UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

~~FORM 10-Q~~

~~(Mark One)~~



FORM			ý10-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~~June 30, ~~2017~~2020



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



Commission File Number:			001-13901

~~AMERIS BANCORP~~


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



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

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

~~(Address of principal executive offices)~~

~~(229) 890-1111~~

~~(Registrant’s telephone number)~~

3490 Piedmont Rd N.E., Suite 1550

Atlanta

Georgia

30305

(Address of principal executive offices)


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

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

Indicate by check mark whether the Registrant has submitted electronically ~~and posted on its corporate Website, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). 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 ~~37,231,049~~69,487,546 shares of Common Stock outstanding as of ~~November 3, 2017.~~

July 31, 2020.

AMERIS BANCORP

TABLE OF CONTENTS



		Page

PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements.

	Consolidated Balance Sheets as of ~~September~~June 30, ~~2017~~2020 and December 31, ~~2016~~2019	1

	Consolidated Statements of Income and Comprehensive Income for the Three and ~~Nine-Month~~Six-Month Periods Ended ~~September~~June 30 ~~2017~~, 2020 and ~~2016~~2019	2

	Consolidated Statements of Shareholders’ Equity for the ~~Nine Months~~Three and Six-Month Periods Ended ~~September~~June 30, ~~2017~~2020 and ~~2016~~2019	3

	Consolidated Statements of Cash Flows for the ~~Nine~~Six Months Ended ~~September 30, 2017~~June 3 0 , 2020 and ~~2016~~2019	45

	Notes to Consolidated Financial Statements	67

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	4147

Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	6472

Item 4.	Controls and Procedures.	6572

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings.	6573

Item 1A.	Risk Factors.	6573

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	6574

Item 3.	Defaults Upon Senior Securities.	6575

Item 4.	Mine Safety Disclosures.	6575

Item 5.	Other Information.	6575

Item 6.	Exhibits.	6676

Signatures			6777

Item 1. Financial Statements.

AMERIS BANCORP AND SUBSIDIARIES

Consolidated Balance Sheets ~~(unaudited)~~

(dollars in thousands, except per share data)


	June 30, 2020 (unaudited)		December 31, 2019
Assets
Cash and due from banks	$	292,899	$	246,234
Federal funds sold and interest-bearing deposits in banks	428,560		375,615
Cash and cash equivalents	721,459		621,849

Time deposits in other banks	249		249
Investment securities available for sale, at fair value	1,238,896		1,403,403
Other investments	76,453		66,919
Loans held for sale, at fair value	1,736,397		1,656,711

Loans, net of unearned income	14,503,157		12,818,476
Allowance for credit losses	(208,793)		(38,189)
Loans, net	14,294,364		12,780,287

Other real estate owned, net	23,563		19,500
Premises and equipment, net	230,118		233,102
Goodwill	928,005		931,637
Other intangible assets, net	80,354		91,586
Cash value of bank owned life insurance	175,011		175,270
Deferred income taxes, net	56,306		2,180
Other assets	311,454		259,886
Total assets	$	19,872,629	$	18,242,579

Liabilities
Deposits:
Noninterest-bearing	$	5,595,868	$	4,199,448
Interest-bearing	9,993,950		9,827,625
Total deposits	15,589,818		14,027,073
Securities sold under agreements to repurchase	12,879		20,635
Other borrowings	1,418,336		1,398,709
Subordinated deferrable interest debentures	123,375		127,560
FDIC loss-share payable, net	18,903		19,642
Other liabilities	249,188		179,378
Total liabilities	17,412,499		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 June 30, 2020 and December 31, 2019)	—		—
Common stock, par value $1 (200,000,000 and 100,000,000 shares authorized at June 30, 2020 and December 31, 2019, respectively; 71,674,087 and 71,499,829 shares issued at June 30, 2020 and December 31, 2019, respectively)	71,674		71,500
Capital surplus	1,909,839		1,907,108
Retained earnings	481,948		507,950
Accumulated other comprehensive income (loss), net of tax	39,613		17,995
Treasury stock, at cost (2,211,305 shares and 1,995,996 shares at June 30, 2020 and December 31, 2019, respectively)	(42,944)		(34,971)
Total shareholders’ equity	2,460,130		2,469,582
Total liabilities and shareholders’ equity	$	19,872,629	$	18,242,579

September 30,
2017 December 31,
2016
Assets

Cash and due from banks $ 131,071
$ 127,164
Federal funds sold and interest-bearing deposits in banks 112,844
71,221
Investment securities available for sale, at fair value 819,593
822,735
Other investments 47,977
29,464
Loans held for sale, at fair value 137,392
105,924

Loans 4,574,678
3,626,821
Purchased loans 917,126
1,069,191
Purchased loan pools 465,218
568,314
Loans, net of unearned income 5,957,022
5,264,326
Allowance for loan losses (25,966 ) (23,920 )
Loans, net 5,931,056
5,240,406

Other real estate owned, net 9,391
10,874
Purchased other real estate owned, net 9,946
12,540
Total other real estate owned, net 19,337
23,414

Premises and equipment, net 119,458
121,217
Goodwill 125,532
125,532
Other intangible assets, net 14,437
17,428
Deferred income taxes, net 39,365
40,776
Cash value of bank owned life insurance 79,241
78,053
Other assets 72,517
88,697
Total assets $ 7,649,820
$ 6,892,031

Liabilities

Deposits:

Noninterest-bearing $ 1,718,022
$ 1,573,389
Interest-bearing 4,177,482
4,001,774
Total deposits 5,895,504
5,575,163
Securities sold under agreements to repurchase 14,156
53,505
Other borrowings 808,572
492,321
Subordinated deferrable interest debentures 85,220
84,228
Other liabilities 44,447
40,377
Total liabilities 6,847,899
6,245,594

Commitments and Contingencies (Note 9)

Shareholders’ Equity

Preferred stock, stated value $1,000 (5,000,000 shares authorized; 0 shares issued and outstanding at September 30, 2017 and December 31, 2016) —
—
Common stock, par value $1 (100,000,000 shares authorized; 38,705,910 and 36,377,807 shares issued at September 30, 2017 and December 31, 2016, respectively) 38,706
36,378
Capital surplus 506,779
410,276
Retained earnings 267,694
214,454
Accumulated other comprehensive income (loss), net of tax 3,241
(1,058 )
Treasury stock, at cost (1,474,861 shares and 1,456,333 shares at September 30, 2017 and December 31, 2016, respectively) (14,499 ) (13,613 )
Total shareholders’ equity 801,921
646,437
Total liabilities and shareholders’ equity $ 7,649,820
$ 6,892,031

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 June 30,						Six Months Ended June 30,
	2017		2016			2017			2016				2020		2019		2020		2019
Interest income												Interest income
Interest and fees on loans	$	70,462	$	57,322		$	197,447		$	160,677		Interest and fees on loans	$	175,345	$	117,010	$	346,587	$	229,411
Interest on taxable securities	5,062		4,336			15,057			13,476			Interest on taxable securities	9,347		9,383		19,429		18,426
Interest on nontaxable securities	392		397			1,209			1,297			Interest on nontaxable securities	157		102		314		258
Interest on deposits in other banks and federal funds sold	406		155			1,070			659			Interest on deposits in other banks and federal funds sold	169		2,533		1,456		5,862
Total interest income	76,322		62,210			214,783			176,109			Total interest income	185,018		129,028		367,786		253,957

Interest expense												Interest expense
Interest on deposits	5,136		3,074			13,479			8,730			Interest on deposits	14,273		23,454		38,375		45,138
Interest on other borrowings	4,331		2,069			10,702			5,287			Interest on other borrowings	6,931		3,923		17,652		7,773
Total interest expense	9,467		5,143			24,181			14,017			Total interest expense	21,204		27,377		56,027		52,911

Net interest income	66,855		57,067			190,602			162,092			Net interest income	163,814		101,651		311,759		201,046
Provision for loan losses	1,787		811			5,828			2,381			Provision for loan losses	68,449		4,668		105,496		8,076
Net interest income after provision for loan losses	65,068		56,256			184,774			159,711
Provision for unfunded commitments												Provision for unfunded commitments	19,712		—		23,712		—
Provision for credit losses												Provision for credit losses	88,161		4,668		129,208		8,076
Net interest income after provision for credit losses												Net interest income after provision for credit losses	75,653		96,983		182,551		192,970

Noninterest income												Noninterest income
Service charges on deposit accounts	10,535		11,358			31,714			31,709			Service charges on deposit accounts	9,922		12,168		21,766		23,814
Mortgage banking activity	13,340		14,067			38,498			38,420			Mortgage banking activity	104,925		18,523		140,258		33,200
Other service charges, commissions and fees	699		791			2,137			2,869			Other service charges, commissions and fees	1,130		803		2,258		1,592
Gain on sale of securities	—		—			37			94
Net gain on securities												Net gain on securities	14		69		5		135
Other noninterest income	2,425		2,648			8,508			8,437			Other noninterest income	4,969		3,673		11,052		7,266
Total noninterest income	26,999		28,864			80,894			81,529			Total noninterest income	120,960		35,236		175,339		66,007

Noninterest expense												Noninterest expense
Salaries and employee benefits	32,583		27,982			89,509			81,700			Salaries and employee benefits	95,168		38,331		171,114		76,663
Occupancy and equipment expense	6,036		5,989			18,059			18,060			Occupancy and equipment expense	13,807		7,834		25,835		16,038
Data processing and communications costs	7,050		6,185			20,650			18,347
Data processing and communications expenses												Data processing and communications expenses	10,514		8,388		22,468		16,779
Credit resolution-related expenses	1,347		1,526			2,879			5,089			Credit resolution-related expenses	950		979		3,148		1,890
Advertising and marketing expense	1,247		1,249			3,612			2,908			Advertising and marketing expense	1,455		1,987		3,813		3,728
Amortization of intangible assets	941		993			2,990			3,332			Amortization of intangible assets	5,601		3,121		11,232		6,253
Merger and conversion charges	92		—			494			6,359			Merger and conversion charges	895		3,475		1,435		5,532
Other noninterest expenses	14,471		9,275			34,406			25,363			Other noninterest expenses	27,378		17,136		54,776		29,793
Total noninterest expense	63,767		53,199			172,599			161,158			Total noninterest expense	155,768		81,251		293,821		156,676

Income before income tax expense	28,300		31,921			93,069			80,082			Income before income tax expense	40,845		50,968		64,069		102,301
Income tax expense	8,142		10,364			28,671			26,159			Income tax expense	8,609		12,064		12,511		23,492
Net income	20,158		21,557			64,398			53,923			Net income	32,236		38,904		51,558		78,809

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 $966, ($1,481), $2,348 and $4,160	1,795		(2,752		)	4,361			7,724
Reclassification adjustment for gains on investment securities included in earnings, net of tax of $0, $0, $13 and $33	—		—			(24		)	(61		)
Unrealized gains (losses) on cash flow hedges arising during period, net of tax expense (benefit) of $14, $130, ($21) and ($306)	25		241			(38		)	(567		)
Net unrealized holding gains (losses) arising during period on investment securities available for sale, net of tax expense (benefit) of $(13), $4,765, $5,743 and $5,793												Net unrealized holding gains (losses) arising during period on investment securities available for sale, net of tax expense (benefit) of $(13), $4,765, $5,743 and $5,793	(49)		17,927		21,604		21,794
Reclassification adjustment for gains on investment securities included in earnings, net of tax of $0, $13, $0 and $25												Reclassification adjustment for gains on investment securities included in earnings, net of tax of $0, $13, $0 and $25	—		(48)		—		(94)
Unrealized gains (losses) on cash flow hedges arising during period, net of tax expense (benefit) of $30, $(64), $4 and $(110)												Unrealized gains (losses) on cash flow hedges arising during period, net of tax expense (benefit) of $30, $(64), $4 and $(110)	111		(239)		14		(412)
Other comprehensive income	1,820		(2,511		)	4,299			7,096			Other comprehensive income	62		17,640		21,618		21,288
Total comprehensive income	$	21,978	$	19,046		$	68,697		$	61,019		Total comprehensive income	$	32,298	$	56,544	$	73,176	$	100,097

Basic earnings per common share	$	0.54	$	0.62		$	1.76		$	1.58		Basic earnings per common share	$	0.47	$	0.82	$	0.74	$	1.66
Diluted earnings per common share	$	0.54	$	0.61		$	1.74		$	1.56		Diluted earnings per common share	$	0.47	$	0.82	$	0.74	$	1.66
Dividends declared per common share	$	0.10	$	0.10		$	0.30		$	0.20
Weighted average common shares outstanding (in thousands)												Weighted average common shares outstanding (in thousands)
Basic	37,225		34,870			36,690			34,156			Basic	69,192		47,311		69,235		47,354
Diluted	37,553		35,195			37,017			34,470			Diluted	69,293		47,338		69,413		47,395

See notes to unaudited consolidated financial statements.

AMERIS BANCORP AND SUBSIDIARIES

Consolidated Statements of Shareholders’ Equity (unaudited)

(dollars in thousands)


	Three Months Ended June 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	71,651,986	$	71,652	$	1,908,721	$	460,153	$	39,551	2,210,712	$	(42,927)		$	2,437,150

Issuance of restricted shares	33,351	33		(33)		—		—		—	—			—
Forfeitures of restricted shares	(11,250)	(11)		(159)		—		—		—	—			(170)

Share-based compensation	—	—		1,310		—		—		—	—			1,310
Purchase of treasury shares	—	—		—		—		—		593	(17)			(17)
Net income	—	—		—		32,236		—		—	—			32,236
Dividends on common shares ($0.15 per share)	—	—		—		(10,441)		—		—	—			(10,441)

Other comprehensive income (loss) during the period	—	—		—		—		62		—	—			62
Balance at end of period	71,674,087	$	71,674	$	1,909,839	$	481,948	$	39,613	2,211,305	$	(42,944)		$	2,460,130


	Six Months Ended June 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	151,976	152		137		—		—		—	—			289
Forfeitures of restricted shares	(11,250)	(11)		(159)		—		—		—	—			(170)
Proceeds from exercise of stock options	33,532	33		668		—		—		—	—			701
Share-based compensation	—	—		2,085		—		—		—	—			2,085
Purchase of treasury shares	—	—		—		—		—		215,309	(7,973)			(7,973)
Net income	—	—		—		51,558		—		—	—			51,558
Dividends on common shares ($0.30 per share)	—	—		—		(20,856)		—		—	—			(20,856)
Cumulative effect of change in accounting for credit losses	—	—		—		(56,704)		—		—	—			(56,704)
Other comprehensive income (loss) during the period	—	—		—		—		21,618		—	—			21,618
Balance at end of period	71,674,087	$	71,674	$	1,909,839	$	481,948	$	39,613	2,211,305	$	(42,944)		$	2,460,130

Nine Months Ended
September 30, 2017 Nine Months Ended
September 30, 2016
Shares Amount Shares Amount
Common Stock

Balance at beginning of period 36,377,807
$ 36,378
33,625,162
$ 33,625
Issuance of common stock 2,141,072
2,141
2,549,469
2,549
Issuance of restricted shares 84,147
84
125,581
126
Cancellation of restricted shares (472 ) —
(7,085 ) (7 )
Proceeds from exercise of stock options 103,356
103
54,510
55
Issued at end of period 38,705,910
$ 38,706
36,347,637
$ 36,348

Capital Surplus

Balance at beginning of period
$ 410,276

$ 337,349
Share-based compensation
2,419

1,586
Issuance of common shares, net of issuance costs of $4,925 and $0
92,359

69,906
Issuance of restricted shares
(84 )
(126 )
Cancellation of restricted shares
—

7
Proceeds from exercise of stock options
1,809

908
Balance at end of period
$ 506,779

$ 409,630

Retained Earnings

Balance at beginning of period
$ 214,454

$ 152,820
Net income
64,398

53,923
Dividends on common shares
(11,158 )
(6,974 )
Balance at end of period
$ 267,694

$ 199,769

Accumulated Other Comprehensive Income, Net of Tax

Unrealized gains (losses) on securities and derivatives:

Balance at beginning of period
$ (1,058 )
$ 3,353
Other comprehensive income during the period
4,299

7,096
Balance at end of period
$ 3,241

$ 10,449

Treasury Stock

Balance at beginning of period 1,456,333
$ (13,613 ) 1,413,777
$ (12,388 )
Purchase of treasury shares 18,528
(886 ) 42,556
(1,225 )
Balance at end of period 1,474,861
$ (14,499 ) 1,456,333
$ (13,613 )

Total Shareholders’ Equity
$ 801,921

$ 642,583
AMERIS BANCORP AND SUBSIDIARIES

Consolidated Statements of Shareholders’ Equity (unaudited)

(dollars in thousands)


	Three Months Ended June 30, 2019

	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	49,126,427	$	49,126	$	1,053,190	$	412,005	$	(1,178)	1,541,118	$	(17,559)		$	1,495,584

Issuance of restricted shares	13,328	13		(13)		—		—		—	—			—
Forfeitures of restricted shares	(40,423)	(40)		(484)		—		—		—	—			(524)
Proceeds from exercise of stock options	—	—		—		—		—		—	—			—
Share-based compensation	—	—		807		—		—		—	—			807
Purchase of treasury shares	—	—		—		—		—		296,630	(10,563)			(10,563)
Net income	—	—		—		38,904		—		—	—			38,904
Dividends on common shares ($0.10 per share)	—	—		—		(4,727)		—		—	—			(4,727)


Other comprehensive income (loss) during the period	—	—		—		—		17,640		—	—			17,640
Balance at end of period	49,099,332	$	49,099	$	1,053,500	$	446,182	$	16,462	1,837,748	$	(28,122)		$	1,537,121


	Six Months Ended June 30, 2019

	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	49,014,925	$	49,015	$	1,051,584	$	377,135	$	(4,826)	1,514,984	$	(16,561)		$	1,456,347

Issuance of restricted shares	117,122	116		799		—		—		—	—			915
Forfeitures of restricted shares	(40,423)	(40)		(484)		—		—		—	—			(524)
Proceeds from exercise of stock options	7,708	8		46		—		—		—	—			54
Share-based compensation	—	—		1,555		—		—		—	—			1,555
Purchase of treasury shares	—	—		—		—		—		322,764	(11,561)			(11,561)
Net income	—	—		—		78,809		—		—	—			78,809
Dividends on common shares ($0.20 per share)	—	—		—		(9,486)		—		—	—			(9,486)

Cumulative effect of change in accounting for leases	—	—		—		(276)		—		—	—			(276)
Other comprehensive income (loss) during the period	—	—		—		—		21,288		—	—			21,288
Balance at end of period	49,099,332	$	49,099	$	1,053,500	$	446,182	$	16,462	1,837,748	$	(28,122)		$	1,537,121

See notes to unaudited consolidated financial statements.

AMERIS BANCORP AND SUBSIDIARIES

Consolidated Statements of Cash Flows (unaudited)

(dollars in thousands)


	Six Months Ended June 30,
	2020		2019
Operating Activities
Net income	$	51,558	$	78,809
Adjustments reconciling net income to net cash provided by (used in) operating activities:
Depreciation	7,923		5,292
Net losses on sale or disposal of premises and equipment including write-downs	8		70
Net write-downs on other assets	1,090		3,580
Provision for credit losses	129,208		8,076
Net losses on sale of other real estate owned including write-downs	873		84
Share-based compensation expense	1,700		1,514
Amortization of intangible assets	11,232		6,253
Amortization of operating lease right-of-use assets	6,599		3,029
Provision for deferred taxes	(32,544)		3,962
Net amortization of investment securities available for sale	2,932		1,653
Net gain on securities	(5)		(135)
Accretion of discount on purchased loans, net	(16,138)		(5,452)
Accretion on other borrowings	94		41
Accretion on subordinated deferrable interest debentures	970		684
Loan servicing asset impairment	30,239		1,460
Originations of mortgage loans held for sale	(3,799,622)		(798,429)
Payments received on mortgage loans held for sale	34,849		488
Proceeds from sales of mortgage loans held for sale	3,724,287		745,876
Net gains on sale of mortgage loans held for sale	(129,450)		(27,222)
Originations of SBA loans	(28,595)		(33,191)
Proceeds from sales of SBA loans	35,152		29,952
Net gains on sale of SBA loans	(2,614)		(2,476)
Increase in cash surrender value of bank owned life insurance	(1,876)		(968)
Gain on bank owned life insurance proceeds	(845)		—

Changes in FDIC loss-share payable, net of cash payments	(562)		3,431
Change attributable to other operating activities	(52,715)		2,495
Net cash provided by (used in) operating activities	(26,252)		28,876

Investing Activities, net of effects of business combinations
Proceeds from maturities of time deposits in other banks	—		10,064
Purchases of securities available for sale	—		(219,352)
Proceeds from prepayments and maturities of securities available for sale	188,920		99,408
Proceeds from sales of securities available for sale	—		64,995
Net (increase) decrease in other investments	(9,529)		(17,949)
Net (increase) decrease in loans	(1,591,894)		(613,881)
Purchases of premises and equipment	(9,267)		(4,610)
Proceeds from sales of premises and equipment	409		762
Proceeds from sales of other real estate owned	3,169		4,854
Payments paid to FDIC under loss-share agreements	(177)		(2,322)
Proceeds from bank owned life insurance	2,980		—

Net cash and cash equivalents received in acquisitions	(2,417)		—
Net cash used in investing activities	(1,417,806)		(678,031)

			(Continued)

Nine Months Ended
September 30,
2017 2016
Operating Activities

Net income $ 64,398
$ 53,923
Adjustments reconciling net income to net cash provided by operating activities:

Depreciation 6,918
7,041
Net losses on sale or disposal of premises and equipment 956
112
Provision for loan losses 5,828
2,381
Net losses on sale of other real estate owned including write-downs 501
1,844
Share-based compensation expense 2,419
1,586
Amortization of intangible assets 2,990
3,332
Provision for deferred taxes (962 ) (6,369 )
Net amortization of investment securities available for sale 4,815
5,086
Net gains on securities available for sale (37 ) (94 )
Accretion of discount on purchased loans (9,023 ) (12,926 )
Amortization of premium on purchased loan pools 2,943
4,149
Net accretion (amortization) on other borrowings 62
(57 )
Amortization of subordinated deferrable interest debentures 992
1,123
Originations of mortgage loans held for sale (1,113,188 ) (1,051,812 )
Payments received on mortgage loans held for sale 799
1,167
Proceeds from sales of mortgage loans held for sale 961,831
982,898
Net gains on sale of mortgage loans held for sale (36,451 ) (41,935 )
Originations of SBA loans (25,720 ) (57,462 )
Proceeds from sales of SBA loans 23,952
21,656
Net gains on sale of SBA loans (3,423 ) (3,054 )
Increase in cash surrender value of BOLI (1,188 ) (1,318 )
Changes in FDIC loss-share receivable/payable, net of cash payments received 1,974
10,277
Change attributable to other operating activities 12,931
16,202
Net cash used in operating activities (95,683 ) (62,250 )

Investing Activities, net of effects of business combinations

Purchase of securities available for sale (83,090 ) (134,786 )
Proceeds from prepayments and maturities of securities available for sale 85,036
93,513
Proceeds from sales of securities available for sale 3,090
53,026
Net increase in other investments (12,669 ) (13,050 )
Net increase in loans, excluding purchased loans (786,548 ) (556,182 )
Payments received on purchased loans 155,033
186,319
Purchases of loan pools —
(151,481 )
Payments received on purchased loan pools 95,533
115,409
Purchases of premises and equipment (3,016 ) (8,250 )
Proceeds from sales of premises and equipment 16
207
Proceeds from sales of other real estate owned 11,989
18,329
Payments received from (payments to) FDIC under loss-share agreements (97 ) 4,770
Net cash proceeds paid in acquisitions —
(7,205 )
Net cash used in investing activities (534,723 ) (399,381 )

(Continued)

AMERIS BANCORP AND SUBSIDIARIES

Consolidated Statements of Cash Flows (unaudited)

(dollars in thousands)


	Nine Months Ended September 30,							Six Months Ended June 30,
	2017			2016				2020		2019
Financing Activities, net of effects of business combinations							Financing Activities, net of effects of business combinations
Net increase in deposits	$	320,341		$	25,448
Net increase (decrease) in deposits							Net increase (decrease) in deposits	$	1,564,859	$	(66,943)
Net decrease in securities sold under agreements to repurchase	(39,349		)	(20,938		)	Net decrease in securities sold under agreements to repurchase	(7,756)		(17,077)
Proceeds from other borrowings	1,687,692			339,500			Proceeds from other borrowings	4,745,000		415,000
Repayment of other borrowings	(1,371,503		)	(53,513		)	Repayment of other borrowings	(4,725,167)		(2,179)
Issuance of common stock	88,656			—
Repayment of subordinated deferrable interest debentures							Repayment of subordinated deferrable interest debentures	(5,155)		—

Proceeds from exercise of stock options	1,912			963			Proceeds from exercise of stock options	701		54
Dividends paid - common stock	(10,927		)	(5,096		)	Dividends paid - common stock	(20,841)		(9,511)
Purchase of treasury shares	(886		)	(1,225		)	Purchase of treasury shares	(7,973)		(11,561)
Net cash provided by financing activities	675,936			285,139			Net cash provided by financing activities	1,543,668		307,783

Net increase (decrease) in cash and cash equivalents	45,530			(176,492		)	Net increase (decrease) in cash and cash equivalents	99,610		(341,372)
Cash and cash equivalents at beginning of period	198,385			390,563			Cash and cash equivalents at beginning of period	621,849		679,527
Cash and cash equivalents at end of period	$	243,915		$	214,071		Cash and cash equivalents at end of period	$	721,459	$	338,155

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	$	23,369		$	13,791		Interest	$	60,725	$	51,250
Income taxes	28,212			30,969			Income taxes	7,934		21,377
Loans (excluding purchased loans) transferred to other real estate owned	4,043			2,101
Purchased loans transferred to other real estate owned	4,294			6,262
Loans transferred to other real estate owned							Loans transferred to other real estate owned	8,165		2,875
Loans transferred from loans held for sale to loans held for investment	165,352			94,601			Loans transferred from loans held for sale to loans held for investment	86,557		—
Loans transferred from loans held for investment to loans held for sale							Loans transferred from loans held for investment to loans held for sale	—		64,773
Loans provided for the sales of other real estate owned	1,334			1,471			Loans provided for the sales of other real estate owned	299		144
Initial recognition of operating lease right-of-use assets							Initial recognition of operating lease right-of-use assets	—		27,286
Initial recognition of operating lease liabilities							Initial recognition of operating lease liabilities	—		29,651
Right-of-use assets obtained in exchange for new operating lease liabilities							Right-of-use assets obtained in exchange for new operating lease liabilities	8,844		262
Assets acquired in business acquisitions	—			561,440			Assets acquired in business acquisitions	—		373
Liabilities assumed in business acquisitions	—			465,048			Liabilities assumed in business acquisitions	—		(1,922)
Issuance of common stock in acquisitions	—			72,455
Issuance of common stock in exchange for equity investment in US Premium Finance Holding Company	5,844			—

Change in unrealized gain (loss) on securities available for sale, net of tax	4,337			7,724			Change in unrealized gain (loss) on securities available for sale, net of tax	21,603		21,700
Change in unrealized gain (loss) on cash flow hedge, net of tax	(38		)	(567		)	Change in unrealized gain (loss) on cash flow hedge, net of tax	14		(412)

				(Concluded)						(Concluded)

See notes to unaudited consolidated financial statements.

AMERIS BANCORP AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

~~September~~June 30, ~~2017~~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 ~~Moultrie,~~Atlanta, Georgia. Ameris conducts substantially all of its operations through its wholly owned banking subsidiary, Ameris Bank (the “Bank”). At ~~September~~June 30, ~~2017,~~2020, the Bank operated 97170 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~~consisting of normal recurring ~~accruals)~~adjustments, which, in the opinion of management, are necessary for a fair presentation of the consolidated financial position and results of operations for the interim periods presented. All significant intercompany accounts and transactions have been eliminated in consolidation. The results of operations for the period ended ~~September~~June 30, ~~2017~~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, ~~2016.~~2019, as amended.

~~Accounting Policy Update~~Cash and Cash Equivalents

~~Other Investments~~ – ~~Other investments~~For purposes of reporting cash flows, cash and cash equivalents include ~~Federal Home Loan~~cash on hand, cash items in process of collection, amounts due from banks, interest-bearing deposits in banks and federal funds sold. The Bank ~~(“FHLB”) stock,~~is required to maintain reserve balances in cash or on deposit with the Federal Reserve Bank ~~stock~~of Atlanta. The required reserve rate was set to 0% effective March 26, 2020 and, ~~a minority equity investment in US Premium Finance Holding Company, a Florida corporation (“USPF”). These investments do not have readily determinable fair values~~accordingly, the Bank had 0 reserve requirement at June 30, 2020. The reserve requirement as of December 31, 2019 was $109.7 million and ~~are carried~~was met by cash on hand and balances at ~~cost. They are periodically reviewed for impairment based on ultimate recovery~~the Federal Reserve Bank of ~~par value or cost basis. Both stock and cash dividends~~Atlanta which are reported ~~as income. For additional information regarding~~on the ~~Company’s minority equity investment~~Company's consolidated balance sheets in ~~USPF, see Note 2.~~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 ~~2017~~2020

ASU ~~2016-09~~2018-15 – ~~Improvements to Employee Share-Based Payment~~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 ~~2016-09”~~2018-15"). ASU ~~2016-09 simplifies various aspects~~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 ~~how share-based payments~~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 ~~accounted~~expensed as incurred. Training costs and certain data conversion costs also cannot be capitalized for ~~and~~a CCA that is a service contract. Amortization expense of capitalized implementation costs will be presented in the ~~financial statements. Under ASU 2016-09, companies~~same income statement caption as the CCA fees. Similarly, capitalized implementation costs will ~~record all excess tax benefits and tax deficiencies as income tax expense or benefit~~be presented in the ~~income statement~~same balance sheet caption as any prepaid CCA fees, and will no longer record excess tax benefits and certain tax deficiencies in additional paid-in capital. The standard eliminates the requirement that excess tax benefits be realized before companies can recognize them. The excess tax benefitscash flows from capitalized implementation costs will be ~~reported as an operating activity on~~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. During the first quarter of 2020, the Company adopted the provision of ASU 2018-15, and the cash paid to a tax authority when shares are withheld to satisfy a company’s statutory income tax withholding obligation will be reported as a financing activity on its statement of cash. In addition, the standard increases the amount an employer can withhold to cover income taxes on awards and still qualify for the exception to liability classification for shares used to satisfy the employer’s statutory income tax withholding obligation. ASU 2016-09 permits companies to make an accounting policy election for the impact of forfeitures on the recognition of expense for share-based payment awards. Forfeitures can be estimated, as required today, or recognized when they occur. The Company has elected to recognize forfeitures as they occur. ASU 2016-09 became effective on January 1, 2017 andadoption did not have a material impact on the Company's consolidated financial statements.

~~Accounting Standards Pending Adoption~~

ASU ~~2017-12~~ 2018-13– ~~"Derivatives and Hedging~~Fair Value Measurement (Topic ~~815)~~820): ~~Targeted Improvements~~Disclosure Framework – Changes to ~~Accounting~~the Disclosure Requirements for ~~Hedging Activities~~ Fair Value Measurement ("ASU ~~2017-12")~~2018-13). ~~The purposes~~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 2017-12 are to (1) improve the transparency and understandability of information conveyed in financial statements about an entity’s risk management activities by better aligning the entity’s financial reporting for hedging relationships with the economic objectives of those risk management activities and (2) reduce the complexity of and simplify the application of hedge accounting by preparers. ASU 2017-122018-13 is effective for interim and annual ~~reporting~~ periods beginning after December 15, ~~2018 with early~~2019. Early adoption ~~in an interim period~~is permitted. ~~ASU 2017-12 requires a modified retrospective transition method in which~~During the first quarter of 2020, the Company ~~will recognize~~adopted the cumulative effect of the change on the opening balance of each affected component of equity in the statement of financial position as of the beginning of the fiscal year of adoption. The Company is currently evaluating the provisionsprovision of ASU ~~2017-12 to determine~~2018-13, and the ~~potential impact the new standard will have on the Company’s results of operations, financial position and disclosures, but it is~~adoption did not ~~expected to have a material impact.~~

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

~~ASU 2017-08 –~~ ~~“Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities~~ (“ASU 2017-08”). ASU 2017-08 shortens the amortization period for certain purchased callable debt securities held at a premium, shortening such period to the earliest call date. Under the current guidance, entities generally amortize the premium on a callable debt security as an adjustment of yield over the contractual life (to maturity date) of the instrument. This ASU does not require any accounting change in the accounting for debt securities held at a discount; the discount continues to be amortized as an adjustment of yield over the contractual life (to maturity) of the instrument. ASU 2017-08 is effective for interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted. Upon adoption, ASU 2017-08 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 adopted. The Company is currently evaluating the provisions of ASU 2017-08 to determine the potential impact the new standard will have on the Company’s results of operations, financial position and disclosures, but it is not expected to have a material impact.

