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.

The following table presents the assets acquired and liabilities of JAXB assumed as of March 11, 2016 and their fair value estimates.



(dollars in thousands)	As Recorded by JAXB			Initial Fair Value Adjustments				Subsequent Fair Value Adjustments				As Recorded by Ameris
Assets
Cash and cash equivalents	$	9,704		$	—			$	—			$	9,704
Federal funds sold and interest-bearing balances	7,027			—				—				7,027
Investment securities	60,836			(942		)	(a)	—				59,894
Other investments	2,458			—				—				2,458
Loans	416,831			(15,746		)	(b)	553			(j)	401,638
Less allowance for loan losses	(12,613		)	12,613			(c)	—				—
Loans, net	404,218			(3,133		)		553				401,638
Other real estate owned	2,873			(1,035		)	(d)	88			(k)	1,926
Premises and equipment	4,798			—				(119		)	(l)	4,679
Intangible assets	288			5,566			(e)	(1,108		)	(m)	4,746
Other assets	14,141			23,266			(f)	(3,524		)	(n)	33,883
Total assets	$	506,343		$	23,722			$	(4,110	)		$	525,955
Liabilities
Deposits:
Noninterest-bearing	$	123,399		$	—			$	—			$	123,399
Interest-bearing	277,539			421			(g)	—				277,960
Total deposits	400,938			421				—				401,359
Other borrowings	48,350			84			(h)	—				48,434
Subordinated deferrable interest debentures	16,294			(3,393		)	(i)	—				12,901
Other liabilities	2,354			—				—				2,354
Total liabilities	467,936			(2,888		)		—				465,048
Net identifiable assets acquired over (under) liabilities assumed	38,407			26,610				(4,110		)		60,907
Goodwill	—			31,375				4,110				35,485
Net assets acquired over (under) liabilities assumed	$	38,407		$	57,985			$	—			$	96,392
Consideration:
Ameris Bancorp common shares issued	2,549,469
Price per share of the Company's common stock	$	28.42
Company common stock issued	$	72,455
Cash exchanged for shares	$	23,937
Fair value of total consideration transferred	$	96,392

Explanation of fair value adjustments


(a)	Adjustment reflects the fair value adjustments of the portfolio of securities available for sale as of the acquisition date.


(b)	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.


(c)	Adjustment reflects the elimination of JAXB’s allowance for loan losses.


(d)	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.


(e)	Adjustment reflects the recording of core deposit intangible on the acquired core deposit accounts.


(f)	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.


(g)	Adjustment reflects the fair value adjustments based on the Company’s evaluation of the acquired deposits.


(h)	Adjustment reflects the fair value adjustments based on the Company’s evaluation of the liability for other borrowings.


(i)	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.


(j)	Adjustment reflects additional recording of fair value adjustment of the acquired loan portfolio.


(k)	Adjustment reflects additional recording of fair value adjustment of other real estate owned.


(l)	Adjustment reflects recording of fair value adjustment of the premises and equipment.


(m)	Adjustment reflects adjustment to the core deposit intangible on the acquired core deposit accounts.


(n)	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	$	42,314
Non-accretable difference	(9,181		)
Cash flows expected to be collected	33,133
Accretable yield	(6,182		)
Total purchased credit-impaired loans acquired	$	26,951

The following table presents the acquired loan data for the JAXB acquisition.



(dollars in thousands)	Fair Value of Acquired Loans at Acquisition Date		Gross Contractual Amounts Receivable at Acquisition Date		Best Estimate at Acquisition Date of Contractual Cash Flows Not Expected to be Collected
Acquired receivables subject to ASC 310-30	$	26,951	$	42,314	$	9,181
Acquired receivables not subject to ASC 310-30	$	374,687	$	488,346	$	—

Branch Acquisition

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.

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.



(dollars in thousands)	As Recorded by Bank of America		Initial Fair Value Adjustments				Subsequent Fair Value Adjustments				As Recorded by Ameris
Assets
Cash and cash equivalents	$	630,220	$	—			$	—			$	630,220
Loans	4,363		—				(364		)	(d)	3,999
Premises and equipment	10,348		1,060			(a)	(755		)	(e)	10,653
Intangible assets	—		7,651			(b)	985			(f)	8,636
Other assets	126		—				—				126
Total assets	$	645,057	$	8,711			$	(134	)		$	653,634
Liabilities
Deposits:
Noninterest-bearing	$	149,854	$	—			$	—			$	149,854
Interest-bearing	495,110		(215		)	(c)	—				494,895
Total deposits	644,964		(215		)		—				644,749
Other liabilities	93		—				—				93
Total liabilities	645,057		(215		)		—				644,842
Net identifiable assets acquired over (under) liabilities assumed	—		8,926				(134		)		8,792
Goodwill	—		11,076				134				11,210
Net assets acquired over (under) liabilities assumed	$	—	$	20,002			$	—			$	20,002
Consideration:
Cash paid as deposit premium	$	20,002
Fair value of total consideration transferred	$	20,002

Explanation of fair value adjustments


(a)	Adjustment reflects the fair value adjustments of the premises and equipment as of the acquisition date.


