~~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)



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

For the quarterly period ended September 30, ~~2019~~2020



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



Commission File Number:			001-13901



AMERIS BANCORP
(Exact name of registrant as specified in its charter)



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



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



(404)			639-6500
(Registrant’s telephone number)

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

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

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ý No ¨

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



Large accelerated filer	ý	Accelerated filer	☐

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

		Emerging growth company	☐

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

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

~~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 ~~69,660,953~~69,490,546 shares of Common Stock outstanding as of ~~November 1, 2019.~~October 31, 2020.

AMERIS BANCORP

TABLE OF CONTENTS



		Page

PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements.

	Consolidated Balance Sheets as of September 30, ~~2019~~2020 and December 31, ~~2018~~2019	1

	Consolidated Statements of Income and Comprehensive Income for the Three and Nine-Month Periods Ended September 30, ~~2019~~2020 and ~~2018~~2019	2

	Consolidated Statements of Shareholders’ Equity for the Three and ~~Nine-Month~~Nine -Month Periods Ended September 30, ~~2019~~2020 and ~~2018~~2019	3

	Consolidated Statements of Cash Flows for the Nine Months Ended September 30, ~~2019~~2020 and ~~2018~~2019	5

	Notes to Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	5047

Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	7772

Item 4.	Controls and Procedures.	7872

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings.	7873

Item 1A.	Risk Factors.	7873

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	7875

Item 3.	Defaults Upon Senior Securities.	7975

Item 4.	Mine Safety Disclosures.	7975

Item 5.	Other Information.	7975

Item 6.	Exhibits.	8076

Signatures		8277

Item 1. Financial Statements.

AMERIS BANCORP AND SUBSIDIARIES

Consolidated Balance Sheets ~~(unaudited)~~

(dollars in thousands, except per share data)


	September 30, 2020 (unaudited)		December 31, 2019
Assets
Cash and due from banks	$	257,026	$	246,234
Federal funds sold and interest-bearing deposits in banks	494,765		375,615
Cash and cash equivalents	751,791		621,849

Time deposits in other banks	249		249
Investment securities available for sale, at fair value, net of allowance for credit losses at $68 and $0 at September 30, 2020 and December 31, 2019, respectively	1,117,436		1,403,403
Other investments	47,329		66,919
Loans held for sale (includes loan at fair value of $1,368,044 and $1,656,711, respectively)	1,414,889		1,656,711

Loans, net of unearned income	14,943,593		12,818,476
Allowance for credit losses	(231,924)		(38,189)
Loans, net	14,711,669		12,780,287

Other real estate owned, net	17,969		19,500
Premises and equipment, net	231,278		233,102
Goodwill	928,005		931,637
Other intangible assets, net	76,164		91,586
Cash value of bank owned life insurance	175,605		175,270
Deferred income taxes, net	53,039		2,180
Other assets	348,428		259,886
Total assets	$	19,873,851	$	18,242,579

Liabilities
Deposits:
Noninterest-bearing	$	5,909,316	$	4,199,448
Interest-bearing	10,154,490		9,827,625
Total deposits	16,063,806		14,027,073
Securities sold under agreements to repurchase	9,103		20,635
Other borrowings	875,255		1,398,709
Subordinated deferrable interest debentures	123,860		127,560
FDIC loss-share payable, net	19,476		19,642
Other liabilities	217,668		179,378
Total liabilities	17,309,168		15,772,997

Commitments and Contingencies (Note 11)

Shareholders’ Equity
Preferred stock, stated value $1,000 (5,000,000 shares authorized; 0 shares issued and outstanding at September 30, 2020 and December 31, 2019)	0		0
Common stock, par value $1 (200,000,000 and 100,000,000 shares authorized at September 30, 2020 and December 31, 2019, respectively; 71,702,587 and 71,499,829 shares issued at September 30, 2020 and December 31, 2019, respectively)	71,703		71,500
Capital surplus	1,911,031		1,907,108
Retained earnings	587,657		507,950
Accumulated other comprehensive income, net of tax	37,252		17,995
Treasury stock, at cost (2,212,041 shares and 1,995,996 shares at September 30, 2020 and December 31, 2019, respectively)	(42,960)		(34,971)
Total shareholders’ equity	2,564,683		2,469,582
Total liabilities and shareholders’ equity	$	19,873,851	$	18,242,579

September 30,
2019 December 31,
2018
Assets

Cash and due from banks $ 193,976
$ 172,036
Federal funds sold and interest-bearing deposits in banks 285,713
507,491
Cash and cash equivalents 479,689
679,527

Time deposits in other banks 499
10,812
Investment securities available for sale, at fair value 1,491,207
1,192,423
Other investments 66,921
14,455
Loans held for sale, at fair value 1,187,551
111,298

Loans 7,208,816
5,660,457
Purchased loans 5,388,336
2,588,832
Purchased loan pools 229,132
262,625
Loans, net of unearned income 12,826,284
8,511,914
Allowance for loan losses (35,530 ) (28,819 )
Loans, net 12,790,754
8,483,095

Other real estate owned, net 4,925
7,218
Purchased other real estate owned, net 15,785
9,535
Total other real estate owned, net 20,710
16,753

Premises and equipment, net 239,428
145,410
Goodwill 911,488
503,434
Other intangible assets, net 97,328
58,689
Cash value of bank owned life insurance 174,442
104,096
Deferred income taxes, net 22,111
35,126
Other assets 282,149
88,397
Total assets $ 17,764,277
$ 11,443,515

Liabilities

Deposits:

Noninterest-bearing $ 4,077,856
$ 2,520,016
Interest-bearing 9,581,738
7,129,297
Total deposits 13,659,594
9,649,313
Securities sold under agreements to repurchase 17,744
20,384
Other borrowings 1,351,172
151,774
Subordinated deferrable interest debentures 127,075
89,187
FDIC loss-share payable, net 19,490
19,487
Other liabilities 168,479
57,023
Total liabilities 15,343,554
9,987,168

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, 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 1,904,789
1,051,584
Retained earnings 457,127
377,135
Accumulated other comprehensive income (loss), net of tax 15,482
(4,826 )
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 2,420,723
1,456,347
Total liabilities and shareholders’ equity $ 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,
	2019			2018			2019			2018				2020		2019		2020		2019
Interest income													Interest income
Interest and fees on loans	$	175,046		$	110,470		$	404,457		$	266,460		Interest and fees on loans	$	172,351	$	175,046	$	518,938	$	404,457
Interest on taxable securities	11,354			8,792			29,780			20,320			Interest on taxable securities	7,259		11,354		26,688		29,780
Interest on nontaxable securities	168			204			426			705			Interest on nontaxable securities	159		168		473		426
Interest on deposits in other banks and federal funds sold	1,793			1,653			7,655			3,092			Interest on deposits in other banks and federal funds sold	165		1,793		1,621		7,655
Total interest income	188,361			121,119			442,318			290,577			Total interest income	179,934		188,361		547,720		442,318

Interest expense													Interest expense
Interest on deposits	29,425			15,630			74,563			30,196			Interest on deposits	11,822		29,425		50,197		74,563
Interest on other borrowings	10,167			6,451			17,940			16,543			Interest on other borrowings	5,574		10,167		23,226		17,940
Total interest expense	39,592			22,081			92,503			46,739			Total interest expense	17,396		39,592		73,423		92,503

Net interest income	148,769			99,038			349,815			243,838			Net interest income	162,538		148,769		474,297		349,815
Provision for loan losses	5,989			2,095			14,065			13,006			Provision for loan losses	26,692		5,989		132,188		14,065
Net interest income after provision for loan losses	142,780			96,943			335,750			230,832
Provision for unfunded commitments													Provision for unfunded commitments	(10,131)		0		13,581		0
Provision for other credit losses													Provision for other credit losses	1,121		0		1,121		0
Provision for credit losses													Provision for credit losses	17,682		5,989		146,890		14,065
Net interest income after provision for credit losses													Net interest income after provision for credit losses	144,856		142,780		327,407		335,750

Noninterest income													Noninterest income
Service charges on deposit accounts	13,411			12,690			37,225			33,531			Service charges on deposit accounts	10,914		13,411		32,680		37,225
Mortgage banking activity	53,041			14,082			86,241			41,771			Mortgage banking activity	138,627		53,041		278,885		86,241
Other service charges, commissions and fees	1,236			790			2,828			2,236			Other service charges, commissions and fees	1,151		1,236		3,409		2,828
Net gain (loss) on securities	4			48			139			(38		)
Net gain on securities													Net gain on securities	0		4		5		139
Other noninterest income	9,301			2,561			16,567			10,442			Other noninterest income	8,326		9,301		19,378		16,567
Total noninterest income	76,993			30,171			143,000			87,942			Total noninterest income	159,018		76,993		334,357		143,000

Noninterest expense													Noninterest expense
Salaries and employee benefits	77,633			38,414			154,296			110,163			Salaries and employee benefits	96,698		77,633		267,812		154,296
Occupancy and equipment expense	12,639			8,598			28,677			21,186			Occupancy and equipment expense	13,805		12,639		39,640		28,677
Data processing and communications expenses	10,372			8,518			27,151			22,092			Data processing and communications expenses	12,226		10,372		34,694		27,151
Credit resolution-related expenses	1,094			1,248			2,984			2,842			Credit resolution-related expenses	802		1,094		3,950		2,984
Advertising and marketing expense	1,949			1,453			5,677			3,938			Advertising and marketing expense	966		1,949		4,779		5,677
Amortization of intangible assets	5,719			2,676			11,972			5,862			Amortization of intangible assets	4,190		5,719		15,422		11,972
Merger and conversion charges	65,158			276			70,690			19,502			Merger and conversion charges	(44)		65,158		1,391		70,690
Other noninterest expenses	18,133			11,170			47,926			32,252			Other noninterest expenses	25,049		18,133		79,825		47,926
Total noninterest expense	192,697			72,353			349,373			217,837			Total noninterest expense	153,692		192,697		447,513		349,373

Income before income tax expense	27,076			54,761			129,377			100,937			Income before income tax expense	150,182		27,076		214,251		129,377
Income tax expense	5,692			13,317			29,184			23,446			Income tax expense	34,037		5,692		46,548		29,184
Net income	21,384			41,444			100,193			77,491			Net income	116,145		21,384		167,703		100,193

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)	(980		)	(4,005		)	20,308			(14,904		)
Other comprehensive income													Other comprehensive income
Net unrealized holding gains (losses) arising during period on investment securities available for sale, net of tax expense (benefit) of $(663), $(244), $5,080 and $5,549													Net unrealized holding gains (losses) arising during period on investment securities available for sale, net of tax expense (benefit) of $(663), $(244), $5,080 and $5,549	(2,494)		(921)		19,110		20,873
Reclassification adjustment for gains on investment securities included in earnings, $0, $0, $0 and $25													Reclassification adjustment for gains on investment securities included in earnings, $0, $0, $0 and $25	0		0		0		(94)
Unrealized gains (losses) on cash flow hedges arising during period, net of tax expense (benefit) of $35, $(15), $39 and $(125)													Unrealized gains (losses) on cash flow hedges arising during period, net of tax expense (benefit) of $35, $(15), $39 and $(125)	133		(59)		147		(471)
Other comprehensive income													Other comprehensive income	(2,361)		(980)		19,257		20,308
Total comprehensive income	$	20,404		$	37,439		$	120,501		$	62,587		Total comprehensive income	$	113,784	$	20,404	$	186,960	$	120,501

Basic earnings per common share	$	0.31		$	0.87		$	1.83		$	1.86		Basic earnings per common share	$	1.68	$	0.31	$	2.42	$	1.83
Diluted earnings per common share	$	0.31		$	0.87		$	1.83		$	1.85		Diluted earnings per common share	$	1.67	$	0.31	$	2.42	$	1.83
Weighted average common shares outstanding (in thousands)													Weighted average common shares outstanding (in thousands)
Basic	69,372			47,515			54,762			41,673			Basic	69,231		69,372		69,243		54,762
Diluted	69,600			47,685			54,883			41,845			Diluted	69,346		69,600		69,403		54,883

See notes to unaudited consolidated financial statements.

AMERIS BANCORP AND SUBSIDIARIES

Consolidated Statements of Shareholders’ Equity (unaudited)

(dollars in thousands)


	Three Months Ended September 30, 2020

	Common Stock			Capital Surplus		Retained Earnings		Accumulated Other Comprehensive Income (Loss), Net of Tax		Treasury Stock			Total Shareholders' Equity
	Shares	Amount								Shares	Amount
Balance at beginning of period	71,674,087	$	71,674	$	1,909,839	$	481,948	$	39,613	2,211,305	$	(42,944)	$	2,460,130

Issuance of restricted shares	12,500	13		(13)		—		—		—	—		0

Proceeds from exercise of stock options	16,000	16		264		—		—		—	—		280
Share-based compensation	—	—		941		—		—		—	—		941
Purchase of treasury shares	—	—		—		—		—		736	(16)		(16)
Net income	—	—		—		116,145		—		—	—		116,145
Dividends on common shares ($0.15 per share)	—	—		—		(10,436)		—		—	—		(10,436)

Other comprehensive income (loss) during the period	—	—		—		—		(2,361)		—	—		(2,361)
Balance at end of period	71,702,587	$	71,703	$	1,911,031	$	587,657	$	37,252	2,212,041	$	(42,960)	$	2,564,683

Three Months Ended September 30, 2019

Common Stock Accumulated Other Comprehensive Income (Loss), Net of Tax Treasury Stock
Shares Amount Capital Surplus Retained Earnings 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, 2020

	Common Stock			Capital Surplus		Retained Earnings		Accumulated Other Comprehensive Income (Loss), Net of Tax		Treasury Stock			Total Shareholders' Equity
	Shares	Amount								Shares	Amount
Balance at beginning of period	71,499,829	$	71,500	$	1,907,108	$	507,950	$	17,995	1,995,996	$	(34,971)	$	2,469,582

Issuance of restricted shares	164,476	164		125		—		—		—	—		289
Forfeitures of restricted shares	(11,250)	(11)		(159)		—		—		—	—		(170)
Proceeds from exercise of stock options	49,532	50		931		—		—		—	—		981
Share-based compensation	—	—		3,026		—		—		—	—		3,026
Purchase of treasury shares	—	—		—		—		—		216,045	(7,989)		(7,989)
Net income	—	—		—		167,703		—		—	—		167,703
Dividends on common shares ($0.45 per share)	—	—		—		(31,292)		—		—	—		(31,292)
Cumulative effect of change in accounting for credit losses	—	—		—		(56,704)		—		—	—		(56,704)
Other comprehensive income (loss) during the period	—	—		—		—		19,257		—	—		19,257
Balance at end of period	71,702,587	$	71,703	$	1,911,031	$	587,657	$	37,252	2,212,041	$	(42,960)	$	2,564,683

Nine Months Ended September 30, 2019

Common Stock Accumulated Other Comprehensive Income (Loss), Net of Tax Treasury Stock
Shares Amount Capital Surplus Retained Earnings 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																								Three Months Ended September 30, 2019

	Common Stock								Accumulated Other Comprehensive Income (Loss), Net of Tax				Treasury Stock												Common Stock						Capital Surplus				Retained Earnings				Accumulated Other Comprehensive Income (Loss), Net of Tax			Treasury Stock						Total Shareholders' Equity
	Shares	Amount		Capital Surplus		Retained Earnings						Shares			Amount				Total Shareholders' Equity					Shares			Amount										Shares					Amount
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		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																							Issuance of common stock for acquisition		22,181,522			22,182				847,112				—				—			—			—			869,294
Issuance of restricted shares																							Issuance of restricted shares		30,452			30			(30)				—				—			—			—			0

Proceeds from exercise of stock options																							Proceeds from exercise of stock options		120,275			136			3,398				—				—			—			—			3,534
Share-based compensation	—	—		1,469		—			—				—			—				1,469			Share-based compensation		—			—			809				—				—			—			—			809
Purchase of treasury shares	—	—		—		—			—				21,696			(1,077		)		(1,077		)

Net income	—	—		—		41,444			—				—			—				41,444			Net income		—			—			—				21,384				—			—			—			21,384
Dividends on common shares ($0.10 per share)	—	—		—		(4,750		)	—				—			—				(4,750		)
Dividends on common shares ($0.15 per share)																							Dividends on common shares ($0.15 per share)		—			—			—				(10,439)				—			—			—			(10,439)

Other comprehensive income (loss) during the period	—	—		—		—			(4,005		)		—			—				(4,005		)	Other comprehensive income (loss) during the period		—			—			—				—				(980)			—			—			(980)
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		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, 2018																										Nine Months Ended September 30, 2019

	Common Stock										Accumulated Other Comprehensive Income (Loss), Net of Tax				Treasury Stock												Common Stock						Capital Surplus				Retained Earnings				Accumulated Other Comprehensive Income (Loss), Net of Tax			Treasury Stock						Total Shareholders' Equity
	Shares		Amount		Capital Surplus			Retained Earnings						Shares			Amount				Total Shareholders' Equity					Shares			Amount										Shares					Amount
Balance at beginning of period	38,734,873		$	38,735	$	508,404		$	273,119			$	(1,280	)		1,474,861			$	(14,499	)		$	804,479		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 acquisitions	10,124,491		10,124		537,003			—			—				—			—				547,127
Issuance of common stock for acquisition																									Issuance of common stock for acquisition		22,181,522			22,182				847,112				—				—			—			—			869,294
Issuance of restricted shares	85,855		86		(86		)	—			—				—			—				—			Issuance of restricted shares		147,574			147			768				—				—			—			—			915
Forfeitures of restricted shares	(472	)	—		—			—			—				—			—				—			Forfeitures of restricted shares		(40,423)			(40)			(484)				—				—			—			—			(524)
Proceeds from exercise of stock options	67,203		67		779			—			—				—			—				846			Proceeds from exercise of stock options		127,983			143			3,444				—				—			—			—			3,587
Share-based compensation	—		—		4,652			—			—				—			—				4,652			Share-based compensation		—			—			2,365				—				—			—			—			2,365
Purchase of treasury shares	—		—		—			—			—				40,123			(2,062		)		(2,062		)	Purchase of treasury shares		—			—			—				—				—			322,764			(11,561)			(11,561)
Net income	—		—		—			77,491			—				—			—				77,491			Net income		—			—			—				100,193				—			—			—			100,193
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
Dividends on common shares ($0.35 per share)																									Dividends on common shares ($0.35 per share)		—			—			—				(19,925)				—			—			—			(19,925)

Cumulative effect of change in accounting for leases																									Cumulative effect of change in accounting for leases		—			—			—				(276)				—			—			—			(276)
Other comprehensive income (loss) during the period	—		—		—			—			(14,904		)		—			—				(14,904		)	Other comprehensive income (loss) during the period		—			—			—				—				20,308			—			—			20,308
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		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

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,
	2020		2019
Operating Activities
Net income	$	167,703	$	100,193
Adjustments reconciling net income to net cash provided by (used in) operating activities:
Depreciation	11,843		9,077
Net (gains) losses on sale or disposal of premises and equipment including write-downs	(125)		159
Net write-downs on other assets	1,366		4,359
Provision for credit losses	146,890		14,065
Net losses on sale of other real estate owned including write-downs	715		158
Share-based compensation expense	2,708		2,450
Amortization of intangible assets	15,422		11,972
Amortization of operating lease right-of-use assets	12,408		7,145
Provision for deferred taxes	(28,652)		12,084
Net amortization of investment securities available for sale	4,702		3,069
Net gain on securities	(5)		(139)
Accretion of discount on purchased loans, net	(22,663)		(9,526)
Accretion on other borrowings	152		33
Accretion on subordinated deferrable interest debentures	1,455		1,170
Loan servicing asset impairment	30,566		141
Originations of mortgage loans held for sale	(6,492,434)		(2,376,070)
Payments received on mortgage loans held for sale	38,919		4,438
Proceeds from sales of mortgage loans held for sale	6,888,287		1,660,599
Net gains on sale of mortgage loans held for sale	(270,503)		(52,605)
Originations of SBA loans	(104,160)		(22,121)
Proceeds from sales of SBA loans	99,369		42,647
Net gains on sale of SBA loans	(6,250)		(4,220)
Increase in cash surrender value of bank owned life insurance	(2,768)		(1,861)
Gain on bank owned life insurance proceeds	(948)		(4,335)
Loss on sale of loans	0		1,954
Changes in FDIC loss-share payable, net of cash payments	223		3,695
Change attributable to other operating activities	(114,858)		4,166
Net cash provided by (used in) operating activities	379,362		(587,303)

Investing Activities, net of effects of business combinations
Proceeds from maturities of time deposits in other banks	0		10,313
Purchases of securities available for sale	0		(219,352)
Proceeds from prepayments and maturities of securities available for sale	306,886		176,760
Proceeds from sales of securities available for sale	0		64,995
Net (increase) decrease in other investments	18,095		(44,936)
Net increase in loans	(2,029,595)		(919,493)
Purchases of premises and equipment	(14,164)		(5,924)
Proceeds from sales of premises and equipment	421		5,330
Proceeds from sales of other real estate owned	7,777		7,448
Payments paid to FDIC under loss-share agreements	(389)		(3,692)
Proceeds from bank owned life insurance	3,381		8,178
Proceeds from sales of loans	0		96,162
Net cash and cash equivalents received in acquisitions	(2,417)		244,181
Net cash used in investing activities	(1,710,005)		(580,030)

			(Continued)

Nine Months Ended
September 30,
2019 2018
Operating Activities

Net income $ 100,193
$ 77,491
Adjustments reconciling net income to net cash provided by (used in) operating activities:

Depreciation 9,077
7,359
Net losses on sale or disposal of premises and equipment including write-downs 159
78
Net write-downs on other assets 4,359
—
Provision for loan losses 14,065
13,006
Net losses on sale of other real estate owned including write-downs 158
947
Share-based compensation expense 2,450
5,433
Amortization of intangible assets 11,972
5,862
Amortization of operating lease right-of-use assets 7,145
—
Provision for deferred taxes 12,084
1,023
Net amortization of investment securities available for sale 3,069
3,909
Net (gain) loss on securities (139 ) 38
Accretion of discount on purchased loans (10,503 ) (8,083 )
Amortization of premium on purchased loan pools 977
1,473
Accretion on other borrowings 33
98
Accretion on subordinated deferrable interest debentures 1,170
1,001
Originations of mortgage loans held for sale (2,376,070 ) (1,361,509 )
Payments received on mortgage loans held for sale 4,438
840
Proceeds from sales of mortgage loans held for sale 1,660,599
1,188,493
Net gains on sale of mortgage loans held for sale (52,605 ) (28,236 )
Originations of SBA loans (22,121 ) (18,032 )
Proceeds from sales of SBA loans 42,647
27,275
Net gains on sale of SBA loans (4,220 ) (2,246 )
Increase in cash surrender value of bank owned life insurance (1,861 ) (1,311 )
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 4,307
(10,268 )
Net cash used in operating activities (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 (219,352 ) (234,711 )
Proceeds from prepayments and maturities of securities available for sale 176,760
112,119
Proceeds from sales of securities available for sale 64,995
68,727
Net (increase) decrease in other investments (44,936 ) 12,040
Net increase in loans, excluding purchased loans (1,571,033 ) (437,513 )
Payments received on purchased loans 619,024
208,910
Payments received on purchased loan pools 32,516
60,042
Purchases of premises and equipment (5,924 ) (7,335 )
Proceeds from sales of premises and equipment 5,330
576
Proceeds from sales of other real estate owned 7,448
7,461
Payments paid to FDIC under loss-share agreements (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 244,181
51,495
Net cash used in investing activities (580,030 ) (159,394 )

(Continued)

AMERIS BANCORP AND SUBSIDIARIES

Consolidated Statements of Cash Flows (unaudited)

(dollars in thousands)


	Nine Months Ended September 30,							Nine Months Ended September 30,
	2019			2018				2020		2019
Financing Activities, net of effects of business combinations							Financing Activities, net of effects of business combinations
Net (decrease) increase in deposits	$	(33,042	)	$	389,884
Net increase (decrease) in deposits							Net increase (decrease) in deposits	$	2,038,847	$	(33,042)
Net decrease in securities sold under agreements to repurchase	(24,985		)	(16,567		)	Net decrease in securities sold under agreements to repurchase	(11,532)		(24,985)
Proceeds from other borrowings	2,969,000			1,530,000			Proceeds from other borrowings	7,053,149		2,969,000
Repayment of other borrowings	(1,921,267		)	(1,338,917		)	Repayment of other borrowings	(7,576,455)		(1,921,267)
Repayment of subordinated deferrable interest debentures							Repayment of subordinated deferrable interest debentures	(5,155)		0

Proceeds from exercise of stock options	3,587			846			Proceeds from exercise of stock options	981		3,587
Dividends paid - common stock	(14,237		)	(11,655		)	Dividends paid - common stock	(31,262)		(14,237)
Purchase of treasury shares	(11,561		)	(2,062		)	Purchase of treasury shares	(7,988)		(11,561)
Net cash provided by financing activities	967,495			551,529			Net cash provided by financing activities	1,460,585		967,495

Net (decrease) increase in cash and cash equivalents	(199,838		)	298,599
Net increase (decrease) in cash and cash equivalents							Net increase (decrease) in cash and cash equivalents	129,942		(199,838)
Cash and cash equivalents at beginning of period	679,527			330,658			Cash and cash equivalents at beginning of period	621,849		679,527
Cash and cash equivalents at end of period	$	479,689		$	629,257		Cash and cash equivalents at end of period	$	751,791	$	479,689

Supplemental Disclosures of Cash Flow Information							Supplemental Disclosures of Cash Flow Information
Cash paid during the period for:
Cash paid (received) during the period for:							Cash paid (received) during the period for:
Interest	$	87,066		$	45,535		Interest	$	78,705	$	87,066
Income taxes	32,096			10,252			Income taxes	56,371		32,096
Loans (excluding purchased loans) transferred to other real estate owned	503			3,764
Purchased loans transferred to other real estate owned	3,908			2,434
Loans transferred to other real estate owned							Loans transferred to other real estate owned	6,871		4,411
Loans transferred from loans held for sale to loans held for investment	—			10,817			Loans transferred from loans held for sale to loans held for investment	135,689		0
Loans transferred from loans held for investment to loans held for sale	1,554			8,831			Loans transferred from loans held for investment to loans held for sale	46,845		1,554
Loans provided for the sales of other real estate owned	144			53			Loans provided for the sales of other real estate owned	592		144
Initial recognition of operating lease right-of-use assets	27,286			—			Initial recognition of operating lease right-of-use assets	0		27,286
Initial recognition of operating lease liabilities	29,651			—			Initial recognition of operating lease liabilities	0		29,651
Right-of-use assets obtained in exchange for new operating lease liabilities	262			—			Right-of-use assets obtained in exchange for new operating lease liabilities	11,040		262
Assets acquired in business acquisitions	5,186,974			3,059,856			Assets acquired in business acquisitions	0		5,186,974
Liabilities assumed in business acquisitions	4,317,661			2,410,453			Liabilities assumed in business acquisitions	0		4,317,661
Issuance of common stock in acquisitions	869,294			547,127

Change in unrealized gain (loss) on securities available for sale, net of tax	20,778			(15,590		)	Change in unrealized gain (loss) on securities available for sale, net of tax	19,109		20,778
Change in unrealized gain (loss) on cash flow hedge, net of tax	(470		)	294			Change in unrealized gain (loss) on cash flow hedge, net of tax	147		(470)

				(Concluded)						(Concluded)

See notes to unaudited consolidated financial statements.

AMERIS BANCORP AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

September 30, ~~2019~~2020

NOTE 1 – BASIS OF PRESENTATION AND ACCOUNTING POLICIES

Nature of Business

Ameris Bancorp (the “Company” or “Ameris”) is a financial holding company headquartered in Atlanta, Georgia. Ameris conducts substantially all of its operations through its wholly owned banking subsidiary, Ameris Bank (the “Bank”). At September 30, ~~2019,~~2020, the Bank operated ~~172~~170 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 (“GAAP”) for complete financial statement presentation. The interim consolidated financial statements included herein are unaudited but reflect all adjustments, consisting of normal recurring 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, ~~2019~~2020 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, ~~2018.~~2019, as amended.

