UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



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

For the Quarterly Period Ended March 31, 2024

OR

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

Commission File Number: 001-39325

ATLANTIC UNION BANKSHARES CORPORATION

(Exact name of registrant as specified in its charter)


Virginia	54-1598552
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

4300 Cox Road

Glen Allen, Virginia 23060

(Address of principal executive offices) (Zip Code)

(804) 633-5031

(Registrant’s telephone number, including area code)

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



Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, par value $1.33 per share	AUB	The New York Stock Exchange
Depositary Shares, Each Representing a 1/400^th Interest in a Share of 6.875% Perpetual Non-Cumulative Preferred Stock, Series A	AUB.PRA	The New York Stock Exchange

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

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

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


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐
		Smaller reporting company	☐
		Emerging growth company	☐

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).


	Yes ☐ No ☒

The number of shares of common stock outstanding as of April 25, 2024 was 89,766,691.

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ATLANTIC UNION BANKSHARES CORPORATION

FORM 10-Q

INDEX


ITEM		PAGE

	PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements

	Consolidated Balance Sheets as of March 31, 2024 (unaudited) and December 31, 2023 (audited)	2

	Consolidated Statements of Income (unaudited) for the three months ended March 31, 2024 and 2023	3

	Consolidated Statements of Comprehensive Income (Loss) (unaudited) for the three months ended March 31, 2024 and 2023	4

	Consolidated Statements of Changes in Stockholders’ Equity (unaudited) for the three months ended March 31, 2024 and 2023	5

	Consolidated Statements of Cash Flows (unaudited) for the three months ended March 31, 2024 and 2023	6

	Notes to Consolidated Financial Statements (unaudited)	8

	Report of Independent Registered Public Accounting Firm	42

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	43

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	69

Item 4.	Controls and Procedures	71

	PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	72

Item 1A.	Risk Factors	72

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	72

Item 5.	Other Information	73

Item 6.	Exhibits	74

	Signatures	75

Table of Contents

Glossary of Acronyms and Defined Terms

In this Quarterly Report on Form 10-Q, unless the context suggests otherwise, the terms “we”, “us”, and “our” refer to Atlantic Union Bankshares Corporation and its direct and indirect subsidiaries, including Atlantic Union Bank.


2023 Form 10-K	–	Annual Report on Form 10-K for the year ended December 31, 2023
ACL	–	Allowance for credit losses
AFS	–	Available for sale
ALCO	–	Asset liability management committee
ALLL	–	Allowance for loan and lease losses, a component of ACL
American National	–	American National Bankshares Inc.
AOCI	–	Accumulated other comprehensive income (loss)
ASC	–	Accounting Standards Codification
ASU	–	Accounting Standards Update
AUB	–	Atlantic Union Bankshares Corporation
the Bank	–	Atlantic Union Bank
BOLI	–	Bank-owned life insurance
bps	–	Basis points
BTFP	–	Bank Term Funding Program
CECL	–	Current expected credit losses
CFPB	–	Consumer Financial Protection Bureau
CME SOFR	–	Chicago Mercantile Exchange Secured Overnight Financing Rate
the Company	–	Atlantic Union Bankshares Corporation and its subsidiaries
depositary shares	–	Depositary shares, each representing a 1/400th ownership interest in a share of the Company’s Series A preferred stock, with a liquidation preference of $10,000 per share of Series A preferred stock (equivalent to $25 per depositary share)
EPS	–	Earnings per common share
Exchange Act	–	Securities Exchange Act of 1934, as amended
FASB	–	Financial Accounting Standards Board
FDIC	–	Federal Deposit Insurance Corporation
Federal Reserve	–	Board of Governors of the Federal Reserve System
FHLB	–	Federal Home Loan Bank of Atlanta
FHLMC	–	Federal Home Loan Mortgage Corporation
FNB	–	FNB Corporation
FNMA	–	Federal National Mortgage Association
FOMC	–	Federal Open Market Committee
FRB	–	Federal Reserve Bank of Richmond
FR Y9-C	–	Consolidated financial statements for a U.S. bank holding company, a savings and loan holding company, a U.S. intermediate holding company, and a securities holding company
FTE	–	Fully taxable equivalent
GAAP	–	Accounting principles generally accepted in the United States
GNMA	–	Government National Mortgage Association
HTM	–	Held to maturity
LHFI	–	Loans held for investment
LHFS	–	Loans held for sale
MBS	–	Mortgage-Backed Securities
merger agreement	–	Agreement and Plan of Merger dated July 24, 2023 by and between Atlantic Union Bankshares Corporation and American National Bankshares Inc.
merger	–	Proposed merger of American National Bankshares Inc. with and into Atlantic Union Bankshares Corporation pursuant to the merger agreement
MFC	–	Middleburg Financial Corporation
NPA	–	Nonperforming assets

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NYSE	–	New York Stock Exchange
OCI	–	Other comprehensive (loss) income
ROU asset	–	Right of Use Asset
RPAs	–	Risk Participation Agreements
SEC	–	Securities and Exchange Commission
Series A preferred stock	–	6.875% Perpetual Non-Cumulative Preferred Stock, Series A, par value $10.00 per share
SOFR	–	Secured Overnight Financing Rate
TLM	–	Troubled loan modification
VFG	–	Virginia Financial Group, Inc.

Table of Contents

PART I – FINANCIAL INFORMATION

ITEM 1 – FINANCIAL STATEMENTS

ATLANTIC UNION BANKSHARES CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF MARCH 31, 2024 AND DECEMBER 31, 2023

(Dollars in thousands, except share data)


	March 31,		December 31,
	2024		2023
ASSETS		(unaudited)		(audited)
Cash and cash equivalents:
Cash and due from banks	$	168,850	$	196,754
Interest-bearing deposits in other banks		225,386		167,601
Federal funds sold		2,434		13,776
Total cash and cash equivalents		396,670		378,131
Securities available for sale, at fair value		2,202,216		2,231,261
Securities held to maturity, at carrying value		828,928		837,378
Restricted stock, at cost		110,272		115,472
Loans held for sale		12,200		6,710
Loans held for investment, net of deferred fees and costs		15,851,628		15,635,043
Less: allowance for loan and lease losses		136,190		132,182
Total loans held for investment, net		15,715,438		15,502,861
Premises and equipment, net		90,126		90,959
Goodwill		925,211		925,211
Amortizable intangibles, net		17,288		19,183
Bank owned life insurance		455,885		452,565
Other assets		623,886		606,466
Total assets	$	21,378,120	$	21,166,197
LIABILITIES
Noninterest-bearing demand deposits	$	3,845,191	$	3,963,181
Interest-bearing deposits		13,433,244		12,854,948
Total deposits		17,278,435		16,818,129
Securities sold under agreements to repurchase		66,405		110,833
Other short-term borrowings		600,000		810,000
Long-term borrowings		391,319		391,025
Other liabilities		493,033		479,883
Total liabilities		18,829,192		18,609,870
Commitments and contingencies (Note 7)
STOCKHOLDERS' EQUITY
Preferred stock, $10.00 par value		173		173
Common stock, $1.33 par value		99,399		99,147
Additional paid-in capital		1,782,809		1,782,286
Retained earnings		1,040,845		1,018,070
Accumulated other comprehensive loss		(374,298)		(343,349)
Total stockholders' equity		2,548,928		2,556,327
Total liabilities and stockholders' equity	$	21,378,120	$	21,166,197

Common shares outstanding		75,381,740		75,023,327
Common shares authorized		200,000,000		200,000,000
Preferred shares outstanding		17,250		17,250
Preferred shares authorized		500,000		500,000

See accompanying notes to consolidated financial statements.

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ATLANTIC UNION BANKSHARES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

THREE MONTHS ENDED MARCH 31, 2024 AND 2023

(Dollars in thousands, except share and per share data)


	Three Months Ended
	March 31,		March 31,
	2024		2023
Interest and dividend income:
Interest and fees on loans	$	234,600	$	189,992
Interest on deposits in other banks		1,280		1,493
Interest and dividends on securities:
Taxable		18,879		16,753
Nontaxable		8,156		9,308
Total interest and dividend income		262,915		217,546
Interest expense:
Interest on deposits		101,864		51,834
Interest on short-term borrowings		8,161		7,563
Interest on long-term borrowings		5,065		4,706
Total interest expense		115,090		64,103
Net interest income		147,825		153,443
Provision for credit losses		8,239		11,850
Net interest income after provision for credit losses		139,586		141,593
Noninterest income:
Service charges on deposit accounts		8,569		7,902
Other service charges, commissions and fees		1,731		1,746
Interchange fees		2,294		2,325
Fiduciary and asset management fees		4,838		4,262
Mortgage banking income		867		854
Gain (loss) on sale of securities		3		(13,400)
Bank owned life insurance income		3,245		2,828
Loan-related interest rate swap fees		1,216		1,439
Other operating income		2,789		1,672
Total noninterest income		25,552		9,628
Noninterest expenses:
Salaries and benefits		61,882		60,529
Occupancy expenses		6,625		6,356
Furniture and equipment expenses		3,309		3,752
Technology and data processing		8,127		8,142
Professional services		3,081		3,413
Marketing and advertising expense		2,318		2,351
FDIC assessment premiums and other insurance		5,143		3,899
Franchise and other taxes		4,501		4,498
Loan-related expenses		1,323		1,552
Amortization of intangible assets		1,895		2,279
Other expenses		7,069		11,503
Total noninterest expenses		105,273		108,274
Income before income taxes		59,865		42,947
Income tax expense		10,096		7,294
Net Income	$	49,769	$	35,653
Dividends on preferred stock		2,967		2,967
Net income available to common shareholders		46,802		32,686

Basic earnings per common share	$	0.62	$	0.44
Diluted earnings per common share	$	0.62	$	0.44
Dividends declared per common share	$	0.32	$	0.30
Basic weighted average number of common shares outstanding		75,197,113		74,832,141
Diluted weighted average number of common shares outstanding		75,197,376		74,835,514

See accompanying notes to consolidated financial statements.

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ATLANTIC UNION BANKSHARES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (UNAUDITED)

THREE MONTHS ENDED MARCH 31, 2024 AND 2023

(Dollars in thousands)


	Three Months Ended
	March 31,
	2024		2023
Net income	$	49,769	$	35,653
Other comprehensive (loss) income:
Cash flow hedges:
Change in fair value of cash flow hedges (net of tax, $2,726 and $3,645 for the three months ended March 31, 2024 and 2023, respectively)		(10,253)		13,714
AFS securities:
Unrealized holding (losses) gains arising during period (net of tax, $5,450 and $8,525 for the three months ended March 31, 2024 and 2023, respectively)		(20,501)		32,068
Reclassification adjustment for (gains) losses included in net income (net of tax, $1 and $2,814 for the three months ended March 31, 2024 and 2023, respectively) ⁽¹⁾		(2)		10,586
HTM securities:
Reclassification adjustment for accretion of unrealized gain on AFS securities transferred to HTM (net of tax) ⁽²⁾		(2)		(3)
Bank owned life insurance:
Unrealized holding (losses) gains arising during the period (net of tax)		(16)		10
Reclassification adjustment for gains included in net income ⁽³⁾		(175)		(22)
Other comprehensive (loss) income:		(30,949)		56,353
Comprehensive income	$	18,820	$	92,006

⁽¹⁾ The gross amounts reclassified into earnings are reported as "Other operating income" on the Company’s Consolidated Statements of Income with the corresponding income tax effect being reflected as a component of income tax expense.

