UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the Quarterly Period Ended | |
OR | |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File Number:
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of | (I.R.S. Employer |
incorporation or organization) | Identification No.) |
(Address of principal executive offices) (Zip Code)
(
(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 |
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.
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).
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.
☒ | 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 |
The number of shares of common stock outstanding as of April 30, 2025 was
ATLANTIC UNION BANKSHARES CORPORATION
FORM 10-Q
INDEX
Glossary of Acronyms and Defined Terms
In this Quarterly Report on Form 10-Q, except as otherwise indicated or the context suggests otherwise, references to the “Company” refers to Atlantic Union Bankshares Corporation, a Virginia corporation, and the terms “we”, “us” and “our” refer to the Company and its direct and indirect subsidiaries, including Atlantic Union Bank, which we refer to as the “Bank.” The “Federal Reserve” refers to the Board of Governor of the Federal Reserve System, our primary federal regulator.
“Our common stock” refers to the Company’s common stock, par value $1.33 per share, and the term “depositary shares” means the Company’s 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). “Series A preferred stock” refers to the Company’s 6.875% Perpetual Non-Cumulative Preferred Stock, Series A, par value $10.00 per share.
“Sandy Spring” refers to Sandy Spring Bancorp, Inc., which we acquired on April 1, 2025, pursuant to the Agreement and Plan of Merger dated October 21, 2024, by and between the Company and Sandy Spring, which we refer to as the “Sandy Spring merger agreement.”
“American National” refers to American National Bankshares Inc., which we acquired on April 1, 2024,
pursuant to the Agreement and Plan of Merger dated July 24, 2023, by and between the Company and American National, which we refer to as the “American National merger agreement.”
The “Forward Sale Agreements” refers to the forward sale agreements between the Company and Morgan Stanley & Co. LLC, as forward purchaser (the “Forward Purchaser”), each dated as of October 21, 2024, in connection with which the Forward Purchaser or its affiliate borrowed from third parties an aggregate of 11,338,028 shares of our common stock for sale in a registered public offering.
ACL | – | Allowance for credit losses |
AFS | – | Available for sale |
ALLL | – | Allowance for loan and lease losses, a component of the ACL |
AOCI | – | Accumulated other comprehensive income (loss) |
ASC | – | Accounting Standards Codification |
ASU | – | Accounting Standards Update |
BOLI | – | Bank-owned life insurance |
bps | – | Basis points |
CECL | – | Current expected credit losses |
CFPB | – | Consumer Financial Protection Bureau |
CRE | – | Commercial real estate |
EPS | – | Earnings per common share |
FASB | – | Financial Accounting Standards Board |
FDIC | – | Federal Deposit Insurance Corporation |
FRB | – | Federal Reserve Bank of Richmond |
FHLB | – | Federal Home Loan Bank of Atlanta |
FOMC | – | Federal Open Market Committee |
FTE | – | Fully taxable equivalent |
GAAP | – | Accounting principles generally accepted in the United States |
HTM | – | Held to maturity |
LHFI | – | Loans held for investment |
LHFS | – | Loans held for sale |
MBS | – | Mortgage-Backed Securities |
NPA | – | Nonperforming assets |
NYSE | – | New York Stock Exchange |
PCD | – | Purchased credit deteriorated |
SEC | – | U.S. Securities and Exchange Commission |
SOFR | – | Secured Overnight Financing Rate |
TLM | – | Troubled loan modification |
PART I – FINANCIAL INFORMATION
ITEM 1 – FINANCIAL STATEMENTS
ATLANTIC UNION BANKSHARES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2025 AND DECEMBER 31, 2024
(Dollars in thousands, except share data)
March 31, | December 31, | ||||
2025 |
| 2024 | |||
ASSETS | (unaudited) | (audited) | |||
Cash and cash equivalents: | |||||
Cash and due from banks | $ | | $ | | |
Interest-bearing deposits in other banks | | | |||
Federal funds sold | | | |||
Total cash and cash equivalents | | | |||
Securities available for sale, at fair value | | | |||
Securities held to maturity, at carrying value | | | |||
Restricted stock, at cost | | | |||
Loans held for sale | | | |||
Loans held for investment, net of deferred fees and costs | | | |||
Less: allowance for loan and lease losses | | | |||
Total loans held for investment, net | | | |||
Premises and equipment, net | | | |||
Goodwill | | | |||
Amortizable intangibles, net | | | |||
Bank owned life insurance | | | |||
Other assets | | | |||
Total assets | $ | | $ | | |
LIABILITIES | |||||
Noninterest-bearing demand deposits | $ | | $ | | |
Interest-bearing deposits | | | |||
Total deposits | | | |||
Securities sold under agreements to repurchase | | | |||
Other short-term borrowings | | | |||
Long-term borrowings | | | |||
Other liabilities | | | |||
Total liabilities | | | |||
Commitments and contingencies (Note 8) | |||||
STOCKHOLDERS' EQUITY | |||||
Preferred stock, $ | | | |||
Common stock, $ | | | |||
Additional paid-in capital | | | |||
Retained earnings | | | |||
Accumulated other comprehensive loss | ( | ( | |||
Total stockholders' equity | | | |||
Total liabilities and stockholders' equity | $ | | $ | | |
Common shares outstanding | | | |||
Common shares authorized | | | |||
Preferred shares outstanding | | | |||
Preferred shares authorized | | |
See accompanying notes to consolidated financial statements.
-2-
ATLANTIC UNION BANKSHARES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
THREE MONTHS ENDED MARCH 31, 2025 AND 2024
(Dollars in thousands, except share and per share data)
Three Months Ended | |||||
March 31, | March 31, | ||||
2025 |
| 2024 | |||
Interest and dividend income: | |||||
Interest and fees on loans | $ | | $ | | |
Interest on deposits in other banks | | | |||
Interest and dividends on securities: | |||||
Taxable | | | |||
Nontaxable | | | |||
Total interest and dividend income | | | |||
Interest expense: | |||||
Interest on deposits | | | |||
Interest on short-term borrowings | | | |||
Interest on long-term borrowings | | | |||
Total interest expense | | | |||
Net interest income | | | |||
Provision for credit losses | | | |||
Net interest income after provision for credit losses | | | |||
Noninterest income: | |||||
Service charges on deposit accounts | | | |||
Other service charges, commissions and fees | | | |||
Interchange fees | | | |||
Fiduciary and asset management fees | | | |||
Mortgage banking income | | | |||
(Loss) gain on sale of securities | ( | | |||
Bank owned life insurance income | | | |||
Loan-related interest rate swap fees | | | |||
Other operating income | | | |||
Total noninterest income | | | |||
Noninterest expenses: | |||||
Salaries and benefits | | | |||
Occupancy expenses | | | |||
Furniture and equipment expenses | | | |||
Technology and data processing | | | |||
Professional services | | | |||
Marketing and advertising expense | | | |||
FDIC assessment premiums and other insurance | | | |||
Franchise and other taxes | | | |||
Loan-related expenses | | | |||
Amortization of intangible assets | | | |||
Merger-related costs | | | |||
Other expenses | | | |||
Total noninterest expenses | | | |||
Income before income taxes | | | |||
Income tax expense | | | |||
Net Income | $ | | $ | | |
Dividends on preferred stock | | | |||
Net income available to common shareholders | $ | | $ | | |
Basic earnings per common share | $ | | $ | | |
Diluted earnings per common share | $ | | $ | | |
Dividends declared per common share | $ | | $ | | |
Basic weighted average number of common shares outstanding | | ||||
Diluted weighted average number of common shares outstanding | |
See accompanying notes to consolidated financial statements.