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

~~ASU 2017-01 –~~ ~~Business Combinations (Topic 805): Clarifying the Definition of a Business~~ (“ASU 2017-01”). ASU 2017-01 provides a framework to use in determining when a set of assets and activities is a business. The standard provides more consistency in applying the business combination guidance, reduces the costs of application, and makes the definition of a business more operable. ASU 2017-01 is effective for interim and annual periods within those annual periods beginning after December 15, 2017. The Company is currently evaluating the impact ~~this standard will have~~ on the ~~Company’s results of operations,~~Company's consolidated financial ~~position and disclosures, but it is not expected to have a material impact.~~statements.

ASU 2016-13 - – Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 significantly changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The standard will replace the current incurred loss approach with an expected loss model, referred to as the current expected credit loss (“CECL”) model. The new standard will apply to

financial assets subject to credit losses and measured at amortized cost and certain off-balance-sheet credit exposures, which include, but are not limited to, loans, leases, held-to-maturity securities, loan commitments and financial guarantees. ASU 2016-13 simplifies the accounting for purchased credit-impaired debt securities and loans and expands the disclosure requirements regarding an entity’s assumptions, models and methods for estimating the allowance for loan and lease losses. In addition, entities will need to disclose the amortized cost balance for each class of financial asset by credit quality indicator, disaggregated by the year of origination. ASU 2016-13 is effective for interim and annual reporting periods beginning after December 15, 2019. Early adoption is permitted for interim and annual reporting periods beginning after December 15, 2018. Upon adoption, ASU 2016-13 provides for a modified retrospective transition by means of a ~~cumulative-effect~~cumulative effect adjustment to equity as of the beginning of the period in which the guidance is effective. ~~While~~

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 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 PCD assets as

of the date of adoption. The Company determined $15.6 million of existing discounts on PCD loans was related to 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 six months ended June 30, 2020 and 2019. Accrued interest receivable on available-for-sale debt securities totaled $4.5 million as of June 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 $67.7 million at June 30, 2020.

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 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.

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 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 political subdivisions. The source of 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. 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 for the commercial, financial and 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 Company generates cash flow projections at the instrument level wherein payment expectations are adjusted for estimated prepayment speed, curtailments, time to recovery, probability of 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 loss drivers. For all loan pools utilizing the DCF method, the Company uses a combination of national and regional data including gross domestic product, home price indices, unemployment rates, retail sales, and rental vacancy rates depending on the 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 for the 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 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 (“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 credit mix of the pools and 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 historical loss rates, the Company applies historical benchmarking PD and LGD ratios provided by a reputable and independent third party to the 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 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 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 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.

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 ~~this standard will have~~of adopting ASU 2020-04 on the ~~results~~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 ~~operations, financial position~~goodwill should be considered part of the acquisition to which it related or recognized as a separate transaction; and ~~disclosures,~~(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 recognize a one-time cumulative effect adjustment to the allowance for loan losses as of the beginning of the first reporting period in which the new standard is effective. The Company has established a steering committee which includes the appropriate members of management to evaluate the impact this ASU will have on Company’s financial position, results of operations and financial statement disclosures and determine the most appropriate method of implementingapply the amendments in this ASU as well as any resources needed to implement the amendments. This committee has identified the software vendor of choice for implementation, established an implementation timeline and continues to stay currentupdate on ~~implementation issues and concerns.~~

~~ASU 2016-02 –~~ ~~Leases (Topic 842)~~ (“ASU 2016-02”). ASU 2016-02 amends the existing standards for lease accounting effectively requiring most leases be carried on the balance sheets of the related lessees by requiring them to recognize a right-of-use asset and a corresponding lease liability. ASU 2016-02 includes qualitative and quantitative disclosure requirements intended to provide greater insight into the nature of an entity’s leasing activities. The standard must be adopted using a modified retrospective ~~transition with a cumulative-effect adjustment~~basis for the provision related to ~~equity as of the beginning of the period in which it is adopted.~~franchise taxes and prospectively for all other amendments. ASU ~~2016-02~~2019-12 is effective for interim and annual ~~reporting~~ periods beginning after December 15, ~~2018, and interim periods within those annual periods with early~~2020. Early adoption ~~permitted. The Company has several leased facilities, which are currently treated as operating leases, and are not currently shown on the Company’s consolidated balance sheet. After ASU 2016-02~~ is ~~implemented, the Company expects to begin reporting these lease agreements on the balance sheet as a right-of-use asset and a corresponding liability.~~permitted. The Company is currently evaluating the impact this ~~standard~~ASU will have on the Company’s consolidated balance sheet, consolidated statement of income and comprehensive income, consolidated statement of ~~stockholders’~~shareholders’ equity and consolidated statement of cash flows, but it is not expected to have a material impact.

~~ASU 2014-09 –~~ ~~Revenue from Contracts with Customers~~ (“ASU 2014-09”). ASU 2014-09 provides guidance that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 is effective prospectively, for annual and interim periods, beginning after December 15, 2017. Management has substantially completed its evaluation of the impact ASU 2014-09 will have on the Company’s consolidated financial statements. Based on this evaluation to date, management has determined that for the revenue streams of the Company within the scope of ASU 2014-09, the new accounting guidance will not change the timing or amount of revenue recognized. The adoption of ASU 2014-09 is not expected to have a material impact on the Company's consolidated financial statements.

NOTE 2 – ~~INVESTMENT IN US PREMIUM FINANCE HOLDING COMPANY~~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 ~~December 15, 2016,~~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, ~~entered into~~with the Bank surviving. The acquisition expanded the Company's existing market presence in Georgia and Florida, as Fidelity Bank had a ~~Management~~total of 62 branches at the time of closing, 46 of which were located in Georgia and ~~License Agreement with William J. Villari and USPF pursuant to~~16 of which ~~Mr. Villari will manage a division~~were located in Florida. Under the terms of the ~~Bank to be operated under the name “US Premium Finance” and which is to be engaged in the business~~merger agreement, Fidelity's shareholders received 0.80 shares of ~~soliciting, originating, servicing, administering and collecting loans made~~Ameris common stock for ~~purposes~~each share of ~~funding insurance premiums and other loans made to persons engaged in the insurance business.~~

~~Also on December 15, 2016,~~Fidelity common stock they previously held. As a result, the Company entered into a Stock Purchase Agreement with Mr. Villari pursuant to which the Company agreed to purchase from Mr. Villari 4.99% of the outstanding shares of common stock of USPF. As consideration for such shares, the Company agreed to issue to Mr. Villari 128,572 unregisteredissued 22,181,522 shares of its common stock inat a ~~private placement transaction pursuant~~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 finalized its fair value adjustments during the second quarter of 2020.


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

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

Explanation of fair value adjustments

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

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

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

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

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

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

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

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

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

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

(k)Adjustment reflects the fair value adjustment to the ~~exemptions from registration provided~~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 ~~Section 4(a)(2)~~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 ~~Securities Act~~acquired other liabilities.

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

(p)Adjustment reflects additional recording of ~~1933, as amended, and Rule 506~~fair value adjustments to loans held for sale.

(q)Adjustment reflects additional recording of Regulation D promulgated thereunder. Those transactions closed on January 18, 2017, and a registration statement was filed with the Securities and Exchange Commission on February 13, 2017 to register the resale or other dispositionfair value adjustments of the ~~shares~~acquired loan portfolio.

(r)Adjustment reflects additional recording of ~~common stock~~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 $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 $75.2 million, or 2.09%, estimated discount to the acquired carrying value. Of the total loans acquired, management identified $121.3 million that were ~~issued~~considered to ~~Mr. Villari.~~

~~The Company’s 4.99% investment in USPF was valued at $5.8 million, based upon the closing price of the Company’s common stock immediately~~be credit impaired and were accounted for under ASC Topic 310-30 prior to the ~~parties’ execution~~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 ~~Stock Purchase Agreement,~~loans as ~~follows:~~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	$	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, except per share amount)
Ameris common shares issued 128,572
Price per share of the Company's common stock $ 45.45
Fair value of consideration transferred $ 5,844
Pro Forma Financial Information

~~Because USPF does not have a readily determinable fair value and Ameris does not exercise significant influence over USPF, the investment is carried at cost and is~~The results of operations of Fidelity subsequent to its acquisition date are included ~~in other investments~~ in the Company’s consolidated ~~balance sheet.~~statements of income and comprehensive income. The ~~net carrying value of~~following unaudited pro forma information reflects the Company’s ~~investment~~estimated consolidated results of operations as if the acquisitions had occurred on January 1, 2019, unadjusted for potential cost savings. Merger and conversion charges are not included in ~~USPF was $5.8 million as of September 30, 2017.~~the pro forma information below.


	Three Months Ended June 30,						Six Months Ended June 30,
(dollars in thousands, except per share data; shares in thousands)	2020		2019		2020		2019
Net interest income and noninterest income	$	284,774	$	200,132	$	357,890	$	392,386
Net income	$	32,943	$	44,495	$	52,693	$	92,348
Net income available to common shareholders	$	32,943	$	44,495	$	52,693	$	92,348
Income per common share available to common shareholders – basic	$	0.48	$	0.64	$	0.76	$	1.33
Income per common share available to common shareholders – diluted	$	0.48	$	0.64	$	0.76	$	1.33
Average number of shares outstanding, basic	69,192		69,492		69,235		69,535
Average number of shares outstanding, diluted	69,293		69,519		69,413		69,576

NOTE 3 – INVESTMENT SECURITIES

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

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


(dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
June 30, 2020
U.S. government sponsored agencies	$	17,207	$	474	$	—	$	17,681
State, county and municipal securities	90,012		3,186		—		93,198
Corporate debt securities	51,680		701		(68)		52,313
SBA pool securities	67,241		2,815		(114)		69,942
Mortgage-backed securities	962,445		43,471		(154)		1,005,762
Total debt securities	$	1,188,585	$	50,647	$	(336)	$	1,238,896

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

(dollars in thousands)
Amortized
Cost

Gross
Unrealized
Gains

Gross
Unrealized
Losses

Estimated
Fair
Value
September 30, 2017
U.S. government sponsored agencies $ 1,000
$ 4
$ —
$ 1,004
State, county and municipal securities 140,190
3,271
(74 ) 143,387
Corporate debt securities 46,704
661
(116 ) 47,249
Mortgage-backed securities 626,927
3,774
(2,748 ) 627,953
Total debt securities $ 814,821
$ 7,710
$ (2,938 ) $ 819,593

December 31, 2016
U.S. government sponsored agencies $ 999
$ 21
$ —
$ 1,020
State, county and municipal securities 149,899
2,605
(469 ) 152,035
Corporate debt securities 32,375
167
(370 ) 32,172
Mortgage-backed securities 641,362
2,700
(6,554 ) 637,508
Total debt securities $ 824,635
$ 5,493
$ (7,393 ) $ 822,735

The amortized cost and estimated fair value of ~~available-for-sale~~debt securities ~~at September~~available for sale securities as of June 30, ~~2017~~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 not included in the maturity categories in the following maturity ~~summary.~~summary:


(dollars in thousands)	Amortized Cost		Estimated Fair Value		(dollars in thousands)	Amortized Cost		Estimated Fair Value
Due in one year or less	$	14,094	$	14,205	Due in one year or less	$	32,971	$	33,230
Due from one year to five years	57,385		58,204		Due from one year to five years	54,049		55,792
Due from five to ten years	77,194		79,093		Due from five to ten years	79,549		82,322
Due after ten years	39,221		40,138		Due after ten years	59,571		61,790
Mortgage-backed securities	626,927		627,953		Mortgage-backed securities	962,445		1,005,762
	$	814,821	$	819,593		$	1,188,585	$	1,238,896

Securities with a carrying value of approximately ~~$238.6~~$586.0 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~~June 30, ~~2017,~~2020, compared with ~~$618.2~~$679.6 million at December 31, ~~2016.~~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~~June 30, ~~2017~~2020 and December 31, ~~2016.~~2019.


	Less Than 12 Months					12 Months or More					Total						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			(dollars in thousands)	Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses
September 30, 2017
U.S. government sponsored agencies	$	—	$	—		$	—	$	—		$	—	$	—
State, county and municipal securities	11,333		(18		)	4,240		(56		)	15,573		(74		)
June 30, 2020																June 30, 2020

Corporate debt securities	8,131		(35		)	10,854		(81		)	18,985		(116		)	Corporate debt securities	$	16,932	$	(68)	$	—	$	—	$	16,932	$	(68)
SBA pool securities																SBA pool securities	250		(1)		4,202		(113)		4,452		(114)
Mortgage-backed securities	225,258		(1,685		)	54,465		(1,063		)	279,723		(2,748		)	Mortgage-backed securities	33,274		(154)		2		—		33,276		(154)
Total debt securities	$	244,722	$	(1,738	)	$	69,559	$	(1,200	)	$	314,281	$	(2,938	)	Total debt securities	$	50,456	$	(223)	$	4,204	$	(113)	$	54,660	$	(336)

December 31, 2016
U.S. government sponsored agencies	$	—	$	—		$	—	$	—		$	—	$	—
December 31, 2019																December 31, 2019

State, county and municipal securities	47,647		(469		)	—		—			47,647		(469		)	State, county and municipal securities	$	803	$	(2)	$	—	$	—	$	803	$	(2)
Corporate debt securities	18,377		(363		)	493		(7		)	18,870		(370		)	Corporate debt securities	2,573		(2)		—		—		2,573		(2)
SBA pool securities																SBA pool securities	28,521		(285)		4,825		(124)		33,346		(409)
Mortgage-backed securities	414,300		(6,177		)	11,791		(377		)	426,091		(6,554		)	Mortgage-backed securities	99,279		(416)		52,326		(467)		151,605		(883)
Total debt securities	$	480,324	$	(7,009	)	$	12,284	$	(384	)	$	492,608	$	(7,393	)	Total debt securities	$	131,176	$	(705)	$	57,151	$	(591)	$	188,327	$	(1,296)

As of ~~September~~June 30, ~~2017,~~2020, the Company’s ~~securities~~security portfolio consisted of ~~421~~536 securities, ~~119~~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~~June 30, ~~2017,~~2020, the Company held ~~101~~19 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 SeptemberAt June 30, ~~2017.~~

~~At September 30, 2017,~~2020, the Company held ~~nine state, county and municipal~~7 SBA pool securities and ~~nine~~4 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, 2017.~~

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~~June 30, ~~2017~~2020 or December 31, ~~2016.~~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 and further, that the~~ Company does not intend to sell these investment securities at an unrealized loss position at ~~September~~June 30, ~~2017,~~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~~June 30, ~~2017, these investments are not considered impaired on an other-than-temporary basis.~~2020, management believes the unrealized losses have resulted from factors other than credit and no allowance for credit losses was recorded.

At ~~September~~June 30, ~~2017~~2020 and December 31, ~~2016,~~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~~six months ended ~~September~~June 30, ~~2017~~2020 and ~~2016:~~2019:


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

Sales proceeds	$	—	$	64,995

(dollars in thousands) September 30,
2017 September 30,
2016
Gross gains on sales of securities $ 38
$ 312
Gross losses on sales of securities (1 ) (218 )
Net realized gains on sales of securities available for sale $ 37
$ 94

Sales proceeds $ 3,090
$ 53,026
Total gain on securities reported on the consolidated statements of income and comprehensive income is comprised of the following for the six months ended June 30, 2020 and 2019:


(dollars in thousands)	June 30, 2020		June 30, 2019
Net realized gains on sales of securities available for sale	$	—	$	58
Unrealized holding gains on equity securities	5		15
Net realized gains on sales of other investments	—		62
Total gain on securities	$	5	$	135

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 an unrelated third ~~party~~parties consumer installment home improvement loans made to borrowers throughout the United States. ~~As of September 30, 2017~~The Bank also offers certain SBA and December 31, 2016, the net carrying value of these consumer installment home improvement loans was approximately $148.0 million and $60.8 million, respectively. During the fourth quarter of 2016, the Bank purchased a pool of commercial insurance premium finance loans ~~made to borrowers throughout~~nationally. Loans oustanding under the United States and began to originate, administer and service these types of loans. As of September 30, 2017 and December 31, 2016, the net carrying value of commercial insurance premium loans was approximately $487.9 million and $353.9 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, farmland and warehouse space. They also include non-owner occupied commercial buildings such as leased retail and office space. Commercial real estate loans may be larger in size and may involve a greater degree of risk than one-to-four family residential mortgage loans. Payments on such loans are often dependent on successful operation or management of the properties. The 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 and other 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,
2017 December 31,
2016
Commercial, financial and agricultural $ 1,307,209
$ 967,138
Real estate – construction and development 550,189
363,045
Real estate – commercial and farmland 1,558,882
1,406,219
Real estate – residential 969,289
781,018
Consumer installment 183,314
96,915
Other 5,795
12,486
$ 4,574,678
$ 3,626,821

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 $917.1 million and $1.07 billion at September 30, 2017 and December 31, 2016, 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,
2017 December 31,
2016
Commercial, financial and agricultural $ 80,895
$ 96,537
Real estate – construction and development 68,583
81,368
Real estate – commercial and farmland 500,169
576,355
Real estate – residential 264,312
310,277
Consumer installment 3,167
4,654
$ 917,126
$ 1,069,191

~~A rollforward of purchased loans for the nine months ended September 30, 2017 and 2016 is shown below:~~

(dollars in thousands) September 30,
2017 September 30,
2016
Balance, January 1 $ 1,069,191
$ 909,083
Charge-offs, net of recoveries (1,761 ) (3,122 )
Additions due to acquisitions —
402,942
Accretion 9,023
12,926
Transfers to purchased other real estate owned (4,294 ) (6,262 )
Payments received (155,033 ) (186,276 )
Other —
90
Ending balance $ 917,126
$ 1,129,381


(dollars in thousands)	June 30, 2020		December 31, 2019
Commercial, financial and agricultural	$	1,839,921	$	802,171
Consumer installment	575,782		498,577
Indirect automobile	739,543		1,061,824
Mortgage warehouse	748,853		526,369
Municipal	731,508		564,304
Premium finance	690,584		654,669
Real estate – construction and development	1,641,744		1,549,062
Real estate – commercial and farmland	4,804,420		4,353,039
Real estate – residential	2,730,802		2,808,461
	$	14,503,157	$	12,818,476

The following is a summary of changes in the accretable discounts of purchased loans during the ~~nine~~six months ended ~~September~~June 30, ~~2017 and 2016:~~2019:

(dollars in thousands) September 30,
2017 September 30,
2016
Balance, January 1 $ 30,624
$ 33,848
Additions due to acquisitions —
9,991
Accretion (9,023 ) (12,926 )
Accretable discounts removed due to charge-offs (15 ) (161 )
Transfers between non-accretable and accretable discounts, net 923
2,544
Ending balance $ 22,509
$ 33,296


(dollars in thousands)	June 30, 2019
Balance, January 1	$	40,496
Additions due to acquisitions	—
Accretion	(6,125)
Accretable discounts removed due to charge-offs	—
Transfers between non-accretable and accretable discounts, net	(2,291)
Ending balance	$	32,080

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, 2017, purchased loan pools totaled $465.2 million and consisted of whole-loan, adjustable rate residential mortgages on properties outside the Company’s markets, with principal balances totaling $459.1 million and $6.1 million of remaining purchase premium paid at acquisition. As of December 31, 2016, purchased loan pools totaled $568.3 million with principal balances totaling $559.4 million and $8.9 million of remaining purchase premium paid at acquisition. At September 30, 2017 and December 31, 2016, one loan in the purchased loan pools with a principal balance of $915,000 and $925,000, respectively, was classified as a troubled debt restructuring and risk-rated grade 40, while all other loans included in the purchased loan pools were performing current loans risk-rated grade 20. During the second quarter of 2017, this troubled debt restructuring defaulted on its restructured terms and was placed on nonaccrual status. At September 30, 2017 and December 31, 2016, the Company had allocated $1.5 million and $1.8 million, 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)	June 30, 2020		December 31, 2019
Commercial, financial and agricultural	$	11,032	$	9,236
Consumer installment	1,186		831
Indirect automobile	1,643		1,746


Premium finance	—		600
Real estate – construction and development	1,913		1,988
Real estate – commercial and farmland	21,874		23,797
Real estate – residential	40,097		36,926
	$	77,745	$	75,124

(dollars in thousands) September 30,
2017 December 31,
2016
Commercial, financial and agricultural $ 2,409
$ 1,814
Real estate – construction and development 735
547
Real estate – commercial and farmland 5,705
8,757
Real estate – residential 5,984
6,401
Consumer installment 492
595
$ 15,325
$ 18,114

There was 0 interest income recognized on nonaccrual loans during the six months ended June 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)	June 30, 2020
Commercial, financial and agricultural	$	1,081






Real estate – commercial and farmland	9,632
Real estate – residential	10,367
	$	21,080

(dollars in thousands) September 30,
2017 December 31,
2016
Commercial, financial and agricultural $ 2,086
$ 692
Real estate – construction and development 3,255
2,611
Real estate – commercial and farmland 6,974
10,174
Real estate – residential 6,646
9,476
Consumer installment 88
13
$ 19,049
$ 22,966

The following table presents an analysis of past-due loans ~~excluding purchased past-due loans~~ as of ~~September~~June 30, ~~2017~~2020 and December 31, ~~2016:~~ 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
June 30, 2020
Commercial, financial and agricultural	$	802	$	1,917	$	6,246	$	8,965	$	1,830,956	$	1,839,921	$	—
Consumer installment	1,699		1,691		2,173		5,563		570,219		575,782		1,377
Indirect automobile	1,458		597		1,528		3,583		735,960		739,543		24
Mortgage warehouse	—		—		—		—		748,853		748,853		—
Municipal	—		—		—		—		731,508		731,508		—
Premium finance	5,141		6,767		11,928		23,836		666,748		690,584		11,928
Real estate – construction and development	8,064		1,359		3,523		12,946		1,628,798		1,641,744		1,795
Real estate – commercial and farmland	890		1,910		15,517		18,317		4,786,103		4,804,420		—
Real estate – residential	20,601		6,507		34,637		61,745		2,669,057		2,730,802		2
Total	$	38,655	$	20,748	$	75,552	$	134,955	$	14,368,202	$	14,503,157	$	15,126

December 31, 2019
Commercial, financial and agricultural	$	3,609	$	2,251	$	6,484	$	12,344	$	789,827	$	802,171	$	—
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	—		—		—		—		526,369		526,369		—
Municipal	—		—		—		—		564,304		564,304		—
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		—
Real estate – commercial and farmland	7,404		3,405		15,598		26,407		4,326,632		4,353,039		—
Real estate – residential	46,226		15,277		31,083		92,586		2,715,875		2,808,461		—
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, 2017

Commercial, financial and agricultural $ 5,388
$ 2,488
$ 5,025
$ 12,901
$ 1,294,308
$ 1,307,209
$ 2,941
Real estate – construction and development 341
52
517
910
549,279
550,189
—
Real estate – commercial and farmland 2,369
1,097
5,203
8,669
1,550,213
1,558,882
—
Real estate – residential 3,293
1,938
4,165
9,396
959,893
969,289
—
Consumer installment loans 1,034
408
338
1,780
181,534
183,314
—
Other —
—
—
—
5,795
5,795
—
Total $ 12,425
$ 5,983
$ 15,248
$ 33,656
$ 4,541,022
$ 4,574,678
$ 2,941

December 31, 2016

Commercial, financial and agricultural $ 565
$ 82
$ 1,293
$ 1,940
$ 965,198
$ 967,138
$ —
Real estate – construction and development 908
446
439
1,793
361,252
363,045
—
Real estate – commercial and farmland 6,329
1,711
6,945
14,985
1,391,234
1,406,219
—
Real estate – residential 6,354
1,282
5,302
12,938
768,080
781,018
—
Consumer installment loans 624
263
350
1,237
95,678
96,915
—
Other —
—
—
—
12,486
12,486
—
Total $ 14,780
$ 3,784
$ 14,329
$ 32,893
$ 3,593,928
$ 3,626,821
$ —

Collateral-Dependent Loans

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 repayment. These loans are written down to the lower of cost or collateral value less estimated selling costs. As of June 30, 2020, there were $102.1 million of collateral-dependent loans which are primarily secured by real estate, equipment and receivables.

~~The following table presents an analysis of purchased past-due loans as of September 30, 2017 and December 31, 2016:~~

(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, 2017

Commercial, financial and agricultural $ 2,674
$ 2
$ 288
$ 2,964
$ 77,931
$ 80,895
$ —
Real estate – construction and development 1,221
935
1,713
3,869
64,714
68,583
—
Real estate – commercial and farmland 2,842
1,318
1,823
5,983
494,186
500,169
—
Real estate – residential 3,308
440
3,435
7,183
257,129
264,312
—
Consumer installment loans 1
4
43
48
3,119
3,167
—
Total $ 10,046
$ 2,699
$ 7,302
$ 20,047
$ 897,079
$ 917,126
$ —

December 31, 2016

Commercial, financial and agricultural $ 113
$ 18
$ 593
$ 724
$ 95,813
$ 96,537
$ —
Real estate – construction and development 161
11
2,518
2,690
78,678
81,368
—
Real estate – commercial and farmland 2,034
326
7,152
9,512
566,843
576,355
—
Real estate – residential 4,566
698
6,835
12,099
298,178
310,277
—
Consumer installment loans 22
—
13
35
4,619
4,654
—
Total $ 6,896
$ 1,053
$ 17,111
$ 25,060
$ 1,044,131
$ 1,069,191
$ —

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, 2017		December 31, 2016		September 30, 2016		(dollars in thousands)	December 31, 2019		June 30, 2019
Nonaccrual loans	$	15,325	$	18,114	$	16,570	Nonaccrual loans	$	75,124	$	41,479
Troubled debt restructurings not included above	12,452		14,209		14,013		Troubled debt restructurings not included above	29,609		31,383
Total impaired loans	$	27,777	$	32,323	$	30,583	Total impaired loans	$	104,733	$	72,862

Quarter-to-date interest income recognized on impaired loans	$	297	$	225	$	252	Quarter-to-date interest income recognized on impaired loans	$	1,201	$	1,171
Year-to-date interest income recognized on impaired loans	$	857	$	1,033	$	808	Year-to-date interest income recognized on impaired loans	$	4,131	$	2,025
Quarter-to-date foregone interest income on impaired loans	$	233	$	267	$	239	Quarter-to-date foregone interest income on impaired loans	$	1,044	$	750
Year-to-date foregone interest income on impaired loans	$	753	$	977	$	710	Year-to-date foregone interest income on impaired loans	$	4,100	$	1,478

The following table presents an analysis of information pertaining to impaired loans ~~excluding purchased loans~~ as of ~~September 30, 2017,~~ December 31, ~~2016~~2019 and ~~September~~June 30, ~~2016:~~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		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		—		839		—		420		767
Indirect automobile	1,845		1,746		—		1,746		—		1,481		592


Premium finance	757		—		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
Nine
Month
Average
Recorded
Investment
September 30, 2017

Commercial, financial and agricultural $ 2,924
$ 1,121
$ 1,331
$ 2,452
$ 379
$ 2,478
$ 2,380
Real estate – construction and development 1,655
532
627
1,159
81
1,179
1,160
Real estate – commercial and farmland 11,451
536
9,938
10,474
806
10,669
11,416
Real estate – residential 15,211
4,558
8,636
13,194
1,058
13,683
14,814
Consumer installment loans 538
498
—
498
—
507
554
Total $ 31,779
$ 7,245
$ 20,532
$ 27,777
$ 2,324
$ 28,516
$ 30,324

(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, 2016

Commercial, financial and agricultural $ 3,068
$ 204
$ 1,656
$ 1,860
$ 134
$ 1,613
$ 1,684
Real estate – construction and development 2,047
—
1,233
1,233
273
1,590
2,018
Real estate – commercial and farmland 13,906
6,811
6,065
12,876
1,503
12,948
12,845
Real estate – residential 15,482
2,238
13,503
15,741
3,080
15,525
14,453
Consumer installment loans 671
—
613
613
5
576
506
Total $ 35,174
$ 9,253
$ 23,070
$ 32,323
$ 4,995
$ 32,252
$ 31,506


(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		Six Month Average Recorded Investment
June 30, 2019															June 30, 2019
Commercial, financial and agricultural															Commercial, financial and agricultural	$	13,097	$	1,632	$	3,407	$	5,039	$	634	$	5,196	$	4,430
Consumer installment															Consumer installment	1,034		932		—		932		—		982		998

(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, 2016
Commercial, financial and agricultural	$	2,568	$	252	$	1,114	$	1,366	$	118	$	1,736	$	1,640

Premium finance															Premium finance	1,104		913		191		1,104		10		552		368
Real estate – construction and development	2,972		—		1,946		1,946		537		2,001		2,214		Real estate – construction and development	16,219		2,059		7,279		9,338		498		8,834		8,612
Real estate – commercial and farmland	14,015		5,499		7,520		13,019		873		12,776		12,837		Real estate – commercial and farmland	20,075		1,951		16,125		18,076		1,984		17,846		18,301
Real estate – residential	14,350		2,046		11,667		13,713		2,648		13,686		13,516		Real estate – residential	41,025		12,221		26,152		38,373		1,880		39,416		39,213
Consumer installment loans	586		—		539		539		6		492		479
Total	$	34,491	$	7,797	$	22,786	$	30,583	$	4,182	$	30,691	$	30,686	Total	$	92,554	$	19,708	$	53,154	$	72,862	$	5,006	$	72,826	$	71,922

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

As of and for the Period Ended
(dollars in thousands) September 30,
2017 December 31,
2016 September 30,
2016
Nonaccrual loans $ 19,049
$ 22,966
$ 23,827
Troubled debt restructurings not included above 20,205
23,543
21,117
Total impaired loans $ 39,254
$ 46,509
$ 44,944

Quarter-to-date interest income recognized on impaired loans $ 493
$ 377
$ 1,493
Year-to-date interest income recognized on impaired loans $ 1,246
$ 2,755
$ 2,378
Quarter-to-date foregone interest income on impaired loans $ 356
$ 354
$ 346
Year-to-date foregone interest income on impaired loans $ 958
$ 1,637
$ 1,283

~~The following table presents an analysis of information pertaining to purchased impaired loans as of September 30, 2017, December 31, 2016 and September 30, 2016:~~

(dollars in thousands)
Unpaid
Contractual
Principal
Balance

Recorded
Investment
With No
Allowance

Recorded
Investment
With
Allowance

Total
Recorded
Investment

Related
Allowance

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

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

(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, 2016

Commercial, financial and agricultural $ 5,031
$ 370
$ 322
$ 692
$ —
$ 783
$ 2,206
Real estate – construction and development 24,566
493
3,477
3,970
153
3,888
4,279
Real estate – commercial and farmland 36,174
3,598
15,036
18,634
385
17,806
19,872
Real estate – residential 27,022
7,883
15,306
23,189
1,088
23,201
23,163
Consumer installment loans 37
24
—
24
—
51
96
Total $ 92,830
$ 12,368
$ 34,141
$ 46,509
$ 1,626
$ 45,729
$ 49,616

(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, 2016

Commercial, financial and agricultural $ 5,097
$ 648
$ 225
$ 873
$ —
$ 838
$ 2,251
Real estate – construction and development 24,253
296
3,509
3,805
184
3,946
4,075
Real estate – commercial and farmland 41,098
1,861
15,116
16,977
402
18,196
19,569
Real estate – residential 26,908
7,473
15,740
23,213
935
23,103
22,893
Consumer installment loans 98
76
—
76
—
80
105
Total $ 97,454
$ 10,354
$ 34,590
$ 44,944
$ 1,521
$ 46,163
$ 48,893

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

Grade 152 – ~~Good~~Strong Credit – This grade includes loans that exhibit one or more characteristics better than that of a ~~Satisfactory~~Good Credit. Generally, the debt service coverage and borrower’s liquidity is materially better than required by the Company’s loan policy.

Grade 203 – ~~Satisfactory~~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 234 – ~~Performing, Under-Collateralized~~Satisfactory Credit – This grade is assigned to loans that are currently performing and supported by adequate financial information that reflects repayment capacity but exhibits a loan-to-value ratio greater than 110%, based on a documented collateral valuation.

~~Grade 25 – Minimum Acceptable Credit~~ – This grade includes loans which exhibit all the characteristics of a ~~Satisfactory~~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 305 – Fair Credit – This grade is assigned to loans that are currently performing and supported by adequate financial information that reflects repayment capacity but exhibits a loan-to-value ratio greater than 110%, based on a documented collateral valuation.

Grade 6 – Other ~~Asset~~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 407 – 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 508 – 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 609 – 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 9 at June 30, 2020.