⁽²⁾ The gross amounts reclassified into earnings are reported within interest income on the Company’s Consolidated Statements of Income with the corresponding income tax effect being reflected as a component of income tax expense.

⁽³⁾ Reclassifications in earnings are reported in "Salaries and benefits" expense on the Company’s Consolidated Statements of Income.

See accompanying notes to consolidated financial statements.

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ATLANTIC UNION BANKSHARES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)

THREE MONTHS ENDED MARCH 31, 2024 AND 2023

(Dollars in thousands, except share and per share amounts)

Accumulated

Additional

Other

Common

Preferred

Paid-In

Retained

Comprehensive

Stock

Capital

Earnings

Income (Loss)

Total

Balance - December 31, 2023

99,147

173

1,782,286

1,018,070

(343,349)

2,556,327

Net Income

49,769

Other comprehensive income (net of taxes of $8,182)

(30,949)

Dividends on common stock ($0.32 per share)

(24,027)

Dividends on preferred stock ($171.88 per share)

(2,967)

Issuance of common stock under Equity Compensation Plans, stock issuance for services rendered, and vesting of restricted stock, net of shares held for taxes (189,503 shares)

252

(2,458)

(2,206)

Stock-based compensation expense

2,981

Balance - March 31, 2024

99,399

173

1,782,809

1,040,845

(374,298)

2,548,928


									Accumulated
					Additional				Other
	Common		Preferred		Paid-In		Retained		Comprehensive
	Stock		Stock		Capital		Earnings		Income (Loss)		Total
Balance - December 31, 2022	$	98,873	$	173	$	1,772,440	$	919,537	$	(418,286)	$	2,372,737
Net Income								35,653				35,653
Other comprehensive income (net of taxes of $14,983)										56,353		56,353
Dividends on common stock ($0.30 per share)								(22,417)				(22,417)
Dividends on preferred stock ($171.88 per share)								(2,967)				(2,967)
Issuance of common stock under Equity Compensation Plans, stock issuance for services rendered, and vesting of restricted stock, net of shares held for taxes (149,684 shares)		199				(1,654)						(1,455)
Stock-based compensation expense						2,332						2,332
Balance - March 31, 2023	$	99,072	$	173	$	1,773,118	$	929,806	$	(361,933)	$	2,440,236

See accompanying notes to consolidated financial statements.

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ATLANTIC UNION BANKSHARES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

THREE MONTHS ENDED MARCH 31, 2024 AND 2023

(Dollars in thousands)


	2024		2023
Operating activities:
Net income	$	49,769	$	35,653
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses		8,239		11,850
Depreciation of premises and equipment		2,961		3,427
Amortization, net		6,542		6,417
Amortization related to acquisitions, net		2,869		1,288
(Gains) losses on securities sales, net		(3)		13,400
BOLI income		(3,245)		(2,828)
Writedown of ROU assets, foreclosed properties, and equipment		—		112
Loans held for sale:
Originations and purchases		(41,244)		(286,526)
Proceeds from sales		35,770		283,316
Changes in operating assets and liabilities:
Net (increase) decrease in other assets		(11,368)		18,840
Net increase (decrease) in other liabilities		6,721		(22,441)
Net cash provided by operating activities		57,011		62,508
Investing activities:
Securities available for sale and restricted stock:
Purchases		(115,674)		(45,633)
Proceeds from sales		61,943		558,466
Proceeds from maturities, calls, and paydowns		60,985		47,338
Securities held to maturity:
Purchases		—		(13,826)
Proceeds from maturities, calls, and paydowns		7,374		5,218
Net change in other investments		(6,724)		(2,941)
Net increase in LHFI		(220,677)		(145,260)
Net purchases of premises and equipment		(2,124)		(1,624)
Proceeds from BOLI settlements		—		353
Proceeds from sales of foreclosed properties and former bank premises		—		533
Net cash (used in) provided by investing activities		(214,897)		402,624
Financing activities:
Net increase (decrease) in:
Non-interest-bearing deposits		(117,990)		(305,230)
Interest-bearing deposits		578,294		829,449
Short-term borrowings		(254,428)		(910,077)
Common stock:
Issuance		227		474
Dividends paid		(26,994)		(25,384)
Vesting of restricted stock, net of shares held for taxes		(2,684)		(2,116)
Net cash provided by (used in) financing activities		176,425		(412,884)
Increase in cash and cash equivalents		18,539		52,248
Cash, cash equivalents and restricted cash at beginning of the period		378,131		319,948
Cash, cash equivalents and restricted cash at end of the period	$	396,670	$	372,196

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ATLANTIC UNION BANKSHARES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

THREE MONTHS ENDED MARCH 31, 2024 AND 2023

(Dollars in thousands)


	2024		2023
Supplemental Disclosure of Cash Flow Information
Cash payments for:
Interest	$	109,148	$	58,678

Supplemental schedule of noncash investing and financing activities
Transfer from LHFI to LHFS		—		7,087

See accompanying notes to consolidated financial statements.

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ATLANTIC UNION BANKSHARES CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

1.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company

Headquartered in Richmond, Virginia, Atlantic Union Bankshares Corporation (NYSE: AUB) is the holding company for Atlantic Union Bank, which provides banking and related financial products and services to consumers and businesses.

Basis of Financial Information

The accounting policies and practices of Atlantic Union Bankshares Corporation and subsidiaries conform to GAAP and follow general practices within the banking industry. The consolidated financial statements include the accounts of the Company, which is a financial holding company and a bank holding company that owns all of the outstanding common stock of its banking subsidiary, Atlantic Union Bank, which owns Union Insurance Group, LLC, Atlantic Union Financial Consultants, LLC, and Atlantic Union Equipment Finance, Inc.

The unaudited consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. The preparation of the unaudited consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the ACL and the fair value of financial instruments. The results of operations for the interim periods are not necessarily indicative of the results that may be expected for the full year or any other period.

The unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Company’s 2023 Form 10-K. Certain prior period amounts have been reclassified to conform to current period presentation. None of these reclassifications had a material effect on the Company’s financial statements. See Note 1 “Summary of Significant Accounting Policies” in the “Notes to the Consolidated Financial Statements” contained in Item 8 “Financial Statements and Supplementary Data” in the Company’s 2023 Form 10-K for additional information on the Company’s accounting policies. There have not been any significant changes to the Company’s accounting policies from those disclosed in the Company’s 2023 Form 10-K that could have a material effect on the Company’s financial statements.

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2. SECURITIES AND OTHER INVESTMENTS

Available for Sale

The amortized cost, gross unrealized gains and losses, and estimated fair values of AFS securities for the periods ended are as follows (dollars in thousands):

Amortized

Gross Unrealized

Estimated

Cost

Gains

(Losses)

Fair Value

March 31, 2024

U.S. government and agency securities

62,561

208

(33)

62,736

Obligations of states and political subdivisions

585,749

(123,913)

461,850

Corporate and other bonds ⁽¹⁾

267,621

(17,440)

250,264

Commercial MBS

Agency

231,296

160

(42,609)

188,847

Non-agency

58,243

—

(1,756)

56,487

Total commercial MBS

289,539

160

(44,365)

245,334

Residential MBS

Agency

1,322,392

350

(220,742)

1,102,000

Non-agency

83,437

213

(5,397)

78,253

Total residential MBS

1,405,829

563

(226,139)

1,180,253

Other securities

1,779

—

1,779

Total AFS securities

2,613,078

1,028

(411,890)

2,202,216

⁽¹⁾ Other bonds include asset-backed securities.

The amortized cost, gross unrealized gains and losses, and estimated fair values of AFS securities for the periods ended are as follows (dollars in thousands):


	Amortized		Gross Unrealized				Estimated
	Cost		Gains		(Losses)		Fair Value
December 31, 2023
U.S. government and agency securities	$	62,367	$	1,023	$	(34)	$	63,356
Obligations of states and political subdivisions		586,865		33		(111,451)		475,447
Corporate and other bonds ⁽¹⁾		261,656		7		(19,774)		241,889
Commercial MBS
Agency		233,775		274		(41,181)		192,868
Non-agency		66,743		—		(1,965)		64,778
Total commercial MBS		300,518		274		(43,146)		257,646
Residential MBS
Agency		1,312,538		114		(205,635)		1,107,017
Non-agency		89,840		141		(5,827)		84,154
Total residential MBS		1,402,378		255		(211,462)		1,191,171
Other securities		1,752		—		—		1,752
Total AFS securities	$	2,615,536	$	1,592	$	(385,867)	$	2,231,261

⁽¹⁾ Other bonds include asset-backed securities.

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The following table shows the gross unrealized losses and fair value of the Company’s AFS securities with unrealized losses, which are aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position for the following periods ended (dollars in thousands).


	Less than 12 months				More than 12 months				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value⁽²⁾		Losses		Value		Losses
March 31, 2024
U.S. government and agency securities	$	—	$	—	$	1,808	$	(33)	$	1,808	$	(33)
Obligations of states and political subdivisions		14,061		(2,301)		443,557		(121,612)		457,618		(123,913)
Corporate and other bonds⁽¹⁾		78,546		(348)		144,239		(17,092)		222,785		(17,440)
Commercial MBS
Agency		35,287		(548)		140,475		(42,061)		175,762		(42,609)
Non-agency		14,536		(257)		41,951		(1,499)		56,487		(1,756)
Total commercial MBS		49,823		(805)		182,426		(43,560)		232,249		(44,365)
Residential MBS
Agency		43,155		(273)		974,263		(220,469)		1,017,418		(220,742)
Non-agency		16,963		(48)		35,832		(5,349)		52,795		(5,397)
Total residential MBS		60,118		(321)		1,010,095		(225,818)		1,070,213		(226,139)
Total AFS securities	$	202,548	$	(3,775)	$	1,782,125	$	(408,115)	$	1,984,673	$	(411,890)

December 31, 2023
U.S. government and agency securities	$	—	$	—	$	1,980	$	(34)	$	1,980	$	(34)
Obligations of states and political subdivisions		11,758		(2,090)		455,931		(109,361)		467,689		(111,451)
Corporate and other bonds⁽¹⁾		89,450		(531)		144,155		(19,243)		233,605		(19,774)
Commercial MBS
Agency		35,665		(547)		143,657		(40,634)		179,322		(41,181)
Non-agency		—		—		64,778		(1,965)		64,778		(1,965)
Total commercial MBS		35,665		(547)		208,435		(42,599)		244,100		(43,146)
Residential MBS
Agency		59,707		(491)		1,011,809		(205,144)		1,071,516		(205,635)
Non-agency		9,022		(41)		40,085		(5,786)		49,107		(5,827)
Total residential MBS		68,729		(532)		1,051,894		(210,930)		1,120,623		(211,462)
Total AFS securities	$	205,602	$	(3,700)	$	1,862,395	$	(382,167)	$	2,067,997	$	(385,867)

⁽¹⁾ Other bonds include asset-backed securities.

