Edgar Filing: Ameris Bancorp

Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)



	ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2018



	¨	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 ý No ¨

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 ý No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.




Large accelerated filer	ý	Accelerated filer	¨

Non-accelerated filer	¨ (Do not check if a smaller reporting company)	Smaller reporting company	¨

		Emerging growth company	¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No ý

There were 47,500,913 shares of Common Stock outstanding as of November 1, 2018.

AMERIS BANCORP

TABLE OF CONTENTS



		Page

PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements.

	Consolidated Balance Sheets as of September 30, 2018 and December 31, 2017	1

	Consolidated Statements of Income and Comprehensive Income for the Three and Nine-Month Periods Ended September 30, 2018 and 2017	2

	Consolidated Statements of Shareholders’ Equity for the Nine Months Ended September 30, 2018 and 2017	3

	Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2018 and 2017	4

	Notes to Consolidated Financial Statements	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	47

Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	76

Item 4.	Controls and Procedures.	76

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings.	76

Item 1A.	Risk Factors.	76

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	77

Item 3.	Defaults Upon Senior Securities.	77

Item 4.	Mine Safety Disclosures.	77

Item 5.	Other Information.	77

Item 6.	Exhibits.	78

Signatures		79

Item 1. Financial Statements.

AMERIS BANCORP AND SUBSIDIARIES

Consolidated Balance Sheets (unaudited)

(dollars in thousands, except per share data)



	September 30, 2018			December 31, 2017
Assets
Cash and due from banks	$	158,453		$	139,313
Federal funds sold and interest-bearing deposits in banks	470,804			191,345
Cash and cash equivalents	629,257			330,658

Time deposits in other banks	11,558			—
Investment securities available for sale, at fair value	1,162,570			810,873
Other investments	35,929			42,270
Loans held for sale, at fair value	130,179			197,442

Loans	5,543,306			4,856,514
Purchased loans	2,711,460			861,595
Purchased loan pools	274,752			328,246
Loans, net of unearned income	8,529,518			6,046,355
Allowance for loan losses	(28,116		)	(25,791		)
Loans, net	8,501,402			6,020,564

Other real estate owned, net	9,375			8,464
Purchased other real estate owned, net	7,692			9,011
Total other real estate owned, net	17,067			17,475

Premises and equipment, net	145,885			117,738
Goodwill	505,604			125,532
Other intangible assets, net	54,729			13,496
Cash value of bank owned life insurance	103,588			79,641
Deferred income taxes, net	38,217			28,320
Other assets	93,009			72,194
Total assets	$	11,428,994		$	7,856,203

Liabilities
Deposits:
Noninterest-bearing	$	2,333,992		$	1,777,141
Interest-bearing	6,847,371			4,848,704
Total deposits	9,181,363			6,625,845
Securities sold under agreements to repurchase	14,071			30,638
Other borrowings	656,831			250,554
Subordinated deferrable interest debentures	88,986			85,550
FDIC loss-share payable, net	18,740			8,803
Other liabilities	64,026			50,334
Total liabilities	10,024,017			7,051,724

Commitments and Contingencies (Note 8)

Shareholders’ Equity
Preferred stock, stated value $1,000 (5,000,000 shares authorized; 0 shares issued and outstanding at September 30, 2018 and December 31, 2017)	—			—
Common stock, par value $1 (100,000,000 shares authorized; 49,011,950 and 38,734,873 shares issued at September 30, 2018 and December 31, 2017, respectively)	49,012			38,735
Capital surplus	1,050,752			508,404
Retained earnings	338,350			273,119
Accumulated other comprehensive income (loss), net of tax	(16,576		)	(1,280		)
Treasury stock, at cost (1,514,984 shares and 1,474,861 shares at September 30, 2018 and December 31, 2017, respectively)	(16,561		)	(14,499		)
Total shareholders’ equity	1,404,977			804,479
Total liabilities and shareholders’ equity	$	11,428,994		$	7,856,203

See notes to unaudited consolidated financial statements.

AMERIS BANCORP AND SUBSIDIARIES

Consolidated Statements of Income and Comprehensive Income (unaudited)

(dollars in thousands, except per share data)



	Three Months Ended September 30,					Nine Months Ended September 30,
	2018			2017		2018			2017
Interest income
Interest and fees on loans	$	110,470		$	70,462	$	266,460		$	197,447
Interest on taxable securities	8,792			5,062		20,320			15,057
Interest on nontaxable securities	204			392		705			1,209
Interest on deposits in other banks and federal funds sold	1,653			406		3,092			1,070
Total interest income	121,119			76,322		290,577			214,783

Interest expense
Interest on deposits	15,630			5,136		30,196			13,479
Interest on other borrowings	6,451			4,331		16,543			10,702
Total interest expense	22,081			9,467		46,739			24,181

Net interest income	99,038			66,855		243,838			190,602
Provision for loan losses	2,095			1,787		13,006			5,828
Net interest income after provision for loan losses	96,943			65,068		230,832			184,774

Noninterest income
Service charges on deposit accounts	12,690			10,535		33,531			31,714
Mortgage banking activity	13,413			13,340		40,203			38,498
Other service charges, commissions and fees	777			699		2,193			2,137
Gain (loss) on securities	48			—		(38		)	37
Other noninterest income	3,243			2,425		12,053			8,508
Total noninterest income	30,171			26,999		87,942			80,894

