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Table of Contents

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, 2025

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 1/400th 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 30, 2025 was 142,468,488.

Table of Contents

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, 2025 (unaudited) and December 31, 2024 (audited)

2

Consolidated Statements of Income (unaudited) for the three months ended March 31, 2025 and 2024

3

Consolidated Statements of Comprehensive Income (Loss) (unaudited) for the three months ended March 31, 2025 and 2024

4

Consolidated Statements of Changes in Stockholders’ Equity (unaudited) for the three months ended March 31, 2025 and 2024

5

Consolidated Statements of Cash Flows (unaudited) for the three months ended March 31, 2025 and 2024

6

Notes to Consolidated Financial Statements (unaudited)

8

Report of Independent Registered Public Accounting Firm

45

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

46

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

74

Item 4.

Controls and Procedures

76

PART II - OTHER INFORMATION

Item 1.

Legal Proceedings

77

Item 1A.

Risk Factors

78

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

78

Item 5.

Other Information

78

Item 6.

Exhibits

79

Signatures

80

Table of Contents

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

Table of Contents

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

$

194,083

$

196,435

Interest-bearing deposits in other banks

236,094

153,695

Federal funds sold

3,961

3,944

Total cash and cash equivalents

434,138

354,074

Securities available for sale, at fair value

2,483,835

2,442,166

Securities held to maturity, at carrying value

821,059

803,851

Restricted stock, at cost

100,312

102,954

Loans held for sale

9,525

9,420

Loans held for investment, net of deferred fees and costs

18,427,689

18,470,621

Less: allowance for loan and lease losses

193,796

178,644

Total loans held for investment, net

18,233,893

18,291,977

Premises and equipment, net

111,876

112,704

Goodwill

1,214,053

1,214,053

Amortizable intangibles, net

79,165

84,563

Bank owned life insurance

496,933

493,396

Other assets

647,822

676,165

Total assets

$

24,632,611

$

24,585,323

LIABILITIES

Noninterest-bearing demand deposits

$

4,471,173

$

4,277,048

Interest-bearing deposits

16,031,701

16,120,571

Total deposits

20,502,874

20,397,619

Securities sold under agreements to repurchase

57,018

56,275

Other short-term borrowings

60,000

Long-term borrowings

418,667

418,303

Other liabilities

468,836

510,247

Total liabilities

21,447,395

21,442,444

Commitments and contingencies (Note 8)

STOCKHOLDERS' EQUITY

Preferred stock, $10.00 par value

173

173

Common stock, $1.33 par value

118,823

118,519

Additional paid-in capital

2,280,300

2,280,547

Retained earnings

1,119,635

1,103,326

Accumulated other comprehensive loss

(333,715)

(359,686)

Total stockholders' equity

3,185,216

3,142,879

Total liabilities and stockholders' equity

$

24,632,611

$

24,585,323

Common shares outstanding

89,340,541

89,770,231

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.

-2-

Table of Contents

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

$

271,515

$

234,600

Interest on deposits in other banks

2,513

1,280

Interest and dividends on securities:

Taxable

23,648

18,879

Nontaxable

8,160

8,156

Total interest and dividend income

305,836

262,915

Interest expense:

Interest on deposits

115,587

101,864

Interest on short-term borrowings

909

8,161

Interest on long-term borrowings

5,176

5,065

Total interest expense

121,672

115,090

Net interest income

184,164

147,825

Provision for credit losses

17,638

8,239

Net interest income after provision for credit losses

166,526

139,586

Noninterest income:

Service charges on deposit accounts

9,683

8,569

Other service charges, commissions and fees

1,762

1,731

Interchange fees

2,949

2,294

Fiduciary and asset management fees

6,697

4,838

Mortgage banking income

973

867

(Loss) gain on sale of securities

(102)

3

Bank owned life insurance income

3,537

3,245

Loan-related interest rate swap fees

2,400

1,216

Other operating income

1,264

2,789

Total noninterest income

29,163

25,552

Noninterest expenses:

Salaries and benefits

75,415

61,882

Occupancy expenses

8,580

6,625

Furniture and equipment expenses

3,914

3,309

Technology and data processing

10,188

8,127

Professional services

4,687

3,081

Marketing and advertising expense

3,184

2,318

FDIC assessment premiums and other insurance

5,201

5,143

Franchise and other taxes

4,643

4,501

Loan-related expenses

1,249

1,323

Amortization of intangible assets

5,398

1,895

Merger-related costs

4,940

1,874

Other expenses

6,785

5,195

Total noninterest expenses

134,184

105,273

Income before income taxes

61,505

59,865

Income tax expense

11,687

10,096

Net Income

$

49,818

$

49,769

Dividends on preferred stock

2,967

2,967

Net income available to common shareholders

$

46,851

$

46,802

Basic earnings per common share

$

0.53

$

0.62

Diluted earnings per common share

$

0.52

$

0.62

Dividends declared per common share

$

0.34

$

0.32

Basic weighted average number of common shares outstanding

89,222,296

75,197,113

Diluted weighted average number of common shares outstanding

90,072,795

75,197,376

See accompanying notes to consolidated financial statements.

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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

$

49,818

$

49,769

Other comprehensive income (loss):

 

 

Cash flow hedges:

 

 

Change in fair value of cash flow hedges (net of tax, $2,747 and $2,726 for the three months ended March 31, 2025 and 2024, respectively)

 

10,336

 

(10,253)

AFS securities:

 

 

Unrealized holding gains (losses) arising during period (net of tax, $4,188 and $5,450 for the three months ended March 31, 2025 and 2024, respectively)

 

15,754

 

(20,501)

Reclassification adjustment for losses (gains) included in net income (net of tax, $21 and $1 for the three months ended March 31, 2025 and 2024, respectively) (1)

 

81

 

(2)

HTM securities:

 

 

Reclassification adjustment for accretion of unrealized gains on AFS securities transferred to HTM (net of tax) (2)

 

 

(2)

Bank owned life insurance:

 

 

Unrealized holding losses arising during the period

(10)

(16)

Reclassification adjustment for gains included in net income (3)

 

(190)

 

(175)

Other comprehensive income (loss):

 

25,971

 

(30,949)

Comprehensive income

$

75,789

$

18,820

(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, 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

$

118,519

$

173

$

2,280,547

$

1,103,326

$

(359,686)

$

3,142,879

Net Income

 

49,818

 

49,818

Other comprehensive income (net of taxes of $6,957)

 

25,971

 

25,971

Dividends on common stock ($0.34 per share)

 

(30,542)

 

(30,542)

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 (228,311 shares)(1)

 

304

(3,698)

(3,394)

Stock-based compensation expense

 

3,451

 

3,451

Balance - March 31, 2025

$

118,823

$

173

$

2,280,300

$

1,119,635

$

(333,715)

$

3,185,216

(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

$

99,147

$

173

$

1,782,286

$

1,018,070

$

(343,349)

$

2,556,327

Net Income

 

49,769

 

49,769

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

 

(30,949)

 

(30,949)

Dividends on common stock ($0.32 per share)

 

(24,027)

 

(24,027)

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 (189,503 shares)

