EX-99.4 5 ex994proformafidelity.htm EXHIBIT 99.4 Exhibit


UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION
 
Since January 1, 2018, Ameris Bancorp (“Ameris” or the “Company”) completed four acquisitions: US Premium Finance Holding Company, Atlantic Coast Financial Corporation, Hamilton State Bancshares, Inc. and Fidelity Southern Corporation.

US Premium Finance Holding Company (“USPF”)

On January 31, 2018, the Company purchased the final 70% of the outstanding shares of common stock of USPF, completing its acquisition of USPF and making USPF a wholly owned subsidiary of the Company. Through a series of three acquisition transactions that closed on January 18, 2017, January 3, 2018 and January 31, 2018, the Company issued a total of 1,073,158 shares of Ameris common stock at a fair value of $55.9 million and paid $21.4 million in cash to the former shareholders of USPF. Pursuant to the terms of the stock purchase agreement under which the Company purchased the final 70% of the outstanding shares of common stock of USPF, the selling shareholders of USPF could receive additional cash payments aggregating up to $5.8 million based on the achievement by the Company's premium finance division of certain income targets, between January 1, 2018 and June 30, 2019. The total contingent consideration paid was $1.2 million based on results achieved through the applicable measurement dates. As of the January 31, 2018 acquisition date, the present value of the contingent earn-out consideration expected to be paid was $5.7 million, and including the fair value of the Ameris common stock issued, cash paid and the present value of the contingent earn-out consideration expected to be paid, the aggregate purchase price of USPF amounted to $83.0 million. The acquisition of USPF did not constitute a business acquisition at a significance level requiring the filing of financial statements as contemplated by Rule 3-05 of Regulation S-X.

Atlantic Coast Financial Corporation (“Atlantic”)

On May 25, 2018, the Company acquired Atlantic through the merger of Atlantic with and into the Company, with Ameris as the surviving entity in the merger. At that time, Atlantic's wholly owned banking subsidiary, Atlantic Coast Bank, also merged with and into Ameris’s wholly owned banking subsidiary, Ameris Bank. The acquisition expanded the Company's existing market presence, as Atlantic Coast Bank had a total of 12 full-service branches located in Jacksonville and Jacksonville Beach, Duval County, Florida, Waycross, Georgia and Douglas, Georgia. Under the terms of the merger agreement, Atlantic's shareholders received 0.17 shares of Ameris common stock and $1.39 in cash for each share of Atlantic common stock they previously held. As a result, the Company issued 2,631,520 common shares at a fair value of $147.8 million and paid $21.5 million in cash to Atlantic's shareholders as merger consideration. The merger with Atlantic did not constitute a business acquisition at a significance level requiring the filing of financial statements as contemplated by Rule 3-05 of Regulation S-X.

Hamilton State Bancshares, Inc. (“Hamilton”)

On June 29, 2018, the Company acquired Hamilton through the merger of Hamilton with and into the Company, with Ameris as the surviving entity in the merger. At that time, Hamilton's wholly owned banking subsidiary, Hamilton State Bank, also merged with and into Ameris Bank. The acquisition expanded the Company's existing market presence, as Hamilton State Bank had a total of 28 full-service branches located in Atlanta, Georgia and the surrounding area as well as in Gainesville, Georgia. Under the terms of the merger agreement, Hamilton's shareholders received 0.16 shares of Ameris common stock and $0.93 in cash for each share of Hamilton voting common stock or nonvoting common stock they previously held. As a result, the Company issued 6,548,385 common shares at a fair value of $349.4 million and paid $47.8 million in cash to Hamilton's shareholders as merger consideration.

Fidelity Southern Corporation (“Fidelity”)

On July 1, 2019, the Company acquired Fidelity through the merger of Fidelity with and into the Company, with Ameris as the surviving entity in the merger. At that time, Fidelity's wholly owned banking subsidiary, Fidelity Bank, also merged with and into Ameris Bank. The acquisition expanded the Company's existing market presence in Georgia and Florida, as Fidelity Bank had a total of 62 branches, 46 of which were located in Georgia and 16 of which were located in Florida. Under the terms of the merger agreement, Fidelity's shareholders received 0.80 shares of Ameris common stock for each share of Fidelity common stock they previously held. As a result, the Company issued 22,181,522 common shares at a fair value of $869.3 million to Fidelity's shareholders as merger consideration.
 
The following unaudited pro forma combined condensed financial information and accompanying notes have been prepared to illustrate the effects of the merger of Fidelity with and into Ameris under the acquisition method of accounting and show the impact on the historical financial condition and results of operations of Ameris and Fidelity.





The unaudited pro forma combined condensed balance sheet as of June 30, 2019, is presented as if the Fidelity acquisition had occurred on June 30, 2019. The unaudited pro forma combined condensed income statements for the six months ended June 30, 2019 and for the year ended December 31, 2018, are presented as if the USPF, Atlantic, Hamilton and Fidelity acquisitions had occurred on January 1, 2018. The historical combined condensed financial information has been adjusted to reflect factually supportable items that are directly attributable to the USPF, Atlantic, Hamilton and Fidelity acquisitions and, with respect to the income statements only, expected to have a continuing impact on consolidated results of operations.
 
