UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-Q
(Mark
One)
|
x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For the
quarterly period ended June 30,
2009
OR
|
o
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
Commission
File Number: 001-13901
|
AMERIS
BANCORP
|
|
(Exact
name of registrant as specified in its
charter)
|
|
GEORGIA
|
58-1456434
|
|
|
(State
of incorporation)
|
(IRS
Employer ID No.)
|
|
310
FIRST STREET, S.E., MOULTRIE, GA 31768
|
|
(Address
of principal executive offices)
|
|
(229)
890-1111
|
|
(Registrant’s
telephone number)
|
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 x No o
Indicate
by check mark whether the Registrant has submitted electronically and posted on
its corporate Website, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding
12 months (or for such shorter period that the registrant was required to submit
and post such files). Yes o No 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. (Check one):
|
Large
accelerated filer o
|
Accelerated
filer x
|
Smaller
reporting company o
|
|
Non-accelerated
filer o (Do
not check if smaller reporting
company)
|
||
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 x
There
were 13,580,985 shares of Common Stock outstanding as of July 31,
2009.
-1-
AMERIS
BANCORP
|
PART
I - FINANCIAL INFORMATION
|
Page
|
|
|
Item
1.
|
Financial
Statements
|
|
|
3
|
||
|
4
|
||
|
5
|
||
|
6
|
||
|
Item
2.
|
21
|
|
|
Item
3.
|
38
|
|
|
Item
4.
|
39
|
|
|
PART
II - OTHER INFORMATION
|
||
|
Item
1.
|
40
|
|
|
Item
1A.
|
40
|
|
|
Item
2.
|
40
|
|
|
Item
3.
|
40
|
|
|
Item
4.
|
41
|
|
|
Item
5.
|
41
|
|
|
Item
6.
|
41
|
|
|
42
|
||
-2-
|
Item 1.
|
Financial
Statements
|
|
AMERIS
BANCORP AND SUBSIDIARIES
|
||||||||||||
|
(Dollars
in Thousands)
|
||||||||||||
|
June
30,
|
December
31,
|
June
30,
|
||||||||||
|
2009
|
2008
|
2008
|
||||||||||
|
(Unaudited)
|
(Audited)
|
(Unaudited)
|
||||||||||
|
Assets
|
||||||||||||
|
Cash
and due from banks
|
$
|
46,773
|
$
|
66,787
|
$
|
47,720
|
||||||
|
Federal
funds sold and interest bearing accounts
|
163,343
|
144,383
|
38,125
|
|||||||||
|
Investment
securities available for sale, at fair value
|
257,771
|
366,106
|
291,813
|
|||||||||
|
Other
investments
|
4,441
|
8,627
|
9,651
|
|||||||||
|
Loans
|
1,677,045
|
1,695,777
|
1,678,147
|
|||||||||
|
Less: allowance for loan losses
|
44,998
|
39,652
|
28,660
|
|||||||||
|
Loans,
net
|
1,632,047
|
1,656,125
|
1,649,487
|
|||||||||
|
Premises
and equipment, net
|
67,334
|
66,107
|
63,291
|
|||||||||
|
Intangible
assets, net
|
3,339
|
3,631
|
4,217
|
|||||||||
|
Goodwill
|
54,813
|
54,813
|
54,813
|
|||||||||
| Other real estate owned | 19,180 | 4,742 | 2,222 | |||||||||
|
Other
assets
|
36,204
|
35,769
|
31,682
|
|||||||||
|
Total assets
|
$
|
2,285,245
|
$
|
2,407,090
|
$
|
2,193,021
|
||||||
|
Liabilities
and Stockholders' Equity
|
||||||||||||
|
Deposits:
|
||||||||||||
|
Noninterest-bearing
|
$
|
210,456
|
$
|
208,532
|
$
|
200,936
|
||||||
|
Interest-bearing
|
1,765,915
|
1,804,993
|
1,569,925
|
|||||||||
|
Total
deposits
|
1,976,371
|
2,013,525
|
1,770,861
|
|||||||||
|
Federal
funds purchased and securities sold under agreements to
repurchase
|
16,484
|
27,416
|
39,795
|
|||||||||
|
Other
borrowings
|
7,000
|
72,000
|
133,000
|
|||||||||
|
Other
liabilities
|
9,967
|
12,521
|
14,541
|
|||||||||
|
Subordinated
deferrable interest debentures
|
42,269
|
42,269
|
42,269
|
|||||||||
|
Total liabilities
|
2,052,091
|
2,167,731
|
2,000,466
|
|||||||||
|
Stockholders'
Equity
|
||||||||||||
|
Preferred