(b)	Adjustment reflects the recording of core deposit intangible on the acquired core deposit accounts.


(c)	Adjustment reflects the fair value adjustments based on the Company’s evaluation of the acquired deposits.


(d)	Adjustment reflects the fair value adjustments based on the Company’s evaluation of the acquired loan portfolio.


(e)	Adjustment reflects additional recording of fair value adjustment of the premises and equipment.


(f)	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.

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)	As Recorded by Merchants			Initial Fair Value Adjustments				Subsequent Fair Value Adjustments				As Recorded by Ameris
Assets
Cash and cash equivalents	$	7,527		$	—			$	—			$	7,527
Federal funds sold and interest-bearing balances	106,188			—				—				106,188
Investment securities	164,421			(553		)	(a)	(639		)	(j)	163,229
Other investments	872			—				(253		)	(k)	619
Loans	199,955			(8,500		)	(b)	91			(l)	191,546
Less allowance for loan losses	(3,354		)	3,354			(c)	—				—
Loans, net	196,601			(5,146		)		91				191,546
Other real estate owned	4,082			(1,115		)	(d)	—				2,967
Premises and equipment	14,614			(3,680		)	(e)	—				10,934
Intangible assets	—			4,577			(f)	(634		)	(m)	3,943
Other assets	2,333			2,335			(g)	(1,109		)	(n)	3,559
Total assets	$	496,638		$	(3,582	)		$	(2,544	)		$	490,512
Liabilities
Deposits:
Noninterest-bearing	$	121,708		$	—			$	—			$	121,708
Interest-bearing	286,112			—				41,588			(o)	327,700
Total deposits	407,820			—				41,588				449,408
Federal funds purchased and securities sold under agreements to repurchase	41,588			—				(41,588		)	(o)	—
Subordinated deferrable interest debentures	6,186			(2,680		)	(h)	—				3,506
Other liabilities	2,151			81			(i)	—				2,232
Total liabilities	457,745			(2,599		)		—				455,146
Net identifiable assets acquired over (under) liabilities assumed	38,893			(983		)		(2,544		)		35,366
Goodwill	—			12,090				2,544				14,634
Net assets acquired over (under) liabilities assumed	$	38,893		$	11,107			$	—			$	50,000
Consideration:
Cash exchanged for shares	$	50,000
Fair value of total consideration transferred	$	50,000

Explanation of fair value adjustments


(a)	Adjustment reflects the fair value adjustments of the investment securities available for sale portfolio as of the acquisition date.


(b)	Adjustment reflects the fair value adjustments based on the Company’s evaluation of the acquired loan portfolio.


(c)	Adjustment reflects the elimination of Merchants’ allowance for loan losses.


(d)	Adjustment reflects the fair value adjustment based on the Company’s evaluation of the acquired OREO portfolio.


(e)	Adjustment reflects the fair value adjustment based on the Company’s evaluation of the acquired premises.


(f)	Adjustment reflects the recording of core deposit intangible on the acquired core deposit accounts.


(g)	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.


(h)	Adjustment reflects the fair value adjustment to the subordinated deferrable interest debentures at the acquisition date.


(i)	Adjustment reflects the fair value adjustments based on the Company’s evaluation of interest rate swap liabilities.


(j)	Adjustment reflects additional fair value adjustments of the investment securities available for sale portfolio as of the acquisition date.


(k)	Adjustment reflects the fair value adjustments of other investments as of the acquisition date.


(l)	Adjustment reflects additional recording of fair value adjustments of the acquired loan portfolio.


(m)	Adjustment reflects adjustment to the core deposit intangible on the acquired core deposit accounts.


(n)	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.


(o)	Subsequent to acquisition, the acquired securities sold under agreements to repurchase were converted to deposit accounts.

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	$	17,201
Non-accretable difference	(2,712		)
Cash flows expected to be collected	14,489
Accretable yield	(3,254		)
Total purchased credit-impaired loans acquired	$	11,235

The following table presents the acquired loan data for the Merchants acquisition.



(dollars in thousands)	Fair Value of Acquired Loans at Acquisition Date		Gross Contractual Amounts Receivable at Acquisition Date		Best Estimate at Acquisition Date of Contractual Cash Flows Not Expected to be Collected
Acquired receivables subject to ASC 310-30	$	11,235	$	14,086	$	2,712
Acquired receivables not subject to ASC 310-30	$	180,311	$	184,906	$	—

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.



	Year Ended December 31,
(dollars in thousands, except per share data)	2016		2015
Net interest income and noninterest income	$	329,248	$	286,573
Net income	$	72,835	$	47,994
Net income available to common shareholders	$	72,835	$	47,994
Income per common share available to common shareholders – basic	$	2.09	$	1.40
Income per common share available to common shareholders – diluted	$	2.07	$	1.38
Average number of shares outstanding, basic	34,841		34,311
Average number of shares outstanding, diluted	35,196		34,676