Edgar Filing: Ameris Bancorp

form10q0309.htm

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 March 31, 2009

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, SE, 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 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 13,584,107 shares of Common Stock outstanding as of April 28, 2009.

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Table of Contents

AMERIS BANCORP

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION		Page
Item 1.	Financial Statements
	Consolidated Balance Sheets at March 31, 2009, December 31, 2008 and March 31, 2008	3

	Consolidated Statements of Operations and Comprehensive Income for the Three Months Ended March 31, 2009 and 2008	4

	Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2009 and 2008	5

	Notes to Consolidated Financial Statements	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30

Item 4.	Controls and Procedures	31

PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	32

Item 1A.	Risk Factors	32

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32

Item 3.	Defaults Upon Senior Securities	32

Item 4.	Submission of Matters to a Vote of Security Holders	33

Item 5.	Other Information	33

Item 6.	Exhibits	33

Signatures		34

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Item 1.

Financial Statements

AMERIS BANCORP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)

	March 31,			December 31,			March 31,
	2009			2008			2008
	(Unaudited)			(Audited)			(Unaudited)
Assets
Cash and due from banks	$	54,758		$	66,787		$	63,401
Federal funds sold & interest bearing accounts		137,770			144,383			4,389
Investment securities available for sale, at fair value		344,032			367,894			295,801
Other investments		5,702			8,627			8,784

Loans		1,672,923			1,695,777			1,622,437
Less: allowance for loan losses		42,417			39,652			28,094
Loans, net		1,630,506			1,656,125			1,594,343

Premises and equipment, net		65,152			66,107			60,053
Intangible assets, net		3,485			3,631			4,509
Goodwill		54,813			54,813			54,675
Other assets		50,060			38,723			32,288
Total assets	$	2,346,278		$	2,407,090		$	2,118,243

Liabilities and Stockholders' Equity
Deposits:
Noninterest-bearing	$	207,686		$	208,532		$	199,692
Interest-bearing		1,820,998			1,804,993			1,584,599
Total deposits		2,028,684			2,013,525			1,784,291
Federal funds purchased & securities sold under agreements to repurchase		18,295			27,416			4,987
Other borrowings		7,000			72,000			74,500
Other liabilities		12,046			12,521			15,888
Subordinated deferrable interest debentures		42,269			42,269			42,269
Total liabilities		2,108,294			2,167,731			1,921,935

Stockholders' Equity
Preferred stock, par value$1; 5,000,000 shares authorized; 52,000 shares issued		49,140			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			14,887
Capital surplus		86,141			86,038			82,920
Retained earnings		91,619			93,696			104,182
Accumulated other comprehensive income		6,956			6,518			5,093
Treasury stock, at cost, 1,331,102, 1,331,102 and 1,330,197 shares		(10,787	)		(10,787	)		(10,774	)
Total stockholders' equity		237,984			239,359			196,308
Total liabilities and stockholders' equity	$	2,346,278		$	2,407,090		$	2,118,243

See notes to unaudited consolidated financial statements

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AMERIS BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(dollars in thousands, except per share data)
(Unaudited)

	Three Months Ended
	March 31,
	2009			2008
Interest Income
Interest and fees on loans	$	25,727		$	30,134
Interest on taxable securities		3,657			3,583
Interest on nontaxable securities		167			172
Interest on deposits in other banks and federal funds sold		66			200
Total Interest Income		29,617			34,089

Interest Expense
Interest on deposits		12,155			14,142
Interest on other borrowings		494			1,487
Total Interest Expense		12,649			15,629

Net Interest Income		16,968			18,460
Provision for Loan Losses		7,912			3,200
Net Interest Income After Provision for Loan Losses		9,056			15,260

Noninterest Income
Service charges on deposit accounts		3,035			3,316
Mortgage banking activity		763			869
Other service charges, commissions and fees		63			278
Gain on sale of securities		713			-
Other noninterest income		922			379
Total Noninterest Income		5,496			4,842

Noninterest Expense
Salaries and employee benefits		7,991			8,618
Equipment and occupancy expense		2,158			1,992
Amortization of intangible assets		146			293
Data processing and communication costs		1,627			1,523
Advertising and marketing expense		574			878
Other operating expenses		3,231			2,336
Total Noninterest Expense		15,727			15,640

(Loss)/Income Before Tax (Benefit)/Expense		(1,175	)		4,462
Applicable Income Tax (Benefit)/Expense		(539	)		1,496
Net (Loss)/Income		(636	)		2,966