-3-
ATLANTIC UNION BANKSHARES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
THREE MONTHS ENDED MARCH 31, 2025 AND 2024
(Dollars in thousands)
Three Months Ended |
| ||||||
March 31, |
| ||||||
| 2025 |
| 2024 |
| |||
Net income | $ | | $ | | |||
Other comprehensive income (loss): |
|
| |||||
Cash flow hedges: |
|
| |||||
Change in fair value of cash flow hedges (net of tax, $ |
| |
| ( | |||
AFS securities: |
|
| |||||
Unrealized holding gains (losses) arising during period (net of tax, $ |
| |
| ( | |||
Reclassification adjustment for losses (gains) included in net income (net of tax, $ |
| |
| ( | |||
HTM securities: |
|
| |||||
Reclassification adjustment for accretion of unrealized gains on AFS securities transferred to HTM (net of tax) (2) |
| |
| ( | |||
Bank owned life insurance: |
|
| |||||
Unrealized holding losses arising during the period | ( | ( | |||||
Reclassification adjustment for gains included in net income (3) |
| ( |
| ( | |||
Other comprehensive income (loss): |
| |
| ( | |||
Comprehensive income | $ | | $ | |
(1)
(2)
(3)
See accompanying notes to consolidated financial statements.
-4-
ATLANTIC UNION BANKSHARES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)
THREE MONTHS ENDED MARCH 31, 2025 AND 2024
(Dollars in thousands, except share and per share amounts)
|
|
|
|
| Accumulated |
| ||||||||||||
Additional | Other | |||||||||||||||||
Common | Preferred | Paid-In | Retained | Comprehensive | ||||||||||||||
Stock | Stock | Capital | Earnings | Income (Loss) | Total | |||||||||||||
Balance - December 31, 2024 | $ | | $ | | $ | | $ | | $ | ( | $ | | ||||||
Net Income |
| |
| | ||||||||||||||
Other comprehensive income (net of taxes of $ |
| |
| | ||||||||||||||
Dividends on common stock ($ |
| ( |
| ( | ||||||||||||||
Dividends on preferred stock ($ |
| ( |
| ( | ||||||||||||||
Issuance of common stock under Equity Compensation Plans, stock issuance for services rendered, and vesting of restricted stock, net of shares held for taxes ( |
| | ( | ( | ||||||||||||||
Stock-based compensation expense |
| |
| | ||||||||||||||
Balance - March 31, 2025 | $ | | $ | | $ | | $ | | $ | ( | $ | |
(1) No stock options remained outstanding at December 31, 2024 or March 31, 2025.
|
|
|
| Accumulated |
| |||||||||||||
Additional | Other | |||||||||||||||||
Common | Preferred | Paid-In | Retained | Comprehensive | ||||||||||||||
Stock | Stock | Capital | Earnings | Income (Loss) | Total | |||||||||||||
Balance - December 31, 2023 | $ | | $ | | $ | | $ | | $ | ( | $ | | ||||||
Net Income |
| |
| | ||||||||||||||
Other comprehensive loss (net of taxes of $ |
| ( |
| ( | ||||||||||||||
Dividends on common stock ($ |
| ( |
| ( | ||||||||||||||
Dividends on preferred stock ($ |
| ( |
| ( | ||||||||||||||
Issuance of common stock under Equity Compensation Plans, stock issuance for services rendered, and vesting of restricted stock, net of shares held for taxes ( |
| | ( | ( | ||||||||||||||
Stock-based compensation expense |
| |
| | ||||||||||||||
Balance - March 31, 2024 | $ | | $ | | $ | | $ | | $ | ( | $ | |
See accompanying notes to consolidated financial statements.
-5-
ATLANTIC UNION BANKSHARES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
THREE MONTHS ENDED MARCH 31, 2025 AND 2024
(Dollars in thousands)
| 2025 |
| 2024 | |||
Operating activities: |
|
|
|
| ||
Net income | $ | | $ | | ||
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
| ||
Provision for credit losses |
| |
| | ||
Depreciation of premises and equipment |
| |
| | ||
Amortization, net |
| |
| | ||
(Accretion) amortization related to acquisitions, net |
| ( |
| | ||
Losses (gains) on securities sales, net |
| |
| ( | ||
BOLI income |
| ( |
| ( | ||
Loans held for sale: | ||||||
Originations and purchases | ( | ( | ||||
Proceeds from sales |
| |
| | ||
Changes in operating assets and liabilities: |
|
| ||||
Net decrease (increase) in other assets |
| |
| ( | ||
Net (decrease) increase in other liabilities |
| ( |
| | ||
Net cash provided by operating activities |
| |
| | ||
Investing activities: |
|
|
| |||
Securities AFS and restricted stock: |
| |||||
Purchases |
| ( |
| ( | ||
Proceeds from sales |
| |
| | ||
Proceeds from maturities, calls and paydowns |
| |
| | ||
Securities HTM: |
| |||||
Purchases | ( | | ||||
Proceeds from maturities, calls and paydowns |
| |
| | ||
Net change in other investments | ( | ( | ||||
Net decrease (increase) in LHFI |
| |
| ( | ||
Net purchases of premises and equipment | ( | ( | ||||
Proceeds from sales of foreclosed properties and former bank premises | |
| | |||
Net cash provided by (used in) investing activities |
| |
| ( | ||
Financing activities: |
|
|
|
| ||
Net increase (decrease) in: |
| |||||
Non-interest-bearing deposits |
| |
| ( | ||
Interest-bearing deposits |
| ( |
| | ||
Short-term borrowings | ( | ( | ||||
Common stock: |
| |||||
Proceeds from exercise of stock options | | | ||||
Dividends paid |
| ( |
| ( | ||
Vesting of restricted stock, net of shares held for taxes | ( | ( | ||||
Net cash provided by financing activities |
| |
| | ||
Increase in cash and cash equivalents |
| | | |||
Cash, cash equivalents and restricted cash at beginning of the period |
| |
| | ||
Cash, cash equivalents and restricted cash at end of the period | $ | | $ | |
-6-
ATLANTIC UNION BANKSHARES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
THREE MONTHS ENDED MARCH 31, 2025 AND 2024
(Dollars in thousands)
| 2025 |
| 2024 | |||
Supplemental Disclosure of Cash Flow Information |
|
|
|
| ||
Cash payments for: |
|
|
|
| ||
Interest | $ | | $ | | ||
Income taxes |
| |
| | ||
Supplemental schedule of noncash investing and financing activities |
|
|
|
| ||
Transfer to LHFI from LHFS | | |
See accompanying notes to consolidated financial statements.
-7-
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 (the “Bank”), which provides banking and related financial products and services to consumers and businesses. Except as otherwise indicated or the context suggests otherwise, references to the “Company” refers to Atlantic Union Bankshares Corporation and its subsidiaries.
Basis of Financial Information
The accounting policies and practices of Atlantic Union Bankshares Corporation and subsidiaries conform to accounting principles generally accepted in the United States (“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 allowance for credit losses (“ACL”), the fair value of financial instruments, and the fair values associated with assets acquired and liabilities assumed in a business combination. 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 Annual Report on Form 10-K for the year ended December 31, 2024 (the “2024 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 2024 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 2024 Form 10-K that could have a material effect on the Company’s financial statements.
-8-
2. ACQUISITIONS
On April 1, 2025, the Company completed its merger with Sandy Spring Bancorp, Inc. (“Sandy Spring”). Because the merger closed on April 1, 2025, the historical consolidated financial results of Sandy Spring are not included in the Company’s financial results for the quarter ended March 31, 2025. Refer to Note 15 “Subsequent Events” within this Item 1 of this Quarterly Report for information on the Company’s completed merger with Sandy Spring.
