Ameris Bancorp - Quarter Report: 2009 September (Form 10-Q)

form10q0909.htm

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2009

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

Commission File Number: 001-13901

AMERIS BANCORP

(Exact name of registrant as specified in its charter)

GEORGIA		58-1456434
(State of incorporation)		(IRS Employer ID No.)

310 FIRST STREET, S.E., MOULTRIE, GA 31768

(Address of principal executive offices)

(229) 890-1111

(Registrant’s telephone number)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer", "accelerated filer" and "smaller reporting company” in Rule 12b-2 of the Securities Exchange Act. (Check one):

Large accelerated filer o	Accelerated filer x	Smaller reporting company o

Non-accelerated filer o (Do not check if smaller reporting company)

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

There were 13,684,094 shares of Common Stock outstanding as of October 30, 2009.

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AMERIS BANCORP

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION		Page
Item 1.	Financial Statements
	Consolidated Balance Sheets at September 30, 2009, December 31, 2008 and September 30, 2008	3

	Consolidated Statements of Operations and Comprehensive Income/(Loss) for the Three and Nine Month Periods Ended September 30, 2009 and 2008	4

	Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2009 and 2008	5

	Notes to Consolidated Financial Statements	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41

Item 4.	Controls and Procedures	42

PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	43

Item 1A.	Risk Factors	43

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	43

Item 3.	Defaults Upon Senior Securities	43

Item 4.	Submission of Matters to a Vote of Security Holders	44

Item 5.	Other Information	44

Item 6.	Exhibits	44

Signatures		45

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Item 1. Financial Statements

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

	September 30,		December 31,		September 30,
	2009		2008		2008
	(Unaudited)		(Audited)		(Unaudited)
Assets
Cash and due from banks	$	43,761	$	66,787	$	43,549
Federal funds sold and interest bearing accounts		114,335		144,383		75,458
Investment securities available for sale, at fair value		251,189		367,894		286,002
Other investments		4,441		6,839		9,836

Loans		1,652,689		1,695,777		1,710,109
Less: allowance for loan losses		41,946		39,652		30,144
Loans, net		1,610,743		1,656,125		1,679,965

Premises and equipment, net		67,641		66,107		65,868
Intangible assets, net		3,193		3,631		3,924
Goodwill		54,813		54,813		54,813
Other real estate owned		21,923		4,742		4,561
Other assets		35,436		35,769		33,667
Total assets	$	2,207,475	$	2,407,090	$	2,257,643

Liabilities and Stockholders' Equity
Deposits:
Noninterest-bearing	$	205,699	$	208,532	$	198,900
Interest-bearing		1,681,830		1,804,993		1,607,439
Total deposits		1,887,529		2,013,525		1,806,339
Federal funds purchased and securities sold under agreements to repurchase		30,393		27,416		63,973
Other borrowings		7,000		72,000		138,600
Other liabilities		7,268		12,521		13,118
Subordinated deferrable interest debentures		42,269		42,269		42,269
Total liabilities		1,974,459		2,167,731		2,064,299

Stockholders' Equity
Preferred stock, par value $1; 5,000,000 shares authorized; 52,000 shares issued		49,411		49,028		-
Common stock, par value $1; 30,000,000 shares authorized; 15,018,328, 14,968,822 and 14,998,253 issued		15,018		14,968		14,998
Capital surplus		86,432		86,038		83,453
Retained earnings		86,425		93,594		105,014
Accumulated other comprehensive income		6,542		6,518		666
Treasury stock, at cost, 1,334,234, 1,331,102 and 1,331,102 shares		(10,812)		(10,787)		(10,787)
Total stockholders' equity		233,016		239,359		193,344
Total liabilities and stockholders' equity	$	2,207,475	$	2,407,090	$	2,257,643

See notes to unaudited consolidated financial statements

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


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2009		2008		2009		2008
Interest Income
Interest and fees on loans	$	24,888	$	28,280	$	76,444	$	86,752
Interest on taxable securities		2,725		3,563		9,288		10,793
Interest on nontaxable securities		329		169		751		514
Interest on deposits in other banks		68		100		201		391
Interest on federal funds sold		12		0		54		0
Total Interest Income		28,022		32,112		86,739		98,450

Interest Expense
Interest on deposits		8,684		11,717		30,869		38,173
Interest on other borrowings		526		1,218		1,551		3,584
Total Interest Expense		9,210		12,935		32,420		41,757

Net Interest Income		18,812		19,177		54,319		56,693
Provision for Loan Losses		8,298		8,220		25,600		15,140
Net Interest Income After Provision for Loan Losses		10,514		10,957		28,719		41,553

Noninterest Income
Service charges on deposit accounts		3,510		3,657		9,938		10,637
Mortgage banking activity		692		745		2,332		2,469
Other service charges, commissions and fees		131		120		271		618
Gain/(loss) on sale of securities		(20)		-		794		-
Other noninterest income		208		117		1,278		1,070
Total Noninterest Income		4,521		4,639		14,613		14,794

Noninterest Expense
Salaries and employee benefits		7,431		7,113		23,321		24,392
Equipment and occupancy expenses		2,114		1,904		6,496		5,999
Amortization of intangible assets		146		293		439		878
Data processing and telecommunications expenses		1,746		1,678		5,077		4,856
Advertising and marketing expenses		301		818		1,314		2,344
Other non-interest expenses		3,622		2,955		12,169		7,894
Total Noninterest Expense		15,360		14,761		48,816		46,363

(Loss)/Income Before Tax (Benefit)/Expense		(325)		835		(5,484)		9,984
Applicable Income Tax (Benefit)/Expense		(198)		469		(2,027)		3,504
Net (Loss)/Income	$	(127)	$	366	$	(3,457)	$	6,480

Preferred Stock Dividends		664		-		1,918		-
Net (Loss)/Income Available to Common Shareholders		(791)		366		(5,375)		6,480

Other Comprehensive Income/(loss)
Unrealized holding gain/(loss) arising during period on investment securities available for sale, net of tax		1,469		856		192		571
Unrealized gain/(loss) on cash flow hedges arising during period , net of tax		(959)		100		280		300
Reclassification adjustment for (gains)/losses included in net income, net of tax		(33)		-		(516)		41
Comprehensive Income/(loss)	$	(314)	$	1,322	$	(5,419)	$	7,392

Basic (loss)/earnings per share	$	(0.06)	$	0.03	$	(0.40)	$	0.48
Diluted (loss)/earnings per share	$	(0.06)	$	0.03	$	(0.40)	$	0.48

Weighted Average Common Shares Outstanding
Basic		13,630		13,620		13,630		13,612
Diluted		13,630		13,648		13,630		13,659

Dividends declared per share	$	-	$	0.05	$	0.10	$	0.33

See notes to unaudited consolidated financial statements

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AMERIS BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
	Nine Months Ended
	September 30,
	2009			2008
Cash Flows From Operating Activities:
Net Income/(Loss)	$	(3,457	)	$	6,480
Adjustments to reconcile net income/(loss) to net cash provided by operating activities:
Depreciation		2,658			2,400
Net (gains)/losses on sale or disposal of premises and equipment		95			(38)
Net (gains)/losses on sale of other real estate owned		706			(41)
Provision for loan losses		25,600			15,140
Amortization of intangible assets		438			878
Net gains on securities available for sale		(794	)		-
Other prepaids, deferrals and accruals, net		(1,618	)		(5,808)
Net cash provided by operating activities		23,628			19,011



Cash Flows From Investing Activities:
Net (increase)/decrease in federal funds sold and interest bearing deposits		30,048			(63,437)
Proceeds from maturities of securities available for sale		135,318			59,9800
Purchase of securities available for sale		(50,196	)		(57,843)
Proceeds from sales of securities available for sale		31,879			-
Net increase in loans		(6,735	)		(116,705)
Proceeds from sales of other real estate owned		8,632			11,266
Proceeds from sales of premises and equipment		1,647			386
Purchases of premises and equipment		(5,934	)		(11,139)
Net cash (used in)/provided by investing activities		144,659			(177,672)



Cash Flows From Financing Activities:
Net increase/(decrease) in deposits		(125,996	)		49,075
Net increase in federal funds purchased and securities sold under agreements to repurchase		2,977			49,268
Decrease in other borrowings		(65,000	)		-
Increase in other borrowings		-			48,100
Dividends paid - preferred stock		(1,918	)		-
Dividends paid - common stock		(1,358	)		(4,476)
Purchase of treasury shares		(25	)		(18)
Proceeds from exercise of stock options		6			457
Net cash (used in)/provided by financing activities		(191,314	)		142,406

Net decrease in cash and due from banks	$	(23,026	)	$	(16,255)

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

Cash and due from banks at end of period	$	43,761		$	43,549

See notes to unaudited consolidated financial statements

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AMERIS BANCORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2009 (Unaudited)

NOTE 1 – BASIS OF PRESENTATION AND ACCOUNTING POLICIES

Ameris Bancorp (the “Company” or “Ameris”) is a financial holding company headquartered in Moultrie, Georgia. Ameris conducts the majority of its operations through its wholly-owned banking subsidiary, Ameris Bank (the “Bank”). At September 30, 2009 the Bank operated 50 branches in Georgia, Alabama, northern Florida and South Carolina. Our business model capitalizes on the efficiencies of a large financial services company while still providing the community with the personalized banking service expected by our customers. We manage our Bank through a balance of decentralized management responsibilities and efficient centralized operating systems, products and loan underwriting standards. Ameris’ board of directors and senior managers establish corporate policy, strategy and administrative policies. Within Ameris’ established guidelines and policies, to minimize risk, each advisory board and senior managers make lending and community specific decisions. This approach allows the banker closest to the customer to respond to the differing needs and demands of their unique market.