 

252

(2,458)

(2,206)

Stock-based compensation expense

 

2,981

 

2,981

Balance - March 31, 2024

$

99,399

$

173

$

1,782,809

$

1,040,845

$

(374,298)

$

2,548,928

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, 2025 AND 2024

(Dollars in thousands)

    

2025

    

2024

Operating activities:

 

  

 

  

Net income

$

49,818

$

49,769

Adjustments to reconcile net income to net cash provided by operating activities:

 

  

 

  

Provision for credit losses

 

17,638

 

8,239

Depreciation of premises and equipment

 

3,168

 

2,961

Amortization, net

 

6,160

 

6,542

(Accretion) amortization related to acquisitions, net

 

(7,155)

 

2,869

Losses (gains) on securities sales, net

 

102

 

(3)

BOLI income

 

(3,537)

 

(3,245)

Loans held for sale:

Originations and purchases

(44,255)

(41,244)

Proceeds from sales

 

43,803

 

35,770

Changes in operating assets and liabilities:

 

 

Net decrease (increase) in other assets

 

17,039

 

(11,368)

Net (decrease) increase in other liabilities

 

(20,749)

 

6,721

Net cash provided by operating activities

 

62,032

 

57,011

Investing activities:

 

 

  

Securities AFS and restricted stock:

 

Purchases

 

(131,017)

 

(115,674)

Proceeds from sales

 

41,366

 

61,943

Proceeds from maturities, calls and paydowns

 

72,477

 

60,985

Securities HTM:

 

Purchases

(25,436)

Proceeds from maturities, calls and paydowns

 

7,036

 

7,374

Net change in other investments

(6,694)

(6,724)

Net decrease (increase) in LHFI

 

53,435

 

(220,677)

Net purchases of premises and equipment

(2,398)

(2,124)

Proceeds from sales of foreclosed properties and former bank premises

874

 

Net cash provided by (used in) investing activities

 

9,643

 

(214,897)

Financing activities:

 

  

 

  

Net increase (decrease) in:

 

Non-interest-bearing deposits

 

194,125

 

(117,990)

Interest-bearing deposits

 

(89,286)

 

578,294

Short-term borrowings

(59,257)

(254,428)

Common stock:

 

Proceeds from exercise of stock options

227

Dividends paid

 

(33,509)

 

(26,994)

Vesting of restricted stock, net of shares held for taxes

(3,684)

(2,684)

Net cash provided by financing activities

 

8,389

 

176,425

Increase in cash and cash equivalents

 

80,064

18,539

Cash, cash equivalents and restricted cash at beginning of the period

 

354,074

 

378,131

Cash, cash equivalents and restricted cash at end of the period

$

434,138

$

396,670

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Table of Contents

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

$

119,161

$

109,148

Income taxes

 

697

 

86

Supplemental schedule of noncash investing and financing activities

 

  

 

  

Transfer to LHFI from LHFS

355

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 (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.

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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 1.35 shares of the Company’s common stock, resulting in 14.3 million additional shares issued, or aggregate consideration of $505.5 million, based on the closing price per share of the Company’s common stock as quoted on the NYSE on March 28, 2024, which was the last trading day prior to the consummation of the acquisition. With the acquisition of American National, the Company acquired 26 branches, deepening its presence in central and western Virginia, and expanding its franchise into contiguous markets in southern Virginia and in North Carolina.

As a result of the American National acquisition, the Company recorded goodwill totaling $288.8 million at March 31, 2025, which reflects expected synergies and economies of scale from the acquisition, allocated between the Company’s Wholesale Banking ($210.8 million) and Consumer Banking ($78.0 million) reporting segments, which is not deductible for tax purposes. While the Company believed the information available on April 1, 2024 provided a reasonable basis for estimating fair value, the Company obtained additional information and evidence within the one year measurement period, that resulted in changes to the estimated fair value amounts and associated goodwill for which measurement period adjustments were recorded. Measurement period adjustments recorded during the third and fourth quarters of 2024 related to the Company’s foreclosed properties, deferred tax assets, long-term borrowings, and franchise tax accruals, which resulted in a $6.5 million increase in the preliminary goodwill recognized as part of the American National acquisition during the second quarter of 2024. In addition, certain reclassification adjustments were made to other assets and other liabilities to conform to the Company’s current balance sheet presentation. The final review of assets acquired and liabilities assumed resulted in no additional measurement period adjustments during the first quarter of 2025, and goodwill was determined to be final as of March 31, 2025.

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

 

  

$

505,473

Fair value of assets acquired:

 

  

 

  

Cash and cash equivalents

$

55,060

 

  

Securities available for sale

 

507,764

 

  

Loans held for sale

 

2,611

 

  

Loans held for investment

2,151,517

Premises and equipment

 

35,802

 

  

Core deposit intangibles and other intangibles

 

84,687

 

  

Bank owned life insurance

30,627

Other assets

 

78,829

 

  

Total assets

$

2,946,897

 

  

Fair value of liabilities assumed:

 

  

 

  

Deposits

$

2,583,089

 

  

Short-term borrowings

 

98,336

 

  

Long-term borrowings

 

25,890

 

  

Other liabilities

 

22,951

 

  

Total liabilities

$

2,730,266

 

  

Fair value of net assets acquired

 

  

$

216,631

Goodwill

 

  

$

288,842

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Table of Contents

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.

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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)

 

$

213,327

 

$

207,363

Net income available to common shareholders (3)

 

$

51,494

 

$

59,445

(1) Includes net interest income and noninterest income.

(2) Includes the net impact of American National’s accretion adjustments of $5.0 million for the three months ended March 31, 2024. There were no pro forma net accretion adjustments for the three months ended March 31, 2025.

(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 $4.6 million and $1.6 million, for the three months ended March 31, 2025 and 2024, respectively, and are recorded in “Merger-related costs” on the Company’s Consolidated Statements of Income and have been expensed as incurred. For the three months ended March 31, 2025, merger-related costs were related to the Sandy Spring acquisition, primarily related to professional fees. All the merger-related costs for the three months ended March 31, 2024 were related to the American National acquisition. American National merger-related costs include costs such as employee severance, professional fees, system conversion, and lease and contract termination expenses

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.

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Table of Contents

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

$

65,428

$

680

$

(13)

$

66,095

Obligations of states and political subdivisions

 

593,973

 

125

 

(137,728)

 

456,370

Corporate and other bonds (1)

 

245,806

 

558

 

(7,534)

 

238,830

Commercial MBS

 

 

Agency

288,399

 

668

 

(41,610)

247,457

Non-agency

67,810

 

90

 

(1,923)

65,977

Total commercial MBS

356,209

 

758

 

(43,533)

313,434

Residential MBS

Agency

1,506,416

 

2,917

 

(195,677)

1,313,656

Non-agency

96,155

 

470

 

(3,060)

93,565

Total residential MBS

1,602,571

 

3,387

 

(198,737)

1,407,221

Other securities

 

1,885

 

 

 

1,885

Total AFS securities

$

2,865,872

$

5,508

$

(387,545)

$

2,483,835

(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

$

65,650

$

390

$

(27)

$

66,013

Obligations of states and political subdivisions

597,956

 

84

 

(129,703)

 

468,337

Corporate and other bonds (1)

 

253,526

 

505

 

(9,319)

 

244,712

Commercial MBS

 

 

Agency

285,949

 

348

 

(44,678)

241,619

Non-agency

61,552

 

4

 

(2,110)

59,446

Total commercial MBS

347,501

 

352

 

(46,788)

301,065

Residential MBS

Agency

1,478,648

 

1,375

 

(216,754)

1,263,269

Non-agency

99,622

 

672

 

(3,384)

96,910

Total residential MBS

1,578,270

 

2,047

 

(220,138)

1,360,179

Other securities

 

1,860

 

 

 

1,860

Total AFS securities

$

2,844,763

$

3,378

$

(405,975)

$

2,442,166

(1) Other bonds include asset-backed securities.