The unaudited pro forma combined condensed financial information is provided for informational purposes only. The unaudited pro forma combined condensed financial information is not necessarily, and should not be assumed to be, an indication of the results that would have been achieved had the transactions been completed as of the dates indicated above or that may be achieved in the future. The preparation of the unaudited pro forma combined condensed financial information and related adjustments required management to make certain assumptions and estimates. The unaudited pro forma combined condensed financial information should be read together with:

•
the accompanying notes to the unaudited pro forma combined condensed financial information;
•
Ameris’s audited consolidated financial statements and accompanying notes, included in Ameris’s Annual Report on Form 10-K for the year ended December 31, 2018;
•
Fidelity’s audited consolidated financial statements and accompanying notes as of and for the years ended December 31, 2018 and 2017, attached as Exhibit 99.2 to this Current Report on Form 8-K/A;
•
Ameris’s unaudited consolidated financial statements and accompanying notes as of and for the three and six months ended June 30, 2019, included in Ameris’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2019; and
•
Fidelity’s unaudited consolidated financial statements and accompanying notes as of and for the three and six months ended June 30, 2019, attached as Exhibit 99.3 to this Current Report on Form 8-K/A.
 




Unaudited Pro Forma Combined Condensed Balance Sheet
As of June 30, 2019
(In thousands)
 
 
 
 
 
 
 
 
 
 
Ameris As Reported
 
Fidelity As Reported
 
Fidelity Pro Forma Adjustments
 
 
Ameris Pro Forma Total Consolidated
Assets
 
 
 
 
 
 
 
 
Cash and due from banks
$
151,186

 
$
26,264

 
$
(19
)
A
 
$
177,431

Federal funds sold and interest-bearing deposits in banks
186,969

 
217,936

 
—

 
 
404,905

Time deposits in other banks
748

 
—

 
—

 
 
748

Investment securities available for sale, at fair value
1,273,244

 
279,746

 
19,703

B
 
1,572,693

Investment securities held to maturity, at amortized cost
—

 
19,595

 
(19,595
)
C
 
—

Other investments
32,481

 
7,449

 
—

 
 
39,930

Loans held for sale
261,073

 
328,657

 
—

 
 
589,730

 
 
 
 
 
 
 
 
—

Loans held for investment
9,049,870

 
3,587,412

 
(67,396
)
D
 
12,569,886

Less allowance for loan losses
(31,793
)
 
(31,245
)
 
31,245

E
 
(31,793
)
Loans held for investment, net
9,018,077

 
3,556,167

 
(36,151
)
 
 
12,538,093

 
 
 
 
 
 
 
 
 
Other real estate owned, net
14,675

 
7,605

 
(1,191
)
F
 
21,089

Premises and equipment, net
141,378

 
93,662

 
30,900

G
 
265,940

Goodwill
501,140

 
5,164

 
399,217

H
 
905,521

Other intangible assets, net
52,437

 
5,506

 
45,104

I
 
103,047

Cash value of bank owned life insurance
105,064

 
72,328

 
—

 
 
177,392

Deferred income taxes, net
30,812

 
104

 
(23,000
)
J
 
7,916

Other assets
120,052

 
157,863

 
—

 
 
277,915

Total assets
$
11,889,336

 
$
4,778,046

 
$
414,968

 
 
$
17,082,350

 
 
 
 
 
 
 
 
 
Liabilities
 

 
 
 
 
 
 
 
Deposits:
 

 
 
 
 
 
 
 
Noninterest-bearing
$
2,771,443

 
$
1,301,829

 
$
—

 
 
$
4,073,272

Interest-bearing
6,810,927

 
2,740,552

 
(699
)
K
 
9,550,780

Total deposits
9,582,370

 
4,042,381

 
(699
)
 
 
13,624,052

Securities sold under agreements to repurchase
3,307

 
22,345

 
—

 
 
25,652

Other borrowings
564,636

 
149,367

 
1,333

L
 
715,336

Subordinated deferrable interest debentures
89,871

 
46,393

 
(9,675
)
M
 
126,589

FDIC loss-share payable, net
20,596

 
—

 
—

 
 
20,596

Deferred tax liability, net
—

 
12,222

 
(12,222
)
N
 
—

Other liabilities
91,435

 
65,027

 
 
 
 
156,462

Total liabilities
10,352,215

 
4,337,735

 
(21,263
)
 
 
14,668,687

 
 
 
 
 
 
 
 
 
Shareholders’ Equity
 

 
 
 
 
 
 
 
Preferred stock
—

 
—

 
—

 
 
—

Common stock
49,099

 
209,852

 
(187,670
)
O
 
71,281

Capital surplus
1,053,500

 
35,089

 
819,271

P
 
1,907,860

Retained earnings
446,182

 
188,144

 
(188,144
)
Q
 
446,182

Accumulated other comprehensive income, net of tax
16,462

 
7,226

 
(7,226
)
R
 
16,462

Treasury stock, at cost
(28,122
)
 
—

 
—

 
 
(28,122
)
Total shareholders’ equity
1,537,121

 
440,311

 
436,231

 
 
2,413,663

Total liabilities and shareholders’ equity
$
11,889,336

 
$
4,778,046

 
$
414,968

 
 
$
17,082,350






Unaudited Pro Forma Combined Condensed Income Statement
For the six months ended June 30, 2019
(In thousands, except share and per share data)
 
 
 
 
 
 
 
 
 
 
Ameris as Reported
 
Fidelity as Reported
 
Fidelity Pro Forma Adjustments
 
 
Ameris Pro Forma Total Consolidated
Interest income
 

 
 
