Published: 2022-05-06 00:00:00 ET

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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 March 31, 2022, the Bank operated 165 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 period ended March 31, 2022 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, 2021.

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. Restricted cash held for securitization investors, which are reported on the Company's consolidated balance sheets in cash and due from banks, was $0 and $43.0 million at March 31, 2022 and December 31, 2021, respectively.

Reclassifications

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

Accounting Standards Pending Adoption

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 writeoffs by year of origination. ASU 2022-02 is effective for annual periods beginning after December 15, 2022, including interim periods within those fiscal years. The amendments of ASU 2022-02 should be adopted prospectively. The amendments related to the recognition and measurement of TDRs may optionally be adopted using a modified retrospective transition method.

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Early adoption is permitted. The Company is currently evaluating the impact on the consolidated financial statements of adopting ASU 2022-02.

ASU No. 2021-01 – Reference Rate Reform (Topic 848): Scope ("ASU 2021-01"). ASU 2021-01 clarifies that certain optional expedients and exceptions in ASC 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. ASU 2021-01 also amends the expedients and exceptions in ASC 848 to capture the incremental consequences of the scope clarification and to tailor the existing guidance to derivative instruments affected by the discounting transition. Because the guidance is intended to assist stakeholders during the global market-wide reference rate transition period, it is in effect for a limited time, from March 12, 2020 through December 31, 2022. The Company is currently evaluating the impact on the consolidated financial statements of adopting ASU 2021-01.

ASU No. 2020-04 – Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting ("ASU 2020-04"). ASU 2020-04 provides optional guidance, for a limited time, to ease the potential burden in accounting for or recognizing the effects of reference rate reform on financial reporting. The amendments, which are elective, provide expedients and exceptions for applying GAAP to contract modifications and hedging relationships affected by reference rate reform if certain criteria are met. The amendments apply only to contracts and hedging relationships that reference LIBOR or another reference rate that is expected to be discontinued due to reference rate reform. The optional expedients for contract modifications apply consistently for all contracts or transactions within the relevant Codification Topic, Subtopic, or Industry Subtopic that contains the guidance that otherwise would be required to be applied, while those for hedging relationships can be elected on an individual hedging relationship basis. Because the guidance is intended to assist stakeholders during the global market-wide reference rate transition period, it is in effect for a limited time, from March 12, 2020 through December 31, 2022. The Company has established a working committee with representatives from relevant functional areas to inventory the contracts and accounts that are tied to LIBOR and develop a transition plan for the affected items. The Company is currently evaluating the impact on the consolidated financial statements of adopting ASU 2020-04.

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												Gross Unrealized Gains						Gross Unrealized Losses						Estimated Fair Value
March 31, 2022
U.S. government sponsored agencies						$	7,067											$	17					$	(12)					$	7,072
State, county and municipal securities						43,416												727						(299)						43,844
Corporate debt securities						27,897												431						(150)						28,178
SBA pool securities						37,863												15						(929)						36,949
Mortgage-backed securities						465,291												1,733						(3,863)						463,161
Total debt securities available-for-sale						$	581,534											$	2,923					$	(5,253)					$	579,204
December 31, 2021
U.S. government sponsored agencies						$	7,084											$	88					$	—					$	7,172
State, county and municipal securities						45,470												2,342						—						47,812
Corporate debt securities						27,897												719						(120)						28,496
SBA pool securities						44,312												958						(69)						45,201
Mortgage-backed securities						448,124												15,822						(6)						463,940
Total debt securities available-for-sale						$	572,887											$	19,929					$	(195)					$	592,621

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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
March 31, 2022
State, county and municipal securities						$	13,905					$	—					$	(2,227)					$	11,678
Mortgage-backed securities						77,549						—						(6,738)						70,811
Total debt securities held-to-maturity						$	91,454					$	—					$	(8,965)					$	82,489
December 31, 2021
State, county and municipal securities						$	8,905					$	4					$	(198)					$	8,711
Mortgage-backed securities						70,945						—						(1,450)						69,495
Total debt securities held-to-maturity						$	79,850					$	4					$	(1,648)					$	78,206

The amortized cost and estimated fair value of debt securities available-for-sale and held-to-maturity as of March 31, 2022, 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			$	11,390					$	11,446					$	—					$	—
Due from one year to five years			26,183						26,201						—						—
Due from five to ten years			43,452						44,052						—						—
Due after ten years			35,218						34,344						13,905						11,678
Mortgage-backed securities			465,291						463,161						77,549						70,811
			$	581,534					$	579,204					$	91,454					$	82,489

Securities with a carrying value of approximately $314.2 million and $366.7 million at March 31, 2022 and December 31, 2021, respectively, serve as collateral to secure public deposits, securities sold under agreements to repurchase and for other purposes required or permitted by law.