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 required reserve rate was set to 0% effective March 26, 2020 and, accordingly, the Bank had 0 reserve requirement at September 30, 2020. The reserve requirement as of ~~September 30, 2019 and~~ December 31, ~~2018~~2019 was ~~$102.5~~$109.7 million ~~and $61.2 million, respectively,~~ and was met by cash on hand and balances at the Federal Reserve Bank of Atlanta which are reported on the Company's consolidated balance sheets in cash and due from banks and federal funds sold and interest-bearing deposits in banks, respectively.

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 ~~2019~~

2020

~~ASU 2016-02 –~~
~~Leases (Topic 842)~~ (“ASU 2016-02”). ASU 2016-02 amends the existing standards for lease accounting effectively requiring that most leases be carried on the balance sheets of the related lessees by requiring them to recognize a right-of-use asset and a corresponding lease liability. ASU 2016-02 includes qualitative and quantitative disclosure requirements intended to provide greater insight into the nature of an entity’s leasing activities. The standard may be adopted using a modified retrospective transition method with a cumulative effect adjustment to equity as of the beginning of the period in which it is adopted. Alternatively, the standard may be adopted using an optional transition method where initial application of the provisions of ASU 2016-02 are applied as the date of adoption, resulting in no adjustment to amounts reported in prior periods. ASU 2016-02 is effective for annual reporting periods beginning after December 15, 2018, and interim periods within those annual periods. The Company adopted ASU 2016-02 during the first quarter of 2019 and elected the optional transition method. The Company also elected the package of practical expedients provided in the guidance which permits the Company to not reassess under the new standard the prior conclusions about lease identification, lease classification and initial direct costs. The Company also elected the hindsight practical expedient to determine lease term and in assessing impairment of the Company's 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 a cumulative effect decrease to retained earnings of $276,000. The right-of-use asset and lease liability are recorded in the consolidated balance sheets in other assets and 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~~During the first quarter of 2020, the Company ~~is currently evaluating~~adopted the ~~impact this~~provision of ASU ~~will have on~~2018-15, and the ~~Company’s consolidated balance sheet, consolidated statement of income and comprehensive income, consolidated statement of shareholders’ equity and consolidated statement of cash flows, but it is~~adoption did not ~~expected to~~ have a material ~~impact.~~impact on the Company's consolidated financial statements.

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~~During the first quarter of 2020, the Company ~~is currently evaluating~~adopted the ~~impact this standard will have on~~provision of ASU 2018-13, and the ~~Company’s fair value measurement disclosures, but it is~~adoption did not ~~expected to~~ have a material ~~impact.~~impact on the Company's consolidated financial statements.

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~~During the first quarter of 2020, the Company ~~is currently evaluating~~adopted the ~~impact this~~provision of ASU ~~will have on~~2017-04, and the ~~Company’s results of operations, financial position and disclosures, but it is~~adoption did not ~~expected to~~ have a material ~~impact.~~impact on the Company's consolidated financial statements.

ASU 2016-13 -– Financial ~~Instruments-Credit~~Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial ~~Instrument~~Instrumentss (“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 ~~applies~~will apply to financial assets subject to credit losses and measured at amortized cost ~~as well as~~and certain off-balance-sheet credit exposures, ~~including,~~which include, 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. ~~Among other requirements,~~In addition, entities ~~must~~will need to disclose the amortized cost balance for each class of financial asset by credit quality indicator, disaggregated by the year of origination. ASU 2016-13 is effective for interim and annual reporting periods beginning after December 15, ~~2019 with early~~2019. 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.

The Company adopted ASU 2016-13 and all related subsequent amendments thereto effective January 1, 2020 using the modified retrospective approach. The Company recognized an increase in the allowance for credit losses on loans of $78.7 million, an increase in the allowance for unfunded commitments of $12.7 million and a reduction of retained earnings of $56.7 million, net of the increase in deferred tax assets of $19.0 million.

The Company adopted ASU 2016-13 using the prospective transition approach for purchased financial assets with credit deterioration ("PCD") that were previously ~~established a steering committee, including appropriate members~~classified as purchased credit impaired ("PCI") and accounted for under ASU

310-30. In accordance with ASU 2016-13, the Company did not reassess whether PCI assets met the criteria of ~~management, to evaluate the impact~~PCD assets as of the ~~ASU adoption on the Company’s financial position, results~~date 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~~determined $15.6 million of existing discounts on PCD loans was related to ~~make progress towards CECL readiness~~credit factors and was reclassified to the ACL upon adoption. The remaining discount on the PCD assets was determined to be related to noncredit factors and will be accreted into interest income on a level-yield method over the life of the loans.

In addition, for available-for-sale debt securities, the new methodology replaces the other-than-temporary impairment model and requires the recognition of an allowance for reductions in a security’s fair value attributable to declines in credit quality, instead of a direct write-down of the security, when a valuation decline is determined to be other-than-temporary. There was no financial impact related to this implementation. The Company has made a policy election to exclude accrued interest from the amortized cost basis of debt securities and report accrued interest in other assets in the consolidated balance sheets. A debt security is placed on nonaccrual status at the time any principal or interest payments become more than 90 days delinquent or if full collection of interest or principal becomes uncertain. Accrued interest for a security placed on nonaccrual is reversed against interest income. There was no accrued interest related to debt securities reversed against interest income for the three and nine months ended September 30, 2020 and 2019. Accrued interest receivable on available-for-sale debt securities totaled $4.5 million as of September 30, 2020. Refer to Note 3 for additional information.

Allowance for Credit Losses – Loans

Under the current expected credit loss model, the allowance for credit losses (“ACL”) on loans is a valuation allowance estimated at each balance sheet date in accordance with GAAP that is deducted from the loans’ amortized cost basis to present the net amount expected to be collected on the loans.

The Company estimates the ACL on loans based on the underlying assets’ amortized cost basis, which is the amount at which the financing receivable is originated or acquired, adjusted for applicable accretion or amortization of premium, discount, and net deferred fees or costs, collection of cash, and charge-offs. In the event that collection of principal becomes uncertain, the Company has policies in place to reverse accrued interest in a timely manner. Therefore, the Company has made a policy election to exclude accrued interest from the measurement of ACL. Accrued interest receivable on loans is reported in other assets on the consolidated balance sheets and totaled $76.0 million at September 30, 2020. During the third quarter of 2020, the Company established an ACL of $1.1 million related to deferred interest on loans modified under its Disaster Relief Program.

Expected credit losses are reflected in the allowance for credit losses through a charge to provision for credit losses. When the Company deems all or a portion of a financial asset to be uncollectible the appropriate amount is written off and the ACL is reduced by the same amount. The Company applies judgment to determine when a financial asset is deemed uncollectible; however, generally speaking, an asset will be considered uncollectible no later than when all efforts at collection have been exhausted. Subsequent recoveries, if any, are credited to the ACL when received.

The Company measures expected credit losses of financial assets on a collective (pool) basis, when the financial assets share similar risk characteristics. Depending on the nature of the pool of financial assets with similar risk characteristics, the Company uses the discounted cash flow (“DCF”) method, the vintage method, the PD×LGD method or a qualitative approach as discussed further below.

The Company has identified the following pools of financial assets with similar risk characteristics for measuring expected credit losses:

Commercial, financial, and agricultural - These loans include both secured and unsecured loans for working capital, expansion, crop production and other business purposes. Commercial, financial and agricultural loans also include certain U.S. Small Business Administration (“SBA”) 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.

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

Indirect automobile - Indirect automobile loans are secured by automobile collateral, generally new and used cars and trucks from auto dealers that operate within selected states. Repayment of these ~~areas.~~loans depends largely on the personal income of the borrowers which can be affected by changes in economic conditions such as unemployment levels. Collateral consists of rapidly depreciating assets that may not provide an adequate source of repayment of the loan in the event of default.

~~A key committee decision~~Mortgage warehouse - Mortgage Warehouse facilities are provided to unaffiliated mortgage origination companies and are collateralized by one-to-four family residential loans or mortgage servicing rights. The originator closes new mortgage loans with the intent to sell these loans to third party investors for a profit. The Bank provides funding to the mortgage companies for the period between the origination and their sale of the loan. The Bank has a policy that requires that it separately validate that each residential mortgage loan was underwritten consistent with the ~~selection~~underwriting requirements of the final investor or market standards prior to advancing funds. The Bank is repaid with the proceeds received from sale of the mortgage loan to the final investor.

Municipal - Municipal loans consists of loans made to counties, municipalities and ~~implementation~~political subdivisions. The source of ~~software from~~repayment for these loans is either general revenue of the municipality or revenues of the project being financed by the loan. These loans may be secured by real estate, machinery, equipment or assignment of certain revenues.

Premium Finance - Premium finance provides loans for the acquisition of certain commercial insurance policies. Repayment of these loans is dependent on the cash flow of the insured which can be affected by changes in economic conditions. The Bank has procedures in place to cancel the insurance policy after default by the borrower to minimize the risk of loss.

Real Estate - Construction and Development - 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 and investment properties. The Company limits its construction lending risk through adherence to established underwriting procedures.

Real Estate - Commercial and Farmland - Commercial real estate loans include loans secured by owner-occupied commercial buildings for office, storage, retail, farmland and warehouse space. They also include non-owner occupied commercial buildings such as leased retail and office space. Lodging (hotel / motel) loans are a ~~vendor~~subsegment of ~~choice~~commercial real estate loans. 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.

Real Estate - Residential - The Company's residential loans represent permanent mortgage financing and are secured by residential properties located within the Bank's market areas. Residential real estate loans also include purchased loan pools secured by residential properties located outside the Bank's market area.

Discounted Cash Flow Method

The Company uses the discounted cash flow method to estimate expected credit losses ~~per~~for the ~~ASU. Other key decisions~~commercial, financial and ~~milestones include~~agricultural, consumer installment, real estate - construction and development, real estate - commercial and farmland and real estate - residential loan segments. For each of these loan segments, the ~~identification~~Company generates cash flow projections at the instrument level wherein payment expectations are adjusted for estimated prepayment speed, curtailments, time to recovery, probability of ~~financial assets within scope;~~default, and loss given default. The modeling of expected prepayment speeds, curtailment rates, and time to recovery are based on historical internal data adjusted based upon peer data.

The Company uses regression analysis of historical internal and peer data to determine suitable loss drivers to utilize when modeling lifetime probability of default and loss given default. This analysis also determines how expected probability of default and loss given default will react to forecasted levels of the ~~preparation~~loss drivers. For all loan pools utilizing the DCF method, the Company uses a combination of ~~appropriate~~national and regional data ~~for modeling;~~including gross domestic product, home price indices, unemployment rates, retail sales, and rental vacancy rates depending on the ~~establishment~~nature of the underlying loan pool and how well that loss driver correlates to expected future losses.

For all DCF models, management has determined that four quarters represents a reasonable and supportable forecast period and reverts back to a historical loss rate over four quarters on a straight-line basis. Management leverages economic projections from a reputable and independent third party to inform its loss driver forecasts over the four-quarter forecast period. Other

internal and external indicators of economic forecasts are also considered by management when developing the forecast metrics.

The combination of adjustments for credit expectations (default and loss) and timing expectations (prepayment, curtailment, and time to recovery) produces an expected cash flow stream at the instrument level. Instrument effective yield is calculated, net of the impacts of prepayment assumptions, and the instrument expected cash flows are then discounted at that effective yield to produce an instrument-level net present value of expected cash flows (“NPV”). An ACL is established for the difference between the instrument’s NPV and amortized cost basis.

Vintage Method

The Company uses a vintage method to estimate expected credit ~~losses;~~losses for the ~~determination~~indirect automobile loans segment. The Company’s vintage analysis is based on loss rates by origination date and includes data on loan amounts, loan charge-offs and recoveries by date. Using this information, vintage tables are created to evaluate loss rate patterns and develop estimated losses by vintage year. Once the tables have been calculated, reserves are estimated by multiplying the balance of a ~~methodology for calculating~~given origination year by the remaining loss to be experienced by that vintage.

PD×LGD Method

The Company uses the PD×LGD method to estimate expected credit ~~losses;~~losses (“EL”) for the premium finance and municipal loan segments. Under the PD×LGD method, the loss rate is a function of two components: (1) the lifetime default rate (“PD”); and (2) the loss given default (“LGD”). For the premium finance loan segment, calculations of lifetime default rates and corresponding loss given default rates of static pools are performed. The PD×LGD method uses the default rates and loss given default rates of different static pools to quantify the relationship between those rates and the ~~development~~credit mix of ~~documentation to support~~ the ~~approach~~pools and ~~accounting selections.~~

~~During the third quarter~~applies that relationship on a going forward basis. The Company has not incurred any historical defaults or charge offs in its municipal portfolio. Therefore, in lieu of ~~2019,~~historical loss rates, the Company ~~implemented~~applies historical benchmarking PD and LGD ratios provided by a reputable and independent third party to the ~~software and conducted~~current municipal loan balance.

Qualitative Factors

The Company uses qualitative factors for model risk uncertainty as well as for loan segment specific risks that cannot be addressed in the quantitative methods.In particular, the warehouse loan segment uses a ~~series of CECL modeling measurements using a discounted cash flow approach. As a result of these modeling measurements,~~qualitative factor for fraud losses based upon historical fraud loss data since the Company has not experienced any credit related losses in this loan segment to date.

Individually Evaluated Assets

Loans that do not share risk characteristics are evaluated on an individual basis. For collateral dependent financial assets where the Company has determined that foreclosure of the collateral is ~~calibrating its model and finalizing input decisions. Results from recent model runs have been consistent with prior projections~~probable, or where the borrower is experiencing financial difficulty and the Company expects repayment of the financial asset to be provided substantially through the operation or sale of the collateral, the ACL is measured based on the difference between the fair value of the collateral and the amortized cost basis of the asset as of the measurement date. When repayment is expected to be from the operation of the collateral, expected credit losses are calculated as the amount by which the amortized cost basis of the financial asset exceeds the present value of expected cash flows from the operation of the collateral. When repayment is expected to be from the sale of the collateral, expected credit losses are calculated as the amount by which the amortized costs basis of the financial asset exceeds the fair value of the underlying collateral less estimated cost to sell. The ACL may be zero if the fair value of the collateral at the measurement date exceeds the amortized cost basis of the financial asset.

The Company’s ~~expectations.~~estimate of the ACL reflects losses expected over the remaining contractual life of the assets. The contractual term does not consider extensions, renewals or modifications unless the Company has identified an expected troubled debt restructuring.

A loan that has been modified or renewed is considered a troubled debt restructuring (“TDR”) when two conditions are met: (1) the borrower is experiencing financial difficulty; and (2) concessions are made for the borrower's benefit that would not otherwise be considered for a borrower or transaction with similar credit risk characteristics. The Company’s ACL reflects all effects of a TDR when an individual asset is specifically identified as a reasonably expected TDR. The Company has determined that a TDR is reasonably expected no later than the point when the lender concludes that modification is the best course of action and it is at least reasonably possible that the troubled borrower will accept some form of concession from the lender to avoid a default. Reasonably expected TDRs and executed non-performing TDRs are evaluated individually to determine the required ACL. TDRs performing in accordance with their modified contractual terms for a reasonable period of

time may be included in the Company’s existing pools based on the underlying risk characteristics of the loan to measure the ACL.

Loan Commitments and Allowance for Credit Losses on Off-Balance Sheet Credit Exposures

Financial instruments include off-balance sheet credit instruments, such as commitments to make loans and commercial letters of credit issued to meet customer financing needs. The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for off-balance sheet loan commitments is represented by the contractual amount of those instruments. Such financial instruments are recorded when they are funded.

The Company records an allowance for credit losses on off-balance sheet credit exposures, unless the commitments to extend credit are unconditionally cancelable, through a charge to provision for unfunded commitments in the Company’s consolidated statements of income. The ACL on off-balance sheet credit exposures is estimated by loan segment at each balance sheet date under the current expected credit loss model using the same methodologies as portfolio loans, taking into consideration the likelihood that funding will occur as well as any third-party guarantees and is included in other liabilities on the Company’s consolidated balance sheets.

Guidance on Non-TDR Loan Modifications due to COVID-19

In April 2020, various regulatory agencies, including the Board of Governors of the Federal Reserve System (the "FRB") and the Federal Deposit Insurance Corporation (the "FDIC"), issued a revised interagency statement encouraging financial institutions to work with customers affected by the novel coronavirus pandemic (“COVID-19”) and providing additional information regarding loan modifications. The revised interagency statement clarifies the interaction between the interagency statement issued on March 22, 2020 and the temporary relief provided by Section 4013 of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). Section 4013 of the CARES Act allows financial institutions to suspend the requirements to classify certain loan modifications as TDRs. The revised statement also provides supervisory interpretations on past due and nonaccrual regulatory reporting of loan modification programs and regulatory capital. This interagency guidance is expected to reduce the number of TDRs that will be reported in future periods; however, the amount is indeterminable and will depend on future developments, which are highly uncertain and cannot be accurately predicted, including the scope and duration of the pandemic and actions taken by governmental authorities and other third parties in response to the pandemic. The Company is evaluating borrowers requesting payment relief beyond two 90-day periods under its Disaster Relief Program against existing TDR guidance and not under Section 4013 of the CARES Act.

Accounting Standards Pending Adoption

ASU No. 2020-04 – Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting ("ASU 2020-04"). ASU 2020-04 provides optional guidance, for a limited time, to ease the potential burden in accounting for or recognizing the effects of reference rate reform on financial reporting. The amendments, which are elective, provide expedients and exceptions for applying GAAP to contract modifications and hedging relationships affected by reference rate reform if certain criteria are met. The amendments apply only to contracts and hedging relationships that reference LIBOR or another reference rate that is expected to be discontinued due to reference rate reform. The optional expedients for contract modifications apply consistently for all contracts or transactions within the relevant Codification Topic, Subtopic, or Industry Subtopic that contains the guidance that otherwise would be required to be applied, while those for hedging relationships can be elected on an individual hedging relationship basis. Because the guidance is intended to assist stakeholders during the global market-wide reference rate transition period, it is in effect for a limited time, from March 12, 2020 through December 31, 2022. The Company has established a working committee with representatives from relevant functional areas to inventory the contracts and accounts that are tied to LIBOR and develop a transition plan for the affected items. The Company is currently evaluating the impact of adopting ASU 2020-04 on the consolidated financial statements.

ASU 2019-12 – Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes ("ASU 2019-12"). ASU 2019-12 simplifies the accounting for income taxes by removing certain technical exceptions. ASU 2019-12 also clarifies and amends the accounting for income taxes in certain areas including, among others: (i) franchise taxes that are partially based on income; (ii) whether step ups in the tax basis of goodwill should be considered part of the acquisition to which it related or recognized as a separate transaction; and (iii) requiring the effect of an enacted change in tax laws or rates to be reflected in the annual effective tax rate computation in the interim period that includes the enactment date. The Company expects to ~~continue~~apply the amendments in this update on a modified retrospective basis for the provision related to ~~run CECL modeling in parallel with its current allowance process.~~

~~As the Company has progressed on implementation of the~~franchise taxes and prospectively for all other amendments. ASU ~~third-party~~2019-12 is effective for interim and ~~internal audit reviews have been conducted to assist with readiness. Identified issues have been addressed. In addition, the~~annual periods beginning after December 15, 2020. Early adoption is permitted. The Company is ~~in the progress of finalizing a third-party validation of its CECL model.~~

~~The Company continues to evaluate~~currently evaluating the impact this ASU will have on the Company’s consolidated balance sheet,

consolidated statement of ~~the ASU on results~~income and comprehensive income, consolidated statement of ~~operations, financial position and disclosures. The Company expects to recognize a one-time cumulative effect adjustment to~~shareholders’ equity and ~~the allowance for loan losses as~~consolidated statement of ~~the beginning of the first reporting period in which the new standard~~cash flows, but it is effective. The cumulative effect adjustment as well as the ongoing impact of implementation will be influenced by the composition, characteristics and quality of our portfolios, as well as the economic conditions and forecasts at the adoption date.not expected to have a material impact.

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~~finalized 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.~~during the second quarter of 2020.


(dollars in thousands)	As Recorded by Fidelity			Initial Fair Value Adjustments				As Recorded by Ameris		(dollars in thousands)	As Recorded by Fidelity		Initial Fair Value Adjustments			Subsequent Adjustments			As Recorded by Ameris
Assets										Assets
Cash and due from banks	$	26,264		$	—			$	26,264	Cash and due from banks	$	26,264	$	0		$	(2,417)	(o)	$	23,847
Federal funds sold and interest-bearing deposits in banks	217,936			—				217,936		Federal funds sold and interest-bearing deposits in banks	217,936		0			0			217,936

Investment securities	299,341			(1,444		)	(a)	297,897		Investment securities	299,341		(1,444)		(a)	0			297,897
Other investments	7,449			—				7,449		Other investments	7,449		0			0			7,449
Loans held for sale	328,657			(1,290		)	(b)	327,367		Loans held for sale	328,657		(1,290)		(b)	250		(p)	327,617
Loans	3,587,412			(79,002		)	(c)	3,508,410		Loans	3,587,412		(79,002)		(c)	3,852		(q)	3,512,262
Less allowance for loan losses	(31,245		)	31,245			(d)	—		Less allowance for loan losses	(31,245)		31,245		(d)	0			0
Loans, net	3,556,167			(47,757		)		3,508,410		Loans, net	3,556,167		(47,757)			3,852			3,512,262
Other real estate owned	7,605			(427		)	(e)	7,178		Other real estate owned	7,605		(427)		(e)	0			7,178
Premises and equipment	93,662			11,407			(f)	105,069		Premises and equipment	93,662		11,407		(f)	(3,820)		(r)	101,249
Other intangible assets, net	10,670			39,940			(g)	50,610		Other intangible assets, net	10,670		39,940		(g)	0			50,610
Cash value of bank owned life insurance	72,328			—				72,328		Cash value of bank owned life insurance	72,328		0			0			72,328
Deferred income taxes, net	104			(104		)	(h)	—		Deferred income taxes, net	104		(104)		(h)	0			0
Other assets	157,863			998			(i)	158,861		Other assets	157,863		998		(i)	(17,138)		(s)	141,723
Total assets	$	4,778,046		$	1,323			$	4,779,369	Total assets	$	4,778,046	$	1,323		$	(19,273)		$	4,760,096
Liabilities										Liabilities
Deposits:										Deposits:
Noninterest-bearing	$	1,301,829		$	—			$	1,301,829	Noninterest-bearing	$	1,301,829	$	0		$	(2,114)	(t)	$	1,299,715
Interest-bearing	2,740,552			942			(j)	2,741,494		Interest-bearing	2,740,552		942		(j)	0			2,741,494
Total deposits	4,042,381			942				4,043,323		Total deposits	4,042,381		942			(2,114)			4,041,209
Securities sold under agreements to repurchase	22,345			—				22,345		Securities sold under agreements to repurchase	22,345		0			0			22,345
Other borrowings	149,367			2,265			(k)	151,632		Other borrowings	149,367		2,265		(k)	(300)		(u)	151,332
Subordinated deferrable interest debentures	46,393			(9,675		)	(l)	36,718		Subordinated deferrable interest debentures	46,393		(9,675)		(l)	0			36,718
Deferred tax liability, net	12,222			(11,401		)	(m)	821		Deferred tax liability, net	12,222		(11,401)		(m)	497		(v)	1,318
Other liabilities	65,027			538			(n)	65,565		Other liabilities	65,027		538		(n)	(839)		(w)	64,726
Total liabilities	4,337,735			(17,331		)		4,320,404		Total liabilities	4,337,735		(17,331)			(2,756)			4,317,648
Net identifiable assets acquired over (under) liabilities assumed	440,311			18,654				458,965		Net identifiable assets acquired over (under) liabilities assumed	440,311		18,654			(16,517)			442,448
Goodwill	—			410,348				410,348		Goodwill	0		410,348			16,517			426,865
Net assets acquired over liabilities assumed	$	440,311		$	429,002			$	869,313	Net assets acquired over liabilities assumed	$	440,311	$	429,002		$	0		$	869,313
Consideration:										Consideration:
Ameris Bancorp common shares issued	22,181,522									Ameris Bancorp common shares issued	22,181,522
Price per share of the Company's common stock	39.19									Price per share of the Company's common stock	39.19
Company common stock issued	$	869,294								Company common stock issued	$	869,294
Cash exchanged for shares	$	19								Cash exchanged for shares	$	19
Fair value of total consideration transferred	$	869,313								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.~~

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


~~(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.~~

(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.

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

(p)Adjustment reflects additional recording of fair value adjustments to loans held for sale.

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

(r)Adjustment reflects additional recording of fair value adjustments to premises and equipment.

(s)Adjustment reflects additional recording of fair value adjustments to other assets and includes a reclassification of deferred income taxes to current income taxes.

(t)Subsequent to acquisition, noninterest-bearing deposits were adjusted for Fidelity reconciling items.

(u)Adjustment reflects additional recording of fair value adjustments to other borrowings.

(v)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 and includes a reclassification of deferred income taxes to current income taxes.

(w)Adjustment reflects additional recording of fair value adjustments to other liabilities.

Goodwill of ~~$410.3~~$426.9 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~~$75.2 million, or ~~2.20%~~2.09%, estimated discount to the ~~outstanding principal balance.~~acquired carrying value. Of the total loans acquired, management identified ~~$119.3~~$121.3 million that were considered to be credit impaired and ~~are~~were accounted for under ASC Topic ~~310-30.~~310-30 prior to the adoption of ASC 326 on January 1, 2020. 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


(dollars in thousands)
Contractually required principal and interest	$	191,534
Non-accretable difference	(23,058)
Cash flows expected to be collected	168,476
Accretable yield	(47,173)
Total purchased credit-impaired loans acquired	$	121,303

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	$	121,303	$	191,534	$	23,058
Acquired receivables not subject to ASC 310-30	$	3,390,959	$	4,217,890	$	33,076

(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, 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.

The following table presents the assets acquired and liabilities assumed of Hamilton as of June 29, 2018, 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 finalized its fair value adjustments during the second quarter of 2019.

(dollars in thousands)
As Recorded
by Hamilton

Initial
Fair Value
Adjustments

Subsequent
Adjustments

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

     Price per share of the Company's common stock $ 53.35

          Company common stock issued $ 349,356

          Cash exchanged for shares $ 47,779

     Fair value of total consideration transferred $ 397,135

~~Explanation of fair value adjustments~~


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


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


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


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


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


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


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


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


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


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


~~(k)~~	~~Adjustment reflects 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 $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 $1.29 billion of loans at fair value, net of $21.1 million, or 1.60%, estimated discount to the outstanding principal balance. Of the total loans acquired, management identified $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

~~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
$ —

~~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, 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.

The following table presents the assets acquired and liabilities assumed of Atlantic as of May 25, 2018, 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 finalized its fair value adjustments during the second quarter of 2019.

(dollars in thousands)
As Recorded
by Atlantic

Initial
Fair Value
Adjustments

Subsequent
Adjustments

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

     Price per share of the Company's common stock $ 56.15

          Company common stock issued $ 147,760

          Cash exchanged for shares $ 21,527

     Fair value of total consideration transferred $ 169,287

~~Explanation of fair value adjustments~~


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


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


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


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


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


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


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


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


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


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


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


~~(l)~~	~~Adjustment reflects additional recording of fair value 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 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 $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

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

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

Gross Contractual
Amounts Receivable
at Acquisition Date

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

~~US Premium Finance Holding Company~~

On January 31, 2018, the Company closed on the purchase of the final 70% of the outstanding shares of common stock of US Premium Finance Holding Company, a Florida corporation ("USPF"), completing its acquisition of USPF and making USPF a wholly owned subsidiary of the Company. Through a series of 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 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 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.

The following table presents the assets acquired and liabilities assumed of USPF as of January 31, 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 Premium Finance" trade name and a non-compete agreement with a former USPF shareholder.

