F-21
Merchants & Southern Banks of Florida, Incorporated
On May 22, 2015, the Company completed its acquisition of all shares of the outstanding common stock of Merchants & Southern
Banks of Florida, Incorporated (“Merchants”), a bank holding company headquartered in Gainesville, Florida, for a total purchase price
of $50,000,000. Upon consummation of the stock purchase, Merchants was merged with and into the Company, with Ameris as the
surviving entity in the merger. At that time, Merchants’ wholly owned banking subsidiary, Merchants and Southern Bank, was also
merged with and into the Bank. The acquisition grew the Company’s existing market presence, as Merchants and Southern Bank had a
total of 13 banking locations in Alachua, Marion and Clay Counties, Florida.
The acquisition of Merchants was accounted for using the acquisition 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. During
the third and fourth quarters of 2015 and the first and second quarters of 2016, management revised its initial estimates regarding the
valuation of investment securities, other investments, loans, core deposit intangible and other assets acquired. In addition, management
continued its assessment and recorded the deferred tax assets resulting from differences in the carrying values of acquired assets and
assumed liabilities for financial reporting purposes and their basis for income tax purposes. This estimate also reflects acquired net
operating loss carryforwards and other acquired assets with built-in losses that are expected to be settled or otherwise recovered in future
periods where the realization of such benefits would be subject to applicable limitations under Sections 382 of the Internal Revenue
Code of 1986, as amended.
The following table presents the assets acquired and liabilities of Merchants assumed as of May 22, 2015 and their 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
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 liabilities
Subordinated deferrable interest debentures
Total liabilities
Net identifiable assets acquired over (under) liabilities
assumed
Goodwill
Net assets acquired over (under) liabilities assumed
Consideration:
Cash exchanged for shares
Fair value of total consideration transferred
As Recorded by
Merchants
Initial Fair
Value
Adjustments
Subsequent
Fair Value
Adjustments
As Recorded
by Ameris
$
$
$
7,527
106,188
164,421
872
199,955
(3,354)
196,601
4,082
14,614
-
2,333
496,638
121,708
286,112
407,820
41,588
2,151
6,186
457,745
38,893
-
-
-
(553)(a)
-
(8,500)(b)
3,354 (c)
(5,146)
(1,115)(d)
(3,680)(e)
4,577 (f)
2,335 (g)
(3,582)
-
-
-
-
81 (h)
(2,680)(i)
(2,599)
$
$
$
$
$
$
-
-
(639)(j)
(253)(k)
91(l)
-
91
-
-
(634)(m)
(1,109) (n)
(2,544)
-
41,588(o)
41,588
(41,588)(o)
-
-
-
(983)
12,090
(2,544)
2,544
7,527
106,188
163,229
619
191,546
-
191,546
2,967
10,934
3,943
3,559
490,512
121,708
327,700
449,408
-
2,232
3,506
455,146
35,366
14,634
38,893
$
11,107
$
-
$
50,000
50,000
50,000
$
$
$
$
$
$
F-22
Explanation of fair value adjustments
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
(k)
(l)
(m)
(n)
(o)
Adjustment reflects the fair value adjustments of the investment securities 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 Merchants’ allowance for loan losses.
Adjustment reflects the fair value adjustment based on the Company’s evaluation of the acquired OREO portfolio.
Adjustment reflects the fair value adjustment based on the Company’s evaluation of the acquired premises.
Adjustment reflects the recording of core deposit intangible on the acquired core deposit accounts.
Adjustment reflects the deferred taxes on the difference in the carrying values of acquired assets and assumed liabilities
for financial reporting purposes and their basis for federal income tax purposes.
Adjustment reflects the fair value adjustments based on the Company’s evaluation of interest rate swap liabilities.
Adjustment reflects the fair value adjustment to the subordinated deferrable interest debentures at the acquisition date.
Adjustment reflects additional fair value adjustments of the investment securities available for sale portfolio as of the
acquisition date.
Adjustment reflects the fair value adjustments of other investments as of the acquisition date.
Adjustment reflects additional recording of fair value adjustments of the acquired loan portfolio.
Adjustment reflects adjustment to the core deposit intangible on the acquired core deposit accounts.
Adjustment reflects additional recording of deferred taxes on the difference in the carrying values of acquired assets and
assumed liabilities for financial reporting purposes and their basis for federal income tax purposes.
Subsequent to acquisition, the acquired securities sold under agreements to repurchase were converted to deposit
accounts and are no longer reported as securities sold under agreements to repurchase on the consolidated balance sheet
as of December 31, 2015.
Goodwill of $14.6 million, which is the excess of the purchase price over the fair value of net assets acquired, was recorded in the
Merchants acquisition and is the result of expected operational synergies and other factors. This goodwill is not expected to be deductible
for tax purposes.
In the acquisition, the Company purchased $191.5 million of loans at fair value, net of $8.4 million, or 4.21%, estimated discount to the
outstanding principal balance. Of the total loans acquired, management identified $11.2 million that were considered to be credit
impaired and are accounted for under ASC Topic 310-30. The table below summarizes the total contractually required principal and
interest cash payments, management’s estimate of expected total cash payments and fair value of the loans as of acquisition date for
purchased credit impaired loans. Contractually required principal and interest payments have been adjusted for estimated prepayments.
(dollars in thousands)
Contractually required principal and interest
Non-accretable difference
Cash flows expected to be collected
Accretable yield
Total purchased credit-impaired loans acquired
$
$
17,201
(2,712)
14,489
(3,254)
11,235
F-23
The following table presents the acquired loan data for the Merchants acquisition.
Acquired receivables subject to ASC 310-30
Acquired receivables not subject to ASC 310-30
Fair Value of
Acquired Loans at
Acquisition Date
Gross
Contractual
Amounts
Receivable at
Acquisition
Date
(Dollars in Thousands)
Best Estimate
at Acquisition
Date of
Contractual
Cash Flows
Not Expected
to be Collected
$
$
11,235
180,311
$
$
14,086
184,906
$
$
2,712
-
The results of operations of JAXB and Merchants subsequent to the respective acquisition dates 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, 2015, unadjusted for potential cost savings.
(dollars in thousands, except per share data)
Net interest income and noninterest income
Net income
Net income available to common stockholders
Income per common share available to common stockholders – basic
Income per common share available to common stockholders – diluted
Average number of shares outstanding, basic
Average number of shares outstanding, diluted
Year Ended December 31,
2015
$286,573
$ 47,994
$ 47,994
1.40
$
$
1.38
34,311
34,676
2016
$ 329,248
$ 72,835
$ 72,835
2.09
$
$
2.07
34,841
35,196
A rollforward of purchased non-covered loans for the years ended December 31, 2016 and 2015 is shown below:
2016
(dollars in thousands)
Balance, January 1 ....................................................................... $ 771,554
(1,066)
Charge-offs ..................................................................................
401,638
Additions due to acquisitions .......................................................
13,284
Accretion .....................................................................................
(4,419)
Transfers to purchased non-covered other real estate owned.......
45,908
Transfer from covered loans due to loss-share expiration ...........
(215,958)
Payments received .......................................................................
90
Other ............................................................................................
$
2015
674,239
(991)
195,818
10,590
(4,473)
50,568
(154,666)
469
Ending balance ............................................................................. $ 1,011,031
$
771,554
The following is a summary of changes in the accretable discounts of purchased non-covered loans during years ended December 31,
2016 and 2015:
(dollars in thousands)
Balance, January 1 ....................................................................... $ 24,785
Additions due to acquisitions .......................................................
Accretion......................................................................................
Transfer from covered loans due to loss-share expiration ...........
Accretable discounts removed due to charge-offs .......................
Transfers between non-accretable and accretable discounts, net .
11,295
(13,284)
3,457
(161)
2,035
2016
$
2015
25,716
5,788
(10,590)
1,665
(1,768)
3,974
Ending balance ............................................................................. $ 28,127
$
24,785
F-24
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.
Midtown 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
The following table summarizes components of all covered assets at December 31, 2016 and 2015 and their origin. The FDIC loss-
share receivable is shown net of the clawback liability.
Covered
loans
Less
fair value
adjustments
Total
covered
loans
Less
fair value
adjustments
Total
covered
OREO
Total
covered
assets
OREO
FDIC
loss-share
receivable
(payable)
As of December 31, 2016
(dollars in thousands)
AUB ..................................... $
- $
-
$
-
$
-
$
USB .....................................
3,199
SCB ......................................
4,019
FBJ .......................................
3,767
DBT .....................................
12,166
TBC .....................................
1,679
HTB .....................................
1,913
OGB .....................................
1,077
13
51
452
565
-
33
32
3,186
3,968
3,315
11,601
1,679
1,880
1,045
51
-
-
-
-
-
-
CBG .....................................
33,449
1,963
31,486
1,161
-
-
-
-
-
-
-
-
4
$
- $
-
$
(27)
51
3,237
(1,642)
-
-
-
-
-
-
3,968
3,315
(32)
(234)
11,601
(4,591)
1,679
(33)
1,880
734
1,045
(993)
1,157
32,643
505
Total .............................. $
61,269 $
3,109
$
58,160
$
1,212
$
4
$
1,208
$ 59,368
$
(6,313)
As of December 31, 2015
AUB ..................................... $
- $
-
$
-
$
-
$
USB .....................................
3,639
SCB ......................................
5,228
FBJ .......................................
4,782
16
124
562
3,623
5,104
4,220
DBT .....................................
15,934
1,131
14,803
TBC .....................................
2,159
11
2,148
165
-
41
-
-
HTB .....................................
44,405
3,881
40,524
2,433
OGB .....................................
27,561
1,900
25,661
160
CBG .....................................
44,865
3,419
41,446
3,139
-
-
-
-
-
-
643
-
284
$
- $
-
$ 111
165
3,788
(1,424)
-
41
-
-
5,104
149
4,261
252
14,803
(1,084)
2,148
1,446
1,790
42,314
3,875
160
25,821
913
2,855
44,301
2,063
Total .............................. $
148,573 $
11,044
$
137,529
$
5,938
$
927
$
5,011 $ 142,540
$ 6,301
F-25
A rollforward of acquired covered loans for the years ended December 31, 2016 and 2015 is shown below:
2016
2015
(dollars in thousands)
Balance, January 1 ......................................................................................
Charge-offs, net of recoveries ....................................................................
Accretion ....................................................................................................
Transfers to covered other real estate owned..............................................
Transfer to purchased non-covered loans due to loss-share expiration ......
Payments received ......................................................................................
$ 137,529
(2,510)
3,353
(2,810)
(45,908)
(31,494)
$ 271,279
(5,558)
9,658
(7,910)
(50,568)
(79,372)
Ending balance ...........................................................................................
$ 58,160
$ 137,529
The following is a summary of changes in the accretable discounts of acquired covered loans during the years ended December 31, 2016
and 2015:
Balance, January 1
Accretion
Transfer to purchased non-covered loans due to loss-share expiration
Transfers between non-accretable and accretable discounts, net
Ending balance
2016
2015
(dollars in thousands)
$9,063
(3,353)
(3,457)
244
$ 2,497
$ 15,578
(9,658)
(1,665)
4,808
$ 9,063
Each acquisition with loss-sharing agreements has separate agreements for the single family residential assets (“SFR”) and the non-
single family assets (“NSF”). The SFR agreements cover losses and recoveries for ten years. The NSF agreements are for eight years.
During the first five years, losses and recoveries are covered. During the final three years, only recoveries, net of expenses, are covered.
The AUB SFR agreement was terminated during 2012 and Ameris received a payment of $87,000. The AUB and USB NSF agreements
passed their five-year anniversary during the fourth quarter of 2014, the SCB NSF agreement passed its five-year anniversary during
the second quarter of 2015, the FBJ, TBC and DBT NSF agreements passed their five year anniversary during the fourth quarter of
2015, and the HTB and OGB NSF agreements passed their five year anniversary during the third quarter of 2016. Losses will no longer
be reimbursed on these agreements. The remaining NSF assets for these eight agreements have been reclassified to purchased non-
covered loans and purchased non-covered other real estate owned.
The shared-loss agreements are subject to the servicing procedures as specified in the agreement with the FDIC. The expected
reimbursements under the shared-loss agreements were recorded as an indemnification asset at their estimated fair values on the
acquisition dates. As of December 31, 2016 and 2015, the Company has recorded a clawback liability of $9.3 million and $8.2 million,
respectively, which represents the obligation of the Company to reimburse the FDIC should actual losses be less than certain thresholds
established in each loss-sharing agreement. This clawback is netted against the FDIC loss share receivable (payable). Changes in the
FDIC loss-share receivable (payable) are as follows:
For the Years Ended
December 31,
2016
2015
(dollars in thousands)
$ 6,301
(816)
(3,913)
(1,056)
(4,804)
233
749
(3,007)
$ (6,313)
$ 31,351
(19,273)
(8,878)
(2,008)
416
4,752
2,582
(2,641)
$ 6,301
Balance, January 1
Payments received from FDIC
Accretion, net
Change in clawback liability
Increase in receivable due to:
Charge-offs (recoveries) on covered loans
Write downs of covered other real estate owned
Reimbursable expenses on covered assets
Other activity, net
Ending balance
F-26
NOTE 4. SECURITIES
The amortized cost and estimated fair value of securities available for sale along with gross unrealized gains and losses are summarized
as follows:
December 31, 2016
U.S. government sponsored agencies
State, county and municipal securities
Corporate debt securities
Mortgage-backed securities
Total debt securities
December 31, 2015
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
Estimated
Fair
Value
(dollars in thousands)
$
999
149,899
32,375
641,362
$
21
2,605
167
2,700
$ -
(469 )
(370)
(6,554 )
$ 1,020
152,035
32,172
637,508
$ 824,635
$ 5,493
$ (7,393)
$ 822,735
$ 14,959
157,681
5,900
599,721
$
-
4,046
145
3,945
$ (69 )
(411 )
(28)
(2,704 )
$ 14,890
161,316
6,017
600,962
$ 778,261
$ 8,136
$ (3,212 )
$ 783,185
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, 2016 and 2015.
Description of Securities
December 31, 2016
U. S. government sponsored agencies
State, county and municipal securities
Corporate debt securities
Mortgage-backed securities
Less Than 12 Months
12 Months or More
Total
Estimated
Fair
Value
Unrealized
Losses
Estimated
Fair
Value
Unrealized
Losses
Estimated
Fair
Value
Unrealized
Losses
(dollars in thousands)
$
-
47,647
18,377
414,300
$ -
(469)
(363)
(6,177)
$ -
-
493
11,791
$ -
-
(7)
(377)
$ -
47,647
18,870
426,091
$ -
(469)
(370)
(6,554)
Total debt securities
$ 480,324
$ (7,009)
$ 12,284
$ (384)
$ 492,608
$ (7,393)
December 31, 2015
U. S. government sponsored agencies
State, county and municipal securities
Corporate debt securities
Mortgage-backed securities
$ 9,932
19,293
1,383
263,281
$
(27)
(199)
(28)
(1,950)
$ 4,958
11,557
-
29,950
$
(42)
(212)
-
(754)
$ 14,890
30,850
1,383
$ 293,231
$ (69)
(411)
(28)
(2,704)
Total debt securities
$ 293,889
$ (2,204)
$ 46,465
$ (1,008)
$ 340,354
$ (3,212)
As of December 31, 2016, the Company’s security portfolio consisted of 418 securities, 180 of which were in an unrealized loss position.
The majority of the unrealized losses are related to the Company’s mortgage-backed securities as discussed below.
At December 31, 2016, the Company held 140 mortgage-backed securities that were in an unrealized loss position, all of which were
issued by U.S. government-sponsored entities and agencies. Because the decline in fair value is attributable to changes in interest rates
and illiquidity, and not credit quality, and because the Company does not have the intent to sell these mortgage-backed securities and it
is likely that it will not be required to sell the securities before their anticipated recovery, the Company does not consider these securities
to be other-than-temporarily impaired at December 31, 2016.
F-27
At December 31, 2016, the Company held 31 state, county and municipal securities, nine corporate securities, and no U.S. government
sponsored agency securities that were in an unrealized loss position. Because the decline in fair value is attributable to changes in interest
rates, and not credit quality, and because the Company does not have the intent to sell these securities and it is likely that it will not be
required to sell the securities before their anticipated recovery, the Company does not consider these securities to be other-than-
temporarily impaired at December 31, 2016.
