EDGAR 10-K Filing

Company CIK: 351569
Filing Year: 2022
Filename: 351569_10-K_2022_0000351569-22-000005.json

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ITEM 1. BUSINESS
ITEM 1. BUSINESS
OVERVIEW
We are a financial holding company whose business is conducted primarily through our wholly owned banking subsidiary, Ameris Bank (the “Bank”), which provides a full range of banking services to its retail and commercial customers who are primarily concentrated in select markets in Georgia, Alabama, Florida, North Carolina and South Carolina. The Company’s executive office is located at 3490 Piedmont Road N.E., Suite 1550, Atlanta, Georgia 30305, our telephone number is (404) 639-6500 and our internet address is www.amerisbank.com. We operate 165 full-service domestic banking offices. We do not operate in any foreign countries. At December 31, 2021, we had approximately $23.86 billion in total assets, $17.13 billion in total loans, $19.67 billion in total deposits and $2.97 billion of shareholders’ equity. Our deposits are insured, up to applicable limits, by the Federal Deposit Insurance Corporation (the “FDIC”).
We make our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act available free of charge on our website at www.amerisbank.com as soon as reasonably practicable after we electronically file such material with the SEC. These reports are also available without charge on the SEC’s website at www.sec.gov.
The Parent Company
Our primary business as a bank holding company is to manage the business and affairs of the Bank. As a bank holding company, we perform certain shareholder and investor relations functions and seek to provide financial support, if necessary, to the Bank.
Ameris Bank
Our principal subsidiary is the Bank, which is headquartered in Atlanta, Georgia and operates branches primarily concentrated in select markets in Georgia, Alabama, Florida, North Carolina and South Carolina. These branches serve distinct communities in our business areas with autonomy but do so as one bank, leveraging our favorable geographic footprint in an effort to acquire more customers.
Strategy
We seek to increase our presence and grow the “Ameris” brand in the markets that we currently serve in Georgia, Alabama, Florida, North Carolina and South Carolina and in neighboring communities that present attractive opportunities for expansion. Management has pursued this objective through an acquisition-oriented growth strategy and a prudent operating strategy. Our community banking philosophy emphasizes personalized service and building broad and deep customer relationships, which has provided us with a substantial base of low cost core deposits. Our markets are managed by senior level, experienced decision makers in a decentralized structure that differentiates us from our larger competitors. Management believes that this structure, along with involvement in and knowledge of our local markets, will continue to provide growth and assist in managing risk throughout our Company.
We have maintained our focus on a long-term strategy of expanding and diversifying our franchise in terms of revenues, profitability and asset size. Our growth over the past several years has been enhanced significantly by bank acquisitions. We expect to continue to take advantage of the consolidation in the financial services industry and enhance our franchise through future acquisitions. We intend to grow within our existing markets, to branch into or acquire financial institutions in existing markets as well as financial institutions in other markets consistent with our capital availability and management abilities.
Our most recent acquisitions include the following:
•Fidelity Southern Corporation ("Fidelity"), in July 2019, which added $4.0 billion in deposits;
•Hamilton State Bancshares, Inc. ("Hamilton"), in June 2018, which added $1.6 billion in deposits;
•Atlantic Coast Financial Corporation ("Atlantic"), in May 2018, which added $585.2 million in deposits; and
In January 2018, the Company completed its acquisition of US Premium Finance Holding Company ("USPF"), a provider of commercial insurance premium finance loans.
In addition, in December 2021, the Bank acquired Balboa Capital Corporation ("Balboa"), a point of sale and direct online provider of lending solutions to small and mid-sized businesses nationwide.
BANKING SERVICES
Lending Activities
General. The Company maintains a diversified loan portfolio by providing a broad range of commercial and retail lending services to business entities and individuals. We provide agricultural loans, commercial business loans, commercial and residential real estate construction and mortgage loans, consumer loans, revolving lines of credit and letters of credit. The Company also originates first mortgage residential mortgage loans and generally enters into a commitment to sell these loans in the secondary market. We have not made or participated in foreign, energy-related or subprime loans. In addition, the Company does not regularly buy loan participations or portions of national credits but from time to time, may acquire balances subject to participation agreements through acquisition. Less than 1% of the Company’s loan portfolio was loan participations purchased at December 31, 2021.
At December 31, 2021, our loan portfolio totaled approximately $17.13 billion, representing approximately 71.8% of our total assets. For additional discussion of our loan portfolio, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Loans.”
Commercial Real Estate Loans. This portion of our loan portfolio has grown significantly over the past few years and represents the largest segment of our loan portfolio. Commercial real estate loans include loans secured by owner-occupied commercial buildings for office, storage, retail, farmland and warehouse space. They also include non-owner occupied commercial buildings such as leased retail and office space. These loans also include extensions for the acquisition, development or construction of commercial properties. The loans are underwritten with an emphasis on the viability of the project, the borrower’s ability to meet certain minimum debt service requirements and an analysis and review of the collateral and guarantors, if any.
Residential Real Estate Mortgage Loans. Ameris originates adjustable and fixed-rate residential mortgage loans. These mortgage loans are generally originated under terms and conditions consistent with secondary market guidelines. Some of these loans will be placed in the Company’s loan portfolio; however, a majority are sold in the secondary market. The residential real estate mortgage loans that are included in the Company’s loan portfolio are usually owner-occupied and generally amortized over a 20- to 30-year period with three- to five-year maturity or repricing.
Agricultural Loans. Our agricultural loans are extended to finance crop production, the purchase of farm-related equipment or farmland and the operations of dairies, poultry producers, livestock producers and timber growers. Agricultural loans typically involve seasonal balance fluctuations. Although we typically look to an agricultural borrower’s cash flow as the principal source of repayment, agricultural loans are also generally secured by a security interest in the crops or the farm-related equipment and, in some cases, an assignment of crop insurance and mortgage on real estate. The lending officer visits the borrower regularly during the growing season and re-evaluates the loan in light of the borrower’s updated cash flow projections. A portion of our agricultural loans is guaranteed by the Farm Service Agency Guaranteed Loan Program.
Commercial and Industrial Loans. Generally, commercial and industrial loans consist of loans made primarily to manufacturers, wholesalers and retailers of goods, service companies, municipalities and other industries. These loans are made for acquisition, expansion, working capital and equipment financing and may be secured by accounts receivable, inventory, equipment, personal guarantees or other assets. The Company monitors these loans by requesting submission of corporate and personal financial statements and income tax returns. The Company has also generated loans which are guaranteed by the U.S. Small Business Administration (the “SBA”). SBA loans are generally underwritten in the same manner as conventional loans generated for the Bank’s portfolio. Periodically, a portion of the loans that are secured by the guaranty of the SBA will be sold in the secondary market. Management believes that making such loans helps the local community and also provides Ameris with a source of income and solid future lending relationships as such businesses grow and prosper. During 2021 and 2020, the Company participated in the SBA's Paycheck Protection Program (the "PPP"), a temporary product under the SBA's 7(a) loan program created under the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"). The primary repayment risk for commercial loans is the failure of the business due to economic or financial factors. The Company also originates, administers and services commercial insurance premium finance loans made to borrowers throughout the United States.
Consumer Loans. Our consumer loans include home improvement, home equity, motor vehicle, loans secured by savings accounts and small unsecured personal credit lines. The terms of these loans typically range from 12 to 240 months and vary based upon the nature of collateral and size of the loan. These loans are generally secured by various assets owned by the
consumer. In addition, during 2016, the Bank began purchasing consumer installment home improvement loans made to borrowers throughout the United States. The Bank was no longer purchasing those loans in 2021.
Credit Administration
We have sought to maintain a comprehensive lending policy that meets the credit needs of each of the communities served by the Bank, including low and moderate-income customers, and to employ lending procedures and policies consistent with this approach. All loans are subject to our corporate loan policy and financing guide, which are reviewed annually and updated as needed. Our lending policy requires, among other things, an analysis of the borrower's projected cash flow and ability to service the debt. The loan policy provides that lending officers have sole authority to approve loans of various amounts commensurate with their seniority, experience and needs within the market. Our local market presidents have discretion to approve loans in varying principal amounts up to established limits, and our regional credit officers review and approve loans that exceed such limits.
Individual lending authority is assigned by the Company’s Chief Credit Officer, as is the maximum limit of new extensions of credit that may be approved in each market. These approval limits are reviewed annually by the Company and adjusted as needed. All requests for extensions of credit in excess of any of these limits are reviewed by one of seven regional credit officers. When the request for approval exceeds the authority level of the regional credit officer, the approval of the Company’s Chief Credit Officer and/or the Company’s loan committee is required. All new loans or modifications to existing loans in excess of $500,000 are reviewed monthly by the Company’s Credit Administration Department with the lender responsible for the credit. In addition, our ongoing loan review program subjects the portfolio to sampling and objective review by our ongoing internal loan review process which is independent of the originating loan officer.
Each lending officer has authority to make loans only in the market area in which his or her Bank office is located and its contiguous counties. Occasionally, our loan committee will approve making a loan outside of the market areas of the Bank, provided the Bank has a prior relationship with the borrower. Our lending policy requires analysis of the borrower’s projected cash flow and ability to service the debt.
The Bank has purchased loans outside of its market area. These include residential mortgage loan pools collateralized by properties located outside our Southeast markets, specifically in California, Washington and Illinois, consumer installment home improvement loans made to borrowers throughout the United States and commercial insurance premium finance loans made to borrowers throughout the United States. These purchases were reviewed and approved by the Company's loan committee.
We actively market our services to qualified lending customers in both the commercial and consumer sectors. Our commercial lending officers actively solicit the business of new companies entering the market as well as longstanding members of that market’s business community. Through personalized professional service and competitive pricing, we have been successful in attracting new commercial lending customers. At the same time, we actively advertise our consumer loan products and continually seek to make our lending officers more accessible.
The Bank continually monitors its loan portfolio to identify areas of concern and to enable management to take corrective action when necessary. Local market presidents and lending officers meet periodically to review all past due loans, the status of large loans and certain other credit or economic related matters. Individual lending officers are responsible for collection of past due amounts and monitoring any changes in the financial status of the borrowers. Loans that are serviced by others, such as certain residential mortgage loans and consumer installment home improvement loans, are monitored by the Company’s credit officers, although ultimate collection of past due amounts is the responsibility of the servicing agents.
Investment Activities
Our investment policy is designed to maximize income from funds not needed to meet loan demand in a manner consistent with appropriate liquidity and risk management objectives. Under this policy, our Company may invest in federal, state and municipal obligations, corporate obligations, public housing authority bonds, industrial development revenue bonds, securities issued by Government-Sponsored Enterprises (“GSEs”) and satisfactorily-rated trust preferred obligations. Investments in our portfolio must satisfy certain quality criteria. Our Company’s investments must be “investment-grade” as determined by a nationally recognized investment rating service. Investment securities where the Company has determined a certain level of credit risk are periodically reviewed to determine the financial condition of the issuer and to support the Company’s decision to continue holding the security. Our Company may purchase non-rated municipal bonds only if the issuer of such bonds is located in the Company’s general market area and such bonds are determined by the Company to have a credit risk no greater than the minimum ratings referred to above. Industrial development authority bonds, which normally are not rated, are
purchased only if the issuer is located in the Company’s market area and if the bonds are considered to possess a high degree of credit soundness. Traditionally, the Company has purchased and held investment securities with very high levels of credit quality, favoring investments backed by direct or indirect guarantees of the U.S. government.
While our investment policy permits our Company to trade securities to improve the quality of yields or marketability or to realign the composition of the portfolio, the Bank historically has not done so to any significant extent.
Our investment committee implements the investment policy and portfolio strategies and monitors the portfolio. Reports on all purchases, sales, net profits or losses and market appreciation or depreciation of the bond portfolio are reviewed by our Board of Directors each quarter. The written investment policy is reviewed annually by the Company’s Board of Directors and updated as needed.
The Company’s securities are held in safekeeping accounts at approved correspondent banks.
Deposits
The Company provides a full range of deposit accounts and services to both retail and commercial customers. These deposit accounts have a variety of interest rates and terms and consist of interest-bearing and noninterest-bearing accounts, including commercial and retail checking accounts, regular interest-bearing savings accounts, money market accounts, individual retirement accounts and certificates of deposit. Our Bank obtains most of its deposits from individuals and businesses in its market areas.
Brokered deposits are deposits obtained by utilizing an outside broker that is paid a fee. The Bank utilizes brokered deposits to accomplish several purposes, such as (i) acquiring a certain maturity and dollar amount without repricing the Bank’s current customers which could increase or decrease the overall cost of deposits and (ii) acquiring certain maturities and dollar amounts to help manage interest rate risk.
Other Funding Sources
The Federal Home Loan Bank (“FHLB”) allows the Company to obtain advances through its credit program. These advances are secured by securities owned by the Company and held in safekeeping by the FHLB, FHLB stock owned by the Company and certain qualifying loans secured by real estate, including residential mortgage loans, home equity lines of credit and commercial real estate loans. The Company maintains credit arrangements with various other financial institutions to purchase federal funds. The Company participates in the Federal Reserve discount window borrowings program.
On September 28, 2020, the Company completed the public offering and sale of $110.0 million in aggregate principal amount of its 3.875% Fixed-To-Floating Rate Subordinated Notes due 2030. The subordinated notes were sold to the public at par. The subordinated notes will mature on October 1, 2030 and through September 30, 2025 will bear a fixed rate of interest of 3.875% per annum. Beginning October 1, 2025, the interest rate on the subordinated notes resets quarterly to a floating rate per annum equal to the then-current three-month SOFR plus 3.753%.
On December 6, 2019, the Company completed the public offering and sale of $120.0 million in aggregate principal amount of its 4.25% Fixed-To-Floating Rate Subordinated Notes due 2029. The subordinated notes were sold to the public at par. The subordinated notes will mature on December 15, 2029 and through December 14, 2024 will bear a fixed rate of interest of 4.25% per annum. Beginning December 15, 2024, the interest rate on the subordinated notes resets quarterly to a floating rate per annum equal to the then-current three-month SOFR plus 2.94%.
On March 13, 2017, the Company completed the public offering and sale of $75.0 million in aggregate principal amount of its 5.75% Fixed-To-Floating Rate Subordinated Notes due 2027. The subordinated notes were sold to the public at par. The subordinated notes will mature on March 15, 2027 and through March 14, 2022 will bear a fixed rate of interest of 5.75% per annum. Beginning March 15, 2022, the interest rate on the subordinated notes resets quarterly to a floating rate per annum equal to the then-current three-month LIBOR plus 3.616%.
The Company has long-term subordinated deferrable interest debentures with a net book carrying value of $126.3 million as of December 31, 2021. The majority of these trust preferred securities were assumed as liabilities in previous whole bank acquisitions.
The Company also enters into repurchase agreements. These repurchase agreements are treated as short-term borrowings and are reflected on the Company’s balance sheet as such.
Use of Derivatives
The Company seeks to provide stable net interest income despite changes in interest rates. In its review of interest rate risk, the Company considers the use of derivatives to protect interest income on loans or to create a structure in institutional borrowings that limits the Company’s cost. During 2019 and through its maturity in September 2020, the Company had an interest rate swap with a notional amount of $37.1 million for the purpose of converting from a variable to a fixed interest rate on certain junior subordinated debentures on the Company’s balance sheet. The interest rate swap, which was classified as a cash flow hedge, was indexed to 90-day LIBOR.
The Company maintains a risk management program to manage interest rate risk and pricing risk associated with its mortgage lending activities. This program includes the use of forward contracts and other derivatives that are used to offset changes in the value of the mortgage inventory due to changes in market interest rates. As a normal part of its operations, the Company enters into derivative contracts such as forward sale commitments and interest rate lock commitments (“IRLCs”) to economically hedge risks associated with overall price risk related to IRLCs and mortgage loans held for sale carried at fair value. The fair value of these instruments amounted to an asset of approximately $11.9 million and $51.8 million at December 31, 2021 and 2020, respectively, and a derivative liability of approximately $710,000 and $16.4 million at December 31, 2021 and 2020, respectively.
MARKET AREAS AND COMPETITION
The banking industry in general, and in the southeastern United States specifically, is highly competitive and dramatic changes continue to occur throughout the industry. While our select market areas in Georgia, Alabama, Florida, North Carolina and South Carolina have experienced strong population growth in recent decades, intense market demands, national and local economic pressures, including a low interest rate environment, and increased customer awareness of product and service differences among financial institutions have forced banks to diversify their services and become much more cost effective. Over the past few years, our Bank has faced strong competition in attracting deposits at profitable levels. Competition for deposits comes from other commercial banks, thrift institutions, savings banks, internet banks, credit unions, and brokerage and investment banking firms. Interest rates, online banking capabilities, convenience of office locations and marketing are all significant factors in our Bank’s competition for deposits.
Competition for loans comes from other commercial banks, thrift institutions, savings banks, insurance companies, consumer finance companies, credit unions, mortgage companies, leasing companies and other institutional and non-traditional lenders. In order to remain competitive, our Bank has varied interest rates and loan fees to some degree as well as increased the number and complexity of services provided. We have not varied or altered our underwriting standards in any material respect in response to competitor willingness to do so and in some markets have not been able to experience the growth in loans that we would have preferred. Competition is affected by the general availability of lendable funds, general and local economic conditions, current interest rate levels and other factors that are not readily predictable.
Competition among providers of financial products and services continues to increase with consumers having the opportunity to select from a growing variety of traditional and nontraditional alternatives, including FinTech firms. While technological innovation has been central to the development of the financial services industry and to our strategy, tech firms increasingly compete directly with banks for a variety of financial product offerings. Management expects that competition will become more intense in the future due to changes in state and federal laws and regulations and the entry of additional bank and nonbank competitors. Further, the industry continues to consolidate, which affects competition by eliminating some regional and local institutions, while strengthening the franchise of acquirers. See “Supervision and Regulation” under this Item.
HUMAN CAPITAL
At Ameris, we consider our teammates to be our greatest strength. At December 31, 2021, the Company employed 2,865 full-time-equivalent employees, primarily located in our core markets of Georgia, Alabama, Florida, North Carolina and South Carolina.
We take pride in listening to our employees, welcoming unique perspectives, supporting personal and professional growth and developing natural strengths. For example, each year the Company administers an employee engagement survey to gather meaningful insights and data, which is used as we continue to make improvements at Ameris and build upon our strong culture. The input obtained from these surveys helps the Company’s Board of Directors and executive officers to execute on initiatives such as the Ameris Bank Foundation, leadership training and diversity and inclusion initiatives.
Effective and frequent communication is critical to supporting our growing culture and teammate needs and is carried out through regular e-newsletters, executive announcements and bulletins, which provide access to information regarding Company news, alerts and updates, as well as educational opportunities and programs.
Support and Benefits
Providing employees with meaningful, competitive and supportive benefits to care for their lives and families is a top priority for the Company. We’re proud to offer a comprehensive benefits package that includes medical, dental, vision and life insurance, paid time-off, 401(k) profit-sharing plan participation and an employee stock purchase plan. The Company’s 401(k) plan matches 50% of each employee’s elective deferral amount, up to the first 6% of the contribution.
The Company’s benefits programs also include access to a network of nearby providers with options for either in-person care or virtual visits at any time. Our behavioral health benefit offers support for such issues as alcohol and drug use recovery, medication management, coping with grief and loss, and depression, anxiety and stress management.
Personal and Professional Growth
At Ameris, our leaders develop action plans and provide mentorship to help employees reach their aspirations. Our teammates are encouraged to share their goals and dreams, and we take pride in offering professional growth opportunities through our robust learning and development initiatives.
Mentorship at all levels is encouraged throughout our organization, as it supports our culture of learning and commitment to our teammates, new ideas and leadership development. Mentor Ameris is the Bank’s formal mentorship program, whereby annually, high potential colleagues are identified as mentees and paired with a selected mentor at the Bank. A total of 26 mentees were selected to participate in the program in 2021, of which 42% were female and 31% were minorities. The program is a nine-month commitment that is designed to encourage a lifelong mentee-mentor relationship.
Launched at the end of 2020, our Leadership Development Program is a self-paced, three-tiered program available to all employees, with coursework specific to leading self, leading others and leading leaders. We believe that effective and meaningful leadership development will further elevate the Company and support us in continuing to attract and retain top talent. At the end of 2021, we had a total of 185 teammates enrolled in the program, of which 74% were female and 30% were minorities.
The development of our employees’ skills and knowledge is critical to the success of the Company. Our educational assistance program, which provides for reimbursement of certain education expenses up to $5,250, encourages personal development through formal education, such as a degree, licensing or certification, so that teammates can maintain and improve their skills or knowledge related to their current job or foreseeable-future position at Ameris. The importance of having career development discussions and guidance with employees is shared and reinforced during manager training sessions as well, as the Company recognizes these discussions are critical to establishing pathways for career growth.
Diversity and Inclusion
Diversity, equity and inclusion represent an integral part of our strategic vision at Ameris. The Company is committed to fostering an equitable work environment that seeks to ensure fair treatment, equality of opportunity, and fairness in access to information and resources for all employees. We believe this is only possible in an environment built on respect and equal dignity, and we believe inclusion builds a culture of belonging by actively inviting the contribution and participation of all people.
As part of that commitment, the Bank appointed its first Diversity and Inclusion Officer in 2020 and established a Diversity Task Force comprised of a diverse group of 19 teammates from across the Company. This group is dedicated to cultivating an environment that supports our strategy to engage, recruit, develop, retain and advance a diverse team of talent, inclusively and equitably. Leaders from this group have established employee resource groups which are meant to bring teammates together from across the Company and offer strong networking opportunities and a forum to listen and to discuss and sponsor programs, activities and empowering resources that foster diversity and inclusion education and awareness. Employee resource groups currently include women in banking, LGBTQIA+, veterans, BIPOC (Black, Indigenous and People of Color), multigenerational, caregivers and mindfulness-mental health.
As of December 31, 2021, females represent 66% of the Company’s employee population, and minorities represent 31%. In addition, females represent 43% of the Company’s senior management staff, consisting of Vice Presidents and above, and minorities represent 16%.
SUPERVISION AND REGULATION
General
We are extensively regulated, supervised and examined under federal and state law. Generally, these laws and regulations are intended to protect our Bank’s depositors, the FDIC’s Deposit Insurance Fund (the “DIF”) and the broader banking system, and not our shareholders. These laws and regulations cover all aspects of our business, including lending and collection practices, treatment of our customers, safeguarding deposits, customer privacy and information security, capital structure, liquidity, dividends and other capital distributions, and transactions with affiliates. Such laws and regulations directly and indirectly affect key drivers of our profitability, including, for example, capital and liquidity, product offerings, risk management and costs of compliance. In addition, changes to these laws and regulations, including as a result of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) and regulations promulgated thereunder, have had, and may continue to have, a significant impact on our business, results of operations and financial condition. As a result, the extensive laws and regulations to which we are subject and with which we must comply significantly impact our earnings, results of operations, financial condition and competitive position.
Set forth below is a summary of certain provisions of key federal and state laws that affect the regulation of bank holding companies and banks. The discussion is qualified in its entirety by reference to applicable laws and regulations. Changes in such laws and regulations may have a material effect on our business and prospects.
Supervision and Examination Authorities
As a bank holding company and financial holding company, Ameris is subject to regulation, supervision and enforcement by the Board of Governors of the Federal Reserve System (the “Federal Reserve”). Our Bank has a Georgia state charter and is subject to regulation, supervision and enforcement by the Georgia Department of Banking and Finance (the “GDBF”). In addition, as a state non-member bank, the Bank is subject to regulation, supervision and enforcement by the FDIC as the Bank’s primary federal regulator. The Federal Reserve, the FDIC and the GDBF regularly examine the operations of the Company and the Bank and are given the authority to approve or disapprove mergers, consolidations, the establishment of branches and similar corporate actions. These agencies also have the power to prevent the continuance or development of unsafe or unsound banking practices or other violations of law.
In addition, the Consumer Financial Protection Bureau (the "CFPB") supervises the Bank with respect to consumer protection laws and regulations.
Federal Law Restrictions on the Company’s Activities and Investments
As a registered bank holding company, we are subject to regulation under the Bank Holding Company Act (the “BHCA”) and to the supervision, examination and reporting requirements of the Federal Reserve.
