Ameris Bancorp - Quarter Report: 2023 September (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549


FORM			10-Q

(Mark One)


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

For the quarterly period ended September 30, 2023


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


Commission File Number:			001-13901


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


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


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


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

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


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

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

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

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


Large accelerated filer	ý	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company	☐

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

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

There were 69,052,061 shares of Common Stock outstanding as of November 3, 2023.

AMERIS BANCORP

TABLE OF CONTENTS


		Page

PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements.

	Consolidated Balance Sheets as of Sept e mber 30, 2023 (unaudited) and December 31, 2022	1

	Consolidated Statements of Income and Comprehensive Income for the Three and Nine Months Ended September 30, 2023 and 2022 (unaudited)	2

	Consolidated Statements of Shareholders’ Equity for the Three and Nine Months Ended September 30, 2023 and 2022 (unaudited)	3

	Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2023 and 2022 (unaudited)	5

	Notes to Unaudited Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	35

Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	54

Item 4.	Controls and Procedures.	55

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings.	56

Item 1A.	Risk Factors.	56

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	56

Item 3.	Defaults Upon Senior Securities.	56

Item 4.	Mine Safety Disclosures.	56

Item 5.	Other Information.	56

Item 6.	Exhibits.	57

Signatures		58

Item 1. Financial Statements.

AMERIS BANCORP AND SUBSIDIARIES

Consolidated Balance Sheets

(dollars in thousands, except per share data)


	September 30, 2023 (unaudited)		December 31, 2022
Assets
Cash and due from banks	$	241,137	$	284,567
Federal funds sold and interest-bearing deposits in banks	1,304,636		833,565
Cash and cash equivalents	1,545,773		1,118,132


Debt securities available-for-sale, at fair value, net of allowance for credit losses of $80 and $75	1,424,081		1,500,060
Debt securities held-to-maturity, at amortized cost, net of allowance for credit losses of $— and $— (fair value of $115,689 and $114,538)	141,859		134,864
Other investments	104,957		110,992
Loans held for sale, at fair value	381,466		392,078

Loans, net of unearned income	20,201,079		19,855,253
Allowance for credit losses	(290,104)		(205,677)
Loans, net	19,910,975		19,649,576

Other real estate owned, net	3,397		843
Premises and equipment, net	217,564		220,283
Goodwill	1,015,646		1,015,646
Other intangible assets, net	92,375		106,194
Cash value of bank owned life insurance	393,769		388,405

Other assets	465,968		416,213
Total assets	$	25,697,830	$	25,053,286

Liabilities
Deposits:
Noninterest-bearing	$	6,589,610	$	7,929,579
Interest-bearing	14,000,735		11,533,159
Total deposits	20,590,345		19,462,738

Other borrowings	1,209,553		1,875,736
Subordinated deferrable interest debentures	129,817		128,322
Other liabilities	421,046		389,090
Total liabilities	22,350,761		21,855,886

Commitments and Contingencies (Note 8)

Shareholders’ Equity
Preferred stock, stated value $1,000; 5,000,000 shares authorized; 0 shares issued and outstanding	—		—
Common stock, par value $1; 200,000,000 shares authorized; 72,514,047 and 72,263,727 shares issued	72,514		72,264
Capital surplus	1,942,852		1,935,211
Retained earnings	1,484,424		1,311,258
Accumulated other comprehensive loss, net of tax	(60,818)		(46,507)
Treasury stock, at cost, 3,375,586 and 2,894,677 shares	(91,903)		(74,826)
Total shareholders’ equity	3,347,069		3,197,400
Total liabilities and shareholders’ equity	$	25,697,830	$	25,053,286

See notes to unaudited consolidated financial statements.

AMERIS BANCORP AND SUBSIDIARIES

Consolidated Statements of Income and Comprehensive Income (unaudited)

(dollars and shares in thousands, except per share data)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Interest income
Interest and fees on loans	$	304,699	$	216,400	$	868,675	$	584,706
Interest on taxable securities	14,754		10,324		44,969		21,627
Interest on nontaxable securities	331		363		1,009		818
Interest on deposits in other banks and federal funds sold	10,769		7,215		33,568		13,093
Total interest income	330,553		234,302		948,221		620,244

Interest expense
Interest on deposits	102,999		14,034		244,268		23,034
Interest on other borrowings	19,803		7,287		75,010		20,321
Total interest expense	122,802		21,321		319,278		43,355

Net interest income	207,751		212,981		628,943		576,889
Provision for loan losses	30,095		17,469		123,114		27,962
Provision for unfunded commitments	(5,634)		192		(3,415)		10,980
Provision for other credit losses	(2)		(9)		5		(135)
Provision for credit losses	24,459		17,652		119,704		38,807
Net interest income after provision for credit losses	183,292		195,329		509,239		538,082

Noninterest income
Service charges on deposit accounts	12,092		11,168		34,323		33,374
Mortgage banking activity	36,290		40,350		108,424		162,049
Other service charges, commissions and fees	1,221		970		3,167		2,907
Net gain (loss) on securities	(16)		(21)		(16)		200
Other noninterest income	13,594		12,857		40,682		37,546
Total noninterest income	63,181		65,324		186,580		236,076

Noninterest expense
Salaries and employee benefits	81,898		78,697		244,144		244,523
Occupancy and equipment	12,745		12,983		38,253		38,456
Data processing and communications expenses	12,973		12,015		39,458		36,742
Credit resolution-related expenses	(1,360)		126		(77)		(343)
Advertising and marketing	2,723		3,553		8,882		8,663
Amortization of intangible assets	4,425		4,710		13,819		15,035
Merger and conversion charges	—		—		—		977
Loan servicing expense	9,290		9,613		26,392		28,452
Other noninterest expenses	18,752		17,881		58,399		53,089
Total noninterest expense	141,446		139,578		429,270		425,594

Income before income tax expense	105,027		121,075		266,549		348,564
Income tax expense	24,912		28,520		63,378		84,245
Net income	80,115		92,555		203,171		264,319

Other comprehensive loss
Net unrealized holding losses arising during period on debt securities available-for-sale, net of tax benefit of $(3,472), $(10,128), $(4,871) and $(17,631)	(10,200)		(38,099)		(14,311)		(66,324)



Total other comprehensive loss	(10,200)		(38,099)		(14,311)		(66,324)
Comprehensive income	$	69,915	$	54,456	$	188,860	$	197,995

Basic earnings per common share	$	1.16	$	1.34	$	2.94	$	3.82
Diluted earnings per common share	$	1.16	$	1.34	$	2.94	$	3.81
Weighted average common shares outstanding
Basic	68,879		69,125		69,023		69,213
Diluted	68,994		69,327		69,130		69,428

See notes to unaudited consolidated financial statements.

AMERIS BANCORP AND SUBSIDIARIES

Consolidated Statements of Shareholders’ Equity (unaudited)

(dollars in thousands)


	Three Months Ended September 30, 2023

	Common Stock			Capital Surplus		Retained Earnings		Accumulated Other Comprehensive Income (Loss), Net of Tax		Treasury Stock			Total Shareholders' Equity
	Shares	Amount								Shares	Amount
Balance, June 30, 2023	72,514,630	$	72,515	$	1,939,865	$	1,414,742	$	(50,618)	3,374,847	$	(91,874)	$	3,284,630

Issuance of restricted shares	1,500	2		(2)		—		—		—	—		—
Forfeitures of restricted shares	(2,083)	(3)		(30)		—		—		—	—		(33)


Share-based compensation	—	—		3,019		—		—		—	—		3,019
Purchase of treasury shares	—	—		—		—		—		739	(29)		(29)
Net income	—	—		—		80,115		—		—	—		80,115
Dividends on common shares ($0.15 per share)	—	—		—		(10,433)		—		—	—		(10,433)

Other comprehensive loss during the period	—	—		—		—		(10,200)		—	—		(10,200)
Balance, September 30, 2023	72,514,047	$	72,514	$	1,942,852	$	1,484,424	$	(60,818)	3,375,586	$	(91,903)	$	3,347,069


	Nine Months Ended September 30, 2023

	Common Stock			Capital Surplus		Retained Earnings		Accumulated Other Comprehensive Income (Loss), Net of Tax		Treasury Stock			Total Shareholders' Equity
	Shares	Amount								Shares	Amount
Balance, December 31, 2022	72,263,727	$	72,264	$	1,935,211	$	1,311,258	$	(46,507)	2,894,677	$	(74,826)	$	3,197,400

Issuance of restricted shares	133,430	134		(134)		—		—		—	—		—
Issuance of common shares pursuant to PSU agreements	102,973	103		(103)		—		—		—	—		—
Forfeitures of restricted shares	(2,083)	(3)		(30)		—		—		—	—		(33)
Proceeds from exercise of stock options	16,000	16		460		—		—		—	—		476
Share-based compensation	—	—		7,448		—		—		—	—		7,448
Purchase of treasury shares	—	—		—		—		—		480,909	(17,077)		(17,077)
Net income	—	—		—		203,171		—		—	—		203,171
Dividends on common shares ($0.45 per share)	—	—		—		(31,282)		—		—	—		(31,282)
Cumulative effect of change in accounting principle for ASU 2022-02	—	—		—		1,277		—		—	—		1,277
Other comprehensive loss during the period	—	—		—		—		(14,311)		—	—		(14,311)
Balance, September 30, 2023	72,514,047	$	72,514	$	1,942,852	$	1,484,424	$	(60,818)	3,375,586	$	(91,903)	$	3,347,069


	Three Months Ended September 30, 2022

	Common Stock			Capital Surplus		Retained Earnings		Accumulated Other Comprehensive Income (Loss), Net of Tax		Treasury Stock			Total Shareholders' Equity
	Shares	Amount								Shares	Amount
Balance, June 30, 2022	72,251,856	$	72,251	$	1,931,088	$	1,157,359	$	(12,635)	2,891,395	$	(74,687)	$	3,073,376


Forfeitures of restricted shares	(4,470)	(4)		(38)		—		—		—	—		(42)

Share-based compensation	—	—		1,856		—		—		—	—		1,856
Purchase of treasury shares	—	—		—		—		—		3,282	(139)		(139)
Net income	—	—		—		92,555		—		—	—		92,555
Dividends on common shares ($0.15 per share)	—	—		—		(10,437)		—		—	—		(10,437)


Other comprehensive loss during the period	—	—		—		—		(38,099)		—	—		(38,099)
Balance, September 30, 2022	72,247,386	$	72,247	$	1,932,906	$	1,239,477	$	(50,734)	2,894,677	$	(74,826)	$	3,119,070


	Nine Months Ended September 30, 2022

	Common Stock			Capital Surplus		Retained Earnings		Accumulated Other Comprehensive Income (Loss), Net of Tax		Treasury Stock			Total Shareholders' Equity
	Shares	Amount								Shares	Amount
Balance, December 31, 2021	72,017,126	$	72,017	$	1,924,813	$	1,006,436	$	15,590	2,407,898	$	(52,405)	$	2,966,451

Issuance of restricted shares	164,346	164		1,177		—		—		—	—		1,341
Forfeitures of restricted shares	(13,889)	(14)		(119)		—		—		—	—		(133)
Proceeds from exercise of stock options	79,803	80		2,244		—		—		—	—		2,324
Share-based compensation	—	—		4,791		—		—		—	—		4,791
Purchase of treasury shares	—	—		—		—		—		486,779	(22,421)		(22,421)
Net income	—	—		—		264,319		—		—	—		264,319
Dividends on common shares ($0.45 per share)	—	—		—		(31,278)		—		—	—		(31,278)


Other comprehensive loss during the period	—	—		—		—		(66,324)		—	—		(66,324)
Balance, September 30, 2022	72,247,386	$	72,247	$	1,932,906	$	1,239,477	$	(50,734)	2,894,677	$	(74,826)	$	3,119,070

See notes to unaudited consolidated financial statements.

AMERIS BANCORP AND SUBSIDIARIES

Consolidated Statements of Cash Flows (unaudited)

(dollars in thousands)


	Nine Months Ended September 30,
	2023		2022
Operating Activities
Net income	$	203,171	$	264,319
Adjustments reconciling net income to net cash provided by (used in) operating activities:
Depreciation	14,260		13,808
Net losses on sale or disposal of premises and equipment	97		92

Provision for credit losses	119,704		38,807
Net write-downs and (gains) losses on sale of other real estate owned	(1,597)		(1,773)
Share-based compensation expense	7,415		4,859
Amortization of intangible assets	13,819		15,035
Amortization of operating lease right of use assets	8,440		8,783
Provision for deferred taxes	(13,382)		(21,699)
Net (accretion) amortization of debt securities available-for-sale	(4,316)		407
Net (accretion) amortization of debt securities held-to-maturity	(136)		71
Net amortization of other investments	1,108		556
Net (gain) loss on securities	16		(200)
Accretion of discount on purchased loans, net	(1,361)		(30)
Net amortization on other borrowings	774		324
Amortization of subordinated deferrable interest debentures	1,495		1,495
Loan servicing asset recovery	—		(21,824)
Originations of mortgage loans held for sale	(2,818,898)		(3,265,190)
Payments received on mortgage loans held for sale	11,806		21,657
Proceeds from sales of mortgage loans held for sale	2,802,956		3,919,672
Net losses on sale of mortgage loans held for sale	4,447		83,975
Originations of SBA loans	(24,252)		(44,664)
Proceeds from sales of SBA loans	27,129		53,961
Net gains on sale of SBA loans	(1,382)		(5,191)
Increase in cash surrender value of bank owned life insurance	(6,768)		(5,433)
Gain on bank owned life insurance proceeds	(486)		(55)


Loss on sale of mortgage servicing rights	—		316
Gain on debt redemption	(1,148)		—
Change attributable to other operating activities	13,157		711
Net cash provided by operating activities	356,068		1,062,789

Investing Activities, net of effects of business combinations

Purchases of debt securities available-for-sale	(500)		(894,260)
Purchases of debt securities held-to-maturity	(8,543)		(52,111)
Proceeds from maturities and paydowns of debt securities available-for-sale	61,394		147,291
Proceeds from sales of debt securities available-for-sale	216		—
Proceeds from maturities and paydowns of debt securities held-to-maturity	1,684		1,676
Net (increase) decrease in other investments	4,911		(13,364)
Net increase in loans	(400,486)		(2,764,936)
Purchases of premises and equipment	(11,680)		(11,307)
Proceeds from sale of premises and equipment	42		46
Proceeds from sales of other real estate owned	8,756		5,086
Proceeds from sale of mortgage servicing rights	—		119,845
Purchases of bank owned life insurance	—		(50,000)
Proceeds from bank owned life insurance	1,890		101


Net cash and cash equivalents paid in acquisitions	—		(14,003)
Net cash used in investing activities	(342,316)		(3,525,936)

			(Continued)

AMERIS BANCORP AND SUBSIDIARIES

Consolidated Statements of Cash Flows (unaudited)

(dollars in thousands)


	Nine Months Ended September 30,
	2023		2022
Financing Activities, net of effects of business combinations
Net increase (decrease) in deposits	$	1,127,607	$	(198,634)
Net decrease in securities sold under agreements to repurchase	—		(5,845)
Proceeds from other borrowings	13,837,000		350,000
Repayment of other borrowings	(14,502,809)		(364,539)


Proceeds from exercise of stock options	476		2,324
Dividends paid - common stock	(31,308)		(31,227)
Purchase of treasury shares	(17,077)		(22,421)
Net cash provided by (used in) financing activities	413,889		(270,342)

Net increase (decrease) in cash, cash equivalents and restricted cash	427,641		(2,733,489)
Cash, cash equivalents and restricted cash at beginning of period	1,118,132		4,064,657
Cash, cash equivalents and restricted cash at end of period	$	1,545,773	$	1,331,168

Supplemental Disclosures of Cash Flow Information
Cash paid (received) during the period for:
Interest	$	290,972	$	42,040
Income taxes	88,353		82,551
Loans transferred to other real estate owned	9,713		346
Loans transferred from loans held for sale to loans held for investment	8,806		192,425

Loans provided for the sales of other real estate owned	—		2,288


Right-of-use assets obtained in exchange for new operating lease liabilities	2,678		1,537
Assets acquired in business acquisitions	—		10,641
Liabilities assumed in business acquisitions	—		(3,362)


Change in unrealized loss on securities available-for-sale, net of tax	(14,311)		(66,324)



			(Concluded)

See notes to unaudited consolidated financial statements.

AMERIS BANCORP AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

September 30, 2023

NOTE 1 – BASIS OF PRESENTATION AND ACCOUNTING POLICIES

Nature of Business

Ameris Bancorp (the “Company” or “Ameris”) is a financial holding company headquartered in Atlanta, Georgia. Ameris conducts substantially all of its operations through its wholly owned banking subsidiary, Ameris Bank (the “Bank”). At September 30, 2023, the Bank operated 164 branches in select markets in Georgia, Alabama, Florida, North Carolina and South Carolina. Our business model capitalizes on the efficiencies of a large financial services company, while still providing the community with the personalized banking service expected by our customers. We manage our Bank through a balance of decentralized management responsibilities and efficient centralized operating systems, products and loan underwriting standards. The Company’s Board of Directors and senior managers establish corporate policy, strategy and administrative policies. Within our established guidelines and policies, the banker closest to the customer responds to the differing needs and demands of his or her unique market.

Basis of Presentation

The accompanying unaudited consolidated financial statements for Ameris have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and Regulation S-X. Accordingly, the financial statements do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (“GAAP”) for complete financial statement presentation. The interim consolidated financial statements included herein are unaudited but reflect all adjustments, consisting of normal recurring adjustments, which, in the opinion of management, are necessary for a fair presentation of the consolidated financial position and results of operations for the interim periods presented. All significant intercompany accounts and transactions have been eliminated in consolidation. The results of operations for the three and nine months ended September 30, 2023 are not necessarily indicative of the results to be expected for the full year. These financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

In preparing the consolidated financial statements in conformity with GAAP, 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.

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, federal funds sold and restricted cash. There was no restricted cash held at both September 30, 2023 and December 31, 2022.

Reclassifications

Certain reclassifications of prior year amounts have been made to conform with the current year presentations. The reclassifications had no effect on net income or shareholders' equity as previously reported.

