UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
FORMý10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended September 30, 2017March 31, 2021
 
OR
¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 
001-13901

 bancorplogoa01.jpg
AMERIS BANCORP
abcb-20210331_g1.jpg
AMERIS BANCORP
(Exact name of registrant as specified in its charter)



GEORGIAGeorgia58-1456434
(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
AtlantaGeorgia30305
(Address of principal executive offices)


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

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $1 per shareABCBNasdaq Global Select Market

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

 
There were 37,231,04969,731,426 shares of Common Stock outstanding as of November 3, 2017.

April 30, 2021.




AMERIS BANCORP
TABLE OF CONTENTS


Page
PART I – FINANCIAL INFORMATION
Item 1.
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.









Item 1. Financial Statements.

AMERIS BANCORP AND SUBSIDIARIES
Consolidated Balance Sheets (unaudited)
(dollars in thousands, except per share data)
 March 31, 2021 (unaudited)December 31, 2020
Assets  
Cash and due from banks$224,159 $203,349 
Federal funds sold and interest-bearing deposits in banks2,534,969 1,913,957 
Cash and cash equivalents2,759,128 2,117,306 
Time deposits in other banks249 249 
Investment securities available for sale, at fair value, net of allowance for credit losses at $101 and $112859,652 982,879 
Other investments27,620 28,202 
Loans held for sale (includes loan at fair value of $1,509,528 and $1,001,807)1,509,528 1,167,659 
Loans, net of unearned income14,599,805 14,480,925 
Allowance for credit losses(178,570)(199,422)
Loans, net14,421,235 14,281,503 
Other real estate owned, net8,841 11,880 
Premises and equipment, net231,550 222,890 
Goodwill928,005 928,005 
Other intangible assets, net67,848 71,974 
Cash value of bank owned life insurance176,575 176,467 
Deferred income taxes, net22,367 33,314 
Other assets414,529 416,310 
Total assets$21,427,127 $20,438,638 
Liabilities  
Deposits:  
Noninterest-bearing$6,804,776 $6,151,070 
Interest-bearing11,071,097 10,806,753 
Total deposits17,875,873 16,957,823 
Securities sold under agreements to repurchase9,320 11,641 
Other borrowings425,231 425,155 
Subordinated deferrable interest debentures124,833 124,345 
Other liabilities234,274 272,586 
Total liabilities18,669,531 17,791,550 
Commitments and Contingencies (Note 9)00
Shareholders’ Equity  
Preferred stock, stated value $1,000; 5,000,000 shares authorized; 0 shares issued and outstanding
Common stock, par value $1; 200,000,000 shares authorized; 71,954,088 and 71,753,705 shares issued71,954 71,754 
Capital surplus1,917,990 1,913,285 
Retained earnings785,984 671,510 
Accumulated other comprehensive income, net of tax26,090 33,505 
Treasury stock, at cost, 2,240,662 and 2,212,224 shares(44,422)(42,966)
Total shareholders’ equity2,757,596 2,647,088 
Total liabilities and shareholders’ equity$21,427,127 $20,438,638 
 September 30,
2017
 December 31,
2016
Assets 
  
Cash and due from banks$131,071
 $127,164
Federal funds sold and interest-bearing deposits in banks112,844
 71,221
Investment securities available for sale, at fair value819,593
 822,735
Other investments47,977
 29,464
Loans held for sale, at fair value137,392
 105,924
    
Loans4,574,678
 3,626,821
Purchased loans917,126
 1,069,191
Purchased loan pools465,218
 568,314
Loans, net of unearned income5,957,022
 5,264,326
Allowance for loan losses(25,966) (23,920)
Loans, net5,931,056
 5,240,406
    
Other real estate owned, net9,391
 10,874
Purchased other real estate owned, net9,946
 12,540
Total other real estate owned, net19,337
 23,414
    
Premises and equipment, net119,458
 121,217
Goodwill125,532
 125,532
Other intangible assets, net14,437
 17,428
Deferred income taxes, net39,365
 40,776
Cash value of bank owned life insurance79,241
 78,053
Other assets72,517
 88,697
Total assets$7,649,820
 $6,892,031
    
Liabilities 
  
Deposits: 
  
Noninterest-bearing$1,718,022
 $1,573,389
Interest-bearing4,177,482
 4,001,774
Total deposits5,895,504
 5,575,163
Securities sold under agreements to repurchase14,156
 53,505
Other borrowings808,572
 492,321
Subordinated deferrable interest debentures85,220
 84,228
Other liabilities44,447
 40,377
Total liabilities6,847,899
 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 surplus506,779
 410,276
Retained earnings267,694
 214,454
Accumulated other comprehensive income (loss), net of tax3,241
 (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’ equity801,921
 646,437
Total liabilities and shareholders’ equity$7,649,820
 $6,892,031


 See notes to unaudited consolidated financial statements.

1



AMERIS BANCORP AND SUBSIDIARIES
Consolidated Statements of Income and Comprehensive Income (unaudited)
(dollars and shares in thousands, except per share data)
Three Months Ended
September 30,
 Nine Months Ended
September 30,
Three Months Ended
March 31,
2017 2016 2017 2016 20212020
Interest income 
  
  
  
Interest income  
Interest and fees on loans$70,462
 $57,322
 $197,447
 $160,677
Interest and fees on loans$171,157 $171,242 
Interest on taxable securities5,062
 4,336
 15,057
 13,476
Interest on taxable securities6,118 10,082 
Interest on nontaxable securities392
 397
 1,209
 1,297
Interest on nontaxable securities141 157 
Interest on deposits in other banks and federal funds sold406
 155
 1,070
 659
Interest on deposits in other banks and federal funds sold534 1,287 
Total interest income76,322
 62,210
 214,783
 176,109
Total interest income177,950 182,768 
       
Interest expense 
  
  
  
Interest expense  
Interest on deposits5,136
 3,074
 13,479
 8,730
Interest on deposits6,798 24,102 
Interest on other borrowings4,331
 2,069
 10,702
 5,287
Interest on other borrowings6,175 10,721 
Total interest expense9,467
 5,143
 24,181
 14,017
Total interest expense12,973 34,823 
       
Net interest income66,855
 57,067
 190,602
 162,092
Net interest income164,977 147,945 
Provision for loan losses1,787
 811
 5,828
 2,381
Provision for loan losses(16,579)37,047 
Net interest income after provision for loan losses65,068
 56,256
 184,774
 159,711
Provision for unfunded commitmentsProvision for unfunded commitments(11,839)4,000 
Provision for other credit lossesProvision for other credit losses(173)
Provision for credit lossesProvision for credit losses(28,591)41,047 
Net interest income after provision for credit lossesNet interest income after provision for credit losses193,568 106,898 
       
Noninterest income 
  
  
  
Noninterest income  
Service charges on deposit accounts10,535
 11,358
 31,714
 31,709
Service charges on deposit accounts10,829 11,844 
Mortgage banking activity13,340
 14,067
 38,498
 38,420
Mortgage banking activity98,486 35,333 
Other service charges, commissions and fees699
 791
 2,137
 2,869
Other service charges, commissions and fees1,016 961 
Gain on sale of securities
 
 37
 94
Net loss on securitiesNet loss on securities(12)(9)
Other noninterest income2,425
 2,648
 8,508
 8,437
Other noninterest income7,654 6,250 
Total noninterest income26,999
 28,864
 80,894
 81,529
Total noninterest income117,973 54,379 
       
Noninterest expense 
  
  
  
Noninterest expense  
Salaries and employee benefits32,583
 27,982
 89,509
 81,700
Salaries and employee benefits95,985 75,946 
Occupancy and equipment expense6,036
 5,989
 18,059
 18,060
Data processing and communications costs7,050
 6,185
 20,650
 18,347
Occupancy and equipmentOccupancy and equipment11,781 12,028 
Data processing and communications expensesData processing and communications expenses11,884 11,954 
Credit resolution-related expenses1,347
 1,526
 2,879
 5,089
Credit resolution-related expenses547 2,198 
Advertising and marketing expense1,247
 1,249
 3,612
 2,908
Advertising and marketingAdvertising and marketing1,431 2,358 
Amortization of intangible assets941
 993
 2,990
 3,332
Amortization of intangible assets4,126 5,631 
Merger and conversion charges92
 
 494
 6,359
Merger and conversion charges540 
Other noninterest expenses14,471
 9,275
 34,406
 25,363
Other noninterest expenses23,044 27,398 
Total noninterest expense63,767
 53,199
 172,599
 161,158
Total noninterest expense148,798 138,053 
       
Income before income tax expense28,300
 31,921
 93,069
 80,082
Income before income tax expense162,743 23,224 
Income tax expense8,142
 10,364
 28,671
 26,159
Income tax expense37,781 3,902 
Net income20,158
 21,557
 64,398
 53,923
Net income124,962 19,322 
       
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 $4,1601,795
 (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)
Other comprehensive income1,820
 (2,511) 4,299
 7,096
Total comprehensive income$21,978
 $19,046
 $68,697
 $61,019
Other comprehensive income (loss)Other comprehensive income (loss)  
Net unrealized holding gains (losses) arising during period on investment securities available for sale, net of tax expense (benefit) of $(1,972) and $5,756Net unrealized holding gains (losses) arising during period on investment securities available for sale, net of tax expense (benefit) of $(1,972) and $5,756(7,415)21,653 
Net unrealized losses on cash flow hedge during the period, net of tax benefit of $0 and $(26)Net unrealized losses on cash flow hedge during the period, net of tax benefit of $0 and $(26)(97)
Total other comprehensive income (loss)Total other comprehensive income (loss)(7,415)21,556 
Comprehensive incomeComprehensive income$117,547 $40,878 
       
Basic earnings per common share$0.54
 $0.62
 $1.76
 $1.58
Basic earnings per common share$1.80 $0.28 
Diluted earnings per common share$0.54
 $0.61
 $1.74
 $1.56
Diluted earnings per common share$1.79 $0.28 
Dividends declared per common share$0.10
 $0.10
 $0.30
 $0.20
Weighted average common shares outstanding (in thousands)
 
  
  
  
Weighted average common shares outstandingWeighted average common shares outstanding  
Basic37,225
 34,870
 36,690
 34,156
Basic69,392 69,248 
Diluted37,553
 35,195
 37,017
 34,470
Diluted69,741 69,502 
See notes to unaudited consolidated financial statements.

2



AMERIS BANCORP AND SUBSIDIARIES
Consolidated Statements of Shareholders’ Equity (unaudited)
(dollars in thousands)

  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
Three Months Ended March 31, 2021
Common StockCapital SurplusRetained EarningsAccumulated Other Comprehensive Income, Net of TaxTreasury StockTotal Shareholders' Equity
SharesAmountSharesAmount
Balance, December 31, 202071,753,705 $71,754 $1,913,285 $671,510 $33,505 2,212,224 $(42,966)$2,647,088 
Issuance of restricted shares86,075 86 513 — — — — 599 
Proceeds from exercise of stock options114,308 114 2,888 — — — — 3,002 
Share-based compensation— — 1,304 — — — — 1,304 
Purchase of treasury shares— — — — — 28,438 (1,456)(1,456)
Net income— — — 124,962 — — — 124,962 
Dividends on common shares ($0.15 per share)— — — (10,488)— — — (10,488)
Other comprehensive income (loss) during the period— — — — (7,415)— — (7,415)
Balance, March 31, 202171,954,088 $71,954 $1,917,990 $785,984 $26,090 2,240,662 $(44,422)$2,757,596 


Three Months Ended March 31, 2020
Common StockCapital SurplusRetained EarningsAccumulated Other Comprehensive Income, Net of TaxTreasury StockTotal Shareholders' Equity
SharesAmountSharesAmount
Balance, December 31, 201971,499,829 $71,500 $1,907,108 $507,950 $17,995 1,995,996 $(34,971)$2,469,582 
Issuance of restricted shares118,625 119 171 — — — — 290 
Proceeds from exercise of stock options33,532 33 668 — — — — 701 
Share-based compensation— — 774 — — — — 774 
Purchase of treasury shares— — — — — 214,716 (7,956)(7,956)
Net income— — — 19,322 — — — 19,322 
Dividends on common shares ($0.15 per share)— — — (10,415)— — — (10,415)
Cumulative effect of change in accounting for credit losses— — — (56,704)— — — (56,704)
Other comprehensive income (loss) during the period— — — — 21,556 — — 21,556 
Balance, March 31, 202071,651,986 $71,652 $1,908,721 $460,153 $39,551 2,210,712 $(42,927)$2,437,150 

See notes to unaudited consolidated financial statements.
3




AMERIS BANCORP AND SUBSIDIARIES
Consolidated Statements of Cash Flows (unaudited)
(dollars in thousands)
 Three Months Ended
March 31,
 20212020
Operating Activities  
Net income$124,962 $19,322 
Adjustments reconciling net income to net cash provided by (used in) operating activities:  
Depreciation4,080 3,916 
Net losses on sale or disposal of premises and equipment139 125 
Net write-downs on other assets122 417 
Provision for credit losses(28,591)41,047 
Net write-downs and (gains) losses on sale of other real estate owned(560)885 
Share-based compensation expense1,753 559 
Amortization of intangible assets4,126 5,631 
Amortization of operating lease right of use assets2,979 3,400 
Provision for deferred taxes12,919 (7,333)
Net amortization of investment securities available for sale1,121 1,385 
Net loss on securities12 
Accretion of discount on purchased loans, net(6,127)(6,320)
Net amortization on other borrowings112 46 
Amortization of subordinated deferrable interest debentures488 485 
Loan servicing asset impairment (recovery)(10,639)22,165 
Originations of mortgage loans held for sale(2,340,847)(1,252,379)
Payments received on mortgage loans held for sale10,680 14,957 
Proceeds from sales of mortgage loans held for sale1,816,503 1,530,122 
Net gains on mortgage loans held for sale(41,720)(40,809)
Originations of SBA loans(11,976)(11,647)
Proceeds from sales of SBA loans12,518 20,062 
Net gains on sale of SBA loans(1,192)(1,824)
Increase in cash surrender value of bank owned life insurance(814)(969)
Gain on bank owned life insurance proceeds(603)
Net gains on other loans held for sale(457)
Changes in FDIC loss-share payable, net of cash payments(1,506)
Change attributable to other operating activities(13,597)(40,757)
Net cash provided by (used in) operating activities(464,609)300,989 
Investing Activities, net of effects of business combinations  
Proceeds from prepayments and maturities of securities available for sale112,730 76,386 
Net (increase) decrease in other investments570 (14,844)
Net increase in loans(72,093)(264,063)
Purchases of premises and equipment(13,809)(3,572)
Proceeds from sale of premises and equipment930 
Proceeds from sales of other real estate owned4,048 1,284 
Payments paid to FDIC under loss-share agreements(25)
Proceeds from bank owned life insurance1,309 
Payments received on other loans held for sale9,136 
Proceeds from sales of other loans held for sale156,803 
Net cash and cash equivalents received from acquisitions
Net cash provided by (used in) investing activities199,624 (204,832)
  (Continued)

4

  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)
Three Months Ended
March 31,
20212020
Financing Activities, net of effects of business combinationsFinancing Activities, net of effects of business combinations  
Net increase (decrease) in depositsNet increase (decrease) in deposits$918,050 $(182,455)
Net decrease in securities sold under agreements to repurchaseNet decrease in securities sold under agreements to repurchase(2,321)(5,475)
Proceeds from other borrowingsProceeds from other borrowings2,770,000 
Repayment of other borrowingsRepayment of other borrowings(36)(2,625,084)
Repayment of subordinated deferrable interest debenturesRepayment of subordinated deferrable interest debentures(5,155)
Proceeds from exercise of stock optionsProceeds from exercise of stock options3,002 701 
Dividends paid - common stockDividends paid - common stock(10,432)(10,426)
Purchase of treasury sharesPurchase of treasury shares(1,456)(7,956)
Net cash provided by (used in) financing activitiesNet cash provided by (used in) financing activities906,807 (65,850)
Net increase in cash and cash equivalentsNet increase in cash and cash equivalents641,822 30,307 
Cash and cash equivalents at beginning of periodCash and cash equivalents at beginning of period2,117,306 621,849 
Cash and cash equivalents at end of periodCash and cash equivalents at end of period$2,759,128 $652,156 
Supplemental Disclosures of Cash Flow InformationSupplemental Disclosures of Cash Flow Information  
Cash paid (received) during the period for:Cash paid (received) during the period for:  
InterestInterest$11,335 $35,234 
Income taxesIncome taxes(1)(77)
Loans transferred to other real estate ownedLoans transferred to other real estate owned449 3,674 
Loans transferred from loans held for sale to loans held for investmentLoans transferred from loans held for sale to loans held for investment48,313 
Loans provided for the sales of other real estate ownedLoans provided for the sales of other real estate owned299 
Right-of-use assets obtained in exchange for new operating lease liabilitiesRight-of-use assets obtained in exchange for new operating lease liabilities2,889 
 Nine Months Ended
September 30,
 2017 2016
Financing Activities, net of effects of business combinations  
  
Net increase in deposits $320,341
 $25,448
Net decrease in securities sold under agreements to repurchase (39,349) (20,938)
Proceeds from other borrowings 1,687,692
 339,500
Repayment of other borrowings (1,371,503) (53,513)
Issuance of common stock 88,656
 
Proceeds from exercise of stock options 1,912
 963
Dividends paid - common stock (10,927) (5,096)
Purchase of treasury shares (886) (1,225)
Net cash provided by financing activities 675,936
 285,139
    
Net increase (decrease) in cash and cash equivalents 45,530
 (176,492)
Cash and cash equivalents at beginning of period 198,385
 390,563
Cash and cash equivalents at end of period $243,915
 $214,071
    
Supplemental Disclosures of Cash Flow Information  
  
Cash paid during the period for:  
  
Interest $23,369
 $13,791
Income taxes 28,212
 30,969
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 from loans held for sale to loans held for investment 165,352
 94,601
Loans provided for the sales of other real estate owned 1,334
 1,471
Assets acquired in business acquisitions 
 561,440
Liabilities assumed in business acquisitions 
 465,048
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(7,415)21,653 
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(97)
    
  
 (Concluded)
 (Concluded)
 
See notes to unaudited consolidated financial statements.


5




AMERIS BANCORP AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
September 30, 2017March 31, 2021
 
NOTE 1 – BASIS OF PRESENTATION AND ACCOUNTING POLICIES
 
Nature of Business


Ameris Bancorp (the “Company” or “Ameris”) is a financial holding company headquartered in Moultrie,Atlanta, Georgia. Ameris conducts substantially all of its operations through its wholly owned banking subsidiary, Ameris Bank (the “Bank”). At September 30, 2017,March 31, 2021, the Bank operated 97165 branches in select markets in Georgia, Alabama, Florida, North Carolina 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, (consistingconsisting of normal recurring accruals)adjustments, which, in the opinion of management, are necessary for a fair presentation of the consolidated financial position and results of operations for the interim periods presented. All significant intercompany accounts and transactions have been eliminated in consolidation. The results of operations for the period ended September 30, 2017March 31, 2021 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, 2016.2020, as amended.

Accounting Policy UpdateCash and Cash Equivalents


Other Investments Other investmentsFor purposes of reporting cash flows, cash and cash equivalents include Federal Home Loancash 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 stockof 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 valuesaccordingly, the Bank had 0 reserve requirement at March 31, 2021 and are carried at cost. They are periodically reviewed for impairment based on ultimate recovery of par value or cost basis. Both stock and cash dividends are reported as income. For additional information regarding the Company’s minority equity investment in USPF, see Note 2.December 31, 2020.

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 20172021


ASU 2016-092019-12Improvements to Employee Share-Based PaymentIncome Taxes (Topic 740): Simplifying the Accounting (“ for Income Taxes ("ASU 2016-09”2019-12"). ASU 2016-09 simplifies various aspects of how share-based payments are accounted for and presented in the financial statements. Under ASU 2016-09, companies will record all excess tax benefits and tax deficiencies as income tax expense or benefit in the income statement 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 benefits will be reported as an operating activity on the statement of cash flows, 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 and did not have a material impact on the consolidated financial statements.



Accounting Standards Pending Adoption
ASU 2017-12 – "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities ("ASU 2017-12"). The purposes of ASU 2017-12 are to (1) improve the transparency and understandability of information conveyed in financial statements about an entity’s risk management activities by better aligning the entity’s financial reporting for hedging relationships with the economic objectives of those risk management activities and (2) reduce the complexity of and simplify the application of hedge accounting by preparers. ASU 2017-12 is effective for interim and annual reporting periods beginning after December 15, 2018 with early adoption in an interim period permitted. ASU 2017-12 requires a modified retrospective transition method in which the Company will recognize 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 provisions of ASU 2017-12 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 2017-09 – “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, financial position or disclosures.
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 impairment test is necessary. The standard must be adopted using a prospective basis and the nature and reason for the change in accounting principle should be disclosed upon transition. ASU 2017-04 is effective for annual or any interim goodwill impairment tests in reporting periods beginning after December 15, 2019. Early adoption is permitted on testing dates after January 1, 2017. The Company is currently evaluating the impact this 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 2017-01 – 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, financial position and disclosures, but it is not expected to have a material impact.
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 2016-132019-12 simplifies the accounting for purchased credit-impaired debt securitiesincome taxes by removing certain technical exceptions. ASU 2019-12 also clarifies and loans and expandsamends the disclosure requirements regarding an entity’s assumptions, models and methodsaccounting for estimatingincome taxes in certain areas including, among others: (i) franchise taxes that are partially based on income; (ii) whether step ups in the allowance for loan and lease losses. In addition, entities will need to disclose the amortized cost balance for each classtax basis 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 adjustment to equity asgoodwill should be considered part of the beginningacquisition to which it related or recognized as a separate transaction; and (iii) requiring the effect of an enacted change in tax laws or rates to be reflected in the annual effective tax rate computation in the interim period in whichthat includes the guidance is effective. Whileenactment date. During the first quarter of 2021, the Company is currently evaluating the impact this standard will have on the results of operations, financial position and disclosures, 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 impactadopted this ASU will have on Company’s financial position, results of operations and financial statement disclosures and determine the most appropriate method of implementingapplied 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 adjustmentbasis for the provision related to equity as of the beginning of the period in which it is adopted. ASU 2016-02 is effective for annual reporting periods beginning after December 15, 2018,franchise taxes and interim periods within those annual periods with early adoption permitted. The Company has several leased facilities, which are currently treated as operating leases, and are not currently shown on the Company’s consolidated balance sheet. After ASU 2016-02 is implemented, the Company expects to begin reporting these lease agreements on the balance sheet as a right-of-use asset and a corresponding liability. The Company is currently evaluating the impact this standard will have on the Company’s consolidated statement of income and comprehensive income, consolidated statement of stockholders’ equity and consolidated statement of cash flows, but it is not expected to have a material impact.
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.all other amendments. The adoption of ASU 2014-09 isdid not expected to have a material impact on the Company's consolidated financial statements.

