fin10ktest.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-K
T
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ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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For
the fiscal year ended December 31, 2007
or
o
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TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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For
the transition period from ______________ to_______________.
Commission
File Number
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001-13901
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AMERIS
BANCORP
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(Exact
name of registrant as specified in its
charter)
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GEORGIA
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58-1456434
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(State
of incorporation)
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(IRS
Employer ID No.)
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24
SECOND AVE., SE MOULTRIE, GA 31768
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(Address
of principal executive offices)
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(229)
890-1111
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(Registrant’s
telephone number)
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Securities
registered pursuant to Section 12(b) of the Act: None
Securities
registered pursuant to Section 12(g) of the Act: Common Stock, Par
Value $1 Per Share
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.
Yes o No
T
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Securities Exchange
Act. Yes o No
T
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes T No
o
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. o
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting
company. See definitions of "large accelerated filer", "accelerated
filer" and "smaller reporting company" in Rule 12b-2 of the Securities
Exchange Act.
Large
accelerated filer o
|
Accelerated
filer T
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Non-accelerated
filer o |
Smaller
Reporting Company filer o
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Securities Exchange Act).
Yes o No
T
As of the
last business day of the registrant’s most recently completed second fiscal
quarter, the aggregate market value of the voting and non-voting common equity
held by nonaffiliates of the registrant was approximately $304.3
million.
As of February 22, 2008, the
registrant had outstanding 13,556,770 shares of common stock, $1.00 par value
per share.
DOCUMENTS
INCORPORATED BY REFERENCE
The
information required by Part III of this Annual Report is incorporated by
reference from the Registrant’s definitive proxy statement to be filed with the
Securities and Exchange Commission pursuant to Regulation 14A not later than 120
days after the end of the fiscal year covered by this Annual
Report.
AMERIS
BANCORP
PART
I
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Item
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PART
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PART
III
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Item
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PART
IV
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Item
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CAUTIONARY
NOTICE
REGARDING
FORWARD-LOOKING STATEMENTS
Certain
statements contained in this Annual Report on Form 10-K (this “Annual Report”)
under the caption “Management’s Discussion and Analysis of Financial Condition
and Results of Operations,” and elsewhere, including information incorporated
herein by reference to other documents, are “forward-looking statements” within
the meaning of, and subject to the protections of, Section 27A of the Securities
Act of 1933, as amended (the “Securities Act”), and Section 21E of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Forward-looking
statements include statements with respect to our beliefs, plans, objectives,
goals, expectations, anticipations, assumptions, estimates, intentions and
future performance and involve known and unknown risks, uncertainties and other
factors, many of which may be beyond our control and which may cause the actual
results, performance or achievements of the Company to be materially different
from future results, performance or achievements expressed or implied by such
forward-looking statements.
All
statements other than statements of historical fact are statements that could be
forward-looking statements. You can identify these forward-looking
statements through our use of words such as “may,” “will,” “anticipate,”
“assume,” “should,” “indicate,” “would,” “believe,” “contemplate,” “expect,”
“estimate,” “continue,” “plan,” “point to,” “project,” “predict,” “could,”
“intend,” “target,” “potential” and other similar words and expressions of the
future. These forward-looking statements may not be realized due to a
variety of factors, including, without limitation, those described in Part I,
Item 1A. “Risk Factors,” and elsewhere in this report and those described from
time to time in our future reports filed with the Securities and Exchange
Commission (the “Commission”) under the Exchange Act.
All
written or oral forward-looking statements that are made by or are attributable
to us are expressly qualified in their entirety by this cautionary
notice. Our forward-looking statements apply only as of the date of
this report or the respective date of the document from which they are
incorporated herein by reference. We have no obligation and do not
undertake to update, revise or correct any of the forward-looking statements
after the date of this report, or after the respective dates on which such
statements otherwise are made, whether as a result of new information, future
events or otherwise.
PART
I
As used
in this document, the terms “we,” “us,” “our,” “Ameris Bancorp,” “Ameris” and
the “Company” mean Ameris Bancorp and its subsidiaries (unless the context
indicates another meaning).
GENERAL
OVERVIEW
We are a
financial holding company whose business is conducted primarily through our
wholly-owned banking subsidiary, which provides a full range of banking services
to its retail and commercial customers located primarily in Georgia, Alabama,
northern Florida and South Carolina. Ameris Bancorp (“Ameris” or the
“Company”) was incorporated on December 18, 1980 as a Georgia
corporation. The Company’s executive office is located at 24 2nd
Avenue, S.E., Moultrie, Georgia 31768, its telephone number is (229) 890-1111
and its Internet address is http://www.amerisbank.com. We operate 46
domestic banking offices with no foreign activities. At December 31,
2007, we had approximately $2.11 billion in total assets, $1.61 billion in total
loans, $1.76 billion in total deposits and shareholders’ equity of $191.2
million. Ameris’ deposits are insured, up to applicable limits, by
the Federal Deposit Insurance Corporation.
THE
PARENT COMPANY
Our
primary business as a bank holding company is to manage the business and affairs
of our banking subsidiary, Ameris Bank (the “Bank”). As a bank
holding company, we perform certain shareholder and investor relations functions
and seek to provide financial support, if necessary, to our
subsidiary.
AMERIS
BANK
Our
principal subsidiary is the Bank. The Bank, headquartered in
Moultrie, Georgia, operates branches in Georgia, Alabama, northern Florida and
South Carolina. These branches serve distinct communities in our
business areas with autonomy but do so as one bank, leveraging our favorable
geographic footprint in an effort to acquire more customers.
CAPITAL
TRUST SECURITIES
On
September 20, 2006, Ameris completed a private placement of an aggregate of
$36 million of trust preferred securities. The placement occurred
through a newly formed Delaware statutory trust subsidiary of Ameris, Ameris
Statutory Trust I (the “Trust”). The trust preferred securities carry
a quarterly adjustable interest rate of 1.63% over three-month LIBOR. The trust
preferred securities mature on December 15, 2036 and are redeemable at the
Company’s option beginning September 15, 2011. The terms of the
trust preferred securities are set forth in that certain Amended and Restated
Declaration of Trust dated as of September 20, 2006 among Ameris,
Wilmington Trust Company, as institutional trustee and Delaware trustee, and the
administrators named therein. The payments of distributions on and
redemption or liquidation of the trust preferred securities issued by the Trust
are guaranteed by Ameris pursuant to a Guarantee Agreement dated as of
September 20, 2006 between Ameris and Wilmington Trust Company, as
trustee.
The net
proceeds to Ameris from the placement of the trust preferred securities by the
Trust were primarily used to redeem outstanding trust preferred securities
issued by Ameris on November 8, 2001. These trust preferred
securities were redeemed on September 30, 2006 for $35.6 million.
On
December 16, 2005, Ameris purchased First National Banc, Inc. which had formed
during 2004 First National Banc Statutory Trust I, a subsidiary whose sole
purpose was to issue $5,000,000 principal amount of trust preferred securities
at a rate per annum equal to the 3-Month LIBOR plus 2.80% through a pool
sponsored by a national brokerage firm. These trust preferred
securities have a maturity of 30 years and are redeemable at the Company’s
option on any quarterly interest payment date after five years. There
are certain circumstances (as described in the trust documents) under which the
securities may be redeemed within the first five years at the Company’s
option. See Notes to Ameris’ Consolidated Financial Statements
included in this Annual Report for a further discussion regarding the issuance
of these trust preferred securities.
BUSINESS
STRATEGY
Our
business strategy is to establish Ameris as a major financial institution in
Georgia, Alabama, northern Florida and South Carolina. Management has
pursued this objective through an acquisition-oriented growth strategy and a
prudent operating strategy. Our operating model allows the Company to
put as many resources in front of customers as possible with efforts to minimize
the expense of our operations. We are continuously evaluating our
structure to maximize opportunities to perfect the balance between efficiency
and customer service. Our markets are managed by senior level,
experienced decision makers in a decentralized structure that differentiates us
from our competition. Management believes that this structure, along
with involvement in and knowledge of our local markets, will continue to provide
growth and assist in managing risk throughout our Company.
We have
maintained a long-term focus on a strategy that includes expanding and
diversifying our franchise in terms of revenues, profitability and asset
size. Our growth over the past several years has been enhanced
significantly by bank acquisitions. We expect to continue to take
advantage of the consolidation in the financial services industry and enhance
our franchise through future acquisitions. We intend to grow within
our existing markets, to branch into or acquire financial institutions in
existing markets and to branch into or acquire financial institutions in other
markets consistent with our capital availability and management
abilities.
BANKING
SERVICES
Lending
Activities
General. The
Company maintains a diversified loan portfolio by providing a broad range of
commercial and retail lending services to business entities and
individuals. We provide agricultural loans, commercial business
loans, commercial and residential real estate construction and mortgage loans,
consumer loans, revolving lines of credit and letters of credit. The
Company also originates first mortgage residential mortgage loans and enters
into a commitment to sell these loans in the secondary market. We
make no foreign or energy-related loans.
At
December 31, 2007, Ameris’ loan portfolio totaled $1.61 billion, representing
approximately 76.3% of our total assets of $2.11 billion. For
additional discussion of our loan portfolio, see “Management’s Discussion of
Financial Condition and Results of Operations – Loan Portfolio.”
Commercial Real Estate
Loans. This portion of our loan portfolio has grown
significantly over the past few years and represents the largest portion of our
loan portfolio. These loans are generally extended for acquisition,
development or construction of commercial properties. The loans are
underwritten with an emphasis on the viability of the project, the borrower’s
ability to meet certain minimum debt service requirements and an analysis and
review of the collateral and guarantors.
Residential Real Estate Mortgage
Loans. Ameris originates adjustable and fixed-rate residential
mortgage loans. These mortgage loans are generally originated under
terms and conditions consistent with secondary market
guidelines. Some of these loans will be placed in the Company’s loan
portfolio; however, a majority are sold to the secondary mortgage
market. The residential real estate mortgage loans that are included
in the Company’s loan portfolio are usually owner-occupied and generally
amortized over a 10 to 20 year period with three to five year maturity or
repricing.
Agricultural
Loans. Our agricultural loans are extended to finance crop
production, the purchase of farm-related equipment or farmland and the
operations of dairies and poultry producers. Agricultural loans
typically involve seasonal fluctuations in amounts. Although we
typically look to an agricultural borrower’s cash flow as the principal source
of repayment, agricultural loans are also generally secured by a security
interest in the crops or the farm-related equipment and, in some cases, an
assignment of crop insurance and mortgage on real estate. The lending
officer visits the borrower regularly during the growing season and re-evaluates
the loan in light of the borrower’s updated cash flow projections. A
portion of our agricultural loans are guaranteed by the FSA Guaranteed Loan
Program.
Commercial and Industrial
Loans. General commercial and industrial loans consist of loans made
primarily to manufacturers, wholesalers and retailers of goods, service
companies and other industries. These loans are made for acquisition,
expansion and working capital purposes and may be secured by real estate,
accounts receivable, inventory, equipment, personal guarantees or other
assets. The Company monitors these loans by requesting submission of
corporate and personal financial statements and income tax
returns. The Company has also generated loans which are guaranteed by
the U.S. Small Business Administration (the “SBA”). SBA loans are
generally underwritten in the same manner as conventional loans generated for
the Bank’s portfolio. Periodically, a portion of the loans that are
secured by the guaranty of the SBA will be sold in the secondary
market. Management believes that making such loans helps the local
community and also provides Ameris with a source of income and solid future
lending relationships as such businesses grow and prosper. The
primary repayment risk for commercial loans is the failure of the business due
to economic or financial factors.
Consumer
Loans. Our consumer loans include motor vehicle, home
improvement, home equity, student and signature loans and small personal credit
lines. The terms of these loans typically range from 12 to 60 months
and vary based upon the nature of collateral and size of the
loan. These loans are generally secured by various assets owned by
the consumer.
Credit
Administration
We have
sought to maintain a comprehensive lending policy that meets the credit needs of
each of the communities served by the Bank, including low- and moderate-income
customers, and to employ lending procedures and policies consistent with this
approach. All loans are subject to our corporate loan policy, which
is reviewed annually and updated as needed. The loan policy provides
that lending officers have sole authority to approve loans of various amounts
commensurate with their seniority and experience. Our local market
Presidents have discretion to approve loans in varying principal amounts up to
established limits. Our regional credit officers review and approve
loans that exceed each President’s lending authority.
Individual
lending authorities are assigned by the Company, as is the maximum limit of new
extensions of credit that may be approved in each market. Those
approval limits are reviewed annually by the Company and adjusted as
needed. All extensions of credit in excess of a market’s approval
limit are reviewed by the appropriate Regional Executive. Further
approval by Ameris’ Senior Credit Officer or the Company’s Loan Committee may
also be needed. Under our ongoing loan review program, all loans are
subject to sampling and objective review by an assigned loan reviewer who is
independent of the originating loan officer.
Each
lending officer has authority to make loans only in the market area in which his
or her Bank office is located and its contiguous
counties. Occasionally, Ameris’ Loan Committee will approve a loan
for purposes outside of the market areas of the Bank, provided the Bank has a
previously established relationship with the borrower. Our lending
policy requires analysis of the borrower’s projected cash flow and ability to
service the debt.
We
actively market our services to qualified lending customers in both the
commercial and consumer sectors. Our commercial lending officers
actively solicit the business of new companies entering the market as well as
longstanding members of that market’s business community. Through
personalized professional service and competitive pricing, we have been
successful in attracting new commercial lending customers. At the
same time, we actively advertise our consumer loan products and continually seek
to make our lending officers more accessible.
The Bank
continually monitors its loan portfolio to identify areas of concern and to
enable management to take corrective action when necessary. Local
market Presidents, lending officers and local boards meet periodically to review
all past due loans, the status of large loans and certain other credit or
economic related matters. Individual lending officers are responsible
for collection of past due amounts and monitoring any changes in the financial
status of the borrowers.
Investment
Activities
Our
investment policy is designed to maximize income from funds not needed to meet
loan demand in a manner consistent with appropriate liquidity and risk
objectives. Under this policy, our Company may invest in federal, state and
municipal obligations, corporate obligations, public housing authority bonds,
industrial development revenue bonds, Government Sponsored Entities (“GSEs”)
securities and satisfactorily rated trust preferred
obligations. Investments in our portfolio must satisfy certain
quality criteria. Our Company’s investments must be rated at least
“BAA” by either Moody’s or Standard and Poor’s. Securities rated
below “A” are periodically reviewed for creditworthiness. Our Company
may purchase non-rated municipal bonds only if the issuer of such bonds is
located in the Company’s general market area and such bonds are determined by
the Company to have a credit risk no greater than the minimum ratings referred
to above. Industrial development authority bonds, which normally are not rated,
are purchased only if the issuer is located in the Company’s market area and if
the bonds are considered to possess a high degree of credit
soundness. Traditionally, the Company has purchased and held
investment securities with very high levels of credit quality, favoring
investments backed by direct or indirect guarantees of the U.S.
Government.
While our
investment policy permits our Company to trade securities to improve the quality
of yields or marketability or to realign the composition of the portfolio, the
Bank historically has not done so to any significant extent.
Our
investment committee implements the investment policy and portfolio strategies
and monitors the portfolio. Reports on all purchases, sales, net
profits or losses and market appreciation or depreciation of the bond portfolio
are reviewed by our Boards of Directors each month. Once a year, the
written investment policy is reviewed by the Company’s board of
directors.
The
Company’s securities are kept in safekeeping accounts at correspondent
banks.
Deposits
The
Company provides a full range of deposit accounts and services to both retail
and commercial customers. These deposit accounts have a variety of
interest rates and terms and consist of interest-bearing and noninterest-bearing
accounts, including commercial and retail checking accounts, regular
interest-bearing savings accounts, money market accounts, individual retirement
accounts and certificates of deposit. Our Bank obtains most of its
deposits from individuals and businesses in its market areas.
Our Bank
has not had to attract new or retain old deposits by paying depositors rates of
interest on certificates of deposit, money market and other interest-bearing
accounts significantly above rates paid by other banks in our market
areas. In the future, increasing competition among banks in our
market areas may cause our Bank’s net interest margins to shrink.
Brokered
time deposits are deposits obtained by utilizing an outside broker that is paid
a fee. These deposits usually have a higher interest rate than the
deposits obtained locally. The Bank utilizes the brokered deposits to
accomplish several purposes, such as (1) acquiring a certain maturity and dollar
amount without repricing the Bank’s current customers which could decrease the
overall cost of deposits, and (2) acquiring certain maturities and dollar
amounts to help manage interest rate risk.
Other
Funding Sources
The
Federal Home Loan Bank (“FHLB”) allows the Company to obtain advances through
its credit program. These advances are secured by securities owned by
the Company and held in safekeeping by the FHLB, FHLB stock owned by the Company
and certain qualifying residential mortgages.
The
Company also enters into repurchase agreements. These repurchase
agreements are treated as short term borrowings and are reflected on the balance
sheet as such.
CORPORATE
RESTRUCTURING AND BUSINESS COMBINATIONS
On
December 29, 2006, Ameris acquired by merger Islands Bancorp and its banking
subsidiary, Islands Community Bank, N.A. (collectively,
“Islands”). Islands was headquartered in Beaufort, South Carolina
where it operated a single branch with satellite loan production offices in
Bluffton, South Carolina and Charleston, South Carolina. The
acquisition of Islands was significant to the Company, as Ameris had recruited
senior level talent that would be instrumental in executing a growth strategy
designed to build a meaningful franchise in South Carolina’s top
markets. The consideration for the acquisition was a combination of
cash and Ameris common stock with an aggregate purchase price of approximately
$19.0 million. The total consideration consisted of $5.1 million in
cash and approximately 494,000 shares of Ameris common stock with a value of
approximately $13.9 million. Islands’ results of operations for 2006
are not included in Ameris’ consolidated financial results because the
acquisition’s effective time was after the close of business on the last day of
the fiscal year.
On
December 16, 2005, Ameris acquired all the issued and outstanding common shares
of First National Banc, Inc., the parent company of First National Bank, in St.
Mary’s, Georgia and First National Bank, in Orange Park, Florida (collectively
“FNB”). The acquisition was accounted for using the purchase method
of accounting, and, accordingly, the results from FNB’s operations have been
included in the consolidated financial statements beginning December 17,
2005. The aggregate purchase price for FNB was $35.3 million,
including cash of $13.1 million and the Company’s common stock valued at $22.2
million.
On
November 30, 2004, Ameris acquired Citizens Bancshares, Inc., a $54.3 million
asset holding company headquartered in Crawfordville, Florida
(“Citizens”). Citizens’ banking offices in Crawfordville, Panacea and
Sopchoppy gave the Bank a presence in the panhandle of Florida. Cash
exchanged in this transaction for 100% of the stock of Citizens was $11.5
million.
On August
31, 2005, Ameris announced its intentions to begin consolidating its subsidiary
bank charters across Georgia, Alabama and northern Florida into a single
charter. In addition to the charter consolidation effort, the Company
announced its intentions to re-brand the Company and its surviving bank
subsidiary with a single identity - Ameris Bank. The re-branding
process was completed during 2006. During 2007, the Company
consolidated its loan processing and maintenance functions as well as all
deposit operations into service centers close to our corporate
headquarters. This effort centralized mostly non-customer contact rolls
and allows our banks to focus almost entirely on sales, customer service and
acquisition of new customers.
MARKET
AREAS AND COMPETITION
The
banking industry in general and in the southeastern United States specifically,
is highly competitive and dramatic changes continue to occur throughout the
industry. Our market areas of Georgia, Alabama, northern Florida and
South Carolina have experienced strong economic and population growth over the
past twenty to thirty years. In recent years, intense market demands,
economic pressures, fluctuating interest rates and increased customer awareness
of product and service differences among financial institutions have forced
banks to diversify their services and become more cost effective. Our
Bank faces strong competition in attracting deposits and making
loans. Its most direct competition for deposits comes from other
commercial banks, thrift institutions, mortgage bankers, finance companies,
credit unions and issuers of securities such as brokerage firms. Interest rates,
convenience of office locations and marketing are all significant factors in our
Bank’s competition for deposits.
Competition
for loans comes from other commercial banks, thrift institutions, savings banks,
insurance companies, consumer finance companies, credit unions and other
institutional lenders. Our Bank competes for loan originations
through the interest rates and loan fees charged and the efficiency and quality
of services provided. Competition is affected by the general
availability of lendable funds, general and local economic conditions, current
interest rate levels and other factors that are not readily
predictable.
Competition
among providers of financial products and services continues to increase with
consumers having the opportunity to select from a growing variety of traditional
and nontraditional alternatives. The industry continues to rapidly
consolidate, which affects competition by eliminating some regional and local
institutions, while strengthening the franchise of
acquirers. Management expects that competition will become more
intense in the future due to changes in state and federal laws and regulations
and the entry of additional bank and nonbank competitors. See
“Supervision and Regulation.”
EMPLOYEES
At
December 31, 2007, the Company employed approximately 620 full time equivalent
employees. We consider our relationship with our employees to be
satisfactory.
We have
adopted one retirement plan for our employees, the Ameris Bancorp 401(k) Profit
Sharing Plan. This plan provides deferral of compensation by our
employees and contributions by Ameris. Ameris and our Bank made
contributions for all eligible employees in 2007. We also maintain a
comprehensive employee benefits program providing, among other benefits,
hospitalization and major medical insurance and life
insurance. Management considers these benefits to be competitive with
those offered by other financial institutions in our market
areas. Our employees are not represented by any collective bargaining
group.
RELATED
PARTY TRANSACTIONS
The
Company makes loans to our directors and their affiliates and to banking
officers. These loans are made on substantially the same terms as
those prevailing at the time for comparable transactions and do not involve more
than normal credit risk. At December 31, 2007, we had $1.6 billion in
total loans outstanding of which $6.3 million were outstanding to certain
directors and their affiliates. Company policy provides for no loans
to executive officers.
SUPERVISION
AND REGULATION
General
We are
extensively regulated under federal and state law. Generally, these
laws and regulations are intended to protect depositors and not
shareholders. The following is a summary description of certain
provisions of certain laws that affect the regulation of bank holding companies
and banks. The discussion is qualified in its entirety by reference
to applicable laws and regulations. Changes in such laws and
regulations may have a material effect on our business and
prospects.
Federal
Bank Holding Company Regulation and Structure
As a bank
holding company, we are subject to regulation under the Bank Holding Company Act
and to the supervision, examination and reporting requirements of the Federal
Reserve Board of Governors. Our Bank has a Georgia state charter and
is subject to regulation, supervision and examination by the Federal Deposit
Insurance Corporation (the “FDIC”) and the Georgia Department of Banking and
Finance (the “GDBF”).
The Bank
Holding Company Act requires every bank holding company to obtain the prior
approval of the Federal Reserve before:
•
|
it
may acquire direct or indirect ownership or control of any voting shares
of any bank if, after the acquisition, the bank holding company will
directly or indirectly own or control more than 5% of the voting shares of
the bank;
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•
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it
or any of its subsidiaries, other than a bank, may acquire all or
substantially all of the assets of any bank;
or
|
•
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it
may merge or consolidate with any other bank holding
company.
|
The Bank
Holding Company Act further provides that the Federal Reserve may not approve
any transaction that would result in a monopoly or that would substantially
lessen competition in the banking business, unless the public interest in
meeting the needs of the communities to be served outweighs the anti-competitive
effects. The Federal Reserve is also required to consider the
financial and managerial resources and future prospects of the bank holding
companies and banks involved and the convenience and needs of the communities to
be served. Consideration of financial resources generally focuses on
capital adequacy, and consideration of convenience and needs issues focuses, in
part, on the performance under the Community Reinvestment Act of 1977, both of
which are discussed in more detail.
The Bank
Holding Company Act generally prohibits a bank holding company from engaging in
activities other than banking; managing or controlling banks or other
permissible subsidiaries and acquiring or retaining direct or indirect control
of any company engaged in any activities other than activities closely related
to banking or managing or controlling banks.
The
activities in which holding companies and their affiliates are permitted to
engage were substantially expanded by the Gramm-Leach-Bliley Act, which was
signed on November 12, 1999. The Gramm-Leach-Bliley Act repeals the
anti-affiliation provisions of the Glass-Steagall Act to permit the common
ownership of commercial banks, investment banks and insurance
companies. The Gramm-Leach-Bliley Act also amends the Bank Holding
Company Act to permit a financial holding company to, among other things, engage
in any activity that the Federal Reserve determines to be (i) financial in
nature or incidental to such financial activity or (ii) complementary to a
financial activity and not a substantial risk to the safety and soundness of
depository institutions or the financial system generally. The
Federal Reserve must consult with the Secretary of the Treasury in determining
whether an activity is financial in nature or incidental to a financial
activity. Holding companies may continue to own companies conducting
activities which had been approved by federal order or regulation on the day
before the Gramm-Leach-Bliley Act was enacted. Effective August 24,
2000, pursuant to a previously-filed election with the Federal Reserve, Ameris
became a financial holding company.
In
determining whether a particular activity is permissible, the Federal Reserve
considers whether performing the activity can be expected to produce benefits to
the public that outweigh possible adverse effects, such as undue concentration
of resources, decreased or unfair competition, conflicts of interest or unsound
banking practices. The Federal Reserve has the power to order a bank
holding company or its subsidiaries to terminate any activity or control of any
subsidiary when the continuation of the activity or control constitutes a
serious risk to the financial safety, soundness or stability of any bank
subsidiary of that bank holding company.
Our Bank
is also subject to numerous state and federal statutes and regulations that
affect its business, activities and operations and is supervised and examined by
state and federal bank regulatory agencies. The FDIC and the GDBF
regularly examine the operations of our Bank and are given the authority to
approve or disapprove mergers, consolidations, the establishment of branches and
similar corporate actions. These agencies also have the power to
prevent the continuance or development of unsafe or unsound banking practices or
other violations of law.
Payment
of Dividends and Other Restrictions
Ameris is
a legal entity separate and distinct from its subsidiaries. While
there are various legal and regulatory limitations under federal and state law
on the extent to which our Bank can pay dividends or otherwise supply funds to
Ameris, the principal source of Ameris’ cash revenues is dividends from our
Bank. The prior approval of applicable regulatory authorities is
required if the total dividends declared by the Bank in any calendar year
exceeds 50% of the Bank’s net profits for the previous year. The
relevant federal and state regulatory agencies also have authority to prohibit a
state member bank or bank holding company, which would include Ameris and the
Bank, from engaging in what, in the opinion of such regulatory body, constitutes
an unsafe or unsound practice in conducting its business. The payment
of dividends could, depending upon the financial condition of the subsidiary, be
deemed to constitute an unsafe or unsound practice in conducting its
business.
Under
Georgia law, the prior approval of the GDBF is required before any cash
dividends may be paid by a state bank if: (i) total classified assets at the
most recent examination of such bank exceed 80% of the equity capital (as
defined, which includes the reserve for loan losses) of such bank; (ii) the
aggregate amount of dividends declared or anticipated to be declared in the
calendar year exceeds 50% of the net profits (as defined) for the previous
calendar year; or (iii) the ratio of equity capital to adjusted total assets is
less than 6%.
Retained
earnings of our Bank available for payment of cash dividends under all
applicable regulations without obtaining governmental approval were
approximately $9.1 million as of December 31, 2007.
In
addition, our Bank is subject to limitations under Section 23A of the Federal
Reserve Act with respect to extensions of credit to, investments in and certain
other transactions with Ameris. Furthermore, loans and extensions of credit are
also subject to various collateral requirements.
The
Federal Reserve has issued a policy statement on the payment of cash dividends
by bank holding companies, which expresses the Federal Reserve’s view that a
bank holding company should pay cash dividends only to the extent that the
holding company’s net income for the past year is sufficient to cover both the
cash dividends and a rate of earning retention that is consistent with the
holding company’s capital needs, asset quality and overall financial
condition. The Federal Reserve also indicated that it would be
inappropriate for a holding company experiencing serious financial problems to
borrow funds to pay dividends. Furthermore, under the prompt
corrective action regulations adopted by the Federal Reserve, the Federal
Reserve may prohibit a bank holding company from paying any dividends if one or
more of the holding company’s bank subsidiaries are classified as
undercapitalized.
Bank
holding companies are required to give the Federal Reserve prior written notice
of any purchase or redemption of its outstanding equity securities if the gross
consideration for the purchase or redemption, when combined with the net
consideration paid for all such purchases or redemptions during the preceding 12
months, is equal to 10% or more of their consolidated net worth. The
Federal Reserve may disapprove such a purchase or redemption if it determines
that the proposal would constitute an unsafe or unsound practice or would
violate any law, regulation, Federal Reserve order or any condition imposed by,
or written agreement with, the Federal Reserve. This notification
requirement does not apply to any company that meets the well-capitalized
standard for commercial banks, has a safety and soundness examination rating of
at least a “2” and is not subject to any unresolved supervisory
issues. As of December 31, 2007, Ameris met these
requirements.
Capital
Adequacy
We must
comply with the Federal Reserve’s established capital adequacy standards, and
our Bank is required to comply with the capital adequacy standards established
by the FDIC. The Federal Reserve has promulgated two basic measures
of capital adequacy for bank holding companies: a risk-based measure and a
leverage measure. A bank holding company must satisfy all applicable
capital standards to be considered in compliance.
The
risk-based capital standards are designed to make regulatory capital
requirements more sensitive to differences in risk profile among banks and bank
holding companies, account for off-balance-sheet exposure and minimize
disincentives for holding liquid assets.
Assets
and off-balance-sheet items are assigned to broad risk categories, each with
appropriate weights. The resulting capital ratios represent capital
as a percentage of total risk-weighted assets and off-balance-sheet
items.
The
minimum guideline for the ratio of total capital to risk-weighted assets is
8%. At least half of total capital must be comprised of Tier 1
Capital, which is common stock, undivided profits, minority interests in the
equity accounts of consolidated subsidiaries and noncumulative perpetual
preferred stock, less goodwill and certain other intangible
assets. The remainder may consist of Tier 2 Capital, which is
subordinated debt, other preferred stock and a limited amount of loan loss
reserves. Since 2001, our consolidated capital ratios have been
increased due to the issuance of trust preferred securities. At
December 31, 2007, all of our trust preferred securities were included in Tier 1
Capital. At December 31, 2007, Ameris’ total risk-based capital ratio
and its Tier 1 risk-based capital ratio were 11.59% and 10.34%,
respectively.
In
addition, the Federal Reserve has established minimum leverage ratio guidelines
for bank holding companies. These guidelines provide for a minimum
ratio of Tier 1 Capital to average assets, less goodwill and certain other
intangible assets, of 3% for bank holding companies that meet specified
criteria. All other bank holding companies generally are required to
maintain a minimum leverage ratio of 4%. Ameris’ ratio at December
31, 2007 was 8.39% and at December 31, 2006 was 8.58%. The guidelines
also provide that bank holding companies experiencing internal growth or making
acquisitions will be expected to maintain strong capital positions substantially
above the minimum supervisory levels without significant reliance on intangible
assets. Furthermore, the Federal Reserve has indicated that it will
consider a “tangible Tier 1 Capital leverage ratio” and other indicia of capital
strength in evaluating proposals for expansion or new activities. The
Federal Reserve has not advised Ameris of any specific minimum leverage ratio or
tangible Tier 1 Capital leverage ratio applicable to it.
Our Bank
is subject to risk-based and leverage capital requirements adopted by the FDIC
that are substantially similar to those adopted by the Federal Reserve for bank
holding companies. Our Bank was in compliance with applicable minimum
capital requirements as of December 31, 2007.
Neither
Ameris nor its Bank has been advised by any federal banking agency of any
specific minimum capital ratio requirement applicable to it.
In
January 2001, the Basel Committee on Banking Supervision issued a consultative
paper entitled “Proposal for a New Basel Capital Accord” and, subsequently, the
Basel Committee, which is comprised of bank supervisors and central banks from
the major industrialized countries, issued a number of working papers
supplementing various aspects of the 2001 paper (the “New
Accord”). Based on these documents, the New Accord would adopt a
three-pillar framework for addressing capital adequacy. These pillars
would include minimum capital requirements, more emphasis on supervisory
assessment of capital adequacy and greater reliance on market
discipline. Under the New Accord, minimum capital requirements would
be more differentiated based upon perceived distinctions in
creditworthiness. Such requirements would be based either on ratings
assigned by rating agencies or, in the case of a banking organization that met
certain supervisory standards, on the organization’s internal credit
ratings. The minimum capital requirements in the New Accord would
also include a separate capital requirement for operational risk. In
June 2004, the Basel Committee published new international guidelines for
calculating regulatory capital, and since that time the U.S. banking regulators
have published draft guidance of their interpretation of the new
guidelines. At the beginning of 2007, we were required to calculate
regulatory capital under the New Accord, in parallel with the existing capital
rules. In 2008, we will calculate regulatory capital solely under the
New Accord.