The BHCA and its implementing regulations prohibit bank holding companies from engaging in certain transactions without the prior approval of the Federal Reserve, including (i) acquiring direct or indirect control of more than 5% of the voting shares of any bank or bank holding company, (ii) acquiring all or substantially all of the assets of any bank and (iii) merging or consolidating with any other bank holding company. In determining whether to approve such a transaction, the Federal Reserve is required to consider a variety of factors, including the competitive impact of the transaction; the financial condition, managerial resources and future prospects of the bank holding companies and banks involved; the convenience and needs of the communities to be served, including the applicant’s record of performance under the Community Reinvestment Act; and the effectiveness of the parties in combating money laundering activities. The Bank Merger Act imposes similar review and approval requirements in connection with acquisitions and mergers involving banks. Additionally, under the Change in Bank Control Act and the BHCA, a person or company that acquires control of a bank holding company or bank must obtain the non-objection or approval of the Federal Reserve in advance of the acquisition. For a publicly-traded bank holding company such as Ameris, control for purposes of the Change in Bank Control Act is presumed to exist if the acquirer will have 10% or more of any class of the company’s voting securities.
The BHCA generally prohibits a bank holding company and its subsidiaries from engaging in, or acquiring control of a company engaged in, activities other than managing or controlling banks, activities that the Federal Reserve has determined to be closely related to banking and certain other permissible nonbanking activities. However, a bank holding company that is qualified and has elected to be a financial holding company may engage in, or acquire control of a company engaged in, an expanded set of financial activities. Effective August 24, 2000, Ameris has elected to be a financial holding company. As such, we may engage in activities that are financial in nature or incidental or complementary to financial activities, including
insurance underwriting, securities underwriting and dealing, and making merchant banking investments in commercial and financial companies, provided that we and the Bank continue to meet certain regulatory standards and comply with applicable regulatory notice requirements. If we or the Bank ceased to be “well capitalized” or “well managed” under applicable regulatory standards, or if the Bank received a rating of less than Satisfactory under the Community Reinvestment Act, our ability to conduct these broader financial activities would be limited.
A provision of the BHCA known as the Volcker Rule limits our and the Bank’s ability to engage in proprietary trading (i.e., engaging as principal in any purchase or sale of one or more financial instruments) or to acquire or retain as principal any ownership interest in or sponsor a covered fund, including private equity and hedge funds.
Source of Strength
As a bank holding company, we are expected to act as a source of financial strength for the Bank and to commit resources to support the Bank. This support may be required at times when we might not be inclined to provide it. In addition, any capital loans made by us to the Bank will be repaid only after the Bank’s deposits and various other obligations are repaid in full.
Payment of Dividends and Other Restrictions
Ameris is a legal entity separate and distinct from its subsidiaries. The principal source of our cash revenues is dividends from the Bank. Federal and state law limit the Bank’s ability to pay dividends to Ameris.
Under Georgia law, the prior approval of the GDBF is required before any cash dividends may be paid by a state bank if: (i) total classified assets at the most recent examination of such bank exceed 80% of the bank’s Tier 1 capital (plus allowance for loan losses); (ii) the aggregate amount of dividends declared or anticipated to be declared by the bank in the calendar year exceeds 50% of its net profits for the previous calendar year; or (iii) the ratio of the bank’s Tier 1 capital to adjusted total assets is less than 6%. As of December 31, 2021, there was approximately $202.7 million of retained earnings of our Bank available for payment of cash dividends under applicable regulations without obtaining regulatory approval.
Under federal law, the ability of an insured depository institution such as the Bank to pay dividends or other distributions is restricted or prohibited if (i) the institution would fail to satisfy the regulatory capital conservation buffer requirement following the distribution, (ii) the distribution would cause the institution to become undercapitalized or (iii) the institution is in default of its payment of deposit insurance assessments to the FDIC. In addition, the FDIC has the authority to prohibit the Bank from engaging in an unsafe or unsound banking practice. The payment of dividends could, depending upon the financial condition of the Bank, be deemed to constitute an unsafe or unsound practice in conducting the Bank’s business.
As a bank holding company, dividends paid by Ameris to its shareholders are subject to federal law limitations. The Federal Reserve has adopted the policy that a bank holding company should pay cash dividends only to the extent that the company’s net income for the past year is sufficient to cover the cash dividends and that the company’s rate of earning retention is consistent with the company’s capital needs, asset quality and overall financial condition. In addition, a bank holding company is required to consult with or notify the Federal Reserve prior to purchasing or redeeming its outstanding equity securities in certain circumstances, including if the gross consideration for the purchase or redemption, when aggregated with the net consideration paid by the company for all such purchases or redemptions during the preceding 12 months, is equal to 10% or more of the company's consolidated net worth. A bank holding company that is well-capitalized, well-managed and not the subject of any unresolved supervisory issues is exempt from this notice requirement.
Capital Adequacy
Bank holding companies and banks are required to maintain minimum regulatory capital ratios imposed under both federal and state law. The Federal Reserve and the FDIC, the primary regulators of Ameris and the Bank, respectively, have adopted substantially similar regulatory capital frameworks, which use both risk-based and leverage-based measures of capital adequacy. Under these frameworks, Ameris 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%. Ameris 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.
Under the capital rules, common equity Tier 1 capital generally includes certain common stock instruments (plus any related surplus), retained earnings and certain minority interests in consolidated subsidiaries (subject to certain limitations). Additional
Tier 1 capital generally includes noncumulative perpetual preferred stock (plus any related surplus) and certain minority interests in consolidated subsidiaries (subject to certain limitations). Tier 2 capital generally includes certain subordinated debt (plus related surplus), certain minority interests in consolidated subsidiaries (subject to certain limitations) and a portion of the allowance for credit losses (“ACL”). Common equity tier 1 capital, additional Tier 1 capital and Tier 2 capital are each subject to various regulatory deductions and adjustments. In general, the risk-based capital standards are designed to make regulatory capital requirements sensitive to differences in risk profile by risk weighting assets and off-balance-sheet exposures based on risk categories.
Failure to meet these capital requirements could subject Ameris and the Bank to a variety of enforcement actions, including the issuance of a capital directive, the termination of deposit insurance by the FDIC and certain other restrictions on our business.
In addition, under the FDIC’s “prompt corrective action” framework, the FDIC may impose various restrictions, including limitations on growth and the payment of dividends, if the Bank becomes undercapitalized. Under this framework, the Bank is considered to be “well capitalized” if it has a common equity Tier 1 risk-based capital ratio of 6.5% or greater, a Tier 1 risk-based capital ratio of 8% or greater, a total risk-based capital ratio of 10% or greater and a leverage ratio of 5% or greater, and is not subject to any order or written directive by the appropriate regulatory authority to meet and maintain a specific capital level for any capital measure.
The Federal Deposit Insurance Act prohibits an insured bank from accepting brokered deposits or offering interest rates on any deposits significantly higher than the prevailing rate in the bank’s normal market area or nationally (depending upon where the deposits are solicited) unless it is “well-capitalized,” or is “adequately capitalized” and has received a waiver from the FDIC. A bank that is “adequately capitalized” and that accepts brokered deposits under a waiver from the FDIC may not pay an interest rate on any deposit in excess of 75 basis points over certain prevailing market rates. There are no such restrictions on a bank that is “well-capitalized.”
At December 31, 2021, the Company exceeded its minimum capital requirements, inclusive of the capital conservation buffer, on a consolidated basis with common equity Tier 1 capital, Tier 1 capital and total capital equal to 10.46%, 10.46% and 13.78% of its total risk-weighted assets, respectively, and a Tier 1 leverage ratio of 8.63%. At December 31, 2021, the Bank exceeded its minimum capital requirements, inclusive of the capital conservation buffer, with common equity Tier 1 capital, Tier 1 capital and total capital equal to 11.50%, 11.50% and 12.45% of its total risk-weighted assets, respectively, and a Tier 1 leverage ratio of 9.50%, and was “well-capitalized” for prompt corrective action purposes based on the ratios and guidelines described above.
Under a December 2018 final rule, banking organizations may elect to phase in the regulatory capital effects of the current expected credit losses (“CECL”) model, the new accounting standard for credit losses, over three years. On March 27, 2020, the CARES Act was signed into law and includes a provision that permits financial institutions to defer temporarily the use of CECL. In a related action, the joint federal bank regulatory agencies issued an interim final rule effective March 31, 2020 that allows banking organizations that implemented CECL in 2020 to elect to mitigate the effects of the CECL accounting standard on their regulatory capital for two years. This two-year delay is in addition to the three-year transition period that the agencies had already made available in December 2018. Ameris and the Bank elected to defer the regulatory capital effects of CECL in accordance with the interim final rule and not to apply the deferral of CECL available under the CARES Act. As a result, the effects of CECL on Ameris’s and the Bank’s regulatory capital were delayed through 2021 and now will be phased-in over a three-year period from January 1, 2022 through December 31, 2024. Under the March 31, 2020 interim final rule, the amount of adjustments to regulatory capital deferred until the phase-in period includes both the initial impact of a banking organization’s adoption of CECL at January 1, 2020 and 25% of subsequent changes in its allowance for credit losses during each quarter of the two-year period ended December 31, 2021.
Transactions with Affiliates and Insiders, Tying Arrangements and Lending Limits
The Bank is subject to certain restrictions in its dealings with Ameris and its affiliates. Transactions between banks and any affiliate are governed by Sections 23A and 23B of the Federal Reserve Act. An affiliate of a bank typically is any company or entity that controls or is under common control with the bank, including the bank’s parent holding company and non-bank subsidiaries of that holding company. Some but not all subsidiaries of a bank may be exempt from the definition of an affiliate. Generally, Sections 23A and 23B (i) limit the extent to which the bank or its subsidiaries may engage in “covered transactions” with any one affiliate to an amount equal to 10% of the bank’s capital stock and surplus, and limit the aggregate of all such transactions with all affiliates to an amount equal to 20% of such capital stock and surplus, and (ii) require that all such transactions be on terms substantially the same, or at least as favorable to the bank or subsidiary, as those that would be provided to a non-affiliate. The term “covered transaction” includes the making of a loan to an affiliate, the purchase of assets from an affiliate, the issuance of a guarantee on behalf of an affiliate and several other types of transactions. Extensions of credit to an affiliate usually must be over-collateralized.
Under section 22 of the Federal Reserve Act, as implemented by the Federal Reserve’s Regulation O, restrictions also apply to extensions of credit by a bank to its executive officers, directors, principal shareholders, and their related interests, and to similar individuals at the holding company or affiliates. In general, such extensions of credit (i) may not exceed certain dollar limitations, (ii) must be made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with third parties and (iii) must not involve more than the normal risk of repayment or present other unfavorable features. Certain extensions of credit to these insiders also require the approval of the bank’s board of directors. Additionally, the Federal Deposit Insurance Act and Georgia law limit asset sales and purchases between a bank and its insiders.
Under anti-tying rules of federal law, a bank may not extend credit, lease, sell property or furnish any service or fix or vary the consideration for them on the condition that (i) the customer obtain or provide some additional credit, property or service from or to the bank or its holding company or their subsidiaries (other than those related to and usually provided in connection with a loan, discount, deposit or trust service) or (ii) the customer not obtain some other credit, property or service from a competitor, except to the extent reasonable conditions are imposed to assure the soundness of the credit extended. The federal banking agencies have, however, allowed banks to offer combined-balance products and otherwise to offer more favorable terms if a customer obtains two or more traditional bank products. The law authorizes the Federal Reserve to grant additional exceptions by regulation or order.
Under Georgia law, a state bank is generally prohibited from making loans, having obligations or having credit exposure as a counterparty in a derivative transaction to any one borrower in an amount exceeding 15% of the bank’s statutory capital base, or 25% of the bank’s statutory capital base if the entire amount is secured by good collateral or other ample security (as defined by law).
Reserves
Pursuant to regulations of the Federal Reserve, an insured depository institution must maintain reserves against its transaction accounts. Because required reserves generally must be maintained in the form of vault cash, with a pass-through correspondent bank, or in the institution’s account at a Federal Reserve Bank, the effect of the reserve requirement may be to reduce the amount of an institution’s assets available for lending or investment. During 2020, in response to the COVID-19 pandemic, the Federal Reserve reduced all reserve requirement ratios to zero. The Federal Reserve indicated that it may adjust reserve requirement ratios in the future if conditions warrant.
FDIC Insurance Assessments
The Bank’s deposits are insured to the maximum extent permitted by the DIF. The Bank is required to pay quarterly premiums, known as assessments, for this deposit insurance coverage. The FDIC uses a risk-based assessment system that imposes insurance premiums as determined by multiplying an insured bank’s assessment base by its assessment rate. A bank’s deposit insurance assessment base is generally equal to its total assets minus its average tangible equity during the assessment period. The Bank’s regular assessments are determined within a range of base assessment rates based in part on the Bank’s CAMELS composite rating, taking into account other factors and adjustments. The CAMELS rating system is a supervisory rating system developed to classify a bank’s overall condition by taking into account capital adequacy, assets, management capability, earnings, liquidity and sensitivity to market and interest rate risk. The methodology that the FDIC uses to calculate assessment amounts is also based on the FDIC’s designated reserve ratio, which is currently 2%. Under the current methodology, the Bank’s assessment rates are based on an initial base assessment rate of 3 to 30 cents per $100 of insured deposits, subject to certain adjustments, and may range from 1.5 to 40 cents after applying adjustments.
The FDIC may terminate the deposit insurance of any insured depository institution, including the Bank, if the FDIC determines after a hearing that the institution has engaged or is engaging in unsafe or unsound banking practices, is in an unsafe or unsound condition to continue operations or has violated any applicable law, regulation or order or any condition imposed by an agreement with the FDIC. The FDIC also may suspend deposit insurance temporarily during the hearing process for the permanent termination of insurance if the institution has no tangible capital. Management is not aware of any existing circumstances that would result in termination of the Bank’s deposit insurance.
Branching
The Bank has branch offices in Alabama, Florida, Georgia, North Carolina and South Carolina. Current federal law authorizes interstate acquisitions of banks and bank holding companies without geographic limitation, so long as the acquirer satisfies certain conditions, including that it is “well capitalized” and “well managed.” Furthermore, a “well capitalized” and “well managed” bank with its main office in one state is generally authorized to merge with a bank with its main office in another
state, subject to certain deposit-percentage limitations, aging requirements and other restrictions. After a bank has established branches in a state through an interstate merger transaction, the bank may establish and acquire additional branches at any location in the state where a bank headquartered in that state could have established or acquired branches under applicable federal or state law.
Community Reinvestment Act
The Community Reinvestment Act (the “CRA”) requires federal bank regulatory agencies to encourage financial institutions to meet the credit needs of low- and moderate-income borrowers in their local communities. The agencies periodically examine the CRA performance of each of the institutions for which they are the primary federal regulator and assign one of four ratings: Outstanding; Satisfactory; Needs to Improve; or Substantial Noncompliance. In order for an insured depository institution and its parent holding company to take advantage of certain regulatory benefits, such as expedited processing of applications and the ability of the holding company to engage in new financial activities, the insured depository institution must maintain a rating of Outstanding or Satisfactory. An institution’s size and business strategy determines the type of examination that it will receive. The FDIC evaluates the Bank as a large, retail-oriented institution and applies performance-based lending, investment and service tests. In its most recent CRA evaluation, as of August 26, 2019, the Bank was rated Satisfactory under the CRA.
Debit Interchange Fee Limitations
Under the Durbin Amendment to the Dodd-Frank Act and the Federal Reserve’s implementing regulations, the debit card interchange fee that the Bank charges merchants must be reasonable and proportional to the cost of clearing the transaction. The maximum permissible interchange fee is capped at the sum of $0.21 plus five basis points of the transaction value for many types of debit interchange transactions. The Bank may also recover $0.01 per transaction for fraud prevention purposes if it complies with certain fraud-related requirements. The Federal Reserve also has established rules governing routing and exclusivity that require debit card issuers to offer two unaffiliated networks for routing transactions on each debit or prepaid product.
Consumer Protection Laws
The Bank is subject to a number of federal and state laws designed to protect customers and promote lending to various sectors of the economy and population. These consumer protection laws apply to a broad range of our activities and to various aspects of our business, and include laws relating to interest rates, fair lending, disclosures of credit terms and estimated transaction costs to consumer borrowers, debt collection practices, the use of and the provision of information to consumer reporting agencies, and the prohibition of unfair, deceptive or abusive acts or practices in connection with the offer, sale or provision of consumer financial products and services. These laws include the Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Truth in Lending Act, the Home Mortgage Disclosure Act, the Real Estate Settlement Procedures Act and the Fair Debt Collection Practices Act, as well as their state law counterparts. At the federal level, most consumer financial protection laws are administered by the CFPB, which supervises the Bank. Among other things, the CFPB has promulgated many mortgage-related rules, including rules related to the ability to repay and qualified mortgage standards, mortgage servicing standards, loan originator compensation standards, high-cost mortgage requirements, Home Mortgage Disclosure Act requirements and appraisal and escrow standards for higher priced mortgages. The mortgage-related final rules issued by the CFPB have materially restructured the origination, servicing and securitization of residential mortgages in the United States, and have imposed significant compliance obligations and costs on mortgage lenders, including the Bank.
Violations of applicable consumer protection laws can result in significant potential liability, including actual damages, restitution and injunctive relief, from litigation brought by customers, state attorneys general and other plaintiffs, as well as enforcement actions by banking regulators and reputational harm.
Financial Privacy and Cybersecurity
Under the Gramm-Leach-Bliley Act, a financial institution must provide to its customers, at the inception of the customer relationship and annually thereafter, the institution’s policies and procedures regarding the handling of customers’ nonpublic personal financial information. The Gramm-Leach-Bliley Act also provides that, with certain limited exceptions, an institution may not provide such personal information to unaffiliated third parties unless the institution discloses to the customer that such information may be so provided and the customer is given the opportunity to opt out of such disclosure. Federal law makes it a criminal offense, except in limited circumstances, to obtain or attempt to obtain customer information of a financial nature by fraudulent or deceptive means.
The federal banking agencies pay close attention to the cybersecurity practices of banks, and the agencies include review of an institution’s information technology and its ability to thwart cyberattacks in their examinations. An institution’s failure to have adequate cybersecurity safeguards in place can result in supervisory criticism, monetary penalties and reputational harm.
Anti-Money Laundering and Sanctions Compliance
The Bank Secrecy Act, the USA PATRIOT Act of 2001 and other federal laws and regulations require financial institutions, among other things, to institute and maintain an effective anti-money laundering (“AML”) program. Under these laws and regulations, the Bank is required to take steps to prevent the use of the Bank to facilitate the flow of illegal or illicit money, to report large currency transactions and to file suspicious activity reports. In addition, the Bank is required to develop and implement a comprehensive AML compliance program, as well as have in place appropriate “know your customer” policies and procedures.
The federal Financial Crimes Enforcement Network of the Department of the Treasury, in addition to other bank regulatory agencies, is authorized to impose significant civil money penalties for violations of these requirements and has recently engaged in coordinated enforcement efforts with state and federal banking regulators, in addition to the U.S. Department of Justice, the CFPB, the Drug Enforcement Administration and the Internal Revenue Service. Violations of AML requirements can also lead to criminal penalties. In addition, the federal banking agencies are required to consider the effectiveness of a financial institution’s AML activities when reviewing proposed bank mergers and bank holding company acquisitions.
The Office of Foreign Assets Control (“OFAC”) is responsible for administering economic sanctions that affect transactions with designated foreign countries, foreign nationals and others, as defined by various Executive Orders and in various pieces of legislation. OFAC publishes lists of persons, organizations and countries suspected of aiding, harboring or engaging in terrorist acts. If we or the Bank find a name on any transaction, account or wire transfer that is on an OFAC list, we or the Bank must freeze or block such account or transaction, file a suspicious activity report and notify the appropriate authorities. Failure to comply with these sanctions could have serious legal and reputational consequences.
We and the Bank maintain policies, procedures and other internal controls designed to comply with these AML requirements and sanctions programs.
Federal Home Loan Bank System
Our Company has a correspondent relationship with the Federal Home Loan Bank (“FHLB”) of Atlanta, which is one of 12 regional FHLBs that administer the home financing credit function of banking institutions. Each FHLB is funded primarily from proceeds derived from the sale of consolidated obligations of the FHLB system and makes advances to members in accordance with policies and procedures established by the Board of Directors of the FHLB and subject to the oversight of the Federal Housing Finance Agency. All advances from an FHLB are required to be fully secured by sufficient collateral as determined by the FHLB. In addition, all long-term advances are required to provide funds for residential home financing.
The FHLB of Atlanta offers certain services to our Company, such as processing checks and other items, buying and selling federal funds, handling money transfers and exchanges, shipping coin and currency, providing security and safekeeping of funds or other valuable items, and furnishing limited management information and advice. As compensation for these services, our Company maintains certain balances with the FHLB of Atlanta in interest-bearing accounts.
Real Estate Lending Evaluations
The federal regulators have adopted uniform standards for evaluations of loans secured by real estate or made to finance improvements to real estate. Banks are required to establish and maintain written internal real estate lending policies consistent with safe and sound banking practices, and appropriate to the size of the institution and the nature and scope of its operations. The regulations establish loan-to-value ratio limitations on real estate loans. Our Company’s loan policies establish limits on loan-to-value ratios that are equal to or less than those established in such regulations.
Commercial Real Estate Concentrations
Under guidance issued by the federal banking regulators, a financial institution will be considered to have a significant commercial real estate (“CRE”) concentration risk, and will be subject to enhanced supervisory expectations to manage that risk, if (i) total reported loans for construction, land development and other land (“C&D”) represent 100% or more of the institution’s total capital or (ii) total CRE loans represent 300% or more of the institution’s total capital and the outstanding balance of the institution’s CRE loan portfolio has increased by 50% or more during the prior 36 months.
As of December 31, 2021, our C&D concentration as a percentage of capital totaled 64.4% and our CRE concentration, net of owner-occupied loans, as a percentage of capital totaled 283.3%.
Relief Measures Under the CARES Act
Congress, various federal agencies and state governments have taken measures to address the economic and social consequences of the COVID-19 pandemic, including the enactment on March 27, 2020 of the CARES Act, which, among other things, established various initiatives to protect individuals, businesses and local economies in an effort to lessen the impact of the pandemic on consumers and businesses. These initiatives included the PPP, relief with respect to troubled debt restructurings (“TDRs”), mortgage forbearance and extended unemployment benefits. The Consolidated Appropriations Act, 2021, enacted on December 27, 2020, extended some of these relief provisions in certain respects.
The PPP permitted small businesses, sole proprietorships, independent contractors and self-employed individuals to apply for loans from existing SBA lenders and other approved regulated lenders that enroll in the program, subject to numerous limitations and eligibility criteria. The CARES Act appropriated $349 billion to fund the PPP, and Congress appropriated an additional $320 billion to the PPP on April 24, 2020, and amended the PPP on June 5, 2020 to make the terms of the PPP loans and loan forgiveness more flexible. Additionally, the Consolidated Appropriations Act, 2021 appropriated a further $284 billion to the PPP and permitted certain PPP borrowers to make “second draw” loans. From April to August 2020, we accepted PPP applications and originated loans to qualified small businesses under this program. Consistent with the terms of the PPP, these loans carry an interest rate of 1% and are 100% guaranteed by the SBA. The substantial majority of the Company’s PPP loans have a term of two years. The Company’s participation in this program could subject us to increased governmental and regulatory scrutiny, negative publicity or increased exposure to litigation, which could increase our operational, legal and compliance costs and damage our reputation.
The CARES Act and related guidance from the federal banking agencies provide financial institutions the option to temporarily suspend requirements under GAAP related to classification of certain loan modifications as TDRs, to account for the current and anticipated effects of COVID-19. The CARES Act, as amended by the Consolidated Appropriations Act, 2021, specified that COVID-19 related loan modifications executed between March 1, 2020 and the earlier of (i) 60 days after the date of termination of the national emergency declared by the President and (ii) January 1, 2022, on loans that were current as of December 31, 2019 are not TDRs. Additionally, under guidance from the federal banking agencies, other short-term modifications made on a good faith basis in response to COVID-19 to borrowers that were current prior to any relief are not TDRs under ASC Subtopic 310-40, “Troubled Debt Restructuring by Creditors.” These modifications include short-term (e.g., up to six months) modifications such as payment deferrals, fee waivers, extensions of repayment terms or delays in payment that are insignificant. Throughout 2020 and 2021, we granted loan modifications to our customers in the form of maturity extensions, payment deferrals and forbearance.
The CARES Act also includes a range of other provisions designed to support the U.S. economy and mitigate the impact of COVID-19 on financial institutions and their customers. For example, provisions of the CARES Act require mortgage servicers to grant, on a borrower’s request, forbearance for up to 180 days (which can be extended for an additional 180 days) on a federally-backed single-family mortgage loan or forbearance up to 30 days (which can be extended for two additional 30-day periods) on a federally-backed multifamily mortgage loan when the borrower experiences financial hardship due to the COVID-19 pandemic.
Further, in response to the COVID-19 pandemic, the Federal Reserve has established a number of facilities to provide emergency liquidity to various segments of the U.S. economy and financial markets. Many of these facilities expired on December 31, 2020. The expiration of these facilities could have adverse effects on the U.S. economy and ultimately on our business.