(dollars in thousands)
As Recorded
by USPF

Initial
Fair Value
Adjustments

Subsequent
Adjustments

As Recorded
by Ameris
Assets
Intangible asset - insurance agent relationships $ —
$ 20,000
(a) $ 2,351
(e) $ 22,351
Intangible asset - US Premium Finance trade name —
1,136
(b) (42 ) (f) 1,094
Intangible asset - non-compete agreement —
178
(c) (16 ) (g) 162
     Total assets $ —
$ 21,314
$ 2,293
$ 23,607
Liabilities
Deferred tax liability $ —
$ 5,492
(d) $ (368 ) (h) $ 5,124
Total liabilities —
5,492
(368 ) 5,124
Net identifiable assets acquired over liabilities assumed —
15,822
2,661
18,483
Goodwill —
67,159
(2,661 ) 64,498
Net assets acquired over liabilities assumed $ —
$ 82,981
$ —
$ 82,981
Consideration:
     Ameris Bancorp common shares issued 1,073,158

     Price per share of the Company's common stock
          (weighted average)
$ 52.047

          Company common stock issued $ 55,855

          Cash exchanged for shares $ 21,421

          Present value of contingent earn-out consideration
               expected to be paid
$ 5,705

     Fair value of total consideration transferred $ 82,981

~~Explanation of fair value adjustments~~


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


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


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


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


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


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


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


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

Goodwill of $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. 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 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 first nine months of 2019.

Pro Forma Financial Information

The results of operations of Fidelity ~~Hamilton, Atlantic and USPF~~ subsequent to ~~their~~its acquisition ~~dates~~date 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, ~~2018,~~2019, 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)	2020		2019		2020		2019
Net interest income and noninterest income	$	321,556	$	225,762	$	808,654	$	618,148
Net income	$	116,111	$	73,213	$	168,804	$	165,561
Net income available to common shareholders	$	116,111	$	73,213	$	168,804	$	165,561
Income per common share available to common shareholders – basic	$	1.68	$	1.06	$	2.44	$	2.38
Income per common share available to common shareholders – diluted	$	1.67	$	1.05	$	2.43	$	2.38
Average number of shares outstanding, basic	69,231		69,372		69,243		69,469
Average number of shares outstanding, diluted	69,346		69,600		69,403		69,590

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

NOTE 3 – INVESTMENT SECURITIES

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


(dollars in thousands)	Amortized Cost		Allowance for Credit Losses		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
September 30, 2020
U.S. government sponsored agencies	$	17,184	$	0	$	420	$	0	$	17,604
State, county and municipal securities	84,219		0		3,429		0		87,648
Corporate debt securities	51,659		(68)		826		(276)		52,141
SBA pool securities	62,204		0		3,019		(107)		65,116
Mortgage-backed securities	855,083		0		39,942		(98)		894,927
Total debt securities	$	1,070,349	$	(68)	$	47,636	$	(481)	$	1,117,436

December 31, 2019
U.S. government sponsored agencies	$	22,246	$	0	$	116	$	0	$	22,362
State, county and municipal securities	102,952		0		2,310		(2)		105,260
Corporate debt securities	51,720		0		1,281		(2)		52,999
SBA pool securities	73,704		0		617		(409)		73,912
Mortgage-backed securities	1,129,816		0		19,937		(883)		1,148,870
Total debt securities	$	1,380,438	$	0	$	24,261	$	(1,296)	$	1,403,403

(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

The amortized cost and estimated fair value of debt securities available for sale securities atas of September 30, ~~2019~~2020, by contractual maturity are ~~summarized in the table~~shown below. ~~Expected maturities for mortgage-backed securities~~Maturities may differ from contractual maturities in mortgage-backed securities because ~~in certain cases borrowers can prepay obligations~~the mortgages underlying these securities may be called or repaid without ~~prepayment penalties.~~penalty. Therefore, these securities are ~~shown separately.~~not included in the maturity categories in the following maturity summary:

(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	$	35,577	$	35,851
Due from one year to five years	56,870		58,892
Due from five to ten years	68,527		71,211
Due after ten years	54,292		56,555
Mortgage-backed securities	855,083		894,927
	$	1,070,349	$	1,117,436

Securities with a carrying value of approximately ~~$513.7~~$595.7 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, ~~2019,~~2020, compared with ~~$510.0~~$679.6 million at December 31, ~~2018.~~2019.

The following table ~~details~~shows the gross unrealized losses and estimated fair value of securities aggregated by category and ~~duration~~length of time that securities have been in a continuous unrealized loss position at September 30, ~~2019~~2020 and December 31, ~~2018.~~2019.

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, 2020


Corporate debt securities	$	9,906	$	(276)	$	0	$	0	$	9,906	$	(276)
SBA pool securities	0		0		4,276		(107)		4,276		(107)
Mortgage-backed securities	24,687		(98)		2		0		24,689		(98)
Total debt securities	$	34,593	$	(374)	$	4,278	$	(107)	$	38,871	$	(481)

December 31, 2019

State, county and municipal securities	$	803	$	(2)	$	0	$	0	$	803	$	(2)
Corporate debt securities	2,573		(2)		0		0		2,573		(2)
SBA pool securities	28,521		(285)		4,825		(124)		33,346		(409)
Mortgage-backed securities	99,279		(416)		52,326		(467)		151,605		(883)
Total debt securities	$	131,176	$	(705)	$	57,151	$	(591)	$	188,327	$	(1,296)

As of September 30, ~~2019,~~2020, the Company’s ~~securities~~security portfolio consisted of ~~568~~524 securities, ~~136~~30 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, ~~2019,~~2020, the Company held ~~133~~17 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, 2019.

At September 30, ~~2019,~~2020, the Company held ~~1 state, county~~7 SBA pool securities and ~~municipal security and 2~~6 corporate ~~debt~~ securities that were in an unrealized loss position. ~~Because the decline in fair value is attributable to changes in interest rates~~

During 2020 and ~~illiquidity, and not credit quality, and because~~2019, the Company ~~does not have the intent to sell these securities~~received timely and ~~it is likely that it will not be required to sell~~current interest and principal payments on all of the securities ~~before their anticipated recovery, the Company does not consider these securities to be other-than-temporarily impaired at September 30, 2019.~~

classified as corporate debt securities. The Company’s investments in ~~corporate~~subordinated 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, ~~2019~~2020 or December 31, ~~2018.~~2019.

Management and the Company’s Asset and Liability Committee (the “ALCO Committee”) evaluate securities ~~for other-than-temporary impairment~~in an unrealized loss position on at least on a quarterly basis, and more frequently when economic or market ~~conditions~~concerns warrant such ~~evaluation. While~~evaluation, to determine if credit-related impairment exists. Management first evaluates whether they intend to sell or more likely than not will be required to sell an impaired security before recovering its amortized cost basis. If either criteria is met, the ~~majority~~entire amount of unrealized loss is recognized in earnings with a corresponding adjustment to the security's amortized cost basis. If either of the ~~unrealized losses on debt securities relate~~above criteria is not met, management evaluates whether the decline in fair value is attributable 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.credit or resulted from other factors. The ~~Company believes that each investment poses minimal credit risk. Furthermore, the~~ Company does not intend to sell these investment securities at an unrealized loss position at September 30, ~~2019,~~2020, and it is more likely than not that the Company will not be required to sell these securities prior to recovery or maturity. ~~Therefore,~~Based on the results of management's review, at September 30, ~~2019, these investments are not considered impaired on an other-than-temporary basis.~~2020, management determined $68,000 was attributable to credit impairment and increased the allowance for credit losses accordingly. The remaining $481,000 in unrealized loss was determined to be from factors other than credit.


(dollars in thousands)	Nine Months Ended September 30, 2020
Allowance for credit losses
Beginning balance	$	0
Current-period provision for expected credit losses	68



Ending balance	$	68

At September 30, ~~2019~~2020 and December 31, ~~2018,~~2019, 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, ~~2019~~2020 and ~~2018:~~2019:


(dollars in thousands)	September 30, 2020		September 30, 2019
Gross gains on sales of securities	$	0	$	522
Gross losses on sales of securities	0		(464)
Net realized gains on sales of securities available for sale	$	0	$	58

Sales proceeds	$	0	$	64,995

(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

Total gain on securities reported on the consolidated statements of income and comprehensive income is comprised of the following for the nine months ended September 30, ~~2019~~2020 and ~~2018:~~2019:


(dollars in thousands)	September 30, 2020		September 30, 2019
Net realized gains on sales of securities available for sale	$	0	$	58
Unrealized holding gains on equity securities	5		19
Net realized gains on sales of other investments	0		62
Total gain on securities	$	5	$	139

(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 )

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, 2019~~The Bank also offers certain SBA and December 31, 2018, the net carrying value of these consumer installment home improvement loans was approximately $404.7 million and $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~~nationally. Loans outstanding under the United States and began to originate, administer and service these types of loans. As of September 30, 2019 and December 31, 2018, the net carrying value of commercial insurance premium loans was approximately $648.7 million and $413.5 million, respectively, and such loansSBA's Paycheck Protection Program ("PPP") 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~~is 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 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.~~amortized cost. Balances within the major loans receivable categories are presented in the following ~~table, excluding purchased loans:~~table:

(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, 2020		December 31, 2019
Commercial, financial and agricultural	$	1,879,788	$	802,171
Consumer installment	450,810		498,577
Indirect automobile	682,396		1,061,824
Mortgage warehouse	995,942		526,369
Municipal	725,669		564,304
Premium finance	710,890		654,669
Real estate – construction and development	1,628,255		1,549,062
Real estate – commercial and farmland	5,116,252		4,353,039
Real estate – residential	2,753,591		2,808,461
	$	14,943,593	$	12,818,476

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 $5.39 billion and $2.59 billion at September 30, 2019 and December 31, 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
18

~~A rollforward of purchased loans for the nine months ended September 30, 2019 and 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

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

(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, 2019
Balance, January 1	$	40,496
Additions due to acquisitions	38,116
Accretion	(10,503)

Transfers between non-accretable and accretable discounts, net	(2,052)
Ending balance	$	66,057

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

At September 30, 2019 and December 31, 2018, all loans in purchased loan pools were performing current loans risk-rated grade 3 (Good Credit). At September 30, 2019 and December 31, 2018, purchased loan pools had 0 loans on nonaccrual status and had 0 loans classified as troubled debt restructurings.

~~At September 30, 2019 and December 31, 2018, the Company had allocated $619,000 and $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:~~basis:


(dollars in thousands)	September 30, 2020		December 31, 2019
Commercial, financial and agricultural	$	11,844	$	9,236
Consumer installment	947		831
Indirect automobile	1,936		1,746


Premium finance	0		600
Real estate – construction and development	5,666		1,988
Real estate – commercial and farmland	39,248		23,797
Real estate – residential	78,522		36,926
	$	138,163	$	75,124

(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

There was 0 interest income recognized on nonaccrual loans during the nine months ended September 30, 2020.

The following table presents an analysis of ~~purchased~~nonaccrual loans ~~accounted~~with no related allowance for ~~on a nonaccrual basis:~~credit losses:

(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, 2020
Commercial, financial and agricultural	$	1,060





Real estate – construction and development	1,947
Real estate – commercial and farmland	9,650
Real estate – residential	24,920
	$	37,577

The following table presents an analysis of past-due loans ~~excluding purchased past-due loans~~ as of September 30, ~~2019~~2020 and December 31, ~~2018:~~ 2019:


(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, 2020
Commercial, financial and agricultural	$	6,419	$	1,892	$	4,831	$	13,142	$	1,866,646	$	1,879,788	$	0
Consumer installment	2,552		1,441		1,942		5,935		444,875		450,810		1,305
Indirect automobile	2,603		796		1,440		4,839		677,557		682,396		0
Mortgage warehouse	0		0		0		0		995,942		995,942		0
Municipal	0		0		0		0		725,669		725,669		0
Premium finance	5,403		4,517		3,774		13,694		697,196		710,890		3,774
Real estate – construction and development	7,268		4,700		4,452		16,420		1,611,835		1,628,255		1,883
Real estate – commercial and farmland	9,962		1,407		9,969		21,338		5,094,914		5,116,252		0
Real estate – residential	16,808		4,070		73,188		94,066		2,659,525		2,753,591		41
Total	$	51,015	$	18,823	$	99,596	$	169,434	$	14,774,159	$	14,943,593	$	7,003

December 31, 2019
Commercial, financial and agricultural	$	3,609	$	2,251	$	6,484	$	12,344	$	789,827	$	802,171	$	0
Consumer installment	3,488		1,336		1,452		6,276		492,301		498,577		922
Indirect automobile	5,978		1,067		1,522		8,567		1,053,257		1,061,824		21
Mortgage warehouse	0		0		0		0		526,369		526,369		0
Municipal	0		0		0		0		564,304		564,304		0
Premium finance	13,801		8,022		5,411		27,234		627,435		654,669		4,811
Real estate – construction and development	7,785		1,224		1,583		10,592		1,538,470		1,549,062		0
Real estate – commercial and farmland	7,404		3,405		15,598		26,407		4,326,632		4,353,039		0
Real estate – residential	46,226		15,277		31,083		92,586		2,715,875		2,808,461		0
Total	$	88,291	$	32,582	$	63,133	$	184,006	$	12,634,470	$	12,818,476	$	5,754

(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 $ 10,695
$ 2,246
$ 8,278
$ 21,219
$ 1,760,018
$ 1,781,237
$ 5,380
Real estate – construction and development 999
675
900
2,574
944,797
947,371
—
Real estate – commercial and farmland 4,101
326
2,813
7,240
2,145,288
2,152,528
—
Real estate – residential 12,898
3,235
12,139
28,272
1,837,856
1,866,128
—
Consumer installment 2,167
1,215
767
4,149
457,403
461,552
456
Total $ 30,860
$ 7,697
$ 24,897
$ 63,454
$ 7,145,362
$ 7,208,816
$ 5,836

December 31, 2018

Commercial, financial and agricultural $ 6,479
$ 5,295
$ 4,763
$ 16,537
$ 1,299,822
$ 1,316,359
$ 3,808
Real estate – construction and development 1,218
481
725
2,424
668,774
671,198
—
Real estate – commercial and farmland 1,625
530
3,645
5,800
1,808,729
1,814,529
—
Real estate – residential 11,423
4,631
8,923
24,977
1,378,023
1,403,000
—
Consumer installment 2,344
1,167
735
4,246
451,125
455,371
414
Total $ 23,089
$ 12,104
$ 18,791
$ 53,984
$ 5,606,473
$ 5,660,457
$ 4,222

Collateral-Dependent Loans

~~The following table presents an analysis~~

Collateral-dependent loans are loans where repayment is expected to be provided solely by the underlying collateral and there are no other available and reliable sources of ~~purchased past-due~~repayment. These loans asare written down to the lower of cost or collateral value less estimated selling costs. As of September 30, ~~2019~~2020, there were $164.0 million of collateral-dependent loans which are primarily secured by real estate, equipment and ~~December 31, 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
$ —

receivables.

Impaired Loans

~~Loans are~~Prior to the adoption of ASU 2016-13, loans were considered impaired when, based on current information and events, it iswas probable the Company ~~will~~would 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~~would be unable to collect all principal and interest payments due in accordance with the contractual terms of the loan agreement, the Company ~~considers~~considered the borrower’s capacity to pay, which ~~includes~~included 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~~assessed 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 iswas deemed impaired, a specific valuation allowance iswas allocated, if necessary, so that the loan iswas 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 iswas expected solely from the collateral. Interest payments on impaired loans ~~are~~were typically applied to principal unless collectability of the principal amount iswas reasonably assured, in which case interest iswas 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, 2019		December 31, 2018		September 30, 2018		(dollars in thousands)	December 31, 2019		September 30, 2019
Nonaccrual loans	$	21,739	$	17,952	$	15,986	Nonaccrual loans	$	75,124	$	100,501
Troubled debt restructurings not included above	13,430		9,323		10,943		Troubled debt restructurings not included above	29,609		31,725
Total impaired loans	$	35,169	$	27,275	$	26,929	Total impaired loans	$	104,733	$	132,226

Quarter-to-date interest income recognized on impaired loans	$	317	$	202	$	201	Quarter-to-date interest income recognized on impaired loans	$	1,201	$	904
Year-to-date interest income recognized on impaired loans	$	782	$	827	$	625	Year-to-date interest income recognized on impaired loans	$	4,131	$	2,930
Quarter-to-date foregone interest income on impaired loans	$	223	$	217	$	225	Quarter-to-date foregone interest income on impaired loans	$	1,044	$	1,579
Year-to-date foregone interest income on impaired loans	$	630	$	853	$	636	Year-to-date foregone interest income on impaired loans	$	4,100	$	3,057

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

(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, 2019

Commercial, financial and agricultural $ 4,242
$ 773
$ 2,979
$ 3,752
$ 1,569
$ 3,724
$ 2,645
Real estate – construction and development 2,019
505
921
1,426
113
1,350
1,280
Real estate – commercial and farmland 6,991
593
5,783
6,376
488
6,235
6,610
Real estate – residential 23,476
5,234
17,907
23,141
1,557
21,365
19,650
Consumer installment 496
474
—
474
—
451
471
Total $ 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, 2019
Commercial, financial and agricultural	$	18,438	$	1,911	$	7,840	$	9,751	$	1,542	$	9,073	$	6,287
Consumer installment	2,179		839		0		839		0		420		767
Indirect automobile	1,845		1,746		0		1,746		0		1,481		592


Premium finance	757		0		757		757		156		758		524
Real estate – construction and development	4,893		1,319		1,605		2,924		204		5,277		7,278
Real estate – commercial and farmland	42,515		12,147		18,381		30,528		953		30,749		23,280
Real estate – residential	62,675		13,413		44,775		58,188		3,592		70,723		51,817
Total	$	133,302	$	31,375	$	73,358	$	104,733	$	6,447	$	118,481	$	90,545

(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)															(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, 2019															September 30, 2019
Commercial, financial and agricultural															Commercial, financial and agricultural	$	19,615	$	4,218	$	4,176	$	8,394	$	1,022	$	6,717	$	5,421
Consumer installment															Consumer installment	0		0		0		0		0		466		749
Indirect automobile															Indirect automobile	3,986		1,216		0		1,216		0		608		304

(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	$	2,216	$	966	$	838	$	1,804	$	5	$	1,791	$	1,629
Premium finance															Premium finance	759		0		759		759		601		932		466
Real estate – construction and development	1,444		720		701		1,421		46		1,110		971		Real estate – construction and development	15,275		674		6,956		7,630		375		8,484		8,367
Real estate – commercial and farmland	8,911		536		7,021		7,557		1,799		8,186		7,969		Real estate – commercial and farmland	45,361		15,211		15,759		30,970		1,043		24,523		21,469
Real estate – residential	15,964		5,298		10,226		15,524		782		15,726		15,308		Real estate – residential	86,805		53,703		29,554		83,257		2,211		60,815		50,224
Consumer installment	658		623		—		623		—		571		531
Total	$	29,193	$	8,143	$	18,786	$	26,929	$	2,632	$	27,384	$	26,408	Total	$	171,801	$	75,022	$	57,204	$	132,226	$	5,252	$	102,545	$	87,000

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

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

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

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

Commercial, financial and agricultural $ 16,132
$ 3,445
$ 1,956
$ 5,401
$ 54
$ 5,401
$ 3,980
Real estate – construction and development 13,256
169
6,035
6,204
262
6,204
6,622
Real estate – commercial and farmland 38,382
14,629
9,977
24,606
555
24,606
18,018
Real estate – residential 63,328
48,469
11,647
60,116
654
60,116
40,808
Consumer installment 3,479
730
—
730
—
730
635
Total $ 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
December 31, 2018

Commercial, financial and agricultural $ 5,717
$ 473
$ 757
$ 1,230
$ —
$ 1,101
$ 836
Real estate – construction and development 13,714
623
6,511
7,134
476
7,240
5,712
Real estate – commercial and farmland 14,766
1,115
10,581
11,696
684
13,514
12,349
Real estate – residential 24,839
8,185
14,116
22,301
773
23,146
21,433
Consumer installment 526
486
—
486
—
487
229
Total $ 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

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. This grade is also assigned to loans which received a second 90-day deferral under our Disaster Relief Program.

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's amortized cost by class of financing receivable, risk grade and year of origination (in thousands). Generally, current period renewals of credit are underwritten again at the point of renewal and considered current period originations for purposes of the table below. There were 0 loans risk graded 8 or 9 at September 30, 2020.


	Term Loans
As of September 30, 2020	2020		2019		2018		2017		2016		Prior		Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term Loans Amortized Cost Basis		Total
Commercial, Financial and Agricultural
Risk Grade:
1	$	1,128,005	$	1,379	$	427	$	5,700	$	3,113	$	511	$	12,969	$	0	$	1,152,104
2	815		864		1,070		1,035		1,719		201		9,130		0		14,834
3	44,905		17,422		20,498		5,410		57,514		9,042		72,872		0		227,663
4	62,651		92,559		49,128		28,498		89,217		22,108		88,512		0		432,673
5	2,812		4,749		9,084		5,873		4,747		877		3,802		0		31,944
6	49		1,372		880		1,275		166		206		958		0		4,906
7	25		2,138		2,167		4,281		1,093		653		5,307		0		15,664


Total commercial, financial and agricultural	$	1,239,262	$	120,483	$	83,254	$	52,072	$	157,569	$	33,598	$	193,550	$	0	$	1,879,788
Consumer Installment
Risk Grade:
1	$	5,631	$	1,859	$	707	$	6	$	3,872	$	115	$	1,378	$	0	$	13,568
2	0		64		2		67		0		0		39		0		172
3	11,488		3,545		1,180		685		8,759		1,620		4,628		0		31,905
4	122,050		106,124		54,423		10,075		92,677		14,018		3,690		0		403,057
5	55		33		29		246		137		6		8		0		514
6	0		14		3		75		15		49		0		0		156
7	21		132		157		608		219		180		121		0		1,438


Total consumer installment	$	139,245	$	111,771	$	56,501	$	11,762	$	105,679	$	15,988	$	9,864	$	0	$	450,810
Indirect Automobile
Risk Grade:

2	$	0	$	88	$	35	$	3,990	$	0	$	6,471	$	0	$	0	$	10,584
3	0		212,956		218,057		72,465		39,310		124,285		0		0		667,073


6	0		83		92		86		0		114		0		0		375
7	0		607		702		1,550		172		1,333		0		0		4,364


Total indirect automobile	$	0	$	213,734	$	218,886	$	78,091	$	39,482	$	132,203	$	0	$	0	$	682,396
Mortgage Warehouse
Risk Grade:


3	$	0	$	0	$	0	$	0	$	0	$	0	$	995,942	$	0	$	995,942






Total mortgage warehouse	$	0	$	0	$	0	$	0	$	0	$	0	$	995,942	$	0	$	995,942


	Term Loans
As of September 30, 2020	2020		2019		2018		2017		2016		Prior		Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term Loans Amortized Cost Basis		Total
Municipal
Risk Grade:
1	$	202,019	$	37,222	$	169,359	$	101,611	$	12,732	$	157,070	$	0	$	0	$	680,013
2	11,679		0		0		2,573		0		9,410		0		0		23,662
3	0		0		5,453		12,595		745		0		0		0		18,793
4	0		0		0		3,201		0		0		0		0		3,201





Total municipal	$	213,698	$	37,222	$	174,812	$	119,980	$	13,477	$	166,480	$	0	$	0	$	725,669
Premium Finance
Risk Grade:

2	$	675,156	$	832	$	862	$	295	$	27,493	$	2,478	$	0	$	0	$	707,116




7	1,925		0		0		0		0		1,849		0		0		3,774


Total premium finance	$	677,081	$	832	$	862	$	295	$	27,493	$	4,327	$	0	$	0	$	710,890
Real Estate – Construction and Development
Risk Grade:


3	$	27,414	$	17,241	$	8,969	$	8,350	$	7,701	$	3,626	$	682	$	0	$	73,983
4	493,627		217,729		89,755		32,030		544,239		13,065		85,415		0		1,475,860
5	1,372		3,239		331		8,672		24,738		17,827		109		0		56,288
6	0		5,190		1,014		4,604		1,916		528		0		0		13,252
7	544		932		589		3,835		2,926		46		0		0		8,872


Total real estate – construction and development	$	522,957	$	244,331	$	100,658	$	57,491	$	581,520	$	35,092	$	86,206	$	0	$	1,628,255
Real Estate – Commercial and Farmland
Risk Grade:
1	$	0	$	193	$	0	$	0	$	0	$	0	$	0	$	0	$	193
2	2,942		520		2,192		11,653		544		4,460		1,141		0		23,452
3	581,108		156,745		204,384		305,731		378,130		206,226		72,033		0		1,904,357
4	250,925		454,581		326,258		575,402		537,223		297,567		41,814		0		2,483,770
5	13,706		110,502		91,700		113,572		56,746		30,747		1,125		0		418,098
6	498		21,790		30,356		31,466		36,514		3,767		866		0		125,257
7	261		13,589		36,097		62,427		13,920		33,959		872		0		161,125


Total real estate – commercial and farmland	$	849,440	$	757,920	$	690,987	$	1,100,251	$	1,023,077	$	576,726	$	117,851	$	0	$	5,116,252
Real Estate - Residential
Risk Grade:
1	$	0	$	0	$	0	$	21	$	0	$	0	$	0	$	0	$	21
2	38		13		124		51,698		408		1,348		1,636		0		55,265
3	486,558		268,355		198,299		406,482		533,460		160,532		214,075		1,792		2,269,553
4	14,078		19,098		12,001		61,872		21,005		14,926		48,030		48		191,058
5	7,852		18,870		17,092		37,919		38,570		12,707		3,647		0		136,657
6	251		909		60		3,946		1,750		288		351		0		7,555
7	5,467		14,426		10,140		28,243		22,407		7,109		5,690		0		93,482


Total real estate - residential	$	514,244	$	321,671	$	237,716	$	590,181	$	617,600	$	196,910	$	273,429	$	1,840	$	2,753,591

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


Risk Grade	Commercial, Financial and Agricultural		Consumer Installment		Indirect Automobile		Mortgage Warehouse		Municipal		Premium Finance		Real Estate - Construction and Development		Real Estate - Commercial and Farmland		Real Estate - Residential		Total
1	$	22,396	$	13,184	$	0	$	0	$	552,062	$	0	$	0	$	208	$	27	$	587,877
2	18,937		1,233		18,354		0		2,690		654,069		17,535		35,299		92,255		840,372
3	215,180		33,314		1,033,861		526,369		8,925		0		90,124		1,720,039		2,406,587		6,034,399
4	482,146		449,224		4,009		0		627		0		1,377,674		2,348,083		222,779		4,884,542
5	33,317		208		0		0		0		0		41,759		133,119		24,618		233,021
6	4,901		213		0		0		0		0		17,223		53,941		10,132		86,410
7	25,294		1,191		5,600		0		0		600		4,747		62,350		52,063		151,845
8	0		8		0		0		0		0		0		0		0		8
9	0		2		0		0		0		0		0		0		0		2
Total	$	802,171	$	498,577	$	1,061,824	$	526,369	$	564,304	$	654,669	$	1,549,062	$	4,353,039	$	2,808,461	$	12,818,476

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

~~The following table presents the purchased loan portfolio by risk grade as of September 30, 2019 and December 31, 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
26

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 asto be troubled debt restructurings because the borrower is not experiencing financial difficulty. The Company modified loans in the first nine months of 2020 and 2019 ~~and 2018~~ totaling ~~$168.6~~$313.6 million and ~~$64.0~~$168.6 million, respectively, under such parameters.

