UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K/A

Amendment No. 1

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

For the fiscal year ended December 31, 2019, or

☐ 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

001-13901

AMERIS BANCORP

(Exact name of registrant as specified in its charter)

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

3490 Piedmont Road N.E., Suite 1550, Atlanta, Georgia 30305

(Address of principal executive offices)

(404) 639-6500

(Registrant’s telephone number)

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

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

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ☒    No  ☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities Exchange Act.    Yes  ☐    No  ☒

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

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

Large accelerated filer	☒	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 Securities Exchange Act).    Yes  ☐    No  ☒

As of the last business day of the registrant’s most recently completed second fiscal quarter, the aggregate market value of the voting and non-voting common equity held by nonaffiliates of the registrant was approximately $1.82 billion.

As of February 29, 2020, the registrant had outstanding 69,336,749 shares of common stock, $1.00 par value per share.

DOCUMENTS INCORPORATED BY REFERENCE

None

Explanatory Note

This Form 10-K/A amends Ameris Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2019 (the "Original Filing"), as filed with the Securities and Exchange Commission on March 9, 2020 (the "Original Filing Date").

We are filing this Form 10-K/A to amend the report of Crowe LLP ("Crowe") relating to the effectiveness of our internal control over financial reporting included in Item 15 of the Original Filing (the "Audit Report") to include certain omitted language on the exclusion of Fidelity Southern Corporation from the scope of Crowe's audit of internal control over financial reporting. This amendment to the Audit Report does not affect Crowe's unqualified opinion on our consolidated financial statements or Crowe's adverse opinion on the effectiveness of our internal control over financial reporting as of December 31, 2019.

In addition to amending the Audit Report as described above, Part IV, Item 15 of the Form 10-K/A includes: (1) a new consent of Crowe as Exhibit 23.1 thereto; and (2) new certifications of our chief executive officer and chief financial officer as Exhibits 31.1, 31.2, 32.1 and 32.2 thereto.

No other changes were made to the Original Filing. This Form 10-K/A speaks as of the Original Filing Date, does not reflect events that may have occurred subsequent to the Original Filing Date and, except as described above, does not modify or update in any way disclosures made in the Original Filing.

AMERIS BANCORP

TABLE OF CONTENTS

		Page
PART IV
Item 15.	Exhibits, Financial Statement Schedules	3

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PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

1. Financial statements:

(a)Ameris Bancorp and Subsidiaries:

(i)Consolidated Balance Sheets – December 31, 2019 and 2018;

(ii)Consolidated Statements of Income – Years ended December 31, 2019, 2018 and 2017;

(iii)Consolidated Statements of Comprehensive Income – Years ended December 31, 2019, 2018 and 2017;

(iv)Consolidated Statements of Shareholders' Equity – Years ended December 31, 2019, 2018 and 2017;

(v)Consolidated Statements of Cash Flows – Years ended December 31, 2019, 2018 and 2017; and

(vi)Notes to Consolidated Financial Statements.

(b)Ameris Bancorp (parent company only):

Parent company only financial information has been included in Note 24 of the Notes to Consolidated Financial Statements.

2. Financial statement schedules:

All schedules are omitted as the required information is inapplicable or the information is presented in the financial statements or related notes.

3. A list of the Exhibits required by Item 601 of Regulation S-K to be filed as a part of this Annual Report is shown on the “Exhibit Index” filed herewith.

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EXHIBIT INDEX

Exhibit No.	Description
2.1	Agreement and Plan of Merger dated as of November 16, 2017 by and between Ameris Bancorp and Atlantic Coast Financial Corporation (incorporated by reference to Exhibit 2.1 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on November 17, 2017).
2.2	Stock Purchase Agreement dated as of December 29, 2017 by and between Ameris Bancorp and William J. Villari (incorporated by reference to Exhibit 2.1 to Ameris Bancorp’s Registration Statement on Form S-3 (Registration No. 333-223080) filed with the SEC on February 16, 2018).
2.3	Agreement and Plan of Merger dated as of January 25, 2018 by and between Ameris Bancorp and Hamilton State Bancshares, Inc. (incorporated by reference to Exhibit 2.1 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on January 26, 2018).
2.4	Stock Purchase Agreement dated as of January 25, 2018 by and among Ameris Bancorp, Ameris Bank, William J. Villari and The Villari Family Gift Trust (incorporated by reference to Exhibit 2.2 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on January 26, 2018).
2.5	Agreement and Plan of Merger dated as of December 17, 2018 by and between Ameris Bancorp and Fidelity Southern Corporation (incorporated by reference to Exhibit 2.1 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on December 17, 2018).
3.1	Articles of Incorporation of Ameris Bancorp, as amended (incorporated by reference to Exhibit 2.1 to Ameris Bancorp’s Regulation A Offering Statement on Form 1-A filed with the SEC on August 14, 1987).
3.2	Articles of Amendment to the Articles of Incorporation of Ameris Bancorp (incorporated by reference to Exhibit 3.7 to Ameris Bancorp’s Annual Report on Form 10-K filed with the SEC on March 26, 1999).
3.3	Articles of Amendment to the Articles of Incorporation of Ameris Bancorp (incorporated by reference to Exhibit 3.9 to Ameris Bancorp’s Annual Report on Form 10-K filed with the SEC on March 31, 2003).
3.4	Articles of Amendment to the Articles of Incorporation of Ameris Bancorp (incorporated by reference to Exhibit 3.1 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on December 1, 2005).
3.5	Articles of Amendment to the Articles of Incorporation of Ameris Bancorp (incorporated by reference to Exhibit 3.1 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on November 21, 2008).
3.6	Articles of Amendment to the Articles of Incorporation of Ameris Bancorp (incorporated by reference to Exhibit 3.1 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on June 1, 2011).
3.7	Bylaws of Ameris Bancorp, as amended and restated through July 1, 2019 (incorporated by reference to Exhibit 3.1 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on July 1, 2019).
4.1	Indenture between Ameris Bancorp and Wilmington Trust Company dated September 20, 2006 (incorporated by reference to Exhibit 4.4 to Ameris Bancorp’s Registration Statement on Form S-4 (Registration No. 333-138252) filed with the SEC on October 27, 2006).
4.2	Floating Rate Junior Subordinated Deferrable Interest Debenture dated September 20, 2006 to Ameris Statutory Trust I (incorporated by reference to Exhibit 4.7 to Ameris Bancorp’s Registration Statement on Form S-4 (Registration No. 333-138252) filed with the SEC on October 27, 2006).
4.3	Indenture between Ameris Bancorp (as successor to The Prosperity Banking Company) and U.S. Bank National Association dated as of March 26, 2003 (incorporated by reference to Exhibit 4.3 to Ameris Bancorp’s Annual Report on Form 10-K filed with the SEC on March 14, 2014).
4.4	First Supplemental Indenture dated as of December 23, 2013 by and among Ameris Bancorp, The Prosperity Banking Company and U.S. Bank National Association (incorporated by reference to Exhibit 4.4 to Ameris Bancorp’s Annual Report on Form 10-K filed with the SEC on March 14, 2014).

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4.5	Form of Floating Rate Junior Subordinated Deferrable Interest Debenture Due 2033 (included as Exhibit A to the Indenture filed as Exhibit 4.3 to Ameris Bancorp’s Annual Report on Form 10-K filed with the SEC on March 14, 2014).
4.6	Indenture between Ameris Bancorp (as successor to The Prosperity Banking Company) and Deutsche Bank Trust Company Americas dated as of June 24, 2004 (incorporated by reference to Exhibit 4.6 to Ameris Bancorp’s Annual Report on Form 10-K filed with the SEC on March 14, 2014).
4.7	First Supplemental Indenture dated as of December 23, 2013 by and among Ameris Bancorp, The Prosperity Banking Company and Deutsche Bank Trust Company Americas (incorporated by reference to Exhibit 4.7 to Ameris Bancorp’s Annual Report on Form 10-K filed with the SEC on March 14, 2014).
4.8	Form of Floating Rate Junior Subordinated Deferrable Interest Note Due 2034 (incorporated by reference to Exhibit 4.8 to Ameris Bancorp’s Annual Report on Form 10-K filed with the SEC on March 14, 2014).
4.9	Indenture between Ameris Bancorp (as successor to The Prosperity Banking Company) and Wilmington Trust Company dated as of January 31, 2006 (incorporated by reference to Exhibit 4.9 to Ameris Bancorp’s Annual Report on Form 10-K filed with the SEC on March 14, 2014).
4.10	First Supplemental Indenture dated as of December 23, 2013 by and among Ameris Bancorp, The Prosperity Banking Company and Wilmington Trust Company (pertaining to Indenture dated as of January 31, 2006) (incorporated by reference to Exhibit 4.10 to Ameris Bancorp’s Annual Report on Form 10-K filed with the SEC on March 14, 2014).
4.11	Form of Floating Rate Junior Subordinated Deferrable Interest Debenture Due 2036 (included as Exhibit A to the Indenture filed as Exhibit 4.9 to Ameris Bancorp’s Annual Report on Form 10-K filed with the SEC on March 14, 2014).
4.12	Indenture between Ameris Bancorp (as successor to The Prosperity Banking Company) and Wilmington Trust Company dated as of September 20, 2007 (incorporated by reference to Exhibit 4.18 to Ameris Bancorp’s Annual Report on Form 10-K filed with the SEC on March 14, 2014).
4.13	First Supplemental Indenture dated as of December 23, 2013 by and among Ameris Bancorp, The Prosperity Banking Company and Wilmington Trust Company (pertaining to Indenture dated as of September 20, 2007) (incorporated by reference to Exhibit 4.19 to Ameris Bancorp’s Annual Report on Form 10-K filed with the SEC on March 14, 2014).
4.14	Form of Fixed/Floating Rate Junior Subordinated Deferrable Interest Debenture Due 2037 (included as Exhibit A to the Indenture filed as Exhibit 4.18 to Ameris Bancorp’s Annual Report on Form 10-K filed with the SEC on March 14, 2014).
4.15	Indenture between Ameris Bancorp (as successor to Coastal Bankshares, Inc.) and Wells Fargo Bank, National Association dated as of August 27, 2003 (incorporated by reference to Exhibit 4.1 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on July 1, 2014).
4.16	First Supplemental Indenture dated as of June 30, 2014 by and among Ameris Bancorp and Wells Fargo Bank, National Association (pertaining to Indenture dated as of August 27, 2003) (incorporated by reference to Exhibit 4.2 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on July 1, 2014).
4.17	Form of Junior Subordinated Debt Security Due 2033 (included as Exhibit A to the Indenture filed as Exhibit 4.1 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on July 1, 2014).
4.18	Indenture between Ameris Bancorp (as successor to Coastal Bankshares, Inc.) and U.S. Bank National Association dated as of December 14, 2005 (incorporated by reference to Exhibit 4.4 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on July 1, 2014).
4.19	First Supplemental Indenture dated as of June 30, 2014 by and among Ameris Bancorp, Coastal Bankshares, Inc. and U.S. Bank National Association (pertaining to Indenture dated as of December 14, 2005) (incorporated by reference to Exhibit 4.5 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on July 1, 2014).

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4.20	Form of Junior Subordinated Debt Security Due 2035 (included as Exhibit A to the Indenture filed as Exhibit 4.4 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on July 1, 2014).
4.21	Indenture between Ameris Bancorp (as successor to Merchants & Southern Banks of Florida, Incorporated) and Wilmington Trust Company dated as of March 17, 2005 (incorporated by reference to Exhibit 4.1 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on May 27, 2015).
4.22	First Supplemental Indenture dated as of May 22, 2015 by and among Ameris Bancorp, Merchants & Southern Banks of Florida, Incorporated and Wilmington Trust Company (pertaining to Indenture dated as of March 17, 2005) (incorporated by reference to Exhibit 4.2 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on May 27, 2015).
4.23	Form of Floating Rate Junior Subordinated Deferrable Interest Debenture Due 2035 (included as Exhibit A to the Indenture filed as Exhibit 4.1 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on May 27, 2015).
4.24	Indenture between Ameris Bancorp (as successor to Merchants & Southern Banks of Florida, Incorporated) and Wilmington Trust Company dated as of March 30, 2006 (incorporated by reference to Exhibit 4.4 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on May 27, 2015).
4.25	First Supplemental Indenture dated as of May 22, 2015 by and among Ameris Bancorp, Merchants & Southern Banks of Florida, Incorporated and Wilmington Trust Company (pertaining to Indenture dated as of March 30, 2006) (incorporated by reference to Exhibit 4.5 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on May 27, 2015).
4.26	Form of Floating Rate Junior Subordinated Deferrable Interest Debenture Due 2036 (included as Exhibit A to the Indenture filed as Exhibit 4.4 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on May 27, 2015).
4.27	Indenture between Ameris Bancorp (as successor to Jacksonville Bancorp, Inc.) and Wilmington Trust Company dated as of June 17, 2004 (incorporated by reference to Exhibit 4.1 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on March 14, 2016).
4.28	First Supplemental Indenture dated as of March 11, 2016 by and among Ameris Bancorp, Jacksonville Bancorp, Inc. and Wilmington Trust Company (incorporated by reference to Exhibit 4.2 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on March 14, 2016).
4.29	Form of Floating Rate Junior Subordinated Deferrable Interest Debenture Due 2034 (included as Exhibit A to the Indenture filed as Exhibit 4.1 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on March 14, 2016).
4.30	Indenture between Ameris Bancorp (as successor to Jacksonville Bancorp, Inc.) and Wilmington Trust Company dated as of September 15, 2005 (incorporated by reference to Exhibit 4.4 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on March 14, 2016).
4.31	Second Supplemental Indenture dated as of March 11, 2016 by and among Ameris Bancorp, Jacksonville Bancorp, Inc. and Wilmington Trust (incorporated by reference to Exhibit 4.5 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on March 14, 2016).
4.32	Form of Fixed/Floating Rate Junior Subordinated Deferrable Interest Debenture Due 2035 (included as Exhibit A to the Indenture filed as Exhibit 4.4 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on March 14, 2016).
4.33	Indenture between Ameris Bancorp (as successor to Jacksonville Bancorp, Inc.) and Wilmington Trust Company dated as of December 14, 2006 (incorporated by reference to Exhibit 4.7 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on March 14, 2016).
4.34	First Supplemental Indenture dated as of March 11, 2016 by and among Ameris Bancorp, Jacksonville Bancorp, Inc. and Wilmington Trust Company (incorporated by reference to Exhibit 4.8 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on March 14, 2016).

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4.35	Form of Floating Rate Junior Subordinated Deferrable Interest Debenture Due 2036 (included as Exhibit A to the Indenture filed as Exhibit 4.7 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on March 14, 2016).
4.36	Indenture between Ameris Bancorp (as successor to Jacksonville Bancorp, Inc.) and Wells Fargo Bank, National Association dated as of June 20, 2008 (incorporated by reference to Exhibit 4.10 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on March 14, 2016).
4.37	First Supplemental Indenture dated as of March 11, 2016 by and between Ameris Bancorp and Wells Fargo Bank, National Association (incorporated by reference to Exhibit 4.11 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on March 14, 2016).
4.38	Form of Junior Subordinated Debt Security Due 2038 (included as Exhibit A to the Indenture filed as Exhibit 4.10 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on March 14, 2016).
4.39	Subordinated Debt Indenture dated as of March 13, 2017 by and between Ameris Bancorp and Wilmington Trust, National Association (incorporated by reference to Exhibit 4.1 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on March 13, 2017).
4.40	First Supplemental Indenture, dated as of March 13, 2017, by and between Ameris Bancorp and Wilmington Trust, National Association (incorporated by reference to Exhibit 4.2 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on March 13, 2017).
4.41	Form of 5.75% Fixed-to-Floating Rate Subordinated Note due 2027 (included as Exhibit A to the First Supplemental Indenture filed as Exhibit 4.2 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on March 13, 2017).
4.42	Indenture dated as of November 10, 2005 by and between Ameris Bancorp (as successor to Hamilton State Bancshares, Inc.) and Wilmington Trust Company (incorporated by reference to Exhibit 4.1 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on July 2, 2018).
4.43	Second Supplemental Indenture dated as of June 29, 2018 by and among Ameris Bancorp, Hamilton State Bancshares, Inc. and Wilmington Trust Company (incorporated by reference to Exhibit 4.2 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on July 2, 2018).
4.44	Form of Fixed/Floating Rate Junior Subordinated Deferrable Interest Debenture (included as Exhibit A to the Indenture filed as Exhibit 4.1 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on July 2, 2018).
4.45	Indenture between Ameris Bancorp (as successor to Fidelity Southern Corporation) and U.S. Bank National Association, dated as of June 26, 2003 (incorporated by reference to Exhibit 4.1 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on July 1, 2019).
4.46	First Supplemental Indenture, among Ameris Bancorp, Fidelity Southern Corporation and U.S. Bank National Association, dated as of July 1, 2019 (incorporated by reference to Exhibit 4.2 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on July 1, 2019).
4.47	Form of Floating Rate Junior Subordinated Deferrable Interest Debentures due 2033 (incorporated by reference to Exhibit 4.3 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on July 1, 2019).
4.48	Indenture between Ameris Bancorp (as successor to Fidelity Southern Corporation) and Wilmington Trust Company, dated as of March 17, 2005 (incorporated by reference to Exhibit 4.4 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on July 1, 2019).
4.49	First Supplemental Indenture, among Ameris Bancorp, Fidelity Southern Corporation and Wilmington Trust Company, dated as of July 1, 2019 (incorporated by reference to Exhibit 4.5 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on July 1, 2019).

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4.50	Form of Floating Rate Junior Subordinated Deferrable Interest Debentures due 2035 (incorporated by reference to Exhibit 4.6 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on July 1, 2019).
4.51	Indenture between Ameris Bancorp (as successor to Fidelity Southern Corporation) and Wilmington Trust Company, dated as of August 20, 2007 (incorporated by reference to Exhibit 4.7 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on July 1, 2019).
4.52	First Supplemental Indenture, among Ameris Bancorp, Fidelity Southern Corporation and Wilmington Trust Company, dated as of July 1, 2019 (incorporated by reference to Exhibit 4.8 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on July 1, 2019).
4.53	Form of Fixed/Floating Rate Junior Subordinated Deferrable Interest Debentures due 2037 (incorporated by reference to Exhibit 4.9 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on July 1, 2019).
4.54	Second Supplemental Indenture, dated as of December 6, 2019, by and between Ameris Bancorp and Wilmington Trust, National Association, as trustee (incorporated by reference to Exhibit 4.2 to Ameris Bancorp's Current Report on Form 8-K filed with the SEC on December 6, 2019).
4.55	Form of 4.25% Fixed-to-Floating Subordinated Notes due 2029 (incorporated by reference to Exhibit 4.3 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on December 6, 2019).
4.56#	Form of Global Note representing Fixed/Floating Rate Subordinated Notes due 2030
4.57#	Description of the Registrant's Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934
10.1*	Supplemental Executive Retirement Agreement with Edwin W. Hortman, Jr., dated as of November 7, 2012 (incorporated by reference to Exhibit 10.1 to Ameris Bancorp’s Form 10-Q filed with the SEC on November 9, 2012).
10.2*	Supplemental Executive Retirement Agreement with Jon S. Edwards, dated as of November 7, 2012 (incorporated by reference to Exhibit 10.3 to Ameris Bancorp’s Form 10-Q filed with the SEC on November 9, 2012).
10.3*	Supplemental Executive Retirement Agreement with Cindi H. Lewis, dated as of November 7, 2012 (incorporated by reference to Exhibit 10.4 to Ameris Bancorp’s Form 10-Q filed with the SEC on November 9, 2012).
10.4*	Supplemental Executive Retirement Agreement with Nicole S. Stokes, dated as of November 7, 2012 (incorporated by reference to Exhibit 10.13 to Ameris Bancorp’s Annual Report on Form 10-K filed with the SEC on March 1, 2018).
10.5*	Ameris Bancorp 2014 Omnibus Equity Compensation Plan (incorporated by reference to Appendix A to Ameris Bancorp’s Definitive Proxy Statement filed with the SEC on April 17, 2014).
10.6*	Form of Incentive Stock Option Grant Agreement (incorporated by reference to Exhibit 99.2 to Ameris Bancorp’s Registration Statement on Form S-8 filed with the SEC on November 26, 2014).
10.7*	Form of Nonqualified Stock Option Grant Agreement (incorporated by reference to Exhibit 99.3 to Ameris Bancorp’s Registration Statement on Form S-8 filed with the SEC on November 26, 2014).
10.8*	Form of Restricted Stock Grant Agreement (incorporated by reference to Exhibit 99.4 to Ameris Bancorp’s Registration Statement on Form S-8 filed with the SEC on November 26, 2014).
10.9*	Supplemental Executive Retirement Agreement by and between Ameris Bank and Edwin W. Hortman, Jr. dated as of November 7, 2016 (incorporated by reference to Exhibit 10.1 to Ameris Bancorp’s Form 10-Q filed with the SEC on November 9, 2016).

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10.10*	First Amendment to Supplemental Executive Retirement Agreement by and between Ameris Bank and Cindi H. Lewis dated as of November 7, 2016 (incorporated by reference to Exhibit 10.2 to Ameris Bancorp’s Form 10-Q filed with the SEC on November 9, 2016).
10.11*	Retirement Agreement dated June 6, 2018 by and among Ameris Bancorp, Ameris Bank and Edwin W. Hortman, Jr. (incorporated by reference to Exhibit 10.1 to Ameris Bancorp’s Current Report on Form 8-K filed with the SEC on June 6, 2018).
10.12*	Form of Severance Protection and Restrictive Covenants Agreement for executive officers (incorporated by reference to Exhibit 10.1 to Ameris Bancorp's Form 10-Q filed with the SEC on May 10, 2019).
10.13*	Employment Agreement by and among Ameris Bancorp, Ameris Bank and James B. Miller, Jr. dated as of December 17, 2018 (incorporated by reference to Exhibit 10.1 to Ameris Bancorp's Form 10-Q filed with the SEC on August 9, 2019).
10.14*	Employment Agreement by and among Ameris Bancorp, Ameris Bank and H. Palmer Proctor, Jr. dated as of December 17, 2018 (incorporated by reference to Exhibit 10.2 to Ameris Bancorp's Form 10-Q filed with the SEC on August 9, 2019).
10.15*	Amendment to Employment Agreement by and among Ameris Bancorp, Ameris Bank and H. Palmer Proctor, Jr. dated as of June 30, 2019 (incorporated by reference to Exhibit 10.3 to Ameris Bancorp's Form 10-Q filed with the SEC on August 9, 2019).
10.16* #	Supplemental Executive Retirement Agreement with Lawton E. Bassett, III, dated as of November 7, 2012.
10.17* #	Form of Performance Stock Unit Grant Agreement.
21.1#	Schedule of Subsidiaries of Ameris Bancorp.
23.1**	Consent of Crowe LLP.
31.1**	Rule 13a-14(a)/15d-14(a) Certification by Chief Executive Officer.
31.2**	Rule 13a-14(a)/15d-14(a) Certification by Chief Financial Officer.
32.1**	Section 1350 Certification by Chief Executive Officer.
32.2**	Section 1350 Certification by Chief Financial Officer.
101.INS**	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**	Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB**	Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE**	Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104**	Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

* Management contract or a compensatory plan or arrangement.

** Filed herewith.

# Previously filed as an exhibit to the Original Filing.

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INDEX TO FINANCIAL STATEMENTS AND SCHEDULES

	Page
Report of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets – December 31, 2019 and 2018	F-5
Consolidated Statements of Income – Years ended December 31, 2019, 2018 and 2017	F-6
Consolidated Statements of Comprehensive Income – Years ended December 31, 2019, 2018 and 2017	F-7
Consolidated Statements of Shareholders’ Equity – Years ended December 31, 2019, 2018 and 2017	F-8
Consolidated Statements of Cash Flows – Years ended December 31, 2019, 2018 and 2017	F-10
Notes to Consolidated Financial Statements	F-12

F-1

         Crowe LLP

Independent Member Crowe Global

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders

Ameris Bancorp

Atlanta, Georgia

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Ameris Bancorp and Subsidiaries (the "Company") as of December 31, 2019 and 2018, the related consolidated statements of income, comprehensive income, shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2019, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2019 in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control – Integrated Framework: (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and our report dated March 9, 2020 expressed an adverse opinion.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or on the account or disclosures to which they relate.

Allowance for Loan Losses – Qualitative Factors

As described in Note 1 - Summary of Significant Accounting Policies and Note 4 – Loans and Allowance for Loan Losses to the consolidated financial statements, the Company estimates and records an allowance for loan losses that management believes will be adequate to absorb estimated losses relating to specifically identified loans, as well as probable incurred losses in the balance of the loan portfolio. For loans that are not specifically identified for impairment, management determines the allowance for loan losses based on historical loss experience adjusted for qualitative factors, such as the growth and mix of the loan portfolio, current loan quality trends, current economic conditions, commodity prices for agriculture products, and other factors in the markets where the Company operates. The Company’s qualitative factors currently utilized in determining the allowance for loan losses are higher compared with prior periods, and now represent a significant portion of the allowance for loan loss estimate. Management exercised significant judgment when assessing these qualitative factors in estimating the allowance for loan losses, which in turn required significant auditor judgment to audit these adjustments. We identified the qualitative factor component of the allowance for loan losses as a critical audit matter as auditing this component of the allowance for loan losses involved especially complex and subjective auditor judgment. The principal consideration for our determination of this matter as a critical audit matter is that the Company’s historical loss experience is minimal and management’s adjustments for qualitative factors depend significantly on management’s professional judgment.