Failure
to meet capital guidelines could subject a bank to a variety of enforcement
remedies, including issuance of a capital directive, the termination of deposit
insurance by the FDIC, a prohibition on taking brokered deposits and certain
other restrictions on its business. As described below, the FDIC can
impose substantial additional restrictions upon FDIC-insured depository
institutions that fail to meet applicable capital requirements.
Acquisitions
As an
active acquirer, we must comply with numerous laws related to our acquisition
activity. Under the Bank Holding Company Act, a bank holding company
may not directly or indirectly acquire ownership or control of more than 5% of
the voting shares or substantially all of the assets of any bank or merge or
consolidate with another bank holding company without the prior approval of the
Federal Reserve. Current federal law authorizes interstate
acquisitions of banks and bank holding companies without geographic
limitation. Furthermore, a bank headquartered in one state is
authorized to merge with a bank headquartered in another state, as long as
neither of the states has opted out of such interstate merger authority prior to
such date, and subject to any state requirement that the target bank shall have
been in existence and operating for a minimum period of time, not to exceed five
years, and to certain deposit market-share limitations. After a bank
has established branches in a state through an interstate merger transaction,
the bank may establish and acquire additional branches at any location in the
state where a bank headquartered in that state could have established or
acquired branches under applicable federal or state law.
FDIC
Insurance Assessments
The FDIC
insures the deposits of the Bank up to prescribed limits for each
depositor. The amount of FDIC assessments paid by each Bank Insurance
Fund (BIF) member institution is based on its relative risks of default as
measured by regulatory capital ratios and other
factors. Specifically, the assessment rate is based on the
institution’s capitalization risk category and supervisory subgroup
category. An institution’s capitalization risk category is based on
the FDIC’s determination of whether the institution is well capitalized,
adequately capitalized or less than adequately capitalized. An
institution’s supervisory subgroup category is based on the FDIC’s assessment of
the financial condition of the institution and the probability that FDIC
intervention or other corrective action will be required. The FDIC
may terminate insurance of deposits upon a finding that a institution has
engaged in unsafe and unsound practices, is in an unsafe or unsound condition to
continue operations, or has violated any applicable law, regulation, rule, order
or condition imposed by the FDIC.
The
Federal Deposit Insurance Act (or “FDI Act”) requires the federal regulatory
agencies to take “prompt corrective action” if a depository institution does not
meet minimum capital requirements. The FDI Act establishes five
capital tiers: “well capitalized”, “adequately capitalized”, “undercapitalized”,
“significantly undercapitalized” and “critically undercapitalized”. A
depository institution’s capital tier will depend upon how its capital levels
compare to various relevant capital measures and certain other factors, as
established by regulation.
The
federal bank regulatory agencies have adopted regulations establishing relevant
capital measurers and relevant capital levels applicable to FDIC-insured
banks. The relevant capital measures are the Total Capital ratio,
Tier 1 Capital ratio and the leverage ratio. Under the regulations, a
FDIC-insured bank will be:
·
|
“well
capitalized” if it has a Total Capital ratio of 10% or greater, a Tier 1
Capital ratio of 6% or greater and a leverage ratio of 5% or greater and
is not subject to any order or written directive by the appropriate
regulatory authority to meet and maintain a specific capital level for any
capital measure;
|
·
|
“adequately
capitalized” if it has a Total Capital ratio of 8% or greater, a Tier 1
Capital ratio of 4% or greater and a leverage ratio of 4% or greater (3%
in certain circumstances) and is not “well
capitalized”;
|
·
|
“undercapitalized”
if it has a Total Capital ratio of less than 8%, a Tier 1 Capital ratio of
less than 4% or a leverage ratio of less than 4% (3% in certain
circumstances);
|
·
|
“significantly
undercapitalized” if it has a Total Capital ratio of less than 6%, a Tier
1 Capital ratio of less than 3% or a leverage ratio of less than 3%;
and
|
·
|
“critically
undercapitalized” if its tangible equity is equal to or less than 2% of
average quarterly tangible assets.
|
An
institution may be downgraded to, or deemed to be in, a capital category that is
lower than is indicated by its capital ratios if it is determined to be in an
unsafe or unsound condition or if it receives an unsatisfactory examination
rating with respect to certain matters. As of December 31, 2007, our
Bank had capital levels that qualify as “well capitalized” under such
regulations.
The
Gramm-Leach-Bliley Act allows bank holding companies that are “well managed” and
“well capitalized” and whose depositor subsidiaries have “satisfactory” or
better Community Reinvestment Act ratings to become financial holding companies
that may engage in a substantially broader range of non-banking activities than
is otherwise permissible, including insurance underwriting and securities
activities. As previously stated, Ameris became a financial holding
company effective August 24, 2000.
The FDI
Act generally prohibits an FDIC-insured bank from making a capital distribution
(including payment of a dividend) or paying any management fee to its holding
company if the bank would thereafter be
“undercapitalized.” “Undercapitalized” banks are subject to growth
limitations and are required to submit a capital restoration
plan. The federal regulators may not accept a capital plan without
determining, among other things, that the plan is based on realistic assumptions
and is likely to succeed in restoring the bank’s capital. In
addition, for a capital restoration plan to be acceptable, the bank’s parent
holding company must guarantee that the institution will comply with such
capital restoration plan. The aggregate liability of the parent
holding company is limited to the lesser of: (i) an amount equal to 5% of the
bank’s total assets at the time it became “undercapitalized”; and (ii) the
amount which is necessary (or would have been necessary) to bring the
institution into compliance with all capital standards applicable with respect
to such institution as of the time it fails to comply with the
plan. If a bank fails to submit an acceptable plan, it is treated as
if it is “significantly undercapitalized.”
“Significantly
undercapitalized” insured banks may be subject to a number of requirements and
restrictions, including orders to sell sufficient voting stock to become
“adequately capitalized”, requirements to reduce total assets and the cessation
of receipt of deposits from correspondent banks. “Critically
undercapitalized” institutions are subject to the appointment of a receiver or
conservator. A bank that is not “well capitalized” is also subject to
certain limitations relating to so-called “brokered” deposits.
Community
Reinvestment Act
The
Community Reinvestment Act requires federal bank regulatory agencies to
encourage financial institutions to meet the credit needs of low- and
moderate-income borrowers in their local communities. An
institution’s size and business strategy determines the type of examination that
it will receive. Large, retail-oriented institutions are examined
using a performance-based lending, investment and service test. Small
institutions are examined using a streamlined approach. All
institutions may opt to be evaluated under a strategic plan formulated with
community input and pre-approved by the bank regulatory agency.
The
Community Reinvestment Act regulations provide for certain disclosure
obligations. Each institution must post a notice advising the public
of its right to comment to the institution and its regulator on the
institution’s Community Reinvestment Act performance and to review the
institution’s Community Reinvestment Act public file. Each lending
institution must maintain for public inspection a file that includes a listing
of branch locations and services, a summary of lending activity, a map of its
communities and any written comments from the public on its performance in
meeting community credit needs. The Community Reinvestment Act
requires public disclosure of a financial institution’s written Community
Reinvestment Act evaluations. This promotes enforcement of Community
Reinvestment Act requirements by providing the public with the status of a
particular institution’s community reinvestment record.
The
Gramm-Leach-Bliley Act made various changes to the Community Reinvestment
Act. Among other changes, Community Reinvestment Act agreements with
private parties must be disclosed and annual Community Reinvestment Act reports
must be made available to a bank’s primary federal regulator. A bank
holding company will not be permitted to become a financial holding company and
no new activities authorized under the Gramm-Leach-Bliley Act may be commenced
by a holding company or by a bank financial subsidiary if any of its bank
subsidiaries received less than a “satisfactory” Community Reinvestment Act
rating in its latest Community Reinvestment Act examination.
Consumer
Protection Laws
The Bank
is subject to a number of federal and state laws designed to protect borrowers
and promote lending to various sectors of the economy and
population. These laws include the Equal Credit Opportunity Act, the
Fair Credit Reporting Act, the Truth in Lending Act, the Home Mortgage
Disclosure Act, the Real Estate Settlement Procedures Act and state law
counterparts.
Federal
law currently contains extensive customer privacy protection
provisions. Under these provisions, a financial institution must
provide to its customers, at the inception of the customer relationship and
annually thereafter, the institution’s policies and procedures regarding the
handling of customers’ nonpublic personal financial
information. These provisions also provide that, except for certain
limited exceptions, an institution may not provide such personal information to
unaffiliated third parties unless the institution discloses to the customer that
such information may be so provided and the customer is given the opportunity to
opt out of such disclosure. Federal law makes it a criminal offense,
except in limited circumstances, to obtain or attempt to obtain customer
information of a financial nature by fraudulent or deceptive means.
Additional
Legislative and Regulatory Matters
On
October 26, 2001, President Bush signed into law the Uniting and Strengthening
America by Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism Act of 2001 (the “USA PATRIOT Act”). Among its other
provisions, the USA PATRIOT Act requires each financial institution: (i) to
establish an anti-money laundering program; (ii) to establish due diligence
policies, procedures and controls with respect to its private banking accounts
involving foreign individuals and certain foreign banks; and (iii) to avoid
establishing, maintaining, administering or managing correspondent accounts in
the United States for, or on behalf of, foreign banks that do not have a
physical presence in any country. The USA PATRIOT Act also requires
the Secretary of the Treasury to prescribe by regulation minimum standards that
financial institutions must follow to verify the identity of customers, both
foreign and domestic, when a customer opens an account. In addition,
the USA PATRIOT Act contains a provision encouraging cooperation among financial
institutions, regulatory authorities and law enforcement authorities with
respect to individuals, entities and organizations engaged in, or reasonably
suspected of engaging in, terrorist acts or money laundering
activities.
On July
30, 2002, the President signed into law the Sarbanes-Oxley Act of 2002
(“Sarbanes-Oxley”), which mandated a variety of reforms intended to address
corporate and accounting fraud. Sarbanes-Oxley also provided for the
establishment of the Public Company Accounting Oversight Board (“PCAOB”), which
enforces auditing, quality control and independence standards for firms that
audit Securities and Exchange Commission (“SEC”) reporting
companies. Sarbanes-Oxley imposes higher standards for auditor
independence and restricts provision of consulting services by auditing firms to
companies they audit and in addition, certain audit partners must be rotated
periodically. Sarbanes-Oxley requires chief executive officers and
chief financial officers, or their equivalents, to certify to the accuracy of
periodic reports filed with the SEC, subject to civil and criminal penalties if
they knowingly or willfully violate this certification
requirement. In addition, under Sarbanes-Oxley, counsel is required
to report specific violations. Directors and executive officers must
report most changes in their ownership of a company’s securities and executives
have restrictions on trading and loans. Sarbanes-Oxley also increases
the oversight and authority of audit committees of publicly traded
companies. Although Ameris has incurred and will continue to incur
additional expense in complying with the provisions of Sarbanes-Oxley and the
related rules, management does not expect that such compliance will have a
material impact on Ameris’ financial condition or results of
operation.
Fiscal
and Monetary Policy
Banking
is a business which depends on interest rate differentials for
success. In general, the difference between the interest paid by a
bank on its deposits and its other borrowings, and the interest received by a
bank on its loans and securities holdings, constitutes the major portion of a
bank’s earnings. Thus, our earnings and growth will be subject to the
influence of economic conditions generally, both domestic and foreign, and also
to the monetary and fiscal policies of the United States and its agencies,
particularly the Federal Reserve. The Federal Reserve regulates the
supply of money through various means, including open market dealings in United
States government securities, the discount rate at which banks may borrow from
the Federal Reserve and the reserve requirements on deposits. The
nature and timing of any changes in such policies and their effect on Ameris
cannot be predicted.
Current
and future legislation and the policies established by federal and state
regulatory authorities will affect our future operations. Banking
legislation and regulations may limit our growth and the return to our investors
by restricting certain of our activities.
In
addition, capital requirements could be changed and have the effect of
restricting our activities or requiring additional capital to be
maintained. We cannot predict what changes, if any, will be made to
existing federal and state legislation and regulations or the effect that such
changes may have on our business.
Federal
Home Loan Bank System
Our
Company has a correspondent relationship with the Federal Home Loan Bank of
Atlanta (“FHLB”), which is one of 12 regional Federal Home Loan Banks (or
“FHLBs”) that administer the home financing credit function of savings
companies. Each FHLB serves as a reserve or central bank for its
members within its assigned region. FHLBs are funded primarily from
proceeds derived from the sale of consolidated obligations of the FHLB system
and make loans to members (i.e., advances) in accordance with policies and
procedures, established by the board of directors of the FHLB which are subject
to the oversight of the Federal Housing Finance Board. All advances
from the FHLB are required to be fully secured by sufficient collateral as
determined by the FHLB. In addition, all long-term advances are
required to provide funds for residential home financing.
FHLB
provides certain services to our Company such as processing checks and other
items, buying and selling federal funds, handling money transfers and exchanges,
shipping coin and currency, providing security and safekeeping of funds or other
valuable items and furnishing limited management information and
advice. As compensation for these services, our Company maintains
certain balances with FHLB in interest-bearing accounts.
Under
federal law, the FHLBs are required to provide funds for the resolution of
troubled savings companies and to contribute to low- and moderately-priced
housing programs through direct loans or interest subsidies on advances targeted
for community investment and low- and moderate-income housing
projects.
Title 6
of the Gramm-Leach-Bliley Act, entitled the Federal Home Loan Bank System
Modernization Act of 1999 (called the “FHLB Modernization Act”), amended the
Federal Home Loan Bank Act to allow voluntary membership and modernized the
capital structure and governance of the FHLBs. The capital structure
established under the FHLB Modernization Act sets forth leverage and risk-based
capital requirements based on permanence of capital. It also requires
some minimum investment in the stock of the FHLBs of all member
entities. Capital includes retained earnings and two forms of stock:
Class A stock redeemable within six months upon written notice and Class B stock
redeemable within five years upon written notice. The FHLB
Modernization Act also reduced the period of time in which a member exiting the
FHLB system must stay out of the system.
Real
Estate Lending Evaluations
The
federal regulators have adopted uniform standards for evaluations of loans
secured by real estate or made to finance improvements to real
estate. Banks are required to establish and maintain written internal
real estate lending policies consistent with safe and sound banking practices
and appropriate to the size of the institution and the nature and scope of its
operations. The regulations establish loan to value ratio limitations
on real estate loans. Our Company’s loan policies establish limits on
loan to value ratios that are equal to or less than those established in such
regulations.
Changing
Regulatory Structure
The laws
and regulations affecting banks and bank holding companies are in a state of
change. The rules and the regulatory agencies in this area have
changed significantly over recent years, and there is reason to expect that
similar changes will continue in the future. It is not possible to
predict the outcome of these changes.
One of
the major additional burdens imposed on the banking industry is the increased
authority of federal agencies to regulate the activities of federal and state
banks and their holding companies. The Federal Reserve and the FDIC
have extensive authority to police unsafe or unsound practices and violations of
applicable laws and regulations by depository institutions and their holding
companies. These agencies can assess civil money penalties. Other
laws such as Sarbanes-Oxley have expanded the agencies’ authority in recent
years, and the agencies have not yet fully tested the limits of their
powers. In addition, the GDBF possesses broad enforcement powers to
address violations of Georgia’s banking laws by banks chartered in
Georgia.
Economic
Environment
The
policies of regulatory authorities, including the monetary policy of the Federal
Reserve, have a significant effect on the operating results of bank holding
companies and their subsidiaries. Among the means available to the
Federal Reserve to affect the money supply are open market operations in U.S.
government securities, changes in the discount rate on member bank borrowings
and changes in reserve requirements against member bank
deposits. These means are used in varying combinations to influence
overall growth and distribution of bank loans, investments and deposits, and
their use may affect interest rates charged on loans or paid on
deposits.
The
Federal Reserve’s monetary policies have materially affected the operating
results of commercial banks in the past and are expected to continue to do so in
the future. The nature of future monetary policies and the effect of
these policies on the business and earnings of our Company cannot be
predicted.
An
investment in the common stock of Ameris is subject to risks inherent in the
Company’s business. The material risks and uncertainties that management
believes affect Ameris are described below. Before making an
investment decision, you should carefully consider the risks and uncertainties
described below, together with all of the other information included or
incorporated by reference in this Annual Report. The risks and uncertainties
described below are not the only ones facing the Company. Additional
risks and uncertainties that management is not aware of or focused on or that
management currently deems immaterial may also impair the Company’s business
operations. This Annual Report is qualified in its entirety by these
risk factors.
If any of
the following risks actually occurs, the Company’s financial condition and
results of operations could be materially and adversely affected. If
this were to happen, the value of the common stock of Ameris could decline
significantly, and you could lose all or part of your investment.
Changes in interest rates could
adversely impact the Company’s financial condition and results of
operations.
The
Company’s earnings and cash flows are largely dependent upon its net interest
income. Net interest income is the difference between interest income
earned on interest-earning assets, such as loans and securities, and interest
expense paid on interest-bearing liabilities, such as deposits and borrowed
funds. Interest rates are highly sensitive to many factors that are
beyond the control of Ameris, including general economic conditions and policies
of various governmental and regulatory agencies and, in particular, the Federal
Reserve Board of Governors. Changes in monetary policy, including
changes in interest rates, could influence not only the interest the Company
receives on loans and securities and the amount of interest it pays on deposits
and borrowings, but such changes could also affect the Company’s ability to
originate loans and obtain deposits, the fair value of the Company’s financial
assets and liabilities and the average duration of the Company’s mortgage-backed
securities portfolio. If the interest rates paid on deposits and
other borrowings increase at a faster rate than the interest rates received on
loans and other investments, the Company’s net interest income and, therefore,
its earnings, could be adversely affected. Earnings could also be adversely
affected if the interest rates received on loans and other investments fall more
quickly than the interest rates paid on deposits and other
borrowings. Although management believes it has implemented effective
asset and liability management strategies to reduce the potential effects of
changes in interest rates on the Company’s results of operations, any
substantial, unexpected, prolonged change in market interest rates could have a
material adverse effect on the Company’s financial condition and results of
operations.
If the Company has higher loan
losses than it has allowed for, its earnings could materially decrease.
The
Company’s loan customers may not repay loans according to their terms, and the
collateral securing the payment of loans may be insufficient to assure
repayment. Ameris may therefore experience significant credit losses
which could have a material adverse effect on its operating
results. Ameris makes various assumptions and judgments about the
collectability of its loan portfolio, including the creditworthiness of
borrowers and the value of the real estate and other assets serving as
collateral for the repayment of loans. In determining the size of the
allowance for loan losses, the Company relies on many factors including
its previous experience and its evaluation of economic
conditions. If assumptions prove to be incorrect, the current
allowance for loan losses may not be sufficient to cover losses inherent in the
loan portfolio and adjustment may be necessary to allow for different economic
conditions or adverse developments in the loan
portfolio. Consequently, a problem with one or more loans could
require the Company to significantly increase the level of its provision for
loan losses. In addition, federal and state regulators periodically
review the Company’s allowance for loan losses and may require it to increase
its provision for loan losses or recognize further loan
charge-offs. Material additions to the allowance would materially
decrease the Company’s net income.
Ameris
has a high concentration of loans secured by real estate and a downturn in the
real estate market, for any reason, could result in losses and materially and
adversely affect business, financial condition, results of operations and future
prospects.
A
significant portion of the Company’s loan portfolio is dependent on real
estate. In addition to the financial strength and cash flow
characteristics of the borrower in each case, often loans are secured with real
estate collateral. At December 31, 2007, approximately 78.2% of loans
have commercial or residential real estate as a component of
collateral. The real estate in each case provides an alternate source
of repayment in the event of default by the borrower and may deteriorate in
value during the time the credit is extended. Further adverse changes
in the economy affecting values of real estate generally or in Ameris’ primary
markets specifically could significantly impair the value of collateral and
ability to sell the collateral upon foreclosure. Furthermore, it is
likely that, in a decreasing real estate market, Ameris would be required to
increase its allowance for loan losses as occurred in 2007, causing material
strain on recurring levels of net income. If the Company is required
to liquidate the collateral securing a loan to satisfy the debt during a period
of reduced real estate values or to increase its allowance for loan losses, its
profitability and financial condition could be adversely
impacted.
Ameris operates in a highly
regulated environment and may be adversely impacted by changes in law and
regulations.
Ameris,
primarily through its Bank, is subject to extensive federal and state regulation
and supervision. Banking regulations are primarily intended to
protect depositors’ funds, federal deposit insurance funds and the banking
system as a whole, not shareholders. These regulations affect the
Company’s lending practices, capital structure, investment practices, dividend
policy and growth, among other things. Congress and federal
regulatory agencies continually review banking laws, regulations and policies
for possible changes. Changes to statutes, regulations or regulatory
policies, including changes in interpretation or implementation of statutes,
regulations or policies, could affect the Company in substantial, unpredictable
and adverse ways. Such changes could subject the Company to
additional costs, limit the types of financial services and products the Company
may offer and/or increase the ability of non-banks to offer competing financial
services and products, among other things. Failure to comply with
laws, regulations or policies could result in sanctions by regulatory agencies,
civil money penalties and/or reputation damage, which could have a material
adverse effect on the Company’s business, financial condition and results of
operations. While the Company has policies and procedures designed to
prevent any such violations, there can be no assurance that such violations will
not occur.
Ameris
relies on dividends from its banking subsidiary for most of its
revenue.
Ameris
Bancorp is a separate and distinct legal entity from its
subsidiaries. It receives substantially all of its revenue from
dividends from the Bank. These dividends are the principal source of
funds to pay dividends on the Company’s common stock and interest and principal
on the Company’s debt. Various federal and/or state laws and
regulations limit the amount of dividends that the Bank may pay to the
Company. Also, the Company’s right to participate in a distribution
of assets upon a subsidiary’s liquidation or reorganization is subject to the
prior claims of the subsidiary’s creditors. In the event the Bank is
unable to pay dividends to the Company, the Company may not be able to service
debt, pay obligations or pay dividends on the Company’s common stock and its
business, financial condition and results of operations may be adversely
affected.
Ameris’
Articles of Incorporation and Bylaws may prevent or delay a takeover by another
company.
Ameris’
Articles of Incorporation permit Ameris’ board of directors to issue preferred
stock without shareowner action. The ability to issue preferred stock
could discourage a company from attempting to obtain control of Ameris by means
of a tender offer, merger, proxy contest or otherwise. Additionally,
Ameris’ Articles of Incorporation and Bylaws divide Ameris’ board of directors
into three classes, as nearly equal in size as possible, with staggered
three-year terms. One class is elected each year. The
classification of Ameris’ board of directors could make it more difficult for a
company to acquire control of Ameris. Ameris is also subject to
certain provisions of the Georgia Business Corporation Code and Ameris’ Articles
of Incorporation which relate to business combinations with interested
shareholders.
Ameris
operates in a highly competitive industry and market areas.
Ameris
faces substantial competition in all areas of its operations from a variety of
different competitors, many of whom are larger and may have more financial
resources. Such competitors primarily include national, regional and
community banks within the various markets in which the Bank
operates. Ameris also faces competition from many other types of
financial institutions, including, without limitation, savings and loan
institutions, credit unions, finance companies, brokerage firms, insurance
companies, factoring companies and other financial
intermediaries. The financial services industry could become even
more competitive as a result of legislative, regulatory and technological
changes and continued consolidation. Banks, securities firms and
insurance companies can merge under the umbrella of a financial holding company,
which can offer virtually any type of financial service, including banking,
securities underwriting, insurance (both agency and underwriting) and merchant
banking. Also, technology has lowered barriers to entry and made it
possible for non-banks to offer products and services traditionally provided by
banks, such as automatic transfer and automatic payment systems. Many
of the Company’s competitors have fewer regulatory constraints and may have
lower cost structures. Additionally, due to their size, many
competitors may be able to achieve economies of scale and, as a result, may
offer a broader range of products and services as well as better pricing for
those products and services than the Company can.
The
Company’s ability to compete successfully depends on a number of factors,
including, among other things:
·
|
the
ability to develop, maintain and build upon long-term customer
relationships based on quality service, high ethical standards and safe,
sound assets;
|
·
|
the
ability to expand the Company’s market
position;
|
·
|
the
scope, relevance and pricing of products and services offered to meet
customer needs and demands;
|
·
|
the
rate at which the Company introduces new products and services relative to
its competitors;
|
·
|
customer
satisfaction with the Company’s level of service;
and
|
·
|
industry
and general economic trends.
|
Failure
to perform in any of these areas could significantly weaken the Company’s
competitive position, which could adversely affect the Company’s growth and
profitability, which, in turn, could have a material adverse effect on the
Company’s financial condition and results of operations.
Potential
acquisitions may disrupt the Company’s business and dilute shareholder
value.
Acquiring
other banks, businesses or branches involves various risks commonly associated
with acquisitions, including, among other things:
·
|
potential
exposure to unknown or contingent liabilities of the target
company;
|
·
|
exposure
to potential asset quality issues of the target
company;
|
·
|
difficulty
and expense of integrating the operations and personnel of the target
company;
|
·
|
potential
disruption to the Company’s
business;
|
·
|
potential
diversion of the Company’s management’s time and
attention;
|
·
|
the
possible loss of key employees and customers of the target
company;
|
·
|
difficulty
in estimating the value of the target company;
and
|
·
|
potential
changes in banking or tax laws or regulations that may affect the target
company.
|
Ameris
has recently acquired other financial institutions and often evaluates
additional merger and acquisition opportunities related to possible transactions
with other financial institutions and financial services
companies. As a result, merger or acquisition discussions and, in
some cases, negotiations may take place and future mergers or acquisitions
involving cash, debt or equity securities of the Company may occur at any
time. Acquisitions typically involve the payment of a premium over
book and market values, and, therefore, some dilution of the Company’s tangible
book value and net income per common share may occur in connection with any
future transaction. Furthermore, failure to realize the expected
revenue increases, cost savings, increases in geographic or product presence
and/or other projected benefits and synergies from an acquisition could have a
material adverse effect on the Company’s financial condition and results of
operations.
Ameris
continually encounters technological change.
The
financial services industry is continually undergoing rapid technological change
with frequent introductions of new technology-driven products and
services. The effective use of technology increases efficiency and
enables financial institutions to better serve customers and to reduce
costs. The Company’s future success depends, in part, upon its
ability to address the needs of its customers by using technology to provide
products and services that will satisfy customer demands, as well as
to create additional efficiencies in the Company’s
operations. Many of the Company’s competitors have substantially
greater resources to invest in technological improvements. The
Company may not be able to effectively implement new technology-driven products
and services or be successful in marketing these products and services to its
customers. Failure to successfully keep pace with technological
change affecting the financial services industry could have a material adverse
impact on the Company’s business and, in turn, the Company’s financial condition
and results of operations.
Ameris
may not be able to attract and retain skilled people.
The
Company’s success depends, in large part, on its ability to attract and retain
key people. Competition for the best people in most activities
engaged in by the Company can be intense and the Company may not be able to hire
people or to retain them. The unexpected loss of services of one or
more of the Company’s key personnel could have a material adverse impact on the
Company’s business because of their skills, knowledge of the Company’s market,
years of industry experience and the difficulty of promptly finding qualified
replacement personnel.
Financial
services companies depend on the accuracy and completeness of information about
customers and counterparties.
In
deciding whether to extend credit or enter into other transactions, the Company
may rely on information furnished by or on behalf of customers and
counterparties, including financial statements, credit reports and other
financial information. The Company may also rely on representations
of those customers, counterparties or other third parties, such as independent
auditors, as to the accuracy and completeness of that
information. Reliance on inaccurate or misleading financial
statements, credit reports or other financial information could have a material
adverse impact on the Company’s business and, in turn, the Company’s financial
condition and results of operations.
None.
Ameris’
corporate headquarters is located at 24 Second Avenue, SE, Moultrie, Georgia
31768. The Company occupies approximately 43,348 square feet at this
location including 3,524 square feet used by the Bank. In addition to
executive offices and the Bank, the corporate headquarters includes mostly
support services for banking operations including credit, sales and operational
support, as well as audit and loan review services.
In
addition to its corporate headquarters, Ameris operates 46 office or branch
locations, of which 39 are owned and seven are subject to either building or
ground leases. At December 31, 2007, there were no significant
encumbrances on the offices, equipment or other operational facilities owned by
Ameris and the Bank.
From time
to time, the Company and the Bank are parties to legal proceedings arising in
the ordinary course of our business operations, including the case described
below. Management, after consultation with legal counsel, does not
anticipate that current litigation will have a material adverse effect on the
Company’s financial position or results of operations or cash
flows.
On June
15, 2006, a Houston County, Alabama jury entered a verdict in a civil action
against Southland Bank, a former subsidiary of the Company that in 2006 was
merged with and into the Bank, and one of Southland Bank’s employees in the
amount of approximately $7.1 million. The plaintiffs in this action
had unsuccessfully applied to Southland Bank for a business loan. The
plaintiffs sued Southland Bank and the employee for actual and punitive damages
alleging a number of purported causes of action, including breach of contract,
negligent failure to provide a loan and fraud, among other things, based on
Southland Bank’s denial of the loan application. The verdict assesses
compensatory damages in the amount of $2.1 million and punitive damages against
Southland Bank in the amount of $5 million. The defendants have filed
post-trial motions with the Supreme Court of the State of Alabama and expect a
ruling during 2008. It is anticipated that any potential financial
obligation that we or our subsidiaries might have to the plaintiffs in this
action will be covered by existing insurance.
ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF
SHAREHOLDERS
No
matters were submitted to a vote of our shareholders during the fourth quarter
of 2007.
PART
II
ITEM
5. MARKET FOR THE REGISTRANT’S COMMON EQUITY,
RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
SECURITIES
Market
Price of Common Stock
Ameris’
common stock, $1.00 par value per share (the “Common Stock”), is listed on the
NASDAQ Global Select Market (“NASDAQ”) under the symbol “ABCB”. The
following table sets forth: (i) the high and low bid prices for the
Common Stock as quoted on NASDAQ during 2007 and 2006; and (ii) the amount of
quarterly dividends declared on the Common Stock during the periods
indicated. The high and low bid prices reflect inter-dealer prices,
without retail mark-up, mark-down or commission, and may not necessarily
represent actual transactions.
Quarter
Ended 2007
|
|
High
|
|
|
Low
|
|
|
Close
|
|
|
Dividend
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March
31
|
|
$ |
27.73 |
|
|
$ |
23.11 |
|
|
$ |
24.33 |
|
|
$ |
.14 |
|
June
30
|
|
|
25.58 |
|
|
|
21.76 |
|
|
|
22.47 |
|
|
|
.14 |
|
September
30
|
|
|
23.05 |
|
|
|
17.72 |
|
|
|
18.08 |
|
|
|
.14 |
|
December
31
|
|
|
18.67 |
|
|
|
13.73 |
|
|
|
16.85 |
|
|
|
.14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
Ended 2006
|
|
High
|
|
|
Low
|
|
|
Close
|
|
|
Dividend
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March
31
|
|
$ |
22.87 |
|
|
$ |
19.26 |
|
|
$ |
22.87 |
|
|
$ |
.14 |
|
June
30
|
|
|
23.01 |
|
|
|
20.03 |
|
|
|
22.91 |
|
|
|
.14 |
|
September
30
|
|
|
27.77 |
|
|
|
20.99 |
|
|
|
27.07 |
|
|
|
.14 |
|
December
31
|
|
|
28.99 |
|
|
|
25.77 |
|
|
|
28.18 |
|
|
|
.14 |
|
Holders
of Common Stock
As of
February 22, 2007, there were approximately 2,000 holders of record of the
Company’s Common Stock. The Company believes that a portion of Common
Stock outstanding is held either in nominee name or street name brokerage
accounts; therefore, the Company is unable to determine the number of beneficial
owners of the Common Stock.
Performance
Graph
Set forth
below is a line graph comparing the change in the cumulative total shareholder
return on the Common Stock against the cumulative return of the NASDAQ Stock
Market (U.S. Companies) Index and the index of NASDAQ Bank Stocks for the
five-year period commencing December 31, 2002, and ending December 31,
2007. This line graph assumes an investment of $100 on December 31,
2002 and reinvestment of dividends and other distributions to
shareholders.
The
following table presents selected consolidated financial information for Ameris.