	Term Loans
As of June 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	$	1,040,825	$	3,753	$	1,793	$	690	$	688	$	5,800	$	10,509	$	—	$	1,064,058
2	36		1,354		935		3,782		108		2,109		6,043		—		14,367
3	52,010		62,009		18,813		19,721		9,505		6,450		73,670		—		242,178
4	50,333		102,834		103,960		60,081		24,471		35,983		95,792		—		473,454
5	1,020		2,961		2,999		5,944		1,482		3,718		2,784		—		20,908
6	—		356		1,860		561		248		1,306		1,482		—		5,813
7	—		744		1,692		2,098		694		4,531		9,384		—		19,143


Total commercial, financial and agricultural	$	1,144,224	$	174,011	$	132,052	$	92,877	$	37,196	$	59,897	$	199,664	$	—	$	1,839,921
Consumer Installment
Risk Grade:
1	$	3,941	$	4,734	$	2,374	$	845	$	145	$	67	$	1,181	$	—	$	13,287
2	—		—		77		3		2,862		1,187		50		—		4,179
3	8,284		10,517		4,510		5,298		39,040		25,378		3,222		—		96,249
4	98,445		120,187		133,148		73,783		18,923		10,625		3,810		—		458,921
5	50		136		37		38		27		243		9		—		540
6	—		14		14		4		50		78		—		—		160
7	—		192		150		196		816		965		127		—		2,446


Total consumer installment	$	110,720	$	135,780	$	140,310	$	80,167	$	61,863	$	38,543	$	8,399	$	—	$	575,782
Indirect Automobile
Risk Grade:

2	$	—	$	—	$	112	$	38	$	5,047	$	3,908	$	—	$	—	$	9,105
3	—		47,286		241,703		252,508		112,068		74,214		—		—		727,779



7	—		93		388		579		638		961		—		—		2,659


Total indirect automobile	$	—	$	47,379	$	242,203	$	253,125	$	117,753	$	79,083	$	—	$	—	$	739,543
Mortgage Warehouse
Risk Grade:


3	$	—	$	—	$	—	$	—	$	—	$	—	$	748,853	$	—	$	748,853






Total mortgage warehouse	$	—	$	—	$	—	$	—	$	—	$	—	$	748,853	$	—	$	748,853


	Term Loans
As of June 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	$	198,131	$	12,763	$	37,851	$	175,644	$	172,620	$	115,134	$	—	$	—	$	712,143
2	—		—		—		—		—		2,587		—		—		2,587
3	—		775		—		6,300		—		9,107		—		—		16,182
4	—		—		—		—		—		596		—		—		596





Total municipal	$	198,131	$	13,538	$	37,851	$	181,944	$	172,620	$	127,424	$	—	$	—	$	731,508
Premium Finance
Risk Grade:

2	$	563,735	$	111,749	$	1,203	$	1,112	$	262	$	594	$	—	$	—	$	678,655




7	2,781		6,297		10		—		2,841		—		—		—		11,929


Total premium finance	$	566,516	$	118,046	$	1,213	$	1,112	$	3,103	$	594	$	—	$	—	$	690,584
Real Estate – Construction and Development
Risk Grade:


3	$	16,000	$	18,405	$	17,828	$	9,991	$	4,005	$	8,759	$	685	$	—	$	75,673
4	288,761		661,716		280,311		120,430		21,001		37,348		92,226		—		1,501,793
5	171		5,100		2,420		607		17,806		9,447		111		—		35,662
6	339		2,652		12,421		2,488		527		4,562		—		—		22,989
7	—		9		1,190		889		46		3,493		—		—		5,627


Total real estate – construction and development	$	305,271	$	687,882	$	314,170	$	134,405	$	43,385	$	63,609	$	93,022	$	—	$	1,641,744
Real Estate – Commercial and Farmland
Risk Grade:
1	$	—	$	—	$	198	$	—	$	—	$	—	$	—	$	—	$	198
2	1,449		547		578		2,289		4,543		15,895		1,946		—		27,247
3	275,436		387,436		172,702		219,630		204,796		325,464		73,997		—		1,659,461
4	220,881		602,402		532,184		418,685		356,739		686,276		33,349		—		2,850,516
5	5,846		4,685		2,798		26,617		15,162		74,695		566		—		130,369
6	—		8,254		9,905		13,851		14,933		24,053		730		—		71,726
7	170		6,096		5,048		8,944		11,173		32,535		937		—		64,903


Total real estate – commercial and farmland	$	503,782	$	1,009,420	$	723,413	$	690,016	$	607,346	$	1,158,918	$	111,525	$	—	$	4,804,420
Real Estate - Residential
Risk Grade:
1	$	—	$	—	$	—	$	—	$	—	$	23	$	—	$	—	$	23
2	—		418		14		126		1,525		61,280		1,768		—		65,131
3	284,058		541,802		303,447		220,661		177,896		462,308		225,353		2,313		2,217,838
4	16,675		74,152		43,926		32,278		34,830		105,288		51,186		59		358,394
5	310		1,453		2,366		3,268		1,499		12,330		3,963		—		25,189
6	172		1,736		939		62		331		4,180		597		—		8,017
7	2,836		8,179		11,568		5,120		2,091		19,355		7,061		—		56,210


Total real estate - residential	$	304,051	$	627,740	$	362,260	$	261,515	$	218,172	$	664,764	$	289,928	$	2,372	$	2,730,802

The following table presents the loan portfolio ~~excluding purchased loans,~~ by risk grade as of ~~September 30, 2017 and~~ December 31, ~~2016~~2019 (in thousands):

Risk
Grade Commercial,
Financial and
Agricultural Real Estate -
Construction and
Development Real Estate -
Commercial and
Farmland Real Estate -
Residential Consumer
Installment
Loans Other Total
September 30, 2017
10 $ 495,116
$ —
$ 6,029
$ 49
$ 9,068
$ —
$ 510,262
15 559,781
959
75,462
55,759
256
—
692,217
20 117,904
48,640
1,005,945
800,557
24,332
5,795
2,003,173
23 343
4,403
4,242
5,986
3
—
14,977
25 121,558
488,956
431,862
86,702
148,891
—
1,277,969
30 8,350
4,458
17,568
5,674
93
—
36,143
40 4,150
2,773
17,774
14,562
671
—
39,930
50 7
—
—
—
—
—
7
60 —
—
—
—
—
—
—
Total $ 1,307,209
$ 550,189
$ 1,558,882
$ 969,289
$ 183,314
$ 5,795
$ 4,574,678

December 31, 2016
10 $ 397,093
$ —
$ 8,814
$ 125
$ 8,532
$ —
$ 414,564
15 376,323
5,390
102,893
54,136
405
—
539,147
20 97,057
36,307
889,539
609,583
25,026
12,486
1,669,998
23 366
6,803
8,533
7,470
14
—
23,186
25 92,066
307,903
357,151
88,370
62,098
—
907,588
30 144
719
22,986
5,197
126
—
29,172
40 4,089
5,923
16,303
16,038
714
—
43,067
50 —
—
—
99
—
—
99
60 —
—
—
—
—
—
—
Total $ 967,138
$ 363,045
$ 1,406,219
$ 781,018
$ 96,915
$ 12,486
$ 3,626,821


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	$	—	$	—	$	552,062	$	—	$	—	$	208	$	27	$	587,877
2	18,937		1,233		18,354		—		2,690		654,069		17,535		35,299		92,255		840,372
3	215,180		33,314		1,033,861		526,369		8,925		—		90,124		1,720,039		2,406,587		6,034,399
4	482,146		449,224		4,009		—		627		—		1,377,674		2,348,083		222,779		4,884,542
5	33,317		208		—		—		—		—		41,759		133,119		24,618		233,021
6	4,901		213		—		—		—		—		17,223		53,941		10,132		86,410
7	25,294		1,191		5,600		—		—		600		4,747		62,350		52,063		151,845
8	—		8		—		—		—		—		—		—		—		8
9	—		2		—		—		—		—		—		—		—		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

~~The following table presents the purchased loan portfolio by risk grade as of September 30, 2017 and December 31, 2016 (in thousands):~~

Risk
Grade

Commercial,
Financial and
Agricultural

Real Estate -
Construction and
Development

Real Estate -
Commercial and
Farmland

Real Estate -
Residential

Consumer
Installment
Loans
Other Total
September 30, 2017
10 $ 3,377
$ —
$ —
$ —
$ 662
$ —
$ 4,039
15 4,969
—
5,327
96,570
231
—
107,097
20 9,497
13,548
198,960
52,646
1,204
—
275,855
23 —
2,302
6,936
10,621
—
—
19,859
25 47,822
40,500
243,216
79,374
864
—
411,776
30 12,817
7,617
22,829
7,378
55
—
50,696
40 2,413
4,616
22,901
17,723
151
—
47,804
50 —
—
—
—
—
—
—
60 —
—
—
—
—
—
—
Total $ 80,895
$ 68,583
$ 500,169
$ 264,312
$ 3,167
$ —
$ 917,126

December 31, 2016
10 $ 5,722
$ —
$ —
$ —
$ 814
$ —
$ 6,536
15 1,266
—
7,619
31,331
570
—
40,786
20 16,204
10,686
194,168
111,712
1,583
—
334,353
23 22
3,643
9,019
14,791
—
—
27,475
25 67,123
56,006
323,242
121,379
1,276
—
569,026
30 5,072
7,271
15,039
7,605
45
—
35,032
40 1,128
3,762
27,268
23,459
366
—
55,983
50 —
—
—
—
—
—
—
60 —
—
—
—
—
—
—
Total $ 96,537
$ 81,368
$ 576,355
$ 310,277
$ 4,654
$ —
$ 1,069,191

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~~six months of ~~2017~~2020 and ~~2016~~2019 totaling ~~$36.6~~$139.6 million and ~~$58.2~~$107.7 million, respectively, under such parameters.

As of ~~September~~June 30, ~~2017~~2020 and December 31, ~~2016,~~2019, the Company had a balance of ~~$14.2~~$42.3 million and ~~$18.2~~$35.2 million, respectively, in troubled debt ~~restructurings, excluding purchased loans.~~restructurings. The Company has recorded ~~$2.8~~$1.7 million and ~~$1.2~~$1.9 million in previous charge-offs on such loans at ~~September~~June 30, ~~2017~~2020 and December 31, ~~2016,~~2019, respectively. The Company’s balance in the allowance for ~~loan~~credit losses allocated to such troubled debt restructurings was ~~$1.2~~$2.9 million and ~~$3.1~~$3.7 million at ~~September~~June 30, ~~2017~~2020 and December 31, ~~2016,~~2019, respectively. At ~~September~~June 30, ~~2017,~~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~~six months ended ~~September~~June 30, ~~2017~~2020 and ~~2016,~~2019, the Company modified loans as troubled debt restructurings ~~excluding purchased loans,~~ with principal balances of ~~$783,000~~$11.3 million and ~~$2.9~~$5.3 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~~six months ended ~~September~~June 30, ~~2017~~2020 and ~~2016:~~2019:

September 30, 2017 September 30, 2016
Loan Class #
Balance
(in thousands)
#
Balance
(in thousands)
Commercial, financial and agricultural 1 $ 4
5 $ 59
Real estate – construction and development — —
2 251
Real estate – commercial and farmland 2 226
4 1,658
Real estate – residential 10 526
7 887
Consumer installment 6 27
9 44
Total 19 $ 783
27 $ 2,899


	June 30, 2020				June 30, 2019
Loan Class	#	Balance (in thousands)		#	Balance (in thousands)
Commercial, financial and agricultural	1	$	731	1	$	7
Consumer installment	4	15		9	62



Premium finance	—	—		1	191
Real estate – construction and development	1	20		—	—
Real estate – commercial and farmland	1	16		2	214
Real estate – residential	76	10,496		34	4,794
Total	83	$	11,278	47	$	5,268

Troubled debt restructurings ~~excluding purchased loans,~~ with an outstanding balance of ~~$1.2~~$1.7 million and ~~$793,000~~$1.9 million defaulted during the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020 and ~~2016,~~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~~six months ended ~~September~~June 30, ~~2017~~2020 and ~~2016:~~2019:


	September 30, 2017			September 30, 2016				June 30, 2020				June 30, 2019
Loan Class	#	Balance (in thousands)		#	Balance (in thousands)		Loan Class	#	Balance (in thousands)		#	Balance (in thousands)
Commercial, financial and agricultural	4	$	58	5	$	51	Commercial, financial and agricultural	1	$	200	2	$	4
Consumer installment							Consumer installment	3	4		4	24

Real estate – construction and development	1	25		—	—		Real estate – construction and development	2	285		—	—
Real estate – commercial and farmland	4	200		5	517		Real estate – commercial and farmland	2	676		—	—
Real estate – residential	12	878		3	219		Real estate – residential	8	567		19	1,832
Consumer installment	7	25		2	6
Total	28	$	1,186	15	$	793	Total	16	$	1,732	25	$	1,860

The following table presents the amount of troubled debt restructurings by loan class ~~excluding purchased loans,~~ classified separately as accrual and nonaccrual at ~~September~~June 30, ~~2017~~2020 and December 31, ~~2016:~~2019:


June 30, 2020	Accruing Loans				Non-Accruing Loans
Loan Class	#	Balance (in thousands)		#	Balance (in thousands)
Commercial, financial and agricultural	7	$	592	13	$	1,034
Consumer installment	13	42		20	67




Real estate – construction and development	5	919		4	308
Real estate – commercial and farmland	18	5,252		8	1,877
Real estate – residential	250	29,935		37	2,231
Total	293	$	36,740	82	$	5,517

September 30, 2017 Accruing Loans Non-Accruing Loans
Loan Class #
Balance
(in thousands)
#
Balance
(in thousands)
Commercial, financial and agricultural 4 $ 44
13 $ 129
Real estate – construction and development 7 424
2 34
Real estate – commercial and farmland 16 4,769
5 210
Real estate – residential 78 7,209
16 1,212
Consumer installment 4 6
36 130
Total 109 $ 12,452
72 $ 1,715


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

December 31, 2016	Accruing Loans			Non-Accruing Loans
Loan Class	#	Balance (in thousands)		#	Balance (in thousands)
Commercial, financial and agricultural	4	$	47	15	$	114

Premium finance							Premium finance	1	156		—	—
Real estate – construction and development	8	686		2	34		Real estate – construction and development	6	936		3	253
Real estate – commercial and farmland	16	4,119		5	2,970		Real estate – commercial and farmland	21	6,732		8	2,071
Real estate – residential	82	9,340		15	739		Real estate – residential	197	21,261		40	2,857
Consumer installment	7	17		32	130
Total	117	$	14,209	69	$	3,987	Total	234	$	29,609	95	$	5,623

COVID-19 Deferrals

As of ~~September~~June 30, 2017 and December 31, 2016, the Company had a balance of $26.0 million and $28.1 million, respectively, in troubled debt restructurings included in purchased loans. The Company has recorded $1.5 million in previous charge-offs on such loans at both September 30, 2017 and December 31, 2016. At September 30, 2017, 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, 2017 and 2016,~~2020, the Company modified ~~purchased~~$2.76 billion in loans asfor borrowers impacted by the COVID-19 pandemic. 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, with principal balances of $1.0 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, 2017 and 2016: restructurings.

September 30, 2017 September 30, 2016
Loan Class #
Balance
(in thousands)
#
Balance
(in thousands)
Commercial, financial and agricultural — $ —
1 $ 76
Real estate – construction and development — —
— —
Real estate – commercial and farmland — —
3 708
Real estate – residential 8 1,005
8 1,130
Consumer installment — —
— —
Total 8 $ 1,005
12 $ 1,914

Troubled debt restructurings included in purchased loans with an outstanding balance of $2.3 million and $733,000 defaulted during the nine months ended September 30, 2017 and 2016, respectively, and these defaults did not have a material impact on the Company’s allowance for loan loss.

The ~~following~~ table below presents ~~purchased loan troubled debt restructurings by class~~short-term deferrals related to the COVID-19 pandemic that ~~defaulted (defined as 30 days past due) during the nine months ended September 30, 2017 and 2016:~~were not considered TDRs.


(dollars in thousands)							(dollars in thousands)	COVID-19 Deferrals		Deferrals as a % of total loans
Commercial, financial and agricultural							Commercial, financial and agricultural	$	155,310	8.4	%
Consumer installment							Consumer installment	15,502		2.7	%
Indirect automobile							Indirect automobile	65,064		8.8	%

	September 30, 2017			September 30, 2016
Loan Class	#	Balance (in thousands)		#	Balance (in thousands)
Commercial, financial and agricultural	1	$	5	2	$	76
Municipal							Municipal	2,461		0.3	%
Premium finance							Premium finance	46,496		6.7	%
Real estate – construction and development	—	—		1	10		Real estate – construction and development	192,474		11.7	%
Real estate – commercial and farmland	5	1,945		1	207		Real estate – commercial and farmland	1,961,513		40.8	%
Real estate – residential	7	333		11	440		Real estate – residential	318,881		11.7	%
Consumer installment	1	3		—	—
Total	14	$	2,286	15	$	733
								$	2,757,701	19.0	%

~~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, 2017 and December 31, 2016.~~

September 30, 2017 Accruing Loans Non-Accruing Loans
Loan Class #
Balance
(in thousands)
#
Balance
(in thousands)
Commercial, financial and agricultural — $ —
3 $ 18
Real estate – construction and development 3 1,022
6 349
Real estate – commercial and farmland 15 6,308
11 3,834
Real estate – residential 119 12,875
25 1,627
Consumer installment — —
2 6
Total 137 $ 20,205
47 $ 5,834

December 31, 2016 Accruing Loans Non-Accruing Loans
Loan Class #
Balance
(in thousands)
#
Balance
(in thousands)
Commercial, financial and agricultural 1 $ 1
4 $ 91
Real estate – construction and development 6 1,358
3 30
Real estate – commercial and farmland 20 8,460
5 2,402
Real estate – residential 123 13,713
33 2,077
Consumer installment 3 11
1 —
Total 153 $ 23,543
46 $ 4,600

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. Mortgage warehouse lines of credit, overdraft protection loans, commercial insurance premium finance loans, and certain consumer and mortgage 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 $500,000. Sampling is based on a number of factors unique to the Bank’s portfolio risks, including, but not limited to, lending divisions, industry, risk grades, and new originations. As a result of these loan reviews, certain loans may be identified as having deteriorating

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

Loan losses are charged against the allowance when management believes the collection of a loan’s principal is unlikely. Subsequent recoveries are credited to the allowance. Consumer loans are ~~charged-off~~charged off in accordance with the Federal Financial Institutions Examination Council’s (“FFIEC”) Uniform Retail Credit Classification and Account Management Policy. Commercial loans are ~~charged-off~~charged off when they are deemed uncollectible, which usually involves a triggering event within the collection effort. If the loan is collateral dependent, the loss is more easily identified and is ~~charged-off~~charged off when it is identified, usually based upon receipt of an appraisal. However, when a loan has guarantor support, the Company may carry the estimated loss as a reserve against the loan while collection efforts with the guarantor are pursued. If, after collection efforts with the guarantor are complete, the deficiency is still considered uncollectible, the loss is ~~charged-off~~charged off and any further collections are treated as recoveries. In all situations, when a loan is downgraded to an Asset Quality Rating of 609 (Loss per the regulatory guidance), the uncollectible portion is ~~charged-off.~~charged off.

During the three and six months ended June 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 at both the time of adoption of ASC 326 on January 1, 2020 and the most recent quarter end of March 31, 2020. In addition, the Company also uses certain qualitative adjustments for specific portfolios as well as model uncertainty.

The following tables detail activity in the allowance for ~~loan~~credit losses by portfolio segment for the three and ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2017, the year ended~~2020 and June 30, 2019 and end of period balances by portfolio segment as of June 30, 2020, December 31, ~~2016~~2019 and ~~the three and nine-month periods ended September~~June 30, ~~2016.~~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 June 30, 2020

(dollars in thousands)	Commercial, Financial and Agricultural		Consumer Installment		Indirect Automobile		Mortgage Warehouse		Municipal		Premium Finance
Balance, March 31, 2020	$	8,110	$	15,446	$	3,464	$	1,102	$	522	$	11,508


Provision for loan losses	11		4,824		915		396		(15)		(2,083)
Loans charged off	(486)		(962)		(1,016)		—		—		(1,903)
Recoveries of loans previously charged off	303		777		18		—		—		676
Balance, June 30, 2020	$	7,938	$	20,085	$	3,381	$	1,498	$	507	$	8,198

	Real Estate – Construction and Development		Real Estate – Commercial and Farmland		Real Estate – Residential		Total
Balance, March 31, 2020	$	25,319	$	51,754	$	32,299	$	149,524


Provision for loan losses	28,853		38,133		(2,585)		68,449
Loans charged off	(74)		(6,315)		(525)		(11,281)
Recoveries of loans previously charged off	168		21		138		2,101
Balance, June 30, 2020	$	54,266	$	83,593	$	29,327	$	208,793

Six Months Ended June 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	$	—	$	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	3,091		8,973		1,479		395		115		2,551
Loans charged off	(2,972)		(2,104)		(2,247)		—		—		(2,734)
Recoveries of loans previously charged off	665		1,420		40		—		—		1,360
Balance, June 30, 2020	$	7,938	$	20,085	$	3,381	$	1,498	$	507	$	8,198

	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	35,587		53,991		(686)		105,496
Loans charged off	(74)		(7,243)		(625)		(17,999)
Recoveries of loans previously charged off	510		106		345		4,446
Balance, June 30, 2020	$	54,266	$	83,593	$	29,327	$	208,793

(dollars in thousands)
Commercial,
Financial and
Agricultural

Real Estate –
Construction and
Development

Real Estate –
Commercial and
Farmland

Real Estate –
Residential

Consumer
Installment
Loans and
Other

Purchased
Loans

Purchased
Loan
Pools
Total
Three Months Ended
September 30, 2017

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

Nine Months Ended
September 30, 2017:

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

Period-end allocation:

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

Loans:

Individually evaluated for impairment⁽¹⁾
$ 3,204
$ 627
$ 10,512
$ 8,636
$ —
$ 32,032
$ 915
$ 55,926
Collectively evaluated for impairment 1,304,005
549,562
1,548,370
960,653
189,109
763,271
464,303
5,779,273
Acquired with deteriorated credit quality —
—
—
—
—
121,823
—
121,823
Ending balance $ 1,307,209
$ 550,189
$ 1,558,882
$ 969,289
$ 189,109
$ 917,126
$ 465,218
$ 5,957,022
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	$	—	$	—	$	—	$	—	$	758
Loans collectively evaluated for impairment	3,024		3,784		—		640		484		1,792
Ending balance	$	4,567	$	3,784	$	—	$	640	$	484	$	2,550

Loans:
Individually evaluated for impairment ⁽¹⁾	$	8,032	$	—	$	—	$	—	$	—	$	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		—		—		—
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 ~~September 30, 2017,~~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		Mortgage Warehouse		Municipal		Premium Finance
Three Months Ended June 30, 2019
Balance, March 31, 2019	$	2,190	$	3,936	$	640	$	508	$	1,830
Provision for loan losses	717		334		—		(6)		1,369
Loans charged off	(473)		(1,171)		—		—		(865)
Recoveries of loans previously charged off	382		289		—		—		650
Balance, June 30, 2019	$	2,816	$	3,388	$	640	$	502	$	2,984


(dollars in thousands)	Commercial, Financial and Agricultural			Real Estate – Construction and Development				Real Estate – Commercial and Farmland			Real Estate – Residential			Consumer Installment Loans and Other			Purchased Loans			Purchased Loan Pools		Total			(dollars in thousands)	Commercial, Financial and Agricultural			Consumer Installment		Mortgage Warehouse		Municipal		Premium Finance
Twelve Months Ended December 31, 2016
Balance, January 1, 2016	$	1,144		$	5,009			$	7,994		$	4,760		$	1,574		$	—		$	581	$	21,062
Six Months Ended June 30, 2019																									Six Months Ended June 30, 2019
Balance, December 31, 2018																									Balance, December 31, 2018	$	2,352		$	3,795	$	640	$	509	$	1,426
Provision for loan losses	2,647			(1,921		)		107			2,757			(523		)	(232		)	1,256		4,091			Provision for loan losses	1,017			2,157		—		(7)		2,083
Loans charged off	(1,999		)	(588		)		(708		)	(1,122		)	(351		)	(1,559		)	—		(6,327		)	Loans charged off	(1,157)			(3,068)		—		—		(2,185)
Recoveries of loans previously charged off	400			490				269			391			127			3,417			—		5,094			Recoveries of loans previously charged off	604			504		—		—		1,660
Balance, December 31, 2016	$	2,192		$	2,990			$	7,662		$	6,786		$	827		$	1,626		$	1,837	$	23,920
Balance, June 30, 2019																									Balance, June 30, 2019	$	2,816	F	$	3,388	$	640	$	502	$	2,984

Period-end allocation:																									Period-end allocation:
Loans individually evaluated for impairment⁽¹⁾	$	120		$	266			$	1,502		$	2,893		$	—		$	1,626		$	—	$	6,407		Loans individually evaluated for impairment⁽¹⁾	$	634		$	—	$	—	$	—	$	1,391
Loans collectively evaluated for impairment	2,072			2,724				6,160			3,893			827			—			1,837		17,513			Loans collectively evaluated for impairment	2,182			3,388		640		502		1,593
Ending balance	$	2,192		$	2,990			$	7,662		$	6,786		$	827		$	1,626		$	1,837	$	23,920		Ending balance	$	2,816		$	3,388	$	640	$	502	$	2,984

Loans:																									Loans:
Individually evaluated for impairment ⁽¹⁾	$	501		$	659			$	12,423		$	12,697		$	—		$	34,141		$	—	$	60,421		Individually evaluated for impairment ⁽¹⁾	$	3,407		$	—	$	—	$	—	$	2,997
Collectively evaluated for impairment	966,637			362,386				1,393,796			768,321			109,401			886,516			568,314		5,055,371			Collectively evaluated for impairment	697,804			474,071		462,481		583,558		610,967
Acquired with deteriorated credit quality	—			—			��	—			—			—			148,534			—		148,534			Acquired with deteriorated credit quality	2,079			124		—		—		—
Ending balance	$	967,138		$	363,045			$	1,406,219		$	781,018		$	109,401		$	1,069,191		$	568,314	$	5,264,326		Ending balance	$	703,290		$	474,195	$	462,481	$	583,558	$	613,964

																										Real Estate – Construction and Development			Real Estate – Commercial and Farmland		Real Estate – Residential		Total
Three Months Ended June 30, 2019																									Three Months Ended June 30, 2019
Balance, March 31, 2019																									Balance, March 31, 2019	$	4,424		$	9,237	$	5,894	$	28,659
Provision for loan losses																									Provision for loan losses	314			(50)		1,990		4,668
Loans charged off																									Loans charged off	(243)			(589)		(155)		(3,496)
Recoveries of loans previously charged off																									Recoveries of loans previously charged off	268			78		295		1,962
Balance, June 30, 2019																									Balance, June 30, 2019	$	4,763		$	8,676	$	8,024	$	31,793

Six Months Ended June 30, 2019																									Six Months Ended June 30, 2019
Balance, December 31, 2018																									Balance, December 31, 2018	$	4,210		$	9,659	$	6,228	$	28,819
Provision for loan losses																									Provision for loan losses	436			742		1,648		8,076
Loans charged off																									Loans charged off	(268)			(1,843)		(354)		(8,875)
Recoveries of loans previously charged off																									Recoveries of loans previously charged off	385			118		502		3,773
Balance, June 30, 2019																									Balance, June 30, 2019	$	4,763	F	$	8,676	$	8,024	$	31,793

Period-end allocation:																									Period-end allocation:
Loans individually evaluated for impairment (1)																									Loans individually evaluated for impairment (1)	$	498		$	1,984	$	1,881	$	6,388
Loans collectively evaluated for impairment																									Loans collectively evaluated for impairment	4,265			6,692		6,143		25,405
Ending balance																									Ending balance	$	4,763		$	8,676	$	8,024	$	31,793

Loans:																									Loans:
Individually evaluated for impairment (1)																									Individually evaluated for impairment (1)	$	7,279		$	17,130	$	26,647	$	57,460
Collectively evaluated for impairment																									Collectively evaluated for impairment	1,089,546			3,118,126		1,883,519		8,920,072
Acquired with deteriorated credit quality																									Acquired with deteriorated credit quality	6,725			46,957		16,453		72,338
Ending balance																									Ending balance	$	1,103,550		$	3,182,213	$	1,926,619	$	9,049,870

(1) At ~~December 31, 2016,~~June 30, 2019, loans individually evaluated for impairment includes all nonaccrual loans greater than $100,000 and all troubled debt restructurings greater than $100,000, including all troubled debt restructurings and not only those currently classified as troubled debt restructurings.

(dollars in thousands) Commercial,
Financial and
Agricultural Real Estate –
Construction and
Development Real Estate –
Commercial and
Farmland Real Estate –
Residential Consumer
Installment
Loans and
Other Purchased
Loans Purchased
Loan
Pools Total
Three Months Ended
September 30, 2016

Balance, June 30, 2016 $ 1,667
$ 3,599
$ 7,459
$ 4,263
$ 2,160
$ 1,387
$ 1,199
$ 21,734
Provision for loan losses 677
(521 ) (554 ) 2,649
(1,595 ) (654 ) 809
811
Loans charged off (326 ) (60 ) —
(292 ) (74 ) (699 ) —
(1,451 )
Recoveries of loans previously charged off 119
131
13
40
78
1,488
—
1,869
Balance, September 30, 2016 $ 2,137
$ 3,149
$ 6,918
$ 6,660
$ 569
$ 1,522
$ 2,008
$ 22,963

Nine Months Ended
September 30, 2016:

Balance, December 31, 2015 $ 1,144
$ 5,009
$ 7,994
$ 4,760
$ 1,574
$ —
$ 581
$ 21,062
Provision for loan losses 1,987
(2,010 ) (559 ) 2,415
(932 ) 53
1,427
2,381
Loans charged off (1,273 ) (324 ) (708 ) (883 ) (192 ) (1,261 ) —
(4,641 )
Recoveries of loans previously charged off 279
474
191
368
119
2,730
—
4,161
Balance, September 30, 2016 $ 2,137
$ 3,149
$ 6,918
$ 6,660
$ 569
$ 1,522
$ 2,008
$ 22,963

Period-end allocation:

Loans individually evaluated for impairment⁽¹⁾
$ 107
$ 529
$ 883
$ 2,629
$ —
$ 1,522
$ —
$ 5,670
Loans collectively evaluated for impairment 2,030
2,620
6,035
4,031
569
—
2,008
17,293
Ending balance $ 2,137
$ 3,149
$ 6,918
$ 6,660
$ 569
$ 1,522
$ 2,008
$ 22,963

Loans:

Individually evaluated for impairment ⁽¹⁾
$ 424
$ 1,154
$ 11,699
$ 11,571
$ —
$ 34,991
$ —
$ 59,839
Collectively evaluated for impairment 625,523
327,154
1,285,883
755,362
72,269
939,243
624,886
4,630,320
Acquired with deteriorated credit quality —
—
—
—
—
155,147
—
155,147
Ending balance $ 625,947
$ 328,308
$ 1,297,582
$ 766,933
$ 72,269
$ 1,129,381
$ 624,886
$ 4,845,306

(1) At September 30, 2016, 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 – ASSETS ACQUIRED IN FDIC-ASSISTED ACQUISITIONS~~

From October 2009 through July 2012, the Company participated in ten FDIC-assisted acquisitions whereby the Company purchased certain failed institutions out of the FDIC’s receivership. These institutions include the following:



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

The determination of the initial fair values of loans at the acquisition date and the initial fair values of the related FDIC indemnification assets involves a high degree of judgment and complexity. The carrying values of the acquired loans and the FDIC indemnification assets reflect management’s best estimate of the fair value of each of these assets as of the date of acquisition.

However, the amount that the Company realizes on these assets could differ materially from the carrying values reflected in the financial statements included in this report, based upon the timing and amount of collections on the acquired loans in future periods. Because of the loss-sharing agreements with the FDIC on these assets, the Company does not expect to incur any significant losses. To the extent the actual values realized for the acquired loans are different from the estimates, the indemnification assets will generally be affected in an offsetting manner due to the loss-sharing support from the FDIC.

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

Each acquisition with loss-sharing agreements has separate agreements for the single family residential assets (“SFR”) and the non-single family assets (“NSF”). The SFR agreements cover losses and recoveries for ten years. The NSF agreements are for eight years. During the first five years, losses and recoveries are covered. During the final three years, only recoveries, net of expenses, are covered. The AUB SFR agreement was terminated during 2012 and Ameris received a payment of $87,000. The AUB and USB NSF agreements passed their five-year anniversaries during the fourth quarter of 2014, the SCB NSF agreement passed its five-year anniversary during the second quarter of 2015, the FBJ, TBC and DBT NSF agreements passed their five-year anniversaries during the fourth quarter of 2015, the HTB and OGB NSF agreements passed their five-year anniversaries during the third quarter of 2016, and the CBG NSF passed its five-year anniversary during the first quarter of 2017. Losses will no longer be reimbursed on these agreements. MBT did not have a loss-sharing agreement.

