0000351569 us-gaap:ResidentialPortfolioSegmentMember abcb:PurchasedLoansMember abcb:RiskGradeFiveMember 2019-09-30

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549




FORM	10-Q

(Mark One)



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

For the quarterly period ended September 30, ~~2018~~2019



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



Commission File Number:	001-13901

~~Commission File Number: 001-13901~~

AMERIS BANCORP

(Exact name of registrant as specified in its charter)



~~GEORGIA~~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)~~



3490 Piedmont Rd NE, Suite 1550
Atlanta	Georgia	30305
(Address of principal executive offices)



(404)	639-6500
(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. Yesý No ¨

Indicate by check mark whether the Registrant has submitted electronically ~~and posted on its corporate Website, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yesý No ¨

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




Large accelerated filer	ý	Accelerated filer	¨☐

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

		Emerging growth company	¨☐

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

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

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $1 per share	ABCB	Nasdaq Global Select Market

There were ~~47,500,913~~69,660,953 shares of Common Stock outstanding as of November 1, ~~2018.~~2019.

AMERIS BANCORP

TABLE OF CONTENTS



		Page

PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements.

	Consolidated Balance Sheets as of September 30, ~~2018~~2019 and December 31, ~~2017~~2018	1

	Consolidated Statements of Income and Comprehensive Income for the Three and Nine-Month Periods Ended September 30, ~~2018~~2019 and ~~2017~~2018	2

	Consolidated Statements of Shareholders’ Equity for the ~~Nine Months~~Three and Nine-Month Periods Ended September 30, ~~2018~~2019 and ~~2017~~2018	3

	Consolidated Statements of Cash Flows for the Nine Months Ended September 30, ~~2018~~2019 and ~~2017~~2018	45

	Notes to Consolidated Financial Statements	67

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	4750

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

~~Item 4.~~	~~Controls and Procedures.~~	76

~~PART II – OTHER INFORMATION~~

~~Item 1.~~	~~Legal Proceedings.~~	76

~~Item 1A.~~	~~Risk Factors.~~	76

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

~~Item 3.~~	~~Defaults Upon Senior Securities.~~	77

Item 4.	~~Mine Safety Disclosures.~~	77

~~Item 5.~~	~~Other Information.~~	77

~~Item 6.~~	~~Exhibits.~~Controls and Procedures.	78

~~Signatures~~PART II – OTHER INFORMATION

Item 1.	Legal Proceedings.	78

Item 1A.	Risk Factors.	78

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	78

Item 3.	Defaults Upon Senior Securities.	79

Item 4.	Mine Safety Disclosures.	79

Item 5.	Other Information.	79

Item 6.	Exhibits.	80

Signatures		82

Item 1. Financial Statements.

AMERIS BANCORP AND SUBSIDIARIES

Consolidated Balance Sheets (unaudited)

(dollars in thousands, except per share data)


	September 30, 2018			December 31, 2017			September 30, 2019			December 31, 2018
Assets
Cash and due from banks	$	158,453		$	139,313		$	193,976		$	172,036
Federal funds sold and interest-bearing deposits in banks	470,804			191,345			285,713			507,491
Cash and cash equivalents	629,257			330,658			479,689			679,527

Time deposits in other banks	11,558			—			499			10,812
Investment securities available for sale, at fair value	1,162,570			810,873			1,491,207			1,192,423
Other investments	35,929			42,270			66,921			14,455
Loans held for sale, at fair value	130,179			197,442			1,187,551			111,298

Loans	5,543,306			4,856,514			7,208,816			5,660,457
Purchased loans	2,711,460			861,595			5,388,336			2,588,832
Purchased loan pools	274,752			328,246			229,132			262,625
Loans, net of unearned income	8,529,518			6,046,355			12,826,284			8,511,914
Allowance for loan losses	(28,116		)	(25,791		)	(35,530		)	(28,819		)
Loans, net	8,501,402			6,020,564			12,790,754			8,483,095

Other real estate owned, net	9,375			8,464			4,925			7,218
Purchased other real estate owned, net	7,692			9,011			15,785			9,535
Total other real estate owned, net	17,067			17,475			20,710			16,753

Premises and equipment, net	145,885			117,738			239,428			145,410
Goodwill	505,604			125,532			911,488			503,434
Other intangible assets, net	54,729			13,496			97,328			58,689
Cash value of bank owned life insurance	103,588			79,641			174,442			104,096
Deferred income taxes, net	38,217			28,320			22,111			35,126
Other assets	93,009			72,194			282,149			88,397
Total assets	$	11,428,994		$	7,856,203		$	17,764,277		$	11,443,515

Liabilities
Deposits:
Noninterest-bearing	$	2,333,992		$	1,777,141		$	4,077,856		$	2,520,016
Interest-bearing	6,847,371			4,848,704			9,581,738			7,129,297
Total deposits	9,181,363			6,625,845			13,659,594			9,649,313
Securities sold under agreements to repurchase	14,071			30,638			17,744			20,384
Other borrowings	656,831			250,554			1,351,172			151,774
Subordinated deferrable interest debentures	88,986			85,550			127,075			89,187
FDIC loss-share payable, net	18,740			8,803			19,490			19,487
Other liabilities	64,026			50,334			168,479			57,023
Total liabilities	10,024,017			7,051,724			15,343,554			9,987,168

Commitments and Contingencies (Note 8)
Commitments and Contingencies (Note 14)

Shareholders’ Equity
Preferred stock, stated value $1,000 (5,000,000 shares authorized; 0 shares issued and outstanding at September 30, 2018 and December 31, 2017)	—			—
Common stock, par value $1 (100,000,000 shares authorized; 49,011,950 and 38,734,873 shares issued at September 30, 2018 and December 31, 2017, respectively)	49,012			38,735
Preferred stock, stated value $1,000 (5,000,000 shares authorized; 0 shares issued and outstanding at September 30, 2019 and December 31, 2018)							—			—
Common stock, par value $1 (100,000,000 shares authorized; 71,431,581 and 49,014,925 shares issued at September 30, 2019 and December 31, 2018, respectively)							71,447			49,015
Capital surplus	1,050,752			508,404			1,904,789			1,051,584
Retained earnings	338,350			273,119			457,127			377,135
Accumulated other comprehensive income (loss), net of tax	(16,576		)	(1,280		)	15,482			(4,826		)
Treasury stock, at cost (1,514,984 shares and 1,474,861 shares at September 30, 2018 and December 31, 2017, respectively)	(16,561		)	(14,499		)
Treasury stock, at cost (1,837,748 shares and 1,514,984 shares at September 30, 2019 and December 31, 2018, respectively)							(28,122		)	(16,561		)
Total shareholders’ equity	1,404,977			804,479			2,420,723			1,456,347
Total liabilities and shareholders’ equity	$	11,428,994		$	7,856,203		$	17,764,277		$	11,443,515

See notes to unaudited consolidated financial statements.

AMERIS BANCORP AND SUBSIDIARIES

Consolidated Statements of Income and Comprehensive Income (unaudited)

(dollars in thousands, except per share data)


	Three Months Ended September 30,					Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017		2018			2017			2019			2018			2019			2018
Interest income
Interest and fees on loans	$	110,470		$	70,462	$	266,460		$	197,447		$	175,046		$	110,470		$	404,457		$	266,460
Interest on taxable securities	8,792			5,062		20,320			15,057			11,354			8,792			29,780			20,320
Interest on nontaxable securities	204			392		705			1,209			168			204			426			705
Interest on deposits in other banks and federal funds sold	1,653			406		3,092			1,070			1,793			1,653			7,655			3,092
Total interest income	121,119			76,322		290,577			214,783			188,361			121,119			442,318			290,577

Interest expense
Interest on deposits	15,630			5,136		30,196			13,479			29,425			15,630			74,563			30,196
Interest on other borrowings	6,451			4,331		16,543			10,702			10,167			6,451			17,940			16,543
Total interest expense	22,081			9,467		46,739			24,181			39,592			22,081			92,503			46,739

Net interest income	99,038			66,855		243,838			190,602			148,769			99,038			349,815			243,838
Provision for loan losses	2,095			1,787		13,006			5,828			5,989			2,095			14,065			13,006
Net interest income after provision for loan losses	96,943			65,068		230,832			184,774			142,780			96,943			335,750			230,832

Noninterest income
Service charges on deposit accounts	12,690			10,535		33,531			31,714			13,411			12,690			37,225			33,531
Mortgage banking activity	13,413			13,340		40,203			38,498			53,041			14,082			86,241			41,771
Other service charges, commissions and fees	777			699		2,193			2,137			1,236			790			2,828			2,236
Gain (loss) on securities	48			—		(38		)	37
Net gain (loss) on securities												4			48			139			(38		)
Other noninterest income	3,243			2,425		12,053			8,508			9,301			2,561			16,567			10,442
Total noninterest income	30,171			26,999		87,942			80,894			76,993			30,171			143,000			87,942

Noninterest expense
Salaries and employee benefits	38,446			32,583		110,311			89,509			77,633			38,414			154,296			110,163
Occupancy and equipment expense	8,598			6,036		21,186			18,059			12,639			8,598			28,677			21,186
Data processing and communications costs	8,518			7,050		22,092			20,650
Data processing and communications expenses												10,372			8,518			27,151			22,092
Credit resolution-related expenses	1,248			1,347		2,842			2,879			1,094			1,248			2,984			2,842
Advertising and marketing expense	1,453			1,247		3,938			3,612			1,949			1,453			5,677			3,938
Amortization of intangible assets	2,676			941		5,862			2,990			5,719			2,676			11,972			5,862
Merger and conversion charges	276			92		19,502			494			65,158			276			70,690			19,502
Other noninterest expenses	11,138			14,471		32,104			34,406			18,133			11,170			47,926			32,252
Total noninterest expense	72,353			63,767		217,837			172,599			192,697			72,353			349,373			217,837

Income before income tax expense	54,761			28,300		100,937			93,069			27,076			54,761			129,377			100,937
Income tax expense	13,317			8,142		23,446			28,671			5,692			13,317			29,184			23,446
Net income	41,444			20,158		77,491			64,398			21,384			41,444			100,193			77,491

Other comprehensive income
Net unrealized holding gains (losses) arising during period on investment securities available for sale, net of tax expense (benefit) of ($1,053), $966, ($4,035) and $2,348	(3,964		)	1,795		(15,181		)	4,361
Reclassification adjustment for gains on investment securities included in earnings, net of tax of $11, $0, $19 and $13	(41		)	—		(70		)	(24		)
Unrealized gains (losses) on cash flow hedges arising during period, net of tax expense (benefit) of $0, $14, $92 and ($21)	—			25		347			(38		)
Other comprehensive income (loss)
Net unrealized holding gains (losses) arising during period on investment securities available for sale, net of tax expense (benefit) of ($244), ($1,053), $5,549 and ($4,035)												(921		)	(3,964		)	20,873			(15,181		)
Reclassification adjustment for gains on investment securities included in earnings, net of tax of $0, $11, $25 and $19												—			(41		)	(94		)	(70		)
Unrealized gains (losses) on cash flow hedges arising during period, net of tax expense (benefit) of ($15), $0, ($125) and $92												(59		)	—			(471		)	347
Other comprehensive income (loss)	(4,005		)	1,820		(14,904		)	4,299			(980		)	(4,005		)	20,308			(14,904		)
Total comprehensive income	$	37,439		$	21,978	$	62,587		$	68,697		$	20,404		$	37,439		$	120,501		$	62,587

Basic earnings per common share	$	0.87		$	0.54	$	1.86		$	1.76		$	0.31		$	0.87		$	1.83		$	1.86
Diluted earnings per common share	$	0.87		$	0.54	$	1.85		$	1.74		$	0.31		$	0.87		$	1.83		$	1.85
Dividends declared per common share	$	0.10		$	0.10	$	0.30		$	0.30
Weighted average common shares outstanding (in thousands)
Basic	47,515			37,225		41,673			36,690			69,372			47,515			54,762			41,673
Diluted	47,685			37,553		41,845			37,017			69,600			47,685			54,883			41,845

See notes to unaudited consolidated financial statements.

AMERIS BANCORP AND SUBSIDIARIES

Consolidated Statements of Shareholders’ Equity (unaudited)

(dollars in thousands)

Nine Months Ended
September 30, 2018 Nine Months Ended
September 30, 2017
Shares Amount Shares Amount
Common Stock

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

Capital Surplus

Balance at beginning of period
$ 508,404

$ 410,276
Share-based compensation
4,652

2,419
Issuance of common shares, net of issuance costs of $0 and $4,925
537,003

92,359
Issuance of restricted shares
(86 )
(84 )
Proceeds from exercise of stock options
779

1,809
Balance at end of period
$ 1,050,752

$ 506,779

Retained Earnings

Balance at beginning of period
$ 273,119

$ 214,454
Cumulative effect of change in accounting for derivatives 28
—
Reclassification of stranded income tax effects from accumulated other comprehensive income 392
—
Adjusted balance at beginning of period 273,539
214,454
Net income
77,491

64,398
Dividends on common shares
(12,680 )
(11,158 )
Balance at end of period
$ 338,350

$ 267,694

Accumulated Other Comprehensive Income (Loss), Net of Tax

Unrealized gains (losses) on securities and derivatives:

Balance at beginning of period
$ (1,280 )
$ (1,058 )
Reclassification of stranded income tax effects to retained earnings (392 ) —
Adjusted balance at beginning of period (1,672 ) (1,058 )
Other comprehensive income (loss) during the period
(14,904 )
4,299
Balance at end of period
$ (16,576 )
$ 3,241

Treasury Stock

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

Total Shareholders’ Equity
$ 1,404,977

$ 801,921



	Three Months Ended September 30, 2019

	Common Stock									Accumulated Other Comprehensive Income (Loss), Net of Tax			Treasury Stock
	Shares	Amount		Capital Surplus			Retained Earnings			Accumulated Other Comprehensive Income (Loss), Net of Tax			Shares	Amount			Total Shareholders' Equity
Balance at beginning of period	49,099,332	$	49,099	$	1,053,500		$	446,182		$	16,462		1,837,748	$	(28,122	)	$	1,537,121
Issuance of common stock for acquisition	22,181,522	22,182		847,112			—			—			—	—			869,294
Issuance of restricted shares	30,452	30		(30		)	—			—			—	—			—
Proceeds from exercise of stock options	120,275	136		3,398			—			—			—	—			3,534
Share-based compensation	—	—		809			—			—			—	—			809
Net income	—	—		—			21,384			—			—	—			21,384
Dividends on common shares ($0.15 per share)	—	—		—			(10,439		)	—			—	—			(10,439		)
Other comprehensive income (loss) during the period	—	—		—			—			(980		)	—	—			(980		)
Balance at end of period	71,431,581	$	71,447	$	1,904,789		$	457,127		$	15,482		1,837,748	$	(28,122	)	$	2,420,723



	Nine Months Ended September 30, 2019

	Common Stock											Accumulated Other Comprehensive Income (Loss), Net of Tax			Treasury Stock
	Shares		Amount			Capital Surplus			Retained Earnings			Accumulated Other Comprehensive Income (Loss), Net of Tax			Shares	Amount			Total Shareholders' Equity
Balance at beginning of period	49,014,925		$	49,015		$	1,051,584		$	377,135		$	(4,826	)	1,514,984	$	(16,561	)	$	1,456,347
Issuance of common stock for acquisition	22,181,522		22,182			847,112			—			—			—	—			869,294
Issuance of restricted shares	147,574		147			768			—			—			—	—			915
Forfeitures of restricted shares	(40,423	)	(40		)	(484		)	—			—			—	—			(524		)
Proceeds from exercise of stock options	127,983		143			3,444			—			—			—	—			3,587
Share-based compensation	—		—			2,365			—			—			—	—			2,365
Purchase of treasury shares	—		—			—			—			—			322,764	(11,561		)	(11,561		)
Net income	—		—			—			100,193			—			—	—			100,193
Dividends on common shares ($0.35 per share)	—		—			—			(19,925		)	—			—	—			(19,925		)
Cumulative effect of change in accounting for derivatives	—		—			—			(276		)	—			—	—			(276		)
Other comprehensive income (loss) during the period	—		—			—			—			20,308			—	—			20,308
Balance at end of period	71,431,581		$	71,447		$	1,904,789		$	457,127		$	15,482		1,837,748	$	(28,122	)	$	2,420,723

AMERIS BANCORP AND SUBSIDIARIES

Consolidated Statements of Shareholders’ Equity (unaudited)

(dollars in thousands)



	Three Months Ended September 30, 2018

	Common Stock								Accumulated Other Comprehensive Income (Loss), Net of Tax			Treasury Stock
	Shares	Amount		Capital Surplus		Retained Earnings			Accumulated Other Comprehensive Income (Loss), Net of Tax			Shares	Amount			Total Shareholders' Equity
Balance at beginning of period	49,011,950	$	49,012	$	1,049,283	$	301,656		$	(12,571	)	1,493,288	$	(15,484	)	$	1,371,896
Share-based compensation	—	—		1,469		—			—			—	—			1,469
Purchase of treasury shares	—	—		—		—			—			21,696	(1,077		)	(1,077		)
Net income	—	—		—		41,444			—			—	—			41,444
Dividends on common shares ($0.10 per share)	—	—		—		(4,750		)	—			—	—			(4,750		)
Other comprehensive income (loss) during the period	—	—		—		—			(4,005		)	—	—			(4,005		)
Balance at end of period	49,011,950	$	49,012	$	1,050,752	$	338,350		$	(16,576	)	1,514,984	$	(16,561	)	$	1,404,977



	Nine Months Ended September 30, 2018

	Common Stock										Accumulated Other Comprehensive Income (Loss), Net of Tax			Treasury Stock
	Shares		Amount		Capital Surplus			Retained Earnings			Accumulated Other Comprehensive Income (Loss), Net of Tax			Shares	Amount			Total Shareholders' Equity
Balance at beginning of period	38,734,873		$	38,735	$	508,404		$	273,119		$	(1,280	)	1,474,861	$	(14,499	)	$	804,479
Issuance of common stock for acquisitions	10,124,491		10,124		537,003			—			—			—	—			547,127
Issuance of restricted shares	85,855		86		(86		)	—			—			—	—			—
Forfeitures of restricted shares	(472	)	—		—			—			—			—	—			—
Proceeds from exercise of stock options	67,203		67		779			—			—			—	—			846
Share-based compensation	—		—		4,652			—			—			—	—			4,652
Purchase of treasury shares	—		—		—			—			—			40,123	(2,062		)	(2,062		)
Net income	—		—		—			77,491			—			—	—			77,491
Dividends on common shares ($0.30 per share)	—		—		—			(12,680		)	—			—	—			(12,680		)
Reclassification of stranded income tax effects	—		—		—			392			(392		)	—	—			—
Cumulative effect of change in accounting for derivatives	—		—		—			28			—			—	—			28
Other comprehensive income (loss) during the period	—		—		—			—			(14,904		)	—	—			(14,904		)
Balance at end of period	49,011,950		$	49,012	$	1,050,752		$	338,350		$	(16,576	)	1,514,984	$	(16,561	)	$	1,404,977

See notes to unaudited consolidated financial statements.

AMERIS BANCORP AND SUBSIDIARIES

Consolidated Statements of Cash Flows (unaudited)

(dollars in thousands)


	Nine Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2019			2018
Operating Activities
Net income	$	77,491		$	64,398		$	100,193		$	77,491
Adjustments reconciling net income to net cash provided by (used in) operating activities:
Depreciation	7,359			6,918			9,077			7,359
Net losses on sale or disposal of premises and equipment including write-downs	78			956			159			78
Net write-downs on other assets							4,359			—
Provision for loan losses	13,006			5,828			14,065			13,006
Net losses (gains) on sale of other real estate owned including write-downs	947			501
Net losses on sale of other real estate owned including write-downs							158			947
Share-based compensation expense	5,433			2,419			2,450			5,433
Amortization of intangible assets	5,862			2,990			11,972			5,862
Amortization of operating lease right-of-use assets							7,145			—
Provision for deferred taxes	1,023			(962		)	12,084			1,023
Net amortization of investment securities available for sale	3,909			4,815			3,069			3,909
Net loss (gain) on securities	38			(37		)
Net (gain) loss on securities							(139		)	38
Accretion of discount on purchased loans	(8,083		)	(9,023		)	(10,503		)	(8,083		)
Amortization of premium on purchased loan pools	1,473			2,943			977			1,473
Accretion on other borrowings	98			62			33			98
Accretion on subordinated deferrable interest debentures	1,001			992			1,170			1,001
Originations of mortgage loans held for sale	(1,361,509		)	(1,113,188		)	(2,376,070		)	(1,361,509		)
Payments received on mortgage loans held for sale	840			799			4,438			840
Proceeds from sales of mortgage loans held for sale	1,188,493			961,831			1,660,599			1,188,493
Net gains on sale of mortgage loans held for sale	(28,236		)	(36,451		)	(52,605		)	(28,236		)
Originations of SBA loans	(18,032		)	(25,720		)	(22,121		)	(18,032		)
Proceeds from sales of SBA loans	27,275			23,952			42,647			27,275
Net gains on sale of SBA loans	(2,246		)	(3,423		)	(4,220		)	(2,246		)
Increase in cash surrender value of bank owned life insurance	(1,311		)	(1,188		)	(1,861		)	(1,311		)
Changes in FDIC loss-share payable, net of cash payments received	1,823			1,974
Gain on bank owned life insurance proceeds							(4,335		)	—
Loss on sale of loans							1,954			—
Changes in FDIC loss-share payable, net of cash payments							3,695			1,823
Change attributable to other operating activities	(10,268		)	12,931			4,307			(10,268		)
Net cash used in operating activities	(93,536		)	(95,683		)	(587,303		)	(93,536		)

Investing Activities, net of effects of business combinations
Proceeds from maturities of time deposits in other banks							10,313			—
Purchases of securities available for sale	(234,711		)	(83,090		)	(219,352		)	(234,711		)
Proceeds from prepayments and maturities of securities available for sale	112,119			85,036			176,760			112,119
Proceeds from sales of securities available for sale	68,727			3,090			64,995			68,727
Net decrease (increase) in other investments	12,040			(12,669		)
Net (increase) decrease in other investments							(44,936		)	12,040
Net increase in loans, excluding purchased loans	(437,513		)	(786,548		)	(1,571,033		)	(437,513		)
Payments received on purchased loans	208,910			155,033			619,024			208,910
Payments received on purchased loan pools	60,042			95,533			32,516			60,042
Purchases of premises and equipment	(7,335		)	(3,016		)	(5,924		)	(7,335		)
Proceeds from sales of premises and equipment	576			16			5,330			576
Proceeds from sales of other real estate owned	7,461			11,989			7,448			7,461
Payments paid to FDIC under loss-share agreements	(1,205		)	(97		)	(3,692		)	(1,205		)
Proceeds from bank owned life insurance							8,178			—
Proceeds from sales of loans							96,162			—
Net cash and cash equivalents received in acquisitions	51,495			—			244,181			51,495
Net cash used in investing activities	(159,394		)	(534,723		)	(580,030		)	(159,394		)

				(Continued)						(Continued)

AMERIS BANCORP AND SUBSIDIARIES

Consolidated Statements of Cash Flows (unaudited)

(dollars in thousands)


	Nine Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2019			2018
Financing Activities, net of effects of business combinations
Net increase in deposits	$	389,884		$	320,341
Net (decrease) increase in deposits							$	(33,042	)	$	389,884
Net decrease in securities sold under agreements to repurchase	(16,567		)	(39,349		)	(24,985		)	(16,567		)
Proceeds from other borrowings	1,530,000			1,687,692			2,969,000			1,530,000
Repayment of other borrowings	(1,338,917		)	(1,371,503		)	(1,921,267		)	(1,338,917		)
Issuance of common stock	—			88,656
Proceeds from exercise of stock options	846			1,912			3,587			846
Dividends paid - common stock	(11,655		)	(10,927		)	(14,237		)	(11,655		)
Purchase of treasury shares	(2,062		)	(886		)	(11,561		)	(2,062		)
Net cash provided by financing activities	551,529			675,936			967,495			551,529

Net increase in cash and cash equivalents	298,599			45,530
Net (decrease) increase in cash and cash equivalents							(199,838		)	298,599
Cash and cash equivalents at beginning of period	330,658			198,385			679,527			330,658
Cash and cash equivalents at end of period	$	629,257		$	243,915		$	479,689		$	629,257

Supplemental Disclosures of Cash Flow Information
Cash paid during the period for:
Interest	$	45,535		$	23,369		$	87,066		$	45,535
Income taxes	10,252			28,212			32,096			10,252
Loans (excluding purchased loans) transferred to other real estate owned	3,764			4,043			503			3,764
Purchased loans transferred to other real estate owned	2,434			4,294			3,908			2,434
Loans transferred from loans held for sale to loans held for investment	10,817			—			—			10,817
Loans transferred from loans held for investment to loans held for sale	8,831			—			1,554			8,831
Loans provided for the sales of other real estate owned	53			1,334			144			53
Initial recognition of operating lease right-of-use assets							27,286			—
Initial recognition of operating lease liabilities							29,651			—
Right-of-use assets obtained in exchange for new operating lease liabilities							262			—
Assets acquired in business acquisitions	3,059,856			—			5,186,974			3,059,856
Liabilities assumed in business acquisitions	2,410,453			—			4,317,661			2,410,453
Issuance of common stock in acquisitions	547,127			—			869,294			547,127
Issuance of common stock in exchange for equity investment in US Premium Finance Holding Company	—			5,844
Change in unrealized gain (loss) on securities available for sale, net of tax	(15,590		)	4,337			20,778			(15,590		)
Change in unrealized gain (loss) on cash flow hedge, net of tax	294			(38		)	(470		)	294

				(Concluded)						(Concluded)

See notes to unaudited consolidated financial statements.

AMERIS BANCORP AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

September 30, ~~2018~~2019

NOTE 1 – BASIS OF PRESENTATION AND ACCOUNTING POLICIES

Nature of Business

Ameris Bancorp (the “Company” or “Ameris”) is a financial holding company headquartered in ~~Moultrie,~~Atlanta, Georgia. Ameris conducts substantially all of its operations through its wholly owned banking subsidiary, Ameris Bank (the “Bank”). At September 30, ~~2018,~~2019, the Bank operated ~~125~~172 branches in select markets in Georgia, Alabama, Florida and South Carolina. Our business model capitalizes on the efficiencies of a large financial services company, while still providing the community with the personalized banking service expected by our customers. We manage our Bank through a balance of decentralized management responsibilities and efficient centralized operating systems, products and loan underwriting standards. The Company’s Board of Directors and senior managers establish corporate policy, strategy and administrative policies. Within our established guidelines and policies, the banker closest to the customer responds to the differing needs and demands of his or her unique market.

Basis of Presentation

The accompanying unaudited consolidated financial statements for Ameris have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and Regulation S-X. Accordingly, the financial statements do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statement presentation. The interim consolidated financial statements included herein are unaudited but reflect all adjustments, ~~(consisting~~consisting of normal recurring ~~accruals)~~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, ~~2018~~2019 are not necessarily indicative of the results to be expected for the full year. These financial statements should be read in conjunction with the financial statements and notes thereto and the report of our registered independent public accounting firm included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2017.~~2018.

Cash and Cash Equivalents

For purposes of reporting cash flows, cash and cash equivalents include cash on hand, cash items in process of collection, amounts due from banks, interest-bearing deposits in banks and federal funds sold. The Bank is required to maintain reserve balances in cash or on deposit with the Federal Reserve Bank of Atlanta. The reserve requirement as of September 30, ~~2018~~2019 and December 31, ~~2017~~2018 was ~~$58.2~~$102.5 million and ~~$44.1~~$61.2 million, respectively, and was met by cash on hand and balances at the Federal Reserve Bank of Atlanta which isare reported on the Company's consolidated balance sheets in cash and due from ~~banks.~~banks and federal funds sold and interest-bearing deposits in banks, respectively.

~~Intangible Assets~~

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

Reclassifications

Certain reclassifications of prior year amounts have been made to conform with the current year presentations. The reclassifications had no effect on net income or shareholders' equity as previously reported.

Accounting Standards Adopted in ~~2018~~2019

ASU ~~2018-02 -~~ ~~Income Statement-Reporting Comprehensive Income~~2016-02 – Leases (Topic ~~220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income~~ ("842) (“ASU ~~2018-02"~~2016-02”). ~~Issued in February 2018,~~ ASU ~~2018-02 seeks to help entities reclassify certain stranded income tax effects in accumulated other comprehensive income resulting from~~2016-02 amends the ~~Tax Cuts and Jobs Act~~existing standards for lease accounting effectively requiring that most leases be carried on the balance sheets of ~~2017 (the "Tax Reform Act"), enacted on December 22, 2017. ASU 2018-02 was issued in response to concerns regarding~~

current accounting guidance that requires deferred tax assets and deferred tax liabilities to be adjusted for the effect of a change in tax laws or rates with the effect included in income from continuing operations in the reporting period that includes the enactment date, even in situations in which the related ~~income tax effects of items in accumulated other comprehensive income were originally recognized in other comprehensive income, rather than net income, and as~~lessees by requiring them to recognize a result the stranded tax effects would not reflect the appropriate tax rate. The amendments of ASU 2018-02 allow an entity to make a reclassification from accumulated other comprehensive income to retained earnings for the stranded tax effects, which is the difference between the historical corporate income tax rate of 35.0% and the newly enacted corporate income tax rate of 21.0%. ASU 2018-02 is effective for fiscal years, and interim periods within those years, beginning after December 31, 2018; however, public business entities are allowed to early adopt the amendments of ASU 2018-02 in any interim period for which the financial statements have not yet been issued. The amendments of ASU 2018-02 may be applied either at the beginning of the period (annual or interim) of adoption or retrospectively to each of the period(s) in which the effect of the change in the U.S. federal corporate tax rate in the Tax Reform Act is recognized. As a result of the remeasurement of the Company's deferred tax assets and deferred tax liabilities following the enactment of the Tax Reform Act, accumulated other comprehensive loss included $392,000 of stranded tax effects at December 31, 2017. The Company early adopted ASU 2018-02 during the first quarter of 2018 and made an election to reclassify the stranded tax effects from accumulated other comprehensive loss to retained earnings at the beginning of the period of adoption. The reclassification of the stranded tax effects resulted in an increase of $392,000 in accumulated other comprehensive lossright-of-use asset and a corresponding ~~increase~~lease liability. ASU 2016-02 includes qualitative and quantitative disclosure requirements intended to provide greater insight into the nature of ~~$392,000 in retained earnings.~~

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

~~ASU 2017-09 –~~ ~~Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting~~ (“ASU 2017-09”). ASU 2017-09 clarifies when changes to the terms of a share-based award must be accounted for as a modification. Companies must apply the modification accounting guidance if any of the following change: the share-based award’s fair value, vesting provisions or classification as an equity instrument or a liability instrument. The new guidance should reduce diversity in practice and result in fewer changes to the terms of share-based awards being accounted for as modifications,2016-02 are applied as the ~~guidance will allow companies~~date of adoption, resulting in no adjustment to ~~make certain non-substantive changes to share-based awards without accounting for them as modifications.~~amounts reported in prior periods. ASU 2017-09 is effective for interim and annual reporting periods beginning after December 15, 2017 with early adoption permitted. During the first quarter of 2018, the Company adopted the provisions of ASU 2017-09, and the adoption did not have a material impact on the Company's consolidated financial statements.

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

~~ASU 2016-01 –~~ ~~Financial Instruments - Recognition and Measurement of Financial Assets and Financial Liabilities~~ ("ASU 2016-01"). ASU 2016-01 (1) requires equity investments that do not result in consolidation and are not accounted for under the equity method to be measured at fair value with changes recognized through net income; (2) simplifies the impairment assessment of equity investments without readily determinable fair values by allowing a qualitative assessment similar to those performed on long-lived assets, goodwill or intangibles to be utilized at each reporting period; (3) eliminates the use of the entry price method requiring all preparers to utilize the exit price notion consistent with Topic 820, ~~Fair Value Measurement~~ in disclosing the fair value of financial instruments measured at amortized cost; (4) requires separate disclosure within other comprehensive income of changes in the fair value of liabilities due to instrument-specific credit risk when the fair value option has been elected; and (5) requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or in the accompanying notes to the financial statements. ASU 2016-012016-02 is effective for annual reporting periods beginning after December 15, ~~2017,~~2018, and interim periods within those annual periods. ~~During~~The Company adopted ASU 2016-02 during the first quarter of ~~2018,~~2019 and elected the optional transition method. The Company also elected the package of practical expedients provided in the guidance which permits the Company ~~adopted ASU 2016-01. Other than changing from~~to not reassess under the ~~entry price method~~new standard the prior conclusions about lease identification, lease classification and initial direct costs. The Company also elected the hindsight practical expedient to ~~an exit price notion~~determine lease term and in ~~disclosing fair value of financial instruments at amortized cost, the adoption did not have a material impact on the Company's consolidated financial statements.~~

~~ASU 2014-09 –~~ ~~Revenue from Contracts with Customers~~ (“ASU 2014-09”). On January 1, 2018, the Company adopted ASU 2014-09 and all subsequent amendments to the ASU (collectively "ASC 606") which (1) creates a single framework for recognizing revenue from contracts with customers that fall within its scope and (2) revises when it is appropriate to recognize a gain (loss) from the transfer of nonfinancial assets, such as other real estate owned ("OREO"). The majorityassessing impairment of the Company's ~~revenues come from interest income~~right-of-use asset. The adoption of

ASU 2016-02 resulted in the recognition of a right-of-use asset of $27.3 million, a lease liability of $29.7 million and ~~other sources, including loans, leases, investment securities~~a cumulative effect decrease to retained earnings of $276,000. The right-of-use asset and derivative financial instruments, that are outside the scope of ASC 606. With the exception of gains/losses on the sale of OREO, the Company's services that fall within the scope of ASC 606 are presented within noninterest income and are recognized as revenue as the Company satisfies its obligations to the customer. Services within the scope of ASC 606 reported in noninterest income include service charges on deposit accounts, debit card interchange fees, and ATM fees. The net of gains and losses on the sale of OREOlease liability are recorded in ~~credit resolution related expenses~~the consolidated balance sheets in ~~the Company's consolidated statement of income~~other assets and comprehensive income. The adoption of ASC 606 did not change the timing or amount of revenue recognized for in-scope revenue streams. Accordingly, no cumulative effect adjustment was recorded under the modified retrospective transition method. See Note 14 for further discussion on the Company's accounting policies for revenue sources within the scope of ASC 606.other liabilities, respectively.

Accounting Standards Pending Adoption

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

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

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

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

ASU 2016-13 –- Financial ~~Instruments—Credit~~Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial ~~Instruments~~Instruments (“ASU 2016-13”, “the ASU”). ASU 2016-13 significantly changes how entities will measure and report credit losses for ~~most~~ financial assets measured at amortized cost and certain other instruments that are not measured at fair value through net income. The standard will replace the current incurred loss approach with an expected loss model, referred to as the current expected credit loss (“CECL”) model. The new standard ~~will apply~~applies to financial assets ~~subject to credit losses and~~ measured at amortized cost ~~and~~as well as certain off-balance-sheet credit exposures ~~which include,~~including, but ~~are~~ not limited to, loans, receivables, leases, held-to-maturity securities, loan commitments and financial guarantees.

ASU 2016-13 simplifies the accounting for purchased credit-impaired debt securities and loans and expands the disclosure requirements regarding ~~an entity’s~~ assumptions, models and methods for estimating the allowance for loan and lease losses. ~~In addition,~~Among other requirements, entities ~~will need to~~must disclose the amortized cost balance for each class of financial asset by credit quality indicator, disaggregated by the year of origination. ASU 2016-13 is effective for interim and annual reporting periods beginning after December 15, ~~2019. Early~~2019 with early adoption is permitted for interim and annual reporting periods beginning after December 15, 2018. The Company will adopt the new guidance on January 1, 2020. Upon adoption, ASU 2016-13 provides for a modified retrospective transition by means of a cumulative effect adjustment to equity as of the beginning of the period in which the guidance is effective. ~~While~~

The Company previously established a steering committee, including appropriate members of management, to evaluate the impact of the ASU adoption on the Company’s financial position, results of operations and financial statement disclosures. Under the direction of the committee, workstreams were established to execute the Company’s adoption plan. Workstreams including accounting and reporting; credit risk modeling; systems and data; and processes and controls meet regularly with senior management to report on progress and to make key decisions related to the adoption. The Company continues to make progress towards CECL readiness in each of these areas.

A key committee decision was the selection and implementation of software from a vendor of choice to estimate expected credit losses per the ASU. Other key decisions and milestones include the identification of financial assets within scope; the preparation of appropriate data for modeling; the establishment of a forecast period to estimate expected credit losses; the determination of a methodology for calculating expected credit losses; and the development of documentation to support the approach and accounting selections.

During the third quarter of 2019, the Company implemented the software and conducted a series of CECL modeling measurements using a discounted cash flow approach. As a result of these modeling measurements, the Company is ~~currently evaluating~~calibrating its model and finalizing input decisions. Results from recent model runs have been consistent with prior projections and the Company’s expectations. The Company expects to continue to run CECL modeling in parallel with its current allowance process.

As the Company has progressed on implementation of the ASU, third-party and internal audit reviews have been conducted to assist with readiness. Identified issues have been addressed. In addition, the Company is in the progress of finalizing a third-party validation of its CECL model.

The Company continues to evaluate the impact ~~this~~of the ASU ~~will have~~ on ~~the~~ results of operations, financial position and ~~disclosures, the~~disclosures. The Company expects to recognize a one-time cumulative effect adjustment to equity and the allowance for loan losses as of the beginning of the first reporting period in which the new standard is effective. The Company has established a steering committee which includes the appropriate members of management to evaluate the impact this ASU will have on Company’s financial position, results of operations and financial statement disclosures and determine the most appropriate method of implementing the amendments in this ASUcumulative effect adjustment as well as ~~any resources needed to implement~~ the ~~amendments. This committee has engaged the software vendor~~ongoing impact of ~~choice for~~ implementation established an implementation time-line, begun working with the software vendor in sourcing and testing required data feeds, conducts regular meetings to monitor the project's status, and continues to stay current on implementation issues and concerns.

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

NOTE 2 – BUSINESS COMBINATIONS

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

Fidelity Southern Corporation

On July 1, 2019, the Company completed its acquisition of Fidelity Southern Corporation ("Fidelity"), a bank holding company headquartered in Atlanta, Georgia. Upon consummation of the acquisition, Fidelity was merged with and into the Company, with Ameris as the surviving entity in the merger, and Fidelity's wholly owned banking subsidiary, Fidelity Bank, was merged with and into the Bank, with the Bank surviving. The acquisition expanded the Company's existing market presence in Georgia and Florida, as Fidelity Bank had a total of 62 branches at the time of closing, 46 of which were located in Georgia and 16 of which were located in Florida. Under the terms of the merger agreement, Fidelity's shareholders received 0.80 shares of Ameris common stock for each share of Fidelity common stock they previously held. As a result, the Company issued 22,181,522 shares of its common stock at a fair value of $869.3 million to Fidelity's shareholders as merger consideration.

The following table presents the assets acquired and liabilities assumed of Fidelity as of July 1, 2019, and their fair value estimates. The fair value estimates were subject to refinement for up to one year after the closing date of the acquisition for new information obtained about facts and circumstances that existed at the acquisition date. The Company continues its evaluation of the facts and circumstances available as of July 1, 2019, to assign fair values to assets acquired and liabilities assumed, which could result in further adjustments to the fair values presented below. Because final external valuations were not complete as of September 30, 2019, management continues to evaluate fair value adjustments related to loans, premises, intangibles, interest-bearing deposits, other borrowings, subordinated deferrable interest debentures and deferred taxes.



(dollars in thousands)	As Recorded by Fidelity			Initial Fair Value Adjustments				As Recorded by Ameris
Assets
Cash and due from banks	$	26,264		$	—			$	26,264
Federal funds sold and interest-bearing deposits in banks	217,936			—				217,936
Investment securities	299,341			(1,444		)	(a)	297,897
Other investments	7,449			—				7,449
Loans held for sale	328,657			(1,290		)	(b)	327,367
Loans	3,587,412			(79,002		)	(c)	3,508,410
Less allowance for loan losses	(31,245		)	31,245			(d)	—
Loans, net	3,556,167			(47,757		)		3,508,410
Other real estate owned	7,605			(427		)	(e)	7,178
Premises and equipment	93,662			11,407			(f)	105,069
Other intangible assets, net	10,670			39,940			(g)	50,610
Cash value of bank owned life insurance	72,328			—				72,328
Deferred income taxes, net	104			(104		)	(h)	—
Other assets	157,863			998			(i)	158,861
Total assets	$	4,778,046		$	1,323			$	4,779,369
Liabilities
Deposits:
Noninterest-bearing	$	1,301,829		$	—			$	1,301,829
Interest-bearing	2,740,552			942			(j)	2,741,494
Total deposits	4,042,381			942				4,043,323
Securities sold under agreements to repurchase	22,345			—				22,345
Other borrowings	149,367			2,265			(k)	151,632
Subordinated deferrable interest debentures	46,393			(9,675		)	(l)	36,718
Deferred tax liability, net	12,222			(11,401		)	(m)	821
Other liabilities	65,027			538			(n)	65,565
Total liabilities	4,337,735			(17,331		)		4,320,404
Net identifiable assets acquired over (under) liabilities assumed	440,311			18,654				458,965
Goodwill	—			410,348				410,348
Net assets acquired over liabilities assumed	$	440,311		$	429,002			$	869,313
Consideration:
Ameris Bancorp common shares issued	22,181,522
Price per share of the Company's common stock	39.19
Company common stock issued	$	869,294
Cash exchanged for shares	$	19
Fair value of total consideration transferred	$	869,313

Explanation of fair value adjustments


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


(b)	Adjustment reflects the fair value adjustments based on the Company's evaluation of the acquired loans held for sale.


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


(d)	Adjustment reflects the elimination of Fidelity's allowance for loan losses.


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


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


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


(h)	Adjustment reflects the reclassification of Fidelity's deferred tax asset against the deferred tax liability.


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


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


(k)	Adjustment reflects the fair value adjustment to the other borrowings at the acquisition date, net of reversal of Fidelity's unamortized deferred issuance costs.


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


(m)	Adjustment reflects the deferred taxes on the differences in the carrying values of acquired assets and assumed liabilities for financial reporting purposes and their basis for federal income tax purposes and reclassification of Fidelity's deferred tax asset against the deferred tax liability.


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

Goodwill of $410.3 million, which is the excess of the purchase price over the fair value of net assets acquired, was recorded in the Fidelity acquisition and is the result of expected operational synergies and other factors. This goodwill is not expected to be deductible for tax purposes.

In the acquisition, the Company purchased $3.51 billion of loans at fair value, net of $79.0 million, or 2.20%, estimated discount to the outstanding principal balance. Of the total loans acquired, management identified $119.3 million that were considered to be credit impaired and are accounted for under ASC Topic 310-30. The table below summarizes the total contractually required principal and interest cash payments, management’s estimate of expected total cash payments and fair value of the loans as of the acquisition date for purchased credit impaired loans. Contractually required principal and interest payments have been adjusted for estimated prepayments.



(dollars in thousands)
Contractually required principal and interest	$	186,118
Non-accretable difference	(25,715		)
Cash flows expected to be collected	160,403
Accretable yield	(41,084		)
Total purchased credit-impaired loans acquired	$	119,319

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



(dollars in thousands)	Fair Value of Acquired Loans at Acquisition Date		Gross Contractual Amounts Receivable at Acquisition Date		Estimate at Acquisition Date of Contractual Cash Flows Not Expected to be Collected
Acquired receivables subject to ASC 310-30	$	119,319	$	186,118	$	25,715
Acquired receivables not subject to ASC 310-30	$	3,389,091	$	4,161,546	$	30,419

Hamilton State Bancshares, Inc.

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

As of September 30, 2018, the Company recorded a preliminary allocation of the purchase price to Hamilton's tangible and identifiable intangible assets acquired and liabilities assumed based on estimated fair values as of June 29, 2018. The following table presents the assets acquired and liabilities assumed of Hamilton as of June 29, 2018, and their fair value estimates. The ~~Company continues its evaluation~~fair value estimates were subject to refinement for up to one year after the closing date of the acquisition for new information obtained about facts and circumstances ~~available as of June 29, 2018, to assign fair values to assets acquired and liabilities assumed which could result in further adjustments to~~that existed at the ~~fair values presented below. Because final external valuations were not complete as of September 30, 2018, management continues to evaluate~~acquisition date. The Company finalized its fair value adjustments ~~related to loans, premises, intangibles, interest-bearing deposits, other borrowings, subordinated deferrable interest debentures and deferred tax assets~~.during the second quarter of 2019.