As of September 30, ~~2019~~2020 and December 31, ~~2018,~~2019, the Company had a balance of ~~$15.1~~$132.9 million and ~~$11.0~~$35.2 million, respectively, in troubled debt ~~restructurings, excluding purchased loans.~~restructurings. The Company has recorded ~~$883,000~~$1.2 million and ~~$890,000~~$1.9 million in previous charge-offs on such loans at September 30, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively. The Company’s balance in the allowance for ~~loan~~credit losses allocated to such troubled debt restructurings was ~~$1.6~~$9.4 million and ~~$820,000~~$3.7 million at September 30, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively. At September 30, ~~2019,~~2020, 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, ~~2019~~2020 and ~~2018,~~2019, the Company modified loans as troubled debt restructurings ~~excluding purchased loans,~~ with principal balances of ~~$5.0~~$103.4 million and ~~$2.3~~$6.7 million, respectively, and these modifications did not have a material impact on the Company’s allowance for ~~loan loss.~~credit losses. 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, ~~2019~~2020 and ~~2018:~~2019:

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, 2020			September 30, 2019
Loan Class	#	Balance (in thousands)		#	Balance (in thousands)
Commercial, financial and agricultural	2	$	725	2	$	392
Consumer installment	4	15		11	65
Indirect automobile	530	3,170		0	0


Premium finance	0	0		1	158
Real estate – construction and development	1	19		0	0
Real estate – commercial and farmland	21	86,788		2	224
Real estate – residential	91	12,692		41	5,857
Total	649	$	103,409	57	$	6,696

Troubled debt restructurings ~~excluding purchased loans,~~ with an outstanding balance of ~~$843,000~~$2.8 million and ~~$1.7~~$2.1 million defaulted during the nine months ended September 30, ~~2019~~2020 and ~~2018,~~2019, respectively, and these defaults did not have a material impact on the Company’s allowance for ~~loan loss.~~credit losses. 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, ~~2019~~2020 and ~~2018:~~2019:

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, 2020			September 30, 2019
Loan Class	#	Balance (in thousands)		#	Balance (in thousands)
Commercial, financial and agricultural	1	$	198	2	$	4
Consumer installment	4	3		7	37




Real estate – construction and development	3	689		0	0
Real estate – commercial and farmland	3	726		4	666
Real estate – residential	16	1,142		21	1,375
Total	27	$	2,758	34	$	2,082

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~~2020 and December 31, ~~2018:~~2019:

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, 2020	Accruing Loans			Non-Accruing Loans
Loan Class	#	Balance (in thousands)		#	Balance (in thousands)
Commercial, financial and agricultural	5	$	459	12	$	1,002
Consumer installment	11	36		22	64
Indirect automobile	481	2,689		49	482



Real estate – construction and development	4	510		5	709
Real estate – commercial and farmland	38	73,763		7	19,942
Real estate – residential	243	28,777		45	4,477
Total	782	$	106,234	140	$	26,676


December 31, 2019	Accruing Loans			Non-Accruing Loans
Loan Class	#	Balance (in thousands)		#	Balance (in thousands)
Commercial, financial and agricultural	5	$	516	17	$	335
Consumer installment	4	8		27	107



Premium finance	1	156		0	0
Real estate – construction and development	6	936		3	253
Real estate – commercial and farmland	21	6,732		8	2,071
Real estate – residential	197	21,261		40	2,857
Total	234	$	29,609	95	$	5,623

COVID-19 Deferrals

In response to the COVID-19 pandemic, the Company offered affected borrowers payment relief under its Disaster Relief Program. These modifications primarily consisted of short-term payment deferrals or interest-only periods to assist customers. Modifications related to the COVID-19 pandemic and qualifying under the provisions of Section 4013 of the CARES Act are not deemed to be troubled debt restructurings. As of September 30, ~~2019 and December 31, 2018, the Company had a balance of $21.2~~2020, $648.5 million ~~and $22.2 million, respectively,~~ in ~~troubled debt restructurings included~~loans remained in purchased loans. The Company has recorded $1.1 million and $940,000 in previous charge-offs on such loans at September 30, 2019 and December 31, 2018, respectively. At September 30, 2019, the Company did not have any commitmentspayment deferral related to ~~lend additional funds to debtors whose terms have been modified in troubled restructurings.~~COVID-19 pandemic Disaster Relief Program.

During the nine months ended September 30, 2019 and 2018, the Company modified purchased loans as troubled debt restructurings, with principal balances of $1.7 million and $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, 2019 and 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

The table below presents short-term deferrals related to the COVID-19 pandemic that were not considered TDRs.

Troubled debt restructurings included in purchased loans with an outstanding balance of $1.2 million and $2.4 million defaulted during the nine months ended September 30, 2019 and 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, 2019 and 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


(dollars in thousands)	COVID-19 Deferrals		Deferrals as a % of total loans
Commercial, financial and agricultural	$	49,526	2.6	%
Consumer installment	2,421		0.5	%
Indirect automobile	11,042		1.6	%



Real estate – construction and development	42,915		2.6	%
Real estate – commercial and farmland	368,607		7.2	%
Real estate – residential	174,005		6.3	%
	$	648,516	4.3	%

~~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

Allowance for ~~Loan~~Credit Losses

The allowance for ~~loan~~credit losses represents an allowance for ~~probable incurred~~expected losses inover the ~~loan portfolio. The adequacy~~remaining contractual life of the ~~allowance for loan losses is evaluated periodically based on~~assets. The contractual term does not consider extensions, renewals or modifications unless the Company reasonably expects to execute a ~~review of all significant loans,~~troubled debt restructuring with a ~~particular emphasis on non-accruing, past-due and other loans that management believes might be potentially impaired or warrant additional attention.~~borrower. 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 in accordance with the Federal Financial Institutions Examination Council’s (“FFIEC”) Uniform Retail Credit Classification and Account Management Policy. Commercial loans are charged off when they are deemed uncollectible, which usually involves a triggering event within the collection effort. If the loan is collateral dependent, the loss is more easily identified and is charged off when it is identified, usually based upon receipt of an appraisal. However, when a loan has guarantor support, the Company may carry the estimated loss as a reserve against the loan while collection efforts with the guarantor are pursued. If, after collection efforts with the guarantor are complete, the deficiency is still considered uncollectible, the loss is charged off and any further collections are treated as recoveries. In all situations, when a loan is downgraded to an Asset Quality Rating of 9 (Loss per the regulatory guidance), the uncollectible portion is charged off.

During the three and nine months ended September 30, 2020, the allowance for credit losses increased primarily due to deterioration in forecasted macroeconomic factors resulting from the COVID-19 pandemic. The current forecast reflects, among other things, a decline in GDP and elevated unemployment levels compared to the forecast the time of adoption of ASC 326 on January 1, 2020. During the third quarter of 2020, the Company added additional qualitative factors on its residential real estate, commercial real estate and hotel portfolios based principally on risk rating migrations, level of deferrals in the portfolio and expected collateral values.

The following tables detail activity in the allowance for ~~loan~~credit losses by portfolio segment for the three and nine-month ~~period~~periods ended September 30, 2020 and September 30, 2019 ~~the year ended~~and end of period balances by portfolio segment as of September 30, 2020, December 31, ~~2018~~2019 and ~~the three and nine-month period ended~~ September 30, ~~2018.~~2019. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.


Three Months Ended September 30, 2020

(dollars in thousands)	Commercial, Financial and Agricultural		Consumer Installment		Indirect Automobile		Mortgage Warehouse		Municipal		Premium Finance
Balance, June 30, 2020	$	7,938	$	20,085	$	3,381	$	1,498	$	507	$	8,198


Provision for loan losses	5,533		(3,693)		322		498		365		(2,316)
Loans charged off	(1,715)		(677)		(697)		0		0		(1,159)
Recoveries of loans previously charged off	470		516		317		0		0		1,224
Balance, September 30, 2020	$	12,226	$	16,231	$	3,323	$	1,996	$	872	$	5,947

	Real Estate – Construction and Development		Real Estate – Commercial and Farmland		Real Estate – Residential		Total
Balance, June 30, 2020	$	54,266	$	83,593	$	29,327	$	208,793


Provision for loan losses	(10,208)		18,419		17,772		26,692
Loans charged off	(9)		(2,977)		(137)		(7,371)
Recoveries of loans previously charged off	182		904		197		3,810
Balance, September 30, 2020	$	44,231	$	99,939	$	47,159	$	231,924

Nine Months Ended September 30, 2020

(dollars in thousands)	Commercial, Financial and Agricultural		Consumer Installment		Indirect Automobile		Mortgage Warehouse		Municipal		Premium Finance
Balance, December 31, 2019	$	4,567	$	3,784	$	0	$	640	$	484	$	2,550
Adjustment to allowance for adoption of ASU 2016-13	2,587		8,012		4,109		463		(92)		4,471

Provision for loan losses	8,624		5,943		1,138		893		480		235
Loans charged off	(4,687)		(2,781)		(2,944)		0		0		(3,893)
Recoveries of loans previously charged off	1,135		1,273		1,020		0		0		2,584
Balance, September 30, 2020	$	12,226	$	16,231	$	3,323	$	1,996	$	872	$	5,947

	Real Estate – Construction and Development		Real Estate – Commercial and Farmland		Real Estate – Residential		Total
Balance, December 31, 2019	$	5,995	$	9,666	$	10,503	$	38,189
Adjustment to allowance for adoption of ASU 2016-13	12,248		27,073		19,790		78,661

Provision for loan losses	25,379		72,410		17,086		132,188
Loans charged off	(83)		(10,220)		(762)		(25,370)
Recoveries of loans previously charged off	692		1,010		542		8,256
Balance, September 30, 2020	$	44,231	$	99,939	$	47,159	$	231,924

(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, 2019

Balance, June 30, 2019 $ 6,302
$ 4,269
$ 7,269
$ 7,451
$ 3,388
$ 2,443
$ 671
$ 31,793
Provision for loan losses 1,925
800
1,166
975
1,289
(114 ) (52 ) 5,989
Loans charged off (1,578 ) —
(14 ) (20 ) (1,195 ) (2,442 ) —
(5,249 )
Recoveries of loans previously charged off 845
2
—
49
269
1,832
—
2,997
Balance, September 30, 2019 $ 7,494
$ 5,071
$ 8,421
$ 8,455
$ 3,751
$ 1,719
$ 619
$ 35,530

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 5,475
1,562
805
2,886
3,495
(45 ) (113 ) 14,065
Loans charged off (4,920 ) (247 ) (1,367 ) (80 ) (4,214 ) (3,296 ) —
(14,124 )
Recoveries of loans previously charged off 2,652
22
8
286
675
3,127
—
6,770
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⁾
$ 2,575
$ 112
$ 488
$ 1,557
$ —
$ 1,719
$ —
$ 6,451
Loans collectively evaluated for impairment 4,919
4,959
7,933
6,898
3,751
—
619
29,079
Ending balance $ 7,494
$ 5,071
$ 8,421
$ 8,455
$ 3,751
$ 1,719
$ 619
$ 35,530

Loans:

Individually evaluated for impairment⁽¹⁾
$ 4,648
$ 921
$ 5,783
$ 17,907
$ —
$ 31,612
$ —
$ 60,871
Collectively evaluated for impairment 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 —
—
—
—
—
183,007
—
183,007
Ending balance $ 1,781,237
$ 947,371
$ 2,152,528
$ 1,866,128
$ 461,552
$ 5,388,336
$ 229,132
$ 12,826,284
Prior to the adoption of ASC 326 on January 1, 2020, the Company calculated the allowance for loan losses under the incurred loss methodology. The following tables are disclosures related to the allowance for loan losses in prior periods.


(dollars in thousands)	Commercial, Financial and Agricultural		Consumer Installment		Indirect Automobile		Mortgage Warehouse		Municipal		Premium Finance






December 31, 2019
Period-end allocation:
Loans individually evaluated for impairment (1)	$	1,543	$	0	$	0	$	0	$	0	$	758
Loans collectively evaluated for impairment	3,024		3,784		0		640		484		1,792
Ending balance	$	4,567	$	3,784	$	0	$	640	$	484	$	2,550

Loans:
Individually evaluated for impairment (1)	$	8,032	$	0	$	0	$	0	$	0	$	6,768
Collectively evaluated for impairment	789,252		498,363		1,056,811		526,369		564,304		647,901
Acquired with deteriorated credit quality	4,887		214		5,013		0		0		0
Ending balance	$	802,171	$	498,577	$	1,061,824	$	526,369	$	564,304	$	654,669

	Real Estate – Construction and Development		Real Estate – Commercial and Farmland		Real Estate – Residential		Total






December 31, 2019
Period-end allocation:
Loans individually evaluated for impairment (1)	$	204	$	953	$	3,704	$	7,162
Loans collectively evaluated for impairment	5,791		8,713		6,799		31,027
Ending balance	$	5,995	$	9,666	$	10,503	$	38,189

Loans:
Individually evaluated for impairment (1)	$	1,605	$	19,759	$	46,311	$	82,475
Collectively evaluated for impairment	1,532,786		4,256,397		2,737,095		12,609,278
Acquired with deteriorated credit quality	14,671		76,883		25,055		126,723
Ending balance	$	1,549,062	$	4,353,039	$	2,808,461	$	12,818,476

(1) At December 31, 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		Consumer Installment		Indirect Automobile		Mortgage Warehouse		Municipal		Premium Finance
Three Months Ended September 30, 2019
Balance, June 30, 2019	$	2,816	$	3,388	$	0	$	640	$	502	$	2,984
Provision for loan losses	831		1,132		580		0		(5)		1,141
Loans charged off	(490)		(1,245)		(965)		0		0		(1,267)
Recoveries of loans previously charged off	300		476		385		0		0		736
Balance, September 30, 2019	$	3,457	$	3,751	$	0	$	640	$	497	$	3,594


(dollars in thousands)	Commercial, Financial and Agricultural		Consumer Installment		Indirect Automobile		Mortgage Warehouse		Municipal		Premium Finance
Nine Months Ended September 30, 2019
Balance, December 31, 2018	$	2,352	$	3,795	$	0	$	640	$	509	$	1,426
Provision for loan losses	1,848		3,289		580		0		(12)		3,224
Loans charged off	(1,647)		(4,313)		(965)		0		0		(3,452)
Recoveries of loans previously charged off	904		980		385		0		0		2,396
Balance, September 30, 2019	$	3,457	$	3,751	$	0	$	640	$	497	$	3,594

Period-end allocation:
Loans individually evaluated for impairment (1)	$	1,022	$	0	$	0	$	0	$	0	$	1,606
Loans collectively evaluated for impairment	2,435		3,751		0		640		497		1,988
Ending balance	$	3,457	$	3,751	$	0	$	640	$	497	$	3,594

Loans:
Individually evaluated for impairment (1)	$	4,176	$	0	$	0	$	0	$	0	$	2,428
Collectively evaluated for impairment	918,162		500,067		1,108,717		562,598		578,267		654,142
Acquired with deteriorated credit quality	9,417		0		3,098		0		0		0
Ending balance	$	931,755	$	500,067	$	1,111,815	$	562,598	$	578,267	$	656,570

	Real Estate – Construction and Development		Real Estate – Commercial and Farmland		Real Estate – Residential		Total
Three Months Ended September 30, 2019
Balance, June 30, 2019	$	4,763	$	8,676	$	8,024	$	31,793
Provision for loan losses	(182)		1,541		951		5,989
Loans charged off	0		(1,315)		(37)		(5,319)
Recoveries of loans previously charged off	930		74		166		3,067
Balance, September 30, 2019	$	5,511	$	8,976	$	9,104	$	35,530

Nine Months Ended September 30, 2019
Balance, December 31, 2018	$	4,210	$	9,659	$	6,228	$	28,819
Provision for loan losses	254		2,283		2,599		14,065
Loans charged off	(268)		(3,158)		(391)		(14,194)
Recoveries of loans previously charged off	1,315		192		668		6,840
Balance, September 30, 2019	$	5,511	$	8,976	$	9,104	$	35,530

Period-end allocation:
Loans individually evaluated for impairment (1)	$	552	$	1,044	$	2,227	$	6,451
Loans collectively evaluated for impairment	4,959		7,932		6,877		29,079
Ending balance	$	5,511	$	8,976	$	9,104	$	35,530

Loans:
Individually evaluated for impairment (1)	$	7,810	$	16,120	$	30,337	$	60,871
Collectively evaluated for impairment	1,441,918		4,090,640		2,727,895		12,582,406
Acquired with deteriorated credit quality	18,968		91,999		59,525		183,007
Ending balance	$	1,468,696	$	4,198,759	$	2,817,757	$	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.

(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.

~~NOTE 5 – OTHER REAL ESTATE OWNED~~

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

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

NOTE 65 – 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, ~~2019~~2020 and December 31, ~~2018,~~2019, 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 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, ~~2019~~2020 and December 31, ~~2018.~~ 2019.

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


(dollars in thousands)	September 30, 2020		December 31, 2019
Securities sold under agreements to repurchase	$	9,103	$	20,635

At September 30, 2020 and December 31, 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 76 – 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, 2020		December 31, 2019
FHLB borrowings:
Fixed Rate Advance due January 10, 2020; fixed interest rate of 1.68%	$	0	$	50,000
Fixed Rate Advance due January 13, 2020; fixed interest rate of 1.68%	0		50,000
Fixed Rate Advance due January 13, 2020; fixed interest rate of 1.67%	0		100,000
Fixed Rate Advance due January 15, 2020; fixed interest rate of 1.71%	0		50,000
Fixed Rate Advance due January 16, 2020; fixed interest rate of 1.69%	0		150,000
Fixed Rate Advance due January 17, 2020; fixed interest rate of 1.70%	0		100,000
Fixed Rate Advance due January 21, 2020; fixed interest rate of 1.71%	0		50,000
Fixed Rate Advance due January 21, 2020; fixed interest rate of 1.71%	0		200,000
Fixed Rate Advance due January 21, 2020; fixed interest rate of 1.70%	0		25,000
Fixed Rate Advance due January 21, 2020; fixed interest rate of 1.71%	0		75,000
Fixed Rate Advance due January 21, 2020; fixed interest rate of 1.71%	0		25,000
Fixed Rate Advance due January 23, 2020; fixed interest rate of 1.71%	0		100,000
Fixed Rate Advance due January 27, 2020; fixed interest rate of 1.73%	0		50,000
Fixed Rate Advance due February 18, 2020; fixed interest rate of 1.72%	0		100,000
Fixed Rate Advance due October 5, 2020; fixed interest rate of 0.22%	200,000		0
Fixed Rate Advance due October 13, 2020; fixed interest rate of 0.22%	150,000		0
Fixed Rate Advance due October 26, 2020; fixed interest rate of 0.22%	100,000		0
Fixed Rate Advance due March 3, 2025; fixed interest rate of 1.208%	15,000		0
Fixed Rate Advance due March 2, 2027; fixed interest rate of 1.445%	15,000		0
Fixed Rate Advance due March 4, 2030; fixed interest rate of 1.606%	15,000		0
Fixed Rate Advance due December 9, 2030; fixed interest rate of 4.55%	1,414		1,422
Fixed Rate Advance due December 9, 2030; fixed interest rate of 4.55%	979		985
Principal Reducing Advance due September 29, 2031; fixed interest rate of 3.095%	1,603		1,712

Subordinated notes payable:
Subordinated notes payable due March 15, 2027 net of unamortized debt issuance cost of $845 and $943, respectively; fixed interest rate of 5.75% through March 14, 2022; variable interest rate thereafter at three-month LIBOR plus 3.616%	74,155		74,057
Subordinated notes payable due December 15, 2029 net of unamortized debt issuance cost of $2,226 and $2,408, respectively; fixed interest rate of 4.25% through December 14, 2024; variable interest rate thereafter at three-month SOFR plus 2.94%	117,774		117,592
Subordinated notes payable due May 31, 2030 net of unaccreted purchase accounting fair value adjustment of $1,181 and $1,596, respectively; fixed interest rate of 5.875% through May 31, 2025; variable interest rate thereafter at three-month LIBOR plus 3.63%	76,181		76,595
Subordinated notes payable due October 1, 2030 net of unamortized debt issuance cost of $1,851 and $0, respectively; fixed interest rate of 3.875% through September 30, 2025; variable interest rate thereafter at three-month SOFR plus 3.753%	108,149		0
Other debt:
Advance from correspondent bank due September 5, 2026; secured by a loan receivable; fixed interest rate of 2.09%	0		1,346
Total	$	875,255	$	1,398,709

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, ~~2019, $1.72~~2020, $2.91 billion was available for borrowing on lines with the FHLB.

At September 30, 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, 2019, there was $30.0 million available for borrowing under the revolving credit arrangement.

As of September 30, ~~2019,~~2020, the Bank maintained credit arrangements with various financial institutions to purchase federal funds up to ~~$157.0~~$152.0 million.

The Bank also participates in the Federal Reserve discount window borrowings program. At September 30, ~~2019,~~2020, the Company had ~~$1.84~~$3.12 billion of loans pledged at the Federal Reserve discount window and had ~~$1.24~~$2.00 billion available for borrowing.

NOTE 87 – SHAREHOLDERS’ EQUITY

Common Stock Repurchase Program

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 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 repurchase of 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, 0~~2020, $14.3 million, or 358,664 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 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.~~

NOTE 98 – ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

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.~~derivatives. The reclassification offor 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 of September 30, ~~2019~~2020 and ~~2018:~~2019:


(dollars in thousands)	Unrealized Gain (Loss) on Derivatives		Unrealized Gain (Loss) on Securities		Accumulated Other Comprehensive Income (Loss)
Balance, January 1, 2020	$	(147)	$	18,142	$	17,995


Reclassification for gains included in net income, net of tax	0		0		0
Current year changes, net of tax	147		19,110		19,257
Balance, September 30, 2020	$	0	$	37,252	$	37,252

(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 )


(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	0		(94)		(94)
Current year changes, net of tax	(471)		20,873		20,402
Balance, September 30, 2019	$	(120)	$	15,602	$	15,482

NOTE 109 – 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)	2020	2019	2020	2019
Average common shares outstanding	69,231	69,372	69,243	54,762
Common share equivalents:
Stock options	5	145	22	46
Nonvested restricted share grants	85	83	122	75
Performance share units	25	0	16	0
Average common shares outstanding, assuming dilution	69,346	69,600	69,403	54,883

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

For the three and nine-month periods ended September 30, ~~2019 and 2018,~~2020, there were ~~no potential~~outstanding 252,765 and 253,765 options exerciseable for common shares, respectively, with strike prices that would cause the underlying shares to be anti-dilutive. Therefore, such option shares have been excluded. For the three and nine-month periods ended September 30, 2019, there were 0 outstanding options exerciseable for common shares with strike prices that would cause ~~them~~the underlying shares 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 1210 – 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 loans held for sale under the fair value 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, 2020		December 31, 2019
Mortgage loans held for sale	$	1,348,193	$	1,647,900
SBA loans held for sale	19,851		8,811
Total loans held for sale	$	1,368,044	$	1,656,711

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.

A net ~~gain~~loss of ~~$23.0~~$23.3 million and a net ~~loss~~gain of ~~$1.4~~$17.8 million resulting from fair value changes of these mortgage loans were recorded in income during the ~~nine months~~three and nine-month periods ended September 30, 2020, respectively. For the three and nine-months ended September 30, 2019, ~~and 2018, respectively. Net gains~~a net gain of ~~$2.1~~$20.3 million and ~~$848,000~~$23.0 million, respectively, resulting from fair value changes of these mortgage loans were recorded in income. A net gain of $21.4 million and $55.2 million 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~~three and nine-month periods ended September 30, 2020, respectively. For the three and nine-months ended September 30, 2019, a net loss of $1.0 million and ~~2018, respectively.~~a net gain of $2.1 million, respectively, resulting from changes in the fair value of the related derivative financial instruments were recorded in income. 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 measured at fair value as of September 30, ~~2019~~2020 and December 31, ~~2018:~~2019:


(dollars in thousands)	September 30, 2020		December 31, 2019
Aggregate fair value of mortgage loans held for sale	$	1,348,193	$	1,647,900
Aggregate unpaid principal balance of mortgage loans held for sale	1,280,559		1,598,057
Past-due loans of 90 days or more	0		1,649
Nonaccrual loans	0		1,649
Unpaid principal balance of nonaccrual loans	0		1,616

(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 —
—

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~~2020 and December 31, ~~2018:~~2019:


(dollars in thousands)	September 30, 2020		December 31, 2019
Aggregate fair value of SBA loans held for sale	$	19,851	$	8,811
Aggregate unpaid principal balance of SBA loans held for sale	17,867		8,206
Past-due loans of 90 days or more	0		0
Nonaccrual loans	0		0

(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, loans held for sale and 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 collateral-dependent impaired loans, loan servicing rights 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.

~~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.

~~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, 2019 and December 31, 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, ~~2019~~2020 and December 31, ~~2018:~~2019:


	Recurring Basis Fair Value Measurements
	September 30, 2020
(dollars in thousands)	Fair Value		Level 1		Level 2		Level 3
Financial assets:
U.S. government sponsored agencies	$	17,604	$	0	$	17,604	$	0
State, county and municipal securities	87,648		0		87,648		0
Corporate debt securities	52,141		0		50,956		1,185
SBA pool securities	65,116		0		65,116		0
Mortgage-backed securities	894,927		0		894,927		0
Loans held for sale	1,368,044		0		1,368,044		0

Mortgage banking derivative instruments	64,694		0		64,694		0
Total recurring assets at fair value	$	2,550,174	$	0	$	2,548,989	$	1,185
Financial liabilities:

Mortgage banking derivative instruments	$	6,177	$	0	$	6,177	$	0
Total recurring liabilities at fair value	$	6,177	$	0	$	6,177	$	0

Recurring Basis
Fair Value Measurements
September 30, 2019
(dollars in thousands)
Fair Value Level 1 Level 2 Level 3
Financial assets:

U.S. government sponsored agencies $ 22,360
$ —
$ 22,360
$ —
State, county and municipal securities 116,349
—
116,349
—
Corporate debt securities 52,918
—
51,418
1,500
Mortgage-backed securities 1,299,580
—
1,299,580
—
Loans held for sale 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 $ 237
$ —
$ 237
$ —
Mortgage banking derivative instruments 1,195
—
1,195
—
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, 2019
(dollars in thousands)	Fair Value		Level 1		Level 2		Level 3
Financial assets:
U.S. government sponsored agencies	$	22,362	$	0	$	22,362	$	0
State, county and municipal securities	105,260		0		105,260		0
Corporate debt securities	52,999		0		51,499		1,500
SBA pool securities	73,912		0		73,912		0
Mortgage-backed securities	1,148,870		0		1,148,870		0
Loans held for sale	1,656,711		0		1,656,711		0

Mortgage banking derivative instruments	7,814		0		7,814		0
Total recurring assets at fair value	$	3,067,928	$	0	$	3,066,428	$	1,500
Financial liabilities:
Derivative financial instruments	$	187	$	0	$	187	$	0
Mortgage banking derivative instruments	4,471		0		4,471		0
Total recurring liabilities at fair value	$	4,658	$	0	$	4,658	$	0

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, ~~2019~~2020 and December 31, ~~2018:~~2019:

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, 2020
Collateral-dependent loans	$	148,083	$	0	$	0	$	148,083
Other real estate owned	4,239		0		0		4,239
Mortgage servicing rights	114,396		0		114,396		0
SBA servicing rights	6,062		0		6,062		0
Total nonrecurring assets at fair value	$	272,780	$	0	$	120,458	$	152,322

December 31, 2019
Impaired loans carried at fair value	$	43,788	$	0	$	0	$	43,788
Other real estate owned	17,289		0		0		17,289
Total nonrecurring assets at fair value	$	61,077	$	0	$	0	$	61,077

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, ~~2019~~2020 and the year ended December 31, ~~2018,~~2019, there was not a change in the methods and significant assumptions used to estimate fair value.

