8-K/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K/A

(Amendment No. 1)

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 12, 2010

Ameris Bancorp

(Exact name of registrant as specified in its charter)

Georgia	001-13901	58-1456434
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

310 First Street

Moultrie, Georgia 31768

(Address of principal executive offices)

(229) 890-1111

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

EXPLANATORY NOTE

On November 18, 2010, Ameris Bancorp (the “Company”) filed a Current Report on Form 8-K (the “Original Report”) to report the Company’s announcement that its wholly-owned subsidiary, Ameris Bank (the “Bank”), had entered into (i) a Purchase and Assumption Agreement dated as of November 12, 2010 with the Federal Deposit Insurance Corporation (the “FDIC”) and with the FDIC, as Receiver of Darby Bank & Trust Co., Vidalia, Georgia (“Darby”), pursuant to which the Bank acquired certain assets, and assumed substantially all of the deposits and certain liabilities, of Darby, and (ii) a Purchase and Assumption Agreement dated as of November 12, 2010 with the FDIC and with the FDIC, as Receiver of Tifton Banking Company, Tifton, Georgia (“Tifton”), pursuant to which the Bank acquired certain assets, and assumed substantially all of the deposits and certain liabilities, of Tifton.

This Current Report on Form 8-K/A (the “Amendment”) amends and supplements the disclosure provided in the Original Report to disclose additional information required with respect to the Darby transaction by Items 9.01(a) and (b) of Form 8-K. Except as otherwise provided herein, the other disclosures made in the Original Report remain unchanged. All financial and other numeric measures of Darby as described in this Amendment are based upon information as of November 12, 2010 and may be subject to change. In addition, the fair values of acquired loans and other real estate remains subject to finalization and revision by the Bank in accordance with accounting guidance on business acquisitions.

Statements made in this Amendment, other than those concerning historical financial information, may be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are subject to risks and uncertainties. These forward-looking statements include, without limitation, statements regarding the Company’s expectations concerning its financial condition, operating results, cash flows, liquidity and capital resources. A discussion of risks, uncertainties and other factors that could cause actual results to differ materially from management’s expectations is set forth under the captions “Cautionary Notice Regarding Forward-Looking Statements,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009 and in the Company’s Quarterly Reports on Form 10-Q for the quarters ended March 31, 2010, June 30, 2010 and September 30, 2010.

Item 1.01 Entry into a Material Definitive Agreement.

The information provided under Item 2.01 “Completion of Acquisition or Disposition of Assets” is incorporated herein by reference.

Item 2.01 Completion of Acquisition or Disposition of Assets.

On November 12, 2010 (the “Closing Date”), Ameris Bank (the “Bank”), a wholly-owned subsidiary of Ameris Bancorp (the “Company”), entered into that certain Purchase and Assumption Agreement (the “Darby Agreement”) by and among the Federal Deposit Insurance Corporation (the “FDIC”), as Receiver of Darby Bank & Trust Co., Vidalia, Georgia (“Darby”), the Bank and the FDIC acting in its corporate capacity, pursuant to which the Bank acquired certain assets, and assumed substantially all of the deposits and certain liabilities, of Darby (the “Darby Acquisition”). In connection with the Darby Acquisition, the Bank also acquired other real estate owned (“OREO”) as of the Closing Date.

Pursuant to the Darby Agreement, the Bank acquired approximately $637.6 million in assets, including approximately $393.3 million in loans, and also assumed approximately $442.7 million in liabilities, including approximately $387.0 million in customer deposits. The deposits were acquired with no premium, and the assets were acquired at a discount of $45.0 million. To settle the transaction, the Bank made a cash payment to the FDIC in the amount of $149.9 million, based on the differential between liabilities assumed and the assets acquired, taking into account the asset discount.

1

The Bank and the FDIC also have entered loss-sharing agreements that provide the Bank with significant protection against credit losses on loans and related assets acquired in the Darby Acquisition. Under these agreements, discussed in more detail below, the FDIC will, for a specified number of years, reimburse the Bank for 80% of all losses and related expenses on covered assets, primarily acquired loans and OREO.

The following discussion of assets acquired and liabilities assumed in connection with the Darby Acquisition is presented based on estimated fair values as of the Closing Date. The fair values of the assets acquired and liabilities assumed were determined as described below. These fair value estimates are based on the information available and are subject to change for up to one year after the Closing Date as additional information relative to Closing Date fair values becomes available. In addition, the tax treatment of FDIC-assisted acquisitions is complex and subject to interpretations that may result in future adjustments of deferred taxes as of the Closing Date. The disclosure set forth in this Item 2.01 reflects the status of these items based on management’s current best estimate.

The Company has determined that the Darby Acquisition constitutes a business acquisition as defined by the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 805, Business Combinations. Accordingly, the assets acquired and liabilities assumed are presented at their estimated fair values as required by that topic. Fair values were determined based on the requirements of ASC Topic 820, Fair Value Measurements. In many cases the determination of these fair values required management to make estimates about discount rates, future expected cash flows, market conditions and other future events that are highly subjective in nature and subject to change. The following is a description of the methods used to determine the fair values of significant assets and liabilities and the fair value determination of each involves significant estimates and assumptions.

Cash and due from banks

The carrying amount of these assets is a reasonable estimate of fair value based on their short term nature.

Securities available for sale

Investment securities were acquired at their fair values at pricing supplied by an independent third party investment broker.

Loans

Fair values for loans were based on a discounted cash flow methodology that considered factors including the type of loan and related collateral, accrual status, fixed or variable interest rate, term of loan, prepayments, whether or not the loan was amortizing and a discount rate reflecting the Bank’s assessment of risk inherent in the cash flow estimates. The Bank has used the provisions of ASC 310, Loans and Debt Securities Acquired with Deteriorated Credit Quality, which applies to a loan with evidence of deterioration of credit quality since origination, acquired by completion of a transfer for which it is probable, at acquisition, that the investor will be unable to collect all contractually required payments receivable. ASC 310 prohibits carrying over or creating an allowance for loan losses upon initial recognition for loans which fall under the scope of this standard. As of the Closing Date, 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.

Core deposit intangible

This intangible asset represents the value of the relationships that Darby had with its deposit customers. The fair value of this intangible asset was estimated based on a discounted cash flow methodology that gave appropriate consideration to expected customer attrition rates, cost of the deposit base, reserve requirements and the net maintenance cost attributable to customer deposits.

2

Other Real Estate Owned (OREO)

Darby has $22.0 million in fair value of OREO and foreclosed properties, which includes all real estate, other than bank premises used in bank operations, owned or controlled by Darby, including real estate acquired in settlement of loans. Properties are recorded at their estimated fair values as of the Closing Date. Fair values of OREO are determined by sales agreement or appraisal, and costs to sell are based on estimation per the terms and conditions of the sales agreement or terms customary for real estate transactions.

Estimated reimbursement from the FDIC

These loss-sharing assets are measured separately from the related loans and OREO acquired as they are not contractually embedded in the assets and are not transferable with the assets should the Bank choose to dispose of them. Fair value was estimated using projected cash flows related to the loss-sharing agreements based on the expected reimbursements for losses and the applicable loss-sharing percentages. These expected reimbursements do not include reimbursable amounts related to future covered expenditures.

Other Assets, Accrued Expenses and Other Liabilities

All other assets, accrued expenses and other liabilities are recorded at Darby’s book value which was determined to approximate fair value as of the Closing Date.

Deposits

The fair values used for the demand and savings deposits that comprise the accounts acquired in the Darby Acquisition equal, by definition, the amount payable on demand at the reporting date. The fair values for time deposits are estimated using a discounted cash flow calculation that applies interest rates currently being offered to the interest rates embedded on such time deposits.

Other Borrowings

The fair value for other borrowings was estimated using discounted cash flows, based on the current incremental borrowing rates for similar types of borrowing arrangements.

3

Assets Acquired and Liabilities Assumed

The fair values of the assets acquired and liabilities assumed in conjunction with the Darby Acquisition as of the Closing Date are detailed in the following table (dollars in thousands):

	November 12, 2010			Avg. Maturity (years)		Effective Yield / Cost
Assets Acquired:
Cash and due from banks	$	91,735
Securities available for sale		105,562			4.05		2.26	%
Loans		261,340			1.90		5.95	%
Other real estate owned		22,026
Estimated reimbursement from the FDIC		112,404
Core deposit intangible		1,180
Other assets		3,957
Assets acquired		598,204
Less cash paid to settle the acquisition		(149,893	)
Fair value of assets acquired	$	448,311

Liabilities assumed:
Deposits	$	386,958	0.83	1.00	%
Other Borrowings		54,418	1.47	1.03	%
Other Liabilities		2,724
Fair value of liabilities assumed		444,100
Net Assets Acquired / Gained from Acquisition	$	4,211

The Bank also entered into loss-sharing agreements with the FDIC that collectively cover approximately $432.1 million of assets, which consists of $389.1 million of loans (residential and commercial) and $43.0 million of OREO. Pursuant to the terms of the loss-sharing agreements, the FDIC’s obligation to reimburse the Bank for losses with respect to covered assets begins with the first dollar of loss incurred. The FDIC will reimburse the Bank for 80% of losses on covered assets. The Bank will reimburse the FDIC for its share of recoveries with respect to losses for which the FDIC paid the Bank a reimbursement under the loss-sharing agreements. Certain other assets of Darby were acquired by the Bank that are not covered by loss-sharing agreements with the FDIC. These assets include cash, marketable securities purchased at fair market value and certain other assets.

The loss-sharing agreement applicable to single-family residential mortgage loans provides for FDIC loss sharing and Bank reimbursement to the FDIC for recoveries for ten years. The loss-sharing agreement applicable to commercial loans and other covered assets provides for FDIC loss-sharing for five years and Bank reimbursement to the FDIC for recoveries for eight years.

4

The following table summarizes the assets covered by the loss-sharing agreements, the amount covered by the FDIC and the estimated fair values (dollars in thousands):

	Amounts Covered		Estimated Fair Value		Single Family Certificate (10 years for losses)		Commercial Certificate (5 years for losses)
Assets Subject to Loss Sharing:
Loans	$	389,044	$	261,340	$	110,363	$	278,681
OREO		43,026		22,026		6,858		36,168
Total	$	432,070	$	283,366	$	117,221	$	314,849

The loss-sharing agreements are subject to certain servicing procedures. The fair value of the loss-sharing agreements was recorded as an indemnification asset at an estimated fair value of $112.4 million on the Closing Date.

The foregoing summary of the Darby Agreement, including the loss-sharing agreements, is not complete and is qualified in its entirety by reference to the full text of the Darby Agreement, which is attached as Exhibit 2.1 to this Current Report and incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

(a) Financial Statements of Businesses Acquired.

Discussion

As set forth in Item 2.01 above, on the Closing Date, the Bank acquired certain assets, and assumed substantially all of the deposits and certain liabilities, of Darby pursuant to the Darby Agreement. A narrative description of the anticipated effects of the Darby Acquisition on the Company’s financial condition, liquidity, capital resources and operating results is presented below. This discussion should be read in conjunction with the historical financial statements and the related notes of the Company, which have been filed with the Securities and Exchange Commission.

5

The Darby Acquisition increased the Company’s total assets, total loans and total deposits by approximately 18%,16% and 18%, respectively, as compared to balances at September 30, 2010. The Company expects the Darby Acquisition to positively affect the Company’s operating results in several ways, as discussed below:

• The Company believes that as the operations of Darby are deleveraged and consolidated with Ameris Bank, additional gains in the Company’s consolidated efficiency ratio will be realized.

• The Company believes that the additional branch footprint in Savannah, Georgia will provide increased opportunities for growth and creates the only community bank with a coastal footprint in the metropolitan markets between Charleston, South Carolina and Jacksonville, Florida.

• The Company’s acquired deposit base in Vidalia, Georgia represents a leading position in market share with a strong deposit concentration in transaction accounts. Historically, this type of deposit mix and market share have correlated very closely with higher than average operating results, and the Company believes that these excess earnings will provide the majority of the capital required to further expand the Company’s market share in Savannah, Georgia.

The Darby Acquisition was accounted for under the purchase method of accounting in accordance with generally accepted accounting principles regarding business combinations. The amount that the Company realizes on these assets could differ materially from the fair values reflected in Item 2.01 above primarily as a result of changes in 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, as described in Item 2.01 above, the Company does not expect to incur significant losses. To the extent the actual values realized for acquired loans differ from the estimated amounts, the indemnification asset will generally be impacted in an offsetting manner due to the loss-sharing support from the FDIC.