During 2016 and 2015, the Company received timely and current interest and principal payments on all of the securities classified as
corporate debt securities. During the third quarter of 2015, the Company received all interest payments due on a security that had
previously deferred interest since 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, 2016 or 2015.
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, 2016, 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, 2016, these investments
are not considered impaired on an other-than-temporary basis.
At December 31, 2016 and 2015, all of the Company’s mortgage-backed securities were obligations of government-sponsored entities
and agencies.
The amortized cost and estimated fair value of debt securities available for sale as of December 31, 2016, 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. Securities not due at a single maturity date are shown separately. 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)
$ 6,783
64,451
60,203
51,836
641,362
$ 6,838
65,117
61,156
52,116
637,508
$ 824,635
$ 822,735
Securities with a carrying value of approximately $618.2 million and $551.0 million at December 31, 2016 and 2015, respectively, serve
as collateral to secure public deposits, securities sold under agreements to repurchase and for other purposes required or permitted by
law.
Gains and losses on sales of securities available for sale consist of the following:
For the Years Ended
December 31,
2016
2015
2014
(dollars in thousands)
$ 312
(218)
94
$
$ 396
(259)
$ 137
$ 141
(3)
$ 138
Gross gains on sales of securities
Gross losses on sales of securities
Net realized gains on sales of securities available for sale
F-28
NOTE 5. LOANS AND ALLOWANCE FOR LOAN LOSSES
Loans
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. During
2015 and 2016, the Bank purchased residential mortgage loan pools collateralized by properties located outside our Southeast markets,
specifically in California, Washington and Illinois. During the third quarter of 2016, the Bank began purchasing from an unrelated third
party consumer installment home improvement loans made to borrowers throughout the United States. During the fourth quarter of
2016, the Bank purchased a pool of commercial insurance premium finance loans made to borrowers throughout the United States and
began a division to originate, administer and services these types of loans. As of December 31, 2016, the net carrying value of
commercial insurance premium finance loans was approximately $353.9 million and such loans are reported in the commercial, financial
and agricultural loan category. 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,
commercial insurance premium finance and other business purposes. Commercial, financial and agricultural loans also include SBA
loans and municipal loans. Short-term working capital loans are secured by non-real estate collateral such as accounts receivable, crops,
inventory and equipment. The Bank 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, one-to-four family home 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, along with warehouse lines of credit secured by residential
mortgages.
Consumer installment loans and other loans include home improvement loans, 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, excluding purchased non-covered and covered loans:
Commercial, financial and agricultural
Real estate – construction and development
Real estate – commercial and farmland
Real estate – residential
Consumer installment
Other
December 31,
2016
2015
(dollars in thousands)
$ 967,138
363,045
1,406,219
781,018
96,915
12,486
$ 449,623
244,693
1,104,991
570,430
31,125
6,015
3,626,821
2,406,877
F-29
Purchased non-covered loans totaling $1.01 billion and $771.6 million at December 31, 2016 and 2015, respectively, are not included
in the above schedule. 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. Loans that were previously classified as covered loans where the loss-sharing agreements have
expired are also included in purchased non-covered loans. The amount of loans reclassified from covered loans to purchased non-
covered loans due to expiration of the loss-sharing agreements was $45.9 million and $50.6 million for the years ending December 31,
2016 and 2015, respectively.
The carrying value of purchased non-covered loans are shown below according to major loan type as of the end of the years shown:
Commercial, financial and agricultural
Real estate – construction and development
Real estate – commercial and farmland
Real estate – residential
Consumer installment
2016
2015
(dollars in thousands)
$ 95,743
78,376
563,438
268,888
4,586
$ 45,462
72,080
390,755
258,153
5,104
$1,011,031
$ 771,554
Purchased loan pools are defined as groups of residential mortgage loans that were not acquired in bank acquisitions or FDIC-assisted
transactions. As of December 31, 2016, purchased loan pools totaled $568.3 million and consisted of whole-loan, adjustable rate
residential mortgages on properties outside the Company’s markets, with principal balances totaling $559.4 million and $8.9 million of
remaining purchase premium paid at acquisition. At December 31, 2016, one loan in the purchased loan pools with a principal balance
of $925,000 was classified as a troubled debt restructuring and risk-rated grade 40, while all other loans included in the purchased loan
pools were performing current loans, risk-rated grade 20. At December 31, 2016, and the Company had allocated $1.8 million of
allowance for loan losses for the purchased loan pools. As of December 31, 2015, purchased loan pools totaled $593.0 million and
consisted of whole-loan, adjustable rate residential mortgages on properties outside the Company’s markets, with principal balances
totaling $580.7 million and $12.3 million of purchase premium paid at acquisition. At December 31, 2015, all loans included in the
purchased loan pools were performing current loans, all risk-rated grade 20, and the Company had allocated $581,000 of allowance for
loan losses for the purchased loan pools. As part of the due diligence process prior to purchasing an individual mortgage pool, a complete
re-underwrite of the individual loan files was conducted. The underwriting process included a review of all income, asset, credit and
property related documentation that was used to originate the loan. Underwriters utilized the originating lender’s program guidelines,
as well as general prudent mortgage lending standards to assess each individual loan file. Additional research was conducted in order
to assess the real estate market conditions and market expectations in the geographic areas where a collateral concentration existed. As
part of this review, an automated valuation model was employed to provide current collateral valuations and to support individual loan-
to-value ratios. Additionally, a sample of site inspections were completed to provide further assurance. The results of the due diligence
review were evaluated by officers of the Company in order to determine overall conformance to the Bank’s credit and lending policies.
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 $58.2 million and $137.5 million at December 31, 2016 and 2015, respectively, are not included in
the above schedules.
The carrying value of covered loans are shown below according to major loan type as of the end of the years shown:
Commercial, financial and agricultural
Real estate – construction and development
Real estate – commercial and farmland
Real estate – residential
Consumer installment
2016
2015
(dollars in thousands)
$
794
2,992
12,917
41,389
68
$ 5,546
7,612
71,226
53,038
107
$ 58,160
$ 137,529
Nonaccrual and Past Due Loans
A loan is placed on nonaccrual 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 nonaccrual is subsequently applied to principal 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. Past due loans are loans whose principal or interest is past due 30 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.
F-30
The following table presents an analysis of loans accounted for on a nonaccrual basis, excluding purchased non-covered and covered
loans:
Commercial, financial and agricultural
Real estate – construction and development
Real estate – commercial and farmland
Real estate – residential
Consumer installment
2016
2015
(dollars in thousands)
$ 1,814
547
8,757
6,401
595
$ 1,302
1,812
7,019
6,278
449
$ 18,114
$ 16,860
The following table presents an analysis of purchased non-covered loans accounted for on a nonaccrual basis:
Commercial, financial and agricultural
Real estate – construction and development
Real estate – commercial and farmland
Real estate – residential
Consumer installment
2016
2015
(dollars in thousands)
$
564
2,536
8,698
6,609
13
$ 1,064
1,106
4,920
6,168
72
$ 18,420
$ 13,330
The following table presents an analysis of covered loans accounted for on a nonaccrual basis:
Commercial, financial and agricultural
Real estate – construction and development
Real estate – commercial and farmland
Real estate – residential
Consumer installment
2016
2015
(dollars in thousands)
$
128
75
1,476
2,867
-
$ 2,803
1,701
5,034
3,663
37
$ 4,546
$ 13,238
F-31
The following table presents an analysis of loans accounted for on a nonaccrual basis, excluding purchased non-covered and covered
loans:
The following table presents an analysis of past due loans, excluding purchased non-covered and covered past due loans as of
December 31, 2016 and 2015.
The following table presents an analysis of purchased non-covered loans accounted for on a nonaccrual basis:
Commercial, financial and agricultural
Real estate – construction and development
Real estate – commercial and farmland
Real estate – residential
Consumer installment
Commercial, financial and agricultural
Real estate – construction and development
Real estate – commercial and farmland
Real estate – residential
Consumer installment
Commercial, financial and agricultural
Real estate – construction and development
Real estate – commercial and farmland
Real estate – residential
Consumer installment
2016
2015
(dollars in thousands)
$ 1,814
$ 1,302
547
8,757
6,401
595
1,812
7,019
6,278
449
$ 18,114
$ 16,860
2016
2015
(dollars in thousands)
$
$ 1,064
$ 18,420
$ 13,330
2016
2015
(dollars in thousands)
$
$ 2,803
564
2,536
8,698
6,609
13
128
75
1,476
2,867
-
1,106
4,920
6,168
72
1,701
5,034
3,663
37
$ 4,546
$ 13,238
The following table presents an analysis of covered loans accounted for on a nonaccrual basis:
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, 2016
Commercial, financial and agricultural
Real estate – construction and
development
Real estate – commercial and farmland
Real estate – residential
Consumer installment
Other
$ 565
$
82
$ 1,293
$ 1,940
$ 965,198
$ 967,138
$
908
6,329
6,354
624
-
446
1,711
1,282
263
-
439
6,945
5,302
350
-
1,793
14,985
12,938
1,237
-
361,252
1,391,234
768,080
95,678
12,486
363,045
1,406,219
781,018
96,915
12,486
Total
$14,780
$ 3,784
$ 14,329
$ 32,893
$ 3,593,928
$ 3,626,821
$
-
-
-
-
-
-
-
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, 2015
Commercial, financial and agricultural
Real estate – construction and
development
Real estate – commercial and farmland
Real estate – residential
Consumer installment
Other
$ 568
$ 271
$
835
$ 1,674
$ 447,949
$ 449,623
$
1,413
1,781
3,806
374
-
261
641
2,120
188
-
1,739
6,912
5,121
238
-
3,413
9,334
11,047
800
-
241,280
1,095,657
559,383
30,325
6,015
244,693
1,104,991
570,430
31,125
6,015
Total
$ 7,942
$ 3,481
$ 14,845
$ 26,268
$ 2,380,609
$ 2,406,877
$
-
-
-
-
-
-
-
F-31
F-32
The following table presents an analysis of purchased non-covered past due loans as of December 31, 2016 and 2015.
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 31, 2016
Commercial, financial and
agricultural ..................................... $
113 $
18 $
466 $
597 $
95,146 $
95,743 $
Real estate – construction and
development ....................................
67
10
2,499
2,576
75,800
78,376
Real estate – commercial and
farmland ..........................................
Real estate – residential .......................
Consumer installment ..........................
1,431
2,779
22
295
670
-
6,917
4,954
8,643
8,403
554,795
260,485
13
35
4,551
563,438
268,888
4,586
Total ..................................................... $
4,412 $
993 $ 14,849 $ 20,254 $
990,777 $ 1,011,031 $
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 31, 2015
Commercial, financial and
agricultural ..................................... $
248 $
13 $
846 $
1,107 $
44,355 $
45,462 $
Real estate – construction and
development ....................................
416
687
420
1,523
70,557
72,080
Real estate – commercial and
farmland ..........................................
Real estate – residential .......................
Consumer installment ..........................
2,479
4,965
31
1,629
2,176
9
3,347
4,928
70
7,455
12,069
110
383,300
246,084
4,994
390,755
258,153
5,104
Total ..................................................... $
8,139 $
4,514 $
9,611 $ 22,264 $
749,290 $
771,554 $
Loans 90
Days or
More
Past Due
and
Still
Accruing
-
-
-
-
-
-
Loans 90
Days or
More
Past Due
and
Still
Accruing
-
-
-
-
-
-
F-33
The following table presents an analysis of covered past due loans as of December 31, 2016 and 2015:
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 31, 2016
Commercial, financial and
agricultural ..................................... $
- $
- $
127 $
127 $
667 $
794 $
Real estate – construction and
development ....................................
94
1
19
114
2,878
2,992
Real estate – commercial and
farmland ..........................................
Real estate – residential .......................
Consumer installment ..........................
603
1,787
-
31
28
-
235
1,881
-
869
3,696
-
12,048
37,693
68
12,917
41,389
68
Total ..................................................... $
2,484 $
60 $
2,262 $
4,806 $
53,354 $
58,160 $
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)
Loans 90
Days or
More
Past Due
and
Still
Accruing
As of December 31, 2015
Commercial, financial and
agricultural ...................................... $
- $
- $
2,802 $
2,802 $
2,744 $
5,546 $
Real estate – construction and
development ....................................
96
-
1,633
1,729
5,883
7,612
Real estate – commercial and
farmland ..........................................
Real estate – residential .......................
Consumer installment ..........................
170
2,155
-
205
1,001
-
3,064
2,658
37
3,439
5,814
37
67,787
47,224
70
71,226
53,038
107
Total ..................................................... $
2,421 $
1,206 $ 10,194 $ 13,821 $
123,708 $
137,529 $
-
-
-
-
-
-
Impaired Loans
Loans are considered impaired when, based on current information and events, it is probable the Company will be unable to collect all
amounts due in accordance with the original contractual terms of the loan agreements. Impaired loans include loans on nonaccrual status
and accruing troubled debt restructurings. 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. The Company individually assesses
for impairment all nonaccrual loans greater than $100,000 and all troubled debt restructurings greater than $100,000 (including all
troubled debt restructurings, whether or not currently classified as such). The tables below include all loans deemed impaired, whether
or not individually assessed for impairment. 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-34
The following is a summary of information pertaining to impaired loans, excluding purchased non-covered and covered loans:
Nonaccrual loans
Troubled debt restructurings not included above
Total impaired loans
Interest income recognized on impaired loans
Foregone interest income on impaired loans
As of and For the Years Ended
December 31,
2016
2015
2014
$ 18,114
14,209
(dollars in thousands)
$ 16,860
14,418
$ 21,728
12,759
$ 32,323
$ 31,278
$ 34,487
$
$
1,033
977
$
$
909
1,204
$
$
1,991
1,491
The following table presents an analysis of information pertaining to impaired loans, excluding purchased non-covered and covered
loans as of December 31, 2016 and 2015.
Unpaid
Contractual
Principal
Balance
Recorded
Investment
With No
Allowance
Recorded
Investment
With
Allowance
Total
Recorded
Investment
Related
Allowance
Average
Recorded
Investment
(dollars in thousands)
As of December 31, 2016
Commercial, financial and agricultural
Real estate – construction and development
Real estate – commercial and farmland
Real estate – residential
Consumer installment
$ 3,068
2,047
13,906
15,482
671
$
204
-
6,811
2,238
-
$ 1,656
1,233
6,065
13,503
613
$ 1,860
1,233
12,876
15,741
613
$
134
273
1,503
3,080
5
$ 1,684
2,018
12,845
14,453
506
Total
$ 35,174
$ 9,253
$ 23,070
$ 32,323
$ 4,995
$ 31,506
Unpaid
Contractual
Principal
Balance
Recorded
Investment
With No
Allowance
Recorded
Investment
With
Allowance
Total
Recorded
Investment
Related
Allowance
Average
Recorded
Investment
(dollars in thousands)
As of December 31, 2015
Commercial, financial and agricultural
Real estate – construction and development
Real estate – commercial and farmland
Real estate – residential
Consumer installment
$ 3,062
3,581
14,385
15,809
592
$
158
230
6,702
1,621
-
$ 1,385
2,374
6,083
12,230
495
$ 1,543
2,604
12,785
13,851
495
$
135
774
1,067
2,224
9
$ 2,275
3,228
15,105
11,977
488
Total
$ 37,429
$ 8,711
$ 22,567
$ 31,278
$ 4,209
$ 33,073
F-35
During 2016, the Company recorded a credit to provision for loan loss expense of $957,000 to account for loans where there was an
increase in cash flows from the initial estimates on loans acquired in FDIC-assisted transactions. During 2015 and 2014, the Company
recorded provision for loan loss expense of $751,000 and $843,000, respectively, to account for losses where there was a decrease in
cash flows from the initial estimates on loans acquired in FDIC-assisted transactions. During 2016 and 2015, the Company recorded a
net recovery of $657,000 and $237,000, respectively, to account for loans where there was an increase in cash flows from the initial
estimates on purchased non-covered loans. During 2014, the Company recorded provision for loan loss expense of $84,000 to account
for losses where there was a decrease in cash flows from the initial estimates on purchased non-covered loans. The allowance for loan
losses recorded on purchased non-covered loans and covered loans that is immediately charged off is related to the purchased credit-
impaired loans. Charge-offs on purchased loans, both covered and non-covered, are recorded when impairment is recorded. Provision
expense for covered loans is recorded net of the indemnification by the FDIC loss-sharing agreements.