(dollars in thousands)	As Recorded by Hamilton			Initial Fair Value Adjustments				Subsequent Adjustments				As Recorded by Ameris		As Recorded by Hamilton			Initial Fair Value Adjustments				Subsequent Adjustments				As Recorded by Ameris
Assets
Cash and due from banks	$	14,405		$	—			$	(478	)	(j)	$	13,927	$	14,405		$	—			$	(478	)	(j)	$	13,927
Federal funds sold and interest-bearing deposits in banks	102,156			—				—				102,156		102,156			—				—				102,156
Time deposits in other banks	11,558			—				—				11,558		11,558			—				—				11,558
Investment securities	288,206			(2,376		)	(a)	—				285,830		288,206			(2,376		)	(a)	—				285,830
Other investments	2,094			—				—				2,094		2,094			—				—				2,094
Loans	1,314,264			(15,528		)	(b)	—				1,298,736		1,314,264			(15,528		)	(b)	(5,550		)	(k)	1,293,186
Less allowance for loan losses	(11,183		)	11,183			(c)	—				—		(11,183		)	11,183			(c)	—				—
Loans, net	1,303,081			(4,345		)		—				1,298,736		1,303,081			(4,345		)		(5,550		)		1,293,186
Other real estate owned	847			—				—				847		847			—				—				847
Premises and equipment	27,483			—				—				27,483		27,483			—				1,488			(l)	28,971
Other intangible assets, net	18,755			(2,755		)	(d)	—				16,000		18,755			(2,755		)	(d)	7,610			(m)	23,610
Cash value of bank owned life insurance	4,454			—				—				4,454		4,454			—				—				4,454
Deferred income taxes, net	12,445			(6,308		)	(e)	—				6,137		12,445			(6,308		)	(e)	3,942			(n)	10,079
Other assets	13,053			—				(43		)	(k)	13,010		13,053			—				(2,098		)	(o)	10,955
Total assets	$	1,798,537		$	(15,784	)		$	(521	)		$	1,782,232	$	1,798,537		$	(15,784	)		$	4,914			$	1,787,667
Liabilities
Deposits:
Noninterest-bearing	$	381,039		$	—			—				$	381,039	$	381,039		$	—			$	—			$	381,039
Interest-bearing	1,201,324			(1,896		)	(f)	—				1,199,428		1,201,324			(1,896		)	(f)	4,783			(p)	1,204,211
Total deposits	1,582,363			(1,896		)		—				1,580,467		1,582,363			(1,896		)		4,783				1,585,250
Other borrowings	10,687			(66		)	(g)	—				10,621		10,687			(66		)	(g)	286			(q)	10,907
Subordinated deferrable interest debentures	3,093			(658		)	(h)	—				2,435
Subordinated deferrable interest debenture														3,093			(658		)	(h)	(143		)	(r)	2,292
Other liabilities	10,460			2,391			(i)	—				12,851		10,460			2,391			(i)	—				12,851
Total liabilities	1,606,603			(229		)		—				1,606,374		1,606,603			(229		)		4,926				1,611,300
Net identifiable assets acquired over (under) liabilities assumed	191,934			(15,555		)		(521		)		175,858		191,934			(15,555		)		(12		)		176,367
Goodwill	—			220,713				564				221,277		—			220,713				55				220,768
Net assets acquired over liabilities assumed	$	191,934		$	205,158			$	43			$	397,135	$	191,934		$	205,158			$	43			$	397,135
Consideration:
Ameris Bancorp common shares issued	6,548,385													6,548,385
Price per share of the Company's common stock	$	53.35												$	53.35
Company common stock issued	$	349,356												$	349,356
Cash exchanged for shares	$	47,779												$	47,779
Fair value of total consideration transferred	$	397,135												$	397,135

Explanation of fair value adjustments


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


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


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


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


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


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


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


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


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


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


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


(l)	Adjustment reflects the recording of fair value adjustment to premises and equipment.


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


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


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


(p)	Adjustment reflects additional recording of fair value adjustments on the acquired deposits.


(q)	Adjustment reflects the fair value adjustment to other borrowings.


(r)	Adjustment reflects additional recording of fair value adjustments to the subordinated deferrable interest debenture.

Goodwill of ~~$221.3~~$220.8 million, which is the excess of the purchase price over the fair value of net assets acquired, was recorded in the Hamilton acquisition and is the result of expected operational synergies and other factors. This goodwill is not expected to be deductible for tax purposes.

In the acquisition, the Company purchased ~~$1.30~~$1.29 billion of loans at fair value, net of ~~$15.5~~$21.1 million, or ~~1.18%~~1.60%, estimated discount to the outstanding principal balance. Of the total loans acquired, management identified ~~$18.8~~$15.4 million that were considered to be credit impaired and are accounted for under ASC Topic 310-30. The table below summarizes the total contractually required principal and interest cash payments, management’s estimate of expected total cash payments and fair value of the loans as of the acquisition date for purchased credit impaired loans. Contractually required principal and interest payments have been adjusted for estimated prepayments.



(dollars in thousands)
Contractually required principal and interest	$	21,223
Non-accretable difference	(5,062		)
Cash flows expected to be collected	16,161
Accretable yield	(794		)
Total purchased credit-impaired loans acquired	$	15,367

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

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



(dollars in thousands)	Fair Value of Acquired Loans at Acquisition Date		Gross Contractual Amounts Receivable at Acquisition Date		Estimate at Acquisition Date of Contractual Cash Flows Not Expected to be Collected
Acquired receivables subject to ASC 310-30	$	15,367	$	21,223	$	5,062
Acquired receivables not subject to ASC 310-30	$	1,277,819	$	1,441,534	$	—

(dollars in thousands)
Fair Value of
Acquired Loans at
Acquisition Date

Gross Contractual
Amounts Receivable
at Acquisition Date

Estimate at
Acquisition Date of
Contractual Cash
Flows Not Expected
to be Collected
Acquired receivables subject to ASC 310-30 $ 18,815
$ 21,223
$ 1,614
Acquired receivables not subject to ASC 310-30 $ 1,279,921
$ 1,441,534
$ —

Atlantic Coast Financial Corporation

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

As of September 30, 2018, the Company recorded a preliminary allocation of the purchase price to Atlantic's tangible and identifiable intangible assets acquired and liabilities assumed based on estimated fair values as of May 25, 2018. The following table presents the assets acquired and liabilities assumed of Atlantic as of May 25, 2018, and their fair value estimates. The ~~Company continues its evaluation~~fair value estimates were subject to refinement for up to one year after the closing date of the acquisition for new information obtained about facts and circumstances ~~available as of May 25, 2018, to assign fair values to assets acquired and liabilities assumed which could result in further adjustments to~~that existed at the ~~fair values presented below. Because final external valuations were not complete as of September 30, 2018, management continues to evaluate~~acquisition date. The Company finalized its fair value adjustments ~~related to loans, intangibles, interest-bearing deposits and deferred tax assets.~~during the second quarter of 2019.


(dollars in thousands)	As Recorded by Atlantic			Initial Fair Value Adjustments				Subsequent Adjustments				As Recorded by Ameris		As Recorded by Atlantic			Initial Fair Value Adjustments				Subsequent Adjustments				As Recorded by Ameris
Assets
Cash and due from banks	$	3,990		$	—			$	—			$	3,990	$	3,990		$	—			$	—			$	3,990
Federal funds sold and interest-bearing deposits in banks	22,149			—				—				22,149		22,149			—				—				22,149
Investment securities	35,186			(60		)	(a)	—				35,126		35,186			(60		)	(a)	—				35,126
Other investments	9,576			—				—				9,576		9,576			—				—				9,576
Loans held for sale	358			—				—				358		358			—				—				358
Loans	777,605			(19,423		)	(b)	(2,478		)	(k)	755,704		777,605			(19,423		)	(b)	(2,478		)	(k)	755,704
Less allowance for loan losses	(8,573		)	8,573			(c)	—				—		(8,573		)	8,573			(c)	—				—
Loans, net	769,032			(10,850		)		(2,478		)		755,704		769,032			(10,850		)		(2,478		)		755,704
Other real estate owned	1,837			(796		)	(d)	—				1,041		1,837			(796		)	(d)	—				1,041
Premises and equipment	12,591			(1,695		)	(e)	—				10,896		12,591			(1,695		)	(e)	(161		)	(l)	10,735
Other intangible assets, net	—			5,937			(f)	1,551			(l)	7,488		—			5,937			(f)	1,551			(m)	7,488
Cash value of bank owned life insurance	18,182			—				—				18,182		18,182			—				—				18,182
Deferred income taxes, net	5,782			709			(g)	(26		)	(m)	6,465		5,782			709			(g)	1,220			(n)	7,711
Other assets	3,604			(634		)	(h)	—				2,970		3,604			(634		)	(h)	(11		)	(o)	2,959
Total assets	$	882,287		$	(7,389	)		$	(953	)		$	873,945	$	882,287		$	(7,389	)		$	121			$	875,019
Liabilities
Deposits:
Noninterest-bearing	$	69,761		$	—			—				$	69,761	$	69,761		$	—			$	—			$	69,761
Interest-bearing	514,935			(554		)	(i)	1,025			(n)	515,406		514,935			(554		)	(i)	1,025			(p)	515,406
Total deposits	584,696			(554		)		1,025				585,167		584,696			(554		)		1,025				585,167
Other borrowings	204,475			—				—				204,475		204,475			—				—				204,475
Other liabilities	8,367			(13		)	(j)	—				8,354		8,367			(13		)	(j)	(1,922		)	(q)	6,432
Total liabilities	797,538			(567		)		1,025				797,996		797,538			(567		)		(897		)		796,074
Net identifiable assets acquired over (under) liabilities assumed	84,749			(6,822		)		(1,978		)		75,949		84,749			(6,822		)		1,018				78,945
Goodwill	—			91,360				1,978				93,338		—			91,360				(1,018		)		90,342
Net assets acquired over liabilities assumed	$	84,749		$	84,538			$	—			$	169,287	$	84,749		$	84,538			$	—			$	169,287
Consideration:
Ameris Bancorp common shares issued	2,631,520													2,631,520
Price per share of the Company's common stock	$	56.15												$	56.15
Company common stock issued	$	147,760												$	147,760
Cash exchanged for shares	$	21,527												$	21,527
Fair value of total consideration transferred	$	169,287												$	169,287

Explanation of fair value adjustments


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


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


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


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


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


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


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


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


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


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


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


(l)	Adjustment reflects additional recording of fair value adjustment to premises and equipment.


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


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


~~(n)~~(o)	Adjustment reflects additional fair value adjustments on acquired other assets.


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


(q)	Adjustment reflects additional fair value adjustments on acquired other liabilities.

Goodwill of ~~$93.3~~$90.3 million, which is the excess of the purchase price over the fair value of net assets acquired, was recorded in the Atlantic acquisition and is the result of expected operational synergies and other factors. This goodwill is not expected to be deductible for tax purposes.

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



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

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

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



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

(dollars in thousands)
Fair Value of
Acquired Loans at
Acquisition Date

Gross Contractual
Amounts Receivable
at Acquisition Date

Estimate at
Acquisition Date of
Contractual Cash
Flows Not Expected
to be Collected
Acquired receivables subject to ASC 310-30 $ 10,763
$ 16,077
$ 4,115
Acquired receivables not subject to ASC 310-30 $ 744,941
$ 1,041,768
$ —

US Premium Finance Holding Company

On January 31, 2018, the Company closed on the purchase of the final 70% of the outstanding shares of common stock of US Premium Finance Holding Company, a Florida corporation ("USPF"), completing its acquisition of USPF and making USPF a wholly owned subsidiary of the Company. Through a series of ~~three~~3 acquisition transactions that closed on January 18, 2017, January 3, 2018 and January 31, 2018, the Company issued a total of 1,073,158 shares of its common stock at a fair value of $55.9 million and paid $21.4 million in cash to the ~~former~~ shareholders of USPF. Pursuant to the terms of the Stock Purchase Agreement dated January 25, 2018 under which the Company purchased the final 70% of the outstanding shares of common stock of USPF, the selling shareholders of USPF ~~may~~could receive additional cash payments aggregating up to $5.8 million based on the achievement by the Company's premium finance division of certain income targets, between January 1, 2018 and June 30, 2019. The total contingent consideration paid was $1.2 million based on results achieved through the applicable measurement dates. As of the January 31, 2018 acquisition date, the present value of the contingent earn-out consideration expected to be paid was $5.7 million. Including the fair value of the Company's common stock issued, cash paid and the present value of the contingent earn-out consideration expected to be paid, the aggregate purchase price of USPF amounted to $83.0 million.

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

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

~~As of September 30, 2018,~~The following table presents the ~~Company finalized its allocation of the purchase price to USPF's~~ assets acquired and liabilities assumed ~~based on estimated fair values~~of USPF as of January 31, ~~2018.~~2018 at their initial and subsequent fair value estimates, as recorded by the Company. The fair value estimates were subject to refinement for up to one year after the closing date of the acquisition for new information obtained about facts and circumstances that existed at the acquisition date. The assets acquired include only identifiable intangible assets related to insurance agent relationships that lead to referral of insurance premium finance loans to USPF, the US"US Premium ~~Finance~~Finance" trade name and a non-compete agreement with a former USPF shareholder. ~~The following table presents the assets acquired and liabilities assumed of USPF as of January 31, 2018, and their fair value estimates.~~


(dollars in thousands)	As Recorded by USPF		Initial Fair Value Adjustments			Subsequent Adjustments				As Recorded by Ameris		As Recorded by USPF		Initial Fair Value Adjustments			Subsequent Adjustments				As Recorded by Ameris
Assets
Intangible asset - insurance agent relationships	$	—	$	20,000	(a)	$	2,351		(e)	$	22,351	$	—	$	20,000	(a)	$	2,351		(e)	$	22,351
Intangible asset - US Premium Finance trade name	—		1,136		(b)	(42		)	(f)	1,094		—		1,136		(b)	(42		)	(f)	1,094
Intangible asset - non-compete agreement	—		178		(c)	(16		)	(g)	162		—		178		(c)	(16		)	(g)	162
Total assets	$	—	$	21,314		$	2,293			$	23,607	$	—	$	21,314		$	2,293			$	23,607
Liabilities
Deferred tax liability	$	—	$	5,492	(d)	591			(h)	$	6,083	$	—	$	5,492	(d)	$	(368	)	(h)	$	5,124
Total liabilities	—		5,492			591				6,083		—		5,492			(368		)		5,124
Net identifiable assets acquired over liabilities assumed	—		15,822			1,702				17,524		—		15,822			2,661				18,483
Goodwill	—		67,159			(1,702		)		65,457		—		67,159			(2,661		)		64,498
Net assets acquired over liabilities assumed	$	—	$	82,981		$	—			$	82,981	$	—	$	82,981		$	—			$	82,981
Consideration:
Ameris Bancorp common shares issued	1,073,158											1,073,158
Price per share of the Company's common stock (weighted average)	$	52.047										$	52.047
Company common stock issued	$	55,855										$	55,855
Cash exchanged for shares	$	21,421										$	21,421
Present value of contingent earn-out consideration expected to be paid	$	5,705										$	5,705
Fair value of total consideration transferred	$	82,981										$	82,981

Explanation of fair value adjustments


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


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


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


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


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


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


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


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

Goodwill of ~~$65.5~~$64.5 million, which is the excess of the purchase price over the fair value of net assets acquired, was recorded in the USPF acquisition and is the result of expected operational synergies and other factors. This goodwill is not expected to be deductible for tax purposes.

During the second quarter of 2018, the Company recorded $2.0 million in other noninterest income in the consolidated statements of income and comprehensive income to reflect a decrease in the estimated contingent consideration liability. ~~This~~During the fourth quarter of 2018, the Company recorded $2.5 million in other noninterest income in the consolidated statements of income and comprehensive income to reflect a further decrease in the estimated contingent consideration liability. These decreases in the

estimated contingent consideration liability ~~was~~were based on projected results of the premium finance division for the entire measurement period from January 1, 2018 through June 30, 2019. No additional adjustment to the estimated contingent consideration liability was considered necessary for the ~~third quarter~~first nine months of ~~2018.~~2019.

Pro Forma Financial Information

The results of operations of Fidelity, Hamilton, Atlantic and USPF subsequent to their ~~respective~~ acquisition dates are included in the Company’s consolidated statements of income and comprehensive income. The following unaudited pro forma information reflects the Company’s estimated consolidated results of operations as if the acquisitions had occurred on January 1, ~~2017,~~2018, unadjusted for potential cost savings. Merger and conversion charges are not included in the pro forma information below.



	Three Months Ended September 30,				Nine Months Ended September 30,
(dollars in thousands, except per share data; shares in thousands)	2019		2018		2019		2018
Net interest income and noninterest income	$	225,762	$	201,618	$	618,148	$	602,620
Net income	$	73,213	$	54,481	$	165,603	$	140,952
Net income available to common shareholders	$	73,213	$	54,481	$	165,603	$	140,952
Income per common share available to common shareholders – basic	$	1.06	$	0.78	$	2.38	$	2.02
Income per common share available to common shareholders – diluted	$	1.05	$	0.78	$	2.38	$	2.02
Average number of shares outstanding, basic	69,372		69,696		69,469		69,628
Average number of shares outstanding, diluted	69,600		69,867		69,590		69,800

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

NOTE 3 – INVESTMENT SECURITIES

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

The amortized cost and estimated fair value of investment securities available for sale, along with unrealized gains and losses, are summarized as follows:



(dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
September 30, 2019
U.S. government sponsored agencies	$	22,265	$	95	$	—		$	22,360
State, county and municipal securities	113,607		2,742		—			116,349
Corporate debt securities	51,740		1,211		(33		)	52,918
Mortgage-backed securities	1,283,846		18,776		(3,042		)	1,299,580
Total debt securities	$	1,471,458	$	22,824	$	(3,075	)	$	1,491,207

December 31, 2018
State, county and municipal securities	$	149,670	$	1,367	$	(304	)	$	150,733
Corporate debt securities	67,123		718		(527		)	67,314
Mortgage-backed securities	982,183		4,172		(11,979		)	974,376
Total debt securities	$	1,198,976	$	6,257	$	(12,810	)	$	1,192,423

(dollars in thousands)
Amortized
Cost

Gross
Unrealized
Gains

Gross
Unrealized
Losses

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

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

The amortized cost and estimated fair value of available for sale securities at September 30, ~~2018~~2019 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.~~shown separately.



(dollars in thousands)	Amortized Cost		Estimated Fair Value
Due in one year or less	$	16,799	$	16,858
Due from one year to five years	74,218		75,228
Due from five to ten years	67,248		69,498
Due after ten years	29,347		30,043
Mortgage-backed securities	1,283,846		1,299,580
	$	1,471,458	$	1,491,207

(dollars in thousands)

Amortized
Cost

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

Securities with a carrying value of approximately ~~$363.1~~$513.7 million serve as collateral to secure public deposits, securities sold under agreements to repurchase and for other purposes required or permitted by law at September 30, ~~2018,~~2019, compared with ~~$403.3~~$510.0 million at December 31, ~~2017.~~2018.

The following table details the gross unrealized losses and estimated fair value of securities aggregated by category and duration of continuous unrealized loss position at September 30, ~~2018~~2019 and December 31, ~~2017.~~2018.



	Less Than 12 Months					12 Months or More					Total
(dollars in thousands)	Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses
September 30, 2019
State, county and municipal securities	$	559	$	—		$	—	$	—		$	559	$	—
Corporate debt securities	1,470		(30		)	2,090		(3		)	3,560		(33		)
Mortgage-backed securities	345,451		(1,828		)	81,039		(1,214		)	426,490		(3,042		)
Total debt securities	$	347,480	$	(1,858	)	$	83,129	$	(1,217	)	$	430,609	$	(3,075	)

December 31, 2018
State, county and municipal securities	$	23,784	$	(52	)	$	33,873	$	(252	)	$	57,657	$	(304	)
Corporate debt securities	17,291		(111		)	17,952		(416		)	35,243		(527		)
Mortgage-backed securities	119,745		(580		)	435,749		(11,399		)	555,494		(11,979		)
Total debt securities	$	160,820	$	(743	)	$	487,574	$	(12,067	)	$	648,394	$	(12,810	)

Less Than 12 Months 12 Months or More Total
(dollars in thousands)
Estimated
Fair
Value

Unrealized
Losses

Estimated
Fair
Value

Unrealized
Losses

Estimated
Fair
Value

Unrealized
Losses
September 30, 2018

State, county and municipal securities $ 83,727
$ (688 ) $ 12,067
$ (193 ) $ 95,794
$ (881 )
Corporate debt securities 12,141
(113 ) 17,970
(446 ) 30,111
(559 )
Mortgage-backed securities 583,330
(9,344 ) 267,078
(12,608 ) 850,408
(21,952 )
Total debt securities $ 679,198
$ (10,145 ) $ 297,115
$ (13,247 ) $ 976,313
$ (23,392 )

December 31, 2017

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

As of September 30, ~~2018,~~2019, the Company’s securities portfolio consisted of ~~527~~568 securities, ~~386~~136 of which were in an unrealized loss position. The majority of unrealized losses are related to the Company’s mortgage-backed securities, as discussed below.

At September 30, ~~2018,~~2019, the Company held ~~303~~133 mortgage-backed securities that were in an unrealized loss position, all of which were issued by U.S. government-sponsored entities and agencies. Because the decline in fair value is attributable to changes in interest rates and illiquidity, and not credit quality, and because the Company does not have the intent to sell these mortgage-backed securities and it is likely that it will not be required to sell the securities before their anticipated recovery, the Company does not consider these securities to be other-than-temporarily impaired at September 30, ~~2018.~~2019.

At September 30, ~~2018,~~2019, the Company held 681 state, county and municipal ~~securities~~security and 152 corporate debt securities that were in an unrealized loss position. Because the decline in fair value is attributable to changes in interest rates and illiquidity, and not credit quality, and because the Company does not have the intent to sell these securities and it is likely that it will not be required to sell the securities before their anticipated recovery, the Company does not consider these securities to be other-than-temporarily impaired at September 30, ~~2018.~~2019.

The Company’s investments in corporate debt include investments in regional and super-regional banks on which the Company prepares regular analysis through review of financial information and credit ratings. Investments in preferred securities are also concentrated in the preferred obligations of regional and super-regional banks through non-pooled investment structures. The Company did not have investments in “pooled” trust preferred securities at September 30, ~~2018~~2019 or December 31, ~~2017.~~2018.

Management and the Company’s Asset and Liability Committee (the “ALCO Committee”) evaluate securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market conditions warrant such evaluation. While the majority of the unrealized losses on debt securities relate to changes in interest rates, corporate debt securities

have also been affected by reduced levels of liquidity and higher risk premiums. Occasionally, management engages independent third parties to evaluate the Company’s position in certain corporate debt securities to aid management and the ALCO Committee in its determination regarding the status of impairment. The Company believes that each investment poses minimal credit ~~risk and further, that~~risk. Furthermore, the Company does not intend to sell these investment securities at an unrealized loss position at September 30, ~~2018,~~2019, and it is more likely than not that the Company will not be required to sell these securities prior to recovery or maturity. Therefore, at September 30, ~~2018,~~2019, these investments are not considered impaired on an other-than-temporary basis.

At September 30, ~~2018~~2019 and December 31, ~~2017,~~2018, all of the Company’s mortgage-backed securities were obligations of government-sponsored agencies.

The following table is a summary of sales activities in the Company’s investment securities available for sale for the nine months ended September 30, ~~2018~~2019 and ~~2017:~~2018:



(dollars in thousands)	September 30, 2019			September 30, 2018
Gross gains on sales of securities	$	522		$	390
Gross losses on sales of securities	(464		)	(301		)
Net realized gains on sales of securities available for sale	$	58		$	89

Sales proceeds	$	64,995		$	68,727

(dollars in thousands) September 30,
2018 September 30,
2017
Gross gains on sales of securities $ 390
$ 38
Gross losses on sales of securities (301 ) (1 )
Net realized gains on sales of securities available for sale $ 89
$ 37

Sales proceeds $ 68,727
$ 3,090

Total gain ~~(loss)~~ on securities reported on the consolidated statements of income and comprehensive income is comprised of the following for the nine months ended September 30, ~~2018~~2019 and ~~2017:~~2018:



(dollars in thousands)	September 30, 2019		September 30, 2018
Net realized gains on sales of securities available for sale	$	58	$	89
Unrealized holding gains (losses) on equity securities	19		(127		)
Net realized gains on sales of other investments	62		—
Total gain (loss) on securities	$	139	$	(38	)

(dollars in thousands) September 30,
2018 September 30,
2017
Net realized gains on sales of securities available for sale $ 89
$ 37
Unrealized holding losses on equity securities (127 ) —
Total gain (loss) on securities $ (38 ) $ 37

NOTE 4 – LOANS

The Bank engages in a full complement of lending activities, including real estate-related loans, agriculture-related loans, commercial and financial loans and consumer installment loans within select markets in Georgia, Alabama, Florida and South Carolina. The Bank purchased residential mortgage loan pools during 2015 and 2016 collateralized by properties located outside our Southeast markets, specifically in California, Washington and Illinois. During the third quarter of 2016, the Bank began purchasing from unrelated third parties consumer installment home improvement loans made to borrowers throughout the United States. As of September 30, ~~2018~~2019 and December 31, ~~2017,~~2018, the net carrying value of these consumer installment home improvement loans was approximately ~~$361.0~~$404.7 million and ~~$273.7~~$399.9 million, respectively, and such loans are reported in the consumer installment loan category. During the fourth quarter of 2016, the Bank purchased a pool of commercial insurance premium finance loans made to borrowers throughout the United States and began to originate, administer and service these types of loans. As of September 30, ~~2018~~2019 and December 31, ~~2017,~~2018, the net carrying value of commercial insurance premium loans was approximately ~~$500.4~~$648.7 million and ~~$482.5~~$413.5 million, respectively, and such loans are reported in the commercial, financial and agricultural loan category.

The Bank concentrates the majority of its lending activities in real estate loans. 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 the Company’s 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. A substantial portion of the Bank’s loans are secured by real estate in the Bank’s primary market area. In addition, a substantial portion of the OREO is located in those same markets. Accordingly, the ultimate collectability of a substantial portion of the Bank’s loan portfolio and the recovery of a substantial portion of the carrying amount of OREO are susceptible to changes in real estate conditions in the Bank’s primary market area.

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

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

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

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, excluding purchased loans:



(dollars in thousands)	September 30, 2019		December 31, 2018
Commercial, financial and agricultural	$	1,781,237	$	1,316,359
Real estate – construction and development	947,371		671,198
Real estate – commercial and farmland	2,152,528		1,814,529
Real estate – residential	1,866,128		1,403,000
Consumer installment	461,552		455,371
	$	7,208,816	$	5,660,457

(dollars in thousands) September 30,
2018 December 31,
2017
Commercial, financial and agricultural $ 1,422,152
$ 1,362,508
Real estate – construction and development 641,830
624,595
Real estate – commercial and farmland 1,804,265
1,535,439
Real estate – residential 1,275,201
1,009,461
Consumer installment 399,858
324,511
$ 5,543,306
$ 4,856,514

Purchased loans are defined as loans that were acquired in bank acquisitions including those that are covered by a loss-sharing agreement with the Federal Deposit Insurance Corporation (the “FDIC”). Purchased loans totaling ~~$2.71~~$5.39 billion and ~~$861.6 million~~$2.59 billion at September 30, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively, are not included in the above schedule.

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



(dollars in thousands)	September 30, 2019		December 31, 2018
Commercial, financial and agricultural	$	385,355	$	372,686
Real estate – construction and development	521,324		227,900
Real estate – commercial and farmland	2,057,384		1,337,859
Real estate – residential	1,285,096		623,199
Consumer installment	1,139,177		27,188
	$	5,388,336	$	2,588,832

(dollars in thousands) September 30,
2018 December 31,
2017
Commercial, financial and agricultural $ 413,365
$ 74,378
Real estate – construction and development 219,882
65,513
Real estate – commercial and farmland 1,399,174
468,246
Real estate – residential 649,352
250,539
Consumer installment 29,687
2,919
$ 2,711,460
$ 861,595

A rollforward of purchased loans for the nine months ended September 30, ~~2018~~2019 and ~~2017~~2018 is shown below:



(dollars in thousands)	September 30, 2019			September 30, 2018
Balance, January 1	$	2,588,832		$	861,595
Charge-offs	(3,521		)	(1,314		)
Additions due to acquisitions	3,508,410			2,054,440
Accretion	10,503			8,083
Subsequent fair value adjustments recorded to goodwill	(4,854		)	—
Loans sold	(86,773		)	—
Transfers to loans held for sale	(1,554		)	—
Transfers to purchased other real estate owned	(3,908		)	(2,434		)
Payments received, net of principal advances	(618,799		)	(208,910		)
Ending balance	$	5,388,336		$	2,711,460

(dollars in thousands) September 30,
2018 September 30,
2017
Balance, January 1 $ 861,595
$ 1,069,191
Charge-offs, net of recoveries (1,314 ) (1,761 )
Additions due to acquisitions 2,054,440
—
Accretion 8,083
9,023
Transfers to purchased other real estate owned (2,434 ) (4,294 )
Payments received (208,910 ) (155,033 )
Ending balance $ 2,711,460
$ 917,126

The following is a summary of changes in the accretable discounts of purchased loans during the nine months ended September 30, ~~2018~~2019 and ~~2017:~~2018:



(dollars in thousands)	September 30, 2019			September 30, 2018
Balance, January 1	$	40,496		$	20,192
Additions due to acquisitions	38,116			29,318
Accretion	(10,503		)	(8,083		)
Accretable discounts removed due to charge-offs	—			(16		)
Transfers between non-accretable and accretable discounts, net	(2,052		)	1,569
Ending balance	$	66,057		$	42,980

(dollars in thousands) September 30,
2018 September 30,
2017
Balance, January 1 $ 20,192
$ 30,624
Additions due to acquisitions 29,318
—
Accretion (8,083 ) (9,023 )
Accretable discounts removed due to charge-offs (16 ) (15 )
Transfers between non-accretable and accretable discounts, net 1,569
923
Ending balance $ 42,980
$ 22,509

Purchased loan pools are defined as groups of residential mortgage loans that were not acquired in bank acquisitions or FDIC-assisted transactions. As of September 30, ~~2018,~~2019, purchased loan pools totaled ~~$274.8~~$229.1 million and consisted of whole-loan residential mortgages on properties outside the Company’s markets, with principal balances totaling ~~$272.3~~$228.0 million and ~~$2.5~~$1.1 million of

remaining purchase premium paid at acquisition. As of December 31, ~~2017,~~2018, purchased loan pools totaled ~~$328.2~~$262.6 million with principal balances totaling ~~$324.4~~$260.5 million and ~~$3.8~~$2.1 million of remaining purchase premium paid at acquisition.

At September 30, 2019 and December 31, 2018, ~~purchased loan pools included principal balances of $4.7 million risk-rated grade 7 (Substandard), while~~ all ~~other~~ loans ~~included~~ in ~~the~~ purchased loan pools were performing current loans risk-rated grade 3 (Good Credit). At September 30, 2019 and December 31, 2018, purchased loan pools ~~included principal balances of $4.7 million on nonaccrual status and~~ had ~~no loans accounted for as troubled debt restructurings.~~

At December 31, 2017, purchased loan pools included principal balances of $904,000 risk-rated grade 7 (Substandard), while all other loans included in purchased loan pools were performing current risk-rated grade 3 (Good Credit). At December 31, 2017, purchased loan pools had no0 loans on nonaccrual status and had ~~one loan accounted for~~0 loans classified as ~~an accruing~~ troubled debt ~~restructuring with a principal balance of $904,000.~~restructurings.

At September 30, ~~2018~~2019 and December 31, ~~2017,~~2018, the Company had allocated ~~$0.8 million~~$619,000 and ~~$1.1 million,~~$732,000, respectively, of allowance for loan losses for the purchased loan pools.

As part of the due diligence process prior to purchasing an individual mortgage pool, a complete re-underwrite of the individual loan files was conducted. The underwriting process included a review of all income, asset, credit and property related documentation that was used to originate the loan. Underwriters utilized the originating lender’s program guidelines, as well as general prudent mortgage lending standards, to assess each individual loan file. Additional research was conducted to assess the real estate market conditions and market expectations in the geographic areas where a collateral concentration existed. As part of this review, an automated valuation model was employed to provide current collateral valuations and to support individual loan-to-value ratios. Additionally, a sample of site inspections was completed to provide further assurance. The results of the due diligence review were evaluated by officers of the Company in order to determine overall conformance to the Bank’s credit and lending policies.

Nonaccrual and Past-Due Loans

A loan is placed on nonaccrual status when, in management’s judgment, the collection of the interest income appears doubtful. Interest receivable that has been accrued and is subsequently determined to have doubtful collectability is charged against interest income. Interest on loans that are classified as nonaccrual is subsequently applied to principal until the loans are returned to accrual status. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. Past-due loans are loans whose principal or interest is past due 30 days or more. In some cases, where borrowers are experiencing financial difficulties, loans may be restructured to provide terms significantly different from the original contractual terms.

The following table presents an analysis of loans accounted for on a nonaccrual basis, excluding purchased loans:



(dollars in thousands)	September 30, 2019		December 31, 2018
Commercial, financial and agricultural	$	3,103	$	1,412
Real estate – construction and development	1,357		892
Real estate – commercial and farmland	3,588		4,654
Real estate – residential	13,226		10,465
Consumer installment	465		529
	$	21,739	$	17,952

(dollars in thousands) September 30,
2018 December 31,
2017
Commercial, financial and agricultural $ 1,624
$ 1,306
Real estate – construction and development 1,037
554
Real estate – commercial and farmland 3,740
2,665
Real estate – residential 8,966
9,194
Consumer installment 619
483
$ 15,986
$ 14,202

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



(dollars in thousands)	September 30, 2019		December 31, 2018
Commercial, financial and agricultural	$	5,370	$	1,199
Real estate – construction and development	5,326		6,119
Real estate – commercial and farmland	18,777		5,534
Real estate – residential	48,559		10,769
Consumer installment	730		486
	$	78,762	$	24,107

(dollars in thousands) September 30,
2018 December 31,
2017
Commercial, financial and agricultural $ 922
$ 813
Real estate – construction and development 6,324
3,139
Real estate – commercial and farmland 8,823
5,685
Real estate – residential 11,208
5,743
Consumer installment 487
48
$ 27,764
$ 15,428

The following table presents an analysis of past-due loans, excluding purchased past-due loans as of September 30, ~~2018~~2019 and December 31, ~~2017:~~2018:


(dollars in thousands)	Loans 30-59 Days Past Due		Loans 60-89 Days Past Due		Loans 90 or More Days Past Due		Total Loans Past Due		Current Loans		Total Loans		Loans 90 Days or More Past Due and Still Accruing		Loans 30-59 Days Past Due		Loans 60-89 Days Past Due		Loans 90 or More Days Past Due		Total Loans Past Due		Current Loans		Total Loans		Loans 90 Days or More Past Due and Still Accruing
September 30, 2018
September 30, 2019
Commercial, financial and agricultural	$	6,085	$	2,484	$	3,874	$	12,443	$	1,409,709	$	1,422,152	$	2,657	$	10,695	$	2,246	$	8,278	$	21,219	$	1,760,018	$	1,781,237	$	5,380
Real estate – construction and development	376		129		844		1,349		640,481		641,830		—		999		675		900		2,574		944,797		947,371		—
Real estate – commercial and farmland	2,116		466		1,934		4,516		1,799,749		1,804,265		—		4,101		326		2,813		7,240		2,145,288		2,152,528		—
Real estate – residential	4,065		2,428		7,635		14,128		1,261,073		1,275,201		—		12,898		3,235		12,139		28,272		1,837,856		1,866,128		—
Consumer installment	2,029		823		568		3,420		396,438		399,858		206		2,167		1,215		767		4,149		457,403		461,552		456
Total	$	14,671	$	6,330	$	14,855	$	35,856	$	5,507,450	$	5,543,306	$	2,863	$	30,860	$	7,697	$	24,897	$	63,454	$	7,145,362	$	7,208,816	$	5,836

December 31, 2017
December 31, 2018
Commercial, financial and agricultural	$	8,124	$	3,285	$	6,978	$	18,387	$	1,344,121	$	1,362,508	$	5,991	$	6,479	$	5,295	$	4,763	$	16,537	$	1,299,822	$	1,316,359	$	3,808
Real estate – construction and development	810		23		288		1,121		623,474		624,595		—		1,218		481		725		2,424		668,774		671,198		—
Real estate – commercial and farmland	869		787		1,940		3,596		1,531,843		1,535,439		—		1,625		530		3,645		5,800		1,808,729		1,814,529		—
Real estate – residential	8,772		2,941		7,041		18,754		990,707		1,009,461		—		11,423		4,631		8,923		24,977		1,378,023		1,403,000		—
Consumer installment	1,556		472		329		2,357		322,154		324,511		—		2,344		1,167		735		4,246		451,125		455,371		414
Total	$	20,131	$	7,508	$	16,576	$	44,215	$	4,812,299	$	4,856,514	$	5,991	$	23,089	$	12,104	$	18,791	$	53,984	$	5,606,473	$	5,660,457	$	4,222

The following table presents an analysis of purchased past-due loans as of September 30, ~~2018~~2019 and December 31, ~~2017:~~2018:



(dollars in thousands)	Loans 30-59 Days Past Due		Loans 60-89 Days Past Due		Loans 90 or More Days Past Due		Total Loans Past Due		Current Loans		Total Loans		Loans 90 Days or More Past Due and Still Accruing
September 30, 2019
Commercial, financial and agricultural	$	758	$	1,435	$	3,720	$	5,913	$	379,442	$	385,355	$	—
Real estate – construction and development	332		—		5,211		5,543		515,781		521,324		414
Real estate – commercial and farmland	2,416		1,480		13,498		17,394		2,039,990		2,057,384		66
Real estate – residential	24,707		7,092		23,453		55,252		1,229,844		1,285,096		—
Consumer installment	2,347		906		203		3,456		1,135,721		1,139,177		9
Total	$	30,560	$	10,913	$	46,085	$	87,558	$	5,300,778	$	5,388,336	$	489

December 31, 2018
Commercial, financial and agricultural	$	421	$	416	$	1,015	$	1,852	$	370,834	$	372,686	$	—
Real estate – construction and development	627		370		5,273		6,270		221,630		227,900		—
Real estate – commercial and farmland	1,935		736		1,698		4,369		1,333,490		1,337,859		—
Real estate – residential	12,531		2,407		7,005		21,943		601,256		623,199		—
Consumer installment	679		237		249		1,165		26,023		27,188		—
Total	$	16,193	$	4,166	$	15,240	$	35,599	$	2,553,233	$	2,588,832	$	—

(dollars in thousands)
Loans
30-59
Days Past
Due

Loans
60-89
Days
Past Due

Loans 90
or More
Days Past
Due

Total
Loans
Past Due

Current
Loans

Total
Loans

Loans 90
Days or
More Past
Due and
Still
Accruing
September 30, 2018

Commercial, financial and agricultural $ 320
$ 131
$ 693
$ 1,144
$ 412,221
$ 413,365
$ —
Real estate – construction and development 398
407
5,280
6,085
213,797
219,882
—
Real estate – commercial and farmland 3,953
402
4,435
8,790
1,390,384
1,399,174
—
Real estate – residential 8,854
2,932
8,068
19,854
629,498
649,352
—
Consumer installment 836
543
231
1,610
28,077
29,687
—
Total $ 14,361
$ 4,415
$ 18,707
$ 37,483
$ 2,673,977
$ 2,711,460
$ —

December 31, 2017

Commercial, financial and agricultural $ —
$ 33
$ 760
$ 793
$ 73,585
$ 74,378
$ —
Real estate – construction and development 87
31
2,517
2,635
62,878
65,513
—
Real estate – commercial and farmland 1,190
701
2,724
4,615
463,631
468,246
—
Real estate – residential 2,722
1,585
2,320
6,627
243,912
250,539
—
Consumer installment 57
4
43
104
2,815
2,919
—
Total $ 4,056
$ 2,354
$ 8,364
$ 14,774
$ 846,821
$ 861,595
$ —

Impaired Loans

Loans are considered impaired when, based on current information and events, it is probable the Company will be unable to collect all amounts due in accordance with the original contractual terms of the loan agreements. Impaired loans include loans on nonaccrual status and accruing troubled debt restructurings. When determining if the Company will be unable to collect all principal and interest payments due in accordance with the contractual terms of the loan agreement, the Company considers the borrower’s capacity to pay, which includes such factors as the borrower’s current financial statements, an analysis of global cash flow sufficient to pay all debt obligations and an evaluation of secondary sources of repayment, such as guarantor support and collateral value. The Company individually assesses for impairment all nonaccrual loans greater than $100,000 and all troubled debt restructurings greater than $100,000 (including all troubled debt restructurings, whether or not currently classified as such). The tables below include all loans deemed impaired, whether or not individually assessed for impairment. If a loan is deemed impaired, a specific valuation allowance is allocated, if necessary, so that the loan is reported net, at the present value of estimated future cash flows using the loan’s existing rate or at the fair value of collateral if repayment is expected solely from the collateral. Interest payments on impaired loans are typically applied to principal unless collectability of the principal amount is reasonably assured, in which case interest is recognized on a cash basis.