Preferred Stock Dividends		589			-
Net (Loss)/Income Available to Common Shareholders	$	(1,225	)	$	2,966

Other Comprehensive Income
Net unrealized holding gain arising during period on investment securities available for sale, net of tax		2,762			871
Net unrealized gain on cash flow hedge arising during period, net of tax		789			1,593
Reclassification adjustment for (gains) included in net income, net of tax		(463	)		-
Comprehensive Income	$	1,863		$	5,430

Basic (loss)/earnings per share	$	(0.09	)	$	0.22
Diluted (loss)/earnings per share	$	(0.09	)	$	0.22

Weighted average common shares outstanding:
Basic		13,567			13,497
Diluted		13,567			13,560

Dividends declared per share	$	0.05		$	0.14

See notes to unaudited consolidated financial statements.

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AMERIS BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
	Three Months Ended
	March 31,
	2009			2008
Cash Flows From Operating Activities:
Net Income/(Loss)	$	(636	)	$	2,966
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		865			741
Net loss on sale or disposal of premises and equipment		(4	)		(46	)
Net gain/(loss) on sale of other real estate owned		161			(319	)
Provision for loan losses		7,912			3,200
Amortization of intangible assets		146			293
Other prepaids, deferrals and accruals, net		1,022			(4,958	)
Net cash provided by operating activities		9,466			1,877



Cash Flows From Investing Activities:
Net decrease in federal funds sold & interest bearing deposits		6,612			7,633
Proceeds from maturities of securities available for sale		27,073			36,915
Purchase of securities available for sale		(8,419	)		(39,132	)
Proceeds from sales of securities available for sale		5,351			-
Net (increase)/decrease in loans		7,084			(8,388	)
Proceeds from sales of other real estate owned		934			6,457
Proceeds from sales of premises and equipment		1,647			275
Purchases of premises and equipment		(1,553	)		(1,636	)
Net cash used in investing activities		38,729			2,124



Cash Flows From Financing Activities:
Net increase in deposits		15,159			27,026
Net decrease in federal funds purchased & securities sold under agreements to repurchase		(9,121	)		(9,718	)
Net decrease in other borrowings		(65,000	)		(16,000	)
Dividends paid - preferred stock		(589	)		-
Dividends paid – common stock		(679	)		(1,898	)
Purchase of treasury shares		-			(4	)
Proceeds from exercise of stock options		6			190
Net cash provided by financing activities		(60,224	)		(404	)

Net decrease in cash and due from banks	$	(12,029	)	$	3,597

Cash and due from banks at beginning of period		66,787			59,804

Cash and due from banks at end of period	$	54,758		$	63,401

See notes to unaudited consolidated financial statements.

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AMERIS BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2009

(Unaudited)

NOTE 1 – BASIS OF PRESENTATION & 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 48 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, 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 quarter ended March 31, 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 March 31, 2008 and December 31, 2008 have been reclassified to conform with the presentation as of March 31, 2009. These reclassifications had no effect on previously reported net income or stockholders' equity.

Newly Adopted Accounting Pronouncements

In March 2008, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities – an Amendment of FASB Statement No. 133” (“SFAS 161”). 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” (SFAS 133”) 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.

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NOTE 1 – BASIS OF PRESENTATION & ACCOUNTING POLICIES (Continued)

The Company’s current hedging strategies involve utilizing interest rate floors and 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.

At March 31, 2009, the Company had 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 March 31, 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	%	$	856
Total Swaps:		37,114		2.95			4.15			856

Prime Interest Rate Floor (08/15/09)		35,000		7.00			-			555
Prime Interest Rate Floor (08/15/11)		35,000		7.00			-			2,793
Total Floors:		70,000		7.00	%		-	%		3,348

Total Derivative Contracts:	$	107,114							$	4,204

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NOTE 1 – BASIS OF PRESENTATION & ACCOUNTING POLICIES (Continued)

Fair Value Measurements

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 active 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.

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.

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NOTE 1 – BASIS OF PRESENTATION & ACCOUNTING POLICIES (Continued)

Deposits: The carrying amount of demand deposits, savings deposits and variable-rate certificates of deposits approximates fair value. The fair value of fixed-rate certificates of deposits is estimated based on discounted contractual cash flows using interest rates currently being offered for certificates of 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. 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 March 31, 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.