stock, par value$1; 5,000,000 shares authorized; 52,000 shares
issued
|
49,279
|
49,028
|
-
|
|||||||||
|
Common
stock, par value $1; 30,000,000 shares authorized; 14,915,209,
14,865,703 and 14,886,967 issued
|
14,915
|
14,866
|
14,895
|
|||||||||
|
Capital
surplus
|
86,286
|
86,038
|
83,308
|
|||||||||
|
Retained
earnings
|
87,451
|
93,696
|
105,430
|
|||||||||
|
Accumulated
other comprehensive income
|
6,033
|
6,518
|
(291
|
)
|
||||||||
|
Treasury
stock, at cost, 1,334,030, 1,331,102 and 1,330,197
shares
|
(10,810
|
)
|
(10,787
|
)
|
(10,787
|
)
|
||||||
|
Total stockholders' equity
|
233,154
|
239,359
|
192,555
|
|||||||||
|
Total liabilities and stockholders' equity
|
$
|
2,285,245
|
$
|
2,407,090
|
$
|
2,193,021
|
||||||
See notes to unaudited consolidated
financial statements
-3-
|
AMERIS BANCORP AND
SUBSIDIARIES
|
||||||||||||||||
|
(dollars
in thousands, except per share data)
|
||||||||||||||||
|
(Unaudited)
|
||||||||||||||||
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
|
June
30,
|
June
30,
|
|||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
|||||||||||||
|
Interest
Income
|
||||||||||||||||
|
Interest
and fees on loans
|
$
|
25,829
|
$
|
28,339
|
$
|
51,556
|
$
|
58,472
|
||||||||
|
Interest
on taxable securities
|
2,906
|
3,646
|
6,563
|
7,228
|
||||||||||||
|
Interest
on nontaxable securities
|
255
|
173
|
422
|
346
|
||||||||||||
|
Interest
on deposits in other banks and federal funds sold
|
110
|
91
|
176
|
291
|
||||||||||||
|
Total
Interest Income
|
29,100
|
32,249
|
58,717
|
66,337
|
||||||||||||
|
Interest
Expense
|
||||||||||||||||
|
Interest
on deposits
|
10,030
|
12,314
|
22,185
|
26,456
|
||||||||||||
|
Interest
on other borrowings
|
531
|
879
|
1,025
|
2,366
|
||||||||||||
|
Total
Interest Expense
|
10,561
|
13,193
|
23,210
|
28,822
|
||||||||||||
|
Net
Interest Income
|
18,539
|
19,056
|
35,507
|
37,715
|
||||||||||||
|
Provision
for Loan Losses
|
9,390
|
3,720
|
17,302
|
6,920
|
||||||||||||
|
Net
Interest Income After Provision for Loan Losses
|
9,149
|
15,336
|
18,205
|
30,595
|
||||||||||||
|
Noninterest
Income
|
||||||||||||||||
|
Service
charges on deposit accounts
|
3,393
|
3,664
|
6,428
|
6,980
|
||||||||||||
|
Mortgage
banking activity
|
877
|
855
|
1,640
|
1,725
|
||||||||||||
|
Other
service charges, commissions and fees
|
77
|
220
|
140
|
498
|
||||||||||||
|
Gain
on sale of securities
|
101
|
-
|
814
|
-
|
||||||||||||
|
Other
noninterest income
|
148
|
588
|
1,070
|
953
|
||||||||||||
|
Total
Noninterest Income
|
4,596
|
5,327
|
10,092
|
10,156
|
||||||||||||
|
Noninterest
Expense
|
||||||||||||||||
|
Salaries
and employee benefits
|
7,899
|
8,660
|
15,890
|
17,278
|
||||||||||||
|
Equipment
and occupancy expenses
|
2,224
|
2,103
|
4,382
|
4,095
|
||||||||||||
|
Amortization
of intangible assets
|
147
|
293
|
293
|
585
|
||||||||||||
|
Data
processing and telecommunications expenses
|
1,704
|
1,655
|
3,331
|
3,179
|
||||||||||||
|
Advertising
and marketing expenses
|
439
|
656
|
1,013
|
1,534
|
||||||||||||
|
Other
non-interest expenses
|
5,316
|
2,609
|
8,547
|
4,931
|
||||||||||||
|
Total
Noninterest Expense
|
17,729
|
15,976
|
33,456
|
31,602
|
||||||||||||
|
(Loss)/Income
Before Tax (Benefit)/Expense
|
(3,984
|
)
|
4,687
|
(5,159
|
)
|
9,149
|
||||||||||
|
Applicable
Income Tax (Benefit)/Expense
|
(1,290
|
)
|
1,538
|
(1,829
|
)
|
3,034
|
||||||||||
|
Net
(Loss)/Income
|
$
|
(2,694
|
)
|
$
|
3,149
|
$
|
(3,330
|
)
|
$
|
6,115
|
||||||
|
Preferred
Stock Dividends
|
665
|
-
|
1,254
|
-
|
||||||||||||
|
Net (Loss)/Income Available to
Common Shareholders
|
(3,359
|
)
|
3,149