⁽²⁾ Comprised of 759 and 757 individual securities as of March 31, 2024 and December 31, 2023, respectively.

The Company has evaluated AFS securities in an unrealized loss position for credit related impairment at March 31, 2024 and December 31, 2023 and concluded no impairment existed based on several factors which included: (1) the majority of these securities are of high credit quality, (2) unrealized losses are primarily the result of market volatility and increases in market interest rates, (3) the contractual terms of the investments do not permit the issuer(s) to settle the securities at a price less than the cost basis of each investment, (4) issuers continue to make timely principal and interest payments, and (5) the Company does not intend to sell any of the investments and the accounting standard of “more likely than not” has not been met for the Company to be required to sell any of the investments before recovery of its amortized cost basis.

Additionally, the majority of the Company’s MBS are issued by FNMA, FHLMC, and GNMA and do not have credit risk given the implicit and explicit government guarantees associated with these agencies. In addition, the non-agency mortgage-backed and asset-backed securities generally received a 20% simplified supervisory formula approach rating. The Company’s AFS investment portfolio is generally highly-rated or agency backed. At March 31, 2024 and December 31, 2023, all AFS securities were current with no securities past due or on non-accrual and no ACL was held against the Company’s AFS securities portfolio.

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The following table presents the amortized cost and estimated fair value of AFS securities as of the periods ended, by contractual maturity (dollars in thousands). Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.


	March 31, 2024				December 31, 2023
	Amortized		Estimated		Amortized		Estimated
	Cost		Fair Value		Cost		Fair Value
Due in one year or less	$	35,082	$	34,745	$	52,427	$	51,936
Due after one year through five years		168,601		167,029		150,271		149,545
Due after five years through ten years		253,073		234,773		282,309		261,720
Due after ten years		2,156,321		1,765,668		2,130,529		1,768,060
Total AFS securities	$	2,613,078	$	2,202,216	$	2,615,536	$	2,231,261

Refer to Note 7 “Commitments and Contingencies” within this Item 1 of this Quarterly Report for information regarding the estimated fair value of AFS securities that were pledged to secure public deposits, repurchase agreements, and for other purposes as permitted or required by law as of March 31, 2024 and December 31, 2023.

Accrued interest receivable on AFS securities totaled $9.1 million and $9.5 million at March 31, 2024 and December 31, 2023, respectively, and is included in “Other assets” on the Company’s Consolidated Balance Sheets. For the three months ended March 31, 2024 and 2023, accrued interest receivable write-offs were not material to the Company’s consolidated financial statements.

Held to Maturity

The Company reports HTM securities on the Company’s Consolidated Balance Sheets at carrying value. Carrying value is amortized cost, which includes any unamortized unrealized gains and losses recognized in AOCI prior to reclassifying the securities from AFS securities to HTM securities. The carrying value, gross unrealized gains and losses, and estimated fair values of HTM securities for the periods ended are as follows (dollars in thousands):

Carrying

Gross Unrealized

Estimated

Value

Gains

(Losses)

Fair Value

March 31, 2024

Obligations of states and political subdivisions

695,952

2,851

(27,308)

671,495

Corporate and other bonds⁽¹⁾

4,230

—

(182)

4,048

Commercial MBS

Agency

27,377

—

(5,819)

21,558

Non-agency

23,437

(493)

22,958

Total commercial MBS

50,814

(6,312)

44,516

Residential MBS

Agency

39,928

—

(6,365)

33,563

Non-agency

38,004

121

(402)

37,723

Total residential MBS

77,932

121

(6,767)

71,286

Total HTM securities

828,928

2,986

(40,569)

791,345

⁽¹⁾ Other bonds include asset-backed securities.

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The carrying value, gross unrealized gains and losses, and estimated fair values of HTM securities for the periods ended are as follows (dollars in thousands):


	Carrying		Gross Unrealized				Estimated
	Value		Gains		(Losses)		Fair Value
December 31, 2023
Obligations of states and political subdivisions		699,189		6,175		(23,464)		681,900
Corporate and other bonds⁽¹⁾		4,349		—		(100)		4,249
Commercial MBS
Agency		27,477		—		(5,570)		21,907
Non-agency		24,503		37		(449)		24,091
Total commercial MBS		51,980		37		(6,019)		45,998
Residential MBS
Agency		40,562		—		(5,713)		34,849
Non-agency		41,298		122		(342)		41,078
Total residential MBS		81,860		122		(6,055)		75,927
Total HTM securities	$	837,378	$	6,334	$	(35,638)	$	808,074

⁽¹⁾ Other bonds include asset-backed securities.

The following table presents the amortized cost of HTM securities as of the periods ended, by security type and credit rating (dollars in thousands):


	Obligations of states and political		Corporate and other		Mortgage-backed		Total HTM
	subdivisions		bonds		securities		securities
March 31, 2024
Credit Rating:
AAA/AA/A	$	685,273	$	—	$	9,186	$	694,459
BBB/BB/B		1,160		—		—		1,160
Not Rated – Agency⁽¹⁾		—		—		67,305		67,305
Not Rated – Non-Agency⁽²⁾		9,519		4,230		52,255		66,004
Total	$	695,952	$	4,230	$	128,746	$	828,928
December 31, 2023
Credit Rating:
AAA/AA/A	$	688,499	$	—	$	9,720	$	698,219
BBB/BB/B		1,166		—		—		1,166
Not Rated – Agency⁽¹⁾		—		—		68,039		68,039
Not Rated – Non-Agency⁽²⁾		9,524		4,349		56,081		69,954
Total	$	699,189	$	4,349	$	133,840	$	837,378

⁽¹⁾ Generally considered not to have credit risk given the government guarantees associated with these agencies.

⁽²⁾ Non-agency mortgage-backed and asset-backed securities have limited credit risk, supported by most receiving a 20% simplified supervisory formula approach rating.

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The following table presents the amortized cost and estimated fair value of HTM securities as of the periods ended, by contractual maturity (dollars in thousands). Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.


	March 31, 2024				December 31, 2023
	Carrying		Estimated		Carrying		Estimated
	Value		Fair Value		Value		Fair Value
Due in one year or less	$	1,048	$	1,042	$	3,065	$	3,058
Due after one year through five years		31,730		32,080		34,093		34,613
Due after five years through ten years		67,865		66,426		45,919		45,263
Due after ten years		728,285		691,797		754,301		725,140
Total HTM securities	$	828,928	$	791,345	$	837,378	$	808,074

Refer to Note 7 Commitments and Contingencies within this Item 1 of this Quarterly Report for information regarding the estimated fair value of HTM securities that were pledged to secure public deposits as permitted or required by law as of March 31, 2024 and December 31, 2023.

Accrued interest receivable on HTM securities totaled $6.7 million and $8.4 million at March 31, 2024 and December 31, 2023, respectively, and is included in “Other assets” on the Company’s Consolidated Balance Sheets. For the three months ended March 31, 2024 and 2023, accrued interest receivable write-offs were not material to the Company’s consolidated financial statements.

The Company’s HTM investment portfolio primarily consists of highly-rated municipal securities. At March 31, 2024 and December 31, 2023, the Company’s HTM securities were all current, with no securities past due or on non-accrual. The Company’s HTM securities ACL was immaterial at March 31, 2024 and December 31, 2023.

Restricted Stock, at cost

The FHLB required the Bank to maintain stock in an amount equal to 4.25% of outstanding borrowings and a specific percentage of the member’s total assets at March 31, 2024 and December 31, 2023, respectively. The FRB requires the Company to maintain stock with a par value equal to 6% of its outstanding capital. At March 31, 2024 and December 31, 2023, restricted stock consists of FRB stock in the amount of $67.0 million, respectively, and FHLB stock in the amount of $43.2 million and $48.4 million, respectively.

Realized Gains and Losses

The following table presents the gross realized gains and losses on and the proceeds from the sale of securities during the three months ended March 31, (dollars in thousands):



	2024		2023
Realized gains (losses)⁽¹⁾:
Gross realized gains	$	3	$	1,346
Gross realized losses		—		(14,746)
Net realized gains (losses)	$	3	$	(13,400)

Proceeds from sales of securities	$	61,943	$	558,466

⁽¹⁾ Includes gains (losses) on sales and calls of securities.

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3. LOANS AND ALLOWANCE FOR LOAN AND LEASE LOSSES

The following tables exclude LHFS. The Company’s LHFI are stated at their face amount, net of deferred fees and costs, and consisted of the following as of the periods ended (dollars in thousands):


	March 31, 2024		December 31, 2023
Construction and Land Development	$	1,246,251	$	1,107,850
Commercial Real Estate – Owner Occupied		1,981,613		1,998,787
Commercial Real Estate – Non-Owner Occupied		4,225,018		4,172,401
Multifamily Real Estate		1,074,957		1,061,997
Commercial & Industrial		3,561,971		3,589,347
Residential 1-4 Family – Commercial		515,667		522,580
Residential 1-4 Family – Consumer		1,081,094		1,078,173
Residential 1-4 Family – Revolving		616,951		619,433
Auto		440,118		486,926
Consumer		113,414		120,641
Other Commercial		994,574		876,908
Total LHFI, net of deferred fees and costs⁽¹⁾		15,851,628		15,635,043
Allowance for loan and lease losses		(136,190)		(132,182)
Total LHFI, net	$	15,715,438	$	15,502,861

⁽¹⁾ Total loans included unamortized premiums and discounts, and unamortized deferred fees and costs totaling $92.5 million and $79.7 million as of March 31, 2024 and December 31, 2023, respectively.

Accrued interest receivable on LHFI totaled $72.8 million and $72.5 million, respectively, at March 31, 2024 and December 31, 2023. Accrued interest receivable write-offs were not material to the Company’s consolidated financial statements for the three months ended March 31, 2024 and 2023.