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NOTE 1 – BASIS OF PRESENTATION & 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 March 31, 2009.

	Fair Value Measurements on a Recurring Basis
	As of March 31, 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	$	344,032	$	-	$	342,032	$	2,000
Derivative financial instruments		4,204		-		4,204		-
Total recurring assets at fair value	$	348,236	$	-	$	346,236	$	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 March 31, 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	$	63,908	$	-	$	62,815	$	1,093
Other real estate owned		14,271		-		14,271		-
Total nonrecurring assets at fair value	$	78,179	$	-	$	77,086	$	1,093

Pursuant to SFAS 157, below is the Company’s reconciliation of Level 3 assets as of March 31, 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		-		(294	)
Transfers in or out of Level 3		-		-
Ending balance March 31, 2009	$	2,000	$	1,093

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NOTE 2 – INVESTMENT SECURITIES

Ameris’ investment policy blends the needs of the Company’s liquidity and interest rate risk with its desire to improve income and provide funds for expected growth in loans. The investment securities portfolio primarily consists 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 a small portion of Ameris’ portfolio that has been 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 March 31, 2009, December 31, 2008 and March 31, 2008 are presented below:

			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
	(Dollars in Thousands)

March 31, 2009:
U. S. Government sponsored agencies	$	122,382	$	1,258	$	-	$	123,640
State and municipal securities		17,998		368		(125)		18,241
Corporate debt securities		12,197		52		(1,399)		10,850
Mortgage-backed securities		184,828		6,630		(157)		191,301
Total debt securities	$	337,405	$	8,308	$	(1,681)	$	344,032

December 31, 2008:
U. S. Government sponsored agencies	$	130,966	$	1,680	$	-	$	132,646
State and municipal securities		18,095		330		(123)		18,302
Corporate debt securities		12,209		186		(777)		11,618
Mortgage-backed securities		200,128		5,332		(132)		205,328
Total securities	$	361,398	$	7,528	$	(1,032)	$	367,894

March 31, 2008:
U. S. Government sponsored agencies	$	46,665	$	1,169	$	-	$	47,834
State and municipal securities		18,967		406		(47)		19,326
Corporate debt securities		11,733		135		(177)		11,691
Mortgage-backed securities		213,438		3,603		(91)		216,950
Total securities	$	290,803		5,313		(315)		295,801

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NOTE 3 - LOANS

The Company engages in a full complement of lending activities, including real estate-related loans, agriculture-related loans, commercial and financial loans and consumer installment loans. Ameris concentrates the majority of its lending activities on real estate loans where the historical loss percentages have been low. While risk of loss in the Company’s portfolio is primarily tied to the credit quality of the various borrowers, risk of loss may increase due to factors beyond Ameris’ control, such as local, regional and/or national economic downturns. General conditions in the real estate market may also impact the relative risk in the real estate portfolio.

The Company evaluates loans for impairment when a loan is risk rated as substandard or worse. The Company measures impairment based upon the present value of the loan’s expected future cash flows discounted at the loan’s effective interest rate, except where foreclosure or liquidation is probable or when the primary source of repayment is provided by real estate collateral. In these circumstances, impairment is measured based upon the estimated fair value of the collateral. In addition, in certain circumstances, impairment may be based on the loan’s observable estimated fair value. Impairment with regard to substantially all of Ameris’ impaired loans has been measured based on the estimated fair value of the underlying collateral. At the time the contractual principal payments on a loan are deemed to be uncollectible, Ameris’ policy is to record a charge-off against the allowance for loan losses.

Nonperforming assets include loans classified as nonaccrual or renegotiated and foreclosed or repossessed assets. It is the general policy of the Company to stop accruing interest income and place the recognition of interest on a cash basis when any commercial, industrial or commercial real estate loan is 90 days or more past due as to principal or interest and/or the ultimate collection of either is in doubt, unless collection of both principal and interest is assured by way of collateralization, guarantees or other security. When a loan is placed on nonaccrual status, any interest previously accrued but not collected is reversed against current income unless the collateral for the loan is sufficient to cover the accrued interest or a guarantor assures payment of interest.