|
(4,584
|
)
|
6,115
|
||||||||||
| Other Comprehensive Income | ||||||||||||||||
|
Unrealized
holding gain/(loss) arising during period on investment securities
available for sale, net of tax
|
(1,774
|
)
|
(4,447
|
)
|
(1,195
|
)
|
(1,770
|
)
|
||||||||
|
Unrealized
gain/(loss) on cash flow hedges arising during period , net of
tax
|
917
|
(1,344
|
)
|
1,239
|
249
|
|||||||||||
|
Reclassification
adjustment for (gains) included in net income, net of
tax
|
(66
|
)
|
-
|
(529
|
)
|
-
|
||||||||||
|
Comprehensive
Income
|
$
|
(4,282
|
)
|
$
|
(2,642
|
)
|
$
|
(5,069
|
)
|
$
|
4,594
|
|||||
|
Basic
(loss)/earnings per share
|
$
|
(0.25
|
)
|
$
|
0.23
|
$
|
(0.34
|
)
|
$
|
0.45
|
||||||
|
Diluted
(loss)/earnings per share
|
$
|
(0.25
|
)
|
$
|
0.23
|
$
|
(0.34
|
)
|
$
|
0.45
|
||||||
|
Weighted
Average Common Shares
Outstanding
|
||||||||||||||||
|
Basic
|
13,524
|
13,511
|
13,526
|
13,558
|
||||||||||||
|
Diluted
|
13,524
|
13,563
|
13,526
|
13,561
|
||||||||||||
|
Dividends
declared per share
|
$
|
0.05
|
$
|
0.14
|
$
|
0.10
|
$
|
0.28
|
||||||||
See notes to unaudited consolidated
financial statements.
-4-
|
AMERIS
BANCORP AND SUBSIDIARIES
|
||||||||
|
(Dollars
in Thousands)
|
||||||||
|
(Unaudited)
|
||||||||
|
Six Months
Ended
|
||||||||
|
June
30,
|
||||||||
|
2009
|
2008
|
|||||||
|
Cash
Flows From Operating Activities:
|
||||||||
|
Net
Income/(Loss)
|
$
|
(3,330
|
)
|
$
|
6,115
|
|||
|
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||
|
Depreciation
|
1,808
|
1,570
|
||||||
|
Net
(gains)/losses on sale or disposal of premises and
equipment
|
96
|
|
(34
|
)
|
||||
|
Net
(gains)/losses on sale of other real estate owned
|
782
|
(329
|
)
|
|||||
|
Provision
for loan losses
|
17,302
|
6,920
|
||||||
|
Amortization
of intangible assets
|
293
|
585
|
||||||
| Net gains on securities available for sale | (794 | ) |
-
|
|||||
|
Other
prepaids, deferrals and accruals, net
|
1,890
|
(795
|
)
|
|||||
|
Net cash provided by operating
activities
|
18,047
|
14,032
|
||||||
|
Cash
Flows From Investing Activities:
|
||||||||
|
Net
decrease in federal funds sold and interest bearing
deposits
|
(18,960
|
) |
(26,103
|
) | ||||
|
Proceeds
from maturities of securities available for sale
|
124,501
|
52,155
|
||||||
|
Purchase
of securities available for sale
|
(48,191
|
)
|
(57,307
|
)
|
||||
|
Proceeds
from sales of securities available for sale
|
31,879
|
-
|
||||||
|
Net
(increase)/decrease in loans
|
(13,503
|
) |
(75,562
|
)
|
||||
|
Proceeds
from sales of other real estate owned
|
5,060
|
10,333
|
||||||
|
Proceeds
from sales of premises and equipment
|
1,647
|
350
|
||||||
|
Purchases
of premises and equipment
|
(4,778
|
)
|
(7,664
|
)
|
||||
|
Net cash used in investing
activities
|
77,655
|
(103,798
|
) | |||||
|
Cash
Flows From Financing Activities:
|
||||||||
|
Net
increase/(decrease) in deposits
|
(37,154
|
) |
13,596
|
|||||
|
Net
(increase)/decrease in federal funds purchased and securities sold
under agreements to repurchase
|
(10,932
|
)
|
25,090
|
|
||||
|
Net
increase/(decrease) in other borrowings
|
(65,000
|
)
|
42,500
|
|
||||
|
Dividends
paid - preferred stock
|
(1,254
|
)
|
-
|
|||||
|
Dividends
paid – common stock
|
(1,358
|
)
|
(3,798
|
)
|
||||
|
Purchase
of treasury shares
|
(24
|
) |
(18
|
)
|
||||
|
Proceeds
from exercise of stock options
|
6
|
312
|
||||||
|
Net cash provided by
financing activities
|
(115,716
|
)
|
77,682
|
|
||||
|
Net
decrease in cash and due from banks
|
$
|
(20,014
|
)
|
$
|
(12,084
|
) | ||
|
Cash
and due from banks at beginning of period
|
66,787
|
59,804