The following is a summary of information pertaining to impaired loans, excluding purchased loans:


	As of and for the Period Ended						As of and for the Period Ended
(dollars in thousands)	September 30, 2018		December 31, 2017		September 30, 2017		September 30, 2019		December 31, 2018		September 30, 2018
Nonaccrual loans	$	15,986	$	14,202	$	15,325	$	21,739	$	17,952	$	15,986
Troubled debt restructurings not included above	10,943		13,599		12,452		13,430		9,323		10,943
Total impaired loans	$	26,929	$	27,801	$	27,777	$	35,169	$	27,275	$	26,929

Quarter-to-date interest income recognized on impaired loans	$	201	$	1,010	$	297	$	317	$	202	$	201
Year-to-date interest income recognized on impaired loans	$	625	$	1,867	$	857	$	782	$	827	$	625
Quarter-to-date foregone interest income on impaired loans	$	225	$	197	$	233	$	223	$	217	$	225
Year-to-date foregone interest income on impaired loans	$	636	$	950	$	753	$	630	$	853	$	636

The following table presents an analysis of information pertaining to impaired loans, excluding purchased loans as of September 30, ~~2018,~~2019, December 31, ~~2017~~2018 and September 30, ~~2017:~~2018:


(dollars in thousands)	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Three Month Average Recorded Investment		Nine Month Average Recorded Investment		Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Three Month Average Recorded Investment		Nine Month Average Recorded Investment
September 30, 2018
September 30, 2019
Commercial, financial and agricultural	$	2,216	$	966	$	838	$	1,804	$	5	$	1,791	$	1,629	$	4,242	$	773	$	2,979	$	3,752	$	1,569	$	3,724	$	2,645
Real estate – construction and development	1,444		720		701		1,421		46		1,110		971		2,019		505		921		1,426		113		1,350		1,280
Real estate – commercial and farmland	8,911		536		7,021		7,557		1,799		8,186		7,969		6,991		593		5,783		6,376		488		6,235		6,610
Real estate – residential	15,964		5,298		10,226		15,524		782		15,726		15,308		23,476		5,234		17,907		23,141		1,557		21,365		19,650
Consumer installment	658		623		—		623		—		571		531		496		474		—		474		—		451		471
Total	$	29,193	$	8,143	$	18,786	$	26,929	$	2,632	$	27,384	$	26,408	$	37,224	$	7,579	$	27,590	$	35,169	$	3,727	$	33,125	$	30,656



(dollars in thousands)	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Three Month Average Recorded Investment		Twelve Month Average Recorded Investment
December 31, 2018
Commercial, financial and agricultural	$	1,902	$	1,155	$	513	$	1,668	$	4	$	1,736	$	1,637
Real estate – construction and development	1,378		613		424		1,037		3		1,229		984
Real estate – commercial and farmland	8,950		867		6,649		7,516		1,591		7,537		7,879
Real estate – residential	16,885		5,144		11,365		16,509		867		14,719		15,029
Consumer installment	561		545		—		545		—		584		534
Total	$	29,676	$	8,324	$	18,951	$	27,275	$	2,465	$	25,805	$	26,063

(dollars in thousands)
Unpaid
Contractual
Principal
Balance

Recorded
Investment
With No
Allowance

Recorded
Investment
With
Allowance

Total
Recorded
Investment

Related
Allowance

Three
Month
Average
Recorded
Investment

Twelve
Month
Average
Recorded
Investment
December 31, 2017

Commercial, financial and agricultural $ 1,453
$ 734
$ 613
$ 1,347
$ 145
$ 1,900
$ 2,173
Real estate – construction and development 1,467
471
500
971
48
1,065
1,122
Real estate – commercial and farmland 10,646
729
8,873
9,602
1,047
8,910
11,053
Real estate – residential 17,416
4,828
10,565
15,393
1,005
14,294
14,930
Consumer installment 523
488
—
488
—
493
541
Total $ 31,505
$ 7,250
$ 20,551
$ 27,801
$ 2,245
$ 26,662
$ 29,819


(dollars in thousands)	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Three Month Average Recorded Investment		Nine Month Average Recorded Investment		Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Three Month Average Recorded Investment		Nine Month Average Recorded Investment
September 30, 2017
September 30, 2018
Commercial, financial and agricultural	$	2,924	$	1,121	$	1,331	$	2,452	$	379	$	2,478	$	2,380	$	2,216	$	966	$	838	$	1,804	$	5	$	1,791	$	1,629
Real estate – construction and development	1,655		532		627		1,159		81		1,179		1,160		1,444		720		701		1,421		46		1,110		971
Real estate – commercial and farmland	11,451		536		9,938		10,474		806		10,669		11,416		8,911		536		7,021		7,557		1,799		8,186		7,969
Real estate – residential	15,211		4,558		8,636		13,194		1,058		13,683		14,814		15,964		5,298		10,226		15,524		782		15,726		15,308
Consumer installment	538		498		—		498		—		507		554		658		623		—		623		—		571		531
Total	$	31,779	$	7,245	$	20,532	$	27,777	$	2,324	$	28,516	$	30,324	$	29,193	$	8,143	$	18,786	$	26,929	$	2,632	$	27,384	$	26,408

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


	As of and for the Period Ended						As of and for the Period Ended
(dollars in thousands)	September 30, 2018		December 31, 2017		September 30, 2017		September 30, 2019		December 31, 2018		September 30, 2018
Nonaccrual loans	$	27,764	$	15,428	$	19,049	$	78,762	$	24,107	$	27,764
Troubled debt restructurings not included above	20,363		20,472		20,205		18,295		18,740		20,363
Total impaired loans	$	48,127	$	35,900	$	39,254	$	97,057	$	42,847	$	48,127

Quarter-to-date interest income recognized on impaired loans	$	309	$	379	$	493	$	587	$	918	$	309
Year-to-date interest income recognized on impaired loans	$	1,285	$	1,625	$	1,246	$	2,148	$	2,203	$	1,285
Quarter-to-date foregone interest income on impaired loans	$	506	$	281	$	356	$	1,356	$	451	$	506
Year-to-date foregone interest income on impaired loans	$	1,032	$	1,239	$	958	$	2,427	$	1,483	$	1,032

The following table presents an analysis of information pertaining to purchased impaired loans as of September 30, ~~2018,~~2019, December 31, ~~2017~~2018 and September 30, ~~2017:~~2018:


(dollars in thousands)	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Three Month Average Recorded Investment		Nine Month Average Recorded Investment		Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Three Month Average Recorded Investment		Nine Month Average Recorded Investment
September 30, 2018
September 30, 2019
Commercial, financial and agricultural	$	5,499	$	631	$	341	$	972	$	—	$	670	$	737	$	16,132	$	3,445	$	1,956	$	5,401	$	54	$	5,401	$	3,980
Real estate – construction and development	16,066		312		7,033		7,345		255		6,561		5,356		13,256		169		6,035		6,204		262		6,204		6,622
Real estate – commercial and farmland	20,297		3,013		12,319		15,332		872		13,282		12,513		38,382		14,629		9,977		24,606		555		24,606		18,018
Real estate – residential	27,028		8,393		15,598		23,991		886		22,932		21,217		63,328		48,469		11,647		60,116		654		60,116		40,808
Consumer installment	537		487		—		487		—		287		165		3,479		730		—		730		—		730		635
Total	$	69,427	$	12,836	$	35,291	$	48,127	$	2,013	$	43,732	$	39,988	$	134,577	$	67,442	$	29,615	$	97,057	$	1,525	$	97,057	$	70,063


(dollars in thousands)	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Three Month Average Recorded Investment		Twelve Month Average Recorded Investment		Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Three Month Average Recorded Investment		Twelve Month Average Recorded Investment
December 31, 2017
December 31, 2018
Commercial, financial and agricultural	$	4,170	$	70	$	744	$	814	$	400	$	1,450	$	827	$	5,717	$	473	$	757	$	1,230	$	—	$	1,101	$	836
Real estate – construction and development	9,060		282		3,875		4,157		1,114		4,218		3,877		13,714		623		6,511		7,134		476		7,240		5,712
Real estate – commercial and farmland	14,596		1,224		11,173		12,397		906		12,840		15,329		14,766		1,115		10,581		11,696		684		13,514		12,349
Real estate – residential	20,867		6,574		11,910		18,484		821		19,002		20,743		24,839		8,185		14,116		22,301		773		23,146		21,433
Consumer installment	57		48		—		48		—		68		41		526		486		—		486		—		487		229
Total	$	48,750	$	8,198	$	27,702	$	35,900	$	3,241	$	37,578	$	40,817	$	59,562	$	10,882	$	31,965	$	42,847	$	1,933	$	45,488	$	40,559



(dollars in thousands)	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Three Month Average Recorded Investment		Nine Month Average Recorded Investment
September 30, 2018
Commercial, financial and agricultural	$	5,499	$	631	$	341	$	972	$	—	$	670	$	737
Real estate – construction and development	16,066		312		7,033		7,345		255		6,561		5,356
Real estate – commercial and farmland	20,297		3,013		12,319		15,332		872		13,282		12,513
Real estate – residential	27,028		8,393		15,598		23,991		886		22,932		21,217
Consumer installment	537		487		—		487		—		287		165
Total	$	69,427	$	12,836	$	35,291	$	48,127	$	2,013	$	43,732	$	39,988

(dollars in thousands)
Unpaid
Contractual
Principal
Balance

Recorded
Investment
With No
Allowance

Recorded
Investment
With
Allowance

Total
Recorded
Investment

Related
Allowance

Three
Month
Average
Recorded
Investment
Nine
Month
Average
Recorded
Investment
September 30, 2017

Commercial, financial and agricultural $ 5,333
$ 345
$ 1,741
$ 2,086
$ 800
$ 1,128
$ 831
Real estate – construction and development 9,268
1,189
3,088
4,277
537
3,885
3,807
Real estate – commercial and farmland 16,492
1,516
11,766
13,282
1,140
13,658
16,063
Real estate – residential 22,462
7,224
12,297
19,521
762
20,088
21,308
Consumer installment 97
88
—
88
—
58
40
Total $ 53,652
$ 10,362
$ 28,892
$ 39,254
$ 3,239
$ 38,817
$ 42,049

Credit Quality Indicators

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

Grade 1 – Prime Credit – This grade represents loans to the Company’s most creditworthy borrowers or loans that are secured by cash or cash equivalents.

Grade 2 – Strong Credit – This grade includes loans that exhibit one or more characteristics better than that of a Good Credit. Generally, the debt service coverage and borrower’s liquidity is materially better than required by the Company’s loan policy.

Grade 3 – Good Credit – This grade is assigned to loans to borrowers who exhibit satisfactory credit histories, contain acceptable loan structures and demonstrate ability to repay.

Grade 4 – Satisfactory Credit – This grade includes loans which exhibit all the characteristics of a Good Credit, but warrant more than normal level of banker supervision due to (i) circumstances which elevate the risks of performance (such as start-up operations, untested management, heavy leverage and interim losses); (ii) adverse, extraordinary events that have affected, or could affect, the borrower’s cash flow, financial condition, ability to continue operating profitability or refinancing (such as death of principal, fire and divorce); (iii) loans that require more than the normal servicing requirements (such as any type of construction financing, acquisition and development loans, accounts receivable or inventory loans and floor plan loans); (iv) existing technical exceptions which raise some doubts about the Bank’s perfection in its collateral position or the continued financial capacity of the borrower; or (v) improvements in formerly criticized borrowers, which may warrant banker supervision.

Grade 5 – Fair Credit – This grade is assigned to loans that are currently performing and supported by adequate financial information that reflects repayment capacity but exhibits a loan-to-value ratio greater than 110%, based on a documented collateral valuation.

Grade 6 – Other Assets Especially Mentioned – This grade includes loans that exhibit potential weaknesses that deserve management’s close attention. If left uncorrected, these weaknesses may result in deterioration of the repayment prospects for the asset or in the Company’s credit position at some future date.

Grade 7 – Substandard – This grade represents loans which are inadequately protected by the current credit worthiness and paying capacity of the borrower or of the collateral pledged, if any. These assets exhibit a well-defined weakness or are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. These weaknesses may be characterized by past due performance, operating losses or questionable collateral values.

Grade 8 – Doubtful – This grade includes loans which exhibit all of the characteristics of a substandard loan with the added provision that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable or improbable.

Grade 9 – Loss – This grade is assigned to loans which are considered uncollectible and of such little value that their continuance as active assets of the Bank is not warranted. This classification does not mean that the loan has absolutely no recovery or salvage value, but rather it is not practical or desirable to defer writing it off.

The following table presents the loan portfolio, excluding purchased loans, by risk grade as of September 30, ~~2018~~2019 and December 31, ~~2017~~2018 (in thousands):



Risk Grade	Commercial, Financial and Agricultural		Real Estate - Construction and Development		Real Estate - Commercial and Farmland		Real Estate - Residential		Consumer Installment		Total
September 30, 2019
1	$	520,635	$	—	$	211	$	29	$	12,183	$	533,058
2	672,622		17,908		27,429		30,552		—		748,511
3	200,075		110,267		1,150,753		1,710,512		25,137		3,196,744
4	360,834		780,296		843,062		96,029		423,560		2,503,781
5	19,919		28,696		79,753		6,789		22		135,179
6	1,997		7,531		27,562		3,378		103		40,571
7	5,141		2,673		23,758		18,839		545		50,956
8	14		—		—		—		—		14
9	—		—		—		—		2		2
Total	$	1,781,237	$	947,371	$	2,152,528	$	1,866,128	$	461,552	$	7,208,816

December 31, 2018
1	$	530,864	$	40	$	500	$	16	$	10,744	$	542,164
2	452,250		681		37,079		33,043		48		523,101
3	174,811		74,657		888,433		1,246,383		23,844		2,408,128
4	137,038		582,456		814,068		94,143		419,983		2,047,688
5	13,714		6,264		30,364		8,634		78		59,054
6	5,130		4,091		20,959		4,881		57		35,118
7	2,552		3,009		23,126		15,900		617		45,204
8	—		—		—		—		—		—
9	—		—		—		—		—		—
Total	$	1,316,359	$	671,198	$	1,814,529	$	1,403,000	$	455,371	$	5,660,457

Risk
Grade Commercial,
Financial and
Agricultural Real Estate -
Construction and
Development Real Estate -
Commercial and
Farmland Real Estate -
Residential Consumer
Installment Total
September 30, 2018
1 $ 535,188
$ —
$ 4,678
$ 16
$ 10,138
$ 550,020
2 562,396
718
40,624
41,824
50
645,612
3 164,235
66,470
926,228
1,108,484
24,167
2,289,584
4 137,161
562,700
778,578
96,324
364,755
1,939,518
5 8,363
5,043
17,749
8,857
29
40,041
6 9,521
4,018
23,034
4,453
99
41,125
7 5,288
2,881
13,374
15,243
620
37,406
8 —
—
—
—
—
—
9 —
—
—
—
—
—
Total $ 1,422,152
$ 641,830
$ 1,804,265
$ 1,275,201
$ 399,858
$ 5,543,306

December 31, 2017
1 $ 539,899
$ —
$ 5,790
$ 47
$ 9,243
$ 554,979
2 568,557
1,005
68,507
49,742
670
688,481
3 125,740
59,318
966,391
843,178
39,352
2,033,979
4 117,358
552,918
454,506
88,537
274,462
1,487,781
5 330
4,474
6,408
5,781
3
16,996
6 5,236
4,207
15,108
5,339
185
30,075
7 5,381
2,673
18,729
16,837
596
44,216
8 7
—
—
—
—
7
9 —
—
—
—
—
—
Total $ 1,362,508
$ 624,595
$ 1,535,439
$ 1,009,461
$ 324,511
$ 4,856,514

The following table presents the purchased loan portfolio by risk grade as of September 30, ~~2018~~2019 and December 31, ~~2017~~2018 (in thousands):



Risk Grade	Commercial, Financial and Agricultural		Real Estate - Construction and Development		Real Estate - Commercial and Farmland		Real Estate - Residential		Consumer Installment		Total
September 30, 2019
1	$	77,581	$	—	$	—	$	—	$	2,642	$	80,223
2	18,645		—		9,550		63,722		16,190		108,107
3	56,256		25,070		454,344		1,027,427		1,097,603		2,660,700
4	171,329		466,461		1,455,604		129,058		19,787		2,242,239
5	32,569		9,184		60,071		15,372		49		117,245
6	8,878		13,914		43,747		6,999		126		73,664
7	20,097		6,695		34,068		42,518		2,780		106,158
8	—		—		—		—		—		—
9	—		—		—		—		—		—
Total	$	385,355	$	521,324	$	2,057,384	$	1,285,096	$	1,139,177	$	5,388,336

December 31, 2018
1	$	90,205	$	—	$	—	$	—	$	570	$	90,775
2	2,648		—		7,407		74,398		164		84,617
3	20,489		18,022		230,089		385,279		2,410		656,289
4	215,096		195,079		1,034,943		118,082		23,177		1,586,377
5	14,445		2,728		29,468		16,937		35		63,613
6	11,601		1,459		10,063		7,231		94		30,448
7	18,202		10,612		25,889		21,272		738		76,713
8	—		—		—		—		—		—
9	—		—		—		—		—		—
Total	$	372,686	$	227,900	$	1,337,859	$	623,199	$	27,188	$	2,588,832

Risk
Grade

Commercial,
Financial and
Agricultural

Real Estate -
Construction and
Development

Real Estate -
Commercial and
Farmland

Real Estate -
Residential

Consumer
Installment
Total
September 30, 2018
1 $ 54,297
$ —
$ —
$ —
$ 543
$ 54,840
2 35,554
—
7,691
89,018
191
132,454
3 80,406
18,141
293,077
70,536
1,147
463,307
4 190,175
184,639
988,802
437,489
26,985
1,828,090
5 38,056
4,424
69,398
21,775
—
133,653
6 11,426
4,033
12,390
7,748
79
35,676
7 3,451
8,645
27,816
22,786
742
63,440
8 —
—
—
—
—
—
9 —
—
—
—
—
—
Total $ 413,365
$ 219,882
$ 1,399,174
$ 649,352
$ 29,687
$ 2,711,460

December 31, 2017
1 $ 3,358
$ —
$ —
$ —
$ 606
$ 3,964
2 4,541
—
5,047
91,270
240
101,098
3 8,517
13,014
186,187
50,988
1,166
259,872
4 43,085
39,877
230,570
70,837
711
385,080
5 —
2,306
6,081
11,349
—
19,736
6 13,718
4,076
13,637
5,637
53
37,121
7 1,159
6,240
26,724
20,458
143
54,724
8 —
—
—
—
—
—
9 —
—
—
—
—
—
Total $ 74,378
$ 65,513
$ 468,246
$ 250,539
$ 2,919
$ 861,595

Troubled Debt Restructurings

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

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

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

In the normal course of business, the Company renews loans with a modification of the interest rate or terms that are not deemed as troubled debt restructurings because the borrower is not experiencing financial difficulty. The Company modified loans in the first nine months of 2019 and 2018 ~~and 2017~~ totaling ~~$64.0~~$168.6 million and ~~$36.6~~$64.0 million, respectively, under such parameters.

As of September 30, ~~2018~~2019 and December 31, ~~2017,~~2018, the Company had a balance of ~~$12.3~~$15.1 million and ~~$15.6~~$11.0 million, respectively, in troubled debt restructurings, excluding purchased loans. The Company has recorded ~~$0.8 million~~$883,000 and ~~$2.8 million~~$890,000 in previous charge-offs on such loans at September 30, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively. The Company’s balance in the allowance for loan losses allocated to such troubled debt restructurings was ~~$0.9~~$1.6 million and ~~$1.4 million~~$820,000 at September 30, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively. At September 30, ~~2018,~~2019, the Company did not have any commitments to lend additional funds to debtors whose terms have been modified in troubled restructurings.

During the nine months ended September 30, ~~2018~~2019 and ~~2017,~~2018, the Company modified loans as troubled debt restructurings, excluding purchased loans, with principal balances of ~~$2.3~~$5.0 million and ~~$0.8~~$2.3 million, respectively, and these modifications did not have a material impact on the Company’s allowance for loan loss. The following table presents the loans by class modified as troubled debt restructurings, excluding purchased loans, which occurred during the nine months ended September 30, ~~2018~~2019 and ~~2017:~~2018:



	September 30, 2019			September 30, 2018
Loan Class	#	Balance (in thousands)		#	Balance (in thousands)
Commercial, financial and agricultural	3	$	550	10	$	302
Real estate – construction and development	—	—		1	3
Real estate – commercial and farmland	2	224		1	303
Real estate – residential	21	4,183		12	1,617
Consumer installment	7	26		6	36
Total	33	$	4,983	30	$	2,261

September 30, 2018 September 30, 2017
Loan Class #
Balance
(in thousands)
#
Balance
(in thousands)
Commercial, financial and agricultural 10 $ 302
1 $ 4
Real estate – construction and development 1 3
— —
Real estate – commercial and farmland 1 303
2 226
Real estate – residential 12 1,617
10 526
Consumer installment 6 36
6 27
Total 30 $ 2,261
19 $ 783

Troubled debt restructurings, excluding purchased loans, with an outstanding balance of ~~$1.7 million~~$843,000 and ~~$1.2~~$1.7 million defaulted during the nine months ended September 30, ~~2018~~2019 and ~~2017,~~2018, respectively, and these defaults did not have a material impact on the Company’s allowance for loan loss. The following table presents for loans, excluding purchased loans, the troubled debt restructurings by class that defaulted (defined as 30 days past due) during the nine months ended September 30, ~~2018~~2019 and ~~2017:~~2018:



	September 30, 2019			September 30, 2018
Loan Class	#	Balance (in thousands)		#	Balance (in thousands)
Commercial, financial and agricultural	1	$	3	4	$	10
Real estate – construction and development	—	—		—	—
Real estate – commercial and farmland	3	341		2	548
Real estate – residential	4	481		17	1,155
Consumer installment	5	18		6	23
Total	13	$	843	29	$	1,736

September 30, 2018 September 30, 2017
Loan Class #
Balance
(in thousands)
#
Balance
(in thousands)
Commercial, financial and agricultural 4 $ 10
4 $ 58
Real estate – construction and development — —
1 25
Real estate – commercial and farmland 2 548
4 200
Real estate – residential 17 1,155
12 878
Consumer installment 6 23
7 25
Total 29 $ 1,736
28 $ 1,186

The following table presents the amount of troubled debt restructurings by loan class, excluding purchased loans, classified separately as accrual and nonaccrual at September 30, ~~2018~~2019 and December 31, ~~2017:~~2018:


September 30, 2018	Accruing Loans			Non-Accruing Loans
September 30, 2019							Accruing Loans			Non-Accruing Loans
Loan Class	#	Balance (in thousands)		#	Balance (in thousands)		#	Balance (in thousands)		#	Balance (in thousands)
Commercial, financial and agricultural	5	$	180	16	$	208	5	$	649	13	$	119
Real estate – construction and development	5	384		2	6		3	69		1	1
Real estate – commercial and farmland	14	3,817		3	306		12	2,788		3	530
Real estate – residential	73	6,558		19	742		88	9,915		20	925
Consumer installment	3	4		30	92		5	9		23	66
Total	100	$	10,943	70	$	1,354	113	$	13,430	60	$	1,641



December 31, 2018	Accruing Loans			Non-Accruing Loans
Loan Class	#	Balance (in thousands)		#	Balance (in thousands)
Commercial, financial and agricultural	5	$	256	14	$	138
Real estate – construction and development	5	145		1	2
Real estate – commercial and farmland	12	2,863		3	426
Real estate – residential	71	6,043		20	1,119
Consumer installment	6	16		24	69
Total	99	$	9,323	62	$	1,754

December 31, 2017 Accruing Loans Non-Accruing Loans
Loan Class #
Balance
(in thousands)
#
Balance
(in thousands)
Commercial, financial and agricultural 4 $ 41
12 $ 120
Real estate – construction and development 6 417
2 34
Real estate – commercial and farmland 17 6,937
5 204
Real estate – residential 74 6,199
18 1,508
Consumer installment 4 5
33 98
Total 105 $ 13,599
70 $ 1,964

As of September 30, ~~2018~~2019 and December 31, ~~2017,~~2018, the Company had a balance of ~~$23.7~~$21.2 million and ~~$24.9~~$22.2 million, respectively, in troubled debt restructurings included in purchased loans. The Company has recorded ~~$1.3~~$1.1 million and ~~$1.2 million~~$940,000 in previous charge-offs on such loans at September 30, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively. At September 30, ~~2018,~~2019, the Company did not have any commitments to lend additional funds to debtors whose terms have been modified in troubled restructurings.

During the nine months ended September 30, ~~2018~~2019 and ~~2017,~~2018, the Company modified purchased loans as troubled debt restructurings, with principal balances of ~~$1.9~~$1.7 million and ~~$1.0~~$1.9 million, respectively, and these modifications did not have a material impact on the Company’s allowance for loan loss. The following table presents the purchased loans by class modified as troubled debt restructurings, which occurred during the nine months ended September 30, ~~2018~~2019 and ~~2017:~~2018:



	September 30, 2019			September 30, 2018
Loan Class	#	Balance (in thousands)		#	Balance (in thousands)
Commercial, financial and agricultural	—	$	—	1	$	5
Real estate – construction and development	—	—		—	—
Real estate – commercial and farmland	—	—		1	69
Real estate – residential	20	1,674		16	1,791
Consumer installment	4	39		—	—
Total	24	$	1,713	18	$	1,865

September 30, 2018 September 30, 2017
Loan Class #
Balance
(in thousands)
#
Balance
(in thousands)
Commercial, financial and agricultural 1 $ 5
— $ —
Real estate – construction and development — —
— —
Real estate – commercial and farmland 1 69
— —
Real estate – residential 16 1,791
8 1,005
Consumer installment — —
— —
Total 18 $ 1,865
8 $ 1,005

Troubled debt restructurings included in purchased loans with an outstanding balance of ~~$2.4~~$1.2 million and ~~$2.3~~$2.4 million defaulted during the nine months ended September 30, ~~2018~~2019 and ~~2017,~~2018, respectively, and these defaults did not have a material impact on the Company’s allowance for loan loss.

The following table presents purchased loan troubled debt restructurings by class that defaulted (defined as 30 days past due) during the nine months ended September 30, ~~2018~~2019 and ~~2017:~~2018:



	September 30, 2019			September 30, 2018
Loan Class	#	Balance (in thousands)		#	Balance (in thousands)
Commercial, financial and agricultural	1	$	1	—	$	—
Real estate – construction and development	—	—		—	—
Real estate – commercial and farmland	1	325		1	69
Real estate – residential	17	895		23	2,302
Consumer installment	2	18		—	—
Total	21	$	1,239	24	$	2,371

September 30, 2018 September 30, 2017
Loan Class #
Balance
(in thousands)
#
Balance
(in thousands)
Commercial, financial and agricultural — $ —
1 $ 5
Real estate – construction and development — —
— —
Real estate – commercial and farmland 1 69
5 1,945
Real estate – residential 23 2,302
7 333
Consumer installment — —
1 3
Total 24 $ 2,371
14 $ 2,286

The following table presents the amount of troubled debt restructurings by loan class of purchased loans, classified separately as accrual and nonaccrual at September 30, ~~2018~~2019 and December 31, ~~2017.~~2018.


September 30, 2018	Accruing Loans			Non-Accruing Loans
September 30, 2019							Accruing Loans			Non-Accruing Loans
Loan Class	#	Balance (in thousands)		#	Balance (in thousands)		#	Balance (in thousands)		#	Balance (in thousands)
Commercial, financial and agricultural	1	$	50	2	$	10	1	$	31	3	$	25
Real estate – construction and development	4	1,021		5	301		4	878		2	257
Real estate – commercial and farmland	13	6,509		8	2,147		11	5,829		5	1,428
Real estate – residential	122	12,783		19	864		113	11,557		18	1,178
Consumer installment	—	—		2	3		—	—		7	54
Total	140	$	20,363	36	$	3,325	129	$	18,295	35	$	2,942



December 31, 2018	Accruing Loans			Non-Accruing Loans
Loan Class	#	Balance (in thousands)		#	Balance (in thousands)
Commercial, financial and agricultural	1	$	31	3	$	32
Real estate – construction and development	4	1,015		5	293
Real estate – commercial and farmland	12	6,162		7	1,685
Real estate – residential	115	11,532		24	1,424
Consumer installment	—	—		4	17
Total	132	$	18,740	43	$	3,451

December 31, 2017 Accruing Loans Non-Accruing Loans
Loan Class #
Balance
(in thousands)
#
Balance
(in thousands)
Commercial, financial and agricultural — $ —
3 $ 16
Real estate – construction and development 3 1,018
6 340
Real estate – commercial and farmland 14 6,713
10 2,582
Real estate – residential 117 12,741
25 1,462
Consumer installment — —
2 5
Total 134 $ 20,472
46 $ 4,405

Allowance for Loan Losses

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

The Company has developed a methodology for determining the adequacy of the allowance for loan losses which is monitored by the Company’s Chief Credit Officer. Procedures provide for the assignment of a risk rating for every loan included in the total loan portfolio. Commercial insurance premium finance loans, overdraft protection loans, and certain residential mortgage loans and consumer loans serviced by outside processors are treated as pools for risk rating purposes. The risk rating schedule provides nine ratings of which five ratings are classified as pass ratings and four ratings are classified as criticized ratings. Each risk rating is

assigned a percentage factor to be applied to the loan balance to determine the adequate amount of reserve. The Bank’s independent internal loan review department reviews on an annual basis a sample of relationships in excess of $1,000,000, as well as selective sampling of loans below this threshold. Sampling is based on a number of factors unique to the Bank’s portfolio risks, including, but not limited to, lending divisions, industry, risk grades, and new originations. As a result of these loan reviews, certain loans

may be identified as having deteriorating credit quality. Other loans that surface as problem loans may also be assigned specific reserves. Past-due loans are assigned risk ratings based on the number of days past due. The calculation of the allowance for loan losses, including underlying data and assumptions, is reviewed regularly by the Company’s Chief Financial Officer and the independent internal loan review department.

Loan losses are charged against the allowance when management believes the collection of a loan’s principal is unlikely. Subsequent recoveries are credited to the allowance. Consumer loans are ~~charged-off~~charged off in accordance with the Federal Financial Institutions Examination Council’s (“FFIEC”) Uniform Retail Credit Classification and Account Management Policy. Commercial loans are ~~charged-off~~charged off when they are deemed uncollectible, which usually involves a triggering event within the collection effort. If the loan is collateral dependent, the loss is more easily identified and is ~~charged-off~~charged off when it is identified, usually based upon receipt of an appraisal. However, when a loan has guarantor support, the Company may carry the estimated loss as a reserve against the loan while collection efforts with the guarantor are pursued. If, after collection efforts with the guarantor are complete, the deficiency is still considered uncollectible, the loss is ~~charged-off~~charged off and any further collections are treated as recoveries. In all situations, when a loan is downgraded to an Asset Quality Rating of 9 (Loss per the regulatory guidance), the uncollectible portion is ~~charged-off.~~charged off.

The following tables detail activity in the allowance for loan losses by portfolio segment for the three and nine-month period ended September 30, ~~2018,~~2019, the year ended December 31, ~~2017~~2018 and the three and nine-month period ended September 30, ~~2017.~~2018. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.


(dollars in thousands)	Commercial, Financial and Agricultural			Real Estate – Construction and Development			Real Estate – Commercial and Farmland			Real Estate – Residential			Consumer Installment			Purchased Loans			Purchased Loan Pools				Total			Commercial, Financial and Agricultural			Real Estate – Construction and Development			Real Estate – Commercial and Farmland			Real Estate – Residential			Consumer Installment			Purchased Loans			Purchased Loan Pools			Total
Three Months Ended September 30, 2018
Balance, June 30, 2018	$	8,400		$	3,789		$	8,215		$	5,136		$	2,877		$	2,339		$	776			$	31,532
Three Months Ended September 30, 2019
Balance, June 30, 2019																										$	6,302		$	4,269		$	7,269		$	7,451		$	3,388		$	2,443		$	671		$	31,793
Provision for loan losses	1,021			137			809			209			1,039			(1,148		)	28				2,095			1,925			800			1,166			975			1,289			(114		)	(52		)	5,989
Loans charged off	(6,121		)	(265		)	(27		)	(293		)	(923		)	(483		)	—				(8,112		)	(1,578		)	—			(14		)	(20		)	(1,195		)	(2,442		)	—			(5,249		)
Recoveries of loans previously charged off	939			1			134			44			178			1,305			—				2,601			845			2			—			49			269			1,832			—			2,997
Balance, September 30, 2018	$	4,239		$	3,662		$	9,131		$	5,096		$	3,171		$	2,013		$	804			$	28,116
Balance, September 30, 2019																										$	7,494		$	5,071		$	8,421		$	8,455		$	3,751		$	1,719		$	619		$	35,530

Nine Months Ended September 30, 2018
Balance, December 31, 2017	$	3,631		$	3,629		$	7,501		$	4,786		$	1,916		$	3,253		$	1,075			$	25,791
Nine Months Ended September 30, 2019
Balance, December 31, 2018																										$	4,287		$	3,734		$	8,975		$	5,363		$	3,795		$	1,933		$	732		$	28,819
Provision for loan losses	9,080			201			1,630			750			3,617			(2,001		)	(271		)	��	13,006			5,475			1,562			805			2,886			3,495			(45		)	(113		)	14,065
Loans charged off	(11,314		)	(285		)	(169		)	(695		)	(2,724		)	(1,514		)	—				(16,701		)	(4,920		)	(247		)	(1,367		)	(80		)	(4,214		)	(3,296		)	—			(14,124		)
Recoveries of loans previously charged off	2,842			117			169			255			362			2,275			—				6,020			2,652			22			8			286			675			3,127			—			6,770
Balance, September 30, 2018	$	4,239		$	3,662		$	9,131		$	5,096		$	3,171		$	2,013		$	804			$	28,116
Balance, September 30, 2019																										$	7,494		$	5,071		$	8,421		$	8,455		$	3,751		$	1,719		$	619		$	35,530

Period-end allocation:
Loans individually evaluated for impairment ⁽¹⁾	$	821		$	46		$	1,800		$	782		$	—		$	2,013		$	2			$	5,464		$	2,575		$	112		$	488		$	1,557		$	—		$	1,719		$	—		$	6,451
Loans collectively evaluated for impairment	3,418			3,616			7,331			4,314			3,171			—			802				22,652			4,919			4,959			7,933			6,898			3,751			—			619			29,079
Ending balance	$	4,239		$	3,662		$	9,131		$	5,096		$	3,171		$	2,013		$	804			$	28,116		$	7,494		$	5,071		$	8,421		$	8,455		$	3,751		$	1,719		$	619		$	35,530

Loans:
Individually evaluated for impairment⁽¹⁾	$	2,362		$	701		$	7,021		$	10,226		$	—		$	36,156		$	4,697			$	61,163		$	4,648		$	921		$	5,783		$	17,907		$	—		$	31,612		$	—		$	60,871
Collectively evaluated for impairment	1,419,790			641,129			1,797,244			1,264,975			399,858			2,573,182			270,055				8,366,233			1,776,589			946,450			2,146,745			1,848,221			461,552			5,173,717			229,132			12,582,406
Acquired with deteriorated credit quality	—			—			—			—			—			102,122			—				102,122			—			—			—			—			—			183,007			—			183,007
Ending balance	$	1,422,152		$	641,830		$	1,804,265		$	1,275,201		$	399,858		$	2,711,460		$	274,752			$	8,529,518		$	1,781,237		$	947,371		$	2,152,528		$	1,866,128		$	461,552		$	5,388,336		$	229,132		$	12,826,284

(1) At September 30, 2019, loans individually evaluated for impairment includes all nonaccrual loans greater than $100,000 and all troubled debt restructurings greater than $100,000, including all troubled debt restructurings and not only those currently classified as troubled debt restructurings.



(dollars in thousands)	Commercial, Financial and Agricultural			Real Estate – Construction and Development			Real Estate – Commercial and Farmland			Real Estate – Residential			Consumer Installment			Purchased Loans			Purchased Loan Pools			Total
Twelve Months Ended December 31, 2018
Balance, December 31, 2017	$	3,631		$	3,629		$	7,501		$	4,786		$	1,916		$	3,253		$	1,075		$	25,791
Provision for loan losses	10,690			277			1,636			1,002			5,569			(2,164		)	(343		)	16,667
Loans charged off	(13,803		)	(292		)	(338		)	(771		)	(4,189		)	(1,738		)	—			(21,131		)
Recoveries of loans previously charged off	3,769			120			176			346			499			2,582			—			7,492
Balance, December 31, 2018	$	4,287		$	3,734		$	8,975		$	5,363		$	3,795		$	1,933		$	732		$	28,819

Period-end allocation:
Loans individually evaluated for impairment⁽¹⁾	$	570		$	3		$	1,591		$	867		$	—		$	1,933		$	—		$	4,964
Loans collectively evaluated for impairment	3,717			3,731			7,384			4,496			3,795			—			732			23,855
Ending balance	$	4,287		$	3,734		$	8,975		$	5,363		$	3,795		$	1,933		$	732		$	28,819

Loans:
Individually evaluated for impairment ⁽¹⁾	$	3,211		$	424		$	6,649		$	11,364		$	—		$	32,244		$	—		$	53,892
Collectively evaluated for impairment	1,313,148			670,774			1,807,880			1,391,636			455,371			2,468,996			262,625			8,370,430
Acquired with deteriorated credit quality	—			—			—			—			—			87,592			—			87,592
Ending balance	$	1,316,359		$	671,198		$	1,814,529		$	1,403,000		$	455,371		$	2,588,832		$	262,625		$	8,511,914

(1) At December 31, 2018, loans individually evaluated for impairment includes all nonaccrual loans greater than $100,000 and all troubled debt restructurings greater than $100,000, including all troubled debt restructurings and not only those currently classified as troubled debt restructurings.



(dollars in thousands)	Commercial, Financial and Agricultural			Real Estate – Construction and Development			Real Estate – Commercial and Farmland			Real Estate – Residential			Consumer Installment			Purchased Loans			Purchased Loan Pools			Total
Three Months Ended September 30, 2018
Balance, June 30, 2018	$	8,400		$	3,789		$	8,215		$	5,136		$	2,877		$	2,339		$	776		$	31,532
Provision for loan losses	1,021			137			809			209			1,039			(1,148		)	28			2,095
Loans charged off	(6,121		)	(265		)	(27		)	(293		)	(923		)	(483		)	—			(8,112		)
Recoveries of loans previously charged off	939			1			134			44			178			1,305			—			2,601
Balance, September 30, 2018	$	4,239		$	3,662		$	9,131		$	5,096		$	3,171		$	2,013		$	804		$	28,116

Nine Months Ended September 30, 2018
Balance, December 31, 2017	$	3,631		$	3,629		$	7,501		$	4,786		$	1,916		$	3,253		$	1,075		$	25,791
Provision for loan losses	9,080			201			1,630			750			3,617			(2,001		)	(271		)	13,006
Loans charged off	(11,314		)	(285		)	(169		)	(695		)	(2,724		)	(1,514		)	—			(16,701		)
Recoveries of loans previously charged off	2,842			117			169			255			362			2,275			—			6,020
Balance, September 30, 2018	$	4,239		$	3,662		$	9,131		$	5,096		$	3,171		$	2,013		$	804		$	28,116

Period-end allocation:
Loans individually evaluated for impairment⁽¹⁾	$	821		$	46		$	1,800		$	782		$	—		$	2,013		$	2		$	5,464
Loans collectively evaluated for impairment	3,418			3,616			7,331			4,314			3,171			—			802			22,652
Ending balance	$	4,239		$	3,662		$	9,131		$	5,096		$	3,171		$	2,013		$	804		$	28,116

Loans:
Individually evaluated for impairment ⁽¹⁾	$	2,362		$	701		$	7,021		$	10,226		$	—		$	36,156		$	4,697		$	61,163
Collectively evaluated for impairment	1,419,790			641,129			1,797,244			1,264,975			399,858			2,573,182			270,055			8,366,233
Acquired with deteriorated credit quality	—			—			—			—			—			102,122			—			102,122
Ending balance	$	1,422,152		$	641,830		$	1,804,265		$	1,275,201		$	399,858		$	2,711,460		$	274,752		$	8,529,518

(1) At September 30, 2018, loans individually evaluated for impairment includes all nonaccrual loans greater than $100,000 and all troubled debt restructurings greater than $100,000, including all troubled debt restructurings and not only those currently classified as troubled debt restructurings.

(dollars in thousands) Commercial,
Financial and
Agricultural Real Estate –
Construction and
Development Real Estate –
Commercial and
Farmland Real Estate –
Residential Consumer
Installment Purchased
Loans Purchased
Loan
Pools Total
Twelve Months Ended
December 31, 2017

Balance, December 31, 2016 $ 2,192
$ 2,990
$ 7,662
$ 6,786
$ 827
$ 1,626
$ 1,837
$ 23,920
Provision for loan losses 3,019
488
508
(86 ) 2,591
2,606
(762 ) 8,364
Loans charged off (2,850 ) (95 ) (853 ) (2,151 ) (1,618 ) (2,900 ) —
(10,467 )
Recoveries of loans previously charged off 1,270
246
184
237
116
1,921
—
3,974
Balance, December 31, 2017 $ 3,631
$ 3,629
$ 7,501
$ 4,786
$ 1,916
$ 3,253
$ 1,075
$ 25,791

Period-end allocation:

Loans individually evaluated for impairment⁽¹⁾
$ 465
$ 48
$ 1,047
$ 1,028
$ —
$ 3,253
$ 177
$ 6,018
Loans collectively evaluated for impairment 3,166
3,581
6,454
3,758
1,916
—
898
19,773
Ending balance $ 3,631
$ 3,629
$ 7,501
$ 4,786
$ 1,916
$ 3,253
$ 1,075
$ 25,791

Loans:

Individually evaluated for impairment ⁽¹⁾
$ 2,971
$ 500
$ 8,873
$ 10,818
$ —
$ 28,165
$ 904
$ 52,231
Collectively evaluated for impairment 1,359,537
624,095
1,526,566
998,643
324,511
718,447
327,342
5,879,141
Acquired with deteriorated credit quality —
—
—
—
—
114,983
—
114,983
Ending balance $ 1,362,508
$ 624,595
$ 1,535,439
$ 1,009,461
$ 324,511
$ 861,595
$ 328,246
$ 6,046,355

(1) At December 31, 2017, loans individually evaluated for impairment includes all nonaccrual loans greater than $100,000 and all troubled debt restructurings greater than $100,000, including all troubled debt restructurings and not only those currently classified as troubled debt restructurings.

(dollars in thousands) Commercial,
Financial and
Agricultural Real Estate –
Construction and
Development Real Estate –
Commercial and
Farmland Real Estate –
Residential Consumer
Installment Purchased
Loans Purchased
Loan
Pools Total
Three Months Ended
September 30, 2017

Balance, March 31, 2017 $ 3,302
$ 3,756
$ 7,869
$ 5,605
$ 1,155
$ 1,791
$ 1,623
$ 25,101
Provision for loan losses 910
(587 ) 68
127
670
745
(146 ) 1,787
Loans charged off (1,091 ) (1 ) (18 ) (852 ) (320 ) (161 ) —
(2,443 )
Recoveries of loans previously charged off 409
126
26
56
17
887
—
1,521
Balance, September 30, 2017 $ 3,530
$ 3,294
$ 7,945
$ 4,936
$ 1,522
$ 3,262
$ 1,477
$ 25,966

Nine Months Ended
September 30, 2017

Balance, December 31, 2016 $ 2,192
$ 2,990
$ 7,662
$ 6,786
$ 827
$ 1,626
$ 1,837
$ 23,920
Provision for loan losses 2,535
155
540
(9 ) 1,539
1,428
(360 ) 5,828
Loans charged off (1,896 ) (95 ) (413 ) (2,031 ) (922 ) (1,472 ) —
(6,829 )
Recoveries of loans previously charged off 699
244
156
190
78
1,680
—
3,047
Balance, September 30, 2017 $ 3,530
$ 3,294
$ 7,945
$ 4,936
$ 1,522
$ 3,262
$ 1,477
$ 25,966

Period-end allocation:

Loans individually evaluated for impairment⁽¹⁾
$ 509
$ 81
$ 1,380
$ 1,058
$ —
$ 3,262
$ 105
$ 6,395
Loans collectively evaluated for impairment 3,021
3,213
6,565
3,878
1,522
—
1,372
19,571
Ending balance $ 3,530
$ 3,294
$ 7,945
$ 4,936
$ 1,522
$ 3,262
$ 1,477
$ 25,966

Loans:

Individually evaluated for impairment ⁽¹⁾
$ 3,204
$ 627
$ 10,512
$ 8,636
$ —
$ 32,032
$ 915
$ 55,926
Collectively evaluated for impairment 1,304,005
549,562
1,548,370
960,653
189,109
763,271
464,303
5,779,273
Acquired with deteriorated credit quality —
—
—
—
—
121,823
—
121,823
Ending balance $ 1,307,209
$ 550,189
$ 1,558,882
$ 969,289
$ 189,109
$ 917,126
$ 465,218
$ 5,957,022

(1) At September 30, 2017, loans individually evaluated for impairment includes all nonaccrual loans greater than $100,000 and all troubled debt restructurings greater than $100,000, including all troubled debt restructurings and not only those currently classified as troubled debt restructurings.

NOTE 5 – OTHER REAL ESTATE OWNED

The following is a summary of the activity in OREO during the nine months ended September 30, ~~2018~~2019 and ~~2017:~~2018:



(dollars in thousands)	September 30, 2019			September 30, 2018
Beginning balance, January 1	$	7,218		$	8,464
Loans transferred to other real estate owned	503			3,764
Net gains (losses) on sale and write-downs recorded in statement of income	(434		)	(470		)
Sales proceeds	(2,362		)	(2,321		)
Other	—			(62		)
Ending balance	$	4,925		$	9,375

(dollars in thousands) September 30,
2018 September 30,
2017
Beginning balance, January 1 $ 8,464
$ 10,874
Loans transferred to other real estate owned 3,764
4,043
Net gains (losses) on sale and write-downs recorded in statement of income (470 ) (766 )
Sales proceeds (2,321 ) (4,760 )
Other (62 ) —
Ending balance $ 9,375
$ 9,391

The following is a summary of the activity in purchased OREO during the nine months ended September 30, ~~2018~~2019 and ~~2017:~~2018:



(dollars in thousands)	September 30, 2019			September 30, 2018
Beginning balance, January 1	$	9,535		$	9,011
Loans transferred to other real estate owned	3,908			2,434
Acquired in acquisitions	7,178			1,888
Portion of gains (losses) on sale and write-downs payable to (receivable from) the FDIC under loss-sharing agreements	(24		)	—
Net gains (losses) on sale and write-downs recorded in statement of income	276			(477		)
Sales proceeds	(5,086		)	(5,140		)
Other	(2		)	(24		)
Ending balance	$	15,785		$	7,692

(dollars in thousands) September 30,
2018 September 30,
2017
Beginning balance, January 1 $ 9,011
$ 12,540
Loans transferred to other real estate owned 2,434
4,294
Acquired in acquisitions 1,888
—
Portion of gains (losses) on sale and write-downs payable to (receivable from) the FDIC under loss-sharing agreements —
76
Net gains (losses) on sale and write-downs recorded in statement of income (477 ) 265
Sales proceeds (5,140 ) (7,229 )
Other (24 ) —
Ending balance $ 7,692
$ 9,946

NOTE 6 – SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

The Company classifies the sales of securities under agreements to repurchase as short-term borrowings. The amounts received under these agreements are reflected as a liability in the Company’s consolidated balance sheets and the investment securities underlying these agreements are included in investment securities in the Company’s consolidated balance sheets. At September 30, ~~2018~~2019 and December 31, ~~2017,~~2018, all securities sold under agreements to repurchase mature on a daily basis. The market value of the securities fluctuate on a daily basis due to market conditions. The Company monitors the market value of the securities underlying these agreements on a daily basis and is required to transfer additional securities if the market value of the securities ~~fall~~falls below the repurchase agreement price. The Company maintains an unpledged securities portfolio that it believes is sufficient to protect against a decline in the market value of the securities sold under agreements to repurchase.