Loans are stated at unpaid balances, net of unearned income and deferred loan fees. Balances within the major loans receivable categories are represented in the following table:

(Dollars in Thousands)	March 31, 2009		December 31, 2008		March 31, 2008
Commercial, financial & agricultural	$	183,860	$	200,421	$	218,964
Real estate – residential		189,069		189,203		156,014
Real estate – commercial & farmland		1,077,044		1,070,483		1,002,849
Real estate – construction & development		151,539		162,887		172,600
Consumer installment		62,176		64,707		68,459
Other		9,235		8,076		3,551
	$	1,672,923	$	1,695,777	$	1,622,437

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NOTE 4 – ALLOWANCE FOR LOAN LOSSES

Activity in the allowance for loan losses for the three months ended March 31, 2009, for the year ended December 31, 2008 and for the three months ended March 31, 2008 is as follows:

(Dollars in Thousands)	March 31, 2009			December 31, 2008			March 31, 2008
Balance, January 1	$	39,652		$	27,640		$	27,640
Provision for loan losses charged to expense		7,912			35,030			3,200
Loans charged off		(5,521	)		(24,340	)		(2,945	)
Recoveries of loans previously charged off		374			1,322			199
Ending balance	$	42,417		$	39,652		$	28,094

The following is a summary of information pertaining to impaired loans for the three months ended March 31, 2009 and the twelve months December 31, 2008:

(Dollars in Thousands)	March 31, 2009		December 31, 2008
Impaired loans	$	63,908	$	65,414
Valuation allowance related to impaired loans	$	10,019	$	9,078
Average investment in impaired loans	$	64,661	$	40,940
Interest income recognized on impaired loans	$	59	$	323
Foregone interest income on impaired loans	$	751	$	4,643

NOTE 5 – 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 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. On an annual basis, the Company engages an independent party to review business strategies as well as current and forecasted levels of earnings and capital. The most recent study, completed in the fourth quarter of 2008, found no impairment in the carrying value of goodwill.

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NOTE 6 – WEIGHTED AVERAGE SHARES OUTSTANDING

Due to the net loss reported at the end of the quarter ended March 31, 2009, the Company has excluded the effects of options as these would have been anti-dilutive. Earnings per share have been computed based on the following weighted average number of common shares outstanding:

	For the Three Months Ended March 31,
	2009		2008
	(share data in thousands)
Basic shares outstanding		13,527		13,497
Plus: Dilutive effect of ISOs		-		49
Plus: Dilutive effect of Restricted Grants		-		14
Diluted shares outstanding		13,527		13,560

NOTE 7 – OTHER BORROWINGS

The Company has certain borrowing arrangements with various financial institutions that are used in the Company’s operations primarily to fund growth in earning assets when appropriate spreads can be realized. At March 31, 2009, total other borrowings amounted to $7.0 million compared to $74.5 million at March 31, 2008. During the quarter, the Company reduced borrowings with the FHLB by $67.5 million. The reduction was made possible by the Company’s growth in total deposits over the last several quarters. At March 31, 2009, $2.0 million of the other borrowings consisted of borrowings with the FHLB of Atlanta.

NOTE 8 – COMMITMENTS AND CONTINGENCIES

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. These instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized in the consolidated balance sheets.

The contract amounts of those instruments reflect the extent of involvement the Company has in particular classes of financial instruments. The Company uses the same credit policies in making commitments and conditional obligations as are used for on-balance-sheet instruments.

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 Company issues standby letters of credit, which are conditional commitments issued to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements and expire in decreasing amounts with varying terms. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. The Company holds various assets as collateral supporting those commitments for which collateral is deemed necessary.

The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation of the borrower. Collateral held may include accounts receivable, inventory, property, plant and equipment, residential real estate, and income-producing commercial properties on those commitments for which collateral is deemed necessary.

The following represent the Company’s commitments to extend credit and standby letters of credit:

(Dollars in Thousands)	March 31, 2009		March 31, 2008

Commitments to extend credit	$	141,233	$	187,125

Standby letters of credit	$	4,285	$	6,804

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Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Certain of the statements made in this report are “forward-looking statements” within the meaning of, and subject to the protections of, Section 27A of the Securities Act of 1933, as amended, 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, legislative and regulatory initiatives; additional competition in Ameris’ markets; potential business strategies, including acquisitions or dispositions of assets or internal restructuring, that may be pursued by Ameris; state and federal banking regulations; changes in or application of environmental and other laws and regulations to which Ameris is subject; political, legal and economic conditions and developments; financial market conditions and the results of financing efforts; changes in commodity prices and interest rates; weather, natural disasters and other catastrophic events; and other factors discussed in Ameris’ filings with the Securities and Exchange 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.