The following table shows the aging of the Company’s LHFI portfolio by class at March 31, 2024 (dollars in thousands):

Greater than

30-59 Days

60-89 Days

90 Days and

Current

Past Due

still Accruing

Nonaccrual

Total Loans

Construction and Land Development

1,242,478

2,163

1,097

171

342

1,246,251

Commercial Real Estate – Owner Occupied

1,971,428

3,663

—

3,634

2,888

1,981,613

Commercial Real Estate – Non-Owner Occupied

4,210,657

2,271

558

1,197

10,335

4,225,018

Multifamily Real Estate

1,074,813

—

144

—

1,074,957

Commercial & Industrial

3,547,743

5,540

348

1,860

6,480

3,561,971

Residential 1-4 Family – Commercial

511,342

1,407

1,030

1,790

515,667

Residential 1-4 Family – Consumer

1,062,189

6,070

204

1,641

10,990

1,081,094

Residential 1-4 Family – Revolving

609,076

1,920

1,477

1,343

3,135

616,951

Auto

435,883

3,192

330

284

429

440,118

Consumer

112,658

418

197

141

—

113,414

Other Commercial

986,285

8,187

102

—

994,574

Total LHFI, net of deferred fees and costs

15,764,552

34,831

4,411

11,445

36,389

15,851,628

% of total loans

99.45

0.22

0.03

0.07

0.23

100.00

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The following table shows the aging of the Company’s LHFI portfolio by class at December 31, 2023 (dollars in thousands):


										Greater than
				30-59 Days			60-89 Days			90 Days and
	Current			Past Due			Past Due			still Accruing			Nonaccrual			Total Loans
Construction and Land Development	$	1,107,183		$	270		$	24		$	25		$	348		$	1,107,850
Commercial Real Estate – Owner Occupied		1,991,632			1,575			—			2,579			3,001			1,998,787
Commercial Real Estate – Non-Owner Occupied		4,156,089			545			184			2,967			12,616			4,172,401
Multifamily Real Estate		1,061,851			—			146			—			—			1,061,997
Commercial & Industrial		3,579,657			4,303			49			782			4,556			3,589,347
Residential 1-4 Family – Commercial		518,150			567			676			1,383			1,804			522,580
Residential 1-4 Family – Consumer		1,053,255			7,546			1,804			4,470			11,098			1,078,173
Residential 1-4 Family – Revolving		611,584			2,238			1,429			1,095			3,087			619,433
Auto		480,557			4,737			872			410			350			486,926
Consumer		119,487			770			232			152			—			120,641
Other Commercial		870,339			6,569			—			—			—			876,908
Total LHFI, net of deferred fees and costs	$	15,549,784		$	29,120		$	5,416		$	13,863		$	36,860		$	15,635,043
% of total loans		99.45	%		0.19	%		0.03	%		0.09	%		0.24	%		100.00	%

The following table shows the Company’s amortized cost basis of loans on nonaccrual status with no related ALLL, as of the periods ended (dollars in thousands):


	March 31,		December 31,
	2024		2023
Commercial Real Estate – Non-Owner Occupied	$	8,003	$	4,835
Commercial & Industrial		2,098		—
Total LHFI	$	10,101	$	4,835

There was no interest income recognized on nonaccrual loans during the three months ended March 31, 2024 and 2023. See Note 1 “Summary of Significant Accounting Policies” in the “Notes to the Consolidated Financial Statements” contained in Item 8 “Financial Statements and Supplementary Data” in the Company’s 2023 Form 10-K for additional information on the Company’s policies for nonaccrual loans.

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Troubled Loan Modifications

See Note 1 “Summary of Significant Accounting Policies” in the “Notes to Consolidated Financial Statements” contained in Item 8 “Financial Statements and Supplementary Data” of the Company’s 2023 Form 10-K for loan modifications to borrowers experiencing financial difficulty and how the Company defines TLMs.

TLMs for the quarter ended March 31, 2024 were not significant at approximately $36,000. The following table presents the amortized cost basis of TLMs for the quarter ended March 31, 2023 (dollars in thousands):


March 31, 2023	Amortized Cost		% of Total Class of Financing Receivable
Term Extension
Construction and Land Development	$	1,344	0.11	%
Commercial Real Estate – Non-Owner Occupied		18,792	0.47	%
Residential 1-4 Family – Consumer		168	0.02	%
Total Term Extension	$	20,304
Combination - Term Extension and Interest Rate Reduction
Residential 1-4 Family – Consumer	$	237	0.02	%
Total Combination - Term Extension and Interest Rate Reduction	$	237

Total	$	20,541

The following table describes the financial effects of TLMs on a weighted average basis for TLMs within that loan type for the period ended:


Three Months Ended March 31, 2023

Term Extension
Loan Type				Financial Effect
Construction and Land Development				Added a weighted-average 0.5 years to the life of loans.
Commercial Real Estate – Non-Owner Occupied				Added a weighted-average 0.5 years to the life of loans.
Residential 1-4 Family – Consumer				Added a weighted-average 18.2 years to the life of loans.

Combination - Term Extension and Interest Rate Reduction
Loan Type				Financial Effect
Residential 1-4 Family – Consumer				Added a weighted-average 20.7 years to the life of loans and changed interest rate from variable to fixed rates, which reduced the weighted average contractual interest rate from 7.5% to7.4%.

There was no material allowance on TLMs for the three months ended March 31, 2024 and 2023.

As of March 31, 2024 and 2023, unfunded commitments on loans modified and designated as TLMs were $1.1 million and $4.4 million, respectively.

The Company considers a default of a TLM to occur when the borrower is 90 days past due following the modification or a foreclosure and repossession of the applicable collateral occurs. During the three months ended March 31, 2024, the Company had three TLM loans for $1.0 million that went into default that had been designated as TLMs in the twelve-month period prior to the time of default. During the three months ended March 31, 2023, the Company did not have any significant loans either individually or in the aggregate that went into default that had been modified and designated as TLMs

The Company monitors the performance of TLMs in order to determine the effectiveness of the modifications. As of March 31, 2024, $3.4 million in loans that have been modified and designated as TLMs were past due. As of March 31, 2023, no loans that have been modified and designated as TLMs were past due.

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Allowance for Loan and Lease Losses

ALLL on the loan portfolio is a material estimate for the Company. The Company estimates its ALLL on its loan portfolio on a quarterly basis. The Company models the ALLL using two primary segments, Commercial and Consumer. Each loan segment is further disaggregated into classes based on similar risk characteristics. The Company has identified the following classes within each loan segment:

●

Commercial: Construction and Land Development, Commercial Real Estate – Owner Occupied, Commercial Real Estate – Non-Owner Occupied, Multifamily Real Estate, Commercial & Industrial, Residential 1-4 Family – Commercial, and Other Commercial

●

Consumer: Residential 1-4 Family – Consumer, Residential 1-4 Family – Revolving, Auto, and Consumer

The following tables show the ALLL activity by loan segment for the periods presented (dollars in thousands):


	Three Months Ended
	March 31, 2024
	Commercial		Consumer		Total
Balance at beginning of period	$	105,896	$	26,286	$	132,182
Loans charged-off		(4,939)		(955)		(5,894)
Recoveries credited to allowance		533		444		977
Provision charged to operations		9,038		(113)		8,925
Balance at end of period	$	110,528	$	25,662	$	136,190


	Three Months Ended
	March 31, 2023
	Commercial		Consumer		Total
Balance at beginning of period	$	82,753	$	28,015	$	110,768
Loans charged-off		(5,007)		(719)		(5,726)
Recoveries credited to allowance		515		652		1,167
Provision charged to operations		9,825		478		10,303
Balance at end of period	$	88,086	$	28,426	$	116,512

Credit Quality Indicators

Credit quality indicators are used to help estimate the collectability of each loan class within the Commercial and Consumer loan segments. For classes of loans within the Commercial segment, the primary credit quality indicator used for evaluating credit quality and estimating the ALLL is risk rating categories of Pass, Watch, Special Mention, Substandard, and Doubtful. For classes of loans within the Consumer segment, the primary credit quality indicator used for evaluating credit quality and estimating ALLL is delinquency bands of Current, 30-59, 60-89, 90+, and Nonaccrual. While other credit quality indicators are evaluated and analyzed as part of the Company’s credit risk management activities, these indicators are primarily used in estimating the ALLL. The Company evaluates the credit risk of its loan portfolio on at least a quarterly basis.

The Company presents loan and lease portfolio segments and classes by credit quality indicator and vintage year. The Company defines the vintage date for the purpose of this disclosure as the date of the most recent credit decision. Renewals are categorized as new credit decisions and reflect the renewal date as the vintage date, except for renewals of loans modified for borrowers experiencing financial difficulty or TLMs, which are presented in the original vintage.

Refer to Note 1 “Summary of Significant Accounting Policies” in the “Notes to the Consolidated Financial Statements” contained in Item 8 “Financial Statements and Supplementary Data” in the Company’s 2023 Form 10-K for additional information on the Company’s policies and for further information on the Company’s credit quality indicators.

Commercial Loans

The Company uses a risk rating system as the primary credit quality indicator for classes of loans within the Commercial segment.

See Note 3 “Loans and Allowance For Loan and Lease Losses” in the “Notes to Consolidated Financial Statements” contained in Item 8 “Financial Statements and Supplementary Data” of the Company’s 2023 Form 10-K for information on the Company’s risk rating system.

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The table below details the amortized cost and gross write-offs of the classes of loans within the Commercial segment by risk level and year of origination for the period presented (dollars in thousands):


		March 31, 2024
		Term Loans Amortized Cost Basis by Origination Year											Revolving
	2024		2023		2022		2021		2020		Prior		Loans		Total
Construction and Land Development
Pass	$	57,737	$	363,088	$	457,043	$	160,837	$	24,735	$	41,955	$	78,319	$	1,183,714
Watch		—		1,764		3,912		19,419		152		1,065		—		26,312
Special Mention		—		65		1,898		4,375		1,332		3,247		—		10,917
Substandard		—		1,290		1,245		899		20,646		1,228		—		25,308
Total Construction and Land Development	$	57,737	$	366,207	$	464,098	$	185,530	$	46,865	$	47,495	$	78,319	$	1,246,251
Current period gross write-off	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Commercial Real Estate – Owner Occupied
Pass	$	23,705	$	188,641	$	252,826	$	185,331	$	226,092	$	973,171	$	27,960	$	1,877,726
Watch		—		567		645		965		4,454		39,732		169		46,532
Special Mention		—		6,979		1,495		248		448		17,141		1,024		27,335
Substandard		—		166		—		—		2,356		27,498		—		30,020
Total Commercial Real Estate – Owner Occupied	$	23,705	$	196,353	$	254,966	$	186,544	$	233,350	$	1,057,542	$	29,153	$	1,981,613
Current period gross write-off	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Commercial Real Estate – Non-Owner Occupied
Pass	$	64,412	$	425,552	$	573,545	$	700,044	$	321,526	$	1,857,649	$	38,073	$	3,980,801
Watch		—		—		1,506		1,690		—		91,236		—		94,432
Special Mention		7		—		—		901		—		48,543		12,756		62,207
Substandard		—		4,929		—		2,098		14,428		66,123		—		87,578
Total Commercial Real Estate – Non-Owner Occupied	$	64,419	$	430,481	$	575,051	$	704,733	$	335,954	$	2,063,551	$	50,829	$	4,225,018
Current period gross write-off	$	—	$	—	$	—	$	—	$	(3,386)	$	—	$	—	$	(3,386)

Commercial & Industrial
Pass	$	266,562	$	864,933	$	573,762	$	357,991	$	152,907	$	268,730	$	878,394	$	3,363,279
Watch		—		3,261		49,919		1,591		1,910		22,547		26,697		105,925
Special Mention		52		105		23,214		282		336		3,336		21,376		48,701
Substandard		—		96		2,682		475		4,297		2,705		33,811		44,066
Total Commercial & Industrial	$	266,614	$	868,395	$	649,577	$	360,339	$	159,450	$	297,318	$	960,278	$	3,561,971
Current period gross write-off	$	—	$	—	$	(30)	$	—	$	(114)	$	(7)	$	(512)	$	(663)