Financial Condition

In connection with the Darby Acquisition, the Bank purchased loans with a contractual principal balance of $393.3 million, the fair value of which was estimated to be $261.3 million. The fair value of the loans acquired represented 15.86% of the Company’s gross outstanding loans as compared to balances reported at September 30, 2010.

Short-term Assets

Initially, the Darby Acquisition reduced the Company’s levels of liquidity by a net amount of $58.2 million. The Company acquired $91.7 million in total cash and due from banks before making a payment of $149.9 million to settle the transaction with the FDIC.

6

Investment Securities Available for Sale

The following table reflects the acquired investment securities available for sale as of the Closing Date (dollars in thousands):

Issuer	Estimated Fair Value		Average Yield			Average Life
GNMA CMO	$	62,466		2.74	%		5.23
FHLB Agency		23,046		0.42	%		1.13
FHLMC Agency		4,030		2.70	%		2.69
FNMA Agency		4,001		1.37	%		0.02
FNMA MBS		3,644		2.68	%		3.16
Tax-free Municipal		2,843		5.89	%		9.64
Corporates		1,070		4.79	%		6.83
GNMA MBS		259		1.44	%		2.91
FHLB Stock		4,203
Total	$	105,562		2.26	%		4.05

The acquired portfolio increased the Company’s investment securities by approximately 44.72% when compared to balances reported at September 30, 2010. The yields of the securities shown in the preceding table are lower than might be expected due to the majority of the bonds being callable in short periods subsequent to the Darby Acquisition.

Loans

Loans acquired amounted to approximately 15.86% of the Company’s gross loans reported at September 30, 2010. The following table presents information regarding the loan portfolio acquired on November 12, 2010 at fair value (dollars in thousands):

	Loans With Deterioration of Credit Quality		Loans Without a Deterioration of Credit Quality		Total Loans, at Fair Value
Commercial, industrial, agricultural	$	5,379	$	11,891	$	17,270
Real estate – residential		50,499		35,826		86,325
Real estate – commercial & farmland		61,474		55,271		116,745
Construction & development		21,800		15,571		37,371
Consumer		666		2,963		3,629
	$	139,818	$	121,522	$	261,340

7

The acquired portfolio contained both fixed and variable rate loans. The following table provides information about the portfolio according to loan rate type and at fair value as of the Closing Date (dollars in thousands):

								Fair Value amounts with:
	Fair Value		Effective Yield			Maturity (years)		Fixed Rates		Variable Rates
Commercial, industrial, agricultural	$	17,270		6.23	%		1.23	$	9,592	$	7,678
Real estate – residential		86,325		5.63	%		1.82		38,704		47,621
Real estate – commercial & farmland		116,745		6.31	%		2.46		63,559		53,186
Construction & development		37,371		5.79	%		1.03		12,798		24,573
Consumer		3,629		4.64	%		1.44		3,318		311
	$	261,340		5.95	%		1.90	$	127,971	$	133,369

Because a significant percentage of the acquired portfolio shows some deterioration of credit quality, management does not believe that the average contractual maturity or average contractual rate are reliable measures with respect to gauging the performance on the acquired loan portfolio. It is likely that many of the acquired loans will reach a resolution before their contractual maturity and may cease paying interest in the periods preceding such resolution.

Other Real Estate Owned

The Company acquired $22.03 million of OREO in connection with the Darby Acquisition. This represented 27.76% of the Company’s balance of OREO at September 30, 2010. The Company was able to determine the fair value of the property acquired through the use of appraisals and/or review of the comparable sales data available at the time of purchase. Losses on OREO are covered by the Company’s loss-sharing agreement with the FDIC. The following table summarizes foreclosed property by type as of the Closing Date (at fair value and in thousands):

Real estate – residential	$	5,257
Real estate – commercial & farmland	$	13,232
Real estate – construction & development		3,537
	$	22,026

8

Deposits

The Bank assumed approximately $387.0 million in deposits based on estimated fair values. This amount represented approximately 18.44% when compared to the Bank’s total deposits of $2.1 billion at September 30, 2010.

The various types of deposit accounts assumed as of the Closing Date are summarized below (dollars in thousands):

	November 12, 2010
	Estimated Fair Value		Weighted Average Contractual Cost			Weighted Average Effective Cost
Checking	$	45,712		0.00	%		0.00	%
NOW & MMDA		79,486		0.76	%		0.60	%
Savings		8,446		0.49	%		0.49	%
CDs		253,314		3.18	%		1.33	%
Total	$	386,958		2.25	%		1.00	%

As of Closing Date, the scheduled maturities of time deposits with balances of more than $100,000 were as follows (dollars in thousands):

	November 12, 2010
Scheduled Maturities:	Estimated Fair Value
0 - 3 Months	$	14,449
3 - 6 Months		15,738
6 - 12 Months		27,641
Over 1 Year		104,697
Total	$	162,525

9

A majority of the time deposits acquired were concentrated in national or out-of-market deposit accounts that had no identifiable relationship with the Bank. In accordance with certain guidelines, the Company adjusted the contractual rates of the out-of-market time deposits to levels deemed to be market level rates. Customers whose rates were adjusted had the right to redeem their time deposit without a penalty for early withdrawal. Through December 31, 2010, approximately 62.5% of the repriced deposit accounts had been redeemed without penalty. The following table summarizes information about the acquired time deposits (dollars in thousands):

	Balance		Contractual Cost			Adjusted Cost			% Deemed Out of Market
0 - 3 months	$	30,472		2.48	%		2.29	%		7.3	%
3 - 6 months		28,040		2.31	%		1.70	%		28.7	%
6 - 12 months		43,314		2.40	%		1.69	%		33.2	%
over 1 year		151,488		3.71	%		0.96	%		59.6	%
Total	$	253,314		3.18	%		1.33	%		45.4	%

In its assumption of the deposit liabilities, the Bank determined that some of the customer relationships associated with these deposits have intangible value, in accordance with the accounting for goodwill and other intangible assets in a business combination. The Bank determined the estimated fair value of the core deposit intangible to be approximately $1.2 million, which will be amortized utilizing the straight line method over an estimated economic life of five years. The Company believes that the economic life of the deposit intangible will be greater due to the fact that the acquired branches are in close proximity to Ameris’ current markets and that many of Darby’s customers are familiar with the Ameris brand.

Future amortization of this core deposit intangible asset over the shorter economic life will decrease results of operations, net of any potential tax effect. Since amortization is a noncash item, it will have no effect upon future liquidity and cash flows. For the calculation of regulatory capital, this core deposit intangible asset is disallowed and is a reduction to equity capital. The Company expects that disallowing this intangible asset should not materially adversely affect the Company’s or the Bank’s regulatory capital ratios.

The core deposit intangible asset is subject to significant estimates by management of the Company related to the value and the life of the asset. These estimates could change over time. The Company will review the valuation of this asset periodically to ensure that no impairment has occurred. If any impairment is subsequently determined, the Company will record the impairment as an expense in its consolidated statement of operations.

10

Other Borrowings

The Company assumed approximately $54.4 million in other borrowings based on estimated fair values. For comparative purposes, the Company had $13.2 million of securities sold under agreements to repurchase and did not have any other borrowings outstanding at September 30, 2010. The various types of borrowings assumed as of the Closing Date are summarized below (dollars in thousands):

	November 12, 2010
	Estimated Fair Value		Weighted Average Effective Cost			Weighted Average Maturity (years)
Advanced from the Federal Home Loan Bank	$	43,636		1.03	%		1.44
Securities sold under agreements to repurchase		10,782		1.03	%		1.62
Total	$	54,418		1.03	%		1.47

Accrued Interest Payable and Other Liabilities

The Company acquired approximately $2.7 million of accrued interest payable and other liabilities. The book value of these liabilities approximated their fair value.

Operating Results and Cash Flows

The Company from time to time becomes aware of acquisition opportunities and performs various types of reviews and analyses to determine their impact on the Company’s operating results, cash flows and risk profile. The Darby Acquisition was attractive to the Company for a variety of reasons, including the following:

• Gaining significant market share position in a new market where the deposit mix is concentrated in transaction accounts and long-term deposit relationships;

• Attractiveness in the pricing of the acquired loan portfolios, including the indemnification assets;

• The ability to utilize the Company’s relatively inexpensive funding sources to replace lost liquidity at Darby in connection with the planned run-off of out-of-market deposits;

• The ability to quickly reduce redundancies and gain additional efficiencies related to the Company’s corporate functions;

• The reduction of credit risk through FDIC loss-sharing agreements; and

• The relatively small size of Darby (based on the number of accounts and total assets) provided less operational risk and less potential for Company management to be materially distracted from existing day-to-day challenges.

11

The Darby Acquisition had an immediate accretive impact on the Company’s financial results as it recognized an after-tax gain of approximately $2.7 million in connection with the transaction. The gain resulted from the Company’s determination that the fair value of the assets acquired exceeded the fair value of the liabilities assumed. The Company’s bid to acquire the assets included a discount of approximately $45.0 million, and the Company paid the FDIC $149.9 million in cash to settle the transaction.

The extent to which the Bank’s operating results may be adversely affected by the acquired loans is largely offset by the loss-sharing agreements and the related discounts reflected in the estimated fair value of these assets as of the Closing Date. In accordance with the provisions of accounting for loans with evidence of credit deterioration, the fair values of the acquired loans reflect an estimate of expected credit losses related to these assets. As a result, the Company’s operating results would only be adversely affected by loan losses to the extent that such losses exceed the expected credit losses reflected in the fair value of these assets as of the Closing Date. In addition, to the extent that the stated interest rate on acquired loans was not considered a market rate of interest as of the Closing Date, appropriate adjustments to the fair values as of the Closing Date will be recorded. These adjustments mitigate the risk associated with the acquisition of loans earning a below-market rate of return.

The accounting guidance for loans with evidence of deterioration of credit quality since origination applies to a loan, for which it is probable at acquisition, that the investor will be unable to collect all contractually-required payments receivable. This accounting guidance prohibits carrying over or creating an allowance for loan losses upon initial recognition for loans that fall under its scope. As of the Closing Date, the preliminary estimate of the contractual receivable amounts was $266.7 million with non-accretable differences (credit quality discounts) of $98.1 million, and the estimated fair value of the loans was $139.8 million, net of accretable yield adjustments totaling $28.8 million. These amounts were determined based upon the estimated prepayments, expected credit losses and market liquidity and interest rates.

The loss-sharing agreements will likely have a material impact on the cash flows and operating results of the Company in both the short term and the long term. In the short term, as stated above, it is likely that there will be a significant amount of the covered assets that will experience deterioration in payment performance or will be determined to have inadequate collateral values to repay the loans. In such instances, the Company will likely no longer receive payments from the borrowers, which will impact cash flows. The loss-sharing agreements will not fully offset the financial effects of such a situation. However, if a loan is subsequently charged off or charged down after the Company exhausts its best efforts at collection, the loss-sharing agreements will cover a substantial portion of the loss associated with the covered assets.

The long-term effects that the Company may experience will depend primarily on the ability of the borrowers under the various loans covered by the loss-sharing agreements to make payments over time. As the loss-sharing agreements cover up to a ten-year period (five years for commercial loans and other assets), changing economic conditions will likely impact the timing of future charge-offs and the resulting reimbursements from the FDIC. The Company believes that any recapture of interest income and recognition of cash flows from the borrowers or received from the FDIC (as part of the FDIC indemnification asset) may be recognized unevenly over this period. In addition, the Company recorded substantial discounts related to the purchase of these covered assets. A portion of these discounts will be accretable to income over the economic life of the loans and will be dependent upon the timing and success of the Company’s collection efforts on the covered assets.

12

Liquidity

Initially, the Darby Acquisition reduced the Company’s liquidity reserves because of the cash payment required to settle the transaction totaling $149.9 million. This payment was partially offset by the acquisition of cash, due from banks and short-term assets acquired in the transaction totaling $91.7 million. In addition, the Company believes that the average life of the indemnification asset representing the FDIC’s protection from planned losses is approximately 24 months. As this receivable is collected over the coming periods, the Company believes the liquidity impact of Darby to be negligible.