 
 
 
 
 
Interest and fees on loans
$
229,411

 
$
88,495

 
$
2,886

S
 
$
320,792

Interest on taxable securities
18,426

 
4,769

 
—

 
 
23,195

Interest on nontaxable securities
258

 
161

 
—

 
 
419

Interest on deposits in other banks
5,426

 
1,477

 
—

 
 
6,903

Interest on federal funds sold
436

 
69

 
—

 
 
505

Total interest income
253,957

 
94,971

 
2,886

 
 
351,814

 
 
 
 
 
 
 
 
 
Interest expense
 

 
 
 
 
 
 
 
Interest on deposits
45,138

 
13,168

 
(116
)
T
 
58,190

Interest on other borrowings
7,773

 
5,008

 
225

U
 
13,006

Total interest expense
52,911

 
18,176

 
109

 
 
71,196

 
 
 
 
 
 
 
 
 
Net interest income
201,046

 
76,795

 
2,777

 
 
280,618

Provision for loan losses
8,076

 
3,078

 
—

 
 
11,154

Net interest income after provision for loan losses
192,970

 
73,717

 
2,777

 
 
269,464

 
 
 
 
 
 
 
 
 
Noninterest income
 

 
 
 
 
 
 
 
Service charges on deposit accounts
23,814

 
3,610

 
—

 
 
27,424

Mortgage banking activity
33,200

 
38,470

 
—

 
 
71,670

Other service charges, commissions and fees
1,561

 
4,853

 
—

 
 
6,414

Net gain (loss) on securities
135

 
—

 
—

 
 
135

Gain on sale of SBA loans
2,476

 
1,996

 
—

 
 
4,472

Other noninterest income
4,821

 
(391
)
 
—

 
 
4,430

Total noninterest income
66,007

 
48,538

 
—

 
 
114,545

 
 
 
 
 
 
 
 
 
Noninterest expense
 

 
 
 
 
 
 
 
Salaries and employee benefits
76,811

 
71,067

 
—

 
 
147,878

Occupancy and equipment
16,038

 
6,824

 
432

V
 
23,294

Data processing and communications expenses
16,779

 
10,552

 
—

 
 
27,331

Legal and other professional fees
4,008

 
2,066

 
—

 
 
6,074

Credit resolution-related expenses
1,890

 
837

 
—

 
 
2,727

Advertising and marketing
3,728

 
1,305

 
—

 
 
5,033

Amortization of intangible assets
6,253

 
527

 
2,004

W
 
8,784

FDIC insurance
1,631

 
2,238

 
—

 
 
3,869

Merger and conversion charges
5,532

 
31,661

 
—

 
 
37,193

Other noninterest expenses
24,006

 
15,604

 
—

 
 
39,610

Total noninterest expense
156,676

 
142,681

 
2,436

 
 
301,793

 
 
 
 
 
 
 
 
 
Income before income tax expense
102,301

 
(20,426
)
 
341

 
 
82,216

Income tax expense
23,492

 
(5,271
)
 
72

X
 
18,293

Net income
78,809

 
(15,155
)
 
269

 
 
63,923

 
 
 
 
 
 
 
 
 
Basic earnings per common share
$
1.66

 
$
(0.55
)
 
 
 
 
$
0.92

Diluted earnings per common share
$
1.66

 
$
(0.55
)
 
 
 
 
$
0.92

Weighted average common shares outstanding (in thousands)
 

 
 
 
 
 
 
 
Basic
47,354

 
27,584

 
 
 
 
69,536

Diluted
47,395

 
27,584

 
 
 
 
69,737






Unaudited Pro Forma Combined Condensed Income Statement
For the year ended December 31, 2018
(In thousands, except share and per share data)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ameris as Reported
 
USPF Pro Forma Adjustments
 
 
Atlantic As Reported
 
Atlantic Pro Forma Adjustments
 
 
Hamilton as Reported
 
Hamilton Pro Forma Adjustments
 
 
Fidelity as Reported
 
Fidelity Pro Forma Adjustments
 
 
Ameris Pro Forma Total Consolidated
Interest income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest and fees on loans
$
378,209

 
$
—

 
 
$
8,846

 
$
445

BB
 
$
17,657

 
$
690

EE
 
$
172,673

 
$
5,771

S
 
$
584,291

Interest on taxable securities
29,006

 
—

 
 
265

 
—

 
 
1,488

 
—

 
 
5,991

 
—

 
 
36,750

Interest on nontaxable securities
900

 
—

 
 
29

 
—

 
 
40

 
—

 
 
326

 
—

 
 
1,295

Interest on deposits in other banks
4,984

 
—

 
 
114

 
—

 
 
426

 
—

 
 
1,945

 
—

 
 
7,469

Interest on federal funds sold
227

 
—

 
 
—

 
—

 
 
11

 
—

 
 
510

 
—

 
 
748

Total interest income
413,326

 
—

 
 
9,254

 
445

 
 
19,622

 
690

 
 
181,445

 
5,771

 
 
630,553

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest on deposits
49,054

 
—

 
 
1,438

 
—

 
 
1,513

 
242

FF
 
20,849

 
(182
)
T
 
72,914

Interest on other borrowings
20,880

 
—

 
 
688

 
—

 
 
102

 
41

GG
 
11,051

 
451

U
 
33,213

Total interest expense
69,934

 
—

 
 