At September 30, 2017, the Company’s FDIC loss-sharing payable totaled $8.2 million, which is comprised of an accrued clawback liability of $9.6 million, less $419,000 in current activity incurred but not yet received from the FDIC (net charge-offs offset by reimbursable expenses) and remaining indemnification of $1.0 million (for reimbursements associated with anticipated losses in future quarters).

~~The following table summarizes components of all covered assets at September 30, 2017 and December 31, 2016 and their origin:~~

(dollars in thousands)
Covered
Loans

Less: Fair
Value
Adjustments

Total
Covered
Loans
OREO
Less: Fair
Value
Adjustments

Total
Covered
OREO

Total
Covered
Assets

FDIC Loss-
Share
Receivable
(Payable)
September 30, 2017

AUB $ —
$ —
$ —
$ —
$ —
$ —
$ —
$ —
USB 2,763
12
2,751
—
—
—
2,751
(1,752 )
SCB 2,541
27
2,514
—
—
—
2,514
(169 )
FBJ 3,647
394
3,253
—
—
—
3,253
(312 )
DBT 9,663
356
9,307
81
—
81
9,388
(4,442 )
TBC 1,667
—
1,667
—
—
—
1,667
(8 )
HTB 1,856
28
1,828
—
—
—
1,828
27
OGB 930
31
899
—
—
—
899
(1,032 )
CBG 10,329
678
9,651
161
—
161
9,812
(502 )
Total $ 33,396
$ 1,526
$ 31,870
$ 242
$ —
$ 242
$ 32,112
$ (8,190 )

December 31, 2016

AUB $ —
$ —
$ —
$ —
$ —
$ —
$ —
$ (27 )
USB 3,199
13
3,186
51
—
51
3,237
(1,642 )
SCB 4,019
51
3,968
—
—
—
3,968
(32 )
FBJ 3,767
452
3,315
—
—
—
3,315
(234 )
DBT 12,166
565
11,601
—
—
—
11,601
(4,591 )
TBC 1,679
—
1,679
—
—
—
1,679
(33 )
HTB 1,913
33
1,880
—
—
—
1,880
734
OGB 1,077
32
1,045
—
—
—
1,045
(993 )
CBG 33,449
1,963
31,486
1,161
4
1,157
32,643
505
Total $ 61,269
$ 3,109
$ 58,160
$ 1,212
$ 4
$ 1,208
$ 59,368
$ (6,313 )

The shared-loss agreements are subject to the servicing procedures as specified in the agreement with the FDIC. The expected reimbursements under the shared-loss agreements were recorded as an indemnification asset at their estimated fair values on the acquisition dates. As of September 30, 2017 and December 31, 2016, the Company has recorded a clawback liability of $9.6 million and $9.3 million, respectively, which represents the obligation of the Company to reimburse the FDIC should actual losses be less than certain thresholds established in each loss-share agreement.

~~Changes in the FDIC shared-loss payable for the nine months ended September 30, 2017 and 2016 are as follows:~~

(dollars in thousands) September 30,
2017 September 30,
2016
Beginning balance, January 1 $ (6,313 ) $ 6,301
Payments to (received from) FDIC 97
(4,770 )
Amortization (747 ) (3,351 )
Changes in clawback liability (326 ) (682 )
Increase in receivable due to:

Net recoveries on covered loans (1,097 ) (4,118 )
Loss (gain) on covered other real estate owned (76 ) 203
Reimbursable expenses on covered assets 401
604
Other activity, net (129 ) (1,962 )
Ending balance $ (8,190 ) $ (7,775 )

~~The FDIC loss-sharing payable is included in other liabilities in the consolidated balance sheets. The FDIC loss-sharing receivable is included in other assets in the consolidated balance sheets.~~

~~NOTE 6 – OTHER REAL ESTATE OWNED~~

~~The following is a summary of the activity in other real estate owned during the nine months ended September 30, 2017 and 2016:~~

(dollars in thousands) September 30,
2017 September 30,
2016
Beginning balance, January 1 $ 10,874
$ 16,147
Loans transferred to other real estate owned 4,043
2,101
Net gains (losses) on sale and write-downs recorded in statement of income (766 ) (1,276 )
Sales proceeds (4,760 ) (6,580 )
Ending balance $ 9,391
$ 10,392

~~The following is a summary of the activity in purchased other real estate owned during the nine months ended September 30, 2017 and 2016:~~

(dollars in thousands) September 30,
2017 September 30,
2016
Beginning balance, January 1 $ 12,540
$ 19,344
Loans transferred to other real estate owned 4,294
6,262
Acquired in acquisitions —
1,838
Portion of gains (losses) on sale and write-downs payable to (receivable from) the FDIC under loss-sharing agreements 76
—
Net gains (losses) on sale and write-downs recorded in statement of income 265
(568 )
Sales proceeds (7,229 ) (11,750 )
Ending balance $ 9,946
$ 15,126

NOTE 75 – 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~~June 30, ~~2017~~2020 and December 31, ~~2016,~~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 ~~fall~~falls below the repurchase agreement price. The Company maintains an unpledged securities portfolio that it believes is sufficient to protect against a decline in the market value of the securities sold under agreements to repurchase.

The following is a summary of the Company’s securities sold under agreements to repurchase at ~~September~~June 30, ~~2017~~2020 and December 31, ~~2016.~~

2019.


(dollars in thousands)	September 30, 2017		December 31, 2016		(dollars in thousands)	June 30, 2020		December 31, 2019
Securities sold under agreements to repurchase	$	14,156	$	53,505	Securities sold under agreements to repurchase	$	12,879	$	20,635

At ~~September~~June 30, ~~2017~~2020 and December 31, ~~2016,~~2019 the investment securities underlying these agreements were comprised of state, county and municipal securities and mortgage-backed securities.

NOTE 86 – OTHER BORROWINGS

The Company has, from time to time, utilized certain borrowing arrangements to fund growth in earning assets or provide additional liquidity when appropriate spreads can be realized. At September 30, 2017 and December 31, 2016, there were $808.6 million and $492.3 million, respectively, in outstanding other borrowings.

Other borrowings consist of the following:

(dollars in thousands) September 30,
2017 December 31,
2016
FHLB borrowings:

Daily Rate Credit from FHLB with a variable interest rate (1.32% at September 30, 2017 and 0.80% at December 31, 2016) $ 168,000
$ 150,000
Advance from FHLB due October 6, 2017; fixed interest rate of 1.16% 565,000
—
Advance from FHLB due January 6, 2017; fixed interest rate of 0.56% —
292,500
Advance from FHLB due January 9, 2017; fixed interest rate of 1.40% —
4,002
Advance from FHLB due May 30, 2017; fixed interest rate of 1.23% —
5,006
Subordinated notes payable:

Subordinated notes payable due March 15, 2027 net of unamortized debt issuance cost of $1,238; fixed interest rate of 5.75% through March 14, 2022; variable interest rate thereafter at three-month LIBOR plus 3.616% 73,762
—
Other debt:

Advance from correspondent bank due October 5, 2019; secured by a loan receivable; fixed interest rate of 4.25% 56
77
Advance from correspondent bank due September 5, 2026; secured by a loan receivable; fixed interest rate of 2.09% 1,754
1,886
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% (4.43% at December 31, 2016) —
38,000
Advances under revolving credit agreement with a regional bank due January 7, 2017; fixed interest rate of 8.00% —
850
Total $ 808,572
$ 492,321


(dollars in thousands)	June 30, 2020		December 31, 2019
FHLB borrowings:
Fixed Rate Advance due January 10, 2020; fixed interest rate of 1.68%	$	—	$	50,000
Fixed Rate Advance due January 13, 2020; fixed interest rate of 1.68%	—		50,000
Fixed Rate Advance due January 13, 2020; fixed interest rate of 1.67%	—		100,000
Fixed Rate Advance due January 15, 2020; fixed interest rate of 1.71%	—		50,000
Fixed Rate Advance due January 16, 2020; fixed interest rate of 1.69%	—		150,000
Fixed Rate Advance due January 17, 2020; fixed interest rate of 1.70%	—		100,000
Fixed Rate Advance due January 21, 2020; fixed interest rate of 1.71%	—		50,000
Fixed Rate Advance due January 21, 2020; fixed interest rate of 1.71%	—		200,000
Fixed Rate Advance due January 21, 2020; fixed interest rate of 1.70%	—		25,000
Fixed Rate Advance due January 21, 2020; fixed interest rate of 1.71%	—		75,000
Fixed Rate Advance due January 21, 2020; fixed interest rate of 1.71%	—		25,000
Fixed Rate Advance due January 23, 2020; fixed interest rate of 1.71%	—		100,000
Fixed Rate Advance due January 27, 2020; fixed interest rate of 1.73%	—		50,000
Fixed Rate Advance due February 18, 2020; fixed interest rate of 1.72%	—		100,000
Fixed Rate Advance due July 6, 2020; fixed interest rate of 0.27%	150,000		—
Fixed Rate Advance due July 8, 2020; fixed interest rate of 0.27%	100,000		—
Fixed Rate Advance due July 10, 2020; fixed interest rate of 0.246%	100,000		—
Fixed Rate Advance due July 20, 2020; fixed interest rate of 0.25%	100,000		—
Fixed Rate Advance due July 22, 2020; fixed interest rate of 0.27%	100,000		—
Fixed Rate Advance due July 23, 2020; fixed interest rate of 0.38%	100,000		—
Fixed Rate Advance due July 23, 2020; fixed interest rate of 0.27%	100,000		—
Fixed Rate Advance due July 28, 2020; fixed interest rate of 0.25%	100,000		—
Fixed Rate Advance due August 18, 2020; fixed interest rate of 0.21%	150,000		—
Fixed Rate Advance due September 21, 2020; fixed interest rate of 0.22%	100,000		—
Fixed Rate Advance due March 3, 2025; fixed interest rate of 1.208%	15,000		—
Fixed Rate Advance due March 2, 2027; fixed interest rate of 1.445%	15,000		—
Fixed Rate Advance due March 4, 2030; fixed interest rate of 1.606%	15,000		—
Fixed Rate Advance due December 9, 2030; fixed interest rate of 4.55%	1,417		1,422
Fixed Rate Advance due December 9, 2030; fixed interest rate of 4.55%	981		985
Principal Reducing Advance due September 29, 2031; fixed interest rate of 3.095%	1,639		1,712

Subordinated notes payable:
Subordinated notes payable due March 15, 2027 net of unamortized debt issuance cost of $878 and $943, respectively; fixed interest rate of 5.75% through March 14, 2022; variable interest rate thereafter at three-month LIBOR plus 3.616%	74,122		74,057
Subordinated notes payable due December 15, 2029 net of unamortized debt issuance cost of $2,287 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%	117,713		117,592
Subordinated notes payable due May 31, 2030 net of unaccreted purchase accounting fair value adjustment of $1,212 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%	76,212		76,595
Other debt:
Advance from correspondent bank due September 5, 2026; secured by a loan receivable; fixed interest rate of 2.09%	1,252		1,346
Total	$	1,418,336	$	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~~June 30, ~~2017, $347.4 million~~2020, $2.83 billion was available for borrowing on lines with the FHLB.

~~At September 30, 2017, $30.0 million was available for borrowing under the revolving credit agreement with a regional bank, secured by subsidiary bank stock.~~

As of ~~September~~June 30, ~~2017,~~2020, the ~~Company~~Bank maintained credit arrangements with various financial institutions to purchase federal funds up to ~~$82.0~~$152.0 million.

The ~~Company~~Bank also participates in the Federal Reserve discount window borrowings program. At ~~September~~June 30, ~~2017,~~2020, the Company had ~~$1.04~~$2.41 billion of loans pledged at the Federal Reserve discount window and had ~~$678.1 million~~$1.43 billion available for borrowing.

~~Subordinated Notes Payable~~

NOTE 7 – SHAREHOLDERS’ EQUITY

Common Stock Repurchase Program

On ~~March 13, 2017,~~September 19, 2019, the Company ~~completed~~announced that its Board of Directors authorized the ~~public offering and sale of $75.0~~Company to repurchase up to $100.0 million ~~in aggregate principal amount~~ of its ~~5.75% Fixed-To-Floating Rate Subordinated Notes due 2027 (the “subordinated notes”).~~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 ~~subordinated notes were sold~~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. As of June 30, 2020, $14.3 million, or 375,241 shares, of the Company's common stock had been repurchased under the program.

Fidelity Acquisition

On July 1, 2019, the Company issued 22,181,522 shares of its common stock to the ~~public~~shareholders of Fidelity. Such shares had a value of $39.19 per share at ~~par pursuant to~~the time of issuance, resulting in an ~~underwriting agreement and were issued pursuant to an indenture and a supplemental indenture. The subordinated notes will mature on March 15, 2027 and through March 14, 2022 will bear a fixed rate~~increase in shareholders’ equity of ~~interest of 5.75% per annum, payable semi-annually in arrears on September 15 and March 15 of each year. Beginning~~ ~~March 15, 2022,~~$869.3 million.

For additional information regarding the interest rate on the subordinated notes resets quarterly to a floating rate per annum equal to the then-current three-month LIBOR plus 3.616%, payable quarterly in arrears on June 15, September 15, December 15, and March 15 of each year to the maturity date or earlier redemption.Fidelity acquisition, see Note 2.

NOTE 8 – ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

~~On any scheduled interest payment date beginning March 15, 2022,~~Accumulated other comprehensive income (loss) for the Company ~~may, at its option, redeem the subordinated notes,~~consists of changes in ~~whole or in part, at a redemption price equal to 100% of the principal amount plus accrued~~net unrealized gains and ~~unpaid interest.~~

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

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

~~NOTE 9 – 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 risksale and interest rate ~~risk~~swap derivatives. The reclassification for gains included in ~~excess of the amount recognized~~net income is recorded in gain (loss) on securities in the ~~Company’s balance sheets.~~

consolidated statement of income and comprehensive income. 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.

Afollowing tables present a summary of the ~~Company’s commitments is~~accumulated other comprehensive income (loss) balances, net of tax, as ~~follows:~~of June 30, 2020 and 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	—		—		—
Current year changes, net of tax	14		21,604		21,618
Balance, June 30, 2020	$	(133)	$	39,746	$	39,613

(dollars in thousands) September 30,
2017 December 31,
2016
Commitments to extend credit $ 1,096,702
$ 1,101,257
Unused home equity lines of credit 63,951
62,586
Financial standby letters of credit 13,192
14,257
Mortgage interest rate lock commitments 113,056
91,426
Mortgage forward contracts with positive fair value —
150,000


(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	(412)		21,794		21,382
Balance, June 30, 2019	$	(61)	$	16,523	$	16,462

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.

~~Other Commitments~~

~~As of September 30, 2017, a $75.0 million letter of credit issued by the FHLB was used to guarantee the Bank’s performance related to 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.~~

A former borrower of the Company has filed a claim related to a loan previously made by the Company asserting lender liability. The case was tried without a jury and a judgment was issued by the court against the Company awarding the borrower approximately $2.9 million on August 8, 2013. The judgment was appealed to the South Carolina Court of Appeals. On May 24, 2017, the Court of Appeals filed its decision and unanimously found in favor of the Company and reversed the trial court judgment. The plaintiff has a filed a petition for rehearing with the Court of Appeals, which has been denied. The plaintiff has filed a writ of certiorari asking the Supreme Court of South Carolina to hear the case. The Company believes the likelihood the Supreme Court will hear the case is not probable, and, accordingly the Company does not expect to incur any loss as a result of this case. Accordingly, the Company has not established any reserves related to this legal matter. In the event that the Company's assumptions used to evaluate this matter as neither probable nor estimable change in future periods, it may be required to record a liability for an adverse outcome.

NOTE ~~10 – SHAREHOLDERS’ EQUITY~~

On January 18, 2017, the Company issued 128,572 unregistered shares of its common stock to William J. Villari in exchange for 4.99% of the outstanding shares of common stock of USPF. A registration statement was filed with the Securities and Exchange Commission on February 13, 2017 to register the resale or other disposition of these shares. The issuance of the 128,572 common shares was valued at $45.45 per share, resulting in an increase in shareholders’ equity of $5.8 million. For additional information regarding the investment in USPF, see Note 2.

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

In March 2017, the Company made a capital contribution to the Bank in the amount of $110.0 million, using the net proceeds of the March 6, 2017 issuance of common stock as well as a portion of the net proceeds of the March 13, 2017 issuance of the Company’s 5.75% Fixed-To-Floating Rate Subordinated Notes due 2027 discussed in Note 8.

~~NOTE 11 – ACCUMULATED OTHER COMPREHENSIVE INCOME~~

Accumulated other comprehensive income for the Company consists of changes in net unrealized gains and losses on investment securities available for sale and an interest rate swap derivative designated as a cash flow hedge. The following tables present a summary of the accumulated other comprehensive income balances, net of tax, as of September 30, 2017 and 2016:

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

Unrealized
Gain (Loss)
on Securities

Accumulated
Other Comprehensive
Income (Loss)
Balance, January 1, 2017 $ 176
$ (1,234 ) $ (1,058 )
Reclassification for gains included in net income, net of tax —
(24 ) (24 )
Current year changes, net of tax (38 ) 4,361
4,323
Balance, September 30, 2017 $ 138
$ 3,103
$ 3,241

(dollars in thousands)

Unrealized
Gain (Loss)
on Derivatives

Unrealized
Gain (Loss)
on Securities

Accumulated
Other Comprehensive
Income (Loss)
Balance, January 1, 2016 $ 152
$ 3,201
$ 3,353
Reclassification for gains included in net income, net of tax —
(61 ) (61 )
Current year changes, net of tax (567 ) 7,724
7,157
Balance, September 30, 2016 $ (415 ) $ 10,864
$ 10,449

~~NOTE 12~~9 – 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,			Three Months Ended June 30,			Six Months Ended June 30,
(share data in thousands)	2017	2016	2017	2016	(share data in thousands)	2020	2019	2020	2019
Average common shares outstanding	37,225	34,870	36,690	34,156	Average common shares outstanding	69,192	47,311	69,235	47,354
Common share equivalents:					Common share equivalents:
Stock options	70	108	70	100	Stock options	9	—	33	—
Nonvested restricted share grants	258	217	257	214	Nonvested restricted share grants	75	27	130	41
Performance share units					Performance share units	17	—	15	—
Average common shares outstanding, assuming dilution	37,553	35,195	37,017	34,470	Average common shares outstanding, assuming dilution	69,293	47,338	69,413	47,395

For the three and ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2017 and 2016,~~2020, there were ~~no potential~~outstanding 252,765 and 56,000 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 six-month periods ended June 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 10 – 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)	June 30, 2020		December 31, 2019
Mortgage loans held for sale	$	1,731,530	$	1,647,900
SBA loans held for sale	4,867		8,811
Total loans held for sale	$	1,736,397	$	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 of $41.1 million and a net gain of $2.7 million resulting from fair value changes of these mortgage loans were recorded in income during the six months ended June 30, 2020 and 2019, respectively. A net gain of $33.8 million and a net gain $3.1 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 six months ended June 30, 2020 and 2019, respectively. The change in fair value of both mortgage loans held for sale and the related derivative financial instruments are recorded in mortgage banking activity in the consolidated statements of income and comprehensive income. The Company’s valuation of mortgage loans held for sale incorporates an assumption for credit risk; however, given the short-term period that the Company holds these loans, valuation adjustments attributable to instrument-specific credit risk is nominal.

The following table summarizes the difference between the fair value and the principal balance for mortgage loans held for sale measured at fair value as of June 30, 2020 and December 31, 2019:


(dollars in thousands)	June 30, 2020		December 31, 2019
Aggregate fair value of mortgage loans held for sale	$	1,731,530	$	1,647,900
Aggregate unpaid principal balance of mortgage loans held for sale	1,640,561		1,598,057
Past-due loans of 90 days or more	—		1,649
Nonaccrual loans	—		1,649
Unpaid principal balance of nonaccrual loans	—		1,616

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 June 30, 2020 and December 31, 2019:


(dollars in thousands)	June 30, 2020		December 31, 2019
Aggregate fair value of SBA loans held for sale	$	4,867	$	8,811
Aggregate unpaid principal balance of SBA loans held for sale	4,439		8,206
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.

The following table presents the fair value measurements of assets and liabilities measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall as of June 30, 2020 and December 31, 2019:


	Recurring Basis Fair Value Measurements
	June 30, 2020
(dollars in thousands)	Fair Value		Level 1		Level 2		Level 3
Financial assets:
U.S. government sponsored agencies	$	17,681	$	—	$	17,681	$	—
State, county and municipal securities	93,198		—		93,198		—
Corporate debt securities	52,313		—		50,813		1,500
SBA pool securities	69,942		—		69,942		—
Mortgage-backed securities	1,005,762		—		1,005,762		—
Loans held for sale	1,736,397		—		1,736,397		—

Mortgage banking derivative instruments	51,919		—		51,919		—
Total recurring assets at fair value	$	3,027,212	$	—	$	3,025,712	$	1,500
Financial liabilities:
Derivative financial instruments	$	170	$	—	$	170	$	—
Mortgage banking derivative instruments	14,769		—		14,769		—
Total recurring liabilities at fair value	$	14,939	$	—	$	14,939	$	—


	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	$	—	$	22,362	$	—
State, county and municipal securities	105,260		—		105,260		—
Corporate debt securities	52,999		—		51,499		1,500
SBA pool securities	73,912		—		73,912		—
Mortgage-backed securities	1,148,870		—		1,148,870		—
Loans held for sale	1,656,711		—		1,656,711		—

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

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 June 30, 2020 and December 31, 2019:


	Nonrecurring Basis Fair Value Measurements
(dollars in thousands)	Fair Value		Level 1		Level 2		Level 3
June 30, 2020
Collateral-dependent loans	$	92,826	$	—	$	—	$	92,826
Other real estate owned	1,753		—		—		1,753
Mortgage servicing rights	91,381		—		91,381		—
SBA servicing rights	5,241		—		5,241		—
Total nonrecurring assets at fair value	$	191,201	$	—	$	96,622	$	94,579

December 31, 2019
Impaired loans carried at fair value	$	43,788	$	—	$	—	$	43,788
Other real estate owned	17,289		—		—		17,289
Total nonrecurring assets at fair value	$	61,077	$	—	$	—	$	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 six months ended June 30, 2020 and the year ended December 31, 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
June 30, 2020
Recurring:
Investment securities available for sale	$	1,500	Discounted par values	Credit quality of underlying issuer	0%	0%
Nonrecurring:
Collateral-dependent loans	$	92,826	Third-party appraisals and discounted cash flows	Collateral discounts and discount rates	17% - 81%	32%
Other real estate owned	$	1,753	Third-party appraisals and sales contracts	Collateral discounts and estimated costs to sell	21% - 48%	35%

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
			June 30, 2020
(dollars in thousands)	Carrying Amount		Level 1		Level 2		Level 3		Total
Financial assets:
Cash and due from banks	$	292,899	$	292,899	$	—	$	—	$	292,899
Federal funds sold and interest-bearing accounts	428,560		428,560		—		—		428,560
Time deposits in other banks	249		—		249		—		249

Loans, net	14,201,538		—		—		14,249,663		14,249,663
Accrued interest receivable	72,175		—		4,490		67,685		72,175
Financial liabilities:
Deposits	15,589,818		—		15,611,958		—		15,611,958
Securities sold under agreements to repurchase	12,879		12,879		—		—		12,879
Other borrowings	1,418,336		—		1,424,093		—		1,424,093
Subordinated deferrable interest debentures	123,375		—		116,869		—		116,869
FDIC loss-share payable	18,903		—		—		19,085		19,085

Accrued interest payable	6,862		—		6,826		—		6,826


			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	$	—	$	—	$	246,234
Federal funds sold and interest-bearing accounts	375,615		375,615		—		—		375,615
Time deposits in other banks	249		—		249		—		249
Loans, net	12,736,499		—		—		12,806,709		12,806,709
Accrued interest receivable	52,362		—		5,179		47,183		52,362
Financial liabilities:
Deposits	14,027,073		—		14,035,686		—		14,035,686
Securities sold under agreements to repurchase	20,635		20,635		—		—		20,635
Other borrowings	1,398,709		—		1,402,510		—		1,402,510
Subordinated deferrable interest debentures	127,560		—		126,815		—		126,815
FDIC loss-share payable	19,642		—		—		19,657		19,657
Accrued interest payable	11,524		—		11,524		—		11,524

NOTE 1311 – ~~FAIR VALUE MEASURES~~COMMITMENTS AND CONTINGENCIES

~~The Company’s loans held for sale are carried at fair value and are comprised of the following:~~

(dollars in thousands) September 30,
2017 December 31,
2016
Mortgage loans held for sale $ 132,201
$ 105,924
SBA loans held for sale 5,191
—
Total loans held for sale $ 137,392
$ 105,924

The Company ~~has elected~~is a party 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~~financial instruments 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 basisoff-balance-sheet risk in the ~~consolidated statements~~normal course of ~~income and comprehensive income under~~business to meet the heading interest income – interest and fees on loans. The servicing value is included in the fair value of the interest rate lock commitments (“IRLCs”) with borrowers. The mark to market adjustments related to mortgage loans held for sale and the associated economic hedges are captured in mortgage banking activities. Net gains of $5.7 million and $4.9 million resulting from fair value changes of these mortgage loans were recorded in income during the nine months ended September 30, 2017 and 2016, respectively. The amount does not reflect changes in fair values of related derivative instruments used to hedge exposure to market-related risks associated with these mortgage loans. The change in fair value of both mortgage loans held for sale and the related derivative 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, 2017 and December 31, 2016:~~

(dollars in thousands)
September 30,
2017 December 31,
2016
Aggregate fair value of mortgage loans held for sale $ 132,201
$ 105,924
Aggregate unpaid principal balance 126,503
103,691
Past-due loans of 90 days or more —
—
Nonaccrual loans —
—

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

~~Fair Value Hierarchy~~

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

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

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

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

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

~~Cash, Due From Banks, Federal Funds Sold and Interest-Bearing Accounts:~~ ~~The carrying amount of cash, due from banks, federal funds sold and interest-bearing deposits in 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 securitiesinstruments 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 include certain residual municipal securities and other less liquid securities.

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

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

~~Loans:~~ The carrying amount of variable-rate loans that reprice frequently and have no significant change in credit risk approximates fair value. The fair value of fixed-rate loans is estimated based on discounted contractual cash flows, using interest rates currently being offered for loans with similar terms to borrowers with similar credit quality. The fair value of impaired loans is estimated based on discounted contractual cash flows or underlying collateral values, where applicable. A loan is determined to be impaired if the Company believes it is probable that all principal and interest amounts due according to the terms of the note will not be collected as scheduled. The fair value of impaired loans is determined in accordance with 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 other real estate owned (“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 other real estate owned should be classified as Level 3.

~~Intangible Assets:~~ Intangible assets consist of core deposit premiums acquired in connection with business combinations and are based on the established value of acquired customer deposits. The core deposit premium is initially recognized based on a valuation performed as of the consummation date and is amortized over an estimated useful life of seven to ten years.

~~FDIC Loss-Share Receivable/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/payable is impacted by changes in estimated cash flows associated with these loans.

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

~~Cash Value of Bank Owned Life Insurance:~~ ~~The carrying value of cash value of bank owned life insurance 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 variable rate borrowings and securities sold under repurchase agreements approximates fair value and are 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 are classified as Level 2.

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

~~Off-Balance-Sheet Instruments:~~ ~~Because~~ commitments to extend credit and standby letters of credit. They involve, to varying degrees, elements of credit ~~are typically made using variable rates~~risk and ~~have short maturities,~~interest rate risk in excess of the ~~carrying value~~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 ~~fair value are immaterial~~conditional obligations as it does for ~~disclosure.~~on-balance-sheet instruments. A summary of the Company’s commitments is as follows:


(dollars in thousands)	June 30, 2020		December 31, 2019
Commitments to extend credit	$	2,468,695	$	2,486,949
Unused home equity lines of credit	261,647		262,089
Financial standby letters of credit	32,877		29,232
Mortgage interest rate lock commitments	1,279,952		288,490

~~Derivatives:~~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 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 ~~entered into derivative~~not been required to perform on any material financial ~~instruments to manage interest rate risk. The valuation~~standby letters 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,credit 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~~not incurred any losses on financial standby letters of credit for 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, 2017 and December 31, 2016, 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.

Recurring Basis
Fair Value Measurements
September 30, 2017
(dollars in thousands)
Fair Value Level 1 Level 2 Level 3
Financial assets:

U.S. government sponsored agencies $ 1,004
$ —
$ 1,004
$ —
State, county and municipal securities 143,387
—
143,387
—
Corporate debt securities 47,249
—
45,749
1,500
Mortgage-backed securities 627,953
—
627,953
—
Loans held for sale 137,392
—
137,392
—
Mortgage banking derivative instruments 3,836
—
3,836
—
Total recurring assets at fair value $ 960,821
$ —
$ 959,321
$ 1,500
Financial liabilities:

Derivative financial instruments $ 723
$ —
$ 723
$ —
Mortgage banking derivative instruments 237
—
237
—
Total recurring liabilities at fair value $ 960
$ —
$ 960
$ —

Recurring Basis
Fair Value Measurements
December 31, 2016
(dollars in thousands) Fair Value Level 1 Level 2 Level 3
Financial assets:

U.S. government sponsored agencies $ 1,020
$ —
$ 1,020
$ —
State, county and municipal securities 152,035
—
152,035
—
Corporate debt securities 32,172
—
30,672
1,500
Mortgage-backed securities 637,508
—
637,508
—
Loans held for sale 105,924
—
105,924
—
Mortgage banking derivative instruments 4,314
—
4,314
—
Total recurring assets at fair value $ 932,973
$ —
$ 931,473
$ 1,500
Financial liabilities:

Derivative financial instruments $ 978
$ —
$ 978
$ —
Total recurring liabilities at fair value $ 978
$ —
$ 978
$ —

Nonrecurring Basis
Fair Value Measurements
(dollars in thousands) Fair Value Level 1 Level 2 Level 3
September 30, 2017

Impaired loans carried at fair value $ 28,790
$ —
$ —
$ 28,790
Other real estate owned 435
—
—
435
Purchased other real estate owned 9,946
—
—
9,946
Total nonrecurring assets at fair value $ 39,171
$ —
$ —
$ 39,171

December 31, 2016

Impaired loans carried at fair value $ 28,253
$ —
$ —
$ 28,253
Other real estate owned 1,172
—
—
1,172
Purchased other real estate owned 12,540
—
—
12,540
Total nonrecurring assets at fair value $ 41,965
$ —
$ —
$ 41,965

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 other real estate owned include market conditions, estimated marketing period or holding period, underlying collateral characteristics and discount rates.

~~For the nine~~six months ended ~~September~~June 30, ~~2017~~2020 and the year ended December 31, ~~2016, there was not a change~~2019.