Capital Resources

At September 30, 2010, the Company and the Bank were considered “well-capitalized” based on a calculation of relevant regulatory capital ratios as shown below:

	Previous quarter ended September 30, 2010
	Ameris Bancorp			Ameris Bank			Well- Capitalized Requirement
Total capital (to risk weighted assets)		19.81	%		19.01	%		10	%
Tier 1 Capital (to risk weighted assets)		18.55	%		17.75	%		6	%
Tier 1 leverage capital		12.42	%		12.01	%		5	%
	As of the Acquisition date November 12, 2010
	Ameris Bancorp			Ameris Bank			Well- Capitalized Requirement
Total capital (to risk weighted assets)		18.77	%		18.28	%		10	%
Tier 1 Capital (to risk weighted assets)		17.43	%		16.94	%		6	%
Tier 1 leverage capital		10.06	%		9.79	%		5	%

Financial Statements

Attached hereto as Exhibit 99.2 and incorporated by reference into this Item 9.01(a) are the audited consolidated financial statements of DBT Holding Company and Subsidiaries as of and for the year ended December 31, 2009. Darby was a wholly-owned subsidiary of DBT Holding Company as of such date and represented substantially all of the assets, liabilities and operations of DBT Holding Company as of and for the year ended December 31, 2009. As a percentage of the respective amounts shown on the attached consolidated financial statements of DBT Holding Company and Subsidiaries, Darby’s assets constituted 99.8% of the total assets shown, Darby’s liabilities constituted 98.6% of the total liabilities shown and Darby’s net loss represented 99.1% of the net loss reported.

Attached hereto as Exhibit 99.3 and incorporated by reference into this Item 9.01(a) are unaudited interim financial statements of Darby as of and for the nine months ended September 30, 2010.

13

(b) Pro Forma Financial Information.

In connection with the Darby Acquisition, the Bank entered into loss-sharing agreements with the FDIC. Pursuant to the terms of the loss-sharing agreements, the FDIC’s obligation to reimburse the Bank for losses with respect to covered assets begins with the first dollar of loss incurred. The FDIC will reimburse the Bank for 80% of all losses.

The Bank will reimburse the FDIC for its share of recoveries with respect to losses for which the FDIC paid the Bank a reimbursement under the loss-sharing agreements.

The loss-sharing agreement applicable to single-family residential mortgage loans provides for FDIC loss-sharing and Bank reimbursement to the FDIC for recoveries for ten years. The loss-sharing agreement applicable to commercial loans and other covered assets provides for FDIC loss-sharing for five years and Bank reimbursement to the FDIC for recoveries for eight years.

Based on the above, the Company believes that the Darby Acquisition is a “significant acquisition” in connection with which federal financial assistance or guarantees are an essential part of the transaction or the nature and magnitude of federal assistance is so pervasive as to substantially reduce the relevance of historical information to an assessment of future operations.

Because the Company believes that the continuity of Darby’s operations is substantially lacking after the Darby Acquisition for the reasons stated above, no additional information regarding Darby is being provided under this Item 9.01(b). Because of the lack of continuity and the loss-sharing agreements, the Company also believes that the historical financial statements required by Item 9.01(a) of Form 8-K (Exhibits 99.2 and 99.3 hereto) are not indicative of the Darby Acquisition.

(d) Exhibits.

2.1	Purchase and Assumption Agreement dated as of November 12, 2010 by and among the Federal Deposit Insurance Corporation, Receiver of Darby Bank & Trust Co., Vidalia, Georgia, Ameris Bank and the Federal Deposit Insurance Corporation acting in its corporate capacity. (1)
2.2	Purchase and Assumption Agreement dated as of November 12, 2010 by and among the Federal Deposit Insurance Corporation, Receiver of Tifton Banking Company, Tifton, Georgia, Ameris Bank and the Federal Deposit Insurance Corporation acting in its corporate capacity. (1)
23.1	Consent of Hancock Askew & Co., LLP. (2)
99.1	Press Release dated November 12, 2010. (1)
99.2	Audited consolidated financial statements of DBT Holding Company and Subsidiaries, as of and for the year ended December 31, 2009. (2)
99.3	Unaudited financial statements of Darby Bank & Trust Company, as of and for the nine months ended September 30, 2010. (2)

(1) Previously filed with the Filing of the Original Report.

(2) Filed herewith.

14

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Company has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

AMERIS BANCORP
By:	/s/    DENNIS J. ZEMBER JR.
	Dennis J. Zember Jr.,
	Executive Vice President and Chief Financial Officer
	(principal accounting and financial officer)

Dated: January 28, 2011

EXHIBIT INDEX

Exhibit No.	Exhibit
2.1	Purchase and Assumption Agreement dated as of November 12, 2010 by and among the Federal Deposit Insurance Corporation, Receiver of Darby Bank & Trust Co., Vidalia, Georgia, Ameris Bank and the Federal Deposit Insurance Corporation acting in its corporate capacity. (1)
2.2	Purchase and Assumption Agreement dated as of November 12, 2010 by and among the Federal Deposit Insurance Corporation, Receiver of Tifton Banking Company, Tifton, Georgia, Ameris Bank and the Federal Deposit Insurance Corporation acting in its corporate capacity. (1)
23.1	Consent of Hancock Askew & Co., LLP. (2)
99.1	Press Release dated November 12, 2010. (1)
99.2	Audited consolidated financial statements of DBT Holding Company and Subsidiaries, as of and for the year ended December 31, 2009. (2)
99.3	Unaudited financial statements of Darby Bank & Trust Company, as of and for the nine months ended September 30, 2010. (2)

⁽¹⁾ Previously filed with the filing of the Original Report.

⁽²⁾ Filed herewith.

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements of Ameris Bancorp on Form S-8 (File No. 333-131244) and on Form S-3 (File Number 333-156367) of our report dated March 10, 2010 with respect to the consolidated financial statements of DBT Holding Company and Subsidiaries as of and for the year ended December 31, 2009.

/s/ Hancock Askew & Co., LLP

Savannah, Georgia

January 26, 2011

EX-99.2

Exhibit 99.2

Independent Auditor’s Report

To the Board of Directors DBT Holding Company Vidalia, Georgia

We have audited the accompanying consolidated balance sheets of DBT Holding Company and Subsidiaries as of December 31, 2009 and 2008, and the related consolidated statements of operations, changes in stockholders’ equity, and cash flows for each of the years in the three year period ended December 31, 2009. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of DBT Holding Company and Subsidiaries as of December 31, 2009 and 2008, and the results of their operations and their cash flows for each of the years in the three year period ended December 31, 2009, in conformity with accounting principles generally accepted in the United States of America.

Respectfully submitted,

March 10, 2010 Savannah, Georgia   100 Riverview Drive Savannah, GA 31404 T: 912.234.8243 F: 912.236.4414

DBT HOLDING COMPANY 7

Balance Sheets

(In thousands except share information) December 31,	2009			2008
ASSETS
Cash and due from banks	$	151,638		$	9,381
Federal funds sold		—			1,328
Investment securities
Available-for-sale, at fair value		108,804			11,124
Held-to-maturity		—			107,892
Other investments - certificates of deposits		25,188			6,460
Loans and leases, net of allowance for loan and lease loss of $17,499 and $9,822		484,325			599,340
Premises and equipment, net		11,687			13,240
Investment in Federal Home Loan Bank stock		4,203			4,145
Other real estate owned		20,559			16,356
Income tax receivable		9,227			—
Interest receivable and other assets		13,884			16,296
	$	829,515		$	785,562
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities
Deposits
Demand	$	12,810		$	14,184
Interest-bearing demand		76,098			180,579
Savings		77,084			68,163
Time, $100,000 and over		436,184			296,892
Other time		116,230			88,767
		718,406			648,585
Accrued interest and other liabilities		7,044			4,612
Advances from Federal Home Loan Bank		62,000			62,000
Other borrowings		20,979			20,979
		808,429			736,176
Stockholders’ equity
Common stock authorized 10,000,000 shares, $1.00 par value; issued and outstanding 1,399,476 shares in 2009, 1,279,806 shares in 2008.		1,400			1,280
Series B Convertible Preferred stock, no par value ($42.81 liquidation preference); 116,800 shares authorized and outstanding, 5% non-cumulative.		—			4,984
Series C Convertible Preferred stock, no par value ($30 liquidation preference); 83,350 shares authorized and 67,171 outstanding, 8% non-cumulative.		2,001			1,355
Capital in excess of par value		19,403			14,362
(Accumulated deficit) retained earnings		(1,529	)		27,581
Accumulated other comprehensive income, net		(189	)		(178	)
		21,086			49,384
	$	829,515		$	785,562

See accompanying notes to consolidated financial statements.

8 DBT HOLDING COMPANY

Statements of Operations

(In thousands except share information) Years ended December 31,	2009			2008		2007
Interest income
Loans, including fees	$	31,666		$	38,598	$	47,770
Investment securities		4,895			6,424		5,604
Other		658			655		431
Total interest income		37,219			45,677		53,805
Interest expense
Deposits		19,640			19,558		24,146
Federal Home Loan Bank advances and other borrowings		3,634			3,576		3,089
Total interest expense		23,274			23,134		27,235
Net interest income		13,945			22,543		26,570
Provision for loan losses		31,290			7,215		3,056
Net interest (loss) income after provision for loan losses		(17,345	)		15,328		23,514
Non-interest income
Service fees		2,208			2,103		1,872
Financing lease income		509			1,061		724
Gain (loss) on sale of investment securities		2,156			768		(2	)
Other income		1,740			2,032		1,863
Total non-interest income		6,613			5,964		4,457
Non-interest expenses
Salaries and employee benefits		8,745			9,572		10,440
Equipment and occupancy		3,325			3,668		3,280
Other real estate owned related expenses		4,580			1,192		100
Other operating expenses		8,701			5,414		5,321
Total non-interest expenses		25,351			19,846		19,141
(Loss) income before income taxes		(36,083	)		1,446		8,830
Income tax (benefit) expense		(7,170	)		154		2,970
Net (loss) income	$	(28,913	)	$	1,292	$	5,860
(Loss) earnings available to common stockholders
Basic	$	(29,110	)	$	1,042	$	5,457
Diluted	$	(28,913	)	$	1,292	$	5,860
(Loss) earnings per share of common stock
Basic	$	(21.71	)	$	.83	$	4.65
Diluted	$	(21.71	)	$	.93	$	4.35
Weighted average shares outstanding
Basic		1,340,843			1,257,697		1,173,206
Diluted		1,340,843			1,393,310		1,347,071

See accompanying notes to consolidated financial statements.

DBT HOLDING COMPANY 9

Statements of Changes in Stockholders’ Equity

	Common Stock
Years ended December 31,	Number of Shares		Amount
Balance, January 1, 2007		1,152,269	$	1,152
Comprehensive income
Net earnings		—		—
Other comprehensive income
Unrealized loss on securities, net of tax of $145		—		—
Reclassification adjustment for realized losses (gains) included in net income		—		—
Total comprehensive income
Conversion of series A preferred stock		95,280		96
Common stock issued		9,390		9
Stock-based compensation		—		—
Cash dividends paid
Common - $.80 per share		—		—
Preferred		—		—
Balance, December 31, 2007		1,256,939		1,257
Comprehensive income
Net earnings		—		—
Other comprehensive income
Unrealized loss on securities, net of tax of $154		—		—
Unrealized loss on derivative financial instrument, net of tax of $105		—		—
Total comprehensive income
Common stock issued		22,867		23
Stock-based compensation		—		—
Series C preferred stock issued		—		—
Cash dividends paid
Common - $.80 per share		—		—
Preferred		—		—
Balance, December 31, 2008		1,279,806		1,280
Comprehensive income
Net loss		—		—
Other comprehensive income
Unrealized loss on securities, net of tax of $25		—		—
Unrealized gain on derivative financial instrument, net of tax of $20		—		—
Total comprehensive income
Conversion of series B preferred stock		116,800		117
Common stock issued		2,870		3
Stock-based compensation		—		—
Series C preferred stock issued		—		—
Cash dividends paid
Preferred		—		—
Balance, December 31, 2009		1,399,476	$	1,400

10 DBT HOLDING COMPANY

Preferred Stock
Number of Shares		Amount			Capital in Excess of Par Value		Retained Earnings (Accumulated Deficit)			Accumulated Other Comprehensive Income (Loss)			Total
	212,080	$	7,955		$	10,928	$	23,008		$	55		$	43,098
	—		—			—		5,860			—			5,860
	—		—			—		—			281			281
	—		—			—		—			8			8
														6,149
	(95,280)		(2,971	)		2,875		—			—			—
	—		—			195		—			—			204
	—		—			55		—			—			55
	—		—			—		(920	)		—			(920	)
	—		—			—		(403	)		—			(403	)
	116,800		4,984			14,053		27,545			344			48,183
	—		—			—		1,292			—			1,292
	—		—			—		—			(299	)		(299	)
	—		—			—		—			(223	)		(223	)
														770
	—		—			189		—			—			212
	—		—			120		—			—			120
	45,168		1,355			—		—			—			1,355
	—		—			—		(1,006	)		—			(1,006	)
	—		—			—		(250	)		—			(250	)
	161,968		6,339			14,362		27,581			(178	)		49,384
	—		—			—		(28,913	)		—			(28,913	)
	—		—			—		—			(51	)		(51	)
	—		—			—		—			40			40
														(28,924	)
	(116,800)		(4,984	)		4,867		—			—			—
	—		—			83		—			—			86
	—		—			91		—			—			91
	22,003		646			—		—			—			646
	—		—			—		(197	)		—			(197	)
	67,171	$	2,001		$	19,403	$	(1,529	)	$	(189	)	$	21,086

See accompanying notes to consolidated financial statements.