2,126

 
—

 
 
1,615

 
283

 
 
31,900

 
269

 
 
106,127

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
343,392

 
—

 
 
7,128

 
445

 
 
18,007

 
407

 
 
149,545

 
5,502

 
 
524,426

Provision for loan losses
16,667

 
—

 
 
168

 
—

 
 
(87
)
 
—

 
 
5,521

 
—

 
 
22,269

Net interest income after provision for loan losses
326,725

 
—

 
 
6,960

 
445

 
 
18,094

 
407

 
 
144,024

 
5,502

 
 
502,157

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Noninterest income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Service charges on deposit accounts
46,128

 
—

 
 
727

 
—

 
 
952

 
—

 
 
6,427

 
—

 
 
54,234

Mortgage banking activity
51,292

 
—

 
 
—

 
—

 
 
164

 
—

 
 
103,077

 
—

 
 
154,533

Other service charges, commissions and fees
3,003

 
—

 
 
19

 
—

 
 
729

 
—

 
 
9,522

 
—

 
 
13,273

Net gain (loss) on securities
(37
)
 
—

 
 
—

 
—

 
 
(3
)
 
—

 
 
—

 
—

 
 
(40
)
Gain on sale of SBA loans
2,728

 
—

 
 
—

 
—

 
 
—

 
—

 
 
6,728

 
—

 
 
9,456

Other noninterest income
15,298

 
—

 
 
490

 
—

 
 
39

 
—

 
 
13,097

 
—

 
 
28,924

Total noninterest income
118,412

 
—

 
 
1,236

 
—

 
 
1,881

 
—

 
 
138,851

 
—

 
 
260,380

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




Unaudited Pro Forma Combined Condensed Income Statement
For the year ended December 31, 2018
(In thousands, except share and per share data)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ameris as Reported
 
USPF Pro Forma Adjustments
 
 
Atlantic As Reported
 
Atlantic Pro Forma Adjustments
 
 
Hamilton as Reported
 
Hamilton Pro Forma Adjustments
 
 
Fidelity as Reported
 
Fidelity Pro Forma Adjustments
 
 
Ameris Pro Forma Total Consolidated
Noninterest expense
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Salaries and employee benefits
149,293

 
—

 
 
3,600

 
—

 
 
6,914

 
—

 
 
149,651

 
—

 
 
309,458

Occupancy and equipment
29,131

 
—

 
 
585

 
—

 
 
1,759

 
—

 
 
13,584

 
863

V
 
45,922

Data processing and communications expenses
30,385

 
—

 
 
582

 
—

 
 
969

 
—

 
 
22,390

 
—

 
 
54,326

Legal and other professional fees
6,386

 
(274
)
Y
 
513

 
—

 
 
445

 
—

 
 
4,233

 
—

 
 
11,303

Credit resolution-related expenses
4,016

 
—

 
 
9

 
—

 
 
367

 
—

 
 
1,649

 
—

 
 
6,041

Advertising and marketing
5,571

 
—

 
 
16

 
—

 
 
20

 
—

 
 
2,853

 
—

 
 
8,460

Amortization of intangible assets
9,512

 
250

Z
 
—

 
148

CC
 
282

 
119

HH
 
1,109

 
3,952

W
 
15,372

FDIC insurance
3,408

 
—

 
 
83

 
—

 
 
125

 
—

 
 
3,613

 
—

 
 
7,229

Merger and conversion charges
20,499

 
—

 
 
233

 
—

 
 
1,509

 
—

 
 
1,176

 
—

 
 
23,417

Other noninterest expenses
35,446

 
—

 
 
729

 
—

 
 
1,815

 
—

 
 
25,034

 
—

 
 
63,024

Total noninterest expense
293,647

 
(24
)
 
 
6,350

 
148

 
 
14,205

 
119

 
 
225,292

 
4,815

 
 
544,552

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income before income tax expense
151,490

 
24

 
 
1,846

 
297

 
 
5,770

 
288

 
 
57,583

 
687

 
 
217,985

Income tax expense
30,463

 
5

AA
 
430

 
62

DD
 
1,370

 
60

II
 
13,760

 
144

X
 
46,294

Net income
$
121,027

 
$
19

 
 
$
1,416

 
$
235

 
 
$
4,400

 
$
228

 
 
$
43,823

 
$
543

 
 
$
171,691

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic earnings per common share
$
2.81

 
 
 
 
$
0.09

 
 
 
 
$
0.11

 
 
 
 
$
1.61

 
 
 
 
$
2.47

Diluted earnings per common share
$
2.80

 
 
 
 
$
0.09

 
 
 
 
$
0.10

 
 
 
 
$
1.61

 
 
 
 
$
2.45

Weighted average common shares outstanding
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
43,142

 
 
 
 
15,438

 
 
 
 
40,411

 
 
 
 
27,155

 
 
 
 
69.642

Diluted
43,248

 
 
 
 
15,449

 
 
 
 
42,478

 
 
 
 
27,259

 
 
 
 
70.016






NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION

Note 1 - Basis of Pro Forma Presentation

The unaudited pro forma combined condensed balance sheet as of June 30, 2019, and the unaudited pro forma combined condensed income statement for the six months ended June 30, 2019 and the year ended December 31, 2018, are based on the historical financial statements of Ameris, USPF, Atlantic, Hamilton and Fidelity after giving effect to the completion of the acquisitions and the assumptions and adjustments described in the accompanying notes. Such financial statements do not reflect cost savings or operating synergies expected to result from the acquisitions, or the costs to achieve these cost savings or operating synergies, or any anticipated disposition of assets that may result from the integration of the operations of the five companies.