Accounting Standards Adopted in 2023

ASU No. 2022-02 – Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures ("ASU 2022-02"). ASU 2022-02 eliminates the troubled debt restructuring ("TDR") measurement and recognition guidance and requires that entities evaluate whether the modification represents a new loan or a continuation of an existing loan consistent with the accounting for other loan modifications. Additional disclosures relating to modifications to borrowers experiencing financial difficulty are required under ASU 2022-02. ASU 2022-02 also requires disclosure of current-period gross write-offs by year of origination. The Company adopted this ASU effective January 1, 2023 on a prospective basis, except for the amendments related to recognition and measurement of TDRs, which were adopted using the modified retrospective method. The adoption was not material and resulted in a reduction to the allowance for credit losses of $1.7 million and an increase to retained earnings of $1.3 million.

ASU No. 2022-06 - Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848. ASU No. 2022-06 extends the temporary relief in Topic 848 from December 31, 2022 to December 31, 2024. Topic 848 provides optional guidance to ease the potential burden in accounting for or recognizing the effects of reference rate reform on financial reporting. The objective of this guidance is to provide temporary relief during the transition period away from LIBOR toward new interest rate benchmarks. This update was effective upon issuance. The Company adopted the guidance in Topic 848 effective January 1, 2023 and the adoption was not material to the consolidated financial statements.

NOTE 2 – 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) Securities available-for-sale	Amortized Cost		Allowance for Credit Losses		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
September 30, 2023
U.S. Treasuries	$	781,154	$	—	$	—	$	(20,558)	$	760,596
U.S. government-sponsored agencies	1,026		—		—		(57)		969
State, county and municipal securities	29,492		—		—		(1,789)		27,703
Corporate debt securities	16,171		(80)		—		(1,055)		15,036
SBA pool securities	23,834		—		2		(2,085)		21,751
Mortgage-backed securities	650,535		—		16		(52,525)		598,026
Total debt securities available-for-sale	$	1,502,212	$	(80)	$	18	$	(78,069)	$	1,424,081

December 31, 2022
U.S. Treasuries	$	775,784	$	—	$	131	$	(16,381)	$	759,534
U.S. government-sponsored agencies	1,036		—		—		(57)		979
State, county and municipal securities	35,358		—		17		(1,180)		34,195
Corporate debt securities	16,397		(75)		—		(396)		15,926
SBA pool securities	29,422		—		3		(2,027)		27,398
Mortgage-backed securities	701,008		—		113		(39,093)		662,028
Total debt securities available-for-sale	$	1,559,005	$	(75)	$	264	$	(59,134)	$	1,500,060

The amortized cost and estimated fair value of securities held-to-maturity along with gross unrealized gains and losses are summarized as follows:


(dollars in thousands) Securities held-to-maturity	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
September 30, 2023


State, county and municipal securities	$	31,905	$	—	$	(7,350)	$	24,555


Mortgage-backed securities	109,954		—		(18,820)		91,134
Total debt securities held-to-maturity	$	141,859	$	—	$	(26,170)	$	115,689



December 31, 2022


State, county and municipal securities	$	31,905	$	—	$	(5,380)	$	26,525


Mortgage-backed securities	102,959		—		(14,946)		88,013
Total debt securities held-to-maturity	$	134,864	$	—	$	(20,326)	$	114,538

The amortized cost and estimated fair value of debt securities available-for-sale and held-to-maturity as of September 30, 2023, by contractual maturity are shown below. Maturities may differ from contractual maturities in mortgage-backed securities

because the mortgages underlying these securities may be called or repaid without penalty. Therefore, these securities are not included in the maturity categories in the following maturity summary:


	Available-for-Sale				Held-to-Maturity
(dollars in thousands)	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Due in one year or less	$	380,435	$	375,844	$	—	$	—
Due from one year to five years	439,956		422,385		—		—
Due from five to ten years	10,753		9,897		—		—
Due after ten years	20,533		17,929		31,905		24,555
Mortgage-backed securities	650,535		598,026		109,954		91,134
	$	1,502,212	$	1,424,081	$	141,859	$	115,689

Securities with a carrying value of approximately $827.9 million and $861.6 million at September 30, 2023 and December 31, 2022, respectively, serve as collateral to secure public deposits and for other purposes required or permitted by law.

The following table shows the gross unrealized losses and estimated fair value of available-for-sale securities aggregated by category and length of time that securities have been in a continuous unrealized loss position at September 30, 2023 and December 31, 2022:


	Less Than 12 Months				12 Months or More				Total
(dollars in thousands) Securities available-for-sale	Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses
September 30, 2023
U.S. Treasuries	$	230,519	$	(2,956)	$	530,077	$	(17,602)	$	760,596	$	(20,558)
U.S. government-sponsored agencies	—		—		969		(57)		969		(57)
State, county and municipal securities	6,739		(135)		19,549		(1,654)		26,288		(1,789)
Corporate debt securities	491		(9)		13,045		(1,046)		13,536		(1,055)
SBA pool securities	43		—		21,547		(2,085)		21,590		(2,085)
Mortgage-backed securities	22,744		(834)		573,996		(51,691)		596,740		(52,525)
Total debt securities available-for-sale	$	260,536	$	(3,934)	$	1,159,183	$	(74,135)	$	1,419,719	$	(78,069)

December 31, 2022
U.S. Treasuries	$	725,250	$	(16,381)	$	—	$	—	$	725,250	$	(16,381)
U.S. government sponsored agencies	979		(57)		—		—		979		(57)
State, county and municipal securities	27,438		(1,180)		—		—		27,438		(1,180)
Corporate debt securities	13,271		(126)		1,155		(270)		14,426		(396)
SBA pool securities	17,806		(1,298)		9,329		(729)		27,135		(2,027)
Mortgage-backed securities	620,544		(37,774)		16,847		(1,319)		637,391		(39,093)
Total debt securities available-for-sale	$	1,405,288	$	(56,816)	$	27,331	$	(2,318)	$	1,432,619	$	(59,134)

As of September 30, 2023, the Company’s available-for-sale security portfolio consisted of 419 securities, 412 of which were in an unrealized loss position. At September 30, 2023, the Company held 320 mortgage-backed securities that were in an unrealized loss position, all of which were issued by U.S. government-sponsored entities and agencies. At September 30, 2023, the Company held 30 U.S. Small Business Administration (“SBA”) pool securities, 27 state, county and municipal securities, six corporate securities, one U.S. government-sponsored agency security, and 28 U.S. Treasury securities that were in an unrealized loss position.

The following table shows the gross unrealized losses and estimated fair value of held-to-maturity securities aggregated by category and length of time that securities have been in a continuous unrealized loss position at September 30, 2023 and December 31, 2022:


	Less Than 12 Months				12 Months or More				Total
(dollars in thousands) Securities held-to-maturity	Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses
September 30, 2023

State, county and municipal securities	$	—	$	—	$	24,555	$	(7,350)	$	24,555	$	(7,350)


Mortgage-backed securities	12,794		(1,046)		78,340		(17,774)		91,134		(18,820)
Total debt securities held-to-maturity	$	12,794	$	(1,046)	$	102,895	$	(25,124)	$	115,689	$	(26,170)

December 31, 2022

State, county and municipal securities	$	16,512	$	(1,488)	$	10,013	$	(3,892)	$	26,525	$	(5,380)


Mortgage-backed securities	32,471		(1,925)		55,542		(13,021)		88,013		(14,946)
Total debt securities held-to-maturity	$	48,983	$	(3,413)	$	65,555	$	(16,913)	$	114,538	$	(20,326)

As of September 30, 2023, the Company’s held-to-maturity security portfolio consisted of 27 securities, all of which were in an unrealized loss position. At September 30, 2023, the Company held 21 mortgage-backed securities and six state, county and municipal securities that were in an unrealized loss position.

At September 30, 2023 and December 31, 2022, all of the Company’s mortgage-backed securities were obligations of government-sponsored agencies.

Management and the Company’s Asset and Liability Committee (the “ALCO Committee”) evaluate available-for-sale securities in an unrealized loss position on at least a quarterly basis, and more frequently when economic or market concerns warrant such evaluation, to determine if credit-related impairment exists. Management first evaluates whether they intend to sell or more likely than not will be required to sell an impaired security before recovering its amortized cost basis. If either criteria is met, the entire amount of unrealized loss is recognized in earnings with a corresponding adjustment to the security's amortized cost basis. If either of the above criteria is not met, management evaluates whether the decline in fair value is attributable to credit or resulted from other factors. The Company does not intend to sell these available-for-sale investment securities at an unrealized loss position at September 30, 2023, and it is more likely than not that the Company will not be required to sell these securities prior to recovery or maturity. Based on the results of management's review, at September 30, 2023, management determined that $80,000 was attributable to credit impairment and an allowance for credit losses was recorded. The remaining $78.1 million in unrealized loss was determined to be from factors other than credit.


(dollars in thousands)	Three Months Ended September 30,				Nine Months Ended September 30,
Allowance for credit losses	2023		2022		2023		2022
Beginning balance	$	82	$	88	$	75	$	—
Provision for other credit losses	(2)		(9)		5		79
Ending balance	$	80	$	79	$	80	$	79

The Company's held-to-maturity securities have no expected credit losses, and no related allowance for credit losses has been established.

The following table is a summary of sales activities in the Company's debt securities available for sale for the three and nine months ended September 30, 2023 and 2022:


	Three Months Ended September 30,				Nine Months Ended September 30,
(dollars in thousands)	2023		2022		2023		2022
Gross gains on sales of securities	$	—	$	—	$	—	$	—
Gross losses on sales of securities	—		—		—		—
Net realized gains (losses) on sales of debt securities available for sale	$	—	$	—	$	—	$	—

Sales proceeds	$	216	$	—	$	216	$	—

Total net gain (loss) on securities reported on the consolidated statements of income and comprehensive income is comprised of the following for the three and nine months ended September 30, 2023 and 2022:


	Three Months Ended September 30,				Nine Months Ended September 30,
(dollars in thousands)	2023		2022		2023		2022

Unrealized holding gains (losses) on equity securities	$	(16)	$	(21)	$	(16)	$	(70)
Net realized gains on sales of other investments	—		—		—		270
Net gain (loss) on securities	$	(16)	$	(21)	$	(16)	$	200

NOTE 3 – LOANS AND ALLOWANCE FOR CREDIT LOSSES

Loans are stated at amortized cost. Balances within the major loans receivable categories are presented in the following table:


(dollars in thousands)	September 30, 2023		December 31, 2022
Commercial, financial and agricultural	$	2,632,836	$	2,679,403
Consumer	259,797		384,037
Indirect automobile	47,108		108,648
Mortgage warehouse	852,823		1,038,924
Municipal	497,093		509,151
Premium finance	1,007,334		1,023,479
Real estate – construction and development	2,236,686		2,086,438
Real estate – commercial and farmland	7,865,389		7,604,867
Real estate – residential	4,802,013		4,420,306
	$	20,201,079	$	19,855,253

Accrued interest receivable on loans is reported in other assets on the consolidated balance sheets totaling $74.3 million and $69.3 million at September 30, 2023 and December 31, 2022, respectively. The Company had no recorded allowance for credit related to accrued interest on loans at both September 30, 2023 and December 31, 2022.

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. 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. 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:


(dollars in thousands)	September 30, 2023		December 31, 2022
Commercial, financial and agricultural	$	7,558	$	11,094
Consumer	888		420
Indirect automobile	290		346



Real estate – construction and development	282		523
Real estate – commercial and farmland	8,063		13,203
Real estate – residential(1)	117,477		109,222
	$	134,558	$	134,808

(1) Included in real estate - residential were $80.8 million and $69.6 million of serviced GNMA-guaranteed nonaccrual loans at September 30, 2023 and December 31, 2022, respectively.

Interest income recognized on nonaccrual loans during the nine months ended September 30, 2023 and 2022 was not material.

The following table presents an analysis of nonaccrual loans with no related allowance for credit losses:


(dollars in thousands)	September 30, 2023		December 31, 2022
Commercial, financial and agricultural	$	677	$	33
Consumer	285		—





Real estate – commercial and farmland	4,133		1,464
Real estate – residential	69,178		58,734
	$	74,273	$	60,231

The following table presents an analysis of past-due loans as of September 30, 2023 and December 31, 2022:


(dollars in thousands)	Loans 30-59 Days Past Due		Loans 60-89 Days Past Due		Loans 90 or More Days Past Due		Total Loans Past Due		Current Loans		Total Loans		Loans 90 Days or More Past Due and Still Accruing
September 30, 2023
Commercial, financial and agricultural	$	12,774	$	5,438	$	7,064	$	25,276	$	2,607,560	$	2,632,836	$	4,765
Consumer	2,290		804		625		3,719		256,078		259,797		—
Indirect automobile	131		41		97		269		46,839		47,108		—
Mortgage warehouse	—		—		—		—		852,823		852,823		—
Municipal	—		—		—		—		497,093		497,093		—
Premium finance	9,648		5,260		7,126		22,034		985,300		1,007,334		7,126
Real estate – construction and development	892		370		280		1,542		2,235,144		2,236,686		—
Real estate – commercial and farmland	5,358		7,128		931		13,417		7,851,972		7,865,389		—
Real estate – residential	39,413		16,926		114,039		170,378		4,631,635		4,802,013		—
Total	$	70,506	$	35,967	$	130,162	$	236,635	$	19,964,444	$	20,201,079	$	11,891

December 31, 2022
Commercial, financial and agricultural	$	16,219	$	5,451	$	11,632	$	33,302	$	2,646,101	$	2,679,403	$	3,267
Consumer	2,539		3,163		741		6,443		377,594		384,037		472
Indirect automobile	466		77		267		810		107,838		108,648		—
Mortgage warehouse	—		—		—		—		1,038,924		1,038,924		—
Municipal	—		—		—		—		509,151		509,151		—
Premium finance	13,859		10,620		13,626		38,105		985,374		1,023,479		13,626
Real estate – construction and development	25,367		3,829		966		30,162		2,056,276		2,086,438		500
Real estate – commercial and farmland	1,738		168		10,223		12,129		7,592,738		7,604,867		—
Real estate – residential	35,015		11,329		106,170		152,514		4,267,792		4,420,306		—
Total	$	95,203	$	34,637	$	143,625	$	273,465	$	19,581,788	$	19,855,253	$	17,865

Collateral-Dependent Loans

Collateral-dependent loans are loans where repayment is expected to be provided substantially through the operation or sale of the collateral when the borrower is experiencing financial difficulty. If the Company determines that foreclosure is probable, these loans are written down to the lower of cost or fair value of the collateral less estimated costs to sell. When repayment is expected to be from the operation of the collateral, the allowance for credit losses is calculated as the amount by which the amortized cost basis of the financial asset exceeds the present value of expected cash flows from the operation of the collateral. The Company may, in the alternative, measure the allowance for credit loss as the amount by which the amortized cost basis of the financial asset exceeds the estimated fair value of the collateral.

The following table presents an analysis of individually evaluated collateral-dependent financial assets and related allowance for credit losses:


	September 30, 2023				December 31, 2022
(dollars in thousands)	Balance		Allowance for Credit Losses		Balance		Allowance for Credit Losses
Commercial, financial and agricultural	$	7,398	$	2,160	$	7,128	$	6,294




Premium finance	—		—		3,233		—
Real estate – construction and development	559		122		780		13
Real estate – commercial and farmland	7,894		876		15,168		1,428
Real estate – residential	15,963		2,000		15,464		2,066
	$	31,814	$	5,158	$	41,773	$	9,801

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:

Pass (Grades 1 - 5) – These grades represent acceptable credit risk to the Company based on factors including creditworthiness of the borrower, current performance and nature of the collateral.

Other Assets Especially Mentioned (Grade 6) – 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.

Substandard (Grade 7) – 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.

Doubtful (Grade 8) – 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.

Loss (Grade 9) – 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 tables present the loan portfolio's amortized cost by class of financing receivable, risk grade and year of origination (in thousands) as of September 30, 2023 and December 31, 2022. Generally, current period renewals of credit are underwritten again at the point of renewal and considered current period originations for purposes of the tables below. The Company had an immaterial amount of revolving loans which converted to term loans and the amortized cost basis of those loans is included in the applicable origination year. There were no loans risk graded 8 or 9 at September 30, 2023 or December 31, 2022.