6


NOTE 2Accounting Standards Pending Adoption

ASU No. 2021-01 INVESTMENT IN US PREMIUM FINANCE HOLDING COMPANY

On December 15, 2016, Reference Rate Reform (Topic 848): Scope ("ASU 2021-01"). ASU 2021-01 clarifies that certain optional expedients and exceptions in ASC 848 for contract modifications and hedge accounting apply to derivatives that are affected by the Bank entered into a Managementdiscounting transition. ASU 2021-01 also amends the expedients and License Agreement with William J. Villari and USPF pursuantexceptions in ASC 848 to which Mr. Villari will manage a divisioncapture the incremental consequences of the Bankscope clarification and to tailor the existing guidance to derivative instruments affected by the discounting transition. 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 is currently evaluating the impact of adopting ASU 2021-01 on the consolidated financial statements.

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 operated underdiscontinued due to reference rate reform. The optional expedients for contract modifications apply consistently for all contracts or transactions within the name “US Premium Finance” and which isrelevant Codification Topic, Subtopic, or Industry Subtopic that contains the guidance that otherwise would be required to be engagedapplied, 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 businesscontracts and accounts that are tied to LIBOR and develop a transition plan for the affected items. The Company is currently evaluating the impact of soliciting, originating, servicing, administering and collecting loans made for purposes of funding insurance premiums and other loans made to persons engaged inadopting ASU 2020-04 on the insurance business.consolidated financial statements.

Also on December 15, 2016, 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 unregistered shares of its common stock in a private placement transaction pursuant to the exemptions from registration provided in Section 4(a)(2) of the Securities Act of 1933, as amended, and Rule 506 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 disposition of the shares of common stock that were issued 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 prior to the parties’ execution of the Stock Purchase Agreement, as follows:


(dollars in thousands, except per share amount) 
Ameris common shares issued128,572
Price per share of the Company's common stock$45.45
Fair value of consideration transferred$5,844
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 included in other investments in the Company’s consolidated balance sheet. The net carrying value of the Company’s investment in USPF was $5.8 million as of September 30, 2017.
NOTE 32 – 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 allowance for credit losses, gross unrealized gains and losses are summarized as follows:
(dollars in thousands)Amortized
Cost
Allowance for Credit LossesGross
Unrealized
Gains
Gross
Unrealized
Losses
Estimated
Fair
Value
March 31, 2021
U.S. government sponsored agencies$12,138 $$256 $$12,394 
State, county and municipal securities60,140 2,845 62,985 
Corporate debt securities46,131 (101)946 (229)46,747 
SBA pool securities54,305 1,488 (102)55,691 
Mortgage-backed securities654,015 27,851 (31)681,835 
Total debt securities$826,729 $(101)$33,386 $(362)$859,652 
December 31, 2020
U.S. government sponsored agencies$17,161 $$343 $$17,504 
State, county and municipal securities63,286 3,492 66,778 
Corporate debt securities51,639 (112)602 (233)51,896 
SBA pool securities59,973 2,620 (96)62,497 
Mortgage-backed securities748,521 35,797 (114)784,204 
Total debt securities$940,580 $(112)$42,854 $(443)$982,879 
(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-saledebt securities at September 30, 2017available for sale securities as of March 31, 2021, by contractual maturity are summarized in the tableshown below. Expected maturities for mortgage-backed securitiesMaturities may differ from contractual maturities in mortgage-backed securities because in certain cases borrowers can prepay obligationsthe
7


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$20,247 $20,462 
Due from one year to five years 57,385
 58,204
Due from one year to five years48,460 50,244 
Due from five to ten years 77,194
 79,093
Due from five to ten years59,558 61,722 
Due after ten years 39,221
 40,138
Due after ten years44,449 45,389 
Mortgage-backed securities 626,927
 627,953
Mortgage-backed securities654,015 681,835 
 $814,821
 $819,593
$826,729 $859,652 
 
Securities with a carrying value of approximately $238.6$372.8 million and $438.7 million at March 31, 2021 and December 31, 2020, respectively, serve as collateral to secure public deposits, securities sold under agreements to repurchase and for other purposes required or permitted by law at September 30, 2017, compared with $618.2 million at December 31, 2016.law.

The following table detailsshows the gross unrealized losses and estimated fair value of securities aggregated by category and durationlength of time that securities have been in a continuous unrealized loss position at September 30, 2017March 31, 2021 and December 31, 2016.2020:

 Less Than 12 Months12 Months or MoreTotal
(dollars in thousands)Estimated
Fair
Value
Unrealized
Losses
Estimated
Fair
Value
Unrealized
Losses
Estimated
Fair
Value
Unrealized
Losses
March 31, 2021      
Corporate debt securities$2,920 $(229)$$$2,920 $(229)
SBA pool securities1,755 (13)3,798 (89)5,553 (102)
Mortgage-backed securities10,102 (28)374 (3)10,476 (31)
Total debt securities$14,777 $(270)$4,172 $(92)$18,949 $(362)
December 31, 2020      
Corporate debt securities$10,159 $(233)$$$10,159 $(233)
SBA pool securities3,948 (96)3,948 (96)
Mortgage-backed securities24,120 (114)24,122 (114)
Total debt securities$34,279 $(347)$3,950 $(96)$38,229 $(443)

  Less Than 12 Months 12 Months or More Total
(dollars in thousands) 
Estimated
Fair
Value
 
Unrealized
Losses
 
Estimated
Fair
Value
 
Unrealized
Losses
 
Estimated
Fair
Value
 
Unrealized
Losses
September 30, 2017  
  
  
  
  
  
U.S. government sponsored agencies $
 $
 $
 $
 $
 $
State, county and municipal securities 11,333
 (18) 4,240
 (56) 15,573
 (74)
Corporate debt securities 8,131
 (35) 10,854
 (81) 18,985
 (116)
Mortgage-backed securities 225,258
 (1,685) 54,465
 (1,063) 279,723
 (2,748)
Total debt securities $244,722
 $(1,738) $69,559
 $(1,200) $314,281
 $(2,938)
             
December 31, 2016  
  
  
  
  
  
U.S. government sponsored agencies $
 $
 $
 $
 $
 $
State, county and municipal securities 47,647
 (469) 
 
 47,647
 (469)
Corporate debt securities 18,377
 (363) 493
 (7) 18,870
 (370)
Mortgage-backed securities 414,300
 (6,177) 11,791
 (377) 426,091
 (6,554)
Total debt securities $480,324
 $(7,009) $12,284
 $(384) $492,608
 $(7,393)

As of September 30, 2017,March 31, 2021, the Company’s securitiessecurity portfolio consisted of 421488 securities, 11933 of which were in an unrealized loss position. The majority of unrealized losses are related to the Company’s mortgage-backed securities, as discussed below.
At September 30, 2017,March 31, 2021, the Company held 10121 mortgage-backed securities that were in an unrealized loss position, all of which were issued by U.S. government-sponsored entities and agencies. Because the decline in fair value is attributable to changes in interest rates and illiquidity, and not credit quality, and because the Company does not have the intent to sell these mortgage-backed securities and it is likely that it will not be required to sell the securities before their anticipated recovery, the Company does not consider these securities to be other-than-temporarily impaired at September 30, 2017.
At September 30, 2017,March 31, 2021, the Company held nine state, county and municipal9 U.S. Small Business Administration (“SBA”) pool securities and nine3 corporate debt securities that were in an unrealized loss position. Because the decline in fair value is attributable to changes in interest rates

During 2021 and illiquidity, and not credit quality, and because2020, the Company does not have the intent to sell these securitiesreceived timely and it is likely that it will not be required to sellcurrent 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 corporatesubordinated debt include investments in regional and super-regional banks on which the Company prepares regular analysis through review of financial information and credit ratings. Investments in preferred securities are also concentrated in the preferred obligations of regional and super-regional banks through non-pooled investment structures. The Company did not have investments in “pooled” trust preferred securities at September 30, 2017March 31, 2021 or December 31, 2016.2020.

Management and the Company’s Asset and Liability Committee (the “ALCO Committee”) evaluate securities for other-than-temporary impairmentin an unrealized loss position on at least on a quarterly basis, and more frequently when economic or market conditionsconcerns warrant such evaluation. Whileevaluation, 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 majorityentire 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 relateabove 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 30, 2017,March 31, 2021, and it is more likely than not that the Company will not be required to sell these securities prior to recovery or maturity. Therefore,Based on the results of management's review, at September 30, 2017, these investments are not considered impaired on an other-than-temporary basis.March 31, 2021, management determined $101,000 was attributable to credit impairment and established the allowance for credit losses accordingly. The remaining $362,000 in unrealized loss was determined to be from factors other than credit.
8


(dollars in thousands)
Allowance for credit losses
Three Months Ended
March 31, 2021
Three Months Ended
March 31, 2020
Beginning balance$112 $
Provision for expected credit losses(11)
Ending balance$101 $

At September 30, 2017March 31, 2021 and December 31, 2016,2020, all of the Company’s mortgage-backed securities were obligations of government-sponsored agencies.

TheTotal loss on securities reported on the consolidated statements of income and comprehensive income is comprised of the following table is a summary of sales activities in the Company’s investment securities available for sale for the ninethree months ended September 30, 2017March 31, 2021 and 2016:2020:
(dollars in thousands)March 31, 2021March 31, 2020
Unrealized holding losses on equity securities$(12)$(9)
Total loss on securities$(12)$(9)
(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



NOTE 43 – 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 consumer installment home improvement loans made to borrowers throughout the United States. As of September 30, 2017 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 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 loans are reported in the commercial, financial and agricultural loan category.
The Bank concentrates the majority of its lending activities in real estate loans. While risk of loss in the Company’s portfolio is primarily tied to the credit quality of the various borrowers, risk of loss may increase due to factors beyond the Company’s control, such as local, regional and/or national economic downturns. General conditions in the real estate market may also impact the relative risk in the real estate portfolio. A substantial portion of the Bank’s loans are secured by real estate in the Bank’s primary market area. In addition, a substantial portion of the OREO is located in those same markets. Accordingly, the ultimate collectability of a substantial portion of the Bank’s loan portfolio and the recovery of a substantial portion of the carrying amount of OREO are susceptible to changes in real estate conditions in the Bank’s primary market area.
Commercial, financial and agricultural loans include both secured and unsecured loans for working capital, expansion, crop production, commercial insurance premium finance, and other business purposes. Commercial, financial and agricultural loans also include SBA loans and municipal loans. Short-term working capital loans are secured by non-real estate collateral such as accounts receivable, crops, inventory and equipment. The Bank evaluates the financial strength, cash flow, management, credit history of the borrower and the quality of the collateral securing the loan. The Bank often requires personal guarantees and secondary sources of repayment on commercial, financial and agricultural loans.
Real estate loans include construction and development loans, commercial and farmland loans and residential loans. Construction and development loans include loans for the development of residential neighborhoods, one-to-four family home residential construction loans to builders and consumers, and commercial real estate construction loans, primarily for owner-occupied properties. The Company limits its construction lending risk through adherence to established underwriting procedures. Commercial real estate loans include loans secured by owner-occupied commercial buildings for office, storage, retail, 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)March 31, 2021December 31, 2020
Commercial, financial and agricultural$1,611,029 $1,627,477 
Consumer installment257,097 306,995 
Indirect automobile482,637 580,083 
Mortgage warehouse880,216 916,353 
Municipal659,228 659,403 
Premium finance706,379 687,841 
Real estate – construction and development1,533,234 1,606,710 
Real estate – commercial and farmland5,616,826 5,300,006 
Real estate – residential2,853,159 2,796,057 
 $14,599,805 $14,480,925 
(dollars in thousands)September 30,
2017
 December 31,
2016
Commercial, financial and agricultural$1,307,209
 $967,138
Real estate – construction and development550,189
 363,045
Real estate – commercial and farmland1,558,882
 1,406,219
Real estate – residential969,289
 781,018
Consumer installment183,314
 96,915
Other5,795
 12,486
 $4,574,678
 $3,626,821



PurchasedIncluded in commercial, financial and agricultural 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, 2017March 31, 2021 and December 31, 2016, respectively,2020 above 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 development68,583
 81,368
Real estate – commercial and farmland500,169
 576,355
Real estate – residential264,312
 310,277
Consumer installment3,167
 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
Accretion9,023
 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
The following is a summary of changes in the accretable discounts of purchased loans during the nine months ended September 30, 2017 and 2016:
(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, net923
 2,544
Ending balance$22,509
 $33,296
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$792.0 million and consisted of whole-loan, adjustable rate residential mortgages$827.4 million, respectively, related to the SBA's Paycheck Protection Program (“PPP”). Accrued interest receivable on properties outsideloans is reported in other assets on the Company’s markets, with principal balancesconsolidated balance sheets totaling $459.1$67.8 million and $6.1$73.4 million of remaining purchase premium paid at acquisition. As of DecemberMarch 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, 20172021 and December 31, 2016, one loan in the purchased loan pools with a principal balance2020, respectively. The Company recorded an allowance for credit losses of $915,000$556,000 and $925,000, respectively, was classified as a troubled debt restructuring and risk-rated grade 40, while all other$718,000 related to deferred interest on 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 onmodified under its restructured terms and was placed on nonaccrual status. At September 30, 2017Disaster Relief Program at March 31, 2021 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.2020, respectively.





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 againstto interest income. Interest on loans that are classified as nonaccrual is subsequently applied to principal until the loans are returned to accrual status. Loans areThe Company’s loan policy states that a nonaccrual loan may be returned to accrual status when all the(i) none of its principal and interest amounts contractuallyis due are brought current and future payments are reasonably assured.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, approved by the Company’s Chief Credit Officer. 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.

9


The following table presents an analysis of loans accounted for on a nonaccrual basis, excluding purchased loans:basis:
(dollars in thousands)March 31, 2021December 31, 2020
Commercial, financial and agricultural$9,686 $9,836 
Consumer installment646 709 
Indirect automobile1,530 2,831 
Real estate – construction and development5,421 5,407 
Real estate – commercial and farmland14,046 18,517 
Real estate – residential39,860 39,157 
$71,189 $76,457 
(dollars in thousands)September 30,
2017
 December 31,
2016
Commercial, financial and agricultural$2,409
 $1,814
Real estate – construction and development735
 547
Real estate – commercial and farmland5,705
 8,757
Real estate – residential5,984
 6,401
Consumer installment492
 595
 $15,325
 $18,114

There was 0 interest income recognized on nonaccrual loans during the three months ended March 31, 2021 and 2020.

The following table presents an analysis of purchasednonaccrual loans accountedwith no related allowance for on a nonaccrual basis:credit losses:
(dollars in thousands)March 31, 2021December 31, 2020
Commercial, financial and agricultural$966 $764 
Real estate – construction and development66 416 
Real estate – commercial and farmland3,621 7,015 
Real estate – residential6,842 5,299 
$11,495 $13,494 
(dollars in thousands)September 30,
2017
 December 31,
2016
Commercial, financial and agricultural$2,086
 $692
Real estate – construction and development3,255
 2,611
Real estate – commercial and farmland6,974
 10,174
Real estate – residential6,646
 9,476
Consumer installment88
 13
 $19,049
 $22,966



The following table presents an analysis of past-due loans excluding purchased past-due loans as of September 30, 2017March 31, 2021 and December 31, 2016: 2020:
(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
March 31, 2021       
Commercial, financial and agricultural$5,729 $1,094 $4,922 $11,745 $1,599,284 $1,611,029 $
Consumer installment1,774 1,017 1,128 3,919 253,178 257,097 749 
Indirect automobile1,036 318 971 2,325 480,312 482,637 
Mortgage warehouse880,216 880,216 
Municipal659,228 659,228 
Premium finance4,693 2,833 4,057 11,583 694,796 706,379 4,057 
Real estate – construction and development28,769 1,898 2,621 33,288 1,499,946 1,533,234 291 
Real estate – commercial and farmland9,796 527 8,114 18,437 5,598,389 5,616,826 
Real estate – residential13,307 4,199 35,904 53,410 2,799,749 2,853,159 
Total$65,104 $11,886 $57,717 $134,707 $14,465,098 $14,599,805 $5,097 
10


(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
(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 
  
  
  
  
  
  
December 31, 2020December 31, 2020       
Commercial, financial and agricultural$5,388
 $2,488
 $5,025
 $12,901
 $1,294,308
 $1,307,209
 $2,941
Commercial, financial and agricultural$4,576 $2,018 $5,652 $12,246 $1,615,231 $1,627,477 $
Consumer installmentConsumer installment2,189 1,114 2,318 5,621 301,374 306,995 1,755 
Indirect automobileIndirect automobile3,293 1,006 2,171 6,470 573,613 580,083 
Mortgage warehouseMortgage warehouse916,353 916,353 
MunicipalMunicipal659,403 659,403 
Premium financePremium finance7,188 3,895 6,571 17,654 670,187 687,841 6,571 
Real estate – construction and development341
 52
 517
 910
 549,279
 550,189
 
Real estate – construction and development13,348 723 5,150 19,221 1,587,489 1,606,710 
Real estate – commercial and farmland2,369
 1,097
 5,203
 8,669
 1,550,213
 1,558,882
 
Real estate – commercial and farmland5,370 1,701 8,651 15,722 5,284,284 5,300,006 
Real estate – residential3,293
 1,938
 4,165
 9,396
 959,893
 969,289
 
Real estate – residential20,519 3,125 34,081 57,725 2,738,332 2,796,057 
Consumer installment loans1,034
 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
Total$56,483 $13,582 $64,594 $134,659 $14,346,266 $14,480,925 $8,326 
             
December 31, 2016 
  
  
  
  
  
  
Commercial, financial and agricultural$565
 $82
 $1,293
 $1,940
 $965,198
 $967,138
 $
Real estate – construction and development908
 446
 439
 1,793
 361,252
 363,045
 
Real estate – commercial and farmland6,329
 1,711
 6,945
 14,985
 1,391,234
 1,406,219
 
Real estate – residential6,354
 1,282
 5,302
 12,938
 768,080
 781,018
 
Consumer installment loans624
 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 substantially through the operation or sale of the collateral when the borrower is experiencing financial difficulty. If the Company determines that foreclosure is probable, these loans are written down to the lower of cost or collateral value less estimated costs to sell. When repayment is expected to be from the operation of the collateral, the allowance for credit losses is 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. The Company may, in the alternative, measure the allowance for credit loss as the amount by which the amortized cost basis of the financial asset exceeded the estimated fair value of the collateral.

The following table presents an analysis of purchased past-due loans as of September 30, 2017collateral-dependent financial assets and December 31, 2016: related allowance for credit losses:
March 31, 2021December 31, 2020
(dollars in thousands)BalanceAllowance for Credit LossesBalanceAllowance for Credit Losses
Commercial, financial and agricultural$5,375 $1,777 $5,490 $2,252 
Premium finance1,577 11 3,523 
Real estate – construction and development4,109 619 4,173 512 
Real estate – commercial and farmland93,689 20,378 100,180 21,001 
Real estate – residential12,672 1,579 9,716 891 
$117,422 $24,364 $123,082 $24,656 
 
(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 development1,221
 935
 1,713
 3,869
 64,714
 68,583
 
Real estate – commercial and farmland2,842
 1,318
 1,823
 5,983
 494,186
 500,169
 
Real estate – residential3,308
 440
 3,435
 7,183
 257,129
 264,312
 
Consumer installment loans1
 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 development161
 11
 2,518
 2,690
 78,678
 81,368
 
Real estate – commercial and farmland2,034
 326
 7,152
 9,512
 566,843
 576,355
 
Real estate – residential4,566
 698
 6,835
 12,099
 298,178
 310,277
 
Consumer installment loans22
 
 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 considered impaired when, based on current information and events, it is probable the Company will be unable to collect all amounts due in accordance with the original contractual terms of the loan agreements. Impaired loans include loans on nonaccrual status and accruing troubled debt restructurings. When determining if the Company will be unable to collect all principal and interest payments due in accordance with the contractual terms of the loan agreement, the Company considers the borrower’s capacity to pay, which includes such factors as the borrower’s current financial statements, an analysis of global cash flow sufficient to pay all debt obligations and an evaluation of secondary sources of repayment, such as guarantor support and collateral value. The Company individually assesses for impairment all nonaccrual loans greater than $100,000 and all troubled debt restructurings greater than $100,000 (including all troubled debt restructurings, whether or not currently classified as such). The tables below include all loans deemed impaired, whether or not individually assessed for impairment. If a loan is deemed impaired, a specific valuation allowance is allocated, if necessary, so that the loan is reported net, at the present value of estimated future cash flows using the loan’s existing rate or at the fair value of collateral if repayment is expected solely from the collateral. Interest payments on impaired loans are typically applied to principal unless collectability of the principal amount is reasonably assured, in which case interest is recognized on a cash basis.


The following is a summary of information pertaining to impaired loans, excluding purchased loans: 
 As of and for the Period Ended
(dollars in thousands)September 30,
2017
 December 31,
2016
 September 30,
2016
Nonaccrual loans$15,325
 $18,114
 $16,570
Troubled debt restructurings not included above12,452
 14,209
 14,013
Total impaired loans$27,777
 $32,323
 $30,583
      
Quarter-to-date interest income recognized on impaired loans$297
 $225
 $252
Year-to-date interest income recognized on impaired loans$857
 $1,033
 $808
Quarter-to-date foregone interest income on impaired loans$233
 $267
 $239
Year-to-date foregone interest income on impaired loans$753
 $977
 $710
The following table presents an analysis of information pertaining to impaired loans, excluding purchased 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$2,924
 $1,121
 $1,331
 $2,452
 $379
 $2,478
 $2,380
Real estate – construction and development1,655
 532
 627
 1,159
 81
 1,179
 1,160
Real estate – commercial and farmland11,451
 536
 9,938
 10,474
 806
 10,669
 11,416
Real estate – residential15,211
 4,558
 8,636
 13,194
 1,058
 13,683
 14,814
Consumer installment loans538
 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 development2,047
 
 1,233
 1,233
 273
 1,590
 2,018
Real estate – commercial and farmland13,906
 6,811
 6,065
 12,876
 1,503
 12,948
 12,845
Real estate – residential15,482
 2,238
 13,503
 15,741
 3,080
 15,525
 14,453
Consumer installment loans671
 
 613
 613
 5
 576
 506
Total$35,174
 $9,253
 $23,070
 $32,323
 $4,995
 $32,252
 $31,506
(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
Real estate – construction and development2,972
 
 1,946
 1,946
 537
 2,001
 2,214
Real estate – commercial and farmland14,015
 5,499
 7,520
 13,019
 873
 12,776
 12,837
Real estate – residential14,350
 2,046
 11,667
 13,713
 2,648
 13,686
 13,516
Consumer installment loans586
 
 539
 539
 6
 492
 479
Total$34,491
 $7,797
 $22,786
 $30,583
 $4,182
 $30,691
 $30,686


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 above20,205
 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 development9,268
 1,189
 3,088
 4,277
 537
 3,885
 3,807
Real estate – commercial and farmland16,492
 1,516
 11,766
 13,282
 1,140
 13,658
 16,063
Real estate – residential22,462
 7,224
 12,297
 19,521
 762
 20,088
 21,308
Consumer installment loans97
 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 development24,566
 493
 3,477
 3,970
 153
 3,888
 4,279
Real estate – commercial and farmland36,174
 3,598
 15,036
 18,634
 385
 17,806
 19,872
Real estate – residential27,022
 7,883
 15,306
 23,189
 1,088
 23,201
 23,163
Consumer installment loans37
 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 development24,253
 296
 3,509
 3,805
 184
 3,946
 4,075
Real estate – commercial and farmland41,098
 1,861
 15,116
 16,977
 402
 18,196
 19,569
Real estate – residential26,908
 7,473
 15,740
 23,213
 935
 23,103
 22,893
Consumer installment loans98
 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 152GoodStrong Credit – This grade includes loans that exhibit one or more characteristics better than that of a SatisfactoryGood Credit. Generally, the debt service coverage and borrower’s liquidity is materially better than required by the Company’s loan policy.