The following table 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 March 31, 2022 and December 31, 2021:

						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
March 31, 2022
U.S. government sponsored agencies						$	1,033					$	(12)					$	—					$	—					$	1,033					$	(12)
State, county and municipal securities						10,209						(299)						—						—						10,209						(299)
Corporate debt securities						—						—						1,350						(150)						1,350						(150)
SBA pool securities						32,988						(871)						2,372						(58)						35,360						(929)
Mortgage-backed securities						242,704						(3,863)						1						—						242,705						(3,863)
Total debt securities available-for-sale						$	286,934					$	(5,045)					$	3,723					$	(208)					$	290,657					$	(5,253)
December 31, 2021
Corporate debt securities						$	—					$	—					$	1,380					$	(120)					$	1,380					$	(120)
SBA pool securities						1,312						(6)						2,572						(63)						3,884						(69)
Mortgage-backed securities						5,514						(6)						1						—						5,515						(6)
Total debt securities available-for-sale						$	6,826					$	(12)					$	3,953					$	(183)					$	10,779					$	(195)

As of March 31, 2022, the Company’s available-for-sale security portfolio consisted of 426 securities, 219 of which were in an unrealized loss position. At March 31, 2022, the Company held 180 mortgage-backed securities that were in an unrealized loss

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position, all of which were issued by U.S. government-sponsored entities and agencies. At March 31, 2022, the Company held 30 U.S. Small Business Administration (“SBA”) pool securities, six state, county and municipal securities, two corporate securities and one U.S. government sponsored agency security 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 March 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
March 31, 2022
State, county and municipal securities						$	11,678					$	(2,227)					$	—					$	—					$	11,678					$	(2,227)
Mortgage-backed securities						63,775						(6,738)						—						—						63,775						(6,738)
Total debt securities held-to-maturity						$	75,453					$	(8,965)					$	—					$	—					$	75,453					$	(8,965)
December 31, 2021
State, county and municipal securities						$	3,707					$	(198)					$	—					$	—					$	3,707					$	(198)
Mortgage-backed securities						69,495						(1,450)						—						—						69,495						(1,450)
Total debt securities held-to-maturity						$	73,202					$	(1,648)					$	—					$	—					$	73,202					$	(1,648)

As of March 31, 2022, the Company’s held-to-maturity security portfolio consisted of 16 securities, 15 of which were in an unrealized loss position. At March 31, 2022, the Company held 11 mortgage-backed securities and four state, county and municipal securities that were in an unrealized loss position.

During 2022 and 2021, the Company received timely and current interest and principal payments on all of the securities classified as corporate debt securities. The Company’s investments in subordinated debt include investments in regional and super-regional banks on which the Company prepares regular analysis through review of financial information and credit ratings. Investments in preferred securities are also concentrated in the preferred obligations of regional and super-regional banks through non-pooled investment structures. The Company did not have investments in “pooled” trust preferred securities at March 31, 2022 or December 31, 2021.

At March 31, 2022 and December 31, 2021, 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 March 31, 2022, 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 March 31, 2022, management determined that none were attributable to credit impairment and no allowance for credit losses was recorded. The $5.3 million in unrealized loss was determined to be from factors other than credit.

(dollars in thousands)			Three Months Ended March 31,
Allowance for credit losses			2022						2021
Beginning balance			$	—					$	112
Provision for expected credit losses			—						(11)
Ending balance			$	—					$	101

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

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Total net loss on securities reported on the consolidated statements of income and comprehensive income is comprised of the following for the three months ended March 31, 2022 and 2021:

			Three Months Ended March 31,
(dollars in thousands)			2022						2021
Unrealized holding losses on equity securities			$	(27)					$	(12)
Net loss on securities			$	(27)					$	(12)

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)			March 31, 2022						December 31, 2021
Commercial, financial and agricultural			$	1,836,663					$	1,875,993
Consumer installment			173,642						191,298
Indirect automobile			214,120						265,779
Mortgage warehouse			732,375						787,837
Municipal			547,926						572,701
Premium finance			819,163						798,409
Real estate – construction and development			1,577,215						1,452,339
Real estate – commercial and farmland			6,924,475						6,834,917
Real estate – residential			3,318,222						3,094,985
			$	16,143,801					$	15,874,258

Accrued interest receivable on loans is reported in other assets on the consolidated balance sheets totaling $50.6 million and $54.8 million at March 31, 2022 and December 31, 2021, respectively. The Company recorded an allowance for credit losses of $170,000 and $214,000 related to deferred interest on loans modified under its Disaster Relief Program at March 31, 2022 and December 31, 2021, respectively.

Nonaccrual and Past-Due Loans

A loan is placed on nonaccrual status when, in management’s judgment, the collection of the interest income appears doubtful. Interest receivable that has been accrued and is subsequently determined to have doubtful collectability is charged 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)			March 31, 2022						December 31, 2021
Commercial, financial and agricultural			$	13,198					$	14,214
Consumer installment			561						476
Indirect automobile			706						947
Real estate – construction and development			847						492
Real estate – commercial and farmland			10,891						15,365
Real estate – residential			76,394						53,772
			$	102,597					$	85,266

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There was no interest income recognized on nonaccrual loans during the three months ended March 31, 2022 and 2021.

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

(dollars in thousands)			March 31, 2022						December 31, 2021
Commercial, financial and agricultural			$	—					$	164
Premium finance			289						—
Real estate – construction and development			304						209
Real estate – commercial and farmland			3,553						2,061
Real estate – residential			4,785						7,942
			$	8,931					$	10,376

The following table presents an analysis of past-due loans as of March 31, 2022 and December 31, 2021:

(dollars in thousands)			Loans 30-59 Days Past Due						Loans 60-89 Days Past Due						Loans 90 or More Days Past Due						Total Loans Past Due						Current Loans						Total Loans						Loans 90 Days or More Past Due and Still Accruing
March 31, 2022
Commercial, financial and agricultural			$	5,422					$	1,708					$	11,500					$	18,630					$	1,818,033					$	1,836,663					$	1,153
Consumer installment			1,555						555						791						2,901						170,741						173,642						412
Indirect automobile			502						137						462						1,101						213,019						214,120						—
Mortgage warehouse			—						—						—						—						732,375						732,375						—
Municipal			—						—						—						—						547,926						547,926						—
Premium finance			5,872						4,620						4,728						15,220						803,943						819,163						4,727
Real estate – construction and development			26,729						468						972						28,169						1,549,046						1,577,215						287
Real estate – commercial and farmland			5,772						3,080						3,383						12,235						6,912,240						6,924,475						4
Real estate – residential			26,603						8,045						66,709						101,357						3,216,865						3,318,222						—
Total			$	72,455					$	18,613					$	88,545					$	179,613					$	15,964,188					$	16,143,801					$	6,583
December 31, 2021
Commercial, financial and agricultural			$	3,431					$	2,005					$	12,017					$	17,453					$	1,858,540					$	1,875,993					$	1,165
Consumer installment			1,786						871						891						3,548						187,750						191,298						584
Indirect automobile			772						185						473						1,430						264,349						265,779						—
Mortgage warehouse			—						—						—						—						787,837						787,837						—
Municipal			—						—						—						—						572,701						572,701						—
Premium finance			6,992						4,340						9,134						20,466						777,943						798,409						9,134
Real estate – construction and development			16,601						1,398						2,190						20,189						1,432,150						1,452,339						1,758
Real estate – commercial and farmland			6,713						1,150						5,924						13,787						6,821,130						6,834,917						7
Real estate – residential			17,729						4,266						49,839						71,834						3,023,151						3,094,985						—
Total			$	54,024					$	14,215					$	80,468					$	148,707					$	15,725,551					$	15,874,258					$	12,648

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

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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:

			March 31, 2022												December 31, 2021
(dollars in thousands)			Balance						Allowance for Credit Losses						Balance						Allowance for Credit Losses
Commercial, financial and agricultural			$	2,261					$	852					$	2,613					$	723
Premium finance			289						—						2,989						30
Real estate – construction and development			304						—						1,432						45
Real estate – commercial and farmland			11,466						795						33,332						6,646
Real estate – residential			14,826						1,989						11,712						453
			$	29,146					$	3,636					$	52,078					$	7,897

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 March 31, 2022 and December 31, 2021. 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 9 at March 31, 2022 or December 31, 2021.

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As of March 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						$	439,047					$	2,079,527					$	1,203,580					$	1,074,253					$	514,681					$	1,464,276					$	66,390											$	6,841,754
6						—						—						—						—						676						22,416						—												23,092
7						—						4,798						2,595						5,587						9,610						37,020						19												59,629
Total real estate – commercial and farmland						$	439,047					$	2,084,325					$	1,206,175					$	1,079,840					$	524,967					$	1,523,712					$	66,409											$	6,924,475
Real Estate - Residential
Risk Grade:
Pass						$	284,325					$	1,205,153					$	606,135					$	308,373					$	136,724					$	474,015					$	211,941											$	3,226,666
6						64						143						65						1,092						495						3,909						48												5,816
7						33						6,629						18,465						24,112						12,197						22,538						1,766												85,740
Total real estate - residential						$	284,422					$	1,211,925					$	624,665					$	333,577					$	149,416					$	500,462					$	213,755											$	3,318,222
Total Loans
Risk Grade:
Pass						$	1,531,804					$	5,378,962					$	2,577,193					$	1,756,993					$	882,481					$	2,472,500					$	1,300,024											$	15,899,957
6						1,285						9,520						641						1,185						8,133						30,310						594												51,668
7						7,048						17,659						22,649						33,722						36,890						69,256						4,952												192,176
Total loans						$	1,540,137					$	5,406,141					$	2,600,483					$	1,791,900					$	927,504					$	2,572,066					$	1,305,570											$	16,143,801

As of December 31, 2021						Term Loans by Origination Year																																				Revolving Loans Amortized Cost Basis
						2021						2020						2019						2018						2017						Prior															Total
Commercial, Financial and Agricultural
Risk Grade:
Pass						$	903,630					$	279,037					$	188,810					$	118,613					$	50,737					$	40,376					$	262,951											$	1,844,154
6						190						—						393						427						368						1,832						1,961												5,171
7						9,216						1,268						4,098						1,472						2,566						6,019						2,029												26,668
Total commercial, financial and agricultural						$	913,036					$	280,305					$	193,301					$	120,512					$	53,671					$	48,227					$	266,941											$	1,875,993
Consumer Installment
Risk Grade:
Pass						$	35,781					$	59,221					$	37,195					$	27,266					$	9,787					$	11,021					$	9,437											$	189,708
6						—						—						—						—						—						135						5												140
7						59						283						290						216						103						405						94												1,450
Total consumer installment						$	35,840					$	59,504					$	37,485					$	27,482					$	9,890					$	11,561					$	9,536											$	191,298
Indirect Automobile
Risk Grade:
Pass						$	—					$	—					$	20,276					$	101,969					$	90,294					$	51,468					$	—											$	264,007
6						—						—						—						24						10						19						—												53
7						—						—						55						234						384						1,046						—												1,719
Total indirect automobile						$	—					$	—					$	20,331					$	102,227					$	90,688					$	52,533					$	—											$	265,779