American National Bankshares Inc. Acquisition
On April 1, 2024, the Company completed its previously announced merger with American National Bankshares Inc. (“American National”), the holding company for American National Bank and Trust Company, headquartered in Danville, Virginia. Under the terms of the American National merger agreement, at the effective time of the American National merger, each outstanding share of American National common stock was converted into
As a result of the American National acquisition, the Company recorded goodwill totaling $
The following table provides a summary of the consideration transferred and the fair value of the assets acquired and liabilities assumed as of the date of the American National acquisition, reflecting the aforementioned measurement period and reclassification adjustments (dollars in thousands):
Purchase price consideration |
|
| $ | | ||
Fair value of assets acquired: |
|
|
|
| ||
Cash and cash equivalents | $ | |
|
| ||
Securities available for sale |
| |
|
| ||
Loans held for sale |
| |
|
| ||
Loans held for investment | | |||||
Premises and equipment |
| |
|
| ||
Core deposit intangibles and other intangibles |
| |
|
| ||
Bank owned life insurance | | |||||
Other assets |
| |
|
| ||
Total assets | $ | |
|
| ||
Fair value of liabilities assumed: |
|
|
|
| ||
Deposits | $ | |
|
| ||
Short-term borrowings |
| |
|
| ||
Long-term borrowings |
| |
|
| ||
Other liabilities |
| |
|
| ||
Total liabilities | $ | |
|
| ||
Fair value of net assets acquired |
|
| $ | | ||
Goodwill |
|
| $ | |
-9-
The Company assessed the fair value based on the following methods for the significant assets acquired and liabilities assumed:
Cash and cash equivalents: The fair value was determined to approximate the carrying amount based on the short-term nature of these assets.
Securities Available for Sale (“AFS”): The fair value of the investment portfolio was based on quoted market prices and dealer quotes and pricing obtained from independent pricing services.
Loans held for sale (“LHFS”): The LHFS portfolio was recorded at fair value based on quotes or bids from third parties.
Loans held for investment (“LHFI”): Fair values for LHFI were estimated using a discounted cash flow analysis that considered factors including loan type, interest rate type, prepayment speeds, duration, and current discount rates. The discount rates used for loans were based on current market rates for new originations of comparable loans and factored in adjustments for any expected liquidity events. Expected cash flows were derived using inputs that considered estimated credit losses and prepayments.
Premises and equipment: The fair value of bank premises and equipment held for use was valued by obtaining recent market data for similar property types with adjustments for characteristics of individual properties.
Core deposit intangible (“CDI”) and other intangibles: CDI represents the future economic benefit of acquired customer deposits. The fair value of the CDI asset was estimated based on a discounted cash flow methodology that incorporated expected customer attrition rates, cost of deposit base, net maintenance cost associated with customer deposits, and the cost for alternative funding sources. The discount rates used were based on market rates. Other intangibles include customer relationship intangible assets and non-compete intangible assets. Customer relationship intangible assets represent the value associated with customer relationships related to the wealth management business that was acquired. Non-compete intangible assets represent the value associated with non-compete agreements for former employees in place at the date of the acquisition.
Bank owned life insurance (“BOLI”): The fair value of BOLI is carried at its current cash surrender value, which is the most reasonable estimate of fair value.
Deposits: The fair value of interest-bearing and non-interest-bearing deposits is the amount payable on demand at the acquisition date. The fair value of time deposits was estimated using a discounted cash flow calculation that includes a market rate analysis of the current rates offered by market participants for certificates of deposits that mature in the same period.
Short-Term Borrowings: Acquired short term borrowings consist of Federal Home Loan Bank of Atlanta (“FHLB”) overnight borrowings and borrowings under repurchase agreements. The fair value of the short-term borrowings was determined to approximate the carrying amounts.
Long-Term Borrowings: The fair values of the Company’s long-term borrowings, including trust preferred securities, were estimated using discounted cash flow analyses, based on the current incremental borrowing rates for similar types of borrowing arrangements.
-10-
The following table presents for illustrative purposes only certain pro forma information as if the Company had acquired American National on January 1, 2024. These results combine the historical results of American National in the Company's Consolidated Statements of Income and while certain adjustments were made for the estimated impact of certain fair value adjustments and other acquisition-related activity, they are not indicative of what would have occurred had the acquisition taken place on January 1, 2024. No adjustments have been made to the pro forma results regarding possible revenue enhancements, provision for credit losses, or expense efficiencies. Pro forma adjustments below include the net impact of American National’s accretion and the elimination of merger-related costs, as disclosed below. The Company expects to achieve further operating cost savings and other business synergies, including branch closures, as a result of the acquisition, which are not reflected in the pro forma amounts below (dollars in thousands):
Pro forma | ||||||
Three Months Ended | ||||||
March 31, | ||||||
| 2025 (2) |
| 2024 (2) | |||
(unaudited) | (unaudited) | |||||
Total revenues (1) |
| $ | |
| $ | |
Net income available to common shareholders (3) |
| $ | |
| $ | |
(1) Includes net interest income and noninterest income.
(2) Includes the net impact of American National’s accretion adjustments of $
(3) For the three months ended March 31, 2025 and 2024, excludes merger-related costs as noted below.
Merger-related costs, net of tax, were $
The Company’s operating results for the three months ended March 31, 2025 include the operating results of the acquired assets and assumed liabilities of American National subsequent to the acquisition on April 1, 2024. Due to the merging of certain processes and the conversion of American National’s systems during the second quarter of 2024, historical reporting for the former American National operations is impracticable and thus disclosures of the revenue from the assets acquired and income before income taxes is impracticable for the period subsequent to acquisition.
-11-
3. SECURITIES AND OTHER INVESTMENTS
Available for Sale
The amortized cost, gross unrealized gains and losses, and estimated fair values of AFS securities as of March 31, 2025 are as follows (dollars in thousands):
Amortized | Gross Unrealized | Estimated | ||||||||||
| Cost |
| Gains |
| (Losses) |
| Fair Value | |||||
U.S. government and agency securities | $ | | $ | | $ | ( | $ | | ||||
Obligations of states and political subdivisions |
| |
| |
| ( |
| | ||||
Corporate and other bonds (1) |
| |
| |
| ( |
| | ||||
Commercial MBS |
|
| ||||||||||
Agency | |
| |
| ( | | ||||||
Non-agency | |
| |
| ( | | ||||||
Total commercial MBS | |
| |
| ( | | ||||||
Residential MBS | ||||||||||||
Agency | |
| |
| ( | | ||||||
Non-agency | |
| |
| ( | | ||||||
Total residential MBS | |
| |
| ( | | ||||||
Other securities |
| |
| |
| |
| | ||||
Total AFS securities | $ | | $ | | $ | ( | $ | |
(1) Other bonds include asset-backed securities.
The amortized cost, gross unrealized gains and losses, and estimated fair values of AFS securities as of December 31, 2024 are as follows (dollars in thousands):
Amortized | Gross Unrealized | Estimated | ||||||||||
| Cost |
| Gains |
| (Losses) |
| Fair Value | |||||
U.S. government and agency securities | $ | | $ | | $ | ( | $ | | ||||
Obligations of states and political subdivisions | |
| |
| ( |
| | |||||
Corporate and other bonds (1) |
| |
| |
| ( |
| | ||||
Commercial MBS |
|
| ||||||||||
Agency | |
| |
| ( | | ||||||
Non-agency | |
| |
| ( | | ||||||
Total commercial MBS | |
| |
| ( | | ||||||
Residential MBS | ||||||||||||
Agency | |
| |
| ( | | ||||||
Non-agency | |
| |
| ( | | ||||||
Total residential MBS | |
| |
| ( | | ||||||
Other securities |
| |
| |
| |
| | ||||
Total AFS securities | $ | | $ | | $ | ( | $ | |
(1) Other bonds include asset-backed securities.