The data set forth below is derived from the audited consolidated financial
statements of Ameris. The acquisitions of Citizens on November 30,
2004, FNB on December 15, 2005 and Islands on December 31, 2006 have
significantly affected the comparability of selected financial
data. Specifically, since these acquisitions were accounted for using
the purchase method, the assets of the acquired institutions were recorded at
their fair values, the excess purchase price over the net fair value of the
assets was recorded as goodwill and the results of operations for these
businesses have been included in the Company’s results since the date these
acquisitions were completed. Accordingly, the level of our assets and
liabilities and our results of operations for these acquisitions have
significantly affected the Company’s financial position and results of
operations. Discussion of these acquisitions can be found in the
“Corporate Restructuring and Business Combinations” section of Part 1, Item 1.
of this Annual Report and in Note 3 – Business Combinations in the Notes to
Consolidated Financial Statements. The selected financial data should
be read in conjunction with, and is qualified in its entirety by, the
Consolidated Financial Statements and the Notes thereto and Management’s
Discussion and Analysis of Financial Condition and Results of Operations
included elsewhere herein.
|
Year
Ended December 31,
|
|
|
2007
|
|
2006
|
|
2005
|
|
2004
|
|
2003
|
|
|
(Dollars
in Thousands, Except Per Share Data)
|
|
Selected
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$
|
2,112,063
|
|
|
$
|
2,047,542
|
|
|
$
|
1,697,209
|
|
|
$
|
1,267,993
|
|
|
$
|
1,169,111
|
|
Total
loans
|
|
|
1,614,048
|
|
|
|
1,442,951
|
|
|
|
1,186,601
|
|
|
|
877,074
|
|
|
|
840,539
|
|
Total
deposits
|
|
|
1,757,265
|
|
|
|
1,710,163
|
|
|
|
1,375,232
|
|
|
|
986,224
|
|
|
|
906,524
|
|
Investment
securities
|
|
|
298,729
|
|
|
|
290,207
|
|
|
|
243,742
|
|
|
|
221,741
|
|
|
|
196,289
|
|
Shareholders’
equity
|
|
|
191,249
|
|
|
|
178,732
|
|
|
|
148,703
|
|
|
|
120,939
|
|
|
|
113,613
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected
Income Statement Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
$
|
146,077
|
|
|
$
|
124,111
|
|
|
$
|
79,539
|
|
|
$
|
64,365
|
|
|
$
|
64,479
|
|
Interest
expense
|
|
|
70,999
|
|
|
|
54,150
|
|
|
|
26,934
|
|
|
|
19,375
|
|
|
|
22,141
|
|
Net
interest income
|
|
|
75,078
|
|
|
|
69,961
|
|
|
|
52,605
|
|
|
|
44,990
|
|
|
|
42,338
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision
for loan losses
|
|
|
11,321
|
|
|
|
2,837
|
|
|
|
1,651
|
|
|
|
1,786
|
|
|
|
3,945
|
|
Other
income
|
|
|
17,592
|
|
|
|
19,262
|
|
|
|
13,530
|
|
|
|
13,023
|
|
|
|
14,718
|
|
Other
expenses
|
|
|
58,896
|
|
|
|
53,129
|
|
|
|
43,607
|
|
|
|
36,505
|
|
|
|
35,147
|
|
Income
before tax
|
|
|
22,453
|
|
|
|
33,257
|
|
|
|
20,877
|
|
|
|
19,722
|
|
|
|
17,964
|
|
Income
tax expense
|
|
|
7,300
|
|
|
|
11,129
|
|
|
|
7,149
|
|
|
|
6,621
|
|
|
|
5,954
|
|
Net
income
|
|
$
|
15,153
|
|
|
$
|
22,128
|
|
|
$
|
13,728
|
|
|
$
|
13,101
|
|
|
$
|
12,010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per
Share Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income - basic
|
|
$
|
1.12
|
|
|
$
|
1.71
|
|
|
$
|
1.15
|
|
|
$
|
1.12
|
|
|
$
|
1.03
|
|
Net
income – diluted
|
|
|
1.11
|
|
|
|
1.68
|
|
|
|
1.14
|
|
|
|
1.11
|
|
|
|
1.02
|
|
Book
value
|
|
|
14.06
|
|
|
|
13.19
|
|
|
|
11.48
|
|
|
|
10.28
|
|
|
|
9.68
|
|
Tangible
book value
|
|
|
9.67
|
|
|
|
8.73
|
|
|
|
7.64
|
|
|
|
7.9
|
|
|
|
7.76
|
|
Dividends
|
|
|
0.56
|
|
|
|
0.56
|
|
|
|
0.56
|
|
|
|
0.47
|
|
|
|
0.43
|
|
|
Year
Ended December 31,
|
|
|
2007
|
|
2006
|
|
2005
|
|
2004
|
|
2003
|
|
|
(Dollars
in Thousands, Except Per Share Data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profitability
Ratios:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income to average total assets
|
|
|
0.74
|
%
|
|
|
1.22
|
%
|
|
|
1.04
|
%
|
|
|
1.12
|
%
|
|
|
1.04
|
%
|
Net
income to average
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
stockholders’
equity
|
|
|
8.13
|
|
|
|
13.9
|
|
|
|
10.87
|
|
|
|
11.19
|
|
|
|
10.85
|
|
Net
interest margin
|
|
|
4.02
|
|
|
|
4.25
|
|
|
|
4.31
|
|
|
|
4.15
|
|
|
|
3.96
|
|
Efficiency
ratio
|
|
|
63.55
|
|
|
|
59.55
|
|
|
|
65.94
|
|
|
|
62.93
|
|
|
|
61.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
charge-offs to total loans
|
|
|
0.53
|
%
|
|
|
0.09
|
%
|
|
|
0.03
|
%
|
|
|
0.22
|
%
|
|
|
0.46
|
%
|
Reserve
for loan losses to total loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and
OREO
|
|
|
1.71
|
|
|
|
1.72
|
|
|
|
1.88
|
|
|
|
1.77
|
|
|
|
1.78
|
|
Nonperforming
assets to total loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and
OREO
|
|
|
1.6
|
|
|
|
0.61
|
|
|
|
0.9
|
|
|
|
0.7
|
|
|
|
0.95
|
|
Reserve
for loan losses to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
nonperforming
loans
|
|
|
145.72
|
|
|
|
361.54
|
|
|
|
232.57
|
|
|
|
274.7
|
|
|
|
231.2
|
|
Reserve
for loan losses to total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
nonperforming
assets
|
|
|
106.47
|
|
|
|
281.93
|
|
|
|
207.68
|
|
|
|
253.32
|
|
|
|
187.58
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liquidity
Ratios:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans
to total deposits
|
|
|
91.85
|
%
|
|
|
84.38
|
%
|
|
|
86.28
|
%
|
|
|
88.93
|
%
|
|
|
92.72
|
%
|
Average
loans to average
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
earnings
assets
|
|
|
81.72
|
|
|
|
79.39
|
|
|
|
77.32
|
|
|
|
80.91
|
|
|
|
78.63
|
|
Noninterest-bearing
deposits to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
total
deposits
|
|
|
9.36
|
|
|
|
12.96
|
|
|
|
14.6
|
|
|
|
15.22
|
|
|
|
15.63
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
Adequacy Ratios:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stockholders’ equity to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
total
assets
|
|
|
9.06
|
%
|
|
|
8.73
|
%
|
|
|
8.76
|
%
|
|
|
9.54
|
%
|
|
|
9.72
|
%
|
Dividend
payout ratio
|
|
|
50.00
|
|
|
|
32.94
|
|
|
|
48.7
|
|
|
|
41.96
|
|
|
|
41.75
|
|
ITEM
7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION
AND
RESULTS OF OPERATIONS
OVERVIEW
Ameris
Bancorp’s performance in 2007 was highlighted by a number of significant
items. The Bank exceeded forecasts for loans and deposits in South
Carolina in our first year of expansion strategy while at the same time
containing operating expenses despite substantial start-up costs associated with
these expansion efforts. In addition to expansion, the Company
completed consolidation of backroom operations across our four-state footprint
and grew revenue 7.6% despite negative pressures from interest rate environment
and industry trends on service charges. Although the Company made
great strides during the year, an increase in the provision for loan loss was
required due to deteriorating real estate environments along coastal areas of
Florida.
For the
year ended December 31, 2007, Ameris reported net income of $15.2 million, or
$1.11 per diluted share compared to net income in 2006 of $22.1 million, or
$1.68 per diluted share. Net income for the fourth quarter of 2007
was $1.2 million or $0.09 per diluted share compared to $5.8 million or $0.43
per diluted share in the fourth quarter of 2006.
Recurring
total revenue (net interest income and non-interest income) grew 7.6% during
2007 to $92.7 million. The net interest income component of total
revenue grew 7.4% to $75.1 million in 2007. Loan growth of $171.1 million or
11.9% during 2007 was the primary factor behind the growth in net interest
income and more than offset the negative pressures from declining net interest
margins. The Company’s net interest margin in 2007 declined to 4.02%
from 4.27% in 2006 as the industry dealt with historically thin spreads and flat
to inverted interest rate environments.
The
non-interest income component of total revenue grew 8.6% to $17.9 million in
2007 (excluding gains on sales of charters in 2006 and losses on investment
sales in both years). Service charges and fees on deposit accounts grew 7.9% to
$12.5 million as the Company increased certain fees and charges. In
addition, the Company significantly increased the number of low-cost deposit
accounts in every market. Mortgage origination and related fees
increased substantially during 2007 as the Company more than doubled its sales
force, mostly in the last half of 2007. While total revenue from
mortgage related activities increased 40.1% to $3.1 million during 2007,
contribution to net earnings was limited due to various start-up
costs.
Total
operating expenses grew 10.9% in 2007 to $58.9 million compared to $53.1 million
in 2006. Several factors impacted operating expenses in 2007, the
largest factor being the Company’s South Carolina initiative, which accounted
for approximately $4.5 million in incremental costs during 2007. Total net
operating losses associated with the South Carolina strategy in 2007 were $0.10
per share, which compares favorably with the $0.13 per share amount that was
initially forecasted. Equipment and occupancy expenses increased approximately
9.3% to $7.5 million as additional offices in South Carolina and Florida were
opened in 2007. Marketing costs are not expected to moderate or fall in 2008 as
the Company has planned events surrounding openings in several new markets
across its footprint and increased marketing around mortgage and treasury
services.
Decreases
in credit quality, particularly in the second half of 2007, were significant
enough to mitigate improvements elsewhere in the Company. The
majority of the decline, as well as the resulting provisions and net charge-offs
resulted from declines in the values of real estate collateral along the coastal
areas of north Florida. Provisions for loan loss in the fourth
quarter of 2007 amounted to $6.9 million compared to $713,000 in the same
quarter of 2006. For the year, Ameris Bank recorded $11.3 million in
total provision for loan loss, a significant increase over the $2.8 million
recorded in 2006. Net charge-offs in 2007 amounted to 0.53% of
average loans compared to 0.09% in 2006.
At
December 31, 2007, non-performing assets amounted to $26.0 million or 1.60% of
total loans compared to 1.38% of total loans at September 30,
2007. Other real estate increased approximately $4.5 million during
the last quarter as the Company foreclosed on several larger properties which
are being marketed aggressively. The Company’s reserve for loan
losses at December 31, 2007 was $27.6 million or 1.71% of total loans, compared
to $24.9 million and 1.72%, respectively, at December 31, 2006.
CRITICAL
ACCOUNTING POLICIES
Ameris
has established certain accounting and financial reporting policies to govern
the application of accounting principles generally accepted in the United States
of America in the preparation of our financial statements. Our
significant accounting policies are described in the Notes to the Consolidated
Financial Statements. Certain accounting policies involve significant
judgments and assumptions by management which have a material impact on the
carrying value of certain assets and liabilities; management considers these
accounting policies to be critical accounting policies. The judgments
and assumptions used by management are based on historical experience and other
factors which are believed to be reasonable under the
circumstances. Because of the nature of the judgments and assumptions
made by management, actual results could differ from the judgments and estimates
adopted by management which could have a material impact on the carrying values
of assets and liabilities and the results of Ameris’ operations. We
believe the following accounting policies applied by Ameris represent critical
accounting policies.
Allowance
for Loan Losses
We
believe the allowance for loan losses is a critical accounting policy that
requires the most significant judgments and estimates used in the preparation of
our consolidated financial statements. The allowance for loan losses
represents management’s estimate of probable loan losses inherent in the
Company’s loan portfolio. Calculation of the allowance for loan
losses represents a critical accounting estimate due to the significant
judgment, assumptions and estimates related to the amount and timing of
estimated losses, consideration of subjective environmental factors and the
amount and timing of cash flows related to impaired loans.
Management
believes that the allowance for loan losses is adequate. While
management uses available information to recognize losses on loans, future
additions to the allowance for loan losses may be necessary based on changes in
economic conditions. In addition, various regulatory agencies, as an integral
part of their examination processes, periodically review the Company’s allowance
for loan losses. Such agencies may require the Company to recognize
additions to the allowance for loan losses based on their judgments about
information available to them at the time of their examination.
Considering
current information and events regarding a borrower’s ability to repay its
obligations, management considers a loan to be impaired when the ultimate
collectability of all amounts due, according to the contractual terms of the
loan agreement, is in doubt. When a loan is considered to be impaired, the
amount of impairment is measured based on the present value of expected future
cash flows discounted at the loan’s effective interest rate or if the loan is
collateral-dependent, the fair value of the collateral is used to determine the
amount of impairment. Impairment losses are included in the allowance for loan
losses through a charge to the provision for losses on loans.
Subsequent
recoveries are credited to the allowance for loan losses. Cash
receipts for accruing loans are applied to principal and interest under the
contractual terms of the loan agreement. Cash receipts on impaired
loans for which the accrual of interest has been discontinued are applied first
to principal and then to interest income.
Certain
economic and interest rate factors could have a material impact on the
determination of the allowance for loan losses. An increase in
interest rates by the Federal Reserve would favorably impact our net interest
margin. An improving economy could result in the expansion of
businesses and creation of jobs which would positively affect Ameris’ loan
growth and improve our gross revenue stream. Conversely, certain
factors could result from an expanding economy which could increase our credit
costs and adversely impact our net earnings. A significant rapid rise
in interest rates could create higher borrowing costs and shrinking corporate
profits which could have a material impact on a borrower’s ability to
pay. We will continue to concentrate on maintaining a high quality
loan portfolio through strict administration of our loan policy.
Another
factor that we have considered in the determination of the allowance for loan
losses is loan concentrations to individual borrowers or
industries. We had one credit relationship that exceeded our in-house
credit limit of $10.0 million. The exposure to that credit
relationship was approximately $12.2 million.
A
substantial portion of our loan portfolio is in the commercial real estate and
residential real estate sectors. Those loans are secured by real
estate in Ameris’ primary market area. A substantial portion of other
real estate owned is located in those same markets. Therefore, the
ultimate collectability of a substantial portion of our loan portfolio and the
recovery of a substantial portion of the carrying amount of other real estate
owned are susceptible to changes to market conditions in Ameris’ primary market
area.
Income
Taxes
SFAS No.
109, “Accounting for Income Taxes,” requires the asset and liability approach
for financial accounting and reporting for deferred income taxes. We
use the asset and liability method of accounting for deferred income taxes and
provide deferred income taxes for all significant income tax temporary
differences. See Note 12 to the Notes to Consolidated Financial
Statements for additional details.
As part
of the process of preparing our consolidated financial statements we are
required to estimate our income taxes in each of the jurisdictions in which we
operate. This process involves estimating our actual current tax
exposure together with assessing temporary differences resulting from differing
treatment of items, such as depreciation and the provision for loan losses, for
tax and financial reporting purposes. These differences result in
deferred tax assets and liabilities that are included in our consolidated
balance sheet.
We must
also assess the likelihood that our deferred tax assets will be recovered from
future taxable income, and to the extent we believe that recovery is not likely,
we must establish a valuation allowance. Significant management
judgment is required in determining our provision for income taxes, our deferred
tax assets and liabilities and any valuation allowance recorded against our net
deferred tax assets. To the extent we establish a valuation allowance
or adjust this allowance in a period, we must include an expense within the tax
provisions in the statement of income.
We have
recorded on our consolidated balance sheet net deferred tax assets of $5.20
million, which includes amounts relating to loss carryforwards. We
believe there will be sufficient taxable income in the future to allow us to
utilize these loss carryforwards in the tax jurisdictions where they
exist.
Long-Lived
Assets, Including Intangibles
In our
financial statements, we have recorded $59.6 million of goodwill and other
intangible assets, which represents the amount by which the price we paid for
acquired businesses exceeds the fair value of tangible assets acquired plus the
liabilities assumed. We evaluate long-lived assets, such as property
and equipment, specifically identifiable intangibles and goodwill, when events
or changes in circumstances indicate that the carrying value of such assets
might not be recoverable. Factors that could trigger impairment
include significant underperformance relative to historical or projected future
operating results, significant changes in the manner of our use of the acquired
assets and significant negative industry or economic trends.
The
determination of whether impairment has occurred is based on an estimate of
undiscounted cash flows attributable to the assets as compared to the carrying
value of the assets. If impairment has occurred, the amount of the
impairment loss recognized would be determined by estimating the fair value of
the assets and recording a loss if the fair value was less than the book
value.
In
determining the existence of impairment factors, our assessment is based on
market conditions, operational performance and legal factors of our
Company. Our review of factors present and the resulting appropriate
carrying value of our goodwill, intangibles and other long-lived assets are
subject to judgments and estimates that management is required to
make. Future events could cause us to conclude that impairment
indicators exist and that our goodwill, intangibles and other long-lived assets
might be impaired. In accordance with accounting rules promulgated by
the Financial Accounting Standards Board (“FASB”), no amount of goodwill was
expensed in 2007, 2006 or 2005.
NET
INCOME AND EARNINGS PER SHARE
In 2007,
we reported net income of $15.2 million, or $1.11 per diluted share,
compared to $22.1 million, or $1.68 per diluted share in 2006 and $13.7 million,
or $1.14 per diluted share, in 2005. Our return on average assets was
0.74%, 1.22% and 1.04% in 2007, 2006 and 2005, respectively. Our
return on average stockholders’ equity was 8.14%, 13.90% and 10.87% in 2007,
2006 and 2005, respectively.
EARNING
ASSETS AND LIABILITIES
Average
earning assets in 2007 increased 14.1% over 2006 levels principally due the
Company’s de novo efforts in South Carolina. The earning asset and
interest-bearing liability mix is consistently monitored to maximize the net
interest margin and therefore increase return on assets and shareholders
equity.
The
following statistical information should be read in conjunction with
“Management’s Discussion and Analysis of Financial Condition and Results of
Operation” and the financial statements and related notes included elsewhere in
this Annual Report and in the documents incorporated herein by
reference.
The
following tables set forth the amount of the our interest income or interest
expense for each category of interest-earning assets and interest-bearing
liabilities and the average interest rate for total interest-earning assets and
total interest-bearing liabilities, net interest spread and net yield on average
interest-earning assets. Federally tax-exempt income is presented on
a taxable-equivalent basis assuming a 35% federal tax rate.
|
Year
Ended December 31,
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
Interest
|
|
|
Average
|
|
|
|
|
|
Interest
|
|
|
Average
|
|
|
|
|
|
Interest
|
|
|
Average
|
|
|
Average
|
Income/
|
|
|
Yield/
|
|
|
Average
|
|
|
Income/
|
|
|
Yield/
|
|
|
Average
|
|
|
Income/
|
|
|
Yield/
|
|
|
Balance
|
Expense
|
|
|
Rate
Paid
|
|
|
Balance
|
|
|
Expense
|
|
|
Rate
Paid
|
|
|
Balance
|
|
|
Expense
|
|
|
Rate
Paid
|
|
|
(Dollars
in Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-earning
assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans
|
$
|
1,536,243
|
|
$
|
129,376
|
|
|
|
8.42
|
%
|
|
$
|
1,308,405
|
|
|
$
|
107,809
|
|
|
|
8.24
|
%
|
|
$
|
952,647
|
|
|
$
|
69,238
|
|
|
|
7.27
|
%
|
Investment
securities
|
|
298,036
|
|
|
14,785
|
|
|
|
4.96
|
|
|
|
267,343
|
|
|
|
12,550
|
|
|
|
4.69
|
|
|
|
223,633
|
|
|
|
8,794
|
|
|
|
3.93
|
|
Short-term
assets
|
|
45,634
|
|
|
2,349
|
|
|
|
5.15
|
|
|
|
72,183
|
|
|
|
3,843
|
|
|
|
5.32
|
|
|
|
42,884
|
|
|
|
1,591
|
|
|
|
3.71
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
earning assets
|
|
1,879,913
|
|
|
146,510
|
|
|
|
7.79
|
|
|
|
1,647,931
|
|
|
|
124,202
|
|
|
|
7.54
|
|
|
|
1,219,164
|
|
|
|
79,623
|
|
|
|
6.53
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-earning
assets
|
|
175,015
|
|
|
|
|
|
|
|
|
|
|
165,839
|
|
|
|
|
|
|
|
|
|
|
|
103,431
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
$
|
2,054,928
|
|
|
|
|
|
|
|
|
|
$
|
1,813,770
|
|
|
|
|
|
|
|
|
|
|
$
|
1,322,595
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing
liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings
and interest-bearing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
demand
deposits
|
$
|
634,287
|
|
$
|
18,014
|
|
|
|
2.84
|
%
|
|
$
|
521,783
|
|
|
$
|
11,397
|
|
|
|
2.18
|
%
|
|
$
|
393,592
|
|
|
$
|
4,013
|
|
|
|
1.02
|
%
|
Time
deposits
|
|
874,609
|
|
|
44,367
|
|
|
|
5.07
|
|
|
|
773,089
|
|
|
|
34,202
|
|
|
|
4.42
|
|
|
|
498,036
|
|
|
|
15,016
|
|
|
|
3.02
|
|
Other
borrowings
|
|
16,425
|
|
|
722
|
|
|
|
4.40
|
|
|
|
11,910
|
|
|
|
514
|
|
|
|
4.32
|
|
|
|
6,521
|
|
|
|
103
|
|
|
|
1.58
|
|
FHLB
advances
|
|
92,570
|
|
|
4,732
|
|
|
|
5.11
|
|
|
|
91,119
|
|
|
|
4,246
|
|
|
|
4.66
|
|
|
|
100,456
|
|
|
|
4,296
|
|
|
|
4.28
|
|
Trust
preferred securities
|
|
42,269
|
|
|
3,164
|
|
|
|
7.49
|
|
|
|
41,841
|
|
|
|
3,791
|
|
|
|
8.20
|
|
|
|
35,779
|
|
|
|
3,506
|
|
|
|
9.80
|
|
Total
interest-bearing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
liabilities
|
|
1,660,160
|
|
|
70,999
|
|
|
|
3.83
|
|
|
|
1,439,742
|
|
|
|
54,150
|
|
|
|
3.74
|
|
|
|
1,034,084
|
|
|
|
26,934
|
|
|
|
2.60
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand
deposits
|
|
192,575
|
|
|
|
|
|
|
|
|
|
|
194,150
|
|
|
|
|
|
|
|
|
|
|
|
154,326
|
|
|
|
|
|
|
|
|
|
Other
liabilities
|
|
15,880
|
|
|
|
|
|
|
|
|
|
|
20,684
|
|
|
|
|
|
|
|
|
|
|
|
7,895
|
|
|
|
|
|
|
|
|
|
Stockholders’
equity
|
|
186,313
|
|
|
|
|
|
|
|
|
|
|
159,194
|
|
|
|
|
|
|
|
|
|
|
|
126,290
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
stockholders’
equity
|
$
|
2,054,928
|
|
|
|
|
|
|
|
|
|
$
|
1,813,770
|
|
|
|
|
|
|
|
|
|
|
$
|
1,322,595
|
|
|
|
|
|
|
|
|
|
Interest
rate spread
|
|
|
|
|
|
|
|
|
3.96
|
%
|
|
|
|
|
|
|
|
|
|
|
3.80
|
%
|
|
|
|
|
|
|
|
|
|
|
3.93
|
%
|
Net
interest income
|
|
|
|
$
|
75,511
|
|
|
|
|
|
|
|
|
|
|
$
|
70,052
|
|
|
|
|
|
|
|
|
|
|
$
|
52,689
|
|
|
|
|
|
Net
interest margin
|
|
|
|
|
|
|
|
|
4.02
|
%
|
|
|
|
|
|
|
|
|
|
|
4.25
|
%
|
|
|
|
|
|
|
|
|
|
|
4.32
|
%
|
RESULTS
OF OPERATIONS
Net
Interest Income
Net
interest income represents the amount by which interest income on
interest-bearing assets exceeds interest expense incurred on interest-bearing
liabilities. Net interest income is the largest component of our
income and is affected by the interest rate environment and the volume and
composition of interest-earning assets and interest-bearing
liabilities. Our interest-earning assets include loans, investment
securities, interest-bearing deposits in banks and federal funds
sold. Our interest-bearing liabilities include deposits, other
short-term borrowings, FHLB advances and subordinated debentures.
2007
compared with 2006:
For the
year ended December 31, 2007, interest income was $146.1 million, an increase of
$22.0 million, or 17.7%, compared to the same period in 2006. Average
earning assets increased $232.0 million, or 14.1%, to $1.88 billion for the year
ended December 31, 2007 compared to $1.65 billion as of December 31,
2006. Yield on average earning assets on a taxable equivalent basis
for 2007 increased to 7.79% compared to 7.54% and 6.53% for the years ended
December 31, 2006 and 2005, respectively. The increase in
yields on earning assets during 2007 is primarily attributed to better pricing
opportunities on fixed rate loans with steady levels of benchmark interest rates
for variable rate loans.
Interest
expense on deposits and other borrowings for the year ended December 31, 2007
was $71.0, a $16.9 million increase from the year ended December 31,
2006. Average interest-bearing liabilities increased by $217.9
million, or 13.3% to end the year at $1.85 billion. Rates on average
interest-bearing liabilities rose to 3.83% from 3.29% and 2.60% as of December
31, 2006 and 2005, respectively. Our Company aggressively manages our
cost of funds to achieve a balance between high levels of profitability and
acceptable levels of growth.
On a
taxable-equivalent basis, net interest income for 2007 was $75.5 million
compared to $70.1 million in 2006, an increase of 7.7%. The Company’s
net interest margin, on a tax equivalent basis, decreased to 4.02% for the year
ended December 31, 2007 compared to 4.25% as of December 31, 2006. Opportunities
to improve the net interest margin proved limited during the year due to an
interest rate environment dominated by an inverted yield curve, that gave way to
falling short term rates late in 2007.
2006
compared with 2005:
Interest
income for the year ended December 31, 2006 was $124.2 million, an increase of
$44.6 million, or 56.0%, compared to the same period in 2005. Average
earning assets increased $428.8 million, or 35.2%, to $1.64 billion for the year
ended December 31, 2006 compared to $1.22 billion as of December 31,
2005. Yield on average earning assets on a taxable equivalent basis
for 2006 increased to 7.54% from 6.53% and 5.98% for the years ended December
31, 2005 and 2004, respectively. The Company’s increase in interest
income is equally attributable to both an increase in average earning assets and
a higher rate environment for most of 2006 than what was seen in previous
years.
Interest
expense on deposits and other borrowings for the year ended December 31, 2006
was $54.2 million, a $27.2 million increase from the year ended December 31,
2005. While average interest-bearing liabilities increased
substantially, by $405.7 million, the higher rate environment and, consequently,
higher rates on those liabilities contributed to the higher level of interest
expense. Rates on average interest-bearing liabilities increased to
3.74% from 2.60% and 2.11% as of December 31, 2005 and 2004,
respectively. Our Company aggressively manages our cost of funds to
achieve a balance between high levels of profitability and acceptable levels of
growth.
Net
interest income for 2006, on a taxable-equivalent basis, was $70.1 million
compared to $52.7 million in 2005, an increase of 33.0%. The
Company’s net interest margin, on a tax equivalent basis, decreased slightly to
4.25% for the year ended December 31, 2006 compared to 4.32% as of December 31,
2005.
|
|
Year
Ended December 31,
|
|
|
|
2007
vs. 2006
|
|
|
2006
vs. 2005
|
|
|
|
Increase
|
|
|
Changes
Due To
|
|
|
Increase
|
|
|
Changes
Due To
|
|
|
|
(Decrease)
|
|
|
Rate
|
|
|
Volume
|
|
|
(Decrease)
|
|
|
Rate
|
|
|
Volume
|
|
|
|
(Dollars
in Thousands)
|
|
Increase
(decrease) in:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
from earning assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
and fees on loans
|
|
$ |
21,567 |
|
|
$ |
18,798 |
|
|
$ |
2,769 |
|
|
$ |
38,321 |
|
|
$ |
12,275 |
|
|
$ |
26,046 |
|
Interest
on securities:
|
|
|
2,235 |
|
|
|
1,434 |
|
|
|
801 |
|
|
|
3,992 |
|
|
|
2,038 |
|
|
|
1,954 |
|
Short-term
assets
|
|
|
(1,494 |
) |
|
|
(1,416 |
) |
|
|
(78 |
) |
|
|
2,259 |
|
|
|
1,165 |
|
|
|
1,094 |
|
Total
interest income
|
|
|
22,308 |
|
|
|
18,816 |
|
|
|
3,492 |
|
|
|
44,572 |
|
|
|
15,478 |
|
|
|
29,094 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expense
from interest-bearing liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
on savings and interest-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
bearing
demand deposits
|
|
|
6,617 |
|
|
|
2,444 |
|
|
|
4,173 |
|
|
|
7,384 |
|
|
|
6,077 |
|
|
|
1,307 |
|
Interest
on time deposits
|
|
|
10,164 |
|
|
|
4,484 |
|
|
|
5,680 |
|
|
|
19,186 |
|
|
|
10,879 |
|
|
|
8,307 |
|
Interest
on other borrowings
|
|
|
208 |
|
|
|
195 |
|
|
|
13 |
|
|
|
411 |
|
|
|
335 |
|
|
|
76 |
|
Interest
on FHLB advances
|
|
|
486 |
|
|
|
68 |
|
|
|
418 |
|
|
|
(50 |
) |
|
|
323 |
|
|
|
(373 |
) |
Interest
on trust preferred securities
|
|
|
(627 |
) |
|
|
35 |
|
|
|
(662 |
) |
|
|
285 |
|
|
|
(667 |
) |
|
|
952 |
|
Total
interest expense
|
|
|
16,848 |
|
|
|
7,226 |
|
|
|
9,622 |
|
|
|
27,216 |
|
|
|
16,947 |
|
|
|
10,269 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
interest income
|
|
$ |
5,460 |
|
|
$ |
11,590 |
|
|
$ |
(6,130 |
) |
|
$ |
17,356 |
|
|
$ |
(1,469 |
) |
|
$ |
18,825 |
|
Provision
for Loan Losses
The
allowance for loan losses is a reserve established through charges to earnings
in the form of a provision for loan losses. The provision for loan
losses is based on management’s evaluation of the size and composition of the
loan portfolio, the level of non-performing and past due loans, historical
trends of charged-off loans and recoveries, prevailing economic conditions and
other factors management deems appropriate. As these factors change,
the level of loan loss provision may change.
Decreases
in credit quality, particularly in the second half of 2007, were significant
enough to mitigate improvements elsewhere in the Company. The
majority of the decline, as well as the resulting provisions and net charge-offs
resulted from declines in the values of real estate collateral along the coastal
areas of north Florida. Provisions for loan loss in the fourth
quarter of 2007 amounted to $6.9 million compared to $713,000 in the same
quarter of 2006. For the year, Ameris Bank recorded $11.3 million in
total provision for loan loss, a significant increase over the $2.8 million
recorded in 2006. Net charge-offs in 2007 amounted to 0.53% of
average loans compared to 0.10% in 2006 and 0.04% in 2005.
At
December 31, 2007, non-performing assets amounted to $26.0 million or 1.60% of
total loans compared to 0.60% of total loans at December 31,
2006. Other real estate increased approximately $5.7 million during
the year as the Company worked aggressively to resolve several larger
non-performing loans. The Company’s reserve for loan losses at
December 31, 2007 was $27.6 million or 1.71% of total loans, compared to $24.9
million and 1.72%, respectively, at December 31, 2006 and 1.95% at December 31,
2005.
Non-interest
income
Following
is a comparison of non-interest income for 2007, 2006 and 2005.
|
Years
Ended December 31,
|
|
|
2007
|
|
2006
|
|
2005
|
|
|
(Dollars
in Thousands)
|
|
Service
charges on deposit accounts
|
|
$ |
12,445 |
|
|
$ |
11,538 |
|
|
$ |
10,428 |
|
Mortgage
banking activities
|
|
|
3,093 |
|
|
|
2,208 |
|
|
|
1,614 |
|
Gain
(loss) on sale of securities
|
|
|
(297 |
) |
|
|
(308 |
) |
|
|
(391 |
) |
Other
income
|
|
|
2,351 |
|
|
|
5,824 |
|
|
|
1,879 |
|
|
|
$ |
17,592 |
|
|
$ |
19,262 |
|
|
$ |
13,530 |
|
2007
compared with 2006:
The
non-interest income component of total revenue grew 8.4% to $17.9 million in
2007 (excluding gains on sales of charters in 2006 and losses on investment
sales in both years). Service charges and fees on deposit accounts grew 7.9% to
$12.5 million as the Company increased certain fees and charges. In
addition to increasing fees, the Company significantly increased the number of
low-cost deposit accounts in virtually every market. Mortgage
origination and related fees increased substantially during 2007 as the Company
more than doubled its sales force, mostly in the last half of
2007. While total revenue from mortgage related activities increased
40.1% to $3.1 million during 2007, contribution to net earnings was limited due
to various start-up costs.