The accompanying unaudited consolidated financial statements for Ameris have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and Regulation S-X. Accordingly, the financial statements do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statement presentation. The interim consolidated financial statements included herein are unaudited, but reflect all adjustments which, in the opinion of management, are necessary for a fair presentation of the consolidated financial position and results of operations for the interim periods presented. All significant intercompany accounts and transactions have been eliminated in consolidation. The results of operations for the period ended September 30, 2009 are not necessarily indicative of the results to be expected for the full year. These financial statements should be read in conjunction with the financial statements and notes thereto and the report of our registered independent public accounting firm included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2008.

Certain amounts reported for the periods ended December 31, 2008 and September 30, 2008 have been reclassified to conform to the presentation as of September 30, 2009. These reclassifications had no effect on previously reported net income or stockholders' equity.

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Subsequent Events - Federally Assisted Acquisitions

Subsequent to September 30, 2009, the Company has participated in two federally assisted acquisitions that will have material impacts on the Company’s operations and statement of condition. These acquisitions are described as follows:

American United Bank, Lawrenceville, Georgia:

On October 23, 2009, Ameris Bank purchased substantially all of the assets and assumed substantially all the liabilities of American United Bank (“AUB”) from the Federal Deposit Insurance Corporation (“FDIC”), as Receiver of AUB. AUB operated only one branch in Lawrenceville, Georgia, a northeast suburb of Atlanta, Georgia. The Company’s agreement with the FDIC included a loss-sharing agreement which affords Ameris Bank significant protection from losses associated with loans and OREO. Under the terms of the loss sharing agreements, the FDIC will absorb 80 percent of losses and share 80 percent of loss recoveries on the first $38 million of losses and, absorb 95 percent of losses and share in 95 percent of loss recoveries on losses exceeding $38 million. The term for loss sharing on residential real estate loans is ten years, while the term for loss sharing on all other loans is five years.

The Company’s bid to acquire AUB included a discount on the book value of the assets totaling $19.6 million. Also included in the bid was a premium of approximately $233,000 on AUB’s deposits. Ameris Bank’s bid resulted in a cash payment from the FDIC totaling $17.2 million.

United Security Bank, Woodstock, Georgia:

On November 6, 2009, Ameris Bank purchased substantially all of the assets and assumed substantially all the liabilities of United Security Bank (“USB”) from the Federal Deposit Insurance Corporation (“FDIC”), as Receiver of USB. USB operated one branch in Woodstock, Georgia and one branch in Sparta, Georgia. The Company’s agreement with the FDIC is similar to the agreement with USB except that under the terms of the USB loss sharing agreements, the FDIC will absorb 80 percent of losses and share 80 percent of loss recoveries on the first $46 million of losses and, absorb 95 percent of losses and share in 95 percent of loss recoveries on losses exceeding $46 million. The term for loss sharing on residential real estate loans is ten years, while the term for loss sharing on all other loans is five years.

The Company’s bid to acquire AUB included a discount on the book value of the assets totaling $32.6 million. Also included in the bid was a premium of approximately $248,000 on USB’s deposits. The settlement of this transaction is not complete but management estimates that Ameris Bank’s bid will result in a cash payment from the FDIC totaling approximately $30.0 million.

Both acquisitions will be accounted for under the purchase method of accounting in accordance with the FASB’s Accounting Standards Codification Topic 805, Business Combinations (“ASC 805”). It is the Company's intent to determine the fair values of the assets purchased and the liabilities assumed in part by using independent experts. This process is expected to be completed by December 31, 2009.

The purchased assets and assumed liabilities for both acquisitions are being recorded at their respective acquisition date fair values and identifiable intangible assets were recorded at fair value. In determining these values, management made significant estimates and exercised significant judgment. The Company’s estimates of fair values are preliminary and subject to refinement for up to one year after the closing date of a merger as information relative to closing date fair values become available. Gains totaling approximately $34.7 million will result from the acquisitions and will be included as a component of non-interest income during the fourth quarter of 2009. The amount of the gain is equal to the amount by which the fair value of assets purchased exceeded the fair value of liabilities assumed.

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The results of operations of AUB and USB will be included in the Company’s consolidated financial statements starting on the respective acquisition dates.

The following table provides a summary of management’s initial estimates of the fair value of assets purchased and liabilities assumed as well as the estimated gains on each acquisition:

	American			United
	United			Security
(in thousands)	Bank			Bank		Total

Assets acquired:
Cash and due from banks	$	24,573	$	38,778	$	63,351
Securities available for sale		18,116		21,745		39,861

Loans		44,734		64,393		109,127
Foreclosed property		3,608		12,214		15,822
Estimated loss reimbursement from the FDIC		30,400		36,800		67,200
Covered assets		78,742		113,407		192,149
Core deposit intangible		250		250		500
Accrued interest receivable and other assets		318		1,305		1,623
Total assets acquired		121,999		175,485		297,484

Liabilities assumed:
Deposits		102,636		150,233		252,869
Federal Home Loan Bank advances		7,737		1,500		9,237
Accrued interest payable and other liabilities		315		337		652
Total liabilities assumed		110,688		152,070		262,758
Net assets acquired / gain from acquisition	$	11,311	$	23,412	$	34,723

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Newly Adopted Accounting Pronouncements

In September 2009, the FASB issued Accounting Standards Update No. 2009-06 (“ASU 2009-06”), Income Taxes (Topic 740) – Implementation Guidance on Accounting for Uncertainty in Income Taxes and Disclosure Amendments for Nonpublic Entities. ASU 2009-06 provides additional implementation guidance on accounting for uncertainty in income taxes by addressing 1.) whether income taxes paid by an entity are attributable to the entity or its owners, 2.) what constitutes a tax position for a pass-through entity or a tax-exempt not-for-profit entity, and 3.) how accounting for uncertainty in income taxes should be applied when a group of related entities comprise both taxable and nontaxable entities. ASU 2009-06 also eliminates certain disclosure requirements for nonpublic entities. The guidance and disclosure amendments included in ASU 2009-06 were effective for Ameris in the third quarter of 2009 and had no impact on results of operations, financial position or disclosures.

In August 2009, the FASB issued Accounting Standards Update No. 2009-05 (“ASU 2009-05”), Fair Value Measurements and Disclosures (Topic 820) – Measuring Liabilities at Fair Value. ASU 2009-05 applies to all entities that measure liabilities at fair value within the scope of ASC Topic 820. ASU 2009-05 provides clarification that in circumstances in which a quoted price in an active market for the identical liability is not available, a reporting entity is required to measure fair value using one or more of the following techniques:

1.)	A valuation technique that uses:

a.	The quoted price of the identical liability when traded as an asset

b.	Quoted prices for similar liabilities or similar liabilities when traded as assets.

2.)

Another valuation technique that is consistent with the principles of ASC Topic 820. Two examples would be an income approach, such as a technique that is based on the amount at the measurement date that the reporting entity would pay to transfer the identical liability or would receive to enter into the identical liability.

The amendments in ASU 2009-5 also clarify that when estimating the fair value of a liability, a reporting entity is not required to include a separate input or adjustment to other inputs relating to the existence of a restriction that prevents the transfer of the liability. It also clarifies that both a quoted price in an active market for the identical liability at the measurement date and the quoted price for the identical liability when traded as an asset in an active market when no adjustments to the quoted price of the asset are required are Level 1 fair value measurements. The guidance provided in ASU 2009-5 is effective for Ameris in the fourth quarter of 2009. Because the Company does not currently have any liabilities that are recorded at fair value, the adoption of this guidance will not have any impact on results of operations, financial position or disclosures.

In August 2009, the FASB issued Accounting Standards Update No. 2009-04 (“ASU 2009-04”), Accounting for Redeemable Equity Instruments – Amendment to Section 480-10-S99. ASU 2009-04 represents an update to Section 480-10-S99, Distinguishing Liabilities from Equity, per Emerging Issues Task Force (“EITF”) Topic D-98, Classification and Measurement of Redeemable Securities. ASU 2009-04 did not have a material effect on the Company's results of operations, financial position or disclosures.