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ITEM 1A. RISK FACTORS
ITEM 1A. RISK FACTORS
An investment in our Common Stock is subject to risks inherent in our business. The material risks and uncertainties that management believes affect Ameris are described below. Before making an investment decision, you should carefully consider the risks and uncertainties described below, together with all of the other information included or incorporated by reference in this Annual Report. The risks and uncertainties described below are not the only ones facing the Company. Additional risks and uncertainties that management is not aware of or focused on or that management currently deems immaterial may also impair the Company’s business operations. This Annual Report is qualified in its entirety by these risk factors.
If any of the following risks or uncertainties actually occurs, the Company’s financial condition and results of operations could be materially and adversely affected. If this were to happen, the value of the Common Stock could decline significantly, and you could lose all or part of your investment.
RISKS RELATED TO OUR COMPANY AND INDUSTRY
The ongoing COVID-19 pandemic and measures intended to prevent the disease's spread have adversely impacted our business, financial condition and results of operations and may continue to do so.
The COVID-19 pandemic has caused significant and unprecedented economic dislocation in the United States. As a result of the pandemic, commercial customers have experienced varying levels of disruptions or restrictions on their business activity, and consumers have 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. In response to the COVID-19 pandemic, the federal banking agencies, among other things, issued guidance encouraging financial institutions to prudently work with affected borrowers and providing relief from reporting loan classifications due to modifications related to the COVID-19 pandemic. Pursuant to such guidance and related provisions of the CARES Act, through 2021, we did not treat certain COVID-19 -related loan modifications as TDRs Additional information on COVID-19 Modifications can be found in Item 8. "Financial Statements and Supplementary Data, Notes to Consolidated Financial Statements, Note 1. Summary of Significant Accounting Policies" under the caption, "Guidance on Non-TDR Loan Modifications due to COVID-19," and "Note 4. Loans and Allowance for Credit Losses" under the caption, "COVID-19 Deferrals."
In addition, the spread of the coronavirus caused us to modify our business practices from time to time, including the implementation of temporary branch and office closures. We may take further actions in the future as may be required by government authorities or that we determine are in the best interests of our employees, customers and business partners. Although we have initiated a remote work protocol, if significant portions of our workforce, including key personnel, are unable to work effectively because of illness, government actions or other restrictions in connection with the pandemic, the impact of the pandemic on our business could be exacerbated. Further, increased levels of remote access may create additional opportunities for cybercriminals to attempt to exploit vulnerabilities, and our employees may be more susceptible to phishing and social engineering attempts in the remote environment. Our technological resources also may become strained due to the number of remote users.
Given the continuing dynamic nature of the circumstances, it is difficult to predict the full impact of the COVID-19 pandemic on our business. The United States government has taken steps to attempt to mitigate some of the more severe anticipated economic effects of the pandemic, including the passage of the CARES Act and subsequent legislation, but there can be no assurance that such steps will be effective or achieve their desired results in a timely fashion. The extent of such impact from the COVID-19 pandemic and related mitigation efforts will depend on future developments, which are highly uncertain, including, but not limited to, the potential for a resurgence or additional waves or variants of the coronavirus, actions to contain or treat the virus, including public acceptance of vaccines, and how quickly and to what extent normal economic and operating conditions can resume.
As the result, we could be subject to any of the following risks, among others, any of which have had, or could be expected to have or continue to have, an adverse effect on our business, financial condition and results of operations:
•demand for our products and services may decline, making it difficult to grow assets and income;
•loan delinquencies, problem assets and foreclosures may increase, resulting in increased charges and reduced income;
•collateral for loans, especially real estate, may decline in value, which could cause loan losses to increase;
•our allowance for loan losses may have to be increased if borrowers experience financial difficulties beyond forbearance periods, which will adversely affect our net income;
•the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us; and
Although the ultimate impact of these factors over the longer term is uncertain and we do not yet know the full extent of the impacts on our business, our operations or the global economy as a whole, the decline in economic conditions generally and the prolonged negative impact on small to medium-sized businesses, in particular, due to COVID-19 is likely to result in an adverse effect on our business, financial condition and results of operations in future periods and may heighten many of our other known risks described herein.
Our revenues are highly correlated to market interest rates.
Our assets and liabilities are primarily monetary in nature, and as a result, we are subject to significant risks tied to changes in interest rates. Our ability to operate profitably is largely dependent upon net interest income. In 2021, net interest income made
up 64.2% of our revenue. Unexpected movement in interest rates, that may or may not change the slope of the current yield curve, could cause our net interest margins to decrease, subsequently decreasing net interest income. In addition, such changes could materially adversely affect the valuation of our assets and liabilities.
At present our one-year interest rate sensitivity position is asset sensitive, such that a gradual increase in interest rates during the next twelve months should have a positive impact on net interest income during that period. However, as with most financial institutions, our results of operations are affected by changes in interest rates and our ability to manage this risk. The difference between interest rates charged on interest-earning assets and interest rates paid on interest-bearing liabilities may be affected by changes in market interest rates, changes in relationships between interest rate indices, and changes in the relationships between long-term and short-term market interest rates. In addition, the mix of assets and liabilities could change as varying levels of market interest rates might present our customer base with more attractive options.
Certain changes in interest rates, inflation, deflation or the financial markets could affect demand for our products and our ability to deliver products efficiently.
Loan originations, and potentially loan revenues, could be materially adversely impacted by sharply rising interest rates. Conversely, sharply falling rates could increase prepayments within our securities portfolio lowering interest earnings from those investments. Rising inflation could cause our operating costs related to salaries and benefits, technology and supplies to increase at a faster pace than our revenues.
The fair market value of our securities portfolio and the investment income from these securities also fluctuate depending on general economic and market conditions. In addition, actual net investment income and/or cash flows from investments that carry prepayment risk, such as mortgage-backed and other asset-backed securities, may differ from those anticipated at the time of investment as a result of interest rate fluctuations.
Cyberattacks or other security breaches could have a material adverse effect on our business.
In the normal course of business, we collect, process and retain sensitive and confidential information regarding our customers. We also have arrangements in place with other third parties through which we share and receive information about their customers who are or may become our customers. Although we devote significant resources and management focus to ensuring the integrity of our systems through information security and business continuity programs, our facilities and systems, and those of third-party service providers, are vulnerable to external or internal security breaches, acts of vandalism, computer viruses, misplaced or lost data, programming or human errors or other similar events. Additionally, information security may be adversely affected by the current or anticipated impact of military conflict, including escalating military tension between Russia and Ukraine, terrorism or other geopolitical events.
Information security risks for financial institutions like us continue to increase in part because of new technologies, the use of the Internet and telecommunications technologies (including mobile devices) to conduct financial and other business transactions and the increased sophistication and activities of organized crime, perpetrators of fraud, hackers, terrorists and others. In addition to cyberattacks or other security breaches involving the theft of sensitive and confidential information, hackers continue to engage in attacks against financial institutions. These attacks include denial of service attacks designed to disrupt external customer facing services and ransomware attacks designed to deny organizations access to key internal resources or systems. We are not able to anticipate or implement effective preventive measures against all security breaches of these types, especially because the techniques used change frequently and because attacks can originate from a wide variety of sources. We employ detection and response mechanisms designed to contain and mitigate security incidents, but early detection may be thwarted by sophisticated attacks and malware designed to avoid detection.
We rely heavily on communications and information systems to conduct our business. Accordingly, we also face risks related to cyberattacks and other security breaches in connection with our own and third-party systems, processes and data, including credit and debit card transactions that typically involve the transmission of sensitive information regarding our customers through various third parties, including merchant acquiring banks, payment processors, payment card networks (e.g., Visa, MasterCard) and our processors. Some of these parties have in the past been the target of security breaches and cyberattacks, and because the transactions involve third parties and environments such as the point of sale that we do not control or secure, future security breaches or cyberattacks affecting any of these third parties could impact us through no fault of our own, and in some cases we may have exposure and suffer losses for breaches or attacks relating to them. We also rely on numerous other third-party service providers to conduct other aspects of our business operations and face similar risks relating to them. While we conduct security reviews on these third parties, we cannot be sure that their information security protocols are sufficient to withstand a cyberattack or other security breach.
The access by unauthorized persons to, or the improper disclosure by us of, confidential information regarding our customers or our own proprietary information, software, methodologies and business secrets could result in significant legal and financial exposure, supervisory liability, damage to our reputation or a loss of confidence in the security of our systems, products and services, which could have a material adverse effect on our business, financial condition or results of operations. In addition, our industry continues to experience well-publicized attacks or breaches affecting others in our industry that have heightened concern by consumers generally about the security of using credit and debit cards, which have caused some consumers, including our customers, to use our credit and debit cards less in favor of alternative methods of payment and has led to increased regulatory focus on, and potentially new regulations relating to, these methods. Further cyberattacks or other breaches in the future, whether affecting us or others, could intensify consumer concern and regulatory focus and result in reduced use of our cards, increased costs and regulatory penalties, all of which could have a material adverse effect on our business. To the extent we are involved in any future cyberattacks or other breaches, our brand and reputation could be affected, which could also have a material adverse effect on our business, financial condition or results of operations.
Our concentration of real estate loans subjects the Company to risks that could materially adversely affect our results of operations and financial condition.
The majority of our loan portfolio is secured by real estate. Declines in real estate values could cause the revenue stream from those loans to come under stress and require additional provision to the allowance for loan losses. Our ability to dispose of foreclosed real estate and resolve credit quality issues is dependent upon real estate activity and real estate prices, both of which can become highly unpredictable.
Greater loan losses than expected may materially adversely affect our earnings.
We, as lenders, are exposed to the risk that our customers will be unable to repay their loans in accordance with their terms and that any collateral securing the payment of their loans may not be sufficient to assure repayment. Credit losses are inherent in the business of making loans and could have a material adverse effect on our operating results. Our credit risk with respect to our real estate and construction loan portfolio will relate principally to the creditworthiness of business entities and the value of the real estate serving as security for the repayment of loans. Our credit risk with respect to our commercial loan portfolio will relate principally to the general creditworthiness of businesses within our local markets. Our credit risk with respect to our consumer loan portfolio will relate principally to the general creditworthiness of individuals.
We make various assumptions and judgments about the collectability of our loan portfolio and provide an allowance for estimated loan losses based on a number of factors. We believe that our current allowance for loan losses is adequate. However, if our assumptions or judgments prove to be incorrect, the allowance for loan losses may not be sufficient to cover actual loan losses. We may have to increase our allowance in the future in response to the request of one of our primary banking regulators, to adjust for changing conditions and assumptions, or as a result of any deterioration in the quality of our loan portfolio. The actual amount of future provisions for loan losses cannot be determined at this time and may vary from the amounts of past provisions.
Our business is highly correlated to local economic conditions in a geographically concentrated part of the United States.
Unlike larger organizations that are more geographically diversified, our banking offices are primarily concentrated in select markets in Georgia, Alabama, Florida, North Carolina and South Carolina. As a result of this geographic concentration, our financial results depend largely upon economic conditions in these market areas. Deterioration in economic conditions in the markets we serve could result in one or more of the following:
•an increase in loan delinquencies;
•an increase in problem assets and foreclosures;
•a decrease in the demand for our products and services; and
•a decrease in the value of collateral for loans, especially real estate, in turn reducing customers’ borrowing power, the value of assets associated with problem loans and collateral coverage.
We face additional risks due to our increased mortgage banking activities that could negatively impact net income and profitability.
We sell the majority of the mortgage loans that we originate. The sale of these loans generates noninterest income and can be a source of liquidity for the Bank. Disruption in the secondary market for residential mortgage loans as well as declines in real estate values, among other economic variables, could result in one or more of the following:
•rising interest rates could cause a decline in mortgage originations, which could negative impact our earnings;
•our inability to sell mortgage loans on the secondary market could negatively impact our liquidity position;
•reductions in real estate values could decrease the potential for mortgage originations, which could negatively impact our earnings;
•if it is determined that loans were made in breach of our representations and warranties to the secondary market, we could incur losses associated with the loans; and
•increased compliance requirements could result in higher compliance costs, higher foreclosure proceedings or lower loan origination volume, all which could negatively impact future earnings
As a participating lender in the SBA’s PPP, the Company is subject to added risks, including credit, compliance, fraud and litigation risks.
The Company participated in the PPP as an eligible lender with the benefit of a government guaranty of loans to small business clients.
As a PPP lender, we face increased risks, particularly in terms of credit, fraud and litigation risks. Additionally, despite subsequent rounds of legislation and associated agency guidance, some inconsistencies and ambiguities remain regarding PPP requirements, and the Company is exposed to risks relating to compliance with program requirements, including the risk of becoming the subject of governmental investigations, enforcement actions and private litigation, as well as the risk of any associated negative publicity.
We have additional credit risk with respect to PPP loans if a determination is made by the SBA that there is a deficiency in the manner in which the loan was originated, funded or serviced, such as an issue with the eligibility of a borrower to receive a PPP loan, which may or may not be related to the ambiguity in the laws, rules and guidance regarding the operation of the PPP. In the event of a loss resulting from a default on a PPP loan and a determination by the SBA that there was a deficiency in the manner in which the PPP loan was originated, funded or serviced by the Company, the SBA may deny its liability under the guaranty, reduce the amount of the guaranty or, if it has already paid under the guaranty, seek recovery of any loss related to the deficiency from the Company.
Also, PPP loans are fixed, low interest rate loans as to which a borrower may apply to have all or a portion of the loan forgiven. If PPP borrowers fail to qualify for loan forgiveness, we face a heightened risk of holding these loans at unfavorable interest rates for an extended period of time.
Furthermore, since the launch of the PPP, several banks have been subject to litigation regarding the process and procedures that such banks used in processing applications for the PPP, and the Company may be exposed to the risk of litigation, from both customers and non-customers that approached the Company regarding PPP loans, relating to these or other matters. The costs and effects of litigation related to PPP participation could have an adverse effect on our business, financial condition and results of operations.
Legislation and regulatory proposals enacted in response to market and economic conditions may materially adversely affect our business and results of operations.
The banking industry is heavily regulated. We are subject to examinations, supervision and comprehensive regulation by various federal and state agencies. Our compliance with these regulations is costly and restricts certain of our activities. Banking regulations are primarily intended to protect the broader banking system, the FDIC’s Deposit Insurance Fund and depositors, not shareholders. The burden imposed by federal and state regulations puts banks at a competitive disadvantage compared to less regulated competitors such as finance companies, mortgage banking companies and leasing companies.
In addition, from time to time, various legislative and regulatory initiatives are introduced in Congress and state legislatures, or by regulatory agencies, that may impact the Company or the Bank. Such initiatives may include proposals to expand or contract the powers of bank holding companies and depository institutions or proposals to substantially change the financial institution regulatory system. Such legislation could change the operating environment of Ameris in substantial and unpredictable ways. If enacted, such legislation could increase or decrease the cost of doing business, limit or expand permissible activities or affect the competitive balance among banks, savings associations, credit unions and other financial institutions. The Company cannot predict whether any such legislation will be enacted, and, if enacted, the effect that it, or any implementing regulations, would have on the financial condition or results of operations of the Company. A change in statutes, regulations or regulatory policies applicable to the Company or the Bank could have a material effect on the business of the Company.
Our growth and financial performance may be negatively impacted if we are unable to successfully execute our growth plans.
Economic conditions and other factors, such as our ability to identify appropriate markets for expansion, our ability to recruit and retain qualified personnel, our ability to fund earning asset growth at a reasonable and profitable level, sufficient capital to support our growth initiatives, competitive factors and banking laws, will impact our success.
We may seek to supplement our internal growth through acquisitions. We cannot predict with certainty the number, size or timing of acquisitions, or whether any such acquisitions will occur at all. Our acquisition efforts have traditionally focused on targeted banking entities in markets in which we currently operate and markets in which we believe we can compete effectively. However, as consolidation of the financial services industry continues, the competition for suitable acquisition candidates may increase. We may compete with other financial services companies for acquisition opportunities, and many of these competitors have greater financial resources than we do and may be able to pay more for an acquisition than we are able or willing to pay. We also may need additional debt or equity financing in the future to fund acquisitions. We may not be able to obtain additional financing or, if available, it may not be in amounts and on terms acceptable to us. If we are unable to locate suitable acquisition candidates willing to sell on terms acceptable to us, or we are otherwise unable to obtain additional debt or equity financing necessary for us to continue making acquisitions, we would be required to find other methods to grow our business and we may not grow at the same rate we have in the past, or at all.
Generally, we must receive federal regulatory approval before we can acquire a bank or bank holding company. In determining whether to approve a proposed bank acquisition, federal bank regulators will consider, among other factors, the effect of the acquisition on the competition, financial condition and future prospects. The regulators also review current and projected capital ratios and levels, the competence, experience and integrity of management and its record of compliance with laws and regulations, the convenience and needs of the communities to be served (including both institutions’ CRA performance history), and the effectiveness of the acquiring institution in combating money laundering activities. We cannot be certain when or if, or on what terms and conditions, any required regulatory approvals will be granted. We may also be required to sell banks or branches as a condition to receiving regulatory approval, which condition may not be acceptable to us or, if acceptable to us, may reduce the benefits of any acquisition.
In the past, we have utilized de novo branching in new and existing markets as a way to supplement our growth. De novo branching and any acquisition carry with it numerous risks, including the following:
•the inability to obtain all required regulatory approvals;
•significant costs and anticipated operating losses associated with establishing a de novo branch or a new bank;
•the inability to secure the services of qualified senior management;
•the local market may not accept the services of a new bank owned and managed by a bank holding company headquartered outside of the market area of the new bank;
•economic downturns in the new market;
•the inability to obtain attractive locations within a new market at a reasonable cost; and
•the additional strain on management resources and internal systems and controls.
We have experienced to some extent many of these risks with our de novo branching to date.
We rely on dividends from the Bank for most of our revenue.
Ameris is a separate and distinct legal entity from its subsidiaries. It receives substantially all of its revenue from dividends from the Bank. These dividends are the principal source of funds to pay dividends on the Common Stock and interest and principal on the Company’s debt. Various federal and state laws and regulations limit the amount of dividends that the Bank may pay to the Company. Also, the Company’s right to participate in a distribution of assets upon a subsidiary’s liquidation or reorganization is subject to the prior claims of the subsidiary’s creditors. In the event the Bank is unable to pay dividends to the Company, the Company may not be able to service debt, pay obligations or pay dividends on the Common Stock and its business, financial condition and results of operations may be materially adversely affected. Consequently, cash-based activities, including further investments in the Bank or in support of the Bank, could require borrowings or additional issuances of common or preferred stock.
We are subject to regulation by various federal and state entities.
We are subject to the regulations of the SEC, the Federal Reserve, the FDIC, the GDBF, the CFPB and other governmental agencies and regulatory bodies. New regulations issued by these agencies may adversely affect our ability to carry on our business activities. We are subject to various federal and state laws and certain changes in these laws and regulations may
adversely affect our operations. Noncompliance with certain of these regulations may impact our business plans, including our ability to branch, offer certain products or execute existing or planned business strategies.
We are also subject to the accounting rules and regulations of the SEC and the Financial Accounting Standards Board. Changes in accounting rules could materially adversely affect the reported financial statements or our results of operations and may also require extraordinary efforts or additional costs to implement. Any of these laws or regulations may be modified or changed from time to time, and we cannot be assured that such modifications or changes will not adversely affect us.
We are subject to industry competition which may have an impact upon our success.
Our profitability depends on our ability to compete successfully. We operate in a highly competitive financial services environment. Certain competitors are larger and may have more resources than we do. We face competition in our regional market areas from other commercial banks, savings and loan associations, credit unions, internet banks, mortgage companies, finance companies, mutual funds, insurance companies, brokerage and investment banking firms, and other financial intermediaries that offer similar services. Some of our nonbank competitors are not subject to the same extensive regulations that govern us or our bank subsidiary and may have greater flexibility in competing for business.
Another competitive factor is that the financial services market, including banking services, is undergoing rapid changes with frequent introductions of new technology-driven products and services. Our future success may depend, in part, on our ability to use technology competitively to provide products and services that provide convenience to customers and create additional efficiencies in our operations.
Changes in the policies of monetary authorities and other government action could materially adversely affect our profitability.
Banking is a business which depends on interest rate differentials for success. In general, the difference between the interest paid by a bank on its deposits and its other borrowings, and the interest received by a bank on its loans and securities holdings, constitutes the major portion of a bank’s earnings. Thus, our earnings and growth will be subject to the influence of economic conditions generally, both domestic and foreign, and also to the monetary and fiscal policies of the United States government and its agencies, particularly the Federal Reserve. The Federal Reserve administers monetary policy by setting target interest rates that it attempts to effect, primarily through open market dealings in United States government securities. The Federal Reserve also may specifically target banking institutions through the discount rate at which banks may borrow from the Federal Reserve Banks and the reserve requirements on deposits. The nature and timing of any changes in such policies and their effect on Ameris cannot be known at this time, but could adversely affect our results of operations.
Fiscal policy, the other principal tool of the federal government to oversee the national economy is largely in the hands of Congress through its authority to make taxation and budget decisions, subject to Presidential approval. These decisions may have a significant impact on the economic sectors in which we operate and could adversely affect our results of operations.
We may need to rely on the financial markets to provide needed capital.
Our Common Stock is listed and traded on the Nasdaq Global Select Market (“Nasdaq”). If the liquidity of the Nasdaq market should fail to operate at a time when we may seek to raise equity capital, or if conditions in the capital markets are adverse, we may be constrained in raising capital. Downgrades in the opinions of the analysts that follow our Company may cause our stock price to fall and significantly limit our ability to access the markets for additional capital. Should these risks materialize, our ability to further expand our operations through internal growth or acquisition may be limited.
We may invest or spend the proceeds in stock offerings in ways with which you may not agree and in ways that may not earn a profit.
We may choose to use the proceeds of future stock offerings for general corporate purposes, including for possible acquisition opportunities that may become available. It is not known whether suitable acquisition opportunities may become available or whether we will be able to successfully complete any such acquisitions. We may use the proceeds of an offering only to focus on sustaining our organic, or internal, growth or for other purposes. In addition, we may use all or a portion of the proceeds of an offering to support our capital. You may not agree with the ways we decide to use the proceeds of any stock offerings, and our use of the proceeds may not yield any profits.
The transition away from the London Inter-Bank Offered Rate (LIBOR) will affect our adjustable rate loan and other agreements and may have a negative impact on our business operations.
The authorized administrator of LIBOR, the ICE Benchmark Administration Limited (“IBA”), on March 5, 2021 published a statement confirming its intention to, among other things, cease the publication of one-week and two-month USD LIBOR after December 31, 2021 and all other USD LIBOR tenors (including overnight, one-month, three-month, six-month and twelve-month) after June 30, 2023. Given LIBOR’s extensive use across financial markets, the transition away from LIBOR presents various risks and challenges to financial markets and institutions, including Ameris and the Bank. Our commercial and consumer businesses issue, trade, and hold various products that are indexed to LIBOR. As of December 31, 2021, Ameris had approximately $2.06 billion of loans and derivatives with a notional value of $16.8 million indexed to LIBOR. In addition, we had approximately $304.4 million of debt securities outstanding that are indexed to LIBOR (either currently or in the future) as of December 31, 2021. We had $54.3 million of investment securities indexed to LIBOR as of December 31, 2021. Our financial instruments and products that are indexed to LIBOR are significant, and if not sufficiently planned for, the discontinuation of LIBOR could result in financial, operational, legal, reputational or compliance risks.
We face risks related to our operational, technological and organizational infrastructure.
Our ability to grow and compete is dependent on our ability to build or acquire the necessary operational and technological infrastructure and to manage the cost of that infrastructure while we expand. Similar to other large corporations, in our case, operational risk can manifest itself in many ways, such as errors related to failed or inadequate processes, faulty or disabled computer systems, fraud by employees or persons outside of our Company and exposure to external events. We are dependent on our operational infrastructure to help manage these risks. In addition, we are heavily dependent on the strength and capability of our technology systems which we use both to interface with our customers and to manage our internal financial and other systems. Our ability to develop and deliver new products that meet the needs of our existing customers and attract new customers depends in part on the functionality of our technology systems. Additionally, our ability to run our business in compliance with applicable laws and regulations is dependent on these infrastructures.
We continuously monitor our operational and technological capabilities and make modifications and improvements when we believe it will be cost effective to do so. In some instances, we may build and maintain these capabilities ourselves. We also outsource some of these functions to third parties. These third parties may experience errors or disruptions that could adversely impact us and over which we may have limited control. We also face risk from the integration of new infrastructure platforms and/or new third party providers of such platforms into our existing businesses.
Financial services companies depend on the accuracy and completeness of information about customers and counterparties.
In deciding whether to extend credit or enter into other transactions, the Company may rely on information furnished by or on behalf of customers and counterparties, including financial statements, credit reports and other financial information. The Company may also rely on representations of those customers, counterparties or other third parties, such as independent auditors, as to the accuracy and completeness of that information. Reliance on inaccurate or misleading financial statements, credit reports or other financial information could have a material adverse impact on the Company’s business and, in turn, the Company’s financial condition and results of operations.
Reputational risk and social factors may impact our results.
Our ability to originate and maintain accounts is highly dependent upon customer and other external perceptions of our business practices and our financial health. Adverse perceptions regarding our business practices or our financial health could damage our reputation in both the customer and funding markets, leading to difficulties in generating and maintaining accounts as well as in financing them. Adverse developments with respect to the consumer or other external perceptions regarding the practices of our competitors, or our industry as a whole, may also adversely impact our reputation. In addition, adverse reputational impacts on third parties with whom we have important relationships may also adversely impact our reputation. Adverse impacts on our reputation, or the reputation of our industry, may also result in greater regulatory or legislative scrutiny, which may lead to laws, regulations or regulatory actions that may change or constrain the manner in which we engage with our customers and the products we offer. Adverse reputational impacts or events may also increase our litigation risk. We carefully monitor internal and external developments for areas of potential reputational risk and have established governance structures to assist in evaluating such risks in our business practices and decisions, but we cannot be certain that our efforts will completely mitigate these risks.
We may not be able to attract and retain skilled people.
The Company’s success depends, in large part, on its ability to attract and retain key people. Competition for the best people in most activities engaged in by the Company can be intense, and the Company may not be able to hire people or to retain them.
The unexpected loss of services of one or more of the Company’s key personnel could have a material adverse impact on the Company’s business because of their skills, knowledge of the Company’s market, years of industry experience and the difficulty of promptly finding qualified replacement personnel.
We engage in acquisitions of other businesses from time to time. These acquisitions may not produce revenue or earnings enhancements or cost savings at levels or within timeframes originally anticipated and may result in unforeseen integration difficulties.
When appropriate opportunities arise, we will engage in acquisitions of other businesses. Difficulty in integrating an acquired business or company may cause us not to realize expected revenue increases, cost savings, increases in geographic or product presence or other anticipated benefits from any acquisition. The integration could result in higher than expected deposit attrition (run-off), loss of key employees, disruption of our business or the business of the acquired company, or otherwise adversely affect our ability to maintain relationships with customers and employees or achieve the anticipated benefits of the acquisition. We will likely need to make additional investments in equipment and personnel to manage higher asset levels and loan balances as a result of any significant acquisition, which may materially adversely impact our earnings. Also, the negative effect of any divestitures required by regulatory authorities in acquisitions or business combinations may be greater than expected.
Depending on the condition of any institution that we may acquire, any acquisition may, at least in the near term, materially adversely affect our capital and earnings and, if not successfully integrated following the acquisition, may continue to have such effects.
Natural disasters, geopolitical events, public health crises and other catastrophic events beyond our control could adversely affect us.
Natural disasters such as hurricanes, tropical storms, floods, wildfires, extreme weather conditions and other acts of nature, geopolitical events such as those involving civil unrest, changes in government regimes, terrorism or military conflict, pandemics and other public health crises, and other catastrophic events could adversely affect our business operations and those of our customers, counterparties and service providers, and cause substantial damage and loss to real and personal property, including damage to or destruction of mortgaged properties or our own banking facilities and offices. Natural disasters, geopolitical events, public health crises and other catastrophic events, or concerns about the occurrence of any such events, could impair our borrowers’ ability to service their loans, decrease the level and duration of deposits by customers, erode the value of loan collateral, including mortgaged properties, result in an increase in the amount of our non-performing loans and a higher level of non-performing assets, including real estate owned, net charge-offs and provision for loan losses, lead to other operational difficulties and impair our ability to manage our business, which could materially and adversely affect our business, financial condition, results of operations and the value of our common stock. We also could be adversely affected if our key personnel or a significant number of our employees were to become unavailable due to a public health crisis (such as an outbreak of a contagious disease), natural disaster, war, act of terrorism, accident or other reason. Additionally, financial markets may be adversely affected by the current or anticipated impact of military conflict, including escalating military tension between Russia and Ukraine, terrorism or other geopolitical events.
RISKS RELATED TO OUR COMMON STOCK
The price of our Common Stock is volatile and may decline.
The trading price of our Common Stock may fluctuate widely as a result of a number of factors, many of which are outside our control. In addition, the stock market is subject to fluctuations in the share prices and trading volumes that affect the market prices of the shares of many companies. These broad market fluctuations have adversely affected and may continue to adversely affect the market price of our Common Stock. Among the factors that could affect our stock price are:
•actual or anticipated quarterly fluctuations in our operating results and financial condition;
•changes in revenue or earnings estimates or publication of research reports and recommendations by financial analysts or actions taken by rating agencies with respect to our securities or those of other financial institutions;
•failure to meet analysts’ revenue or earnings estimates;
•speculation in the press or investment community;
•strategic actions by us or our competitors, such as acquisitions or restructurings;
•actions by institutional shareholders;
•fluctuations in the stock price and operating results of our competitors;
•general market conditions and, in particular, developments related to market conditions for the financial services industry;
•proposed or adopted regulatory changes or developments, including changes in accounting rules;
•proposed or adopted changes or developments in tax policies or rates;
•anticipated or pending investigations, proceedings or litigation that involve or affect us; or
•domestic and international economic factors unrelated to our performance.
A significant decline in our stock price could result in substantial losses for individual shareholders and could lead to costly and disruptive securities litigation.
Securities issued by us, including our Common Stock, are not FDIC insured.
Securities issued by us, including our Common Stock, are not savings or deposit accounts or other obligations of any bank and are not insured by the FDIC, the Deposit Insurance Fund or any other governmental agency or instrumentality, or any private insurer, and are subject to investment risk, including the possible loss of principal.
Holders of the Company’s debt obligations and any shares of the Company’s preferred stock that may be outstanding in the future will have priority over the Company’s common stock with respect to payment in the event of liquidation, dissolution or winding up and with respect to the payment of interest and preferred dividends.
In the event of any winding up and termination of the Company, our Common Stock would rank below all claims of the holders of the Company’s debt and any preferred stock then outstanding. As of December 31, 2021, we had outstanding trust preferred securities and accompanying junior subordinated debentures with a carrying value of $126.3 million and other subordinated notes payable with a carrying value of $427.2 million.
Upon the winding up and termination of the Company, holders of our Common Stock will not be entitled to receive any payment or other distribution of assets until after all of our obligations to our debt holders have been satisfied and holders of our senior debt, subordinated debt and junior subordinated debentures issued in connection with trust preferred securities have received any payments and other distributions due to them. In addition, we are required to pay interest on our senior debt, subordinated debt and junior subordinated debentures issued in connection with the Company’s trust preferred securities before we pay any dividends on our Common Stock.
We may borrow funds or issue additional debt and equity securities or securities convertible into equity securities, any of which may be senior to our Common Stock as to distributions and in liquidation, which could negatively affect the value of our Common Stock.
In the future, we may attempt to increase our capital resources by entering into debt or debt-like financing that is unsecured or secured by all or up to all of our assets, or by issuing additional debt or equity securities, which could include issuances of secured or unsecured commercial paper, medium-term notes, senior notes, subordinated notes, preferred stock, common stock or securities convertible into or exchangeable for equity securities. In the event of our liquidation, our lenders and holders of our debt and preferred securities would receive a distribution of our available assets before distributions to the holders of our Common Stock. Because our decision to incur debt and issue securities in our future offerings will depend on market conditions and other factors beyond our control, we cannot predict or estimate with certainty the amount, timing or nature of our future offerings and debt financings. Further, market conditions could require us to accept less favorable terms for the issuance of our securities in the future. In addition, the borrowing of funds or issuance of debt would increase our leverage and decrease our liquidity, and the issuance of additional equity securities would dilute the interests of our existing shareholders.
You may not receive dividends on the Common Stock.
Holders of our Common Stock are only entitled to receive such dividends as our Board of Directors may declare out of funds legally available for such payments. Although we have consistently paid dividends on our Common Stock in recent years, the payment of dividends could be suspended at any time.
Sales of a significant number of shares of our Common Stock in the public markets, or the perception of such sales, could depress the market price of our Common Stock.
Sales of a substantial number of shares of our Common Stock in the public markets and the availability of those shares for sale could adversely affect the market price of our Common Stock. In addition, future issuances of equity securities, including pursuant to outstanding options, could dilute the interests of our existing shareholders and could cause the market price of our Common Stock to decline. We may issue such additional equity or convertible securities to raise additional capital. Depending on the amount offered and the levels at which we offer the stock, issuances of common or preferred stock could be substantially dilutive to shareholders of our Common Stock. Moreover, to the extent that we issue restricted stock, phantom shares, stock appreciation rights, options or warrants to purchase our Common Stock in the future and those stock appreciation rights, options
or warrants are exercised or as shares of the restricted stock vest, our shareholders may experience further dilution. Holders of our shares of Common Stock have no preemptive rights that entitle holders to purchase their pro rata share of any offering of shares of any class or series and, therefore, such sales or offerings could result in increased dilution to our shareholders. We cannot predict with certainty the effect that future sales of our Common Stock would have on the market price of our Common Stock.