The following is a summary of the Company’s securities sold under agreements to repurchase at September 30, ~~2018~~2019 and December 31, ~~2017.~~ 2018.



(dollars in thousands)	September 30, 2019		December 31, 2018
Securities sold under agreements to repurchase	$	17,744	$	20,384

(dollars in thousands) September 30,
2018 December 31, 2017
Securities sold under agreements to repurchase $ 14,071
$ 30,638

At September 30, ~~2018 and December 31, 2017,~~2019 the investment securities underlying these agreements were comprised of state, county and municipal securities and mortgage-backed securities. At December 31, 2018, the investment securities underlying these agreements were comprised of mortgage-backed securities.

NOTE 7 – OTHER BORROWINGS

The Company has, from time to time, utilized certain borrowing arrangements to fund growth in earning assets or provide additional liquidity when appropriate spreads can be realized. At September 30, 2018 and December 31, 2017, there were $656.8 million and $250.6 million, respectively, in outstanding other borrowings.

Other borrowings consist of the following:



(dollars in thousands)	September 30, 2019		December 31, 2018
FHLB borrowings:
Convertible Flipper Advance due May 22, 2019; fixed interest rate of 4.68%	$	—	$	1,514
Principal Reducing Advance due June 20, 2019; fixed interest rate of 1.274%	—		500
Fixed Rate Advance due October 11, 2019; fixed interest rate of 2.14%	100,000		—
Fixed Rate Advance due October 15, 2019; fixed interest rate of 2.14%	50,000		—
Fixed Rate Advance due October 17, 2019; fixed interest rate of 2.23%	50,000		—
Fixed Rate Advance due October 21, 2019; fixed interest rate of 2.10%	100,000		—
Fixed Rate Advance due October 21, 2019; fixed interest rate of 2.10%	100,000		—
Fixed Rate Advance due October 24, 2019; fixed interest rate of 2.08%	50,000		—
Fixed Rate Advance due October 28, 2019; fixed interest rate of 2.02%	75,000		—
Fixed Rate Advance due October 30, 2019; fixed interest rate of 2.01%	200,000		—
Fixed Rate Advance due November 18, 2019; fixed interest rate of 2.11%	75,000		—
Fixed Rate Advance due November 19, 2019; fixed interest rate of 2.13%	75,000		—
Fixed Rate Advance due December 16, 2019; fixed interest rate of 2.05%	150,000		—
Fixed Rate Advance due December 23, 2019; fixed interest rate of 2.04%	100,000		—
Fixed Rate Advance due December 9, 2030; fixed interest rate of 4.55%	1,425		1,434
Fixed Rate Advance due December 9, 2030; fixed interest rate of 4.55%	987		993
Principal Reducing Advance due September 29, 2031; fixed interest rate of 3.095%	1,749		1,858
Subordinated notes payable:
Subordinated notes payable due March 15, 2027 net of unamortized debt issuance cost of $976 and $1,074, respectively; fixed interest rate of 5.75% through March 14, 2022; variable interest rate thereafter at three-month LIBOR plus 3.616%	74,024		73,926
Subordinated notes payable due May 31, 2030 net of unaccreted purchase accounting fair value adjustment of $1,596 and $0, respectively; fixed interest rate of 5.875% through May 31, 2025; variable interest rate thereafter at three-month LIBOR plus 3.630%	76,596		—
Other debt:
Advance from correspondent bank due October 5, 2019; secured by a loan receivable; fixed interest rate of 4.25%	—		20
Advance from correspondent bank due September 5, 2026; secured by a loan receivable; fixed interest rate of 2.09%	1,391		1,529
Advances under revolving credit agreement with a regional bank due September 26, 2020; secured by subsidiary bank stock; variable interest rate at 90-day LIBOR plus 3.50% (5.63% at September 30, 2019)	70,000		70,000
Total	$	1,351,172	$	151,774

(dollars in thousands) September 30,
2018 December 31,
2017
FHLB borrowings:

Daily Rate Credit with a variable interest rate (1.59% at December 31, 2017) $ —
$ 25,000
Fixed Rate Advance due October 10, 2018; fixed interest rate of 2.13% 250,000
—
Fixed Rate Advance due October 17, 2018; fixed interest rate of 2.17% 250,000
—
Fixed Rate Hybrid Advance due November 6, 2018; fixed interest rate of 2.727% 5,000
—
Convertible Flipper Advance due May 22, 2019; current interest rate of 4.68% 1,500
—
Principal Reducing Advance due June 20, 2019; fixed interest rate of 1.274% 750
—
Fixed Rate Advance due December 9, 2030; fixed interest rate of 4.55% 1,300
—
Fixed Rate Advance due December 9, 2030; fixed interest rate of 4.55% 900
—
Principal Reducing Advance due September 29, 2031; fixed interest rate of 3.095% 1,885
—
Fixed Rate Advance due January 8, 2018; fixed interest rate of 1.39% —
150,000
Subordinated notes payable:

Subordinated notes payable due March 15, 2027 net of unamortized debt issuance cost of $1,107 and $1,205, respectively; fixed interest rate of 5.75% through March 14, 2022; variable interest rate thereafter at three-month LIBOR plus 3.616% 73,893
73,795
Other debt:

Advance from correspondent bank due October 5, 2019; secured by a loan receivable; fixed interest rate of 4.25% 28
49
Advance from correspondent bank due September 5, 2026; secured by a loan receivable; fixed interest rate of 2.09% 1,575
1,710
Advances under revolving credit agreement with a regional bank due September 26, 2020; secured by subsidiary bank stock; variable interest rate at 90-day LIBOR plus 3.50% (5.82% at September 30, 2018) 70,000
—
Total $ 656,831
$ 250,554

The advances from the FHLB are collateralized by a blanket lien on all eligible first mortgage loans and other specific loans in addition to FHLB stock. At September 30, ~~2018, $1.50~~2019, $1.72 billion was available for borrowing on lines with the FHLB.

At September 30, ~~2018,~~2019, the Company had a revolving credit arrangement with a regional bank with a maximum line amount of $100.0 million. This line of credit is secured by subsidiary bank stock, expires on September 26, 2020, and bears a variable interest rate of 90-day LIBOR plus 3.50%. At September 30, ~~2018,~~2019, there was $30.0 million available for borrowing under the revolving credit arrangement.

As of September 30, ~~2018,~~2019, the Bank maintained credit arrangements with various financial institutions to purchase federal funds up to ~~$117.0~~$157.0 million.

The Bank also participates in the Federal Reserve discount window borrowings program. At September 30, ~~2018,~~2019, the Company had ~~$1.30~~$1.84 billion of loans pledged at the Federal Reserve discount window and had ~~$859.3 million~~$1.24 billion available for borrowing.

~~Subordinated Notes Payable~~

~~On March 13, 2017, the Company~~ completed the public offering and sale of $75.0 million in aggregate principal amount of its 5.75% Fixed-To-Floating Rate Subordinated Notes due 2027 (the “subordinated notes”). The subordinated notes were sold to the public at par pursuant to an underwriting agreement and were issued pursuant to an indenture and a supplemental indenture. The subordinated notes will mature on March 15, 2027 and through March 14, 2022 will bear a fixed rate of interest of 5.75% per annum, payable semi-annually in arrears on September 15 and March 15 of each year. Beginning March 15, 2022, the interest rate on the subordinated notes resets quarterly to a floating rate per annum equal to the then-current three-month LIBOR plus 3.616%, payable quarterly in arrears on June 15, September 15, December 15, and March 15 of each year to the maturity date or earlier redemption.

On any scheduled interest payment date beginning March 15, 2022, the Company may, at its option, redeem the subordinated notes, in whole or in part, at a redemption price equal to 100% of the principal amount plus accrued and unpaid interest.

The subordinated notes are unsecured and rank equally with all other unsecured subordinated indebtedness of the Company, including any subordinated indebtedness issued in the future under the indenture governing the subordinated notes. The subordinated notes are subordinated in right of payment to all senior indebtedness of the Company. The subordinated notes are

obligations of the Company only and are not guaranteed by any subsidiaries, including the Bank. Additionally, the subordinated notes are structurally subordinated to all existing and future indebtedness and other liabilities of the Company’s subsidiaries, meaning that creditors of the Company’s subsidiaries (including, in the case of the Bank, its depositors) generally will be paid from those subsidiaries’ assets before holders of the subordinated notes have any claim to those assets.

For regulatory capital adequacy purposes, the subordinated notes qualify as Tier 2 capital for the Company. If in the future the subordinated notes no longer qualify as Tier 2 capital, the subordinated notes may be redeemed by the Company at a redemption price equal to 100% of the principal amount plus accrued and unpaid interest, subject to prior approval by the Board of Governors of the Federal Reserve System.

NOTE 8 – ~~COMMITMENTS AND CONTINGENCIES~~SHAREHOLDERS’ EQUITY

~~Loan Commitments~~Common Stock Repurchase Program

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. They involve, to varying degrees, elements of credit risk and interest rate risk in excess of the amount recognized in the Company’s balance sheets.

The Company’s exposure to credit loss is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments.

~~A summary of the Company’s commitments is as follows:~~

(dollars in thousands) September 30,
2018 December 31,
2017
Commitments to extend credit $ 1,581,342
$ 1,109,806
Unused home equity lines of credit 112,706
69,788
Financial standby letters of credit 21,862
11,389
Mortgage interest rate lock commitments 113,642
86,149
Mortgage forward contracts with positive fair value 246,601
31,500

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. These commitments, predominantly at variable interest rates, generally have fixed expiration dates of one year or less 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 amount of collateral obtained, if deemed necessary byOn September 19, 2019, the Company ~~upon extension~~announced that its Board of ~~credit, is based on management’s credit evaluation of the customer.~~

~~Standby letters of credit are conditional commitments issued by~~Directors authorized the Company to ~~guarantee~~repurchase up to $100.0 million of its outstanding common stock. Repurchases of shares, which are authorized to occur through October 31, 2020, will

be made, if at all, in accordance with applicable securities laws and may be made from time to time in the ~~performance~~open market or by negotiated transactions. The amount and timing of repurchases will be based on a ~~customer~~variety of factors, including share acquisition price, regulatory limitations and other market and economic factors. The program does not require the repurchase of any specific number of shares. It replaces the Company's prior share repurchase program which was set to ~~a third party. Those guarantees are primarily issued to support public~~expire in October 2019 and ~~private borrowing arrangements. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers. Collateral is required in instances~~under which the Company ~~deems necessary.~~

~~Other Commitments~~

repurchased $10.6 million of its outstanding common stock in the past year. As of September 30, 2019, 0 shares of the Company's common stock had been repurchased under the new program.

Fidelity Acquisition

On July 1, 2019, the Company issued 22,181,522 shares of its common stock to the shareholders of Fidelity. Such shares had a value of $39.19 per share at the time of issuance, resulting in an increase in shareholders’ equity of $869.3 million.

For additional information regarding the Fidelity acquisition, see Note 2.

Hamilton Acquisition

On June 29, 2018, the Company issued 6,548,385 shares of its common stock to the shareholders of Hamilton. Such shares had a value of $53.35 per share at the time of issuance, resulting in an increase in shareholders’ equity of $349.4 million.

For additional information regarding the Hamilton acquisition, see Note 2.

Atlantic Acquisition

On May 25, 2018, the Company issued 2,631,520 shares of its common stock to the shareholders of Atlantic. Such shares had a value of $56.15 per share at the time of issuance, resulting in an increase in shareholders’ equity of $147.8 million.

For additional information regarding the Atlantic acquisition, see Note 2.

USPF Acquisition

On January 18, 2017, in exchange for 4.99% of the outstanding shares of common stock of USPF, the Company issued 128,572 unregistered shares of its common stock to a selling shareholder of USPF. A registration statement was filed with the Securities and Exchange Commission (the “SEC”) on February 13, 2017 to register the resale or other disposition of these shares. The issuance of the 128,572 common shares, valued at $45.45 per share at the time of issuance, resulted in an increase in shareholders’ equity of $5.8 million.

On January 3, 2018, in exchange for 25.01% of the outstanding shares of common stock of USPF, the Company issued 114,285 unregistered shares of its common stock and paid $12.5 million in cash to a selling shareholder of USPF. The issuance of the 114,285 common shares, valued at $48.55 per share at the time of issuance, resulted in an increase in shareholders’ equity of $5.5 million.

On January 31, 2018, in exchange for the final 70% of the outstanding shares of common stock of USPF, the Company issued 830,301 unregistered shares of its common stock and paid $8.9 million in cash to the selling shareholders of USPF. The issuance of the 830,301 common shares, valued at $53.55 per share at the time of issuance, resulted in an increase in shareholders’ equity of $44.5 million. The selling shareholders of USPF could receive additional cash payments aggregating up to $5.8 million based on the achievement by the Company's premium finance division of certain income targets, between January 1, 2018 and June 30, 2019. The total contingent consideration paid was $1.2 million based on results achieved through the applicable measurement dates.

On February 16, 2018, a ~~$75.0 million letter~~registration statement was filed with the SEC to register the resale or other disposition of ~~credit~~the combined 944,586 shares issued byon January 3, 2018 and January 31, 2018.

For additional information regarding the ~~FHLB was used to guarantee the Bank’s performance related to public fund deposit balances.~~USPF acquisition, see Note 2.

~~Contingencies~~

NOTE 9 – ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

~~Certain conditions may exist~~Accumulated other comprehensive income (loss) for the Company consists of changes in net unrealized gains and losses on investment securities available for sale and an interest rate swap derivative designated as a cash flow hedge. The reclassification of gains included in net income is recorded in gain on securities in the consolidated statement of income and comprehensive

income. The following tables present a summary of the accumulated other comprehensive income (loss) balances, net of tax, as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company’s managementSeptember 30, 2019 and its legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.2018:



(dollars in thousands)	Unrealized Gain (Loss) on Derivatives			Unrealized Gain (Loss) on Securities			Accumulated Other Comprehensive Income (Loss)
Balance, January 1, 2019	$	351		$	(5,177	)	$	(4,826	)
Reclassification for gains included in net income, net of tax	—			(94		)	(94		)
Current year changes, net of tax	(505		)	20,907			20,402
Balance, September 30, 2019	$	(154	)	$	15,636		$	15,482



(dollars in thousands)	Unrealized Gain (Loss) on Derivatives			Unrealized Gain (Loss) on Securities			Accumulated Other Comprehensive Income (Loss)
Balance, December 31, 2017	$	292		$	(1,572	)	$	(1,280	)
Reclassification to retained earnings due to change in federal corporate tax rate	(53		)	(339		)	(392		)
Adjusted balance, January 1, 2018	239			(1,911		)	(1,672		)
Reclassification for gains included in net income, net of tax	—			(70		)	(70		)
Current year changes, net of tax	347			(15,181		)	(14,834		)
Balance, September 30, 2018	$	586		$	(17,162	)	$	(16,576	)

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, would be disclosed.

~~Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the nature of the guarantee would be disclosed.~~

NOTE 910 – ~~SHAREHOLDERS’ EQUITY~~WEIGHTED AVERAGE SHARES OUTSTANDING

~~Hamilton Acquisition~~

~~On June 29, 2018, the Company issued 6,548,385 shares of its common stock to the shareholders of Hamilton. Such shares had a value of $53.35~~Earnings per share ~~at the time of issuance, resulting in an increase in shareholders’ equity of $349.4 million.~~

~~For additional information regarding the Hamilton acquisition, see Note 2.~~

~~Atlantic Acquisition~~

~~For additional information regarding the Atlantic acquisition, see Note 2.~~

~~USPF Acquisition~~

On January 18, 2017, in exchange for 4.99% of the outstanding shares of common stock of USPF, the Company issued 128,572 unregistered shares of its common stock to a selling shareholder of USPF. A registration statement was filed with the Securities and Exchange Commission on February 13, 2017 to register the resale or other disposition of these shares. The issuance of the 128,572 common shares, valued at $45.45 per share at the time of issuance, resulted in an increase in shareholders’ equity of $5.8 million.

On January 31, 2018, in exchange for the final 70% of the outstanding shares of common stock of USPF, the Company issued 830,301 unregistered shares of its common stock and paid $8.9 million in cash to the selling shareholders of USPF. The issuance of the 830,301 common shares, valued at $53.55 per share at the time of issuance, resulted in an increase in shareholders’ equity of $44.5 million. The selling shareholders of USPF may receive additional cash payments aggregating up to $5.8 millionhave been computed based on the ~~achievement by the Company's premium finance division~~following weighted average number of ~~certain income targets, between January 1, 2018 and June 30, 2019.~~common shares outstanding:



	Three Months Ended September 30,		Nine Months Ended September 30,
(share data in thousands)	2019	2018	2019	2018
Average common shares outstanding	69,372	47,515	54,762	41,673
Common share equivalents:
Stock options	145	14	46	14
Nonvested restricted share grants	83	156	75	158
Average common shares outstanding, assuming dilution	69,600	47,685	54,883	41,845

On February 16, 2018, a registration statement was filed with the Securities and Exchange Commission to register the resale or other disposition of the combined 944,586 shares issued on January 3, 2018 and January 31, 2018.

~~For additional information regarding the USPF acquisition, see Note 2.~~

~~2017 Public Offering~~

On March 6, 2017, the Company completed an underwritten public offering of 2,012,500 shares of the Company’s common stock at a price to the public of $46.50 per share. The Company received net proceeds from the issuance of $88.7 million, after deducting $4.9 million in underwriting discounts and commissions and other issuance costs.

~~In March 2017,~~For the Company made a capital contribution to the Bank in the amount of $110.0 million, using the net proceeds of the March 6, 2017 issuance of common stock as well as a portion of the net proceeds of the March 13, 2017 issuance of the Company’s 5.75% Fixed-To-Floating Rate Subordinated Notes due 2027 discussed in Note 7.

~~NOTE 10 – ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)~~

~~Accumulated other comprehensive income (loss) for the Company consists of changes in net unrealized gains~~three and losses on investment securities available for sale and an interest rate swap derivative designated as a cash flow hedge. The reclassification of gains included in net income is recorded in gain (loss) on securities in the consolidated statement of income and comprehensive income. The following tables present a summary of the accumulated other comprehensive income (loss) balances, net of tax, as ofnine-month periods ended September 30, 2019 and 2018, ~~and 2017:~~

(dollars in thousands)
Unrealized
Gain (Loss)
on Derivatives

Unrealized
Gain (Loss)
on Securities

Accumulated
Other Comprehensive
Income (Loss)
Balance, December 31, 2017 $ 292
$ (1,572 ) $ (1,280 )
Reclassification to retained earnings due to change in federal corporate tax rate (53 ) (339 ) (392 )
Adjusted balance, January 1, 2018 239
(1,911 ) (1,672 )
Reclassification for gains included in net income, net of tax —
(70 ) (70 )
Current year changes, net of tax 347
(15,181 ) (14,834 )
Balance, September 30, 2018 $ 586
$ (17,162 ) $ (16,576 )

(dollars in thousands)

Unrealized
Gain (Loss)
on Derivatives

Unrealized
Gain (Loss)
on Securities

Accumulated
Other Comprehensive
Income (Loss)
Balance, December 31, 2016 $ 176
$ (1,234 ) $ (1,058 )
Reclassification for gains included in net income, net of tax —
(24 ) (24 )
Current year changes, net of tax (38 ) 4,361
4,323
Balance, September 30, 2017 $ 138
$ 3,103
$ 3,241
there were no potential common shares with strike prices that would cause them to be anti-dilutive.

NOTE 11 – LEASES

The Company has entered into various operating leases for certain branch locations, ATM locations, loan production offices, and corporate support services locations with terms extending through June 2028. Generally, these leases have initial lease terms of ten years or less. Many of the leases have one or more lease renewal options. The exercise of lease renewal options is at our sole discretion. The Company does not consider exercise of any lease renewal options reasonably certain. Certain of our lease agreements contain early termination options. No renewal options or early termination options have been included in the calculation of the operating right-of-use assets or operating lease liabilities. Certain of our lease agreements provide for periodic adjustments to rental payments for inflation. As the majority of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate at the commencement date in determining the present value of lease payments. The incremental borrowing rate is based on the term of the lease. Incremental borrowing rates on January 1, 2019 were used for operating leases that commenced prior to that date. Leases with an initial term of 12 months or less are not recorded on the balance sheet. For these short-term leases, lease expense is recognized on a straight-line basis over the lease term. At September 30, 2019, the Company had 0 leases classified as finance leases.

Operating lease cost was $3.3 million and $6.7 million for the three and nine months ended September 30, 2019, respectively. For the nine months ended September 30, 2019, the Company had 0 sublease income offsetting operating lease cost. Variable rent expense and short-term lease expense were not material for the nine months ended September 30, 2019.

The following table presents the impact of leases on the Company's consolidated balance sheet at September 30, 2019:



(dollars in thousands)	Location	September 30, 2019
Operating lease right-of-use assets	Other assets	$	39,611
Operating lease liabilities	Other liabilities	42,050

Future maturities of the Company's operating lease liabilities are summarized as follows:



(dollars in thousands)
Twelve Months Ended September 30,	Lease Liability
2020	$	11,497
2021	10,133
2022	7,155
2023	5,748
2024	3,304
After September 30, 2024	7,276
Total lease payments	$	45,113
Less: Interest	(3,063		)
Present value of lease liabilities	$	42,050



Supplemental lease information
(dollars in thousands)	September 30, 2019
Weighted-average remaining lease term (years)	5.1
Weighted-average discount rate	2.57		%
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases (cash payments)	$	6,628
Operating cash flows from operating leases (lease liability reduction)	$	6,610
Operating lease right-of-use assets obtained in exchange for leases entered into during the period, net of business combinations	$	3,370

~~NOTE 11 – WEIGHTED AVERAGE SHARES OUTSTANDING~~

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

Three Months Ended
September 30, Nine Months Ended
September 30,
(share data in thousands) 2018 2017 2018 2017
Average common shares outstanding 47,515
37,225
41,673
36,690
Common share equivalents:

Stock options 14
70
14
70
Nonvested restricted share grants 156
258
158
257
Average common shares outstanding, assuming dilution 47,685
37,553
41,845
37,017

~~For the three and nine-month periods ended September 30, 2018 and 2017, there were no potential common shares with strike prices that would cause them to be anti-dilutive.~~

NOTE 12 – FAIR VALUE MEASURES

The fair value of an asset or liability 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 assets and liabilities. 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 asset or liability. The accounting standard for disclosures about the fair value measures 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 ~~Company’s~~Company's loans held for sale ~~are carried at~~under the fair value ~~and~~option are comprised of the following:



(dollars in thousands)	September 30, 2019		December 31, 2018
Mortgage loans held for sale	$	1,183,417	$	107,428
SBA loans held for sale	4,134		3,870
Total loans held for sale	$	1,187,551	$	111,298

(dollars in thousands) September 30,
2018 December 31,
2017
Mortgage loans held for sale $ 130,179
$ 190,445
SBA loans held for sale —
6,997
Total loans held for sale $ 130,179
$ 197,442

The Company has elected to record mortgage loans held for sale at fair value in order to eliminate the complexities and inherent difficulties of achieving hedge accounting and to better align reported results with the underlying economic changes in value of the loans and related hedge instruments. This election impacts the timing and recognition of origination fees and costs, as well as servicing value, which are now recognized in earnings at the time of origination. Interest income on mortgage loans held for sale

is recorded on an accrual basis in the consolidated statements of income and comprehensive income under the heading interest income – interest and fees on loans. The servicing value is included in the fair value of the interest rate lock commitments (“IRLCs”) with borrowers. The mark to market adjustments related to mortgage loans held for sale and the associated economic hedges are captured in mortgage banking activities. ~~Net gains~~A net gain of ~~$3.3~~$23.0 million and ~~$5.7~~a net loss of $1.4 million resulting from fair value changes of these mortgage loans were recorded in income during the nine months ended September 30, 2019 and 2018, ~~and 2017,~~ respectively. ~~A net gain~~Net gains of ~~$2.7~~$2.1 million and ~~a net loss of $3.4 million~~$848,000 resulting from changes in the fair value of the related derivative financial instruments used to hedge exposure to the market-related risks associated with these mortgage loans were recorded in income during the nine months ended September 30, ~~2018~~2019 and ~~2017,~~2018, respectively. The change in fair value of both mortgage loans held for sale and the related derivative financial instruments are recorded in mortgage banking activity in the consolidated statements of income and comprehensive income. The Company’s valuation of mortgage loans held for sale incorporates an assumption for credit risk; however, given the short-term period that the Company holds these loans, valuation adjustments attributable to instrument-specific credit risk is nominal.

The following table summarizes the difference between the fair value and the principal balance for mortgage loans held for sale ~~carried~~measured at fair value as of September 30, ~~2018~~2019 and December 31, ~~2017:~~2018:



(dollars in thousands)	September 30, 2019		December 31, 2018
Aggregate fair value of mortgage loans held for sale	$	1,183,417	$	107,428
Aggregate unpaid principal balance of mortgage loans held for sale	1,148,283		103,319
Past-due loans of 90 days or more	—		—
Nonaccrual loans	—		—

(dollars in thousands)
September 30,
2018 December 31,
2017
Aggregate fair value of mortgage loans held for sale $ 130,179
$ 190,445
Aggregate unpaid principal balance 126,903
185,814
Past-due loans of 90 days or more —
—
Nonaccrual loans —
—

The following table summarizes the difference between the fair value and the principal balance for SBA loans held for sale measured at fair value as of September 30, 2019 and December 31, 2018:



(dollars in thousands)	September 30, 2019		December 31, 2018
Aggregate fair value of SBA loans held for sale	$	4,134	$	3,870
Aggregate unpaid principal balance of SBA loans held for sale	3,755		3,581
Past-due loans of 90 days or more	—		—
Nonaccrual loans	—		—

The Company utilizes fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. Securities available for sale, ~~mortgage~~ loans held for sale and ~~derivatives~~derivative financial instruments are recorded at fair value on a recurring basis. From time to time, the Company may be required to record at fair value other assets on a nonrecurring basis, such as impaired loans and OREO. Additionally, the Company is required to disclose, but not record, the fair value of other financial instruments.

Fair Value Hierarchy

The Company groups assets and liabilities at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. These levels are:

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

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

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

The following methods and assumptions were used by the Company in estimating the fair value of its assets and liabilities recorded at fair value and for estimating the fair value of its financial instruments:

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

Investment Securities Available for Sale: The fair value of securities available for sale is determined by various valuation methodologies. Where quoted market prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. If quoted market prices are not available, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics, or discounted cash flows. Level 2 securities include certain U.S. agency bonds, mortgage-backed securities, collateralized mortgage and debt obligations, and municipal securities. The Level 2 fair value pricing is provided by an independent third party and is based upon similar securities in an active market. In certain cases where Level 1 or Level 2 inputs are not available, securities are classified within Level 3 of the hierarchy and may include certain residual municipal securities and other less liquid securities.

~~Other Investments:~~ FHLB stock and Federal Reserve Bank stock are included in other investment securities. Prior to the Company's completion of its acquisition of USPF on January 31, 2018, the minority equity investment in USPF was also included in other investments. These investments do not have readily determinable fair values and are carried at original cost basis. It is not practical to determine the fair value of these investments due to restrictions placed on transferability. These investments are periodically evaluated for impairment based on ultimate recovery of par value or cost basis. Cost basis approximates fair value for these investments.

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

Loans: The fair value for loans held for investment is estimated using an exit price methodology. An exit price methodology considers expected cash flows that take into account contractual loan terms, as applicable, prepayment expectations, probability of default, loss severity in the event of default, recovery lag and, in the case of variable rate loans, expectations for future interest rate movements. These cash flows are present valued at a risk adjusted discount rate, which considers the cost of funding, liquidity, servicing costs, and other factors. Because observable quoted prices seldom exist for identical or similar assets carried in loans held for investment, Level 3 inputs are primarily used to determine fair value exit pricing. 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 ASC 310-10, Accounting by Creditors for Impairment of a Loan, and generally results in a specific reserve established through a charge to the provision for loan losses. Losses on impaired loans are charged to the allowance when management believes the uncollectability of a loan is confirmed. Management has determined that the majority of impaired loans are Level 3 assets due to the extensive use of market appraisals.

Other Real Estate Owned: The fair value of OREO is determined using certified appraisals and internal evaluations that value the property at its highest and best uses by applying traditional valuation methods common to the industry. The Company does not hold any OREO for profit purposes and all other real estate is actively marketed for sale. In most cases, management has determined that additional write-downs are required beyond what is calculable from the appraisal to carry the property at levels that would attract buyers. Because this additional write-down is not based on observable inputs, management has determined that OREO should be classified as Level 3.

Accrued Interest Receivable/Payable: The carrying amount of accrued interest receivable and accrued interest payable approximates fair value.

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 being offered for certificates of similar maturities.

Securities Sold under Agreements to Repurchase and Other Borrowings: The carrying amount of securities sold under agreements to repurchase approximates fair value and is classified as Level 1. The carrying amount of variable rate other borrowings approximates fair value and is classified as Level 1. The fair value of fixed rate other borrowings is estimated based on discounted contractual cash flows using the current incremental borrowing rates for similar borrowing arrangements and is classified as Level 2.

Subordinated Deferrable Interest Debentures: The fair value of the Company’s trust preferred securities is based on discounted cash flows using rates for securities with similar terms and remaining maturities and are classified as Level 2.

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

Pursuant to the clawback provisions of the loss-sharing agreements for the Company’s FDIC-assisted acquisitions, the Company may be required to reimburse the FDIC should actual losses be less than certain thresholds established in each loss-sharing agreement. The amount of the clawback provision for each acquisition is measured and recorded at fair value. The clawback amount, which is payable to the FDIC upon termination of the applicable loss-sharing agreement, is discounted using an appropriate discount rate.

~~Liability for USPF Acquisition Contingent Consideration:~~ As discussed in Note 2, the selling shareholders of USPF may receive additional future cash payments based on the achievement by the Company's premium finance division of certain income targets between January 1, 2018 and June 30, 2019. The carrying value is used as the Level 3 fair value estimate for this liability.

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

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

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

Although the Company has determined that the majority of the inputs used to value its derivative fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself or the counterparty. However, as of September 30, ~~2018~~2019 and December 31, ~~2017,~~2018, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustment is not significant to the overall valuation of its derivatives. As a result, the Company has determined that its derivative valuation in its entirety is classified in Level 2 of the fair value hierarchy.

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, ~~2018~~2019 and December 31, ~~2017:~~2018:


	Recurring Basis Fair Value Measurements								Recurring Basis Fair Value Measurements
	September 30, 2018								September 30, 2019
(dollars in thousands)	Fair Value		Level 1		Level 2		Level 3		Fair Value		Level 1		Level 2		Level 3
Financial assets:
U.S. government sponsored agencies									$	22,360	$	—	$	22,360	$	—
State, county and municipal securities	$	151,749	$	—	$	151,749	$	—	116,349		—		116,349		—
Corporate debt securities	67,118		—		65,618		1,500		52,918		—		51,418		1,500
Mortgage-backed securities	943,703		—		943,703		—		1,299,580		—		1,299,580		—
Loans held for sale	130,179		—		130,179		—		1,187,551		—		1,187,551		—
Mortgage banking derivative instruments									15,935		—		15,935		—
Total recurring assets at fair value									$	2,694,693	$	—	$	2,693,193	$	1,500
Financial liabilities:
Derivative financial instruments	315		—		315		—		$	237	$	—	$	237	$	—
Mortgage banking derivative instruments	3,668		—		3,668		—		1,195		—		1,195		—
Total recurring assets at fair value	$	1,296,732	$	—	$	1,295,232	$	1,500
Total recurring liabilities at fair value									$	1,432	$	—	$	1,432	$	—



	Recurring Basis Fair Value Measurements
	December 31, 2018
(dollars in thousands)	Fair Value		Level 1		Level 2		Level 3
Financial assets:
State, county and municipal securities	$	150,733	$	—	$	150,733	$	—
Corporate debt securities	67,314		—		65,814		1,500
Mortgage-backed securities	974,376		—		974,376		—
Loans held for sale	111,298		—		111,298		—
Derivative financial instruments	102		—		102		—
Mortgage banking derivative instruments	2,537		—		2,537		—
Total recurring assets at fair value	$	1,306,360	$	—	$	1,304,860	$	1,500
Financial liabilities:
Mortgage banking derivative instruments	$	1,276	$	—	$	1,276	$	—
Total recurring liabilities at fair value	$	1,276	$	—	$	1,276	$	—

Recurring Basis
Fair Value Measurements
December 31, 2017
(dollars in thousands) Fair Value Level 1 Level 2 Level 3
Financial assets:

State, county and municipal securities $ 137,794
$ —
$ 137,794
$ —
Corporate debt securities 47,143
—
45,643
1,500
Mortgage-backed securities 625,936
—
625,936
—
Loans held for sale 197,442
—
197,442
—
Mortgage banking derivative instruments 2,888
—
2,888
—
Total recurring assets at fair value $ 1,011,203
$ —
$ 1,009,703
$ 1,500
Financial liabilities:

Derivative financial instruments $ 381
$ —
$ 381
$ —
Mortgage banking derivative instruments 67
—
67
—
Total recurring liabilities at fair value $ 448
$ —
$ 448
$ —

The following table presents the fair value measurements of assets measured at fair value on a non-recurring basis, as well as the general classification of such instruments pursuant to the valuation hierarchy as of September 30, ~~2018~~2019 and December 31, ~~2017:~~2018:



	Nonrecurring Basis Fair Value Measurements
(dollars in thousands)	Fair Value		Level 1		Level 2		Level 3
September 30, 2019
Impaired loans carried at fair value	$	34,487	$	—	$	—	$	34,487
Other real estate owned	196		—		—		196
Purchased other real estate owned	15,784		—		—		15,784
Total nonrecurring assets at fair value	$	50,467	$	—	$	—	$	50,467

December 31, 2018
Impaired loans carried at fair value	$	28,653	$	—	$	—	$	28,653
Other real estate owned	408		—		—		408
Purchased other real estate owned	9,535		—		—		9,535
Total nonrecurring assets at fair value	$	38,596	$	—	$	—	$	38,596

Nonrecurring Basis
Fair Value Measurements
(dollars in thousands) Fair Value Level 1 Level 2 Level 3
September 30, 2018

Impaired loans carried at fair value $ 31,182
$ —
$ —
$ 31,182
Other real estate owned 2,734
—
—
2,734
Purchased other real estate owned 7,692
—
—
7,692
Total nonrecurring assets at fair value $ 41,608
$ —
$ —
$ 41,608

December 31, 2017

Impaired loans carried at fair value $ 27,684
$ —
$ —
$ 27,684
Other real estate owned 323
—
—
323
Purchased other real estate owned 9,011
—
—
9,011
Total nonrecurring assets at fair value $ 37,018
$ —
$ —
$ 37,018

The inputs used to determine estimated fair value of impaired loans include market conditions, loan terms, underlying collateral characteristics and discount rates. The inputs used to determine fair value of OREO include market conditions, estimated marketing period or holding period, underlying collateral characteristics and discount rates.

For the nine months ended September 30, ~~2018~~2019 and the year ended December 31, ~~2017,~~2018, there was not a change in the methods and significant assumptions used to estimate fair ~~value for assets and liabilities carried at fair~~ value.

The following table shows significant unobservable inputs used in the fair value measurement of Level 3 ~~assets and liabilities:~~

assets:



(dollars in thousands)	Fair Value		Valuation Technique	Unobservable Inputs	Range of Discounts	Weighted Average Discount
September 30, 2019
Recurring:
Investment securities available for sale	$	1,500	Discounted par values	Credit quality of underlying issuer	0%	0%
Nonrecurring:
Impaired loans	$	28,653	Third-party appraisals and discounted cash flows	Collateral discounts and discount rates	20% - 92%	28%
Other real estate owned	$	408	Third-party appraisals and sales contracts	Collateral discounts and estimated costs to sell	15% - 42%	33%
Purchased other real estate owned	$	9,535	Third-party appraisals	Collateral discounts and estimated costs to sell	8% - 91%	28%

December 31, 2018
Recurring:
Investment securities available for sale	$	1,500	Discounted par values	Credit quality of underlying issuer	0%	0%
Nonrecurring:
Impaired loans	$	28,653	Third-party appraisals and discounted cash flows	Collateral discounts and discount rates	3% - 53%	30%
Other real estate owned	$	408	Third-party appraisals and sales contracts	Collateral discounts and estimated costs to sell	15% - 69%	31%
Purchased other real estate owned	$	9,535	Third-party appraisals	Collateral discounts and estimated costs to sell	6% - 74%	39%

(dollars in thousands) Fair Value
Valuation
Technique
Unobservable Inputs
Range of
Discounts

Weighted
Average
Discount
September 30, 2018

Recurring:

Investment securities available for sale $ 1,500
Discounted par values Credit quality of underlying issuer 0% 0%
Nonrecurring:

Impaired loans $ 31,182
Third-party appraisals and discounted cash flows Collateral discounts and
discount rates 10% - 90% 26%
Other real estate owned $ 2,734
Third-party appraisals and sales contracts Collateral discounts and estimated
costs to sell 15% - 54% 23%
Purchased other real estate owned $ 7,692
Third-party appraisals Collateral discounts and estimated
costs to sell 6% - 74% 38%

December 31, 2017

Recurring:

Investment securities available for sale $ 1,500
Discounted par values Credit quality of underlying issuer 0% 0%
Nonrecurring:

Impaired loans $ 27,684
Third-party appraisals and discounted cash flows Collateral discounts and
discount rates 20% - 90% 24%
Other real estate owned $ 323
Third-party appraisals and sales contracts Collateral discounts and estimated
costs to sell 15% - 15% 15%
Purchased other real estate owned $ 9,011
Third-party appraisals Collateral discounts and estimated
costs to sell 10% - 74% 26%

The carrying amount and estimated fair value of the Company’s financial instruments, not shown elsewhere in these financial statements, were as follows. The methods used to estimate the fair value of financial instruments at December 31, 2017 approximated an entry price. In accordance with the adoption of ASU 2016-01, the methods utilized to estimate the fair value of financial instruments at September 30, 2018 represent an approximation of exit price; however, an actual price derived in an active market may differ.


			Fair Value Measurements										Fair Value Measurements
			September 30, 2018										September 30, 2019
(dollars in thousands)	Carrying Amount		Level 1		Level 2		Level 3		Total		Carrying Amount		Level 1		Level 2		Level 3		Total
Financial assets:
Cash and due from banks	$	158,453	$	158,453	$	—	$	—	$	158,453	$	193,976	$	193,976	$	—	$	—	$	193,976
Federal funds sold and interest-bearing deposits in banks	470,804		470,804		—		—		470,804		285,713		285,713		—		—		285,713
Time deposits in other banks	11,558		—		11,558		—		11,558		499		—		499		—		499
Loans, net	8,470,220		—		—		8,421,188		8,421,188		12,756,267		—		—		12,759,699		12,759,699
Accrued interest receivable	36,846		—		5,498		31,348		36,846		50,077		—		6,012		44,065		50,077
Financial liabilities:
Deposits	$	9,181,363	$	—	$	9,175,256	$	—	$	9,175,256	$	13,659,594	$	—	$	13,658,398	$	—	$	13,658,398
Securities sold under agreements to repurchase	14,071		14,071		—		—		14,071		17,744		17,744		—		—		17,744
Other borrowings	656,831		—		658,197		—		658,197		1,351,172		—		1,352,726		—		1,352,726
Subordinated deferrable interest debentures	88,986		—		85,400		—		85,400		127,075		—		124,130		—		124,130
FDIC loss-share payable	18,740		—		—		18,901		18,901		19,490		—		—		19,489		19,489
Liability for USPF acquisition contingent consideration	2,514		—		—		2,514		2,514
Accrued interest payable	4,462		—		4,462		—		4,462		11,107		—		11,107		—		11,107



			Fair Value Measurements
			December 31, 2018
(dollars in thousands)	Carrying Amount		Level 1		Level 2		Level 3		Total
Financial assets:
Cash and due from banks	$	172,036	$	172,036	$	—	$	—	$	172,036
Federal funds sold and interest-bearing deposits in banks	507,491		507,491		—		—		507,491
Time deposits in other banks	10,812		—		10,812		—		10,812
Loans, net	8,454,442		—		—		8,365,293		8,365,293
Accrued interest receivable	36,970		—		5,456		31,514		36,970
Financial liabilities:
Deposits	$	9,649,313	$	—	$	9,645,617	$	—	$	9,645,617
Securities sold under agreements to repurchase	20,384		20,384		—		—		20,384
Other borrowings	151,774		—		152,873		—		152,873
Subordinated deferrable interest debentures	89,187		—		90,180		—		90,180
FDIC loss-share payable	19,487		—		—		19,576		19,576
Accrued interest payable	5,669		—		5,669		—		5,669

Fair Value Measurements
December 31, 2017
(dollars in thousands)
Carrying
Amount
Level 1 Level 2 Level 3 Total
Financial assets:

Cash and due from banks $ 139,313
$ 139,313
$ —
$ —
$ 139,313
Federal funds sold and interest-bearing deposits in banks 191,345
191,345
—
—
191,345
Loans, net 5,992,880
—
—
5,960,963
5,960,963
Accrued interest receivable 26,005
26,005
—
—
26,005
Financial liabilities:

Deposits $ 6,625,845
$ —
$ 6,627,773
$ —
$ 6,627,773
Securities sold under agreements to repurchase 30,638
30,638
—
—
30,638
Other borrowings 250,554
—
251,759
—
251,759
Subordinated deferrable interest debentures 85,550
—
74,243
—
74,243
FDIC loss-share payable 8,803
—
—
9,548
9,548
Accrued interest payable 3,258
3,258
—
—
3,258

NOTE 13 – ~~SEGMENT REPORTING~~COMMITMENTS AND CONTINGENCIES

Loan Commitments

The Company’s exposure to credit loss is represented by the contractual amount of those instruments. The Company ~~has~~uses the ~~following five reportable segments: Banking Division, Retail Mortgage Division, Warehouse Lending Division, SBA Division~~same credit policies in making commitments and Premium Finance Division. The Banking Division derives its revenues from the delivery of full-service financial services, including commercial loans, consumer loans and deposit accounts. The Retail Mortgage Division derives its revenues from the origination, sales and servicing of one-to-four family residential mortgage loans. The Warehouse Lending Division derives its revenues from the origination and servicing of warehouse lines to other businesses that are secured by underlying one-to-four family residential mortgage loans. The SBA Division derives its revenues from the origination, sales and servicing of SBA loans. The Premium Finance Division derives its revenues from the origination and servicing of commercial insurance premium finance loans.conditional obligations as it does for on-balance-sheet instruments.