As of September 30, 2023	Term Loans by Origination Year												Revolving Loans Amortized Cost Basis
	2023		2022		2021		2020		2019		Prior				Total

Commercial, Financial and Agricultural
Risk Grade:
Pass	$	668,738	$	817,646	$	417,329	$	112,503	$	67,547	$	51,702	$	475,435		$	2,610,900
6	17		315		53		113		153		426		1,171			2,248
7	2,387		2,661		3,536		1,448		2,912		3,368		3,376			19,688


Total commercial, financial and agricultural	$	671,142	$	820,622	$	420,918	$	114,064	$	70,612	$	55,496	$	479,982		$	2,632,836

Current-period gross charge offs	2,920		20,026		13,793		1,316		1,228		2,760		25			42,068
Consumer
Risk Grade:
Pass	$	42,436	$	20,734	$	7,289	$	28,346	$	17,662	$	25,477	$	116,578		$	258,522
6	—		6		—		—		—		26		4			36
7	52		83		47		183		195		519		160			1,239


Total consumer	$	42,488	$	20,823	$	7,336	$	28,529	$	17,857	$	26,022	$	116,742		$	259,797

Current-period gross charge offs	50		311		74		1,359		892		1,203		251			4,140
Indirect Automobile
Risk Grade:
Pass	$	—	$	—	$	—	$	—	$	7,341	$	39,182	$	—		$	46,523
6	—		—		—		—		—		1		—			1
7	—		—		—		—		33		551		—			584


Total indirect automobile	$	—	$	—	$	—	$	—	$	7,374	$	39,734	$	—		$	47,108

Current-period gross charge offs	—		—		—		—		—		135		—			135
Mortgage Warehouse
Risk Grade:
Pass	$	—	$	—	$	—	$	—	$	—	$	—	$	817,919		$	817,919
6	—		—		—		—		—		—		34,904			34,904
7	—		—		—		—		—		—		—			—


Total mortgage warehouse	$	—	$	—	$	—	$	—	$	—	$	—	$	852,823		$	852,823

Current-period gross charge offs	—		—		—		—		—		—		—			—
Municipal
Risk Grade:
Pass	$	7,630	$	22,886	$	54,558	$	178,659	$	14,961	$	218,399	$	—		$	497,093




Total municipal	$	7,630	$	22,886	$	54,558	$	178,659	$	14,961	$	218,399	$	—		$	497,093

Current-period gross charge offs	—		—		—		—		—		—		—			—
Premium Finance
Risk Grade:
Pass	$	970,328	$	27,170	$	2,710	$	—	$	—	$	—	$	—		$	1,000,208

7	4,361		2,765		—		—		—		—		—			7,126


Total premium finance	$	974,689	$	29,935	$	2,710	$	—	$	—	$	—	$	—		$	1,007,334

Current-period gross charge offs	310		4,600		310		—		—		—		—			5,220


As of September 30, 2023	Term Loans by Origination Year												Revolving Loans Amortized Cost Basis
	2023		2022		2021		2020		2019		Prior				Total

Real Estate – Construction and Development
Risk Grade:
Pass	$	381,311	$	861,269	$	696,969	$	131,329	$	53,581	$	31,230	$	68,218		$	2,223,907
6	—		—		—		—		—		507		—			507
7	—		269		303		—		—		11,700		—			12,272


Total real estate – construction and development	$	381,311	$	861,538	$	697,272	$	131,329	$	53,581	$	43,437	$	68,218		$	2,236,686

Current-period gross charge offs	—		—		—		—		—		—		—			—
Real Estate – Commercial and Farmland
Risk Grade:
Pass	$	363,104	$	1,820,072	$	1,975,533	$	1,134,332	$	798,673	$	1,488,013	$	106,312		$	7,686,039
6	427		344		60,040		—		38,259		44,074		40			143,184
7	—		305		449		3,604		1,490		30,318		—			36,166


Total real estate – commercial and farmland	$	363,531	$	1,820,721	$	2,036,022	$	1,137,936	$	838,422	$	1,562,405	$	106,352		$	7,865,389

Current-period gross charge offs	—		—		—		—		3,151		169		—			3,320
Real Estate - Residential
Risk Grade:
Pass	$	628,618	$	1,429,936	$	1,157,750	$	515,637	$	246,347	$	444,992	$	248,504		$	4,671,784
6	—		187		1,115		173		622		2,980		1,492			6,569
7	2,201		23,423		24,660		24,254		21,471		25,558		2,093			123,660


Total real estate - residential	$	630,819	$	1,453,546	$	1,183,525	$	540,064	$	268,440	$	473,530	$	252,089		$	4,802,013

Current-period gross charge offs	24		—		9		—		—		109		89			231
Total Loans
Risk Grade:
Pass	$	3,062,165	$	4,999,713	$	4,312,138	$	2,100,806	$	1,206,112	$	2,298,995	$	1,832,966		$	19,812,895
6	444		852		61,208		286		39,034		48,014		37,611			187,449
7	9,001		29,506		28,995		29,489		26,101		72,014		5,629			200,735


Total loans	$	3,071,610	$	5,030,071	$	4,402,341	$	2,130,581	$	1,271,247	$	2,419,023	$	1,876,206		$	20,201,079
Total current-period gross charge offs	3,304		24,937		14,186		2,675		5,271		4,376		365			55,114


As of December 31, 2022	Term Loans by Origination Year												Revolving Loans Amortized Cost Basis
	2022		2021		2020		2019		2018		Prior				Total

Commercial, Financial and Agricultural
Risk Grade:
Pass	$	1,127,120	$	526,043	$	174,120	$	109,091	$	56,657	$	41,612	$	621,784		$	2,656,427
6	—		13		94		183		895		1,774		317			3,276
7	8,565		1,214		1,182		3,314		545		2,759		2,121			19,700


Total commercial, financial and agricultural	$	1,135,685	$	527,270	$	175,396	$	112,588	$	58,097	$	46,145	$	624,222		$	2,679,403
Consumer
Risk Grade:
Pass	$	41,487	$	12,692	$	37,906	$	23,454	$	17,144	$	13,825	$	236,113		$	382,621
6	38		—		—		—		—		98		196			332
7	68		62		216		106		118		431		83			1,084


Total consumer	$	41,593	$	12,754	$	38,122	$	23,560	$	17,262	$	14,354	$	236,392		$	384,037
Indirect Automobile
Risk Grade:
Pass	$	—	$	—	$	—	$	11,900	$	50,749	$	45,120	$	—		$	107,769
6	—		—		—		—		—		11		—			11
7	—		—		—		41		149		678		—			868


Total indirect automobile	$	—	$	—	$	—	$	11,941	$	50,898	$	45,809	$	—		$	108,648
Mortgage Warehouse
Risk Grade:
Pass	$	—	$	—	$	—	$	—	$	—	$	—	$	990,106		$	990,106
6	—		—		—		—		—		—		22,831			22,831
7	—		—		—		—		—		—		25,987			25,987


Total mortgage warehouse	$	—	$	—	$	—	$	—	$	—	$	—	$	1,038,924		$	1,038,924
Municipal
Risk Grade:
Pass	$	18,074	$	46,809	$	188,507	$	9,752	$	4,358	$	241,651	$	—		$	509,151




Total municipal	$	18,074	$	46,809	$	188,507	$	9,752	$	4,358	$	241,651	$	—		$	509,151
Premium Finance
Risk Grade:
Pass	$	1,000,214	$	9,667	$	12	$	—	$	—	$	—	$	—		$	1,009,893

7	13,051		535		—		—		—		—		—			13,586


Total premium finance	$	1,013,265	$	10,202	$	12	$	—	$	—	$	—	$	—		$	1,023,479
Real Estate – Construction and Development
Risk Grade:
Pass	$	834,831	$	793,723	$	306,084	$	69,596	$	7,934	$	31,490	$	27,474		$	2,071,132
6	277		—		—		—		173		165		—			615
7	—		783		164		5		13,159		580		—			14,691


Total real estate – construction and development	$	835,108	$	794,506	$	306,248	$	69,601	$	21,266	$	32,235	$	27,474		$	2,086,438


As of December 31, 2022	Term Loans by Origination Year												Revolving Loans Amortized Cost Basis
	2022		2021		2020		2019		2018		Prior				Total

Real Estate – Commercial and Farmland
Risk Grade:
Pass	$	1,739,021	$	1,975,003	$	1,085,086	$	869,116	$	447,311	$	1,259,763	$	110,848		$	7,486,148
6	607		17,974		—		30,841		4,801		18,289		—			72,512
7	387		2,810		3,078		12,007		6,527		21,398		—			46,207


Total real estate – commercial and farmland	$	1,740,015	$	1,995,787	$	1,088,164	$	911,964	$	458,639	$	1,299,450	$	110,848		$	7,604,867
Real Estate - Residential
Risk Grade:
Pass	$	1,524,021	$	1,214,724	$	548,968	$	268,821	$	115,693	$	393,570	$	234,684		$	4,300,481
6	236		145		94		688		364		2,910		600			5,037
7	6,735		21,283		25,860		27,173		14,396		17,665		1,676			114,788


Total real estate - residential	$	1,530,992	$	1,236,152	$	574,922	$	296,682	$	130,453	$	414,145	$	236,960		$	4,420,306
Total Loans
Risk Grade:
Pass	$	6,284,768	$	4,578,661	$	2,340,683	$	1,361,730	$	699,846	$	2,027,031	$	2,221,009		$	19,513,728
6	1,158		18,132		188		31,712		6,233		23,247		23,944			104,614
7	28,806		26,687		30,500		42,646		34,894		43,511		29,867			236,911


Total loans	$	6,314,732	$	4,623,480	$	2,371,371	$	1,436,088	$	740,973	$	2,093,789	$	2,274,820		$	19,855,253

Allowance for Credit Losses on Loans

The allowance for credit losses represents an allowance for expected losses over the remaining contractual life of the assets. The contractual term does not consider extensions, renewals or modifications. The Company segregates the loan portfolio by type of loan and utilizes this segregation in evaluating exposure to risks within the portfolio.

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 (the “FFIEC”) Uniform Retail Credit Classification and Account Management Policy. Commercial loans are charged off when they are deemed uncollectible, which usually involves a triggering event within the collection effort. If the loan is collateral dependent, the loss is more easily identified and is charged off when it is identified, usually based upon receipt of an appraisal. However, when a loan has guarantor support, the Company may carry the estimated loss as a reserve against the loan while collection efforts with the guarantor are pursued. If, after collection efforts with the guarantor are complete, the deficiency is still considered uncollectible, the loss is charged off and any further collections are treated as recoveries. In all situations, when a loan is downgraded to an Asset Quality Rating of 9 (Loss per the regulatory guidance), the uncollectible portion is charged off.

The Company’s methodologies for estimating the allowance for credit losses consider available relevant information about the collectability of cash flows, including information about past events, current conditions, and reasonable and supportable forecasts. The methodologies apply historical loss information, adjusted for asset-specific characteristics, economic conditions at the measurement date, and forecasts about future economic conditions expected to exist through the contractual lives of the financial assets that are reasonable and supportable, to the identified pools of loans with similar risk characteristics for which the historical loss experience was observed. The Company utilizes a one year reasonable and supportable forecast period. The Company’s methodologies revert back to historical loss information on a straight-line basis over four quarters after the reasonable and supportable forecast period.

During the nine months ended September 30, 2023, the allowance for credit losses increased due to a decline in forecasted macroeconomic factors, particularly residential and commercial real estate price indices and organic loan growth during the period. The allowance for credit losses was determined at both September 30, 2023 and December 31, 2022 using the Moody's baseline scenario economic forecast. The current forecast reflects, among other things, declines in forecast levels of home prices and commercial real estate prices compared with the forecast at December 31, 2022.

The following tables detail activity and end of period balances in the allowance for credit 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.


Three Months Ended September 30, 2023

(dollars in thousands)	Commercial, Financial and Agricultural		Consumer		Indirect Automobile		Mortgage Warehouse		Municipal		Premium Finance
Balance, June 30, 2023	$	50,789	$	4,548	$	98	$	2,335	$	357	$	776


Provision for loan losses	14,650		310		(149)		(589)		(9)		183
Loans charged off	(16,519)		(948)		(36)		—		—		(1,951)
Recoveries of loans previously charged off	4,745		203		158		—		—		1,639
Balance, September 30, 2023	$	53,665	$	4,113	$	71	$	1,746	$	348	$	647

	Real Estate – Construction and Development		Real Estate – Commercial and Farmland		Real Estate – Residential		Total
Balance, June 30, 2023	$	54,589	$	96,140	$	62,439	$	272,071


Provision for loan losses	8,525		5,453		1,721		30,095
Loans charged off	—		—		(34)		(19,488)
Recoveries of loans previously charged off	74		371		236		7,426
Balance, September 30, 2023	$	63,188	$	101,964	$	64,362	$	290,104

Nine Months Ended September 30, 2023

(dollars in thousands)	Commercial, Financial and Agricultural		Consumer Installment		Indirect Automobile		Mortgage Warehouse		Municipal		Premium Finance
Balance, December 31, 2022	$	39,455	$	5,413	$	174	$	2,118	$	357	$	1,025
Adjustment to allowance for adoption of ASU 2022-02	(105)		—		—		—		—		—

Provision for loan losses	46,050		2,146		(567)		(372)		(9)		141
Loans charged off	(42,068)		(4,140)		(135)		—		—		(5,220)
Recoveries of loans previously charged off	10,333		694		599		—		—		4,701
Balance, September 30, 2023	$	53,665	$	4,113	$	71	$	1,746	$	348	$	647

	Real Estate – Construction and Development		Real Estate – Commercial and Farmland		Real Estate – Residential		Total
Balance, December 31, 2022	$	32,659	$	67,433	$	57,043	$	205,677
Adjustment to allowance for adoption of ASU 2022-02	(37)		(722)		(847)		(1,711)

Provision for loan losses	29,920		38,097		7,708		123,114
Loans charged off	—		(3,320)		(231)		(55,114)
Recoveries of loans previously charged off	646		476		689		18,138
Balance, September 30, 2023	$	63,188	$	101,964	$	64,362	$	290,104


Three Months Ended September 30, 2022

(dollars in thousands)	Commercial, Financial and Agricultural		Consumer		Indirect Automobile		Mortgage Warehouse		Municipal		Premium Finance
Balance, June 30, 2022	$	25,658	$	5,269	$	291	$	3,885	$	371	$	2,762


Provision for loan losses	9,568		(244)		(288)		(1,884)		(9)		(638)
Loans charged off	(4,722)		(1,228)		(50)		—		—		(1,205)
Recoveries of loans previously charged off	2,201		277		276		—		—		1,023
Balance, September 30, 2022	$	32,705	$	4,074	$	229	$	2,001	$	362	$	1,942

	Real Estate – Construction and Development		Real Estate – Commercial and Farmland		Real Estate – Residential		Total
Balance, June 30, 2022	$	23,232	$	59,349	$	51,825	$	172,642


Provision for loan losses	3,227		(1,200)		8,937		17,469
Loans charged off	—		(2,014)		(53)		(9,272)
Recoveries of loans previously charged off	96		96		83		4,052
Balance, September 30, 2022	$	26,555	$	56,231	$	60,792	$	184,891

Nine Months Ended September 30, 2022

(dollars in thousands)	Commercial, Financial and Agricultural		Consumer Installment		Indirect Automobile		Mortgage Warehouse		Municipal		Premium Finance
Balance, December 31, 2021	$	26,829	$	6,097	$	476	$	3,231	$	401	$	2,729


Provision for loan losses	11,521		1,102		(884)		(1,230)		(39)		(530)
Loans charged off	(13,527)		(3,790)		(179)		—		—		(3,640)
Recoveries of loans previously charged off	7,882		665		816		—		—		3,383
Balance, September 30, 2022	$	32,705	$	4,074	$	229	$	2,001	$	362	$	1,942

	Real Estate – Construction and Development		Real Estate – Commercial and Farmland		Real Estate – Residential		Total
Balance, December 31, 2021	$	22,045	$	77,831	$	27,943	$	167,582


Provision for loan losses	3,841		(18,399)		32,580		27,962
Loans charged off	—		(3,378)		(190)		(24,704)
Recoveries of loans previously charged off	669		177		459		14,051
Balance, September 30, 2022	$	26,555	$	56,231	$	60,792	$	184,891

Modifications to Borrowers Experiencing Financial Difficulty

The Company periodically provides modifications to borrowers experiencing financial difficulty. These modifications include either payment deferrals, term extensions, interest rate reductions, principal forgiveness or combinations of modification types. The determination of whether the borrower is experiencing financial difficulty is made on the date of the modification. When principal forgiveness is provided, the amount of principal forgiveness is charged off against the allowance for credit losses with a corresponding reduction in the amortized cost basis of the loan.

The following table shows the amortized cost basis of the loans modified to borrowers experiencing financial difficulty, disaggregated by class of financing receivable and type of concession granted as of September 30, 2023:


(dollars in thousands)	Payment Deferral		Term Extension		Interest Rate Reduction		Combination of Term Extension and Rate Reduction		Total		Percentage of Total Class of Financial Receivable
Commercial, financial and agricultural	$	1,180	$	2,502	$	—	$	—	$	3,682	0.1	%





Real estate – construction and development	—		278		—		—		278		—	%
Real estate – commercial and farmland	—		1,197		832		—		2,029		—	%
Real estate – residential	1,033		3,165		—		348		4,546		0.1	%
Total	$	2,213	$	7,142	$	832	$	348	$	10,535	0.1	%

The Company has unfunded commitments of $480,000 to borrowers experiencing financial difficulty for which the Company has modified their loans.

The following table describes the financial effect of the modifications made to borrowers experiencing financial difficulty during the nine months ended September 30, 2023:


Payment Deferral
Loan Type						Financial Effect
Commercial, financial and agricultural						Payments were reduced approximately 32% for three months before returning to a fully amortizing payment structure thereafter.
Commercial, financial and agricultural						Payments were reduced approximately 73% for four months before requiring full repayment.







Real estate – residential						Payments were deferred for a weighted average of four months


Term Extension
Loan Type						Financial Effect
Commercial, financial and agricultural						Maturity dates were extended for a weighted average of 10 months.
Real estate – construction and development						Maturity date was extended for 11 months.
Real estate – commercial and farmland						Maturity dates were extended for an average of 12 months.
Real estate - residential						Maturity dates were extended for a weighted average of 92 months


Interest Rate Reduction
Loan Type						Financial Effect
Real estate – commercial and farmland						Interest rate was reduced by 4.75%


Combination of Term Extension and Rate Reduction
Loan Type						Financial Effect
Real estate - residential						Maturity date was extended 58 months and rate was reduced by 1.375%

The Company monitors the performance of the loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The following table depicts the performance of loans that have been modified in the last 12 months:


(dollars in thousands)	Current		30-59 Days Past Due		60-89 Days Past Due		90 or More Days Past Due		Total
Commercial, financial and agricultural	$	2,385	$	—	$	815	$	482	$	3,682





Real estate – construction and development	—		278		—		—		278
Real estate – commercial and farmland	1,529		—		—		500		2,029
Real estate – residential	3,262		1,284		—		—		4,546
Total	$	7,176	$	1,562	$	815	$	982	$	10,535

The following table provides the amortized cost basis of financing receivables that had a payment default during both the three and nine months ended September 30, 2023 and were modified in the 12 months before default to borrowers experiencing financial difficulty.