The Company maintains an allowance for credit losses on unfunded commitments which is recorded in other liabilities on the ~~methods and significant assumptions used to estimate fair value.~~

consolidated balance sheets. The following table ~~shows significant unobservable inputs used~~presents activity in the ~~fair value measurement of Level 3 assets and liabilities:~~allowance for unfunded commitments for the periods presented:


	Three Months Ended June 30,		Six Months Ended June 30,
(dollars in thousands)	2020		2020
Balance at beginning of period	$	17,791	$	1,077
Adjustment to reflect adoption of ASU 2016-13	—		12,714
Provision for unfunded commitments	19,712		23,712
Balance at end of period	$	37,503	$	37,503

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

Weighted
Average
Discount
September 30, 2017

Recurring:

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

Impaired loans $ 28,790
Third-party appraisals and discounted cash flows Collateral discounts and
discount rates 10% - 100% 25%
Other real estate owned $ 435
Third-party appraisals and sales contracts Collateral discounts and estimated
costs to sell 15% - 20% 13%
Purchased other real estate owned $ 9,946
Third-party appraisals Collateral discounts and estimated
costs to sell 10% - 74% 16%

December 31, 2016

Recurring:

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

Impaired loans $ 28,253
Third-party appraisals and discounted cash flows Collateral discounts and
discount rates 15% - 100% 28%
Other real estate owned $ 1,172
Third-party appraisals and sales contracts Collateral discounts and estimated
costs to sell 15% - 74% 22%
Purchased other real estate owned $ 12,540
Third-party appraisals Collateral discounts and estimated
costs to sell 10% - 74% 15%

Other Commitments

As of June 30, 2020, letters of credit issued by the FHLB totaling $157.4 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 ~~carrying~~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, ~~fair value of~~then the estimated liability would be accrued in the Company’s financial ~~instruments,~~statements. If the assessment indicates that a potentially material loss contingency is not ~~shown elsewhere in these financial statements, were as follows:~~

Fair Value Measurements
September 30, 2017
(dollars in thousands)
Carrying
Amount
Level 1 Level 2 Level 3 Total
Financial assets:

Cash and due from banks $ 131,071
$ 131,071
$ —
$ —
$ 131,071
Federal funds sold and interest-bearing accounts 112,844
112,844
—
—
112,844
Loans, net 5,902,267
—
—
5,871,518
5,871,518
Accrued interest receivable 25,068
25,068
—
—
25,068
Financial liabilities:

Deposits $ 5,895,504
$ —
$ 5,896,989
$ —
$ 5,896,989
Securities sold under agreements to repurchase 14,156
14,156
—
—
14,156
Other borrowings 808,572
—
809,810
—
809,810
Subordinated deferrable interest debentures 85,220
—
70,984
—
70,984
FDIC loss-share payable 8,190
—
—
9,077
9,077
Accrued interest payable 2,313
2,313
—
—
2,313
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

In December 2019, a novel coronavirus (COVID-19) was reported in China, and, in March 2020, the World Health Organization declared the outbreak a pandemic. The COVID-19 pandemic has caused significant economic dislocation in the United States, as many state and local governments have intermittently ordered non-essential businesses to close and residents to shelter in place at home. This has resulted in an unprecedented slowdown in economic activity and a related increase in unemployment and unemployment claims. 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

Fair Value Measurements
December 31, 2016
(dollars in thousands)
Carrying
Amount
Level 1 Level 2 Level 3 Total
Financial assets:

Cash and due from banks $ 127,164
$ 127,164
$ —
$ —
$ 127,164
Federal funds sold and interest-bearing accounts 71,221
71,221
—
—
71,221
Loans, net 5,212,153
—
—
5,236,034
5,236,034
Accrued interest receivable 22,278
22,278
—
—
22,278
Financial liabilities:

Deposits $ 5,575,163
$ —
$ 5,575,288
$ —
$ 5,575,288
Securities sold under agreements to repurchase 53,505
53,505
—
—
53,505
Other borrowings 492,321
—
492,321
—
492,321
Subordinated deferrable interest debentures 84,228
—
67,321
—
67,321
FDIC loss-share payable 6,313
—
—
8,243
8,243
Accrued interest payable 1,501
1,501
—
—
1,501
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 ~~five~~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 six months ended ~~September~~June 30, ~~2017~~2020 and ~~2016:~~2019:


	Three Months Ended June 30, 2020
(dollars in thousands)	Banking Division		Retail Mortgage Division		Warehouse Lending Division		SBA Division		Premium Finance Division		Total
Interest income	$	128,653	$	34,714	$	5,285	$	8,757	$	7,609	$	185,018
Interest expense	8,323		10,412		259		1,723		487		21,204
Net interest income	120,330		24,302		5,026		7,034		7,122		163,814
Provision for credit losses	86,805		423		403		2,322		(1,792)		88,161
Noninterest income	14,468		104,195		727		1,570		—		120,960
Noninterest expense
Salaries and employee benefits	40,423		50,003		209		2,612		1,921		95,168
Equipment and occupancy expenses	11,679		1,953		1		97		77		13,807
Data processing and telecommunications expenses	8,919		1,406		55		15		119		10,514
Other expenses	27,997		6,949		88		359		886		36,279
Total noninterest expense	89,018		60,311		353		3,083		3,003		155,768
Income before income tax expense	(41,025)		67,763		4,997		3,199		5,911		40,845
Income tax expense	(8,582)		14,231		1,049		671		1,240		8,609
Net income	$	(32,443)	$	53,532	$	3,948	$	2,528	$	4,671	$	32,236

Total assets	$	13,121,679	$	3,905,683	$	753,668	$	1,310,077	$	781,522	$	19,872,629
Goodwill	863,507		—		—		—		64,498		928,005
Other intangible assets, net	64,007		—		—		—		16,347		80,354

Three Months Ended
September 30, 2017
(dollars in thousands) Banking
Division Retail
Mortgage
Division Warehouse
Lending
Division SBA
Division Premium
Finance
Division Total
Interest income $ 59,130
$ 5,862
$ 2,022
$ 1,413
$ 7,895
$ 76,322
Interest expense 5,530
1,597
487
432
1,421
9,467
Net interest income 53,600
4,265
1,535
981
6,474
66,855
Provision for loan losses 1,037
262
215
(1 ) 274
1,787
Noninterest income 13,007
12,257
583
1,130
22
26,999
Noninterest expense

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

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


	Three Months Ended June 30, 2019
(dollars in thousands)	Banking Division		Retail Mortgage Division		Warehouse Lending Division		SBA Division		Premium Finance Division		Total
Interest income	$	98,892	$	13,633	$	5,550	$	2,287	$	8,666	$	129,028
Interest expense	14,137		6,066		2,563		1,105		3,506		27,377
Net interest income	84,755		7,567		2,987		1,182		5,160		101,651
Provision for credit losses	2,306		609		—		178		1,575		4,668
Noninterest income	14,830		18,070		450		1,883		3		35,236
Noninterest expense
Salaries and employee benefits	24,228		11,886		162		735		1,320		38,331
Equipment and occupancy expenses	7,034		670		1		65		64		7,834
Data processing and telecommunications expenses	7,635		394		38		3		318		8,388
Other expenses	22,728		2,385		75		359		1,151		26,698
Total noninterest expense	61,625		15,335		276		1,162		2,853		81,251
Income before income tax expense	35,654		9,693		3,161		1,725		735		50,968
Income tax expense	8,691		2,170		664		362		177		12,064
Net income	$	26,963	$	7,523	$	2,497	$	1,363	$	558	$	38,904

Total assets	$	9,208,685	$	1,306,063	$	462,780	$	211,433	$	700,375	$	11,889,336
Goodwill	436,642		—		—		—		64,498		501,140
Other intangible assets, net	33,086		—		—		—		19,351		52,437


	Six Months Ended June 30, 2020
(dollars in thousands)	Banking Division		Retail Mortgage Division		Warehouse Lending Division		SBA Division		Premium Finance Division		Total
Interest income	$	260,954	$	68,125	$	10,135	$	12,485	$	16,087	$	367,786
Interest expense	22,249		26,067		1,807		3,270		2,634		56,027
Net interest income	238,705		42,058		8,328		9,215		13,453		311,759
Provision for credit losses	122,802		2,420		394		1,419		2,173		129,208
Noninterest income	32,241		138,564		1,687		2,847		—		175,339
Noninterest expense
Salaries and employee benefits	82,044		81,100		419		4,088		3,463		171,114
Equipment and occupancy expenses	22,026		3,457		2		194		156		25,835
Data processing and telecommunications expenses	19,716		2,392		96		28		236		22,468
Other expenses	58,642		12,824		122		874		1,942		74,404
Total noninterest expense	182,428		99,773		639		5,184		5,797		293,821
Income before income tax expense	(34,284)		78,429		8,982		5,459		5,483		64,069
Income tax expense	(8,307)		16,639		1,886		1,146		1,147		12,511
Net income	$	(25,977)	$	61,790	$	7,096	$	4,313	$	4,336	$	51,558


	Six Months Ended June 30, 2019
(dollars in thousands)	Banking Division		Retail Mortgage Division		Warehouse Lending Division		SBA Division		Premium Finance Division		Total
Interest income	$	196,766	$	26,145	$	10,354	$	4,461	$	16,231	$	253,957
Interest expense	26,972		12,825		4,677		2,193		6,244		52,911
Net interest income	169,794		13,320		5,677		2,268		9,987		201,046
Provision for credit losses	4,364		745		—		409		2,558		8,076
Noninterest income	29,200		32,360		829		3,613		5		66,007
Noninterest expense
Salaries and employee benefits	52,160		20,093		323		1,462		2,625		76,663
Equipment and occupancy expenses	14,315		1,436		2		124		161		16,038
Data processing and telecommunications expenses	15,227		724		68		5		755		16,779
Other expenses	39,684		4,499		143		746		2,124		47,196
Total noninterest expense	121,386		26,752		536		2,337		5,665		156,676
Income before income tax expense	73,244		18,183		5,970		3,135		1,769		102,301
Income tax expense	17,466		3,783		1,254		658		331		23,492
Net income	$	55,778	$	14,400	$	4,716	$	2,477	$	1,438	$	78,809

NOTE 13 – LOAN SERVICING RIGHTS

The ~~following tables present selected financial information~~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 ~~respect~~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)	June 30, 2020		December 31, 2019
Loan Servicing Rights
Residential mortgage	$	91,381	$	94,902
SBA	5,241		7,886
Indirect automobile	162		247
Total loan servicing rights	$	96,784	$	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 six-months ended June 30, 2020, the Company recorded servicing fee income of $6.9 million and $13.1 million, respectively. During the three- and six-months ended June 30, 2019, the Company recorded servicing fee income of $949,000 and $1.8 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 ~~reportable~~MSRs and impairment:


	Three Months Ended June 30,						Six Months Ended June 30,
(dollars in thousands)	2020		2019		2020		2019
Residential mortgage servicing rights
Beginning carrying value, net	$	85,922	$	12,104	$	94,902	$	11,814
Additions	19,298		1,007		35,359		1,699
Amortization	(5,687)		(466)		(9,853)		(868)
Impairment	(8,152)		(1,460)		(29,027)		(1,460)
Ending carrying value, net	$	91,381	$	11,185	$	91,381	$	11,185


	Three Months Ended June 30,						Six Months Ended June 30,
(dollars in thousands)	2020		2019		2020		2019
Residential mortgage servicing impairment
Beginning balance	$	20,979	$	—	$	104	$	—
Additions	8,152		1,460		29,027		1,460

Ending balance	$	29,131	$	1,460	$	29,131	$	1,460

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)	June 30, 2020			December 31, 2019
Residential mortgage servicing rights
Unpaid principal balance of loans serviced for others	$	10,266,233		$	8,469,600
Composition of residential loans serviced for others:
FHLMC	21.24		%	25.87		%
FNMA	64.77		%	65.35		%
GNMA	13.99		%	8.78		%
Total	100.00		%	100.00		%
Weighted average term (months)	341			341
Weighted average age (months)	28			33
Modeled prepayment speed	20.21		%	14.41		%
Decline in fair value due to a 10% adverse change	(5,255)			(4,455)
Decline in fair value due to a 20% adverse change	(9,945)			(8,520)
Weighted average discount rate	9.64		%	9.49		%
Decline in fair value due to a 10% adverse change	(2,936)			(3,557)
Decline in fair value due to a 20% adverse change	(5,686)			(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 ~~segments~~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 six-months ended June 30, 2020, the Company recorded servicing fee income of $1.0 million and $2.1 million, respectively. During the three- and six-months ended June 30, 2019, the Company recorded servicing fee income of $520,000 and $1.1 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 June 30,						Six Months Ended June 30,
(dollars in thousands)	2020		2019		2020		2019
SBA servicing rights
Beginning carrying value, net	$	5,394	$	3,042	$	7,886	$	3,012
Additions	100		170		475		429
Purchase accounting adjustment	—		—		(1,214)		—
Amortization	(416)		(102)		(779)		(331)
(Impairment)/recovery	163		—		(1,127)		—
Ending carrying value, net	$	5,241	$	3,110	$	5,241	$	3,110


	Three Months Ended June 30,						Six Months Ended June 30,
(dollars in thousands)	2020		2019		2020		2019
SBA servicing impairment
Beginning balance	$	1,431	$	—	$	141	$	—
Additions	—		—		1,127		—
Recoveries	(163)		—		—		—
Ending balance	$	1,268	$	—	$	1,268	$	—


(dollars in thousands)	June 30, 2020			December 31, 2019
SBA servicing rights
Unpaid principal balance of loans serviced for others	$	335,416		$	339,247
Weighted average life (in years)	3.37			3.81
Modeled prepayment speed	19.87		%	17.86		%
Decline in fair value due to a 10% adverse change	(306)			(299)
Decline in fair value due to a 20% adverse change	(581)			(570)
Weighted average discount rate	10.91		%	11.47		%
Decline in fair value due to a 100 basis point adverse change	(130)			(144)
Decline in fair value due to a 200 basis point adverse change	(254)			(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 June 30,						Six Months Ended June 30,
(dollars in thousands)	2020		2019		2020		2019
Indirect automobile servicing rights
Beginning carrying value, net	$	204	$	—	$	247	$	—

Amortization	(42)		—		(85)		—

Ending carrying value, net	$	162	$	—	$	162	$	—

During the three- and six-months ended June 30, 2020, the Company recorded servicing fee income of $518,000 and $1.2 million, respectively. The Company did 0t record any servicing fee income for the ~~nine months~~three- and six-months ended ~~September~~June 30, ~~2017~~2019. Servicing fee income includes servicing fees, late fees and ~~2016:~~ancillary fees earned for each period.

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

Retail
Mortgage
Division

Warehouse
Lending
Division

SBA
Division

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

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

Nine Months Ended
September 30, 2016
(dollars in thousands)
Banking
Division

Retail
Mortgage
Division

Warehouse
Lending
Division

SBA
Division

Premium
Finance
Division
Total
Interest income $ 158,682
$ 9,992
$ 4,714
$ 2,721
$ —
$ 176,109
Interest expense 10,726
2,383
458
450
—
14,017
Net interest income 147,956
7,609
4,256
2,271
—
162,092
Provision for loan losses 1,471
540
94
276
—
2,381
Noninterest income 39,702
36,126
1,328
4,373
—
81,529
Noninterest expense

Salaries and employee benefits 55,740
23,591
399
1,970
—
81,700
Equipment and occupancy expenses 16,541
1,326
3
190
—
18,060
Data processing and telecommunications expenses 17,299
974
71
3
—
18,347
Other expenses 39,040
3,392
77
542
—
43,051
Total noninterest expense 128,620
29,283
550
2,705
—
161,158
Income before income tax expense 57,567
13,912
4,940
3,663
—
80,082
Income tax expense 18,278
4,870
1,729
1,282
—
26,159
Net income $ 39,289
$ 9,042
$ 3,211
$ 2,381
$ —
$ 53,923

NOTE 1514 – ~~REGULATORY MATTERS~~GOODWILL

OnThe 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 June 30, 2020 and December ~~16, 2016,~~31, 2019, respectively. The carrying value of goodwill at the ~~Bank entered into~~Premium Finance Division was $64.5 million at both June 30, 2020 and December 31, 2019. The Company performs its annual impairment test at December 31 of each year and more frequently if a ~~Stipulation~~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 ~~the Issuance of a Consent Order with its bank regulatory agencies, the FDIC~~book value and the ~~Georgia Department~~impact of COVID-19 on the economy and determined that it was more likely than not that the reporting unit's fair value exceeded its 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 ~~Finance (the “GDBF”), consenting~~the Company also used a market approach comparing to the issuance of a consent order (the “Order”) relating to the Bank’s Bank Secrecy Act (together with its implementing regulations, the “BSA”) compliance program. In consenting to the issuancesimilar public companies multiples and control premiums from transactions during prior distressed periods. The results from each of the ~~Order, the Bank did not admit or deny any charges of unsafe or unsound banking practices related to its BSA compliance program.~~

~~Under the terms~~primary approaches showed valuation of the ~~Order,~~reporting unit in excess of carrying value at May 31, 2020. The discounted cash flow approach for the ~~Bank or~~Premium Finance Division resulted in a fair value approximately 11% higher than its ~~board~~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 are materially consistent with those modeled at May 31, 2020 and therefore, management determined no impairment existed at June 30, 2020.

Each of ~~directors is required to take certain affirmative actions to comply with~~ the Bank’s obligations under the BSA. These include, but are not limited to, the following: strengthening the board of directors’ oversight of BSA activities; enhancing and adopting a revised BSA compliance program; completing a BSA risk assessment; developing a revised system of internal controls designed to ensure full compliance with the BSA; reviewing and revising customer due diligence and risk assessment processes, policies and procedures; developing, adopting and implementing effective BSA training programs; assessing BSA staffing needs and resources and appointing a qualified BSA officer; establishing an independent BSA testing program; ensuring that all reports requiredvaluation methods used by the ~~BSA~~Company requires significant assumptions. Depending on the specific method, assumptions are ~~accurately~~made regarding growth rates, discount rates for cash flows, control premiums, and ~~properly filed; and engaging an independent firm~~selected multiples. Changes to ~~review past account activity to determine whether suspicious activity was properly identified and reported.~~

~~Prior to implementation, certain~~any of the ~~actions required by the Order were subject to review by, and approval or non-objection from, the FDIC and the GDBF. The Order will remain~~assumptions could result in ~~effect and be enforceable until it is modified, terminated, suspended or~~significantly different results.

set aside by the FDIC and the GDBF. The Bank expects that it will continue to meet the required actions within the time periods specified in the Order based upon ongoing communications with its regulators.

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; movements in interest 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; ~~state~~the successful integration of acquired businesses on a timely basis; the timely realization of expected cost savings and ~~federal banking regulations; changes in or application of environmental~~any revenue synergies from acquisition transactions; our outlook and other laws and regulations to which we are subject; political, legal and economic conditions and developments; financial market conditions and the results of financing efforts; changes in commodity prices and interest rates;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 ~~Securities and Exchange Commission~~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~~June 30, ~~2017,~~2020, as compared with December 31, ~~2016,~~2019, and operating results for the three- and ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2017~~2020 and ~~2016.~~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 ~~operating~~ net income, and adjusted ~~operating~~ 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 ~~previous~~most recent five 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															Six Months Ended June 30,
(in thousands, except share and per share data)	Third Quarter 2017		Second Quarter 2017		First Quarter 2017		Fourth Quarter 2016		Third Quarter 2016		September 30, 2017		September 30, 2016		(in thousands, except share and per share data)	Second Quarter 2020		First Quarter 2020		Fourth Quarter 2019		Third Quarter 2019		Second Quarter 2019		2020		2019
Results of Operations:															Results of Operations:
Net interest income	$	66,855	$	63,157	$	60,590	$	57,279	$	57,067	$	190,602	$	162,092	Net interest income	$	163,814	$	147,945	$	155,351	$	148,769	$	101,651	$	311,759	$	201,046
Net interest income (tax equivalent)	68,668		64,773		62,108		58,897		58,024		195,549		164,726		Net interest income (tax equivalent)	165,178		149,018		156,454		149,896		102,714		314,196		203,166
Provision for loan losses	1,787		2,205		1,836		1,710		811		5,828		2,381
Non-interest income	26,999		28,189		25,706		24,272		28,864		80,894		81,529
Non-interest expense	63,767		55,739		53,093		54,677		53,199		172,599		161,158
Provision for credit losses															Provision for credit losses	88,161		41,047		5,693		5,989		4,668		129,208		8,076
Noninterest income															Noninterest income	120,960		54,379		55,113		76,993		35,236		175,339		66,007
Noninterest expense															Noninterest expense	155,768		138,053		122,564		192,697		81,251		293,821		156,676
Income tax expense	8,142		10,315		10,214		6,987		10,364		28,671		26,159		Income tax expense	8,609		3,902		20,959		5,692		12,064		12,511		23,492
Net income available to common shareholders	20,158		23,087		21,153		18,177		21,557		64,398		53,923		Net income available to common shareholders	32,236		19,322		61,248		21,384		38,904		51,558		78,809
Selected Average Balances:															Selected Average Balances:
Investment securities	$	864,456	$	866,960	$	862,616	$	856,671	$	857,433	$	864,684	$	840,688	Investment securities	$	1,382,699	$	1,456,462	$	1,514,494	$	1,592,005	$	1,264,415	$	1,419,580	$	1,245,098
Loans held for sale	126,798		110,933		77,617		102,926		105,859		105,296		96,340		Loans held for sale	1,614,080		1,587,131		1,537,648		856,572		154,707		1,600,606		128,261
Loans	4,379,082		3,994,213		3,678,149		3,145,714		2,897,771		4,018,597		2,642,498		Loans	13,915,406		12,712,997		12,697,912		12,677,063		8,740,561		13,308,960		8,612,978
Purchased loans	937,595		973,521		1,034,983		1,101,907		1,199,175		982,033		1,147,821
Purchased loan pools	475,742		516,949		547,057		590,617		629,666		513,750		629,118
Earning assets	6,892,939		6,584,386		6,347,807		5,925,634		5,780,455		6,610,374		5,490,525		Earning assets	17,334,983		16,203,479		16,077,986		15,478,774		10,547,095		16,763,989		10,434,152
Assets	7,461,367		7,152,024		6,915,965		6,573,344		6,330,350		7,180,330		6,030,181		Assets	19,222,181		18,056,445		17,998,494		17,340,387		11,625,344		18,649,746		11,525,068
Deposits	5,837,154		5,671,394		5,491,324		5,490,657		5,221,219		5,667,891		5,102,729		Deposits	14,890,348		13,702,332		13,903,846		13,520,926		9,739,892		14,296,340		9,659,181
Shareholders’ equity	796,856		774,664		695,830		653,991		640,382		756,153		599,817		Shareholders’ equity	2,478,373		2,456,617		2,437,272		2,432,182		1,519,598		2,486,140		1,499,144
Period-End Balances:															Period-End Balances:
Investment securities	$	867,570	$	861,188	$	866,715	$	852,199	$	862,702	$	867,570	$	862,702	Investment securities	$	1,315,349	$	1,434,794	$	1,470,322	$	1,558,128	$	1,305,725	$	1,315,349	$	1,305,725
Loans held for sale	137,392		146,766		105,637		105,924		126,263		137,392		126,263		Loans held for sale	1,736,397		1,398,229		1,656,711		1,187,551		261,073		1,736,397		261,073
Loans	4,574,678		4,230,228		3,785,480		3,626,821		3,091,039		4,574,678		3,091,039		Loans	14,503,157		13,094,106		12,818,476		12,826,284		9,049,870		14,503,157		9,049,870
Purchased loans	917,126		950,499		1,006,935		1,069,191		1,129,381		917,126		1,129,381
Purchased loan pools	465,218		490,114		529,099		568,314		624,886		465,218		624,886
Earning assets	7,074,828		6,816,606		6,525,911		6,293,670		5,925,072		7,074,828		5,925,072		Earning assets	17,983,712		16,324,222		16,321,373		15,858,175		10,804,385		17,983,712		10,804,385
Total assets	7,649,820		7,397,858		7,094,856		6,892,031		6,493,495		7,649,820		6,493,495		Total assets	19,872,629		18,224,548		18,242,579		17,764,277		11,889,336		19,872,629		11,889,336
Deposits	5,895,504		5,793,397		5,642,369		5,575,163		5,306,098		5,895,504		5,306,098		Deposits	15,589,818		13,844,618		14,027,073		13,659,594		9,582,370		15,589,818		9,582,370
Shareholders’ equity	801,921		782,682		758,216		646,437		642,583		801,921		642,583		Shareholders’ equity	2,460,130		2,437,150		2,469,582		2,420,723		1,537,121		2,460,130		1,537,121
Per Common Share Data:															Per Common Share Data:
Earnings per share - basic	$	0.54	0.62		0.59		0.52		0.62		1.76		1.58		Earnings per share - basic	$	0.47	$	0.28	$	0.88	$	0.31	$	0.82	$	0.74	$	1.66
Earnings per share - diluted	$	0.54	0.62		0.59		0.52		0.61		1.74		1.56		Earnings per share - diluted	$	0.47	$	0.28	$	0.88	$	0.31	$	0.82	$	0.74	$	1.66
Book value per common share	$	21.54	$	21.03	$	20.42	$	18.51	$	18.42	$	21.54	$	18.42	Book value per common share	$	35.42	$	35.10	$	35.53	$	34.78	$	32.52	$	35.42	$	32.52
Tangible book value per common share	$	17.78	$	17.24	$	16.60	$	14.42	$	14.38	$	17.78	$	14.38	Tangible book value per common share	$	20.90	$	20.44	$	20.81	$	20.29	$	20.81	$	20.90	$	20.81
End of period shares outstanding	37,231,049		37,222,904		37,128,714		34,921,474		34,891,304		37,231,049		34,891,304		End of period shares outstanding	69,462,782		69,441,274		69,503,833		69,593,833		47,261,584		69,462,782		47,261,584


																Nine Months Ended																						Six Months Ended June 30,
(in thousands, except share and per share data)	Third Quarter 2017			Second Quarter 2017			First Quarter 2017			Fourth Quarter 2016			Third Quarter 2016			September 30, 2017			September 30, 2016			(in thousands, except share and per share data)	Second Quarter 2020			First Quarter 2020			Fourth Quarter 2019			Third Quarter 2019			Second Quarter 2019			2020			2019
Weighted Average Shares Outstanding:																						Weighted Average Shares Outstanding:
Basic	37,225,418			37,162,810			35,664,420			34,915,459			34,869,747			36,689,934			34,155,556			Basic	69,191,778			69,247,661			69,429,193			69,372,125			47,310,561			69,235,117			47,353,678
Diluted	37,552,667			37,489,348			36,040,240			35,293,035			35,194,739			37,017,486			34,470,101			Diluted	69,292,972			69,502,022			69,683,999			69,600,499			47,337,809			69,413,027			47,394,911
Market Price:																						Market Price:
High intraday price	$	51.28		$	49.80		$	49.50		$	47.70		$	36.20		$	51.28		$	36.20		High intraday price	$	29.82		$	43.79		$	44.90		$	40.65		$	39.60		$	43.79		$	42.01
Low intraday price	$	41.05		$	42.60		$	41.60		$	34.61		$	28.90		$	41.05		$	24.96		Low intraday price	$	17.12		$	17.89		$	38.34		$	33.71		$	33.57		$	17.12		$	31.27
Closing price for quarter	$	48.00		$	48.20		$	46.10		$	43.60		$	34.95		$	48.00		$	34.95		Closing price for quarter	$	23.59		$	23.76		$	42.54		$	40.24		$	39.19		$	23.59		$	39.19
Average daily trading volume	168,911			169,617			242,982			191,894			166,841			193,555			211,351			Average daily trading volume	470,151			461,692			353,783			461,289			352,684			465,955			369,959
Cash dividends declared per share	$	0.10		$	0.10		$	0.10		$	0.10		$	0.10		$	0.30		$	0.20		Cash dividends declared per share	$	0.15		$	0.15		$	0.15		$	0.15		$	0.10		$	0.30		$	0.20
Closing price to book value	2.23			2.29			2.26			2.36			1.90			2.23			1.90			Closing price to book value	0.67			0.68			1.20			1.16			1.21			0.67			1.21
Performance Ratios:																						Performance Ratios:
Return on average assets	1.07		%	1.29		%	1.24		%	1.10		%	1.35		%	1.20		%	1.19		%	Return on average assets	0.67		%	0.43		%	1.35		%	0.49		%	1.34		%	0.56		%	1.38		%
Return on average common equity	10.04		%	11.95		%	12.33		%	11.06		%	13.39		%	11.39		%	12.01		%	Return on average common equity	5.23		%	3.16		%	9.97		%	3.49		%	10.27		%	4.17		%	10.60		%
Average loans to average deposits	101.41		%	98.66		%	97.20		%	89.99		%	92.55		%	99.15		%	88.50		%	Average loans to average deposits	104.29		%	104.36		%	102.39		%	100.09		%	91.33		%	104.29		%	90.50		%
Average equity to average assets	10.68		%	10.83		%	10.06		%	9.95		%	10.12		%	10.53		%	9.95		%	Average equity to average assets	12.89		%	13.61		%	13.54		%	14.03		%	13.07		%	13.33		%	13.01		%
Net interest margin (tax equivalent)	3.95		%	3.95		%	3.97		%	3.95		%	3.99		%	3.96		%	4.01		%	Net interest margin (tax equivalent)	3.83		%	3.70		%	3.86		%	3.84		%	3.91		%	3.77		%	3.93		%
Efficiency ratio	67.94		%	61.02		%	61.52		%	67.05		%	61.91		%	63.57		%	66.15		%	Efficiency ratio	54.70		%	68.23		%	58.24		%	85.35		%	59.36		%	60.32		%	58.67		%

Non-GAAP Measures Reconciliation -																						Non-GAAP Measures Reconciliation -
Tangible book value per common share:																						Tangible book value per common share:
Total shareholders’ equity	$	801,921		$	782,682		$	758,216		$	646,437		$	642,583		$	801,921		$	642,583		Total shareholders’ equity	$	2,460,130		$	2,437,150		$	2,469,582		$	2,420,723		$	1,537,121		$	2,460,130		$	1,537,121
Less:																						Less:
Goodwill	125,532			125,532			125,532			125,532			122,545			125,532			122,545			Goodwill	928,005			931,947			931,637			911,488			501,140			928,005			501,140
Other intangible assets, net	14,437			15,378			16,391			17,428			18,472			14,437			18,472			Other intangible assets, net	80,354			85,955			91,586			97,328			52,437			80,354			52,437
Tangible common equity	$	661,952		$	641,772		$	616,293		$	503,477		$	501,566		$	661,952		$	501,566		Tangible common equity	$	1,451,771		$	1,419,248		$	1,446,359		$	1,411,907		$	983,544		$	1,451,771		$	983,544
End of period shares outstanding	37,231,049			37,222,904			37,128,714			34,921,474			34,891,304			37,231,049			34,891,304			End of period shares outstanding	69,462,782			69,441,274			69,503,833			69,593,833			47,261,584			69,462,782			47,261,584
Book value per common share	$	21.54		$	21.03		$	20.42		$	18.51		$	18.42		$	21.54		$	18.42		Book value per common share	$	35.42		$	35.10		$	35.53		$	34.78		$	32.52		$	35.42		$	32.52
Tangible book value per common share	17.78			17.24			16.60			14.42			14.38			17.78			14.38			Tangible book value per common share	20.90			20.44			20.81			20.29			20.81			20.90			20.81

Fidelity Acquisition

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

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 $4.76 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, branch lobbies are available by appointment only and ATMs are available. Online and mobile banking platforms are also available to serve our customers. Approximately 75% 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 six months ended June 30, 2020, the Company modified $2.66 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 June 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 quarter 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. These factors were the primary drivers of the Company's $129.2 million provision for credit losses during the first six months of 2020. Additionally, the Company incurred $2.6 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 MD&A.

Results of Operations for the Three Months Ended ~~September~~June 30, ~~2017~~2020 and ~~2016~~2019

Consolidated Earnings and Profitability

Ameris reported net income available to common shareholders of ~~$20.2~~$32.2 million, or ~~$0.54~~$0.47 per diluted share, for the quarter ended ~~September~~June 30, ~~2017,~~2020, compared with ~~$21.6~~$38.9 million, or ~~$0.61~~$0.82 per diluted share, for the same period in ~~2016.~~2019. The Company’s return on average assets and average shareholders’ equity were ~~1.07%~~0.67% and ~~10.04%~~5.23%, respectively, in the ~~third~~second quarter of ~~2017,~~2020, compared with ~~1.35%~~1.34% and ~~13.39%~~10.27%, respectively, in the ~~third~~second quarter of ~~2016.~~2019. During the ~~third~~second quarter of ~~2017~~2020, the Company recorded pre-tax merger and conversion charges of $895,000, pre-tax restructuring charges related to branch consolidations and efficiency initiatives of $1.5 million, pre-tax servicing right impairment of $8.0 million, pre-tax gain on bank owned life insurance ("BOLI") proceeds of $845,000, pre-tax expenses related to SEC and DOJ investigation of $1.3 million, pre-tax expenses related to the COVID-19 pandemic of $2.0 million and pre-tax losses on the sale of premises of $281,000. During the second quarter of 2019, the Company incurred pre-tax merger and conversion charges of ~~$92,000, pre-tax BSA compliance resolution expenses of $4.7~~$3.5 million, pre-tax ~~Hurricane Irma expenses~~servicing right impairment of ~~$410,000,~~$1.5 million, pre-tax financial impact of hurricanes of $50,000 and pre-tax losses on the sale of premises of ~~$91,000. During the third quarter of 2016, the Company incurred pre-tax losses on the sale of premises of $238,000.~~$2.8 million. Excluding these ~~merger and conversion charges, compliance resolution expenses, Hurricane Irma expenses, and losses on the sale of premises,~~adjustment items, the Company’s net income would have been ~~$23.6~~$42.4 million, or ~~$0.63~~$0.61 per diluted share, for the ~~third~~second quarter of ~~2017~~2020 and ~~$21.7~~$45.2 million, or ~~$0.62~~$0.96 per diluted share, for the ~~third~~second quarter of ~~2016.~~2019.

