UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_________________________

FORM 10-Q

(Mark one)

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

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

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, ~~2017~~2021

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

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

For the transition period from _______to_______

Commission file number 001-36452

SERVISFIRST BANCSHARES, INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	26-0734029
(State or Other Jurisdiction of	(I.R.S. Employer
Incorporation or Organization)	Identification No.)

~~2500 Woodcrest Place, Birmingham, Alabama~~	*~~35209~~*
~~(Address of Principal Executive Offices)~~	~~(Zip Code)~~

2500 Woodcrest Place, Birmingham, Alabama 35209

(Address of Principal Executive Offices) (Zip Code)

(205) 949-0302

(Registrant's Telephone Number, Including Area Code)

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

Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common stock, par value $.001 per share	SFBS	New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or Section 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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files).

Yes ☒ 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”,~~filer,” “accelerated ~~filer”,~~filer,” “smaller reporting ~~company”~~company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act (Check one):

Large accelerated filer ☒

Accelerated filer ☐

Non-accelerated filer ☐

Smaller reporting company ☐

Emerging growth company ☐

~~Large accelerated filer ☒ Accelerated filer~~ ☐ ~~Non-accelerated filer ☐ 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 ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practical date.

Class	Outstanding as of October ~~27, 2017~~25, 2021
Common stock, $.001 par value	~~52,979,310~~54,211,147

~~TABLE OF CONTENTS~~

TABLE OF CONTENTS

EX-31.01 SECTION 302 CERTIFICATION OF THE CEO

EX-31.02 SECTION 302 CERTIFICATION OF THE CFO

EX-32.01 SECTION 906 CERTIFICATION OF THE CEO

EX-32.02 SECTION 906 CERTIFICATION OF THE CFO

PART 1. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SERVISFIRST BANCSHARES, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)

	September 30, 2017			December 31, 2016			September 30, 2021			December 31, 2020
	(Unaudited)			(1)			(Unaudited)				(1)
ASSETS
Cash and due from banks	$	79,431		$	56,855		$	102,313		$	93,655
Interest-bearing balances due from depository institutions		86,719			566,707			4,297,473			2,115,985
Federal funds sold		182,841			160,435			44,700			1,771
Cash and cash equivalents		348,991			783,997			4,444,486			2,211,411
Available for sale debt securities, at fair value		435,325			422,375			723,324			886,688
Held to maturity debt securities (fair value of $89,329 and $63,302 at September 30, 2017 and December 31, 2016, respectively)		87,399			62,564
Restricted equity securities		1,038			1,024
Held to maturity debt securities (fair value of $261,276 at September 30, 2021 and $250 at December 31, 2020)								261,276			250
Mortgage loans held for sale		4,971			4,675			578			14,425
Loans		5,628,765			4,911,770			8,812,811			8,465,688
Less allowance for loan losses		(58,459	)		(51,893	)
Less allowance for credit losses								(108,950	)		(87,942	)
Loans, net		5,570,306			4,859,877			8,703,861			8,377,746
Premises and equipment, net		55,104			40,314			60,953			54,969
Accrued interest and dividends receivable		20,334			15,801			33,815			36,841
Deferred tax assets		26,326			27,132			31,533			31,072
Other real estate owned and repossessed assets		3,888			4,988			2,068			6,497
Bank owned life insurance contracts		126,722			114,388			281,399			276,387
Goodwill and other identifiable intangible assets		14,787			14,996			13,705			13,908
Other assets		16,912			18,317			45,230			22,460
Total assets	$	6,712,103		$	6,370,448		$	14,602,228		$	11,932,654
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
Noninterest-bearing	$	1,405,965		$	1,281,605		$	4,366,654		$	2,788,772
Interest-bearing		4,390,936			4,138,706			7,712,016			7,186,952
Total deposits		5,796,901			5,420,311			12,078,670			9,975,724
Federal funds purchased		254,880			355,944			1,286,756			851,545
Other borrowings		54,975			55,262			64,701			64,748
Accrued interest payable		4,353			4,401			12,697			12,321
Other liabilities		10,781			11,641			45,111			35,464
Total liabilities		6,121,890			5,847,559			13,487,935			10,939,802
Stockholders' equity:
Preferred stock, Series A Senior Non-Cumulative Perpetual, par value $0.001 (liquidation preference $1,000), net of discount; no shares authorized or outstanding at September 30, 2017 and December 31, 2016		-			-
Preferred stock, par value $0.001 per share; 1,000,000 authorized and undesignated at September 30, 2017 and December 31, 2016		-			-
Common stock, par value $0.001 per share; 100,000,000 shares authorized; 52,970,310 shares issued and outstanding at September 30, 2017, and 52,636,896 shares issued and outstanding at December 31, 2016		53			53
Preferred stock, par value $0.001 per share; 1,000,000 authorized and undesignated at September 30, 2021 and December 31, 2020								0			0
Common stock, par value $0.001 per share; 100,000,000 shares authorized; 54,207,147 shares issued and outstanding at September 30, 2021, and 53,943,751 shares issued and outstanding at December 31, 2020								54			54
Additional paid-in capital		217,483			215,932			225,648			223,856
Retained earnings		371,127			307,151			869,731			748,224
Accumulated other comprehensive income		1,048			(624	)		18,360			20,218
Total stockholders' equity attributable to ServisFirst Bancshares, Inc.		589,711			522,512			1,113,793			992,352
Noncontrolling interest		502			377			500			500
Total stockholders' equity		590,213			522,889			1,114,293			992,852
Total liabilities and stockholders' equity	$	6,712,103		$	6,370,448		$	14,602,228		$	11,932,654

(1) Derived from audited financial statements.

~~See Notes to Consolidated Financial Statements.~~

~~SERVISFIRST BANCSHARES, INC.~~

~~CONSOLIDATED STATEMENTS OF INCOME~~

~~(In thousands, except share and per share amounts)~~

~~(Unaudited)~~

Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016
Interest income:
Interest and fees on loans $ 63,857 $ 51,473 $ 179,325 $ 147,930
Taxable securities 2,288 1,232 6,649 3,739
Nontaxable securities 729 823 2,246 2,515
Federal funds sold 379 347 1,185 630
Other interest and dividends 388 816 1,291 1,888
Total interest income 67,641 54,691 190,696 156,702
Interest expense:
Deposits 7,574 5,358 19,877 14,352
Borrowed funds 1,671 1,415 4,804 4,362
Total interest expense 9,245 6,773 24,681 18,714
Net interest income 58,396 47,918 166,015 137,988
Provision for loan losses 4,803 3,464 14,170 9,323
Net interest income after provision for loan losses 53,593 44,454 151,845 128,665
Noninterest income:
Service charges on deposit accounts 1,467 1,367 4,203 3,980
Mortgage banking 978 1,112 2,941 2,681
Credit card income 1,149 1,114 3,517 2,159
Securities losses - - - (3 )
Increase in cash surrender value life insurance 825 770 2,334 2,049
Other operating income 371 428 1,146 1,207
Total noninterest income 4,790 4,791 14,141 12,073
Noninterest expenses:
Salaries and employee benefits 12,428 10,958 36,172 32,758
Equipment and occupancy expense 1,947 2,100 6,452 6,108
Professional services 805 1,182 2,384 2,919
FDIC and other regulatory assessments 810 775 2,888 2,328
OREO expense 31 178 163 668
Other operating expenses 5,476 4,969 16,580 14,175
Total noninterest expenses 21,497 20,162 64,639 58,956
Income before income taxes 36,886 29,083 101,347 81,782
Provision for income taxes 11,627 8,174 29,405 22,041
Net income 25,259 20,909 71,942 59,741
Preferred stock dividends - - 31 23
Net income available to common stockholders $ 25,259 $ 20,909 $ 71,911 $ 59,718

Basic earnings per common share $ 0.48 $ 0.40 $ 1.36 $ 1.14

Diluted earnings per common share $ 0.47 $ 0.39 $ 1.33 $ 1.12

~~See Notes to Consolidated Financial Statements.~~

~~SERVISFIRST BANCSHARES, INC. AND SUBSIDIARIES~~

~~CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME~~

~~(In thousands)~~

~~(Unaudited)~~

Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016
Net income $ 25,259 $ 20,909 $ 71,942 $ 59,741
Other comprehensive income (loss), net of tax:
Unrealized holding gains (losses) arising during period from securities available for sale, net of tax of $165 and $896 for the three and nine months ended September 30, 2017, respectively, and $(415) and $844 for the three and nine months ended September 30, 2016, respectively 305 (771 ) 1,672 1,583
Reclassification adjustment for net losses on sale of securities, net of tax of $1 for the nine months ended September 30, 2016 - - - 2
Other comprehensive income, net of tax 305 (771 ) 1,672 1,585
Comprehensive income $ 25,564 $ 20,138 $ 73,614 $ 61,326

See Notes to Consolidated Financial Statements.

SERVISFIRST BANCSHARES, INC.

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
Interest income:
Interest and fees on loans	$	96,119	$	89,564	$	285,373	$	268,332
Taxable securities		6,544		5,858		18,666		16,104
Nontaxable securities		62		166		255		610
Federal funds sold		4		16		11		327
Other interest and dividends		1,507		506		3,046		2,584
Total interest income		104,236		96,110		307,351		287,957
Interest expense:
Deposits		6,581		9,876		20,298		37,377
Borrowed funds		1,335		1,152		3,700		4,624
Total interest expense		7,916		11,028		23,998		42,001
Net interest income		96,320		85,082		283,353		245,956
Provision for credit losses		5,963		12,284		23,066		36,151
Net interest income after provision for credit losses		90,357		72,798		260,287		209,805
Noninterest income:
Service charges on deposit accounts		1,727		1,818		5,542		5,557
Mortgage banking		1,423		2,519		6,869		5,697
Credit card income		2,043		1,840		5,147		5,003
Securities gains		0		0		620		0
Increase in cash surrender value life insurance		1,671		1,733		5,012		4,650
Other operating income		1,162		262		2,897		972
Total noninterest income		8,026		8,172		26,087		21,879
Noninterest expenses:
Salaries and employee benefits		17,995		14,994		50,425		46,444
Equipment and occupancy expense		2,996		2,556		8,494		7,390
Third party processing and other services		4,144		3,281		11,506		10,360
Professional services		948		955		2,978		2,994
FDIC and other regulatory assessments		1,630		1,061		4,637		2,988
OREO expense		123		119		820		2,023
Other operating expenses		6,541		3,607		15,740		11,110
Total noninterest expenses		34,377		26,573		94,600		83,309
Income before income taxes		64,006		54,397		191,774		148,375
Provision for income taxes		11,507		11,035		37,793		29,787
Net income		52,499		43,362		153,981		118,588
Preferred stock dividends		0		0		31		31
Net income available to common stockholders	$	52,499	$	43,362	$	153,950	$	118,557

Basic earnings per common share	$	0.97	$	0.80	$	2.84	$	2.20
Diluted earnings per common share	$	0.96	$	0.80	$	2.83	$	2.19

See Notes to Consolidated Financial Statements.

SERVISFIRST BANCSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2021			2020		2021			2020
Net income	$	52,499		$	43,362	$	153,981		$	118,588
Other comprehensive (loss) income, net of tax:
Unrealized net holding (loss) gains arising during period from securities available for sale, net of tax of $(1,798) and $(2,097) for the three and nine months ended September 30, 2021, respectively, and net of tax of $58 and $3,477 for the three and nine months ended September 30, 2020, respectively		(6,764	)		220		(7,916	)		13,082
Amortization of net unrealized gains on securities transferred from available-for-sale to held-to-maturity, net of tax of $36 for the three and nine months ended September 30, 2021		(136	)		0		(136	)		0
Reclassification adjustment for securities transferred from available-for-sale to held-to-maturity net of tax of $1,480 for the three and nine months ended September 30, 2021, respectively		5,705			0		5,705			0
Reclassification adjustment for net gains on call of securities, net of tax of $130 for the nine months ended September 30, 2021		0			0		490			0
Other comprehensive income (loss), net of tax		(1,195	)		220		(1,858	)		13,082
Comprehensive income	$	51,304		$	43,582	$	152,123		$	131,670

See Notes to Consolidated Financial Statements.

SERVISFIRST BANCSHARES, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

(In thousands, except share amounts)

(Unaudited)

Common
Stock Additional
Paid-in
Capital Retained
Earnings Accumulated
Other
Comprehensive
Income Noncontrolling
Interest Total
Stockholders'
Equity
Balance, December 31, 2015 $ 52 $ 211,546 $ 234,124 $ 3,048 $ 377 $ 449,147
Common dividends paid, $0.08 per share - - (4,194 ) - - (4,194 )
Common dividends declared, $.04 per share - - (2,106 ) - - (2,106 )
Preferred dividends paid - - (23 ) - - (23 )
Issue 656,500 shares of common stock upon exercise of stock options - 2,785 - - - 2,785
Stock based compensation expense - 931 - - - 931
Other comprehensive income, net of tax - - - 1,585 - 1,585
Net income - - 59,741 - - 59,741
Balance, September 30, 2016 $ 52 $ 215,262 $ 287,542 $ 4,633 $ 377 $ 507,866

Balance, December 31, 2016 $ 53 $ 215,932 $ 307,151 $ (624 ) $ 377 $ 522,889
Common dividends paid, $0.10 per share - - (5,286 ) - - (5,286 )
Common dividends declared, $0.05 per share - - (2,649 ) - - (2,649 )
Preferred dividends paid - - (31 ) - - (31 )
Issue 328,214 shares of common stock upon exercise of stock options - 635 - - - 635
Issue 125 shares of REIT preferred stock - - - - 125 125
Stock based compensation expense - 916 - - - 916
Other comprehensive income, net of tax - - - 1,672 - 1,672
Net income - - 71,942 - - 71,942
Balance, September 30, 2017 $ 53 $ 217,483 $ 371,127 $ 1,048 $ 502 $ 590,213

	Three Months Ended September 30,
	Common Shares		Preferred Stock		Common Stock		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Noncontrolling interest			Total Stockholders' Equity
Balance, July 1, 2020		53,874,276	$	0	$	54	$	222,437		$	672,984		$	18,611		$	502		$	914,588
Common dividends declared, $0.175 per share		-		0		0		0			(9,422	)		0			0			(9,422	)
Issue restricted shares pursuant to stock incentives, net of forfeitures		3,500		0		0		0			0			0			0			0
Issue shares of common stock upon exercise of stock options		37,469		0		0		728			0			0			0			728
5,831 shares of common stock withheld in net settlement upon exercise of stock options		-		0		0		(225	)		0			0			0			(225	)
Stock-based compensation expense		-		0		0		340			0			0			0			340
Other comprehensive income, net of tax		-		0		0		0			0			220			0			220
Net income		-		0		0		0			43,362			0			(2	)		43,360
Balance, September 30, 2020		53,915,245	$	0	$	54	$	223,280		$	706,924		$	18,831		$	500		$	949,589

Balance, July 1, 2021		54,201,204	$	0	$	54	$	225,127		$	828,048		$	19,555		$	500		$	1,073,284
Common dividends declared, $0.20 per share		-		0		0		0			(10,842	)		0			0			(10,842	)
Dividends on nonvested restricted stock recognized as compensation expense		-		0		0		0			26			0			0			26
Issue restricted shares pursuant to stock incentives, net of forfeitures		346		0		0		0			0			0			0			0
Issue shares of common stock upon exercise of stock options		5,597		0		0		159			0			0			0			159
1,903 shares of common stock withheld in net settlement upon exercise of stock options		-		0		0		(99	)		0			0			0			(99	)
Stock-based compensation expense		-		0		0		461			0			0			0			461
Other comprehensive loss, net of tax		-		0		0		0			0			(1,195	)		0			(1,195	)
Net income		-		0		0		0			52,499			0			0			52,499
Balance, September 30, 2021		54,207,147	$	0	$	54	$	225,648		$	869,731		$	18,360		$	500		$	1,114,293

~~See Notes to Consolidated Financial Statements.~~

	Nine Months Ended September 30,
	Common Shares		Preferred Stock		Common Stock		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Noncontrolling interest			Total Stockholders' Equity
Balance, January 1, 2020		53,623,740	$	0	$	54	$	219,766		$	616,611		$	5,749		$	502		$	842,682
Common dividends paid, $0.35 per share		-		0		0		0			(18,822	)		0			0			(18,822	)
Common dividends declared, $0.175 per share		-		0		0		0			(9,422	)		0			0			(9,422	)
Preferred dividends paid		-		0		0		0			(31	)		0			0			(31	)
Issue restricted shares pursuant to stock incentives, net of forfeitures		29,067		0		0		0			0			0			0			0
Issue shares of common stock upon exercise of stock options		262,438		0		0		3,172			0			0			0			3,172
16,862 shares of common stock withheld in net settlement upon exercise of stock options		-		0		0		(627	)		0			0			0			(627	)
Stock-based compensation expense		-		0		0		969			0			0			0			969
Other comprehensive income, net of tax		-		0		0		0			0			13,082			0			13,082
Net income		-		0		0		0			118,588			0			(2	)		118,586
Balance, September 30, 2020		53,915,245	$	0	$	54	$	223,280		$	706,924		$	18,831		$	500		$	949,589

Balance, January 1, 2021		53,943,751	$	0	$	54	$	223,856		$	748,224		$	20,218		$	500		$	992,852
Common dividends paid, $0.40 per share		-		0		0		0			(21,678	)		0			0			(21,678	)
Common dividends declared, $0.20 per share		-		0		0		0			(10,842	)		0			0			(10,842	)
Preferred dividends paid		-		0		0		0			(31	)		0			0			(31	)
Dividends on nonvested restricted stock recognized as compensation expense		-		0		0		0			77			0			0			77
Issue restricted shares pursuant to stock incentives, net of forfeitures		57,570		0		0		0			0			0			0			0
Issue shares of common stock upon exercise of stock options		205,826		0		0		3,219			0			0			0			3,219
51,374 shares of common stock withheld in net settlement upon exercise of stock options		-		0		0		(2,737	)		0			0			0			(2,737	)
Stock-based compensation expense		-		0		0		1,310			0			0			0			1,310
Other comprehensive loss, net of tax		-		0		0		0			0			(1,858	)		0			(1,858	)
Net income		-		0		0		0			153,981			0			0			153,981
Balance, September 30, 2021		54,207,147	$	0	$	54	$	225,648		$	869,731		$	18,360		$	500		$	1,114,293

See Notes to Consolidated Financial Statements.

SERVISFIRST BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) (Unaudited)

	Nine Months Ended September 30,
	2021			2020
OPERATING ACTIVITIES
Net income	$	153,981		$	118,588
Adjustments to reconcile net income to net cash provided by
Deferred tax (benefit)		12			(4,675	)
Provision for credit losses		23,066			36,151
Depreciation		3,074			2,788
Accretion on acquired loans		0			(100	)
Amortization of core deposit intangible		203			203
Net amortization of debt securities available for sale		7,456			3,834
Decrease (increase) in accrued interest and dividends receivable		3,026			(10,345	)
Stock-based compensation expense		1,310			969
Increase (decrease) in accrued interest payable		376			(19	)
Proceeds from sale of mortgage loans held for sale		221,548			194,558
Originations of mortgage loans held for sale		(200,832	)		(204,021	)
Gain on call of securities available for sale		(620	)		0
Gain on sale of mortgage loans held for sale		(6,869	)		(5,697	)
Net loss (gain) on sale of other real estate owned and repossessed assets		282			(8	)
Write down of other real estate owned and repossessed assets		876			1,836
Operating losses of tax credit partnerships		4			4
Increase in cash surrender value of life insurance contracts		(5,012	)		(4,650	)
Net change in other assets, liabilities, and other operating activities		(6,395	)		(11,916	)
Net cash provided by operating activities		195,486			117,500
INVESTMENT ACTIVITIES
Purchase of debt securities available for sale		(298,684	)		(288,453	)
Proceeds from maturities, calls and paydowns of debt securities available for sale		188,559			148,206
Investment in tax credit partnership and SBIC		(10,546	)		(636	)
Increase in loans		(350,600	)		(1,269,704	)
Purchase of premises and equipment		(9,058	)		(1,565	)
Purchase of bank owned life insurance contracts		0			(40,000	)
Proceeds from sale of other real estate owned and repossessed assets		911			1,780
Net cash used in investing activities		(479,418	)		(1,450,372	)
FINANCING ACTIVITIES
Net increase in non-interest-bearing deposits		1,577,882			1,012,935
Net increase in interest-bearing deposits		525,064			1,130,415
Net increase in federal funds purchased		435,211			198,601
Proceeds from exercise of stock options		3,219			3,172
Taxes paid in net settlement of tax obligation upon exercise of stock options		(2,737	)		(627	)
Dividends paid on common stock		(21,601	)		(18,822	)
Dividends paid on preferred stock		(31	)		(31	)
Net cash provided by financing activities		2,517,007			2,325,643
Net increase in cash and cash equivalents		2,233,075			992,771
Cash and cash equivalents at beginning of period		2,211,411			630,600
Cash and cash equivalents at end of period	$	4,444,486		$	1,623,371
SUPPLEMENTAL DISCLOSURE
Cash paid/(received) for:
Interest	$	23,622		$	42,020
Income taxes		18,148			38,593
Income tax refund		(3	)		(47	)
NONCASH TRANSACTIONS
Other real estate acquired in settlement of loans	$	1,419		$	2,406
Internally financed sale of other real estate owned		3,779			0
Available-for-sale securities transferred to held-to-maturity portfolio		261,026			0
Dividends declared		10,842			9,422

See Notes to Consolidated Financial Statements.

Nine Months Ended September 30,
2017 2016
OPERATING ACTIVITIES
Net income $ 71,942 $ 59,741
Adjustments to reconcile net income to net cash provided by
Deferred tax (3,099 ) 350
Provision for loan losses 14,170 9,323
Depreciation 2,281 2,211
Accretion on acquired loans (374 ) (819 )
Amortization of core deposit intangible 209 257
Net amortization of debt securities available for sale 2,874 2,034
Increase in accrued interest and dividends receivable (4,533 ) (950 )
Stock-based compensation expense 916 931
(Decrease) increase in accrued interest payable (48 ) 1,257
Proceeds from sale of mortgage loans held for sale 105,940 97,868
Originations of mortgage loans held for sale (103,295 ) (92,964 )
Loss on sale of debt securities available for sale - 3
Gain on sale of mortgage loans held for sale (2,941 ) (2,681 )
Net (gain) loss on sale of other real estate owned and repossessed assets (33 ) 27
Write down of other real estate owned and repossessed assets 5 557
Losses of tax credit partnerships 42 178
Increase in cash surrender value of life insurance contracts (2,334 ) (2,049 )
Net change in other assets, liabilities, and other operating activities (551 ) (4,633 )
Net cash provided by operating activities 81,171 70,641
INVESTMENT ACTIVITIES
Purchase of debt securities available for sale (77,567 ) (84,106 )
Proceeds from sale of debt securities available for sale - 6,085
Proceeds from maturities, calls and paydowns of debt securities available for sale 65,734 71,425
Purchase of debt securities held to maturity (29,782 ) (627 )
Proceeds from maturities, calls and paydowns of debt securities held to maturity 4,947 2,200
Purchase of equity securities (10 ) (708 )
Increase in loans (724,626 ) (443,771 )
Purchase of premises and equipment (17,071 ) (7,809 )
Purchase of bank-owned life insurance contracts (10,000 ) (20,000 )
Expenditures to complete construction of other real estate owned - (3 )
Proceeds from sale of other real estate owned and repossessed assets 1,529 1,648
Investment in tax credit partnerships - (2,491 )
Net cash used in investing activities (786,846 ) (478,157 )
FINANCING ACTIVITIES
Net increase in non-interest-bearing deposits 124,360 216,259
Net increase in interest-bearing deposits 252,230 640,981
Net decrease in federal funds purchased (101,064 ) (7,970 )
Repayment of Federal Home Loan Bank advances (300 ) (300 )
Proceeds from sale of preferred stock, net 125 -
Proceeds from exercise of stock options and warrants 635 2,785
Dividends paid on common stock (5,286 ) (4,194 )
Dividends paid on preferred stock (31 ) (23 )
Net cash provided by financing activities 270,669 847,538
Net (decrease) increase in cash and cash equivalents (435,006 ) 440,022
Cash and cash equivalents at beginning of period 783,997 352,235
Cash and cash equivalents at end of period $ 348,991 $ 792,257
SUPPLEMENTAL DISCLOSURE
Cash paid for:
Interest $ 24,729 $ 17,457
Income taxes 30,651 22,666
Income tax refund (492 ) (929 )
NONCASH TRANSACTIONS
Other real estate acquired in settlement of loans $ 586 $ 2,033
Internally financed sales of other real estate owned 185 2,161
Dividends declared 2,649 2,106

~~See Notes to Consolidated Financial Statements.~~

SERVISFIRST BANCSHARES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, ~~2017~~2021

(Unaudited)

NOTE 1 - GENERAL

The accompanying consolidated financial statements in this report have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission, including Regulation ~~S-X~~S-X and the instructions for Form ~~10-Q,~~10-Q, and have not been audited. These consolidated financial statements do not include all of the information and footnotes required by U.S. generally accepted accounting principles (“U.S. GAAP”) for complete financial statements. In the opinion of management, all adjustments necessary to present fairly the consolidated financial position and the consolidated results of operations for the interim periods have been made. All such adjustments are of a normal recurring nature. The consolidated results of operations are not necessarily indicative of the consolidated results of operations which ServisFirst Bancshares, Inc. (the “Company”) and its consolidated subsidiaries, including ServisFirst Bank (the “Bank”), may achieve for future interim periods or the entire year. For further information, refer to the consolidated financial statements and footnotes included in the Company’s Form ~~10-K~~10-K for the year ended December 31, ~~2016.~~

On December 20, 2016, the Company effected a two-for-one split of its common stock in the form of a stock dividend. Except where specifically indicated otherwise, all reported amounts in this Form 10-Q have been adjusted to give effect to this stock split.2020.

All reported amounts are in thousands except share and per share data.

DebtSecurities

Debt securities are classified based on the Company’s intention on the date of purchase. All debt securities classified as available-for-sale are recorded at fair value with any unrealized gains and losses reported in accumulated other comprehensive income (loss), net of the deferred income tax effects. Securities that the Company has both the positive intent and ability to hold to maturity are classified as held-to-maturity and are carried at historical cost and adjusted for amortization of premiums and accretion of discounts.

Interest and dividends on securities, including amortization of premiums and accretion of discounts calculated under the effective interest method, are included in interest income. For certain securities, amortization of premiums and accretion of discounts is computed based on the anticipated life of the security which may be shorter than the stated life of the security. Realized gains and losses from the sale of securities are determined using the specific identification method and are recorded on the trade date of the sale.

Allowance for Credit Losses

The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was passed on March 27, 2020 and provided financial institutions with the option to delay adoption of Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2016-13,Financial Instruments-Credit Losses (Topic326): Measurement of Credit Losses on Financial Instruments (“CECL”). As described below under “Note 9 - Recently Adopted Accounting Pronouncements”, the Company decided to delay its adoption of ASU 2016-13, as provided by the CARES Act, until December 31, 2020, with an effective retrospective implementation date of January 1, 2020. Prior to January 1, 2020, as well as for quarterly periods in 2020 which were not restated, the allowance for credit losses (“ACL”) was calculated using an incurred losses methodology.

Prior to the adoption of ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, the allowance for loan losses represented management’s best estimate of inherent losses that had been incurred within the existing portfolio of loans. The allowance for losses on loans included allowance allocations calculated in accordance with FASB Accounting Standards Codification (“ASC”) Topic 310, “Receivables” and allowance allocations calculated in accordance with ASC Topic 450, “Contingencies.”

NOTE 2 - CASH AND CASH EQUIVALENTS

Cash on hand, cash items in process of collection, amounts due from banks, and federal funds sold are included in cash and cash equivalents.