In August 2009, the FASB issued Accounting Standards Update No. 2009-03 (“ASU 2009-03”), SEC Update – Amendments to Various Topics Containing SEC Staff Accounting Bulletins. ASU 2009-03 represents technical corrections to various topics containing SEC Staff Accounting Bulletins to update cross-references to Codification text. This ASU did not have a material effect on Ameris' results of operations, financial position or disclosures.

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In June 2009, the FASB issued Accounting Standards Update No. 2009-02 (“ASU 2009-02”), Omnibus Update – Amendments to Various Topics for Technical Corrections. The adoption of ASU 2009-02 did not have a material effect on Ameris' results of operations, financial position or disclosures.

In June 2009, the FASB issued Accounting Standards Update No. 2009-01 (“ASU 2009-01”), Topic 105 – Generally Accepted Accounting Principles amendments based on Statement of Financial Accounting Standards No. 168 – The FASB Accounting Standards Codification TM and the Hierarchy of Generally Accepted Accounting Principles. ASU 2009-01 amends the FASB Accounting Standards Codification for the issuance of FASB Statement No. 168 (“SFAS 168”), The FASB Accounting Standards Codification TM and the Hierarchy of Generally Accepted Accounting Principles. ASU 2009-1 includes SFAS 168 in its entirety, including the accounting standards update instructions contained in Appendix B of the Statement. The FASB Accounting Standards Codification TM (“Codification”) became the source of authoritative U.S. generally accepted accounting principles (“GAAP”) recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. On the effective date of this Statement, the Codification will supersede all then-existing non-SEC accounting and reporting standards. All other non-grandfathered non-SEC accounting literature not included in the Codification will become non-authoritative. This Statement is effective for Ameris' financial statements beginning in the interim period ended September 30, 2009.

Following this Statement, the FASB will not issue new standards in the form of Statements, FASB Staff Positions, or Emerging Issues Task Force Abstracts. Instead, it will issue Accounting Standards Updates. The FASB does not consider Accounting Standards Updates as authoritative in their own right. Accounting Standards Updates serve only to update the Codification, provide background information about the guidance, and provide the bases for conclusions on the change(s) in the Codification. FASB Statement No. 162, The Hierarchy of Generally Accepted Accounting Principles, which became effective on November 13, 2008, identified the sources of accounting principles and the framework for selecting the principles used in preparing the financial statements of nongovernmental entities that are presented in conformity with GAAP. Statement 162 arranged these sources of GAAP in a hierarchy for users to apply accordingly. Upon becoming effective, all of the content of the Codification carries the same level of authority, effectively superseding Statement 162. In other words, the GAAP hierarchy has been modified to include only two levels of GAAP: authoritative and non-authoritative. As a result, this Statement replaces Statement 162 to indicate this change to the GAAP hierarchy. The adoption of the Codification and ASU 2009-01 did not have any effect on Ameris' results of operations or financial position. All references to accounting literature included in the notes to the financial statements have been changed to reference the appropriate sections of the Codification.

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In June 2009, the FASB issued Statement of Financial Accounting Standards ("SFAS") No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles -a replacement of FASB Statement No. 162. This Statement is effective for financial statements issued for interim and annual periods ending after September 15, 2009. Management does not anticipate it will have a material effect on the Company's consolidated financial condition or results of operations.

In June 2009, the FASB issued SFAS No. 167 (not yet reflected on FASB ASC), Amendments to FASB Interpretation No. 46(R). This statement amends certain requirements of FASB Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest Entities, to improve financial reporting by enterprises involved with variable interest entities and to provide more relevant and reliable information to users of financial statements. This Statement shall be effective as of the beginning of each reporting entity's first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period, and for interim and annual reporting periods thereafter with earlier application prohibited. Management does not anticipate it will have a material effect on the Company's consolidated financial condition or results of operations.

In June 2009, the FASB issued SFAS No. 166 (not yet reflected on FASB ASC), Accounting for Transfers of Financial Assets, an amendment of FASB Statement No. 140. The objective of this Statement is to improve the relevance, representational faithfulness, and comparability of the information that a reporting entity provides in its financial reports about a transfer of financial assets; the effects of a transfer on its financial position, financial performance, and cash flows; and a transferor’s continuing involvement in transferred financial assets. This Statement must be applied as of the beginning of each reporting entity's first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period and for interim and annual reporting periods thereafter with earlier application prohibited. This Statement must be applied to transfers occurring on or after the effective date. Management does not anticipate it will have a material effect on the Company's consolidated financial condition or results of operations.

In May 2009, the FASB issued ASC 855, Subsequent Events. This Statement establishes principles and requirements for subsequent events, setting forth the period after the balance sheet date during which management of a reporting entity shall evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, the circumstances under which an entity shall recognize events or transactions occurring after the balance sheet date in its financial statements, and the disclosures that an entity shall make about events or transactions that occurred after the balance sheet date. This statement is effective for interim or annual financial periods ending after June 15, 2009, and shall be applied prospectively. The adoption of this statement did not have a material effect on the Company's consolidated financial condition or results of operations.

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In April 2009, the FASB issued Accounting Standards Codification ("ASC") 820-10-65-4, Transition Related to FASB Staff Position FAS157-4, which provides additional guidance for estimating fair value when the volume and level of activity for the asset or liability have significantly decreased. This ASC also includes guidance on identifying circumstances that indicate a transaction is not orderly, emphasizing that even if there has been a significant decrease in the volume and level of activity for the asset or liability and regardless of the valuation technique(s) used, the objective of a fair value measurement remains the same. The guidance is effective for interim and annual reporting periods ending after June 15, 2009, and early adoption is permitted for periods ending after March 15, 2009. The adoption of this guidance did not have a material effect on the Company's consolidated financial condition or results of operations.

In April 2009, the FASB issued ASC 825-10-65-1, Transition Related to FSP FAS 107-1 and APB 28-1 ("ASC825"), which requires disclosures about fair value of financial instruments for interim reporting periods as well as in annual financial statements. This ASC also requires those disclosures in summarized financial information at interim reporting periods. This accounting standard is effective for interim reporting periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. The adoption of ASC 825 did not have a material effect on the Company's consolidated financial condition or results of operations.

In April 2009, the FASB issued ASC 320-10-65-1, Transition Related to FSB FAS 115-2 and FAS 124-2 ("ASC 320") which addresses the unique features of debt securities and clarifies the interaction of the factors that should be considered when determining whether a debt security is other-than-temporarily impaired. This accounting standard expands and increases the frequency of existing disclosures about other-than-temporary impairments for debt and equity securities. It does not amend existing recognition and measurement guidance for other-than-temporary impairments. The accounting standard is effective for interim and annual reporting periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. Earlier adoption for periods ending before March 15, 2009 is not permitted. The adoption of ASC 320 did not have a material effect on the Company's consolidated financial condition or results of operations.

In April 2009, the FASB issued ASC 805-20-25-15A, Business Combinations ("ASC 805"). This standard addresses application issues raised by preparers, auditors, and members of the legal profession on initial recognition and measurement, subsequent measurement and accounting, and disclosure of assets and liabilities arising from contingencies in a business combination. This FSP is effective for assets or liabilities arising from contingencies in business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The adoption of ASC 805 did not have a material effect on the Company's consolidated financial condition or results of operations.

In January 2009, the FASB issued ASC 325-40-65-1, Transition Related to FSP EITF 99-20-1 ("ASC 325"). This guidance amends the impairment guidance in EITF Issue No. 99-20, Recognition of Interest Income and Impairment on Purchased Beneficial Interests and Beneficial Interests That Continue to Be Held by a Transferor in Securitized Financial Assets, to achieve more consistent determination of whether an other-than-temporary impairment has occurred. The accounting standard also retains and emphasizes the objective of an other-than-temporary impairment assessment and the related disclosure requirements in FASB Statement No. 115, Accounting for Certain Investments in Debt and Equity Securities, and other related guidance. This accounting standard is effective for interim and annual reporting periods ending after December 15, 2008, and shall be applied prospectively. Retrospective application to a prior interim or annual reporting period is not permitted. The adoption of ASC 325 did not have a material effect on the Company's consolidated financial condition or results of operations.

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In December 2008, the FASB issued ASC 715-20-65, Transition Related to FSP FAS 123 (R), which provides guidance on an employer's disclosures about plan assets of a defined benefit pension or other postretirement plan. This FSP also includes a technical amendment to Statement 132(R) that requires a nonpublic entity to disclose net periodic benefit cost for each annual period for which a statement of income is presented. This FSP is effective for fiscal years ending after December 15, 2009. Management does not anticipate it will have a material effect on the Company's consolidated financial condition or results of operations.

ASC 815-10 Derivative and Hedging requires an entity to provide enhanced disclosures about how and why an entity uses derivative instruments, how derivative instruments and related items are accounted for and how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. The guidance is intended to enhance the current disclosure framework, by requiring the objectives for using derivative instruments be disclosed in terms of underlying risk and accounting designation.