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ITEM 1B. UNRESOLVED STAFF COMMENTS
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.

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ITEM 2. PROPERTIES
ITEM 2. PROPERTIES
The Company’s corporate headquarters is located at 3490 Piedmont Road N.E., Suite 1550, Atlanta, Georgia 30305. The Company occupies approximately 19,200 square feet at this location plus an additional 90,800 square feet used for a branch location and support services for banking operations, including credit, marketing and operational support. The Company also leases approximately 38,000 square feet in Jacksonville, Florida used for additional corporate support services. Inclusive of the branch at its headquarters, Ameris operates 165 office or branch locations. Of the 165 branch locations, 136 are owned and 29 are subject to either building or ground leases. Ameris also operates 35 mortgage and loan production offices, all of which are subject to building leases. At December 31, 2021, there were no significant encumbrances on the offices, equipment or other operational facilities owned by Ameris and the Bank.

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ITEM 3. LEGAL PROCEEDINGS
ITEM 3. LEGAL PROCEEDINGS
Disclosure concerning legal proceedings can be found in Item 8. "Financial Statements and Supplementary Data, Notes to Consolidated Financial Statements, Note 20. Commitments and Contingent Liabilities" under the caption, "Litigation and Regulatory Contingencies," which is incorporated herein by reference.

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ITEM 4. MINE SAFETY DISCLOSURE
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
PART II

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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
The Common Stock is listed on Nasdaq under the symbol “ABCB”. As of February 18, 2022, there were approximately 3,636 holders of record of the Common Stock. The Company believes a portion of Common Stock outstanding is held either in nominee name or street name brokerage accounts; therefore, the Company is unable to determine the number of beneficial owners of the Common Stock.
The amount of and nature of any dividends declared on our Common Stock will be determined by our Board of Directors in its sole discretion. The Company is required to comply with the restrictions on the payment of dividends in respect of the Common Stock discussed in the section of Part I, Item 1 of this Annual Report captioned “Payment of Dividends and Other Restrictions.”
Repurchases of Common Stock
The table below sets forth information regarding the Company’s repurchase of shares of its outstanding common stock during the three-month period ended December 31, 2021.
Period Total
Number of
Shares
Purchased Average Price
Paid Per Share Total Number
of Shares
Purchased as
Part of Publicly
Announced
Plans or
Programs Approximate
Dollar Value of
Shares That
May Yet be
Purchased
Under the Plans
or Programs(1)
October 1, 2021 through October 31, 2021 - $ - - $ 79,190,199
November 1, 2021 through November 30, 2021(2)
306 $ 54.23 - $ 79,190,199
December 1, 2021 through December 31, 2021(2)
26,857 $ 48.49 25,859 $ 77,936,808
Total 27,163 $ 48.55 25,859 $ 77,936,808
(1) On September 19, 2019, the Company announced that its Board of Directors authorized the Company to repurchase up to $100.0 million of its outstanding common stock through October 31, 2020. On October 22, 2020 and again on October 28, 2021, the Company announced that its Board of Directors had approved the extension of the share repurchase program for an additional year in each instance. As a result, the Company is currently authorized to engage in repurchases through October 31, 2022. 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 December 31, 2021, $22.1 million, or 521,893 shares of the Company's common stock, had been repurchased under the program.
(2) The shares purchased from November 1, 2021 through November 30, 2021 and December 1, 2021 through December 31, 2021 include 306 and 998 shares of common stock, respectively, surrendered to the Company in payment of the income tax withholding obligations relating to the vesting of shares of restricted stock.
Performance Graph
Set forth below is a line graph comparing the change in the cumulative total shareholder return on the Common Stock against the cumulative return of the NASDAQ Stock Market (U.S. Companies) index and the index of KBW NASDAQ Bank Stocks for the five-year period commencing December 31, 2016 and ending December 31, 2021. This line graph assumes an investment of $100 on December 31, 2016, and reinvestment of dividends and other distributions to shareholders.
Period Ending
Index 12/31/2016 12/31/2017 12/31/2018 12/31/2019 12/31/2020 12/31/2021
Ameris Bancorp 100.00 111.50 73.93 100.60 92.25 121.79
NASDAQ Stock Market (US Companies) 100.00 129.64 125.96 172.18 249.51 304.85
KBW NASDAQ Bank Stocks 100.00 118.59 97.58 132.84 119.14 164.80
Source: S&P Global Market Intelligence
Pursuant to the regulations of the SEC, this performance graph is not “soliciting material,” is not deemed filed with the SEC and is not to be incorporated by reference in any filing of the Company under the Securities Act or the Exchange Act.

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ITEM 6. SELECTED FINANCIAL DATA
ITEM 6. [Reserved]

