NOTE 5 – ASSETS ACQUIRED IN FDIC-ASSISTED ACQUISITIONS

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

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

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

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

Each acquisition with loss-sharing agreements has separate agreements for the single family residential assets (“SFR”) and the non-single family assets (“NSF”). The SFR agreements cover losses and recoveries for ten years. The NSF agreements are for eight years. During the first five years, losses and recoveries are covered. During the final three years, only recoveries, net of expenses, are covered. The AUB SFR agreement was terminated during 2012 and Ameris received a payment of $87,000. The AUB and USB NSF agreements passed their five-year anniversaries during the fourth quarter of 2014, the SCB NSF agreement passed its five-year anniversary during the second quarter of 2015 and the FBJ, TBC and DBT NSF agreements passed their five-year anniversaries during the fourth quarter of 2015. Losses will no longer be reimbursed on these agreements. The remaining NSF assets for these six agreements have been reclassified to purchased non-covered loans and purchased non-covered other real estate owned.

At March 31, 2016, the Company’s FDIC loss-sharing receivable totaled $1.2 million, which is comprised of $5.1 million in indemnification asset (for reimbursements associated with anticipated losses in future quarters) and $4.4 million in current charge-offs and expenses already incurred but not yet submitted for reimbursement, less the accrued clawback liability of $8.3 million.

The following table summarizes components of all covered assets at March 31, 2016, December 31, 2015 and March 31, 2015 and their origin:

	Covered loans		Less: Fair value adjustments		Total covered loans		OREO		Less: Fair value adjustments		Total covered OREO		Total covered assets		FDIC loss-share receivable (payable)
As of March 31, 2016:
AUB	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	261
USB		3,561		(14)		3,547		-		-		-		3,547		(1,590)
SCB		5,187		(87)		5,100		-		-		-		5,100		138
FBJ		4,498		(541)		3,957		68		-		68		4,025		(20)
DBT		15,147		(1,000)		14,147		-		-		-		14,147		(3,451)
TBC		2,027		(10)		2,017		-		-		-		2,017		94
HTB		43,996		(3,750)		40,246		1,451		(328)		1,123		41,369		3,079
OGB		22,512		(1,249)		21,263		136		-		136		21,399		556
CBG		42,895		(2,893)		40,002		2,602		(165)		2,437		42,439		2,130
Total	$	139,823	$	(9,544)	$	130,279	$	4,257	$	(493)	$	3,764	$	134,043	$	1,197

	Covered loans		Less: Fair value adjustments		Total covered loans		OREO		Less: Fair value adjustments		Total covered OREO		Total covered assets		FDIC loss-share receivable (payable)
As of December 31, 2015:

AUB	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	111

USB		3,639		16		3,623		165		-		165		3,788		(1,424)

SCB		5,228		124		5,104		-		-		-		5,104		149

FBJ		4,782		562		4,220		41		-		41		4,261		252

DBT		15,934		1,131		14,803		-		-		-		14,803		(1,084)

TBC		2,159		11		2,148		-		-		-		2,148		1,446

HTB		44,405		3,881		40,524		2,433		643		1,790		42,314		3,875

OGB		27,561		1,900		25,661		160		-		160		25,821		913

CBG		44,865		3,419		41,446		3,139		284		2,855		44,301		2,063

Total	$	148,573	$	11,044	$	137,529	$	5,938	$	927	$	5,011	$	142,540	$	6,301

	Covered loans		Less: Fair value adjustments		Total covered loans		OREO		Less: Fair value adjustments		Total covered OREO		Total covered assets		FDIC loss-share receivable
As of March 31, 2015:

AUB	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	248

USB		4,031		19		4,012		165		-		165		4,177		(1,216)

SCB		23,803		512		23,291		2,474		389		2,085		25,376		2,093

FBJ		19,409		1,539		17,870		427		56		371		18,241		1,366

DBT		53,832		4,740		49,092		5,716		381		5,335		54,427		3,576

TBC		21,068		570		20,498		1,698		162		1,536		22,034		1,545

HTB		48,384		4,331		44,053		2,885		938		1,947		46,000		7,069

OGB		38,699		2,409		36,290		1,435		39		1,396		37,686		2,748

CBG		56,262		5,623		50,639		3,731		477		3,254		53,893		5,883

Total	$	265,488	$	19,743	$	245,745	$	18,531	$	2,442	$	16,089	$	261,834	$	23,312

A rollforward of acquired covered loans for the three months ended March 31, 2016, the year ended December 31, 2015 and the three months ended March 31, 2015 is shown below:

(Dollars in Thousands)	March 31, 2016		December 31, 2015		March 31, 2015
Balance, January 1	$	137,529	$	271,279	$	271,279
Charge-offs		(361)		(5,558)		(2,812)
Accretion		1,487		9,658		4,466
Transfer to covered other real estate owned		(158)		(7,910)		(1,230)
Transfer to purchased, non-covered loans due to loss-share expiration		-		(50,568)		-
Payments received		(8,218)		(79,372)		(25,958)
Ending balance	$	130,279	$	137,529	$	245,745

The following is a summary of changes in the accretable discounts of acquired loans during the three months ended March 31, 2016, the year ended December 31, 2015 and the three months ended March 31, 2015:

(Dollars in Thousands)	March 31, 2016		December 31, 2015		March 31, 2015
Balance, January 1	$	9,063	$	15,578	$	15,578
Accretion		(1,487)		(9,658)		(4,466)
Transfer to purchased, non-covered loans due to loss-share expiration		-		(1,665)		-
Transfers between non-accretable and accretable discounts, net		366		4,808		1,853
Ending balance	$	7,942	$	9,063	$	12,965

The shared-loss agreements are subject to the servicing procedures as specified in the agreement with the FDIC. The expected reimbursements under the shared-loss agreements were recorded as an indemnification asset at their estimated fair values on the acquisition dates. As of March 31, 2016, December 31, 2015 and March 31, 2015, the Company has recorded a clawback liability of $8.3 million, $8.2 million and $6.8 million, respectively, which represents the obligation of the Company to reimburse the FDIC should actual losses be less than certain thresholds established in each loss-share agreement. Changes in the FDIC shared-loss receivable for the three months ended March 31, 2016, for the year ended December 31, 2015 and for the three months ended March 31, 2015 are as follows:

(Dollars in Thousands)	March 31, 2016		December 31, 2015		March 31, 2015
Beginning balance, January 1	$	6,301	$	31,351	$	31,351
Payments received from FDIC		(3,299)		(19,273)		(6,390)
Amortization, net		(1,545)		(8,878)		(3,666)
Change in clawback liability		(91)		(2,008)		(569)
Increase in receivable due to:
Charge-offs on covered loans		(673)		416		1,602
Write downs of covered other real estate		581		4,752		804
Reimbursable expenses on covered assets		244		2,582		651
Other activity, net		(321)		(2,641)		(471)
Ending balance	$	1,197	$	6,301	$	23,312