2006
compared with 2005:
Total
non-interest income during 2006 increased substantially to $19.3 million, an
increase of 42.4% over 2005 levels. Service charges on deposit
accounts increased by 10.6% during 2006 to $11.5 million as the Company
experienced strong increases in demand deposits and sought to maximize this area
of income with certain changes to its deposit account fee
structure. Mortgage fees increased by 36.8% during 2006 to $2.2
million as the Company expanded its mortgage production staff in most of its
geographic footprint. Other income during 2006 includes $3.1 million
of gains recognized from the Company’s successful efforts to sell three banking
charters to unrelated parties.
Non-interest
expense
Following
is a comparison of non-interest expense for 2007, 2006 and 2005.
|
|
Years
Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
(Dollars
in Thousands)
|
|
Salaries
and employee benefits
|
|
$ |
29,844 |
|
|
$ |
27,043 |
|
|
$ |
22,483 |
|
Equipment
and occupancy
|
|
|
7,540 |
|
|
|
6,836 |
|
|
|
4,931 |
|
Amortization
of intangible assets
|
|
|
1,297 |
|
|
|
1,107 |
|
|
|
819 |
|
Data
processing fees
|
|
|
2,579 |
|
|
|
2,136 |
|
|
|
1,899 |
|
Business
restructuring
|
|
|
0 |
|
|
|
1,452 |
|
|
|
2,838 |
|
Other
expense
|
|
|
17,636 |
|
|
|
14,555 |
|
|
|
10,637 |
|
|
|
$ |
58,896 |
|
|
$ |
53,129 |
|
|
$ |
43,607 |
|
2007
compared with 2006:
Total
operating expenses grew 10.9% in 2007 to $58.9 million compared to $53.1 million
in 2006. Several factors impacted operating expenses in 2007, the
largest factor being the Company’s South Carolina initiative, which accounted
for approximately $4.5 million in incremental costs during
2007. Equipment and occupancy expenses increased approximately 10.3%
to $7.5 million as additional offices in South Carolina and Florida were opened
in 2007. Advertising-related expenses in 2007 increased approximately $460,000
to $2.1 million as the Company expanded its marketing in existing markets and
promoted its products in new and existing markets. Marketing costs are not
expected to moderate or fall in 2008 as the Company has planned events
surrounding openings in several new markets across its footprint and increased
marketing around mortgage and treasury services.
Expenses
associated with data processing increased approximately 20.7% during
2007. These expenses fluctuate in proportion to business volumes
(loans and deposits) and branch officers. The Company’s expansion
efforts over the past few years, as well as acquisition activity, have resulted
in higher levels of expense.
2006
compared with 2005:
Non-interest
expense increased during 2006 largely as a result of the FNB
acquisition. Expenses for these two banks were not included in our
results for 2005 as the acquisition was consummated at the end of the
year. The assets assumed in this acquisition amounted to
approximately 18.5% of our total assets at the end of 2005. In
addition to the necessary costs assumed with this acquisition, the Company’s
level of operating costs has been influenced by the need to renovate several
existing offices and efforts to hire talented bankers when the opportunity
exists.
Business
restructuring costs of $1.5 million in 2006 relate to the restructuring
announced during 2005. Additional costs were necessary as the Company
began to streamline it support functions and finalize its efforts to create a
single bank with a uniform and recognizable brand.
Income
Taxes:
Federal
income tax expense is influenced by the amount of taxable income, the amount of
tax-exempt income and the amount of non-deductible expenses. Income
taxes totaled $7.3 million, $11.1 million and $7.1 million in 2007, 2006 and
2005, respectively. The Company’s effective tax rate was 33%, 33% and
34% for the years ended December 31, 2007, 2006 and 2005.
LOANS
Management
believes that our loan portfolio is adequately diversified. The loan portfolio
contains no foreign or energy-related loans or significant concentrations in any
one industry, with the exception of residential and commercial real estate
mortgages, which constituted approximately 54.7% of our loan portfolio as of
December 31, 2007. The amount of loans outstanding at the indicated
dates is shown in the following table according to type of loans.
|
|
December
31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
2003
|
|
|
|
(Dollars
in Thousands)
|
|
Commercial
and financial
|
|
$ |
164,708 |
|
|
$ |
137,290 |
|
|
$ |
129,612 |
|
|
$ |
100,585 |
|
|
$ |
95,514 |
|
Agricultural
|
|
|
40,433 |
|
|
|
34,614 |
|
|
|
31,438 |
|
|
|
27,718 |
|
|
|
22,242 |
|
Real
estate - construction
|
|
|
174,576 |
|
|
|
157,260 |
|
|
|
73,639 |
|
|
|
39,516 |
|
|
|
26,581 |
|
Real
estate - mortgage, farmland
|
|
|
83,784 |
|
|
|
79,931 |
|
|
|
65,052 |
|
|
|
55,910 |
|
|
|
57,024 |
|
Real
estate - mortgage, commercial
|
|
|
912,727 |
|
|
|
803,652 |
|
|
|
654,315 |
|
|
|
448,425 |
|
|
|
420,896 |
|
Real
estate - mortgage, residential
|
|
|
157,334 |
|
|
|
147,789 |
|
|
|
142,609 |
|
|
|
126,985 |
|
|
|
131,181 |
|
Consumer
installment loans
|
|
|
69,099 |
|
|
|
73,218 |
|
|
|
79,239 |
|
|
|
66,779 |
|
|
|
72,461 |
|
Other
|
|
|
11,381 |
|
|
|
9,197 |
|
|
|
10,646 |
|
|
|
11,157 |
|
|
|
14,640 |
|
|
|
|
1,614,048 |
|
|
|
1,442,951 |
|
|
|
1,186,601 |
|
|
|
877,074 |
|
|
|
840,539 |
|
Less
reserve for possible loan losses
|
|
|
27,640 |
|
|
|
24,863 |
|
|
|
22,294 |
|
|
|
15,493 |
|
|
|
14,963 |
|
Loans,
net
|
|
$ |
1,586,408 |
|
|
$ |
1,418,088 |
|
|
$ |
1,164,307 |
|
|
$ |
861,581 |
|
|
$ |
825,576 |
|
Total
loans as of December 31, 2007 are shown in the following table according to
maturity or repricing opportunities.
|
|
(Dollars
in
|
|
|
|
Thousands)
|
|
Maturity
or Repricing Within:
|
|
|
|
One
year or less
|
|
$ |
725,355 |
|
After
one year through five years
|
|
|
714,869 |
|
After
five years
|
|
|
173,825 |
|
|
|
$ |
1,614,048 |
|
The
following table summarizes loans at December 31, 2007 with due dates after one
year which (1) have predetermined interest rates and (2) have floating or
adjustable interest rates.
|
|
(Dollars
in
|
|
|
|
Thousands)
|
|
|
|
|
|
Predetermined
interest rates
|
|
$ |
495,837 |
|
Floating
or adjustable interest rates
|
|
|
392,857 |
|
|
|
$ |
888,694 |
|
Records
were not available to present the above information in each category listed in
the first paragraph above and could not be reconstructed without undue
burden.
ALLOWANCE
AND PROVISION FOR LOAN LOSSES
The
allowance for loan losses represents a reserve for inherent losses in the loan
portfolio. The adequacy of the allowance for loan losses is evaluated
periodically based on a review of all significant loans, with a particular
emphasis on non-accruing, past due and other loans that management believes
might be potentially impaired or warrant additional attention. We segregate our
loan portfolio by type of loan and utilize this segregation in evaluating
exposure to risks within the portfolio. In addition, based on internal reviews
and external reviews performed by independent auditors and regulatory
authorities, we further segregate our loan portfolio by loan grades based on an
assessment of risk for a particular loan or group of loans. Certain reviewed
loans are assigned specific allowances when a review of relevant data determines
that a general allocation is not sufficient or when the review affords
management the opportunity to fine tune the amount of exposure in a given
credit. In establishing allowances, management considers historical loan loss
experience but adjusts this data with a significant emphasis on data such as
current loan quality trends, current economic conditions and other factors in
the markets where the Bank operates. Factors considered include among others,
current valuations of real estate in our markets, unemployment rates, the effect
of weather conditions on agricultural related entities and other significant
local economic events, such as major plant closings.
We have
developed a methodology for determining the adequacy of the loan loss reserve
which is monitored by the Company’s Senior Credit Officer and internal audit
staff. Procedures provide for the assignment of a risk rating for every loan
included in our total loan portfolio, with the exception of credit card
receivables and overdraft protection loans which are treated as pools for risk
rating purposes. The risk rating schedule provides eight ratings of which four
ratings are classified as pass ratings and four ratings are classified as
criticized ratings. Each risk rating is assigned a percent factor to be applied
to the loan balance to determine the adequate amount of reserve. Many of the
larger loans require an annual review by an independent loan officer and are
often reviewed by independent third parties. As a result of these loan reviews,
certain loans may be assigned specific reserve allocations. Other loans that
surface as problem loans may also be assigned specific reserves. Past due loans
are assigned risk ratings based on the number of days past due. Risk ratings are
subject to periodic review by internal and external loan review
staff.
The
following table sets forth the breakdown of the allowance for loan losses by
loan category for the periods indicated. Management believes the allowance can
be allocated only on an approximate basis. The allocation of the allowance to
each category is not necessarily indicative of future losses and does not
restrict the use of the allowance to absorb losses in any other
category.
|
|
At
December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
2003
|
|
|
|
(Dollars
in Thousands)
|
|
|
|
|
|
|
%
of
|
|
|
|
|
|
%
of
|
|
|
|
|
|
%
of
|
|
|
|
|
|
%
of
|
|
|
|
|
|
%
of
|
|
|
|
Amount
|
|
|
Total
Loans
|
|
|
Amount
|
|
|
Total
Loans
|
|
|
Amount
|
|
|
Total
Loans
|
|
|
Amount
|
|
|
Total
Loans
|
|
|
Amount
|
|
|
Total
Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial,
financial,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
industrial
and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
agricultural
|
|
$ |
3,830 |
|
|
|
13 |
% |
|
$ |
3,792 |
|
|
|
13
|
% |
|
$ |
4,215 |
|
|
|
14
|
% |
|
$ |
3,030 |
|
|
|
16
|
% |
|
$ |
2,332 |
|
|
|
16
|
% |
Commercial
R/E
|
|
|
16,049 |
|
|
|
57 |
|
|
|
12,976 |
|
|
|
55 |
|
|
|
11,354 |
|
|
|
55 |
|
|
|
7,344 |
|
|
|
51 |
|
|
|
7,857 |
|
|
|
50 |
|
Total
Commercial
|
|
|
19,879 |
|
|
|
70 |
|
|
|
16,768 |
|
|
|
68 |
|
|
|
15,569 |
|
|
|
69 |
|
|
|
10,374 |
|
|
|
67 |
|
|
|
10,189 |
|
|
|
66 |
|
Residential
R/E
|
|
|
2,078 |
|
|
|
10 |
|
|
|
2,325 |
|
|
|
10 |
|
|
|
2,585 |
|
|
|
12 |
|
|
|
1,986 |
|
|
|
14 |
|
|
|
2,180 |
|
|
|
16 |
|
Agricultural
R/E
|
|
|
1,150 |
|
|
|
5 |
|
|
|
1,331 |
|
|
|
6 |
|
|
|
1,359 |
|
|
|
6 |
|
|
|
970 |
|
|
|
6 |
|
|
|
884 |
|
|
|
7 |
|
Construction
|
|
|
3,487 |
|
|
|
11 |
|
|
|
3,293 |
|
|
|
11 |
|
|
|
1,270 |
|
|
|
6 |
|
|
|
553 |
|
|
|
5 |
|
|
|
364 |
|
|
|
3 |
|
Consumer
Installment
|
|
|
1,046 |
|
|
|
4 |
|
|
|
1,146 |
|
|
|
5 |
|
|
|
1,511 |
|
|
|
7 |
|
|
|
1,610 |
|
|
|
8 |
|
|
|
1,346 |
|
|
|
9 |
|
|
|
$ |
27,640 |
|
|
|
100
|
% |
|
$ |
24,863 |
|
|
|
100
|
% |
|
$ |
22,294 |
|
|
|
100
|
% |
|
$ |
15,493 |
|
|
|
100
|
% |
|
$ |
14,963 |
|
|
|
100
|
% |
The
following table presents an analysis of our loan loss experience for the periods
indicated:
|
|
December
31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
2003
|
|
|
|
(Dollars
in Thousands)
|
|
Average
amount of loans outstanding
|
|
$ |
1,536,243 |
|
|
$ |
1,308,174 |
|
|
$ |
952,647 |
|
|
$ |
855,205 |
|
|
$ |
841,857 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
of reserve for possible loan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
losses
at beginning of period
|
|
$ |
24,863 |
|
|
$ |
22,294 |
|
|
$ |
15,493 |
|
|
$ |
14,963 |
|
|
$ |
14,868 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charge-offs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
mortage, financial and agricultural
|
|
|
(8,735 |
) |
|
|
(1,712 |
) |
|
|
(649 |
) |
|
|
(1,639 |
) |
|
|
(3,114 |
) |
Residential
mortage
|
|
|
(623 |
) |
|
|
(1,444 |
) |
|
|
(543 |
) |
|
|
(382 |
) |
|
|
(781 |
) |
Consumer
|
|
|
(1,057 |
) |
|
|
(874 |
) |
|
|
(963 |
) |
|
|
(1,555 |
) |
|
|
(1443 |
) |
Recoveries:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
mortage, financial and agricultural
|
|
|
1,339 |
|
|
|
1,528 |
|
|
|
601 |
|
|
|
464 |
|
|
|
963 |
|
|
|
|
120 |
|
|
|
745 |
|
|
|
644 |
|
|
|
483 |
|
|
|
46 |
|
Consumer
|
|
|
412 |
|
|
|
477 |
|
|
|
532 |
|
|
|
718 |
|
|
|
479 |
|
Net
charge-offs
|
|
|
(8,544 |
) |
|
|
(1,292 |
) |
|
|
(378 |
) |
|
|
(1,911 |
) |
|
|
(3,850 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions
to reserve charged to operating expenses
|
|
|
11,321 |
|
|
|
2,837 |
|
|
|
1,651 |
|
|
|
1,786 |
|
|
|
3,945 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance
for loan losses of acquired subsidiary
|
|
|
- |
|
|
|
1,024 |
|
|
|
5,528 |
|
|
|
655 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
of reserve for possible
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
loan
losses at end of period
|
|
$ |
27,640 |
|
|
$ |
24,863 |
|
|
$ |
22,294 |
|
|
$ |
15,493 |
|
|
$ |
14,963 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratio
of net loan charge-offs to average loans
|
|
|
0.53 |
% |
|
|
0.10 |
% |
|
|
0.04 |
% |
|
|
0.22 |
% |
|
|
0.46 |
% |
NONPERFORMING
LOANS
A loan is
placed on non-accrual status when, in management’s judgment, the collection of
the interest income appears doubtful. Interest receivable that has been accrued
in prior years and is subsequently determined to have doubtful collectability is
charged to the allowance for possible loan losses. Interest on loans
that are classified as non-accrual is recognized when received. Past
due loans are loans whose principal or interest is past due 90 days or
more. In some cases, where borrowers are experiencing financial
difficulties, loans may be restructured to provide terms significantly different
from the original contractual terms.
|
|
December
31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
2003
|
|
|
|
(Dollars
in Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans
accounted for on a non-accrual basis
|
|
$
|
18,968
|
|
|
$
|
6,877
|
|
|
$
|
9,586
|
|
|
$
|
5,640
|
|
|
$
|
6,472
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Installment
loans and term loans contractually past due ninety days or more as to
interest or principal payments and still accruing
|
|
|
4
|
|
|
|
-
|
|
|
|
-
|
|
|
|
44
|
|
|
|
25
|
|
In the
opinion of management, any loans classified by regulatory authorities as
doubtful, substandard or special mention that have not been disclosed above do
not (i) represent or result from trends or uncertainties which management
reasonably expects will materially impact future operating results, liquidity or
capital resources, or (ii) represent material credits about which management is
aware of any information which causes management to have serious doubts as to
the ability of such borrowers to comply with the loan repayment
terms. Any loans classified by regulatory authorities as loss have
been charged off.
LIQUIDITY
AND RATE SENSITIVITY
Liquidity
management involves the matching of the cash flow requirements of customers, who
may be either depositors desiring to withdraw funds or borrowers needing
assurance that sufficient funds will be available to meet their credit needs,
and the ability of our Company to meet those needs. We seek to meet
liquidity requirements primarily through management of short-term investments
(principally interest-bearing deposits in banks) and monthly amortizing
loans. Another source of liquidity is the repayment of maturing
single payment loans. In addition, our Company maintains
relationships with correspondent banks which could provide funds to them on
short notice, if needed.
A
principal objective of our asset/liability management strategy is to minimize
its exposure to changes in interest rates by matching the maturity and repricing
horizons of interest-earning assets and interest-bearing
liabilities. This strategy is overseen in part through the direction
of our Asset and Liability Committee (the “ALCO Committee”) which establishes
policies and monitors results to control interest rate
sensitivity.
As part
of our interest rate risk management policy, the ALCO Committee examines the
extent to which its assets and liabilities are “interest rate sensitive” and
monitors its interest rate-sensitivity “gap”. An asset or liability
is considered to be interest rate sensitive if it will reprice or mature within
the time period analyzed, usually one year or less. The interest
rate-sensitivity gap is the difference between the interest-earning assets and
interest-bearing liabilities scheduled to mature or reprice within such time
period. A gap is considered positive when the amount of interest
rate-sensitive assets exceeds the amount of interest rate-sensitive
liabilities. A gap is considered negative when the amount of interest
rate-sensitive liabilities exceeds the interest rate-sensitive
assets. During a period of rising interest rates, a negative gap
would tend to adversely affect net interest income, while a positive gap would
tend to result in an increase in net interest income. During a period
of falling interest rates, a negative gap would tend to result in an increase in
net interest income, while a positive gap would tend to adversely affect net
interest income. If our assets and liabilities were equally flexible
and moved concurrently, the impact of any increase or decrease in interest rates
on net interest income would be minimal.
A simple
interest rate “gap” analysis by itself may not be an accurate indicator of how
net interest income will be affected by changes in interest
rates. Accordingly, the ALCO Committee also evaluates how the
repayment of particular assets and liabilities is impacted by changes in
interest rates. Income associated with interest-earning assets and
costs associated with interest-bearing liabilities may not be affected uniformly
by changes in interest rates. In addition, the magnitude and duration
of changes in interest rates may have a significant impact on net interest
income. For example, although certain assets and liabilities may have
similar maturities or periods of repricing, they may not react identically to
changes in market interest rates. Interest rates on certain types of
assets and liabilities fluctuate in advance of changes in general market
interest rates, while interest rates on other types may lag behind changes in
general market rates. In addition, certain assets, such as adjustable
rate mortgage loans, have features (generally referred to as “interest rate
caps”) which limit changes in interest rates on a short-term basis and over the
life of the asset. In the event of a change in interest rates,
prepayment and early withdrawal levels also could deviate significantly from
those assumed in calculating the interest rate gap. The ability of
many borrowers to service their debts also may decrease in the event of an
interest rate increase.
We manage
the mix of asset and liability maturities in an effort to control the effects of
changes in the general level of interest rates on net interest
income. Except for its effect on the general level of interest rates,
inflation does not have a material impact on the portfolio due to the rate
variability and short-term maturities of its earning assets. In
particular, approximately 44.9% of the loan portfolio is comprised of loans
which mature or reprice within one year or less. Mortgage loans,
primarily with five to fifteen year maturities, are also made on a variable rate
basis with rates being adjusted every one to five
years. Additionally, 1.5% of the investment portfolio matures or
reprices within one year or less.
The
following table sets forth the distribution of the repricing of our earning
assets and interest-bearing liabilities as of December 31, 2007, the interest
rate sensitivity gap (i.e., interest rate sensitive assets divided by interest
rate sensitivity liabilities), the cumulative interest rate sensitivity gap
ratio (i.e., interest rate sensitive assets divided by interest rate sensitive
liabilities) and the cumulative sensitivity gap ratio. The table also
sets forth the time periods in which earning assets and liabilities will mature
or may reprice in accordance with their contractual terms. However,
the table does not necessarily indicate the impact of general interest rate
movements on the net interest margin since the repricing of various categories
of assets and liabilities is subject to competitive pressures and the needs of
our customers. In addition, various assets and liabilities indicated
as repricing within the same period may in fact reprice at different times
within such period and at different rates.
|
|
At
December 31, 2007
|
|
|
|
Maturing
or Repricing Within
|
|
|
|
Zero
to
|
|
|
Three
|
|
|
One
to
|
|
|
Over
|
|
|
|
|
|
|
Three
|
|
|
Months
to
|
|
|
Five
|
|
|
Five
|
|
|
|
|
|
|
Months
|
|
|
One
Year
|
|
|
Years
|
|
|
Years
|
|
|
Total
|
|
|
|
(Dollars
in Thousands)
|
|
Earning
assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term
assets
|
|
$ |
12,022 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
12,022 |
|
Investment
securities
|
|
|
2,766 |
|
|
|
1,800 |
|
|
|
147,262 |
|
|
|
139,342 |
|
|
|
291,170 |
|
Loans
|
|
|
262,685 |
|
|
|
462,669 |
|
|
|
714,869 |
|
|
|
173,825 |
|
|
|
1,614,048 |
|
|
|
|
277,473 |
|
|
|
464,469 |
|
|
|
862,131 |
|
|
|
313,167 |
|
|
|
1,917,240 |
|
Interest-bearing
liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing
demand deposits
|
|
|
624,479 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
624,479 |
|
Savings
|
|
|
53,834 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
53,834 |
|
Time
deposits
|
|
|
235,936 |
|
|
|
518,530 |
|
|
|
127,135 |
|
|
|
6 |
|
|
|
881,607 |
|
Other
borrowings
|
|
|
19,705 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
19,705 |
|
FHLB
advances
|
|
|
80,000 |
|
|
|
- |
|
|
|
5,500 |
|
|
|
- |
|
|
|
85,500 |
|
Trust
preferred securities
|
|
|
42,269 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
42,269 |
|
|
|
|
1,056,223 |
|
|
|
518,530 |
|
|
|
132,635 |
|
|
|
6 |
|
|
|
1,707,394 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
rate sensitivity gap
|
|
$ |
(778,750) |
|
|
$ |
(54,061) |
|
|
$ |
729,496 |
|
|
$ |
313,161 |
|
|
$ |
209,846 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative
interest rate sensitivity gap
|
|
$ |
(778,750) |
|
|
$ |
(832,811) |
|
|
$ |
(103,315) |
|
|
$ |
209,846 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
rate sensitivity gap ratio
|
|
|
0.26 |
|
|
|
0.90 |
|
|
|
6.5 |
|
|
|
N/A |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative
interest rate sensitivity gap ratio
|
|
|
0.26 |
|
|
|
0.47 |
|
|
|
2.04 |
|
|
|
1.13 |
|
|
|
|
|
INVESTMENT
PORTFOLIO
Following
is a summary of the carrying value of investments, including restricted equity
securities, as of the end of each reported period:
|
|
December
31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
(Dollars
in Thousands)
|
|
U.
S. Government sponsored agencies
|
|
$
|
69,923
|
|
|
$
|
101,863
|
|
|
$
|
92,461
|
|
State
and municipal securities
|
|
|
18,320
|
|
|
|
18,934
|
|
|
|
7,968
|
|
Corporate
debt securities
|
|
|
9,498
|
|
|
|
9,829
|
|
|
|
7,113
|
|
Mortgage-backed
securities
|
|
|
191,641
|
|
|
|
151,818
|
|
|
|
126,870
|
|
Marketable
equity securities
|
|
|
1,788
|
|
|
|
748
|
|
|
|
733
|
|
Restricted
equity securities
|
|
|
7,559
|
|
|
|
7,015
|
|
|
|
8,597
|
|
|
|
$
|
298,729
|
|
|
$
|
290,207
|
|
|
$
|
243,742
|
|
The
amounts of securities available for sale in each category as of December 31,
2007 are shown in the following table according to contractual maturity
classifications: (1) one year or less, (2) after one year through
five years, (3) after five years through ten years and (4) after ten
years.
|
|
U.
S. Treasury
|
|
|
|
|
|
|
|
|
|
and
Other U. S.
|
|
|
|
|
|
|
|
|
|
Government
Agencies
|
|
|
State
and Political
|
|
|
|
and
Corporations
|
|
|
Subdivisions
|
|
|
|
|
|
|
Yield
|
|
|
|
|
|
Yield
|
|
|
|
Amount
|
|
|
|
(1)
|
|
|
Amount
|
|
|
|
(1)(2)
|
|
|
|
(Dollars
in Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maturity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One
year or less
|
|
$
|
479
|
|
|
|
3.59
|
%
|
|
$
|
571
|
|
|
|
5.35
|
%
|
After
one year through five years
|
|
|
63,829
|
|
|
|
4.69
|
|
|
|
5,637
|
|
|
|
5.64
|
|
After
five years through ten years
|
|
|
40,952
|
|
|
|
4.71
|
|
|
|
8,535
|
|
|
|
5.69
|
|
After
ten years
|
|
|
167,590
|
|
|
|
5.41
|
|
|
|
3,577
|
|
|
|
6.00
|
|
|
|
$
|
272,850
|
|
|
|
5.13
|
%
|
|
$
|
18,320
|
|
|
|
5.73
|
%
|
(1)
|
Yields
were computed using coupon interest, adding discount accretion or
subtracting premium amortization, as appropriate, on a ratable basis over
the life of each security. The weighted average yield for each
maturity range was computed using the acquisition price of each security
in that range.
|
(2)
|
Yields
on securities of state and political subdivisions are stated on a
taxable-equivalent basis, using a tax rate of
35%.
|
DEPOSITS
Average
amount of deposits and average rate paid thereon, classified as to
noninterest-bearing demand deposits, interest-bearing demand and savings
deposits and time deposits, for the periods indicated are presented
below.
|
|
Year
Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
|
Amount
|
|
|
Rate
|
|
|
Amount
|
|
|
Rate
|
|
|
|
(Dollars
in Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest-bearing
demand deposits
|
|
$
|
192,575
|
|
|
|
-
|
%
|
|
$
|
194,150
|
|
|
|
-
|
%
|
Interest-bearing
demand and savings deposits
|
|
|
634,287
|
|
|
|
2.84
|
|
|
|
521,783
|
|
|
|
2.18
|
|
Time
deposits
|
|
|
874,610
|
|
|
|
5.07
|
|
|
|
773,089
|
|
|
|
4.42
|
|
Total
deposits
|
|
$
|
1,701,472
|
|
|
|
|
|
|
$
|
1,489,022
|
|
|
|
|
|
We have a
large, stable base of time deposits with little or no dependence on what we
consider volatile deposits of $100,000 or more. These time deposits
are principally certificates of deposit and individual retirement accounts
obtained for individual customers.
The
amounts of time certificates of deposit issued in amounts of $100,000 or more as
of December 31, 2007, are shown below by category, which is based on time
remaining until maturity of (1) three months or less, (2) over three through
twelve months and (3) over twelve months.
|
|
(Dollars
in Thousands)
|
|
|
|
|
|
Three
months or less
|
|
$ |
136,513 |
|
Over
three through twelve months
|
|
|
298,862 |
|
Over
twelve months
|
|
|
87,460 |
|
Total
|
|
$ |
522,835 |
|
OFF-BALANCE
SHEET ARRANGEMENTS AND CONTRACTUAL OBLIGATIONS
In the
ordinary course of business, our Bank has granted commitments to extend credit
to approved customers. Generally, these commitments to extend credit
have been granted on a temporary basis for seasonal or inventory requirements
and have been approved by the Bank’s local boards. Our Bank has also
granted commitments to approved customers for financial standby letters of
credit. These commitments are recorded in the financial statements
when funds are disbursed or the financial instruments become
payable. The Bank uses the same credit policies for these off-balance
sheet commitments as it does for financial instruments that are recorded in the
consolidated financial statements. Commitments generally have fixed
expiration dates or other termination clauses and may require payment of a
fee. Since many of the commitment amounts expire without being drawn
upon, the total commitment amounts do not necessarily represent future cash
requirements.
Following
is a summary of the commitments outstanding at December 31, 2007 and
2006.
|
December
31,
|
|
|
2007
|
|
2006
|
|
|
(Dollars
in Thousands)
|
|
|
|
|
|
|
|
|
Commitments
to extend credit
|
|
$ |
177,410 |
|
|
$ |
179,727 |
|
Financial
standby letters of credit
|
|
|
7,426 |
|
|
|
6,139 |
|
|
|
$ |
184,836 |
|
|
$ |
185,866 |
|
The
following table summarizes short-term borrowings for the periods
indicated:
|
Years
Ended December 31,
|
|
2007
|
2006
|
2005
|
|
(Dollars
in Thousands)
|
|
Average
Balance
|
|
|
Average
Rate
|
Average
Balance
|
|
|
Average
Rate
|
Average
Balance
|
|
|
Average
Rate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal
funds purchased and securities sold
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
under
agreement to repurchase
|
|
$ |
16,411 |
|
|
|
2.15
|
% |
|
$ |
6,910 |
|
|
|
2.68
|
% |
|
$ |
6,521 |
|
|
|
1.58
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Balance
|
|
|
|
|
|
Total
Balance
|
|
|
|
|
|
Total
Balance
|
|
|
|
|
|
Total
maximum short-term borrowings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
outstanding
at any month-end during the year
|
|
$ |
32,359 |
|
|
|
|
|
|
$ |
16,024 |
|
|
|
|
|
|
$ |
15,545 |
|
|
|
|
|
The
following table sets forth certain information about contractual cash
obligations as of December 31, 2007.
|
Payments
Due After December 31, 2007
|
|
|
|
|
|
1
Year |
|
1-3 |
|
4-5 |
|
5 |
|
|
Total
|
|
Or
Less
|
|
Years
|
|
Years
|
|
Years
|
|
|
(Dollars
in Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term
borrowings
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
Time
certificates of deposit
|
|
|
881,607 |
|
|
|
754,465 |
|
|
|
122,051 |
|
|
|
5,085 |
|
|
|
6 |
|
Long-term
debt
|
|
|
5,000 |
|
|
|
- |
|
|
|
5,000 |
|
|
|
- |
|
|
|
- |
|
Federal
Home Loan Bank advances
|
|
|
85,500 |
|
|
|
- |
|
|
|
85,500 |
|
|
|
- |
|
|
|
- |
|
Subordinated
debentures
|
|
|
42,269 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
42,269 |
|
Total
contractual cash obligations
|
|
$ |
1,014,376 |
|
|
$ |
754,465 |
|
|
$ |
212,551 |
|
|
$ |
5,085 |
|
|
$ |
42,275 |
|
Our
operating leases represent short-term obligations, normally with maturities of
one year or less. Many of the operating leases have thirty-day
cancellation provisions. The total contractual obligations for
operating leases do not require a material amount of our cash
funds.
At
December 31, 2007 we had immaterial amounts of binding commitments for capital
expenditures.
CAPITAL
ADEQUACY
The
capital resources of our Company are monitored on a periodic basis by state and
federal regulatory authorities. During 2007, we increased our capital
by retaining net earnings of $7.2 million after payment of
dividends. Other capital related transactions, such as the issuance
and exercise of stock options and restricted stock, changes in unrealized losses
on investment securities and repurchase of treasury shares combined to account
for only a small change in the capital of the Company.
In
accordance with risk capital guidelines issued by the Federal Reserve, we are
required to maintain a minimum standard of total capital to risk-weighted assets
of 8%. Additionally, all member banks must maintain “core” or “Tier
1” capital of at least 4% of total assets (“leverage ratio”). Member
banks operating at or near the 4% capital level are expected to have
well-diversified risks, including no undue interest rate risk exposure,
excellent control systems, good earnings, high asset quality and well managed
on- and off-balance sheet activities, and, in general, be considered strong
banking organizations with a composite 1 rating under the CAMEL rating system of
banks. For all but the most highly rated banks meeting the above
conditions, the minimum leverage ratio is to be 4% plus an additional 1% to
2%.
