Business Combinations and Assets Acquired in FDIC-Assisted Acquisitions (Tables)

12 Months Ended

Dec. 31, 2013

The following unaudited pro forma information reflects the Company’s estimated consolidated results of operations as if the acquisitions had occurred on January 1, 2012 and 2011, unadjusted for potential cost savings (in thousands).


	Year Ended December 31, Unaudited
	2012			2011
Net interest income and noninterest income	$	176,262		$	187,826
Net loss	$	(10,233	)	$	(17,744	)
Net loss available to common shareholders	$	(13,810	)	$	(20,985	)
Loss per common share available to common shareholders – basic and diluted	$	(0.58	)	$	(0.90	)
Average number shares outstanding, basic		23,816			23,446
Average number shares outstanding, diluted		23,857			23,538

Schedule of Acquisition Details

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


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

Summary of Total Assets Purchased and Liabilities Assumed

The following table summarizes the total assets purchased and liabilities assumed, as well as key elements of the purchase and assumption agreements between the FDIC and the Bank (in thousands):


	AUB			USB			SCB			FBJ			TBC			DBT			HTB			OGB			CBG			MBT
Acquisition date		10/23/09			11/06/09			05/14/10			10/22/10			11/12/10			11/12/10			07/15/11			07/15/11			02/24/12			07/06/12

Assets, fair value	$	120,994		$	169,172		$	84,342		$	77,709		$	132,036		$	448,311		$	197,463		$	166,052		$	293,189		$	156,867
Deposits, fair value	$	100,470		$	141,094		$	75,530		$	71,869		$	132,939		$	386,958		$	175,887		$	136,101		$	261,036		$	156,699
Other borrowings	$	7,802		$	1,504		$	-		$	2,613		$	-		$	54,418		$	-		$	21,107		$	10,334		$	-

Discount bid	$	19,645		$	32,615		$	14,395		$	4,810		$	3,973		$	45,002		$	33,500		$	22,500		$	33,900		$	-
Deposit premium	$	262		$	228		$	92		$	-		$	-		$	-		$	-		$	-		$	-		$	-
Cash received/(paid)	$	17,100		$	24,200		$	(35,657	)	$	8,117		$	(10,251	)	$	(149,893	)	$	30,228		$	(5,658	)	$	31,900		$	138,740
Gain/(Goodwill)	$	12,445		$	26,121		$	8,208		$	2,385		$	(956	)	$	4,211		$	18,922		$	7,945		$	20,037		$	-

FDIC loss sharing – Tranche 1
Cumulative Loss threshold	$	38,000		$	46,000			All losses			All losses			All losses		$	131,772			All losses			All losses			All losses			n/a
Percentage retained by FDIC		80	%		80	%		80	%		80	%		80	%		80	%		80	%		80	%		80	%		n/a

FDIC loss sharing – Tranche 2
Cumulative Loss threshold	$	>38,000		$	>46,000			n/a			n/a			n/a		$	193,068			n/a			n/a			n/a			n/a
Percentage retained by FDIC		95	%		95	%		n/a			n/a			n/a			30	%		n/a			n/a			n/a			n/a

FDIC loss sharing – Tranche 3
Cumulative Loss threshold		n/a			n/a			n/a			n/a			n/a		$	>193,068			n/a			n/a			n/a			n/a
Percentage retained by FDIC		n/a			n/a			n/a			n/a			n/a			80	%		n/a			n/a			n/a			n/a

Estimated Fair Values of Assets and Liabilities Assumed

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of the acquisitions (in thousands):