~~The Banking, Retail Mortgage, Warehouse Lending, SBA and Premium Finance Divisions are managed as separate business units because~~A summary of the ~~different products and services they provide. The Company evaluates performance and allocates resources based on profit or loss from operations. There are no material intersegment sales or transfers.~~Company’s commitments is as follows:



(dollars in thousands)	September 30, 2019		December 31, 2018
Commitments to extend credit	$	2,403,565	$	1,671,419
Unused home equity lines of credit	267,503		112,310
Financial standby letters of credit	30,308		24,596
Mortgage interest rate lock commitments	603,518		81,833

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. These commitments, predominantly at variable interest rates, generally have fixed expiration dates of one year or less 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 ~~following tables present selected financial information with respect to~~amount of collateral obtained, if deemed necessary by the ~~Company’s reportable business segments for~~Company upon extension of credit, is based on management’s credit evaluation of the ~~three months ended September 30, 2018 and 2017:~~

Three Months Ended
September 30, 2018
(dollars in thousands) Banking
Division Retail
Mortgage
Division Warehouse
Lending
Division SBA
Division Premium
Finance
Division Total
Interest income $ 97,282
$ 9,347
$ 4,035
$ 2,090
$ 8,365
$ 121,119
Interest expense 13,241
3,803
1,566
631
2,840
22,081
Net interest income 84,041
5,544
2,469
1,459
5,525
99,038
Provision for loan losses 1,229
122
—
41
703
2,095
Noninterest income 16,524
12,097
503
1,045
2
30,171
Noninterest expense

Salaries and employee benefits 26,120
10,061
136
682
1,447
38,446
Equipment and occupancy expenses 7,871
618
2
58
49
8,598
Data processing and telecommunications expenses 7,589
347
30
1
551
8,518
Other expenses 13,461
1,828
69
210
1,223
16,791
Total noninterest expense 55,041
12,854
237
951
3,270
72,353
Income before income tax expense 44,295
4,665
2,735
1,512
1,554
54,761
Income tax expense 11,156
943
574
317
327
13,317
Net income $ 33,139
$ 3,722
$ 2,161
$ 1,195
$ 1,227
$ 41,444

Total assets $ 9,616,931
$ 789,402
$ 297,979
$ 134,172
$ 590,510
$ 11,428,994
Goodwill 440,147
—
—
—
65,457
505,604
Other intangible assets, net 33,125
—
—
—
21,604
54,729

Three Months Ended
September 30, 2017
(dollars in thousands)
Banking
Division

Retail
Mortgage
Division

Warehouse
Lending
Division

SBA
Division

Premium
Finance
Division
Total
Interest income $ 59,130
$ 5,862
$ 2,022
$ 1,413
$ 7,895
$ 76,322
Interest expense 5,530
1,597
487
432
1,421
9,467
Net interest income 53,600
4,265
1,535
981
6,474
66,855
Provision for loan losses 1,037
262
215
(1 ) 274
1,787
Noninterest income 13,007
12,257
583
1,130
22
26,999
Noninterest expense

Salaries and employee benefits 20,554
9,792
129
858
1,250
32,583
Equipment and occupancy expenses 5,384
555
1
54
42
6,036
Data processing and telecommunications expenses 6,357
425
28
9
231
7,050
Other expenses 14,905
1,001
51
63
2,078
18,098
Total noninterest expense 47,200
11,773
209
984
3,601
63,767
Income before income tax expense 18,370
4,487
1,694
1,128
2,621
28,300
Income tax expense 4,850
1,475
580
394
843
8,142
Net income $ 13,520
$ 3,012
$ 1,114
$ 734
$ 1,778
$ 20,158

Total assets $ 6,296,159
$ 531,897
$ 236,024
$ 94,531
$ 491,209
$ 7,649,820
Goodwill 125,532
—
—
—
—
125,532
Other intangible assets, net 14,437
—
—
—
—
14,437

customer.

Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements. The ~~following tables present selected financial information with respect to~~credit risk involved in issuing letters of credit is essentially the ~~Company’s reportable business segments for the nine months ended September 30, 2018 and 2017:~~

Nine Months Ended
September 30, 2018
(dollars in thousands)
Banking
Division

Retail
Mortgage
Division

Warehouse
Lending
Division

SBA
Division

Premium
Finance
Division
Total
Interest income $ 226,576
$ 24,142
$ 10,428
$ 5,428
$ 24,003
$ 290,577
Interest expense 25,417
8,555
3,778
1,725
7,264
46,739
Net interest income 201,159
15,587
6,650
3,703
16,739
243,838
Provision for loan losses 2,883
585
—
1,025
8,513
13,006
Noninterest income 42,910
37,571
1,635
3,764
2,062
87,942
Noninterest expense
Salaries and employee benefits 74,834
28,667
402
2,158
4,250
110,311
Equipment and occupancy expenses 19,032
1,756
2
171
225
21,186
Data processing and telecommunications expenses 19,504
1,119
93
19
1,357
22,092
Other expenses 54,478
5,337
176
736
3,521
64,248
Total noninterest expense 167,848
36,879
673
3,084
9,353
217,837
Income before income tax expense 73,338
15,694
7,612
3,358
935
100,937
Income tax expense 18,114
3,262
1,598
705
(233 ) 23,446
Net income $ 55,224
$ 12,432
$ 6,014
$ 2,653
$ 1,168
$ 77,491

Nine Months Ended
September 30, 2017
(dollars in thousands)
Banking
Division

Retail
Mortgage
Division

Warehouse
Lending
Division

SBA
Division

Premium
Finance
Division
Total
Interest income $ 170,036
$ 14,890
$ 4,968
$ 3,884
$ 21,005
$ 214,783
Interest expense 14,510
4,179
1,074
1,111
3,307
24,181
Net interest income 155,526
10,711
3,894
2,773
17,698
190,602
Provision for loan losses 4,510
617
159
98
444
5,828
Noninterest income 38,974
35,823
1,340
4,663
94
80,894
Noninterest expense

Salaries and employee benefits 58,757
24,771
403
2,339
3,239
89,509
Equipment and occupancy expenses 16,068
1,684
3
159
145
18,059
Data processing and telecommunications expenses 18,778
1,182
80
12
598
20,650
Other expenses 34,355
3,030
137
533
6,326
44,381
Total noninterest expense 127,958
30,667
623
3,043
10,308
172,599
Income before income tax expense 62,032
15,250
4,452
4,295
7,040
93,069
Income tax expense 17,801
5,337
1,559
1,503
2,471
28,671
Net income $ 44,231
$ 9,913
$ 2,893
$ 2,792
$ 4,569
$ 64,398

~~NOTE 14 – REVENUE FROM CONTRACTS WITH CUSTOMERS~~

With the exception of gains/losses on the sale of OREO discussed below, revenue from contracts with customers ("ASC 606 Revenue") is recorded in the service charges on deposit accounts category and the other service charges, commissions and fees category in the Company's consolidated statement of income and comprehensive income as part of noninterest income. Substantially all ASC 606 Revenue is recorded in the Banking Division. The following provides information on these noninterest income categories that contain ASC 606 Revenue for the periods indicated.

Three Months Ended
September 30, Nine Months Ended
September 30,
(dollars in thousands) 2018 2017 2018 2017
Service charges on deposit accounts
ASC 606 revenue items
   Debit card interchange fees $ 4,996
$ 3,938
$ 13,785
$ 12,127
   Overdraft fees 4,976
4,572
13,171
13,424
   Other service charges on deposit accounts 2,718
2,025
6,575
6,163
   Total ASC 606 revenue included in service charges on deposits accounts 12,690
10,535
33,531
31,714
Total service charges on deposit accounts $ 12,690
$ 10,535
$ 33,531
$ 31,714

Other service charges, commissions and fees
ASC 606 revenue items
ATM fees $ 697
$ 619
$ 1,991
$ 1,948
Total ASC 606 revenue included in other service charges, commission and fees 697
619
1,991
1,948
Other 80
80
202
189
Total other service charges, commission and fees $ 777
$ 699
$ 2,193
$ 2,137

~~Debit Card Interchange Fees~~ - The Company earns debit card interchange fees from debit cardholder transactions conducted through various payment networks. Interchange fees from debit cardholders transactions represent a percentage of the underlying transaction amount and are recognized daily, concurrently with the transaction processing services provided to the debit cardholder.

~~Overdraft Fees~~ ~~- Overdraft fees are recognized at the point in time that the overdraft occurs.~~

~~Other Service Charges on Deposit Accounts~~ - Other service charges on deposit accounts include both transaction-based fees and account maintenance fees. Transaction based fees, which include wire transfer fees, stop payment charges, statement rendering, and automated clearing house ("ACH") fees, are recognized at the time the transaction is executedsame as that involved in extending loans to customers. Collateral is ~~the point~~required in ~~time the Company fulfills the customer's request. Account maintenance fees, which relate primarily to monthly maintenance, are earned over the course of a month, representing the period over~~instances which the Company ~~satisfies~~deems necessary.

Other Commitments

As of September 30, 2019, $82.4 million in letters of credit issued by the FHLB was used to guarantee the Bank’s performance ~~obligation.~~related to public fund deposit balances.

~~ATM Fees~~ - ~~Transaction-based ATM usage fees~~Contingencies

Certain conditions may exist as of the date the financial statements are ~~recognized at the time the transaction is executed as that is the point at~~issued, which may result in a loss to the Company ~~satisfies the performance obligation.~~

~~Gains/Losses on the Sale~~but which will only be resolved when one or more future events occur or fail to occur. The Company’s management and its legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of ~~OREO~~ - ~~The net gains and losses on sales of OREO~~judgment. In assessing loss contingencies related to legal proceedings that are recorded in credit resolution related expenses in the Company's consolidated statement of income and comprehensive income. The Company records a gain or loss from the sale of OREO when control of the property transfers to the buyer, which generally occurs at the time of an executed deed. Whenpending against the Company ~~finances~~or unasserted claims that may result in such proceedings, the ~~sale~~Company’s legal counsel evaluates the perceived merits of OREO to the buyer, the Company assesses whether the buyer is committed to perform their obligations under the contract and whether collectability of the transaction price is probable. Once these criteria are met, the OREO asset is derecognized and the gainany legal proceedings or loss on sale is recorded upon the transfer of control of the property to the buyer. The Company does not provide financing for the sale of OREO unless these criteria are met and the OREO can be derecognized. The following provides information on net gains (losses) recognized on the sale of OREO for the periods indicated.

Three Months Ended
September 30, Nine Months Ended
September 30,
(dollars in thousands) 2018 2017 2018 2017
Net gains (losses) recognized on sale of OREO $ (185 ) $ (11 ) $ (414 ) $ 669

~~NOTE 15 – SUBSEQUENT EVENTS~~

On October 25, 2018, the Company announced that its Board of Directors has authorized the Company to repurchase up to $100.0 million of its outstanding common stock. Repurchases of shares, which are authorized to occur over the next twelve months, will be made in accordance with applicable securities laws and may be made from time to time in the open market or by negotiated transactions. The amount and timing of repurchases will be based on a variety of factors, including share acquisition price, regulatory limitations and other market and economic factors. The program does not require the Company to repurchase any specific number of shares.

On October 10, 2018, Hurricane Michael hit the Gulf Coast of the Florida Panhandle as a high-end Category 4 hurricane with sustained winds exceeding 150 mph as it made landfall near Mexico Beach, Florida. In Florida, Mexico Beach, Panama City and Lynn Haven suffered significant damage due to the extreme winds and storm surge, causing heavy damage to homes and buildings, as well as knocking down trees and power lines. On October 11, 2018 , the following five Florida counties were declared major disaster counties by the President of the United States: Bay, Franklin, Gulf, Taylor and Wakulla.

The storm weakened as it began to take a northeastward trajectory across the inner Southeastern United States. However, Hurricane Michael reached the Georgia state border as a Category 3 hurricane. Agriculture across Georgia suffered significant losses, especially cotton and pecan crops.

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of ~~power or network connectivity, employee assistance, refund of overdraft fees and ATM fees and other community outreach programs. Although management’s assessment was not finalized at~~ the ~~time of this filing,~~liability can be estimated, then the ~~total financial impact of Hurricane Michael expected to~~estimated liability would be ~~recorded~~accrued in the ~~fourth quarter~~Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of ~~2018 is currently projected on a pre-tax basis to be in~~the contingent liability, together with an estimate of the range of ~~$1.5 million to $2.3 million.~~possible loss if determinable and material, would be disclosed.

Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the nature of the guarantee would be disclosed.

~~Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.~~NOTE 14 – SEGMENT REPORTING

~~Cautionary Note Regarding Forward-Looking Statements~~The Company has the following 5 reportable segments: Banking Division, Retail Mortgage Division, Warehouse Lending Division, SBA Division and Premium Finance Division. The Banking Division derives its revenues from the delivery of full-service financial services, including commercial loans, consumer loans and deposit accounts. The Retail Mortgage Division derives its revenues from the origination, sales and servicing of one-to-four family residential mortgage loans. The Warehouse Lending Division derives its revenues from the origination and servicing of warehouse lines to other businesses that are secured by underlying one-to-four family residential mortgage loans. The SBA Division derives its revenues from the origination, sales and servicing of SBA loans. The Premium Finance Division derives its revenues from the origination and servicing of commercial insurance premium finance loans.

~~Certain~~The Banking, Retail Mortgage, Warehouse Lending, SBA and Premium Finance Divisions are managed as separate business units because of the ~~statements made in this report~~different products and services they provide. The Company evaluates performance and allocates resources based on profit or loss from operations. There are “forward-looking statements” within the meaning of, and subject to the protections of, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements include statementsno material intersegment sales or transfers.

The following tables present selected financial information 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, the following: general competitive, economic, political and market conditions and fluctuations, including movements in interest rates; competitive pressures on product pricing and services; legislative and regulatory initiatives; additional competition in our markets; changes in state and federal banking laws and regulations to which we are subject; financial market conditions and the results of financing efforts; changes in commodity prices and interest rates; potentialCompany’s reportable business strategies, including acquisitions or dispositions of assets or internal restructuring, that may be pursued by us; the successful integration of acquired businesses on a timely basis; the timely realization of expected cost savings and any revenue synergies from acquisition transactions; weather, natural disasters and other catastrophic events; and other factors discussed in our filings with the Securities and Exchange Commission under the Exchange Act.

All written or oral forward-looking statements that are made by or are attributable to us are expressly qualified in their entirety by this cautionary notice. Our forward-looking statements apply only as of the date of this report or the respective date of the document from which they are incorporated herein by reference. We have no obligation and do not undertake to update, revise or correct any of the forward-looking statements after the date of this report, or after the respective dates on which such statements otherwise are made, whether as a result of new information, future events or otherwise.

~~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, 2018, as compared with December 31, 2017, and operating resultssegments for the ~~three-~~three and nine-month periods ended September 30, 2018 and 2017. These comments should be read in conjunction with the Company’s unaudited consolidated financial statements and accompanying notes appearing elsewhere herein.

This discussion contains certain performance measures determined by methods other than in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Management of the Company uses these non-GAAP measures in its analysis of the Company’s performance. These measures are useful when evaluating the underlying performance and efficiency of the Company’s operations and balance sheet. The Company’s management believes that these non-GAAP measures provide a greater understanding of ongoing operations, enhance comparability of results with prior periods and demonstrate the effects of significant gains and charges in the current period. The Company’s management believes that investors may use these non-GAAP financial measures to evaluate the Company’s financial performance without the impact of unusual items that may obscure trends in the Company’s underlying performance. These disclosures should not be viewed as a substitute for financial measures determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Non-GAAP measures include tangible common equity, tangible book value per common share, adjusted net income, and adjusted net income per diluted share. The Company calculates the regulatory capital ratios using current regulatory report instructions. The Company’s management uses these measures to assess the quality of capital and believes that investors may find them useful in their evaluation of the Company. These capital measures may or may not be necessarily comparable to similar capital measures that may be presented by other companies.

~~The following table sets forth unaudited selected financial data for the most recent five quarters and for the~~ nine months ended September 30, ~~2018~~2019 and ~~2017. This data should be read in conjunction with the unaudited consolidated financial statements and the notes thereto and the information contained in this Item 2.~~2018:



	Three Months Ended September 30, 2019
(dollars in thousands)	Banking Division			Retail Mortgage Division		Warehouse Lending Division		SBA Division			Premium Finance Division		Total
Interest income	$	141,630		$	27,141	$	5,786	$	4,366		$	9,438	$	188,361
Interest expense	17,368			14,132		2,617		1,793			3,682		39,592
Net interest income	124,262			13,009		3,169		2,573			5,756		148,769
Provision for loan losses	3,549			1,490		—		(15		)	965		5,989
Noninterest income	21,173			52,493		560		2,766			1		76,993
Noninterest expense
Salaries and employee benefits	39,794			34,144		286		1,985			1,424		77,633
Equipment and occupancy expenses	10,750			1,686		2		66			135		12,639
Data processing and telecommunications expenses	9,551			660		41		22			98		10,372
Other expenses	87,059			3,484		27		503			980		92,053
Total noninterest expense	147,154			39,974		356		2,576			2,637		192,697
Income before income tax expense	(5,268		)	24,038		3,373		2,778			2,155		27,076
Income tax expense	(1,269		)	5,048		708		584			621		5,692
Net income	$	(3,999	)	$	18,990	$	2,665	$	2,194		$	1,534	$	21,384

Total assets	$	13,031,554		$	3,156,895	$	564,297	$	262,719		$	748,812	$	17,764,277
Goodwill	846,990			—		—		—			64,498		911,488
Other intangible assets, net	78,728			—		—		—			18,600		97,328

Nine Months Ended
September 30,
(in thousands, except share and per share data) Third
Quarter
2018 Second
Quarter
2018 First
Quarter
2018 Fourth
Quarter
2017 Third
Quarter
2017 2018 2017
Results of Operations:
Net interest income $ 99,038
$ 75,999
$ 68,801
$ 69,523
$ 66,855
$ 243,838
$ 190,602
Net interest income (tax equivalent) 100,117
76,943
69,787
71,537
68,668
246,847
195,549
Provision for loan losses 2,095
9,110
1,801
2,536
1,787
13,006
5,828
Non-interest income 30,171
31,307
26,464
23,563
26,999
87,942
80,894
Non-interest expense 72,353
86,386
59,098
59,337
63,767
217,837
172,599
Income tax expense 13,317
2,423
7,706
22,063
8,142
23,446
28,671
Net income available to common shareholders 41,444
9,387
26,660
9,150
20,158
77,491
64,398
Selected Average Balances:

Investment securities $ 1,185,225
$ 908,782
$ 860,419
$ 850,817
$ 864,456
$ 986,065
$ 864,684
Loans held for sale 151,396
141,875
138,129
138,468
126,798
143,848
105,296
Loans 5,703,921
5,198,301
4,902,082
4,692,997
4,379,082
5,277,108
4,018,597
Purchased loans 2,499,393
1,107,184
842,509
888,854
937,595
1,483,029
982,033
Purchased loan pools 287,859
310,594
325,113
446,677
475,742
307,718
513,750
Earning assets 10,138,029
7,818,525
7,215,742
7,202,103
6,892,939
8,403,042
6,610,374
Assets 11,204,504
8,529,035
7,823,451
7,777,996
7,461,367
9,217,174
7,180,330
Deposits 8,962,170
6,607,518
6,383,513
6,372,259
5,837,154
7,327,179
5,667,891
Shareholders’ equity 1,395,479
974,494
849,346
812,264
796,856
1,094,233
756,153
Period-End Balances:

Investment securities $ 1,198,499
$ 1,198,472
$ 880,812
$ 853,143
$ 867,570
$ 1,198,499
$ 867,570
Loans held for sale 130,179
137,249
111,135
197,442
137,392
130,179
137,392
Loans 5,543,306
5,380,515
5,051,986
4,856,514
4,574,678
5,543,306
4,574,678
Purchased loans 2,711,460
2,812,510
818,587
861,595
917,126
2,711,460
917,126
Purchased loan pools 274,752
297,509
319,598
328,246
465,218
274,752
465,218
Earning assets 10,340,558
10,110,983
7,393,048
7,288,285
7,074,828
10,340,558
7,074,828
Total assets 11,428,994
11,190,697
8,022,828
7,856,203
7,649,820
11,428,994
7,649,820
Deposits 9,181,363
8,761,593
6,446,165
6,625,845
5,895,504
9,181,363
5,895,504
Shareholders’ equity 1,404,977
1,371,896
868,944
804,479
801,921
1,404,977
801,921
Per Common Share Data:

Earnings per share - basic $ 0.87
0.24
0.70
0.25
0.54
1.86
1.76
Earnings per share - diluted $ 0.87
0.24
0.70
0.24
0.54
1.85
1.74
Book value per common share $ 29.58
$ 28.87
$ 22.67
$ 21.59
$ 21.54
$ 29.58
$ 21.54
Tangible book value per common share $ 17.78
$ 17.12
$ 16.90
$ 17.86
$ 17.78
$ 17.78
$ 17.78
End of period shares outstanding 47,496,966
47,518,662
38,327,081
37,260,012
37,231,049
47,496,966
37,231,049



	Three Months Ended September 30, 2018
(dollars in thousands)	Banking Division		Retail Mortgage Division		Warehouse Lending Division		SBA Division		Premium Finance Division		Total
Interest income	$	97,282	$	9,347	$	4,035	$	2,090	$	8,365	$	121,119
Interest expense	13,241		3,803		1,566		631		2,840		22,081
Net interest income	84,041		5,544		2,469		1,459		5,525		99,038
Provision for loan losses	1,229		122		—		41		703		2,095
Noninterest income	16,524		12,097		503		1,045		2		30,171
Noninterest expense
Salaries and employee benefits	26,120		10,061		136		650		1,447		38,414
Equipment and occupancy expenses	7,871		618		2		58		49		8,598
Data processing and telecommunications expenses	7,589		347		30		1		551		8,518
Other expenses	13,461		1,828		69		242		1,223		16,823
Total noninterest expense	55,041		12,854		237		951		3,270		72,353
Income before income tax expense	44,295		4,665		2,735		1,512		1,554		54,761
Income tax expense	11,156		943		574		317		327		13,317
Net income	$	33,139	$	3,722	$	2,161	$	1,195	$	1,227	$	41,444

Total assets	$	9,616,931	$	789,402	$	297,979	$	134,172	$	590,510	$	11,428,994
Goodwill	440,147		—		—		—		65,457		505,604
Other intangible assets, net	33,125		—		—		—		21,604		54,729

Nine Months Ended
September 30,
(in thousands, except share and per share data) Third
Quarter
2018 Second
Quarter
2018 First
Quarter
2018 Fourth
Quarter
2017 Third
Quarter
2017 2018 2017
Weighted Average Shares Outstanding:

Basic 47,514,653
39,432,021
37,966,781
37,238,564
37,225,418
41,672,792
36,689,934
Diluted 47,685,334
39,709,503
38,250,122
37,556,335
37,552,667
41,844,900
37,017,486
Market Price:

High intraday price $ 54.35
$ 58.10
$ 59.05
$ 51.30
$ 51.28
$ 59.05
$ 51.28
Low intraday price $ 45.15
$ 50.20
$ 47.90
$ 44.75
$ 41.05
$ 45.15
$ 41.05
Closing price for quarter $ 45.70
$ 53.35
$ 52.90
$ 48.20
$ 48.00
$ 45.70
$ 48.00
Average daily trading volume 382,622
253,413
235,964
206,178
168,911
291,061
193,555
Cash dividends declared per share $ 0.10
$ 0.10
$ 0.10
$ 0.10
$ 0.10
$ 0.30
$ 0.30
Closing price to book value 1.54
1.85
2.33
2.23
2.23
1.54
2.23
Performance Ratios:

Return on average assets 1.47 % 0.44 % 1.38 % 0.47 % 1.07 % 1.12 % 1.20 %
Return on average common equity 11.78 % 3.86 % 12.73 % 4.47 % 10.04 % 9.47 % 11.39 %
Average loans to average deposits 96.43 % 102.28 % 97.25 % 96.78 % 101.41 % 98.42 % 99.15 %
Average equity to average assets 12.45 % 11.43 % 10.86 % 10.44 % 10.68 % 11.87 % 10.53 %
Net interest margin (tax equivalent) 3.92 % 3.95 % 3.92 % 3.94 % 3.95 % 3.93 % 3.96 %
Efficiency ratio 56.00 % 80.50 % 62.04 % 63.74 % 67.94 % 65.66 % 63.57 %

Non-GAAP Measures Reconciliation -

Tangible book value per common share:

Total shareholders’ equity $ 1,404,977
$ 1,371,896
$ 868,944
$ 804,479
$ 801,921
$ 1,404,977
$ 801,921
Less:

Goodwill 505,604
504,764
208,513
125,532
125,532
505,604
125,532
Other intangible assets, net 54,729
53,561
12,562
13,496
14,437
54,729
14,437
Tangible common equity $ 844,644
$ 813,571
$ 647,869
$ 665,451
$ 661,952
$ 844,644
$ 661,952
End of period shares outstanding 47,496,966
47,518,662
38,327,081
37,260,012
37,231,049
47,496,966
37,231,049
Book value per common share $ 29.58
$ 28.87
$ 22.67
$ 21.59
$ 21.54
$ 29.58
$ 21.54
Tangible book value per common share 17.78
17.12
16.90
17.86
17.78
17.78
17.78

~~Acquisitions Completed in 2018~~

~~During the six months ended June 30, 2018, the Company completed three acquisitions: USPF, Atlantic, and Hamilton.~~

~~In accounting for business combinations, the Company uses the acquisition method of accounting in accordance with ASC 805,~~ ~~Business Combinations~~. Under the acquisition method of accounting, assets acquired, liabilities assumed and consideration exchanged are recorded at their respective acquisition date fair values. Any identifiable intangible assets that are acquired in a business combination are recognized at fair value on the acquisition date. Identifiable intangible assets are recognized separately if they arise from contractual or other legal rights or if they are separable (i.e., capable of being sold, transferred, licensed, rented or exchanged separately from the entity). If the consideration given exceeds the fair value of the net assets received, goodwill is recognized. Determining the fair value of assets and liabilities is a complicated process involving significant judgment regarding methods and assumptions used to calculate estimated fair values. Fair values are subject to refinement for up to one year after the closing date of the acquisition as additional information regarding the closing date fair values becomes available.

~~Under the acquisition method, income and expenses of the acquiree are recognized prospectively beginning from the date of acquisition.~~

~~US Premium Finance Holding Company~~

On January 31, 2018, the Company closed on the purchase of the final 70% of the outstanding shares of common stock of USPF, completing its acquisition of USPF and making USPF a wholly owned subsidiary of the Company. Through a series of three acquisition transactions that closed on January 18, 2017, January 3, 2018 and January 31, 2018, the Company issued a total of 1,073,158 shares of its common stock at a fair value of $55.9 million and paid $21.4 million in cash to the former shareholders of USPF. Pursuant to the terms of the Stock Purchase Agreement dated January 25, 2018 under which Company purchased the final 70% of the outstanding shares of common stock of USPF, the selling shareholders of USPF may receive additional cash payments aggregating up to $5.8 million based on the achievement by the Company's premium finance division of certain income targets, between January 1, 2018 and June 30, 2019. As of the January 31, 2018 acquisition date, the present value of the contingent earn-out consideration expected to be paid was $5.7 million. Including the fair value of the Company's common stock issued, cash paid and the present value of the contingent earn-out consideration expected to be paid, the aggregate purchase price of USPF amounted to $83.0 million. For additional information regarding the USPF acquisition see Note 2.

~~Atlantic Coast Financial Corporation~~

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

In accounting for the Atlantic acquisition, the Company recorded assets (exclusive of goodwill) of $873.9 million, loans held for investment of $755.7 million, deposits of $585.2 million, and other borrowings of $204.5 million. For additional information regarding the Atlantic acquisition see Note 2.

~~Hamilton State Bancshares, Inc.~~

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

In accounting for the Hamilton acquisition, the Company recorded assets (exclusive of goodwill) of $1.78 billion, investment securities of $285.8 million, loans held for investment of $1.30 billion, and deposits of $1.58 billion. For additional information regarding the Hamilton acquisition see Note 2.

~~Costs and Requirements for Exceeding $10 Billion in Total Assets~~

With the completion of the Hamilton acquisition, the Bank surpassed $10 billion in total assets as of the merger's June 29, 2018 closing date. As a result, the Bank is now subject to additional regulations and oversight that can affect both our revenues and expenses.

Such regulations and oversight include becoming subject to: increased expectations with respect to risk management, internal audit, and information security; enhanced stress testing as a component of liquidity and capital planning; the examination and enforcement authority of the Consumer Financial Protection Bureau with respect to consumer and small business products and services; deposit insurance premium assessments based on an FDIC scorecard which takes into account, among other things, the Bank's CAMELS rating and results of asset-related stress testing and funding-related stress testing; and a cap on interchange transaction fees for debit cards, as required by Federal Reserve regulations, which will significantly reduce Ameris Bank's interchange revenue beginning in 2019 after a phase-in period.

We expect to expend additional resources to comply with these additional regulatory requirements. Further possible increased deposit insurance assessments may result in increased expenses. A decrease in the amount of interchange fees we receive on electronic debit interchange transactions will reduce our revenues. Finally, a failure to meet prudential risk management and capital planning standards or compliance with consumer lending laws could, among other things, limit our ability to engage in expansionary activities or make dividend payments to our shareholders.

~~Subsequent Events~~

Management continues to evaluate the financial impact of Hurricane Michael to be recorded in the fourth quarter of 2018. This assessment includes the increased credit risk stemming from loans secured by real estate, agricultural loans, consumer installment home improvement loans, as well as the general economic impact to the impacted areas. The assessment also includes damage to bank branch locations and equipment not expected to be covered by insurance, business interruption to certain bank branch locations due to loss of power or network connectivity, employee assistance, refund of overdraft fees and ATM fees and other community outreach programs. Although management’s assessment was not finalized at the time of this filing, the total financial impact of Hurricane Michael expected to be recorded in the fourth quarter of 2018 is currently projected on a pre-tax basis to be in the range of $1.5 million to $2.3 million.

~~Results of Operations for the Three Months Ended September 30, 2018 and 2017~~

~~Consolidated Earnings and Profitability~~

Ameris reported net income available to common shareholders of $41.4 million, or $0.87 per diluted share, for the quarter ended September 30, 2018, compared with $20.2 million, or $0.54 per diluted share, for the same period in 2017. The Company’s return on average assets and average shareholders’ equity were 1.47% and 11.78%, respectively, in the third quarter of 2018, compared with 1.07% and 10.04%, respectively, in the third quarter of 2017. During the third quarter of 2018, the Company incurred pre-tax merger and conversion charges of $276,000, pre-tax executive retirement benefits of $1.0 million, pre-tax restructuring charges related to branch consolidations of $229,000 and pre-tax losses on the sale of premises of $4,000. During the third quarter of 2017, the Company incurred pre-tax merger and conversion charges of $92,000, pre-tax compliance resolution expenses of $4.7 million, pre-tax financial impact of Hurricane Irma of $410,000 and pre-tax losses on the sale of premises of $91,000. Excluding these merger and conversion charges, executive retirement benefits, restructuring charges, compliance resolution expenses, the financial impact of Hurricane Irma and losses on the sale of premises, the Company’s net income would have been $43.3 million, or $0.91 per diluted share, for the third quarter of 2018 and $23.6 million, or $0.63 per diluted share, for the third quarter of 2017.

~~Below is a reconciliation of adjusted net income to net income, as discussed above.~~



	Nine Months Ended September 30, 2019
(dollars in thousands)	Banking Division		Retail Mortgage Division		Warehouse Lending Division		SBA Division		Premium Finance Division		Total
Interest income	$	338,396	$	53,286	$	16,140	$	8,827	$	25,669	$	442,318
Interest expense	44,340		26,957		7,294		3,986		9,926		92,503
Net interest income	294,056		26,329		8,846		4,841		15,743		349,815
Provision for loan losses	7,913		2,235		—		394		3,523		14,065
Noninterest income	50,373		84,853		1,389		6,379		6		143,000
Noninterest expense
Salaries and employee benefits	91,954		54,237		609		3,447		4,049		154,296
Equipment and occupancy expenses	25,065		3,122		4		190		296		28,677
Data processing and telecommunications expenses	24,778		1,384		109		27		853		27,151
Other expenses	126,743		7,983		170		1,249		3,104		139,249
Total noninterest expense	268,540		66,726		892		4,913		8,302		349,373
Income before income tax expense	67,976		42,221		9,343		5,913		3,924		129,377
Income tax expense	16,197		8,831		1,962		1,242		952		29,184
Net income	$	51,779	$	33,390	$	7,381	$	4,671	$	2,972	$	100,193



	Nine Months Ended September 30, 2018
(dollars in thousands)	Banking Division		Retail Mortgage Division		Warehouse Lending Division		SBA Division		Premium Finance Division			Total
Interest income	$	226,576	$	24,142	$	10,428	$	5,428	$	24,003		$	290,577
Interest expense	25,417		8,555		3,778		1,725		7,264			46,739
Net interest income	201,159		15,587		6,650		3,703		16,739			243,838
Provision for loan losses	2,883		585		—		1,025		8,513			13,006
Noninterest income	42,910		37,571		1,635		3,764		2,062			87,942
Noninterest expense
Salaries and employee benefits	74,834		28,667		402		2,010		4,250			110,163
Equipment and occupancy expenses	19,032		1,756		2		171		225			21,186
Data processing and telecommunications expenses	19,504		1,119		93		19		1,357			22,092
Other expenses	54,478		5,337		176		884		3,521			64,396
Total noninterest expense	167,848		36,879		673		3,084		9,353			217,837
Income before income tax expense	73,338		15,694		7,612		3,358		935			100,937
Income tax expense (benefit)	18,114		3,262		1,598		705		(233		)	23,446
Net income	$	55,224	$	12,432	$	6,014	$	2,653	$	1,168		$	77,491

Three Months Ended September 30,
(in thousands, except share and per share data) 2018 2017
Net income available to common shareholders $ 41,444
$ 20,158
Adjustment items:

Merger and conversion charges 276
92
Executive retirement benefits 962
—
Restructuring charge 229
—
Certain compliance resolution expenses —
4,729
Financial impact of Hurricane Irma —
410
Loss on the sale of premises 4
91
Tax effect of adjustment items (Note 1)
377
(1,863 )
After tax adjustment items 1,848
3,459
Adjusted net income $ 43,292
$ 23,617

Weighted average common shares outstanding - diluted 47,685,334
37,552,667
Net income per diluted share $ 0.87
$ 0.54
Adjusted net income per diluted share $ 0.91
$ 0.63

Note 1: A portion of the 2018 third quarter merger and conversion charges is nondeductible for tax purposes.

Below is additional information regarding the retail banking activities, mortgage banking activities, warehouse lending activities, SBA activities and premium finance activities of the Company during the third quarter of 2018 and 2017, respectively:

Three Months Ended
September 30, 2018
(dollars in thousands)
Banking
Division

Retail
Mortgage
Division

Warehouse
Lending
Division

SBA
Division

Premium
Finance
Division
Total
Interest income $ 97,282
$ 9,347
$ 4,035
$ 2,090
$ 8,365
$ 121,119
Interest expense 13,241
3,803
1,566
631
2,840
22,081
Net interest income 84,041
5,544
2,469
1,459
5,525
99,038
Provision for loan losses 1,229
122
—
41
703
2,095
Noninterest income 16,524
12,097
503
1,045
2
30,171
Noninterest expense

Salaries and employee benefits 26,120
10,061
136
682
1,447
38,446
Equipment and occupancy expenses 7,871
618
2
58
49
8,598
Data processing and telecommunications expenses 7,589
347
30
1
551
8,518
Other expenses 13,461
1,828
69
210
1,223
16,791
Total noninterest expense 55,041
12,854
237
951
3,270
72,353
Income before income tax expense 44,295
4,665
2,735
1,512
1,554
54,761
Income tax expense 11,156
943
574
317
327
13,317
Net income $ 33,139
$ 3,722
$ 2,161
$ 1,195
$ 1,227
$ 41,444

~~Net Interest Income and Margins~~

The following table sets forth the average balance, interest income or interest expense, and average yield/rate paid for each category of interest-earning assets and interest-bearing liabilities, net interest spread, and net interest margin on average interest-earning assets for the three months ended September 30, 2018 and 2017. Federally tax-exempt income is presented on a taxable-equivalent basis assuming a 21% federal tax rate for 2018 and a 35% federal tax rate for 2017.

Quarter Ended
September 30,
2018 2017
(dollars in thousands)
Average
Balance

Interest
Income/
Expense

Average
Yield/
Rate Paid

Average
Balance

Interest
Income/
Expense

Average
Yield/
Rate Paid
Assets

Interest-earning assets:

Federal funds sold, interest-bearing deposits in banks, and time deposits in other banks $ 310,235
$ 1,653
2.11% $ 109,266
$ 406
1.47%
Investment securities 1,185,225
9,050
3.03% 864,456
5,665
2.60%
Loans held for sale 151,396
1,566
4.10% 126,798
1,131
3.54%
Loans 5,703,921
73,178
5.09% 4,379,082
53,394
4.84%
Purchased loans 2,499,393
34,692
5.51% 937,595
14,048
5.94%
Purchased loan pools 287,859
2,059
2.84% 475,742
3,491
2.91%
Total interest-earning assets 10,138,029
122,198
4.78% 6,892,939
78,135
4.50%
Noninterest-earning assets 1,066,475

568,428

Total assets $ 11,204,504

$ 7,461,367

Liabilities and Shareholders’ Equity

Interest-bearing liabilities:

Savings and interest-bearing demand deposits $ 4,430,646
$ 7,109
0.64% $ 3,162,448
$ 2,963
0.37%
Time deposits 2,210,673
8,521
1.53% 1,020,239
2,173
0.85%
Federal funds purchased and securities sold under agreements to repurchase 12,529
4
0.13% 19,414
11
0.22%
FHLB advances 513,460
2,745
2.12% 608,413
1,849
1.21%
Other borrowings 145,513
2,180
5.94% 75,590
1,183
6.21%
Subordinated deferrable interest debentures 88,801
1,522
6.80% 85,040
1,288
6.01%
Total interest-bearing liabilities 7,401,622
22,081
1.18% 4,971,144
9,467
0.76%
Demand deposits 2,320,851

1,654,467

Other liabilities 86,552

38,900

Shareholders’ equity 1,395,479

796,856

Total liabilities and shareholders’ equity $ 11,204,504

$ 7,461,367

Interest rate spread

3.60%

3.74%
Net interest income
$ 100,117

$ 68,668

Net interest margin

3.92%

3.95%

On a tax-equivalent basis, net interest income for the third quarter of 2018 was $100.1 million, an increase of $31.4 million, or 45.8%, compared with $68.7 million reported in the same quarter in 2017. The higher net interest income is a result of growth in average interest earning assets which increased $3.25 billion, or 47.1%, from $6.89 billion in the third quarter of 2017 to $10.14 billion for the third quarter of 2018. This growth in interest earning assets resulted primarily from the Atlantic acquisition and the Hamilton acquisition both occurring in the second quarter of 2018, as well as strong growth in average legacy loans which increased $1.32 billion, or 30.3%, to $5.70 billion in the third quarter 2018 from $4.38 billion in the same period of 2017. The Company’s net interest margin during the third quarter of 2018 was 3.92%, down three basis points from 3.95% reported in the third quarter of 2017 and also down three basis points from 3.95% reported in the second quarter of 2018.

Total interest income, on a tax-equivalent basis, increased to $122.2 million during the third quarter of 2018, compared with $78.1 million in the same quarter of 2017. Yields on earning assets increased to 4.78% during the third quarter of 2018, compared with 4.50% reported in the third quarter of 2017. During the third quarter of 2018, loans comprised 85.2% of average earning assets, compared with 85.9% in the same quarter of 2017. Yields on legacy loans increased to 5.09% in the third quarter of 2018, compared with 4.84% in the same period of 2017. The yield on purchased loans decreased from 5.94% in the third quarter of 2017 to 5.51% during the third quarter of 2018. Accretion income for the third quarter of 2018 was $3.7 million, compared with $2.7 million in the second quarter of 2018 and $2.7 million in the third quarter of 2017. Excluding the effect of accretion on purchased loans, the yield on purchased loans was 4.79% for the third quarter of 2017, compared with 4.93% in the same period of 2018. Yields on

purchased loan pools decreased from 2.91% in the third quarter of 2017 to 2.84% in the same period in 2018. Management anticipates improving economic conditions and increased loan demand will provide consistent interest income.

The yield on total interest-bearing liabilities increased from 0.76% in the third quarter of 2017 to 1.18% in the third quarter of 2018. Total funding costs, inclusive of noninterest-bearing demand deposits, increased to 0.90% in the third quarter of 2018, compared with 0.57% during the third quarter of 2017. Deposit costs increased from 0.35% in the third quarter of 2017 to 0.69% in the third quarter of 2018. Non-deposit funding costs increased from 2.18% in the third quarter of 2017 to 3.37% in the third quarter of 2018. The increase in non-deposit funding costs was driven primarily by higher market rates being paid on short-term FHLB advances. Funding from non-CD deposits averaged 75.3% of total deposits in the third quarter of 2018, compared with 82.5% during the third quarter of 2017. Average balances of interest bearing deposits and their respective costs for the third quarter of 2018 and 2017 are shown below:

Three Months Ended
September 30, 2018 Three Months Ended
September 30, 2017
(dollars in thousands)
Average
Balance

Average
Cost

Average
Balance

Average
Cost
NOW $ 1,567,111
0.29% $ 1,201,151
0.20%
MMDA 2,440,086
0.96% 1,682,306
0.55%
Savings 423,449
0.08% 278,991
0.07%
Retail CDs < $100,000 744,145
0.97% 437,641
0.62%
Retail CDs > $100,000 978,842
1.48% 582,598
1.01%
Brokered CDs 487,686
2.48% —
—%
Interest-bearing deposits $ 6,641,319
0.93% $ 4,182,687
0.49%

~~Provision for Loan Losses~~

The Company’s provision for loan losses during the third quarter of 2018 amounted to $2.1 million, compared with $9.1 million in the second quarter of 2018 and $1.8 million in the third quarter of 2017. Approximately $6.7 million of the provision for loan losses recorded during the second quarter of 2018 was attributable to two loan relationships within the premium finance division that became impaired during the second quarter of 2018. At September 30, 2018, classified loans still accruing increased to $67.1 million, compared with $57.8 million at December 31, 2017 due to classified loans still accruing purchased during the second quarter of 2018 in the Atlantic and Hamilton acquisitions. Non-performing assets as a percentage of total assets decreased from 0.68% at December 31, 2017 to 0.60% at September 30, 2018. Net charge-offs on legacy loans during the third quarter of 2018 were approximately $6.3 million, or 0.44% of average legacy loans on an annualized basis, compared with approximately $1.6 million, or 0.15%, in the third quarter of 2017. The increase in net charge-offs on legacy loans during the third quarter of 2018 was primarily attributable to elevated charge-offs in the premium finance division which had been provided for through increased provision for loan losses in the second quarter of 2018. The Company’s allowance for loan losses allocated to legacy loans at September 30, 2018 was $25.3 million, or 0.46% of legacy loans, compared with $21.5 million, or 0.44% of legacy loans, at December 31, 2017. The Company’s total allowance for loan losses at September 30, 2018 was $28.1 million, or 0.33% of total loans, compared with $25.8 million, or 0.43% of total loans, at December 31, 2017.

~~Noninterest Income~~

Total non-interest income for the third quarter of 2018 was $30.2 million, an increase of $3.2 million, or 11.7%, from the $27.0 million reported in the third quarter of 2017. Service charges on deposit accounts in the third quarter of 2018 were $12.7 million, increasing by $2.2 million , or 20.5%, compared with $10.5 million in the third quarter of 2017. This increase in service charges on deposit accounts is due primarily to an increase in the number of deposit accounts resulting from the Atlantic and Hamilton acquisitions in the second quarter of 2018. Income from mortgage-related activities was $13.4 million in the third quarter of 2018 consistent with $13.3 million in the third quarter of 2017. Total production in the third quarter of 2018 amounted to $479.1 million, compared with $401.7 million in the same quarter of 2017, while spread (gain on sale) decreased to 3.00% in the current quarter compared with 3.30% in the same quarter of 2017. The retail mortgage open pipeline finished the third quarter of 2018 at $162.4 million, compared with $228.7 million at the beginning of the third quarter of 2018 and $158.4 million at the end of the third quarter of 2017. Other service charges, commissions and fees increased $78,000, or 11.2%, to $777,000 during the third quarter of 2018, compared with $699,000 during the third quarter of 2017 due to increased ATM fees. Other non-interest income increased $818,000, or 33.7%, to $3.2 million for the third quarter of 2018, compared with $2.4 million during the third quarter of 2017. The increase in other non-interest income was primarily attributable to increases in loan servicing income, bank owned life insurance income and check order fee income, with such increases partially offset by a decrease in gain on sale of SBA loans.

