BUSINESS COMBINATIONS

In accounting for business combinations, the Company uses the acquisition method of accounting in accordance with ASC 805, Business Combinations. Under the acquisition method of accounting, assets acquired, liabilities assumed and consideration exchanged are recorded at their respective acquisition date fair values. Any identifiable intangible assets that are acquired in a business combination are recognized at fair value on the acquisition date. Identifiable intangible assets are recognized separately if they arise from contractual or other legal rights or if they are separable (i.e., capable of being sold, transferred, licensed, rented or exchanged separately from the entity). If the consideration given exceeds the fair value of the net assets received, goodwill is recognized. Determining the fair value of assets and liabilities is a complicated process involving significant judgment regarding methods and assumptions used to calculate estimated fair values. Fair values are subject to refinement for up to one year after the closing date of the acquisition as additional information regarding the closing date fair values becomes available. In addition, management will assess and record the deferred tax assets and deferred tax liabilities resulting from differences in the carrying value of acquired assets and assumed liabilities for financial reporting purposes and their basis for income tax purposes, including acquired net operating loss carryforwards and other acquired assets with built-in losses that are expected to be settled or otherwise recovered in future periods where the realization of such benefits would be subject to applicable limitations under Section 382 of the Internal Revenue Code of 1986, as amended.

Hamilton State Bancshares, Inc.

On June 29, 2018, the Company completed its acquisition of Hamilton State Bancshares, Inc. ("Hamilton"), a bank holding company headquartered in Hoschton, Georgia. Upon consummation of the acquisition, Hamilton was merged with and into the Company, with Ameris as the surviving entity in the merger. At that time, Hamilton's wholly owned banking subsidiary, Hamilton State Bank, was also merged with and into the Bank. The acquisition expanded the Company's existing market presence, as Hamilton State Bank had a total of 28 full-service branches located in Atlanta, Georgia and the surrounding area, as well as in Gainesville, Georgia. Under the terms of the merger agreement, Hamilton's shareholders received 0.16 shares of Ameris common stock and $0.93 in cash for each share of Hamilton voting common stock or nonvoting common stock they previously held. As a result, the Company issued 6,548,385 common shares at a fair value of $349.4 million and paid $47.7 million in cash to the former shareholders of Hamilton as merger consideration.

As of June 30, 2018, the Company recorded a preliminary allocation of the purchase price to Hamilton's tangible and identifiable intangible assets acquired and liabilities assumed based on estimated fair values as of June 29, 2018. The following table presents the assets acquired and liabilities assumed of Hamilton as of June 29, 2018, and their fair value estimates. The Company continues its evaluation of the facts and circumstances available as of June 29, 2018, to assign fair values to assets acquired and liabilities assumed which could result in further adjustments to the fair values presented below. Because final external valuations were not complete as of June 30, 2018, management continues to evaluate fair value adjustments related to loans, premises, intangibles, interest-bearing deposits, subordinated deferrable interest debentures and deferred tax assets.