	AUB		USB		SCB			FBJ		TBC			DBT			HTB		OGB		CBG		MBT

Assets acquired
Cash	$	26,452	$	41,490	$	(33,093	)	$	10,669	$	4,862		$	(58,158	)	$	36,432	$	1,585	$	65,050	$	155,466
Investment securities		10,242		8,335		10,814			7,343		7,060			105,562			14,770		28,891		39,920		-
Federal funds sold		-		2,605		12,661			5,690		-			-			-		5,070		-		-
Loans		56,482		83,646		68,751			40,454		92,568			261,340			84,732		74,843		124,782		1,218
Foreclosed property		2,165		8,069		2,012			1,816		3,472			22,026			10,272		7,242		6,177		-
FDIC loss share asset		24,200		21,640		22,400			11,307		22,807			112,404			49,485		45,488		52,654		-
Core deposit intangible		187		386		185			132		175			1,180			-		-		1,149		-
Other assets		1,266		3,001		612			298		1,092			3,957			1,772		2,933		3,457		183


Total assets acquired		120,994		169,172		84,342			77,709		132,036			448,311			197,463		166,052		293,189		156,867


Liabilities assumed
Deposits		100,470		141,094		75,530			71,869		132,939			386,958			175,887		136,101		261,036		156,699
FHLB advances		7,802		1,504		-			2,613		-			2,724			-		21,107		10,334		-
Other liabilities		277		453		604			842		53			54,418			2,654		899		1,782		168

Total liabilities assumed		108,549		143,051		76,134			75,324		132,992			444,100			178,541		158,107		273,152		156,867


Net assets acquired	$	12,445	$	26,121	$	8,208		$	2,385	$	(956	)	$	4,211		$	18,922	$	7,945	$	20,037	$	-

Summary of Covered Loans Deterioration of Credit Quality on Respective Acquisition Dates

The total covered loans on the respective acquisition dates are presented in the following table:


	AUB		USB		SCB		FBJ		TBC		DBT		HTB		OGB		CBG		Total Covered Loans
					(Dollars in Thousands)
Construction and development	$	17,504	$	30,276	$	16,800	$	7,984	$	6,948	$	37,371	$	6,561	$	8,129	$	20,545	$	152,118
Real estate secured		12,043		41,087		49,582		30,319		54,361		203,070		76,920		55,337		89,598		612,317
Commercial, industrial, agricultural		26,495		6,904		1,641		1,412		29,394		17,270		395		10,734		7,544		101,789
Consumer		440		5,379		728		739		1,865		3,629		856		643		7,095		21,374

	$	56,482	$	83,646	$	68,751	$	40,454	$	92,568	$	261,340	$	84,732	$	74,843	$	124,782	$	887,598

Loans Receivable at Acquisition Date for Loans with Deterioration in Credit Quality

The following table presents the loans receivable (in thousands) at the acquisition date for loans with deterioration in credit quality.


2012 Acquisitions:	CBG		MBT		Total
	(Dollars in Thousands)
Contractually required principal payments receivable	$	137,407	$	-	$	137,407
Non-accretable difference		53,603		-		53,603
Present value of cash flows expected to be collected		83,804		-		83,804
Accretable difference		10,390		-		10,390

Fair value of loans acquired with deterioration of credit quality	$	73,414	$	-	$	73,414

2011 Acquisitions:	HTB		OGB		Total
	(Dollars in Thousands)
Contractually required principal payments receivable	$	136,928	$	104,858	$	241,786
Non-accretable difference		49,447		45,629		95,076

Present value of cash flows expected to be collected		87,481		59,229		146,710
Accretable difference		13,265		9,309		22,574

Fair value of loans acquired with deterioration of credit quality	$	74,216	$	49,920	$	124,136


2010 Acquisitions:	SCB		FBJ		TBC		DBT		Total
	(Dollars in Thousands)
Contractually required principal payments receivable	$	49,864	$	29,474	$	51,908	$	225,262	$	356,508
Non-accretable difference		22,885		6,672		20,569		56,637		106,763

Present value of cash flows expected to be collected		26,979		22,802		31,339		168,625		249,745
Accretable difference		1,508		3,564		1,366		28,807		35,245

Fair value of loans acquired with deterioration of credit quality	$	25,471	$	19,238	$	29,973	$	139,818	$	214,500