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The following table sets forth unaudited selected financial data for the previous five quarters. This data should be read in conjunction with the consolidated financial statements and the notes thereto and the information contained in this Item 2.

	2009			2008
(in thousands, except share	First			Fourth			Third		Second		First
data, taxable equivalent)	Quarter			Quarter			Quarter		Quarter		Quarter
Results of Operations:
Net interest income	$	16,968		$	15,972		$	19,177	$	19,056	$	18,460
Net interest income (tax equivalent)		17,126			15,991			19,691		19,514		18,814
Provision for loan losses		7,912			19,890			8,220		3,720		3,200
Non-interest income		5,496			4,393			4,639		5,313		4,842
Non-interest expense		15,727			16,428			14,761		15,962		15,640
Provision for income tax (benefit)/expense		(539	)		(5,556)			469		1,538		1,496
Preferred stock dividends		589			328			-		-		-
Net (loss)/income available to common shareholders		(1,225	)		(10,725	)		366		3,149		2,966
Selected Average Balances:
Loans, net of unearned income	$	1,683,615		$	1,703,137		$	1,698,024	$	1,650,781	$	1,617,991
Investment securities		359,754			328,956			287,973		296,597		281,756
Earning assets		2,166,624			2,174,387			2,018,807		1,976,321		1,933,179
Assets		2,346,958			2,354,142			2,192,501		2,141,940		2,115,561
Deposits		2,002,534			1,987,840			1,792,821		1,764,067		1,748,961
Common shareholders’ equity		190,395			192,479			186,541		192,605		193,971
Period-End Balances:
Loans, net of unearned income	$	1,672,923		$	1,695,777		$	1,710,109	$	1,678,147	$	1,622,437
Earning assets		2,160,427			2,216,681			2,083,193		2,019,525		1,931,411
Total assets		2,346,278			2,407,090			2,257,643		2,193,021		2,118,243
Deposits		2,028,684			2,013,525			1,806,339		1,770,861		1,784,291
Common shareholders’ equity		188,844			190,331			193,344		192,555		196,308
Per Common Share Data:
Earnings per share - Basic	$	(0.09	)	$	(0.79	)	$	0.03	$	0.23	$	0.22
Earnings per share - Diluted		(0.09	)		(0.79	)		0.03		0.23		0.22
Book value per share		13.90			14.06			14.25		14.2		14.48
End of period shares outstanding		13,584,107			13,534,601			13,564,032		13,564,032		13,556,770
Weighted average shares outstanding
Basic		13,527,437			13,532,521			13,515,767		13,510,907		13,497,344
Diluted		13,527,437			13,532,521			13,543,612		13,563,032		13,559,761
Market Data:
High closing price	$	11.73		$	14.21		$	15.02	$	16.26	$	16.41
Low closing price		3.66			7.19			7.79		8.70		12.49
Closing price for quarter		4.71			11.85			14.85		8.70		16.06
Average daily trading volume		31,931			31,527			43,464		62,739		61,780
Cash dividends per share		0.05			0.05			0.05		0.14		0.14
Price to earnings		N/M			N/M			N/M		9.45		18.25
Price to book value		0.34			0.84			1.04		0.61		1.11
Performance Ratios:
Return on average assets		(0.21%	)		(1.81%	)		0.07%		0.59%		0.56%
Return on average common equity		(2.61%	)		(22.17%	)		0.78%		6.58%		6.15%
Average loan to average deposits		84.07%			85.67%			94.71%		93.58%		92.51%
Average equity to average assets		8.11%			8.18%			8.51%		8.99%		9.27%
Net interest margin (tax equivalent)		3.21%			2.92%			3.87%		3.96%		3.91%
Efficiency ratio		70.01%			80.67%			61.98%		65.50%		67.12%

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Overview

The following is management’s discussion and analysis of certain significant factors which have affected the financial condition and results of operations of the Company as reflected in the unaudited consolidated statement of condition as of March 31, 2009 as compared to December 31, 2008 and operating results for the three-month period ended March 31, 2008. These comments should be read in conjunction with the Company’s unaudited consolidated financial statements and accompanying notes appearing elsewhere herein.