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
During 2021, the Company reported net income of $376.9 million, or $5.40 per diluted share, compared with $262.0 million, or $3.77 per diluted share, in 2020. The Company’s net income as a percentage of average assets for 2021 and 2020 was 1.73% and 1.36%, respectively, while the Company’s net income as a percentage of average shareholders’ equity was 13.33% and 10.35%, respectively. Reported net income for the year ended December 31, 2020 includes $145.4 million in provision for credit losses, primarily related to economic conditions resulting from the COVID-19 pandemic, compared with a provision release of $35.4 million in 2021.
Highlights of the Company’s performance in 2021 include the following:
•Growth in adjusted net earnings1 of $68.2 million, representing a 22.7% increase over 2020
•Organic growth in loans of $727.5 million, or 5.0% (and $1.43 billion, or 10.5% exclusive of PPP loans)
•Adjusted return on average assets1 of 1.69%, compared with 1.56% in 2020
•Adjusted return on average tangible common equity1 of 20.19%, compared with 19.77% in 2020
•Net interest margin of 3.32% during 2021, down 38 basis points from 2020 amid challenging interest rate environment and excess liquidity from deposit growth during the year
•Growth in tangible book value per share1 of 10.8%, from $23.69 at the end of 2020 to $26.26 at the end of 2021
•Improvement in deposit mix with noninterest bearing deposits representing 39.5% of total deposits at the end of 2021
•Annualized net charge-offs of 0.04% of average total loans, compared with 0.31% in 2020
•Continued management of nonperforming assets, down five basis points to 0.43% of total assets compared with 2020
•Successfully completed the acquisition of Balboa Capital Corporation in December 2021
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1 A reconciliation of non-GAAP financial measures can be found in the following table.
Adjusted Net Income Reconciliation
Year Ended
December 31,
(dollars in thousands except per share data) 2021 2020
Net income available to common shareholders $ 376,913 $ 261,988
Adjustment items:
Merger and conversion charges 4,206 1,391
Restructuring charge - 1,513
Servicing right impairment (14,530) 40,067
Expenses related to SEC and DOJ investigation - 3,058
Natural disaster and pandemic expenses (Note 1) - 3,296
Gain on BOLI proceeds (603) (948)
Loss on sale of premises 510 624
Tax effect of adjustment items (Note 2) 2,203 (10,488)
After-tax adjustment items (8,214) 38,513
Adjusted net income $ 368,699 $ 300,501
Average assets $ 21,847,731 $ 19,240,493
Reported return on average assets 1.73 % 1.36 %
Adjusted return on average assets 1.69 % 1.56 %
Average common equity $ 2,827,669 $ 2,531,419
Average tangible common equity $ 1,826,433 $ 1,520,303
Reported return on average common equity 13.33 % 10.35 %
Adjusted return on average tangible common equity 20.19 % 19.77 %
Total shareholders' equity $ 2,966,451 $ 2,647,088
Less:
Goodwill 1,012,620 928,005
Other intangibles, net 125,938 71,974
Total tangible shareholders' equity $ 1,827,893 $ 1,647,109
Period end number of shares 69,609,228 69,541,481
Book value per share $ 42.62 $ 38.06
Tangible book value per share $ 26.26 $ 23.69
Note 1: Pandemic charges include "thank you" pay for certain employees, additional sanitizing expenses at our locations, protective equipment for our employees and branch locations, and additional equipment required to support our remote workforce.
Note 2: A portion of the merger and conversion charges for both periods are nondeductible for tax purposes.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Ameris has established certain accounting and financial reporting policies to govern the application of accounting principles generally accepted in the United States of America (“GAAP”) in the preparation of its financial statements. Our significant accounting policies are described in Note 1 to the consolidated financial statements. Certain accounting policies involve significant judgments and assumptions by management which have a material impact on the carrying value of certain assets and liabilities; management considers these accounting policies to be critical accounting policies. The judgments and assumptions used by management are based on historical experience and other factors which are believed to be reasonable under the circumstances. Because of the nature of the judgments and assumptions made by management, actual results could differ from the judgments and estimates adopted by management which could have a material impact on the carrying values of assets and liabilities and the results of our operations. We believe the following accounting policies applied by Ameris represent critical accounting policies.
Allowance for Credit Losses
We believe the allowance for credit losses ("ACL") is a critical accounting policy that requires significant judgments and estimates used in the preparation of our consolidated financial statements. The ACL is a valuation allowance estimated at each balance sheet date in accordance with GAAP that is deducted from financial assets measured at amortized cost to present the
net amount expected to be collected on those assets. Management uses a systematic methodology to determine its ACL for loans and certain off-balance-sheet credit exposures. Management considers relevant information including past events, current conditions, and reasonable and supportable forecasts on the collectability of the loan portfolio. The Company’s estimate of its ACL involves a high degree of judgment; therefore, management’s process for determining expected credit losses may result in a range of expected credit losses. It is possible that others, given the same information, may at any point in time reach a different reasonable conclusion.
Loans which share common risk characteristics are pooled for the purposes of determining the ACL. Management uses the discounted cash flow method or the PD×LGD method, which may be adjusted for qualitative factors, in measuring the ACL for pooled loans. Loans which do not share common risk characteristics are evaluated on an individual basis. When repayment is expected to be from the operation of the collateral, expected credit losses are calculated as the amount by which the amortized cost basis of the loan exceeds the present value of expected cash flows from the operation of the collateral. The expected credit losses may also be calculated, in the alternative, as the amount by which the amortized cost basis of the loan exceeds the estimated fair value of the collateral. When repayment is expected to be from the sale of the collateral, expected credit losses are calculated as the amount by which the amortized cost basis of the loan exceeds the fair value of the underlying collateral less estimated cost to sell.
Management believes that the ACL is adequate. While management uses available information to recognize expected losses on loans, future additions to the ACL may be necessary based on changes in economic conditions. In addition, various regulatory agencies, as an integral part of their examination processes, periodically review the Company’s ACL. Such agencies may require the Company to recognize additions to the ACL based on their judgments about information available to them at the time of their examination.
As discussed in Note 4 to the consolidated financial statements, Management determined the ACL on loans at December 31, 2021 using a weighting of five Moody's economic scenarios. If Management utilized the downside 96th percentile S-4 scenario from Moody's, the quantitative portion of the ACL on loans would have increased approximately $29.4 million.
Business Combinations
Assets purchased and liabilities assumed in a business combination are recorded at their fair value. The fair value of a loan portfolio acquired in a business combination requires greater levels of management estimates and judgment than the remainder of purchased assets or assumed liabilities. Loans which have experienced a more-than-insignificant deterioration in credit quality since origination, as determined by our assessment are considered purchased credit deteriorated ("PCD") loans. At acquisition, the expected credit loss of a PCD loan is added to the allowance for credit losses. The non-credit discount or premium is the difference between the unpaid principal balance and amortized cost basis as of the acquisition date of the PCD loan. Subsequent to the acquisition date, the change in the allowance for credit losses on PCD loans is recognized through provision for credit losses. The non-credit discount or premium is accreted or amortized, respectively, into interest income over the remaining life of the PCD loan on a level-yield basis.
Prior to the adoption of CECL, on the date of acquisition, when loans had evidence of credit deterioration since origination and it was probable at the date of acquisition that the Company would not collect all contractually required principal and interest payments ("purchased credit impaired loans"), the difference between contractually required payments at acquisition and the cash flows expected to be collected at acquisition was referred to as the nonaccretable difference. The Company estimated expected cash flows at each reporting date. Subsequent decreases to the expected cash flows would generally result in a provision for credit losses. Subsequent increases in cash flows resulted in a reversal of the provision for credit losses to the extent of prior charges and adjusted accretable yield which would have a positive impact on future interest income. In accordance with the transition requirements within the CECL standard, the Company's purchased credit impaired loans were treated as PCD loans upon adoption.
Income Taxes
As required by GAAP, we use the asset and liability method of accounting for deferred income taxes and provide deferred income taxes for all significant income tax temporary differences. See Note 13, “Income Taxes,” in the notes to consolidated financial statements for additional details.
As part of the process of preparing our consolidated financial statements we are required to estimate our income taxes in each of the jurisdictions in which we operate. This process involves estimating our actual current tax exposure together with assessing temporary differences resulting from differing treatment of items, such as the provision for credit losses and gains on FDIC-
assisted transactions, for tax and financial reporting purposes. These differences result in deferred tax assets and liabilities that are included in our consolidated balance sheet.
We must also assess the likelihood that our deferred tax assets will be recovered from future taxable income, and to the extent we believe that recovery is not likely, we must establish a valuation allowance. Significant management judgment is required in determining our provision for income taxes, our deferred tax assets and liabilities and any valuation allowance recorded against our net deferred tax assets. To the extent we establish a valuation allowance or adjust this allowance in a period, we must include an expense within the tax provisions in the statement of income.
Long-Lived Assets, Including Intangibles
Goodwill represents the excess of cost over the fair value of the net assets purchased in business combinations. Goodwill is required to be tested annually for impairment or whenever events occur that may indicate that the recoverability of the carrying amount is not probable. In the event of an impairment, the amount by which the carrying amount exceeds the fair value is charged to earnings. The Company performs its annual impairment testing of goodwill in the fourth quarter of each year.
Intangible assets include core deposit premiums from various past bank acquisitions as well as intangible assets recorded in connection with the certain non-bank acquisitions for referral relationships, trade names, non-compete agreements and patent assets. Intangible assets are initially recognized based on a valuation performed as of the acquisition date.
Core deposit premiums acquired in various past bank acquisitions are based on the established value of acquired customer deposits. The core deposit premium is initially recognized based on a valuation performed as of the acquisition date and is amortized over an estimated useful life of seven to ten years.
The referral relationships intangible is amortized over an estimated useful life of eight to ten years. Trade name intangible assets are being amortized over an estimated useful life of five to seven years. Non-compete agreement and patent intangible assets are being amortized over estimated useful lives of three years and ten years, respectively.
The valuation of intangible assets involves significant forward looking assumptions such as economic conditions, market interest rates, asset growth rates, credit losses, etc. Changes in any of these assumptions could materially affect the valuation of the intangible assets.
Amortization periods for intangible assets are reviewed annually in connection with the annual impairment testing of goodwill.
Servicing Assets
We sell residential mortgage and SBA loans with servicing retained. We have also assumed servicing of loans sold with servicing retained, primarily indirect automobile loan pools, in prior acquisitions. When the contractual servicing fees on loans sold with servicing retained are expected to be more than adequate compensation to a servicer for performing the servicing, a capitalized servicing asset is recognized. Servicing assets are subsequently measured using the amortization method which requires servicing rights to be amortized into non-interest income in proportion to, and over the period of, the estimated future net servicing income of the underlying loans. Management makes certain estimates and assumptions related to costs to service varying types of loans and pools of loans, the projected lives of loans and pools of loans sold, and discount factors used in calculating the present values of servicing fees projected to be received.
No less frequently than quarterly for mortgage servicing rights and semi-annually for all other servicing rights, management reviews the status of all loans and pools of loans sold with related capitalized servicing assets to determine if there is any impairment to those assets due to such factors as earlier than estimated repayments or significant prepayments. Any impairment identified in these assets will result in reductions in their carrying values through a valuation allowance and a corresponding increase in operating expenses.
NET INCOME AND EARNINGS PER SHARE
The Company’s net income during 2021 was $376.9 million, or $5.40 per diluted share, compared with $262.0 million, or $3.77 per diluted share, in 2020, and $161.4 million, or $2.75 per diluted share, in 2019.
For the fourth quarter of 2021, the Company recorded net income of $81.9 million, or $1.18 per diluted share, compared with $94.3 million, or $1.36 per diluted share, for the quarter ended December 31, 2020, and $61.2 million, or $0.88 per diluted share, for the quarter ended December 31, 2019.
EARNING ASSETS AND LIABILITIES
Average earning assets were approximately $19.89 billion in 2021, compared with approximately $17.37 billion in 2020. The earning asset and interest-bearing liability mix is regularly monitored to maximize the net interest margin and, therefore, increase return on assets and shareholders’ equity.
The following statistical information should be read in conjunction with the remainder of “Management’s Discussion and Analysis of Financial Condition and Results of Operation” and the consolidated financial statements and related notes included elsewhere in this Annual Report and in the documents incorporated herein by reference.
The following tables set forth the amount of 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. Federally tax-exempt income is presented on a taxable-equivalent basis assuming a 21% federal tax rate.
Year Ended December 31,
2021 2020 2019
(dollars in thousands) Average
Balance
Interest
Income/
Expense
Average
Yield/
Rate Paid
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 $ 2,877,263 $ 3,924 0.14 % $ 564,921 $ 1,886 0.33 % $ 393,733 $ 8,815 2.24 %
Investment securities 842,201 23,252 2.76 1,289,800 33,875 2.63 1,400,440 40,889 2.92
Loans held for sale 1,463,614 42,651 2.91 1,497,051 47,760 3.19 667,078 25,003 3.75
Loans 14,703,956 637,861 4.34 14,018,582 648,137 4.62 10,666,978 566,037 5.31
Total interest-earning assets 19,887,034 707,688 3.56 17,370,354 731,658 4.21 13,128,229 640,744 4.88
Noninterest-earning assets 1,960,697 1,870,139 1,492,956
Total assets $ 21,847,731 $ 19,240,493 $ 14,621,185
Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Savings and interest-bearing demand deposits $ 9,238,812 $ 11,764 0.13 % $ 7,584,732 $ 25,744 0.34 % $ 5,641,123 $ 53,048 0.94 %
Time deposits 1,954,552 10,593 0.54 2,385,296 33,323 1.40 2,696,533 49,485 1.84
Federal funds purchased and securities sold under agreements to repurchase 6,700 20 0.30 12,115 82 0.68 14,043 86 0.61
FHLB advances 48,888 775 1.59 849,546 7,701 0.91 483,735 10,044 2.08
Other borrowings 399,485 19,278 4.83 297,023 15,191 5.11 186,798 11,127 5.96
Subordinated deferrable interest debentures 125,324 5,355 4.27 124,632 6,709 5.38 110,129 7,438 6.75
Total interest-bearing liabilities 11,773,761 47,785 0.41 11,253,344 88,750 0.79 9,132,361 131,228 1.44
Noninterest-bearing demand deposits 7,017,614 5,227,399 3,364,785
Other liabilities 228,687 228,331 153,259
Shareholders' equity 2,827,669 2,531,419 1,970,780
Total liabilities and shareholders’ equity $ 21,847,731 $ 19,240,493 $ 14,621,185
Interest rate spread 3.15 % 3.42 % 3.44 %
Net interest income $ 659,903 $ 642,908 $ 509,516
Net interest margin 3.32 % 3.70 % 3.88 %
RESULTS OF OPERATIONS
Net Interest Income
Net interest income represents the amount by which interest income on interest-earning assets exceeds interest expense incurred on interest-bearing liabilities. Net interest income is the largest component of our income and is affected by the interest rate environment and the volume and composition of interest-earning assets and interest-bearing liabilities. Our interest-earning assets include loans, investment securities, other investments, interest-bearing deposits in banks, federal funds sold and time deposits in other banks. Our interest-bearing liabilities include deposits, securities sold under agreements to repurchase, other borrowings and subordinated deferrable interest debentures.
2021 compared with 2020. For the year ended December 31, 2021, interest income was $703.1 million, a decrease of $23.4 million, or 3.2%, compared with the same period in 2020. Average earning assets increased $2.52 billion, or 14.5%, to $19.89 billion for the year ended December 31, 2021, compared with $17.37 billion for 2020. Yield on average earning assets on a taxable equivalent basis decreased during 2021 to 3.56%, compared with 4.21% for the year ended December 31, 2020. Average yields on all interest-earning asset categories except investment securities decreased from 2020 to 2021 as market interest rates declined.
Interest expense on deposits and other borrowings for the year ended December 31, 2021 was $47.8 million, a decrease of $41.0 million, or 46.2%, compared with $88.8 million for the year ended December 31, 2020. During 2021 average interest-bearing liabilities were $11.77 billion as compared with $11.25 billion for 2020, an increase of $520.4 million, or 4.6%. During 2021, average noninterest-bearing deposit accounts were $7.02 billion and comprised 38.5% of average total deposits, compared with $5.23 billion, or 34.4% of average total deposits, during 2020. Average balances of time deposits amounted to $1.95 billion and comprised 10.7% of average total deposits during 2021, compared with $2.39 billion, or 15.7% of average total deposits, during 2020.
On a taxable-equivalent basis, net interest income for 2021 was $659.9 million, compared with $642.9 million in 2020, an increase of $17.0 million, or 2.6%. The Company’s net interest margin, on a tax equivalent basis, decreased 38 basis points to 3.32% for the year ended December 31, 2021, compared with 3.70% for the year ended December 31, 2020. Accretion income for 2021 decreased to $16.3 million, compared with $27.4 million for 2020.
2020 compared with 2019. For the year ended December 31, 2020, interest income was $726.5 million, an increase of $90.1 million, or 14.2%, compared with the same period in 2019. Average earning assets increased $4.24 billion, or 32.3%, to $17.37 billion for the year ended December 31, 2020, compared with $13.13 billion for 2019. Yield on average earning assets on a taxable equivalent basis decreased during 2020 to 4.21%, compared with 4.88% for the year ended December 31, 2019. Average yields on all interest-earning asset categories decreased from 2019 to 2020 as market interest rates declined.
Interest expense on deposits and other borrowings for the year ended December 31, 2020 was $88.8 million, a decrease of $42.5 million, or 32.4%, compared with $131.2 million for the year ended December 31, 2019. During 2020 average interest-bearing liabilities were $11.25 billion as compared with $9.13 billion for 2019, an increase of $2.12 billion, or 23.2%. During 2020, average noninterest-bearing deposit accounts were $5.23 billion and comprised 34.4% of average total deposits, compared with $3.36 billion, or 28.8% of average total deposits, during 2019. Average balances of time deposits amounted to $2.39 billion and comprised 15.7% of average total deposits during 2020, compared with $2.70 billion, or 23.0% of average total deposits, during 2019.
On a taxable-equivalent basis, net interest income for 2020 was $642.9 million, compared with $509.5 million in 2019, an increase of $133.4 million, or 26.2%. The Company’s net interest margin, on a tax equivalent basis, decreased 18 basis points to 3.70% for the year ended December 31, 2020, compared with 3.88% for the year ended December 31, 2019. Accretion income for 2020 increased to $27.4 million, compared with $19.9 million for 2019.
The summary of changes in interest income and interest expense on a fully taxable equivalent basis resulting from changes in volume and changes in rates for each category of earning assets and interest-bearing liabilities for the years ended December 31, 2021 and 2020 are shown in the following table:
2021 vs. 2020 2020 vs. 2019
Increase Changes Due To Increase Changes Due To
(dollars in thousands) (Decrease) Rate Volume (Decrease) Rate Volume
Increase (decrease) in:
Income from earning assets:
Interest on federal funds sold, interest-bearing deposits in banks and time deposits in other banks $ 2,038 $ (5,682) $ 7,720 $ (6,929) $ (10,762) $ 3,833
Interest on investment securities (10,623) 1,133 (11,756) (7,014) (3,784) (3,230)
Interest on loans held for sale (5,109) (4,042) (1,067) 22,757 (8,352) 31,109
Interest and fees on loans (10,276) (41,964) 31,688 82,100 (95,751) 177,851
Total interest income (23,970) (50,555) 26,585 90,914 (118,649) 209,563
Expense from interest-bearing liabilities:
Interest on savings and interest-bearing demand deposits (13,980) (19,594) 5,614 (27,304) (45,581) 18,277
Interest on time deposits (22,730) (16,712) (6,018) (16,162) (10,450) (5,712)
Interest on federal funds purchased and securities sold under agreements to repurchase (62) (25) (37) (4) 8 (12)
Interest on FHLB advances (6,926) 332 (7,258) (2,343) (9,938) 7,595
Interest on other borrowings 4,087 (1,153) 5,240 4,064 (2,502) 6,566
Interest on trust preferred securities (1,354) (1,391) 37 (729) (1,709) 980
Total interest expense (40,965) (38,543) (2,422) (42,478) (70,172) 27,694
Net interest income $ 16,995 $ (12,012) $ 29,007 $ 133,392 $ (48,477) $ 181,869
Provision for Credit Losses
The Company's provision for credit losses on loans during 2021 amounted to a release of $35.1 million, compared with provisions of $125.5 million for 2020 and $19.8 million for 2019. On January 1, 2020, the Company adopted CECL and measured its allowance for credit losses on loans in 2021 and 2020 using an expected loss model while 2019 was measured under the incurred loss method. The decreased provision for 2021 was primarily attributable to improvements in forecast economic conditions, partially offset by organic loan growth and the addition of Balboa's portfolio. Net charge-offs in 2021 were 0.04% of average loans, compared with 0.31% in 2020 and 0.10% in 2019. The Company sold selected hotel loans during the fourth quarter of 2020 totaling $87.5 million which resulted in charge-offs of $17.2 million. Excluding the impact of the hotel sale, net charge-offs for 2020 would have been 0.18% of average loans.
At December 31, 2021, non-performing assets amounted to $101.9 million, or 0.43% of total assets, compared with $97.2 million, or 0.48% of total assets, at December 31, 2020. Other real estate was approximately $3.8 million as of December 31, 2021, reflecting a 67.9% decrease from the $11.9 million reported at December 31, 2020.
The Company’s allowance for credit losses on loans at December 31, 2021 was $167.6 million, or 1.06% of loans compared with $199.4 million, or 1.38%, and $38.2 million, or 0.30%, at December 31, 2020 and 2019, respectively. The decrease in the allowance for credit losses on loans as a percentage of loans compared with December 31, 2020 was primarily attributable to improvements in forecast economic conditions in the Company's CECL model and the provision release recorded during 2021.
The Company's provision for unfunded commitments during 2021 amounted to $332,000, compared with $19.1 million for 2020 and no such provision for 2019. Subsequent to the adoption of CECL, the allowance for unfunded commitments on off-balance sheet credit exposures is estimated by loan segment at each balance sheet date under the current expected credit loss model using the same methodologies as portfolio loans, taking into consideration the likelihood that funding will occur as well as any third-party guarantees. The Company recorded a release of provision for other credit losses during 2021 totaling $616,000, compared with a provision of $830,000 for 2020 and no such provision for 2019.
Noninterest Income
Following is a comparison of noninterest income for 2021, 2020 and 2019.
Years Ended December 31,
(dollars in thousands) 2021 2020 2019
Service charges on deposit accounts $ 45,106 $ 44,145 $ 50,792
Mortgage banking activity 285,900 374,077 119,409
Other service charges, commissions and fees 4,188 3,914 3,566
Net gain (loss) on securities 515 5 138
Gain on sale of SBA loans 6,623 7,226 6,058
Other noninterest income 23,212 17,133 18,150
$ 365,544 $ 446,500 $ 198,113
2021 compared with 2020. Total noninterest income in 2021 was $365.5 million, compared with $446.5 million in 2020, reflecting a decrease of 18.1%, or $81.0 million.
Service charges on deposit accounts increased $961,000, or 2.2%, to $45.1 million during 2021 compared with 2020. This increase was primarily attributable to increases in debit card interchange income and corporate services charges, partially offset by a decline in volume of NSF income which declined $1.8 million compared with 2020.
Other service charges, commission and fees increased by $274,000 to $4.2 million during 2021, an increase of 7.0% compared with 2020 due primarily to an increase in ATM fees.
Income from mortgage banking activities decreased $88.2 million, or 23.6%, to $285.9 million during 2021 compared with 2020. This decrease was a result of a decline in production and tightening of gain on sale spreads compared with 2020. Total production in the retail mortgage division decreased to $8.9 billion for 2021, compared with $9.8 billion for 2020, while gain on sale spreads decreased in 2021 to 3.31% from 3.79% in 2020. The decrease in gain on sale spread is primarily related to normalization of pricing in the industry after experiencing record production levels in 2020. Noninterest income from the Company's warehouse lending division increased $739,000 to $4.6 million for 2021 compared with $3.9 million for 2020.
Gain on sale of SBA loans decreased by $603,000, or 8.3%, to $6.6 million during 2021 compared with 2020, while loans sold decreased $12.5 million, or 14.0%, to $76.6 million during 2021 compared with 2020.
Other noninterest income increased by $6.1 million, or 35.5%, to $23.2 million during 2021 compared with 2020. This increase was primarily due to increases in BOLI income, trust services income and merchant fee income of $1.8 million, $1.8 million and $1.3 million, respectively. Non-mortgage loan servicing income decreased $249,000 in 2021 primarily due to increased amortization related to declines in serviced portfolio balances, partially offset by a $906,000 recovery of prior SBA servicing right impairment.
2020 compared with 2019. Total noninterest income in 2020 was $446.5 million, compared with $198.1 million in 2019, reflecting an increase of 125.4%, or $248.4 million.
Service charges on deposit accounts decreased by $6.6 million, or 13.1%, to $44.1 million during 2020 compared with 2019. This decrease was primarily attributable to a decline in volume of NSF income which declined $3.8 million compared with 2019. Also contributing to the decrease in service charge revenue was the full year impact of the Durbin Amendment which was effective for the Company beginning in the third quarter of 2019.
Other service charges, commission and fees increased by $348,000 to $3.9 million during 2020, an increase of 9.8% compared with 2019 due primarily to an increase in ATM fees.
Income from mortgage banking activities increased $254.7 million, or 213.3%, to $374.1 million during 2020 compared with 2019. This increase was a result of the full year impact of the Fidelity acquisition and additional growth from the low interest rate environment during 2020. Total production in the retail mortgage division increased to $9.8 billion for 2020, compared with $4.3 billion for 2019, while gain on sale spreads increased in 2020 to 3.79% from 2.75% in 2019. The increase in gain on sale spread is primarily related to improved pricing in the industry amid record production levels in the current low interest rate
environment. Noninterest income from the Company's warehouse lending division increased $1.9 million to $3.9 million for 2020 compared with $2.0 million for 2019.
Gain on sale of SBA loans increased by $1.2 million, or 19.3%, to $7.2 million during 2020 compared with 2019, while loans sold were approximately flat at $89.0 million during 2020 compared with 2019.
Other noninterest income decreased by $1.0 million, or 5.6%, to $17.1 million during 2020 compared with 2019. This decrease was primarily due to a reduction in gain on BOLI proceeds of $2.6 million, partially offset by increases in BOLI income and trust services income of $770,000 and $1.7 million, respectively. Non-mortgage loan servicing income decreased $1.1 million in 2020 primarily due to increased amortization and impairment in the current low interest rate environment.
Noninterest Expense
Following is a comparison of noninterest expense for 2021, 2020 and 2019.
Years Ended December 31,
(dollars in thousands) 2021 2020 2019
Salaries and employee benefits $ 337,776 $ 360,278 $ 223,938
Occupancy and equipment 48,066 52,349 40,596
Advertising and marketing 8,434 8,046 7,927
Amortization of intangible assets 14,965 19,612 17,713
Data processing and communications expenses 45,976 46,017 38,513
Legal and other professional fees 11,920 15,972 10,634
Credit resolution-related expenses 3,538 5,106 4,082
Merger and conversion charges 4,206 1,391 73,105
FDIC insurance 5,614 14,078 1,945
Loan servicing expenses 26,481 20,910 10,817
Other noninterest expenses 53,148 54,870 42,667
$ 560,124 $ 598,629 $ 471,937
2021 compared with 2020. Total noninterest expense decreased $38.5 million, or 6.4%, in 2021 to $560.1 million from $598.6 million in 2020. Total noninterest expense for 2021 include approximately $4.2 million in merger-related charges and $510,000 in losses on sale of bank premises. Total noninterest expense for 2020 include approximately $1.4 million in merger-related charges, $624,000 in losses on sale of bank premises, $1.5 million in restructuring charges, $3.3 million in natural disaster and pandemic expenses charges, and $3.1 million in expenses related to the previously announced SEC and DOJ investigation. Excluding these amounts, expenses in 2021 decreased by $33.3 million, or 5.7%, compared with 2020 levels.
Salaries and benefits decreased $22.5 million, or 6.2%, from $360.3 million in 2020 to $337.8 million in 2021. This decrease was primarily attributable to a decrease in variable pay resulting from decreased production levels in our retail mortgage division. Salaries and benefits in our mortgage division decreased $17.0 million, or 9.2%, to $167.8 million in 2021. Also contributing to the decrease in salaries and benefits expense was a reduction in incentives tied to PPP loan production. Full time equivalent employees increased from 2,671 at December 31, 2020 to 2,865 at December 31, 2021, primarily as a result of the Balboa acquisition in December 2021.
Occupancy costs decreased $4.3 million, or 8.2%, from $52.3 million in 2020 to $48.1 million in 2021 due primarily to a reduction in leased locations related to previously announced branch consolidations and efficiency initiatives.
Amortization of intangible assets decreased $4.6 million, or 23.7%, to $15.0 million for 2021 compared with $19.6 million for 2020. Core deposit intangibles are being amortized over an accelerated basis; therefore, the expense recorded will decline over the life of the asset.
Legal and other professional fees decreased $4.1 million, or 25.4%, from $16.0 million in 2020 to $11.9 million in 2021, primarily due to a decrease of $3.1 million related to the previously announced SEC and DOJ investigation.
Merger and conversion charges were $4.2 million in 2021, an increase of $2.8 million, or 202.4%, compared with $1.4 million recorded for 2020. Merger and conversion charges for 2021 were primarily related to the acquisition of Balboa while expenses for 2020 were primarily related to the acquisition of Fidelity.
Other noninterest expense decreased $1.7 million, or 3.1%, to $53.1 million in 2021 from $54.9 million in 2020, resulting primarily from decreases in natural disaster and pandemic charges, credit investigations and loan related expenses for loans previously covered under loss-sharing agreements with the FDIC, partially offset by increases in other losses and tax and license expense. Also contributing to the decrease was a decrease in variable expenses related to our elevated mortgage production.
2020 compared with 2019. Total noninterest expense increased $126.7 million, or 26.8%, in 2020 to $598.6 million from $471.9 million in 2019. Total noninterest expense for 2020 include approximately $1.4 million in merger-related charges, $624,000 in losses on sale of bank premises, $1.5 million in restructuring charges, $3.3 million in natural disaster and pandemic expenses charges, and $3.1 million in expenses related to the previously announced SEC and DOJ investigation. Total noninterest expense for 2019 include approximately $73.1 million in merger-related charges, $6.0 million in losses on sale of bank premises, $245,000 in restructuring charges, ($39,000) in natural disaster and pandemic expenses charges, and $463,000 in expenses related to the previously announced SEC and DOJ investigation. Excluding these amounts, expenses in 2020 increased by $196.6 million, or 50.1%, compared with 2019 levels.
Salaries and benefits increased $136.3 million, or 60.9%, from $223.9 million in 2019 to $360.3 million in 2020. This increase was primarily attributable to an increase in variable pay resulting from increased production levels in our retail mortgage division. Salaries and benefits in our mortgage division increased $102.3 million, or 124.0%, to $184.8 million in 2020. Also contributing to the increase in salaries and benefits expense was the full year impact of the Fidelity acquisition which closed at the beginning of the third quarter of 2019. Full time equivalent employees decreased from 2,722 at December 31, 2019 to 2,671 at December 31, 2020.
Occupancy costs increased $11.8 million, or 29.0%, from $40.6 million in 2019 to $52.3 million in 2020 due primarily to 62 branch locations being added during 2019 as a result of the Fidelity acquisition, partially offset by branch closures related to previously announced branch consolidations. Also contributing to the increase was approximately $2.1 million in lease termination expense related to locations closed as part of efficiency initiatives.
Amortization of intangible assets increased $1.9 million, or 10.7%, to $19.6 million for 2020 compared with $17.7 million for 2019 due to additional amortization of intangible assets recorded as part of the Fidelity acquisition.
Data processing and telecommunications expenses increased $7.5 million, or 19.5%, to $46.0 million for 2020 compared with $38.5 million for 2019. This increase reflects increased core banking system charges due to an increase in the number of accounts being processed by our core banking system as a result of the Fidelity acquisition and a volume related increase related to elevated production levels in our retail mortgage division.
Legal and other professional fees increased $5.3 million, or 50.2%, from $10.6 million in 2019 to $16.0 million in 2020, primarily due to an increase of $2.6 million related to the previously announced SEC and DOJ investigation.
Merger and conversion charges were $1.4 million in 2020, a decrease of $71.7 million, or 98.1%, compared with $73.1 million recorded for 2019. Merger and conversion charges for both 2020 and 2019 were primarily related to the acquisition of Fidelity.
Loan servicing expenses were $20.9 million in 2020, an increase of $10.1 million, or 93.3%, compared with $10.8 million recorded for 2019, primarily due to an increase in serviced loans related to elevated mortgage production.
Other noninterest expense increased $12.2 million, or 28.6%, to $54.9 million in 2020 from $42.7 million in 2019, resulting primarily from increases in natural disaster and pandemic charges, insurance expense, and tax and license expenses, partially offset by decreases in loss on fixed assets, deposit charge-offs and travel related expenses. Also contributing to the increase was an increase in variable expenses related to our elevated mortgage production.
Income Taxes
Income tax expense is influenced by statutory federal and state tax rates, the amount of taxable income, the amount of tax-exempt income and the amount of non-deductible expenses. For the year ended December 31, 2021, the Company recorded income tax expense of approximately $119.2 million, compared with $78.3 million recorded in 2020 and $50.1 million