2009 Acquisitions:	AUB		USB		Total
	(Dollars in Thousands)
Contractually required principal payments receivable	$	65,438	$	44,372	$	109,810
Non-accretable difference		26,416		21,292		47,708

Present value of cash flows expected to be collected		39,022		23,080		62,102
Accretable difference		1,945		1,605		3,550

Fair value of loans acquired with deterioration of credit quality	$	37,077	$	21,475	$	58,552

Components of Covered Assets

The following table summarizes components of all covered assets at December 31, 2013 and 2012 and their origin:


	Covered loans		Less Credit risk adjustments		Less Liquidity and rate adjustments		Total covered loans		OREO		Less Fair value adjustments		Total covered OREO		Total covered assets		FDIC indemnification asset
As of December 31, 2013:	(Dollars in thousands)

AUB	$	15,787	$	231	$	-	$	15,556	$	4,264	$	-	$	4,264	$	19,820	$	1,452

USB		18,504		1,427		-		17,077		2,865		141		2,724		19,801		889

SCB		34,637		1,483		-		33,154		3,461		303		3,158		36,312		3,175

FBJ		25,891		3,730		-		22,161		1,880		242		1,638		23,799		3,689

DBT		105,157		17,819		-		87,338		17,023		1,282		15,741		103,079		18,724

TBC		32,590		2,340		14		30,236		4,844		745		4,099		34,335		3,721

HTB		67,126		7,321		38		59,767		6,374		2,304		4,070		63,837		9,325

OGB		58,512		4,969		98		53,445		7,506		2,984		4,522		57,967		9,645

CBG		85,118		13,535		80		71,503		7,610		1,933		5,677		77,180		14,821


Total	$	443,322	$	52,855	$	230	$	390,237	$	55,827	$	9,934	$	45,893	$	436,130	$	65,441


As of December 31, 2012:

AUB	$	27,169	$	2,481	$	-	$	24,688	$	10,636	$	102	$	10,534	$	35,222	$	2,905

USB		27,286		4,320		-		22,966		7,087		99		6,988		29,954		6,619

SCB		41,389		3,285		-		38,104		10,686		654		10,032		48,136		6,133

FBJ		32,574		6,204		27		26,343		3,260		526		2,734		29,077		6,589

DBT		169,527		41,631		207		127,689		30,395		2,160		28,235		155,924		47,012

TBC		46,796		4,979		173		41,644		11,089		1,381		9,708		51,352		8,073

HTB		90,602		16,072		52		74,478		13,980		4,954		9,026		83,504		20,020

OGB		81,908		17,127		136		64,645		9,168		4,078		5,090		69,735		16,871

CBG		124,200		36,884		161		87,155		9,046		3,120		5,926		93,081		45,502


Total	$	641,451	$	132,983	$	756	$	507,712	$	105,347	$	17,074	$	88,273	$	595,985	$	159,724

Loan-by-Loan Basis Performance of Fair Value Adjustments

The adjustments to estimated cash flows are performed on a loan-by-loan basis and have resulted in the following:


Total Amounts	December 31, 2013		December 31, 2012
	(Dollars in Thousands)
Adjustments needed where the Company’s initial estimate of cash flows were underestimated (recorded with a reclassification from non-accretable difference to accretable discount)	$	51,003	$	23,050

Adjustments needed where the Company’s initial estimate of cash flows were overstated (recorded through a provision for loan losses)	$	7,695	$	13,190

Amounts reflected in the Company’s Statement of Income	December 31, 2013		December 31, 2012
	(Dollars in Thousands)
Adjustments needed where the Company’s initial estimate of cash flows were underestimated (recorded with a reclassification from non-accretable difference to accretable discount)	$	10,201	$	4,610
Adjustments needed where the Company’s initial estimate of cash flows were overstated (recorded through a provision for loan losses)	$	1,539	$	2,638