The transactions will be accounted for under the acquisition method of accounting in accordance with Accounting Standards Codification (“ASC”) Topic 805, Business Combinations (“ASC 805”). In business combination transactions in which the consideration given is not in the form of cash (that is, in the form of non-cash assets, liabilities incurred, or equity interests issued), measurement of the acquisition consideration is based on the fair value of the consideration given or the fair value of the assets (or net assets) acquired, whichever is more clearly evident and, thus, more reliably measurable. 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 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.

Under ASC 805, all of the assets acquired and liabilities assumed in a business combination are recognized at their acquisition-date fair value, while transaction costs and restructuring costs associated with the business combination are expensed as incurred. The excess of the acquisition consideration over the fair value of assets acquired and liabilities assumed, if any, is allocated to goodwill. Changes in deferred tax asset valuation allowances and income tax uncertainties after the acquisition date generally affect income tax expense. Subsequent to the completion of the acquisition of USPF and the mergers with Atlantic, Hamilton and Fidelity, Ameris will finalize integration plans, which may affect how the assets acquired, including intangible assets, will be utilized by the combined company. For those assets in the combined company that will be phased out or will no longer be used, additional amortization, depreciation and possibly impairment charges will be recorded after management completes the integration plans.

The unaudited pro forma combined condensed financial information is presented solely for informational purposes and is not necessarily indicative of the combined results of operations or financial position that might have been achieved for the periods or dates indicated, nor is it necessarily indicative of the future results of the combined company.




Note 2 - Acquisition Consideration

US Premium Finance Holding Company Acquisition

The acquisition consideration for USPF is summarized as follows (in thousands):

Acquisition Consideration - USPF
Number of shares of Ameris common stock – as exchanged
1,073

Fair value of Ameris common stock issued (weighted average of $52.047 per share)
$
55,855

Cash paid to former shareholders of USPF
$
21,421

Present value of contingent earn-out consideration expected to be paid out
$
5,705

Total Acquisition Consideration – USPF
$
82,981


Atlantic Coast Financial Corporation Acquisition

Under the terms of the merger agreement with Atlantic, Atlantic’s shareholders received 0.17 shares of Ameris common stock plus $1.39 in cash for each share of Atlantic common stock. Based on the number of shares of Atlantic common stock outstanding as of the acquisition date of May 25, 2018, the acquisition consideration is as follows (in thousands):

Acquisition Consideration - Atlantic
Total number of shares of Atlantic common stock outstanding at May 25, 2018
15,541

Less: Unallocated shares of Atlantic common stock held by ESOP and benefit plans
(61
)
Total number of shares of Atlantic common stock to be converted
15,480

Per share exchange ratio
0.17

Number of shares of Ameris common stock – as exchanged
2,632

Multiplied by Ameris common stock price on May 25, 2018
$
56.15

Fair value of Ameris common stock issued
$
147,760

Per share cash exchange price
$
1.39

Cash paid at acquisition to Atlantic’s shareholders
$
21,527

Total Acquisition Consideration – Atlantic
$
169,287


Hamilton State Bancshares, Inc. Acquisition

Under the terms of the merger agreement with Hamilton, Hamilton’s shareholders received 0.16 shares of Ameris common stock plus $0.93 in cash for each share of Hamilton common stock. Based on the number of shares of Hamilton common stock outstanding as of the acquisition date of June 29, 2018, the acquisition consideration is as follows (in thousands):

Acquisition Consideration - Hamilton
Total number of shares of Hamilton common stock outstanding at June 29, 2018 including restricted share units that automatically vest under a change in control
40,927

Per share exchange ratio
0.16

Number of shares of Ameris common stock – as exchanged
6,548

Multiplied by Ameris common stock price on June 29, 2018
$
53.35

Fair value of Ameris common stock issued
$
349,356

Per share cash exchange price
$
0.93

Cash paid at acquisition to Hamilton’s shareholders
$
38,068

Cash paid at acquisition to holders of Hamilton stock warrants
$
9,711

Total Acquisition Consideration - Hamilton
$
397,135






Fidelity Southern Corporation Acquisition

Under the terms of the merger agreement with Fidelity, Fidelity’s shareholders received 0.80 shares of Ameris common stock for each share of Fidelity common stock. Outstanding Fidelity options were converted into options to purchase shares of Ameris common stock, with the exercise price and the number of shares underlying each option adjusted to reflect the exchange ratio of 0.80. Based on the number of shares of Fidelity common stock outstanding and the number of Fidelity options outstanding as of the acquisition date of July 1, 2019, the acquisition consideration is as follows (in thousands):

Acquisition Consideration - Fidelity
Total number of shares of Fidelity common stock outstanding at July 1, 2019, including restricted shares that immediately vest on the merger date
27,728

Per share exchange ratio
0.80

Number of shares of Ameris common stock - as exchanged
22,182

Multiplied by Ameris common stock price on June 28, 2019
$
39.19

Fair value of Ameris common stock issued
$
869,294

Total number of Fidelity options outstanding at July 1, 2019
721

Per option exchange ratio
0.80

Number of Ameris options - as exchanged
577

Weighted average fair value per option
$
12.57

Fair value of rolled over stock options
$
7,248

Cash payment for fractional shares
$
19

Total Acquisition Consideration - Fidelity
$
876,561


Note 3 - Preliminary Estimated Acquisition Consideration Allocation

Under the acquisition method of accounting, the total acquisition consideration is allocated to the acquired tangible and intangible assets and assumed liabilities of USPF, Atlantic, Hamilton, and Fidelity based on their estimated fair values as of the closing dates of the acquisitions. The excess of the acquisition consideration over the fair value of assets acquired and liabilities assumed, if any, is allocated to goodwill.