F-2

The primary audit procedures we performed to address this critical audit matter included the following:

•Tested the operating effectiveness of controls over the Company’s allowance for loan losses, including controls over the completeness and accuracy of data utilized in assessing the qualitative factors, reasonableness of assumptions and judgement applied including directional consistency in application, and mathematical accuracy of the calculation.

•Evaluated management’s judgments and assumptions used in the development of the qualitative adjustments for reasonableness, and the reliability of the underlying data on which these adjustments are based.

•Evaluated the relevance of management’s judgements, assumptions, and data used in the development of the qualitative factor adjustments made by management.

•Performed data validation of inputs and tested mathematical accuracy of management’s calculation.

•Performed substantive analytical procedures on the year-end allowance balance and year-to-date provision expense.

Business Combinations – Fair Value of Acquired Loans

As described in Note 2 – Business Combinations to the consolidated financial statements, on July 1, 2019 the Company completed its acquisition of Fidelity Southern Corporation (“Fidelity”) for total consideration of $869.3 million. Determination of the acquisition date fair values of the assets acquired and liabilities assumed requires management to make significant estimates and assumptions. As disclosed by management, the fair value of a loan portfolio acquired in a business combination requires greater levels of management estimates and judgment than the remainder of purchased assets or assumed liabilities. In determining the fair value of loans acquired, management must determine whether or not acquired loans have evidence of credit deterioration at acquisition, the amount and timing of cash flows expected to be collected, and market discount rates, among other assumptions. Changes in these assumptions could have a significant impact on the fair value of the loans acquired and the amount of goodwill recorded.

We identified the acquisition date fair value of acquired loans as a critical audit matter as auditing this estimate is especially complex and requires subjective auditor judgment. The principal considerations for our determination that this is a critical audit matter is the level of judgement involved in evaluating management’s identification of loans with evidence of credit deterioration, the need for specialized skill in development and application of subjective assumptions in estimated cash flows, and the size of the acquired loan portfolio.

We performed the following procedures in connection with forming our overall opinion on the financial statements.

•Tested the operating effectiveness of controls over the Company’s identification of loans with credit deterioration at acquisition date and valuation of these loans, selection of the third-party valuation specialist and review of work performed including application of subjective assumptions in estimating cash flows, and completeness and accuracy of the data utilized in the fair value determination by the third-party specialist.

•Evaluated the significant assumptions and methods utilized in developing the fair value of the loan portfolio, including review of significant assumptions, and evaluating whether the assumptions used were reasonable considering past acquisitions and current market participant views and other factors.

•Utilized a valuation specialist to assist in testing the Company’s calculation of fair value of the loan portfolio acquired and certain significant assumptions, including among other assumptions, prepayment speeds and discount rates.

•Tested the completeness and accuracy of loans determined to have credit deterioration at acquisition and evaluated the reasonableness of the criteria utilized by management in the determination.

•Tested the accuracy of the data utilized in the acquisition date fair value by confirming, on a sample basis, select data.

/s/ Crowe LLP

We have served as the Company's auditor since 2014.

Atlanta, Georgia

March 9, 2020

F-3

         Crowe LLP

Independent Member Crowe Global

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders

Ameris Bancorp

Atlanta, Georgia

Opinion on Internal Control over Financial Reporting

We have audited Ameris Bancorp and Subsidiaries' (the “Company”) internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control – Integrated Framework: (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, because of the effects of the material weakness discussed in the following paragraph, the Company has not maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control – Integrated Framework: (2013) issued by COSO.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis. The following material weakness has been identified and included in Management's Report on Internal Control Over Financial Reporting. Subsequent to the conversion of Fidelity’s core system to Ameris’s core system on November 3, 2019, certain balance sheet account reconciliations were being prepared, but reconciling items were not being researched and cleared in a timely manner.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets of the Company as of December 31, 2019 and 2018, the related consolidated statements of income, comprehensive income, shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2019, and the related notes (collectively referred to as the "financial statements") and our report dated March 9, 2020 expressed an unqualified opinion. We considered the material weakness identified above in determining the nature, timing, and extent of audit procedures applied in our audit of the 2019 financial statements, and this report on Internal Control over Financial Reporting does not affect such report on the financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. As permitted, the Company has excluded the operations of Fidelity Southern Corporation acquired during 2019, from the scope of management's report on internal control over financial reporting. As such, it has also been excluded from the scope of our audit of internal control over financial reporting. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Crowe LLP

Atlanta, Georgia

March 9, 2020

F-4

AMERIS BANCORP AND SUBSIDIARIES

Consolidated Balance Sheets

December 31, 2019 and 2018

(dollars in thousands, except per share data)

	2019		2018
Assets
Cash and due from banks	$	246,234	$	172,036
Interest-bearing deposits in banks	351,202		472,443
Federal funds sold	24,413		35,048
Cash and cash equivalents	621,849		679,527
Time deposits in other banks	249		10,812
Investment securities available for sale, at fair value	1,403,403		1,192,423
Other investments	66,919		14,455
Loans held for sale, at fair value	1,656,711		111,298
Loans	7,529,987		5,660,457
Purchased loans	5,075,281		2,588,832
Purchased loan pools	213,208		262,625
Loans, net of unearned income	12,818,476		8,511,914
Allowance for loan losses	(38,189)		(28,819)
Loans, net	12,780,287		8,483,095
Other real estate owned, net	4,500		7,218
Purchased other real estate owned, net	15,000		9,535
Total other real estate owned, net	19,500		16,753
Premises and equipment, net	233,102		145,410
Goodwill	931,637		503,434
Other intangible assets, net	91,586		58,689
Cash value of bank owned life insurance	175,270		104,096
Deferred income taxes, net	2,180		35,126
Other assets	259,886		88,397
Total assets	$	18,242,579	$	11,443,515
Liabilities
Deposits
Noninterest-bearing	$	4,199,448	$	2,520,016
Interest-bearing	9,827,625		7,129,297
Total deposits	14,027,073		9,649,313
Securities sold under agreements to repurchase	20,635		20,384
Other borrowings	1,398,709		151,774
Subordinated deferrable interest debentures, net	127,560		89,187
FDIC loss-share payable, net	19,642		19,487
Other liabilities	179,378		57,023
Total liabilities	15,772,997		9,987,168
Commitments and Contingencies (Note 21)
Shareholders’ Equity
Preferred stock, stated value $1,000; 5,000,000 shares authorized; 0 shares issued and outstanding	—		—
Common stock, par value $1; 100,000,000 shares authorized; 71,499,829 and 49,014,925 shares issued	71,500		49,015
Capital surplus	1,907,108		1,051,584
Retained earnings	507,950		377,135
Accumulated other comprehensive income (loss), net of tax	17,995		(4,826)
Treasury stock, at cost, 1,995,996 and 1,514,984 shares	(34,971)		(16,561)
Total shareholders’ equity	2,469,582		1,456,347
Total liabilities and shareholders’ equity	$	18,242,579	$	11,443,515

See notes to consolidated financial statements.

F-5

AMERIS BANCORP AND SUBSIDIARIES

Consolidated Statements of Income

Years Ended December 31, 2019, 2018 and 2017

(dollars in thousands, except per share data)

	2019		2018		2017
Interest income
Interest and fees on loans	$	586,848	$	378,209	$	270,887
Interest on taxable securities	40,138		29,006		20,154
Interest on nontaxable securities	593		900		1,581
Interest on deposits in other banks	8,139		4,984		1,725
Interest on federal funds sold	676		227		—
Total interest income	636,394		413,326		294,347
Interest expense
Interest on deposits	102,533		49,054		19,877
Interest on other borrowings	28,695		20,880		14,345
Total interest expense	131,228		69,934		34,222
Net interest income	505,166		343,392		260,125
Provision for loan losses	19,758		16,667		8,364
Net interest income after provision for loan losses	485,408		326,725		251,761
Noninterest income
Service charges on deposit accounts	50,792		46,128		42,054
Mortgage banking activity	119,409		53,654		48,535
Other service charges, commissions and fees	3,913		3,059		2,883
Net gain (loss) on securities	138		(37)		37
Gain on sale of SBA loans	6,058		2,728		4,590
Other noninterest income	17,803		12,880		6,358
Total noninterest income	198,113		118,412		104,457
Noninterest expense
Salaries and employee benefits	223,938		149,132		119,783
Occupancy and equipment	40,596		29,131		24,069
Advertising and marketing	7,927		5,571		5,131
Amortization of intangible assets	17,713		9,512		3,932
Data processing and communications expenses	38,513		30,385		27,869
Legal and other professional fees	10,634		6,386		15,355
Credit resolution-related expenses	4,082		4,016		3,493
Merger and conversion charges	73,105		20,499		915
FDIC insurance	1,945		3,408		3,078
Other noninterest expenses	53,484		35,607		28,311
Total noninterest expense	471,937		293,647		231,936
Income before income tax expense	211,584		151,490		124,282
Income tax expense	50,143		30,463		50,734
Net income	$	161,441	$	121,027	$	73,548
Basic earnings per common share	$	2.76	$	2.81	$	2.00
Diluted earnings per common share	$	2.75	$	2.80	$	1.98
Weighted average common shares outstanding
Basic	58,462		43,142		36,828
Diluted	58,614		43,248		37,144

See notes to consolidated financial statements.

F-6

AMERIS BANCORP AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

Years Ended December 31, 2019, 2018 and 2017

(dollars in thousands)

	2019		2018		2017
Net income	$	161,441	$	121,027	$	73,548
Other comprehensive income (loss)
Net unrealized holding gains (losses) arising during period on investment securities available for sale, net of tax expense (benefit) of $6,211, ($849) and ($169)	23,365		(3,196)		(314)
Reclassification adjustment for gains on investment securities included in earnings, net of tax of $12, $19 and $13	(46)		(70)		(24)
Net unrealized gains (losses) on cash flow hedge during the period, net of tax expense (benefit) of ($133), $30 and $63	(498)		112		116
Total other comprehensive income (loss)	22,821		(3,154)		(222)
Comprehensive income	$	184,262	$	117,873	$	73,326

See notes to consolidated financial statements.

F-7

AMERIS BANCORP AND SUBSIDIARIES
Consolidated Statements of Shareholders' Equity
Years Ended December 31, 2019, 2018 and 2017
(dollars in thousands, except per share data)
	Common Stock							Accumulated Other Comprehensive Income (Loss), Net of Tax		Treasury Stock
	Shares	Amount		Capital Surplus		Retained Earnings				Shares	Amount		Total Shareholders' Equity
Balance at beginning of period	36,377,807	$	36,378	$	410,276	$	214,454	$	(1,058)	1,456,333	$	(13,613)	$	646,437
Issuance of common stock, net of issuance costs of $4,925	2,141,072	2,141		92,359		—		—		—	—		94,500
Issuance of restricted shares	84,147	84		(84)		—		—		—	—		—
Forfeitures of restricted shares	(472)	—		—		—		—		—	—		—
Exercise of stock options	132,319	132		2,537		—		—		—	—		2,669
Share-based compensation	—	—		3,316		—		—		—	—		3,316
Purchase of treasury shares	—	—		—		—		—		18,528	(886)		(886)
Net income	—	—		—		73,548		—		—	—		73,548
Dividends on common shares ($0.40 per share)	—	—		—		(14,883)		—		—	—		(14,883)
Other comprehensive income (loss) during the period	—	—		—		—		(222)		—	—		(222)
Balance at December 31, 2017	38,734,873	$	38,735	$	508,404	$	273,119	$	(1,280)	1,474,861	$	(14,499)	$	804,479
Issuance of common stock	10,124,491	10,124		537,003		—		—		—	—		547,127
Issuance of restricted shares	89,855	90		(90)		—		—		—	—		—
Forfeitures of restricted shares	(10,580)	(10)		10		—		—		—	—		—
Exercise of stock options	76,286	76		838		—		—		—	—		914
Share-based compensation	—	—		5,419		—		—		—	—		5,419
Purchase of treasury shares	—	—		—		—		—		40,123	(2,062)		(2,062)
Net income	—	—		—		121,027		—		—	—		121,027
Dividends on common shares ($0.40 per share)	—	—		—		(17,431)		—		—	—		(17,431)
Cumulative effect of change in accounting for derivatives	—	—		—		28		—		—	—		28
Reclassification of stranded income tax effects	—	—		—		392		(392)		—	—		—
Other comprehensive income (loss) during the period	—			—		—		(3,154)		—	—		(3,154)
Balance at December 31, 2018	49,014,925	$	49,015	$	1,051,584	$	377,135	$	(4,826)	1,514,984	$	(16,561)	$	1,456,347

F-8

AMERIS BANCORP AND SUBSIDIARIES
Consolidated Statements of Shareholders' Equity
Years Ended December 31, 2019, 2018 and 2017
(dollars in thousands, except per share data)
	Common Stock							Accumulated Other Comprehensive Income (Loss), Net of Tax		Treasury Stock
	Shares	Amount		Capital Surplus		Retained Earnings				Shares	Amount		Total Shareholders' Equity
Balance at January 1, 2019	49,014,925	$	49,015	$	1,051,584	$	377,135	$	(4,826)	1,514,984	$	(16,561)	$	1,456,347
Issuance of common stock	22,181,522	22,182		847,112		—		—		—	—		869,294
Issuance of restricted shares	147,574	147		768		—		—		—	—		915
Forfeitures of restricted shares	(41,295)	(41)		(518)		—		—		—	—		(559)
Exercise of stock options	197,103	197		4,942		—		—		—	—		5,139
Share-based compensation	—	—		3,220		—		—		—	—		3,220
Purchase of treasury shares	—	—		—		—		—		481,012	(18,410)		(18,410)
Net income	—	—		—		161,441		—		—	—		161,441
Dividends on common shares ($0.50 per share)	—	—		—		(30,350)		—		—	—		(30,350)
Cumulative effect of change in accounting for leases	—	—		—		(276)		—		—	—		(276)
Other comprehensive income (loss) during the period	—	—		—		—		22,821		—	—		22,821
Balance at December 31, 2019	71,499,829	$	71,500	$	1,907,108	$	507,950	$	17,995	1,995,996	$	(34,971)	$	2,469,582

See notes to consolidated financial statements.

F-9

AMERIS BANCORP AND SUBSIDIARIES

Consolidated Statements of Cash Flows

Years Ended December 31, 2019, 2018 and 2017

(dollars in thousands)

	2019		2018		2017
Operating Activities
Net income	$	161,441	$	121,027	$	73,548
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation	13,120		10,014		9,196
Net losses (gains) on sale or disposal of premises and equipment	41		133		1,264
Net write-downs on other assets	6,210		—		—
Provision for loan losses	19,758		16,667		8,364
Net write-downs and losses on sale of other real estate owned	496		1,301		500
Share-based compensation expense	3,424		6,241		3,316
Amortization of intangible assets	17,713		9,512		3,932
Amortization of operating lease right of use assets	10,264		—		—
Provision for deferred taxes	22,821		1,374		12,430
Net amortization of investment securities available for sale	4,680		4,891		6,384
Net loss (gain) on securities	(138)		37		(37)
Accretion of discount on purchased loans	(20,255)		(11,918)		(11,308)
Amortization of premium on purchased loan pools	1,277		1,825		3,543
Net amortization (accretion) on other borrowings	80		96		95
Amortization of subordinated deferrable interest debentures	1,655		1,345		1,322
Originations of mortgage loans held for sale	(3,791,311)		(1,768,934)		(1,502,314)
Payments received on mortgage loans held for sale	17,445		986		1,238
Proceeds from sales of mortgage loans held for sale	2,620,290		1,542,755		1,370,008
Net gains on mortgage loans held for sale	(74,546)		(37,336)		(46,913)
Originations of SBA loans	(41,435)		(27,820)		(33,104)
Proceeds from sales of SBA loans	65,862		33,675		30,696
Net gains on sales of SBA loans	(6,058)		(2,728)		(4,590)
Increase in cash surrender value of bank owned life insurance	(2,692)		(1,819)		(1,588)
Gain on bank owned life insurance proceeds	(3,583)		—		—
Loss on sale of loans	1,233		—		—
Changes in FDIC loss-share receivable/payable, net of cash payments received	3,865		5,156		3,005
Increase in interest receivable	(15,392)		(10,965)		(3,728)
Increase (decrease) in interest payable	5,855		2,411		1,757
Increase (decrease) in taxes payable	(3,597)		4,032		(473)
Change attributable to other operating activities	41,266		(10,761)		10,895
Net cash used in operating activities	(940,211)		(108,803)		(62,562)
Investing Activities, net of effects of business combinations
Proceeds from maturities of time deposits in other banks	10,563		746		—
Purchases of securities available for sale	(219,352)		(290,649)		(113,261)
Proceeds from prepayments and maturities of securities available for sale	266,171		152,393		115,166
Proceeds from sale of securities available for sale	64,995		68,727		3,090
Net decrease (increase) in other investments	(44,935)		33,515		11,046
Net increase in loans, excluding purchased loans	(1,934,070)		(470,156)		(1,016,409)
Payments received on purchased loans	1,015,798		330,226		210,470
Purchase of acquired formerly serviced portfolio	(103,530)		—		—
Payments received on purchased loan pools	48,140		71,817		112,330
Purchases of premises and equipment	(11,581)		(10,009)		(3,760)
Proceeds from sale of premises and equipment	5,587		588		16
Proceeds from sales of other real estate owned	10,140		11,784		14,920
Payments received from (paid to) FDIC under loss-sharing agreements	(3,710)		(3,791)		(515)
Proceeds from bank owned life insurance	7,429		—		—
Proceeds from sales of loans	157,087		—		—
Net cash proceeds received from (paid in) acquisitions	244,181		51,495		—
Net cash used in investing activities	(487,087)		(53,314)		(666,907)

F-10

AMERIS BANCORP AND SUBSIDIARIES

Consolidated Statements of Cash Flows (Continued)

Years Ended December 31, 2019, 2018 and 2017

(dollars in thousands)

	2019		2018		2017
Financing Activities, net of effects of business combinations
Net increase in deposits	$	334,437	$	853,051	$	1,050,682
Net decrease in securities sold under agreements to repurchase	(22,094)		(10,254)		(22,867)
Proceeds from other borrowings	5,236,572		1,530,000		1,837,692
Repayment of other borrowings	(4,141,349)		(1,844,258)		(2,079,554)
Issuance of common stock	—		—		88,656
Proceeds from exercise of stock options	5,139		914		2,669
Dividends paid - common stock	(24,675)		(16,405)		(14,650)
Purchase of treasury shares	(18,410)		(2,062)		(886)
Net cash provided by financing activities	1,369,620		510,986		861,742
Net increase (decrease) in cash and cash equivalents	(57,678)		348,869		132,273
Cash and cash equivalents at beginning of period	679,527		330,658		198,385
Cash and cash equivalents at end of period	$	621,849	$	679,527	$	330,658
Supplemental Disclosures of Cash Flow Information
Cash paid during the year for:
Interest	$	125,373	$	67,523	$	32,465
Income taxes	$	35,865	$	20,026	$	38,939
Loans (excluding purchased loans) transferred to other real estate owned	$	1,094	$	4,124	$	4,372
Purchased loans transferred to other real estate owned	$	5,135	$	6,393	$	5,023
Loans transferred from loans held for sale to loans held for investment	$	—	$	10,817	$	212,850
Loans transferred from loans held for investment to loans held for sale	$	8,293	$	8,831	$	119,389
Loans provided for the sales of other real estate owned	$	144	$	931	$	1,334
Initial recognition of operating lease right-of-use assets	$	27,286	$	—	$	—
Initial recognition of operating lease liabilities	$	29,651	$	—	$	—
Right-of-use assets obtained in exchange for new operating lease liabilities	$	6,016	$	—	$	—
Assets acquired in business combinations	$	5,194,955	$	3,064,615	$	—
Liabilities assumed in business combinations	$	4,325,642	$	2,415,212	$	—
Issuance of common stock in acquisitions	$	869,294	$	547,127	$	—
Issuance of common stock in exchange for equity investment in US Premium Finance Holding Company	$	—	$	—	$	5,844
Change in unrealized gain (loss) on securities available for sale, net of tax	$	23,320	$	(3,266)	$	(338)
Change in unrealized gain on cash flow hedge, net of tax	$	(499)	$	112	$	116

See notes to consolidated financial statements

F-11

AMERIS BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

Ameris Bancorp and subsidiaries (the “Company” or “Ameris”) is a financial holding company headquartered in Atlanta, Georgia, and whose primary business is presently conducted by Ameris Bank, its wholly owned banking subsidiary (the “Bank”). Through the Bank, the Company operates a full service banking business and offers a broad range of retail and commercial banking services to its customers concentrated in select markets in Georgia, Alabama, Florida and South Carolina. The Bank also engages in mortgage banking activities and SBA lending, and, as such, originates, acquires, sells and services one-to-four family residential mortgage loans and SBA loans in the Southeast. The Bank has purchased residential mortgage loan pools collateralized by properties located outside our Southeast markets, specifically in California, Washington and Illinois. The Bank purchases consumer installment home improvement loans made to borrowers throughout the United States. The Bank also originates, administers and services commercial insurance premium loans made to borrowers throughout the United States. The Company and the Bank are subject to the regulations of certain federal and state agencies and are periodically examined by those regulatory agencies.

Basis of Presentation and Accounting Estimates

The consolidated financial statements include the accounts of the Company and its subsidiaries. Significant intercompany transactions and balances have been eliminated in consolidation.

In preparing the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Acquisition Accounting

Acquisitions are accounted for under the acquisition method of accounting. Purchased assets and assumed liabilities are recorded at their estimated fair values as of the purchase date. Any identifiable intangible assets are also recorded at fair value. When the consideration given is less than the fair value of the net assets received, the acquisition results in a “bargain purchase gain.” If the consideration given exceeds the fair value of the net assets received, goodwill is recognized. Fair values are subject to refinement for up to one year after the closing date of an acquisition as additional information regarding the closing date fair values becomes available.

All identifiable intangible assets that are acquired in a business combination are recognized at fair value on the acquisition date. Identifiable intangible assets are recognized separately if they arise from contractual or other legal rights or if they are separable (i.e., capable of being sold, transferred, licensed, rented, or exchanged separately from the entity).

Purchased loans acquired in a business combination are recorded at estimated fair value on their purchase date and carryover of the seller's related allowance for loan losses is prohibited. When the loans have evidence of credit deterioration since origination and it is probable at the date of acquisition that the Company will not collect all contractually required principal and interest payments, the difference between contractually required payments at acquisition and the cash flows expected to be collected at acquisition is referred to as the non-accretable difference. The Company must estimate expected cash flows at each reporting date. Subsequent decreases to the expected cash flows will generally result in a provision for loan losses. Subsequent increases in expected cash flows result in a reversal of the provision for loan losses to the extent of prior provisions and adjust accretable discount if no prior provisions have been made or have been fully reversed. This increase in accretable discount will have a positive impact on future interest income.

Transfer of financial assets

Transfers of financial assets are accounted for as sales, when control over the assets has been relinquished.  Control over transferred assets is deemed to be surrendered when the assets have been isolated from the Company, the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.

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Cash and Cash Equivalents

For purposes of reporting cash flows, cash and cash equivalents include cash on hand, cash items in process of collection, amounts due from banks, interest-bearing deposits in banks and federal funds sold. Net cash flows are reported for customer loan and deposit transactions, securities sold under agreements to repurchase and federal funds purchased.

The Bank is required to maintain reserve balances in cash or on deposit with the Federal Reserve Bank. The reserve requirement as of December 31, 2019 and 2018 was $109.7 million and $61.2 million, respectively, and was met by cash on hand and balances held at the Federal Reserve Bank which are reported on the Company's consolidated balance sheets in cash and due from banks and interest-bearing deposits in banks, respectively.

Investment Securities

The Company classifies its debt securities in one of three categories: (i) trading, (ii) held to maturity or (iii) available for sale. Trading securities are bought and held principally for the purpose of selling them in the near term. Held to maturity securities are those securities for which the Company has the ability and intent to hold until maturity. All other debt securities are classified as available for sale. At December 31, 2019 and 2018, all debt securities were classified as available for sale.

Trading securities are carried at fair value. Unrealized gains and losses on trading securities are recorded in earnings as a component of other noninterest income. Held to maturity securities are recorded initially at cost and subsequently adjusted for paydowns and amortization of purchase premium or accretion of purchase discount. Available for sale securities are carried at fair value. Unrealized holding gains and losses, net of the related deferred tax effect, on available for sale securities are excluded from earnings and are reported in other comprehensive income as a separate component of shareholders’ equity until realized. Transfers of securities between categories are recorded at fair value at the date of transfer. Unrealized holding gains or losses associated with transfers of securities from held to maturity to available for sale are recorded as a separate component of shareholders’ equity. These unrealized holding gains or losses are amortized into income over the remaining life of the security as an adjustment to the yield in a manner consistent with the amortization or accretion of the original purchase premium or discount on the associated security.

