Ameris Bancorp - Interim / Quarterly Report 2012

10-Q 1 d264012d10q.htm FORM 10-Q FORM 10-Q

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2012

¨ 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

(Registrants 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 ¨

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 x No ¨

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	¨	Accelerated filer	x
Non-accelerated filer	¨ (Do not check if a smaller reporting company)	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 ¨ No x

There were 23,819,144 shares of Common Stock outstanding as of July 27, 2012.

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AMERIS BANCORP

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PART I FINANCIAL INFORMATION
Item 1.	Financial Statements.
	Consolidated Balance Sheets at June 30, 2012, December 31, 2011 and June 30, 2011	1
	Consolidated Statements of Operations and Comprehensive Income for the Three and Six Month Periods Ended
June 30, 2012 and 2011	2
	Consolidated Statements of Changes in Stockholders Equity for the Six Months Ended June
30, 2012 and 2011	3
	Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2012 and 2011	4
	Notes to Consolidated Financial Statements	5
Item 2.	Managements Discussion and Analysis of Financial Condition and Results of Operations.	32
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	44
Item 4.	Controls and Procedures.	44
PART II OTHER INFORMATION
Item 1.	Legal Proceedings.	45
Item 1A.	Risk Factors.	45
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	45
Item 3.	Defaults Upon Senior Securities.	45
Item 4.	Mine Safety Disclosures.	45
Item 5.	Other Information.	45
Item 6.	Exhibits.	45
Signatures		45

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Item 1. Financial Statements.

AMERIS BANCORP AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Dollars in Thousands)

	June 30, 2012 — (Unaudited)	(Audited)		(Unaudited)
Assets
Cash and due from banks	$ 60,126	$	65,528	$	68,552
Federal funds sold and interest bearing accounts	111,251		229,042		218,330
Investment securities available for sale, at fair value	366,980		339,967		334,376
Other investments	7,884		9,878		10,354
Mortgage loans held for sale	19,659		11,563
Loans	1,365,489		1,332,086		1,360,063
Covered loans	601,737		571,489		486,489
Less: allowance for loan losses	26,198		35,156		34,523
Loans, net	1,941,028		1,868,419		1,812,029
Other real estate owned	40,018		50,301		61,533
Covered other real estate owned	83,467		78,617		63,583
Total other real estate owned	123,485		128,918		125,116
FDIC indemnification asset	203,801		242,394		160,927
Premises and equipment, net	75,192		73,124		65,925
Intangible assets, net	3,767		3,250		3,745
Goodwill	956		956		956
Other assets	6,182		21,268		56,927
Total assets	$ 2,920,311	$	2,994,307	$	2,857,237
Liabilities and Stockholders Equity
Liabilities
Deposits:
Noninterest-bearing	$ 429,113	$	395,347	$	318,004
Interest-bearing	2,115,559		2,196,219		2,193,359
Total deposits	2,544,672		2,591,566		2,511,363
Securities sold under agreements to repurchase	19,800		37,665		17,136
Other borrowings	3,810		20,000
Other liabilities	8,821		9,037		9,311
Subordinated deferrable interest debentures	42,269		42,269		42,269
Total liabilities	2,619,372		2,700,537		2,580,079
Commitments and contingencies
Stockholders Equity
Preferred stock, stated value $1,000; 5,000,000 shares authorized; 52,000 shares issued	51,044		50,727		50,419
Common stock, par value $1; 100,000,000 shares authorized; 25,155,318, 25,087,468 and 25,102,218 issued	25,155		25,087		25,102
Capital surplus	166,685		166,639		166,170
Retained earnings	61,081		54,852		38,888
Accumulated other comprehensive income	7,805		7,296		7,410
Treasury stock, at cost, 1,336,174 shares	(10,831	)	(10,831	)	(10,831	)
Total stockholders equity	300,939		293,770		277,158
Total liabilities and stockholders equity	$ 2,920,311	$	2,994,307	$	2,857,237

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 June 30, — 2012	2011		2012		2011
Interest income
Interest and fees on loans	$ 30,334	$	32,876	$	59,816	$	61,847
Interest on taxable securities	2,187		2,574		4,496		5,232
Interest on nontaxable securities	374		314		739		634
Interest on deposits in other banks and federal funds sold	112		159		238		347
Total interest income	33,007		35,923		65,289		68,060
Interest expense
Interest on deposits	3,635		6,828		7,719		14,200
Interest on other borrowings	491		351		962		906
Total interest expense	4,126		7,179		8,681		15,106
Net interest income	28,881		28,747		56,608		52,954
Provision for loan losses	7,225		9,115		20,107		16,158
Net interest income after provision for loan losses	21,656		19,632		36,501		36,796
Noninterest income
Service charges on deposit accounts	4,770		4,665		9,156		8,932
Mortgage banking activity	3,006		376		4,481		826
Other service charges, commissions and fees	322		273		713		515
Gain on acquisitions					20,037
Gain on sale of securities			14				238
Other noninterest income	777		646		1,752		1,656
Total noninterest income	8,875		5,974		36,139		12,167
Noninterest expense
Salaries and employee benefits	12,125		9,421		23,571		19,264
Equipment and occupancy expenses	2,880		2,752		6,215		5,482
Amortization of intangible assets	412		242		632		505
Data processing and telecommunications expenses	2,905		2,452		4,830		4,848
Advertising and marketing expenses	364		149		713		312
Other non-interest expenses	7,937		7,580		24,908		13,340
Total noninterest expense	26,623		22,596		60,869		43,751
Income before income tax expense	3,908		3,010		11,771		5,212
Applicable income tax expense	1,413		896		3,911		1,720
Net income	$ 2,495	$	2,114	$	7,860	$	3,492
Preferred stock dividends	817		807		1,632		1,605
Net income available to common shareholders	$ 1,678	$	1,307	$	6,228	$	1,887
Other comprehensive income
Unrealized holding gain arising during period on investment securities available for sale, net of tax	1,934		2,250		1,244		1,988
Reclassification adjustment for gains included in net loss, net of tax			(8	)			(154	)
Unrealized loss on cash flow hedges arising during period, net of tax	(642	)	(574	)	(736	)	(628	)
Other comprehensive income	1,292		1,668		508		1,206
	$ 2,970	$	2,975	$	6,736	$	3,093
Basic and Diluted earnings per share	$ 0.07	$	0.06	$	0.26	$	0.08
Weighted Average Common Shares Outstanding
Basic	23,819		23,449		23,791		23,445
Diluted	23,973		23,508		23,945		23,491

See notes to unaudited consolidated financial statements.

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AMERIS BANCORP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY

(dollars in thousands, except per share data)

(Unaudited)


June 30, 2012			June 30, 2011
Shares		Amount	Shares	Amount
PREFERRED STOCK
Balance at beginning of period	52,000	$ 50,727	52,000	$	50,121
Accretion of fair value of warrant		317			298
Issued at end of period	52,000	$ 51,044	52,000	$	50,419
COMMON STOCK
Issued at beginning of period	25,087,468	$ 25,087	24,982,911	$	24,983
Issuance of restricted shares	67,450	67	125,075		125
Cancellation of restricted shares			(7,000	)	(7	)
Proceeds from exercise of stock options	400	1	1,232		1
Issued at end of period	25,155,318	$ 25,155	25,102,218	$	25,102
CAPITAL SURPLUS
Balance at beginning of period		$ 166,639		$	165,930
Stock-based compensation		111			349
Proceeds from exercise of stock options		2			9
Issuance of restricted shares		(67	)		(125	)
Cancellation of restricted shares					7
Balance at end of period		$ 166,685		$	166,170
RETAINED EARNINGS
Balance at beginning of period		$ 54,852		$	37,000
Net income		7,860			3,492
Dividends on preferred shares		(1,314	)		(1,306	)
Accretion of fair value of warrant		(317	)		(298	)
Balance at end of period		$ 61,081		$	38,888
ACCUMULATED OTHER COMPREHENSIVE INCOME, NET OF TAX
Unrealized gains on securities and derivatives:
Balance at beginning of period		$ 7,296		$	6,204
Other comprehensive income		509			1,206
Balance at end of period		$ 7,805		$	7,410
TREASURY STOCK
Balance at beginning of period		$ 10,831		$	10,831
Purchase of treasury shares
Balance at end of period		$ 10,831		$	10,831
TOTAL STOCKHOLDERS EQUITY		$ 300,939		$	277,158

See notes to unaudited consolidated financial statements.

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AMERIS BANCORP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in Thousands)

(Unaudited)

	Six Months Ended June 30, — 2012		2011
Cash Flows From Operating Activities:
Net income	$ 7,860		$ 3,492
Adjustments reconciling net income to net cash provided by operating activities:
Depreciation	2,331		2,168
Net gains on sale or disposal of premises and equipment	(1	)	(139	)
Net losses or write-downs on sale of other real estate owned	8,065		3,570
Provision for loan losses	20,107		16,158
Gain on acquisitions	(23,037	)
Amortization of intangible assets	632		505
Net change in mortgage loans held for sale	(8,096	)
Net gains on securities available for sale			(238	)
Change in other prepaids, deferrals and accruals, net	14,163		(15,659	)
Net cash provided by operating activities	25,024		9,857
Cash Flows From Investing Activities, net of effect of business combinations:
Net (increase)/decrease in federal funds sold and interest bearing deposits	117,791		42,932
Proceeds from maturities of securities available for sale	52,737		37,430
Purchase of securities available for sale	(63,757	)	(85,556	)
Proceeds from sales of securities available for sale	28,923		39,388
Net decrease in loans	1,691		33,819
Proceeds from sales of other real estate owned	33,920		21,361
Proceeds from sales of premises and equipment	346		1,105
Purchases of premises and equipment	(4,744	)	(2,459	)
Decrease in FDIC indemnification asset	91,247		16,260
Net cash proceeds received from FDIC-assisted acquisitions	65,050
Net cash provided by investing activities	323,204		104,280
Cash Flows From Financing Activities, net of effect of business combinations:
Net decrease in deposits	(307,930	)	(24,063	)
Net decrease in securities sold under agreements to repurchase	(17,865	)	(51,048	)
Decrease in other borrowings	(26,524	)	(43,495	)
Dividends paidpreferred stock	(1,314	)	(1,305	)
Proceeds from exercise of stock options	3
Net cash used in financing activities	(353,630	)	(119,911	)
Net decrease in cash and due from banks	$ (5,402	)	$ (5,774	)
Cash and due from banks at beginning of period	65,528		74,326
Cash and due from banks at end of period	$ 60,126		$ 68,552
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid/(received) during the period for:
Interest	$ 9,928		$ 16,044
Income taxes	$ 48		$ 902

See notes to unaudited consolidated financial statements.

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AMERIS BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2012

(Unaudited)

NOTE 1 BASIS OF PRESENTATION AND ACCOUNTING POLICIES

Ameris Bancorp (the Company or Ameris) is a financial holding company headquartered in Moultrie, Georgia. Ameris conducts substantially all of its operations through its wholly-owned banking subsidiary, Ameris Bank (the Bank). At June 30, 2012, the Bank operated 67 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. Ameris Board of Directors and senior managers establish corporate policy, strategy and administrative policies. Within Ameris established guidelines and policies, the banker closest to the customer responds to the differing needs and demands of their unique market.

The accompanying unaudited consolidated financial statements for Ameris have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and Regulation S-X. Accordingly, the financial statements do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statement presentation. The interim consolidated financial statements included herein are unaudited, but reflect all adjustments which, in the opinion of management, are necessary for a fair presentation of the consolidated financial position and results of operations for the interim periods presented. All significant intercompany accounts and transactions have been eliminated in consolidation. The results of operations for the period ended June 30, 2012 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 Companys Annual Report on Form 10-K for the year ended December 31, 2011.

Newly Adopted Accounting Pronouncements

ASU 2011-04 Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs (ASU 2011-04). ASU 2011-04 generally represents clarifications of Topic 820, but also includes some instances where a particular principle or requirement for measuring fair value or disclosing information about fair value measurements has changed. ASU 2011-04 results in common principles and requirements for measuring fair value and for disclosing information about fair value measurements. ASU 2011-04 is to be applied prospectively and is effective during interim and annual periods beginning after December 15, 2011 for public companies. It did not have a material impact on the Companys results of operations, financial position or disclosures.

ASU 2011-05 Amendments to Topic 220, Comprehensive Income (ASU 2011-05). ASU 2011-05 grants an entity the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. ASU 2011-05 eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders equity. ASU 2011-05 does not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income. For public entities, ASU 2011-05 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011, and is to be adopted retrospectively. It did not have a material impact on the Companys results of operations, financial position or disclosures.

ASU 2011-08 Intangibles Goodwill and Other (Topic 350) Testing Goodwill for Impairment (ASU 2011-08). ASU 2011-08 grants an entity the option to assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. This conclusion can be used as a basis for determining whether it is necessary to perform the two-step goodwill impairment test required in Topic 350. ASU 2011-08 is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. It is not expected to have a material impact on the Companys results of operations, financial position or disclosures.

Fair Value of Financial Instruments

The fair value of a financial instrument is the current amount that would be exchanged between willing parties, other than in a forced liquidation. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Companys various financial instruments. In cases where quoted market prices are not available, fair value is based on discounted cash flows or other valuation techniques. These techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument. The accounting standard for disclosures about the fair value of financial instruments excludes certain financial instruments and all nonfinancial instruments from its disclosure requirements. Accordingly, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Company.

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The Company has elected to record mortgage loans held-for-sale at fair value in order to eliminate the complexities and inherent difficulties of achieving hedge accounting and to better align reported results with the underlying economic changes in value of the loans and related hedge instruments. This election impacts the timing and recognition of origination fees and costs, as well as servicing value, which are now recognized in earnings at the time of origination. Interest income on mortgage loans held-for-sale is recorded on an accrual basis in the consolidated statement of income under the heading Interest income interest and fees on loans. The servicing value is included in the fair value of the Interest Rate Lock Commitments (IRLCs) with borrowers. The mark to market adjustments related to loans held-for-sale and the associated economic hedges are captured in mortgage banking activities.

The fair value hierarchy describes three levels of inputs that may be used to measure fair value:

Level 1 Quoted prices in active markets for identical assets or liabilities.

Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

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 and Due From Banks, Federal Funds Sold and Interest-Bearing Accounts: The carrying amount of cash and due from banks, federal funds sold and interest-bearing accounts approximates fair value.

Investment 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 mortgage-backed securities issued by government sponsored enterprises and municipal bonds. The level 2 fair value pricing is provided by an independent third-party and is based upon similar securities in an active market. 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.

Other Investments: Federal Home Loan Bank (FHLB) stock is included in other investments at its original cost basis, as cost approximates fair value and there is no ready market for such investments.

Mortgage Loans Held-for-Sale: The fair value of mortgage loans held-for-sale is determined on outstanding commitments from third party investors in the secondary markets and are classified within Level 2 of the valuation hierarchy.

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 expected future 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 loan will not be collected as scheduled. The fair value of impaired loans is determined in accordance with accounting standards 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.

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. In most cases, management has determined that additional write-downs are required beyond what is calculable from the appraisal to carry the property at levels that would attract buyers. Because this additional write-down is not based on observable inputs, management has determined that other real estate owned should be classified as Level 3.

Covered Assets: Covered assets include loans and other real estate owned on which the majority of losses would be covered by loss-sharing agreements with the Federal Deposit Insurance Corporation (the FDIC). Management initially valued these assets at fair value using mostly unobservable inputs and, as such, has classified these assets as Level 3.

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Intangible Assets and Goodwill: Intangible assets consist of 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 three to ten years. Goodwill represents the excess of the purchase price over the fair value of the net identifiable assets acquired in a business combination. Goodwill and other intangible assets deemed to have an indefinite useful life are not amortized but instead are subject to an annual review for impairment.

FDIC Indemnification Asset: Because the FDIC will reimburse the Company for certain acquired loans should the Company experience a loss, an indemnification asset is recorded at fair value at the acquisition date. The indemnification asset is recognized at the same time as the indemnified loans and measured on the same basis, subject to collectability or contractual limitations. The shared- loss agreements on the acquisition date reflect the reimbursements expected to be received from the FDIC, using an appropriate discount rate which reflects counterparty credit risk and other uncertainties. The shared-loss agreements continue to be measured on the same basis as the related indemnified loans, and the loss-share receivable is impacted by changes in estimated cash flows associated with these loans.