Noninterest expense
Salaries and employee benefits	38,446			32,583		110,311			89,509
Occupancy and equipment expense	8,598			6,036		21,186			18,059
Data processing and communications costs	8,518			7,050		22,092			20,650
Credit resolution-related expenses	1,248			1,347		2,842			2,879
Advertising and marketing expense	1,453			1,247		3,938			3,612
Amortization of intangible assets	2,676			941		5,862			2,990
Merger and conversion charges	276			92		19,502			494
Other noninterest expenses	11,138			14,471		32,104			34,406
Total noninterest expense	72,353			63,767		217,837			172,599

Income before income tax expense	54,761			28,300		100,937			93,069
Income tax expense	13,317			8,142		23,446			28,671
Net income	41,444			20,158		77,491			64,398

Other comprehensive income
Net unrealized holding gains (losses) arising during period on investment securities available for sale, net of tax expense (benefit) of ($1,053), $966, ($4,035) and $2,348	(3,964		)	1,795		(15,181		)	4,361
Reclassification adjustment for gains on investment securities included in earnings, net of tax of $11, $0, $19 and $13	(41		)	—		(70		)	(24		)
Unrealized gains (losses) on cash flow hedges arising during period, net of tax expense (benefit) of $0, $14, $92 and ($21)	—			25		347			(38		)
Other comprehensive income (loss)	(4,005		)	1,820		(14,904		)	4,299
Total comprehensive income	$	37,439		$	21,978	$	62,587		$	68,697

Basic earnings per common share	$	0.87		$	0.54	$	1.86		$	1.76
Diluted earnings per common share	$	0.87		$	0.54	$	1.85		$	1.74
Dividends declared per common share	$	0.10		$	0.10	$	0.30		$	0.30
Weighted average common shares outstanding (in thousands)
Basic	47,515			37,225		41,673			36,690
Diluted	47,685			37,553		41,845			37,017

See notes to unaudited consolidated financial statements.

AMERIS BANCORP AND SUBSIDIARIES

Consolidated Statements of Shareholders’ Equity (unaudited)

(dollars in thousands)



	Nine Months Ended September 30, 2018					Nine Months Ended September 30, 2017
	Shares		Amount			Shares		Amount
Common Stock
Balance at beginning of period	38,734,873		$	38,735		36,377,807		$	36,378
Issuance of common stock	10,124,491		10,124			2,141,072		2,141
Issuance of restricted shares	85,855		86			84,147		84
Cancellation of restricted shares	(472	)	—			(472	)	—
Proceeds from exercise of stock options	67,203		67			103,356		103
Issued at end of period	49,011,950		$	49,012		38,705,910		$	38,706

Capital Surplus
Balance at beginning of period			$	508,404				$	410,276
Share-based compensation			4,652					2,419
Issuance of common shares, net of issuance costs of $0 and $4,925			537,003					92,359
Issuance of restricted shares			(86		)			(84		)
Proceeds from exercise of stock options			779					1,809
Balance at end of period			$	1,050,752				$	506,779

Retained Earnings
Balance at beginning of period			$	273,119				$	214,454
Cumulative effect of change in accounting for derivatives			28					—
Reclassification of stranded income tax effects from accumulated other comprehensive income			392					—
Adjusted balance at beginning of period			273,539					214,454
Net income			77,491					64,398
Dividends on common shares			(12,680		)			(11,158		)
Balance at end of period			$	338,350				$	267,694

Accumulated Other Comprehensive Income (Loss), Net of Tax
Unrealized gains (losses) on securities and derivatives:
Balance at beginning of period			$	(1,280	)			$	(1,058	)
Reclassification of stranded income tax effects to retained earnings			(392		)			—
Adjusted balance at beginning of period			(1,672		)			(1,058		)
Other comprehensive income (loss) during the period			(14,904		)			4,299
Balance at end of period			$	(16,576	)			$	3,241

Treasury Stock
Balance at beginning of period	1,474,861		$	(14,499	)	1,456,333		$	(13,613	)
Purchase of treasury shares	40,123		(2,062		)	18,528		(886		)
Balance at end of period	1,514,984		$	(16,561	)	1,474,861		$	(14,499	)

Total Shareholders’ Equity			$	1,404,977				$	801,921

See notes to unaudited consolidated financial statements.

AMERIS BANCORP AND SUBSIDIARIES

Consolidated Statements of Cash Flows (unaudited)

(dollars in thousands)



	Nine Months Ended September 30,
	2018			2017
Operating Activities
Net income	$	77,491		$	64,398
Adjustments reconciling net income to net cash provided by (used in) operating activities:
Depreciation	7,359			6,918
Net losses on sale or disposal of premises and equipment including write-downs	78			956
Provision for loan losses	13,006			5,828
Net losses (gains) on sale of other real estate owned including write-downs	947			501
Share-based compensation expense	5,433			2,419
Amortization of intangible assets	5,862			2,990
Provision for deferred taxes	1,023			(962		)
Net amortization of investment securities available for sale	3,909			4,815
Net loss (gain) on securities	38			(37		)
Accretion of discount on purchased loans	(8,083		)	(9,023		)
Amortization of premium on purchased loan pools	1,473			2,943
Accretion on other borrowings	98			62
Accretion on subordinated deferrable interest debentures	1,001			992
Originations of mortgage loans held for sale	(1,361,509		)	(1,113,188		)
Payments received on mortgage loans held for sale	840			799
Proceeds from sales of mortgage loans held for sale	1,188,493			961,831
Net gains on sale of mortgage loans held for sale	(28,236		)	(36,451		)
Originations of SBA loans	(18,032		)	(25,720		)
Proceeds from sales of SBA loans	27,275			23,952
Net gains on sale of SBA loans	(2,246		)	(3,423		)
Increase in cash surrender value of bank owned life insurance	(1,311		)	(1,188		)
Changes in FDIC loss-share payable, net of cash payments received	1,823			1,974
Change attributable to other operating activities	(10,268		)	12,931
Net cash used in operating activities	(93,536		)	(95,683		)