The amortization of premiums and accretion of discounts are recognized in interest income using methods approximating the interest method over the expected life of the securities. Realized gains and losses, determined on the basis of the cost of specific securities sold, are included in earnings on the trade date. A decline in the market value of any available for sale or held to maturity investment below cost that is deemed other than temporary establishes a new cost basis for the security. Other than temporary impairment deemed to be credit related is charged to earnings. Other than temporary impairment attributed to non-credit related factors is recognized in other comprehensive income.

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

Other Investments

Other investments include Federal Home Loan Bank (“FHLB”) stock. These investments do not have readily determinable fair values due to restrictions placed on transferability and therefore are carried at cost. These investments are periodically evaluated for impairment based on ultimate recovery of par value or cost basis. Both cash and stock dividends are reported as income.

Also included in other investments are 57,611 Visa Class B restricted shares owned by the Bank with a carrying value of approximately $242,000 as of December 31, 2019.  These shares are transferable only under limited circumstances until they can be converted into the publicly traded Visa Class A common shares. This conversion will not occur until the settlement of certain litigation which will be indemnified by Visa members, including the Bank. Visa funded an escrow account from its initial public offering to settle these litigation claims. Should this escrow account be insufficient to cover these litigation claims, Visa is entitled to fund additional amounts to the escrow account by reducing each member bank’s Visa Class B conversion ratio to unrestricted Visa Class A shares.  As of December 31, 2019, the conversion ratio was 1.6228.

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Loans Held for Sale

Loans held for sale are carried at the estimated fair value, as determined by outstanding commitments from third party investors in the secondary market. Adjustments to reflect unrealized gains and losses resulting from changes in fair value of mortgage loans held for sale and realized gains and losses upon ultimate sale of the mortgage loans held for sale are classified as mortgage banking activity in the consolidated statements of income. Adjustments to reflect unrealized gains and losses resulting from changes in fair value of SBA loans held for sale and realized gains and losses upon ultimate sale of the SBA loans held for sale are classified as gain on sale of SBA loans in the consolidated statements of income.

Servicing Rights

When mortgage and SBA loans are sold with servicing retained, servicing rights are initially recorded at fair value with the income statement effect recorded in mortgage banking activity or gains on sales of SBA loans accordingly. Fair value is based on market prices for comparable servicing contracts, when available or alternatively, is based on a valuation model that calculates the present value of estimated future net servicing income. All classes of servicing assets are subsequently measured using the amortization method which requires servicing rights to be amortized into noninterest income in proportion to, and over the period of, the estimated future net servicing income of the underlying loans. The Company assumed the servicing of certain indirect automobile loans in an acquisition. The servicing asset was recorded at fair value on the date of acquisition and follows the amortization method.

Servicing fee income, which is reported on the income statement in mortgage banking activity for serviced mortgage loans and other noninterest income for all other serviced loans, is recorded for fees earned for servicing loans. The fees are based on a contractual percentage of the outstanding principal or a fixed amount per loan and are recorded as income when earned. The amortization of servicing rights is netted against loan servicing fee income. Servicing fees totaled $19.9 million, $4.5 million and $1.7 million for the years ended December 31, 2019, 2018 and 2017, respectively. Late fees and ancillary fees related to loan servicing are not material.

Servicing rights are evaluated for impairment based upon the fair value of the rights as compared to carrying amount. Impairment is determined by stratifying rights into strata based on predominant risk characteristics, such as interest rate, loan type and investor type. Impairment is recognized for a particular stratum through a valuation allowance, to the extent that fair value is less than the carrying amount. If the Company later determines that all or a portion of the impairment no longer exists for a particular stratum, a reduction of the valuation allowance may be recorded as an increase to income. Changes in valuation allowances related to servicing rights are reported in mortgage banking activity and other noninterest income on the income statement. The fair values of servicing rights are subject to significant fluctuations as a result of changes in estimated and actual prepayment speeds and default rates and losses.

Loans

Loans, excluding purchased loans and residential mortgage purchased loan pools (“purchased loan pools”) are reported at their outstanding principal balances less unearned income, net of deferred fees and origination costs. Interest income is accrued on the outstanding principal balance. For all classes of loans, the accrual of interest on loans is discontinued when, in management’s opinion, the borrower may be unable to make payments as they become due, unless the loan is well secured and in the process of collection. Interest income on mortgage and commercial loans is discontinued and placed on nonaccrual status at the time the loan is 90 days delinquent unless the loan is well secured and in process of collection. Mortgage loans and commercial loans are charged off to the extent principal or interest is deemed uncollectible. Consumer loans continue to accrue interest until they are charged off, generally between 90 and 120 days past due, unless the loan is in the process of collection. Nonaccrual loans and loans past due 90 days still on accrual include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans. All interest accrued, but not collected for loans that are placed on nonaccrual or charged off, is reversed against interest income.  Interest income on nonaccrual loans is applied against principal until the loans are returned to accrual status. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

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Purchased Loans

Purchased loans include loans acquired in FDIC-assisted acquisitions (“covered loans”) and other acquisitions (“purchased non-covered loans”) and are initially recorded at fair value on the date of the purchase. Purchased loans that contain evidence of credit deterioration (“purchased credit impaired loans”) on the date of purchase are carried at the net present value of expected future proceeds. All other purchased loans are recorded at their initial fair value, adjusted for subsequent advances, pay downs, amortization or accretion of any premium or discount on purchase, charge-offs and any other adjustment to carrying value. There is no carryover of the seller’s allowance for loan losses. After acquisition, losses are recognized by recording a charge-off of the loss and a corresponding provision expense.

In determining the initial fair value of purchased loans without evidence of credit deterioration at the date of acquisition, management includes (i) no carryover of the seller's allowance for loan losses and (ii) an adjustment of the recorded investment to reflect an appropriate market rate of interest, given the remaining term, risk profile and grade assigned to each loan. This adjustment is accreted into earnings as a yield adjustment, using methods approximating the effective yield method, over the remaining life of each loan.

Purchased credit impaired loans are accounted for individually. The Company estimates the amount and timing of expected cash flows for each loan, and the expected cash flows in excess of the amount paid is recorded as interest income over the remaining life of the loan (accretable yield). The excess of the loan’s contractual principal and interest over expected cash flows is not recorded (nonaccretable difference).

Over the life of the loan, expected cash flows continue to be estimated. If the present value of expected cash flows is less than the carrying amount, an impairment loss is recorded as a provision for loan losses. If the present value of expected cash flows is greater than the carrying amount, it results in a reversal of the provision for loan losses to the extent of prior provisions and then is recognized as part of future interest income through an increase in accretable yield.

Purchased Loan Pools

Purchased loan pools include groups of residential mortgage loans that were not acquired in bank acquisitions or FDIC-assisted transactions. Purchased loan pools are reported at their outstanding principal balances plus purchase premiums, net of accumulated amortization. Interest income is accrued on the outstanding principal balance. The accrual of interest on loans is discontinued when, in management’s opinion, the borrower may be unable to make payments as they become due, unless the loan is well secured and in the process of collection. 

Allowance for Loan Losses

The allowance for loan losses is established through a provision for loan losses charged to expense. Loan losses are charged against the allowance when management believes the collection of a loan’s principal is unlikely. Subsequent recoveries are credited to the allowance.

The allowance is an amount that management believes will be adequate to absorb estimated losses relating to specifically identified loans, as well as probable incurred losses in the balance of the loan portfolio. The allowance for loan losses is evaluated on a regular basis by management and is based upon management’s periodic review of various risks in the loan portfolio highlighted by historical experience, the nature and volume of the loan portfolio, overall portfolio quality, review of specific problem loans, current economic conditions that may affect the borrower’s ability to pay, estimated value of any underlying collateral and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available.

The allowance for loan losses evaluation does not include the effects of expected losses on specific loans or groups of loans that are related to future events or expected changes in economic conditions. While management uses the best information available to make its evaluation, future adjustments to the allowance may be necessary if there are significant changes in economic conditions. In addition, regulatory agencies, as an integral part of their examination process, periodically review the Bank’s allowance for loan losses and may require the Bank to make additions to the allowance based on their judgment about information available to them at the time of their examinations.

The allowance consists of specific and general components. The specific component includes loans management considers impaired and other loans or groups of loans that management has classified with higher risk characteristics. For such loans that are classified as impaired, an allowance is established when the discounted cash flows, collateral value or observable market

F-15

price of the impaired loan is lower than the carrying value of that loan. The general component covers non-classified loans and is based on historical loss experience adjusted for qualitative factors.

The allowance for loan losses represents a reserve for probable incurred losses in the loan portfolio. The adequacy of the allowance for loan losses is evaluated periodically based on a review of all significant loans, with a particular emphasis on non-accruing, past due and other loans that management believes might be potentially impaired or warrant additional attention. The Company segregates the loan portfolio by type of loan and utilizes this segregation in evaluating exposure to risks within the portfolio. In addition, based on internal reviews and external reviews performed by independent loan reviewers and regulatory authorities, the Company further segregates the loan portfolio by loan grades based on an assessment of risk for a particular loan or group of loans. In establishing allowances, management considers historical loan loss experience but adjusts this data with a significant emphasis on data such as risk ratings, current loan quality trends, current economic conditions and other factors in the markets where the Company operates. Factors considered include, among others, current valuations of real estate in their markets, unemployment rates, the effect of weather conditions on agricultural related entities and other significant local economic events.

The Company has developed a methodology for determining the adequacy of the allowance for loan losses which is monitored by the Company’s Chief Credit Officer. Procedures provide for the assignment of a risk rating for every loan included in the total loan portfolio. Commercial insurance premium loans, overdraft protection loans and certain mortgage loans and consumer loans serviced by outside processors are treated as pools for risk rating purposes. The risk rating schedule provides nine ratings of which five ratings are classified as pass ratings and four ratings are classified as criticized ratings. Each risk rating is assigned a percentage factor of historical losses, calculated by loan type, and adjusted for qualitative factors to be applied to the balance of loans by risk rating and loan type, to determine the adequate amount of reserve. Many of the larger loans require an annual review by an independent loan officer in the Company’s internal loan review department. Assigned risk ratings are adjusted based on various factors including changes in borrower’s financial condition, the number of days past due and general economic conditions. The calculation of the allowance for loan losses, including underlying data and assumptions, is reviewed quarterly by the independent internal loan review department.

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

Loan Commitments and Financial Instruments

Financial instruments include off-balance sheet credit instruments, such as commitments to make loans and standby letters of credit, issued to meet customer financing needs.  The face amount for these items represents the exposure to loss, before considering customer collateral or ability to repay.  Such financial instruments are recorded when they are funded. 

Premises and Equipment

Land is carried at cost. Other premises and equipment are carried at cost, less accumulated depreciation computed on the straight-line method over the estimated useful lives of the assets. In general, estimated lives for buildings are up to 40 years, furniture and equipment useful lives range from three to 20 years and the lives of software and computer related equipment range from three to five years. Leasehold improvements are amortized over the life of the related lease, or the related assets, whichever is shorter. Expenditures for major improvements of the Company’s premises and equipment are capitalized and depreciated over their estimated useful lives. Minor repairs, maintenance and improvements are charged to operations as incurred. When assets are sold or disposed of, their cost and related accumulated depreciation are removed from the accounts and any gain or loss is reflected in earnings.

Leases

The Company has entered into various operating leases for certain branch locations, ATM locations, loan production offices, and corporate support services locations with terms extending through September 2029. Generally, these leases have initial

F-16

lease terms of ten years or less. Many of the leases have one or more lease renewal options. The exercise of lease renewal options is at our sole discretion. The Company does not consider exercise of any lease renewal options reasonably certain. Certain of our lease agreements contain early termination options. No renewal options or early termination options have been included in the calculation of the operating right-of-use assets or operating lease liabilities. Certain of our lease agreements provide for periodic adjustments to rental payments for inflation. At the commencement date of the lease, the Company recognizes a lease liability at the present value of the lease payments not yet paid, discounted using the discount rate for the lease or the Company’s incremental borrowing rate. As the majority of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate at the commencement date in determining the present value of lease payments. The incremental borrowing rate is based on the term of the lease. Incremental borrowing rates on January 1, 2019 were used for operating leases that commenced prior to that date. At the commencement date, the company also recognizes a right-of-use asset measured at (i) the initial measurement of the lease liability; (ii) any lease payments made to the lessor at or before the commencement date less any lease incentives received; and (iii) any initial direct costs incurred by the lessee. Leases with an initial term of 12 months or less are not recorded on the balance sheet. For these short-term leases, lease expense is recognized on a straight-line basis over the lease term. At December 31, 2019, the Company had no leases classified as finance leases.

FDIC Loss-Share Receivable/Payable

In connection with the Company’s FDIC-assisted acquisitions, the Company has recorded an FDIC loss-share receivable to reflect the indemnification provided by the FDIC. Since the indemnified items are covered loans and covered foreclosed assets, which are initially measured at fair value, the FDIC loss-share receivable is also initially measured and recorded at fair value, and is calculated by discounting the cash flows expected to be received from the FDIC. These cash flows are estimated by multiplying estimated losses by the reimbursement rates as set forth in the loss-sharing agreements. The balance of the FDIC loss-share receivable and the accretion (or amortization) thereof is adjusted periodically to reflect changes in expectations of discounted cash flows, expense reimbursements under the loss-sharing agreements and other factors. The Company is accreting (or amortizing) its FDIC loss-share receivable over the shorter of the contractual term of the indemnification agreement (ten years for the single family loss-sharing agreements, and five years for the non-single family loss-sharing agreements) or the remaining life of the indemnified asset.

Pursuant to the clawback provisions of the loss-sharing agreements for the Company’s FDIC-assisted acquisitions, the Company may be required to reimburse the FDIC should actual losses be less than certain thresholds established in each loss-sharing agreement. The amount of the clawback provision for each acquisition is measured and recorded at fair value. It is calculated as the difference between management’s estimated losses on covered loans and covered foreclosed assets and the loss threshold contained in each loss-sharing agreement, multiplied by the applicable clawback provisions contained in each loss-sharing agreement. This clawback amount, which is payable to the FDIC upon termination of the applicable loss-sharing agreement, is then discounted back to net present value. To the extent that actual losses on covered loans and covered foreclosed assets are less than estimated losses, the applicable clawback payable to the FDIC upon termination of the loss-sharing agreements will increase. To the extent that actual losses on covered loans and covered foreclosed assets are more than estimated losses, the applicable clawback payable to the FDIC upon termination of the loss-sharing agreements will decrease. The balance of the FDIC clawback payable and the amortization thereof are adjusted periodically to reflect changes in expected losses on covered assets and the impact of such changes on the clawback payable and other factors.

Goodwill and Intangible Assets

Goodwill represents the excess of cost over the fair value of the net assets purchased in business combinations. Goodwill is required to be tested annually for impairment or whenever events occur that may indicate that the recoverability of the carrying amount is not probable. In the event of an impairment, the amount by which the carrying amount exceeds the fair value is charged to earnings. The Company performs its annual impairment testing of goodwill in the fourth quarter of each year.

Intangible assets include core deposit premiums from various past bank acquisitions as well as intangible assets recorded in connection with the USPF acquisition for insurance agent relationships, the "US Premium Finance" trade name and a non-compete agreement.

Core deposit premiums acquired in various past bank acquisitions are based on the established value of acquired customer deposits. The core deposit premium is initially recognized based on a valuation performed as of the acquisition date and is amortized over an estimated useful life of seven to ten years.

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The insurance agent relationships, the "US Premium Finance" trade name and non-compete agreement intangible assets acquired in the USPF acquisition are based on the established values as of the acquisition date and are being amortized over estimated useful lives of eight years, seven years and three years, respectively.

Amortization periods for intangible assets are reviewed annually in connection with the annual impairment testing of goodwill.

Cash Value of Bank Owned Life Insurance

The Company has purchased life insurance policies on certain officers. The life insurance is recorded at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for other charges or other amounts due that are probable at settlement.

Other Real Estate Owned

Foreclosed assets acquired through or in lieu of loan foreclosure are held for sale and are initially recorded at fair value less estimated cost to sell. Any write-down to fair value at the time of transfer to foreclosed assets is charged to the allowance for loan losses. Subsequent to foreclosure, valuations are periodically performed by management and the assets are carried at the lower of carrying amount or fair value less cost to sell. Costs of improvements are capitalized up to the fair value of the property, whereas costs relating to holding foreclosed assets and subsequent adjustments to the value are charged to operations. 

Income Taxes

Deferred income tax assets and liabilities are determined using the liability method. Under this method, the net deferred tax asset or liability is determined based on the tax effects of the temporary differences between the book and tax bases of the various balance sheet assets and liabilities and gives current recognition to changes in tax rates and laws.

In the event the future tax consequences of differences between the financial reporting bases and the tax bases of the assets and liabilities results in deferred tax assets, an evaluation of the probability of being able to realize the future benefits indicated by such assets is required. A valuation allowance is provided for the portion of the deferred tax asset when it is more likely than not that some portion or all of the deferred tax asset will not be realized. In assessing the realizability of the deferred tax assets, management considers the scheduled reversals of deferred tax liabilities, projected future taxable income and tax planning strategies.

The Company currently evaluates income tax positions judged to be uncertain. A loss contingency reserve is accrued if it is probable that the tax position will be challenged with a tax examination being presumed to occur, it is probable that the future resolution of the challenge will confirm that a loss has been incurred, and the amount of such loss can be reasonably estimated.

The Company recognizes interest and penalties related to income tax matters in other noninterest expenses.

Loss Contingencies

Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated.

Share-Based Compensation

The Company accounts for its stock compensation plans using a fair value based method whereby compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. The Company recorded approximately $3.4 million, $6.2 million, and $3.3 million of share-based compensation cost in 2019, 2018 and 2017, respectively. The Company recognized forfeitures as they occur.

Treasury Stock

The Company’s repurchases of shares of its common stock are recorded at cost as treasury stock and result in a reduction of shareholders' equity.

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Earnings Per Share

Basic earnings per share are computed by dividing net income allocated to common shareholders by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per common share are computed by dividing net income allocated to common shareholders by the sum of the weighted-average number of shares of common stock outstanding and the effect of the issuance of potential common shares that are dilutive. Potential common shares consist of stock options and restricted shares for the years ended December 31, 2019, 2018 and 2017, and are determined using the treasury stock method. The Company has determined that its outstanding non-vested stock awards are participating securities, and all dividends on these awards are paid similar to other dividends.

Presented below is a summary of the components used to calculate basic and diluted earnings per share.

	Years Ended December 31,
(dollars in thousands, shares in thousands)	2019		2018		2017
Net income available to common shareholders	$	161,441	$	121,027	$	73,548
Weighted average number of common shares outstanding	58,462		43,142		36,828
Effect of dilutive stock options	69		6		62
Effect of dilutive restricted stock awards	83		100		254
Weighted average number of common shares outstanding used to calculate diluted earnings per share	58,614		43,248		37,144

For the years ended December 31, 2019, 2018 and 2017, the Company has not excluded any potential common shares with strike prices that would cause them to be anti-dilutive.

Derivative Instruments and Hedging Activities

The goal of the Company’s interest rate risk management process is to minimize the volatility in the net interest margin caused by changes in interest rates. Derivative instruments are used to hedge certain assets or liabilities as a part of this process. The Company is required to recognize certain contracts and commitments as derivatives when the characteristics of those contracts and commitments meet the definition of a derivative. All derivative instruments are required to be carried at fair value on the balance sheet.

The Company’s hedging strategies include utilizing an interest rate swap classified as a cash flow hedge. Cash flow hedges relate to converting the variability in future interest payments on a floating rate liability to fixed payments. When effective, the fair value of cash flow hedges is carried as a component of other comprehensive income rather than an income statement item.

The Company had a cash flow hedge with notional amount of $37.1 million at December 31, 2019 and 2018 for the purpose of converting the variable rate on certain junior subordinated debentures to a fixed rate. The fair value of this instrument amounted to a liability of $187,000 as of December 31, 2019 and an asset of $102,000 as of December 31, 2018. No material hedge ineffectiveness from cash flow hedges was recognized in the statement of income. All components of each derivative’s gain or loss are included in the assessment of hedge effectiveness. The interest rate swap matures in September 2020.

Revenue Recognition

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

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

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

Other Service Charges on Deposit Accounts - Other service charges on deposit accounts include both transaction-based fees and account maintenance fees. Transaction based fees, which include wire transfer fees, stop payment charges, statement

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rendering, and automated clearing house ("ACH") fees, are recognized at the time the transaction is executed as that is the point in time the Company fulfills the customer's request. Account maintenance fees, which relate primarily to monthly maintenance, are earned over the course of a month, representing the period over which the Company satisfies the performance obligation.

ATM Fees - Transaction-based ATM usage fees are recognized at the time the transaction is executed as that is the point at which the Company satisfies the performance obligation.

Gains on the Sale of OREO - The net gains and losses on sales of OREO are recorded in credit resolution related expenses in the Company's consolidated statement of income. The Company records a gain or loss from the sale of OREO when control of the property transfers to the buyer, which generally occurs at the time of an executed deed. When the Company finances the sale of OREO to the buyer, the Company assesses whether the buyer is committed to perform their obligations under the contract and whether collectability of the transaction price is probable. Once these criteria are met, the OREO asset is derecognized and the gain on sale is recorded upon the transfer of control of the property to the buyer. The Company does not provide financing for the sale of OREO unless these criteria are met and the OREO can be derecognized.

Mortgage Banking Derivatives

The Company maintains a risk management program to manage interest rate risk and pricing risk associated with its mortgage lending activities. Commitments to fund mortgage loans (interest rate locks) to be sold into the secondary market and forward commitments for the future delivery of these mortgage loans are accounted for as free standing derivatives. The fair value of the interest rate lock is recorded at the time the commitment to fund the mortgage loan is executed and is adjusted for the expected exercise of the commitment before the loan is funded. In order to hedge the change in interest rates resulting from its commitments to fund the loans, the Company enters into forward commitments for the future delivery of mortgage loans when interest rate locks are entered into. Fair values of these mortgage derivatives are estimated based on changes in mortgage interest rates from the date the interest on the loan is locked. Changes in the fair values of these derivatives are included in mortgage banking activity in the Company's consolidated statement of income. The fair value of these instruments amounted to an asset of approximately $7.8 million and $2.5 million at December 31, 2019 and 2018, respectively, and a derivative liability of approximately $4.5 million and $1.3 million at December 31, 2019 and 2018, respectively.

Comprehensive Income

The Company’s comprehensive income consists of net income, changes in the net unrealized holding gains and losses of securities available for sale, unrealized gain or loss on the effective portion of cash flow hedges and the realized gain or loss recognized due to the sale or unwind of cash flow hedges prior to their contractual maturity date. These amounts are carried in accumulated other comprehensive income (loss) on the consolidated statements of comprehensive income and are presented net of taxes.

Fair Value Measures

Fair values of assets and liabilities are estimated using relevant market information and other assumptions, as more fully disclosed in a separate note. Fair value estimates involve uncertainties and matters of significant judgment regarding interest rates, credit risk, prepayments, and other factors, especially in the absence of broad markets for particular items. Changes in assumptions or in market conditions could significantly affect these estimates.

Operating Segments

The Company has five reportable segments, the Banking Division, the Retail Mortgage Division, the Warehouse Lending Division, the SBA Division and the Premium Finance Division. The Banking Division derives its revenues from the delivery of full service financial services to include commercial loans, consumer loans and deposit accounts. The Retail Mortgage Division derives its revenues from the origination, sales and servicing of one-to-four family residential mortgage loans. The Warehouse Lending Division derives its revenues from the origination and servicing of warehouse lines to other businesses that are secured by underlying one-to-four family residential mortgage loans and residential mortgage servicing rights. The SBA Division derives its revenues from the origination, sales and servicing of SBA loans. The Premium Finance Division derives its revenues from the origination and servicing of commercial insurance premium finance loans.

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

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Accounting Standards Adopted in 2019

ASU 2016-02 – Leases (Topic 842) (“ASU 2016-02”). ASU 2016-02 amends the existing standards for lease accounting effectively requiring that most leases be carried on the balance sheets of the related lessees by requiring them to recognize a right-of-use asset and a corresponding lease liability. ASU 2016-02 includes qualitative and quantitative disclosure requirements intended to provide greater insight into the nature of an entity’s leasing activities. The standard may be adopted using a modified retrospective transition method with a cumulative effect adjustment to equity as of the beginning of the period in which it is adopted. Alternatively, the standard may be adopted using an optional transition method where initial application of the provisions of ASU 2016-02 are applied as the date of adoption, resulting in no adjustment to amounts reported in prior periods. ASU 2016-02 is effective for annual reporting periods beginning after December 15, 2018, and interim periods within those annual periods. The Company adopted ASU 2016-02 during the first quarter of 2019 and elected the optional transition method. The Company also elected the package of practical expedients provided in the guidance which permits the Company to not reassess under the new standard the prior conclusions about lease identification, lease classification and initial direct costs. The Company also elected the hindsight practical expedient to determine lease term and in assessing impairment of the Company's right-of-use asset. The adoption of ASU 2016-02 resulted in the recognition of a right-of-use asset of $27.3 million, a lease liability of $29.7 million and a cumulative effect decrease to retained earnings of $276,000. The right-of-use asset and lease liability are recorded in the consolidated balance sheets in other assets and other liabilities, respectively.