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

Securities Sold under Agreements to Repurchase and 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 borrowing arrangements.

Subordinated Deferrable Interest Debentures: The carrying amount of the Companys variable rate trust preferred securities approximates fair value.

Off-Balance-Sheet Instruments: Because commitments to extend credit and standby letters of credit are typically made using variable rates and have short maturities, the carrying value and fair value are immaterial for disclosure.

Derivatives: The Company has entered into derivative financial instruments to manage interest rate risk. The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of the derivatives. This analysis reflects the contractual terms of the derivative, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The fair value of the derivatives are determined using the market standard methodology of netting the discounted future fixed cash receipts and the discounted expected variable cash payments. The variable cash payments are based on an expectation of future interest rates (forward curves derived from observable market interest rate curves).

The Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterpartys nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting any applicable credit enhancements such as collateral postings, thresholds, mutual puts and guarantees.

Although the Company has determined that the majority of the inputs used to value its derivative fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself or the counterparty. However, as of June 30, 2012, December 31, 2011 and June 30, 2011, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustment is not significant to the overall valuation of its derivatives. As a result, the Company has determined that its derivative valuation in its entirety is classified in Level 2 of the fair value hierarchy.

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The carrying amount and estimated fair value of the Companys financial instruments, not shown elsewhere in these financial instruments, were as follows:

	Carrying Amount	Fair Value Measurements at June 30, 2012 Using: — Level 1	Level 2	Level 3	Total
	(Dollars in Thousands)
Financial assets:
Loans, net	$ 1,941,028	$	$ 1,975,541	$	$ 1,975,541
Financial liabilities:
Deposits	2,544,672		2,546,740		2,546,740
Other borrowings	3,810	3,835			3,835

	December 31, 2011 — Carrying Amount	Fair Value	June 30, 2011 — Carrying Amount	Fair Value
	(Dollars in Thousands)
Financial assets:
Loans, net	$ 1,868,419	$ 1,877,320	$ 1,812,029	$ 1,818,152
Financial liabilities:
Deposits	2,591,566	2,593,113	2,511,363	2,513,459
Other borrowings	20,000	20,936

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 fair value hierarchy in which the fair value measurements fall as of June 30, 2012 and 2011 and December 31, 2011 (dollars in thousands):

| | Fair Value Measurements on a Recurring Basis As of June
30, 2012 — Fair Value | Level 1 | | Level 2 | Level 3 | |
| --- | --- | --- | --- | --- | --- | --- |
| U.S. government agencies | $ 8,898 | $ | | $ 8,898 | $ | |
| State, county and municipal securities | 100,327 | | 5,432 | 94,895 | | |
| Corporate debt securities | 11,506 | | 250 | 9,256 | | 2,000 |
| Mortgage backed securities | 246,249 | | 5,086 | 241,163 | | |
| Mortgage loans held for sale | 19,659 | | | 19,659 | | |
| Total recurring assets at fair value | $ 386,639 | $ | 10,768 | $ 373,871 | $ | 2,000 |
| Derivative financial instruments | $ 2,970 | $ | | $ 2,970 | | |
| Total recurring liabilities at fair value | $ 2,970 | $ | | $ 2,970 | $ | |
| | Fair Value Measurements on a Recurring Basis As of December
31, 2011 | | | | | |
| | Fair Value | Level 1 | | Level 2 | Level 3 | |
| U.S. government agencies | $ 14,937 | $ | | $ 14,937 | $ | |
| State, county and municipal securities | 79,133 | | 2,966 | 76,167 | | |
| Corporate debt securities | 11,401 | | | 9,401 | | 2,000 |
| Mortgage backed securities | 234,496 | | 3,302 | 231,194 | | |
| Derivative financial instruments | (2,049 | ) | | (2,049 | ) | |
| Total recurring assets at fair value | $ 337,918 | $ | 6,268 | $ 329,650 | $ | 2,000 |
| | Fair Value Measurements on a Recurring Basis As of June 30, 2011 | | | | | |
| | Fair Value | Level 1 | | Level 2 | Level 3 | |
| U.S. government agencies | $ 24,259 | $ | | $ 24,259 | $ | |
| State, county and municipal securities | 60,546 | | 2,367 | 58,179 | | |
| Corporate debt securities | 9,722 | | | 7,722 | | 2,000 |
| Mortgage backed securities | 239,849 | | 8,153 | 231,696 | | |
| Derivative financial instruments | 243 | | | 243 | | |
| Total recurring assets at fair value | $ 334,619 | $ | 10,520 | $ 322,099 | $ | 2,000 |

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The following table is a presentation 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 valuation hierarchy as of June 30, 2012 and 2011 and December 31, 2011 (dollars in thousands):

| | Fair Value Measurements on a Nonrecurring Basis As of June 30,
2012 — Fair Value | Level 1 | Level 2 | Level 3 |
| --- | --- | --- | --- | --- |
| Impaired loans carried at fair value | $ 60,277 | $ | $ 60,277 | $ |
| Other real estate owned | 40,018 | | | 40,018 |
| Covered loans | 601,737 | | | 601,737 |
| Covered other real estate owned | 83,467 | | | 83,467 |
| Total non-recurring assets at fair value | $ 785,499 | $ | $ 60,277 | $ 725,222 |
| | Fair Value Measurements on a Nonrecurring Basis As of December 31, 2011 | | | |
| | Fair Value | Level 1 | Level 2 | Level 3 |
| Impaired loans carried at fair value | $ 70,296 | $ | $ 70,296 | $ |
| Other real estate owned | 50,301 | | | 50,301 |
| Covered loans | 571,489 | | | 571,489 |
| Covered other real estate owned | 78,617 | | | 78,617 |
| Total nonrecurring assets at fair value | $ 770,703 | $ | $ 70,296 | $ 700,407 |
| | Fair Value Measurements on a Nonrecurring Basis As of June 30, 2011 | | | |
| | Fair Value | Level 1 | Level 2 | Level 3 |
| Impaired loans carried at fair value | $ 60,545 | $ | $ 60,545 | $ |
| Other real estate owned | 61,533 | | | 61,533 |
| Covered loans | 486,489 | | | 486,489 |
| Covered other real estate owned | 63,583 | | | 63,583 |
| Total nonrecurring assets at fair value | $ 672,150 | $ | $ 60,545 | $ 611,605 |

Below is the Companys reconciliation of Level 3 assets as of June 30, 2012 (dollars in thousands):

Beginning balance January 1, 2012	Investment Securities Available for Sale — $ 2,000	Other Real Estate Owned — $ 50,301	$	571,489	$	78,617
Total gains/(losses) included in net income		(8,065	)
Purchases, sales, issuances, and settlements, net		(12,609	)	50,232		(15,134	)
Transfers in or out of Level 3		10,391		(19,984	)	19,984
Ending balance June 30, 2012	$ 2,000	$ 40,018	$	601,737	$	83,467

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NOTE 2 INVESTMENT SECURITIES

Ameris investment policy blends the Companys liquidity needs and interest rate risk management with its desire to increase income and provide funds for expected growth in loans. The investment securities portfolio consists primarily of U.S. government sponsored mortgage-backed securities and agencies, state, county and municipal securities and corporate debt securities. Ameris portfolio and investing philosophy concentrate activities in obligations where the credit risk is limited. For the small portion of Ameris portfolio found to present credit risk, the Company has reviewed the investments and financial performance of the obligors and believes the credit risk to be acceptable.

The amortized cost and estimated fair value of investment securities available for sale at June 30, 2012, December 31, 2011 and June 30, 2011 are presented below:

	Amortized Cost	Gross Unrealized Gains	Gross Unrealized Losses		Fair Value
	(Dollars in Thousands)
June 30, 2012:
U. S. government agencies	$ 8,602	$ 296	$		$ 8,898
State, county and municipal securities	95,354	5,047	(74	)	100,327
Corporate debt securities	11,792	231	(517	)	11,506
Mortgage-backed securities	239,412	7,032	(195	)	246,249
Total securities	$ 355,160	$ 12,606	$ (786	)	$ 366,980
December 31, 2011:
U. S. government agencies	$ 14,670	$ 267	$		$ 14,937
State, county and municipal securities	75,665	3,558	(90	)	79,133
Corporate debt securities	11,640	167	(406	)	11,401
Mortgage-backed securities	228,085	6,559	(148	)	234,496
Total securities	$ 330,060	$ 10,551	$ (644	)	$ 339,967
June 30, 2011:
U. S. government agencies	$ 24,056	$ 203	$		$ 24,259
State, county and municipal securities	58,636	1,950	(40	)	60,546
Corporate debt securities	11,637	242	(2,157	)	9,722
Mortgage-backed securities	234,437	5,979	(567	)	239,849
Total securities	$ 328,766	$ 8,374	$ (2,764	)	$ 334,376

The amortized cost and fair value of available-for-sale securities at June 30, 2012 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:

	Amortized Cost	Fair Value
	(Dollars in Thousands)
Due in one year or less	$ 9,306	$ 9,320
Due from one year to five years	18,553	19,264
Due from five to ten years	51,174	54,892
Due after ten years	36,715	37,255
Mortgage-backed securities	239,412	246,249
	$ 355,160	$ 366,980

Securities with a carrying value of approximately $201.2 million serve as collateral to secure public deposits and other purposes required or permitted by law at June 30, 2012.

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The following table details the gross unrealized losses and fair value of securities aggregated by category and duration of continuous unrealized loss position at June 30, 2012, December 31, 2011 and June 30, 2011.

Description of Securities	Less Than 12 Months — Fair Value	Unrealized Losses		12 Months or More — Fair Value	Unrealized Losses		Total — Fair Value	Unrealized Losses
	(Dollars in Thousands)
June 30, 2012:
U. S. government agencies	$	$		$	$		$	$
State, county and municipal securities	10,342	(73	)				10,342	(73	)
Corporate debt securities				6,562	(518	)	6,562	(518	)
Mortgage-backed securities	31,680	(167	)	5,040	(28	)	36,720	(195	)
Total temporarily impaired securities	$ 42,022	$ (240	)	$ 11,602	$ (546	)	$ 53,624	$ (786	)
December 31, 2011:
U. S. government agencies	$	$		$	$		$	$
State, county and municipal securities	10,134	(90	)				10,134	(90	)
Corporate debt securities	100			6,681	(406	)	6,781	(406	)
Mortgage-backed securities	20,929	(148	)				20,929	(148	)
Total temporarily impaired securities	$ 31,163	$ (238	)	$ 6,681	$ (406	)	$ 37,844	$ (644	)
June 30, 2011:
U. S. government agencies	$	$		$	$		$	$
State, county and municipal securities	3,844	(39	)	203	(1	)	4,047	(40	)
Corporate debt securities	100	(1	)	4,936	(2,156	)	5,036	(2,157	)
Mortgage-backed securities	60,926	(567	)				60,926	(567	)
Total temporarily impaired securities	$ 64,870	$ (607	)	$ 5,139	$ (2,158	)	$ 70,009	$ (2,764	)

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 within select markets in Georgia, Alabama, Florida and South Carolina. Ameris concentrates the majority of its lending activities in real estate loans. While risk of loss in the Companys 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.

Commercial, financial and agricultural loans include both secured and unsecured loans for working capital, expansion, crop production, and other business purposes. Short-term working capital loans are secured by non-real estate collateral such as accounts receivable, crops, inventory and equipment. The Company evaluates the financial strength, cash flow, management, credit history of the borrower and the quality of the collateral securing the loan. The Bank often requires personal guarantees and secondary sources of repayment on commercial, financial and agricultural loans.

Real estate loans include construction and development loans, commercial and farmland loans and residential loans. Construction and development loans include loans for the development of residential neighborhoods, construction of one-to-four family residential construction loans to builders and consumers, and commercial real estate construction loans, primarily for owner-occupied properties. The Company limits its construction lending risk through adherence to established underwriting procedures. Commercial real estate loans include loans secured by owner-occupied commercial buildings for office, storage, retail, farmland and warehouse space. They also include non-owner occupied commercial buildings such as leased retail and office space. Commercial real estate loans may be larger in size and may involve a greater degree of risk than one-to-four family residential mortgage loans. Payments on such loans are often dependent on successful operation or management of the properties. The Companys residential loans represent permanent mortgage financing and are secured by residential properties located within the Banks market areas.

Consumer installment loans and other loans include automobile loans, boat and recreational vehicle financing, and both secured and unsecured personal loans. Consumer loans carry greater risks than other loans, as the collateral can consist of rapidly depreciating assets such as automobiles and equipment that may not provide an adequate source of repayment of the loan in the case of default.

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

(Dollars in Thousands)	June 30, 2012	December 31, 2011	June 30, 2011
Commercial, financial and agricultural	$ 174,903	$ 142,960	$ 150,377
Real estate construction and development	124,556	130,270	143,684
Real estate commercial and farmland	675,404	672,765	681,228
Real estate residential	332,124	330,727	336,485
Consumer installment	41,431	37,296	35,584
Other	17,071	18,068	12,705
	$ 1,365,489	$ 1,332,086	$ 1,360,063

Covered loans are defined as loans that were acquired in FDIC-assisted transactions that are covered by a loss-sharing agreement with the FDIC. Covered loans totaling $601.7 million, $571.5 million and $486.5 million at June 30, 2012, December 31, 2011 and June 30, 2011, respectively, are not included in the above schedule.

Covered loans are shown below according to loan type as of the end of the periods shown:

(Dollars in Thousands)	June 30, 2012	December 31, 2011	June 30, 2011
Commercial, financial and agricultural	$ 41,372	$ 41,867	$ 42,494
Real estate construction and development	83,991	77,077	79,540
Real estate commercial and farmland	322,393	321,257	229,924
Real estate residential	150,683	127,644	129,721
Consumer installment	3,298	3,644	4,810
	$ 601,737	$ 571,489	$ 486,489

Nonaccrual and Past Due Loans

A loan is placed on nonaccrual status when, in managements judgment, the collection of the interest income appears doubtful. Interest receivable that has been accrued and is subsequently determined to have doubtful collectability is charged to interest income. Interest on loans that are classified as non-accrual is recognized when received. Past due loans are loans whose principal or interest is past due 90 days or more. In some cases, where borrowers are experiencing financial difficulties, loans may be restructured to provide terms significantly different from the original contractual terms.

The following table presents an analysis of non-covered loans accounted for on a nonaccrual basis:

(Dollars in Thousands)	June 30, 2012	December 31, 2011	June 30, 2011
Commercial, financial and agricultural	$ 4,968	$ 3,987	$ 5,439
Real estate construction and development	8,979	15,020	13,714
Real estate commercial and farmland	13,728	35,385	24,205
Real estate residential	15,542	15,498	16,625
Consumer installment	1,204	933	562
	$ 44,421	$ 70,823	$ 60,545

The following table presents an analysis of covered loans accounted for on a nonaccrual basis:

(Dollars in Thousands)	June 30, 2012	December 31, 2011	June 30, 2011
Commercial, financial and agricultural	$ 13,406	$ 11,952	$ 11,809
Real estate construction and development	28,225	30,977	31,131
Real estate commercial and farmland	71,271	75,458	55,771
Real estate residential	37,669	41,139	36,129
Consumer installment	654	473	705
	$ 151,225	$ 159,999	$ 135,545

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The following table presents an analysis of non-covered past due loans as of June 30, 2012, December 31, 2011 and June 30, 2011.