-12-
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, 2025 |
|
|
|
|
|
| ||||||||||||
U.S. government and agency securities | $ | | $ | | $ | | $ | ( | $ | | $ | ( | ||||||
Obligations of states and political subdivisions | | ( | | ( | | ( | ||||||||||||
Corporate and other bonds (1) |
| |
| ( |
| |
| ( |
| |
| ( | ||||||
Commercial MBS |
| |||||||||||||||||
Agency | | ( | | ( | | ( | ||||||||||||
Non-agency | | ( | | ( | | ( | ||||||||||||
Total commercial MBS | | ( | | ( | | ( | ||||||||||||
Residential MBS | ||||||||||||||||||
Agency | | ( | | ( | | ( | ||||||||||||
Non-agency | | ( | | ( | | ( | ||||||||||||
Total residential MBS | | ( | | ( | | ( | ||||||||||||
Total AFS securities | $ | | $ | ( | $ | | $ | ( | $ | | $ | ( | ||||||
December 31, 2024 |
|
|
|
|
|
|
|
|
|
|
|
| ||||||
U.S. government and agency securities | $ | | $ | ( | $ | | $ | ( | $ | | $ | ( | ||||||
Obligations of states and political subdivisions | | ( | | ( | | ( | ||||||||||||
Corporate and other bonds (1) |
| |
| ( |
| |
| ( |
| |
| ( | ||||||
Commercial MBS |
| |||||||||||||||||
Agency | | ( | | ( | | ( | ||||||||||||
Non-agency | | ( | | ( | | ( | ||||||||||||
Total commercial MBS | | ( | | ( | | ( | ||||||||||||
Residential MBS | ||||||||||||||||||
Agency | | ( | | ( | | ( | ||||||||||||
Non-agency | | ( | | ( | | ( | ||||||||||||
Total residential MBS | | ( | | ( | | ( | ||||||||||||
Total AFS securities | $ | | $ | ( | $ | | $ | ( | $ | | $ | ( |
(1) Other bonds include asset-backed securities.
(2) Comprised of
The Company has evaluated AFS securities in an unrealized loss position for credit related impairment at March 31, 2025 and December 31, 2024 and concluded
Additionally, the majority of the Company’s mortgage-backed securities (“MBS”) are issued by the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, and the Government National Mortgage Association 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
-13-
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, 2025 | December 31, 2024 | |||||||||||
| Amortized |
| Estimated |
| Amortized |
| Estimated | |||||
Cost | Fair Value | Cost | Fair Value | |||||||||
Due in one year or less | $ | | $ | | $ | | $ | | ||||
Due after one year through five years |
| |
| |
| |
| | ||||
Due after five years through ten years |
| |
| |
| |
| | ||||
Due after ten years |
| |
| |
| |
| | ||||
Total AFS securities | $ | | $ | | $ | | $ | |
Refer to Note 8 “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, 2025 and December 31, 2024.
Accrued interest receivable on AFS securities totaled $
Held to Maturity
The Company reports held to maturity (“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 accumulated other comprehensive income (loss) (“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 as of March 31, 2025 are as follows (dollars in thousands):
Carrying | Gross Unrealized | Estimated | ||||||||||
| Value |
| Gains |
| (Losses) | Fair Value | ||||||
Obligations of states and political subdivisions | $ | | $ | | $ | ( | $ | | ||||
Corporate and other bonds (1) | | | ( | | ||||||||
Commercial MBS |
| |||||||||||
Agency | | | ( | | ||||||||
Non-agency | | | ( | | ||||||||
Total commercial MBS | | | ( | | ||||||||
Residential MBS | ||||||||||||
Agency | | | ( | | ||||||||
Non-agency | | | ( | | ||||||||
Total residential MBS | | | ( | | ||||||||
Total HTM securities | $ | | $ | | $ | ( | $ | |
(1) Other bonds include asset-backed securities.
-14-
The carrying value, gross unrealized gains and losses, and estimated fair values of HTM securities as of December 31, 2024 are as follows (dollars in thousands):
Carrying | Gross Unrealized | Estimated | ||||||||||
| Value |
| Gains |
| (Losses) |
| Fair Value | |||||
Obligations of states and political subdivisions | $ | | $ | | $ | ( | $ | | ||||
Corporate and other bonds (1) | | | ( | | ||||||||
Commercial MBS | ||||||||||||
Agency | | | ( | | ||||||||
Non-agency | | | ( | | ||||||||
Total commercial MBS | | | ( | | ||||||||
Residential MBS | ||||||||||||
Agency | | | ( | | ||||||||
Non-agency | | | ( | | ||||||||
Total residential MBS | | | ( | | ||||||||
Total HTM securities | $ | | $ | | $ | ( | $ | |
(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, 2025 | ||||||||||||
Credit Rating: |
|
| ||||||||||
AAA/AA/A | $ | | $ | | $ | | $ | | ||||
BBB/BB/B | | | | | ||||||||
Not Rated – Agency (1) | | | | | ||||||||
Not Rated – Non-Agency (2) |
| |
| | | | ||||||
Total | $ | | $ | | $ | | $ | | ||||
December 31, 2024 | ||||||||||||
Credit Rating: |
|
| ||||||||||
AAA/AA/A | $ | | $ | | $ | | $ | | ||||
BBB/BB/B | | | | | ||||||||
Not Rated – Agency (1) | | | | | ||||||||
Not Rated – Non-Agency (2) |
| |
| | | | ||||||
Total | $ | | $ | | $ | | $ | |
(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
-15-
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, 2025 | December 31, 2024 | |||||||||||
| Carrying |
| Estimated |
| Carrying |
| Estimated | |||||
Value | Fair Value | Value | Fair Value | |||||||||
Due in one year or less | $ | | $ | | $ | | $ | | ||||
Due after one year through five years |
| |
| |
| |
| | ||||
Due after five years through ten years |
| |
| |
| |
| | ||||
Due after ten years |
| |
| |
| |
| | ||||
Total HTM securities | $ | | $ | | $ | | $ | |
Refer to Note 8 “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, 2025 and December 31, 2024.
Accrued interest receivable on HTM securities totaled $
The Company’s HTM investment portfolio primarily consists of highly-rated municipal securities. At March 31, 2025 and December 31, 2024, the Company’s HTM securities were all current, with
Restricted Stock, at cost
The FHLB required the Bank to maintain stock in an amount equal to
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):
| 2025 |
| 2024 | |||
Realized gains (losses): (1) | ||||||
Gross realized gains |
| $ | |
| $ | |
Gross realized losses |
| ( |
| | ||
Net realized (losses) gains |
| $ | ( |
| $ | |
Proceeds from sales of securities |
| $ | |
| $ | |
(1) Includes gains (losses) on sales and calls of securities.