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
Interest income recognized on impaired loans
Foregone interest income on impaired loans
As of and For the Years Ended
December 31,
2016
2015
2014
$ 18,420
11,004
(dollars in thousands)
$ 13,330
9,373
$ 18,249
1,212
$ 29,424
$ 22,703
$ 19,461
$
$
2,070
1,175
$
$
785
1,365
$
$
109
1,759
The following table presents an analysis of information pertaining to purchased non-covered impaired loans as of December 31, 2016
and 2015.
Unpaid
Contractual
Principal
Balance
Recorded
Investment
With No
Allowance
Recorded
Investment
With
Allowance
Total
Recorded
Investment
Related
Allowance
Average
Recorded
Investment
(dollars in thousands)
As of December 31, 2016
Commercial, financial and agricultural
Real estate – construction and development
Real estate – commercial and farmland
Real estate – residential
Consumer installment
$ 4,737
23,581
29,104
13,280
30
$
242
415
3,447
3,050
19
$
322
2,662
11,802
7,465
-
$
564
3,077
15,249
10,515
19
$
-
151
363
868
-
$
742
2,257
14,035
9,433
55
Total
$ 70,732
$ 7,173
$ 22,251
$ 29,424
$ 1,382
$ 26,522
As of December 31, 2015
Commercial, financial and agricultural
Real estate – construction and development
Real estate – commercial and farmland
Real estate – residential
Consumer installment
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)
$
$ 3,103
8,987
14,999
14,946
94
$ 1,066
1,469
11,134
8,957
77
$ 42,129
$ 22,703
$
-
-
-
-
-
-
$
$ 1,066
1,469
11,134
8,957
77
$ 22,703
$
-
-
-
-
-
-
$
392
1,429
10,806
8,067
65
$ 20,759
F-36
The following is a summary of information pertaining to covered impaired loans:
Nonaccrual loans
Troubled debt restructurings not included above
Total impaired loans
Interest income recognized on impaired loans
Foregone interest income on impaired loans
As of and For the Years Ended
December 31,
2016
2015
2014
$
4,546
12,539
(dollars in thousands)
$ 13,238
13,283
$ 35,412
22,619
$ 17,085
$ 26,521
$ 58,031
$
$
685
462
$
$
886
1,596
$
$
1,134
3,123
The following table presents an analysis of information pertaining to covered impaired loans as of December 31, 2016 and 2015.
As of December 31, 2016
Commercial, financial and agricultural
Real estate – construction and development
Real estate – commercial and farmland
Real estate – residential
Consumer installment
Total
As of December 31, 2015
Commercial, financial and agricultural
Real estate – construction and development
Real estate – commercial and farmland
Real estate – residential
Consumer installment
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)
$
294
985
7,070
13,742
7
$
128
78
151
4,833
5
$
-
815
3,234
7,841
-
$
128
893
3,385
12,674
5
$
$ 22,098
$ 5,195
$ 11,890
$ 17,085
$
-
2
22
220
-
244
$ 1,464
2,022
5,837
13,730
41
$ 23,094
Unpaid
Contractual
Principal
Balance
Recorded
Investment
With No
Allowance
Recorded
Investment
With
Allowance
Total
Recorded
Investment
Related
Allowance
Average
Recorded
Investment
(dollars in thousands)
$
$ 5,188
15,119
20,508
15,830
60
$ 2,802
2,480
7,001
14,192
46
$ 56,705
$ 26,521
$
-
-
-
-
-
-
$
$ 2,802
2,480
7,001
14,192
46
$ 26,521
$
-
-
-
-
-
-
$ 7,408
6,906
18,504
16,010
86
$ 48,914
F-37
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 credit worthiness 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-38
The following table presents the loan portfolio, excluding purchased non-covered and covered loans, by risk grade as of December 31,
2016 and 2015.
As of December 31, 2016
Commercial,
financial
and
agricultural
Real estate -
construction
and
development
Real estate -
commercial
and
farmland
Risk Grade
Real estate -
residential
Consumer
installment
Other
Total
10
15
20
23
25
30
40
50
60
$ 397,093
376,323
97,057
366
92,066
144
4,089
-
-
$ -
5,390
36,307
6,803
307,903
719
5,923
-
-
$ 8,814
102,893
889,539
8,533
357,151
22,986
16,303
-
-
(dollars in thousands)
$ 125
54,136
609,583
7,470
88,370
5,197
16,038
99
-
$ 8,532
405
25,026
14
62,098
126
714
-
-
$ -
-
12,486
-
-
-
-
-
-
$ 414,564
539,147
1,669,998
23,186
907,588
29,172
43,067
99
-
Total
$ 967,138
$ 363,045
$1,406,219
$781,018
$96,915
$12,486
$ 3,626,821
As of December 31, 2015
Commercial,
financial
and
agricultural
Real estate -
construction
and
development
Real estate -
commercial
and
farmland
Risk Grade
Real estate -
residential
Consumer
installment
Other
Total
10
15
20
23
25
30
40
50
60
$ 241,721
28,420
97,142
559
77,829
1,492
2,460
-
-
$
294
2,074
46,221
7,827
183,512
1,620
3,145
-
-
$
(dollars in thousands)
1,606
$
78,165
369,624
6,112
91,465
7,347
16,111
-
-
116
117,880
685,538
13,073
254,012
13,821
20,551
-
-
$ 6,872
1,191
19,780
36
2,595
143
506
-
2
$
-
-
6,015
-
-
-
-
-
-
$ 250,609
227,730
1,224,320
27,607
609,413
24,423
42,773
-
2
Total
$ 449,623
$ 244,693
$ 1,104,991
$ 570,430
$ 31,125
$ 6,015
$ 2,406,877
F-39
The following table presents the purchased non-covered loan portfolio by risk grade as of December 31, 2016 and 2015.
As of December 31, 2016
Commercial,
financial
and
agricultural
Real estate -
construction
and
development
Real estate -
commercial
and
farmland
Risk Grade
Real estate -
residential
Consumer
installment
Other
Total
10
15
20
23
25
30
40
50
60
$ 5,722
1,266
16,181
-
66,506
5,072
996
-
-
$
$
-
-
10,245
3,643
53,910
6,927
3,651
-
-
$
(dollars in thousands)
-
$
31,331
104,656
11,151
101,951
4,416
15,383
-
-
-
7,619
192,173
9,019
317,782
13,191
23,654
-
-
$
814
570
1,583
-
1,259
-
360
-
-
Total
$ 95,743
$
78,376
$ 563,438
$ 268,888
$ 4,586
$
-
-
-
-
-
-
-
-
-
-
$
6,536
40,786
324,838
23,813
541,408
29,606
44,044
-
-
$ 1,011,031
As of December 31, 2015
Commercial,
financial
and
agricultural
Real estate -
construction
and
development
Real estate -
commercial
and
farmland
Risk Grade
Real estate -
residential
Consumer
installment
Other
Total
10
15
20
23
25
30
40
50
60
$
$
8,592
1,186
10,057
-
17,565
6,657
1,373
30
2
-
1,143
13,678
438
47,517
4,185
5,119
-
-
$
(dollars in thousands)
-
$
37,808
128,005
6,414
66,166
5,503
14,257
-
-
-
10,490
183,219
5,177
162,253
14,297
15,319
-
-
$ 1,010
541
2,031
-
1,328
51
143
-
-
$
Total
$ 45,462
$
72,080
$ 390,755
$ 258,153
$ 5,104
$
-
-
-
-
-
-
-
-
-
-
$
9,602
51,168
336,990
12,029
294,829
30,693
36,211
30
2
$ 771,554
F-40
The following table presents the covered loan portfolio by risk grade as of December 31, 2016 and 2015.
As of December 31, 2016
Commercial,
financial
and
agricultural
Real estate -
construction
and
development
Real estate -
commercial
and
farmland
Risk Grade
Real estate -
residential
Consumer
installment
Other
Total
$
10
15
20
23
25
30
40
50
60
Total
$
-
-
23
22
617
-
132
-
-
794
$
$
$
-
-
441
-
2,096
344
111
-
-
(dollars in thousands)
-
$
-
7,056
3,640
19,428
3,189
8,076
-
-
-
-
1,995
-
5,460
1,848
3,614
-
-
$
2,992
$
12,917
$ 41,389
$
-
-
-
-
17
45
6
-
-
68
$
$
-
-
-
-
-
-
-
-
-
-
$
-
-
9,515
3,662
27,618
5,426
11,939
-
-
$
58,160
As of December 31, 2015
Commercial,
financial
and
agricultural
Real estate -
construction
and
development
Real estate -
commercial
and
farmland
Risk Grade
Real estate -
residential
Consumer
installment
Other
Total
10
15
20
23
25
30
40
50
60
$
$
-
-
93
52
2,594
5
2,802
-
-
$
-
-
800
-
3,907
828
2,077
-
-
$
(dollars in thousands)
-
$
-
10,040
5,723
24,345
4,552
8,378
-
-
-
-
11,698
2,957
38,741
2,857
14,973
-
-
$
-
-
-
-
11
-
96
-
-
Total
$
5,546
$
7,612
$
71,226
$ 53,038
$
107
$
-
-
-
-
-
-
-
-
-
-
$
-
-
22,631
8,732
69,598
8,242
28,326
-
-
$ 137,529
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.
F-41
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) 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 2016 and
2015 totaling $69.4 million and $96.5 million, respectively, under such parameters.
As of December 31, 2016 and 2015, the Company had a balance of $19.1 million and $16.4 million, respectively, in troubled debt
restructurings, excluding purchased non-covered and covered loans. The Company has recorded $1.2 million and $1.3 million in
previous charge-offs on such loans at December 31, 2016 and 2015, respectively. The Company’s balance in the allowance for loan
losses allocated to such troubled debt restructurings was $3.1 million and $2.7 million at December 31, 2016 and 2015, respectively.
At December 31, 2016, the Company did not have any commitments to lend additional funds to debtors whose terms have been modified
in troubled restructurings.
During the year ending December 31, 2016 and 2015, the Company modified loans as troubled debt restructurings, excluding purchased
non-covered and covered loans, with principal balances of $4.5 million and $7.3 million, respectively. These modifications impacted
the Company’s allowance for loan losses by $176,000 and $1.4 million for the year ended December 31, 2016 and 2015, respectively.
The following table presents the loans by class modified as troubled debt restructurings, excluding purchased non-covered and covered
loans, which occurred during the year ending December 31, 2016 and 2015.
Loan class
Commercial, financial and agricultural
Real estate – construction and development
Real estate – commercial and farmland
Real estate – residential
Consumer installment
Total
#
6
2
4
34
12
58
December 31, 2016
December 31, 2015
Balance
(in thousands)
$ 58
250
1,656
2,495
63
$ 4,522
#
7
2
2
33
16
60
Balance
(in thousands)
$ 80
15
2,121
4,992
61
$ 7,269
Troubled debt restructurings, excluding purchased non-covered and covered loans, with an outstanding balance of $3.5 million and $2.2
million at December 31, 2015 and 2014 defaulted during the year ended December 31, 2016 and 2015, respectively, and these defaults
did not have a material impact on the Company’s allowance for loan loss. The following table presents the troubled debt restructurings
by class that defaulted (defined as 30 days past due) during the year ending December 31, 2016 and 2015.
Loan class
Commercial, financial and agricultural
Real estate – construction and development
Real estate – commercial and farmland
Real estate – residential
Consumer installment
Total
#
5
1
5
5
6
22
December 31, 2016
December 31, 2015
Balance
(in thousands)
$ 51
5
2,970
460
38
$ 3,524
#
3
2
3
20
9
37
Balance
(in thousands)
$ 37
33
624
1,493
45
$ 2,232
F-42
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, 2016 and 2015.
As of December 31, 2016
Accruing Loans
Loan class
Commercial, financial and agricultural
Real estate – construction and development
Real estate – commercial and farmland
Real estate – residential
Consumer installment
Total
As of December 31, 2015
Loan class
Commercial, financial and agricultural
Real estate – construction and development
Real estate – commercial and farmland
Real estate – residential
Consumer installment
Total
Balance
(in thousands)
$ 47
686
4,119
9,340
17
$ 14,209
Accruing Loans
Balance
(in thousands)
$ 240
792
5,766
7,574
46
$ 14,418
#
4
8
16
82
7
117
#
4
11
16
51
12
94
Non-Accruing Loans
Balance
(in thousands)
$ 114
34
2,970
739
130
$ 3,987
Non-Accruing Loans
Balance
(in thousands)
$ 110
63
596
1,123
94
$ 1,986
#
15
2
5
15
32
69
#
10
3
3
20
23
59
As of December 31, 2016 and 2015, the Company had a balance of $13.6 million and $10.0 million, respectively, in troubled debt
restructurings included in purchased non-covered loans. The Company has recorded $752,000 and $377,000, respectively, in previous
charge-offs on such loans at December 31, 2016 and 2015. At December 31, 2016, the Company did not have any commitments to lend
additional funds to debtors whose terms have been modified in troubled restructurings.
During the year ending December 31, 2016 and 2015, the Company modified purchased non-covered loans as troubled debt
restructurings, with principal balances of $4.5 million and $2.7 million, respectively, and these modifications did not have a material
impact on the Company’s allowance for loan losses. The Company did not transfer any troubled debt restructurings from the covered
loan category to the purchased non-covered loan category during the year ended December 31, 2016 due to the expiration of the loss-
sharing agreements. The following table presents the purchased non-covered loans by class modified as troubled debt restructurings,
which occurred during the year ending December 31, 2016 and 2015.
Loan class
Commercial, financial and agricultural
Real estate – construction and development
Real estate – commercial and farmland
Real estate – residential
Consumer installment
Total
#
-
-
5
15
-
20
December 31, 2016
December 31, 2015
Balance
(in thousands)
$ -
-
2,321
2,218
-
$ 4,539
#
2
2
5
8
3
20
Balance
(in thousands)
$ 21
30
1,051
1,541
8
$ 2,651
F-43
Troubled debt restructurings included in purchased non-covered loans with an outstanding balance of $88,000 and $883,000 defaulted
during the years ended December 31, 2016 and 2015, respectively, and these defaults did not have a material impact on the Company’s
allowance for loan loss. The following table presents the troubled debt restructurings by class that defaulted (defined as 30 days past
due) during the year ending December 31, 2016 and 2015.
Loan class
Commercial, financial and agricultural
Real estate – construction and development
Real estate – commercial and farmland
Real estate – residential
Consumer installment
Total
#
-
1
-
1
-
2
December 31, 2016
December 31, 2015
Balance
(in thousands)
$ -
9
-
79
-
$ 88
#
-
2
2
6
1
11
Balance
(in thousands)
$ -
30
57
795
1
$ 883
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, 2016 and 2015.
As of December 31, 2016
Accruing Loans
Loan class
Commercial, financial and agricultural
Real estate – construction and development
Real estate – commercial and farmland
Real estate – residential
Consumer installment
Total
As of December 31, 2015
Loan class
Commercial, financial and agricultural
Real estate – construction and development
Real estate – commercial and farmland
Real estate – residential
Consumer installment
Total
Balance
(in thousands)
$ 1
540
6,551
3,906
6
$ 11,004
Accruing Loans
Balance
(in thousands)
$ 2
363
6,214
2,789
5
$ 9,373
#
1
2
15
25
2
45
#
1
1
14
13
2
31
Non-Accruing Loans
Balance
(in thousands)
$ 15
30
1,844
662
-
$ 2,551
Non-Accruing Loans
Balance
(in thousands)
$ 21
42
412
180
3
$ 658
#
1
3
4
6
1
15
#
2
3
3
4
2
14
During 2016, the Company modified one loan in the purchased loan pools with a balance of $925,000. The loan was on accrual status
as of December 31, 2016. The modification did not have a material impact on the Company’s allowance for loan losses. There are no
other troubled debt restructurings included in the purchased loan pools.