(dollars in thousands)	Term Extension		Payment Deferral
Commercial, financial and agricultural	$	482	$	815





Real estate – construction and development	278		—
Real estate – commercial and farmland	500		—
Real estate – residential	1,090		194
Total	$	2,350	$	1,009

NOTE 4 – OTHER BORROWINGS

Other borrowings consist of the following:


(dollars in thousands)	September 30, 2023		December 31, 2022
FHLB borrowings:
Fixed Rate Advance due January 9, 2023; fixed interest rate of 4.150%	$	—	$	300,000
Fixed Rate Advance due January 9, 2023; fixed interest rate of 4.110%	—		50,000
Fixed Rate Advance due January 12, 2023; fixed interest rate of 4.140%	—		50,000
Fixed Rate Advance due January 13, 2023; fixed interest rate of 4.150%	—		50,000
Fixed Rate Advance due January 17, 2023; fixed interest rate of 4.170%	—		350,000
Fixed Rate Advance due January 17, 2023; fixed interest rate of 4.250%	—		150,000
Fixed Rate Advance due January 18, 2023; fixed interest rate of 4.260%	—		200,000
Fixed Rate Advance due January 19, 2023; fixed interest rate of 4.230%	—		50,000
Fixed Rate Advance due January 20, 2023; fixed interest rate of 4.220%	—		150,000
Fixed Rate Advance due January 27, 2023; fixed interest rate of 4.230%	—		100,000
Fixed Rate Advance due October 16, 2023; fixed interest rate of 5.460%	75,000		—
Fixed Rate Advance due October 16, 2023; fixed interest rate of 5.470%	200,000		—
Fixed Rate Advance due October 18, 2023; fixed interest rate of 5.470%	150,000		—
Fixed Rate Advance due October 18, 2023; fixed interest rate of 5.470%	100,000		—
Fixed Rate Advance due October 19, 2023; fixed interest rate of 5.470%	75,000		—
Fixed Rate Advance due October 20, 2023; fixed interest rate of 5.460%	250,000		—
Fixed Rate Advance due March 3, 2025; fixed interest rate of 1.208%	15,000		15,000
Fixed Rate Advance due March 2, 2027; fixed interest rate of 1.445%	15,000		15,000
Fixed Rate Advance due March 4, 2030; fixed interest rate of 1.606%	15,000		15,000
Fixed Rate Advance due December 9, 2030; fixed interest rate of 4.55%	1,380		1,389
Fixed Rate Advance due December 9, 2030; fixed interest rate of 4.55%	956		961
Principal Reducing Advance due September 29, 2031; fixed interest rate of 3.095%	1,166		1,275

Subordinated notes payable:

Subordinated notes payable due March 15, 2027 net of unamortized debt issuance cost of $0 and $551, respectively; fixed interest rate of 5.75% through March 14, 2022; variable interest rate thereafter at three-month LIBOR plus 3.616%	—		74,449
Subordinated notes payable due December 15, 2029 net of unamortized debt issuance cost of $1,350 and $1,680, respectively; fixed interest rate of 4.25% through December 14, 2024; variable interest rate thereafter at three-month SOFR plus 2.94%	106,650		118,320
Subordinated notes payable due May 31, 2030 net of unaccreted purchase accounting fair value adjustment of $814 and $906, respectively; fixed interest rate of 5.875% through May 31, 2025; variable interest rate thereafter at three-month LIBOR plus 3.63%	75,814		75,906
Subordinated notes payable due October 1, 2030 net of unamortized debt issuance cost of $1,413 and $1,564, respectively; fixed interest rate of 3.875% through September 30, 2025; variable interest rate thereafter at three-month SOFR plus 3.753%	108,587		108,436





Other Debt:
Advance from correspondent bank due November 28, 2024; secured by a loan receivable; variable interest rate at one-month SOFR plus 2.50%	10,000		—
Advance from correspondent bank due December 1, 2025; secured by a loan receivable; variable interest rate at one-month SOFR plus 2.65%	10,000		—
	$	1,209,553	$	1,875,736

The advances from the FHLB are collateralized by a blanket lien on all eligible first mortgage loans and other specific loans in addition to FHLB stock. At September 30, 2023, $3.62 billion was available for borrowing on lines with the FHLB.

As of September 30, 2023, the Bank maintained credit arrangements with various financial institutions to purchase federal funds up to $127.0 million.

The Bank also participates in the Federal Reserve discount window borrowings program. At September 30, 2023, the Bank had $3.60 billion of loans pledged at the Federal Reserve discount window and had $2.63 billion available for borrowing.

NOTE 5 – ACCUMULATED OTHER COMPREHENSIVE INCOME

Accumulated other comprehensive income (loss) for the Company consists of changes in net unrealized gains and losses on debt securities available-for-sale. The reclassification for gains included in net income is recorded in net gain (loss) on securities in the consolidated statement of income and comprehensive income.

The following table presents a summary of the accumulated other comprehensive income (loss) balances, net of tax, for the periods indicated:


(dollars in thousands)	Accumulated Other Comprehensive Income (Loss)
Three Months Ended September 30, 2023
Balance, June 30, 2023	$	(50,618)

Unrealized loss on debt securities available-for-sales, net of tax	(10,200)
Balance, September 30, 2023	$	(60,818)

Three Months Ended September 30, 2022
Balance, June 30, 2022	$	(12,635)

Unrealized loss on debt securities available-for-sales, net of tax	(38,099)
Balance, September 30, 2022	$	(50,734)

Nine Months Ended September 30, 2023
Balance, December 31, 2022	$	(46,507)

Unrealized loss on debt securities available-for-sales, net of tax	(14,311)
Balance, September 30, 2023	$	(60,818)

Nine Months Ended September 30, 2022
Balance, December 31, 2021	$	15,590

Unrealized loss on debt securities available-for-sales, net of tax	(66,324)
Balance, September 30, 2022	$	(50,734)

NOTE 6 – WEIGHTED AVERAGE SHARES OUTSTANDING

Earnings per share have been computed based on the following weighted average number of common shares outstanding:


	Three Months Ended September 30,		Nine Months Ended September 30,
(share data in thousands)	2023	2022	2023	2022
Average common shares outstanding	68,879	69,125	69,023	69,213
Common share equivalents:
Stock options	—	11	—	20
Nonvested restricted share grants	47	59	52	73
Performance stock units	68	132	55	122
Average common shares outstanding, assuming dilution	68,994	69,327	69,130	69,428

There were 84.487 anti-dilutive securities excluded from the computation of earnings per share for the nine months ended September 30, 2023. There were no anti-dilutive securities excluded from the computation of earnings per share for the three months ended September 30, 2023, and for the three and nine months ended September 30, 2022.

NOTE 7 – FAIR VALUE MEASURES

The fair value of an asset or liability is the current amount that would be exchanged between willing parties, other than in a forced liquidation. Fair value is best determined based upon quoted market prices. However, in many instances, there are no

quoted market prices for the Company’s various assets and liabilities. In cases where quoted market prices are not available, fair value is based on discounted cash flows or other valuation techniques. These techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the asset or liability. The accounting standard for disclosures about the fair value measures excludes certain financial instruments and all nonfinancial instruments from its disclosure requirements. Accordingly, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Company.

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


(dollars in thousands)	September 30, 2023		December 31, 2022
Mortgage loans held for sale	$	381,466	$	390,583
SBA loans held for sale	—		1,495
Total loans held for sale	$	381,466	$	392,078

The Company has elected to record mortgage loans held for sale at fair value in order to eliminate the complexities and inherent difficulties of achieving hedge accounting and to better align reported results with the underlying economic changes in value of the loans and related hedge instruments. This election impacts the timing and recognition of origination fees and costs, as well as servicing value, which are now recognized in earnings at the time of origination. Interest income on mortgage loans held for sale is recorded on an accrual basis in the consolidated statements of income and comprehensive income under the heading interest income – interest and fees on loans. The servicing value is included in the fair value of the interest rate lock commitments (“IRLCs”) with borrowers. The mark to market adjustments related to mortgage loans held for sale and the associated economic hedges are captured in mortgage banking activities.

Net losses of $3.2 million and $857,000 resulting from changes in fair value of these mortgage loans were recorded in income during the three and nine months ended September 30, 2023, respectively. For the three and nine months ended September 30, 2022, net losses of $11.9 million and $44.7 million, respectively, resulting from changes in fair value of these mortgage loans were recorded in income. A net loss of $207,000 and a net gain of $4.9 million resulting from changes in the fair value of the related derivative financial instruments used to hedge exposure to the market-related risks associated with these mortgage loans were recorded in income during the three and nine months ended September 30, 2023, respectively. For the three and nine months ended September 30, 2022, net gains of $11.7 million and $10.5 million, respectively, resulting from changes in the fair value of the related derivative financial instruments were recorded in income. The changes in fair value of both mortgage loans held for sale and the related derivative financial instruments are recorded in mortgage banking activity in the consolidated statements of income and comprehensive income. The Company’s valuation of mortgage loans held for sale incorporates an assumption for credit risk; however, given the short-term period that the Company holds these loans, valuation adjustments attributable to instrument-specific credit risk is nominal.

The following table summarizes the difference between the fair value and the principal balance for mortgage loans held for sale measured at fair value as of September 30, 2023 and December 31, 2022:


(dollars in thousands)	September 30, 2023		December 31, 2022
Aggregate fair value of mortgage loans held for sale	$	381,466	$	390,583
Aggregate unpaid principal balance of mortgage loans held for sale	381,350		389,610
Past-due loans of 90 days or more	475		—
Nonaccrual loans	475		—
Unpaid principal balance of nonaccrual loans	470		—

The following table summarizes the difference between the fair value and the principal balance for SBA loans held for sale measured at fair value as of September 30, 2023 and December 31, 2022:


(dollars in thousands)	September 30, 2023		December 31, 2022
Aggregate fair value of SBA loans held for sale	$	—	$	1,495
Aggregate unpaid principal balance of SBA loans held for sale	—		1,350
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 under the fair value option and derivative financial instruments are recorded at fair value on a recurring basis. From time to time, the Company may be required to record at fair value other assets on a nonrecurring basis, such as collateral-dependent loans, loan servicing rights and OREO. Additionally, the Company is required to disclose, but not record, the fair value of other financial instruments.

The following table presents the fair value measurements of assets and liabilities measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall as of September 30, 2023 and December 31, 2022:


	Recurring Basis Fair Value Measurements
	September 30, 2023
(dollars in thousands)	Fair Value		Level 1		Level 2		Level 3
Financial assets:
Investment securities available-for-sale:
U.S. Treasuries	$	760,596	$	760,596	$	—	$	—
U.S. government sponsored agencies	969		—		969		—
State, county and municipal securities	27,703		—		27,703		—
Corporate debt securities	15,036		—		14,061		975
SBA pool securities	21,751		—		21,751		—
Mortgage-backed securities	598,026		—		598,026		—
Loans held for sale	381,466		—		381,466		—
Derivative financial instruments	13,199		—		13,199		—
Mortgage banking derivative instruments	8,809		—		8,809		—
Total recurring assets at fair value	$	1,827,555	$	760,596	$	1,065,984	$	975
Financial liabilities:
Derivative financial instruments	$	12,988	$	—	$	12,988	$	—

Total recurring liabilities at fair value	$	12,988	$	—	$	12,988	$	—


	Recurring Basis Fair Value Measurements
	December 31, 2022
(dollars in thousands)	Fair Value		Level 1		Level 2		Level 3
Financial assets:
Investment securities available-for-sale:
U.S. Treasuries	$	759,534	$	759,534	$	—	$	—
U.S. government sponsored agencies	979		—		979		—
State, county and municipal securities	34,195		—		34,195		—
Corporate debt securities	15,926		—		14,771		1,155
SBA pool securities	27,398		—		27,398		—
Mortgage-backed securities	662,028		—		662,028		—
Loans held for sale	392,078		—		392,078		—
Derivative financial instruments	4,580		—		4,580		—
Mortgage banking derivative instruments	3,933		—		3,933		—
Total recurring assets at fair value	$	1,900,651	$	759,534	$	1,139,962	$	1,155
Financial liabilities:
Derivative financial instruments	$	4,574	$	—	$	4,574	$	—

Total recurring liabilities at fair value	$	4,574	$	—	$	4,574	$	—

The following table presents the fair value measurements of assets measured at fair value on a non-recurring basis, as well as the general classification of such instruments pursuant to the valuation hierarchy as of September 30, 2023 and December 31, 2022:


	Nonrecurring Basis Fair Value Measurements
(dollars in thousands)	Fair Value		Level 1		Level 2		Level 3
September 30, 2023
Collateral-dependent loans	$	26,656	$	—	$	—	$	26,656
Other real estate owned	1,606		—		—		1,606


Total nonrecurring assets at fair value	$	28,262	$	—	$	—	$	28,262

December 31, 2022
Collateral-dependent loans	$	31,972	$	—	$	—	$	31,972



Total nonrecurring assets at fair value	$	31,972	$	—	$	—	$	31,972

The inputs used to determine estimated fair value of collateral-dependent loans include market conditions, loan term, underlying collateral characteristics and discount rates.

For the nine months ended September 30, 2023 and the year ended December 31, 2022, there was not a change in the methods and significant assumptions used to estimate fair value.

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


(dollars in thousands)	Fair Value		Valuation Technique	Unobservable Inputs	Range of Discounts	Weighted Average Discount
September 30, 2023
Recurring:
Debt securities available-for-sale	$	975	Discounted cash flows	Probability of Default	12.2%	12.2%
				Loss Given Default	44%	44%
Nonrecurring:
Collateral-dependent loans	$	26,656	Third-party appraisals and discounted cash flows	Collateral discounts and discount rates	5% - 50%	30%
Other real estate owned	$	1,606	Third-party appraisals and sales contracts	Collateral discounts and estimated costs to sell	15% - 46%	26%



December 31, 2022
Recurring:
Debt securities available-for-sale	$	1,155	Discounted cash flows	Probability of Default	12.1%	12.1%
				Loss Given Default	41%	41%
Nonrecurring:
Collateral-dependent loans	$	31,972	Third-party appraisals and discounted cash flows	Collateral discounts and discount rates	0% - 48%	27%

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
			September 30, 2023
(dollars in thousands)	Carrying Amount		Level 1		Level 2		Level 3		Total
Financial assets:
Cash and due from banks	$	241,137	$	241,137	$	—	$	—	$	241,137
Federal funds sold and interest-bearing accounts	1,304,636		1,304,636		—		—		1,304,636

Debt securities held-to-maturity	141,859		—		115,689		—		115,689

Loans, net	19,884,319		—		—		19,247,521		19,247,521
Accrued interest receivable	83,574		—		9,264		74,311		83,575
Financial liabilities:
Deposits	20,590,345		—		20,579,194		—		20,579,194

Other borrowings	1,209,553		—		1,189,399		—		1,189,399
Subordinated deferrable interest debentures	129,817		—		141,206		—		141,206
Accrued interest payable	38,836		—		38,836		—		38,836


			Fair Value Measurements
			December 31, 2022
(dollars in thousands)	Carrying Amount		Level 1		Level 2		Level 3		Total
Financial assets:
Cash and due from banks	$	284,567	$	284,567	$	—	$	—	$	284,567
Federal funds sold and interest-bearing accounts	833,565		833,565		—		—		833,565

Debt securities held-to-maturity	134,864		—		114,538				114,538
Loans, net	19,617,604		—		—		19,067,612		19,067,612
Accrued interest receivable	77,042		—		7,694		69,348		77,042
Financial liabilities:
Deposits	19,462,738		—		19,455,187		—		19,455,187

Other borrowings	1,875,736		—		1,861,850		—		1,861,850
Subordinated deferrable interest debentures	128,322		—		125,988		—		125,988
Accrued interest payable	10,530		—		10,530		—		10,530

NOTE 8 – COMMITMENTS AND CONTINGENCIES

Loan Commitments

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

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


(dollars in thousands)	September 30, 2023		December 31, 2022
Commitments to extend credit	$	4,915,246	$	6,318,039
Unused home equity lines of credit	388,405		345,001
Financial standby letters of credit	41,034		33,557
Mortgage interest rate lock commitments	275,759		148,148

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 financial standby letters of credit and the Company has not incurred any losses on financial standby letters of credit for the nine months ended September 30, 2023 and the year ended December 31, 2022.

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


	Three Months Ended September 30,				Nine Months Ended September 30,
(dollars in thousands)	2023		2022		2023		2022
Balance at beginning of period	$	54,630	$	43,973	$	52,411	$	33,185


Provision for unfunded commitments	(5,634)		192		(3,415)		10,980
Balance at end of period	$	48,996	$	44,165	$	48,996	$	44,165

Other Commitments

As of September 30, 2023, letters of credit issued by the FHLB totaling $900.0 million were used to guarantee the Bank’s performance related to a portion of its public fund deposit balances.