	Loans 30-59 Days Past Due	Loans 60-89 Days Past Due	Loans 90 or More Days Past Due	Total Loans Past Due	Current Loans	Total Loans	Loans 90 Days or More Past Due and Still Accruing
	(Dollars in Thousands)
As of June 30, 2012:
Commercial, financial & agricultural	$ 531	$ 701	$ 4,371	$ 5,603	$ 169,300	$ 174,903	$
Real estate construction & development	1,986	2,119	7,855	11,960	112,596	124,556
Real estate commercial & farmland	5,282	6,930	8,597	20,809	654,595	675,404
Real estate residential	5,665	3,885	14,782	24,332	307,792	332,124
Consumer installment loans	545	220	1,117	1,883	39,548	41,431	1
Other					17,071	17,071
Total	$ 14,009	$ 13,855	$ 36,722	$ 64,587	$ 1,300,902	$ 1,365,489	$ 1
	Loans 30-59 Days Past Due	Loans 60-89 Days Past Due	Loans 90 or More Days Past Due	Total Loans Past Due	Current Loans	Total Loans	Loans 90 Days or More Past Due and Still Accruing
	(Dollars in Thousands)
As of December 30, 2011:
Commercial, financial & agricultural	$ 1,103	$ 705	$ 3,975	$ 5,783	$ 137,177	$ 142,960	$
Real estate construction & development	2,395	1,507	13,608	17,510	112,760	130,270
Real estate commercial & farmland	6,686	7,071	32,953	46,710	626,055	672,765
Real estate residential	5,229	4,995	12,874	23,098	307,629	330,727
Consumer installment loans	963	305	725	1,993	35,303	37,296
Other					18,068	18,068
Total	$ 16,376	$ 14,583	$ 64,135	$ 95,094	$ 1,236,992	$ 1,332,086	$
	Loans 30-59 Days Past Due	Loans 60-89 Days Past Due	Loans 90 or More Days Past Due	Total Loans Past Due	Current Loans	Total Loans	Loans 90 Days or More Past Due and Still Accruing
	(Dollars in Thousands)
As of June 30, 2011:
Commercial, financial & agricultural	$ 653	$ 282	$ 5,334	$ 6,269	$ 144,108	$ 150,377	$
Real estate construction & development	1,551	1,243	13,194	15,988	127,696	143,684
Real estate commercial & farmland	8,494	807	23,898	33,199	648,029	681,228
Real estate residential	5,086	2,729	14,539	22,354	314,131	336,485
Consumer installment loans	525	178	493	1,196	34,388	35,584
Other					12,705	12,705
Total	$ 16,309	$ 5,239	$ 57,458	$ 79,006	$ 1,281,057	$ 1,360,063	$

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The following table presents an analysis of covered past due loans as of June 30, 2012, December 31, 2011 and June 30, 2011.

	Loans 30-59 Days Past Due	Loans 60-89 Days Past Due	Loans 90 or More Days Past Due	Total Loans Past Due	Current Loans	Total Loans	Loans 90 Days or More Past Due and Still Accruing
	(Dollars in Thousands)
As of June 30, 2012:
Commercial, financial & agricultural	$ 851	$ 754	$ 12,703	$ 14,308	$ 27,064	$ 41,372	$ 298
Real estate construction & development	2,688	3,007	25,021	30,716	53,275	83,991
Real estate commercial & farmland	12,452	7,656	60,879	80,987	241,406	322,393	891
Real estate residential	5,366	3,180	31,607	40,153	110,530	150,683	78
Consumer installment loans	70	40	430	540	2,758	3,298
Total	$ 21,427	$ 14,637	$ 130,640	$ 166,704	$ 435,033	$ 601,737	$ 1,267
	Loans 30-59 Days Past Due	Loans 60-89 Days Past Due	Loans 90 or More Days Past Due	Total Loans Past Due	Current Loans	Total Loans	Loans 90 Days or More Past Due and Still Accruing
	(Dollars in Thousands)
As of December 30, 2011:
Commercial, financial & agricultural	$ 968	$ 4,297	$ 11,253	$ 16,518	$ 25,349	$ 41,867	$
Real estate construction & development	2,444	1,318	27,867	31,629	45,448	77,077
Real estate commercial & farmland	18,282	8,544	64,091	90,917	230,340	321,257	165
Real estate residential	3,485	1,493	35,950	40,928	86,716	127,644	290
Consumer installment loans	127	270	440	837	2,807	3,644
Total	$ 25,306	$ 15,922	$ 139,601	$ 180,829	$ 390,660	$ 571,489	$ 455
	Loans 30-59 Days Past Due	Loans 60-89 Days Past Due	Loans 90 or More Days Past Due	Total Loans Past Due	Current Loans	Total Loans	Loans 90 Days or More Past Due and Still Accruing
	(Dollars in Thousands)
As of June 30, 2011:
Commercial, financial & agricultural	$ 1,201	$ 635	$ 11,047	$ 12,883	$ 29,611	$ 42,494	$ 313
Real estate construction & development	1,424	1,068	28,531	31,023	48,517	79,540	75
Real estate commercial & farmland	3,941	6,075	52,287	62,303	167,621	229,924	2,223
Real estate residential	2,445	3,403	33,354	39,202	90,519	129,721	444
Consumer installment loans	76	47	645	768	4,042	4,810
Total	$ 9,087	$ 11,228	$ 125,864	$ 146,179	$ 340,310	$ 486,489	$ 3,055

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Impaired Loans

Loans are considered impaired when, based on current information and events, it is probable the Company will be unable to collect all amounts due in accordance with the original contractual terms of the loan agreements. When determining if the Company will be unable to collect all principal and interest payments due in accordance with the contractual terms of the loan agreement, the Company considers the borrowers capacity to pay, which includes such factors as the borrowers current financial statements, an analysis of global cash flow sufficient to pay all debt obligations and an evaluation of secondary sources of repayment, such as guarantor support and collateral value. Impaired loans include loans on nonaccrual status and troubled debt restructurings. The Company individually assesses for impairment all nonaccrual loans greater than $200,000 and rated substandard or worse and all troubled debt restructurings greater than $100,000. If a loan is deemed impaired, a specific valuation allowance is allocated, if necessary, so that the loan is reported net, at the present value of estimated future cash flows using the loans existing rate or at the fair value of collateral if repayment is expected solely from the collateral. Interest payments on impaired loans are typically applied to principal unless collectability of the principal amount is reasonably assured, in which case interest is recognized on a cash basis.

The following is a summary of information pertaining to non-covered impaired loans:

	As of and For the Period Ended — June 30, 2012	December 31, 2011	June 30, 2011
	(Dollars in Thousands)
Nonaccrual loans	$ 44,421	$ 70,823	$ 60,545
Troubled debt restructurings not included above	22,970	17,951	21,756
Total impaired loans	$ 67,391	$ 88,774	$ 82,301
Impaired loans not requiring a related allowance	$	$	$
Impaired loans requiring a related allowance	$ 67,391	$ 88,774	$ 82,301
Allowance related to impaired loans	$ 7,136	$ 18,478	$ 15,328
Average investment in impaired loans	$ 78,432	$ 88,320	$ 76,136
Interest income recognized on impaired loans	$ 153	$ 637	$ 150
Foregone interest income on impaired loans	$ 332	$ 613	$ 249

The following table presents an analysis of information pertaining to non-covered impaired loans as of June 30, 2012, December 31, 2011 and June 30, 2011.

	Unpaid Contractual Principal Balance	Recorded Investment With No Allowance	Recorded Investment With Allowance	Total Recorded Investment	Related Allowance	Average Recorded Investment
	(Dollars in Thousands)
As of June 30, 2012:
Commercial, financial & agricultural	$ 8,116	$	$ 4,968	$ 4,968	$ 692	$ 4,936
Real estate construction & development	18,805		10,184	10,184	1,070	12,611
Real estate commercial & farmland	32,265		27,021	27,021	2,081	37,111
Real estate residential	27,069		24,014	24,014	3,254	22,637
Consumer installment loans	1,331		1,204	1,204	39	1,137
Total	$ 87,586	$	$ 67,391	$ 67,391	$ 7,136	$ 78,432

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	Unpaid Contractual Principal Balance	Recorded Investment With No Allowance	Recorded Investment With Allowance	Total Recorded Investment	Related Allowance	Average Recorded Investment
	(Dollars in Thousands)
As of December 31, 2011:
Commercial, financial & agricultural	$ 9,592	$	$ 5,110	$ 5,110	$ 1,366	$ 5,700
Real estate construction & development	21,893		15,672	15,672	4,053	18,667
Real estate commercial & farmland	48,688		45,006	45,006	8,331	42,192
Real estate residential	25,309		22,053	22,053	4,499	21,081
Consumer installment loans	1,056		933	933	229	680
Total	$ 106,538	$	$ 88,774	$ 88,774	$ 18,478	$ 88,320
	Unpaid Contractual Principal Balance	Recorded Investment With No Allowance	Recorded Investment With Allowance	Total Recorded Investment	Related Allowance	Average Recorded Investment
	(Dollars in Thousands)
As of June 30, 2011:
Commercial, financial & agricultural	$ 9,229	$	$ 3,853	$ 3,853	$ 1,586	$ 4,391
Real estate construction & development	26,562		12,198	12,198	3,695	16,113
Real estate commercial & farmland	42,445		33,045	33,045	5,096	38,738
Real estate residential	24,118		17,456	17,456	4,810	16,451
Consumer installment loans	732		421	421	141	443
Total	$ 103,086	$	$ 66,973	$ 66,973	$ 15,328	$ 76,136

The following is a summary of information pertaining to covered impaired loans:

	As of and For the Period Ended — June 30, 2012	December 31, 2011	June 30, 2011
	(Dollars in Thousands)
Nonaccrual loans	$ 151,225	$ 159,999	$ 135,545
Troubled debt restructurings not included above	14,842	19,884	9,312
Total impaired loans	$ 166,067	$ 179,883	$ 144,857
Impaired loans not requiring a related allowance	$ 166,067	$ 179,883	$ 144,857
Impaired loans requiring a related allowance	$	$	$
Allowance related to impaired loans	$	$	$
Average investment in impaired loans	$ 178,130	$ 138,950	$ 119,950
Interest income recognized on impaired loans	$ 628	$ 526	$ 287
Foregone interest income on impaired loans	$ 482	$ 202	$ 122

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The following table presents an analysis of information pertaining to impaired covered loans as of June 30, 2012, December 31, 2011 and June 30, 2011.

	Unpaid Contractual Principal Balance	Recorded Investment With No Allowance	Recorded Investment With Allowance	Total Recorded Investment	Related Allowance	Average Recorded Investment
	(Dollars in Thousands)
As of June 30, 2012:
Commercial, financial & agricultural	$ 22,616	$ 13,464	$	$ 13,464	$	$ 13,250
Real estate construction & development	46,439	30,586		30,586		34,260
Real estate commercial & farmland	110,388	81,330		81,330		85,639
Real estate residential	58,645	40,033		40,033		44,393
Consumer installment loans	1,034	654		654		588
Total	$ 239,122	$ 166,067	$	$ 166,067	$	$ 178,130
	Unpaid Contractual Principal Balance	Recorded Investment With No Allowance	Recorded Investment With Allowance	Total Recorded Investment	Related Allowance	Average Recorded Investment
	(Dollars in Thousands)
As of December 31, 2011:
Commercial, financial & agricultural	$ 21,352	$ 12,027	$	$ 12,027	$	$ 10,210
Real estate construction & development	47,005	34,363		34,363		30,610
Real estate commercial & farmland	106,953	84,740		84,740		56,607
Real estate residential	68,411	48,280		48,280		40,675
Consumer installment loans	623	473		473		848
Total	$ 244,344	$ 179,883	$	$ 179,883	$	$ 138,950
	Unpaid Contractual Principal Balance	Recorded Investment With No Allowance	Recorded Investment With Allowance	Total Recorded Investment	Related Allowance	Average Recorded Investment
	(Dollars in Thousands)
As of June 30, 2011:
Commercial, financial & agricultural	$ 23,421	$ 11,866	$	$ 11,866	$	$ 8,943
Real estate construction & development	75,282	31,131		31,131		28,435
Real estate commercial & farmland	101,453	57,422		57,422		44,234
Real estate residential	71,421	43,733		43,733		37,233
Consumer installment loans	807	705		705		1,105
Total	$ 272,384	$ 144,857	$	$ 144,857	$	$ 119,950

Credit Quality Indicators

The Company uses a nine category risk grading system to assign a risk grade to each loan in the portfolio. Following is a description of the general characteristics of the grades:

Grade 10 Prime Credit  This grade represents loans to the Companys most creditworthy borrowers or loans that are secured by cash or cash equivalents.

Grade 15 Good Credit  This grade includes loans that exhibit one or more characteristics better than that of a Satisfactory Credit . Generally, debt service coverage and borrowers liquidity is materially better than required by the Companys loan policy.

Grade 20 Satisfactory Credit This grade is assigned to loans to borrowers who exhibit satisfactory credit histories, contain acceptable loan structures and demonstrate ability to repay.

Grade 23 Performing, Under-Collateralized Credit  This grade is assigned to loans that are currently performing and supported by adequate financial information that reflects repayment capacity but exhibits a loan-to-value ratio greater than 110%, based on a documented collateral valuation.

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Grade 25 Minimum Acceptable Credit  This grade includes loans which exhibit all the characteristics of a Satisfactory Credit , but warrant more than normal level of banker supervision due to (i) circumstances which elevate the risks of performance (such as start-up operations, untested management, heavy leverage, interim losses); (ii)adverse, extraordinary events that have affected, or could affect, the borrowers cash flow, financial condition, ability to continue operating profitability or refinancing (such as death of principal, fire, divorce); (iii) loans that require more than the normal servicing requirements (such as any type of construction financing, acquisition and development loans, accounts receivable or inventory loans and floor plan loans); (iv) existing technical exceptions which raise some doubts about the Banks perfection in its collateral position or the continued financial capacity of the borrower; or (v) improvements in formerly criticized borrowers, which may warrant banker supervision.

Grade 30 Other Asset Especially Mentioned  This grade includes loans that exhibit potential weaknesses that deserve managements close attention. If left uncorrected, these weaknesses may result in deterioration of the repayment prospects for the asset or in the Companys credit position at some future date.

Grade 40 Substandard  This grade represents loans which are inadequately protected by the current sound worth and paying capacity of the borrower or of the collateral pledged, if any. These assets exhibit a well-defined weakness or are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. These weaknesses may be characterized by past due performance, operating losses or questionable collateral values.

Grade 50 Doubtful  This grade includes loans which exhibit all of the characteristics of a substandard loan with the added provision that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable or improbable.

Grade 60 Loss  This grade is assigned to loans which are considered uncollectible and of such little value that their continuance as active assets of the Bank is not warranted. This classification does not mean that the loss has absolutely no recovery or salvage value, but rather it is not practical or desirable to defer writing it off.

The following table presents the non-covered loan portfolio by risk grade as of June 30, 2012.

Risk Grade	Commercial, financial & agricultural	Real estate - construction & development	Real estate - commercial & farmland	Real estate - residential	Consumer installment loans	Other	Total
	(Dollars in Thousands)
10	$ 20,395	$ 17	$ 230	$ 414	$ 7,226	$	$ 28,282
15	11,909	3,628	158,608	75,752	1,260		251,157
20	79,985	39,077	287,874	93,018	23,537	17,071	540,562
23		6,691	9,578	13,839	23		30,131
25	54,072	57,266	170,342	109,269	7,035		397,984
30	1,404	4,018	17,870	12,461	554		36,307
40	7,137	13,703	30,902	27,306	1,776		80,824
50	1	156		65	20		242
60
Total	$ 174,903	$ 124,556	$ 675,404	$ 332,124	$ 41,431	$ 17,071	$ 1,365,489

The following table presents the non-covered loan portfolio by risk grade as of December 31, 2011.

Risk Grade	Commercial, financial & agricultural	Real estate - construction & development	Real estate - commercial & farmland	Real estate - residential	Consumer installment loans	Other	Total
	(Dollars in Thousands)
10	$ 17,213	$ 20	$ 235	$ 252	$ 6,210	$	$ 23,930
15	15,379	5,391	151,068	88,586	1,065		261,489
20	60,631	32,654	272,241	80,989	20,781	18,068	485,364
23	32	7,994	10,679	10,997	28		29,730
25	42,815	62,029	163,554	110,786	7,181		386,365
30	2,509	2,027	21,490	15,001	557		41,584
40	4,258	19,864	53,498	23,867	1,460		102,947
50	123	291		249	14		677
60
Total	$ 142,960	$ 130,270	$ 672,765	$ 330,727	$ 37,296	$ 18,068	$ 1,332,086

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The following table presents the non-covered loan portfolio by risk grade as of June 30, 2011.