The following table shows significant unobservable inputs used in the fair value measurement of Level 3 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, 2020
Recurring:
Investment securities available for sale	$	1,185	Discounted cash flows	Probability of default	14.6%	14.6%
				Loss given default	31%	31%
Nonrecurring:
Collateral-dependent loans	$	148,083	Third-party appraisals and discounted cash flows	Collateral discounts and discount rates	20% - 77%	45%
Other real estate owned	$	4,239	Third-party appraisals and sales contracts	Collateral discounts and estimated costs to sell	0% - 75%	21%

December 31, 2019
Recurring:
Investment securities available for sale	$	1,500	Discounted par values	Credit quality of underlying issuer	0%	0%
Nonrecurring:
Impaired loans	$	43,788	Third-party appraisals and discounted cash flows	Collateral discounts and discount rates	1% - 95%	27%
Other real estate owned	$	17,289	Third-party appraisals and sales contracts	Collateral discounts and estimated costs to sell	9% - 89%	31%

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


			Fair Value Measurements											Fair Value Measurements
			September 30, 2019											September 30, 2020
(dollars in thousands)	Carrying Amount		Level 1		Level 2		Level 3		Total		(dollars in thousands)	Carrying Amount		Level 1		Level 2		Level 3		Total
Financial assets:											Financial assets:
Cash and due from banks	$	193,976	$	193,976	$	—	$	—	$	193,976	Cash and due from banks	$	257,026	$	257,026	$	0	$	0	$	257,026
Federal funds sold and interest-bearing deposits in banks	285,713		285,713		—		—		285,713
Federal funds sold and interest-bearing accounts											Federal funds sold and interest-bearing accounts	494,765		494,765		0		0		494,765
Time deposits in other banks	499		—		499		—		499		Time deposits in other banks	249		0		249		0		249

Loans, net	12,756,267		—		—		12,759,699		12,759,699		Loans, net	14,563,586		0		0		14,657,861		14,657,861
Accrued interest receivable	50,077		—		6,012		44,065		50,077		Accrued interest receivable	79,403		0		4,485		74,918		79,403
Financial liabilities:											Financial liabilities:
Deposits	$	13,659,594	$	—	$	13,658,398	$	—	$	13,658,398	Deposits	16,063,806		0		16,076,073		0		16,076,073
Securities sold under agreements to repurchase	17,744		17,744		—		—		17,744		Securities sold under agreements to repurchase	9,103		9,103		0		0		9,103
Other borrowings	1,351,172		—		1,352,726		—		1,352,726		Other borrowings	875,255		0		877,424		0		877,424
Subordinated deferrable interest debentures	127,075		—		124,130		—		124,130		Subordinated deferrable interest debentures	123,860		0		116,193		0		116,193
FDIC loss-share payable	19,490		—		—		19,489		19,489		FDIC loss-share payable	19,476		0		0		19,639		19,639

Accrued interest payable	11,107		—		11,107		—		11,107		Accrued interest payable	6,443		0		6,443		0		6,443


			Fair Value Measurements
			December 31, 2019
(dollars in thousands)	Carrying Amount		Level 1		Level 2		Level 3		Total
Financial assets:
Cash and due from banks	$	246,234	$	246,234	$	0	$	0	$	246,234
Federal funds sold and interest-bearing accounts	375,615		375,615		0		0		375,615
Time deposits in other banks	249		0		249		0		249
Loans, net	12,736,499		0		0		12,806,709		12,806,709
Accrued interest receivable	52,362		0		5,179		47,183		52,362
Financial liabilities:
Deposits	14,027,073		0		14,035,686		0		14,035,686
Securities sold under agreements to repurchase	20,635		20,635		0		0		20,635
Other borrowings	1,398,709		0		1,402,510		0		1,402,510
Subordinated deferrable interest debentures	127,560		0		126,815		0		126,815
FDIC loss-share payable	19,642		0		0		19,657		19,657
Accrued interest payable	11,524		0		11,524		0		11,524

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

NOTE 1311 – COMMITMENTS AND CONTINGENCIES

Loan Commitments

The Company is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. 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,
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


(dollars in thousands)	September 30, 2020		December 31, 2019
Commitments to extend credit	$	2,340,433	$	2,486,949
Unused home equity lines of credit	259,421		262,089
Financial standby letters of credit	33,087		29,232
Mortgage interest rate lock commitments	1,658,214		288,490

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 by the Company upon extension of credit, is based on management’s credit evaluation of the 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 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 which the Company deems necessary. The Company has not been required to perform on any material financial standby letters of credit and the Company has not incurred any losses on financial standby letters of credit for the nine months ended September 30, 2020 and the year ended December 31, 2019.

The Company maintains an allowance for credit losses on unfunded commitments which is recorded in other liabilities on the consolidated balance sheets. The following table presents activity in the allowance for unfunded commitments for the periods presented:


	Three Months Ended September 30,				Nine Months Ended September 30,
(dollars in thousands)	2020		2019		2020		2019
Balance at beginning of period	$	37,503	$	0	$	1,077	$	0
Adjustment to reflect adoption of ASU 2016-13	0		0		12,714		0
Addition due to acquisition	0		1,077		0		1,077
Provision for unfunded commitments	(10,131)		0		13,581		0
Balance at end of period	$	27,372	$	1,077	$	27,372	$	1,077

Other Commitments

As of September 30, ~~2019, $82.4 million in~~2020, letters of credit issued by the FHLB ~~was~~totaling $427.3 million were used to guarantee the Bank’s performance related to a portion of its public fund deposit balances.

Contingencies

Certain conditions may exist 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 management 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.

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.

COVID-19

The COVID-19 pandemic has caused significant economic dislocation in the United States and an unprecedented slowdown in economic activity, as many state and local governments have intermittently ordered non-essential businesses to close and residents to shelter in place at home. As a result of the pandemic, commercial customers are experiencing varying levels of disruptions or restrictions on their business activity, and consumers are experiencing interrupted income or unemployment. We have outstanding loans to borrowers in certain industries that have been particularly susceptible to the effects of the pandemic, such as hotels, restaurants and other retail businesses. Given the ongoing and dynamic nature of the circumstances, it is difficult to predict the full impact of the COVID-19 outbreak on our business. The United States government has taken steps to attempt

to mitigate some of the more severe anticipated economic effects of the coronavirus, including the passage of the CARES Act and subsequent legislation, but there can be no assurance that such steps will be effective or achieve their desired results in a timely fashion. The extent of such impact from the COVID-19 outbreak and related mitigation efforts will depend on future developments, which are highly uncertain, including, but not limited to, the duration and spread of the outbreak, its severity, the actions to contain the virus or treat its impact, and how quickly and to what extent normal economic and operating conditions can resume. This could cause a material, adverse effect on the Company’s business, financial condition, liquidity and results of operations, including increases in loan delinquencies, problem assets and foreclosures; decreases in the value of collateral securing our loans; increases in our allowance for credit losses; and decreases in the value of our intangible assets.

NOTE 1412 – SEGMENT REPORTING

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.

The Banking, Retail Mortgage, Warehouse Lending, SBA and Premium Finance Divisions are managed as separate business units because 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.

The following tables present selected financial information with respect to the Company’s reportable business segments for the three and nine months ended September 30, ~~2019~~2020 and ~~2018:~~2019:


	Three Months Ended September 30, 2019															Three Months Ended September 30, 2020
(dollars in thousands)	Banking Division			Retail Mortgage Division		Warehouse Lending Division		SBA Division			Premium Finance Division		Total		(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 income	$	123,593	$	31,040	$	6,844	$	10,958	$	7,499	$	179,934
Interest expense	17,368			14,132		2,617		1,793			3,682		39,592		Interest expense	4,031		10,647		298		1,992		428		17,396
Net interest income	124,262			13,009		3,169		2,573			5,756		148,769		Net interest income	119,562		20,393		6,546		8,966		7,071		162,538
Provision for loan losses	3,549			1,490		—		(15		)	965		5,989
Provision for credit losses															Provision for credit losses	487		15,051		495		4,297		(2,648)		17,682
Noninterest income	21,173			52,493		560		2,766			1		76,993		Noninterest income	15,265		137,583		1,064		5,106		0		159,018
Noninterest expense															Noninterest expense
Salaries and employee benefits	39,794			34,144		286		1,985			1,424		77,633		Salaries and employee benefits	39,718		53,500		266		1,572		1,642		96,698
Equipment and occupancy expenses	10,750			1,686		2		66			135		12,639		Equipment and occupancy expenses	11,955		1,676		1		97		76		13,805
Data processing and telecommunications expenses	9,551			660		41		22			98		10,372		Data processing and telecommunications expenses	9,716		2,349		73		4		84		12,226
Other expenses	87,059			3,484		27		503			980		92,053		Other expenses	21,517		7,889		28		595		934		30,963
Total noninterest expense	147,154			39,974		356		2,576			2,637		192,697		Total noninterest expense	82,906		65,414		368		2,268		2,736		153,692
Income before income tax expense	(5,268		)	24,038		3,373		2,778			2,155		27,076		Income before income tax expense	51,434		77,511		6,747		7,507		6,983		150,182
Income tax expense	(1,269		)	5,048		708		584			621		5,692		Income tax expense	13,453		16,112		1,431		1,577		1,464		34,037
Net income	$	(3,999	)	$	18,990	$	2,665	$	2,194		$	1,534	$	21,384	Net income	$	37,981	$	61,399	$	5,316	$	5,930	$	5,519	$	116,145

Total assets	$	13,031,554		$	3,156,895	$	564,297	$	262,719		$	748,812	$	17,764,277	Total assets	$	13,098,562	$	3,632,999	$	1,002,027	$	1,338,794	$	801,469	$	19,873,851
Goodwill	846,990			—		—		—			64,498		911,488		Goodwill	863,507		0		0		0		64,498		928,005
Other intangible assets, net	78,728			—		—		—			18,600		97,328		Other intangible assets, net	60,568		0		0		0		15,596		76,164

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, 2019													Three Months Ended September 30, 2019
(dollars in thousands)	Banking Division		Retail Mortgage Division		Warehouse Lending Division		SBA Division		Premium Finance Division		Total		(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 income	$	141,630	$	27,141	$	5,786	$	4,366	$	9,438	$	188,361
Interest expense	44,340		26,957		7,294		3,986		9,926		92,503		Interest expense	17,368		14,132		2,617		1,793		3,682		39,592
Net interest income	294,056		26,329		8,846		4,841		15,743		349,815		Net interest income	124,262		13,009		3,169		2,573		5,756		148,769
Provision for loan losses	7,913		2,235		—		394		3,523		14,065
Provision for credit losses													Provision for credit losses	3,549		1,490		0		(15)		965		5,989
Noninterest income	50,373		84,853		1,389		6,379		6		143,000		Noninterest income	21,173		52,493		560		2,766		1		76,993
Noninterest expense													Noninterest expense
Salaries and employee benefits	91,954		54,237		609		3,447		4,049		154,296		Salaries and employee benefits	39,794		34,144		286		1,985		1,424		77,633
Equipment and occupancy expenses	25,065		3,122		4		190		296		28,677		Equipment and occupancy expenses	10,750		1,686		2		66		135		12,639
Data processing and telecommunications expenses	24,778		1,384		109		27		853		27,151		Data processing and telecommunications expenses	9,551		660		41		22		98		10,372
Other expenses	126,743		7,983		170		1,249		3,104		139,249		Other expenses	87,059		3,484		27		503		980		92,053
Total noninterest expense	268,540		66,726		892		4,913		8,302		349,373		Total noninterest expense	147,154		39,974		356		2,576		2,637		192,697
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
Income (loss) before income tax expense													Income (loss) before income tax expense	(5,268)		24,038		3,373		2,778		2,155		27,076
Income tax expense (benefit)													Income tax expense (benefit)	(1,269)		5,048		708		584		621		5,692
Net income (loss)													Net income (loss)	$	(3,999)	$	18,990	$	2,665	$	2,194	$	1,534	$	21,384

Total assets													Total assets	$	13,031,554	$	3,156,895	$	564,297	$	262,719	$	748,812	$	17,764,277
Goodwill													Goodwill	846,990		0		0		0		64,498		911,488
Other intangible assets, net													Other intangible assets, net	78,728		0		0		0		18,600		97,328

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


	Nine Months Ended September 30, 2020
(dollars in thousands)	Banking Division		Retail Mortgage Division		Warehouse Lending Division		SBA Division		Premium Finance Division		Total
Interest income	$	384,547	$	99,165	$	16,979	$	23,443	$	23,586	$	547,720
Interest expense	26,280		36,714		2,105		5,262		3,062		73,423
Net interest income	358,267		62,451		14,874		18,181		20,524		474,297
Provision for credit losses	123,289		17,471		889		5,716		(475)		146,890
Noninterest income	47,506		276,147		2,751		7,953		0		334,357
Noninterest expense
Salaries and employee benefits	121,762		134,600		685		5,660		5,105		267,812
Equipment and occupancy expenses	33,981		5,133		3		291		232		39,640
Data processing and telecommunications expenses	29,432		4,741		169		32		320		34,694
Other expenses	80,159		20,713		150		1,469		2,876		105,367
Total noninterest expense	265,334		165,187		1,007		7,452		8,533		447,513
Income before income tax expense	17,150		155,940		15,729		12,966		12,466		214,251
Income tax expense	5,146		32,751		3,317		2,723		2,611		46,548
Net income	$	12,004	$	123,189	$	12,412	$	10,243	$	9,855	$	167,703


	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 credit losses	7,913		2,235		0		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

NOTE 13 – LOAN SERVICING RIGHTS

The Company sells certain residential mortgage loans and SBA loans to third parties. All such transfers are accounted for as sales and the continuing involvement in the loans sold is limited to certain servicing responsibilities. The Company has also acquired portfolios of residential mortgage, SBA and indirect automobile loans serviced for others. Loan servicing rights are initially recorded at fair value and subsequently recorded at the lower of cost or fair value and are amortized over the remaining service life of the loans, with consideration given to prepayment assumptions. Loan servicing rights are recorded in other assets on the consolidated balance sheets. The carrying value of the loan servicing rights assets is shown in the table below:


(dollars in thousands)	September 30, 2020		December 31, 2019
Loan Servicing Rights
Residential mortgage	$	114,396	$	94,902
SBA	6,062		7,886
Indirect automobile	117		247
Total loan servicing rights	$	120,575	$	103,035

Residential Mortgage Loans

The Company sells certain first-lien residential mortgage loans to third party investors, primarily Federal National Mortgage Association (“FNMA”), Government National Mortgage Association (“GNMA”), and Federal Home Loan Mortgage Corporation (“FHLMC”). The Company retains the related mortgage servicing rights (“MSRs”) and receives servicing fees on certain of these loans. The net gain on loan sales, MSRs amortization and recoveries/impairment, and ongoing servicing fees on the portfolio of loans serviced for others are recorded in the consolidated statements of income and comprehensive income as part of mortgage banking activity.

During the three- and nine-months ended September 30, 2020, the Company recorded servicing fee income of $8.3 million and $21.4 million, respectively. During the three- and nine-months ended September 30, 2019, the Company recorded servicing fee income of $5.9 million and $7.7 million, respectively. Servicing fee income includes servicing fees, late fees and ancillary fees earned for each period.

The table below is an analysis of the activity in the Company’s MSRs and impairment:


	Three Months Ended September 30,				Nine Months Ended September 30,
(dollars in thousands)	2020		2019		2020		2019
Residential mortgage servicing rights
Beginning carrying value, net	$	91,381	$	11,185	$	94,902	$	11,814
Additions	30,376		4,962		65,735		6,661
Addition due to acquisition	0		78,855		0		78,855
Amortization	(6,231)		(3,564)		(16,084)		(4,432)
(Impairment)/recoveries	(1,130)		1,460		(30,157)		0
Ending carrying value, net	$	114,396	$	92,898	$	114,396	$	92,898


	Three Months Ended September 30,				Nine Months Ended September 30,
(dollars in thousands)	2020		2019		2020		2019
Residential mortgage servicing impairment
Beginning balance	$	29,131	$	1,460	$	104	$	0
Additions	1,130		0		30,157		0
Recoveries	0		(1,460)		0		0
Ending balance	$	30,261	$	0	$	30,261	$	0

The fair value of MSRs, key metrics, and the sensitivity of the fair value to adverse changes in model inputs and/or assumptions are summarized below:


(dollars in thousands)	September 30, 2020			December 31, 2019
Residential mortgage servicing rights
Unpaid principal balance of loans serviced for others	$	12,185,383		$	8,469,600
Composition of residential loans serviced for others:
FHLMC	21.97		%	25.87		%
FNMA	62.89		%	65.35		%
GNMA	15.14		%	8.78		%
Total	100.00		%	100.00		%
Weighted average term (months)	341			341
Weighted average age (months)	23			33
Modeled prepayment speed	21.03		%	14.41		%
Decline in fair value due to a 10% adverse change	(6,249)			(4,455)
Decline in fair value due to a 20% adverse change	(11,924)			(8,520)
Weighted average discount rate	9.67		%	9.49		%
Decline in fair value due to a 10% adverse change	(3,861)			(3,557)
Decline in fair value due to a 20% adverse change	(7,154)			(6,810)

SBA Loans

All sales of SBA loans, consisting of the guaranteed portion, are executed on a servicing retained basis. These loans, which are partially guaranteed by the SBA, are generally secured by business property such as real estate, inventory, equipment and accounts receivable. The net gain on SBA loan sales, amortization and impairment/recoveries of servicing rights, and ongoing servicing fees are recorded in the consolidated statements of income and comprehensive income as part of other noninterest income.

During the three- and nine-months ended September 30, 2020, the Company recorded servicing fee income of $1.1 million and $3.3 million, respectively. During the three- and nine-months ended September 30, 2019, the Company recorded servicing fee income of $1.2 million and $2.4 million, respectively. Servicing fee income includes servicing fees, late fees and ancillary fees earned for each period.

The table below is an analysis of the activity in the Company’s SBA loan servicing rights and impairment:


	Three Months Ended September 30,				Nine Months Ended September 30,
(dollars in thousands)	2020		2019		2020		2019
SBA servicing rights
Beginning carrying value, net	$	5,241	$	3,110	$	7,886	$	3,012
Additions	499		155		974		783
Addition due to acquisition	0		5,242		0		5,242
Purchase accounting adjustment	0		0		(1,214)		0
Amortization	(396)		(167)		(1,175)		(556)
(Impairment)/recovery	718		0		(409)		(141)
Ending carrying value, net	$	6,062	$	8,340	$	6,062	$	8,340


	Three Months Ended September 30,				Nine Months Ended September 30,
(dollars in thousands)	2020		2019		2020		2019
SBA servicing impairment
Beginning balance	$	1,268	$	0	$	141	$	0
Additions	0		141		409		141
Recoveries	(718)		0		0		0
Ending balance	$	550	$	141	$	550	$	141


(dollars in thousands)	September 30, 2020			December 31, 2019
SBA servicing rights
Unpaid principal balance of loans serviced for others	$	347,964		$	339,247
Weighted average life (in years)	3.37			3.81
Modeled prepayment speed	19.68		%	17.86		%
Decline in fair value due to a 10% adverse change	(391)			(299)
Decline in fair value due to a 20% adverse change	(739)			(570)
Weighted average discount rate	6.61		%	11.47		%
Decline in fair value due to a 100 basis point adverse change	(169)			(144)
Decline in fair value due to a 200 basis point adverse change	(329)			(280)

Indirect Automobile Loans

The Company acquired a portfolio of indirect automobile loans serviced for others. These loans, or portions of loans, were sold on a servicing retained basis. Amortization and impairment/recoveries of servicing rights, and ongoing servicing fees are recorded in the consolidated statements of income and comprehensive income as part of other noninterest income. The Company is not actively originating or selling indirect automobile loans.


	Three Months Ended September 30,				Nine Months Ended September 30,
(dollars in thousands)	2020		2019		2020		2019
Indirect automobile servicing rights
Beginning carrying value, net	$	162	$	0	$	247	$	0
Addition due to acquisition	0		777		0		777
Amortization	(45)		(125)		(130)		(125)

Ending carrying value, net	$	117	$	652	$	117	$	652

During the three- and nine-months ended September 30, 2020, the Company recorded servicing fee income of $259,000 and $1.5 million, respectively. During the three- and nine-months ended September 30, 2019, the Company recorded servicing fee income of $1.1 million. Servicing fee income includes servicing fees, late fees and ancillary fees earned for each period.

NOTE 14 – GOODWILL

The Company has goodwill at its Banking Division and Premium Finance Division (collectively "the divisions"). The carrying value of goodwill at the Banking Division was $863.5 million and $867.1 million at September 30, 2020 and December 31, 2019, respectively. The carrying value of goodwill at the Premium Finance Division was $64.5 million at both September 30, 2020 and December 31, 2019. The Company performs its annual impairment test at December 31 of each year and more frequently if a triggering event occurs. At December 31, 2019, the Company performed a qualitative assessment of goodwill at the divisions and determined it was more likely than not that the reporting unit's fair value exceeded its carrying value. The Company performed an interim qualitative assessment at March 31, 2020 considering the decline in the Company's stock price relative to book value and the impact of COVID-19 on the economy and determined that it was more likely than not that the reporting units fair values exceeded their carrying value.

During the second quarter of 2020, the Company assessed the indicators of goodwill impairment and determined a triggering event had occurred. Triggering events included sustained decline in the Company's share price, the impact of COVID-19 on the economy and low interest rate environment. The Company performed a quantitative analysis of goodwill at the divisions as of May 31, 2020. The Premium Finance Division was measured utilizing a discounted cash flow approach. The Banking Division was measured using multiple approaches. The primary approach for the Banking Division was the discounted cash flow approach, and the Company also used a market approach comparing to similar public companies' multiples and control premiums from transactions during prior distressed periods. The results from each of the primary approaches showed valuation of the reporting unit in excess of carrying value at May 31, 2020. The discounted cash flow approach for the Premium Finance Division resulted in a fair value approximately 11% higher than its carrying value. The discounted cash flow approach for the Banking Division indicated a fair value approximately 42% higher than its carrying value, and the market approach indicated a fair value approximately 5% higher than its carrying value. Economic conditions and forecasted results through June 30, 2020 were materially consistent with those modeled at May 31, 2020, and therefore, management determined no impairment existed at June 30, 2020.

At September 30, 2020, the Company performed an interim qualitative assessment and determined that it was more likely than not that the reporting units fair values exceeded their carrying values.

Each of the valuation methods used by the Company requires significant assumptions. Depending on the specific method, assumptions are made regarding growth rates, discount rates for cash flows, control premiums, and selected multiples. Changes to any of the assumptions could result in significantly different results.

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~~fluctuations; movements in interest ~~rates;~~rates and our expectations regarding net interest margin; expectations on credit quality and performance; competitive pressures on product pricing and services; legislative and regulatory ~~initiatives;~~changes; 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; our outlook and long-term goals for future growth; weather events, natural disasters, geopolitical events, public health crises and other catastrophic events; and other factors discussed in our filings with the SEC under the Exchange Act.

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

Overview

The following is 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,~~2020, as compared with December 31, ~~2018,~~2019, and operating results for the three- and nine-month periods ended September 30, ~~2019~~2020 and ~~2018.~~2019. 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”).~~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, 2019 and 2018.~~quarters. 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,															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		(in thousands, except share and per share data)	Third Quarter 2020		Second Quarter 2020		First Quarter 2020		Fourth Quarter 2019		Third Quarter 2019		2020		2019
Results of Operations:															Results of Operations:
Net interest income	$	148,769	$	101,651	$	99,395	$	99,554	$	99,038	$	349,815	$	243,838	Net interest income	$	162,538	$	163,814	$	147,945	$	155,351	$	148,769	$	474,297	$	349,815
Net interest income (tax equivalent)	149,896		102,714		100,453		100,633		100,117		353,062		246,847		Net interest income (tax equivalent)	163,949		165,178		149,018		156,454		149,896		478,145		353,062
Provision for loan losses	5,989		4,668		3,408		3,661		2,095		14,065		13,006
Provision for credit losses															Provision for credit losses	17,682		88,161		41,047		5,693		5,989		146,890		14,065
Noninterest income	76,993		35,236		30,771		30,470		30,171		143,000		87,942		Noninterest income	159,018		120,960		54,379		55,113		76,993		334,357		143,000
Noninterest expense	192,697		81,251		75,425		75,810		72,353		349,373		217,837		Noninterest expense	153,692		155,768		138,053		122,564		192,697		447,513		349,373
Income tax expense	5,692		12,064		11,428		7,017		13,317		29,184		23,446		Income tax expense	34,037		8,609		3,902		20,959		5,692		46,548		29,184
Net income available to common shareholders	21,384		38,904		39,905		43,536		41,444		100,193		77,491		Net income available to common shareholders	116,145		32,236		19,322		61,248		21,384		167,703		100,193
Selected Average Balances:															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	Investment securities	$	1,246,860	$	1,382,699	$	1,456,462	$	1,514,494	$	1,592,005	$	1,361,586	$	1,362,004
Loans held for sale	856,572		154,707		101,521		129,664		151,396		373,699		143,848		Loans held for sale	1,507,481		1,614,080		1,587,131		1,537,648		856,572		1,569,337		373,699
Loans	7,514,821		6,370,860		5,867,037		5,819,684		5,703,921		6,587,916		5,277,108		Loans	14,688,317		13,915,406		12,712,997		12,697,912		12,677,063		13,772,102		9,982,560
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		Earning assets	17,930,099		17,334,983		16,203,479		16,077,986		15,478,774		17,155,528		12,134,171
Assets	17,340,387		11,625,344		11,423,677		11,307,980		11,204,504		13,483,044		9,217,174		Assets	19,810,084		19,222,181		18,056,445		17,998,494		17,340,387		19,045,028		13,483,044
Deposits	13,520,926		9,739,892		9,577,574		9,452,944		8,962,170		10,960,575		7,327,179		Deposits	15,799,774		14,890,348		13,702,332		13,903,846		13,520,926		14,801,144		10,960,575
Shareholders’ equity	2,432,182		1,519,598		1,478,462		1,428,341		1,395,479		1,813,575		1,094,233		Shareholders’ equity	2,529,471		2,478,373		2,456,617		2,437,272		2,432,182		2,500,689		1,813,575
Period-End Balances:															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	Investment securities	$	1,164,765	$	1,315,349	$	1,434,794	$	1,470,322	$	1,558,128	$	1,164,765	$	1,558,128
Loans held for sale	1,187,551		261,073		112,070		111,298		130,179		1,187,551		130,179		Loans held for sale	1,414,889		1,736,397		1,398,229		1,656,711		1,187,551		1,414,889		1,187,551
Loans	7,208,816		6,522,448		5,756,358		5,660,457		5,543,306		7,208,816		5,543,306		Loans	14,943,593		14,503,157		13,094,106		12,818,476		12,826,284		14,943,593		12,826,284
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		Earning assets	18,018,261		17,983,712		16,324,222		16,321,373		15,858,175		18,018,261		15,858,175
Total assets	17,764,277		11,889,336		11,656,275		11,443,515		11,428,994		17,764,277		11,428,994		Total assets	19,873,851		19,872,629		18,224,548		18,242,579		17,764,277		19,873,851		17,764,277
Deposits	13,659,594		9,582,370		9,800,875		9,649,313		9,181,363		13,659,594		9,181,363		Deposits	16,063,806		15,589,818		13,844,618		14,027,073		13,659,594		16,063,806		13,659,594
Shareholders’ equity	2,420,723		1,537,121		1,495,584		1,456,347		1,404,977		2,420,723		1,404,977		Shareholders’ equity	2,564,683		2,460,130		2,437,150		2,469,582		2,420,723		2,564,683		2,420,723
Per Common Share Data:															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 - basic	$	1.68	$	0.47	$	0.28	$	0.88	$	0.31	$	2.42	$	1.83
Earnings per share - diluted	$	0.31	$	0.82	$	0.84	$	0.91	$	0.87	$	1.83	$	1.85	Earnings per share - diluted	$	1.67	$	0.47	$	0.28	$	0.88	$	0.31	$	2.42	$	1.83
Book value per common share	$	34.78	$	32.52	$	31.43	$	30.66	$	29.58	$	34.78	$	29.58	Book value per common share	$	36.91	$	35.42	$	35.10	$	35.53	$	34.78	$	36.91	$	34.78
Tangible book value per common share	$	20.29	$	20.81	$	19.73	$	18.83	$	17.78	$	20.29	$	17.78	Tangible book value per common share	$	22.46	$	20.90	$	20.44	$	20.81	$	20.29	$	22.46	$	20.29
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		End of period shares outstanding	69,490,546		69,462,782		69,441,274		69,503,833		69,593,833		69,490,546		69,593,833


																Nine Months Ended September 30,
(in thousands, except share and per share data)	Third Quarter 2020			Second Quarter 2020			First Quarter 2020			Fourth Quarter 2019			Third Quarter 2019			2020			2019
Weighted Average Shares Outstanding:
Basic	69,230,667			69,191,778			69,247,661			69,429,193			69,372,125			69,243,280			54,762,216
Diluted	69,346,141			69,292,972			69,502,022			69,683,999			69,600,499			69,403,104			54,883,122
Market Price:
High intraday price	$	27.81		$	29.82		$	43.79		$	44.90		$	40.65		$	43.79		$	42.01
Low intraday price	$	19.91		$	17.12		$	17.89		$	38.34		$	33.71		$	17.12		$	31.27
Closing price for quarter	$	22.78		$	23.59		$	23.76		$	42.54		$	40.24		$	22.78		$	40.24
Average daily trading volume	359,059			470,151			461,692			353,783			461,289			429,758			401,050
Cash dividends declared per share	$	0.15		$	0.15		$	0.15		$	0.15		$	0.15		$	0.45		$	0.35
Closing price to book value	0.62			0.67			0.68			1.20			1.16			0.62			1.16
Performance Ratios:
Return on average assets	2.33		%	0.67		%	0.43		%	1.35		%	0.49		%	1.18		%	0.99		%
Return on average common equity	18.27		%	5.23		%	3.16		%	9.97		%	3.49		%	8.96		%	7.39		%
Average loans to average deposits	102.51		%	104.29		%	104.36		%	102.39		%	100.09		%	103.65		%	94.49		%
Average equity to average assets	12.77		%	12.89		%	13.61		%	13.54		%	14.03		%	13.13		%	13.45		%
Net interest margin (tax equivalent)	3.64		%	3.83		%	3.70		%	3.86		%	3.84		%	3.72		%	3.89		%
Efficiency ratio	47.80		%	54.70		%	68.23		%	58.24		%	85.35		%	55.34		%	70.89		%

Non-GAAP Measures Reconciliation -
Tangible book value per common share:
Total shareholders’ equity	$	2,564,683		$	2,460,130		$	2,437,150		$	2,469,582		$	2,420,723		$	2,564,683		$	2,420,723
Less:
Goodwill	928,005			928,005			931,947			931,637			911,488			928,005			911,488
Other intangible assets, net	76,164			80,354			85,955			91,586			97,328			76,164			97,328
Tangible common equity	$	1,560,514		$	1,451,771		$	1,419,248		$	1,446,359		$	1,411,907		$	1,560,514		$	1,411,907
End of period shares outstanding	69,490,546			69,462,782			69,441,274			69,503,833			69,593,833			69,490,546			69,593,833
Book value per common share	$	36.91		$	35.42		$	35.10		$	35.53		$	34.78		$	36.91		$	34.78
Tangible book value per common share	22.46			20.90			20.44			20.81			20.29			22.46			20.29

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

Fidelity Acquisition

~~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~~$4.76 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.