Accounting Standards Pending Adoption

ASU 2019-12 – Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes ("ASU 2019-12"). ASU 2019-12 simplifies the accounting for income taxes by removing certain technical exceptions. ASU 2019-12 also clarifies and amends the accounting for income taxes in certain areas including, among others: (i) franchise taxes that are partially based on income; (ii) whether step ups in the tax basis of goodwill should be considered part of the acquisition to which it related or recognized as a separate transaction; and (iii) requiring the effect of an enacted change in tax laws or rates to be reflected in the annual effective tax rate computation in the interim period that includes the enactment date. The Company expects to apply the amendments in this update on a modified retrospective basis for the provision related to franchise taxes and prospectively for all other amendments. ASU is effective for interim and annual periods beginning after December 15, 2020. Early adoption is permitted. The Company is currently evaluating the impact this ASU will have on the Company’s consolidated balance sheet, consolidated statement of income and comprehensive income, consolidated statement of shareholders’ equity and consolidated statement of cash flows, but it is not expected to have a material impact.

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

ASU 2018-13 – Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement ("ASU 2018-13). ASU 2018-13 changes fair value measurement disclosure requirements by removing certain requirements, modifying certain requirements and adding certain new requirements. Disclosure requirements removed include the following: transfers between Level 1 and Level 2 of the fair value hierarchy; the policy for determining when transfers between any of the three levels have occurred; the valuation processes for Level 3 measurements; and the changes in unrealized gains or losses presented in earnings for Level 3 instruments held at end of the reporting period. Disclosure requirements that have been modified include the following: for investments in certain entities that calculate net asset value, an entity is required to disclose the timing of liquidation of an investee's assets and the date when restrictions from redemption might lapse only if the investee has communicated the timing to the entity or announced the timing publicly; and clarification that the Level 3 measurement uncertainty disclosure should communicate information about the uncertainty at the balance sheet date. New disclosure requirements include the following: the changes in unrealized gains and losses for the

F-21

period included in other comprehensive income for recurring Level 3 instruments held at the end of the reporting period; and the range and weighted average of significant unobservable inputs used for Level 3 measurements or disclosure of other quantitative information in place of the weighted average to the extent that it would be a more reasonable and rational method to reflect the distribution of unobservable inputs. ASU 2018-13 is effective for interim and annual periods beginning after December 15, 2019. Early adoption is permitted. The Company is currently evaluating the impact this standard will have on the Company’s fair value measurement disclosures, but it is not expected to have a material impact.

ASU 2017-04 – Intangibles: Goodwill and Other: Simplifying the Test for Goodwill Impairment (“ASU 2017-04”). ASU 2017-04 eliminates Step 2 from the goodwill impairment test to simplify the subsequent measurement of goodwill. The annual, or interim, goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. In addition, the income tax effects of tax deductible goodwill on the carrying amount of the reporting unit should be considered when measuring the goodwill impairment loss, if applicable. ASU 2017-04 also eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform Step 2 of the goodwill impairment test. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The standard must be adopted using a prospective basis and the nature and reason for the change in accounting principle should be disclosed upon transition. ASU 2017-04 is effective for annual or any interim goodwill impairment tests in reporting periods beginning after December 15, 2019. Early adoption is permitted on testing dates after January 1, 2017. The Company is currently evaluating the impact this ASU will have on the Company’s results of operations, financial position and disclosures, but it is not expected to have a material impact.

ASU 2016-13 – Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 significantly changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The standard will replace the current incurred loss approach with an expected loss model, referred to as the current expected credit loss (“CECL”) model. The new standard will apply to financial assets subject to credit losses and measured at amortized cost and certain off-balance-sheet credit exposures, which include, but are not limited to, loans, leases, held-to-maturity securities, loan commitments and financial guarantees. ASU 2016-13 simplifies the accounting for purchased credit-impaired debt securities and loans and expands the disclosure requirements regarding an entity’s assumptions, models and methods for estimating the allowance for loan and lease losses. In addition, entities will need to disclose the amortized cost balance for each class of financial asset by credit quality indicator, disaggregated by the year of origination. ASU 2016-13 is effective for interim and annual reporting periods beginning after December 15, 2019. Early adoption is permitted for interim and annual reporting periods beginning after December 15, 2018. Upon adoption, ASU 2016-13 provides for a modified retrospective transition by means of a cumulative effect adjustment to equity as of the beginning of the period in which the guidance is effective.

The Company is finalizing its evaluation of the adoption of this ASU. The Company to date has selected the software vendor of choice for implementation, sourced and tested required data from the Company’s loan systems, tested data feeds to the model, contracted for and received results from independent third parties of model validation and internal audit of the CECL model and process, determined appropriate segmentations of its portfolio, selected a preliminary forecast period for reasonable and supportable forecasts and reversion methodology, and has performed parallel runs of the model. The Company is currently finalizing its assessment of current and forecasted macroeconomic factors and assumptions and testing and finalization of internal controls. The Company currently estimates the allowance for loan losses will increase to a range of $85 million and $120 million and is inclusive of the gross up of the allowance for expected credit losses on purchased credit deteriorated assets. In addition, the Company expects to recognize a liability for unfunded commitments between $10 million and $20 million upon adoption. The Company will finalize the adoption during the first quarter of 2020.

Reclassifications

Certain reclassifications of prior year amounts have been made to conform with the current year presentations.

NOTE 2. BUSINESS COMBINATIONS

In accounting for business combinations, the Company uses the acquisition method of accounting in accordance with ASC 805, Business Combinations. Under the acquisition method of accounting, assets acquired, liabilities assumed and consideration exchanged are recorded at their respective acquisition date fair values. Any identifiable intangible assets that are acquired in a business combination are recognized at fair value on the acquisition date. Identifiable intangible assets are recognized separately if they arise from contractual or other legal rights or if they are separable (i.e., capable of being sold, transferred, licensed, rented or exchanged separately from the entity). If the consideration given exceeds the fair value of the net assets

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received, goodwill is recognized. Determining the fair value of assets and liabilities is a complicated process involving significant judgment regarding methods and assumptions used to calculate estimated fair values. Fair values are subject to refinement for up to one year after the closing date of the acquisition as additional information regarding the closing date fair values becomes available. In addition, management will assess and record the deferred tax assets and deferred tax liabilities resulting from differences in the carrying value of acquired assets and assumed liabilities for financial reporting purposes and their basis for income tax purposes, including acquired net operating loss carryforwards and other acquired assets with built-in losses that are expected to be settled or otherwise recovered in future periods where the realization of such benefits would be subject to applicable limitations under Section 382 of the Internal Revenue Code of 1986, as amended.

Fidelity Southern Corporation

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

The following table presents the assets acquired and liabilities assumed of Fidelity as of July 1, 2019, and their fair value estimates. The fair value estimates were subject to refinement for up to one year after the closing date of the acquisition for new information obtained about facts and circumstances that existed at the acquisition date. The Company continues its evaluation of the facts and circumstances as of July 1, 2019, to assign fair values to assets acquired and liabilities assumed, which could result in further adjustments to the fair values presented below. At December 31, 2019, management continues to evaluate fair value adjustments related to loans, premises, intangibles, interest-bearing deposits, other borrowings, subordinated deferrable interest debentures and deferred taxes.

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(dollars in thousands)	As Recorded by Fidelity		Initial Fair Value Adjustments			Subsequent Adjustments			As Recorded by Ameris
Assets
Cash and due from banks	$	26,264	$	—		$	—		$	26,264
Federal funds sold and interest-bearing deposits in banks	217,936		—			—			217,936
Investment securities	299,341		(1,444)		(a)	—			297,897
Other investments	7,449		—			—			7,449
Loans held for sale	328,657		(1,290)		(b)	—			327,367
Loans	3,587,412		(79,002)		(c)	3,235		(o)	3,511,645
Less allowance for loan losses	(31,245)		31,245		(d)	—			—
Loans, net	3,556,167		(47,757)			3,235			3,511,645
Other real estate owned	7,605		(427)		(e)	—			7,178
Premises and equipment	93,662		11,407		(f)	(2,418)		(p)	102,651
Other intangible assets, net	10,670		39,940		(g)	—			50,610
Cash value of bank owned life insurance	72,328		—			—			72,328
Deferred income taxes, net	104		(104)		(h)	—			—
Other assets	157,863		998		(i)	(13,014)		(q)	145,847
Total assets	$	4,778,046	$	1,323		$	(12,197)		$	4,767,172
Liabilities
Deposits:
Noninterest-bearing	$	1,301,829	$	—		$	—		$	1,301,829
Interest-bearing	2,740,552		942		(j)	—			2,741,494
Total deposits	4,042,381		942			—			4,043,323
Securities sold under agreements to repurchase	22,345		—			—			22,345
Other borrowings	149,367		2,265		(k)	—			151,632
Subordinated deferrable interest debentures	46,393		(9,675)		(l)	—			36,718
Deferred tax liability, net	12,222		(11,401)		(m)	8,791		(r)	9,612
Other liabilities	65,027		538		(n)	(839)		(s)	64,726
Total liabilities	4,337,735		(17,331)			7,952			4,328,356
Net identifiable assets acquired over (under) liabilities assumed	440,311		18,654			(20,149)			438,816
Goodwill	—		410,348			20,149			430,497
Net assets acquired over liabilities assumed	$	440,311	$	429,002		$	—		$	869,313
Consideration:
Ameris Bancorp common shares issued	22,181,522
Price per share of the Company's common stock	$	39.19
Company common stock issued	$	869,294
Cash exchanged for shares	$	19
Fair value of total consideration transferred	$	869,313

____________________________________________________________

Explanation of fair value adjustments

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Goodwill of $430.5 million, which is the excess of the purchase price over the fair value of net assets acquired, was recorded in the Fidelity acquisition and is the result of expected operational synergies and other factors. This goodwill is not expected to be deductible for tax purposes.

In the acquisition, the Company purchased $3.51 billion of loans at fair value, net of $75.8 million, or 2.11%, estimated discount to the acquired carrying value. Of the total loans acquired, management identified $120.7 million that were considered to be credit impaired and are accounted for under ASC Topic 310-30. The table below summarizes the total contractually required principal and interest cash payments, management’s estimate of expected total cash payments and fair value of the loans as of the acquisition date for purchased credit impaired loans. Contractually required principal and interest payments have been adjusted for estimated prepayments.

(dollars in thousands)
Contractually required principal and interest	$	191,534
Non-accretable difference	(23,668)
Cash flows expected to be collected	167,866
Accretable yield	(47,173)
Total purchased credit-impaired loans acquired	$	120,693

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

(dollars in thousands)	Fair Value of Acquired Loans at Acquisition Date		Gross Contractual Amounts Receivable at Acquisition Date		Estimate at Acquisition Date of Contractual Cash Flows Not Expected to be Collected
Acquired receivables subject to ASC 310-30	$	120,693	$	191,534	$	23,668
Acquired receivables not subject to ASC 310-30	$	3,390,952	$	4,217,890	$	32,466

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Hamilton State Bancshares, Inc.

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

The following table presents the assets acquired and liabilities of Hamilton assumed as of June 29, 2018 and their fair value estimates. The fair value estimates were subject to refinement for up to one year after the closing date of the acquisition for new information obtained about facts and circumstances that existed at the acquisition date. The Company finalized its fair value adjustments during the second quarter of 2019.

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

____________________________________________________________

Explanation of fair value adjustments

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

In the acquisition, the Company purchased $1.29 billion of loans at fair value, net of $21.1 million, or 1.60%, estimated discount to the acquired carrying value. Of the total loans acquired, management identified $18.6 million that were considered to be credit impaired and are accounted for under ASC Topic 310-30. The table below summarizes the total contractually required principal and interest cash payments, management’s estimate of expected total cash payments and fair value of the loans as of the acquisition date for purchased credit impaired loans. Contractually required principal and interest payments have been adjusted for estimated prepayments.

(dollars in thousands)
Contractually required principal and interest	$	21,223
Non-accretable difference	(1,840)
Cash flows expected to be collected	19,383
Accretable yield	(794)
Total purchased credit-impaired loans acquired	$	18,589

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

(dollars in thousands)	Fair Value of Acquired Loans at Acquisition Date		Gross Contractual Amounts Receivable at Acquisition Date		Estimate at Acquisition Date of Contractual Cash Flows Not Expected to be Collected
Acquired receivables subject to ASC 310-30	$	18,589	$	21,223	$	1,840
Acquired receivables not subject to ASC 310-30	$	1,274,597	$	1,441,534	$	5,104

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Atlantic Coast Financial Corporation

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

The following table presents the assets acquired and liabilities of Atlantic assumed as of May 25, 2018 and their fair value estimates. The fair value estimates were subject to refinement for up to one year after the closing date of the acquisition for new information obtained about facts and circumstances that existed at the acquisition date. The Company finalized its fair value adjustments during the second quarter of 2019.

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

F-29

____________________________________________________________

Explanation of fair value adjustments

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

F-30

US Premium Finance Holding Company

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

Prior to the January 31, 2018 completion of the acquisition, the Company's 30% investment in USPF was carried at its $23.9 million original cost basis. Once the acquisition was completed, the $83.0 million aggregate purchase price equaled the fair value of USPF which was determined utilizing the incremental projected earnings. Accordingly, no gain or loss was recorded by the Company in the consolidated statement of income and comprehensive income as a result of remeasuring to fair value the prior minority equity investment in USPF held by the Company immediately before the business combination was completed.

During the first quarter of 2019, the Company finalized its allocation of the purchase price to USPF's assets acquired and liabilities assumed based on estimated fair values as of January 31, 2018. The assets acquired include only identifiable intangible assets related to insurance agent relationships that lead to referral of insurance premium finance loans to USPF, the "US Premium Finance" trade name and a non-compete agreement with a former USPF shareholder.

The following table presents the assets acquired and liabilities assumed of USPF as of January 31, 2018, and their fair value estimates.

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

____________________________________________________________

Explanation of fair value adjustments

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

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

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

F-31

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

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

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

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

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

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

During the second quarter of 2018, the Company recorded $2.0 million in other noninterest income in the consolidated statements of income to reflect a decrease in the estimated contingent consideration liability. During the fourth quarter of 2018, the Company recorded $2.5 million in other noninterest income in the consolidated statements of income to reflect a further decrease in the estimated contingent consideration liability. These decreases in the estimated contingent consideration liability were based on projected results of the premium finance division for the entire measurement period from January 1, 2018 through June 30, 2019.

Pro Forma Financial Information

The results of operations of Fidelity, Hamilton, Atlantic and USPF subsequent to the respective acquisition dates are included in the Company’s consolidated statements of income. 

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

	Year Ended December 31,
(dollars in thousands, except per share data)	2019		2018		2017
Net interest income and noninterest income	$	828,612	$	803,281	$	747,700
Net income	$	228,798	$	196,352	$	138,359
Net income available to common shareholders	$	228,798	$	196,352	$	138,359
Income per common share available to common shareholders – basic	$	3.29	$	2.82	$	2.00
Income per common share available to common shareholders – diluted	$	3.29	$	2.82	$	1.99
Average number of shares outstanding, basic	69,462		69,642		69,140
Average number of shares outstanding, diluted	69,614		69,748		69,456

F-32

NOTE 3. INVESTMENT SECURITIES

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

(dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
December 31, 2019
U.S. government sponsored agencies	$	22,246	$	116	$	—	$	22,362
State, county and municipal securities	102,952		2,310		(2)		105,260
Corporate debt securities	51,720		1,281		(2)		52,999
SBA pool securities	73,704		617		(409)		73,912
Mortgage-backed securities	1,129,816		19,937		(883)		1,148,870
Total debt securities	$	1,380,438	$	24,261	$	(1,296)	$	1,403,403
December 31, 2018
State, county and municipal securities	$	149,670	$	1,367	$	(304)	$	150,733
Corporate debt securities	67,123		718		(527)		67,314
SBA pool securities	79,410		183		(1,789)		77,804
Mortgage-backed securities	902,773		3,989		(10,190)		896,572
Total debt securities	$	1,198,976	$	6,257	$	(12,810)	$	1,192,423

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

	Less Than 12 Months				12 Months or More				Total
(dollars in thousands)	Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses
December 31, 2019
State, county and municipal securities	$	803	$	(2)	$	—	$	—	$	803	$	(2)
Corporate debt securities	2,573		(2)		—		—		2,573		(2)
SBA pool securities	28,521		(285)		4,825		(124)		33,346		(409)
Mortgage-backed securities	99,279		(416)		52,326		(467)		151,605		(883)
Total debt securities	$	131,176	$	(705)	$	57,151	$	(591)	$	188,327	$	(1,296)
December 31, 2018
State, county and municipal securities	$	23,784	$	(52)	$	33,873	$	(252)	$	57,657	$	(304)
Corporate debt securities	17,291		(111)		17,952		(416)		35,243		(527)
SBA pool securities	1,291		(7)		61,966		(1,782)		63,257		(1,789)
Mortgage-backed securities	118,454		(573)		373,783		(9,617)		492,237		(10,190)
Total debt securities	$	160,820	$	(743)	$	487,574	$	(12,067)	$	648,394	$	(12,810)

As of December 31, 2019, the Company’s security portfolio consisted of 557 securities, 84 of which were in an unrealized loss position. The majority of the unrealized losses are related to the Company’s mortgage-backed securities as discussed below.

At December 31, 2019, the Company held 62 mortgage-backed securities that were in an unrealized loss position, all of which were issued by U.S. government-sponsored entities and agencies. Because the decline in fair value is attributable to changes in interest rates, and not credit quality, and because the Company does not have the intent to sell these mortgage-backed securities and it is likely that it will not be required to sell the securities before their anticipated recovery, the Company does not consider these securities to be other-than-temporarily impaired at December 31, 2019.

At December 31, 2019, the Company held 18 SBA pool securities, two state, county and municipal securities and two corporate securities that were in an unrealized loss position. Because the decline in fair value is attributable to changes in interest rates, and not credit quality, and because the Company does not have the intent to sell these securities and it is likely that it will not be required to sell the securities before their anticipated recovery, the Company does not consider these securities to be other-than-temporarily impaired at December 31, 2019.

F-33

During 2019 and 2018, the Company received timely and current interest and principal payments on all of the securities classified as corporate debt securities. The Company’s investments in subordinated debt include investments in regional and super-regional banks on which the Company prepares regular analysis through review of financial information or credit ratings. Investments in preferred securities are also concentrated in the preferred obligations of regional and super-regional banks through non-pooled investment structures. The Company did not have investments in “pooled” trust preferred securities at December 31, 2019 or 2018.

Management and the Company’s Asset and Liability Committee (the “ALCO Committee”) evaluate securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. While the majority of the unrealized losses on debt securities relate to changes in interest rates, corporate debt securities have also been affected by reduced levels of liquidity and higher risk premiums. Occasionally, management engages independent third parties to evaluate the Company’s position in certain corporate debt securities to aid management and the ALCO Committee in its determination regarding the status of impairment. The Company does not intend to sell these investment securities at an unrealized loss position at December 31, 2019, and it is more likely than not that the Company will not be required to sell these securities prior to recovery or maturity. Therefore, at December 31, 2019, these investments are not considered impaired on an other-than-temporary basis.

The amortized cost and estimated fair value of debt securities available for sale as of December 31, 2019, by contractual maturity are shown below. Maturities may differ from contractual maturities in mortgage-backed securities because the mortgages underlying the securities may be called or repaid without penalty. Securities not due at a single maturity date are shown separately. Therefore, these securities are not included in the maturity categories in the following maturity summary.

(dollars in thousands)	Amortized Cost		Estimated Fair Value
Due in one year or less	$	29,116	$	29,298
Due from one year to five years	62,121		63,030
Due from five to ten years	91,717		93,822
Due after ten years	67,668		68,383
Mortgage-backed securities	1,129,816		1,148,870
	$	1,380,438	$	1,403,403

Securities with a carrying value of approximately $679.6 million and $510.0 million at December 31, 2019 and 2018, respectively, serve as collateral to secure public deposits, securities sold under agreements to repurchase and for other purposes required or permitted by law.

The following table is a summary of sales activities in the Company's investment securities available for sale:

	For the Years Ended December 31,
(dollars in thousands)	2019		2018		2017
Gross gains on sales of securities	$	522	$	390	$	38
Gross losses on sales of securities	(464)		(301)		(1)
Net realized gains on sales of securities available for sale	$	58	$	89	$	37
Sales proceeds	$	64,995	$	68,727	$	3,090

Total gain (loss) on securities reported on the consolidated statements of income is comprised of the following:

	For the Years Ended December 31,
(dollars in thousands)	2019		2018		2017
Net realized gains on sales of securities available for sale	$	58	$	89	$	37
Unrealized holding gains (losses) on equity securities	19		(126)		—
Net realized gains on sales of other investments	61		—		—
Total gain (loss) on securities	$	138	$	(37)	$	37

F-34

NOTE 4. LOANS AND ALLOWANCE FOR LOAN LOSSES

Loans

The Bank engages in a full complement of lending activities, including real estate-related loans, agriculture-related loans, commercial and financial loans and consumer installment loans within select markets in Georgia, Alabama, Florida and South Carolina. During 2015 and 2016, the Bank purchased residential mortgage loan pools collateralized by properties located outside our Southeast markets, specifically in California, Washington and Illinois. These loans are reported as purchased loan pools on the consolidated balance sheets. During the third quarter of 2016, the Bank began purchasing from unrelated third parties consumer installment home improvement loans made to borrowers throughout the United States. As of December 31, 2019 and 2018, the net carrying value of these consumer installment home improvement loans was approximately $415.0 million and $399.9 million, respectively, and such loans are reported in the consumer installment loan category. During the fourth quarter of 2016, the Bank purchased a pool of commercial insurance premium finance loans made to borrowers throughout the United States and began a division to originate, administer and service these types of loans. As of December 31, 2019 and 2018, the net carrying value of commercial insurance premium finance loans was approximately $646.5 million and $413.5 million, respectively, and such loans are reported in the commercial, financial and agricultural loan category. The Bank concentrates the majority of its lending activities in real estate loans. While risk of loss in the Company’s portfolio is primarily tied to the credit quality of the various borrowers, risk of loss may increase due to factors beyond the Company’s control, such as local, regional and/or national economic downturns. General conditions in the real estate market may also impact the relative risk in the real estate portfolio.

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

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

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

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

F-35

Loans are stated at unpaid balances, net of unearned income and deferred loan fees. Balances within the major loans receivable categories are presented in the following table, excluding purchased loans.

	December 31,
(dollars in thousands)	2019		2018
Commercial, financial and agricultural	$	1,646,438	$	1,316,359
Real estate – construction and development	1,083,564		671,198
Real estate – commercial and farmland	2,447,834		1,814,529
Real estate – residential	1,901,352		1,403,000
Consumer installment	450,799		455,371
	$	7,529,987	$	5,660,457

Purchased loans are defined as loans that were acquired in bank acquisitions including those that are covered by a loss-sharing agreement with the FDIC. Purchased loans totaling $5.08 billion and $2.59 billion at December 31, 2019 and 2018, respectively, are not included in the above schedule.

The carrying value of purchased loans are shown below according to major loan type as of the end of the years shown.

(dollars in thousands)	2019		2018
Commercial, financial and agricultural	$	384,273	$	372,686
Real estate – construction and development	465,497		227,900
Real estate – commercial and farmland	1,905,205		1,337,859
Real estate – residential	1,220,271		623,199
Consumer installment	1,100,035		27,188
	$	5,075,281	$	2,588,832

A rollforward of purchased loans for the years ended December 31, 2019 and 2018 is shown below.

(dollars in thousands)	2019		2018
Balance, January 1	$	2,588,832	$	861,595
Charge-offs	(5,275)		(1,803)
Additions due to acquisitions	3,511,645		2,053,744
Accretion	20,255		11,918
Purchase of acquired formerly serviced portfolio	103,530		—
Subsequent fair value adjustments recorded to goodwill	(4,854)		—
Loans sold	(109,611)		—
Transfers to loans held for sale	(8,293)		—
Transfers to purchased other real estate owned	(5,135)		(6,396)
Payments received	(1,015,798)		(330,226)
Other	(15)		—
Ending balance	$	5,075,281	$	2,588,832

The following is a summary of changes in the accretable discounts of purchased loans during years ended December 31, 2019 and 2018:

(dollars in thousands)	2019		2018
Balance, January 1	$	40,496	$	20,192
Additions due to acquisitions	38,116		30,037
Reduction due to purchase of acquired formerly serviced portfolio	(750)		—
Accretion	(20,255)		(11,918)
Accretable discounts removed due to charge-offs	—		(42)
Transfers between non-accretable and accretable discounts, net	1,678		2,227
Ending balance	$	59,285	$	40,496

Purchased loan pools are defined as groups of residential mortgage loans that were not acquired in bank acquisitions or FDIC-assisted transactions. As of December 31, 2019, purchased loan pools totaled $213.2 million and consisted of whole-loan, adjustable rate residential mortgages on properties outside the Company’s markets, with principal balances totaling $212.4

F-36

million and $811,000 of remaining purchase premium paid at acquisition. As of December 31, 2018, purchased loan pools totaled $262.6 million with principal balances totaling $260.5 million and $2.1 million of purchase premium paid at acquisition.