~~Noninterest Expense~~

Total non-interest expenses for the third quarter of 2018 increased $8.6 million, or 13.5%, to $72.4 million, compared with $63.8 million in the same quarter 2017. Salaries and employee benefits increased $5.9 million, or 18.0%, from $32.6 million in the third quarter of 2017 to $38.4 million in the third quarter of 2018 due primarily to an increase of 402, or 27.8%. full-time equivalent employees from 1,445 at September 30, 2017 to 1,847 at September 30, 2018, resulting from staff added as a result of the Atlantic and Hamilton acquisitions which occurred in the second quarter of 2018. Additionally, $962,000 in salaries and employee benefits expense was recorded during the third quarter of 2018 related to executive retirement benefits. Occupancy and equipment expenses increased $2.6 million, or 42.4%, to $8.6 million for the third quarter of 2018, compared with $6.0 million in the third quarter of 2017 due primarily to an increase of 28 branch locations from 97 at September 30, 2017 to 125 at September 30, 2018, resulting from branch locations added as a result of the Atlantic and Hamilton acquisitions. Data processing and telecommunications expense increased $1.5 million, or 20.8%, to $8.5 million in the third quarter of 2018, compared with $7.1 million in the third quarter of 2017, due to an increase in core banking system charges related to an increase in the number of accounts being processed by our core banking system as a result of the Atlantic and Hamilton acquisitions and additional software fees incurred related to the buildout of our BSA compliance program. Credit resolution-related expenses decreased $99,000, or 7.3%, from $1.3 million in the third quarter of 2017 to $1.2 million in the third quarter of 2018. Advertising and marketing expense was $1.5 million in the third quarter of 2018, compared with $1.2 million in the third quarter of 2017. Amortization of intangible assets increased $1.7 million, or 184.4%, from $941,000 in the third quarter of 2017 to $2.7 million in the third quarter of 2018 due to additional amortization of intangible assets recorded as part of the USPF, Atlantic and Hamilton acquisitions. Merger and conversion charges were $276,000 in the third quarter of 2018, compared with $92,000 in the same quarter of 2017. Other noninterest expenses decreased $3.3 million, or 23.0%, from $14.5 million in the third quarter of 2017 to $11.1 million in the third quarter of 2018, due primarily to a reduction in consulting fees related to our BSA compliance program.

~~Income Taxes~~

Income tax expense is influenced by the statutory rate, the amount of taxable income, the amount of tax-exempt income and the amount of non-deductible expenses. For the third quarter of 2018, the Company reported income tax expense of $13.3 million, compared with $8.1 million in the same period of 2017. The Company’s effective tax rate for the three months ending September 30, 2018 and 2017 was 24.3% and 28.8%, respectively. The decrease in the effective tax rate is due to enactment of the Tax Reform Act during the fourth quarter of 2017.

~~Results of Operations for the Nine Months Ended September 30, 2018 and 2017~~

~~Consolidated Earnings and Profitability~~

Ameris reported net income available to common shareholders of $77.5 million, or $1.85 per diluted share, for the nine months ended September 30, 2018, compared with $64.4 million, or $1.74 per diluted share, for the same period in 2017. The Company’s return on average assets and average shareholders’ equity were 1.12% and 9.47%, respectively, in the nine months ended September 30, 2018, compared with 1.20% and 11.39%, respectively, in the same period in 2017. During the first nine months of 2018, the Company incurred pre-tax merger and conversion charges of $19.5 million, pre-tax executive retirement benefits of $6.4 million, pre-tax restructuring charges related to branch consolidations of $229,000 and pre-tax losses on the sale of premises of $783,000. During the first nine months of 2017, the Company incurred pre-tax merger and conversion charges of $494,000, pre-tax compliance resolution expenses of $4.7 million, pre-tax financial impact of Hurricane Irma of $410,000 and pre-tax losses on the sale of premises of $956,000. Excluding these merger and conversion charges, executive retirement benefits, restructuring charges, compliance resolution expenses, the financial impact of Hurricane Irma and losses on the sale of premises, the Company’s net income would have been $100.3 million, or $2.40 per diluted share, for the nine months ended September 30, 2018 and $68.7 million, or $1.86 per diluted share, for the same period in 2017.

~~Below is a reconciliation of adjusted net income to net income, as discussed above.~~

Nine Months Ended
September 30,
(in thousands, except share and per share data) 2018 2017
Net income available to common shareholders $ 77,491
$ 64,398
Adjustment items:

Merger and conversion charges 19,502
494
Executive retirement benefits 6,419
—
Restructuring charge 229
—
Certain compliance resolution expenses —
4,729
Financial impact of Hurricane Irma —
410
Loss on the sale of premises 783
956
Tax effect of adjustment items (Note 1)
(4,113 ) (2,306 )
After tax adjustment items 22,820
4,283
Adjusted net income $ 100,311
$ 68,681

Weighted average common shares outstanding - diluted 41,844,900
37,017,486
Net income per diluted share $ 1.85
$ 1.74
Adjusted net income per diluted share $ 2.40
$ 1.86

Note 1: A portion of the 2018 merger and conversion charges and a portion of the 2018 executive retirement benefits are nondeductible for tax purposes.

~~Net Interest Income and Margins~~

The following table sets forth the average balance, interest income or interest expense, and average yield/rate paid for each category of interest-earning assets and interest-bearing liabilities, net interest spread, and net interest margin on average interest-earning assets for the nine months ended September 30, 2018 and 2017. Federally tax-exempt income is presented on a taxable-equivalent basis assuming a 21% federal tax rate for 2018 and a 35% federal tax rate for 2017.

Nine Months Ended
September 30,
2018 2017
(dollars in thousands)
Average
Balance

Interest
Income/
Expense

Average
Yield/
Rate Paid

Average
Balance

Interest
Income/
Expense

Average
Yield/
Rate Paid
Assets

Interest-earning assets:

Federal funds sold, interest-bearing deposits in banks, and time deposits in other banks $ 205,274
$ 3,092
2.01% $ 126,014
$ 1,070
1.14%
Investment securities 986,065
21,212
2.88% 864,684
16,917
2.62%
Loans held for sale 143,848
4,091
3.80% 105,296
2,842
3.61%
Loans 5,277,108
195,857
4.96% 4,018,597
143,806
4.78%
Purchased loans 1,483,029
62,584
5.64% 982,033
43,986
5.99%
Purchased loan pools 307,718
6,750
2.93% 513,750
11,109
2.89%
Total interest-earning assets 8,403,042
293,586
4.67% 6,610,374
219,730
4.44%
Noninterest-earning assets 814,132

569,956

Total assets $ 9,217,174

$ 7,180,330

Liabilities and Shareholders’ Equity

Interest-bearing liabilities:

Savings and interest-bearing demand deposits $ 3,861,389
$ 16,784
0.58% $ 3,048,284
$ 7,614
0.33%
Time deposits 1,438,645
13,412
1.25% 994,770
5,865
0.79%
Federal funds purchased and securities sold under agreements to repurchase 16,036
18
0.15% 29,612
44
0.20%
FHLB advances 529,917
7,585
1.91% 539,496
3,994
0.99%
Other borrowings 102,713
4,634
6.03% 66,420
2,900
5.84%
Subordinated deferrable interest debentures 86,874
4,306
6.63% 84,712
3,764
5.94%
Total interest-bearing liabilities 6,035,574
46,739
1.04% 4,763,294
24,181
0.68%
Demand deposits 2,027,145

1,624,837

Other liabilities 60,222

36,046

Shareholders’ equity 1,094,233

756,153

Total liabilities and shareholders’ equity $ 9,217,174

$ 7,180,330

Interest rate spread

3.63%

3.76%
Net interest income
$ 246,847

$ 195,549

Net interest margin

3.93%

3.96%

On a tax-equivalent basis, net interest income for the nine months ended September 30, 2018 was $246.8 million, an increase of $51.3 million, or 26.2%, compared with $195.5 million reported in the same period of 2017. The higher net interest income is a result of growth in average interest earning assets which increased $1.79 billion, or 27.1%, from $6.61 billion in the first nine months of 2017 to $8.40 billion for the first nine months of 2018. This increase in average interest earning assets is primarily a result of growth in average legacy loans and average purchased loans. Average legacy loans increased $1.26 billion, or 31.3%, to $5.28 billion in the first nine months of 2018 from $4.02 billion in the same period of 2017. Average purchased loans increased $501.0 million, or 51.0%, to $1.48 billion in the first nine months of 2018 from $982.0 million in the same period in 2017, resulting from the Atlantic acquisition and the Hamilton acquisition both occurring in the second quarter of 2018. The Company’s net interest margin decreased during the first nine months of 2018 to 3.93%, compared with 3.96% reported in the first nine months of 2017.

Total interest income, on a tax-equivalent basis, increased to $293.6 million during the nine months ended September 30, 2018, compared with $219.7 million in the same period of 2017. Yields on earning assets increased to 4.67% during the first nine months of 2018, compared with 4.44% reported in the same period of 2017. During the first nine months of 2018, loans comprised 85.8% of average earning assets, compared with 85.0% in the same period of 2017. Yields on legacy loans increased to 4.96% during the nine months ended September 30, 2018, compared with 4.78% in the same period of 2017. The yield on purchased loans decreased from 5.99% in the first nine months of 2017 to 5.64% during the first nine months of 2018. Accretion income for the first nine months of 2018 was $7.8 million, compared with $8.4 million in the first nine months of 2017. Excluding the effect of

accretion on purchased loans, the yield on purchased loans was 4.84% for the first nine months of 2017, compared with 4.94% in the same period of 2018. Yields on purchased loan pools increased from 2.89% in the first nine months of 2017 to 2.93% in the same period in 2018. Management anticipates improving economic conditions and increased loan demand will provide consistent interest income.

The yield on total interest-bearing liabilities increased from 0.68% during the nine months ended September 30, 2017 to 1.04% in the same period of 2018. Total funding costs, inclusive of noninterest-bearing demand deposits, increased to 0.78% in the first nine months of 2018, compared with 0.51% during the same period of 2017. Deposit costs increased from 0.32% in the first nine months of 2017 to 0.55% in the same period of 2018. Non-deposit funding costs increased from 1.99% in the first nine months of 2017 to 3.01% in the same period of 2018. The increase in non-deposit funding costs was driven primarily by higher market rates being paid on short-term FHLB advances coupled with an increase in the average balance of other borrowings which carry a higher interest rate. Funding from non-CD deposits averaged 80.4% of total deposits in the first nine months of 2018, compared with 82.4% during the same period of 2017. Average balances of interest bearing deposits and their respective costs for the nine months ended September 30, 2018 and 2017 are shown below:

Nine Months Ended
September 30, 2018 Nine Months Ended
September 30, 2017
(dollars in thousands)
Average
Balance

Average
Cost

Average
Balance

Average
Cost
NOW $ 1,406,434
0.31% $ 1,175,143
0.18%
MMDA 2,122,138
0.84% 1,597,637
0.49%
Savings 332,817
0.07% 275,504
0.07%
Retail CDs < $100,000 548,805
0.83% 441,107
0.57%
Retail CDs > $100,000 720,781
1.28% 553,663
0.96%
Brokered CDs 169,059
2.47% —
—%
Interest-bearing deposits $ 5,300,034
0.76% $ 4,043,054
0.45%

~~Provision for Loan Losses~~

The Company’s provision for loan losses during the nine months ended September 30, 2018 amounted to $13.0 million, compared with $5.8 million in the nine months ended September 30, 2017. Approximately $6.7 million of the provision for loan losses recorded during the nine months ended September 30, 2018 was attributable to two loan relationships within the premium finance division that became impaired during the second quarter of 2018. At September 30, 2018, classified loans still accruing increased to $67.1 million, compared with $57.8 million at December 31, 2017 due to classified loans still accruing purchased during the second quarter of 2018 in the Atlantic and Hamilton acquisitions. Non-performing assets as a percentage of total assets decreased from 0.68% at December 31, 2017 to 0.60% at September 30, 2018. Net charge-offs on legacy loans during the first nine months of 2018 were $11.4 million, or 0.29% of average legacy loans on an annualized basis, compared with approximately $4.0 million, or 0.13%, in the first nine months of 2017. The increase in net charge-offs on legacy loans during the first nine months of 2018 was primarily attributable to elevated charge-offs in the premium finance division. The Company’s allowance for loan losses allocated to legacy loans at September 30, 2018 was $25.3 million, or 0.46% of legacy loans, compared with $21.5 million, or 0.44% of legacy loans, at December 31, 2017. The Company’s total allowance for loan losses at September 30, 2018 was $28.1 million, or 0.33% of total loans, compared with $25.8 million, or 0.43% of total loans, at December 31, 2017.

~~Noninterest Income~~

Total non-interest income for the nine months ended September 30, 2018 was $87.9 million, an increase of $7.0 million, or 8.7%, from the $80.9 million reported for the nine months ended September 30, 2017.~~Service charges on deposit accounts in the first nine months of 2018 increased $1.8 million, or 5.7%, to $33.5 million, compared with $31.7 million in the first nine months of 2017.This increase in service charge revenue was primarily attributable to higher debit card interchange income.Income from mortgage-related activities increased $1.7 million , or 4.4%, from $38.5 million in the first nine months of 2017 to $40.2 million in the same period of 2018.~~Total production in the first nine months of 2018 amounted to $1.36 billion, compared with $1.11 billion in the same period of 2017, while spread (gain on sale) decreased to 2.88% during the nine months ended September 30, 2018, compared with 3.40% in the same period of 2017. The retail mortgage open pipeline finished the first nine months of 2018 at $162.4 million, compared with $119.6 million at the beginning of 2018 and $158.4 million at the end of the first nine months of 2017. Other service charges, commissions and fees were $2.2 million during the first nine months of 2018, consistent with $2.1 million during the first nine months of 2017. Other non-interest income increased $3.5 million, or 41.7%, to $12.1 million for the first nine months of 2018, compared with $8.5 million during the same period of 2017. The increase in other non-interest income was primarily attributable to $2.0 million in other income recorded as a result of a decrease in the estimated contingent consideration liability related to the USPF acquisition coupled with increases in loan servicing income, check order fee income and bankcard merchant fee income, with such increases partially offset by a decrease in gain on sale of SBA loans.

~~Noninterest Expense~~

Total non-interest expenses for the nine months ended September 30, 2018 increased $45.2 million, or 26.2%, to $217.8 million, compared with $172.6 million in the same period of 2017. Salaries and employee benefits increased $20.8 million, or 23.2%, from $89.5 million in the first nine months of 2017 to $110.3 million in the same period of 2018 due to $6.4 million in expense recorded during the first nine months of 2018 related to executive retirement benefits coupled with higher incentive pay, increased share-based compensation expense and increased investment in the Company's BSA function, as well as staff additions resulting from the Atlantic and Hamilton acquisitions. Occupancy and equipment expenses increased $3.1 million, or 17.3%, to $21.2 million for the first nine months of 2018, compared with $18.1 million in the same period of 2017 due primarily to 28 branch locations being added during 2018 as a result of the Atlantic and Hamilton acquisitions. Data processing and telecommunications expense was $22.1 million in the first nine months of 2018, increasing $1.4 million, or 7.0% from $20.7 million reported in the same period of 2017. This increase in data processing and telecommunications during the first nine months of 2018 reflects increased core banking system charges due to an increase in the number of accounts being processed by our core banking system and additional software fees incurred related to the buildout of our BSA compliance program, partially offset by a $1.4 million refund recorded in the second quarter of 2018 related to overcharges on prior billings from a data processing vendor.Credit resolution-related expenses decreased $37,000, or 1.3%, from $2.9 million in the first nine months of 2017 to $2.8 million in the same period of 2018. Amortization of intangible assets increased $2.9 million, or 96.1%, from $3.0 million in the first nine months of 2017 to $5.9 million in the first nine months of 2018, due primarily to additional amortization of intangible assets recorded as part of the USPF, Atlantic and Hamilton acquisitions. Merger and conversion charges were $19.5 million in the first nine months of 2018, compared with $494,000 in the same period in 2017, reflecting the USPF, Atlantic and Hamilton acquisitions during the first nine months of 2018. Other noninterest expenses decreased $2.3 million, or 6.7%, from $34.4 million in the first nine months of 2017 to $32.1 million in the same period of 2018 resulting primarily from a decrease in 2018 consulting fees related to our BSA compliance program and a decrease in loan expense, partially offset by increases in loan servicing expense, debit card charge-offs, and servicing asset amortization expense.

~~Income Taxes~~

Income tax expense is influenced by the statutory rate, the amount of taxable income, the amount of tax-exempt income and the amount of non-deductible expenses. For the nine months ended September 30, 2018, the Company reported income tax expense of $23.4 million, compared with $28.7 million in the same period of 2017. The Company’s effective tax rate for the nine months ended September 30, 2018 and 2017 was 23.2% and 30.8%, respectively. The decrease in the effective tax rate is due to enactment of the Tax Reform Act during the fourth quarter of 2017.

~~Financial Condition as of September 30, 2018~~

~~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. Restricted equity securities, are classified as other investment securities and are carried at cost and are periodically evaluated for impairment based on ultimate recovery of par value or cost basis.

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 trade date. Declines in the fair value of securities below their cost that are deemed to be other-than-temporary are reflected in earnings as realized losses.

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

Management evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Substantially all of the unrealized losses on debt securities are related to changes in interest rates and do not affect the expected cash flows of the issuer or underlying collateral. All unrealized losses are considered temporary because each security carries an acceptable investment grade and the Company does not intend to sell these investment securities at an unrealized loss position at September 30, 2018, and it is more likely than not that the Company will

~~not be required to sell these securities prior to recovery or maturity. Therefore, at September 30, 2018, these investments are not considered impaired on an other-than temporary basis.~~

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

(dollars in thousands) Amortized Cost
Fair
Value

Book
Yield

Modified
Duration

Estimated
Cash
Flows
12 Months
September 30, 2018
State, county and municipal securities $ 151,934
$ 151,749
3.81% 4.07 $ 17,753
Corporate debt securities 67,175
67,118
4.53% 4.98 500
Mortgage-backed securities 965,185
943,703
2.83% 4.22 134,523
Total debt securities $ 1,184,294
$ 1,162,570
3.05% 4.25 $ 152,776

December 31, 2017

State, county and municipal securities $ 135,968
$ 137,794
3.78% 4.61 $ 11,370
Corporate debt securities 46,659
47,143
4.12% 5.17 3,000
Mortgage-backed securities 630,666
625,936
2.37% 3.91 100,603
Total debt securities $ 813,293
$ 810,873
2.71% 4.10 $ 114,973

~~Loans and Allowance for Loan Losses~~

At September 30, 2018, gross loans outstanding (including purchased loans, purchased loan pools, and loans held for sale) were $8.66 billion, an increase of $2.42 billion, or 38.7%, from $6.24 billion reported at December 31, 2017. Loans held for sale decreased from $197.4 million at December 31, 2017 to $130.2 million at September 30, 2018. Legacy loans (excluding purchased loans and purchased loan pools) increased $686.8 million, or 14.1%, from $4.86 billion at December 31, 2017 to $5.54 billion at September 30, 2018, driven primarily by growth in the commercial real estate and residential real estate loan categories. Purchased loans increased $1.85 billion, or 214.7%, from $861.6 million at December 31, 2017 to $2.71 billion at September 30, 2018, due to $2.05 billion in loans purchased in the Atlantic and Hamilton acquisitions and accretion of $8.1 million, partially offset by paydowns of $208.9 million, charge-offs of $1.3 million and transfers to OREO of $2.4 million. Purchased loan pools decreased $53.5 million, or 16.3%, from $328.2 million at December 31, 2017 to $274.8 million at September 30, 2018 due primarily to payments on the portfolio of $60.0 million and premium amortization of $1.5 million during the first nine months of 2018.

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) construction and development related real estate; (3) commercial and farmland real estate; (4) residential real estate; and (5) consumer. The Company’s management has strategically located its branches in select markets in Georgia, North Florida, Southeast Alabama and 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 probable incurred losses 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, which 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 market 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.

At the end of the third quarter of 2018, the allowance for loan losses allocated to legacy loans totaled $25.3 million, or 0.46% of legacy loans, compared with $21.5 million, or 0.44% of legacy loans, at December 31, 2017. The allowance for loan losses as a percentage of legacy loans increased from December 31, 2017 to September 30, 2018 due primarily to an increase in the allowance for loan losses allocated to loans collectively evaluated for impairment. Our legacy nonaccrual loans increased from $14.2 million at December 31, 2017 to $16.0 million at September 30, 2018. For the first nine months of 2018, our legacy net charge off ratio as a percentage of average legacy loans increased to 0.29%, compared with 0.13% for the first nine months of 2017. The total provision for loan losses for the first nine months of 2018 was $13.0 million, increasing from $5.8 million recorded for the first nine months of 2017. Our ratio of total nonperforming assets to total assets decreased from 0.68% at December 31, 2017 to 0.60% at September 30, 2018.

The balance of the allowance for loan losses allocated to all loans collectively evaluated for impairment increased 14.6%, or $2.9 million, during the first nine months of 2018, while the balance of all loans collectively evaluated for impairment increased 42.3%, or $2.49 billion, during the same period. The large increase in the balance of all loans collectively evaluated for impairment is primarily attributable to loans purchased during the second quarter of 2018 in the Atlantic and Hamilton acquisitions. As a percentage of total loans collectively evaluated for impairment, the allowance allocated to those loans declined from 0.34% at December 31, 2017 to 0.27% at September 30, 2018.

The balance of the allowance for loan losses allocated to legacy loans collectively evaluated for impairment increased 15.8%, or $3.0 million, during the first nine months of 2018, while the balance of legacy loans collectively evaluated for impairment increased 14.3%, or $689.6 million, during the same period. As a percentage of legacy loans collectively evaluated for impairment, the allowance allocated to those loans increased one basis point from 0.39% at December 31, 2017 to 0.40% at September 30, 2018 due to the consistency in the mix of loan and collateral types and the overall credit quality of the loan portfolio.

For the allowance allocated to loans collectively evaluated expressed as a percentage of loans evaluated collectively for impairment, the largest change for the first nine months of 2018 was noted in the legacy consumer installment loan category, which increased from 0.59% at December 31, 2017 to 0.79% at September 30, 2018 due to increased net charge-offs for the category. We consider a four year loss rate on all loan categories. We adjust the qualitative factors to account for the inherent risks in the portfolio that are not captured in the historical loss rates, such as volatile commodity prices for agriculture products, weather-related risks (droughts and hurricanes), growth rates of certain loan types and other factors management deems appropriate.

The balance of the allowance for loan losses allocated to loans individually evaluated for impairment decreased 9.2%, or $554,000, during the first nine months of 2018, while the balance of loans individually evaluated for impairment increased 17.1%, or $8.9 million, during the same period. The increase in loan balances individually evaluated for impairment was primarily attributable to an increase of $8.0 million in the purchased loans category. The largest change in the allowance for loan losses allocated to loans individually evaluated for impairment from December 31, 2017 to September 30, 2018 was a $1.2 million decrease for the purchased loans category.

~~The following tables present an analysis of the allowance for loan losses as of and for the nine months ended September 30, 2018 and 2017:~~

Nine Months Ended
September 30,
(dollars in thousands) 2018 2017
Balance of allowance for loan losses at beginning of period $ 25,791
$ 23,920
Provision charged to operating expense 13,006
5,828
Charge-offs:

Commercial, financial and agricultural 11,314
1,896
Real estate – construction and development 285
95
Real estate – commercial and farmland 169
413
Real estate – residential 695
2,031
Consumer installment 2,724
922
Purchased loans 1,514
1,472
Purchased loan pools —
—
Total charge-offs 16,701
6,829
Recoveries:

Commercial, financial and agricultural 2,842
699
Real estate – construction and development 117
244
Real estate – commercial and farmland 169
156
Real estate – residential 255
190
Consumer installment 362
78
Purchased loans 2,275
1,680
Purchased loan pools —
—
Total recoveries 6,020
3,047
Net charge-offs 10,681
3,782
Balance of allowance for loan losses at end of period $ 28,116
$ 25,966

As of and for the
Nine Months Ended
September 30, 2018
(dollars in thousands)
Legacy
Loans

Purchased
Loans

Purchased
Loan
Pools
Total
Allowance for loan losses at end of period $ 25,299
$ 2,013
$ 804
$ 28,116
Net charge-offs (recoveries) for the period 11,442
(761 ) —
10,681
Loan balances:

End of period 5,543,306
2,711,460
274,752
8,529,518
Average for the period 5,277,108
1,483,029
307,718
7,067,855
Net charge-offs as a percentage of average loans 0.29 % (0.07 )% 0.00 % 0.20 %
Allowance for loan losses as a percentage of end of period loans 0.46 % 0.07 % 0.29 % 0.33 %

As of and for the
Nine Months Ended
September 30, 2017
(dollars in thousands)
Legacy
Loans

Purchased
Loans

Purchased
Loan
Pools
Total
Allowance for loan losses at end of period $ 21,227
$ 3,262
$ 1,477
$ 25,966
Net charge-offs (recoveries) for the period 3,990
(208 ) —
3,782
Loan balances:

End of period 4,574,678
917,126
465,218
5,957,022
Average for the period 4,018,597
982,033
513,750
5,514,380
Net charge-offs as a percentage of average loans 0.13 % (0.03 )% 0.00 % 0.09 %
Allowance for loan losses as a percentage of end of period loans 0.46 % 0.36 % 0.32 % 0.44 %

~~Loans Excluding Purchased Loans~~

~~The following table summarizes the various loan types comprising the "Commercial, financial and agricultural" loan category displayed in the preceding table.~~

(dollars in thousands) September 30,
2018 December 31,
2017
Municipal loans $ 523,956
$ 522,880
Premium finance loans 500,424
482,536
Other commercial, financial and agricultural loans 397,772
357,092
$ 1,422,152
$ 1,362,508

~~Purchased Assets~~

Loans that were acquired in transactions, including those that are covered by the loss-sharing agreements with the FDIC (“purchased loans”), totaled $2.71 billion and $861.6 million at September 30, 2018 and December 31, 2017, respectively. The increase in purchased loans of $1.85 billion, or 214.7%, resulted primarily from $2.05 billion in loans purchased during the second quarter of 2018 in the Atlantic and Hamilton acquisitions. OREO that was acquired in transactions, including OREO that is covered by the loss-sharing agreements with the FDIC, totaled $7.7 million and $9.0 million, at September 30, 2018 and December 31, 2017, respectively.

The Bank initially records purchased loans at fair value, taking into consideration certain credit quality risk and interest rate risk. The Company believes its estimation of credit risk and its adjustments to the carrying balances of the acquired loans are adequate. If the Company determines that a loan or group of loans has deteriorated from its initial assessment of fair value, additional provision for loan loss expense will be recorded for the impairment in value. If the Company determines that a loan or group of loans has improved from its initial assessment of fair value, then the increase in cash flows over those expected at the acquisition date will result in the reversal of provision for loan loss expense to the extent of prior provisions or will be recognized as interest income prospectively if no provisions have been made or have been fully reversed.

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

(dollars in thousands) September 30,
2018 December 31, 2017
Commercial, financial and agricultural $ 413,365
$ 74,378
Real estate – construction and development 219,882
65,513
Real estate – commercial and farmland 1,399,174
468,246
Real estate – residential 649,352
250,539
Consumer installment 29,687
2,919
$ 2,711,460
$ 861,595

~~Purchased Loan Pools~~

Purchased loan pools are defined as groups of residential mortgage loans that were not acquired in bank acquisitions or FDIC-assisted transactions. As of September 30, 2018, purchased loan pools totaled $274.8 million and consisted of whole-loan residential mortgages on properties outside the Company’s markets, with principal balances totaling $272.3 million and $2.5 million of remaining purchase premium paid at acquisition. As of December 31, 2017, purchased loan pools totaled $328.2 million and consisted of whole-loan, adjustable rate residential mortgages on properties outside the Company’s markets, with principal balances totaling $324.4 million and $3.8 million of remaining purchase premium paid at acquisition. The Company has allocated

~~approximately $0.8 million and $1.1 million of the allowance for loan losses to the purchased loan pools at September 30, 2018 and December 31, 2017, respectively.~~

~~Non-Performing Assets~~

Non-performing assets include nonaccrual loans, accruing loans contractually past due 90 days or more, repossessed personal property, and OREO. 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 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.

Nonaccrual loans, excluding purchased loans, totaled $16.0 million at September 30, 2018, an increase of $1.8 million, or 12.6%, from $14.2 million reported at December 31, 2017. Nonaccrual purchased loans totaled $27.8 million at September 30, 2018, an increase of $12.3 million, or 80.0%, compared with $15.4 million at December 31, 2017. This increase in nonaccrual purchased loans resulted from nonaccrual loans purchased during the second quarter of 2018 as part of the Atlantic and Hamilton acquisitions. Nonaccrual loans within purchased loan pools totaled $4.7 million at September 30, 2018, compared with $0 at December 31, 2017. Accruing loans delinquent 90 days or more, excluding purchased loans, totaled $2.9 million at September 30, 2018, a decrease of $3.1 million, or 52.2%, compared with $6.0 million at December 31, 2017. At September 30, 2018, OREO, excluding purchased OREO, totaled $9.4 million, an increase of $911,000, or 10.8%, compared with $8.5 million at December 31, 2017. Purchased OREO totaled $7.7 million at September 30, 2018, a decrease of $1.3 million, or 14.6%, compared with $9.0 million at December 31, 2017. Management regularly assesses the valuation of OREO through periodic reappraisal and through inquiries received in the marketing process. At the end of the third quarter of 2018, total non-performing assets as a percent of total assets decreased to 0.60% compared with 0.68% at December 31, 2017.

~~Non-performing assets at September 30, 2018 and December 31, 2017 were as follows:~~

(dollars in thousands) September 30,
2018 December 31, 2017
Nonaccrual loans, excluding purchased loans $ 15,986
$ 14,202
Nonaccrual purchased loans 27,764
15,428
Nonaccrual purchased loan pools 4,696
—
Accruing loans delinquent 90 days or more, excluding purchased loans 2,863
5,991
Accruing purchased loans delinquent 90 days or more —
—
Foreclosed assets, excluding purchased assets 9,375
8,464
Purchased other real estate owned 7,692
9,011
Total non-performing assets $ 68,376
$ 53,096

~~Troubled Debt Restructurings~~

~~The restructuring of a loan is considered a “troubled debt restructuring” if both (i) the borrower is experiencing financial difficulties and (ii) the Company has granted a concession.~~

As of September 30, 2018 and December 31, 2017, the Company had a balance of $12.3 million and $15.6 million, respectively, in troubled debt restructurings, excluding purchased loans. The following table presents the amount of troubled debt restructurings by loan class, excluding purchased loans, classified separately as accrual and nonaccrual at September 30, 2018 and December 31, 2017:

September 30, 2018 Accruing Loans Non-Accruing Loans
Loan Class #
Balance
(in thousands)
#
Balance
(in thousands)
Commercial, financial and agricultural 5 $ 180
16 $ 208
Real estate – construction and development 5 384
2 6
Real estate – commercial and farmland 14 3,817
3 306
Real estate – residential 73 6,558
19 742
Consumer installment 3 4
30 92
Total 100 $ 10,943
70 $ 1,354

The following table presents the amount of troubled debt restructurings by loan class, excluding purchased loans, classified separately as those currently paying under restructured terms and those that have defaulted (defined as 30 days past due) under restructured terms at September 30, 2018 and December 31, 2017:

September 30, 2018
Loans Currently Paying
Under Restructured Terms
Loans that have Defaulted Under Restructured Terms
Loan Class #
Balance
(in thousands)
#
Balance
(in thousands)
Commercial, financial and agricultural 14 $ 337
7 $ 51
Real estate – construction and development 6 387
1 3
Real estate – commercial and farmland 15 3,575
2 548
Real estate – residential 66 5,687
26 1,613
Consumer installment 22 58
11 38
Total 123 $ 10,044
47 $ 2,253

December 31, 2017 Loans Currently Paying
Under Restructured Terms Loans that have Defaulted Under Restructured Terms
Loan Class #
Balance
(in thousands)
#
Balance
(in thousands)
Commercial, financial and agricultural 9 $ 55
7 $ 106
Real estate – construction and development 4 156
4 295
Real estate – commercial and farmland 18 6,722
4 419
Real estate – residential 78 6,753
14 954
Consumer installment 24 59
13 44
Total 133 $ 13,745
42 $ 1,818

The following table presents the amount of troubled debt restructurings, excluding purchased loans, by types of concessions made, classified separately as accrual and nonaccrual at September 30, 2018 and December 31, 2017:

September 30, 2018 Accruing Loans Non-Accruing Loans
Type of Concession #
Balance
(in thousands)
#
Balance
(in thousands)
Forbearance of interest 11 $ 2,319
4 $ 378
Forgiveness of principal 2 793
1 26
Forbearance of principal 6 809
5 74
Rate reduction only 12 1,171
1 56
Rate reduction, forbearance of interest 30 2,270
10 247
Rate reduction, forbearance of principal 8 1,292
44 348
Rate reduction, forgiveness of interest 31 2,289
4 223
Rate reduction, forgiveness of principal — —
1 2
Total 100 $ 10,943
70 $ 1,354

December 31, 2017 Accruing Loans Non-Accruing Loans
Type of Concession #
Balance
(in thousands)
#
Balance
(in thousands)
Forbearance of interest 12 $ 2,567
4 $ 163
Forgiveness of principal 3 1,238
— —
Forbearance of principal 5 2,299
6 657
Rate reduction only 12 1,366
1 29
Rate reduction, forbearance of interest 32 2,224
19 484
Rate reduction, forbearance of principal 6 1,192
33 216
Rate reduction, forgiveness of interest 35 2,713
4 408
Rate reduction, forgiveness of principal — —
3 7
Total 105 $ 13,599
70 $ 1,964

The following table presents the amount of troubled debt restructurings, excluding purchased loans, by collateral types, classified separately as accrual and nonaccrual at September 30, 2018 and December 31, 2017:

September 30, 2018 Accruing Loans Non-Accruing Loans
Collateral Type #
Balance
(in thousands)
#
Balance
(in thousands)
Warehouse 5 $ 560
— $ —
Raw land 6 436
2 6
Hotel and motel 2 1,029
1 245
Office 3 341
— —
Retail, including strip centers 5 1,979
1 18
1-4 family residential 74 6,589
20 785
Automobile/equipment/CD 4 8
44 280
Livestock — —
1 18
Unsecured 1 1
1 2
Total 100 $ 10,943
70 $ 1,354

December 31, 2017 Accruing Loans Non-Accruing Loans
Collateral Type #
Balance
(in thousands)
#
Balance
(in thousands)
Warehouse 4 $ 2,697
1 $ 79
Raw land 8 713
2 34
Hotel and motel 3 1,370
— —
Office 4 656
— —
Retail, including strip centers 5 2,159
3 80
1-4 family residential 74 5,992
20 1,553
Automobile/equipment/CD 6 11
43 216
Unsecured 1 1
1 2
Total 105 $ 13,599
70 $ 1,964

As of September 30, 2018 and December 31, 2017, the Company had a balance of $23.7 million and $24.9 million, respectively, in troubled debt restructurings included in purchased loans. The following table presents the amount of troubled debt restructurings by loan class of purchased loans, classified separately as accrual and nonaccrual at September 30, 2018 and December 31, 2017:

September 30, 2018 Accruing Loans Non-Accruing Loans
Loan Class #
Balance
(in thousands)
#
Balance
(in thousands)
Commercial, financial and agricultural 1 $ 50
2 $ 10
Real estate – construction and development 4 1,021
5 301
Real estate – commercial and farmland 13 6,509
8 2,147
Real estate – residential 122 12,783
19 864
Consumer installment — —
2 3
Total 140 $ 20,363
36 $ 3,325

The following table presents the amount of troubled debt restructurings by loan class of purchased loans, classified separately as those currently paying under restructured terms and those that have defaulted (defined as 30 days past due) under restructured terms at September 30, 2018 and December 31, 2017:

September 30, 2018
Loans Currently Paying
Under Restructured Terms
Loans that have Defaulted Under Restructured Terms
Loan Class #
Balance
(in thousands)
#
Balance
(in thousands)
Commercial, financial and agricultural 2 $ 55
1 $ 5
Real estate – construction and development 8 1,319
1 3
Real estate – commercial and farmland 19 8,382
2 274
Real estate – residential 111 11,103
30 2,544
Consumer installment 1 —
1 3
Total 141 $ 20,859
35 $ 2,829

December 31, 2017 Loans Currently Paying
Under Restructured Terms Loans that have Defaulted Under Restructured Terms
Loan Class #
Balance
(in thousands)
#
Balance
(in thousands)
Commercial, financial and agricultural 1 $ 11
2 $ 5
Real estate – construction and development 8 1,352
1 6
Real estate – commercial and farmland 22 9,014
2 281
Real estate – residential 124 13,151
18 1,052
Consumer installment 1 2
1 3
Total 156 $ 23,530
24 $ 1,347

The following table presents the amount of troubled debt restructurings included in purchased loans, by types of concessions made, classified separately as accrual and nonaccrual at September 30, 2018 and December 31, 2017:

September 30, 2018 Accruing Loans Non-Accruing Loans
Type of Concession #
Balance
(in thousands)
#
Balance
(in thousands)
Forbearance of interest 6 $ 477
7 $ 1,512
Forbearance of principal 6 2,401
3 234
Forbearance of principal, extended amortization 1 294
1 266
Rate reduction only 76 11,309
9 731
Rate reduction, forbearance of interest 25 2,693
9 183
Rate reduction, forbearance of principal 7 1,618
6 355
Rate reduction, forgiveness of interest 19 1,571
1 44
Total 140 $ 20,363
36 $ 3,325

December 31, 2017 Accruing Loans Non-Accruing Loans
Type of Concession #
Balance
(in thousands)
#
Balance
(in thousands)
Forbearance of interest 4 $ 182
9 $ 1,740
Forgiveness of principal — —
1 63
Forbearance of principal 5 2,363
4 406
Forbearance of principal, extended amortization 2 371
1 290
Rate reduction only 70 11,450
15 1,361
Rate reduction, forbearance of interest 22 2,211
9 257
Rate reduction, forbearance of principal 10 2,195
5 187
Rate reduction, forgiveness of interest 21 1,700
2 101
Total 134 $ 20,472
46 $ 4,405

The following table presents the amount of troubled debt restructurings included in purchased loans, by collateral types, classified separately as accrual and nonaccrual at September 30, 2018 and December 31, 2017:

September 30, 2018 Accruing Loans Non-Accruing Loans
Collateral Type #
Balance
(in thousands)
#
Balance
(in thousands)
Warehouse 2 $ 359
— $ —
Raw land 2 878
6 735
Hotel and motel 1 146
1 414
Office 2 428
2 466
Retail, including strip centers 6 4,204
— —
1-4 family residential 126 13,141
21 1,450
Church 1 1,207
1 206
Automobile/equipment/CD — —
5 54
Total 140 $ 20,363
36 $ 3,325

December 31, 2017 Accruing Loans Non-Accruing Loans
Collateral Type #
Balance
(in thousands)
#
Balance
(in thousands)
Warehouse 2 $ 368
— $ —
Raw land 2 893
7 829
Hotel and motel 1 149
1 476
Office 2 460
2 494
Retail, including strip centers 7 4,407
1 160
1-4 family residential 119 12,958
28 2,161
Church 1 1,237
1 218
Automobile/equipment/CD — —
6 67
Total 134 $ 20,472
46 $ 4,405

~~Commercial Lending Practices~~

The federal bank regulatory agencies previously issued interagency guidance on commercial real estate lending and prudent risk management practices. 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.

~~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, 2018, the Company exhibited a concentration in the 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, 2018 and December 31, 2017. The loan categories and concentrations below are based on Federal Reserve Call codes and include purchased loans:

September 30,
2018 December 31,
2017
(dollars in thousands) Balance
% of Total
Loans
Balance
% of Total
Loans
Construction and development loans $ 861,712
10% $ 690,108
11%
Multi-family loans 295,708
4% 148,663
3%
Nonfarm non-residential loans (excluding owner occupied) 1,722,972
20% 979,205
16%
Total CRE Loans (excluding owner occupied)
2,880,392
34% 1,817,976
30%
All other loan types 5,649,126
66% 4,228,379
70%
Total Loans $ 8,529,518
100% $ 6,046,355
100%

The following table outlines the percentage of construction and development loans and total CRE loans, net of owner occupied loans, to the Bank’s total risk-based capital, and the Company’s internal concentration limits as of September 30, 2018 and December 31, 2017:

Internal
Limit
Actual
September 30,
2018 December 31,
2017
Construction and development loans 100% 77% 83%
Total CRE loans (excluding owner occupied) 300% 258% 219%

~~Short-Term Investments~~

The Company’s short-term investments are comprised of federal funds sold and interest-bearing deposits in banks. At September 30, 2018, the Company’s short-term investments were $470.8 million, compared with $191.3 million at December 31, 2017. At September 30, 2018, the Company had $22.7 million in federal funds sold and $448.1 million was in interest-bearing deposit balances at correspondent banks and the Federal Reserve Bank of Atlanta.

~~Derivative Instruments and Hedging Activities~~

The Company has a cash flow hedge that matures September 15, 2020 with a notional amount of $37.1 million at September 30, 2018 and December 31, 2017 for the purpose of converting the variable rate on certain junior subordinated debentures to a fixed rate of 4.11%. The fair value of this instrument was an asset of $315,000 at September 30, 2018 and a liability of $381,000 at December 31, 2017.

The Company also has forward contracts and IRLCs to hedge changes in the value of the mortgage inventory due to changes in market interest rates. The fair value of these instruments amounted to an asset of $3.7 million and $2.9 million at September 30, 2018 and December 31, 2017, respectively, and a liability of $0 and $67,000 at September 30, 2018 and December 31, 2017, respectively.

No material hedge ineffectiveness from cash flow was recognized in the statement of operations. All components of each derivative’s gain or loss are included in the assessment of hedge effectiveness.

~~Capital~~

~~Hamilton Acquisition~~

~~For additional information regarding the Hamilton acquisition, see Note 2.~~

~~Atlantic Acquisition~~

~~For additional information regarding the Atlantic acquisition, see Note 2.~~

~~USPF Acquisition~~

On January 18, 2017, in exchange for 4.99% of the outstanding shares of common stock of USPF, the Company issued 128,572 unregistered shares of its common stock to a selling shareholder of USPF. A registration statement was filed with the Securities and Exchange Commission on February 13, 2017 to register the resale or other disposition of these shares. The issuance of the 128,572 common shares, valued at $45.45 per share at the time of issuance, resulted in an increase in shareholders’ equity of $5.8 million.

On January 3, 2018, in exchange for 25.01% of the outstanding shares of common stock of USPF, the Company issued 114,285 unregistered shares of its common stock and $12.5 million in cash to a selling shareholder of USPF. The issuance of the 114,285 common shares, valued at $48.55 per share at the time of issuance, resulted in an increase in shareholders’ equity of $5.5 million.

On January 31, 2018, in exchange for the final 70% of the outstanding shares of common stock of USPF, the Company issued 830,301 unregistered shares of its common stock and paid $8.9 million in cash to the selling shareholders of USPF. The issuance of the 830,301 common shares, valued at $53.55 per share at the time of issuance, resulted in an increase in shareholders’ equity of $44.5 million. The selling shareholders of USPF may receive additional cash payments aggregating up to $5.8 million based on the achievement by the Company's premium finance division of certain income targets, between January 1, 2018 and June 30, 2019.

~~For additional information regarding the USPF acquisition, see Note 2.~~

~~2017 Public Offering~~

In March 2017, the Company made a capital contribution to the Bank in the amount of $110.0 million, using the net proceeds of the March 6, 2017 issuance of common stock as well as a portion of the net proceeds of the March 13, 2017 issuance of the Company’s 5.75% Fixed-To-Floating Rate Subordinated Notes due 2027.

~~Capital Management~~

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

The FRB, the FDIC and the GDBF have adopted risk-based capital requirements for assessing bank holding company and bank capital adequacy. These standards define and establish minimum capital requirements in relation to assets and off-balance sheet exposure, adjusted for credit risk. The risk-based capital standards currently in effect are designed to make regulatory capital

~~requirements more sensitive to differences in risk profiles among bank holding companies and banks and to account for off-balance sheet exposure.~~

In July 2013, the Federal Reserve published final rules for the adoption of the Basel III regulatory capital framework (the "Basel III Capital Rules"). The Basel III Capital Rules defined a new capital measure called "Common Equity Tier 1" ("CET1"), established that Tier 1 capital consist of Common Equity Tier 1 and "Additional Tier 1 Capital" instruments meeting specified requirements, defined Common Equity Tier 1, established a capital conservation buffer and expanded the scope of the adjustments as compared with existing regulations. The capital conservation buffer is being increased by 0.625% per year until reaching 2.50% by 2019. The capital conservation buffer is being phased in from 0.0% for 2015 to, 0.625% for 2016, 1.25% for 2017, 1.875% for 2018, and 2.50% for 2019. The Basel III Capital Rules became effective for us on January 1, 2015 with certain transition provisions fully phased in on January 1, 2019.