F-44
As of December 31, 2015 and 2014, the Company had a balance of $14.6 million and $15.5 million, respectively, in troubled debt
restructurings included in covered loans. The Company has recorded $791,000 and $1.2 million in previous charge-offs on such loans
at December 31, 2016 and 2015, respectively. At December 31, 2016, the Company did not have any commitments to lend additional
funds to debtors whose terms have been modified in troubled restructurings.
During the year ending December 31, 2016 and 2015, the Company modified covered loans as troubled debt restructurings, with
principal balances of $1.4 million and $2.2 million, respectively, and these modifications did not have a material impact on the
Company’s allowance for loan losses. The following table presents the covered loans by class modified as troubled debt restructurings,
which occurred during the year ending December 31, 2016 and 2015.
Loan class
Commercial, financial and agricultural
Real estate – construction and development
Real estate – commercial and farmland
Real estate – residential
Consumer installment
Total
#
1
-
1
13
-
15
December 31, 2016
December 31, 2015
Balance
(in thousands)
$ 76
-
468
873
-
$ 1,417
#
1
3
3
23
1
31
Balance
(in thousands)
$ 1
334
1,099
745
8
$ 2,187
Troubled debt restructurings included in covered loans with an outstanding balance of $907,000 and $1.3 million defaulted during the
year ended December 31, 2016 and 2015, respectively, and these defaults did not have a material impact on the Company’s allowance
for loan loss. The following table presents the troubled debt restructurings by class that defaulted (defined as 30 days past due) during
the year ending December 31, 2016 and 2015.
Loan class
Commercial, financial and agricultural
Real estate – construction and development
Real estate – commercial and farmland
Real estate – residential
Consumer installment
Total
#
2
-
-
17
-
19
December 31, 2016
December 31, 2015
Balance
(in thousands)
$ 76
-
-
831
-
$ 907
#
-
-
2
16
-
18
Balance
(in thousands)
$ -
-
145
1,190
-
$ 1,335
The following table presents the amount of troubled debt restructurings by loan class of covered loans, classified separately as accrual
and nonaccrual at December 31, 2016 and 2015.
As of December 31, 2016
Accruing Loans
Loan class
Commercial, financial and agricultural
Real estate – construction and development
Real estate – commercial and farmland
Real estate – residential
Consumer installment
Total
As of December 31, 2015
Loan class
Commercial, financial and agricultural
Real estate – construction and development
Real estate – commercial and farmland
Real estate – residential
Consumer installment
Total
Balance
(in thousands)
$ -
818
1,909
9,807
5
$ 12,539
Accruing Loans
Balance
(in thousands)
$ -
779
1,967
10,529
8
$ 13,283
#
-
4
5
98
1
108
#
-
4
4
97
2
107
F-45
Non-Accruing Loans
Balance
(in thousands)
$ 76
-
558
1,415
-
$ 2,049
Non-Accruing Loans
Balance
(in thousands)
$ 1
-
1,067
1,116
-
$ 2,184
#
3
-
1
27
-
31
#
2
-
3
26
-
31
Related Party Loans
In the ordinary course of business, the Company has granted loans to certain directors and their affiliates. Company policy prohibits
loans to executive officers. Changes in related party loans are summarized as follows:
Balance, January 1
Advances
Repayments
Transactions due to changes in related parties
Ending balance
Allowance for Loan Losses
December 31,
2016
2015
(dollars in thousands)
$ 3,818
78
(729)
-
$ 3,167
$ 4,403
162
(674)
(73)
$ 3,818
The following table details activity in the allowance for loan losses by portfolio segment for the periods indicated. 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
and
agricultural
Real estate –
construction
and
development
Real estate –
commercial
and
farmland
Real estate -
residential
Consumer
installment
and Other
(dollars in thousands)
Purchased
non-covered
loans,
including
pools
Covered
loans
Total
Twelve months ended December 31, 2016
Balance, January 1, 2016..........$
Provision for loan losses .............
Loans charged off .......................
Recoveries of loans previously
1,144 $ 5,009 $ 7,994 $ 4,760
2,757
(1,921) 107
2,647
(1,122)
(708)
(1,999)
(588)
$ 1,574 $
(523)
(351)
581 $
1,981
(1,066)
- $ 21,062
4,091
(6,327)
(957)
(493)
charged off ............................
400
490 269
391
127
1,723
1,694
5,094
Balance, December 31, 2016 ....$
2,192 $
2,990 $ 7,662 $ 6,786
$ 827 $
3,219 $
244 $ 23,920
Period-end amount allocated
to:
Loans individually evaluated for
impairment(1) ......................... $ 120
$ 266
$ 1,502
$ 2,893
$
- $
1,382
$ 244
$ 6,407
Loans collectively evaluated for
impairment ............................
2,072
2,724
6,160
3,893
827
1,837
-
17,513
Ending balance .......................... $ 2,192
$ 2,990
$ 7,662
$ 6,786
$ 827 $
3,219
$ 244
$ 23,920
Loans:
Individually evaluated for
impairment(1) ......................... $ 501
$ 659
$ 12,423
$ 12,697
$
- $
22,251
$ 11,890
$ 60,421
Collectively evaluated for
impairment ............................
Acquired with deteriorated
credit quality .........................
966,637
362,386
1,393,796
768,321
109,401
1,428,680
26,150
5,055,371
-
-
-
-
-
128,414
20,120
148,534
Ending balance .......................... $ 967,138
$ 363,045
$1,406,219
$ 781,018
$
109,401 $ 1,579,345
$
58,160
$ 5,264,326
(1) At December 31, 2016, loans individually evaluated for impairment includes all nonaccrual loans greater than $100,000 and all troubled debt restructurings
greater than $100,000, including all troubled debt restructurings and not only those currently classified as troubled debt restructurings.
F-46
Commercial,
financial
and
agricultural
Real estate –
construction
and
development
Real estate –
commercial
and
farmland
Real estate -
residential
Consumer
installment
and Other
(dollars in thousands)
Purchased
non-covered
loans,
including
pools
Covered
loans
Total
Twelve months ended December 31, 2015
Balance, January 1, 2015 .......... $
Provision for loan losses .............
Loans charged off ........................
Recoveries of loans previously
2,004 $
(73)
(1,438)
5,030 $
278
(622 )
8,823 $
1,221
(2,367 )
4,129 $
2,067
(1,587 )
1,171 $
676
(410)
- $
344
(950)
$
-
751
(1,759)
charged off .............................
651
323
317
151
137
1,187
1,008
21,157
5,264
(9,133)
3,774
Balance, December 31, 2015 ..... $
1,144 $
5,009 $
7,994 $
4,760 $
1,574 $
581 $
-
$
21,062
Period-end amount allocated
to:
Loans individually evaluated for
impairment(1) .......................... $
Loans collectively evaluated for
impairment ............................
126 $
759
$
1,074
$
2,172 $
- $
-
$
1,018
4,250
6,920
2,588
1,574
581
Ending balance .......................... $
1,144 $
5,009
$
7,994
$
4,760 $
1,574 $
581
$
-
-
-
$
$
4,131
16,931
21,062
Loans:
Individually evaluated for
impairment(1) .......................... $
Collectively evaluated for
impairment ............................
Acquired with deteriorated credit
quality ....................................
323 $
1,958
$
11,877
$
9,554 $
- $
22,672
$
22,317
$
68,701
449,300
242,735
1,093,114
560,876
37,140
1,261,821
52,451
3,697,437
-
-
-
-
-
80,024
62,761
142,785
Ending balance .......................... $
449,623 $
244,693
$ 1,104,991
$
570,430 $
37,140 $ 1,364,517
$ 137,529
$
3,908,923
(1) At December 31, 2015, loans individually evaluated for impairment includes all nonaccrual loans greater than $200,000 and all troubled debt
restructurings greater than $100,000, including all troubled debt restructurings and not only those currently classified as troubled debt restructurings.
Commercial,
financial
and
agricultural
Real estate –
construction
and
development
Real estate –
commercial
and
farmland
Real estate -
residential
Consumer
installment
and Other
(dollars in thousands)
Purchased
non-covered
loans,
including
pools
Covered
loans
Total
Twelve months ended December 31, 2014
Balance, January 1, 2014 .......... $
Provision for loan losses .............
Loans charged off ........................
Recoveries of loans previously
1,823 $
1,427
(1,567)
charged off .............................
321
5,538 $
(265 )
(592 )
8,393 $
3,444
(3,288 )
6,034 $
(452)
(1,707 )
589 $
567
(471)
- $
84
(84)
$
-
843
(1,851)
349
274
254
486
-
1,008
22,377
5,648
(9,560)
2,692
Balance, December 31, 2014 ..... $
2,004 $
5,030 $
8,823 $
4,129 $
1,171 $
- $
-
$
21,157
Period-end amount allocated
to:
Loans individually evaluated for
impairment(1) .......................... $
Loans collectively evaluated for
impairment ............................
375 $
743
$
1,861
$
911 $
- $
1,629
4,287
6,962
3,218
1,171
Ending balance .......................... $
2,004 $
5,030
$
8,823
$
4,129 $
1,171 $
-
-
-
$
$
-
-
-
$
$
3,890
17,267
21,157
Loans:
Individually evaluated for
impairment(1) .......................... $
Collectively evaluated for
impairment ............................
Acquired with deteriorated credit
quality ....................................
490 $
3,709
$
14,546
$
8,904 $
- $
-
$
-
$
27,649
319,164
157,798
892,978
447,202
45,090
579,172
122,248
2,563,652
-
-
-
-
-
95,067
149,031
244,098
Ending balance .......................... $
319,654 $
161,507
$
907,524
$
456,106 $
45,090 $
674,239
$ 271,279
$
2,835,399
(1) At December 31, 2014, loans individually evaluated for impairment includes all nonaccrual loans greater than $200,000 and all troubled debt restructurings
greater than $100,000, including all troubled debt restructurings and not only those currently classified as troubled debt restructurings.
F-47
NOTE 6. OTHER REAL ESTATE OWNED
The following is a summary of the activity in other real estate owned during years ended December 31, 2016 and 2015:
(Dollars in Thousands)
Balance, January 1 ....................................................................... $ 16,147
3,203
Loans transferred to other real estate owned ................................
(1,338)
Net gains (losses) on sale and write-downs .................................
(7,138)
Sales proceeds ..............................................................................
2016
2015
$ 33,160
11,261
(9,971)
(18,303)
Ending balance ............................................................................. $ 10,874
$ 16,147
The following is a summary of the activity in purchased non-covered other real estate owned during years ended December 31, 2016
and 2015:
(Dollars in Thousands)
Balance, January 1 ....................................................................... $ 14,333
4,419
Loans transferred to other real estate owned ................................
Acquired in acquisitions ..............................................................
1,927
Transfer from covered other real estate owned due to loss-share
expiration ................................................................................
Net gains (losses) on sale and write-downs .................................
Sales proceeds ..............................................................................
466
(75)
(9,738)
2016
$
2015
15,585
4,473
2,160
3,148
201
(11,234)
Ending balance ............................................................................. $ 11,332
$
14,333
The following is a summary of the activity in covered other real estate owned during years ended December 31, 2016 and 2015:
(Dollars in Thousands)
Balance, January 1 ....................................................................... $ 5,011
Loans transferred to other real estate owned ................................
2,810
Transfer to purchased non-covered other real estate owned due
to loss-share expiration ...........................................................
Net gains (losses) on sale and write-downs .................................
Sales proceeds ..............................................................................
(466)
(540)
(5,607)
2016
2015
$ 19,907
7,910
(3,148)
(5,926)
(13,732)
Ending balance ............................................................................. $ 1,208
$ 5,011
F-48
NOTE 7. PREMISES AND EQUIPMENT
Premises and equipment are summarized as follows:
Land
Buildings
Furniture and equipment
Construction in progress
Accumulated depreciation
December 31,
2016
2015
(dollars in thousands)
$ 38,521
94,533
45,988
1,533
180,575
(59,358)
$ 121,217
$ 38,806
94,310
48,140
1,393
182,649
(61,010)
$ 121,639
Depreciation expense was approximately $9.5 million, $8.1 million, and $6.6 million for the years ended December 31, 2016, 2015 and
2014, respectively.
Leases
The Company has entered into various operating leases for certain branch locations, mortgage production offices, and corporate support
services. 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 $4,482,000, $2,963,000, and $2,189,000 for the years ended December 31, 2016, 2015 and
2014, respectively. Future minimum lease commitments under the Company’s operating leases, excluding any renewal options, are
summarized as follows (in thousands):
2017
2018
2019
2020
2021
Thereafter
$ 4,638
4,028
3,384
2,658
2,181
5,235
$
22,124
NOTE 8. GOODWILL AND INTANGIBLE ASSETS
The carrying value of goodwill as of December 31, 2016 and 2015 was $125,532,000 and $90,082,000, respectively. The change in the
carrying value of goodwill is summarized below:
Carrying amount of goodwill at beginning of year
Additions related to acquisitions in current year
Fair value adjustments related to acquisitions in prior year
Carrying amount of goodwill at end of year
December 31,
2016
2015
(dollars in thousands)
$ 90,082
35,485
(35)
$ 63,547
25,880
655
$ 125,532
$ 90,082
During 2016, the Company recorded goodwill totaling $35,485,000 related to the acquisition of JAXB. During 2015, the Company
recorded $11,210,000 of goodwill on the branch purchase from Bank of America and $14,670,000 of goodwill on the Merchants
acquisition. During 2016, the Company recorded a reduction of $35,000 of goodwill related to the 2015 Merchants acquisition, for total
goodwill recorded of $14,634,000 in the Merchants acquisition. During 2015, the Company recorded an increase of $655,000 of
goodwill related to the 2014 Coastal acquisition, for total goodwill recorded of $28,093,000 in the Coastal acquisition.
Impairment exists when a reporting unit’s carrying value of goodwill exceeds its fair value. At December 31, 2016, the Company’s
reporting unit had positive equity and the Company elected to perform a qualitative assessment to determine if it was more likely than
not that the fair value of the reporting unit exceeded its carrying value, including goodwill. The qualitative assessment indicated that it
was more likely than not that the fair value of the reporting unit exceeded its carrying value, resulting in no impairment.
F-49
The carrying value of intangible assets as of December 31, 2016 and 2015 was $17,428,000 and $17,058,000, respectively. Intangible
assets are comprised solely of core deposit intangibles. The Company recorded a core deposit intangible asset of $4,746,000 associated
with the acquisition of JAXB during 2016. The Company recorded a core deposit intangible asset of $8,636,000 associated with the
branch purchase from Bank of America and $3,943,000 associated with the Merchants acquisition during 2015. The amortization period
used for core deposit intangibles ranges from seven to ten years. Following is a summary of information related to acquired intangible
assets:
As of December 31, 2016
As of December 31, 2015
Gross
Amount
Accumulated
Amortization
Gross
Amount
Accumulated
Amortization
Amortized intangible assets - core deposit premiums
$ 26,250
$
(dollars in thousands)
8,822
$ 21,504
$
4,446
The aggregate amortization expense for intangible assets was approximately $4,376,000, $3,741,000, and $2,330,000 for the years ended
December 31, 2016, 2015 and 2014, respectively.
The estimated amortization expense for each of the next five years is as follows (in thousands):
2017
2018
2019
2020
2021
Thereafter
$ 3,932
3,697
3,622
2,915
1,691
1,571
$ 17,428
NOTE 9. DEPOSITS
The aggregate amount of time deposits in denominations of $250,000 or more at December 31, 2016 and 2015 was $172.8 million and
$131.5 million, respectively. The scheduled maturities of time deposits at December 31, 2016 are as follows:
(dollars in thousands)
2017
2018
2019
2020
2021
Thereafter
$ 707,938
122,776
94,427
19,269
9,388
3,767
$ 957,565
The Company did not have any brokered deposits at December 31, 2016 and 2015.
Deposits from principal officers, directors, and their affiliates at December 31, 2016 and 2015 were $5,623,000 and $7,098,000,
respectively.
F-50
NOTE 10. SECURITIES SOLD UNDER REPURCHASE AGREEMENTS
The Company classifies the sales of securities under agreements to repurchase as short-term borrowings. The amounts received under
these agreements are reflected as a liability in the Company’s consolidated balance sheets and the securities underlying these agreements
are included in investment securities in the Company’s consolidated balance sheets. At December 31, 2016 and 2015, all securities sold
under agreements to repurchase mature on a daily basis. The market value of the securities fluctuate on a daily basis due to market
conditions. The Company monitors the market value of the securities underlying these agreements on a daily basis and is required to
transfer additional securities if the market value of the securities fall below the repurchase agreement price. The Company maintains
an unpledged securities portfolio that it believes is sufficient to protect against a decline in the market value of the securities sold under
agreements to repurchase.