The goal of the Company’s interest rate risk management process is to minimize the volatility in the net interest margin caused by changes in interest rates. Derivative instruments are used to hedge certain assets or liabilities as a part of this process. The Company is required to recognize certain contracts and commitments as derivatives when the characteristics of those contracts and commitments meet the definition of a derivative. All derivative instruments are required to be carried at fair value on the balance sheet.

The Company’s current hedging strategies involve utilizing interest rate floors and interest rate swaps classified as cash flow hedges. Cash flows related to floating-rate assets and liabilities will fluctuate with changes in an underlying rate index. When effectively hedged, the increases or decreases in cash flows related to the floating rate asset or liability will generally be offset by changes in cash flows of the derivative instrument designated as a hedge. The fair value of derivatives is recognized as assets or liabilities in the financial statements. The accounting for the changes in the fair value of a derivative depends on the intended use of the derivative instrument at inception. The change in fair value of the effective portion of cash flow hedges is accounted for in other comprehensive income. The change in fair value of the ineffective portion of cash flow hedges would be reflected in the statement of income.

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At September 30, 2009, the Company had asset cash flow hedges with notional amounts totaling $72.1 million for the purpose of managing interest rate sensitivity. These cash flow hedges included a LIBOR rate swap under which it pays a fixed rate and receives a variable rate. In addition, the Company utilizes a prime interest rate floor contract for the purpose of converting floating rate assets to fixed rate. No hedge ineffectiveness from cash flow hedges was recognized in the statement of operations. All components of each derivative’s gain or loss are included in the assessment of hedge effectiveness.

The following table presents the interest rate derivative contracts outstanding at September 30, 2009.

Type (Maturity)	Notional Amount		Rate Received /Floor Rate			Rate Paid			Fair Value
	(Dollars in Thousands)
LIBOR Swap (12/15/2018)	$	37,114		2.26	%		4.15	%	$	1,983

Prime Interest Rate Floor (08/15/11)		35,000		7.00	%		-			2,216

Total Derivative Contracts:	$	72,114							$	4,199

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Fair Value of Financial Instruments

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

The following methods and assumptions were used by the Company in estimating the fair value of its financial instruments and other accounts recorded based on their fair value:

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

Securities Available for Sale: The fair value of securities available for sale is determined by various valuation methodologies. Where quoted market prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. If quoted market prices are not available, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics, or discounted cash flows. Level 2 securities include certain U.S. agency bonds, collateralized mortgage and debt obligations, and certain municipal securities. In certain cases where Level 1 or Level 2 inputs are not available, securities are classified within Level 3 of the hierarchy and include certain residual municipal securities and other less liquid securities. Fair value of securities is based on available quoted market prices. Federal Home Loan Bank (“FHLB”) stock is included in other investment securities at its original cost basis, as cost approximates fair value and there is no ready market for such investments.

Loans: The carrying amount of variable-rate loans that reprice frequently and have no significant change in credit risk approximates fair value. The fair value of fixed-rate loans is estimated based on discounted contractual cash flows, using interest rates currently being offered for loans with similar terms to borrowers with similar credit quality. The fair value of impaired loans is estimated based on discounted contractual cash flows or underlying collateral values, where applicable. A loan is determined to be impaired if the Company believes it is probable that all principal and interest amounts due according to the terms of the note will not be collected as scheduled. The fair value of impaired loans is determined in accordance with 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.

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

Repurchase Agreements and/or Other Borrowings: The carrying amount of variable rate borrowings and securities sold under repurchase agreements approximates fair value. The fair value of fixed rate other borrowings is estimated based on discounted contractual cash flows using the current incremental borrowing rates for similar type borrowing arrangements.

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

Off-Balance-Sheet Instruments: The carrying amount of commitments to extend credit and standby letters of credit approximates fair value. The carrying amount of the off-balance-sheet financial instruments is based on fees charged to enter into such agreements.

Derivatives: The Company’s current hedging strategies involve utilizing interest rate floors and interest rate swaps. The fair value of derivatives is recognized as assets or liabilities in the financial statements. The accounting for the changes in the fair value of a derivative depends on the intended use of the derivative instrument at inception and ongoing tests of effectiveness. As of September 30, 2009, the Company had cash flow hedges with a notional amount of $72.1 million.

Other Real Estate Owned: The fair value of other real estate owned ("OREO") is determined using certified appraisals that value the property at its highest and best uses by applying traditional valuation methods common to the industry. The Company does not hold any OREO for profit purposes and all other real estate is actively marketed for sale. Management has determined that in most cases the valuation method for other real estate produces reliable estimates of fair value and has classified these assets as Level 2.

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

	September 30, 2009				December 31, 2008
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
	(Dollars in Thousands)
Financial assets:
Loans, net	$	1,610,743	$	1,623,132	$	1,656,125	$	1,671,499

Financial liabilities:
Deposits		1,887,529		1,891,817		2,013,525		2,019,964
Other borrowings		7,000		7,067		72,000		71,545

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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.

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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 September 30, 2009.

		Fair Value Measurements on a Recurring Basis
		As of September 30, 2009
				Quoted Prices
				in Active		Significant
				Markets for		Other		Significant
				Identical		Observable		Unobservable
				Assets		Inputs		Inputs
		Fair Value		(Level 1)		(Level 2)		(Level 3)

Securities available for sale	$	251,189	$	-	$	249,189	$	2,000
Derivative financial instruments		4,199		-		4,199		-
Total recurring assets at fair value	$	255,388	$	-	$	255,388	$	2,000

Following is a description of the valuation methodologies used for instruments measured at fair value on a nonrecurring basis, as well as the general classification of such instruments pursuant to the valuation hierarchy.

		Fair Value Measurements on a Nonrecurring Basis
		As of September 30, 2009
				Quoted Prices
				in Active		Significant
				Markets for		Other		Significant
				Identical		Observable		Unobservable
				Assets		Inputs		Inputs
		Fair Value		(Level 1)		(Level 2)		(Level 3)

Impaired loans carried at fair value	$	83,917	$	-	$	83,917	$	-
Other real estate owned		21,923		-		21,923		-
Total nonrecurring assets at fair value	$	105,840	$	-	$	105,840	$	-

Pursuant to accounting standards, below is the Company’s reconciliation of Level 3 assets as of September 30, 2009. Gains or losses on impaired loans are recorded in the provision for loan losses.

	Investment Securities Available for Sale		Impaired Loans
Beginning balance January 1, 2009	$	2,000	$	1,387
Total gains/(losses) included in net income		-		-
Purchases, sales, issuances, and settlements, net		-		(1,387)
Transfers in or out of Level 3		-		-
Ending balance September 30, 2009	$	2,000	$	-

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NOTE 2 – INVESTMENT SECURITIES

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

The amortized cost and estimated fair value of investment securities available for sale at September 30, 2009, December 31, 2008 and September 30, 2008 are presented below:

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

September 30, 2009:
U. S. government sponsored agencies	$	40,115	$	594	$	-	$	40,709
State and municipal securities		39,381		1,368		(21)		40,728
Corporate debt securities		12,181		77		(3,357)		8,901
Mortgage-backed securities		153,524		7,455		(128)		160,851
Total debt securities	$	245,201	$	9,494	$	(3,506)	$	251,189

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

September 30, 2008:
U. S. government sponsored agencies	$	58,875	$	229	$	(736)	$	58,368
State and municipal securities		18,502		244		(135)		18,611
Corporate debt securities		12,709		83		(1,021)		11,771
Mortgage-backed securities		196,461		1,422		(630)		197,253
Total securities	$	286,546		1,978		(2,523)		286,002

The amortized cost and fair value of available-for-sale securities at September 30, 2009 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.

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	Amortized		Fair
	Cost		Value
	(Dollars in Thousands)

Due in one year or less	$	8,012	$	8,181
Due from one year to five years		22,585		23,176
Due from five to ten years		45,343		45,973
Due after ten years		15,737		13,008
Mortgage-backed securities		153,524		160,851
	$	245,201	$	251,189

Securities with a carrying value of approximately $148.3 million were pledged to secure public deposits and other purposes required or permitted by law at September 30, 2009.

The following table details the gross unrealized losses and fair value of securities aggregated by category and duration of continuous unrealized loss position at September 30, 2009 and December 31, 2008.