As of December 31, 2019, purchased loan pools included principal balance of $810,000 risk-rated 7 (Substandard), while all other loans in purchased loan pools were performing current loans risk-rated 3 (Good Credit). As of December 31, 2019, purchased pool loans had one loan on nonaccrual status with a principal balance of $810,000 and had no loans classified as troubled debt restructurings.

As of December 31, 2018, all loans in purchased loan pools were performing current loans risk-rated 3 (Good Credit). As of December 31, 2018, purchased pool loans had no loans on nonaccrual status and no loans classified as troubled debt restructurings.

At December 31, 2019 and 2018, the Company had allocated $624,000 and $732,000, respectively, of allowance for loan losses for the purchased loan pools.

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

Nonaccrual and Past Due Loans

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

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

(dollars in thousands)	2019		2018
Commercial, financial and agricultural	$	3,914	$	1,412
Real estate – construction and development	1,145		892
Real estate – commercial and farmland	4,232		4,654
Real estate – residential	19,557		10,465
Consumer installment	443		529
	$	29,291	$	17,952

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

(dollars in thousands)	2019		2018
Commercial, financial and agricultural	$	5,933	$	1,199
Real estate – construction and development	842		6,119
Real estate – commercial and farmland	19,565		5,534
Real estate – residential	16,560		10,769
Consumer installment	2,123		486
	$	45,023	$	24,107

F-37

The following table presents an analysis of past due loans, excluding purchased loans as of December 31, 2019 and 2018.

(dollars in thousands)	Loans 30-59 Days Past Due		Loans 60-89 Days Past Due		Loans 90 or More Days Past Due		Total Loans Past Due		Current Loans		Total Loans		Loans 90 Days or More Past Due and Still Accruing
As of December 31, 2019
Commercial, financial and agricultural	$	16,323	$	9,925	$	7,167	$	33,415	$	1,613,023	$	1,646,438	$	4,811
Real estate – construction and development	6,054		1,222		994		8,270		1,075,294		1,083,564		—
Real estate – commercial and farmland	4,195		565		3,087		7,847		2,439,987		2,447,834		—
Real estate – residential	25,581		5,243		17,318		48,142		1,853,210		1,901,352		—
Consumer installment	2,752		1,301		1,260		5,313		445,486		450,799		922
Total	$	54,905	$	18,256	$	29,826	$	102,987	$	7,427,000	$	7,529,987	$	5,733

(dollars in thousands)	Loans 30-59 Days Past Due		Loans 60-89 Days Past Due		Loans 90 or More Days Past Due		Total Loans Past Due		Current Loans		Total Loans		Loans 90 Days or More Past Due and Still Accruing
As of December 31, 2018
Commercial, financial and agricultural	$	6,479	$	5,295	$	4,763	$	16,537	$	1,299,822	$	1,316,359	$	3,808
Real estate – construction and development	1,218		481		725		2,424		668,774		671,198		—
Real estate – commercial and farmland	1,625		530		3,645		5,800		1,808,729		1,814,529		—
Real estate – residential	11,423		4,631		8,923		24,977		1,378,023		1,403,000		—
Consumer installment	2,344		1,167		735		4,246		451,125		455,371		414
Total	$	23,089	$	12,104	$	18,791	$	53,984	$	5,606,473	$	5,660,457	$	4,222

The following table presents an analysis of purchased past due loans as of December 31, 2019 and 2018.

(dollars in thousands)	Loans 30-59 Days Past Due		Loans 60-89 Days Past Due		Loans 90 or More Days Past Due		Total Loans Past Due		Current Loans		Total Loans		Loans 90 Days or More Past Due and Still Accruing
As of December 31, 2019
Commercial, financial and agricultural	$	1,087	$	348	$	4,738	$	6,173	$	378,100	$	384,273	$	—
Real estate – construction and development	1,731		2		588		2,321		463,176		465,497		—
Real estate – commercial and farmland	3,209		2,840		12,511		18,560		1,886,645		1,905,205		—
Real estate – residential	20,645		8,685		12,956		42,286		1,177,985		1,220,271		—
Consumer installment	6,714		1,102		1,704		9,520		1,090,515		1,100,035		21
Total	$	33,386	$	12,977	$	32,497	$	78,860	$	4,996,421	$	5,075,281	$	21

F-38

(dollars in thousands)	Loans 30-59 Days Past Due		Loans 60-89 Days Past Due		Loans 90 or More Days Past Due		Total Loans Past Due		Current Loans		Total Loans		Loans 90 Days or More Past Due and Still Accruing
As of December 31, 2018
Commercial, financial and agricultural	$	421	$	416	$	1,015	$	1,852	$	370,834	$	372,686	$	—
Real estate – construction and development	627		370		5,273		6,270		221,630		227,900		—
Real estate – commercial and farmland	1,935		736		1,698		4,369		1,333,490		1,337,859		—
Real estate – residential	12,531		2,407		7,005		21,943		601,256		623,199		—
Consumer installment	679		237		249		1,165		26,023		27,188		—
Total	$	16,193	$	4,166	$	15,240	$	35,599	$	2,553,233	$	2,588,832	$	—

Impaired Loans

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

F-39

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

	As of and For the Years Ended December 31,
(dollars in thousands)	2019		2018		2017
Nonaccrual loans	$	29,291	$	17,952	$	14,202
Troubled debt restructurings not included above	11,646		9,323		13,599
Total impaired loans	$	40,937	$	27,275	$	27,801
Interest income recognized on impaired loans	$	1,023	$	827	$	1,867
Foregone interest income on impaired loans	$	882	$	853	$	950

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

(dollars in thousands)	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Average Recorded Investment
As of December 31, 2019
Commercial, financial and agricultural	$	5,825	$	1,084	$	3,472	$	4,556	$	1,025	$	3,027
Real estate – construction and development	1,535		612		598		1,210		68		1,266
Real estate – commercial and farmland	7,586		627		6,344		6,971		392		6,682
Real estate – residential	28,122		5,315		22,434		27,749		1,695		21,270
Consumer installment	473		451		—		451		—		467
Total	$	43,541	$	8,089	$	32,848	$	40,937	$	3,180	$	32,712

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

F-40

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

	As of and For the Years Ended December 31,
(dollars in thousands)	2019		2018		2017
Nonaccrual loans	$	45,023	$	24,107	$	15,428
Troubled debt restructurings not included above	17,963		18,740		20,472
Total impaired loans	$	62,986	$	42,847	$	35,900
Interest income recognized on impaired loans	$	3,108	$	2,203	$	1,625
Foregone interest income on impaired loans	$	3,218	$	1,483	$	1,239

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

(dollars in thousands)	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Average Recorded Investment
As of December 31, 2019
Commercial, financial and agricultural	$	13,380	$	838	$	5,125	$	5,963	$	673	$	4,377
Real estate – construction and development	3,358		707		1,007		1,714		136		5,640
Real estate – commercial and farmland	34,929		11,520		12,037		23,557		561		19,126
Real estate – residential	33,744		8,098		21,531		29,629		1,897		38,572
Consumer installment	3,540		2,123		—		2,123		—		932
Total	$	88,951	$	23,286	$	39,700	$	62,986	$	3,267	$	68,647

(dollars in thousands)	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Average Recorded Investment
As of December 31, 2018
Commercial, financial and agricultural	$	5,717	$	473	$	757	$	1,230	$	—	$	836
Real estate – construction and development	13,714		623		6,511		7,134		476		5,712
Real estate – commercial and farmland	14,766		1,115		10,581		11,696		684		12,349
Real estate – residential	24,839		8,185		14,116		22,301		773		21,433
Consumer installment	526		486		—		486		—		229
Total	$	59,562	$	10,882	$	31,965	$	42,847	$	1,933	$	40,559

Credit Quality Indicators

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

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

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

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

Grade 4 – Satisfactory Credit – This grade includes loans which exhibit all the characteristics of a Good Credit, but warrant more than normal level of banker supervision due to (i) circumstances which elevate the risks of performance (such as start-up operations, untested management, heavy leverage and interim losses); (ii) adverse, extraordinary events that have affected, or could affect, the borrower’s cash flow, financial condition, ability to continue operating profitability or refinancing (such as

F-41

death of principal, fire and divorce); (iii) loans that require more than the normal servicing requirements (such as any type of construction financing, acquisition and development loans, accounts receivable or inventory loans and floor plan loans); (iv) existing technical exceptions which raise some doubts about the Bank’s perfection in its collateral position or the continued financial capacity of the borrower; or (v) improvements in formerly criticized borrowers, which may warrant banker supervision.

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

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

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

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

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

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

As of December 31, 2019

Risk Grade	Commercial, Financial and Agricultural		Real Estate - Construction and Development		Real Estate - Commercial and Farmland		Real Estate - Residential		Consumer Installment		Total
1 - Prime credit	$	497,942	$	—	$	208	$	27	$	11,807	$	509,984
2 - Strong credit	670,267		17,535		26,688		32,101		—		746,591
3 - Good credit	161,353		76,871		1,313,853		1,730,257		7,551		3,289,885
4 - Satisfactory credit	289,882		954,555		993,053		104,597		430,707		2,772,794
5 - Fair credit	19,450		24,415		67,047		8,077		30		119,019
6 - Other assets especially mentioned	1,952		7,786		20,268		2,540		120		32,666
7 - Substandard	5,592		2,402		26,717		23,753		574		59,038
8 - Doubtful	—		—		—		—		8		8
9 - Loss	—		—		—		—		2		2
Total	$	1,646,438	$	1,083,564	$	2,447,834	$	1,901,352	$	450,799	$	7,529,987

F-42

As of December 31, 2018

Risk Grade	Commercial, Financial and Agricultural		Real Estate - Construction and Development		Real Estate - Commercial  and Farmland		Real Estate - Residential		Consumer Installment		Total
1 - Prime credit	$	530,864	$	40	$	500	$	16	$	10,744	$	542,164
2 - Strong credit	452,250		681		37,079		33,043		48		523,101
3 - Good credit	174,811		74,657		888,433		1,246,383		23,844		2,408,128
4 - Satisfactory credit	137,038		582,456		814,068		94,143		419,983		2,047,688
5 - Fair credit	13,714		6,264		30,364		8,634		78		59,054
6 - Other assets especially mentioned	5,130		4,091		20,959		4,881		57		35,118
7 - Substandard	2,552		3,009		23,126		15,900		617		45,204
8 - Doubtful	—		—		—		—		—		—
9 - Loss	—		—		—		—		—		—
Total	$	1,316,359	$	671,198	$	1,814,529	$	1,403,000	$	455,371	$	5,660,457

The following table presents the purchased loan portfolio by risk grade as of December 31, 2019 and 2018 (in thousands).

As of December 31, 2019

Risk Grade	Commercial, Financial and Agricultural		Real Estate - Construction and Development		Real Estate - Commercial and Farmland		Real Estate - Residential		Consumer Installment		Total
1 - Prime credit	$	76,516	$	—	$	—	$	—	$	1,377	$	77,893
2 - Strong credit	5,729		—		8,611		60,154		19,287		93,781
3 - Good credit	72,008		13,252		406,185		990,302		1,050,368		2,532,115
4 - Satisfactory credit	192,890		423,119		1,355,031		118,181		22,526		2,111,747
5 - Fair credit	13,867		17,343		66,072		16,541		178		114,001
6 - Other assets especially mentioned	2,950		9,437		33,674		7,592		93		53,746
7 - Substandard	20,313		2,346		35,632		27,501		6,206		91,998
8 - Doubtful	—		—		—		—		—		—
9 - Loss	—		—		—		—		—		—
Total	$	384,273	$	465,497	$	1,905,205	$	1,220,271	$	1,100,035	$	5,075,281

As of December 31, 2018

Risk Grade	Commercial, Financial and Agricultural		Real Estate - Construction and Development		Real Estate - Commercial and Farmland		Real Estate - Residential		Consumer Installment		Total
1 - Prime credit	$	90,205	$	—	$	—	$	—	$	570	$	90,775
2 - Strong credit	2,648		—		7,407		74,398		164		84,617
3 - Good credit	20,489		18,022		230,089		385,279		2,410		656,289
4 - Satisfactory credit	215,096		195,079		1,034,943		118,082		23,177		1,586,377
5 - Fair credit	14,445		2,728		29,468		16,937		35		63,613
6 - Other assets especially mentioned	11,601		1,459		10,063		7,231		94		30,448
7 - Substandard	18,202		10,612		25,889		21,272		738		76,713
8 - Doubtful	—		—		—		—		—		—
9 - Loss	—		—		—		—		—		—
Total	$	372,686	$	227,900	$	1,337,859	$	623,199	$	27,188	$	2,588,832

F-43

Troubled Debt Restructurings

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

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

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

In the normal course of business, the Company renews loans with a modification of the interest rate or terms that are not deemed as troubled debt restructurings because the borrower is not experiencing financial difficulty. The Company modified loans in 2019 and 2018 totaling $325.7 million and $111.7 million, respectively, under such parameters.

As of December 31, 2019 and 2018, the Company had a balance of $14.1 million and $11.0 million, respectively, in troubled debt restructurings, excluding purchased loans. The Company has recorded $827,000 and $890,000 in previous charge-offs on such loans at December 31, 2019 and 2018, respectively. The Company’s balance in the allowance for loan losses allocated to such troubled debt restructurings was $1.8 million and $820,000 at December 31, 2019 and 2018, respectively. At December 31, 2019, the Company did not have any commitments to lend additional funds to debtors whose terms have been modified in troubled restructurings.

During the year ending December 31, 2019 and 2018, the Company modified loans as troubled debt restructurings, excluding purchased loans, with principal balances of $4.8 million and $2.3 million, respectively, and these modifications did not have a material impact on the Company's allowance for loan losses. The following table presents the loans by class modified as troubled debt restructurings, excluding purchased loans, which occurred during the year ending December 31, 2019 and 2018.

	December 31, 2019			December 31, 2018
Loan Class	#	Balance (in thousands)		#	Balance (in thousands)
Commercial, financial and agricultural	5	$	784	11	$	348
Real estate – construction and development	—	—		1	3
Real estate – commercial and farmland	2	220		2	440
Real estate – residential	20	3,751		13	1,430
Consumer installment	7	24		6	35
Total	34	$	4,779	33	$	2,256

F-44

Troubled debt restructurings, excluding purchased loans, with an outstanding balance of $1.9 million and $1.3 million at December 31, 2019 and 2018 defaulted during the year ended December 31, 2019 and 2018, respectively, and these defaults did not have a material impact on the Company’s allowance for loan loss. The following table presents the troubled debt restructurings by class that defaulted (defined as 30 days past due) during the year ending December 31, 2019 and 2018.

	December 31, 2019			December 31, 2018
Loan Class	#	Balance (in thousands)		#	Balance (in thousands)
Commercial, financial and agricultural	4	$	81	8	$	107
Real estate – construction and development	1	2		1	—
Real estate – commercial and farmland	2	794		1	246
Real estate – residential	6	1,052		16	911
Consumer installment	4	17		7	34
Total	17	$	1,946	33	$	1,298

The following table presents the amount of troubled debt restructurings by loan class, excluding purchased loans, classified separately as accrual and non-accrual at December 31, 2019 and 2018.

As of December 31, 2019	Accruing Loans			Non-Accruing Loans
Loan Class	#	Balance (in thousands)		#	Balance (in thousands)
Commercial, financial and agricultural	5	$	642	14	$	312
Real estate – construction and development	2	64		1	1
Real estate – commercial and farmland	12	2,740		2	359
Real estate – residential	83	8,192		21	1,751
Consumer installment	4	8		21	59
Total	106	$	11,646	59	$	2,482

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

As of December 31, 2019 and 2018, the Company had a balance of $21.1 million and $22.2 million, respectively, in troubled debt restructurings included in purchased loans. The Company has recorded $1.1 million and $940,000, respectively, in previous charge-offs on such loans at December 31, 2019 and 2018. At December 31, 2019, the Company did not have any commitments to lend additional funds to debtors whose terms have been modified in troubled restructurings.

During the year ending December 31, 2019 and 2018, the Company modified purchased loans as troubled debt restructurings, with principal balances of $3.7 million and $2.5 million, respectively, and these modifications did not have a material impact on the Company’s allowance for loan losses. The following table presents the purchased loans by class modified as troubled debt restructurings, which occurred during the year ending December 31, 2019 and 2018.

	December 31, 2019			December 31, 2018
Loan Class	#	Balance (in thousands)		#	Balance (in thousands)
Commercial, financial and agricultural	—	$	—	4	$	63
Real estate – construction and development	—	—		—	—
Real estate – commercial and farmland	—	—		1	71
Real estate – residential	28	3,691		27	2,351
Consumer installment	3	34		2	14
Total	31	$	3,725	34	$	2,499

F-45

Troubled debt restructurings included in purchased loans with an outstanding balance of $2.2 million and $2.5 million defaulted during the years ended December 31, 2019 and 2018, respectively, and these defaults did not have a material impact on the Company’s allowance for loan loss. The following table presents the troubled debt restructurings by class that defaulted (defined as 30 days past due) during the year ending December 31, 2019 and 2018.

	December 31, 2019			December 31, 2018
Loan Class	#	Balance (in thousands)		#	Balance (in thousands)
Commercial, financial and agricultural	2	$	6	—	$	—
Real estate – construction and development	—	—		—	—
Real estate – commercial and farmland	3	1,148		1	71
Real estate – residential	17	1,078		25	2,400
Consumer installment	1	15		—	—
Total	23	$	2,247	26	$	2,471

The following table presents the amount of troubled debt restructurings by loan class of purchased loans, classified separately as accrual and non-accrual at December 31, 2019 and 2018.

As of December 31, 2019	Accruing Loans			Non-Accruing Loans
Loan Class	#	Balance (in thousands)		#	Balance (in thousands)
Commercial, financial and agricultural	1	$	30	3	$	23
Real estate – construction and development	4	872		2	252
Real estate – commercial and farmland	9	3,992		6	1,712
Real estate – residential	114	13,069		19	1,106
Consumer installment	—	—		6	48
Total	128	$	17,963	36	$	3,141

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

As of December 31, 2019, there were no loans in purchased loan pools that had been modified as troubled debt restructurings. As of December 31, 2018, there were no loans in purchased loan pools that had been modified as a troubled debt restructurings.

Related Party Loans

In the ordinary course of business, the Company has granted loans to certain executive officers, directors and their affiliates. Changes in related party loans are summarized as follows:

	December 31,
(dollars in thousands)	2019		2018
Balance, January 1	$	1,458	$	2,145
Advances	6,799		257
Repayments	(2,537)		(944)
Transactions due to changes in related parties	27,960		—
Ending balance	$	33,680	$	1,458

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Allowance for Loan Losses

The following table details activity in the allowance for loan losses by portfolio segment for the periods indicated. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.

(dollars in thousands)	Commercial, Financial and Agricultural		Real Estate – Construction and Development		Real Estate – Commercial and Farmland		Real Estate - Residential		Consumer Installment		Purchased Loans		Purchased Loan Pools		Total
Twelve months ended December 31, 2019
Balance, January 1, 2019	$	4,287	$	3,734	$	8,975	$	5,363	$	3,795	$	1,933	$	732	$	28,819
Provision for loan losses	6,699		2,421		1,446		3,108		4,774		1,418		(108)		19,758
Loans charged off	(7,131)		(321)		(1,430)		(160)		(5,695)		(5,051)		—		(19,788)
Recoveries of loans previously charged off	3,072		25		113		295		910		4,985		—		9,400
Balance, December 31, 2019	$	6,927	$	5,859	$	9,104	$	8,606	$	3,784	$	3,285	$	624	$	38,189
Period-end amount allocated to:
Loans individually evaluated for impairment(1)	$	1,627	$	68	$	392	$	1,790	$	—	$	3,285	$	—	$	7,162
Loans collectively evaluated for impairment	5,300		5,791		8,712		6,816		3,784		—		624		31,027
Ending balance	$	6,927	$	5,859	$	9,104	$	8,606	$	3,784	$	3,285	$	624	$	38,189
Loans:
Individually evaluated for impairment(1)	$	9,483	$	598	$	6,344	$	22,998	$	—	$	42,242	$	810	$	82,475
Collectively evaluated for impairment	1,636,955		1,082,966		2,441,490		1,878,354		450,799		4,899,116		212,398		12,602,078
Acquired with deteriorated credit quality	—		—		—		—		—		133,923		—		133,923
Ending balance	$	1,646,438	$	1,083,564	$	2,447,834	$	1,901,352	$	450,799	$	5,075,281	$	213,208	$	12,818,476

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

F-47

(dollars in thousands)	Commercial, Financial and Agricultural		Real Estate – Construction and Development		Real Estate – Commercial and Farmland		Real Estate - Residential		Consumer Installment		Purchased Loans		Purchased Loan Pools		Total
Twelve months ended December 31, 2018
Balance, January 1, 2018	$	3,631	$	3,629	$	7,501	$	4,786	$	1,916	$	3,253	$	1,075	$	25,791
Provision for loan losses	10,690		277		1,636		1,002		5,569		(2,164)		(343)		16,667
Loans charged off	(13,803)		(292)		(338)		(771)		(4,189)		(1,738)		—		(21,131)
Recoveries of loans previously charged off	3,769		120		176		346		499		2,582		—		7,492
Balance, December 31, 2018	$	4,287	$	3,734	$	8,975	$	5,363	$	3,795	$	1,933	$	732	$	28,819
Period-end amount allocated to:
Loans individually evaluated for impairment(1)	$	570	$	3	$	1,591	$	867	$	—	$	1,933	$	—	$	4,964
Loans collectively evaluated for impairment	3,717		3,731		7,384		4,496		3,795		—		732		23,855
Ending balance	$	4,287	$	3,734	$	8,975	$	5,363	$	3,795	$	1,933	$	732	$	28,819
Loans:
Individually evaluated for impairment(1)	$	3,211	$	424	$	6,649	$	11,364	$	—	$	32,244	$	—	$	53,892
Collectively evaluated for impairment	1,313,148		670,774		1,807,880		1,391,636		455,371		2,468,996		262,625		8,370,430
Acquired with deteriorated credit quality	—		—		—		—		—		87,592		—		87,592
Ending balance	$	1,316,359	$	671,198	$	1,814,529	$	1,403,000	$	455,371	$	2,588,832	$	262,625	$	8,511,914

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

F-48

(dollars in thousands)	Commercial, Financial and Agricultural		Real Estate – Construction and Development		Real Estate – Commercial and Farmland		Real Estate - Residential		Consumer Installment		Purchased Loans		Purchased Loan Pools		Total
Twelve months ended December 31, 2017
Balance, January 1, 2017	$	2,192	$	2,990	$	7,662	$	6,786	$	827	$	1,626	$	1,837	$	23,920
Provision for loan losses	3,019		488		508		(86)		2,591		2,606		(762)		8,364
Loans charged off	(2,850)		(95)		(853)		(2,151)		(1,618)		(2,900)		—		(10,467)
Recoveries of loans previously charged off	1,270		246		184		237		116		1,921		—		3,974
Balance, December 31, 2017	$	3,631	$	3,629	$	7,501	$	4,786	$	1,916	$	3,253	$	1,075	$	25,791
Period-end amount allocated to:
Loans individually evaluated for impairment(1)	$	465	$	48	$	1,047	$	1,028	$	—	$	3,253	$	177	$	6,018
Loans collectively evaluated for impairment	3,166		3,581		6,454		3,758		1,916		—		898		19,773
Ending balance	$	3,631	$	3,629	$	7,501	$	4,786	$	1,916	$	3,253	$	1,075	$	25,791
Loans:
Individually evaluated for impairment(1)	$	2,971	$	500	$	8,873	$	10,818	$	—	$	28,165	$	904	$	52,231
Collectively evaluated for impairment	1,359,537		624,095		1,526,566		998,643		324,511		718,447		327,342		5,879,141
Acquired with deteriorated credit quality	—		—		—		—		—		114,983		—		114,983
Ending balance	$	1,362,508	$	624,595	$	1,535,439	$	1,009,461	$	324,511	$	861,595	$	328,246	$	6,046,355

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

NOTE 5. PREMISES AND EQUIPMENT

Premises and equipment are summarized as follows:

	December 31,
(dollars in thousands)	2019		2018
Land	$	74,868	$	49,518
Buildings and leasehold improvements	167,837		110,623
Furniture and equipment	69,108		53,425
Construction in progress	2,282		3,312
Premises and equipment, gross	314,095		216,878
Accumulated depreciation	(80,993)		(71,468)
Premises and equipment, net	$	233,102	$	145,410

Depreciation expense was approximately $13.1 million, $10.0 million, and $9.2 million for the years ended December 31, 2019, 2018 and 2017, respectively.