The following is a summary of securities sold under repurchase agreements for the years ended December 31, 2016, 2015 and 2014:
Average daily balance during the year
Average interest rate during the year
Maximum month-end balance during the year
Weighted average interest rate at year-end
As of and For the Years Ended
December 31,
2016
2015
2014
$ 44,324
0.22%
$ 56,203
0.19%
(dollars in thousands)
$ 50,988
0.34%
$ 68,300
0.30%
$ 47,136
0.35%
$ 73,310
0.31%
The following is a summary of the Company’s securities sold under agreements to repurchase at December 31, 2016 and 2015:
(dollars in thousands)
Securities sold under agreements to repurchase ........................................ $
December 31,
2016
December 31,
2015
53,505
$
63,585
At December 31, 2016 and 2015, the investment securities underlying these agreements were comprised of state, county and municipal
securities and mortgage-backed securities.
NOTE 11. 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. An employee is eligible to participate in the Plan after 30 days of
employment and having attained an age of 18.
The aggregate expense under the Plan charged to operations during 2016, 2015 and 2014 amounted to $2,053,000, $1,430,000
$1,160,000, respectively.
NOTE 12. DEFERRED COMPENSATION PLANS
The Company and the Bank have entered into separate deferred compensation arrangements and supplemental executive retirement
plans 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 these liabilities. The cash surrender value of the life insurance
was $78.1 million and $64.3 million at December 31, 2016 and 2015, respectively. Accrued deferred compensation of $944,000 and
$991,000 at December 31, 2016 and 2015, respectively, is included in other liabilities. Accrued supplemental executive retirement plan
liabilities of $3,570,000 and $2,443,000 at December 31, 2016 and 2015, respectively, is also included in other liabilities. Aggregate
compensation expense under the plans was $1,127,000, $849,000 and $743,000 per year for 2016, 2015 and 2014, respectively, which
is included in salaries and employee benefits.
F-51
NOTE 13. OTHER BORROWINGS
Other borrowings consist of the following:
Daily Rate Credit from Federal Home Loan Bank with a variable interest rate (0.80% at
December 31, 2016)
Advance from Federal Home Loan Bank with a fixed rate of 0.56%, due January 6, 2017
Advance from Federal Home Loan Bank with a fixed rate of 1.40%, due January 9, 2017
Advance from Federal Home Loan Bank with a fixed rate of 1.23%, due May 30, 2017
Advances under revolving credit agreement with a regional bank with interest at 90-day
LIBOR plus 3.50% (4.43% at December 31, 2016 and 3.92% at December 31, 2015) due
September 26, 2017, secured by subsidiary bank stock
Advances under revolving credit agreement with a regional bank with a fixed interest rate of
8.00% due January 7, 2017
Advance from correspondent bank with a fixed interest rate of 4.25%, due October 5, 2019,
secured by a loan receivable
Advance from correspondent bank with a fixed interest rate of 2.09%, due September 5,
2026, secured by a loan receivable
Subordinated debt issued by The Prosperity Banking Company due September 2016 with an
interest rate of 90-day LIBOR plus 1.75% (2.28% at December 31, 2015)
December 31,
2016
2015
(dollars in thousands)
$
$ 150,000
292,500
4,002
5,006
-
-
-
-
38,000
24,000
850
77
1,886
-
-
-
-
15,000
$ 492,321
$ 39,000
The advances from the FHLB are collateralized by a blanket lien on all eligible first mortgage loans and other specific loans in addition
to FHLB stock. At December 31, 2016, $736.4 million was available for borrowing on lines with the FHLB.
At December 31, 2016, $22.0 million was available for borrowing under the revolving credit agreement with a regional bank, secured
by subsidiary bank stock.
As of December 31, 2016, the Company maintained credit arrangements with various financial institutions to purchase federal funds up
to $57.0 million.
The Company also participates in the Federal Reserve discount window borrowings. At December 31, 2016, the Company had $900.1
million of loans pledged at the Federal Reserve discount window and had $588.8 million available for borrowing.
NOTE 14. 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 was 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 qualified as Tier 1 capital and paid cumulative dividends at a rate of 5% per annum for the first five years and
9% per annum thereafter. The preferred stock was 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 did not change the Company’s capital position. On August 22, 2012, the
Company repurchased the warrant from the Treasury for $2.67 million. During the fourth quarter of 2012, the Company repurchased
24,000 shares of the outstanding preferred stock at par, leaving 28,000 shares of preferred stock outstanding at December 31, 2013.
During the first quarter of 2014, the Company repurchased the remaining 28,000 shares of the outstanding preferred stock at par.
F-52
NOTE 15. INCOME TAXES
The income tax expense in the consolidated statements of income consists of the following:
Current – federal
Current - state
Deferred - federal
Deferred - state
For the Years Ended December 31,
2016
2015
2014
(dollars in thousands)
$ 28,749
3,550
2,460
(1,613)
$ 15,215
1,026
(344)
-
$ 33,146
$ 15,897
$ 10,499
467
6,516
-
$ 17,482
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
State income tax, net of federal benefit
Other
Provision for income taxes
For the Years Ended December 31,
2016
2015
2014
$ 36,836
(dollars in thousands)
$ 19,860
$ 19,672
(3,916)
(607)
695
138
(2,490)
(484)
667
(1,656)
$ 33,146
$ 15,897
(1,647)
(568)
304
(279)
$ 17,482
Net deferred income tax assets of $40,776,000 and $19,459,000 at December 31, 2016 and 2015, respectively, are included in other
assets. 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
Nonaccrual interest
Purchase accounting adjustments
Goodwill and intangible assets
Other real estate owned
Net operating loss tax carryforward
AMT credit carryforward
Unrealized loss on securities available for sale
Capitalized costs, accrued expenses and other
Deferred tax liabilities
Depreciation and amortization
Mortgage servicing rights
Subordinated debentures
FDIC-assisted transaction adjustments
Unrealized gain on securities available for sale
Net deferred tax asset
F-53
December 31,
2016
2015
(dollars in thousands)
$ 8,731
1,648
296
342
17
13,444
7,488
6,244
26,414
813
665
680
66,782
6,188
1,412
9,428
8,978
-
26,006
$40,776
$ 7,372
1,202
381
504
49
10,825
9,357
8,597
11,179
-
-
200
49,666
5,591
715
7,732
14,446
1,723
30,207
$19,459
At December 31, 2016, the Company had federal net operating loss carryforwards of approximately $72.37 million which expire at
various dates from 2028 to 2035. At December 31, 2015, the Company had federal net operating loss carryforwards of approximately
$31.90 million which expire at various dates from 2028 to 2033. At December 31, 2016, the Company had state net operating loss
carryforwards of approximately $73.27 million which expire at various dates from 2033 to 2034. At December 31, 2015, the Company
had state net operating loss carryforwards of approximately $32.59 million which expire in 2033. The federal net operating loss
carryforwards are subject to limitations pursuant to section 382 of the Internal Revenue Code and are expected to be recovered over the
next 17 to 19 years. The state net operating loss carryforwards are subject to similar limitations and are expected to be recovered over
the next 17 to 18 years. Deferred tax assets are recognized for net operating losses because the benefit is more likely than not to be
realized.
The Company did not record any interest and penalties related to income taxes for the years ended December 31, 2016, 2015 and 2014,
and the Company did not have any amount accrued for interest and penalties at December 31, 2016, 2015 and 2014.
The Company and its subsidiaries are subject to U.S. federal income tax as well as income tax of the various states. The Company is no
longer subject to examination by taxing authorities for years before 2013.
NOTE 16. 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% (3.80% at December 31, 2016) 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, 2016 was $5,000,000. The
aggregate principal amount of debentures outstanding was $5,155,000. The Company’s investment in the common stock of the trust
was $155,000 and is included in other assets.
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% (2.59% at December 31, 2016). 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. The
Company’s investment in the common stock of the trust was $1,114,000 and is included in other assets.
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% (3.57% at December 31, 2016) 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, 2016 was $5,000,000. The aggregate principal
amount of debentures outstanding was $5,155,000, and is being carried at $3,363,000 on the Company’s balance sheet net of
unamortized purchase discount. The Company’s investment in the common stock of the trust was $155,000 and is included in other
assets.
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% (4.15% at December 31, 2016) 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, 2016 was $4,500,000. The aggregate principal
amount of debentures outstanding was $4,640,000, and is being carried at $3,354,000 on the Company’s balance sheet net of
unamortized purchase discount. The Company’s investment in the common stock of the trust was $140,000 and is included in other
assets.
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% (2.56% at December 31, 2016) 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, 2016 was $10,000,000. The aggregate principal
amount of debentures outstanding was $10,310,000, and is being carried at $5,483,000 on the Company’s balance sheet net of
unamortized purchase discount. The Company’s investment in the common stock of the trust was $310,000 and is included in other
assets.
F-54
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% (2.50% at December 31, 2016) 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, 2016 was $5,000,000. The aggregate
principal amount of debentures outstanding was $5,155,000, and is being carried at $2,944,000 on the Company’s balance sheet net of
unamortized purchase discount. The Company’s investment in the common stock of the trust was $310,000 and is included in other
assets.
During 2014, the Company acquired Coastal Bankshares Statutory Trust I, a statutory trust subsidiary of Coastal, 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
3.15% (4.03% at December 31, 2016) 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 October 2008. The
aggregate principal amount of trust preferred certificates outstanding at December 31, 2016 was $5,000,000. The aggregate principal
amount of debentures outstanding was $5,155,000, and is being carried at $3,858,000 on the Company’s balance sheet net of
unamortized purchase discount. The Company’s investment in the common stock of the trust was $155,000 and is included in other
assets.
During 2014, the Company acquired Coastal Bankshares Statutory Trust II, a statutory trust subsidiary of Coastal, 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% (2.56% at December 31, 2016) 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
2010. The aggregate principal amount of trust preferred certificates outstanding at December 31, 2016 was $10,000,000. The aggregate
principal amount of debentures outstanding was $10,310,000, and is being carried at $5,962,000 on the Company’s balance sheet net of
unamortized purchase discount. The Company’s investment in the common stock of the trust was $310,000 and is included in other
assets.
During 2015, the Company acquired Merchants & Southern Statutory Trust I, a statutory trust subsidiary of Merchants, whose sole
purpose was to issue $3,000,000 principal amount of trust preferred securities at a rate per annum equal to the 3-Month LIBOR plus
1.90% (2.89% at December 31, 2016) 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 2010. The
aggregate principal amount of trust preferred certificates outstanding at December 31, 2016 was $3,000,000. The aggregate principal
amount of debentures outstanding was $3,093,000, and is being carried at $1,941,000 on the Company’s balance sheet net of
unamortized purchase discount. The Company’s investment in the common stock of the trust was $93,000 and is included in other
assets.
During 2015, the Company acquired Merchants & Southern Statutory Trust II, a statutory trust subsidiary of Merchants, whose sole
purpose was to issue $3,000,000 principal amount of trust preferred securities at a rate per annum equal to the 3-Month LIBOR plus
1.50% (2.46% at December 31, 2016) 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 June 2011. The
aggregate principal amount of trust preferred certificates outstanding at December 31, 2016 was $3,000,000. The aggregate principal
amount of debentures outstanding was $3,093,000, and is being carried at $1,773,000 on the Company’s balance sheet net of
unamortized purchase discount. The Company’s investment in the common stock of the trust was $93,000 and is included in other
assets.
During 2016, the Company acquired Atlantic BancGroup, Inc. Statutory Trust I, a statutory trust subsidiary of JAXB, whose sole purpose
was to issue $3,000,000 principal amount of trust preferred securities at a rate per annum equal to the 3-Month LIBOR plus
1.50% (2.46% at December 31, 2016) 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 September
2015. The aggregate principal amount of trust preferred certificates outstanding at December 31, 2016 was $3,000,000. The aggregate
principal amount of debentures outstanding was $3,093,000, and is being carried at $1,729,000 on the Company’s balance sheet net of
unamortized purchase discount. The Company’s investment in the common stock of the trust was $93,000 and is included in other
assets.
During 2016, the Company acquired Jacksonville Statutory Trust I, a statutory trust subsidiary of JAXB, whose sole purpose was to
issue $4,000,000 principal amount of trust preferred securities at a rate per annum equal to the 3-Month LIBOR plus 2.63% (3.62% at
December 31, 2016) 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 June 2009. The aggregate principal
amount of trust preferred certificates outstanding at December 31, 2016 was $4,000,000. The aggregate principal amount of debentures
outstanding was $4,124,000, and is being carried at $3,070,000 on the Company’s balance sheet net of unamortized purchase discount.
The Company’s investment in the common stock of the trust was $124,000 and is included in other assets.
F-55
During 2016, the Company acquired Jacksonville Statutory Trust II, a statutory trust subsidiary of JAXB, whose sole purpose was to
issue $3,000,000 principal amount of trust preferred securities at a rate per annum equal to the 3-Month LIBOR plus 1.73% (2.69% at
December 31, 2016) 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 2011. The aggregate
principal amount of trust preferred certificates outstanding at December 31, 2016 was $3,000,000. The aggregate principal amount of
debentures outstanding was $3,093,000, and is being carried at $1,924,000 on the Company’s balance sheet net of unamortized purchase
discount. The Company’s investment in the common stock of the trust was $93,000 and is included in other assets.
During 2016, the Company acquired Jacksonville Bancorp, Inc. Statutory Trust III, a statutory trust subsidiary of JAXB, whose sole
purpose was to issue $7,550,000 principal amount of trust preferred securities at a rate per annum equal to the 3-Month LIBOR plus
3.75% (4.71% at December 31, 2016) 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 June 2013. The
aggregate principal amount of trust preferred certificates outstanding at December 31, 2016 was $7,550,000. The aggregate principal
amount of debentures outstanding was $7,784,000, and is being carried at $6,558,000 on the Company’s balance sheet net of
unamortized purchase discount. The Company’s investment in the common stock of the trust was $234,000 and is included in other
assets.
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 17. STOCK-BASED COMPENSATION
The Company awards its employees and directors 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 2,985,000 subject to adjustment in certain circumstances to prevent dilution. At
December 31, 2016, there were 968,749 shares available to be issued under the plans.
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.
The Company did not grant any options during 2016, 2015 or 2014. As of December 31, 2016, there was no unrecognized compensation
cost related to nonvested share-based compensation arrangements granted related to performance or non-performance-based options.
As of December 31, 2016, the Company has 279,727 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 four 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 2016, 2015 and 2014, compensation
expense related to these grants was approximately $2,261,000, $1,485,000, and $2,058,000, respectively. The total income tax benefit
related to these grants was approximately $721,000, $1,069,000 and $861,000 in 2016, 2015 and 2014, 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 2016, 2015 and 2014. The total income tax benefit
related to stock options was approximately $177,000, $102,000 and $49,000 in 2016, 2014 and 2013, respectively.
The fair value of each stock-based compensation grant is estimated on the date of grant using the Black-Scholes option-pricing model.