Multifamily Real Estate
Pass	$	3,268	$	21,729	$	129,418	$	342,949	$	220,749	$	286,990	$	51,382	$	1,056,485
Watch		—		—		—		—		—		110		—		110
Special Mention		—		—		—		—		250		79		—		329
Substandard		—		14,219		—		—		—		3,814		—		18,033
Total Multifamily Real Estate	$	3,268	$	35,948	$	129,418	$	342,949	$	220,999	$	290,993	$	51,382	$	1,074,957
Current period gross write-off	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Residential 1-4 Family – Commercial
Pass	$	9,700	$	38,830	$	68,137	$	75,323	$	68,081	$	238,145	$	593	$	498,809
Watch		—		149		675		575		217		7,847		105		9,568
Special Mention		—		—		—		36		—		1,455		—		1,491
Substandard		—		154		—		609		278		4,505		253		5,799
Total Residential 1-4 Family – Commercial	$	9,700	$	39,133	$	68,812	$	76,543	$	68,576	$	251,952	$	951	$	515,667
Current period gross write-off	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Other Commercial
Pass	$	83,401	$	200,038	$	167,887	$	153,248	$	108,801	$	185,488	$	75,597	$	974,460
Watch		—		—		7,064		7,485		29		4,205		—		18,783
Special Mention		—		90		—		—		—		617		99		806
Substandard		—		521		—		—		—		4		—		525
Total Other Commercial	$	83,401	$	200,649	$	174,951	$	160,733	$	108,830	$	190,314	$	75,696	$	994,574
Current period gross write-off	$	—	$	—	$	—	$	—	$	—	$	(890)	$	—	$	(890)

Total Commercial
Pass	$	508,785	$	2,102,811	$	2,222,618	$	1,975,723	$	1,122,891	$	3,852,128	$	1,150,318	$	12,935,274
Watch		—		5,741		63,721		31,725		6,762		166,742		26,971		301,662
Special Mention		59		7,239		26,607		5,842		2,366		74,418		35,255		151,786
Substandard		—		21,375		3,927		4,081		42,005		105,877		34,064		211,329
Total Commercial	$	508,844	$	2,137,166	$	2,316,873	$	2,017,371	$	1,174,024	$	4,199,165	$	1,246,608	$	13,600,051
Total current period gross write-off	$	—	$	—	$	(30)	$	—	$	(3,500)	$	(897)	$	(512)	$	(4,939)

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		December 31, 2023
		Term Loans Amortized Cost Basis by Origination Year											Revolving
	2023		2022		2021		2020		2019		Prior		Loans		Total
Construction and Land Development
Pass	$	289,786	$	440,473	$	192,148	$	19,536	$	10,934	$	38,841	$	64,137	$	1,055,855
Watch		84		3,611		16,249		—		—		2,127		—		22,071
Special Mention		—		—		4,444		1,332		—		367		—		6,143
Substandard		114		1,244		1,248		20,705		205		265		—		23,781
Total Construction and Land Development	$	289,984	$	445,328	$	214,089	$	41,573	$	11,139	$	41,600	$	64,137	$	1,107,850
Current period gross write-off	$	—	$	—	$	—	$	—	$	—	$	(11)	$	—	$	(11)

Commercial Real Estate – Owner Occupied
Pass	$	175,627	$	257,889	$	194,030	$	239,549	$	259,502	$	750,180	$	23,689	$	1,900,466
Watch		5,919		1,311		4,768		4,422		9,146		27,829		399		53,794
Special Mention		786		849		249		—		5,150		9,549		611		17,194
Substandard		362		—		—		326		—		26,645		—		27,333
Total Commercial Real Estate – Owner Occupied	$	182,694	$	260,049	$	199,047	$	244,297	$	273,798	$	814,203	$	24,699	$	1,998,787
Current period gross write-off	$	—	$	—	$	—	$	—	$	—	$	(141)	$	—	$	(141)

Commercial Real Estate – Non-Owner Occupied
Pass	$	374,221	$	548,262	$	710,122	$	334,449	$	492,782	$	1,419,882	$	35,276	$	3,914,994
Watch		—		1,520		1,690		—		32,326		82,930		—		118,466
Special Mention		—		—		—		—		—		67,001		12,155		79,156
Substandard		4,837		—		2,121		17,956		5,899		28,972		—		59,785
Total Commercial Real Estate – Non-Owner Occupied	$	379,058	$	549,782	$	713,933	$	352,405	$	531,007	$	1,598,785	$	47,431	$	4,172,401
Current period gross write-off	$	—	$	—	$	—	$	—	$	—	$	(3,528)	$	—	$	(3,528)

Commercial & Industrial
Pass	$	981,290	$	617,805	$	409,973	$	178,578	$	122,160	$	168,368	$	923,359	$	3,401,533
Watch		2,708		38,711		512		1,379		18,065		4,943		22,832		89,150
Special Mention		108		32,714		981		3,310		1,722		1,513		19,865		60,213
Substandard		—		146		343		2,000		925		3,181		31,856		38,451
Total Commercial & Industrial	$	984,106	$	689,376	$	411,809	$	185,267	$	142,872	$	178,005	$	997,912	$	3,589,347
Current period gross write-off	$	—	$	—	$	(101)	$	—	$	—	$	(17)	$	(1,812)	$	(1,930)

Multifamily Real Estate
Pass	$	21,911	$	129,854	$	321,918	$	222,172	$	45,879	$	250,887	$	50,060	$	1,042,681
Watch		—		—		—		—		—		914		—		914
Special Mention		—		—		—		250		—		81		—		331
Substandard		14,222		—		—		—		3,703		146		—		18,071
Total Multifamily Real Estate	$	36,133	$	129,854	$	321,918	$	222,422	$	49,582	$	252,028	$	50,060	$	1,061,997
Current period gross write-off	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Residential 1-4 Family – Commercial
Pass	$	41,631	$	67,495	$	77,321	$	69,779	$	44,498	$	203,125	$	604	$	504,453
Watch		49		387		580		220		757		8,854		107		10,954
Special Mention		47		—		—		—		—		1,302		—		1,349
Substandard		57		—		614		279		624		3,997		253		5,824
Total Residential 1-4 Family – Commercial	$	41,784	$	67,882	$	78,515	$	70,278	$	45,879	$	217,278	$	964	$	522,580
Current period gross write-off	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Other Commercial
Pass	$	201,252	$	180,346	$	165,732	$	114,838	$	123,515	$	62,284	$	9,850	$	857,817
Watch		14,355		—		—		32		4		3,977		—		18,368
Special Mention		93		—		—		—		—		630		—		723
Total Other Commercial	$	215,700	$	180,346	$	165,732	$	114,870	$	123,519	$	66,891	$	9,850	$	876,908
Current period gross write-off	$	—	$	(101)	$	—	$	—	$	—	$	(3,016)	$	—	$	(3,117)

Total Commercial
Pass	$	2,085,718	$	2,242,124	$	2,071,244	$	1,178,901	$	1,099,270	$	2,893,567	$	1,106,975	$	12,677,799
Watch		23,115		45,540		23,799		6,053		60,298		131,574		23,338		313,717
Special Mention		1,034		33,563		5,674		4,892		6,872		80,443		32,631		165,109
Substandard		19,592		1,390		4,326		41,266		11,356		63,206		32,109		173,245
Total Commercial	$	2,129,459	$	2,322,617	$	2,105,043	$	1,231,112	$	1,177,796	$	3,168,790	$	1,195,053	$	13,329,870
Total current period gross write-off	$	—	$	(101)	$	(101)	$	—	$	—	$	(6,713)	$	(1,812)	$	(8,727)

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Consumer Loans

For Consumer loans, the Company evaluates credit quality based on the delinquency status of the loan. The following table details the amortized cost and gross write-offs of the classes of loans within the Consumer segment based on their delinquency status and year of origination for the period presented (dollars in thousands):


		March 31, 2024
		Term Loans Amortized Cost Basis by Origination Year											Revolving
	2024		2023		2022		2021		2020		Prior		Loans		Total
Residential 1-4 Family – Consumer
Current	$	14,473	$	123,570	$	269,138	$	261,624	$	152,740	$	240,630	$	14	$	1,062,189
30-59 Days Past Due		—		328		1,849		393		—		3,500		—		6,070
60-89 Days Past Due		—		—		—		—		—		204		—		204
90+ Days Past Due		—		—		—		—		104		1,537		—		1,641
Nonaccrual		—		409		887		860		—		8,834		—		10,990
Total Residential 1-4 Family – Consumer	$	14,473	$	124,307	$	271,874	$	262,877	$	152,844	$	254,705	$	14	$	1,081,094
Current period gross write-off	$	—	$	—	$	—	$	—	$	—	$	(19)	$	—	$	(19)

Residential 1-4 Family – Revolving
Current	$	4,229	$	40,510	$	52,726	$	11,466	$	4,183	$	1,947	$	494,015	$	609,076
30-59 Days Past Due		—		180		70		—		—		—		1,670		1,920
60-89 Days Past Due		—		65		133		—		—		—		1,279		1,477
90+ Days Past Due		—		—		70		—		—		—		1,273		1,343
Nonaccrual		—		—		72		—		49		—		3,014		3,135
Total Residential 1-4 Family – Revolving	$	4,229	$	40,755	$	53,071	$	11,466	$	4,232	$	1,947	$	501,251	$	616,951
Current period gross write-off	$	—	$	—	$	—	$	(27)	$	—	$	—	$	(58)	$	(85)

Auto
Current	$	504	$	71,604	$	194,181	$	97,178	$	46,615	$	25,801	$	—	$	435,883
30-59 Days Past Due		—		368		1,398		652		424		350		—		3,192
60-89 Days Past Due		—		3		150		122		36		19		—		330
90+ Days Past Due		—		19		149		52		—		64		—		284
Nonaccrual		—		40		159		131		49		50		—		429
Total Auto	$	504	$	72,034	$	196,037	$	98,135	$	47,124	$	26,284	$	—	$	440,118
Current period gross write-off	$	—	$	(47)	$	(192)	$	(82)	$	(38)	$	(21)	$	—	$	(380)

Consumer
Current	$	3,108	$	10,997	$	20,417	$	9,404	$	7,365	$	35,959	$	25,408	$	112,658
30-59 Days Past Due		—		46		101		67		18		153		33		418
60-89 Days Past Due		—		26		59		3		33		60		16		197
90+ Days Past Due		—		12		85		39		—		3		2		141
Total Consumer	$	3,108	$	11,081	$	20,662	$	9,513	$	7,416	$	36,175	$	25,459	$	113,414
Current period gross write-off	$	—	$	(84)	$	(20)	$	(13)	$	(165)	$	(167)	$	(22)	$	(471)