The allocations of the acquisition consideration for Fidelity are considered preliminary because the allocations for Fidelity are based on estimates, assumptions, valuations, and other studies which have not progressed to a stage where there is sufficient information to make a definitive allocation. Accordingly, the acquisition consideration allocation unaudited pro forma adjustments for Fidelity will remain preliminary until Ameris's management determines the final acquisition consideration and the fair values of assets acquired and liabilities assumed. The final determination of the acquisition consideration allocation is anticipated to be completed as soon as practicable after the completion of the acquisition of Fidelity and will be based on the value of the Ameris common stock at the closing date of such acquisition. The final amounts allocated to assets acquired and liabilities assumed could differ significantly from the amounts presented in the unaudited pro forma condensed combined financial statements.

The allocations of the acquisition consideration for USPF, Atlantic and Hamilton are considered final as of the date of this filing, having crossed the one-year anniversary of the respective acquisition dates.




The total acquisition consideration as shown in the tables above is allocated to USPF’s, Atlantic’s, Hamilton’s and Fidelity's tangible and intangible assets and liabilities as of June 30, 2019, based on their fair values (which are preliminary estimates as to Fidelity) as follows (in thousands):

Preliminary Estimated Acquisition Consideration Allocation
 
USPF
 
Atlantic
 
Hamilton
 
Fidelity
Cash and due from banks
$
—

 
$
3,990

 
$
13,927

 
$
26,264

Federal funds sold and interest-bearing deposits in banks
—

 
22,149

 
102,156

 
217,936

Time deposits in other banks
—

 
—

 
11,558

 
—

Investment securities
—

 
35,126

 
285,830

 
299,449

Other investments
—

 
9,576

 
2,094

 
7,449

Loans held for sale
—

 
358

 
—

 
328,657

Loans
—

 
755,704

 
1,293,186

 
3,520,016

Other real estate owned, net
—

 
1,041

 
847

 
6,414

Premises and equipment, net
—

 
10,735

 
28,971

 
124,562

Goodwill
64,498

 
90,342

 
220,768

 
404,381

Other intangible assets, net
23,607

 
7,488

 
23,610

 
50,610

Cash value of bank owned life insurance
—

 
18,182

 
4,454

 
72,328

Deferred income taxes, net
(5,124
)
 
7,711

 
10,079

 
(22,896
)
Other assets
—

 
2,959

 
10,955

 
157,863

Deposits
—

 
(585,167
)
 
(1,585,250
)
 
(4,041,682
)
Securities sold under agreements to repurchase
—

 
—

 
—

 
(22,345
)
Other borrowings
—

 
(204,475
)
 
(10,907
)
 
(150,700
)
Subordinated deferrable interest debentures
—

 
—

 
(2,292
)
 
(36,718
)
Other liabilities
—

 
(6,432
)
 
(12,851
)
 
(65,027
)
Total Acquisition Consideration
$
82,981

 
$
169,287

 
$
397,135

 
$
876,561


Approximately $23.6 million, $7.5 million, $23.6 million and $50.6 million has been allocated to amortizable intangible assets acquired in the USPF, Atlantic, Hamilton and Fidelity acquisitions, respectively. The amortization related to the fair value of net amortizable intangible assets is reflected as a pro forma adjustment to the unaudited pro forma condensed combined financial statements.

Identifiable Intangible Assets. The fair values of intangible assets were determined based on the provisions of ASC 805, which defines fair value in accordance with ASC Topic 820, Fair Value Measurements and Disclosures (“ASC 820”). ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Intangible assets were identified that met either the separability criterion or the contractual-legal criterion described in ASC 805. For the USPF acquisition, the allocation to intangible assets is allocated to insurance agent relationships, trade name, and non-compete agreement intangibles. For the Atlantic, Hamilton and Fidelity acquisitions, the allocation to intangible assets is allocated to core deposit intangibles.

Goodwill. Goodwill represents the excess of the acquisition consideration over the fair value of the underlying net tangible and intangible assets. Among the factors that contributed to a purchase price in excess of the fair value of the net tangible and intangible assets are the skill sets, operations, customer base and organizational cultures that can be leveraged to enable the combined company to build an enterprise greater than the sum of its parts. In accordance with ASC Topic 350, Intangibles ― Goodwill and Other, goodwill will not be amortized, but instead will be tested for impairment at least annually and whenever events or circumstances have occurred that may indicate a possible impairment. In the event management determines that the value of goodwill has become impaired, the combined company will incur an accounting charge for the amount of the impairment during the period in which the determination is made.