Schedule of Changes in Accretable Discounts Related Acquired Covered Loans

The following is a summary of changes in the accretable discounts of acquired covered loans during the years ended December 31, 2013 and 2012:


	2013			2012
	(Dollars in Thousands)
Balance, beginning of year	$	16,698		$	29,537
Additions due to acquisitions		–			9,863
Accretion		(42,208	)		(45,752	)
Other activity, net		51,003			23,050

Balance, end of year	$	25,493		$	16,698

Changes in FDIC Loss Share Receivable

Changes in the FDIC loss-share receivable are as follows:


	For the Years Ended December 31,
	2013			2012
	(Dollars in Thousands)

Beginning balance	$	159,724		$	242,394

Indemnification asset recorded in acquisitions		–			52,654
Payments received from FDIC		(68,822	)		(128,730	)
Effect of change in expected cash flows on covered assets		(25,461	)		(6,594	)

Ending balance	$	65,441		$	159,724

Loans with Deterioration of Credit Quality [Member]

Summary of Covered Loans Deterioration of Credit Quality on Respective Acquisition Dates

The covered loans with deterioration of credit quality on the respective acquisition dates are presented in the following table:


	AUB		USB		SCB		FBJ		TBC		DBT		HTB		OGB		CBG		Total Loans with Deterioration of Credit Quality
					(Dollars in Thousands)
Construction and development	$	16,513	$	16,086	$	8,976	$	4,821	$	2,435	$	21,800	$	6,508	$	4,783	$	15,038	$	96,960
Real estate secured		8,460		3,987		16,422		13,279		20,305		111,973		67,497		35,621		56,847		334,391
Commercial, industrial, agricultural		12,102		769		73		886		7,134		5,379		153		9,263		1,256		37,015
Consumer		2		633		—		252		99		666		58		253		273		2,236

	$	37,077	$	21,475	$	25,471	$	19,238	$	29,973	$	139,818	$	74,216	$	49,920	$	73,414	$	470,602

Rollforward of Acquired Covered Loans Deterioration of Credit Quality

A rollforward of acquired covered loans with deterioration of credit quality for the years ended December 31, 2013 and 2012 is shown below:


	2013			2012
	(Dollars in Thousands)
Balance, beginning of year	$	282,737		$	307,790
Change in estimate of cash flows, net of charge-offs or recoveries		35,306			(17,712	)
Additions due to acquisitions		-			73,414
Other (loan payments, transfers, etc.)		(100,996	)		(80,755	)

Balance, end of year	$	217,047		$	282,737

Loans without Deterioration of Credit Quality [Member]

Summary of Covered Loans Deterioration of Credit Quality on Respective Acquisition Dates

The covered loans without deterioration of credit quality on the respective acquisition dates are presented in the following table:


	AUB		USB		SCB		FBJ		TBC		DBT		HTB		OGB		CBG		Total Loans without Deterioration of Credit Quality
					(Dollars in Thousands)
Construction and development	$	991	$	14,190	$	7,824	$	3,163	$	4,513	$	15,571	$	53	$	3,346	$	5,507	$	55,158
Real estate secured		3,583		37,100		33,160		17,040		34,056		91,097		9,423		19,716		32,751		277,926
Commercial, industrial, agricultural		14,393		6,135		1,568		526		22,260		11,891		242		1,471		6,288		64,774
Consumer		438		4,746		728		487		1,766		2,963		798		390		6,822		19,138

	$	19,405	$	62,171	$	43,280	$	21,216	$	62,595	$	121,522	$	10,516	$	24,923	$	51,368	$	416,996

Rollforward of Acquired Covered Loans Deterioration of Credit Quality

A rollforward of acquired covered loans without deterioration of credit quality for the years ended December 31, 2013 and 2012 is shown below:


	2013			2012
	(Dollars in Thousands)
Balance, beginning of year	$	228,602		$	266,966
Change in estimate of cash flows, net of charge-offs or recoveries		13,471			1,376
Additions due to acquisitions		-			51,368
Other (loan payments, transfers, etc.)		(68,883	)		(91,108	)

Balance, end of year	$	173,190		$	228,602

Prosperity Banking Company [Member]

Estimated Fair Value of Assumed Assets Acquired and Liabilities of Prosperity

The following table presents the assets acquired and liabilities of Prosperity assumed as of December 23, 2013 at their initial fair value estimates:


(Dollars in Thousands)	As Recorded by Prosperity			Fair Value Adjustments			As Recorded by Ameris
Assets
Cash and cash equivalents	$	4,285		$	-		$	4,285
Federal funds sold and interest-bearing balances		21,687			-			21,687
Investment securities		151,863			411	(a)		152,274
Other investments		8,727			-			8,727
Loans		487,358			(37,662	)(b)		449,696
Less allowance for loan losses		(6,811	)		6,811	(c)		-

Loans, net		480,547			(30,851	)		449,696
Other real estate owned and repossessed assets		6,883			(1,260	)(d)		5,623
Premises and equipment		36,293			-			36,293
Intangible assets		174			4,383	(e)		4,557
Other assets		26,600			1,192	(f)		27,792

Total assets	$	737,059		$	(26,125	)	$	710,934

Liabilities
Deposits:
Noninterest-bearing	$	149,242		$	-		$	149,242
Interest-bearing		324,441			-			324,441

Total deposits		473,683			-			473,683
Federal funds purchased and securities sold under agreements to repurchase		21,530			-			21,530
Other borrowings		185,000			12,313	(g)		197,313
Other liabilities		14,058			455	(h)		14,513
Subordinated deferrable interest debentures		29,500			(16,303	)(i)		13,197

Total liabilities		723,771			(3,535	)		720,236

Net identifiable assets acquired over (under) liabilities assumed		13,288			(22,590	)		(9,302	)
Goodwill		-			34,093			34,093

Net assets acquired over (under) liabilities assumed	$	13,288		$	11,503		$	24,791

Consideration:
Ameris Bancorp common shares issued		1,168,918
Purchase price per share of the Company’s common stock	$	21.07

Company common stock issued		24,629
Cash exchanged for shares		162

Fair value of total consideration transferred	$	24,791

Explanation of fair value adjustments

(a)

Adjustment reflects the fair value adjustments of the available for sale portfolio as of the acquisition date.

(b)

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

(c)

Adjustment reflects the elimination of Prosperity’s allowance for loan losses.

(d)

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

(e)

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

(f)

Adjustment reflects the adjustment to write-off the non-realizable portion of Prosperity’s deferred tax asset of ($6.644 million), to record the deferred tax asset generated by purchase accounting adjustments of $8.435 million and to record the fair value adjustment of other assets of ($0.599 million) at the acquisition date.

(g)

Adjustment reflects the fair value adjustment (premium) to the FHLB borrowings of $12.741 million and the fair value adjustment to the subordinated debt of $0.428 million.

(h)

Adjustment reflects the fair value adjustment of other liabilities at the acquisition date.

(i)

Adjustment reflects the fair value adjustment to the subordinated deferrable interest debentures s at the acquisition date.

Pro Forma Information of Acquisitions

The following unaudited pro forma information reflects the Company’s estimated consolidated results of income as if the acquisition had occurred on January 1, 2013 and 2012, unadjusted for potential cost savings (in thousands).


	Year Ended December 31, Unaudited
	2013		2012
Net interest income and noninterest income	$	187,927	$	199,089
Net income	$	19,927	$	15,604
Net income available to common shareholders	$	18,189	$	12,027
Net income common share available to common shareholders – basic	$	.73	$	.48
Net income per common share available to common shareholders – diluted	$	.71	$	.48

Average number shares outstanding, basic		25,087		24,985
Average number shares outstanding, diluted		25,634		25,026