Total Consumer
Current	$	22,314	$	246,681	$	536,462	$	379,672	$	210,903	$	304,337	$	519,437	$	2,219,806
30-59 Days Past Due		—		922		3,418		1,112		442		4,003		1,703		11,600
60-89 Days Past Due		—		94		342		125		69		283		1,295		2,208
90+ Days Past Due		—		31		304		91		104		1,604		1,275		3,409
Nonaccrual		—		449		1,118		991		98		8,884		3,014		14,554
Total Consumer	$	22,314	$	248,177	$	541,644	$	381,991	$	211,616	$	319,111	$	526,724	$	2,251,577
Total current period gross write-off	$	—	$	(131)	$	(212)	$	(122)	$	(203)	$	(207)	$	(80)	$	(955)

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Table of Contents

The following table details the amortized cost and gross write-offs of the classes of loans within the Consumer segment based on their delinquency status and year of origination for the period presented (dollars in thousands):


		December 31, 2023
		Term Loans Amortized Cost Basis by Origination Year											Revolving
	2023		2022		2021		2020		2019		Prior		Loans		Total
Residential 1-4 Family – Consumer
Current	$	120,480	$	266,261	$	265,255	$	154,440	$	32,591	$	214,214	$	14	$	1,053,255
30-59 Days Past Due		273		2,195		705		249		181		3,943		—		7,546
60-89 Days Past Due		208		—		—		—		—		1,596		—		1,804
90+ Days Past Due		—		—		1,713		—		—		2,757		—		4,470
Nonaccrual		205		875		870		—		38		9,110		—		11,098
Total Residential 1-4 Family – Consumer	$	121,166	$	269,331	$	268,543	$	154,689	$	32,810	$	231,620	$	14	$	1,078,173
Current period gross write-off		—	$	(16)	$	(21)	$	—	$	(69)	$	(95)	$	—	$	(201)

Residential 1-4 Family – Revolving
Current	$	42,593	$	54,560	$	11,756	$	4,348	$	937	$	1,115	$	496,275	$	611,584
30-59 Days Past Due		—		14		—		—		39		—		2,185		2,238
60-89 Days Past Due		181		148		—		—		—		26		1,074		1,429
90+ Days Past Due		—		—		—		—		—		—		1,095		1,095
Nonaccrual		—		154		27		51		—		—		2,855		3,087
Total Residential 1-4 Family – Revolving	$	42,774	$	54,876	$	11,783	$	4,399	$	976	$	1,141	$	503,484	$	619,433
Current period gross write-off		—	$	—	$	(3)	$	—	$	—	$	—	$	(55)	$	(58)

Auto
Current	$	77,293	$	210,692	$	107,568	$	52,742	$	24,877	$	7,385	$	—	$	480,557
30-59 Days Past Due		526		2,022		1,095		612		292		190		—		4,737
60-89 Days Past Due		61		326		298		58		96		33		—		872
90+ Days Past Due		36		210		24		112		23		5		—		410
Nonaccrual		39		120		63		69		59		—		—		350
Total Auto	$	77,955	$	213,370	$	109,048	$	53,593	$	25,347	$	7,613	$	—	$	486,926
Current period gross write-off		(64)	$	(487)	$	(295)	$	(145)	$	(69)	$	(80)	$	—	$	(1,140)

Consumer
Current	$	12,453	$	23,303	$	10,442	$	7,999	$	15,176	$	24,056	$	26,058	$	119,487
30-59 Days Past Due		21		156		28		32		129		366		38		770
60-89 Days Past Due		11		82		40		14		47		21		17		232
90+ Days Past Due		63		72		10		—		—		4		3		152
Total Consumer	$	12,548	$	23,613	$	10,520	$	8,045	$	15,352	$	24,447	$	26,116	$	120,641
Current period gross write-off		(43)	$	(66)	$	(124)	$	(851)	$	(23)	$	(679)	$	(83)	$	(1,869)

Total Consumer
Current	$	252,819	$	554,816	$	395,021	$	219,529	$	73,581	$	246,770	$	522,347	$	2,264,883
30-59 Days Past Due		820		4,387		1,828		893		641		4,499		2,223		15,291
60-89 Days Past Due		461		556		338		72		143		1,676		1,091		4,337
90+ Days Past Due		99		282		1,747		112		23		2,766		1,098		6,127
Nonaccrual		244		1,149		960		120		97		9,110		2,855		14,535
Total Consumer	$	254,443	$	561,190	$	399,894	$	220,726	$	74,485	$	264,821	$	529,614	$	2,305,173
Current period gross write-off		(107)	$	(569)	$	(443)	$	(996)	$	(161)	$	(854)	$	(138)	$	(3,268)

As of March 31, 2024 and December 31, 2023 the Company did not have any significant revolving loans convert to term.

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4. GOODWILL AND INTANGIBLE ASSETS

The Company’s intangible assets consist of core deposits, goodwill, and other intangibles arising from previous acquisitions. The Company has determined that core deposit intangibles have finite lives and amortizes them over their estimated useful lives. Core deposit intangibles are being amortized over the period of expected benefit, which ranges from four years to ten years, using an accelerated method. Other amortizable intangible assets are being amortized over the period of expected benefit, which ranges from four years to ten years, using various methods. The Company concluded that there was no impairment to the goodwill or intangible assets as of the balance sheet date. In the normal course of business, the Company routinely monitors the impact of the changes in the financial markets and includes these assessments in the Company’s impairment process.

The following table presents the Company’s goodwill and intangible assets by operating segment as of the periods ended (dollars in thousands):


	Wholesale Banking		Consumer Banking		Corporate Other		Total
March 31, 2024
Goodwill	$	639,180	$	286,031	$	—	$	925,211
Intangible Assets		1,238		936		15,114		17,288
December 31, 2023
Goodwill	$	639,180	$	286,031	$	—	$	925,211
Intangible Assets		1,302		989		16,892		19,183

Amortization expense of intangibles for the three months ended March 31, 2024 and 2023 totaled $1.9 million and $2.3 million, respectively.

As of March 31, 2024, the estimated remaining amortization expense of intangibles is as follows for the years ending (dollars in thousands):


For the remaining nine months of 2024	$	5,041
2025		5,289
2026		3,654
2027		2,068
2028		843
Thereafter		393
Total estimated amortization expense	$	17,288

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5. LEASES

Lessor Arrangements

The Company’s lessor arrangements consist of sales-type and direct financing leases for equipment, including vehicles and machinery, with terms ranging from 5 months to 122 months. At March 31, 2024 and December 31, 2023, the carrying value of residual assets covered by residual value guarantees and residual value insurance was $91.5 million and $84.1 million, respectively. For more information on the Company’s lessor arrangements, refer to Note 1 “Summary of Significant Accounting Policies” in the “Notes to the Consolidated Financial Statements” contained in Item 8 “Financial Statements and Supplementary Data” in the Company’s 2023 Form 10-K.

Total net investment in sales-type and direct financing leases consists of the following as of the periods ended (dollars in thousands):


	March 31, 2024		December 31, 2023
Sales-type and direct financing leases:
Lease receivables, net of unearned income and deferred selling profit	$	451,861	$	409,264
Unguaranteed residual values, net of unearned income and deferred selling profit		25,726		21,484
Total net investment in sales-type and direct financing leases	$	477,587	$	430,748

Lessee Arrangements

The Company’s lessee arrangements consist of operating and finance leases; however, the majority of the leases have been classified as non-cancellable operating leases and are primarily for real estate leases with remaining lease terms of up to 22 years. For more information on the Company’s lessee arrangements, refer to Note 1 “Summary of Significant Accounting Policies” in the “Notes to the Consolidated Financial Statements” contained in Item 8 “Financial Statements and Supplementary Data” in the Company’s 2023 Form 10-K.

The tables below provide information about the Company’s lessee lease portfolio and other supplemental lease information for the following periods ended (dollars in thousands):


	March 31, 2024						December 31, 2023
	Operating			Finance			Operating			Finance
ROU assets	$	70,704		$	4,440		$	71,788		$	4,669
Lease liabilities		76,140			6,735			78,043			7,052
Lease Term and Discount Rate of Operating leases:
Weighted-average remaining lease term (years)		11.72			4.83			11.75			5.08
Weighted-average discount rate ⁽¹⁾		6.25	%		1.17	%		6.21	%		1.17	%

⁽¹⁾ A lease implicit rate or an incremental borrowing rate is used based on information available at commencement date of lease or at remeasurement date.


	Three months ended March 31,
	2024		2023
Cash paid for amounts included in measurement of lease liabilities:
Operating Cash Flows from Finance Leases	$	20	$	24
Operating Cash Flows from Operating Leases		3,403		2,812
Financing Cash Flows from Finance Leases		317		306
ROU assets obtained in exchange for lease obligations:
Operating leases	$	1,007	$	852


	Three months ended March 31,
		2024		2023
Net Operating Lease Cost	$	3,102	$	2,240
Finance Lease Cost:
Amortization of right-of-use assets		230		230
Interest on lease liabilities		20		24
Total Lease Cost	$	3,352	$	2,494

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The maturities of lessor and lessee arrangements outstanding are presented in the table below for the years ending (dollars in thousands):


	March 31, 2024
	Lessor		Lessee
		Sales-type and Direct Financing	Operating		Finance
For the remaining nine months of 2024	$	85,120	$	10,009	$	1,021
2025		100,667		12,670		1,392
2026		90,286		10,142		1,427
2027		90,176		8,776		1,462
2028		66,633		7,831		1,499
Thereafter		97,729		64,120		127
Total undiscounted cash flows		530,611		113,548		6,928
Less: Adjustments ⁽¹⁾		78,750		37,408		193
Total ⁽²⁾	$	451,861	$	76,140	$	6,735

⁽¹⁾ Lessor – unearned income and unearned guaranteed residual value; Lessee – imputed interest.

⁽²⁾ Represents lease receivables for lessor arrangements and lease liabilities for lessee arrangements.

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6. BORROWINGS

Short-term Borrowings

The Company classifies all borrowings that will mature within a year from the date on which the Company enters into them as short-term borrowings. Total short-term borrowings consist primarily of securities sold under agreements to repurchase, which are secured transactions with customers and generally mature the day following the date sold, advances from the FHLB, federal funds purchased (which are secured overnight borrowings from other financial institutions), and other lines of credit.

Total short-term borrowings consist of the following as of the periods ended (dollars in thousands):


		March 31,			December 31,
	2024			2023
Securities sold under agreements to repurchase	$	66,405		$	110,833
Federal Funds Purchased		—			90,000
FHLB Advances		600,000			720,000
Total short-term borrowings	$	666,405		$	920,833

Average outstanding balance during the period	$	614,681		$	573,553
Average interest rate during the period		5.34	%		4.73	%
Average interest rate at end of period		5.33	%		5.15	%

The Company maintains federal funds lines with several correspondent banks; the available balance was $752.0 million and $682.0 million, respectively, at March 31, 2024 and December 31, 2023. The Company also maintains an alternate line of credit at a correspondent bank, and the available balance was $25.0 million at both March 31, 2024 and December 31, 2023. Additionally, the Company had a collateral dependent line of credit with the FHLB of up to $6.3 billion at March 31, 2024 and $6.2 billion at December 31, 2023. The Company’s secured line of credit capacity totaled $2.0 billion and $1.7 billion, of which $1.4 billion and $988.7 million were available at March 31, 2024 and December 31, 2023, respectively.