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Table of Contents

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

$

$

$

1,094

$

(13)

$

1,094

$

(13)

Obligations of states and political subdivisions

6,008

(377)

434,789

(137,351)

440,797

(137,728)

Corporate and other bonds (1)

 

195

 

(1)

 

152,758

 

(7,533)

 

152,953

 

(7,534)

Commercial MBS

 

Agency

15,166

(83)

161,498

(41,527)

176,664

(41,610)

Non-agency

19,316

(856)

20,262

(1,067)

39,578

(1,923)

Total commercial MBS

34,482

(939)

181,760

(42,594)

216,242

(43,533)

Residential MBS

Agency

108,671

(571)

886,146

(195,106)

994,817

(195,677)

Non-agency

23,135

(197)

26,443

(2,863)

49,578

(3,060)

Total residential MBS

131,806

(768)

912,589

(197,969)

1,044,395

(198,737)

Total AFS securities

$

172,491

$

(2,085)

$

1,682,990

$

(385,460)

$

1,855,481

$

(387,545)

December 31, 2024

 

  

 

  

 

  

 

  

 

  

 

  

U.S. government and agency securities

$

1,935

$

(2)

$

1,286

$

(25)

$

3,221

$

(27)

Obligations of states and political subdivisions

6,560

(322)

444,056

(129,381)

450,616

(129,703)

Corporate and other bonds (1)

 

8,620

 

(27)

 

145,655

 

(9,292)

 

154,275

 

(9,319)

Commercial MBS

 

Agency

31,291

(359)

160,880

(44,319)

192,171

(44,678)

Non-agency

24,864

(1,188)

21,110

(922)

45,974

(2,110)

Total commercial MBS

56,155

(1,547)

181,990

(45,241)

238,145

(46,788)

Residential MBS

Agency

104,477

(546)

895,714

(216,208)

1,000,191

(216,754)

Non-agency

6,067

(98)

27,851

(3,286)

33,918

(3,384)

Total residential MBS

110,544

(644)

923,565

(219,494)

1,034,109

(220,138)

Total AFS securities

$

183,814

$

(2,542)

$

1,696,552

$

(403,433)

$

1,880,366

$

(405,975)

(1) Other bonds include asset-backed securities.

(2) Comprised of 715 and 726 individual securities as of March 31, 2025 and December 31, 2024, respectively.

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 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 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 20% simplified supervisory formula approach rating. The Company’s AFS investment portfolio is generally highly-rated or agency backed. At March 31, 2025 and December 31, 2024, 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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Table of Contents

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

$

20,877

$

20,790

$

35,954

$

35,808

Due after one year through five years

 

225,718

 

226,577

 

215,517

 

215,513

Due after five years through ten years

 

288,239

 

270,629

 

286,487

 

271,443

Due after ten years

 

2,331,038

 

1,965,839

 

2,306,805

 

1,919,402

Total AFS securities

$

2,865,872

$

2,483,835

$

2,844,763

$

2,442,166

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 $9.7 million and $10.1 million at March 31, 2025 and December 31, 2024, respectively, and is included in “Other assets” on the Company’s Consolidated Balance Sheets. For the three months ended March 31, 2025 and 2024, accrued interest receivable write-offs were not material to the Company’s consolidated financial statements.

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

$

720,888

$

665

$

(37,312)

$

684,241

Corporate and other bonds (1)

3,087

(59)

3,028

Commercial MBS

 

Agency

26,671

(5,780)

20,891

Non-agency

16,824

102

(585)

16,341

Total commercial MBS

43,495

102

(6,365)

37,232

Residential MBS

Agency

37,373

(5,450)

31,923

Non-agency

16,216

(228)

15,988

Total residential MBS

53,589

(5,678)

47,911

Total HTM securities

$

821,059

$

767

$

(49,414)

$

772,412

(1) Other bonds include asset-backed securities.

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Table of Contents

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

$

697,683

$

715

$

(31,763)

$

666,635

Corporate and other bonds (1)

3,322

(82)

3,240

Commercial MBS

Agency

26,787

(6,185)

20,602

Non-agency

17,922

28

(659)

17,291

Total commercial MBS

44,709

28

(6,844)

37,893

Residential MBS

Agency

37,808

(6,288)

31,520

Non-agency

20,329

(282)

20,047

Total residential MBS

58,137

(6,570)

51,567

Total HTM securities

$

803,851

$

743

$

(45,259)

$

759,335

(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

$

710,141

$

$

5,416

$

715,557

BBB/BB/B

1,139

1,139

Not Rated – Agency (1)

64,044

64,044

Not Rated – Non-Agency (2)

 

9,608

 

3,087

27,624

40,319

Total

$

720,888

$

3,087

$

97,084

$

821,059

December 31, 2024

Credit Rating:

 

 

AAA/AA/A

$

686,923

$

$

5,748

$

692,671

BBB/BB/B

1,144

1,144

Not Rated – Agency (1)

64,595

64,595

Not Rated – Non-Agency (2)

 

9,616

 

3,322

32,503

45,441

Total

$

697,683

$

3,322

$

102,846

$

803,851

(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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Table of Contents

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

$

$

$

3,369

$

3,358

Due after one year through five years

 

18,744

 

19,041

 

18,293

 

18,547

Due after five years through ten years

 

142,875

 

135,547

 

115,243

 

109,358

Due after ten years

 

659,440

 

617,824

 

666,946

 

628,072

Total HTM securities

$

821,059

$

772,412

$

803,851

$

759,335

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 $6.8 million and $8.4 million at March 31, 2025 and December 31, 2024, respectively, and is included in “Other assets” on the Company’s Consolidated Balance Sheets. For the three months ended March 31, 2025 and 2024, 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, 2025 and December 31, 2024, 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, 2025 and December 31, 2024.