The
following table summarizes the regulatory capital levels of Ameris at December
31, 2007.
|
Actual
|
Required
|
Excess
|
|
Amount
|
|
|
Percent
|
Amount
|
|
|
Percent
|
Amount
|
|
|
Percent
|
|
(Dollars
in Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leverage
capital
|
|
$ |
171,331 |
|
|
|
8.39
|
% |
|
$ |
81,719 |
|
|
|
4.00
|
% |
|
$ |
89,612 |
|
|
|
4.39
|
% |
Risk-based
capital:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core
capital
|
|
|
171,331 |
|
|
|
10.34 |
|
|
|
66,263 |
|
|
|
4.00 |
|
|
|
105,068 |
|
|
|
6.34 |
|
Total
capital
|
|
|
191,150 |
|
|
|
11.59 |
|
|
|
132,525 |
|
|
|
8.00 |
|
|
|
58,625 |
|
|
|
3.59 |
|
INFLATION
The
consolidated financial statements and related consolidated financial data
presented herein have been prepared in accordance with generally accepted
accounting principles and practices within the banking industry which require
the measurement of financial position and operating results in terms of
historical dollars without considering the changes in the relative purchasing
power of money over time due to inflation. Unlike most industrial
companies, virtually all the assets and liabilities of a financial institution
are monetary in nature. As a result, interest rates have a more
significant impact on a financial institution’s performance than the effects of
general levels of inflation.
QUARTERLY
FINANCIAL INFORMATION (Unaudited)
The
following table sets forth certain consolidated quarterly financial information
of the Company. This information is derived from unaudited
consolidated financial statements, which include, in the opinion of management,
all normal recurring adjustments which management considers necessary for a fair
presentation of the results for such periods.
|
Quarters
Ended December 31, 2007
|
|
|
|
|
4
|
|
|
|
3
|
|
|
|
2
|
|
|
|
1
|
|
|
(Dollars
in Thousands, Except Per Share Data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected
Income Statement Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
$ |
36,930 |
|
|
$ |
37,451 |
|
|
$ |
35,843 |
|
|
$ |
35,410 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
interest income
|
|
|
19,248 |
|
|
|
19,081 |
|
|
|
18,330 |
|
|
|
18,419 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
|
1,186 |
|
|
|
3,570 |
|
|
|
5,373 |
|
|
|
5,024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per
Share Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income – basic
|
|
|
0.09 |
|
|
|
0.26 |
|
|
|
0.40 |
|
|
|
0.37 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income – diluted
|
|
|
0.09 |
|
|
|
0.26 |
|
|
|
0.39 |
|
|
|
0.37 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends
|
|
|
0.14 |
|
|
|
0.14 |
|
|
|
0.14 |
|
|
|
0.14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarters
Ended December 31, 2006
|
|
|
|
|
4
|
|
|
|
3
|
|
|
|
2
|
|
|
|
1
|
|
|
(Dollars
in Thousands, Except Per Share Data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected
Income Statement Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
$ |
34,524 |
|
|
$ |
32,624 |
|
|
$ |
29,822 |
|
|
$ |
27,141 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
interest income
|
|
|
17,999 |
|
|
|
17,897 |
|
|
|
17,673 |
|
|
|
16,392 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
|
5,759 |
|
|
|
5,954 |
|
|
|
5,315 |
|
|
|
5,100 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per
Share Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income – basic
|
|
|
0.44 |
|
|
|
0.46 |
|
|
|
0.41 |
|
|
|
0.39 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income – diluted
|
|
|
0.43 |
|
|
|
0.45 |
|
|
|
0.40 |
|
|
|
0.39 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends
|
|
|
0.14 |
|
|
|
0.14 |
|
|
|
0.14 |
|
|
|
0.14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ITEM
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK
We are
exposed only to U. S. Dollar interest rate changes and, accordingly, we manage
exposure by considering the possible changes in the net interest
margin. We do not have any trading instruments nor do we classify any
portion of the investment portfolio as held for trading. We do not
engage in any hedging activities or enter into any derivative instruments with a
higher degree of risk than mortgage-backed securities, which are commonly,
pass-through securities. Finally, we have no exposure to foreign
currency exchange rate risk, commodity price risk and other market
risks.
Interest
rates play a major part in the net interest income of a financial
institution. The sensitivity to rate changes is known as “interest
rate risk.” The repricing of interest earning assets and
interest-bearing liabilities can influence the changes in net interest
income. As part of our asset/liability management program, the timing
of repriced assets and liabilities is referred to as gap
management. Our policy is to maintain a gap ratio in the one-year
time horizon of .80 to 1.20. As indicated by the gap analysis
included in this Annual Report, we are somewhat asset sensitive in relation to
changes in market interest rates. Being asset sensitive would result
in net interest income increasing in a rising rate environment and decreasing in
a declining rate environment.
We use
simulation analysis to monitor changes in net interest income due to changes in
market interest rates. The simulation of rising, declining and flat
interest rate scenarios allow management to monitor and adjust interest rate
sensitivity to minimize the impact of market interest rate
swings. The analysis of the impact on net interest income over a
twelve-month period is subjected to a gradual 200 basis points increase or 200
basis points decrease in market rates on net interest income and is monitored on
a quarterly basis. Our most recent simulation model projects net
interest income would increase 2.2% if rates rise 200 basis points gradually
over the next year. On the other hand, the model projects net
interest income to decrease 5.8% if rates decline 200 basis points over the next
year.
ITEM
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA
Report of
Independent Registered Public Accounting Firm
Consolidated
Balance Sheets - December 31, 2007 and 20065
Consolidated
Statements of Income - Years ended December 31, 2007, 2006 and 2005
Consolidated
Statements of Comprehensive Income - Years ended December 31, 2007, 2006 and
2005
Consolidated
Statements of Stockholders’ Equity - Years ended December 31, 2007, 2006 and
2005
Consolidated
Statements of Cash Flows - Years ended December 31, 2007, 2006 and
2005
Notes to
Consolidated Financial Statements.
ITEM
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
During
2007 and 2006, Ameris did not change its accountants and there was no
disagreement on any matter of accounting principles or practices for financial
statement disclosure.
Disclosure
Controls and Procedures
The
Company’s Chief Executive Officer and Chief Financial Officer have evaluated the
Company’s disclosure controls and procedures (as such term is defined in Rules
13a-15(e) or 15d-15(e) promulgated under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”)), as of the end of the period covered by this
Annual Report, as required by paragraph (b) of Rules 13a-15 or 15d-15 of the
Exchange Act. Based on such evaluation, such officers have concluded
that, as of the end of the period covered by this Annual Report, the Company’s
disclosure controls and procedures are effective.
Management’s
Annual Report on Internal Control Over Financial Reporting
The
management of Ameris Bancorp is responsible for establishing and maintaining
adequate internal control over financial reporting as defined in Rules 13a-15(f)
and 15d-15(f) under the Securities Exchange Act of 1934. The
company’s internal control over financial reporting is designed to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles.
All
internal control systems, no matter how well designed, have inherent
limitations. Therefore, even those systems determined to be effective
can provide only reasonable assurance with respect to financial statement
preparation and presentation.
Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation
of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions or that the degree of
compliance with the policies or procedures may deteriorate.
Management
assessed the effectiveness of the company’s internal control over financial
reporting as of December 31, 2007. In making this assessment,
management used the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) in Internal Control-Integrated
Framework. Based on this assessment and those criteria,
management believes that the company maintained effective internal control over
financial reporting as of December 31, 2007.
Mauldin
& Jenkins, Certified Public Accountants, LLC (“Mauldin & Jenkins”), the
Company’s independent auditors, has issued an attestation report on management’s
assessment of the Company’s internal control over financial
reporting. That report is included in this Item under the heading
“Report of Independent Registered Public Accounting Firm.”
Changes
in Internal Control Over Financial Reporting
During
the quarter ended December 31, 2007 there was not any change in the Company’s
internal control over financial reporting identified in connection with the
evaluation required by paragraph (d) of Rules 13a-15 or 15d-15 of the Exchange
Act that has materially affected, or is reasonably likely to materially affect,
the Company’s internal control over financial reporting.
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the Board of Directors
Ameris
Bancorp
Moultrie,
Georgia
We have
audited Ameris Bancorp and Subsidiaries' internal control over financial
reporting as of December 31, 2007, based on criteria established in Internal
Control—Integrated Framework issued by the Committee of Sponsoring Organizations
of the Treadway Commission (COSO). Ameris Bancorp and Subsidiaries'
management is responsible for maintaining effective internal control over
financial reporting and for its assessment of the effectiveness of internal
control over financial reporting included in the accompanying Management's
Annual Report on Internal Control Over Financial Reporting. Our
responsibility is to express an opinion on the company's internal control over
financial reporting based on our audit.
We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
effective internal control over financial reporting was maintained in all
material respects. Our audit included obtaining an understanding of internal
control over financial reporting, assessing the risk that a material weakness
exists, and testing and evaluating the design and operating effectiveness of
internal control based on the assessed risk. Our audit also included
performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis
for our opinion.
A
company's internal control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. A company's internal
control over financial reporting includes those policies and procedures that (1)
pertain to the maintenance of records that, in reasonable detail, accurately and
fairly reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company's
assets that could have a material effect on the financial
statements.
Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation
of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.
In our
opinion, Ameris Bancorp and Subsidiaries maintained, in all material respects,
effective internal control over financial reporting as of December 31, 2007,
based on criteria established in Internal Control—Integrated Framework issued by
the Committee of Sponsoring Organizations of the Treadway Commission
(COSO).
We have
also audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the consolidated balance sheets of Ameris
Bancorp and Subsidiaries as of December 31, 2007 and 2006 and the related
consolidated statements of income, comprehensive income, stockholders' equity
and cash flows for each of the years ended in the three-year period ended
December 31, 2007, and our report dated March 5, 2008 expressed an unqualified
opinion.
/s/
Mauldin & Jenkins, LLC
Albany,
Georgia
March 5,
2008
ITEM
9B. OTHER INFORMATION
None.
PART
III
ITEM
10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE
Directors
and Nominees for Director
Information with respect to the
Company’s directors and nominees for director is set forth in the Company’s
Proxy Statement for the Annual Meeting of Shareholders (the “Proxy Statement”)
under the caption “Proposal I: Election of Directors” and is
incorporated herein by reference.
Executive
Officers
The following table sets forth certain
information with respect to the executive officers of Ameris as of March 5,
2008.
Name,
Age and
Term
as Officer
|
|
Position
with Ameris
|
|
Principal
Occupation for the Last Five Years
and
Other Directorships
|
|
|
|
|
|
Edwin
W. Hortman, Jr.; 54
Officer
since 2002
|
|
President
and Chief Executive Officer
|
|
President
and Chief Executive Officer since January 1, 2005. Director
since November 2003. President and Chief Operating Officer from
November 2003 through December 2004. Executive Vice President
and Regional Bank Executive for Northern Division from August 2002 through
November 2003. President, Chief Executive Officer and director
of Citizens Security Bank from April 1998 to November
2003. Director of each subsidiary bank in the Northern
Division from September 2002 through March 2004.
|
|
|
|
|
|
Dennis
J. Zember, Jr.; 38
Officer
since 2005
|
|
Executive
Vice President
and
Chief Financial Officer
|
|
Executive
Vice President and Chief Financial Officer of Ameris since February 14,
2005. Senior Vice President and Treasurer of Flag Financial
Corporation and Senior Vice President and Chief Financial Officer of Flag
Bank from January 2002 to February 2005. Vice President and
Treasurer of Century South Banks, Inc. from August 1997 to May
2001.
|
|
|
|
|
|
Jon
S. Edwards; 46
Officer
since 1999
|
|
Executive
Vice President and Director of Credit
Administration
|
|
Executive
Vice President and Director of Credit Administration since May
2005. Executive Vice President and Regional Bank Executive for
Southern Division from August 2002 through April 2005. Director
of Credit Administration from March 1999 to July 2003. Senior
Vice President from March 1999 to August 2002. Director of each
subsidiary bank in the Southern Division from September 2002 through April
2005.
|
|
|
|
|
|
C.
Johnson Hipp, III; 56
Officer
since 2006
|
|
Group
President for South Carolina and Mortgage Business
Division
|
|
Officer
since June 2006. Chief Executive Officer of South Carolina Bank
and Trust from 1994 to 2004.
|
|
|
|
|
|
Cindi
H. Lewis; 54
Officer
since 1987
|
|
Executive
Vice President, Chief Administrative Officer and Corporate
Secretary
|
|
Chief
Administrative Officer since May 2006, Executive Vice President since May
2002 and Corporate Secretary since May 2000. Director of Human
Resources from May 2000 to May 2006 and Senior Vice President from May
2000 to May 2002.
|
|
|
|
|
|
Johnny
R. Myers; 58
Officer
since 2005
|
|
Executive
Vice President and South Regional Executive
|
|
Executive
Vice President and South Regional Executive since May
2005. Director of each subsidiary bank in the Southern Division
from May 2005 until each such bank was merged into Ameris
Bank.
|
Officers
serve at the discretion of the Company’s board of directors.
The information set forth in the Proxy
Statement under the caption “Section 16(a) Beneficial Ownership Reporting
Compliance” is incorporated herein by reference.
Code
of Ethics
Ameris has adopted a code of ethics
that is applicable to all employees, including its Chief Executive Officer and
all senior financial officers, including its Chief Financial Officer and
principal accounting officer. Ameris shall provide to any person
without charge, upon request, a copy of its code of ethics. Such
requests should be directed to the Corporate Secretary of Ameris Bancorp at 24
2nd
Avenue, S.E., Moultrie, Georgia 31768.
The
information set forth under the caption “Executive Compensation” in the Proxy
Statement is incorporated herein by reference.
ITEM
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS
The
information set forth under the captions “Security Ownership of Certain
Beneficial Owners and Management” and “Equity Compensation Plans” in the Proxy
Statement is incorporated herein by reference.
ITEM
13. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information set forth under the
captions “Certain Relationships and Related Transactions” and “Proposal
I: Election of Directors” in the Proxy Statement is incorporated
herein by reference.
ITEM
14. PRINCIPAL ACCOUNTANT FEES AND
SERVICES
The following is a summary of the fees
billed to Ameris by Mauldin & Jenkins, the Company’s independent
accountants, for professional services rendered for the fiscal years ended
December 31, 2007 and 2006:
Fee
Category
|
|
Fiscal
2007
Fees
|
|
|
Fiscal
2006
Fees
|
|
|
|
|
|
|
|
|
Audit
fees
|
|
$ |
280,000 |
|
|
$ |
322,600 |
|
Audit-related
fees
|
|
|
41,750 |
|
|
|
55,500 |
|
Tax
fees
|
|
|
87,000 |
|
|
|
98,650 |
|
Total
fees
|
|
$ |
408,750 |
|
|
$ |
476,750 |
|
Audit
Fees
The amounts consist of fees billed for
professional services rendered for the audit of the Company’s annual
consolidated financial statements, internal control and review of the interim
consolidated financial statements included in quarterly reports.
Audit-Related
Fees
Audit-related fees are fees
principally for the audits of the Company’s employee benefit
plans, consultations concerning financial accounting and reporting
standards and assistance with SEC inquires.
Tax
Fees
The amounts consist of fees billed for
professional services for tax compliance, tax advice and tax
planning. These services include assistance regarding federal, state
and local tax compliance and assistance with tax notices.
Policy
on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of
Independent Auditors
All services provided by Mauldin &
Jenkins are subject to pre-approval by the Audit Committee of the Company’s
board of directors. The Audit Committee may authorize any member of
the Audit Committee to approve services by Mauldin & Jenkins in the event
there is a need for such approval prior to the next full Audit Committee
meeting. However, the Audit Committee must review the decisions made
by such authorized member of the Audit Committee at its next schedule
meeting. Before granting any approval, the Audit Committee gives due
consideration to whether approval of the proposed service will have a
detrimental impact on Mauldin & Jenkins’ independence.
PART
IV
ITEM
15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
1.
|
Financial
statements:
|
|
|
|
|
(a)
|
Ameris
Bancorp and Subsidiaries:
|
|
|
|
|
|
|
(i)
|
Consolidated
Balance Sheets - December 31, 2007 and 2006;
|
|
|
|
|
|
|
(ii)
|
Consolidated
Statements of Income - Years ended December 31, 2007, 2006 and 2005;2007,
2006 and 2005;
|
|
|
|
|
|
|
(iii)
|
Consolidated
Statements of Comprehensive Income - Years ended December 31, 2007,
2006 and 2005;
|
|
|
|
|
|
|
(iv)
|
Consolidated
Statements of Stockholders’ Equity - Years ended December 31, 2007,
2006 and 2005;
|
|
|
|
|
|
|
(v)
|
Statements
of Cash Flows - Years ended December 31, 2007, 2006 and 2005;
and
|
|
|
|
|
|
|
(vi)
|
Notes
to Consolidated Financial Statements
|
|
|
|
|
|
(b)
|
Ameris
Bancorp (parent company only):
|
|
|
|
|
|
|
|
Parent
company only financial information has been included in Note 21 of Notes
to Consolidated Financial Statements.
|
|
|
|
2.
|
Financial
statement schedules:
|
|
|
|
|
All
schedules are omitted as the required information is inapplicable or the
information is presented in the financial statements or related
notes.
|
|
|
|
3.
|
A
list of the Exhibits required by Item 601 of Regulation S-K to be filed as
a part of this report is shown on the “Exhibit Index” filed
herewith.
|
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
|
|
|
AMERIS
BANCORP
|
|
|
|
|
|
|
|
|
|
|
Date:
|
March
5, 2008
|
|
By:
|
/s/
Edwin W. Hortman, Jr.
|
|
|
|
|
Edwin
W. Hortman, Jr., President and Chief Executive Officer
|
|
|
|
|
|
POWER
OF ATTORNEY
KNOW
ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints Edwin W. Hortman, Jr. as his attorney-in-fact, acting
with full power of substitution for him in his name, place and stead, in any and
all capacities, to sign any amendments to this Form 10-K and to file the same,
with exhibits thereto, and any other documents in connection therewith, with the
Securities and Exchange Commission and hereby ratifies and confirms all that
said attorney-in-fact, or his substitute or substitutes, may do or cause to be
done by virtue thereof.
Pursuant
to the requirements of the Exchange Act, this Form 10-K has been signed by the
following persons in the capacities and on the dates indicated.
Date:
|
March
5, 2008
|
|
/s/
Edwin W. Hortman, Jr.
|
|
|
|
|
|
|
Edwin
W. Hortman, Jr., President, Chief Executive Officer and
Director
|
|
|
|
|
|
|
|
|
|
|
Date:
|
March
5, 2008
|
|
/s/
Dennis J. Zember, Jr.
|
|
|
|
|
|
|
Dennis
J. Zember, Jr., Executive Vice President and Chief Financial
Officer
|
|
|
|
|
|
|
|
|
|
|
Date:
|
March
5, 2008
|
|
/s/
Johnny W. Floyd
|
|
|
|
|
|
|
Johnny
W. Floyd, Director
|
|
|
|
|
|
|
|
|
|
|
Date:
|
March
5, 2008
|
|
/s/
J. Raymond Fulp
|
|
|
|
|
|
|
J.
Raymond Fulp, Director
|
|
|
|
|
|
|
|
|
|
|
Date:
|
March
5, 2008
|
|
/s/
Daniel B. Jeter
|
|
|
|
|
|
|
Daniel
B. Jeter, Director and Vice Chairman of the Board
|
|
|
|
|
|
|
|
|
|
|
Date:
|
March
5, 2008
|
|
/s/
Glenn A. Kirbo
|
|
|
|
|
|
Glenn
A. Kirbo, Director
|
|
|
|
|
|
|
Date:
|
March
5, 2008
|
|
/s/
Robert P. Lynch
|
|
|
|
|
Robert
P. Lynch, Director
|
|
|
|
|
|
|
Date:
|
March
5, 2008
|
|
/s/
Brooks Sheldon
|
|
|
|
|
Brooks
Sheldon, Director
|
|
|
|
|
|
|
Date:
|
March
5, 2008
|
|
/s/
Eugene M. Vereen, Jr.
|
|
|
|
|
Eugene
M. Vereen, Jr., Director
|
|
|
|
|
|
|
Date:
|
March
5, 2008
|
|
/s/
Henry C. Wortman
|
|
|
|
|
Henry
C. Wortman, Director
|
EXHIBIT
INDEX
|
3.1
|
Articles
of Incorporation of Ameris Bancorp, as amended (incorporated by reference
to Exhibit 2.1 to Ameris Bancorp’s Regulation A Offering Statement on Form
1-A filed August 14, 1987).
|
|
|
|
|
3.2
|
Amendment
to Amended Articles of Incorporation (incorporated by reference to Exhibit
3.1.1 to Ameris Bancorp’s Form 10-K filed March 28,
1996).
|
|
|
|
|
3.3
|
Amendment
to Amended Articles of Incorporation (incorporated by reference to Exhibit
4.3 to Ameris Bancorp’s Registration Statement on Form S-4 filed with the
Commission on July 17, 1996).
|
|
|
|
|
3.4
|
Articles
of Amendment to the Articles of Incorporation (incorporated by reference
to Exhibit 3.5 to Ameris Bancorp’s Annual Report on Form 10-K filed with
the Commission on March 25, 1998).
|
|
|
|
|
3.5
|
Articles
of Amendment to the Articles of Incorporation (incorporated by reference
to Exhibit 3.7 to Ameris Bancorp’s Annual Report on Form 10-K filed with
the Commission on March 26, 1999).
|
|
|
|
|
3.6
|
Articles
of Amendment to the Articles of Incorporation (incorporated by reference
to Exhibit 3.9 to Ameris Bancorp’s Annual Report on Form 10-K filed with
the Commission on March 31, 2003).
|
|
|
|
|
3.7
|
Articles
of Amendment to the Articles of Incorporation (incorporated by reference
to Exhibit 3.1 to Ameris Bancorp’s Current Report on Form 8-K filed with
the Commission on December 1, 2005).
|
|
|
|
|
3.8
|
Amended
and Restated Bylaws (incorporated by reference to Exhibit 3.1 to Ameris
Bancorp’s Current Report on Form 8-K filed with the Commission on March
14, 2005).
|
|
|
|
|
4.1
|
Placement
Agreement between Ameris Bancorp, Ameris Statutory Trust I, FTN Financial
Capital Markets and Keefe, Bruyette & Woods, Inc. dated September 13,
2006 (incorporated by reference to Exhibit 4.1 to Ameris Bancorp’s
Registration Statement on Form S-4 (Registration No. 333-138252)
filed with the Commission on October 27,
2006).
|
|
|
|
|
4.2
|
Subscription
Agreement between Ameris Bancorp, Ameris Statutory Trust I and First
Tennessee Bank National Association dated September 20, 2006 (incorporated
by reference to Exhibit 4.2 to Ameris Bancorp’s Registration Statement on
Form S-4 (Registration No. 333-138252) filed with the Commission on
October 27, 2006).
|
|
|
|
|
4.3
|
Subscription
Agreement between Ameris Bancorp, Ameris Statutory Trust I and TWE, Ltd.
dated September 20, 2006 (incorporated by reference to Exhibit 4.3 to the
Ameris Bancorp’s Registration Statement on Form S-4 (Registration No.
333-138252) filed with the Commission on October 27,
2006).
|
|
|
|
EXHIBIT
INDEX
|
4.4
|
Indenture
between Ameris Bancorp and Wilmington Trust Company dated September 20,
2006 (incorporated by reference to Exhibit 4.4 to Ameris Bancorp’s
Registration Statement on Form S-4 (Registration No. 333-138252) filed
with the Commission on October 27, 2006).
|
|
|
|
|
4.5
|
Amended
and Restated Declaration of Trust between Ameris Bancorp, the
Administrators of Ameris Statutory Trust I signatory thereto and
Wilmington Trust Company dated September 20, 2006 (incorporated by
reference to Exhibit 4.5 to Ameris Bancorp’s Registration Statement on
Form S-4 (Registration No. 333-138252) filed with the Commission on
October 27, 2006).
|
|
|
|
|
4.6
|
Guarantee
Agreement between Ameris Bancorp and Wilmington Trust Company dated
September 20, 2006 (incorporated by reference to Exhibit 4.6 to
Ameris Bancorp’s Registration Statement on Form S-4 (Registration No.
333-138252) filed with the Commission on October 27,
2006).
|
|
|
|
|
4.7
|
Floating
Rate Junior Subordinated Deferrable Interest Debenture dated September 20,
2006 issued to Ameris Statutory Trust I (incorporated by reference to
Exhibit 4.7 to Ameris Bancorp’s Registration Statement on Form S-4
(Registration No. 333-138252) filed with the Commission on October 27,
2006).
|
|
|
|
|
10.1
|
Deferred
Compensation Agreement for Kenneth J. Hunnicutt dated December 16, 1986
(incorporated by reference to Exhibit 5.3 to Ameris Bancorp’s Regulation A
Offering Statement on Form 1-A filed with the Commission on August 14,
1987).
|
|
|
|
|
10.2
|
Executive
Salary Continuation Agreement dated February 14, 1984 (incorporated by
reference to Exhibit 10.6 to Ameris Bancorp’s Annual Report on Form 10-KSB
filed with the Commission on March 27, 1989).
|
|
|
|
|
10.3
|
Form
of Omnibus Stock Ownership and Long-Term Incentive Plan (incorporated by
reference to Exhibit 10.17 to Ameris Bancorp’s Annual Report on Form 10-K
filed with the Commission on March 25, 1998).
|
|
|
|
|
10.4
|
Form
of Rights Agreement between Ameris Bancorp and SunTrust Bank dated as of
February 17, 1998 (incorporated by reference to Exhibit 10.18 to Ameris
Bancorp’s Annual Report on Form 10-K filed with the Commission on
March 25, 1998).
|
|
|
|
|
10.5
|
ABC
Bancorp 2000 Officer/Director Stock Bonus Plan (incorporated by reference
to Exhibit 10.19 to Ameris Bancorp’s Annual Report on Form 10-K filed with
the Commission on Mach 29, 2000).
|
|
|
|
|
10.6
|
Joint
Marketing Agreement by and between Ameris Bancorp and MBNA America Bank,
N.A. dated as of December 19, 2002 (incorporated by reference to Exhibit
10.18 to Ameris Bancorp’s Annual Report on Form 10-K filed with the
Commission on March 31, 2003).
|
|
|
|
|
10.7
|
Executive
Employment Agreement with Jon S. Edwards dated as of July 1, 2003
(incorporated by reference to Exhibit 10.1 to Ameris Bancorp’s Quarterly
Report on Form 10-Q filed with the Commission on November 12,
2003).
|
|
|
|
|
10.8
|
Executive
Employment Agreement with Edwin W. Hortman, Jr. dated as of
December 31, 2003 (incorporated by reference to Exhibit 10.19 to
Ameris Bancorp’s Annual Report on Form 10-K filed with the Commission on
March 15, 2004).
|
|
|
|
EXHIBIT
INDEX
|
10.9
|
Executive
Employment Agreement with Cindi H. Lewis dated as of December 31, 2003
(incorporated by reference to Exhibit 10.20 to Ameris Bancorp’s Annual
Report on Form 10-K filed with the Commission on March 15,
2004).
|
|
|
|
|
10.10
|
Amendment
No. 1 to Executive Employment Agreement with Edwin W. Hortman, Jr. dated
as of March 10, 2005 (incorporated by reference to Exhibit 10.1 to Ameris
Bancorp’s Current Report on Form 8-K filed with the Commission on March
14, 2005).
|
|
|
|
|
10.11
|
Form
of 2005 Omnibus Stock Ownership and Long-Term Incentive Plan (incorporated
by reference to Appendix A to Ameris Bancorp’s Definitive Proxy Statement
filed with the Commission on April 18, 2005).
|
|
|
|
|
10.12
|
Executive
Employment Agreement with Dennis J. Zember, Jr. dated as of May 5, 2005
(incorporated by reference to Exhibit 10.1 to Ameris Bancorp’s Current
Report on Form 8-K/A filed with the Commission on May 11,
2005).
|
|
|
|
|
10.13
|
Executive
Employment Agreement with Johnny R. Myers dated as of May 11, 2005
(incorporated by reference to Exhibit 10.1 to Ameris Bancorp’s Current
Report on Form 8-K filed with the Commission on May 16,
2005).
|
|
|
|
|
10.14
|
Revolving
Credit Agreement with SunTrust Bank dated as of December 14, 2005
(incorporated by reference to Exhibit 10.1 to Ameris Bancorp’s Current
Report on Form 8-K filed with the Commission on December 20,
2005).
|
|
|
|
|
10.15
|
Security
Agreement with SunTrust Bank dated as of December 14, 2005 (incorporated
by reference to Exhibit 10.2 to Ameris Bancorp’s Current Report on Form
8-K filed with the Commission on December 20, 2005).
|
|
|
|
|
10.16
|
Form
of Incentive Stock Option Agreement (incorporated by reference to Exhibit
4.2 to Ameris Bancorp’s Registration Statement on Form S-8 filed with the
Commission on January 24, 2006).
|
|
|
|
|
10.17
|
Form
of Non-Qualified Stock Option Agreement (incorporated by reference to
Exhibit 4.3 to Ameris Bancorp’s Registration Statement on Form S-8 filed
with the Commission on January 24, 2006).
|
|
|
|
|
10.18
|
Form
of Restricted Stock Agreement (incorporated by reference to Exhibit 4.4 to
Ameris Bancorp’s Registration Statement on Form S-8 filed with the
Commission on January 24, 2006).
|
|
|
|
|
10.19
|
Executive
Employment Agreement with C. Johnson Hipp, III dated as of September 5,
2006 (incorporated by reference to Exhibit 10.1 to Ameris Bancorp’s
Current Report on Form 8-K filed with the Commission on September 8,
2006).
|
|
|
|
|
10.20
|
Executive
Employment Agreement with C. Marc J. Bogan dated as of May 31, 2007
(incorporated by reference to Exhibit 10.1 to Ameris Bancorp’s Current
Report on Form 8-K filed with the Commission on June 6,
2007).
|
|
|
|
|
10.21
|
Executive
Employment Agreement with C. Richard Sturm dated as of May 31, 2007
(incorporated by reference to Exhibit 10.1 to Ameris Bancorp’s Current
Report on Form 8-K filed with the Commission on June 6,
2007).
|
|
|
|
EXHIBIT
INDEX
|
21.1
|
Schedule
of subsidiaries of Ameris Bancorp.
|
|
|
|
|
23.1
|
Consent
of Mauldin & Jenkins, LLC.
|
|
|
|
|
24.1
|
Power
of Attorney relating to this Form 10-K is set forth on the signature pages
of this Form 10-K.
|
|
|
|
|
31.1
|
Rule
13a-14(a)/15d-14(a) Certification by Ameris Bancorp’s Chief Executive
Officer.
|
|
|
|
|
31.2
|
Rule
13a-14(a)/15d-14(a) Certification by Ameris Bancorp’s Chief Financial
Officer.
|
|
|
|
|
32.1
|
Section
1350 Certification by Ameris Bancorp’s Chief Executive
Officer.
|
|
|
|
|
32.2
|
Section
1350 Certification by Ameris Bancorp’s Chief Financial
Officer.
|
AMERIS
BANCORP
INDEX
TO FINANCIAL STATEMENTS AND SCHEDULES
Consolidated
financial statements:
Report of Independent Registered
Public Accounting Firm
Consolidated Balance Sheets -
December 31, 2007 and 2006
Consolidated Statements of Income -
Years ended December 31, 2007, 2006 and 2005
Consolidated Statements of
Comprehensive Income - Years ended December 31, 2007, 2006 and 2005
Consolidated Statements of
Stockholders’ Equity - Years ended December 31, 2007, 2006 and 2005
Consolidated Statements of Cash Flows
- Years ended December 31, 2007, 2006 and 2005
Notes to Consolidated Financial
Statements
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the Board of Directors and Stockholders
Ameris
Bancorp
We have
audited the accompanying consolidated balance sheets of Ameris Bancorp and
Subsidiaries as of December 31, 2007 and 2006, and the related
consolidated statements of income, comprehensive income, stockholders' equity
and cash flows for each of the three years in the period ended December 31,
2007. These financial statements are the responsibility of the
Company’s management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require
that we plan and perform the audit 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 consolidated financial statements referred to above present fairly,
in all material respects, the financial position of Ameris Bancorp and
Subsidiaries as of December 31, 2007 and 2006, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2007, in conformity with accounting principles generally accepted
in the United States of America.