	Less Than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
Description of Securities	Value		Losses		Value		Losses		Value		Losses
	(Dollars in Thousands)
September 30, 2009:
U. S. government sponsored agencies	$	-	$	-	$	-	$	-	$	-	$	-
State and municipal securities		1,802		(11)		605		(10)		2,407		(21)
Corporate debt securities		2,759		(2,418)		2,009		(939)		4,768		(3,357)
Mortgage-backed securities		1,984		(126)		427		(2)		2,411		(128)
Total debt securities		6,545		(2,555)		3,041		(951)		9,586		(3,506)


December 31, 2008:
U. S. government sponsored agencies	$	-	$	-	$	-	$	-	$	-	$	-
State and municipal securities		3,715		(80)		981		(43)		4,696		(123)
Corporate debt securities		2,178		(777)		-		-		2,178		(777)
Mortgage-backed securities		7,264		(83)		2,408		(49)		9,672		(132)
Total debt securities		13,157		(939)		3,389		(93)		16,546		(1,032)

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NOTE 3 - LOANS

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

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

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

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

(Dollars in Thousands)	September 30,		December 31,		September 30,
(Dollars in Thousands)	2009		2008		2008
Commercial, financial and agricultural	$	185,942	$	200,421	$	205,565
Real estate – residential		187,327		189,203		419,697
Real estate – commercial and farmland		1,095,471		1,070,483		661,619
Real estate – construction and development		114,208		162,887		360,160
Consumer installment		61,643		64,707		52,769
Other		8,098		8,076		10,299
	$	1,652,689	$	1,695,777	$	1,710,109

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NOTE 4 – ALLOWANCE FOR LOAN LOSSES

Activity in the allowance for loan losses for the nine months ended September 30, 2009, for the year ended December 31, 2008 and for the nine months ended September 30, 2008 is as follows:

(Dollars in Thousands)	September 30,		December 31,			September 30,
(Dollars in Thousands)	2009		2008			2008
Balance, January 1	$	39,652	$	27,640		$	27,640
Provision for loan losses charged to expense		25,600		35,030			15,140
Loans charged off		(24,616)		(24,340	)		(13,691)
Recoveries of loans previously charged off		1,310		1,322			1,055
Ending balance	$	41,946	$	39,652		$	30,144

The following is a summary of information pertaining to impaired loans for the nine months ended September 30, 2009 and the twelve months ended December 31, 2008:

(Dollars in Thousands)	September 30,		December 31,
(Dollars in Thousands)	2009		2008
Impaired loans	$	83,917	$	65,414
Valuation allowance related to impaired loans	$	17,449	$	9,078
Average investment in impaired loans		71,654		40,940
Interest income recognized on impaired loans	$	176	$	323
Foregone interest income on impaired loans	$	2,923	$	4,643

NOTE 5 - GOODWILL AND INTANGIBLE ASSETS

Goodwill represents the excess of cost over the fair value of the net assets purchased in business combinations. Goodwill is required to be tested annually for impairment or whenever events occur that may indicate that the recoverability of the carrying amount is not probable. In the event of impairment, the amount by which the carrying amount exceeds the fair value is charged to earnings.

The determination of whether impairment has occurred is based on an estimate of undiscounted cash flows attributable to the assets as compared to the carrying value of the assets. If impairment has occurred, the amount of the impairment loss recognized would be determined by estimating the fair value of the assets and recording a loss if the fair value was less than the book value. On an annual basis, the Company engages an independent party to review business strategies as well as current and forecasted levels of earnings and capital. The review is scheduled to be completed during the fourth quarter of 2009.

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NOTE 6 - OTHER REAL ESTATE OWNED

The following is an inventory of other real estate as of September 30, 2009:

(Dollars in Thousands)
			Carrying
	Number		Amount
Construction and Development		36	$	15,436
Farmland		1		340
1-4 Residential		29		3,674
Non-Farm Non-Residential		11		2,473
Total Other Real Estate Owned		77	$	21,923

NOTE 7 – WEIGHTED AVERAGE SHARES OUTSTANDING

Due to the net loss reported for the quarter and the year to date periods ending September 30, 2009, the Company has excluded the effects of options as these would have been anti-dilutive. Earnings per share have been computed based on the following weighted average number of common shares outstanding:

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2009		2008		2009		2008
	(share data in thousands)				(share data in thousands)
Basic shares outstanding		13,630		13,620		13,630		13,612
Plus: Dilutive effect of ISOs		-		16		-		35
Plus: Dilutive effect of Restricted Grants		-		12		-		12
Diluted shares outstanding		13,630		13,648		13,630		13,659

NOTE 8 – OTHER BORROWINGS

The Company has certain borrowing arrangements with various financial institutions that are used in the Company’s operations primarily to fund growth in earning assets when appropriate spreads can be realized. At September 30, 2009, total other borrowings amounted to $7.0 million compared to $138.6 million at September 30, 2008. During the first quarter of 2009, the Company reduced borrowings with the FHLB by $67.5 million and has maintained reduced borrowing levels by attracting and retaining lower cost core deposits. At September 30, 2009, $2.0 million of the other borrowings consisted of borrowings with the FHLB of Atlanta.

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NOTE 9 – COMMITMENTS AND CONTINGENCIES

The Company is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. These instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized in the consolidated balance sheets.

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

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.

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

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

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

(Dollars in Thousands)	September 30,		September 30,
(Dollars in Thousands)	2009		2008

Commitments to extend credit	$	139,720	$	176,985

Standby letters of credit	$	3,808	$	8,281

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

Certain of the statements made in this report are “forward-looking statements” within the meaning of, and subject to the protections of, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations, anticipations, assumptions, estimates, intentions and future performance and involve known and unknown risks, uncertainties and other factors, many of which may be beyond our control and which may cause the actual results, performance or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements.

All statements other than statements of historical fact are statements that could be forward-looking statements. You can identify these forward-looking statements through our use of words such as “may,” “will,” “anticipate,” “assume,” “should,” “indicate,” “would,” “believe,” “contemplate,” “expect,” “estimate,” “continue,” “plan,” “point to,” “project,” “predict,” “could,” “intend,” “target,” “potential” and other similar words and expressions of the future. These forward-looking statements may not be realized due to a variety of factors, including, without limitation, legislative and regulatory initiatives; additional competition in Ameris’ markets; potential business strategies, including acquisitions or dispositions of assets or internal restructuring, that may be pursued by Ameris; state and federal banking regulations; changes in or application of environmental and other laws and regulations to which Ameris is subject; political, legal and economic conditions and developments; financial market conditions and the results of financing efforts; changes in commodity prices and interest rates; weather, natural disasters and other catastrophic events; and other factors discussed in Ameris’ filings with the 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.

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

	2009								2008
(in thousands, except share	Third		Second		First		Fourth			Third
data, taxable equivalent)	Quarter		Quarter		Quarter		Quarter			Quarter
Results of Operations:
Net interest income	$	18,812	$	18,539	$	16,968	$	15,972		$	19,177
Net interest income (tax equivalent)		18,967		18,721		17,126		15,991			19,691
Provision for loan losses		8,298		9,390		7,912		19,890			8,220
Non-interest income		4,521		4,596		5,496		4,393			4,639
Non-interest expense		15,360		17,729		15,727		16,428			14,761
Income tax (benefit)/expense		(198)		(1,290)		(539)		(5,556)			469
Preferred stock dividends		664		665		589		328			-
Net (loss)/income available to common		(791)		(3,359)		(1,225)		(10,725)			366
shareholders		(791)		(3,359)		(1,225)		(10,725)			366
Selected Average Balances:
Loans, net of unearned income	$	1,666,821	$	1,674,984	$	1,683,615	$	1,703,137		$	1,698,024
Investment securities		259,605		264,995		359,754		328,956			287,973
Earning assets		2,064,253		2,098,757		2,166,624		2,174,387			2,018,807
Assets		2,244,527		2,285,190		2,346,958		2,354,142			2,192,501
Deposits		1,931,990		2,002,528		2,002,534		1,987,840			1,792,821
Common shareholders’ equity		186,858		188,442		190,395		192,479			186,541
Period-End Balances:
Loans, net of unearned income	$	1,652,689	$	1,677,045	$	1,672,923	$	1,695,777		$	1,710,109
Earning assets		2,024,442		2,095,599		2,160,427		2,216,681			2,083,193
Total assets		2,207,475		2,285,245		2,346,278		2,407,090			2,257,643
Deposits		1,887,529		1,976,371		2,028,684		2,013,525			1,806,339
Common shareholders' equity		183,605		183,875		188,844		190,331			193,344
Per Common Share Data:
Earnings per share – Basic	$	(0.06)	$	(0.25)	$	(0.09)	$	(0.79)		$	0.03
Earnings per share – Diluted		(0.06)		(0.25)		(0.09)		(0.79)			0.03
Book value per share		13.52		13.54		13.90		14.06			14.25
End of period shares outstanding		13,684,094		13,685,650		13,688,600		13,638,713			13,668,371
Weighted average shares outstanding
Basic		13,629,895		13,627,852		13,631,494		13,616,617			13,619,734
Diluted		13,629,895		13,627,852		13,631,494		13,616,617			13,647,793
Market Data:
High closing price	$	7.47	$	8.09	$	11.73	$	14.21		$	15.02
Low closing price		5.93		5.29		3.66		7.19			7.79
Closing price for quarter		7.15		6.32		4.71		11.85			14.85
Average daily trading volume		30,407		28,778		31,931		31,527			43,464
Cash dividends per share		-		0.05		0.05		0.05			0.05
Stock dividend		1 for 130		-		-		-			-
Price to earnings		N/M		N/M		N/M		N/M			N/M
Price to book value		0.53		0.47		0.34		0.84			1.04
Performance Ratios:
Return on average assets		(0.14%)		(0.59%)		(0.21%)		(1.81%)			0.07%
Return on average common equity		(1.68%)		(7.15%)		(2.61%)		(22.17%)			0.78%
Average loan to average deposits		86.27%		84.79%		84.07%		85.67%			94.71%
Average equity to average assets		8.32%		8.25%		8.11%		8.18%			8.51%
Net interest margin (tax equivalent)		3.64%		3.58%		3.21%		2.92%			3.87%
Efficiency ratio (tax equivalent)		65.83%		76.03%		70.01%		80.67%			61.98%