Risk Grade	Commercial, financial & agricultural	Real estate - construction & development	Real estate - commercial & farmland	Real estate - residential	Consumer installment loans	Other	Total
	(Dollars in Thousands)
10	$ 13,799	$ 213	$ 329	$ 109	$ 5,926	$	$ 20,376
15	11,307	3,483	151,047	35,416	899		202,152
20	61,543	36,007	274,185	128,581	21,477	12,705	534,498
23	1,614	7,360	8,484	12,346	29		29,833
25	54,635	67,615	157,862	121,094	5,927		407,133
30	1,477	6,071	44,388	13,028	564		65,528
40	5,362	22,659	44,933	25,911	747		99,612
50	640	276			6		922
60					9		9
Total	$ 150,377	$ 143,684	$ 681,228	$ 336,485	$ 35,584	$ 12,705	$ 1,360,063

The following table presents the covered loan portfolio by risk grade as of June 30, 2012.

Risk Grade	Commercial, financial & agricultural	Real estate - construction & development	Real estate - commercial & farmland	Real estate - residential	Consumer installment loans	Other	Total
	(Dollars in Thousands)
10	$ 172	$ 9	$	$ 857	$ 412	$	$ 1,450
15	115	47	1,717	560	10		2,449
20	5,963	15,440	37,729	38,108	745		97,985
23	11	1,602	3,784	1,840			7,237
25	13,545	19,814	139,886	49,254	1,254		223,753
30	4,544	9,843	38,306	10,873	89		63,655
40	17,017	37,236	100,971	49,080	788		205,092
50	5			111			116
60
Total	$ 41,372	$ 83,991	$ 322,393	$ 150,683	$ 3,298	$	$ 601,737

The following table presents the covered loan portfolio by risk grade as of December 31, 2011.

Risk Grade	Commercial, financial & agricultural	Real estate - construction & development	Real estate - commercial & farmland	Real estate - residential	Consumer installment loans	Other	Total
	(Dollars in Thousands)
10	$ 442	$	$	$ 1,329	$ 768	$	$ 2,539
15	29	52	1,755	586	14		2,436
20	4,807	5,751	26,211	19,216	687		56,672
23		1,177	3,262	1,038			5,477
25	15,531	21,142	137,981	43,606	1,308		219,568
30	5,882	10,654	49,642	12,374	172		78,724
40	15,176	38,273	102,406	49,495	695		206,045
50		28					28
60
Total	$ 41,867	$ 77,077	$ 321,257	$ 127,644	$ 3,644	$	$ 571,489

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The following table presents the covered loan portfolio by risk grade as of June 30, 2011.

Risk Grade	Commercial, financial & agricultural	Real estate - construction & development	Real estate - commercial & farmland	Real estate - residential	Consumer installment loans	Other	Total
	(Dollars in Thousands)
10	$ 614	$	$	$	$ 543	$	$ 1,157
15	63	53	650	476	20		1,262
20	7,872	6,240	28,951	19,630	1,182		63,875
23	280	105	1,047	855			2,287
25	13,860	20,458	83,901	48,744	1,719		168,682
30	4,351	11,425	29,231	9,540	257		54,804
40	15,250	41,259	86,144	50,112	1,089		193,854
50	204			364			568
60
Total	$ 42,494	$ 79,540	$ 229,924	$ 129,721	$ 4,810	$	$ 486,489

Troubled Debt Restructurings

The restructuring of a loan is considered a troubled debt restructuring if both (i) the borrower is experiencing financial difficulties and (ii) the Company has granted a concession. Concessions may include interest rate reductions to below market interest rates, principal forgiveness, restructuring amortization schedules and other actions intended to minimize potential losses. The Company has exhibited the greatest success for rehabilitation of the loan by a reduction in the rate alone (maintaining the amortization of the debt) or a combination of a rate reduction and the forbearance of previously past due interest or principal. This has most typically been evidenced in certain commercial real estate loans whereby a disruption in the borrowers cash flow resulted in an extended past due status, of which the borrower was unable to catch up completely as the cash flow of the property ultimately stabilized at a level lower than its original level. A reduction in rate, coupled with a forbearance of unpaid principal and/or interest, allowed the net cash flows to service the debt under the modified terms.

The Companys policy requires a restructure request to be supported by a current, well-documented credit evaluation of the borrowers financial condition and a collateral evaluation that is no older than six months from the date of the restructure. Key factors of that evaluation include the documentation of current, recurring cash flows, support provided by the guarantor(s) and the current valuation of the collateral. If the appraisal in file is older than six months, an evaluation must be made as to the continued reasonableness of the valuation. For certain income-producing properties, current rent rolls and/or other income information can be utilized to support the appraisal valuation, when coupled with documented cap rates within our markets and a physical inspection of the collateral to validate the current condition.

The Companys policy states in the event a loan has been identified as a troubled debt restructuring, it should be assigned a grade of substandard and placed on nonaccrual status until such time that the borrower has demonstrated the ability to service the loan payments based on the restructured terms generally defined as six months of satisfactory payment history. Missed payments under the original loan terms are not considered under the new structure; however, subsequent missed payments are considered non-performance and are not considered toward the six month required term of satisfactory payment history. The Companys loan policy states that a nonaccrual loan may be returned to accrual status when (i) none of its principal and interest is due and unpaid, and the Company expects repayment of the remaining contractual principal and interest, or (ii) when it otherwise becomes well secured and in the process of collection. Restoration to accrual status on any given loan must be supported by a well-documented credit evaluation of the borrowers financial condition and the prospects for full repayment, approved by the Companys Senior Credit Officer.

In the normal course of business, the Company renews loans with a modification of the interest rate or terms that are not deemed as troubled debt restructurings because the borrower is not experiencing financial difficulty. The Company modified loans in the first six months of 2012 totaling $14.3 million and loans in 2011 totaling $37.2 million under such parameters. In addition, the Company offers consumer loan customers an annual skip-a-pay program that is based on certain qualifying parameters and not based on financial difficulties. The Company does not treat these as troubled debt restructurings.

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The following table presents the amount of troubled debt restructurings by loan class, classified separately as accrual and non-accrual at June 30, 2012 and December 31, 2011.

As of June 30, 2012 — Loan class:	Accruing Loans — #	Balance (in thousands)	Non-Accruing Loans — #	Balance (in thousands)
Commercial, financial & agricultural		$	1	$ 18
Real estate construction & development	5	1,205	2	1,124
Real estate commercial & farmland	16	13,293	2	2,815
Real estate residential	24	8,472	5	1,213
Total	45	$ 22,970	10	$ 5,170

As of December 31, 2011 — Loan class:	Accruing Loans — #	Balance (in thousands)	Non-Accruing Loans — #	Balance (in thousands)
Real estate construction & development	6	$ 1,774	5	$ 2,122
Real estate commercial & farmland	14	9,622	2	4,737
Real estate residential	19	6,555	4	1,296
Total	39	$ 17,951	11	$ 8,155

The following table presents the amount of troubled debt restructurings by loan class, classified separately as those currently paying under restructured terms and those that have defaulted under restructured terms at June 30, 2012 and December 31, 2011.

As of June 30, 2012 — Loan class:	Loans Currently Paying Under Restructured Terms — #	Balance (in thousands)	Loans that have Defaulted Under Restructured Terms — #	Balance (in thousands)
Commercial, financial & agricultural	1	$ 18		$
Real estate construction & development	6	2,305	1	24
Real estate commercial & farmland	18	16,108
Real estate residential	25	8,529	4	1,156
Total	50	$ 26,960	5	$ 1,180

As of December 31, 2011 — Loan class:	Loans Currently Paying Under Restructured Terms — #	Balance (in thousands)	Loans that have Defaulted Under Restructured Terms — #	Balance (in thousands)
Real estate construction & development	7	$ 2,897	4	$ 999
Real estate commercial & farmland	15	11,695	1	2,664
Real estate residential	20	6,862	3	989
Total	42	$ 21,454	8	$ 4,652

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The following table presents the amount of troubled debt restructurings by types of concessions made, classified separately as accrual and non-accrual at June 30, 2012 and December 31, 2011.

As of June 30, 2012 — Type of Concession:	Accruing Loans — #	Balance (in thousands)	Non-Accruing Loans — #	Balance (in thousands)
Forbearance of Interest	3	$ 2,092		$
Forgiveness of Principal	4	1,897
Payment Modification Only	1	91	1	251
Rate Reduction Only	8	6,141	4	929
Rate Reduction, Forbearance of Interest	12	8,292	4	2,891
Rate Reduction, Forbearance of Principal	16	4,401	1	1,099
Rate Reduction, Payment Modification	1	56
Total	45	$ 22,970	10	$ 5,170

As of December 31, 2011 — Type of Concession:	Accruing Loans — #	Balance (in thousands)	Non-Accruing Loans — #	Balance (in thousands)
Forbearance of Interest	1	$ 311		$
Forgiveness of Principal	2	902	1	136
Payment Modification Only	1	92	1	307
Rate Reduction Only	7	4,192	4	1,145
Rate Reduction, Forbearance of Interest	14	9,347
Rate Reduction, Forbearance of Principal	14	3,107	1	1,123
Rate Reduction, Payment Modification			4	5,444
Total	39	$ 17,951	11	$ 8,155

The following table presents the amount of troubled debt restructurings by collateral types, classified separately as accrual and non-accrual at June 30, 2012 and December 31, 2011.

As of June 30, 2012 — Collateral type:	Accruing Loans — #	Balance (in thousands)	Non-Accruing Loans — #	Balance (in thousands)
Warehouse	1	$ 1,341		$
Raw Land	5	2,878
Hotel & Motel	3	2,406
Office	2	1,513	1	2,770
Retail, including Strip Centers	8	6,228	1	45
1-4 Family Residential	26	8,604	8	2,355
Total	45	$ 22,970	10	$ 5,170

As of December 31, 2011 — Collateral type:	Accruing Loans — #	Balance (in thousands)	Non-Accruing Loans — #	Balance (in thousands)
Apartments	1	$ 1,347		$
Raw Land	3	1,549	2	618
Hotel & Motel	1	503	1	2,072
Office	3	1,077
Retail, including Strip Centers	9	6,694	1	2,665
1-4 Family Residential	22	6,781	7	2,800
Total	39	$ 17,951	11	$ 8,155

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As of June 30, 2012 and December 31, 2011, the Company had a balance of $28.2 million and $26.1 million, respectively, in troubled debt restructurings. The Company has recorded $2.0 million and $1.7 million in previous charge-offs on such loans at June 30, 2012 and December 31, 2011, respectively. The Companys balance in the allowance for loan losses allocated to such troubled debt restructurings was $868,000 and $2.7 million at June 30, 2012 and December 31, 2011, respectively.

Allowance for Loan Losses

The allowance for loan losses represents a reserve for inherent losses in the loan portfolio. The adequacy of the allowance for loan losses is evaluated periodically based on a review of all significant loans, with a particular emphasis on non-accruing, past due and other loans that management believes might be potentially impaired or warrant additional attention. The Company segregates the loan portfolio by type of loan and utilizes this segregation in evaluating exposure to risks within the portfolio. In addition, based on internal reviews and external reviews performed by independent auditors and regulatory authorities, the Company further segregates the loan portfolio by loan grades based on an assessment of risk for a particular loan or group of loans. Certain reviewed loans are assigned specific allowances when a review of relevant data determines that a general allocation is not sufficient or when the review affords management the opportunity to adjust the amount of exposure in a given credit. In establishing allowances, management considers historical loan loss experience but adjusts this data with a significant emphasis on data such as current loan quality trends, current economic conditions and other factors in the markets where the Company operates. Factors considered include, among others, current valuations of real estate in their markets, unemployment rates, the effect of weather conditions on agricultural related entities and other significant local economic events.

The Company has developed a methodology for determining the adequacy of the allowance for loan losses which is monitored by the Companys Chief Credit Officer. Procedures provide for the assignment of a risk rating for every loan included in the total loan portfolio, with the exception of credit card receivables and overdraft protection loans which are treated as pools for risk rating purposes. The risk rating schedule provides nine ratings of which five ratings are classified as pass ratings and four ratings are classified as criticized ratings. Each risk rating is assigned a percentage factor to be applied to the loan balance to determine the adequate amount of reserve. Many of the larger loans require an annual review by an independent loan officer or an independent third party loan review firm. As a result of these loan reviews, certain loans may be assigned specific reserve allocations. Other loans that surface as problem loans may also be assigned specific reserves. Past due loans are assigned risk ratings based on the number of days past due. The calculation of the allowance for loan losses, including underlying data and assumptions, is reviewed regularly by the Companys Chief Financial Officer and the Director of Internal Audit.

Loan losses are charged against the allowance when management believes the collection of a loans principal is unlikely. Subsequent recoveries are credited to the allowance. Consumer loans are charged-off in accordance with the Federal Financial Institutions Examination Councils (FFIEC) Uniform Retail Credit Classification and Account Management Policy. Commercial loans are charged-off when they are deemed uncollectible, which usually involves a triggering event within the collection effort. If the loan is collateral dependent, the loss is more easily identified and is charged-off when it is identified, usually based upon receipt of an appraisal. However, when a loan has guarantor support, the Company may carry the estimated loss as a reserve against the loan while collection efforts with the guarantor are pursued. If, after collection efforts with the guarantor are complete, the deficiency is still considered uncollectible, the loss is charged-off and any further collections are treated as recoveries. In all situations, when a loan is downgraded to an Asset Quality Rating of 60 (Loss per the regulatory guidance), the uncollectible portion is charged-off.

Activity in the allowance for loan losses for the six months ended June 30, 2012, for the year ended December 31, 2011 and for the six months ended June 30, 2011 is as follows:

(Dollars in Thousands) — Balance, January 1	June 30, 2012 — $ 35,156	$	34,576	$	34,576
Provision for loan losses charged to expense	18,670		30,341		14,554
Loans charged off	(28,075	)	(31,623	)	(15,626	)
Recoveries of loans previously charged off	447		1,862		1,019
Ending balance	$ 26,198	$	35,156	$	34,523

During the six months ended June 30, 2012, the year ended December 31, 2011 and the six months ended June 30, 2011, the Company recorded provision for loan loss expense of $1.4 million, $2.4 million and $1.6 million, respectively, to account for losses where the initial estimate of cash flows was found to be excessive on loans acquired in FDIC-assisted transactions. These amounts are excluded from the rollforwards above and below but are reflected in the Companys Consolidated Statements of Operations.

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The following table details activity in the allowance for loan losses by portfolio segment for the six months ended June 30, 2012, the year ended December 31, 2011 and the six months ended June 30, 2011. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.