DBT HOLDING COMPANY 11

Statements of Cash Flows

(In thousands) Years ended December 31,	2009			2008			2007
Cash flows from operating activities
Net (loss) income	$	(28,913	)	$	1,292		$	5,860
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities
Gain on sale of property		(26	)		(213	)		—
Provision for loan losses		31,290			7,215			3,056
Depreciation		1,358			1,695			1,516
Amortization and accretion		170			(52	)		7
Net realized gains on sales of investments		(2,156	)		(768	)		—
Deferred tax provision		2,217			(1,017	)		(351	)
Stock-based compensation expense		177			214			138
Increase in cash surrender value of life insurance		(240	)		(259	)		(241	)
Changes in
Interest receivable and other assets		(7,823	)		381			(1,089	)
Accrued interest and other liabilities		1,526			(2,876	)		841
Cash (used in) provided by operating activities		(2,420	)		5,612			9,737
Cash flows from investing activities
Decrease (increase) in federal funds sold		1,326			(1,326	)		7,434
Proceeds from maturities and sales of investment securities		98,445			91,038			18,214
Purchases of investment securities		(105,049	)		(86,295	)		(52,014	)
(Increase) decrease in FHLB stock		(58	)		(755	)		(1,360	)
Net decrease (increase) in loans and leases		79,751			(58,480	)		(76,453	)
Purchase of property		(84	)		(652	)		(6,067	)
Proceeds from sale of property		77			1,532			286
Preferred stock subscribed		645			1,356			—
Other		—			—			35
Cash provided by (used for) investing activities		75,053			(53,582	)		(109,925	)
Cash flows from financing activities
Net increase in deposits		69,821			28,622			65,010
Net borrowings (repayments) to Federal Home Loan Bank		—			12,000			30,000
Net increase in repurchase agreements		—			—			10,100
(Decrease) increase in federal funds purchased		—			(6,727	)		8,327
Proceeds from common stock issuance		—			118			121
Dividends paid		(197	)		(1,255	)		(1,323	)
Cash provided by financing activities		69,624			32,758			112,235
Net increase (decrease) in cash and due from banks		142,257			(15,212	)		12,047
Cash and due from banks, beginning of year		9,381			24,593			12,546
Cash and due from banks, end of year	$	151,638		$	9,381		$	24,593
Supplemental cash flow information, Note 20

See accompanying notes to consolidated financial statements.

12 DBT HOLDING COMPANY

Notes to Consolidated Financial Statements

1. Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and conform to banking industry practices. These consolidated financial statements include the accounts of DBT Holding Company (the Company) and its wholly- owned subsidiaries, Darby Bank and Trust Company of Vidalia, Georgia (the Bank) and DBT Real Estate, LLC. All significant intercompany accounts have been eliminated in consolidation. The Company’s wholly-owned subsidiaries, DBT Capital Trust II and DBT Statutory Trust III, are not consolidated as the Company is not deemed to be the primary beneficiary of these variable interest entities.

Cash Equivalents

For the purpose of presentation in the consolidated statements of cash flows, cash and cash equivalents are defined as those amounts included in the balance sheet caption “Cash and Due from Banks”, which includes cash on hand, cash items in the process of collection, and amounts due from correspondent banks.

Investments

The Company has marketable investment securities. Debt securities that management has the ability and intent to hold to maturity are classified as held-to-maturity and carried at cost, adjusted for amortization of premiums and accretion of discounts, which are recognized as adjustments to interest income using a methodology that approximates a level-yield over the remaining period until maturity. Other securities are classified as available-for-sale and carried at fair value with net unrealized gains and losses included in accumulated other comprehensive income, a component of stockholders’ equity, on an after-tax basis. Realized gains and losses on disposition are determined using the specific identification method. The Company does not purchase securities for trading purposes.

The Company has investments in joint ventures and other entities. Investments where the Company’s voting interests are more than 20% and less than 50% are generally recorded on the equity method. The Company’s share of each entity’s equity is reported in the balance sheet line item; other assets and income or loss for the year is included in other income on the accompanying statements of income.

DBT HOLDING COMPANY 13

Notes to Consolidated Financial Statements

1. Summary of Significant Accounting Policies (cont.) Loans and Leases

Loans are reported at their outstanding principal balances net of any unearned income, charge-offs, unamortized deferred fees and costs on originated loans, and premiums or discounts on purchased loans. Loan origination fees and certain direct origination costs are deferred and recognized as adjustments to income over the lives of the related loans using a methodology that approximates a level-yield over the remaining period until maturity. Unearned income, discounts and premiums are amortized to income using a methodology that approximates a level-yield over the remaining period until maturity.

Interest on loans is accrued and credited to income based on the principal amount and contracted interest rate on the loan. Loans that are past due 90 days or more as to principal or interest, or where reasonable doubt exists as to timely collection of principal or interest, including loans that are individually identified as being impaired, are generally classified as non-accrual loans unless well-secured and in the process of collection. Interest accrued but not collected is reversed when a loan is classified as non-performing. Interest collections on non-performing loans for which the ultimate collectability of principal is uncertain are applied as principal reductions; otherwise, such collections are credited to income when received. Loans are returned to performing status only when the loan is brought current and ultimate collectability of principal is no longer in doubt.

The Company provides equipment financing to its customers through leasing arrangements, which are carried at the aggregate of lease payments receivable plus estimated residual value of the leased property, less unearned income. Unearned income on direct financing leases is amortized over the lease terms by methods that approximate the interest method.

Allowance for Loan and Lease Losses

The Company uses the allowance method to provide for loan losses. Accordingly, loan losses are charged to the allowance and recoveries are credited to the allowance. The allowance for loan and lease losses represents management’s estimate for probable losses on existing loans and leases. The Company performs periodic detailed reviews of its lending portfolio to identify credit risks and to assess the overall collectability of the portfolio. The allowance on certain homogeneous loans is based on aggregated portfolio segment evaluations generally by product type and the bank loan grade. Loss estimates for these loans consider a variety of factors including, but not limited to, historical loss experience, delinquencies, economic conditions and credit scores.

14 DBT HOLDING COMPANY

1. Summary of Significant Accounting Policies (cont.) Allowance for Loan and Lease Losses (cont.)

The remaining loans are reviewed on an individual loan basis. Loans subject to individual reviews are analyzed and segregated by risk according to the Company’s internal risk rating scale. If necessary, a specific allowance for loan and lease losses is established for individual loans. A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect amounts due according to the contractual terms of the agreement Specific allowances for impaired loans are generally determined based on collateral values or the present value of estimated cash flows. The risk classifications, in conjunction with an analysis of historical loss experience, current economic conditions and performance trends, and any other pertinent information, together with specific allowances for loan loss and impaired loans, result in the estimation of the allowance for loan and lease losses. Loans are charged-off against the allowance for loan and lease losses when available information confirms that the collection of the principal is considered remote.

Derivatives

The Company enters into derivative instruments in order to manage its exposure to interest rates on certain financial instruments. The accounting for the changes in the fair value of a derivative depends on the intended use of the derivative instrument at inception. For derivative contracts where the Company has elected hedge accounting, the effective portion of the hedge is accounted for in other comprehensive income rather than net income. For the derivative instruments that are not designated as hedging instruments the Company recognizes the gain or loss, calculated as the change in the fair value of the derivative instrument, in current earnings during the period of change. The Company bases the fair value of derivative instruments on market quotes or estimates of fair value for similar instruments. The Company reports derivative instruments that are an asset as other assets and derivative instruments that are liabilities as other liabilities.

Premises and Equipment

Premises and equipment are stated at cost less accumulated depreciation. Depreciation is charged to operations and is computed principally on the straight-line method over the estimated useful lives of the assets. Estimated lives range up to 40 years for buildings, up to 7 years for furniture and equipment, and the shorter of lease term or estimated useful life for leasehold improvements.

DBT HOLDING COMPANY 15

Notes to Consolidated Financial Statements

1. Summary of Significant Accounting Policies (cont.) Other Real Estate Owned

Other real estate owned is included in other assets. These properties are acquired through foreclosure or in full or partial satisfaction of the related loan. Other real estate owned is carried at the lower of cost or the fair value, net of estimated selling costs. After foreclosure, valuations are periodically performed by management and the carrying amounts are adjusted as necessary.

Income Taxes

Income taxes are provided for the tax effects of the transactions reported in the financial statements and consist of taxes currently due, plus deferred taxes or less deferred tax benefits. Deferred taxes or benefits are related primarily to temporary differences in reporting of allowance for loan losses and accumulated depreciation for financial and income tax reporting. The net deferred tax asset or liability represents the future tax consequences of those differences, which have been recognized in different periods for financial reporting than for income tax purposes.

In the event the future tax consequences of differences between the financial reporting bases and tax bases of the Company’s assets and liabilities result in deferred tax assets, an evaluation of the probability of being able to realize the future benefits indicated by such assets is made. 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 Company’s ability to realize the deferred tax assets, management considers the scheduled reversals of deferred tax liabilities, projected future taxable income and tax planning strategies.

Comprehensive Income

Accumulated other comprehensive income is comprised of unrealized gains and losses on available-for-sale securities and the change in value of derivatives and is reported net of applicable taxes. The Company records the changes in unrealized gains and losses on available-for-sale securities as a component of accumulated other comprehensive income and reports those changes in the statement of stockholders’ equity. Gains and losses on available-for-sale securities are reclassified to net income as the gains or losses are realized upon sale of the securities.

16 DBT HOLDING COMPANY

1. Summary of Significant Accounting Policies (cont.) Earnings Per Share

Basic earnings per share are calculated by dividing net income by the weighted average number of shares outstanding during the period. For diluted earnings per common share, net income can be affected by the conversion of the convertible preferred stock. Where the effect of this conversion would have been dilutive, net income is adjusted by the associated preferred dividends. This adjusted net income is divided by the weighted average number of common shares issued and outstanding for each period plus amounts representing the dilutive effect of stock options outstanding and the dilution resulting from the conversion of the convertible preferred stock.

Stock Compensation Plans

Stock options issued prior to January 1, 2006, are accounted for based on the intrinsic value method. Under this method, compensation expense for employee stock options was not recognized if the exercise price of the option equals or exceeds the estimated fair value of the stock on the date of grant. Pro-forma information regarding net income and earnings per share is disclosed in Note 22.

For equity awards granted after January 1, 2006, the cost of employee services received in exchange for equity instruments including options and restricted stock awards generally will be measured at fair value at the grant date. The grant date fair value will be estimated using option-pricing models adjusted for the unique characteristics of those options and instruments. The cost will be recognized over the requisite service period, often the vesting period.

The Company awarded restricted stock units in 2009 and 2008. The fair value of such units is expensed over the vesting period.

Off Balance Sheet Financial Instruments

In the ordinary course of business, the Bank has entered into off balance sheet financial instruments consisting of commitments to extend credit, commercial letters of credit and standby letters of credit Such financial instruments are recorded in the financial statements when they become payable and are subject to the same credit policies and processes afforded loans by the Company.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

DBT HOLDING COMPANY 17

Notes to Consolidated Financial Statements

1. Summary of Significant Accounting Policies (cont.) Use of Estimates (cont.)

A material estimate that is particularly susceptible to significant changes relates to the determination of the allowance for loan losses. While management uses all available information to estimate loan losses, future additions to the allowance may be necessary based on changes in local economic conditions or changes in the underlying credit of borrowers. In addition, regulatory agencies, as an integral part of the examination process, periodically review the Bank’s allowance for loan losses and may require the Bank to recognize additions to the allowance based on judgments about information available at the time of the examinations. Because of these factors, it is reasonably possible that the allowance for loan losses may change materially in the near term.