F-56
A summary of the activity of non-performance-based and performance-based options as of December 31, 2016 is presented below:
Non-Performance-Based
Weighted-
Average
Exercise
Price
Weighted
Average
Contractual
Term
Aggregate
Intrinsic
Value
$ (000)
$ 18.55
-
14.38
-
$
200
Shares
224,132
-
(40,714)
(40,508)
Shares
72,483
-
(13,880)
-
Performance-Based
Weighted-
Average
Exercise
Price
Weighted
Average
Contractual
Term
Aggregate
Intrinsic
Value
$ (000)
$ 16.92
-
14.68
19.67
$
765
58,603
$ 14.76
1.14
$ 1,620
142,910
$ 15.06
1.22
$ 3,909
58,603
$ 14.76
1.14
$ 1,620
142,910
$ 15.06
1.22
$ 3,909
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, 2015 is presented below:
Non-Performance-Based
Weighted-
Average
Exercise
Price
Weighted
Average
Contractual
Term
Aggregate
Intrinsic
Value
$ (000)
$ 18.00
-
15.47
-
$
242
Shares
359,331
-
(59,507)
(75,691)
Shares
88,111
-
(15,628)
-
Performance-Based
Weighted-
Average
Exercise
Price
Weighted
Average
Contractual
Term
Aggregate
Intrinsic
Value
$ (000)
$ 16.74
-
15.39
17.37
$
916
72,483
$ 18.55
2.13
$ 1,331
224,132
$ 16.92
1.80
$ 3,697
72,483
$ 18.55
2.13
$ 1,331
189,587
$ 15.91
2.06
$ 3,252
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, 2014 is presented below:
Non-Performance-Based
Weighted-
Average
Exercise
Price
Weighted
Average
Contractual
Term
Aggregate
Intrinsic
Value
$ (000)
Shares
Performance-Based
Weighted-
Average
Exercise
Price
Weighted
Average
Contractual
Term
Aggregate
Intrinsic
Value
$ (000)
Shares
Under option,
beginning of year
Granted
Exercised
Forfeited
Under option, end of
year
Exercisable at end of
year
115,459
-
$ 17.24
-
(25,395)
(1,953)
14.81
14.88
88,111
$ 18.00
88,111
$ 18.00
371,000
-
$ 16.76
-
$
148
(6,477)
(5,192)
11.05
25.51
$
72
2.71
2.71
$
$
884
359,331
$ 16.74
2.11
$ 2,955
884
341,030
$ 17.23
2.00
$ 2,629
F-57
A summary of the status of the Company’s restricted stock awards as of and for the years ended December 31, 2016, 2015 and 2014 is
presented below:
2016
2015
2014
Nonvested shares at beginning of year
Granted
Vested
Forfeited
Nonvested shares at end of year
Weighted-
Average
Grant-Date
Fair Value
$ 17.29
29.26
13.10
23.80
Shares
323,151
71,000
(108,825)
-
Weighted-
Average
Grant-Date
Fair Value
$ 13.46
23.46
9.96
-
Shares
377,725
82,047
(126,050)
(10,571)
26.10
285,326
17.29
323,151
Weighted-
Average
Grant-Date
Fair Value
$ 11.78
20.99
13.12
15.61
13.46
Shares
285,326
155,751
(154,350)
(7,000)
279,727
The balance of unearned compensation related to restricted stock grants as of December 31, 2016, 2015 and 2014 was approximately
$3,878,000, $1,749,000, and $1,568,000, respectively. At December 31, 2016, the cost is expected to be recognized over a weighted-
average period of 1.4 years.
NOTE 18. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
Cash Flow Hedge
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 certain junior subordinated debentures. The interest rate swap contract has a notional amount of $37.1 million and is hedging the
variable rate on certain junior subordinated debentures described in Note 16 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.
This contract is classified as a cash flow hedge of an exposure to changes in the cash flow of a recognized liability. At December 31,
2016 and 2015, the fair value of the remaining instrument totaled a liability of $978,000 and $1,439,000, 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, 2016, the hedge is deemed to be highly effective. Interest
expense recorded on this swap transaction totaled $678,000, $822,000, and $845,000 during 2016, 2015, and 2014 and is reported as a
component of interest expense on other borrowings. At December 31, 2106, the Company expected $492,000 of the unrealized loss to
be reclassified as an increase of interest expense during the next 12 months.
Mortgage Banking Derivatives
The Company maintains 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 IRLCs to economically hedge risks associated with overall price risk related to IRLCs
and mortgage loans held for sale carried at fair value. These mortgage banking derivatives are not designated in hedge relationships.
At December 31, 2016, the Company had approximately $91.4 million of IRLCs and $150.0 million of forward commitments for the
future delivery of residential mortgage loans. The fair value of these mortgage banking derivatives was reflected as a derivative asset
of $4.3 million and a derivative liability of $0. At December 31, 2015, the Company had approximately $77.7 million of IRLCs and
$123.5 million of forward commitments for the future delivery of residential mortgage loans. The fair value of these mortgage banking
derivatives was reflected as a derivative asset of $2.7 million and a derivative liability of $137,000. Fair values were estimated based
on changes in mortgage interest rates from the date of the commitments. Changes in the fair values of these mortgage-banking derivatives
are included in net gains on sales of mortgage loans.
The net gains (losses) relating to free-standing mortgage banking derivative instruments used for risk management are summarized
below as of December 31, 2016, 2015 and 2014:
Forward contracts related to
mortgage loans held for sale ..........
Interest rate lock commitments ..........
Mortgage banking activity
Mortgage banking activity
$
$
1,285
3,029
$ (137) $
$ 2,687
(249)
$ 1,757
Location
December 31,
2016
December 31,
2015
December 31,
2014
(dollars in thousands)
F-58
The following table reflects the amount and market value of mortgage banking derivatives included in the consolidated balance sheets
as of December 31, 2016 and 2015:
2016
2015
Notional
Amount
Fair
Value
Notional
Amount
Fair
Value
(dollars in thousands)
Included in other assets:
Forward contracts related to mortgage loans held for
sale ........................................................................
Interest rate lock commitments .................................
$ 150,000
91,426
$ 1,285 $ -
3,029 77,710
$
-
2,687
Total included in other assets
$ 241,426
$ 4,314 $ 77,710
$ 2,687
Included in other liabilities:
Forward contracts related to mortgage loans held for
sale ........................................................................
Total included in other liabilities
$ -
$ -
$
$
- $ 123,500
- $ 123,500
$
$
137
137
NOTE 19. 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 consolidated 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
Unused home equity lines of credit
Financial standby letters of credit
Mortgage interest rate lock commitments
December 31,
2016
2015
(dollars in thousands)
$ 1,101,257
$ 548,898
62,586
52,798
14,257
14,712
91,426
77,710
Mortgage forward contracts with positive fair value
150,000
-
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. These commitments, predominantly at variable interest rates, generally have fixed expiration dates of one year or less 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, 2016 and 2015.
Other Commitments
As of December 31, 2016, a $75.0 million letter of credit issued by the Federal Home Loan Bank was used to guarantee the Bank’s
performance related to a portion of its public fund deposit balances.
F-59
Contingencies
Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will
only be resolved when one or more future events occur or fail to occur. The Company’s management and its legal counsel assess such
contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal
proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company’s legal counsel
evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief
sought or expected to be sought therein.
If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can
be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a
potentially material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature
of the contingent liability, together with an estimate of the range of possible loss if determinable and material, would be disclosed.
Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the nature of the
guarantee would be disclosed.
A former borrower of the Company has filed a claim related to a loan previously made by the Company asserting lender liability. The
case was tried without a jury and an order was issued by the court against the Company awarding the borrower approximately $2.9
million on August 8, 2013. The order is currently on appeal to the South Carolina Court of Appeals and the Company is asserting it had
no fiduciary responsibility to the borrower. As of December 31, 2016, the Company believes that it has valid bases in law and fact to
overturn on appeal the verdict. As a result, the Company believes that the likelihood that the amount of the judgment will be affirmed
is not probable, and, accordingly, that the amount of any loss cannot be reasonably estimated at this time. Because the Company believes
that this potential loss is not probable or estimable, it has not recorded any reserves or contingencies related to this legal matter. In the
event that the Company's assumptions used to evaluate this matter as neither probable nor estimable change in future periods, it may be
required to record a liability for an adverse outcome.
NOTE 20. 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, 2016, $39.0 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, Tier 1 capital and Common Equity Tier 1 capital, as defined by the regulations, to risk-weighted assets, as
defined, and of Tier 1 capital to average assets, as defined. The final rules implementing the Basel Committee on Banking Supervision’s
capital guidelines for U.S. banks (the “Basel III rules”) became effective for the Company on January 1, 2015 with full compliance with
all of the requirements being phased in over a multi-year schedule, and fully phased in by January 1, 2019. Under the Basel III rules,
the Company must hold a capital conservation buffer above the adequately capitalized risk-based capital ratios. The capital conservation
buffer is being phased in from 0.0% for 2015 to 2.50% by 2019. The capital conservation buffer for 2016 is 0.625%. The net realized
gain or loss on available for sale securities is not included in computing regulatory capital. Management believes that, as of
December 31, 2016 and 2015, the Company and the Bank met all capital adequacy requirements to which they are subject.
As of December 31, 2016 and 2015, 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 1 risk-based, Common Equity Tier 1 risk-based and Tier 1 leverage ratios as set forth in the following table. There
are no conditions or events since that notification that management believes have changed the Bank’s category. Prompt corrective action
provisions are not applicable to bank holding companies.
F-60
The Company’s and Bank’s actual capital amounts and ratios are presented in the following table.
Actual
For Capital
Adequacy
Purposes
To Be Well Capitalized
Under Prompt Corrective
Action Provisions
Amount
Ratio
Amount
Ratio
Amount
Ratio
(dollars in thousands)
$ 555,447
$ 592,641
8.675%
9.266%
$ 256,106
$ 255,828
4.000%
4.000%
$ 319,785
—N/A—
5.00 %
$ 476,806
$ 592,641
8.317%
10.351%
$ 293,811
$ 293,422
5.125%
5.125%
$ 372,145
—N/A—
6.50 %
$ 555,447
$ 592,641
9.689%
10.351%
$ 379,804
$ 379,301
6.625%
6.625%
$ 458,024
—N/A—
8.00 %
$ 579,367
$ 616,561
10.106%
10.769%
$ 494,462
$ 493,807
8.625%
8.625%
$ 572,530
—N/A—
10.00 %
$ 462,961
$ 495,615
8.70%
9.32%
$ 212,771
$ 212,608
4.00%
4.00%
$ 265,760
—N/A—
5.00 %
$ 403,322
$ 495,615
9.54%
11.74%
$ 190,157
$ 189,949
4.50%
4.50%
$ 274,371
—N/A—
6.50 %
$ 462,961
$ 495,615
10.96%
11.74%
$ 253,543
$ 253,266
6.00%
6.00%
$ 337,687
—N/A—
8.00 %
As of December 31, 2016
Tier 1 Leverage Ratio (tier 1 capital to average
assets):
Consolidated
Ameris Bank
CET1 Ratio (common equity tier 1 capital to risk
weighted assets):
Consolidated
Ameris Bank
Tier 1 Capital Ratio (tier 1 capital to risk weighted
assets):
Consolidated
Ameris Bank
Total Capital Ratio (total capital to risk weighted
assets):
Consolidated
Ameris Bank
As of December 31, 2015
Tier 1 Leverage Ratio (tier 1 capital to average
assets):
Consolidated
Ameris Bank
CET1 Ratio (common equity tier 1 capital to risk
weighted assets):
Consolidated
Ameris Bank
Tier 1 Capital Ratio (tier 1 capital to risk weighted
assets):
Consolidated
Ameris Bank
Total Capital to Risk Weighted Assets Total
Capital Ratio (total capital to risk weighted
assets):
Consolidated
Ameris Bank
$ 484,023
$ 516,677
11.45%
12.24%
$ 338,057
$ 337,687
8.00%
8.00%
$ 422,109
—N/A—
10.00 %
The December 31, 2016 CET1 Ratios, the Tier 1 Capital Ratios, and the Total Capital Ratios displayed in the above table under the
heading “For Capital Adequacy Purposes” include a capital conservation buffer of 0.625%. There was no capital conservation buffer
requirement as of December 31, 2015.
FDIC Consent Order
On December 16, 2016, the Bank entered into a Stipulation to the Issuance of a Consent Order (the “Stipulation”) with its bank regulatory
agencies, the FDIC and the GDBF, consenting to the issuance of a consent order (the “Order”) relating to weaknesses in the Bank’s
Bank Secrecy Act (together with its implementing regulations, the “BSA”) compliance program. In consenting to the issuance of the
Order, the Bank did not admit or deny any charges of unsafe or unsound banking practices related to its BSA compliance program.
Under the terms of the Order, the Bank or its board of directors is required to take certain affirmative actions to comply with the Bank’s
obligations under the BSA. These include, but are not limited to, the following: strengthening the board of directors’ oversight of BSA
activities; enhancing and adopting a revised BSA compliance program; completing a BSA risk assessment; developing a revised system
of internal controls designed to ensure full compliance with the BSA; reviewing and revising customer due diligence and risk assessment
processes, policies and procedures; developing, adopting and implementing effective BSA training programs; assessing BSA staffing
needs and resources and appointing a qualified BSA officer; establishing an independent BSA testing program; ensuring that all reports
required by the BSA are accurately and properly filed; and engaging an independent firm to review past account activity to determine
whether suspicious activity was properly identified and reported.
F-61
Prior to implementation, certain of the actions required by the Order are subject to review by, and approval or non-objection from, the
FDIC and the GDBF. The Order will remain in effect and be enforceable until it is modified, terminated, suspended or set aside by the
FDIC and the GDBF.
NOTE 21. FAIR VALUE MEASURES
The fair value of an asset or liability is the current amount that would be exchanged between willing parties, other than in a forced
liquidation. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market
prices for the Company’s various assets and liabilities. In cases where quoted market prices are not available, fair value is based on
discounted cash flows or other valuation techniques. These techniques are significantly affected by the assumptions used, including the
discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement
of the asset or liability. The accounting standard for disclosures about the fair value measures excludes certain financial instruments and
all nonfinancial instruments from its disclosure requirements. Accordingly, the aggregate fair value amounts presented may not
necessarily represent the underlying fair value of the Company.
The Company has elected to record mortgage loans held for sale at fair value in order to eliminate the complexities and inherent
difficulties of achieving hedge accounting and to better align reported results with the underlying economic changes in value of the
loans and related hedge instruments. This election impacts the timing and recognition of origination fees and costs, as well as servicing
value, which are now recognized in earnings at the time of origination. Interest income on mortgage loans held for sale is recorded on
an accrual basis in the consolidated statement of income under the heading interest income – interest and fees on loans. The servicing
value is included in the fair value of the IRLCs with borrowers. The mark to market adjustments related to loans held for sale and the
associated economic hedges are captured in mortgage banking activities. Net gains of $2.2 million, $3.5 million and $4.3 million
resulting from fair value changes of these mortgage loans were recorded in income during the years ended December 31, 2016, 2015
and 2014, respectively. The amount does not reflect changes in fair values of related derivative instruments used to hedge exposure to
market-related risks associated with these mortgage loans. The change in fair value of both mortgage loans held for sale and the related
derivative instruments are recorded in mortgage banking activity in the consolidated statements of income. The Company’s valuation
of mortgage loans held for sale incorporates an assumption for credit risk; however, given the short-term period that the Company holds
these loans, valuation adjustments attributable to instrument-specific credit risk is nominal.
The following table summarizes the difference between the fair value and the principal balance for mortgage loans held for sale measured
at fair value as of December 31, 2016 and 2015:
December 31,
2016
2015
(dollars in thousands)
Aggregate fair value of mortgage loans held for sale
$ 105,924
$ 111,182
Aggregate unpaid principal balance
Past due loans of 90 days or more
Nonaccrual loans
$ 103,691
$ 107,652
$
$
-
-
$
$
-
-
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, mortgage loans held 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 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.
F-62
The following methods and assumptions were used by the Company in estimating the fair value of its assets and liabilities recorded at
fair value and for estimating the fair value of its financial instruments:
Cash, Due From Banks, Federal Funds Sold and Interest-Bearing Accounts: The carrying amount of cash, due from banks, federal
funds sold and interest-bearing deposits in banks approximates fair value.
Investment 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, mortgage-backed securities,
collateralized mortgage and debt obligations, and 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 and FRB 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. It is not practical to determine the fair value of FHLB and FRB stock due to
restrictions placed on its transferability.
Mortgage Loans Held for Sale: The Company records mortgage loans held for sale at fair value. The fair value of mortgage loans
held for sale is determined on outstanding commitments from third party investors in the secondary markets and is 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.
Other Real Estate Owned: The fair value of other real estate owned (“OREO”) is determined using certified appraisals, internal
evaluations and broker price opinions 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 Other Real Estate Owned: Covered other real estate owned includes 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: 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 seven to ten years.
FDIC Loss-Share Receivable/Payable: 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/payable is impacted by changes in estimated cash flows associated
with these loans.
Accrued Interest Receivable/Payable: The carrying amount of accrued interest receivable and accrued interest payable approximates
fair value.