Restricted Stock, at cost

The FHLB required the Bank to maintain stock in an amount equal to 4.75% of outstanding borrowings and a specific percentage of the member’s total assets at March 31, 2025 and December 31, 2024, respectively. The Federal Reserve Bank of Richmond (“FRB”) requires the Company to maintain stock with a par value equal to 6% of its outstanding capital. At March 31, 2025 and December 31, 2024, restricted stock consisted of FRB stock in the amount of $82.9 million for both periods, and FHLB stock in the amount of $17.4 million and $20.1 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):

    

2025

    

2024

Realized gains (losses): (1)

Gross realized gains

 

$

14

 

$

3

Gross realized losses

 

(116)

 

Net realized (losses) gains

 

$

(102)

 

$

3

Proceeds from sales of securities

 

$

41,366

 

$

61,943

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

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Table of Contents

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

$

1,305,969

$

1,731,108

Commercial Real Estate ("CRE") – Owner Occupied

 

2,363,509

 

2,370,119

CRE – Non-Owner Occupied

 

5,072,694

 

4,935,590

Multifamily Real Estate

 

1,531,547

 

1,240,209

Commercial & Industrial

 

3,819,415

 

3,864,695

Residential 1-4 Family – Commercial

 

738,388

 

719,425

Residential 1-4 Family – Consumer

 

1,286,526

 

1,293,817

Residential 1-4 Family – Revolving

 

778,527

 

756,944

Auto

 

279,517

 

316,368

Consumer

 

101,334

 

104,882

Other Commercial

 

1,150,263

 

1,137,464

Total LHFI, net of deferred fees and costs(1)

18,427,689

18,470,621

Allowance for loan and lease losses

(193,796)

(178,644)

Total LHFI, net

$

18,233,893

$

18,291,977

(1) Total loans included unamortized premiums and discounts, and unamortized deferred fees and costs totaling $206.0 million and $220.6 million as of March 31, 2025 and December 31, 2024, respectively.

Accrued interest receivable on LHFI totaled $71.4 million and $73.7 million at March 31, 2025 and December 31, 2024, respectively. Accrued interest receivable write-offs were not material to the Company’s consolidated financial statements for the three months ended March 31, 2025 and 2024.

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

$

1,302,682

$

458

    

$

35

    

$

    

$

2,794

    

$

1,305,969

CRE – Owner Occupied

 

2,357,437

 

1,455

    

 

971

    

 

714

    

 

2,932

    

 

2,363,509

CRE – Non-Owner Occupied

 

5,067,775

 

3,760

    

 

    

 

    

 

1,159

    

 

5,072,694

Multifamily Real Estate

 

1,529,089

 

1,353

    

 

981

    

 

    

 

124

    

 

1,531,547

Commercial & Industrial

 

3,770,204

 

4,192

    

 

838

    

 

1,075

    

 

43,106

    

 

3,819,415

Residential 1-4 Family – Commercial

 

734,639

 

1,029

    

 

19

    

 

1,091

    

 

1,610

    

 

738,388

Residential 1-4 Family – Consumer

 

1,261,038

 

11,005

    

 

348

    

 

1,193

    

 

12,942

    

 

1,286,526

Residential 1-4 Family – Revolving

 

768,867

 

2,533

 

1,137

    

 

2,397

    

 

3,593

    

 

778,527

Auto

 

274,479

 

3,662

 

539

 

196

    

 

641

    

 

279,517

Consumer

 

100,361

 

479

 

384

 

94

 

16

 

101,334

Other Commercial

1,142,145

6,875

1,123

22

98

1,150,263

Total LHFI, net of deferred fees and costs

$

18,308,716

$

36,801

$

6,375

$

6,782

$

69,015

$

18,427,689

% of total loans

99.35

%

0.20

%

0.04

%

0.04

%

0.37

%

100.00

%

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Table of Contents

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

$

1,729,637

$

38

    

$

    

$

120

    

$

1,313

    

$

1,731,108

CRE – Owner Occupied

 

2,362,458

 

2,080

    

 

1,074

    

 

1,592

    

 

2,915

    

 

2,370,119

CRE – Non-Owner Occupied

 

4,926,168

 

1,381

    

 

    

 

6,874

    

 

1,167

    

 

4,935,590

Multifamily Real Estate

 

1,238,711

 

1,366

    

 

    

 

    

 

132

    

 

1,240,209

Commercial & Industrial

 

3,820,564

 

9,405

    

 

69

    

 

955

    

 

33,702

    

 

3,864,695

Residential 1-4 Family – Commercial

 

715,604

 

697

    

 

665

    

 

949

    

 

1,510

    

 

719,425

Residential 1-4 Family – Consumer

 

1,266,467

 

5,928

    

 

7,390

    

 

1,307

    

 

12,725

    

 

1,293,817

Residential 1-4 Family – Revolving

 

747,474

 

1,824

 

2,110

    

 

1,710

    

 

3,826

    

 

756,944

Auto

 

311,354

 

3,615

 

456

 

284

    

 

659

    

 

316,368

Consumer

 

103,528

 

804

 

486

 

44

 

20

 

104,882

Other Commercial

1,132,960

2,167

2,029

308

1,137,464

Total LHFI, net of deferred fees and costs

$

18,354,925

$

29,305

$

14,279

$

14,143

$

57,969

$

18,470,621

% of total loans

99.37

%

0.16

%

0.08

%

0.08

%

0.31

%

100.00

%

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

$

1,277

$

Commercial & Industrial

2,510

Total LHFI

$

1,277

$

2,510

There was no interest income recognized on nonaccrual loans during the three months ended March 31, 2025 and 2024.

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Table of Contents

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 $36,000.

2025

Amortized Cost

% of Total Class of Financing Receivable

 

Combination - Other-Than-Insignificant Payment Delay and Term Extension

Commercial and Industrial

$

493

0.01

%

Total Combination - Other-Than-Insignificant Payment Delay and Term Extension

$

493

Term Extension

 

CRE – Owner Occupied

$

305

0.01

%

Residential 1-4 Family – Commercial

332

0.04

%

Residential 1-4 Family – Consumer

201

0.02

%

Total Term Extension

$

838

Combination - Term Extension and Interest Rate Reduction

Residential 1-4 Family – Consumer

$

840

0.07

%

Total Combination - Term Extension and Interest Rate Reduction

$

840

Total

$

2,171

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 1.6 years to the life of loans and reduced the weighted average contractual interest rate from 5.0% to 2.1%.

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 not have any material loans that went into default that had been modified and designated as TLMs in the twelve-month period prior to the time of default.

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 not have any material loans that had been modified and designated as TLMs that were past due.

As of March 31, 2025 and December 31, 2024, there were no material unfunded commitments on loans modified and designated as TLMs.

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Table of Contents

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, 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

$

148,887

$

29,757

$

178,644

Loans charged-off

 

(1,847)

 

(1,038)

 

(2,885)

Recoveries credited to allowance

 

230

 

377

 

607

Provision charged to operations

 

15,638

 

1,792

 

17,430

Balance at end of period

$

162,908

$

30,888

$

193,796

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

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.