We have
audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), Ameris Bancorp and Subsidiaries’ internal
control over financial reporting as of December 31, 2007, based on criteria
established in Internal
Control - Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) and our report dated March 5,
2008, expressed an unqualified opinion of Ameris Bancorp and Subsidiaries’
internal control over financial reporting..
/s/
Mauldin & Jenkins, LLC
Albany,
Georgia
March 5,
2008
|
|
CONSOLIDATED
BALANCE SHEETS
|
DECEMBER
31, 2007 AND 2006
|
|
|
|
|
|
Assets
|
|
2007
|
|
|
2006
|
|
|
|
|
|
|
|
|
Cash
and due from banks
|
|
$ |
59,804 |
|
|
$ |
66,856 |
|
Interest-bearing
deposits in banks
|
|
|
12,022 |
|
|
|
125,793 |
|
Federal
funds sold
|
|
|
- |
|
|
|
9,439 |
|
Securities
available for sale, at fair value
|
|
|
291,170 |
|
|
|
283,192 |
|
Restricted
equity securities, at cost
|
|
|
7,559 |
|
|
|
7,015 |
|
|
|
|
|
|
|
|
|
|
Loans,
net of unearned income
|
|
|
1,614,048 |
|
|
|
1,442,951 |
|
Less
allowance for loan losses
|
|
|
27,640 |
|
|
|
24,863 |
|
Loans,
net
|
|
|
1,586,408 |
|
|
|
1,418,088 |
|
|
|
|
|
|
|
|
|
|
Premises
and equipment, net
|
|
|
59,132 |
|
|
|
46,604 |
|
Intangible
assets
|
|
|
4,802 |
|
|
|
6,099 |
|
Goodwill
|
|
|
54,813 |
|
|
|
54,365 |
|
Other
assets
|
|
|
36,353 |
|
|
|
30,091 |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
2,112,063 |
|
|
$ |
2,047,542 |
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders'
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
|
|
|
|
|
|
Noninterest-bearing
|
|
$ |
197,345 |
|
|
$ |
221,592 |
|
Interest-bearing
|
|
|
1,559,920 |
|
|
|
1,488,571 |
|
Total
deposits
|
|
|
1,757,265 |
|
|
|
1,710,163 |
|
Securities
sold under agreements to repurchase
|
|
|
14,705 |
|
|
|
15,933 |
|
Other
borrowings
|
|
|
90,500 |
|
|
|
75,500 |
|
Subordinated
deferrable interest debentures
|
|
|
42,269 |
|
|
|
42,269 |
|
Other
liabilities
|
|
|
16,075 |
|
|
|
24,945 |
|
Total
liabilities
|
|
|
1,920,814 |
|
|
|
1,868,810 |
|
|
|
|
|
|
|
|
|
|
Commitments
and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity
|
|
|
|
|
|
|
|
|
Common
stock, par value $1; 30,000,000 shares authorized;
|
|
|
|
|
|
|
|
|
14,869,924
and 14,850,237 shares issued
|
|
|
14,870 |
|
|
|
14,850 |
|
Capital
surplus
|
|
|
82,750 |
|
|
|
81,481 |
|
Retained
earnings
|
|
|
103,095 |
|
|
|
95,523 |
|
Accumulated
other comprehensive income(loss)
|
|
|
1,303 |
|
|
|
(2,529 |
) |
|
|
|
202,018 |
|
|
|
189,325 |
|
Less
cost of 1,329,939 and 1,322,717 shares acquired for the
treasury
|
|
|
(10,769 |
) |
|
|
(10,593 |
) |
Total
stockholders' equity
|
|
|
191,249 |
|
|
|
178,732 |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
2,112,063 |
|
|
$ |
2,047,542 |
|
|
|
|
|
|
|
|
|
|
See
Notes to Consolidated Financial Statements.
|
|
|
|
|
|
|
|
|
AMERIS
BANCORP AND SUBSIDIARIES
|
|
CONSOLIDATED
STATEMENTS OF INCOME
|
|
YEARS
ENDED DECEMBER 31, 2007, 2006 AND 2005
|
|
(Dollars
in Thousands)
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
Interest
income
|
|
|
|
|
|
|
|
|
|
Interest
and fees on loans
|
|
$ |
128,869 |
|
|
$ |
107,559 |
|
|
$ |
69,238 |
|
Interest
on taxable securities
|
|
|
14,171 |
|
|
|
12,147 |
|
|
|
8,547 |
|
Interest
on nontaxable securities
|
|
|
688 |
|
|
|
555 |
|
|
|
163 |
|
Interest
on deposits in other banks
|
|
|
2,306 |
|
|
|
3,589 |
|
|
|
1,502 |
|
Interest
on federal funds sold
|
|
|
43 |
|
|
|
261 |
|
|
|
89 |
|
|
|
|
146,077 |
|
|
|
124,111 |
|
|
|
79,539 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
on deposits
|
|
|
62,380 |
|
|
|
45,599 |
|
|
|
19,029 |
|
Interest
on other borrowings
|
|
|
8,619 |
|
|
|
8,551 |
|
|
|
7,905 |
|
|
|
|
70,999 |
|
|
|
54,150 |
|
|
|
26,934 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
interest income
|
|
|
75,078 |
|
|
|
69,961 |
|
|
|
52,605 |
|
Provision
for loan losses
|
|
|
11,321 |
|
|
|
2,837 |
|
|
|
1,651 |
|
Net
interest income after provision for loan losses
|
|
|
63,757 |
|
|
|
67,124 |
|
|
|
50,954 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
income
|
|
|
|
|
|
|
|
|
|
|
|
|
Service
charges on deposit accounts
|
|
|
12,455 |
|
|
|
11,538 |
|
|
|
10,428 |
|
Other
service charges, commissions and fees
|
|
|
1,268 |
|
|
|
997 |
|
|
|
926 |
|
Mortgage
origination fees
|
|
|
3,093 |
|
|
|
2,208 |
|
|
|
1,614 |
|
Losses
on sales of securities
|
|
|
(297 |
) |
|
|
(308 |
) |
|
|
(391 |
) |
Other
|
|
|
1,073 |
|
|
|
4,827 |
|
|
|
953 |
|
|
|
|
17,592 |
|
|
|
19,262 |
|
|
|
13,530 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries
and employee benefits
|
|
|
29,844 |
|
|
|
27,043 |
|
|
|
22,483 |
|
Equipment
expense
|
|
|
3,499 |
|
|
|
3,530 |
|
|
|
2,331 |
|
Occupancy
expense
|
|
|
4,041 |
|
|
|
3,306 |
|
|
|
2,600 |
|
Amortization
of intangible assets
|
|
|
1,297 |
|
|
|
1,107 |
|
|
|
819 |
|
Data
processing fees
|
|
|
2,579 |
|
|
|
2,136 |
|
|
|
1,899 |
|
Business
restructuring costs
|
|
|
- |
|
|
|
1,452 |
|
|
|
2,838 |
|
Other
operating expenses
|
|
|
17,636 |
|
|
|
14,555 |
|
|
|
10,637 |
|
|
|
|
58,896 |
|
|
|
53,129 |
|
|
|
43,607 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
before income taxes
|
|
|
22,453 |
|
|
|
33,257 |
|
|
|
20,877 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Applicable
income taxes
|
|
|
7,300 |
|
|
|
11,129 |
|
|
|
7,149 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$ |
15,153 |
|
|
$ |
22,128 |
|
|
$ |
13,728 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
earnings per share
|
|
$ |
1.12 |
|
|
$ |
1.71 |
|
|
$ |
1.15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
earnings per share
|
|
$ |
1.11 |
|
|
$ |
1.68 |
|
|
$ |
1.14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See
Notes to Consolidated Financial Statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
AMERIS
BANCORP AND SUBSIDIARIES
|
|
CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME
|
|
YEARS
ENDED DECEMBER 31, 2007, 2006 AND 2005
|
|
(Dollars
in Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$ |
15,153 |
|
|
$ |
22,128 |
|
|
$ |
13,728 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
unrealized holding gains(losses) arising during period,
|
|
|
|
|
|
|
|
|
|
|
|
|
net
of tax of ($1,498), $35 and $1,366
|
|
|
2,907 |
|
|
|
(67 |
) |
|
|
(2,653 |
) |
Unrealized
gain(loss) on cash flow hedge during the period,
|
|
|
|
|
|
|
|
|
|
|
|
|
net
of tax of ($376) and $22
|
|
|
729 |
|
|
|
(40 |
) |
|
|
- |
|
Reclassification
adjustment for losses included in net
|
|
|
|
|
|
|
|
|
|
|
|
|
income,
net of tax of $101, $105 and $133
|
|
|
196 |
|
|
|
203 |
|
|
|
258 |
|
Total
other comprehensive income(loss)
|
|
|
3,832 |
|
|
|
96 |
|
|
|
(2,395 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
income
|
|
$ |
18,985 |
|
|
$ |
22,224 |
|
|
$ |
11,333 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See
Notes to Consolidated Financial Statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
AMERIS
BANCORP AND SUBSIDIARIES
|
|
CONSOLIDATED
STATEMENTS OF STOCKHOLDERS' EQUITY
|
|
YEARS
ENDED DECEMBER 31, 2007, 2006 AND 2005
|
|
(Dollars
in Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
Stock
|
|
|
Capital
|
|
|
|
Shares
|
|
|
Par
Value
|
|
|
Surplus
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2004
|
|
|
13,070,578 |
|
|
$ |
13,071 |
|
|
$ |
45,073 |
|
Net
income
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Cash
dividends declared, $.56 per share
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Adjustments
to record acquisition of purchased
|
|
|
|
|
|
|
|
|
|
|
|
|
subsidiaries,
net of direct costs
|
|
|
1,083,718 |
|
|
|
1,084 |
|
|
|
21,103 |
|
Issuance
of restricted shares of common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
under
employee incentive plan
|
|
|
17,300 |
|
|
|
17 |
|
|
|
307 |
|
Stock-based
compensation
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Proceeds
from exercise of stock options
|
|
|
100,129 |
|
|
|
100 |
|
|
|
845 |
|
Payment
for fractional shares
|
|
|
(942 |
) |
|
|
(1 |
) |
|
|
- |
|
Reduction
in income taxes payable resulting
|
|
|
|
|
|
|
|
|
|
|
|
|
from
vesting of restricted shares
|
|
|
- |
|
|
|
- |
|
|
|
53 |
|
Purchase
of shares for treasury
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Other
comprehensive loss
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Balance,
December 31, 2005
|
|
|
14,270,783 |
|
|
|
14,271 |
|
|
|
67,381 |
|
Net
income
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Cash
dividends declared, $.56 per share
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Adjustments
to record acquisition of purchased
|
|
|
|
|
|
|
|
|
|
|
|
|
subsidiaries,
net of direct costs
|
|
|
494,327 |
|
|
|
494 |
|
|
|
13,440 |
|
Issuance
of restricted shares of common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
under
employee incentive plan
|
|
|
44,150 |
|
|
|
44 |
|
|
|
(44 |
) |
Transition
adjustment for the adoption of SFAS 123(R)
|
|
|
- |
|
|
|
- |
|
|
|
(526 |
) |
Stock-based
compensation
|
|
|
- |
|
|
|
- |
|
|
|
823 |
|
Proceeds
from exercise of stock options
|
|
|
40,977 |
|
|
|
41 |
|
|
|
367 |
|
Reduction
in income taxes payable resulting
|
|
|
|
|
|
|
|
|
|
|
|
|
from
vesting of restricted shares
|
|
|
- |
|
|
|
- |
|
|
|
40 |
|
Purchase
of shares for treasury
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Other
comprehensive income
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Balance,
December 31, 2006
|
|
|
14,850,237 |
|
|
|
14,850 |
|
|
|
81,481 |
|
Net
income
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Cash
dividends declared, $0.56 per share
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Issuance
of restricted shares of common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
under
employee incentive plan
|
|
|
4,200 |
|
|
|
4 |
|
|
|
(4 |
) |
Stock-based
compensation
|
|
|
- |
|
|
|
- |
|
|
|
1,095 |
|
Proceeds
from exercise of stock options
|
|
|
15,487 |
|
|
|
16 |
|
|
|
160 |
|
Reduction
in income taxes payable resulting
|
|
|
|
|
|
|
|
|
|
|
|
|
from
vesting of restricted shares
|
|
|
- |
|
|
|
- |
|
|
|
18 |
|
Purchase
of shares for treasury
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Other
comprehensive income
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Balance,
December 31, 2007
|
|
|
14,869,924 |
|
|
$ |
14,870 |
|
|
$ |
82,750 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See
Notes to Consolidated Financial Statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retained
|
|
|
Comprehensive
|
|
|
Unearned
|
|
|
Treasury
Stock
|
|
|
|
|
Earnings
|
|
|
Income
(Loss)
|
|
|
Compensation
|
|
|
Shares
|
|
|
Cost
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
73,768 |
|
|
$ |
(230 |
) |
|
$ |
(523 |
) |
|
|
1,304,430 |
|
|
$ |
(10,220 |
) |
|
$ |
120,939 |
|
|
13,728 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
13,728 |
|
|
(6,795 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(6,795 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
22,187 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
(324 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
- |
|
|
|
- |
|
|
|
321 |
|
|
|
- |
|
|
|
- |
|
|
|
321 |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
945 |
|
|
(18 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(19 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
53 |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
14,035 |
|
|
|
(261 |
) |
|
|
(261 |
) |
|
- |
|
|
|
(2,395 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(2,395 |
) |
|
80,683 |
|
|
|
(2,625 |
) |
|
|
(526 |
) |
|
|
1,318,465 |
|
|
|
(10,481 |
) |
|
|
148,703 |
|
|
22,128 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
22,128 |
|
|
(7,288 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(7,288 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
13,934 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
- |
|
|
|
- |
|
|
|
526 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
823 |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
408 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
40 |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
4,252 |
|
|
|
(112 |
) |
|
|
(112 |
) |
|
- |
|
|
|
96 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
96 |
|
|
95,523 |
|
|
|
(2,529 |
) |
|
|
- |
|
|
|
1,322,717 |
|
|
|
(10,593 |
) |
|
|
178,732 |
|
|
15,153 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,153 |
|
|
(7,581 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(7,581 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,095 |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
176 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18 |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
7,222 |
|
|
|
(176 |
) |
|
|
(176 |
) |
|
- |
|
|
|
3,832 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
3,832 |
|
$ |
103,095 |
|
|
$ |
1,303 |
|
|
$ |
- |
|
|
|
1,329,939 |
|
|
$ |
(10,769 |
) |
|
$ |
191,249 |
|
AMERIS
BANCORP AND SUBSIDIARIES
|
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
YEARS
ENDED DECEMBER 31, 2007, 2006 AND 2005
|
|
(Dollars
in Thousands)
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
OPERATING
ACTIVITIES
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$
|
15,153
|
|
|
$
|
22,128
|
|
|
$
|
13,728
|
|
Adjustments
to reconcile net income to net cash
|
|
|
|
|
|
|
|
|
|
|
|
|
provided
by operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
3,061
|
|
|
|
2,919
|
|
|
|
2,153
|
|
Amortization
of intangible assets
|
|
|
1,297
|
|
|
|
1,113
|
|
|
|
819
|
|
Stock-based
compensation expense
|
|
|
1,095
|
|
|
|
823
|
|
|
|
321
|
|
Net
losses on sale of securities available for sale
|
|
|
297
|
|
|
|
308
|
|
|
|
391
|
|
Net
losses on sale or disposal of premises and equipment
|
|
|
63
|
|
|
|
107
|
|
|
|
36
|
|
Provision
for loan losses
|
|
|
11,321
|
|
|
|
2,837
|
|
|
|
1,651
|
|
Provision
for deferred taxes
|
|
|
(1,522
|
)
|
|
|
(249
|
)
|
|
|
(35
|
)
|
Increase in
interest receivable
|
|
|
(854
|
)
|
|
|
(4,051
|
)
|
|
|
(2,290
|
)
|
Increase
in interest payable
|
|
|
33
|
|
|
|
3,636
|
|
|
|
911
|
|
Increase
(decrease) in taxes payable
|
|
|
(600
|
)
|
|
|
2,423
|
|
|
|
(400
|
)
|
Net
other operating activities
|
|
|
(6,319
|
)
|
|
|
2,593
|
|
|
|
4,414
|
|
Total
adjustments
|
|
|
7,872
|
|
|
|
12,569
|
|
|
|
7,971
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash provided by operating activities
|
|
|
23,025
|
|
|
|
34,697
|
|
|
|
21,699
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INVESTING
ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase
in interest-bearing deposits in banks
|
|
|
113,771
|
|
|
|
(54,939
|
)
|
|
|
(10,888
|
)
|
Purchases
of securities available for sale
|
|
|
(137,268
|
)
|
|
|
(98,512
|
)
|
|
|
(80,495
|
)
|
Proceeds
from maturities of securities available for sale
|
|
|
70,748
|
|
|
|
38,589
|
|
|
|
49,066
|
|
Proceeds
from sale of securities available for sale
|
|
|
62,912
|
|
|
|
14,775
|
|
|
|
20,451
|
|
(Increase)
decrease in restricted equity securities, net
|
|
|
(544
|
)
|
|
|
1,813
|
|
|
|
647
|
|
Decrease
in federal funds sold
|
|
|
9,439
|
|
|
|
18,646
|
|
|
|
13,413
|
|
Increase
in loans, net
|
|
|
(189,913
|
)
|
|
|
(196,335
|
)
|
|
|
(116,295
|
)
|
Purchase
of premises and equipment
|
|
|
(15,878
|
)
|
|
|
(6,363
|
)
|
|
|
(2,954
|
)
|
Proceeds
from sale of premises and equipment
|
|
|
225
|
|
|
|
19
|
|
|
|
-
|
|
Proceeds
from sale of other real estate owned
|
|
|
3,067
|
|
|
|
877
|
|
|
|
-
|
|
Net
cash received (paid) for acquisitions and divestitures
|
|
|
-
|
|
|
|
(199
|
)
|
|
|
5,125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash used in investing activities
|
|
|
(83,441
|
)
|
|
|
(281,629
|
)
|
|
|
(121,930
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCING
ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase
in deposits
|
|
|
47,102
|
|
|
|
270,709
|
|
|
|
147,569
|
|
Increase
(decrease) in federal funds purchased and securities
|
|
|
|
|
|
|
|
|
|
|
|
|
sold
under agreements to repurchase
|
|
|
(1,228
|
)
|
|
|
5,626
|
|
|
|
2,777
|
|
Proceeds
from other borrowings and debentures
|
|
|
216,500
|
|
|
|
102,114
|
|
|
|
5,000
|
|
Repayment
of other borrowings and debentures
|
|
|
(201,500
|
)
|
|
|
(132,089
|
)
|
|
|
(15,344
|
)
|
Dividends
paid
|
|
|
(7,510
|
)
|
|
|
(7,288
|
)
|
|
|
(6,355
|
)
|
Proceeds
from exercise of stock options
|
|
|
176
|
|
|
|
408
|
|
|
|
945
|
|
Payment
for fractional shares
|
|
|
-
|
|
|
|
-
|
|
|
|
(19
|
)
|
Purchase
of treasury shares
|
|
|
(176
|
)
|
|
|
(112
|
)
|
|
|
(261
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash provided by financing activities
|
|
|
53,364
|
|
|
|
239,368
|
|
|
|
134,312
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
increase (decrease) in cash and due from banks
|
|
|
(7,052
|
)
|
|
|
(7,564
|
)
|
|
|
34,081
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and due from banks at beginning of year
|
|
|
66,856
|
|
|
|
74,420
|
|
|
|
40,339
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and due from banks at end of year
|
|
$
|
59,804
|
|
|
$
|
66,856
|
|
|
$
|
74,420
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AMERIS
BANCORP AND SUBSIDIARIES
|
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
YEARS
ENDED DECEMBER 31, 2007, 2006 AND 2005
|
|
(Dollars
in Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
DISCLOSURES OF CASH FLOW
|
|
|
|
|
|
|
|
|
|
INFORMATION
|
|
|
|
|
|
|
|
|
|
Cash
paid during the year for:
|
|
|
|
|
|
|
|
|
|
Interest
|
|
$ |
70,966 |
|
|
$ |
50,514 |
|
|
$ |
25,821 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
taxes
|
|
$ |
9,573 |
|
|
$ |
9,002 |
|
|
$ |
7,584 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NONCASH
TRANSACTIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal
balances of loans transferred to other
|
|
|
|
|
|
|
|
|
|
|
|
|
real
estate owned
|
|
$ |
10,272 |
|
|
$ |
1,237 |
|
|
$ |
1,153 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
in unrealized gain(loss) on securities available for sale
|
|
$ |
4,667 |
|
|
$ |
206 |
|
|
$ |
(3,656 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
in unrealized gain(loss) on cash flow hedge
|
|
$ |
1,105 |
|
|
$ |
(62 |
) |
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See
Notes to Consolidated Financial Statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
AMERIS
BANCORP AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE
1. SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
Nature
of Business
Ameris
Bancorp (the "Company") is a financial holding company whose primary business is
presently conducted by its subsidiary bank (the "Bank"). Through the
Bank, the Company operates a full service banking business and offers a broad
range of retail and commercial banking services to its customers located in a
market area which includes Georgia, Alabama, Northern Florida and South
Carolina. The Company and the Bank are subject to the regulations of
certain federal and state agencies and are periodically examined by those
regulatory agencies.
Basis
of Presentation and
Accounting Estimates
The
consolidated financial statements include the accounts of the Company and its
subsidiaries. Significant intercompany transactions and balances have
been eliminated in consolidation.
In
preparing the consolidated financial statements in conformity with accounting
principles generally accepted in the United States of America, management is
required to make estimates and assumptions that affect the reported amounts of
assets and liabilities as of the date of the balance sheet and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ 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 foreclosed assets. The determination
of the adequacy of the allowance for loan losses is based on estimates that are
susceptible to significant changes in the economic environment and market
conditions. In connection with the determination of the estimated losses on
loans and the valuation of foreclosed assets, management obtains independent
appraisals for significant collateral or assets.
Cash,
Due from Banks and Cash Flows
For
purposes of reporting cash flows, cash and due from banks includes cash on hand,
cash items in process of collection and amounts due from banks. Cash
flows from federal funds sold, deposits, interest-bearing deposits in banks,
federal funds purchased, restricted equity securities, loans and securities sold
under agreements to repurchase are reported net.
The Bank is required to
maintain reserve balances in cash or on deposit with the Federal Reserve
Bank. The total of those reserve balances was approximately
$4.5 million
and
$9.3 million
at December 31,
2007 and 2006,
respectively.
Securities
Securities,
including equity securities with readily determinable fair values, are
classified as available for sale and recorded at fair value with unrealized
gains and losses excluded from earnings and reported in accumulated other
comprehensive income, net of the related deferred tax effect. Equity
securities, including restricted equity securities, without a readily
determinable fair value are classified as available for sale and recorded at
cost.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE
1. SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Securities (Continued)
The
amortization of premiums and accretion of discounts are recognized in interest
income using methods approximating the interest method over the life of the
securities. Realized gains and losses, determined on the basis of the
cost of specific securities sold, are included in earnings on the settlement
date. Declines in the fair value of securities below their cost that
are deemed to be other than temporary are reflected in earnings as realized
losses.
In
determining whether other-than-temporary impairment losses exist, management
considers (1) the length of time and the extent to which the fair value has been
less than cost, (2) the financial condition and near-term prospects of the
issuer and (3) 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.
Loans
Loans are
reported at their outstanding principal balances less unearned income, net of
deferred fees and origination cost and the allowance for loan
losses. Interest income is accrued on the outstanding principal
balance.
The
accrual of interest on loans is discontinued when, in management's opinion, the
borrower may be unable to make payments as they become due, unless the loan is
well-secured. Past due status is based on contractual terms of the
loan. In all cases, loans are placed on nonaccrual or charged off at
an earlier date if collection of principal or interest is considered
doubtful. All interest accrued, but not collected for loans that are
placed on nonaccrual or charged off, is reversed against interest income, unless
management believes that the accrued interest is recoverable through the
liquidation of collateral. Interest income on nonaccrual loans is
subsequently recognized only to the extent cash payments are received until the
loans are returned to accrual status. Loans are returned to accrual
status when all the principal and interest amounts contractually due are brought
current and future payments are reasonably assured.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE
1. SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Allowance
for Loan Losses
The
allowance for loan losses is established as losses are estimated to have
occurred through a provision for loan losses charged to expense. Loan
losses are charged against the allowance when management believes the
collectability of the principal is unlikely. Subsequent recoveries
are credited to the allowance.
The
allowance is an amount that management believes will be adequate to absorb
estimated losses relating to specifically identified loans, as well as probable
credit losses inherent in the balance of the loan portfolio. The
allowance for loan losses is evaluated on a regular basis by management and is
based upon management's periodic review of the collectability of loans in light
of historical experience, the nature and volume of the loan portfolio, overall
portfolio quality, review of specific problem loans, current economic conditions
that may affect the borrower's ability to pay, estimated value of any underlying
collateral and prevailing economic conditions. This evaluation is
inherently subjective as it requires estimates that are susceptible to
significant revision as more information becomes available.
This
evaluation does not include the effects of expected losses on specific loans or
groups of loans that are related to future events or expected changes in
economic conditions. While management uses the best information
available to make its evaluation, future adjustments to the allowance may be
necessary if there are significant changes in economic conditions. In
addition, regulatory agencies, as an integral part of their examination process,
periodically review the Banks’ allowance for loan losses and may require the
Banks to make additions to the allowance based on their judgment about
information available to them at the time of their examinations.
The
allowance consists of specific and general components. The specific
component includes loans management considers impaired and other loans or groups
of loans that management has classified with higher risk
characteristics. For such loans that are classified as impaired, an
allowance is established when the discounted cash flows, collateral value or
observable market price of the impaired loan is lower than the carrying value of
that loan. The general component covers non-classified loans and is
based on historical loss experience adjusted for qualitative
factors.
Premises
and Equipment
Land is
carried at cost. Premises and equipment are carried at cost, less
accumulated depreciation computed on the straight-line method over the estimated
useful lives of the assets. In general, estimated lives for buildings
are up to 40 years, furniture and equipment useful lives range from 3 to 20
years and the lives of software and computer related equipment range from 3 to 5
years. Leasehold improvements are amortized over the life of the
related lease, or the related assets, whichever is
shorter. Expenditures for major improvements of the Company’s
premises and equipment are capitalized and depreciated over their estimated
useful lives. Minor repairs, maintenance and improvements are charged
to operations as incurred. When assets are sold or disposed of, their
cost and related accumulated depreciation are removed from the accounts and any
gain or loss is reflected in earnings.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE
1. SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Goodwill and Intangible
Assets
Goodwill represents the
excess of cost over the fair value of the net assets purchased in business
combinations. Goodwill is required to be tested annually for
impairment or whenever events occur that may indicate that the recoverability of
the carrying amount is not probable. In
the event of an impairment, the amount by which the carrying amount exceeds the
fair value is charged to earnings. The Company performed its annual
test of impairment in the fourth quarter and determined that there was no
impairment in the carrying value of goodwill assigned to its subsidiary bank as
of December 31, 2007.
Intangible
assets consist of core deposit premiums acquired in connection with business
combinations and are based on the established value of acquired customer
deposits. The core deposit premium is initially recognized based on a
valuation performed as of the consummation date and is amortized over the
estimated average remaining life of the acquired customer deposits, or five to
ten years. Amortization periods are reviewed annually in connection
with the annual impairment testing of goodwill.
Foreclosed
Assets
Foreclosed assets acquired
through or in lieu of loan foreclosure are held for sale and are
initially recorded at fair value less estimated disposal
costs. Any write-down
to fair value at the time of transfer to foreclosed assets is charged to the
allowance for loan losses. Subsequent to foreclosure, valuations are
periodically performed by management and the assets are carried at the lower of
carrying amount or fair value less cost to sell. Costs of
improvements are capitalized, whereas costs relating to holding foreclosed
assets and subsequent adjustments to the value are
charged to
operations. The carrying
amount of foreclosed assets at December 31, 2007 and 2006 was $7.0 million and
$1.9 million, respectively.
Income
Taxes
Deferred income tax assets
and liabilities are determined using the balance sheet method. Under
this method, the net deferred tax asset or liability is determined based on the tax
effects of the temporary differences between the book and tax bases of the
various balance sheet assets and liabilities and gives current recognition to
changes in tax rates and laws.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE
1. SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Stock-Based
Compensation
On
January 1, 2006, Ameris adopted the fair value recognition provisions of FASB
Statement No. 123(R), Share-Based Payment ("SFAS 123(R)"), using the modified
prospective-transition method. Under that transition method, compensation cost
recognized beginning in 2006 includes: (a) the compensation cost for all
share-based payments granted prior to, but not yet vested as of January 1, 2006,
based on the grant date fair value estimated in accordance with the original
provisions of FASB Statement No. 123, and (b) the compensation cost for all
share-based payments granted subsequent to January 1, 2006, based on the
grant-date fair value estimated in accordance with the provisions of SFAS
123(R). Results for prior periods have not been restated.
Prior to
the adoption of Statement 123(R), the Company had elected to continue measuring
stock-based compensation costs using the intrinsic value based method of
accounting prescribed by Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to
Employees, whereby compensation cost is the excess, if any, of the quoted
market price of the stock at the grant date over the amount an employee must pay
to acquire the stock. Because of this election, no stock-based
employee compensation cost is reflected in net income for years prior to 2006,
as all options granted under the plans had an exercise price equal to the market
value of the underlying stock on the date of grant.
As a
result of the adoption of SFAS 123 (R), the Company recorded approximately
$444,000 and $339,000 of stock-based compensation cost in 2007 and 2006,
respectively. In December 2005, the Company accelerated the vesting
of 7,332 options to purchase its common stock to avoid the income statement
impact of adopting FASB Statement 123R in future years for those
options.
Treasury
Stock
The
Company’s repurchases of shares of its common stock are recorded at cost as
treasury stock and result in a reduction of stockholders’
equity.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE
1. SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Earnings
Per Share
Basic
earnings per common share are computed by dividing net income by the
weighted-average number of shares of common stock outstanding during the
year. Diluted earnings per common share are computed by dividing net
income, by the effect of the issuance of potential common shares that are
dilutive, by the sum of the weighted-average number of shares of common stock
outstanding and dilutive potential common shares. Potential common
shares consist of only stock options for the years ended December 31, 2007, 2006
and 2005, and are determined using the treasury stock method.
Presented
below is a summary of the components used to calculate basic and diluted
earnings per share:
|
|
Years
Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
(Dollars
in Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$ |
15,153 |
|
|
$ |
22,128 |
|
|
$ |
13,728 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of
|
|
|
|
|
|
|
|
|
|
|
|
|
common
shares outstanding
|
|
|
13,479 |
|
|
|
12,928 |
|
|
|
11,933 |
|
Effect
of dilutive options
|
|
|
152 |
|
|
|
301 |
|
|
|
113 |
|
Weighted
average number of common
|
|
|
|
|
|
|
|
|
|
|
|
|
shares
outstanding used to calculate
|
|
|
|
|
|
|
|
|
|
|
|
|
dilutive
earnings per share
|
|
|
13,631 |
|
|
|
13,229 |
|
|
|
12,046 |
|
At
December 31, 2007, approximately 190,000 common shares were excluded from the
calculation of diluted earnings per share because of
anti-dilution. At December 31, 2006 and 2005, there were immaterial
amounts of potential common shares that were not included in the calculation of
diluted earnings per share because the exercise of such shares would be
anti-dilutive.
Derivative
Instruments and Hedging Activities
The goal
of the Company’s interest rate risk management process is to minimize the
volatility in the net interest margin caused by changes in interest rates.
Derivative instruments are used to hedge certain assets or liabilities as a part
of this process. The Company is required to recognize certain contracts and
commitments as derivatives when the characteristics of those contracts and
commitments meet the definition of a derivative. Under the guidelines of SFAS
133, Accounting for Derivative Instruments and Hedging Activities, as amended,
all derivative instruments are required to be carried at fair value on the
balance sheet.
The
Company’s current hedging strategies involve utilizing interest floors
classified as Cash Flow Hedges. Cash flows related to floating-rate
assets and liabilities will fluctuate with changes in an underlying rate
index. When effectively hedged, the increases or decreases in cash
flows related to the floating rate asset or liability will generally be offset
by changes in cash flows of the derivative instrument designated as a
hedge. The fair value of derivatives is recognized as assets or
liabilities in the financial statements. The accounting for the
changes in the fair value of a derivative depends on the intended use of the
derivative instrument at inception. The change in fair value of the
effective portion of cash flow hedges is accounted for in other comprehensive
income rather than net income.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE
1. SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Derivative
Instruments and Hedging Activities (Continued)
As of
December 31, 2007, the Company had cash flow hedges with a notional amount
of $70 million for the purpose of converting floating rate assets to fixed
rate. The fair value of these instruments amounted to approximately
$1.5 million and $435,000 as of December 31, 2007 and 2006, respectively, and
was recorded as an asset. No hedge ineffectiveness from cash flow
hedges was recognized in the statement of income. All components of
each derivative’s gain or loss are included in the assessment of hedge
effectiveness.