CECL Adoption

On January 1, 2020, the Company adopted ASC Topic 326 which replaces the current incurred loss approach for measuring credit losses with an expected loss model, referred to the current expected credit loss ("CECL") model. CECL applies to financial assets subject to credit losses and measured at amortized cost and certain off-balance-sheet credit exposures, which include, but are not limited to, loans, leases, held-to-maturity securities, loan commitments and financial guarantees. The adoption of this guidance resulted in an increase of the allowance for credit losses of $78.7 million, an increase in the allowance for unfunded commitments of $12.7 million and a reduction of retained earnings of $56.7 million, net of the increase in deferred tax assets of $19.0 million.

Impact and Response to the COVID-19 Pandemic

The Company has locations and personnel in multiple states. Many of these states have intermittently placed significant restrictions on companies and individuals since March 2020 as a result of the COVID-19 pandemic. As a financial institution, we are considered an essential business and therefore continue to operate on a modified basis to comply with governmental restrictions and public health guidelines. All branch drive thru facilities remain open, certain of our branch lobbies have reopened and the remaining are available by appointment only and ATMs are available. Online and mobile banking platforms are also available to serve our customers. Much of our workforce has transitioned to working remotely and those remaining in our offices are appropriately spaced.

At the same time, the Company enacted its disaster relief program, which allows 90-day extensions for borrowers impacted by the COVID-19 outbreak. During the nine months ended September 30, 2020, the Company modified $2.71 billion in loans under its disaster relief program. Additionally, the Company participated in the SBA's PPP program and approximately $1.1 billion in loans under the program were outstanding at September 30, 2020. These loans bear interest at 1% and have two or five-year terms, depending on the date of origination. These loans also earn an origination fee of 1% to 5%, depending on the loan size, that is deferred and amortized over the estimated life of the loan using the effective yield method.

The COVID-19 pandemic materially impacted the allowance for credit losses and related provision for credit losses during the first nine months of 2020. Updated economic forecasts during the reasonable and supportable forecast period showed, among other things, a significant decline in expected GDP and an increase in expected unemployment rates relative to those at the adoption of CECL. More recent forecasts have begun to show moderate improvement compared with the June 30, 2020 forecast. These factors were the primary drivers of the Company's $146.9 million provision for credit losses during the first nine months of 2020. Additionally, the Company incurred $3.1 million in incremental expenses related to the COVID-19 pandemic primarily for additional sanitizing of our locations and “thank you” pay for certain of our employees who are unable to work remotely.

Critical Accounting Policies

There have been no significant changes to our critical accounting policies from those disclosed in our 2019 Annual Report on Form 10-K, as amended, except as described below related to the adoption of CECL. The reader should refer to the notes to our consolidated financial statements in our 2019 Annual Report on Form 10-K, as amended, for a full disclosure of all critical accounting policies.

Allowance for Credit Losses

The allowance for credit losses ("ACL") is a valuation allowance estimated at each balance sheet date in accordance with GAAP that is deducted from financial assets measured at amortized cost to present the net amount expected to be collected on those assets. Management uses a systematic methodology to determine its ACL for loans and certain off-balance-sheet credit exposures. Management considers relevant information including past events, current conditions, and reasonable and supportable forecasts on the collectability of the loan portfolio. The Company’s estimate of its ACL involves a high degree of judgment; therefore, management’s process for determining expected credit losses may result in a range of expected credit losses. It is possible that others, given the same information, may at any point in time reach a different reasonable conclusion. The Company’s ACL recorded in the balance sheet reflects management’s best estimate within the range of expected credit losses. The Company recognizes in the consolidated statements of income and comprehensive income the amount needed to adjust the ACL for management’s current estimate of expected credit losses. See Note 1 - Basis of Presentation and Accounting Policies in this Quarterly Report on Form 10-Q for further detailed descriptions of our estimation process and methodology related to the ACL. See also Note 4 — Loans in this Quarterly Report on Form 10-Q, “Loans and Allowance for Credit Losses” in this Item 2.

Results of Operations for the Three Months Ended September 30, ~~2019~~2020 and ~~2018~~2019

Consolidated Earnings and Profitability

Ameris reported net income available to common shareholders of $116.1 million, or $1.67 per diluted share, for the quarter ended September 30, 2020, compared with $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.~~2019. The Company’s return on average assets and average shareholders’ equity were 2.33% and 18.27%, respectively, in the third quarter of 2020, compared with 0.49% and 3.49%, respectively, in the third quarter of ~~2019, compared with 1.47% and 11.78%, respectively, in~~2019. During the third quarter of ~~2018.~~2020, the Company recorded pre-tax merger and conversion charges of $(44,000), pre-tax restructuring charges related to branch consolidations and efficiency initiatives of $50,000, pre-tax servicing right impairment of $412,000, pre-tax gain on bank owned life insurance ("BOLI") proceeds of $103,000, pre-tax expenses related to SEC and DOJ investigation of $268,000, pre-tax expenses related to the COVID-19 pandemic of $470,000 and pre-tax gains on the sale of premises of $97,000. 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")~~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,~~adjustment items, the Company’s net income would have been $116.9 million, or $1.69 per diluted share, for the third quarter of 2020 and $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.~~2019.

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)	2020		2019
Net income available to common shareholders	$	116,145	$	21,384
Adjustment items:
Merger and conversion charges	(44)		65,158

Restructuring charge	50		—
Servicing right impairment (recovery)	412		(1,319)
Gain on BOLI proceeds	(103)		(4,335)
Expenses related to SEC and DOJ investigation	268		—
Natural disaster and pandemic expenses	470		—
(Gain) loss on the sale of premises	(97)		889
Tax effect of adjustment items (Note 1)	(222)		(13,238)
After tax adjustment items	734		47,155
Adjusted net income	$	116,879	$	68,539

Weighted average common shares outstanding - diluted	69,346,141		69,600,499
Net income per diluted share	$	1.67	$	0.31
Adjusted net income per diluted share	$	1.69	$	0.98

Note 1: A portion of the merger and conversion charges for the three months ended September 30, 2019 are nondeductible for tax purposes.

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.

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 ~~2019~~2020 and ~~2018,~~2019, respectively:


	Three Months Ended September 30, 2020
(dollars in thousands)	Banking Division		Retail Mortgage Division		Warehouse Lending Division		SBA Division		Premium Finance Division		Total
Interest income	$	123,593	$	31,040	$	6,844	$	10,958	$	7,499	$	179,934
Interest expense	4,031		10,647		298		1,992		428		17,396
Net interest income	119,562		20,393		6,546		8,966		7,071		162,538
Provision for credit losses	487		15,051		495		4,297		(2,648)		17,682
Noninterest income	15,265		137,583		1,064		5,106		—		159,018
Noninterest expense
Salaries and employee benefits	39,718		53,500		266		1,572		1,642		96,698
Equipment and occupancy expenses	11,955		1,676		1		97		76		13,805
Data processing and telecommunications expenses	9,716		2,349		73		4		84		12,226
Other expenses	21,517		7,889		28		595		934		30,963
Total noninterest expense	82,906		65,414		368		2,268		2,736		153,692
Income before income tax expense	51,434		77,511		6,747		7,507		6,983		150,182
Income tax expense	13,453		16,112		1,431		1,577		1,464		34,037
Net income	$	37,981	$	61,399	$	5,316	$	5,930	$	5,519	$	116,145

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													Three Months Ended September 30, 2019
(dollars in thousands)	Banking Division		Retail Mortgage Division		Warehouse Lending Division		SBA Division		Premium Finance Division		Total		(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 income	$	141,630	$	27,141	$	5,786	$	4,366	$	9,438	$	188,361
Interest expense	13,241		3,803		1,566		631		2,840		22,081		Interest expense	17,368		14,132		2,617		1,793		3,682		39,592
Net interest income	84,041		5,544		2,469		1,459		5,525		99,038		Net interest income	124,262		13,009		3,169		2,573		5,756		148,769
Provision for loan losses	1,229		122		—		41		703		2,095
Provision for credit losses													Provision for credit losses	3,549		1,490		—		(15)		965		5,989
Noninterest income	16,524		12,097		503		1,045		2		30,171		Noninterest income	21,173		52,493		560		2,766		1		76,993
Noninterest expense													Noninterest expense
Salaries and employee benefits	26,120		10,061		136		650		1,447		38,414		Salaries and employee benefits	39,794		34,144		286		1,985		1,424		77,633
Equipment and occupancy expenses	7,871		618		2		58		49		8,598		Equipment and occupancy expenses	10,750		1,686		2		66		135		12,639
Data processing and telecommunications expenses	7,589		347		30		1		551		8,518		Data processing and telecommunications expenses	9,551		660		41		22		98		10,372
Other expenses	13,461		1,828		69		242		1,223		16,823		Other expenses	87,059		3,484		27		503		980		92,053
Total noninterest expense	55,041		12,854		237		951		3,270		72,353		Total noninterest expense	147,154		39,974		356		2,576		2,637		192,697
Income before income tax expense	44,295		4,665		2,735		1,512		1,554		54,761		Income before income tax expense	(5,268)		24,038		3,373		2,778		2,155		27,076
Income tax expense	11,156		943		574		317		327		13,317		Income tax expense	(1,269)		5,048		708		584		621		5,692
Net income	$	33,139	$	3,722	$	2,161	$	1,195	$	1,227	$	41,444	Net income	$	(3,999)	$	18,990	$	2,665	$	2,194	$	1,534	$	21,384

Net Interest Income and Margins

The following table sets forth the average balance, interest income or interest expense, and average ~~yield/~~interest 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~~2020 and ~~2018.~~2019. Federally tax-exempt income is presented on a taxable-equivalent basis assuming a 21% federal tax rate.


	Quarter Ended September 30,											Quarter Ended September 30,
	2019					2018						2020					2019
(dollars in thousands)	Average Balance		Interest Income/ Expense		Average Yield/ Rate Paid	Average Balance		Interest Income/ Expense		Average Yield/ Rate Paid	(dollars in thousands)	Average Balance		Interest Income/ Expense		Average Yield/ Rate Paid	Average Balance		Interest Income/ Expense		Average Yield/ Rate Paid
Assets											Assets
Interest-earning 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%	Federal funds sold, interest-bearing deposits in banks, and time deposits in other banks	$	487,441	$	166	0.14%	$	353,134	$	1,793	2.01%
Investment securities	1,592,005		11,567		2.88%	1,185,225		9,050		3.03%	Investment securities	1,246,860		7,462		2.38%	1,592,005		11,567		2.88%
Loans held for sale	856,572		7,889		3.65%	151,396		1,566		4.10%	Loans held for sale	1,507,481		10,365		2.74%	856,572		7,889		3.65%
Loans	7,514,821		108,839		5.75%	5,703,921		73,178		5.09%	Loans	14,688,317		163,352		4.42%	12,677,063		168,239		5.27%
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%	Total interest-earning assets	17,930,099		181,345		4.02%	15,478,774		189,488		4.86%
Noninterest-earning assets	1,861,613					1,066,475					Noninterest-earning assets	1,879,985					1,861,613
Total assets	$	17,340,387				$	11,204,504				Total assets	$	19,810,084				$	17,340,387

Liabilities and Shareholders’ Equity											Liabilities and Shareholders’ Equity
Interest-bearing liabilities:											Interest-bearing liabilities:
Savings and interest-bearing demand deposits	$	6,525,915	$	15,710	0.96%	$	4,430,646	$	7,109	0.64%	Savings and interest-bearing demand deposits	$	7,741,528	$	4,329	0.22%	$	6,525,915	$	15,710	0.96%
Time deposits	2,954,419		13,715		1.84%	2,210,673		8,521		1.53%	Time deposits	2,276,083		7,493		1.31%	2,954,419		13,715		1.84%
Federal funds purchased and securities sold under agreements to repurchase	19,914		32		0.64%	12,529		4		0.13%	Federal funds purchased and securities sold under agreements to repurchase	10,483		9		0.34%	19,914		32		0.64%
FHLB advances	810,384		4,618		2.26%	513,460		2,745		2.12%	FHLB advances	799,034		661		0.33%	810,384		4,618		2.26%
Other borrowings	220,918		3,332		5.98%	145,513		2,180		5.94%	Other borrowings	272,443		3,558		5.20%	220,918		3,332		5.98%
Subordinated deferrable interest debentures	133,519		2,185		6.49%	88,801		1,522		6.80%	Subordinated deferrable interest debentures	123,604		1,346		4.33%	133,519		2,185		6.49%
Total interest-bearing liabilities	10,665,069		39,592		1.47%	7,401,622		22,081		1.18%	Total interest-bearing liabilities	11,223,175		17,396		0.62%	10,665,069		39,592		1.47%
Demand deposits	4,040,592					2,320,851					Demand deposits	5,782,163					4,040,592
Other liabilities	202,544					86,552					Other liabilities	275,275					202,544
Shareholders’ equity	2,432,182					1,395,479					Shareholders’ equity	2,529,471					2,432,182
Total liabilities and shareholders’ equity	$	17,340,387				$	11,204,504				Total liabilities and shareholders’ equity	$	19,810,084				$	17,340,387
Interest rate spread					3.39%					3.60%	Interest rate spread					3.40%					3.39%
Net interest income			$	149,896				$	100,117		Net interest income			$	163,949				$	149,896
Net interest margin					3.84%					3.92%	Net interest margin					3.64%					3.84%

On a tax-equivalent basis, net interest income for the third quarter of ~~2019~~2020 was ~~$149.9~~$163.9 million, an increase of ~~$49.8~~$14.1 million, or ~~49.7%~~9.4%, compared with ~~$100.1~~$149.9 million reported in the same quarter in ~~2018.~~2019. The higher net interest income is a result of growth in average interest earning assets which increased ~~$5.34~~$2.45 billion, or ~~52.7%~~15.8%, from ~~$10.14~~$15.48 billion in the third quarter of ~~2018~~2019 to ~~$15.48~~$17.93 billion for the third quarter of ~~2019.~~2020. This growth in interest earning assets resulted primarily from ~~the Fidelity acquisition occurring in the third quarter of 2019, as well as strong~~organic growth in average ~~legacy~~ loans, ~~which increased $1.81 billion, or 31.7%, to $7.51 billion~~including PPP loans, and strong production in ~~the third quarter 2019 from $5.70 billion in the same period of 2018.~~mortgage. The Company’s net interest margin during the third quarter of ~~2019~~2020 was ~~3.84%~~3.64%, down ~~eight~~20 basis points from ~~3.92%~~3.84% reported in the third quarter of ~~2018.~~2019. Loan production in the lines of business (including retail mortgage, warehouse lending, SBA and premium finance) amounted to $7.7 billion during the third quarter of 2020, with weighted average yields of 3.33%, compared with $4.2 billion and 4.51%, respectively, during the third quarter of 2019. Loan production in the banking division amounted to $870.0 million during the third quarter of 2020 with weighted average yields of 4.00%, compared with $1.2 billion and 5.08%, respectively, during the third quarter of 2019.

Total interest income, on a tax-equivalent basis, ~~increased~~decreased to ~~$189.5~~$181.3 million during the third quarter of ~~2019,~~2020, compared with ~~$122.2~~$189.5 million in the same quarter of ~~2018.~~2019. Yields on earning assets ~~increased~~decreased to ~~4.86%~~4.02% during the third quarter of ~~2019,~~2020, compared with ~~4.78%~~4.86% reported in the third quarter of ~~2018.~~2019. During the third quarter of ~~2019,~~2020, loans comprised ~~87.4%~~90.3% of average earning assets, compared with ~~85.2%~~87.4% in the same quarter of ~~2018.~~2019. Yields on ~~legacy~~ loans ~~increased~~decreased to ~~5.75%~~4.42% in the third quarter of ~~2019,~~2020, compared with ~~5.09%~~5.27% 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~~2020 was ~~$4.2~~$6.5 million, compared with ~~$3.7~~$4.2 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~~decreased from ~~1.18% in the third quarter of 2018 to~~ 1.47% in the third quarter of ~~2019.~~2019 to 0.62% in the third quarter of 2020. Total funding costs, inclusive of noninterest-bearing demand deposits, ~~increased~~decreased to 0.41% in the third quarter of 2020,

compared with 1.07% during the third quarter of 2019. Deposit costs decreased from 0.86% in the third quarter of 2019 ~~compared with 0.90% during the third quarter of 2018. Deposit costs increased from 0.69%~~to 0.30% in the third quarter of ~~2018 to 0.86% in the third quarter of 2019.~~2020. Non-deposit funding costs ~~increased slightly~~decreased from ~~3.37% in the third quarter of 2018 to~~ 3.40% in the third quarter of ~~2019.~~2019 to 1.84% in the third quarter of 2020. The decrease in non-deposit funding costs was driven primarily by a shift in mix to short-term FHLB advances coupled with lower market interest rates being paid on FHLB advances. Average balances of interest bearing deposits and their respective costs for the third quarter of ~~2019~~2020 and ~~2018~~2019 are shown below:


	Three Months Ended September 30, 2019			Three Months Ended September 30, 2018				Three Months Ended September 30, 2020			Three Months Ended September 30, 2019
(dollars in thousands)	Average Balance		Average Cost	Average Balance		Average Cost	(dollars in thousands)	Average Balance		Average Cost	Average Balance		Average Cost
NOW	$	2,049,175	0.55%	$	1,567,111	0.29%	NOW	$	2,718,315	0.20%	$	2,049,175	0.55%
MMDA	3,815,185		1.31%	2,440,086		0.96%	MMDA	4,273,899		0.26%	3,815,185		1.31%
Savings	661,555		0.16%	423,449		0.08%	Savings	749,314		0.06%	661,555		0.16%
Retail CDs	2,804,243		1.83%	1,722,987		1.26%	Retail CDs	2,274,150		1.31%	2,804,243		1.83%
Brokered CDs	150,176		2.14%	487,686		2.48%	Brokered CDs	1,933		1.85%	150,176		2.14%
Interest-bearing deposits	$	9,480,334	1.23%	$	6,641,319	0.93%	Interest-bearing deposits	$	10,017,611	0.47%	$	9,480,334	1.23%

Provision for ~~Loan~~Credit Losses

The Company’s provision for ~~loan~~credit losses during the third quarter of ~~2019~~2020 amounted to ~~$6.0~~$17.7 million, compared with ~~$2.1~~$6.0 million in the third quarter of ~~2018.~~2019. This increase was primarily attributable to an updated economic forecast in our CECL model which reflects the impact of the coronavirus pandemic, including, among other things, a corresponding decrease in forecasted GDP and increase in forecasted unemployment. The provision for credit losses for the third quarter of 2020 was comprised of $26.7 million related to loans and $(10.1) million related to unfunded commitments and $1.1 million related to other credit losses while the $6.0 million recorded for the third quarter of 2019 related solely to loans. At September 30, ~~2019,~~2020, classified loans still accruing ~~decreased~~increased to ~~$78.3~~$146.9 million, compared with ~~$81.9~~$73.9 million at December 31, ~~2018.~~2019. Non-performing assets as a percentage of total assets increased from ~~0.55%~~0.56% at December 31, ~~2018~~2019 to ~~0.73%~~0.82% at September 30, ~~2019.~~2020. The increase in non-performing assets is primarily attributable to an increase in nonaccruing loans as the Company migrated certain residential mortgage loans which completed their extension period and had not been formally modified or brought current at quarter end. Also contributing to the increase in nonperforming assets ~~acquired in~~was one hotel relationship totaling $18.6 million migrating to nonaccrual and TDR status during the ~~Fidelity acquisition.~~quarter. Net charge-offs on ~~legacy~~ loans during the third quarter of ~~2019~~2020 were approximately ~~$1.6~~$3.6 million, or ~~0.09%~~0.10% of average ~~legacy~~ loans on an annualized basis, compared with approximately ~~$6.3~~$2.3 million, or ~~0.44%~~0.07%, 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, 2018.2019. The Company’s total allowance for ~~loan~~credit losses on loans at September 30, ~~2019~~2020 was ~~$35.5~~$231.9 million, or ~~0.28%~~1.55% of total loans, compared with ~~$28.8~~$38.2 million, or ~~0.34%~~0.30% of total loans, at December 31, ~~2018.~~2019. This increase is primarily attributable to the adoption impact of CECL which increased the allowance for credit losses on loans $78.7 million and the provision recorded year-to-date.

Noninterest Income

Total noninterest income for the third quarter of ~~2019~~2020 was ~~$77.0~~$159.0 million, an increase of ~~$46.8~~$82.0 million, or ~~155.2%~~106.5%, from the ~~$30.2~~$77.0 million reported in the third quarter of ~~2018.~~2019. Income from mortgage-related activities was $138.6 million in the third quarter of 2020, an increase of $85.6 million, or 161.4%, from $53.0 million in the third quarter of 2019. Total production in the third quarter of 2020 amounted to $2.92 billion, compared with $1.81 billion in the same quarter of 2019, while spread (gain on sale) increased to 3.92% in the current quarter, compared with 2.67% in the same quarter of 2019. The retail mortgage open pipeline finished the third quarter of 2020 at $2.71 billion, compared with $2.67 billion at June 30, 2020 and $784.2 million at the end of the third quarter of 2019. Service charges on deposit accounts ~~increased $721,000,~~decreased $2.5 million, or ~~5.7%~~18.6%, to $10.9 million in the third quarter of 2020, compared with $13.4 million in the third quarter of ~~2019, compared with $12.7 million in the third quarter of 2018.~~2019. This ~~increase~~decrease in service charges on deposit accounts is due primarily to ~~an increase~~the impact of the Durbin Amendment and a decrease in ~~the number of deposit accounts resulting from the Fidelity acquisition in~~NSF income.

Other noninterest income decreased $1.0 million, or 10.5%, to $8.3 million for 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,2020, 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$9.3 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 2018.2019. The ~~increase~~decrease in other noninterest income was primarily attributable to ~~a $4.3 million~~decreases in gain on BOLI proceeds ~~due to the unfortunate death~~ of ~~a former officer~~$4.2 million and indirect automobile servicing income of ~~Fidelity, a $1.3~~$806,000. These decreases were partially offset by an increase of $1.9 million ~~increase~~ in gain on ~~sale~~sales of SBA loans and ~~an increase~~a decrease of $2.0 million in ~~servicing income from indirect automobile loans~~loss on sale of ~~$1.0 million.~~loans.

Noninterest Expense

Total noninterest expenses for the third quarter of ~~2019 increased $120.3~~2020 decreased $39.0 million, or ~~166.3%~~20.2%, to ~~$192.7~~$153.7 million, compared with ~~$72.4~~$192.7 million in the same quarter ~~2018.~~2019. Salaries and employee benefits increased ~~$39.2~~$19.1 million, or ~~102.1%~~24.6%, from ~~$38.4~~$77.6 million in the third quarter of ~~2018~~2019 to ~~$77.6~~$96.7 million in the third quarter of 2020, due primarily to an increase in variable compensation tied to increased mortgage production of $19.9 million. Occupancy and equipment expenses increased $1.2 million, or 9.2%, to

$13.8 million for the third quarter of 2020, compared with $12.6 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$1.8 million in ~~the third quarter of 2018, due primarily~~lease termination costs related 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 withpreviously announced ~~branch consolidations.~~efficiency initiatives. Data processing and telecommunications expense increased $1.9 million, or ~~21.8%~~17.9%, to ~~$10.4~~$12.2 million in the third quarter of ~~2019,~~2020, 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$10.4 million in the third quarter of 2019, due primarily to variable expenses related to increased mortgage production. Advertising and marketing expense was $1.0 million in the third quarter of 2020, compared with $1.9 million in the third quarter of 2019. Amortization of intangible assets decreased $1.5 million, or 26.7%, from $5.7 million in the third quarter of 2019 to $4.2 million in the third quarter of 2020. Core deposit intangibles are being amortized over an accelerated basis; therefore, the expense recorded will decline over the life of the asset. Merger and conversion charges were $(44,000) in the third quarter of 2020, compared with $65.2 million in the same quarter of 2019. Other noninterest expenses increased $6.9 million, or 38.1%, from $18.1 million in the third quarter of 2019 to $25.0 million in the third quarter of 2020, due primarily to an increase of ~~$885,000~~$2.7 million in ~~the loss on sale~~FDIC insurance, an increase of ~~premises~~$2.9 million in mortgage servicing expenses, and an increase of ~~$1.7 million~~$470,000 in ~~consulting fees~~natural disaster and pandemic charges related to ~~implementation of new support systems.~~the COVID-19 pandemic. 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~~nondeductible expenses. For the third quarter of ~~2019,~~2020, the Company reported income tax expense of ~~$5.7~~$34.0 million, compared with ~~$13.3~~$5.7 million in the same period of ~~2018.~~2019. The Company’s effective tax rate for the three months ending September 30, 2020 and 2019 was 22.7% and ~~2018 was~~ 21.0% ~~and 24.3%~~, respectively. The ~~decrease~~increase in the effective tax rate is primarily ~~related to~~ a ~~non-taxable~~result of decreased nontaxable gain on BOLI proceeds ~~and~~compared with the same period a ~~reduction in the Florida corporate income tax rate partially offset by certain non-deductible merger expenses.~~

year ago.

Results of Operations for the Nine Months Ended September 30, ~~2019~~2020 and ~~2018~~2019

Consolidated Earnings and Profitability

Ameris reported net income available to common shareholders of ~~$100.2~~$167.7 million, or ~~$1.83~~$2.42 per diluted share, for the nine months ended September 30, ~~2019,~~2020, compared with ~~$77.5~~$100.2 million, or ~~$1.85~~$1.83 per diluted share, for the same period in ~~2018.~~2019. The Company’s return on average assets and average shareholders’ equity were ~~0.99%~~1.18% and ~~7.39%~~8.96%, respectively, in the nine months ended September 30, ~~2019,~~2020, compared with ~~1.12%~~0.99% and ~~9.47%~~7.39%, respectively, in the same period in ~~2018.~~2019. During the first nine months of 2020, the Company incurred pre-tax merger and conversion charges of $1.4 million, pre-tax restructuring charges related to branch consolidations and efficiency initiatives of $1.5 million, pre-tax servicing right impairment of $30.6 million, pre-tax gain on BOLI proceeds of $948,000, pre-tax expenses related to SEC and DOJ investigation of $3.0 million, pre-tax expenses related to the COVID-19 pandemic of $3.1 million and pre-tax losses on the sale of premises of $654,000. 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 gain on BOLI proceeds of $4.3 million, 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,adjustment items, the Company’s net income would have been ~~$156.3~~$198.5 million, or ~~$2.85~~$2.86 per diluted share, for the nine months ended September 30, ~~2019~~2020 and ~~$100.3~~$156.3 million, or ~~$2.40~~$2.85 per diluted share, for the same period in ~~2018.~~2019.