(dollars in thousands)	As Recorded by Hamilton			Initial Fair Value Adjustments				As Recorded by Ameris
Assets
Cash and due from banks	$	14,405		$	—			$	14,405
Federal funds sold and interest-bearing deposits in banks	102,156			—				102,156
Time deposits in other banks	11,558			—				11,558
Investment securities	288,206			(2,376		)	(a)	285,830
Other investments	2,094			—				2,094
Loans	1,314,264			(15,528		)	(b)	1,298,736
Less allowance for loan losses	(11,183		)	11,183			(c)	—
Loans, net	1,303,081			(4,345		)		1,298,736
Other real estate owned	847			—				847
Premises and equipment	27,483			—				27,483
Other intangible assets, net	18,755			(2,755		)	(d)	16,000
Cash value of bank owned life insurance	4,454			—				4,454
Deferred income taxes, net	12,445			(6,308		)	(e)	6,137
Other assets	13,053			—				13,053
Total assets	$	1,798,537		$	(15,784	)		$	1,782,753
Liabilities
Deposits:
Noninterest-bearing	$	381,039		$	—			$	381,039
Interest-bearing	1,201,324			(1,896		)	(f)	1,199,428
Total deposits	1,582,363			(1,896		)		1,580,467
Other borrowings	10,687			(66		)	(g)	10,621
Subordinated deferrable interest debentures	3,093			(658		)	(h)	2,435
Other liabilities	10,460			2,391			(i)	12,851
Total liabilities	1,606,603			(229		)		1,606,374
Net identifiable assets acquired over (under) liabilities assumed	191,934			(15,555		)		176,379
Goodwill	—			220,713				220,713
Net assets acquired over liabilities assumed	$	191,934		$	205,158			$	397,092
Consideration:
Ameris Bancorp common shares issued	6,548,385
Price per share of the Company's common stock	$	53.35
Company common stock issued	$	349,356
Cash exchanged for shares	$	47,736
Fair value of total consideration transferred	$	397,092

____________________________________________________________

Explanation of fair value adjustments


(a)	Adjustment reflects the fair value adjustments of the portfolio of investment securities as of the acquisition date.


(b)	Adjustment reflects the fair value adjustments based on the Company's evaluation of the acquired loan portfolio, net of the reversal of Hamilton's unamortized accounting adjustments from their prior acquisitions, loan premiums, loan discounts, deferred loan origination costs and deferred loan origination fees.


(c)	Adjustment reflects the elimination of Hamilton's allowance for loan losses.


(d)	Adjustment reflects the recording of core deposit intangible on the acquired core deposit accounts, net of reversal of Hamilton's remaining intangible assets from its past acquisitions.


(e)	Adjustment reflects the deferred taxes on the differences in the carrying values of acquired assets and assumed liabilities for financial reporting purposes and their basis for federal income tax purposes.


(f)	Adjustment reflects the fair value adjustments based on the Company's evaluation of the acquired deposits.


(g)	Adjustment reflects the reversal of Hamilton's unamortized accounting adjustments for other borrowings from its past acquisitions.


(h)	Adjustment reflects the fair value adjustment to the subordinated deferrable interest debenture at the acquisition date.


(i)	Adjustment reflects the fair value adjustment to the FDIC loss-share clawback liability included in other liabilities.

Goodwill of $220.7 million, which is the excess of the purchase price over the fair value of net assets acquired, was recorded in the Hamilton acquisition and is the result of expected operational synergies and other factors. This goodwill is not expected to be deductible for tax purposes.

In the acquisition, the Company purchased $1.30 billion of loans at fair value, net of $15.5 million, or 1.18%, estimated discount to the outstanding principal balance. Of the total loans acquired, management identified $18.8 million that were considered to be credit impaired and are accounted for under ASC Topic 310-30. The table below summarizes the total contractually required principal and interest cash payments, management’s estimate of expected total cash payments and fair value of the loans as of the acquisition date for purchased credit impaired loans. Contractually required principal and interest payments have been adjusted for estimated prepayments.



(dollars in thousands)
Contractually required principal and interest	$	21,223
Non-accretable difference	(1,614		)
Cash flows expected to be collected	19,609
Accretable yield	(794		)
Total purchased credit-impaired loans acquired	$	18,815

The following table presents the acquired loan data for the Hamilton acquisition.