|
||||||
|
Cash
and due from banks at end of period
|
$
|
46,773
|
$
|
47,720
|
||||
See
notes to unaudited consolidated financial statements.
-5-
AMERIS
BANCORP AND SUBSIDIARIES
June
30, 2009
(Unaudited)
NOTE
1 – BASIS OF PRESENTATION AND ACCOUNTING POLICIES
Ameris
Bancorp (the “Company” or “Ameris”) is a financial holding company headquartered
in Moultrie, Georgia. Ameris conducts the majority of its operations
through its wholly owned banking subsidiary, Ameris Bank (the
“Bank”). Ameris Bank currently operates 50 branches in Georgia,
Alabama, northern Florida and South Carolina. Our business model
capitalizes on the efficiencies of a large financial services company while
still providing the community with the personalized banking service expected by
our customers. We manage our Bank through a balance of decentralized
management responsibilities and efficient centralized operating systems,
products and loan underwriting standards. Ameris’ board of directors
and senior managers establish corporate policy, strategy and administrative
policies. Within Ameris’ established guidelines and policies, to
minimize risk, each advisory board and senior managers make lending and
community specific decisions. This approach allows the banker closest
to the customer to respond to the differing needs and demands of their unique
market.
The
accompanying unaudited consolidated financial statements for Ameris have been
prepared in accordance with accounting principles generally accepted in the
United States of America for interim financial information and Regulation
S-X. Accordingly, the financial statements do not include all of the
information and footnotes required by accounting principles generally accepted
in the United States of America for complete financial statement
presentation. The interim consolidated financial statements included
herein are unaudited, but reflect all adjustments which, in the opinion of
management, are necessary for a fair presentation of the consolidated financial
position and results of operations for the interim periods
presented. All significant intercompany accounts and transactions
have been eliminated in consolidation. The results of operations for
the period ended June 30, 2009 are not necessarily indicative of the results to
be expected for the full year. These financial statements should be
read in conjunction with the financial statements and notes thereto and the
report of our registered independent public accounting firm included in the
Company’s Annual Report on Form 10-K for the year ended December 31,
2008.
Certain
amounts reported for the periods ended December 31, 2008 and June 30, 2008
have been reclassified to conform to the presentation as of June 30,
2009. These reclassifications had no effect on previously reported
net income or stockholders' equity.
-6-
Subsequent
Events
The Company has evaluated all subsequent
events through August 7, 2009, the date of this filing, and determined there are
no material recognized or unrecognized subsequent events.
Newly Adopted Accounting
Pronouncements
In
June 2009, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 168, The
AFSB Accounting Standards Codification and the Hierarchy of Generally Accepted
Accounting Principles - a replacement of FASB Statement No. 162.
This Statement is effective for financial statements issued for interim and
annual periods ending after September 15, 2009. Management does not
anticipate it will have a material effect on the Company's consolidated
financial condition or results of operations.