recorded in 2019. The Company’s effective tax rate was 24.0%, 23.0% and 23.7% for the years ended December 31, 2021, 2020 and 2019, respectively.
BALANCE SHEET COMPARISON
LOANS
Management believes that our loan portfolio is adequately diversified. The loan portfolio contains no foreign loans or significant concentrations in any one industry. As of December 31, 2021, approximately 71.7% of our loan portfolio was secured by real estate, compared with 67.0% at December 31, 2020.
The amount of loans outstanding at the indicated dates is shown in the following table according to type of loans.
December 31,
(dollars in thousands) 2021 2020
Commercial, financial and agricultural $ 1,875,993 $ 1,627,477
Consumer installment 191,298 306,995
Indirect automobile 265,779 580,083
Mortgage warehouse 787,837 916,353
Municipal 572,701 659,403
Premium finance 798,409 687,841
Real estate - construction and development 1,452,339 1,606,710
Real estate - commercial and farmland 6,834,917 5,300,006
Real estate - residential 3,094,985 2,796,057
Loans, net of unearned income $ 15,874,258 $ 14,480,925
The Company seeks to diversify its loan portfolio across its geographic footprint and in various loan types. Also, the Company’s in-house lending limit for a single loan is $40.0 million for construction loans and $50.0 million for term loans with stabilized cash flows, which would normally prevent a concentration with a single loan project. Certain lending relationships may contain more than one loan and, consequently, exceed the in-house lending limit. The Company regularly monitors its largest loan relationships to avoid a concentration with a single borrower. The largest 25 loan relationships as of December 31, 2021 based on committed amount are summarized below by type.
(dollars in thousands) Committed
Amount Average
Rate Average
Maturity
(months) %
Unsecured % in
Nonaccrual
Status
Commercial, financial and agricultural $ 188,250 3.60 % 8 48.78 % - %
Mortgage warehouse 555,000 2.85 % 3 - - %
Real estate - construction and development 548,848 3.37 % 46 - - %
Real estate - commercial and farmland 733,030 3.14 % 36 - - %
Total $ 2,025,128 3.12 % 25 4.53 % - %
Total loans as of December 31, 2021, are shown in the following table according to their contractual maturity.
Contractual Maturity in:
(dollars in thousands) One Year
or Less
Over
One Year
through
Five Years
Over
Five Years through Fifteen Years Over
Fifteen Years Total
Commercial, financial and agricultural $ 287,750 $ 1,275,717 $ 303,960 $ 8,566 $ 1,875,993
Consumer installment 15,880 76,491 98,165 762 191,298
Indirect automobile 17,765 248,009 5 - 265,779
Mortgage warehouse 787,837 - - - 787,837
Municipal 10,610 65,152 443,070 53,869 572,701
Premium finance 782,723 15,686 - - 798,409
Real estate - construction and development 747,833 530,652 140,505 33,349 1,452,339
Real estate - commercial and farmland 665,979 3,238,946 2,666,848 263,144 6,834,917
Real estate - residential 46,249 177,571 407,820 2,463,345 3,094,985
$ 3,362,626 $ 5,628,224 $ 4,060,373 $ 2,823,035 $ 15,874,258
Total loans which have maturity dates after one year are summarized below by those loans that have predetermined interest rates and those loans that have floating or adjustable interest rates.
(dollars in thousands) December 31, 2021
Predetermined interest rates $ 9,541,101
Commercial, financial and agricultural 1,324,006
Consumer installment 169,783
Indirect automobile 248,014
Municipal 561,682
Premium finance 15,686
Real estate - construction and development 351,583
Real estate - commercial and farmland 4,798,409
Real estate - residential 2,071,941
$ 9,541,104
Floating or adjustable interest rates
Commercial, financial and agricultural $ 264,237
Consumer installment 5,635
Municipal 409
Real estate - construction and development 352,923
Real estate - commercial and farmland 1,370,529
Real estate - residential 976,795
$ 2,970,528
ALLOWANCE AND PROVISION FOR CREDIT LOSSES
The allowance for credit losses ("ACL") represents an allowance for expected losses over the remaining contractual life of the assets adjusted for prepayments. 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.
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 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 it can no longer develop reasonable and supportable forecasts.
Prior to the adoption of CECL on January 1, 2020, the allowance for credit losses represented a reserve for probable incurred losses in the loan portfolio. The adequacy of the allowance for credit losses was evaluated periodically based on a review of all significant loans, with a particular emphasis on nonaccruing, past due and other loans that management believed might be potentially impaired or warrant additional attention. We segregated our loan portfolio by type of loan and utilized this segregation in evaluating exposure to risks within the portfolio. In addition, based on internal reviews and external reviews performed by independent loan reviewers and regulatory authorities, we further segregated our loan portfolio by loan grades based on an assessment of risk for a particular loan or group of loans. Certain reviewed loans were assigned specific allowances when a review of relevant data determines that a general allocation is not sufficient or when the review affords management the opportunity to fine tune the amount of exposure in a given credit. In establishing allowances, management considered historical loan loss experience but adjusted this data with a significant emphasis on data such as current loan quality trends, current economic conditions and other factors in the markets where the Bank operates. Factors considered included, among others, current valuations of real estate in our markets, unemployment rates, the effect of weather conditions on agricultural related entities and other significant local economic events, such as major plant closings.
The following table sets forth the breakdown of the allowance for credit losses on loans by loan category for the periods indicated. Management believes the allowance can be allocated only on an approximate basis. The allocation of the allowance to each category is not necessarily indicative of future losses and does not restrict the use of the allowance to absorb losses in any other category.
December 31,
2021 2020 2019
(dollars in thousands) Amount % of Loans to Total Loans Amount % of Loans to Total Loans Amount % of Loans to Total Loans
Commercial, financial and agricultural $ 26,829 12 % $ 7,359 11 % $ 4,567 6 %
Consumer installment 6,097 1 4,076 2 3,784 4
Indirect automobile 476 2 1,929 4 - 8
Mortgage warehouse 3,231 5 3,666 6 640 4
Municipal 401 4 791 5 484 4
Premium finance 2,729 5 3,879 5 2,550 5
Real estate - construction and development 22,045 9 45,304 11 5,995 12
Real estate - commercial and farmland 77,831 43 88,894 37 9,666 35
Real estate - residential 27,943 19 43,524 19 10,503 22
Total $ 167,582 100 % $ 199,422 100 % $ 38,189 100 %
The following table provides an analysis of the net charge-offs (recoveries) by loan category for the years ended December 31, 2021, 2020 and 2019.
2021 2020 2019
Net charge-offs (recoveries) Average Balance Rate Net charge-offs (recoveries) Average balance Rate Net charge-offs (recoveries) Average balance Rate
Commercial, financial and agricultural $ 2,033 $ 1,526,100 0.13 % $ 8,758 $ 1,400,398 0.63 % $ 1,622 $ 758,158 0.21 %
Consumer installment 5,309 235,056 2.26 3,889 472,253 0.82 4,279 478,280 0.89
Indirect automobile (491) 404,461 (0.12) 1,945 803,212 0.24 1,459 537,003 0.27
Mortgage warehouse - 827,159 - - 749,671 - - 456,509 -
Municipal - 623,839 - - 688,585 - - 572,527 -
Premium finance (1,202) 752,094 (0.16) 2,944 683,630 0.43 1,597 596,183 0.27
Real estate - construction and development (273) 1,493,855 (0.02) (734) 1,616,655 (0.05) (1,331) 1,244,474 (0.11)
Real estate - commercial and farmland 1,279 5,958,257 0.02 26,055 4,835,463 0.54 3,010 3,683,419 0.08
Real estate - residential (464) 2,883,135 (0.02) 59 2,768,715 - (248) 2,340,425 (0.01)
$ 6,191 $ 14,703,956 0.04 % $ 42,916 $ 14,018,582 0.31 % $ 10,388 $ 10,666,978 0.10 %
The following table provides an analysis of the allowance for credit losses on loans held for investment.
December 31,
(dollars in thousands) 2021 2020 2019
Allowance for credit losses on loans at end of period $ 167,582 $ 199,422 $ 38,189
Loan balances:
End of period 15,874,258 14,480,925 12,818,476
Allowance for credit losses on loans as a percentage of end of period loans 1.06 % 1.38 % 0.30 %
Nonaccrual loans as a percentage of end of period loans 0.54 % 0.53 % 0.59 %
Allowance for credit losses to nonaccrual loans at end of period 196.54 % 260.83 % 50.83 %
At December 31, 2021, the allowance for credit losses on loans totaled $167.6 million, or 1.06% of loans, compared with $199.4 million, or 1.38% of loans, at December 31, 2020. The decrease in the allowance for credit losses on loans as a percentage of loans compared with December 31, 2020 was primarily attributable to improvements in forecast economic conditions and the related provision release recorded during 2021. For the year ended December 31, 2021, our net charge off ratio as a percentage of average loans decreased to 0.04%, compared with 0.31% for the year ended December 31, 2020. This decrease was primarily a result of the sale of certain hotel loans totaling $87.5 million during the fourth quarter of 2020 which resulted in charge offs of $17.2 million. The hotel loans sold were selected based on a number of factors, including the level of relationship with the borrower, tier of hotel brand underlying the property and market conditions in the area.
The provision for credit losses on loans for the year ended December 31, 2021 was a release of $35.1 million, compared with a provision of $125.5 million for the year ended December 31, 2020. This decrease primarily resulted from improvement in forecast economic conditions compared with the forecast at the December 31, 2020, partially offset by organic loan growth during 2021 and the addition of Balboa's portfolio in December 2021. As of December 31, 2021 our ratio of nonperforming assets to total assets had decreased slightly to 0.43% from 0.48% at December 31, 2020.
NONPERFORMING 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 reversed against interest income. Interest on loans that are classified as nonaccrual is recognized when received. Past due loans are placed on nonaccrual status when principal or interest is past due 90 days or more unless the loan is well secured and in the process of collection. 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 and loans contractually past due 90 days or more as to interest or principal payments and still accruing.
December 31,
(dollars in thousands) 2021 2020
Nonaccrual loans
Commercial, financial and agricultural $ 14,214 $ 9,836
Consumer installment 476 709
Indirect automobile 947 2,831
Premium finance - -
Real estate - construction and development 492 5,407
Real estate - commercial and farmland 15,365 18,517
Real estate - residential 53,772 39,157
Total $ 85,266 $ 76,457
Loans contractually past due 90 days or more as to interest or principal payments and still accruing $ 12,648 $ 8,326
Troubled Debt Restructurings
The restructuring of a loan is considered a “troubled debt restructuring” if both (i) the borrower is experiencing financial difficulties and (ii) the Company has granted a concession.
As of December 31, 2021 and 2020, the Company had a balance of $76.6 million and $85.0 million, respectively, in troubled debt restructurings. These totals do not include COVID-19 loan modifications accounted for under Section 4013 of the CARES Act. Further information on these loans is set forth under the heading "COVID-19 Deferrals" below. The following table presents the amount of troubled debt restructurings by loan class classified separately as accrual and non-accrual at December 31, 2021 and 2020.
As of 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
As of December 31, 2020
Accruing Loans Non-Accruing Loans
Loan class # Balance
(in thousands)
# Balance
(in thousands)
Commercial, financial and agricultural 9 $ 521 11 $ 849
Consumer installment 10 32 20 56
Indirect automobile 437 2,277 51 461
Real estate - construction and development 4 506 5 707
Real estate - commercial and farmland 28 36,707 7 1,401
Real estate - residential 264 38,800 34 2,671
Total 752 $ 78,843 128 $ 6,145
The following table presents the amount of troubled debt restructurings by loan class classified separately as those currently paying under restructured terms and those that have defaulted (defined as 30 days past due) under restructured terms at December 31, 2021 and 2020.
As of December 31, 2021
Loans Currently
Paying Under
Restructured Terms
Loans that have
Defaulted Under
Restructured Terms
Loan class # Balance
(in thousands)
# Balance
(in thousands)
Commercial, financial and agricultural 11 $ 1,269 7 $ 100
Consumer installment 10 17 14 34
Indirect automobile 233 1,052 52 258
Real estate - construction and development 4 789 1 13
Real estate - commercial and farmland 29 41,452 1 47
Real estate - residential 215 26,956 37 4,601
Total 502 $ 71,535 112 $ 5,053
As of December 31, 2020
Loans Currently
Paying Under
Restructured Terms Loans that have
Defaulted Under
Restructured Terms
Loan class # Balance
(in thousands)
# Balance
(in thousands)
Commercial, financial and agricultural 11 $ 532 9 $ 839
Consumer installment 12 33 18 55
Indirect automobile 411 2,138 77 600
Real estate - construction and development 5 507 4 706
Real estate - commercial and farmland 29 36,512 6 1,595
Real estate - residential 249 35,348 49 6,123
Total 717 $ 75,070 163 $ 9,918
The following table presents the amount of troubled debt restructurings by types of concessions made, classified separately as accrual and non-accrual at December 31, 2021 and 2020.
As of December 31, 2021
Accruing Loans Non-Accruing Loans
Type of Concession # Balance
(in thousands)
# Balance
(in thousands)
Forgiveness of interest 3 $ 287 - $ -
Forbearance of interest 16 1,218 1 15
Forbearance of principal 332 49,778 73 9,783
Rate reduction only 55 6,321 4 200
Rate reduction, maturity extension - - 1 1
Rate reduction, forbearance of interest 33 2,296 6 319
Rate reduction, forbearance of principal 18 2,694 29 363
Rate reduction, forgiveness of interest 37 2,988 6 325
Total 494 $ 65,582 120 $ 11,006
As of December 31, 2020
Accruing Loans Non-Accruing Loans
Type of Concession # Balance
(in thousands)
# Balance
(in thousands)
Forgiveness of interest 1 $ 73 - $ -
Forbearance of interest 19 2,255 7 1,044
Forbearance of principal 563 58,131 72 3,372
Forbearance of principal, extended amortization - - 1 204
Rate reduction only 66 8,893 4 525
Rate reduction, maturity extension - - 1 5
Rate reduction, forbearance of interest 41 3,472 9 389
Rate reduction, forbearance of principal 21 2,609 25 193
Rate reduction, forgiveness of interest 41 3,410 8 412
Rate reduction, forgiveness of principal - - 1 1
Total 752 $ 78,843 128 $ 6,145
The following table presents the amount of troubled debt restructurings by collateral types, classified separately as accrual and non-accrual at December 31, 2021 and 2020.
As of December 31, 2021
Accruing Loans Non-Accruing Loans
Collateral Type # Balance
(in thousands)
# Balance
(in thousands)
Warehouse 3 $ 61 2 $ 272
Raw land 6 3,776 1 13
Hotel and motel 4 22,069 1 4,798
Office 5 710 1 485
Retail, including strip centers 8 7,118 1 370
1-4 family residential 215 27,129 39 4,678
Church 2 2,393 - -
Automobile/equipment/CD 251 2,326 75 390
Total 494 $ 65,582 120 $ 11,006
As of December 31, 2020
Accruing Loans Non-Accruing Loans
Collateral Type # Balance
(in thousands)
# Balance
(in thousands)
Warehouse 4 $ 248 2 $ 305
Raw land 5 4,611 7 1,135
Hotel and motel 4 22,372 - -
Office 6 1,281 - -
Retail, including strip centers 13 8,627 - -
1-4 family residential 266 38,913 35 3,170
Church - - 1 166
Automobile/equipment/CD 454 2,791 82 1,368
Unsecured - - 1 1
Total 752 $ 78,843 128 $ 6,145
COVID-19 Deferrals
In response to the COVID-19 pandemic, the Company offered affected borrowers payment relief under its Disaster Relief Program. These modifications primarily consisted of short-term payment deferrals or interest-only periods to assist customers. The Company has begun providing payment modifications to certain borrowers in economically sensitive industries of various terms up to nine months. Modifications related to the COVID-19 pandemic and qualifying under the provisions of Section 4013 of the CARES Act are not deemed to be troubled debt restructurings. As of December 31, 2021, $41.7 million in loans remained in payment deferral under the COVID-19 pandemic Disaster Relief Program.
The table below presents short-term deferrals related to the COVID-19 pandemic that were not considered TDRs.
(dollars in thousands) COVID-19 Deferrals Deferrals as a % of total loans
Commercial, financial and agricultural $ 1,430 0.1 %
Real estate - commercial and farmland 1,899 - %
Real estate - residential 38,396 1.2 %
$ 41,725 0.3 %
LIQUIDITY AND INTEREST RATE SENSITIVITY
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 our Company to meet those needs. We seek to meet liquidity requirements primarily through management of short-term investments (principally interest-bearing deposits in banks) and monthly amortizing loans. Another source of
liquidity is the repayment of maturing single payment loans. In addition, our Company maintains relationships with correspondent banks, including the FHLB and the Federal Reserve Bank of Atlanta, which could provide funds on short notice, if needed.
A principal objective of our asset/liability management strategy is to minimize our exposure to changes in interest rates by matching the maturity and repricing horizons of interest-earning assets and interest-bearing liabilities. This strategy is overseen in part through the direction of our Asset and Liability Committee (the “ALCO Committee”) which establishes policies and monitors results to control interest rate sensitivity.
As part of our interest rate risk management policy, the ALCO Committee examines the extent to which its assets and liabilities are “interest rate sensitive” and monitors its interest rate-sensitivity “gap.” An asset or liability is considered to be interest rate sensitive if it will reprice or mature within the time period analyzed, usually one year or less. The interest rate-sensitivity gap is the difference between the interest-earning assets and interest-bearing liabilities scheduled to mature or reprice within such time period. A gap is considered positive when the amount of interest rate-sensitive assets exceeds the amount of interest rate-sensitive liabilities. A gap is considered negative when the amount of interest rate-sensitive liabilities exceeds the interest rate-sensitive assets. During a period of rising interest rates, a negative gap would tend to adversely affect net interest income, while a positive gap would tend to result in an increase in net interest income. During a period of falling interest rates, a negative gap would tend to result in an increase in net interest income, while a positive gap would tend to adversely affect net interest income. If our assets and liabilities were equally flexible and moved concurrently, the impact of any increase or decrease in interest rates on net interest income would be minimal.
A simple interest rate “gap” analysis by itself may not be an accurate indicator of how net interest income will be affected by changes in interest rates. Accordingly, the ALCO Committee also evaluates how the repayment of particular assets and liabilities is impacted by changes in interest rates. Income associated with interest-earning assets and costs associated with interest-bearing liabilities may not be affected uniformly by changes in interest rates. In addition, the magnitude and duration of changes in interest rates may have a significant impact on net interest income. For example, although certain assets and liabilities may have similar maturities or periods of repricing, they may not react identically to changes in market interest rates. Interest rates on certain types of assets and liabilities fluctuate in advance of changes in general market interest rates, while interest rates on other types may lag behind changes in general market rates. In addition, certain assets, such as adjustable rate mortgage loans, have features (generally referred to as “interest rate caps”) which limit changes in interest rates on a short-term basis and over the life of the asset. In the event of a change in interest rates, prepayment and early withdrawal levels also could deviate significantly from those assumed in calculating the interest rate gap. The ability of many borrowers to service their debts also may decrease in the event of an interest rate increase.
We manage the mix of asset and liability maturities in an effort to control the effects of changes in the general level of interest rates on net interest income. Except for its effect on the general level of interest rates, inflation does not have a material impact on the balance sheet due to the rate variability and short-term maturities of its earning assets. In particular, approximately 61.4% of earning assets mature or reprice within one year or less. Mortgage loans, generally our loan category with the longest maturity, are usually made with fifteen to thirty year maturities, but a portion is at a variable interest rate with an adjustment between origination date and maturity date.
The Alternative Reference Rates Committee (the “ARRC”), which was convened by the Federal Reserve and the Federal Reserve Bank of New York, has recommended a paced market transition to the Secured Overnight Financing Rate (“SOFR”) from LIBOR. On July 29, 2021, the ARRC formally recommended the forward-looking term rates based on SOFR published by CME Group. The federal banking agencies issued a statement in November 2020 reiterating that the use of SOFR is voluntary and they are not endorsing a specific replacement rate. The Company has material contracts that are indexed to LIBOR, which include certain financial instruments within investment securities, loans, other borrowings, subordinated deferrable interest debentures and derivative financial instruments. Organizations are currently working on industrywide and company-specific transition plans as it relates to derivatives and cash markets exposed to LIBOR. Company management is monitoring developments in the financial markets and is evaluating the related risks. 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 implement a transition plan for the affected items.
The following table sets forth the distribution of the repricing of our interest-earning assets and interest-bearing liabilities as of December 31, 2021, the interest rate sensitivity gap (i.e., interest rate sensitive assets minus interest rate sensitive liabilities), the cumulative interest rate sensitivity gap, the interest rate sensitivity gap ratio (i.e., interest rate sensitive assets divided by interest rate sensitive liabilities) and the cumulative interest rate sensitivity gap ratio. The table also sets forth the time periods in which earning assets and liabilities will mature or may reprice in accordance with their contractual terms. However, the table does not necessarily indicate the impact of general interest rate movements on the net interest margin since the repricing of various categories of assets and liabilities is subject to competitive pressures and the needs of our customers. In addition, various assets and liabilities indicated as repricing within the same period may in fact reprice at different times within such period and at different rates.
December 31, 2021
Maturing or Repricing Within
(dollars in thousands) Zero to
Three
Months
Three
Months to
One Year
One to
Five
Years
Over
Five
Years
Total
Interest-earning assets:
Federal funds sold and interest-bearing deposits in banks $ 3,756,844 $ - $ - $ - $ 3,756,844
Investment securities 11,172 48,164 239,332 373,803 672,471
Loans held for sale 1,254,632 - - - 1,254,632
Loans 4,083,010 4,073,596 6,170,927 1,546,725 15,874,258
9,105,658 4,121,760 6,410,259 1,920,528 21,558,205
Interest-bearing liabilities:
Interest-bearing demand deposits 3,784,925 - - - 3,784,925
Money market deposit accounts 5,345,726 - - - 5,345,726
Savings 957,012 - - - 957,012
Time deposits 464,355 1,002,375 335,520 817 1,803,067
Federal funds purchased and securities sold under agreements to repurchase 5,845 - - - 5,845
FHLB advances - - 15,000 33,790 48,790
Other borrowings 74,319 - 585,635 31,135 691,089
Trust preferred securities 126,328 - - - 126,328
10,758,510 1,002,375 936,155 65,742 12,762,782
Interest rate sensitivity gap $ (1,652,852) $ 3,119,385 $ 5,474,104 $ 1,854,786 $ 8,795,423
Cumulative interest rate sensitivity gap $ (1,652,852) $ 1,466,533 $ 6,940,637 $ 8,795,423
Interest rate sensitivity gap ratio 0.85 4.11 6.85 29.21
Cumulative interest rate sensitivity gap ratio 0.85 1.12 1.55 1.69
INVESTMENT PORTFOLIO
Following is a summary of the carrying value of debt securities available-for-sale as of the end of each reported period:
December 31,
(dollars in thousands) 2021 2020
U.S. government sponsored agencies $ 7,172 $ 17,504
State, county and municipal securities 47,812 66,778
Corporate debt securities 28,496 51,896
SBA pool securities 45,201 62,497
Mortgage-backed securities 463,940 784,204
Total debt securities available-for-sale $ 592,621 $ 982,879
Following is a summary of the carrying value of debt securities held-to-maturity as of the end of each reported period:
December 31,
(dollars in thousands) 2021 2020
State, county and municipal securities $ 8,905 $ -
Mortgage-backed securities 70,945 -
Total debt securities held-to-maturity $ 79,850 $ -
The amounts of securities available-for-sale and held-to in each category as of December 31, 2021 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.
Securities available-for-sale (1) U.S. Government Sponsored Agencies State, County and
Municipal Securities
Corporate Debt
Securities
(dollars in thousands) Amount Yield
(2)
Amount Yield
(2)(3)
Amount Yield
(2)
One year or less $ 6,086 1.89 % $ 5,093 2.94 % $ 500 3.03 %
After one year through five years 1,086 2.16 % 16,476 3.84 % 500 3.88 %
After five years through ten years - - % 16,535 3.73 % 25,595 5.25 %
After ten years - - % 9,708 3.02 % 1,901 4.24 %
$ 7,172 1.93 % $ 47,812 3.53 % $ 28,496 5.12 %
Securities available-for-sale (1) SBA Pool Securities Mortgage-backed Securities
Amount Yield
(2)
Amount Yield
(2)
One year or less $ - - % $ 3,113 1.80 %
After one year through five years 15,123 2.65 % 83,069 2.70 %
After five years through ten years 2,996 3.86 % 126,924 2.89 %
After ten years 27,082 2.48 % 250,834 2.55 %
$ 45,201 2.63 % $ 463,940 2.66 %
Securities held-to-maturity (1) State, County and
Municipal Securities
Mortgage-backed Securities
Amount Yield
(2)(3)
Amount Yield
(2)
One year or less $ - - % $ - - %
After one year through five years - - % 11,792 1.01 %
After five years through ten years - - % 15,997 1.62 %
After ten years 8,905 2.02 % 43,156 1.63 %
$ 8,905 2.02 % $ 70,945 1.53 %
(1)The amortized cost and fair value of debt securities 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%.
The investment portfolio includes securities which are classified as available-for-sale and recorded at fair value with unrealized gains and losses excluded from earnings and reported in accumulated other comprehensive income, net of the related deferred tax effect. Securities classified as held-to-maturity are recorded at amortized cost.
The amortization of premiums and accretion of discounts are recognized in interest income using methods approximating the interest method over the 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 ALCO Committee evaluates 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 investment securities at an unrealized loss position at December 31, 2021, and it is more likely than not that the Company will not be required to sell these securities prior to recovery or maturity. Based on the results of management's review, at December 31, 2021, management determined none was attributable to credit impairment and increased the allowance for credit losses accordingly. The remaining $195,000 in unrealized loss was determined to be from factors other than credit. The Company's held-to-maturity securities have zero expected credit losses and no related allowance for credit losses has been established.
The Company’s investments in subordinated debt include investments in regional and super-regional banks on which the Company conducts regular analysis through review of financial information or credit ratings. Investments in preferred securities are also concentrated in the preferred obligations of regional and super-regional banks through non-pooled investment structures. The Company did not hold any investments in “pooled” trust preferred securities at December 31, 2021.
DEPOSITS
Average amount of various deposit classes and the average rates paid thereon are presented below.
Year Ended December 31,
2021 2020
(dollars in thousands) Amount Rate Amount Rate
Noninterest-bearing demand $ 7,017,614 - % $ 5,227,399 - %
NOW 3,400,441 0.10 2,605,349 0.25
Money market 4,953,748 0.16 4,259,467 0.44
Savings 884,623 0.06 719,916 0.08
Time 1,954,552 0.54 2,385,296 1.40
Total deposits $ 18,210,978 0.12 % $ 15,197,427 0.39 %
We have a large, stable base of time deposits with little or no dependence on what we consider volatile deposits. Volatile deposits, in management’s opinion, are those deposit accounts that are overly rate sensitive and apt to move if our rate offerings are not at or near the top of the market. Generally speaking, these are brokered deposits or time deposits in amount greater than $250,000.
At December 31, 2021, the Company had brokered deposits of $326.0 million. The amounts of time certificates of deposit issued in amounts of $250,000 or more as of December 31, 2021, are shown below by category, which is based on time remaining until maturity of (i) three months or less, (ii) over three through twelve months and (iii) greater than one year.
(dollars in thousands) December 31, 2021
Three months or less $ 132,817
Over three months through six months 108,953
Over six months through one year 126,007
Over one year 144,371
Total $ 512,148
As of December 31, 2021 and 2020, the Company had estimated uninsured deposits of $9.11 billion and $5.14 billion, respectively. These estimates were derived using the same methodologies and assumptions used for the Bank's regulatory reporting.
OFF-BALANCE-SHEET ARRANGEMENTS AND CONTRACTUAL OBLIGATIONS
In the ordinary course of business, our Bank has granted commitments to extend credit to approved customers. Generally, these commitments to extend credit have been granted on a temporary basis for seasonal or inventory requirements or for construction period financing and have been approved within the Bank’s credit guidelines. Our Bank has also granted commitments to approved customers for financial standby letters of credit. These commitments are recorded in the financial statements when funds are disbursed or the financial instruments become payable. The Bank uses the same credit policies for these off-balance-sheet commitments as it does for financial instruments that are recorded in the consolidated financial
statements. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitment amounts expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.
The following table summarizes commitments outstanding at December 31, 2021 and 2020.
December 31,
(dollars in thousands) 2021 2020
Commitments to extend credit $ 4,328,749 $ 2,826,719
Unused lines of credit 272,029 259,015
Financial standby letters of credit 36,184 33,613
Mortgage interest rate lock commitments 417,126 1,199,939
Mortgage forward contracts with positive fair value - -
Mortgage forward contracts with negative fair value 1,935,237 2,128,000
$ 6,989,325 $ 6,447,286
The following table summarizes short-term borrowings for the periods indicated.
Year Ended December 31,
2021 2020 2019
(dollars in thousands) Average
Balance
Average
Rate
Average
Balance
Average
Rate
Average
Balance
Average
Rate
Federal funds purchased and securities sold under agreement to repurchase $ 6,700 0.30 % $ 12,115 0.68 % $ 14,043 0.61 %
Year Ended December 31,
2021 2020 2019
(dollars in thousands) Total
Balance
Total
Balance
Total
Balance
Total maximum short-term borrowings outstanding at any month-end during the year $ 9,320 $ 15,998 $ 23,626
As of December 31, 2021, letters of credit issued by the Federal Home Loan Bank totaling $420.0 million were used to guarantee the Bank’s performance related to a portion of its public fund deposit balances.
The following table sets forth certain information about contractual cash obligations as of December 31, 2021.
Payments Due After December 31, 2021
(dollars in thousands) Total 1 Year
or Less 1-3
Years 4-5
Years >5
Years
Deposits without a stated maturity $ 17,862,486 $ 17,862,486 $ - $ - $ -
Time certificates of deposit 1,803,067 1,466,730 295,552 39,968 817
Repurchase agreements with customers 5,845 5,845 - - -
Other borrowings 742,567 - 125,506 177,347 439,714
Subordinated deferrable interest debentures 154,390 - - - 154,390
Operating lease obligations 68,128 12,048 17,751 12,097 26,232
Strategic marketing and promotional arrangements 2,700 900 1,800 - -
Total contractual cash obligations $ 20,639,183 $ 19,348,009 $ 440,609 $ 229,412 $ 621,153
At December 31, 2021, estimated costs to complete construction projects in progress and other binding commitments for capital expenditures were not a material amount.
CAPITAL ADEQUACY
Capital Regulations
The capital resources of the Company are monitored on a periodic basis by state and federal regulatory authorities. During 2021, the Company’s capital increased $319.4 million, primarily due to net income of $376.9 million, which was partially offset by the cash dividends declared on common shares of $42.0 million. During 2020, the Company’s capital increased $177.5 million, primarily due to net income of $262.0 million, which was partially offset by the cash dividends declared on common shares of $41.7 million and the adoption impact of CECL of $56.7 million. For both 2021 and 2020, other capital related transactions, such as other comprehensive income, share-based compensation, common stock issuances through the exercise of stock options, and issuances of shares of restricted stock accounted for only a small change in the capital of the Company.
Under the regulatory capital frameworks adopted by the Federal Reserve and the FDIC, Ameris 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%. Ameris 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 Federal Reserve 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.
The following table summarizes the regulatory capital levels of Ameris at December 31, 2021.
Actual Required Excess
(dollars in thousands) Amount Percent Amount Percent Amount Percent
Tier 1 Leverage Ratio (tier 1 capital to average assets)
Consolidated $ 1,897,725 8.63 % $ 879,079 4.00 % $ 1,018,646 4.63 %
Ameris Bank $ 2,084,465 9.50 % $ 877,891 4.00 % $ 1,206,574 5.50 %
CET1 Ratio (common equity tier 1 capital to risk weighted assets)
Consolidated $ 1,897,725 10.46 % $ 1,270,535 7.00 % $ 627,190 3.46 %
Ameris Bank $ 2,084,465 11.50 % $ 1,268,622 7.00 % $ 815,843 4.50 %
Tier 1 Capital Ratio (tier 1 capital to risk weighted assets)
Consolidated $ 1,897,725 10.46 % $ 1,542,792 8.50 % $ 354,933 1.96 %
Ameris Bank $ 2,084,465 11.50 % $ 1,540,470 8.50 % $ 543,995 3.00 %
Total Capital Ratio (total capital to risk weighted assets)
Consolidated $ 2,500,287 13.78 % $ 1,905,802 10.50 % $ 594,485 3.28 %
Ameris Bank $ 2,255,699 12.45 % $ 1,902,934 10.50 % $ 352,765 1.95 %
The required CET1 Ratio, Tier 1 Capital Ratio, and the Total Capital Ratio reflected in the table above include a capital conservation buffer of 2.50%.
INFLATION
The consolidated financial statements and related consolidated financial data presented herein have been prepared in accordance with GAAP and practices within the banking industry which require the measurement of financial position and operating results in terms of historical dollars without considering the changes in the relative purchasing power of money over time due to inflation. Unlike most industrial companies, virtually all the assets and liabilities of a financial institution are monetary in nature. As a result, interest rates have a more significant impact on a financial institution’s performance than the effects of general levels of inflation.
QUARTERLY FINANCIAL INFORMATION
The following table sets forth certain consolidated quarterly financial information of the Company. This information is derived from unaudited consolidated financial statements, which include, in the opinion of management, all normal recurring adjustments which management considers necessary for a fair presentation of the results for such periods.
Three Months Ended
(dollars in thousands, except per share data) December 31, 2021 September 30, 2021 June 30, 2021 March 31, 2021
Selected Income Statement Data:
Interest income $ 178,365 $ 173,046 $ 173,751 $ 177,950
Interest expense 11,528 11,385 11,899 12,973
Net interest income 166,837 161,661 161,852 164,977
Provision for credit losses 2,759 (9,675) 142 (28,591)
Net interest income after provision for credit losses 164,078 171,336 161,710 193,568
Noninterest income 81,769 76,562 89,240 117,973
Noninterest expense excluding merger and conversion charges 134,346 137,013 135,761 148,798
Merger and conversion charges 4,023 183 - -
Income before income taxes 107,478 110,702 115,189 162,743
Income tax 25,534 29,022 26,862 37,781
Net income $ 81,944 $ 81,680 $ 88,327 $ 124,962
Per Share Data:
Net income - basic $ 1.18 $ 1.18 $ 1.27 $ 1.80
Net income - diluted 1.18 1.17 1.27 1.79
Common dividends - cash 0.15 0.15 0.15 0.15
Three Months Ended
(dollars in thousands) December 31, 2020 September 30, 2020 June 30, 2020 March 31, 2020
Selected Income Statement Data:
Interest income $ 178,783 $ 179,934 $ 185,018 $ 182,768
Interest expense 15,327 17,396 21,204 34,823
Net interest income 163,456 162,538 163,814 147,945
Provision for credit losses (1,510) 17,682 88,161 41,047
Net interest income after provision for credit losses 164,966 144,856 75,653 106,898
Noninterest income 112,143 159,018 120,960 54,379
Noninterest expense excluding merger and conversion charges 151,116 153,736 154,873 137,513
Merger and conversion charges - (44) 895 540
Income before income taxes 125,993 150,182 40,845 23,224
Income tax 31,708 34,037 8,609 3,902
Net income $ 94,285 $ 116,145 $ 32,236 $ 19,322
Per Share Data:
Net income - basic $ 1.36 $ 1.68 $ 0.47 $ 0.28
Net income - diluted 1.36 1.67 0.47 0.28
Common dividends - cash 0.15 0.15 0.15 0.15