~~The regulatory capital standards are defined by the following key measurements:~~

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

b) The “CET1 Ratio” is defined as Common equity tier 1 capital to total risk weighted assets. To be considered “adequately capitalized” under this measurement, a bank must maintain a CET1 ratio greater than or equal to 4.50% (6.375% including the 1.875% capital conservation buffer for 2018; 5.75% including the 1.25% capital conservation buffer for 2017). For a bank to be considered “well capitalized,” it must maintain a CET1 ratio greater than or equal to 6.50%.

c) The “Tier 1 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 Tier 1 capital ratio greater than or equal to 6.00% (7.875% including the 1.875% capital conservation buffer for 2018; 7.25% including the 1.25% capital conservation buffer for 2017). For a bank to be considered “well capitalized,” it must maintain a Tier 1 capital ratio greater than or equal to 8.00%.

d) 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% (9.875% including the 1.875% capital conservation buffer for 2018; 9.25% including the 1.25% capital conservation buffer for 2017). For a bank to be considered “well capitalized,” it must maintain a total capital ratio greater than or equal to 10.00%.

As of September 30, 2018, under the regulatory capital standards, the Bank was considered “well capitalized” under all capital measurements. The following table sets forth the regulatory capital ratios of for the Company and the Bank at September 30, 2018 and December 31, 2017.

September 30,
2018 December 31, 2017
Tier 1 Leverage Ratio (tier 1 capital to average assets)

Consolidated 8.89% 9.71%
Ameris Bank 10.25% 10.56%
CET1 Ratio (common equity tier 1 capital to risk weighted assets)

Consolidated 9.66% 10.29%
Ameris Bank 12.31% 12.64%
Tier 1 Capital Ratio (tier 1 capital to risk weighted assets)

Consolidated 10.66% 11.58%
Ameris Bank 12.31% 12.64%
Total Capital Ratio (total capital to risk weighted assets)

Consolidated 11.81% 13.14%
Ameris Bank 12.62% 13.05%

~~Interest Rate Sensitivity and Liquidity~~

The Company’s primary market risk exposures are credit risk, interest rate risk, and to a lesser degree, liquidity risk. The Bank operates under an Asset Liability Management Policy approved by the 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 of Directors and executive management to minimize those identified risks.

The normal course of business activity exposes the Company to interest rate risk. Interest rate risk is managed within an overall asset and liability framework for the Company. The principal objectives of asset and liability management are to predict the sensitivity of net interest spreads to potential changes in interest rates, control risk and enhance profitability. Funding positions are kept within predetermined limits designed to properly manage risk and liquidity. The Company employs sensitivity analysisin 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. The ALCO Committee has determined that an acceptable level of interest rate risk would be for net interest income to increase/decrease no more than 20% 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 assets at any given time will adequately cover any reasonably anticipated immediate need for funds. Additionally, the Bank maintains relationships with correspondent banks, which could provide funds on short notice, if needed. The Company has invested in FHLB stock for the purpose of establishing credit lines with the FHLB. The credit availability to the Bank is equal to 30% 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, 2018 and December 31, 2017, the net carrying value of the Company’s other borrowings was $656.8 million and $250.6 million, respectively. On March 13, 2017, the Company completed the public offering and sale of $75.0 million in aggregate principal amount of its 5.75% Fixed-To-Floating Rate Subordinated Notes due 2027. These subordinated notes are included in other borrowings at September 30, 2018 at a net carrying value of $73.9 million. See Note 7 for additional details on the subordinated notes.

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

September 30, 2018 June 30, 2018 March 31, 2018 December 31, 2017 September 30, 2017
Investment securities available for sale to total deposits 12.66% 13.17% 13.16% 12.24% 13.90%
Loans (net of unearned income) to total deposits 92.90% 96.91% 96.03% 91.25% 101.04%
Interest-earning assets to total assets 90.48% 90.35% 92.15% 92.77% 92.48%
Interest-bearing deposits to total deposits 74.58% 73.11% 71.02% 73.18% 70.86%

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, 2018 were considered satisfactory. The Company is aware of no events or trends likely to result in a material change in liquidity.

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

Cautionary Note Regarding Forward-Looking Statements

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

All statements other than statements of historical fact are statements that could be forward-looking statements. You can identify these forward-looking statements through our use of words such as “may,” “will,” “anticipate,” “assume,” “should,” “indicate,” “would,” “believe,” “contemplate,” “expect,” “estimate,” “continue,” “plan,” “point to,” “project,” “predict,” “could,” “intend,” “target,” “potential” and other similar words and expressions of the future. These forward-looking statements may not be realized due to a variety of factors, including, without limitation, the following: general competitive, economic, political and market conditions and fluctuations, including movements in interest rates; competitive pressures on product pricing and services; legislative and regulatory initiatives; additional competition in our markets; changes in state and federal banking laws and regulations to which we are subject; financial market conditions and the results of financing efforts; changes in commodity prices and interest rates; potential business strategies, including acquisitions or dispositions of assets or internal restructuring, that may be pursued by us; the successful integration of acquired businesses on a timely basis; the timely realization of expected cost savings and any revenue synergies from acquisition transactions; weather, natural disasters and other catastrophic events; and other factors discussed in our filings with the SEC under the Exchange Act.

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, 2019, as compared with December 31, 2018, and operating results for the three- and nine-month periods ended September 30, 2019 and 2018. These comments should be read in conjunction with the Company’s unaudited consolidated financial statements and accompanying notes appearing elsewhere herein.

The following table sets forth unaudited selected financial data for the most recent five quarters and for the nine months ended September 30, 2019 and 2018. This data should be read in conjunction with the unaudited consolidated financial statements and the notes thereto and the information contained in this Item 2.



											Nine Months Ended September 30,
(in thousands, except share and per share data)	Third Quarter 2019		Second Quarter 2019		First Quarter 2019		Fourth Quarter 2018		Third Quarter 2018		2019		2018
Results of Operations:
Net interest income	$	148,769	$	101,651	$	99,395	$	99,554	$	99,038	$	349,815	$	243,838
Net interest income (tax equivalent)	149,896		102,714		100,453		100,633		100,117		353,062		246,847
Provision for loan losses	5,989		4,668		3,408		3,661		2,095		14,065		13,006
Noninterest income	76,993		35,236		30,771		30,470		30,171		143,000		87,942
Noninterest expense	192,697		81,251		75,425		75,810		72,353		349,373		217,837
Income tax expense	5,692		12,064		11,428		7,017		13,317		29,184		23,446
Net income available to common shareholders	21,384		38,904		39,905		43,536		41,444		100,193		77,491
Selected Average Balances:
Investment securities	$	1,592,005	$	1,264,415	$	1,225,564	$	1,187,437	$	1,185,225	$	1,362,004	$	986,065
Loans held for sale	856,572		154,707		101,521		129,664		151,396		373,699		143,848
Loans	7,514,821		6,370,860		5,867,037		5,819,684		5,703,921		6,587,916		5,277,108
Purchased loans	4,927,839		2,123,754		2,359,280		2,402,610		2,499,393		3,148,726		1,483,029
Purchased loan pools	234,403		245,947		257,661		268,568		287,859		245,918		307,718
Earning assets	15,478,774		10,547,095		10,319,954		10,220,747		10,138,029		12,134,171		8,403,042
Assets	17,340,387		11,625,344		11,423,677		11,307,980		11,204,504		13,483,044		9,217,174
Deposits	13,520,926		9,739,892		9,577,574		9,452,944		8,962,170		10,960,575		7,327,179
Shareholders’ equity	2,432,182		1,519,598		1,478,462		1,428,341		1,395,479		1,813,575		1,094,233
Period-End Balances:
Investment securities	$	1,558,128	$	1,305,725	$	1,249,592	$	1,206,878	$	1,198,499	$	1,558,128	$	1,198,499
Loans held for sale	1,187,551		261,073		112,070		111,298		130,179		1,187,551		130,179
Loans	7,208,816		6,522,448		5,756,358		5,660,457		5,543,306		7,208,816		5,543,306
Purchased loans	5,388,336		2,286,425		2,472,271		2,588,832		2,711,460		5,388,336		2,711,460
Purchased loan pools	229,132		240,997		253,710		262,625		274,752		229,132		274,752
Earning assets	15,858,175		10,804,385		10,563,571		10,348,393		10,340,558		15,858,175		10,340,558
Total assets	17,764,277		11,889,336		11,656,275		11,443,515		11,428,994		17,764,277		11,428,994
Deposits	13,659,594		9,582,370		9,800,875		9,649,313		9,181,363		13,659,594		9,181,363
Shareholders’ equity	2,420,723		1,537,121		1,495,584		1,456,347		1,404,977		2,420,723		1,404,977
Per Common Share Data:
Earnings per share - basic	$	0.31	$	0.82	$	0.84	$	0.92	$	0.87	$	1.83	$	1.86
Earnings per share - diluted	$	0.31	$	0.82	$	0.84	$	0.91	$	0.87	$	1.83	$	1.85
Book value per common share	$	34.78	$	32.52	$	31.43	$	30.66	$	29.58	$	34.78	$	29.58
Tangible book value per common share	$	20.29	$	20.81	$	19.73	$	18.83	$	17.78	$	20.29	$	17.78
End of period shares outstanding	69,593,833		47,261,584		47,585,309		47,499,941		47,496,966		69,593,833		47,496,966



																Nine Months Ended September 30,
(in thousands, except share and per share data)	Third Quarter 2019			Second Quarter 2019			First Quarter 2019			Fourth Quarter 2018			Third Quarter 2018			2019			2018
Weighted Average Shares Outstanding:
Basic	69,372,125			47,310,561			47,366,296			47,501,150			47,514,653			54,762,216			41,672,792
Diluted	69,600,499			47,337,809			47,456,314			47,593,252			47,685,334			54,883,122			41,844,900
Market Price:
High intraday price	$	40.65		$	39.60		$	42.01		$	47.25		$	54.35		$	42.01		$	59.05
Low intraday price	$	33.71		$	33.57		$	31.27		$	29.97		$	45.15		$	31.27		$	45.15
Closing price for quarter	$	40.24		$	39.19		$	34.35		$	31.67		$	45.70		$	40.24		$	45.70
Average daily trading volume	461,289			352,684			387,800			375,773			382,622			401,050			291,061
Cash dividends declared per share	$	0.15		$	0.10		$	0.10		$	0.10		$	0.10		$	0.35		$	0.30
Closing price to book value	1.16			1.21			1.09			1.03			1.54			1.16			1.54
Performance Ratios:
Return on average assets	0.49		%	1.34		%	1.42		%	1.53		%	1.47		%	0.99		%	1.12		%
Return on average common equity	3.49		%	10.27		%	10.95		%	12.09		%	11.78		%	7.39		%	9.47		%
Average loans to average deposits	100.09		%	91.33		%	89.64		%	91.19		%	96.43		%	94.49		%	98.42		%
Average equity to average assets	14.03		%	13.07		%	12.94		%	12.63		%	12.45		%	13.45		%	11.87		%
Net interest margin (tax equivalent)	3.84		%	3.91		%	3.95		%	3.91		%	3.92		%	3.89		%	3.93		%
Efficiency ratio	85.35		%	59.36		%	57.95		%	58.30		%	56.00		%	70.89		%	65.66		%

Non-GAAP Measures Reconciliation -
Tangible book value per common share:
Total shareholders’ equity	$	2,420,723		$	1,537,121		$	1,495,584		$	1,456,347		$	1,404,977		$	2,420,723		$	1,404,977
Less:
Goodwill	911,488			501,140			501,308			503,434			505,604			911,488			505,604
Other intangible assets, net	97,328			52,437			55,557			58,689			54,729			97,328			54,729
Tangible common equity	$	1,411,907		$	983,544		$	938,719		$	894,224		$	844,644		$	1,411,907		$	844,644
End of period shares outstanding	69,593,833			47,261,584			47,585,309			47,499,941			47,496,966			69,593,833			47,496,966
Book value per common share	$	34.78		$	32.52		$	31.43		$	30.66		$	29.58		$	34.78		$	29.58
Tangible book value per common share	20.29			20.81			19.73			18.83			17.78			20.29			17.78

Acquisitions Completed in 2018 and 2019

Since January 1, 2018, the Company completed four acquisitions: US Premium Finance Holding Company, Atlantic Coast Financial Corporation, Hamilton State Bancshares, Inc. and Fidelity Southern Corporation.

Under the acquisition method, income and expenses of the acquiree are recognized prospectively beginning from the date of acquisition.

US Premium Finance Holding Company

On January 31, 2018, the Company closed on the purchase of the final 70% of the outstanding shares of common stock of USPF, completing its acquisition of USPF and making USPF a wholly owned subsidiary of the Company. Through a series of three acquisition transactions that closed on January 18, 2017, January 3, 2018 and January 31, 2018, the Company issued a total of 1,073,158 shares of its common stock at a fair value of $55.9 million and paid $21.4 million in cash to the shareholders of USPF. Pursuant to the terms of the Stock Purchase Agreement dated January 25, 2018 under which Company purchased the final 70% of the outstanding shares of common stock of USPF, the selling shareholders of USPF could receive additional cash payments aggregating up to $5.8 million based on the achievement by the Company's premium finance division of certain income targets, between January 1, 2018 and June 30, 2019. The total contingent consideration paid was $1.2 million based on results achieved through the applicable measurement dates. As of the January 31, 2018 acquisition date, the present value of the contingent earn-out consideration expected to be paid was $5.7 million. Including the fair value of the Company's common stock issued, cash paid and the present value of the contingent earn-out consideration expected to be paid, the aggregate purchase price of USPF amounted to $83.0 million. For additional information regarding the USPF acquisition, see Note 2.

Atlantic Coast Financial Corporation

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

In accounting for the Atlantic acquisition, the Company recorded assets (exclusive of goodwill) of $875.0 million, loans held for investment of $755.7 million, deposits of $585.2 million, and other borrowings of $204.5 million. For additional information regarding the Atlantic acquisition, see Note 2.

Hamilton State Bancshares, Inc.

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

In accounting for the Hamilton acquisition, the Company recorded assets (exclusive of goodwill) of $1.79 billion, investment securities of $285.8 million, loans held for investment of $1.29 billion, and deposits of $1.59 billion. For additional information regarding the Hamilton acquisition, see Note 2.

Fidelity Southern Corporation

On July 1, 2019, the Company completed its acquisition of Fidelity. Upon consummation of the acquisition, Fidelity was merged with and into the Company, with Ameris as the surviving entity in the merger, and Fidelity's wholly owned banking subsidiary, Fidelity Bank, was merged with and into the Bank, with the Bank surviving. The acquisition expanded the Company's existing market presence, as Fidelity Bank had a total of 62 full-service branches at the time of closing, 46 of which were located in Georgia and 16 of which were located in Florida, providing financial products and services to customers primarily in the metropolitan markets of Atlanta, Georgia, and Jacksonville, Orlando, Tallahassee, and Sarasota-Bradenton, Florida. Under the terms of the merger agreement, Fidelity's shareholders received 0.80 shares of Ameris common stock, par value $1.00 per share, for each share of Fidelity common stock they held. As a result, the Company issued 22,181,522 shares of its common stock at a fair value of $869.3 million to Fidelity's shareholders as merger consideration.

In accounting for the Fidelity acquisition, the Company recorded assets (exclusive of goodwill) of $4.78 billion, investment securities of $297.9 million, loans held for investment of $3.51 billion, and deposits of $4.04 billion. For additional information regarding the Fidelity acquisition, see Note 2.

Results of Operations for the Three Months Ended September 30, 2019 and 2018

Consolidated Earnings and Profitability

Ameris reported net income available to common shareholders of $21.4 million, or $0.31 per diluted share, for the quarter ended September 30, 2019, compared with $41.4 million, or $0.87 per diluted share, for the same period in 2018. The Company’s return on average assets and average shareholders’ equity were 0.49% and 3.49%, respectively, in the third quarter of 2019, compared with 1.47% and 11.78%, respectively, in the third quarter of 2018. During the third quarter of 2019, the Company incurred pre-tax merger and conversion charges of $65.2 million, pre-tax servicing right recovery of $1.3 million, pre-tax gain on bank owned life insurance ("BOLI") proceeds of $4.3 million, and pre-tax losses on the sale of premises of $889,000. During the third quarter of 2018, the Company incurred pre-tax merger and conversion charges of $276,000, pre-tax executive retirement benefits of $1.0 million, pre-tax restructuring charges related to branch consolidations of $229,000, and pre-tax losses on the sale of premises of $4,000. Excluding these merger and conversion charges, executive retirement benefits, restructuring charges, servicing right recovery, gain on BOLI proceeds and losses on the sale of premises, the Company’s net income would have been $68.5 million, or $0.98 per diluted share, for the third quarter of 2019 and $43.3 million, or $0.91 per diluted share, for the third quarter of 2018.

Below is a reconciliation of adjusted net income to net income, as discussed above.



	Three Months Ended September 30,
(in thousands, except share and per share data)	2019			2018
Net income available to common shareholders	$	21,384		$	41,444
Adjustment items:
Merger and conversion charges	65,158			276
Executive retirement benefits	—			962
Restructuring charge	—			229
Servicing right recovery	(1,319		)	—
Gain on BOLI proceeds	(4,335		)	—
Loss on the sale of premises	889			4
Tax effect of adjustment items (Note 1)	(13,238		)	377
After tax adjustment items	47,155			1,848
Adjusted net income	$	68,539		$	43,292

Weighted average common shares outstanding - diluted	69,600,499			47,685,334
Net income per diluted share	$	0.31		$	0.87
Adjusted net income per diluted share	$	0.98		$	0.91

Note: A portion of the merger and conversion charges for both periods and the third quarter 2018 executive retirement benefits are nondeductible for tax purposes. Gain on BOLI proceeds is nontaxbable.



	Three Months Ended September 30, 2019
(dollars in thousands)	Banking Division			Retail Mortgage Division		Warehouse Lending Division		SBA Division			Premium Finance Division		Total
Interest income	$	141,630		$	27,141	$	5,786	$	4,366		$	9,438	$	188,361
Interest expense	17,368			14,132		2,617		1,793			3,682		39,592
Net interest income	124,262			13,009		3,169		2,573			5,756		148,769
Provision for loan losses	3,549			1,490		—		(15		)	965		5,989
Noninterest income	21,173			52,493		560		2,766			1		76,993
Noninterest expense
Salaries and employee benefits	39,794			34,144		286		1,985			1,424		77,633
Equipment and occupancy expenses	10,750			1,686		2		66			135		12,639
Data processing and telecommunications expenses	9,551			660		41		22			98		10,372
Other expenses	87,059			3,484		27		503			980		92,053
Total noninterest expense	147,154			39,974		356		2,576			2,637		192,697
Income before income tax expense	(5,268		)	24,038		3,373		2,778			2,155		27,076
Income tax expense	(1,269		)	5,048		708		584			621		5,692
Net income	$	(3,999	)	$	18,990	$	2,665	$	2,194		$	1,534	$	21,384



	Three Months Ended September 30, 2018
(dollars in thousands)	Banking Division		Retail Mortgage Division		Warehouse Lending Division		SBA Division		Premium Finance Division		Total
Interest income	$	97,282	$	9,347	$	4,035	$	2,090	$	8,365	$	121,119
Interest expense	13,241		3,803		1,566		631		2,840		22,081
Net interest income	84,041		5,544		2,469		1,459		5,525		99,038
Provision for loan losses	1,229		122		—		41		703		2,095
Noninterest income	16,524		12,097		503		1,045		2		30,171
Noninterest expense
Salaries and employee benefits	26,120		10,061		136		650		1,447		38,414
Equipment and occupancy expenses	7,871		618		2		58		49		8,598
Data processing and telecommunications expenses	7,589		347		30		1		551		8,518
Other expenses	13,461		1,828		69		242		1,223		16,823
Total noninterest expense	55,041		12,854		237		951		3,270		72,353
Income before income tax expense	44,295		4,665		2,735		1,512		1,554		54,761
Income tax expense	11,156		943		574		317		327		13,317
Net income	$	33,139	$	3,722	$	2,161	$	1,195	$	1,227	$	41,444

Net Interest Income and Margins

The following table sets forth the average balance, interest income or interest expense, and average yield/rate paid for each category of interest-earning assets and interest-bearing liabilities, net interest spread, and net interest margin on average interest-earning assets for the three months ended September 30, 2019 and 2018. Federally tax-exempt income is presented on a taxable-equivalent basis assuming a 21% federal tax rate.



	Quarter Ended September 30,
	2019					2018
(dollars in thousands)	Average Balance		Interest Income/ Expense		Average Yield/ Rate Paid	Average Balance		Interest Income/ Expense		Average Yield/ Rate Paid
Assets
Interest-earning assets:
Federal funds sold, interest-bearing deposits in banks, and time deposits in other banks	$	353,134	$	1,793	2.01%	$	310,235	$	1,653	2.11%
Investment securities	1,592,005		11,567		2.88%	1,185,225		9,050		3.03%
Loans held for sale	856,572		7,889		3.65%	151,396		1,566		4.10%
Loans	7,514,821		108,839		5.75%	5,703,921		73,178		5.09%
Purchased loans	4,927,839		57,661		4.64%	2,499,393		34,692		5.51%
Purchased loan pools	234,403		1,739		2.94%	287,859		2,059		2.84%
Total interest-earning assets	15,478,774		189,488		4.86%	10,138,029		122,198		4.78%
Noninterest-earning assets	1,861,613					1,066,475
Total assets	$	17,340,387				$	11,204,504

Liabilities and Shareholders’ Equity
Interest-bearing liabilities:
Savings and interest-bearing demand deposits	$	6,525,915	$	15,710	0.96%	$	4,430,646	$	7,109	0.64%
Time deposits	2,954,419		13,715		1.84%	2,210,673		8,521		1.53%
Federal funds purchased and securities sold under agreements to repurchase	19,914		32		0.64%	12,529		4		0.13%
FHLB advances	810,384		4,618		2.26%	513,460		2,745		2.12%
Other borrowings	220,918		3,332		5.98%	145,513		2,180		5.94%
Subordinated deferrable interest debentures	133,519		2,185		6.49%	88,801		1,522		6.80%
Total interest-bearing liabilities	10,665,069		39,592		1.47%	7,401,622		22,081		1.18%
Demand deposits	4,040,592					2,320,851
Other liabilities	202,544					86,552
Shareholders’ equity	2,432,182					1,395,479
Total liabilities and shareholders’ equity	$	17,340,387				$	11,204,504
Interest rate spread					3.39%					3.60%
Net interest income			$	149,896				$	100,117
Net interest margin					3.84%					3.92%

On a tax-equivalent basis, net interest income for the third quarter of 2019 was $149.9 million, an increase of $49.8 million, or 49.7%, compared with $100.1 million reported in the same quarter in 2018. The higher net interest income is a result of growth in average interest earning assets which increased $5.34 billion, or 52.7%, from $10.14 billion in the third quarter of 2018 to $15.48 billion for the third quarter of 2019. This growth in interest earning assets resulted primarily from the Fidelity acquisition occurring in the third quarter of 2019, as well as strong growth in average legacy loans which increased $1.81 billion, or 31.7%, to $7.51 billion in the third quarter 2019 from $5.70 billion in the same period of 2018. The Company’s net interest margin during the third quarter of 2019 was 3.84%, down eight basis points from 3.92% reported in the third quarter of 2018.

Total interest income, on a tax-equivalent basis, increased to $189.5 million during the third quarter of 2019, compared with $122.2 million in the same quarter of 2018. Yields on earning assets increased to 4.86% during the third quarter of 2019, compared with 4.78% reported in the third quarter of 2018. During the third quarter of 2019, loans comprised 87.4% of average earning assets, compared with 85.2% in the same quarter of 2018. Yields on legacy loans increased to 5.75% in the third quarter of 2019, compared with 5.09% in the same period of 2018. The yield on purchased loans decreased from 5.51% in the third quarter of 2018 to 4.64% during the third quarter of 2019. Accretion income for the third quarter of 2019 was $4.2 million, compared with $3.7 million in the third quarter of 2018. Yields on purchased loan pools increased from 2.84% in the third quarter of 2018 to 2.94% in the same period in 2019.

The yield on total interest-bearing liabilities increased from 1.18% in the third quarter of 2018 to 1.47% in the third quarter of 2019. Total funding costs, inclusive of noninterest-bearing demand deposits, increased to 1.07% in the third quarter of 2019, compared with 0.90% during the third quarter of 2018. Deposit costs increased from 0.69% in the third quarter of 2018 to 0.86% in the third quarter of 2019. Non-deposit funding costs increased slightly from 3.37% in the third quarter of 2018 to 3.40% in the third quarter of 2019. Average balances of interest bearing deposits and their respective costs for the third quarter of 2019 and 2018 are shown below:



	Three Months Ended September 30, 2019			Three Months Ended September 30, 2018
(dollars in thousands)	Average Balance		Average Cost	Average Balance		Average Cost
NOW	$	2,049,175	0.55%	$	1,567,111	0.29%
MMDA	3,815,185		1.31%	2,440,086		0.96%
Savings	661,555		0.16%	423,449		0.08%
Retail CDs	2,804,243		1.83%	1,722,987		1.26%
Brokered CDs	150,176		2.14%	487,686		2.48%
Interest-bearing deposits	$	9,480,334	1.23%	$	6,641,319	0.93%

Provision for Loan Losses

The Company’s provision for loan losses during the third quarter of 2019 amounted to $6.0 million, compared with $2.1 million in the third quarter of 2018. At September 30, 2019, classified loans still accruing decreased to $78.3 million, compared with $81.9 million at December 31, 2018. Non-performing assets as a percentage of total assets increased from 0.55% at December 31, 2018 to 0.73% at September 30, 2019. The increase in non-performing assets is primarily attributable to assets acquired in the Fidelity acquisition. Net charge-offs on legacy loans during the third quarter of 2019 were approximately $1.6 million, or 0.09% of average legacy loans on an annualized basis, compared with approximately $6.3 million, or 0.44%, in the third quarter of 2018. The decrease in net charge-offs on legacy loans during the third quarter of 2019 was primarily attributable to a decrease in charge-offs on commercial, financial, and agricultural loans. The Company’s allowance for loan losses allocated to legacy loans at September 30, 2019 was $33.2 million, or 0.46% of legacy loans, compared with $26.2 million, or 0.46% of legacy loans, at December 31, 2018. The Company’s total allowance for loan losses at September 30, 2019 was $35.5 million, or 0.28% of total loans, compared with $28.8 million, or 0.34% of total loans, at December 31, 2018.

Noninterest Income

Total noninterest income for the third quarter of 2019 was $77.0 million, an increase of $46.8 million, or 155.2%, from the $30.2 million reported in the third quarter of 2018. Service charges on deposit accounts increased $721,000, or 5.7%, to $13.4 million in the third quarter of 2019, compared with $12.7 million in the third quarter of 2018. This increase in service charges on deposit accounts is due primarily to an increase in the number of deposit accounts resulting from the Fidelity acquisition in the third quarter of 2019 and organic growth. The Fidelity acquisition added $3.6 million in service charge revenue, which was offset by a decline of approximately $2.8 million in revenue as a result of the Durbin Amendment. Income from mortgage-related activities was $53.0 million in the third quarter of 2019, an increase of $39.0 million, or 276.7%, from $14.1 million in the third quarter of 2018. Total production in the third quarter of 2019 amounted to $1.8 billion, compared with $479.1 million in the same quarter of 2018, while spread (gain on sale) decreased to 2.67% in the current quarter, compared with 3.00% in the same quarter of 2018. The retail mortgage open pipeline finished the third quarter of 2019 at $784.2 million, compared with $287.4 million at June 30, 2019 and $162.4 million at the end of the third quarter of 2018. Other service charges, commissions and fees increased $446,000, or 56.5%, to $1.2 million during the third quarter of 2019, compared with $790,000 during the third quarter of 2018, due primarily to increased ATM fees. Other noninterest income increased $6.7 million, or 263.2%, to $9.3 million for the third quarter of 2019, compared with $2.6 million during the third quarter of 2018. The increase in other noninterest income was primarily attributable to a $4.3 million gain on BOLI proceeds due to the unfortunate death of a former officer of Fidelity, a $1.3 million increase in gain on sale of SBA loans and an increase in servicing income from indirect automobile loans of $1.0 million.

Noninterest Expense

Total noninterest expenses for the third quarter of 2019 increased $120.3 million, or 166.3%, to $192.7 million, compared with $72.4 million in the same quarter 2018. Salaries and employee benefits increased $39.2 million, or 102.1%, from $38.4 million in the third quarter of 2018 to $77.6 million in the third quarter of 2019, due primarily to an increase of 1,059, or 57.3%, full-time equivalent employees from 1,847 at September 30, 2018 to 2,906 at September 30, 2019, resulting from staff added as a result of the Fidelity acquisition which occurred in the third quarter of 2019. Also contributing to the increase in salary and employee benefits was an increase in variable incentive pay of $16.2 million resulting from an increase in mortgage production. Occupancy and equipment expenses increased $4.0 million, or 47.0%, to $12.6 million for the third quarter of 2019, compared with $8.6 million in the third quarter of 2018, due primarily to an increase of 47 branch locations from 125 at September 30, 2018 to 172 at September 30, 2019, resulting from branch locations added as a result of the Fidelity acquisition, partially offset by branch locations closed in connection with announced branch consolidations. Data processing and telecommunications expense increased $1.9 million, or 21.8%, to $10.4 million in the third quarter of 2019, compared with $8.5 million in the third quarter of 2018, due to the Fidelity acquisition. Credit resolution-related expenses decreased $154,000, or 12.3%, from $1.2 million in the third quarter of 2018 to $1.1 million in the third quarter of 2019. Advertising and marketing expense was $1.9 million in the third quarter of 2019, compared with $1.5 million in the third quarter of 2018. Amortization of intangible assets increased $3.0 million, or 113.7%, from $2.7 million in the third quarter of 2018 to $5.7 million in the third quarter of 2019 due to additional amortization of intangible assets recorded as part of the Fidelity acquisition. Merger and conversion charges were $65.2 million in the third quarter of 2019, compared with $276,000 in the same quarter of 2018. Other noninterest expenses increased $7.0 million, or 62.3%, from $11.2 million in the third quarter of 2018 to $18.1 million in the third quarter of 2019, due primarily to an increase of $885,000 in the loss on sale of premises and an increase of $1.7 million in consulting fees related to implementation of new support systems. Also contributing to the increase in other noninterest expenses was an increase in volume in certain areas related to our acquisition of Fidelity and increases in variable expenses tied to production in our lines of business.

Income Taxes

Income tax expense is influenced by the statutory rate, the amount of taxable income, the amount of tax-exempt income and the amount of non-deductible expenses. For the third quarter of 2019, the Company reported income tax expense of $5.7 million, compared with $13.3 million in the same period of 2018. The Company’s effective tax rate for the three months ending September 30, 2019 and 2018 was 21.0% and 24.3%, respectively. The decrease in the effective tax rate is primarily related to a non-taxable gain on BOLI proceeds and a reduction in the Florida corporate income tax rate partially offset by certain non-deductible merger expenses.

Results of Operations for the Nine Months Ended September 30, 2019 and 2018

Consolidated Earnings and Profitability

Ameris reported net income available to common shareholders of $100.2 million, or $1.83 per diluted share, for the nine months ended September 30, 2019, compared with $77.5 million, or $1.85 per diluted share, for the same period in 2018. The Company’s return on average assets and average shareholders’ equity were 0.99% and 7.39%, respectively, in the nine months ended September 30, 2019, compared with 1.12% and 9.47%, respectively, in the same period in 2018. During the first nine months of 2019, the Company incurred pre-tax merger and conversion charges of $70.7 million, pre-tax restructuring charges related to branch consolidations of $245,000, pre-tax servicing right impairment of $141,000, pre-tax reduction in financial impact of hurricanes of $39,000, pre-tax gain on BOLI proceeds of $4.3 million and pre-tax losses on the sale of premises of $4.6 million. During the first nine months of 2018, the Company incurred pre-tax merger and conversion charges of $19.5 million, pre-tax executive retirement benefits of $6.4 million, pre-tax restructuring charges related to branch consolidations of $229,000 and pre-tax losses on the sale of premises of $783,000. Excluding these merger and conversion charges, executive retirement benefits, restructuring charges, servicing right impairment, the financial impact of hurricanes, gain on BOLI proceeds and losses on the sale of premises, the Company’s net income would have been $156.3 million, or $2.85 per diluted share, for the nine months ended September 30, 2019 and $100.3 million, or $2.40 per diluted share, for the same period in 2018.

Below is a reconciliation of adjusted net income to net income, as discussed above.



	Nine Months Ended September 30,
(in thousands, except share and per share data)	2019			2018
Net income available to common shareholders	$	100,193		$	77,491
Adjustment items:
Merger and conversion charges	70,690			19,502
Executive retirement benefits	—			6,419
Restructuring charge	245			229
Servicing right impairment	141			—
Financial impact of hurricanes	(39		)	—
Gain on BOLI proceeds	(4,335		)	—
Loss on the sale of premises	4,608			783
Tax effect of adjustment items (Note 1)	(15,167		)	(4,113		)
After tax adjustment items	56,143			22,820
Adjusted net income	$	156,336		$	100,311

Weighted average common shares outstanding - diluted	54,883,122			41,844,900
Net income per diluted share	$	1.83		$	1.85
Adjusted net income per diluted share	$	2.85		$	2.40

Note 1: A portion of the 2019 and 2018 merger and conversion charges and a portion of the 2018 executive retirement benefits are nondeductible for tax purposes. Gain on BOLI proceeds is nontaxable.



	Nine Months Ended September 30, 2019
(dollars in thousands)	Banking Division		Retail Mortgage Division		Warehouse Lending Division		SBA Division		Premium Finance Division		Total
Interest income	$	338,396	$	53,286	$	16,140	$	8,827	$	25,669	$	442,318
Interest expense	44,340		26,957		7,294		3,986		9,926		92,503
Net interest income	294,056		26,329		8,846		4,841		15,743		349,815
Provision for loan losses	7,913		2,235		—		394		3,523		14,065
Noninterest income	50,373		84,853		1,389		6,379		6		143,000
Noninterest expense
Salaries and employee benefits	91,954		54,237		609		3,447		4,049		154,296
Equipment and occupancy expenses	25,065		3,122		4		190		296		28,677
Data processing and telecommunications expenses	24,778		1,384		109		27		853		27,151
Other expenses	126,743		7,983		170		1,249		3,104		139,249
Total noninterest expense	268,540		66,726		892		4,913		8,302		349,373
Income before income tax expense	67,976		42,221		9,343		5,913		3,924		129,377
Income tax expense	16,197		8,831		1,962		1,242		952		29,184
Net income	$	51,779	$	33,390	$	7,381	$	4,671	$	2,972	$	100,193



	Nine Months Ended September 30, 2018
(dollars in thousands)	Banking Division		Retail Mortgage Division		Warehouse Lending Division		SBA Division		Premium Finance Division			Total
Interest income	$	226,576	$	24,142	$	10,428	$	5,428	$	24,003		$	290,577
Interest expense	25,417		8,555		3,778		1,725		7,264			46,739
Net interest income	201,159		15,587		6,650		3,703		16,739			243,838
Provision for loan losses	2,883		585		—		1,025		8,513			13,006
Noninterest income	42,910		37,571		1,635		3,764		2,062			87,942
Noninterest expense
Salaries and employee benefits	74,834		28,667		402		2,010		4,250			110,163
Equipment and occupancy expenses	19,032		1,756		2		171		225			21,186
Data processing and telecommunications expenses	19,504		1,119		93		19		1,357			22,092
Other expenses	54,478		5,337		176		884		3,521			64,396
Total noninterest expense	167,848		36,879		673		3,084		9,353			217,837
Income before income tax expense	73,338		15,694		7,612		3,358		935			100,937
Income tax expense	18,114		3,262		1,598		705		(233		)	23,446
Net income	$	55,224	$	12,432	$	6,014	$	2,653	$	1,168		$	77,491

Net Interest Income and Margins

The following table sets forth the average balance, interest income or interest expense, and average yield/rate paid for each category of interest-earning assets and interest-bearing liabilities, net interest spread, and net interest margin on average interest-earning assets for the nine months ended September 30, 2019 and 2018. Federally tax-exempt income is presented on a taxable-equivalent basis assuming a 21% federal tax rate.



	Nine Months Ended September 30,
	2019					2018
(dollars in thousands)	Average Balance		Interest Income/ Expense		Average Yield/ Rate Paid	Average Balance		Interest Income/ Expense		Average Yield/ Rate Paid
Assets
Interest-earning assets:
Federal funds sold, interest-bearing deposits in banks, and time deposits in other banks	$	415,908	$	7,655	2.46%	$	205,274	$	3,092	2.01%
Investment securities	1,362,004		30,319		2.98%	986,065		21,212		2.88%
Loans held for sale	373,699		10,673		3.82%	143,848		4,091		3.80%
Loans	6,587,916		273,573		5.55%	5,277,108		195,857		4.96%
Purchased loans	3,148,726		117,826		5.00%	1,483,029		62,584		5.64%
Purchased loan pools	245,918		5,519		3.00%	307,718		6,750		2.93%
Total interest-earning assets	12,134,171		445,565		4.91%	8,403,042		293,586		4.67%
Noninterest-earning assets	1,348,873					814,132
Total assets	$	13,483,044				$	9,217,174

Liabilities and Shareholders’ Equity
Interest-bearing liabilities:
Savings and interest-bearing demand deposits	$	5,248,058	$	38,776	0.99%	$	3,861,389	$	16,784	0.58%
Time deposits	2,603,879		35,787		1.84%	1,438,645		13,412		1.25%
Federal funds purchased and securities sold under agreements to repurchase	13,017		45		0.46%	16,036		18		0.15%
FHLB advances	282,622		4,803		2.27%	529,917		7,585		1.91%
Other borrowings	170,891		7,769		6.08%	102,713		4,634		6.03%
Subordinated deferrable interest debentures	104,345		5,323		6.82%	86,874		4,306		6.63%
Total interest-bearing liabilities	8,422,812		92,503		1.47%	6,035,574		46,739		1.04%
Demand deposits	3,108,638					2,027,145
Other liabilities	138,019					60,222
Shareholders’ equity	1,813,575					1,094,233
Total liabilities and shareholders’ equity	$	13,483,044				$	9,217,174
Interest rate spread					3.44%					3.63%
Net interest income			$	353,062				$	246,847
Net interest margin					3.89%					3.93%

On a tax-equivalent basis, net interest income for the nine months ended September 30, 2019 was $353.1 million, an increase of $106.2 million, or 43.0%, compared with $246.8 million reported in the same period of 2018. The higher net interest income is a result of growth in average interest earning assets which increased $3.73 billion, or 44.4%, from $8.40 billion in the first nine months of 2018 to $12.13 billion for the first nine months of 2019. This increase in average interest earning assets is primarily a result of growth in average legacy loans and average purchased loans. Average legacy loans increased $1.31 billion, or 24.8%, to $6.59 billion in the first nine months of 2019 from $5.28 billion in the same period of 2018. Average purchased loans increased $1.67 billion, or 112.3%, to $3.15 billion in the first nine months of 2019 from $1.48 billion in the same period in 2018, resulting from the Fidelity acquisition which occurred in the third quarter of 2019 and the second quarter 2018 acquisitions of Atlantic and Hamilton. The Company’s net interest margin was down slightly during the first nine months of 2019 to 3.89%, compared with 3.93% for the first nine months of 2018.

Total interest income, on a tax-equivalent basis, increased to $445.6 million during the nine months ended September 30, 2019, compared with $293.6 million in the same period of 2018. Yields on earning assets increased to 4.91% during the first nine months of 2019, compared with 4.67% reported in the same period of 2018. During the first nine months of 2019, loans comprised 85.3% of average earning assets, compared with 85.8% in the same period of 2018. Yields on legacy loans increased to 5.55% during the nine months ended September 30, 2019, compared with 4.96% in the same period of 2018. The yield on purchased loans decreased from 5.64% in the first nine months of 2018 to 5.00% during the first nine months of 2019. Accretion income for the

first nine months of 2019 was $10.2 million, compared with $7.8 million in the first nine months of 2018. Yields on purchased loan pools increased from 2.93% in the first nine months of 2018 to 3.00% in the same period in 2019.

The yield on total interest-bearing liabilities increased from 1.04% during the nine months ended September 30, 2018 to 1.47% in the same period of 2019. Total funding costs, inclusive of noninterest-bearing demand deposits, increased to 1.07% in the first nine months of 2019, compared with 0.78% during the same period of 2018. Deposit costs increased from 0.55% in the first nine months of 2018 to 0.91% in the same period of 2019. Non-deposit funding costs increased from 3.01% in the first nine months of 2018 to 4.20% in the same period of 2019. The increase in non-deposit funding costs was driven primarily by an increase in the average balance of other borrowings and subordinated deferrable interest debentures which carry a higher interest rate coupled with higher market rates being paid on short-term FHLB advances. Average balances of interest bearing deposits and their respective costs for the nine months ended September 30, 2019 and 2018 are shown below:



	Nine Months Ended September 30, 2019			Nine Months Ended September 30, 2018
(dollars in thousands)	Average Balance		Average Cost	Average Balance		Average Cost
NOW	$	1,705,108	0.57%	$	1,406,434	0.31%
MMDA	3,053,272		1.36%	2,122,138		0.84%
Savings	489,678		0.12%	332,817		0.07%
Retail CDs	2,222,942		1.73%	1,269,586		1.08%
Brokered CDs	380,937		2.45%	169,059		2.47%
Interest-bearing deposits	$	7,851,937	1.27%	$	5,300,034	0.76%

Provision for Loan Losses

The Company’s provision for loan losses during the nine months ended September 30, 2019 amounted to $14.1 million, compared with $13.0 million in the nine months ended September 30, 2018. Approximately $6.7 million of the provision for loan losses recorded during the nine months ended September 30, 2018 was attributable to two loan relationships within the premium finance division that became impaired during the second quarter of 2018. At September 30, 2019, classified loans still accruing decreased to $78.3 million, compared with $81.9 million at December 31, 2018, due primarily to classified loans still accruing which paid down or were upgraded during the nine months ended September 30, 2019. Non-performing assets as a percentage of total assets increased from 0.55% at December 31, 2018 to 0.73% at September 30, 2019. The increase in non-performing assets is primarily attributable to assets acquired from Fidelity. Net charge-offs on legacy loans during the first nine months of 2019 were $7.2 million, or 0.15% of average legacy loans on an annualized basis, compared with approximately $11.4 million, or 0.29%, in the first nine months of 2018. The decrease in net charge-offs on legacy loans during the first nine months of 2019 was primarily attributable to a decrease in commercial, financial and agricultural charge-offs, partially offset by a $1.2 million commercial real estate loan which was fully charged off during the first quarter of 2019 which previously was specifically reserved for at December 31, 2018. The Company’s allowance for loan losses allocated to legacy loans at September 30, 2019 was $33.2 million, or 0.46% of legacy loans, compared with $26.2 million, or 0.46% of legacy loans, at December 31, 2018. The Company’s total allowance for loan losses at September 30, 2019 was $35.5 million, or 0.28% of total loans, compared with $28.8 million, or 0.34% of total loans, at December 31, 2018.

Noninterest Income

Total noninterest income for the nine months ended September 30, 2019 was $143.0 million, an increase of $55.1 million, or 62.6%, from the $87.9 million reported for the nine months ended September 30, 2018.Service charges on deposit accounts in the first nine months of 2019 increased $3.7 million, or 11.0%, to $37.2 million, compared with $33.5 million in the first nine months of 2018.This increase in service charge revenue was primarily attributable to higher debit card interchange income and an increase in the number of deposit accounts from organic growth and the Fidelity acquisition.Income from mortgage-related activities increased $44.5 million, or 106.5%, from $41.8 million in the first nine months of 2018 to $86.2 million in the same period of 2019.Total production in the first nine months of 2019 amounted to $2.75 billion, compared with $1.36 billion in the same period of 2018, while spread (gain on sale) decreased slightly to 2.83% during the nine months ended September 30, 2019, compared with 2.88% in the same period of 2018. The retail mortgage open pipeline was $784.2 million at September 30, 2019, compared with $119.2 million at the beginning of 2019 and $162.4 million at September 30, 2018. Other service charges, commissions and fees were $2.8 million during the first nine months of 2019, compared with $2.2 million during the first nine months of 2018. Other noninterest income increased $6.1 million, or 58.7%, to $16.6 million for the first nine months of 2019, compared with $10.4 million during the same period of 2018. The increase in other noninterest income was primarily attributable to a $4.3 million gain on BOLI proceeds resulting from the unfortunate death of a former officer of Fidelity and a $2.0 million increase in gain on sale of SBA loans for the nine months ended September 30, 2019 compared with the same period in 2018.