NOTE 3 - EARNINGS PER COMMON SHARE

Basic earnings per common share are computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per common share include the dilutive effect of additional potential common shares issuable under stock ~~options and warrants. All reported amounts in this Form 10-Q have been adjusted to give effect to the two-for-one stock split discussed above.~~options.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
	(In Thousands, Except Shares and Per Share Data)
Earnings per common share
Weighted average common shares outstanding		54,205,565		53,893,753		54,143,324		53,817,928
Net income available to common stockholders	$	52,499	$	43,362	$	153,950	$	118,557
Basic earnings per common share	$	0.97	$	0.80	$	2.84	$	2.20
Weighted average common shares outstanding		54,205,565		53,893,753		54,143,324		53,817,928
Dilutive effects of assumed conversions and exercise of stock options and warrants		272,175		339,212		296,680		380,494
Weighted average common and dilutive potential common shares outstanding		54,477,740		54,232,965		54,440,004		54,198,422
Net income available to common stockholders	$	52,499	$	43,362	$	153,950	$	118,557
Diluted earnings per common share	$	0.96	$	0.80	$	2.83	$	2.19

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(In Thousands, Except Shares and Per Share Data)
Earnings per common share
Weighted average common shares outstanding 52,950,644 52,554,918 52,854,332 52,557,910
Net income available to common stockholders $ 25,259 $ 20,909 $ 71,911 $ 59,718
Basic earnings per common share $ 0.48 $ 0.40 $ 1.36 $ 1.14

Weighted average common shares outstanding 52,950,644 52,554,918 52,854,332 52,557,910
Dilutive effects of assumed conversions and exercise of stock options and warrants 1,149,028 1,324,410 1,256,580 932,008
Weighted average common and dilutive potential common shares outstanding 54,099,672 53,879,328 54,110,912 53,489,918
Net income available to common stockholders $ 25,259 $ 20,909 $ 71,911 $ 59,718
Diluted earnings per common share $ 0.47 $ 0.39 $ 1.33 $ 1.12

NOTE 4 - SECURITIES

The amortized cost and fair value of available-for-sale and held-to-maturity securities at September 30, ~~2017~~ 2021 and December 31, ~~2016~~ 2020 are summarized as follows:

	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss			Market Value				Gross		Gross
September 30, 2017	(In Thousands)
										Amortized		Unrealized		Unrealized			Market
										Cost		Gain		Loss			Value
September 30, 2021										(In Thousands)
Securities Available for Sale
U.S. Treasury and government sponsored agencies	$	56,518	$	335	$	(75	)	$	56,778
Mortgage-backed securities		243,465		1,457		(1,179	)		243,743
State and municipal securities		133,729		1,201		(126	)		134,804
Total		433,712		2,993		(1,380	)		435,325
Securities Held to Maturity
Mortgage-backed securities		31,165		393		(179	)		31,379
State and municipal securities		5,726		300		-			6,026
Corporate debt		50,508		1,416		-			51,924
Total	$	87,399	$	2,109	$	(179	)	$	89,329

December 31, 2016
Securities Available for Sale
U.S. Treasury and government sponsored agencies	$	45,998	$	382	$	(126	)	$	46,254
U.S. Treasury securities										$	14,001	$	178	$	0		$	14,179
Government agencies											9,023		61		0			9,084
Mortgage-backed securities		228,843		1,515		(3,168	)		227,190		294,887		4,693		(1,032	)		298,548
State and municipal securities		139,504		1,120		(694	)		139,930		21,414		221		(38	)		21,597
Corporate debt		8,985		16		-			9,001		367,861		12,580		(525	)		379,916
Total		423,330		3,033		(3,988	)		422,375	$	707,186	$	17,733	$	(1,595	)	$	723,324
Securities Held to Maturity
Mortgage-backed securities		19,164		321		(245	)		19,240	$	261,026	$	0	$	0		$	261,026
State and municipal securities		5,888		315		(12	)		6,191		250		0		0			250
Total										$	261,276	$	0	$	0		$	261,276

December 31, 2020
Securities Available for Sale
U.S. Treasury securities										$	13,993	$	364	$	0		$	14,357
Government agencies											15,228		230		0			15,458
Mortgage-backed securities											477,407		17,720		(18	)		495,109
State and municipal securities											37,671		444		0			38,115
Corporate debt		37,512		374		(15	)		37,871		316,857		7,296		(504	)		323,649
Total	$	62,564	$	1,010	$	(272	)	$	63,302	$	861,156	$	26,054	$	(522	)	$	886,688
Securities Held to Maturity
Mortgage-backed securities										$	0	$	0	$	0		$	0
State and municipal securities											250		0		0			250
Total										$	250	$	0	$	0		$	250

During the third quarter of 2021, the company transferred, at fair value, $261.3 million of mortgage-backed securities from the available-for-sale portfolio to the held-to-maturity portfolio. The related unrealized after-tax gains of $5.6 million remained in accumulated other comprehensive income and will be amortized over the remaining life of the securities, offsetting the related amortization of discount on the transferred securities. No gains or losses were recognized at the time of the transfer.

The amortized cost and fair value of debt securities as of September 30, ~~2017~~ 2021 and December 31, 2020 by contractual maturity are shown below. Actual maturities may differ from contractual maturities of mortgage-backed securities since the mortgages underlying the securities may be called or prepaid with or without penalty. Therefore, these securities are not included in the maturity categories along with the other categories of debt securities.

September 30, 2017 December 31, 2016
Amortized
Cost Fair Value Amortized
Cost Fair Value
(In thousands)
Debt securities available for sale
Due within one year $ 25,961 $ 26,035 $ 28,270 $ 28,400
Due from one to five years 151,842 153,099 152,347 153,003
Due from five to ten years 12,054 12,058 13,870 13,782
Due after ten years 390 390 - -
Mortgage-backed securities 243,465 243,743 228,843 227,190
$ 433,712 $ 435,325 $ 423,330 $ 422,375

Debt securities held to maturity
Due from one to five years $ 3,250 $ 3,280 $ 250 $ 250
Due from five to ten years 48,997 50,450 34,251 34,617
Due after ten years 3,987 4,220 8,899 9,195
Mortgage-backed securities 31,165 31,379 19,164 19,240
$ 87,399 $ 89,329 $ 62,564 $ 63,302

	September 30, 2021				December 31, 2020
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(In thousands)
Debt securities available for sale
Due within one year	$	35,755	$	36,142	$	30,797	$	31,060
Due from one to five years		41,797		42,745		59,828		61,481
Due from five to ten years		331,653		342,607		288,002		293,886
Due after ten years		3,094		3,282		5,122		5,152
Mortgage-backed securities		294,887		298,548		477,407		495,109
	$	707,186	$	723,324	$	861,156	$	886,688

Debt securities held to maturity
Due from one to five years	$	250	$	250	$	250	$	250
Due from five to ten years		0		-		0		-
Due after ten years		0		-		0		-
Mortgage-backed securities		261,026		261,026		0		0
	$	261,276	$	261,276	$	250	$	250

All mortgage-backed securities are with government-sponsored enterprises (GSEs) such as Federal National Mortgage Association, Government National Mortgage Association, Federal Home Loan Bank, and Federal Home Loan Mortgage Corporation.

The carrying value of debt securities pledged to secure public funds on deposit and for other purposes as required by law as of September 30, 2021 and December 31, 2020 was $536.0 million and $477.6 million, respectively.

The following table identifies, as of September 30, ~~2017~~ 2021 and December 31, ~~2016,~~ 2020, the Company’s investment securities that have been in a continuous unrealized loss position for less than 12 months and those that have been in a continuous unrealized loss position for 12 or more months.

	Less Than Twelve Months					Twelve Months or More				Total
	Gross					Gross				Gross
	Unrealized					Unrealized				Unrealized
	Losses			Fair Value		Losses		Fair Value		Losses			Fair Value
	(In Thousands)
September 30, 2021
Mortgage-backed securities	$	(1,537	)	$	194,922	$	0	$	0	$	(1,537	)	$	194,922
State and municipal securities		(38	)		3,954		0		0		(38	)		3,954
Corporate debt		(525	)		30,975		0		0		(525	)		30,975
Total	$	(2,100	)	$	229,851	$	0	$	0	$	(2,100	)	$	229,851

December 31, 2020
Mortgage-backed securities	$	(18	)	$	3,667	$	0	$	0	$	(18	)	$	3,667
Corporate debt		(504	)		59,576		0		0		(504	)		59,576
Total	$	(522	)	$	63,243	$	0	$	0	$	(522	)	$	63,243

The following table summarizes information about sales and calls of debt securities held for sale.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
	(In Thousands)
Sale and call proceeds	$	12,735	$	2,001	$	35,532	$	12,947
Gross realized gains	$	0	$	0	$	620	$	0
Net realized gain	$	0	$	0	$	620	$	0

At September 30, ~~2017, 52 of the Company’s 807~~2021, 0 allowance for credit losses has been recognized on available for sale debt securities ~~had been~~ in an unrealized loss position as the Company does not believe any of the debt securities are credit impaired. This is based on the Company’s analysis of the risk characteristics, including credit ratings, and other qualitative factors related to available for ~~12 or more months.~~sale debt securities. The issuers of these debt securities continue to make timely principal and interest payments under the contractual terms of the securities. The Company does not intend to sell these debt securities and it is more likely than not that the Company will not be required to sell the debt securities before recovery of their amortized cost, which may be ~~maturity; accordingly, the Company does not consider these securities~~at maturity. The unrealized losses are due to ~~be other-than-temporarily impaired at September 30, 2017. Further, the Company believes any deterioration in value of its current investment securities is attributable to changes~~increases in market interest rates over the yields available at the time the debt securities were purchased. Furthermore, the Company performed an analysis that determined that the following securities have a 0 expected credit loss: U.S. Treasury Securities; and, ~~not credit quality~~Agency-Backed Securities, including securities issued by GNMA, FNMA, FHLB, FFCB and SBA. All of the ~~issuer.~~U.S. Treasury and Agency-Backed Securities have the full faith and credit backing of the United States Government or one of its agencies. All debt securities in an unrealized loss position as of September 30, 2021 continue to perform as scheduled and the Company does not believe there is a possible credit loss or that an allowance for credit loss on these debt securities is necessary.

Less Than Twelve Months Twelve Months or More Total
Gross
Unrealized
Losses Fair Value Gross
Unrealized
Losses Fair Value Gross
Unrealized
Losses Fair Value
(In Thousands)
September 30, 2017
U.S. Treasury and government sponsored agencies $ (75 ) $ 9,670 $ - $ - $ (75 ) $ 9,670
Mortgage-backed securities (596 ) 77,553 (762 ) 43,721 (1,358 ) 121,274
State and municipal securities (76 ) 22,069 (50 ) 7,041 (126 ) 29,110
Total $ (747 ) $ 109,292 $ (812 ) $ 50,762 $ (1,559 ) $ 160,054

December 31, 2016
U.S. Treasury and government sponsored agencies $ (126 ) $ 10,865 $ - $ - $ (126 ) $ 10,865
Mortgage-backed securities (3,413 ) 174,225 - - (3,413 ) 174,225
State and municipal securities (698 ) 64,502 (8 ) 1,021 (706 ) 65,523
Corporate debt (15 ) 3,034 - - (15 ) 3,034
Total $ (4,252 ) $ 252,626 $ (8 ) $ 1,021 $ (4,260 ) $ 253,647

NOTE 5– LOANS

~~NOTE 5~~ The loan portfolio is classified based on the underlying collateral utilized to secure each loan for financial reporting purposes. This classification is consistent with the Quarterly Report of Condition and Income filed by the Bank with the Federal Deposit Insurance Corporation (FDIC).

Commercial, financial and agricultural - Includes loans to business enterprises issued for commercial, industrial, agricultural production and/or other professional purposes. These loans are generally secured by equipment, inventory, and accounts receivable of the borrower and repayment is primarily dependent on business cash flows.

Real estate – construction – ~~LOANS~~Includes loans secured by real estate to finance land development or the construction of industrial, commercial or residential buildings. Repayment is dependent upon the completion and eventual sale, refinance or operation of the related real estate project.

Owner-occupied commercial real estate mortgage – Includes loans secured by nonfarm nonresidential properties for which the primary source of repayment is the cash flow from the ongoing operations conducted by the party that owns the property.

1-4 family real estate mortgage – Includes loans secured by residential properties, including home equity lines of credit. Repayment is primarily dependent on the personal cash flow of the borrower.

Other real estate mortgage – Includes loans secured by nonowner-occupied properties, including office buildings, industrial buildings, warehouses, retail buildings, multifamily residential properties and farmland. Repayment is primarily dependent on income generated from the underlying collateral.

Consumer – Includes loans to individuals not secured by real estate. Repayment is dependent upon the personal cash flow of the borrower.

In light of the U.S. and global economic crisis brought about by the COVID-19 pandemic, the Company has prioritized assisting its clients through this troubled time. The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) provides for Paycheck Protection Program (“PPP”) loans to be made by banks to employers with less than 500 employees if they continue to employ their existing workers. The American Rescue Plan Act of 2021, which was signed into law on March 21, 2021, provides additional relief for businesses, states, municipalities and individuals by, among other things, allocating additional funds for the PPP. Effective May 28, 2021, the PPP was closed to new applications. The Company funded approximately 7,400 loans for a total amount of $1.5 billion for clients under the PPP since April 2020. At September 30, 2021 and December 31, 2020, unaccreted deferred loan origination fees, net of costs, related to PPP loans totaled $11.9 million and $17.8 million, respectively. PPP loan origination fees recorded to interest income totaled $5.2 million and $4.0 million for the three months ended September 30, 2021 and 2020, respectively, and totaled $22.3 million and $6.6 million for the nine months ended September 30, 2021 and 2020, respectively. PPP loans outstanding totaled $387.7 million and $900.5 million at September 30, 2021 and December 31, 2020, respectively. PPP loans are included within the commercial, financial and agricultural loan category in the table below.

The following table details the Company’s loans at September 30, ~~2017~~ 2021 and December 31, ~~2016:~~2020:

	September 30,			December 31,
	2021			2020
	(Dollars In Thousands)
Commercial, financial and agricultural	$	2,927,845		$	3,295,900
Real estate - construction		887,938			593,614
Real estate - mortgage:
Owner-occupied commercial		1,809,840			1,693,428
1-4 family mortgage		765,102			711,692
Other mortgage		2,357,812			2,106,184
Subtotal: Real estate - mortgage		4,932,754			4,511,304
Consumer		64,274			64,870
Total Loans		8,812,811			8,465,688
Less: Allowance for credit losses		(108,950	)		(87,942	)
Net Loans	$	8,703,861		$	8,377,746

Commercial, financial and agricultural		33.22	%		38.93	%
Real estate - construction		10.08	%		7.01	%
Real estate - mortgage:
Owner-occupied commercial		20.54	%		20.00	%
1-4 family mortgage		8.68	%		8.41	%
Other mortgage		26.75	%		24.89	%
Subtotal: Real estate - mortgage		55.97	%		53.29	%
Consumer		0.73	%		0.77	%
Total Loans		100.00	%		100.00	%

September 30,
2017 December 31,
2016
(Dollars In Thousands)
Commercial, financial and agricultural $ 2,223,910 $ 1,982,267
Real estate - construction 467,838 335,085
Real estate - mortgage:
Owner-occupied commercial 1,323,383 1,171,719
1-4 family mortgage 593,180 536,805
Other mortgage 962,690 830,683
Subtotal: Real estate - mortgage 2,879,253 2,539,207
Consumer 57,764 55,211
Total Loans 5,628,765 4,911,770
Less: Allowance for loan losses (58,459 ) (51,893 )
Net Loans $ 5,570,306 $ 4,859,877

Commercial, financial and agricultural 39.51 % 40.36 %
Real estate - construction 8.31 % 6.82 %
Real estate - mortgage:
Owner-occupied commercial 23.51 % 23.86 %
1-4 family mortgage 10.54 % 10.93 %
Other mortgage 17.10 % 16.91 %
Subtotal: Real estate - mortgage 51.15 % 51.70 %
Consumer 1.03 % 1.12 %
Total Loans 100.00 % 100.00 %

The credit quality of the loan portfolio is summarized no less frequently than quarterly using categories similar to the standard asset classification system used by the federal banking agencies. The following table presents credit quality indicators for the loan ~~loss~~credit portfolio segments and classes. These categories are utilized to develop the associated allowance for ~~loan~~credit losses using historical losses adjusted for current economic conditions defined as follows:

●

Pass – loans which are well protected by the current net worth and paying capacity of the ~~obligor~~borrower (or ~~obligors,~~guarantors, if any) or by the fair value, less cost to acquire and sell, of any underlying collateral.

●

Special Mention – loans with potential weakness that may, if not reversed or corrected, weaken the credit or inadequately protect the Company’s position at some future date. These loans are not adversely classified and do not expose ~~an institution~~the Company to sufficient risk to warrant an adverse classification.

●

Substandard – loans that exhibit well-defined weakness or weaknesses that currently jeopardize debt repayment. These loans are characterized by the distinct possibility that the ~~institution~~Company will sustain some loss if the weaknesses are not corrected.

●

Doubtful – loans that have all the weaknesses inherent in loans classified substandard, plus the added characteristic that the weaknesses make collection or liquidation in full on the basis of currently existing facts, conditions, and values highly questionable and improbable.

~~Loans~~The table below presents loan balances classified by credit quality indicator, loan type and based on year of origination as of September 30, ~~2017~~2021 :

													Revolving
September 30, 2021	2021		2020		2019		2018		2017		Prior		Loans		Total
	(In Thousands)
Commercial, financial and agricultural
Pass	$	743,568	$	354,601	$	247,276	$	152,278	$	120,995	$	129,518	$	1,082,443	$	2,830,679
Special Mention		1,994		1,381		1,243		0		1,183		761		21,993		28,555
Substandard		133		389		10,356		1,762		1,841		9,203		44,927		68,611
Doubtful		0		0		0		0		0		0		0		0
Total Commercial, financial and agricultural	$	745,695	$	356,371	$	258,875	$	154,040	$	124,019	$	139,482	$	1,149,363	$	2,927,845
Real estate - construction
Pass	$	358,942	$	260,450	$	138,146	$	18,669	$	13,538	$	18,671	$	69,693	$	878,109
Special Mention		0		0		7,094		2,500		0		0		0		9,594
Substandard		0		0		0		0		0		235		0		235
Doubtful		0		0		0		0		0		0		0		0
Total Real estate - construction	$	358,942	$	260,450	$	145,240	$	21,169	$	13,538	$	18,906	$	69,693	$	887,938
Owner-occupied commercial
Pass	$	270,480	$	364,308	$	261,258	$	190,301	$	173,659	$	476,757	$	64,069	$	1,800,832
Special Mention		0		0		0		780		289		2,886		0		3,955
Substandard		0		0		0		0		0		5,053		0		5,053
Doubtful		0		0		0		0		0		0		0		0
Total Owner-occupied commercial	$	270,480	$	364,308	$	261,258	$	191,081	$	173,948	$	484,696	$	64,069	$	1,809,840
1-4 family mortgage
Pass	$	204,167	$	131,472	$	79,542	$	48,773	$	39,955	$	42,073	$	209,286	$	755,268
Special Mention		0		852		920		235		165		1,607		3,738		7,517
Substandard		0		150		238		122		232		620		955		2,317
Doubtful		0		0		0		0		0		0		0		0
Total 1-4 family mortgage	$	204,167	$	132,474	$	80,700	$	49,130	$	40,352	$	44,300	$	213,979	$	765,102
Other mortgage
Pass	$	517,787	$	451,397	$	429,536	$	190,584	$	307,546	$	380,299	$	60,331	$	2,337,480
Special Mention		0		0		0		0		2,739		4,691		0		7,430
Substandard		0		0		0		4,521		8,381		0		0		12,902
Doubtful		0		0		0		0		0		0		0		0
Total Other mortgage	$	517,787	$	451,397	$	429,536	$	195,105	$	318,666	$	384,990	$	60,331	$	2,357,812
Consumer
Pass	$	13,736	$	5,643	$	3,211	$	1,073	$	1,083	$	3,897	$	35,605	$	64,248
Special Mention		0		0		0		0		0		26		0		26
Substandard		0		0		0		0		0		0		0		0
Doubtful		0		0		0		0		0		0		0		0
Total Consumer	$	13,736	$	5,643	$	3,211	$	1,073	$	1,083	$	3,923	$	35,605	$	64,274
Total Loans
Pass	$	2,108,680	$	1,567,871	$	1,158,969	$	601,678	$	656,776	$	1,051,215	$	1,521,427	$	8,666,616
Special Mention		1,994		2,233		9,257		3,515		4,376		9,971		25,731		57,077
Substandard		133		539		10,594		6,405		10,454		15,111		45,882		89,118
Doubtful		0		0		0		0		0		0		0		0
Total Loans	$	2,110,807	$	1,570,643	$	1,178,820	$	611,598	$	671,606	$	1,076,297	$	1,593,040	$	8,812,811

The table below presents loan balances classified by credit quality indicator, loan type and based on year of origination as of December 31, ~~2016 were as follows:~~2020:

September 30, 2017	Pass		Special Mention		Substandard		Doubtful		Total
																							Revolving
December 31, 2020											2020		2019		2018		2017		2016		Prior		Loans		Total
	(In Thousands)										(In Thousands)
Commercial, financial and agricultural	$	2,144,426	$	49,079	$	30,405	$	-	$	2,223,910
Pass											$	1,260,341	$	332,690	$	229,838	$	169,616	$	89,893	$	137,021	$	988,093	$	3,207,492
Special Mention												2,551		1,404		10		253		163		281		14,948		19,610
Substandard												569		10,639		617		5,447		963		2,038		48,525		68,798
Doubtful												0		0		0		0		0		0		0		0
Total Commercial, financial and agricultural											$	1,263,461	$	344,733	$	230,465	$	175,316	$	91,019	$	139,340	$	1,051,566	$	3,295,900
Real estate - construction		457,188		7,367		3,283		-		467,838
Real estate - mortgage:
Pass											$	230,931	$	222,357	$	53,981	$	16,361	$	7,677	$	13,816	$	48,256	$	593,379
Special Mention												0		0		0		0		0		0		0		0
Substandard												0		0		0		0		0		235		0		235
Doubtful												0		0		0		0		0		0		0		0
Total Real estate - construction											$	230,931	$	222,357	$	53,981	$	16,361	$	7,677	$	14,051	$	48,256	$	593,614
Owner-occupied commercial		1,305,408		11,814		6,161		-		1,323,383
Pass											$	351,808	$	271,645	$	221,513	$	198,935	$	158,531	$	417,743	$	61,119	$	1,681,294
Special Mention												0		0		0		6,524		543		1,873		200		9,140
Substandard												0		0		12		780		0		1,962		240		2,994
Doubtful												0		0		0		0		0		0		0		0
Total Owner-occupied commercial											$	351,808	$	271,645	$	221,525	$	206,239	$	159,074	$	421,578	$	61,559	$	1,693,428
1-4 family mortgage		587,451		1,492		4,237		-		593,180
Pass											$	179,314	$	111,016	$	70,381	$	60,774	$	27,985	$	44,111	$	212,616	$	706,197
Special Mention												508		0		0		105		481		0		1,112		2,206
Substandard												350		126		0		235		218		0		2,360		3,289
Doubtful												0		0		0		0		0		0		0		0
Total 1-4 family mortgage											$	180,172	$	111,142	$	70,381	$	61,114	$	28,684	$	44,111	$	216,088	$	711,692
Other mortgage		945,548		14,118		3,024		-		962,690
Total real estate mortgage		2,838,407		27,424		13,422		-		2,879,253
Pass											$	470,086	$	470,092	$	250,945	$	368,283	$	180,244	$	272,722	$	68,721	$	2,081,093
Special Mention												0		0		0		2,793		541		8,566		0		11,900
Substandard												0		50		4,589		8,552		0		0		0		13,191
Doubtful												0		0		0		0		0		0		0		0
Total Other mortgage											$	470,086	$	470,142	$	255,534	$	379,628	$	180,785	$	281,288	$	68,721	$	2,106,184
Consumer		57,672		4		88		-		57,764
Total	$	5,497,693	$	83,874	$	47,198	$	-	$	5,628,765
Pass											$	20,410	$	4,421	$	1,551	$	1,671	$	1,031	$	3,615	$	32,125	$	64,824
Special Mention												0		0		15		0		31		0		0		46
Substandard												0		0		0		0		0		0		0		0
Doubtful												0		0		0		0		0		0		0		0
Total Consumer											$	20,410	$	4,421	$	1,566	$	1,671	$	1,062	$	3,615	$	32,125	$	64,870
Total Loans
Pass											$	2,512,890	$	1,412,221	$	828,209	$	815,640	$	465,361	$	889,028	$	1,410,930	$	8,334,279
Special Mention												3,059		1,404		25		9,675		1,759		10,720		16,260		42,902
Substandard												919		10,815		5,218		15,014		1,181		4,235		51,125		88,507
Doubtful												0		0		0		0		0		0		0		0
Total Loans											$	2,516,868	$	1,424,440	$	833,452	$	840,329	$	468,301	$	903,983	$	1,478,315	$	8,465,688

December 31, 2016 Pass Special
Mention Substandard Doubtful Total
(In Thousands)
Commercial, financial and agricultural $ 1,893,664 $ 61,035 $ 27,568 $ - $ 1,982,267
Real estate - construction 324,958 5,861 4,266 - 335,085
Real estate - mortgage:
Owner-occupied commercial 1,158,615 6,037 7,067 - 1,171,719
1-4 family mortgage 531,868 2,065 2,872 - 536,805
Other mortgage 818,724 11,224 735 - 830,683
Total real estate mortgage 2,509,207 19,326 10,674 - 2,539,207
Consumer 55,135 76 - - 55,211
Total $ 4,782,964 $ 86,298 $ 42,508 $ - $ 4,911,770

Loans by performance status as of September 30, ~~2017~~ 2021 and December 31, ~~2016~~ 2020 were as follows:

September 30, 2017	Performing		Nonperforming		Total

September 30, 2021							Performing		Nonperforming		Total
	(In Thousands)						(In Thousands)
Commercial, financial and agricultural	$	2,216,004	$	7,906	$	2,223,910	$	2,920,843	$	7,002	$	2,927,845
Real estate - construction		465,553		2,285		467,838		887,704		234		887,938
Real estate - mortgage:
Owner-occupied commercial		1,320,886		2,497		1,323,383		1,808,779		1,061		1,809,840
1-4 family mortgage		591,544		1,636		593,180		763,639		1,463		765,102
Other mortgage		962,260		430		962,690		2,353,121		4,691		2,357,812
Total real estate mortgage		2,874,690		4,563		2,879,253		4,925,539		7,215		4,932,754
Consumer		57,656		108		57,764		64,254		20		64,274
Total	$	5,613,903	$	14,862	$	5,628,765	$	8,798,340	$	14,471	$	8,812,811

December 31, 2020	Performing		Nonperforming		Total
	(In Thousands)
Commercial, financial and agricultural	$	3,284,180	$	11,720	$	3,295,900
Real estate - construction		593,380		234		593,614
Real estate - mortgage:
Owner-occupied commercial		1,692,169		1,259		1,693,428
1-4 family mortgage		710,817		875		711,692
Other mortgage		2,101,379		4,805		2,106,184
Total real estate mortgage		4,504,365		6,939		4,511,304
Consumer		64,809		61		64,870
Total	$	8,446,734	$	18,954	$	8,465,688

December 31, 2016 Performing Nonperforming Total

(In Thousands)
Commercial, financial and agricultural $ 1,974,975 $ 7,292 $ 1,982,267
Real estate - construction 331,817 3,268 335,085
Real estate - mortgage:
Owner-occupied commercial 1,165,511 6,208 1,171,719
1-4 family mortgage 536,731 74 536,805
Other mortgage 830,683 - 830,683
Total real estate mortgage 2,532,925 6,282 2,539,207
Consumer 55,166 45 55,211
Total $ 4,894,883 $ 16,887 $ 4,911,770

Loans by past due status as of September 30, ~~2017~~ 2021 and December 31, ~~2016~~ 2020 were as follows:

September 30, 2017	Past Due Status (Accruing Loans)
September 30, 2021															Past Due Status (Accruing Loans)
	30-59 Days		60-89 Days		90+ Days		Total Past Due		Non-Accrual		Current		Total Loans								Total Past		Total						Nonaccrual
															30-59 Days		60-89 Days		90+ Days		Due		Nonaccrual		Current		Total Loans		With no ACL
	(In Thousands)														(In Thousands)
Commercial, financial and agricultural	$	5,317	$	12,081	$	2,108	$	19,506	$	5,798	$	2,198,606	$	2,223,910	$	193	$	77	$	36	$	306	$	6,966	$	2,920,573	$	2,927,845	$	4,233
Real estate - construction		997		618		-		1,615		2,285		463,938		467,838		0		0		0		0		234		887,704		887,938		0
Real estate - mortgage:
Owner-occupied commercial		310		3,354		-		3,664		2,497		1,317,222		1,323,383		289		0		0		289		1,061		1,808,490		1,809,840		1,061
1-4 family mortgage		1,132		295		328		1,755		1,308		590,117		593,180		200		622		579		1,401		884		762,817		765,102		368
Other mortgage		-		-		-		-		430		962,260		962,690		0		0		4,691		4,691		0		2,353,121		2,357,812		0
Total real estate - mortgage		1,442		3,649		328		5,419		4,235		2,869,599		2,879,253		489		622		5,270		6,381		1,945		4,924,428		4,932,754		1,429
Consumer		102		13		70		185		38		57,541		57,764		56		51		20		127		0		64,147		64,274		0
Total	$	7,858	$	16,361	$	2,506	$	26,725	$	12,356	$	5,589,684	$	5,628,765	$	738	$	750	$	5,326	$	6,814	$	9,145	$	8,796,852	$	8,812,811	$	5,662

December 31, 2016	Past Due Status (Accruing Loans)
December 31, 2020															Past Due Status (Accruing Loans)
	30-59 Days		60-89 Days		90+ Days		Total Past Due		Non-Accrual		Current		Total Loans								Total Past		Total						Nonaccrual
															30-59 Days		60-89 Days		90+ Days		Due		Nonaccrual		Current		Total Loans		With no ACL
	(In Thousands)														(In Thousands)
Commercial, financial and agricultural	$	710	$	40	$	10	$	760	$	7,282	$	1,974,225	$	1,982,267	$	92	$	1,738	$	11	$	1,841	$	11,709	$	3,282,350	$	3,295,900	$	5,101
Real estate - construction		59		-		-		59		3,268		331,758		335,085		0		0		0		0		234		593,380		593,614		0
Real estate - mortgage:
Owner-occupied commercial		-		-		6,208		6,208		-		1,165,511		1,171,719		0		995		0		995		1,259		1,691,174		1,693,428		467
1-4 family mortgage		160		129		-		289		74		536,442		536,805		61		1,073		104		1,238		771		709,683		711,692		512
Other mortgage		95		811		-		906		-		829,777		830,683		18		0		4,805		4,823		0		2,101,361		2,106,184		0
Total real estate - mortgage		255		940		6,208		7,403		74		2,531,730		2,539,207		79		2,068		4,909		7,056		2,030		4,502,218		4,511,304		979
Consumer		52		17		45		114		-		55,097		55,211		64		13		61		138		0		64,732		64,870		0
Total	$	1,076	$	997	$	6,263	$	8,336	$	10,624	$	4,892,810	$	4,911,770	$	235	$	3,819	$	4,981	$	9,035	$	13,973	$	8,442,680	$	8,465,688	$	6,080

~~The allowance~~As described in Note 9 - Recently Adopted Accounting Pronouncements, the Company adopted ASU 2016-13 on January 1, 2020, which introduced the CECL methodology for ~~loan~~estimating all expected losses ~~is maintained at~~over the life of a ~~level which, in management’s judgment, is adequate to absorb credit losses inherent in~~financial asset. Under the loan portfolio. The amount of the allowance is based on management’s evaluation of the collectability of the loan portfolio, including the nature of the portfolio, credit concentrations, trends in historical loss experience, specific impaired loans, economic conditions and other risks inherent in the portfolio. Allowances for impaired loans are generally determined based on collateral values or the present value of the estimated cash flows. The allowance is increased by a provision for loan losses, which is charged to expense, and reduced by charge-offs, net of recoveries. In addition, various regulatory agencies, as an integral part of their examination process, periodically reviewCECL methodology, the allowance for credit losses is measured on ~~loans. Such agencies may require~~a collective basis for pools of loans with similar risk characteristics. For loans that do not share similar risk characteristics with the ~~Company~~collectively evaluated pools, evaluations are performed on an individual basis. For all loan segments collectively evaluated, losses are predicted over a period of time determined to ~~recognize adjustments to the allowance based on their judgments about information available to them~~be reasonable and supportable, and at the ~~time~~end of ~~their examination.~~the reasonable and supportable forecast period losses are reverted to long-term historical averages. The estimated loan losses for all loan segments are adjusted for changes in qualitative factors not inherently considered in the quantitative analyses.