Grade 203SatisfactoryGood Credit – This grade is assigned to loans to borrowers who exhibit satisfactory credit histories, contain acceptable loan structures and demonstrate ability to repay.

11


Grade 234Performing, Under-CollateralizedSatisfactory 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 SatisfactoryGood 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 AssetAssets 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 presentstables present the loan portfolio, excluding purchased loans,portfolio's amortized cost by class of financing receivable, risk grade and year of origination (in thousands) as of September 30, 2017March 31, 2021 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 $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
2020. Generally, current period renewals of credit are underwritten again at the point of renewal and considered current period originations for purposes of the tables below. The following table presentsCompany had an immaterial amount of revolving loans which converted to term loans and the purchased loan portfolio byamortized cost basis of those loans is included in the applicable origination year. There were 0 loans risk grade as of September 30, 2017 andgraded 9 at December 31, 2016 (in thousands):       2020.

As of March 31, 2021Term Loans by Origination YearRevolving Loans Amortized Cost Basis
20212020201920182017PriorTotal
Commercial, Financial and Agricultural
Risk Grade:
1$329,750 $483,062 $2,631 $983 $295 $5,290 $63,365 $885,376 
27,799 449 8,991 638 810 976 10,771 30,434 
330,638 69,131 43,563 14,490 17,168 9,080 61,094 245,164 
438,031 74,263 59,189 77,684 30,449 35,375 75,733 390,724 
576 4,191 4,543 4,374 6,345 4,493 6,431 30,453 
612 1,673 470 576 3,847 397 6,978 
7343 3,080 3,790 2,686 4,072 6,361 1,568 21,900 
Total commercial, financial and agricultural$406,640 $634,188 $124,380 $101,325 $59,715 $65,422 $219,359 $1,611,029 
12


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
As of March 31, 2021Term Loans by Origination YearRevolving Loans Amortized Cost Basis
20212020201920182017PriorTotal
Consumer Installment
Risk Grade:
1$1,597 $5,577 $2,625 $1,308 $510 $33 $155 $11,805 
233 58 41 133 
35,983 11,263 5,382 2,045 647 1,921 4,991 32,232 
411,275 87,762 46,500 35,996 14,116 11,715 3,308 210,672 
546 86 12 25 163 332 
6143 158 
7287 525 188 94 581 86 1,761 
9
Total consumer installment$18,855 $104,935 $55,120 $39,591 $15,393 $14,614 $8,589 $257,097 
Indirect Automobile
Risk Grade:
2$$$$75 $29 $6,512 $$6,616 
331,573 162,594 159,571 119,905 473,643 
630 33 101 164 
738 288 354 1,534 2,214 
Total indirect automobile$$$31,611 $162,987 $159,987 $128,052 $$482,637 
Mortgage Warehouse
Risk Grade:
3$$$$$$$880,216 $880,216 
Total mortgage warehouse$$$$$$$880,216 $880,216 
Municipal
Risk Grade:
1$25,045 $91,812 $11,565 $8,540 $141,216 $205,673 $$483,851 
272,903 13,012 85,915 
361,551 682 5,452 12,648 80,333 
46,285 2,844 9,129 
Total municipal$25,045 $232,551 $12,247 $8,540 $146,668 $234,177 $$659,228 
Premium Finance
Risk Grade:
2$351,490 $340,097 $9,738 $257 $638 $100 $$702,320 
73,980 79 4,059 
Total premium finance$351,490 $344,077 $9,817 $257 $638 $100 $$706,379 
13



As of March 31, 2021Term Loans by Origination YearRevolving Loans Amortized Cost Basis
20212020201920182017PriorTotal
Real Estate – Construction and Development
Risk Grade:
2$$62 $$$$$$62 
314,018 42,007 6,565 4,269 3,444 11,263 873 82,439 
4168,849 545,742 362,783 132,341 49,482 35,491 37,990 1,332,678 
5387 2,136 17,825 38,407 13,755 29,389 106 102,005 
6120 892 5,991 598 1,194 8,795 
7143 3,019 482 629 2,982 7,255 
Total real estate – construction and development$183,254 $590,210 $391,084 $181,490 $67,908 $80,319 $38,969 $1,533,234 
Real Estate – Commercial and Farmland
Risk Grade:
1$$$$156 $$$$156 
27,352 380 448 2,094 13,262 17 23,553 
3186,578 928,268 414,458 181,807 248,378 515,131 52,651 2,527,271 
487,859 366,846 563,285 396,659 255,335 671,363 43,474 2,384,821 
51,323 17,020 96,085 71,810 63,286 142,589 4,223 396,336 
610,313 15,984 47,716 38,807 112,823 
77,714 55,005 18,532 13,038 76,935 642 171,866 
Total real estate – commercial and farmland$275,760 $1,327,200 $1,139,526 $685,396 $629,847 $1,458,087 $101,010 $5,616,826 
Real Estate - Residential
Risk Grade:
1$$$$$$17 $$17 
236 388 11 99 42,503 1,313 44,350 
3296,261 731,149 434,948 202,552 154,099 467,379 197,899 2,484,287 
45,768 29,740 17,636 14,464 10,104 61,238 40,174 179,124 
5481 8,581 28,055 9,476 9,202 28,452 3,523 87,770 
649 418 951 881 367 3,520 107 6,293 
7789 3,385 10,435 13,031 4,406 16,630 2,642 51,318 
Total real estate - residential$303,348 $773,309 $492,413 $240,415 $178,277 $619,739 $245,658 $2,853,159 

14



As of December 31, 2020Term Loans by Origination YearRevolving Loans Amortized Cost Basis
20202019201820172016PriorTotal
Commercial, Financial and Agricultural
Risk Grade:
1$829,710 $2,912 $1,055 $387 $490 $4,961 $36,373 $875,888 
21,213 1,512 668 996 172 967 14,317 19,845 
3109,352 54,266 16,932 17,968 7,027 3,905 68,806 278,256 
486,837 71,645 74,388 37,779 15,359 23,069 85,366 394,443 
54,061 4,269 4,772 7,443 804 5,842 4,352 31,543 
621 72 506 193 3,509 1,232 632 6,165 
73,312 3,460 2,579 3,573 1,294 5,214 1,886 21,318 
819 19 
Total commercial, financial and agricultural$1,034,506 $138,136 $100,900 $68,339 $28,655 $45,190 $211,751 $1,627,477 
Consumer Installment
Risk Grade:
1$6,782 $3,001 $1,550 $583 $95 $$667 $12,679 
246 63 42 153 
315,172 6,960 2,838 887 1,455 601 4,389 32,302 
4120,800 53,593 53,182 16,329 3,121 9,437 3,556 260,018 
549 127 28 30 242 487 
6145 156 
730 209 72 105 134 553 97 1,200 
Total consumer installment$142,833 $63,892 $57,725 $17,936 $4,808 $11,042 $8,759 $306,995 
Indirect Automobile
Risk Grade:
2$$$81 $31 $5,356 $3,054 $$8,522 
335,432 187,656 188,302 103,570 52,781 567,741 
657 70 62 85 274 
7163 519 561 1,078 1,225 3,546 
Total indirect automobile$$35,595 $188,313 $188,964 $110,066 $57,145 $$580,083 
Mortgage Warehouse
Risk Grade:
3$$$$$$$916,353 $916,353 
Total mortgage warehouse$$$$$$$916,353 $916,353 
Municipal
Risk Grade:
1$91,692 $12,685 $8,944 $143,741 $124,929 $97,923 $$479,914 
273,000 9,410 82,410 
339,990 713 5,453 7,204 5,489 58,849 
431,394 6,836 38,230 
Total municipal$236,076 $13,398 $8,944 $149,194 $141,543 $110,248 $$659,403 
15


As of December 31, 2020Term Loans by Origination YearRevolving Loans Amortized Cost Basis
20202019201820172016PriorTotal
Premium Finance
Risk Grade:
2$661,614 $18,236 $515 $746 $121 $38 $$681,270 
75,811 760 6,571 
Total premium finance$667,425 $18,996 $515 $746 $121 $38 $$687,841 
Real Estate – Construction and Development
Risk Grade:
3$59,325 $7,035 $6,870 $8,046 $3,415 $6,916 $1,293 $92,900 
4605,254 445,496 205,444 50,181 14,672 26,915 68,574 1,416,536 
51,614 26,720 9,612 13,261 17,712 10,127 107 79,153 
6685 1,036 3,646 1,302 4,564 11,233 
715 2,858 566 271 42 3,136 6,888 
Total real estate – construction and development$666,893 $483,145 $226,138 $73,061 $35,841 $51,658 $69,974 $1,606,710 
Real Estate – Commercial and Farmland
Risk Grade:
1$$$161 $$$$$161 
27,482 540 521 2,131 4,375 10,663 1,138 26,850 
3918,939 370,703 143,591 197,942 224,712 274,665 67,067 2,197,619 
4344,777 584,814 423,241 331,024 242,573 545,745 34,326 2,506,500 
54,027 39,216 69,173 80,726 25,561 94,461 1,274 314,438 
610,680 4,895 28,139 7,670 31,224 82,608 
7250 54,439 18,574 15,489 27,044 55,763 271 171,830 
Total real estate – commercial and farmland$1,275,475 $1,060,392 $660,156 $655,451 $531,935 $1,012,521 $104,076 $5,300,006 
Real Estate - Residential
Risk Grade:
1$$$$$$19 $$19 
237 398 12 121 1,275 47,286 1,402 50,531 
3763,101 529,268 254,632 186,531 154,285 388,825 203,491 2,480,133 
419,296 19,874 15,784 11,607 14,240 53,869 44,276 178,946 
5400 1,768 3,489 3,479 1,151 12,824 3,618 26,729 
6527 1,843 1,030 334 724 3,391 255 8,104 
73,442 9,387 12,339 4,667 2,157 16,659 2,944 51,595 
Total real estate - residential$786,803 $562,538 $287,286 $206,739 $173,832 $522,873 $255,986 $2,796,057 

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.
16


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 ninethree months of 20172021 and 20162020 totaling $36.6$118.0 million and $58.2$71.3 million, respectively, under such parameters.
 
As of September 30, 2017March 31, 2021 and December 31, 2016,2020, the Company had a balance of $14.2$87.1 million and $18.2$85.0 million, respectively, in troubled debt restructurings, excluding purchased loans.restructurings. The Company has recorded $2.8$1.2 million and $1.2 million in previous charge-offs on such loans at September 30, 2017March 31, 2021 and December 31, 2016,2020, respectively. The Company’s balance in the allowance for loancredit losses allocated to such troubled debt restructurings was $1.2$14.2 million and $3.1$13.0 million at September 30, 2017March 31, 2021 and December 31, 2016,2020, respectively. At September 30, 2017,March 31, 2021, the Company did not have any commitments to lend additional funds to debtors whose terms have been modified in troubled restructurings.
 
During the ninethree months ended September 30, 2017March 31, 2021 and 2016,2020, the Company modified loans as troubled debt restructurings excluding purchased loans, with principal balances of $783,000$8.7 million and $2.9$1.0 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 ninethree months ended September 30, 2017March 31, 2021 and 2016:2020: 

September 30, 2017 September 30, 2016 March 31, 2021March 31, 2020
Loan Class# 
Balance
(in thousands)
 # 
Balance
(in thousands)
Loan Class#
Balance
(in thousands)
#
Balance
(in thousands)
Commercial, financial and agricultural1 $4
 5 $59
Commercial, financial and agricultural4$463 0$
Real estate – construction and development 
 2 251
Consumer installmentConsumer installment01
Real estate – commercial and farmland2 226
 4 1,658
Real estate – commercial and farmland27,658 164 
Real estate – residential10 526
 7 887
Real estate – residential5572 8903 
Consumer installment6 27
 9 44
Total19 $783
 27 $2,899
Total11$8,693 10$976 



Troubled debt restructurings excluding purchased loans, with an outstanding balance of $1.2$6.2 million and $793,000$3.0 million defaulted during the ninethree months ended September 30, 2017March 31, 2021 and 2016,2020, 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 ninethree months ended September 30, 2017March 31, 2021 and 2016:2020: 

September 30, 2017 September 30, 2016 March 31, 2021March 31, 2020
Loan Class# 
Balance
(in thousands)
 # 
Balance
(in thousands)
Loan Class#
Balance
(in thousands)
#
Balance
(in thousands)
Commercial, financial and agricultural4 $58
 5 $51
Commercial, financial and agricultural3$56 1$200 
Consumer installmentConsumer installment50
Indirect automobileIndirect automobile1694 0
Real estate – construction and development1 25
  
Real estate – construction and development12287 
Real estate – commercial and farmland4 200
 5 517
Real estate – commercial and farmland25,193 2681 
Real estate – residential12 878
 3 219
Real estate – residential11809 191,800 
Consumer installment7 25
 2 6
Total28 $1,186
 15 $793
Total38$6,159 24$2,968 
 
17


The following table presents the amount of troubled debt restructurings by loan class excluding purchased loans, classified separately as accrual and nonaccrual at September 30, 2017March 31, 2021 and December 31, 2016:2020: 

March 31, 2021March 31, 2021Accruing LoansNon-Accruing Loans
Loan ClassLoan Class#
Balance
(in thousands)
#
Balance
(in thousands)
Commercial, financial and agriculturalCommercial, financial and agricultural10$930 12$854 
Consumer installmentConsumer installment827 2253 
Indirect automobileIndirect automobile3851,931 47321 
September 30, 2017Accruing Loans Non-Accruing Loans
Loan Class# 
Balance
(in thousands)
 # 
Balance
(in thousands)
Commercial, financial and agricultural4 $44
 13 $129
Real estate – construction and development7 424
 2 34
Real estate – construction and development4501 5706 
Real estate – commercial and farmland16 4,769
 5 210
Real estate – commercial and farmland2743,398 102,233 
Real estate – residential78 7,209
 16 1,212
Real estate – residential24833,324 362,818 
Consumer installment4 6
 36 130
Total109 $12,452
 72 $1,715
Total682$80,111 132$6,985 

December 31, 2020December 31, 2020Accruing LoansNon-Accruing Loans
Loan ClassLoan Class#
Balance
(in thousands)
#
Balance
(in thousands)
Commercial, financial and agriculturalCommercial, financial and agricultural9$521 11$849 
Consumer installmentConsumer installment1032 2056 
Indirect automobileIndirect automobile4372,277 51461 
December 31, 2016Accruing Loans Non-Accruing Loans
Loan Class# 
Balance
(in thousands)
 # 
Balance
(in thousands)
Commercial, financial and agricultural4 $47
 15 $114
Real estate – construction and development8 686
 2 34
Real estate – construction and development4506 5707 
Real estate – commercial and farmland16 4,119
 5 2,970
Real estate – commercial and farmland2836,707 71,401 
Real estate – residential82 9,340
 15 739
Real estate – residential26438,800 342,671 
Consumer installment7 17
 32 130
Total117 $14,209
 69 $3,987
Total752$78,843 128$6,145 
 
As of September 30, 2017 and December 31, 2016,COVID-19 Deferrals

In response to the COVID-19 pandemic, the Company had a balanceoffered affected borrowers payment relief under its Disaster Relief Program. These modifications primarily consisted of $26.0 million and $28.1 million, respectively, in troubled debt restructurings included in purchased loans.short-term payment deferrals or interest-only periods to assist customers. The Company has recorded $1.5also provided payment modifications to certain borrowers in economically sensitive industries of various terms up to nine months. Modifications related to the COVID-19 pandemic and qualifying under the provisions of Section 4013 of the CARES Act are not deemed to be troubled debt restructurings. As of March 31, 2021, $235.4 million in previous charge-offs on such loans remained in payment deferral related to COVID-19 pandemic Disaster Relief Program compared with $332.8 million 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.2020.
During the nine months ended September 30, 2017 and 2016, the Company modified purchased loans as 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: 
 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 – residential8 1,005
 8 1,130
Consumer installment 
  
Total8 $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 classshort-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.
March 31, 2021December 31, 2020
(dollars in thousands)COVID-19 DeferralsDeferrals as a % of total loansCOVID-19 DeferralsDeferrals as a % of total loans
Commercial, financial and agricultural$4,460 0.3 %$12,471 0.8 %
Consumer installment569 0.2 %1,418 0.5 %
Indirect automobile3,536 0.7 %8,936 1.5 %
Real estate – construction and development418 %11,049 0.7 %
Real estate – commercial and farmland152,337 2.7 %179,183 3.4 %
Real estate – residential74,101 2.6 %119,722 4.3 %
$235,421 1.6 %$332,779 2.3 %
 September 30, 2017 September 30, 2016
Loan Class# 
Balance
(in thousands)
 # 
Balance
(in thousands)
Commercial, financial and agricultural1 $5
 2 $76
Real estate – construction and development 
 1 10
Real estate – commercial and farmland5 1,945
 1 207
Real estate – residential7 333
 11 440
Consumer installment1 3
  
Total14 $2,286
 15 $733
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, 2017Accruing Loans Non-Accruing Loans
Loan Class# 
Balance
(in thousands)
 # 
Balance
(in thousands)
Commercial, financial and agricultural $
 3 $18
Real estate – construction and development3 1,022
 6 349
Real estate – commercial and farmland15 6,308
 11 3,834
Real estate – residential119 12,875
 25 1,627
Consumer installment 
 2 6
Total137 $20,205
 47 $5,834
December 31, 2016Accruing Loans Non-Accruing Loans
Loan Class# 
Balance
(in thousands)
 # 
Balance
(in thousands)
Commercial, financial and agricultural1 $1
 4 $91
Real estate – construction and development6 1,358
 3 30
Real estate – commercial and farmland20 8,460
 5 2,402
Real estate – residential123 13,713
 33 2,077
Consumer installment3 11
 1 
Total153 $23,543
 46 $4,600

Allowance for LoanCredit Losses
 
The allowance for loancredit losses represents an allowance for probable incurredexpected losses inover the loan portfolio. The adequacyremaining contractual life of the allowance for loan losses is evaluated periodically based onassets. 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-offcharged off in accordance with the Federal Financial Institutions Examination Council’s (“FFIEC”) Uniform Retail Credit Classification and Account Management Policy.
18


Commercial loans are charged-offcharged 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-offcharged 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-offcharged 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 months ended March 31, 2021, the allowance for credit losses decreased primarily due to improvement in forecasted macroeconomic factors. The allowance for credit losses was determined at March 31, 2021 using the Moody's baseline economic forecast, which Moody's defines as having a 50% probability the economy will perform better than the baseline projection and the same probability it will perform worse. The current forecast reflects, among other things, improvements in forecast levels of unemployment, home prices and commercial real estate prices compared with the forecast at December 31, 2020.

The following tables detail activity and end of period balances in the allowance for loancredit losses by portfolio segment for the three and nine-month periods ended September 30, 2017, the year ended December 31, 2016 and the three and nine-month periods ended September 30, 2016.indicated. 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 March 31, 2021
(dollars in thousands)Commercial,
Financial and
Agricultural
Consumer
Installment
Indirect AutomobileMortgage WarehouseMunicipalPremium Finance
Balance, December 31, 2020$7,359 $4,076 $1,929 $3,666 $791 $3,879 
Provision for loan losses2,575 5,806 (528)(145)(1)442 
Loans charged off(2,370)(1,448)(829)(1,343)
Recoveries of loans previously charged off727 356 700 1,122 
Balance, March 31, 2021$8,291 $8,790 $1,272 $3,521 $790 $4,100 
Real Estate – Construction and DevelopmentReal Estate –
Commercial and
Farmland
Real Estate –
Residential
Total
Balance, December 31, 2020$45,304 $88,894 $43,524 $199,422 
Provision for loan losses(22,587)3,671 (5,812)(16,579)
Loans charged off(26)(1,395)(163)(7,574)
Recoveries of loans previously charged off167 41 188 3,301 
Balance, March 31, 2021$22,858 $91,211 $37,737 $178,570 

Three Months Ended March 31, 2020
(dollars in thousands)Commercial,
Financial and
Agricultural
Consumer
Installment
Indirect AutomobileMortgage WarehouseMunicipalPremium Finance
Balance, December 31, 2019$4,567 $3,784 $$640 $484 $2,550 
Adjustment to allowance for adoption of ASU 2016-132,587 8,012 4,109 463 (92)4,471 
Provision for loan losses3,080 4,149 564 (1)130 4,634 
Loans charged off(2,486)(1,142)(1,231)(831)
Recoveries of loans previously charged off362 321 344 684 
Balance, March 31, 2020$8,110 $15,124 $3,786 $1,102 $522 $11,508 
Real Estate – Construction and DevelopmentReal 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 2016-1312,248 27,073 19,790 78,661 
Provision for loan losses6,734 15,858 1,899 37,047 
Loans charged off(928)(100)(6,718)
Recoveries of loans previously charged off342 85 207 2,345 
Balance, March 31, 2020$25,319 $51,754 $32,299 $149,524 
19


(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 losses910
 (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 off409
 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 losses2,535
 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 off699
 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 impairment3,021
 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 impairment1,304,005
 549,562
 1,548,370
 960,653
 189,109
 763,271
 464,303
 5,779,273
Acquired with deteriorated credit quality
 
 
 
 
 121,823
 
 121,823
Ending balance$1,307,209
 $550,189
 $1,558,882
 $969,289
 $189,109
 $917,126
 $465,218
 $5,957,022


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


(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
Twelve Months Ended
December 31, 2016
 
  
  
  
  
  
  
  
Balance, January 1, 2016$1,144
 $5,009
 $7,994
 $4,760
 $1,574
 $
 $581
 $21,062
Provision for loan losses2,647
 (1,921) 107
 2,757
 (523) (232) 1,256
 4,091
Loans charged off(1,999) (588) (708) (1,122) (351) (1,559) 
 (6,327)
Recoveries of loans previously charged off400
 490
 269
 391
 127
 3,417
 
 5,094
Balance, December 31, 2016$2,192
 $2,990
 $7,662
 $6,786
 $827
 $1,626
 $1,837
 $23,920
                
Period-end allocation: 
  
  
  
  
  
  
  
Loans individually evaluated for impairment (1)
$120
 $266
 $1,502
 $2,893
 $
 $1,626
 $
 $6,407
Loans collectively evaluated for impairment2,072
 2,724
 6,160
 3,893
 827
 
 1,837
 17,513
Ending balance$2,192
 $2,990
 $7,662
 $6,786
 $827
 $1,626
 $1,837
 $23,920
                
Loans: 
  
  
  
  
  
  
  
Individually evaluated for impairment (1)
$501
 $659
 $12,423
 $12,697
 $
 $34,141
 $
 $60,421
Collectively evaluated for impairment966,637
 362,386
 1,393,796
 768,321
 109,401
 886,516
 568,314
 5,055,371
Acquired with deteriorated credit quality
 
��
 
 
 148,534
 
 148,534
Ending balance$967,138
 $363,045
 $1,406,219
 $781,018
 $109,401
 $1,069,191
 $568,314
 $5,264,326
(1) At December 31, 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.