-16-
4. 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, 2025 | December 31, 2024 | ||||||
Construction and Land Development | $ | | $ | | |||
Commercial Real Estate ("CRE") – Owner Occupied |
| |
| | |||
CRE – Non-Owner Occupied |
| |
| | |||
Multifamily Real Estate |
| |
| | |||
Commercial & Industrial |
| |
| | |||
Residential 1-4 Family – Commercial |
| |
| | |||
Residential 1-4 Family – Consumer |
| |
| | |||
Residential 1-4 Family – Revolving |
| |
| | |||
Auto |
| |
| | |||
Consumer |
| |
| | |||
Other Commercial |
| |
| | |||
Total LHFI, net of deferred fees and costs(1) | | | |||||
Allowance for loan and lease losses | ( | ( | |||||
Total LHFI, net | $ | | $ | |
(1) Total loans included unamortized premiums and discounts, and unamortized deferred fees and costs totaling $
The following table shows the aging of the Company’s LHFI portfolio by class at March 31, 2025 (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 | $ | | $ | |
| $ | |
| $ | |
| $ | |
| $ | | |||
CRE – Owner Occupied |
| |
| |
|
| |
|
| |
|
| |
|
| | |||
CRE – Non-Owner Occupied |
| |
| |
|
| |
|
| |
|
| |
|
| | |||
Multifamily Real Estate |
| |
| |
|
| |
|
| |
|
| |
|
| | |||
Commercial & Industrial |
| |
| |
|
| |
|
| |
|
| |
|
| | |||
Residential 1-4 Family – Commercial |
| |
| |
|
| |
|
| |
|
| |
|
| | |||
Residential 1-4 Family – Consumer |
| |
| |
|
| |
|
| |
|
| |
|
| | |||
Residential 1-4 Family – Revolving |
| |
| |
| |
|
| |
|
| |
|
| | ||||
Auto |
| |
| |
| |
| |
|
| |
|
| | |||||
Consumer |
| |
| |
| |
| |
| |
| | |||||||
Other Commercial | | | | | | | |||||||||||||
Total LHFI, net of deferred fees and costs | $ | | $ | | $ | | $ | | $ | | $ | | |||||||
% of total loans | % | % | % | % | % | % |
-17-
The following table shows the aging of the Company’s LHFI portfolio by class at December 31, 2024 (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 | $ | | $ | |
| $ | |
| $ | |
| $ | |
| $ | | |||
CRE – Owner Occupied |
| |
| |
|
| |
|
| |
|
| |
|
| | |||
CRE – Non-Owner Occupied |
| |
| |
|
| |
|
| |
|
| |
|
| | |||
Multifamily Real Estate |
| |
| |
|
| |
|
| |
|
| |
|
| | |||
Commercial & Industrial |
| |
| |
|
| |
|
| |
|
| |
|
| | |||
Residential 1-4 Family – Commercial |
| |
| |
|
| |
|
| |
|
| |
|
| | |||
Residential 1-4 Family – Consumer |
| |
| |
|
| |
|
| |
|
| |
|
| | |||
Residential 1-4 Family – Revolving |
| |
| |
| |
|
| |
|
| |
|
| | ||||
Auto |
| |
| |
| |
| |
|
| |
|
| | |||||
Consumer |
| |
| |
| |
| |
| |
| | |||||||
Other Commercial | | | | | | | |||||||||||||
Total LHFI, net of deferred fees and costs | $ | | $ | | $ | | $ | | $ | | $ | | |||||||
% of total loans | % | % | % | % | % | % |
The following table shows the Company’s amortized cost basis of loans on nonaccrual status with no related allowance for loan and lease losses (“ALLL”), a component of the ACL as of the periods ended (dollars in thousands):
March 31, | December 31, | |||||
2025 | 2024 | |||||
Construction and Land Development | $ | | $ | | ||
Commercial & Industrial | | | ||||
Total LHFI | $ | | $ | |
There was
-18-
Troubled Loan Modifications (“TLMs”)
The following table presents the amortized cost basis of loan modifications to borrowers experiencing financial difficulty for the three months ended March 31, 2025 (dollars in thousands). TLMs for the quarter ended March 31, 2024 were not significant at approximately $
2025 | ||||||
Amortized Cost | % of Total Class of Financing Receivable |
| ||||
Combination - Other-Than-Insignificant Payment Delay and Term Extension | ||||||
Commercial and Industrial | $ | | | % | ||
Total Combination - Other-Than-Insignificant Payment Delay and Term Extension | $ | | ||||
Term Extension |
| |||||
CRE – Owner Occupied | $ | | | % | ||
Residential 1-4 Family – Commercial | | | % | |||
Residential 1-4 Family – Consumer | | | % | |||
Total Term Extension | $ | | ||||
Combination - Term Extension and Interest Rate Reduction | ||||||
Residential 1-4 Family – Consumer | $ | | | % | ||
Total Combination - Term Extension and Interest Rate Reduction | $ | | ||||
Total | $ | |
The following table describes the financial effects of TLMs on a weighted average basis for TLMs within that loan type for the three months ended March 31,:
2025 | ||||||||
Combination - Term Extension and Interest Rate Reduction | ||||||||
Loan Type | Financial Effect | |||||||
Residential 1-4 Family - Consumer | Added a weighted-average |
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, 2025 and 2024, the Company did
The Company monitors the performance of TLMs to determine the effectiveness of the modifications. During the three months ended March 31, 2025 and 2024, the Company did
As of March 31, 2025 and December 31, 2024, there were
-19-
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
● | Commercial: Construction and Land Development, CRE – Owner Occupied, CRE – 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 three months ended March 31, (dollars in thousands):
2025 | |||||||||
Commercial | Consumer | Total | |||||||
Balance at beginning of period | $ | | $ | | $ | | |||
Loans charged-off |
| ( |
| ( |
| ( | |||
Recoveries credited to allowance |
| |
| |
| | |||
Provision charged to operations |
| |
| |
| | |||
Balance at end of period | $ | | $ | | $ | |
2024 | |||||||||
Commercial | Consumer | Total | |||||||
Balance at beginning of period | $ | | $ | | $ | | |||
Loans charged-off |
| ( |
| ( |
| ( | |||
Recoveries credited to allowance |
| |
| |
| | |||
Provision charged to operations |
| |
| ( |
| | |||
Balance at end of period | $ | | $ | | $ | |
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 (including 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 2024 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. The Company defines pass loans as risk rated 1-5 and criticized loans as risk rated 6-9. See Note 4 “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 2024 Form 10-K for information on the Company’s risk rating system.