The ~~methodology utilized~~Company uses the discounted cash flow (“DCF”) method to estimate ACL for the calculation of the allowance for loan losses is divided into four distinct categories. Those categories include allowances for non-impaired loans (ASC 450), impaired loans (ASC 310), external qualitative factors, and internal qualitative factors. A description of each category of the allowance for loan loss methodology is listed below.

~~Non-Impaired Loans.~~ ~~Non-impaired loans are grouped into homogeneous~~all loan pools ~~by loan type and are the following:~~except for commercial ~~and industrial, construction and development, commercial real estate, second lien home equity~~revolving lines of credit and credit cards. For all ~~other loans.~~ loan pools utilizing the DCF method, the Company utilizes and forecasts national unemployment rate as a loss driver. The Company also utilizes and forecasts GDP growth as a second loss driver for its agricultural and consumer loan pools. Consistent forecasts of the loss drivers are used across the loan segments. At September 30, 2021 and December 31, 2020, the Company utilized a reasonable and supportable forecast period of twelve months followed by a six-month straight-line reversion to long-term averages. The Company leveraged economic projections from reputable and independent sources to inform its loss driver forecasts. The Company expects national unemployment to remain above pre-pandemic levels over the forecast period with an improved national GDP growth rate as the economy comes back on-line over the next year.

The Company uses a loss-rate method to estimate expected credit losses for its C&I lines of credit and credit card pools. The C&I lines of credit pool incorporates a probability of default (“PD”) and loss given default (“LGD”) modeling approach. This approach involves estimating the pool average life and then using historical correlations of default and loss experience over time to calculate the lifetime PD and LGD. These two inputs are then applied to the outstanding pool balance. The credit card pool incorporates a remaining life modeling approach, which utilizes an attrition-based method to estimate the remaining life of the pool. A quarterly average loss rate is then calculated using the Company’s historical loss data. The model reduces the pool balance quarterly on a straight-line basis over the estimated life of the pool. The quarterly loss rate is multiplied by the outstanding balance at each period-end resulting in an estimated loss for each quarter. The sum of estimated loss for all quarters is the total calculated reserve for the pool. Management has applied the loss-rate method to C&I lines of credit and to credit cards due to their generally short-term nature. An expected loss ratio is applied based on internal and peer historical losses.

Each loan pool is stratified by internal risk rating and multiplied by a loss allocation percentage derived from the loan pool historical loss rate. The historical loss rate is based on an age weighted five year history of net charge-offs experienced by pool, with the most recent net charge-off experience given a greater weighting. This resultsadjusted for qualitative factors not inherently considered in the ~~expected loss rate per year, adjusted by a~~quantitative analyses. The qualitative ~~adjustment factor~~adjustments either increase or decrease the quantitative model estimation. The Company considers factors that are relevant within the qualitative framework which include the following: lending policy, changes in nature and ~~a years-to-impairment factor, for each pool~~volume of loans, ~~to derive the total amount~~staff experience, changes in volume and trends of ~~allowance for non-impaired loans.~~problem loans, concentration risk, trends in underlying collateral values, external factors, quality of loan review system and other economic conditions.

~~Impaired Loans.~~ Loans are considered impaired when, based on current information and events, it is probable that the Bank will be unable to collect all amounts due according to the original terms of the loan agreement. The collection of all amounts due according to contractual terms means that both the contractual interest and principal payments of a loan will be collected as scheduledInherent risks in the loan ~~agreement. Impaired loans are measured~~portfolio will differ based on ~~the present value~~type of expected future cash flows discounted at the loan’s effective interest rate, at the loan’s observable market price or the fair value of the underlying collateral. The fair value of collateral, reducedloan. Specific risk characteristics by ~~costs to sell on a discounted basis, is used if a~~ loan ~~is collateral-dependent. Fair value estimates for specifically impaired collateral-dependent loans~~portfolio segment are derived from appraised values based on the current market value or “as is” value of the property, normally from recently received and reviewed appraisals. Appraisals are obtained from certified and licensed appraisers and are based on certain assumptions, which may include construction or development status and the highest and best use of the property.These appraisals are reviewed by our credit administration department, and values are adjusted downward to reflect anticipated disposition costs. Once this estimated net realizable value has been determined, the value used in the impairment assessment is updated for each impaired loan. As subsequent events dictate and estimated net realizable values decline, required reserves may be established or further adjustments recorded.listed below:

~~External Qualitative Factors~~Commercial and industrial~~. The determination~~loans include risks associated with borrower’s cash flow, debt service coverage and management’s expertise. These loans are subject to the risk that the Company may have difficulty converting collateral to a liquid asset if necessary, as well as risks associated with degree of ~~the portion~~specialization, mobility and general collectability in a default situation. These commercial loans may be subject to many different types of ~~the allowance for loan losses relating to external qualitative factors is based on consideration of the following factors: gross domestic product growth rate,~~risks, including fraud, bankruptcy, economic downturn, deteriorated or non-existent collateral, and changes in prime rate, delinquency trends, peer delinquency trends, year-over-year loan growth and state unemployment rate trends. Data for the three most recent periods is utilized in the calculation for each external qualitative component. The factors have a consistent weighted methodology to calculate the amount of allowance due to external qualitative factors.interest rates.

~~Internal Qualitative Factors~~Real estate construction~~. The determination~~loans include risks associated with the borrower’s credit-worthiness, contractor’s qualifications, borrower and contractor performance, and the overall risk and complexity of the ~~portion~~proposed project. Construction lending is also subject to risks associated with sub-market dynamics, including population, employment trends and household income. During times of economic stress, this type of loan has typically had a greater degree of risk than other loan types.

Real estate mortgageloans consist of loans secured by commercial and residential real estate. Commercial real estate lending is dependent upon successful management, marketing and expense supervision necessary to maintain the property. Repayment of these loans may be adversely affected by conditions in the real estate market or the general economy. Also, commercial real estate loans typically involve relatively large loan balances to a single borrower. Residential real estate lending risks are generally less significant than those of other loans. Real estate lending risks include fluctuations in the value of real estate, bankruptcies, economic downturn and customer financial problems.

Consumer loans carry a moderate degree of risk compared to other loans. They are generally more risky than traditional residential real estate loans but less risky than commercial loans. Risk of default is usually determined by the well-being of the ~~allowance for loan losses relating to internal qualitative factors~~local economies. During times of economic stress, there is ~~based on~~usually some level of job loss both nationally and locally, which directly affects the consideration of criteria which includes the following: number of extensions and deferrals, single pay and interest only loans, current financial information, credit concentrations and risk grade accuracy. A self-assessment for eachability of the ~~criteria is made with a consistent weighted methodology used~~consumer to ~~calculate the amount of allowance required for internal qualitative factors.~~repay debt.

The following table presents ~~an analysis of~~changes in the allowance for credit losses, and allowance for loan losses, segregated by loan type, for the three and nine months ended September 30, 2021 and September 30, 2020.

	Commercial,
	financial and			Real estate -		Real estate -
	agricultural			construction		mortgage			Consumer			Total
	(In Thousands)
	Three Months Ended September 30, 2021
Allowance for credit losses:
Balance at June 30, 2021	$	42,433		$	22,413	$	38,530		$	1,294		$	104,670
Charge-offs		(1,541	)		0		(208	)		(86	)		(1,835	)
Recoveries		140			0		4			8			152
Provision		(144	)		2,124		3,681			302			5,963
Balance at September 30, 2021	$	40,888		$	24,537	$	42,007		$	1,518		$	108,950

	Three Months Ended September 30, 2020
Allowance for loan losses:
Balance at June 30, 2020	$	47,986		$	4,531		$	38,399		$	591		$	91,507
Charge-offs		(11,146	)		0			(200	)		(44	)		(11,390	)
Recoveries		12			0			12			15			39
Provision		12,421			(441	)		304			0			12,284
Balance at September 30, 2020	$	49,273		$	4,090		$	38,515		$	562		$	92,440

	Nine Months Ended September 30, 2021
Allowance for credit losses:
Balance at December 31, 2020	$	36,370		$	16,057		$	33,722		$	1,793		$	87,942
Charge-offs		(2,168	)		0			(279	)		(227	)		(2,674	)
Recoveries		464			52			68			32			616
Provision		6,222			8,428			8,496			(80	)		23,066
Balance at September 30, 2021	$	40,888		$	24,537		$	42,007		$	1,518		$	108,950

	Nine Months Ended September 30, 2020
Allowance for loan losses:
Balance at December 31, 2019	$	43,666		$	2,768		$	29,653		$	497		$	76,584
Charge-offs		(15,144	)		(830	)		(4,397	)		(165	)		(20,536	)
Recoveries		158			2			26			55			241
Provision		20,593			2,150			13,233			175			36,151
Balance at September 30, 2020	$	49,273		$	4,090		$	38,515		$	562		$	92,440

The following table details the allowance for loan losses and recorded investment in loans by ~~portfolio segment~~impairment evaluation method as of September 30, 2020, as determined in accordance with ASC 310 prior to the adoption of ASU 2016-13:

	Commercial,
	financial and		Real estate -		Real estate -
	agricultural		construction		mortgage		Consumer		Total
	(In Thousands)
Allowance for loan losses:
Individually Evaluated for Impairment	$	9,204	$	201	$	195	$	0	$	9,600
Collectively Evaluated for Impairment		40,069		3,889		38,320		562		82,840

Loans:
Ending Balance	$	3,466,189	$	530,919	$	4,453,612	$	57,834	$	8,508,554
Individually Evaluated for Impairment		73,800		587		19,376		0		93,763
Collectively Evaluated for Impairment		3,392,389		530,332		4,434,236		57,834		8,414,791

We maintain an allowance for credit losses on unfunded lending commitments and ~~changes~~letters of credit to provide for the risk of loss inherent in these arrangements. The allowance is computed using a methodology similar to that used to determine the allowance for ~~loan~~credit losses for loans, modified to take into account the ~~three~~ probability of a drawdown on the commitment. The allowance for credit losses on unfunded loan commitments is classified as a liability account on the balance sheet within other liabilities, while the corresponding provision for these credit losses is recorded as a component of other expense. The allowance for credit losses on unfunded commitments was $3.0 million at September 30, 2021 and ~~nine~~$2.2 million at December 31, 2020. The provision expense for unfunded commitments was reduced by $300,000 for the three months ended September 30, ~~2017~~ 2021 and was $800,000 for the nine months ended September 30, ~~2016.~~ 2021. The ~~total~~provision expense for unfunded commitments was $0 for both corresponding periods in 2020. Prior to January 1, 2020, except quarterly periods in 2020 which were not restated, the allowance for losses on unfunded loan commitments was calculated using an incurred losses ~~is disaggregated into those amounts associated with loans individually evaluated and those associated with loans collectively evaluated.~~methodology.

Commercial
financial and
agricultural Real estate -
construction Real estate -
mortgage Consumer Total

(In Thousands)
Three Months Ended September 30, 2017
Allowance for loan losses:
Balance at June 30, 2017 $ 29,127 $ 5,138 $ 20,392 $ 402 $ 55,059
Charge-offs (924 ) (16 ) (550 ) (65 ) (1,555 )
Recoveries 67 12 59 14 152
Provision 3,431 197 1,065 110 4,803
Balance at September 30, 2017 $ 31,701 $ 5,331 $ 20,966 $ 461 $ 58,459

Three Months Ended September 30, 2016
Allowance for loan losses:
Balance at June 30, 2016 $ 23,655 $ 5,279 $ 17,600 $ 464 $ 46,998
Charge-offs (1,270 ) (79 ) (144 ) (81 ) (1,574 )
Recoveries 35 9 1 - 45
Provision 3,560 (394 ) 282 16 3,464
Balance at September 30, 2016 $ 25,980 $ 4,815 $ 17,739 $ 399 $ 48,933

Nine Months Ended September 30, 2017
Allowance for loan losses:
Balance at December 31, 2016 $ 28,872 $ 5,125 $ 17,504 $ 392 $ 51,893
Charge-offs (6,846 ) (56 ) (922 ) (173 ) (7,997 )
Recoveries 273 42 62 16 393
Provision 9,402 220 4,322 226 14,170
Balance at September 30, 2017 $ 31,701 $ 5,331 $ 20,966 $ 461 $ 58,459

Nine Months Ended September 30, 2016
Allowance for loan losses:
Balance at December 31, 2015 $ 21,495 $ 5,432 $ 16,061 $ 431 $ 43,419
Charge-offs (2,732 ) (815 ) (335 ) (130 ) (4,012 )
Recoveries 39 64 100 - 203
Provision 7,178 134 1,913 98 9,323
Balance at September 30, 2016 $ 25,980 $ 4,815 $ 17,739 $ 399 $ 48,933

As of September 30, 2017
Allowance for loan losses:
Individually Evaluated for Impairment $ 5,725 $ 829 $ 1,892 $ 50 $ 8,496
Collectively Evaluated for Impairment 25,976 4,502 19,074 411 49,963

Loans:
Ending Balance $ 2,223,910 $ 467,838 $ 2,879,253 $ 57,764 $ 5,628,765
Individually Evaluated for Impairment 30,405 3,328 15,789 88 49,610
Collectively Evaluated for Impairment 2,193,505 464,510 2,863,464 57,676 5,579,155

As of December 31, 2016
Allowance for loan losses:
Individually Evaluated for Impairment $ 6,607 $ 923 $ 622 $ - $ 8,152
Collectively Evaluated for Impairment 22,265 4,202 16,882 392 43,741

Loans:
Ending Balance $ 1,982,267 $ 335,085 $ 2,539,207 $ 55,211 $ 4,911,770
Individually Evaluated for Impairment 27,922 4,314 13,350 3 45,589
Collectively Evaluated for Impairment 1,954,345 330,771 2,525,857 55,208 4,866,181

Loans that no longer share similar risk characteristics with collectively evaluated pools are estimated on an individual basis. A loan is considered collateral-dependent when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. The following table ~~presents details~~summarizes collateral-dependent gross loans held for investment by collateral type as follows:

			Accounts								ACL
September 30, 2021	Real Estate		Receivable		Equipment		Other		Total		Allocation
	(In Thousands)
Commercial, financial and agricultural	$	16,299	$	21,941	$	16,430	$	5,275	$	59,945	$	7,613
Real estate - construction		235		0		0		0		235		14
Real estate - mortgage:
Owner-occupied commercial		1,059		1,002		0		0		2,061		557
1-4 family mortgage		1,804		0		0		24		1,828		66
Other mortgage		12,901		0		0		0		12,901		0
Total real estate - mortgage		15,764		1,002		0		24		16,790		623
Consumer		0		0		0		0		0		0
Total	$	32,298	$	22,943	$	16,430	$	5,299	$	76,970	$	8,250

			Accounts								ACL
December 31, 2020	Real Estate		Receivable		Equipment		Other		Total		Allocation
	(In Thousands)
Commercial, financial and agricultural	$	19,373	$	27,952	$	16,877	$	4,594	$	68,796	$	7,142
Real estate - construction		235		0		0		0		235		1
Real estate - mortgage:
Owner-occupied commercial		2,012		971		0		12		2,995		499
1-4 family mortgage		3,264		0		0		24		3,288		48
Other mortgage		13,191		0		0		0		13,191		0
Total real estate - mortgage		18,467		971		0		36		19,474		547
Consumer		0		0		0		0		0		0
Total	$	38,075	$	28,923	$	16,877	$	4,630	$	88,505	$	7,690

On March 22, 2020, an Interagency Statement was issued by banking regulators that encourages financial institutions to work prudently with borrowers who are or may be unable to meet their contractual payment obligations due to the effects of COVID-19. Additionally, Section 4013 of the CARES Act further provides that a qualified loan modification is exempt by law from classification as a TDR as defined by GAAP, from the period beginning March 1, 2020 until the earlier of December 31, 2020 or the date that is 60 days after the date on which the national emergency concerning the COVID-19 outbreak declared by the President of the United States under the National Emergencies Act terminates. The Interagency Statement was subsequently revised in April 2020 to clarify the interaction of the original guidance with Section 4013 of the CARES Act, as well as setting forth the banking regulators’ views on consumer protection considerations. On December 27, 2020, President Trump signed into law the Consolidated Appropriations Act 2021, which extended the period established by Section 4013 of the CARES Act to the earlier of January 1, 2022 or the date that is 60 days after the date on which the national COVID-19 emergency terminates. In accordance with such guidance, the Bank is offering short-term modifications made in response to COVID-19 to borrowers who are current and otherwise not past due. These include short-term (180 days or less) modifications in the form of payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment that are insignificant. As of September 30, 2021, there were 18 loans outstanding totaling $2.7 million that have payment deferrals in connection with the COVID-19 relief provided by the CARES Act. All of these remaining deferrals are principal and interest deferrals. The CARES Act precluded all of the Company’s ~~impaired loans~~COVID-19 loan modifications from being classified as a TDR as of September 30, ~~2017 and December 31, 2016, respectively. Loans which have been fully charged off do not appear in the tables.~~2021.

September 30, 2017 For the three months
ended September 30,
2017 For the nine months
ended September 30,
2017
Recorded
Investment Unpaid
Principal
Balance Related
Allowance Average
Recorded
Investment Interest
Income
Recognized
in Period Average
Recorded
Investment Interest
Income
Recognized
in Period

(In Thousands)
With no allowance recorded:
Commercial, financial and agricultural $ 4,671 $ 4,671 $ - $ 4,770 $ 52 $ 4,998 $ 164
Real estate - construction 45 48 - 48 1 49 2
Real estate - mortgage:
Owner-occupied commercial 2,366 2,532 - 2,551 37 2,584 113
1-4 family mortgage 1,752 1,752 - 1,756 22 1,781 67
Other mortgage 732 732 - 732 10 733 32
Total real estate - mortgage 4,850 5,016 - 5,039 69 5,098 212
Consumer 38 40 - 41 1 42 2
Total with no allowance recorded 9,604 9,775 - 9,898 123 10,187 380

With an allowance recorded:
Commercial, financial and agricultural 25,734 27,719 5,725 26,129 256 27,021 800
Real estate - construction 3,283 3,283 829 3,357 14 3,369 42
Real estate - mortgage:
Owner-occupied commercial 8,024 8,024 1,512 8,024 75 7,873 217
1-4 family mortgage 2,485 2,485 328 2,485 10 2,506 56
Other mortgage 430 980 52 974 (4 ) 984 21
Total real estate - mortgage 10,939 11,489 1,892 11,483 81 11,363 294
Consumer 50 50 50 50 1 39 2
Total with allowance recorded 40,006 42,541 8,496 41,019 352 41,792 1,138

Total Impaired Loans:
Commercial, financial and agricultural 30,405 32,390 5,725 30,899 308 32,019 964
Real estate - construction 3,328 3,331 829 3,405 15 3,418 44
Real estate - mortgage:
Owner-occupied commercial 10,390 10,556 1,512 10,575 112 10,457 330
1-4 family mortgage 4,237 4,237 328 4,241 32 4,287 123
Other mortgage 1,162 1,712 52 1,706 6 1,717 53
Total real estate - mortgage 15,789 16,505 1,892 16,522 150 16,461 506
Consumer 88 90 50 91 2 81 4
Total impaired loans $ 49,610 $ 52,316 $ 8,496 $ 50,917 $ 475 $ 51,979 $ 1,518

December 31, 2016 For the twelve months
ended December 31, 2016
Recorded
Investment Unpaid
Principal
Balance Related
Allowance Average
Recorded
Investment Interest Income
Recognized in
Period

(In Thousands)
With no allowance recorded:
Commercial, financial and agricultural $ 1,003 $ 1,003 $ - $ 992 $ 64
Real estate - construction 938 1,802 - 1,159 3
Real estate - mortgage:
Owner-occupied commercial 2,615 2,778 - 2,884 166
1-4 family mortgage 1,899 1,899 - 1,901 102
Other mortgage 940 940 - 965 60
Total real estate - mortgage 5,454 5,617 - 5,750 328
Consumer 3 5 - 6 -
Total with no allowance recorded 7,398 8,427 - 7,907 395

With an allowance recorded:
Commercial, financial and agricultural 26,919 31,728 6,607 26,955 1,162
Real estate - construction 3,376 3,376 923 3,577 68
Real estate - mortgage:
Owner-occupied commercial 6,924 6,924 348 6,934 362
1-4 family mortgage 972 972 274 313 19
Other mortgage - - - - -
Total real estate - mortgage 7,896 7,896 622 7,247 381
Consumer - - - - -
Total with allowance recorded 38,191 43,000 8,152 37,779 1,611

Total Impaired Loans:
Commercial, financial and agricultural 27,922 32,731 6,607 27,947 1,226
Real estate - construction 4,314 5,178 923 4,736 71
Real estate - mortgage:
Owner-occupied commercial 9,539 9,702 348 9,818 528
1-4 family mortgage 2,871 2,871 274 2,214 121
Other mortgage 940 940 - 965 60
Total real estate - mortgage 13,350 13,513 622 12,997 709
Consumer 3 5 - 6 -
Total impaired loans $ 45,589 $ 51,427 $ 8,152 $ 45,686 $ 2,006

Troubled Debt Restructurings (“TDR”) at September 30, ~~2017,~~ 2021, December 31, ~~2016~~ 2020 and September 30, ~~2016~~ 2020 totaled ~~$16.4~~$‐‐2.9 million, ~~$7.3~~$1.5 million and ~~$6.7~~$2.7 million, respectively. At The portion of those TDRs accruing interest at September 30, ~~2017, the Company had a related allowance for loan losses of $4.0 million allocated to these TDRs, compared to $2.3 million at~~ 2021, December 31, ~~2016~~ 2020 and ~~$1.7 million at~~ September 30, ~~2016.~~2020 totaled $437,000, $818,000 and $1.8 million, respectively. The following tables present loans modified in a TDR ~~activity~~ during three and nine months ended September 30, 2021 and September 30, 2020 by portfolio segment ~~for~~and the ~~three and nine months ended September 30, 2017 is presented in the table below.~~financial impact of those modifications. The tables include modifications made to new TDRs, as well as renewals of existing TDRs.

Three Months Ended September 30, 2017 Nine Months Ended September 30, 2017
Number of
Contracts Pre-
Modification
Outstanding
Recorded
Investment Post-
Modification
Outstanding
Recorded
Investment Number of
Contracts Pre-
Modification
Outstanding
Recorded
Investment Post-
Modification
Outstanding
Recorded
Investment
(In Thousands)
Troubled Debt Restructurings
Commercial, financial and agricultural - $ - $ - 5 $ 7,205 $ 7,205
Real estate - construction - - - 1 997 997
Real estate - mortgage:
Owner-occupied commercial - - - 2 3,664 3,664
1-4 family mortgage - - - 1 850 850
Other mortgage - - - - - -
Total real estate mortgage - - - 3 4,514 4,514
Consumer - - - - - -
- $ - $ - 9 $ 12,716 $ 12,716

	Three Months Ended September 30, 2021						Nine Months Ended September 30, 2021
			Pre-		Post-				Pre-		Post-
			Modification		Modification				Modification		Modification
			Outstanding		Outstanding				Outstanding		Outstanding
	Number of		Recorded		Recorded		Number of		Recorded		Recorded
	Contracts		Investment		Investment		Contracts		Investment		Investment
	(In Thousands)
Troubled Debt Restructurings
Commercial, financial and agricultural		0	$	0	$	0		2	$	1,155	$	1,155
Real estate - construction		0		0		0		0		0		0
Real estate - mortgage:
Owner-occupied commercial		0		0		0		1		991		991
1-4 family mortgage		0		0		0		0		0		0
Other mortgage		0		0		0		0		0		0
Total real estate mortgage		0		0		0		1		991		991
Consumer		0		0		0		0		0		0
		0	$	0	$	0		3	$	2,146	$	2,146

													Three Months Ended September 30, 2020						Nine Months Ended September 30, 2020
															Pre-		Post-				Pre-		Post-
															Modification		Modification				Modification		Modification
															Outstanding		Outstanding				Outstanding		Outstanding
	Three Months Ended September 30, 2016						Nine Months Ended September 30, 2016						Number of		Recorded		Recorded		Number of		Recorded		Recorded
	Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Contracts		Investment		Investment		Contracts		Investment		Investment
	(In Thousands)												(In Thousands)
Troubled Debt Restructurings
Commercial, financial and agricultural		-	$	-	$	-		1	$	366	$	366		1	$	214	$	214		2	$	564	$	564
Real estate - construction		-		-		-		-		-		-		1		357		357		1		357		357
Real estate - mortgage:
Owner-occupied commercial		-		-		-		-		-		-		1		611		611		1		611		611
1-4 family mortgage		-		-		-		-		-		-		0		0		0		0		0		0
Other mortgage		-		-		-		1		234		234		0		0		0		0		0		0
Total real estate mortgage		-		-		-		1		234		234		1		611		611		1		611		611
Consumer		-		-		-		-		-		-		0		0		0		0		0		0
		-	$	-	$	-		2	$	600	$	600		3	$	1,182	$	1,182		4	$	1,532	$	1,532

There were ~~no TDRs which defaulted during the three and nine months ended September 30, 2017 and 2016, and~~0 loans which were modified in the previous twelve months (i.e., the twelve months prior to default). that defaulted during the three and nine months ended September 30, 2021 and September 30, 2020, respectively. For purposes of this disclosure, default is defined as 90 days past due and still accruing or placement on nonaccrual status. ~~As of September 30, 2017, the Company’s TDRs have all resulted from term extensions, rather than from interest rate reductions or debt forgiveness.~~

NOTE 6 - LEASES

The Company leases space under non-cancelable operating leases for several of its banking offices and certain office equipment. The leases have remaining terms up to 10.2 years. At September 30, 2021, the Company had lease right-of-use assets and lease liabilities totaling $18.8 million and $19.4 million, respectively, compared to $10.5 million and $10.6 million, respectively, at December 31, 2020 which are reflected in other assets and other liabilities, respectively, in the Company’s Consolidated Balance Sheets.

Maturities of operating lease liabilities as of September 30, 2021 are as follows:

	September 30, 2021
	(In Thousands)
2021 (remaining)	$	991
2022		4,013
2023		3,520
2024		2,566
2025		2,481
thereafter		7,411
Total lease payments		21,308
Less: imputed interest		(1,455	)
Present value of operating lease liabilities	$	19,424

As of September 30, 2021, the weighted average remaining term of operating leases is 6.9 years and the weighted average discount rate used in the measurement of operating lease liabilities was 2.47%.

Operating cash flows related to leases were $967,000 and $2.5 million for the three and nine months ended September 30, 2021, respectively, compared to $855,000 and $2.6 million for the three and nine months ended September 30, 2020, respectively.

Lease costs during the three and nine months ended September 30, 2021 and September 30, 2020 were as follows (in thousands):

	Three Months Ended September 30,
	2021			2020
Operating lease cost	$	1,048		$	876
Short-term lease cost		0			13
Variable lease cost		148			77
Sublease income		(24	)		(25	)
Net lease cost	$	1,172		$	941

	Nine Months Ended September 30,
	2021			2020
Operating lease cost	$	2,960		$	2,623
Short-term lease cost		0			45
Variable lease cost		346			165
Sublease income		(86	)		(70	)
Net lease cost	$	3,220		$	2,763

NOTE 67 - EMPLOYEE AND DIRECTOR BENEFITS

Stock Options

~~At September 30, 2017, the~~The Company ~~had~~has a stock-based compensation ~~plans,~~plan as described below. The compensation cost that has been charged to earnings for the ~~plans~~plan was ~~approximately $294,000~~$461,000 and ~~$916,000~~$1.3 million for the three and nine months ended September 30, ~~2017, respectively,~~ 2021 and ~~$291,000~~$340,000 and ~~$931,000~~$969,000 for the three and nine months ended September 30, ~~2016, respectively.~~2020.