Comprehensive
Income
Accounting
principles generally require that recognized revenue, expenses, gains and losses
be included in net income. Although certain changes in assets and
liabilities, such as unrealized gains and losses on securities available for
sale and unrealized gains and losses on effective cash flow hedges, are reported
as a separate component of the equity section of the balance sheet, such items,
along with net income, are components of comprehensive income.
Accounting
Standards
New Accounting
Pronouncements. In September 2006, the FASB issued SFAS 157,
Fair Value Measurements, which replaces the different definitions of fair value
in existing accounting literature with a single definition, sets out a framework
for measuring fair value, and requires additional disclosures about fair value
measurements. SFAS 157 is required to be applied whenever another financial
accounting standard requires or permits an asset or liability to be measured at
fair value. The Company will adopt the guidance of SFAS 157 beginning
January 1, 2008, and does not expect it to have a material impact on the
Company’s consolidated financial statements.
In
February 2007, the FASB issued Statement of Financial Accounting Standard
(“SFAS”) No. 159, The Fair Value Option for Financial Assets and Financial
Liabilities – Including an Amendment of FASB Statement No. 115. This
standard permits an entity to choose to measure many financial instruments and
certain other items at fair value. This option is available to all entities.
Most of the provisions in SFAS 159 are elective; however, the amendment to SFAS
115, Accounting for Certain Investments in Debt and Equity Securities, applies
to all entities with available-for-sale and trading securities. SFAS 159 is
effective as of the beginning of an entity’s first fiscal year that begins after
November 15, 2007. The Company will adopt SFAS 159 beginning
January 1, 2008 and is currently evaluating the impact SFAS 159 will have
on the Company’s consolidated financial statements.
In
December 2007, the FASB issued SFAS No. 141-R, "Business Combinations"
(SFAS No. 141-R) which revised SFAS No. 141, "Business Combinations"
(SFAS No. 141). This pronouncement is effective for the Company as of
January 1, 2009. Under SFAS No. 141, organizations utilized the
announcement date as the measurement date for the purchase price of the acquired
entity. SFAS No. 141-R requires measurement at the date the acquirer
obtains control of the acquiree, generally referred to as the acquisition date.
SFAS No. 141-R will have a significant impact on the accounting for
transaction costs, restructuring costs as well as the initial recognition of
contingent assets and liabilities assumed during a business combination. Under
SFAS No. 141-R, adjustments to the acquired entity's deferred tax assets
and uncertain tax position balances occurring outside the measurement period are
recorded as a component of the income tax expense, rather than goodwill. As the
provisions of SFAS No. 141-R are applied prospectively, the impact to the
Company cannot be determined until a transaction occurs.
Reclassifications. Certain
reclassifications of prior year amounts have been made to conform with the
current year presentations.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE
2. CORPORATE
RESTRUCTURE
During
2005, the Company initiated a corporate restructuring plan to create a single
brand name for the Company and each of its thirteen bank
subsidiaries. In addition to the single brand name, the Company
announced its intentions to consolidate its bank subsidiaries into a single bank
subsidiary. To effect this corporate restructuring, management
identified several costs that would be incurred. These restructuring
costs included approximately $838,000 for the branding initiative and $2,000,000
to standardize and streamline the data processing functions of each
subsidiary. The branding initiative and consolidation of the Bank
subsidiaries was substantially completed during 2006.
NOTE
3. BUSINESS
COMBINATIONS AND DIVESTITURES
On
December 29, 2006, Ameris acquired 100 percent of the outstanding common
shares of Islands Bancorp and its banking subsidiary, Islands Community Bank, NA
(collectively, “Islands”). Islands was headquartered in Beaufort,
South Carolina where it operated a single branch with satellite loan production
offices in Bluffton, South Carolina and Charleston, South
Carolina. The consideration for the acquisition was a combination of
cash and common stock with an aggregate purchase price of approximately
$19,055,000. The total consideration consisted of $5,121,000 in cash,
and approximately 494,000 shares of Ameris Bancorp common stock with a value of
approximately $13,934,000. The value of the shares of common stock
issued of $28.18 was based on the average closing price of Ameris common stock
for the 10 trading days immediately preceding the merger. Islands
results of operations for 2006 are not included in Ameris’ consolidated
financial results as the merger date occurred after close of business on the
last day of the fiscal year.
On
December 16, 2005, Ameris acquired all the issued and outstanding common shares
of First National Banc, Inc., the parent company of First National Bank, in St.
Marys, Georgia and First National Bank, in Orange Park, Florida (collectively
“FNB”). The acquisition was accounted for using the purchase method
of accounting and accordingly, the results from FNB’s operations have been
included in the consolidated financial statements beginning December 17,
2005. The aggregate purchase price for FNB was $35,333,000, including cash of
$13,085,000 and the Company’s common stock valued at $22,248,000. The
value of the 1,083,718 common shares was determined based on the closing price
of the Company’s common stock on December 14, 2005, the first date on which the
number of shares became fixed.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE
3. BUSINESS
COMBINATIONS AND DIVESTITURES (Continued)
The
following table summarizes the estimated fair values of the assets acquired and
liabilities assumed on the acquisition dates (in thousands):
|
|
Islands
|
|
|
FNB
|
|
|
|
as
of
|
|
|
as
of
|
|
|
|
December
29,
|
|
|
December
16,
|
|
(In
Thousands)
|
|
2006
|
|
|
2005
|
|
|
|
|
|
|
|
|
Cash
and due from banks
|
|
$
|
1,100
|
|
|
$
|
18,210
|
|
Interest-bearing
deposits and federal funds sold
|
|
|
9,439
|
|
|
|
32,690
|
|
Investments
|
|
|
3,249
|
|
|
|
15,688
|
|
Loans,
net
|
|
|
62,331
|
|
|
|
189,235
|
|
Premises
and equipment
|
|
|
4,597
|
|
|
|
11,069
|
|
Core
deposits intangible asset
|
|
|
800
|
|
|
|
3,525
|
|
Goodwill
|
|
|
10,312
|
|
|
|
18,251
|
|
Other
assets
|
|
|
580
|
|
|
|
3,456
|
|
Total
assets acquired
|
|
|
92,408
|
|
|
|
292,124
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
71,510
|
|
|
|
241,439
|
|
Other
borrowings
|
|
|
1,000
|
|
|
|
6,000
|
|
Subordinated
deferrable interest debentures
|
|
|
-
|
|
|
|
5,155
|
|
Other
liabilities
|
|
|
843
|
|
|
|
4,197
|
|
Total
liabilities assumed
|
|
|
73,353
|
|
|
|
256,791
|
|
|
|
|
|
|
|
|
|
|
Net
assets acquired
|
|
$
|
19,055
|
|
|
$
|
35,333
|
|
Unaudited
proforma consolidated results of operations for the years ended December 31,
2006 and 2005 as though Islands and FNB had been acquired as of January 1, 2005
follows:
|
|
(Dollars
in Thousands)
|
|
|
|
2006
|
|
|
2005
|
|
|
|
|
|
|
|
|
Net
interest income
|
|
$
|
73,101
|
|
|
$
|
64,723
|
|
Net
income
|
|
$
|
21,939
|
|
|
$
|
9,807
|
|
Basic
earnings per share
|
|
$
|
1.63
|
|
|
$
|
0.72
|
|
Diluted
earnings per share
|
|
$
|
1.60
|
|
|
$
|
0.72
|
|
During
2006, Ameris negotiated contracts for the sale of three stand-alone bank
charters to other banks. The Company recognized gains of
approximately $3.1 million, $1.9 million after tax, as a result of these
sales. Total assets, loans and deposits were reduced by approximately
$11.3 million, $1.0 million and $7.3 million, respectively, as a result of these
sales.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE
4. SECURITIES
The
amortized cost and fair value of securities available for sale with gross
unrealized gains and losses are summarized as follows:
|
|
|
|
|
Gross
|
|
|
Gross
|
|
|
|
|
|
|
Amortized
|
|
|
Unrealized
|
|
|
Unrealized
|
|
|
Fair
|
|
|
|
Cost
|
|
|
Gains
|
|
|
Losses
|
|
|
Value
|
|
|
|
(Dollars
in Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31, 2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
U.
S. Government sponsored agencies
|
|
$
|
69,562
|
|
|
$
|
366
|
|
|
$
|
(5)
|
|
|
$
|
69,923
|
|
State
and municipal securities
|
|
|
18,232
|
|
|
|
181
|
|
|
|
(93)
|
|
|
|
18,320
|
|
Corporate
debt securities
|
|
|
9,812
|
|
|
|
37
|
|
|
|
(351)
|
|
|
|
9,498
|
|
Mortgage-backed
securities
|
|
|
190,896
|
|
|
|
1,281
|
|
|
|
(536)
|
|
|
|
191,641
|
|
Total
debt securities
|
|
|
288,502
|
|
|
|
1,865
|
|
|
|
(985)
|
|
|
|
289,382
|
|
Equity
securities
|
|
|
1,788
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,788
|
|
Total
securities
|
|
$
|
290,290
|
|
|
$
|
1,865
|
|
|
$
|
(985)
|
|
|
$
|
291,170
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31, 2006:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.
S. Government sponsored agencies
|
|
$
|
103,207
|
|
|
$
|
31
|
|
|
$
|
(1,375
|
)
|
|
$
|
101,863
|
|
State
and municipal securities
|
|
|
19,364
|
|
|
|
42
|
|
|
|
(472
|
)
|
|
|
18,934
|
|
Corporate
debt securities
|
|
|
9,852
|
|
|
|
40
|
|
|
|
(63
|
)
|
|
|
9,829
|
|
Mortgage-backed
securities
|
|
|
153,768
|
|
|
|
194
|
|
|
|
(2,144
|
)
|
|
|
151,818
|
|
Total
debt securities
|
|
|
286,191
|
|
|
|
307
|
|
|
|
(4,054
|
)
|
|
|
282,444
|
|
Equity
securities
|
|
|
788
|
|
|
|
-
|
|
|
|
(40
|
)
|
|
|
748
|
|
Total
securities
|
|
$
|
286,979
|
|
|
$
|
307
|
|
|
$
|
(4,094
|
)
|
|
$
|
283,192
|
|
The
amortized cost and fair value of debt securities available for sale as of
December 31, 2007 by contractual maturity are shown below. Maturities
may differ from contractual maturities in mortgage-backed securities because the
mortgages underlying the securities may be called or repaid without
penalty. Therefore, these securities are not included in the maturity
categories in the following maturity summary.
|
|
Amortized
Cost
|
|
|
Fair
Value
|
|
|
|
(Dollars
in Thousands)
|
|
|
|
|
|
|
|
|
Due
in one year or less
|
|
$ |
570 |
|
|
$ |
571 |
|
Due
from one year to five years
|
|
|
48,662 |
|
|
|
48,891 |
|
Due
from five to ten years
|
|
|
38,037 |
|
|
|
38,242 |
|
Due
after ten years
|
|
|
10,337 |
|
|
|
10,037 |
|
Mortgage-backed
securities
|
|
|
190,896 |
|
|
|
191,641 |
|
|
|
$ |
288,502 |
|
|
$ |
289,382 |
|
Securities
with a carrying value of approximately $247,190,000 and $192,951,000 at December
31, 2007 and 2006, respectively, were pledged to secure public deposits and for
other purposes required or permitted by law.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE
4. SECURITIES
(Continued)
Gains and
losses on sales of securities available for sale consist of the
following:
|
|
December
31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
(Dollars
in Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Gross
gains on sales of securities
|
|
$
|
26
|
|
|
$
|
-
|
|
|
$
|
61
|
|
Gross
losses on sales of securities
|
|
|
(323
|
)
|
|
|
(308
|
)
|
|
|
(452
|
)
|
Net
realized gains (losses) on sales of securities available for
sale
|
|
$
|
(297
|
)
|
|
$
|
(308
|
)
|
|
$
|
(391
|
)
|
The
following table shows the gross unrealized losses and fair value of securities
aggregated by category and length of time that securities have been in a
continuous unrealized loss position at December 31, 2007 and 2006.
|
|
Less
Than 12 Months
|
|
|
12
Months or More
|
|
|
Total
|
|
|
|
Fair
|
|
|
Unrealized
|
|
|
Fair
|
|
|
Unrealized
|
|
|
Fair
|
|
|
Unrealized
|
|
Description
of Securities
|
|
Value
|
|
|
Losses
|
|
|
Value
|
|
|
Losses
|
|
|
Value
|
|
|
Losses
|
|
|
|
(Dollars
in Thousands)
|
|
December
31, 2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.
S. Government sponsored agencies
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
State
and municipal securities
|
|
|
2,466
|
|
|
|
(17)
|
|
|
|
3,012
|
|
|
|
(81)
|
|
|
|
5,478
|
|
|
|
(98)
|
|
Corporate
debt securities
|
|
|
5,910
|
|
|
|
(334)
|
|
|
|
1,494
|
|
|
|
(17)
|
|
|
|
7,404
|
|
|
|
(351)
|
|
Mortgage-backed
securities
|
|
|
29,214
|
|
|
|
(37)
|
|
|
|
37,902
|
|
|
|
(499)
|
|
|
|
67,116
|
|
|
|
(536)
|
|
Subtotal,
debt securities
|
|
|
37,590
|
|
|
|
(388)
|
|
|
|
42,408
|
|
|
|
(597)
|
|
|
|
79,998
|
|
|
|
(985)
|
|
Equity
securities
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Total
temporarily impaired securities
|
|
$
|
37,590
|
|
|
$
|
(388)
|
|
|
$
|
42,408
|
|
|
$
|
(597)
|
|
|
$
|
79,998
|
|
|
$
|
(985)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31, 2006:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.
S. Government sponsored agencies
|
|
$
|
18,869
|
|
|
$
|
(75)
|
|
|
$
|
72,520
|
|
|
$
|
(1,300)
|
|
|
$
|
91,389
|
|
|
$
|
(1,375)
|
|
State
and municipal securities
|
|
|
9,658
|
|
|
|
(300)
|
|
|
|
4,884
|
|
|
|
(172)
|
|
|
|
14,542
|
|
|
|
(472)
|
|
Corporate
debt securities
|
|
|
-
|
|
|
|
-
|
|
|
|
1,935
|
|
|
|
(63)
|
|
|
|
1,935
|
|
|
|
(63)
|
|
Mortgage-backed
securities
|
|
|
69,148
|
|
|
|
(359)
|
|
|
|
69,642
|
|
|
|
(1,785)
|
|
|
|
138,791
|
|
|
|
(2,144)
|
|
Subtotal,
debt securities
|
|
|
97,675
|
|
|
|
(734)
|
|
|
|
148,981
|
|
|
|
(3,320)
|
|
|
|
246,657
|
|
|
|
(4,054)
|
|
Equity
securities
|
|
|
-
|
|
|
|
-
|
|
|
|
567
|
|
|
|
(40)
|
|
|
|
567
|
|
|
|
(40)
|
|
Total
temporarily impaired securities
|
|
$
|
97,675
|
|
|
$
|
(734)
|
|
|
$
|
149,548
|
|
|
$
|
(3,360)
|
|
|
$
|
247,224
|
|
|
$
|
(4,094)
|
|
Management
evaluates securities for other-than-temporary impairment at least on a quarterly
basis, and more frequently when economic or market concerns warrant such
evaluation. Substantially all of the unrealized losses on debt
securities are related to changes in interest rates and do not affect the
expected cash flows of the issuer or underlying collateral. All
unrealized losses are considered temporary because each security carries an
acceptable investment grade and the Company has the intent and ability to hold
to maturity.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE
5. LOANS
AND ALLOWANCE FOR LOAN LOSSES
The
composition of loans is summarized as follows:
|
|
December
31,
|
|
|
|
2007
|
|
|
2006
|
|
|
|
(Dollars
in Thousands)
|
|
Commercial
and financial
|
|
$ |
151,029 |
|
|
$ |
174,852 |
|
Agricultural
|
|
|
37,623 |
|
|
|
33,980 |
|
Real
estate - construction
|
|
|
383,317 |
|
|
|
340,325 |
|
Real
estate - mortgage, farmland
|
|
|
96,505 |
|
|
|
91,650 |
|
Real
estate - mortgage, commercial
|
|
|
495,672 |
|
|
|
397,837 |
|
Real
estate - mortgage, residential
|
|
|
386,736 |
|
|
|
339,843 |
|
Consumer
installment loans
|
|
|
55,114 |
|
|
|
59,422 |
|
Other
|
|
|
8,052 |
|
|
|
5,042 |
|
|
|
|
1,614,048 |
|
|
|
1,442,951 |
|
Allowance
for loan losses
|
|
|
27,640 |
|
|
|
24,863 |
|
Loans,
net
|
|
$ |
1,586,408 |
|
|
$ |
1,418,088 |
|
The
following is a summary of information pertaining to impaired loans:
|
|
As
of and For the Years Ended
|
|
|
|
December
31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
(Dollars
in Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Impaired
loans
|
|
$
|
18,468
|
|
|
$
|
6,834
|
|
|
$
|
9,586
|
|
Valuation
allowance related to impaired loans
|
|
$
|
2,978
|
|
|
$
|
1,034
|
|
|
$
|
1,749
|
|
Average
investment in impaired loans
|
|
$
|
16,247
|
|
|
$
|
8,181
|
|
|
$
|
5,236
|
|
Interest
income recognized on impaired loans
|
|
$
|
314
|
|
|
$
|
15
|
|
|
$
|
26
|
|
Forgone
interest income on impaired loans
|
|
$
|
1,340
|
|
|
$
|
404
|
|
|
$
|
527
|
|
Loans on
nonaccrual status amounted to approximately $18.5 million, $6.8 million and $9.6
million at December 31, 2007, 2006 and 2005, respectively. There
were no material amounts of loans past due ninety days or more and still
accruing interest at December 31, 2007, 2006 or 2005.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE
5. LOANS
AND ALLOWANCE FOR LOAN LOSSES (Continued)
Changes
in the allowance for loan losses for the years ended December 31, 2007, 2006 and
2005 are as follows:
|
|
December
31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
(Dollars
in Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
beginning of year
|
|
$
|
24,863
|
|
|
$
|
22,294
|
|
|
$
|
15,493
|
|
Provision
for loan losses
|
|
|
11,321
|
|
|
|
2,837
|
|
|
|
1,651
|
|
Loans
charged off
|
|
|
(10,418
|
)
|
|
|
(3,198
|
)
|
|
|
(2,155
|
)
|
Recoveries
of loans previously charged off
|
|
|
1,874
|
|
|
|
1,906
|
|
|
|
1,777
|
|
Acquired
loan loss reserve
|
|
|
-
|
|
|
|
1,024
|
|
|
|
5,528
|
|
Balance,
end of year
|
|
$
|
27,640
|
|
|
$
|
24,863
|
|
|
$
|
22,294
|
|
In the
ordinary course of business, the Company has granted loans to certain directors
and their affiliates. The interest rates on these loans were
substantially the same as rates prevailing at the time of the transaction and
repayment terms are customary for the type of loan. Company policy
provides for no loans to executive officers. Changes in related party
loans are summarized as follows:
|
|
December
31,
|
|
|
|
2007
|
|
|
2006
|
|
|
|
(Dollars
in Thousands)
|
|
|
|
|
|
|
|
|
Balance,
beginning of year
|
|
$
|
5,912
|
|
|
$
|
40,349
|
|
Advances
|
|
|
864
|
|
|
|
6,986
|
|
Repayments
|
|
|
(1,176
|
)
|
|
|
(4,939
|
)
|
Transactions
due to changes in related parties
|
|
|
646
|
|
|
|
(36,484
|
)
|
Balance,
end of year
|
|
$
|
6,246
|
|
|
$
|
5,912
|
|
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE
6. PREMISES
AND EQUIPMENT
Premises
and equipment are summarized as follows:
|
|
December
31,
|
|
|
|
2007
|
|
|
2006
|
|
|
|
(Dollars
in Thousands)
|
|
|
|
|
|
|
|
|
Land
|
|
$
|
13,966
|
|
|
$
|
12,054
|
|
Buildings
|
|
|
36,947
|
|
|
|
37,344
|
|
Furniture
and equipment
|
|
|
22,482
|
|
|
|
21,496
|
|
Construction
in progress; estimated cost to complete, $9,600,000
|
|
|
15,048
|
|
|
|
3,208
|
|
|
|
|
88,443
|
|
|
|
74,102
|
|
Accumulated
depreciation
|
|
|
(29,311
|
)
|
|
|
(27,498
|
)
|
|
|
$
|
59,132
|
|
|
$
|
46,604
|
|
Leases
The
Company has a noncancelable operating lease on its operations center with its
Chairman of the Board. The lease has an initial term of five years
with one five year renewal option.
The
Company has various operating leases with unrelated parties on three
branches. Generally, these leases are on smaller locations with
initial lease terms under ten years and up to two renewal options.
Rental
expense amounted to approximately $335,000, $147,000 and $140,000 for the years
ended December 31, 2007, 2006 and 2005, respectively. Future
minimum lease commitments under the Company’s operating leases, excluding any
renewal options, are summarized as follows:
2008
|
|
$ |
330,465 |
|
2009
|
|
|
204,525 |
|
2010
|
|
|
123,805 |
|
2011
|
|
|
87,147 |
|
Thereafter
|
|
|
43,395 |
|
|
|
$ |
789,337 |
|
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE
7. INTANGIBLE
ASSETS
Following
is a summary of information related to acquired intangible assets:
|
As
of December 31, 2007
|
|
As
of December 31, 2006
|
|
Gross
Amount
|
|
Accumulated
Amortization
|
|
Gross
Amount
|
Accumulated
Amortization
|
|
(Dollars
in Thousands)
|
|
|
|
|
|
|
|
|
Amortized
intangible assets
|
|
|
|
|
|
|
|
Core
deposit premiums
|
$14,430 |
|
$ |
9,628 |
|
$14,430 |
$8,331 |
The
aggregate amortization expense for intangible assets was approximately
$1,297,000, $1,107,000 and $819,000 for the years ended December 31, 2007,
2006 and 2005, respectively.
The
estimated amortization expense for each of the next five years is as
follows:
2008
|
|
$ |
1,170,000 |
|
2009
|
|
|
584,000 |
|
2010
|
|
|
547,000 |
|
2011
|
|
|
547,000 |
|
2012
|
|
|
493,000 |
|
Changes
in the carrying amount of goodwill are as follows:
|
For
the Years Ended December 31,
|
|
|
2007
|
|
2006
|
|
|
(Dollars
in Thousands)
|
|
|
|
|
|
|
|
|
Beginning
balance
|
|
$
|
54,365
|
|
|
$
|
43,304
|
|
Adjustment
of previously acquired goodwill based
|
|
on
final allocations
|
|
|
448
|
|
|
|
749
|
|
Goodwill
acquired through business combinations
|
|
|
-
|
|
|
|
10,312
|
|
Ending
balance
|
|
$
|
54,813
|
|
|
$
|
54,365
|
|
NOTE
8. DEPOSITS
The
aggregate amount of time deposits in denominations of $100,000 or more at
December 31, 2007 and 2006 was $522.9 million and $501.9 million, respectively.
The scheduled maturities of time deposits at December 31, 2007 are as
follows:
|
|
(Dollars
in
Thousands)
|
|
|
|
|
|
2007
|
|
$ |
754,465 |
|
2008
|
|
|
102,400 |
|
2009
|
|
|
13,369 |
|
2010
|
|
|
6,282 |
|
2011
|
|
|
5,091 |
|
|
|
$ |
881,607 |
|
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE
8. DEPOSITS
(Continued)
The
Company had brokered deposits of $128.0 million and $147.9 million at December
31, 2007 and 2006. At year end 2007, $91.2 million of the brokered
deposits mature in 2008, and $36.8 million mature in 2009.
NOTE
9. SECURITIES
SOLD UNDER REPURCHASE AGREEMENTS
Securities
sold under repurchase agreements, which are secured borrowings, generally mature
within one to four days from the transaction date. Securities sold
under repurchase agreements are reflected at the amount of cash received in
connection with the transactions. The Company may be required to
provide additional collateral based on the fair value of the underlying
securities. The Company monitors the fair value of the underlying
securities on a daily basis. Securities sold under repurchase
agreements at December 31, 2007 and 2006 were $14.7 million and $15.9 million,
respectively.
NOTE
10. EMPLOYEE
BENEFIT PLANS
The
Company has established a retirement plan for eligible employees. The
Ameris Bancorp 401(k) Profit Sharing Plan allows a participant to defer a
portion of his compensation and provides that the Company will match a portion
of the deferred compensation. The Plan also provides for non-elective
and discretionary contributions. All full-time and part-time
employees are eligible to participate in the Plan provided they have met the
eligibility requirements. Generally, a participant must have
completed twelve months of employment with a minimum of 1,000 hours and have
attained an age of 21.
Aggregate
expense under the plan charged to operations during 2007, 2006 and 2005 amounted
to $1.3 million, $1.4 million and $1.2 million, respectively.
NOTE
11. DEFERRED
COMPENSATION PLANS
The
Company and the Bank have entered into separate deferred compensation
arrangements with certain executive officers and directors. The plans
call for certain amounts payable at retirement, death or
disability. The estimated present value of the deferred compensation
is being accrued over the expected service period. The Company and
Banks have purchased life insurance policies which they intend to use to finance
this liability. Cash surrender value of life insurance of $2.1
million and $2.2 million at December 31, 2007 and 2006, respectively, is
included in other assets. Accrued deferred compensation of $1.1
million at December 31, 2007 and 2006, is included in other
liabilities. Aggregate compensation expense under the plans was
$119,000, $112,000 and $60,000 for 2007, 2006 and 2005, respectively, and is
included in other operating expenses.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE
12. OTHER
BORROWINGS
Other
borrowings consist of the following:
|
|
December
31,
|
|
|
|
2007
|
|
|
2006
|
|
|
|
(Dollars
in Thousands)
|
|
|
|
|
|
|
|
|
Advances
under revolving credit agreement with a regional bank with interest at
thirty day LIBOR plus 1.35% (5.95% at December 31, 2007) due in December
2009, secured by subsidiary bank stock.
|
|
$
|
5,000
|
|
|
$
|
5,000
|
|
|
|
|
|
|
|
|
|
|
Advances
from the FHLB with adjustable interest at three month LIBOR plus 0.32%
(5.53% at December 31, 2007) maturing August 2009.
|
|
|
65,000
|
|
|
|
65,000
|
|
|
|
|
|
|
|
|
|
|
Advance
from Federal Home Loan Bank with a fixed interest rate of 3.64%, due
September 2008.
|
|
|
1,000
|
|
|
|
1,000
|
|
|
|
|
|
|
|
|
|
|
Advances
from Federal Home Loan Bank with interest at fixed rates (weighted
average rate of 4.67%) convertible to a variable rate at the
option of the lender, due at various dates through May
2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
advances from Federal Home Loan Bank are collateralized by the pledging of a
blanket lien on all first mortgage loans and other specific loans, as well as
FLHB stock.
Other
borrowings at December 31, 2007 have maturities in future years as
follows:
|
|
(Dollars
in Thousands)
|
|
|
|
|
|
2008
|
|
$ |
18,500 |
|
2009
|
|
|
70,000 |
|
2010
|
|
|
2,000 |
|
|
|
$ |
90,500 |
|
The
Company and subsidiaries have available unused lines of credit with various
financial institutions totaling approximately $111,183,000 at December 31,
2007.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE
13. INCOME
TAXES
The
income tax expense in the consolidated statements of income consists of the
following:
|
|
For
the Years Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
(Dollars
in Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
$
|
8,822
|
|
|
$
|
11,425
|
|
|
$
|
7,184
|
|
Deferred
|
|
|
(1,522
|
)
|
|
|
(296
|
)
|
|
|
(35
|
|
|
|
$
|
7,300
|
|
|
$
|
11,129
|
|
|
$
|
7,149
|
|
The
Company's income tax expense differs from the amounts computed by applying the
federal income tax statutory rates to income before income taxes. A
reconciliation of the differences is as follows:
|
|
For
the Years Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
(Dollars
in Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Tax
at federal income tax rate
|
|
$
|
7,859
|
|
|
$
|
11,640
|
|
|
$
|
7,098
|
|
Increase
(decrease) resulting from:
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax-exempt
interest
|
|
|
(403
|
)
|
|
|
(318
|
)
|
|
|
(182
|
)
|
Amortization
of intangible assets
|
|
|
-
|
|
|
|
-
|
|
|
|
2
|
|
Other
|
|
|
(156
|
)
|
|
|
(193
|
)
|
|
|
231
|
|
Provision
for income taxes
|
|
$
|
7,300
|
|
|
$
|
11,129
|
|
|
$
|
7,149
|
|
Net
deferred income tax assets of $5,535,000 and $5,971,000 at December 31, 2007 and
2006, respectively, are included in other assets. The components of
deferred income taxes are as follows:
|
|
December
31,
|
|
|
|
2007
|
|
|
2006
|
|
|
|
(Dollars
in Thousands)
|
|
|
|
|
|
|
|
|
Deferred
tax assets:
|
|
|
|
|
|
|
Loan
loss reserves
|
|
$
|
9,306
|
|
|
$
|
8,036
|
|
Deferred
compensation
|
|
|
372
|
|
|
|
390
|
|
Stock
based compensation
|
|
|
41
|
|
|
|
120
|
|
Nonaccrual
interest
|
|
|
253
|
|
|
|
248
|
|
Net
operating loss carryforward
|
|
|
90
|
|
|
|
652
|
|
Unrealized
loss on securities available for sale
|
|
|
-
|
|
|
|
1,287
|
|
Other
real estate owned
|
|
|
221
|
|
|
|
2
|
|
Capitalized
costs
|
|
|
216
|
|
|
|
246
|
|
|
|
|
10,499
|
|
|
|
10,979
|
|
Deferred
tax liabilities:
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
2,560
|
|
|
|
2,878
|
|
Intangible
assets
|
|
|
1,733
|
|
|
|
2,132
|
|
Unrealized
gain on securities available for sale
|
|
|
299
|
|
|
|
-
|
|
Unrealized
gain on cash flow hedge
|
|
|
372
|
|
|
|
-
|
|
|
|
|
4,964
|
|
|
|
5,010
|
|
|
|
|
|
|
|
|
|
|
Net
deferred tax assets
|
|
$
|
5,535
|
|
|
$
|
5,971
|
|
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE
14. SUBORDINATED
DEFERRABLE INTEREST DEBENTURES
In 2001,
the Company formed a statutory business trust, ABC Bancorp Capital Trust I,
which existed for the exclusive purposes of (i) issuing Trust Securities
representing undivided beneficial interests in the assets of the Trust; (ii)
investing the gross proceeds of the Trust securities in junior subordinated
deferrable interest debentures (subordinated debentures); and (iii) engaging in
only those activities necessary or incidental thereto. The trust
preferred securities in the amount of $34,500,000 issued through ABC Bancorp
Capital Trust I and the related Debentures in the amount of $35,567,000 bore
interest at 9%, and were redeemable in whole or in part at any time after
September 30, 2006. The Company redeemed all outstanding trust
preferred certificates issued under the Trust during 2006.
During
2005, the Company acquired First National Banc Statutory Trust I, a subsidiary
of First National Banc, Inc., whose sole purpose was to issue $5,000,000
principal amount of Trust Preferred Securities at a rate per annum equal to the
3-Month LIBOR plus 2.80% (7.63% at December 31, 2007) through a pool
sponsored by a national brokerage firm. The Trust Preferred
Securities have a maturity of 30 years and are redeemable at the Company’s
option on any quarterly interest payment date after five years. There
are certain circumstances (as described in the Trust agreement) in which the
securities may be redeemed within the first five years at the Company’s option.
The aggregate principal amount of trust preferred certificates outstanding at
December 31, 2007 was $5,000,000. The aggregate principal amount of
Debentures outstanding was $5,155,000.
During
2006, the Company formed Ameris Statutory Trust I, issuing trust preferred
certificates in the aggregate principal amount of $36,000,000. The
related debentures issued by the Company were in the aggregate principal amount
of $37,114,000. Both the trust preferred securities and the related
Debentures bear interest at 3-Month LIBOR plus 1.63% (6.62% at December 31,
2007). Distributions on the trust preferred securities are paid
quarterly, with interest on the Debentures being paid on the corresponding
dates. The trust preferred securities mature on December 15, 2036 and
are redeemable at the Company’s option beginning September 15,
2011.