(dollars in thousands)	Fair Value of Acquired Loans at Acquisition Date		Gross Contractual Amounts Receivable at Acquisition Date		Estimate at Acquisition Date of Contractual Cash Flows Not Expected to be Collected
Acquired receivables subject to ASC 310-30	$	18,815	$	21,223	$	1,614
Acquired receivables not subject to ASC 310-30	$	1,279,921	$	1,441,534	$	—

Atlantic Coast Financial Corporation

On May 25, 2018, the Company completed its acquisition of Atlantic Coast Financial Corporation ("Atlantic"), a bank holding company headquartered in Jacksonville, Florida. Upon consummation of the acquisition, Atlantic was merged with and into the Company, with Ameris as the surviving entity in the merger. At that time, Atlantic's wholly owned banking subsidiary, Atlantic Coast Bank, was also merged with and into the Bank. The acquisition expanded the Company's existing market presence, as Atlantic Coast Bank had a total of 12 full-service branches located in Jacksonville and Jacksonville Beach, Duval County, Florida, Waycross, Georgia and Douglas, Georgia. Under the terms of the merger agreement, Atlantic's shareholders received 0.17 shares of Ameris common stock and $1.39 in cash for each share of Atlantic common stock they previously held. As a result, the Company issued 2,631,520 common shares at a fair value of $147.8 million and paid $21.5 million in cash to the former shareholders of Atlantic as merger consideration.

As of June 30, 2018, the Company recorded a preliminary allocation of the purchase price to Atlantic's tangible and identifiable intangible assets acquired and liabilities assumed based on estimated fair values as of May 25, 2018. The following table presents the assets acquired and liabilities assumed of Atlantic as of May 25, 2018, and their fair value estimates. The Company continues its evaluation of the facts and circumstances available as of May 25, 2018, to assign fair values to assets acquired and liabilities assumed which could result in further adjustments to the fair values presented below. Because final external valuations were not complete as of June 30, 2018, management continues to evaluate fair value adjustments related to loans, intangibles, interest-bearing deposits and deferred tax assets.



(dollars in thousands)	As Recorded by Atlantic			Initial Fair Value Adjustments				As Recorded by Ameris
Assets
Cash and due from banks	$	3,990		$	—			$	3,990
Federal funds sold and interest-bearing deposits in banks	22,149			—				22,149
Investment securities	35,186			(60		)	(a)	35,126
Other investments	9,576			—				9,576
Loans held for sale	358			—				358
Loans	777,605			(19,423		)	(b)	758,182
Less allowance for loan losses	(8,573		)	8,573			(c)	—
Loans, net	769,032			(10,850		)		758,182
Other real estate owned	1,837			(796		)	(d)	1,041
Premises and equipment	12,591			(1,695		)	(e)	10,896
Other intangible assets, net	—			5,937			(f)	5,937
Cash value of bank owned life insurance	18,182			—				18,182
Deferred income taxes, net	5,782			709			(g)	6,491
Other assets	3,604			(634		)	(h)	2,970
Total assets	$	882,287		$	(7,389	)		$	874,898
Liabilities
Deposits:
Noninterest-bearing	$	69,761		$	—			$	69,761
Interest-bearing	514,935			(554		)	(i)	514,381
Total deposits	584,696			(554		)		584,142
Other borrowings	204,475			—				204,475
Other liabilities	8,367			(13		)	(j)	8,354
Total liabilities	797,538			(567		)		796,971
Net identifiable assets acquired over (under) liabilities assumed	84,749			(6,822		)		77,927
Goodwill	—			91,360				91,360
Net assets acquired over liabilities assumed	$	84,749		$	84,538			$	169,287
Consideration:
Ameris Bancorp common shares issued	2,631,520
Price per share of the Company's common stock	$	56.15
Company common stock issued	$	147,760
Cash exchanged for shares	$	21,527
Fair value of total consideration transferred	$	169,287

____________________________________________________________

Explanation of fair value adjustments


(a)	Adjustment reflects the fair value adjustments of the portfolio of investment securities as of the acquisition date.


(b)	Adjustment reflects the fair value adjustments based on the Company's evaluation of the acquired loan portfolio, net of the reversal of Atlantic's unamortized accounting adjustments from loan premiums, loan discounts, deferred loan origination costs and deferred loan origination fees.


(c)	Adjustment reflects the elimination of Atlantic's allowance for loan losses.


(d)	Adjustment reflects the fair value adjustment based on the Company's evaluation of the acquired OREO portfolio.