The Company’s ~~2005 Amended and Restated Stock Option Plan allows for the grant of stock options to purchase up to 6,150,000 shares of the Company’s common stock. The Company’s~~ 2009 Amended and Restated Stock Incentive Plan authorizes the grant of up to 5,550,000 shares and allows for the issuance of Stock Appreciation Rights, Restricted Stock, Stock Options, Performance Shares or Performance Units. ~~Both plans allow~~The plan allows for the grant of incentive stock options and non-qualified stock options, and option awards are granted with an exercise price equal to the market value of the Company’s common stock at the date of grant. The maximum term of the options granted under the ~~plans~~plan is ten years.

The Company estimates the fair value of each stock option award using a Black-Scholes-Merton valuation model that uses the assumptions noted in the following table. ~~These assumptions are highly subjective and changes to them can materially affect the fair value estimate.~~ Expected ~~market price~~ volatility ~~and expected term of options are~~is based on historical ~~data~~volatilities of the Company’s common stock. The expected term for options granted is based on the short-cut method and ~~other factors.~~represents the period of time that options granted are expected to be outstanding. The risk-free rate for periods within the contractual life of the option is based on the ~~U. S.~~U.S. Treasury yield curve in effect at the time of grant.

2017 2016
Expected volatility 29.00 % 29.00 %
Expected dividends 0.44 % 0.64 %
Expected term (in years) 6.25 6.25
Risk-free rate 2.08 % 1.86 %

	2021
Expected volatility		40.00	%
Expected dividends		1.78	%
Expected term (in years)		7.5
Risk-free rate		2.43	%

The weighted average grant-date fair value of options granted during the nine months ended September 30, ~~2017 and~~ 2021 was $12.73. There were 0 grants of stock options during the nine months ended September 30, ~~2016 was $11.83 and $5.95, respectively.~~2020.

The following table summarizes stock option activity during the nine months ended September 30, ~~2017~~ 2021 and September 30, ~~2016:~~2020:

Shares Weighted
Average
Exercise
Price Weighted
Average
Remaining
Contractual
Term (years) Aggregate
Intrinsic
Value
(In Thousands)
Nine Months Ended September 30, 2017:
Outstanding at January 1, 2017 2,026,334 $ 9.00 6.2 $ 57,636
Granted 52,500 37.93 9.4 (35 )
Exercised (359,000 ) 4.97 4.2 11,590
Forfeited (32,000 ) 21.96 8.4 489
Outstanding at September 30, 2017 1,687,834 10.51 5.7 $ 45,136

Exercisable at September 30, 2017 810,736 $ 5.22 4.2 $ 25,971

Nine Months Ended September 30, 2016:
Outstanding at January 1, 2016 2,498,834 $ 6.66 6.3 $ 42,743
Granted 234,000 19.98 9.5 1,398
Exercised (656,500 ) 4.25 4.2 14,254
Forfeited (13,000 ) 19.41 9.0 85
Outstanding at September 30, 2016 2,063,334 8.86 6.5 $ 35,277

Exercisable at September 30, 2016 594,536 $ 6.45 6.0 $ 13,901

						Weighted
				Weighted		Average
				Average		Remaining		Aggregate
				Exercise		Contractual		Intrinsic
	Shares			Price		Term (years)		Value
								(In Thousands)
Nine Months Ended September 30, 2021:
Outstanding at January 1, 2021		640,950		$	18.14		4.6	$	16,981
Granted		500			32.60		7.7		23
Exercised		(257,200	)		12.46		3.2		16,805
Forfeited		(9,000	)		16.57		2.1		256
Outstanding at September 30, 2021		375,250		$	19.56		4.1	$	22,438

Exercisable at September 30, 2021		281,000		$	12.79		3.0	$	18,565

Nine Months Ended September 30, 2020:
Outstanding at January 1, 2020		965,248		$	15.19		4.9	$	21,911
Granted		0			0		-		0
Exercised		(279,300	)		11.36		3.2		6,330
Forfeited		(18,000	)		30.79		6.4		58
Outstanding at September 30, 2020		667,948		$	16.37		4.5	$	11,720

Exercisable at September 30, 2020		209,200		$	12.41		3.2	$	4,425

As of September 30, ~~2017,~~ 2021, there was ~~approximately $2.1 million~~$467,000 of total unrecognized compensation cost related to non-vested stock options. The cost is expected to be recognized on the straight-line method over the next ~~2.7~~1.7 years.

Restricted Stock and Performance Shares

The Company periodically grants restricted stock awards that vest upon time-based service conditions. Dividend payments are made during the vesting period. The value of restricted stock is determined to be the current value of the Company’s stock, and this total value will be recognized as compensation expense over the vesting period. As of September 30, ~~2017,~~ 2021, there was ~~$543,000~~$3.5 million of total unrecognized compensation cost related to non-vested time-based restricted stock. The cost is expected to be recognized evenly over the remaining ~~1.2~~2.4 years of the restricted stock’s vesting period.

The Company periodically grants performance shares that give plan participants the opportunity to earn between 0% and 150% of the number of performance shares granted based on achieving certain performance metrics. The number of performance shares earned is determined by reference to the Company’s total shareholder return relative to a peer group of other publicly traded banks and bank holding companies during the performance period. The performance period is generally three years starting on the grant date. The fair value of the performance shares is determined using a Monte Carlo simulation model on the grant date.

	Restricted Stock					Performance Shares
	Shares			Weighted Average Grant Date Fair Value		Shares		Weighted Average Grant Date Fair Value
Nine Months Ended September 30, 2021:
Non-vested at January 1, 2021		84,307		$	34.92		0	$	0
Granted		69,295			48.92		12,437		37.05
Vested		(13,024	)		28.44		0		0
Forfeited		(11,725	)		39.59		0		0
Non-vested at September 30, 2021		128,853		$	42.68		12,437	$	37.05

Nine Months Ended September 30, 2020:
Non-vested at January 1, 2020		71,290		$	31.53		0	$	0
Granted		29,067			33.20		0		0
Vested		(19,928	)		23.64		0		0
Forfeited		0			0		0		0
Non-vested at September 30, 2020		80,429		$	34.09		0	$	0

NOTE 8 - DERIVATIVES

The ~~following table summarizes restricted stock activity during~~Company periodically enters into derivative contracts to manage exposures to movements in interest rates. The Company purchased an interest rate cap in May of 2020 to limit exposures to increases in interest rates. The interest rate cap is not designated as a hedging instrument but rather as a stand-alone derivative. The interest rate cap has an original term of 3 years, a notional amount of $300 million and is tied to the ~~nine months ended~~ one-month LIBOR rate with a strike rate of 0.50%. The fair value of the interest rate cap is carried on the balance sheet in other assets and the change in fair value is recognized in noninterest income each quarter. At September 30, ~~2017~~2021 the interest rate cap had a fair value of $314,000 and ~~September 30, 2016:~~

Shares Weighted
Average Grant
Date Fair Value

Nine Months Ended September 30, 2017:
Non-vested at January 1, 2017 118,676 $ 8.88
Granted 7,000 38.02
Vested (4,200 ) 15.74
Forfeited (800 ) 15.74
Non-vested at September 30, 2017 120,676 10.29

Nine Months Ended September 30, 2016:
Non-vested at January 1, 2016 294,176 $ 6.44
Granted 9,000 19.58
Vested (178,500 ) 5.59
Forfeited - -
Non-vested at September 30, 2016 124,676 8.66

~~NOTE 7 - DERIVATIVES~~remaining term of 1.6 years.

The Company has entered into agreements with secondary market investors to deliver loans on a “best efforts delivery” basis. When a rate is committed to a borrower, it is based on the best price that day and locked with the investor for the customer for a ~~30-day~~30-day period. In the event the loan is not delivered to the investor, the Company has no risk or exposure with the investor. The interest rate lock commitments related to loans that are originated for later sale are classified as derivatives. The fair values of the Company’s agreements with investors and rate lock commitments to customers as of September 30, ~~2017~~ 2021 and December 31, ~~2016~~ 2020 were not material.

NOTE 8 9– RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS

In ~~March~~June 2016, the FASB issued ASU ~~2016-09,~~ ~~Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting~~ (“ASU 2016-09”), which is intended to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 is effective for annual periods beginning after December 15, 2016 and interim periods within those annual periods. Early adoption was permitted. The Company elected to early adopt the provisions of this ASU during the second quarter of 2016, and retrospectively apply the changes in accounting for stock compensation back to the first quarter of 2016. Accordingly, the Company recognized a reduction in its provision for income taxes during the quarter and nine months ended September 30, 2017 of $1.4 million and $3.5 million, respectively, compared to $1.2 million and $3.5 million during the quarter and nine months ended September 30, 2016, respectively. Prior to the adoption of ASU 2016-09, such tax benefits were recorded as an increase to additional paid-in capital.

~~In March 2016, the FASB issued ASU 2016-07~~~~, Investments – Equity Method and Joint Ventures (Topic 323), Simplifying the Transition to the Equity Method of Accounting~~. The amendments eliminate the requirement that when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence, an investor must adjust the investment, results of operations, and retained earnings retroactively on a step-by-step basis as if the equity method had been in effect during all previous periods that the investment had been held. The amendments require that the equity method investor add the cost of acquiring the additional interest in the investee to the current basis of the investor’s previously held interest and adopt the equity method of accounting as of the date the investment becomes qualified for equity method accounting. The amendments require that an entity that has an available-for-sale equity security that becomes qualified for the equity method of accounting recognize through earnings the unrealized holding gain or loss in accumulated other comprehensive income at the date the investment becomes qualified for use of the equity method. The amendments became effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. The amendments should be applied prospectively upon their effective date to increase the level of ownership interest or degree of influence that results in the adoption of the equity method. Adoption of this standard has not affected the consolidated financial statements.

~~In January 2017, the FASB issued ASU 2017-03,~~ ~~Accounting Changes and Error Corrections~~ ~~(Topic 250) and~~ ~~Investments – Equity Method and Joint Ventures~~ ~~(Topic 323)~~ ~~– Amendments to SEC Paragraphs Pursuant to Staff Announcements at the September 22, 2016 and November 17, 2016 EITF Meetings.~~ ASU 2017-03 provides amendments that add paragraph 250-10-S99-6 which includes the text of "SEC Staff Announcement: Disclosure of the Impact That Recently Issued Accounting Standards Will Have on the Financial Statements of a Registrant When Such Standards Are Adopted in a Future Period” (in accordance with Staff Accounting Bulletin (SAB) Topic 11.M). Registrants are required to disclose the effect that recently issued accounting standards will have on their financial statements when adopted in a future period. In cases where a registrant cannot reasonably estimate the impact of the adoption, then additional qualitative disclosures should be considered to assist the reader in assessing the significance of the standard's impact on its financial statements. The Company has enhanced its disclosures regarding the impact recently issued accounting standards adopted in a future period will have on its accounting and disclosures.

~~NOTE 9~~ - ~~RECENT ACCOUNTING PRONOUNCEMENTS~~

~~In May 2014, the FASB issued ASU No. 2014-09,~~ ~~Revenue From Contracts With Customers~~ (Topic 606). These amendments affect any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (e.g., insurance contracts or lease contracts). This ASU will supersede the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance, and creates a Topic 606, Revenue from Contracts with Customers. The core principle of the guidance is 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. This ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. The ASU allows for either full retrospective or modified retrospective adoption. In August 2015, the FASB issued ASU 2015-14, ~~Revenue From Contracts With Customers (Topic 606): Deferral of the Effective Date.~~ ~~This ASU defers the effective date of ASU 2014-09,~~ ~~Revenue From Contracts With Customers (Topic 606)~~, by one year. The new guidance is effective for interim and annual reporting periods beginning after December 15, 2017. The Company’s revenue has been more significantly weighted towards net interest income on financial assets and liabilities, which is explicitly excluded from the scope of the new standard, and noninterest income has not been as significant. The Company is continuing to assess its revenue streams and reviewing its contracts with customers that are potentially affected by the new guidance including fees on deposits, gains and losses on the sale of other real estate owned, credit and debit card interchange fees, and credit card revenue, to determine the potential impact the new guidance is expected to have on the Company’s consolidated financial statements. However, the Company’s revenue recognition pattern for these revenue streams is not expected to change materially from current practice. In addition, the Company continues to follow implementation issues specific to financial institutions which are still under discussion by the FASB’s Transition Resource Group. The Company is currently planning to adopt the ASU on January 1, 2018 utilizing the modified retrospective approach.

~~In January 2016, the FASB issued ASU 2016-01,~~ ~~Financial Instruments Overall (Topic 825): Recognition and Measurement of Financial Assets and Financial Liabilities~~. The amendments in ASU 2016-1: (a) require equity investments (except for those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income; (b) simplify the impairment assessment of equity securities without readily determinable fair values by requiring a qualitative assessment to identify impairment; (c) eliminate the requirement for public business entities to disclose the method and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; (d) require public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; (e) require an entity to present separately in other comprehensive income, the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments; (f) require separate presentation of financial assets and financial liabilities by measurement category and form of financial assets on the balance sheet or the notes to the financial statements; and (g) clarify that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. The amendments in this ASU are effective for public companies for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company is evaluating the provisions of this ASU to determine the potential impact the new standard will have on the Company’s consolidated financial statements.

~~In February 2016, the FASB issued ASU 2016-02,~~ ~~Leases (Topic 842)~~. The FASB issued this ASU to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet by lessees for those leases classified as operating leases under current U.S. GAAP and disclosing key information about leasing arrangements. The amendments in this ASU are effective for public business entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2018. Early application of this ASU is permitted for all entities. The Company leases many of its banking offices under lease agreements it classifies as operating leases. The Company is currently evaluating the impact that the new guidance will have on its consolidated financial statements. Management currently anticipates recognizing a right-of-use asset and a lease liability associated with its long-term operating leases. Additionally, the inclusion of these right-of-use lease assets in our balance sheet will impact our total risk-weighted assets.

~~In June 2016, the FASB issued ASU 2016-13,~~13, Financial Instruments-Credit Losses (Topic ~~326)~~326): Measurement of Credit Losses on Financial Instruments, which is essentially the final rule on use of the so-called CECL model, or current expected credit losses. Among other things, ~~the amendments in this ASU require~~ASC 326 requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable ~~forecasts.~~forecasts that affect the collectability of the reported amount. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. ~~Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses.~~ In addition, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. ~~For SEC filers,~~The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), enacted on March 27, 2020, gave financial institutions the ~~amendments~~option to delay adoption of CECL. The Company elected to delay its adoption of the update until December 31, 2020, with an effective retrospective adoption date of January 1, 2020. Amounts reported for periods beginning on or after January 1, 2020 are presented under ASC 326, except quarterly periods in 2020, which were not restated under CECL and all prior period information is presented in accordance with previously applicable GAAP. Based on prevailing economic conditions and forecasts as of January 1, 2020, the Company recognized a cumulative net increase to retained earnings of $1.1 million, net of tax, attributable to a decrease in the allowance for credit losses of $2.0 million, an increase in the allowance for off balance sheet credit exposures of $0.5 million, and a decrease in deferred tax assets of $0.4 million. This was the result of implementing a more quantitative methodology. The commercial, financial, and agricultural loan category decreased $8.2 million due to the portfolio primarily consisting of loans with generally short contractual maturities. This was partially offset by an increase of $6.2 million in the real estate – construction loan category due to the application of peer loss rates within the discounted cash flow pool reserve methodology. Peer historical loss rates were utilized to better align with loss expectations given the Company’s low historical loss experience in this category.

In March 2020, the FASB issued ASU ~~are~~2020-04,Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The update provides temporary optional guidance to ease the potential burden in accounting for reference rate reform. The guidance provides optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued. The guidance is intended to help stakeholders during the global market-wide reference rate transition period. Therefore, it will be effective for a limited time, starting March 12, 2020 through December 31, 2022. The Company has identified a replacement reference rate established by the American Financial Exchange. This rate is based on an active market of daily fund trading among participant banks. The Company will apply the guidance provided by this ASU in transitioning to the new reference rate.

In August 2021, the FASB issued ASU No.2021-06Presentation of Financial Statements (Topic 205), Financial Services—Depository and Lending (Topic 942), and Financial Services—Investment Companies (Topic 946): Amendments to SEC Paragraphs Pursuant to SEC Final Rule Releases No.33-10786, Amendments to Financial Disclosures about Acquired and Disposed Businesses, and No.33-10835, Update of Statistical Disclosures for Bank and Savings and Loan Registrants. This ASU amends and adds various SEC paragraphs to the codification pursuant to the issuance of SEC Final Rule Releases No.33-10786 and No.33-10835 issued to improve disclosure rules. The ASU is effective upon issuance. The adoption of this disclosure guidance did not have a material impact on the Company's consolidated financial statements

NOTE 10 - RECENT ACCOUNTING PRONOUNCEMENTS

In August 2020, FASB issued ASU 2020-06,Debt-Debt with Conversion and Other Options (Topic 470) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Topic 815): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The update is intended to simplify accounting for convertible instruments by removing major separation models required under current U.S. GAAP. Consequently, more convertible debt instruments will be reported as a single liability instrument and more convertible preferred stock as a single equity instrument with no separate accounting for embedded conversion features. The update removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for it. The update also simplifies the diluted earnings per share calculation in certain areas. The update is effective for the Company for its fiscal ~~years, and~~year beginning after December 15, 2021, including interim periods within those ~~fiscal years, beginning after December 15, 2019, with later effective dates for non-SEC registrant public companies and other organizations.~~years. Early adoption will be ~~permitted~~permitted. The Company does not currently have any affected convertible debt instruments outstanding so it does not believe that the update will have an impact on its consolidated financial statements.

In July 2021, the FASB issued ASU 2021-05, “Leases (Topic 842): Lessors-Certain Leases with Variable Lease Payments”which amends guidance so that lessors are no longer required to record a selling loss at lease commencement for ~~all organizations~~a lease with any variable lease payments that do not depend on an index or rate. A lessor would classify such leases as an operating lease rather than a sales-type or direct financing lease. The update is effective for the Company for its fiscal ~~years, and~~year beginning after December 15, 2021, including interim periods within those ~~fiscal years, beginning after December 15, 2018.~~years. The Company ~~is currently evaluating the~~does not expect adoption of ASU 2021-05 to have an impact ~~of the amendments in this ASU~~ on its consolidated financial ~~statements, and is collecting data that will be needed to produce historical inputs into any models created as a result of adopting this ASU.~~statements.

~~In March 2017, the FASB issued ASU 2017-08,~~ ~~Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20), Premium Amortization on Purchased Callable Debt Securities.~~ The amendments shorten the amortization period for certain callable debt securities held at a premium. Specifically, the amendments require the premium to be amortized to the earliest call date. The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. The amendments in this ASU are effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted. The amendments should be applied on a modified retrospective basis, with a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The amendments in this ASU will not impact the Company’s financial statements as it has always amortized premiums to the first call date.

~~In May 2017, the FASB issued ASU No. 2017-09,~~ ~~Compensation - Stock Compensation (Topic 718)~~, ~~Scope of Modification Accounting~~. The amendments provide guidance on determining which changes to the terms and conditions of share-based payment awards require an entity to apply modification accounting under Topic 718. The guidance is effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. Early adoption is permitted, including adoption in an interim period. The amendments in this ASU should be applied prospectively to an award modified on or after the adoption date. The Company is currently evaluating the impact of the amendments in the ASU on the its consolidated financial statements.

NOTE 1011 - FAIR VALUE MEASUREMENT

Measurement of fair value under U.S. GAAP establishes a hierarchy that prioritizes observable and unobservable inputs used to measure fair value, as of the measurement date, into three broad levels, which are described below:

Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.

Level 2: Observable prices that are based on inputs not quoted on active markets, but corroborated by market data.

Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.

In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible and also considers counterparty credit risk in its assessment of fair value.

Debt ~~Securities~~Securities.. Where quoted prices are available in an active market, securities are classified within Level 1 of the hierarchy. Level 1 securities include highly liquid government securities such as U.S. Treasuries and exchange-traded equity securities. For securities traded in secondary markets for which quoted market prices are not available, the Company generally relies on pricing services provided by independent vendors. Such independent pricing services are to advise the Company on the carrying value of the securities available for sale portfolio. As part of the Company’s procedures, the price provided from the service is evaluated for reasonableness given market changes. When a questionable price exists, the Company investigates further to determine if the price is valid. If needed, other market participants may be utilized to determine the correct fair value. The Company has also reviewed and confirmed its determinations in discussions with the pricing source regarding their methods of price discovery. Securities measured with these techniques are classified within Level 2 of the hierarchy and often involve using quoted market prices for similar securities, pricing models or discounted cash flow calculations using inputs observable in the market where available. Examples include U.S. government agency securities, mortgage-backed securities, obligations of states and political subdivisions, and certain corporate, asset-backed and other securities. ~~In cases where~~The Company periodically buys corporate debt securities in private placement transactions. Level ~~1 or Level~~ 2 inputs are not available for these securities. The Company uses average observable prices of similar corporate securities owned by the Company to value such securities and are classified in Level 3 of the hierarchy. The weighted average value observed for the Company’s other similar corporate securities was 4% as of September 30, 2021.

Derivative instruments. The fair values of derivatives are determined based on a valuation pricing model using readily available observable market parameters such as interest rate curves, adjusted for counterparty credit risk. These measurements are classified as level 2 within the valuation hierarchy.

~~Impaired~~ Loans Individually Evaluated. ~~. Impaired loans~~Loans individually evaluated are measured and reported at fair value when full payment under the loan terms is not probable. ~~Impaired loans~~Loans individually evaluated are carried at the present value of expected future cash flows using the loan’s existing rate in a discounted cash flow calculation, or the fair value of the collateral if the loan is collateral-dependent. Expected cash flows are based on internal inputs reflecting expected default rates on contractual cash flows. This method of estimating fair value does not incorporate the exit-price concept of fair value described in ASC ~~820-10~~820-10 and would generally result in a higher value than the exit-price approach. For loans measured using the estimated fair value of collateral less costs to sell, fair value is generally determined based on appraisals performed by certified and licensed appraisers using inputs such as absorption rates, capitalization rates and market comparables, adjusted for estimated costs to sell. Management modifies the appraised values, if needed, to take into account recent developments in the market or other factors, such as changes in absorption rates or market conditions from the time of valuation, and anticipated sales values considering management’s plans for disposition. Such modifications to the appraised values could result in lower valuations of such collateral. Estimated costs to sell are based on current amounts of disposal costs for similar assets. These measurements are classified as Level 3 within the valuation hierarchy. ~~Impaired loans~~Loans individually evaluated are subject to nonrecurring fair value adjustment upon initial recognition or subsequent ~~impairment.~~individual evaluation. A portion of the allowance for ~~loan~~credit losses is allocated to ~~impaired~~ loans individually evaluated if the value of such loans is deemed to be less than the unpaid balance. ~~Impaired loans~~The range of fair value adjustments and weighted average adjustment as of September 30, 2021 was 0% to 60% and 23.8%, respectively. The range of fair value adjustments and weighted average adjustment as of December 31, 2020 was 0% to 56% and 22.3% respectively. Loans individually evaluated are reviewed and evaluated on at least a quarterly basis for additional impairment and adjusted accordingly based on the same factors identified above. The amount recognized ~~as an impairment charge related~~ to ~~impaired~~write-down individually evaluated loans that are measured at fair value on a nonrecurring basis was ~~$2,660,000~~$113,000 and ~~$7,967,000~~$3.4 million during the three and nine months ended September 30, ~~2017,~~ 2021, respectively, and ~~$3,544,000~~$11.2 million and ~~$6,090,000~~$20.0 million during the three and nine months ended September 30, ~~2016,~~ 2020, respectively.

Other Real Estate Owned. Other real estate assets (“OREO”) acquired through, or in lieu of, foreclosure are held for sale and are initially recorded at the lower of cost or fair value, less selling costs. Any write-downs to fair value at the time of transfer to OREO are charged to the allowance for ~~loan~~credit losses subsequent to foreclosure. Values are derived from appraisals of underlying collateral and discounted cash flow analysis. Appraisals are performed by certified and licensed appraisers. Subsequent to foreclosure, valuations are updated periodically and assets are marked to current fair value, not to exceed the new cost basis. In the determination of fair value subsequent to foreclosure, management also considers other factors or recent developments, such as changes in absorption rates and market conditions from the time of valuation, and anticipated sales values considering management’s plans for disposition, which could result in adjustment to lower the property value estimates indicated in the appraisals. The range of fair value adjustments and weighted average adjustment as of September 30, 2021 was 8% to 25% and 10%, respectively. The range of fair value adjustments and weighted average adjustment as of December 31, 2020 was 5% to 27% and 12.5%, respectively. These measurements are classified as Level 3 within the valuation hierarchy. A ~~gain on the sale of OREO of $20,000 and $56,000 was recognized for the three and nine months ended September 30, 2017, respectively, and a~~ loss on the sale and write-downs of ~~$148,000~~OREO and ~~$584,000~~repossessed assets of $115,000 and $1.1 million was recognized for the three and nine months ended September 30, ~~2016,~~ 2021, respectively, and $86,000 and $2.5 million for the three and nine months ended September 30, 2020, respectively. These charges were for write-downs in the value of OREO subsequent to foreclosure and ~~gains or~~ losses on the disposal of OREO. OREO is classified within Level 3 of the hierarchy.

There ~~were no~~was one residential real estate ~~loan foreclosures~~loans with a balance of $72,000 foreclosed and classified as OREO as of September 30, ~~2017,~~ 2021, compared to ~~$189,000~~0 residential real estate loan foreclosure as of December 31, ~~2016.~~2020.

One residential real estate loan ~~with a balance of $921,000~~for $150,000 was in the process of being foreclosed as of September 30, ~~2017.~~2021. There were 0 residential real estate loans in process of foreclosure as of December 31, 2020.

The following table presents the Company’s financial assets ~~and financial liabilities~~ carried at fair value on a recurring basis as of September 30, ~~2017~~ 2021 and December 31, ~~2016:~~2020. There were 0 liabilities measured at fair value on a recurring basis as of September 30, 2021 and December 31, 2020.

	Fair Value Measurements at September 30, 2021 Using
	Quoted Prices in
	Active Markets		Significant Other		Significant
	for Identical		Observable Inputs		Unobservable
	Assets (Level 1)		(Level 2)		Inputs (Level 3)		Total
Assets Measured on a Recurring Basis:	(In Thousands)
Available-for-sale debt securities:
U.S. Treasury securities	$	0	$	14,179	$	0	$	14,179
Government agencies		0		9,084		0		9,084
Mortgage-backed securities		0		298,548		0		298,548
State and municipal securities		0		21,597		0		21,597
Corporate debt		0		362,898		17,018		379,916
Total available-for-sale debt securities		0		706,306		17,018		723,324
Interest rate cap derivative		0		314		0		314
Total assets at fair value	$	0	$	706,620	$	17,018	$	723,638

	Fair Value Measurements at December 31, 2020 Using
	Quoted Prices in
	Active Markets		Significant Other		Significant
	for Identical		Observable Inputs		Unobservable
	Assets (Level 1)		(Level 2)		Inputs (Level 3)		Total
Assets Measured on a Recurring Basis:	(In Thousands)
Available-for-sale debt securities:
U.S. Treasury securities	$	0	$	14,357	$	0	$	14,357
Government agencies		-		15,458		0		15,458
Mortgage-backed securities		0		495,109		0		495,109
State and municipal securities		0		38,115		0		38,115
Corporate debt		0		323,649		0		323,649
Total available-for-sale debt securities				886,688				886,688
Interest rate cap derivative		-		139		-		139
Total assets at fair value	$	0	$	886,827	$	0	$	886,827

Fair Value Measurements at September 30, 2017, Using
Quoted Prices in
Active Markets
for Identical
Assets (Level 1) Significant Other
Observable Inputs
(Level 2) Significant
Unobservable
Inputs (Level 3) Total
Assets Measured on a Recurring Basis: (In Thousands)
Available-for-sale securities:
U.S. Treasury and government sponsored agencies $ - $ 56,778 $ - $ 56,778
Mortgage-backed securities - 243,743 - 243,743
State and municipal securities - 134,804 - 134,804
Total assets at fair value $ - $ 435,325 $ - $ 435,325

Fair Value Measurements at December 31, 2016, Using
Quoted Prices in
Active Markets
for Identical
Assets (Level 1) Significant Other
Observable Inputs
(Level 2) Significant
Unobservable
Inputs (Level 3) Total
Assets Measured on a Recurring Basis: (In Thousands)
Available-for-sale securities
U.S. Treasury and government sponsored agencies $ - $ 46,254 $ - $ 46,254
Mortgage-backed securities - 227,190 - 227,190
State and municipal securities - 139,930 - 139,930
Corporate debt - 9,001 - 9,001
Total assets at fair value $ - $ 422,375 $ - $ 422,375

The following table presents the Company’s financial assets ~~and financial liabilities~~ carried at fair value on a nonrecurring basis as of September 30, ~~2017~~ 2021 and December 31, ~~2016:~~2020:

	Fair Value Measurements at September 30, 2017, Using								Fair Value Measurements at September 30, 2021
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Assets Measured on a Nonrecurring Basis:	(In Thousands)								(In Thousands)
Impaired loans	$	-	$	-	$	41,114	$	41,114
Loans individually evaluated									$	0	$	0	$	79,935	$	79,935
Other real estate owned and repossessed assets		-		-		3,888		3,888		0		0		2,068		2,068
Total assets at fair value	$	-	$	-	$	45,002	$	45,002	$	0	$	0	$	82,003	$	82,003

	Fair Value Measurements at December 31, 2016, Using								Fair Value Measurements at December 31, 2020
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Assets Measured on a Nonrecurring Basis:	(In Thousands)								(In Thousands)
Impaired loans	$	-	$	-	$	37,437	$	37,437
Loans individually evaluated									$	0	$	0	$	80,815	$	80,815
Other real estate owned and repossessed assets		-		-		4,988		4,988		0		0		6,497		6,497
Total assets at fair value	$	-	$	-	$	42,425	$	42,425	$	0	$	0	$	87,312	$	87,312

There were 0 liabilities measured at fair value on a non-recurring basis as of September 30, 2021 and December 31, 2020.