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As of December 31, 2021						Term Loans by Origination Year																																				Revolving Loans Amortized Cost Basis
						2021						2020						2019						2018						2017						Prior															Total
Mortgage Warehouse
Risk Grade:
Pass						$	—					$	—					$	—					$	—					$	—					$	—					$	787,837											$	787,837
Total mortgage warehouse						$	—					$	—					$	—					$	—					$	—					$	—					$	787,837											$	787,837
Municipal
Risk Grade:
Pass						$	44,727					$	219,385					$	14,831					$	5,494					$	109,040					$	179,224					$	—											$	572,701
Total municipal						$	44,727					$	219,385					$	14,831					$	5,494					$	109,040					$	179,224					$	—											$	572,701
Premium Finance
Risk Grade:
Pass						$	787,884					$	1,059					$	26					$	—					$	302					$	4					$	—											$	789,275
7						9,039						95						—						—						—						—						—												9,134
Total premium finance						$	796,923					$	1,154					$	26					$	—					$	302					$	4					$	—											$	798,409
Real Estate – Construction and Development
Risk Grade:
Pass						$	826,094					$	290,814					$	176,476					$	35,773					$	24,533					$	44,514					$	21,267											$	1,419,471
6						6,527						549						—						15,260						—						2,101						—												24,437
7						1,143						678						7						2,476						57						1,011						3,059												8,431
Total real estate – construction and development						$	833,764					$	292,041					$	176,483					$	53,509					$	24,590					$	47,626					$	24,326											$	1,452,339
Real Estate – Commercial and Farmland
Risk Grade:
Pass						$	2,186,291					$	1,205,578					$	1,119,239					$	542,295					$	486,477					$	1,103,675					$	80,379											$	6,723,934
6						416						—						1,036						14,760						5,334						21,665						—												43,211
7						4,709						2,682						11,109						9,076						4,861						35,315						20												67,772
Total real estate – commercial and farmland						$	2,191,416					$	1,208,260					$	1,131,384					$	566,131					$	496,672					$	1,160,655					$	80,399											$	6,834,917
Real Estate - Residential
Risk Grade:
Pass						$	1,171,008					$	638,232					$	329,247					$	149,990					$	108,538					$	408,240					$	217,982											$	3,023,237
6						145						66						1,106						505						356						3,717						49												5,944
7						2,405						10,167						21,239						11,376						4,597						13,970						2,050												65,804
Total real estate - residential						$	1,173,558					$	648,465					$	351,592					$	161,871					$	113,491					$	425,927					$	220,081											$	3,094,985
Total Loans
Risk Grade:
Pass						$	5,955,415					$	2,693,326					$	1,886,100					$	981,400					$	879,708					$	1,838,522					$	1,379,853											$	15,614,324
6						7,278						615						2,535						30,976						6,068						29,469						2,015												78,956
7						26,571						15,173						36,798						24,850						12,568						57,766						7,252												180,978
Total loans						$	5,989,264					$	2,709,114					$	1,925,433					$	1,037,226					$	898,344					$	1,925,757					$	1,389,120											$	15,874,258

Troubled Debt Restructurings

The restructuring of a loan is considered a “troubled debt restructuring” if both (i) the borrower is experiencing financial difficulties and (ii) the Company has granted a concession. Concessions may include interest rate reductions to below market

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interest rates, principal forgiveness, restructuring amortization schedules and other actions intended to minimize potential losses.

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

The Company’s policy states that in the event a loan has been identified as a troubled debt restructuring, it should be assigned a grade of substandard until such time the borrower has demonstrated the ability to service the loan payments based on the restructured terms – generally defined as six months of satisfactory payment history. Missed payments under the original loan terms are not considered under the new structure; however, subsequent missed payments are considered non-performance and are not considered toward the six month required term of satisfactory payment history.

In the normal course of business, the Company renews loans with a modification of the interest rate or terms that are not deemed to be troubled debt restructurings because the borrower is not experiencing financial difficulty. The Company modified loans in the first three months of 2022 and 2021 totaling $132.0 million and $118.0 million, respectively, under such parameters.

As of March 31, 2022 and December 31, 2021, the Company had a balance of $50.0 million and $76.6 million, respectively, in troubled debt restructurings. The Company has recorded $654,000 in previous charge-offs on such loans at each of March 31, 2022 and December 31, 2021. The Company’s balance in the allowance for credit losses allocated to such troubled debt restructurings was $3.4 million and $10.5 million at March 31, 2022 and December 31, 2021, respectively. At March 31, 2022, the Company did not have any commitments to lend additional funds to debtors whose terms have been modified in troubled restructurings.

The following table presents the loans by class modified as troubled debt restructurings which occurred during the three months ended March 31, 2022 and 2021. These modifications did not have a material impact on the Company’s allowance for credit losses.

			Three Months Ended March 31,
			2022												2021
Loan Class			#						Balance (in thousands)						#						Balance (in thousands)
Commercial, financial and agricultural			—						$	—					4						$	463
Premium finance			5						162						—						—
Real estate – commercial and farmland			—						—						2						7,658
Real estate – residential			3						977						5						572
Total			8						$	1,139					11						$	8,693

The following table presents the outstanding balance of troubled debt restructurings by class that defaulted (defined as 30 days past due) during the three months ended March 31, 2022 and 2021. These defaults did not have a material impact on the Company's allowance for credit losses.

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			Three Months Ended March 31,
			2022												2021
Loan Class			#						Balance (in thousands)						#						Balance (in thousands)
Commercial, financial and agricultural			—						$	—					3						$	56
Consumer installment			1						3						5						6
Indirect automobile			14						49						16						94
Real estate – construction and development			—						—						1						1
Real estate – commercial and farmland			2						1,569						2						5,193
Real estate – residential			18						2,793						11						809
Total			35						$	4,414					38						$	6,159

The following table presents the amount of troubled debt restructurings by loan class classified separately as accrual and nonaccrual at March 31, 2022 and December 31, 2021:

March 31, 2022			Accruing Loans												Non-Accruing Loans
Loan Class			#						Balance (in thousands)						#						Balance (in thousands)
Commercial, financial and agricultural			9						$	868					4						$	72
Consumer installment			6						13						16						31
Indirect automobile			215						893						46						221
Premium finance			5						162						—						—
Real estate – construction and development			3						725						1						11
Real estate – commercial and farmland			21						17,161						4						788
Real estate – residential			207						24,664						38						4,341
Total			466						$	44,486					109						$	5,464