Note 4 - Preliminary Unaudited Pro Forma and Acquisition Accounting Adjustments

The unaudited pro forma combined condensed financial information is not necessarily indicative of what the financial position actually would have been had the acquisitions been completed at the date indicated. Such information includes adjustments which are preliminary and may be revised. Such revisions may result in material changes. The financial position shown herein is




not necessarily indicative of what the past financial position of the combined companies would have been, nor necessarily indicative of the financial position of the post-acquisition periods. The unaudited pro forma combined condensed financial information does not give consideration to the impact of possible expense efficiencies, synergies, strategy modifications, asset dispositions or other actions that may result from the acquisitions.

The following unaudited pro forma adjustments result from accounting for the acquisitions, including the determination of fair value of the assets, liabilities, and commitments which Ameris, as the acquirer for accounting purposes, acquired from USPF, Atlantic, Hamilton and Fidelity. The descriptions related to these adjustments (which are preliminary as to Fidelity) are as follows (in thousands):

Balance Sheet - Fidelity
 
 
As of
June 30, 2019
A
Adjustment to cash and due from banks to reflect cash paid at closing to Fidelity's shareholders
$
(19
)
B
Adjustment to investment securities available for sale
 
 
To reclass at amortized cost investment securities designated as held to maturity by Fidelity to investment securities available for sale
$
19,595

 
To reflect fair value at acquisition date for investment securities designated as held to maturity by Fidelity but will be designated as available for sale by Ameris
$
108

 
Total adjustment to investment securities available for sale
$
19,703

C
Adjustment to investment securities held to maturity to reclass at amortized cost investment securities designated as held to maturity by Fidelity to investment securities available for sale
$
(19,595
)
D
Adjustment to loans
 
 
To reflect the reversal of Fidelity’s June 30, 2019 unamortized accounting adjustments for its prior acquisitions, loan premiums, loan discounts, deferred loan origination costs, and deferred loan origination fees
$
(16,642
)
 
To reflect the estimated fair value at acquisition date of loans
$
(50,754
)
 
Total adjustment to loans
$
(67,396
)
E
Adjustment to allowance for loan losses to reflect the reversal of Fidelity’s June 30, 2019 allowance for loan losses
$
31,245

F
Adjustment to other real estate owned to reflect the estimated fair value at acquisition date based on Ameris’s more aggressive liquidation strategy
$
(1,191
)
G
Adjustment to premises and equipment to reflect the estimated fair value at acquisition date
$
30,900

H
Adjustment to goodwill
 
 
To reflect reversal of Fidelity's June 30, 2019 goodwill recorded from its prior acquisitions
$
(5,164
)
 
Adjustment to goodwill to reflect the estimated goodwill generated as a result of consideration paid being greater than the net assets acquired
$
404,381

 
Total adjustment to goodwill
$
399,217

I
Adjustment to intangible assets
 
 
To reflect reversal of Fidelity’s June 30, 2019 unamortized intangible assets
$
(5,506
)
 
To reflect the recording of the estimated core deposit intangible
$
50,610

 
Total adjustment to intangible assets
$
45,104

J
Adjustment to deferred tax asset, net
 
 
To reclass Fidelity's June 30, 2019 net deferred tax liability position against Ameris's net deferred tax asset position
$
(12,222
)
 
To reflect the deferred tax impact resulting from the net fair value adjustments based on assumed effective tax rate of 21%
$
(10,778
)
 
Total adjustment to deferred tax asset, net
$
(23,000
)
K
Adjustment to interest-bearing deposits
 
 
To reflect reversal of Fidelity’s June 30, 2019 unamortized fair value adjustment on certificates of deposit from its prior acquisitions
$
(176
)
 
To reflect the estimated fair value at acquisition date of certificate of deposits
$
(523
)
 
Total adjustment to interest-bearing deposits
$
(699
)
L
Adjustment to other borrowings to reflect the estimated fair value at acquisition
$
1,333

M
Adjustment to subordinated deferrable interest debentures to reflect the estimated fair value at acquisition
$
(9,675
)




 
 
As of
June 30, 2019
N
Adjustment to deferred tax liability, net to reflect reclass of Fidelity's June 30, 2019 net deferred tax liability position against Ameris's net deferred tax asset position
$
(12,222
)
O
Adjustment to common stock
 
 
To reflect the reversal of Fidelity’s June 30, 2019 common stock
$
(209,852
)
 
To reflect the value of Ameris common stock issued to Fidelity’s shareholders
$
22,182

 
Total adjustment to common stock
$
(187,670
)
P
Adjustment to capital surplus
 
 
To reflect the reversal of Fidelity's June 30, 2019 capital surplus
$
(35,089
)
 
To reflect the value of Ameris common stock issued to Fidelity’s shareholders
$
847,112

 
To reflect the value of Ameris options issued to Fidelity optionholders
$
7,248

 
Total adjustment to capital surplus
$
819,271

Q
Adjustment to retained earnings to reflect the reversal of Fidelity's June 30, 2019 retained earnings
$
(188,144
)
R
Adjustment to accumulated other comprehensive income to reflect the reversal of Fidelity's June 30, 2019 accumulated other comprehensive income
$
(7,226
)

Income Statement – Fidelity
 
 
Six Months Ended
June 30, 2019
 
Year Ended
December 31, 2018
S
Adjustment to interest income and fees on loans to reflect estimated additional accretion on loan portfolio
$
2,886

 
$
5,771

T
Adjustment to interest expense on deposits
 
 
 
 
To reflect the reversal of Fidelity’s amortization of fair value adjustment on certificates of deposits resulting from its prior acquisitions
$
59