Litigation and Regulatory Contingencies

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 and regulatory 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 and regulatory 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 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 9 – SEGMENT REPORTING

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

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

The following tables present selected financial information with respect to the Company’s reportable business segments for the three and nine months ended September 30, 2023 and 2022:


	Three Months Ended September 30, 2023
(dollars in thousands)	Banking Division		Retail Mortgage Division		Warehouse Lending Division		SBA Division		Premium Finance Division		Total
Interest income	$	228,448	$	54,532	$	19,357	$	4,766	$	23,450	$	330,553
Interest expense	60,853		31,727		13,349		2,804		14,069		122,802
Net interest income	167,595		22,805		6,008		1,962		9,381		207,751
Provision for credit losses	20,833		2,399		(589)		1,677		139		24,459
Noninterest income	26,245		35,691		662		579		4		63,181
Noninterest expense
Salaries and employee benefits	56,226		21,231		924		1,209		2,308		81,898
Occupancy and equipment	11,437		1,182		1		36		89		12,745
Data processing and communications expenses	11,786		1,052		30		32		73		12,973
Other expenses	20,274		12,153		219		157		1,027		33,830
Total noninterest expense	99,723		35,618		1,174		1,434		3,497		141,446
Income before income tax expense	73,284		20,479		6,085		(570)		5,749		105,027
Income tax expense	18,283		4,301		1,278		(120)		1,170		24,912
Net income	$	55,001	$	16,178	$	4,807	$	(450)	$	4,579	$	80,115

Total assets	$	18,369,102	$	4,980,246	$	859,517	$	264,953	$	1,224,012	$	25,697,830
Goodwill	951,148		—		—		—		64,498		1,015,646
Other intangible assets, net	85,648		—		—		—		6,727		92,375


	Three Months Ended September 30, 2022
(dollars in thousands)	Banking Division		Retail Mortgage Division		Warehouse Lending Division		SBA Division		Premium Finance Division		Total
Interest income	$	164,095	$	40,389	$	12,490	$	3,919	$	13,409	$	234,302
Interest expense	(10,412)		21,106		5,511		1,495		3,621		21,321
Net interest income	174,507		19,283		6,979		2,424		9,788		212,981
Provision for credit losses	10,551		9,043		(1,836)		52		(158)		17,652
Noninterest income	23,269		38,584		1,516		1,946		9		65,324
Noninterest expense
Salaries and employee benefits	48,599		25,813		1,055		1,412		1,818		78,697
Occupancy and equipment	11,357		1,460		1		82		83		12,983
Data processing and communications expenses	10,779		1,082		43		29		82		12,015
Other expenses	22,974		11,641		209		100		959		35,883
Total noninterest expense	93,709		39,996		1,308		1,623		2,942		139,578
Income before income tax expense	93,516		8,828		9,023		2,695		7,013		121,075
Income tax expense	22,706		1,854		1,895		566		1,499		28,520
Net income	$	70,810	$	6,974	$	7,128	$	2,129	$	5,514	$	92,555

Total assets	$	16,980,520	$	4,402,221	$	955,711	$	259,427	$	1,215,778	$	23,813,657
Goodwill	958,573		—		—		—		64,498		1,023,071
Other intangible assets, net	101,225		—		—		—		9,678		110,903


	Nine Months Ended September 30, 2023
(dollars in thousands)	Banking Division		Retail Mortgage Division		Warehouse Lending Division		SBA Division		Premium Finance Division		Total
Interest income	$	661,947	$	155,988	$	54,931	$	14,056	$	61,299	$	948,221
Interest expense	147,583		91,739		37,057		7,806		35,093		319,278
Net interest income	514,364		64,249		17,874		6,250		26,206		628,943
Provision for credit losses	108,804		8,530		(372)		1,997		745		119,704
Noninterest income	74,795		106,557		2,546		2,660		22		186,580
Noninterest expense
Salaries and employee benefits	167,864		63,321		2,498		3,834		6,627		244,144
Occupancy and equipment	34,218		3,689		2		113		231		38,253
Data processing and communications expenses	35,481		3,518		120		115		224		39,458
Other expenses	66,940		35,759		644		912		3,160		107,415
Total noninterest expense	304,503		106,287		3,264		4,974		10,242		429,270
Income before income tax expense	175,852		55,989		17,528		1,939		15,241		266,549
Income tax expense	44,443		11,758		3,681		407		3,089		63,378
Net income	$	131,409	$	44,231	$	13,847	$	1,532	$	12,152	$	203,171


	Nine Months Ended September 30, 2022
(dollars in thousands)	Banking Division		Retail Mortgage Division		Warehouse Lending Division		SBA Division		Premium Finance Division		Total
Interest income	$	435,229	$	111,276	$	27,779	$	15,456	$	30,504	$	620,244
Interest expense	(25,145)		51,919		7,653		3,223		5,705		43,355
Net interest income	460,374		59,357		20,126		12,233		24,799		576,889
Provision for credit losses	25,952		15,129		(1,191)		(614)		(469)		38,807
Noninterest income	68,102		158,028		3,958		5,963		25		236,076
Noninterest expense
Salaries and employee benefits	144,527		88,646		1,546		3,999		5,805		244,523
Occupancy and equipment	33,599		4,337		3		262		255		38,456
Data processing and communications expenses	32,872		3,377		138		86		269		36,742
Other expenses	64,142		37,098		639		1,019		2,975		105,873
Total noninterest expense	275,140		133,458		2,326		5,366		9,304		425,594
Income before income tax expense	227,384		68,798		22,949		13,444		15,989		348,564
Income tax expense	58,822		14,448		4,820		2,823		3,332		84,245
Net income	$	168,562	$	54,350	$	18,129	$	10,621	$	12,657	$	264,319

NOTE 10 – LOAN SERVICING RIGHTS

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

The carrying value of the loan servicing rights assets is shown in the table below:


(dollars in thousands)	September 30, 2023		December 31, 2022
Loan Servicing Rights
Residential mortgage	$	168,379	$	147,014
SBA	2,822		3,443

Total loan servicing rights	$	171,201	$	150,457

Residential Mortgage Loans

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

During the three- and nine-month periods ended September 30, 2023, the Company recorded servicing fee income of $15.8 million and $45.0 million, respectively. During the three- and nine-month periods ended September 30, 2022, the Company recorded servicing fee income of $18.4 million and $54.6 million, respectively. Servicing fee income includes servicing fees, late fees and ancillary fees earned for each period.

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


(dollars in thousands)	Three Months Ended September 30,				Nine Months Ended September 30,
Residential mortgage servicing rights	2023		2022		2023		2022
Beginning carrying value, net	$	160,021	$	257,112	$	147,014	$	206,944
Additions	13,265		14,893		35,726		58,145

Amortization	(4,907)		(6,939)		(14,361)		(20,515)
Recoveries	—		1,332		—		21,824
Disposals	—		(121,634)		—		(121,634)
Ending carrying value, net	$	168,379	$	144,764	$	168,379	$	144,764


(dollars in thousands)	Three Months Ended September 30,				Nine Months Ended September 30,
Residential mortgage servicing valuation allowance	2023		2022		2023		2022
Beginning balance	$	—	$	5,290	$	—	$	25,782

Recoveries	—		(1,332)		—		(21,824)
Reduction due to disposal	—		(3,958)		—		(3,958)
Ending balance	$	—	$	—	$	—	$	—

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


(dollars in thousands)	September 30, 2023			December 31, 2022
Residential mortgage servicing rights
Unpaid principal balance of loans serviced for others	$	12,013,844		$	10,046,052
Composition of residential loans serviced for others:
FHLMC	17.41		%	16.80		%
FNMA	50.44		%	50.09		%
GNMA	32.15		%	33.11		%
Total	100.00		%	100.00		%
Weighted average term (months)	354			353
Weighted average age (months)	26			22
Modeled prepayment speed	7.79		%	8.22		%
Decline in fair value due to a 10% adverse change	(2,900)			(5,800)
Decline in fair value due to a 20% adverse change	(6,483)			(11,184)
Weighted average discount rate	11.66		%	10.00		%
Decline in fair value due to a 10% adverse change	(3,843)			(6,413)
Decline in fair value due to a 20% adverse change	(8,989)			(12,330)

The sensitivity calculations above are hypothetical and should not be considered to be predictive of future performance. As indicated, changes in fair value based on adverse changes in model inputs and/or assumptions generally cannot be extrapolated because the relationship of a change in input or assumption to the change in fair value may not be linear. In addition, the effect of an adverse variation in a particular input or assumption on the value of the residential mortgage servicing rights is calculated without changing any other input or assumption. In reality, a change in another factor may magnify or counteract the effect of the change in the first.

SBA Loans

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

During the three- and nine-month periods ended September 30, 2023, the Company recorded servicing fee income of $734,000 and $2.2 million, respectively. During the three- and nine-month periods ended September 30, 2022, the Company recorded servicing fee income of $907,000 and $2.8 million, respectively. Servicing fee income includes servicing fees, late fees and ancillary fees earned for each period.

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


(dollars in thousands)	Three Months Ended September 30,				Nine Months Ended September 30,
SBA servicing rights	2023		2022		2023		2022
Beginning carrying value, net	$	3,097	$	4,954	$	3,443	$	5,556
Additions	33		99		348		873


Amortization	(308)		(735)		(969)		(2,111)

Ending carrying value, net	$	2,822	$	4,318	$	2,822	$	4,318


(dollars in thousands)	September 30, 2023			December 31, 2022
SBA servicing rights
Unpaid principal balance of loans serviced for others	$	299,910		$	326,418
Weighted average life (in years)	3.49			3.69
Modeled prepayment speed	19.68		%	18.24		%
Decline in fair value due to a 10% adverse change	(265)			(177)
Decline in fair value due to a 20% adverse change	(415)			(340)
Weighted average discount rate	16.97		%	19.57		%
Decline in fair value due to a 100 basis point adverse change	(170)			(83)
Decline in fair value due to a 200 basis point adverse change	(236)			(163)

The sensitivity calculations above are hypothetical and should not be considered to be predictive of future performance. As indicated, changes in fair value based on adverse changes in model inputs and/or assumptions generally cannot be extrapolated because the relationship of a change in input or assumption to the change in fair value may not be linear. In addition, the effect of an adverse variation in a particular input or assumption on the value of the SBA servicing rights is calculated without changing any other input or assumption. In reality, a change in another factor may magnify or counteract the effect of the change in the first.

NOTE 11 – GOODWILL

occurs. At December 31, 2022, the Company performed a qualitative assessment of goodwill at the divisions and determined it was more likely than not that, in each case, the reporting unit's fair value exceeded its carrying value. The Company performed an interim qualitative assessment at March 31, 2023 considering the decline in the Company's stock price relative to book value and the impact of recent bank failures on the economy and again determined that it was more likely than not that each reporting unit's fair value exceeded its carrying value.

During the second quarter of 2023, the Company assessed the indicators of goodwill impairment and determined a triggering event had occurred due to the sustained decline in the Company's stock price. The Company performed a quantitative analysis of goodwill at the divisions as of June 30, 2023. The Premium Finance Division was measured utilizing a discounted cash flow approach. The Banking Division was measured using multiple approaches. The primary approach for the Banking Division was the discounted cash flow approach, and the Company also used a market approach comparing to similar public companies' multiples and control premiums from transactions during prior distressed periods. The results from each of the primary approaches showed valuation of the reporting unit in excess of carrying value at June 30, 2023. The discounted cash flow approach for the Premium Finance Division resulted in a fair value approximately 8% higher than its carrying value. The discounted cash flow approach for the Banking Division indicated a fair value approximately 20% higher than its carrying value, and the market approach indicated a fair value approximately 9% higher than its carrying value. As a result, management determined no impairment existed at June 30, 2023. At September 30, 2023, the Company assessed the indicators of goodwill impairment and determined a triggering event had not occurred and no impairment test was performed. The Company will perform its annual impairment test at December 31, 2023.

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

NOTE 12 – SUBSEQUENT EVENTS

On October 19, 2023, the Bank announced that it had entered into a settlement with the United States Department of Justice that resolves alleged violations of fair lending laws in the Jacksonville, Florida metropolitan area from 2016 to 2021. The terms of the settlement are reflected in the consent order filed in the United States District Court for the Middle District of Florida (the “Consent Order”). In accordance with the terms of the Consent Order, the Bank will provide $7.5 million in mortgage loan subsidies over a five-year period in Majority Black and Hispanic Census Tracts (“MBHCTs”) in Jacksonville and will also commit, for the same five-year period in the Jacksonville MBHCT communities, $900,000 for focused advertising and outreach and $600,000 for community development partnerships providing services related to credit, financial education, homeownership, and foreclosure prevention. In addition, the Bank will open a new full-service branch in a Jacksonville MBHCT community as specified in the Consent Order. The settlement includes no civil penalties levied against the Bank.

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

Cautionary Note Regarding Forward-Looking Statements

Certain of the statements made in this report are “forward-looking statements” within the meaning of, and subject to the protections of, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations, anticipations, assumptions, estimates, intentions and future performance and involve known and unknown risks, uncertainties and other factors, many of which may be beyond our control and which may cause the actual results, performance or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements.

All statements other than statements of historical fact are statements that could be forward-looking statements. You can identify these forward-looking statements through our use of words such as “may,” “will,” “anticipate,” “assume,” “should,” “indicate,” “would,” “believe,” “contemplate,” “expect,” “estimate,” “continue,” “plan,” “point to,” “project,” “predict,” “could,” “intend,” “target,” “potential” and other similar words and expressions of the future. These forward-looking statements may not be realized due to a variety of factors, including, without limitation, the following: general competitive, economic, unemployment, political and market conditions and fluctuations, including real estate market conditions, and the effects of such conditions and fluctuations on the creditworthiness of borrowers, collateral values, asset recovery values and the value of investment securities; movements in interest rates and their impacts on net interest margin; expectations on credit quality and performance; competitive pressures on product pricing and services; legislative and regulatory changes; changes in U.S. government monetary and fiscal policy; investment security valuation and other performance measures; the potential impact of the phase-out of the London Interbank Offered Rate ("LIBOR") or other changes involving LIBOR; additional competition in our markets; changes in state and federal banking laws and regulations to which we are subject; financial market conditions and the results of financing efforts; the cost savings and any revenue synergies expected to result from acquisition transactions, which may not be fully realized within the expected timeframes if at all; the success and timing of other business strategies; our outlook and long-term goals for future growth; weather events, natural disasters, geopolitical events, acts of war or terrorism or other hostilities, public health crises and other catastrophic events beyond our control; and other factors discussed in our filings with the Securities and Exchange Commission (the “SEC”) under the Exchange Act.

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

Overview

The following is management’s discussion and analysis of certain significant factors which have affected the financial condition and results of operations of the Company as reflected in the unaudited consolidated balance sheet as of September 30, 2023, as compared with December 31, 2022, and operating results for the three- and nine-month periods ended September 30, 2023 and 2022. These comments should be read in conjunction with the Company’s unaudited consolidated financial statements and accompanying notes appearing elsewhere herein.

This discussion contains certain performance measures determined by methods other than in accordance with GAAP. Management of the Company uses these non-GAAP measures in its analysis of the Company’s performance. These measures are useful when evaluating the underlying performance and efficiency of the Company’s operations and balance sheet. The Company’s management believes that these non-GAAP measures provide a greater understanding of ongoing operations, enhance comparability of results with prior periods and demonstrate the effects of significant gains and charges in the current period. The Company’s management believes that investors may use these non-GAAP financial measures to evaluate the Company’s financial performance without the impact of unusual items that may obscure trends in the Company’s underlying performance. These disclosures should not be viewed as a substitute for financial measures determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Non-GAAP measures include adjusted net income and adjusted net income per diluted share. The Company calculates the regulatory capital ratios using current regulatory report instructions. The Company’s management uses these measures to assess the quality of capital and believes that investors may find them useful in their evaluation of the Company. These capital measures may or may not be necessarily comparable to similar capital measures that may be presented by other companies.

Critical Accounting Policies

There have been no significant changes to our critical accounting policies from those disclosed in our 2022 Annual Report on Form 10-K, except as described below. The reader should refer to the notes to our consolidated financial statements in our 2022 Annual Report on Form 10-K for a full disclosure of all critical accounting policies.

Goodwill

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.

Results of Operations for the Three Months Ended September 30, 2023 and 2022

Consolidated Earnings and Profitability

Ameris reported net income available to common shareholders of $80.1 million, or $1.16 per diluted share, for the quarter ended September 30, 2023, compared with $92.6 million, or $1.34 per diluted share, for the same period in 2022. The Company’s return on average assets and average shareholders’ equity were 1.25% and 9.56%, respectively, in the third quarter of 2023, compared with 1.56% and 11.76%, respectively, in the third quarter of 2022. During the third quarter of 2022, the Company recorded pre-tax servicing right impairment recovery of $1.3 million, pre-tax gain on bank owned life insurance (BOLI) proceeds of $55,000, pre-tax loss on sale of mortgage servicing rights of $316,000 and pre-tax natural disaster expenses of $151,000. Excluding these adjustment items, the Company’s net income would have been $91.8 million, or $1.32 per diluted share, for the third quarter of 2022.

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


	Three Months Ended September 30,
(in thousands, except share and per share data)	2023		2022
Net income	$	80,115	$	92,555
Adjustment items:

Loss on sale of mortgage servicing rights	—		316

Servicing right impairment (recovery)	—		(1,332)
Gain on BOLI proceeds	—		(55)

Natural disaster expenses	—		151

Tax effect of adjustment items (Note 1)	—		182
After tax adjustment items	—		(738)
Adjusted net income	$	80,115	$	91,817

Weighted average common shares outstanding - diluted	68,994,247		69,327,414
Net income per diluted share	$	1.16	$	1.34
Adjusted net income per diluted share	$	1.16	$	1.32

Note 1: Tax effect is calculated utilizing a 21% rate for taxable adjustments. Gain on BOLI proceeds is non-taxable and no tax effect is included.

Below is additional information regarding the retail banking activities, mortgage banking activities, warehouse lending activities, SBA activities and premium finance activities of the Company during the third quarter of 2023 and 2022, respectively:


	Three Months Ended September 30, 2023
(dollars in thousands)	Banking Division		Retail Mortgage Division		Warehouse Lending Division		SBA Division		Premium Finance Division		Total
Interest income	$	228,448	$	54,532	$	19,357	$	4,766	$	23,450	$	330,553
Interest expense	60,853		31,727		13,349		2,804		14,069		122,802
Net interest income	167,595		22,805		6,008		1,962		9,381		207,751
Provision for credit losses	20,833		2,399		(589)		1,677		139		24,459
Noninterest income	26,245		35,691		662		579		4		63,181
Noninterest expense
Salaries and employee benefits	56,226		21,231		924		1,209		2,308		81,898
Occupancy and equipment	11,437		1,182		1		36		89		12,745
Data processing and communications expenses	11,786		1,052		30		32		73		12,973
Other expenses	20,274		12,153		219		157		1,027		33,830
Total noninterest expense	99,723		35,618		1,174		1,434		3,497		141,446
Income before income tax expense	73,284		20,479		6,085		(570)		5,749		105,027
Income tax expense	18,283		4,301		1,278		(120)		1,170		24,912
Net income	$	55,001	$	16,178	$	4,807	$	(450)	$	4,579	$	80,115


	Three Months Ended September 30, 2022
(dollars in thousands)	Banking Division		Retail Mortgage Division		Warehouse Lending Division		SBA Division		Premium Finance Division		Total
Interest income	$	164,095	$	40,389	$	12,490	$	3,919	$	13,409	$	234,302
Interest expense	(10,412)		21,106		5,511		1,495		3,621		21,321
Net interest income	174,507		19,283		6,979		2,424		9,788		212,981
Provision for credit losses	10,551		9,043		(1,836)		52		(158)		17,652
Noninterest income	23,269		38,584		1,516		1,946		9		65,324
Noninterest expense
Salaries and employee benefits	48,599		25,813		1,055		1,412		1,818		78,697
Occupancy and equipment	11,357		1,460		1		82		83		12,983
Data processing and communications expenses	10,779		1,082		43		29		82		12,015
Other expenses	22,974		11,641		209		100		959		35,883
Total noninterest expense	93,709		39,996		1,308		1,623		2,942		139,578
Income before income tax expense	93,516		8,828		9,023		2,695		7,013		121,075
Income tax expense	22,706		1,854		1,895		566		1,499		28,520
Net income	$	70,810	$	6,974	$	7,128	$	2,129	$	5,514	$	92,555

Net Interest Income and Margins

The following table sets forth the average balance, interest income or interest expense, and average interest rate for each category of interest-earning assets and interest-bearing liabilities, net interest spread, and net interest margin on average interest-earning assets for the three months ended September 30, 2023 and 2022. Federally tax-exempt income is presented on a taxable-equivalent basis assuming a 21% federal tax rate.