December 31, 2021			Accruing Loans												Non-Accruing Loans
Loan Class			#						Balance (in thousands)						#						Balance (in thousands)
Commercial, financial and agricultural			12						$	1,286					6						$	83
Consumer installment			7						16						17						35
Indirect automobile			233						1,037						52						273
Real estate – construction and development			4						789						1						13
Real estate – commercial and farmland			25						35,575						5						5,924
Real estate – residential			213						26,879						39						4,678
Total			494						$	65,582					120						$	11,006

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 unless the Company reasonably expects to execute a troubled debt restructuring with a borrower. 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.

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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 when the Company can no longer develop reasonable and supportable forecasts.

During the three months ended March 31, 2022, the allowance for credit losses decreased due to improvement in forecasted macroeconomic factors. The allowance for credit losses was determined at March 31, 2022 using a weighting of four economic forecasts from Moody's. The Moody's baseline scenario was weighted at 15%, the downside 90th percentile S-3 scenario was weighted at 65%, the slower trend growth scenario was weighted at 10% and the stagflation scenario was weighted at 10%. The allowance for credit losses was determined at December 31, 2021 using a weighting of five economic forecasts from Moody's. The Moody's baseline scenario was weighted at 10%, the downside 75th percentile S-2 scenario was weighted at 10%, the downside 90th percentile S-3 scenario was weighted at 50%, the slower trend growth scenario was weighted at 20% and the stagflation scenario was weighted at 10%. The current forecast reflects, among other things, improvements in forecast levels of home prices, commercial real estate prices and unemployment compared with the forecast at December 31, 2021.

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 March 31, 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			215						789						(290)						(221)						(17)						(92)
Loans charged off			(4,414)						(1,425)						(88)						—						—						(1,369)
Recoveries of loans previously charged off			2,896						158						275						—						—						1,247
Balance, March 31, 2022			$	25,526					$	5,619					$	373					$	3,010					$	384					$	2,515
			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			4,568						(9,552)						1,866						(2,734)
Loans charged off			—						(1,283)						—						(8,579)
Recoveries of loans previously charged off			218						37						151						4,982
Balance, March 31, 2022			$	26,831					$	67,033					$	29,960					$	161,251

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NOTE 4 – SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

The Company classifies the sales of securities under agreements to repurchase as short-term borrowings. The amounts received under these agreements are reflected as a liability in the Company’s consolidated balance sheets and the securities underlying these agreements are included in investment securities in the Company’s consolidated balance sheets. At March 31, 2022 and December 31, 2021, all securities sold under agreements to repurchase mature on a daily basis. The market value of the securities fluctuates on a daily basis due to market conditions. The Company monitors the market value of the securities underlying these agreements on a daily basis and is required to transfer additional securities if the market value falls below the repurchase agreement price. The Company maintains an unpledged securities portfolio that it believes is sufficient to protect against a decline in the market value of the securities sold under agreements to repurchase.

The following is a summary of the Company’s securities sold under agreements to repurchase at March 31, 2022 and December 31, 2021:

(dollars in thousands)			March 31, 2022						December 31, 2021
Securities sold under agreements to repurchase			$	2,065					$	5,845

At March 31, 2022 and December 31, 2021 the investment securities underlying these agreements included state, county and municipal securities and mortgage-backed securities.

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NOTE 5 – OTHER BORROWINGS

Other borrowings consist of the following:

(dollars in thousands)			March 31, 2022						December 31, 2021
FHLB borrowings:
Fixed Rate Advance due March 3, 2025; fixed interest rate of 1.208%			$	15,000					$	15,000
Fixed Rate Advance due March 2, 2027; fixed interest rate of 1.445%			15,000						15,000
Fixed Rate Advance due March 4, 2030; fixed interest rate of 1.606%			15,000						15,000
Fixed Rate Advance due December 9, 2030; fixed interest rate of 4.55%			1,397						1,400
Fixed Rate Advance due December 9, 2030; fixed interest rate of 4.55%			967						969
Principal Reducing Advance due September 29, 2031; fixed interest rate of 3.095%			1,385						1,421
Subordinated notes payable:
Subordinated notes payable due June 1, 2026, net of unaccreted purchase accounting fair value adjustment of $— and $500, respectively; fixed interest rate of 5.50%			—						50,500
Subordinated notes payable due March 15, 2027 net of unamortized debt issuance cost of $649 and $681, respectively; fixed interest rate of 5.75% through March 14, 2022; variable interest rate thereafter at three-month LIBOR plus 3.616%			74,351						74,319
Subordinated notes payable due December 15, 2029 net of unamortized debt issuance cost of $1,862 and $1,923, respectively; fixed interest rate of 4.25% through December 14, 2024; variable interest rate thereafter at three-month SOFR plus 2.94%			118,138						118,077
Subordinated notes payable due May 31, 2030 net of unaccreted purchase accounting fair value adjustment of $997 and $1,028, respectively; fixed interest rate of 5.875% through May 31, 2025; variable interest rate thereafter at three-month LIBOR plus 3.63%			75,997						76,028
Subordinated notes payable due October 1, 2030 net of unamortized debt issuance cost of $1,715 and $1,766, respectively; fixed interest rate of 3.875% through September 30, 2025; variable interest rate thereafter at three-month SOFR plus 3.753%			108,285						108,234
Securitzation Facilities:
Equipment contract backed notes, Series 2018-1 (BCC XIV) due on various dates through 2025 and bear a weighted-average interest rate of 5.11%			—						19,199
Equipment contract backed notes, Series 2019-1 (BCC XVI) due on various dates through 2027 and bear a weighted-average interest rate of 2.84%			—						139,329
Equipment contract backed notes, Series 2020-1 (BCC XVII) due on various dates through 2027 and bear a weighted-average interest rate of 1.48%			—						105,403
			$	425,520					$	739,879

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 March 31, 2022, $4.23 billion was available for borrowing on lines with the FHLB.