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Table of Contents

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

$

61,598

$

354,330

$

499,256

$

133,499

$

24,383

$

62,203

$

85,135

$

1,220,404

Watch

209

1,275

53

23

3,590

73

5,223

Special Mention

938

18,356

31,822

1,559

52,675

Substandard

20

159

79

135

859

4,113

22,302

27,667

Total Construction and Land Development

$

61,618

$

355,636

$

518,966

$

165,509

$

25,265

$

71,465

$

107,510

$

1,305,969

Current period gross write-off

$

$

$

$

$

$

$

$

CRE – Owner Occupied

Pass

$

34,765

$

169,044

$

251,374

$

290,094

$

256,793

$

1,195,085

$

17,632

$

2,214,787

Watch

5,138

5,324

1,190

3,618

58,423

1,111

74,804

Special Mention

570

6,066

1,788

1,661

13,985

562

24,632

Substandard

24,567

1,738

1,357

665

20,819

140

49,286

Total CRE – Owner Occupied

$

34,765

$

199,319

$

264,502

$

294,429

$

262,737

$

1,288,312

$

19,445

$

2,363,509

Current period gross write-off

$

$

$

$

$

$

$

$

CRE – Non-Owner Occupied

Pass

$

71,820

$

361,994

$

631,090

$

706,424

$

815,402

$

2,122,235

$

69,106

$

4,778,071

Watch

25,029

6,835

10,891

65,084

13,303

121,142

Special Mention

365

4,815

4,635

8,378

30,001

48,194

Substandard

6,279

22,112

1,133

95,693

70

125,287

Total CRE – Non-Owner Occupied

$

71,820

$

362,359

$

667,213

$

740,006

$

835,804

$

2,313,013

$

82,479

$

5,072,694

Current period gross write-off

$

$

$

$

$

$

$

$

Commercial & Industrial

Pass

$

269,658

$

737,413

$

495,465

$

456,317

$

242,636

$

304,032

$

956,294

$

3,461,815

Watch

1,396

5,663

49,212

2,388

2,451

41,322

102,432

Special Mention

3,622

38,201

14,793

5,663

20,090

74,518

156,887

Substandard

43

9,309

3,577

4,040

5,501

1,394

34,721

58,585

Doubtful

1,623

1,553

36,520

39,696

Total Commercial & Industrial

$

269,701

$

753,363

$

542,906

$

525,915

$

256,188

$

327,967

$

1,143,375

$

3,819,415

Current period gross write-off

$

$

$

(20)

$

$

$

$

(981)

$

(1,001)

Multifamily Real Estate

Pass

$

24,486

$

69,594

$

63,117

$

447,952

$

276,264

$

502,318

$

54,525

$

1,438,256

Watch

731

1,715

73,780

76,226

Special Mention

1,425

1,425

Substandard

14,163

1,477

15,640

Total Multifamily Real Estate

$

24,486

$

70,325

$

77,280

$

449,667

$

350,044

$

505,220

$

54,525

$

1,531,547

Current period gross write-off

$

$

$

$

$

$

$

$

Residential 1-4 Family – Commercial

Pass

$

34,503

$

46,268

$

75,413

$

113,147

$

106,794

$

314,977

$

6,767

$

697,869

Watch

165

881

1,270

722

7,230

102

10,370

Special Mention

23,211

211

1,721

25,143

Substandard

353

517

231

229

3,423

253

5,006

Total Residential 1-4 Family – Commercial

$

34,856

$

46,950

$

76,294

$

137,859

$

107,956

$

327,351

$

7,122

$

738,388

Current period gross write-off

$

$

$

$

$

$

(38)

$

$

(38)

Other Commercial

Pass

$

29,841

$

244,141

$

187,761

$

164,552

$

153,446

$

235,821

$

103,082

$

1,118,644

Watch

1,096

3,818

881

9,255

15,050

Special Mention

82

948

2,654

2,672

1,872

8,228

Substandard

1,872

5,757

561

52

99

8,341

Total Other Commercial

$

29,841

$

244,141

$

190,811

$

175,075

$

157,542

$

247,800

$

105,053

$

1,150,263

Current period gross write-off

$

$

$

$

$

$

(808)

$

$

(808)

Total Commercial

Pass

$

526,671

$

1,982,784

$

2,203,476

$

2,311,985

$

1,875,718

$

4,736,671

$

1,292,541

$

14,929,846

Watch

7,639

39,268

64,093

92,303

146,033

55,911

405,247

Special Mention

5,495

67,520

77,197

18,567

71,453

76,952

317,184

Substandard

416

34,552

27,708

33,632

8,948

126,971

57,585

289,812

Doubtful

1,623

1,553

36,520

39,696

Total Commercial

$

527,087

$

2,032,093

$

2,337,972

$

2,488,460

$

1,995,536

$

5,081,128

$

1,519,509

$

15,981,785

Total current period gross write-off

$

$

$

(20)

$

$

$

(846)

$

(981)

$

(1,847)

-21-

Table of Contents

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

$

350,344

$

630,033

$

372,483

$

120,851

$

14,180

$

46,671

$

120,240

$

1,654,802

Watch

3

22,790

18,172

384

717

42,066

Special Mention

739

1,771

1,629

226

1,332

1,139

6,836

Substandard

162

80

22,237

745

1,467

2,713

27,404

Total Construction and Land Development

$

351,248

$

654,674

$

414,521

$

122,206

$

16,979

$

51,240

$

120,240

$

1,731,108

Current period gross write-off

$

$

$

(1,109)

$

$

$

$

$

(1,109)

CRE – Owner Occupied

Pass

$

152,865

$

243,842

$

293,260

$

262,430

$

248,187

$

1,014,962

$

27,316

$

2,242,862

Watch

4,455

1,391

1,424

1,854

2,507

35,093

79

46,803

Special Mention

1,153

6,659

1,577

2,102

2,266

11,556

2,389

27,702

Substandard

24,722

1,188

1,921

352

2,433

21,996

140

52,752

Total CRE – Owner Occupied

$

183,195

$

253,080

$

298,182

$

266,738

$

255,393

$

1,083,607

$

29,924

$

2,370,119

Current period gross write-off

$

$

$

$

$

$

(354)

$

$

(354)

CRE – Non-Owner Occupied

Pass

$

349,991

$

514,460

$

692,155

$

835,195

$

381,544

$

1,838,343

$

40,741

$

4,652,429

Watch

150

7,465

11,855

70,113

13,013

102,596

Special Mention

384

18,342

883

7,387

47,286

74,282

Substandard

12,609

1,130

36,796

55,677

71

106,283

Total CRE – Non-Owner Occupied

$

350,375

$

527,219

$

717,962

$

849,063

$

425,727

$

2,011,419

$

53,825

$

4,935,590

Current period gross write-off

$

$

$

$

$

(3,386)

$

$

$

(3,386)

Commercial & Industrial

Pass

$

787,683

$

593,676

$

534,064

$

300,348

$

124,214

$

227,352

$

982,085

$

3,549,422

Watch

2,458

30,428

48,661

6,980

486

2,434

24,153

115,600

Special Mention

2,289

12,328

15,458

4,001

2,183

19,125

64,204

119,588

Substandard

9,214

2,340

3,423

4,139

472

1,327

29,839

50,754

Doubtful

1,598

27,733

29,331

Total Commercial & Industrial

$

801,644

$

638,772

$

603,204

$

315,468

$

127,355

$

250,238

$

1,128,014

$

3,864,695

Current period gross write-off

$

$

(42)

$

(1,081)

$

(145)

$

(147)