At December 31, 2019, estimated costs to complete construction projects in progress and other binding commitments for capital expenditures were not a material amount.

F-49

NOTE 6. GOODWILL AND INTANGIBLE ASSETS

The change in the carrying value of goodwill for the years ended December 31, 2019 and 2018 is summarized below for both the total Company and by the Company's reportable segments.

	December 31,
(dollars in thousands)	2019		2018
Consolidated
Carrying amount of goodwill at beginning of year	$	503,434	$	125,532
Additions related to acquisitions in current year	430,497		377,902
Fair value adjustments related to acquisitions in prior year	(2,294)		—
Carrying amount of goodwill at end of year	$	931,637	$	503,434
Banking Division
Carrying amount of goodwill at beginning of year	$	438,144	$	125,532
Additions related to acquisitions in current year	430,497		312,612
Fair value adjustments related to acquisitions in prior year	(1,502)		—
Carrying amount of goodwill at end of year	$	867,139	$	438,144
Premium Finance Division
Carrying amount of goodwill at beginning of year	$	65,290	$	—
Additions related to acquisitions in current year	—		65,290
Fair value adjustments related to acquisitions in prior year	(792)		—
Carrying amount of goodwill at end of year	$	64,498	$	65,290

During 2019, the Company recorded net additions to goodwill totaling $428.2 million comprised of $430.5 million related to the Fidelity acquisition and $1.1 million, $(2.6) million and $(792,000) related to subsequent fair value adjustments on the Hamilton, Atlantic and USPF acquisitions, respectively.

Impairment exists when a reporting unit’s carrying value of goodwill exceeds its fair value.

At December 31, 2019, the Banking Division had positive equity and the Company's qualitative assessment indicated that it was more likely than not that the Banking Division's fair value exceeded its carrying value, resulting in no goodwill impairment.

At December 31, 2019, the Premium Finance Division had positive equity but the Company’s qualitative assessment did not indicate that it was more likely than not that the reporting unit’s fair value exceeded its carrying value. Therefore, the Company proceeded to the two step impairment test. Step 1 includes the determination of the carrying value of the reporting unit, including the goodwill and intangible assets, and estimating fair value of the reporting unit. If the carrying amount of a reporting unit exceeds its fair value, Step 2 determines the impairment. Step 1 was completed for the Premium Finance Division by updating the original cash flow model used to value the division with current customer information, margin assumptions and future growth. The resulting fair value of the Premium Finance Division exceeded its carrying value, indicating no goodwill impairment and eliminating the need to do Step 2.

The carrying value of intangible assets as of December 31, 2019 and 2018 was $91.6 million and $58.7 million, respectively. Intangible assets are comprised of core deposit intangibles, an insurance agent relationships intangible, a "US Premium Finance" trade name intangible and a non-compete agreement intangible. During 2019, the Company recorded core deposit intangible assets of $50.6 million associated with the Fidelity acquisition. During 2018, the Company recorded core deposit intangible assets of $23.6 million and $7.5 million associated with the Hamilton acquisition and the Atlantic acquisition, respectively. The amortization period used for core deposit intangibles ranges from seven to ten years. Also during 2018, in connection with the USPF acquisition, the Company recorded an insurance agent relationships intangible asset of $22.4 million, a "US Premium Finance" trade name intangible asset of $1.1 million and a non-compete agreement intangible asset of $162,000. The amortization periods used for the insurance agent relationships, the "US Premium Finance" trade name and the non-compete agreement intangible assets are eight years, seven years and three years, respectively.

F-50

The following is a summary of information related to acquired intangible assets:

	As of December 31, 2019				As of December 31, 2018
(dollars in thousands)	Gross Amount		Accumulated Amortization		Gross Amount		Accumulated Amortization
Amortized intangible assets:
Core deposit premiums	$	107,958	$	34,220	$	57,348	$	19,512
Insurance agent relationships	22,351		5,355		22,351		2,561
US Premium Finance trade name	1,094		300		1,094		143
Non-compete agreement	162		104		162		50
	$	131,565	$	39,979	$	80,955	$	22,266

The aggregate amortization expense for intangible assets was approximately $17.7 million, $9.5 million and $3.9 million for the years ended December 31, 2019, 2018 and 2017, respectively.

The estimated amortization expense for each of the next five years is as follows (in thousands):

2020	$	19,612
2021	14,965
2022	12,554
2023	11,054
2024	9,999
Thereafter	23,402
	$	91,586

NOTE 7. DEPOSITS

The scheduled maturities of time deposits at December 31, 2019 are as follows:

(dollars in thousands)
2020	$	2,317,715
2021	400,703
2022	93,718
2023	31,522
2024	21,658
Thereafter	2,057
	$	2,867,373

The aggregate amount of time deposits in denominations of $250,000 or more at December 31, 2019 and 2018 was $702.3 million and $423.6 million, respectively.

As of December 31, 2019, the Company had brokered deposits of $452.7 million. As of December 31, 2018, the Company had brokered deposits of $846.7 million.

Deposits from principal officers, directors, and their affiliates at December 31, 2019 and 2018 were $118.5 million and $8.0 million, respectively.

NOTE 8. SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

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

F-51

The following is a summary of securities sold under repurchase agreements for the years ended December 31, 2019, 2018 and 2017:

	For the Years Ended December 31,
(dollars in thousands)	2019			2018			2017
Average daily balance during the year	$	14,043		$	15,692		$	28,694
Average interest rate during the year	0.61		%	0.15		%	0.20		%
Maximum month-end balance during the year	$	23,626		$	23,270		$	49,836
Weighted average interest rate at year-end	0.81		%	0.14		%	0.18		%

The following is a summary of the Company’s securities sold under agreements to repurchase at December 31, 2019 and 2018:

(dollars in thousands)	December 31, 2019		December 31, 2018
Securities sold under agreements to repurchase	$	20,635	$	20,384

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

F-52

NOTE 9. OTHER BORROWINGS

Other borrowings consist of the following:

	December 31,
(dollars in thousands)	2019		2018
Federal Home Loan Bank ("FHLB") borrowings:
Convertible Flipper Advance due May 22, 2019; current interest rate of 4.68%	$	—	$	1,514
Principal Reducing Advance due June 20, 2019; fixed interest rate of 1.274%	—		500
Fixed Rate Advance due January 10, 2020; fixed interest rate of 1.68%	50,000		—
Fixed Rate Advance due January 13, 2020; fixed interest rate of 1.68%	50,000		—
Fixed Rate Advance due January 13, 2020; fixed interest rate of 1.67%	100,000		—
Fixed Rate Advance due January 15, 2020; fixed interest rate of 1.71%	50,000		—
Fixed Rate Advance due January 16, 2020; fixed interest rate of 1.69%	150,000		—
Fixed Rate Advance due January 17, 2020; fixed interest rate of 1.70%	100,000		—
Fixed Rate Advance due January 21, 2020; fixed interest rate of 1.71%	50,000		—
Fixed Rate Advance due January 21, 2020; fixed interest rate of 1.71%	200,000		—
Fixed Rate Advance due January 21, 2020; fixed interest rate of 1.70%	25,000		—
Fixed Rate Advance due January 21, 2020; fixed interest rate of 1.71%	75,000		—
Fixed Rate Advance due January 21, 2020; fixed interest rate of 1.71%	25,000		—
Fixed Rate Advance due January 23, 2020; fixed interest rate of 1.71%	100,000		—
Fixed Rate Advance due January 27, 2020; fixed interest rate of 1.73%	50,000		—
Fixed Rate Advance due February 18, 2020; fixed interest rate of 1.72%	100,000		—
Fixed Rate Advance due December 9, 2030; fixed interest rate of 4.55%	1,422		1,434
Fixed Rate Advance due December 9, 2030; fixed interest rate of 4.55%	985		993
Principal Reducing Advance due September 29, 2031; fixed interest rate of 3.095%	1,712		1,858
Subordinated notes payable:
Subordinated notes payable due March 15, 2027 net of unamortized debt issuance cost of $943 and $1,074, respectively; fixed interest rate of 5.75% through March 14, 2022; variable interest rate thereafter at three-month LIBOR plus 3.616%	74,057		73,926
Subordinated notes payable due December 15, 2029 net of unamortized debt issuance cost of $2,408 and $0, respectively; fixed interest rate of 4.25% through December 14, 2024; variable interest rate thereafter at three-month SOFR plus 2.94%	117,592		—
Subordinated notes payable due May 31, 2030 net of unaccreted purchase accounting fair value adjustment of $1,596 and $0, respectively; fixed interest rate of 5.875% through May 31, 2025; variable interest rate thereafter at three-month LIBOR plus 3.63%	76,595		—
Other debt:
Advance from correspondent bank due October 5, 2019; fixed interest rate of 4.25%	—		20
Advance from correspondent bank due September 5, 2026; secured by a loan receivable; fixed interest rate of 2.09%	1,346		1,529
Advances under revolving credit agreement with a regional bank due September 26, 2020; secured by subsidiary bank stock; variable interest rate at 90-day LIBOR plus 3.50% (6.24% at December 31, 2018)	—		70,000
	$	1,398,709	$	151,774

The advances from the FHLB are collateralized by a blanket lien on all eligible first mortgage loans and other specific loans in addition to FHLB stock. At December 31, 2019, $1.66 billion was available for borrowing on lines with the FHLB.

At December 31, 2018, the Company had a revolving credit arrangement with a regional bank with a maximum line amount of $100.0 million. This line of credit was secured by subsidiary bank stock, expired on September 26, 2020, and bore a variable interest rate of 90-day LIBOR plus 3.50%. The revolving credit arrangement was terminated by the Company during December 2019.

As of December 31, 2019, the Bank maintained credit arrangements with various financial institutions to purchase federal funds up to $157.0 million.

The Bank also participates in the Federal Reserve discount window borrowings program. At December 31, 2019, the Bank had $2.22 billion of loans pledged at the Federal Reserve discount window and had $1.49 billion available for borrowing.

F-53

Subordinated Notes Payable

On March 13, 2017, the Company completed the public offering and sale of $75.0 million in aggregate principal amount of its 5.75% Fixed-To-Floating Rate Subordinated Notes due 2027 (the “2027 subordinated notes”). The 2027 subordinated notes were sold to the public at par pursuant to an underwriting agreement and were issued pursuant to an indenture and a supplemental indenture. The 2027 subordinated notes will mature on March 15, 2027 and through March 14, 2022 will bear a fixed rate of interest of 5.75% per annum, payable semi-annually in arrears on September 15 and March 15 of each year. Beginning March 15, 2022, the interest rate on the 2027 subordinated notes resets quarterly to a floating rate per annum equal to the then-current three-month LIBOR plus 3.616%, payable quarterly in arrears on June 15, September 15, December 15 and March 15 of each year to the maturity date or earlier redemption. On any scheduled interest payment date beginning March 15, 2022, the Company may, at its option, redeem the 2027 subordinated notes, in whole or in part, at a redemption price equal to 100% of the principal amount plus accrued and unpaid interest.

On December 6, 2019, the Company completed the public offering and sale of $120.0 million in aggregate principal amount of its 4.25% Fixed-To-Floating Rate Subordinated Notes due 2029 (the “2029 subordinated notes”). The 2029 subordinated notes were sold to the public at par pursuant to an underwriting agreement and were issued pursuant to an indenture and a supplemental indenture. The 2029 subordinated notes will mature on December 15, 2029 and through December 14, 2024 will bear a fixed rate of interest of 4.25% per annum, payable semi-annually in arrears on June 15 and December 15 of each year. Beginning December 15, 2024, the interest rate on the 2029 subordinated notes resets quarterly to a floating rate per annum equal to the then-current three-month SOFR plus 2.94%, payable quarterly in arrears on March 15, June 15, September 15 and December 15 of each year to the maturity date or earlier redemption. On any scheduled interest payment date beginning December 15, 2024, the Company may, at its option, redeem the 2029 subordinated notes, in whole or in part, at a redemption price equal to 100% of the principal amount plus accrued and unpaid interest.

The 2027 and 2029 subordinated notes are unsecured and rank equally with all other unsecured subordinated indebtedness of the Company, including any subordinated indebtedness issued in the future under the indenture governing the 2027 and 2029 subordinated notes. The 2027 and 2029 subordinated notes are subordinated in right of payment to all senior indebtedness of the Company. The 2027 and 2029 subordinated notes are obligations of the Company only and are not guaranteed by any subsidiaries, including the Bank. Additionally, the 2027 and 2029 subordinated notes are structurally subordinated to all existing and future indebtedness and other liabilities of the Company’s subsidiaries, meaning that creditors of the Company’s subsidiaries (including, in the case of the Bank, its depositors) generally will be paid from those subsidiaries’ assets before holders of the 2027 and 2029 subordinated notes have any claim to those assets.

As a result of the Fidelity acquisition on July 1, 2019, the Bank assumed $75.0 million in aggregate principal amount of 5.875% Fixed-To-Floating Rate Subordinated Notes due 2030 (the "2030 subordinated notes"). The 2030 subordinated notes were acquired inclusive of an unaccreted purchase accounting fair value adjustment of $1.6 million. The 2030 subordinated notes will mature on May 31, 2030, and through May 31, 2025 will bear a fixed rate of interest of 5.875% per annum, payable semi-annually in arrears on December 1 and June 1 of each year. Beginning on June 1, 2025, the interest rate on the 2030 subordinated notes resets quarterly to a floating rate per annum equal to the then-current three-month LIBOR plus 3.63%, payable quarterly in arrears on September 1, December 1, March 1 and June 1 of each year to the maturity date or earlier redemption. On any scheduled interest payment date beginning June 1, 2025, the Bank may, at its option, redeem the 2030 subordinated notes, in whole or in part, at a redemption price equal to 100% of the principal amount plus accrued and unpaid interest.

The 2030 subordinated notes of the Bank are unsecured and structurally rank senior to all other unsecured subordinated indebtedness of the Company. The 2030 subordinated notes are subordinated in right of payment to all senior indebtedness of the Bank.

For regulatory capital adequacy purposes, the 2030 subordinated notes qualify as Tier 2 capital for the Bank and the 2027, 2029 and 2030 subordinated notes (collectively "subordinated notes") qualify as Tier 2 capital for the Company. If in the future the subordinated notes no longer qualify as Tier 2 capital, the subordinated notes may be redeemed by the Bank or Company at a redemption price equal to 100% of the principal amount plus accrued and unpaid interest, subject to prior approval by the Board of Governors of the Federal Reserve System.

F-54

NOTE 10. SUBORDINATED DEFERRABLE INTEREST DEBENTURES

During 2005, the Company acquired First National Banc Statutory Trust I, a statutory trust subsidiary of First National Banc, Inc., whose sole purpose was to issue $5,000,000 principal amount of trust preferred securities at a rate per annum equal to the 3-Month LIBOR plus 2.80% (4.74% at December 31, 2019) through a pool sponsored by a national brokerage firm. The trust preferred securities have a maturity of 30 years and are redeemable at the Company’s option on any quarterly interest payment date beginning in April 2009. There are certain circumstances (as described in the trust agreement) in which the securities may be redeemed within the first five years at the Company’s option. The aggregate principal amount of trust preferred certificates outstanding at December 31, 2019 was $5,000,000. The aggregate principal amount of debentures outstanding was $5,155,000. The Company’s investment in the common stock of the trust was $155,000 and is included in other assets.

During 2006, the Company formed Ameris Statutory Trust I, issuing trust preferred certificates in the aggregate principal amount of $36,000,000. The related debentures issued by the Company were in the aggregate principal amount of $37,114,000. Both the trust preferred securities and the related debentures bear interest at 3-Month LIBOR plus 1.63% (3.52% at December 31, 2019). Distributions on the trust preferred securities are paid quarterly, with interest on the debentures being paid on the corresponding dates. The trust preferred securities mature on December 15, 2036 and are redeemable at the Company’s option beginning September 15, 2011. The Company’s investment in the common stock of the trust was $1,114,000 and is included in other assets.

During 2013, the Company acquired Prosperity Banking Capital Trust I, a statutory trust subsidiary of Prosperity, whose sole purpose was to issue $5,000,000 principal amount of trust preferred securities at a rate per annum equal to the 3-Month LIBOR plus 2.57% (4.53% at December 31, 2019) through a pool sponsored by a national brokerage firm. The trust preferred securities have a maturity of 30 years and are redeemable at the Company’s option on any quarterly interest payment date beginning in July 2009. The aggregate principal amount of trust preferred certificates outstanding at December 31, 2019 was $5,000,000. The aggregate principal amount of debentures outstanding was $5,155,000, and is being carried at $3,670,000 on the Company’s balance sheet net of unamortized purchase discount. The Company’s investment in the common stock of the trust was $155,000 and is included in other assets.

During 2013, the Company acquired Prosperity Bank Statutory Trust II, a statutory trust subsidiary of Prosperity, whose sole purpose was to issue $4,500,000 principal amount of trust preferred securities at a rate per annum equal to the 3-Month LIBOR plus 3.15% (5.10% at December 31, 2019) through a pool sponsored by a national brokerage firm. The trust preferred securities have a maturity of 30 years and are redeemable at the Company’s option on any quarterly interest payment date beginning in March 2008. The aggregate principal amount of trust preferred certificates outstanding at December 31, 2019 was $4,500,000. The aggregate principal amount of debentures outstanding was $4,640,000, and is being carried at $3,592,000 on the Company’s balance sheet net of unamortized purchase discount. The Company’s investment in the common stock of the trust was $140,000 and is included in other assets.

During 2013, the Company acquired Prosperity Bank Statutory Trust III, a statutory trust subsidiary of Prosperity, whose sole purpose was to issue $10,000,000 principal amount of trust preferred securities at a rate per annum equal to the 3-Month LIBOR plus 1.60% (3.49% at December 31, 2019) through a pool sponsored by a national brokerage firm. The trust preferred securities have a maturity of 30 years and are redeemable at the Company’s option on any quarterly interest payment date beginning in March 2011. The aggregate principal amount of trust preferred certificates outstanding at December 31, 2019 was $10,000,000. The aggregate principal amount of debentures outstanding was $10,310,000, and is being carried at $6,241,000 on the Company’s balance sheet net of unamortized purchase discount. The Company’s investment in the common stock of the trust was $310,000 and is included in other assets.

During 2013, the Company acquired Prosperity Bank Statutory Trust IV, a statutory trust subsidiary of Prosperity, whose sole purpose was to issue $10,000,000 principal amount of trust preferred securities at a rate per annum equal to the 3-Month LIBOR plus 1.54% (3.43% at December 31, 2019) through a pool sponsored by a national brokerage firm. The trust preferred securities have a maturity of 30 years and are redeemable at the Company’s option on any quarterly interest payment date beginning in December 2012. The aggregate principal amount of trust preferred certificates outstanding at December 31, 2019 was $5,000,000. The aggregate principal amount of debentures outstanding was $5,155,000, and is being carried at $3,587,000 on the Company’s balance sheet net of unamortized purchase discount. The Company’s investment in the common stock of the trust was $310,000 and is included in other assets.

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During 2014, the Company acquired Coastal Bankshares Statutory Trust I, a statutory trust subsidiary of Coastal, whose sole purpose was to issue $5,000,000 principal amount of trust preferred securities at a rate per annum equal to the 3-Month LIBOR plus 3.15% (5.14% at December 31, 2019) through a pool sponsored by a national brokerage firm. The trust preferred securities have a maturity of 30 years and are redeemable at the Company’s option on any quarterly interest payment date beginning in October 2008. The aggregate principal amount of trust preferred certificates outstanding at December 31, 2019 was $5,000,000. The aggregate principal amount of debentures outstanding was $5,155,000, and is being carried at $4,091,000 on the Company’s balance sheet net of unamortized purchase discount. The Company’s investment in the common stock of the trust was $155,000 and is included in other assets.

During 2014, the Company acquired Coastal Bankshares Statutory Trust II, a statutory trust subsidiary of Coastal, whose sole purpose was to issue $10,000,000 principal amount of trust preferred securities at a rate per annum equal to the 3-Month LIBOR plus 1.60% (3.49% at December 31, 2019) through a pool sponsored by a national brokerage firm. The trust preferred securities have a maturity of 30 years and are redeemable at the Company’s option on any quarterly interest payment date beginning in December 2010. The aggregate principal amount of trust preferred certificates outstanding at December 31, 2019 was $10,000,000. The aggregate principal amount of debentures outstanding was $10,310,000, and is being carried at $6,650,000 on the Company’s balance sheet net of unamortized purchase discount. The Company’s investment in the common stock of the trust was $310,000 and is included in other assets.

During 2015, the Company acquired Merchants & Southern Statutory Trust I, a statutory trust subsidiary of Merchants, whose sole purpose was to issue $3,000,000 principal amount of trust preferred securities at a rate per annum equal to the 3-Month LIBOR plus 1.90% (3.80% at December 31, 2019) through a pool sponsored by a national brokerage firm. The trust preferred securities have a maturity of 30 years and are redeemable at the Company’s option on any quarterly interest payment date beginning in March 2010. The aggregate principal amount of trust preferred certificates outstanding at December 31, 2019 was $3,000,000. The aggregate principal amount of debentures outstanding was $3,093,000, and is being carried at $2,131,000 on the Company’s balance sheet net of unamortized purchase discount. The Company’s investment in the common stock of the trust was $93,000 and is included in other assets.

During 2015, the Company acquired Merchants & Southern Statutory Trust II, a statutory trust subsidiary of Merchants, whose sole purpose was to issue $3,000,000 principal amount of trust preferred securities at a rate per annum equal to the 3-Month LIBOR plus 1.50% (3.39% at December 31, 2019) through a pool sponsored by a national brokerage firm. The trust preferred securities have a maturity of 30 years and are redeemable at the Company’s option on any quarterly interest payment date beginning in June 2011.  The aggregate principal amount of trust preferred certificates outstanding at December 31, 2019 was $3,000,000. The aggregate principal amount of debentures outstanding was $3,093,000, and is being carried at $1,979,000 on the Company’s balance sheet net of unamortized purchase discount. The Company’s investment in the common stock of the trust was $93,000 and is included in other assets.

During 2016, the Company acquired Atlantic BancGroup, Inc. Statutory Trust I, a statutory trust subsidiary of JAXB, whose sole purpose was to issue $3,000,000 principal amount of trust preferred securities at a rate per annum equal to the 3-Month LIBOR plus 1.50% (3.39% at December 31, 2019) through a pool sponsored by a national brokerage firm. The trust preferred securities have a maturity of 30 years and are redeemable at the Company’s option on any quarterly interest payment date beginning in September 2015. The aggregate principal amount of trust preferred certificates outstanding at December 31, 2019 was $3,000,000. The aggregate principal amount of debentures outstanding was $3,093,000, and is being carried at $1,902,000 on the Company’s balance sheet net of unamortized purchase discount. The Company’s investment in the common stock of the trust was $93,000 and is included in other assets.

During 2016, the Company acquired Jacksonville Statutory Trust I, a statutory trust subsidiary of JAXB, whose sole purpose was to issue $4,000,000 principal amount of trust preferred securities at a rate per annum equal to the 3-Month LIBOR plus 2.63% (4.53% at December 31, 2019) through a pool sponsored by a national brokerage firm. The trust preferred securities have a maturity of 30 years and are redeemable at the Company’s option on any quarterly interest payment date beginning in June 2009.  The aggregate principal amount of trust preferred certificates outstanding at December 31, 2019 was $4,000,000. The aggregate principal amount of debentures outstanding was $4,124,000, and is being carried at $3,251,000 on the Company’s balance sheet net of unamortized purchase discount. The Company’s investment in the common stock of the trust was $124,000 and is included in other assets.

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During 2016, the Company acquired Jacksonville Statutory Trust II, a statutory trust subsidiary of JAXB, whose sole purpose was to issue $3,000,000 principal amount of trust preferred securities at a rate per annum equal to the 3-Month LIBOR plus 1.73% (3.62% at December 31, 2019) through a pool sponsored by a national brokerage firm. The trust preferred securities have a maturity of 30 years and are redeemable at the Company’s option on any quarterly interest payment date beginning in December 2011. The aggregate principal amount of trust preferred certificates outstanding at December 31, 2019 was $3,000,000. The aggregate principal amount of debentures outstanding was $3,093,000, and is being carried at $2,100,000 on the Company’s balance sheet net of unamortized purchase discount. The Company’s investment in the common stock of the trust was $93,000 and is included in other assets.