	Commercial, financial & agricultural
	(Dollars in thousands)
Balance, January 1, 2012	$ 2,918	$	9,438	$	14,226	$	8,128	$	446	$	35,156
Provision for loan losses	425		1,795		11,153		3,751		1,546		18,670
Loans charged off	(654	)	(5,211	)	(17,484	)	(4,374	)	(352	)	(28,075	)
Recoveries of loans previously charged off	78		19		24		162		164		447
Balance, June 30, 2012	$ 2,767	$	6,041	$	7,919	$	7,667	$	1,804	$	26,198
Period-end amount allocated to:
Loans individually evaluated for impairment	$ 623	$	898	$	1,999	$	3,109	$	3	$	6,632
Loans collectively evaluated for impairment	2,144		5,143		5,920		4,558		1,801		19,566
Ending balance	$ 2,767	$	6,041	$	7,919	$	7,667	$	1,804	$	26,198
Loans:
Individually evaluated for impairment	$ 2,776	$	7,173	$	24,838	$	19,088	$	16	$	53,891
Collectively evaluated for impairment	172,127		117,383		650,566		313,036		58,486		1,311,598
Ending balance	$ 174,903	$	124,556	$	675,404	$	332,124	$	58,502	$	1,365,489
	Commercial, financial & agricultural	Real estate - construction & development		Real estate - commercial & farmland		Real estate - residential		Consumer installment loans and Other		Total
	(Dollars in thousands)
Balance, January 1, 2011	$ 2,779	$	7,705	$	14,971	$	8,664	$	457	$	34,576
Provision for loan losses	5,772		11,354		7,883		4,717		615		30,341
Loans charged off	(5,807	)	(10,988	)	(8,680	)	(5,399	)	(749	)	(31,623	)
Recoveries of loans previously charged off	174		1,367		52		146		123		1,862
Balance, December 31, 2011	$ 2,918	$	9,438	$	14,226	$	8,128	$	446	$	35,156
Period-end amount allocated to:
Loans individually evaluated for impairment	$ 766	$	3,478	$	8,152	$	3,567	$	3	$	15,966
Loans collectively evaluated for impairment	2,152		5,960		6,074		4,561		443		19,190
Ending balance	$ 2,918	$	9,438	$	14,226	$	8,128	$	446	$	35,156
Loans:
Individually evaluated for impairment	$ 2,831	$	13,561	$	45,084	$	16,080	$	17	$	77,573
Collectively evaluated for impairment	140,129		116,709		627,681		314,647		55,347		1,254,513
Ending balance	$ 142,960	$	130,270	$	672,765	$	330,727	$	55,364	$	1,332,086

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	Commercial, financial & agricultural
	(Dollars in thousands)
Balance, January 1, 2011	$ 2,779	$	7,705	$	14,971	$	8,664	$	457	$	34,576
Provision for loan losses	3,234		3,683		4,908		2,466		263		14,554
Loans charged off	(3,241	)	(5,247	)	(4,889	)	(1,944	)	(305	)	(15,626	)
Recoveries of loans previously charged off	68		829		6		59		57		1,019
Balance, June 30, 2011	$ 2,840	$	6,970	$	14,996	$	9,245	$	472	$	34,523
Period-end amount allocated to:
Loans individually evaluated for impairment	$ 949	$	2,680	$	5,383	$	3,165	$	16	$	12,193
Loans collectively evaluated for impairment	1,891		4,290		9,613		6,080		456		22,330
Ending balance	$ 2,840	$	6,970	$	14,996	$	9,245	$	472	$	34,523
Loans:
Individually evaluated for impairment	$ 3,509	$	12,110	$	39,289	$	15,199	$	63	$	70,170
Collectively evaluated for impairment	146,868		131,574		641,939		321,286		48,226		1,289,893
Ending balance	$ 150,377	$	143,684	$	681,228	$	336,485	$	48,289	$	1,360,063

NOTE 4 ASSETS ACQUIRED IN FDIC-ASSISTED ACQUISITIONS

From October 2009 through February 2012, the Company participated in nine FDIC-assisted acquisitions whereby the Company purchased certain failed institutions out of the FDICs receivership. These institutions include:

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

On February 24, 2012, the Bank purchased substantially all of the assets and assumed substantially all the liabilities of Central Bank of Georgia (CBG) from the FDIC, as Receiver of CBG. CBG operated five branches in Ellaville, Buena Vista, Butler, Cusseta and Macon, Georgia. The Companys agreement with the FDIC included shared-loss agreements that afford the Bank significant protection from losses associated with loans and OREO. Under the terms of the shared-loss agreements, the FDIC will absorb 80% of all losses and share 80% of all loss recoveries. The shared-loss agreement applicable to single family residential mortgage loans provides for FDIC loss sharing and reimbursement by the Bank to the FDIC for ten years. The shared-loss agreement applicable to commercial loans and securities provides for FDIC loss sharing for five years and reimbursement by the Bank to the FDIC for eight years.

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The estimated fair value of the assets acquired and the liabilities assumed are shown below:

(Dollars in Thousands)	Central Bank of Georgia
Assets acquired:
Cash and due from banks	$ 33,150
Securities available for sale	39,920
Loans	124,782
Foreclosed property	6,177
Estimated FDIC indemnification asset	52,654
Other assets	4,606
Assets acquired	261,289
Cash received (paid) to settle the acquisition	31,900
Fair value of assets acquired	$ 293,189
Liabilities assumed:
Deposits	$ 261,036
Other borrowings	10,334
Other liabilities	1,782
Fair value of liabilities assumed	$ 273,152
Net assets acquired / gain from acquisition	$ 20,037

The Companys bid to acquire the assets of CBG included a discount of approximately $33.9 million, and the Company received a $31.9 million cash payment from the FDIC to settle the acquisition.

The shared-loss agreements are subject to the servicing procedures as specified in the agreements with the FDIC. The expected reimbursements under the CBG shared-loss agreements were recorded as an indemnification asset at its estimated fair value of $52.7 million on the acquisition date. Based upon the acquisition date fair values of the net assets acquired, no goodwill was recorded on the transaction.

The CBG transaction resulted in a before-tax gain of $20.0 million, which is included in the Companys June 30, 2012 Consolidated Statement of Operations. Due to the difference in tax bases of the assets acquired and liabilities assumed, the Bank recorded deferred tax liabilities with respect to CBG of $7.0 million, resulting in an after-tax gain of $13.0 million.

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

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

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On the acquisition date, the preliminary estimates of the contractually required payments receivable for all ASC 310 loans acquired in the CBG acquisition totaled $137.2 million and the estimated fair values of the loans totaled $73.4 million, net of an accretable discount of $10.2 million, the difference between the value of the loans on the Companys balance sheet and the cash flows they are expected to produce. These amounts were determined based upon the estimated remaining life of the underlying loans, which includes the effects of estimated prepayments.

The estimated fair values of loans acquired in the CBG acquisition are detailed below based on their initial estimate of credit quality (dollars in thousands):

	Loans with deterioration of credit quality	Loans without a deterioration of credit quality	Total loans, at fair value
Commercial, industrial, agricultural	$ 1,256	$ 6,288	$ 7,544
Real estate residential	22,389	22,213	44,602
Real estate commercial & farmland	34,458	10,538	44,996
Construction & development	15,038	5,507	20,545
Consumer	273	6,822	7,095
	$ 73,414	$ 51,368	$ 124,782

The results of operations of CBG subsequent to the acquisition date are included in the Companys consolidated statements of operations. The following unaudited pro forma information reflects the Companys estimated consolidated results of operations as if the acquisitions had occurred on December 31, 2011 and 2010, unadjusted for potential cost savings (in thousands).

	Three Months Ended June 30, — 2012	2011	Six Months Ended June 30, — 2012	2011
Net interest income and noninterest income	$ 37,756	$ 37,462	$ 94,217	$ 70,496
Net income (loss)	$ 2,495	$ 2,275	$ 7,747	$ (2,104	)
Net income (loss) available to common stockholders	$ 1,678	$ 1,468	$ 6,115	$ (3,709	)
Income (loss) per common share available to common stockholders basic	$ 0.07	$ 0.06	$ 0.26	$ (0.16	)
Income (loss) per common share available to common stockholders diluted	$ 0.07	$ 0.06	$ 0.26	$ (0.16	)
Average number of shares outstanding, basic	23,819	23,449	23,791	23,445
Average number of shares outstanding, diluted	23,973	23,508	23,945	23,491

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In addition to the covered assets acquired in the most recent acquisitions, the Company has other investments in covered assets remaining from its previous FDIC-assisted acquisitions. The following table summarizes components of all covered assets at June 30, 2012 and 2011 and at December 31, 2011 and their origin:

	Covered loans	Less: Credit risk adjustments	Less: Liquidity and rate adjustments	Total covered loans	OREO	Less: Fair value adjustments	Total covered OREO	Total covered assets	FDIC indemnification asset
As of June 30, 2012:	(Dollars in thousands)
AUB	$ 29,740	$ 2,542	$	$ 27,198	$ 11,489	$	$ 11,489	$ 38,687	$ 2,620
USB	40,355	4,666		35,689	7,192	50	7,142	42,831	6,757
SCB	46,033	840		45,193	11,078	646	10,432	55,625	4,663
FBJ	35,618	6,645	59	28,914	2,787	515	2,272	31,186	7,051
DBT	222,724	60,218	455	162,051	24,121	1,422	22,699	184,750	65,684
TBC	63,593	8,155	252	55,186	8,616	1,184	7,432	62,618	14,838
HTB	98,624	20,676	60	77,888	16,860	6,499	10,361	88,249	25,249
OGB	88,717	22,041	156	66,520	13,397	6,573	6,824	73,344	26,105
CBG	153,342	50,037	207	103,098	8,637	3,821	4,816	107,914	50,834
Total	$ 778,746	$ 175,820	$ 1,189	$ 601,737	$ 104,177	$ 20,710	$ 83,467	$ 685,204	$ 203,801
	Covered loans	Less: Credit risk adjustments	Less: Liquidity and rate adjustments	Total covered loans	OREO	Less: Fair value adjustments	Total covered OREO	Total covered assets	FDIC indemnification asset
As of December 31, 2011:	(Dollars in thousands)
AUB	$ 34,242	$ 3,236	$	$ 31,006	$ 11,100	$	$ 11,100	$ 42,106	$ 7,271
USB	51,409	5,259	50	46,100	7,445	50	7,395	53,495	10,648
SCB	56,780	5,779	155	50,846	10,635	500	10,135	60,981	6,527
FBJ	40,106	7,473	92	32,541	2,370	641	1,729	34,270	8,551
DBT	260,883	68,757	703	191,423	28,947	2,763	26,184	217,607	105,528
TBC	79,586	14,358	331	64,897	8,441	1,274	7,167	72,064	18,628
HTB	110,899	28,024	73	82,802	20,132	10,171	9,961	92,763	48,289
OGB	105,285	33,221	190	71,874	12,615	7,669	4,946	76,820	36,952
Total	$ 739,190	$ 166,107	$ 1,594	$ 571,489	$ 101,685	$ 23,068	$ 78,617	$ 650,106	$ 242,394
	Covered loans	Less: Credit risk adjustments	Less: Liquidity and rate adjustments	Total covered loans	OREO	Less: Fair value adjustments	Total covered OREO	Total covered assets	FDIC indemnification asset
As of June 30, 2011:	(Dollars in thousands)
AUB	$ 48,309	$ 5,208	$ 86	$ 43,015	$ 11,064	$ 77	$ 10,987	$ 54,002	$ 5,338
USB	67,203	6,332	249	60,622	10,274	73	10,201	70,823	9,888
SCB	61,958	6,471	361	55,126	9,761	500	9,261	64,387	9,669
FBJ	45,011	8,500	119	36,392	3,053	1,559	1,494	37,886	9,812
DBT	326,991	112,589	951	213,451	36,383	9,582	26,801	240,252	100,150
TBC	99,529	21,249	397	77,883	6,113	1,274	4,839	82,722	26,070
Total	$ 649,001	$ 160,349	$ 2,163	$ 486,489	$ 76,648	$ 13,065	$ 63,583	$ 550,072	$ 160,927

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On the dates of acquisition, the Company estimated the future cash flows on each individual loan and made the necessary adjustments to reflect the asset at fair value. At each quarter end subsequent to the acquisition dates, the Company revises the estimates of future cash flows based on current information and makes the necessary adjustments to continue reflecting the assets at fair value. The adjustments to fair value are performed on a loan-by-loan basis and have resulted in the following:

Total Amounts	June 30, 2012	December 31, 2011	June 30, 2011
	(Dollars in thousands)
Adjustments needed where the Companys initial estimate of cash flows were underestimated: (recorded with a reclassification
from non-accretable difference to accretable discount)	$ 8,189	$ 22,031	$ 8,448
Adjustments needed where the Companys initial estimate of cash flows were overstated: (recorded through a provision for
loan losses)	7,185	11,940	8,018
Amounts reflected in the Companys Statement of Operations	June 30, 2012	December 31, 2011	June 30, 2011
	(Dollars in thousands)
Adjustments needed where the Companys initial estimate of cash flows were underestimated: (recorded with a reclassification
from non-accretable difference to accretable discount)	$ 1,638	$ 4,406	$ 1,689
Adjustments needed where the Companys initial estimate of cash flows were overstated: (recorded through a provision for
loan losses)	1,437	2,388	1,604

A rollforward of acquired loans with deterioration of credit quality for the six months ended June 30, 2012, the year ended December 31, 2011 and the six months ended June 30, 2011 is shown below:

(Dollars in Thousands) — Balance, January 1	June 30, 2012 — $ 307,790	$	252,535	$	252,535
Change in estimate of cash flows, net of charge-offs or recoveries	(3,702	)	(25,787	)	(6,681	)
Additions due to acquisitions	73,414		124,136
Other (loan payments, transfers, etc.)	(44,164	)	(43,094	)	(2,648	)
Ending balance	$ 333,338	$	307,790	$	243,206

A rollforward of acquired loans without deterioration of credit quality for the six months ended June 30, 2012, the year ended December 31, 2011 and the six months ended June 30, 2011 is shown below:

(Dollars in Thousands) — Balance, January 1	June 30, 2012 — $ 266,966	$	302,456	$	302,456
Change in estimate of cash flows, net of charge-offs or recoveries	1,152		(11,604	)
Additions due to acquisitions	51,367		35,439
Other (loan payments, transfers, etc.)	(42,627	)	(59,325	)	(59,173	)
Ending balance	$ 276,858	$	266,966	$	243,283

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The following is a summary of changes in the accretable discounts of acquired loans during the six months ended June 30, 2012, the year ended December 31, 2011 and the six months ended June 30, 2011.

(Dollars in Thousands) — Balance, January 1	June 30, 2012 — $ 29,537	$	37,383	$	37,383
Additions due to acquisitions	9,863		24,094
Accretion	(25,166	)	(36,519	)	(10,073	)
Other activity, net	8,189		4,579		(7,178	)
Ending balance	$ 22,423	$	29,537	$	20,132

The shared-loss agreements are subject to the servicing procedures as specified in the agreement with the FDIC. The expected reimbursements under the shared-loss agreements were recorded as an indemnification asset at their estimated fair values on the acquisition dates. Changes in the FDIC shared-loss receivable for the six months ended June 30, 2012, for the year ended December 31, 2011 and for the six months ended June 30, 2011 are as follows:

(Dollars in Thousands) — Balance, January 1	June 30, 2012 — $ 242,394	$	177,187	$	177,187
Indemnification asset recorded in acquisitions	52,654		94,973
Payments received from FDIC	(86,482	)	(36,813	)	(5,162	)
Effect of change in expected cash flows on covered assets	(4,765	)	7,047		(11,098	)
Ending balance	$ 203,801	$	242,394	$	160,927

NOTE 5 WEIGHTED AVERAGE SHARES OUTSTANDING

Earnings per share have been computed based on the following weighted average number of common shares outstanding:

2012	2011	2012	2011
(share data in thousands)		(share data in thousands)
Basic shares outstanding	23,819	23,449	23,791	23,445
Plus: Dilutive effect of ISOs	105	34	105	34
Plus: Dilutive effect of Restricted Grants	49	25	49	12
Diluted shares outstanding	23,973	23,508	23,945	23,491

NOTE 6 OTHER BORROWINGS

The Company has, from time to time, utilized certain borrowing arrangements with various financial institutions to fund growth in earning assets or provide additional liquidity when appropriate spreads can be realized. At June 30, 2012 and December 31, 2011, there were $3.8 million and $20.0 million, respectively, outstanding borrowings with the Companys correspondent banks. There were no outstanding borrowings with the Companys correspondent banks at June 30, 2011. The Companys success with attracting and retaining retail deposits has allowed for very low dependence on more volatile non-deposit funding.

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NOTE 7 COMMITMENTS

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 customers 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 managements credit evaluation of the borrower. Collateral held may include accounts receivable, inventory, property, plant and equipment, residential real estate and income-producing commercial properties.

The Companys commitments to extend credit and standby letters of credit are presented in the following table:

(Dollars in Thousands)	June 30, 2012	December 31, 2011	June 30, 2011
Commitments to extend credit	$ 143,890	$ 132,700	$ 124,528
Standby letters of credit	$ 9,039	$ 8,074	$ 9,117

NOTE 8 SUBSEQUENT EVENT

Subsequent to June 30, 2012, the Company participated in a FDIC-assisted acquisition that is not expected to have a material impact on the Companys operations and statement of condition. The acquisition is described as follows:

Montgomery Bank & Trust, Ailey, Georgia:

On July 6, 2012, the Bank purchased certain assets and assumed substantially all the deposits of Montgomery Bank & Trust (MBT) from the FDIC, as Receiver of MBT. MBT operated two branches in Ailey and Vidalia, Georgia. The Bank assumed approximately $156.6 million in customer deposits and acquired approximately $18.1 million in assets, including approximately $16.7 million in cash and cash equivalents and approximately $1.2 million in deposit-secured loans. The assets were acquired without a discount and the deposits were assumed with no premium. To settle the transaction, the FDIC made a cash payment to the Bank totaling approximately $138.7 million, based on the differential between liabilities assumed and assets acquired.