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed only to U.S. Dollar interest rate changes and, accordingly, we manage exposure by considering the possible changes in the net interest margin. We do not have any trading instruments nor do we classify any portion of the investment portfolio as trading. Finally, we have no exposure to foreign currency exchange rate risk, commodity price risk or 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 our asset/liability management program, the timing of repriced assets and liabilities is referred to as gap management.
As indicated by the table below, we are asset sensitive in relation to changes in market interest rates in the one-year and two-year time horizons. Being asset sensitive would result in net interest income increasing in a rising rate environment and decreasing in a declining rate environment.
We use 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 allow 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 twelve-month period is subjected to an instantaneous 100 basis point increase or 100 basis point decrease in market rates on net interest income and is monitored on a quarterly basis. Our most recent model projects net interest income would increase if rates rise 100 basis points over the next year. A scenario involving more than a 100 basis point decrease is less meaningful at this time due to the level of current market rates.
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 January 1, 2022. 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 26.0% 41.1%
300 19.7% 31.2%
200 13.1% 21.0%
100 6.4% 10.5%
(100) (5.7)% (10.1)%
In the event of a shift in interest rates, we may take certain actions intended to mitigate the negative impact to net interest income or to maximize the positive impact to net interest income. These actions may include, but are not limited to, restructuring of interest-earning assets and interest-bearing liabilities, seeking alternative funding sources or investment opportunities and modifying the pricing or terms of loans, leases and deposits.
Impact of Inflation and Changing Prices
The consolidated financial statements and related notes presented elsewhere in this report have been prepared in accordance with GAAP. This requires the measurement of financial position and operating results in terms of historical dollars without considering the changes in the relative purchasing power of money over time due to inflation. Unlike most industrial companies, the vast majority of our assets and liabilities are monetary in nature. As a result, interest rates have a greater impact on our performance than do the effects of general levels of inflation. Interest rates do not necessarily move in the same direction or to the same extent as the prices of goods and services.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets - December 31, 2021 and 2020
Consolidated Statements of Income - Years ended December 31, 2021, 2020 and 2019
Consolidated Statements of Comprehensive Income - Years ended December 31, 2021, 2020 and 2019
Consolidated Statements of Shareholders' Equity - Years ended December 31, 2021, 2020 and 2019
Consolidated Statements of Cash Flows - Years ended December 31, 2021, 2020 and 2019
Notes to Consolidated Financial Statements