-20-
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 as of March 31, (dollars in thousands):
2025 | ||||||||||||||||||||||||
Term Loans Amortized Cost Basis by Origination Year | Revolving | |||||||||||||||||||||||
2025 | 2024 | 2023 | 2022 | 2021 | Prior | Loans | Total | |||||||||||||||||
Construction and Land Development | ||||||||||||||||||||||||
Pass | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Watch | | | | | | | | | ||||||||||||||||
Special Mention | | | | | | | | | ||||||||||||||||
Substandard | | | | | | | | | ||||||||||||||||
Total Construction and Land Development | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Current period gross write-off | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
CRE – Owner Occupied | ||||||||||||||||||||||||
Pass | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Watch | | | | | | | | | ||||||||||||||||
Special Mention | | | | | | | | | ||||||||||||||||
Substandard | | | | | | | | | ||||||||||||||||
Total CRE – Owner Occupied | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Current period gross write-off | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
CRE – Non-Owner Occupied | ||||||||||||||||||||||||
Pass | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Watch | | | | | | | | | ||||||||||||||||
Special Mention | | | | | | | | | ||||||||||||||||
Substandard | | | | | | | | | ||||||||||||||||
Total CRE – Non-Owner Occupied | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Current period gross write-off | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Commercial & Industrial | ||||||||||||||||||||||||
Pass | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Watch | | | | | | | | | ||||||||||||||||
Special Mention | | | | | | | | | ||||||||||||||||
Substandard | | | | | | | | | ||||||||||||||||
Doubtful | | | | | | | | | ||||||||||||||||
Total Commercial & Industrial | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Current period gross write-off | $ | | $ | | $ | ( | $ | | $ | | $ | | $ | ( | $ | ( | ||||||||
Multifamily Real Estate | ||||||||||||||||||||||||
Pass | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Watch | | | | | | | | | ||||||||||||||||
Special Mention | | | | | | | | | ||||||||||||||||
Substandard | | | | | | | | | ||||||||||||||||
Total Multifamily Real Estate | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Current period gross write-off | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Residential 1-4 Family – Commercial | ||||||||||||||||||||||||
Pass | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Watch | | | | | | | | | ||||||||||||||||
Special Mention | | | | | | | | | ||||||||||||||||
Substandard | | | | | | | | | ||||||||||||||||
Total Residential 1-4 Family – Commercial | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Current period gross write-off | $ | | $ | | $ | | $ | | $ | | $ | ( | $ | | $ | ( | ||||||||
Other Commercial | ||||||||||||||||||||||||
Pass | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Watch | | | | | | | | | ||||||||||||||||
Special Mention | | | | | | | | | ||||||||||||||||
Substandard | | | | | | | | | ||||||||||||||||
Total Other Commercial | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Current period gross write-off | $ | | $ | | $ | | $ | | $ | | $ | ( | $ | | $ | ( | ||||||||
Total Commercial | ||||||||||||||||||||||||
Pass | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Watch | | | | | | | | | ||||||||||||||||
Special Mention | | | | | | | | | ||||||||||||||||
Substandard | | | | | | | | | ||||||||||||||||
Doubtful | | | | | | | | | ||||||||||||||||
Total Commercial | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Total current period gross write-off | $ | | $ | | $ | ( | $ | | $ | | $ | ( | $ | ( | $ | ( |
-21-
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 as of December 31, (dollars in thousands):
2024 | ||||||||||||||||||||||||
Term Loans Amortized Cost Basis by Origination Year | Revolving | |||||||||||||||||||||||
2024 | 2023 | 2022 | 2021 | 2020 | Prior | Loans | Total | |||||||||||||||||
Construction and Land Development | ||||||||||||||||||||||||
Pass | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Watch | | | | | | | | | ||||||||||||||||
Special Mention | | | | | | | | | ||||||||||||||||
Substandard | | | | | | | | | ||||||||||||||||
Total Construction and Land Development | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Current period gross write-off | $ | | $ | | $ | ( | $ | | $ | | $ | | $ | | $ | ( | ||||||||
CRE – Owner Occupied | ||||||||||||||||||||||||
Pass | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Watch | | | | | | | | | ||||||||||||||||
Special Mention | | | | | | | | | ||||||||||||||||
Substandard | | | | | | | | | ||||||||||||||||
Total CRE – Owner Occupied | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Current period gross write-off | $ | | $ | | $ | | $ | | $ | | $ | ( | $ | | $ | ( | ||||||||
CRE – Non-Owner Occupied | ||||||||||||||||||||||||
Pass | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Watch | | | | | | | | | ||||||||||||||||
Special Mention | | | | | | | | | ||||||||||||||||
Substandard | | | | | | | | | ||||||||||||||||
Total CRE – Non-Owner Occupied | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Current period gross write-off | $ | | $ | | $ | | $ | | $ | ( | $ | | $ | | $ | ( | ||||||||
Commercial & Industrial | ||||||||||||||||||||||||
Pass | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Watch | | | | | | | | | ||||||||||||||||
Special Mention | | | | | | | | | ||||||||||||||||
Substandard | | | | | | | | | ||||||||||||||||
Doubtful | | | | | | | | | ||||||||||||||||
Total Commercial & Industrial | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Current period gross write-off | $ | | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||
Multifamily Real Estate | ||||||||||||||||||||||||
Pass | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Watch | | | | | | | | | ||||||||||||||||
Special Mention | | | | | | | | | ||||||||||||||||
Substandard | | | | | | | | | ||||||||||||||||
Total Multifamily Real Estate | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Current period gross write-off | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Residential 1-4 Family – Commercial | ||||||||||||||||||||||||
Pass | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Watch | | | | | | | | | ||||||||||||||||
Special Mention | | | | | | | | | ||||||||||||||||
Substandard | | | | | | | | | ||||||||||||||||
Total Residential 1-4 Family – Commercial | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Current period gross write-off | $ | | $ | | $ | | $ | | $ | ( | $ | | $ | | $ | ( | ||||||||
Other Commercial | ||||||||||||||||||||||||
Pass | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Watch | | | | | | | | | ||||||||||||||||
Special Mention | | | | | | | | | ||||||||||||||||
Substandard | | | | | | | | | ||||||||||||||||
Total Other Commercial | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Current period gross write-off | $ | | $ | | $ | | $ | | $ | | $ | ( | $ | | $ | ( | ||||||||
Total Commercial | ||||||||||||||||||||||||
Pass | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Watch | | | | | | | | | ||||||||||||||||
Special Mention | | | | | | | | | ||||||||||||||||
Substandard | | | | | | | | | ||||||||||||||||
Doubtful | | | | | | | | | ||||||||||||||||
Total Commercial | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Total current period gross write-off | $ | | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( |
-22-
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 as of March 31, (dollars in thousands):
2025 | ||||||||||||||||||||||||
Term Loans Amortized Cost Basis by Origination Year | Revolving | |||||||||||||||||||||||
2025 | 2024 | 2023 | 2022 | 2021 | Prior | Loans | Total | |||||||||||||||||
Residential 1-4 Family – Consumer | ||||||||||||||||||||||||
Current | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
30-59 Days Past Due | | | | | | | | | ||||||||||||||||
60-89 Days Past Due | | | | | | | | | ||||||||||||||||
90+ Days Past Due | | | | | | | | | ||||||||||||||||
Nonaccrual | | | | | | | | | ||||||||||||||||
Total Residential 1-4 Family – Consumer | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Current period gross write-off | $ | | $ | | $ | | $ | ( | $ | | $ | ( | $ | | $ | ( | ||||||||
Residential 1-4 Family – Revolving | ||||||||||||||||||||||||
Current | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
30-59 Days Past Due | | | | | | | | | ||||||||||||||||
60-89 Days Past Due | | | | | | | | | ||||||||||||||||
90+ Days Past Due | | | | | | | | | ||||||||||||||||
Nonaccrual | | | | | | | | | ||||||||||||||||
Total Residential 1-4 Family – Revolving | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Current period gross write-off | $ | | $ | | $ | | $ | | $ | | $ | | $ | ( | $ | ( | ||||||||
Auto | ||||||||||||||||||||||||
Current | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
30-59 Days Past Due | | | | | | | | | ||||||||||||||||
60-89 Days Past Due | | | | | | | | | ||||||||||||||||
90+ Days Past Due | | | | | | | | | ||||||||||||||||
Nonaccrual | | | | | | | | | ||||||||||||||||