As of March 31, 2022, 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 March 31, 2022, the Bank had $2.80 billion of loans pledged at the Federal Reserve discount window and had $2.18 billion available for borrowing.

NOTE 6 – ACCUMULATED OTHER COMPREHENSIVE INCOME

Accumulated other comprehensive income for the Company consists of changes in net unrealized gains and losses on investment securities available-for-sale. 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.

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The following table presents a summary of the accumulated other comprehensive income balances as well as changes in each of the respective components, net of tax, for the periods indicated:

(dollars in thousands)												Unrealized Gain (Loss) on Securities						Accumulated Other Comprehensive Income (Loss)
Three Months Ended March 31, 2022
Balance, December 31, 2021												$	15,590					$	15,590
Current year changes, net of tax												(17,431)						(17,431)
Balance, March 31, 2022												$	(1,841)					$	(1,841)
Three Months Ended March 31, 2021
Balance, December 31, 2020												$	33,505					$	33,505
Current year changes, net of tax												(7,415)						(7,415)
Balance, March 31, 2021												$	26,090					$	26,090

NOTE 7 – WEIGHTED AVERAGE SHARES OUTSTANDING

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

			Three Months Ended March 31,
(share data in thousands)			2022						2021
Average common shares outstanding			69,346						69,392
Common share equivalents:
Stock options			31						81
Nonvested restricted share grants			167						172
Performance stock units			117						96
Average common shares outstanding, assuming dilution			69,661						69,741

NOTE 8 – FAIR VALUE MEASURES

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

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

(dollars in thousands)			March 31, 2022						December 31, 2021
Mortgage loans held for sale			$	899,009					$	1,247,997
SBA loans held for sale			2,541						6,635
Total loans held for sale			$	901,550					$	1,254,632

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

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as servicing value, which are now recognized in earnings at the time of origination. Interest income on mortgage loans held for sale is recorded on an accrual basis in the consolidated statements of income and comprehensive income under the heading interest income – interest and fees on loans. The servicing value is included in the fair value of the interest rate lock commitments (“IRLCs”) with borrowers. The mark to market adjustments related to mortgage loans held for sale and the associated economic hedges are captured in mortgage banking activities.

A net loss of $43.9 million resulting from changes in fair value of these mortgage loans was recorded in income during the three months ended March 31, 2022. For the three months ended March 31, 2021, a net loss of $25.1 million resulting from changes in fair value of these mortgage loans was recorded in income. A net gain of $26.0 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 was recorded in income during the three months ended March 31, 2022. For the three months ended March 31, 2021, a net gain of $27.5 million resulting from changes in the fair value of the related derivative financial instruments was 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 March 31, 2022 and December 31, 2021:

(dollars in thousands)			March 31, 2022						December 31, 2021
Aggregate fair value of mortgage loans held for sale			$	899,009					$	1,247,997
Aggregate unpaid principal balance of mortgage loans held for sale			906,552						1,211,646
Past-due loans of 90 days or more			466						746
Nonaccrual loans			466						746
Unpaid principal balance of nonaccrual loans			475						718

The following table summarizes the difference between the fair value and the principal balance for SBA loans held for sale measured at fair value as of March 31, 2022 and December 31, 2021:

(dollars in thousands)			March 31, 2022						December 31, 2021
Aggregate fair value of SBA loans held for sale			$	2,541					$	6,635
Aggregate unpaid principal balance of SBA loans held for sale			2,427						5,825
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.

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The following table presents the fair value measurements of assets and liabilities measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall as of March 31, 2022 and December 31, 2021:

			Recurring Basis Fair Value Measurements
			March 31, 2022
(dollars in thousands)			Fair Value						Level 1						Level 2						Level 3
Financial assets:
Investment securities available-for-sale:
U.S. government sponsored agencies			$	7,072					$	—					$	7,072					$	—
State, county and municipal securities			43,844						—						43,844						—
Corporate debt securities			28,178						—						26,828						1,350
SBA pool securities			36,949						—						36,949						—
Mortgage-backed securities			463,161						—						463,161						—
Loans held for sale			901,550						—						901,550						—
Mortgage banking derivative instruments			37,182						—						37,182						—
Total recurring assets at fair value			$	1,517,936					$	—					$	1,516,586					$	1,350

			Recurring Basis Fair Value Measurements
			December 31, 2021
(dollars in thousands)			Fair Value						Level 1						Level 2						Level 3
Financial assets:
Investment securities available-for-sale:
U.S. government sponsored agencies			$	7,172					$	—					$	7,172					$	—
State, county and municipal securities			47,812						—						47,812						—
Corporate debt securities			28,496						—						27,116						1,380
SBA pool securities			45,201						—						45,201						—
Mortgage-backed securities			463,940						—						463,940						—
Loans held for sale			1,254,632						—						1,254,632						—
Mortgage banking derivative instruments			11,940						—						11,940						—
Total recurring assets at fair value			$	1,859,193					$	—					$	1,857,813					$	1,380
Financial liabilities:
Mortgage banking derivative instruments			$	710					$	—					$	710					$	—
Total recurring liabilities at fair value			$	710					$	—					$	710					$	—