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Overview

The following is management’s discussion and analysis of certain significant factors which have affected the financial condition and results of operations of the Company as reflected in the unaudited consolidated balance sheet as of September 30, 2009 as compared to December 31, 2008 and operating results for the three and nine month periods ended September 30, 2009. These comments should be read in conjunction with the Company’s unaudited consolidated financial statements and accompanying notes appearing elsewhere herein.

Results of Operations for the Three Months Ended September 30, 2009

Consolidated Earnings and Profitability

Ameris reported a net loss available to common shareholders of $791,000, or $0.06 per diluted share, for the quarter ended September 30, 2009, compared to net income for the same quarter in 2008 of $366,000, or $0.03 per diluted share. The Company’s return on average assets and average shareholders’ equity decreased in the third quarter of 2009 to (0.14%) and (1.68%), respectively, compared to 0.07% and 0.78% in the third quarter of 2008. The decrease in earnings and profitability during the quarter was primarily due to higher levels of loan loss provisions and costs associated with problem assets.

Net Interest Income and Margins

On a tax equivalent basis, net interest income for the third quarter of 2009 was $18.9 million, a decrease of $724,000 compared to the same quarter in 2008. The Company’s net interest margin fell during the third quarter of 2009 to 3.64% compared to 3.87% during the same quarter in 2008. While the net interest margin decreased from the prior year period, margins for the third quarter of 2009 increased when compared to 3.58% during the second quarter of 2009. The improvement is due primarily to lower funding costs.

Total interest income during the third quarter of 2009 was $28.0 million compared to $32.1 million in the same quarter of 2008. Yields on earning assets fell to 5.44% compared to 6.31% reported in the third quarter of 2008. During the quarter, loan yields decreased when compared to the third quarter of 2008 due primarily to the lower interest rate environment that materialized late in 2008. Although rates remain at historical lows, spreads on loan production in the Bank’s local markets have improved during the first three quarters of 2009 and have helped to stabilize loan yields for the most recent three quarters.

Interest expense declined significantly, helping to offset declines in interest income. Total interest expense in the third quarter of 2009 amounted to $9.2 million, reflecting a decline of $3.7 million from the same quarter in 2008. Total funding costs declined to 1.83% in the third quarter of 2009 compared to 2.54% at the same time in 2008. The decline in total funding costs relates to savings realized on both deposit funding and non-deposit funding. Deposit costs decreased from 2.59% in the third quarter of 2008 to 1.78% in the current quarter of 2009. Ongoing efforts to increase low-cost deposit accounts will continue to reduce interest expense. Savings on non-deposit borrowings reflect lower levels of one and three-month LIBOR as well as lower outstanding balances. At the end of the third quarter of 2009, the Company’s total non-deposit funding was 2.23% of total assets compared to 8.01% at the same time in 2008.

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Provision for Loan Losses and Credit Quality

The Company’s provision for loan losses during the third quarter amounted to $8.3 million, an increase of $78,000 over the $8.2 million recorded in the third quarter of 2008. The higher level in the provision for loan losses reflects the trend in the level of non-performing assets. At the end of the third quarter of 2009, total non-performing assets increased to 6.32% of total loans compared to 2.52% at September 30, 2008. 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 third quarter of 2009 increased to $11.4 million, compared to $6.7 million in the third quarter of 2008. For the quarters ended September 30, 2009 and 2008, net charge-offs annualized as a percentage of loans were 2.72% and 1.58%, respectively. The Company’s allowance for loan losses at September 30, 2009 was $42.0 million, or 2.54% of total loans, compared to $30.1 million, or 1.76% of total loans, at September 30, 2008.

Non-interest Income

Total non-interest income for the third quarter of 2009 decreased slightly to $4.5 million from $4.6 million in the third quarter of 2008. The decrease in non-interest income related to declines in service charge revenue as the Company continued to experience lower levels of overdrafts. For the third quarter of 2009, total service charges were $3.5 million when compared to $3.7 million in the same quarter of 2008. Although service charge revenue remains below the prior year period, the current quarter reflects an increase of $117,000 over the second quarter of 2009.

Non-interest Expense

Total non-interest expenses for the third quarter of 2009 increased to $15.3 million, compared to $14.8 million at the same time in 2008. Salaries and benefits increased 4.2% from the prior year period, primarily due to increases in staffing related to new branches opened late in the second quarter. Occupancy and equipment expense for the third quarter of 2009 was $2.1 million, representing an increase of 11.0% from the same quarter in 2008, which reflected the cost of several new offices opened earlier in 2009. Other operating expenses increased $740,000 during the third quarter of 2009 compared to in the same quarter in 2008. Increases in collection expenses, losses on OREO and costs related to problem loans contributed to the increase in other operating expsenses. Additionally, FDIC premiums increased from $393,000 in the third quarter of 2008 to $669,000 in the third quarter of 2009. The increase reflects continued elevated levels of collection expenses, losses on OREO and problem loan expenses, as well as increased FDIC premiums.

Income taxes

Federal 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 third quarter of 2009, the Company reported an income tax benefit of $198,000. This compares to income tax expense of $469,000 in the same period of 2008. The Company’s effective tax rate for the nine months ending September 30, 2009 and 2008 was 36.7% and 35.1%, respectively.

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Results of Operations for the Nine Months Ended September 30, 2009

Interest Income

Interest income for the nine months ended September 30, 2009 was $86.7 million, a decline of $11.7 million when compared to $98.5 million for the same period in 2008. Average earning assets for the nine month period increased $132.3 million to $2.11 billion as of September 30, 2009 compared to $2.02 billion as of September 30, 2008. Yield on average earning assets declined to 5.35% from 6.31% for the nine months ended September 30, 2009 and 2008, respectively.

Interest Expense

Total interest expense for the nine months ended September 30, 2009 amounted to $32.4 million, reflecting a decrease of $9.3 million from the same period of 2008. During the nine month period ended September 30, 2009, the Company’s funding costs declined to 2.11% from 2.85% reported in the previous year. In the same period, yields on the Company’s time deposits fell to 3.24% compared to 4.26% for the nine month period ended September 30, 2008. The Company’s non-deposit funding increased to 2.75% from 2.61% compared to the period ended September 30, 2008.

Net Interest Income

Net interest income for the nine months ended September 30, 2009 decreased $2.4 million to $54.3 million compared to $56.7 million for the period ended September 30, 2008. The Company’s net interest margin decreased to 3.48% for the nine months ended September 30, 2009 compared to 3.92% as of September 30, 2008.

Provision for Loan Losses

The provision for loan losses rose to $25.6 million for the nine months ended September 30, 2009 compared to $15.1 million in the same period in 2008. Total non-performing assets increased to $105.8 million at September 30, 2009 from $43.2 million at September 30, 2008. For the nine month period ended September 30, 2009, Ameris had net charge-offs of $23.3 million compared to $12.6 million for the same period in 2008.

Non-interest Income

Non-interest income for the first nine months of 2009 decreased $181,000, or 1.2%, to $14.6 million, compared to the prior year period. Service charges on deposit accounts decreased by 6.6%, or $699,000, to end the nine month period at $9.9 million. During the first quarter of 2009, the Company recognized a gain of approximately $543,000 on the early repayment of FHLB advances, as well as $814,000 in gains on the sale of investment securities. Excluding these items, non-interest income would have declined in the current period by 10.4% to $13.2 million when compared to the same period in 2008. Mortgage banking activities include origination fees, service release premiums and gain on the sales of mortgage loans held-for sale. Mortgage banking activities for the nine months ended September 30, 2009 totaled $2.3 million, a decrease of $137,000, or 5.5%, compared to mortgage banking activities of $2.5 million in the nine months ended September 30, 2008.

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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 investment securities and are recorded at their fair market value.

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 has the intent and ability to hold to maturity. Therefore, at September 30, 2009, these investments are not considered impaired on an other-than temporary basis.