Subsequent Events

In May 2009, the FASB issued an accounting standard which establishes the general standards of accounting for, and disclosures of, events that occur after the balance sheet date but before financial statements are issued or available to be issued. It requires entities to disclose the date through which subsequent events have been evaluated and the basis for the date. This standard is effective for reporting periods ending after June 15, 2009 and was effective for the Company as of December 31, 2009. The adoption of this standard did not have a significant impact on the Company’s financial statements. The Company has evaluated subsequent events through March 10, 2010.

2. Restrictions on Cash and Due
from Banks When required, cash and due from banks includes required reserve amounts which under Federal Reserve Board Regulations are to be maintained on an average daily basis in the form of cash. There was no average reserve requirement at December 31, 2009 and 2008.

3. Investment Securities During 2009, the Company’s management philosophy as to investments was reconsidered. As a result, management no longer believes any securities meet the requirements to be classified as held-to-maturity. In March 2009, management reclassified approx $99,800,000 of previously classified held-to-maturity securities to the available-for sale classification. The securities were transferred at the market value at the time of transfer with the unrealized gain or loss being recorded to other comprehensive income. Subsequent to this transfer the Company sold approximately $66,000,000 of these transferred securities for a realized gain of approximately $1,600,000.

18 DBT HOLDING COMPANY

3. Investment Securities (cont.) Investment securities held-to-maturity consist of the following (in thousands):

December 31, 2008	Carrying Amount		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Obligations of United States government agencies	$	23,103	$	795	$	—		$	23,898
Obligations of states and political subdivisions		7,016		105		(247	)		6,874
Mortgage backed securities		74,720		1,608		(133	)		76,195
Corporate securities		3,053		—		(230	)		2,823
	$	107,892	$	2,508	$	(610	)	$	109,790

Investment securities available-for-sale consist of the following (in thousands):

December 31, 2009	Carrying Amount		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Obligations of United States government agencies	$	16,001	$	214	$	—		$	16,215
Obligations of states and political subdivisions		4,936		58		(74	)		4,920
Mortgage backed securities		85,865		634		(787	)		85,712
Corporate securities		2,009		—		(52	)		1,957
	$	108,811	$	906	$	(913	)	$	108,804
December 31, 2008	Carrying Amount		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Obligations of United States government agencies	$	2,980	$	115	$	—		$	3,095
Mortgage backed securities		6,118		139		(53	)		6,204
Corporate securities		1,993		—		(168	)		1,825
	$	11,091	$	254	$	(221	)	$	11,124

DBT HOLDING COMPANY 19

Notes to Consolidated Financial Statements

3. Investment Securities (cont.) Investment securities held-to-maturity consist of the following (in thousands):

December 31, 2008	Carrying Amount		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Obligations of United States government agencies	$	23,103	$	795	$	—		$	23,898
Obligations of states and political subdivisions		7,016		105		(247	)		6,874
Mortgage backed securities		74,720		1,608		(133	)		76,195
Corporate securities		3,053		—		(230	)		2,823
	$	107,892	$	2,508	$	(610	)	$	109,790

Investment securities available-for-sale consist of the following (in thousands):

December 31, 2009	Carrying Amount		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Obligations of United States government agencies	$	16,001	$	214	$	—		$	16,215
Obligations of states and political subdivisions		4,936		58		(74	)		4,920
Mortgage backed securities		85,865		634		(787	)		85,712
Corporate securities		2,009		—		(52	)		1,957
	$	108,811	$	906	$	(913	)	$	108,804
December 31, 2008	Carrying Amount		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Obligations of United States government agencies	$	2,980	$	115	$	—		$	3,095
Mortgage backed securities		6,118		139		(53	)		6,204
Corporate securities		1,993		—		(168	)		1,825
	$	11,091	$	254	$	(221	)	$	11,124

20 DBT HOLDING COMPANY

3. Investment Securities (cont.) Information pertaining to securities with gross unrealized losses at December 31, 2009, aggregated by investment category and length of time that individual securities have been in a continuous loss position, follows (in thousands):

	Less than 12 Months				12 Months or Greater				Total
December 31, 2009	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Available-for-sale
Obligations of United States government agencies	$	—	$	—	$	—	$	—	$	—	$	—
Obligations of states and political subdivisions		—		—		2,132		74		2,132		74
Mortgage backed securities		33,405		652		450		135		33,855		787
Corporate securities		—		—		1,957		52		1,957		52
	$	33,405	$	652	$	4,539	$	261	$	37,944	$	913

Management evaluated securities for other-than-temporary impairment annually, or more frequently when economic or market concerns warrant such evaluation. Consideration is given to the length of time and the extent to which fair value has been less than cost, the financial condition and near-term prospects of the issuer, and 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. As of December 31, 2009, management identified a mortgage backed security that met the other-than-temporary impairment criteria and noted a credit based impairment of $77,000 which they recorded through earnings.

The amortized cost and estimated market value of securities at December 31, 2009, by contractual maturity, are shown below. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations.

Securities available-for-sale are as follows (in thousands):

December 31, 2009	Carrying Value		Fair Value
Due one year or less	$	5,685	$	5,760
Due after one year through five years		48,780		49,349
Due after five years through ten years		47,910		47,469
Due after ten years		6,436		6,226
	$	108,811	$	108,804

DBT HOLDING COMPANY 21

Notes to Consolidated Financial Statements

4. Investment Securities (cont.) In 2009, held-to-maturity securities were called resulting in proceeds of $6,175,000 and no gross gains or losses. In 2009, available-for-sale securities were called, resulting in proceeds of $638,000 and no gross gains or losses. In 2009, available-for-sale securities were sold, resulting in proceeds of $80,439,000 and gross gains of $2,451,000. In 2008, held-to-maturity securities were called resulting in proceeds of $26,613,000 and no gross gains or losses.

Investment securities with an approximate market value of $47,799,000 at December 31, 2009 and $74,644,000 at December 31, 2008, were pledged to secure public deposits and for other purposes.

5. Other Investments, Certificates of Deposit The bank invests in certificates of deposit with various financial institutions. These deposits mature at various dates through July 2011 and accrue interest at rates ranging from 1.85% to 2.95%. At December 31, 2009 and 2008 the balance was $25,188,000 and $6,460,000, respectively.

6. Loans and Leases Major classifications of loans and leases are as follows (in thousands):

December 31,	2009			2008
Commercial loans	$	465,119		$	563,202
Home equity and personal lines of credit		10,427			11,129
Installment loans		22,062			28,295
Leases		4,236			6,583
Unearned fees		(169	)		(154	)
Allowance for loan losses		(17,499	)		(9,822	)
Loans, net		484,176			599,233
Overdrafts		149			107
	$	484,325		$	599,340

The Bank grants loans and extensions of credit to individuals and a variety of businesses located primarily in Southeastern Georgia. A substantial portion of the loan portfolio is collateralized by improved and unimproved real estate, equipment, inventory and other security.

Changes in the allowance for loan losses are as follows (in thousands):

December 31,	2009			2008			2007
Balance, beginning of year	$	9,822		$	7,418		$	7,165
Provision for loan losses		31,290			7,215			3,056
Charge-offs		(24,623	)		(5,218	)		(3,001	)
Recoveries		1,010			407			198
Balance, end of year	$	17,499		$	9,822		$	7,418

22 DBT HOLDING COMPANY

6. Loans and Leases (cont.) Impairment of loans having recorded investments of $46,816,000 and $34,976,000 at December 31, 2009 and 2008, respectively, have been recognized. The average recorded investment in such impaired loans during 2009 and 2008 was $50,905,000 and $33,789,000, respectively. The total allowance for loan losses related to these loans was $9,422,000 and $6,237,000 at December 31, 2009 and 2008, respectively. In 2009 and 2008, the Bank received payments on these loans totaling $7,430,000 and $2,755,000, respectively. In 2009 and 2008, interest income recognized on these loans was $2,903,000 and $2,124,000, respectively.

In addition, at December 31, 2009 the Bank had other non-accrual loans of $40,211,000 that were not identified as impaired.

Maturities of loans and leases by category and interest rate type are as follows (in thousands):

December 31, 2009	Variable		Fixed		Total
One year or less	$	242,376	$	87,760	$	330,136
One to two years		43,439		51,818		95,257
Two to three years		15,611		25,494		41,105
Three to five years		2,288		11,346		13,634
Five to ten years		9,131		2,685		11,816
More than ten years		3,909		5,967		9,876
	$	316,754	$	185,070	$	501,824
December 31, 2009	Commercial		Consumer		Total
One year or less	$	317,436	$	12,700	$	330,136
One to two years		89,945		5,312		95,257
Two to three years		36,892		4,213		41,105
Three to five years		12,015		1,619		13,634
Five to ten years		4,307		7,509		11,816
More than ten years		9,024		852		9,876
	$	469,619	$	32,205	$	501,824

7. Derivatives Derivatives utilized by the Company include swaps and option contracts. A swap agreement is a contract between two parties to exchange cash flows based on specified underlying notional amounts, assets and/or indices. An option contract is an agreement that conveys to the purchaser the right, but not the obligation, to buy or sell a quantity of a financial instrument, index, currency or commodity at a predetermined rate or price during a period or at a time in the future. Option agreements can be transacted on organized exchanges or directly between parties.

DBT HOLDING COMPANY 23

Notes to Consolidated Financial Statements

7. Derivatives (cont.) The Company is exposed to counterparty credit risk for non-performance and, in the event of non-performance, to market risk for changes in interest rates. The Company’s derivative activities are primarily with commercial banks and broker/dealers. To minimize credit risk, the Company enters into legally enforceable netting agreements, which reduce risk by permitting the closeout and netting of transactions with the same counterparty upon occurrence of certain events.

At December 31, 2009, the Company was party to swaps and option contracts with an aggregate notional amount of approximately $6,028,000. At December 31, 2009, the fair value of the swaps liability and option contracts asset were ($278,000) and $ 100, respectively. At December 31, 2008, the fair value of the swaps liability and option contracts asset were ($394,000) and $49,000, respectively.

8. Premises and Equipment Major classifications of premises and equipment are summarized as follows (in thousands):

December 31,	2009			2008
Land	$	3,138		$	3,138
Buildings		6,746			6,746
Equipment		7,256			7,246
Automobiles		410			489
Leased assets		1,522			1,972
Leasehold improvements		1,007			1,007
		20,079			20,598
Accumulated depreciation		(8,451	)		(7,417	)
Construction in progress		59			59
	$	11,687		$	13,240

9. Other Assets Other assets consisted of the following (in thousands):

December 31,	2009		2008
Accrued interest receivable	$	3,112	$	4,369
Prepaid expenses		1,802		1,562
Deferred tax assets, net		1,346		3,559
Bank owned life insurance		6,524		6,284
Other investments		369		369
Other		731		153
	$	13,884	$	16,296

24 DBT HOLDING COMPANY

9. Other Assets (cont.) The Bank funded the purchase of bank owned life insurance policies on the lives of certain officers and employees of the bank. The Company has recognized any increase in the cash surrender value of life insurance, net of insurance costs, in the consolidated statements of income as other income. In 2009, 2008 and 2007, the cash surrender value increased by approximately $240,000, $259,000 and $241,000, respectively.

10. Deposits Scheduled maturities of time deposits are as follows (in thousands):

December 31,
2010	$	170,446
2011		148,930
2012		212,664
2013		15,803
2014		4,571
	$	552,414

At December 31, 2009, time deposits included $325,808,000 of out-of-market deposits. These deposits are scheduled to mature at various dates through 2012.

11. Income Taxes The consolidated provision for income taxes consisted of the following (in thousands):

Years ended December 31,	2009			2008			2007
Current (benefit) payable	$	(9,387	)	$	1,171		$	3,321
Deferred tax benefit		(4,945	)		(1,017	)		(351	)
Valuation allowance		7,162			—			—
	$	(7,170	)	$	154		$	2,970

Deferred tax benefit does not reflect the deferred tax effects of unrealized gains and losses on available-for-sale securities and derivative financial instruments of $ 136,000 in 2009 and $ 153,000 in 2008.