Noninterest Expense

Total noninterest expenses for the nine months ended September 30, 2019 increased $131.5 million, or 60.4%, to $349.4 million, compared with $217.8 million in the same period of 2018. Salaries and employee benefits increased $44.1 million, or 40.1%, from $110.2 million in the first nine months of 2018 to $154.3 million in the same period of 2019 due to staff additions resulting from the Fidelity acquisition and an increase in variable incentive pay related to production increases partially offset by a reduction of $6.6 million in expense recorded during the first nine months of 2018 related to executive retirement benefits and staff reductions from branch consolidation efforts in 2019. Occupancy and equipment expenses increased $7.5 million, or 35.4%, to $28.7 million for the first nine months of 2019, compared with $21.2 million in the same period of 2018, due primarily to 90 branch locations being added during 2018 and 2019 as a result of the Atlantic, Hamilton and Fidelity acquisitions partially offset by branch consolidations during the first nine months of 2019. Data processing and telecommunications expense increased $5.1 million, or 22.9%, to $27.2 million in the first nine months of 2019, from $22.1 million reported in the same period of 2018. This increase in data processing and telecommunications during the first nine months of 2019 reflects increased core banking system charges due to an increase in the number of accounts being processed by our core banking system and a $1.4 million refund recorded in the second quarter of 2018 related to overcharges on prior billings from a data processing vendor.Credit resolution-related expenses increased $142,000, or 5.0%, from $2.8 million in the first nine months of 2018 to $3.0 million in the same period of 2019. Amortization of intangible assets increased $6.1 million, or 104.2%, from $5.9 million in the first nine months of 2018 to $12.0 million in the first nine months of 2019, due primarily to additional amortization of intangible assets recorded as part of the Atlantic, Hamilton and Fidelity acquisitions. Merger and conversion charges were $70.7 million in the first nine months of 2019, compared with $19.5 million in the same period in 2018. Merger and conversion charges in the first nine months of 2019 were primarily related to the Fidelity acquisition while charges for the first nine months of 2018 primarily related to the USPF, Atlantic and Hamilton acquisitions. Other noninterest expenses increased $15.7 million, or 48.6%, from $32.3 million in the first nine months of 2018 to $47.9 million in the same period of 2019 resulting primarily from increases in consulting fees related to the implementation of a new support system, loss on sale of fixed assets, variable expenses in our lines of business tied to production levels and an increase in volume in certain areas related to our acquisitions of Hamilton, Atlantic and Fidelity.

Income Taxes

Income tax expense is influenced by the statutory rate, the amount of taxable income, the amount of tax-exempt income and the amount of non-deductible expenses. For the nine months ended September 30, 2019, the Company reported income tax expense of $29.2 million, compared with $23.4 million in the same period of 2018. The Company’s effective tax rate for the nine months ended September 30, 2019 and 2018 was 22.6% and 23.2%, respectively. The decrease in the effective tax rate is due to a non-taxable gain on BOLI proceeds, a reduction in the Florida corporate income tax rate and a reduction in non-deductible executive retirement benefits recognized during 2019 compared with 2018.

Financial Condition as of September 30, 2019

Securities

Management evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Substantially all of the unrealized losses on debt securities are related to changes in interest rates and do not affect the expected cash flows of the issuer or underlying collateral. All unrealized losses are considered temporary because each security carries an acceptable investment grade and the Company does not intend to sell these investment securities at an unrealized loss position at September 30, 2019, and it is more likely than not that the Company will

not be required to sell these securities prior to recovery or maturity. Therefore, at September 30, 2019, these investments are not considered impaired on an other-than temporary basis.

The following table is a summary of our investment portfolio at the dates indicated.



	September 30, 2019				December 31, 2018
(dollars in thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
September 30, 2019
U.S. government sponsored agencies	$	22,265	$	22,360	$	—	$	—
State, county and municipal securities	113,607		116,349		149,670		150,733
Corporate debt securities	51,740		52,918		67,123		67,314
Mortgage-backed securities	1,283,846		1,299,580		982,183		974,376
Total debt securities	$	1,471,458	$	1,491,207	$	1,198,976	$	1,192,423

The amounts of securities available for sale in each category as of September 30, 2019 are shown in the following table according to contractual maturity classifications: (i) one year or less, (ii) after one year through five years, (iii) after five years through ten years and (iv) after ten years.



	U.S. Government Sponsored Agencies				State, County and Municipal Securities				Corporate Debt Securities				Mortgage-Backed Securities
(dollars in thousands)	Amount		Yield (1)		Amount		Yield (1)(2)		Amount		Yield (1)		Amount		Yield (1)
One year or less	$	4,997	2.12	%	$	11,861	3.16	%	$	—	—	%	$	46	1.95	%
After one year through five years	16,269		1.92		44,232		3.37		14,727		2.80		46,132		2.67
After five years through ten years	1,094		2.16		32,184		3.51		36,220		5.40		355,141		2.81
After ten years	—		—		28,072		3.63		1,971		6.05		898,261		2.69
	$	22,360	1.97	%	$	116,349	3.45	%	$	52,918	4.69	%	$	1,299,580	2.72	%


(1)	Yields were computed using coupon interest, adding discount accretion or subtracting premium amortization, as appropriate, on a ratable basis over the life of each security. The weighted average yield for each maturity range was computed using the amortized cost of each security in that range.


(2)	Yields on securities of state and political subdivisions are stated on a taxable-equivalent basis, using a tax rate of 21%.

Loans and Allowance for Loan Losses

At September 30, 2019, gross loans outstanding (including purchased loans, purchased loan pools, and loans held for sale) were $14.01 billion, an increase of $5.39 billion, or 62.5%, from $8.62 billion reported at December 31, 2018. Loans held for sale increased from $111.3 million at December 31, 2018 to $1.19 billion at September 30, 2019 primarily due to elevated mortgage production levels in the third quarter of 2019. Legacy loans (excluding purchased loans and purchased loan pools) increased $1.55 billion, or 27.4%, from $5.66 billion at December 31, 2018 to $7.21 billion at September 30, 2019, driven primarily by growth in all loan categories. Approximately half of the growth in legacy loans for the first nine months of 2019 was related to our lines of business with the remaining attributable to our banking segment. Purchased loans increased $2.80 billion, or 108.1%, from $2.59 billion at December 31, 2018 to $5.39 billion at September 30, 2019, due primarily to loans acquired from Fidelity of $3.51 billion, partially offset by paydowns of $618.8 million and loans sold totaling $86.8 million. Purchased loan pools decreased $33.5 million, or 12.8%, from $262.6 million at December 31, 2018 to $229.1 million at September 30, 2019, due primarily to payments on the portfolio of $32.5 million and premium amortization of $1.0 million during the first nine months of 2019.

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) construction and development related real estate; (3) commercial and farmland real estate; (4) residential real estate; and (5) consumer. The Company’s management has strategically located its branches in select markets in Georgia, Florida, Alabama and South Carolina to take advantage of the growth in these areas.

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 probable incurred losses 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, which 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.

At the end of the third quarter of 2019, the allowance for loan losses allocated to legacy loans totaled $33.2 million, or 0.46% of legacy loans, compared with $26.2 million, or 0.46% of legacy loans, at December 31, 2018. Our legacy nonaccrual loans increased slightly from $18.0 million at December 31, 2018 to $21.7 million at September 30, 2019. For the first nine months of 2019, our legacy net charge off ratio as a percentage of average legacy loans decreased to 0.15%, compared with 0.29% for the first nine months of 2018. The total provision for loan losses for the first nine months of 2019 was $14.1 million, increasing from $13.0 million recorded for the first nine months of 2018. Our ratio of total nonperforming assets to total assets increased from 0.55% at December 31, 2018 to 0.73% at September 30, 2019, primarily resulting from assets acquired from Fidelity.

The balance of the allowance for loan losses allocated to all loans collectively evaluated for impairment increased 21.9%, or $5.2 million, during the first nine months of 2019, while the balance of all loans collectively evaluated for impairment increased 50.3%, or $4.21 billion, during the same period. The increase in the balance of all loans collectively evaluated for impairment is primarily attributable to growth in legacy loans and purchased loans, partially offset by paydowns on purchased loan pools. As a percentage of total loans collectively evaluated for impairment, the allowance allocated to those loans was down five basis points to 0.23% for September 30, 2019 compared with December 31, 2018.

The balance of the allowance for loan losses allocated to legacy loans collectively evaluated for impairment increased 23.1%, or $5.3 million, during the first nine months of 2019, while the balance of legacy loans collectively evaluated for impairment increased 27.3%, or $1.54 billion, during the same period. As a percentage of legacy loans collectively evaluated for impairment, the allowance allocated to those loans decreased one basis point from 0.41% at December 31, 2018 to 0.40% at September 30, 2019 due to the consistency in the mix of loan and collateral types and the overall credit quality of the loan portfolio.

For the allowance allocated to loans collectively evaluated expressed as a percentage of loans evaluated collectively for impairment, the largest change for the first nine months of 2019 was noted in the residential real estate loan category which increased five basis points, offset by decreases in all other categories from December 31, 2018 to September 30, 2019. The increase noted in the residential real estate category was due to a shift in the mix of loans within that category while the historical loss rates on all components declined over the same period. We consider a four year loss rate on all loan categories. We adjust the qualitative factors to account for the inherent risks in the portfolio that are not captured in the historical loss rates, such as volatile commodity prices for agriculture products, weather-related risks (droughts and hurricanes), growth rates of certain loan types and other factors management deems appropriate.

The balance of the allowance for loan losses allocated to loans individually evaluated for impairment increased 30.0%, or $1.5 million, during the first nine months of 2019, while the balance of loans individually evaluated for impairment increased 12.9%, or $7.0 million, during the same period. The increase in loan balances individually evaluated for impairment was primarily

attributable to increases of $6.5 million and $1.4 million in the residential real estate and commercial, financial and agricultural categories, respectively, partially offset by a decrease of $866,000 in the commercial and farmland real estate category. The increase in the allowance for loan losses allocated to loans individually evaluated for impairment from December 31, 2018 to September 30, 2019 was primarily related to a small number of loans which migrated to substandard over the same period.

The following tables present an analysis of the allowance for loan losses as of and for the nine months ended September 30, 2019 and 2018:



	Nine Months Ended September 30,
(dollars in thousands)	2019		2018
Balance of allowance for loan losses at beginning of period	$	28,819	$	25,791
Provision charged to operating expense	14,065		13,006
Charge-offs:
Commercial, financial and agricultural	4,920		11,314
Real estate – construction and development	247		285
Real estate – commercial and farmland	1,367		169
Real estate – residential	80		695
Consumer installment	4,214		2,724
Purchased loans	3,296		1,514
Purchased loan pools	—		—
Total charge-offs	14,124		16,701
Recoveries:
Commercial, financial and agricultural	2,652		2,842
Real estate – construction and development	22		117
Real estate – commercial and farmland	8		169
Real estate – residential	286		255
Consumer installment	675		362
Purchased loans	3,127		2,275
Purchased loan pools	—		—
Total recoveries	6,770		6,020
Net charge-offs	7,354		10,681
Balance of allowance for loan losses at end of period	$	35,530	$	28,116



	As of and for the Nine Months Ended September 30, 2019
(dollars in thousands)	Legacy Loans			Purchased Loans			Purchased Loan Pools			Total
Allowance for loan losses at end of period	$	33,192		$	1,719		$	619		$	35,530
Net charge-offs (recoveries) for the period	7,185			169			—			7,354
Loan balances:
End of period	7,208,816			5,388,336			229,132			12,826,284
Average for the period	6,587,916			3,148,726			245,918			9,982,560
Net charge-offs as a percentage of average loans (annualized)	0.15		%	0.01		%	0.00		%	0.10		%
Allowance for loan losses as a percentage of end of period loans	0.46		%	0.03		%	0.27		%	0.28		%



	As of and for the Nine Months Ended September 30, 2018
(dollars in thousands)	Legacy Loans			Purchased Loans			Purchased Loan Pools			Total
Allowance for loan losses at end of period	$	25,299		$	2,013		$	804		$	28,116
Net charge-offs (recoveries) for the period	11,442			(761		)	—			10,681
Loan balances:
End of period	5,543,306			2,711,460			274,752			8,529,518
Average for the period	5,277,108			1,483,029			307,718			7,067,855
Net charge-offs as a percentage of average loans (annualized)	0.29		%	(0.07		)%	0.00		%	0.20		%
Allowance for loan losses as a percentage of end of period loans	0.46		%	0.07		%	0.29		%	0.33		%

Loans Excluding Purchased Loans



(dollars in thousands)	September 30, 2019		December 31, 2018
Commercial, financial and agricultural	$	1,781,237	$	1,316,359
Real estate – construction and development	947,371		671,198
Real estate – commercial and farmland	2,152,528		1,814,529
Real estate – residential	1,866,128		1,403,000
Consumer installment	461,552		455,371
	$	7,208,816	$	5,660,457

The following table summarizes the various loan types comprising the "Commercial, financial and agricultural" loan category displayed in the preceding table.



(dollars in thousands)	September 30, 2019		December 31, 2018
Municipal loans	$	498,595	$	510,600
Premium finance loans	656,570		410,381
Other commercial, financial and agricultural loans	626,072		395,378
	$	1,781,237	$	1,316,359

Purchased Assets

Loans that were acquired in transactions, including those that are covered by the loss-sharing agreements with the FDIC (“purchased loans”), totaled $5.39 billion and $2.59 billion at September 30, 2019 and December 31, 2018, respectively. The increase in purchased loans of $2.80 billion, or 108.1%, resulted primarily from loans acquired from Fidelity of $3.51 billion, partially offset by paydowns of $618.8 million and loans sold of $86.8 million during the current year. OREO that was acquired in transactions, including OREO that is covered by the loss-sharing agreements with the FDIC, totaled $15.8 million at September 30, 2019 and $9.5 million at December 31, 2018.

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



(dollars in thousands)	September 30, 2019		December 31, 2018
Commercial, financial and agricultural	$	385,355	$	372,686
Real estate – construction and development	521,324		227,900
Real estate – commercial and farmland	2,057,384		1,337,859
Real estate – residential	1,285,096		623,199
Consumer installment	1,139,177		27,188
	$	5,388,336	$	2,588,832

Purchased Loan Pools

Purchased loan pools are defined as groups of residential mortgage loans that were not acquired in bank acquisitions or FDIC-assisted transactions. As of September 30, 2019, purchased loan pools totaled $229.1 million and consisted of whole-loan residential mortgages on properties outside the Company’s markets, with principal balances totaling $228.0 million and $1.1 million of remaining purchase premium paid at acquisition. As of December 31, 2018, purchased loan pools totaled $262.6 million and consisted of whole-loan, adjustable rate residential mortgages on properties outside the Company’s markets, with principal balances totaling $260.5 million and $2.1 million of remaining purchase premium paid at acquisition. The Company has allocated

approximately $619,000 and $732,000 of the allowance for loan losses to the purchased loan pools at September 30, 2019 and December 31, 2018, respectively.

Non-Performing Assets

Nonaccrual loans, excluding purchased loans, totaled $21.7 million at September 30, 2019, an increase of $3.8 million, or 21.1%, from $18.0 million at December 31, 2018. Nonaccrual purchased loans totaled $78.8 million at September 30, 2019, an increase of $54.7 million, or 226.7%, compared with $24.1 million at December 31, 2018. Accruing loans delinquent 90 days or more, excluding purchased loans, totaled $5.8 million at September 30, 2019, an increase of $1.6 million, or 38.2%, compared with $4.2 million at December 31, 2018. At September 30, 2019, OREO, excluding purchased OREO, totaled $4.9 million, a decrease of $2.3 million, or 31.8%, compared with $7.2 million at December 31, 2018. Purchased OREO totaled $15.8 million at September 30, 2019, an increase of $6.3 million, or 65.5%, compared with $9.5 million at December 31, 2018. Management regularly assesses the valuation of OREO through periodic reappraisal and through inquiries received in the marketing process. At the end of the third quarter of 2019, total non-performing assets as a percent of total assets increased to 0.73% compared with 0.55% at December 31, 2018, primarily from assets acquired from Fidelity.

Non-performing assets at September 30, 2019 and December 31, 2018 were as follows:



(dollars in thousands)	September 30, 2019		December 31, 2018
Nonaccrual loans, excluding purchased loans	$	21,739	$	17,952
Nonaccrual purchased loans	78,762		24,107
Nonaccrual purchased loan pools	—		—
Accruing loans delinquent 90 days or more, excluding purchased loans	5,836		4,222
Accruing purchased loans delinquent 90 days or more	489		—
Repossessed assets	1,258		—
Other real estate owned, excluding purchased assets	4,925		7,218
Purchased other real estate owned	15,785		9,535
Total non-performing assets	$	128,794	$	63,034

Troubled Debt Restructurings

The restructuring of a loan is considered a “troubled debt restructuring” if both (i) the borrower is experiencing financial difficulties and (ii) the Company has granted a concession.

As of September 30, 2019 and December 31, 2018, the Company had a balance of $15.1 million and $11.1 million, respectively, in troubled debt restructurings, excluding purchased loans. The following table presents the amount of troubled debt restructurings by loan class, excluding purchased loans, classified separately as accrual and nonaccrual at September 30, 2019 and December 31, 2018:



September 30, 2019	Accruing Loans			Non-Accruing Loans
Loan Class	#	Balance (in thousands)		#	Balance (in thousands)
Commercial, financial and agricultural	5	$	649	13	$	119
Real estate – construction and development	3	69		1	1
Real estate – commercial and farmland	12	2,788		3	530
Real estate – residential	88	9,915		20	925
Consumer installment	5	9		23	66
Total	113	$	13,430	60	$	1,641



December 31, 2018	Accruing Loans			Non-Accruing Loans
Loan Class	#	Balance (in thousands)		#	Balance (in thousands)
Commercial, financial and agricultural	5	$	256	14	$	138
Real estate – construction and development	5	145		1	2
Real estate – commercial and farmland	12	2,863		3	426
Real estate – residential	71	6,043		20	1,119
Consumer installment	6	16		24	69
Total	99	$	9,323	62	$	1,754



September 30, 2019	Loans Currently Paying Under Restructured Terms			Loans that have Defaulted Under Restructured Terms
Loan Class	#	Balance (in thousands)		#	Balance (in thousands)
Commercial, financial and agricultural	10	$	661	8	$	107
Real estate – construction and development	4	71		—	—
Real estate – commercial and farmland	11	2,736		4	582
Real estate – residential	89	9,643		19	1,197
Consumer installment	16	32		12	42
Total	130	$	13,143	43	$	1,928



December 31, 2018	Loans Currently Paying Under Restructured Terms			Loans that have Defaulted Under Restructured Terms
Loan Class	#	Balance (in thousands)		#	Balance (in thousands)
Commercial, financial and agricultural	10	$	282	9	$	112
Real estate – construction and development	5	147		1	—
Real estate – commercial and farmland	14	3,043		1	246
Real estate – residential	65	5,756		26	1,406
Consumer installment	18	36		12	49
Total	112	$	9,264	49	$	1,813



September 30, 2019	Accruing Loans			Non-Accruing Loans
Type of Concession	#	Balance (in thousands)		#	Balance (in thousands)
Forgiveness of interest	—	$	—	1	$	54
Forbearance of interest	10	1,391		4	424
Forgiveness of principal	1	674		—	—
Forbearance of principal	25	4,949		6	69
Rate reduction only	10	906		2	223
Rate reduction, forbearance of interest	26	2,251		12	305
Rate reduction, forbearance of principal	12	1,179		28	135
Rate reduction, forgiveness of interest	29	2,080		6	430
Rate reduction, forgiveness of principal	—	—		1	1
Total	113	$	13,430	60	$	1,641



December 31, 2018	Accruing Loans			Non-Accruing Loans
Type of Concession	#	Balance (in thousands)		#	Balance (in thousands)
Forgiveness of interest	—	$	—	1	$	55
Forbearance of interest	9	1,361		5	509
Forgiveness of principal	1	686		—	—
Forbearance of principal	6	360		4	75
Rate reduction only	11	1,155		1	56
Rate reduction, forbearance of interest	27	2,149		13	618
Rate reduction, forbearance of principal	15	1,384		32	175
Rate reduction, forgiveness of interest	30	2,228		5	264
Rate reduction, forgiveness of principal	—	—		1	2
Total	99	$	9,323	62	$	1,754



September 30, 2019	Accruing Loans			Non-Accruing Loans
Collateral Type	#	Balance (in thousands)		#	Balance (in thousands)
Warehouse	3	$	249	2	$	289
Raw land	4	122		2	237
Hotel and motel	1	237		1	241
Office	1	156		—	—
Retail, including strip centers	6	2,093		—	—
1-4 family residential	89	9,943		19	689
Automobile/equipment/CD	8	472		35	184
Livestock	—	—		—	—
Unsecured	1	158		1	1
Total	113	$	13,430	60	$	1,641



December 31, 2018	Accruing Loans			Non-Accruing Loans
Collateral Type	#	Balance (in thousands)		#	Balance (in thousands)
Warehouse	5	$	544	1	$	137
Raw land	7	435		1	2
Hotel and motel	1	260		1	246
Office	1	161		—	—
Retail, including strip centers	6	1,980		—	—
1-4 family residential	71	5,835		21	1,161
Automobile/equipment/CD	8	108		36	188
Livestock	—	—		1	18
Unsecured	—	—		1	2
Total	99	$	9,323	62	$	1,754

As of September 30, 2019 and December 31, 2018, the Company had a balance of $21.2 million and $22.2 million, respectively, in troubled debt restructurings included in purchased loans. The following table presents the amount of troubled debt restructurings by loan class of purchased loans, classified separately as accrual and nonaccrual at September 30, 2019 and December 31, 2018:



September 30, 2019	Accruing Loans			Non-Accruing Loans
Loan Class	#	Balance (in thousands)		#	Balance (in thousands)
Commercial, financial and agricultural	1	$	31	3	$	25
Real estate – construction and development	4	878		2	257
Real estate – commercial and farmland	11	5,829		5	1,428
Real estate – residential	113	11,557		18	1,178
Consumer installment	—	—		7	54
Total	129	$	18,295	35	$	2,942



December 31, 2018	Accruing Loans			Non-Accruing Loans
Loan Class	#	Balance (in thousands)		#	Balance (in thousands)
Commercial, financial and agricultural	1	$	31	3	$	32
Real estate – construction and development	4	1,015		5	293
Real estate – commercial and farmland	12	6,162		7	1,685
Real estate – residential	115	11,532		24	1,424
Consumer installment	—	—		4	17
Total	132	$	18,740	43	$	3,451



September 30, 2019	Loans Currently Paying Under Restructured Terms			Loans that have Defaulted Under Restructured Terms
Loan Class	#	Balance (in thousands)		#	Balance (in thousands)
Commercial, financial and agricultural	3	$	55	1	$	1
Real estate – construction and development	6	1,135		—	—
Real estate – commercial and farmland	14	6,744		2	513
Real estate – residential	97	10,209		34	2,526
Consumer installment	4	33		3	21
Total	124	$	18,176	40	$	3,061



December 31, 2018	Loans Currently Paying Under Restructured Terms			Loans that have Defaulted Under Restructured Terms
Loan Class	#	Balance (in thousands)		#	Balance (in thousands)
Commercial, financial and agricultural	4	$	63	—	$	—
Real estate – construction and development	8	1,305		1	3
Real estate – commercial and farmland	17	7,576		2	271
Real estate – residential	106	10,040		33	2,916
Consumer installment	3	14		1	3
Total	138	$	18,998	37	$	3,193



September 30, 2019	Accruing Loans			Non-Accruing Loans
Type of Concession	#	Balance (in thousands)		#	Balance (in thousands)
Forbearance of interest	5	$	440	9	$	1,317
Forbearance of principal	8	2,705		4	222
Forbearance of principal, extended amortization	—	—		1	233
Rate reduction only	64	9,559		4	344
Rate reduction, forbearance of interest	24	2,253		10	443
Rate reduction, forbearance of principal	7	1,717		4	184
Rate reduction, forgiveness of interest	21	1,621		3	199
Total	129	$	18,295	35	$	2,942



December 31, 2018	Accruing Loans			Non-Accruing Loans
Type of Concession	#	Balance (in thousands)		#	Balance (in thousands)
Forbearance of interest	5	$	224	10	$	1,751
Forbearance of principal	6	2,368		3	226
Forbearance of principal, extended amortization	—	—		1	258
Rate reduction only	73	10,911		6	285
Rate reduction, forbearance of interest	24	2,304		14	356
Rate reduction, forbearance of principal	8	1,635		6	368
Rate reduction, forgiveness of interest	16	1,298		3	207
Total	132	$	18,740	43	$	3,451



September 30, 2019	Accruing Loans			Non-Accruing Loans
Collateral Type	#	Balance (in thousands)		#	Balance (in thousands)
Warehouse	2	$	348	—	$	—
Raw land	2	759		3	625
Hotel and motel	1	142		—	—
Office	2	389		1	353
Retail, including strip centers	5	3,785		—	—
1-4 family residential	115	11,676		19	1,686
Church	1	1,165		1	188
Automobile/equipment/CD	1	31		11	90
Total	129	$	18,295	35	$	2,942



December 31, 2018	Accruing Loans			Non-Accruing Loans
Collateral Type	#	Balance (in thousands)		#	Balance (in thousands)
Warehouse	2	$	356	—	$	—
Raw land	2	873		6	718
Hotel and motel	1	145		—	—
Office	2	419		2	457
Retail, including strip centers	5	3,882		—	—
1-4 family residential	118	11,837		26	2,009
Church	1	1,197		1	201
Automobile/equipment/CD	1	31		8	65
Total	132	$	18,740	43	$	3,450

Commercial Lending Practices

The federal bank regulatory agencies previously issued interagency guidance on commercial real estate lending and prudent risk management practices. 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 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, 2019, the Company exhibited a concentration in the 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, 2019 and December 31, 2018. The loan categories and concentrations below are based on Federal Reserve Call codes and include purchased loans:



	September 30, 2019			December 31, 2018
(dollars in thousands)	Balance		% of Total Loans	Balance		% of Total Loans
Construction and development loans	$	1,468,696	11%	$	899,097	11%
Multi-family loans	269,623		2%	276,528		3%
Nonfarm non-residential loans (excluding owner-occupied)	2,291,551		18%	1,694,267		20%
Total CRE Loans (excluding owner-occupied)	4,029,870		31%	2,869,892		34%
All other loan types	8,796,414		69%	5,642,022		66%
Total Loans	$	12,826,284	100%	$	8,511,914	100%

The following table outlines the percentage of construction and development loans and total CRE loans, net of owner-occupied loans, to the Bank’s total risk-based capital, and the Company’s internal concentration limits as of September 30, 2019 and December 31, 2018:



	Internal Limit	Actual
	Internal Limit	September 30, 2019	December 31, 2018
Construction and development loans	100%	84%	78%
Total CRE loans (excluding owner-occupied)	300%	231%	249%

Short-Term Investments

The Company’s short-term investments are comprised of federal funds sold and interest-bearing deposits in banks. At September 30, 2019, the Company’s short-term investments were $285.7 million, compared with $507.5 million at December 31, 2018. At September 30, 2019, the Company had $21.1 million in federal funds sold and $264.6 million was in interest-bearing deposit balances at correspondent banks and the Federal Reserve Bank of Atlanta.

Derivative Instruments and Hedging Activities

The Company has a cash flow hedge that matures September 15, 2020 with a notional amount of $37.1 million at September 30, 2019 and December 31, 2018 for the purpose of converting the variable rate on certain junior subordinated debentures to a fixed rate of 4.11%. The fair value of this instrument was a liability of $237,000 at September 30, 2019 and an asset of $102,000 at December 31, 2018.

The Company also has forward contracts and IRLCs to hedge changes in the value of the mortgage inventory due to changes in market interest rates. The fair value of these instruments amounted to an asset of $15.9 million and $2.5 million at September 30, 2019 and December 31, 2018, respectively, and a liability of $1.2 million and $1.3 million at September 30, 2019 and December 31, 2018, respectively.

Capital

Common Stock Repurchase Program

On September 19, 2019, the Company announced that its Board of Directors authorized the Company to repurchase up to $100.0 million of its outstanding common stock. Repurchases of shares, which are authorized to occur through October 31 2020, must be made in accordance with applicable securities laws and may be made from time to time in the open market or by negotiated transactions. The amount and timing of repurchases will be based on a variety of factors, including share acquisition price, regulatory limitations and other market and economic factors. The program does not require the Company to repurchase any specific number of shares. It replaces the Company's prior share repurchase program which was set to expire in October 2019 and under which the Company repurchased $10.6 million of its outstanding common stock in the past year. As of September 30, 2019, no shares of the Company's common stock, had been repurchased under the program.

Fidelity Acquisition

For additional information regarding the Fidelity acquisition, see Note 2.

Hamilton Acquisition

For additional information regarding the Hamilton acquisition, see Note 2.

Atlantic Acquisition

For additional information regarding the Atlantic acquisition, see Note 2.

USPF Acquisition

On January 18, 2017, in exchange for 4.99% of the outstanding shares of common stock of USPF, the Company issued 128,572 unregistered shares of its common stock to a selling shareholder of USPF. A registration statement was filed with the SEC on February 13, 2017 to register the resale or other disposition of these shares. The issuance of the 128,572 common shares, valued at $45.45 per share at the time of issuance, resulted in an increase in shareholders’ equity of $5.8 million.

On February 16, 2018, a registration statement was filed with the SEC to register the resale or other disposition of the combined 944,586 shares issued on January 3, 2018 and January 31, 2018.

For additional information regarding the USPF acquisition, see Note 2.

Capital Management

that Tier 1 capital consist of Common Equity Tier 1 and "Additional Tier 1 Capital" instruments meeting specified requirements, defined Common Equity Tier 1, established a capital conservation buffer and expanded the scope of the adjustments as compared with existing regulations. The capital conservation buffer is being increased by 0.625% per year until reaching 2.50% by 2019. The capital conservation buffer was being phased in from 0.0% for 2015 to, 0.625% for 2016, 1.25% for 2017, 1.875% for 2018, and 2.50% for 2019. The Basel III Capital Rules became effective for us on January 1, 2015 with certain transition provisions fully phased in on January 1, 2019.

The regulatory capital standards are defined by the following key measurements:

b) The “CET1 Ratio” is defined as Common equity tier 1 capital to total risk weighted assets. To be considered “adequately capitalized” under this measurement, a bank must maintain a CET1 ratio greater than or equal to 4.50% (7.00% including the 2.50% capital conservation buffer for 2019; 6.375% including the 1.875% capital conservation buffer for 2018). For a bank to be considered “well capitalized,” it must maintain a CET1 ratio greater than or equal to 6.50%.

c) The “Tier 1 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 Tier 1 capital ratio greater than or equal to 6.00% (8.50% including the 2.50% capital conservation buffer for 2019; 7.875% including the 1.875% capital conservation buffer for 2018). For a bank to be considered “well capitalized,” it must maintain a Tier 1 capital ratio greater than or equal to 8.00%.

d) 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% (10.50% including the 2.50% capital conservation buffer for 2019; 9.875% including the 1.875% capital conservation buffer for 2018). For a bank to be considered “well capitalized,” it must maintain a total capital ratio greater than or equal to 10.00%.

As of September 30, 2019, under the regulatory capital standards, the Bank was considered “well capitalized” under all capital measurements. The following table sets forth the regulatory capital ratios of for the Company and the Bank at September 30, 2019 and December 31, 2018.



	September 30, 2019	December 31, 2018
Tier 1 Leverage Ratio (tier 1 capital to average assets)
Consolidated	8.55%	9.17%
Ameris Bank	10.03%	10.46%
CET1 Ratio (common equity tier 1 capital to risk weighted assets)
Consolidated	9.75%	10.07%
Ameris Bank	11.42%	12.66%
Tier 1 Capital Ratio (tier 1 capital to risk weighted assets)
Consolidated	9.75%	11.07%
Ameris Bank	11.42%	12.66%
Total Capital Ratio (total capital to risk weighted assets)
Consolidated	11.04%	12.23%
Ameris Bank	12.20%	12.98%

Interest Rate Sensitivity and Liquidity

The Company’s primary market risk exposures are credit risk, interest rate risk, and to a lesser degree, liquidity risk. The Bank operates under an Asset Liability Management Policy approved by the Company’s Board of Directors and 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 independent 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 of Directors and executive management to minimize those identified risks.

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 assets at any given time will adequately cover any reasonably anticipated immediate need for funds. Additionally, the Bank maintains relationships with correspondent banks, which could provide funds on short notice, if needed. The Company has invested in FHLB stock for the purpose of establishing credit lines with the FHLB. The credit availability to the Bank is equal to 30% 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, 2019 and December 31, 2018, the net carrying value of the Company’s other borrowings was $1.35 billion and $151.8 million, respectively.

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



	September 30, 2019	June 30, 2019	March 31, 2019	December 31, 2018	September 30, 2018
Investment securities available for sale to total deposits	10.92%	13.29%	12.60%	12.36%	12.66%
Loans (net of unearned income) to total deposits	93.90%	94.44%	86.55%	88.21%	92.90%
Interest-earning assets to total assets	89.27%	90.87%	90.63%	90.43%	90.48%
Interest-bearing deposits to total deposits	70.15%	71.08%	71.91%	73.88%	74.58%

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, 2019 were considered satisfactory. The Company is aware of no events or trends likely to result in a material change in liquidity.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

The Company is exposed only to U.S. dollar interest rate changes, and, accordingly, the Company manages exposure by considering the possible changes in the net interest margin. The Company does not have any trading instruments nor does it classify any portion of the investment portfolio as held for trading. The 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, ~~2018,~~2019, the Company had one cash flow hedge with a notional amount of $37.1 million for the purpose of converting the variable rate on certain junior subordinated debentures to a fixed rate. The LIBOR rate swap exchanges fixed rate payments of 4.11% for floating rate payments based on the three-month LIBOR rate and matures September 2020. The fair value of this instrument was a liability of $237,000 at September 30, 2019 and an asset of ~~$315,000 at September 30, 2018 and a liability of $381,000~~$102,000 at December 31, ~~2017.~~2018.

The Company also had forward contracts and IRLCs to hedge changes in the value of the mortgage inventory due to changes in market interest rates. The fair value of these instruments amounted to an asset of approximately ~~$3.7~~$15.9 million and ~~$2.9~~$2.5 million at

September 30, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively, and a liability of $0$1.2 million and ~~$67,000~~$1.3 million at September 30, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively.

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 12-month and 24-month period is subjected to gradual and parallel shocks of 100, 200, 300 and 400 basis point increases and decreases in market rates and is monitored on a quarterly basis.

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

Item 4. Controls and Procedures.

The 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 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, ~~2018,~~2019, there was no change 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.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time, ~~as a normal incident of the nature and kind of business in which~~ the Company ~~is engaged,~~and the Bank are subject to various legal proceedings, claims ~~or charges are asserted against~~and disputes that arise in the ~~Company or the Bank. In~~ordinary course of business. Additionally, in the ordinary course of business, the Company and the Bank are also subject to regulatory examinations, information gathering requests, inquiries and investigations. ~~Other than ordinary routine litigation incidental to~~Based on the Company’s ~~business, management believes based on its~~ current knowledge and ~~after consultation with~~advice of counsel, management presently does not believe that the liabilities arising from these legal ~~counsel that there are no pending or threatened legal proceedings that~~matters will ~~individually or in the aggregate,~~ have a material adverse effect on the Company’s consolidated financial condition, results of operations or cash flows. However, it is possible that the ultimate resolution of these legal matters could have a material adverse effect on the Company’s results of operations and financial condition ~~of the Company.~~for any particular period.

Item 1A. Risk Factors.

There have been no material changes to the risk factors disclosed in Item 1A. of Part I of our Annual Report on Form 10-K for the year ended December 31, ~~2017.~~2018.

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

c) Issuer Purchases of Equity Securities.

The table below sets forth information regarding the Company’s repurchase of shares of its outstanding common stock during the three-month period ended September 30, ~~2018.~~ 2019.

Period
Total
Number of
Shares
Purchased⁽¹⁾

Average Price
Paid Per Share

Total Number
of Shares
Purchased as
Part of Publicly
Announced
Plans or
Programs

Approximate
Dollar Value of
Shares That
May Yet be
Purchased
Under the Plans
or Programs
July 1, 2018 through July 31, 2018 —
$ —
—
$ —
August 1, 2018 through August 31, 2018 —
$ —
—
$ —
September 1, 2018 through September 30, 2018 21,696
$ 49.65
—
$ —
Total 21,696
$ 49.65
—
$ —



Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares That May Yet be Purchased Under the Plans or Programs⁽¹⁾
July 1, 2019 through July 31, 2019	—	$	—	—	$	89,447,425
August 1, 2019 through August 31, 2019	—	$	—	—	$	89,447,425
September 1, 2019 through September 30, 2019	—	$	—	—	$	100,000,000
Total	—	$	—	—	$	100,000,000

(1)

On September 19, 2019, the Company announced that its Board of Directors authorized the Company to repurchase up to $100.0 million of its outstanding common stock. Repurchases of shares, which are authorized to occur through October 31, 2020, will be made, if at all, in accordance with applicable securities laws and may be made from time to time in the open market or by negotiated transactions. The ~~shares purchased from July 1, 2018 through~~amount and timing of repurchases will be based on a variety of factors, including share acquisition price, regulatory limitations and other market and economic factors. The program does not require the Company to repurchase any specific number of shares. It replaces the Company's prior share repurchase program which was set to expire in October 2019 and under which the Company repurchased $10.6 million of its outstanding common stock in the past year. As of September 30, ~~2018 consist of~~2019, no shares of the Company's common stock, ~~surrendered to~~had been repurchased under the ~~Company in payment of the income tax withholding obligations relating to the vesting of shares of restricted stock.~~new program.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.



Exhibit Number		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 with the SEC on August 14, 1987).

3.2		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 SEC on March 26, 1999).

3.3		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 SEC on March 31, 2003).

3.4		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 SEC on December 1, 2005).

3.5		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 SEC on November 21, 2008).

3.6		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 SEC on June 1, 2011).

3.7		Bylaws of Ameris Bancorp, as amended and restated ~~effective January 16, 2018~~through July 1, 2019 (incorporated by reference to Exhibit 3.1 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on ~~January 19, 2018)~~July 1, 2019).

4.1		Indenture between Ameris Bancorp (as successor to Fidelity Southern Corporation) and U.S. Bank National Association, dated as of June 26, 2003 (incorporated by reference to Exhibit 4.1 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on July 1, 2019).

4.2		First Supplemental Indenture, among Ameris Bancorp, Fidelity Southern Corporation and U.S. Bank National Association, dated as of July 1, 2019 (incorporated by reference to Exhibit 4.2 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on July 1, 2019).

4.3		Form of Floating Rate Junior Subordinated Deferrable Interest Debentures due 2033 (incorporated by reference to Exhibit 4.3 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on July 1, 2019).

4.4		Indenture between Ameris Bancorp (as successor to Fidelity Southern Corporation) and Wilmington Trust Company, dated as of March 17, 2005 (incorporated by reference to Exhibit 4.4 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on July 1, 2019).

4.5		First Supplemental Indenture, among Ameris Bancorp, Fidelity Southern Corporation and Wilmington Trust Company, dated as of July 1, 2019 (incorporated by reference to Exhibit 4.4 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on July 1, 2019).

4.6		Form of Floating Rate Junior Subordinated Deferrable Interest Debentures due 2035 (incorporated by reference to Exhibit 4.6 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on July 1, 2019).

4.7		Indenture between Ameris Bancorp (as successor to Fidelity Southern Corporation) and Wilmington Trust Company, dated as of August 20, 2007 (incorporated by reference to Exhibit 4.7 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on July 1, 2019).

4.8		First Supplemental Indenture, among Ameris Bancorp, Fidelity Southern Corporation and Wilmington Trust Company, dated as of July 1, 2019 (incorporated by reference to Exhibit 4.8 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on July 1, 2019).

4.9		Form of Fixed/Floating Rate Junior Subordinated Deferrable Interest Debentures due 2037 (incorporated by reference to Exhibit 4.9 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on July 1, 2019).

10.1		Employment Agreement by and among Ameris Bancorp, Ameris Bank and James B. Miller, Jr. dated as of December 17, 2018 (incorporated by reference to Exhibit 10.1 to Ameris Bancorp's Form 10-Q filed with the SEC on August 9, 2019).

10.2		Employment Agreement by and among Ameris Bancorp, Ameris Bank and H. Palmer Proctor, Jr. dated as of December 17, 2018 (incorporated by reference to Exhibit 10.2 to Ameris Bancorp's Form 10-Q filed with the SEC on August 9, 2019).

10.3		Amendment to Employment Agreement by and among Ameris Bancorp, Ameris Bank and H. Palmer Proctor, Jr. dated as of June 30, 2019 (incorporated by reference to Exhibit 10.3 to Ameris Bancorp's Form 10-Q filed with the SEC on August 9, 2019).

31.1		Rule 13a-14(a)/15d-14(a) Certification by the Company’s Chief Executive Officer.



Exhibit Number		Description
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.

~~101~~101.INS		~~The following financial statements from Ameris Bancorp’s Form 10-Q for~~XBRL Instance Document - the ~~quarter ended September 30, 2018, formatted as~~instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH		Inline XBRL Taxonomy Extension Schema Document.

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104		Cover Page Interactive Data File - the cover page interactive data ~~files~~file does not appear in the Interactive Data File because its XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Income and Comprehensive Income; (iii) Consolidated Statements of Shareholders’ Equity; (iv) Consolidated Statements of Cash Flows; and (v) Notes to Consolidated Financial Statements.tags are embedded within the Inline XBRL document.

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.



Dated: November ~~9, 2018~~8, 2019	AMERIS BANCORP

	/s/ Nicole S. Stokes
	Nicole S. Stokes
	Executive Vice President and Chief Financial Officer (duly authorized signatory and principal accounting and financial officer)

7982



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

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

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

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

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

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



	Three Months Ended September 30, 2017
(dollars in thousands)	Banking Division		Retail Mortgage Division		Warehouse Lending Division		SBA Division			Premium Finance Division		Total
Interest income	$	59,130	$	5,862	$	2,022	$	1,413		$	7,895	$	76,322
Interest expense	5,530		1,597		487		432			1,421		9,467
Net interest income	53,600		4,265		1,535		981			6,474		66,855
Provision for loan losses	1,037		262		215		(1		)	274		1,787
Noninterest income	13,007		12,257		583		1,130			22		26,999
Noninterest expense
Salaries and employee benefits	20,554		9,792		129		858			1,250		32,583
Equipment and occupancy expenses	5,384		555		1		54			42		6,036
Data processing and telecommunications expenses	6,357		425		28		9			231		7,050
Other expenses	14,905		1,001		51		63			2,078		18,098
Total noninterest expense	47,200		11,773		209		984			3,601		63,767
Income before income tax expense	18,370		4,487		1,694		1,128			2,621		28,300
Income tax expense	4,850		1,475		580		394			843		8,142
Net income	$	13,520	$	3,012	$	1,114	$	734		$	1,778	$	20,158

Total assets	$	6,296,159	$	531,897	$	236,024	$	94,531		$	491,209	$	7,649,820
Goodwill	125,532		—		—		—			—		125,532
Other intangible assets, net	14,437		—		—		—			—		14,437



	September 30, 2018	June 30, 2018	March 31, 2018	December 31, 2017	September 30, 2017
Investment securities available for sale to total deposits	12.66%	13.17%	13.16%	12.24%	13.90%
Loans (net of unearned income) to total deposits	92.90%	96.91%	96.03%	91.25%	101.04%
Interest-earning assets to total assets	90.48%	90.35%	92.15%	92.77%	92.48%
Interest-bearing deposits to total deposits	74.58%	73.11%	71.02%	73.18%	70.86%



Period	Total Number of Shares Purchased⁽¹⁾	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares That May Yet be Purchased Under the Plans or Programs
July 1, 2018 through July 31, 2018	—	$	—	—	$	—
August 1, 2018 through August 31, 2018	—	$	—	—	$	—
September 1, 2018 through September 30, 2018	21,696	$	49.65	—	$	—
Total	21,696	$	49.65	—	$	—