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Non-interest Expense

Non-interest expense for the first nine months of 2009 was $48.8 million representing a $2.5 million increase when compared to the same period in 2008. Salaries and employee benefits of $23.3 million for the nine months ended September 30, 2009 were $1.1 million less than the $24.4 million reported for the same period in 2008. The decrease is due to a 9.5% reduction in the number of full-time equivalent employees, as well as lower incentive accruals. Occupancy and equipment expense increased $497,000 to $6.5 million for the nine months ended September 30, 2009 compared to the same period of 2008 as a result of opening new branch offices in several existing markets. Marketing and advertising expense decreased during the first three quarters of 2009 to $1.3 million compared to $2.4 million during the same period in 2008. At the end of the first nine months of 2009, collection expenses related to problem loans and OREO increased to $2.1 million from $522,000 during the period ended September 30, 2008. Significant components of other non-interest expenses are detailed in the table below.

	Nine Months Ended				Three Months Ended
	September 30,				September 30,
	2009		2008		2009		2008

FDIC assessments and regulatory charges	$	2,733	$	669	$	702	$	393
OREO and problem loan expenses		3,081		581		992		373
Courier, postage, printing and supplies		1,335		1,514		423		483
Professional Fees		955		681		286		34

Income Taxes

For the nine months ended September 30, 2009, the Company recorded an income tax benefit of $2.0 million compared to the $3.5 million tax expense for the same period in 2008. The effective tax rate for the nine months ended September 30, 2009 was 36.9% compared to 35.1% for the same period in 2008. The amount of income tax expense is influenced by the amount of taxable income and the amount of tax-exempt income. Decreases in the tax expense directly correspond to the decrease in taxable income reported at the end of the first nine months of 2009 compared to the first nine months of 2008.

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Loans and Allowance for Loan Losses

At September 30, 2009, gross loans outstanding were $1.65 billion, a decrease of $57.4 million, or 3.4%, compared to balances at September 30, 2008. When compared to the period ended December 31, 2008, gross loans declined approximately $43.1 million, or 2.5%. The decline in loans reflects management's focus on reducing higher risk loans within the Bank’s loan portfolio as well as the slower economic environment that has persisted throughout 2009. 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 Company’s management has strategically located its branches in south and southeast Georgia, north Florida, southeast Alabama and throughout the state of South Carolina to take advantage of the growth in these areas.

The Company’s 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 management’s 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 Company’s 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 Company’s 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 Company’s 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 Company’s corporate loan review system; and other factors management deems appropriate.

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For the nine month period ended September 30, 2009, the Company recorded net charge-offs totaling $23.3 million compared to $12.6 million for the period ended September 30, 2008. The provision for loan losses for the nine months ended September 30, 2009 increased to $25.6 million compared to $15.1 million during the nine month period ended September 30, 2008. When compared to the period ended September 30, 2008 the loan loss provision increased $10.5 million. The allowance for loan losses totaled $41.9 million, or 2.54% of total loans, at September 30, 2009, compared to $39.7 million, or 2.34% of total loans, and $30.1 million, or 1.76% of total loans, at December 31, 2008 and September 30, 2008, respectively.

The following table presents an analysis of the allowance for loan losses for the year to date periods ended September 30, 2009 and September 30, 2008:

	September 30,		September 30,
(Dollars in Thousands)	2009		2008
Balance of allowance for loan losses at beginning of period	$	39,652	$	27,640
Provision charged to operating expense		25,600		15,140
Charge-offs:
Commercial, financial and agricultural		2,805		1,635
Real estate – residential		6,948		2,563
Real estate – commercial and farmland		1,661		976
Real estate – construction and development		12,532		7,789
Consumer installment		670		728
Other		-		-
Total charge-offs		24,616		13,691
Recoveries:
Commercial, financial and agricultural		162		203
Real estate – residential		452		169
Real estate – commercial and farmland		246		96
Real estate – construction and development		332		382
Consumer installment		118		204
Other		-		1
Total recoveries		1,310		1,055
Net charge-offs		23,306		12,636
Balance of allowance for loan losses at end of period	$	41,946	$	30,144
Net annualized charge-offs as a percentage of average loans		1.86%		0.76%
Allowance for loan losses as a percentage of loans at end of period		2.54%		1.76%

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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. 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.

In late 2008, and continuing into 2009, slowing real estate activity in some of the Company’s markets altered the Company’s risk profile and credit quality deteriorated as a result. Near the end of 2008, instability in the market began to diminish; however, liquidity issues remain in place for certain borrowers leading the Bank to take a proactive stance in identifying new problem loans and increasing the pace of loan workouts through renegotiation with borrowers or through foreclosure. Management believes a shift towards smaller loan transactions in the Bank's markets will allow Ameris to work through this credit cycle faster than otherwise could have been expected.

For the quarter ended September 30, 2009, nonaccrual or impaired loans totaled $83.9 million, an increase of approximately $18.5 million (net of charge-offs) since the period ended December 31, 2008. The increase in nonaccrual loans is reflective of continuing market stress on real estate values in certain of the Company’s markets; particularly values of single family residential building lots and raw land. Total non-performing assets increased $35.7 million to $105.8 million during the year to date period ended September 30, 2009. The increase is attributed to a $17.2 million increase in foreclosed assets and a $18.5 million increase in nonaccrual loans. Non-performing assets as a percentage of loans and repossessed collateral were 6.26%, 4.13% and 2.52% at September 30, 2009, December 31, 2008 and September 30, 2008, respectively.

Non-performing assets at September 30, 2009, December 31, 2008 and September 30, 2008 were as follows:

	September 30,		December 31,		September 30,
(Dollars in Thousands)	2009		2008		2008
Total nonaccrual loans	$	83,917	$	65,414	$	39,427
Accruing loans delinquent 90 days or more		-		2		1
Other real estate owned and repossessed collateral		21,923		4,742		3,734
Total non-performing assets	$	105,840	$	70,158	$	43,161

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Other Real Estate Owned

For the nine months ended September 30, 2009, the Company sold 75 foreclosed assets with an aggregate estimated value of $8.6 million. During the same period, the Company foreclosed on 112 properties with an aggregate estimated value of $27.7 million. Approximately 55.4% of the newly foreclosed assets were construction and development properties.

The following is a summary of other real estate activity for the nine month period ending September 30, 2009:

(Dollars in Thousands)

Balance as of December 31, 2008	$	4,742
Write-down		(1,269)
Improvements		59
Loss on sale of foreclosed assets		(706)
Sale of 29 construction and development properties		(3,193)
Sale of 32 residential properties		(2,316)
Sale of 1 farmland property		(17)
Sale of 13 non-farm non-residential properties		(3,106)
Foreclosure on 47 construction and development properties		16,952
Foreclosure on 50 residential properties		5,887
Foreclosure on 15 non-farm non-residential properties		4,891
Balance as of September 30, 2009	$	21,923

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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 bank’s 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 bank’s total risk-based capital.

Banks that are subject to the CRE guidance’s 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 September 30, 2009, the Company exhibited a concentration in commercial real estate (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 September 30, 2009 and December 31, 2008. The loan categories and concentrations below are based on Federal Reserve Call codes.

Dollars in Thousands)	September 30, 2009					December 31, 2008
			% of Total					% of Total
	Balance		Loans			Balance		Loans
Construction and development loans	$	264,198		16	%	$	342,160		20	%
Multi-family loans		44,289		3	%		37,755		2	%
Nonfarm non-residential loans		593,332		36	%		563,445		34	%
Total CRE Loans	$	407,819		55	%	$	943,360		56	%
All other loan types		750,870		45	%		752,417		44	%
Total Loans	$	1,652,689		100	%	$	1,695,777		100	%

The following table outlines the percent of total CRE loans, net owner occupied loans to total risk-based capital, and the Company's internal concentration limits as of September 30, 2009 and December 31, 2008.

	Internal			September 30,			December 31,
				2009			2008
	Limit			Actual			Actual
Construction and development		150	%		115	%		181	%

Construction and development, multi-family and		300	%		276	%		358	%

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Short-Term Investments

The Company’s short-term investments are comprised of federal funds sold and interest bearing balances. At September 30, 2009, the Company’s short-term investments were $114.3 million, compared to $144.4 million and $75.5 million at December 31, 2008 and September 30, 2008, respectively. At September 30, 2009, approximately 100% of the balance was comprised of interest bearing balances, the majority of which were at the FHLB.

Derivative Instruments and Hedging Activities

As of September 30, 2009, the Company had two cash flow hedges with notional amounts totaling $72.1 million. The cash flow hedges consisted of one interest rate floor with a total fair value of approximately $2.0 million and $1.9 million as of September 30, 2009 and 2008, respectively, and a LIBOR swap purchased during the first quarter of 2009 with a total fair value of $2.2 million as of September 30, 2009.

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 Federal Deposit Insurance Corporation (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 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 September 30, 2009, under the regulatory capital standards the Bank was considered “well capitalized” under all capital measurements. The following table sets forth the Bank’s ratios at September 30, 2009, December 31, 2008 and September 30, 2008.