In the case of the investment securities portfolio, the Company monitors the portfolio to ascertain when transfers between levels have been affected. The nature of the remaining assets and liabilities is such that transfers in and out of any level are expected to be rare. For the nine months ended September 30, 2021, there were four transfers between Levels 1,2 or 3.

The table below includes a rollforward of the balance sheet amounts for the three and nine months ended September 30, 2021 and September 30, 2020 (including the change in fair value) for financial instruments classified by the Company within Level 3 of the valuation hierarchy measured at fair value on a recurring basis including changes in fair value due in part to observable factors that are part of the valuation methodology:

	For the Three months ended September 30,						For the Nine months ended September 30,
	2021			2020			2021			2020
	Available-for-sale Securities			Available-for-sale Securities			Available-for-sale Securities			Available-for-sale Securities
	(In Thousands)
Fair value, beginning of period	$	14,994		$	6,596		$	0		$	6,596
Transfers into Level 3		0			0			6,000			0
Total realized gains included in income		0			0			0			0
Changes in unrealized gains/losses included in other comprehensive income for assets and liabilities still held at period-end		24			(15	)		518			(15	)
Purchases		5,500			0			18,000			0
Transfers out of Level 3		(3,500	)		0			(7,500	)		0
Fair value, end of period	$	17,018		$	6,581		$	17,018		$	6,581

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

The ~~following methods and assumptions were used by the Company in estimating its fair value disclosures for financial instruments:~~

~~Cash and due from banks:~~ ~~The carrying amounts reported in the statements of financial condition approximate those assets’ fair values.~~

~~Debt securities:~~ Where quoted prices are available in an active market, securities are classified within Level 1 of the hierarchy. Level 1 securities include highly liquid government securities such as U.S. treasuries and exchange-traded equity securities. For securities traded in secondary markets for which quoted market prices are not available, the Company generally relies on prices obtained from independent vendors. Such independent pricing services are to advise the Company on the carrying value of the securities available for sale portfolio. As part of the Company’s procedures, the price provided from the service is evaluated for reasonableness given market changes. When a questionable price exists, the Company investigates further to determine if the price is valid. If needed, other market participants may be utilized to determine the correct fair value. The Company has also reviewed and confirmed its determinations in discussions with the pricing service regarding their methods of price discovery. Securities measured with these techniques are classified within Level 2 of the hierarchy and often involve using quoted market prices for similar securities, pricing models or discounted cash flow calculations using inputs observable in the market where available. Examples include U.S. government agency securities, mortgage-backed securities, obligations of states and political subdivisions, and certain corporate, asset-backed and other securities. In cases where Level 1 or Level 2 inputs are not available, securities are classified in Level 3 of the fair value hierarchy.

~~Equity securities:~~ ~~Fair values for other investments are considered to be their cost as they are redeemed at par value.~~

~~Federal funds sold:~~ ~~The carrying amounts reported in the statements of financial condition approximate those assets’ fair values.~~

~~Mortgage loans held for sale:~~ Loans are committed to be delivered to investors on a “best efforts delivery” basis within 30 days of origination. Due to this short turn-around time, the carrying amounts of the Company’s agreements approximate their fair values.

~~Bank owned life insurance contracts:~~ ~~The carrying amounts in the statements of condition approximate these assets’ fair value.~~

~~Loans, net:~~ For variable-rate loans that re-price frequently and with no significant change in credit risk, fair value is based on carrying amounts. The fair value of other loans (for example, fixed-rate commercial real estate loans, mortgage loans and industrial loans) is estimated using discounted cash flow analysis, based on interest rates currently being offered for loans with similar terms to borrowers of similar credit quality. Loan fair value estimates include judgments regarding future expected loss experience and risk characteristics. The method of estimating fair value does not incorporate the exit-price concept of fair value as prescribed by ASC 820 and generally produces a higher value than an exit-price approach. The measurement of the fair value of loans is classified within Level 3 of the fair value hierarchy.

~~Deposits:~~ The fair values disclosed for demand deposits are, by definition, equal to the amount payable on demand at the reporting date (that is, their carrying amounts). The carrying amounts of variable-rate, fixed-term money market accounts and certificates of deposit approximate their fair values. Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation using interest rates currently offered for deposits with similar remaining maturities. The fair value of the Company’s time deposits do not take into consideration the value of the Company’s long-term relationships with depositors, which may have significant value. Measurements of the fair value of certificates of deposit are classified within Level 2 of the fair value hierarchy.

~~Federal funds purchased:~~ ~~The carrying amounts in the statements of condition approximate these assets’ fair value.~~

~~Other borrowings:~~ The fair values of other borrowings are estimated using a discounted cash flow analysis, based on interest rates currently being offered on the best alternative debt available at the measurement date. These measurements are classified as Level 2 in the fair value hierarchy.

~~Loan commitments:~~ ~~The~~ fair values of the Company’s ~~off-balance-sheet~~ financial instruments are based on fees currently charged to enter into similar agreements. Since the majority of the Company’s other off-balance-sheet financial instruments consists of non-fee-producing, variable-rate commitments, the Company has determined they do not ~~have a distinguishable fair value.~~

The carrying amount, estimated fair value, and placement in the fair value hierarchy of the Company’s financial instruments as of September 30, 2017 and December 31, 2016 are presented in the following table. This table includes those financial assets and liabilities that are not measured ~~and reported~~ at fair value on a recurring or non-recurring basis ~~or nonrecurring basis.~~as of September 30, 2021 and December 31, 2020 were as follows:

									September 30, 2021				December 31, 2020
	September 30, 2017				December 31, 2016				Carrying				Carrying
	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Amount		Fair Value		Amount		Fair Value
	(In Thousands)								(In Thousands)
Financial Assets:
Level 1 inputs:
Cash and due from banks	$	166,150	$	166,150	$	623,562	$	623,562	$	4,399,786	$	4,399,786	$	2,209,640	$	2,209,640

Level 2 inputs:
Available for sale debt securities		435,325		435,325		422,375		422,375
Federal funds sold										44,700		44,700		1,771		1,771
Held to maturity debt securities		36,891		37,406		25,052		25,431		261,026		261,026		0		0
Restricted equity securities		1,038		1,038		1,024		1,024
Federal funds sold		182,841		182,841		160,435		160,435
Mortgage loans held for sale		4,971		5,033		4,675		4,736		578		574		14,425		14,497
Bank owned life insurance contracts		126,722		126,722		114,388		114,388

Level 3 inputs:
Debt securities held to maturity		50,508		51,923		37,512		37,871
Held to maturity debt securities										250		250		250		250
Loans, net		5,570,306		5,564,250		4,859,877		4,872,689		8,623,926		8,564,829		8,296,931		8,387,718

Financial liabilities:
Level 2 inputs:
Deposits	$	5,796,901	$	5,793,324	$	5,420,311	$	5,417,320	$	12,078,670	$	12,084,052	$	9,975,724	$	9,987,665
Federal funds purchased		254,880		254,880		355,944		355,944		1,286,756		1,286,756		851,545		851,545
Other borrowings		54,975		56,996		55,262		54,203		64,701		65,500		64,748		65,560

~~NOTE 11 – SUBSEQUENT EVENTS~~

The Company has evaluated all subsequent events through the date of this filing to ensure that this Form 10-Q includes appropriate disclosure of events both recognized in the financial statements as of September 30, 2017, and events which occurred subsequent to September 30, 2017 but were not recognized in the financial statements.

ITEM 2. ~~MANAGEMENT’S~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis is designed to provide a better understanding of various factors relating to the results of operations and financial condition of ServisFirst Bancshares, Inc. (the “Company”) and its wholly-owned subsidiary, ServisFirst ~~Bank (the “Bank”).~~Bank. This discussion is intended to supplement and highlight information contained in the accompanying unaudited consolidated financial statements as of and for the three and nine months ended September 30, ~~2017~~2021 and September 30, ~~2016.~~2020.

Forward-Looking Statements

Statements in this document that are not historical facts, including, but not limited to, statements concerning future operations, results or performance, are hereby identified as “forward-looking statements” for the purpose of the safe harbor provided by Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”) and Section 27A of the Securities Act of 1933. The words “believe,” “expect,” “anticipate,” “project,” “plan,” “intend,” “will,” “could,” “would,” “might” and similar expressions often signify forward-looking statements. Such statements involve inherent risks and uncertainties. The Company cautions that such forward-looking statements, wherever they occur in this quarterly report or in other statements attributable to the Company, are necessarily estimates reflecting the judgment of the Company’s senior management and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. Such forward-looking statements should, therefore, be considered in light of various factors that could affect the accuracy of such forward-looking statements, ~~including:~~including, but not limited to: the global health and economic crisis precipitated by the COVID-19 outbreak; general economic conditions, especially in the credit markets and in the Southeast; the performance of the capital markets; changes in interest rates, yield curves and interest rate spread relationships; changes in accounting and tax principles, policies or guidelines; changes in legislation or regulatory requirements; changes as a result of our reclassification as a large financial institution by the FDIC; changes in our loan portfolio and the deposit base; economic crisis and associated credit issues in industries most impacted by the COVID-19 outbreak, including but not limited to, the restaurant, hospitality and retail sectors; possible changes in laws and regulations and governmental monetary and fiscal ~~policies;~~policies, including, but not limited to, economic stimulus initiatives and the ability of the U.S. Congress to increase the U.S. statutory debt limit as needed; the cost and other effects of legal and administrative cases and similar contingencies; possible changes in the creditworthiness of customers and the possible impairment of the collectability of loans and the value of collateral; the effect of natural disasters, such as hurricanes and tornados, in our geographic markets; and increased competition from both banks and ~~non-banks.~~non-bank financial institutions. The foregoing list of factors is not exhaustive. For discussion of these and other risks that may cause actual results to differ from expectations, please refer to “Cautionary Note Regarding Forward Looking Statements” and “Risk Factors” in our most recent Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q for fiscal year 2021 and our other SEC filings. If one or more of the factors affecting our forward-looking information and statements proves incorrect, then our actual results, performance or achievements could differ materially from those expressed in, or implied by, forward-looking information and statements contained herein. Accordingly, you should not place undue reliance on any forward-looking statements, which speak only as of the date made. ~~ServisFirst Bancshares, Inc.~~The Company assumes no obligation to update or revise any forward-looking statements that are made from time to time.

Business

We are a bank holding company under the Bank Holding Company Act of 1956 and are headquartered in Birmingham, Alabama. Our wholly-owned subsidiary, ServisFirst Bank, an Alabama banking corporation, provides ~~commercial banking~~business and personal financial services through ~~nineteen~~21 full-service banking offices located in Birmingham, Huntsville, Mobile, Montgomery and Dothan, Alabama, ~~Tampa Bay,~~Northwest Florida, ~~the panhandle of~~West Central Florida, ~~the greater~~Nashville, Tennessee, Atlanta, Georgia, ~~metropolitan area,~~and Charleston, South ~~Carolina, and Nashville, Tennessee.~~Carolina. Through the ~~bank,~~Bank, we originate commercial, consumer and other loans and accept deposits, provide electronic banking services, such as online and mobile banking, including remote deposit capture, deliver treasury and cash management services and provide correspondent banking services to other financial institutions.

Our principal business is to accept deposits from the public and to make loans and other investments. Our principal sources of funds for loans and investments are demand, time, savings, and other deposits. Our principal sources of income are interest and fees collected on loans, interest and dividends collected on other investments and service charges. Our principal expenses are interest paid on savings and other deposits, interest paid on our other borrowings, employee compensation, office expenses and other overhead expenses.

Overview of Quarter and Year-to-Date Results

As of September 30, ~~2017,~~2021, we had consolidated total assets of ~~$6.71~~$14.60 billion, ~~an increase of $341.7 million,~~up $2.67 billion, or ~~5.4%~~22.4%, from ~~$6.37~~total assets of $11.93 billion at December 31, ~~2016. This increase in total assets resulted from a $717.0 million increase in loans, offset by a $435.0 million decrease in cash and cash equivalents.~~2020. Total loans were ~~$5.63~~$8.81 billion at September 30, ~~2017,~~2021, up ~~$717.0~~$347.1 million, or ~~14.6%~~4.1%, from ~~$4.91~~$8.47 billion at December 31, ~~2016.~~2020. Total deposits were ~~$5.80~~$12.08 billion at September 30, ~~2017, an increase of $376.6 million,~~2021, up $2.10 billion, or ~~6.9%~~21.1%, from ~~$5.42~~$9.98 billion at December 31, ~~2016.~~2020.

Net income available to common stockholders for the three months ended September 30, ~~2017~~2021 was ~~$25.3~~$52.5 million, ~~an increase of $4.4~~up $9.1 million, or ~~21.1%~~21.0%, from ~~$20.9~~$43.4 million for the ~~corresponding period in 2016.~~three months ended September 30, 2020. Basic and diluted earnings per common share were ~~$0.48~~$0.97 and ~~$0.47, respectively,~~$0.96 for the three months ended September 30, ~~2017,~~2021, compared to ~~basic~~$0.80 and ~~diluted earnings per common share of $0.40 and $0.39,~~$0.80, respectively, for the corresponding period in ~~2016.~~2020.

Net income available to common stockholders for the nine months ended September 30, ~~2017~~2021 was ~~$71.9~~$154.0 million, ~~an increase of $12.2~~up $35.4 million, or ~~20.4%~~29.9%, from ~~$59.7~~$118.6 million for the corresponding period in ~~2016.~~2020. Basic and diluted earnings per common share were ~~$1.36~~$2.84 and ~~$1.33,~~$2.83, respectively, for the nine months ended September 30, ~~2017,~~2021, compared to ~~$1.14~~$2.20 and ~~$1.12,~~$2.19, respectively, for the corresponding period in ~~2016.~~2020.

Critical Accounting Policies

The accounting and financial policies of the Company conform to U.S. generally accepted accounting principles ~~(“U.S. GAAP”)~~ and to general practices within the banking industry. To prepare consolidated financial statements in conformity with U.S. GAAP, management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the financial statements and the disclosures provided, and future results could differ. The allowance for ~~loan~~credit losses ~~valuation of foreclosed real estate, deferred~~and income taxes ~~and fair value of financial instruments~~ are particularly subject to change. Information concerning our accounting policies with respect to these items is available in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016.~~2020.

Financial Condition

Cash and Cash Equivalents

At September 30, ~~2017,~~2021, we had ~~$182.8~~$44.7 million in federal funds sold, compared to ~~$160.4~~$1.8 million at December 31, ~~2016.~~2020. We also maintain balances at the Federal Reserve Bank of Atlanta, which earn interest. At September 30, ~~2017,~~2021, we had ~~$85.2 million~~$4.21 billion in balances at the Federal Reserve, compared to ~~$565.1 million~~$1.92 billion at December 31, ~~2016. This decrease was a~~2020. The increase in balances kept at the Federal Reserve in 2021 result offrom federal stimulus funds on deposit with us by our ~~lower levels of excess liquidity due to loan growth and a decrease in federal funds purchased~~customers stemming from ~~our correspondent banks during~~ the ~~first nine months of 2017.~~COVID-19 pandemic.

Debt Securities

Debt securities available for sale totaled ~~$435.3~~$723.3 million at September 30, ~~2017~~2021 and ~~$422.4~~$886.7 million at December 31, ~~2016. Debt~~2020. Investment securities held to maturity totaled ~~$87.4~~$261.2 million at September 30, ~~2017~~2021 and ~~$62.6 million~~$250,000 at December 31, ~~2016.~~2020. During the third quarter of 2021, we transferred, at fair value, $261.3 million of mortgage-backed securities from the available for sale portfolio to the held to maturity portfolio. The unrealized after-tax gain of $5.6 million associated with these securities remained in accumulated other comprehensive income and will be amortized over their remaining life, offsetting the related amortization of discount on the transferred securities. We had ~~pay downs~~paydowns of ~~$37.6~~$143.9 million on mortgage-backed securities and government agencies, maturities of ~~$21.1~~$44.0 million on municipal ~~agency~~bonds, corporate securities and ~~corporate~~treasury securities, and calls of ~~$11.9~~$35.1 million on U.S. government agencies and municipal securities ~~and subordinated notes~~ during the nine months ended September 30, ~~2017.~~2021. We recognized a $620,000 gain on the call of a corporate bond during the second quarter of 2021. We purchased ~~$72.0~~$218.7 million in mortgage-backed securities ~~$13.8~~and $80.0 million in ~~municipal~~corporate securities ~~$2.9 million in U.S. Treasury securities and $16.0 million in subordinated notes~~ during the first nine months of ~~2017. Nine mortgage-backed~~2021. For a tabular presentation of debt securities available for sale and ~~five subordinated notes purchased were classified as~~ held to ~~maturity. All other securities purchased are classified as available for sale.~~maturity at September 30, 2021 and December 31, 2020, see “Note 4 – Securities” in our Notes to Consolidated Financial Statements.

The objective of our investment policy is to invest funds not otherwise needed to meet our loan demand to earn the maximum return, yet still maintain sufficient liquidity to meet fluctuations in our loan demand and deposit structure. In doing so, we balance the market and credit risks against the potential investment return, make investments compatible with the pledge requirements of any deposits of public funds, maintain compliance with regulatory investment requirements, and assist certain public entities with their financial needs. The investment committee has full authority over the investment portfolio and makes decisions on purchases and sales of securities. The entire portfolio, along with all investment transactions occurring since the previous board of directors meeting, is reviewed by the board at each monthly meeting. The investment policy allows portfolio holdings to include short-term securities purchased to provide us with needed liquidity and ~~longer term~~longer-term securities purchased to generate level income for us over periods of interest rate fluctuations.

Each quarter, management assesses whether there have been events or economic circumstances indicating that a security on which there is an unrealized loss is other-than-temporarily impaired. Management considers several factors, including the amount and duration of the impairment; the intent and ability of the Company to hold the security for a period sufficient for a recovery in value; and known recent events specific to the issuer or its industry. In analyzing an issuer’s financial condition, management considers whether the securities are issued by agencies of the federal government, whether downgrades by bond rating agencies have occurred, and industry analysts’ reports, among other things. As we currently do not have the intent to sell these securities and it is not more likely than not that we will be required to sell these securities before recovery of their amortized cost basis, which may be at maturity, and impairment positions at September 30, 2017 are interest-rate driven, no declines are deemed to be other than temporary. We will continue to evaluate our investment securities for possible other-than-temporary impairment, which could result in non-cash charges to earnings in one or more future periods.

All securities held are traded in liquid markets. As of September 30, 2017, we owned restricted securities of First National Bankers Bank with an aggregate book value and market value of $0.4 million, securities of a fund that invests in Community Reinvestment Act-qualifying real estate with a book value and market value of $0.5 million, and securities of a bank holding company in Georgia with a book value and market value of $0.1 million. Upon termination of our membership in the Federal Home Loan Bank of Atlanta during the fourth quarter of 2016, we redeemed all but approximately $30,000 of our FHLB stock. This remaining restricted stock in the FHLB is a required holding as long as our principal reducing advances are outstanding. We had no investments in any one security, restricted or liquid, in excess of 10% of our stockholders’ equity.

The ~~Bank~~Company does not invest in collateralized debt obligations (“CDOs”). ~~We have $50.5~~At September 30, 2021, we had $379.4 million of bank holding company subordinated notes. ~~All~~If rated, all of these notes were rated BBB or better by Kroll Bond Rating Agency at the time of our ~~investment in them.~~investment. All other corporate bonds had a Standard and Poor’s or Moody’s rating of A-1 or better when purchased. The total investment portfolio at September 30, ~~2017~~2021 has a combined average credit rating of AA.

The carrying value of investment securities pledged to secure public funds on deposit and for other purposes ~~as required by law~~ was ~~$240.5~~$536.0 million and ~~$223.7~~$477.6 million as of September 30, ~~2017~~2021 and December 31, ~~2016,~~2020, respectively.

Loans

We had total loans of ~~$5.63~~$8.81 billion at September 30, ~~2017,~~2021, an increase of ~~$717.0~~$347.1 million, or ~~14.6%~~4.1%, compared to ~~$4.91~~$8.47 billion at December 31, ~~2016. At~~2020. Excluding the impact of PPP loan origination and forgiveness, we grew our loans by $859.9 million, or 11.4% from December 31, 2020 to September 30, ~~2017,~~2021. We originated approximately 7,400 PPP loans totaling $1.5 billion during the ~~percentage~~Covid-19 pandemic. Over 6,300 of ~~our~~these loans ~~in each~~had a balance of ~~our regions were as follows:~~

	~~Percentage of Total~~ ~~Loans in MSA~~
~~Birmingham-Hoover, AL MSA~~		~~42.9~~	%
~~Dothan, AL MSA~~		~~9.9~~	%
~~Huntsville, AL MSA~~		~~9.7~~	%
~~Montgomery, AL MSA~~		~~6.9~~	%
~~Mobile, AL MSA~~		~~6.1~~	%
~~Total Alabama MSAs~~		~~75.5~~	%
~~Pensacola-Ferry Pass-Brent, FL MSA~~		~~6.3~~	%
~~Tampa-St. Petersburg-Clearwater, FL MSA~~		~~1.9~~	%
~~Total Florida MSAs~~		~~8.2~~	%
~~Atlanta-Sandy Springs-Roswell, GA MSA~~		~~4.4~~	%
~~Nashville-Davidson-Murfreesboro-Franklin, TN MSA~~		~~8.7~~	%
~~Charleston-North Charleston, SC MSA~~		~~3.2~~	%

~~Premises and Equipment, Net~~less than $350,000.

~~Premises~~As of September 30, 2021, there are 18 loans outstanding totaling $2.7 million that have payment deferrals in connection with the COVID-19 relief provided by the CARES Act. All of these payment deferrals were principal and ~~equipment increased $14.8 million~~interest deferrals. The amount of accrued interest related to ~~$55.1~~payment deferrals provided by the CARES Act on all loans originated to date totaled $4.1 million at September 30, ~~2017 compared to $40.3 million at December 31, 2016. This increase is primarily the result of our construction of a new headquarters building~~2021. These deferrals were not considered troubled debt restructurings based on interagency guidance issued in ~~Birmingham, Alabama. Construction began in the first quarter of 2016 and it was placed in service in September 2017. Total cost of the building and contents is approximately $31.0 million.~~March 2020.

Asset Quality

The Company assesses the adequacy of its allowance for ~~loan losses is established and maintained at levels management deems adequate to absorb anticipated~~ credit losses ~~from identified~~at the end of each calendar quarter. The level of allowance is based on the Company’s evaluation of historical default and ~~otherwise~~loss experience, current and projected economic conditions, asset quality trends, known and inherent risks in the portfolio, adverse situations that may affect the borrowers’ ability to repay a loan, the estimated value of any underlying collateral, composition of the loan portfolio asand other relevant factors. The allowance is increased by a provision for credit losses, which is charged to expense, and reduced by charge-offs, net of recoveries. The allowance for credit losses is believed adequate to absorb all expected future losses to be recognized over the contractual life of the ~~balance sheet date. In assessing~~loans in the ~~adequacy~~portfolio.

Loans with similar risk characteristics are evaluated in pools and, depending on the nature of each identified pool, the Company utilizes a discounted cash flow (“DCF”), probability of default / loss given default (“PD/LGD”) or remaining life method. For all loan pools utilizing the DCF method, the Company utilizes and forecasts the national unemployment rate as a loss driver. The Company also utilizes and forecasts GDP growth as a second loss driver for its agricultural and consumer loan pools. Consistent forecasts of the loss drivers are used across the loan segments. At September 30, 2021 and December 31, 2020, the Company utilized a reasonable and supportable forecast period of twelve months followed by a six-month straight-line reversion to long term averages. The Company leveraged economic projections from reputable and independent sources to inform its loss driver forecasts. The Company expects national unemployment to remain above pre-pandemic levels over the forecast period with an improved national GDP growth rate as the economy comes back on-line over the next year.

The historical loss experience estimate by pool is then adjusted by forecast factors that are quantitatively related to the Company’s historical credit loss experience, such as national unemployment rates and gross domestic product. Losses are predicted over a period of time determined to be reasonable and supportable, and at the end of the reasonable and supportable period losses are reverted to long term historical averages. The reasonable and supportable period and reversion period are re-evaluated each quarter by the Company and are dependent on the current economic environment among other factors. See “Note 5 – Loans” in our Notes to Consolidated Financial Statements.

The expected credit losses for each loan pool are then adjusted for changes in qualitative factors not inherently considered in the quantitative analyses. The qualitative adjustments either increase or decrease the quantitative model estimation. The Company considers factors that are relevant within the qualitative framework which include the following: lending policy, changes in nature and volume of loans, staff experience, changes in volume and trends of problem loans, concentration risk, trends in underlying collateral values, external factors, quality of loan review system and other economic conditions.

Expected credit losses for loans that no longer share similar risk characteristics with the collectively evaluated pools are excluded from the collective evaluation and estimated on an individual basis. Individual evaluations are performed for nonaccrual loans, loans rated substandard, and modified loans classified as troubled debt restructurings. Specific allocations of the allowance for credit losses are estimated on one of several methods, including the estimated fair value of the underlying collateral, observable market value of similar debt or the present value of expected cash flows.

Prior to the adoption of ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, the allowance for loan losses ~~management considers its evaluation~~represented management’s best estimate of inherent losses that had been incurred within the ~~loan~~existing portfolio ~~past due loan experience, collateral values, current economic conditions~~of loans. The allowance for losses on loans included allowance allocations calculated in accordance with FASB Accounting Standards Codification (“ASC”) Topic 310, “Receivables” and ~~other factors considered necessary to maintain the~~ allowance ~~at an adequate level. Our management believes that the allowance was adequate at September 30, 2017.~~allocations calculated in accordance with ASC Topic 450, “Contingencies.”

	As of and for the Three Months Ended						As of and for the Nine Months Ended
	September 30,						September 30,
	2021			2020			2021			2020
	(Dollars in thousands)
Total loans outstanding, net of unearned income	$	8,812,811		$	8,508,554		$	8,812,811		$	8,508,554
Average loans outstanding, net of unearned income	$	8,680,174		$	8,365,155		$	8,613,172		$	8,021,262
Allowance for credit losses at beginning of period		104,670			-			87,942
Allowance for loan losses at beginning of period		-			91,507			-			76,584
Charge-offs:
Commercial, financial and agricultural loans		1,541			11,146			2,168		��	15,144
Real estate - construction		-			-			-			830
Real estate - mortgage		208			200			279			4,397
Consumer loans		86			44			227			165
Total charge-offs		1,835			11,390			2,674			20,536
Recoveries:
Commercial, financial and agricultural loans		140			12			464			158
Real estate - construction		-			-			52			2
Real estate - mortgage		4			12			68			26
Consumer loans		8			15			32			55
Total recoveries		152			39			616			241
Net charge-offs		1,683			11,351			2,058			20,295
Provision for credit losses		5,963			12,284			23,066			36,151
Allowance for credit losses at period end	$	108,950		$	-		$	108,950		$	-
Allowance for loan losses at period end	$	-		$	92,440		$	-		$	92,440
Allowance for credit losses to period end loans		1.24	%		-	%		1.24	%		-	%
Allowance for loan losses to period end loans		-	%		1.09	%		-	%		1.09	%
Net charge-offs to average loans		0.08	%		0.54	%		0.03	%		0.34	%

			Percentage of loans
			in each category
September 30, 2021	Amount		to total loans
	(In Thousands)
Commercial, financial and agricultural	$	40,888		33.22	%
Real estate - construction		24,537		10.08	%
Real estate - mortgage		42,007		55.97	%
Consumer		1,518		0.73	%
Total	$	108,950		100.00	%

			Percentage of loans
			in each category
December 31, 2020	Amount		to total loans
	(In Thousands)
Commercial, financial and agricultural	$	36,370		38.93	%
Real estate - construction		16,057		7.01	%
Real estate - mortgage		33,722		53.29	%
Consumer		1,793		0.77	%
Total	$	87,942		100.00	%

The following table presents the allocation of the allowance for loan losses for each respective loan category with the corresponding percentage of loans in each category to total loans. Management believes that the comprehensive allowance analysis developed by our credit administration group is in compliance with all current regulatory guidelines.

September 30, 2017 Amount Percentage of loans
in each category
to total loans
(In Thousands)
Commercial, financial and agricultural $ 31,701 39.51 %
Real estate - construction 5,331 8.31 %
Real estate - mortgage 20,966 51.15 %
Consumer 461 1.03 %
Total $ 58,459 100.00 %

December 31, 2016 Amount Percentage of loans
in each category
to total loans
(In Thousands)
Commercial, financial and agricultural $ 28,872 40.36 %
Real estate - construction 5,125 6.82 %
Real estate - mortgage 17,504 51.70 %
Consumer 392 1.12 %
Total $ 51,893 100.00 %

Nonperforming Assets

Total nonperforming loans, which include nonaccrual loans and loans 90 or more days past due and still accruing, decreased ~~$2.0 million~~ to ~~$14.9~~$14.5 million at September 30, ~~2017,~~2021, compared to ~~$16.9~~$19.0 million at December 31, ~~2016.~~2020. Of this total, nonaccrual loans ~~were $12.4~~of $9.1 million at September 30, ~~2017, compared to $10.6~~2021 represented a net decrease of $4.9 million from nonaccrual loans at December 31, ~~2016, an increase of $1.8 million.~~2020. Excluding credit card accounts, there were ~~three~~five loans 90 or more days past due and still accruing totaling ~~$2.4~~$5.3 million at September 30, 2021, compared to ~~two loans~~one loan totaling ~~$6.2~~$4.9 million at December 31, ~~2016.~~2020. Troubled Debt Restructurings (“TDR”) at September 30, ~~2017~~2021 and December 31, ~~2016~~2020 were ~~$16.4~~$2.9 million and ~~$7.3~~$1.4 million, respectively. There were no loans newly classified as TDR for the three months ended September 30, 2017 and one relationship totaling $12.7 million, which includes nine loans of various types, was newly classified as TDR for the nine months ended September 30, 2017. There were no loans newly classified as TDR for the three and nine months ended September 30, 2016. There were no renewals of existing TDRs for the three months ended September 30, 2016 and two renewals of existing TDRs totaling $600,000 for the nine months ended September 30, 2016. These TDRs are the result of term extensions rather than interest rate reductions or forgiveness of debt.