In
June 2009, the FASB issued SFAS No. 167, Amendments
to FASB Interpretation No. 46(R). This statement amends certain
requirements of FASB Interpretation No. 46 (revised December 2003), Consolidation
of Variable Inerest Entitities, to improve financial reporting by
enterprises involved with variable interest entities and to provide more
relevant and reliable information to users of financial statements. This
Statement shall be effective as of the beginning of each reporting entity's
first annual reporting period that begins after November 15, 2009, for interim
periods within that first annual reporting period, and for interim and annual
reporting periods thereafter with earlier application prohibited.
Management does not anticipate it will have a material effect on the Company's
consolidated financial condition or results of operations.
In
June 2009, the FASB issued SFAS No. 166, Accounting
for Transfers of Financial Assets, an amendment of FASB Statement No.
140. The objective of this Statement is to improve the relevance,
representational faithfulness, and comparability of the information that a
reporting entity provides in its financial reports about a transfer of financial
assets; the effects of a transfer on its financial position, financial
performance, and cash flows; and a transferors's continuing involvement in
transferred financial assets. This Statement must be applied as of the
beginning of each reporting entity's first annual reporting period that begins
after November 15, 2009, for interim periods within that first annual reporting
period and for interim and annual reporting periods thereafter with earlier
application prohibited. This Statement must be applied to transfers
occurring on or after the effective date. Management does not anticipate
it will have a material effect on the Company's consolidated financial condition
or results of operations.
In May
2009, the FASB issued SFAS No. 165, Subsequent
Events. This
Statement establishes principles and requirements for subsequent events, setting
forth the period after the balance sheet date during which management of a
reporting entity shall evaluate events or transactions that may occur for
potential recognition or disclosure in the financial statements, the
circumstances under which an entity shall recognize events or transactions
occurring after the balance sheet date in its financial statements, and the
disclosures that an entity shall make about events or transactions that occurred
after the balance sheet date. This statement is effective for
interim or annual financial periods ending after June 15,
2009, and shall be applied prospectively. The adoption of this statement
did not have a
material
effect on the Company's
consolidated
financial condition or results of operations.
-7-
In April 2009,
the FASB
issued FASB Staff Position
("FSP") FAS 157-4, Determining Fair
Value When the Volume and Level of Activity for the Asset or Liability Have
Significantly Decreased and Identifying Transactions That are not Orderly.
This FSP provides
additional guidance for estimating fair value in accordance with FAS 157 when
the volume and level of activity for the asset or liability have significantly
decreased. This FSP also includes guidance on identifying circumstances that
indicate a transaction is not orderly, emphasizing that even if there has been a
significant decrease in the volume and level of activity for the asset or
liability and regardless of the valuation technique(s) used, the objective of a
fair value measurement remains the same. This FSP is effective for interim and
annual reporting periods ending after June 15, 2009, and early adoption is
permitted for periods ending after March 15, 2009. The adoption of FSP
157-4 did not have a material
effect on the Company's
consolidated
financial condition or results of operations.
In April 2009, the FASB issued FSP FAS
107-1 and APB 28-1, Interim Disclosures
about Fair Value of Financial Instruments. This FSP requires disclosures about
fair value of financial instruments for interim reporting periods as well as in
annual financial statements. This FSP also amends APB Opinion No. 28,
Interim Financial
Reporting, to require
those disclosures in summarized financial information at interim reporting
periods. This FSP is effective for interim reporting periods ending after June
15, 2009, with early adoption permitted for periods ending after March 15, 2009.
The adoption of FSP 107-1 and APB 28-1 did not have a
material effect on the
Company's consolidated
financial condition or results of operations.
In April 2009, the FASB issued FSP
115-2 and 124-2, Recognition and
Presentation of Other-Than-Temporary Impairments. This FSP addresses the unique features
of debt securities and clarifies the interaction of the factors that should be
considered when determining whether a debt security is other-than-temporarily
impaired. This FSP expands and increases the frequency of existing disclosures
about other-than-temporary impairments for debt and equity securities. This FSP
does not amend existing recognition and measurement guidance for
other-than-temporary impairments. The FSP is effective for interim and annual
reporting periods ending after June 15, 2009, with early adoption permitted for
periods ending after March 15, 2009. Earlier adoption for periods ending before
March 15, 2009 is not permitted. The adoption of FSP 115-2 and 124-2 did
not have a
material effect on the
Company's consolidated
financial condition or results of operations.