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

Three Months Ended September 30, Nine Months Ended September 30,
(in thousands, except share and per share data) 2017 2016 2017 2016
Net income available to common shareholders $ 20,158
$ 21,557
$ 64,398
$ 53,923
Adjustment items:

Merger and conversion charges 92
—
494
6,359
Certain compliance resolution expenses 4,729
—
4,729
—
Financial impact of Hurricane Irma 410
—
410
—
Losses on the sale of premises 91
238
956
562
Tax effect of management adjusted charges (1,863 ) (83 ) (2,306 ) (2,422 )
After tax management-adjusted charges 3,459
155
4,283
4,499
Adjusted operating net income $ 23,617
$ 21,712
$ 68,681
$ 58,422

Weighted average common shares outstanding - diluted 37,552,667
35,194,739
37,017,486
34,470,101
Earnings per diluted share $ 0.54
$ 0.61
$ 1.74
$ 1.56
Adjusted operating net income per diluted share $ 0.63
$ 0.62
$ 1.86
$ 1.69


	Three Months Ended June 30,
(in thousands, except share and per share data)	2020		2019
Net income available to common shareholders	$	32,236	$	38,904
Adjustment items:
Merger and conversion charges	895		3,475

Restructuring charge	1,463		—
Servicing right impairment	7,989		1,460
Gain on BOLI proceeds	(845)		—
Expenses related to SEC and DOJ investigation	1,294		—
Natural disaster and pandemic expenses	2,043		50
Loss on the sale of premises	281		2,800
Tax effect of adjustment items (Note 1)	(2,933)		(1,479)
After tax adjustment items	10,187		6,306
Adjusted net income	$	42,423	$	45,210

Weighted average common shares outstanding - diluted	69,292,972		47,337,809
Net income per diluted share	$	0.47	$	0.82
Adjusted net income per diluted share	$	0.61	$	0.96

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

Below is additional information regarding the retail banking activities, mortgage banking activities, warehouse lending activities, SBA activities and premium finance activities of the Company during the second quarter of 2020 and 2019, respectively:


	Three Months Ended June 30, 2020
(dollars in thousands)	Banking Division		Retail Mortgage Division		Warehouse Lending Division		SBA Division		Premium Finance Division		Total
Interest income	$	128,653	$	34,714	$	5,285	$	8,757	$	7,609	$	185,018
Interest expense	8,323		10,412		259		1,723		487		21,204
Net interest income	120,330		24,302		5,026		7,034		7,122		163,814
Provision for credit losses	86,805		423		403		2,322		(1,792)		88,161
Noninterest income	14,468		104,195		727		1,570		—		120,960
Noninterest expense
Salaries and employee benefits	40,423		50,003		209		2,612		1,921		95,168
Equipment and occupancy expenses	11,679		1,953		1		97		77		13,807
Data processing and telecommunications expenses	8,919		1,406		55		15		119		10,514
Other expenses	27,997		6,949		88		359		886		36,279
Total noninterest expense	89,018		60,311		353		3,083		3,003		155,768
Income before income tax expense	(41,025)		67,763		4,997		3,199		5,911		40,845
Income tax expense	(8,582)		14,231		1,049		671		1,240		8,609
Net income	$	(32,443)	$	53,532	$	3,948	$	2,528	$	4,671	$	32,236


	Three Months Ended June 30, 2019
(dollars in thousands)	Banking Division		Retail Mortgage Division		Warehouse Lending Division		SBA Division		Premium Finance Division		Total
Interest income	$	98,892	$	13,633	$	5,550	$	2,287	$	8,666	$	129,028
Interest expense	14,137		6,066		2,563		1,105		3,506		27,377
Net interest income	84,755		7,567		2,987		1,182		5,160		101,651
Provision for credit losses	2,306		609		—		178		1,575		4,668
Noninterest income	14,830		18,070		450		1,883		3		35,236
Noninterest expense
Salaries and employee benefits	24,228		11,886		162		735		1,320		38,331
Equipment and occupancy expenses	7,034		670		1		65		64		7,834
Data processing and telecommunications expenses	7,635		394		38		3		318		8,388
Other expenses	22,728		2,385		75		359		1,151		26,698
Total noninterest expense	61,625		15,335		276		1,162		2,853		81,251
Income before income tax expense	35,654		9,693		3,161		1,725		735		50,968
Income tax expense	8,691		2,170		664		362		177		12,064
Net income	$	26,963	$	7,523	$	2,497	$	1,363	$	558	$	38,904

Net Interest Income and Margins

The following table sets forth the average balance, interest income or interest expense, and average interest rate 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 June 30, 2020 and 2019. Federally tax-exempt income is presented on a taxable-equivalent basis assuming a 21% federal tax rate.


	Quarter Ended June 30,
	2020									2019
(dollars in thousands)	Average Balance		Interest Income/ Expense		Average Yield/ Rate Paid	Average Balance		Interest Income/ Expense		Average Yield/ Rate Paid
Assets
Interest-earning assets:
Federal funds sold, interest-bearing deposits in banks, and time deposits in other banks	$	422,798	$	168	0.16%	$	387,412	$	2,533	2.62%
Investment securities	1,382,699		9,544		2.78%	1,264,415		9,512		3.02%
Loans held for sale	1,614,080		14,053		3.50%	154,707		1,632		4.23%
Loans	13,915,406		162,617		4.70%	8,740,561		116,413		5.34%
Total interest-earning assets	17,334,983		186,382		4.32%	10,547,095		130,090		4.95%
Noninterest-earning assets	1,887,198					1,078,249
Total assets	$	19,222,181				$	11,625,344

Liabilities and Shareholders’ Equity
Interest-bearing liabilities:
Savings and interest-bearing demand deposits	$	7,355,593	$	5,123	0.28%	$	4,567,335	$	11,833	1.04%
Time deposits	2,473,177		9,150		1.49%	2,448,714		11,621		1.90%
Federal funds purchased and securities sold under agreements to repurchase	12,452		25		0.81%	3,213		2		0.25%
FHLB advances	1,212,537		1,686		0.56%	22,390		141		2.53%
Other borrowings	269,300		3,487		5.21%	145,453		2,210		6.09%
Subordinated deferrable interest debentures	123,120		1,733		5.66%	89,686		1,570		7.02%
Total interest-bearing liabilities	11,446,179		21,204		0.75%	7,276,791		27,377		1.51%
Demand deposits	5,061,578					2,723,843
Other liabilities	236,051					105,112
Shareholders’ equity	2,478,373					1,519,598
Total liabilities and shareholders’ equity	$	19,222,181				$	11,625,344
Interest rate spread					3.57%					3.44%
Net interest income			$	165,178				$	102,713
Net interest margin					3.83%					3.91%

On a tax-equivalent basis, net interest income for the second quarter of 2020 was $165.2 million, an increase of $62.5 million, or 60.8%, compared with $102.7 million reported in the same quarter in 2019. The higher net interest income is a result of growth in average interest earning assets which increased $6.79 billion, or 64.4%, from $10.55 billion in the second quarter of 2019 to $17.33 billion for the second quarter of 2020. This growth in interest earning assets resulted primarily from the Fidelity acquisition occurring in the third quarter of ~~2017~~2019, as well as organic growth in average loans, including PPP loans, and ~~2016, respectively:~~

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

Retail
Mortgage
Division

Warehouse
Lending
Division

SBA
Division

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

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

Three Months Ended
September 30, 2016
(dollars in thousands)
Banking
Division

Retail
Mortgage
Division

Warehouse
Lending
Division

SBA
Division

Premium
Finance
Division
Total
Interest income $ 55,369
$ 3,679
$ 2,073
$ 1,089
$ —
$ 62,210
Interest expense 3,716
1,054
225
148
—
5,143
Net interest income 51,653
2,625
1,848
941
—
57,067
Provision for loan losses 57
447
94
213
—
811
Noninterest income 13,949
13,198
555
1,162
—
28,864
Noninterest expense

Salaries and employee benefits 18,323
8,940
103
616
—
27,982
Equipment and occupancy expenses 5,490
433
1
65
—
5,989
Data processing and telecommunications expenses 5,794
364
26
1
—
6,185
Other expenses 11,533
1,303
26
181
—
13,043
Total noninterest expense 41,140
11,040
156
863
—
53,199
Income before income tax expense 24,405
4,336
2,153
1,027
—
31,921
Income tax expense 7,733
1,518
754
359
—
10,364
Net income $ 16,672
$ 2,818
$ 1,399
$ 668
$ —
$ 21,557
strong production in mortgage. The Company’s net interest margin during the second quarter of 2020 was 3.83%, down eight basis points from 3.91% reported in the second quarter of 2019. Loan production in the lines of business (including retail mortgage, warehouse lending, SBA and premium finance) amounted to $7.2 billion during the second quarter of 2020, with weighted average yields of 3.17%, compared with $2.6 billion and 5.20%, respectively, during the second quarter of 2019. Loan production yields in the lines of business were materially impacted by originations of Paycheck Protection Program ("PPP") loans in our SBA division. Excluding PPP loans, loan production in the lines of business amounted to $6.1 billion during the second quarter of 2020, with weighted average yields of 3.53%

Total interest income, on a tax-equivalent basis, increased to $186.4 million during the second quarter of 2020, compared with $130.1 million in the same quarter of 2019. Yields on earning assets decreased to 4.32% during the second quarter of 2020, compared with 4.95% reported in the second quarter of 2019. During the second quarter of 2020, loans comprised 89.6% of average earning assets, compared with 84.3% in the same quarter of 2019. Yields on loans decreased to 4.70% in the second quarter of 2020, compared with 5.34% in the same period of 2019. Accretion income for the second quarter of 2020 was $9.6 million, compared with $3.1 million in the second quarter of 2019.

The yield on total interest-bearing liabilities decreased from 1.51% in the second quarter of 2019 to 0.75% in the second quarter of 2020. Total funding costs, inclusive of noninterest-bearing demand deposits, decreased to 0.52% in the second quarter of 2020, compared with 1.10% during the second quarter of 2019. Deposit costs decreased from 0.97% in the second quarter of 2019 to 0.39% in the second quarter of 2020. Non-deposit funding costs decreased from 6.03% in the second quarter of 2019 to 1.72% in the second 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 second quarter of 2020 and 2019 are shown below:


	Three Months Ended June 30, 2020					Three Months Ended June 30, 2019
(dollars in thousands)	Average Balance		Average Cost	Average Balance		Average Cost
NOW	$	2,441,305	0.21%	$	1,506,721	0.60%
MMDA	4,221,906		0.36%	2,655,108		1.43%
Savings	692,382		0.05%	405,506		0.08%
Retail CDs	2,471,134		1.49%	1,962,422		1.75%
Brokered CDs	2,043		2.76%	486,292		2.50%
Interest-bearing deposits	$	9,828,770	0.58%	$	7,016,049	1.34%

Provision for Credit Losses

The Company’s provision for credit losses during the second quarter of 2020 amounted to $88.2 million, compared with $4.7 million in the second quarter of 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 second quarter of 2020 was comprised of $68.4 million related to loans and $19.7 million related to unfunded commitments while the $4.7 million recorded for the second quarter of 2019 related solely to loans. At June 30, 2020, classified loans still accruing increased to $73.4 million, compared with $69.8 million at December 31, 2019. Non-performing assets as a percentage of total assets increased from 0.56% at December 31, 2019 to 0.59% at June 30, 2020. The increase in non-performing assets is primarily attributable to an increase in accruing loans past due 90 days or more within our premium finance division. Net charge-offs on loans during the second quarter of 2020 were approximately $9.2 million, or 0.27% of average loans on an annualized basis, compared with approximately $1.5 million, or 0.07%, in the second quarter of 2019. Approximately $3.7 million of the net charge-offs for the second quarter of 2020 was related to the sale of certain substandard loans acquired in the acquisition of Fidelity. The Company’s total allowance for loan losses at June 30, 2020 was $208.8 million, or 1.44% of total loans, compared with $38.2 million, or 0.30% of total loans, at December 31, 2019. This increase is primarily attributable to the adoption impact of CECL which increased the allowance for loan losses $78.7 million and the provision recorded year-to-date.

Noninterest Income

Total noninterest income for the second quarter of 2020 was $121.0 million, an increase of $85.7 million, or 243.3%, from the $35.2 million reported in the second quarter of 2019. Service charges on deposit accounts decreased $2.2 million, or 18.5%, to $9.9 million in the second quarter of 2020, compared with $12.2 million in the second quarter of 2019. This decrease in service charges on deposit accounts is due primarily to the impact of the Durbin Amendment and a decrease in NSF income, partially offset by an increase in the number of deposit accounts resulting from the Fidelity acquisition in the third quarter of 2019 and organic growth. Income from mortgage-related activities was $104.9 million in the second quarter of 2020, an increase of $86.4 million, or 466.5%, from $18.5 million in the second quarter of 2019. Total production in the second quarter of 2020 amounted to $2.67 billion, compared with $585.1 million in the same quarter of 2019, while spread (gain on sale) increased to 3.53% in the current quarter, compared with 3.11% in the same quarter of 2019. The retail mortgage open pipeline finished the second quarter of 2020 at $2.67 billion, compared with $1.16 billion at March 31, 2020 and $287.4 million at the end of the second quarter of 2019. Mortgage-related activities were negatively impacted during the second quarter of 2020 by a mortgage servicing right impairment of $8.2 million compared with $1.5 million in the second quarter of 2019.

Other service charges, commissions and fees increased $327,000, or 40.7%, to $1.1 million during the second quarter of 2020, compared with $803,000 during the second quarter of 2019, due primarily to increased ATM fees. Other noninterest income increased $1.3 million, or 35.3%, to $5.0 million for the second quarter of 2020, compared with $3.7 million during the second quarter of 2019. The increase in other noninterest income was primarily attributable to a $845,000 gain on BOLI proceeds, an increase in servicing income from indirect automobile loans of $475,000, an increase of $318,000 in BOLI income and an increase in trust income of $595,000. These increases were partially offset by a decrease of $574,000 in gain on sales of SBA loans as the SBA division shifted its focus temporarily to PPP loan production during the second quarter of 2020.

Noninterest Expense

Total noninterest expenses for the second quarter of 2020 increased $74.5 million, or 91.7%, to $155.8 million, compared with $81.3 million in the same quarter 2019. Salaries and employee benefits increased $56.8 million, or 148.3%, from $38.3 million in the second quarter of 2019 to $95.2 million in the second quarter of 2020, due primarily to an increase of 868, or 48.8%, full-time equivalent employees from 1,777 at June 30, 2019 to 2,645 at June 30, 2020, 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 mortgage commissions of $23.6 million resulting from an increase in mortgage production. Occupancy and equipment expenses increased $6.0 million, or 76.2%, to $13.8 million for the second quarter of 2020, compared with $7.8 million in the second quarter of 2019, due primarily to an increase of 56 branch locations from 114 at June 30, 2019 to 170 at June 30, 2020, resulting from branch locations added as a result of the Fidelity acquisition. Data processing and telecommunications expense increased $2.1 million, or 25.3%, to $10.5 million in the second quarter of 2020, compared with $8.4 million in the second quarter of 2019, due to the Fidelity acquisition. Advertising and marketing expense was $1.5 million in the second quarter of 2020, compared with $2.0 million in the second quarter of 2019. Amortization of intangible assets increased $2.5 million, or 79.5%, from $3.1 million in the second quarter of 2019 to $5.6 million in the second quarter of 2020 due to additional amortization of intangible assets recorded as part of the Fidelity acquisition. Merger and conversion charges were $895,000 in the second quarter of 2020, compared with $3.5 million in the same quarter of 2019. Other noninterest expenses increased $10.2 million, or 59.8%, from $17.1 million in the second quarter of 2019 to $27.4 million in the second quarter of 2020, due primarily to an increase of $2.6 million in FDIC insurance, an increase of $1.9 million in legal fees, an increase of $3.1 million in mortgage servicing expenses, and an increase of $2.0 million in natural disaster and pandemic charges related to 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 nondeductible expenses. For the second quarter of 2020, the Company reported income tax expense of $8.6 million, compared with $12.1 million in the same period of 2019. The Company’s effective tax rate for the three months ending June 30, 2020 and 2019 was 21.1% and 23.7%, respectively. The decrease in the effective tax rate is primarily a result of decreased nondeductible expenses compared with the same period a year ago.

Results of Operations for the Six Months Ended June 30, 2020 and 2019

Consolidated Earnings and Profitability

Ameris reported net income available to common shareholders of $51.6 million, or $0.74 per diluted share, for the six months ended June 30, 2020, compared with $78.8 million, or $1.66 per diluted share, for the same period in 2019. The Company’s return on average assets and average shareholders’ equity were 0.56% and 4.17%, respectively, in the six months ended June 30, 2020, compared with 1.38% and 10.60%, respectively, in the same period in 2019. During the first six 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 $30.2 million, pre-tax gain on BOLI proceeds of $845,000, pre-tax expenses related to SEC and DOJ investigation of $2.7 million, pre-tax expenses related to the COVID-19 pandemic of $2.6 million and pre-tax losses on the sale of premises of $751,000. During the first six months of 2019, the Company incurred pre-tax merger and conversion charges of $5.5 million, pre-tax restructuring charges related to branch consolidations of $245,000, pre-tax servicing right impairment of $1.5 million, pre-tax reduction in financial impact of hurricanes of $39,000 and pre-tax losses on the sale of premises of $3.7 million. Excluding these adjustment items, the Company’s net income would have been $81.6 million, or $1.18 per diluted share, for the six months ended June 30, 2020 and $87.8 million, or $1.85 per diluted share, for the same period in 2019.

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


	Six Months Ended June 30,
(in thousands, except share and per share data)	2020		2019
Net income available to common shareholders	$	51,558	$	78,809
Adjustment items:
Merger and conversion charges	1,435		5,532

Restructuring charge	1,463		245
Servicing right impairment	30,154		1,460
Gain on BOLI proceeds	(845)		—
Expenses related to SEC and DOJ investigation	2,737		—
Natural disaster and pandemic charges	2,591		(39)
Loss on the sale of premises	751		3,719
Tax effect of adjustment items (Note 1)	(8,216)		(1,929)
After tax adjustment items	30,070		8,988
Adjusted net income	$	81,628	$	87,797

Weighted average common shares outstanding - diluted	69,413,027		47,394,911
Net income per diluted share	$	0.74	$	1.66
Adjusted net income per diluted share	$	1.18	$	1.85

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


	Six Months Ended June 30, 2020
(dollars in thousands)	Banking Division		Retail Mortgage Division		Warehouse Lending Division		SBA Division		Premium Finance Division		Total
Interest income	$	260,954	$	68,125	$	10,135	$	12,485	$	16,087	$	367,786
Interest expense	22,249		26,067		1,807		3,270		2,634		56,027
Net interest income	238,705		42,058		8,328		9,215		13,453		311,759
Provision for loan losses	122,802		2,420		394		1,419		2,173		129,208
Noninterest income	32,241		138,564		1,687		2,847		—		175,339
Noninterest expense
Salaries and employee benefits	82,044		81,100		419		4,088		3,463		171,114
Equipment and occupancy expenses	22,026		3,457		2		194		156		25,835
Data processing and telecommunications expenses	19,716		2,392		96		28		236		22,468
Other expenses	58,642		12,824		122		874		1,942		74,404
Total noninterest expense	182,428		99,773		639		5,184		5,797		293,821
Income before income tax expense	(34,284)		78,429		8,982		5,459		5,483		64,069
Income tax expense	(8,307)		16,639		1,886		1,146		1,147		12,511
Net income	$	(25,977)	$	61,790	$	7,096	$	4,313	$	4,336	$	51,558


	Six Months Ended June 30, 2019
(dollars in thousands)	Banking Division		Retail Mortgage Division		Warehouse Lending Division		SBA Division		Premium Finance Division		Total
Interest income	$	196,766	$	26,145	$	10,354	$	4,461	$	16,231	$	253,957
Interest expense	26,972		12,825		4,677		2,193		6,244		52,911
Net interest income	169,794		13,320		5,677		2,268		9,987		201,046
Provision for loan losses	4,364		745		—		409		2,558		8,076
Noninterest income	29,200		32,360		829		3,613		5		66,007
Noninterest expense
Salaries and employee benefits	52,160		20,093		323		1,462		2,625		76,663
Equipment and occupancy expenses	14,315		1,436		2		124		161		16,038
Data processing and telecommunications expenses	15,227		724		68		5		755		16,779
Other expenses	39,684		4,499		143		746		2,124		47,196
Total noninterest expense	121,386		26,752		536		2,337		5,665		156,676
Income before income tax expense	73,244		18,183		5,970		3,135		1,769		102,301
Income tax expense	17,466		3,783		1,254		658		331		23,492
Net income	$	55,778	$	14,400	$	4,716	$	2,477	$	1,438	$	78,809

Net Interest Income and Margins

The following table sets forth the average balance, interest income or interest expense, and average yield/rate paid for each category of interest-earning assets and interest-bearing liabilities, net interest spread, and net interest margin on average interest-earning assets for the ~~three~~six months ended ~~September~~June 30, ~~2017~~2020 and ~~2016.~~2019. Federally tax-exempt income is presented on a taxable-equivalent basis assuming a ~~35%~~21% federal tax rate.


	Quarter Ended September 30,											Six Months Ended June 30,
	2017					2016						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 and interest-bearing deposits in banks	$	109,266	$	406	1.47%	$	90,551	$	155	0.68%
Federal funds sold, interest-bearing deposits in banks, and time deposits in other banks											Federal funds sold, interest-bearing deposits in banks, and time deposits in other banks	$	434,843	$	1,455	0.67%	$	447,815	$	5,862	2.64%
Investment securities	864,456		5,665		2.60%	857,433		4,872		2.26%	Investment securities	1,419,580		19,825		2.81%	1,245,098		18,753		3.04%
Loans held for sale	126,798		1,131		3.54%	105,859		826		3.10%	Loans held for sale	1,600,606		27,690		3.48%	128,261		2,784		4.38%
Loans	4,379,082		53,394		4.84%	2,897,771		33,672		4.62%	Loans	13,308,960		321,253		4.85%	8,612,978		228,678		5.35%
Purchased loans	937,595		14,048		5.94%	1,199,175		19,296		6.40%
Purchased loan pools	475,742		3,491		2.91%	629,666		4,346		2.75%
Total interest-earning assets	6,892,939		78,135		4.50%	5,780,455		63,167		4.35%	Total interest-earning assets	16,763,989		370,223		4.44%	10,434,152		256,077		4.95%
Noninterest-earning assets	568,428					549,895					Noninterest-earning assets	1,885,757					1,090,916
Total assets	$	7,461,367				$	6,330,350				Total assets	$	18,649,746				$	11,525,068

Liabilities and Shareholders’ Equity											Liabilities and Shareholders’ Equity
Interest-bearing liabilities:											Interest-bearing liabilities:
Savings and interest-bearing demand deposits	$	3,162,448	$	2,963	0.37%	$	2,787,323	$	1,719	0.25%	Savings and interest-bearing demand deposits	$	7,145,803	$	17,855	0.50%	$	4,598,540	$	23,066	1.01%
Time deposits	1,020,239		2,173		0.85%	887,685		1,355		0.61%	Time deposits	2,579,288		20,520		1.60%	2,425,704		22,072		1.83%
Federal funds purchased and securities sold under agreements to repurchase	19,414		11		0.22%	37,305		18		0.19%	Federal funds purchased and securities sold under agreements to repurchase	14,045		65		0.93%	9,511		13		0.28%
FHLB advances	608,413		1,849		1.21%	265,202		393		0.59%	FHLB advances	1,239,920		6,795		1.10%	14,368		185		2.60%
Other borrowings	75,590		1,183		6.21%	49,345		479		3.86%	Other borrowings	269,377		6,998		5.22%	145,463		4,437		6.15%
Subordinated deferrable interest debentures	85,040		1,288		6.01%	83,719		1,179		5.60%	Subordinated deferrable interest debentures	125,426		3,794		6.08%	89,516		3,138		7.07%
Total interest-bearing liabilities	4,971,144		9,467		0.76%	4,110,579		5,143		0.50%	Total interest-bearing liabilities	11,373,859		56,027		0.99%	7,283,102		52,911		1.47%
Demand deposits	1,654,467					1,546,211					Demand deposits	4,571,249					2,634,937
Other liabilities	38,900					33,178					Other liabilities	218,498					107,885
Shareholders’ equity	796,856					640,382					Shareholders’ equity	2,486,140					1,499,144
Total liabilities and shareholders’ equity	$	7,461,367				$	6,330,350				Total liabilities and shareholders’ equity	$	18,649,746				$	11,525,068
Interest rate spread					3.74%					3.85%	Interest rate spread					3.45%					3.48%
Net interest income			$	68,668				$	58,024		Net interest income			$	314,196				$	203,166
Net interest margin					3.95%					3.99%	Net interest margin					3.77%					3.93%

On a tax-equivalent basis, net interest income for the ~~third quarter of 2017~~six months ended June 30, 2020 was ~~$68.7~~$314.2 million, an increase of ~~$10.6~~$111.0 million, or ~~18.3%~~54.6%, compared with ~~$58.0~~$203.2 million reported in the same ~~quarter in 2016.~~period of 2019. The higher net interest income is a result of growth in average interest earning assets which increased ~~$1.11~~$6.33 billion, or ~~19.2%~~60.7%, from ~~$5.78~~$10.43 billion in the first six months of 2019 to $16.76 billion for the first six months of 2020. This increase in average interest earning assets resulted primarily from the Fidelity acquisition occurring in the third quarter of ~~2016~~2019, as well as organic growth in average loans, including PPP loans, and strong production in mortgage.. Average loans increased $4.70 billion, or 54.5%, to ~~$6.89~~$13.31 billion ~~for~~in the ~~third quarter~~first six months of ~~2017.~~2020 from $8.61 billion in the same period of 2019. The Company’s net interest margin ~~decreased~~was down 16 basis points during the ~~third quarter~~first six months of ~~2017~~2020 to ~~3.95%~~3.77%, compared with ~~3.99% reported in~~3.93% for the ~~third quarter~~first six months of ~~2016 but remained stable compared with 3.95% reported in the second quarter of 2017.~~2019.

Total interest income, on a tax-equivalent basis, increased to ~~$78.1~~$370.2 million during the ~~third quarter of 2017,~~six months ended June 30, 2020, compared with ~~$63.2~~$256.1 million in the same quarter of 2016. Yields on earning assets increased to 4.50% during the third quarter of 2017, compared with 4.35% reported in the third quarter of 2016. During the third quarter of 2017, loans comprised 85.9% of earning assets, compared with 83.6% in the same quarter of 2016. This increase is a result of growth in average legacy loans which increased $1.48 billion, or 51.1%, to $4.38 billion in the third quarter 2017 from $2.90 billion in the same period of ~~2016.~~2019. Yields on ~~legacy loans increased~~earning assets decreased to ~~4.84% in~~4.44% during the ~~third quarter~~first six months of ~~2017,~~2020, compared with ~~4.62%~~4.95% reported in the same period of ~~2016. The yield on purchased~~2019. During the first six months of 2020, loans ~~decreased from 6.40% in the third quarter~~comprised 88.9% of ~~2016 to 5.94% during the third quarter of 2017. Accretion income for the third quarter of 2017 was $2.7 million,~~average earning assets, compared with ~~$3.6 million in the third quarter of 2016. Excluding the effect of accretion on purchased loans, the yield on purchased loans was 5.21% for the third quarter of 2016, compared with 4.79%~~83.8% in the same period of ~~2017.~~2019. Yields on ~~purchased loan pools increased from 2.75% in~~loans decreased to 4.85% during the ~~third quarter of 2016 to 2.91%~~six months ended June 30, 2020, compared with 5.35% in the same period of 2019. Accretion income for the first six months of 2020 was $16.1 million, compared with $6.0 million in ~~2017. Management anticipates improving economic conditions and increased loan demand will provide consistent interest income.~~the first six months of 2019.

The yield on total interest-bearing liabilities ~~increased~~decreased from ~~0.50%~~1.47% during the six months ended June 30, 2019 to 0.99% in the ~~third quarter~~same period of ~~2016 to 0.76% in the third quarter of 2017.~~2020. Total funding costs, inclusive of ~~noninterest bearing~~noninterest-bearing demand deposits, ~~increased~~decreased to ~~0.57%~~0.71% in the ~~third quarter~~first six months of ~~2017,~~2020, compared with ~~0.36%~~1.08% during the ~~third quarter~~same period of ~~2016.~~2019. Deposit costs ~~increased~~decreased from ~~0.23%~~0.94% in the ~~third quarter~~first six months of ~~2016~~2019 to ~~0.35%~~0.54% in the ~~third quarter~~same period of ~~2017.~~2020. Non-deposit funding costs ~~increased~~decreased from ~~1.89%~~6.06% in the ~~third quarter~~ first six months

of ~~2016~~2019 to ~~2.18%~~2.15% in the ~~third quarter~~same period of ~~2017.~~2020. The ~~increase~~decrease in non-deposit funding costs was driven primarily by ~~an increased utilization of~~a shift in mix to short-term FHLB advances coupled with ~~an increase in the average rate~~lower market interest rates being paid on other borrowings related to the March 2017 issuance of $75.0 million of 5.75% Fixed-To-Floating Rate Subordinated Notes due 2027. Ongoing efforts to maintain the percentage of funding from transaction deposits have succeeded such that non-CD deposits averaged 82.5% of total deposits in the third quarter of 2017, compared with 83.0% during the third quarter of 2016.FHLB advances. Average balances of interest bearing deposits and their respective costs for the ~~third quarter of 2017~~six months ended June 30, 2020 and ~~2016~~2019 are shown below:


	Three Months Ended September 30, 2017			Three Months Ended September 30, 2016				Six Months Ended June 30, 2020					Six Months Ended June 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	$	1,201,151	0.20%	$	1,085,828	0.16%	NOW	$	2,364,626	0.34%	$	1,530,224	0.58%
MMDA	1,682,306		0.55%	1,435,151		0.34%	MMDA	4,113,275		0.66%	2,666,001		1.40%
Savings	278,991		0.07%	266,344		0.07%	Savings	667,902		0.09%	402,315		0.08%
Retail CDs < $100,000	437,641		0.62%	431,570		0.45%
Retail CDs > $100,000	582,598		1.01%	451,115		0.75%
Retail CDs							Retail CDs	2,547,671		1.59%	1,927,474		1.67%
Brokered CDs	—		—%	5,000		0.64%	Brokered CDs	31,617		2.04%	498,230		2.49%
Interest-bearing deposits	$	4,182,687	0.49%	$	3,675,008	0.33%	Interest-bearing deposits	$	9,725,091	0.79%	$	7,024,244	1.30%

Provision for ~~Loan~~Credit Losses

The Company’s provision for ~~loan~~credit losses during the ~~third quarter of 2017~~six months ended June 30, 2020 amounted to ~~$1.8~~$129.2 million, compared with ~~$2.2~~$8.1 million in the ~~second quarter~~six months ended June 30, 2019. This increase was primarily attributable to an updated economic forecast in our CECL model which reflects the impact of ~~2017~~the coronavirus pandemic including, among other things, a corresponding decrease in forecasted GDP and ~~$811,000~~increase in forecasted unemployment. The provision for credit losses for the ~~third quarter~~first six months of ~~2016.~~2020 was comprised of $105.5 million related to loans and $23.7 million related to unfunded commitments while the $8.1 million recorded for the same period in 2019 related solely to loans. At ~~September~~June 30, ~~2017,~~2020, classified loans still accruing ~~totaled $45.8~~increased to $73.4 million, compared with ~~$43.3~~$69.8 million at December 31, ~~2016.~~2019. Non-performing assets as a percentage of total assets ~~decreased~~increased from ~~0.94%~~0.56% at December 31, ~~2016~~2019 to ~~0.75%~~0.59% at ~~September~~June 30, ~~2017.~~2020. Net charge-offs on ~~legacy~~ loans during the ~~third quarter~~first six months of ~~2017~~2020 were ~~approximately $1.6~~$13.6 million, or ~~0.15%~~0.20% of average ~~legacy~~ loans on an annualized basis, compared with approximately ~~$371,000,~~$5.1 million, or ~~0.05%~~0.12%, in the ~~third quarter~~first six months of 2016. The Company’s allowance for loan losses allocated to legacy loans at September 30, 2017 was $21.2 million, or 0.46% of legacy loans, compared with $20.5 million, or 0.56% of legacy loans, at December 31, 2016.2019. The Company’s total allowance for ~~loan~~credit losses on loans at ~~September~~June 30, ~~2017~~2020 was ~~$26.0~~$208.8 million, or ~~0.44%~~1.44% of total loans, ~~increasing from $23.9~~compared with $38.2 million, or ~~0.45%~~0.30% of total loans, at December 31, ~~2016.~~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 noted above.