Investing Activities, net of effects of business combinations
Purchases of securities available for sale	(234,711		)	(83,090		)
Proceeds from prepayments and maturities of securities available for sale	112,119			85,036
Proceeds from sales of securities available for sale	68,727			3,090
Net decrease (increase) in other investments	12,040			(12,669		)
Net increase in loans, excluding purchased loans	(437,513		)	(786,548		)
Payments received on purchased loans	208,910			155,033
Payments received on purchased loan pools	60,042			95,533
Purchases of premises and equipment	(7,335		)	(3,016		)
Proceeds from sales of premises and equipment	576			16
Proceeds from sales of other real estate owned	7,461			11,989
Payments paid to FDIC under loss-share agreements	(1,205		)	(97		)
Net cash and cash equivalents received in acquisitions	51,495			—
Net cash used in investing activities	(159,394		)	(534,723		)

				(Continued)

AMERIS BANCORP AND SUBSIDIARIES

Consolidated Statements of Cash Flows (unaudited)

(dollars in thousands)



	Nine Months Ended September 30,
	2018			2017
Financing Activities, net of effects of business combinations
Net increase in deposits	$	389,884		$	320,341
Net decrease in securities sold under agreements to repurchase	(16,567		)	(39,349		)
Proceeds from other borrowings	1,530,000			1,687,692
Repayment of other borrowings	(1,338,917		)	(1,371,503		)
Issuance of common stock	—			88,656
Proceeds from exercise of stock options	846			1,912
Dividends paid - common stock	(11,655		)	(10,927		)
Purchase of treasury shares	(2,062		)	(886		)
Net cash provided by financing activities	551,529			675,936

Net increase in cash and cash equivalents	298,599			45,530
Cash and cash equivalents at beginning of period	330,658			198,385
Cash and cash equivalents at end of period	$	629,257		$	243,915

Supplemental Disclosures of Cash Flow Information
Cash paid during the period for:
Interest	$	45,535		$	23,369
Income taxes	10,252			28,212
Loans (excluding purchased loans) transferred to other real estate owned	3,764			4,043
Purchased loans transferred to other real estate owned	2,434			4,294
Loans transferred from loans held for sale to loans held for investment	10,817			—
Loans transferred from loans held for investment to loans held for sale	8,831			—
Loans provided for the sales of other real estate owned	53			1,334
Assets acquired in business acquisitions	3,059,856			—
Liabilities assumed in business acquisitions	2,410,453			—
Issuance of common stock in acquisitions	547,127			—
Issuance of common stock in exchange for equity investment in US Premium Finance Holding Company	—			5,844
Change in unrealized gain (loss) on securities available for sale, net of tax	(15,590		)	4,337
Change in unrealized gain (loss) on cash flow hedge, net of tax	294			(38		)

				(Concluded)

See notes to unaudited consolidated financial statements.

AMERIS BANCORP AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

September 30, 2018

NOTE 1 – BASIS OF PRESENTATION AND ACCOUNTING POLICIES

Nature of Business

Ameris Bancorp (the “Company” or “Ameris”) is a financial holding company headquartered in Moultrie, Georgia. Ameris conducts substantially all of its operations through its wholly owned banking subsidiary, Ameris Bank (the “Bank”). At September 30, 2018, the Bank operated 125 branches in select markets in Georgia, Alabama, 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. The Company’s Board of Directors and senior managers establish corporate policy, strategy and administrative policies. Within our established guidelines and policies, the banker closest to the customer responds to the differing needs and demands of his or her unique market.

Basis of Presentation

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 (consisting of normal recurring accruals) 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 September 30, 2018 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, 2017.

Cash and Cash Equivalents

For purposes of reporting cash flows, cash and cash equivalents include cash on hand, cash items in process of collection, amounts due from banks, interest-bearing deposits in banks and federal funds sold. The Bank is required to maintain reserve balances in cash or on deposit with the Federal Reserve Bank of Atlanta. The reserve requirement as of September 30, 2018 and December 31, 2017 was $58.2 million and $44.1 million, respectively, and was met by cash on hand which is reported on the Company's consolidated balance sheets in cash and due from banks.

Intangible Assets

Intangible assets include core deposit premiums acquired in connection with business combinations and are based on the established value of acquired customer deposits. The core deposit premium is initially recognized based on a valuation performed as of the consummation date and is amortized over an estimated useful life of seven to ten years. Intangible assets also include insurance agent relationships, trade name and non-compete agreement intangible assets acquired in the acquisition of US Premium Finance Holding Company. These agent relationship, trade name and non-compete agreement intangible assets were initially recognized based on a valuation performed as of the consummation date and are amortized over estimated useful lives ranging from three to eight years.

Reclassifications

Certain reclassifications of prior year amounts have been made to conform with the current year presentations.