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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.

Cautionary Note Regarding Any Forward-Looking Statements

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 (the Securities Act), 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 SEC 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.

Overview

The following is managements 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 balance sheet as of June 30, 2012 as compared to December 31, 2011 and operating results for the three-and six-month periods ended June 30, 2012 and 2011. These comments should be read in conjunction with the Companys unaudited consolidated financial statements and accompanying notes appearing elsewhere herein.

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

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| (in thousands, except share data, taxable equivalent) | Second Quarter
2012 | First Quarter
2012 | Fourth Quarter
2011 | Third Quarter
2011 | Second Quarter
2011 | For Six Months Ended | |
| --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | June 30, 2012 | June 30, 2011 |
| Results of Operations: | | | | | | | |
| Net interest income | $ 28,881 | $ 27,727 | $ 32,768 | $ 27,802 | $ 28,747 | $ 56,608 | $ 52,954 |
| Net interest income (tax equivalent) | 29,058 | 27,655 | 33,022 | 28,026 | 28,969 | 56,713 | 53,387 |
| Provision for loan losses | 7,225 | 12,882 | 9,019 | 7,552 | 9,115 | 20,107 | 16,158 |
| Non-interest income | 8,875 | 27,264 | 6,689 | 33,945 | 5,974 | 36,139 | 12,167 |
| Non-interest expense | 26,623 | 34,246 | 28,710 | 29,486 | 22,596 | 60,869 | 43,751 |
| Income tax expense | 1,413 | 2,498 | 587 | 8,249 | 896 | 3,911 | 1,720 |
| Preferred stock dividends | 817 | 815 | 819 | 817 | 807 | 1,632 | 1,605 |
| Net income available to common shareholders | 1,678 | 4,550 | 322 | 15,643 | 1,307 | 6,228 | 1,887 |
| Selected Average Balances: | | | | | | | |
| Loans, net of unearned income | $ 1,378,448 | $ 1,329,146 | $ 1,335,242 | $ 1,437,609 | $ 1,349,092 | $ 1,356,338 | $ 1,357,664 |
| Covered loans | 601,802 | 602,353 | 600,367 | 540,959 | 506,251 | 601,507 | 522,497 |
| Investment securities | 370,928 | 356,112 | 338,076 | 327,195 | 289,149 | 364,189 | 295,344 |
| Earning assets | 2,505,744 | 2,482,070 | 2,516,100 | 2,503,121 | 2,426,041 | 2,502,571 | 2,440,683 |
| Assets | 2,966,527 | 2,978,469 | 2,978,469 | 3,048,337 | 2,909,012 | 2,972,498 | 2,945,426 |
| Deposits | 2,591,607 | 2,589,978 | 2,623,403 | 2,639,848 | 2,540,738 | 2,547,066 | 2,547,066 |
| Common shareholders equity | 243,463 | 242,817 | 248,729 | 228,716 | 229,794 | 243,140 | 228,645 |
| Period-End Balances: | | | | | | | |
| Loans, net of unearned income | $ 1,365,489 | $ 1,323,844 | $ 1,332,086 | $ 1,368,895 | $ 1,360,063 | $ 1,365,489 | $ 1,360,063 |
| Covered loans | 601,737 | 653,377 | 571,489 | 595,428 | 486,489 | 601,737 | 486,489 |
| Earning assets | 2,465,116 | 2,558,047 | 2,484,147 | 2,475,511 | 2,399,258 | 2,465,116 | 2,399,258 |
| Total assets | 2,920,311 | 3,043,234 | 2,994,307 | 3,010,379 | 2,857,237 | 2,920,311 | 2,857,237 |
| Total deposits | 2,544,672 | 2,665,360 | 2,591,566 | 2,628,892 | 2,511,363 | 2,544,672 | 2,511,363 |
| Common shareholders equity | 249,895 | 246,813 | 243,043 | 243,850 | 226,739 | 249,895 | 226,739 |
| Per Common Share Data: | | | | | | | |
| Earnings per share - Basic | $ 0.07 | $ 0.19 | $ 0.01 | $ 0.67 | $ 0.06 | $ 0.26 | $ 0.08 |
| Earnings per share - Diluted | 0.07 | 0.19 | 0.01 | 0.06 | 0.06 | 0.26 | 0.08 |
| Common book value per share | 10.49 | 10.36 | 10.23 | 10.27 | 9.54 | 10.49 | 9.54 |
| End of period shares outstanding | 23,819,144 | 23,814,144 | 23,751,294 | 23,742,794 | 23,766,044 | 23,819,144 | 23,766,044 |
| Weighted average shares outstanding | | | | | | | |
| Basic | 23,818,814 | 23,762,196 | 23,457,739 | 23,438,335 | 23,449,123 | 23,790,505 | 23,522,361 |
| Diluted | 23,973,039 | 23,916,421 | 23,611,964 | 23,559,063 | 23,508,419 | 23,944,730 | 23,566,476 |
| Market Price: | | | | | | | |
| High closing price | 13.40 | 13.32 | 10.66 | 10.30 | 10.16 | 13.40 | 11.10 |
| Low closing price | 10.88 | 10.34 | 8.55 | 8.47 | 8.49 | 10.34 | 8.49 |
| Closing price for quarter | 12.60 | 13.14 | 10.28 | 8.71 | 8.87 | 12.60 | 8.87 |
| Average daily trading volume | 58,370 | 59,139 | 68,654 | 71,955 | 58,706 | 58,751 | 52,545 |
| Cash dividends per share | | | | | | | |
| Stock dividend | | | | | | | |
| Closing price to book value | 1.20 | 1.27 | 1.00 | 0.85 | 0.93 | 1.20 | 0.93 |
| Performance Ratios: | | | | | | | |
| Return on average assets | 0.34 % | 0.72 % | 0.15 % | 2.14 % | 0.18 % | 0.53 % | 0.13 % |
| Return on average common equity | 4.12 % | 8.89 % | 1.82 % | 28.55 % | 2.28 % | 6.49 % | 1.66 % |
| Average loans to average deposits | 76.41 % | 74.58 % | 73.78 % | 74.95 % | 73.02 % | 76.87 % | 73.82 % |
| Average equity to average assets | 9.93 % | 9.86 % | 9.91 % | 9.16 % | 9.63 % | 9.90 % | 9.47 % |
| Net interest margin (tax equivalent) | 4.66 % | 4.48 % | 5.21 % | 4.44 % | 4.79 % | 4.56 % | 4.41 % |
| Efficiency ratio (tax equivalent) | 70.51 % | 62.28 % | 72.76 % | 47.75 % | 65.08 % | 65.63 % | 66.85 % |

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Results of Operations for the Three Months Ended June 30, 2012

Consolidated Earnings and Profitability

Ameris reported net income available to common shareholders of $1.7 million, or $0.07 per diluted share, for the quarter ended June 30, 2012, compared to $1.3 million, or $0.06 per diluted share for the same period in 2011. The Companys return on average assets and average shareholders equity increased in the second quarter of 2012 to 0.34% and 4.12%, respectively, compared to 0.18% and 2.28% in the second quarter of 2011. The increase in earnings and profitability during the quarter was primarily due to increased net interest income and reduced credit costs.

Net Interest Income and Margins

On a tax equivalent basis, net interest income for the second quarter of 2012 was $29.1 million, a slight increase compared to $29.0 million reported in the same quarter in 2011. Significant increases in the Companys net interest margin have been the result of flat yields on all classes of earning assets complemented by steady decreases in the Companys cost of funds. The Companys net interest margin increased during the first quarter of 2012 to 4.66%, compared to 4.48% during the first quarter of 2012 and 4.79% during the second quarter of 2011. The decreased net interest margin in the second quarter of 2012 is due to $3.8 million of non-recurring accretion on covered loans from improvements in the expected cash flows from FDIC-assisted acquisitions recognized in the second quarter of 2011. Increases in earning assets over the past year have been in covered loans with favorable yields compared to the Companys low cost of funds.

Total interest income during the second quarter of 2012 was $33.2 million, compared to $36.1 million in the same quarter of 2011. Yields on earning assets fell to 5.33%, compared to 5.98% reported in the second quarter of 2011. During the second quarter of 2012, short-term assets averaged 5.8% of total earning assets, compared to 11.2% in the same quarter in 2011. Current opportunities to invest a portion of the short-term assets in the bond market have been limited by the Companys inability to maintain certain portfolio characteristics with current yields and structures being offered. Efforts to increase lending activities have been slow to generate increases in outstanding loans due to the current economic conditions in the Companys markets. Management anticipates improving economic conditions and increased loan demand will provide opportunities to invest a portion of the short-term assets at higher yields.

Total funding costs declined to 0.62% in the second quarter of 2012, compared to 1.10% during the second quarter of 2011. Deposit costs decreased from 1.08% in the second quarter of 2011 and 0.63% in the first quarter of 2012 to 0.56% in the second quarter of 2012. Ongoing efforts to maintain the percentage of funding from transaction deposits have succeeded such that non-CD deposits averaged 67.6% of total deposits in the second quarter of 2012 compared to 60.1% during the second quarter of 2011. Lower costs on deposits were due mostly to the lower rate environment and the Companys ability to be less competitive on higher priced CDs due to its larger than normal position in short-term assets. Further opportunity to realize savings on deposits exists but may be limited due to current costs. Average balances of interest bearing deposits and their respective costs for the second quarter of 2012 and 2011 are shown below:

(Dollars in Thousands)	June 30, 2012 — Average Balance	Average Cost	June 30, 2011 — Average Balance	Average Cost
NOW	$ 605,494	0.30 %	$ 582,773	0.71 %
MMDA	616,449	0.53 %	545,261	1.06 %
Savings	97,097	0.15 %	78,674	0.45 %
Retail CDs < $100,000	369,651	0.91 %	417,297	1.43 %
Retail CDs > $100,000	410,855	1.05 %	490,660	1.61 %
Brokered CDs	59,526	2.96 %	105,338	3.33 %
Interest bearing deposits	$ 2,159,072	0.68 %	$ 2,220,003	1.25 %

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Provision for Loan Losses and Credit Quality

The Companys provision for loan losses during the second quarter of 2012 amounted to $7.2 million, compared to $12.9 million in the first quarter of 2012 and $9.1 million in the second quarter of 2011. Although the Company has experienced improving trends in criticized and classified assets for several quarters, provision for loan losses continues to be required to account for continued devaluation of real estate collateral. At June 30, 2012, classified loans still accruing totaled $37.3 million, compared to $40.0 million at June 30, 2011. Non-accrual loans at June 30, 2012 totaled $44.4 million, a 15.0% decrease from the $52.3 million reported at March 31, 2012 and a 26.6% decrease from the $60.5 million reported at June 30, 2011.

At June 30, 2012, other real estate owned (excluding covered OREO) totaled $40.0 million, compared to $40.0 million at March 31, 2012 and $61.5 million at June 30, 2011. Management regularly assesses the valuation of OREO through periodic reappraisal and through inquiries received in the marketing process. The Company has found that with a marketing window of 3-6 months, the liquidation of properties occurs between 85% and 100% of current book value. Certain properties, mostly raw land and subdivision lots, have extended marketing periods because of excessive inventory and record low home building activity. At the end of the second quarter of 2012, total non-performing assets decreased to 2.89% of total assets, compared to 4.27% at June 30, 2011. Management continues to aggressively identify and resolve problem assets while seeking quality credits to grow the loan portfolio.

Net charge-offs on loans during the second quarter of 2012 were $8.6 million, or 2.5% of loans on an annualized basis, compared to $8.4 million, or 2.5% of loans, in the second quarter of 2011. The Companys allowance for loan losses at June 30, 2012 was $26.2 million, or 1.92% of total loans, compared to $34.5 million, or 2.54% of total loans, at June 30, 2011.

Non-interest Income

Total non-interest income for the second quarter of 2012 was $8.9 million, compared to $6.0 million in the second quarter of 2011. Income from mortgage related activities continued to increase as a result of the Companys increased number of mortgage bankers and higher level of productions. During the second quarter of 2012, the Company elected to record newly originated mortgage loans held-for-sale at fair value, which increased mortgage income by approximately $616,000. Service charges on deposit accounts in the second quarter of 2012 increased slightly to $4.8 million, compared to $4.4 million in the first quarter of 2012 and $4.7 million in the second quarter of 2012.

Non-interest Expense

Total non-interest expenses for the second quarter of 2012 increased to $26.6 million, compared to $22.6 million in the same quarter in 2011. Salaries and benefits increased $2.7 million when compared to the second quarter of 2011, due to the reinstatement of certain compensation elements (including incentive accruals and board fees). Occupancy and equipment expense increased during the quarter from $2.8 million in the second quarter of 2011 to $2.9 million in the second quarter of 2012. Data processing and telecommunications expenses increased slightly to $2.9 million for the second quarter of 2012 from $2.8 million for the same period in 2011. Both of these increases over the same period in 2011 relate to eight additional branches acquired in FDIC-assisted transactions over the past year. Credit related expenses, including problem loan and OREO expense and OREO write-downs and losses, decreased to $3.4 million in the second quarter of 2012, compared to $3.9 million in the second quarter of 2011.

Income Taxes

Income tax expense is influenced by the amount of taxable income, the amount of tax-exempt income and the amount of non-deductible expenses. For the second quarter of 2012, the Company reported income tax expense of $1.4 million, compared to $896,000 in the same period of 2011. The Companys effective tax rate for the three months ending June 30, 2012 and 2011 was 36.2% and 29.8%, respectively.

Results of Operations for the Six Months Ended June 30, 2012

Interest Income

Interest income for the six months ended June 30, 2012 was $65.4 million on a tax equivalent basis, a decrease of $3.1 million when compared to $68.5 million for the same period in 2011. Average earning assets for the six-month period increased $61.9 million to $2.50 billion as of June 30, 2012, compared to $2.44 billion as of June 30, 2011. Yield on average earning assets was 5.25% compared to 5.66% in the first six months of 2011. The decreased yield in 2012 was due to $3.8 million of non-recurring accretion on covered loans during the second quarter of 2011 from improvements in the expected cash flows from FDIC-assisted acquisitions. Earning assets acquired in connection with the Companys FDIC-assisted acquisitions have allowed the Company to maintain rather level amounts of earning assets while interest rate floors on individual customer loans have allowed the Company to keep the yield on loans from falling precipitously in the current rate environment. Additionally, yields on the acquired assets have been much stronger than the Companys other earning assets, helping boost the Companys overall yield on earning assets.

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Interest Expense

Total interest expense for the six months ended June 30, 2012 amounted to $8.7 million, reflecting a $6.4 million decrease from the $15.1 million expense recorded in the same period of 2011. During the six-month period ended June 30, 2012, the Companys funding costs declined to 0.66% from 1.16% reported in the previous period. The majority of the decline in interest expense and costs relates to improvements in the cost of the Companys retail time deposits, which fell to 1.16% in the six-month period ending June 30, 2012, compared to 1.60% in the same period in 2011.

Net Interest Income

Higher levels of earning assets with generally level yields have combined with reduced funding costs to result in material improvements in net interest income. For the year-to-date period ending June 30, 2012, the Company reported $56.7 million of net interest income on a tax equivalent basis, compared to $53.4 million of net interest income for the same period in 2011. The Companys net interest margin increased to 4.56% in the six month period ending June 30, 2012, compared to 4.41% in the same period in 2011.