(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 losses677
 (521) (554) 2,649
 (1,595) (654) 809
 811
Loans charged off(326) (60) 
 (292) (74) (699) 
 (1,451)
Recoveries of loans previously charged off119
 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 losses1,987
 (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 off279
 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 impairment2,030
 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 impairment625,523
 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.1October 23, 2009
United Security Bank (“USB”)Sparta, Ga.2November 6, 2009
Satilla Community Bank (“SCB”)St. Marys, Ga.1May 14, 2010
First Bank of Jacksonville (“FBJ”)Jacksonville, Fl.2October 22, 2010
Tifton Banking Company (“TBC”)Tifton, Ga.1November 12, 2010
Darby Bank & Trust (“DBT”)Vidalia, Ga.7November 12, 2010
High Trust Bank (“HTB”)Stockbridge, Ga.2July 15, 2011
One Georgia Bank (“OGB”)Midtown Atlanta, Ga.1July 15, 2011
Central Bank of Georgia (“CBG”)Ellaville, Ga.5February 24, 2012
Montgomery Bank & Trust (“MBT”)Ailey, Ga.2July 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$
 $
 $
 $
 $
 $
 $
 $
USB2,763
 12
 2,751
 
 
 
 2,751
 (1,752)
SCB2,541
 27
 2,514
 
 
 
 2,514
 (169)
FBJ3,647
 394
 3,253
 
 
 
 3,253
 (312)
DBT9,663
 356
 9,307
 81
 
 81
 9,388
 (4,442)
TBC1,667
 
 1,667
 
 
 
 1,667
 (8)
HTB1,856
 28
 1,828
 
 
 
 1,828
 27
OGB930
 31
 899
 
 
 
 899
 (1,032)
CBG10,329
 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)
USB3,199
 13
 3,186
 51
 
 51
 3,237
 (1,642)
SCB4,019
 51
 3,968
 
 
 
 3,968
 (32)
FBJ3,767
 452
 3,315
 
 
 
 3,315
 (234)
DBT12,166
 565
 11,601
 
 
 
 11,601
 (4,591)
TBC1,679
 
 1,679
 
 
 
 1,679
 (33)
HTB1,913
 33
 1,880
 
 
 
 1,880
 734
OGB1,077
 32
 1,045
 
 
 
 1,045
 (993)
CBG33,449
 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 owned4,043
 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 owned4,294
 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 agreements76
 
Net gains (losses) on sale and write-downs recorded in statement of income265
 (568)
Sales proceeds(7,229) (11,750)
Ending balance$9,946
 $15,126
NOTE 74 – 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 securities underlying these agreements are included in investment securities in the Company’s consolidated balance sheets. At September 30, 2017March 31, 2021 and December 31, 2016,2020, 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 below the repurchase agreement price. The Company maintains an unpledged securities portfolio that it believes is sufficient to protect against a decline in the market value of the securities sold under agreements to repurchase.
 
The following is a summary of the Company’s securities sold under agreements to repurchase at September 30, 2017March 31, 2021 and December 31, 2016.    
2020:
(dollars in thousands)September 30,
2017
 December 31, 2016(dollars in thousands)March 31, 2021December 31, 2020
Securities sold under agreements to repurchase$14,156
 $53,505
Securities sold under agreements to repurchase$9,320 $11,641 
 
At September 30, 2017March 31, 2021 and December 31, 2016,2020 the investment securities underlying these agreements were comprised of state, county and municipal securities and mortgage-backed securities.

NOTE 85 – 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)March 31, 2021December 31, 2020
FHLB borrowings:  
Fixed Rate Advance due March 3, 2025; fixed interest rate of 1.208%$15,000 $15,000 
Fixed Rate Advance due March 2, 2027; fixed interest rate of 1.445%15,000 15,000 
Fixed Rate Advance due March 4, 2030; fixed interest rate of 1.606%15,000 15,000 
Fixed Rate Advance due December 9, 2030; fixed interest rate of 4.55%1,408 1,411 
Fixed Rate Advance due December 9, 2030; fixed interest rate of 4.55%975 977 
Principal Reducing Advance due September 29, 2031; fixed interest rate of 3.095%1,531 1,567 
Subordinated notes payable:  
Subordinated notes payable due March 15, 2027 net of unamortized debt issuance cost of $780 and $812, respectively; fixed interest rate of 5.75% through March 14, 2022; variable interest rate thereafter at three-month LIBOR plus 3.616%74,220 74,188 
Subordinated notes payable due December 15, 2029 net of unamortized debt issuance cost of $2,105 and $2,165, respectively; fixed interest rate of 4.25% through December 14, 2024; variable interest rate thereafter at three-month SOFR plus 2.94%117,895 117,835 
Subordinated notes payable due May 31, 2030 net of unaccreted purchase accounting fair value adjustment of $1,119 and $1,150, respectively; fixed interest rate of 5.875% through May 31, 2025; variable interest rate thereafter at three-month LIBOR plus 3.63%76,119 76,150 
Subordinated notes payable due October 1, 2030 net of unamortized debt issuance cost of $1,917 and $1,973, respectively; fixed interest rate of 3.875% through September 30, 2025; variable interest rate thereafter at three-month SOFR plus 3.753%108,083 108,027 
$425,231 $425,155 
(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

The advances from the FHLB are collateralized by a blanket lien on all eligible first mortgage loans and other specific loans in addition to FHLB stock. At September 30, 2017, $347.4 millionMarch 31, 2021, $3.55 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 30, 2017,March 31, 2021, the CompanyBank maintained credit arrangements with various financial institutions to purchase federal funds up to $82.0$127.0 million.

The CompanyBank also participates in the Federal Reserve discount window borrowings program. At September 30, 2017,March 31, 2021, the Company had $1.04$3.04 billion of loans pledged at the Federal Reserve discount window and had $678.1 million$2.05 billion available for borrowing.


Subordinated Notes Payable
20



On March 13, 2017,NOTE 6 – ACCUMULATED OTHER COMPREHENSIVE INCOME
Accumulated other comprehensive income for the Company completed the public offeringconsists of changes in net unrealized gains and sale of $75.0 million in aggregate principal amount of its 5.75% Fixed-To-Floating Rate Subordinated Notes due 2027 (the “subordinated notes”). The subordinated notes were sold to the public at par pursuant to an underwriting agreement and were issued pursuant to an indenture and a supplemental indenture. The subordinated notes will maturelosses on March 15, 2027 and through March 14, 2022 will bear a fixed rate of interest of 5.75% per annum, payable semi-annually in arrears on September 15 and March 15 of each year. Beginning March 15, 2022, the interest rate on the subordinated notes resets quarterly to a floating rate per annum equal to the then-current three-month LIBOR plus 3.616%, payable quarterly in arrears on June 15, September 15, December 15, and March 15 of each year to the maturity date or earlier redemption.
On any scheduled interest payment date beginning March 15, 2022, the Company may, at its option, redeem the subordinated notes, in whole or in part, at a redemption price equal to 100% of the principal amount plus accrued and unpaid interest.
The subordinated notes are unsecured and rank equally with all other unsecured subordinated indebtedness of the Company, including any subordinated indebtedness issued in the future under the indenture governing the subordinated notes. The subordinated notes are subordinated in right of payment to all senior indebtedness of the Company. The subordinated notes are obligations of the Company only and are not guaranteed by any subsidiaries, including the Bank. Additionally, the subordinated notes are structurally subordinated to all existing and future indebtedness and other liabilities of the Company’s subsidiaries, meaning that creditors of the Company’s subsidiaries (including, in the case of the Bank, its depositors) generally will be paid from those subsidiaries’ assets before holders of the subordinated notes have any claim to those assets.


For regulatory capital adequacy purposes, the subordinated notes qualify as Tier 2 capitalinvestment 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 riskswap derivatives. The reclassification for gains included in excess of the amount recognizednet income is recorded in net 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 isaccumulated other comprehensive income balances, net of tax, as follows:of March 31, 2021 and 2020:
(dollars in thousands)
Unrealized
Gain (Loss)
on Derivatives
Unrealized
Gain (Loss)
on Securities
Accumulated
Other Comprehensive
Income (Loss)
Balance, January 1, 2021$$33,505 $33,505 
Reclassification for gains included in net income, net of tax
Current year changes, net of tax(7,415)(7,415)
Balance, March 31, 2021$$26,090 $26,090 
(dollars in thousands)September 30,
2017
 December 31,
2016
Commitments to extend credit$1,096,702
 $1,101,257
Unused home equity lines of credit63,951
 62,586
Financial standby letters of credit13,192
 14,257
Mortgage interest rate lock commitments113,056
 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, 2020$(147)$18,142 $17,995 
Reclassification for gains included in net income, net of tax
Current year changes, net of tax(97)21,653 21,556 
Balance, March 31, 2020$(244)$39,795 $39,551 
 
Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. These commitments, predominantly at variable interest rates, generally have fixed expiration dates of one year or less or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation of the customer.
Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers. Collateral is required in instances which the Company deems necessary.
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 127 – 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
March 31,
(share data in thousands)2017 2016 2017 2016(share data in thousands)20212020
Average common shares outstanding37,225
 34,870
 36,690
 34,156
Average common shares outstanding69,392 69,248 
Common share equivalents: 
  
  
  
Common share equivalents:  
Stock options70
 108
 70
 100
Stock options81 93 
Nonvested restricted share grants258
 217
 257
 214
Nonvested restricted share grants172 161 
Performance stock unitsPerformance stock units96 
Average common shares outstanding, assuming dilution37,553
 35,195
 37,017
 34,470
Average common shares outstanding, assuming dilution69,741 69,502 
 
For the three and nine-monththree-month periods ended September 30, 2017March 31, 2021 and 2016,2020, there were no potential0 outstanding options exerciseable for common shares with strike prices that would cause themthe underlying shares to be anti-dilutive.
 
NOTE 8 – 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.
21


The Company's loans held for sale under the fair value option are comprised of the following:
(dollars in thousands)March 31, 2021December 31, 2020
Mortgage loans held for sale$1,505,121 $998,050 
SBA loans held for sale4,407 3,757 
Total loans held for sale$1,509,528 $1,001,807 
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 loss of $25.1 million and a net gain of $15.1 million resulting from fair value changes of these mortgage loans were recorded in income during the three months ended March 31, 2021 and 2020, respectively. A net gain of $27.5 million and net loss of $2.6 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 three months ended March 31, 2021 and 2020, 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 March 31, 2021 and December 31, 2020:
(dollars in thousands) 
March 31, 2021December 31, 2020
Aggregate fair value of mortgage loans held for sale$1,505,121 $998,050 
Aggregate unpaid principal balance of mortgage loans held for sale1,479,606 947,460 
Past-due loans of 90 days or more
Nonaccrual loans
Unpaid principal balance of nonaccrual loans
The following table summarizes the difference between the fair value and the principal balance for SBA loans held for sale measured at fair value as of March 31, 2021 and December 31, 2020:
(dollars in thousands) 
March 31, 2021December 31, 2020
Aggregate fair value of SBA loans held for sale$4,407 $3,757 
Aggregate unpaid principal balance of SBA loans held for sale3,849 3,393 
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 loans, loan servicing rights and OREO. Additionally, the Company is required to disclose, but not record, the fair value of other financial instruments.
22


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 March 31, 2021 and December 31, 2020:
Recurring Basis
Fair Value Measurements
 March 31, 2021
(dollars in thousands) 
Fair ValueLevel 1Level 2Level 3
Financial assets:    
U.S. government sponsored agencies$12,394 $$12,394 $
State, county and municipal securities62,985 62,985 
Corporate debt securities46,747 45,577 1,170 
SBA pool securities55,691 55,691 
Mortgage-backed securities681,835 681,835 
Loans held for sale1,509,528 1,509,528 
Mortgage banking derivative instruments62,870 62,870 
Total recurring assets at fair value$2,432,050 $$2,430,880 $1,170 

Recurring Basis
Fair Value Measurements
 December 31, 2020
(dollars in thousands)Fair ValueLevel 1Level 2Level 3
Financial assets:    
U.S. government sponsored agencies$17,504 $$17,504 $
State, county and municipal securities66,778 66,778 
Corporate debt securities51,896 50,726 1,170 
SBA pool securities62,497 62,497 
Mortgage-backed securities784,204 784,204 
Loans held for sale1,001,807 1,001,807 
Mortgage banking derivative instruments51,756 51,756 
Total recurring assets at fair value$2,036,442 $$2,035,272 $1,170 
Financial liabilities:    
Mortgage banking derivative instruments$16,415 $$16,415 $
Total recurring liabilities at fair value$16,415 $$16,415 $
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 March 31, 2021 and December 31, 2020:
 Nonrecurring Basis
Fair Value Measurements
(dollars in thousands)Fair ValueLevel 1Level 2Level 3
March 31, 2021    
Collateral-dependent loans$93,058 $$$93,058 
Other real estate owned299 299 
Mortgage servicing rights154,746 154,746 
Total nonrecurring assets at fair value$248,103 $$$248,103 
December 31, 2020    
Collateral-dependent loans$98,426 $$$98,426 
Other real estate owned4,964 4,964 
Mortgage servicing rights130,630 130,630 
SBA servicing rights5,839 5,839 
Total nonrecurring assets at fair value$239,859 $$5,839 $234,020 
The inputs used to determine estimated fair value of collateral-dependent loans include market conditions, loan term, 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 three months ended March 31, 2021 and the year ended December 31, 2020, there was not a change in the methods and significant assumptions used to estimate fair value.
23


The following table shows significant unobservable inputs used in the fair value measurement of Level 3 assets:
(dollars in thousands)Fair ValueValuation
Technique
Unobservable InputsRange of
Discounts
Weighted
Average
Discount
March 31, 2021     
Recurring:     
Investment securities available for sale$1,170 Discounted par valuesProbability of default17.1%17.1%
Loss given default39%39%
Nonrecurring:     
Collateral-dependent loans$93,058 Third-party appraisals and discounted cash flowsCollateral discounts and
discount rates
20% - 57%44%
Other real estate owned$299 Third-party appraisals and sales contractsCollateral discounts and estimated
costs to sell
15% - 36%27%
Mortgage servicing rights$154,746 Discounted cash flowsDiscount rate9% - 10%9%
Prepayment speed11% - 38%13%
December 31, 2020     
Recurring:     
Investment securities available for sale$1,170 Discounted par valuesProbability of default18.8%18.8%
Loss given default40%40%
Nonrecurring:    
Collateral-dependent loans$98,426 Third-party appraisals and discounted cash flowsCollateral discounts and
discount rates
20% - 90%44%
Other real estate owned$4,964 Third-party appraisals and sales contractsCollateral discounts and estimated
costs to sell
15% - 59%28%
Mortgage servicing rights$130,630 Discounted cash flowsDiscount rate9% - 12%10%
Prepayment speed14% - 37%19%

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
  March 31, 2021
(dollars in thousands)Carrying
Amount
Level 1Level 2Level 3Total
Financial assets:     
Cash and due from banks$224,159 $224,159 $$$224,159 
Federal funds sold and interest-bearing accounts2,534,969 2,534,969 2,534,969 
Time deposits in other banks249 249 249 
Loans, net14,328,177 14,339,254 14,339,254 
Accrued interest receivable70,697 3,469 67,228 70,697 
Financial liabilities:     
Deposits17,875,873 17,870,613 17,870,613 
Securities sold under agreements to repurchase9,320 9,320 9,320 
Other borrowings425,231 429,650 429,650 
Subordinated deferrable interest debentures124,833 117,285 117,285 
Accrued interest payable7,126 7,126 7,126 

24


Fair Value Measurements
  December 31, 2020
(dollars in thousands)Carrying
Amount
Level 1Level 2Level 3Total
Financial assets:     
Cash and due from banks$203,349 $203,349 $$$203,349 
Federal funds sold and interest-bearing accounts1,913,957 1,913,957 1,913,957 
Time deposits in other banks249 249 249 
Loans, net14,183,077 14,096,711 14,096,711 
Accrued interest receivable76,254 3,567 72,687 76,254 
Financial liabilities:     
Deposits16,957,823 16,968,606 16,968,606 
Securities sold under agreements to repurchase11,641 11,641 11,641 
Other borrowings425,155 431,783 431,783 
Subordinated deferrable interest debentures124,345 116,280 116,280 
Accrued interest payable5,487 5,487 5,487 

NOTE 139FAIR VALUE MEASURESCOMMITMENTS AND CONTINGENCIES

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.Loan Commitments
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 sale5,191
 
Total loans held for sale$137,392
 $105,924

The Company has electedis 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 resultsfinancial 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 statementsnormal course of income and comprehensive income underbusiness 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 balance126,503
 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 valuefinancing needs of its assets and liabilities recorded at fair value and for estimating the fair value of itscustomers. 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 risk and interest rate risk in excess of the amount recognized in the Company’s balance sheets.

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

(dollars in thousands)March 31, 2021December 31, 2020
Commitments to extend credit$3,193,867 $2,826,719 
Unused home equity lines of credit257,967 259,015 
Financial standby letters of credit31,359 33,613 
Mortgage interest rate lock commitments1,033,336 1,199,939 

Commitments to extend credit are typically made usingagreements 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 have short maturities,may require payment of a fee. Since many of the carrying valuecommitments 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 fair value are immaterial for disclosure.
Derivatives: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 derivativenot been required to perform on any material financial instruments to manage interest rate risk. The valuationstandby 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 considerednot 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.


The following table presents the fair value measurements of assets and liabilities measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall as of September 30, 2017 and December 31, 2016:
 
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 securities143,387
 
 143,387
 
Corporate debt securities47,249
 
 45,749
 1,500
Mortgage-backed securities627,953
 
 627,953
 
Loans held for sale137,392
 
 137,392
 
Mortgage banking derivative instruments3,836
 
 3,836
 
Total recurring assets at fair value$960,821
 $
 $959,321
 $1,500
Financial liabilities: 
  
  
  
Derivative financial instruments$723
 $
 $723
 $
Mortgage banking derivative instruments237
 
 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 securities152,035
 
 152,035
 
Corporate debt securities32,172
 
 30,672
 1,500
Mortgage-backed securities637,508
 
 637,508
 
Loans held for sale105,924
 
 105,924
 
Mortgage banking derivative instruments4,314
 
 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
 $
The following table presents the fair value measurements of assets measured at fair value on a non-recurring basis, as well as the general classification of such instruments pursuant to the valuation hierarchy as of September 30, 2017 and December 31, 2016:
 
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 owned435
 
 
 435
Purchased other real estate owned9,946
 
 
 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 owned1,172
 
 
 1,172
Purchased other real estate owned12,540
 
 
 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 ninethree months ended September 30, 2017March 31, 2021 and the year ended December 31, 2016, there was not a change2020.

25


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 usedpresents activity in the fair value measurementallowance for unfunded commitments for the periods presented:
Three Months Ended March 31,
(dollars in thousands)20212020
Balance at beginning of period$32,854 $1,077 
Adjustment to reflect adoption of ASU 2016-1312,714 
Provision for unfunded commitments(11,839)4,000 
Balance at end of period$21,015 $17,791 

Other Commitments

As of Level 3 assetsMarch 31, 2021, letters of credit issued by the FHLB totaling $490.0 million were used to guarantee the Bank’s performance related to a portion of its public fund deposit balances.

Litigation and liabilities:Regulatory Contingencies

(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%
On November 19, 2019, the Company received a subpoena from the Atlanta Regional Office of the Securities and Exchange Commission (the “SEC”), and the Bank received a grand jury subpoena from the United States Attorney’s Office for the Northern District of Georgia, each requesting that the Company and the Bank produce documents and other materials relating to the Company’s acquisition of US Premium Finance Holding Company, the Bank’s sale of certain loans to CEBV LLC and related disclosures. The Company has cooperated fully with the investigation and produced all requested documents responsive to the subpoenas. While the Company remains unable to make any assurances regarding the outcome of the investigation by the United States Attorney's Office, or the impact, if any, that such investigation may have on the Company's business, consolidated financial condition, results of operations or cash flows, the Company received a letter from the SEC staff, dated March 29, 2021, stating that the SEC has concluded its investigation as to the Company and does not intend to recommend any enforcement action against the Company.

Additionally, from time to time, the Company and the Bank are subject to various legal proceedings, claims and disputes that arise in the ordinary course of business. The Company and the Bank are also subject to regulatory examinations, information gathering requests, inquiries and investigations in the ordinary course of business. Based on the Company’s current knowledge and advice of counsel, management presently does not believe that the liabilities arising from these legal matters will have a material adverse effect on the Company’s consolidated financial condition, results of operations or cash flows. However, it is possible that the ultimate resolution of these legal matters could have a material adverse effect on the Company’s results of operations and financial condition for any particular period.

The carryingCompany’s management and its legal counsel periodically assess contingent liabilities, 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, 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 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 ofthen 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 elsewhereprobable, 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 thesewhich case the nature of the guarantee would be disclosed.

COVID-19

The COVID-19 pandemic has caused significant economic dislocation in the United States and an unprecedented slowdown in economic activity, as many state and local governments have intermittently ordered non-essential businesses to close and residents to shelter in place at home. As a result of the pandemic, commercial customers are experiencing varying levels of disruptions or restrictions on their business activity, and consumers are experiencing interrupted income or unemployment. We have outstanding loans to borrowers in certain industries that have been particularly susceptible to the effects of the pandemic, such as hotels, restaurants and other retail businesses. Given the ongoing and dynamic nature of the circumstances, it is difficult to predict the full impact of the COVID-19 pandemic on our business. The United States government has taken steps to attempt
26


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 pandemic and related mitigation efforts will depend on future developments, which are highly uncertain, including, but not limited to, the duration of the pandemic and spread of the coronavirus, including a resurgence or additional waves of the virus, the actions to contain the virus or treat its impact, and how quickly and to what extent normal economic and operating conditions can resume, especially as a vaccine becomes widely available. This could cause a material, adverse effect on the Company’s business, financial statements, were as follows:condition 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.

