NOTE 3. ASSETS ACQUIRED IN FDIC-ASSISTED ACQUISITIONS

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


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

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of the acquisitions, as well as key elements of the purchase and assumption agreements between the FDIC and the Bank (in thousands):


	AUB		USB		SCB		FBJ		TBC		DBT		HTB		OGB		CBG		MBT


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


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


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

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


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

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 anniversary during the fourth quarter of 2014 and losses will no longer be reimbursed. The remaining NSF assets for these two agreements have been reclassified to purchased non-covered loans and purchased non-covered other real estate owned.

The failed bank bidding process was a competitive process and the FDIC offered a variety of reimbursement structures. The AUB and USB agreements were structured to reimburse combined SFR and NSF losses up to a threshold at 80% ($38 million for AUB and $46 million for USB) with losses in excess of the threshold reimbursed at 95%. For SCB, FBJ, TBC, HTB, OGB, and CBG all losses under the agreements are reimbursed at 80%. For DBT, the losses under the SFR and NSF agreements have separate thresholds and reimbursement percentages. Under the SFR agreement, losses up to $8.4 million were reimbursed at 80%, losses between $8.4 million and $11.8 million were reimbursed at 30%, and losses in excess of $11.8 million will be reimbursed at 80%. Under this agreement, losses of $14.5 million have been incurred and all future losses will be reimbursed at 80%. Under the NSF agreement, losses up to $123.4 million will be reimbursed at 80%, losses between $123.4 million and $181.3 million will be reimbursed at 30%, and losses in excess of $181.3 million will be reimbursed at 80%. Under this agreement, losses of $110.2 million have been incurred. MBT did not have a loss sharing agreement.

The results of operations of CBG and MBT subsequent to the acquisition date are included in the Company’s consolidated statements of 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, 2012, unadjusted for potential cost savings (in thousands).


	Year Ended December 31, 2012
Net interest income and noninterest income	$	176,262
Net loss	$	(10,233)
Net loss available to common shareholders	$	(13,810)
Loss per common share available to common shareholders – basic and diluted	$	(0.58)
Average number shares outstanding, basic		23,816
Average number shares outstanding, diluted		23,857

The CBG acquisition resulted in a gain of $20.0 million, before tax, which is included in the Company’s December 31, 2012 consolidated statement of income. Due to the difference in tax bases of the assets acquired and liabilities assumed, the Bank recorded a deferred tax liability of $7.0 million, resulting in an after-tax gain of $13.0 million during 2012. The MBT acquisition did not result in a gain or loss during 2012.

The following table presents the loans receivable (in thousands) at the 2012 acquisition date for loans with deterioration in credit quality.


2012 Acquisitions:	CBG		MBT		Total

	(Dollars in Thousands)
Contractually required principal payments receivable	$	137,407	$	-	$	137,407
Non-accretable difference		53,603		-		53,603

Present value of cash flows expected to be collected		83,804		-		83,804
Accretable difference		10,390		-		10,390

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

The following table summarizes components of all covered assets at December 31, 2014 and 2013 and their origin. The FDIC loss-share receivable is shown net of the clawback liability.


	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 December 31, 2014:	(Dollars in thousands)

AUB	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	188

USB		4,350		150		4,200		165		-		165		4,365		(1,197)

SCB		26,686		602		26,084		2,849		389		2,460		28,544		1,828

FBJ		21,243		1,825		19,418		632		0		632		20,050		1,885

DBT		64,338		6,437		57,901		6,655		514		6,141		64,042		6,860

TBC		23,487		1,117		22,370		2,388		367		2,021		24,391		3,287

HTB		52,699		5,120		47,579		3,670		1,283		2,387		49,966		6,459

OGB		42,971		3,785		39,186		2,244		39		2,205		41,391		3,906

CBG		60,950		6,409		54,541		4,805		909		3,896		58,437		8,135


Total	$	296,724	$	25,445	$	271,279	$	23,408	$	3,501	$	19,907	$	291,186	$	31,351


As of December 31, 2013:

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

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

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

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

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

TBC		32,590		2,354		30,236		4,844		745		4,099		34,335		3,721

HTB		67,126		7,359		59,767		6,374		2,304		4,070		63,837		9,325

OGB		58,512		5,067		53,445		7,506		2,984		4,522		57,967		9,645

CBG		85,118		13,615		71,503		7,610		1,933		5,677		77,180		14,821


Total	$	443,322	$	53,085	$	390,237	$	55,827	$	9,934	$	45,893	$	436,130	$	65,441

A rollforward of acquired covered loans for the years ended December 31, 2014 and 2013 is shown below:


(Dollars in Thousands)	2014		2013
Balance, January 1	$	390,237	$	507,712
Charge-offs, net of recoveries		(9,255)		(7,695)
Accretion		22,188		42,208
Transfers to covered other real estate owned		(13,650)		(31,833)
Transfer to purchased, non-covered loans due to loss share expiration		(15,475)		-
Payments received		(102,996)		(120,155)
Other		230		-

Ending balance	$	271,279	$	390,237

The following is a summary of changes in the accretable discounts of acquired covered loans during the years ended December 31, 2014 and 2013:


	2014			2013
	(Dollars in Thousands)
Balance, beginning of year	$	25,493		$	16,698
Accretion		(22,188	)		(42,208	)
Transfers between non-accretable and accretable discounts, net		12,273			51,003

Balance, end of year	$	15,578		$	25,493

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 December 31, 2014 and 2013, the Company has recorded a clawback liability of $6.2 million and $5.0 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 loss-share receivable are as follows:


	For the Years Ended December 31,
	2014			2013
	(Dollars in Thousands)

Beginning balance	$	65,441		$	159,724

Payments received from FDIC		(22,494	)		(68,822	)
Accretion (amortization)		(18,449	)		(34,533	)
Change in clawback liability		(1,222	)		(3,398	)
Increase in receivable due to:
Charge-offs on covered loans		3,372			6,156
Write downs of covered other real estate owned		4,771			13,117
Reimbursable expenses on covered assets		1,078			5,820
Other activity, net		(1,146	)		(12,623	)

Ending balance	$	31,351		$	65,441