DBT HOLDING COMPANY 25

Notes to Consolidated Financial Statements

11. Income Taxes (cont.) The following is a reconciliation of income tax expense at the statutory rate to income tax expense at the effective rate (in thousands):

Years ended December 31,	2009			2008			2007
Income tax (benefit)/expense at statutory rate	$	(13,697	)	$	549		$	3,352
Effect of tax exempt income		(204	)		(239	)		(305	)
Effect of nondeductible expenses		104			136			137
Tax credits utilized		(305	)		(193	)		(195	)
Other		(230	)		(99	)		(19	)
Valuation allowance		7,162			—			—
	$	(7,170	)	$	154		$	2,970

Deferred tax assets and liabilities have been provided for temporary deductible and taxable differences relating to the allowance for loan losses, accumulated depreciation and tax credits carried forward (in thousands):

December 31,	2009			2008
Deferred tax assets	$	9,659		$	4,844
Valuation allowance		(7,162	)		—
Net deferred tax assets		2,497			4,844
Deferred tax liabilities		(1,151	)		(1,285	)
Net deferred tax assets	$	1,346		$	3,559

The future tax consequences of the differences between the financial reporting and tax basis of the Company’s assets and liabilities resulted in a net deferred tax asset at December 31, 2009 and 2008. A valuation allowance was established for the net deferred tax asset as of December 31, 2009 for the portion where management has determined is more likely than not to not be realized as of December 31, 2009.

12. Employee Benefit Plan The Company has a noncontributory profit sharing plan for eligible employees. The Company’s contributions to the plan, as determined by management, are discretionary, and subject to certain limitations. The amounts contributed to the plan for the years ended December 31, 2009, 2008 and 2007 were approximately $0, $0, and $621,000, respectively.

26 DBT HOLDING COMPANY

13. Changes in Capital Stock In 2004, the Board of Directors authorized 116,800 shares of a class of preferred shares designated as Series B Convertible Preferred Stock. Noncumulative dividends, as declared by the Board of Directors, will be payable at a rate of 5% per annum, payable quarterly. Holders of this class of stock are entitled to a liquidation preference of $42.808 per share, plus any declared but unpaid dividends. This preference is junior to the Company’s subordinated debentures and trust preferred securities. In the event of a change in control of the Company, each preferred stockholder shall have the right to convert each share of preferred stock into a share of common stock of the Company. On June 30, 2009, each share of outstanding preferred stock automatically converted to a share of common stock.

In 2008, the Board of Directors authorized 83,350 shares of a class of preferred shares designated as Series C Convertible Preferred Stock. Noncumulative dividends, as declared by the Board of Directors, will be payable at a rate of 8% per annum, payable semi-annually. Holders of this class of stock are entitled to a liquidation preference of $30 per share, plus any declared but unpaid dividends. This preference is junior to the Company’s subordinated debentures and trust preferred securities. In the event of a change in control, each preferred stockholder or the Company shall have the right to convert each share of preferred stock into a share of common stock of the Company. On December 31, 2011, each share of outstanding preferred stock will automatically convert to a share of common stock. At December 31, 2009, 67,171 shares had been issued totaling $2,001,000, less expenses of the offering. At December 31, 2008, 45,168 shares had been issued totaling $1,355,000, less expenses of the offering.

14. Related Party Transactions The Company makes loans and accepts deposits with certain of its employees, directors, significant stockholders and their affiliates (Related Parties). Such transactions were made in the ordinary course of business on substantially the same terms and conditions, including interest rates and collateral, as those prevailing at the same time for comparable transactions with other customers, and did not, in the opinion of management, involve more than normal credit risk or present other unfavorable features. The aggregate amounts of loans to such Related Parties were $5,856,000 and $18,710,000 at December 31, 2009 and 2008, respectively. The aggregate amounts of deposits accepted from Related Parties were $8,439,000 and $7,806,000 at December 31, 2009 and 2008, respectively.

Changes in Related Party loans during the year are as follows (in thousands):

For the year ended December 31,	2009
Balance, beginning of year	$	18,710
Advances		320
Repayments		(1,287	)
Change in status		(11,887	)
Balance, end of year	$	5,856

DBT HOLDING COMPANY 27

Notes to Consolidated Financial Statements

15. Group Concentration of Credit Risk Most of the Bank’s lending activity is with customers located within the local lending area. Although the Bank has a diversified loan portfolio, a substantial portion of its debtors’ ability to honor their contracts is dependent upon economic conditions in the local lending area, which primarily includes Toombs and Chatham counties.

16. Commitments and Contingent Liabilities The Bank is party to financial instruments with off balance sheet risk in the normal course of business to meet the financing needs of its customers. These instruments involve, to varying degrees, elements of credit risk, interest rate risk and liquidity risk.

The Bank’s exposure to credit loss, in the event of non-performance by the customer for commitments to extend credit and standby letters of credit, is represented by the contractual amount of those instruments. The Bank uses the same credit policies in making credit commitments as those for the extension of credit on loans included in the financial statements. Collateral or other securities are generally required for commitments to extend credit The amount of collateral obtained, if deemed necessary, varies, but may include securities, accounts receivable, inventory, equipment and real estate.

A summary of the Bank’s off balance sheet financial instruments were as follows (in thousands):

December 31, 2009
Loan commitments	$	5,073
Standby letters of credit	$	2,853

The Company has entered into various lease agreements which are classified as operating leases. Rent expense was $831,000, $868,000 and $756,000 for the years ended December 31, 2009, 2008 and 2007, respectively.

Future minimum lease payments are as follows (in thousands):

Years ending December 31,
2010	$	761
2011		765
2012		789
2013		814
2014		833
Thereafter		11,078
	$	15,040

The bank leases certain office space from a related party. The lease commenced in 2007 and has an initial term of ten years with three five year renewal options. Monthly lease payments are approximately $ 11,000.

28 DBT HOLDING COMPANY

16. Commitments and Contingent Liabilities (cont). The Company is subject to various claims and lawsuits arising in the ordinary course of business. In the opinion of management, the ultimate resolution of the matters will not have a material effect on the combined financial statements of the Company.

17. Advances from Federal Home Loan Bank The Bank had outstanding advances from the Federal Home Loan Bank of $62,000,000 and $62,000,000 as of December 31, 2009 and 2008, respectively. Specific mortgage and commercial real estate loans totaling approximately $93,220,000 and $121,389,000, respectively, were pledged to secure these and future advances. The Bank may obtain advances up to 60% of the pledged amount for mortgage loans, up to 40% of the pledged amount for commercial real estate loans, and up to 50% of the pledged amount for home equity lines of credit and second mortgage loans. The Bank is required to keep all advances fully collateralized with qualifying mortgages, commercial real estate loans and home equity lines or eligible securities. The Bank is also required to purchase a certain amount of stock from the Federal Home Loan Bank, which is calculated in accordance with Federal Home Loan Bank standards.

18. Other Borrowings Other borrowings consist of the following (in thousands):

December 31,	2009		2008
DBT Capital Trust II	$	3,093	$	3,093
DBT Capital Trust III		6,186		6,186
Securities sold under repurchase agreement		10,100		10,100
Line of credit		1,600		1,600
	$	20,979	$	20,979

These borrowings are more fully described below.

In December 2002, the Company formed a wholly-owned subsidiary, DBT Capital Trust II (Trust II), and was issued $93,000 of floating rate common securities by Trust II. Trust II also issued $3,000,000 in floating rate capital securities (Trust Preferred Securities) to qualified institutional buyers. Trust II invested these proceeds in $3,093,000 of the Company’s Series 2002-1 Unsecured Floating Junior Subordinated Debentures (the 2002 Debentures). The 2002 Debentures represent the sole assets of Trust II, mature on December 31, 2032, bear interest at the adjustable rate of prime plus 1.25% payable quarterly and are redeemable in whole, or in part, by the Company beginning on December 31, 2007 at 100% of the principal amount plus any accrued and unpaid interest to the redemption date.

DBT HOLDING COMPANY 29

Notes to Consolidated Financial Statements

18. Other Borrowings (cont) In 2006, the Company formed a wholly-owned subsidiary, DBT Statutory Trust III (Trust III), and was issued $186,000 of floating rate common securities by Trust III. Trust III also issued $6,000,000 in floating rate capital securities (Trust Preferred Securities) to qualified institutional buyers. Trust III invested these proceeds in $6,186,000 of the Company’s 2006-1 Unsecured Floating Rate Junior Subordinated Debentures (the 2006 Debentures). The 2006 Debentures represent the sole assets of Trust III, mature on December 15, 2036, bear interest at the adjustable rate of LIBOR plus 1.70%, payable quarterly and are redeemable in whole, or in part, by the Company beginning on December 15, 2011, at 100% of the principal amount plus any accrued and unpaid interest to the redemption date.

The 2002 and 2006 Debentures are unsecured obligations of the Company and are junior in right of payment to all present and future senior indebtedness of the Company. The Company may defer interest payments on the 2002 and 2006 Debentures from time-to-time for a period not exceeding twenty consecutive quarters. However, any unpaid quarterly interest payments will continue to accrue interest at prime plus 1.25% for the 2002 Debentures and LIBOR plus 1.70% for the 2006 Debentures.

Holders of the Trust Preferred Securities are entitled to cumulative cash distributions. The Trust Preferred Securities will be redeemed upon repayment of the 2002 and 2006 Debentures. If the Company defers interest payments on the 2002 and 2006 Debentures, Trust II and Trust III will defer distributions on the Trust Preferred Securities during any deferral period. However, any unpaid quarterly distributions on the Trust Preferred Securities will continue to accrue with interest at prime plus 1.25% for Trust II and LIBOR plus 1.70% for Trust III. The Company has guaranteed, on a subordinated basis, distributions and other payments due on the Trust Preferred Securities.

The Bank has entered into a repurchase agreement for certain securities. The agreement requires interest at a variable rate based upon LIBOR and matures June 25, 2012. As of December 31, 2009, the Bank sold $ 10,100,000 under this agreement

19. Other Credit Arrangements The Company maintains a line of credit with a financial institution in the amount of $ 1,600,000. As of December 31, 2009, there was $1,600,000 outstanding.

20. Fair Values of Financial Instruments The assumptions used in the estimation of the fair value of financial instruments are detailed below. Where quoted prices are not available, fair values are based on estimates using discounted cash flows and other valuation techniques. The use of discounted cash flows can be significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. The following disclosures should not be considered as representative of the liquidation value of the Company, but rather a good-faith estimate of the increase or decrease in value of financial instruments held since purchase, origination or issuance.

Cash and Short-Term Investments

For cash, due from banks, federal funds sold and interest-bearing deposits with other banks, the carrying amount is a reasonable estimate of fair value.

30 DBT HOLDING COMPANY

20. Fair Values of Financial Instruments (cont.) Investment Securities

Fair values for investment securities are based on quoted market prices.

Loans and Commitments to Extend Credit and Standby Letters of Credit

For variable rate loans that reprice frequently with no significant change in credit risk, fair values are based on carrying amounts. The fair values of other loans (for example, fixed rate real estate loans, commercial and state and municipal loans) are estimated using discounted cash flow analysis, based on interest rates currently being offered for loans with similar terms to borrowers of similar credit quality. Loan fair value estimates include adjustments regarding future expected loss experience and risk characteristics.

Federal Home Loan Bank (FHLB) Stock

It is not practical to estimate the fair value of FHLB Stock, as it is not marketable. The investment in FHLB Stock is carried at cost in the accompanying balance sheet and is assumed to approximate fair value.

Interest Receivable and Other Assets

The carrying amounts of these assets are assumed to approximate their fair values.

Deposit Liabilities

The fair value of demand deposits, savings accounts and certain money market deposits is the amount payable on demand at the reporting date. The fair value of fixed maturity certificates of deposit is estimated by discounting the future cash flows using the rates currently offered for deposits of similar remaining maturities.

Advances from Federal Home Loan Bank and Other Borrowings

The carrying amounts of short-term borrowings approximate their fair values.

Accrued Interest and Other Liabilities

The carrying amounts of these liabilities are assumed to approximate their fair values.

DBT HOLDING COMPANY 31

Notes to Consolidated Financial Statements

20. Fair Values of Financial Instruments (cont.) Accrued Interest and Other Liabilities (cont.)

Fair value estimates are made at a specific point in time based on relevant market information, and information about the respective financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Bank’s entire holdings of a particular financial instrument Because no market exists for a significant portion of the Bank’s financial instruments, fair value estimates are based on judgments, which are subjective in nature and involve uncertainties and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates. Fair value estimates are based on existing and off balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. Significant assets and liabilities that are not considered financial instruments include deferred income taxes and premises and equipment. In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimates.