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.
F-63
Securities Sold under Agreements to Repurchase and Other Borrowings: The carrying amount of variable rate borrowings and
securities sold under repurchase agreements approximates fair value and are classified as Level 1. The fair value of fixed rate other
borrowings is estimated based on discounted contractual cash flows using the current incremental borrowing rates for similar borrowing
arrangements and are classified as Level 2.
Subordinated Deferrable Interest Debentures: The fair value of the Company’s variable rate trust preferred securities is based
primarily upon discounted cash flows using rates for securities with similar terms and remaining maturities and are classified as Level
2.
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 is 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, 2016 and 2015, 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.
F-64
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, 2016 and 2015:
U.S. government sponsored agencies
State, county and municipal securities
Corporate debt securities
Mortgage-backed securities
Mortgage loans held for sale
Mortgage banking derivative instruments
Total recurring assets at fair value
Derivative financial instruments
Total recurring liabilities at fair value
U.S. government sponsored agencies
State, county and municipal securities
Corporate debt securities
Mortgage-backed securities
Mortgage loans held for sale
Mortgage banking derivative instruments
Total recurring assets at fair value
Derivative financial instruments
Mortgage banking derivative instruments
Total recurring liabilities at fair value
Fair Value Measurements on a Recurring Basis
As of December 31, 2016
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
(dollars in thousands)
-
-
-
-
-
-
$ 1,020
152,035
30,672
637,508
105,924
4,314
-
-
-
$ 931,473
$ 978
$ 978
$
$
$
$
$
$
$
$
-
-
1,500
-
-
-
1,500
-
-
Fair Value Measurements on a Recurring Basis
As of December 31, 2015
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
(dollars in thousands)
$
$
$
$
-
-
-
-
-
-
-
-
-
-
$ 14,890
161,316
3,019
600,962
111,182
2,687
$ 894,056
$ 1,439
137
$ 1,576
$
$
$
$
-
-
2,998
-
-
-
2,998
-
-
-
Fair Value
$ 1,020
152,035
32,172
637,508
105,924
4,314
$ 932,973
$ 978
$ 978
Fair Value
$ 14,890
161,316
6,017
600,962
111,182
2,687
$ 897,054
$ 1,439
137
$ 1,576
F-65
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, 2016 and 2015:
Impaired loans carried at fair value
Other real estate owned
Purchased non-covered other real estate owned
Covered other real estate owned
Total nonrecurring assets at fair value
Impaired loans carried at fair value
Other real estate owned
Purchased non-covered other real estate owned
Covered other real estate owned
Total nonrecurring assets at fair value
Fair Value Measurements on a Nonrecurring Basis
As of December 31, 2016
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
(dollars in thousands)
-
-
-
-
-
$
$
-
-
-
-
-
$
$
Fair Value Measurements on a Nonrecurring Basis
As of December 31, 2015
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
(dollars in thousands)
-
-
-
-
-
$
$
-
-
-
-
-
$
$
Significant
Unobservable
Inputs
(Level 3)
$ 28,253
1,172
11,332
1,208
$ 41,965
Significant
Unobservable
Inputs
(Level 3)
$
27,069
10,456
14,333
5,011
$
56,869
Fair Value
$ 28,253
1,172
11,332
1,208
$ 41,965
Fair Value
$ 27,069
10,456
14,333
5,011
$ 56,869
F-66
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, 2016 and 2015, 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.
Fair Value
Valuation Technique
Unobservable Inputs
(dollars in thousands)
Range of
Discounts
Weighted
Average
Discount
28%
22%
15%
15%
0%
29%
13%
19%
12%
0%
As of December 31, 2016
Nonrecurring:
Impaired loans
Other real estate owned
Purchased non-covered real estate owned
Covered real estate owned
Recurring:
Investment securities available for sale
As of December 31, 2015
Nonrecurring:
Impaired loans
Other real estate owned
$
$
$
$
Purchased non-covered real estate owned
Covered real estate owned
Recurring:
Investment securities available for sale
$
$
$
$
28,253
1,172
Third party appraisals
and discounted cash flows
Third party appraisals,
sales contracts, Broker
price opinions
11,332
Third party appraisals
1,208
Third party appraisals
Collateral discounts and
discount rates
Collateral discounts and
estimated costs to sell
Collateral discounts and
estimated costs to sell
Collateral discounts and
estimated costs to sell
15%-100%
15% - 74%
10% - 74%
15% - 50%
1,500
Discounted par values
Credit quality of
underlying issuer
0%
$
27,069
$
10,456
Third party appraisals
and discounted cash flows
Third party appraisals,
sales contracts, Broker
price opinions
14,333
Third party appraisals
5,011
Third party appraisals
Collateral discounts and
discount rates
Collateral discounts and
estimated costs to sell
Collateral discounts and
estimated costs to sell
Collateral discounts and
estimated costs to sell
0% - 100%
10% - 90%
10% - 69%
0% - 74%
2,998
Discounted par values
Credit quality of
underlying issuer
0%
F-67
The carrying amount and estimated fair value of the Company’s financial instruments, not shown elsewhere in these financial statements,
The carrying amount and estimated fair value of the Company’s financial instruments, not shown elsewhere in these financial statements,
were as follows:
were as follows:
Fair Value Measurements at December 31, 2016 Using:
Fair Value Measurements at December 31, 2016 Using:
Carrying
Carrying
Amount
Amount
Level 1
Level 1
Level 2
Level 2
Level 3
Level 3
Total
Total
(Dollars in Thousands)
(Dollars in Thousands)
127,164
127,164
$
$
127,164 $
127,164 $
- $
- $
- $
- $
127,164
127,164
Financial assets:
Financial assets:
Cash and due from banks ................... $
Cash and due from banks ................... $
Federal funds sold and interest-
Federal funds sold and interest-
bearing accounts ............................
bearing accounts ............................
Loans, net ...........................................
Loans, net ...........................................
Accrued interest receivable ................
Accrued interest receivable ................
Financial liabilities:
Financial liabilities:
Deposits .............................................
Deposits .............................................
Securities sold under agreements to
Securities sold under agreements to
repurchase .....................................
repurchase .....................................
Other borrowings ...............................
Other borrowings ...............................
FDIC loss-share payable ....................
FDIC loss-share payable ....................
Accrued interest payable ....................
Accrued interest payable ....................
Subordinated deferrable interest
Subordinated deferrable interest
debentures .....................................
debentures .....................................
Financial assets:
Cash and due from banks ................... $
Financial assets:
Federal funds sold and interest-
Cash and due from banks ................... $
bearing accounts ............................
Federal funds sold and interest-
Loans, net ...........................................
bearing accounts ............................
FDIC loss-share receivable ................
Loans, net ...........................................
Accrued interest receivable ................
FDIC loss-share receivable ................
Accrued interest receivable ................
Financial liabilities:
Deposits .............................................
Financial liabilities:
Securities sold under agreements to
Deposits .............................................
repurchase .....................................
Securities sold under agreements to
Other borrowings ...............................
repurchase .....................................
Accrued interest payable ....................
Other borrowings ...............................
Subordinated deferrable interest
Accrued interest payable ....................
debentures .....................................
Subordinated deferrable interest
71,221
71,221
5,212,153
5,212,153
22,278
22,278
5,575,163
5,575,163
53,505
53,505
492,321
492,321
6,313
6,313
1,501
1,501
84,228
84,228
Carrying
Amount
Carrying
Amount
118,518
118,518
272,045
3,971,974
272,045
6,301
3,971,974
21,274
6,301
21,274
4,879,290
4,879,290
63,585
39,000
63,585
1,054
39,000
1,054
69,874
71,221
71,221
-
-
22,278
22,278
-
-
53,505
53,505
-
-
-
-
1,501
1,501
-
-
-
-
-
-
-
-
-
-
5,236,034
5,236,034
-
-
5,575,288
5,575,288
-
492,321
-
-
-
492,321
-
-
67,321
67,321
-
-
-
-
-
-
8,243
8,243
-
-
-
-
71,221
71,221
5,236,034
5,236,034
22,278
22,278
5,575,288
5,575,288
53,505
53,505
492,321
492,321
8,243
8,243
1,501
1,501
67,321
67,321
Fair Value Measurements at December 31, 2015 Using:
Fair Value Measurements at December 31, 2015 Using:
Level 1
Level 2
Level 1
(Dollars in Thousands)
Level 2
Level 3
Level 3
Total
Total
(Dollars in Thousands)
- $
- $
118,518
$
$
118,518 $
118,518 $
272,045
-
272,045
-
-
21,274
-
21,274
-
-
63,585
-
63,585
1,054
-
1,054
-
-
-
-
-
4,880,294
4,880,294
-
39,000
-
-
39,000
-
52,785
- $
-
- $
-
-
-
-
3,982,606
-
(944)
3,982,606
-
(944)
-
118,518
272,045
3,982,606
272,045
(944)
3,982,606
21,274
(944)
21,274
-
-
-
-
-
-
-
-
-
-
4,880,294
4,880,294
63,585
39,000
1,054
63,585
39,000
1,054
52,785
52,785
debentures .....................................
69,874
-
52,785
F-68
F-68
NOTE 22 – ACCUMULATED OTHER COMPREHENSIVE INCOME
NOTE 22 – ACCUMULATED OTHER COMPREHENSIVE INCOME
Accumulated other comprehensive income for the Company consists of changes in net unrealized gains and losses on investment
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 reclassification for gains included in net income is recorded in net
securities available for sale and interest rate swap derivatives. The reclassification for gains included in net income is recorded in net
gains on sales of securities in the consolidated statements of income. The following tables present a summary of the accumulated other
gains on sales of securities in the consolidated statements of income. The following tables present a summary of the accumulated other
comprehensive income balances, net of tax, as of December 31, 2016 and 2015.
comprehensive income balances, net of tax, as of December 31, 2016 and 2015.
(dollars in thousands)
(dollars in thousands)
Balance, January 1, 2016 ................................................... $
Balance, January 1, 2016 ................................................... $
Reclassification for gains included in net income, net of
Reclassification for gains included in net income, net of
tax ..................................................................................
tax ..................................................................................
Current year changes, net of tax .........................................
Current year changes, net of tax .........................................
Balance, December 31, 2016 .............................................. $
Balance, December 31, 2016 .............................................. $
Unrealized
Unrealized
Gain (Loss) on
Gain (Loss) on
Derivatives
Derivatives
152
152
Unrealized
Unrealized
Gain (Loss) on
Gain (Loss) on
Securities
Securities
3,201
3,201
$
$
Accumulated Other
Comprehensive Income
(Loss)
Accumulated Other
Comprehensive Income
(Loss)
3,353
$
$
3,353
-
-
24
24
176
176
(61)
(4,374)
(61)
(4,374)
$ (1,234)
$ (1,234)
(61)
(4,350)
(61)
(4,350)
$ (1,058)
$ (1,058)
(dollars in thousands)
Balance, January 1, 2015 ................................................... $
(dollars in thousands)
Reclassification for gains included in net income, net of
Balance, January 1, 2015 ................................................... $
tax ..................................................................................
Reclassification for gains included in net income, net of
Current year changes, net of tax .........................................
tax ..................................................................................
Current year changes, net of tax .........................................
Balance, December 31, 2015 .............................................. $
Unrealized
Gain (Loss) on
Unrealized
Derivatives
Gain (Loss) on
Derivatives
508
508
-
(356)
-
(356)
152
Balance, December 31, 2015 .............................................. $
152
NOTE 23 – SEGMENT REPORTING
$
$
$
$
Unrealized
Gain (Loss) on
Unrealized
Securities
Gain (Loss) on
Securities
5,590
Accumulated Other
Comprehensive Income
(Loss)
Accumulated Other
Comprehensive Income
(Loss)
6,098
$
5,590
(89)
(2,300)
(89)
(2,300)
3,201
$
$
6,098
(89)
(2,656)
(89)
(2,656)
3,353
3,201
$
3,353
NOTE 23 – SEGMENT REPORTING
The following table presents selected financial information with respect to the Company’s reportable business segments for the years
ended December 31, 2016, 2015 and 2014.
The following table presents selected financial information with respect to the Company’s reportable business segments for the years
ended December 31, 2016, 2015 and 2014.
Retail
Mortgage
Division
Retail
Mortgage
Division
$
Banking
Division
SBA
Division
Total
$
$
$
SBA
Division
(dollars in thousands)
(dollars in thousands)
Interest income .....................................................................
Interest expense ....................................................................
Interest income .....................................................................
Net interest income ...............................................................
Interest expense ....................................................................
Provision for loan losses .......................................................
Net interest income ...............................................................
Noninterest income ...............................................................
Noninterest expense..............................................................
Provision for loan losses .......................................................
Noninterest income ...............................................................
Salaries and employee benefits .........................................
Noninterest expense..............................................................
Occupancy and equipment expenses ................................
Data processing and communications expenses ...............
Salaries and employee benefits .........................................
Other expenses .................................................................
Occupancy and equipment expenses ................................
Total noninterest expense .....................................................
Data processing and communications expenses ...............
Income before income tax expense ......................................
Other expenses .................................................................
Income tax expense ..............................................................
Total noninterest expense .....................................................
Net income ...........................................................................
Income before income tax expense ......................................
Less preferred stock dividends .............................................
Income tax expense ..............................................................
Net income available to common shareholders ....................
Net income ...........................................................................
Less preferred stock dividends .............................................
Total assets ........................................................................... $ 6,252,956 $ 358,497 $ 189,670 $ 90,908
$ -
Other intangible assets, net ...................................................
Net income available to common shareholders ....................
$ -
Goodwill ...............................................................................
14,110
-
14,110
14,110
-
573
14,110
45,162
573
45,162
30,689
1,928
1,300
30,689
4,485
1,928
38,402
1,300
20,297
4,485
7,104
38,402
13,193
20,297
-
7,104
13,193
13,193
-
$ - $ -
$ - $ -
Banking
Division
$ 214,310
18,955
$ 214,310
195,355
18,955
2,081
195,355
53,168
2,081
53,168
72,824
22,211
23,184
72,824
54,707
22,211
172,926
23,184
73,516
54,707
22,040
172,926
51,476
73,516
-
22,040
51,476
51,476
-
$ 17,428
51,476
$ 125,532
3,959
739
3,959
3,220
739
847
3,220
5,681
847
5,681
2,705
254
4
2,705
712
254
3,675
4
4,379
712
1,533
3,675
2,846
4,379
-
1,533
2,846
-
Total assets ........................................................................... $ 6,252,956 $ 358,497 $ 189,670 $ 90,908
$ -
Other intangible assets, net ...................................................
$ -
Goodwill ...............................................................................
$ - $ -
$ - $ -
$ 17,428
$ 125,532
13,193
4,585
2,846
2,846
F-69
$
$
$
$
$
$
$
Total
$ 239,065
19,694
$ 239,065
219,371
19,694
4,091
219,371
105,801
4,091
105,801
106,837
24,397
24,591
106,837
60,010
24,397
215,835
24,591
105,246
60,010
33,146
215,835
72,100
105,246
-
33,146
72,100
-
72,100
$
$ 6,892,031
$ 17,428
$
$ 125,532
72,100
$ 6,892,031
$ 17,428
$ 125,532
$
$
Year Ended
December 31, 2016
Warehouse
Year Ended
Lending
December 31, 2016
Division
Warehouse
Lending
Division
6,686
-
6,686
6,686
-
590
6,686
1,790
590
1,790
619
4
103
619
106
4
832
103
7,054
106
2,469
832
4,585
7,054
-
2,469
4,585
4,585
-
$
F-69
Interest income .....................................................................
Interest expense ....................................................................
Net interest income ...............................................................
Provision for loan losses .......................................................
Noninterest income ...............................................................
Noninterest expense..............................................................
Salaries and employee benefits .........................................
Occupancy and equipment expenses ................................
Data processing and communications expenses ...............
Other expenses .................................................................
Total noninterest expense .....................................................
Income before income tax expense ......................................
Income tax expense ..............................................................
Net income ...........................................................................
Less preferred stock dividends .............................................