 
$
167

 
To reflect the estimated amortization of the fair value adjustment on certificates of deposit
$
(175
)
 
$
(349
)
 
Total adjustment to interest expense on deposits
$
(116
)
 
$
(182
)
U
Adjustment to interest expense on other borrowings and subordinated deferrable interest debentures
$
225

 
$
451

V
Adjustment to occupancy and equipment expense to reflect estimated additional depreciation resulting from fair value adjustments on premises and equipment
$
432

 
$
863

W
Adjustment to amortization of intangible assets
 
 
 
 
To reflect the reversal of Fidelity’s amortization expense on its existing core deposit intangible resulting from its prior acquisitions
$
(527
)
 
$
(1,109
)
 
To reflect the estimated amortization expense on the core deposit intangible
$
2,531

 
$
5,061

 
Total adjustment to amortization of intangible assets
$
2,004

 
$
3,952

X
Adjustment to income tax expense to reflect the tax effect of the Fidelity income statement pro forma adjustments using an assumed effective tax rate of 21%
$
72

 
$
144


Income Statement – USPF
 
 
Year Ended
December 31, 2018
Y
Adjustment to amortization of intangible assets to reflect estimated amortization expense on the insurance agent relationships, trade name, and non-compete intangible assets
$
250

Z
Adjustment to legal and other professional fees to reflect elimination of fees previously paid under the USPF Management and License Agreement that are no longer incurred after acquisition of the final 70% investment in USPF
$
(274
)
AA
Adjustment to income tax expense to reflect the tax effect of the USPF income statement pro forma adjustments using an assumed effective tax rate of 21%
$
5






Income Statement – Atlantic
 
 
Year Ended
December 31, 2018
BB
Adjustment to interest income and fees on loans to reflect estimated additional accretion on loan portfolio
$
445

CC
Adjustment to amortization of intangible assets to reflect the estimated amortization of the core deposit intangible
$
148

DD
Adjustment to income tax expense to reflect the tax effect of the Atlantic income statement pro forma adjustments using an assumed effective tax rate of 21%
$
62


Income Statement – Hamilton
 
 
Year Ended
December 31, 2018
EE
Adjustment to interest income and fees on loans to reflect estimated additional accretion on loan portfolio
$
690

FF
Adjustment to interest expense on deposits
 
 
To reflect the reversal of Hamilton’s amortization of fair value adjustment on certificates of deposits resulting from its prior acquisitions
$
6

 
To reflect the estimated amortization of the fair value adjustment on certificates of deposit
$
236

 
Total adjustment to interest expense on deposits
$
242

GG
Adjustment to interest expense on other borrowings and subordinated deferrable interest debentures
 
 
To reflect the reversal of Hamilton’s amortization of fair value adjustment in other borrowings from its prior acquisitions
$
32

 
To reflect the estimated amortization of the fair value adjustment on subordinated deferrable interest debentures
$
9

 
Total adjustment to interest expense on other borrowings and subordinated deferrable interest debentures
$
41

HH
Adjustment to amortization of intangible assets
 
 
To reflect the reversal of Hamilton’s amortization expense on its existing core deposit intangible resulting from its prior acquisitions
$
(281
)
 
To reflect the estimated amortization expense on the core deposit intangible
$
400

 
Total adjustment to amortization of intangible assets
$
119

II
Adjustment to income tax expense to reflect the tax effect of the Hamilton income statement pro forma adjustments using an assumed effective tax rate of 21%
$
60



The estimated transaction costs included as part of the unaudited pro forma condensed balance sheet as of June 30, 2019, have not been included in the above unaudited pro forma condensed income statements.

Pursuant to the acquisition method of accounting, the final acquisition consideration was based on the price of the Ameris common stock immediately prior to the effective time of the applicable transactions.

Note 5 - Earnings Per Common Share

Unaudited total combined pro forma earnings per common share for Ameris including USPF, Atlantic, Hamilton and Fidelity for the six months ended June 30, 2019 and the year ended December 31, 2018 have been calculated using Ameris’s historic weighted average common shares outstanding plus the common shares issued to USPF’s shareholders, Atlantic’s shareholders, Hamilton’s shareholders and Fidelity's shareholders in the respective acquisitions.

The following table sets forth the calculation of basic and diluted unaudited total combined pro forma earnings per common share for Ameris including USPF, Atlantic, Hamilton and Fidelity for the six months ended June 30, 2019 and the year ended December 31, 2018 (in thousands, except per share data).




 
Six Months Ended
June 30, 2019
 
Year Ended
December 31, 2018
 
Basic
 
Diluted
 
Basic
 
Diluted
Pro forma net income available to common shareholders
$
63,923

 
$
63,923

 
$
171,691

 
$
171,691

Weighted average common shares outstanding:
 
 
 
 
 
 
 
Ameris
47,354

 
47,395

 
43,142

 
43,248

Common shares issued to USPF’s shareholders
—

 
—

 
69

 
69

Common shares issued to Atlantic’s shareholders
—

 
—

 
1,038

 
1,038

Common shares issued to Hamilton’s shareholders
—

 
—

 
3,211

 
3,211

Common shares issued to Fidelity’s shareholders
22,182

 
22,342

 
22,182

 
22,450

Pro forma
69,536

 
69,737

 
69,642

 
70,016

Pro forma earnings per common share
$
0.92

 
$
0.92

 
$
2.47

 
$
2.45