The carrying amounts and estimated fair values of the Bank’s financial instruments are as follows (in thousands):

	2009				2008
As of December 31,	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Assets
Investment securities	$	108,811	$	108,804	$	118,983	$	120,914
Federal Home Loan Bank stock	$	4,203	$	4,203	$	4,145	$	4,145
Loans	$	484,325	$	482,891	$	599,340	$	609,287
Liabilities
Deposits	$	718,406	$	727,568	$	648,585	$	652,687
Borrowings	$	82,979	$	82,979	$	82,979	$	82,979
Off balance sheet financial instruments
Commitments to extend credit	$	—	$	5,058	$	—	$	84,611

32 DBT HOLDING COMPANY

20. Fair Values of Financial Instruments (cont.) Assets measured at fair value on a recurring basis as follows (in thousands):

As of December 31, 2009
	Total carrying value in the consolidated balance sheet at December 31, 2009		Quoted market prices in an active market (Level 1)		Significant other observable market parameters (Level 2)		Internal models with significant unobservable market parameters (Level 3)
Investment securities	$	108,804	$	108,804	$	—	$	—

Assets measured at fair value on a recurring basis as follows (in thousands):

As of December 31, 2008
	Total carrying value in the consolidated balance sheet at December 31, 2008		Quoted market prices in an  active market (Level 1)		Significant other observable  market parameters (Level 2)		Internal models with significant  unobservable market parameters (Level 3)
Investment securities	$	11,124	$	11,124	$	—	$	—

DBT HOLDING COMPANY 33

Notes to Consolidated Financial Statements

20. Fair Values of Financial Instruments (cont.) Assets and liabilities measured at fair value on a non-recurring basis as follows (in thousands):

As of December 31, 2009
	Total carrying value in the consolidated balance sheet at December 31, 2009		Quoted market prices in an active market (Level 1)		Significant other observable market parameters (Level 2)		Internal models  with significant unobservable market parameters (Level 3)
Assets
Impaired loans	$	37,394	$	—	$	—	$	37,394
Other real estate owned		20,559		—		—		20,559
Total assets at fair value	$	57,953	$	—	$	—	$	57,953
Liabilities
Derivative financial instruments	$	278	$	—	$	278	$	—
Total liabilities at fair value	$	278	$	—	$	278	$	—

34 DBT HOLDING COMPANY

20. Fair Values of Financial Instruments (cont.) Assets measured at fair value on a nonrecurring basis as follows (in thousands):

As of December 31, 2008
	Total carrying value in the consolidated balance sheet at December 31, 2008		Quoted market prices in an active market (Level 1)		Significant other observable market parameters (Level 2)		Internal models with significant unobservable market parameters (Level 3)
Assets
Impaired loans	$	28,739	$	—	$	—	$	28,739
Other real estate owned		16,356		—		—		16,356
Derivative financial instruments		49		—		49		—
Total assets at fair value	$	45,144	$	—	$	49	$	45,095
Liabilities
Derivative financial instruments	$	394	$	—	$	394	$	—
Total liabilities at fair value	$	394	$	—	$	394	$	—

Rollforward of assets determined to be a Level 3 (in thousands):

	Impaired Loans		Other Real Estate Owned
Balance at December 31, 2008	$	28,739	$	16,356
Total losses for the year		—		(2,449	)
Net transfers in/out Level 3		8,655		6,652
Balance at December 31, 2009	$	37,394	$	20,559

DBT HOLDING COMPANY 35

Notes to Consolidated Financial Statements

21. Regulatory Matters The Bank is 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 Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank’s assets, liabilities and certain off balance sheet items as calculated under regulatory accounting practices. The Bank’s 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 Bank to maintain minimum amounts and ratios (set forth in the table below) of Total and Tier I capital (as defined in the regulations) to risk-weighted assets (as defined), and Tier I capital (as defined) to average assets (as defined). Due to the Bank’s condition, the FDIC has required that the Bank’s Board of Directors sign a Consent Order which conveys specific actions needed to address certain findings from the examination and to address the Bank’s current financial condition. The Bank entered into the Consent Order with the FDIC on December 18, 2009 and it contains a list of strict requirements including the following:

• The Board of Directors must create a committee to ensure compliance with the Order; the Committee must ensure appropriate management is in place and regularly monitor activities towards compliance with the Consent Order.

• The Bank must implement a plan to raise additional capital and meet or exceed certain minimum capital ratios within a specified time period.

• The Bank may not pay dividends without prior approval from the FDIC.

• The Bank must charge off certain non-performing and classified assets and formulate a written plan to deal with significant non-performing assets.

• The Bank must continually reevaluate its Allowance for Loan and Lease Losses and accounting for Other Real Estate and ensure adequate provisions.

• The Bank shall review its underwriting policy and is limited in making additional extensions of credit to certain borrowers.

• The Bank must establish a written liquidity management plan, interest rate risk policy, budget and strategic business plan for submission to the FDIC.

• The Bank’s ability to accept, renew or roll over brokered deposits will be limited without being granted a waiver of this provision by the FDIC.

The Bank’s Board of Directors has put plans in place to respond to and comply with the Consent Order. There is no assurance that the FDIC will accept such response or that the Bank will achieve compliance with the Consent Order.

36 DBT HOLDING COMPANY

21. Regulatory Matters (cont.) The Bank’s actual capital amounts and ratios are also presented in the table (in thousands).

	Actual					For Capital Adequacy Purposes					To Be Well Capitalized Under Prompt Corrective Action Provisions
As of December 31, 2009	Amount		Ratio			Amount		Ratio			Amount		Ratio
Total capital (to risk-weighted assets)
DBT Holding Company	$	36,901		7.1	%	$	41,451		8.0	%	$	51,814		10.0	%
Darby Bank & Trust	$	37,519		7.2	%	$	41,434		8.0	%	$	51,792		10.0	%
Tier I capital (to risk-weighted assets)
DBT Holding Company	$	25,699		4.9	%	$	20,726		4.0	%	$	31,089		6.0	%
Darby Bank & Trust	$	30,909		5.9	%	$	20,717		4.0	%	$	31,075		6.0	%
Tier I capital (to average assets)
DBT Holding Company	$	25,699		2.9	%	$	34,339		4.0	%	$	42,923		5.0	%
Darby Bank & Trust	$	30,909		3.6	%	$	34,452		4.0	%	$	43,066		5.0	%
As of December 31, 2008
Total capital (to risk-weighted assets)
DBT Holding Company	$	58,563		9.4	%	$	50,196		8.0	%	$	62,745		10.0	%
Darby Bank & Trust	$	65,395		10.4	%	$	50,171		8.0	%	$	62,714		10.0	%
Tier I capital (to risk-weighted assets)
DBT Holding Company	$	66,431		10.2	%	$	25,098		4.0	%	$	37,647		6.0	%
Darby Bank & Trust	$	57,560		9.2	%	$	25,086		4.0	%	$	37,628		6.0	%
Tier I capital (to average assets)
DBT Holding Company	$	58,563		7.2	%	$	25,318		4.0	%	$	31,648		5.0	%
Darby Bank & Trust	$	57,560		7.1	%	$	32,639		4.0	%	$	40,798		5.0	%

DBT HOLDING COMPANY 37

Notes to Consolidated Financial Statements

22. Supplemental Cash Flow Information Noncash transactions:

During 2009, 2008 and 2007, loans having a carrying value of $ 15,253,000, $21,445,000, and $2,539,000, respectively, were transferred to other real estate owned.

Cash paid during the year for (in thousands):

December 31,	2009		2008		2007
Interest	$	20,564	$	22,856	$	25,422
Income taxes	$	—	$	1,505	$	3,641

23. Stock Incentive Plan The Company sponsors various stock option plans. An aggregate of 120,000 shares have been reserved for issuance under the plans. The grant price, exercise period and vesting schedule for each option are determined at the date of grant by the Board of Directors.

December 31,	2009					2008					2007
	Shares			Weighted Average Exercise Price		Shares			Weighted Average Exercise Price		Shares			Weighted Average Exercise Price
Outstanding at beginning of year		46,690		$	21.71		78,443		$	16.58		86,046		$	16.53
Granted		—		$	—		—		$	—		—		$	—
Exercised		—		$	—		(22,153	)	$	7.63		(7,603	)	$	15.97
Forfeited		(9,197	)	$	28.99		(9,600	)	$	7.45		—		$	—
Outstanding at end of year		37,493		$	21.17		46,690		$	22.71		78,443		$	16.58
Options exercisable at end of year		35,803		$	20.34		41,391		$	20.67		58,014		$	14.83
Weighted average fair value of all options granted during the year				$	—				$	—				$	—

38 DBT HOLDING COMPANY

23. Stock Incentive Plan (cont.)

Options Outstanding						Options Exercisable
Range of Option Prices		Weighted Average Remaining Contractual Life (Years)		Options Outstanding December 31, 2009		Weighted Average Exercise Price		Options Exercisable December 31, 2009		Weighted Average Exercise Price
	$ 12-13		1		17,328	$	12.79		18,528	$	12.79
	$ 19-21		4		11,717	$	20.94		18,000	$	20.94
	$ 38-39		6		8,448	$	38.68		12,518	$	38.68

The following table illustrates the effect on net income and earnings per share if the Company had applied the fair value recognition of the stock-based compensation accounting standard (in thousands, except per share data):

December 31,	2009			2008		2007
Net income available to common Stockholders
As reported	$	(28,913	)	$	1,292	$	5,860
Deduct: stock-based compensation expense determined under fair value method, net of tax benefit	$	14		$	19	$	34
Pro forma	$	(28,927	)	$	1,273	$	5,826
Basic (loss) earnings per share
As reported	$	(21.71	)	$	.83	$	4.65
Pro forma	$	(21.72	)	$	.81	$	4.62
Diluted (loss) earnings per share
As reported	$	(21.71	)	$	.93	$	4.35
Pro forma	$	(21.72	)	$	.91	$	4.33

DBT HOLDING COMPANY 39

Notes to Consolidated Financial Statements

23. Stock Incentive Plan (cont.) The fair value of options granted was estimated on the date of grant using the Black Scholes Valuation method with the following weighted average assumptions: dividend yield of 1.6% to 2.6%; a risk-free interest rate of 4%; and an expected life of 10 years.

In 2001, the Company instituted a director stock incentive plan. An aggregate of 24,000 shares have been reserved for issuance under the plan. Certain eligible directors have elected to receive payment for 2009, 2008 and 2007 director fees in shares of common stock, resulting in the issuance of 4,903 shares, 2,869 shares, and 1,814 shares, respectively.

In 2007, the Company instituted a restricted stock unit plan. A restricted stock unit represents the contingent right to receive one share of the Company’s common stock at a future date. The restricted stock units vest on a pro-rata basis in periods ranging from one to five years and are expensed accordingly on a straight-line basis. There were 14,267 and 5,850 restricted stock units granted in 2009 and 2008, respectively.

24. (Loss) / Earnings Per Share In thousands except share information.

December 31,	2009
	Income (Numerator)			Shares (Denominator)		Per Share Amount
Net loss	$	(28,913	)
Less: preferred stock dividends		197
Basic EPS
Loss available to common stockholders	$	(29,110	)		1,340,843	$	(21.71	)
Effect of dilutive securities
Stock options and restricted stock units		—			—
Series B convertible preferred stock		—			—
Series C convertible preferred stock		—			—
Diluted EPS
Loss available to common stockholders plus assumed conversions	$	(29,110	)		1,340,843	$	(21.71	)

Due to the net loss as of December 31, 2009, the calculation of diluted per share amounts would cause an anti-dilutive result and, therefore, is not calculated

40 DBT HOLDING COMPANY

24. (Loss) / Earnings Per Share In thousands except share information.

December 31,	2008
	Income (Numerator)		Shares (Denominator)		Per Share Amount
Net income	$	1,292
Less: preferred stock dividends		250
Basic EPS
Income available to common stockholders	$	1,042		1,257,697	$	.83
Effect of dilutive securities
Stock options		—		18,813
Series B convertible preferred stock		250		116,800
Diluted EPS
Income available to common stockholders plus assumed conversions	$	1,292		1,393,310	$	.93
December 31,	2007
	Income (Numerator)		Shares (Denominator)		Per Share Amount
Net income	$	5,860
Less: preferred stock dividends		403
Basic EPS
Income available to common stockholders	$	5,457		1,173,206	$	4.65
Effect of dilutive securities
Stock options		—		57,065
Series A convertible preferred stock		152		—
Series B convertible preferred stock		251		116,800
Diluted EPS
Income available to common stockholders plus assumed conversions	$	5,860		1,347,071	$	4.35

25. Reclassification Certain amounts reported in the prior years’ financial statements have been reclassified to conform to the current reporting format.