The Company was eligible to borrow from the Federal Reserve’s BTFP, which provided additional contingent liquidity through the pledging of certain qualifying securities. The BTFP was a one-year program that began in the first quarter of 2023 and ended March 11, 2024. While the Company had access to the funds and pledged assets during the qualifying period; the Company did not borrow funds under the BTFP program.

Refer to Note 7 “Commitments and Contingencies” for additional information on the Company’s pledged collateral. The Company has certain restrictive covenants related to certain asset quality, capital, and profitability metrics associated with these lines and was in compliance with these covenants as of March 31, 2024 and December 31, 2023.

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Long-term Borrowings

Total long-term borrowings consist of the following as of March 31, 2024 (dollars in thousands):

Spread to

Principal

3-Month SOFR ⁽¹⁾

Rate ⁽²⁾

Maturity

Investment ⁽³⁾

Trust Preferred Capital Securities

Trust Preferred Capital Note – Statutory Trust I

22,500

2.75

8.31

6/17/2034

696

Trust Preferred Capital Note – Statutory Trust II

36,000

1.40

6.96

6/15/2036

1,114

VFG Limited Liability Trust I Indenture

20,000

2.73

8.29

3/18/2034

619

FNB Statutory Trust II Indenture

12,000

3.10

8.66

6/26/2033

372

Gateway Capital Statutory Trust I

8,000

3.10

8.66

9/17/2033

248

Gateway Capital Statutory Trust II

7,000

2.65

8.21

6/17/2034

217

Gateway Capital Statutory Trust III

15,000

1.50

7.06

5/30/2036

464

Gateway Capital Statutory Trust IV

25,000

1.55

7.11

7/30/2037

774

MFC Capital Trust II

5,000

2.85

8.41

1/23/2034

155

Total Trust Preferred Capital Securities

150,500

4,659

Subordinated Debt ⁽⁴⁾

2031 Subordinated Debt

250,000

—

2.875

12/15/2031

Total Subordinated Debt ⁽⁵⁾

250,000

Fair Value Discount ⁽⁶⁾

(13,840)

Investment in Trust Preferred Capital Securities

4,659

Total Long-term Borrowings

391,319

⁽¹⁾ Three-Month CME SOFR + 0.262%.

⁽²⁾ Rate as of March 31, 2024. Calculated using non-rounded numbers.

⁽³⁾ Represents the junior subordinated debentures owned by the Company in trust and is reported in “Other assets” on the Company’s Consolidated Balance Sheets.

⁽⁴⁾ Subordinated notes qualify as Tier 2 capital for the Company for regulatory purposes.

⁽⁵⁾ Fixed-to-floating rate notes. On December 15, 2026, the interest rate changes to a floating rate of the then current Three-Month Term SOFR plus a spread of 186 bps through its maturity date or earlier redemption. The notes may be redeemed before maturity on any interest payment date occurring on or after December 15, 2026.

⁽⁶⁾ Remaining discounts of $11.4 million and $2.4 million on Trust Preferred Capital Securities and Subordinated Debt, respectively.

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Total long-term borrowings consist of the following as of December 31, 2023 (dollars in thousands):


			Spread to
	Principal		3-Month SOFR ⁽¹⁾		Rate ⁽²⁾		Maturity	Investment ⁽³⁾
Trust Preferred Capital Securities
Trust Preferred Capital Note – Statutory Trust I	$	22,500	2.75	%	8.34	%	6/17/2034	$	696
Trust Preferred Capital Note – Statutory Trust II		36,000	1.40	%	6.99	%	6/15/2036		1,114
VFG Limited Liability Trust I Indenture		20,000	2.73	%	8.32	%	3/18/2034		619
FNB Statutory Trust II Indenture		12,000	3.10	%	8.69	%	6/26/2033		372
Gateway Capital Statutory Trust I		8,000	3.10	%	8.69	%	9/17/2033		248
Gateway Capital Statutory Trust II		7,000	2.65	%	8.24	%	6/17/2034		217
Gateway Capital Statutory Trust III		15,000	1.50	%	7.09	%	5/30/2036		464
Gateway Capital Statutory Trust IV		25,000	1.55	%	7.14	%	7/30/2037		774
MFC Capital Trust II		5,000	2.85	%	8.44	%	1/23/2034		155
Total Trust Preferred Capital Securities	$	150,500						$	4,659
Subordinated Debt ⁽⁴⁾
2031 Subordinated Debt		250,000	—	%	2.875	%	12/15/2031
Total Subordinated Debt ⁽⁵⁾	$	250,000
Fair Value Discount ⁽⁶⁾		(14,134)
Investment in Trust Preferred Capital Securities		4,659
Total Long-term Borrowings	$	391,025

⁽¹⁾ Three-Month CME SOFR + 0.262%.

⁽²⁾ Rate as of December 31, 2023. Calculated using non-rounded numbers.

⁽³⁾ Represents the junior subordinated debentures owned by the Company in trust and is reported in “Other assets” on the Company’s Consolidated Balance Sheets.

⁽⁴⁾ Subordinated notes qualify as Tier 2 capital for the Company for regulatory purposes.

⁽⁵⁾ Fixed-to-floating rate notes. On December 15, 2026, the interest changes to a floating rate of the then current Three-Month Term SOFR plus a spread of 186 bps through its maturity date or earlier redemption. The notes may be redeemed before maturity on any interest payment date occurring on or after December 15, 2026.

⁽⁶⁾ Remaining discounts of $11.7 million and $2.5 million on Trust Preferred Capital Securities and Subordinated Debt, respectively.

As of March 31, 2024, the contractual maturities of long-term debt are as follows for the years ending (dollars in thousands):

Trust

Preferred

Total

Capital

Subordinated

Fair Value

Long-term

Notes

Debt

Discount ⁽¹⁾

Borrowings

For the remaining nine months of 2024

—

(893)

2025

—

(1,211)

2026

—

(1,236)

2027

—

(1,263)

2028

—

(1,293)

Thereafter

155,159

250,000

(7,944)

397,215

Total long-term borrowings

155,159

250,000

(13,840)

391,319

⁽¹⁾ Includes discount on Trust Preferred Capital Securities and Subordinated Debt.

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7. COMMITMENTS AND CONTINGENCIES

Litigation and Regulatory Matters

In the ordinary course of its operations, the Company and its subsidiaries are subject to loss contingencies related to legal and regulatory proceedings. The Company establishes accruals for those matters when a loss contingency is considered probable and the related amount is reasonably estimable. When applicable, the Company estimates loss contingencies and whether there is an accruable probable loss. When the Company is able to estimate such losses and when it is reasonably possible that the Company could incur losses in excess of the amounts accrued, the Company discloses the aggregate estimation of such possible losses.

As previously disclosed, on February 9, 2022, pursuant to the CFPB’s Notice and Opportunity to Respond and Advise process, the CFPB Office of Enforcement notified the Bank that it was considering recommending that the CFPB take legal action against the Bank in connection with alleged violations of Regulation E, 12 C.F.R. § 1005.17, and the Consumer Financial Protection Act, 12 U.S.C. §§ 5531 and 5536, in connection with the Bank’s overdraft practices and policies. In March 2023, the CFPB commenced settlement discussions with the Company to resolve the matter, and on December 7, 2023, the Bank entered into a Consent Order with the CFPB to resolve the matter. As of March 31, 2024, the Company has recorded a probable and estimable liability in connection with this matter

Financial Instruments with Off-Balance Sheet Risk

The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers and to reduce its own exposure to fluctuations in interest rates. These financial instruments include commitments to extend credit and letters of credit. These instruments involve elements of credit and interest rate risk in excess of the amount recognized on the Company’s Consolidated Balance Sheets. The contractual amounts of these instruments reflect the extent of the Company’s involvement in particular classes of financial instruments.

The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instruments for commitments to extend credit and letters of credit written is represented by the contractual amount of these instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments. Unless noted otherwise, the Company does not require collateral or other security to support off-balance sheet instruments with credit risk. The Company considers credit losses related to off-balance sheet commitments by undergoing a similar process in evaluating losses for loans that are carried on the balance sheet. The Company considers historical loss and funding information, current and future economic conditions, risk ratings, and past due status among other factors in the consideration of expected credit losses in the Company’s off-balance sheet commitments to extend credit.

The Company also records an indemnification reserve based on historical statistics and loss rates related to mortgage loans previously sold. At March 31, 2024 and December 31, 2023, the Company’s reserve for unfunded commitments and indemnification reserve totaled $15.8 million and $16.5 million, respectively.

Commitments to extend credit are agreements to lend to customers as long as there are no violations of any conditions established in the contracts. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Because many of the commitments may expire without being completely drawn upon, the total commitment amounts do not necessarily represent future cash requirements.

Letters of credit are conditional commitments issued by the Company to guarantee the performance of customers to third parties. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers.

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The following table presents the balances of commitments and contingencies as of the periods ended (dollars in thousands):


	March 31, 2024		December 31, 2023
Commitments with off-balance sheet risk:
Commitments to extend credit⁽¹⁾	$	5,865,505	$	5,961,238
Letters of credit		126,106		140,498
Total commitments with off-balance sheet risk	$	5,991,611	$	6,101,736

⁽¹⁾ Includes unfunded overdraft protection.

As of March 31, 2024 and December 31, 2023, the Company had approximately $220.1 million and $218.5 million, respectively, in deposits in other financial institutions of which $156.9 million and $154.4 million, respectively, served as collateral for cash flow, fair value and loan swap derivatives. The Company had approximately $60.1 million and $60.8 million, respectively, in deposits in other financial institutions that were uninsured at March 31, 2024 and December 31, 2023. At least annually, the Company’s management evaluates the loss risk of its uninsured deposits in financial counterparties.

For asset/liability management purposes, the Company uses interest rate contracts to hedge various exposures or to modify the interest rate characteristics of various balance sheet accounts. For the over-the-counter derivatives cleared with the central clearinghouses, the variation margin is treated as a settlement of the related derivatives fair values. Refer to Note 8 “Derivatives” within this Item 1 of this Quarterly Report for additional information.

As part of the Company’s liquidity management strategy, the Company pledges collateral to secure various financing and other activities that occur during the normal course of business. The following tables present the types of collateral pledged as of the periods ended (dollars in thousands):

Pledged Assets as of March 31, 2024

AFS

HTM

Cash

Securities ⁽¹⁾

Loans ⁽²⁾

Total

Public deposits

—

754,132

615,378

—

1,369,510

Repurchase agreements

—

199,975

—

199,975

FHLB advances

—

46,448

—

3,244,890

3,291,338

Derivatives

156,891

60,868

—

217,759

Federal Reserve Discount Window

—

394,700

Other purposes

—

16,836

—

16,836

Total pledged assets

156,891

1,078,259

615,378

3,639,590

5,490,118

⁽¹⁾ Balance represents market value.