	September 30,			December 31,			September 30,
	2009			2008			2008
Leverage Ratio(tier 1 capital to average assets)		8.69	%		7.25	%		8.30	%
Core Capital Ratio(tier 1 capital to risk weighted assets)		11.28	%		9.15	%		10.08	%
Total Capital Ratio(total capital to risk weighted assets)		12.51	%		10.41	%		11.33	%

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Recent Developments

On November 21, 2008, the Company, elected to participate in the Capital Purchase Program (“CPP”) established under the Emergency Economic Stabilization Act of 2008 (“EESA”). Accordingly, on such date, the Company issued and sold to the United States Treasury (“Treasury”), for an aggregate cash purchase price of $52 million, (i) 52,000 shares (the "Preferred Shares”) of the Company's 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 Company's common stock, par value $1.00 per share (the Common Stock), at an exercise price of $11.48 per share. The issuance and sale of these securities was a private placement exempt from registration pursuant to Section 4(2) of the Securities Act of 1933, as amended.

Cumulative dividends on the Preferred Shares will accrue on the liquidation preference at a rate of 5% per annum for the first five years and at a rate of 9% per annum thereafter, but such dividends will be paid only if, as and when declared by the Company’s Board of Directors. The Preferred Shares have no maturity date and rank senior to the Common Stock (and pari passu with the Company’s 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, provided that the Preferred Shares by their terms may be redeemed prior to the first dividend payment date falling after the third anniversary of the Closing Date (February 15, 2012) only if (i) the Company has raised aggregate gross proceeds in one or more Qualified Equity Offerings (as defined in the Letter Agreement dated November 21, 2008 between the Company and the Treasury, including the Securities Purchase Agreement – Standard Terms incorporated by reference therein (collectively, the “Purchase Agreement”)) in excess of $13 million and (ii) the aggregate redemption price does not exceed the aggregate net proceeds from such Qualified Equity Offerings.

The Treasury may not transfer a portion or portions of the Warrant with respect to, and/or exercise the Warrant for more than one-half of, the 679,443 shares of Common Stock issuable upon exercise of the Warrant, in the aggregate, until the earlier of

(i) the date on which the Company has received aggregate gross proceeds of not less than $52 million from one or more Qualified Equity Offerings and (ii) December 31, 2009. If the Company completes one or more Qualified Equity Offerings on or prior to December 31, 2009 that result in the Company receiving aggregate gross proceeds of not less than $52 million, then the number of the shares of Common Stock underlying the portion of the Warrant then held by the Treasury will be reduced by one-half of the number of shares of Common Stock originally covered by the Warrant. For purposes of the foregoing, as provided in the Purchase Agreement, “Qualified Equity Offering” is defined as the sale and issuance for cash by the Company to persons other than the Company or any Company subsidiary after the Closing Date of shares of perpetual Preferred Stock, Common Stock or any combination of such stock, that, in each case, qualify as and may be included in Tier I capital of the Company at the time of issuance under the applicable risk-based capital guidelines of the Company’s federal banking agency (other than any such sales and issuances made pursuant to agreements or arrangements entered into, or pursuant to financing plans which were publicly announced, on or prior to October 13, 2008).

Notwithstanding the foregoing, as amended by the American Recovery and Reinvestment Act of 2009, which became effective on February 17, 2009, EESA now provides that, subject to consultation with the appropriate federal banking agency, the Secretary of the Treasury shall permit a CPP participant to repay assistance previously received from the Treasury without regard to whether such participant has replaced such funds from any other source or to any waiting period. If any such assistance is repaid, then the Treasury shall also liquidate warrants associated with such assistance at the current market price.

The Purchase Agreement pursuant to which the Preferred Shares and the Warrant were sold contains limitations on the payment of dividends on the Common Stock (including with respect to the payment of cash dividends in excess of $0.05 per share, which was the amount of the last regular dividend declared by the Company prior to October 14, 2008) and on the Company’s ability to repurchase its Common Stock, and subjects the Company to certain of the executive compensation limitations included in the EESA.

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Interest Rate Sensitivity and Liquidity

The Company’s primary market risk exposures are credit, interest rate risk, and to a lesser degree, liquidity risk. The Bank operates under an Asset Liability Management Policy approved by the Company’s 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 Bank’s 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 Bank’s interest rate risk objectives.

The ALCO Committee is comprised of senior officers of Ameris and two outside members of the Company’s 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 Company’s balance sheet and use reasonable methods approved by the Company’s board 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 Company’s financial instruments, cash flows and net interest income. The Company’s 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 Company’s 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. ALCO 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 Federal Home Loan Bank stock for the purpose of establishing credit lines with the Federal Home Loan Bank. The credit availability to the Bank is equal to 20% of the Bank's total assets as reported on the most recent quarterly financial information submitted to the regulators subject to the pledging of sufficient collateral. At September 30, 2009 there were $2.0 million in advances outstanding with the FHLB and $5 million in advances outstanding on the Company’s line of credit held with a correspondent bank.

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

	September 30,		June 30, 2009		March 31, 2009		December 31, 2008		September 30, 2008
	2009		June 30, 2009		March 31, 2009		December 31, 2008		September 30, 2008
Investment securities available for sale to total
deposits		13.31%		13.35%		16.96%		18.27%		15.83%
Loans (net of unearned income) to total deposits		87.56%		84.85%		82.46%		84.22%		94.67%
Interest-earning assets to total assets		91.71%		92.09%		92.08%		92.09%		92.27%
Interest-bearing deposits to total deposits		89.10%		89.35%		89.76%		89.64%		88.98%

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 Company’s and the Bank's liquidity ratios at September 30, 2009 were considered satisfactory. The Company is aware of no events or trends likely to result in a material change in liquidity.

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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 Company’s hedging activities are limited to cash flow hedges and are part of the Company’s program to manage interest rate sensitivity. At September 30, 2009, the Company had one effective interest rate floor with a notional amount totaling $35 million and one effective LIBOR rate swap with a notional amount of $37.1 million. The floor is a hedging specific cash flow associated with certain variable rate loans, has a strike rate of 7.00% and matures August 2011. 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. 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 Company’s 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.

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Item 4. Controls and Procedures

The Company’s Chief Executive Officer and Chief Financial Officer have evaluated the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) or 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (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 Company’s disclosure controls and procedures are effective.

During the quarter ended September 30, 2009, there were no changes in the Company’s 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 has materially affected, or is reasonably likely to materially affect, the Company’s 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, 2008.

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds
	None.

Item 3.	Defaults upon Senior Securities
	None.

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Item 4.	Submission of Matters to a Vote of Security Holders
	The Annual Meeting of the Shareholders of the Company was held on May 19, 2009. The proposals set forth below were voted on at the Annual Meeting, with the following results:
	1.	The following director nominees were elected by a plurality vote to serve as Class II directors until the annual meeting to be held in 2012:
			Nominee	For	Authority Withheld
			Glenn A. Kirbo	10,224,130	244,285
			Jimmy D. Veal	10,181,248	287,167

	2.	Ratification of the appointment of Porter Keadle Moore, LLP, as the Company’s independent auditor for the fiscal year ended December 31, 2009 by a vote of 10,359,496 for, 64,710 against, and 44,209 abstaining.

	3.	Approval of a non-binding advisory proposal on executive compensation by a vote of 9,588,912 for, 678,224 against, and 201,280 abstaining.

	4.	Approval to transact any other business to come before the Annual Meeting by a vote of 7,805,118 for, 2,569,238 against, 94,059 abstaining.

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.

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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.

AMERIS BANCORP

Date: November 9, 2009

/s/Dennis J. Zember Jr.

Dennis J. Zember Jr.,

Executive Vice President and Chief Financial Officer

(duly authorized signatory and principal accounting 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 Bancorp’s Regulation A Offering Statement on Form 1-A filed August 14, 1987).

3.2	Amendment to Amended Articles of Incorporation of Ameris Bancorp (incorporated by reference to Exhibit 3.1.1 to Ameris Bancorp’s Form 10-K filed March 28, 1996).

3.3	Amendment to Amended Articles of Incorporation of Ameris Bancorp (incorporated by reference to Exhibit 4.3 to Ameris Bancorp’s 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 Bancorp’s 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 Bancorp’s 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 Bancorp’s 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 Bancorp’s 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 Bancorp's Current Report on Form 8-K filed with the Commission on November 21, 2008).

3.9	Amended and Restated Bylaws of Ameris Bancorp (incorporated by reference to Exhibit 3.1 to Ameris Bancorp’s 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 Company’s Chief Executive Officer

31.2	Rule 13a-14(a)/15d-14(a) Certification by the Company’s Chief Financial Officer

32.1	Section 1350 Certification by the Company’s Chief Executive Officer

32.2	Section 1350 Certification by the Company’s Chief Financial Officer