DBT HOLDING COMPANY 41

Notes to Consolidated Financial Statements

26. Condensed Financial Statements of DBT Holding Company (Parent Company Only)

Condensed Balance Sheets (In thousands) December 31,	2009			2008
Assets
Cash	$	289		$	530
Investment in subsidiaries		30,905			57,605
Other assets		1,454			2,496
	$	32,648		$	60,631
Liabilities
Other payables	$	683		$	368
Borrowings		10,879			10,879
		11,562			11,247
Stockholders’ equity
Common stock		1,400			1,280
Preferred stock		2,001			6,339
Surplus		19,403			14,362
Retained earnings		(1,529	)		27,581
Accumulated other comprehensive income		(189	)		(178	)
		21,086			49,384
	$	32,648		$	60,631

Condensed Statements of Earnings (In thousands) Years ended December 31,	2009			2008		2007
Revenues
Dividend income	$	—		$	14	$	1,222
Equity in undistributed (loss) earnings of subsidiary		(28,650	)		1,367		5,483
Other		45			620		449
Total (loss) income		(28,605	)		2,001		7,154
Expenses
Salaries and benefits		74			245		370
Other operating expenses		234			464		924
		308			709		1,294
Net (loss) earnings	$	(28,913	)	$	1,292	$	5,860

42 DBT HOLDING COMPANY

26. Condensed Financial Statements of DBT Holding Company (Parent Company Only) (cont.)

Condensed Statements of Cash Flows (In thousands) Years ended December 31,	2009			2008			2007
Cash flows from operating activities
Net (loss) earnings	$	(28,913	)	$	1,292		$	5,860
Adjustments to reconcile net (loss) earnings to cash provided by operating activities
Undistributed loss (earnings) of subsidiary		28,650			(1,367	)		(5,483	)
Stock-based compensation expense		177			214			138
Changes in
Other assets		1,042			(244	)		(423	)
Other payables		354			(631	)		126
Cash provided by (used for) operating activities		1,310			(736	)		218
Cash flows from investing activity
Investment in subsidiaries		(2,000	)		(1,850	)		—
Cash used for investing activity		(2,000	)		(1,850	)		—
Cash flows from financing activities
Increase to line of credit		—			1,600			—
Common stock issued		—			118			121
Preferred stock subscribed		646			1,355			—
Payment of cash dividends		(197	)		(1,255	)		(1,324	)
Cash provided by (used for) financing activities		449			1,818			(1,203	)
Net decrease in cash and cash equivalents		(241	)		(768	)		(985	)
Cash and cash equivalents, beginning of year		530			1,298			2,283
Cash and cash equivalents, end of year	$	289		$	530		$	1,298

DBT HOLDING COMPANY 43

EX-99.3

Exhibit 99.3

DARBY BANK AND TRUST COMPANY

BALANCE SHEETS

(UNAUDITED)

(Dollars in Thousands)

Assets	September 30, 2010			December 31, 2009
Cash and due from banks	$	9,080		$	33,592
Interest-bearing deposits in banks		86,130			143,133
Federal funds sold		—			—
Securities available for sale, at fair value		104,592			108,804
Other investments		4,203			4,203
Loans, net of unearned income		398,815			501,823
Less allowance for loan losses		12,604			17,499
Loans, net		386,211			484,324
Premises and equipment, net		10,136			11,687
Other real estate owned		42,190			20,559
Other assets		12,172			21,759
	$	654,714		$	828,061
Liabilities and Stockholders’ Equity
Deposits
Noninterest-bearing	$	41,077		$	44,286
Interest-bearing		546,549			674,409
Total deposits		587,626			718,695
Securities sold under agreements to repurchase		10,100			10,100
Other borrowings		42,000			62,000
Other liabilities		5,968			6,362
Total liabilities		645,694			797,157
Stockholders’ equity
Common stock, par value $1; 500,000 shares authorized and issued		500			500
Capital surplus		19,486			19,486
Retained earnings		(11,923	)		10,923
Accumulated other comprehensive income, net of tax		957			(5	)
Total stockholders’ equity		9,020			30,904
	$	654,714		$	828,061

See Notes to Financial Statements.

1

DARBY BANK AND TRUST COMPANY

STATEMENT OF OPERATIONS

(UNAUDITED)

(Dollars in Thousands)

	Nine Months Ended September 30,
	2010			2009
Interest income
Interest and fees on loans	$	17,830		$	24,725
Interest on securities		3,036			3,619
Interest on deposits in other banks		553			420
Other interest		254			442
		21,673			29,206
Interest expense
Interest on deposits		13,029			14,502
Interest on other borrowings		2,059			2,281
		15,088			16,783
Net interest income		6,585			12,423
Provision for loan losses		12,967			27,545
Net interest income (loss) after provision for loan losses		(6,382	)		(15,122	)
Other income
Service charges on deposit accounts		1,404			1,651
Other service charges, commissions and fees		460			468
Gain on sales of securities		3,514			1,587
Loss on sale of foreclosed real estate		(6,462	)		(1,561	)
Other		621			759
		(463	)		2,904
Other expenses
Salaries and employee benefits		6,160			6,627
Occupancy and equipment expense		2,164			2,544
Professional fees		1,634			829
FDIC deposit insurance assessments		2,755			1,045
Other real estate owned related expenses		1,339			800
Other operating expenses		2,127			2,563
		16,179			14,408
Loss before income taxes		(23,024	)		(26,626	)
Applicable income tax benefit		(178	)		(10,108	)
Net loss	$	(22,846	)	$	(16,518	)

See Notes to Financial Statements.

2

DARBY BANK AND TRUST COMPANY

STATEMENTS OF STOCKHOLDERS’ EQUITY

NINE MONTHS ENDED SEPTEMBER 30, 2010

(UNAUDITED)

(Dollars in Thousands)

	Common Stock		Capital Surplus		Retained Earnings			Accumulated Other Comprehensive Income			Total Stockholders’ Equity
Balance at December 31, 2009	$	500		19,486		10,923			(5	)		30,904
Comprehensive loss:
Net loss						(22,846	)					(22,846	)
Net change in unrealized loss on securities									962			962
Comprehensive loss												(21,884	)
Balance at September 30, 2010	$	500		19,486		(11,923	)		957			9,020

See Notes to Financial Statements.

3

DARBY BANK AND TRUST COMPANY

STATEMENTS OF CASH FLOWS

(UNAUDITED)

(Dollars in Thousands)

	Nine Months Ended September 30,
	2010			2009
OPERATING ACTIVITIES
Net loss	$	(22,846	)	$	(16,518	)
Adjustments to reconcile net (loss)/income to net cash provided by operating activities:
Depreciation and amortization		1,022			1,254
Net gain on securities available for sale		(3,514	)		(1,587	)
Net gain on sale or disposal of premises and equipment		(105	)		(3	)
Net loss on sale of other real estate owned		6,462			1,561
Provision for loan losses		12,967			27,545
Increase (decrease) in net taxes payable and deferred taxes		8,857			(10,143	)
Decrease in interest receivable		222			1,018
Increase/(decrease) in interest payable		(225	)		1,346
Net other operating activities		(171	)		(3,380	)
Total adjustments		25,515			17,611
Net cash provided by operating activities		2,669			1,093
INVESTING ACTIVITIES
(Increase)/decrease in interest-bearing deposits in banks		57,003			(171,268	)
Decrease in federals funds sold		—			1,326
Purchases of investment securities		(100,675	)		(85,701	)
Proceeds from sales and maturities of securities		109,873			86,078
Increase in restricted equity securities, net		—			(58	)
Decrease in loans, net		53,183			47,266
Purchase of premises and equipment		(47	)		(83	)
Proceeds from sale of premises and equipment		17			22
Proceeds from sale of other real estate owned		4,534			2,595
Net cash provided by (used in) investing activities		123,888			(119,823	)
FINANCING ACTIVITIES
Increase/(decrease) in deposits		(131,069	)		136,091
Proceeds from capital injection from holding company		—			2,000
Repayment of other borrowings and debentures		(20,000	)		—
Net cash provided by (used in) financing activities		(151,069	)		138,091
Net increase (decrease) in cash and due from banks		(24,512	)		19,361
Cash and due from banks at beginning of period		33,592			9,110
Cash and due from banks at end of period	$	9,080		$	28,471

See Notes to Financial Statements.

4

DARBY BANK AND TRUST COMPANY

NOTES TO THE FINANCIAL STATEMENTS

(UNAUDITED)

Note 1 – General

The financial statements in this report have been prepared in accordance with the standards of Generally Accepted Accounting Principles, and have not been audited. These financial statements do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments necessary to present fairly the financial position and results of operations for the interim periods have been made. All such adjustments are of a normal recurring nature. The results of operations for interim periods are not necessarily indicative of the results of operations which Darby Bank and Trust Company (the “Bank”) may achieve for future interim periods or for an entire year.

Note 2 – Cash and Cash Flows

Cash on hand, cash items in process of collection, amounts due from banks, and federal funds sold are included in cash and cash equivalents. The following supplemental cash flow information addresses certain cash payments and noncash transactions for the nine months ended September 30, 2010 and 2009, respectively:

	Nine Months Ended September 30,
	2010		2009
Supplemental information on cash payments:
Interest Paid	$	15,313	$	15,437
Supplemental information on noncash transactions:
Transfers of loans to other real estate owned and repossessions		31,963		5,994

Note 3 – Comprehensive Loss

The primary component of the difference between net loss and comprehensive loss for the Bank is the change in fair value on available-for-sale securities. Total comprehensive loss for the nine months ended September 30, 2010 and 2009, respectively as follows:

	Nine Months Ended September 30,
	2010			2009
Net loss	$	(22,846	)	$	(16,518	)
Change in fair value of securities available-for-sale, net of tax		962			1,081
Comprehensive loss, net of tax	$	(21,884	)	$	15,437

5

DARBY BANK AND TRUST COMPANY

NOTES TO THE FINANCIAL STATEMENTS

(UNAUDITED)

Note 4 – Accounting Estimates

In preparing the financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the statement of condition and revenues and expenses for the period. Actual results could differ significantly from those estimates. Material estimates that are particularly susceptible to significant change in the near-term relate to the determination of the allowance for loan losses and the valuation of real estate acquired in connection with foreclosures or in satisfaction of loans.

A substantial portion of the Bank’s loans are secured by real estate in Georgia and Florida. Accordingly, the ultimate collectability of a substantial portion of the Bank’s loan portfolio is susceptible to changes in market conditions in that area. Management believes the allowance for losses on loans is adequate. While management uses available information to recognize losses on loans, future additions to the allowance may be necessary based on changes in economic conditions.

Note 5 – Fair Value Measurement

Effective January 1, 2008, the Bank adopted “Fair Value Measurements” which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements has been applied prospectively as of the beginning of the period and 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, and also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

Level 1 - Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.

Level 2 - Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in active markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

6

DARBY BANK AND TRUST COMPANY

NOTES TO THE FINANCIAL STATEMENTS

(UNAUDITED)

Note 5 – Fair Value Measurement (Continued)

In determining fair value, the Bank utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible, as well as considers counterparty credit risk in its assessment of fair value. The following table presents the fair value hierarchy of financial assets and financial liabilities measured at fair value as of September 30, 2010:

	Fair Value Measurements At September 30, 2010 Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)	Total Carrying Value in the Consolidated Balance Sheet
	(Dollars in Thousands)
Securities available for sale	$	$	104,592	$	$	104,592
Total recurring assets at fair value	$	$	104,592	$	$	104,592

Following is a description of the valuation methodologies used for instruments measured at fair value on a recurring basis and recognized in the accompanying balance sheet, as well as the general classifications of such instruments pursuant to the valuation hierarchy.

Securities Available For Sale: The fair value of securities available for sale is determined by various valuation methodologies. Where quoted market prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. If quoted market prices are not available, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics, or discounted cash flows. Level 2 securities include certain U.S. agency bonds, collateralized mortgage and debt obligations, and certain municipal securities. 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. Fair value of securities is based on available quoted market prices.

Impaired Loans: 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 “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. Certain assets are measured at fair value on a non-recurring basis and therefore are not included in the table above. Management has determined that the majority of impaired loans are Level 2 assets due to the extensive use of market appraisals. To the extent that market appraisals or other methods do not produce reliable determinations of fair value, these assets are deemed to be Level 3.

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