Accounting Standards Adopted in 2018

ASU 2018-02 - Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income ("ASU 2018-02"). Issued in February 2018, ASU 2018-02 seeks to help entities reclassify certain stranded income tax effects in accumulated other comprehensive income resulting from the Tax Cuts and Jobs Act of 2017 (the "Tax Reform Act"), enacted on December 22, 2017. ASU 2018-02 was issued in response to concerns regarding

current accounting guidance that requires deferred tax assets and deferred tax liabilities to be adjusted for the effect of a change in tax laws or rates with the effect included in income from continuing operations in the reporting period that includes the enactment date, even in situations in which the related income tax effects of items in accumulated other comprehensive income were originally recognized in other comprehensive income, rather than net income, and as a result the stranded tax effects would not reflect the appropriate tax rate. The amendments of ASU 2018-02 allow an entity to make a reclassification from accumulated other comprehensive income to retained earnings for the stranded tax effects, which is the difference between the historical corporate income tax rate of 35.0% and the newly enacted corporate income tax rate of 21.0%. ASU 2018-02 is effective for fiscal years, and interim periods within those years, beginning after December 31, 2018; however, public business entities are allowed to early adopt the amendments of ASU 2018-02 in any interim period for which the financial statements have not yet been issued. The amendments of ASU 2018-02 may be applied either at the beginning of the period (annual or interim) of adoption or retrospectively to each of the period(s) in which the effect of the change in the U.S. federal corporate tax rate in the Tax Reform Act is recognized. As a result of the remeasurement of the Company's deferred tax assets and deferred tax liabilities following the enactment of the Tax Reform Act, accumulated other comprehensive loss included $392,000 of stranded tax effects at December 31, 2017. The Company early adopted ASU 2018-02 during the first quarter of 2018 and made an election to reclassify the stranded tax effects from accumulated other comprehensive loss to retained earnings at the beginning of the period of adoption. The reclassification of the stranded tax effects resulted in an increase of $392,000 in accumulated other comprehensive loss and a corresponding increase of $392,000 in retained earnings.

ASU 2017-12 – Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities ("ASU 2017-12"). The purposes of ASU 2017-12 are to (1) improve the transparency and understandability of information conveyed in financial statements about an entity’s risk management activities by better aligning the entity’s financial reporting for hedging relationships with the economic objectives of those risk management activities and (2) reduce the complexity of and simplify the application of hedge accounting by preparers. ASU 2017-12 is effective for interim and annual reporting periods beginning after December 15, 2018 with early adoption in an interim period permitted. ASU 2017-12 requires a modified retrospective transition method in which the Company will recognize the cumulative effect of the change on the opening balance of each affected component of equity in the statement of financial position as of the beginning of the fiscal year of adoption. During the first quarter of 2018, the Company early adopted the provisions of ASU 2017-12, and the adoption did not have a material impact on the Company's consolidated financial statements.

ASU 2017-09 – Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting (“ASU 2017-09”). ASU 2017-09 clarifies when changes to the terms of a share-based award must be accounted for as a modification. Companies must apply the modification accounting guidance if any of the following change: the share-based award’s fair value, vesting provisions or classification as an equity instrument or a liability instrument. The new guidance should reduce diversity in practice and result in fewer changes to the terms of share-based awards being accounted for as modifications, as the guidance will allow companies to make certain non-substantive changes to share-based awards without accounting for them as modifications. ASU 2017-09 is effective for interim and annual reporting periods beginning after December 15, 2017 with early adoption permitted. During the first quarter of 2018, the Company adopted the provisions of ASU 2017-09, and the adoption did not have a material impact on the Company's consolidated financial statements.

ASU 2017-01 – Business Combinations (Topic 805): Clarifying the Definition of a Business (“ASU 2017-01”). ASU 2017-01 provides a framework to use in determining when a set of assets and activities is a business. The standard provides more consistency in applying the business combination guidance, reduces the costs of application, and makes the definition of a business more operable. ASU 2017-01 is effective for interim and annual periods within those annual periods beginning after December 15, 2017. During the first quarter of 2018, the Company adopted the provisions of ASU 2017-01, and the adoption did not have a material impact on the Company's consolidated financial statements.

ASU 2016-01 – Financial Instruments - Recognition and Measurement of Financial Assets and Financial Liabilities ("ASU 2016-01"). ASU 2016-01 (1) requires equity investments that do not result in consolidation and are not accounted for under the equity method to be measured at fair value with changes recognized through net income; (2) simplifies the impairment assessment of equity investments without readily determinable fair values by allowing a qualitative assessment similar to those performed on long-lived assets, goodwill or intangibles to be utilized at each reporting period; (3) eliminates the use of the entry price method requiring all preparers to utilize the exit price notion consistent with Topic 820, Fair Value Measurement in disclosing the fair value of financial instruments measured at amortized cost; (4) requires separate disclosure within other comprehensive income of changes in the fair value of liabilities due to instrument-specific credit risk when the fair value option has been elected; and (5) requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or in the accompanying notes to the financial statements. ASU 2016-01 is effective for annual reporting periods beginning after December 15, 2017, and interim periods. During the first quarter of 2018, the Company adopted ASU 2016-01. Other than changing from the entry price method to an exit price notion in disclosing fair value of financial instruments at amortized cost, the adoption did not have a material impact on the Company's consolidated financial statements.

ASU 2014-09 – Revenue from Contracts with Customers (“ASU 2014-09”). On January 1, 2018, the Company adopted ASU 2014-09 and all subsequent amendments to the ASU (collectively "ASC 606") which (1) creates a single framework for recognizing revenue from contracts with customers that fall within its scope and (2) revises when it is appropriate to recognize a gain (loss) from the transfer of nonfinancial assets, such as other real estate owned ("OREO"). The majority of the Company's revenues come from interest income and other sources, including loans, leases, investment securities and derivative financial instruments, that are outside the scope of ASC 606. With the exception of gains/losses on the sale of OREO, the Company's services that fall within the scope of ASC 606 are presented within noninterest income and are recognized as revenue as the Company satisfies its obligations to the customer. Services within the scope of ASC 606 reported in noninterest income include service charges on deposit accounts, debit card interchange fees, and ATM fees. The net of gains and losses on the sale of OREO are recorded in credit resolution related expenses in the Company's consolidated statement of income and comprehensive income. The adoption of ASC 606 did not change the timing or amount of revenue recognized for in-scope revenue streams. Accordingly, no cumulative effect adjustment was recorded under the modified retrospective transition method. See Note 14 for further discussion on the Company's accounting policies for revenue sources within the scope of ASC 606.

