NOTE 6 – ASSETS ACQUIRED IN FDIC-ASSISTED ACQUISITIONS

From October 2009 through July 2012, the Company participated in ten FDIC-assisted acquisitions whereby the Company purchased certain failed institutions out of the FDIC’s receivership. These institutions include the following:

Bank Acquired	Location	Branches	Date Acquired
American United Bank (“AUB”)	Lawrenceville, Ga.	1	October 23, 2009
United Security Bank (“USB”)	Sparta, Ga.	2	November 6, 2009
Satilla Community Bank (“SCB”)	St. Marys, Ga.	1	May 14, 2010
First Bank of Jacksonville (“FBJ”)	Jacksonville, Fl.	2	October 22, 2010
Tifton Banking Company (“TBC”)	Tifton, Ga.	1	November 12, 2010
Darby Bank & Trust (“DBT”)	Vidalia, Ga.	7	November 12, 2010
High Trust Bank (“HTB”)	Stockbridge, Ga.	2	July 15, 2011
One Georgia Bank (“OGB”)	Midtown Atlanta, Ga.	1	July 15, 2011
Central Bank of Georgia (“CBG”)	Ellaville, Ga.	5	February 24, 2012
Montgomery Bank & Trust (“MBT”)	Ailey, Ga.	2	July 6, 2012

The determination of the initial fair values of loans at the acquisition date and the initial fair values of the related FDIC indemnification assets involves a high degree of judgment and complexity. The carrying values of the acquired loans and the FDIC indemnification assets reflect management’s best estimate of the fair value of each of these assets as of the date of acquisition. However, the amount that the Company realizes on these assets could differ materially from the carrying values reflected in the financial statements included in this report, based upon the timing and amount of collections on the acquired loans in future periods. Because of the loss-sharing agreements with the FDIC on these assets, the Company does not expect to incur any significant losses. To the extent the actual values realized for the acquired loans are different from the estimates, the indemnification assets will generally be affected in an offsetting manner due to the loss-sharing support from the FDIC.

FASB ASC 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality (“ASC 310-30”), applies to a loan with evidence of deterioration of credit quality since origination, acquired by completion of a transfer for which it is probable, at acquisition, that the investor will be unable to collect all contractually required payments receivable. ASC 310-30 prohibits carrying over or creating an allowance for loan losses upon initial recognition for loans which fall under the scope of this statement. At the acquisition dates, a majority of these loans were valued based on the liquidation value of the underlying collateral because the future cash flows are primarily based on the liquidation of underlying collateral. There was no allowance for credit losses established related to these ASC 310-30 loans at the acquisition dates, based on the provisions of this statement. Over the life of the acquired loans, the Company continues to estimate cash flows expected to be collected. If the expected cash flows expected to be collected increases, then the Company adjusts the amount of accretable discount recognized on a prospective basis over the loan’s remaining life. If the expected cash flows expected to be collected decreases, then the Company records a provision for loan loss in its consolidated statements of income and comprehensive income.

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 anniversaries 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 anniversaries during the fourth quarter of 2015, the HTB and OGB NSF agreements passed their five-year anniversaries during the third quarter of 2016, and the CBG NSF passed its five-year anniversary during the first quarter of 2017. Losses will no longer be reimbursed on these agreements. MBT did not have a loss-sharing agreement.

At March 31, 2017, the Company’s FDIC loss-sharing payable totaled $6.5 million, which is comprised of an accrued clawback liability of $9.4 million, less $1.5 million in current activity incurred but not yet remitted to the FDIC (net charge-offs offset by reimbursable expenses) and remaining indemnification of $1.4 million (for reimbursements associated with anticipated losses in future quarters).

The following table summarizes components of all covered assets at March 31, 2017 and December 31, 2016 and their origin:

(dollars in thousands)	Covered Loans		Less: Fair Value Adjustments		Total Covered Loans		OREO		Less: Fair Value Adjustments		Total Covered OREO		Total Covered Assets		FDIC Loss- Share Receivable (Payable)
March 31, 2017
AUB	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	(34)
USB		3,118		12		3,106		-		-		-		3,106		(1,655)
SCB		3,989		36		3,953		-		-		-		3,953		(19)
FBJ		3,714		433		3,281		-		-		-		3,281		(255)
DBT		11,655		486		11,169		-		-		-		11,169		(4,229)
TBC		1,737		-		1,737		-		-		-		1,737		(48)
HTB		1,899		30		1,869		-		-		-		1,869		708
OGB		1,068		32		1,036		-		-		-		1,036		(1,040)
CBG		11,454		881		10,573		215		-		215		10,788		83
Total	$	38,634	$	1,910	$	36,724	$	215	$	-	$	215	$	36,939	$	(6,489)

December 31, 2016
AUB	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	(27)
USB		3,199		13		3,186		51		-		51		3,237		(1,642)
SCB		4,019		51		3,968		-		-		-		3,968		(32)
FBJ		3,767		452		3,315		-		-		-		3,315		(234)
DBT		12,166		565		11,601		-		-		-		11,601		(4,591)
TBC		1,679		-		1,679		-		-		-		1,679		(33)
HTB		1,913		33		1,880		-		-		-		1,880		734
OGB		1,077		32		1,045		-		-		-		1,045		(993)
CBG		33,449		1,963		31,486		1,161		4		1,157		32,643		505
Total	$	61,269	$	3,109	$	58,160	$	1,212	$	4	$	1,208	$	59,368	$	(6,313)

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 March 31, 2017 and December 31, 2016, the Company has recorded a clawback liability of $9.4 million and $9.3 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-share agreement.

Changes in the FDIC shared-loss receivable (payable) for the three months ended March 31, 2017 and 2016 are as follows:

(dollars in thousands)	March 31, 2017		March 31, 2016
Beginning balance, January 1	$	(6,313)	$	6,301
Payments paid to (received from) FDIC		559		(3,299)
Amortization		(415)		(1,545)
Changes in clawback liability		(101)		(91)
Increase in receivable due to:
Net charge-offs (recoveries) on covered loans		(224)		(673)
Loss (gain) on covered other real estate owned		(15)		581
Reimbursable expenses on covered assets		171		244
Other activity, net		(151)		(321)
Ending balance	$	(6,489)	$	1,197

The FDIC loss-sharing payable is included in other liabilities in the consolidated balance sheets. The FDIC loss-sharing receivable is included in other assets in the consolidated balance sheets.