   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 accounts112,844
 112,844
 
 
 112,844
Loans, net5,902,267
 
 
 5,871,518
 5,871,518
Accrued interest receivable25,068
 25,068
 
 
 25,068
Financial liabilities: 
  
  
  
  
Deposits$5,895,504
 $
 $5,896,989
 $
 $5,896,989
Securities sold under agreements to repurchase14,156
 14,156
 
 
 14,156
Other borrowings808,572
 
 809,810
 
 809,810
Subordinated deferrable interest debentures85,220
 
 70,984
 
 70,984
FDIC loss-share payable8,190
 
 
 9,077
 9,077
Accrued interest payable2,313
 2,313
 
 
 2,313


   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 accounts71,221
 71,221
 
 
 71,221
Loans, net5,212,153
 
 
 5,236,034
 5,236,034
Accrued interest receivable22,278
 22,278
 
 
 22,278
Financial liabilities: 
  
  
  
  
Deposits$5,575,163
 $
 $5,575,288
 $
 $5,575,288
Securities sold under agreements to repurchase53,505
 53,505
 
 
 53,505
Other borrowings492,321
 
 492,321
 
 492,321
Subordinated deferrable interest debentures84,228
 
 67,321
 
 67,321
FDIC loss-share payable6,313
 
 
 8,243
 8,243
Accrued interest payable1,501
 1,501
 
 
 1,501
NOTE 1410 – SEGMENT REPORTING

The Company has the following five5 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 months ended September 30, 2017March 31, 2021 and 2016:2020:
 Three Months Ended
March 31, 2021
(dollars in thousands)Banking
Division
Retail
Mortgage
Division
Warehouse
Lending
Division
SBA
Division
Premium
 Finance
 Division
Total
Interest income$112,379 $30,199 $10,327 $18,034 $7,011 $177,950 
Interest expense(437)11,215 421 1,399 375 12,973 
Net interest income112,816 18,984 9,906 16,635 6,636 164,977 
Provision for credit losses(23,904)(4,553)(145)(547)558 (28,591)
Noninterest income16,738 97,640 980 2,611 117,973 
Noninterest expense      
Salaries and employee benefits42,723 49,838 330 1,382 1,712 95,985 
Equipment and occupancy expenses10,120 1,476 106 78 11,781 
Data processing and telecommunications expenses10,201 1,546 49 87 11,884 
Other expenses19,710 8,189 33 295 921 29,148 
Total noninterest expense82,754 61,049 413 1,784 2,798 148,798 
Income before income tax expense70,704 60,128 10,618 18,009 3,284 162,743 
Income tax expense18,456 12,627 2,230 3,782 686 37,781 
Net income$52,248 $47,501 $8,388 $14,227 $2,598 $124,962 
Total assets$14,591,933 $4,086,210 $886,004 $1,055,068 $807,912 $21,427,127 
Goodwill863,507 64,498 928,005 
Other intangible assets, net53,745 14,103 67,848 

 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 expense5,530
 1,597
 487
 432
 1,421
 9,467
Net interest income53,600
 4,265
 1,535
 981
 6,474
 66,855
Provision for loan losses1,037
 262
 215
 (1) 274
 1,787
Noninterest income13,007
 12,257
 583
 1,130
 22
 26,999
Noninterest expense 
  
  
  
  
  
Salaries and employee benefits20,554
 9,792
 129
 858
 1,250
 32,583
Equipment and occupancy expenses5,384
 555
 1
 54
 42
 6,036
Data processing and telecommunications expenses6,357
 425
 28
 9
 231
 7,050
Other expenses14,905
 1,001
 51
 63
 2,078
 18,098
Total noninterest expense47,200
 11,773
 209
 984
 3,601
 63,767
Income before income tax expense18,370
 4,487
 1,694
 1,128
 2,621
 28,300
Income tax expense4,850
 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
Goodwill125,532
 
 
 
 
 125,532
Other intangible assets, net14,437
 
 
 
 
 14,437
27

 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 expense3,716
 1,054
 225
 148
 
 5,143
Net interest income51,653
 2,625
 1,848
 941
 
 57,067
Provision for loan losses57
 447
 94
 213
 
 811
Noninterest income13,949
 13,198
 555
 1,162
 
 28,864
Noninterest expense 
  
  
  
  
  
Salaries and employee benefits18,323
 8,940
 103
 616
 
 27,982
Equipment and occupancy expenses5,490
 433
 1
 65
 
 5,989
Data processing and telecommunications expenses5,794
 364
 26
 1
 
 6,185
Other expenses11,533
 1,303
 26
 181
 
 13,043
Total noninterest expense41,140
 11,040
 156
 863
 
 53,199
Income before income tax expense24,405
 4,336
 2,153
 1,027
 
 31,921
Income tax expense7,733
 1,518
 754
 359
 
 10,364
Net income$16,672
 $2,818
 $1,399
 $668
 $
 $21,557
            
Total assets$5,841,207
 $356,755
 $203,334
 $92,199
 $
 $6,493,495
Goodwill122,545
 
 
 
 
 122,545
Other intangible assets, net18,472
 
 
 
 
 18,472

 Three Months Ended
March 31, 2020
(dollars in thousands)Banking
Division
Retail
Mortgage
Division
Warehouse
Lending
Division
SBA
Division
Premium
 Finance
 Division
Total
Interest income$132,301 $33,411 $4,850 $3,728 $8,478 $182,768 
Interest expense13,926 15,655 1,548 1,547 2,147 34,823 
Net interest income118,375 17,756 3,302 2,181 6,331 147,945 
Provision for credit losses35,997 1,997 (9)(903)3,965 41,047 
Noninterest income17,773 34,369 960 1,277 54,379 
Noninterest expense      
Salaries and employee benefits41,621 31,097 210 1,476 1,542 75,946 
Equipment and occupancy expenses10,347 1,504 97 79 12,028 
Data processing and telecommunications expenses10,797 986 41 13 117 11,954 
Other expenses30,645 5,875 34 515 1,056 38,125 
Total noninterest expense93,410 39,462 286 2,101 2,794 138,053 
Income (loss) before income tax expense6,741 10,666 3,985 2,260 (428)23,224 
Income tax expense (benefit)275 2,408 837 475 (93)3,902 
Net income (loss)$6,466 $8,258 $3,148 $1,785 $(335)$19,322 
Total assets$13,201,373 $3,466,766 $548,837 $252,668 $754,904 $18,224,548 
Goodwill867,449 64,498 931,947 
Other intangible assets, net68,857 17,098 85,955 



NOTE 11 – LOAN SERVICING RIGHTS

The following tables present selected financial informationCompany 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 respectconsideration 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)March 31, 2021December 31, 2020
Loan Servicing Rights
Residential mortgage$154,746 $130,630 
SBA6,445 5,839 
Indirect automobile29 73 
Total loan servicing rights$161,220 $136,542 

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-months ended March 31, 2021, the Company recorded servicing fee income of $10.1 million. During the three-months ended March 31, 2020, the Company recorded servicing fee income of $6.2 million. Servicing fee income includes servicing fees, late fees and ancillary fees earned for each period.

28


The table below is an analysis of the activity in the Company’s reportable business segments for the nine months ended September 30, 2017MSRs and 2016:impairment:
 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 expense14,510
 4,179
 1,074
 1,111
 3,307
 24,181
Net interest income155,526
 10,711
 3,894
 2,773
 17,698
 190,602
Provision for loan losses4,510
 617
 159
 98
 444
 5,828
Noninterest income38,974
 35,823
 1,340
 4,663
 94
 80,894
Noninterest expense 
  
  
  
  
  
Salaries and employee benefits58,757
 24,771
 403
 2,339
 3,239
 89,509
Equipment and occupancy expenses16,068
 1,684
 3
 159
 145
 18,059
Data processing and telecommunications expenses18,778
 1,182
 80
 12
 598
 20,650
Other expenses34,355
 3,030
 137
 533
 6,326
 44,381
Total noninterest expense127,958
 30,667
 623
 3,043
 10,308
 172,599
Income before income tax expense62,032
 15,250
 4,452
 4,295
 7,040
 93,069
Income tax expense17,801
 5,337
 1,559
 1,503
 2,471
 28,671
Net income$44,231
 $9,913
 $2,893
 $2,792
 $4,569
 $64,398

(dollars in thousands)Three Months Ended March 31,
Residential mortgage servicing rights20212020
Beginning carrying value, net$130,630 $94,902 
Additions21,867 16,061 
Amortization(7,484)(4,166)
Recoveries/(impairment)9,733 (20,875)
Ending carrying value, net$154,746 $85,922 
 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 expense10,726
 2,383
 458
 450
 
 14,017
Net interest income147,956
 7,609
 4,256
 2,271
 
 162,092
Provision for loan losses1,471
 540
 94
 276
 
 2,381
Noninterest income39,702
 36,126
 1,328
 4,373
 
 81,529
Noninterest expense 
  
  
  
  
  
Salaries and employee benefits55,740
 23,591
 399
 1,970
 
 81,700
Equipment and occupancy expenses16,541
 1,326
 3
 190
 
 18,060
Data processing and telecommunications expenses17,299
 974
 71
 3
 
 18,347
Other expenses39,040
 3,392
 77
 542
 
 43,051
Total noninterest expense128,620
 29,283
 550
 2,705
 
 161,158
Income before income tax expense57,567
 13,912
 4,940
 3,663
 
 80,082
Income tax expense18,278
 4,870
 1,729
 1,282
 
 26,159
Net income$39,289
 $9,042
 $3,211
 $2,381
 $
 $53,923

(dollars in thousands)Three Months Ended March 31,
Residential mortgage servicing valuation allowance20212020
Beginning balance$39,407 $104 
Additions20,875 
Recoveries(9,733)
Ending balance$29,674 $20,979 

NOTE 15 – REGULATORY MATTERS
On December 16, 2016, the Bank entered into a Stipulation to the Issuance of a Consent Order with its bank regulatory agencies, the FDICThe key metrics and the Georgia Department of Banking and Finance (the “GDBF”), consenting 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 issuancesensitivity of the Order, the Bank did not admit fair value to adverse changes in model inputs and/or deny any chargesassumptions are summarized below:

(dollars in thousands)March 31, 2021December 31, 2020
Residential mortgage servicing rights
Unpaid principal balance of loans serviced for others$14,171,621 $13,764,529 
Composition of residential loans serviced for others:
FHLMC21.05 %21.55 %
FNMA61.40 %61.75 %
GNMA17.55 %16.70 %
Total100.00 %100.00 %
Weighted average term (months)340340
Weighted average age (months)2020
Modeled prepayment speed13.37 %18.82 %
Decline in fair value due to a 10% adverse change(6,886)(7,154)
Decline in fair value due to a 20% adverse change(13,262)(13,664)
Weighted average discount rate8.76 %9.50 %
Decline in fair value due to a 10% adverse change(5,522)(4,304)
Decline in fair value due to a 20% adverse change(10,671)(8,321)

SBA Loans

All sales of unsafe or unsound banking practices related to its BSA compliance program.
Under the termsSBA loans, consisting of the Order, the Bank or its board of directors is required to take certain affirmative actions to comply with the Bank’s obligations under the BSA.guaranteed portion, are executed on a servicing retained basis. These include, butloans, which 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 requiredpartially guaranteed by the BSASBA, are accuratelygenerally secured by business property such as real estate, inventory, equipment and properly filed;accounts receivable. The net gain on SBA loan sales, amortization and engagingimpairment/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-months ended March 31, 2021, the Company recorded servicing fee income of $1.0 million. During the three-months ended March 31, 2020, the Company recorded servicing fee income of $1.1 million. Servicing fee income includes servicing fees, late fees and ancillary fees earned for each period.

29


The table below is an independent firm to review past account activity to determine whether suspicious activity was properly identified and reported.
Prior to implementation, certainanalysis 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 in effect and be enforceable until it is modified, terminated, suspended or


set aside by the FDIC and the GDBF. The Bank expects that it will continue to meet the required actions within the time periods specifiedactivity in the Order based uponCompany’s SBA loan servicing rights and impairment:

(dollars in thousands)Three Months Ended March 31,
SBA servicing rights20212020
Beginning carrying value, net$5,839 $7,886 
Additions230 375 
Purchase accounting adjustment(1,214)
Amortization(529)(363)
Recoveries/(impairment)905 (1,290)
Ending carrying value, net$6,445 $5,394 

(dollars in thousands)Three Months Ended March 31,
SBA servicing valuation allowance20212020
Beginning balance$905 $141 
Additions1,290 
Recoveries(905)
Ending balance$$1,431 

(dollars in thousands)March 31, 2021December 31, 2020
SBA servicing rights
Unpaid principal balance of loans serviced for others$437,989 $351,325 
Weighted average life (in years)3.493.46
Modeled prepayment speed19.05 %19.14 %
Decline in fair value due to a 10% adverse change(412)(335)
Decline in fair value due to a 20% adverse change(783)(636)
Weighted average discount rate7.09 %9.55 %
Decline in fair value due to a 100 basis point adverse change(188)(151)
Decline in fair value due to a 200 basis point adverse change(367)(295)

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 communications with its regulators.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.



(dollars in thousands)Three Months Ended March 31,
Indirect automobile servicing rights20212020
Beginning carrying value, net$73 $247 
Amortization(44)(43)
Ending carrying value, net$29 $204 



During the three-months ended March 31, 2021, the Company recorded servicing fee income of $206,000. During the three-months ended March 31, 2020, the Company recorded servicing fee income of $710,000. Servicing fee income includes servicing fees, late fees and ancillary fees earned for each period.


30


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, unemployment, political and market conditions and fluctuations, including real estate market conditions, and the effects of such conditions and fluctuations on the creditworthiness of borrowers; collateral values, asset recovery values and the value of investment securities; movements in interest rates and their impacts on net interest margin; expectations on credit quality and performance; competitive pressures on product pricing and services; legislative and regulatory initiatives;changes; changes in U.S. government monetary and fiscal policy; the impact of the COVID-19 pandemic on the general economy, our customers and the allowance for loan losses; the benefits that may be realized by our customers from government assistance programs and regulatory actions related to the COVID-19 pandemic; the potential impact of the phase-out of the London Interbank Offered Rate ("LIBOR") or other changes involving LIBOR; additional competition in our markets; potential business strategies, including acquisitions or dispositions of assets or internal restructuring, that may be pursued by us;changes in state and federal banking regulations; changes in or application of environmental 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; the cost savings and any revenue synergies expected to result from acquisition transactions, which may not be fully realized within the expected timeframes if at all; the success and timing of other business strategies; our outlook and long-term goals for future growth; weather events, natural disasters, geopolitical events, acts of war or terrorism or other hostilities, public health crises and other catastrophic events;events beyond our control; and other factors discussed in our filings with the Securities and Exchange CommissionSEC under the Exchange Act.
 
All written or oral forward-looking statements that are made by or are attributable to us are expressly qualified in their entirety by this cautionary notice. Our forward-looking statements apply only as of the date of this report or the respective date of the document from which they are incorporated herein by reference. We have no obligation and do not undertake to update, revise or correct any of the forward-looking statements after the date of this report, or after the respective dates on which such statements otherwise are made, whether as a result of new information, future events or otherwise.


Overview
 
The following is management’s discussion and analysis of certain significant factors which have affected the financial condition and results of operations of the Company as reflected in the unaudited consolidated balance sheet as of September 30, 2017,March 31, 2021, as compared with December 31, 2016,2020, and operating results for the three- and nine-monththree-month periods ended September 30, 2017March 31, 2021 and 2016.2020. 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
31


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.


Critical Accounting Policies




There have been no significant changes to our critical accounting policies from those disclosed in our 2020 Annual Report on Form 10-K. The following table sets forth unaudited selected financial data forreader should refer to the previous five quarters. This data should be read in conjunction with the unauditednotes to our consolidated financial statements and the notes thereto and the information contained in this Item 2.our 2020 Annual Report on Form 10-K for a full disclosure of all critical accounting policies.

32
           Nine Months Ended
(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
Results of Operations:             
Net interest income$66,855
 $63,157
 $60,590
 $57,279
 $57,067
 $190,602
 $162,092
Net interest income (tax equivalent)68,668
 64,773
 62,108
 58,897
 58,024
 195,549
 164,726
Provision for loan losses1,787
 2,205
 1,836
 1,710
 811
 5,828
 2,381
Non-interest income26,999
 28,189
 25,706
 24,272
 28,864
 80,894
 81,529
Non-interest expense63,767
 55,739
 53,093
 54,677
 53,199
 172,599
 161,158
Income tax expense8,142
 10,315
 10,214
 6,987
 10,364
 28,671
 26,159
Net income available to common shareholders20,158
 23,087
 21,153
 18,177
 21,557
 64,398
 53,923
Selected Average Balances: 
  
  
  
  
  
  
Investment securities$864,456
 $866,960
 $862,616
 $856,671
 $857,433
 $864,684
 $840,688
Loans held for sale126,798
 110,933
 77,617
 102,926
 105,859
 105,296
 96,340
Loans4,379,082
 3,994,213
 3,678,149
 3,145,714
 2,897,771
 4,018,597
 2,642,498
Purchased loans937,595
 973,521
 1,034,983
 1,101,907
 1,199,175
 982,033
 1,147,821
Purchased loan pools475,742
 516,949
 547,057
 590,617
 629,666
 513,750
 629,118
Earning assets6,892,939
 6,584,386
 6,347,807
 5,925,634
 5,780,455
 6,610,374
 5,490,525
Assets7,461,367
 7,152,024
 6,915,965
 6,573,344
 6,330,350
 7,180,330
 6,030,181
Deposits5,837,154
 5,671,394
 5,491,324
 5,490,657
 5,221,219
 5,667,891
 5,102,729
Shareholders’ equity796,856
 774,664
 695,830
 653,991
 640,382
 756,153
 599,817
Period-End Balances: 
  
  
  
  
  
  
Investment securities$867,570
 $861,188
 $866,715
 $852,199
 $862,702
 $867,570
 $862,702
Loans held for sale137,392
 146,766
 105,637
 105,924
 126,263
 137,392
 126,263
Loans4,574,678
 4,230,228
 3,785,480
 3,626,821
 3,091,039
 4,574,678
 3,091,039
Purchased loans917,126
 950,499
 1,006,935
 1,069,191
 1,129,381
 917,126
 1,129,381
Purchased loan pools465,218
 490,114
 529,099
 568,314
 624,886
 465,218
 624,886
Earning assets7,074,828
 6,816,606
 6,525,911
 6,293,670
 5,925,072
 7,074,828
 5,925,072
Total assets7,649,820
 7,397,858
 7,094,856
 6,892,031
 6,493,495
 7,649,820
 6,493,495
Deposits5,895,504
 5,793,397
 5,642,369
 5,575,163
 5,306,098
 5,895,504
 5,306,098
Shareholders’ equity801,921
 782,682
 758,216
 646,437
 642,583
 801,921
 642,583
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 - diluted$0.54
 0.62
 0.59
 0.52
 0.61
 1.74
 1.56
Book value per common share$21.54
 $21.03
 $20.42
 $18.51
 $18.42
 $21.54
 $18.42
Tangible book value per common share$17.78
 $17.24
 $16.60
 $14.42
 $14.38
 $17.78
 $14.38
End of period shares outstanding37,231,049
 37,222,904
 37,128,714
 34,921,474
 34,891,304
 37,231,049
 34,891,304




           Nine Months Ended
(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
Weighted Average Shares Outstanding: 
  
  
  
  
  
  
Basic37,225,418
 37,162,810
 35,664,420
 34,915,459
 34,869,747
 36,689,934
 34,155,556
Diluted37,552,667
 37,489,348
 36,040,240
 35,293,035
 35,194,739
 37,017,486
 34,470,101
Market Price: 
  
  
  
  
  
  
High intraday price$51.28
 $49.80
 $49.50
 $47.70
 $36.20
 $51.28
 $36.20
Low intraday price$41.05
 $42.60
 $41.60
 $34.61
 $28.90
 $41.05
 $24.96
Closing price for quarter$48.00
 $48.20
 $46.10
 $43.60
 $34.95
 $48.00
 $34.95
Average daily trading volume168,911
 169,617
 242,982
 191,894
 166,841
 193,555
 211,351
Cash dividends declared per share$0.10
 $0.10
 $0.10
 $0.10
 $0.10
 $0.30
 $0.20
Closing price to book value2.23
 2.29
 2.26
 2.36
 1.90
 2.23
 1.90
Performance Ratios: 
  
  
  
  
  
  
Return on average assets1.07% 1.29% 1.24% 1.10% 1.35% 1.20% 1.19%
Return on average common equity10.04% 11.95% 12.33% 11.06% 13.39% 11.39% 12.01%
Average loans to average deposits101.41% 98.66% 97.20% 89.99% 92.55% 99.15% 88.50%
Average equity to average assets10.68% 10.83% 10.06% 9.95% 10.12% 10.53% 9.95%
Net interest margin (tax equivalent)3.95% 3.95% 3.97% 3.95% 3.99% 3.96% 4.01%
Efficiency ratio67.94% 61.02% 61.52% 67.05% 61.91% 63.57% 66.15%
              
Non-GAAP Measures Reconciliation - 
  
  
  
  
  
  
Tangible book value per common share: 
  
  
  
  
  
  
Total shareholders’ equity$801,921
 $782,682
 $758,216
 $646,437
 $642,583
 $801,921
 $642,583
Less: 
  
  
  
  
  
  
Goodwill125,532
 125,532
 125,532
 125,532
 122,545
 125,532
 122,545
Other intangible assets, net14,437
 15,378
 16,391
 17,428
 18,472
 14,437
 18,472
Tangible common equity$661,952
 $641,772
 $616,293
 $503,477
 $501,566
 $661,952
 $501,566
End of period shares outstanding37,231,049
 37,222,904
 37,128,714
 34,921,474
 34,891,304
 37,231,049
 34,891,304
Book value per common share$21.54
 $21.03
 $20.42
 $18.51
 $18.42
 $21.54
 $18.42
Tangible book value per common share17.78
 17.24
 16.60
 14.42
 14.38
 17.78
 14.38



Results of Operations for the Three Months Ended September 30, 2017March 31, 2021 and 20162020
 
Consolidated Earnings and Profitability
 
Ameris reported net income available to common shareholders of $20.2$125.0 million, or $0.54$1.79 per diluted share, for the quarter ended September 30, 2017,March 31, 2021, compared with $21.6$19.3 million, or $0.61$0.28 per diluted share, for the same period in 2016.2020. The Company’s return on average assets and average shareholders’ equity were 1.07%2.44% and 10.04%18.80%, respectively, in the thirdfirst quarter of 2017,2021, compared with 1.35%0.43% and 13.39%3.16%, respectively, in the thirdfirst quarter of 2016.2020. During the thirdfirst quarter of 20172021, the Company recorded pre-tax servicing right recovery of $10.6 million, pre-tax gain on bank owned life insurance ("BOLI") proceeds of $603,000 and pre-tax gains on the sale of premises of $264,000. During the first quarter of 2020, the Company incurred pre-tax merger and conversion charges of $92,000,$540,000, pre-tax BSA compliance resolution expensesservicing right impairment of $4.7$22.2 million, pre-tax Hurricane Irma expenses related to SEC and DOJ investigation of $410,000,$1.4 million, pre-tax expenses related to the COVID-19 pandemic of $548,000 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.$470,000. 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$115.7 million, or $0.63$1.66 per diluted share, for the thirdfirst quarter of 20172021 and $21.7$39.2 million, or $0.62$0.56 per diluted share, for the thirdfirst quarter of 2016.2020.
 