	Quarter Ended September 30,
	2023					2022
(dollars in thousands)	Average Balance		Interest Income/ Expense		Average Yield/ Rate Paid	Average Balance		Interest Income/ Expense		Average Yield/ Rate Paid
Assets
Interest-earning assets:
Federal funds sold, interest-bearing deposits in banks, and time deposits in other banks	$	864,028	$	10,769	4.94%	$	1,399,529	$	7,215	2.05%
Investment securities	1,691,060		15,172		3.56%	1,339,750		10,783		3.19%
Loans held for sale	464,452		7,460		6.37%	471,070		6,012		5.06%
Loans	20,371,689		298,102		5.81%	18,146,083		211,223		4.62%
Total interest-earning assets	23,391,229		331,503		5.62%	21,356,432		235,233		4.37%
Noninterest-earning assets	2,134,684					2,242,033
Total assets	$	25,525,913				$	23,598,465

Liabilities and Shareholders’ Equity
Interest-bearing liabilities:
Savings and interest-bearing demand deposits	$	10,105,110	$	64,729	2.54%	$	9,758,158	$	12,706	0.52%
Time deposits	3,642,267		38,270		4.17%	1,506,761		1,328		0.35%
Securities sold under agreements to repurchase	—		—		—%	92		—		—%
FHLB advances	943,855		12,543		5.27%	94,357		527		2.22%
Other borrowings	312,572		3,821		4.85%	376,942		4,655		4.90%
Subordinated deferrable interest debentures	129,554		3,439		10.53%	127,560		2,105		6.55%
Total interest-bearing liabilities	15,133,358		122,802		3.22%	11,863,870		21,321		0.71%
Demand deposits	6,655,191					8,259,625
Other liabilities	412,404					351,252
Shareholders’ equity	3,324,960					3,123,718
Total liabilities and shareholders’ equity	$	25,525,913				$	23,598,465
Interest rate spread					2.40%					3.66%
Net interest income			$	208,701				$	213,912
Net interest margin					3.54%					3.97%

On a tax-equivalent basis, net interest income for the third quarter of 2023 was $208.7 million, a decrease of $5.2 million, or 2.4%, compared with $213.9 million reported in the same quarter in 2022. The decrease in net interest income is primarily a result of increased cost of funds as market interest rates have risen, partially offset by growth in average earning assets and related rates. Average interest earning assets increased $2.03 billion, or 9.5%, from $21.36 billion in the third quarter of 2022 to $23.39 billion for the third quarter of 2023. This growth in interest-earning assets resulted primarily from organic loan growth and securities purchases, partially offset by a decline in excess liquidity. The Company’s net interest margin during the third quarter of 2023 was 3.54%, down 43 basis points from 3.97% reported in the third quarter of 2022. Loan production in the lines of business (including retail mortgage, warehouse lending, SBA and premium finance) amounted to $4.2 billion during the third quarter of 2023, with weighted average yields of 7.28%, compared with $4.6 billion and 5.29%, respectively, during the third quarter of 2022. Loan production in the banking division amounted to $621.0 million during the third quarter of 2023, with weighted average yields of 9.49%, compared with $1.1 billion and 6.26%, respectively, during the third quarter of 2022.

Total interest income, on a tax-equivalent basis, increased to $331.5 million during the third quarter of 2023, compared with $235.2 million in the same quarter of 2022. Yields on earning assets increased to 5.62% during the third quarter of 2023, compared with 4.37% reported in the third quarter of 2022. During the third quarter of 2023, loans comprised 89.1% of average earning assets, compared with 87.2% in the same quarter of 2022. Yields on loans increased to 5.81% in the third quarter of 2023, compared with 4.62% in the same period of 2022.

The yield on total interest-bearing liabilities increased from 0.71% in the third quarter of 2022 to 3.22% in the third quarter of 2023. Total funding costs, inclusive of noninterest-bearing demand deposits, increased to 2.24% in the third quarter of 2023, compared with 0.42% during the third quarter of 2022. Deposit costs increased from 0.29% in the third quarter of 2022 to 2.00% in the third quarter of 2023. Non-deposit funding costs increased from 4.83% in the third quarter of 2022 to 5.67% in the third quarter of 2023. Average balances of interest-bearing deposits and their respective costs for the third quarter of 2023 and 2022 are shown below:


	Three Months Ended September 30, 2023			Three Months Ended September 30, 2022
(dollars in thousands)	Average Balance		Average Cost	Average Balance		Average Cost
NOW	$	3,661,701	1.87%	$	3,701,045	0.40%
MMDA	5,527,731		3.28%	5,026,815		0.68%
Savings	915,678		0.78%	1,030,298		0.14%
Retail CDs	2,200,413		3.43%	1,506,761		0.35%
Brokered CDs	1,441,854		5.30%	—		—%
Interest-bearing deposits	$	13,747,377	2.97%	$	11,264,919	0.49%

Provision for Credit Losses

The Company’s provision for credit losses during the third quarter of 2023 amounted to $24.5 million, compared with $17.7 million in the third quarter of 2022. This increase was attributable to the updated economic forecast. The provision for credit losses for the third quarter of 2023 was comprised of $30.1 million related to loans, negative $5.6 million related to unfunded commitments and negative $2,000 related to other credit losses, compared with $17.5 million related to loans, $192,000 related to unfunded commitments and negative $9,000 related to other credit losses for the third quarter of 2022. Non-performing assets as a percentage of total assets decreased three basis points to 0.58% at September 30, 2023, compared with 0.61% at December 31, 2022. The decrease in non-performing assets is primarily attributable to a decrease in accruing loans delinquent 90 days or more of $6.0 million, partially offset by an increase in other real estate owned of $2.6 million. The Company recognized net charge-offs on loans during the third quarter of 2023 of approximately $12.1 million, or 0.23% of average loans on an annualized basis, compared with net charge-offs of approximately $5.2 million, or 0.11%, in the third quarter of 2022. Approximately $3.2 million of net charge-offs for the third quarter of 2023 related to acquired loans which were fully reserved at the acquisition date. The Company’s total allowance for credit losses on loans at September 30, 2023 was $290.1 million, or 1.44% of total loans, compared with $205.7 million, or 1.04% of total loans, at December 31, 2022. This increase is primarily attributable to updated forecast economic conditions.

Noninterest Income

Total noninterest income for the third quarter of 2023 was $63.2 million, a decrease of $2.1 million, or 3.3%, from the $65.3 million reported in the third quarter of 2022. Income from mortgage banking activities was $36.3 million in the third quarter of 2023, a decrease of $4.1 million, or 10.1%, from $40.4 million in the third quarter of 2022. Total production in the third quarter of 2023 amounted to $1.18 billion, compared with $1.26 billion in the same quarter of 2022, while spread (gain on sale) increased to 2.15% in the current quarter, compared with 2.10% in the same quarter of 2022. Mortgage banking activities for the third quarter of 2022 were positively impacted by a recovery of prior mortgage servicing right impairment of $1.3 million, compared with no such recovery in the third quarter of 2023 The retail mortgage open pipeline finished the third quarter of 2023 at $623.9 million, compared with $652.1 million at June 30, 2023 and $520.0 million at the end of the third quarter of 2022.

Service charges on deposit accounts increased $924,000, or 8.3%, to $12.1 million in the third quarter of 2023, compared with $11.2 million in the third quarter of 2022. Other noninterest income increased $737,000, or 5.7%, to $13.6 million for the third quarter of 2023, compared with $12.9 million during the third quarter of 2022. The increase in other noninterest income was primarily attributable to increased equipment finance fee income, BOLI income and SBA servicing income of $2.2 million, $568,000 and $253,000, respectively, partially offset by declines in gain on sale of SBA loans and trust income of $1.6 million and $1.1 million, respectively.

Noninterest Expense

Total noninterest expense for the third quarter of 2023 increased $1.9 million, or 1.3%, to $141.4 million, compared with $139.6 million in the same quarter 2022. Salaries and employee benefits increased $3.2 million, or 4.1%, from $78.7 million in the third quarter of 2022 to $81.9 million in the third quarter of 2023, due primarily to decreases in deferred origination costs of

$8.0 million, partially offset by declines in variable commissions tied to mortgage production of $2.5 million, and incentive compensation of $2.8 million. Occupancy and equipment expenses decreased $238,000, or 1.8%, to $12.7 million for the third quarter of 2023, compared with $13.0 million in the third quarter of 2022. Data processing and communications expenses increased $1.0 million, or 8.0%, to $13.0 million in the third quarter of 2023, compared with $12.0 million in the third quarter of 2022. Advertising and marketing expense was $2.7 million in the third quarter of 2023, compared with $3.6 million in the third quarter of 2022. This decrease was primarily related to a marketing campaign begun in the second quarter of 2022 which was narrowed in 2023. Amortization of intangible assets decreased $285,000, or 6.1%, from $4.7 million in the third quarter of 2022 to $4.4 million in the third quarter of 2023. This decrease was primarily related to a reduction in core deposit intangible amortization. Loan servicing expenses decreased $323,000, or 3.4%, from $9.6 million in the third quarter of 2022 to $9.3 million in the third quarter of 2023, primarily attributable to the sale of a portion of our mortgage servicing portfolio during the third quarter of 2022, partially offset by additional mortgage loans serviced added from mortgage production over the previous year. Other noninterest expenses increased $871,000, or 4.9%, from $17.9 million in the third quarter of 2022 to $18.8 million in the third quarter of 2023, due primarily to a decrease of $846,000 in deferred third-party origination costs in our equipment finance division.

Income Taxes

Income tax expense is influenced by the statutory rate, the amount of taxable income, the amount of tax-exempt income and the amount of nondeductible expenses. For the third quarter of 2023, the Company reported income tax expense of $24.9 million, compared with $28.5 million in the same period of 2022. The Company’s effective tax rate for the three months ended September 30, 2023 and 2022 was 23.7% and 23.6%, respectively.

Results of Operations for the Nine Months Ended September 30, 2023 and 2022

Consolidated Earnings and Profitability

Ameris reported net income available to common shareholders of $203.2 million, or $2.94 per diluted share, for the nine months ended September 30, 2023, compared with $264.3 million, or $3.81 per diluted share, for the same period in 2022. The Company’s return on average assets and average shareholders’ equity were 1.07% and 8.26%, respectively, in the nine months ended September 30, 2023, compared with 1.51% and 11.57%, respectively, in the same period in 2022. During the first nine months of 2023, the Company recorded pre-tax gain on BOLI proceeds of $486,000. During the first nine months of 2022, the Company recorded pre-tax merger and conversion charges of $977,000, pre-tax loss on sale of mortgage servicing rights of $316,000, pre-tax servicing right recovery of $21.8 million, pre-tax gain on BOLI proceeds of $55,000, pre-tax natural disaster expenses of $151,000 and pre-tax gain on bank premises of $45,000. Excluding these adjustment items, the Company’s net income would have been $202.7 million, or $2.93 per diluted share, for the nine months ended September 30, 2023 and $248.3 million, or $3.58 per diluted share, for the same period in 2022.

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


	Nine Months Ended September 30,
(in thousands, except share and per share data)	2023		2022
Net income available to common shareholders	$	203,171	$	264,319
Adjustment items:
Merger and conversion charges	—		977
Loss on sale of mortgage servicing rights	—		316

Servicing right recovery	—		(21,824)
Gain on BOLI proceeds	(486)		(55)

Natural disaster expenses	—		151
Gain on bank premises	—		(45)
Tax effect of adjustment items (Note 1)	—		4,490
After tax adjustment items	(486)		(15,990)
Adjusted net income	$	202,685	$	248,329

Weighted average common shares outstanding - diluted	69,129,921		69,427,522
Net income per diluted share	$	2.94	$	3.81
Adjusted net income per diluted share	$	2.93	$	3.58

Note 1: Tax effect is calculated utilizing a 21% rate for taxable adjustments. Gain on BOLI proceeds is non-taxable and no tax effect is included. A portion of the merger and conversion charges for the nine months ended September 30, 2022 is nondeductible for tax purposes.


	Nine Months Ended September 30, 2023
(dollars in thousands)	Banking Division		Retail Mortgage Division		Warehouse Lending Division		SBA Division		Premium Finance Division		Total
Interest income	$	661,947	$	155,988	$	54,931	$	14,056	$	61,299	$	948,221
Interest expense	147,583		91,739		37,057		7,806		35,093		319,278
Net interest income	514,364		64,249		17,874		6,250		26,206		628,943
Provision for loan losses	108,804		8,530		(372)		1,997		745		119,704
Noninterest income	74,795		106,557		2,546		2,660		22		186,580
Noninterest expense
Salaries and employee benefits	167,864		63,321		2,498		3,834		6,627		244,144
Occupancy and equipment	34,218		3,689		2		113		231		38,253
Data processing and communications expenses	35,481		3,518		120		115		224		39,458
Other expenses	66,940		35,759		644		912		3,160		107,415
Total noninterest expense	304,503		106,287		3,264		4,974		10,242		429,270
Income before income tax expense	175,852		55,989		17,528		1,939		15,241		266,549
Income tax expense	44,443		11,758		3,681		407		3,089		63,378
Net income	$	131,409	$	44,231	$	13,847	$	1,532	$	12,152	$	203,171


	Nine Months Ended September 30, 2022
(dollars in thousands)	Banking Division		Retail Mortgage Division		Warehouse Lending Division		SBA Division		Premium Finance Division		Total
Interest income	$	435,229	$	111,276	$	27,779	$	15,456	$	30,504	$	620,244
Interest expense	(25,145)		51,919		7,653		3,223		5,705		43,355
Net interest income	460,374		59,357		20,126		12,233		24,799		576,889
Provision for loan losses	25,952		15,129		(1,191)		(614)		(469)		38,807
Noninterest income	68,102		158,028		3,958		5,963		25		236,076
Noninterest expense
Salaries and employee benefits	144,527		88,646		1,546		3,999		5,805		244,523
Occupancy and equipment	33,599		4,337		3		262		255		38,456
Data processing and communications expenses	32,872		3,377		138		86		269		36,742
Other expenses	64,142		37,098		639		1,019		2,975		105,873
Total noninterest expense	275,140		133,458		2,326		5,366		9,304		425,594
Income before income tax expense	227,384		68,798		22,949		13,444		15,989		348,564
Income tax expense	58,822		14,448		4,820		2,823		3,332		84,245
Net income	$	168,562	$	54,350	$	18,129	$	10,621	$	12,657	$	264,319

Net Interest Income and Margins

The following table sets forth the average balance, interest income or interest expense, and average yield/rate paid for each category of interest-earning assets and interest-bearing liabilities, net interest spread, and net interest margin on average interest-earning assets for the nine months ended September 30, 2023 and 2022. Federally tax-exempt income is presented on a taxable-equivalent basis assuming a 21% federal tax rate.


	Nine Months Ended September 30,
	2023					2022
(dollars in thousands)	Average Balance		Interest Income/ Expense		Average Yield/ Rate Paid	Average Balance		Interest Income/ Expense		Average Yield/ Rate Paid
Assets
Interest-earning assets:
Federal funds sold, interest-bearing deposits in banks, and time deposits in other banks	$	907,433	$	33,568	4.95%	$	2,339,364	$	13,093	0.75%
Investment securities	1,730,824		46,246		3.57%	1,023,118		22,662		2.96%
Loans held for sale	510,690		22,865		5.99%	835,418		24,180		3.87%
Loans	20,121,143		848,375		5.64%	16,951,566		563,223		4.44%
Total interest-earning assets	23,270,090		951,054		5.46%	21,149,466		623,158		3.94%
Noninterest-earning assets	2,155,974					2,255,945
Total assets	$	25,426,064				$	23,405,411

Liabilities and Shareholders’ Equity
Interest-bearing liabilities:
Savings and interest-bearing demand deposits	$	10,070,954	$	164,382	2.18%	$	9,815,352	$	18,896	0.26%
Time deposits	2,939,293		79,886		3.63%	1,657,193		4,138		0.33%
Federal funds purchased and securities sold under agreements to repurchase	—		—		—%	1,974		4		0.27%
FHLB advances	1,436,753		52,213		4.86%	64,130		909		1.90%
Other borrowings	330,035		13,072		5.30%	398,898		14,256		4.78%
Subordinated deferrable interest debentures	129,059		9,725		10.07%	127,066		5,152		5.42%
Total interest-bearing liabilities	14,906,094		319,278		2.86%	12,064,613		43,355		0.48%
Demand deposits	6,838,618					7,960,149
Other liabilities	391,646					326,293
Shareholders’ equity	3,289,706					3,054,356
Total liabilities and shareholders’ equity	$	25,426,064				$	23,405,411
Interest rate spread					2.60%					3.46%
Net interest income			$	631,776				$	579,803
Net interest margin					3.63%					3.67%

On a tax-equivalent basis, net interest income for the nine months ended September 30, 2023 was $631.8 million, an increase of $52.0 million, or 9.0%, compared with $579.8 million reported in the same period of 2022. The higher net interest income is a result of growth in average earning assets and increased market rates, partially offset by increased funding costs. Average interest earning assets increased $2.12 billion, or 10.0%, from $21.15 billion in the first nine months of 2022 to $23.27 billion for the first nine months of 2023. This growth in interest earning assets resulted primarily from organic growth in average loans and investment securities purchases, partially offset by a decline in excess liquidity and average loans held for sale. The Company’s net interest margin during the first nine months of 2023 was 3.63%, down four basis points from 3.67% reported for the first nine months of 2022. Loan production in the lines of business (including retail mortgage, warehouse lending, SBA and premium finance) amounted to $12.32 billion during the first nine months of 2023, with weighted average yields of 6.91%, compared with $14.53 billion and 4.39%, respectively, during the first nine months of 2022. Loan production in the banking division amounted to $1.7 billion during the first nine months of 2023 with weighted average yields of 9.20%, compared with $3.0 billion and 5.60%, respectively, during the first nine months of 2022.