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)	2020		2019
Net income available to common shareholders	$	167,703	$	100,193
Adjustment items:
Merger and conversion charges	1,391		70,690

Restructuring charge	1,513		245
Servicing right impairment	30,566		141
Gain on BOLI proceeds	(948)		(4,335)
Expenses related to SEC and DOJ investigation	3,005		—
Natural disaster and pandemic charges	3,061		(39)
Loss on the sale of premises	654		4,608
Tax effect of adjustment items (Note 1)	(8,438)		(15,167)
After tax adjustment items	30,804		56,143
Adjusted net income	$	198,507	$	156,336

Weighted average common shares outstanding - diluted	69,403,104		54,883,122
Net income per diluted share	$	2.42	$	1.83
Adjusted net income per diluted share	$	2.86	$	2.85

Note 1: A portion of the merger and conversion charges for all periods are nondeductible for tax purposes.

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.

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 nine months ended September 30, ~~2019~~2020 and ~~2018,~~2019, respectively:


	Nine Months Ended September 30, 2020
(dollars in thousands)	Banking Division		Retail Mortgage Division		Warehouse Lending Division		SBA Division		Premium Finance Division		Total
Interest income	$	384,547	$	99,165	$	16,979	$	23,443	$	23,586	$	547,720
Interest expense	26,280		36,714		2,105		5,262		3,062		73,423
Net interest income	358,267		62,451		14,874		18,181		20,524		474,297
Provision for loan losses	123,289		17,471		889		5,716		(475)		146,890
Noninterest income	47,506		276,147		2,751		7,953		—		334,357
Noninterest expense
Salaries and employee benefits	121,762		134,600		685		5,660		5,105		267,812
Equipment and occupancy expenses	33,981		5,133		3		291		232		39,640
Data processing and telecommunications expenses	29,432		4,741		169		32		320		34,694
Other expenses	80,159		20,713		150		1,469		2,876		105,367
Total noninterest expense	265,334		165,187		1,007		7,452		8,533		447,513
Income before income tax expense	17,150		155,940		15,729		12,966		12,466		214,251
Income tax expense	5,146		32,751		3,317		2,723		2,611		46,548
Net income	$	12,004	$	123,189	$	12,412	$	10,243	$	9,855	$	167,703

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														Nine Months Ended September 30, 2019
(dollars in thousands)	Banking Division		Retail Mortgage Division		Warehouse Lending Division		SBA Division		Premium Finance Division			Total		(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 income	$	338,396	$	53,286	$	16,140	$	8,827	$	25,669	$	442,318
Interest expense	25,417		8,555		3,778		1,725		7,264			46,739		Interest expense	44,340		26,957		7,294		3,986		9,926		92,503
Net interest income	201,159		15,587		6,650		3,703		16,739			243,838		Net interest income	294,056		26,329		8,846		4,841		15,743		349,815
Provision for loan losses	2,883		585		—		1,025		8,513			13,006		Provision for loan losses	7,913		2,235		—		394		3,523		14,065
Noninterest income	42,910		37,571		1,635		3,764		2,062			87,942		Noninterest income	50,373		84,853		1,389		6,379		6		143,000
Noninterest expense														Noninterest expense
Salaries and employee benefits	74,834		28,667		402		2,010		4,250			110,163		Salaries and employee benefits	91,954		54,237		609		3,447		4,049		154,296
Equipment and occupancy expenses	19,032		1,756		2		171		225			21,186		Equipment and occupancy expenses	25,065		3,122		4		190		296		28,677
Data processing and telecommunications expenses	19,504		1,119		93		19		1,357			22,092		Data processing and telecommunications expenses	24,778		1,384		109		27		853		27,151
Other expenses	54,478		5,337		176		884		3,521			64,396		Other expenses	126,743		7,983		170		1,249		3,104		139,249
Total noninterest expense	167,848		36,879		673		3,084		9,353			217,837		Total noninterest expense	268,540		66,726		892		4,913		8,302		349,373
Income before income tax expense	73,338		15,694		7,612		3,358		935			100,937		Income before income tax expense	67,976		42,221		9,343		5,913		3,924		129,377
Income tax expense	18,114		3,262		1,598		705		(233		)	23,446		Income tax expense	16,197		8,831		1,962		1,242		952		29,184
Net income	$	55,224	$	12,432	$	6,014	$	2,653	$	1,168		$	77,491	Net income	$	51,779	$	33,390	$	7,381	$	4,671	$	2,972	$	100,193

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~~2020 and ~~2018.~~2019. Federally tax-exempt income is presented on a taxable-equivalent basis assuming a 21% federal tax rate.


	Nine Months Ended September 30,											Nine Months Ended September 30,
	2019					2018						2020					2019
(dollars in thousands)	Average Balance		Interest Income/ Expense		Average Yield/ Rate Paid	Average Balance		Interest Income/ Expense		Average Yield/ Rate Paid	(dollars in thousands)	Average Balance		Interest Income/ Expense		Average Yield/ Rate Paid	Average Balance		Interest Income/ Expense		Average Yield/ Rate Paid
Assets											Assets
Interest-earning 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%	Federal funds sold, interest-bearing deposits in banks, and time deposits in other banks	$	452,503	$	1,621	0.48%	$	415,908	$	7,655	2.46%
Investment securities	1,362,004		30,319		2.98%	986,065		21,212		2.88%	Investment securities	1,361,586		27,287		2.68%	1,362,004		30,319		2.98%
Loans held for sale	373,699		10,673		3.82%	143,848		4,091		3.80%	Loans held for sale	1,569,337		38,055		3.24%	373,699		10,673		3.82%
Loans	6,587,916		273,573		5.55%	5,277,108		195,857		4.96%	Loans	13,772,102		484,605		4.70%	9,982,560		396,918		5.32%
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%	Total interest-earning assets	17,155,528		551,568		4.29%	12,134,171		445,565		4.91%
Noninterest-earning assets	1,348,873					814,132					Noninterest-earning assets	1,889,500					1,348,873
Total assets	$	13,483,044				$	9,217,174				Total assets	$	19,045,028				$	13,483,044

Liabilities and Shareholders’ Equity											Liabilities and Shareholders’ Equity
Interest-bearing liabilities:											Interest-bearing liabilities:
Savings and interest-bearing demand deposits	$	5,248,058	$	38,776	0.99%	$	3,861,389	$	16,784	0.58%	Savings and interest-bearing demand deposits	$	7,345,828	$	22,184	0.40%	$	5,248,058	$	38,776	0.99%
Time deposits	2,603,879		35,787		1.84%	1,438,645		13,412		1.25%	Time deposits	2,477,483		28,013		1.51%	2,603,879		35,787		1.84%
Federal funds purchased and securities sold under agreements to repurchase	13,017		45		0.46%	16,036		18		0.15%	Federal funds purchased and securities sold under agreements to repurchase	12,849		74		0.77%	13,017		45		0.46%
FHLB advances	282,622		4,803		2.27%	529,917		7,585		1.91%	FHLB advances	1,091,885		7,456		0.91%	282,622		4,803		2.27%
Other borrowings	170,891		7,769		6.08%	102,713		4,634		6.03%	Other borrowings	270,407		10,556		5.21%	170,891		7,769		6.08%
Subordinated deferrable interest debentures	104,345		5,323		6.82%	86,874		4,306		6.63%	Subordinated deferrable interest debentures	124,814		5,140		5.50%	104,345		5,323		6.82%
Total interest-bearing liabilities	8,422,812		92,503		1.47%	6,035,574		46,739		1.04%	Total interest-bearing liabilities	11,323,266		73,423		0.87%	8,422,812		92,503		1.47%
Demand deposits	3,108,638					2,027,145					Demand deposits	4,977,833					3,108,638
Other liabilities	138,019					60,222					Other liabilities	243,240					138,019
Shareholders’ equity	1,813,575					1,094,233					Shareholders’ equity	2,500,689					1,813,575
Total liabilities and shareholders’ equity	$	13,483,044				$	9,217,174				Total liabilities and shareholders’ equity	$	19,045,028				$	13,483,044
Interest rate spread					3.44%					3.63%	Interest rate spread					3.42%					3.44%
Net interest income			$	353,062				$	246,847		Net interest income			$	478,145				$	353,062
Net interest margin					3.89%					3.93%	Net interest margin					3.72%					3.89%

On a tax-equivalent basis, net interest income for the nine months ended September 30, ~~2019~~2020 was ~~$353.1~~$478.1 million, an increase of ~~$106.2~~$125.1 million, or ~~43.0%~~35.4%, compared with ~~$246.8~~$353.1 million reported in the same period of ~~2018.~~2019. The higher net interest income is a result of growth in average interest earning assets which increased ~~$3.73~~$5.02 billion, or ~~44.4%~~41.4%, 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 to $17.16 billion for the first nine months of 2020. This increase in average interest earning assets resulted primarily from ~~$5.28 billion~~the Fidelity acquisition occurring in the ~~same period~~third quarter of ~~2018.~~2019, as well as organic growth in average loans, including PPP loans, and strong production in mortgage. Average ~~purchased~~ loans increased ~~$1.67~~$3.79 billion, or ~~112.3%~~38.0%, to ~~$3.15~~$13.77 billion in the first nine months of ~~2019~~2020 from ~~$1.48~~$9.98 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.~~2019. The Company’s net interest margin was down ~~slightly~~17 basis points during the first nine months of ~~2019~~2020 to ~~3.89%~~3.72%, compared with ~~3.93%~~3.89% for the first nine months of ~~2018.~~2019.

Total interest income, on a tax-equivalent basis, increased to ~~$445.6~~$551.6 million during the nine months ended September 30, ~~2019,~~2020, compared with ~~$293.6~~$445.6 million in the same period of ~~2018.~~2019. Yields on earning assets ~~increased~~decreased to ~~4.91%~~4.29% during the first nine months of ~~2019,~~2020, compared with ~~4.67%~~4.91% reported in the same period of ~~2018.~~2019. During the first nine months of ~~2019,~~2020, loans comprised ~~85.3%~~89.4% of average earning assets, compared with ~~85.8%~~85.3% in the same period of ~~2018.~~2019. Yields on ~~legacy~~ loans ~~increased~~decreased to ~~5.55%~~4.70% during the nine months ended September 30, 2020, compared with 5.32% in the same period of 2019. Accretion income for the first nine months of 2020 was $22.7 million, compared with $10.2 million in the first nine months of 2019.

The yield on total interest-bearing liabilities decreased from 1.47% during the nine months ended September 30, 2019 ~~compared with 4.96%~~to 0.87% 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.~~2020. Total funding costs, inclusive of noninterest-bearing demand deposits, ~~increased~~decreased to 0.60% in the first nine months of 2020, compared with 1.07% during the same period of 2019. Deposit costs decreased from 0.91% 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%~~0.45% in the same period of ~~2019.~~2020. Non-deposit funding costs ~~increased~~decreased from ~~3.01%~~4.20% in the first

nine months of ~~2018~~2019 to ~~4.20%~~2.07% in the same period of ~~2019.~~2020. The ~~increase~~decrease in non-deposit funding costs was driven primarily by ~~an increase~~a shift in ~~the average balance of other borrowings and subordinated deferrable interest debentures which carry a higher interest rate~~mix to short-term FHLB advances coupled with ~~higher~~lower market interest 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~~2020 and ~~2018~~2019 are shown below:


	Nine Months Ended September 30, 2019			Nine Months Ended September 30, 2018				Nine Months Ended September 30, 2020			Nine Months Ended September 30, 2019
(dollars in thousands)	Average Balance		Average Cost	Average Balance		Average Cost	(dollars in thousands)	Average Balance		Average Cost	Average Balance		Average Cost
NOW	$	1,705,108	0.57%	$	1,406,434	0.31%	NOW	$	2,483,383	0.29%	$	1,705,108	0.57%
MMDA	3,053,272		1.36%	2,122,138		0.84%	MMDA	4,167,207		0.52%	3,053,272		1.36%
Savings	489,678		0.12%	332,817		0.07%	Savings	695,238		0.08%	489,678		0.12%
Retail CDs	2,222,942		1.73%	1,269,586		1.08%	Retail CDs	2,455,833		1.51%	2,222,942		1.73%
Brokered CDs	380,937		2.45%	169,059		2.47%	Brokered CDs	21,650		2.03%	380,937		2.45%
Interest-bearing deposits	$	7,851,937	1.27%	$	5,300,034	0.76%	Interest-bearing deposits	$	9,823,311	0.68%	$	7,851,937	1.27%

Provision for ~~Loan~~Credit Losses

The Company’s provision for ~~loan~~credit losses during the nine months ended September 30, ~~2019~~2020 amounted to ~~$14.1~~$146.9 million, compared with ~~$13.0~~$14.1 million in the nine months ended September 30, ~~2018. Approximately $6.7 million~~2019. This increase was primarily attributable to an updated economic forecast in our CECL model which reflects the impact of the coronavirus pandemic including, among other things, a corresponding decrease in forecasted GDP and increase in forecasted unemployment. The provision for ~~loan~~credit losses ~~recorded during~~for the first nine months ~~ended September 30, 2018~~of 2020 was ~~attributable~~comprised of $132.2 million related to ~~two loan relationships within~~loans, $13.6 million related to unfunded commitments and $1.1 million related to other credit losses while the ~~premium finance division that became impaired during~~$14.1 million recorded for the ~~second quarter of 2018.~~same period in 2019 related solely to loans. At September 30, ~~2019,~~2020, classified loans still accruing ~~decreased~~increased to ~~$78.3~~$146.9 million, compared with ~~$81.9~~$73.9 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%~~0.56% at December 31, ~~2018~~2019 to ~~0.73%~~0.82% at September 30, ~~2019. The increase in non-performing assets is primarily attributable to assets acquired from Fidelity.~~2020. Net charge-offs on ~~legacy~~ loans during the first nine months of ~~2019~~2020 were ~~$7.2~~$17.1 million, or ~~0.15%~~0.17% of average ~~legacy~~ loans on an annualized basis, compared with approximately ~~$11.4~~$7.4 million, or ~~0.29%~~0.10%, 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, 2018.2019. The Company’s total allowance for ~~loan~~credit losses on loans at September 30, ~~2019~~2020 was ~~$35.5~~$231.9 million, or ~~0.28%~~1.55% of total loans, compared with ~~$28.8~~$38.2 million, or ~~0.34%~~0.30% of total loans, at December 31, ~~2018.~~2019. This increase is primarily attributable to the adoption impact of CECL, which resulted in an increase in the allowance for credit losses on loans of $78.7 million and the provision noted above.

Noninterest Income

Total noninterest income for the nine months ended September 30, ~~2019~~2020 was ~~$143.0~~$334.4 million, an increase of ~~$55.1~~$191.4 million, or ~~62.6%~~133.8%, from the ~~$87.9~~$143.0 million reported for the nine months ended September 30, ~~2018.~~2019. Income from mortgage-related activities increased $192.6 million, or 223.4%, from $86.2 million in the first nine months of 2019 to $278.9 million in the same period of 2020.Total production in the first nine months of 2020 amounted to $6.95 billion, compared with $2.75 billion in the same period of 2019, while spread (gain on sale) increased to 3.57% during the nine months ended September 30, 2020, compared with 2.83% in the same period of 2019. The retail mortgage open pipeline was $2.71 billion at September 30, 2020, compared with $1.16 billion at the beginning of 2020 and $784.2 million at September 30, 2019. Mortgage-related activities was negatively impacted during the first nine months of 2020 by a mortgage servicing right impairment of $30.2 million, compared with no such impairment for the same period in 2019. Service charges on deposit accounts in the first nine months of ~~2019 increased $3.7~~2020 decreased $4.5 million, or ~~11.0%~~12.2%, to ~~$37.2~~$32.7 million, compared with ~~$33.5~~$37.2 million in the first nine months of ~~2018.~~2019. This ~~increase~~decrease in service charge revenue was primarily attributable to ~~higher~~lower debit card interchange income ~~and an increase in~~resulting from the ~~number of deposit accounts from organic growth and the Fidelity acquisition.~~Durbin Amendment. ~~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 $3.4 million during the first nine months of 2020, compared with $2.8 million during the first nine months of ~~2019, compared with $2.2 million during the first nine months of 2018.~~2019. Other noninterest income increased ~~$6.1~~$2.8 million, or ~~58.7%~~17.0%, to ~~$16.6~~$19.4 million for the first nine months of ~~2019,~~2020, compared with ~~$10.4~~$16.6 million during the same period of ~~2018.~~2019. The increase in other noninterest income was primarily attributable to ~~a $4.3 million gain on BOLI proceeds resulting from the unfortunate death~~increases of ~~a former officer of Fidelity and a~~ $2.0 million ~~increase~~ in gain on sale of SBA loans, $762,000 in BOLI income and $1.2 million in trust income and a decrease of $2.0 million in loss on sale of loans for the nine months ended September 30, ~~2019~~2020 compared with the same period in ~~2018.~~2019. These increases were partially offset by a decrease in gain on BOLI proceeds of $3.4 million.

Noninterest Expense

Total noninterest expenses for the nine months ended September 30, ~~2019~~2020 increased ~~$131.5~~$98.1 million, or ~~60.4%~~28.1%, to ~~$349.4~~$447.5 million, compared with ~~$217.8~~$349.4 million in the same period of ~~2018.~~2019. Salaries and employee benefits increased ~~$44.1~~$113.5 million, or ~~40.1%~~73.6%, from ~~$110.2~~$154.3 million in the first nine months of ~~2018~~2019 to ~~$154.3~~$267.8 million in the same period of ~~2019~~2020 due to staff additions resulting from the Fidelity acquisition and an increase of $58.4 million in ~~variable incentive pay~~mortgage commissions 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.increases. Occupancy and equipment expenses increased ~~$7.5~~$11.0 million, or ~~35.4%~~38.2%, to ~~$28.7~~$39.6 million for the first nine months of ~~2019,~~2020, compared with ~~$21.2~~$28.7 million in the same period of ~~2018,~~2019, due primarily to 9062 branch locations being added during ~~2018 and~~ 2019 as a result of the ~~Atlantic, Hamilton and~~ Fidelity ~~acquisitions~~acquisition partially offset by branch consolidations ~~during the first nine months of 2019.~~subsequent to acquisition. Data processing and telecommunications expense increased ~~$5.1~~$7.5 million, or ~~22.9%~~27.8%, to ~~$27.2~~$34.7 million in the first nine months of ~~2019,~~2020, from ~~$22.1~~$27.2 million reported in the same period of ~~2018.~~2019. This increase in data processing and telecommunications during the first nine months of ~~2019~~2020 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~~variable expenses related to ~~overcharges on prior billings from a data processing vendor.~~increased mortgage production. Credit resolution-related expenses increased ~~$142,000,~~$1.0 million, or ~~5.0%~~32.4%, from ~~$2.8~~$3.0 million in the first nine months of ~~2018~~2019 to ~~$3.0~~$4.0 million in the same period of ~~2019.~~2020. This increase in credit resolution-related expenses primarily resulted from additional write-downs on OREO properties. Amortization of intangible assets increased ~~$6.1~~$3.5 million, or ~~104.2%~~28.8%, from ~~$5.9 million in the first nine months of 2018 to~~ $12.0 million in the first nine months of 2019 to $15.4 million in the first nine months of 2020, due primarily to additional amortization of intangible assets recorded as part of the ~~Atlantic, Hamilton and~~ Fidelity ~~acquisitions.~~acquisition. Merger and conversion charges were $1.4 million in the first nine months of 2020, compared with $70.7 million in the same period in 2019. Merger and conversion charges for both periods principally related to the Fidelity acquisition. Other noninterest expenses increased $31.9 million, or 66.6%, from $47.9 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~~$79.8 million in the same period of ~~2019~~2020 resulting primarily from ~~increases~~an increase of $7.5 million in ~~consulting~~FDIC insurance, an increase of $4.8 million in legal and other professional fees, ~~related to the implementation~~an increase of ~~a new support system, loss on sale~~$8.2 million in loan servicing expenses, an increase of ~~fixed assets, variable~~$3.1 million in natural disaster and pandemic expenses ~~in our lines of business tied to production levels~~ and an increase in volume in certain areas related to our ~~acquisitions~~acquisition of ~~Hamilton, Atlantic~~Fidelity and ~~Fidelity.~~increased production in our lines of business. These increases were partially offset by a decrease of $3.8 million in loss on sale of fixed assets.

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~~nondeductible expenses. For the nine months ended September 30, ~~2019,~~2020, the Company reported income tax expense of ~~$29.2~~$46.5 million, compared with ~~$23.4~~$29.2 million in the same period of ~~2018.~~2019. The Company’s effective tax rate for the nine months ended September 30, 2020 and 2019 was 21.7% and ~~2018 was~~ 22.6% ~~and 23.2%~~, respectively. The decrease in the effective tax rate is due to loss carrybacks allowed a ~~non-taxable gain on BOLI proceeds, a reduction in~~result of the ~~Florida corporate income tax rate~~recently enacted CARES Act and a reduction in ~~non-deductible executive retirement benefits~~meals and entertainment expenses recognized during ~~2019~~2020 compared with ~~2018.~~

2019.

Financial Condition as of September 30, ~~2019~~2020

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~~Management and the ~~extent to which the fair value has been less than cost, (2) the financial condition~~Company’s Asset and ~~near-term prospects of the issuer and (3) the intent and ability of the Company to retain its investment~~Liability Committee (the “ALCO Committee”) evaluate securities 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~~an unrealized loss position on at least on a quarterly basis, and more frequently when economic or market concerns warrant such ~~evaluation. Substantially all~~evaluation, to determine if credit-related impairment exists.Management first evaluates whether they intend to sell or more likely than not will be required to sell an impaired security before recovering its amortized cost basis.If either criteria is met, the entire amount of unrealized loss is recognized in earnings with a corresponding adjustment to the security's amortized cost basis.If either of the ~~unrealized losses on debt securities are related~~above criteria is not met, management evaluates whether the decline in fair value is attributable to ~~changes in interest rates and do not affect the expected cash flows of the issuer~~credit or ~~underlying collateral. All unrealized losses are considered temporary because each security carries an acceptable investment grade and the~~resulted from other factors. The Company does not intend to sell these investment securities at an unrealized loss position at September 30, ~~2019,~~2020, and it is more likely than not that the Company will

not be required to sell these securities prior to recovery or maturity. ~~Therefore,~~Based on the results of management's review, at September 30, ~~2019, these investments are not considered impaired on an other-than temporary basis.~~2020, management determined that $68,000 was

attributable to credit impairment and increased the allowance for credit losses accordingly. The remaining $481,000 in unrealized loss was determined to be from factors other than credit.

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


	September 30, 2020				December 31, 2019
(dollars in thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
U.S. government sponsored agencies	$	17,184	$	17,604	$	22,246	$	22,362
State, county and municipal securities	84,219		87,648		102,952		105,260
Corporate debt securities	51,659		52,141		51,720		52,999
SBA pool securities	62,204		65,116		73,704		73,912
Mortgage-backed securities	855,083		894,927		1,129,816		1,148,870
Total debt securities	$	1,070,349	$	1,117,436	$	1,380,438	$	1,403,403

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~~2020 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
(dollars in thousands)	Amount		Yield (1)		Amount		Yield (1)(2)		Amount		Yield (1)
One year or less	$	—	—	%	$	14,694	3.35	%	$	—	—	%
After one year through five years	16,452		1.92		26,506		3.72		14,718		2.72
After five years through ten years	1,152		2.16		28,799		3.86		35,735		5.34
After ten years	—		—		17,649		4.45		1,688		4.40
	$	17,604	1.93	%	$	87,648	3.85	%	$	52,141	4.57	%

	SBA Pool Securities				Mortgage-Backed Securities
(dollars in thousands)	Amount		Yield (1)		Amount		Yield (1)
One year or less	$	—	—	%	$	24	3.41	%
After one year through five years	2,015		2.09		42,383		2.76
After five years through ten years	24,014		2.20		278,580		2.73
After ten years	39,087		2.50		573,940		2.17
	$	65,116	2.37	%	$	894,927	2.37	%

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.


~~(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%.~~

(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~~Credit Losses

At September 30, ~~2019,~~2020, gross loans outstanding (including ~~purchased~~ loans ~~purchased loan pools,~~ and loans held for sale) were ~~$14.01~~$16.36 billion, ~~an increase of $5.39~~up $1.88 billion ~~or 62.5%,~~ from ~~$8.62~~$14.48 billion reported at December 31, ~~2018.~~2019. Loans held for sale ~~increased~~decreased from ~~$111.3 million~~$1.66 billion at December 31, ~~2018~~2019 to ~~$1.19~~$1.41 billion at September 30, ~~2019~~2020 primarily due to ~~elevated~~efficiencies in mortgage ~~production levels~~deliveries in ~~the third quarter of 2019. Legacy loans (excluding purchased loans and purchased loan pools)~~our mortgage division. Loans increased ~~$1.55~~$2.13 billion, or ~~27.4%~~16.6%, from ~~$5.66~~$12.82 billion at December 31, ~~2018~~2019 to ~~$7.21~~$14.94 billion at September 30, ~~2019,~~2020, driven primarily by ~~growth~~$1.10 billion in ~~all loan categories. Approximately half of the growth in legacy~~PPP 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.organic growth.

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) consumer installment; (3) indirect automobile; (4) mortgage warehouse; (5) municipal; (6) premium finance; (7) construction and development related real estate; ~~(3)~~(8) commercial and farmland real estate; ~~(4)~~and (9) residential real ~~estate; and (5) consumer.~~estate. 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 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 ofCompany estimates the allowance for ~~loan~~credit losses to("ACL") on loans based on the ~~Company’s Board of Directors,~~underlying assets’ amortized cost basis, 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~~amount at which the financing receivable is originated or acquired, adjusted for applicable accretion or amortization of premium, discount, and net deferred fees or costs, collection of cash, and charge-offs. In the event that collection of principal becomes uncertain, the Company has policies in place to ~~analyze~~reverse accrued interest in a timely manner. Therefore, the ~~loan portfolio and thus analyze~~Company has made a policy election to exclude accrued interest from the ~~adequacy~~measurement of ACL.

Expected credit losses are reflected in the allowance for ~~loan losses.~~

~~The allowance for loan~~credit losses ~~is established by examining (1)~~through a charge to credit loss expense. When 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 allocateCompany deems all or a portion of a financial asset to be uncollectible the ~~allowance based~~appropriate amount is written off and the ACL is reduced by the same amount. The Company applies judgment to determine when a financial asset is deemed uncollectible; however, generally speaking, an asset will be considered uncollectible no later than when all efforts at collection have been exhausted. Subsequent recoveries, if any, are credited to the ACL when received.

The Company measures expected credit losses of financial assets on a collective (pool) basis, when the financial assets share similar risk characteristics. Depending on the nature of the pool of financial assets with similar risk characteristics, the Company uses the DCF method, the vintage method, the PD×LGD method or a qualitative approach.

The Company’s methodologies for estimating the ACL consider available relevant information about the collectability of cash flows, including information about past events, current conditions, and reasonable and supportable forecasts. The methodologies apply historical loss information, adjusted for asset-specific characteristics, economic conditions at the measurement date, and forecasts about future economic conditions expected to exist through the contractual lives of the financial assets that are reasonable and supportable, to the identified pools of financial assets with similar risk characteristics for which the historical loss experience was observed. The Company’s methodologies revert back to historical loss information on a straight-line basis over four quarters when it can no longer develop reasonable 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.supportable forecasts.