Below is a reconciliation of adjusted operating net income to net income, as discussed above.
 Three Months Ended March 31,
(in thousands, except share and per share data)20212020
Net income$124,962 $19,322 
Adjustment items:  
Merger and conversion charges— 540 
Servicing right impairment (recovery)(10,639)22,165 
Gain on BOLI proceeds(603)— 
Expenses related to SEC and DOJ investigation— 1,443 
Natural disaster and pandemic expenses— 548 
(Gain) loss on the sale of premises(264)470 
Tax effect of adjustment items (Note 1)
2,290 (5,283)
After tax adjustment items(9,216)19,883 
Adjusted net income$115,746 $39,205 
Weighted average common shares outstanding - diluted69,740,860 69,502,022 
Net income per diluted share$1.79 $0.28 
Adjusted net income per diluted share$1.66 $0.56 
Note 1: A portion of the merger and conversion charges for the three months ended March 31, 2020 are nondeductible for tax purposes.
 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 charges92
 
 494
 6,359
Certain compliance resolution expenses4,729
 
 4,729
 
Financial impact of Hurricane Irma410
 
 410
 
Losses on the sale of premises91
 238
 956
 562
Tax effect of management adjusted charges(1,863) (83) (2,306) (2,422)
After tax management-adjusted charges3,459
 155
 4,283
 4,499
Adjusted operating net income$23,617
 $21,712
 $68,681
 $58,422
        
Weighted average common shares outstanding - diluted37,552,667
 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


Below is additional information regarding the retail banking activities, mortgage banking activities, warehouse lending activities, SBA activities and premium finance activities of the Company during the third quarter of 2017 and 2016, respectively:
33
 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 expense5,530
 1,597
 487
 432
 1,421
 9,467
Net interest income53,600
 4,265
 1,535
 981
 6,474
 66,855
Provision for loan losses1,037
 262
 215
 (1) 274
 1,787
Noninterest income13,007
 12,257
 583
 1,130
 22
 26,999
Noninterest expense 
  
  
  
  
  
Salaries and employee benefits20,554
 9,792
 129
 858
 1,250
 32,583
Equipment and occupancy expenses5,384
 555
 1
 54
 42
 6,036
Data processing and telecommunications expenses6,357
 425
 28
 9
 231
 7,050
Other expenses14,905
 1,001
 51
 63
 2,078
 18,098
Total noninterest expense47,200
 11,773
 209
 984
 3,601
 63,767
Income before income tax expense18,370
 4,487
 1,694
 1,128
 2,621
 28,300
Income tax expense4,850
 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 expense3,716
 1,054
 225
 148
 
 5,143
Net interest income51,653
 2,625
 1,848
 941
 
 57,067
Provision for loan losses57
 447
 94
 213
 
 811
Noninterest income13,949
 13,198
 555
 1,162
 
 28,864
Noninterest expense 
  
  
  
  
  
Salaries and employee benefits18,323
 8,940
 103
 616
 
 27,982
Equipment and occupancy expenses5,490
 433
 1
 65
 
 5,989
Data processing and telecommunications expenses5,794
 364
 26
 1
 
 6,185
Other expenses11,533
 1,303
 26
 181
 
 13,043
Total noninterest expense41,140
 11,040
 156
 863
 
 53,199
Income before income tax expense24,405
 4,336
 2,153
 1,027
 
 31,921
Income tax expense7,733
 1,518
 754
 359
 
 10,364
Net income$16,672
 $2,818
 $1,399
 $668
 $
 $21,557


Net Interest Income and Margins
The following table sets forth the average balance, interest income or interest expense, and average yield/rate paid for each category of interest-earning assets and interest-bearing liabilities, net interest spread, and net interest margin on average interest-earning assets for the three months ended September 30, 2017 and 2016. Federally tax-exempt income is presented on a taxable-equivalent basis assuming a 35% federal tax rate.
 Quarter 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$109,266
 $406
 1.47% $90,551
 $155
 0.68%
Investment securities864,456
 5,665
 2.60% 857,433
 4,872
 2.26%
Loans held for sale126,798
 1,131
 3.54% 105,859
 826
 3.10%
Loans4,379,082
 53,394
 4.84% 2,897,771
 33,672
 4.62%
Purchased loans937,595
 14,048
 5.94% 1,199,175
 19,296
 6.40%
Purchased loan pools475,742
 3,491
 2.91% 629,666
 4,346
 2.75%
Total interest-earning assets6,892,939
 78,135
 4.50% 5,780,455
 63,167
 4.35%
Noninterest-earning assets568,428
  
   549,895
  
  
Total assets$7,461,367
  
   $6,330,350
  
  
            
Liabilities and Shareholders’ Equity 
  
    
  
  
Interest-bearing liabilities: 
  
    
  
  
Savings and interest-bearing demand deposits$3,162,448
 $2,963
 0.37% $2,787,323
 $1,719
 0.25%
Time deposits1,020,239
 2,173
 0.85% 887,685
 1,355
 0.61%
Federal funds purchased and securities sold under agreements to repurchase19,414
 11
 0.22% 37,305
 18
 0.19%
FHLB advances608,413
 1,849
 1.21% 265,202
 393
 0.59%
Other borrowings75,590
 1,183
 6.21% 49,345
 479
 3.86%
Subordinated deferrable interest debentures85,040
 1,288
 6.01% 83,719
 1,179
 5.60%
Total interest-bearing liabilities4,971,144
 9,467
 0.76% 4,110,579
 5,143
 0.50%
Demand deposits1,654,467
  
   1,546,211
  
  
Other liabilities38,900
  
   33,178
  
  
Shareholders’ equity796,856
  
   640,382
  
  
Total liabilities and shareholders’ equity$7,461,367
  
   $6,330,350
  
  
Interest rate spread 
  
 3.74%  
  
 3.85%
Net interest income 
 $68,668
    
 $58,024
  
Net interest margin 
  
 3.95%  
  
 3.99%
On a tax-equivalent basis, net interest income for the third quarter of 2017 was $68.7 million, an increase of $10.6 million, or 18.3%, compared with $58.0 million reported in the same quarter in 2016. The higher net interest income is a result of growth in average interest earning assets which increased $1.11 billion, or 19.2%, from $5.78 billion in the third quarter of 2016 to $6.89 billion for the third quarter of 2017. The Company’s net interest margin decreased during the third quarter of 2017 to 3.95%, compared with 3.99% reported in the third quarter of 2016 but remained stable compared with 3.95% reported in the second quarter of 2017.
Total interest income, on a tax-equivalent basis, increased to $78.1 million during the third quarter of 2017, compared with $63.2 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. Yields on legacy loans increased to 4.84% in the third quarter of 2017, compared with 4.62% in the same period of 2016. The yield on purchased loans decreased from 6.40% in the third quarter of 2016 to 5.94% during the third quarter of 2017. Accretion income for the third quarter of 2017 was $2.7 million, 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% in the same period of 2017. Yields on purchased loan pools increased from 2.75% in the third quarter of 2016 to 2.91% in the same period in 2017. Management anticipates improving economic conditions and increased loan demand will provide consistent interest income.



The yield on total interest-bearing liabilities increased from 0.50% in the third quarter of 2016 to 0.76% in the third quarter of 2017. Total funding costs, inclusive of noninterest bearing demand deposits, increased to 0.57% in the third quarter of 2017, compared with 0.36% during the third quarter of 2016. Deposit costs increased from 0.23% in the third quarter of 2016 to 0.35% in the third quarter of 2017. Non-deposit funding costs increased from 1.89% in the third quarter of 2016 to 2.18% in the third quarter of 2017. The increase in non-deposit funding costs was driven primarily by an increased utilization of short-term FHLB advances coupled with an increase in the average rate 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. Average balances of interest bearing deposits and their respective costs for the third quarter of 2017 and 2016 are shown below:
 Three Months Ended
September 30, 2017
 Three Months Ended
September 30, 2016
(dollars in thousands)
Average
Balance
 
Average
Cost
 
Average
Balance
 
Average
Cost
NOW$1,201,151
 0.20% $1,085,828
 0.16%
MMDA1,682,306
 0.55% 1,435,151
 0.34%
Savings278,991
 0.07% 266,344
 0.07%
Retail CDs < $100,000437,641
 0.62% 431,570
 0.45%
Retail CDs > $100,000582,598
 1.01% 451,115
 0.75%
Brokered CDs
 —% 5,000
 0.64%
Interest-bearing deposits$4,182,687
 0.49% $3,675,008
 0.33%
Provision for Loan Losses
The Company’s provision for loan losses during the third quarter of 2017 amounted to $1.8 million, compared with $2.2 million in the second quarter of 2017 and $811,000 in the third quarter of 2016. At September 30, 2017, classified loans still accruing totaled $45.8 million, compared with $43.3 million at December 31, 2016. Non-performing assets as a percentage of total assets decreased from 0.94% at December 31, 2016 to 0.75% at September 30, 2017. Net charge-offs on legacy loans during the third quarter of 2017 were approximately $1.6 million, or 0.15% of average legacy loans on an annualized basis, compared with approximately $371,000, or 0.05%, in the third quarter 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. The Company’s total allowance for loan losses at September 30, 2017 was $26.0 million, or 0.44% of total loans, increasing from $23.9 million, or 0.45% of total loans, at December 31, 2016.
Noninterest Income
Total non-interest income for the third quarter of 2017 was $27.0 million, a decrease of $1.9 million, or 6.5%, from the $28.9 million reported in the third quarter of 2016.  Service charges on deposit accounts in the third quarter of 2017 decreased $823,000, or 7.2%, to $10.5 million, compared with $11.4 million in the third quarter of 2016. This decrease in service charge revenue was primarily attributable to lower overdraft fee income. Income from mortgage-related activities decreased $727,000, or 5.2%, from $14.1 million in the third quarter of 2016 to $13.3 million in the third quarter of 2017. Total production in the third quarter of 2017 amounted to $401.7 million, compared with $410.8 million in the same quarter of 2016, while spread (gain on sale) decreased to 3.30% in the current quarter compared with 3.69% in the same quarter of 2016. The retail mortgage open pipeline finished the third quarter of 2017 at $158.4 million, compared with $174.3 million at the beginning of the third quarter of 2017 and $145.4 million at the end of the third quarter of 2016. Other service charges, commissions and fees decreased $92,000, or 11.6%, 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 million for the third quarter of 2017, compared with $2.6 million during the third quarter of 2016. The decrease in other non-interest income was primarily attributable to lower bank owned life insurance income and lower check order fee income.
Noninterest Expense
Total non-interest expenses for the third quarter of 2017 increased $10.6 million, or 19.9%, to $63.8 million, compared with $53.2 million in the same quarter 2016. Salaries and employee benefits increased $4.6 million, or 16.4%, from $28.0 million in the third quarter of 2016 to $32.6 million in the third quarter of 2017 due to staff additions for the premium finance division, increased staffing related to the Company’s ongoing BSA compliance efforts, higher incentive accruals for production staff, increased commissions in the mortgage and SBA divisions, and staff additions for 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 to a minimum. Data processing and telecommunications expense increased $865,000, or 14.0%, to $7.1 million in the third quarter of 2017, compared with $6.2 million in the third quarter of 2016, due to an increase in the number of accounts being processed by our core banking system and additional software fees incurred related to the buildout of our BSA compliance program 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. Other noninterest expenses increased $5.2 million from $9.3 million in the third quarter of 2016 to $14.5 million in the third quarter of 2017 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
Income tax expense is influenced by the amount of taxable income, the amount of tax-exempt income and the amount of non-deductible expenses. For the third quarter of 2017, the Company reported income tax expense of $8.1 million, compared with $10.4 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. 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 months ended September 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 and average shareholders’ equity were 1.20% and 11.39%, 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.
 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 charges92
 
 494
 6,359
Certain compliance resolution expenses4,729
 
 4,729
 
Financial impact of Hurricane Irma410
 
 410
 
Losses on the sale of premises91
 238
 956
 562
Tax effect of management adjusted charges(1,863) (83) (2,306) (2,422)
After tax management-adjusted charges3,459
 155
 4,283
 4,499
Adjusted operating net income$23,617
 $21,712
 $68,681
 $58,422
        
Weighted average common shares outstanding - diluted37,552,667
 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


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 first nine monthsquarter of 20172021 and 2016,2020, respectively:
 Three Months Ended
March 31, 2021
(dollars in thousands)Banking
Division
Retail
Mortgage
Division
Warehouse
Lending
Division
SBA
Division
Premium
 Finance
 Division
Total
Interest income$112,379 $30,199 $10,327 $18,034 $7,011 $177,950 
Interest expense(437)11,215 421 1,399 375 12,973 
Net interest income112,816 18,984 9,906 16,635 6,636 164,977 
Provision for credit losses(23,904)(4,553)(145)(547)558 (28,591)
Noninterest income16,738 97,640 980 2,611 117,973 
Noninterest expense      
Salaries and employee benefits42,723 49,838 330 1,382 1,712 95,985 
Equipment and occupancy expenses10,120 1,476 106 78 11,781 
Data processing and telecommunications expenses10,201 1,546 49 87 11,884 
Other expenses19,710 8,189 33 295 921 29,148 
Total noninterest expense82,754 61,049 413 1,784 2,798 148,798 
Income before income tax expense70,704 60,128 10,618 18,009 3,284 162,743 
Income tax expense18,456 12,627 2,230 3,782 686 37,781 
Net income$52,248 $47,501 $8,388 $14,227 $2,598 $124,962 
 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 expense14,510
 4,179
 1,074
 1,111
 3,307
 24,181
Net interest income155,526
 10,711
 3,894
 2,773
 17,698
 190,602
Provision for loan losses4,510
 617
 159
 98
 444
 5,828
Noninterest income38,974
 35,823
 1,340
 4,663
 94
 80,894
Noninterest expense 
  
  
  
  
  
Salaries and employee benefits58,757
 24,771
 403
 2,339
 3,239
 89,509
Equipment and occupancy expenses16,068
 1,684
 3
 159
 145
 18,059
Data processing and telecommunications expenses18,778
 1,182
 80
 12
 598
 20,650
Other expenses34,355
 3,030
 137
 533
 6,326
 44,381
Total noninterest expense127,958
 30,667
 623
 3,043
 10,308
 172,599
Income before income tax expense62,032
 15,250
 4,452
 4,295
 7,040
 93,069
Income tax expense17,801
 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
Three Months Ended
March 31, 2020
(dollars in thousands)
Banking
Division
 
Retail
Mortgage
Division
 
Warehouse
Lending
Division
 
SBA
Division
 
Premium
Finance
Division
 Total(dollars in thousands)Banking
Division
Retail
Mortgage
Division
Warehouse
Lending
Division
SBA
Division
Premium
Finance
Division
Total
Interest income$158,682
 $9,992
 $4,714
 $2,721
 $
 $176,109
Interest income$132,301 $33,411 $4,850 $3,728 $8,478 $182,768 
Interest expense10,726
 2,383
 458
 450
 
 14,017
Interest expense13,926 15,655 1,548 1,547 2,147 34,823 
Net interest income147,956
 7,609
 4,256
 2,271
 
 162,092
Net interest income118,375 17,756 3,302 2,181 6,331 147,945 
Provision for loan losses1,471
 540
 94
 276
 
 2,381
Provision for credit lossesProvision for credit losses35,997 1,997 (9)(903)3,965 41,047 
Noninterest income39,702
 36,126
 1,328
 4,373
 
 81,529
Noninterest income17,773 34,369 960 1,277 — 54,379 
Noninterest expense 
  
  
  
  
  
Noninterest expense      
Salaries and employee benefits55,740
 23,591
 399
 1,970
 
 81,700
Salaries and employee benefits41,621 31,097 210 1,476 1,542 75,946 
Equipment and occupancy expenses16,541
 1,326
 3
 190
 
 18,060
Equipment and occupancy expenses10,347 1,504 97 79 12,028 
Data processing and telecommunications expenses17,299
 974
 71
 3
 
 18,347
Data processing and telecommunications expenses10,797 986 41 13 117 11,954 
Other expenses39,040
 3,392
 77
 542
 
 43,051
Other expenses30,645 5,875 34 515 1,056 38,125 
Total noninterest expense128,620
 29,283
 550
 2,705
 
 161,158
Total noninterest expense93,410 39,462 286 2,101 2,794 138,053 
Income before income tax expense57,567
 13,912
 4,940
 3,663
 
 80,082
Income before income tax expense6,741 10,666 3,985 2,260 (428)23,224 
Income tax expense18,278
 4,870
 1,729
 1,282
 
 26,159
Income tax expense275 2,408 837 475 (93)3,902 
Net income$39,289
 $9,042
 $3,211
 $2,381
 $
 $53,923
Net income$6,466 $8,258 $3,148 $1,785 $(335)$19,322 
 
Interest Income
34


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 and Margins
 
The following table sets forth the average balance, interest income or interest expense, and average yield/interest rate paid for each category of interest-earning assets and interest-bearing liabilities, net interest spread, and net interest margin on average interest-earning assets for the ninethree months ended September 30, 2017March 31, 2021 and 2016.2020. Federally tax-exempt income is presented on a taxable-equivalent basis assuming a 35%21% federal tax rate.
Nine Months Ended
September 30,
Quarter Ended March 31,
2017 2016 20212020
(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$126,014
 $1,070
 1.14% $134,060
 $659
 0.66%
Federal funds sold, interest-bearing deposits in banks, and time deposits in other banksFederal funds sold, interest-bearing deposits in banks, and time deposits in other banks$2,165,652 $534 0.10%$446,889 $1,287 1.16%
Investment securities864,684
 16,917
 2.62% 840,688
 15,227
 2.42%Investment securities957,575 6,296 2.67%1,456,462 10,281 2.84%
Loans held for sale105,296
 2,842
 3.61% 96,340
 2,402
 3.33%Loans held for sale1,284,821 10,827 3.42%1,587,131 13,637 3.46%
Loans4,018,597
 143,806
 4.78% 2,642,498
 93,887
 4.75%Loans14,453,975 161,473 4.53%12,712,997 158,636 5.02%
Purchased loans982,033
 43,986
 5.99% 1,147,821
 53,348
 6.21%
Purchased loan pools513,750
 11,109
 2.89% 629,118
 13,220
 2.81%
Total interest-earning assets6,610,374
 219,730
 4.44% 5,490,525
 178,743
 4.35%Total interest-earning assets18,862,023 179,130 3.85%16,203,479 183,841 4.56%
Noninterest-earning assets569,956
  
   539,656
  
  Noninterest-earning assets1,872,392 1,852,966 
Total assets$7,180,330
  
   $6,030,181
  
  Total assets$20,734,415 $18,056,445 
        
Liabilities and Shareholders’ Equity 
  
    
  
  Liabilities and Shareholders’ Equity
Interest-bearing liabilities: 
  
    
  
  Interest-bearing liabilities:
Savings and interest-bearing demand deposits$3,048,284
 $7,614
 0.33% $2,740,368
 $4,922
 0.24%Savings and interest-bearing demand deposits$8,766,563 $3,048 0.14%$6,936,013 $12,732 0.74%
Time deposits994,770
 5,865
 0.79% 872,209
 3,808
 0.58%Time deposits2,067,410 3,750 0.74%2,685,399 11,370 1.70%
Federal funds purchased and securities sold under agreements to repurchase29,612
 44
 0.20% 44,433
 77
 0.23%Federal funds purchased and securities sold under agreements to repurchase9,284 0.31%15,637 40 1.03%
FHLB advances539,496
 3,994
 0.99% 126,855
 571
 0.60%FHLB advances48,951 192 1.59%1,267,303 5,109 1.62%
Other borrowings66,420
 2,900
 5.84% 47,809
 1,333
 3.72%Other borrowings376,260 4,638 5.00%269,454 3,511 5.24%
Subordinated deferrable interest debentures84,712
 3,764
 5.94% 79,912
 3,306
 5.53%Subordinated deferrable interest debentures124,574 1,338 4.36%127,731 2,061 6.49%
Total interest-bearing liabilities4,763,294
 24,181
 0.68% 3,911,586
 14,017
 0.48%Total interest-bearing liabilities11,393,042 12,973 0.46%11,301,537 34,823 1.24%
Demand deposits1,624,837
  
   1,490,152
  
  Demand deposits6,412,268 4,080,920 
Other liabilities36,046
  
   28,626
  
  Other liabilities234,100 217,371 
Shareholders’ equity756,153
  
   599,817
  
  Shareholders’ equity2,695,005 2,456,617 
Total liabilities and shareholders’ equity$7,180,330
  
   $6,030,181
  
  Total liabilities and shareholders’ equity$20,734,415 $18,056,445 
Interest rate spread 
  
 3.76%  
  
 3.87%Interest rate spread 3.39%3.32%
Net interest income 
 $195,549
    
 $164,726
  Net interest income $166,157 $149,018 
Net interest margin 
  
 3.96%  
  
 4.01%Net interest margin  3.57% 3.70%
 
ForOn a tax-equivalent basis, net interest income for the year-to-date period ending September 30, 2017,first quarter of 2021 was $166.2 million, an increase of $17.1 million, or 11.5%, compared with $149.0 million reported in the Companysame quarter in 2020. The higher net interest income is a result of disciplined deposit pricing and a reduction in borrowing costs, partially offset by a decline in the yield on earning assets. Average interest earning assets increased $2.66 billion, or 16.4%, from $16.20 billion in the first quarter of 2020 to $18.86 billion for the first quarter of 2021. This growth in interest earning assets resulted primarily from organic growth in average loans, including PPP loans, and excess liquidity from deposit growth. The Company’s net interest margin during the first quarter of 2021 was 3.57%, down 13 basis points from 3.70% reported $195.5in the first quarter of 2020. Loan production in the lines of business (including retail mortgage, warehouse lending, SBA and premium finance) amounted to $7.5 billion during the first quarter of 2021, with weighted average yields of 3.15%, compared with $3.9 billion and 4.15%, respectively, during the first quarter of 2020. Loan production yields in the lines of business were negatively impacted 11 basis points during the first quarter of 2021 by originations of PPP loans in our SBA division. Loan production in the banking division amounted to $600.6 million during the first quarter of net2021 with weighted average yields of 3.80%, compared with $918.4 million and 4.55%, respectively, during the first quarter of 2020.
Total interest income, on a tax-equivalent basis, an increase of $30.8decreased to $179.1 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 margin2021, compared with $183.8 million in the same quarter of 2020.  Yields on earning assets decreased to 3.96%3.85% during the first quarter of 2021, compared with 4.56% reported in the nine-month period ending September 30, 2017,first quarter of 2020. During the first quarter of 2021, loans comprised 83.4% of average earning assets, compared with 4.01%88.3% in the same quarter of 2020. Yields on loans decreased to 4.53% in the first quarter of
35


2021, compared with 5.02% in the same period in 2016. The decreaseof 2020. Accretion income for the first quarter of 2021 was $6.1 million, compared with $6.6 million in the netfirst quarter of 2020.