The following table presents the fair value measurements of assets measured at fair value on a non-recurring basis, as well as the general classification of such instruments pursuant to the valuation hierarchy as of March 31, 2022 and December 31, 2021:

			Nonrecurring Basis Fair Value Measurements
(dollars in thousands)			Fair Value						Level 1						Level 2						Level 3
March 31, 2022
Collateral-dependent loans			$	25,510					$	—					$	—					$	25,510
Other real estate owned			399						—						—						399
Mortgage servicing rights			232,236						—						—						232,236
Total nonrecurring assets at fair value			$	258,145					$	—					$	—					$	258,145
December 31, 2021
Collateral-dependent loans			$	44,181					$	—					$	—					$	44,181
Mortgage servicing rights			206,944						—						—						206,944
Total nonrecurring assets at fair value			$	251,125					$	—					$	—					$	251,125

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

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For the three months ended March 31, 2022 and the year ended December 31, 2021, 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
March 31, 2022
Recurring:
Debt securities available-for-sale						$	1,350					Discounted par values						Discount rate						10.0%						10.0%
Nonrecurring:
Collateral-dependent loans						$	25,510					Third-party appraisals and discounted cash flows						Collateral discounts and discount rates						0% - 50%						34%
Other real estate owned						$	399					Third-party appraisals and sales contracts						Collateral discounts and estimated costs to sell						15% - 47%						21%
Mortgage servicing rights						$	232,236					Discounted cash flows						Discount rate						10% - 11%						10%
																		Prepayment speed						5% - 23%						8%
December 31, 2021
Recurring:
Debt securities available-for-sale						$	1,380					Discounted par values						Discount Rate						8.0%						8.0%
Nonrecurring:
Collateral-dependent loans						$	44,181					Third-party appraisals and discounted cash flows						Collateral discounts and discount rates						0% - 50%						39%
Mortgage servicing rights						$	206,944					Discounted cash flows						Discount rate						9% - 10%						9%
																		Prepayment speed						10% - 40%						13%

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

									Fair Value Measurements
									March 31, 2022
(dollars in thousands)			Carrying Amount						Level 1						Level 2						Level 3						Total
Financial assets:
Cash and due from banks			$	257,316					$	257,316					$	—					$	—					$	257,316
Federal funds sold and interest-bearing accounts			3,541,144						3,541,144						—						—						3,541,144
Debt securities held-to-maturity			91,454						—						82,489						—						82,489
Loans, net			15,957,040						—						—						15,927,461						15,927,461
Accrued interest receivable			53,036						—						2,598						50,438						53,036
Financial liabilities:
Deposits			19,588,441						—						19,590,158						—						19,590,158
Securities sold under agreements to repurchase			2,065						2,065						—						—						2,065
Other borrowings			425,520						—						431,131						—						431,131
Subordinated deferrable interest debentures			126,827						—						117,196						—						117,196
Accrued interest payable			6,121						—						6,121						—						6,121

									Fair Value Measurements
									December 31, 2021
(dollars in thousands)			Carrying Amount						Level 1						Level 2						Level 3						Total
Financial assets:
Cash and due from banks			$	307,813					$	307,813					$	—					$	—					$	307,813
Federal funds sold and interest-bearing accounts			3,756,844						3,756,844						—						—						3,756,844
Debt securities held-to-maturity			79,850						—						78,206						—						78,206
Loans, net			15,662,495						—						—						15,509,410						15,509,410
Accrued interest receivable			56,917						—						2,373						54,544						56,917
Financial liabilities:
Deposits			19,665,553						—						19,667,612						—						19,667,612
Securities sold under agreements to repurchase			5,845						5,845						—						—						5,845
Other borrowings			739,879						—						760,829						—						760,829
Subordinated deferrable interest debentures			126,328						—						117,764						—						117,764
Accrued interest payable			4,313						—						4,313						—						4,313

NOTE 9 – COMMITMENTS AND CONTINGENCIES

Loan Commitments

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

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

(dollars in thousands)			March 31, 2022						December 31, 2021
Commitments to extend credit			$	4,817,539					$	4,328,749
Unused home equity lines of credit			284,144						272,029
Financial standby letters of credit			31,440						36,184
Mortgage interest rate lock commitments			520,939						417,126

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

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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 three months ended March 31, 2022 and the year ended December 31, 2021.

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 March 31,
(dollars in thousands)			2022						2021
Balance at beginning of period			$	33,185					$	32,854
Provision for unfunded commitments			9,009						(11,839)
Balance at end of period			$	42,194					$	21,015

Other Commitments

As of March 31, 2022, letters of credit issued by the FHLB totaling $420.0 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 matters will have a material adverse effect on the Company’s consolidated financial condition, results of operations or cash flows. However, it is possible that the ultimate resolution of these legal matters could have a material adverse effect on the Company’s results of operations and financial condition for any particular period.