During 2016, the Company acquired Jacksonville Bancorp, Inc. Statutory Trust III, a statutory trust subsidiary of JAXB, whose sole purpose was to issue $7,550,000 principal amount of trust preferred securities at a rate per annum equal to the 3-Month LIBOR plus 3.75% (5.64% at December 31, 2019). The trust preferred securities have a maturity of 30 years and are redeemable at the Company’s option on any quarterly interest payment date beginning in June 2013. The aggregate principal amount of trust preferred certificates outstanding at December 31, 2019 was $7,550,000. The aggregate principal amount of debentures outstanding was $7,784,000, and is being carried at $6,730,000 on the Company’s balance sheet net of unamortized purchase discount. The Company’s investment in the common stock of the trust was $234,000 and is included in other assets.

During 2018, the Company acquired Cherokee Statutory Trust I, a statutory trust subsidiary of Hamilton, whose sole purpose was to issue $3,000,000 principal amount of trust preferred securities at a rate per annum equal to the 3-Month LIBOR plus 1.50% (3.39% at December 31, 2019) through a pool sponsored by a national brokerage firm. The trust preferred securities have a maturity of 30 years and are redeemable at the Company’s option on any quarterly interest payment date beginning in December 2010. The aggregate principal amount of trust preferred certificates outstanding at December 31, 2019 was $3,093,000. The aggregate principal amount of debentures outstanding was $3,000,000, and is being carried at $2,362,000 on the Company’s balance sheet net of unamortized purchase discount. The Company’s investment in the common stock of the trust was $93,000 and is included in other assets.

During 2019, the Company acquired Fidelity Southern Statutory Trust I, a statutory trust subsidiary of Fidelity whose sole purpose was to issue $15,000,000 principal amount of trust preferred securities at a rate per annum equal to the 3-Month LIBOR plus 3.10% (5.05% at December 31, 2019). The trust preferred securities have a maturity of 30 years and are redeemable at the Company’s option on any quarterly interest payment date beginning in June 2008. The aggregate principal amount of trust preferred certificates outstanding at December 31, 2019 was $15,000,000. The aggregate principal amount of debentures outstanding was $15,464,000, and is being carried at $14,139,000 on the Company’s balance sheet net of unamortized purchase discount. The Company’s investment in the common stock of the trust was $464,000 and is included in other assets.

During 2019, the Company acquired Fidelity Southern Statutory Trust II, a statutory trust subsidiary of Fidelity whose sole purpose was to issue $10,000,000 principal amount of trust preferred securities at a rate per annum equal to the 3-Month LIBOR plus 1.89% (3.79% at December 31, 2019). The trust preferred securities have a maturity of 30 years and are redeemable at the Company’s option on any quarterly interest payment date beginning in March 2010. The aggregate principal amount of trust preferred certificates outstanding at December 31, 2019 was $10,000,000. The aggregate principal amount of debentures outstanding was $10,310,000, and is being carried at $8,120,000 on the Company’s balance sheet net of unamortized purchase discount. The Company’s investment in the common stock of the trust was $310,000 and is included in other assets.

During 2019, the Company acquired Fidelity Southern Statutory Trust III, a statutory trust subsidiary of Fidelity whose sole purpose was to issue $20,000,000 principal amount of trust preferred securities at a rate per annum equal to the 3-Month LIBOR plus 1.40% (3.29% at December 31, 2019). The trust preferred securities have a maturity of 30 years and are redeemable at the Company’s option on any quarterly interest payment date beginning in September 2012. The aggregate principal amount of trust preferred certificates outstanding at December 31, 2019 was $20,000,000. The aggregate principal amount of debentures outstanding was $20,619,000, and is being carried at $14,746,000 on the Company’s balance sheet net of unamortized purchase discount. The Company’s investment in the common stock of the trust was $619,000 and is included in other assets.

Under applicable accounting standards, the assets and liabilities of such trusts, as well as the related income and expenses, are excluded from the Company’s consolidated financial statements. However, the subordinated debentures issued by the Company and purchased by the trusts remain on the consolidated balance sheets. In addition, the related interest expense continues to be included in the consolidated statements of income. For regulatory capital purposes, the trust preferred securities qualify as a component of Tier 2 Capital.

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NOTE 11. SHAREHOLDERS' EQUITY

Common Stock Repurchase Program

On September 19, 2019, the Company announced that its Board of Directors authorized the Company to repurchase up to $100.0 million of its outstanding common stock. Repurchases of shares, which are authorized to occur through October 31, 2020, will be made, if at all, in accordance with applicable securities laws and may be made from time to time in the open market or by negotiated transactions. The amount and timing of repurchases will be based on a variety of factors, including share acquisition price, regulatory limitations and other market and economic factors. The program does not require the repurchase of any specific number of shares. It replaces the Company's prior share repurchase program which was set to expire in October 2019 and under which the Company repurchased $10.6 million, or 296,335 of its outstanding common stock in the past year. As of December 31, 2019, $6.8 million, or 158,248 shares of the Company's common stock had been repurchased under the new program.

Fidelity Acquisition

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

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

Hamilton Acquisition

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

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

Atlantic Acquisition

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

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

USPF Acquisition

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

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

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

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

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

2017 Public Offering

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

In March 2017, the Company made a capital contribution to the Bank in the amount of $110.0 million, using the net proceeds of the March 6, 2017 issuance of common stock as well as a portion of the net proceeds of the March 13, 2017 issuance of the Company’s 5.75% Fixed-To-Floating Rate Subordinated Notes due 2027 discussed in Note 9.

NOTE 12. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Accumulated other comprehensive income (loss) for the Company consists of changes in net unrealized gains and losses on investment securities available for sale and interest rate swap derivatives. The reclassification for gains included in net income is recorded in net gain (loss) on securities in the consolidated statements of income. The following tables present a summary of the accumulated other comprehensive income (loss) balances, net of tax, as of December 31, 2019, 2018 and 2017.

(dollars in thousands)	Unrealized Gain (Loss) on Derivatives		Unrealized Gain (Loss) on Securities		Accumulated Other Comprehensive Income (Loss)
Balance, December 31, 2018	$	351	$	(5,177)	$	(4,826)
Reclassification for gains included in net income, net of tax	—		(46)		(46)
Current year changes, net of tax	(498)		23,365		22,867
Balance, December 31, 2019	$	(147)	$	18,142	$	17,995

(dollars in thousands)	Unrealized Gain (Loss) on Derivatives		Unrealized Gain (Loss) on Securities		Accumulated Other Comprehensive Income (Loss)
Balance, December 31, 2017	$	292	$	(1,572)	$	(1,280)
Reclassification to retained earnings due to change in federal corporate tax rate	(53)		(339)		(392)
Adjusted balance, January 1, 2018	239		(1,911)		(1,672)
Reclassification for gains included in net income, net of tax	—		(70)		(70)
Current year changes, net of tax	112		(3,196)		(3,084)
Balance, December 31, 2018	$	351	$	(5,177)	$	(4,826)

(dollars in thousands)	Unrealized Gain (Loss) on Derivatives		Unrealized Gain (Loss) on Securities		Accumulated Other Comprehensive Income (Loss)
Balance, December 31, 2016	$	176	$	(1,234)	$	(1,058)
Reclassification for gains included in net income, net of tax	—		(24)		(24)
Current year changes, net of tax	116		(314)		(198)
Balance, December 31, 2017	$	292	$	(1,572)	$	(1,280)

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NOTE 13. – REVENUE FROM CONTRACTS WITH CUSTOMERS

The following provides information on noninterest income categories that contain ASC 606 Revenue for the periods indicated. 

	For the Years Ended December 31,
(dollars in thousands)	2019		2018		2017
Service charges on deposit accounts
ASC 606 revenue items
Debit card interchange fees	$	18,909	$	18,945	$	16,086
Overdraft fees	21,710		18,267		17,736
Other service charges on deposit accounts	10,173		8,916		8,232
Total ASC 606 revenue included in service charges on deposits accounts	50,792		46,128		42,054
Total service charges on deposit accounts	$	50,792	$	46,128	$	42,054
Other service charges, commissions and fees
ASC 606 revenue items
ATM fees	$	3,228	$	2,721	$	2,575
Total ASC 606 revenue included in other service charges, commission and fees	3,228		2,721		2,575
Other	685		338		308
Total other service charges, commission and fees	$	3,913	$	3,059	$	2,883

The following provides information on net gains (losses) recognized on the sale of OREO for the periods indicated.

	For the Years Ended December 31,
(dollars in thousands)	2019		2018		2017
Net gains (losses) recognized on sale of OREO	$	10	$	(459)	$	850

NOTE 14. INCOME TAXES

The income tax expense in the consolidated statements of income consists of the following:

	For the Years Ended December 31,
(dollars in thousands)	2019		2018		2017
Current – federal	$	21,994	$	27,714	$	33,074
Current - state	5,328		1,375		5,230
Deferred - federal	19,639		496		3,874
Deferred - state	3,182		878		(5,069)
Remeasurement of deferred tax assets and deferred tax liabilities at reduced federal corporate tax rate	—		—		13,625
	$	50,143	$	30,463	$	50,734

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The Company’s income tax expense differs from the amounts computed by applying the federal income tax statutory rates to income before income taxes. A reconciliation of the differences is as follows:

	For the Years Ended December 31,
(dollars in thousands)	2019			2018			2017
Federal income statutory rate	21		%	21		%	35		%
Tax at federal income tax rate	$	44,433		$	31,813		$	43,499
Change resulting from:
State income tax, net of federal benefit	7,389			1,965			(680)
Tax-exempt interest	(2,911)			(3,095)			(4,390)
Increase in cash value of bank owned life insurance	(581)			(382)			(556)
Excess tax benefit from stock compensation	(108)			(602)			(939)
Nondeductible merger expenses	799			1,002			—
Other	1,122			(238)			175
Remeasurement of deferred tax assets and deferred tax liabilities at reduced federal corporate tax rate	—			—			13,625
Provision for income taxes	$	50,143		$	30,463		$	50,734

The components of deferred income taxes are as follows:

	December 31,
(dollars in thousands)	2019		2018
Deferred tax assets
Allowance for loan losses	$	9,596	$	7,222
Deferred compensation	3,459		3,467
Deferred gain on interest rate swap	39		56
Nonaccrual interest	107		107
Purchase accounting adjustments	21,104		13,144
Other real estate owned	4,556		2,980
Net operating loss tax carryforward	18,775		19,277
Tax credit carryforwards	3,701		1,655
Unrealized loss on securities available for sale	—		2,792
FDIC-assisted transaction adjustments	2,060		2,501
Capitalized costs, accrued expenses and other	4,840		2,535
Lease liability	10,619		—
	78,856		55,736
Deferred tax liabilities
Premises and equipment	12,211		4,597
Mortgage servicing rights	25,990		3,716
Subordinated debentures	7,226		5,259
Goodwill and intangible assets	15,756		7,017
Unrealized gain on securities available for sale	5,430		—
Unrealized gain on interest rate swap	—		21
Right of use lease asset	10,063		—
	76,676		20,610
Net deferred tax asset	$	2,180	$	35,126

At December 31, 2019, the Company had federal net operating loss carryforwards of approximately $74.47 million which expire at various dates from 2027 to 2035. At December 31, 2019, the Company had state net operating loss carryforwards of approximately $74.84 million which expire at various dates from 2027 to 2035. The federal net operating loss carryforwards are subject to limitations pursuant to Section 382 of the Internal Revenue Code and are expected to be recovered over the next 16 years. The state net operating loss carryforwards are subject to similar limitations and are expected to be recovered over the next 16 years. Deferred tax assets are recognized for net operating losses because the benefit is more likely than not to be realized.

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The Company did not record any interest and penalties related to income taxes for the years ended December 31, 2019, 2018 and 2017, and the Company did not have any amount accrued for interest and penalties at December 31, 2019, 2018 and 2017.

The Company and its subsidiaries are subject to U.S. federal income tax as well as income tax of the various states. The Company is no longer subject to examination by federal taxing authorities for years before 2016 and state taxing authorities for years before 2015.

NOTE 15. EMPLOYEE BENEFIT PLANS

The Company has established a retirement plan for eligible employees. The Ameris Bancorp 401(k) Profit Sharing Plan allows a participant to defer a portion of their compensation and provides that the Company will match a portion of the deferred compensation. The Plan also provides for non-elective and discretionary contributions. All full-time and part-time employees are eligible to participate in the Plan provided they have met the eligibility requirements. An employee is eligible to participate in the Plan after 30 days of employment and having attained an age of 18 years.

The aggregate expense under the Plan charged to operations during 2019, 2018 and 2017 amounted to $4.4 million, $2.9 million and $2.2 million, respectively.

NOTE 16. DEFERRED COMPENSATION PLANS

The Company and the Bank have entered into separate deferred compensation arrangements and supplemental executive retirement plans with certain executive officers and directors. The plans call for certain amounts payable at retirement, death or disability. The estimated present value of the deferred compensation is being accrued over the expected service period. The Company and the Bank have purchased life insurance policies which they intend to use to fund these liabilities. The cash surrender value of the life insurance was $175.3 million and $104.1 million at December 31, 2019 and 2018, respectively. The Company and the Bank assumed certain split dollar agreements in the acquisition of Fidelity which provide for death benefits to designated beneficiaries of the executive or director. Accrued deferred compensation of $698,000 and $769,000 at December 31, 2019 and 2018, respectively, is included in other liabilities. Accrued supplemental executive retirement plan and split dollar agreement liabilities of $9.5 million and $5.5 million at December 31, 2019 and 2018, respectively, is also included in other liabilities. Aggregate compensation expense under the plans was $386,000, $739,000 and $1.4 million per year for 2019, 2018 and 2017, respectively, which is included in salaries and employee benefits.

NOTE 17. SHARE-BASED COMPENSATION

The Company awards its employees and directors various forms of share-based incentives under certain plans approved by its shareholders. Awards granted under the plans may be in the form of qualified or nonqualified stock options, restricted stock, stock appreciation rights (“SARs”), long-term incentive compensation units consisting of cash and common stock, or any combination thereof within the limitations set forth in the plans. The plans provide that the aggregate number of shares of the Company’s common stock which may be subject to award may not exceed 1,200,000 subject to adjustment in certain circumstances to prevent dilution. At December 31, 2019, there were 699,992 shares available to be issued under the plans.

All stock options have an exercise price that is equal to the closing fair market value of the Company’s stock on the date the options were granted. Options granted under the plans generally vest over a five-year period and have a 10-year maximum term. Most options granted since 2005 contain performance-based vesting conditions.

The Company did not grant any options during 2019, 2018 or 2017. As of December 31, 2019, there was no unrecognized compensation cost related to nonvested share-based compensation arrangements granted related to performance or non-performance-based options.  During 2019, the Company assumed 576,588 fully vested options in the Fidelity acquisition.

As of December 31, 2019, the Company has 182,401 outstanding restricted shares granted under the plans as compensation to certain employees and directors. These shares carry dividend and voting rights. Sales of these shares are restricted prior to the date of vesting, which is one to five years from the date of the grant. Shares issued under the plans are recorded at their fair market value on the date of their grant. The compensation expense is recognized on a straight-line basis over the related vesting period. In 2019, 2018 and 2017, compensation expense related to these grants was approximately $3.4 million, $6.2 million, and $3.3 million, respectively. The total income tax benefit related to these grants was approximately $113,000, $818,000 and $698,000 in 2019, 2018 and 2017, respectively. Approximately $460,000 of the compensation expense recorded for the year ending December 31, 2019 for restricted stock awards was related to performance-based restricted stock that was not yet

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granted as of December 31, 2019, and was therefore recorded in other liabilities rather than in shareholders' equity on the Company's consolidated balance sheet as of December 31, 2019.

It is the Company’s policy to issue new shares for stock option exercises and restricted stock rather than issue treasury shares. The Company recognizes share-based compensation expense on a straight-line basis over the options’ related vesting term. The Company did not record any share-based compensation expense related to stock options during 2019, 2018 and 2017. The total income tax benefit related to stock options was approximately $0, $24,000 and $248,000 in 2019, 2018 and 2017, respectively.

The fair value of each share-based compensation grant is estimated on the date of grant using the Black-Scholes option-pricing model.

A summary of the activity of non-performance-based and performance-based options as of December 31, 2019 is presented below.

	Non-Performance-Based						Performance-Based
	Shares	Weighted Average Exercise Price		Weighted Average Contractual Term	Aggregate Intrinsic Value $ (000)		Shares	Weighted Average Exercise Price		Weighted Average Contractual Term	Aggregate Intrinsic Value $ (000)
Under option, beginning of year	—	$	—				7,711	$	6.94
Granted	—	—					—	—
Options assumed pursuant to acquisition of Fidelity	576,588	26.62					—	—
Exercised	(189,395)	26.85			$	2,437	(7,711)	6.94			$	229
Forfeited	—	—					—	—
Under option, end of year	387,193	$	26.51	1.91	$	6,208	—	$	—	—	$	—
Exercisable at end of year	387,193	$	26.51	1.91	$	6,208	—	$	—	—	$	—

A summary of the activity of non-performance-based and performance-based options as of December 31, 2018 is presented below.

	Non-Performance-Based						Performance-Based
	Shares	Weighted Average Exercise Price		Weighted Average Contractual Term	Aggregate Intrinsic Value $ (000)		Shares	Weighted Average Exercise Price		Weighted Average Contractual Term	Aggregate Intrinsic Value $ (000)
Under option, beginning of year	47,294	$	14.76				37,013	$	7.36
Granted	—	—					—	—
Exercised	(47,294)	14.76			$	653	(29,014)	7.47			$	217
Forfeited	—	—					(288)	7.47
Under option, end of year	—	$	—	—	$	—	7,711	$	6.94	0.11	$	308
Exercisable at end of year	—	$	—	—	$	—	7,711	$	6.94	0.11	$	308

A summary of the status of the Company’s restricted stock awards as of and for the years ended December 31, 2019, and 2018 is presented below.

	2019			2018
	Shares	Weighted Average Grant Date Fair Value		Shares	Weighted Average Grant Date Fair Value
Nonvested shares at beginning of year	161,746	$	43.40	277,815	$	33.24
Granted	125,022	39.35		89,855	53.37
Vested	(63,072)	32.52		(195,344)	33.21
Forfeited	(41,295)	44.93		(10,580)	49.52
Nonvested shares at end of year	182,401	44.04		161,746	43.40

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The balance of unearned compensation related to restricted stock grants as of December 31, 2019, 2018 and 2017 was approximately $3.7 million, $3.3 million, and $4.5 million, respectively. At December 31, 2019, the cost is expected to be recognized over a weighted-average period of 1.4 years.

NOTE 18. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

Cash Flow Hedge

During 2010, the Company entered into an interest rate swap to lock in a fixed rate as opposed to the contractual variable interest rate on certain junior subordinated debentures. The interest rate swap contract has a notional amount of $37.1 million and is hedging the variable rate on certain junior subordinated debentures described in Note 10 of the consolidated financial statements. The Company receives a variable rate of the 90-day LIBOR rate plus 1.63% and pays a fixed rate of 4.11%. The swap matures in September 2020.

This contract is classified as a cash flow hedge of an exposure to changes in the cash flow of a recognized liability. At December 31, 2019 and 2018, the fair value of the remaining instrument totaled a liability of $187,000 and an asset of $102,000, respectively. As a cash flow hedge, the change in fair value of a hedge that is deemed to be highly effective is recognized in other comprehensive income and the portion deemed to be ineffective is recognized in earnings. As of December 31, 2019, the hedge is deemed to be highly effective. Interest expense recorded on this swap transaction totaled $(10,000), $122,000, and $484,000 during 2019, 2018, and 2017 and is reported as a component of interest expense on other borrowings. At December 31, 2019, the Company expected $187,000 of the unrealized loss to be reclassified as an increase of interest expense during the next 12 months.

Mortgage Banking Derivatives

The Company maintains a risk management program to manage interest rate risk and pricing risk associated with its mortgage lending activities. This program includes the use of forward contracts and other derivatives that are used to offset changes in value of the mortgage inventory due to changes in market interest rates. As a normal part of its operations, the Company enters into derivative contracts such as forward sale commitments and IRLCs to economically hedge risks associated with overall price risk related to IRLCs and mortgage loans held for sale carried at fair value. These mortgage banking derivatives are not designated in hedge relationships. At December 31, 2019, the Company had approximately $288.5 million of IRLCs and $1.81 billion of forward commitments for the future delivery of residential mortgage loans. The fair value of these mortgage banking derivatives was reflected as a derivative asset of $7.8 million and a derivative liability of $4.5 million. At December 31, 2018, the Company had approximately $81.8 million of IRLCs and $163.2 million of forward commitments for the future delivery of residential mortgage loans. The fair value of these mortgage banking derivatives was reflected as a derivative asset of $2.5 million and a derivative liability of $1.3 million. Fair values were estimated based on changes in mortgage interest rates from the date of the commitments. Changes in the fair values of these mortgage-banking derivatives are included in net gains on sales of mortgage loans.

The net gains (losses) relating to free-standing mortgage banking derivative instruments used for risk management are summarized below as of December 31, 2019, 2018 and 2017.

(dollars in thousands)	Location	December 31, 2019		December 31, 2018		December 31, 2017
Forward contracts related to mortgage loans held for sale	Mortgage banking activity	$	(4,471)	$	(1,276)	$	(12)
Interest rate lock commitments	Mortgage banking activity	$	7,814	$	2,537	$	2,833

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The following table reflects the amount and market value of mortgage banking derivatives included in the consolidated balance sheets as of December 31, 2019 and 2018.

	2019				2018
(dollars in thousands)	Notional Amount		Fair Value		Notional Amount		Fair Value
Included in other assets:
Interest rate lock commitments	$	288,490	$	7,814	$	81,833	$	2,537
Total included in other assets	$	288,490	$	7,814	$	81,833	$	2,537
Included in other liabilities:
Forward contracts related to mortgage loans held for sale	$	1,814,669	$	4,471	$	163,189	$	1,276
Total included in other liabilities	$	1,814,669	$	4,471	$	163,189	$	1,276

NOTE 19. FAIR VALUE MEASURES

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

The Company's loans held for sale under the fair value option are comprised of the following:

	December 31,
(dollars in thousands)	2019		2018
Mortgage loans held for sale	$	1,647,900	$	107,428
SBA loans held for sale	8,811		3,870
Total loans held for sale	$	1,656,711	$	111,298

The Company has elected to record mortgage loans held for sale at fair value in order to eliminate the complexities and inherent difficulties of achieving hedge accounting and to better align reported results with the underlying economic changes in value of the loans and related hedge instruments. This election impacts the timing and recognition of origination fees and costs, as well as servicing value, which are now recognized in earnings at the time of origination. Interest income on mortgage loans held for sale is recorded on an accrual basis in the consolidated statement of income under the heading interest income – interest and fees on loans. The servicing value is included in the fair value of the IRLCs with borrowers. The mark to market adjustments related to mortgage loans held for sale and the associated economic hedges are captured in mortgage banking activities. Net gains of $37.7 million, $4.1 million and $4.6 million resulting from fair value changes of these mortgage loans were recorded in income during the years ended December 31, 2019, 2018 and 2017, respectively. A net loss of $9.3 million, a net gain of $1.8 million and a net loss of $3.0 million resulting from changes in the fair value and the related derivative financial instruments used to hedge exposure to the market-related risks associated with these mortgage loans were recorded in income during the years ended December 31, 2019, 2018 and 2017, respectively. These amounts do not reflect changes in fair values of related derivative instruments used to hedge exposure to market-related risks associated with these mortgage loans. The change in fair value of both mortgage loans held for sale and the related derivative instruments are recorded in mortgage banking activity in the consolidated statements of income. The Company’s valuation of mortgage loans held for sale incorporates an assumption for credit risk; however, given the short-term period that the Company holds these loans, valuation adjustments attributable to instrument-specific credit risk is nominal.

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

	December 31,
(dollars in thousands)	2019		2018
Aggregate fair value of mortgage loans held for sale	$	1,647,900	$	107,428
Aggregate unpaid principal balance of mortgage loans held for sale	1,598,057		103,319
Past due loans of 90 days or more	1,649		—
Nonaccrual loans	1,649		—
Unpaid principal balance of nonaccrual loans	1,616		—

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

	December 31,
(dollars in thousands)	2019		2018
Aggregate fair value of SBA loans held for sale	$	8,811	$	3,870
Aggregate unpaid principal balance of SBA loans held for sale	8,206		3,581
Past due loans of 90 days or more	—		—
Nonaccrual loans	—		—

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

Fair Value Hierarchy

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

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

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

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

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

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

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

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

Loans: The fair value for loans held for investment is estimated using an exit price methodology.  An exit price methodology considers expected cash flows that take into account contractual loan terms, as applicable, prepayment expectations, probability of default, loss severity in the event of default, recovery lag and, in the case of variable rate loans, expectations for future interest rate movements. These cash flows are present valued at a risk adjusted discount rate, which considers the cost of funding, liquidity, servicing costs, and other factors.   Because observable quoted prices seldom exist for identical or similar assets carried in loans held for investment, Level 3 inputs are primarily used to determine fair value exit pricing. The fair value of impaired loans is estimated based on discounted contractual cash flows or underlying collateral values, where applicable. A loan is determined to be impaired if the Company believes it is probable that all principal and interest amounts due according to the terms of the note will not be collected as scheduled. The fair value of impaired loans is determined in accordance with ASC 310-10, Accounting by Creditors for Impairment of a Loan, and generally results in a specific reserve established through a charge to the provision for loan losses. Losses on impaired loans are charged to the allowance when management believes the uncollectability of a loan is confirmed. Management has determined that the majority of impaired loans are Level 3 assets due to the extensive use of market appraisals.