The yield on total interest-bearing liabilities decreased from 1.24% in the first quarter of 2020 to 0.46% in the first quarter of 2021. Total funding costs, inclusive of noninterest-bearing demand deposits, decreased to 0.30% in the first quarter of 2021, compared with 0.91% during the first quarter of 2020. Deposit costs decreased from 0.71% in the first quarter of 2020 to 0.16% in the first quarter of 2021. Non-deposit funding costs increased from 2.57% in the first quarter of 2020 to 4.48% in the first quarter of 2021. The increase in non-deposit funding costs was driven primarily by a shift in mix from short-term FHLB advances as excess liquidity reduced outstanding FHLB advances. Average balances of interest marginbearing deposits and their respective costs for the first quarter of 2021 and 2020 are shown below:
 Three Months Ended
March 31, 2021
Three Months Ended
March 31, 2020
(dollars in thousands)Average
Balance
Average
Cost
Average
Balance
Average
Cost
NOW$3,182,245 0.12%$2,287,947 0.49%
MMDA4,761,279 0.17%4,004,644 0.98%
Savings823,039 0.06%643,422 0.13%
Retail CDs2,066,410 0.73%2,624,209 1.70%
Brokered CDs1,000 2.43%61,190 2.01%
Interest-bearing deposits$10,833,973 0.25%$9,621,412 1.01%
Provision for Credit Losses
The Company’s provision for credit losses during the first quarter of 2021 amounted to a negative $28.6 million, compared with $41.0 million in the first quarter of 2020. This decrease was primarily attributable to an improved economic forecast in our CECL model, particularly levels of unemployment, home prices and commercial real estate prices. The construction and development segment was the increaselargest contributor to the decrease in yield on interest-bearing liabilities.
Provision for Loan Losses
provision as a result of both a decline in funded balances and an improvement in qualitative factors compared with December 31, 2020. The improvement in qualitative factors is attributable to uncertainty in the forecast and loss drivers used in the December 31, 2020 provision estimate which Management determined were both properly addressed in the first quarter 2021 estimate. The provision for loancredit losses for the first quarter of 2021 was comprised of negative $16.6 million related to loans, negative $11.8 million related to unfunded commitments and negative $173,000 related to other credit losses compared with $37.0 million related to loans and $4.0 million related to unfunded commitments for the first quarter of 2020. Non-performing assets as a percentage of total assets decreased from 0.48% at December 31, 2020 to 0.40% at March 31, 2021. The decrease in non-performing assets is primarily attributable to a decrease in nonaccruing loans as a result of collection activities and upgrades. Net charge-offs on loans during the first quarter of 2021 were approximately $4.3 million, or 0.12% of average loans on an annualized basis, compared with approximately $4.4 million, or 0.14%, in the first quarter of 2020. The Company’s total allowance for credit losses on loans at March 31, 2021 was $178.6 million, or 1.22% of total loans, compared with $199.4 million, or 1.38% of total loans, at December 31, 2020. This decrease is primarily attributable to the provision release noted above.
Noninterest Income
Total noninterest income for the first quarter of 2021 was $118.0 million, an increase of $63.6 million, or 116.9%, from the $54.4 million reported in the first quarter of 2020.  Income from mortgage-related activities was $98.5 million in the first quarter of 2021, an increase of $63.2 million, or 178.7%, from $35.3 million in the first quarter of 2020. Total production in the first quarter of 2021 amounted to $2.63 billion, compared with $1.36 billion in the same quarter of 2020, while spread (gain on sale) increased to $5.83.95% in the current quarter, compared with 2.88% in the same quarter of 2020. The retail mortgage open pipeline finished the first quarter of 2021 at $2.33 billion, compared with $2.00 billion at December 31, 2020 and $2.43 billion at the end of the first quarter of 2020. Service charges on deposit accounts decreased $1.0 million, or 8.6%, to $10.8 million in the first quarter of 2021, compared with $11.8 million in the first quarter of 2020. This decrease in service charges on deposit accounts is due primarily to a decrease in NSF income resulting from a decline in volume.

Other noninterest income increased $1.4 million, or 22.5%, to $7.7 million for the nine months ended September 30, 2017,first quarter of 2021, compared with $6.3 million during the first quarter of 2020. The increase in other noninterest income was primarily attributable to an increase in gain on BOLI proceeds of $603,000 and a decrease in SBA servicing asset impairment of $2.2 million, partially offset by a decrease of $632,000 in gain on sales of SBA loans.

36


Noninterest Expense
Total noninterest expenses for the first quarter of 2021 increased $10.7 million, or 7.8%, to $148.8 million, compared with $138.1 million in the same quarter 2020. Salaries and employee benefits increased $20.0 million, or 26.4%, from $75.9 million in the first quarter of 2020 to $96.0 million in the first quarter of 2021, due primarily to an increase in variable compensation tied to increased mortgage production of $16.8 million. Occupancy and equipment expenses decreased $247,000, or 2.1%, to $11.8 million for the first quarter of 2021, compared with $12.0 million in the first quarter of 2020, due primarily to a reduction in leased locations related to previously announced efficiency initiatives. Data processing and telecommunications expense decreased $70,000, or 0.6%, to $11.9 million in the first quarter of 2021, compared with $12.0 million in the first quarter of 2020. Advertising and marketing expense was $1.4 million in the first quarter of 2021, 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 $3.9first quarter of 2020. Amortization of intangible assets decreased $1.5 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%26.7%, 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$5.6 million in the first nine monthsquarter of 20162020 to $38.5$4.1 million in the first nine monthsquarter of 2017, due to higher levels2021. Core deposit intangibles are being amortized over an accelerated basis; therefore, the expense recorded will decline over the life of production.the asset. There were no merger and conversion charges in the first quarter of 2021, compared with $540,000 of such charges in the same quarter of 2020. Other service charges, commissions and feesnoninterest expenses decreased $732,000,$4.4 million, or 25.5%15.9%, to $2.1from $27.4 million in the first nine monthsquarter of 2017, compared with $2.92020 to $23.0 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 20162021, due primarily to consulting fees related to BSA compliance resolution, managementa decrease of $2.2 million in FDIC insurance, a decrease of $1.7 million in problem loan expenses, and licensing fees associated with the premium finance division,a decrease of $2.3 million in legal and professional fees. These decreases in other noninterest expenses were partially offset by increases in loan servicing fees associated with consumer installment home improvement loans serviced by an unrelated third party.expenses of $2.0 million and variable expenses tied to production in our lines of business.

Income Taxes
 
InIncome 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 first nine monthsquarter of 2017,2021, the Company recordedreported income tax expense of $28.7$37.8 million, compared with $26.2$3.9 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.2020. The Company’s effective tax rate for the ninethree months ended September 30, 2017ending March 31, 2021 and 20162020 was 30.8%23.2% and 32.7%16.8%, respectively. The increase in the effective tax rate is primarily a result of the benefit recorded in the first quarter of 2020 for loss carrybacks allowed as a result of the CARES Act.


Financial Condition as of September 30, 2017March 31, 2021
 
Securities
 
Debt securities with readily determinable fair values are classified as available for sale and recorded at fair value with unrealized holding gains and losses excluded from earnings and reported in accumulated other comprehensive income, net of the related deferred tax effect. Equity securities, including restrictedRestricted equity securities are classified as other investment securities and are recordedcarried at cost and are periodically evaluated for impairment based on the lowerultimate 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 expected 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 timeManagement and the extent to which the fair value has been less than cost, (2) the financial conditionCompany’s Asset and near-term prospects of the issuer and (3) the intent and ability of the Company to retain its investmentLiability 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 impairmentan unrealized loss position on at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Substantially allevaluation, 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 unrealizedabove criteria is not met, management evaluates whether the decline in fair value is attributable to credit or resulted from other factors. If credit-related impairment exists, the Company recognizes an allowance for credit losses, on debt securities are relatedlimited to


changes the amount by which the fair value is less than the amortized cost basis. Any impairment not recognized through an allowance for credit losses is recognized in interest rates and do not affect the expected cash flowsother comprehensive income, net of the issuer or underlying collateral. All unrealized losses are considered temporary because each security carries an acceptable investment grade and thetax, as a non credit-related impairment. The Company does not intend to sell these investment securities at an unrealized loss position at September 30, 2017,March 31, 2021, and it is more likely than not that the Company will not be required to sell these securities prior to recovery or maturity. Therefore,Based on the results of management's review, at September 30, 2017, these investments are not considered impaired on an other-than temporary basis.March 31, 2021, management determined that $101,000 was attributable to credit impairment and established the allowance for credit losses accordingly. The remaining $362,000 in unrealized loss was determined to be from factors other than credit.

37


The following table illustrates certain information regarding the Company’sis a summary of our investment portfolio with respectat the dates indicated:
March 31, 2021December 31, 2020
(dollars in thousands)Amortized CostFair
Value
Amortized CostFair
Value
U.S. government sponsored agencies$12,138 $12,394 $17,161 $17,504 
State, county and municipal securities60,140 62,985 63,286 66,778 
Corporate debt securities46,131 46,747 51,639 51,896 
SBA pool securities54,305 55,691 59,973 62,497 
Mortgage-backed securities654,015 681,835 748,521 784,204 
Total debt securities$826,729 $859,652 $940,580 $982,879 

The amounts of securities available for sale in each category as of March 31, 2021 are shown in the following table according to yields, sensitivitiescontractual 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)AmountYield
 (1)
AmountYield
(1)(2)
AmountYield
(1)
One year or less$5,065 1.95 %$12,394 3.49 %$3,003 2.37 %
After one year through five years7,329 1.93 19,045 3.77 10,799 4.41 
After five years through ten years— — 20,325 3.84 31,263 5.31 
After ten years— — 11,221 3.88 1,682 4.35 
$12,394 1.94 %$62,985 3.76 %$46,747 4.87 %
SBA Pool SecuritiesMortgage-Backed Securities
(dollars in thousands)AmountYield
 (1)
AmountYield
(1)
One year or less$— — %$938 2.90 %
After one year through five years13,071 2.23 99,423 2.74 
After five years through ten years10,134 2.28 184,302 2.71 
After ten years32,486 2.48 397,172 2.32 
$55,691 2.38 %$681,835 2.48 %
(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 prepaymentslife 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 securities140,190
 143,387
 4.06% 4.82 14,048
Corporate debt securities46,704
 47,249
 4.00% 5.34 3,000
Mortgage-backed securities626,927
 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 securities149,899
 152,035
 3.73% 5.34 7,884
Corporate debt securities32,375
 32,172
 2.94% 4.87 2,000
Mortgage-backed securities641,362
 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 LoanCredit Losses

At September 30, 2017,March 31, 2021, gross loans outstanding (including purchased loans purchased loan pools, and loans held for sale) were $6.09$16.11 billion, an increaseup $460.7 million from $5.37$15.65 billion reported at December 31, 2016.2020. 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$1.17 billion at December 31, 20162020 to $4.57$1.51 billion at September 30, 2017, drivenMarch 31, 2021 primarily bydue to strategic slowdown in mortgage deliveries 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$118.9 million, or 0.82%, from $1.07$14.48 billion at December 31, 20162020 to $917.1 million$14.60 billion at September 30, 2017, due to paydownsMarch 31, 2021, driven primarily by organic growth net of $155.0 million, transfers to other real estate owned of $4.3 million and charge-offs of $1.8 million, partially offset by accretion of $9.0 million. PurchasedPPP 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.runoff.

The Company regularly monitors the composition of the loan portfolio to evaluate the adequacy of the allowance for loancredit losses ("ACL") on loans 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 SouthGeorgia, Alabama, Florida, North Carolina 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
38


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.ACL. 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 allowanceCompany 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 loanapplicable 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.

Expected credit losses is a reserve established through charges to earningsare reflected in the form ofACL through a provision for loan losses. The provision for loan losses is based on management’s evaluation ofcharge to credit loss expense. When 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 managementCompany deems appropriate. The Company’s management has established an allowance for loan losses which it believes is adequate for the probable incurred losses in the loan portfolio. Based on a credit evaluation of the loan portfolio, management presents a monthly review of the allowance for loan losses to the Company’s Board of Directors, which primarily focuses on risk by evaluating individual loans in certain risk categories. These categories have also been established by management and take the form of loan grades. By grading the loan portfolio in this manner the Company’s management is able to effectively evaluate the portfolio by risk, which management believes is the most effective way to analyze the loan portfolio and thus analyze the adequacy of the allowance for loan losses.
The allowance for loan losses is established by examining (1) the large classified loans, nonaccrual loans and loans considered impaired and evaluating them individually to determine the specific reserve allocation and (2) the remainder of the loan portfolio to allocateall or a portion of a financial asset to be uncollectible the allowance basedappropriate 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 thirdfirst quarter of 2017,2021, the allowance for loan losses allocated to legacyACL on loans totaled $21.2$178.6 million, or 0.46%1.22% of legacy loans, compared with $20.5$199.4 million, or 0.56%1.38% 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.2020. Our legacy nonaccrual loans decreased from $18.1$76.5 million at December 31, 20162020 to $15.3$71.2 million at September 30, 2017.March 31, 2021. The decrease in nonaccrual loans is primarily attributable to collection activities and upgrades. For the first ninethree months of 2017,2021, our legacy net charge off ratio as a percentage of average legacy loans increaseddecreased to 0.13%0.12%, compared with 0.10%0.14% for the first ninethree months of 2016.2020. The total provision for loancredit losses for the first ninethree months of 2017 increased to $5.82021 was negative $28.6 million, compared with $2.4decreasing from $41.0 million recorded for the first ninethree months of 2016.2020. Our ratio of total nonperforming assets to total assets decreased from 0.94%0.48% at December 31, 20162020 to 0.75%0.40% at September 30, 2017.March 31, 2021.

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.
39


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 presenttable presents an analysis of the allowance for loancredit losses on loans, provision for credit losses on loans and net charge-offs as of and for the ninethree months ended September 30, 2017March 31, 2021 and 2016:2020:
Three Months Ended
March 31,
(dollars in thousands)20212020
Balance of allowance for credit losses on loans at beginning of period$199,422 $38,189 
Adjustment to allowance for adoption of ASU 2016-13— 78,661 
Provision charged to operating expense(16,579)37,047 
Charge-offs:  
Commercial, financial and agricultural2,370 2,486 
Consumer installment1,448 1,142 
Indirect automobile829 1,231 
Premium finance1,343 831 
Real estate – construction and development26 — 
Real estate – commercial and farmland1,395 928 
Real estate – residential163 100 
Total charge-offs7,574 6,718 
Recoveries:
Commercial, financial and agricultural727 362 
Consumer installment356 321 
Indirect automobile700 344 
Premium finance1,122 684 
Real estate – construction and development167 342 
Real estate – commercial and farmland41 85 
Real estate – residential188 207 
Total recoveries3,301 2,345 
Net charge-offs4,273 4,373 
Balance of allowance for credit losses on loans at end of period$178,570 $149,524 
 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 expense5,828
 2,381
Charge-offs: 
  
Commercial, financial and agricultural1,896
 1,273
Real estate – construction and development95
 324
Real estate – commercial and farmland413
 708
Real estate – residential2,031
 883
Consumer installment and Other922
 192
Purchased loans1,472
 1,261
Purchased loan pools
 
Total charge-offs6,829
 4,641
Recoveries: 
  
Commercial, financial and agricultural699
 279
Real estate – construction and development244
 474
Real estate – commercial and farmland156
 191
Real estate – residential190
 368
Consumer installment and Other78
 119
Purchased loans1,680
 2,730
Purchased loan pools
 
Total recoveries3,047
 4,161
Net charge-offs3,782
 480
Balance of allowance for loan losses at end of period$25,966
 $22,963

 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 period3,990
 (208) 
 3,782
Loan balances: 
  
  
  
End of period4,574,678
 917,126
 465,218
 5,957,022
Average for the period4,018,597
 982,033
 513,750
 5,514,380
Net charge-offs as a percentage of average loans0.13% (0.03)% 0.00% 0.09%
Allowance for loan losses as a percentage of end of period loans0.46% 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 period1,949
 (1,469) 
 480
Loan balances: 
  
  
  
End of period3,091,039
 1,129,381
 624,886
 4,845,306
Average for the period2,642,498
 1,147,821
 629,118
 4,419,437
Net charge-offs as a percentage of average loans0.10% (0.17)% 0.00% 0.01%
Allowance for loan losses as a percentage of end of period loans0.63% 0.13 % 0.32% 0.47%



Purchased Assets
Loans that were acquired 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.
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 development68,583
 81,368
Real estate – commercial and farmland500,169
 576,355
Real estate – residential264,312
 310,277
Consumer installment3,167
 4,654
 $917,126
 $1,069,191
Purchased Loan Pools
Purchased loan pools are defined as groups of residential mortgage loans that were not acquired in bank acquisitions or FDIC-assisted transactions. As of September 30, 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 and consisted of whole-loan, adjustable rate residential mortgages on properties outside the Company’s markets, with principal balances totaling $559.4 million and $8.9 million of remaining purchase premium paid at acquisition. The Company has allocated approximately $1.5 million and $1.8 millionfollowing table presents an analysis of the allowance for loancredit losses toon loans and net charge-offs for loans held for investment:
As of and for the Three Months Ended
(dollars in thousands)March 31, 2021March 31, 2020
Allowance for credit losses on loans at end of period$178,570 $149,524 
Net charge-offs for the period4,273 4,373 
Loan balances:
End of period14,599,805 13,094,106 
Average for the period14,453,975 12,712,997 
Net charge-offs as a percentage of average loans (annualized)0.12 %0.14 %
Allowance for credit losses on loans as a percentage of end of period loans1.22 %1.14 %

40


Loans

Loans are stated at amortized cost. Balances within the purchased loan pools at September 30, 2017 and December 31, 2016, respectively.major loans receivable categories are presented in the following table:
(dollars in thousands)March 31, 2021December 31, 2020
Commercial, financial and agricultural$1,611,029 $1,627,477 
Consumer installment257,097 306,995 
Indirect automobile482,637 580,083 
Mortgage warehouse880,216 916,353 
Municipal659,228 659,403 
Premium finance706,379 687,841 
Real estate – construction and development1,533,234 1,606,710 
Real estate – commercial and farmland5,616,826 5,300,006 
Real estate – residential2,853,159 2,796,057 
$14,599,805 $14,480,925 

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 impairednon-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$71.2 million at September 30, 2017,March 31, 2021, a decrease of 15.4%$5.3 million, or 6.9%, 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$76.5 million at December 31, 2016. At September 30, 2017, OREO, excluding purchased OREO,2020. Accruing loans delinquent 90 days or more totaled $9.4$5.1 million at March 31, 2021, a decrease of $3.2 million, or 38.8%, compared with $10.9$8.3 million at December 31, 2016. Purchased2020. At March 31, 2021, OREO totaled $9.9$8.8 million, at September 30, 2017,a decrease of $3.0 million, or 25.6%, compared with $12.5$11.9 million at December 31, 2016.2020. Management regularly assesses the valuation of OREO through periodic reappraisal and through inquiries received in the marketing process.  At the end of the thirdfirst quarter of 2017,2021, total non-performing assets decreased to 0.75%as a percent of total assets decreased to 0.40% compared with 0.94%0.48% at December 31, 2016.2020.



Non-performing assets at September 30, 2017March 31, 2021 and December 31, 20162020 were as follows:
(dollars in thousands)March 31, 2021December 31, 2020
Nonaccrual loans$71,189 $76,457 
Accruing loans delinquent 90 days or more5,097 8,326 
Repossessed assets840 544 
Other real estate owned8,841 11,880 
Total non-performing assets$85,967 $97,207 

41

(dollars in thousands)September 30,
2017
 December 31, 2016
Nonaccrual loans, excluding purchased loans$15,325
 $18,114
Nonaccrual purchased loans19,049
 22,966
Nonaccrual purchased loan pools915
 
Accruing loans delinquent 90 days or more, excluding purchased loans2,941
 
Accruing purchased loans delinquent 90 days or more
 
Foreclosed assets, excluding purchased assets9,391
 10,874
Purchased other real estate owned9,946
 12,540
Total non-performing assets$57,567
 $64,494

Troubled Debt Restructurings

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

As of September 30, 2017March 31, 2021 and December 31, 2016,2020, the Company had a balance of $14.2$87.1 million and $18.2$85.0 million, respectively, in troubled debt restructurings, excluding purchased loans.restructurings. These totals do not include COVID-19 loan modifications accounted for under Section 4013 of the CARES Act. Further information on these loans is set forth under the heading "COVID-19 Deferrals" below. The following table presents the amount of troubled debt restructurings by loan class excluding purchased loans, classified separately as accrual and nonaccrual at September 30, 2017March 31, 2021 and December 31, 2016: 2020:
March 31, 2021Accruing LoansNon-Accruing Loans
Loan Class#
Balance
(in thousands)
#
Balance
(in thousands)
Commercial, financial and agricultural10$930 12$854 
Consumer installment827 2253 
Indirect automobile3851,931 47321 
Real estate – construction and development4501 5706 
Real estate – commercial and farmland2743,398 102,233 
Real estate – residential24833,324 362,818 
Total682$80,111 132$6,985 
September 30, 2017Accruing Loans Non-Accruing Loans
Loan Class# 
Balance
(in thousands)
 # 
Balance
(in thousands)
Commercial, financial and agricultural4 $44
 13 $129
Real estate – construction and development7 424
 2 34
Real estate – commercial and farmland16 4,769
 5 210
Real estate – residential78 7,209
 16 1,212
Consumer installment4 6
 36 130
Total109 $12,452
 72 $1,715

December 31, 2020Accruing LoansNon-Accruing Loans
Loan Class#
Balance
(in thousands)
#
Balance
(in thousands)
Commercial, financial and agricultural9$521 11$849 
Consumer installment1032 2056 
Indirect automobile4372,277 51461 
Real estate – construction and development4506 5707 
Real estate – commercial and farmland2836,707 71,401 
Real estate – residential26438,800 342,671 
Total752$78,843 128$6,145 
December 31, 2016Accruing Loans Non-Accruing Loans
Loan Class# 
Balance
(in thousands)
 # 
Balance
(in thousands)
Commercial, financial and agricultural4 $47
 15 $114
Real estate – construction and development8 686
 2 34
Real estate – commercial and farmland16 4,119
 5 2,970
Real estate – residential82 9,340
 15 739
Consumer installment7 17
 32 130
Total117 $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 30, 2017March 31, 2021 and December 31, 2016:2020:
March 31, 2021Loans Currently Paying
Under Restructured Terms
Loans that have Defaulted Under Restructured Terms
Loan Class#
Balance
(in thousands)
#
Balance
(in thousands)
Commercial, financial and agricultural13$1,604 9$179 
Consumer installment824 2256 
Indirect automobile3611,809 71443 
Real estate – construction and development4501 5706 
Real estate – commercial and farmland3039,051 76,580 
Real estate – residential24631,225 384,918 
Total662$74,214 152$12,882 

December 31, 2020Loans Currently Paying
Under Restructured Terms
Loans that have Defaulted Under Restructured Terms
Loan Class#
Balance
(in thousands)
#
Balance
(in thousands)
Commercial, financial and agricultural11$532 9$839 
Consumer installment1233 1855 
Indirect automobile4112,138 77600 
Real estate – construction and development5507 4706 
Real estate – commercial and farmland2936,512 61,595 
Real estate – residential24935,348 496,123 
Total717$75,070 163$9,918 
42

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 agricultural8 $56
 9 $117
Real estate – construction and development6 399
 3 59
Real estate – commercial and farmland17 4,778
 4 201
Real estate – residential80 7,425
 14 996
Consumer installment25 74
 15 62
Total136 $12,732
 45 $1,435

December 31, 2016Loans Currently Paying
Under Restructured Terms
 Loans that have Defaulted Under Restructured Terms
Loan Class# 
Balance
(in thousands)
 # 
Balance
(in thousands)
Commercial, financial and agricultural12 $82
 7 $79
Real estate – construction and development8 686
 2 34
Real estate – commercial and farmland16 4,119
 5 2,970
Real estate – residential84 9,248
 13 831
Consumer installment25 76
 14 71
Total145 $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 30, 2017March 31, 2021 and December 31, 2016: 2020:
March 31, 2021Accruing LoansNon-Accruing Loans
Type of Concession#
Balance
(in thousands)
#
Balance
(in thousands)
Forgiveness of interest1$72 $— 
Forbearance of interest151,162 122,042 
Forbearance of principal50360,940 663,095 
Forbearance of principal, extended amortization— 1188 
Rate reduction only628,670 6653 
Rate reduction, maturity extension— 1
Rate reduction, forbearance of interest403,150 8386 
Rate reduction, forbearance of principal192,579 30215 
Rate reduction, forgiveness of interest423,538 8402 
Total682$80,111 132$6,985 
September 30, 2017Accruing Loans Non-Accruing Loans
Type of Concession# 
Balance
(in thousands)
 # 
Balance
(in thousands)
Forbearance of interest12 $2,622
 4 $172
Forgiveness of principal3 1,256
  