$

(928)

$

(1,187)

$

(3,530)

Multifamily Real Estate

Pass

$

80,345

$

34,060

$

259,493

$

229,950

$

205,699

$

302,186

$

35,706

$

1,147,439

Watch

1,719

73,780

129

75,628

Special Mention

250

1,185

1,435

Substandard

14,210

1,497

15,707

Total Multifamily Real Estate

$

80,345

$

48,270

$

261,212

$

303,730

$

206,078

$

304,868

$

35,706

$

1,240,209

Current period gross write-off

$

$

$

$

$

$

$

$

Residential 1-4 Family – Commercial

Pass

$

49,068

$

66,307

$

115,526

$

108,751

$

79,090

$

250,273

$

9,617

$

678,632

Watch

274

504

1,277

737

730

6,571

152

10,245

Special Mention

23,435

215

331

1,500

25,481

Substandard

517

229

588

3,480

253

5,067

Total Residential 1-4 Family – Commercial

$

49,859

$

66,811

$

140,238

$

109,932

$

80,739

$

261,824

$

10,022

$

719,425

Current period gross write-off

$

$

$

$

$

(18)

$

$

$

(18)

Other Commercial

Pass

$

233,480

$

196,703

$

169,440

$

157,815

$

82,990

$

161,984

$

106,368

$

1,108,780

Watch

1,926

6,170

1,525

5,293

4,419

19,333

Special Mention

84

1,059

3,163

582

4,888

Substandard

1,060

3,272

30

2

99

4,463

Total Other Commercial

$

233,480

$

199,773

$

179,941

$

162,503

$

88,313

$

166,987

$

106,467

$

1,137,464

Current period gross write-off

$

$

$

$

$

$

(3,492)

$

$

(3,492)

Total Commercial

Pass

$

2,003,776

$

2,279,081

$

2,436,421

$

2,015,340

$

1,135,904

$

3,841,771

$

1,322,073

$

15,034,366

Watch

7,190

57,189

84,888

97,115

9,145

119,347

37,397

412,271

Special Mention

4,565

20,842

61,500

10,590

13,749

82,373

66,593

260,212

Substandard

34,615

31,487

30,853

6,595

41,786

86,692

30,402

262,430

Doubtful

1,598

27,733

29,331

Total Commercial

$

2,050,146

$

2,388,599

$

2,615,260

$

2,129,640

$

1,200,584

$

4,130,183

$

1,484,198

$

15,998,610

Total current period gross write-off

$

$

(42)

$

(2,190)

$

(145)

$

(3,551)

$

(4,774)

$

(1,187)

$

(11,889)

-22-

Table of Contents

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

$

21,210

$

132,639

$

170,395

$

275,906

$

277,866

$

383,022

$

$

1,261,038

30-59 Days Past Due

642

558

3,178

743

5,884

11,005

60-89 Days Past Due

348

348

90+ Days Past Due

177

310

706

1,193

Nonaccrual

494

3,120

1,461

7,867

12,942

Total Residential 1-4 Family – Consumer

$

21,210

$

133,281

$

171,624

$

282,514

$

280,070

$

397,827

$

$

1,286,526

Current period gross write-off

$

$

$

$

(20)

$

$

(17)

$

$

(37)

Residential 1-4 Family – Revolving

Current

$

5,166

$

15,479

$

30,812

$

43,531

$

9,849

$

4,948

$

659,082

$

768,867

30-59 Days Past Due

117

47

2,369

2,533

60-89 Days Past Due

1,137

1,137

90+ Days Past Due

274

129

1,994

2,397

Nonaccrual

138

107

42

3,306

3,593

Total Residential 1-4 Family – Revolving

$

5,166

$

15,479

$

31,224

$

43,884

$

9,849

$

5,037

$

667,888

$

778,527

Current period gross write-off

$

$

$

$

$

$

$

(45)

$

(45)

Auto

Current

$

362

$

2,005

$

50,262

$

129,816

$

59,880

$

32,154

$

$

274,479

30-59 Days Past Due

419

1,824

789

630

3,662

60-89 Days Past Due

287

142

110

539

90+ Days Past Due

126

16

54

196

Nonaccrual

62

335

140

104

641

Total Auto

$

362

$

2,005

$

50,743

$

132,388

$

60,967

$

33,052

$

$

279,517

Current period gross write-off

$

$

$

(68)

$

(358)

$

(114)

$

(54)

$

$

(594)

Consumer

Current

$

3,740

$

11,841

$

6,847

$

10,452

$

6,354

$

32,167

$

28,960

$

100,361

30-59 Days Past Due

12

72

38

120

21

157

59

479

60-89 Days Past Due

25

55

28

5

260

11

384

90+ Days Past Due

2

34

40

3

15

94

Nonaccrual

10

6

16

Total Consumer

$

3,752

$

11,940

$

6,974

$

10,650

$

6,389

$

32,584

$

29,045

$

101,334

Current period gross write-off

$

$

(30)

$

(75)

$

(18)

$

(9)

$

(219)

$

(11)

$

(362)

Total Consumer

Current

$

30,478

$

161,964

$

258,316

$

459,705

$

353,949

$

452,291

$

688,042

$

2,404,745

30-59 Days Past Due

12

714

1,015

5,239

1,553

6,718

2,428

17,679

60-89 Days Past Due

25

55

315

147

718

1,148

2,408

90+ Days Past Due

2

485

605

19

760

2,009

3,880

Nonaccrual

694

3,572

1,607

8,013

3,306

17,192

Total Consumer

$

30,490

$

162,705

$

260,565

$

469,436

$

357,275

$

468,500

$

696,933

$

2,445,904

Total current period gross write-off

$

$

(30)

$

(143)

$

(396)

$

(123)

$

(290)

$

(56)

$

(1,038)

-23-

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 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

$

137,808

$

171,237

$

287,376

$

277,653

$

151,177

$

241,203

$

13

$

1,266,467

30-59 Days Past Due

233

405

14

470

954

3,852

5,928

60-89 Days Past Due

28

216

5,546

1,600

7,390

90+ Days Past Due

150

94

1,063

1,307

Nonaccrual

505

2,953

1,109

207

7,951

12,725

Total Residential 1-4 Family – Consumer

$

138,041

$

172,325

$

290,653

$

284,778

$

152,338

$

255,669

$

13

$

1,293,817

Current period gross write-off

$

$

(76)

$

(3)

$

$

$

(142)

$

$

(221)

Residential 1-4 Family – Revolving

Current

$

17,522

$

33,934

$

45,558

$

10,407

$

3,578

$

1,731

$

634,744

$

747,474

30-59 Days Past Due

11

81

30

1,702

1,824

60-89 Days Past Due

2,110

2,110

90+ Days Past Due

178

130

1,402

1,710

Nonaccrual

139

112

45

3,530

3,826

Total Residential 1-4 Family – Revolving

$

17,522

$

34,262

$

45,881

$

10,407

$

3,653

$

1,731

$

643,488

$

756,944

Current period gross write-off

$

$

$

$

(28)

$

$

$

(189)

$

(217)