Total interest income, on a tax-equivalent basis, increased to $951.1 million during the nine months ended September 30, 2023, compared with $623.2 million in the same period of 2022. Yields on earning assets increased to 5.46% during the first nine months of 2023, compared with 3.94% reported in the same period of 2022. During the first nine months of 2023, loans comprised 88.7% of average earning assets, compared with 84.1% in the same period of 2022. Yields on loans increased to 5.64% during the nine months ended September 30, 2023, compared with 4.44% in the same period of 2022.

The yield on total interest-bearing liabilities increased from 0.48% during the nine months ended September 30, 2022 to 2.86% in the same period of 2023. Total funding costs, inclusive of noninterest-bearing demand deposits, increased to 1.96% in the first nine months of 2023, compared with 0.29% during the same period of 2022. Deposit costs increased from 0.16% in the first nine months of 2022 to 1.65% in the same period of 2023. Non-deposit funding costs increased from 4.59% in the first nine months of 2022 to 5.29% in the same period of 2023. The increase in non-deposit funding costs was driven primarily by an increase in index rates. Average balances of interest bearing deposits and their respective costs for the nine months ended September 30, 2023 and 2022 are shown below:


	Nine Months Ended September 30, 2023			Nine Months Ended September 30, 2022
(dollars in thousands)	Average Balance		Average Cost	Average Balance		Average Cost
NOW	$	3,917,476	1.72%	$	3,693,829	0.21%
MMDA	5,176,794		2.81%	5,117,528		0.33%
Savings	976,684		0.74%	1,003,995		0.08%
Retail CDs	1,947,739		2.84%	1,657,193		0.33%
Brokered CDs	991,554		5.19%	—		—%
Interest-bearing deposits	$	13,010,247	2.51%	$	11,472,545	0.27%

Provision for Credit Losses

The Company’s provision for credit losses during the nine months ended September 30, 2023 amounted to $119.7 million, compared with $38.8 million in the nine months ended September 30, 2022. This increase was primarily attributable to the updated economic forecast and organic growth in loans during the first nine months of 2023. The provision for credit losses for the first nine months of 2023 was comprised of $123.1 million related to loans, negative $3.4 million related to unfunded commitments and $5,000 related to other credit losses, compared with $28.0 million related to loans, $11.0 million related to unfunded commitments and negative $135,000 related to other credit losses for the same period in 2022. Non-performing assets as a percentage of total assets decreased from 0.61% at December 31, 2022 to 0.58% at September 30, 2023. The decrease in non-performing assets is primarily attributable to a decrease in accruing loans delinquent 90 days or more of $6.0 million, partially offset by an increase in other real estate owned of $2.6 million. Net charge-offs on loans during the first nine months of 2023 were $37.0 million, or 0.25% of average loans on an annualized basis, compared with approximately $10.7 million, or 0.08%, in the first nine months of 2022. The Company’s total allowance for credit losses on loans at September 30, 2023 was $290.1 million, or 1.44% of total loans, compared with $205.7 million, or 1.04% of total loans, at December 31, 2022. This increase is primarily attributable to organic growth in loans and the updated economic forecast.

Noninterest Income

Total noninterest income for the nine months ended September 30, 2023 was $186.6 million, a decrease of $49.5 million, or 21.0%, from the $236.1 million reported for the nine months ended September 30, 2022. Income from mortgage banking activities decreased $53.6 million, or 33.1%, from $162.0 million in the first nine months of 2022 to $108.4 million in the same period of 2023. Total production in the first nine months of 2023 amounted to $3.45 billion, compared with $4.52 billion in the same period of 2022, while spread (gain on sale) decreased to 2.11% during the nine months ended September 30, 2023, compared with 2.48% in the same period of 2022. The retail mortgage open pipeline was $623.9 million at September 30, 2023, compared with $507.1 million at December 31, 2022 and $520.0 million at September 30, 2022. Mortgage banking activities was positively impacted during the first nine months of 2022 by a recovery of previous mortgage servicing right impairment of $21.8 million, compared with no such recovery for the same period in 2023.

Other noninterest income increased $3.1 million, or 8.4%, to $40.7 million for the first nine months of 2023, compared with $37.5 million during the same period of 2022. The increase in other noninterest income was primarily attributable to increases in fee income from equipment finance, BOLI income, gain on debt redemption and derivative fee income of $3.8 million, $1.3 million, $1.1 million and $1.2 million, respectively, partially offset by a decrease of $3.7 million in trust income after exiting this business at the end of 2022.

Noninterest Expense

Total noninterest expenses for the nine months ended September 30, 2023 increased $3.7 million, or 0.9%, to $429.3 million, compared with $425.6 million in the same period of 2022. Salaries and employee benefits decreased $379,000, or 0.2%, from $244.5 million in the first nine months of 2022 to $244.1 million in the same period of 2023. Data processing and communications expenses increased $2.7 million, or 7.4%, to $39.5 million in the first nine months of 2023, from $36.7 million

reported in the same period of 2022. Credit resolution-related expenses increased $266,000, or 77.6%, from negative $343,000 in the first nine months of 2022 to negative $77,000 in the same period of 2023. Advertising and marketing expense was $8.9 million in the first nine months of 2023, compared with $8.7 million in the first nine months of 2022. Amortization of intangible assets decreased $1.2 million, or 8.1%, from $15.0 million in the first nine months of 2022 to $13.8 million in the first nine months of 2023. This decrease was primarily related to a reduction in core deposit intangible amortization. There were no merger and conversion charges in the first nine months of 2023, compared with $977,000 in the same period in 2022. Loan servicing expenses decreased $2.1 million, or 7.2%, from $28.5 million in the first nine months of 2022 to $26.4 million in the same period of 2023, primarily attributable to the sale of a portion of our mortgage servicing portfolio during the third quarter of 2022, partially offset by additional mortgage loans added from mortgage production over the previous year. Other noninterest expenses increased $5.3 million, or 10.0%, from $53.1 million in the first nine months of 2022 to $58.4 million in the same period of 2023, due primarily to increases of $5.8 million in FDIC insurance expenses and $1.7 million in legal and professional fees. These increases in other noninterest expenses were partially offset by a decrease from the first nine months of 2022 in fraud/forgery losses of $1.1 million and variable expenses tied to production in our mortgage division.

Income Taxes

Income tax expense is influenced by the statutory rate, the amount of taxable income, the amount of tax-exempt income and the amount of nondeductible expenses. For the nine months ended September 30, 2023, the Company reported income tax expense of $63.4 million, compared with $84.2 million in the same period of 2022. The Company’s effective tax rate for the nine months ended September 30, 2023 and 2022 was 23.8% and 24.2%, respectively. The decrease in the effective tax rate is primarily a result of a discrete charge to the Company's state tax liability and nondeductible merger and conversion charges incurred during the first nine months of 2022.

Financial Condition as of September 30, 2023

Securities

Debt securities classified as available-for-sale are recorded at fair value with unrealized holding gains and losses excluded from earnings and reported in accumulated other comprehensive income, net of the related deferred tax effect. Securities available-for-sale may be bought and sold in response to changes in market conditions, including, but not limited to, fluctuations in interest rates, changes in securities' prepayment risk, increases in loan demand, general liquidity needs and positioning the portfolio to take advantage of market conditions that create more economically attractive returns. Debt securities are classified as held-to-maturity based on management's positive intent and ability to hold such securities to maturity and are carried at amortized cost. Restricted equity securities are classified as other investment securities and are carried at cost and are periodically evaluated for impairment based on the ultimate recovery of par value or cost basis.

The amortization of premiums and accretion of discounts are recognized in interest income using methods approximating the interest method over the 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.

Management and the Company’s ALCO Committee evaluate available-for-sale securities in an unrealized loss position on at least a quarterly basis, and more frequently when economic or market concerns warrant such evaluation, to determine if credit-related impairment exists. Management first evaluates whether they intend to sell or more likely than not will be required to sell an impaired security before recovering its amortized cost basis. If either criteria is met, the entire amount of unrealized loss is recognized in earnings with a corresponding adjustment to the security's amortized cost basis. If either of the above criteria is not met, management evaluates whether the decline in fair value is attributable to credit or resulted from other factors. If credit-related impairment exists, the Company recognizes an allowance for credit losses, limited to the amount by which the fair value is less than the amortized cost basis. Any impairment not recognized through an allowance for credit losses is recognized in other comprehensive income, net of tax, as a non credit-related impairment. The Company does not intend to sell these available-for-sale investment securities at an unrealized loss position at September 30, 2023, and it is more likely than not that the Company will not be required to sell these securities prior to recovery or maturity. Based on the results of management's review, at September 30, 2023, management determined that $80,000 was attributable to credit impairment and, accordingly, an allowance for credit losses was established. The remaining $78.1 million in unrealized loss was determined to be from factors other than credit.

The Company's held-to-maturity securities have no expected credit losses, and no related allowance for credit losses has been established.

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


	September 30, 2023				December 31, 2022
(dollars in thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Securities available-for-sale
U.S. Treasuries	$	781,154	$	760,596	$	775,784	$	759,534
U.S. government-sponsored agencies	1,026		969		1,036		979
State, county and municipal securities	29,492		27,703		35,358		34,195
Corporate debt securities	16,171		15,036		16,397		15,926
SBA pool securities	23,834		21,751		29,422		27,398
Mortgage-backed securities	650,535		598,026		701,008		662,028
Total debt securities available-for-sale	$	1,502,212	$	1,424,081	$	1,559,005	$	1,500,060

Securities held-to-maturity

State, county and municipal securities	$	31,905	$	24,555	$	31,905	$	26,525


Mortgage-backed securities	109,954		91,134		102,959		88,013
Total debt securities held-to-maturity	$	141,859	$	115,689	$	134,864	$	114,538

The amounts of securities available-for-sale and held-to-maturity in each category as of September 30, 2023 are shown in the following table according to contractual maturity classifications: (i) one year or less; (ii) after one year through five years; (iii) after five years through ten years; and (iv) after ten years:


	U.S. Treasuries				U.S. Government-Sponsored Agencies				State, County and Municipal Securities
(dollars in thousands) Securities available-for-sale (1)	Amount		Yield (2)		Amount		Yield (2)		Amount		Yield (2)(3)
One year or less	$	373,910	3.91	%	$	—	—	%	$	1,934	3.97	%
After one year through five years	386,686		2.57		969		2.16		16,151		3.94
After five years through ten years	—		—		—		—		4,031		4.56
After ten years	—		—		—		—		5,587		3.63
	$	760,596	3.22	%	$	969	2.16	%	$	27,703	3.96	%

	Corporate Debt Securities				SBA Pool Securities				Mortgage-Backed Securities
(dollars in thousands) Securities available-for-sale (1)	Amount		Yield (2)		Amount		Yield (2)		Amount		Yield (2)
One year or less	$	—	—	%	$	—	—	%	$	15,255	1.93	%
After one year through five years	13,697		7.12		4,881		2.12		281,553		3.20
After five years through ten years	—		—		5,866		2.64		91,745		2.88
After ten years	1,339		8.63		11,004		3.21		209,473		3.29
	$	15,036	7.30	%	$	21,751	2.81	%	$	598,026	3.16	%

	State, County and Municipal Securities				Mortgage-Backed Securities
(dollars in thousands) Securities held-to-maturity (1)	Amount		Yield (2)(3)		Amount		Yield (2)
One year or less	$	—	—	%	$	—	—	%
After one year through five years	—		—		11,882		1.34
After five years through ten years	—		—		66,008		2.55
After ten years	31,905		3.93		32,064		2.61
	$	31,905	3.93	%	$	109,954	2.44	%

(1)The amortized cost of securities held-to-maturity and fair value of securities available-for-sale are presented based on contractual maturities. Actual cash flows may differ from contractual maturities because borrowers may have the right to prepay obligations without prepayment penalties.

(2)Yields were computed using coupon interest, adding discount accretion or subtracting premium amortization, as appropriate, on a ratable basis over the life of each security. The weighted average yield for each maturity range was computed using the amortized cost of each security in that range.

(3)Yields on securities of state and political subdivisions are stated on a taxable-equivalent basis, using a tax rate of 21%.

Loans and Allowance for Credit Losses

At September 30, 2023, gross loans outstanding (including loans and loans held for sale) were $20.58 billion, up $335.2 million from $20.25 billion reported at December 31, 2022. Loans increased $345.8 million, or 1.7%, from $19.86 billion at December 31, 2022 to $20.20 billion at September 30, 2023, driven primarily by organic growth. Loans held for sale decreased from $392.1 million at December 31, 2022 to $381.5 million at September 30, 2023 primarily in our mortgage division.

The Company regularly monitors the composition of the loan portfolio to evaluate the adequacy of the allowance for credit losses ("ACL") on loans in light of the impact that changes in the economic environment may have on the loan portfolio. The Company focuses on the following loan categories: (1) commercial, financial and agricultural; (2) consumer; (3) indirect automobile; (4) mortgage warehouse; (5) municipal; (6) premium finance; (7) construction and development related real estate; (8) commercial and farmland real estate; and (9) residential real estate. The Company’s management has strategically located its branches in select markets in Georgia, Alabama, Florida, North Carolina and South Carolina to take advantage of the growth in these areas.

The Company’s risk management processes include a loan review program designed to evaluate the credit risk in the loan portfolio and ensure credit grade accuracy. Through the loan review process, the Company conducts (1) a loan portfolio summary analysis, (2) charge-off and recovery analysis, (3) trends in accruing problem loan analysis, and (4) problem and past-due loan analysis. This analysis process serves as a tool to assist management in assessing the overall quality of the loan portfolio and the adequacy of the ACL. Loans classified as “substandard” are loans which are inadequately protected by the current sound worth and paying capacity of the borrower or of the collateral pledged. These assets exhibit a well-defined weakness or are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. These weaknesses may be characterized by past due performance, operating losses and/or questionable collateral values. Loans classified as “doubtful” are those loans that have characteristics similar to substandard loans but have an increased risk of loss. Loans classified as “loss” are those loans which are considered uncollectible and are in the process of being charged off.

The Company estimates the ACL on loans based on the underlying assets’ amortized cost basis, which is the amount at which the financing receivable is originated or acquired, adjusted for applicable accretion or amortization of premium, discount, and net deferred fees or costs, collection of cash, and charge-offs. In the event that collection of principal becomes uncertain, the Company has policies in place to reverse accrued interest in a timely manner. Therefore, the Company has made a policy election to exclude accrued interest from the measurement of ACL.

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

The Company measures expected credit losses of financial assets on a collective (pool) basis, when the financial assets share similar risk characteristics. Depending on the nature of the pool of financial assets with similar risk characteristics, the Company currently uses the DCF method or the PD×LGD method which may be adjusted for qualitative factors.

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

At the end of the third quarter of 2023, the ACL on loans totaled $290.1 million, or 1.44% of loans, compared with $205.7 million, or 1.04% of loans, at December 31, 2022. Our nonaccrual loans decreased from $134.8 million at December 31, 2022 to $134.6 million at September 30, 2023. For the first nine months of 2023, our net charge off ratio as a percentage of average loans increased to 0.25%, compared with 0.08% for the first nine months of 2022. The total provision for credit losses for the first nine months of 2023 was $119.7 million, increasing from a provision of $38.8 million recorded for the first nine months of 2022. Our ratio of total nonperforming assets to total assets was down three basis points from 0.61% at December 31, 2022 to 0.58% at September 30, 2023.

The following table presents an analysis of the allowance for credit losses on loans, provision for credit losses on loans and net charge-offs as of and for the nine months ended September 30, 2023 and 2022:


	Nine Months Ended September 30,
(dollars in thousands)	2023		2022
Balance of allowance for credit losses on loans at beginning of period	$	205,677	$	167,582
Adjustment to allowance for adoption of ASU 2022-02	(1,711)		—
Provision charged to operating expense	123,114		27,962
Charge-offs:
Commercial, financial and agricultural	42,068		13,527
Consumer	4,140		3,790
Indirect automobile	135		179


Premium finance	5,220		3,640

Real estate – commercial and farmland	3,320		3,378
Real estate – residential	231		190
Total charge-offs	55,114		24,704

Recoveries:
Commercial, financial and agricultural	10,333		7,882
Consumer	694		665
Indirect automobile	599		816


Premium finance	4,701		3,383
Real estate – construction and development	646		669
Real estate – commercial and farmland	476		177
Real estate – residential	689		459
Total recoveries	18,138		14,051
Net charge-offs	36,976		10,653
Balance of allowance for credit losses on loans at end of period	$	290,104	$	184,891

The following table presents an analysis of the allowance for credit losses on loans and net charge-offs for loans held for investment:


	As of and for the Nine Months Ended
(dollars in thousands)	September 30, 2023			September 30, 2022
Allowance for credit losses on loans at end of period	$	290,104		$	184,891
Net charge-offs for the period	36,976			10,653
Loan balances:
End of period	20,201,079			18,806,856
Average for the period	20,121,143			16,951,566
Net charge-offs as a percentage of average loans (annualized)	0.25		%	0.08		%
Allowance for credit losses on loans as a percentage of end of period loans	1.44		%	0.98		%

Loans

Loans are stated at amortized cost. Balances within the major loans receivable categories are presented in the following table:


(dollars in thousands)	September 30, 2023		December 31, 2022
Commercial, financial and agricultural	$	2,632,836	$	2,679,403
Consumer	259,797		384,037
Indirect automobile	47,108		108,648
Mortgage warehouse	852,823		1,038,924
Municipal	497,093		509,151
Premium finance	1,007,334		1,023,479
Real estate – construction and development	2,236,686		2,086,438
Real estate – commercial and farmland	7,865,389		7,604,867
Real estate – residential	4,802,013		4,420,306
	$	20,201,079	$	19,855,253

Non-Performing Assets

Non-performing assets include nonaccrual loans, accruing loans contractually past due 90 days or more, repossessed personal property, and OREO. Loans are placed on nonaccrual status when management has concerns relating to the ability to collect the principal and interest and generally when such loans are 90 days or more past due. Management performs a detailed review and valuation assessment of non-performing loans over $250,000 on a quarterly basis. When a loan is placed on nonaccrual status, any interest previously accrued but not collected is reversed against current income.