Total Auto | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Current period gross write-off | $ | | $ | | $ | ( | $ | ( | $ | ( | $ | ( | $ | | $ | ( | ||||||||
Consumer | ||||||||||||||||||||||||
Current | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
30-59 Days Past Due | | | | | | | | | ||||||||||||||||
60-89 Days Past Due | | | | | | | | | ||||||||||||||||
90+ Days Past Due | | | | | | | | | ||||||||||||||||
Nonaccrual | | | | | | | | | ||||||||||||||||
Total Consumer | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Current period gross write-off | $ | | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||
Total Consumer | ||||||||||||||||||||||||
Current | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
30-59 Days Past Due | | | | | | | | | ||||||||||||||||
60-89 Days Past Due | | | | | | | | | ||||||||||||||||
90+ Days Past Due | | | | | | | | | ||||||||||||||||
Nonaccrual | | | | | | | | | ||||||||||||||||
Total Consumer | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Total current period gross write-off | $ | | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( |
-23-
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 as of December 31, (dollars in thousands):
2024 | ||||||||||||||||||||||||
Term Loans Amortized Cost Basis by Origination Year | Revolving | |||||||||||||||||||||||
2024 | 2023 | 2022 | 2021 | 2020 | Prior | Loans | Total | |||||||||||||||||
Residential 1-4 Family – Consumer | ||||||||||||||||||||||||
Current | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
30-59 Days Past Due | | | | | | | | | ||||||||||||||||
60-89 Days Past Due | | | | | | | | | ||||||||||||||||
90+ Days Past Due | | | | | | | | | ||||||||||||||||
Nonaccrual | | | | | | | | | ||||||||||||||||
Total Residential 1-4 Family – Consumer | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Current period gross write-off | $ | | $ | ( | $ | ( | $ | | $ | | $ | ( | $ | | $ | ( | ||||||||
Residential 1-4 Family – Revolving | ||||||||||||||||||||||||
Current | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
30-59 Days Past Due | | | | | | | | | ||||||||||||||||
60-89 Days Past Due | | | | | | | | | ||||||||||||||||
90+ Days Past Due | | | | | | | | | ||||||||||||||||
Nonaccrual | | | | | | | | | ||||||||||||||||
Total Residential 1-4 Family – Revolving | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Current period gross write-off | $ | | $ | | $ | | $ | ( | $ | | $ | | $ | ( | $ | ( | ||||||||
Auto | ||||||||||||||||||||||||
Current | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
30-59 Days Past Due | | | | | | | | | ||||||||||||||||
60-89 Days Past Due | | | | | | | | | ||||||||||||||||
90+ Days Past Due | | | | | | | | | ||||||||||||||||
Nonaccrual | | | | | | | | | ||||||||||||||||
Total Auto | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Current period gross write-off | $ | | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | $ | | $ | ( | ||||||||
Consumer | ||||||||||||||||||||||||
Current | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
30-59 Days Past Due | | | | | | | | | ||||||||||||||||
60-89 Days Past Due | | | | | | | | | ||||||||||||||||
90+ Days Past Due | | | | | | | | | ||||||||||||||||
Nonaccrual | | | | | | | | | ||||||||||||||||
Total Consumer | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Current period gross write-off | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||
Total Consumer | ||||||||||||||||||||||||
Current | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
30-59 Days Past Due | | | | | | | | | ||||||||||||||||
60-89 Days Past Due | | | | | | | | | ||||||||||||||||
90+ Days Past Due | | | | | | | | | ||||||||||||||||
Nonaccrual | | | | | | | | | ||||||||||||||||
Total Consumer | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Total current period gross write-off | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( |
As of March 31, 2025 and December 31, 2024, the Company did
-24-
5. 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 its core deposit intangibles have finite lives and they are amortized over their estimated useful lives, which ranges from
As a result of the American National acquisition, the Company recorded goodwill totaling $
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, 2025 |
|
|
|
|
|
|
| |||||
Goodwill | $ | | $ | | $ | | $ | | ||||
Intangible Assets |
| |
| |
| |
| | ||||
December 31, 2024 |
|
|
|
|
|
|
|
| ||||
Goodwill | $ | | $ | | $ | | $ | | ||||
Intangible Assets |
| |
| |
| |
| |
Amortization expense of intangibles for the three months ended March 31, 2025 and 2024 totaled $
For the remaining nine months of 2025 |
| $ | |
2026 | | ||
2027 | | ||
2028 | | ||
2029 | | ||
Thereafter | | ||
Total estimated amortization expense | $ | |
6. 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
Total net investment in sales-type and direct financing leases are included in “Loans held for investment, net of deferred fees and costs” on the Company’s Consolidated Balance Sheets and consist of the following as of the periods ended (dollars in thousands):
| March 31, 2025 | December 31, 2024 | |||||
Sales-type and direct financing leases: | |||||||
Lease receivables, net of unearned income and deferred selling profit | $ | | $ | | |||
Unguaranteed residual values, net of unearned income and deferred selling profit | | | |||||
Total net investment in sales-type and direct financing leases |
| $ | | $ | |
-25-
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
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, 2025 | December 31, 2024 | |||||||||||||||
Operating | Operating | ||||||||||||||||
$ | | $ | | $ | | $ | | ||||||||||
| | | | ||||||||||||||
Lease Term and Discount Rate of Operating leases: |
| ||||||||||||||||
Weighted-average remaining lease term (years) |
| ||||||||||||||||
Weighted-average discount rate (1) |
| | % | | % | | % | | % |
(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, | ||||||
| 2025 | 2024 | ||||
Cash paid for amounts included in measurement of lease liabilities: | ||||||
Operating Cash Flows from Finance Leases | $ | | $ | | ||
Operating Cash Flows from Operating Leases | | | ||||
Financing Cash Flows from Finance Leases | | | ||||
ROU assets obtained in exchange for lease obligations: | ||||||
Operating leases | $ | | $ | |
Three months ended March 31, | |||||||
2025 | 2024 | ||||||
Net Operating Lease Cost |
| $ | | $ | | ||
Finance Lease Cost: | |||||||
Amortization of right-of-use assets | | | |||||
Interest on lease liabilities |
| | | ||||
Total Lease Cost | $ | | $ | |
The maturities of lessor and lessee arrangements outstanding as of March 31, 2025 are presented in the table below for the years ending (dollars in thousands):
March 31, 2025 | |||||||||
Lessor | Lessee | ||||||||
Sales-type and Direct Financing | Operating | Finance | |||||||
For the remaining nine months of 2025 | $ | | $ | | $ | | |||
2026 |
| | | | |||||
2027 |
| | | | |||||
2028 |
| | | | |||||
2029 | | | | ||||||
Thereafter |
| | | | |||||
Total undiscounted cash flows |
| | | | |||||
Less: Adjustments (1) |
| | | | |||||
Total (2) | $ | | $ | | $ | |
(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.
-26-
7. 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, | ||||||
2025 | 2024 |
| |||||
Securities sold under agreements to repurchase | $ | | $ | | |||
FHLB Advances |
| |
| | |||
Total short-term borrowings | $ | | $ | | |||
Average outstanding balance during the period | $ | | $ | | |||
Average interest rate during the period |
| % |
| % | |||
Average interest rate at end of period |
| % |
| % |
The Company maintains federal funds lines with several correspondent banks; the available balance was $
Refer to Note 8 “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, 2025 and December 31, 2024.
-27-
Long-term Borrowings
Total long-term borrowings consist of the following as of March 31, 2025 (dollars in thousands):
Spread to | ||||||||||||||
Principal | 3-Month SOFR | Rate (3) | Maturity | Investment (4) | ||||||||||
Trust Preferred Capital Securities |
| |||||||||||||
Trust Preferred Capital Note – Statutory Trust I | $ | |
| | % (1) | | % | $ | | |||||
Trust Preferred Capital Note – Statutory Trust II |
| |
| | % (1) | | % |
| | |||||
VFG Limited Liability Trust I Indenture |
| |
| | % (1) | | % |
| | |||||
FNB Statutory Trust II Indenture |
| |
| | % (1) | | % |
| | |||||
Gateway Capital Statutory Trust I |
| |
| | % (1) | | % |
| | |||||
Gateway Capital Statutory Trust II |
| |
| | % (1) | | % |
| | |||||
Gateway Capital Statutory Trust III |
| |
| | % (1) | | % |
| | |||||
Gateway Capital Statutory Trust IV |
| |
| | % (1) | | % |
| | |||||
MFC Capital Trust II |
| |
| | % (1) | | % |
| | |||||
AMNB Statutory Trust I | | | % (1) | | % | | ||||||||
MidCarolina Trust I | | | % (2) | | % | | ||||||||
MidCarolina Trust II | | | % (2) | | % | | ||||||||
Total Trust Preferred Capital Securities | $ | |
|
|
|
|
|
| $ | | ||||
Subordinated Debt (5) | ||||||||||||||
2031 Subordinated Debt | | | % | | % | |||||||||
Total Subordinated Debt (6) | $ | | ||||||||||||
Fair Value Discount (7) | ( | |||||||||||||
Investment in Trust Preferred Capital Securities | | |||||||||||||
Total Long-term Borrowings | $ | |
(1) Three-Month Chicago Mercantile Exchange Secured Overnight Financing Rate (“ ”) +
(2) Three-Month Chicago Mercantile Exchange SOFR.