OREO and repossessed assets decreased to ~~$3.9~~$2.1 million at September 30, ~~2017,~~2021, from ~~$5.0~~$6.5 million at December 31, ~~2016. The total number of OREO and repossessed asset accounts decreased to nine at September 30, 2017, compared to 12 at December 31, 2016.~~2020. The following table summarizes OREO and repossessed asset activity for the nine months ended September 30, ~~2017~~2021 and ~~2016:~~2020:

Nine months ended September 30,
2017 2016
(In thousands)
Balance at beginning of period $ 4,988 $ 5,392
Transfers from loans and capitalized expenses 586 2,036
Proceeds from sales (1,529 ) (1,648 )
Internally financed sales (185 ) (2,161 )
Write-downs / net gain (loss) on sales 28 (584 )
Balance at end of period $ 3,888 $ 3,035

	Nine Months Ended September 30,
	2021			2020
	(In thousands)
Balance at beginning of period	$	6,497		$	8,178
Transfers from loans and capitalized expenses		1,419			2,406
Proceeds from sales		(911	)		(1,780	)
Internally financed sales		(3,779	)		-
Write-downs / net gain (loss) on sales		(1,158	)		(1,828	)
Balance at end of period	$	2,068		$	6,976

The following table summarizes our nonperforming assets and TDRs at September 30, ~~2017~~2021 and December 31, ~~2016:~~2020:

											September 30, 2021					December 31, 2020
	September 30, 2017					December 31, 2016								Number of					Number of
	Balance			Number of Loans		Balance			Number of Loans		Balance			Loans		Balance			Loans
	(Dollar Amounts In Thousands)										(Dollar Amounts In Thousands)
Nonaccrual loans:
Commercial, financial and agricultural	$	5,798			16	$	7,282			13	$	6,966			23	$	11,709			22
Real estate - construction		2,285			3		3,268			5		234			1		234			1
Real estate - mortgage:
Owner-occupied commercial		2,497			3		-			-		1,061			2		1,259			4
1-4 family mortgage		1,308			3		74			1		884			9		771			7
Other mortgage		430			3		-			-		-			-		-			-
Total real estate - mortgage		4,235			9		74			1		1,945			11		2,030			11
Consumer		38			1		-			-		-			-		-			-
Total Nonaccrual loans:	$	12,356			29	$	10,624			19	$	9,145			35	$	13,973			34

90+ days past due and accruing:
Commercial, financial and agricultural	$	2,108			3	$	10			1	$	36			5	$	11			2
Real estate - construction		-			-		-			-		-			-		-			-
Real estate - mortgage:
Owner-occupied commercial		-			-		6,208			1		-			-		-			-
1-4 family mortgage		-			-		-			-		579			4		104			1
Other mortgage		328			1		-			-		4,691			1		4,805			1
Total real estate - mortgage		328			1		6,208			1		5,270			5		4,909			2
Consumer		70			27		45			10		20			17		61			25
Total 90+ days past due and accruing:	$	2,506			31	$	6,263			12	$	5,326			27	$	4,981			29

Total Nonperforming Loans:	$	14,862			60	$	16,887			31	$	14,471			62	$	18,954			63

Plus: Other real estate owned and repossessions		3,888			9		4,988			12		2,068			7		6,497			11
Total Nonperforming Assets	$	18,750			69	$	21,875			43	$	16,539			69	$	25,451			74

Restructured accruing loans:
Commercial, financial and agricultural	$	7,189			5	$	354			1	$	437			2	$	818			3
Real estate - construction		997			1		-			-		-			-		-			-
Real estate - mortgage:
Owner-occupied commercial		3,664			2		-			-		-			-		-			-
1-4 family mortgage		850			1		-			-		-			-		-			-
Other mortgage		-			-		204			1		-			-		-			-
Total real estate - mortgage		4,514			3		204			1		-			-		-			-
Consumer		-			-		-			-		-			-		-			-
Total restructured accruing loans:	$	12,700			9	$	558			2	$	437			2	$	818			3

Total Nonperforming assets and restructured accruing loans	$	31,450			78	$	22,433			45	$	16,976			71	$	26,269			77

Ratios:
Nonperforming loans to total loans		0.26	%				0.34	%				0.16	%				0.22	%
Nonperforming assets to total loans plus other real estate owned and repossessions		0.33	%				0.44	%				0.19	%				0.30	%
Nonperforming assets plus restructured accruing loans to total loans plus other real estate owned and repossessions		0.56	%				0.46	%				0.19	%				0.31	%

The balance of nonperforming assets can fluctuate due to changes in economic conditions. We have established a policy to discontinue accruing interest on a loan (i.e., place the loan on nonaccrual status) after it has become 90 days delinquent as to payment of principal or interest, unless the loan is considered to be well-collateralized and is actively in the process of collection. In addition, a loan will be placed on nonaccrual status before it becomes 90 days delinquent ~~unless~~if management believes that the collection of interest is not expected. Interest previously accrued but uncollected on such loans is reversed and charged against current income when the receivable is determined to be uncollectible. Interest income on nonaccrual loans is recognized only as received. If we believe that a loan will not be collected in full, we will increase the allowance for ~~loan~~credit losses to reflect management’s estimate of any potential exposure or loss. Generally, payments received on nonaccrual loans are applied directly to principal.

~~Impaired Loans~~In keeping with guidance from regulators, the Company continues to work with COVID-19 affected borrowers to defer their payments and ~~Allowance for Loan Losses~~

interest. While interest continues to accrue to income, through normal GAAP accounting, should eventual credit losses on these deferred payments emerge, the related loans would be placed on nonaccrual status and interest income accrued would be reversed. In such a scenario, interest income in future periods could be negatively impacted. As of September 30, ~~2017, we had impaired loans~~2021, the Company carries $4.1 million of ~~$49.6~~accrued interest income on deferrals made to COVID-19 affected borrowers compared to $5.8 million ~~inclusive of nonaccrual loans, an increase of $4.0 million from $45.6 million as of~~at December 31, ~~2016. This increase~~2020. At this time, the Company is attributable to $15.0 million of loans newly classified as specifically impaired, partially offset by charge-offs totaling $5.6 million, net pay downs of $4.1 million, loan classification upgrades of $0.7 million and OREO transfers and repossessions of $0.6 million. We allocated $8.5 million of our allowance for loan losses at September 30, 2017 to these impaired loans, an increase of $0.3 million compared to $8.2 million as of December 31, 2016. A loan is considered impaired, based on current information and events, if it is probable that we will be unable to ~~collect~~project the ~~scheduled payments~~materiality of ~~principal or interest when due according~~such an impact on future deferrals to COVID-19 affected borrowers but recognizes the ~~contractual terms~~breadth of the original loan agreement. Impairment does not always indicate credit loss, but provides an indication of collateral exposure based on prevailing market conditions and third-party valuations. Impaired loans are measured by either the present value of expectedeconomic impact may affect its borrowers’ ability to repay in future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral-dependent. The amount of impairment, if any, and subsequent changes are included in the allowance for loan losses. Interest on accruing impaired loans is recognized as long as such loans do not meet the criteria for nonaccrual status. Our credit administration group performs verification and testing to ensure appropriate identification of impaired loans and that proper reserves are held on these loans.

Of the $49.6 million of impaired loans reported as of September 30, 2017, $30.4 million were commercial, financial and agricultural loans, $3.3 million were real estate construction loans, $15.8 million were real estate mortgage loans and $0.1 million were consumer loans.periods.

Deposits

Total deposits ~~increased $376.6 million, or 6.9%, to $5.80~~were $12.08 billion at September 30, ~~2017 compared to $5.42~~2021, an increase of $2.10 billion, or 21.1%, over $9.98 billion at December 31, ~~2016. While we~~2020. Increased growth rates during 2020 and 2021 have ~~experienced somewhat slower growth~~been the result of PPP lending in which our ~~deposits so far~~borrowers have retained portions of their proceeds in ~~2017, we~~the Bank. We believe that these increased deposit balances will be temporary in nature. We anticipate long-term sustainable growth in deposits through continued development of market share in our ~~regions.~~less mature markets and through organic growth in our mature markets.

For amounts and rates of our deposits by category, see the table “Average ~~Consolidated~~ Balance Sheets and Net Interest Analysis on a Fully ~~Taxable-equivalent~~Taxable-Equivalent Basis” under the subheading “Net Interest Income.”

The following table summarizes balances of our deposits and the percentage of each type to the total at September 30, 2021 and December 31, 2020:

	September 30, 2021				December 31, 2020
Noninterest-bearing demand	$	4,366,655	36.15	%	$	2,788,772	27.96	%
Interest-bearing demand		6,780,830	56.14	%		6,276,910	62.92	%
Savings		121,626	1.01	%		89,418	0.90	%
Time deposits , $250,000 and under		259,585	2.15	%		273,301	2.74	%
Time deposits, over $250,000		499,974	4.14	%		497,323	4.99	%
Brokered time deposits		50,000	0.41	%		50,000	0.50	%
	$	12,078,670	100.00	%	$	9,975,724	100.00	%

The following table presents the maturities of our time deposits as of September 30, 2021 and December 30, 2020.

At September 30, 2021	$100,000 and greater		Less than $100,000		Total
Maturity	(In Thousands)
Three months or less	$	181,832	$	22,295	$	204,127
Over three through six months		167,216		26,307		193,523
Over six months through one year		324,548		35,799		360,347
Over one year		1,500		50,062		51,562
Total	$	675,096	$	134,463	$	809,559

At December 31, 2020	$100,000 and greater		Less than $100,000		Total
Maturity	(In Thousands)
Three months or less	$	117,505	$	18,996	$	136,501
Over three through six months		132,828		18,866		151,694
Over six months through one year		215,578		23,116		238,694
Over one year		216,617		74,119		290,736
Total	$	682,528	$	135,097	$	817,625

Other Borrowings

Our borrowings consist of federal funds purchased and subordinated notes ~~payable and Federal Home Loan Bank advances.~~payable. We had ~~$254.9 million~~$1.29 billion and ~~$355.9~~$851.5 million at September 30, ~~2017~~2021 and December 31, ~~2016,~~2020, respectively, in federal funds purchased from correspondent banks that are clients of our correspondent banking unit. ~~Like us, our correspondent bank clients have experienced slower growth in deposits in 2017.~~ The average rate paid on these borrowings was ~~1.34%~~0.21% for the quarter ended September 30, ~~2017, which has increased during the past three quarters due to increases in the FRB’s targeted federal funds rate.~~2021. Other borrowings consist of the following:

●

$~~20.0~~34.75 million of ~~5.50%~~the Company’s 4% Subordinated Notes due October 21, 2030, which were issued in a private placement in October 2020 and pay interest semi-annually. The Notes may not be prepaid by the Company prior to October 21, 2025.

●

$30.0 million of 4.5% Subordinated Notes due November ~~9, 2022,~~8, 2027, which were issued in a private placement in November ~~2012,~~

~~$34.75 million of 5% Subordinated Notes due July 15, 2025, which were issued in a private placement in July 2015,~~2017 and

~~$300,000 of principal reducing advances from the Federal Home Loan Bank of Atlanta, which have an~~ pay interest ~~rate of 0.75% and require quarterly principal payments of $100,000 until maturity on May 22, 2018.~~semi-annually.

Liquidity

Liquidity is defined as our ability to generate sufficient cash to fund current loan demand, deposit withdrawals, and other cash demands and disbursement needs, and otherwise to operate on an ongoing basis.

The retention of existing deposits and attraction of new deposit sources through new and existing customers is critical to our liquidity position. If our liquidity were to decline due to a run-off in deposits, we have procedures that provide for certain actions under varying liquidity conditions. These actions include borrowing from existing correspondent banks, selling or participating loans, and curtailing loan commitments and funding. At September 30, ~~2017,~~2021, liquid assets, which are represented by cash and due from banks, federal funds sold and unpledged available-for-sale securities, totaled ~~$628.1 million. Additionally,~~$5.03 billion. At September 30, 2021, the Bank had borrowing availability of approximately ~~$485.0~~$986.0 million in unused federal funds lines of credit with regional banks, subject to certain restrictions and collateral requirements. We believe these sources of funding are adequate to meet ~~immediate~~our anticipated funding needs.

Our management meets on a quarterly basis to review sources and uses of funding to determine the appropriate strategy to ensure an appropriate level of liquidity. At the current time, our long-term liquidity needs primarily relate to funds required to support loan originations and commitments and deposit withdrawals. Our regular sources of funding are from the growth of our deposit base, correspondent banking relationships and related federal funds purchased, repayment of principal and interest on loans, the sale of loans and the renewal of time deposits. In addition, we have issued debt as described above under “Other Borrowings”.

We are subject to general FDIC guidelines that require a minimum level of liquidity. Management believes our liquidity ratios meet or exceed these guidelines. Our management is not currently aware of any trends or demands that are reasonably likely to result in liquidity materially increasing or decreasing. However, uncertainties brought about by the COVID-19 pandemic may adversely affect our ability to obtain funding or may increase the cost of funding.

The following table reflects the contractual maturities of our term liabilities as of September 30, ~~2017.~~2021. The amounts shown do not reflect any early withdrawal or prepayment assumptions.

											Payments due by Period
	Payments due by Period														Over 1 - 3		Over 3 - 5
	Total		1 year or less		Over 1 - 3 years		Over 3 - 5 years		Over 5 years		Total		Less than 1 year		years		years		Over 5 years
	(In Thousands)										(In Thousands)
Contractual Obligations (1)

Deposits without a stated maturity	$	5,235,403	$	-	$	-	$	-	$	-	$	11,269,111	$	-	$	-	$	-	$	-
Certificates of deposit (2)		561,498		324,179		152,527		83,161		1,631		759,559		577,599		157,063		24,897		-
Brokered certificates of deposit												50,000		-		50,000		-		-
Federal funds purchased		254,880		254,880		-		-		-		1,286,756		1,286,756		-		-		-
Subordinated debentures		54,975		300		-		-		54,675		64,750		-		-		-		64,750
Operating lease commitments		16,180		3,101		5,365		3,870		3,844		19,424		874		6,826		4,639		7,085
Total	$	6,122,936	$	582,460	$	157,892	$	87,031	$	60,150	$	13,449,600	$	1,865,499	$	213,789	$	29,469	$	71,732

(1)

Excludes interest.

(2)

~~(1) Excludes interest.~~

~~(2)~~ Certificates of deposit give customers the right to early withdrawal. Early withdrawals may be subject to penalties. The penalty amount depends on the remaining time to maturity at the time of early withdrawal.

Capital Adequacy

Total stockholders’ equity attributable to us at September 30, 2021 was $1.11 billion, or 7.63% of total assets. At December 31, 2020, total stockholders’ equity attributable to us was $992.4 million, or 8.32% of total assets. The decline in the ratio of capital to assets is the result of increased deposits during 2021. We believe a large portion of these increased deposits to be temporary in nature, although we cannot project when they might be withdrawn.

As of September 30, ~~2017,~~2021, our most recent notification from the FDIC categorized us as well-capitalized under the regulatory framework for prompt corrective action. To remain categorized as well-capitalized, we must maintain minimum total risk-based, Tier 1 risk-based, and Tier 1 leverage ~~ratios as disclosed in~~ratios.

The final rules implementing the ~~table below. Our management believes that we are well-capitalized~~Basel Committee on Banking Supervision's capital guidelines for U.S. banks (Basel III rules) became effective January 1, 2015, subject to a phase-in period for certain aspects of the new rules. In order to avoid restrictions on capital distributions and discretionary bonus payments to executives, under the ~~prompt corrective action provisions as~~new rules a covered banking organization is also required to maintain a “capital conservation buffer” in addition to its minimum risk-based capital requirements. This buffer is required to consist solely of ~~September 30, 2017.~~common equity Tier 1, and the buffer applies to all three risk-based measurements (CET1, Tier 1 capital and total capital). The capital conservation buffer became fully effective on January 1, 2019. As of January 1, 2019, an additional amount of Tier 1 common equity equal to 2.5% of risk-weighted assets is required for compliance with the capital conservation buffer. The ratios for the Company and the Bank are currently sufficient to satisfy the fully phased-in conservation buffer.

The following table sets forth (i) the capital ratios required by the FDIC and the Alabama Banking Department’s leverage ratio requirement and (ii) our actual ratios, not including the capital conservation buffer, of capital to total regulatory or risk-weighted assets, as of September 30, ~~2017,~~2021, December 31, ~~2016~~2020 and September 30, ~~2016:~~2020:

	Actual					For Capital Adequacy Purposes					To Be Well Capitalized Under Prompt Corrective Action Provisions															To Be Well Capitalized
	Amount		Ratio			Amount		Ratio			Amount		Ratio								For Capital Adequacy					Under Prompt Corrective
As of September 30, 2017:	(Dollars in thousands)
																Actual					Purposes					Action Provisions
																Amount		Ratio			Amount		Ratio			Amount		Ratio
As of September 30, 2021																(Dollars in Thousands)
CET 1 Capital to Risk-Weighted Assets:
Consolidated	$	574,296		9.60	%	$	269,204		4.50	%		N/A		N/A		$	1,081,750		10.46	%	$	465,322		4.50	%		N/A		N/A
ServisFirst Bank		629,146		10.52	%		269,172		4.50	%	$	388,803		6.50	%		1,143,936		11.06	%		465,264		4.50	%	$	672,047		6.50	%
Tier 1 Capital to Risk-Weighted Assets:
Consolidated		574,798		9.61	%		358,938		6.00	%		N/A		N/A			1,082,250		10.47	%		620,429		6.00	%		N/A		N/A
ServisFirst Bank		629,648		10.53	%		358,896		6.00	%		478,527		8.00	%		1,144,436		11.07	%		620,352		6.00	%		827,135		8.00	%
Total Capital to Risk-Weighted Assets:
Consolidated		688,432		11.51	%		478,584		8.00	%		N/A		N/A			1,258,901		12.17	%		827,239		8.00	%		N/A		N/A
ServisFirst Bank		688,607		11.51	%		478,527		8.00	%		598,159		10.00			1,256,386		12.15	%		827,135		8.00	%		1,033,919		10.00
Tier 1 Capital to Average Assets:
Consolidated		574,798		8.91	%		257,939		4.00	%		N/A		N/A			1,082,250		7.80	%		554,910		4.00	%		N/A		N/A
ServisFirst Bank		629,648		9.76	%		258,498		4.00	%		323,123		5.00	%		1,144,436		8.25	%		554,858		4.00	%		693,572		5.00	%

As of December 31, 2016:
As of December 31, 2020
CET 1 Capital to Risk-Weighted Assets:
Consolidated	$	508,982		9.78	%	$	234,262		4.50	%		N/A		N/A		$	958,300		10.50	%	$	410,816		4.50	%		N/A		N/A
ServisFirst Bank		560,731		10.77	%		234,232		4.50	%	$	338,335		6.50	%		1,018,031		11.15	%		410,766		4.50	%	$	593,328		6.50	%
Tier 1 Capital to Risk-Weighted Assets:
Consolidated		509,359		9.78	%		312,350		6.00	%		N/A		N/A			958,800		10.50	%		547,755		6.00	%		N/A		N/A
ServisFirst Bank		561,108		10.78	%		312,309		6.00	%		416,413		8.00	%		1,018,531		11.16	%		547,688		6.00	%		730,250		8.00	%
Total Capital to Risk-Weighted Assets:
Consolidated		616,415		11.84	%		416,467		8.00	%		N/A		N/A			1,113,690		12.20	%		730,340		8.00	%		N/A		N/A
ServisFirst Bank		613,501		11.79	%		416,413		8.00	%		520,516		10.00	%		1,108,673		12.15	%		730,250		8.00	%		912,813		10.00	%
Tier 1 Capital to Average Assets:
Consolidated		509,359		8.22	%		247,777		4.00	%		N/A		N/A			958,800		8.23	%		465,980		4.00	%		N/A		N/A
ServisFirst Bank		561,108		9.06	%		247,760		4.00	%		309,700		5.00	%		1,018,531		8.75	%		465,448		4.00	%		581,810		5.00	%

As of September 30, 2016:
As of September 30, 2020
CET 1 Capital to Risk-Weighted Assets:
Consolidated	$	488,673		9.91	%	$	221,937		4.50	%		N/A		N/A		$	916,373		11.24	%	$	366,802		4.50	%		N/A		N/A
ServisFirst Bank		540,233		10.96	%		221,902		4.50	%	$	320,525		6.50	%		978,584		12.01	%		366,724		4.50	%	$	529,712		6.50	%
Tier 1 Capital to Risk-Weighted Assets:
Consolidated		489,050		9.92	%		295,916		6.00	%		N/A		N/A			916,873		11.25	%		489,070		6.00	%		N/A		N/A
ServisFirst Bank		540,610		10.96	%		295,869		6.00	%		394,493		8.00	%		979,084		12.01	%		488,965		6.00	%		651,953		8.00	%
Total Capital to Risk-Weighted Assets:
Consolidated		593,140		12.03	%		394,554		8.00	%		N/A		N/A			1,067,583		13.10	%		652,093		8.00	%		N/A		N/A
ServisFirst Bank		590,043		11.97	%		394,493		8.00	%		493,116		10.00	%		1,072,024		13.15	%		651,953		8.00	%		814,941		10.00	%
Tier 1 Capital to Average Assets:
Consolidated		489,050		8.20	%		238,594		4.00	%		N/A		N/A			916,873		8.22	%		446,428		4.00	%		N/A		N/A
ServisFirst Bank		540,610		9.06	%		238,583		4.00	%		298,228		5.00	%		979,084		8.78	%		446,243		4.00	%		557,804		5.00	%

We are a legal entity separate and distinct from the Bank. Our principal source of cash flow, including cash flow to pay dividends to our stockholders, is dividends the Bank pays to us as the Bank’s sole shareholder. Statutory and regulatory limitations apply to the Bank’s payment of dividends to us as well as to our payment of dividends to our stockholders. The requirement that a bank holding company must serve as a source of strength to its subsidiary banks also results in the position of the Federal Reserve that a bank holding company should not maintain a level of cash dividends to its stockholders that places undue pressure on the capital of its bank subsidiaries or that can be funded only through additional borrowings or other arrangements that may undermine the Bank holding company’s ability to serve as such a source of strength. Our ability to pay dividends is also subject to the provisions of Delaware corporate law.

The Alabama Banking Department also regulates the Bank’s dividend payments. Under Alabama law, a state-chartered bank may not pay a dividend in excess of 90% of its net earnings until the Bank’s surplus is equal to at least 20% of its capital (our Bank’s surplus currently exceeds 20% of its capital). Moreover, our Bank is also required by Alabama law to obtain the prior approval of the Superintendent of Banks (“Superintendent”) for its payment of dividends if the total of all dividends declared by the Bank in any calendar year will exceed the total of (i) the Bank’s net earnings (as defined by statute) for that year, plus (ii) its retained net earnings for the preceding two years, less any required transfers to surplus. In addition, no dividends, withdrawals or transfers may be made from the Bank’s surplus without the prior written approval of the Superintendent.

The Bank’s payment of dividends may also be affected or limited by other factors, such as the requirement to maintain adequate capital above regulatory guidelines. The federal banking agencies have indicated that paying dividends that deplete a depository institution’s capital base to an inadequate level would be an unsafe and unsound banking practice. Under the Federal Deposit Insurance Corporation Improvement Act of 1991, a depository institution may not pay any dividends if payment would cause it to become undercapitalized or if it already is undercapitalized. Moreover, the federal agencies have issued policy statements that provide that bank holding companies and insured banks should generally only pay dividends out of current operating earnings. If, in the opinion of the federal banking regulators, the Bank were engaged in or about to engage in an unsafe or unsound practice, the federal banking regulators could require, after notice and a hearing, that the Bank stop or refrain from engaging in the questioned practice.

Off-Balance Sheet Arrangements

In the normal course of business, we are a party to financial instruments with off-balance sheet risk to meet the financing needs of our customers. These financial instruments include commitments to extend credit beyond current fundings, credit card arrangements, standby letters of credit, and financial guarantees. Those instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized in our balance sheet. The contract or notional amounts of those instruments reflect the extent of involvement we have in those particular financial ~~instruments.~~arrangements. All such credit arrangements bear interest at variable rates and we have no such credit arrangements which bear interest at fixed rates.

Our exposure to credit loss in the event of non-performance by the other party to such financial ~~instruments~~instrument for commitments to extend credit, credit card arrangements and standby letters of credit is represented by the contractual or notional amount of ~~those~~these instruments. We use the same credit policies in making commitments and conditional obligations as we do for on-balance sheet instruments. ~~As of September 30, 2017, we have reserved $500,000 for losses on such off-balance sheet arrangements consistent with guidance in the FRB’s Interagency Policy Statement SR 06-17.~~

As part of our mortgage operations, we originate and sell certain loans to investors in the secondary market. We continue to experience a manageable level of investor repurchase demands. For loans sold, we have an obligation to either repurchase the outstanding principal balance of a loan or make the purchaser whole for the economic benefits of a loan if it is determined that the loans sold were in violation of representations and warranties made by the Bank at the time of the sale. Representations and warranties typically include those made regarding loans that had missing or insufficient file documentation or loans obtained through fraud by borrowers or other third parties such as appraisers. ~~We had a reserve of $368,000 as of September 30, 2017 and December 31, 2016 for the settlement of any repurchase demands by investors.~~

Financial instruments whose contract amounts represent credit risk at September 30, ~~2017~~2021 and December 31, 2020 are as follows:

	September 30, 2017		September 30, 2021		December 31, 2020
	(In Thousands)		(In Thousands)
Commitments to extend credit	$	1,873,412	$	3,332,764	$	2,606,258
Credit card arrangements		82,684		350,929		286,128
Standby letters of credit		49,894		56,077		66,208
	$	2,005,990	$	3,739,770	$	2,958,594

Commitments to extend credit beyond current funded amounts are agreements to lend to a customer as long as there is no violation of any condition established in the applicable loan agreement. Such commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. We evaluate each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained if deemed necessary by us upon extension of credit is based on our management’s credit evaluation. Collateral held varies but may include accounts receivable, inventory, property, plant and equipment and income-producing commercial properties.

Standby letters of credit are conditional commitments issued by us to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements, including commercial paper, bond financing, and similar transactions. All letters of credit are due within one year or less of the original commitment date. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers.

Federal funds lines of credit are uncommitted lines issued to downstream correspondent banks for the purpose of providing liquidity to them. The lines are unsecured, and we have no obligation to sell federal funds to the correspondent, nor does the correspondent have any obligation to request or accept purchases of federal funds from us.

Results of Operations

Summary of Net Income

Net income and net income available to common stockholders for the three months ended September 30, ~~2017~~2021 was ~~$25.3~~$52.5 million compared to net income and net income available to common stockholders of ~~$20.9~~$43.4 million for the three months ended September 30, ~~2016.~~2020. Net income and net income available to common stockholders for the nine months ended September 30, ~~2017~~2021 was ~~$71.9~~$154.0 million compared to net income and net income available to common stockholders of ~~$59.7~~$118.6 million for the nine months ended September 30, ~~2016.~~2020. For the three months ended September 30, 2021 compared to 2020 net interest income increased $11.2 million. The increase in net interest income for the three and nine-month periods is primarily attributable to growth in average earning assets and non-interest-bearing deposit balances. Decreases in provision for credit losses of $6.3 million and $13.1 million for the three and nine-month periods also contributed to the increase in net income for the ~~three months ended September 30, 2017 over~~comparative periods. Non-interest income also contributed to the same period in 2016 was primarily attributable to a $10.5 million increase in net interest income resulting from growth in earning assets, partially offset by a $3.4 million increase in tax provision. The increase inincreased net income ~~for~~in the ~~nine months ended September 30, 2017 compared~~nine-month period, increasing $4.2 million, or 19.2%, to ~~2016 was primarily the result of a $28.0 million increase in net interest income resulting from growth in average earning assets and a $2.0 million increase~~$26.1 million. Increases in non-interest ~~income, led by increased credit card income. Non-interest expenses increased by $1.3~~expense of $7.8 million and ~~$5.6~~$11.3 million and increases in income tax expense of $472,000 and $8.0 million, respectively, for the three and nine months ended September 30, ~~2017~~2021 compared to ~~2016.~~2020 partially offset increases in income.