In April
2009, the FASB issued FSP
FAS 141(R)-1, Accounting for
Assets Acquired and Liabilities Assumed in a Business Combination that Arise
from Contingencies. This
FSP amends and clarifies FASB Statement No. 141 (revised 2007), Business
Combinations, to address
application issues raised by preparers, auditors, and members of the legal
profession on initial recognition and measurement, subsequent measurement and
accounting, and disclosure of assets and liabilities arising from contingencies
in a business combination. This FSP is effective for assets or liabilities
arising from contingencies in business combinations for which the acquisition
date is on or after the beginning of the first annual reporting period beginning
on or after December 15, 2008. The adoption of 141(R)-1 did not have
a
material effect on the
Company's consolidated
financial condition or results of operations.
In
January 2009, the FASB issued FSP No.
99-20-1, Amendments
to the Impairment Guidance of EITF Issue No. 99-20.
This FSP amends the
impairment guidance in EITF Issue No. 99-20, Recognition of
Interest Income and Impairment on Purchased Beneficial Interests and Beneficial
Interests That Continue to Be Held by a Transferor in Securitized Financial
Assets, to achieve more
consistent determination of whether an other-than-temporary impairment has
occurred. The FSP also retains and emphasizes the objective of an
other-than-temporary impairment assessment and the related disclosure
requirements in FASB Statement No. 115, Accounting for
Certain Investments in Debt and Equity Securities, and other related guidance. This
FSP is effective for interim and annual reporting periods ending after December
15, 2008, and shall be applied prospectively. Retrospective application to a
prior interim or annual reporting period is not permitted. The adoption of
FSP No.
99-20-1 did not have a material effect on the Company's consolidated
financial condition or results of operations.
-8-
In
December 2008, the FASB issued FSP FAS 132(R)-1, Employers' Disclosures about
Postretirement Benefit Plan Assets. This FSP amends FASB Statement
No. 132 (revised 2003), Employers' Disclosures about
Pensions and Other Postretirement Benefits, to provide guidance on an
employer's disclosures about plan assets of a defined benefit pension or other
postretirement plan. This FSP also includes a technical amendment to
Statement 132(R) that requires a nonpublic entity to disclose net periodic
benefit cost for each annual period for which a statement of income is
presented. This FSP is effective for fiscal years ending after December
15, 2009. Management does not
anticipate it will have a material effect on the Company's consolidated financial
condition or results of operations.
In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities – an Amendment of FASB Statement No. 133. This statement requires an entity to provide enhanced disclosures about how and why an entity uses derivative instruments, how derivative instruments and related items are accounted for under SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities and its related interpretations, and how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. SFAS 161 is intended to enhance the current disclosure framework in SFAS 133, by requiring the objectives for using derivative instruments be disclosed in terms of underlying risk and accounting designation.
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, 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 rate floors and
interest rate swaps 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. The change in fair value of the ineffective portion of cash flow
hedges would be reflected in the statement of income.
-9-
NOTE
1 – BASIS OF PRESENTATION AND ACCOUNTING POLICIES (Continued)
At June
30, 2009, the Company had asset cash flow hedges with notional amounts totaling
$107.1 million for the purpose of managing interest rate
sensitivity. These cash flow hedges included a LIBOR rate swap under
which it pays a fixed rate and receives a variable rate. In addition,
the Company utilizes Prime interest rate floor contracts for the purpose of
converting floating rate assets to fixed rate. 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.
The
following table presents the interest rate derivative contracts outstanding at
June 30, 2009.
|
Type
(Maturity)
|
Notional
Amount
|
Rate
Received
/Floor
Rate
|
Rate
Paid
|
Fair
Value
|
||||||||||||
|
(Dollars
in Thousands)
|
||||||||||||||||
|
LIBOR
Swap (12/15/2018)
|
$
|
37,114
|
2.95
|
%
|
4.15
|
%
|
$
|
3,003
|
||||||||
|
Total
Swaps:
|
37,114
|
2.95
|
4.15
|
3,003
|
||||||||||||
|
Prime
Interest Rate Floor (08/15/09)
|
35,000
|
7.00
|
-
|
231
|
||||||||||||
|
Prime
Interest Rate Floor (08/15/11)
|
35,000
|
7.00
|
-
|
2,380
|
||||||||||||
|
Total Floors:
|
70,000
|
7.00
|
%
|
-
|
%
|
2,611
|
||||||||||
|
Total Derivative
Contracts:
|
$
|
107,114
|
$
|
5,614
|
||||||||||||
-10-
NOTE
1 – BASIS OF PRESENTATION AND ACCOUNTING POLICIES (Continued)
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 No. 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 and other accounts recorded based on
their fair value:
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 Available For Sale: The fair value of
securities available for sale is determined by various valuation
methodologies. Where quoted market prices are available in an active
market, securities are classified within Level 1 of the valuation
hierarchy. If quoted market prices are not available, then fair
values are estimated by using pricing models, quoted prices of securities with
similar characteristics, or discounted cash flows. Level 2 securities
include certain U.S. agency bonds, collateralized mortgage and debt obligations,
and certain municipal securities. In certain cases where Level 1 or
Level 2 inputs are not available, securities are classified within Level 3 of
the hierarchy and include certain residual municipal securities and other less
liquid securities. Fair value of securities
is based on available quoted market prices. Federal Home Loan Bank
(“FHLB”) stock is included in other investment securities at its original cost
basis, as cost approximates fair value and there is no ready market for such
investments.