Provision for Loan Losses

The provision for loan losses increased to $20.1 million for the six months ended June 30, 2012, compared to $16.2 million in the same period in 2011, due to charges related to the bulk sale in the first quarter of 2012. Non-performing assets totaled $84.4 million at June 30, 2012, compared to $122.1 million at June 30, 2011. For the six-month period ended June 30, 2012, the Company had net charge-offs totaling $27.6 million, compared to $14.6 million for the same period in 2011. Annualized net charge-offs as a percentage of loans increased to 4.07% during the first six months of 2012, compared to 2.17% during the first six months of 2011. This increase was due to the Companys bulk sale of certain non-performing assets during the first quarter of 2012.

Non-interest Income

Non-interest income for the first six months of 2012 was $36.1 million, compared to $12.2 million in the same period in 2011. Excluding non-recurring gains on investment securities and an FDIC-assisted acquisition, the Companys non-interest income totaled $16.1 million, an increase of $4.2 million, or 35.0% compared to the same period in 2011. Service charges on deposit accounts increased approximately $224,000 to $9.2 million in the first six months of 2012 compared to the same period in 2011. Income from mortgage banking activity increased from $826,000 in the first six months of 2011 to $4.5 million in the first half of 2012, due to increased number of mortgage bankers and higher level of productions.

Non-interest Expense

Total operating expenses for the first six months of 2012 increased to $60.9 million, compared to $43.8 million in the same period in 2011. Salaries and benefits increased $4.3 million when compared to the first half of 2011, due to the increased number of branch locations over this time period and the reinstatement of certain compensation elements during 2012. Occupancy and equipment expenses for the first six months of 2012 amounted to $6.2 million, representing an increase of $733,000 from the same period in 2011. Data processing and telecommunications expenses decreased slightly during the first six months of 2012. Credit related expenses, including problem loan and OREO expense and OREO write-downs and losses, increased to $16.2 million in the first six months of 2012, compared to $5.7 million in the first half of 2011, due to the Companys bulk sale of certain nonperforming assets in the first quarter of 2012. During the first quarter of 2012, the Company successfully sold $31.2 million of non-performing and classified assets through several individual transactions. Through these sales, the Company sold $16.1 million in non-performing loans, $13.3 million in other real estate owned and $1.8 million in classified accruing loans. Losses associated with the sales totaled $16.1 million.

Income Taxes

In the first six months of 2012, the Company recorded income tax expense of $3.9 million, compared to $1.7 million in the same period of 2011. The Companys effective tax rate for the six months ended June 30, 2012 and 2011 was 33.2% and 33.0%, respectively.

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Financial Condition as of June 30, 2012

Securities

Debt securities with readily determinable fair values are classified as available for sale and recorded at fair value with unrealized gains and losses excluded from earnings and reported in accumulated other comprehensive income, net of the related deferred tax effect. Equity securities, including restricted equity securities, are classified as other investments and are recorded at cost.

The amortization of premiums and accretion of discounts are recognized in interest income using methods approximating the interest method over the life of the securities. Realized gains and losses, determined on the basis of the cost of specific securities sold, are included in earnings on the settlement date. Declines in the fair value of securities below their cost that are deemed to be other-than-temporary are reflected in earnings as realized losses.

In determining whether other-than-temporary impairment losses exist, management considers: (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer and (3) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.

Management evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Substantially all of the unrealized losses on debt securities are related to changes in interest rates and do not affect the expected cash flows of the issuer or underlying collateral. All unrealized losses are considered temporary because each security carries an acceptable investment grade and the Company does not intend to sell these investment securities at an unrealized loss position at June 30, 2012, and it is more likely than not that the Company will not be required to sell these securities prior to recovery or maturity. Therefore, at June 30, 2012, these investments are not considered impaired on an other-than temporary basis.

The following table illustrates certain information regarding the Companys investment portfolio with respect to yields, sensitivities and expected cash flows over the next twelve months assuming constant prepayments and maturities:

	Book Value	Fair Value			Estimated Cash Flows 12 months
	Dollars in Thousands
June 30, 2012:
U.S. government agencies	$ 8,602	$ 8,898	1.55 %	2.16	$
State and municipal securities	95,354	100,327	2.79 %	5.87	9,369
Corporate debt securities	11,792	11,506	6.95 %	6.95	1,250
Mortgage-backed securities	239,412	246,249	1.47 %	2.60	75,700
Total debt securities	$ 355,160	$ 366,980	2.00 %	3.62	$ 86,319
June 30, 2011:
U.S. government agencies	$ 24,056	$ 24,259	1.30 %	1.44	$ 18,300
State and municipal securities	58,636	60,546	3.70 %	5.59	4,722
Corporate debt securities	11,637	9,722	6.66 %	5.98	100
Mortgage-backed securities	234,437	239,849	3.56 %	3.13	62,159
Total debt securities	$ 328,766	$ 334,376	3.54 %	3.57	$ 85,281

Loans and Allowance for Loan Losses

At June 30, 2012, gross loans outstanding (including covered loans) were $1.97 billion, an increase from $1.85 billion reported at June 30, 2011. Covered loans increased $115.2 million, from $486.5 million at June 30, 2011 to $601.7 million at June 30, 2012. This increase in covered loans is due to the FDIC-assisted transactions completed during the first quarter of 2012 and the third quarter of 2011. The Companys participation in FDIC-assisted acquisitions was integral to being able to maintain a certain level of loans because management does not feel that enough loan opportunities with acceptable quality and profitability exist in our current market areas to stabilize and increase. Non-covered loans increased $41.6 million to $1.37 billion during the second quarter of 2012, compared to $1.32 billion at March 31, 2012 and $1.36 billion at June 30, 2011.

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The slower decline in loans reflects increased economic activity compared to 2009 and 2010, offset by managements focus on reducing higher risk loans within the Banks loan portfolio. The Company regularly monitors the composition of the loan portfolio to evaluate the adequacy of the allowance for loan losses in light of the impact that changes in the economic environment may have on the loan portfolio.

The Company focuses on the following loan categories: (1) commercial, financial and agricultural; (2) residential real estate; (3) commercial and farmland real estate; (4) construction and development related real estate; and (5) consumer. The Companys management has strategically located its branches in select markets in south and southeast Georgia, north Florida, southeast Alabama and throughout South Carolina to take advantage of the growth in these areas.

The Companys risk management processes include a loan review program designed to evaluate the credit risk in the loan portfolio and ensure credit grade accuracy. Through the loan review process, the Company conducts (1) a loan portfolio summary analysis, (2) charge-off and recovery analysis, (3) trends in accruing problem loan analysis, and (4) problem and past due loan analysis. This analysis process serves as a tool to assist management in assessing the overall quality of the loan portfolio and the adequacy of the allowance for loan losses. Loans classified as substandard are loans which are inadequately protected by the current sound worth and paying capacity of the borrower or of the collateral pledged. These assets exhibit a well-defined weakness or are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. These weaknesses may be characterized by past due performance, operating losses and/or questionable collateral values. Loans classified as doubtful are those loans that have characteristics similar to substandard loans but have an increased risk of loss. Loans classified as loss are those loans which are considered uncollectible and are in the process of being charged-off.

The allowance for loan losses is a reserve established through charges to earnings in the form of a provision for loan losses. The provision for loan losses is based on managements evaluation of the size and composition of the loan portfolio, the level of non-performing and past due loans, historical trends of charged-off loans and recoveries, prevailing economic conditions and other factors management deems appropriate. The Companys management has established an allowance for loan losses which it believes is adequate for the risk of loss inherent in the loan portfolio. Based on a credit evaluation of the loan portfolio, management presents a monthly review of the allowance for loan losses to the Companys Board of Directors. The review that management has developed primarily focuses on risk by evaluating individual loans in certain risk categories. These categories have also been established by management and take the form of loan grades. By grading the loan portfolio in this manner the Companys management is able to effectively evaluate the portfolio by risk, which management believes is the most effective way to analyze the loan portfolio and thus analyze the adequacy of the allowance for loan losses.

The allowance for loan losses is established by examining (1) the large classified loans, nonaccrual loans and loans considered impaired and evaluating them individually to determine the specific reserve allocation, and (2) the remainder of the loan portfolio to allocate a portion of the allowance based on past loss experience and the economic conditions for the particular loan category. The Company also considers other factors such as changes in lending policies and procedures; changes in national, regional, and/or local economic and business conditions; changes in the nature and volume of the loan portfolio; changes in the experience, ability and depth of either the bank president or lending staff; changes in the volume and severity of past due and classified loans; changes in the quality of the Companys corporate loan review system; and other factors management deems appropriate.

For the six month period ended June 30, 2012, the Company recorded net charge-offs totaling $27.6 million, compared to $14.6 million for the period ended June 30, 2011. The provision for loan losses for the six months ended June 30, 2012 increased to $20.1 million, compared to $16.2 million during the six-month period ended June 30, 2011. Increased levels of charge-offs and provision expense relates almost entirely to the Companys bulk sale of non-performing loans during the first quarter of 2012. At the end of the second quarter of 2012, the allowance for loan losses totaled $26.2 million, or 1.92% of total legacy loans, compared to $35.2 million, or 2.64% of total legacy loans, at December 31, 2011 and $34.5 million, or 2.54% of total legacy loans, at June 30, 2011.

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The following table presents an analysis of the allowance for loan losses for the six months ended June 30, 2012 and 2011:

(Dollars in Thousands)	June 30, 2012	June 30, 2011
Balance of allowance for loan losses at beginning of period	$ 35,156	$ 34,576
Provision charged to operating expense	18,670	14,554
Charge-offs:
Commercial, financial and agricultural	654	3,241
Real estate residential	4,374	1,944
Real estate commercial and farmland	17,484	4,889
Real estate construction and development	5,211	5,247
Consumer installment	352	305
Other
Total charge-offs	28,075	15,626
Recoveries:
Commercial, financial and agricultural	78	68
Real estate residential	162	59
Real estate commercial and farmland	24	6
Real estate construction and development	19	829
Consumer installment	164	57
Other
Total recoveries	447	1,019
Net charge-offs	27,628	14,607
Balance of allowance for loan losses at end of period	$ 26,198	$ 34,523
Net annualized charge-offs as a percentage of average loans	4.07 %	2.17 %
Allowance for loan losses as a percentage of loans at end of period	1.92 %	2.54 %

Assets Covered by Loss-Sharing Agreements with the FDIC

Loans that were acquired in FDIC-assisted transactions that are covered by the loss-sharing agreements with the FDIC (covered loans) totaled $601.7 million, $571.5 million and $486.5 million at June 30, 2012, December 31, 2011 and June 30, 2011, respectively. OREO that is covered by the loss-sharing agreements with the FDIC totaled $83.5 million, $78.6 million and $63.6 million at June 30, 2012, December 31, 2011 and June 30, 2011, respectively. The loss-sharing agreements are subject to the servicing procedures as specified in the agreements with the FDIC. The expected reimbursements under the loss-sharing agreements were recorded as an indemnification asset at their estimated fair value on the acquisition dates. The FDIC loss-share receivable reported at June 30, 2012, December 31, 2011 and June 30, 2011 was $203.8 million, $242.4 million and $160.9 million, respectively.

The Bank recorded the loans at their fair values, taking into consideration certain credit quality, risk and liquidity marks. The Company is confident in its estimation of credit risk and its adjustments to the carrying balances of the acquired loans. If the Company determines that a loan or group of loans has deteriorated from its initial assessment of fair value, a reserve for loan losses will be established to account for that difference. During the six months ended June 30, 2012, the year ended December 31, 2011 and the six months ended June 30, 2011, the Company recorded provision for loan loss expense of $1.4 million, $2.4 million and $1.6 million, respectively, to account for losses where the initial estimate of cash flows was found to be excessive on loans acquired in FDIC-assisted transactions. If the Company determines that a loan or group of loans has improved from its initial assessment of fair value, the increase in cash flows over those expected at the acquisition date is recognized as interest income prospectively.

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Covered loans are shown below according to loan type as of the end of the periods shown:

(Dollars in Thousands)	June 30, 2012	December 31, 2011	June 30, 2011
Commercial, financial and agricultural	$ 41,372	$ 41,867	$ 42,494
Real estate construction and development	83,991	77,077	79,540
Real estate commercial and farmland	322,393	321,257	229,924
Real estate residential	150,683	127,644	129,721
Consumer installment	3,298	3,644	4,810
	$ 601,737	$ 571,489	$ 486,489

Non-Performing Assets

Non-performing assets include nonaccrual loans, accruing loans contractually past due 90 days or more, repossessed personal property and other real estate owned. Loans are placed on nonaccrual status when management has concerns relating to the ability to collect the principal and interest and generally when such loans are 90 days or more past due. Management performs a detailed review and valuation assessment of impaired loans on a quarterly basis and recognizes losses when permanent impairment is identified. A loan is considered impaired when it is probable that not all principal and interest amounts will be collected according to the loan contract. When a loan is placed on nonaccrual status, any interest previously accrued but not collected is reversed against current income.

As of June 30, 2012, nonaccrual or impaired loans totaled $44.4 million, a decrease of approximately $26.4 million since December 31, 2011. The decrease in nonaccrual loans is due to the bulk sale of non-performing assets during the first quarter of 2012, the success in the foreclosure and resolution process, and a significant slowdown in the formation of new problem credits. Non-performing assets as a percentage of total assets were 2.89%, 4.05% and 4.27% at June 30, 2012, December 31, 2011 and June 30, 2011, respectively.

Non-performing assets at June 30, 2012, December 31, 2011 and June 30, 2011 were as follows:

(Dollars in Thousands)	June 30, 2012	December 31, 2011	June 30, 2011
Total nonaccrual loans	$ 44,421	$ 70,823	$ 60,545
Other real estate owned and repossessed collateral	40,018	50,301	61,533
Accruing loans delinquent 90 days or more	1
Total non-performing assets	$ 84,440	$ 121,124	$ 122,078

Loan class:	June 30,2012 — #	Balance (in thousands)	December 31, 2011 — #	Balance (in thousands)
Real estate construction & development	5	$ 1,205	6	$ 1,774
Real estate commercial & farmland	16	13,293	14	9,622
Real estate residential	24	8,472	19	6,555
Total	45	$ 22,970	39	$ 17,951

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Commercial Lending Practices

On December 12, 2006, the Federal Bank Regulatory Agencies released guidance on Concentration in Commercial Real Estate Lending . This guidance defines commercial real estate (CRE) loans as loans secured by raw land, land development and construction (including 1-4 family residential construction), multi-family property and non-farm nonresidential property where the primary or a significant source of repayment is derived from rental income associated with the property, excluding owner occupied properties (loans for which 50% or more of the source of repayment is derived from the ongoing operations and activities conducted by the party, or affiliate of the party, who owns the property) or the proceeds of the sale, refinancing or permanent financing of the property. Loans for owner occupied CRE are generally excluded from the CRE guidance.

The CRE guidance is applicable when either:

(1) total loans for construction, land development, and other land, net of owner occupied loans, represent 100% or more of a banks total risk-based capital; or

(2) total loans secured by multifamily and nonfarm nonresidential properties and loans for construction, land development, and other land, net of owner occupied loans, represent 300% or more of a banks total risk-based capital.

Banks that are subject to the CRE guidances criteria are required to implement enhanced strategic planning, CRE underwriting policies, risk management and internal controls, portfolio stress testing, risk exposure limits, and other policies, including management compensation and incentives, to address the CRE risks. Higher allowances for loan losses and capital levels may also be appropriate.

As of June 30, 2012, the Company exhibited a concentration in CRE loan category based on Federal Reserve Call codes. The primary risks of CRE lending are:

(1) within CRE loans, construction and development loans are somewhat dependent upon continued strength in demand for residential real estate, which is reliant on favorable real estate mortgage rates and changing population demographics;

(2) on average, CRE loan sizes are generally larger than non-CRE loan types; and

(3) certain construction and development loans may be less predictable and more difficult to evaluate and monitor.

The following table outlines CRE loan categories and CRE loans as a percentage of total loans as of June 30, 2012 and December 31, 2011. The loan categories and concentrations below are based on Federal Reserve Call codes and include covered loans.