Noninterest Income

Total ~~non-interest~~noninterest income for the ~~third quarter~~six months ended June 30, 2020 was $175.3 million, an increase of ~~2017 was $27.0 million, a decrease of $1.9~~$109.3 million, or ~~6.5%~~165.6%, from the ~~$28.9~~$66.0 million reported infor the ~~third quarter of 2016.~~ six months ended June 30, 2019.Service charges on deposit accounts in the ~~third quarter~~first six months of ~~2017~~2020 decreased ~~$823,000,~~$2.0 million, or ~~7.2%~~8.6%, to ~~$10.5~~$21.8 million, compared with ~~$11.4~~$23.8 million in the ~~third quarter~~first six months of ~~2016.~~ 2019.This decrease in service charge revenue was primarily attributable to lower ~~overdraft fee income.~~ debit card interchange income resulting from the Durban Amendment.Income from mortgage-related activities ~~decreased $727,000,~~increased $107.1 million, or ~~5.2%~~322.5%, from ~~$14.1~~$33.2 million in the ~~third quarter~~first six months of ~~2016~~2019 to ~~$13.3~~$140.3 million in the ~~third quarter~~same period of ~~2017.~~ 2020.Total production in the ~~third quarter~~first six months of ~~2017~~2020 amounted to ~~$401.7 million,~~$4.03 billion, compared with ~~$410.8~~$941.1 million in the same ~~quarter~~period of ~~2016,~~2019, while spread (gain on sale) ~~decreased~~increased to ~~3.30% in~~3.31% during the ~~current quarter~~six months ended June 30, 2020, compared with ~~3.69%~~3.14% in the same ~~quarter~~period of ~~2016.~~2019. The retail mortgage open pipeline ~~finished the third quarter of 2017~~was $2.67 billion at ~~$158.4 million,~~June 30, 2020, compared with ~~$174.3 million~~$1.16 billion at the beginning of ~~the third quarter of 2017~~2020 and ~~$145.4~~$287.4 million at June 30, 2019. Mortgage-related activities was negatively impacted during the ~~end~~first six months of 2020 by a mortgage servicing right impairment of $29.0 million, compared with $1.5 million for the ~~third quarter of 2016.~~same period in 2019. Other service charges, commissions and fees ~~decreased $92,000,~~were $2.3 million during the first six months of 2020, compared with $1.6 million during the first six months of 2019. Other noninterest income increased $3.8 million, or ~~11.6%~~52.1%, to $699,000 during the third quarter of 2017, compared with $791,000 during the third quarter of 2016. The decrease in other service charges, commissions and fees was primarily attributable to lower ATM fees, reflecting the Company's decision to waive ATM fees for customers during Hurricane Irma. Other non-interest income decreased $223,000, or 8.4%, to $2.4$11.1 million for the ~~third quarter~~first six months of ~~2017,~~2020, compared with ~~$2.6~~$7.3 million during the ~~third quarter~~same period of ~~2016.~~2019. The ~~decrease~~increase in other ~~non-interest~~noninterest income was primarily attributable to ~~lower bank owned life insurance~~an $845,000 gain on BOLI proceeds, an increase of $783,000 in BOLI income and ~~lower check order fee income.~~an $1.1 million increase in trust income for the six months ended June 30, 2020 compared with the same period in 2019.

Noninterest Expense

~~Noninterest Expense~~

Total ~~non-interest~~noninterest expenses for the ~~third quarter of 2017~~six months ended June 30, 2020 increased ~~$10.6~~$137.1 million, or ~~19.9%~~87.5%, to ~~$63.8~~$293.8 million, compared with ~~$53.2~~$156.7 million in the same ~~quarter 2016.~~period of 2019. Salaries and employee benefits increased ~~$4.6~~$94.5 million, or ~~16.4%~~123.2%, from ~~$28.0~~$76.7 million in the ~~third quarter~~first six months of ~~2016~~2019 to ~~$32.6~~$171.1 million in the ~~third quarter~~same period of ~~2017~~2020 due to staff additions resulting from the Fidelity acquisition and an increase of $35.8 million in mortgage commissions related to production increases. Occupancy and equipment expenses increased $9.8 million, or 61.1%, to $25.8 million for the ~~premium finance division, increased staffing related to the Company’s ongoing BSA compliance efforts, higher incentive accruals for production staff, increased commissions~~first six months of 2020, compared with $16.0 million in the ~~mortgage and SBA divisions, and staff additions for~~same period of 2019, due primarily to 56 branch locations being added during 2019 as a result of the ~~equipment finance line of business. Occupancy and~~

~~equipment expenses remained stable at $6.0 million for both the third quarter of 2017 and the third quarter of 2016. Tighter controls on expenses held increases in these costs~~Fidelity acquisition partially offset by branch consolidations subsequent to ~~a minimum.~~acquisition. Data processing and telecommunications expense increased ~~$865,000,~~$5.7 million, or ~~14.0%~~33.9%, to ~~$7.1~~$22.5 million in the ~~third quarter~~first six months of ~~2017, compared with $6.2~~2020, from $16.8 million reported in the ~~third quarter~~same period of ~~2016,~~2019. This increase in data processing and telecommunications during the first six months of 2020 reflects increased core banking system charges due to an increase in the number of accounts being processed by our core banking ~~system~~system.Credit resolution-related expenses increased $1.3 million, or 66.6%, from $1.9 million in the first six months of 2019 to $3.1 million in the same period of 2020. This increase in credit resolution-related expenses primarily resulted from additional write-downs on OREO properties. Amortization of intangible assets increased $5.0 million, or 79.6%, from $6.3 million in the first six months of 2019 to $11.2 million in the first six months of 2020, due primarily to additional amortization of intangible assets recorded as part of the Fidelity acquisition. Merger and ~~additional software fees incurred~~conversion charges were $1.4 million in the first six months of 2020, compared with $5.5 million in the same period in 2019. Merger and conversion charges for both periods principally related to the buildout of our BSA compliance program which we expect to stabilize. Credit resolution-related expenses decreased from $1.5 million in the third quarter of 2016 to $1.3 million in the third quarter of 2017. Fidelity acquisition. Other noninterest expenses increased ~~$5.2~~$25.0 million, or 83.9%, from ~~$9.3~~$29.8 million in the ~~third quarter~~first six months of ~~2016~~2019 to ~~$14.5~~$54.8 million in the ~~third quarter~~same period of ~~2017 due~~2020 resulting primarily ~~to consulting~~from an increase of $4.8 million in FDIC insurance, an increase of $5.6 million in legal and other professional fees, $1.4 million in expenses principally related to ~~BSA compliance resolution, management~~final adjustments to the clawback liability on one of our FDIC loss share agreements and ~~licensing fees associated with the premium finance division~~certain unreimbursed expenses related to that agreement, and ~~loan servicing fees associated with consumer installment home improvement loans serviced~~an increase in volume in certain areas related to our acquisition of Fidelity. These increases were partially offset by ~~an unrelated third party.~~a decrease of $3.0 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 ~~third quarter of 2017,~~six months ended June 30, 2020, the Company reported income tax expense of ~~$8.1~~$12.5 million, compared with ~~$10.4~~$23.5 million in the same period of ~~2016. This decrease in income tax expense is directly correlated to the decrease in pre-tax income for the periods.~~2019. The Company’s effective tax rate for the ~~three months ending September 30, 2017 and 2016 was 28.8% and 32.5%, respectively.~~

~~Results of Operations for the Nine Months Ended September 30, 2017 and 2016~~

~~Consolidated Earnings and Profitability~~

~~Ameris reported net income available to common shareholders of $64.4 million, or $1.74 per diluted share, for the nine~~six months ended ~~September~~June 30, ~~2017, compared with $53.9 million, or $1.56 per diluted share, for the same period in 2016. The Company’s return on average assets~~2020 and ~~average shareholders’ equity were 1.20%~~2019 was 19.5% and ~~11.39%~~23.0%, respectively, for the nine months ended September 30, 2017, compared with 1.19% and 12.01%, respectively, for the nine months ended September 30, 2016. During the nine months ended September 30, 2017, the Company incurred pre-tax merger and conversion charges of $494,000, pre-tax BSA compliance resolution expenses of $4.7 million, pre-tax Hurricane Irma expenses of $410,000, and pre-tax losses on the sale of premises of $956,000. During the nine months ended September 30, 2016, the Company incurred pre-tax merger and conversion charges of $6.4 million and pre-tax losses on the sale of premises of $562,000. Excluding these merger and conversion charges, compliance resolution expenses, Hurricane Irma expenses, and losses on the sale of premises, the Company’s net income would have been $68.7 million, or $1.86 per diluted share, and $58.4 million, or $1.69 per diluted share, for the first nine months of 2017 and 2016, respectively.

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

~~Interest Income~~

Interest income, on a tax-equivalent basis, for the nine months ended September 30, 2017 was $219.7 million, an increase of $41.0 million, or 22.9%, as compared with $178.7 million for the same period in 2016. Average earning assets for the nine-month period increased $1.12 billion, or 20.4%, to $6.61 billion as of September 30, 2017, compared with $5.49 billion as of September 30, 2016. The increase in average earning assets is due to organic growth in the loan portfolio coupled with acquisition activity during the first quarter of 2016. Yield on average earning assets increased to 4.44% for the nine months ended September 30, 2017, compared with 4.35% in the first nine months of 2016. The increase in the yield on average earning assets was primarily attributable to the growth in legacy loans.

~~Interest Expense~~

Total interest expense for the nine months ended September 30, 2017 amounted to $24.2 million, reflecting a $10.2 million increase from the $14.0 million expense recorded in the same period of 2016. During the nine-month period ended September 30, 2017, the Company’s funding costs increased to 0.51% from 0.35% reported in 2016. Deposit costs increased to 0.32% during the nine-month period ended September 30, 2017, compared with 0.23% during the same period in 2016. Total non-deposit funding costs decreased to 1.99% during the nine-month period ended September 30, 2017, compared with 2.36% during the first nine months of 2016. The decrease in non-deposit funding costs was driven primarily by an increased utilization of lower rate short-term FHLB advances.

~~Net Interest Income~~

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, 2017 and 2016. Federally tax-exempt income is presented on a taxable-equivalent basis assuming a 35% federal tax rate.

Nine Months Ended
September 30,
2017 2016
(dollars in thousands)
Average
Balance

Interest
Income/
Expense

Average
Yield/
Rate Paid

Average
Balance

Interest
Income/
Expense

Average
Yield/
Rate Paid
Assets

Interest-earning assets:

Federal funds sold and interest-bearing deposits in banks $ 126,014
$ 1,070
1.14% $ 134,060
$ 659
0.66%
Investment securities 864,684
16,917
2.62% 840,688
15,227
2.42%
Loans held for sale 105,296
2,842
3.61% 96,340
2,402
3.33%
Loans 4,018,597
143,806
4.78% 2,642,498
93,887
4.75%
Purchased loans 982,033
43,986
5.99% 1,147,821
53,348
6.21%
Purchased loan pools 513,750
11,109
2.89% 629,118
13,220
2.81%
Total interest-earning assets 6,610,374
219,730
4.44% 5,490,525
178,743
4.35%
Noninterest-earning assets 569,956

539,656

Total assets $ 7,180,330

$ 6,030,181

Liabilities and Shareholders’ Equity

Interest-bearing liabilities:

Savings and interest-bearing demand deposits $ 3,048,284
$ 7,614
0.33% $ 2,740,368
$ 4,922
0.24%
Time deposits 994,770
5,865
0.79% 872,209
3,808
0.58%
Federal funds purchased and securities sold under agreements to repurchase 29,612
44
0.20% 44,433
77
0.23%
FHLB advances 539,496
3,994
0.99% 126,855
571
0.60%
Other borrowings 66,420
2,900
5.84% 47,809
1,333
3.72%
Subordinated deferrable interest debentures 84,712
3,764
5.94% 79,912
3,306
5.53%
Total interest-bearing liabilities 4,763,294
24,181
0.68% 3,911,586
14,017
0.48%
Demand deposits 1,624,837

1,490,152

Other liabilities 36,046

28,626

Shareholders’ equity 756,153

599,817

Total liabilities and shareholders’ equity $ 7,180,330

$ 6,030,181

Interest rate spread

3.76%

3.87%
Net interest income
$ 195,549

$ 164,726

Net interest margin

3.96%

4.01%

For the year-to-date period ending September 30, 2017, the Company reported $195.5 million of net interest income on a tax-equivalent basis, an increase of $30.8 million, or 18.7%, compared with $164.7 million of net interest income for the same period in 2016. The average balance of earning assets increased $1.12 billion, or 20.4%, from $5.49 billion during the first nine months of 2016 to $6.61 billion during the first nine months of 2017. The increase in average earning assets is due to organic growth in the loan portfolio coupled with acquisition activity during the first quarter of 2016. The Company’s net interest margin decreased to 3.96% in the nine-month period ending September 30, 2017, compared with 4.01% in the same period in 2016. The decrease in the ~~net interest margin was primarily attributable to the increase in yield on interest-bearing liabilities.~~

~~Provision for Loan Losses~~

The provision for loan losses increased to $5.8 million for the nine months ended September 30, 2017, compared with $2.4 million in the same period in 2016. For the nine-month period ended September 30, 2016, the Company had legacy net charge-offs totaling $3.9 million, compared with $1.9 million for the same period in 2016. Annualized legacy net charge-offs as a percentage of average legacy loans increased to 0.13% during the first nine months of 2017, compared with 0.10% during the first nine months of 2016. For the nine-month period ended September 30, 2017, the Company had total loan net charge-offs totaling $3.8 million, compared with $480,000 for the same period in 2016. Annualized total loan net charge-offs as a percentage of average total loans increased to 0.09% during the first nine months of 2017, compared with 0.01% during the first nine months of 2016. Non-performing assets declined to $57.6 million at September 30, 2017, compared with $66.6 million at September 30, 2016.

~~Noninterest Income~~

Non-interest income for the first nine months of 2017 decreased $635,000, or 0.8%, to $80.9 million, compared with $81.5 million in the same period in 2016. Service charges on deposit accounts remained stable at $31.7 million for both the first nine months of 2017 and the first nine months of 2016. However, service charge revenues on both commercial and consumer accounts increased, while overdraft fee income declined. Income from mortgage banking activity increased slightly from $38.4 million in the first nine months of 2016 to $38.5 million in the first nine months of 2017, due to higher levels of production. Other service charges, commissions and fees decreased $732,000, or 25.5%, to $2.1 million in the first nine months of 2017, compared with $2.9 million in the first nine months of 2016. The decrease in other service charges, commissions and fees was primarily attributable to lower ATM fees and lower brokerage income. Other non-interest income increased slightly from $8.4 million during the first nine months of 2016 to $8.5 million during the first nine months of 2017.

~~Noninterest Expense~~

Total operating expenses for the first nine months of 2017 increased $11.4 million, or 7.1%, to $172.6 million, compared with $161.2 million in the same period in 2016. Salaries and benefits for the first nine months of 2017 increased $7.8 million as compared with the first nine months of 2016 due to staff additions for the premium finance division, increased staffing related to the Company’s ongoing BSA compliance efforts, staff additions for the equipment finance line of business, and the acquisition of Jacksonville Bancorp, Inc. (“JAXB”) during the first quarter of 2016. Occupancy and equipment expenses remained stable at $18.1 million for both the first nine months of 2017 and the first nine months of 2016. Data processing and telecommunications expenses increased from $18.3 million in the first nine months of 2016 to $20.7 million in the first nine months of 2017. Credit resolution-related expenses, including problem loan and OREO expense and OREO write-downs and losses, decreased to $2.9 million for the first nine months of 2017, compared with $5.1 million in the first nine months of 2016. Advertising and marketing expenses increased from $2.9 million for the first nine months of 2016 to $3.6 million for the first nine months of 2017. Amortization of intangible assets for the first nine months of 2017 decreased $342,000 as compared with the first nine months of 2016. Merger and conversion charges were $494,000 and $6.4 million for the nine months ended September 30, 2017 and 2016, respectively, reflecting the first quarter 2016 acquisition of JAXB. Other noninterest expense increased $9.0 million for the first nine months of 2017 as compared with the first nine months of 2016 due primarily to consulting fees related to BSA compliance resolution, management and licensing fees associated with the premium finance division, and loan servicing fees associated with consumer installment home improvement loans serviced by an unrelated third party.

~~Income Taxes~~

In the first nine months of 2017, the Company recorded income tax expense of $28.7 million, compared with $26.2 million in the same period of 2016. This increase in income tax expense is directly correlated to the increase in pre-tax income for the periods. The Company’s effective tax rate ~~for~~is due to a non-taxable gain on BOLI proceeds, loss carrybacks allowed a result of the ~~nine months ended September 30, 2017~~recently enacted CARES Act and ~~2016 was 30.8%~~a reduction in nondeductible merger related expenses and ~~32.7%, respectively.~~meals and entertainment expenses recognized during 2020 compared with 2019.

Financial Condition as of ~~September~~June 30, ~~2017~~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. ~~Equity securities, including restricted~~Restricted equity securities, are classified as other investment securities and are ~~recorded~~carried at ~~the lower~~cost and are periodically evaluated for impairment based on ultimate recovery of par value or cost ~~or market value.~~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~~June 30, ~~2017,~~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~~June 30, ~~2017, these investments are not considered impaired on an other-than temporary basis.~~2020, management believes the unrealized losses have resulted from factors other than credit and no allowance for credit losses was recorded.

The following table ~~illustrates certain information regarding the Company’s~~is a summary of our investment portfolio ~~with respect~~at the dates indicated.


	June 30, 2020						December 31, 2019
(dollars in thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
June 30, 2020
U.S. government sponsored agencies	$	17,207	$	17,681	$	22,246	$	22,362
State, county and municipal securities	90,012		93,198		102,952		105,260
Corporate debt securities	51,680		52,313		51,720		52,999
SBA pool securities	67,241		69,942		73,704		73,912
Mortgage-backed securities	962,445		1,005,762		1,129,816		1,148,870
Total debt securities	$	1,188,585	$	1,238,896	$	1,380,438	$	1,403,403

The amounts of securities available for sale in each category as of June 30, 2020 are shown in the following table according to ~~yields, sensitivities~~contractual maturity classifications: (i) one year or less, (ii) after one year through five years, (iii) after five years through ten years and ~~expected cash flows~~(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	$	—	—	%	$	18,247	3.33	%	$	—	—	%
After one year through five years	16,525		1.92		26,530		3.47		14,799		2.72
After five years through ten years	1,156		2.16		28,262		3.68		35,550		5.34
After ten years	—		—		20,159		3.53		1,964		5.65
	$	17,681	1.93	%	$	93,198	3.51	%	$	52,313	4.62	%

	SBA Pool Securities						Mortgage-Backed Securities
(dollars in thousands)	Amount		Yield (1)		Amount		Yield (1)
One year or less	$	—	—	%	$	72	3.39	%
After one year through five years	2,496		2.03		45,453		2.77
After five years through ten years	27,059		2.16		288,376		2.78
After ten years	40,387		2.49		671,861		2.31
	$	69,942	2.34	%	$	1,005,762	2.46	%

(1)Yields were computed using coupon interest, adding discount accretion or subtracting premium amortization, as appropriate, on a ratable basis over the ~~next twelve months assuming constant prepayments~~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 ~~maturities:~~political subdivisions are stated on a taxable-equivalent basis, using a tax rate of 21%.

(dollars in thousands) Amortized Cost
Fair
Value

Book
Yield

Modified
Duration

Estimated
Cash
Flows
12 Months
September 30, 2017
U.S. government sponsored agencies $ 1,000
$ 1,004
3.20% 0.19 $ 1,000
State, county and municipal securities 140,190
143,387
4.06% 4.82 14,048
Corporate debt securities 46,704
47,249
4.00% 5.34 3,000
Mortgage-backed securities 626,927
627,953
2.34% 3.91 102,846
Total debt securities $ 814,821
$ 819,593
2.73% 4.14 $ 120,894

December 31, 2016

U.S. government sponsored agencies $ 999
$ 1,020
3.20% 0.92 $ 1,000
State, county and municipal securities 149,899
152,035
3.73% 5.34 7,884
Corporate debt securities 32,375
32,172
2.94% 4.87 2,000
Mortgage-backed securities 641,362
637,508
2.38% 4.33 94,081
Total debt securities $ 824,635
$ 822,735
2.65% 4.53 $ 104,965

Loans and Allowance for ~~Loan~~Credit Losses

At ~~September~~June 30, ~~2017,~~2020, gross loans outstanding (including ~~purchased~~ loans ~~purchased loan pools,~~ and loans held for sale) were ~~$6.09~~$16.24 billion, ~~an increase~~up $1.76 billion from ~~$5.37~~$14.48 billion reported at December 31, ~~2016.~~2019. Loans held for sale increased from ~~$105.9 million at December 31, 2016 to $137.4 million at September 30, 2017. Legacy loans (excluding purchased loans and purchased loan pools) increased $947.9 million, from $3.63~~$1.66 billion at December 31, ~~2016~~2019 to ~~$4.57~~$1.74 billion at ~~September~~June 30, ~~2017, driven~~2020 primarily bydue to continued strong production in our mortgage division. Loans increased ~~growth in commercial, financial and agricultural, construction and development, residential real estate, and commercial real estate loan categories. Purchased loans decreased $152.1 million,~~$1.68 billion, or 13.1%, from ~~$1.07~~$12.82 billion at December 31, ~~2016~~2019 to ~~$917.1 million~~$14.50 billion at ~~September~~June 30, ~~2017, due to paydowns of $155.0 million, transfers to other real estate owned of $4.3 million~~2020, driven primarily by $1.08 billion in PPP loans and charge-offs of $1.8 million, partially offset by accretion of $9.0 million. Purchased loan pools decreased $103.1 million, from $568.3 million at December 31, 2016 to $465.2 million at September 30, 2017 due to payments on the portfolio of $95.5 million and premium amortization of $2.9 million during the first nine months of 2017.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 ~~South and Southeast~~ Georgia, ~~North~~ Florida, ~~Southeast~~ Alabama and ~~throughout~~ 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.~~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~~second quarter of ~~2017,~~2020, the allowance for ~~loan~~credit losses ~~allocated to legacy~~on loans totaled ~~$21.2~~$208.8 million, or ~~0.46%~~1.44% of ~~legacy~~ loans, compared with ~~$20.5~~$38.2 million, or ~~0.56%~~0.30% of ~~legacy~~ loans, at December 31, 2016. The decrease in the allowance for loan losses as a percentage of legacy loans reflects improvement in the credit risk of our portfolio, both from the mix of loan and collateral types and the credit quality of the loan portfolio.2019. Our ~~legacy~~ nonaccrual loans ~~decreased~~increased slightly from ~~$18.1~~$75.1 million at December 31, ~~2016~~2019 to ~~$15.3~~$77.7 million at ~~September~~June 30, ~~2017.~~2020. For the first ~~nine~~six months of ~~2017,~~2020, our ~~legacy~~ net charge off ratio as a percentage of average ~~legacy~~ loans increased to ~~0.13%~~0.20%, compared with ~~0.10%~~0.12% for the first ~~nine~~six months of ~~2016.~~2019. The total provision for ~~loan~~credit losses for the first ~~nine~~six months of ~~2017 increased to $5.8~~2020 was $129.2 million, ~~compared with $2.4~~increasing from $8.1 million recorded for the first ~~nine~~six months of ~~2016.~~2019. Our ratio of total nonperforming assets to total assets ~~decreased~~increased from ~~0.94%~~0.56% at December 31, ~~2016~~2019 to ~~0.75%~~0.59% at ~~September~~June 30, ~~2017.~~2020.

The balance of the allowance for loan losses allocated to loans collectively evaluated for impairment increased 11.8%, or $2.1 million, during the first nine months of 2017, while the balance of loans collectively evaluated for impairment increased 14.3%, or $723.9 million, during the same period. A significant portion of the loan growth was concentrated in lower risk categories such as commercial premium finance loans and municipal loans which did not require as large of an allowance for loan losses as other categories of loans. In addition to the change of type of loan growth, we also experienced a decline in our historical loss rates across nearly all loan portfolios. We consider a four year loss rate on all loan categories and our charge off ratios have been declining over that period. We have adjusted the qualitative factors to account for the inherent risks in the portfolio that are not captured in the historical loss rates, such as weak commodity prices for agriculture products, growth rates of certain loan types and other factors management deems appropriate. As a percentage of all loans collectively evaluated for impairment, the allowance allocated to those loans declined 1 basis point from 0.35% at December 31, 2016 to 0.34% at September 30, 2017. The largest decrease was in the legacy construction and development real estate category, which decreased from 0.75% at December 31, 2016 to 0.58% at September 30, 2017. The reason for this decline is the positive trend in net losses within that category.

The balance of the allowance for loan losses allocated to loans individually evaluated for impairment decreased slightly by 0.2%, or $12,000, during the first nine months of 2017, while the balance of loans individually evaluated for impairment decreased 7.4%, or $4.5 million, during the same period. Although the total allowance for loan losses allocated to loans individually evaluated for impairment changed by only $12,000 from December 31, 2016 to September 30, 2017, the amount allocated for the legacy residential real estate category declined by $1.8 million, while the amount allocated for purchased loans increased by $1.6 million.

The following tables present an analysis of the allowance for loan losses as of and for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020 and ~~2016:~~2019:


	Six Months Ended June 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	105,496		8,076
Charge-offs:
Commercial, financial and agricultural	2,972		1,157
Consumer installment	2,104		3,068
Indirect automobile	2,247		—


Premium finance	2,734		2,185
Real estate – construction and development	74		268
Real estate – commercial and farmland	7,243		1,843
Real estate – residential	625		354
Total charge-offs	17,999		8,875

Recoveries:
Commercial, financial and agricultural	665		604
Consumer installment	1,420		504
Indirect automobile	40		—


Premium finance	1,360		1,660
Real estate – construction and development	510		385
Real estate – commercial and farmland	106		118
Real estate – residential	345		502
Total recoveries	4,446		3,773
Net charge-offs	13,553		5,102
Balance of allowance for credit for loan losses on loans at end of period	$	208,793	$	31,793


	As of and for the Six Months Ended
(dollars in thousands)	June 30, 2020			June 30, 2019
Allowance for credit losses on loans at end of period	$	208,793		$	31,793
Net charge-offs (recoveries) for the period	13,553			5,102
Loan balances:
End of period	14,503,157			9,049,870
Average for the period	13,915,406			8,612,978
Net charge-offs as a percentage of average loans (annualized)	0.20		%	0.12		%
Allowance for credit losses on loans as a percentage of end of period loans	1.44		%	0.35		%

Nine Months Ended
September 30,
(dollars in thousands) 2017 2016
Balance of allowance for loan losses at beginning of period $ 23,920
$ 21,062
Provision charged to operating expense 5,828
2,381
Charge-offs:

Commercial, financial and agricultural 1,896
1,273
Real estate – construction and development 95
324
Real estate – commercial and farmland 413
708
Real estate – residential 2,031
883
Consumer installment and Other 922
192
Purchased loans 1,472
1,261
Purchased loan pools —
—
Total charge-offs 6,829
4,641
Recoveries:

Commercial, financial and agricultural 699
279
Real estate – construction and development 244
474
Real estate – commercial and farmland 156
191
Real estate – residential 190
368
Consumer installment and Other 78
119
Purchased loans 1,680
2,730
Purchased loan pools —
—
Total recoveries 3,047
4,161
Net charge-offs 3,782
480
Balance of allowance for loan losses at end of period $ 25,966
$ 22,963
Loans

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

Purchased
Loans

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

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

As of and for the
Nine Months Ended
September 30, 2016
(dollars in thousands)
Legacy
Loans

Purchased
Loans

Purchased
Loan
Pools
Total
Allowance for loan losses at end of period $ 19,433
$ 1,522
$ 2,008
$ 22,963
Net charge-offs (recoveries) for the period 1,949
(1,469 ) —
480
Loan balances:

End of period 3,091,039
1,129,381
624,886
4,845,306
Average for the period 2,642,498
1,147,821
629,118
4,419,437
Net charge-offs as a percentage of average loans 0.10 % (0.17 )% 0.00 % 0.01 %
Allowance for loan losses as a percentage of end of period loans 0.63 % 0.13 % 0.32 % 0.47 %

~~Purchased Assets~~

Loans ~~that were acquired~~are stated at amortized cost. Balances within the major loans receivable categories are presented in ~~transactions, including those that are covered by~~ the loss-sharing agreements with the FDIC (“purchased loans”), totaled $917.1 million and $1.07 billion at September 30, 2017 and December 31, 2016, respectively. OREO that was acquired in transactions, including OREO that is covered by the loss-sharing agreements with the FDIC, totaled $9.9 million and $12.5 million, at September 30, 2017 and December 31, 2016, respectively.following table:

The Bank initially recorded purchased loans at their fair values, taking into consideration certain credit quality, risk and liquidity marks. 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, a reserve for loan losses will be established to account for that difference. 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 is recognized as interest income prospectively. During the nine months ended September 30, 2017, the Company recorded for purchased loans a provision for loan loss of $745,000. During the nine months ended September 30, 2016, the Company recorded for purchased loans a reduction in provision for loan loss of $654,000 due to recoveries exceeding charge-offs for purchased loans.

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

(dollars in thousands) September 30,
2017 December 31, 2016
Commercial, financial and agricultural $ 80,895
$ 96,537
Real estate – construction and development 68,583
81,368
Real estate – commercial and farmland 500,169
576,355
Real estate – residential 264,312
310,277
Consumer installment 3,167
4,654
$ 917,126
$ 1,069,191

~~Purchased Loan Pools~~


(dollars in thousands)	June 30, 2020		December 31, 2019
Commercial, financial and agricultural	$	1,839,921	$	802,171
Consumer installment	575,782		498,577
Indirect automobile	739,543		1,061,824
Mortgage warehouse	748,853		526,369
Municipal	731,508		564,304
Premium finance	690,584		654,669
Real estate – construction and development	1,641,744		1,549,062
Real estate – commercial and farmland	4,804,420		4,353,039
Real estate – residential	2,730,802		2,808,461
	$	14,503,157	$	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 ~~other real estate owned.~~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 ~~$15.3~~$77.7 million at ~~September~~June 30, ~~2017, a decrease~~2020, an increase of ~~15.4%~~$2.6 million, or 3.5%, from ~~$18.1 million reported at December 31, 2016. Nonaccrual purchased loans totaled $19.0 million at September 30, 2017, a decrease of 17.1%, compared with $23.0~~$75.1 million at December 31, ~~2016. At September~~2019. Accruing loans delinquent 90 days or more totaled $15.1 million at June 30, ~~2017, OREO, excluding purchased OREO, totaled~~2020, an increase of $9.4 million, or 162.9%, compared with ~~$10.9~~$5.8 million at December 31, ~~2016. Purchased~~2019. At June 30, 2020, OREO totaled ~~$9.9~~$23.6 million, ~~at September 30, 2017,~~an increase of $4.1 million, or 20.8%, compared with ~~$12.5~~$19.5 million at December 31, ~~2016.~~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~~second quarter of ~~2017,~~2020, total non-performing assets ~~decreased to 0.75%~~as a percent of total assets increased to 0.59% compared with ~~0.94%~~0.56% at December 31, ~~2016.~~2019.

Non-performing assets at ~~September~~June 30, ~~2017~~2020 and December 31, ~~2016~~2019 were as follows:

(dollars in thousands) September 30,
2017 December 31, 2016
Nonaccrual loans, excluding purchased loans $ 15,325
$ 18,114
Nonaccrual purchased loans 19,049
22,966
Nonaccrual purchased loan pools 915
—
Accruing loans delinquent 90 days or more, excluding purchased loans 2,941
—
Accruing purchased loans delinquent 90 days or more —
—
Foreclosed assets, excluding purchased assets 9,391
10,874
Purchased other real estate owned 9,946
12,540
Total non-performing assets $ 57,567
$ 64,494


(dollars in thousands)	June 30, 2020		December 31, 2019
Nonaccrual loans	$	77,745	$	75,124
Accruing loans delinquent 90 days or more	15,126		5,754
Repossessed assets	1,348		939
Other real estate owned	23,563		19,500
Total non-performing assets	$	117,782	$	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.