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. A loan is determined to be impaired if the
Company believes it is probable that all principal and interest amounts due
according to the terms of the note will not be collected as scheduled. The
fair value of impaired loans is determined in accordance with SFAS No. 114,
Accounting
by Creditors for Impairment of a Loan, and generally results in a
specific reserve established through a charge to the provision for loan
losses. Losses on impaired loans are charged to the allowance when
management believes the uncollectability of a loan is confirmed.
Management has determined that the majority of impaired loans are Level 2 assets
due to the extensive use of market appraisals. To the extent that market
appraisals or other methods do not produce reliable determinations of fair
value, these assets are deemed to be Level 3.
-11-
NOTE
1 – BASIS OF PRESENTATION AND ACCOUNTING POLICIES (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 offered for certificates with similar
maturities.
|
|
Repurchase Agreements and/or
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.
|
|
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.
|
Derivatives: The Company’s
current hedging strategies involve utilizing interest rate floors and interest
rate swaps. 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 and ongoing tests of effectiveness. As
of June 30, 2009, the Company had cash flow hedges with a notional amount
of $107.1 million.
Other Real Estate Owned: The
fair value of other real estate owned ("OREO") is determined using certified
appraisals that value the property at its highest and best uses by applying
traditional valuation methods common to the industry. The Company does not
hold any OREO for profit purposes and all other real estate is actively marketed
for sale. Management has determined that in most cases the valuation
method for other real estate produces reliable estimates of fair value and has
classified these assets as Level 2.
The
carrying amount and estimated fair value of the Company's financial instruments,
not shown elsewhere in these financial statements, were as follows:
|
|
June
30, 2009
|
December
31, 2008
|
||||||||||||
|
Carrying
|
Fair
|
Carrying
|
Fair
|
|||||||||||
|
|
Amount
|
Value
|
Amount
|
Value
|
||||||||||
|
(Dollars
in Thousands)
|
||||||||||||||
|
Financial
assets:
|
||||||||||||||
|
Loans,
net
|
$
|
1,632,047
|
$
|
1,644,118
|
$
|
1,656,125
|
$
|
1,671,499
|
||||||
|
Financial
liabilities:
|
||||||||||||||
|
Deposits
|
1,976,371
|
1,982,813
|
2,013,525
|
2,019,964
|
||||||||||
|
Other
borrowings
|
7,000
|
7,088
|
72,000
|
71,545
|
||||||||||
-12-
NOTE
1 – BASIS OF PRESENTATION AND ACCOUNTING POLICIES (Continued)
Statement
of Financial Accounting Standards (“SFAS”) No. 157, “Fair Value Measurements”,
(“SFAS 157”), describes three levels of inputs that may be used to measure fair
value:
Level 1 - Quoted prices in
active markets for identical assets or liabilities.
Level 2 - Observable inputs
other than Level 1 prices, such as quoted prices for similar assets or
liabilities; quoted prices in markets that are not active; or other inputs that
are observable or can be corroborated by observable market data for
substantially the full term of the assets or liabilities.
Level 3 - Unobservable inputs
that are supported by little or no market activity and that are significant to
the fair value of the assets or liabilities.