(e)	Adjustment reflects the fair value adjustments based on the Company's evaluation of the acquired premises and equipment.


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


(g)	Adjustment reflects the deferred taxes on the differences in the carrying values of acquired assets and assumed liabilities for financial reporting purposes and their basis for federal income tax purposes.


(h)	Adjustment reflects the fair value adjustments based on the Company's evaluation of the acquired other assets.


(i)	Adjustment reflects the fair value adjustments based on the Company's evaluation of the acquired deposits.


(j)	Adjustment reflects the fair value adjustments based on the Company's evaluation of the acquired other liabilities.

Goodwill of $91.4 million, which is the excess of the purchase price over the fair value of net assets acquired, was recorded in the Atlantic acquisition and is the result of expected operational synergies and other factors. This goodwill is not expected to be deductible for tax purposes.

In the acquisition, the Company purchased $758.2 million of loans at fair value, net of $19.4 million, or 2.50%, estimated discount to the outstanding principal balance. Of the total loans acquired, management identified $12.1 million that were considered to be credit impaired and are accounted for under ASC Topic 310-30. The table below summarizes the total contractually required principal and interest cash payments, management’s estimate of expected total cash payments and fair value of the loans as of the acquisition date for purchased credit impaired loans. Contractually required principal and interest payments have been adjusted for estimated prepayments.



(dollars in thousands)
Contractually required principal and interest	$	16,077
Non-accretable difference	(2,795		)
Cash flows expected to be collected	13,282
Accretable yield	(1,199		)
Total purchased credit-impaired loans acquired	$	12,083

The following table presents the acquired loan data for the Atlantic acquisition.



(dollars in thousands)	Fair Value of Acquired Loans at Acquisition Date		Gross Contractual Amounts Receivable at Acquisition Date		Estimate at Acquisition Date of Contractual Cash Flows Not Expected to be Collected
Acquired receivables subject to ASC 310-30	$	12,083	$	16,077	$	2,795
Acquired receivables not subject to ASC 310-30	$	746,099	$	1,041,768	$	—

US Premium Finance Holding Company

On January 31, 2018, the Company closed on the purchase of the final 70% of the outstanding shares of common stock of US Premium Finance Holding Company, a Florida corporation ("USPF"), completing its acquisition of USPF and making USPF a wholly owned subsidiary of the Company. Through a series of three acquisition transactions that closed on January 18, 2017, January 3, 2018 and January 31, 2018, the Company issued a total of 1,073,158 shares of its common stock at a fair value of $55.9 million and paid $21.4 million in cash to the former shareholders of USPF. Pursuant to the terms of the Stock Purchase Agreement dated January 25, 2018 under which Company purchased the final 70% of the outstanding shares of common stock of USPF, the selling shareholders of USPF may receive additional cash payments aggregating up to $5.8 million based on the achievement by the Company's premium finance division of certain income targets, between January 1, 2018 and June 30, 2019. As of the January 31, 2018 acquisition date, the present value of the contingent earn-out consideration expected to be paid was $5.7 million. Including the fair value of the Company's common stock issued, cash paid and the present value of the contingent earn-out consideration expected to be paid, the aggregate purchase price of USPF amounted to $83.0 million.

Prior to the January 31, 2018 completion of the acquisition, the Company's 30% investment in USPF was carried at its $23.9 million original cost basis. Once the acquisition was completed, the $83.0 million aggregate purchase price equaled the fair value of USPF which was determined utilizing the incremental projected earnings. Accordingly, no gain or loss was recorded by the Company in the consolidated statement of income and comprehensive income as a result of remeasuring to fair value the prior minority equity investment in USPF held by the Company immediately before the business combination was completed.