⁽²⁾ Balance represents book value.


	Pledged Assets as of December 31, 2023
			AFS		HTM
	Cash		Securities ⁽¹⁾		Securities ⁽¹⁾		Loans ⁽²⁾		Total
Public deposits	$	—	$	749,398	$	621,494	$	—	$	1,370,892
Repurchase agreements		—		174,075		—		—		174,075
FHLB advances		—		48,718		—		2,960,926		3,009,644
Derivatives		154,382		61,311		—		—		215,693
Federal Reserve Discount Window ⁽³⁾		—		411,661		17,356		418,468		847,485
Other purposes		—		15,591		—		—		15,591
Total pledged assets	$	154,382	$	1,460,754	$	638,850	$	3,379,394	$	5,633,380

⁽¹⁾ Balance represents market value.

⁽²⁾ Balance represents book value.

⁽³⁾ Includes AFS and HTM securities pledged under the BTFP program.

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8. DERIVATIVES

The Company has cash flow and fair value hedges that are derivatives designated as accounting hedges. The Company also has derivatives not designated as accounting hedges that include foreign exchange contracts, interest rate contracts, and RPAs. The Company’s mortgage banking derivatives do not have a material impact to the Company and are not included within the derivatives disclosures noted below. See Note 1 “Summary of Significant Accounting Policies” in the “Notes to the Consolidated Financial Statements” contained in Item 8 “Financial Statements and Supplementary Data” in the Company’s 2023 Form 10-K for additional information on the Company’s polices regarding derivatives.

The following table summarizes key elements of the Company’s derivative instruments as of the periods ended, segregated by derivatives that are considered accounting hedges and those that are not (dollars in thousands):


	March 31, 2024						December 31, 2023
			Derivative ⁽²⁾						Derivative ⁽²⁾
	Notional or						Notional or
	Contractual						Contractual
	Amount ⁽¹⁾		Assets		Liabilities		Amount ⁽¹⁾		Assets		Liabilities
Derivatives designated as accounting hedges:
Interest rate contracts: ⁽³⁾
Cash flow hedges	$	900,000	$	—	$	9,442	$	900,000	$	1,419	$	4,359
Fair value hedges:
Loans		76,830		1,922		—		78,072		1,633		—
Securities		50,000		1,898		—		50,000		1,329		—
Derivatives not designated as accounting hedges:
Interest rate contracts⁽³⁾⁽⁴⁾		6,603,129		95,427		216,438		6,595,975		88,646		202,202
Foreign exchange contracts		12,758		12		897		12,726		16		1,219

Cash collateral (received)/pledged ⁽⁵⁾		—	$	(15,080)	$	—		—	$	(14,879)	$	—

⁽¹⁾Notional amounts are not recorded on the Company’s Consolidated Balance Sheets and are generally used only as a basis on which interest and other payments are determined.

⁽²⁾Balances represent fair value of derivative financial instruments.

⁽³⁾The Company’s cleared derivatives are classified as a single-unit of accounting, resulting in the fair value of the designated swap being reduced by the variation margin, which is treated as settlement of the related derivatives fair value for accounting purposes and is reported on a net basis.

⁽⁴⁾ Includes RPAs.

⁽⁵⁾The fair value of derivative assets and liabilities is presented on a gross basis. The Company has not applied collateral netting; as such the amounts of cash collateral received or pledged are not offset against the derivative assets and derivative liabilities in the Consolidated Balance Sheets.

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The following table summarizes the carrying value of the Company’s hedged assets in fair value hedges and the associated cumulative basis adjustments included in those carrying values as of the periods ended (dollars in thousands):

March 31, 2024

December 31, 2023

Cumulative

Amount of Basis

Adjustments

Included in the

Carrying Amount

Carrying

Carrying Amount

Carrying

of Hedged

Amount of the

of Hedged

Amount of the

Assets/(Liabilities)

Hedged

Assets/(Liabilities)

Hedged

Amount ⁽¹⁾

Assets/(Liabilities)

Amount ⁽¹⁾

Assets/(Liabilities)

Line items on the Consolidated Balance Sheets in which the hedged item is included:

Securities available-for-sale ^{(1) (2)}

80,236

(1,888)

82,203

(1,323)

Loans⁽³⁾

76,830

(10,507)

78,072

(9,392)

⁽¹⁾These amounts include the amortized cost basis of the investment securities designated in hedging relationships for which the hedged item is the last layer expected to be remaining at the end of the hedging relationship. The amount of the designated hedged item at March 31, 2024 and December 31, 2023 totaled $50 million.

⁽²⁾Carrying value represents amortized cost.

⁽³⁾ The fair value of the swaps associated with the derivative related to hedged items at March 31, 2024 and December 31, 2023 was an unrealized gain of $10.7 million and $9.6 million, respectively.

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9. STOCKHOLDERS’ EQUITY

Share Repurchase Programs

The Company’s share repurchase program activity is dependent on management’s determination of its capital deployment needs, subject to market, economic, and regulatory conditions. Authorized repurchase programs allow the Company to repurchase its common stock through either open market transactions or privately negotiated transactions. During the quarters ended March 31, 2024 and 2023, there were no active share repurchase programs.

Series A Preferred Stock

On June 9, 2020, the Company issued and sold 6,900,000 depositary shares, each representing a 1/400th ownership interest in a share of its Series A preferred stock, with a liquidation preference of $10,000 per share of Series A preferred stock (equivalent to $25 per depositary share), including 900,000 depositary shares pursuant to the exercise in full by the underwriters of their option to purchase additional depositary shares.

Accumulated Other Comprehensive Income (Loss)

The change in AOCI for the three months ended March 31, 2024 is summarized as follows, net of tax (dollars in thousands):

Unrealized Gains

(Losses)

Unrealized

for AFS

Unrealized

(Losses)

Securities

Change in Fair

Gains

on AFS

Transferred to

Value of Cash

(Losses) on

Securities

HTM

Flow Hedge

BOLI

Total

AOCI (loss) – December 31, 2023

(302,532)

(42,165)

1,342

(343,349)

Other comprehensive (loss) income:

Other comprehensive loss before reclassification

(20,501)

—

(10,253)

(16)

(30,770)

Amounts reclassified from AOCI into earnings

(2)

—

(175)

(179)

Net current period other comprehensive loss

(20,503)

(2)

(10,253)

(191)

(30,949)

AOCI (loss) – March 31, 2024

(323,035)

(52,418)

1,151

(374,298)

The change in AOCI for the three months ended March 31, 2023 is summarized as follows, net of tax (dollars in thousands):


			Unrealized Gain
			(Losses)
	Unrealized		for AFS				Unrealized
	Gains (Losses)		Securities		Change in Fair		Gains
	on AFS		Transferred to		Value of Cash		(Losses)
	Securities		HTM		Flow Hedge		on BOLI		Total
AOCI (loss) – December 31, 2022	$	(363,919)	$	17	$	(54,610)	$	226	$	(418,286)
Other comprehensive (loss) income:
Other comprehensive income before reclassification		32,068		—		13,714		10		45,792
Amounts reclassified from AOCI into earnings		10,586		(3)		—		(22)		10,561
Net current period other comprehensive income (loss)		42,654		(3)		13,714		(12)		56,353
AOCI (loss) – March 31, 2023	$	(321,265)	$	14	$	(40,896)	$	214	$	(361,933)

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10. FAIR VALUE MEASUREMENTS

The Company follows ASC 820, Fair Value Measurement to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. ASC 820 clarifies that fair value of certain assets and liabilities is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between willing market participants.

ASC 820 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. The three levels of the fair value hierarchy under ASC 820 based on these two types of inputs are as follows:

Level 1 Valuation is based on quoted prices in active markets for identical assets and liabilities.

Level 2 Valuation is based on observable inputs including quoted prices in active markets for similar assets and liabilities, quoted prices for identical or similar assets and liabilities in less active markets, and model-based valuation techniques for which significant assumptions can be derived primarily from or corroborated by observable data in the markets.

Level 3 Valuation is based on model-based techniques that use one or more significant inputs or assumptions that are unobservable in the market. These unobservable inputs reflect the Company’s assumptions about what market participants would use and information that is reasonably available under the circumstances without undue cost and effort.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following describes the valuation techniques used by the Company to measure certain financial assets and liabilities recorded at fair value on a recurring basis in the financial statements. Refer to Note 1 “Summary of Significant Accounting Policies” in the “Notes to the Consolidated Financial Statements” contained in Item 8 “Financial Statements and Supplementary Data” in the Company’s 2023 Form 10-K for additional information on the valuation techniques used by the Company.

●

AFS Securities: AFS securities are recorded at fair value on a recurring basis. The Company’s investment portfolio is primarily valued using fair value measurements that are Level 2. The Company has contracted with a third-party portfolio accounting service vendor for valuation of its securities portfolio; no material differences were identified during the valuations as of March 31, 2024 and December 31, 2023.

The carrying value of restricted FRB and FHLB stock approximates fair value based on the redemption provisions of each entity and is therefore excluded from the fair value disclosure table below.

●

Loans Held for Sale: Residential loans originated for sale in the open market are carried at fair value. Fair value is based on the price secondary markets are currently offering for similar loans using observable market data which is not materially different than cost due to the short duration between origination and sale (Level 2). Gains and losses on the sale of loans are recorded in current period earnings as a component of “Mortgage banking income” on the Company’s Consolidated Statements of Income.

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●

Derivative Instruments: The Company records derivative instruments at fair value on a recurring basis. The Company utilizes derivative instruments as part of the management of interest rate risk to modify the re-pricing characteristics of certain portions of the Company’s interest-bearing assets and liabilities, as well as to manage the Company’s exposure to credit risk related to borrower’s performance under interest rate derivatives. The Company has contracted with a third-party vendor to provide valuations for derivatives using standard valuation techniques and therefore classifies such valuations as Level 2. Third-party valuations are validated by the Company using the Bloomberg Valuation Service’s derivative pricing functions. The Company determines the fair value of rate lock commitments, delivery contracts, and forward sales contracts of MBS by measuring the change in the value of the underlying asset, while taking into consideration the probability that the rate lock commitments will close or be funded. No significant differences were identified during the valuations as of March 31, 2024 and December 31, 2023. The Company has considered counterparty credit risk in the valuation of its derivative assets and has considered its own credit risk in the valuation of its derivative liabilities.

The following table presents the balances of financial assets and liabilities measured at fair value on a recurring basis as of the periods ended (dollars in thousands):

Fair Value Measurements at March 31, 2024 using

Significant

Quoted Prices in

Other

Significant

Active Markets for

Observable

Unobservable

Identical Assets

Inputs

Level 1

Level 2

Level 3

Balance

ASSETS

AFS securities:

U.S. government and agency securities

60,868

1,868

—

62,736

Obligations of states and political subdivisions

—

461,850

—

461,850

Corporate and other bonds⁽¹⁾

—

250,264