Results of Operations for the Three Months Ended March 31, 2009 and 2008

Consolidated Earnings and Profitability

Ameris reported a net loss available to common shareholders of $1.2 million, or $0.09 per diluted share, for the quarter ended March 31, 2009, compared to net income for the same quarter in 2008 of $3.0 million, or $0.22 per share. The Company’s return on average assets and average shareholders’ equity declined in the first quarter of 2009 to (0.21%) and (2.61%), respectively, compared to 0.56% and 6.15% in the first quarter of 2008. The decline in earnings and profitability during the quarter was principally due to higher levels of loan loss provisions, lower net interest margins and costs associated with problem assets.

Net Interest Income and Margins

On a tax equivalent basis, net interest income for the first quarter of 2009 was $17.1 million, a decrease of 9.0% compared to the same quarter in 2008. The Company’s net interest margin fell during the first quarter of 2009 to 3.21% compared to 3.91% during the same quarter in 2008. The margin was negatively impacted by the lower interest rate environment which caused loan yields to fall commensurately with national rate indices. Normally, the company would offset these declines in asset yields and interest income with lower deposit costs but intense competition for local deposits have kept deposit yields unusually high.

Total interest income during the first quarter of 2009 was $29.6 million compared to $34.1 million in the same quarter of 2008. Yields on earning assets fell 22.3% to 5.57% compared to 7.17% reported in the first quarter of 2008. During the quarter, loan yields decreased when compared to the first quarter of 2008 due mostly to the lower interest rate environment that materialized late in 2008. Although rates are at historical lows, current spreads on loan production in the Bank’s local markets have widened significantly. Because of these wide spreads, management does not anticipate significant erosion to current loan yields.

Interest expense declined significantly, helping somewhat to offset declines in interest income. Total interest expense in the first quarter of 2009 amounted to $12.6 million, reflecting a decline of 19.2% from the same quarter in 2008. Total funding costs declined to 2.45% in the first quarter of 2009 compared to 3.30% at the same time in 2008. The decline in total funding costs relates to savings realized on both deposit funding and non-deposit funding. Deposit costs decreased from 3.25% in the first quarter of 2008 to 2.46% in the current quarter of 2009. Management expects significant savings to be realized in the coming quarters as the Company reprices a substantial part of its time deposits to rates reflecting the current rate environment. Savings on non-deposit borrowings reflect lower levels of one and three month LIBOR as well as lower outstanding balances. At the end of the first quarter of 2009, the Company’s total non-deposit funding was 2.88% of total assets compared to 5.75% at the same time in 2008.

Provision for Loan Losses and Credit Quality

The Company’s provision for loan losses during the first quarter amounted to $7.9 million, an increase of $4.7 million over the $3.2 million recorded in the first quarter of 2008. The increase in the provision for loan losses reflected the trend in the level of non-performing assets. At the end of the first quarter of 2009, total non-performing assets increased to 4.63% of total loans compared to 2.00% at March 31, 2008.

Net charge-offs on loans during the first quarter of 2009 increased to $5.1 million, compared to $2.7 million in the first quarter of 2008. For the quarters ended March 31, 2009 and 2008, net charge-offs as a percentage of loans were 1.23% and 0.68% respectively. The Company’s allowance for loan losses at March 31, 2009 was $42.4 million or 2.54% of total loans, compared to $28.1 million or 1.7% at March 31, 2008.

Noninterest Income

Total non-interest income for the first quarter of 2009 increased 14.5% to $5.5 million from $4.8 million in the first quarter of 2008. During the first quarter of 2009, the Company sold several positions in its investment portfolio and recognized a gain of approximately $713,000. In addition, the Company recognized a gain of approximately $543,000 on the early repayment of FHLB advances. Excluding these gains, non-interest income would have declined in the current quarter by 11.6% to $4.2 million when compared to the same period in 2008. The majority of the decrease in non-interest income related to declines in service charge revenue where the Company experienced significantly fewer overdrafts. For the first quarter of 2009, total service charges were $3.0 million when compared to $3.3 million in the same quarter of 2008.

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Noninterest Expense

Total non-interest expenses for the first quarter of 2009 rose slightly to $15.7 million, compared to $15.6 million at the same time in 2008. Salaries and benefits declined 7.3% from the year ago period, which reflected a decrease in full time equivalent employees of 5.8%. Occupancy and equipment expense for the first quarter of 2009 was $2.2 million, representing an increase of 8.4% from the same quarter in 2008, reflecting the cost of several new offices opened during the past few quarters. Other operating expenses increased $942,000 during the first quarter of 2009 compared to the same quarter in 2008. Increases in collection expens