Accounting Standards Pending Adoption

ASU 2018-15 – Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs incurred in a Cloud Computing Arrangement That Is a Service Contract ("ASU 2018-15"). ASU 2018-15 requires that application development stage implementation costs incurred in a Cloud Computing Arrangement ("CCA") that are service contracts be capitalized and amortized over the term of the hosting arrangement including renewal option terms if the customer entity is reasonably certain to exercise the option. Costs incurred in the preliminary project and post-implementation stages are expensed as incurred. Training costs and certain data conversion costs also cannot be capitalized for a CCA that is a service contract. Amortization expense of capitalized implementation costs will be presented in the same income statement caption as the CCA fees. Similarly, capitalized implementation costs will be presented in the same balance sheet caption as any prepaid CCA fees and cash flows from capitalized implementation costs will be classified in the statement of cash flows in the same manner as payments made for the CCA fees. The requirements of ASU 2018-15 should be applied either retrospectively or prospectively to all implementation costs incurred after the adoption date. ASU 2018-15 is effective for interim and annual periods beginning after December 15, 2019. Early adoption is permitted. The Company is currently evaluating the impact this ASU will have on the Company’s consolidated balance sheet, consolidated statement of income and comprehensive income, consolidated statement of stockholders’ equity and consolidated statement of cash flows, but it is not expected to have a material impact.

ASU 2018-13 – Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement ("ASU 2018-13). ASU 2018-13 changes fair value measurement disclosure requirements by removing certain requirements, modifying certain requirements and adding certain new requirements. Disclosure requirements removed include the following: transfers between Level 1 and Level 2 of the fair value hierarchy; the policy for determining when transfers between any of the three levels have occurred; the valuation processes for Level 3 measurements; and the changes in unrealized gains or losses presented in earnings for Level 3 instruments held at end of the reporting period. Disclosure requirements that have been modified include the following: for investments in certain entities that calculate net asset value, an entity is required to disclose the timing of liquidation of an investee's assets and the date when restrictions from redemption might lapse only if the investee has communicated the timing to the entity or announced the timing publicly; and clarification that the Level 3 measurement uncertainty disclosure should communicate information about the uncertainty at the balance sheet date. New disclosure requirements include the following: the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 instruments held at the end of the reporting period; and the range and weighted average of significant unobservable inputs used for Level 3 measurements or disclosure of other quantitative information in place of the weighted average to the extent that it would be a more reasonable and rational method to reflect the distribution of unobservable inputs. ASU 2018-13 is effective for interim and annual periods beginning after December 15, 2019. Early adoption is permitted. The Company is currently evaluating the impact this standard will have on the Company’s fair value measurement disclosures, but it is not expected to have a material impact.

ASU 2017-04 – Intangibles: Goodwill and Other: Simplifying the Test for Goodwill Impairment (“ASU 2017-04”). ASU 2017-04 eliminates Step 2 from the goodwill impairment test to simplify the subsequent measurement of goodwill. The annual, or interim, goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. In addition, the income tax effects of tax deductible goodwill on the carrying amount of the reporting unit should be considered when measuring the goodwill impairment loss, if applicable. ASU 2017-04 also eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform Step 2 of the goodwill impairment test. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The standard must be adopted using a prospective basis and the nature and reason for the change in accounting principle should be disclosed upon transition. ASU 2017-04 is effective

for annual or any interim goodwill impairment tests in reporting periods beginning after December 15, 2019. Early adoption is permitted on testing dates after January 1, 2017. The Company is currently evaluating the impact this ASU will have on the Company’s results of operations, financial position and disclosures, but it is not expected to have a material impact.

ASU 2016-13 – Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 significantly changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The standard will replace the current incurred loss approach with an expected loss model, referred to as the current expected credit loss (“CECL”) model. The new standard will apply to financial assets subject to credit losses and measured at amortized cost and certain off-balance-sheet credit exposures, which include, but are not limited to, loans, leases, held-to-maturity securities, loan commitments and financial guarantees. ASU 2016-13 simplifies the accounting for purchased credit-impaired debt securities and loans and expands the disclosure requirements regarding an entity’s assumptions, models and methods for estimating the allowance for loan and lease losses. In addition, entities will need to disclose the amortized cost balance for each class of financial asset by credit quality indicator, disaggregated by the year of origination. ASU 2016-13 is effective for interim and annual reporting periods beginning after December 15, 2019. Early adoption is permitted for interim and annual reporting periods beginning after December 15, 2018. Upon adoption, ASU 2016-13 provides for a modified retrospective transition by means of a cumulative effect adjustment to equity as of the beginning of the period in which the guidance is effective. While the Company is currently evaluating the impact this ASU will have on the results of operations, financial position and disclosures, the Company expects to recognize a one-time cumulative effect adjustment to equity and the allowance for loan losses as of the beginning of the first reporting period in which the new standard is effective. The Company has established a steering committee which includes the appropriate members of management to evaluate the impact this ASU will have on Company’s financial position, results of operations and financial statement disclosures and determine the most appropriate method of implementing the amendments in this ASU as well as any resources needed to implement the amendments. This committee has engaged the software vendor of choice for implementation, established an implementation time-line, begun working with the software vendor in sourcing and testing required data feeds, conducts regular meetings to monitor the project's status, and continues to stay current on implementation issues and concerns.