Under
applicable accounting standards, the assets and liabilities of such trusts, as
well as the related income and expenses, are excluded from the Company’s
Consolidated Financial Statements. However, the subordinated
debentures issued by the Company and purchased by the trusts remain on the
Consolidated Balance Sheet. In addition, the related interest expense
continues to be included in the Consolidated Statement of Income. For
regulatory capital purposes, the Trust Securities qualify as a component of Tier
1 Capital.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE
15. STOCK-BASED
COMPENSATION
Ameris
awards its employees various forms of stock-based incentives under certain plans
approved by its shareholders. Awards granted under the plans may be
in the form of qualified or nonqualified stock options, restricted stock, stock
appreciation rights (“SARs”), long-term incentive compensation units consisting
of cash and common stock, or any combination thereof within the limitations set
forth in the plans. The plans provide that the aggregate number of
shares of the Company’s common stock which may be subject to award may not
exceed 1,785,000 subject to adjustment in certain circumstances to prevent
dilution.
All stock
options have an exercise price that is equal to the closing fair market value of
Ameris’ stock on the date the options were granted. Options granted
under the plans generally vest over a five year period and have a 10 year
maximum term. Most options granted since 2005 contain
performance-based vesting conditions.
As of
December 31, 2007, the Company has outstanding a total of 53,430 restricted
shares granted under the plans as compensation to certain
employees. These shares carry dividend and voting
rights. Sale of these shares is restricted prior to the date of
vesting, which is three to five years from the date of the
grant. Shares issued under the plans are recorded at their fair
market value on the date of their grant. The compensation expense is
recognized on a straight-line basis over the related vesting
period. Compensation expense related to these grants was $651,000,
$484,000 and $321,000 for 2007, 2006 and 2005, respectively.
It is
Ameris’ policy to issue new shares for stock option exercises and restricted
stock rather than issue treasury shares. Ameris recognizes
stock-based compensation expense on a straight-line basis over the options’
related vesting term.
Stock-based
compensation expense related to stock options was approximately $444,000 and
$339,000 in 2007 and 2006, respectively.
A summary
of non-performance-based option activity as of December 31, 2007, 2006 and
2005 and changes during the years then ended is presented
below:
|
|
December
31, 2007
|
|
|
December
31, 2006
|
|
|
December
31, 2005
|
|
|
|
|
|
|
Weighted-
|
|
|
Weighted
|
|
|
Aggregate
|
|
|
|
|
|
Weighted-
|
|
|
Weighted
|
|
|
Aggregate
|
|
|
|
|
|
Weighted-
|
|
|
Weighted
|
|
|
Aggregate
|
|
|
|
|
|
|
Average
|
|
|
Average
|
|
|
Intrinsic
|
|
|
|
|
|
Average
|
|
|
Average
|
|
|
Intrinsic
|
|
|
|
|
|
Average
|
|
|
Average
|
|
|
Intrinsic
|
|
|
|
|
|
|
Exercise
|
|
|
Contractual
|
|
|
Value
|
|
|
|
|
|
Exercise
|
|
|
Contractual
|
|
|
Value
|
|
|
|
|
|
Exercise
|
|
|
Contractual
|
|
|
Value
|
|
|
|
|
|
|
|
Price
|
|
|
Term
|
|
|
$
|
(000)
|
|
|
|
|
|
|
Price
|
|
|
Term
|
|
|
$
|
(000)
|
|
|
|
|
|
|
Price
|
|
|
Term
|
|
|
$
|
(000)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Under
option, beginning of year
|
|
|
252,068
|
|
|
$
|
11.82
|
|
|
|
|
|
|
|
|
|
|
296,235
|
|
|
$
|
11.59
|
|
|
|
|
|
|
|
|
|
|
390,042
|
|
|
$
|
10.87
|
|
|
|
|
|
|
|
|
Granted
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
14,000
|
|
|
|
16.92
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
(15,382
|
)
|
|
|
11.20
|
|
|
|
|
|
|
|
|
|
|
(40,987
|
)
|
|
|
6.94
|
|
|
|
|
|
|
|
|
|
|
(100,129
|
)
|
|
|
9.43
|
|
|
|
|
|
|
|
|
Forfeited
|
|
|
(4,105
|
)
|
|
|
13.45
|
|
|
|
|
|
|
|
|
|
|
(3,180
|
)
|
|
|
16.43
|
|
|
|
|
|
|
|
|
|
|
(7,678
|
)
|
|
|
13.53
|
|
|
|
|
|
|
|
|
Under
option, end of year
|
|
|
232,581
|
|
|
$
|
12.83
|
|
|
|
3.91
|
|
|
$
|
1,167
|
|
|
|
252,068
|
|
|
$
|
11.82
|
|
|
|
4.90
|
|
|
$
|
4,123
|
|
|
|
296,235
|
|
|
$
|
13.89
|
|
|
|
5.64
|
|
|
$
|
1,763
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable
at end of year
|
|
|
205,412
|
|
|
$
|
11.34
|
|
|
|
3.57
|
|
|
$
|
1,113
|
|
|
|
206,917
|
|
|
$
|
11.23
|
|
|
|
4.47
|
|
|
$
|
3,505
|
|
|
|
207,851
|
|
|
$
|
10.50
|
|
|
|
4.79
|
|
|
$
|
1,941
|
|
Weighted-average
fair value per option granted during year
|
|
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
4.90
|
|
|
|
|
|
|
|
|
|
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE
15. STOCK-BASED
COMPENSATION (Continued)
As of
December 31, 2007, there was $100,000 of total unrecognized compensation cost
related to nonvested share-based compensation arrangements for
non-performance-based options. That cost is expected to be recognized
over a weighted-average period of 0.89 years. The total intrinsic
value of those shares vested during the year ended December 31, 2007 and
2006 was $365,000 and $1,094,000, respectively.
Additional
information pertaining to non-performance based options outstanding at December
31, 2007 is as follows:
|
|
|
Options
Outstanding
|
|
Options
Exercisable
|
|
|
|
|
Weighted-
|
|
Weighted-
|
|
|
|
Weighted-
|
Range
of
|
|
|
Average
|
|
Average
|
|
|
|
Average
|
Exercise
|
|
Number
|
Contractual
|
|
Exercise
|
|
Number
|
|
Exercise
|
Prices
|
|
Outstanding
|
Life
in Years
|
|
Price
|
|
Outstanding
|
|
Price
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
8.25
-10.00
|
|
87,006
|
2.35
|
|
$
|
8.68
|
|
87,006
|
|
$ |
8.68
|
$
|
11.04
- 18.16
|
|
145,575
|
4.83
|
|
$
|
13.72
|
|
118,456
|
|
$
|
13.29
|
|
|
|
232,581
|
|
|
|
|
|
205,462
|
|
|
|
A summary
of the activity of performance-based options as of December 31, 2007, 2006
and 2005 and changes during the years then ended is presented
below:
|
|
December
31, 2007
|
|
|
December
31, 2006
|
|
|
December
31, 2005
|
|
|
|
|
|
|
Weighted-
|
|
|
Weighted
|
|
|
Aggregate
|
|
|
|
|
|
Weighted-
|
|
|
Weighted
|
|
|
Aggregate
|
|
|
|
|
|
Weighted-
|
|
|
Weighted
|
|
|
Aggregate
|
|
|
|
|
|
|
Average
|
|
|
Average
|
|
|
Intrinsic
|
|
|
|
|
|
Average
|
|
|
Average
|
|
|
Intrinsic
|
|
|
|
|
|
Average
|
|
|
Average
|
|
|
Intrinsic
|
|
|
|
|
|
|
Exercise
|
|
|
Contractual
|
|
|
Value
|
|
|
|
|
|
Exercise
|
|
|
Contractual
|
|
|
Value
|
|
|
|
|
|
Exercise
|
|
|
Contractual
|
|
|
Value
|
|
|
|
|
|
|
|
Price
|
|
|
Term
|
|
|
|
(000)
|
|
|
|
|
|
|
Price
|
|
|
Term
|
|
|
|
(000)
|
|
|
|
|
|
|
Price
|
|
|
Term
|
|
|
|
(000)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Under
option, beginning of year
|
|
|
259,750
|
|
|
$
|
19.71
|
|
|
|
|
|
|
|
|
|
|
163,000
|
|
|
$
|
18.07
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
Granted
|
|
|
171,500
|
|
|
|
22.98
|
|
|
|
|
|
|
|
|
|
|
101,750
|
|
|
|
21.38
|
|
|
|
|
|
|
|
|
|
|
163,000
|
|
|
|
18.07
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
(180
|
)
|
|
|
18
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
Forfeited
|
|
|
(5,320
|
)
|
|
|
20.94
|
|
|
|
|
|
|
|
|
|
|
(5,000
|
)
|
|
|
18
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
Under
option, end of year
|
|
|
425,750
|
|
|
$
|
20.8
|
|
|
|
8.49
|
|
|
$
|
-
|
|
|
|
259,750
|
|
|
$
|
19.71
|
|
|
|
8.86
|
|
|
$
|
2,290
|
|
|
|
163,000
|
|
|
$
|
18.07
|
|
|
|
9.96
|
|
|
$
|
281
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable
at end of year
|
|
|
82,650
|
|
|
$
|
18.87
|
|
|
|
7.72
|
|
|
$
|
-
|
|
|
|
79,300
|
|
|
$
|
18.67
|
|
|
|
8.7
|
|
|
$
|
754
|
|
|
|
30,500
|
|
|
$
|
18.07
|
|
|
|
9.49
|
|
|
$
|
56
|
|
The
weighted-average grant date fair value of options granted during the years 2007
and 2006 was $5.53 and $3.48, respectively. As of December 31, 2007,
there was $1.2 million of unrecognized compensation cost related to nonvested
share-based compensation arrangements granted related to performance-based
options. That cost is expected to be recognized over a
weighted-average period of 2 years.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE
15. STOCK-BASED
COMPENSATION (Continued)
Additional
information pertaining to performance-based options outstanding at December 31,
2007 is as follows:
|
|
|
Options
Outstanding
|
|
Options
Exercisable
|
|
|
|
|
Weighted-
|
|
Weighted-
|
|
|
|
Weighted-
|
Range
of
|
|
|
Average
|
|
Average
|
|
|
|
Average
|
Exercise
|
|
Number
|
Contractual
|
|
Exercise
|
|
Number
|
|
Exercise
|
Prices
|
|
Outstanding
|
Life
in Years
|
|
Price
|
|
Outstanding
|
|
Price
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
18.00
-20.12
|
|
156,500
|
7.50
|
|
$
|
18.07
|
|
62,600
|
|
$ |
18.87
|
$
|
20.76
- 28.53
|
|
269,250
|
9.06
|
|
$
|
22.39
|
|
20,050
|
|
$
|
21.39
|
|
|
|
425,750
|
|
|
|
|
|
82,650
|
|
|
|
The fair
value of each stock-based compensation grant is estimated on the date of grant
using the Black-Scholes option-pricing model with the following
assumptions:
|
|
Years
Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
|
|
|
|
|
|
|
|
Dividend
yield
|
|
|
1.99-2.52
|
%
|
|
|
1.96-2.70
|
%
|
|
|
3.11
|
%
|
Expected
life
|
|
8
years
|
|
|
8
years
|
|
|
8
years
|
|
Expected
volatility
|
|
|
18.09-25.02
|
%
|
|
|
16.51-20.28
|
%
|
|
|
30.05
|
%
|
Risk-free
interest rate
|
|
|
4.59-5.20
|
%
|
|
|
4.45-5.12
|
%
|
|
|
3.94
|
%
|
A summary
of the status of Ameris’ restricted stock awards as of December 31, 2007 and
changes during the year then ended is presented below:
|
|
Shares
|
|
|
Weighted-
Average
Grant-Date
Fair
Value
|
|
|
|
|
|
|
|
|
Nonvested
shares at January 1, 2007
|
|
|
89,770 |
|
|
$ |
19.02 |
|
Granted
|
|
|
4,800 |
|
|
|
22.83 |
|
Vested
|
|
|
(39,440 |
) |
|
|
17.28 |
|
Forfeited
|
|
|
(1,700 |
) |
|
|
13.32 |
|
Nonvested
shares at December 31, 2007
|
|
|
53,430 |
|
|
$ |
20.83 |
|
The
balance of unearned compensation related to restricted stock grants as of
December 31, 2007 and 2006 was approximately $451,000 and $1.0 million
respectively.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE
16. DERIVATIVE
INSTRUMENTS AND HEDGING ACTIVITIES
During
2006, the Company entered into derivative instruments to minimize the volatility
in its net interest margin due to a reduction in the prime rate and the
resulting effect on interest income from its variable rate loan
portfolio. The Company purchased two $35 million notional amount, 3
and 5-year, 7% prime rate floor contracts to hedge against the exposure to the
cash flow of these variable rate loans. The premium paid for these
contracts was $497,000. These contracts are classified as cash flow
hedges of an exposure to changes in the cash flow of a recognized
asset. As a cash flow hedge, the change in fair value of a hedge that
is deemed to be highly effective is recognized in other comprehensive income and
the portion deemed to be ineffective is recognized in earnings. As of
December 31, 2007, the hedge is deemed to be highly effective.
|
|
|
|
|
|
|
|
Fair
Value
|
|
Fair
Value
|
|
|
Notional
|
|
|
Rate
of
|
|
|
December
31,
|
|
December
31,
|
|
|
Amount
|
|
|
Floor
|
|
Index
|
2007
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flow hedges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Floor
- 5 year
|
|
$ |
35,000,000 |
|
|
|
7%
|
|
Prime
|
|
$ |
1,144,000 |
|
|
$ |
328,000 |
|
Floor
- 3 year
|
|
|
35,000,000 |
|
|
|
7%
|
|
Prime
|
|
|
396,000 |
|
|
|
107,000 |
|
|
|
$ |
70,000,000 |
|
|
|
|
|
|
|
$ |
1,540,000 |
|
|
$ |
435,000 |
|
NOTE
17. COMMITMENTS
AND CONTINGENT LIABILITIES
Loan
Commitments
The
Company is a party to financial instruments with off-balance-sheet risk in the
normal course of business to meet the financing needs of its
customers. These financial instruments include commitments to extend
credit and standby letters of credit. They involve, to varying
degrees, elements of credit risk and interest rate risk in excess of the amount
recognized in the balance sheets.
The
Company's exposure to credit loss is represented by the contractual amount of
those instruments. The Company uses the same credit policies in
making commitments and conditional obligations as it does for on-balance-sheet
instruments. A summary of the Company's commitments is as
follows:
|
|
December
31,
|
|
|
|
2007
|
|
|
2006
|
|
|
|
(Dollars
in Thousands)
|
|
|
|
|
|
|
|
|
Commitments
to extend credit
|
|
$
|
177,410
|
|
|
$
|
179,727
|
|
Financial
standby letters of credit
|
|
|
7,426
|
|
|
|
6,139
|
|
|
|
$
|
184,836
|
|
|
$
|
185,866
|
|
Commitments to extend credit
are agreements to lend to a customer as long as there is no violation of any
condition established in the contract. Commitments generally have
fixed expiration dates or other termination clauses and may require payment of a
fee. Since many of the commitments are expected to expire without
being drawn upon, the total commitment amounts do not necessarily represent
future cash requirements. The amount of collateral obtained, if
deemed necessary by the Company upon extension of credit, is based on
management’s credit evaluation of the customer.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE
17. COMMITMENTS
AND CONTINGENT LIABILITIES (Continuted)
Loan
Commitments (Continued)
Standby
letters of credit are conditional commitments issued by the Company to guarantee
the performance of a customer to a third party. Those guarantees are
primarily issued to support public and private borrowing
arrangements. The credit risk involved in issuing letters of credit
is essentially the same as that involved in extending loans to
customers. Collateral is required in instances which the Company
deems necessary. The Company has not been required to perform on any
material financial standby letters of credit and the Company has not incurred
any losses on financial standby letters of credit for the years ended December
31, 2007 and 2006.
At
December 31, 2007, the Company had guaranteed the debt of certain officers’
liabilities at another financial institution totaling approximately $535,000.
These guarantees represent the available credit line of those certain officers
for the purchase of Company stock. Any stock purchased under this
program will be assigned to the Company and held in safekeeping. The Company has
not been required to perform on any of these guarantees for the year ended
December 31, 2007.
Contingencies
In the
normal course of business, the Company is involved in various legal
proceedings. In the opinion of management, any liability resulting
from such proceedings would not have a material effect on the Company's
financial statements.
NOTE
18. CONCENTRATIONS
OF CREDIT
The Bank
makes commercial, residential, construction, agricultural, agribusiness and
consumer loans to customers primarily in Georgia, northern Florida, Alabama and
South Carolina. A substantial portion of the customers' abilities to
honor their contracts is dependent on the business economy in the geographical
area served by the Bank.
A
substantial portion of the Company's loans are secured by real estate in the
Company's primary market area. In addition, a substantial portion of
the other real estate owned is located in those same
markets. Accordingly, the ultimate collectability of a substantial
portion of the Company's loan portfolio and the recovery of a substantial
portion of the carrying amount of other real estate owned are susceptible to
changes in real estate conditions in the Company's primary market
area.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE
19. REGULATORY
MATTERS
The Bank
is subject to certain restrictions on the amount of dividends that may be
declared without prior regulatory approval. At December 31, 2007,
approximately $9,100,000 of retained earnings were available for dividend
declaration without regulatory approval.
The
Company and the Bank are 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 Company's and Bank's financial
statements. Under capital adequacy guidelines and the regulatory
framework for prompt corrective action, the Company and the Bank must meet
specific capital guidelines that involve quantitative measures of their assets,
liabilities and certain off-balance-sheet items as calculated under regulatory
accounting practices. 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
Company and the Bank to maintain minimum amounts and ratios of total and Tier I
capital, as defined by the regulations, to risk-weighted assets, as defined, and
of Tier I capital to average assets, as defined. Management believes,
as of December 31, 2007 and 2006, the Company and the Bank met all capital
adequacy requirements to which they are subject.
As of
December 31, 2007, the most recent notification from the regulatory authorities
categorized the Bank as well capitalized under the regulatory framework for
prompt corrective action. To be categorized as well capitalized, the
Bank must maintain minimum total risk-based, Tier I risk-based and Tier I
leverage ratios as set forth in the following table. There are no
conditions or events since that notification that management believes have
changed the Bank’s category. Prompt corrective action provisions are
not applicable to bank holding companies.
The
Company’s and Bank’s actual capital amounts and ratios are presented in the
following table.
|
|
|
|
|
|
|
For
Capital |
|
|
To
Be Well Capitalized
|
|
|
|
|
|
|
|
|
Adequacy
|
|
|
Under
Prompt Corrective
|
|
|
|
Actual
|
|
|
Purposes
|
|
|
Action
Provisions
|
|
|
|
Amount
|
|
Ratio
|
|
|
Amount
|
|
Ratio
|
|
|
Amount
|
|
Ratio
|
|
As
of December 31, 2007
|
|
(Dollars
in Thousands)
|
|
Total
Capital to Risk Weighted Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
$
|
191,950
|
|
11.59
|
%
|
|
$
|
132,525
|
|
8.00
|
%
|
|
-
- -N/A - - -
|
|
Ameris
Bank
|
|
$
|
193,220
|
|
11.68
|
%
|
|
$
|
133,343
|
|
8.00
|
%
|
|
$
|
166,679
|
|
10.00
|
%
|
Tier
I Capital to Risk Weighted Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
$
|
171,331
|
|
10.34
|
%
|
|
$
|
66,263
|
|
4.00
|
%
|
|
-
- -N/A - - -
|
|
Ameris
Bank
|
|
$
|
172,630
|
|
10.44
|
%
|
|
$
|
66,172
|
|
4.00
|
%
|
|
$
|
99,258
|
|
6.00
|
%
|
Tier
I Capital to Average Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
$
|
171,331
|
|
8.39
|
%
|
|
$
|
81,719
|
|
4.00
|
%
|
|
-
- -N/A - - -
|
|
Ameris
Bank
|
|
$
|
172,630
|
|
8.47
|
%
|
|
$
|
81,566
|
|
4.00
|
%
|
|
$
|
101,958
|
|
5.00
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
To
Be Well Capitalized
|
|
|
|
|
|
|
|
|
For
Capital Adequacy
|
|
|
Under
Prompt Corrective
|
|
|
|
Actual
|
|
|
Purposes
|
|
|
Action
Provisions
|
|
|
|
Amount
|
|
Ratio
|
|
|
Amount
|
|
Ratio
|
|
|
Amount
|
|
Ratio
|
|
As
of December 31, 2006
|
|
(Dollars
in Thousands)
|
|
Total
Capital to Risk Weighted Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
$
|
180,676
|
|
11.92
|
%
|
|
$
|
121,305
|
|
8.00
|
%
|
|
- -
-N/A - - -
|
|
Ameris
Bank
|
|
$
|
180,675
|
|
11.94
|
%
|
|
$
|
121,089
|
|
8.00
|
%
|
|
$
|
151,361
|
|
10.00
|
%
|
Tier
I Capital to Risk Weighted Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
$
|
161,797
|
|
10.67
|
%
|
|
$
|
60,653
|
|
4.00
|
%
|
|
- -
-N/A - - -
|
|
Ameris
Bank
|
|
$
|
161,830
|
|
10.69
|
%
|
|
$
|
60,545
|
|
4.00
|
%
|
|
$
|
90,817
|
|
6.00
|
%
|
Tier
I Capital to Average Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
$
|
161,797
|
|
8.58
|
%
|
|
$
|
75,452
|
|
4.00
|
%
|
|
- -
-N/A - - -
|
|
Ameris
Bank
|
|
$
|
161,830
|
|
8.64
|
%
|
|
$
|
74,954
|
|
4.00
|
%
|
|
$
|
93,693
|
|
5.00
|
%
|
NOTE
20. FAIR
VALUE OF FINANCIAL INSTRUMENTS
The fair
value of a financial instrument is the current amount that would be exchanged
between willing parties, other than in a forced liquidation. Fair
value is best determined based upon quoted market prices. However, in
many instances, there are no quoted market prices for the Company’s various
financial instruments. In cases where quoted market prices are not
available, fair value is based on discounted cash flows or other valuation
techniques. These techniques are significantly affected by the
assumptions used, including the discount rate and estimates of future cash
flows. Accordingly, the fair value estimates may not be realized in
an immediate settlement of the instrument. SFAS 107, Disclosures about Fair Value of
Financial Instruments, excludes certain financial instruments and all
nonfinancial instruments from its disclosure
requirements. Accordingly, the aggregate fair value amounts presented
may not necessarily represent the underlying fair value of the
Company.
The
following methods and assumptions were used by the Company in estimating the
fair value of its financial instruments.
|
Cash, Due From Banks,
Interest-Bearing Deposits in Banks and Federal Funds
Sold: The carrying amount of cash, due from banks and
interest-bearing deposits in banks and federal funds sold approximates
fair value.
|
|
Securities: Fair
value of securities is based on available quoted market
prices. The carrying amount of equity securities with no
readily determinable fair value approximates fair
value.
|
|
Loans: The
carrying amount of variable-rate loans that reprice frequently and have no
significant change in credit risk approximates fair value. The
fair value of fixed-rate loans is estimated based on discounted
contractual cash flows, using interest rates currently being offered for
loans with similar terms to borrowers with similar credit
quality. The fair value of impaired loans is estimated based on
discounted contractual cash flows or underlying collateral values, where
applicable.
|
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE
20. FAIR
VALUE OF FINANCIAL INSTRUMENTS (Continued)
|
Deposits: The carrying amount of
demand deposits, savings deposits and variable-rate certificates of
deposit approximates fair
value. The fair value of fixed-rate certificates of
deposit is estimated based on discounted contractual cash flows using
interest rates currently being offered for certificates of similar
maturities.
|
|
Repurchase Agreements and Other
Borrowings: The carrying amount of variable rate
borrowings and securities sold under repurchase agreements approximates
fair value. The fair value
of fixed rate other borrowings is estimated based on discounted
contractual cash flows using the current incremental borrowing rates for
similar type borrowing
arrangements.
|
|
Subordinated Deferrable
Interest Debentures: The carrying amount of the Company’s variable
rate trust preferred securities approximates fair
value.
|
|
Accrued
Interest: The carrying amount of accrued interest
approximates fair value.
|
|
Off-Balance-Sheet
Instruments: The carrying amount of commitments to
extend credit and standby letters of credit approximates fair
value. The carrying amount of the off-balance-sheet
financial instruments is based on fees charged to enter into such
agreements.
|
|
Interest Rate
Floors: The cash flow hedges are carried at their fair
value
|
The carrying amount and estimated fair
value of the Company's financial instruments, not shown elsewhere in these
financial statements, were as follows:
|
|
December
31, 2007
|
|
|
December
31, 2006
|
|
|
|
Carrying
|
|
|
Fair
|
|
|
Carrying
|
|
|
Fair
|
|
|
|
Amount
|
|
|
Value
|
|
|
Amount
|
|
|
Value
|
|
|
|
(Dollars
in Thousands)
|
|
Financial
assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans,
net
|
|
$
|
1,586,408
|
|
|
$
|
1,592,465
|
|
|
$
|
1,418,088
|
|
|
$
|
1,410,168
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial
liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
1,757,265
|
|
|
|
1,760,069
|
|
|
|
1,710,163
|
|
|
|
1,710,074
|
|
Other
borrowings
|
|
|
90,500
|
|
|
|
89,558
|
|
|
|
75,500
|
|
|
|
75,554
|
|
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE
21. CONDENSED
FINANCIAL INFORMATION OF AMERIS BANCORP
(PARENT COMPANY ONLY)
CONDENSED
BALANCE SHEETS
|
|
DECEMBER
31, 2007 AND 2006
|
|
(Dollars
in Thousands)
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2006
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
Cash
and due from banks
|
|
$
|
2,809
|
|
|
$
|
6,812
|
|
Investment
in subsidiaries
|
|
|
233,548
|
|
|
|
220,439
|
|
Other
assets
|
|
|
4,758
|
|
|
|
6,414
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$
|
241,115
|
|
|
$
|
233,665
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
Other
borrowings
|
|
$
|
5,000
|
|
|
$
|
5,000
|
|
Other
liabilities
|
|
|
2,597
|
|
|
|
7,664
|
|
Subordinated
deferrable interest debentures
|
|
|
42,269
|
|
|
|
42,269
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
|
49,866
|
|
|
|
54,933
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity
|
|
|
191,249
|
|
|
|
178,732
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities and stockholders' equity
|
|
$
|
241,115
|
|
|
$
|
233,665
|
|
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE
21. CONDENSED
FINANCIAL INFORMATION OF AMERIS BANCORP
(PARENT COMPANY ONLY) (Continued)
CONDENSED
STATEMENTS OF INCOME
|
|
YEARS
ENDED DECEMBER 31, 2007, 2006 AND 2005
|
|
(Dollars
in Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
|
|
|
|
|
|
|
|
Income
|
|
|
|
|
|
|
|
|
|
Dividends
from subsidiaries
|
|
$
|
9,000
|
|
|
$
|
6,840
|
|
|
$
|
11,952
|
|
Interest
on deposits in other banks
|
|
|
-
|
|
|
|
-
|
|
|
|
254
|
|
Fee
income from subsidiaries
|
|
|
-
|
|
|
|
2,777
|
|
|
|
11,244
|
|
Other
income
|
|
|
277
|
|
|
|
3,386
|
|
|
|
1,936
|
|
Total
income
|
|
|
9,277
|
|
|
|
13,003
|
|
|
|
25,386
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expense
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
|
|
|
3,534
|
|
|
|
4,122
|
|
|
|
3,530
|
|
Amortization
and depreciation
|
|
|
-
|
|
|
|
-
|
|
|
|
736
|
|
Business
restructuring expense
|
|
|
-
|
|
|
|
-
|
|
|
|
2,838
|
|
Other
expense
|
|
|
1,255
|
|
|
|
2,668
|
|
|
|
15,362
|
|
Total
expense
|
|
|
4,789
|
|
|
|
6,790
|
|
|
|
22,466
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
before income tax benefits and
|
|
|
|
|
|
|
|
|
|
|
|
|
equity
in undistributed earnings of subsidiaries
|
|
|
4,488
|
|
|
|
6,213
|
|
|
|
2,920
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
tax benefits
|
|
|
1,526
|
|
|
|
175
|
|
|
|
3,258
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
before equity in undistributed earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
of
subsidiaries
|
|
|
6,014
|
|
|
|
6,388
|
|
|
|
6,178
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
in undistributed earnings of subsidiaries
|
|
|
9,139
|
|
|
|
15,740
|
|
|
|
7,550
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$
|
15,153
|
|
|
$
|
22,128
|
|
|
$
|
13,728
|
|
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE
21. CONDENSED
FINANCIAL INFORMATION OF AMERIS BANCORP
(PARENT COMPANY ONLY) (Continued)
CONDENSED
STATEMENTS OF CASH FLOWS
|
|
YEARS
ENDED DECEMBER 31, 2007, 2006 AND 2005
|
|
(Dollars
in Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
ACTIVITIES
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$
|
15,153
|
|
|
$
|
22,128
|
|
|
$
|
13,728
|
|
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
-
|
|
|
|
-
|
|
|
|
736
|
|
Stock-based
compensation expense
|
|
|
1,095
|
|
|
|
823
|
|
|
|
321
|
|
Undistributed
earnings of subsidiaries
|
|
|
(9,139
|
)
|
|
|
(15,740
|
)
|
|
|
(7,550
|
)
|
Decrease
in interest receivable
|
|
|
-
|
|
|
|
-
|
|
|
|
3
|
|
Increase
(decrease) in interest payable
|
|
|
106
|
|
|
|
(106
|
)
|
|
|
10
|
|
Increase
in tax receivable
|
|
|
(1,658
|
)
|
|
|
(177
|
)
|
|
|
(1,190
|
)
|
Provision
for deferred taxes
|
|
|
61
|
|
|
|
201
|
|
|
|
(180
|
)
|
(Increase)
decrease in due from subsidiaries
|
|
|
(40
|
)
|
|
|
166
|
|
|
|
(90
|
)
|
Other
operating activities
|
|
|
(2,089
|
)
|
|
|
(1,296
|
)
|
|
|
3,169
|
|
Total
adjustments
|
|
|
(11,664
|
)
|
|
|
(13,537
|
)
|
|
|
(4,771
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash provided by operating activities
|
|
|
3,489
|
|
|
|
8,591
|
|
|
|
8,957
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INVESTING
ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
Decrease
in interest-bearing deposits in banks
|
|
|
-
|
|
|
|
-
|
|
|
|
4,546
|
|
Purchases
of premises and equipment
|
|
|
-
|
|
|
|
(3
|
)
|
|
|
(587
|
)
|
Proceeds
from sale of fixed assets
|
|
|
-
|
|
|
|
3,884
|
|
|
|
-
|
|
Contribution
of capital to subsidiary bank
|
|
|
-
|
|
|
|
-
|
|
|
|
(325
|
)
|
Net
cash paid for acquisitions
|
|
|
-
|
|
|
|
(5,120
|
)
|
|
|
(13,073
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash used in investing activities
|
|
|
-
|
|
|
|
(1,239
|
)
|
|
|
(9,439
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCING
ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
Repayment
of other borrowings
|
|
|
-
|
|
|
|
-
|
|
|
|
(219
|
)
|
Proceeds
from subordinated debentures, net
|
|
|
-
|
|
|
|
1,547
|
|
|
|
5,000
|
|
Purchase
of treasury shares
|
|
|
(176
|
)
|
|
|
(112
|
)
|
|
|
(261
|
)
|
Dividends
paid
|
|
|
(7,510
|
)
|
|
|
(7,288
|
)
|
|
|
(6,355
|
)
|
Reduction
in income taxes payable resulting from
|
|
|
|
|
|
|
|
|
|
|
|
|
vesting
of restricted shares
|
|
|
18
|
|
|
|
40
|
|
|
|
53
|
|
Payment
for fractional shares
|
|
|
-
|
|
|
|
-
|
|
|
|
(19
|
)
|
Proceeds
from exercise of stock options
|
|
|
176
|
|
|
|
408
|
|
|
|
945
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash used in financing activities
|
|
|
(7,492
|
)
|
|
|
(5,405
|
)
|
|
|
(856
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
increase (decrease) in cash and due from banks
|
|
|
(4,003
|
)
|
|
|
1,947
|
|
|
|
(1,338
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and due from banks at beginning of year
|
|
|
6,812
|
|
|
|
4,865
|
|
|
|
6,203
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and due from banks at end of year
|
|
$
|
2,809
|
|
|
$
|
6,812
|
|
|
$
|
4,865
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
paid during the year for interest
|
|
$
|
3,428
|
|
|
$
|
4,224
|
|
|
$
|
3,520
|
|