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

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

Deposits: The carrying amount of demand deposits, savings deposits and variable-rate certificates of deposit approximates fair value. The fair value of fixed-rate certificates of deposit is estimated based on discounted contractual cash flows using interest rates currently being offered for certificates of similar maturities.

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

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

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

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

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

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

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

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

The following table presents the fair value measurements of assets and liabilities measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall as of December 31, 2019 and 2018.

	Recurring Basis Fair Value Measurements December 31, 2019
(dollars in thousands)	Fair Value		Level 1		Level 2		Level 3
Financial assets:
U.S. government sponsored agencies	$	22,362	$	—	$	22,362	$	—
State, county and municipal securities	105,260		—		105,260		—
Corporate debt securities	52,999		—		51,499		1,500
SBA pool securities	73,912		—		73,912		—
Mortgage-backed securities	1,148,870		—		1,148,870		—
Loans held for sale	1,656,711		—		1,656,711		—
Mortgage banking derivative instruments	7,814		—		7,814		—
Total recurring assets at fair value	$	3,067,928	$	—	$	3,066,428	$	1,500
Financial liabilities:
Derivative financial instruments	$	187	$	—	$	187	$	—
Mortgage banking derivative instruments	4,471		—		4,471		—
Total recurring liabilities at fair value	$	4,658	$	—	$	4,658	$	—

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	Recurring Basis Fair Value Measurements December 31, 2018
(dollars in thousands)	Fair Value		Level 1		Level 2		Level 3
Financial assets:
State, county and municipal securities	$	150,733	$	—	$	150,733	$	—
Corporate debt securities	67,314		—		65,814		1,500
SBA pool securities	77,804		—		77,804		—
Mortgage-backed securities	896,572		—		896,572		—
Loans held for sale	111,298		—		111,298		—
Derivative financial instruments	102		—		102		—
Mortgage banking derivative instruments	2,537		—		2,537		—
Total recurring assets at fair value	$	1,306,360	$	—	$	1,304,860	$	1,500
Financial liabilities:
Mortgage banking derivative instruments	$	1,276	$	—	$	1,276	$	—
Total recurring liabilities at fair value	$	1,276	$	—	$	1,276	$	—

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

	Nonrecurring Basis Fair Value Measurements December 31, 2019
(dollars in thousands)	Fair Value		Level 1		Level 2		Level 3
Impaired loans carried at fair value	$	43,788	$	—	$	—	$	43,788
Other real estate owned	2,289		—		—		2,289
Purchased other real estate owned	15,000		—		—		15,000
Total nonrecurring assets at fair value	$	61,077	$	—	$	—	$	61,077

	Nonrecurring Basis Fair Value Measurements December 31, 2018
(dollars in thousands)	Fair Value		Level 1		Level 2		Level 3
Impaired loans carried at fair value	$	28,653	$	—	$	—	$	28,653
Other real estate owned	408		—		—		408
Purchased other real estate owned	9,535		—		—		9,535
Total nonrecurring assets at fair value	$	38,596	$	—	$	—	$	38,596

The inputs used to determine estimated fair value of impaired loans include market conditions, loan term, underlying collateral characteristics and discount rates. The inputs used to determine fair value of other real estate owned include market conditions, estimated marketing period or holding period, underlying collateral characteristics and discount rates.

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

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The following table shows significant unobservable inputs used in the fair value measurement of Level 3 assets.

(dollars in thousands)	Fair Value		Valuation Technique	Unobservable Inputs	Range of Discounts	Weighted Average Discount
As of December 31, 2019
Recurring:
Investment securities available for sale	$	1,500	Discounted par values	Credit quality of underlying issuer	0%	0%
Nonrecurring:
Impaired loans	$	43,788	Third party appraisals and discounted cash flows	Collateral discounts and discount rates	1% - 95%	27%
Other real estate owned	$	2,289	Third party appraisals and sales contracts	Collateral discounts and estimated costs to sell	15% - 31%	25%
Purchased other real estate owned	$	15,000	Third party appraisals	Collateral discounts and estimated costs to sell	9% - 89%	31%
As of December 31, 2018
Recurring:
Investment securities available for sale	$	1,500	Discounted par values	Credit quality of underlying issuer	0%	0%
Nonrecurring:
Impaired loans	$	28,653	Third party appraisals and discounted cash flows	Collateral discounts and discount rates	3% - 53%	30%
Other real estate owned	$	408	Third party appraisals and sales contracts	Collateral discounts and estimated costs to sell	15% - 69%	31%
Purchased other real estate owned	$	9,535	Third party appraisals	Collateral discounts and estimated costs to sell	6% - 74%	39%

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

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

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

NOTE 20. LEASES

Operating lease cost was $10.0 million for the year ended December 31, 2019. For the year ended December 31, 2019, the Company had no sublease income offsetting operating lease cost. Variable rent expense and short-term lease expense were not material for the year ended December 31, 2019. Rental expense measured under ASC 840, Leases, amounted to approximately $7.9 million and $4.9 million for the years ended December 31, 2018 and 2017, respectively.

The following table presents the impact of leases on the Company's consolidated balance sheet at December 31, 2019:

(dollars in thousands)	Location	December 31, 2019
Operating lease right-of-use assets	Other assets	$	39,321
Operating lease liabilities	Other liabilities	42,262

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

(dollars in thousands)
Year Ended December 31,	Lease Liability
2020	$	11,818
2021	9,988
2022	7,346
2023	5,320
2024	3,285
Thereafter	7,538
Total lease payments	$	45,295
Less: Interest	(3,033)
Present value of lease liabilities	$	42,262

Supplemental lease information (dollars in thousands)	December 31, 2019
Weighted-average remaining lease term (years)	5.1
Weighted-average discount rate	2.56		%
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases (cash payments)	$	9,910
Operating cash flows from operating leases (lease liability reduction)	$	10,244
Operating lease right-of-use assets obtained in exchange for leases entered into during the period, net of business combinations	$	5,826

NOTE 21. COMMITMENTS AND CONTINGENT LIABILITIES

Loan Commitments

The Company is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. They involve, to varying degrees, elements of credit risk and interest rate risk in excess of the amount recognized in the consolidated balance sheets.

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

	December 31,
(dollars in thousands)	2019		2018
Commitments to extend credit	$	2,486,949	$	1,671,419
Unused home equity lines of credit	262,089		112,310
Financial standby letters of credit	29,232		24,596
Mortgage interest rate lock commitments	288,490		81,833

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. These commitments, predominantly at variable interest rates, generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation of the customer.

Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers. Collateral is required in instances which the Company deems necessary. The Company has not been required to perform on any material

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financial standby letters of credit and the Company has not incurred any losses on financial standby letters of credit for the years ended December 31, 2019 and 2018.

Other Commitments

As of December 31, 2019, letters of credit issued by the FHLB totaling $82.4 million were used to guarantee the Bank’s performance related to a portion of its public fund deposit balances.

Contingencies

The Company is, and has been, involved in various legal proceedings with William J. Villari, who formerly owned USPF, and entities that Mr. Villari owns. First, on December 13, 2018, Mr. Villari filed a demand for arbitration, claiming that the Bank’s termination of his employment for “cause” was improper and that he was entitled to additional compensation from the Company and the Bank under his employment agreement. Second, on December 28, 2018, Mr. Villari and his wholly owned company, P1 Finance Holdings LLC (“P1”), filed a lawsuit against the Bank in Broward County, Florida, seeking additional compensation for his service while an employee, as well as other relief. Third, on May 30, 2019, CEBV LLC (“CEBV”), which also is wholly owned by Mr. Villari, filed a lawsuit against the Bank in Duval County, Florida, arising out of a loan purchase agreement with the Bank dated May 8, 2018. CEBV’s complaint in that lawsuit, which also names as a defendant the Company’s former Chief Executive Officer, Dennis J. Zember Jr., seeks unspecified damages and other relief related to asserted claims for fraudulent inducement and breach of contract based on the Bank’s alleged failure to provide sufficient assistance to CEBV in collecting on loans purchased by CEBV from the Bank.

In addition, on January 30, 2019, the Company and the Bank filed a lawsuit against Mr. Villari in Dekalb County, Georgia, asserting claims for unspecified damages arising from Mr. Villari’s alleged failure to disclose material information in connection with the sale of USPF to the Company and the Bank.

In the first of these proceedings to be adjudicated, the Company and the Bank received on November 20, 2019, an Order and Award from the American Arbitration Association in which the arbitrator ruled that the Company and the Bank had cause to terminate Mr. Villari and had properly exercised that right and that, as a result, Mr. Villari is not entitled to any additional payments under his employment agreement or a separate management and licensing agreement with the Bank.

We believe the remaining allegations of Mr. Villari, P1 and CEBV in their complaints are without merit, and we are vigorously defending the cases. We believe that the amount or any estimable range of reasonably possible or probable loss in connection with these matters will not, individually or in the aggregate, have a material adverse effect on the consolidated results of operations or financial condition of the Company.

On November 19, 2019, the Company received a subpoena from the Atlanta Regional Office of the SEC, and the Bank received a grand jury subpoena from the United States Attorney’s Office for the Northern District of Georgia, each requesting that the Company and the Bank produce documents and other materials relating to the Company’s acquisition of USPF, the Bank’s sale of certain loans to CEBV and related disclosures. The Company intends to cooperate fully with the investigation and is currently producing documents in response to the subpoenas. The Company is unable to make any assurances regarding the outcome of the investigation or the impact, if any, that the investigation may have on the Company’s business, consolidated financial condition, results of operations or cash flows.

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

The Company’s management and its legal counsel periodically assess contingent liabilities, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or unasserted claims, as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If

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the assessment indicates that a potentially material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the nature of the guarantee would be disclosed.

NOTE 22. REGULATORY MATTERS

The Bank is subject to certain restrictions on the amount of dividends that may be declared without prior regulatory approval. At December 31, 2019, $93.1 million of retained earnings were available for dividend declaration without regulatory approval.

The Company and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary, actions by regulators that, if undertaken, could have a direct material effect on the Company’s and Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of their assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. Capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios of total, Tier 1 capital and Common Equity Tier 1 capital, as defined by the regulations, to risk-weighted assets, as defined, and of Tier 1 capital to average assets, as defined. The final rules implementing the Basel Committee on Banking Supervision’s capital guidelines for U.S. banks (the “Basel III rules”) became effective for the Company on January 1, 2015 with full compliance with all of the requirements being phased in over a multi-year schedule, and fully phased in by January 1, 2019. Under the Basel III rules, the Company must hold a capital conservation buffer above the adequately capitalized risk-based capital ratios. The capital conservation buffer is being phased in from 0.0% for 2015 to 2.50% by 2019. The capital conservation buffer for 2019 is 2.500%. The capital conservation buffer for 2018 was 1.875%. The net realized gain or loss on available for sale securities is not included in computing regulatory capital. Management believes that, as of December 31, 2019 and 2018, the Company and the Bank met all capital adequacy requirements to which they are subject.

As of December 31, 2019 and 2018, the most recent notification from the regulatory authorities categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Bank must maintain minimum total risk-based, Tier 1 risk-based, Common Equity Tier 1 risk-based and Tier 1 leverage ratios as set forth in the following table. There are no conditions or events since that notification that management believes have changed the Bank’s category. Prompt corrective action provisions are not applicable to bank holding companies.

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The Company’s and Bank’s actual capital amounts and ratios are presented in the following table.

	Actual				For Capital Adequacy Purposes				To Be Well Capitalized Under Prompt Corrective Action Provisions
(dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio
As of December 31, 2019
Tier 1 Leverage Ratio (tier 1 capital to average assets):
Consolidated	$	1,437,991	8.476	%	$	678,650	4.000	%			—N/A—
Ameris Bank	$	1,649,699	9.733	%	$	677,973	4.000	%	$	847,446	5.00	%
CET1 Ratio (common equity tier 1 capital to risk weighted assets):
Consolidated	$	1,437,991	9.925	%	$	1,014,173	7.000	%			—N/A—
Ameris Bank	$	1,649,699	11.394	%	$	1,013,485	7.000	%	$	941,094	6.50	%
Tier 1 Capital Ratio (tier 1 capital to risk weighted assets):
Consolidated	$	1,437,991	9.925	%	$	1,231,495	8.500	%			—N/A—
Ameris Bank	$	1,649,699	11.394	%	$	1,230,661	8.500	%	$	1,158,269	8.00	%
Total Capital Ratio (total capital to risk weighted assets):
Consolidated	$	1,874,817	12.940	%	$	1,521,259	10.500	%			—N/A—
Ameris Bank	$	1,763,965	12.183	%	$	1,520,228	10.500	%	$	1,447,836	10.00	%
As of December 31, 2018
Tier 1 Leverage Ratio (tier 1 capital to average assets):
Consolidated	$	984,620	9.166	%	$	429,690	4.000	%			—N/A—
Ameris Bank	$	1,127,926	10.506	%	$	429,428	4.000	%	$	536,785	5.00	%
CET1 Ratio (common equity tier 1 capital to risk weighted assets):
Consolidated	$	895,433	10.070	%	$	566,859	6.375	%			—N/A—
Ameris Bank	$	1,127,926	12.716	%	$	565,486	6.375	%	$	576,573	6.50	%
Tier 1 Capital Ratio (tier 1 capital to risk weighted assets):
Consolidated	$	984,620	11.073	%	$	700,237	7.875	%			—N/A—
Ameris Bank	$	1,127,926	12.716	%	$	698,541	7.875	%	$	709,629	8.00	%
Total Capital Ratio (total capital to risk weighted assets):
Consolidated	$	1,087,364	12.229	%	$	878,075	9.875	%			—N/A—
Ameris Bank	$	1,156,745	13.041	%	$	875,948	9.875	%	$	887,036	10.00	%

The December 31, 2019 The CET1 Ratios, the Tier 1 Capital Ratios, and the Total Capital Ratios displayed in the above table under the heading “For Capital Adequacy Purposes” include a capital conservation buffer of 2.500% for December 31, 2019 and 1.875% for December 31, 2018.

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NOTE 23. SEGMENT REPORTING

The following table presents selected financial information with respect to the Company’s reportable business segments for the years ended December 31, 2019, 2018 and 2017.

	Year Ended December 31, 2019
(dollars in thousands)	Banking Division		Retail Mortgage Division		Warehouse Lending Division		SBA Division		Premium Finance Division		Total
Interest income	$	478,340	$	88,129	$	22,370	$	12,735	$	34,820	$	636,394
Interest expense	59,327		43,577		9,753		5,704		12,867		131,228
Net interest income	419,013		44,552		12,617		7,031		21,953		505,166
Provision for loan losses	12,654		3,472		67		544		3,021		19,758
Noninterest income	69,005		118,188		1,999		8,915		6		198,113
Noninterest expense
Salaries and employee benefits	130,134		82,470		934		4,783		5,617		223,938
Occupancy and equipment expenses	35,281		4,666		5		269		375		40,596
Data processing and communications expenses	34,934		2,418		156		32		973		38,513
Other expenses	149,919		12,536		223		1,651		4,561		168,890
Total noninterest expense	350,268		102,090		1,318		6,735		11,526		471,937
Income before income tax expense	125,096		57,178		13,231		8,667		7,412		211,584
Income tax expense	31,609		12,202		2,778		1,820		1,734		50,143
Net income	$	93,487	$	44,976	$	10,453	$	6,847	$	5,678	$	161,441
Total assets	$	13,063,461	$	3,636,321	$	527,527	$	267,273	$	747,997	$	18,242,579
Goodwill	$	867,139	$	—	$	—	$	—	$	64,498	$	931,637
Other intangible assets, net	$	73,737	$	—	$	—	$	—	$	17,849	$	91,586

	Year Ended December 31, 2018
(dollars in thousands)	Banking Division		Retail Mortgage Division		Warehouse Lending Division		SBA Division		Premium Finance Division		Total
Interest income	$	323,757	$	37,146	$	14,522	$	7,672	$	30,229	$	413,326
Interest expense	38,199		13,686		5,434		2,617		9,998		69,934
Net interest income	285,558		23,460		9,088		5,055		20,231		343,392
Provision for loan losses	4,486		584		—		1,137		10,460		16,667
Noninterest income	58,694		48,260		2,021		4,858		4,579		118,412
Noninterest expense
Salaries and employee benefits	100,716		39,469		547		2,709		5,691		149,132
Occupancy and equipment expenses	26,112		2,440		2		234		343		29,131
Data processing and communications expenses	27,026		1,425		122		19		1,793		30,385
Other expenses	71,788		6,998		238		1,298		4,677		84,999
Total noninterest expense	225,642		50,332		909		4,260		12,504		293,647
Income before income tax expense	114,124		20,804		10,200		4,516		1,846		151,490
Income tax expense	23,607		4,335		2,142		948		(569)		30,463
Net income	$	90,517	$	16,469	$	8,058	$	3,568	$	2,415	$	121,027
Total assets	$	9,290,437	$	1,153,615	$	360,839	$	139,671	$	498,953	$	11,443,515
Goodwill	$	438,144	$	—	$	—	$	—	$	65,290	$	503,434
Other intangible assets, net	$	37,836	$	—	$	—	$	—	$	20,853	$	58,689

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	Year Ended December 31, 2017
(dollars in thousands)	Banking Division		Retail Mortgage Division		Warehouse Lending Division		SBA Division		Premium Finance Division		Total
Interest income	$	231,111	$	21,318	$	7,701	$	5,293	$	28,924	$	294,347
Interest expense	20,392		5,731		1,824		1,549		4,726		34,222
Net interest income	210,719		15,587		5,877		3,744		24,198		260,125
Provision for loan losses	6,787		771		186		(111)		731		8,364
Noninterest income	51,416		44,913		1,739		6,277		112		104,457
Noninterest expense
Salaries and employee benefits	78,857		32,996		530		2,893		4,507		119,783
Occupancy and equipment expenses	21,436		2,217		4		215		197		24,069
Data processing and communications expenses	25,177		1,611		98		21		962		27,869
Other expenses	46,192		4,260		163		971		8,629		60,215
Total noninterest expense	171,662		41,084		795		4,100		14,295		231,936
Income before income tax expense	83,686		18,645		6,635		6,032		9,284		124,282
Income tax expense	36,518		6,526		2,322		2,111		3,257		50,734
Net income	$	47,168	$	12,119	$	4,313	$	3,921	$	6,027	$	73,548
Total assets	$	6,431,151	$	598,355	$	238,561	$	101,737	$	486,399	$	7,856,203
Goodwill	$	125,532	$	—	$	—	$	—	$	—	$	125,532
Other intangible assets, net	$	13,496	$	—	$	—	$	—	$	—	$	13,496

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NOTE 24. CONDENSED FINANCIAL INFORMATION OF AMERIS BANCORP (PARENT COMPANY ONLY)

Condensed Balance Sheets

December 31, 2019 and 2018

(dollars in thousands)

	2019		2018
Assets
Cash and due from banks	$	102,392	$	6,977
Investment in subsidiaries	2,688,952		1,684,810
Other assets	16,667		9,169
Total assets	$	2,808,011	$	1,700,956
Liabilities
Other liabilities	$	19,220	$	11,496
Other borrowings	191,649		143,926
Subordinated deferrable interest debentures	127,560		89,187
Total liabilities	338,429		244,609
Shareholders' equity	2,469,582		1,456,347
Total liabilities and shareholders' equity	$	2,808,011	$	1,700,956

Condensed Statements of Income

Years Ended December 31, 2019, 2018 and 2017

(dollars in thousands)

	2019		2018		2017
Income
Dividends from subsidiaries	$	67,200	$	46,000	$	—
Other income	493		4,726		132
Total income	67,693		50,726		132
Expense
Interest expense	16,264		12,670		9,065
Other expense	12,199		8,578		4,612
Total expense	28,463		21,248		13,677
Income (loss) before taxes and equity in undistributed income of subsidiaries	39,230		29,478		(13,545)
Income tax benefit	5,603		5,051		10,622
Income (loss) before equity in undistributed income of subsidiaries	44,833		34,529		(2,923)
Equity in undistributed income of subsidiaries	116,608		86,498		76,471
Net income	$	161,441	$	121,027	$	73,548

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Condensed Statements of Cash Flows

Years Ended December 31, 2019, 2018 and 2017

(dollars in thousands)

	2019		2018		2017
OPERATING ACTIVITIES
Net income	$	161,441	$	121,027	$	73,548
Adjustments to reconcile net income to net cash provided by operating activities:
Share-based compensation expense	3,424		6,241		3,316
Undistributed earnings of subsidiaries	(116,608)		(86,498)		(76,471)
Increase (decrease) in interest payable	33		313		1,142
Decrease (increase) in tax receivable	(6,860)		1,436		5,176
Provision for deferred taxes	1,595		195		(4,620)
Gain on sale of equity security	(61)		—		—
Other operating activities	(2,396)		(2,051)		1,230
Total adjustments	(120,873)		(80,364)		(70,227)
Net cash provided by operating activities	40,568		40,663		3,321
INVESTING ACTIVITIES
Proceeds from sale of equity security	282		—		—
Repayment of advances to subsidiary bank	10,000		—		—
Investment in subsidiary	—		—		(110,000)
Net cash proceeds received from (paid for) acquisitions	34,939		(90,542)		—
Net cash provided by (used in) investing activities	45,221		(90,542)		(110,000)
FINANCING ACTIVITIES
Issuance of common stock	—		—		88,656
Purchase of treasury shares	(18,410)		(2,062)		(886)
Dividends paid common stock	(24,675)		(16,405)		(14,650)
Proceeds from other borrowings	117,572		70,000		73,692
Repayment of other borrowings	(70,000)		—		(38,850)
Proceeds from exercise of stock options	5,139		914		2,669
Net cash provided by financing activities	9,626		52,447		110,631
Net change in cash and cash equivalents	95,415		2,568		3,952
Cash and cash equivalents at beginning of year	6,977		4,409		457
Cash and cash equivalents at end of year	$	102,392	$	6,977	$	4,409
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for interest	$	16,173	$	12,357	$	7,923
Cash paid (received) during the year for income taxes	$	—	$	(7,500)	$	(11,000)

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NOTE 25. QUARTERLY FINANCIAL DATA (unaudited)

The following tables set forth certain consolidated quarterly financial information of the Company for 2019 and 2018.  During the third quarter of 2019, the Company recorded $65.2 million of pre-tax merger and conversion charges. During the second quarter of 2018, the Company recorded $18.4 million of pre-tax merger and conversion charges and $5.5 million of pre-tax executive retirement benefits.

	Three Months Ended
(dollars in thousands, except per share data)	December 31, 2019		September 30, 2019		June 30, 2019		March 31, 2019
Selected Income Statement Data
Interest income	$	194,076	$	188,361	$	129,028	$	124,929
Interest expense	38,725		39,592		27,377		25,534
Net interest income	155,351		148,769		101,651		99,395
Provision for loan losses	5,693		5,989		4,668		3,408
Net interest income after provision for loan losses	149,658		142,780		96,983		95,987
Noninterest income	55,113		76,993		35,236		30,771
Other noninterest expense	120,149		127,539		77,776		73,368
Merger and conversion charges	2,415		65,158		3,475		2,057
Income before income taxes	82,207		27,076		50,968		51,333
Income tax	20,959		5,692		12,064		11,428
Net income	$	61,248	$	21,384	$	38,904	$	39,905
Per Share Data
Net income – basic	$	0.88	$	0.31	$	0.82	$	0.84
Net income – diluted	0.88		0.31		0.82		0.84
Common dividends - cash	0.15		0.15		0.10		0.10

	Three Months Ended
(dollars in thousands, except per share data)	December 31, 2018		September 30, 2018		June 30, 2018		March 31, 2018
Selected Income Statement Data
Interest income	$	122,749	$	121,119	$	89,946	$	79,512
Interest expense	23,195		22,081		13,947		10,711
Net interest income	99,554		99,038		75,999		68,801
Provision for loan losses	3,661		2,095		9,110		1,801
Net interest income after provision for loan losses	95,893		96,943		66,889		67,000
Noninterest income	30,470		30,171		31,307		26,464
Other noninterest expense	74,813		72,077		67,995		58,263
Merger and conversion charges	997		276		18,391		835
Income before income taxes	50,553		54,761		11,810		34,366
Income tax	7,017		13,317		2,423		7,706
Net income	$	43,536	$	41,444	$	9,387	$	26,660
Per Share Data
Net income – basic	$	0.92	$	0.87	$	0.24	$	0.70
Net income – diluted	0.91		0.87		0.24		0.70
Common dividends - cash	0.10		0.10		0.10		0.10

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

	AMERIS BANCORP
Date: March 20, 2020	By:	/s/ H. Palmer Proctor, Jr.
		H. Palmer Proctor, Jr.,
		Chief Executive Officer (principal executive officer)

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