As of June 30, 2018, the Company recorded a preliminary allocation of the purchase price to USPF's assets acquired and liabilities assumed based on estimated fair values as of January 31, 2018. The assets acquired include only identifiable intangible assets related to insurance agent relationships that lead to referral of insurance premium finance loans to USPF, the US Premium Finance trade name and a non-compete agreement with a former USPF shareholder. The following table presents the assets acquired and liabilities assumed of USPF as of January 31, 2018, and their fair value estimates. The Company continues its evaluations of the facts and circumstances available as of January 31, 2018, to assign fair values to assets acquired and liabilities assumed which could result in further adjustments to the fair values presented below. Because the final external valuation was not complete as of June 30, 2018, management continues to evaluate fair value adjustments related to the insurance agent relationships intangible and the deferred tax liability.



(dollars in thousands)	As Recorded by USPF		Initial Fair Value Adjustments			As Recorded by Ameris
Assets
Intangible asset - insurance agent relationships	$	—	$	20,000	(a)	$	20,000
Intangible asset - US Premium Finance trade name	—		1,136		(b)	1,136
Intangible asset - non-compete agreement	—		178		(c)	178
Total assets	$	—	$	21,314		$	21,314
Liabilities
Deferred tax liability	$	—	$	5,492	(d)	$	5,492
Total liabilities	—		5,492			5,492
Net identifiable assets acquired over liabilities assumed	—		15,822			15,822
Goodwill	—		67,159			67,159
Net assets acquired over liabilities assumed	$	—	$	82,981		$	82,981
Consideration:
Ameris Bancorp common shares issued	1,073,158
Price per share of the Company's common stock (weighted average)	$	52.047
Company common stock issued	$	55,855
Cash exchanged for shares	$	21,421
Present value of contingent earn-out consideration expected to be paid	$	5,705
Fair value of total consideration transferred	$	82,981

____________________________________________________________

Explanation of fair value adjustments


(a)	Adjustment reflects the recording of the fair value of the insurance agent relationships intangible.


(b)	Adjustment reflect the recording of the fair value of the trade name intangible.


(c)	Adjustment reflects the recording of the fair value of the non-compete agreement intangible.


(d)	Adjustment reflects the deferred taxes on the differences in the carrying values of acquired intangible assets for financial reporting purposes and their basis for federal income tax purposes.

The preliminary allocation of the purchase price to identifiable intangible assets resulted in $1.3 million of amortization expense in the second quarter of 2018. If this allocation had been applied as of the acquisition date, $504,000 of this amount would have been recorded in the first quarter of 2018.

Goodwill of $67.2 million, which is the excess of the purchase price over the fair value of net assets acquired, was recorded in the USPF acquisition and is the result of expected operational synergies and other factors. This goodwill is not expected to be deductible for tax purposes.

During the second quarter of 2018, the Company recorded $2.0 million in other noninterest income in the consolidated statements of income and comprehensive income to reflect a decrease in the estimated contingent consideration liability. This decrease in the estimated contingent consideration liability was based on the results of the Premium Finance Division for the three months ended June 30, 2018.

Pro Forma Financial Information

The results of operations of Hamilton, Atlantic and USPF subsequent to their respective acquisition dates are included in the Company’s consolidated statements of income and comprehensive income. The following unaudited pro forma information reflects the Company’s estimated consolidated results of operations as if the acquisitions had occurred on January 1, 2017, unadjusted for potential cost savings.



	Three Months Ended June 30,				Six Months Ended June 30,
(dollars in thousands, except per share data; shares in thousands)	2018		2017		2018		2017
Net interest income and noninterest income	$	132,540	$	119,137	$	255,652	$	233,949
Net income	$	14,603	$	30,913	$	49,506	$	59,643
Net income available to common shareholders	$	14,603	$	30,913	$	49,506	$	59,643
Income per common share available to common shareholders – basic	$	0.31	$	0.65	$	1.04	$	1.28
Income per common share available to common shareholders – diluted	$	0.31	$	0.65	$	1.04	$	1.27
Average number of shares outstanding, basic	47,398		47,287		47,412		46,554
Average number of shares outstanding, diluted	47,676		47,614		47,689		46,881