Forbearance of principal5 75
 5 644
Rate reduction only13 1,580
 1 29
Rate reduction, forbearance of interest33 2,431
 20 491
Rate reduction, forbearance of principal7 1,465
 35 249
Rate reduction, forgiveness of interest36 3,023
 3 119
Rate reduction, forgiveness of principal 
 4 11
Total109 $12,452
 72 $1,715

December 31, 2020Accruing LoansNon-Accruing Loans
Type of Concession#
Balance
(in thousands)
#
Balance
(in thousands)
Forgiveness of interest1$73 $— 
Forbearance of interest192,255 71,044 
Forbearance of principal56358,131 723,372 
Forbearance of principal, extended amortization— 1204 
Rate reduction only668,893 4525 
Rate reduction, maturity extension— 1
Rate reduction, forbearance of interest413,472 9389 
Rate reduction, forbearance of principal212,609 25193 
Rate reduction, forgiveness of interest413,410 8412 
Rate reduction, forgiveness of principal— 1
Total752$78,843 128$6,145 
December 31, 2016Accruing Loans Non-Accruing Loans
Type of Concession# 
Balance
(in thousands)
 # 
Balance
(in thousands)
Forbearance of interest11 $1,685
 5 $146
Forgiveness of principal3 1,303
  
Forbearance of principal8 2,210
 9 315
Rate reduction only12 1,573
 1 29
Rate reduction, forbearance of interest38 2,618
 21 1,647
Rate reduction, forbearance of principal8 1,734
 29 1,506
Rate reduction, forgiveness of interest37 3,086
 3 341
Rate reduction, forgiveness of principal 
 1 3
Total117 $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, 2017Accruing Loans Non-Accruing Loans
Collateral Type# 
Balance
(in thousands)
 # 
Balance
(in thousands)
Warehouse3 $445
 1 $80
Raw land9 723
 2 34
Hotel and motel3 1,411
  
Office4 667
  
Retail, including strip centers5 2,189
 3 85
1-4 family residential78 7,002
 18 1,259
Automobile/equipment/CD6 13
 47 255
Unsecured1 2
 1 2
Total109 $12,452
 72 $1,715
December 31, 2016Accruing Loans Non-Accruing Loans
Collateral Type# 
Balance
(in thousands)
 # 
Balance
(in thousands)
Warehouse5 $763
  $
Raw land9 742
 2 34
Apartments 
 3 1,505
Hotel and motel3 1,525
  
Office3 477
  
Retail, including strip centers4 1,298
  
1-4 family residential82 9,340
 17 746
Church 
 2 1,465
Automobile/equipment/CD10 61
 44 233
Unsecured1 3
 1 4
Total117 $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: 
September 30, 2017Accruing Loans Non-Accruing Loans
Loan Class# 
Balance
(in thousands)
 # 
Balance
(in thousands)
Commercial, financial and agricultural $
 3 $18
Real estate – construction and development3 1,022
 6 349
Real estate – commercial and farmland15 6,308
 11 3,834
Real estate – residential119 12,875
 25 1,627
Consumer installment 
 2 6
Total137 $20,205
 47 $5,834
December 31, 2016Accruing Loans Non-Accruing Loans
Loan Class# 
Balance
(in thousands)
 # 
Balance
(in thousands)
Commercial, financial and agricultural1 $1
 4 $91
Real estate – construction and development6 1,358
 3 30
Real estate – commercial and farmland20 8,460
 5 2,402
Real estate – residential123 13,713
 33 2,077
Consumer installment3 11
 1 
Total153 $23,543
 46 $4,600



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 agricultural1 $12
 2 $6
Real estate – construction and development8 1,365
 1 6
Real estate – commercial and farmland21 8,197
 5 1,945
Real estate – residential127 13,340
 17 1,162
Consumer installment1 3
 1 3
Total158 $22,917
 26 $3,122
December 31, 2016Loans Currently Paying
Under Restructured Terms
 Loans that have Defaulted Under Restructured Terms
Loan Class# 
Balance
(in thousands)
 # 
Balance
(in thousands)
Commercial, financial and agricultural3 $16
 2 $76
Real estate – construction and development8 1,378
 1 9
Real estate – commercial and farmland25 10,862
  
Real estate – residential126 13,484
 30 2,306
Consumer installment4 11
  
Total166 $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, 2017Accruing Loans Non-Accruing Loans
Type of Concession# 
Balance
(in thousands)
 # 
Balance
(in thousands)
Forbearance of interest4 $189
 9 $1,772
Forgiveness of principal 
 1 63
Forbearance of principal6 1,934
 5 1,588
Forbearance of principal, extended amortization2 375
 1 298
Rate reduction only72 11,607
 16 1,465
Rate reduction, forbearance of interest19 1,913
 10 454
Rate reduction, forbearance of principal10 2,211
 5 194
Rate reduction, forgiveness of interest24 1,976
  
Total137 $20,205
 47 $5,834
December 31, 2016Accruing Loans Non-Accruing Loans
Type of Concession# 
Balance
(in thousands)
 # 
Balance
(in thousands)
Forbearance of interest12 $3,553
 4 $207
Forbearance of principal7 2,003
 5 1,528
Forbearance of principal, extended amortization1 78
 1 323
Rate reduction only78 12,710
 13 1,385
Rate reduction, forbearance of interest20 1,387
 19 632
Rate reduction, forbearance of principal11 1,617
 3 231
Rate reduction, forgiveness of interest24 2,195
 1 294
Total153 $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 30, 2017March 31, 2021 and December 31, 2016: 2020:
March 31, 2021Accruing LoansNon-Accruing Loans
Collateral Type#
Balance
(in thousands)
#
Balance
(in thousands)
Warehouse4$242 2$304 
Raw land54,591 71,131 
Hotel and motel527,851 — 
Office61,261 — 
Retail, including strip centers97,681 3857 
1-4 family residential25133,454 373,304 
Church12,180 1161 
Automobile/equipment/CD4012,851 821,228 
Total682$80,111 132$6,985 

December 31, 2020Accruing LoansNon-Accruing Loans
Collateral Type#
Balance
(in thousands)
#
Balance
(in thousands)
Warehouse4$248 2$305 
Raw land54,611 71,135 
Hotel and motel422,372 — 
Office61,281 — 
Retail, including strip centers138,627 — 
1-4 family residential26638,913 353,170 
Church— 1166 
Automobile/equipment/CD4542,791 821,368 
Unsecured— 1
Total752$78,843 128$6,145 
September 30, 2017Accruing Loans Non-Accruing Loans
Collateral Type# 
Balance
(in thousands)
 # 
Balance
(in thousands)
Warehouse2 $369
  $
Raw land3 1,045
 7 846
Hotel and motel1 151
 1 497
Office2 470
 2 505
Retail, including strip centers8 5,074
 1 169
1-4 family residential121 13,096
 28 2,356
Church 
 2 1,390
Automobile/equipment/CD 
 6 71
Total137 $20,205
 47 $5,834
43


December 31, 2016Accruing Loans Non-Accruing Loans
Collateral Type# 
Balance
(in thousands)
 # 
Balance
(in thousands)
Warehouse4 $1,532
  $
Raw land7 1,919
 4 86
Hotel and motel1 154
 1 558
Office3 967
  
Retail, including strip centers7 4,489
 1 197
1-4 family residential127 14,470
 33 2,318
Church 
 1 1,298
Automobile/equipment/CD4 12
 6 143
Total153 $23,543
 46 $4,600
COVID-19 Deferrals

In response to the COVID-19 pandemic, the Company offered affected borrowers payment relief under its Disaster Relief Program. These modifications primarily consisted of short-term payment deferrals or interest-only periods to assist customers. The Company has begun providing payment modifications to certain borrowers in economically sensitive industries of various terms up to nine months. Modifications related to the COVID-19 pandemic and qualifying under the provisions of Section 4013 of the CARES Act are not deemed to be troubled debt restructurings. As of March 31, 2021, $235.4 million in loans remained in payment deferral under the COVID-19 pandemic Disaster Relief Program compared with $332.8 million at December 31, 2020.

The table below presents short-term deferrals related to the COVID-19 pandemic that were not considered TDRs as of March 31, 2021 and December 31, 2020.
March 31, 2021December 31, 2020
(dollars in thousandsCOVID-19 DeferralsDeferrals as a % of total loansCOVID-19 DeferralsDeferrals as a % of total loans
Commercial, financial and agricultural$4,460 0.3 %$12,471 0.8 %
Consumer installment569 0.2 %1,418 0.5 %
Indirect automobile3,536 0.7 %8,936 1.5 %
Real estate – construction and development418 — %11,049 0.7 %
Real estate – commercial and farmland152,337 2.7 %179,183 3.4 %
Real estate – residential74,101 2.6 %119,722 4.3 %
$235,421 1.6 %$332,779 2.3 %

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 1-4one-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 occupiedowner-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 occupiedowner-occupied CRE are generally excluded from the CRE guidance.

The CRE guidance is applicable when either:

(1)total loans for construction, land development, and other land, net of owner occupied loans, represent 100% or more of a bank’s total risk-based capital; or
(2)total loans secured by multifamily and nonfarm nonresidential properties and loans for construction, land development, and other land, net of owner occupied loans, represent 300% or more of a bank’s total risk-based capital.

(1)total loans for construction, land development, and other land, net of owner-occupied loans, represent 100% or more of a bank’s total risk-based capital; or
(2)total loans secured by multifamily and nonfarm nonresidential properties and loans for construction, land development, and other land, net of owner-occupied loans, represent 300% or more of a bank’s total risk-based capital.

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

As of September 30, 2017,March 31, 2021, 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.

44


The following table outlines CRE loan categories and CRE loans as a percentage of total loans as of September 30, 2017March 31, 2021 and December 31, 2016.2020. The loan categories and concentrations below are based on Federal Reserve Call codes and include purchased loans: codes:
March 31, 2021December 31, 2020
(dollars in thousands)Balance% of Total
Loans
Balance% of Total
Loans
Construction and development loans$1,533,235 11%$1,606,710 11%
Multi-family loans467,621 3%347,951 2%
Nonfarm non-residential loans (excluding owner-occupied)3,449,882 24%3,260,389 23%
Total CRE Loans (excluding owner-occupied)
5,450,738 37%5,215,050 36%
All other loan types9,149,067 63%9,265,875 64%
Total Loans$14,599,805 100%$14,480,925 100%
 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 loans160,577
 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 types4,165,012
 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 occupiedowner-occupied loans, to the Bank’s total risk-based capital, and the Company’s internal concentration limits as of September 30, 2017March 31, 2021 and December 31, 2016: 2020:
Internal
Limit
Actual
March 31, 2021December 31, 2020
Construction and development loans100%68%74%
Total CRE loans (excluding owner-occupied)300%240%241%
 
Internal
Limit
 Actual
  September 30,
2017
 December 31,
2016
Construction and development100% 76% 72%
Commercial real estate300% 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 30, 2017,March 31, 2021, the Company’s short-term investments were $112.8 million,$2.53 billion, compared with $71.2 million$1.91 billion at December 31, 2016.2020. At September 30, 2017,March 31, 2021, the Company did not have anyhad $20.0 million in federal funds sold and all $112.8 million$2.51 billion was in interest-bearing deposit balances at correspondent banks and the Federal Reserve Bank of Atlanta.

Derivative Instruments and Hedging Activities

The Company has a cash flow hedge that matures September 15, 2020 with a notional amount of $37.1 million at September 30, 2017 and December 31, 2016 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 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 at December 31, 2016.
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$62.9 million and $4.3$51.8 million at September 30, 2017March 31, 2021 and December 31, 2016,2020, respectively, and a liability of approximately $237,000$0 and $0$16.4 million at September 30, 2017March 31, 2021 and December 31, 2016,2020, 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 issued 128,572 unregistered sharesannounced that its Board of Directors authorized the Company to repurchase up to $100.0 million of its outstanding common stock to William J. Villari in exchange for 4.99%through October 31, 2020. On October 22, 2020, the Company announced that its Board of Directors approved the extension of the outstandingshare repurchase program through October 31, 2021.  Repurchases of shares must be made in accordance with applicable securities laws and may be made from time to time in the open market or by negotiated transactions. The amount and timing of common stockrepurchases will be based on a variety of USPF. A registration statement was filed with the Securitiesfactors, including share acquisition price, regulatory limitations and Exchange Commission on February 13, 2017 to register the resale or other disposition of these shares.market and economic factors. 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.


On March 6, 2017,program does not require the Company completed an underwritten public offeringto repurchase any specific number of 2,012,500shares. As of March 31, 2021, $14.3 million, or 358,664 shares of the Company’sCompany's common stock, at a price tohad been repurchased under 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.program.

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

Capital management consists of providing equity to support both current and anticipated future operations. The capital resources of the Company is subject toare monitored on a periodic basis by state and federal regulatory authorities.

Under the regulatory capital adequacy requirements imposedframeworks adopted by the Federal Reserve Board (the “FRB”) and the GDBF,FDIC, the Company and the Bank is subject to capital adequacy requirements imposed by the FDIC and the GDBF.
The FRB, the FDIC and the GDBF have adopted risk-based capital requirements for assessing bank holding company and bank capital adequacy. These standards define and establish minimum capital requirements in relation to assets and off-balance sheet exposure, adjusted for credit risk. The risk-based capital standards currently in effect are designed to make regulatory capital requirements more sensitive to differences in risk profiles among bank holding companies and banks and to account for off-balance sheet exposure.
In July 2013, the Federal Reserve published final rules for the adoption of the Basel III regulatory capital framework (the "Basel III Capital Rules"). The Basel III Capital Rules definedmust each maintain a new capital measure called "Common Equity Tier 1" ("CET1"), established thatcommon equity Tier 1 capital consistto total risk-weighted assets ratio of Common Equityat least 4.5%, a Tier 1 capital to total risk-weighted assets ratio of at least 6%, a total capital to total risk-weighted assets ratio of at least 8% and "Additional Tier 1 Capital" instruments meeting specified requirements, defined Common Equity Tier 1, established a capital conservation buffer and expanded the scopeleverage ratio of the adjustments as compared with existing regulations. The capital conservation buffer is being increased by 0.625% per year until reaching 2.50% by 2019. The capital conservation buffer is being phased in from 0.0% for 2015 to, 0.625% for 2016, 1.25% for 2017, 1.875% for 2018, and 2.50% for 2019. The Basel III Capital Rules became effective for us on January 1, 2015 with certain transition provisions fully phased in on January 1, 2019.
The regulatory capital standards are defined by the following key measurements:
a) The “Tier 1 Leverage Ratio” is defined as Tier 1 capital to average assets. To be considered “adequately capitalized” under this measurement, a bank musttotal consolidated assets of at least 4%. The Company and the Bank are also required to 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%.capital
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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% including the 1.25% capital conservation buffer for 2017; 5.125% including the 0.625% capital conservation buffer for 2016). 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 asof common equity Tier 1 capital of at least 2.5% of risk-weighted assets in addition to total risk weighted assets. To be considered “adequately capitalized”the minimum risk-based capital ratios in order to avoid certain restrictions on capital distributions and discretionary bonus payments.

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 this measurement, a bank must maintain a Tier 1 capital ratio greater than or equal to 6.00% (7.25% including the 1.25% capital conservation buffer for 2017; 6.625% including the 0.625% capital conservation buffer for 2016). For a bank to be considered “well capitalized,” it must maintain a Tier 1 capital ratio greater than or equal to 8.00%.interim final rule effective March 31, 2020.
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% including the 1.25% capital conservation buffer for 2017; 8.625% including the 0.625% capital conservation buffer for 2016). For a bank to be considered “well capitalized,” it must maintain a total capital ratio greater than or equal to 10.00%.



As of September 30, 2017,March 31, 2021, under the regulatory capital standards, the Bank was considered “well capitalized” under all capital measurements. The following table sets forth the regulatory capital ratios of for the Company and the Bank at September 30, 2017March 31, 2021 and December 31, 2016. 2020:
March 31, 2021December 31, 2020
Tier 1 Leverage Ratio (tier 1 capital to average assets)
  
Consolidated9.18%8.99%
Ameris Bank10.58%10.39%
CET1 Ratio (common equity tier 1 capital to risk weighted assets)
  
Consolidated11.45%11.14%
Ameris Bank13.20%12.87%
Tier 1 Capital Ratio (tier 1 capital to risk weighted assets)
  
Consolidated11.45%11.14%
Ameris Bank13.20%12.87%
Total Capital Ratio (total capital to risk weighted assets)
  
Consolidated15.27%15.27%
Ameris Bank14.31%14.19%
 September 30,
2017
 December 31, 2016
Tier 1 Leverage Ratio (tier 1 capital to average assets)
   
Consolidated9.94% 8.68%
Ameris Bank10.83% 9.27%
CET1 Ratio (common equity tier 1 capital to risk weighted assets)
   
Consolidated10.35% 8.32%
Ameris Bank12.69% 10.35%
Tier 1 Capital Ratio (tier 1 capital to risk weighted assets)
   
Consolidated11.65% 9.69%
Ameris Bank12.69% 10.35%
Total Capital Ratio (total capital to risk weighted assets)
   
Consolidated13.25% 10.11%
Ameris Bank13.10% 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 members of the Company’s Board of Directors.Ameris. 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.

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Liquidity management involves the matching of the cash flow requirements of customers, who may be either depositors desiring to withdraw funds or borrowers needing assurance that sufficient funds will be available to meet their credit needs, and the ability of Ameris to manage those requirements. The Company strives to maintain an adequate liquidity position by managing the balances and maturities of interest-earning assets and interest-bearing liabilities so that the balance it has in short-term assets at any given time will adequately cover any reasonably anticipated immediate need for funds. Additionally, the Bank maintains relationships with correspondent banks, which could provide funds on short notice, if needed. The Company has invested in FHLB stock for the purpose of establishing credit lines with the FHLB. The credit availability to the Bank is equal to 30% of the Bank’s total assets as reported on the most recent quarterly financial information submitted to the regulators subject to the pledging of sufficient collateral. At September 30, 2017March 31, 2021 and December 31, 2016,2020, the net carrying value of the Company’s other borrowings was $808.6$425.2 million and $492.3$425.2 million, respectively. On March 13, 2017, the Company completed the public offering and sale of $75.0 million


in aggregate principal amount of its 5.75% Fixed-To-Floating Rate Subordinated Notes due 2027. These subordinated notes are included in other borrowings at September 30, 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:
March 31,
2021
December 31,
2020
September 30,
2020
June 30,
2020
March 31,
2020
Investment securities available for sale to total deposits4.81%5.80%6.96%7.95%9.77%
Loans (net of unearned income) to total deposits81.67%85.39%93.03%93.03%94.58%
Interest-earning assets to total assets91.15%90.88%90.66%90.51%89.57%
Interest-bearing deposits to total deposits61.93%63.73%63.21%64.11%69.47%
 September 30, 2017 June 30, 2017 March 31, 2017 December 31, 2016 September 30, 2016
Investment securities available for sale to total deposits13.90% 14.13% 14.72% 14.76% 15.80%
Loans (net of unearned income) to total deposits101.04% 97.88% 94.31% 94.42% 91.32%
Interest-earning assets to total assets92.48% 92.14% 91.98% 91.32% 91.25%
Interest-bearing deposits to total deposits70.86% 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 30, 2017March 31, 2021 were considered satisfactory. The Company is aware of no events or trends likely to result in a material change in liquidity.


Item 3. Quantitative and Qualitative Disclosures About Market Risk.

The Company is exposed only to U.S. dollar interest rate changes, and, accordingly, the Company manages exposure by considering the possible changes in the net interest margin. The Company does not have any trading instruments nor does it classify any portion of the investment portfolio as held for trading. The Company’s hedging activities are limited to cash flow hedges and fair value hedges and are part of the Company’s program to manage interest rate sensitivity.
At September 30, 2017, 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 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 at December 31, 2016.

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$62.9 million and $4.3$51.8 million at September 30, 2017March 31, 2021 and December 31, 2016,2020, respectively, and a liability of $237,000$0 and $0$16.4 million at September 30, 2017March 31, 2021 and December 31, 2016,2020, 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 basisbasis.

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
47


evaluation, such officers have concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures arewere effective.

During the quarter ended September 30, 2017,March 31, 2021, 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, various claims or charges are asserted against the Company or the Bank. 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 the Company’s business, management believes based on its current knowledge and after consultation with legal counsel that there are no pending or threatenedDisclosure concerning legal proceedings that will, individually orcan be found in Part I - "Financial Information, Item 1. Financial Statements, Notes to Unaudited Consolidated Financial Statements, Note 9 – Commitments and Contingencies" under the aggregate, have a material adverse effect on the consolidated results of operations or financial condition of the Company.caption, "Litigation and Regulatory Contingencies," which is incorporated herein by reference.

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, 2016.2020.

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 March 31, 2021. 
Period
Total
Number of
Shares
Purchased(2)
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)
January 1, 2021 through January 31, 2021317 $38.07 — $85,723,412 
February 1, 2021 through February 28, 202110,971 $46.88 — $85,723,412 
March 1, 2021 through March 31, 202117,150 $54.18 — $85,723,412 
Total28,438 $51.19 — $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 through October 31, 2020.  On October 22, 2020, the Company announced that its Board of Directors approved the extension of the share repurchase program through October 31, 2021. Repurchases of shares must be made in accordance with applicable securities laws and may be made from time to time in the open market or by negotiated transactions. The amount and timing of repurchases will be based on a variety of factors, including share acquisition price, regulatory limitations and other market and economic factors. The program does not require the Company to repurchase any specific number of shares. As of March 31, 2021, $14.3 million, or 358,664 shares of the Company's common stock, had been repurchased under the new program.
(2)The shares purchased from January 1, 2021 through March 31, 2021 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.



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Item 6. Exhibits.

Exhibit

Number
Description
3.1Articles 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).
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).
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).
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).
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).
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).
Articles of Amendment to the Articles of Incorporation of Ameris Bancorp (incorporated by reference to Exhibit 3.7 to Ameris Bancorp's Quarterly Report on Form 10-Q filed with the SEC on August 10, 2020).
Bylaws of Ameris Bancorp, as amended and restated effective July 18, 2017through June 11, 2020 (incorporated by reference to Exhibit 3.13.8 to Ameris Bancorp’s CurrentBancorp's Quarterly Report on Form 8-K10-Q filed with the SEC on July 21, 2017)August 10, 2020).
Severance Protection and Restrictive Covenants Agreement by and among Ameris Bancorp, Ameris Bank 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).
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).
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).
.
Rule 13a-14(a)/15d-14(a) Certification by the Company’s Chief Executive Officer.
Rule 13a-14(a)/15d-14(a) Certification by the Company’s Chief Financial Officer.
Section 1350 Certification by the Company’s Chief Executive Officer.
Section 1350 Certification by the Company’s Chief Financial Officer.
101101.INSThe following financial statements from Ameris Bancorp’s Form 10-Q forXBRL Instance Document - the quarter ended September 30, 2017, formatted asinstance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCHInline XBRL Taxonomy Extension Schema Document.
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document.
101.LABInline XBRL Taxonomy Extension Label Linkbase Document.
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document.
104Cover Page Interactive Data File - the cover page interactive data filesfile 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.



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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
Dated: November 9, 2017May 7, 2021AMERIS 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)



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