(3) Rate as of March 31, 2025. Calculated using non-rounded numbers.
(4) Represents the junior subordinated debentures owned by the Company in trust and is reported in “Other assets” on the Company’s Consolidated Balance Sheets.
(5) Subordinated notes qualify as Tier 2 capital for the Company for regulatory purposes.
(6) 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
(7) Remaining discounts of $
-28-
Total long-term borrowings consist of the following as of December 31, 2024 (dollars in thousands):
Spread to | |||||||||||||
Principal | 3-Month SOFR | Rate (3) | Maturity | Investment (4) | |||||||||
Trust Preferred Capital Securities |
| ||||||||||||
Trust Preferred Capital Note – Statutory Trust I |
| $ | |
| | % (1) | | % | $ | | |||
Trust Preferred Capital Note – Statutory Trust II |
| |
| | % (1) | | % |
| | ||||
VFG Limited Liability Trust I Indenture |
| |
| | % (1) | | % |
| | ||||
FNB Statutory Trust II Indenture |
| |
| | % (1) | | % |
| | ||||
Gateway Capital Statutory Trust I |
| |
| | % (1) | | % |
| | ||||
Gateway Capital Statutory Trust II |
| |
| | % (1) | | % |
| | ||||
Gateway Capital Statutory Trust III |
| |
| | % (1) | | % |
| | ||||
Gateway Capital Statutory Trust IV |
| |
| | % (1) | | % |
| | ||||
MFC Capital Trust II |
| |
| | % (1) | | % |
| | ||||
AMNB Statutory Trust I | | | % (1) | | % | | |||||||
MidCarolina Trust I | | | % (2) | | % | | |||||||
MidCarolina Trust II | | | % (2) | | % | | |||||||
Total Trust Preferred Capital Securities | $ | |
|
|
|
|
|
| $ | | |||
Subordinated Debt (5) | |||||||||||||
2031 Subordinated Debt | | | % | | % | ||||||||
Total Subordinated Debt (6) | $ | | |||||||||||
Fair Value Discount (7) | ( | ||||||||||||
Investment in Trust Preferred Capital Securities | | ||||||||||||
Total Long-term Borrowings | $ | |
(1) Three-Month Chicago Mercantile Exchange +
(2) Three-Month Chicago Mercantile Exchange SOFR.
(3) Rate as of December 31, 2024. Calculated using non-rounded numbers.
(4) Represents the junior subordinated debentures owned by the Company in trust and is reported in “Other assets” on the Company’s Consolidated Balance Sheets.
(5) Subordinated notes qualify as Tier 2 capital for the Company for regulatory purposes.
(6) 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
(7) Remaining discounts of $
As of March 31, 2025, 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 2025 | $ | | $ | | $ | ( |
| ( | ||||
2026 |
| |
| |
| ( |
| ( | ||||
2027 |
| |
| |
| ( |
| ( | ||||
2028 | | | ( |
| ( | |||||||
2029 | | | ( | ( | ||||||||
Thereafter |
| |
| |
| ( |
| | ||||
Total long-term borrowings | $ | | $ | | $ | ( | $ | |
(1) Includes discount on Trust Preferred Capital Securities and Subordinated Debt.
-29-
8. 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 Consumer Financial Protection Bureau’s (“CFPB”) 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, 2025, the Company has maintained 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, included in “Other Liabilities” on the Company’s Consolidated Balance Sheets. At March 31, 2025 and December 31, 2024, the Company’s reserve for unfunded commitments and indemnification reserve totaled $
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, 2025 |
| December 31, 2024 | |||
Commitments with off-balance sheet risk: |
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Commitments to extend credit(1) | $ | | $ | | ||
Letters of credit |
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Total commitments with off-balance sheet risk | $ | | $ | |
(1) Includes unfunded overdraft protection.
As of March 31, 2025, the Company had approximately $
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 9 “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 Company has recently increased its borrowing capacity at the FHLB and FRB since secured borrowing facilities provide the most reliable sources of funding, especially during times of market turbulence and financial distress. The following tables present the types of collateral pledged as of the periods ended (dollars in thousands):
Pledged Assets as of March 31, 2025 | |||||||||||||||
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| AFS |
| HTM |
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Cash | Securities (1) | Securities (1) | Loans (2) | Total | |||||||||||
Public deposits | $ | | $ | | $ | | $ | | $ | | |||||
Repurchase agreements |
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FHLB advances |
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Derivatives |
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Federal Reserve Discount Window | | | | | | ||||||||||
Other purposes |
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Total pledged assets | $ | | $ | | $ | | $ | | $ | |
(1) Balance represents market value.
(2) Balance represents book value.
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Pledged Assets as of December 31, 2024 | |||||||||||||||
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| AFS |
| HTM |
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Cash | Securities (1) | Securities (1) | Loans (2) | Total | |||||||||||
Public deposits | $ | | $ | | $ | | $ | | $ | | |||||
Repurchase agreements |
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FHLB advances |
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Derivatives |
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Federal Reserve Discount Window | | | | | | ||||||||||
Other purposes |
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Total pledged assets | $ | | $ | | $ | | $ | | $ | |
(1) Balance represents market value.
(2) Balance represents book value.
9. 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 Risk Participation Agreements. 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.
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, 2025 |
| December 31, 2024 | |||||||||||||||
Derivative (2) | Derivative (2) | |||||||||||||||||
| Notional or |
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| Notional or |
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Contractual | Contractual | |||||||||||||||||
Amount (1) | Amount (1) | |||||||||||||||||
Derivatives designated as accounting hedges: | ||||||||||||||||||
Interest rate contracts: (3) |
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Cash flow hedges | $ | | $ | | $ | | $ | | $ | | $ | | ||||||
Fair value hedges: |
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Loans | | | | | | | ||||||||||||
Securities | | | | | | | ||||||||||||
Derivatives not designated as accounting hedges: | ||||||||||||||||||
Interest rate contracts (3)(4) |
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| |
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Foreign exchange contracts | | | | | | | ||||||||||||
Cash collateral (received)/pledged (5) | $ | | $ | ( | $ | | $ | | $ | ( | $ | |
(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 Risk Participation Agreements.
(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. Cash collateral received or pledged are included in “Interest-bearing deposits in other banks” on the Company’s 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, 2025 | December 31, 2024 | |||||||||||
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| Cumulative |
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| Cumulative | |||||||
Amount of Basis | Amount of Basis | |||||||||||
Adjustments | Adjustments | |||||||||||
Included in the | 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: |
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Securities available-for-sale (1) (2) | $ | | $ | ( | $ | | $ | ( | ||||
Loans (3) |
| |
| ( |
| |
| ( |
(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, 2025 and December 31, 2024 totaled $
(2) Carrying value represents amortized cost.
(3) The fair value of the swaps associated with the derivative related to hedged items at March 31, 2025 and December 31, 2024 was an unrealized gain of $
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10. STOCKHOLDERS’ EQUITY
Forward Sale Agreements
On October 21, 2024, in connection with the execution of the Sandy Spring merger agreement, the Company entered into an initial forward sale agreement with Morgan Stanley & Co. LLC (the “Forward Purchaser”) relating to an aggregate of