Nonaccrual loans totaled $134.6 million at September 30, 2023, a decrease of $250,000, or 0.2%, from $134.8 million at December 31, 2022. Accruing loans delinquent 90 days or more totaled $11.9 million at September 30, 2023, a decrease of $6.0 million, or 33.4%, compared with $17.9 million at December 31, 2022. At September 30, 2023, OREO totaled $3.4 million, an increase of $2.6 million, or 303.0%, compared with $843,000 at December 31, 2022. Management regularly assesses the valuation of OREO through periodic reappraisal and through inquiries received in the marketing process. At the end of the third quarter of 2023, total non-performing assets as a percent of total assets was down three basis points from 0.61% at December 31, 2022 to 0.58% at September 30, 2023.

Non-performing assets at September 30, 2023 and December 31, 2022 were as follows:


(dollars in thousands)	September 30, 2023		December 31, 2022
Nonaccrual loans(1)	$	134,558	$	134,808
Accruing loans delinquent 90 days or more	11,891		17,865
Repossessed assets	22		28
Other real estate owned	3,397		843
Total non-performing assets	$	149,868	$	153,544

(1) Included in nonaccrual loans were $80.8 million and $69.6 million of serviced GNMA-guaranteed nonaccrual loans at September 30, 2023 and December 31, 2022, respectively.

Commercial Lending Practices

The federal bank regulatory agencies previously issued interagency guidance on commercial real estate lending and prudent risk management practices. This guidance defines commercial real estate (“CRE”) loans as loans secured by raw land, land development and construction (including one-to-four family residential construction), multi-family property and non-farm nonresidential property where the primary or a significant source of repayment is derived from rental income associated with the property, excluding owner-occupied properties (loans for which 50% or more of the source of repayment is derived from the ongoing operations and activities conducted by the party, or affiliate of the party, who owns the property) or the proceeds of the sale, refinancing or permanent financing of the property. Loans for owner-occupied CRE are generally excluded from the CRE guidance.

The CRE guidance is applicable when either:

(1)total loans for construction, land development, and other land, net of owner-occupied loans, represent 100% or more of a tier I capital plus allowance for credit losses on loans and leases; or

(2)total loans secured by multifamily and nonfarm nonresidential properties and loans for construction, land development, and other land, net of owner-occupied loans, represent 300% or more of a bank’s tier I capital plus allowance for credit losses on loans and leases.

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

As of September 30, 2023, the Company exhibited a concentration in the CRE loan category based on Federal Reserve Call codes. The primary risks of CRE lending are:

(1)within CRE loans, construction and development loans are somewhat dependent upon continued strength in demand for residential real estate, which is reliant on favorable real estate mortgage rates and changing population demographics;

(2)on average, CRE loan sizes are generally larger than non-CRE loan types; and

(3)certain construction and development loans may be less predictable and more difficult to evaluate and monitor.

The following table outlines CRE loan categories and CRE loans as a percentage of total loans as of September 30, 2023 and December 31, 2022. The loan categories and concentrations below are based on Federal Reserve Call codes:


	September 30, 2023			December 31, 2022
(dollars in thousands)	Balance		% of Total Loans	Balance		% of Total Loans
Construction and development loans	$	2,236,686	11%	$	2,086,438	11%
Multi-family loans	900,675		4%	779,027		4%
Nonfarm non-residential loans (excluding owner-occupied)	4,875,580		24%	4,796,358		24%
Total CRE Loans (excluding owner-occupied)	8,012,941		40%	7,661,823		39%
All other loan types	12,188,138		60%	12,193,430		61%
Total Loans	$	20,201,079	100%	$	19,855,253	100%

The following table outlines the percentage of construction and development loans and total CRE loans, net of owner-occupied loans, to the Bank’s tier I capital plus allowance for credit losses on loans and leases, and the Company’s internal concentration limits as of September 30, 2023 and December 31, 2022:


	Internal Limit	Actual
		September 30, 2023	December 31, 2022
Construction and development loans	100%	79%	79%
Total CRE loans (excluding owner-occupied)	300%	283%	292%

Short-Term Investments

The Company’s short-term investments are comprised of federal funds sold and interest-bearing deposits in banks. At September 30, 2023, the Company’s short-term investments were $1.30 billion, compared with $833.6 million at December 31, 2022, all of which was in interest-bearing deposit balances at correspondent banks and the Federal Reserve Bank of Atlanta.

Derivative Instruments and Hedging Activities

The Company has forward contracts and IRLCs to economically hedge changes in the value of the mortgage inventory due to changes in market interest rates. The fair value of these instruments amounted to an asset of $8.8 million and $3.9 million at September 30, 2023 and December 31, 2022, respectively. The Company also enters into interest rate derivative agreements to facilitate the risk management strategies of certain clients. The Company mitigates this risk by entering into equal and offsetting interest rate swap agreements with highly rated third-party financial institutions. The fair value of these instruments amounted to an asset of $13.2 million and $4.6 million at September 30, 2023 and December 31, 2022, respectively, and a liability of $13.0 million and $4.6 million at September 30, 2023 and December 31, 2022, respectively.

Deposits

Total deposits at the Company increased $1.13 billion, or 5.8%, to $20.59 billion at September 30, 2023, compared with $19.46 billion at December 31, 2022. Noninterest-bearing deposits decreased $1.34 billion, or 16.9%, while interest-bearing deposits increased $2.47 billion, or 21.4%, during the first nine months of 2023. The decrease in noninterest-bearing deposits was attributable to a shift in consumer behavior to interest-bearing accounts as interest rates have risen. At September 30, 2023, the Company had approximately $1.47 billion in short-term brokered CDs, compared with none at December 31, 2022. As of September 30, 2023 and December 31, 2022, the Company had estimated uninsured deposits of $8.43 billion and $9.30 billion, respectively. These estimates were derived using the same methodologies and assumptions used for the Bank's regulatory reporting. Approximately $2.27 billion, or 26.9%, of the uninsured deposits at September 30, 2023 were for municipalities which are collateralized with investment securities or letters of credit.

Capital

Common Stock Repurchase Program

On September 19, 2019, the Company announced that its Board of Directors authorized the Company to repurchase up to $100.0 million of its outstanding common stock through October 31, 2020. The Board has subsequently extended the share repurchase program each year since that original authorization, with the most recent extension, which also included the replenishment of the program to $100.0 million, being announced on October 26, 2023. As a result, the Company is currently authorized to engage in additional share repurchases up to $100.0 million through October 31, 2024. Repurchases of shares must be made in accordance with applicable securities laws and may be made from time to time in the open market or by negotiated transactions. The amount and timing of repurchases will be based on a variety of factors, including share acquisition price, regulatory limitations and other market and economic factors. The program does not require the Company to repurchase any specific number of shares. As of September 30, 2023, an aggregate of $13.5 million, or 405,233 shares of the Company's common stock, had been repurchased under the program's October 27, 2022 renewal, which also included the replenishment of the program to $100.0 million.

Capital Management

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

Under the regulatory capital frameworks adopted by the Federal Reserve Board (the "FRB") and the Federal Deposit Insurance Corporation (the "FDIC"), the Company and the Bank must each maintain a common equity Tier 1 capital to total risk-weighted assets ratio of at least 4.5%, a Tier 1 capital to total risk-weighted assets ratio of at least 6%, a total capital to total risk-weighted assets ratio of at least 8% and a leverage ratio of Tier 1 capital to average total consolidated assets of at least 4%. The Company and the Bank are also required to maintain a capital conservation buffer of common equity Tier 1 capital of at least 2.5% of risk-weighted assets in addition to the minimum risk-based capital ratios in order to avoid certain restrictions on capital distributions and discretionary bonus payments.

In March 2020, the Office of the Comptroller of the Currency, the FRB and the FDIC issued an interim final rule that delays the estimated impact on regulatory capital stemming from the implementation of CECL. The interim final rule provides banking

organizations that implement CECL in 2020 the option to delay for two years an estimate of CECL’s effect on regulatory capital, relative to the incurred loss methodology’s effect on regulatory capital, followed by a three-year transition period. As a result, the Company and Bank elected the five-year transition relief allowed under the interim final rule effective March 31, 2020.

As of September 30, 2023, under the regulatory capital standards, the Bank was considered “well capitalized” under all capital measurements. The following table sets forth the regulatory capital ratios of for the Company and the Bank at September 30, 2023 and December 31, 2022:


	September 30, 2023	December 31, 2022
Tier 1 Leverage Ratio (tier 1 capital to average assets)
Consolidated	9.62%	9.36%
Ameris Bank	10.51%	10.56%
CET1 Ratio (common equity tier 1 capital to risk weighted assets)
Consolidated	10.82%	9.86%
Ameris Bank	11.81%	11.12%
Tier 1 Capital Ratio (tier 1 capital to risk weighted assets)
Consolidated	10.82%	9.86%
Ameris Bank	11.81%	11.12%
Total Capital Ratio (total capital to risk weighted assets)
Consolidated	14.01%	12.90%
Ameris Bank	13.41%	12.28%

Interest Rate Sensitivity and Liquidity

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

The ALCO Committee is comprised of senior officers of Ameris. The ALCO Committee makes all strategic decisions with respect to the sources and uses of funds that may affect net interest income, including net interest spread and net interest margin. The objective of the ALCO Committee is to identify the interest rate, liquidity and market value risks of the Company’s balance sheet and use reasonable methods approved by the Company’s Board of Directors and executive management to minimize those identified risks.

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

The Company uses a simulation modeling process to measure interest rate risk and evaluate potential strategies. Interest rate scenario models are prepared using software created and licensed from an outside vendor. The Company’s simulation includes all financial assets and liabilities. Simulation results quantify interest rate risk under various interest rate scenarios. Management then develops and implements appropriate strategies. The ALCO Committee has determined that an acceptable level of interest rate risk would be for net interest income to increase/decrease no more than 20% given a change in selected interest rates of 200 basis points over any 24-month period.

Liquidity management involves the matching of the cash flow requirements of customers, who may be either depositors desiring to withdraw funds or borrowers needing assurance that sufficient funds will be available to meet their credit needs, and the ability of Ameris to manage those requirements. The Company strives to maintain an adequate liquidity position by managing the balances and maturities of interest-earning assets and interest-bearing liabilities so that the balance it has in short-

term assets at any given time will adequately cover any reasonably anticipated immediate need for funds. Additionally, the Bank maintains relationships with correspondent banks, which could provide funds on short notice, if needed. The Company has invested in FHLB stock for the purpose of establishing credit lines with the FHLB. The credit availability to the Bank is equal to 30% of the Bank’s total assets as reported on the most recent quarterly financial information submitted to the regulators subject to the pledging of sufficient collateral. At September 30, 2023 and December 31, 2022, the net carrying value of the Company’s other borrowings was $1.21 billion and $1.88 billion, respectively. At September 30, 2023, the Company had availability with the FHLB and FRB Discount Window of $3.62 billion and $2.63 billion, respectively.

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


	September 30, 2023	June 30, 2023	March 31, 2023	December 31, 2022	September 30, 2022
Investment securities available-for-sale to total deposits	6.92%	7.14%	7.52%	7.71%	6.45%
Loans (net of unearned income) to total deposits	98.11%	100.14%	100.50%	102.02%	96.61%
Interest-earning assets to total assets	91.67%	91.51%	91.71%	91.11%	90.76%
Interest-bearing deposits to total deposits	68.00%	67.19%	61.60%	59.26%	57.14%

The liquidity resources of the Company are monitored continually by the ALCO Committee and on a periodic basis by state and federal regulatory authorities. As determined under guidelines established by these regulatory authorities, the Company’s and the Bank’s liquidity ratios at September 30, 2023 were considered satisfactory. The Company is aware of no events or trends likely to result in a material change in liquidity.

Goodwill Impairment Testing

The Company has goodwill at its Banking Division and Premium Finance Division (collectively "the divisions"). The carrying value of goodwill at the Banking Division was $951.1 million at both September 30, 2023 and December 31, 2022. The carrying value of goodwill at the Premium Finance Division was $64.5 million at both September 30, 2023 and December 31, 2022. The Company performs its annual impairment test at December 31 of each year and more frequently if a triggering event occurs. At December 31, 2022, the Company performed a qualitative assessment of goodwill at the divisions and determined it was more likely than not that, in each case, the reporting unit's fair value exceeded its carrying value. The Company performed an interim qualitative assessment at March 31, 2023 considering the decline in the Company's stock price relative to book value and the impact of recent bank failures on the economy and again determined that it was more likely than not that each reporting unit's fair value exceeded its carrying value.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

The Company is exposed only to U.S. dollar interest rate changes, and, accordingly, the Company manages exposure by considering the possible changes in the net interest margin. The Company does not have any trading instruments nor does it classify any portion of the investment portfolio as held for trading.

The Company also had forward contracts and IRLCs to economically hedge changes in the value of the mortgage inventory due to changes in market interest rates. The fair value of these instruments amounted to an asset of approximately $8.8 million and $3.9 million at September 30, 2023 and December 31, 2022, respectively. The Company also enters into interest rate derivative agreements to facilitate the risk management strategies of certain clients. The Company mitigates this risk by entering into equal and offsetting interest rate swap agreements with highly rated third-party financial institutions. The fair value of these instruments amounted to an asset of $13.2 million and $4.6 million at September 30, 2023 and December 31, 2022, respectively, and a liability of $13.0 million and $4.6 million at September 30, 2023 and December 31, 2022, respectively.

The Company has no exposure to foreign currency exchange rate risk, commodity price risk and other market risks.

Interest rates play a major part in the net interest income of a financial institution. The sensitivity to rate changes is known as “interest rate risk.” The repricing of interest-earning assets and interest-bearing liabilities can influence the changes in net interest income. As part of the Company’s asset/liability management program, the timing of repriced assets and liabilities is referred to as “gap management.”

The Company uses simulation analysis to monitor changes in net interest income due to changes in market interest rates. The simulation of rising, declining and flat interest rate scenarios allows management to monitor and adjust interest rate sensitivity to minimize the impact of market interest rate swings. The analysis of the impact on net interest income over a 12-month and 24-month period is subjected to gradual and parallel shocks of 100, 200, 300 and 400 basis point increases and decreases in market rates and is monitored on a quarterly basis.

The following table presents the earnings simulation model’s projected impact of a change in interest rates on the projected baseline net interest income for the 12- and 24-month periods commencing October 1, 2023. This change in interest rates assumes parallel shifts in the yield curve and does not take into account changes in the slope of the yield curve.


Earnings Simulation Model Results
Change in	% Change in Projected Baseline
Interest Rates	Net Interest Income
(in bps)	12 Months	24 Months
400	(5.5)%	5.9%
300	(2.4)%	6.1%
200	(0.1)%	5.3%
100	0.2%	2.9%
(100)	(0.3)%	(2.3)%
(200)	(0.7)%	(5.1)%
(300)	(1.3)%	(8.4)%
(400)	(1.9)%	(11.7)%

Additional information required by Item 305 of Regulation S-K is set forth under Part I, Item 2 of this report.

Item 4. Controls and Procedures.

The Company’s Chief Executive Officer and Chief Financial Officer have evaluated the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) or 15d-15(e) promulgated under the Exchange Act) as of the end of the period covered by this report, as required by paragraph (b) of Rules 13a-15 or 15d-15 of the Exchange Act. Based on such evaluation, such officers have concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective.

During the quarter ended September 30, 2023, there was no change in the Company’s internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rules 13a-15 or 15d-15 of the Exchange Act that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

Disclosure concerning legal proceedings can be found in Part I - "Financial Information, Item 1. Financial Statements, Notes to Unaudited Consolidated Financial Statements, Note 8 – Commitments and Contingencies" under the caption, "Litigation and Regulatory Contingencies," which is incorporated herein by reference.

Item 1A. Risk Factors.

There have not been any material changes to the risk factors disclosed in Item 1A. of Part I of the Company's Annual Report on Form 10-K for the year ended December 31, 2022, previously filed with the SEC.

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

c) Issuer Purchases of Equity Securities.

The table below sets forth information regarding the Company’s repurchase of shares of its outstanding common stock during the three-month period ended September 30, 2023.


Period	Total Number of Shares Purchased(1)	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares That May Yet be Purchased Under the Plans or Programs(2)
July 1, 2023 through July 31, 2023	495	$	37.02	—	$	86,496,795
August 1, 2023 through August 31, 2023	244	$	43.58	—	$	86,496,795
September 1, 2023 through September 30, 2023	—	$	—	—	$	86,496,795
Total	739	$	39.19	—	$	86,496,795

(1)The shares purchased in July 2023 and August 2023 consist of shares of common stock surrendered to the Company in payment of the income tax withholding obligations relating to the vesting of shares of restricted stock.

(2)On September 19, 2019, the Company announced that its Board of Directors authorized the Company to repurchase up to $100.0 million of its outstanding common stock through October 31, 2020. The Board has subsequently extended the share repurchase program each year since the original authorization, with the most recent extension, which also included the replenishment of the program to $100.0 million, being announced on October 26, 2023. As a result, the Company is currently authorized to engage in additional share repurchases totaling up to $100.0 million through October 31, 2024. Repurchases of shares must be made in accordance with applicable securities laws and may be made from time to time in the open market or by negotiated transactions. The amount and timing of repurchases will be based on a variety of factors, including share acquisition price, regulatory limitations and other market and economic factors. The program does not require the Company to repurchase any specific number of shares. As of September 30, 2023, an aggregate of $13.5 million, or 405,233 shares of the Company's common stock, had been repurchased under the program's October 27, 2022 renewal, which also included the replenishment of the program to $100.0 million.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

During the quarter ended September 30, 2023, no director or Section 16 officer of the Company adopted or terminated any Rule 10b5-1 trading arrangement or any non-Rule 10b5-1 trading arrangement (in each case, as defined in Item 408(a) of Regulation S-K).

Item 6. Exhibits.


Exhibit Number						Description

3.1						Restated Articles of Incorporation of Ameris Bancorp (incorporated by reference to Exhibit 3.1 to Ameris Bancorp’s Annual Report on Form 10-K filed with the SEC on February 28, 2023).

3.2						Bylaws of Ameris Bancorp, as amended and restated through February 23, 2023 (incorporated by reference to Exhibit 3.2 to Ameris Bancorp's Quarterly Report on Form 10-Q filed with the SEC on May 8, 2023).

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

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

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

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

101.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.

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SIGNATURE

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


Dated: November 8, 2023			AMERIS BANCORP

			/s/ Nicole S. Stokes
			Nicole S. Stokes
			Chief Financial Officer (duly authorized signatory and principal accounting and financial officer)