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.

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ITEM 9A. CONTROLS AND PROCEDURES
ITEM 9A. CONTROLS AND PROCEDURES
Disclosure 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 Annual 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 Annual Report, the Company’s disclosure controls and procedures were effective.
Management’s Report on Internal Control Over Financial Reporting
Management’s Report on Internal Control Over Financial Reporting is set forth on page of this Annual Report.
Changes in Internal Control Over Financial Reporting
During the quarter ended December 31, 2021, there was no change in the Company’s internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rules 13a-15 or 15d-15 of the Exchange Act that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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ITEM 9B. OTHER INFORMATION
ITEM 9B. OTHER INFORMATION
Not applicable.

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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information set forth under the captions “Matters To Be Voted On - Proposal 1 - Election of Directors,” “Governance - Director Independence,” “Environmental, Social and Governance Matters,” “Board of Directors - Board Members,” “Board of Directors - Board Committees,” “Board of Directors - Director Compensation,” “Information About Our Executive Officers,” “Executive Compensation - Employment Agreements,” “Audit Matters - Audit Committee Report” and “Stock Ownership - Delinquent Section 16(a) Reports” in the Proxy Statement to be used in connection with the solicitation of proxies for the Company’s 2022 Annual Meeting of Shareholders, to be filed with the SEC, is incorporated herein by reference.
Code of Ethics
Ameris has adopted a code of ethics that is applicable to all employees, including its Chief Executive Officer and all senior financial officers, including its Chief Financial Officer and principal accounting officer. Ameris will provide to any person without charge, upon request, a copy of its code of ethics. Such requests should be directed to the Corporate Secretary of Ameris Bancorp at 3490 Piedmont Road N.E., Suite 1550, Atlanta, Georgia 30305.

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ITEM 11. EXECUTIVE COMPENSATION
ITEM 11. EXECUTIVE COMPENSATION
The information set forth under the captions “Board of Directors - Board Committees - Compensation Committee,” “Board of Directors - Director Compensation” and “Executive Compensation” in the Proxy Statement to be used in connection with the solicitation of proxies for the Company’s 2022 Annual Meeting of Shareholders, to be filed with the SEC, is incorporated herein by reference.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The information set forth under the caption “Stock Ownership - Security Ownership of Certain Beneficial Owners and Management” in the Proxy Statement to be used in connection with the solicitation of proxies for the Company’s 2022 Annual Meeting of Shareholders, to be filed with the SEC, is incorporated herein by reference.
Equity Compensation Plans
The following table sets forth certain information with respect to securities to be issued under our equity compensation plans as of December 31, 2021.
Plan Category Number of securities to be issued upon exercise of outstanding options, warrants and rights (1) Weighted average exercise price of outstanding options, warrants and rights (1) Number of securities remaining available for future issuance under equity compensation plans (2)
(a) (b) (c)
Equity compensation plans approved by security holders 238,405 $ 28.79 2,824,364
(1)Represents shares issuable upon the exercise of stock options outstanding under the Fidelity Southern Corporation Equity Incentive Plan and the Fidelity Southern Corporation 2018 Omnibus Incentive Plan, each as amended, which options converted into options to acquire shares of common stock, par value $1.00 per share, of the Company on July 1, 2019, pursuant to the Agreement and Plan of Merger, dated as of December 17, 2018, by and between the Company and Fidelity Southern Corporation, and performance stock units ("PSUs") granted under the 2014 Omnibus Equity Compensation Plan at target. PSUs are not taken into account in column (b).
(2)Consists of our 2021 Omnibus Equity Compensation Plan, which provides for the granting to directors, officers and certain other employees of qualified or nonqualified stock options, stock units, stock awards, stock appreciation rights, dividend equivalents and other stock-based awards.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information set forth under the captions “Governance - Director Independence,” “Board of Directors - Board Committees” and “Related Party Transactions” in the Proxy Statement to be used in connection with the solicitation of proxies for the Company’s 2022 Annual Meeting of Shareholders, to be filed with the SEC, is incorporated herein by reference.

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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The information set forth under the caption “Matters To Be Voted On - Proposal 2 - Ratification of Appointment of Our Registered Independent Public Accounting Firm,” “Board of Directors - Board Committees - Audit Committee” and “Audit Matters - Fees and Services” in the Proxy Statement to be used in connection with the solicitation of proxies for the Company’s 2022 Annual Meeting of Shareholders, to be filed with the SEC, is incorporated herein by reference.
PART IV

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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
1. Financial statements:
(a)Ameris Bancorp and Subsidiaries:
(i)Consolidated Balance Sheets - December 31, 2021 and 2020;
(ii)Consolidated Statements of Income - Years ended December 31, 2021, 2020 and 2019;
(iii)Consolidated Statements of Comprehensive Income - Years ended December 31, 2021, 2020 and 2019;
(iv)Consolidated Statements of Shareholders' Equity - Years ended December 31, 2021, 2020 and 2019;
(v)Consolidated Statements of Cash Flows - Years ended December 31, 2021, 2020 and 2019; and
(vi)Notes to Consolidated Financial Statements.
(b)Ameris Bancorp (parent company only):
Parent company only financial information has been included in Note 23 of the Notes to Consolidated Financial Statements.
2. Financial statement schedules:
All schedules are omitted as the required information is inapplicable or the information is presented in the financial statements or related notes.
3. A list of the Exhibits required by Item 601 of Regulation S-K to be filed as a part of this Annual Report is shown on the “Exhibit Index” filed herewith.