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

COVID-19

The COVID-19 pandemic has caused significant and unprecedented economic dislocation in the United States. As a result of the pandemic, many commercial customers experienced varying levels of disruptions or restrictions on their business activities, and many consumers experienced interrupted income or unemployment. We have outstanding loans to borrowers in certain industries that have been particularly susceptible to the effects of the pandemic, such as hotels, restaurants and other retail businesses. Given the ongoing and dynamic nature of the circumstances, it remains difficult to predict the full impact of the COVID-19 pandemic on our business. The United States government has taken steps to attempt to mitigate some of the more severe anticipated economic effects of the pandemic, including the passage of the CARES Act and subsequent legislation, but

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NOTE 10 – 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 months ended March 31, 2022 and 2021:

			Three Months Ended March 31, 2022
(dollars in thousands)			Banking Division						Retail Mortgage Division						Warehouse Lending Division						SBA Division						Premium  Finance  Division						Total
Interest income			$	129,290					$	32,832					$	6,813					$	6,780					$	7,659					$	183,374
Interest expense			(4,455)						13,537						366						769						613						10,830
Net interest income			133,745						19,295						6,447						6,011						7,046						172,544
Provision for credit losses			5,226						1,587						(222)						(143)						(217)						6,231
Noninterest income			21,364						61,649						1,401						2,491						6						86,911
Noninterest expense
Salaries and employee benefits			49,195						31,614						283						1,271						1,918						84,281
Occupancy and equipment			11,074						1,471						1						99						82						12,727
Data processing and communications expenses			11,230						1,172						47						28						95						12,572
Other expenses			20,045						12,645						218						380						952						34,240
Total noninterest expense			91,544						46,902						549						1,778						3,047						143,820
Income before income tax expense			58,339						32,455						7,521						6,867						4,222						109,404
Income tax expense			16,996						6,815						1,579						1,442						874						27,706
Net income			$	41,343					$	25,640					$	5,942					$	5,425					$	3,348					$	81,698
Total assets			$	17,409,973					$	4,197,613					$	703,558					$	313,219					$	935,929					$	23,560,292
Goodwill			957,847						—						—						—						64,498						1,022,345
Other intangible assets, net			109,604						—						—						—						11,153						120,757

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NOTE 11 – 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 portfolios of residential mortgage, SBA and indirect automobile loans serviced for others. Loan servicing rights are initially recorded at fair value and subsequently recorded at the lower of cost or fair value and are amortized over the remaining service life of the loans, with 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)			March 31, 2022						December 31, 2021
Loan Servicing Rights
Residential mortgage			$	232,236					$	206,944
SBA			5,384						5,556
Total loan servicing rights			$	237,620					$	212,500

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-months ended March 31, 2022, the Company recorded servicing fee income of $17.1 million. During the three-months ended March 31, 2021, the Company recorded servicing fee income of $10.1 million. Servicing fee income includes servicing fees, late fees and ancillary fees earned for each period.

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

(dollars in thousands)			Three Months Ended March 31,
Residential mortgage servicing rights			2022						2021
Beginning carrying value, net			$	206,944					$	130,630
Additions			21,701						21,867
Amortization			(6,062)						(7,484)
Recoveries			9,653						9,733
Ending carrying value, net			$	232,236					$	154,746

(dollars in thousands)			Three Months Ended March 31,
Residential mortgage servicing valuation allowance			2022						2021
Beginning balance			$	25,782					$	39,407
Recoveries			(9,653)						(9,733)
Ending balance			$	16,129					$	29,674

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)			March 31, 2022						December 31, 2021
Residential mortgage servicing rights
Unpaid principal balance of loans serviced for others			$	17,534,847					$	16,786,442
Composition of residential loans serviced for others:
FHLMC			21.85		%				21.88		%
FNMA			60.44		%				60.26		%
GNMA			17.71		%				17.86		%
Total			100.00		%				100.00		%
Weighted average term (months)			342						341
Weighted average age (months)			21						20
Modeled prepayment speed			8.35		%				12.96		%
Decline in fair value due to a 10% adverse change			(8,521)						(8,368)
Decline in fair value due to a 20% adverse change			(16,149)						(16,157)
Weighted average discount rate			9.77		%				8.77		%
Decline in fair value due to a 10% adverse change			(10,222)						(6,984)
Decline in fair value due to a 20% adverse change			(19,270)						(13,504)

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.

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During the three-months ended March 31, 2022, the Company recorded servicing fee income of $876,000. During the three-months ended March 31, 2021, the Company recorded servicing fee income of $1.0 million. 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 March 31,
SBA servicing rights			2022						2021
Beginning carrying value, net			$	5,556					$	5,839
Additions			538						230
Amortization			(710)						(529)
Recoveries			—						905
Ending carrying value, net			$	5,384					$	6,445

(dollars in thousands)			Three Months Ended March 31,
SBA servicing valuation allowance			2022						2021
Beginning balance			$	—					$	905
Recoveries			—						(905)
Ending balance			$	—					$	—

(dollars in thousands)			March 31, 2022						December 31, 2021
SBA servicing rights
Unpaid principal balance of loans serviced for others			$	407,006					$	410,167
Weighted average life (in years)			3.67						3.65
Modeled prepayment speed			17.54		%				17.68		%
Decline in fair value due to a 10% adverse change			(316)						(291)
Decline in fair value due to a 20% adverse change			(602)						(557)
Weighted average discount rate			10.19		%				11.92		%
Decline in fair value due to a 100 basis point adverse change			(159)						(144)
Decline in fair value due to a 200 basis point adverse change			(310)						(282)

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.

Indirect Automobile Loans

The Company previously acquired a portfolio of indirect automobile loans serviced for others. These loans, or portions of loans, were sold on a servicing retained basis. Amortization and impairment/recoveries of servicing rights, and ongoing servicing fees are recorded in the consolidated statements of income and comprehensive income as part of other noninterest income. The Company is not actively originating or selling indirect automobile loans.

(dollars in thousands)			Three Months Ended March 31,
Indirect automobile servicing rights			2022						2021
Beginning carrying value, net			$	—					$	73
Amortization			—						(44)
Ending carrying value, net			$	—					$	29

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