ASU 2016-02 – Leases (Topic 842) (“ASU 2016-02”). ASU 2016-02 amends the existing standards for lease accounting effectively requiring most leases be carried on the balance sheets of the related lessees by requiring them to recognize a right-of-use asset and a corresponding lease liability. ASU 2016-02 includes qualitative and quantitative disclosure requirements intended to provide greater insight into the nature of an entity’s leasing activities. The standard must be adopted using a modified retrospective transition with a cumulative effect adjustment to equity as of the beginning of the period in which it is adopted. ASU 2016-02 is effective for annual reporting periods beginning after December 15, 2018, and interim periods within those annual periods with early adoption permitted. The Company has several leased facilities, which are currently treated as operating leases, and are not currently shown on the Company’s consolidated balance sheet. After ASU 2016-02 is implemented, the Company expects to begin reporting these lease agreements on the balance sheet as a right-of-use asset and a corresponding liability. The Company is currently evaluating the impact this ASU will have on the Company’s consolidated statement of income and comprehensive income, consolidated statement of stockholders’ equity and consolidated statement of cash flows, but it is not expected to have a material impact. A software vendor has been selected by the Company for assistance in the Company's implementation of ASU 2016-02.

NOTE 2 – BUSINESS COMBINATIONS

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

Hamilton State Bancshares, Inc.

On June 29, 2018, the Company completed its acquisition of Hamilton State Bancshares, Inc. ("Hamilton"), a bank holding company headquartered in Hoschton, Georgia. Upon consummation of the acquisition, Hamilton was merged with and into the Company, with Ameris as the surviving entity in the merger. At that time, Hamilton's wholly owned banking subsidiary, Hamilton State Bank, was also merged with and into the Bank. The acquisition expanded the Company's existing market presence, as Hamilton State Bank had a total of 28 full-service branches located in Atlanta, Georgia and the surrounding area, as well as in Gainesville, Georgia. Under the terms of the merger agreement, Hamilton's shareholders received 0.16 shares of Ameris common stock and $0.93 in cash for each share of Hamilton voting common stock or nonvoting common stock they previously held. As a result, the Company issued 6,548,385 common shares at a fair value of $349.4 million and paid $47.8 million in cash to the former shareholders of Hamilton as merger consideration.

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



(dollars in thousands)	As Recorded by Hamilton			Initial Fair Value Adjustments				Subsequent Adjustments				As Recorded by Ameris
Assets
Cash and due from banks	$	14,405		$	—			$	(478	)	(j)	$	13,927
Federal funds sold and interest-bearing deposits in banks	102,156			—				—				102,156
Time deposits in other banks	11,558			—				—				11,558
Investment securities	288,206			(2,376		)	(a)	—				285,830
Other investments	2,094			—				—				2,094
Loans	1,314,264			(15,528		)	(b)	—				1,298,736
Less allowance for loan losses	(11,183		)	11,183			(c)	—				—
Loans, net	1,303,081			(4,345		)		—				1,298,736
Other real estate owned	847			—				—				847
Premises and equipment	27,483			—				—				27,483
Other intangible assets, net	18,755			(2,755		)	(d)	—				16,000
Cash value of bank owned life insurance	4,454			—				—				4,454
Deferred income taxes, net	12,445			(6,308		)	(e)	—				6,137
Other assets	13,053			—				(43		)	(k)	13,010
Total assets	$	1,798,537		$	(15,784	)		$	(521	)		$	1,782,232
Liabilities
Deposits:
Noninterest-bearing	$	381,039		$	—			—				$	381,039
Interest-bearing	1,201,324			(1,896		)	(f)	—				1,199,428
Total deposits	1,582,363			(1,896		)		—				1,580,467
Other borrowings	10,687			(66		)	(g)	—				10,621
Subordinated deferrable interest debentures	3,093			(658		)	(h)	—				2,435
Other liabilities	10,460			2,391			(i)	—				12,851
Total liabilities	1,606,603			(229		)		—				1,606,374
Net identifiable assets acquired over (under) liabilities assumed	191,934			(15,555		)		(521		)		175,858
Goodwill	—			220,713				564				221,277
Net assets acquired over liabilities assumed	$	191,934		$	205,158			$	43			$	397,135
Consideration:
Ameris Bancorp common shares issued	6,548,385
Price per share of the Company's common stock	$	53.35
Company common stock issued	$	349,356
Cash exchanged for shares	$	47,779
Fair value of total consideration transferred	$	397,135

____________________________________________________________

Explanation of fair value adjustments


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


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


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


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


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


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


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


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


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


(j)	Subsequent to acquisition, cash and due from banks were adjusted for Hamilton reconciling items.


(k)	Adjustment reflects the fair value adjustment to other assets.

Goodwill of $221.3 million, which is the excess of the purchase price over the fair value of net assets acquired, was recorded in the Hamilton acquisition and is the result of expected operational synergies and other factors. This goodwill is not expected to be deductible for tax purposes.