June 30, 2020	Accruing Loans				Non-Accruing Loans
Loan Class	#	Balance (in thousands)		#	Balance (in thousands)
Commercial, financial and agricultural	7	$	592	13	$	1,034
Consumer installment	13	42		20	67




Real estate – construction and development	5	919		4	308
Real estate – commercial and farmland	18	5,252		8	1,877
Real estate – residential	250	29,935		37	2,231
Total	293	$	36,740	82	$	5,517


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

September 30, 2017	Accruing Loans			Non-Accruing Loans
Loan Class	#	Balance (in thousands)		#	Balance (in thousands)
Commercial, financial and agricultural	4	$	44	13	$	129

Premium finance							Premium finance	1	156		—	—
Real estate – construction and development	7	424		2	34		Real estate – construction and development	6	936		3	253
Real estate – commercial and farmland	16	4,769		5	210		Real estate – commercial and farmland	21	6,732		8	2,071
Real estate – residential	78	7,209		16	1,212		Real estate – residential	197	21,261		40	2,857
Consumer installment	4	6		36	130
Total	109	$	12,452	72	$	1,715	Total	234	$	29,609	95	$	5,623

December 31, 2016 Accruing Loans Non-Accruing Loans
Loan Class #
Balance
(in thousands)
#
Balance
(in thousands)
Commercial, financial and agricultural 4 $ 47
15 $ 114
Real estate – construction and development 8 686
2 34
Real estate – commercial and farmland 16 4,119
5 2,970
Real estate – residential 82 9,340
15 739
Consumer installment 7 17
32 130
Total 117 $ 14,209
69 $ 3,987

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~~June 30, ~~2017~~2020 and December 31, ~~2016:~~2019:


June 30, 2020	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	13	$	1,355	7	$	270
Consumer installment	17	53		16	56




Real estate – construction and development	6	921		3	305
Real estate – commercial and farmland	22	6,115		4	1,014
Real estate – residential	258	30,249		29	1,918
Total	316	$	38,693	59	$	3,563

September 30, 2017
Loans Currently Paying
Under Restructured Terms
Loans that have Defaulted Under Restructured Terms
Loan Class #
Balance
(in thousands)
#
Balance
(in thousands)
Commercial, financial and agricultural 8 $ 56
9 $ 117
Real estate – construction and development 6 399
3 59
Real estate – commercial and farmland 17 4,778
4 201
Real estate – residential 80 7,425
14 996
Consumer installment 25 74
15 62
Total 136 $ 12,732
45 $ 1,435


December 31, 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	11	$	121	11	$	730
Consumer installment	13	57		18	58



Premium finance	—	—		1	156
Real estate – construction and development	1	2		8	1,187
Real estate – commercial and farmland	7	2,366		22	6,437
Real estate – residential	55	4,454		182	19,664
Total	87	$	7,000	242	$	28,232

December 31, 2016 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 12 $ 82
7 $ 79
Real estate – construction and development 8 686
2 34
Real estate – commercial and farmland 16 4,119
5 2,970
Real estate – residential 84 9,248
13 831
Consumer installment 25 76
14 71
Total 145 $ 14,211
41 $ 3,985

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~~June 30, ~~2017~~2020 and December 31, ~~2016:~~ 2019:


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

Forbearance of interest	17	$	1,789	11	$	1,853

Forbearance of principal	80	14,332		20	2,140
Forbearance of principal, extended amortization	—	—		1	217
Rate reduction only	70	9,737		3	128
Rate reduction, maturity extension	—	—		2	12
Rate reduction, forbearance of interest	52	4,178		10	401
Rate reduction, forbearance of principal	25	2,608		26	377
Rate reduction, forgiveness of interest	49	4,096		8	388
Rate reduction, forgiveness of principal	—	—		1	1
Total	293	$	36,740	82	$	5,517


December 31, 2019							December 31, 2019	Accruing Loans				Non-Accruing Loans
Type of Concession							Type of Concession	#	Balance (in thousands)		#	Balance (in thousands)

September 30, 2017	Accruing Loans			Non-Accruing Loans
Type of Concession	#	Balance (in thousands)		#	Balance (in thousands)
Forbearance of interest	12	$	2,622	4	$	172	Forbearance of interest	16	$	1,860	14	$	1,993
Forgiveness of principal	3	1,256		—	—		Forgiveness of principal	—	—		1	666
Forbearance of principal	5	75		5	644		Forbearance of principal	27	6,294		10	605
Forbearance of principal, extended amortization							Forbearance of principal, extended amortization	—	—		1	225
Rate reduction only	13	1,580		1	29		Rate reduction only	72	9,887		7	538
Rate reduction, maturity extension							Rate reduction, maturity extension	—	—		2	15
Rate reduction, forbearance of interest	33	2,431		20	491		Rate reduction, forbearance of interest	49	4,250		19	793
Rate reduction, forbearance of principal	7	1,465		35	249		Rate reduction, forbearance of principal	19	3,267		30	264
Rate reduction, forgiveness of interest	36	3,023		3	119		Rate reduction, forgiveness of interest	51	4,051		10	523
Rate reduction, forgiveness of principal	—	—		4	11		Rate reduction, forgiveness of principal	—	—		1	1
Total	109	$	12,452	72	$	1,715	Total	234	$	29,609	95	$	5,623

December 31, 2016 Accruing Loans Non-Accruing Loans
Type of Concession #
Balance
(in thousands)
#
Balance
(in thousands)
Forbearance of interest 11 $ 1,685
5 $ 146
Forgiveness of principal 3 1,303
— —
Forbearance of principal 8 2,210
9 315
Rate reduction only 12 1,573
1 29
Rate reduction, forbearance of interest 38 2,618
21 1,647
Rate reduction, forbearance of principal 8 1,734
29 1,506
Rate reduction, forgiveness of interest 37 3,086
3 341
Rate reduction, forgiveness of principal — —
1 3
Total 117 $ 14,209
69 $ 3,987

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, 2017 and December 31, 2016:

September 30, 2017 Accruing Loans Non-Accruing Loans
Collateral Type #
Balance
(in thousands)
#
Balance
(in thousands)
Warehouse 3 $ 445
1 $ 80
Raw land 9 723
2 34
Hotel and motel 3 1,411
— —
Office 4 667
— —
Retail, including strip centers 5 2,189
3 85
1-4 family residential 78 7,002
18 1,259
Automobile/equipment/CD 6 13
47 255
Unsecured 1 2
1 2
Total 109 $ 12,452
72 $ 1,715

December 31, 2016 Accruing Loans Non-Accruing Loans
Collateral Type #
Balance
(in thousands)
#
Balance
(in thousands)
Warehouse 5 $ 763
— $ —
Raw land 9 742
2 34
Apartments — —
3 1,505
Hotel and motel 3 1,525
— —
Office 3 477
— —
Retail, including strip centers 4 1,298
— —
1-4 family residential 82 9,340
17 746
Church — —
2 1,465
Automobile/equipment/CD 10 61
44 233
Unsecured 1 3
1 4
Total 117 $ 14,209
69 $ 3,987

As of September 30, 2017 and December 31, 2016, the Company had a balance of $26.0 million and $28.1 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, 2017 and December 31, 2016:

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, 2017 and December 31, 2016:

September 30, 2017
Loans Currently Paying
Under Restructured Terms
Loans that have Defaulted Under Restructured Terms
Loan Class #
Balance
(in thousands)
#
Balance
(in thousands)
Commercial, financial and agricultural 1 $ 12
2 $ 6
Real estate – construction and development 8 1,365
1 6
Real estate – commercial and farmland 21 8,197
5 1,945
Real estate – residential 127 13,340
17 1,162
Consumer installment 1 3
1 3
Total 158 $ 22,917
26 $ 3,122

December 31, 2016 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 $ 16
2 $ 76
Real estate – construction and development 8 1,378
1 9
Real estate – commercial and farmland 25 10,862
— —
Real estate – residential 126 13,484
30 2,306
Consumer installment 4 11
— —
Total 166 $ 25,751
33 $ 2,391

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, 2017 and December 31, 2016:

September 30, 2017 Accruing Loans Non-Accruing Loans
Type of Concession #
Balance
(in thousands)
#
Balance
(in thousands)
Forbearance of interest 4 $ 189
9 $ 1,772
Forgiveness of principal — —
1 63
Forbearance of principal 6 1,934
5 1,588
Forbearance of principal, extended amortization 2 375
1 298
Rate reduction only 72 11,607
16 1,465
Rate reduction, forbearance of interest 19 1,913
10 454
Rate reduction, forbearance of principal 10 2,211
5 194
Rate reduction, forgiveness of interest 24 1,976
— —
Total 137 $ 20,205
47 $ 5,834

December 31, 2016 Accruing Loans Non-Accruing Loans
Type of Concession #
Balance
(in thousands)
#
Balance
(in thousands)
Forbearance of interest 12 $ 3,553
4 $ 207
Forbearance of principal 7 2,003
5 1,528
Forbearance of principal, extended amortization 1 78
1 323
Rate reduction only 78 12,710
13 1,385
Rate reduction, forbearance of interest 20 1,387
19 632
Rate reduction, forbearance of principal 11 1,617
3 231
Rate reduction, forgiveness of interest 24 2,195
1 294
Total 153 $ 23,543
46 $ 4,600

~~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~~June 30, ~~2017~~2020 and December 31, ~~2016:~~ 2019:


September 30, 2017	Accruing Loans			Non-Accruing Loans
June 30, 2020							June 30, 2020	Accruing Loans				Non-Accruing Loans
Collateral Type	#	Balance (in thousands)		#	Balance (in thousands)		Collateral Type	#	Balance (in thousands)		#	Balance (in thousands)
Warehouse	2	$	369	—	$	—	Warehouse	4	$	254	2	$	326
Raw land	3	1,045		7	846		Raw land	4	855		5	685
Hotel and motel	1	151		1	497		Hotel and motel	2	354		1	156
Office	2	470		2	505		Office	2	214		1	320
Retail, including strip centers	8	5,074		1	169		Retail, including strip centers	9	4,380		—	—
1-4 family residential	121	13,096		28	2,356		1-4 family residential	253	30,073		38	2,740
Church	—	—		2	1,390		Church	—	—		1	182
Automobile/equipment/CD	—	—		6	71		Automobile/equipment/CD	19	610		32	1,105
Livestock							Livestock	—	—		1	2
Unsecured							Unsecured	—	—		1	1
Total	137	$	20,205	47	$	5,834	Total	293	$	36,740	82	$	5,517


December 31, 2016	Accruing Loans			Non-Accruing Loans
December 31, 2019							December 31, 2019	Accruing Loans				Non-Accruing Loans
Collateral Type	#	Balance (in thousands)		#	Balance (in thousands)		Collateral Type	#	Balance (in thousands)		#	Balance (in thousands)
Warehouse	4	$	1,532	—	$	—	Warehouse	4	$	267	2	$	442
Raw land	7	1,919		4	86		Raw land	5	869		5	732
Apartments							Apartments	—	—		—	—
Hotel and motel	1	154		1	558		Hotel and motel	2	364		1	241
Office	3	967		—	—		Office	3	531		1	342
Retail, including strip centers	7	4,489		1	197		Retail, including strip centers	11	5,520		—	—
1-4 family residential	127	14,470		33	2,318		1-4 family residential	200	21,404		40	3,232
Church	—	—		1	1,298		Church	—	—		1	183
Automobile/equipment/CD	4	12		6	143		Automobile/equipment/CD	8	498		43	436
Livestock							Livestock	—	—		1	14
Unsecured							Unsecured	1	156		1	1
Total	153	$	23,543	46	$	4,600	Total	234	$	29,609	95	$	5,623

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~~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~~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~~June 30, ~~2017,~~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~~June 30, ~~2017~~2020 and December 31, ~~2016.~~2019. The loan categories and concentrations below are based on Federal Reserve Call ~~codes and include purchased loans:~~ codes:


	June 30, 2020					December 31, 2019
(dollars in thousands)	Balance		% of Total Loans	Balance		% of Total Loans
Construction and development loans	$	1,641,743	11%	$	1,549,062	12%
Multi-family loans	273,244		2%	297,317		2%
Nonfarm non-residential loans (excluding owner-occupied)	2,819,757		19%	2,358,987		18%
Total CRE Loans (excluding owner-occupied)	4,734,744		33%	4,205,366		33%
All other loan types	9,768,413		67%	8,613,110		67%
Total Loans	$	14,503,157	100%	$	12,818,476	100%

September 30,
2017 December 31,
2016
(dollars in thousands) Balance
% of Total
Loans
Balance
% of Total
Loans
Construction and development loans $ 618,772
10% $ 444,412
8%
Multi-family loans 160,577
3% 130,723
3%
Nonfarm non-residential loans (excluding owner occupied) 1,012,661
17% 985,496
19%
Total CRE Loans (excluding owner occupied)
1,792,010
30% 1,560,631
30%
All other loan types 4,165,012
70% 3,703,695
70%
Total Loans $ 5,957,022
100% $ 5,264,326
100%

The following table outlines the percentage of construction and development loans and total CRE loans, net of ~~owner occupied~~owner-occupied loans, to the Bank’s total risk-based capital, and the Company’s internal concentration limits as of ~~September~~June 30, ~~2017~~2020 and December 31, ~~2016:~~ 2019:


	Internal Limit	Actual
			June 30, 2020		December 31, 2019
Construction and development loans	100%	85%		88%
Total CRE loans (excluding owner-occupied)	300%	244%		238%

Internal
Limit
Actual
September 30,
2017 December 31,
2016
Construction and development 100% 76% 72%
Commercial real estate 300% 220% 253%

Short-Term Investments

The Company’s short-term investments are comprised of federal funds sold and interest-bearing deposits in banks. At ~~September~~June 30, ~~2017,~~2020, the Company’s short-term investments were ~~$112.8~~$428.6 million, compared with ~~$71.2~~$375.6 million at December 31, ~~2016.~~2019. At ~~September~~June 30, ~~2017,~~2020, the Company ~~did not have any~~had $20.0 million in federal funds sold and ~~all $112.8~~$408.6 million was in interest-bearing deposit balances at correspondent banks and the Federal Reserve Bank of Atlanta.

Derivative Instruments and Hedging Activities

The Company has a cash flow hedge that matures September 15, 2020 with a notional amount of $37.1 million at ~~September~~June 30, ~~2017~~2020 and December 31, ~~2016~~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 ~~approximately $723,000~~$170,000 at June 30, 2020 and ~~$978,000 at September 30, 2017 and December 31, 2016, respectively.~~

The Company has fair value hedges with a combined notional amount of $22.7 million at September 30, 2017 for the purpose of hedging the change in fair value of certain fixed rate loans. These instruments have maturity dates that range from January 2023 to October 2031 and are indexed to the one-month LIBOR rate. The fair value of these instruments amounted to an asset of approximately $204,000 and a liability of approximately $96,000 at September 30, 2017. At December 31, 2016, the Company had fair value hedges with a combined notional amount of $20.2 million. These instruments have maturity dates that range from January 2023 to October 2031 and are indexed to the one-month LIBOR rate. The fair value of these instruments amounted to an asset of approximately $229,000 and a liability of approximately $96,000$187,000 at December 31, ~~2016.~~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 ~~approximately $3.8~~$51.9 million and ~~$4.3~~$7.8 million at ~~September~~June 30, ~~2017~~2020 and December 31, ~~2016,~~2019, respectively, and a liability of ~~approximately $237,000~~$14.8 million and $0$4.5 million at ~~September~~June 30, ~~2017~~2020 and December 31, ~~2016,~~2019, respectively.

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

Capital

Common Stock Repurchase Program

On ~~January 18, 2017,~~September 19, 2019, the Company announced that its Board of Directors authorized the Company to repurchase up to $100.0 million of its outstanding common stock. Repurchases of shares, which are authorized to occur through October 31 2020, must be made in accordance with applicable securities laws and may be made from time to time in the open market or by negotiated transactions. The amount and timing of repurchases will be based on a variety of factors, including share acquisition price, regulatory limitations and other market and economic factors. The program does not require the Company to repurchase any specific number of shares. As of June 30, 2020, $14.3 million, or 375,241 shares of the Company's common stock, had been repurchased under the program.

Fidelity Acquisition

On July 1, 2019, the Company issued ~~128,572 unregistered~~22,181,522 shares of its common stock to ~~William J. Villari in exchange for 4.99%~~the shareholders of ~~the outstanding~~Fidelity. Such shares had a value of common stock of USPF. A registration statement was filed with the Securities and Exchange Commission on February 13, 2017 to register the resale or other disposition of these shares. The issuance of the 128,572 common shares was valued at $45.45$39.19 per share at the time of issuance, resulting in an increase in shareholders’ equity of ~~$5.8 million.~~$869.3 million .

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

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 ~~GDBF,~~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 is being phased in from 0.0% for 2015 to, 0.625% for 2016, 1.25% for 2017, 1.875% for 2018, and~~ 2.50% for ~~2019. The Basel III Capital Rules became effective for us on January 1, 2015 with certain transition provisions fully phased in on January 1,~~2020 and 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% ~~(5.75%~~(7.00% including the ~~1.25%~~2.50% capital conservation ~~buffer for 2017; 5.125% including the 0.625% capital conservation buffer for 2016)~~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% ~~(7.25%~~(8.50% including the ~~1.25%~~2.50% capital conservation ~~buffer for 2017; 6.625% including the 0.625% capital conservation buffer for 2016)~~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% ~~(9.25%~~(10.50% including the ~~1.25%~~2.50% capital conservation ~~buffer for 2017; 8.625% including the 0.625% capital conservation buffer for 2016)~~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~~June 30, ~~2017,~~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~~June 30, ~~2017~~2020 and December 31, ~~2016.~~ 2019.


	June 30, 2020	December 31, 2019
Tier 1 Leverage Ratio (tier 1 capital to average assets)
Consolidated	8.20%	8.48%
Ameris Bank	9.54%	9.73%
CET1 Ratio (common equity tier 1 capital to risk weighted assets)
Consolidated	9.84%	9.90%
Ameris Bank	11.44%	11.36%
Tier 1 Capital Ratio (tier 1 capital to risk weighted assets)
Consolidated	9.84%	9.90%
Ameris Bank	11.44%	11.36%
Total Capital Ratio (total capital to risk weighted assets)
Consolidated	13.25%	12.90%
Ameris Bank	12.76%	12.15%

September 30,
2017 December 31, 2016
Tier 1 Leverage Ratio (tier 1 capital to average assets)

Consolidated 9.94% 8.68%
Ameris Bank 10.83% 9.27%
CET1 Ratio (common equity tier 1 capital to risk weighted assets)

Consolidated 10.35% 8.32%
Ameris Bank 12.69% 10.35%
Tier 1 Capital Ratio (tier 1 capital to risk weighted assets)

Consolidated 11.65% 9.69%
Ameris Bank 12.69% 10.35%
Total Capital Ratio (total capital to risk weighted assets)

Consolidated 13.25% 10.11%
Ameris Bank 13.10% 10.77%

Interest Rate Sensitivity and Liquidity

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

The ALCO Committee is comprised of senior officers of Ameris and two ~~outside~~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 analysisin the form of a net interest income simulation to help characterize the market risk arising from changes in interest rates. In addition, fluctuations in interest rates usually result in changes in the fair market value of the Company’s financial instruments, cash flows and net interest income. The Company’s interest rate risk position is managed by the ALCO Committee.

The Company uses a simulation modeling process to measure interest rate risk and evaluate potential strategies. Interest rate scenario models are prepared using software created and licensed from an outside vendor. The Company’s simulation includes all financial assets and liabilities. Simulation results quantify interest rate risk under various interest rate scenarios. Management then develops and implements appropriate strategies. The ALCO Committee has determined that an

acceptable level of interest rate risk would be for net interest income to increase/decrease no more than 20% given a change in selected interest rates of 200 basis points over any 24-month period.

Liquidity management involves the matching of the cash flow requirements of customers, who may be either depositors desiring to withdraw funds or borrowers needing assurance that sufficient funds will be available to meet their credit needs, and the ability of Ameris to manage those requirements. The Company strives to maintain an adequate liquidity position by managing the balances and maturities of interest-earning assets and interest-bearing liabilities so that the balance it has in short-term assets at any given time will adequately cover any reasonably anticipated immediate need for funds. Additionally, the Bank maintains relationships with correspondent banks, which could provide funds on short notice, if needed. The Company has invested in FHLB stock for the purpose of establishing credit lines with the FHLB. The credit availability to the Bank is equal to 30% of the Bank’s total assets as reported on the most recent quarterly financial information submitted to the regulators subject to the pledging of sufficient collateral. At ~~September~~June 30, ~~2017~~2020 and December 31, ~~2016,~~2019, the net carrying value of the Company’s other borrowings was ~~$808.6 million~~$1.42 billion and ~~$492.3 million,~~$1.40 billion, respectively. ~~On March 13, 2017, the Company completed the public offering and sale of $75.0 million~~

in aggregate principal amount of its 5.75% Fixed-To-Floating Rate Subordinated Notes due 2027. These subordinated notes are included in other borrowings at September 30, 2017 at a net carrying value of $73.8 million. See Note 8 for additional details on the subordinated notes.

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


	June 30, 2020	March 31, 2020	December 31, 2019	September 30, 2019	June 30, 2019
Investment securities available for sale to total deposits	7.95%	9.77%	10.00%	10.92%	13.29%
Loans (net of unearned income) to total deposits	93.03%	94.58%	91.38%	93.90%	94.44%
Interest-earning assets to total assets	90.51%	89.57%	89.47%	89.27%	90.87%
Interest-bearing deposits to total deposits	64.11%	69.47%	70.06%	70.15%	71.08%

September 30, 2017 June 30, 2017 March 31, 2017 December 31, 2016 September 30, 2016
Investment securities available for sale to total deposits 13.90% 14.13% 14.72% 14.76% 15.80%
Loans (net of unearned income) to total deposits 101.04% 97.88% 94.31% 94.42% 91.32%
Interest-earning assets to total assets 92.48% 92.14% 91.98% 91.32% 91.25%
Interest-bearing deposits to total deposits 70.86% 71.12% 70.67% 71.78% 70.54%

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~~June 30, ~~2017~~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

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 June 30, 2020 and December 31, 2019, respectively. The carrying value of goodwill at the Premium Finance Division was $64.5 million at both June 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 unit's fair value exceeded its 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 are materially consistent with those modeled at May 31, 2020 and therefore, management determined no impairment existed at June 30, 2020.

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 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 ~~fair value hedges and~~ are part of the Company’s program to manage interest rate sensitivity.

At ~~September~~June 30, ~~2017,~~2020, the Company had one cash flow hedge with a notional amount of $37.1 million for the purpose of converting the variable rate on certain junior subordinated debentures to a fixed rate. The LIBOR rate swap exchanges fixed rate payments of 4.11% for floating rate payments based on the three-month LIBOR rate and matures September 2020. The fair value of this instrument was a liability of ~~approximately $723,000~~$170,000 at June 30, 2020 and ~~$978,000 at September 30, 2017 and December 31, 2016, respectively.~~

At September 30, 2017, the Company had fair value hedges with a combined notional amount of $22.7 million for the purpose of hedging the change in fair value of certain fixed rate loans. These instruments have maturity dates that range from January 2023 to October 2031 and are indexed to the one-month LIBOR rate. The fair value of these instruments amounted to an asset of approximately $204,000 and a liability of approximately $96,000 at September 30, 2017. At December 31, 2016, the Company had fair value hedges with a combined notional amount of $20.2 million. These instruments have maturity dates that range from January 2023 to October 2031 and are indexed to the one-month LIBOR rate. The fair value of these instruments amounted to an asset of approximately $229,000 and a liability of approximately $96,000$187,000 at December 31, ~~2016.~~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 ~~$3.8~~$51.9 million and ~~$4.3~~$7.8 million at ~~September~~June 30, ~~2017~~2020 and December 31, ~~2016,~~2019, respectively, and a liability of ~~$237,000~~$14.8 million and $0$4.5 million at ~~September~~June 30, ~~2017~~2020 and December 31, ~~2016,~~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~~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 June 30, 2020.

Remediation Plan

Management has been actively engaged during the first half 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~~June 30, ~~2017,~~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, ~~as a normal incident of the nature and kind of business in which~~ the Company ~~is engaged,~~and the Bank are subject to various legal proceedings, claims ~~or charges are asserted against~~and disputes that arise in the ~~Company or the Bank. In~~ordinary course of business. Additionally, in the ordinary course of business, the Company and the Bank are also subject to regulatory examinations, information gathering requests, inquiries and investigations. ~~Other than ordinary routine litigation incidental to~~Based on the Company’s ~~business, management believes based on its~~ current knowledge, ~~and after consultation with~~management presently does not believe that the liabilities arising from these legal ~~counsel that there are no pending or threatened legal proceedings that~~matters will ~~individually or in the aggregate,~~ have a material adverse effect on the Company’s consolidated financial condition, results of operations or cash flows. However, it is possible that the ultimate resolution of these legal matters could have a material adverse effect on the Company’s results of operations and financial condition ~~of the Company.~~for any particular period.

Item 1A. Risk Factors.

There have been no material changes to the risk factors disclosed in Item 1A. of Part I of our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2019, as amended, except as follows:

The ongoing COVID-19 pandemic and measures intended to prevent the disease's spread could have a material adverse effect on our business, financial condition and results of operations, and such effects will depend on future developments, which are highly uncertain and difficult to predict.

In December 2019, a novel coronavirus (COVID-19) was reported in China, and, in March 2020, the World Health Organization declared the outbreak a pandemic. On March 12, 2020, the President of the United States declared the COVID-19 outbreak in the United States a national emergency. The COVID-19 pandemic has caused significant economic dislocation in the United States, as many state and local governments have intermittently ordered non-essential businesses to close and residents to shelter in place at home. This has resulted in an unprecedented slowdown in economic activity and a related increase in unemployment and unemployment claims. 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 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.

Additionally, the spread of the coronavirus has caused us to modify our business practices, including the implementation of temporary branch and office closures. Although the Company has established a pandemic response plan and procedures, our workforce has been, is and may continue to be impacted by COVID-19. 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. There is no certainty that such measures will be sufficient to mitigate the risks posed by the coronavirus or will otherwise be

satisfactory to government authorities. In addition, the unanticipated loss or unavailability of key employees due to the outbreak could harm our ability to operate our business or execute our business strategy.

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 may decline to a greater extent than the decline in our cost of interest-bearing liabilities, reducing our net interest margin and spread and reducing 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.

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

~~None.~~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 June 30, 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⁾
April 1, 2020 through April 30, 2020⁽²⁾	593	$	27.95	16,577	$	85,723,412
May 1, 2020 through May 31, 2020	—	$	—	—	$	85,723,412
June 1, 2020 through June 30, 2020	—	$	—	—	$	85,723,412
Total	593	$	27.95	16,577	$	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. As of June 30, 2020, $14.3 million, or 375,241 shares of the Company's common stock, had been repurchased under the new program.

(2)The shares purchased from April 1, 2020 through April 30, 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

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.

3.8		Bylaws of Ameris Bancorp, as amended and restated ~~effective July 18, 2017 (incorporated by reference to Exhibit 3.1 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on July 21, 2017).~~through June 11, 2020.

10.1*3.9		~~Severance Protection and Restrictive Covenants Agreement by and among~~Amendments to Articles of Incorporation of Ameris Bancorp

3.10		Amendments to Bylaws of Ameris Bancorp, ~~Ameris Bank~~as amended and ~~William D. McKendry dated as of October 3, 2017 (incorporated by reference to Exhibit 10.1 to Ameris Bancorp's Current Report on Form 8-K filed with the SEC on October 6, 2017).~~restated through June 11, 2020

~~10.2~~31.1		Third Amendment to Loan Agreement dated October 20, 2017 by and between Ameris Bancorp and NexBank SSB (incorporated by reference to Exhibit 10.1 to Ameris Bancorp's Current Report on Form 8-K filed with the SEC on October 23, 2017).

~~10.3~~	Third Amended and Restated Revolving Promissory Note dated as of September 26, 2017 issued by Ameris Bancorp to NexBank SSB (incorporated by reference to Exhibit 10.2 to Ameris Bancorp's Current Report on Form 8-K filed with the SEC on October 23, 2017). .

~~31.1~~	Rule 13a-14(a)/15d-14(a) Certification by the Company’s Chief Executive Officer.

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

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

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

~~101~~101.INS		~~The following financial statements from Ameris Bancorp’s Form 10-Q for~~XBRL Instance Document - the ~~quarter ended September 30, 2017, formatted as~~instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH		Inline XBRL Taxonomy Extension Schema Document.

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104		Cover Page Interactive Data File - the cover page interactive data ~~files~~file does not appear in the Interactive Data File because its XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Income and Comprehensive Income; (iii) Consolidated Statements of Shareholders’ Equity; (iv) Consolidated Statements of Cash Flows; and (v) Notes to Consolidated Financial Statements.

* Management contract or a compensatory plan or arrangement.tags are embedded within the Inline XBRL document.

SIGNATURE

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



Dated: ~~November 9, 2017~~August 10, 2020			AMERIS BANCORP

			/s/ ~~Dennis J. Zember Jr.~~Nicole S. Stokes
			~~Dennis J. Zember Jr.,~~Nicole S. Stokes
			~~Executive Vice President,~~ Chief Financial Officer ~~and Chief Operating Officer~~ (duly authorized signatory and principal accounting and financial officer)



	Nine Months Ended September 30, 2017					Nine Months Ended September 30, 2016
	Shares		Amount			Shares		Amount
Common Stock
Balance at beginning of period	36,377,807		$	36,378		33,625,162		$	33,625
Issuance of common stock	2,141,072		2,141			2,549,469		2,549
Issuance of restricted shares	84,147		84			125,581		126
Cancellation of restricted shares	(472	)	—			(7,085	)	(7		)
Proceeds from exercise of stock options	103,356		103			54,510		55
Issued at end of period	38,705,910		$	38,706		36,347,637		$	36,348

Capital Surplus
Balance at beginning of period			$	410,276				$	337,349
Share-based compensation			2,419					1,586
Issuance of common shares, net of issuance costs of $4,925 and $0			92,359					69,906
Issuance of restricted shares			(84		)			(126		)
Cancellation of restricted shares			—					7
Proceeds from exercise of stock options			1,809					908
Balance at end of period			$	506,779				$	409,630

Retained Earnings
Balance at beginning of period			$	214,454				$	152,820
Net income			64,398					53,923
Dividends on common shares			(11,158		)			(6,974		)
Balance at end of period			$	267,694				$	199,769

Accumulated Other Comprehensive Income, Net of Tax
Unrealized gains (losses) on securities and derivatives:
Balance at beginning of period			$	(1,058	)			$	3,353
Other comprehensive income during the period			4,299					7,096
Balance at end of period			$	3,241				$	10,449

Treasury Stock
Balance at beginning of period	1,456,333		$	(13,613	)	1,413,777		$	(12,388	)
Purchase of treasury shares	18,528		(886		)	42,556		(1,225		)
Balance at end of period	1,474,861		$	(14,499	)	1,456,333		$	(13,613	)

Total Shareholders’ Equity			$	801,921				$	642,583



(dollars in thousands, except per share amount)
Ameris common shares issued	128,572
Price per share of the Company's common stock	$	45.45
Fair value of consideration transferred	$	5,844



(dollars in thousands)	Covered Loans		Less: Fair Value Adjustments		Total Covered Loans		OREO		Less: Fair Value Adjustments		Total Covered OREO		Total Covered Assets		FDIC Loss- Share Receivable (Payable)
September 30, 2017
AUB	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
USB	2,763		12		2,751		—		—		—		2,751		(1,752		)
SCB	2,541		27		2,514		—		—		—		2,514		(169		)
FBJ	3,647		394		3,253		—		—		—		3,253		(312		)
DBT	9,663		356		9,307		81		—		81		9,388		(4,442		)
TBC	1,667		—		1,667		—		—		—		1,667		(8		)
HTB	1,856		28		1,828		—		—		—		1,828		27
OGB	930		31		899		—		—		—		899		(1,032		)
CBG	10,329		678		9,651		161		—		161		9,812		(502		)
Total	$	33,396	$	1,526	$	31,870	$	242	$	—	$	242	$	32,112	$	(8,190	)

December 31, 2016
AUB	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	(27	)
USB	3,199		13		3,186		51		—		51		3,237		(1,642		)
SCB	4,019		51		3,968		—		—		—		3,968		(32		)
FBJ	3,767		452		3,315		—		—		—		3,315		(234		)
DBT	12,166		565		11,601		—		—		—		11,601		(4,591		)
TBC	1,679		—		1,679		—		—		—		1,679		(33		)
HTB	1,913		33		1,880		—		—		—		1,880		734
OGB	1,077		32		1,045		—		—		—		1,045		(993		)
CBG	33,449		1,963		31,486		1,161		4		1,157		32,643		505
Total	$	61,269	$	3,109	$	58,160	$	1,212	$	4	$	1,208	$	59,368	$	(6,313	)



	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands, except share and per share data)	2017			2016			2017			2016
Net income available to common shareholders	$	20,158		$	21,557		$	64,398		$	53,923
Adjustment items:
Merger and conversion charges	92			—			494			6,359
Certain compliance resolution expenses	4,729			—			4,729			—
Financial impact of Hurricane Irma	410			—			410			—
Losses on the sale of premises	91			238			956			562
Tax effect of management adjusted charges	(1,863		)	(83		)	(2,306		)	(2,422		)
After tax management-adjusted charges	3,459			155			4,283			4,499
Adjusted operating net income	$	23,617		$	21,712		$	68,681		$	58,422

Weighted average common shares outstanding - diluted	37,552,667			35,194,739			37,017,486			34,470,101
Earnings per diluted share	$	0.54		$	0.61		$	1.74		$	1.56
Adjusted operating net income per diluted share	$	0.63		$	0.62		$	1.86		$	1.69



	As of and for the Nine Months Ended September 30, 2017
(dollars in thousands)	Legacy Loans			Purchased Loans			Purchased Loan Pools			Total
Allowance for loan losses at end of period	$	21,227		$	3,262		$	1,477		$	25,966
Net charge-offs (recoveries) for the period	3,990			(208		)	—			3,782
Loan balances:
End of period	4,574,678			917,126			465,218			5,957,022
Average for the period	4,018,597			982,033			513,750			5,514,380
Net charge-offs as a percentage of average loans	0.13		%	(0.03		)%	0.00		%	0.09		%
Allowance for loan losses as a percentage of end of period loans	0.46		%	0.36		%	0.32		%	0.44		%



	September 30, 2017	June 30, 2017	March 31, 2017	December 31, 2016	September 30, 2016
Investment securities available for sale to total deposits	13.90%	14.13%	14.72%	14.76%	15.80%
Loans (net of unearned income) to total deposits	101.04%	97.88%	94.31%	94.42%	91.32%
Interest-earning assets to total assets	92.48%	92.14%	91.98%	91.32%	91.25%
Interest-bearing deposits to total deposits	70.86%	71.12%	70.67%	71.78%	70.54%