-13-
NOTE
1 – BASIS OF PRESENTATION AND ACCOUNTING POLICIES (Continued)
The
following table presents the fair value measurements of assets and liabilities
measured at fair value on a recurring basis and the level within the SFAS 157
fair value hierarchy in which the fair value measurements fall as of June
30, 2009.
|
Fair
Value Measurements on a Recurring Basis
|
||||||||||||||||
|
As
of June 30, 2009
|
||||||||||||||||
|
Quoted
Prices
|
||||||||||||||||
|
in
Active
|
Significant
|
|||||||||||||||
|
Markets for
|
Other
|
Significant
|
||||||||||||||
|
Identical
|
Observable
|
Unobservable
|
||||||||||||||
|
Assets
|
Inputs
|
Inputs
|
||||||||||||||
|
Fair
Value
|
(Level
1)
|
(Level
2)
|
(Level
3)
|
|||||||||||||
|
(Dollars
in Thousands)
|
||||||||||||||||
|
Securities
available for sale
|
$ | 257,771 | $ | - | $ | 255,771 | $ | 2,000 | ||||||||
|
Derivative
financial instruments
|
5,614 | - | 5,614 | - | ||||||||||||
|
Total
recurring assets at fair value
|
$ | 263,385 | $ | - | $ | 261,385 | $ | 2,000 | ||||||||
Following
is a description of the valuation methodologies used for instruments measured at
fair value on a nonrecurring basis, as well as the general classification of
such instruments pursuant to the SFAS 157 valuation hierarchy.
|
Fair
Value Measurements on a Nonrecurring Basis
|
||||||||||||||||
|
As
of June 30, 2009
|
||||||||||||||||
|
Quoted
Prices
|
||||||||||||||||
|
in
Active
|
Significant
|
|||||||||||||||
|
Markets for
|
Other
|
Significant
|
||||||||||||||
|
Identical
|
Observable
|
Unobservable
|
||||||||||||||
|
Assets
|
Inputs
|
Inputs
|
||||||||||||||
|
Fair
Value
|
(Level
1)
|
(Level
2)
|
(Level
3)
|
|||||||||||||
|
(Dollars
in Thousands)
|
||||||||||||||||
|
Impaired
loans carried at fair value
|
$ | 68,858 | $ | - | $ | 68,858 | $ | - | ||||||||
|
Other
real estate owned
|
19,180 | - | 18,980 | 200 | ||||||||||||
|
Total
nonrecurring assets at fair value
|
$ | 88,038 | $ | - | $ | 87,838 | $ | 200 | ||||||||
Pursuant
to SFAS 157, below is the Company’s reconciliation of Level 3 assets as of June
30, 2009. Gains or losses on impaired loans are recorded in the
provision for loan losses.
|
Investment
Securities
Available
for
Sale
|
Impaired
Loans
|
|||||||
|
Beginning
balance January 1, 2009
|
$
|
2,000
|
$
|
1,387
|
||||
|
Total
gains/(losses) included in net income
|
-
|
-
|
||||||
|
Purchases,
sales, issuances, and settlements, net
|
-
|
(1,387
|
)
|
|||||
|
Transfers
in or out of Level 3
|
-
|
-
|
||||||
|
Ending
balance June 30, 2009
|
$
|
2,000
|
$
|
-
|
||||
-14-
NOTE
2 – INVESTMENT SECURITIES
Ameris’
investment policy blends the Company’s liquidity needs and interest rate risk
management with its desire to increase income and provide funds for
expected growth in loans. The investment securities portfolio
consists primarily of U.S Government sponsored mortgage-backed securities and
agencies, state and municipal securities and corporate debt
securities. Ameris’ portfolio and investing philosophy concentrate
activities in obligations where the credit risk is
limited. For the small portion of Ameris’ portfolio found to
present credit risk, the Company has reviewed the investments and financial
performance of the obligors and believes the credit risk to be
acceptable.
The
amortized cost and estimated fair value of investment securities available for
sale at June 30, 2009, December 31, 2008 and June 30, 2008 are presented
below:
|
|
Gross
|
Gross
|
||||||||||||||
|
Amortized
|
Unrealized
|
Unrealized
|
Fair
|
|||||||||||||
|
Cost
|
Gains
|
Losses
|
Value
|
|||||||||||||
|
(Dollars
in Thousands)
|
||||||||||||||||
|
June
30, 2009:
|
||||||||||||||||
|
U.
S. Government sponsored agencies
|
$
|
40,138
|
$
|
524
|
$
|
(127)
|
$
|
40,535
|
||||||||
|
State
and municipal securities
|
38,347
|
394
|
(376)
|
38,365
|
||||||||||||
|
Corporate
debt securities
|
12,183
|
51
|
(1,832)
|
10,402
|
||||||||||||
|
Mortgage-backed
securities
|
||||||||||||||||