(Dollars in Thousands)	June 30, 2012 — Balance	% of Total Loans	December 31, 2011 — Balance	% of Total Loans
Construction and development loans	$ 208,547	10 %	$ 207,347	11 %
Multi-family loans	55,376	3 %	60,247	3 %
Nonfarm non-residential loans	806,230	41 %	806,176	42 %
Total CRE Loans	$ 1,070,153	54 %	$ 1,073,770	56 %
All other loan types	897,073	46 %	829,805	44 %
Total Loans	$ 1,967,226	100 %	$ 1,903,575	100 %

The following table outlines the percent of total CRE loans, net owner occupied loans to total risk-based capital, and the Companys internal concentration limits as of June 30, 2012 and December 31, 2011:

	Actual	Actual
Construction and development	100 %	69 %	71 %
Commercial real estate	300 %	228 %	228 %

Short-Term Investments

The Companys short-term investments are comprised of federal funds sold and interest bearing balances. At June 30, 2012, the Companys short-term investments were $111.3 million, compared to $229.0 million and $218.3 million at December 31, 2011 and June 30, 2011, respectively. At June 30, 2012, approximately 99.9% of the balance was comprised of interest bearing balances.

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Derivative Instruments and Hedging Activities

The Company had cash flow hedges with notional amounts totaling $35.0 million at June 30, 2011 for the purpose of converting floating rate loans to fixed rate. The Company had a cash flow hedge with notional amount of $37.1 million at June 30, 2012, December 31, 2011 and June 30, 2011, for the purpose of converting the variable rate on the junior subordinated debentures to fixed rate. The fair value of these instruments amounted to a liability of approximately $3.0 million and $2.0 million at June 30, 2012 and December 31, 2011, respectively, and an asset of approximately $243,000 at June 30, 2011. No hedge ineffectiveness from cash flow hedges was recognized in the statement of operations. All components of each derivatives gain or loss are included in the assessment of hedge effectiveness.

Additionally, beginning in the second quarter of 2012, the Company began maintaining a risk management program to manage interest rate risk and pricing risk associated with its mortgage lending activities. This includes the use of forward contracts and other derivatives that are used to offset changes in value of the mortgage inventory due to changes in market interest rates. As a normal part of its operations, the Company enters into derivative contracts such as forward sale commitments and Interest Rate Lock Commitments (IRLCs) to economically hedge risks associated with overall price risk related to IRLCs and mortgage loans held-for-sale carried at fair value. The fair value of these instruments amounted to an asset of approximately $235,000 at June 30, 2012.

Capital

Capital management consists of providing equity to support both current and anticipated future operations. The Company is subject to capital adequacy requirements imposed by the Federal Reserve Board (the FRB) and the Georgia Department of Banking and Finance (the GDBF), and the Bank is subject to capital adequacy requirements imposed by the FDIC and the GDBF.

The FRB, the FDIC and the GDBF have adopted risk-based capital requirements for assessing bank holding company and bank capital adequacy. These standards define and establish minimum capital requirements in relation to assets and off-balance sheet exposure, adjusted for credit risk. The risk-based capital standards currently in effect are designed to make regulatory capital requirements more sensitive to differences in risk profiles among bank holding companies and banks and to account for off-balance sheet exposure. The regulatory capital standards are defined by the following three key measurements:

a) The Leverage Ratio is defined as Tier 1 capital to average assets. To be considered adequately capitalized under this measurement, a bank must maintain a leverage ratio greater than or equal to 4.00%. For a bank to be considered well capitalized a bank must maintain a leverage ratio greater than or equal to 5.00%.

b) The Core Capital Ratio is defined as Tier 1 capital to total risk weighted assets. To be considered adequately capitalized under this measurement, a bank must maintain a core capital ratio greater than or equal to 4.00%. For a bank to be considered well capitalized a bank must maintain a core capital ratio greater than or equal to 6.00%.

c) The Total Capital Ratio is defined as total capital to total risk weighted assets. To be considered adequately capitalized under this measurement, a bank must maintain a total capital ratio greater than or equal to 8.00%. For a bank to be considered well capitalized a bank must maintain a total capital ratio greater than or equal to 10.00%.

As of June 30, 2012, under the regulatory capital standards, the Bank was considered well capitalized under all capital measurements. The following table sets forth the regulatory capital ratios of Ameris at June 30, 2012, December 31, 2011 and June 30, 2011.


Leverage Ratio (tier 1 capital to average assets)
Consolidated	11.12 %	10.76 %	10.68 %
Ameris Bank	11.09	10.62	10.39
Core Capital Ratio (tier 1 capital to risk weighted assets)
Consolidated	19.32	18.80	18.64
Ameris Bank	19.27	18.61	18.19
Total Capital Ratio (total capital to risk weighted assets)
Consolidated	20.57	20.05	19.90
Ameris Bank	20.53	19.87	19.45

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Capital Purchase Program

On November 21, 2008, the Company issued and sold to the United States Treasury (the Treasury), as part of its Troubled Asset Relief Program (TARP) Capital Purchase Program, for an aggregate cash purchase price of $52 million, (i) 52,000 shares (the Preferred Shares) of the Companys fixed rate Cumulative Perpetual Preferred Stock, Series A, having a liquidation preference of $1,000 per share, and (ii) a ten-year warrant (the Warrant) to purchase up to 679,443 shares of the Companys common stock, par value $1.00 per share (the Common Stock), at an exercise price of $11.48 per share. On June 14, 2012, the Preferred Shares were sold by the Treasury through a registered public offering as part of the Treasurys efforts to wind down its remaining TARP bank investments. While the sale of the Preferred Shares to new investors did not result in any accounting entries and does not change the Companys capital position, it eliminated many executive compensation and corporate governance restrictions that were applicable to the Company during the period in which the Treasury held its investment in the Preferred Shares. The Treasury continues to hold the Warrant, which, as a result of prior adjustments, is currently exercisable for 698,554.05 shares of Common Stock at an exercise price of $11.166 per share.

Cumulative dividends on the Preferred Shares will continue to accrue on the liquidation preference at a rate of 5% per annum for the first five years from initial issuance and at a rate of 9% per annum thereafter, but such dividends will be paid only if, as and when declared by the Companys Board of Directors. The Preferred Shares have no maturity date and rank senior to the Common Stock (and pari passu with the Companys other authorized preferred stock, of which no shares are currently designated or outstanding) with respect to the payment of dividends and distributions and amounts payable upon liquidation, dissolution and winding up of the Company. Subject to the approval of the Board of Governors of the Federal Reserve System, the Preferred Shares are redeemable at the option of the Company at 100% of their liquidation preference.

Interest Rate Sensitivity and Liquidity

The Companys primary market risk exposures are credit risk, interest rate risk, and to a lesser degree, liquidity risk. The Bank operates under an Asset Liability Management Policy approved by the Companys Board of Directors and the Asset and Liability Committee (the ALCO Committee). The policy outlines limits on interest rate risk in terms of changes in net interest income and changes in the net market values of assets and liabilities over certain changes in interest rate environments. These measurements are made through a simulation model which projects the impact of changes in interest rates on the Banks assets and liabilities. The policy also outlines responsibility for monitoring interest rate risk, and the process for the approval, implementation and monitoring of interest rate risk strategies to achieve the Banks interest rate risk objectives.

The ALCO Committee is comprised of senior officers of Ameris and two outside members of the Companys Board of Directors. The ALCO Committee makes all strategic decisions with respect to the sources and uses of funds that may affect net interest income, including net interest spread and net interest margin. The objective of the ALCO Committee is to identify the interest rate, liquidity and market value risks of the Companys balance sheet and use reasonable methods approved by the Companys Board of Directors and executive management to minimize those identified risks.

The normal course of business activity exposes the Company to interest rate risk. Interest rate risk is managed within an overall asset and liability framework for the Company. The principal objectives of asset and liability management are to predict the sensitivity of net interest spreads to potential changes in interest rates, control risk and enhance profitability. Funding positions are kept within predetermined limits designed to properly manage risk and liquidity. The Company employs sensitivity analysis in the form of a net interest income simulation to help characterize the market risk arising from changes in interest rates. In addition, fluctuations in interest rates usually result in changes in the fair market value of the Companys financial instruments, cash flows and net interest income. The Companys interest rate risk position is managed by the ALCO Committee.

The Company uses a simulation modeling process to measure interest rate risk and evaluate potential strategies. Interest rate scenario models are prepared using software created and licensed from an outside vendor. The Companys simulation includes all financial assets and liabilities. Simulation results quantify interest rate risk under various interest rate scenarios. Management then develops and implements appropriate strategies. The ALCO Committee has determined that an acceptable level of interest rate risk would be for net interest income to decrease no more than 5.00% given a change in selected interest rates of 200 basis points over any 24-month period.

Liquidity management involves the matching of the cash flow requirements of customers, who may be either depositors desiring to withdraw funds or borrowers needing assurance that sufficient funds will be available to meet their credit needs, and the ability of Ameris to manage those requirements. The Company strives to maintain an adequate liquidity position by managing the balances and maturities of interest-earning assets and interest-bearing liabilities so that the balance it has in short-term investments at any given time will adequately cover any reasonably anticipated immediate need for funds. Additionally, the Bank maintains relationships with correspondent banks, which could provide funds on short notice, if needed. The Company has invested in FHLB stock for the purpose of establishing credit lines with the FHLB. The credit availability to the Bank is equal to 20% of the Banks total assets as reported on the most recent quarterly financial information submitted to the regulators subject to the pledging of sufficient collateral. At June 30, 2012, there were $3.8 million outstanding borrowings with the Companys correspondent banks, compared to $20.0 million at December 31, 2011. There were no outstanding borrowings with the Companys correspondent banks at June 30, 2011.

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The following liquidity ratios compare certain assets and liabilities to total deposits or total assets:

Investment securities available for sale to total deposits	14.42 %	13.95 %	13.12 %	12.97 %	13.31 %
Loans (net of unearned income) to total deposits (1)	53.66 %	49.67 %	51.40 %	52.07 %	54.16 %
Interest-earning assets to total assets	84.41 %	84.06 %	82.96 %	82.23 %	83.97 %
Interest-bearing deposits to total deposits	83.14 %	83.32 %	84.74 %	86.52 %	87.34 %

(1) Loans exclude covered assets where appropriate

The liquidity resources of the Company are monitored continuously by the ALCO Committee and on a periodic basis by state and federal regulatory authorities. As determined under guidelines established by these regulatory authorities, the Companys and the Banks liquidity ratios at June 30, 2012 were considered satisfactory. The Company is aware of no events or trends likely to result in a material change in liquidity.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

The Company is exposed only to U.S. dollar interest rate changes, and, accordingly, the Company manages exposure by considering the possible changes in the net interest margin. The Company does not have any trading instruments nor does it classify any portion of the investment portfolio as held for trading. The Companys hedging activities are limited to cash flow hedges that are part of the Companys program to manage interest rate sensitivity and the use of forward contracts and other derivatives that are used to offset changes in value of the mortgage inventory due to changes in market interest rates. At June 30, 2012, the Company had one effective LIBOR rate swap with a notional amount of $37.1 million. The LIBOR rate swap exchanges fixed rate payments of 4.15% for floating rate payments based on the three month LIBOR and matures December 2018. The Company also had forward contracts with a fair value of approximately $235,000 at June 30, 2012 to hedge changes in the value of the mortgage inventory due to changes in market interest rates. Finally, the Company has no exposure to foreign currency exchange rate risk, commodity price risk and other market risks.

Interest rates play a major part in the net interest income of a financial institution. The sensitivity to rate changes is known as interest rate risk. The repricing of interest-earning assets and interest-bearing liabilities can influence the changes in net interest income. As part of the Companys asset/liability management program, the timing of repriced assets and liabilities is referred to as gap management.

The Company uses simulation analysis to monitor changes in net interest income due to changes in market interest rates. The simulation of rising, declining and flat interest rate scenarios allows management to monitor and adjust interest rate sensitivity to minimize the impact of market interest rate swings. The analysis of the impact on net interest income over a twelve-month period is subjected to a gradual 200 basis point increase or decrease in market rates on net interest income and is monitored on a quarterly basis.

Additional information required by Item 305 of Regulation S-K is set forth under Part I, Item 2 of this report.

Item 4. Controls and Procedures.

The Companys Chief Executive Officer and Chief Financial Officer have evaluated the Companys disclosure controls and procedures (as such term is defined in Rules 13a-15(e) or 15d-15(e) promulgated under the Exchange Act), as of the end of the period covered by this report, as required by paragraph (b) of Rules 13a-15 or 15d-15 of the Exchange Act. Based on such evaluation, such officers have concluded that, as of the end of the period covered by this report, the Companys disclosure controls and procedures are effective.

During the quarter ended June 30, 2012, there were no changes in the Companys internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rules 13a-15 or 15d-15 of the Exchange Act that materially affected, or are reasonably likely to materially affect, the Companys internal control over financial reporting.

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PART II OTHER INFORMATION

Item 1. Legal Proceedings.

Nothing to report with respect to the period covered by this report.

Item 1A. Risk Factors.

There have been no material changes to the risk factors disclosed in Item 1A. of Part 1 in our Annual Report on Form 10-K for the year ended December 31, 2011.

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

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

The exhibits required to be furnished with this report are listed on the exhibit index attached hereto.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: August 9, 2012

AMERIS BANCORP
/s/ Dennis J. Zember Jr.
Dennis J. Zember Jr., Executive Vice President and Chief Financial Officer (duly authorized signatory and principal accounting and financial officer)

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EXHIBIT INDEX

Exhibit No.	Description
3.1	Articles of Incorporation of Ameris Bancorp, as amended (incorporated by reference to Exhibit 2.1 to Ameris Bancorps Regulation A Offering Statement on Form 1-A filed with the
Commission on August 14, 1987).
3.2	Amendment to Amended Articles of Incorporation of Ameris Bancorp (incorporated by reference to Exhibit 3.1.1 to Ameris Bancorps Form 10-K filed with the Commission on
March 28, 1996).
3.3	Amendment to Amended Articles of Incorporation of Ameris Bancorp (incorporated by reference to Exhibit 4.3 to Ameris Bancorps Registration Statement on Form S-4 filed
with the Commission on July 17, 1996).
3.4	Articles of Amendment to the Articles of Incorporation of Ameris Bancorp (incorporated by reference to Exhibit 3.5 to Ameris Bancorps Annual Report on Form 10-K filed
with the Commission on March 25, 1998).
3.5	Articles of Amendment to the Articles of Incorporation of Ameris Bancorp (incorporated by reference to Exhibit 3.7 to Ameris Bancorps Annual Report on Form 10-K filed with the
Commission on March 26, 1999).
3.6	Articles of Amendment to the Articles of Incorporation of Ameris Bancorp (incorporated by reference to Exhibit 3.9 to Ameris Bancorps Annual Report on Form 10-K filed with the
Commission on March 31, 2003).
3.7	Articles of Amendment to the Articles of Incorporation of Ameris Bancorp (incorporated by reference to Exhibit 3.1 to Ameris Bancorps Current Report on Form 8-K filed
with the Commission on December 1, 2005).
3.8	Articles of Amendment to the Articles of Incorporation of Ameris Bancorp (incorporated by reference to Exhibit 3.1 to Ameris Bancorps Current Report on Form 8-K filed with the
Commission on November 21, 2008).
3.9	Articles of Amendment to the Articles of Incorporation of Ameris Bancorp (incorporated by reference to Exhibit 3.1 to Ameris Bancorps Current Report on Form 8-K filed with the
Commission on June 1, 2011).
3.10	Amended and Restated Bylaws of Ameris Bancorp (incorporated by reference to Exhibit 3.1 to Ameris Bancorps Current Report on Form 8-K filed with the Commission on
March 14, 2005).
31.1	Rule 13a-14(a)/15d-14(a) Certification by the Companys Chief Executive Officer
31.2	Rule 13a-14(a)/15d-14(a) Certification by the Companys Chief Financial Officer
32.1	Section 1350 Certification by the Companys Chief Executive Officer
32.2	Section 1350 Certification by the Companys Chief Financial Officer
101	The following financial statements from Ameris Bancorps Form 10-Q for the quarter ended June 30, 2012, formatted as interactive data files in XBRL (eXtensible Business
Reporting Language): (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Operations and Comprehensive Income; (iii) Consolidated Statements of Changes in Stockholders Equity; (iv) Consolidated Statements of Cash Flows; and (v)
Notes to Consolidated Financial Statements. (1)

(1) Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not to be filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not to be filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

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