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



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

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



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

Atlantic Coast Financial Corporation

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

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



(dollars in thousands)	As Recorded by Atlantic			Initial Fair Value Adjustments				Subsequent Adjustments				As Recorded by Ameris
Assets
Cash and due from banks	$	3,990		$	—			$	—			$	3,990
Federal funds sold and interest-bearing deposits in banks	22,149			—				—				22,149
Investment securities	35,186			(60		)	(a)	—				35,126
Other investments	9,576			—				—				9,576
Loans held for sale	358			—				—				358
Loans	777,605			(19,423		)	(b)	(2,478		)	(k)	755,704
Less allowance for loan losses	(8,573		)	8,573			(c)	—				—
Loans, net	769,032			(10,850		)		(2,478		)		755,704
Other real estate owned	1,837			(796		)	(d)	—				1,041
Premises and equipment	12,591			(1,695		)	(e)	—				10,896
Other intangible assets, net	—			5,937			(f)	1,551			(l)	7,488
Cash value of bank owned life insurance	18,182			—				—				18,182
Deferred income taxes, net	5,782			709			(g)	(26		)	(m)	6,465
Other assets	3,604			(634		)	(h)	—				2,970
Total assets	$	882,287		$	(7,389	)		$	(953	)		$	873,945
Liabilities
Deposits:
Noninterest-bearing	$	69,761		$	—			—				$	69,761
Interest-bearing	514,935			(554		)	(i)	1,025			(n)	515,406
Total deposits	584,696			(554		)		1,025				585,167
Other borrowings	204,475			—				—				204,475
Other liabilities	8,367			(13		)	(j)	—				8,354
Total liabilities	797,538			(567		)		1,025				797,996
Net identifiable assets acquired over (under) liabilities assumed	84,749			(6,822		)		(1,978		)		75,949
Goodwill	—			91,360				1,978				93,338
Net assets acquired over liabilities assumed	$	84,749		$	84,538			$	—			$	169,287
Consideration:
Ameris Bancorp common shares issued	2,631,520
Price per share of the Company's common stock	$	56.15
Company common stock issued	$	147,760
Cash exchanged for shares	$	21,527
Fair value of total consideration transferred	$	169,287

____________________________________________________________

Explanation of fair value adjustments


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


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


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


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


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


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


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


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


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


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


(k)	Adjustment reflects additional recording of fair value adjustments of the acquired loan portfolio.


(l)	Adjustment reflects additional recording of fair value adjustments to the core deposit intangible on the acquired core deposit accounts.


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


(n)	Adjustment reflects additional fair value adjustments on the acquired deposits.

Goodwill of $93.3 million, which is the excess of the purchase price over the fair value of net assets acquired, was recorded in the Atlantic acquisition and is the result of expected operational synergies and other factors. This goodwill is not expected to be deductible for tax purposes.

In the acquisition, the Company purchased $755.7 million of loans at fair value, net of $21.9 million, or 2.82%, estimated discount to the outstanding principal balance. Of the total loans acquired, management identified $10.8 million that were considered to be credit impaired and are accounted for under ASC Topic 310-30. The table below summarizes the total contractually required principal and interest cash payments, management’s estimate of expected total cash payments and fair value of the loans as of the acquisition date for purchased credit impaired loans. Contractually required principal and interest payments have been adjusted for estimated prepayments.



(dollars in thousands)
Contractually required principal and interest	$	16,077
Non-accretable difference	(4,115		)
Cash flows expected to be collected	11,962
Accretable yield	(1,199		)
Total purchased credit-impaired loans acquired	$	10,763

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



(dollars in thousands)	Fair Value of Acquired Loans at Acquisition Date		Gross Contractual Amounts Receivable at Acquisition Date		Estimate at Acquisition Date of Contractual Cash Flows Not Expected to be Collected
Acquired receivables subject to ASC 310-30	$	10,763	$	16,077	$	4,115
Acquired receivables not subject to ASC 310-30	$	744,941	$	1,041,768	$	—

US Premium Finance Holding Company

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

Prior to the January 31, 2018 completion of the acquisition, the Company's 30% investment in USPF was carried at its $23.9 million original cost basis. Once the acquisition was completed, the $83.0 million aggregate purchase price equaled the fair value

of USPF which was determined utilizing the incremental projected earnings. Accordingly, no gain or loss was recorded by the Company in the consolidated statement of income and comprehensive income as a result of remeasuring to fair value the prior minority equity investment in USPF held by the Company immediately before the business combination was completed.

As of September 30, 2018, the Company finalized its allocation of the purchase price to USPF's assets acquired and liabilities assumed based on estimated fair values as of January 31, 2018. The assets acquired include only identifiable intangible assets related to insurance agent relationships that lead to referral of insurance premium finance loans to USPF, the US Premium Finance trade name and a non-compete agreement with a former USPF shareholder. The following table presents the assets acquired and liabilities assumed of USPF as of January 31, 2018, and their fair value estimates.



(dollars in thousands)	As Recorded by USPF		Initial Fair Value Adjustments			Subsequent Adjustments				As Recorded by Ameris
Assets
Intangible asset - insurance agent relationships	$	—	$	20,000	(a)	$	2,351		(e)	$	22,351
Intangible asset - US Premium Finance trade name	—		1,136		(b)	(42		)	(f)	1,094
Intangible asset - non-compete agreement	—		178		(c)	(16		)	(g)	162
Total assets	$	—	$	21,314		$	2,293			$	23,607
Liabilities
Deferred tax liability	$	—	$	5,492	(d)	591			(h)	$	6,083
Total liabilities	—		5,492			591				6,083
Net identifiable assets acquired over liabilities assumed	—		15,822			1,702				17,524
Goodwill	—		67,159			(1,702		)		65,457
Net assets acquired over liabilities assumed	$	—	$	82,981		$	—			$	82,981
Consideration:
Ameris Bancorp common shares issued	1,073,158
Price per share of the Company's common stock (weighted average)	$	52.047
Company common stock issued	$	55,855
Cash exchanged for shares	$	21,421
Present value of contingent earn-out consideration expected to be paid	$	5,705
Fair value of total consideration transferred	$	82,981

____________________________________________________________

Explanation of fair value adjustments


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


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


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


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


(e)	Adjustment reflects additional fair value adjustment for the insurance agent relationships intangible.