Basic and diluted net income per common share were ~~$0.48~~$0.97 and ~~$0.47,~~$0.96, respectively, for the three months ended September 30, ~~2017,~~2021, compared to ~~$0.40 and $0.39, respectively,~~$0.80 for the corresponding period in ~~2016.~~2020. Basic and diluted net income per common share were ~~$1.36~~$2.84 and ~~$1.33,~~$2.83, respectively, for the nine months ended September 30, ~~2017,~~2021, compared to ~~$1.14~~$2.20 and ~~$1.12,~~$2.19, respectively, for the corresponding period in ~~2016.~~2020. Return on average assets for the three and nine months ended September 30, ~~2017~~2021 was ~~1.55%~~1.50% and ~~1.52%, respectively,~~1.58% compared to ~~1.39% and 1.43%~~1.54%, respectively, for the corresponding periods in ~~2016.~~2020. Return on average common stockholders’ equity for the three and nine months ended September 30, ~~2017~~2021 was ~~17.28%~~18.93% and ~~17.24%~~19.45%, respectively, compared to ~~16.66%~~18.43% and ~~16.60%~~17.73%, respectively, for the corresponding periods in ~~2016.~~

Dividend payout ratio for the three and nine months ended September 30, 2017 was 10.71% and 11.29% compared to 10.26% and 10.62%, respectively, for the corresponding periods in 2016. Stockholders’ equity to total assets as of September 30, 2017 and 2016 was 8.79% and 8.46%, respectively.2020.

Net Interest Income and Net Interest Margin Analysis

Net interest income is the difference between the income earned on interest-earning assets and interest paid on interest-bearing liabilities used to support such assets. The major factors which affect net interest income are changes in volumes, the yield on interest-earning assets and the cost of interest-bearing liabilities. Our management’s ability to respond to changes in interest rates by effective asset-liability management techniques is critical to maintaining the stability of the net interest margin and the momentum of our primary source of earnings.

Taxable-equivalent net interest income increased ~~$8.5~~$11.2 million, or ~~17.6%~~13.2%, to ~~$56.9~~$96.4 million for the three months ended September 30, ~~2017~~2021 compared to ~~$48.4~~$85.2 million for the corresponding period in ~~2016,~~2020, and increased ~~$28.0~~$37.4 million, or ~~20.1%~~15.2%, to ~~$167.5~~$283.6 million for the nine months ended September 30, ~~2017~~2021 compared to ~~$139.5~~$246.2 million for the corresponding period in ~~2016.~~2020. This increase was primarily attributable to growth in average earning assets, which increased ~~$435.8 million,~~$2.66 billion, or ~~7.6%~~24.7%, from the third quarter of ~~2016~~2020 to the third quarter of ~~2017,~~2021, and ~~$699.2 million,~~$2.65 billion, or ~~13.0%~~26.9%, from the nine months ended September 30, ~~2016~~2020 to the same period in ~~2017.~~2021. The taxable-equivalent yield on interest-earning assets ~~increased~~decreased to ~~4.37%~~3.08% for the three months ended September 30, ~~2017~~2021 from ~~3.81%~~3.55% for the corresponding period in ~~2016,~~2020, and ~~increased~~decreased to ~~4.23%~~3.28% for the nine months ended September 30, ~~2017~~2021 from ~~3.93%~~3.90% for the corresponding period in ~~2016.~~2020. The yield on loans for the three months ended September 30, ~~2017~~2021 was ~~4.66%~~4.39% compared to ~~4.47%~~4.26% for the corresponding period in ~~2016,~~2020, and ~~4.58%~~4.43% compared to 4.47% for the nine months ended September 30, ~~2017~~2021 and September 30, ~~2016,~~2020, respectively. The cost of total interest-bearing liabilities ~~increased~~decreased to ~~0.81%~~0.35% for the three months ended September 30, ~~2017~~2021 compared to ~~0.64%~~0.59% for the corresponding period in ~~2016,~~2020, and ~~increased~~decreased to ~~0.74%~~0.37% for the nine months ended September 30, ~~2017~~2021 from ~~0.63%~~0.81% for the corresponding period in ~~2016.~~2020. Net interest margin for the three months ended September 30, ~~2017~~2021 was ~~3.77%~~2.85% compared to ~~3.35%~~3.14% for the corresponding period in ~~2016,~~2020, and ~~3.69%~~3.03% for the nine months ended September 30, ~~2017~~2021 compared to ~~3.47%~~3.33% for the corresponding period in ~~2016.~~2020. The Federal Open Market Committee of the Federal Reserve Bank has recently signaled that it would discontinue buying assets in the open market and possibly start raising interest rates in an effort to control inflation. Higher interest rates could benefit our loan interest income in the future.

The following tables show, for the three and nine months ended September 30, ~~2017~~2021 and September 30, ~~2016,~~2020, the average balances of each principal category of our assets, liabilities and stockholders’ equity, and an analysis of net interest revenue. The accompanying tables reflect changes in our net interest margin as a result of changes in the volume and rate of our interest-earning assets and interest-bearing liabilities for the same periods. Changes as a result of mix or the number of days in the periods have been allocated to the volume and rate changes in proportion to the relationship of the absolute dollar amounts of the change in each. The tables are presented on a taxable-equivalent basis where applicable:

Average Balance Sheets and Net Interest Analysis

On a Fully Taxable-Equivalent Basis

For the Three Months Ended September 30,

(In thousands, except Average Yields and Rates)

																2021							2020
																		Interest		Average					Interest		Average
	2017							2016								Average		Earned /		Yield /			Average		Earned /		Yield /
	Average Balance		Interest Earned / Paid		Average Yield / Rate			Average Balance		Interest Earned / Paid		Average Yield / Rate				Balance		Paid		Rate			Balance		Paid		Rate
Assets:
Interest-earning assets:
Loans, net of unearned income (1)(2)
Loans, net of unearned income (1)
Taxable	$	5,407,109	$	63,519		4.66	%	$	4,554,900	$	51,233		4.47	%		$	8,653,632	$	95,870		4.40	%	$	8,335,087	$	89,236		4.26	%
Tax-exempt (3)		33,357		435		5.17			21,939		241		4.37
Tax-exempt (2)																	26,542		271		4.05			30,068		313		4.14
Total loans, net of unearned income		5,440,466		63,954		4.66			4,576,839		51,474		4.47				8,680,174		96,141		4.39			8,365,155		89,549		4.26
Mortgage loans held for sale		4,862		43		3.51			6,724		64		3.79				7,050		30		1.69			20,053		71		1.41
Investment securities:
Taxable		385,431		2,287		2.37			224,825		1,232		2.19				969,715		6,544		2.70			820,526		5,858		2.86
Tax-exempt (3)		131,478		1,097		3.34			135,272		1,262		3.73
Total investment securities (4)		516,909		3,384		2.62			360,097		2,494		2.77
Tax-exempt (2)																	12,382		74		2.39			31,880		200		2.51
Total investment securities (3)																	982,097		6,618		2.70			852,406		6,058		2.84
Federal funds sold		111,175		378		1.35			217,158		347		0.64				8,551		4		0.19			41,884		16		0.15
Restricted equity securities		1,030		9		3.47			5,658		57		4.01
Interest-bearing balances with banks		118,510		379		1.27			590,675		759		0.51				3,761,652		1,507		0.16			1,500,563		506		0.13
Total interest-earning assets	$	6,192,952	$	68,147		4.37	%	$	5,757,151	$	55,195		3.81	%		$	13,439,524	$	104,300		3.08		$	10,780,061	$	96,200		3.55
Non-interest-earning assets:
Cash and due from banks		65,457							58,809								90,034							75,065
Net fixed assets and equipment		54,727							25,000								62,845							56,799
Allowance for loan losses, accrued interest and other assets		151,786							145,804
Allowance for credit losses, accrued interest and other assets																	315,178							281,196
Total assets	$	6,464,922							5,986,764							$	13,907,581						$	11,193,121

Liabilities and stockholders' equity:															Liabilities and stockholders' equity:
Interest-bearing liabilities:
Interest-bearing demand deposits	$	800,437	$	849		0.42	%	$	696,100	$	644		0.37	%		$	1,431,420	$	694		0.19	%	$	1,077,595	$	840		0.31	%
Savings deposits		48,313		37		0.30			43,569		33		0.30				122,579		54		0.17			82,671		75		0.36
Money market accounts		2,774,061		5,170		0.74			2,471,829		3,387		0.55				5,328,291		3,492		0.26			4,739,566		5,188		0.44
Time deposits (5)		546,020		1,518		1.10			519,653		1,294		0.99
Time deposits																	806,108		2,341		1.15			841,378		3,773		1.78
Total interest-bearing deposits		4,168,831		7,574		0.72			3,731,151		5,358		0.57				7,688,398		6,581		0.34			6,741,210		9,876		0.58
Federal funds purchased		282,806		954		1.34			436,415		698		0.64				1,205,327		643		0.21			682,971		375		0.22
Other borrowings		55,034		717		5.17			55,410		717		5.15				64,694		692		4.23			64,717		777		4.78
Total interest-bearing liabilities	$	4,506,671	$	9,245		0.81	%	$	4,222,976	$	6,773		0.64	%		$	8,958,419	$	7,916		0.35	%	$	7,488,898	$	11,028		0.59	%
Non-interest-bearing liabilities:
Non-interest-bearing demand deposits		1,363,207							1,250,139								3,800,972							2,728,513
Other liabilities		15,070							14,376								48,060							39,537
Stockholders' equity		578,626							494,248								1,078,987							917,626
Unrealized gains on securities and derivatives		1,348							5,025
Accumulated other comprehensive income																	21,143							18,547
Total liabilities and stockholders' equity	$	6,464,922						$	5,986,764							$	13,907,581						$	11,193,121
Net interest income			$	58,902						$	48,422							$	96,384						$	85,172
Net interest spread						3.56	%						3.17	%							2.73	%						2.96	%
Net interest margin						3.77	%						3.35	%							2.85	%						3.14	%

(1)

Non-accrual loans are included in average loan balances in all periods. Loan fees of ~~$749,000~~$7,203 and ~~$653,000~~$5,193 are included in interest income in ~~2017~~the third quarter of 2021 and ~~2016,~~2020, respectively. Loan fees include accretion of PPP loan fees.

(2)

~~Accretion on acquired loan discounts of $107,000 and $194,000 are included in interest income in 2017 and 2016, respectively.~~

~~(3)~~

Interest income and yields are presented on a fully taxable equivalent basis using a tax rate of ~~35%~~21%.

~~(4)~~

(3)

Unrealized gains of ~~$2,072,000~~$26,709 and ~~$7,730,000~~$23,418 are excluded from the yield calculation in ~~2017~~the third quarter of 2021 and ~~2016,~~2020, respectively.

~~(5)~~

~~Accretion on acquired CD premiums of $0 and $48,000 are included in interest in 2017 and 2016, respectively.~~

	For the Three Months Ended September 30,									For the Three Months Ended September 30,
	2017 Compared to 2016 Increase (Decrease) in Interest Income and Expense Due to Changes in:									2021 Compared to 2020 Increase (Decrease) in Interest Income and Expense Due to Changes in:
	Volume			Rate			Total			Volume			Rate			Total
	(In Thousands)									(In Thousands)
Interest-earning assets:
Loans, net of unearned income
Taxable	$	10,054		$	2,232		$	12,286		$	3,613		$	3,021		$	6,634
Tax-exempt		144			50			194			(35	)		(7	)		(42	)
Total loans, net of unearned income		10,198			2,282			12,480			3,578			3,014			6,592
Mortgages held for sale		(16	)		(5	)		(21	)		(53	)		12			(41	)
Debt securities:
Taxable		949			106			1,055			1,034			(348	)		686
Tax-exempt		(34	)		(131	)		(165	)		(117	)		(9	)		(126	)
Total debt securities		915			(25	)		890			917			(357	)		560
Federal funds sold		(227	)		258			31			(15	)		3			(12	)
Restricted equity securities		(41	)		(7	)		(48	)
Interest-bearing balances with banks		(923	)		543			(380	)		892			109			1,001
Total interest-earning assets		9,906			3,046			12,952		$	5,319		$	2,781		$	8,100

Interest-bearing liabilities:
Interest-bearing demand deposits		105			100			205		$	229		$	(375	)	$	(146	)
Savings		4			-			4			27			(48	)		(21	)
Money market accounts		455			1,328			1,783			588			(2,284	)		(1,696	)
Time deposits		69			155			224			(152	)		(1,280	)		(1,432	)
Total interest-bearing deposits		633			1,583			2,216			692			(3,987	)		(3,295	)
Federal funds purchased		(311	)		567			256			280			(12	)		268
Other borrowed funds		(4	)		4			-			-			(85	)		(85	)
Total interest-bearing liabilities		318			2,154			2,472			972			(4,084	)		(3,112	)
Increase in net interest income	$	9,588		$	892		$	10,480		$	4,347		$	6,865		$	11,212

Our growth in loans ~~non-interest bearing deposits and average equity~~ continues to drive favorable volume component change and overall change. ~~Also, the recent increases in the Federal Reserve Bank’s target federal funds rate has contributed to a favorable variance relating to the interest~~The rate component ~~because~~was favorable as loan yields ~~on loans have~~ increased ~~more than~~13 basis points and average rates paid on ~~deposits. More recently, increases~~interest-bearing liabilities decreased 24 basis points. Growth in ~~rates paid on~~non-interest-bearing deposits ~~has~~and equity also contributed ~~an unfavorable rate variance when~~to the increase in net interest revenue during the three months ended September 30, 2021 compared to ~~prior quarters~~the same period in ~~2017. Management continues to closely monitor pricing of deposit accounts in an effort to control interest expense.~~2020.

Average ~~Consolidated~~ Balance Sheets and Net Interest Analysis

On a Fully Taxable-Equivalent Basis

For the Nine Months Ended September 30,

(In thousands, except Average Yields and Rates)

															2021							2020
																	Interest							Interest
	2017							2016							Average		Earned /		Average			Average		Earned /		Average
	Average Balance		Interest Earned / Paid		Average Yield / Rate			Average Balance		Interest Earned / Paid		Average Yield / Rate			Balance		Paid		Yield / Rate			Balance		Paid		Yield / Rate
Assets:
Interest-earning assets:
Loans, net of unearned income (1)(2)
Taxable	$	5,193,860	$	178,311		4.59	%	$	4,398,894	$	147,328		4.47	%	$	8,586,180	$	284,548		4.43	%	$	7,989,750	$	267,354		4.47	%
Tax-exempt (3)		33,963		1,257		4.93			16,200		573		4.72			26,992		834		4.13			31,512		968		4.10
Total loans, net of unearned income		5,227,823		179,568		4.58			4,415,094		147,901		4.47			8,613,172		285,382		4.43			8,021,262		268,322		4.47
Mortgage loans held for sale		5,483		158		3.85			6,710		200		3.98			10,683		150		1.88			12,565		164		1.74
Investment securities:
Taxable		381,157		6,646		2.32			216,947		3,739		2.30			928,567		18,666		2.69			777,662		16,104		2.77
Tax-exempt (3)		132,545		3,373		3.39			136,326		3,845		3.76			16,748		315		2.51			38,014		709		2.49
Total investment securities (4)		513,702		10,019		2.60			353,273		7,584		2.86			945,315		18,981		2.68			815,676		16,813		2.75
Federal funds sold		147,626		1,185		1.07			136,879		630		0.61			9,558		11		0.15			76,733		327		0.57
Restricted equity securities		1,030		39		5.06			5,427		154		3.79
Interest-bearing balances with banks		174,040		1,252		0.96			453,087		1,734		0.51			2,943,629		3,046		0.14			941,817		2,584		0.37
Total interest-earning assets	$	6,069,704	$	192,221		4.23	%	$	5,370,470	$	158,203		3.93	%	$	12,522,357	$	307,570		3.28	%	$	9,868,053	$	288,210		3.90	%
Non-interest-earning assets:
Cash and due from banks		64,704							61,906							127,963							72,482
Net fixed assets and equipment		49,796							23,095							60,448							57,435
Allowance for loan losses, accrued interest and other assets		144,499							133,357
Allowance for credit losses, accrued interest and other assets																318,745							258,263
Total assets	$	6,328,703						$	5,588,828						$	13,029,513						$	10,256,233

Liabilities and stockholders' equity:
Interest-bearing liabilities:
Interest-bearing demand deposits	$	789,916	$	2,348		0.40	%	$	684,348	$	1,838		0.36	%	$	1,359,212	$	1,954		0.19	%	$	1,009,332	$	3,061		0.41	%
Savings deposits		48,967		113		0.31			42,062		95		0.30			106,853		142		0.18			74,095		233		0.42
Money market accounts		2,678,993		13,143		0.66			2,186,703		8,612		0.53			5,236,809		10,348		0.26			4,363,630		21,871		0.67
Time deposits (5)		537,806		4,273		1.06			508,510		3,807		1.00
Time deposits																805,523		7,854		1.30			841,583		12,212		1.94
Total interest-bearing deposits		4,055,682		19,877		0.66			3,421,623		14,352		0.56			7,508,397		20,298		0.36			6,288,640		37,377		0.79
Federal funds purchased		326,017		2,653		1.09			460,844		2,210		0.64			1,009,905		1,630		0.22			583,232		2,286		0.52
Other borrowings		55,134		2,150		5.21			55,520		2,152		5.18			64,691		2,070		4.28			64,712		2,338		4.83
Total interest-bearing liabilities	$	4,436,833	$	24,680		0.74	%	$	3,937,987	$	18,714		0.63	%	$	8,582,993	$	23,998		0.37	%	$	6,936,584	$	42,001		0.81	%
Non-interest-bearing liabilities:
Non-interest-bearing demand deposits		1,319,695							1,157,106							3,295,530							2,376,029
Other liabilities		14,637							13,250							92,641							50,328
Stockholders' equity		556,952							475,905							1,038,336							878,271
Unrealized gains on securities and derivatives		586							4,580
Accumulated other comprehensive income																20,013							15,021
Total liabilities and stockholders' equity	$	6,328,703						$	5,588,828						$	13,029,513						$	10,256,233
Net interest income			$	167,541						$	139,489						$	283,572						$	246,209
Net interest spread						3.49	%						3.30	%						2.91	%						3.09	%
Net interest margin						3.69	%						3.47	%						3.03	%						3.33	%

(1)	Non-accrual loans are included in average loan balances in all periods. Loan fees of ~~$2,376,000~~$27,519 and ~~$1,574,000~~$10,123 are included in interest income in ~~2017~~2021 and ~~2016,~~2020, respectively.
(2)	Accretion on acquired loan discounts of ~~$374,000 and $819,000 are~~$100 is included in interest income in ~~2017 and 2016, respectively.~~2020.
(3)	Interest income and yields are presented on a fully taxable equivalent basis using a tax rate of ~~35%~~21%.
(4)	Unrealized gains of ~~$304,000~~$25,276 and ~~$6,694,000~~$18,955 are excluded from the yield calculation in ~~2017~~2021 and ~~2016,~~2020, respectively.
~~(5)~~	~~Accretion on acquired CD premiums of $32,000 and $189,000 are included in interest in 2017 and 2016, respectively.~~

	For the Nine Months Ended September 30,									For the Nine Months Ended September 30,
	2017 Compared to 2016 Increase (Decrease) in Interest Income and Expense Due to Changes in:									2021 Compared to 2020 Increase (Decrease) in Interest Income and Expense Due to Changes in:
	Volume			Rate			Total			Volume			Rate			Total
	(In Thousands)									(In Thousands)
Interest-earning assets:
Loans, net of unearned income
Taxable	$	26,839		$	4,144		$	30,983		$	19,564		$	(2,370	)	$	17,194
Tax-exempt		655			29			684			(141	)		7			(134	)
Total loans, net of unearned income		27,494			4,173			31,667			19,423			(2,363	)		17,060
Mortgages held for sale		(36	)		(6	)		(42	)		(26	)		12			(14	)
Debt securities:
Taxable		2,852			55			2,907			3,032			(470	)		2,562
Tax-exempt		(106	)		(366	)		(472	)		(401	)		7			(394	)
Total debt securities		2,746			(311	)		2,435			2,631			(463	)		2,168
Federal funds sold		52			503			555			(172	)		(144	)		(316	)
Restricted equity securities		(154	)		39			(115	)
Interest-bearing balances with banks		(1,454	)		972			(482	)		2,843			(2,381	)		462
Total interest-earning assets		28,648			5,370			34,018		$	24,699		$	(5,339	)	$	19,360

Interest-bearing liabilities:
Interest-bearing demand deposits		298			212			510		$	837		$	(1,944	)	$	(1,107	)
Savings		16			2			18			77			(168	)		(91	)
Money market accounts		2,150			2,381			4,531			3,709			(15,232	)		(11,523	)
Time deposits		220			246			466			(504	)		(3,854	)		(4,358	)
Total interest-bearing deposits		2,684			2,841			5,525			4,119			(21,198	)		(17,079	)
Federal funds purchased		(780	)		1,223			443			1,125			(1,781	)		(656	)
Other borrowed funds		(18	)		16			(2	)		(1	)		(267	)		(268	)
Total interest-bearing liabilities		1,886			4,080			5,966			5,243			(23,246	)		(18,003	)
Increase in net interest income	$	26,762		$	1,290		$	28,052		$	19,456		$	17,907		$	37,363

Our growth in loans ~~non-interest bearing deposits and average equity~~ continues to drive favorable volume component change and overall change. ~~Also, the recent increases in the Federal Reserve Bank’s target federal funds rate has contributed to a favorable variance relating to the interest~~The rate component ~~because yields on loans have increased more than~~was favorable as average rates paid on ~~deposits.~~interest-bearing liabilities decreased 44 basis points while loan yields decreased 4 basis points. Growth in non-interest-bearing deposits and equity also contributed to the increase in net interest revenue during the nine months ended September 30, 2021 compared to the same period in 2020.

Provision for ~~Loan~~Credit Losses

The provision for loan losses represents the amount determined by management to be necessary to maintain the allowance for loan losses at a level capable of absorbing inherent losses in the loan portfolio. Our management reviews the adequacy of the allowance for loan losses on a quarterly basis. The allowance for loan losses calculation is segregated into various segments that include classified loans, loans with specific allocations and pass rated loans. A pass rated loan is generally characterized by a very low to average risk of default and in which management perceives there is a minimal risk of loss. Loans are rated using a nine-point risk grade scale with loan officers having the primary responsibility for assigning risk grades and for the timely reporting of changes in the risk grades. Based on these processes, and the assigned risk grades, the criticized and classified loans in the portfolio are segregated into the following regulatory classifications: Special Mention, Substandard, Doubtful or Loss, with some general allocation of reserve based on these grades. At September 30, 2017, total loans rated Special Mention, Substandard, and Doubtful were $131.1 million, or 2.3% of total loans, compared to $128.8 million, or 2.6% of total loans, at December 31, 2016. Impaired loans are reviewed specifically and separately to determine the appropriate reserve allocation. Our management compares the investment in an impaired loan with the present value of expected future cash flow discounted at the loan’s effective interest rate, the loan’s observable market price or the fair value of the collateral, if the loan is collateral-dependent, to determine the specific reserve allowance. Reserve percentages assigned to non-impaired loans are based on historical charge-off experience adjusted for other risk factors. To evaluate the overall adequacy of the allowance to absorb losses inherent in our loan portfolio, our management considers historical loss experience based on volume and types of loans, trends in classifications, volume and trends in delinquencies and nonaccruals, economic conditions and other pertinent information. Based on future evaluations, additional provisions for loan losses may be necessary to maintain the allowance for loan losses at an appropriate level.

~~The provision for loan~~credit losses was ~~$4.8~~$6.0 million for the three months ended September 30, ~~2017, an increase~~2021, a decrease of ~~$1.3~~$6.3 million from ~~$3.5~~$12.3 million for the three months ended September 30, ~~2016,~~2020, and was ~~$14.2~~$23.1 million for the nine months ended September 30, ~~2017,~~2021, a ~~$4.9~~$13.1 million ~~increase~~decrease compared to ~~$9.3~~$36.2 million for the nine months ended September 30, ~~2016. Nonperforming loans decreased to $14.9~~2020. The ACL for September 30, 2021 and December 31, 2020 was calculated under the current expected credit losses (“CECL”) methodology and totaled $109.0 million and $87.9 million, or ~~0.26%~~1.24% and 1.04% of ~~total~~ loans, ~~at September 30, 2017 from $16.9 million, or 0.34%~~net of total loans, at December 31, 2016, but were higher than $6.7 million, or 0.14% of total loans, at September 30, 2016. Impaired loans increased to $49.6 million, or 0.88% of total loans, at September 30, 2017, compared to $45.6 million, or 0.93% of total loans, at December 31, 2016.unearned income, respectively. The allowance for loan losses totaled ~~$58.5~~$92.4 million, or ~~1.04%~~1.09% of ~~total~~ loans, net of unearned income, at September 30, ~~2017,~~2020 and was calculated under the incurred loss methodology. Excluding PPP loans, the allowance for credit losses as a percentage of total loans under the CECL methodology at September 30, 2021 and June 30, 2021 was 1.29% and 1.30%, respectively, compared to ~~$51.9~~1.24% at September 30, 2020, under the incurred loss model. The increase in the ACL as a percent of total loans at September 30, 2021 from December 31, 2020 is largely the result of a net decrease in PPP loans totaling $513 million, which were excluded from the ACL, and $860 million in net loan growth, excluding PPP loans, during 2021. This loan growth was primarily within our real estate – mortgage and real estate – construction loan categories which have increased $421 million and $294 million, respectively. We added a new qualitative environmental factor to address the termination of the PPP for the effect it could have on various businesses that will need to be self-sustaining without the assistance of PPP as well as potential risk of nonpayment from SBA due to fraud within PPP loans. This new qualitative factor totaled $3.5 million at June 30, 2021 and totaled $2.8 million at September 30, 2021. Additionally, we allocated ACL totaling $1.7 million to address the risk associated with a newly downgraded commercial relationship at September 30, 2021. Annualized net credit charge-offs to quarter-to-date average loans were 0.08% for the third quarter of 2021, compared to 0.54% for the corresponding period in 2020. Annualized net credit charge-offs to year-to-date average loans were 0.03% for the nine months ended September 30, 2021, compared to 0.34% for the corresponding period in 2020. Nonperforming loans decreased to $14.5 million, or ~~1.06%~~0.16% of total loans, ~~net~~at September 30, 2021 from $19.0 million, or 0.22% of ~~unearned income,~~total loans, at December 31, ~~2016.~~2020, and were $26.6 million, or 0.31% of total loans, at September 30, 2020. See the section captioned “Asset Quality” located elsewhere in this item for additional discussion related to provision for credit losses.

Noninterest Income

Noninterest income ~~was flat at $4.8~~totaled $8.0 million for the three months ended September 30, ~~2017~~2021, a decrease of $146,000 compared to the corresponding period in ~~2016,~~2020, and totaled ~~$14.1~~$26.1 million for the nine months ended September 30, ~~2017,~~2021, an increase of ~~$2.0~~$4.2 million, or ~~16.5%~~19.2%, compared to the corresponding period in ~~2016.~~2020. Mortgage banking income decreased ~~$0.1~~$1.1 million, or ~~9.1%~~43.5%, to ~~$1.0~~$1.4 million for the three months ended September 30, ~~2017~~2021 compared to ~~$1.1~~$2.5 million for the same period in ~~2016,~~2020, and increased ~~$0.2~~$1.2 million, or ~~7.4%~~20.6%, to $6.9 million for the nine months ended September 30, 2021 compared to $5.7 million for the same period in 2020.The number of mortgage loans originated during the third quarter of 2021 fell to 208 from 325 during the same quarter in 2020, and increased to 755 during the nine months ended September 30, 2021 compared to 734 mortgage loans originated during the same period in 2020 . Credit card income increased $203,000 to $2.0 million for the three months ended September 30, 2021 compared to the same period in 2020, and increased $144,000 to $5.1 million for the nine months ended September 30, 2021 compared to the same period in 2020. The number of credit card accounts increased approximately 31% and the aggregate amount of spend on all credit card accounts increased 43% during the third quarter of 2021 compared to the third quarter of 2020. Increase in cash surrender value of life insurance decreased $62,000, or 3.6%, to $1.7 million during the three months ended September 30, 2021, compared to the corresponding period in 2020, and increased $362,000, or 7.8%, to $5.0 million for the nine months ended September 30, 2021 compared to $4.7 million for the same period in 2020.The quarter-to-date decrease is the result of a decrease in crediting rates on existing policies while the year-to-date increase is the result of $40.0 million in new policies purchased in July 2020. Other income increased $900,000, or 343.5%, to $1.2 million for the three months ended September 30, 2021 compared to $262,000 for the same period in 2020, and increased $1.9 million, or 198.0%, to $2.9 million for the nine months ended September 30, ~~2017~~2021 compared to ~~$2.7 million~~$972,000 for the same period in ~~2016. Credit card income was flat at $1.1 million for~~2020. We wrote down the three months ended September 30, 2017 compared to the same period in 2016, and increased $1.3 million, or 59.1%, to $3.5 million for the nine months ended September 30, 2017 compared to $2.2 million for the same period in 2016. Flat credit card income for the comparative quarters was the resultvalue of ~~higher accruals for rebates and awards on credit card accounts~~our interest rate cap by $98,000 during the third quarter of ~~2017. The number~~2021 through other income compared to a write down of ~~credit card accounts~~$343,000 during the third quarter of 2020. Merchant service revenue increased ~~35.7%~~ from ~~September 30, 2016~~$163,000 during the third quarter of 2020 to ~~September 30, 2017 and~~$375,000, or 30.1%, during the ~~volume~~third quarter of ~~purchases on cards increased 58.5% from the quarter ended September 30, 2016 to the quarter ended September 30, 2017.~~2021.