Retail
Mortgage
Division
Year Ended
December 31, 2015
Warehouse
Lending
Division
(dollars in thousands)
$
$
8,821
-
8,821
417
34,498
22,112
1,674
1,065
3,787
28,638
14,264
4,992
9,272
-
4,137
-
4,137
-
1,364
519
7
95
123
744
4,757
1,665
3,092
-
SBA
Division
Total
$
3,273
471
2,802
-
5,473
3,189
194
8
522
3,913
4,362
1,527
2,835
-
$ 190,393
14,856
175,537
5,264
85,586
94,003
21,195
19,849
64,068
199,115
56,744
15,897
40,847
-
Banking
Division
$ 174,162
14,385
159,777
4,847
44,251
68,183
19,320
18,681
59,636
165,820
33,361
7,713
25,648
-
Net income available to common shareholders ....................
$
25,648
$
9,272
$
3,092
$
2,835
$
40,847
Total assets ...........................................................................
Other intangible assets, net ...................................................
Goodwill ...............................................................................
$ 5,166,045
$ 17,058
$ 90,082
$ 246,730 $ 101,893
$ - $ -
$ - $ -
$ 74,272
$ -
$ -
$ 5,588,940
$ 17,058
$ 90,082
Interest income .....................................................................
Interest expense ....................................................................
Net interest income ...............................................................
Provision for loan losses .......................................................
Noninterest income ...............................................................
Noninterest expense..............................................................
Salaries and employee benefits .........................................
Occupancy and equipment expenses ................................
Data processing and communications expenses ...............
Other expenses .................................................................
Total noninterest expense .....................................................
Income before income tax expense ......................................
Income tax expense ..............................................................
Net income ...........................................................................
Less preferred stock dividends .............................................
Retail
Mortgage
Division
Year Ended
December 31, 2014
Warehouse
Lending
Division
(dollars in thousands)
$
$
5,344
-
5,344
826
24,959
15,918
1,342
1,043
3,603
21,906
7,571
2,650
4,921
-
2,016
-
2,016
-
655
255
1
54
392
702
1,969
689
1,280
-
SBA
Division
Total
$
2,308
242
2,066
-
4,885
2,604
81
18
749
3,452
3,499
1,225
2,274
-
$ 164,566
14,680
149,886
5,648
62,836
73,878
17,521
15,551
43,919
150,869
56,205
17,482
38,723
286
Banking
Division
$ 154,898
14,438
140,460
4,822
32,337
55,101
16,097
14,436
39,175
124,809
43,166
12,918
30,248
286
Net income available to common shareholders ....................
$
29,962
$
4,921
$
1,280
$
2,274
$
38,437
Total assets ...........................................................................
Other intangible assets, net ...................................................
Goodwill ...............................................................................
$ 3,751,503
$ 8,221
$ 63,547
$ 164,588 $ 58,502
$ - $ -
$ - $ -
$ 62,484
$ -
$ -
$ 4,037,077
$ 8,221
$ 63,547
F-70
NOTE 24 - QUARTERLY FINANCIAL DATA (unaudited)
The following table sets forth certain consolidated quarterly financial information of the Company. During the first quarter of 2016, the
Company completed the acquisition of JAXB. The Company recorded approximately $4.1 million of after-tax merger related charges
from this acquisition. During the fourth quarter of 2016, the Company recorded approximately $3.7 million of after-tax compliance
resolution expense. During the second quarter of 2015, the Company completed the acquisition of Merchants and completed the
acquisition and data conversion of 18 additional branches in South Georgia and North Florida from Bank of America. The Company
recorded approximately $3.7 million of after-tax merger related charges from these acquisitions. Additionally, during the second quarter
of 2015, the Company recorded $7.3 million of after-tax OREO write-downs and other credit-related resolution expenses related to an
aggressive write-down on remaining non-performing assets.
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
Merger and conversion charges
Income before income taxes
Income tax
Net income
Per Share Data
Net income – basic
Net income – diluted
Common dividends - cash
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
Merger and conversion charges
Income before income taxes
Income tax
Net income
Per Share Data
Net income – basic
Net income – diluted
Common dividends - cash
Quarters Ended December 31, 2016
4
3
2
1
(dollars in thousands, except per share data)
$ 62,956
5,677
57,279
1,710
55,569
24,272
54,660
17
25,164
6,987
$ 18,177
$ 62,210
5,143
57,067
811
56,256
28,864
53,199
-
31,921
10,364
$ 21,557
$ 59,340
4,751
54,589
889
53,700
28,379
52,359
-
29,720
9,671
$ 20,049
$ 54,559
4,123
50,436
681
49,755
24,286
49,241
6,359
18,441
6,124
$ 12,317
$
0.52
0.52
0.10
$
0.62
0.61
0.10
$
0.58
0.57
0.05
$
0.38
0.37
0.05
Quarters Ended December 31, 2015
4
3
2
1
(dollars in thousands, except per share data)
$ 52,601
3,983
48,618
553
48,065
22,407
51,221
1,807
17,444
3,296
$ 14,148
$ 51,195
3,796
47,399
986
46,413
24,978
47,950
446
22,995
7,368
$ 15,627
$
0.44
0.43
0.05
$
0.49
0.48
0.05
$ 44,229
3,541
40,688
2,656
$ 42,368
3,536
38,832
1,069
38,032
20,626
51,152
5,712
1,794
486
1,308
0.04
0.04
0.05
$
$
37,763
17,575
40,812
15
14,511
4,747
9,764
0.32
0.32
0.05
$
$
F-71
NOTE 25. CONDENSED FINANCIAL INFORMATION OF AMERIS BANCORP (PARENT COMPANY ONLY)
CONDENSED BALANCE SHEETS
DECEMBER 31, 2016 AND 2015
(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
2016
2015
457
$
767,682
7,706
5,847
$
617,134
6,717
$ 775,845
$ 629,698
$ 6,330
38,850
84,228
$ 6,065
39,000
69,874
129,408
114,939
646,437
514,759
$ 775,845
$ 629,698
F-72
CONDENSED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(dollars in thousands)
Income
Dividends from subsidiaries
Other income
Total income
Expense
Interest expense
Other expense
Total expense
2016
2015
2014
$34,631
208
$10,000
59
$29,000
235
34,839
10,059
29,235
6,280
2,825
4,813
1,521
4,558
2,253
9,105
6,334
6,811
Earnings before income tax benefit and equity in undistributed income of subsidiaries
25,734
3,725
22,424
Income tax benefit
Earnings before equity in undistributed income of subsidiaries
Equity in undistributed income of subsidiaries
Net income
Preferred stock dividends
Net income available to common shareholders
2,972
2,382
2,468
28,706
6,107
24,892
43,394
34,740
13,831
72,100
40,847
38,723
-
-
286
$72,100
$40,847
$38,437
F-73
CONDENSED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
(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
Undistributed earnings of subsidiaries
(Increase) decrease in interest payable
Decrease in tax receivable
Provision for deferred taxes
Other operating activities
Total adjustments
2016
2015
2014
$ 72,100
$ 40,847
$ 38,723
2,261
(43,394)
(63)
(3,224)
508
(528)
(44,440)
1,485
(34,740)
20
(2,656)
188
866
(34,837)
2,058
(13,831)
(214)
(256)
(426)
(1,558)
(14,227)
Net cash provided by (used in) operating activities
27,660
6,010
24,496
INVESTING ACTIVITIES
Investment in subsidiary
Net cash proceeds received from (paid for) acquisitions
Net cash provided by investing activities
FINANCING ACTIVITIES
Issuance of common stock
Purchase of treasury shares
Dividends paid preferred stock
Dividends paid common stock
Proceeds from other borrowings
Repayment of other borrowings
Repurchase of preferred stock
Proceeds from exercise of stock options
-
(23,205)
(23,205)
(60,000)
(49,940)
(109,940)
-
144
144
-
(1,225)
-
(8,584)
14,000
(15,000)
-
964
114,889
(732)
-
(6,439)
-
-
-
1,191
-
(474)
(286)
(4,016)
14,000
(9,005)
(28,000)
459
Net cash provided by (used in) financing activities
(9,845)
108,909
(27,322)
Net change in cash and due from banks
Cash and due from banks at beginning of year
Cash and due from banks at end of year
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for interest
Cash paid during the year for income taxes
(5,390)
5,847
4,979
868
(2,682)
3,550
$ 457
$ 5,847
$
868
$ 6,343
-
$
$ 4,793
-
$
$ 4,772
-
$
F-74
REGISTRANT’S SUBSIDIARIES
Name of Subsidiary
Ameris Bank
Ameris Statutory Trust I
Ameris Sub Holding Company, Inc.
Moultrie Real Estate Holdings, Inc.
Quitman Real Estate Holdings, Inc.
Thomas Real Estate Holdings, Inc.
Citizens Real Estate Holdings, Inc.
Cairo Real Estate Holdings, Inc.
Southland Real Estate Holdings, Inc.
Cordele Real Estate Holdings, Inc.
First National Real Estate Holdings, Inc.
M&F Real Estate Holdings, Inc.
Tri-County Real Estate Holdings, Inc.
First National Banc Statutory Trust I
Prosperity Bank Statutory Trust II
Prosperity Bank Statutory Trust III
Prosperity Bank Statutory Trust IV
Prosperity Banking Capital Trust I
Prosperity Land Holdings, LLC
Coastal Bankshares Statutory Trust I
Coastal Bankshares Statutory Trust II
Merchants & Southern Statutory Trust I
Merchants & Southern Statutory Trust II
Atlantic BancGroup, Inc. Statutory Trust I
Jacksonville Statutory Trust I
Jacksonville Statutory Trust II
Jacksonville Bancorp, Inc. Statutory Trust III
East Arlington, Inc.
Fountain Financial, Inc.
Jarrett Point, LLC
Parman Place, Inc.
S. Pt. Properties, Inc.
TJB Properties, LLC
Exhibit 21.1
State of Incorporation or Organization
Georgia
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Alabama
Delaware
Delaware
Delaware
Delaware
Delaware
Connecticut
Delaware
Delaware
Delaware
Florida
Delaware
Connecticut
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Florida
Florida
Florida
Florida
Florida
Florida
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statements on Form S-3 (Nos. 333-202277 and 333-216035) and Form
S-8 (Nos. 333-131244, 333-197208 and 333-200597) of Ameris Bancorp of our report dated February 27, 2017, relating to the
financial statements and effectiveness of internal control over financial reporting, appearing in this Annual Report on Form 10-K.
/s/ CROWE HORWATH LLP
Exhibit 23.1
Atlanta, Georgia
February 27, 2017
Exhibit 31.1
I, Edwin W. Hortman, Jr., certify that:
CERTIFICATION
1.
2.
3.
4.
I have reviewed this Annual Report on Form 10-K for the year ended December 31, 2016, of Ameris Bancorp;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading
with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report;
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined
in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under
our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this
report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
and
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons
performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial
information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant’s internal control over financial reporting.
Dated: February 27, 2017
/s/ Edwin W. Hortman, Jr.
Edwin W. Hortman, Jr.,
President and Chief Executive Officer
(principal executive officer)
Exhibit 31.2
I, Dennis J. Zember Jr., certify that:
CERTIFICATION
1.
2.
3.
4.
I have reviewed this Annual Report on Form 10-K for the year ended December 31, 2016, of Ameris Bancorp;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading
with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report;
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined
in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under
our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this
report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
and
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons
performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial
information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant’s internal control over financial reporting.
Dated: February 27, 2017
/s/ Dennis J. Zember Jr.
Dennis J. Zember Jr.,
Executive Vice President, Chief Financial Officer and
Chief Operating Officer
(principal accounting and financial officer)
SECTION 1350 CERTIFICATION
Exhibit 32.1
I, Edwin W. Hortman, Jr., President and Chief Executive Officer of Ameris Bancorp (the “Company”), do hereby certify, in
accordance with 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
1.
2.
The Annual Report on Form 10-K of the Company for the year ended December 31, 2016 (the “Periodic Report”) fully
complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended; and
The information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of
operations of the Company.
Dated: February 27, 2017
/s/ Edwin W. Hortman, Jr.
Edwin W. Hortman, Jr.,
President and Chief Executive Officer
(principal executive officer)
SECTION 1350 CERTIFICATION
Exhibit 32.2
I, Dennis J. Zember Jr., Executive Vice President, Chief Financial Officer and Chief Operating Officer of Ameris Bancorp (the
“Company”), do hereby certify, in accordance with 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002, that, to my knowledge:
1.
2.
The Annual Report on Form 10-K of the Company for the year ended December 31, 2016 (the “Periodic Report”) fully
complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended; and
The information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of
operations of the Company.
Dated: February 27, 2017
/s/ Dennis J. Zember Jr.
Dennis J. Zember Jr.,
Executive Vice President, Chief Financial Officer and
Chief Operating Officer
(principal accounting and financial officer)
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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 2016.
CALENDAR PERIOD
______________________________________________________________________
2016
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
SALES PRICE
Low
High
$24.96 $33.81
$27.73 $32.76
$28.90 $36.20
$34.61 $47.70
$.05
$.05
$.10
$.10
DIVIDENDS
SHAREHOLDER SERVICES
Computershare is Ameris Bancorp’s stock transfer agent and administers all matters related to our stock. You may 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: (800) 568-3476
Investor Centre™ portal: www.computershare.com/investor
If your shares are held in a brokerage account, please contact your broker or financial advisor.
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 2016.
Please direct requests to:
Ameris Bancorp
Attention: Angela Redd, Investor Relations
1301 Riverplace Boulevard, Suite 2600
Jacksonville, FL 32207
ANNUAL MEETING OF SHAREHOLDERS
The 2017 Annual Meeting of Shareholders of Ameris Bancorp will be held at 9:30 AM (ET), Tuesday, May 16, 2017, at 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 COMMUNITIES
SOUTH CAROLINA
Beaufort
Charleston West Ashley
Columbia
Greenville
Hilton Head Island
Irmo
Lexington
Mt. Pleasant
Summerville
TENNESSEE
Franklin*
*Denotes communities with
Mortgage only locations.
Montgomery
Albany
Tifton
Nashville
Greensboro
Raleigh
Charlotte
Wilmington
Greenville
Columbia
Birmingham
Atlanta
Macon
Augusta
Beaufort
Charleston
Hilton Head
Dothan
Mobile
Pensacola
Panama City
Savannah
Brunswick
Corporate
Headquarters
Moultrie
Valdosta
Tallahassee
Executive
Headquarters
Jacksonville
St. Augustine
Gainesville
Orlando
Tampa
Ft. Lauderdale
Miami
ALABAMA
Abbeville
Birmingham
Dothan
Eufaula
FLORIDA
Blountstown
Crawfordville
Cross City
Defuniak Springs
Fleming Island
Gainesville
High Springs
Jacksonville
Jacksonville Beach
Keystone Heights
Lake City
Live Oak
Lynn Haven
Melrose
Neptune Beach
Ocala
Orange Park
Ormond Beach
Palatka
Palm Coast
Panama City
Panama City Beach
St. Augustine
Tallahassee
Trenton
GEORGIA
Albany
Atlanta Midtown
Brunswick
Buena Vista
Butler
Cairo
Colquitt
Cordele
Doerun
Donalsonville
Doulgas
Dublin
Duluth*
Ellaville
Fitzgerald
Hinesville
Jekyll Island
Lyons
Marietta*
Moultrie
Ocilla
Pooler
Quitman
Richmond Hill
Rincon
Savannah
St. Marys
St. Simons Island
Stockbridge*
Thomasville
Tifton
Valdosta
Vidalia
Waycross
170 | AMERIS BANCORP
2016 AMERIS BANK COMMUNITIES
Nashville
Greensboro
Raleigh
Charlotte
Wilmington
Greenville
Columbia
Birmingham
Atlanta
Macon
Augusta
Beaufort
Charleston
Hilton Head
Montgomery
Albany
Dothan
Mobile
Pensacola
Panama City
Tifton
Corporate
Headquarters
Moultrie
Valdosta
Tallahassee
Savannah
Brunswick
Executive
Headquarters
Jacksonville
St. Augustine
Gainesville
Orlando
Tampa
Ft. Lauderdale
Miami
ANNUAL REPORT 2016 | 171
2016 310 First Street, SE
PO Box 3668
Moultrie, GA 31776
(P) 229.890.1111 | (F) 229.890.2235
amerisbank.com
002CSN790A Annual Report/10K Wrap