(f)	Adjustment reflects additional fair value adjustment for the trade name intangible.


(g)	Adjustment reflects additional fair value adjustment for the non-compete agreement intangible.


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

Goodwill of $65.5 million, which is the excess of the purchase price over the fair value of net assets acquired, was recorded in the USPF acquisition and is the result of expected operational synergies and other factors. This goodwill is not expected to be deductible for tax purposes.

During the second quarter of 2018, the Company recorded $2.0 million in other noninterest income in the consolidated statements of income and comprehensive income to reflect a decrease in the estimated contingent consideration liability. This decrease in the estimated contingent consideration liability was based on projected results of the premium finance division for the entire measurement period from January 1, 2018 through June 30, 2019. No additional adjustment to the estimated contingent consideration liability was considered necessary for the third quarter of 2018.

Pro Forma Financial Information

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



	Three Months Ended September 30,				Nine Months Ended September 30,
(dollars in thousands, except per share data; shares in thousands)	2018		2017		2018		2017
Net interest income and noninterest income	$	129,209	$	121,864	$	384,861	$	355,813
Net income	$	41,444	$	27,668	$	90,950	$	87,311
Net income available to common shareholders	$	41,444	$	27,668	$	90,950	$	87,311
Income per common share available to common shareholders – basic	$	0.87	$	0.58	$	1.92	$	1.86
Income per common share available to common shareholders – diluted	$	0.87	$	0.58	$	1.91	$	1.85
Average number of shares outstanding, basic	47,515		47,350		47,447		46,822
Average number of shares outstanding, diluted	47,685		47,677		47,619		47,150

NOTE 3 – INVESTMENT SECURITIES

The Company’s 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 state, county and municipal securities. The Company’s portfolio and investing philosophy concentrate activities in obligations where the credit risk is limited. For the small portion of the Company’s 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, along with unrealized gains and losses, are summarized as follows:



(dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
September 30, 2018
State, county and municipal securities	$	151,934	$	696	$	(881	)	$	151,749
Corporate debt securities	67,175		502		(559		)	67,118
Mortgage-backed securities	965,185		470		(21,952		)	943,703
Total debt securities	$	1,184,294	$	1,668	$	(23,392	)	$	1,162,570

December 31, 2017
State, county and municipal securities	$	135,968	$	1,989	$	(163	)	$	137,794
Corporate debt securities	46,659		721		(237		)	47,143
Mortgage-backed securities	630,666		1,762		(6,492		)	625,936
Total debt securities	$	813,293	$	4,472	$	(6,892	)	$	810,873

The amortized cost and estimated fair value of available for sale securities at September 30, 2018 by contractual maturity are summarized in the table below. Expected maturities for mortgage-backed securities may differ from contractual maturities because in certain cases borrowers can prepay obligations without prepayment penalties. Therefore, these securities are not included in the following maturity summary.



(dollars in thousands)	Amortized Cost		Estimated Fair Value
Due in one year or less	$	16,066	$	16,077
Due from one year to five years	87,492		86,858
Due from five to ten years	86,201		86,565
Due after ten years	29,350		29,367
Mortgage-backed securities	965,185		943,703
	$	1,184,294	$	1,162,570

Securities with a carrying value of approximately $363.1 million serve as collateral to secure public deposits, securities sold under agreements to repurchase and for other purposes required or permitted by law at September 30, 2018, compared with $403.3 million at December 31, 2017.

The following table details the gross unrealized losses and estimated fair value of securities aggregated by category and duration of continuous unrealized loss position at September 30, 2018 and December 31, 2017.



	Less Than 12 Months					12 Months or More					Total
(dollars in thousands)	Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses
September 30, 2018
State, county and municipal securities	$	83,727	$	(688	)	$	12,067	$	(193	)	$	95,794	$	(881	)
Corporate debt securities	12,141		(113		)	17,970		(446		)	30,111		(559		)
Mortgage-backed securities	583,330		(9,344		)	267,078		(12,608		)	850,408		(21,952		)
Total debt securities	$	679,198	$	(10,145	)	$	297,115	$	(13,247	)	$	976,313	$	(23,392	)

December 31, 2017
State, county and municipal securities	$	33,976	$	(115	)	$	4,725	$	(48	)	$	38,701	$	(163	)
Corporate debt securities	3,465		(35		)	18,853		(202		)	22,318		(237		)
Mortgage-backed securities	262,353		(2,401		)	190,368		(4,091		)	452,721		(6,492		)
Total debt securities	$	299,794	$	(2,551	)	$	213,946	$	(4,341	)	$	513,740	$	(6,892	)

As of September 30, 2018, the Company’s securities portfolio consisted of 527 securities, 386 of which were in an unrealized loss position. The majority of unrealized losses are related to the Company’s mortgage-backed securities, as discussed below.

At September 30, 2018, the Company held 303 mortgage-backed securities that were in an unrealized loss position, all of which were issued by U.S. government-sponsored entities and agencies. Because the decline in fair value is attributable to changes in interest rates and illiquidity, and not credit quality, and because the Company does not have the intent to sell these mortgage-backed securities and it is likely that it will not be required to sell the securities before their anticipated recovery, the Company does not consider these securities to be other-than-temporarily impaired at September 30, 2018.

At September 30, 2018, the Company held 68 state, county and municipal securities and 15 corporate debt securities that were in an unrealized loss position. Because the decline in fair value is attributable to changes in interest rates and illiquidity, and not credit quality, and because the Company does not have the intent to sell these securities and it is likely that it will not be required to sell the securities before their anticipated recovery, the Company does not consider these securities to be other-than-temporarily impaired at September 30, 2018.