At the end of the third quarter of ~~2019,~~2020, the allowance for ~~loan~~credit losses ~~allocated to legacy~~on loans totaled ~~$33.2~~$231.9 million, or ~~0.46%~~1.55% of ~~legacy~~ loans, compared with ~~$26.2~~$38.2 million, or ~~0.46%~~0.30% of ~~legacy~~ loans, at December 31, ~~2018.~~2019. Our ~~legacy~~ nonaccrual loans increased ~~slightly~~ from ~~$18.0~~$75.1 million at December 31, ~~2018~~2019 to ~~$21.7~~$138.2 million at September 30, ~~2019.~~2020. The increase in nonaccrual loans is primarily attributable to residential mortgages where deferment has been completed but the borrowers have not yet notified the Company of their intention to either bring their loan current or enter into a long term modification program. Also contributing to the increase in nonaccrual loans is one hotel relationship totaling $18.6 million which migrated to nonaccrual and TDR status during the third quarter of 2020. For the first nine months of ~~2019,~~2020, our ~~legacy~~ net charge off ratio as a percentage of average ~~legacy~~ loans ~~decreased~~increased to ~~0.15%~~0.17%, compared with ~~0.29%~~0.10% for the first nine months of ~~2018.~~2019. The total provision for ~~loan~~credit losses for the first nine months of ~~2019~~2020 was ~~$14.1~~$146.9 million, increasing from ~~$13.0~~$14.1 million recorded for the first nine months of ~~2018.~~2019. Our ratio of total nonperforming assets to total assets increased from ~~0.55%~~0.56% at December 31, ~~2018~~2019 to ~~0.73%~~0.82% at September 30, ~~2019, primarily resulting from assets acquired from Fidelity.~~2020.

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~~2020 and ~~2018:~~2019:


	Nine Months Ended September 30,
(dollars in thousands)	2020		2019
Balance of allowance for credit losses on loans at beginning of period	$	38,189	$	28,819
Adjustment to allowance for adoption of ASU 2016-13	78,661		—
Provision charged to operating expense	132,188		14,065
Charge-offs:
Commercial, financial and agricultural	4,687		1,647
Consumer installment	2,781		4,313
Indirect automobile	2,944		965


Premium finance	3,893		3,452
Real estate – construction and development	83		268
Real estate – commercial and farmland	10,220		3,158
Real estate – residential	762		391
Total charge-offs	25,370		14,194

Recoveries:
Commercial, financial and agricultural	1,135		904
Consumer installment	1,273		980
Indirect automobile	1,020		385


Premium finance	2,584		2,396
Real estate – construction and development	692		1,315
Real estate – commercial and farmland	1,010		192
Real estate – residential	542		668
Total recoveries	8,256		6,840
Net charge-offs	17,114		7,354
Balance of allowance for credit losses on loans at end of period	$	231,924	$	35,530


	As of and for the Nine Months Ended
(dollars in thousands)	September 30, 2020			September 30, 2019
Allowance for credit losses on loans at end of period	$	231,924		$	35,530
Net charge-offs for the period	17,114			7,354
Loan balances:
End of period	14,943,593			12,826,284
Average for the period	13,772,102			9,982,560
Net charge-offs as a percentage of average loans (annualized)	0.17		%	0.10		%
Allowance for credit losses on loans as a percentage of end of period loans	1.55		%	0.28		%

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 %
Loans

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~~

~~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.

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,
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.~~


(dollars in thousands)	September 30, 2020		December 31, 2019
Commercial, financial and agricultural	$	1,879,788	$	802,171
Consumer installment	450,810		498,577
Indirect automobile	682,396		1,061,824
Mortgage warehouse	995,942		526,369
Municipal	725,669		564,304
Premium finance	710,890		654,669
Real estate – construction and development	1,628,255		1,549,062
Real estate – commercial and farmland	5,116,252		4,353,039
Real estate – residential	2,753,591		2,808,461
	$	14,943,593	$	12,818,476

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~~non-performing loans over $250,000 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.basis. 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 ~~$21.7~~$138.2 million at September 30, ~~2019,~~2020, an increase of ~~$3.8~~$63.0 million, or ~~21.1%~~83.9%, from ~~$18.0~~$75.1 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.~~2019. Accruing loans delinquent 90 days or more ~~excluding purchased loans,~~ totaled ~~$5.8~~$7.0 million at September 30, ~~2019,~~2020, an increase of ~~$1.6~~$1.2 million, or ~~38.2%~~21.7%, compared with ~~$4.2~~$5.8 million at December 31, ~~2018.~~2019. At September 30, ~~2019, OREO, excluding purchased~~2020, OREO totaled ~~$4.9~~$18.0 million, a decrease of ~~$2.3~~$1.5 million, or ~~31.8%~~7.9%, compared with ~~$7.2~~$19.5 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.~~2019. 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,~~2020, total non-performing assets as a percent of total assets increased to ~~0.73%~~0.82% compared with ~~0.55%~~0.56% at December 31, ~~2018, primarily from assets acquired from Fidelity.~~

2019.

Non-performing assets at September 30, ~~2019~~2020 and December 31, ~~2018~~2019 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


(dollars in thousands)	September 30, 2020		December 31, 2019
Nonaccrual loans	$	138,163	$	75,124
Accruing loans delinquent 90 days or more	7,003		5,754
Repossessed assets	258		939
Other real estate owned	17,969		19,500
Total non-performing assets	$	163,393	$	101,317

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~~2020 and December 31, ~~2018,~~2019, the Company had a balance of ~~$15.1~~$132.9 million and ~~$11.1~~$35.2 million, respectively, in troubled debt ~~restructurings, excluding purchased loans.~~restructurings. 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~~2020 and December 31, ~~2018:~~ 2019:


September 30, 2020	Accruing Loans			Non-Accruing Loans
Loan Class	#	Balance (in thousands)		#	Balance (in thousands)
Commercial, financial and agricultural	5	$	459	12	$	1,002
Consumer installment	11	36		22	64
Indirect automobile	481	2,689		49	482



Real estate – construction and development	4	510		5	709
Real estate – commercial and farmland	38	73,763		7	19,942
Real estate – residential	243	28,777		45	4,477
Total	782	$	106,234	140	$	26,676


December 31, 2019	Accruing Loans			Non-Accruing Loans
Loan Class	#	Balance (in thousands)		#	Balance (in thousands)
Commercial, financial and agricultural	5	$	516	17	$	335
Consumer installment	4	8		27	107



Premium finance	1	156		—	—
Real estate – construction and development	6	936		3	253
Real estate – commercial and farmland	21	6,732		8	2,071
Real estate – residential	197	21,261		40	2,857
Total	234	$	29,609	95	$	5,623

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, ~~2019~~2020 and December 31, ~~2018:~~2019:


September 30, 2020							September 30, 2020	Loans Currently Paying Under Restructured Terms			Loans that have Defaulted Under Restructured Terms
Loan Class							Loan Class	#	Balance (in thousands)		#	Balance (in thousands)
Commercial, financial and agricultural							Commercial, financial and agricultural	10	$	1,191	7	$	270
Consumer installment							Consumer installment	16	47		17	53
Indirect automobile							Indirect automobile	453	2,532		77	639

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 – construction and development	5	511		4	707
Real estate – commercial and farmland	11	2,736		4	582		Real estate – commercial and farmland	41	92,964		4	741
Real estate – residential	89	9,643		19	1,197		Real estate – residential	250	29,282		38	3,973
Consumer installment	16	32		12	42
Total	130	$	13,143	43	$	1,928	Total	775	$	126,527	147	$	6,383


December 31, 2019							December 31, 2019	Loans Currently Paying Under Restructured Terms			Loans that have Defaulted Under Restructured Terms
Loan Class							Loan Class	#	Balance (in thousands)		#	Balance (in thousands)
Commercial, financial and agricultural							Commercial, financial and agricultural	11	$	730	11	$	121
Consumer installment							Consumer installment	18	58		13	57

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

Premium finance							Premium finance	1	156		—	—
Real estate – construction and development	5	147		1	—		Real estate – construction and development	8	1,187		1	2
Real estate – commercial and farmland	14	3,043		1	246		Real estate – commercial and farmland	22	6,437		7	2,366
Real estate – residential	65	5,756		26	1,406		Real estate – residential	182	19,664		55	4,454
Consumer installment	18	36		12	49
Total	112	$	9,264	49	$	1,813	Total	242	$	28,232	87	$	7,000

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, ~~2019~~2020 and December 31, ~~2018:~~ 2019:


September 30, 2020	Accruing Loans			Non-Accruing Loans
Type of Concession	#	Balance (in thousands)		#	Balance (in thousands)

Forbearance of interest	18	$	2,147	8	$	1,255

Forbearance of principal	584	84,570		78	23,482
Forbearance of principal, extended amortization	—	—		1	209
Rate reduction only	69	9,273		4	527
Rate reduction, maturity extension	—	—		2	12
Rate reduction, forbearance of interest	47	3,868		9	398
Rate reduction, forbearance of principal	19	2,434		29	392
Rate reduction, forgiveness of interest	45	3,942		8	400
Rate reduction, forgiveness of principal	—	—		1	1
Total	782	$	106,234	140	$	26,676

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, 2019	Accruing Loans			Non-Accruing Loans
Type of Concession	#	Balance (in thousands)		#	Balance (in thousands)

Forbearance of interest	16	$	1,860	14	$	1,993
Forgiveness of principal	—	—		1	666
Forbearance of principal	27	6,294		10	605
Forbearance of principal, extended amortization	—	—		1	225
Rate reduction only	72	9,887		7	538
Rate reduction, maturity extension	—	—		2	15
Rate reduction, forbearance of interest	49	4,250		19	793
Rate reduction, forbearance of principal	19	3,267		30	264
Rate reduction, forgiveness of interest	51	4,051		10	523
Rate reduction, forgiveness of principal	—	—		1	1
Total	234	$	29,609	95	$	5,623

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

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, ~~2019~~2020 and December 31, ~~2018:~~ 2019:


September 30, 2020	Accruing Loans			Non-Accruing Loans
Collateral Type	#	Balance (in thousands)		#	Balance (in thousands)
Warehouse	5	$	267	2	$	314
Raw land	6	4,676		6	1,087
Hotel and motel	14	56,089		1	18,572
Office	3	600		—	—
Retail, including strip centers	11	4,775		—	—
1-4 family residential	245	28,893		46	4,980
Church	—	—		1	171
Assisted living facilities	2	7,772		—	—
Automobile/equipment/CD	496	3,162		82	1,549
Livestock	—	—		1	2
Unsecured	—	—		1	1
Total	782	$	106,234	140	$	26,676

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, 2019	Accruing Loans			Non-Accruing Loans
Collateral Type	#	Balance (in thousands)		#	Balance (in thousands)
Warehouse	4	$	267	2	$	442
Raw land	5	869		5	732
Apartments	—	—		—	—
Hotel and motel	2	364		1	241
Office	3	531		1	342
Retail, including strip centers	11	5,520		—	—
1-4 family residential	200	21,404		40	3,232
Church	—	—		1	183
Automobile/equipment/CD	8	498		43	436
Livestock	—	—		1	14
Unsecured	1	156		1	1
Total	234	$	29,609	95	$	5,623

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:

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, 2019 and December 31, 2018:

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

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, 2019 and December 31, 2018:

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

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, 2019 and December 31, 2018:

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~~one-to-four 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.

(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,~~2020, 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.~~

(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~~2020 and December 31, ~~2018.~~2019. The loan categories and concentrations below are based on Federal Reserve Call ~~codes and include purchased loans:~~ codes:


	September 30, 2020			December 31, 2019
(dollars in thousands)	Balance		% of Total Loans	Balance		% of Total Loans
Construction and development loans	$	1,628,255	11%	$	1,549,062	12%
Multi-family loans	330,730		2%	297,317		2%
Nonfarm non-residential loans (excluding owner-occupied)	3,150,043		21%	2,358,987		18%
Total CRE Loans (excluding owner-occupied)	5,109,028		34%	4,205,366		33%
All other loan types	9,834,565		66%	8,613,110		67%
Total Loans	$	14,943,593	100%	$	12,818,476	100%

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~~2020 and December 31, ~~2018:~~ 2019:


	Internal Limit	Actual
		September 30, 2020	December 31, 2019
Construction and development loans	100%	76%	88%
Total CRE loans (excluding owner-occupied)	300%	237%	238%

Internal
Limit
Actual
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,~~2020, the Company’s short-term investments were ~~$285.7~~$494.8 million, compared with ~~$507.5~~$375.6 million at December 31, ~~2018.~~2019. At September 30, ~~2019,~~2020, the Company had ~~$21.1~~$20.0 million in federal funds sold and ~~$264.6~~$474.8 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~~had a cash flow hedge that ~~matures~~matured September 15, 2020 with a notional amount of $37.1 million at ~~September 30, 2019 and~~ December 31, ~~2018~~2019 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~~$187,000 at December 31, ~~2018.~~2019. 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.

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~~$64.7 million and ~~$2.5~~$7.8 million at September 30, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively, and a liability of ~~$1.2~~$6.2 million and ~~$1.3~~$4.5 million at September 30, ~~2019~~2020 and December 31, ~~2018,~~2019, 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

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.~~stock through October 31, 2020. On October 22, 2020, the Company announced that its Board of Directors approved the extension of the share repurchase program through October 31, 2021. 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~~2020, $14.3 million, or 358,664 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 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 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

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”)~~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~~FRB 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 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 2020 and 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% (7.00% including the 2.50% capital conservation ~~buffer for 2019; 6.375% including the 1.875% capital conservation buffer for 2018)~~buffer). 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)~~buffer). 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)~~buffer). For a bank to be considered “well capitalized,” it must maintain a total capital ratio greater than or equal to 10.00%.

In March 2020, the Office of the Comptroller of the Currency, the FRB and the FDIC issued an interim final rule that delays the estimated impact on regulatory capital stemming from the implementation of CECL. The interim final rule provides banking organizations that implement CECL in 2020 the option to delay for two years an estimate of CECL’s effect on regulatory capital, relative to the incurred loss methodology’s effect on regulatory capital, followed by a three-year transition period. As a result, the Company and Bank elected the five-year transition relief allowed under the interim final rule effective March 31, 2020.

As of September 30, ~~2019,~~2020, 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~~2020 and December 31, ~~2018.~~2019.


	September 30, 2020	December 31, 2019
Tier 1 Leverage Ratio (tier 1 capital to average assets)
Consolidated	8.57%	8.48%
Ameris Bank	10.27%	9.73%
CET1 Ratio (common equity tier 1 capital to risk weighted assets)
Consolidated	10.44%	9.90%
Ameris Bank	12.51%	11.36%
Tier 1 Capital Ratio (tier 1 capital to risk weighted assets)
Consolidated	10.44%	9.90%
Ameris Bank	12.51%	11.36%
Total Capital Ratio (total capital to risk weighted assets)
Consolidated	14.65%	12.90%
Ameris Bank	13.94%	12.15%

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.

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

The Company uses a simulation modeling process to measure interest rate risk and evaluate potential strategies. Interest rate scenario models are prepared using software created and licensed from an outside vendor. The Company’s simulation includes all financial assets and liabilities. Simulation results quantify interest rate risk under various interest rate scenarios. Management then develops and implements appropriate strategies. 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, ~~2019~~2020 and December 31, ~~2018,~~2019, the net carrying value of the Company’s other borrowings was ~~$1.35~~$875.3 million and $1.40 billion, ~~and $151.8 million,~~ respectively.

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


	September 30, 2020	June 30, 2020	March 31, 2020	December 31, 2019	September 30, 2019
Investment securities available for sale to total deposits	6.96%	7.95%	9.77%	10.00%	10.92%
Loans (net of unearned income) to total deposits	93.03%	93.03%	94.58%	91.38%	93.90%
Interest-earning assets to total assets	90.66%	90.51%	89.57%	89.47%	89.27%
Interest-bearing deposits to total deposits	63.21%	64.11%	69.47%	70.06%	70.15%

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~~2020 were considered satisfactory. The Company is aware of no events or trends likely to result in a material change in liquidity.

Goodwill Impairment Testing

At September 30, 2020, the Company performed an interim qualitative assessment and determined that it was more likely than not that the reporting units fair values exceeded their carrying values.

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,~~December 31, 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~~exchanged fixed rate payments of 4.11% for floating rate payments based on the three-month LIBOR rate and ~~matures~~matured September 2020. The fair value of this instrument was a liability of ~~$237,000 at September 30, 2019 and an asset of $102,000~~$187,000 at December 31, ~~2018.~~2019.

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 ~~$15.9~~$64.7 million and ~~$2.5~~$7.8 million at

September 30, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively, and a liability of ~~$1.2~~$6.2 million and ~~$1.3~~$4.5 million at September 30, ~~2019~~2020 and December 31, ~~2018,~~2019, 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.~~not effective, due to the material weakness in internal control over financial reporting described below.

~~During~~A material weakness is a deficiency or combination of deficiencies in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s financial statements will not be prevented or detected on a timely basis.

We continue to have a material weakness in our internal control over financial reporting as disclosed in Management's Assessment of Internal Control over Financial Reporting in Item 9A. Controls and Procedures of our Annual Report on Form 10-K for the year ended December 31, 2019, as amended. Specifically, during the first quarter of 2020, the Company identified a control deficiency related to certain general ledger account reconciliations that began as of the conversion of Fidelity’s core platform on November 3, 2019. While the reconciliations were completed in a timely manner, various items, which were principally related to the acquired indirect auto loan portfolio, were not researched and resolved in a timely manner. This control deficiency creates a reasonable possibility that a material misstatement to the consolidated financial statements would not have been prevented or detected on a timely basis, and as such, management has concluded that the control deficiency represents a material weakness in internal control over financial reporting.

Because of this material weakness, management concluded that the Company did not maintain effective internal control over financial reporting as of September 30, 2020.

Remediation Plan

Management has been actively engaged during the first nine months of 2020 in implementing remediation plans to address the material weakness. These plans include: (i) additional training for accounting staff performing the reconciliations; (ii) development of more detailed reconciliation procedures to allow for more timely research and resolution of items; (iii) increased personnel in the accounting department to ensure timeliness of clearing reconciling items; and (iv) the review of the system interface to the general ledger such that the number of reconciling items among impacted balance sheet accounts will be reduced.

The Company’s material weakness will not be considered remediated until the remediation plans have been implemented and tested and management concludes these controls are operating effectively.

Changes in Internal Control Over Financial Reporting

On January 1, 2020, the Company adopted ASU 2016-13 – Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). The Company implemented changes to the policies, processes, and controls over the allowance for credit losses. Many of the controls mirror controls over our prior incurred loss methodology. New controls were implemented over data quality of critical data elements used in the new model, unfunded commitments and reconciliations. Other than the controls related to ASU 2016-13 and remediation efforts as described above, during the quarter ended September 30, ~~2019,~~2020, 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, the Company and the Bank are subject to various legal proceedings, claims and disputes that arise in the 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. Based on the Company’s current knowledge, ~~and advice of counsel,~~ management presently does not believe that the liabilities arising from these legal matters will 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 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, ~~2018.~~2019, as amended, except as follows:

The ongoing COVID-19 pandemic and measures intended to prevent the disease's spread have adversely impacted our business, financial condition and results of operations and will likely continue to do so.

The COVID-19 pandemic has caused significant economic dislocation in the United States and an unprecedented slowdown in economic activity, as many state and local governments have intermittently ordered non-essential businesses to close and residents to shelter in place at home. As a result of the pandemic, commercial customers are experiencing varying levels of disruptions or restrictions on their business activity, and consumers are experiencing interrupted income or unemployment. We have outstanding loans to borrowers in certain industries that have been particularly susceptible to the effects of the pandemic, such as hotels, restaurants and other retail businesses. In response to the COVID-19 outbreak, the Federal Reserve Board reduced the benchmark fed funds rate to a target range of 0% to 0.25%, and the yields on 10- and 30-year treasury notes declined to historic lows. The federal banking agencies have also encouraged financial institutions to prudently work with affected borrowers and have provided relief from reporting loan classifications due to modifications related to the COVID-19 outbreak.

In addition, the spread of the coronavirus has caused us to modify our business practices, including the implementation of temporary branch and office closures. We may take further actions as may be required by government authorities or that we

determine are in the best interests of our employees, customers and business partners. Although we have initiated a remote work protocol and restricted business travel in our workforce, if significant portions of our workforce, including key personnel, are unable to work effectively because of illness, government actions or other restrictions in connection with the pandemic, the impact of the pandemic on our business could be exacerbated.

Given the ongoing and dynamic nature of the circumstances, it is difficult to predict the full impact of the COVID-19 outbreak on our business. The United States government has taken steps to attempt to mitigate some of the more severe anticipated economic effects of the coronavirus, including the passage of the CARES Act and subsequent legislation, but there can be no assurance that such steps will be effective or achieve their desired results in a timely fashion. The extent of such impact from the COVID-19 outbreak and related mitigation efforts will depend on future developments, which are highly uncertain, including, but not limited to, the duration and spread of the outbreak, its severity, the actions to contain the virus or treat its impact, and how quickly and to what extent normal economic and operating conditions can resume.

As the result, we could be subject to any of the following risks, among others, any of which could have a material, adverse effect on our business, financial condition, liquidity and results of operations:

•demand for our products and services may decline, making it difficult to grow assets and income;

•if the economy is unable to substantially and successfully reopen, and high levels of unemployment continue, for an extended period of time, loan delinquencies, problem assets and foreclosures may increase, resulting in increased charges and reduced income;

•collateral for loans, especially real estate, may decline in value, which could cause loan losses to increase;

•our allowance for loan losses may have to be increased if borrowers experience financial difficulties beyond forbearance periods, which will adversely affect our net income;

•the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us; and

•as the result of the decline in the Federal Reserve Board’s target federal funds rate, the yield on our assets has declined and may continue to decline, to a greater extent even than the decline in our cost of interest-bearing liabilities, reducing our net interest margin and spread and adversely affecting our net income.

Any one or a combination of the factors identified above could negatively impact our business, financial condition and results of operations. Even after the COVID-19 outbreak has subsided, we may continue to experience materially adverse impacts to our business and prospects as a result of the virus’s global economic impact, including the availability of credit, adverse impacts on our liquidity and the consequences of any recession that has occurred or may occur in the future.

As a participating lender in the SBA’s Paycheck Protection Program (“PPP”), the Company is subject to added risks, including credit, fraud and litigation risks, that could adversely impact our financial condition and results of operations.

The Company participated in the PPP as an eligible lender with the benefit of a government guaranty of loans to small business clients, many of whom may face difficulties even after being granted such a loan. A significant amount of our loan growth since December 31, 2019 has been a direct result of PPP loans. However, PPP loan growth will not continue in the absence of further governmental action to extend the program.

As a participant in the PPP, we face increased risks, particularly in terms of credit, fraud and litigation risks. The PPP opened to borrower applications shortly after the enactment of its authorizing legislation, and, as a result, there is some ambiguity in the laws, rules and guidance regarding the program’s operation. Subsequent rounds of legislation and associated agency guidance have not provided needed clarity and in certain instances have potentially created additional inconsistencies and ambiguities. Accordingly, the Company is exposed to risks relating to compliance with PPP requirements.

We have additional credit risk with respect to PPP loans if a determination is made by the SBA that there is a deficiency in the manner in which the loan was originated, funded or serviced, such as an issue with the eligibility of a borrower to receive a PPP loan, which may or may not be related to the ambiguity in the laws, rules and guidance regarding the operation of the PPP. In the event of a loss resulting from a default on a PPP loan and a determination by the SBA that there was a deficiency in the manner in which the PPP loan was originated, funded or serviced by the Company, the SBA may deny its liability under the guaranty, reduce the amount of the guaranty or, if it has already paid under the guaranty, seek recovery of any loss related to the deficiency from the Company.

Also, PPP loans are fixed, low interest rate loans that are guaranteed by the SBA and subject to numerous other regulatory requirements, and a borrower may apply to have all or a portion of the loan forgiven. If PPP borrowers fail to qualify for loan forgiveness, we face a heightened risk of holding these loans at unfavorable interest rates for an extended period of time.

Furthermore, since the launch of the PPP, several larger banks have been subject to litigation regarding the process and procedures that such banks used in processing applications for the PPP, and the Company may be exposed to the risk of litigation, from both customers and non-customers that approached the Company regarding PPP loans, relating to these or other matters. Also many financial institutions throughout the country have been named in putative class actions regarding the alleged nonpayment of fees that may be due to certain agents who facilitated PPP loan applications. The Company is currently named as a defendant in one such agent fee action. The costs and effects of litigation related to PPP participation could be material to us.

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, ~~2019.~~2020.

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


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, 2020 through July 31, 2020(2)	736	$	21.70	—	$	85,723,412
August 1, 2020 through August 31, 2020	—	$	—	—	$	85,723,412
September 1, 2020 through September 30, 2020	—	$	—	—	$	85,723,412
Total	736	$	21.70	—	$	85,723,412

(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 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, noOn 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 through October 31, 2020. On October 22, 2020, the Company announced that its Board of Directors approved the extension of the share repurchase program through October 31, 2021. Repurchases of shares 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. As of September 30, 2020, $14.3 million, or 358,664 shares of the Company's common stock, had been repurchased under the new program.

(2)The shares purchased from July 1, 2020 through July 31, 2020 consist of shares of common stock surrendered to the Company in payment of the income tax withholding obligations relating to the vesting of shares of restricted stock.

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

1.1		Underwriting agreement dated September 23, 2020, by and between Ameris Bancorp, Keefe, Bruyette & Woods, Inc. and Piper Sandler & Co. (incorporated by reference to Exhibit 1.1 to Ameris Bancorp's Current Report on Form 8-K filed with the SEC on September 28, 2020).

~~Exhibit~~ ~~Number~~ 3.1		~~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		Articles of Amendment to the Articles of Incorporation of Ameris Bancorp (incorporated by reference to Exhibit 3.7 to Ameris Bancorp's Quarterly Report on Form 10-Q filed with the SEC on August 10, 2020).

3.8		Bylaws of Ameris Bancorp, as amended and restated through ~~July 1, 2019~~June 11, 2020 (incorporated by reference to Exhibit ~~3.1~~3.8 to Ameris ~~Bancorp’s~~Bancorp's Quarterly Report on Form 10-Q filed with the SEC on August 10, 2020).

4.1		Third Supplemental Indenture, dated as of September 28, 2020, by and between Ameris Bancorp and Wilmington Trust, National Association, as trustee (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)~~September 28, 2020).

~~4.1~~4.2		~~Indenture between Ameris Bancorp (as successor to Fidelity Southern Corporation) and U.S. Bank National Association, dated as~~Form of ~~June 26, 2003~~3.875% Fixed-to-Floating Subordinated Notes due 2030 (incorporated by reference to Exhibit ~~4.1~~4.3 to Ameris ~~Bancorp’s~~Bancorp's Current Report on Form 8-K filed with the SEC on ~~July 1, 2019)~~September 28, 2020).

~~4.2~~31.1		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~~31.2		~~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.

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SIGNATURE

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



Dated: November ~~8, 2019~~6, 2020			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)



(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



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



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



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



(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, 2019
Balance, June 30, 2019	$	6,302		$	4,269		$	7,269		$	7,451		$	3,388		$	2,443		$	671		$	31,793
Provision for loan losses	1,925			800			1,166			975			1,289			(114		)	(52		)	5,989
Loans charged off	(1,578		)	—			(14		)	(20		)	(1,195		)	(2,442		)	—			(5,249		)
Recoveries of loans previously charged off	845			2			—			49			269			1,832			—			2,997
Balance, September 30, 2019	$	7,494		$	5,071		$	8,421		$	8,455		$	3,751		$	1,719		$	619		$	35,530

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	5,475			1,562			805			2,886			3,495			(45		)	(113		)	14,065
Loans charged off	(4,920		)	(247		)	(1,367		)	(80		)	(4,214		)	(3,296		)	—			(14,124		)
Recoveries of loans previously charged off	2,652			22			8			286			675			3,127			—			6,770
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⁾	$	2,575		$	112		$	488		$	1,557		$	—		$	1,719		$	—		$	6,451
Loans collectively evaluated for impairment	4,919			4,959			7,933			6,898			3,751			—			619			29,079
Ending balance	$	7,494		$	5,071		$	8,421		$	8,455		$	3,751		$	1,719		$	619		$	35,530

Loans:
Individually evaluated for impairment⁽¹⁾	$	4,648		$	921		$	5,783		$	17,907		$	—		$	31,612		$	—		$	60,871
Collectively evaluated for impairment	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	—			—			—			—			—			183,007			—			183,007
Ending balance	$	1,781,237		$	947,371		$	2,152,528		$	1,866,128		$	461,552		$	5,388,336		$	229,132		$	12,826,284



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



(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



	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		%



	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%