Auto

Current

$

2,251

$

55,170

$

145,517

$

68,282

$

28,923

$

11,211

$

$

311,354

30-59 Days Past Due

507

1,571

1,053

218

266

3,615

60-89 Days Past Due

97

233

87

39

456

90+ Days Past Due

10

149

74

31

20

284

Nonaccrual

94

305

113

118

29

659

Total Auto

$

2,251

$

55,878

$

147,775

$

69,609

$

29,290

$

11,565

$

$

316,368

Current period gross write-off

$

$

(243)

$

(835)

$

(335)

$

(82)

$

(75)

$

$

(1,570)

Consumer

Current

$

13,664

$

7,932

$

12,490

$

6,998

$

5,903

$

27,967

$

28,574

$

103,528

30-59 Days Past Due

26

73

87

9

10

542

57

804

60-89 Days Past Due

15

54

56

10

14

333

4

486

90+ Days Past Due

4

31

3

4

2

44

Nonaccrual

13

7

20

Total Consumer

$

13,705

$

8,063

$

12,677

$

7,027

$

5,931

$

28,842

$

28,637

$

104,882

Current period gross write-off

$

(6)

$

(206)

$

(116)

$

(31)

$

(782)

$

(756)

$

(162)

$

(2,059)

Total Consumer

Current

$

171,245

$

268,273

$

490,941

$

363,340

$

189,581

$

282,112

$

663,331

$

2,428,823

30-59 Days Past Due

259

996

1,753

1,532

1,212

4,660

1,759

12,171

60-89 Days Past Due

15

179

505

5,643

14

1,972

2,114

10,442

90+ Days Past Due

342

404

77

35

1,083

1,404

3,345

Nonaccrual

738

3,383

1,229

370

7,980

3,530

17,230

Total Consumer

$

171,519

$

270,528

$

496,986

$

371,821

$

191,212

$

297,807

$

672,138

$

2,472,011

Total current period gross write-off

$

(6)

$

(525)

$

(954)

$

(394)

$

(864)

$

(973)

$

(351)

$

(4,067)

As of March 31, 2025 and December 31, 2024, the Company did not have any material revolving loans convert to term.

-24-

Table of Contents

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 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 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.

As a result of the American National acquisition, the Company recorded goodwill totaling $288.8 million at March 31, 2025. See Note 2 “Acquisitions” in Part I, Item I of this Quarterly Report for more information on the American National acquisition.

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

$

850,035

$

364,018

$

$

1,214,053

Intangible Assets

 

8,410

 

737

 

70,018

 

79,165

December 31, 2024

 

  

 

  

 

  

 

  

Goodwill

$

850,035

$

364,018

$

$

1,214,053

Intangible Assets

 

8,714

 

778

 

75,071

 

84,563

Amortization expense of intangibles for the three months ended March 31, 2025 and 2024 totaled $5.4 million and $1.9 million, respectively. As of March 31, 2025, the estimated remaining amortization expense of intangibles is as follows for the years ending (dollars in thousands):

For the remaining nine months of 2025

    

$

14,551

2026

16,245

2027

12,936

2028

10,151

2029

7,872

Thereafter

17,410

Total estimated amortization expense

$

79,165

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 11 months to 122 months. At March 31, 2025 and December 31, 2024, the carrying value of residual assets covered by residual value guarantees and residual value insurance was $109.9 million and $102.6 million, respectively.

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

$

544,799

$

529,657

Unguaranteed residual values, net of unearned income and deferred selling profit

36,861

34,546

Total net investment in sales-type and direct financing leases

 

$

581,660

$

564,203

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Table of Contents

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 15 years.

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

Finance

Operating

Finance

ROU assets

$

73,015

$

3,521

$

74,782

$

3,751

Lease liabilities

77,705

5,439

79,642

5,769

Lease Term and Discount Rate of Operating leases:

 

Weighted-average remaining lease term (years)

 

10.87

3.83

10.96

4.08

Weighted-average discount rate (1)

 

6.28

%

1.17

%

6.24

%

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, 

 

2025

2024

Cash paid for amounts included in measurement of lease liabilities:

Operating Cash Flows from Finance Leases

$

16

$

20

Operating Cash Flows from Operating Leases

3,751

3,403

Financing Cash Flows from Finance Leases

330

317

ROU assets obtained in exchange for lease obligations:

Operating leases

$

688

$

1,007

Three months ended March 31, 

2025

2024

Net Operating Lease Cost

 

$

3,488

$

3,102

Finance Lease Cost:

Amortization of right-of-use assets

230

230

Interest on lease liabilities

 

16

20

Total Lease Cost

$

3,734

$

3,352

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

$

137,652

$

10,935

$

1,046

2026

 

127,419

12,484

1,427

2027

 

127,894

11,016

1,462

2028

 

92,940

9,945

1,499

2029

67,024

8,179

127

Thereafter

 

83,217

59,882

Total undiscounted cash flows

 

636,146

112,441

5,561

Less: Adjustments (1)

 

91,347

34,736

122

Total (2)

$

544,799

$

77,705

$

5,439

(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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Table of Contents

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

$

57,018

$

56,275

FHLB Advances

 

 

60,000

Total short-term borrowings

$

57,018

$

116,275

Average outstanding balance during the period

$

101,753

$

445,339

Average interest rate during the period

 

3.62

%  

 

5.22

%

Average interest rate at end of period

 

2.87

%  

 

3.34

%

The Company maintains federal funds lines with several correspondent banks; the available balance was $597.0 million at both March 31, 2025 and December 31, 2024. 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, 2025 and December 31, 2024. Additionally, the Company had a collateral dependent line of credit with the FHLB of up to $7.3 billion at March 31, 2025 and $7.4 billion at December 31, 2024. At both March 31, 2025 and December 31, 2024, the Company’s secured line of credit capacity totaled $2.8 billion, of which $2.5 billion and $2.4 billion were available at March 31, 2025 and December 31, 2024, respectively. The Company’s borrowing capacity with the Federal Reserve Discount Window totaled $2.8 billion and $3.0 billion, none of which was used at March 31, 2025 and December 31, 2024, respectively.

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.

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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

$

22,500

2.75

(1)

7.30

%  

6/17/2034

$

696

Trust Preferred Capital Note – Statutory Trust II

 

36,000

 

1.40

(1)

5.95

%  

6/15/2036

 

1,114

VFG Limited Liability Trust I Indenture

 

20,000

 

2.73

(1)

7.28

%  

3/18/2034

 

619

FNB Statutory Trust II Indenture

 

12,000

 

3.10

(1)

7.65

%  

6/26/2033

 

372

Gateway Capital Statutory Trust I

 

8,000

 

3.10

(1)

7.65

%  

9/17/2033

 

248

Gateway Capital Statutory Trust II

 

7,000

 

2.65

(1)

7.20

%  

6/17/2034

 

217

Gateway Capital Statutory Trust III

 

15,000

 

1.50

(1)

6.05

%  

5/30/2036

 

464

Gateway Capital Statutory Trust IV

 

25,000

 

1.55

(1)

6.10

%  

7/30/2037

 

774

MFC Capital Trust II

 

5,000

 

2.85

(1)

7.40

%  

1/23/2034

 

155

AMNB Statutory Trust I

20,000

1.35

(1)

5.90

%  

6/30/2036

619

MidCarolina Trust I

5,000

3.45

(2)

7.74

%

11/7/2032

155

MidCarolina Trust II

3,500

2.95

(2)

7.24

%

1/7/2034

109

Total Trust Preferred Capital Securities

$

179,000

 

  

 

  

 

  

$

5,542

Subordinated Debt (5)

2031 Subordinated Debt

250,000

%

2.875

%

12/15/2031

Total Subordinated Debt (6)

$

250,000

Fair Value Discount (7)

(15,875)

Investment in Trust Preferred Capital Securities

5,542

Total Long-term Borrowings

$

418,667

(1) Three-Month Chicago Mercantile Exchange Secured Overnight Financing Rate (“SOFR”) + 0.262%.