Noninterest Expense

Noninterest expense totaled ~~$21.5~~$34.4 million for the three months ended September 30, ~~2017,~~2021, an increase of ~~$1.3~~$7.8 million, or ~~6.4%~~29.4%, compared to ~~$20.2~~$26.6 million for the same period in ~~2016,~~2020, and totaled ~~$64.6~~$94.6 million for the nine months ended September 30, ~~2017,~~2021, an increase of ~~$5.6~~$11.3 million, or ~~9.5%~~13.6%, compared to ~~$59.0~~$83.3 million for the same period in ~~2016.~~2020.

Details of ~~expenses~~expense are as follows:

●

Salary and benefit expense increased ~~$1.5~~$3.0 million, or ~~13.4%~~20.0%, to ~~$12.4~~$18.0 million for the three months ended September 30, ~~2017~~2021, from ~~$11.0~~$15.0 million for the same period in ~~2016,~~2020, and increased ~~$3.4~~$4.0 million, or ~~10.4%~~8.6%, to ~~$36.2~~$50.4 million for the nine months ended September 30, ~~2017~~2021 from ~~$32.8~~$46.4 million for the same period in ~~2016.~~2020. Total employees increased from ~~416~~496 as of September 30, ~~2016~~2020, to ~~438~~518 as of September 30, ~~2017,~~2021, or ~~5.3%~~4.4%. ~~Merit increases, cost~~Accruals for annual incentives increased $2.2 million from the third quarter of ~~living adjustments, and medical benefit cost increases also contributed~~2020 to the ~~2017 overall~~third quarter of 2021, primarily due to recent increases in loan originations.

●

Equipment and occupancy expense increased ~~salary and benefits expense.~~

~~Occupancy expense decreased $0.2 million,~~$440,000, or ~~7.3%~~17.2%, to ~~$1.9~~$3.0 million for the three months ended September 30, ~~2017~~2021 from ~~$2.1~~$2.6 million for the corresponding period in ~~2016,~~2020, and increased ~~$0.3~~$1.1 million, or ~~5.6%~~14.9%, to ~~$6.4~~$8.5 million ~~during~~for the nine months ended September 30, ~~2017 from $6.1~~2021 compared to $7.4 million ~~during~~for the corresponding period in ~~2016.~~2020. We ~~leased a new main~~moved our Nashville, Tennessee office ~~building in our Tampa Bay, Florida region starting~~ in early ~~2017 which was a replacement of~~2021 to expand our ~~previous loan production office~~space and improve visibility and we opened new offices in ~~Pasco County. We also leased a new main office in our Mobile, Alabama region, a replacement of a previous smaller location with less visibility.~~Orlando, Florida and Columbus, Georgia during 2021.

●

~~Professional~~

Third party processing and other services ~~expense decreased $0.4 million,~~increased $863,000, or ~~31.9%~~26.3%, to ~~$0.8~~$4.1 million for the three months ended September 30, ~~2017~~2021, from ~~$1.2~~$3.3 million for the corresponding period in ~~2016,~~2020, and ~~decreased $0.5~~increased$1.1 million, or ~~18.3%~~11.1%, to ~~$2.4 million from $2.9~~$11.5 million for the nine months ended September 30, ~~2017. Legal fees related~~2021 compared to ~~pending litigation during 2016 drove higher expenses~~$10.4 million for the corresponding period in 2020. We increased the ~~previous year’s comparative periods.~~number of correspondent banks for which we are processing transactions through the Federal Reserve Bank.

●

~~Federal deposit insurance~~

FDIC and other regulatory assessments ~~were flat at $0.8~~increased $569,000, or 53.6%, to $1.6 million for the three months ended September 30, ~~2017 compared to~~2021 from $1.1 million for the ~~same~~corresponding period in ~~2016,~~2020, and increased ~~$0.6~~$1.6 million, or 55.2%, to ~~$2.9~~$4.6 million for the nine months ended September 30, ~~2017~~2021 compared to $3.0 million for the ~~same~~corresponding period in ~~2016.~~2020. Growth in total assets has increased our assessments. The ~~increase in the nine-month comparative periods is driven by asset growth and~~Bank was reclassified as a ~~change in the assessment rate calculation enacted~~large financial institution by the FDIC ~~starting in the third quarter~~as of ~~2016.~~September 30, 2021.

●

OREO ~~expenses decreased~~expense increased $4,000, or 3.4%, to ~~$31,000~~$123,000 for the three months ended September 30, ~~2017~~2021, from ~~$0.2 million~~$119,000 for the corresponding period in ~~2016,~~2020, and decreased ~~$0.5~~$1.2 million, or ~~75.6%~~59.5%, to ~~$0.2 million~~$820,000 from ~~$0.7~~$2.0 million for the nine months ended September 30, ~~2017. Fewer properties in OREO and less activity lead~~2021 compared to the ~~drop~~corresponding period in ~~expenses. We continue to actively manage and maintain~~2020. The third quarter of 2021 included a write-down in value of a property in our ~~OREO properties to minimize potential losses until they are sold.~~Atlanta region.

●

Other operating expenses increased ~~$0.5~~$2.9 million, or 81.3%, to ~~$5.5~~$6.5 million for the three months ended September 30, ~~2017 compared to~~2021, from $3.6 million for the ~~same~~corresponding period in ~~2016,~~2020, and increased ~~$2.4~~$4.6 million, or 41.7%, to ~~$16.6~~$15.7 million from $11.1 million for the nine months ended September 30, ~~2017~~2021, compared to the ~~same~~corresponding period in ~~2016. State sales taxes paid for~~2020. We invested in federal new market tax credits in July 2021 and wrote down the ~~construction of our new headquarters building in Birmingham, Alabama and higher credit card processing expenses each contributed $0.4~~investment by $2.8 million of the increase for the nine month comparative periods. Increased transaction volume drove increased loan expenses ($0.6 million), increased bank service charges ($0.1 million) and increased travel expenses ($0.1 million). We incurred a $0.2 million increase in non-credit losses during the ~~nine months ended September 30, 2017 compared~~third quarter of 2021 with a charge to other operating expenses. We decreased our reserve for credit losses on unfunded loan commitments by $300,000 in the ~~same period in 2016.~~third quarter of 2021.

The following table presents our non-interest income and non-interest expense for the ~~three and nine month~~three-and-nine-month periods ending September 30, ~~2017~~2021, compared to the same periods in ~~2016.~~2020.

	Three Months Ended September 30,										Nine Months Ended September 30,											Three Months Ended September 30,										Nine Months Ended September 30,
	2017		2016		$ change			% change			2017		2016			$ change			% change			2021		2020		$ change			% change			2021		2020		$ change			% change
Non-interest income:
Noninterest income:
Service charges on deposit accounts	$	1,467	$	1,367	$	100			7.3	%	$	4,203	$	3,980		$	223			5.6	%	$	1,727	$	1,818	$	(91	)		(5.0)	%	$	5,542	$	5,557	$	(15	)		(0.3)	%
Mortgage banking		978		1,112		(134	)		(12.1	)%		2,941		2,681			260			9.7	%		1,423		2,519		(1,096	)		(43.5)	%		6,869		5,697		1,172			20.6	%
Credit card income		1,149		1,116		33			3.0	%		3,517		2,159			1,358			62.9	%		2,043		1,840		203			11.0	%		5,147		5,003		144			2.9	%
Securities gains		-		-		-			NM			-		(3	)		3			NM			-		-		-			-	%		620		-		620			NM	%
Increase in cash surrender value life insurance		825		770		55			7.1	%		2,334		2,049			285			13.9	%		1,671		1,733		(62	)		(3.6)	%		5,012		4,650		362			7.8	%
Other operating income		371		426		(55	)		(12.9	)%		1,146		1,207			(61	)		(5.1	)%		1,162		262		900			343.5	%		2,897		972		1,925			198.0	%
Total non-interest income	$	4,790	$	4,791	$	(1	)		-	%	$	14,141	$	12,073		$	2,068			17.1	%	$	8,026	$	8,172	$	(146	)		(1.8)	%	$	26,087	$	21,879	$	4,208			19.2	%

Non-interest expense:
Noninterest expense:
Salaries and employee benefits		12,428		10,958		1,470			13.4	%		36,172		32,758			3,414			10.4	%	$	17,995	$	14,994	$	3,001			20.0	%	$	50,425	$	46,444	$	3,981			8.6	%
Equipment and occupancy expense		1,947		2,100		(153	)		(7.3	)%		6,452		6,108			344			5.6	%		2,996		2,556		440			17.2	%		8,494		7,390		1,104			14.9	%
Third party processing and other services																							4,144		3,281		863			26.3	%		11,506		10,360		1,146			11.1	%
Professional services		805		1,182		(377	)		(31.9	)%		2,384		2,919			(535	)		(18.3	)%		948		955		(7	)		(0.7)	%		2,978		2,994		(16	)		(0.5)	%
FDIC and other regulatory assessments		810		775		35			4.5	%		2,888		2,328			560			24.1	%		1,630		1,061		569			53.6	%		4,637		2,988		1,649			55.2	%
OREO expense		31		178		(147	)		(82.6	)%		163		668			(505	)		(75.6	)%		123		119		4			3.4	%		820		2,023		(1,203	)		(59.5)	%
Other operating expense		5,476		4,969		507			10.2	%		16,580		14,175			2,405			17.0	%		6,541		3,607		2,934			81.3	%		15,740		11,110		4,630			41.7	%
Total non-interest expense	$	21,497	$	20,162	$	1,335			6.6	%	$	64,639	$	58,956		$	5,683			9.6	%	$	34,377	$	26,573	$	7,804			29.4	%	$	94,600	$	83,309	$	11,291			13.6	%

Income Tax Expense

Income tax expense was ~~$11.6~~$11.5 million for the three months ended September 30, ~~2017~~2021, compared to ~~$8.2~~$11.0 million for the same period in ~~2016,~~2020, and was ~~$29.4~~$37.8 million for the nine months ended September 30, ~~2017~~2021, compared to ~~$22.0~~$29.8 million for the same period in ~~2016.~~2020. Our effective tax rate for the three and nine months ended September 30, ~~2017~~2021 was ~~31.5%~~17.98% and ~~29.0%~~19.71%, respectively, compared to ~~28.1%~~20.29% and ~~27.0%~~20.08% for the corresponding periods in ~~2016,~~2020, respectively. We recognized ~~a reduction~~$3.2 million in ~~provision for income taxes resulting from~~credits during the third quarter of 2021 related to the investment in federal new market tax credits in July 2021. We recognized excess tax benefits as an income tax credit to our income tax expense from the exercise and vesting of stock options and restricted stock during the three and nine months ended September 30, ~~2017~~2021 of ~~$0.8 million~~$78,000 and ~~$4.3~~$2.4 million, respectively, compared to ~~$1.2 million~~$180,000 and ~~$4.7~~$1.4 million during the three and nine months ended September 30, ~~2016,~~2020, respectively. Lower excess tax benefits from the exercise of stock options and lower Alabama state sales taxes, which we can deduct from our Alabama corporate income taxes, during the third quarter of 2017 contributed to the higher effective tax rate when compared to the same quarter in 2016. Our primary permanent differences are related to tax exempt income on securities, state income tax benefit on real estate investment trust dividends, various qualifying tax credits and change in cash surrender value of bank-owned life insurance.

We own real estate investment trusts for the purpose of holding and managing participations in residential mortgages and commercial real estate loans originated by the Bank. The trusts are ~~wholly-owned~~whollyowned subsidiaries of a trust holding company, which in turn is an indirect wholly-owned subsidiary of the Bank. The trusts earn interest income on the loans they hold and incur operating expenses related to their activities. They pay their net earnings, in the form of dividends, to the Bank, which receives a deduction for state income taxes.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Like all financial institutions, we are subject to market risk from changes in interest rates. Interest rate risk is inherent in the balance sheet due to the mismatch between the maturities of rate-sensitive assets and rate-sensitive liabilities. If rates are rising, and the level of rate-sensitive liabilities exceeds the level of rate-sensitive assets, the net interest margin will be negatively impacted. Conversely, if rates are falling, and the level of rate-sensitive liabilities is greater than the level of rate-sensitive assets, the impact on the net interest margin will be favorable. Managing interest rate risk is further complicated by the fact that all rates do not change at the same pace; in other words, short-term rates may be rising while longer-term rates remain stable. In addition, different types of rate-sensitive assets and rate-sensitive liabilities react differently to changes in rates.

To manage interest rate risk, we must take a position on the expected future trend of interest rates. Rates may rise, fall or remain the same. Our asset-liability committee develops its view of future rate trends and strives to manage rate risk within a targeted range by monitoring economic indicators, examining the views of economists and other experts, and understanding the current status of our balance sheet. Our annual budget reflects the anticipated rate environment for the next 12 months. The asset-liability committee conducts a quarterly analysis of the rate sensitivity position and reports its results to our board of directors.

The asset-liability committee thoroughly analyzes the maturities of rate-sensitive assets and liabilities. This analysis measures the “gap”, which is defined as the difference between the dollar amount of rate-sensitive assets repricing during a period and the volume of rate-sensitive liabilities repricing during the same period. The gap is also expressed as the ratio of rate-sensitive assets divided by rate-sensitive liabilities. If the ratio is greater than one, the dollar value of assets exceeds the dollar value of liabilities; the balance sheet is “asset-sensitive.” Conversely, if the value of liabilities exceeds the value of assets, the ratio is less than one and the balance sheet is “liability-sensitive.” Our internal policy requires management to maintain the gap such that net interest margins will not change more than 10% if interest rates change 100 basis points or more than 15% if interest rates change 200 basis points. There have been no changes to our policies or procedures for analyzing our interest rate risk since December 31, ~~2016,~~2020, and there ~~are~~have been no ~~significant~~material changes to our sensitivity to changes in interest rates since December 31, ~~2016~~2020, as disclosed in our Annual Report on Form 10-K.

ITEM 4. CONTROLS AND PROCEDURES

CEO and CFO Certification.

Appearing as exhibits to this report are Certifications of our Chief Executive Officer (“CEO”) and our Chief Financial Officer (“CFO”). The Certifications are required to be made by Rule 13a-14 or Rule 15d-14 under the Securities Exchange Act of ~~1934, as amended (the “Exchange Act”).~~1934. This item contains the information about the evaluation that is referred to in the Certifications, and the information set forth below in this Item 4 should be read in conjunction with the Certifications for a more complete understanding of the Certifications.

Evaluation of Disclosure Controls and Procedures.

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

We conducted an evaluation (the "Evaluation") of the effectiveness of the design and operation of our disclosure controls and procedures under the supervision and with the participation of our management, including our CEO and CFO, as of September 30, ~~2017.~~2021. Based upon the Evaluation, our CEO and CFO have concluded that, as of September 30, ~~2017,~~2021, our disclosure controls and procedures are effective to ensure that material information relating to ~~ServisFirst Bancshares, Inc.~~the Company. and its subsidiaries is made known to management, including the CEO and CFO, particularly during the period when our periodic reports are being prepared.

Changes in Internal Control Over Financial Reporting

There have not been any changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time we may be a party to various legal proceedings arising in the ordinary course of business. Management does not believe the Company, or the Bank, is currently a party to any material legal proceedings.

ITEM 1A. RISK FACTORS

Our business is influenced by many factors that are difficult to predict, involve uncertainties that may materially affect actual results and are often beyond our control. We have identified a number of these risk factors in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016,~~2020, which should be taken into consideration when reviewing the information contained in this report. There have been no material changes ~~with regard to~~in the Company’s risk factors ~~previously~~from those disclosed in the Company’s Annual Report on Form 10-K. For other factors that may cause actual results to differ materially from those indicated in any forward-looking statement or projection contained in this report, see “Forward-Looking Statements” under Part 1, Item 2 above.10-K for the year ended December 31, 2020.

Our operations and financial performance could be adversely affected by natural disasters, and climate change can increase those risks while adding regulatory, compliance, reputational and other risks.

Natural disasters could have a material adverse effect on our financial position and results of operations. Natural disasters, such as hurricanes, tornados, earthquakes and similar unpredictable weather events, could affect us directly (by interrupting our systems, damaging our offices or otherwise preventing us from operating our business in the ordinary course) or indirectly (by damaging or destroying the businesses or properties of our customers or otherwise impairing our customers’ ability to make loan payments on a timely basis or destroying property pledged as collateral for loans).

Climate change may result in new or increased regulatory burdens, which could materially affect our results of operations by requiring us to implement costly measures to comply with any new laws and regulations related to climate change. Changes to regulations or market shifts in response to climate change may also impact the businesses of some of our customers, which may require us to adjust our lending portfolios and business strategies with respect to such customers.

In addition, the investing public is increasingly focused on the financial services industry’s ability to manage environmental impact. We recently have adopted an Environmental, Social and Governance (“ESG”) Policy in an effort to refine and track our compliance efforts; however, failure to appropriately manage our environmental impact could have a material adverse effect on our reputation and harm our ability to attract and retain customers and employees.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

Exhibit:		Description
31.01		Certification of principal executive officer pursuant to Rule 13a-14(a).
31.02		Certification of principal financial officer pursuant to Rule 13a-14(a).
32.01		Certification of principal executive officer pursuant to 18 U.S.C. Section 1350.
32.02		Certification of principal financial officer pursuant to 18 U.S.C. Section 1350.
101.INS	Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document
~~101.DEF~~		~~XBRL Taxonomy Extension Definition Linkbase Document~~
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
~~101.INS~~101.DEF		Inline XBRL ~~Instance~~Taxonomy Extension Definition Linkbase Document
~~101.SCH~~104		Cover Page Interactive Data File (formatted as Inline XBRL ~~Taxonomy Extension Schema Document~~and contained in Exhibit 101)

SIGNATURES

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.

	SERVISFIRST BANCSHARES, INC.



Date: October ~~31, 2017~~29, 2021	By	/s/ Thomas A. Broughton III
		Thomas A. Broughton III
		President and Chief Executive Officer

Date: October ~~31, 2017~~29, 2021	By	/s/ William M. Foshee
		William M. Foshee
		Chief Financial Officer

PART I. FINANCIAL INFORMATION		34
	Item 1.	Financial Statements	34
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2728
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	4144
	Item 4.	Controls and Procedures	4245

PART II. OTHER INFORMATION		4245
	Item 1 1.	Legal Proceedings	4245
	Item 1A.	Risk Factors	4345
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4346
	Item 3.	Defaults Upon Senior Securities	4346
	Item 4.	Mine Safety Disclosures	4346
	Item 5.	Other Information	4346
	Item 6.	Exhibits	4347

	Common Stock		Additional Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Income			Noncontrolling Interest		Total Stockholders' Equity
Balance, December 31, 2015	$	52	$	211,546	$	234,124		$	3,048		$	377	$	449,147
Common dividends paid, $0.08 per share		-		-		(4,194	)		-			-		(4,194	)
Common dividends declared, $.04 per share		-		-		(2,106	)		-			-		(2,106	)
Preferred dividends paid		-		-		(23	)		-			-		(23	)
Issue 656,500 shares of common stock upon exercise of stock options		-		2,785		-			-			-		2,785
Stock based compensation expense		-		931		-			-			-		931
Other comprehensive income, net of tax		-		-		-			1,585			-		1,585
Net income		-		-		59,741			-			-		59,741
Balance, September 30, 2016	$	52	$	215,262	$	287,542		$	4,633		$	377	$	507,866

Balance, December 31, 2016	$	53	$	215,932	$	307,151		$	(624	)	$	377	$	522,889
Common dividends paid, $0.10 per share		-		-		(5,286	)		-			-		(5,286	)
Common dividends declared, $0.05 per share		-		-		(2,649	)		-			-		(2,649	)
Preferred dividends paid		-		-		(31	)		-			-		(31	)
Issue 328,214 shares of common stock upon exercise of stock options		-		635		-			-			-		635
Issue 125 shares of REIT preferred stock		-		-		-			-			125		125
Stock based compensation expense		-		916		-			-			-		916
Other comprehensive income, net of tax		-		-		-			1,672			-		1,672
Net income		-		-		71,942			-			-		71,942
Balance, September 30, 2017	$	53	$	217,483	$	371,127		$	1,048		$	502	$	590,213

	September 30, 2017			December 31, 2016
	(Dollars In Thousands)
Commercial, financial and agricultural	$	2,223,910		$	1,982,267
Real estate - construction		467,838			335,085
Real estate - mortgage:
Owner-occupied commercial		1,323,383			1,171,719
1-4 family mortgage		593,180			536,805
Other mortgage		962,690			830,683
Subtotal: Real estate - mortgage		2,879,253			2,539,207
Consumer		57,764			55,211
Total Loans		5,628,765			4,911,770
Less: Allowance for loan losses		(58,459	)		(51,893	)
Net Loans	$	5,570,306		$	4,859,877


Commercial, financial and agricultural		39.51	%		40.36	%
Real estate - construction		8.31	%		6.82	%
Real estate - mortgage:
Owner-occupied commercial		23.51	%		23.86	%
1-4 family mortgage		10.54	%		10.93	%
Other mortgage		17.10	%		16.91	%
Subtotal: Real estate - mortgage		51.15	%		51.70	%
Consumer		1.03	%		1.12	%
Total Loans		100.00	%		100.00	%

	Commercial financial and agricultural			Real estate - construction			Real estate - mortgage			Consumer			Total

	(In Thousands)
	Three Months Ended September 30, 2017
Allowance for loan losses:
Balance at June 30, 2017	$	29,127		$	5,138		$	20,392		$	402		$	55,059
Charge-offs		(924	)		(16	)		(550	)		(65	)		(1,555	)
Recoveries		67			12			59			14			152
Provision		3,431			197			1,065			110			4,803
Balance at September 30, 2017	$	31,701		$	5,331		$	20,966		$	461		$	58,459

	Three Months Ended September 30, 2016
Allowance for loan losses:
Balance at June 30, 2016	$	23,655		$	5,279		$	17,600		$	464		$	46,998
Charge-offs		(1,270	)		(79	)		(144	)		(81	)		(1,574	)
Recoveries		35			9			1			-			45
Provision		3,560			(394	)		282			16			3,464
Balance at September 30, 2016	$	25,980		$	4,815		$	17,739		$	399		$	48,933

	Nine Months Ended September 30, 2017
Allowance for loan losses:
Balance at December 31, 2016	$	28,872		$	5,125		$	17,504		$	392		$	51,893
Charge-offs		(6,846	)		(56	)		(922	)		(173	)		(7,997	)
Recoveries		273			42			62			16			393
Provision		9,402			220			4,322			226			14,170
Balance at September 30, 2017	$	31,701		$	5,331		$	20,966		$	461		$	58,459

	Nine Months Ended September 30, 2016
Allowance for loan losses:
Balance at December 31, 2015	$	21,495		$	5,432		$	16,061		$	431		$	43,419
Charge-offs		(2,732	)		(815	)		(335	)		(130	)		(4,012	)
Recoveries		39			64			100			-			203
Provision		7,178			134			1,913			98			9,323
Balance at September 30, 2016	$	25,980		$	4,815		$	17,739		$	399		$	48,933

	As of September 30, 2017
Allowance for loan losses:
Individually Evaluated for Impairment	$	5,725		$	829		$	1,892		$	50		$	8,496
Collectively Evaluated for Impairment		25,976			4,502			19,074			411			49,963

Loans:
Ending Balance	$	2,223,910		$	467,838		$	2,879,253		$	57,764		$	5,628,765
Individually Evaluated for Impairment		30,405			3,328			15,789			88			49,610
Collectively Evaluated for Impairment		2,193,505			464,510			2,863,464			57,676			5,579,155

	As of December 31, 2016
Allowance for loan losses:
Individually Evaluated for Impairment	$	6,607		$	923		$	622		$	-		$	8,152
Collectively Evaluated for Impairment		22,265			4,202			16,882			392			43,741

Loans:
Ending Balance	$	1,982,267		$	335,085		$	2,539,207		$	55,211		$	4,911,770
Individually Evaluated for Impairment		27,922			4,314			13,350			3			45,589
Collectively Evaluated for Impairment		1,954,345			330,771			2,525,857			55,208			4,866,181

	September 30, 2017						For the three months ended September 30, 2017					For the nine months ended September 30, 2017
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized in Period			Average Recorded Investment		Interest Income Recognized in Period

	(In Thousands)
With no allowance recorded:
Commercial, financial and agricultural	$	4,671	$	4,671	$	-	$	4,770	$	52		$	4,998	$	164
Real estate - construction		45		48		-		48		1			49		2
Real estate - mortgage:
Owner-occupied commercial		2,366		2,532		-		2,551		37			2,584		113
1-4 family mortgage		1,752		1,752		-		1,756		22			1,781		67
Other mortgage		732		732		-		732		10			733		32
Total real estate - mortgage		4,850		5,016		-		5,039		69			5,098		212
Consumer		38		40		-		41		1			42		2
Total with no allowance recorded		9,604		9,775		-		9,898		123			10,187		380

With an allowance recorded:
Commercial, financial and agricultural		25,734		27,719		5,725		26,129		256			27,021		800
Real estate - construction		3,283		3,283		829		3,357		14			3,369		42
Real estate - mortgage:
Owner-occupied commercial		8,024		8,024		1,512		8,024		75			7,873		217
1-4 family mortgage		2,485		2,485		328		2,485		10			2,506		56
Other mortgage		430		980		52		974		(4	)		984		21
Total real estate - mortgage		10,939		11,489		1,892		11,483		81			11,363		294
Consumer		50		50		50		50		1			39		2
Total with allowance recorded		40,006		42,541		8,496		41,019		352			41,792		1,138

Total Impaired Loans:
Commercial, financial and agricultural		30,405		32,390		5,725		30,899		308			32,019		964
Real estate - construction		3,328		3,331		829		3,405		15			3,418		44
Real estate - mortgage:
Owner-occupied commercial		10,390		10,556		1,512		10,575		112			10,457		330
1-4 family mortgage		4,237		4,237		328		4,241		32			4,287		123
Other mortgage		1,162		1,712		52		1,706		6			1,717		53
Total real estate - mortgage		15,789		16,505		1,892		16,522		150			16,461		506
Consumer		88		90		50		91		2			81		4
Total impaired loans	$	49,610	$	52,316	$	8,496	$	50,917	$	475		$	51,979	$	1,518

	December 31, 2016						For the twelve months ended December 31, 2016
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized in Period

	(In Thousands)
With no allowance recorded:
Commercial, financial and agricultural	$	1,003	$	1,003	$	-	$	992	$	64
Real estate - construction		938		1,802		-		1,159		3
Real estate - mortgage:
Owner-occupied commercial		2,615		2,778		-		2,884		166
1-4 family mortgage		1,899		1,899		-		1,901		102
Other mortgage		940		940		-		965		60
Total real estate - mortgage		5,454		5,617		-		5,750		328
Consumer		3		5		-		6		-
Total with no allowance recorded		7,398		8,427		-		7,907		395

With an allowance recorded:
Commercial, financial and agricultural		26,919		31,728		6,607		26,955		1,162
Real estate - construction		3,376		3,376		923		3,577		68
Real estate - mortgage:
Owner-occupied commercial		6,924		6,924		348		6,934		362
1-4 family mortgage		972		972		274		313		19
Other mortgage		-		-		-		-		-
Total real estate - mortgage		7,896		7,896		622		7,247		381
Consumer		-		-		-		-		-
Total with allowance recorded		38,191		43,000		8,152		37,779		1,611

Total Impaired Loans:
Commercial, financial and agricultural		27,922		32,731		6,607		27,947		1,226
Real estate - construction		4,314		5,178		923		4,736		71
Real estate - mortgage:
Owner-occupied commercial		9,539		9,702		348		9,818		528
1-4 family mortgage		2,871		2,871		274		2,214		121
Other mortgage		940		940		-		965		60
Total real estate - mortgage		13,350		13,513		622		12,997		709
Consumer		3		5		-		6		-
Total impaired loans	$	45,589	$	51,427	$	8,152	$	45,686	$	2,006

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value
								(In Thousands)
Nine Months Ended September 30, 2017:
Outstanding at January 1, 2017		2,026,334		$	9.00		6.2	$	57,636
Granted		52,500			37.93		9.4		(35	)
Exercised		(359,000	)		4.97		4.2		11,590
Forfeited		(32,000	)		21.96		8.4		489
Outstanding at September 30, 2017		1,687,834			10.51		5.7	$	45,136

Exercisable at September 30, 2017		810,736		$	5.22		4.2	$	25,971

Nine Months Ended September 30, 2016:
Outstanding at January 1, 2016		2,498,834		$	6.66		6.3	$	42,743
Granted		234,000			19.98		9.5		1,398
Exercised		(656,500	)		4.25		4.2		14,254
Forfeited		(13,000	)		19.41		9.0		85
Outstanding at September 30, 2016		2,063,334			8.86		6.5	$	35,277

Exercisable at September 30, 2016		594,536		$	6.45		6.0	$	13,901

	Shares			Weighted Average Grant Date Fair Value

Nine Months Ended September 30, 2017:
Non-vested at January 1, 2017		118,676		$	8.88
Granted		7,000			38.02
Vested		(4,200	)		15.74
Forfeited		(800	)		15.74
Non-vested at September 30, 2017		120,676			10.29

Nine Months Ended September 30, 2016:
Non-vested at January 1, 2016		294,176		$	6.44
Granted		9,000			19.58
Vested		(178,500	)		5.59
Forfeited		-			-
Non-vested at September 30, 2016		124,676			8.66

September 30, 2017	Amount		Percentage of loans in each category to total loans
	(In Thousands)
Commercial, financial and agricultural	$	31,701		39.51	%
Real estate - construction		5,331		8.31	%
Real estate - mortgage		20,966		51.15	%
Consumer		461		1.03	%
Total	$	58,459		100.00	%