(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 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.

(7) Remaining discounts of $13.8 million and $2.1 million on Trust Preferred Capital Securities and Subordinated Debt, respectively.

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Table of Contents

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

$

22,500

2.75

(1)

7.32

%  

6/17/2034

$

696

Trust Preferred Capital Note – Statutory Trust II

 

36,000

 

1.40

(1)

5.97

%  

6/15/2036

 

1,114

VFG Limited Liability Trust I Indenture

 

20,000

 

2.73

(1)

7.30

%  

3/18/2034

 

619

FNB Statutory Trust II Indenture

 

12,000

 

3.10

(1)

7.67

%  

6/26/2033

 

372

Gateway Capital Statutory Trust I

 

8,000

 

3.10

(1)

7.67

%  

9/17/2033

 

248

Gateway Capital Statutory Trust II

 

7,000

 

2.65

(1)

7.22

%  

6/17/2034

 

217

Gateway Capital Statutory Trust III

 

15,000

 

1.50

(1)

6.07

%  

5/30/2036

 

464

Gateway Capital Statutory Trust IV

 

25,000

 

1.55

(1)

6.12

%  

7/30/2037

 

774

MFC Capital Trust II

 

5,000

 

2.85

(1)

7.42

%  

1/23/2034

 

155

AMNB Statutory Trust I

20,000

1.35

(1)

5.92

%  

6/30/2036

619

MidCarolina Trust I

5,000

3.45

(2)

7.76

%

11/7/2032

155

MidCarolina Trust II

3,500

2.95

(2)

7.26

%

1/7/2034

109

Total Trust Preferred Capital Securities

$

179,000

 

  

 

  

 

  

$

5,542

Subordinated Debt (5)

2031 Subordinated Debt

250,000

%

2.875

%

12/15/2031

Total Subordinated Debt (6)

$

250,000

Fair Value Discount (7)

(16,239)

Investment in Trust Preferred Capital Securities

5,542

Total Long-term Borrowings

$

418,303

(1) Three-Month Chicago Mercantile Exchange SOFR + 0.262%.

(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 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.

(7) Remaining discounts of $14.0 million and $2.2 million on Trust Preferred Capital Securities and Subordinated Debt, respectively.

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

$

$

$

(1,116)

 

(1,116)

2026

 

 

 

(1,510)

 

(1,510)

2027

 

 

 

(1,541)

 

(1,541)

2028

(1,575)

 

(1,575)

2029

(1,606)

(1,606)

Thereafter

 

184,542

 

250,000

 

(8,527)

 

426,015

Total long-term borrowings

$

184,542

$

250,000

$

(15,875)

$

418,667

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

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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 $15.5 million and $15.3 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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Table of Contents

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:

 

  

 

  

Commitments to extend credit(1)

$

5,745,699

$

5,987,562

Letters of credit

 

136,769

 

145,985

Total commitments with off-balance sheet risk

$

5,882,468

$

6,133,547

(1) Includes unfunded overdraft protection.

As of March 31, 2025, the Company had approximately $124.6 million in deposits in other financial institutions of which $103.9 million served as collateral for cash flow, fair value and loan swap derivatives. As of December 31, 2024, the Company had approximately $184.6 million in deposits in other financial institutions of which $134.7 million served as collateral for cash flow, fair value and loan swap derivatives. The Company had approximately $17.8 million and $47.2 million, respectively, in deposits in other financial institutions that were uninsured at March 31, 2025 and December 31, 2024. 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 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

    

    

AFS

    

HTM

    

    

Cash

Securities (1)

Securities (1)

Loans (2)

Total

Public deposits

$

$

772,731

$

595,193

$

$

1,367,924

Repurchase agreements

 

 

93,558

 

 

 

93,558

FHLB advances

 

 

571,632

 

9,543

 

3,998,576

 

4,579,751

Derivatives

 

103,900

 

62,860

 

 

 

166,760

Federal Reserve Discount Window

4,080,175

4,080,175

Other purposes

 

18,041

18,041

Total pledged assets

$

103,900

$

1,518,822

$

604,736

$

8,078,751

$

10,306,209

(1) Balance represents market value.

(2) Balance represents book value.

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Table of Contents

Pledged Assets as of December 31, 2024

    

    

AFS

    

HTM

    

    

Cash

Securities (1)

Securities (1)

Loans (2)

Total

Public deposits

$

$

771,486

$

601,421

$

$

1,372,907

Repurchase agreements

 

 

93,667

 

 

 

93,667

FHLB advances

 

 

579,947

 

9,417

 

4,089,049

 

4,678,413

Derivatives

 

134,668

 

62,199

 

 

 

196,867

Federal Reserve Discount Window

4,358,701

4,358,701

Other purposes

 

18,713

18,713

Total pledged assets

$

134,668

$

1,526,012

$

610,838

$

8,447,750

$

10,719,268

(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

    

    

    

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

$

865

$

3,169

$

900,000

$

$

6,467

Fair value hedges:

 

 

 

 

 

 

Loans

71,530

1,119

72,807

1,469

Securities

50,000

789

50,000

1,157

Derivatives not designated as accounting hedges:

Interest rate contracts (3)(4)

 

7,841,821

 

92,087

 

172,498

 

7,529,494

 

94,772

 

192,683

Foreign exchange contracts

17,271

23

753

12,449

47

398

Cash collateral (received)/pledged (5)

$

$

(15,787)

$

$

$

(15,685)

$

(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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Table of Contents

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

    

    

Cumulative

    

    

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:

 

  

 

  

 

  

 

  

Securities available-for-sale (1) (2)

$

71,739

$

(777)

$

73,603

$

(1,150)

Loans (3)

 

71,530

 

(8,795)

 

72,807

 

(10,063)

(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 $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, 2025 and December 31, 2024 was an unrealized gain of $8.9 million and $10.2 million, respectively.

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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 9,859,155 shares of the Company’s common stock. On October 21, 2024, the Company priced the public offering of shares of the Company’s common stock in connection with such forward sale agreement and entered into an underwriting agreement with Morgan Stanley & Co. LLC, as representative for the underwriters named therein, the Forward Purchaser and Morgan Stanley & Co. LLC as forward seller (the “Forward Seller”), relating to the registered public offering and sale of